Uncategorized – Page 140 – Peak Oil Barrel

Bakken Production Data for June + EIA Data

08/16/201408/17/2014 Ron Patterson 120 Comments

The Bakken and North Dakota production numbers are in for June. There was a big jump in oil production in June. The Bakken was up 53,162 barrels per day to 1,028,352 bpd. All North Dakota was up 52,148 bpd to 1,092,617 meaning the area outside the Bakken was down about 1,000 bpd.

From the Director’s Cut:

May Sweet Crude Price = $88.31/barrel
June Sweet Crude Price = $90.03/barrel
July Sweet Crude Price = $86.20/barrel
Today’s Sweet Crude Price = $79.50/barrel (all-time high was $136.29 7/3/2008)

The drilling rig count was up one from May to June, and up two more from June to July.
The number of well completions increased as weather impacts eased in June with
significant rainfall on 2 days near Minot and 1 day near Dickinson. However, there were
still 6 to 8 days with wind speeds in excess of 35 mph (too high for completion work).

At the end of June there were about 585 wells waiting on completion services, a decrease
of 25.

For the first time in a couple of years he did not give us the exact number of new well completions, only that they increased. Last month there were 227 well completions and production was up 37,000 bpd so we can assume there were aroun 235 to 240 new well completions in June.

Well completions should not be confused with “additional wells producing. That is and entirely different figure.

Additional wells producing is new wells completed, plus previously shut down wells brought back on, line minus wells shut down. Sometimes this number goes negative as it did in December of 2013. That month “Wells Producing” dropped by 52 even though there were 119 new wells completed. All data is barrels per day.

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Global and Russian Energy Outlook to 2040

08/14/201408/14/2014 Ron Patterson 78 Comments

Like BP, OPEC, the EIA and the IEA Russia also publishes an annual energy outlook. It is called the Global and Russian Energy Outlook to 2040. It is published by The Energy Research Institute of The Russian Academy of Sciences and The Analytical Center for The Government of The Russian Federation. I have no idea who these guys are but their titles sound impressive and they seem to be Russian think tanks funded by the Russian Government. But that is just an assumption of mine.

It is a very large 175 page PDF file that appears to be very scholarly and well researched. However they appear to be very optimistic in their prediction of the future oil supply out to 2040. In one scenario they are not optimistic at all for coal production however.

The report has three scenarios, the Baseline Scenario where business as usual continues until 2040. The New Producers Scenario where oil prices collapse due to overproduction and The Other Asia Scenario which is based on peak coal and the effect this will have on China and India. In that scenario they assume China coal production will peak within the next ten years. The Baseline Scenario assumes adequate supplies of coal will be available however. Only in the Other Asian Scenario do they figure in peak coal. All three scenarios assume plenty of oil will be available through 2040.

Obviously they don’t see any peak in oil production out to 2040, only growth. However they have coal and gas growing even more. And they seem to be very optimistic about “other” renewables. I don’t know exactly what that might be.

And here is their take with an oil price overlay. It appears they think, because production increases right along with demand, that the oil prices will remain flat.

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Enno Peters’ post + EIA DPR Report

08/12/201408/13/2014 Ron Patterson 105 Comments

The first half of this post is a guest post by Enno Peters. The second half is taken from the latest EIA Drilling Productivity Report.

GEOGRAPHICAL ANALYSIS OF WELL QUALITY IN NORTH DAKOTA

by Enno Peters

SUMMARY

I was interested in doing a geographical analysis of the oil production in North Dakota. Detailed information made freely available by the NDIC allowed me to analyze how, geographically, wellperformance has been changing over time, in the area of North Dakota where most oil is produced.

RESULTS

In the following animated gif, you will see part of North Dakota. It contains the North West corner that borders Montana and Canada. The scale is in miles, with a rather arbitrary origin. Projected on this map is a contour map. The numbers of these contours are the cumulative 1 year returns for wells drilled within that area, and the unit is 1000 barrels of oil (no gas). For example, contours with the value 50 mark the area in which wells produced at least 50 k barrels of oil in their first year.

