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The World’s Most Vulnerable Oil

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Is U.S. Shale Circling The Drain?

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Arthur Berman

Arthur Berman

Arthur E. Berman is a petroleum geologist with 36 years of oil and gas industry experience. He is an expert on U.S. shale plays and…

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Big Hit For U.S. Oil Production In January

U.S. crude oil production fell at least 135,000 barrels of oil per day in January 2015 compared to December 2014 according to the EIA (Figure 1).

USCrudeOilProduction

Figure 1. U.S. crude oil production. Source: EIA and Labyrinth Consulting Services, Inc.

(Click image to enlarge)

Related: Latest EIA Predictions Should Be Taken With More Than A Pinch Of Salt

Bakken Shale production fell the most of any play or jurisdiction losing 37,000 barrels per day in North Dakota and 4,000 barrels per day in Montana for a total of 41,000 barrels of oil per day (Figure 2). Production in California, the offshore Gulf of Mexico, Alaska and Wyoming also declined significantly.

ProductionChangesByJurisdiction

Figure 2. January 2015 production changes by jurisdiction. Source: EIA and Labyrinth Consulting Services, Inc.

(Click image to enlarge)

Figure 3 shows Bakken production based on DrillingInfo data. The 42,000 barrels of oil per day drop in January production is completely consistent with EIA data differing by only 1,000 barrels per day.

BakkenOilProduction

Figure 3. Bakken oil production. Source: DrillingInfo and Labyrinth Consulting Services, Inc.

(Click image to enlarge)

Related: Is This Where Investors Should Be Looking When Oil Recovers?

This is important because DrillingInfo data also shows significant decreases in the Eagle Ford and Permian basin plays in January 2015 of 36,000 and 33,000 barrels of oil per day, respectively (Figures 4 and 5). EIA shows that Texas production increased 3,000 barrels per day.

EagleFordOilProduction


Figure 4. Eagle Ford oil production. Source: DrillingInfo and Labyrinth Consulting Services, Inc.

(Click image to enlarge)

 PermianBasinProduction

Figure 5. Permian basin “shale” play oil production. This includes Bone Springs, Consolidated, Delaware, Spraberry, Wolfcamp,Trend Area and related combinations of those reservoirs. Source: DrillingInfo and Labyrinth Consulting Services, Inc.

(Click image to enlarge)

It is important to emphasize that all of the data presented here is early and subject to revision. In fact, my models do not predict production decreases in the tight oil plays in January based on declining rig counts. The explanation may be that the decreases are seasonal or, more likely, that operators are electing to postpone production because of low oil prices. Falling production shown by EIA in California and Wyoming could represent stripper wells that do not return operating costs at current oil prices. Related: Wall Street Bets On Oil Price Rally

If these declines prove to be valid, combined decreases from the Bakken, Eagle Ford and Permian plays amount to 111,000 barrels per day.

In any case, it is interesting that the EIA showcases all increases in U.S. oil and gas production but is silent about the production decreases that its own data shows.

By Art Berman of Oilprice.com

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Leave a comment
  • Lee James on April 24 2015 said:
    Interesting. I know I had a strong impression that U.S. oil production had not fallen in January of this year.
  • rjsigmund on April 24 2015 said:
    i agree with lee james....this is the weekly EIA data i've been watching:
    http://www.eia.gov/dnav/pet/pet_crd_crpdn_adc_mbbl_m.htm
    (up 15% YoY)
    can someone explain why it's so different than that cited above?
  • Ahmad on April 25 2015 said:
    There is no difference. The data you linked to shows the same decline from Dec 14 to Jan 15. The data in the link is monthly production so you need to divide by 30 to get the daily production rate. It is true that production has risen 15% YoY, however it declined between December and January.

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