[Tanada]

^
I don't have the slightest idea. And neither does anyone else.

Well if YOU don't know what you think how could anyone else be expected to figure it out?

[ROCKMAN]

Crap guys...I know the answer as to whether Texas will reach a new peak. Easy answer: maybe. It had peaked in 1973 and we're about 500k bbls short today but the rate increase in recent years has been steep. Just a question of bow soon and hard the breaks are applied to our tite oil trends. Here's a little context:

"In mid-2009, Texas was producing less than 20% of America’s domestic crude oil. The recent gusher of unconventional oil being produced in the Eagle Ford Shale and Permian Basin oil fields of Texas has recently pushed the Lone Star State’s share of domestically produced crude oil all the way up to more than 36% of America’s crude output in December – a new monthly record high – and more than 34.5% for all of 2013 – a new annual record.

Oil output has increased so significantly in Texas in recent years that if the state was considered as a separate oil-producing country, Texas would have been the 9th largest oil-producing nation in the world for crude oil output in October (most recent month available for international oil production data) at 2.75 million bpd – just slightly behind No. 8 UAE at 2.82 million bpd and ahead of No. 10 Kuwait at 2.65 million bpd.

The dramatic increase in Texas’s oil production is bringing jobs and economic prosperity to the state. For example, during 2013, payrolls in the state of Texas increased by 252,400 jobs, which was a 2.3% annual increase in the state’s employment level, compared to 1.6% increase in US payrolls over that period. Every business day over the last year, almost 1,000 new jobs were created in the Lone Star State, and many of those jobs were directly or indirectly related to the state’s booming energy sector, which experienced an 11.1% increase in payrolls for oil and gas extraction jobs (10,500 new jobs) over the most recent 12-month period through December. Oil and gas companies in Texas hired more than 40 new employees every business day over the last year just for extraction activities, or more than 5 new hires every hour!"

That's the good news from $90+/bbl oil. We'll see what a 40% decrease in prices bring. What Dog giveth Dog can just as quickly taketh away. LOL.

[shallow sand]

Texas population EST 27 million.

UAE population EST 9.2 million

Kuwait population EST 3.4 million

Think Texas will handle down turn better or worse than these oil producing peers?

[ennui2]

I made a business trip to Houston and let me say, it's a tale of the 1%ers and the 99%ers. I don't think Houston has any real middle-class. It's just Maseratis and F150s. Pretty depressing.

[vtsnowedin]

I made a business trip to Houston and let me say, it's a tale of the 1%ers and the 99%ers. I don't think Houston has any real middle-class. It's just Maseratis and F150s. Pretty depressing.

If you have a job and a F150 your current with the payments on you are middle class and in most of the world a ten percenter.
A new F150 will run you $44K and be a lot more useful and comfortable then a Maseratis.

[ROCKMAN]

ennui - you need to stop being so snooty and hanging out in the burgs with the upper income folks. About half the Houston area is mixed/middle income and the other half lower income.
Except for a small number on the west end few of the upper income folks live in Houston. They are concentrated in the outer areas of the county.

And if I read correctly you consider an F150 to be a status symbol of the wealthy? LOL. Dang: then I know a bunch of "wealthy" red necks that live out in the Texas country side.

http://www.chron.com/news/houston-texas ... 755755.php

Texas overall has one of the biggest income inequities of all the states. And that's primarily a result of a little of blue collar middle income folks with good paying energy industry jobs which includes the refinery biz. It isn't so much that Texas has that many more poor folks then other states but because we have a large chunk of middle income folks in the oil patch. The good news: Texas income inequality will like decrease significantly in the next couple of years. The bad news: it will be because a lot of middle income folks will switch category to lower income. Which means less taxes, retails sales (and retail jobs), etc. IOW the support systems for lower income folks will be bringing in less money. But income will be distributed “more fairly”.

[copious.abundance]

3.447 million barrels/day in December!!!

[ROCKMAN]

And possibly a bit higher in Jan and maybe Feb. Don't forget the lag time. Let's see where we are next Dec. If the Texas rig count drops as far as I suspect it will we may be looking at a peak in Texas production in 1Q 2015.

[Synapsid]

ROCKMAN,

Would be nice to know how much was 45 API and above, and how much was below.

