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Page added on April 7, 2015
The Bakken bust continues
In North Dakota’s Bakken shale oil play, the drilling boom has gone bust. It may only be a temporary bust—but aren’t all booms, and all busts? Here I show a compilation of the latest data from North Dakota, assembled in advance of the state’s monthly release. Production was down 1.5 percent from January to February, that’s in addition to a 3.1 percent decline the month before.
North Dakota’s oil production fell 3.1 percent from December to January, and another 1.5 percent from January to February, according to statistics I compiled from the state, ahead of their monthly “Director’s Cut” report.
Bakken is mostly in North Dakota—and North Dakota’s oil production is overwhelmingly from the Bakken. So Bakken and North Dakota are, for most intents and purposes, the same thing.
So this means Bakken oil production has declined for two months in a row, and was running at a rate of 1.17 million barrels per day in February. (Remember, folks, you heard it here first.)
The graph above shows my compilation of the North Dakota data—and for comparison, a year-and-a-half of the state’s own figures. For whatever reason, mine is consistently coming out a tad lower—about 0.6 percent lower, to be exact. Perhaps there are some small number of older wells that I’m missing. In any case, the ups and downs match precisely, so I’m confident I’m capturing all the recently drilled wells.
When the state issues their next round of data later this month, I’m expecting they’re going to say production was the same as my count, give or take 0.01 million barrels per day.
U.S. already declining?
There are many articles saying that U.S. oil production has continued to rise despite the big drop in drilling since the start of the year. I think a major reason people keep saying this is because that’s what the Energy Information Administration’s weekly reports have said is happening. But if you read the fine print on those reports, it turns out the weekly production numbers are actually forecasts, not measurements.
I stand by what I said in an earlier post: It may well be that total U.S. oil production started declining two or three months ago, but we just don’t know it yet.
We can say the Bakken definitely started declining three months ago, back in January. The situation may be somewhat better in other plays, such as Texas’s Eagle Ford. But because of limitations on Texas’s data—as highlighted in a recent post from the Dallas Morning News—it may be a while before it’s clear what’s happening in Texas.
14 Comments on "The Bakken bust continues"
Nony on Tue, 7th Apr 2015 8:16 pm
Mason also speculated about the Marcellus boom ending, about a year ago.
https://medium.com/@masoninman/is-the-marcellus-boom-ending-3f72147ecf36
That was pretty clearly wrong: grew 2.8 BCF/day over 2014. But he never went and finished up his story.
Inman is a lot better than the typical peaker. More data driven. Nice graphics. Great writing. But he does have this tendency of moving on when his peaker suspicions don’t bear fruit.
shallow sand on Tue, 7th Apr 2015 9:25 pm
Read that XTO had to shut in 140 wells in Bakken in February and March due to flaring restrictions. I think other operators had to restrict production also. Will be interesting to see what ND reports for Feb in a few days. Flaring restrictions may skew things.
Dave T. on Tue, 7th Apr 2015 9:51 pm
This could be an illustration of just how fast the fracking wells deplete?
Westexasfanclub on Wed, 8th Apr 2015 5:36 am
Interesting situation. US probably declining, SA seemingly at a new surge, Iran coming back into business. Is this the peak, the extension of the pateau or just BAU?
Davy on Wed, 8th Apr 2015 7:17 am
WestTex, it is likely the end of BAU because oil is more than just oil it is part of an economy and a financial system that must remain robust to deliver the kind of production we see today. Any kind of demand and supply destruction that continues beyond a normal economic cycle will be very nerve racking for global investors. Confidence is liquidity is BAU. A little panic is all it will take to disrupt this fragile global BAU with her JIT production and distribution, financial system of trust and liquidity, and massive resource production networks. It is all too complex and fragile for any disruption.
We saw what a near seizure of the system was like in 2008. We just cannot have disruptions at all anymore. The system is too brittle in efficiency and liquidity to take disruption. The interconnectedness from comparative advantages spread across the globe supporting production and distribution is too far past regression. A war between vital nodes in this system or a financial crisis now will cause the system to seize up.
It is now just a waiting game because there are just so many predicaments, problems, and black swans that can derail the train. Then there is POD, food and water stress, and growing geopolitical instability always in the background. This is likely the transition period of the plateau to the descent. It is just a matter of time.
Us humans are short-termism oriented creatures. This time period delay is mistaken for BAUtopian “all is well” and “all will work out”. Train wrecks don’t work out they end and end abruptly. The 200MIL excess deaths over births period lasting a generation is close at hand. This event will likely not show up as a smooth curve it will be jagged and ugly.
