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Ron Patterson

Ron Patterson

Ron Patterson is a retired computer engineer. He worked in Saudi Arabia for five years, two years at the Ghazlan Power Plant near Ras Tanura…

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Non-OPEC Production Peaks As U.S. Production Nears Bottom

Roughnecks at work

The Bakken and North Dakota production data is out.

(Click to enlarge)

Bakken production was up 6,540 barrels per day while all North Dakota production was up 5,383 bpd. This was not posted as a correction to last month’s data, though it looks like that is exactly what it is. Last month’s data was twice as much as it should have been so now it is correct. Notice the data from the Drilling Productivity Report. It appears to have June data exactly correct, or very nearly so. Of course that is all of the Bakken, including the Montana Bakken.

(Click to enlarge)

Bakken barrels per day per well held steady at 94 in May, while all North Dakota bpd per well fell by 1 to 81.

From the Director’s Cut

Oil Production

April 31,259,426 barrels = 1,041,981 barrels/day

May 32,468,271 barrels = 1,047,364 barrels/day (preliminary)(all-time high was Dec 2014 at 1,227,483 barrels/day)

994,727 barrels per day or 95 percent from Bakken and Three Forks

52,637 barrels per day or 5 percent from legacy conventional pools

Gas Production

April 48,503,062 MCF = 1,616,769 MCF/day

May 50,949,167 MCF = 1,643,522 MCF/day (preliminary)( all-time high was April 2016 at 1,710,823 MCFD)

Producing Wells

April 13,054

May 13,167 (preliminary)(all-time high was Oct 2015 13,190)

11,078 wells or 84 percent are now unconventional Bakken – Three forks wells

2,089 wells or 16 percent produce from legacy conventional pools

Permitting

April 66 drilling and 0 seismic
May 42 drilling and 0 seismic
June 65 drilling and 0 seismic (all time high was 370 in 10/2012)
ND Sweet Crude Price

April $30.75/barrel
May $33.74/barrel
June $38.75/barrel
Today $36.25/barrel (all-time high was $136.29 7/3/2008)

Rig Count

April 29
May 27
June 28

Today’s rig count is 29 (all-time high was 218 on 5/29/2012)

Comments:

The drilling rig count fell 2 from April to May, then increased by 1 from May to June, and increased 1 more from June to today. Operators remain committed to running the minimum number of rigs while oil prices remain below $60/barrel WTI. The number of well completions fell from 41 (final) in April to 37 (preliminary) in May. Oil price weakness is the primary reason for the slow-down and is now anticipated to last into at least the third quarter of this year and perhaps into the second quarter of 2017. There was 1 significant precipitation event, 14 days with wind speeds in excess of 35 mph (too high for completion work), and no days with temperatures below -10F.

Over 98 percent of drilling now targets the Bakken and Three Forks formations.

The number of estimated wells waiting on completion services is 931, up 39 from the end of April to the end of May.

The estimated inactive well count is 1,584, down 6 from the end of April to the end of May.

Crude oil take away capacity remains dependent on rail deliveries to coastal refineries to remain adequate.

Low oil price associated with lifting of sanctions on Iran and a weaker economy in China are expected to lead to continued low drilling rig count. Utilization rate for rigs capable of 20,000+ feet is 25-30 percent and for shallow well rigs (7,000 feet or less) 15-20 percent.

Drilling permit activity decreased from April to May and then increased sharply in June as operators began to position themselves for higher oil prices in 2017. Operators have a significant permit inventory should a return to the drilling price point occur in the next 12 months.

The EIA’s Short-Term Energy Outlook came out Tuesday. I have the most interesting charts from that publication below. All data below is through June, and projected data is through December 2017 and is in million barrels per day.

(Click to enlarge)

The EIA has Non-OPEC total liquids peaking, so far, in 2015. This should surprise no one.

(Click to enlarge)

The EIA’s projection of Russia is quite a shocker. They have Russia peaking in March 2016. Remember this is total liquids. The data from the Russian web site CDU TEK is crude + condensate.

(Click to enlarge)

They have OPEC total liquids up 520,000 barrels per day in June. The OPEC MOMR has OPEC crude up about half that amount. I think the EIA is a little overly optimistic concerning OPEC production.

Data in all charts below is crude + condensate.

(Click to enlarge)

The EIA has the U.S. decline pretty much halting in August at about 8.2 million barrels per day, down about 1.5 million barrels per day from the peak in April 2015.

(Click to enlarge)

The halt in the decline of U.S. production is due to the ever increasing production from the Gulf of Mexico. The spikes down in August, September and October of 2016 and 2017 are due to the expected hurricane season disruption. In this case I think they are too pessimistic. I think that it is unlikely that we will have much of a hurricane season this year. Next year?

(Click to enlarge)

Alaska maintenance season bottoms out in August. The Alaskan decline was halted in 2016 but the EIA expects it to continue next year. It looks like Alaska will never have a monthly average of half a million barrels per day again.

(Click to enlarge)

The EIA expects U.S. Lower 48 to bottom out early next year, at 5.8 to 5.9 million barrels per day, down about 1.85 million barrels per day from the peak in March 2015.

By Ron Patterson

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  • Amvet on July 25 2016 said:
    Small detail: Your production graph for all of ND and Bakken is mislabeled.

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