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Page added on August 23, 2016
U.S. Production by Basin
Permian, Marcellus Lead U.S., while Eagle Ford Dives Hard
As cost structures are held in check and oil price fluctuations are seemingly without end, producers are evaluating acreage positions and determining what are the best assets.
As covered by Oil & Gas 360®, the Permian basin has been the hot bed of activity recently. With IRRs and breakeven costs in the Permian being some of the best in the industry, companies are snapping up acreage in the play at a rapid rate.
Another visible data point is the level of total production in the U.S.
Industry followers for the past almost two years have been focused on weekly storage reports, levels of production, and the level of refinery storage.
The EIA compiles oil and gas production numbers by basin, and the chart below shows data from the seven most prolific basins in the U.S. With the exception of the Haynesville, production remained largely flat until 2011 to 2012.
The two basins with the largest growth over the last few years have been the Marcellus and the Eagle Ford. Since July 2009, production has grown in the Marcellus by 1053% from 261.5 MBoe/d to 3,020.1 Mboe/d in July 2016. In the Eagle Ford, production has increased 593% over the same time period, rising from 309.6 MBoe/d to 2,144 MBoe/d.
But production in the Eagle Ford has fallen dramatically in the last year, 23% since last July. The Marcellus and the Permian have held strong over the last year, with slight production increases despite the depletion of oil prices.
The Permian Basin was responsible for the largest chunk of U.S. production before the shale boom brought several other basins to the forefront.
The Marcellus and the Permian are currently the two largest basins by production, with the Permian edging out the Marcellus by a hair. One of the reasons both basins are continuing to produce at high levels is the favorable well economics in the basin.
According to KLR Group, breakeven prices are lower in the Permian and Marcellus than in other plays. “Predicated on company capital performance, the breakeven cost of U.S. oil supply is bracketed by the Midland Basin Wolfcamp/Lower Spraberry (~$48) and Williston Basin Bakken/TFS (~$64). The breakeven cost of U.S. natural gas supply is bracketed by the southwest Marcellus (~$3.15) and Fayetteville (~$3.75),” KLR said in a note today.
In a period of capital constraints, it would make sense to allocate resources to the areas generating the highest return, in this case the Permian Basin and the Marcellus.
Bust follows Boom
In the basins with less favorable economics, the downturn has taken its toll on employment. According to Manufacturers News Inc., manufacturing jobs have been declining in North Dakota. “The oil and gas extraction sector has led North Dakota’s post-recession job gains, with jobs skyrocketing 250% between 2010 and 2014, but the industry’s employment declined for the first time in a near decade, falling 23% over the past twelve months. The oil/gas extraction sector ranks second in North Dakota for industrial employment, employing 6,952.”
The boom in jobs would correlate closely with the increase in production coming from the Bakken. As the oil price has depleted, so too has the production level. Production levels in the Bakken have decreased by 16.6%, tracked by the 23% decrease in state manufacturing employment.
Oil and Gas Projections
The recent declines in oil and gas in some basins can be largely attributed to the decline in commodity prices. As prices begin to rise again, where will the upswing in production come from? EIA believes that the increase will likely come from tight oil plays.
The EIA said, “Production from tight oil in 2015 was 4.89 million barrels per day, or 52% of total U.S. crude oil production. From 2015 to 2017, tight oil production is projected to decrease by 700,000 barrels per day in the Reference case, mainly attributed to low oil prices and the resulting cuts in investment. However, production declines will continue to be mitigated by reductions in cost and improvements in drilling techniques. The use of more efficient hydraulic fracturing techniques and the application of multiwell-pad drilling, as well as changes in well completion designs, will allow producers to recover greater volumes from a single well.”
Bakken returns to the throne by 2019: EIA
“As oil prices recover, oil production from tight formations is expected to increase,” the agency reported. “By 2019, Bakken oil production is projected to reach 1.3 million b/d, surpassing the Eagle Ford to become the largest tight oil-producing formation in the United States. The Bakken, which spans 37,000 square miles in North Dakota and Montana, has a technically recoverable resource of 23 billion barrels of tight oil that can be produced based on current technology, industry practice, and geologic knowledge. Bakken production is projected to reach 2.3 million barrels per day by 2040, almost a third of the projected U.S. total tight oil production.”
The increase coming from tight oil plays highlights the influence of hydraulic fracturing and technological improvements. The initial learning curve for hydraulic fracturing seems to be surmounted and the innovations coming from the oil field are rapidly improving.