[ROCKMAN]

Syn - Did you read what I posted about the US refineries needing the lighter oils to blend with the heavier oils like the Venezuelan and Canadian crude? Apparently our surge in light oil production was used to sub for imports of light oil. I just discovered the below. This info should radically change ideas about the shale production:

Refiners are very fussy about the quality of crude oil that they process. It is most definitely not the case that any old crude can be processed in any old refinery. Most refineries handle a range of crudes by blending them to ensure the average quality stays close to target. They employ complex computer models to tell them which crudes to buy based on current crude and product prices, the refinery’s technical specifications and the desired blend quality. But refineries only have flexibility within a fairly narrow range. Blended crude quality must be kept within tight quality limits. Keeping average quality within operating limits means that U.S. refineries could struggle to process all the country’s domestic output long before imports fall to zero. In fact, U.S. refiners could start running up against their operating limits.

OCEAN OF LIGHT OIL – U.S. refiners have shown a strong preference for a medium blend. Since 1985, the average density of oil processed by U.S. refiners has been fairly steady and not varied much in the short term. In statistical terms, the weighted average specific gravity has been 31.1 degrees. The problem for U.S. refiners is that almost all the extra oil being produced as a result of the shale boom is much lighter than they would like. Roughly 96 percent of the 1.8 million barrels per day growth in domestic production between 2011 and 2013 consisted of grades with API gravity of 40 or above according to the EIA. If refiners had purchased and processed all the extra domestic oil without making adjustments to the other types of crude they buy, the specific gravity of the blend would have soared, making the refining process much less efficient. Instead, refiners have held the average blend quality constant by substituting domestic crude for imported light oils, while maintaining imports of medium-heavy and heavy oils. So while imports of medium-heavy and heavy oils (with specific gravity of less than 30 degrees) have remained roughly constant at 4.5-5.0 million barrels per day since 2007, imports of medium-light and light oils have shriveled from 6 million barrels per day to just over 2 million.

IOW the light oil from the shales have found a very nice home in this country.

[Synapsid]

ROCKMAN,

"I just discovered the below." Well, I discovered that ages ago--yesterday, I think it was. I can tell that you just don't read my posts over at Ron's blog, but I'll bear up under the grief.

Yeah, it's become a handy match, what with WCS finally flowing to the Gulf Coast there to encounter all that light crude just waiting for the blending. The losers are Mexican Maya and Venezuelan crude, so that's all right. Good news except for producers in the Gulf Coast oil patch, but that shouldn't affect you, right?

My short post up above, though, was just wondering about how much of the new and highly advertised production in Texas is the light stuff and not red-blooded crude--the distinction that cornucopians seem not to make.

[ROCKMAN]

Syn - Yep, Ron has a great site but I just can't get into the habit of checking it out. I'm old and it's difficult to change routine. Like waking up at 2 am every morning to pee. LOL.

According to the TRRC EFS “OIL” production has increased from 15k bbls/day in 2010 to 975k bbls/day in 2014. During that same period “CONDENSATE” production has increased from 19k bbls/day to 260k bbls/day.

More oil than condensate? Confused? It gets worse. The definition of oil vs condensate in Texas is not based upon the gravity of the liquid hydrocarbon. Two wells could be making the same 40 API liquid with identical composition and one would be classified as an oil well and the other as a gas well producing condensate. And if that’s not confusing enough a well classified as an oil producer for the first 3 years might be reclassified as a condensate producing gas well during the last part of its life. So yes: according to TRRC the same well might have produced X bbls of oil and Y bbls of condensate. And that’s what will be posted in the state production statistics.

The determination process is way too complex to explain. But here’s a taste from an official TRRC hearing docket. And understand this is not some trivial distinction. The classification of a well as oil or gas has a huge impact of development drilling: the spacing between wells (as to how many wells can be drilled on a lease) varies greatly with that determination. Literally there can be hundreds of $millions at stake:

The Fishers Reef (9800 FB D) Field was discovered in December, 2000, with the completion of Masters’ State Tract 9-12B Lease, Well No. 1, still the only well in the field. The subject well was perforated from 9684' to 9714' and tested, on January 20, 2001, at a maximum daily rate of 3811 MCF and a gas/oil ratio of 5899 cubic feet per barrel. Cumulative production since that time is 615 MMCF of gas and 72,000 barrels of condensate. On the distillation test reported on Form G-5, this well did not meet the standards for classification as a gas well. The gas/oil ratio was less than 12,500 cubic feet per barrel and the hydrocarbon liquid was colored brown.

