oil production – Page 9

Update on oversupply of oil – 12/16

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Lots of news lately on what is going on with crude oil. Here are a few articles of particular value for me: zombies appearing in the oil patch, low prices are due to worldwide oversupply and thus will likely continue a while, increased production and thus competition by producers will likely keep prices low.

12/10 – Reuters – Zombies appear in US oil fields as crude plums new lows – Here is a phrase that will make OPEC happy: zombies, in the context of the energy industry. That refers to a drilling company with such poor income that it is using all its cash to cover interest payments. That leaves no cash for drilling new wells.

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More signs the North Dakota infrastructure is catching up

If you let an economy function, market forces will create pressures to smooth things out. The forces of supply and demand have an amazing ability to balance a temporarily unbalanced marketplace. Several recent articles illustrate this concept in North Dakota.

11/17 – Amy Dalrymple at Dickinson Press – Pipelines now outpacing trucks for gathering Bakken oil – After oil is pulled on the ground it needs to be moved from the well pad to either a rail-loading terminal where it leaves the state by rail or it gets moved to a major transmission pipeline where it leaves the state by pipe.

The oil is initially moved by either trucks or underground pipes.

The number of small gathering pipelines to carry oil away from the wells is finally large enough that more oil is moved by gathering pipelines than by trucks.

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What might North Dakota oil production have looked like without the drop in crude oil prices?

How many rigs do you see? There are 2 clear rigs in addition to the obvious one. High magnification suggests there are at least another half dozen on the horizon. Photo by James Ulvog in October 2014. — How many drilling rigs do you see? There are 2 rigs for sure in addition to the obvious one. Looking under high zoom suggests there may be another half-dozen on the horizon. Rig towers are much wider than power poles and shorter than the radio tower. Photo by James Ulvog in October 2014.

Just as a matter of pure speculation, I wonder what production of crude oil might be if OPEC, I mean Saudi Arabia, had not opened the production spigots in late 2014?

What might the output be if growth continued at the rate of the last few years?

I tried graphing the production trend assuming the growth in output continued at the average rate of the last two years.

First the graph showing my guess, then my assumptions:

Now my assumptions.

Continue reading “What might North Dakota oil production have looked like without the drop in crude oil prices?”

North Dakota oil production increases half a percent in October ‘15

Average daily production in the state increased from 1,162,159 average bopd in September to 1,168,950 bopd in October. That is an increase of 6,791 bopd, or 0.58%, just over half a percent.

Fracklog dropped from previously reported 1,091 to 975. That is still a huge amount of oil sitting on the shelf, just waiting for a frackjob to start producing.

Not quite what OPEC, I mean the Saudis, had planned when they adopted their plan to take out US shale.

Average price of sweet crude in the state is $27.00 now, was $32.16 in November, and $34.37 in September. That info from the Director’s Cut. That is really low.

That is perhaps what OPEC, err, the Saudis, were thinking.

Here are my regular basic production graphs. Won’t have the others this month.

Still looks sort of like a plateau.

Here is the long-term view:

Continue reading “North Dakota oil production increases half a percent in October ‘15”

More impact from low oil prices

Pumps on new wells being installed in 9/15. Not exactly a sign of a collapsed industry. Photo by James Ulvog. Check out that beautiful sky.

Two previous posts discussed OPEC’s decision to maintain production and some of the implications. Here are a few more articles on the impact of low prices. Also, great illustrations of how the assets will be bought up by stronger players at bargain prices.

12/4 – Reuters media at Dickinson Press – Shares of Bakken Shale oil producers plummet after OPEC decision – Lack of a production cut and realization that OPEC production will actually exceed their announced limit combined with Iran ready to jump into the market pushed oil prices down. That in turn pushed down stock prices of North Dakota producers.

One industry representative is quoted as saying OPEC’s goal is to

“… outlast {U.S.} shale oil exploration and production…”

Yeah, I think that’s the worldwide consensus on the OPEC, I mean Saudi, goal.

