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Page added on March 22, 2014

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Is Eagle Ford Peaking?

Is Eagle Ford Peaking? thumbnail

This page Texas Oil and Gas Production was last updated on February 18. However the data on this page has been updated. And the January production has been updated also: Oil and Gas Production Data Query then check “Lease”, “Both”, Statewide and then punch in the appropriate dates. Then when the next page comes up click on “Monthly Totals”. This brings up the updated monthly totals for Crude, Casinghead Gas, Gas Well Gas and Condensate.

There were revisions going back to July 2010 but only 2013 had any major revisions though there were some 2012 revisions also as the chart below shows.

Texas Revisions

The earlier revisions were smaller and there were some of them that were negative. That is the figures were revised downward.

This chart compares Texas with North Dakota. This is all Texas not just Eagle Ford. The last data point for all is January 2014.

Texas + North Dakota

Though there is a lot of conventional production in Texas, the increase is nevertheless about all tight oil. And these two states produce perhaps 95% of all tight oil produced in the United States. And that is about 2  million barrels so far if the Texas RRC is close.

 

But the EIA’s Drilling Productivity Report tells a different story. They have Texas alone increasing by about 2.8 mb/d since the middle of 2010.

Texas RRC

Now I know most will say that the RRC data will be revised upward.  Yes it will but I think most revisions after the first month will be negligible.

But here is the chart I found most interesting, Texas condensate production.

Texas Condensate

The December condensate data has already been revised upward along with the December Crude which was revised upward by 56,237 barrels per day. A lot of condensate means a lot of oil from Eagle Ford which has a very high percentage of condensate. Falling condensate numbers means primarily falling production from Eagle Ford.

But even if there are revisions the percentage of condensate should not change with the revisions. That is if both crude and condensate are revised upward the percentage of condensate should remain relatively the same. So if the percentage of condensate is falling then Eagle Ford production is falling in relation to the rest of Texas.

Texas Percent Cond.

Bottom line, I believe Eagle Ford is very close to peak. I predict a peak in Eagle Ford in 2014 if it hasn’t already happened. I seldom make outright predictions but I am making an exception in this case.

Check out Roger Blanchard’s post of one year ago. Thanks to Jean Laherrere for calling my attention to this.
Commentary: Texas and Eagle Ford – Where the Action Is

I first recognized a discrepancy between US DOE/EIA and TRC data in early 2012. At the time, I attempted to contact both the US DOE/EIA and TRC to try and determine the source of the discrepancy. I was informed by a representative of the TRC that they send their data to the US DOE/EIA but he wasn’t sure why their posted production figures differed from those of the US DOE/EIA. I received no response from the US DOE/EIA.

Blanchard Eagle Ford

Roger, in the above chart posted in March 2013, has Eagle Ford peaking this year, 2014, at 600,000 barrels per day. Of course there is a very large discrepancy between what Roger’s data and he EIA’s data. And there is an even larger discrepancy between what the EIA’s Drilling Productivity Report says.  They have Eagle Ford averaging 1.05 million barrels per day in 2013.

In 2012, according to Roger’s data, Eagle Ford averaged 423,875 bp/d while according to the data published by the Drilling Productivity Report, Eagle averaged 628,193 bp/d in 2012.

I believe Roger is pretty close on his peak date for Eagle Ford. His decline rate of 6%per year is apparently based on drilling continuing in Eagle Ford. If drilling stops however the decline rate will be many times greater.

Jean Laherrere posted this chart of Texas production from different sources.

A1

Rigzone used one of my charts and failed to give me credit. Oh well.
Musings: It’s Official – Oil Industry Enters The New Era Of Austerity

It is near the bottom of the page with the caption:

Exhibit 2. Rising Oil Expectations Could Be At Risk   Source EIA

True the EIA was the source of the data but their data was in Quadrillion BTU per year. I converted it to barrels per day and created the chart. It is here:
Will US Light Tight Oil Save The World?

At any rate this Rigzone article is really great. They are starting to sing the same song as peak oilers. Capex is going through the roof while production is at a standstill.

peak oil barrel



12 Comments on "Is Eagle Ford Peaking?"

  1. Nony on Sat, 22nd Mar 2014 1:09 pm 

    Ron is underestimating the effect of the revisions (‘not significant after first month’). You can see this just by looking at the Blanchard article, written a year ago.

    In MAR2013, Blanchard saw an average of 350,000 bpd delta for 2012 production between EIA and RRC. However, looking at Ron’s article (one year later), what do we see? Squint at the graph and it’s about 70,000 delta at the end of 2012 and about 10,000 delta at the beginning of 2012. So, an average of about 40,000.

    Maybe it’s 50 or 60 K (am squinting on a chart, rather than having the data), but in any case…it’s a far cry from 350 K. The reason for the difference is more time and more revisions.

    ****

    Net, net we need more than Ron’s single analysis to show that revisions are typically only a month old and of the magnitude of 50K. I think DC has done this work and even posted it at Ron’s blog and it shows that EIA estimates are pretty good and that RRC takes a long time to update true numbers.

  2. Pops on Sat, 22nd Mar 2014 1:14 pm 

    I’d bet if you overlay the EIA budget cuts with the 3rd chart above showing a straight line increase in Tx C+C you’d find a correlation. Drawing an infinitely increasing line is cheaper than actually tracking reality.