The initial boiling point was 183o F., above the maximum permitted for gas wells of 120o; and at 80% recovery the boiling temperature was 567o F., exceeding the maximum temperature of 520o permitted for gas well classification. A fluid sample was taken and recombined at initial reservoir temperature and pressure, and the recombined fluids were evaluated at various pressures. The initial reservoir pressure was 7645 psi and temperature was 213o F. Constant composition expansion showed the reservoir fluid was a single phase gas until the reservoir pressure declined to the retrograde dew point pressure of 4577 psi, when small amounts of liquid began to condense from the gas. There were no critical points detected in the analysis.

[ROCKMAN]

Syn - There are engineering consulting firms that specialize in this area. Many operators don't have the expertise to handle the process. So how easy would it be for the general public to understand? And if you're interested in knowing how that riveting court case above turned out:

Statewide Rule 79 defines a gas well as:
....a well which produces hydrocarbon liquids, a part of which is formed by a
condensation from a gas phase and a part of which is crude petroleum oil, shall be
classified as a gas well unless there is produced one barrel or more of crude petroleum
oil per 100,000 cubic feet of natural gas; and that the term “crude petroleum oil” shall
not be construed to mean any liquid hydrocarbon mixture or portion thereof which is
not in the liquid phase in the reservoir, removed from the reservoir in such liquid phase, and obtained at the surface as such.

The subject well was temporarily classified as a gas well in January, 2002, based on the results of a PVT test. This classification expired January 29, 2003, but the Commission did not inform the applicant of the well’s reclassification as an oil well until August 4, 2003. Masters believes that because the liquid hydrocarbons in the reservoir are immobile, the liquid produced at the surface does not meetthe definition of ‘crude petroleum oil’. Instead, the produced liquid is a product of condensation and should therefor not be used as a basis for classifying the well as an oil well. Masters also believes that any overproduction that occurred after the well was reclassified to oil should be canceled.

And the ruling: Any liquid hydrocarbons produced at the surface have condensed from the gas and do not meet the statutory definition of crude petroleum oil. The condensed liquids produced by wells in the Fishers Reef (9800 FB-D) Field should not be considered in determining the gas-oil ratio or the classification of wells as oil wells because the liquids produced at the surface are not crude petroleum oil.

[Synapsid]

ROCKMAN,

Seems straightforward to me. What's your point?

OK, OK--I'm joking. I will say that the court's decision agrees with mine.

[copious.abundance]

Their 70's peak was just shy of 3.5 million bpd in the early 70's. At 3.2 million now they're almost there.


LINK

Ladies and gentlemen, boys and girls, I have an announcement to make: The state of Texas has clearly and unambiguously reached a new oil production record. I repeat: Texas is now in all-time high oil production territory! And has been for at least 3 months, as of March.

3.675 million barrels/day, as of March

[ROCKMAN]

"Texas is now in all-time high oil production territory! And has been for at least 3 months, as of March". Indeed it has. And to all our cousins in the country: you're welcome. LOL. Of course it also means Texas has just reached its personal PO since the price drop has cratered drilling here. Maybe some day we'll reach a new peak...maybe not. But it sure a hell won't be this year. LOL. The lag time between a well being drilled and when it begins producing has just about been used up. Which is why the above post notes production in March and not more recently.

[copious.abundance]

Which is why the above post notes production in March and not more recently.

No, the reason why the above post notes production in March and not more recently, is because March is the latest month the EIA has data for. Click on the link.

[Tanada]

That is interesting, meanwhile this graph shows that Texas has already gone into decline also using EIA data.


http://www.bloomberg.com/news/articles/ ... op#media-1

The shale oil boom that turned the U.S. into the world’s largest fuel exporter and brought $3 gasoline back to America’s pumps is grinding to a halt.

Crude output from the prolific tight-rock formations such as North Dakota’s Bakken and Texas’s Eagle Ford shale will shrink 1.3 percent to 5.58 million barrels a day this month, based on Energy Information Administration estimates. It’ll drop further in July to 5.49 million, the lowest level since January, the agency said Monday.