12/1 – Dickinson Press – US oil companies’ restructuring plans founder as prices plunge – Continue reading “More impact from low oil prices”

Oil prices will remain low after OPEC, uh, I mean after Saudi decision. 2 of 2

Previously discussed the decision by OPEC on 12/4/15 to maintain production. That will keep prices low and sustain the worldwide glut of oil. Also mentioned my opinion that OPEC is now the front for Saudi Arabia.

12/2 – Million Dollar Way – OPEC’s Pyrrhic victory – Post pointed me to the following two articles. The MDW post includes quotes of key paragraphs from both articles.

Pyrrhic victory?

11/30 – John Kemp at Reuters at Rigzone – OPEC Risks Pyrrhic Victory With Oil Policy – Article starts by explaining how King Pyrrhus won a big victory over the Romans but lost a huge number of men leaving him no reserves and also costing him most of his generals. The Romans merely advanced a few more legions and were ready to go again. King Pyrrhus? Not so. The two victories emptied his army.

Join with me as I learn more about that phrase. Wikipedia quotes Plutarch, who explains: Continue reading “Oil prices will remain low after OPEC, uh, I mean after Saudi decision. 2 of 2”

Oil prices will remain low after OPEC, uh, I mean after Saudi decision. 1 of 2

Oil prices will remain low after an OPEC decision on December 4 not to reduce production. Sure looks to me like OPEC is now essentially Saudi Arabia. What the Saudis decide is what OPEC will do. And what the Saudis have decided is to maintain production. Thus prices will continue at the current low level and the worldwide glut of oil will continue. In addition the OPEC producers will continue to burn up their foreign reserves.

12/4 – Wall Street Journal – OPEC Meeting Ends With No Production Cuts / Meeting marked by deep divisions; ‘shale is the new reality’ – Article points out a dramatic disagreement. Producers such as Iran and Venezuela want to maintain their production and have Saudi Arabia alone absorb enough of a production cut to balance the market.

Continue reading “Oil prices will remain low after OPEC, uh, I mean after Saudi decision. 1 of 2”

Update on the oversupply of oil

Ras Tanura oil terminal, Saudi Arabia. Photo courtesy of DollarPhotoClub.com

More completely wild guesses after comments yesterday on Saudi plans.

On one hand…

11/24 – Reuters at Bakken.com – Saudi Arabia says ready to work with others to stabilize oil market – Article says the Saudi cabinet is making comments indicating their willing to work with OPEC and non-OPEC oil producers to stabilize prices.

Next meeting of OPEC is on December 4.

On the other hand…

Continue reading “Update on the oversupply of oil”

Update on the oversupply of oil; Saudi plans

15 wells on one pad with room for another 15 wells. Drilling rig in background. Goal of OPEC is to shut down those wells. Photo by James Ulvog. — Fifteen wells on one pad (15!) with room for another 15 wells. Drilling rig in background. Goal of OPEC is to shut down those wells. Photo by James Ulvog.

Doesn’t look like Saudi Arabia will be cutting back production anytime soon. Seems they want to keep crude prices low. Drillers are responding creatively to the price pressure.

10/2 – Bloomberg at Calgary Herald – Drillers taking it slow on shale wells in bid to squeeze out more oil – Drillers are intentionally slowing down initial output of shale wells. That is called choking back. Apparently this has the effect of keeping more frac sand in the ground instead of being flushed out with the high initial flow of oil. Article says drillers choking back are seeing higher total recoveries from their wells than other drillers.

In addition to increasing production, this defers some production to later, when prices are expected to be higher.

This also means that initial production amounts (IP) are not necessarily an indicator of the estimated ultimate production (EUP).

In addition, this suggests total production from Bakken and Eagle Ford won’t be dropping as quickly as you would expect by the drop in drilling rigs.

Finally, you can file this in the category of human ingenuity always increases production. Also, file this under Peak Oil Is Still Wrong.

11/8 – Financial Times – Saudi Arabia will not stop pumping to boost oil prices – Links to the paper indicate Saudi Arabia has no intentions of dropping their production. They intend to keep prices on the worldwide market very low.

