The huge volume of this gassy new oil [LTO] has created a glut, pushing prices to $10 or more below the level of traditional crude. Energy companies think they could get higher prices by sending the new oil abroad, which explains some of the push to lift a U.S. ban on exporting crude. Federal officials recently gave two companies permission to export condensate under certain circumstances.
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Greg Garland, the chief executive of Phillips 66, PSX +0.67% told analysts recently that there was no question that "people are blending condensate" into West Texas Intermediate, the U.S. benchmark, to try to pass it off as regular crude and get more money for it.
Each month the Commission reports preliminary Texas production of crude oil and gas well gas based on producer filings of Form PR. Preliminary production totals are key indicators for many industry analysts, who use the data to forecast U. S. oil and natural gas supply and demand and to measure industry activity and performance.
The Commission recognizes, however, that this preliminary snapshot of Texas monthly production underestimates the final and complete total. In subsequent months of producer filings, the Commission receives many corrected or delinquent production reports.
The Commission may need to resolve problems in data collection, format, or processing that again result in subsequent upward revisions to monthly production totals. Company mergers and acquisitions may also delay timely producer filings. This ongoing process of reconciling operator data typically pushes the actual production totals higher.
In an effort to estimate actual monthly production more accurately, the Commission will calculate a supplemental production adjustment factor each month to be applied to the preliminary, reported statewide total of oil and gas well gas. The production adjustment factor, multiplied by the preliminary production total, is the Commission's estimate of the expected, final statewide production for a given month.
copious.abundance wrote:This has been discussed ad nauseum.
Everyone knows the U.S. is now pumping oil and gas in new places from North Dakota to Alabama. But less-known is that Texas remains the powerhouse when it comes to oil output—and may be on the verge of producing a glut.
One of the state's oldest oil fields, the Permian Basin in West Texas, is booming again, thanks to advanced technologies such as hydraulic fracturing and horizontal drilling. And Permian oil output shows no signs of stopping at its current 1.7 million barrels a day.
"You're definitely going to hit the 2 million barrel mark," Bob Reeves, chief executive of Athlon Energy Inc., ATHL -1.59% which is based in Fort Worth, Texas, said at an investor conference recently. "I think it's not a matter of if, it's just a matter of when." Production could ultimately reach 3 million barrels a day, he said.
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The oil flowing from the Permian is so plentiful that it is threatening prices. A barrel of oil in Midland, Texas, the Permian's trading hub, cost $78.97 in mid-August. In Cushing, Okla., the national storage and transportation center for oil, the same crude fetched $96.48—$17.51 more.
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The Permian is producing more oil than local pipelines can handle. Count on the next couple of years being full of pipeline planning, construction and community fights. Trains full of crude also will continue to rumble out of towns like Wink, Texas, to California and the Gulf Coast.
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Alfred Tennyson wrote:We are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
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