We have a population that needs to be reduced to 1BIL or less to support itself post energy intensity and complexity. Neither energy intensity nor complexity can be supported without a functioning and healthy BAU. It’s over folks but that time frame may yet be a few years so the lies and delusions of the BAUtopians of all shades and colors will continue until that train wreck wrecks all the various shades of fantasies we see globally now.
shortonoil on Wed, 8th Apr 2015 10:14 am
The new flaring regulations are likely to have some impact on Bakken production, but other factors are much more important. A $37/ barrel well head price will limit development into the future. With per barrel drilling cost of $53/ barrel, the Bakken is not a long term cost effective field.
A simple calculation shows that the average Bakken well reaches its dead state after 77,000 barrels of production, or about 10 months. This limits its production primarily to use as a feedstock material. The demand for feedstock was created by its use as a diluent for Canadian bitumen, and other petrochemical production that resulted from a growing economy. That economic growth has now stalled; demand for Bakken oil will decline.
This is all part of the larger view. The world’s economy can no longer afford low energy, high priced oil. Bakken production has been a luxury that the economy will not long be able to pay. The price that the economy can afford to pay for oil peaked in 2012 at an average annual price of $104/ barrel. It is now declining, and will continue too into the future. The impact of depletion can not be reversed. The long term downward price trend of petroleum will continue. The oil age will end when producers can no longer produce petroleum at a profit. That day is not that far away!
http://www.thehillsgroup.org
Plantagenet on Wed, 8th Apr 2015 10:57 am
Its too soon to count the Bakken out. The current oil glut is caused by the Saudis producing flat out at record high levels. If the Saudis choose to cut back, the oil glut will end, world oil prices will rise, and the Bakken will again be profitable.
BobInget on Wed, 8th Apr 2015 11:19 am
http://www.investorvillage.com/uploads/69286/files/WorldwideRigCountMar2015.pdf
Northwest Resident on Wed, 8th Apr 2015 12:30 pm
“The current oil glut is caused by the Saudis producing flat out at record high levels.”
Bullshit.
The oil glut is the result of massive malinvestment in tight oil production, powered by investors desperately seeking yield in a ZIRP world. Billion$ and trillion$ flowed into tight oil production desperately seeking yield, allowing tight oil producers to continue operating despite showing little to any prospect of current or future profitability.
Tight oil massive overproduction of “oil” that is incapable of powering its own production or much of anything else is the reason for the oil glut, despite what the industry shill and consummate troll wants you to believe.
Why does the management of peakoil dot com allow obnoxious trolls like Plant to use this forum as a bullhorn for lies, industry propaganda and misinformation?
The Oil Price Collapse Is Because of Expensive Tight Oil
http://www.artberman.com/the-oil-price-collapse-is-because-of-expensive-tight-oil/
Westexasfanclub on Wed, 8th Apr 2015 4:54 pm
Maybe Plant is not totally wrong: SA is bringing down US fracking – when the glut is running out prices go up and fracking is back. When fracking is finally over the peak Iran jumps in as later on does Irak. The result: the plateau extended until 2020, which is the best possible scenery for BAU in our finite world. It could be engineered by a handful of people in politics, economy and finances. Just a thought.
Jim B on Wed, 8th Apr 2015 4:59 pm
I’ve been driving through Dickinson 2-3 times a year for the last 3 years, occasionally stopping for a few days, windshield gawlking up to Watford City, etc. I went through last Monday and the place was shut down. Big warehouses and yards either empty and quiet, or piled high with service vehicles. Traffic in town was back to normal; no white company pickups anywhere, none. No water trucks or service rigs. No drilling or fracking going on out on the landscape. I did see a half dozen newish pumps operating West of town and about 5 or 6 oil transports on the freeway.
My take on this is that we’ll see continued oil being pumped and delivered until those new wells start to dry up, then we’ll see ND’s numbers plummet.
Joe on Wed, 8th Apr 2015 6:24 pm
Actually blaming SA for the oil glut and not cutting back production is like a retailer saying if my competitors would close there stores for half the week,then I could make a profit.
Golden! Joe
Joe on Wed, 8th Apr 2015 6:30 pm
Honestly the USA should be THANKING SA for
helping to drive them out of business.With
a Trillion dollars in debt the US fracking
scam will be stopped so it doesn’t add another trillion more of debt.
Thanks SA! Joe
Ken300 on Thu, 9th Apr 2015 9:31 am
High cost shale, tar sands and deep water producers are pulling back as the banks have now stopped their lending to high cost projects.