Register

Peak Oil is You


Donate Bitcoins ;-) or Paypal :-)


Page added on March 20, 2018

Bookmark and Share

EIA Production estimates are way off the mark and so too may be future United States energy dominance

Production

The term energy dominance has been eschewed by the US Department of Energy as the end game of the shale revolution with the resurgence of production to all time highs (oil, natural gas and NGL’s). Politicians and the media are singularly focused on when, not if US oil production will eclipse Russia (at 11.3 million bpd) and Saudi Arabia at (10.0 million bpd constrained).  This viewpoint is understandable as oil is the largest hydrocarbon energy source and is fungible and easily transported. Furthermore, as we all know, production and control of oil has been one of the most important if not the most important geo-political levers throughout history, with strategic alliances and wars fought over it. So, it is understandable why the US is rightfully pleased as punch that its shale oil resources are increasingly being developed creating monthly record production and increasingly rosy forecasts of production.

According to the BP 2017 Statistical Review, the US already has a commanding lead in terms of oil and NGL production at about 13.5 million bpd. This is followed by Saudi Arabia at 12.3 million bpd and Russia at 11.2 million bpd. In terms a f natural gas production, the US leads by a wide margin at 749 billion cubic metres (bcm) followed by Russia at 579 bcm and Iran at 202 bcm. So clearly in terms of hydrocarbon production, the US is the leader by a wide margin.

But this brings me back to my belief, as I have previously written, that EIA production numbers are way off. The EIA is already forecasting in the latest drilling Productivity Report that production will grow by 131,000 bpd in April! This would put April production at around 10.6 million bpd. In my audit of production from the major shale oil states, I have not received final December Texas numbers. So far, though it’s not looking good for the EIA numbers.

So how does the short-term EIA data jive with their annual long-term outlook? In the recently issued 2018 Outlook, they forecast reaching about 12 million bpd by 2021 assuming a reference price of $75 per bbl. In the high oil price, at $100 per barrel in 2020 rising to $250 per bbl, they assume that US production reaches 15 million bpd by 2025.

Here’s what I think is going on both internally in the EIA and external conventional wisdom based on the relentless positive reports of production growth by EIA. The market believes that shale oil growth will follow the high trajectory because of the so-called innovation advances in the last year or two. However, if I am right, actual production growth is much smaller than is being forecast. If so, it points to a much lower shale oil peak, likely following the reference case for total US production.

Depending on which way my audit falls, the result in the supply demand balance will have an enormous impact on storage and prices. My gut tells me that the relative strength of prices above $60 tells me that the market is near balance and that we do truly live in interesting times.

Oh, and PS: Mark Papa, the former CEO of EOG Resources, and who has probably been presented more technical data pertaining to shale oil than anyone, believes that shale oil growth potential may be over-stated as the prime areas of the Eagleford and Bakken are already drilled up. The question is how far does the Permian have left.

Probably a couple of years.

Randy Evanchuk, P. Eng., has 35 years of experience in the patch. From 2007 until he retired in 2015, Mr. Evanchuk was involved in all phases of of unconventional resource development including;evaluation, economics, production and facilities. As as senior consultant with Murphy’s Holdings, he evaluated their Montney holding as well was as a member of evaluation team. Mr. Evanchuk was the Vice President of new ventures at Daylight Energy where his team was successful in acquiring a substantial Duvernay position. At Seven Generations Energy he was Executive Vice President looking after facilities, marketing, production operations and long range facility and marketing planning

boe report



21 Comments on "EIA Production estimates are way off the mark and so too may be future United States energy dominance"

  1. BobInget on Tue, 20th Mar 2018 1:37 pm 

    If ‘Our Dear Leader’ could read this short page he might not be so quick throwing Venezuela under the bus.

  2. Boat on Tue, 20th Mar 2018 4:26 pm 

    Let Russia and China stay in bed with Venz. In fact the US should just shut down the Citgo refineries.

  3. Outcast_Searcher on Tue, 20th Mar 2018 5:16 pm 

    He hasn’t received the final December numbers. But the Permian (where the majority of the production growth is) is in Texas.

    This is a blogger without any credibility, compared to the EIA.

  4. MASTERMIND on Tue, 20th Mar 2018 8:00 pm 

    Boat

    Oh no you beloved EIA is getting ripped apart! Better go back to the POB site with all the other retards! Dennis will pick you up in his new Tesla! oh wait they can’t go out of the city! LOL Oh well! Better luck next civilization!

  5. MASTERMIND on Tue, 20th Mar 2018 8:04 pm 

    Chevron CEO warns US shale oil alone cannot meet the world’s growing demand for crude
    https://www.cnbc.com/2017/05/01/us-shale-cannot-meet-the-worlds-growing-oil-demand-chevron-ceo-warns.html

    The IEA is grossly overestimating shale growth
    https://oilprice.com/Energy/Oil-Prices/The-IEA-Is-Grossly-Overestimating-Shale-Growth.html

    The Shale Gas Revolution Is A Media Myth
    https://oilprice.com/Energy/Natural-Gas/The-Shale-Gas-Revolution-Is-A-Media-Myth.html

    Peak U.S. Shale Could Be 4 Years Away
    https://oilprice.com/Energy/Crude-Oil/Peak-US-Shale-Could-Be-4-Years-Away.html

    https://imgur.com/a/OB1w6

  6. Kat C on Tue, 20th Mar 2018 8:13 pm 

    Yes production estimates may be off the mark, but ENERGY DOMINANCE? We can’t even supply all the oil we use. Both Russia and KSA are net exporters. How does that look like dominance to anyone? Who writes this stuff?????

