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US oil production watch thread Pt. 2

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US oil production watch thread Pt. 2

Unread postby GoghGoner » Tue 15 Mar 2016, 20:09:58

2012? Wow, that is much lower than the EIA is showing in the drilling report.

https://marcellus.com/news/id/135945/eagle-ford-bakken-production-continues-to-drop/

The Eagle Ford Shale and Bakken formation produced less oil in January than in December, according to analytics and consulting group Platts Bentek. In fact, oil production from both Eagle Ford and Bakken formations reached their lowest levels since Platts Bentek started tracking them in October 2012.
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Re: US oil production watch thread

Unread postby americandream » Tue 15 Mar 2016, 21:14:46

ralfy wrote:
americandream wrote:
Only to the extent that the market determines that. And for the moment, the presence of a subjective price agent (Saudi Arabia) is making price discovery for the vast bulk of the market a volatile and uncertain process.

That said, I cannot see anything to suggest that reserves are one thing or another. The global energy sector is in the hands of feudalists and thus it is little wonder we are neither here nor there,


It's a volatile process not because of price discovery but of limits to growth, and it won't matter who's in charge.


And as I keep saying, we do not know. Oh, it is a given that capitalism will hit limits. I am a Marxist, I know that only too well. But for as long as subjective Saudi forces play with our market structure most will not know. I could pull up a long term time frame chart and satisfy my own curiosity as objective structure frames subjective noise but who am I going to tell? And will anyone listen to me and do anything about it. Looking at the reaction on here, what do you think?
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Re: US oil production watch thread

Unread postby Tanada » Wed 16 Mar 2016, 06:54:41

GoghGoner wrote:2012? Wow, that is much lower than the EIA is showing in the drilling report.

https://marcellus.com/news/id/135945/eagle-ford-bakken-production-continues-to-drop/

The Eagle Ford Shale and Bakken formation produced less oil in January than in December, according to analytics and consulting group Platts Bentek. In fact, oil production from both Eagle Ford and Bakken formations reached their lowest levels since Platts Bentek started tracking them in October 2012.


If we are really at or below late 2012 production levels the market will become balanced much more quickly than most analysts are projecting.
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Re: US oil production watch thread

Unread postby ROCKMAN » Wed 16 Mar 2016, 07:10:54

As always it's best not to hang to many theories on relatively short term stats. Even when there's much less volatility then today there's always misestimates and revision. We probably won't have a reliable picture of the current dynamic until early 2017. But nothing wrong with making guesses as long as we don't waste too much time arguing IMHO about what won't be proven for a long time down the road.
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Re: US oil production watch thread

Unread postby Revi » Wed 16 Mar 2016, 07:16:10

I think it will be down for the same reason that all commodities are down. We are entering a worldwide recession so the world needs less of everything. Homeless people don't buy much. The price of oil won't go up enough to cover what we need to encourage production, nor will the price of wood, or any other commodity. It's going to be painful.
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Re: US oil production watch thread

Unread postby Subjectivist » Wed 16 Mar 2016, 14:08:27

Tanada wrote:
GoghGoner wrote:2012? Wow, that is much lower than the EIA is showing in the drilling report.

https://marcellus.com/news/id/135945/eagle-ford-bakken-production-continues-to-drop/

The Eagle Ford Shale and Bakken formation produced less oil in January than in December, according to analytics and consulting group Platts Bentek. In fact, oil production from both Eagle Ford and Bakken formations reached their lowest levels since Platts Bentek started tracking them in October 2012.


If we are really at or below late 2012 production levels the market will become balanced much more quickly than most analysts are projecting.


We are almost 150 percent, I looked it up. 2012 Bakken averaged about 780,000/bbl/d and right now they are producing about 1,200,000/bbl/d.
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Re: US oil production watch thread

Unread postby americandream » Wed 16 Mar 2016, 14:17:30

Revi wrote:I think it will be down for the same reason that all commodities are down. We are entering a worldwide recession so the world needs less of everything. Homeless people don't buy much. The price of oil won't go up enough to cover what we need to encourage production, nor will the price of wood, or any other commodity. It's going to be painful.


This year is going to be bad with the elections looming and most of the current crop of business arrangments shitting their pants at the prospect of a Trump presidency, especially the Arabs. I see there is talk of an output adjustment meeting which it is rumored the Iranians may not attend. The Russians have just withdrawn from Syria, seemingly mission accomplished, the Saudis are as usual looking for their arses...so yeah, this year is gonna be roller coaster land.

Not that I care. I was set up for FOMC last night (NZ) and sailed into her this morning.
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Re: US oil production watch thread

Unread postby ralfy » Wed 16 Mar 2016, 20:15:44

americandream wrote:
And as I keep saying, we do not know. Oh, it is a given that capitalism will hit limits. I am a Marxist, I know that only too well. But for as long as subjective Saudi forces play with our market structure most will not know. I could pull up a long term time frame chart and satisfy my own curiosity as objective structure frames subjective noise but who am I going to tell? And will anyone listen to me and do anything about it. Looking at the reaction on here, what do you think?


