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U.S. Production by Basin

U.S. Production by Basin thumbnail

Permian, Marcellus Lead U.S., while Eagle Ford Dives Hard

As cost structures are held in check and oil price fluctuations are seemingly without end, producers are evaluating acreage positions and determining what are the best assets.

As covered by Oil & Gas 360®, the Permian basin has been the hot bed of activity recently. With IRRs and breakeven costs in the Permian being some of the best in the industry, companies are snapping up acreage in the play at a rapid rate.

Another visible data point is the level of total production in the U.S.

Industry followers for the past almost two years have been focused on weekly storage reports, levels of production, and the level of refinery storage.

The EIA compiles oil and gas production numbers by basin, and the chart below shows data from the seven most prolific basins in the U.S. With the exception of the Haynesville, production remained largely flat until 2011 to 2012.

basin1

The two basins with the largest growth over the last few years have been the Marcellus and the Eagle Ford. Since July 2009, production has grown in the Marcellus by 1053% from 261.5 MBoe/d to 3,020.1 Mboe/d in July 2016. In the Eagle Ford, production has increased 593% over the same time period, rising from 309.6 MBoe/d to 2,144 MBoe/d.

But production in the Eagle Ford has fallen dramatically in the last year, 23% since last July. The Marcellus and the Permian have held strong over the last year, with slight production increases despite the depletion of oil prices.

The Permian Basin was responsible for the largest chunk of U.S. production before the shale boom brought several other basins to the forefront.

The Marcellus and the Permian are currently the two largest basins by production, with the Permian edging out the Marcellus by a hair. One of the reasons both basins are continuing to produce at high levels is the favorable well economics in the basin.

According to KLR Group, breakeven prices are lower in the Permian and Marcellus than in other plays. “Predicated on company capital performance, the breakeven cost of U.S. oil supply is bracketed by the Midland Basin Wolfcamp/Lower Spraberry (~$48) and Williston Basin Bakken/TFS (~$64). The breakeven cost of U.S. natural gas supply is bracketed by the southwest Marcellus (~$3.15) and Fayetteville (~$3.75),” KLR said in a note today.

In a period of capital constraints, it would make sense to allocate resources to the areas generating the highest return, in this case the Permian Basin and the Marcellus.

Bust follows Boom

In the basins with less favorable economics, the downturn has taken its toll on employment. According to Manufacturers News Inc., manufacturing jobs have been declining in North Dakota. “The oil and gas extraction sector has led North Dakota’s post-recession job gains, with jobs skyrocketing 250% between 2010 and 2014, but the industry’s employment declined for the first time in a near decade, falling 23% over the past twelve months. The oil/gas extraction sector ranks second in North Dakota for industrial employment, employing 6,952.”

The boom in jobs would correlate closely with the increase in production coming from the Bakken. As the oil price has depleted, so too has the production level. Production levels in the Bakken have decreased by 16.6%, tracked by the 23% decrease in state manufacturing employment.

Oil and Gas Projections

The recent declines in oil and gas in some basins can be largely attributed to the decline in commodity prices. As prices begin to rise again, where will the upswing in production come from? EIA believes that the increase will likely come from tight oil plays.

The EIA said, “Production from tight oil in 2015 was 4.89 million barrels per day, or 52% of total U.S. crude oil production. From 2015 to 2017, tight oil production is projected to decrease by 700,000 barrels per day in the Reference case, mainly attributed to low oil prices and the resulting cuts in investment. However, production declines will continue to be mitigated by reductions in cost and improvements in drilling techniques. The use of more efficient hydraulic fracturing techniques and the application of multiwell-pad drilling, as well as changes in well completion designs, will allow producers to recover greater volumes from a single well.”
basin2

Bakken returns to the throne by 2019: EIA

“As oil prices recover, oil production from tight formations is expected to increase,” the agency reported. “By 2019, Bakken oil production is projected to reach 1.3 million b/d, surpassing the Eagle Ford to become the largest tight oil-producing formation in the United States. The Bakken, which spans 37,000 square miles in North Dakota and Montana, has a technically recoverable resource of 23 billion barrels of tight oil that can be produced based on current technology, industry practice, and geologic knowledge. Bakken production is projected to reach 2.3 million barrels per day by 2040, almost a third of the projected U.S. total tight oil production.”

