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Dean Fantazzini has provided his latest estimates of Texas oil and natural gas output.

His analysis is based on RRC data only. Each RRC data set from Jan 2014 to Sept 2017 for crude and from April 2014 to Sept 2017 for condensate and natural gas are used in the “all data” estimate, the most recent 49 months of data are collected for each individual data set. After March 2016 there was a shift in the data for crude and condensate so for the C+C estimate, I include an estimate which uses all data from April 2016 to the most recent data point (“Corrected 18 month vintage”). Dean prefers to present an “all vintage data” estimate and an estimate using only the most recent 3 months “correction factors”. For Sept 2017 the all vintage data estimate is 3174 kb/d, the last 3 month vintage estimate is 2957 kb/d, and the last 18 month vintage estimate is 3039 kb/d with falls of 68, 96, and 80 kb/d respectively from the previous month.

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A chart I have not presented recently shows initial data reported for the past 26 months (July 2015 to Sept 2017). The change in the data around July 2016 is pretty clear. Notice how the lines start to become very closely spaced at about 6 to 8 months from most recent estimate, especially for the Sept 2016 to Feb 2017 period. This is an indication that the RRC data is improving.

chart/

The Chart below is something new. It shows only the most recent data point from each of the data sets since March 2014 and compares with the data from drilling info which can be found at the EIA website. Notice that the RRC initial data from the RRC website’s online query does not always move in sync with the drilling info data due to fluctuations in the amount of pending lease data from month to month and other factors affecting the speed that data is reported and processed.

…click on the above link to read the rest of the article…

OPEC October Production Data

November 15, 2017

OPEC October Production Data

All data below is based on the latest OPEC Monthly Oil Market Report.

All data is through October 2017 and is in thousand barrels per day.

I have now included Equatorial Guneia although I only have data from January 2015 from OPEC’s secondary sources. The January 2015 E. Guneia data was extended back to January 2005. I know this is inaccurate but production from E. Guneia is so small it will make little difference.

OPEC crude oil production dropped by 151,000 barrels per day in October.

Algeria took a hit in October, down 38,400 bpd.

Angola was up almost 70,000 bpd in October.

Not much is happening in Ecuador. They were up 7,100 bpd in October.

I do not have historical data for Equatorial Guinea. The OPEC MOMR gives average annual production data for 2015 and 2016 and quarterly data for the first two quarters of 2017. But now we will have monthly data from now on. However, they produce the least of all OPEC countries and their production will make little difference.

Gabon, another of the also-rans. Any change in their production will have only a small effect.

…click on the above link to read the rest of the article…

Norway and UK Production Update

November 8, 2017

Norway and UK Production Update

Short-term trends for UK oil and gas production and, to a lesser extent, Norway can be rendered a bit meaningless by seasonal impacts from summer maintenance turn-arounds and cyclic gas demand. Overall, though, both are at or approaching the tail end of the production curve, but with slight upticks in the nearer term. Barring several large and unlikely new discoveries over the coming years the industry will continue winding down in both countries, with the UK ahead of Norway, and exploration and development leading operations and finally decommissioning. However some Norwegian gas production still has a multi-decade plateau to come and there are a couple of large oil projects due on-line in each country which will run for twenty to thirty years.

norway drilling and discoveries

chart/

The usual patterns of exploration wells and discoveries following a bell curve that is matched by a later development curve (see below for the UK example and note that production is in cubic meters as it fits on a common axis better that way) is not seen so much in the Norwegian numbers. There are a number of reasons for this: 1) the wells and discoveries shown are for oil and gas and Norwegian gas development has been several years behind oil; 2) Norway really has three basins which have been explored somewhat sequentially – the North Sea, then the Norwegian Sea and then the Barents Sea; 3) the NPD includes as discoveries ‘hydrocarbon shows’ which will never be developed and skew the numbers, additionally in the chart the large number of ‘not evaluated’ finds in recent years will mostly become ‘unlikely to be developed’; 5) in the past Norwegian governments has made efforts to spread development of the resources through approval and leasing timing; 6) I think there are tax breaks in Norway that encourage exploration drilling even at low oil prices and low discovery rates; and 7) the chart shows numbers of discoveries rather than size, which would show a much clearer bell curve.