The fair assumption is that innovation will continue to improve the drilling efforts in the U.S. and continued reductions in drilling and completion days combined with technology enhancements will lead to better well economics in the tight oil plays.
In his recent conference presentation about the Bakken and the evolution of completion technologies in the Williston basin, Mark Williams, EVP drilling and development for Whiting Petroleum—2014’s largest Bakken producer, said, “The advance of technology is what this is really all about. If you had told me ten years ago that we’d be drilling 7,000 foot deep wells with 7,500 foot long laterals in four days, I wouldn’t have believed it.”
82 Comments on "U.S. Production by Basin"
Cloggie on Tue, 23rd Aug 2016 6:07 am
RIP ASPO-2000
shortonoil on Tue, 23rd Aug 2016 7:05 am
The only thing that this is showing is that the Bakken and Eagle Ford were the first to go into rapid decline. Out side of that, it doesn’t show much because it doesn’t even include the units used on the graphs. We can assume that they are boe; meaning they are comparing apples and oranges. A boe of gas delivers 15% less energy to the economy than a boe of crude. The lighter fractions produce a greater percentage of waste heat from their gross exergy content.
All and all this does not appear to be good news for the Shale industry. Then we get the Fairy Tale line “As oil prices recover, oil production from tight formations is expected to increase,” the agency reported.” The world has been waiting for almost three years for this magical price recovery to appear. Do they eventually admit that there is not going to be price a recovery, or do they die of old age first?
http://www.thehillsgroup.org/depletion2_022.htm
Cloggie on Tue, 23rd Aug 2016 7:28 am
What do you mean “no units”, shortonsight? The real-tell-it-all graph, the one at the bottom, clearly says no peak-shale before 2040, with a staggering 7 mbd, more than enough to keep the US fuzzy and warm on Italy-1990 levels and install a windturbine or two.
Thank God, we still have the Lousiana floods for the collapseniks to cling to the last straw… and keep the Trump campaign going.
marmico on Tue, 23rd Aug 2016 7:39 am
Imagine $407/barrel.
It is a point that the laws of physics tells us we can not exceed.
http://www.theoildrum.com/node/8625#comment-853935
So in 2011 the laws of physics says that $407/barrel can not be crossed. But in 2014 the laws of physics says that $12/barrel in 2020 can not be crossed.
You are a fuctard.
Cloggie on Tue, 23rd Aug 2016 7:40 am
“All and all this does not appear to be good news for the Shale industry. Then we get the Fairy Tale line “As oil prices recover, oil production from tight formations is expected to increase,” the agency reported.” The world has been waiting for almost three years for this magical price recovery to appear. Do they eventually admit that there is not going to be price a recovery, or do they die of old age first?”
Who cares about the shale industry other than rockman? The shale industry will suffer in the short term but will rise from the dead on the very moment that global conventional oil will begin to severely decline, pushing prices upward, making tight oil competative.
Global peak oil 2030 is far more realistic than 2016 and I wouldn’t be surprised if by 2030 peak oil will be as irrelevant as ASPO-2000 peak conventional oil 2007 was., because they meanwhile mastered picking methane ice up with robots or burning of sub-sea coal sub-sea.
The real interesting question is which event occurs first:
1. peakoil.com namechange
2. thehillsgroup being sued for selling hot air
observerbrb on Tue, 23rd Aug 2016 7:59 am
Oil creates its own demand (it has to pay for its extraction/processing/refining/distribution and also be able to deliver energy to the end-consumer) and moves the economy. If you cannot grasp this concept, there is no reason to discuss your point, Mr. CLoggie.
What could happen if the oil production were to slump to 50 mbd tomorrow? Do you think that the world will be wealthier or poorer?
marmico on Tue, 23rd Aug 2016 8:15 am
EROI is intellectual masturbation for academic ecologists. The price signal works just fine.
2016 well to tank EROI is higher than in 1960. And 150% more work is performed in 2016 per btu of oil.
Cloggie on Tue, 23rd Aug 2016 8:25 am
“Oil creates its own demand (it has to pay for its extraction/processing/refining/distribution and also be able to deliver energy to the end-consumer) and moves the economy”
That’s an open door, short, um, I mean observerbrb.
Your point related to the points I made?
observerbrb on Tue, 23rd Aug 2016 8:26 am
I think it’s common sense. If you use more energy to power the energy industry, you will have less energy available for the rest of the economy.