The increase coming from tight oil plays highlights the influence of hydraulic fracturing and technological improvements. The initial learning curve for hydraulic fracturing seems to be surmounted and the innovations coming from the oil field are rapidly improving.

The fair assumption is that innovation will continue to improve the drilling efforts in the U.S. and continued reductions in drilling and completion days combined with technology enhancements will lead to better well economics in the tight oil plays.

In his recent conference presentation about the Bakken and the evolution of completion technologies in the Williston basin, Mark Williams, EVP drilling and development for Whiting Petroleum—2014’s largest Bakken producer, said, “The advance of technology is what this is really all about. If you had told me ten years ago that we’d be drilling 7,000 foot deep wells with 7,500 foot long laterals in four days, I wouldn’t have believed it.”

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82 Comments on "U.S. Production by Basin"

  1. Tom S on Tue, 23rd Aug 2016 3:59 pm 

    GregT:

    “You continue to display a complete lack of understanding of the exponential function.”

    Boat didn’t even mention exponential growth in his post. He simply said that the number of vehicles HAS GROWN. How does that demonstrate ignorance of the exponential function?

    -Tom S

  2. Tom S on Tue, 23rd Aug 2016 4:06 pm 

    Hi Short,

    I’ll admit that I haven’t paid for your report, nor have I read the full version. I’ve only read that one page you linked (http://www.thehillsgroup.org/depletion2_022.htm).

    The final graph on that page seems to indicate that net energy per barrel of oil has already dropped by more than 90% since 1960. Is that right? Is that what you meant by that?

    World population has more than doubled since that time. How are we still driving around?

    Am I misunderstanding your meaning here? As I said, I haven’t read the full report, because it costs money.

    -Tom S

  3. onlooker on Tue, 23rd Aug 2016 4:07 pm 

    True Tom only a slight discrepancy. My bad

  4. Tom S on Tue, 23rd Aug 2016 4:14 pm 

    Boat:

    I’ll admit that I haven’t paid for your report, nor have I read the full version. However, I have read the page that you linked to here (http://www.thehillsgroup.org/depletion2_022.htm).

    The last graph on that page seems to indicate that net energy per barrel of oil has dropped by more than 90% since 1960. Is that right? Is that what you mean by that graph?

    The world population has more than doubled in that time. In that case, hasn’t the net energy per capita in the world declined by more than 95% since that time? How are we still driving around?

    Am I misunderstanding what you’re saying here? As I said, I’ve not read the full report. Maybe I’m misreading something.

    -Tom S

  5. Tom S on Tue, 23rd Aug 2016 4:16 pm 

    Boat:

    I’ll admit that I haven’t paid for your report, nor have I read the full version. However, I have read the page that you linked to here.

    The last graph on that page seems to indicate that net energy per barrel of oil has dropped by more than 90% since 1960. Is that right? Is that what you mean by that graph?

    The world population has more than doubled in that time. In that case, hasn’t the net energy per capita in the world declined by more than 95% since that time? How are we still driving around?

    Am I misunderstanding what you’re saying here? As I said, I’ve not read the full report. Maybe I’m misreading something.

    -Tom S

  6. marmico on Tue, 23rd Aug 2016 4:17 pm 

    http://www.wikinvest.com/wiki/Barrel_of_Oil_Equivalents_(BOE)

  7. Tom S on Tue, 23rd Aug 2016 5:16 pm 

    Oops that last post was addressed to SHORTINOIL, not boat. Sorry. I’m typing on my ipad right now.

    -tom S

  8. JuanP on Tue, 23rd Aug 2016 7:26 pm 

    Thanks, Tom!

  9. rockman on Tue, 23rd Aug 2016 8:56 pm 

    Tom – “The last graph on that page seems to indicate that net energy per barrel of oil has dropped by more than 90% since 1960. Is that right? Is that what you mean by that graph?” A very good question given that the Btu content of the very highest quality oil and the worst isn’t anythunb close to 90%. And that would only be valid if we’ve switched from 100% good stuff to 100% crappy stuff. All kinds of petroleum out there…a complete spectrum. So let’s just look at some extremes. From

    http://www.engineeringtoolbox.com/fuels-higher-calorific-values-d_169.html

    Light distillate oil – 48,000 kJ/kg
    Heavy fuel oil – 43,000 kJ/kg
    Tar – 36,000 kJ/kg

    So even tar (which doesn’t even rate the level of crappy oil) has 75% of the energy content of some of the best oil out there. So again: 90% less????

