There's been a lot of speculation recently that lower oil prices should impact production. Potentially setting up the market for a rebound.
And statistics released this week now seem to confirm that trend -- in one of the largest producing regions in the U.S.
State regulator Railroad Commission of Texas just released data for production rates in January. Showing that output of both oil and gas took one of the most sizeable monthly declines in recent memory.
Oil output during January fell 11%, or 8.5 million barrels, as compared to the previous month. Related: US Oil Demand Is Alive And Well
Natural gas production was also down month-on-month -- falling 8%, or 43 billion cubic feet. And condensate production dropped 10%, or 1.2 million barrels.
As the chart below shows, this is a decided break lower for the production trend for Texas. Basically erasing all of the gains in production seen over the past year. Related: U.S. Oil Glut Story Grossly Exaggerated
Source: Railroad Commission of Texas
The scale of the monthly decline is notable -- being much deeper than during any of the previous months since oil began its decline last summer. Up until now, oil output had been largely holding steady. Related: Oil Prices To Fall Or Fly Depending On Iranian Nuclear Talks
But that's all changed. Potentially signaling that drilling activity may have pulled back to a point that can no longer make up for natural declines from existing wells. Indeed, the Railroad Commission reported that February saw just 1,521 new oil wells completed in Texas -- a 45% drop from the 2,768 oil wells drilled during February 2014.
If this trend does hold, it could be a signal that lower prices are finally having an impact on supply. Watch for stats from the Railroad Commission next month to see if the pattern continues.
Here's to making a dent,
More Top Reads From Oilprice.com:
- Saudi Influence On Oil Markets Slipping
- Low Oil Prices Not Enough To Kill Off Oil Sands, Yet
- Who Benefits Most From Cheap Oil?
"The Commission recognizes, however, that this preliminary snapshot of Texas monthly production underestimates the final and complete total. In subsequent months of producer filings, the Commission receives many corrected or delinquent production reports."
If you multiply preliminary January production by the RRC's production adjustment factor, production did not go down in January
What the State comes up with in "final estimates" is reflected in the report called RRC Production Statistics & Allowables for April 2015 compared to the same report for March 2015.
"The Commissions estimated final production for December is 83,718,353 barrels of crude oil and 553,215,585 Mcf (thousand cubic feet) of gas well gas." from the March report.
"The Commission's estimated final production for January 2015 is 81,015,390 barrels of crude oil and 528,271,896 Mcf (thousand cubic feet) of gas well gas." from the April report.
They keep these figures as production numbers unless they are overridden later as late well activity is posted. Usually, it stays fairly close.
The only one that is not close is the EIA. They consistently grossly overstate production for Texas, and appear not to have corrected their figures to actual in, at least, a year.
Taking the January production number of 81,015,390, and being conservative and using 9,000,000 in condensate, that gives 90,015,390. Subtracting that from the EIA number gives 17,274,610 in overstatement. Translating that into daily numbers that is 557,245 daily production overstatement. It is more than significant.
Also our infrastructure is failing and a blind eye is not a fix , I save as much as I can on American made , support local business as A US citizen . in trades and all home born goods . A person can't even buy a US made toothpick , I tried .