    And it’s good for business too!

    LOL

    http://gregor.us/eia/there-goes-the-data-major-cuts-at-eia-washington/

    http://online.wsj.com/news/articles/SB10001424052748703567404576292942223889996

  3. Nony on Sat, 22nd Mar 2014 1:15 pm 

    DC’s analysis here shows this apparent peaking happening all the time and then disappearing with data updates. The shape of apparent peaks is an artifact of the update process, not actual peaking:

    http://peakoilbarrel.com/bakken-update-january-production-numbers/comment-page-2/#comment-13360

    P.s. Ron’s condensate proxy work is more interesting though.

  4. rollin on Sat, 22nd Mar 2014 3:06 pm 

    Just stop drilling for a month or two and you will see a peak.

    Anyone can see that even with an increase of 4 to 5 times in the cost of a barrel of oil, that overall production is fairly flat. Sure there are gimmicks to add in NGL’s and non-oil conversions (tar sands) but even with them the response is only small compared to the amount of money put into the system.
    Oil is dying, don’t let it take us down with it.

  5. westexas on Sat, 22nd Mar 2014 5:34 pm 

    It’s interesting to look at some regional declines in US oil and gas production, e.g., marketed Louisiana natural gas production (the EIA doesn’t have dry processed data by state).

    According to the EIA, the observed simple percentage decline in Louisiana’s annual natural gas production from 2012 to 2013 was 20%. This would be the net change in production, after new wells were added. The gross decline rate (from existing wells in 2012) would be even higher. This puts a recent Citi Research estimate in perspective.

    Citi estimates that the gross underlying decline rate for overall US natgas production is about 24%/year. This would be the simple percentage change in annual production if no new sources of gas were put on line in the US. In round numbers, this requires the US to add about 16 BCF/day of new gas production every year, just to maintain about 66 BCF/day of dry processed natural gas production. To put 16 BCF/day in perspective, dry processed natural gas production from all of Texas was probably at about 18 BCF/day in 2013.

    At a 24%/year gross underlying decline rate, the US would have to replace 100% of current natural gas production in about four years, just to maintain a dry processed gas production rate of 66 BCF/day for four years. Or, the US would have to put on line the productive equivalent of the 2013 natural gas production from the Marcellus Play–every six months–just to maintain current production.

    In regard to oil, the observed 10 years (2003 to 2013) exponential rate of decline in Alaska’s crude oil production was 7.5%/year. Again, this was the net decline rate, after new wells were added in Alaska.

    I am (conservatively) estimating that the gross underlying decline rate from existing US crude oil production is about 10%/year (and rising, as an increasing percentage of production comes from high decline rate tight/shale plays).

  6. rockman on Sat, 22nd Mar 2014 9:07 pm 

    Just a small thing to keep in mind about those oil vs. condensate numbers the TRRC puts out. First, condensate is oil. Often a lighter oil that many of the “oil” producing reservoirs but not always. In Texas the distinction between the two isn’t strictly based on the weight. Condensate is typically oil that exists on a gaseous state on the reservoir. When this “gas” is produces in loses pressure at the surface causing the oil to condense… thus the term “condensate”. So the characterization here also includes the reservoir pressure metric. And it varies between state. Liquid hydrocarbons coming from a well in La.
    may be classified by their regulators as “oil” but the identical liquid in Texas could be classified as condensate.

    And to make it more confusing a well in Texas may be producing X bbl of condensate per day initially but in time, as the reservoir pressure declines, it may be reclassified as oil production. This is So the same well might be shown to have produced Y thousands of bbl oil and Z thousands of bbls of condensate. And depending on where you’re looking at the TRRC records they might have lumped condensate and oil together all called it all “oil”.

    I doubt this explains the bulk of the discrepancies but I’ve never seen this factor analyzes.

  7. rockman on Sat, 22nd Mar 2014 9:10 pm 

    Hit send too soon. I was saying the distinction between a well’s production being classified as “oil” vs. “gas/condensate” is a serious regulatory issue that determines unit size and how close wells can be drilled next to each other.

  8. Kenz300 on Sat, 22nd Mar 2014 10:06 pm 

    Walk, ride a bicycle, take mass transit or get an electric car…….. you will worry less about the price of oil.

  9. Northwest Resident on Sun, 23rd Mar 2014 12:02 am 

    “At last look over 7 out of every 10 barrels of new production in the US shale plays are required to replace decling production of existing wells…”

    That’s a comment to a related article I read on another site. I’ve never seen it put in those terms before. But if the “barrels used” to “barrels extracted” ratio is that high, then I’m guessing we have a problem, peak or not.

  10. Nony on Sun, 23rd Mar 2014 2:17 am 

    Proved reserves are growing in EF (and Bakken). If reserves are growing, than we are stayin ahead of extraction. The “Red Queen” is getting her…shiny red ass kicked. 🙂

  11. rockman on Sun, 23rd Mar 2014 5:35 pm 

    Non – That’s one way to look at it. And then there are those of us who see the Red Queen as a world class whore that’s just laying back and pulling in the script from all those drunken marines/oil companies that just hit the beach. LOL. Kicking her ass? Yeah… all the way to the bank.

  12. Nony on Sun, 23rd Mar 2014 5:59 pm 

    Go drunken Marines! Boo Red Queen. Boo, I say. 🙂

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