…click on the above link to read the rest of the article…

Recent Production: Colombia, Mexico and Brazil

October 18, 2017

Recent Production: Colombia, Mexico and Brazil

Colombia

Colombia production is holding a plateau over the past year after a large decline in the last part of 2015 and first half of 2016. August value was 858 kbpd (down 0.04% y-o-y).

chart/

Colombia oil reserves at the end of 2016 were 1.66 Gb (down 16.8% from 2 Gb in 2015 which followed a drop from 2.31 Gb in 2014). At the average 2016 production rate of 885 kbpd this gave an R/P of 5.1 years, the lowest for any significant producing country. Most of their production is heavy oil. Ecoptrol, which accounts for more than three quarters of Colombia’s crude and natural gas reserves and output, estimated about 45% of their decline was due to the “pronounced fall in oil prices”.

Individual field production is reported through the Colombian hydrocarbon agency (ANH), but data is only available to June. The previous decline mainly seems to have come from the many smaller fields (there are almost 500 total producing fields listed for 2017) and the largest one, Rubales. A few smaller fields were added in 2015, but the main cause of the plateau seems to be an arrest of the previous declines in the mature fields. Some of that may have been to do with the cessation of insurgent sabotage on pipelines.

chart/

It’s unlikely they will be able to maintain a plateau without new discoveries. Exploration has dropped significantly in the last couple of years; Anadarko has been one of the few companies to maintain some activity but they only found gas and the latest news from them would appear to indicate they are going to use money for share buybacks rather than expansion. Even EcoPetrol look more interested in opportunities abroad (e.g. offshore Mexico).

…click on the above link to read the rest of the article…

How OPEC Continues To Cheat On Its Own Deal

October 11, 2017

How OPEC Continues To Cheat On Its Own Deal

All data below is based on the latest OPEC Monthly Oil Market Report.

All data is through September 2017 and is in thousand barrels per day.

(Click to enlarge)

The above chart does not include the 14th member of OPEC that was recently added, Equatorial Guinea. I do not have historical data for Equatorial Guinea so I may not add them at all. OPEC production has held steady for the past four months. Equatorial Guinea production is tiny, 141,000 bpd so their monthly change in production can be ignored without much effect. OPEC 14 production was up 88,000 barrels per day in September. But that was after their August production had been revised downward by 82,000 bpd.
The OPEC 13, (not including Equatorial Guinea), peaked in 2016 at 32,385 kbpd and are down 150 kbpd for the first 9 months of 2017. Please note that when I say “peaked” I mean “peaked so far“. I am well aware of the fact that OPEC, or some OPEC nations may have further peaks in the future.

(Click to enlarge)

Not much is happening in Algeria. They peaked in 2008 at 1,393 kbpd and their annual average is down 338 kbpd since then.
Note: Here and below the annual average being down from the peak, I am referring to the average of the first 9 months of 2017. And, of course, I am aware that there may be further peaks down the road although that is highly unlikely for all but a couple of OPEC nations. That is because every OPEC nation is currently producing every barrel they possibly can and that includes Saudi Arabia.

…click on the above link to read the rest of the article…

An Improved Empirical Model For Oil Prices

September 22, 2017

An Improved Empirical Model For Oil Prices

This is an update to the post An Empirical Model For Oil Prices and Some Implications in which we discussed a model for oil prices as a function of 3 years of production, that is oil price in year t was estimated by production in year t, the discrete first derivative of production in year t, and the discrete second derivative in year t. We subsequently published a paper titled Oil Extraction, Economic Growth, and Oil Price Dynamics using the same model. This article contains most of our intuition on how peak oil will effect oil prices. We believe in fact that peak oil is about extraction prices rising faster than market prices and hence lower profitability for the oil industry.

