The EIA has published their Petroleum Supply Monthly with all US production numbers through December 2014. The chart below shows the largest changes in December and Yearly production. Almost every state had a production increase. The largest decliner was Wyoming, down 7,000 bpd. Below are the biggest gainers and the amount of their production increase in thousand barrels per day for December and the whole year.
The Gulf of Mexico was up 68,000 bpd in December but was down 56,000 bpd in November. The EIA had great hopes for the GOM expecting it to hit 2 million barrels per day in 2016. I don’t think that is going to happen. GOM production now stands at 1,441,000 bpd
Alaska’s decline seems to be slowing down slightly. They are now at 520,000 bpd.
The US oil production was up 187,000 barrels per day in December and 1,366,000 bpd for the year to 9,226,000 bpd. The consensus among many in the media is that US production will just keep on increasing.
Business Insider says Rig Counts Don’t Matter. They said, bold theirs:
“The rig count decline is still not sufficient, in our view, to achieve the slowdown in US production growth required to balance the oil market.”
And they posted the below chart to prove it. (The oval and circle inserts are mine.)
The rig count turned down two months ago but production has not started to drop yet. Therefore we can infer that rig counts don’t matter. But rig count started to rise in 2009 and it was late 2011, two years later before production started to rise by very much. Even then there continued to be over a one year lag time between increasing rig counts and increasing production.
The following is a guest post by Ovi Colavincenzo
Reverse Engineering the North Dakota Bakken Data: Part 2
In February 2014, Part 1 of this post was published. The purpose of the post was to assess whether it was possible reverse analyze the North Dakota Bakken data to estimate the newly added gross monthly production and associated decline. The objective being to provide further insight to what is happening in the ND Bakken.
In response to the post, D Coyne and Enno provided more information. Dennis familiarized me with the Arps hyperbolic decline function, which can be used to project a well’s future production. Enno shared his detailed Bakken well data with Dennis, who used it to derive a decline function for an average Bakken well. David Hughes provided his average Bakken decline curve. This update uses the Coyne/Enno decline function and the D. Hughes decline function to analyse the ND Bakken data.
Fred W and Enno have posted well data on POB and Fred’s is shown below. Note that it has a first month droop of close to 25% and as noted by Ron above, that result is due to all wells not coming online at the beginning of the month. The decline curve posted by David Hughes does not show a droop. The model has been updated to account for the first month production droop.
The original D. Hughes decline function was converted to a pseudo monthly decline curve by assuming that one well came online each day within a 30 day month. The first chart below shows the original curve and the resulting pseudo field curve. It has the first month droop and interestingly after about 6 months closely follows the original single well decline curve.
Note that the second month production is higher than shown by Fred W and the first month is about the same, i.e. ~300 b/d, but lower percentage wise relative to the peak.
Above is a comparison of the normalized Enno/Coyne decline curve with the pseudo Hughes field curve. They are reasonably similar except for the first month droop and a 5% difference in decline rate at 12 months, 60% vs 65%. In Ron’s post above, the first year decline rate in 2014 is shown as being 66%.
Both the Enno/Coyne and DH normalized decline curves were then used to estimate the incremental production required each month to match the ND published data. Due to the irregularity in the monthly data, the estimated new monthly supply rates and associated monthly declines shown match the three month production moving average. The results using the Hughes field curve are shown above and the Enno/Coyne results are shown below.
In both cases, the first month production in the ND Bakken peaked in the May to August 2014 timeframe and is in the 70 kb/d to 75 kb/d range. The December net decline rates are between 46 Kb/d for the Enno/Coyne decline curve and 53 kb/d for the Hughes curve.
The interesting thing to note in the above chart is that the 25% first month droop results in the second month production being 33% higher than the first month.
This has some interesting implications. For instance if no wells are brought online in January, the December wells would add 20.5 kb/d to the Bakken field offset by a legacy decline of 73.7 kb/d for a net decline of 53.2 kb/d, using the D Hughes field decline curve.
So the question is what does it take to offset the 53.2 kb/d decline. Using the first month field average production of 300 kb/d shown in the Fred W chart would require 177 wells to be brought on in January to the offset the decline. Using the Enno/Coyne decline curve, 155 wells are required.
These well numbers to offset decline are larger than the more typical quoted numbers in the 130 to 140 range. If Fred W’s first month production rate of 300 bbl/d is correct, then 130 new wells to offset decline implies a decline rate of 39,000 bbls/d, which seems low according to my model.
Looking at Ron’s well numbers for Sept to December below, Oct and Nov show that a high number of wells are required to offset the decline. However, Sept with only a few more wells than Oct brought on an additional 53,486 b/d. I think this shows the difficulty of coming up with a realistic estimate for the number of new wells required to offset the decline. The December numbers show a larger number of new wells and a lower change in production. This variability is why the above analysis uses a 3 month moving average for production.
I would appreciate seeing information confirming or rejecting the 70 kb/d to 75 kb/d first month production numbers estimated for May to August? More interestingly, did the ND Bakken sweet areas peak in August? If someone is interested in the details of the analysis, forward your request through Ron.
Note: If you would like to receive an email notice when I publish a new post, then email me at DarwinianOne@gmail.com