Perhaps you mean "they do not know."
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Re: US oil production watch thread

Unread postby GoghGoner » Wed 23 Mar 2016, 06:53:38

Legacy production (greater than 4 years) has not budged in the last 14 years. That means all of those wells that have been drilled in the boom prior to 2013 have not added anything to legacy production but only managed to keep it steady. Really amazing stat.

Wells drilled since start of 2014 provided nearly half of Lower 48 oil production in 2015

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Re: US oil production watch thread

Unread postby GoghGoner » Wed 23 Mar 2016, 09:09:08

I guess the boom really started after 2010 so the legacy production could go up significantly the next few years.
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Re: US oil production watch thread

Unread postby ROCKMAN » Wed 23 Mar 2016, 09:30:55

G -Not a big surprise if you consider how different the decline curve is for the shale reservoirs compared to the CONVENTIONAL heritage wells. The shales give a huge initial bump up but then have that well known dramatic initial decline rate. Consider a typical decline of 50% - 60% in the first 24 months. Compare that to the big conventional reservoirs developed in the 50's and 60's that might have taken 10 to 15 years to decline just 50%. And many of those old fields are still producing at stripper level and declining more like 1% to 2% today. But last time I looked the strippers collectively accounted for 20% tp 25% of US production. Many of the Eagle Ford wells completed in 2010 are not producing at the same rate as conventional wells completed 30+ years ago. IOW the high initial rates of the shales gave many folks an incorrect impression of the ultimate recover.

Consider the old conventional field the Rockman is currently redeveloping with horizontal well bores. It began producing 77 YEARS AGO IN 1946. It has made 28 million bbls of oil. The 40+ wells in this reservoir never did more than 60 or 70 bopd each. But declined very slowly. It would take about 70 to 80 of the typical EFS well to produce that much but do so in less than 7 or 8 years.

Bottom line:the production profile of future heritage shale wells won't look anything like that of the conventional heritage wells. Once the flush production from the Bakken and EFS has passed the U.S. will return to the down sloping curve we diverted from prior to the shale boom. That stat was anticipated by the oil patch when the shale play began. It was the ever increasing number of new shale wells being drilled that hid the trend we're seeing now.
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Re: US oil production watch thread

Unread postby rockdoc123 » Wed 23 Mar 2016, 11:48:33

IOW the high initial rates of the shales gave many folks an incorrect impression of the ultimate recover


I don't think that is the case. All of the shale type curves irrespective of what formation or basin they are representative have the same projection of an intial hyperbolic decline (the very high 60 - 80% decline in the first 24 months) followed by an exponential decline where decline rates are recognized as being as low as 1-2%/annum. This type of decline was predicted quite early on by theory (Terry Engelder is best known for his work in this area) and has been proven successfully in the Bakken and longer producing shale gas wells in the US. There are of course different type curves based on average rock lithology and mechanical properties which is why we see a range of EUR across basins such as the Eagleford. There is a wide range of IP versus EUR with some quite large IPs and significant EUR (Permian basin some wells doing 1000 bopd with EUR of 400 - 500 Mbo) some smaller IPs and smaller EUR (areas in Eagleford with IP's in the 150 bopd and EUR below 150 Mbo) and a wide range between. At issue is the amount of anastomosing fractures created during the frack job, how connected they are and whether there are any issues that could cause either plugged perforations (mobile clays), collapsed fractures (compressed sand) or in the unusual event of collapsed casing, all of which can affect the exponential decline portion of the curve and hence EUR. The business is a bit statistical in nature. Operators realize that wells will behave similar to the type curve but will have some spread around it, hence if you drill enough wells the EUR predicted by the type curve should be reasonably accurate for the total well count whereas each individual well my actually perform better or worse than the type curve. It is certainly more difficult to predict EUR given material balance calculations are not an option.

Bottom line:the production profile of future heritage shale wells won't look anything like that of the conventional heritage wells. Once the flush production from the Bakken and EFS has passed the U.S. will return to the down sloping curve we diverted from prior to the shale boom. That stat was anticipated by the oil patch when the shale play began. It was the ever increasing number of new shale wells being drilled that hid the trend we're seeing now.


Once the flush production is gone the shale wells for all intents and purposes should look very similar to stripper wells (low decline for long periods). If all of the shale wells in the US were in their exponential decline portion they would be producing anywhere from 10 - 50 bopd (on average). One way of looking at this would be if we were to assume the majority of the shale wells currently producing were in the hyperbolic decline phase then the 9 MMBO/d rate would sink to somewhere near 2 MMBO/d when they all reached the exponential decline phase ( a gross simplification given the wide range in behavior and the fact that some of the wells producing are already in the exponential phase). My guess is the number would be higher but it is still an interesting point that dropping that far would be the US production back to where it was in the 50's.