Before going on, we note that all available data is very approximate. Jean Laherrère has exhaustively documented incoherence in extraction data from all standard sources [1]. We use a single price of oil provided by BP, but there is a large spectrum of prices for oil of different densities, chemistry, and provenance [2]. For this reason we do not search a perfect fit but rather try to understand the dynamics creating oil demand.

Inspired by work of Gail Tverberg and Rune Likvern on interest rates and oil prices, we added interest rates to the independent variables. Without interest rates, we had an adjusted R squared of .55.

We used extraction and price data from BP. The interest rate is the average yearly rate of the U.S. Federal Reserve. The justification for using this rate is that we believe that the U. S. dollar is the currency of oil markets and the U.S. Fed rate is the effective rate for the oil business.

…click on the above link to read the rest of the article…

OPEC August Crude Oil Production

September 12, 2017

OPEC August Crude Oil Production

All data below is based on the latest OPEC Monthly Oil Market Report.

All data is through August 2017 and is in thousand barrels per day.

The above chart does not include the 14th member of OPEC that was just added, Equatorial Guinea. I do not have historical data for Equatorial Guinea so I may not add them at all. OPEC production has held steady for the past three months. Their production was down 79,000 barrels per day in August but that is not a big drop when production is over 32.5 million barrels per day.

August production was down 79,100 barrels per day.

Not much is happening in Algeria. They peaked almost 10 years ago and have been in slow decline ever since.

Angola peaked in 2010 but have been holding pretty steady since.

Ecuador peaked in 2015.

Gabon’s oil production dropped 32,300 bpd in August.

Iran has obviously reached peak post sanctions production. Like every other OPEC member, they are producing every barrel they possibly can.

…click on the above link to read the rest of the article…

MEXICO Oil Reserves and Production

July 4, 2017

MEXICO Oil Reserves and Production

In dollar terms, since mid 2015 Mexico has been a net importer of hydrocarbons (oil, natural gas, petroleum products and petrochemicals combined). To date it has been a relatively small and fairly constant amount, but with their oil production declining, and oil prices apparently continuing to fall while natural gas prices may be on the rise, the net cost could now start to increase.

chart/

2017 reserve numbers were issued in early June. These used to come from PEMEX, but now look like they come from the government through the National Hydrocarbon Commission (probably as a result of the initiative for oil industry deregulation). Overall all categories of reserves have been falling for some years. The chart below shows oil and total (i.e. including condensate, NGL and natural gas) for proved, probable and possible. The production, discoveries and revisions for total petroleum (no figures for crude alone) are also shown – a bit fiddly but the trends can be seen – falling production, small and declining discoveries and some big recent revisions.

Note that the usual confusion holds here in that reserves are for crude only (condensate is included in the total numbers), but total flow rates (discussed further below) have crude and condensate numbers included (but clearly specified). To add to the confusion the datasets below are labeled P1, P2 and P3, but because the charts are stacked they should be read on the axis as 1P, 2P and 3Ps (the bar chart increments don’t really work out very well like this because the revisions can be positive or negative).

chart/

Mexico has four oil producing regions, Northeast Marine, which includes KMZ and Cantarell – the biggest fields, Southwest Marines, Northern Region onshore and Southern Region Onshore. The changes from 2016 to 2017 for these are shown below.

…click on the above link to read the rest of the article…

The Future of US Light Tight Oil (LTO)

March 5, 2017

The Future of US Light Tight Oil (LTO)

The future output from the light tight oil (LTO) sector of the US oil industry is the subject of much speculation. Above I present some possible future output scenarios based on a simple model of US LTO, the scenarios are compared with the EIA’s 2017 Annual Energy Outlook (AEO) reference scenario with cumulative output of 82 Gb from 2001 to 2050. The cumulative output of the model scenarios is for the same period (2001-2050).

