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Page added on April 1, 2017

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Texas oil production down year-over-year

Production

Though recovery is expected to evolve through 2017, data on oil production from Texas show volumes declined year-over-year, based on preliminary figures.

The Railroad Commission of Texas, the state energy regulator, reported a preliminary volume of oil produced in January at 75,331,644 barrels. Year-over-year, preliminary production reported to the commission was 76,063,179 barrels, which was later updated to 89,235,660 barrels.

Breaking the data down to daily output, the commission reported preliminary production levels in January were around 2.43 million barrels per day, compared with an average 2.45 million barrels per day for January 2016.

Lower crude oil prices last year curbed spending in the energy sector, a factor often reflected by rig counts. In its weekly reports, oilfield services company Baker Hughes has reported steady gains in rig activity in the United States as the market recovers, though there’s a lag time between when drill bits start spinning and actual production.

Including an ultra-light form of oil called condensate in its total for 2016, production in Texas was down 10 percent from the previous year, the regulator reported. A decline in production for December was the first since at least 2010. Total production of oil, including condensate, peaked last year at the January level of 102.5 million barrels.

Michael D. Plante, a senior economist at the Federal Reserve Bank of Dallas, said the latest industry survey finds a growing sense of optimism from those in the energy sector.

“Activity levels in the oil and gas sector continued growing at a rapid clip this quarter and nearly all survey measures pointed to further expansion,” he said in a statement. “Outlooks remain positive, especially among oilfield services firms.”

The price for West Texas Intermediate, the U.S. benchmark for the price of oil, was near $50 per barrel early Thursday. The Dallas Fed said some work in parts of the Permian shale basin in Texas, one of the more lucrative in the country, is breaking even at $46 per barrel.

For the second quarter in a row, companies working on exploration and production expressed optimism, according to the bank’s latest survey. Those responding told the Dallas Fed they expect WTI to hit $53 per barrel by the end of the year.

upi.com



7 Comments on "Texas oil production down year-over-year"

  1. BobInget on Sat, 1st Apr 2017 12:39 pm 

    According to EIA, the Texas crude production in December was 3.154 MM barrels/day with condensate production at 471000 barrels/day.

    The actual crude production then is 2.68 MM barrels/day vs. Texas RRC December number of 2.56 MM barrels/day. Both numbers are subject to further revisions but the differences are small.

  2. rockman on Sat, 1st Apr 2017 1:31 pm 

    Just a reminder of how the TRRC classifies oil vs condensate. It IS NOT based on the API gravity of the oil. A 42°API production could be classified as “oil” while a 36° API could be classified as “condensate”. The determination is based on the state of the hydrocarbon in the reservoir: liquid = oil and gaseous = condensate. And that classification is not constant: a well may start out producing “condensate” but as reservoir pressure the condensate might “drop out” (IOW condenses) and from the on production is classified as “oil”.

    And that classification is not a trivial technicality: the implication can be measured in the hundreds of $millions. The TRRC dictates the “spacing rules”: IOW how close wells can be drilled to each other. A tight spacing might allow 1 well drilled on ever 10 acres while a wide spacing might only allow a 360 acre producing unit. A huge difference in how many wells can be drilled (and thus how much daily production) in a field that covers 5,000 acres. And again a 5,000 acre lease might originally be allowed to have a CONDENSATE well drilled on every 160 acre unit when the pressure drops and the reservoir begins producing oil the field can now be infield drilled on 40 acre spacing. IOW 3X as many wells can then be drilled…if the companies deem it economic to do so.

    But it can be advantageous for a company to reduce production production from a pressure depletion drive reservoir to maintain the condensate classification (and thus larger producing units) if drilling economics are favorable. Why? Each mineral lease has a “primary term”…5 years is common in Texas. Any part of a lease not HBP (Held By Production) and the end of the PT is returned to the mineral owner. Thus the larger the producing unit (say for a condensate vs oil well) the more acreage that can be held as HBP. So some operators have to decide: lower production rates to maintain condensate classification and hold more acreage HBP or increase cash flow and risk losing acreage.

    But another twist: if the companies to sell production and IF the economics are looking better for infield drilling and new owner might draw down pressure (and convert production to oil) and quickly have a lot of new low risk wells to drill. New wells that would add additional PROVED RESERVES to book…the primary goal of every pubco. But works only IF infield drilling is economical. Or if the buyer expects an increase in prices in the near future that would make drilling viable.

