Dean has shared his estimates for Texas Oil and Natural Gas output. Texas (TX) C+C output was revised lower by -10, -17, -22, -18, and -52 kb/d for Nov 2015 through March 2016 respectively. Output in April 2016 increased by 27 kb/d from the revised March 2016 estimate to 3511 kb/d. The EIA estimate for March 2016 is 3276 kb/d, and Dean’s revised estimate is 3484 kb/d, 208 kb/d more than the EIA estimate.
As several commenters in the past have questioned Dean’s estimates (which I am convinced are robust, especially through March 2016), I asked Dean the following questions:
“At one point you thought there may have been a structural change in the data. Is that no longer the case? …. Are you seeing any issues that I … would have missed?”
“I just tested the correcting factors for stationarity with panel unit root tests and the null of a unit root is rejected for all tests considered.”
I did some research on stationarity and unit root tests and then asked:
“So the mean and variance of the correcting factors do not change with time or follow any trend?”
He said that was correct.
Essentially the statistics suggest that the mean and variance of the correction factors have remained stable over the past 24 months and over time they are likely to approach their “true” value. The Chart below shows how the TX C+C correction factors have changed from Sept 2014 to April 2016.
The chart below shows how the estimates of TX C+C have changed from May 2015 to April 2016. The dashed lines suggest the estimates with the minimum correction factors (Nov 2015) and the maximum correction factors (March 2016).
To find a range of estimates I used the November 2015 correction factors to find a “minimum” estimate and the March 2016 correction factors to find a “maximum” estimate. This is compared with Dean’s “Corrected” estimate which I have relabeled as “Dean”. Note that Dean’s estimate uses all the data we have to date from the RRC spanning Jan 2014 to April 2016 for oil and April 2014 to April 2016 for condensate.
There is no statistical rationale for throwing out the data from Dec 2015 to April 2016 (which we essentially do for the “minimum” estimate) or to throw out the April 2016 data (which would correspond with the “maximum estimate). The most recent estimate is the best guess (Dean on chart).
Average output from March 2015 (peak output) to April 2016 was 3482 kb/d, the slope of the linear trend (blue) is -71 kb/d in 12 months so the annual decline rate is 71/3482= 2% per year over that 14 month period. Over the previous 12 months output has increased slightly (slope of red trend line is 11 kb/d).
Oil output up by 17.5 kb/d, from the revised March 2016 output (27 kb/d less than last month’s estimate). Oil output 3056 kb/d in April 2016 and 3038 kb/d in March 2016.
Condensate output was 446 kb/d in March and 455 kb/d in April 2016. The March 2016 condensate estimate was revised down by 24 kb/d.
Dean’s estimate of Texas Natural Gas output is 24.3 BCF/d in March and 24.6 BCF/d in April 2016, the March estimate was revised lower by 0.4 BCF/d. The EIA estimate (Gross withdrawals) for March was 22.6 BCF/d, 1.7 BCF/d less than Dean’s estimate.
The Correction Factors for natural gas have been stable to decreasing for the past 18 months, chart below.