The models all use the same well profiles from 2006 to 2016 and are based on data gathered from Enno Peters excellent blog, shaleprofile.com. A preliminary hyperbolic profile was fit to the average LTO well data and then the parameters were fit using least squares and solver in Excel so that the model matched the data for output and number of wells added each month over the period from 2011 to 2015. The data for 2016 is incomplete and this leads to an under report of wells added for most of 2016 (from March through October). For this period the wells added were adjusted so that the model matched the output data from the EIA (which is more complete than the data reported at shaleprofile.com.)

The well profiles used are shown below, two were used, a lower profile for the early period and a higher well profile for the later period. The vertical axis is output in barrels per month and the horizontal axis is months from first output.

chart/

The well profile in red (219 kb) is the basis for all the scenarios. In every case it is assumed that the estimated ultimate recovery (EUR) or total output from the well over its life starts to decrease in Feb 2017, but the rate of decrease varies from model to model, based on underlying assumptions and the number of new wells added each month.

…click on the above link to read the rest of the article…

End of the U.S. Major Oil Industry Era: Big Trouble At ExxonMobil

November 12, 2016

END OF THE U.S. MAJOR OIL INDUSTRY ERA: Big Trouble At ExxonMobil

The era of the mighty U.S. major oil industry is coming to an end as the country’s largest petroleum company is in big trouble. While ExxonMobil has been the most profitable U.S. oil company in the past, it suffered its worst year on record.

For example, just four years ago, ExxonMobil enjoyed a $45 billion net income profit in 2012. Now compare that to a total $5 billion net income gain for the first three-quarters of 2016. If Exxon continues to report disappointing results for the remainder of the year, its net income will have declined a stunning 85% since 2012.

Actually, the situation at Exxon is much worse if we dig a little deeper.

profitability is much less when we factor in capital expenditures

To understand the real profitability of a company we have to look at its cash flow, or what is known as free cash flow. Free cash flow is calculated by deducting capital expenditures (CAPEX) from the company’s cash from operations. ExxonMobil’s free cash flow declined from $24.4 billion in 2011 to $1 billion for the first nine months of 2016:

steve-1

So, here we can see that Exxon’s free cash flow of $1 billion (2016 YTD) is down 95% from $24.4 billion in 2011. The reason for the rapidly falling free cash flow is due to skyrocketing capital expenditures and falling oil prices. But, this is only part of the picture.

If we include dividend payouts, Exxon’s financial situation drops down another notch. While free cash flow does not include dividend payouts, the money Exxon pays its shareholders must come from its available cash. By including dividend payouts, the company was $8.3 billion in the hole in 2015:

…click on the above link to read the rest of the article…

Bakken Production Down, OPEC Production Up

October 16, 2016

Bakken Production Down, OPEC Production Up

North Dakota has released August production data for the Bakken and also for all North Dakota.

bakken-bpd

Bakken production was down 46,433 barrels per day to 930,931 bod, All North Dakota was down 48,695 bpd to 981,039 bpd. This is first time North Dakota has been below 1 million barrels per day since March of 2014.

bakken-bpd-per-well

Bakken barrels per day per well dropped by 4 to 97 while all North Dakota bpd per well dropped by 3 to 76.

From the Director’s Cut

Oil Production

July 31,921,757 barrels = 1,029,734 barrels/day
August 30,412,200 barrels = 981,039 barrels/day (preliminary)(all-time high was Dec 2014 at 1,227,483 barrels/day)

Producing Wells

July 13,265
August 13,289 (preliminary)(all-time high)

Permitting

July 86 drilling and 0 seismic
August 99 drilling and 1 seismic September 63 drilling and 1 seismic (all time high was 370 in 10/2012)

ND Sweet Crude Price

July $35.57/barrel
August $33.73/barrel
September $32.98/barrel Today $39.75/barrel (all-time high was $136.29 7/3/2008)

Rig Count

July    31
August        32
September   34 Today’s rig count is 33 (all-time high was 218 on 5/29/2012)

Comments:

The drilling rig count increased one from July to August, then increased two from August to September, and is down one more from September to today. Operators remain committed to running the minimum number of rigs while oil prices remain below $60/barrel WTI. The number of well completions rose from 44(final) in July to 59(preliminary) in August. Oil price weakness is the primary reason for the slow-down and is now anticipated to last into at least the fourth quarter of this year and perhaps into the second quarter of 2017. There were no significant precipitation events, 11 days with wind speeds in excess of 35 mph (too high for completion work), and no days with temperatures below -10F.