    I’m also not certain what “net energy per bbl of oil” implies. But if it means energy produced less the energy usedcto produce it then that makes even less sense: we are only netting 10% of the energy produced today as we did in 1960. That would mean we are only netting about 10% of the revenue we were making in 1960. So adjusted for inflation: 1960 = $22/bbl and thus today we are netting less the $3/bbl???

    I think some detailed clarification of these numbers being tossed around is called for, don’t you?

  10. Davy on Tue, 23rd Aug 2016 9:16 pm 

    “The Permian Pitfall: A Race To The Bottom For Tight Oil”
    http://oilprice.com/Energy/Energy-General/The-Permian-Pitfall-A-Race-To-The-Bottom-For-Tight-Oil.html

  11. Tom S on Wed, 24th Aug 2016 12:50 am 

    rockman:

    “I’m also not certain what ‘net energy per bbl of oil’ implies. But if it means energy produced less the energy usedcto produce it then that makes even less sense”

    I’m pretty sure that’s what it means.

    “we are only netting 10% of the energy produced today as we did in 1960. That would mean we are only netting about 10% of the revenue we were making in 1960.”

    I think he’s claiming that there was some kind of surplus back in 1960; that it provided MORE revenue than the amount of energy required to obtain it, or something like that. I suppose I should let him defend it.

    In 1960 there were 20 million bbls/day of oil extracted (not including NGLs, etc) and today there are 80 million bbls/day. If the net energy per bbl has declined by more than 90%, then we are producing only 40% ((80*0.1)/20) as much net energy from oil as in 1960. Since there are twice as many people in the world now, the net energy per capita from oil would have fallen by 80% since 1960. If that had happened, I think it would have been very obvious. Things like cars sold and vehicle miles travelled would have declined precipitously during that time.

    I just don’t see how such a massive loss of net energy per capita would have escaped anyone’s attention.

    Short, am I misinterpreting you? It seems to me that your theory is incompatible with existing evidence, but it’s possible I’m misinterpreting something.

    -Tom S

  12. shortonoil on Wed, 24th Aug 2016 6:22 am 

    Deliverable Energy (Net Energy) 1960 134,400 BTU/gal
    Deliverable Energy (Net Energy) 2015 63,545 BTU/gal
    Change – 70,855
    per unit decline – 53%

    Production increase C+C – 378%

  13. marmico on Wed, 24th Aug 2016 7:09 am 

    What a crock of shit.

    How many BTUs consumed in oil extraction in 1960 and 2015?

    How many BTUs consumed in the refinery process in 1960 and 2015?

    How many BTUs consumed in transportation to the refinery and distribution from the refinery to end users in 1960 and 2015?

  14. joe on Wed, 24th Aug 2016 7:12 am 

    Just noted today on bloomberg, oil down, despite the Saudis scare stories. Opec is still mired in impotence. The age of tight oil will be prolonged, but batteries prices are slowly falling. They only have to compete with the cost of tight oil and then thats it, new age of energy mix begins. Even the war of choice against a muslim nation has done nothing to help them, maybe its kept oil in the 40s, maybe it should be cheaper!

  15. rockman on Wed, 24th Aug 2016 7:20 am 

    Tom – “I just don’t see how such a massive loss of net energy per capita would have escaped anyone’s attention.”

    Here’s a better question IMHO: how the hell can the global economy be in as good a shape we’re in today if that were true? Even more important: how could the oil patch survived all those years? I’ve given details before: almost everyone way overestimates how much energy it takes to dervelop oil/NG production.

    Second: how important is per capita net energy when a large % consume so little and others, like the US, consume so much?

    So again to ask your same question: how could number be anywhere close to reality and just being realized today? It’s not like the energy dynamics haven’t been continuously analyzed in great detain by MILLIONS of very experienced folks over the last 50+ years.

    So again: the world is functioning on only 10% of the energy it was in 1960? So the world must be in truly terrible condition today compared half a century ago…does that statement make any sense to you?

