Home » Posts tagged 'lto'

Tag Archives: lto

Olduvai
Click on image to purchase

Olduvai III: Catacylsm
Click on image to purchase

Post categories

Post Archives by Category

US Crude plus Condensate and Tight Oil, Jan 2018 Update

January 26, 2018

US Crude plus Condensate and Tight Oil, Jan 2018 Update

chart

From Dec 2016 to Dec 2017 US Tight oil output has increased by 975 kb/d based on US tight oil output data from the EIA.

For the entire US we only have EIA monthly output estimates through Oct 2017. Over the Dec 2016 to Oct 2017 period US output has increased by 866 kb/d and the OLS trend has a slope of 821 kb/d.

chart/

Note that the 866 kb/d increase in US output over 10 months would be a 1040 kb/d increase over a 12 month period.

Most of the increase in US output has been from increased LTO output. The forecasts by several agencies (EIA, IEA, and OPEC) of more than a 1000 kb/d increase in US output in 2018 may assume that the recently increased oil price level will lead to increased investment in the oil sector.

Much of the increase in LTO output has been in the Permian basin and several factors may slow down the recent rapid growth. Among these are limited fracking crews, inadequate pipeline capacity for natural gas, which will limit output as flaring limits are reached, and potential water shortages.

Longer term the various LTO plays will run out of space to drill more wells in the tier one areas (the so-called sweet-spots) and this will limit the rate of increase within 2 or 3 years. It is likely that the Eagle Ford is close to this point, the Bakken might reach that point by 2019, and the Permian basin perhaps by 2021.

For US C+C output, I expect about a 600+/-100 kb/d increase in 2018.

Oil Price Outlook December 2017

December 21, 2017

Oil Price Outlook December 2017 

This assessment is based on the data in the 2017 BP Statistical Review of World Energy available here. As such it uses that review’s definition of oil which is crude and condensate and natural gas liquids, uncompensated for their different energy contents or values of refined product components.

chart/

Figure 1: World Oil Production 1990 – 2017
This analysis was prompted by a chart by Ovi showing that Non-OPEC production less Russia, Canada and the United States has been in decline since 2004. That decline rate is 0.25 million barrels/day/annum. It had previously risen strongly from 1990.

chart/

Figure 2: Production Rate Change 2007 – 2016
The United States LTO patch is widely credited with having caused the oil price collapse of 2014. American production had risen by six million barrels per day since 2007. The United States was not alone with four other countries totalling six million barrels per day of production increase. Iraq and Saudi Arabia contributed two million barrels per day each with Russia and Canada contributing one million barrels per day each.

chart/

Figure 3: World Oil Consumption 1990 – 2016
OECD consumption has been flat even as OECD countries have had an increase in GDP.

chart/

Figure 4: Where the Oil Went
The fall of non-OECD consumption from 1990 to 1996 was due to the dissolution of the Soviet Union. Since then consumption growth has been steady at about 835,000 barrels/day/annum. Chinese consumption growth was 240,000 barrels/day/annum up to 2002 and then steepened to 512,000 barrels/day/annum since. OECD consumption growth was strong up to 2007 and then demand contracted due to higher oil prices. From here it looks like OECD consumption has plateaued. China may have also plateaued. Non-OECD consumption is likely to continue rising with a large part of that being due to India.

chart/

Figure 5: World Oil Production from 1990 with a Projection to 2025

…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)

chart/

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…

Oil Shipments by Rail Declining

July 18, 2015

Oil Shipments by Rail Declining

Weekly oil shipments by rail can be found on the web at Weekly Carload Reports. And a summation of that data with charts can be found at Association of American Railroads  Freight Rail Traffic Data.

Rail Oil Carloads 3

Crude oil by rail basically started with the shale boom. Prior to that almost all oil was shipped by pipeline. Of course a lot of oil was trucked to the pipelines. The EIA says in the first seven months of 2014 8 percent of all us crude and refined products was shipped by rail. It looks like that percentage was increased somewhat in the second half of 2014.

Rail Oil Carloads

Oil by rail, for the entire USA, peaked in August, September and October of 2014 and has declined since.

Daily Oil by Rail 2

I have converted the weekly carloads to daily then converted carloads to barrels. There are about 700 barrels per carload. That gives us the average barrels per day by rail.

Daily Oil by Rail

I have converted the weekly “daily average” to monthly “daily average” and plotted it against the North Dakota production. The EIA says: Between 60% and 70% of the more than 1 million barrels per day of oil produced in the state has been transported to refineries by rail each month in the first half of 2014, according to the North Dakota Pipeline Authority.

