Peak Oil – Page 82 – Peak Oil Barrel

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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Global Financial System: On Life Support

08/05/201408/05/2014 Ron Patterson 171 Comments

Yesterday I watched a short web video that blew me away: Global Financial System: On Life Support. Then I watched it again, and again… It is only 12 minutes long. The crux of the presentation was not only that the global financial system is on life support but also that the financial system is dependent on energy flows into the economy and energy flows are dependent on a healthy financial system. That is they are co-dependent upon each other.

About two centuries ago, a new financial system was required:

To concentrate and direct the vast amounts of capital needed to exploit fossil fuel resources.

To fund the exponential growth that these energy resources facilitated.

The crux is a vast amount of capital is needed to fund the fossil fuel industry and…

Vast amounts of fossil fuels are needed to feed economic growth of the economy.

Economic growth is driven by cheap fossil fuel, primarily cheap crude oil. If the price gets too high the economy suffers. Less oil is consumed at this price so the price collapses. When the price collapses a production decline inevitably follows. And when the price rises again, a production increase will follow… if there is more oil to produce at that price.
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EIA Petroleum Supply Monthly

08/01/201408/03/2014 Ron Patterson 136 Comments

The EIA has released its Petroleum Supply Monthly with C+C production numbers through May 2014. Of all the EIA data releases this seems to be the most accurate. However in some cases it is only as good as a few EIA employees guesses. And the more state data they have to work with, the better their guess.

The data in this report goes back to 1920 for total US production and to 1981 for individual states and offshore production. However I have chosen to shorten the time frame for my charts in order to better show what has happened recently.

US production was down 36,000 bp/d in May to 8,357,000 barrels per day. US production took off in mid 2011 when Shale production took off and has risen some 3,300,000 since. Of course there was shale production prior to this but it was only keeping US production on a relatively flat plateau.

Everyone is interested in the Bakken so I have combined the two Bakken states. Of course there is production in these two states outside the Bakken but this is the best I could do. Note that when the Bakken has one bad month as they had in December, it takes several months to get back to their prior production level.

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World Crude Oil Exports

07/29/201407/29/2014 Ron Patterson 334 Comments

OPEC has released their Annual Statistial Bulletin 2014. Under the heading of “Oil and Gas Data” there are several tables you can download. I was excited to find one labeled “Table 3.21: World Exports of Crude Oil and Petroleum Products by Country”. It turned out to be useless however as it includes a lot of exports of imported products. And they have no table of “Net Imports”. However their their table labeled “Table 3.18: World Crude Oil Exports by Country” turned out to be very useful as it seems to measure the same thing as the EIA does in their International Energy Statistics, Crude Oil Exports which also includes lease condensate.

The OPEC export data goes back to 1960 but I have only plotted it from 1990. The EIA data only goes back to 1993. The OPEC data is through 2013 while the EIA data only goes through 2010 except for Canada, Mexico and Norway which goes through 2012. All data is in thousand barrels per day.

World crude oil exports peaked in 2007 and now stand 42,297,000 bp/d and in 2013 stood 2,467,000 bp/d below that point. World crude oil exports in 2013 were 2,467,000 barrels per day below peak and at the lowest point in 10 years.

OPEC exports peaked, so far, in 2012 at 25,068,000 barrels per day. Their exports fell by just over 1,000,000 barrels per day last year and I am betting they will fall further this year.

Non-OPEC exports have taken a hit in the last few years, peaking in 2004 and are down just under three million barrels per day since then.