I could calculate the surface areas of several levels of first year well returns, in order to determine the trend of these areas. In the following chart you can see for each year the (estimated) surface volumes for 3 levels of first year well returns, 50k, 80k, and 110 k barrels of oil.

The sudden increase in 2013 of estimated productive surface area, in which wells could produce at least 50 k barrels of oil in their first year, may be explained by

1) the fact that I could only use data until June 2013 (as the 2014 May data is currently the latest one available), and therefore the number of data points are 1/3 of what I have for 2012. The method to determine the contours may not be suitable with this number of data points.

2) changing well practices

3) entering of new formations

So far I suspect that it is mostly 1), but that 2) and 3) could also be part of the answer, and therefore recommend to mostly ignore the 2013 results for now.

As a guide to interpret these results, I estimate (based on a discounted cash flow analysis) that a well that returns 50 k barrels of oil needs a minimum WTI price of about $120; about $82 WTI is needed for 80 k wells or better, and a well that returns 110 k barrels of oil in its first year is about even with $64 WTI. These are rough indications; I have seen a good analysis that estimates 10% higher required WTI prices for these levels of well performance. With current prices that would mean that 50 k wells are not profitable, while 80+ k wells clearly are.

I further estimate that the estimated total oil return (EUR) of a well is just over 4 times its first year return.
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OPEC Annual Statistical Bulletin + MOMR

08/10/201408/10/2014 Ron Patterson 153 Comments

The August OPEC Monthly Oil Market Report is out with the OPEC production numbers for July 2014. There were no big surprises and only small revisions in the June data.

The OPEC 12 was up 166,000 barrels per day. The increase was due to some Libyan oil coming back on line.

Libyan crude only was up 206 kbd to 438 kbd. Libya was up and down all the month of July and is now down again. From the Wall Street Journal: Risks Remain to Libya’s Oil Supply Despite Reopening of Ports, Fields Behind a pay wall but accessible via Google.

Following an end to protests by a local ethnic group at the country’s largest oil field, called Sharara, Libya’s oil production surged to a five-month high in mid-July to about 600,000 barrels a day—one third of which came from Sharara…

A week after the fighting broke out Libya’s state-owned National Oil Co. acknowledged the country’s output had fallen back by around 100,000 barrels a day.
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The Imminent Peak in US Oil Production

08/08/201408/08/2014 Ron Patterson 204 Comments

This is a guest post by David Archibald

The Imminent Peak in US Oil Production

The seven years of production of tight oil in the US has produced enough data to
enable estimation of the amount of oil that will be recovered from these systems and
the timing of peak production. Based on data to May 2014, the four main tight oil
basins will produce a total of 7.7 billion barrels with a peak production rate of 3.9
million barrels per day in mid-2015. Following that peak, production is predicted to
decline as rapidly as it rose. That in turn is expected to cause a re-assessment of the
ability to produce sufficient transport fuels based on current policies.

The Bakken in North Dakota

Jean Laherrere has plotted monthly oil production from the Bakken Fm in North
Dakota using Hubbert linearization:

FIG. 1

Also called a logistic decline plot, Hubbert linearization plots annual production divided by cumulative production to that date on the y axis against cumulative production on the x axis. This is the method that M. King Hubbert famously used in 1956 to predict the peak of US oil production in 1970. He was also largely correct in predicting the rate of decline from that peak. This methodology is based on the theory of the rate of extraction from a finite resource originally developed by the early nineteenth-century Belgian mathematician Pierre Francois Verhulst (1804–1849). The fact that Bakken production from 2012 has plotted as a straight line on this graph reflects depletion of a resource close to 2,500 million barrels.

Nearly 90% of Bakken production in North Dakota comes from four counties:Williams, Dunn, Mountrail and McKenzie. Figure 2 shows the monthly production history of these counties from 2005:

FIG. 2
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