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Leonard Brecken

Leonard Brecken

Leonard is a former portfolio manager and principal at Brecken Capital LLC, a hedge fund focused on domestic equities. You can reach Leonard on Twitter.

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EIA Data Still Doesn’t Add Up

EIA Data Still Doesn’t Add Up

As initially pointed out by Peakoilbarrel.com in a recent article, discrepancies between actual data for oil production in Texas vs. what the EIA claims are so stark it’s almost scary. How this can be overlooked by the mainstream media as well as by most of the broker community is even more alarming. Further, how the U.S. oil industry fails to catch it and question it given that their livelihood is tied to it is even scarier.

Using the data plotted on the Texas RRC website, combined with the knowledge that Bakken production has been flat to declining, makes us wonder how in the world the EIA can not only restate monthly production higher recently, starting in March, but expect over a 700,000 barrels per day (B/D) overall increase for 2015.

Using the IEA's own data off their website on page 7 of their June monthly report, in Texas they expect a 2015 increase of 400,000 B/D (3592 vs. 3164 in table below) alone. Historical data through May shows production essentially flat from March to May ( 3675 vs.3609) as well as in 1Q15 to 2Q15 (3614 vs. 3602). Related: Could Armenia Be The Next Ukraine?

TexasRRCFigures

(Click Image To Enlarge)

The EIA's data below shows a ramp of 200,000 per day from Dec to April with a slight decline latest month which is even worse.

EIA Texas Production (thousands of barrels per day)

14 Nov14 Dec15 Jan15 Feb15 Mar15 Apr
3,4263,5103,4633,6033,7753,711

EIATexasProduction

Comparing these figures with Texas RRC figures off their website, the differences are startling. First, the chart below clearly shows the trend through 4/1/15 as being flat to down, as production nosedived in April by nearly 15 percent, compared with the previous month, and 15 percent from end of 2014.

Yes, these numbers bounce around but, plotting the monthly data below, the trend is clearly down, not up. So the first question is: what prompted the EIA to boost expectations recently, starting in March, when the data is clearly flat in the largest region of EIA growth expectations?

Second, why, based on EIA’s own projections, should one expect production in 2015 to grow at all let alone by 400,000B/D in Texas? To me, it was an attempt to offset the positive price impacts of the recent large inventory draws. Honestly, I don’t know what else to conclude as the data does not warrant a ratcheting up of expectations for higher production. Larger E&P company managements who can have some sway better start initiating inquiries into all of this in my view. Especially if the EIA doesn’t revise its revisions, and soon. Related: How Greece Crisis Could Drag Oil Prices Down

TexasMonthlyOilProduction

Source: Texas RRC

Below is a chart provided by Peakoilbarrel.com on monthly oil production clearly showing declines in North Dakota (Bakken) too. Related: Nature Provides Novel Solution To Energy Storage Problem

AllNorthDakota

(Click Image To Enlarge)

Last, I should note the trends in natural gas production in Texas are similar. And with growth slowing in the Marcellus and Utica shales as demand increases, one could get quite optimistic about higher prices. This is especially true if the upcoming winter is colder than normal. Moreover, there could be strong demand pull. Utilities are increasingly switching over to natural gas for electricity generation – coal plant closures could reach a high watermark this year. And by the end of the year, the U.S. will start exporting natural gas, further depleting inventories, which have only recently moved back towards their five-year average from low points. This suggests natural gas prices could rise as well. 

TexasMonthlyWellHeadNGAS

Source: TX RRC

By Leonard Brecken of Oilprice.com

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  • rushabh shah on June 30 2015 said:
    We need the general media to get hold of this. If we get a good article out in the wall street journal for example then the information can spread and the market can correct itself much faster.
  • James Williams on June 30 2015 said:
    You should discount this article. It critical of the EIA (Energy Information Administration), but uses an estimate/forecast table from the IEA (International Energy Agency). It is Table 3a OIL SUPPLY IN OECD COUNTRIES on page 7 at https://www.iea.org/media/omrreports/tables/2015-06-11.pdf. Note the address is iea.org NOT eia.gov.

    The EIA monthly data just released today shows a decline in April production. See http://www.eia.gov/dnav/pet/pet_crd_crpdn_adc_mbblpd_m.htm. You will note that it has lower April production in both Texas and North Dakota. The total production increase is due to higher Federal offshore production in the Gulf of Mexico.

    Furthermore, the April Texas RRC data is likely to be more understated than the normal 19% as is common when producers are under financial stress and are later than normal in reporting.
  • Stavros Hadjiyiannis on June 30 2015 said:
    The reason is that the US Deep State has decided that the unprofitable shale production must be stopped somehow, and also that the Russian economy must be hurt at all costs.
  • lenb on June 30 2015 said:
    You are correct the data is IEAs but the EIAs as per the commentary actually shows a ramp of 200,000 barrels since Dec while the Texas RRC does not at all infact its down vs that same time period....will correct. That is the point.
  • JP Gabriel on July 01 2015 said:
    Oil shipments by train are down 7% through March 2015, 26 million barrels. In March shipments are down 120,000 barrels per day. Canadian exports by train fell 25% March yoy down to 120,000 barrels per day. Kind of confirms your hypothesis. However, EIA points to 2008 when reduction in rigs did also not translate to lower production.
  • Mikhael on July 02 2015 said:
    It's oil from Saudi Arabia. Over quota :)
  • James Williams on July 02 2015 said:
    lenb It is important to realize the TX RRC data initially reported are always on the low side and even more when operators are suffering from low prices and delay reporting. They use an adjustment factor and continually revise the data for months. I have used their data since the 1980s as well as that of the TX Comptroller. All of the current data from all sources including EIA, IEA, various state reporting agencies are estimates. We won't know who's right or wrong for at least six months. If I had to bet against any organization IEA would be at the top of the list.

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