Rail Oil ND 1

As we can see from this chart the volume of oil shipped by rail changes from month to month. The chart is barrels per day per month. The peak, for North Dakota, is December 2014. Oil by rail for the USA peaked about three months earlier.

 

 

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

The Bakken ”Red Queen” is restrained with more credit

June 9, 2015

The Bakken ”Red Queen” is restrained with more credit

This post is an update on Light Tight Oil (LTO) extraction in Bakken based upon published data from the North Dakota Industrial Commission (NDIC) as per March 2015.

Extraction developments of LTO from Bakken may be followed by county, formation, vintage of wells, and one important source to understand the developments are coming from studying the developments by companies. Holding this up with companies’ financial statements (10-K and 10-Q) is an invaluable source about the companies, their financial capabilities and their strategies. This information is paramount to understand the developments in LTO extraction from Bakken and provides valuable insights into what to expect of future developments.

To get some understanding of what will drive future developments, it is helpful to look at individual companies.

Amongst all the companies operating in Bakken I selected for this post to present a closer look at 3 of the biggest companies in Bakken; Continental Resources, EOG Resources and Whiting Petroleum.

These 3 companies were found to be representative for several of the companies with regard to a range of variation in quality of wells, development strategies, use of debt, asset sales and not least what their responses to oil price changes may reveal.

  1. For Q1 – 15 the companies involved in LTO extraction in Bakken used an estimated $4 Billion(CAPEX) for well manufacturing and an estimated $2.3 Billion was from external sources, primarily from equity and asset sales and assuming more debt.
    The “average” well with around 90 kb [90,000 barrels] of flow in its first year is estimated to have an undiscounted point forward break even (that is a nominal break even with 0% return for the well)at around $60/Bbl (WTI).
  2. The break even price increases with increases in the return requirement.
  3. This analysis shows that the companies have deployed different strategies as responses to the decline in the oil price, which will affect future developments in LTO extraction.

 

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

World Oil Output Last 3 Years

June 4, 2015

World Oil Output Last 3 Years

The EIA publishes every possible energy stat for the USA and hardly anything for the rest of the world. Well, anything current for the rest of the world anyway. TheirInternational Energy Statistics is already five full months behind and working on six. December 2014 is the last international oil production data we have.

Anyway during this lull in other data I decided to look at the last three years of international data, from December 2011 to December 2014. All data is in thousand barrels per day.Post 1

World C+C production was flat for most of 2012 and 2013 but in late 2013 production took off and has increased by about 3 million barrels per day above the average for 2012 and 2013. December C+C production was 79,300,000 BPD.

Post 4

While total C+C production has increased by 3,000,000 BPD over the last three years the top ten gainers have increased just over twice as much, 6,200,000 BPD.

And just who were the big C+C production increasers for the last three years. Keep in mind this is the total change, or increase, over the last three years, not total production.

Post 2

The largest gainer, by a wide margin, was the USA. Iraq and Canada were runners up and the rest were also rans.

Almost everyone else had declines.

 

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

Are The Bakken’s Sweet Spots Past Their Prime?

January 12, 2015

Are The Bakken’s Sweet Spots Past Their Prime?

This post is an update on total Light Tight Oil (LTO) extraction from Bakken in North Dakota based upon actual data as of October 2014 from North Dakota Industrial Commission (NDIC). It further presents a statistical analysis on developments of well productivity with a detailed look at developments in Parshall, Reunion Bay and Sanish.

• There were general improvements in LTO well productivity in Bakken during 2013.

• Present trends in LTO well productivity for Mountrail’s sweet spots (Alger, Parshall, Reunion Bay, Sanish and Van Hook) suggests these are past their prime.

• Figure 29 in this post shows development in well productivity for Alger and Van Hook and figures 06, 08 and 10 for Parshall, Reunion Bay and Sanish. A common feature for Parshall, Reunion Bay, Sanish, and Van Hook is that these reached new highs in well productivity for wells started in 2013.
Alger has been in general decline since 2011.

• LTO extraction in recent years may be viewed as a source for global swing production for oil.

BakkenChart1

Figure 01: The chart above shows development in Light Tight Oil (LTO) extraction from January 2009 and as of October 2014 in Bakken North Dakota [green area, right hand scale]. The top black line is the price of Western Texas Intermediate (WTI), red middle line the Bakken LTO price (sweet) as published by the Director for NDIC and bottom orange line the spread between WTI and Bakken LTO wellhead all left hand scale.

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

 

 

Olduvai IV: Courage
Click on image to read excerpts

Olduvai II: Exodus
Click on image to purchase

Click on image to purchase @ FriesenPress