    Bottom line: there are a number of moving parts to the current dynamic. And certainly nothing being hinted by the bumper sticker headlines being put out by the MSM. Can you imagine them publishing a piece with the details just presented? And I don’t mean to insult our group but I actually dumbed down the story a bit because I didn’t feeling like writing for another hour…or two. LOL

    In fact the above was the original point I meant to make. Texas oil production is concentrated in two areas: the Permian Basin (42 million bbls/month) and coastal south Texas (27 million bbls/month)…essentially home of the Eagle Ford Shale. The EFS production some of which is classified by the TTRC as condensate and the rest as oil. Which is the primary reason folks like the EIA use the stat “C+C” because they don’t want to spend a huge amount of manpower breaking down the numbers. Especially since it isn’t critical: condensate is crude oil despite what anyone says.

  3. rockman on Sat, 1st Apr 2017 1:50 pm 

    “Both numbers are subject to further revisions but the differences are small.” The EIA numbers are based on the extrapolation of a limited data set voluntarily given by some companies. The TRRC is the only source of actual production recorded by every operator for every well in the state. And the initial data accumulated by the TRRC is always off due to operators being late in their data submissions for the month. The Rockman has seen operators 6+ months behind. But the TRRC recognized that problem some years ago and began applying a correction factor (1% -2%?). Still not 100% accurate but much closer. And more important: the TRRC stats will always be more accurate then those from any other source since it is the only agency that collects production data from every operator of every oil well in Texas. Throughout his entire career the Rockman has never worked for company that reported its Texas production to any organization other then the TRRC.

  4. Boat on Sat, 1st Apr 2017 2:14 pm 

    Rock,

    I assume the Eia must get their numbers from the TRRC. The Eia also runs a chart that shows oil production in the US by api range, condensate starting at 50 api. Which btw according to the Eia is somewhere around 15 percent. That includes all oil over 50 api.

  5. rockman on Sat, 1st Apr 2017 10:20 pm 

    Boat – Took a while but I finally found the EIA protocol I stumbled across long ago. They do say they use state agency data when available but then modify the data by using a variety of estimated metrics. “Estimated”: their word repeated many times as you’ll see. Go here and look for link at bottom of right hand column: “Explanatory notes and sources…”

    https://www.eia.gov/petroleum/drilling/

    And here’s a link to Peak Oil Barrel that goes into great detail about the EIA discrepancies:

    http://peakoilbarrel.com/texas-rrc-report-april-production-data/

  6. deadlykillerbeaz on Sun, 2nd Apr 2017 6:51 am 

    Texas oil production stats.

    Downward trend from 1978 to 2012, then back to 1970’s production yearly totals beginning 2015.

    http://www.rrc.state.tx.us/oil-gas/research-and-statistics/production-data/texas-monthly-oil-gas-production/

    http://www.rrc.state.tx.us/oil-gas/research-and-statistics/production-data/historical-production-data/crude-oil-production-and-well-counts-since-1935/

    In the beginning, the US exported 40 percent of oil produced in the lower 48. The whole world was buying oil from the United States, then everybody started looking for oil.

    Well, not really, but US oil development got the ball rolling for modern oil extraction.

    Oil was always there when drilling, it was a useless substance, water well drillers were disappointed when they hit oil and not water. That was before oil became a resource, kerosene replaced whale oil. Whalers had to become oil explorers and give up whaling. Thank God for oil, it saved the whales from becoming lamp oil. Oil answered the whales’ prayers.

    Nobody turns down oil, there is always demand for more, doesn’t matter where it comes from, crude oil is ecologically and environmentally firendly, oil has been kind to the whales and to humans both.

    Oil is greener than any green technology out there.

    Back to the past.

    Titusville went dry, down to Texas where an oil tycoon quipped he would drink every gallon of oil west of the Mississippi River. Way back around 1890 something when the peak oil fantasy was born by Thomas Edison and that gang of drooling idiots who were the energy nuts figuring everything out for the good of humanity.

    Nikola Tesla was digging holes for two dollars per day.

    No oil in Pennsylvania, on to other bigger and better places.

    Spindletop then over to California where Dry Hole Charlie dug the Lakeview Gusher and ruined California.

    http://www.sjvgeology.com/history/index.html

    Suffice it to say oil not only changed the world, it saved the world too.

    We can thank Texas for having the oil that saved the whales.

    More oil is better than less, we’re doomed with no oil.

    That’s why Texas and the rest of the world produces 95,000,000 barrels per day of oil and condensates, can’t ignore the facts.

    It is needed in the worst way.

  7. rockman on Sun, 2nd Apr 2017 11:45 am 

    killer – Yes, always a two sided coin when it comes to oil. While AGW is bad had Texas not discovered the giant East Texas Field in the 30’s we might all be eating sauerbraten with chopsticks right now. LOL. Now would we be worried about Russians since they would be extinct just like the Jews.

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