API sees signs U.S. production slide slowing

The American Petroleum Institute says there are signs that the decline in U.S. crude production may be slowing.

API said U.S. output fell the fifth year in a row in 1996, a 1.8% drop to 6,445,000 b/d. But that was only half the rate of decline of the early 1990s, and Lower 48 production in second half 1996 topped 1995's second half.

"This reflects, in part, the impact of higher crude prices but also the effects of improved technology on production in the Gulf of Mexico. This is a very positive sign that suggests a potential significant slowing, if not reversing, of the longer term trend of declining U.S. crude production."

API said 1996 U.S. well completions dropped only 4%, compared with an average rate of 7%/year the previous 5 years. It noted the rotary rig count began increasing substantially late in 1996.

Operators completed 20,904 oil wells, gas wells, and dry holes last year vs. 21,768 the previous year.

Gas well completions were up 3% at 8,611, oil well completions sank 11% to 7,338, and dry holes were down 4% at 4,955.

API said petroleum deliveries rose 2.8% in 1996, more than a percentage point greater than during 1992-95's average of about 1.5%/year.

It said the higher growth resulted from stronger deliveries for distillate fuel oil, kerosine jet fuel, and liquefied petroleum gas, coupled with a flattening of residual fuel oil's decline trend of prior years. Gasoline deliveries slowed from 1995's rate.

"In their largest year-to-year increase since 1993, total imports in 1996 rose 6% to 9.4 million b/d, contrasting with a 1.7% decline for 1995.

"Although stronger growth in domestic consumption was partly responsible for the contrast, more than half of this difference in import growth was due to differing patterns of domestic inventory behavior.

Adjusted for inventory changes, imports in 1996 would have risen only about 4%."

API explained that inventories hovered at about 1-1.1 billion bbl for a decade, until late in 1995 they began to fall substantially and ended the year at only 970 million bbl, as a response to increasing worldwide demand.