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Texas Weathers The Oil Slump Better Than Expected

Texas Weathers The Oil Slump Better Than Expected

The Texas RRC Data is out. All RRC data below is through May. The EIA data is through April.

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There appears to be an increase in Texas May crude oil production. You will notice that the EIA has departed from their usual practice of just estimating Texas C+C production up about 50,000 bpd for every month for the last six months or so. They have a new method of estimating Texas production which is explained in the first link below the charts.

That new method has Texas C+C production down 64,000 barrels per day in April. The May Texas production data will be out on July 31, in the Petroleum Supply Monthly.

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Dr. Dean Fantazzini has calculated what the data wil eventually look like and given us the 95% confidence bounds. He has Texas C+C basically flat since December.

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Texas crude only appears to have had a very good gain in May. Related: Good News For Coal Exporters From The Unlikeliest Of Sources

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Dr. Fantazzini has Texas crude only showing only a very tiny gain since December.

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Texas Condensate was up slightly in May but not nearly as much as crude.

Dr. Fantazzini has Texas condensate flat to slightly down since December. Related: Will Morocco Finally Realize Its Shale Dream?

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Texas total gas was also up in May over the last few months.

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Dr. Fantazzini has Texas total gas making a new high in May but only slightly higher than the December peak.

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Texas gas well gas was up in May but it still appears to be below the level reached in December.

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The biggest gain of all appears to be in associated gas, or what the RRC refers to as casinghead gas. Related: Iran-Pakistan Pipeline Receives Boost from Nuclear Deal

The following three charts are also from Dr. Dean Fantazzini. I don’t quite understand them but his definition is below.

I also attached a plot about the dynamics for the oil (only) correcting factors. As you see, in the last two months, the factors for the closest months T and T-1 have jumped a little: my impression is that in the last two months the RRC is trying to increase the amount of oil data processed. Interestingly, this is not happening for condensate and natural gas, instead.

Below is part of the explanation of how the EIA is now calculating Texas Crude plus Condensate production, hoping to get better accuracy than in the past. If this really interest you then you should click on the link and read the whole article.

How much oil does Texas really produce? The EIA now says it has a better way to count

HOUSTON — The U.S. Energy Information Administration is trying to make its oil production estimates faster and more accurate. That will mean going around Texas’ top industry regulator and straight to the producers to get the numbers.

Recent price swings in crude oil markets have necessitated the shift, said Gary Long, an EIA petroleum engineer, as production has swung faster during the downturn than it did at any point during the long buildup of the shale oil boom.

“We were basically just using a ruler and adding 50,000 (barrels) a day, and that worked pretty well for a while,” he said. “But after the downtown and the talk of the (production) rollover… we thought ‘Our methodology isn’t going to see that.’”…

Accordingly, the EIA has been experimenting with going straight to producers to get its production data. The process would resemble how the group arrives at its natural gas data, Long said.

The top 80 percent or so of producers by the amount of crude they pump would report to the EIA how much they produced across the state. That data would then form the backbone of a production estimate by the EIA, whose analysts would estimate the rest.

“We actually started surveying operators or producers,” Long said, saying that the next monthly estimate may be made using the new methodology if all goes well. “That data has started coming in. We’re looking at it, we’re evaluating it.”

Conclusions

If the slump continues over the next few days, it could be a sign that shale producers are deferring putting more wells into production to save cash and wait for better prices.

But the slump did not continue. July 22, there were 28 “Producing Wells Completed” and 9 “Confidential Wells Plugged or Producing”. That brings total wells brought on line in July to 62 putting us on track for a total of 87 wells for July. That is still way below the number required to keep production flat.

By Ron Patterson

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Leave a comment
  • K Yamaguchi on July 24 2015 said:
    Ron,

    Bottom line, if Dr. Fantazzini's "corrected" numbers are correct, does this mean EIA on July 31 will be adjusting Texas crude production downward from prior estimates, and as a result adjust downward total U.S. production?

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