The new October OPEC Monthly Oil Market Report is out with crude only production numbers for September 2016. All charts are in thousand barrels per day.

…click on the above link to read the rest of the article…

Texas Oil and Natural Gas Update- Sept 2016

October 1, 2016

Texas Oil and Natural Gas Update- Sept 2016

Dean has provided his monthly update for Texas Oil and Natural Gas. The most recent month’s estimate is often volatile and may be ignored, the June and May estimates are likely pretty good (within 1% and 2%), the April 2016 estimate is likely to be robust(within 1% of the final value). The June EIA estimate is 240 kb/d lower than Dean’s estimate (about 7% too low). The numbers above the lines are for Dean’s estimate and the numbers below the lines are the EIA estimates for each month.

TXchart/

The change in the correction factors over time is shown in the chart above in kb/d, this amount is added to the RRC estimate to get the “corrected” output given by Dean’s estimate. The average is the April 2014 to July 2016 average shown by the dotted lines (T and T-1 only). T is the most recent month reported, T-1 is the month before month T, etc.

TXchart/

The chart above shows how Dean’s estimates have changed over time, wth estimates from Jan 2015 to July 2016. I have dropped the final 3 data points from each of the estimates, except for July 2016 where only the final month (July 2016) was dropped. Most months there was a tendency to underestimate output (except for the final 3 months of the estimate which is not shown in most cases). March 2016 was a notable exception, but even in that month’s estimate output was only too high by 0.6% relative to the July estimate after the most recent 3 months are dropped. By contrast the Nov 2015 estimate was 1.6% too low. The final 2 points of the July 2016 estimate in the chart above might be high or low by a few percent, but the April 2016 data point of 3434 kb/d for TX C+C output is likely to be within 1% of the final value.

…click on the above link to read the rest of the article…

Mexico, China and Beyond

September 25, 2016

Mexico, China and Beyond

Ron Patterson’s post asking if China’s oil production has peaked reminded me of Mexico
which also produces mainly from supergiant fields. Mexico’s oil production peaked in 2004 and has averaged a 3.5 percent per annum decline rate since, with a peak yearly decline rate of 9 percent in 2008. China’s oil production has fallen 10% from its peak in 2015. Part of that is oil price-related as the Daqing oil field has an operating cost of $46 per barrel and could reverse as the oil price rises. The comparison of China and Mexico with a projection to 2023 is shown in the following figure:

da-1

The production histories tracked each other from 1965 until they parted ways in 2005. Themainstay of Mexican production had been the Cantarell field as shown by this graph from The Economist with data up to 2011:

da-2

Cantarell production had been pumped up with nitrogen injection until sudden collapse in2005. Part of the decline from Cantarell was offset by increased production from Ku-Maloob-Zaap. Mexico is now producing slightly more oil than it consumes. In the absence of successful privately funded oil exploration from here, Mexico will become an importer of both oil and food.

A good description of the Chinese oil production industry is provided by a paper by Aleklett, from the University of Uppsala, et al from 2010 using data up to 2007. One field, Daqing discovered in 1959, had been producing about a million barrels per day for close to 30 years:

da-3

Table 2 from that paper is reproduced following. It shows that only one of the Chinese giant oilfields would not have entered decline by 2015:

da-4

…click on the above link to read the rest of the article…

Bakken July Production Data

September 17, 2016

Bakken July Production Data

North Dakota has just come out with their oil production numbers for July 2016. Bakken production was up by 3,046 barrels per day while all North Dakota production was up 2,376 barrels per day.

bakken-bpd

The EIA’s Drilling Productivity Report missed it for July. They will make the correction next month.

bakken-bpd-per-well

Barrels per day per well held steady in July, 91 for the Bakken and 79 for all North Dakota.

bakken-monthly-change

The trend is down in spite of the slight increase in July.