  7. MASTERMIND on Tue, 20th Mar 2018 8:14 pm 

    Chuck E cheese fight
    https://i.imgur.com/BSjtH4X.gifv

  8. Boat on Tue, 20th Mar 2018 8:26 pm 

    Kat C

    Welcome to fake news. You will see a lot of it here. This site is like Sputnik and RT. An anti American version of the news.

  9. Boat on Tue, 20th Mar 2018 8:34 pm 

    The eia has always been off in it’s projections. If you read and followed it you would know how often and by how much.

    Tell me this, what was the US production estimate for 2018 in December. What is it now.

  10. MASTERMIND on Tue, 20th Mar 2018 8:44 pm 

    Boat

    Shale is a ponzi scheme that should be shut down by the Nevada gaming commission!

  11. MASTERMIND on Tue, 20th Mar 2018 9:01 pm 

    John McCain blasts Trump for congratulating Putin on winning ‘sham election’

    https://www.msn.com/en-us/news/politics/john-mccain-blasts-trump-for-congratulating-putin-on-winning-sham-election/ar-BBKtPZc

    Putin is just one false flag away from getting hit with a nuclear first strike….

  12. Boat on Tue, 20th Mar 2018 9:10 pm 

    Mm

    I don’t know if you try to be funny but your future is the comedy stage. Go to HBO and just talk. Get even more radical like Trump. SNL would work.
    Good comedy can be non reality with a grain of truth mixed in. You got that in spades.

  13. Boat on Tue, 20th Mar 2018 9:17 pm 

    McCain is of course right. I am amazed the crazy Republicans voted for both these guys. I grew Republican humility. Thought I knew the party. Found out I had no clue. Lived my entire life in red States to boot. The idea of conservative is dead along with fiscal discipline.

  14. GregT on Tue, 20th Mar 2018 9:46 pm 

    “McCain is of course right.”

    McCain should be committed to an asylum for criminally insane geriatrics.

  15. Plantagenet on Tue, 20th Mar 2018 11:06 pm 

    The EIA is almost certainly wrong. Its projections have always been wrong in the past—why should this latest projection be any different?

    Cheers!

  16. Anonymous on Tue, 20th Mar 2018 11:15 pm 

    Author does not seem aware of the issues with RRC data lag, pending file, etc.

  17. BobInget on Wed, 21st Mar 2018 9:36 am 

    5 minutes old

    Total products supplied over the last four-week period averaged 20.5 million barrels per day, up by 4.9% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 9.3 million barrels per day, up by 1.9% from the same period last year. Distillate fuel product supplied averaged 3.9 million barrels per day over the last four weeks, down by 4.5% from the same period last year. Jet fuel product supplied is up 4.8% compared to the same four-week period last year.

  18. BobInget on Wed, 21st Mar 2018 9:41 am 

    Mind you, this is the so called ‘shoulder season’
    between winter and spring. A time when refiners
    should be ADDING to storage.
    for the remainder of morning’s EIA;

    EIA Weekly Report
    Summary of Weekly Petroleum Data for the Week Ending March 16, 2018

    U.S. crude oil refinery inputs averaged about 16.8 million barrels per day during the week ending March 16, 2018, 410,000 barrels per day more than the previous week’s average. Refineries operated at 91.7% of their operable capacity last week. Gasoline production decreased last week, averaging over 9.9 million barrels per day. Distillate fuel production increased last week, averaging 4.5 million barrels per day.

    U.S. crude oil imports averaged about 7.1 million barrels per day last week, down by 508,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 7.5 million barrels per day, 4.8% less than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 564,000 barrels per day. Distillate fuel imports averaged 122,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 2.6 million barrels from the previous week. At 428.3 million barrels, U.S. crude oil inventories are in the lower half of the average range for this time of year. Total motor gasoline inventories decreased by 1.7 million barrels last week, but are near the upper limit of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories decreased by 2.0 million barrels last week and are in the lower half of the average range for this time of year. Propane/propylene inventories decreased by 2.1 million barrels last week, and are in the lower half of the average range. Total commercial petroleum inventories decreased by 6.9 million barrels last week.

    Total products supplied over the last four-week period averaged 20.5 million barrels per day, up by 4.9% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 9.3 million barrels per day, up by 1.9% from the same period last year. Distillate fuel product supplied averaged 3.9 million barrels per day over the last four weeks, down by 4.5% from the same period last year. Jet fuel product supplied is up 4.8% compared to the same four-week period last year.

  19. BobInget on Wed, 21st Mar 2018 9:44 am 

    Next week, by all that’s normal, we should be adding crude to storage. If not, there will be real trouble in River City come June.

    Take a Canadian to lunch.

  20. BobInget on Wed, 21st Mar 2018 10:30 am 

    On topic;
    Everyone should recall that EIA projects over a 5m build each week in March. A draw of 2.6 means each week has to build closer to 10 to reach their targets. It puts in serious question the idea the market is in surplus.

    (there will be No 5 M B build next week, closer IMO to 1.5 M B)

    First of all, BOTH Venezuela and Ecuador are
    OUT of the big game. You can take that to the bank, (after 4/1)…

    Four so called NorWesters are cancelling flights all over the NE. Even so, Jet Fuel was up 4.8%
    week over week.

  21. BobInget on Wed, 21st Mar 2018 10:38 am 

    Brent, where it really matters, pushing $70.
    http://www.livecharts.co.uk/MarketCharts/brent.php

    six more days before China opens yuan based
    trading.

Leave a Reply

Your email address will not be published. Required fields are marked *