… Unless you can offset the decline adding new sources and energy inputs, that are net-energy positive, to the economy.
observerbrb on Tue, 23rd Aug 2016 8:32 am
Cloggie said:
“The shale industry will suffer in the short term but will rise from the dead on the very moment that global conventional oil will begin to severely decline, pushing prices upward, making tight oil competative.”
Why do you think that oil prices are going to go up after that scenario? Are you saying that we will be wealthier and we will create enough aggregate demand to push prices up? Where is that demand going to come from?
I don’t know if you are following my reasoning. If the answer is yes, you will see how I am replying your points.
Sissyfuss on Tue, 23rd Aug 2016 8:45 am
Obs, Cloggectomy don’t do common sense. Else he might mention the Ponzi enabling tight oil in the first place or that climate disruption is half the equation
of any discussion on energys’ future. But his mind is too enraptured with visions of Scandinavia becoming the new Fertile Crescent.
Boat on Tue, 23rd Aug 2016 9:18 am
Clog,
You and others are obsessed with lack of demand. Other than a couple years right after the crash demand looks OK too me. 22 million and growing vehicles of new growth every year.
Boat on Tue, 23rd Aug 2016 9:39 am
ERIO so called experts can’t agree what the inputs should be. Equipment for the rig fine but do you count the cost of the home office etc.
GregT on Tue, 23rd Aug 2016 9:52 am
Boat,
You continue to display a complete lack of understanding of the exponential function.
This excellent, although admittedly somewhat boring lecture by Al Bartlett is easy enough for most 10 year olds to understand. If you are unable to grasp such a simple concept, there is little point in continuing to post your constant nonsense here.
And yes, EROEI must take into consideration all inputs, or it is not a true indicator of reality.
GregT on Tue, 23rd Aug 2016 10:00 am
Sorry, link here:
https://www.youtube.com/watch?v=DZCm2QQZVYk
onlooker on Tue, 23rd Aug 2016 10:13 am
“And yes, EROEI must take into consideration all inputs, or it is not a true indicator of reality.” Not sure why it is difficult to understand this unless of course your boat
GregT on Tue, 23rd Aug 2016 10:17 am
“ERIO so called experts can’t agree what the inputs should be.”
The same so called ‘experts’ can’t figure out why the world’s economies still cannot recover from the global financial crisis, never mind what’s causing it.
onlooker on Tue, 23rd Aug 2016 10:20 am
Haha, they haven’t figured out this
“Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.”
peakyeast on Tue, 23rd Aug 2016 10:34 am
Me personally.. I only take credence in EROEI.
Since the economics of today is obviously rigged and manipulated and doesnt represent the real values.
But EROEI is difficult to ascertain precisely – nevertheless that is the one that is the hard limit. If we dont want to put effort into defining it precisely we get what we have: A big blur.
onlooker on Tue, 23rd Aug 2016 10:39 am
Get your point Peak. It really is about actual resources and physical processes rather than finance which tends to confuse everything
rockman on Tue, 23rd Aug 2016 10:47 am
“Who cares about the shale industry other than rockman?” Apparently another newbie that hasn’t been around long enough that doesn’t know when they ared talking thru their ass. LOL. Not only has the Rockman NOT been a shale player nothing would have made this conventional oil player happier then if the shale play had never developed.
“…EROEI must take into consideration all inputs, or it is not a true indicator of reality.” Reality? Like the reality that investments in fossil fuel development has never and will never consider EROEI to be a direct factor in the decision making?
Boat on Tue, 23rd Aug 2016 10:59 am
I have seen ERIO’s of solar from below 1 to 70. I have read ERIO of hydraulic dams from 50 to 450. I have read discussions by “educated annalists” concluding there is no definitive limit to inputs. Once greggiet publishes his book of definitions then the world will finally know how to measure shyt.
Boat on Tue, 23rd Aug 2016 10:59 am
I have seen ERIO’s of solar from below 1 to 70. I have read ERIO of hydraulic dams from 50 to 450. I have read discussions by “educated annalists” concluding there is no definitive limit to inputs. Once greggiet publishes his book of definitions then the world will finally know how to measure shyt.
ghung on Tue, 23rd Aug 2016 10:59 am
peakyeastsaid; “…If we don’t want to put effort into defining it precisely we get what we have: A big blur.”
It’s pretty simple unless one wants to get obtuse about it.
If your primary source of calories is rabbit, and you’ve caught so many rabbits to where it takes more energy to catch a rabbit than you get from eating that rabbit, eventually you’ll starve.
