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Page added on July 12, 2015
Texas Oil Production Increases 16%
While crude oil production in the U.S. seems to have leveled off, oil production in Texas continues to move forward at a brisk pace.
The Energy Information Administration (EIA) said that US oil production declined slightly by 0.5 percent or 50,000 barrels per day (bpd) in May from the prior month to an average of 9.7 million bpd.
In Texas, however, crude oil production increased 16 percent in May to 107 million barrels (3.6 million bpd) from 92 million barrels (3.1 million bpd) in May 2014, according the Texas Petro Index.
The surplus of oil in Texas and worldwide has created a softening of price. Prices declined on the New York Mercantile Exchange (NYMEX) on July 7 to $51.98 the lowest price since April 13 and a 17 percent drop since its 2015 high of $62.58 in May. The six-year low was set on March 18 at $42.03.
The recently release Texas Petro Index shows that crude oil prices averaged a decline of 43 percent in May compared to the same month last year. Crude oil prices averaged $55.95 in May and $98.32 in May 2014.
With the decline in price come the decline in the rig count, drilling permits, oil completions and even employment. The rig count is down 58 percent with just 375 rigs running in Texas in May. Drilling permits were off 61 percent, oil well completions were down 36 percent, and employment declined 3 percent.
Every category in the Texas Petro Index declined in May – except for oil production – making the index decline to 265.4, which is a 15 percent decline from it high of 312 in October 2014.
The EIA expects US production to decline from April 2015 to February 2016. It called for US crude oil output to average 9.47 million bpd in 2015 and 9.32 million bpd in 2016.
“While US crude oil production is expected to decline over the months ahead, total output in 2015 is on track to be the highest in 45 years,” said EIA Administrator Adam Sieminski.
The EIA also raised its forecasts for US oil consumption. “US gasoline demand will likely top 9 million bpd this year for the first time since 2007, which reflects record highway travel,” Sieminski said.
The EIA said international petroleum supplies would average 95.46 million bpd in 2015 and 95.67 million bpd in 2016, up from its prior projections of 95.24 million bpd in 2015 and 95.48 million bpd in 2016.
Consumption is projected to average 93.63 million bpd this year and 95.03 million bpd next year.
The EIA said WTI crude prices would average $55.51 per barrel this year, up from its previous forecast of $55.35 per barrel. The US price averaged $93.17 per barrel in 2014. The EIA lowered its 2015 forecast for Brent to $60.22 per barrel from $60.53 per barrel. In 2014, Brent averaged $98.89 per barrel. It maintained its 2016 forecasts for US prices to average $62.04 per barrel and for Brent to average $67.04 per barrel.
22 Comments on "Texas Oil Production Increases 16%"
ronpatterson on Sun, 12th Jul 2015 2:09 pm
Well, not really. They are talking about production increase from May 2014 to May 2015. And in view of the shale boom, that is simply what would be expected. But what we would really like to know is how did May’s production compare to April’s production? They say:
….In Texas, however, crude oil production increased 16 percent in May to 107 million barrels (3.6 million bpd) from 92 million barrels (3.1 million bpd) in May 2014, according the Texas Petro Index….
Okay, 92 million barrels in May 2014 comes to 2.97 million barrels per day. Simple math, just divide 92 by 31. And 107 million barrels in May 2015 equals 3.451 million barrels per day. Not bad until we realize that the EIA says that Texas produced 3.775 million barrels per day in March and 3.711 million barrels per day in April. So 3.451 mbd in May represents a 259,387 barrels per day decline from April production and a 323,387 barrels per day decline from Texas March production.
So if the Texas Petro Index is correct then Texas is experiencing a steep decline in crude oil production. However it is far more likely that the EIA’s March and April numbers are way too high and there is a decline in May, but not nearly as great as these numbers indicate.
rockman on Sun, 12th Jul 2015 2:18 pm
“In Texas, however, crude oil production increased 16 percent in May to 107 million barrels (3.6 million bpd) from 92 million barrels (3.1 million bpd) in May 2014…”. Hell, that ain’t nothing: it has increased from only 32 million bbls in 2004.
