U.S. Oil Production Fell 135,000 Barrels Per Day in January

Posted in The Petroleum Truth Report on April 23, 2015

U.S. crude oil production fell at least 135,000 barrels of oil per day in January 2015 compared to December 2014 according to the EIA (Figure 1).

U.S. Crude Oil Production Jan 2015 Decreases 22 April 2015
Figure 1. U.S. crude oil production. Source: EIA and Labyrinth Consulting Services, Inc.
(Click image to enlarge)

Bakken Shale production fell the most of any play or jurisdiction losing 37,000 barrels per day in North Dakota and 4,000 barrels per day in Montana for a total of 41,000 barrels of oil per day (Figure 2). Production in California, the offshore Gulf of Mexico, Alaska and Wyoming also declined significantly.

Jan 2015 US Prod Changes by Jurisdiction
Figure 2. January 2015 production changes by jurisdiction. Source:  EIA and Labyrinth Consulting Services, Inc.
(Click image to enlarge)

Figure 3 shows Bakken production based on DrillingInfo data. The 42,000 barrels of oil per day drop in January production is completely consistent with EIA data differing by only 1,000 barrels per day.

Bakken Prod 11 AP 2015
Figure 3. Bakken oil production. Source:  DrillingInfo and Labyrinth Consulting Services, Inc.
(Click image to enlarge)

This is important because DrillingInfo data also shows significant decreases in the Eagle Ford and Permian basin plays in January 2015 of 36,000 and 33,000 barrels of oil per day, respectively (Figures 4 and 5). EIA shows that Texas production increased 3,000 barrels per day.

EAGLE FORD PROD HRZ 11 APRIL 2015
Figure 4. Eagle Ford oil production. Source: DrillingInfo and Labyrinth Consulting Services, Inc.
(Click image to enlarge)

PERMIAN SHALE HRZ ALL 14 APRIL 2015
Figure 5. Permian basin “shale” play oil production. This includes Bone Springs, Consolidated, Delaware, Spraberry, Wolfcamp,Trend Area and related combinations of those reservoirs. Source: DrillingInfo and Labyrinth Consulting Services, Inc.
(Click image to enlarge)

It is important to emphasize that all of the data presented here is early and subject to revision. In fact, my models do not predict production decreases in the tight oil plays in January based on declining rig counts.   The explanation may  be that the decreases are seasonal or, more likely, that operators are electing to postpone production because of low oil prices. Falling production shown by EIA in California and Wyoming could represent stripper wells that do not return operating costs at current oil prices.

If these declines prove to be valid, combined decreases from the Bakken, Eagle Ford and Permian plays amount to 111,000 barrels per day.

In any case, it is interesting that the EIA showcases all increases in U.S. oil and gas production but is silent about the production decreases that its own data shows.


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16 comments on this entry


  1. Do you know anything about how DrillingInfo gets its production numbers for Texas? Texas releases preliminary production data, then gradually revises it upward over many months.

    Are these DrillingInfo numbers for January (and other recent months) based directly off what Texas is reporting? Or are they revised somehow, to try to account for future revisions to the data that will likely take place? EIA appears to estimate such future revisions when reporting Texas data.


  2. Mason,

    As far as I know, DrillingInfo, IHS and other subscription-based production data providers get their data from the various state regulatory agencies, for Texas, the TX RRC. I believe that they look into the TX RRC “pending files” in addition to the routine production data.

    When I consider recent months production data from DI, I look carefully at the number of producing wells that correspond to the monthly production volume. If the number of wells is much lower than the previous month, I disregard that month. In the case of the three charts that I show in this post, the data passed that test. I have no doubt that it will be revised as TX RRC data is revised.

    All the best,

    Art


  3. Ah, OK—good to know. Thanks!


  4. Your article inspired me to research the monthly numbers on Kansas.

    December 2014 Oil Production was 4,205,302 BBL (from 11820 Leases)
    January 2015 Oil Production was 4,167,306 BBL (from 11724 leases)
    So, Kansas was down 38k bbls, or 1200 bbs per day.
    This is sales data from the State.


  5. Sean,

    Thanks for the data point. EIA shows that Kansas production in January was the same as in December. That’s why I said at least 135,000 barrels less production. Once you start adding in 1,200 bopd from Kansas and similar amounts from other states, and try to understand why Drilling Info suggests another ~75,000 bopd decrease from the Eagle Ford and Permian, January production could easily be down 200,000 bopd from December.

    Art


  6. Hi Art,

    Energy Transfer Partners recently announced plans to build a 42 inch high pressure natural gas pipeline from the WAHA hub near Coyanos, Tx to Ojinaga, Mexico a distance of about 143 miles. The pipeline will link up to Mexico’s pipeline network to replace Mexico’s coal fired power generation plants with natural gas. The 1400+psi pipeline will export about 1.5 billion cfg/day to Mexico.

    Here is a link to the article printed in the Midland Reporter Telegram on Aprril 12th. If ETP keeps to its schedule, the pipeline will be operational by 2017.

    Do you have any thoughts on this. Mycontact in the gas marketing business tell me it will have no effect on gas supplies because our pipeline infrastructure is extremely efficient and that BTUs are BTUs so gas supplies will follow the highest price. Without his saying so, I inferred his comments to mean that ETP will have no trouble filling this pipeline even if the gas is sourced from the Marcellus or Utica.