From the Director’s Cut

Oil Production

June 30,813,924 barrels = 1,027,131 barrels/day
July 31,914,711 barrels = 1,029,507 barrels/day (preliminary)(all time high was Dec 2014 at 1,227,483 barrels/day)
977,342 barrels per day or 95% from Bakken and Three Forks
52,165 barrels per day or 5% from legacy conventional pools

Producing Wells

June 13,248
July 13,255 (preliminary)(all time high) 11,168 wells or 84% are now unconventional Bakken Three forks wells 2,087 wells or 16% produce from legacy conventional pools

Permitting

June 65 drilling and 0 seismic
July 86 drilling and 0 seismic
August 99 drilling and 1 seismic (all time high was 370 in 10/2012)

ND Sweet Crude Price

June $38.75/barrel
July $35.57/barrel
August $33.73/barrel
Today $32.00/barrel (all time high was $136.29 7/3/2008)

Rig Count

June 28
July 31
August 32
Today’s rig count is 33 (all time high was 218 on 5/29/2012)

Comments:

The drilling rig count increased three from June to July, then increased one from July to August, and increased one more from August to today. Operators remain committed to running the minimum number of rigs while oil prices remain below $60/barrel WTI. The number of well completions dropped from 45(final) in June to 41(preliminary) in July. Oil price weakness is the primary reason for the slow down and is now anticipated to last into at least the fourth quarter of this year and perhaps into the second quarter of 2017. There was one significant precipitation event, 12 days with wind speeds in excess of 35 mph (too high for completion work), and no days with temperatures below 10F.

Over 98% of drilling now targets the Bakken and Three Forks formations.

…click on the above link to read the rest of the article…

Overview of the Northern Deepwater Gulf of Mexico

September 10, 2016

Overview of the Northern Deepwater Gulf of Mexico

The post that follows is a guest post by southlageo, a geologist with over 30 years of oil industry experience.

SouthLageo/

In this post, I will address 3 topics relating to the Northern Deepwater Gulf of Mexico –
1. Historical oil production
2. One view of the future of exploration
3. EUR ranges

I will limit my comments to oil production (not gas production). All production data is from BSEE/BOEM. The play outlines on the map are my best estimates. I will be using the BSEE definition of deepwater which includes water depths greater than 1000’. And, I will be assuming a Business As Usual future – by that I mean that fossil fuels will continue to be an important an energy source, and the world will continue to be able to afford them.

1. Historical production

Cumulative production to date from the deepwater GOM is about 7 billion barrels of oil (Bbo). Total shelf production is about 13 Bbo. The chart below shows both shelf (in green) and deepwater production (in brown/red), in annual, increments, going back to 1985. As you can see, shelf production dominated throughout the 80s and 90s, and then in 2000 deepwater production exceeded shelf production, and it has been that way ever since.

(The totals above include production from before 1985)

SouthLageo/

The 3 peaks in deepwater production, in 2002-2004, 2009-2010, and the present peak from 2014, are the results of advances in technologies that have allowed industry to march into deeper water and produce from deeper reservoirs.

The earliest peak was, in a sense, an extension of shelf play types into deepwater. The reservoirs were Pleistocene to Miocene in age, mostly bright-spot associated, and outboard of salt, and ranged in depth from ~10,000-20,000’. The biggest fields in this trend were Shell’s Mars/Ursa complex in Mississippi Canyon, and their Auger field in Garden Banks. Peak production approached 1 million barrels of oil per day (mmbopd).

…click on the above link to read the rest of the article…

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