So who f*cking cares about the increase in the last 12 months? Nice bit of history but that’s all it is at this point…history. The critical question today is how much oil will Texas be producing in May 2016. And: “…total output in 2015 is on track to be the highest in 45 years…”. Making predictions are fine. But how about a more timely prediction: how much will US oil production be in a year…from June 2015?
This is the last chance the cornies have to tout numbers…including predictions. By 1Q 2016, assuming oil prices stay at current low levels (which I suspect they will along with the fact that most hedges keeping many companies alive and semi-active today will be ending) they’ll become very quiet except for touting how oil production will increase…when oil gets back to $100/bbl.
Nony on Sun, 12th Jul 2015 2:29 pm
This is a really dumb story and how it has gotten spread around the net.
1. You can’t compare a monthly change of US oil from EIA with a yearly change of Texas Oil from “Texas Alliance”. Those are different data sources as well as different periods.
2. The Texas Petro Index might be OK, but it is basically just coming from one guy, Karr Ingham, at a state trade association. It’s not a product from RRC, EIA, IEA, API, or the like. The index might be interesting, combines a lot of factors, but I’m not sure that his production estimates or surveys are special (don’t know really).
3. I actually tracked down the April numbers from the Texas Petro Index (they have a website). It was 103,566,000 barrels of volume. That’s 3.452 bpd. The 107,000,000 reported for May would equate to…wait for it…3.452 bpd! For a growth rate of 0%. Even if you assume some normalized 30 day month for both, it would then get you to 3.6 MM bpd, but only about a 3% increase, not 16%. (And I don’t think the months are normalized…but hard to tell as cite talks about barrels per month, versus an absolute.)
4. FWIW, the April year to year difference in Texas was more dramatic than May. A 17% difference vice a 16% one.
See here:
http://texasalliance.org/wp-content/uploads/2015/06/86-06-June-2015-NewsLine-Petro-Index-FULL-pg-for-website.pdf
Nony on Sun, 12th Jul 2015 2:34 pm
Rock, the cornies will just tout the price. You were right to say how bad $100 was for the lst 4 years, but have been truculent to admit the worm has turned.
If I have to choose between high volumes from shale or low(er) prices for consumers, it’s a no brainer what I prefer.
P.s. Shale probably stopped us from going to 150-200 over the last four years also. Several good analysts have said so. They know more about supply and demand and oil prices than you do. Your expertise is more around the mudlogger and stuff like that (not overall economics). You’re nothing special, dude. There is an army of guys working in the oil patch, including lots brighter and savvier than you.
Nony on Sun, 12th Jul 2015 2:37 pm
3.452 million bpd, that is.
Davy on Sun, 12th Jul 2015 3:09 pm
NOo, the critical issue is prices and volumns within an acceptable economic range for both consumer and producer. Anymore the lines between producer and consumer are blurred with a world so financialized. This global world is all about systematic congruity not winner take all.
Boat on Sun, 12th Jul 2015 3:54 pm
Davy, Nony showed a great chart today. After adjusted inflation gas is pretty close to normal price with the price around $2.75.
Nony on Sun, 12th Jul 2015 4:09 pm
Nat gas was above $5 from about 2003-2009. For the last 5 years, we’ve pretty much been under there. Still above the consistent low prices of the late 90s, but we HAVE had a big increase in volume consumed.
http://www.eia.gov/dnav/ng/hist/rngwhhdA.htm
Davy on Sun, 12th Jul 2015 4:23 pm
Boat, my point earlier to the NOo was a higher or lower and or better or worse price is not the key. The Key is a price satisfactory range the entire world economy can live with. You can crow short term or whine short term for this or that player fine. That is good fun for those with agendas. Longer term we are all on the same sinking ship and what we need is economic congruity.
Nony on Sun, 12th Jul 2015 4:32 pm
Producers always want higher prices. Consumers always want lower. Where the supply and demand curves cross is the compromise, Davy.
marmico on Sun, 12th Jul 2015 4:47 pm
So who f*cking cares about the increase in the last 12 months?