Of course, we can apply all sorts of value judgements as to why we still catch rabbits. We like rabbit! There’s no substitute for rabbit. We’ve always eaten rabbit. We built our society on rabbit…..
Bottom line: If it takes more calories to catch a rabbit than you get from eating that rabbit, you’ll eventually starve. You can refine the process of catching that rabbit; technology (traps) and all that, but the embedded energy in any process that improves your rabbit-recovery-rate has to be included in the energy/rabbit ratio. You can substitute other sources of (lower quality) calories to offset the declining net-energy/rabbit ratio, but all of those inputs/outputs have to be accounted for. Doing these things also depletes the rabbit population quicker….
…..and oil doesn’t breed like rabbits.
JuanP on Tue, 23rd Aug 2016 11:00 am
The author of this article is an extremely ignorant fucktard. To begin with, the first graph doesn’t even specify what type of units it is using.
But, the really horrible mistakes are in the text. This whole shit displays huge ignorance “The two basins with the largest growth over the last few years have been the Marcellus and the Eagle Ford. Since July 2009, production has grown in the Marcellus by 1053% from 261.5 MBoe/d to 3,020.1 Mboe/d in July 2016. In the Eagle Ford, production has increased 593% over the same time period, rising from 309.6 MBoe/d to 2,144 MBoe/d.”. With all those hundreds and thousands of Mboe/d the world must have an incredible GLUT of oil, gas, and whatnot production.
Can anyone else spot the mistakes or am I the only one? The only thing this article proves is that the author shouldn’t be writing at all.
JuanP on Tue, 23rd Aug 2016 11:03 am
OK, I see Short spotted part of the problem. Well done, Short!
rockman on Tue, 23rd Aug 2016 11:06 am
Just some small but important distinctions. The Bakken, Eagle Ford and Marcellus are not BASINS but individual RESERVOIRS that are in BASINS that contain other productive reservoirs. The Permian is a BASIN containing numerous productive RESERVOIRS. Comparing its production to those reservoirs is truly an apple to orange blunder.
Additionally the targets in the Permian Basin are very different then the objective in those formations: the vast majority of PB drilling has been in existing and, more important, producing fields. And many of the fields contain CONVENTIONAL reservoirs. IOW very little new lease acquisition cost as well as a significant amount of production infrastructure inplace. Infrastructure that has paid out many years ago.
Taken all together comparing the Permian BASIN to individual RESERVOIRS in other BASINS is rather meaningless.
onlooker on Tue, 23rd Aug 2016 11:07 am
Obviously the guy never took math in school. 1053% ?
593% over the same time period, rising from 309.6 MBoe/d to 2,144 MBoe/d.” ?
JuanP on Tue, 23rd Aug 2016 11:10 am
I think the data may prove to be right if that “e” in Mboe/d includes BULLSHIT.
Then the article finishes by using some more data from EIA forecasts of future production to make a laughable graph. I never get tired of saying that anyone who believes in EIA forecasts is an ignorant fool since their forecasts have always been hopelessly optimistic and incredibly inaccurate. This article gets an A+ for bullshit!
shortonoil on Tue, 23rd Aug 2016 11:13 am
“It really is about actual resources and physical processes rather than finance which tends to confuse everything”
It it seems sort of ridiculous to talk about an energy product in terms of $, barrels, tonnes or cubic feet. After central banks, Goldman, and J.P. Morgan get done converting it to a CDS, CDO, synthetic CLO or bottom tranche MBS it looks like something attacked by a psychopathic squirrel. Then to proclaim that it is some kind of an indication for the health of the industry is like using furlongs and fortnights to compare a Chevy Nova to an Edsel. Nuts!
rockman on Tue, 23rd Aug 2016 11:15 am
And if the point wasn’t clear enough: development costs in the Permian Basin reservoirs are very different then in those other reservoirs because they are very different animals. Much of the new PB production is more similar to the Saudi horizontal drilling in Ghawar Field then to the Eagle Ford Shale play.
JuanP on Tue, 23rd Aug 2016 11:16 am
Onlooker, His biggest mistake is that he is talking about thousands of millions of barrels of oil equivalent per day. The whole world doesn’t extract that much fossil fuels or energy in any way even if we count all the cows’ farts in the world. LOL!
onlooker on Tue, 23rd Aug 2016 11:16 am
The EIA Forecasts are like the climate summit projections. Utterly unfounded as per real world trends and data
onlooker on Tue, 23rd Aug 2016 11:36 am
Short your on a roll. Keep shedding the light on this forum
onlooker on Tue, 23rd Aug 2016 11:41 am
And even if you wish to talk finance, the
OIL Industry is losing trillions, right Short
rockman on Tue, 23rd Aug 2016 1:08 pm
Onlooker – “…the OIL Industry is losing trillions…”. A slight modification: the oil industry LOST $trillions. And today the oil industry is taking in $trillions in revenue. Currently about $1 trillion per year.
onlooker on Tue, 23rd Aug 2016 1:26 pm
So Rock, in Net my understanding from Short is that the Industry is losing trillions , is that accurate ?