Mind you as the US production drops oil price will rise (it is US production that has been mostly responsible for world increase in supply) which will allow for the frack log to be brought on (some estimate 500 Kbopd capacity) followed by new drilling. This could cause issues for sometime until all of the shale basins have become quite mature in both intial drilling as well as any potential downspacing or re-fracking. As a consequence the prediction for future production is difficult to my mind.
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Re: US oil production watch thread

Unread postby ROCKMAN » Wed 23 Mar 2016, 13:07:23

Doc - I wasn't referring to folks like we have here that understand the dynamics. It was about the public at large that readily ought into the idea that we'll always have all the oil we need. And now it's an even sweeter deal now that prices have come down
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Re: US oil production watch thread

Unread postby rockdoc123 » Wed 23 Mar 2016, 13:13:44

Ah OK. No matter how you look at it the future is not bright if you look far enough out.
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Re: US oil production watch thread

Unread postby Tanada » Wed 23 Mar 2016, 14:22:22

rockdoc123 wrote:Ah OK. No matter how you look at it the future is not bright if you look far enough out.


All depends on how you make your living and your personal preference for what lifestyle your neighbors live. I am sure if you grew up Amish and think that is the best lifestyle ever developed then the idea of everyone being forced to give up high technology is not such a horrible thought.

On the other hand when your life depends on modern medication your opinion is likely to be shall we say, a bit different ROFL.

Like everything else in the wide wonderful world there will be winners and losers. The trick is arranging to be on the winning side :razz:
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Re: US oil production watch thread

Unread postby Outcast_Searcher » Thu 24 Mar 2016, 17:36:40

Tanada wrote:
rockdoc123 wrote:Ah OK. No matter how you look at it the future is not bright if you look far enough out.


All depends on how you make your living and your personal preference for what lifestyle your neighbors live. I am sure if you grew up Amish and think that is the best lifestyle ever developed then the idea of everyone being forced to give up high technology is not such a horrible thought.

On the other hand when your life depends on modern medication your opinion is likely to be shall we say, a bit different ROFL.

Like everything else in the wide wonderful world there will be winners and losers. The trick is arranging to be on the winning side :razz:

EXCELLENT point! OTOH, if I had control over my parents (and their genetics), barring random accident, I think life would be far easier and seem more rational, for older people with hard won experience. (i.e. consequences flow from the nature of our behavior, work ethic, planning, etc). OTOH, as you grow older and suddenly body part "X" suddenly fouls up without warning (and independent of your behavior), winners and losers suddenly seem a hell of a lot more random!

Of course if it weren't that way, the old AND rich would be forever in charge.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: US oil production watch thread

Unread postby ROCKMAN » Fri 25 Mar 2016, 08:58:49

We can pick out subsets of society and discuss their future energy predicaments (or lack there of). But if we look at society as a whole even some of the less affected will be still be impacted to some degree by the overall dynamics. The Amish won't starve for sure. But they do depend on society for a wee bit: they pay taxes for instances...taxes that will have to be increased to support those more impacted. And I
think they earn a bit of income from the "English" consumers which will disappear to some degree. And while the Rockman doesn't subscribe to the Mad Max future as some do there is that slight possibility the Amish haves would be targeted by the non-Amish have nots.
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Re: US oil production watch thread Pt. 2

Unread postby GoghGoner » Fri 08 Apr 2016, 08:34:35

Long term graph of rig counts. Rig counts were being reported on weekly basis by the finance media but have since falling out of flavor when they didn't see an immediate impact on production. By the same token, I probably should have stopped following them but, alas!, I am still smitten by them.


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Re: US oil production watch thread Pt. 2

Unread postby ROCKMAN » Sat 09 Apr 2016, 22:54:50

Of course the decline in rig count has an immediate effect of production. If the number of rigs decline the number of new wells decline. Few new wells = less new production. The problem is not appreciating the lag time especially between production and data reporting. My data base come a commercial copant that gets it directly from the Texas Rail Road Commission. And my latest data is last January. And it get worse: a rig that drilled a well that began producing last January might have been dropped last August or September when it finished drill that well. IOW it can take a number of months for a well to begin producing after the rig moves off.

What to know the effect on production as a result of rig decline laser week? No problem...check back with me next August or September. LOL.
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Re: US oil production watch thread Pt. 2

Unread postby GoghGoner » Tue 12 Apr 2016, 12:22:01

The STEO is hot off the press. Last December they were expecting production to start increasing by the end of 2016. Now they are saying 0.6 mbd decrease in 2017 from 2016 - wow, that tune has really changed.

U.S. crude oil production is projected to decrease from an average of 9.4 million b/d in 2015 to 8.6 million b/d in 2016 and to 8.0 million b/d in 2017. The forecast reflects a decline in Lower 48 onshore production driven by persistently low oil prices that is partially offset by growing production in the federal Gulf of Mexico.

EIA estimates total U.S. crude oil production has fallen by 0.7 million b/d since April 2015 to an average of 9.0 million b/d in March 2016. The entire production decline came from Lower 48 onshore.
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