Peakoiler numbnuts like you. Will world oil production kiss 80 million barrels per day in April 2015? Just missed in March @ 79.996 mb/d.
Davy on Sun, 12th Jul 2015 5:01 pm
Where the supply and demand curves cross is the compromise in a normal non-repressed and unrigged market with proper price discovery. That is something we have not seen in almost a decade.
Nony on Sun, 12th Jul 2015 5:08 pm
Well if the answer is lower prices, I’m all for it. But I think you are being irrational with the rigged market comment. That market is functioning fine–we have had plenty of volatility (which is a sign of functioning).
Brent on Sun, 12th Jul 2015 10:04 pm
I don’t know what the argument is all about. Greece is falling apart at current prices.
apneaman on Sun, 12th Jul 2015 11:51 pm
Oh no nony-marm whatever will we do? Go green baby.
Fossil fuel industry must ‘implode’ to avoid climate disaster, says top scientist
‘The age of carbon is over’ and a transition to a greener economy is inevitable, says Hans Joachim Schellnhuber, adviser to the German government and Pope Francis
http://www.theguardian.com/environment/2015/jul/10/fossil-fuel-industry-must-implode-to-avoid-climate-disaster-says-top-scientist?utm_content=bufferd1e63&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
Northwest Resident on Mon, 13th Jul 2015 1:19 am
“That market is functioning fine…”
Not very perceptive of you, Nony. That corresponds to your lack of analytical capability on several other topics. I used to think that you were merely pushing an agenda, knowing full well how absurd your theme of Econ-101 based optimism was. Now, I have begun to realize that in fact you truly are just not getting it. That’s okay, Nony. Hang tough. There’s plenty of other old fogies out there hanging onto the nostalgic past, same as you. It takes a special breed to perceive the truth of our dire situation and to embrace it and prepare to meet it. Most people can’t handle the truth. You are an excellent case in point.
Davy on Mon, 13th Jul 2015 1:33 am
N/R. the NOo is a specialist. He is unable the venture out into the real world of non-linear increasing levels of abstraction. He has to stay focused on the numbers and the curves lest he gets flustered.
Northwest Resident on Mon, 13th Jul 2015 1:56 am
Lots of people like that, Davy. Locked into official stats and sucking up the 24/7 propaganda, living the dream, believing that all is well. Mass delusion — who would have thought 20 or 30 years ago that we’d be witnessing it first hand. But here we are.
Except, I suspect there are a LOT of very knowledgeable individuals who know the score, they just aren’t letting on. Last week I had meetings and dinner outings out-of-state with some high profile and internationally recognized players in the international financial services software biz. Getting to know them on a more personal level, it became clear that they are aware that “NOT all is well”, that oil price and China and Greece and unpayable debt are highly relevant to their future. I saw some very, very worried people. But next day, sitting in the official meetings, BAU baby! Gotta keep dancing while the music is playing, me included.
joe on Mon, 13th Jul 2015 2:09 am
Don’t these companies mine oil to pay debts? Just how profitable are they? Why isn’t Royal Dutch Shell the biggest player? The companies have to produce to pay the bank or go bust, but it can’t be very profitable to do it. I’m sue they would rather hold on to their oil and keep it for the later higher price, but I guess they gotta eat too.
Westexasfanclub on Mon, 13th Jul 2015 6:55 am
… Not bad until we realize that the EIA says that Texas produced 3.775 million barrels per day in March and 3.711 million barrels per day in April. So 3.451 mbd in May represents a 259,387 barrels per day decline from April production and a 323,387 barrels per day decline from Texas March production. …
Even if the final numbers are lower, this shows how that report is willfully skewing oil data by suppressing crucial numbers.
Kenz300 on Mon, 13th Jul 2015 9:40 am
Oil price goes down…. Texas produces more oil…..
Oil price goes down further…..
Ride a bicycle and worry less about the price of oil….
Dredd on Mon, 13th Jul 2015 9:42 am
Texas is the heartland of Oil-Qaeda (The Clathrate Minds of Oil-Qaeda).