Oil production from key shale formations in North Dakota and Texas increased marginally in June versus May, according to Bentek Energy, an analytics and forecasting unit of Platts, a leading global provider of energy, petrochemicals, metals and agriculture information.
Oil production from the Eagle Ford shale basin in Texas remained strong in June, jumping 18,000 barrels per day (b/d), or less than 1%, vs May, the latest analysis showed. This marked the fourth consecutive month of production growth, albeit small, since February when production dipped nearly 10,000 b/d month on month. Meanwhile, crude oil production in the North Dakota section of the Bakken shale formation of the Williston Basin remained relatively flat, increasing 6000 barrels b/d, or less than 1% in June vs May.
The average oil production from the South Texas, Eagle Ford basin last month was 1.6 million barrels per day. On a year-over-year basis, that is up almost 240,000 incremental barrels per day, or about 17% higher than June 2014, according to Sami Yahya, Bentek energy analyst. The average crude oil production from the North Dakota section of the Bakken in June was 1.2 million b/d, or up nearly 100,000 b/d from year ago levels.
“It is astonishing to see what producers in the Eagle Ford and Bakken shale basins are accomplishing despite dwindling rig count numbers,” said Yahya. “Rig count in the Eagle Ford basin decreased by roughly 65% from a year ago, from 233 in June 2014 to the 105 active rigs today. And yet, production is almost a quarter of a million barrels per day more.”
Similar trend is observed in the Bakken shale, where rig count dipped about 50% from approximately 160 rigs last year to the current 80 active rigs, said Yahya. In Bakken too, production is up about a hundred thousand barrels per day, he said.
The contradictory relationship between rig count decline and production growth speaks volumes to the efficiency gains producers have achieved over the past year.
“Gains in efficiency have been swept every facet of the drilling and production operations,” said Yahya. “Drill times have been reduced on averaged by three to five days in most of the major shale plays in the country. As well, producers are continuing to focus more on their more productive acreages, where initial production (IP) rates are higher.”
Bentek analysis shows that from June 2014 to June 2015, total U.S. crude oil production has increased by about 750,000 b/d.
It’s a different story for prices, noted Luciano Battistini, Platts managing editor of Americas crude.
“The price recovery oil producers were hoping for has been delayed as the massively oversupplied oil complex continues to pressure prices. Eagle Ford crossed the $65 per barrel (/b) mark on June 11 and has been sliding since,” said Battistini. “Bakken prices at theWilliston basin, however, ranged between $55/b and $60/b from the end of April to end of June, showing resilience.”
The Platts Eagle Ford Marker, a daily price assessment launched in October 2012 and reflecting the value of oil out of the Eagle Ford Shale formation in South Texas, has increased 31% between January and June, with an average price of $57.56/b for the first six months of 2015. But it is down 41% from year-ago levels. The marker has ranged between $46.22/b and $66.23/b since the beginning of this year.
The price of oil out of the Bakken formation at Williston, North Dakota, was up 44% between January and June, with an average price of $49.31/b for the first six months of 2015, according to the Platts Bakken assessment. Platts Bakken, however, is down 40% when compared to last year’s corresponding month. The wellhead assessment has ranged between $37.67/b and $59.32/b since the beginning of January.
The Platts Bakken, introduced April 22, 2014, is a daily assessment of price for oil closest to the wellhead prior to determination of transportation by rail or pipe. The assessment reflects a sulfur content of 0.2% or less and an American Petroleum Institute (API)** gravity of 42 or less, similar to the nature of North Dakota Light Sweet crude. The Platts Eagle Ford Marker reflects the value of a median 47-API Eagle Ford crude barrel, based on the crude’s product yields and Platts product price assessments, adjusted for U.S. Gulf Coast logistics.
Platts introduced the world’s first independent daily price reference valuing crude oil produced from a shale formation in May 2010when it began assessing Bakken Blend shale oil injected into pipelines at Clearbrook, Minnesota, and Guernsey, Wyoming.
For more information on Platts price assessments methodology visit these links: Details of Platts Bakken and Platts Eagle Ford Marker. Bentek Energy’s shale oil production figures are derived from proprietary data models using publicly available data.
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