  16. Boat on Wed, 24th Aug 2016 9:15 am 

    Joe,

    What sense would there be for OPEC to freeze production. Tight oil will fill any void a freeze would create.

  17. Boat on Wed, 24th Aug 2016 9:15 am 

    Joe,

    What sense would there be for OPEC to freeze production. Tight oil will fill any void a freeze would create.

  18. ghung on Wed, 24th Aug 2016 9:36 am 

    What sense would there be for OPEC to freeze production. Tight oil Debt will fill any void a freeze would create.

  19. shortonoil on Wed, 24th Aug 2016 9:42 am 

    “I’m also not certain what ‘net energy per bbl of oil’ implies. But if it means energy produced less the energy usedcto produce it then that makes even less sense”

    If there is 140,000 BTU in a gallon of crude, and it takes 40,000 to extract, process, and distribute it the net energy is then 100,000 BTU. It is an extremely simple concept. Most children could easily grasp it. Of course. Marmi has been trying to get his head wrapped around for 5 years.

  20. shortonoil on Wed, 24th Aug 2016 9:42 am 

    “I’m also not certain what ‘net energy per bbl of oil’ implies. But if it means energy produced less the energy usedcto produce it then that makes even less sense”

    If there is 140,000 BTU in a gallon of crude, and it takes 40,000 to extract, process, and distribute it the net energy is then 100,000 BTU. It is an extremely simple concept. Most children could easily grasp it. Of course. Marmi has been trying to get his head wrapped around for 5 years.

  21. marmico on Wed, 24th Aug 2016 10:20 am 

    You still can’t answer the question about the quantity of refinery BTUs consumed in 1960 and 2015. That is why the ETP is a crock of shit.

  22. Kenz300 on Wed, 24th Aug 2016 10:43 am 

    Fossil fuels are poisoning the planet……………..

    It is time to speed up the transition to safer, cleaner and cheaper alternative energy sources…………

    Climate Change is real and it will impact all of us and all future generations……………

  23. shortonoil on Wed, 24th Aug 2016 5:34 pm 

    “You still can’t answer the question about the quantity of refinery BTUs consumed in 1960 and 2015. “

    See the Etp Model Q&A thread page 51!

    Then mail everything that you know about oil written on the back of a postage stamp and mail it to me. I’ll give you 94¢ for it. You’ll double your money?

  24. Boat on Wed, 24th Aug 2016 5:45 pm 

    One of the problems with short theory is the idea that only oil with an api between 35 and 45 is viable. This eliminates heaver oils that have been used for decades. In fact US refiners are set up for an average 30 to 32 api for decades.

    http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRAPUS2&f=M

    We have all heard about the rise of tight oil around 2002 and the peaking of conventional in 2005. Look at the 80’s and the 90’s from the different Padds in the chart below. Most of it had an api below 35. This is the good o’l oil he refers to as conventional. This same oil that we have used for decades he deemed as not worth using in his model.

    http://www.eia.gov/dnav/pet/PET_PNP_CRQ_A_EPC0_YCG_D_M.htm

  25. rockman on Wed, 24th Aug 2016 8:46 pm 

    shorty – “If there is 140,000 BTU in a gallon of crude, and it takes 40,000 to extract, process, and distribute it the net energy is then 100,000 BTU.”

    Thanks. But that leads to two more questions. Is that 100,000 net Btu are what we’re getting today or in 1960? And clarify: was it you or someone else that claims we’re getting 90% less net energy today then in 1960?

    So if those staterments are true then your 100,000 Btu’s are 10% of what we were getting in 1960 which means we were getting 1 million Btu’s from 140,000 Btu’s from a gallon of oil.

    Or if we were netting 100,000 Btu’s from 140,000 Btu’s from a gallon of oil in 1960 then today we’re only netting 10,000 Btu’s from that same gallon of 1960 oil.

    So which is your belief?

    And while we’re at it how many Btu’s does it take extract a gallon of oil today? And in 1960? And how many Btu’s to process a gallon of oil today? And in 1960? And how many Btu’s to distribute the refinery products made from gallon of oil today? And in 1960?

    Mucho thanks in advance.