    Then, there are the issues of exporting this much gas and using eminent domain to condemn easements for a foreign market. It is a very interesting situation so I hope you will share your thoughts.

    If this is too far off topic, I apologize and just ignore me.

    John

    :


  7. John,

    I suggest you read the following blog posts from December 2014: Why The Debate Over The Fracking Fallacy Is A Big Deal and David Hughes Weighs In on The Fracking Fallacy Debate.

    The Bureau of Economic Geology (UT Austin) and David Hughes’ Drilling Deeper in-depth research projects indicate that U.S. natural gas supply will peak before 2025. By 2020, the U.S. will be dedicating almost 20 bcf/day to Mexico pipeline exports for pipelines already built, LNG and coal-fired electric power plant retirements. That’s 27% of present marketed gas production.

    The delusion that the U.S. has unlimited gas cannot be supported by any credible study. All shale gas plays except the Marcellus are in decline and most estimates suggest Marcellus will peak near 2020–what is the next source of gas? Higher prices will stimulate production of marginal gas that is not commercial at $6/mmBtu but I believe that is somewhat limited.

    I am not opposed to natural gas export but the public does not understand that there are consequences. I predict that the U.S. will become a significant LNG importer by 2030. I thought that the EIA would take “The Fracking Fallacy” debate seriously and incorporate the BEG/Drilling Deeper studies into consideration but the AEO (Annual Energy Outlook) 2015 is even more optimistic about gas supply than AEO 2014.

    Art


  8. Art, interesting as always, and good to highlight that the EIA issues different data, depending on which part of their webpages you visit. For example, this shows a peak in production in December as you have shown.

    http://www.eia.gov/dnav/pet/pet_crd_crpdn_adc_mbbl_m.htm

    Whereas this shows a peak on March 20th

    http://www.eia.gov/dnav/pet/pet_sum_sndw_dcus_nus_w.htm

    Re the comment that you do not model a reduction in January based on rig counts, the issue may be the number of completions rather than the number of rigs. When I modelled Bakken production based on the reduction in the number of completions it came out very close to the production number. I think that completions fell faster than the rig count, at least in January.

    Further to the theme of your blog post, I love it that the mainstream press are willing to point out that drilled but uncompleted wells (DUC’s), were they to be completed say in August, would raise production by 320,000 bopd eg.

    https://www.oilandgaseurasia.com/en/news/cera-2015-drilleduncompleted-wells-may-affect-oil-price-volatility-ceo

    but they are unwilling to concede that NOT completing those wells now has not reduced production by the same 320,000 bopd.


  9. Update.

    This is a better source for the idea that completing DUC’s in the future will quickly add 500 000 bopd but there is no recognition that their remaining uncompleted now is not reducing production by a similar number

    http://www.bloomberg.com/news/articles/2015-04-24/oil-at-65-seen-freeing-half-million-barrels-from-shale-fracklog


  10. Keith,

    We do not know that DUCs (drilled uncompleted wells) are a meaningful factor because production data is lagged at least 3 months by the state regulatory agencies. A recent report by Bernstein Research said that the level of DUCs is not much greater than normal and that it is a red herring issue.

    During the 2008-2009 rig count decline, there was a lot of speculation that DUCs would flood the market with gas when prices rebounded. There were estimates then of 10,000 DUCs. That never happened. It may have been because shale gas was a relatively small percentage of total gas production (see my post ExxonMobil CEO Wrong About “Resilience” of Tight Oil Production) and with oil it will be different. The truth is that we just don’t know and journalists will write about whatever sells stories.

    All the best,

    Art


  11. Update 2.

    And here is the article that was quoting 320 000 bopd in future production from the completion of part of the fracklog

    http://www.rigzone.com/news/oil_gas/a/138258/US_Shale_Fracklog_Triples_As_Drillers_Keep_Oil_From_Market


  12. Hi Art, the recently published “Weekly Preliminary Crude Imports by Top 10 Countries of Origin” by EIA, show that there has been a big increase in Saudi oil imports (and to a lesser degree, Canadian and Mexican):

    http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=w_epc0_im0_nus-nsa_mbbld&f=4

    http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=w_epc0_im0_nus-nca_mbbld&f=4

    http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=w_epc0_im0_nus-nmx_mbbld&f=4

    This evidence explains why crude stocks keep on increasing. The key question now, is why Saudi oil imports have increased so much: do you have any idea?

    Thanks.


  13. […] Eagle Ford, Bakken and Permian basin plays declined approximately 111,000 barrels of oil per day in January. These declines are part of a systematic decrease in the number of new producing wells added […]


  14. […] Eagle Ford, Bakken and Permian basin plays declined approximately 111,000 barrels of oil per day in January. These declines are part of a systematic decrease in the number of new producing wells added since […]


  15. […] Eagle Ford, Bakken and Permian basin plays declined approximately 111,000 barrels of oil per day in January. These declines are part of a systematic decrease in the number of new producing wells added since […]


  16. […] Eagle Ford, Bakken and Permian basin plays declined approximately 111,000 barrels of oil per day in January. These declines are part of a systematic decrease in the number of new producing wells added since […]