Continue reading “Update on the oversupply of oil; Saudi plans”

Megapads in Bakken

One thing that struck me during my September 2015 visit to Williston is the number of well pads with lots of pumps. Two years ago I was impressed by two or four pumps on one site. This trip, I noticed a lot of pads with 6 working pumps and lots of pads that were far too large for the one or two pumps in place. Obviously there are plans to put more wells on each of those pads.

The most amazing sight for me was a pad with 15 wells. Yes, 15. There are three in a row on the west side of the pad, six in a middle row, and six more in a row on the east. Will have several more shots of the site included in this post. The pad is at the end of a private road so all the pictures I have were taken from the nearby public roads.

Continue reading “Megapads in Bakken”

Illustration of the foolishness of calculating how many years of a resource is left by using the amount of currently known reserves

Those 6 wells will soon start producing. Twenty years ago it was impossible to reach that oil. Technological innovation makes recoverable oil that was previously untouchable. Photo by James Ulvog. — Those 6 wells in North Dakota will soon start pulling huge amounts of oil out of the ground. Twenty years ago it was impossible to reach that oil. Technological innovation makes oil recoverable that was previously untouchable. Photo by James Ulvog.

Robert Bryce dives deep into the astounding technological and economic advances of the last 200 years as he ponders Smaller Faster Lighter Denser Cheaper: How Innovation Keeps Proving the Catastrophists Wrong.

Innovation leading to technological advances creates wealth, improves health, and makes everyone better off. Some people in some places have been left behind by the dramatic economic improvements of the last two centuries. The best way to make life better for those folks is to continue innovating and make cheap, small, fast, highly economical tools and resources available to them.

The book as so many explanations and illustrations. I’d love to describe dozens of things that caught my eye. I will mention merely a few.

You will often see the foolish and erroneous statement that we only have X years of some resource left on the planet. When you look at the built-in calculation you see the presence of the silly fallacy of dividing known reserves by current consumption.

The reason that calculation is so foolish is it completely ignores exploration that finds new fields, innovation in recovering more resources, and economic changes that make it worthwhile to gather something that was uneconomical before.

Consider for a moment the idea that we are going to run out of oil because at current consumption rates will use up all the proven reserves in however many years. The formula is

proven reserves
divided by current consumption
equals years until we completely, totally exhaust all of that item on the entire planet

Continue reading “Illustration of the foolishness of calculating how many years of a resource is left by using the amount of currently known reserves”

More November data on North Dakota oil production

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Here are a few more graphs on crude production in North Dakota as released by the state on 11/13/15. First the fracklog and then the number of working rigs.

Fracklog for September is 1,091. That is the estimated number of wells waiting to be completed. They are drilled to depth, temporarily closed, and only need to be fracked in order to start producing.

$fracklog 9-15$

Continue reading “More November data on North Dakota oil production”

North Dakota oil production drops 2.1% in September, to 1.16 million barrels a day

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The September production was 1,162,253 BOPD, which is down 2.14% for the month. That is down 5.3% from the peak of 1,227,329 in December 2014.

Here are a few production graphs.

Statewide and Bakken/Three Forks production since 2008:

Monthly average production since 1990:

Continue reading “North Dakota oil production drops 2.1% in September, to 1.16 million barrels a day”

Drillers get additional year to complete wells. Guess on future production. Recent well count.

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In very big news, Million Dollar Way explains NDIC Gives Operators An Extra Year To Bring Their DUCs On-Line; Flexibility On Flaring Also Announced . DUC means drilled, uncompleted. That is well that hasn’t been fracked yet, part of the fracklog.

Currently a well must be completed, or start producing oil, within a year of the drilling being finished or else. The ‘or else’ is the state gives six months notice to complete and if not done in that cumulative 18-month timeframe, the well must be filled in.

The NDIC just gave drillers permission a total of two years to go from finishing the drilling to starting production.

Continue reading “Drillers get additional year to complete wells. Guess on future production. Recent well count.”

Tag: oil production