Cloggie on Tue, 23rd Aug 2016 1:50 pm
Rockman, your posts of 11:06, 11:15 show very well that you “care” (from a professional point of view) of what the shale competitor is doing. If you were a shale defender, you would unlikely be posting here.
SK on Tue, 23rd Aug 2016 2:26 pm
JuanP you have your units wrong. The M stands for thousands, so when he states 3,020.1 Mboe/day that is 3 million barrels equivalent.
Cloggie on Tue, 23rd Aug 2016 2:30 pm
“Onlooker, His biggest mistake is that he is talking about thousands of millions of barrels of oil equivalent per day. The whole world doesn’t extract that much fossil fuels or energy in any way even if we count all the cows’ farts in the world. LOL!”
It is fairly obvious that the unit is a factor of 1000 wrong, a typo really or not reviewed. The article should be judged after this simple correction is applied.
JuanP on Tue, 23rd Aug 2016 2:31 pm
OK then. Now I get it!
JuanP on Tue, 23rd Aug 2016 2:33 pm
Sk, why are thousands represented by an M?
JuanP on Tue, 23rd Aug 2016 2:36 pm
Well, Cloggie, This guy made exactly the same typo four out of four times. Is that a typo or a display of ignorance? What about all the other mistakes in the article? Are they typos, too?
JuanP on Tue, 23rd Aug 2016 2:43 pm
Cloggie, what about those percentage calculations which are all wrong as Onlooker pointed out? Are they typos, too? The author of this article is stupid, ignorant, illiterate, and innumerate! If you reread the article and my comments you will see that the article is wrong and I am right. Thousands are not millions and arithmetic is not a matter of belief!
Cloggie on Tue, 23rd Aug 2016 2:45 pm
The most interesting aspect about the article is the EIA graph at the bottom, the rest is nitpicking.
JuanP on Tue, 23rd Aug 2016 2:55 pm
Cloggie, I have been reading EIA forecasts and looking at their graphs of future production estimates for more than a decade and they are almost always wrong. I don’t believe anything the EIA says about the future; only their data about past production is reliable, IMO. I no longer read articles based on EIA forecasts because they are a waste of time. That graph is nothing more than mental masturbation, the expression of a wish, and its predicted future production is nothing more than a very biased guess.
SK on Tue, 23rd Aug 2016 3:06 pm
M is the Roman numeral for 1000, MM is used for millions.
His percentage increase calculations are also correct.
[(2144/309.6)-1]*100= 593% increase
[(3020.1/261.5)-1]*100= 1,055% increase
Tom S on Tue, 23rd Aug 2016 3:51 pm
Hi JuanP,
“With all those hundreds and thousands of Mboe/d the world must have an incredible GLUT of oil, gas, and whatnot production.”
For whatever reason, many people in the industry use the acronym “mboe” to refer to THOUSANDS of barrels. When they’re referring to MILLIONS of barrels, they use “mmboe” (two m’s). I don’t know why. See here:
https://www.pfcenergy.com/PFC-Energy-Definitions
-Tom S
Tom S on Tue, 23rd Aug 2016 3:56 pm
Onlooker:
“Obviously the guy never took math in school. 1053% ?”
What is wrong with the percentage calculations? They appear to be correct to me.
Remember, he is saying that the amount has GROWN by 1053%, not that it IS 1053%. If something IS 100% of something else, then it’s the same size. If something has GROWN by 100%, then it has doubled. If something has GROWN by 1053%, then it has increased by 11.53 times.
261.5 * 11.53 is approximately equal to the number indicated in the article. There is a rounding error because the author doesn’t include very many decimal places, but it appears approximately correct.
Why do you think it’s an error?
-Tom S
Tom S on Tue, 23rd Aug 2016 3:58 pm
SK:
“M is the Roman numeral for 1000, MM is used for millions.”
Oh, is that why? I didn’t even realize. What an archaic way of doing things. In other contexts, “M” often refers to “million” or “mega-“.