  26. shortonoil on Thu, 25th Aug 2016 7:47 am 

    ” And clarify: was it you or someone else that claims we’re getting 90% less net energy today then in 1960? “

    I have absolutely no idea where that 90% number came from? Between 1960 and 2015 the net energy (deliverable energy) from a barrel of oil has fallen by 53%. Production increased by 378%. Up until recently the world compensated for falling per unit energy delivery by producing more barrels. Production is not increasing enough at present, however, to cover that decline. Between 2005 and 2014 it only grew by 0.43% per year. Between 1960 and 2005 it was growing a 5.46%

    “And while we’re at it how many Btu’s does it take extract a gallon of oil today?” 

    In 2015 the average was 15,700 BTU per gallon. That is a distribution that could run as low as 5000 on the bottom and 20,000 on the top. Chances are it is exponential like almost every thing else for petroleum. About 20,000 is where the WOR (water oil ratio) hits 45 to 1, and most wells are shut-in. That is a water cut of 97.8%. With prices as low as they presently are the cut off is likely to be about 40 to 1, or a water cut of 97.5%.

    In 1960 the average ERoEI was 78:1. That would have put the energy extraction cost at 1,800 BTU per gallon. The average water cut was 21% as compared to 47% at present. Our graphs show that even though water cut is still increasing it is not increasing as fast as it did in previous years. It will start to increase again rapidly at 90% of Pmax. Pmax is the total amount of oil that will ever be produced.

    The problem is that not enough new oil is coming on line to keep the average energy extaction cost from soon becoming prohibitive. In 2015 only 2 Gb of new oil came on line to replace the 34 extracted. That was only 5.9% of the total pumped. Without the new oil the average cost keeps increasing, and increases rapidly. It is the new wells that keeps the industry alive, not the old ones. Massive fields like Ghawar were able to bring new areas under production rapidly and cheaply for a long time. That is no longer the case.

    http://www.thehillsgroup.org/

  27. marmico on Thu, 25th Aug 2016 8:27 am 

    In 2015 the average was 15,700 BTU per gallon.

    Murphy says ~8200 BTU per gallon (EROI 17).

    http://rsta.royalsocietypublishing.org/content/372/2006/20130126.long

    Saudi Aramco says ~2900 BTU per gallon (EROI 50) for its own production.

    Page 15, http://www.saudiaramco.com/content/dam/Publications/facts-and-figures/FF-2015-SaudiAramco-English.pdf

    No one disputes that energy efficiency has declined at the well head. The issue is how much energy efficiency has increased at the refinery. What is 1960 refinery energy efficiency expressed as a percent? If need be I’ll produce multiple peer reviewed citations that refinery energy efficiency is ~90% in 2015.

    Bottom line, there is more net energy in a gallon of gasoline in 2015 than in 1960 after analyzing the flow of a gallon of oil from discovery and extraction at the well to the tank.

    To suggest that energy costs on a BTU basis per gallon have ballooned from ~8500 BTUs in 1960 to ~70000 BTUs in 2015 is nonsensical.

  28. shortonoil on Thu, 25th Aug 2016 10:17 am 

    When one takes into consideration, that according to the EPA, the average US well now has a water cut greater than 90%, it is not hard to see why US production has only been able to grow on the back of huge debt accumulation by the industry. Without new conventional wells coming on line that is a situation that can only get worse with time.

  29. marmico on Thu, 25th Aug 2016 10:25 am 

    Do you know what the scientific method is? Models (algorithms) are a dime a dozen. The model is tested against empirical observations. It is accepted or rejected. Your model is rejected as nonsense.

    What is 1960 refinery energy efficiency expressed as a percent?

  30. shortonoil on Thu, 25th Aug 2016 10:55 am 

    Gasoline is octane (C8H18) and it has an energy content of 119,436 BTU/ gallon. It always has, and always will. Only an illiterate moron would suggest otherwise.

  31. marmico on Fri, 26th Aug 2016 4:21 am 

    You are a fuctard.

    What is 1960 refinery energy efficiency expressed as a percent?

  32. Andi DUferense on Thu, 10th Feb 2022 2:03 am 

    Have you bowed down before the here and powerful Oz? No, I’m not referring to the fictional wizard from Dorothy’s magical land. I’m talking about mass-marketed medical guru and Oprah protégé, Dr. Oz. And while he may be powerful, the scientific community is not convinced that his recommendations are all that great.

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