With the Organization of Petroleum Exporting Countries maintaining its own oil production, U.S. shale is coming under pressure to rebalance a global supply glut. EOG Resources Inc., the country’s biggest shale-oil producer, hedge fund manager Andrew J. Hall and banks including Standard Chartered Plc have forecast declines in U.S. output following last year’s plunge in crude prices. The nation was still pumping the most in four decades in March.

“Production has to come down because rigs drilling for oil are down 57 percent this year,” James Williams, president of energy consultancy WTRG Economics, said by phone Monday from London, Arkansas. “Countering that is the fact that the rigs we’re still using are more efficient and drilling in areas where you get higher production. So that has delayed the decline.”

West Texas Intermediate crude for July delivery added 72 cents to $58.86 a barrel in electronic trading on the New York Mercantile Exchange at 6:23 a.m. local time. Futures rebounded 32 percent since March 18 through Monday amid speculation U.S. oil drillers had laid down enough rigs to curb supply.
Fewer Rigs

Despite the U.S. oil rig count falling for 26 straight weeks, domestic crude production surged 126,000 barrels a day, or 1.3 percent, to 9.53 million in March, the most since 1972, Energy Information Administration data show.

“We do not believe that the direction of U.S. oil output has changed,” Standard Chartered analysts including Nicholas Snowdon said in a research note June 1. “In our view, U.S. oil supply is still falling, and it is likely to carry on falling for the rest of this year.”

Shale oil output will decline by 105,000 barrels a day in July after dropping 86,000 barrels in June, according to the London-based bank.

EOG Resources Chief Executive Officer Bill Thomas said at a conference last month that U.S. production would drop through the end of the year.

The EIA’s forecasts for U.S. oil production cover the yield from major plays that together accounted for 95 percent of domestic output growth from 2011 to 2013.
Eagle Ford

Output from the Eagle Ford in Texas, the second-largest oil field in the U.S., will contract by 49,000 barrels a day in July to 1.59 million. Production in the Bakken shale region of North Dakota will slip by 29,000 to 1.24 million, the EIA said.

Yield from the Permian Basin in West Texas and New Mexico, the largest U.S. oil field, will rise by 3,000 barrels a day to 2.06 million.

The EIA’s oil-production forecasts are based on the number of rigs drilling in each play and estimates on how productive they are.

U.S. drillers are retreating from oil fields as OPEC, which accounts for more than a third of the world’s oil, continues to resist calls to curb its own supply. The 12-nation group decided last week to instead maintain a combined daily crude-production target of 30 million barrels. Output from the group has exceeded that level for each of the past 12 months, according to data compiled by Bloomberg.
Pyrrhic Victory

The EIA expects production from the shale plays to fall in July by 93,000 barrels a day, the largest drop since the boom began. The steepening decline provides some validation to OPEC members who decided to preserve their market share and let falling prices force others to cut back, said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $3.4 billion.

It may be a Pyrrhic victory for some OPEC members, such as Venezuela, whose budgets have been hampered by oil prices that fell more than 50 percent from last summer. The declines in U.S. production might not be piling up fast enough to boost crude revenues for them, O’Grady said.

“You’re seeing production go down, but is it going down fast enough?” O’Grady said by phone Monday. “If you’re a country like Venezuela, is it happening fast enough for you to basically be saved? That’s really the rub.”

©2015 Bloomberg L.P. All Rights Reserved

[ROCKMAN]

"...because March is the latest month the EIA has data for" Which is exactly why I go directly to a source to capture a sense of the dynamics. From the TRRC:

From the recent high of 82.73 million bbls in August 2014 the latest monthly number is 71.59 million bbls in March 2015. So even from before the price and rig count collapse Texas production has declined 13.5% in the last 7 months. IMHO that gives a pretty good snapshot of where US oil production is heading.

[copious.abundance]

Which is exactly why I go directly to a source to capture a sense of the dynamics. From the TRRC:

From the recent high of 82.73 million bbls in August 2014 the latest monthly number is 71.59 million bbls in March 2015. So even from before the price and rig count collapse Texas production has declined 13.5% in the last 7 months. IMHO that gives a pretty good snapshot of where US oil production is heading.

Notice I specified the EIA. We all know the TRRC has more recent data, but we also know it's not complete for a couple years after the fact, and that it tends to eventually catch up with the EIA. So I'm not sure why you bothered posting RRC data.