U.S. is World's Largest Oil Producer

U.S. Oil Production
U.S. Oil Production

The U.S. is now the world's largest producer of oil, surpassing Russia and Saudi Arabia, according to Bank of America Corp. (BAC), as reported in Bloomberg.

U.S. crude oil output in the first quarter surpassed 11-million b/d, which was the highest volume produced by the country in 24 years. The U.S. is expected to hold the top spot through the end of the year, BAC officials said.

Most of that production is coming from Texas and North Dakota, which produced nearly half (48%) of all U.S. oil in April of 2014, according to the Energy Information Administration (EIA). Texas alone produced nearly 3-million b/d in the same month, thanks largely to the Eagle Ford Shale, reaching production levels not seen since the 70s.

Read more: Texas Oil Production Reaches Levels Not Seen Since the 70s

According to the International Energy Agency (IEA), U.S. oil output will increase to 13.1 million b/d in 2019 and plateau. Most analysts agree the Eagle Ford and Bakken Shale plays, which are largely responsible for production in Texas and North Dakota, will peak around this time, and begin to decline.

Oil Inventories Stacking Up

With the glut of oil being produced in the U.S., crude inventories on the U.S. Gulf Coast (USGC) have recently climbed to record levels according to the EIA, hitting 207.2 million bbl on April 11, 2014. The EIA says the USGC region has about 275 million bbls of current capacity, but more midstream projects pushing oil to the USGC have been scheduled.

To accommodate the influx of oil into the region, several crude oil storage projects are expected along the USGC through 2016. Recently, Haddington Ventures LLC, a midstream oil and gas investment firm, was identified in a Wall Street Journal (WSJ) blog as the designer/builder for a major crude oil storage project in Houston, TX.

Read more: Crude Supply Creates Demand for Storage Projects on USGC

Overall, the challenges that have come and will continue to come with the oil & gas renaissance in the U.S. seem to be outweighing most of the negative impacts. Namely, U.S. energy independence is the most favorable outcome, with tensions growing in Russia and unrest in the Middle East. The EIA predicts the U.S. will be energy independent by 2035.

Six Eagle Ford Counties Rank as Top U.S. Oil Producing Areas

Top Oil Producing Counties in U.S.
Top Oil Producing Counties in U.S.

According to recent data from consultancy DrillingInfo, half of all U.S. crude oil production comes from just 20 counties/development areas.

Included in the list are six Eagle Ford counties: Karnes, LaSalle, Dewitt, Dimmit, Gonzales and McMullen. Four counties in North Dakota covering another major shale play, the Bakken Shale, were also included.

The 20 counties/development areas covered make up only 2% of all oil producing counties across the country, but accounted for 52% of all oil production. Karnes County, which is the top oil producing county in the state, ranked at number seven on the list.

See below for a full list of Eagle Ford counties included in the DrillingInfo report and their respective ranking and daily production data:

  • Karnes (7) - 214,000 b/d
  • LaSalle (9) - 141,000 b/d
  • Dewitt (13) - 133,000 b/d
  • Dimmit (14) - 117,000 b/d
  • Gonzales (15) - 116,000 b/d
  • McMullen (19) - 88,000 b/d

In July of 2014, the Energy Information Administration (EIA) predicts the Eagle Ford Shale will produce 1.429 million b/d of crude oil and other liquids. That's approximately 24,000 b/d over June production, according to the EIA’s most recent Drilling Productivity Report. By 2020, some analysts predict the Eagle Ford will reach  two-million b/d of crude and condensate production.

Since the Eagle Ford oil boom began in 2009, more than 14,000 drilling permits have been issued by the Texas Railroad Commission (RRC) in the play. Permitting peaked in 2012 and 2013 in the top producing Eagle Ford counties, and has started to decline. According to the RRC, in 2013, there were 2,521 producing oil leases on schedule.

Murphy Oil's Eagle Ford Production Grows to 39,000 boe/d in 2013

Murphy Eagle Ford Production
Murphy Eagle Ford Production

In 2013, Murphy Oil originally planned Eagle Ford production of ~30,000 boe/d, but the company blew through that goal and produced an average of 39,000 boe/d for the year.

Also read:Murphy Oil's Eagle Ford Production Hits Milestone

Murphy's fourth quarter total oil production rose from 132,918 b/d in 2012 to 139,660 b/d in 2013 or an increase of 5%. The Eagle Ford was the primary contributor to oil production growth.

The company's average oil production was 135,078 b/d in 2013, an increase of ~20% compared to the 2012 level of 112,591 b/d.

In 2013, we continued to grow production led by our onshore Eagle Ford Shale operation, where total production averaged 39,000 net barrels of oil equivalent per day for the year.
— Murphy's President, Roger Jenkins

With oil production growth of 20%, it's easy to see the significant impact oil plays like the Eagle Ford.

Murphy Oil at a Glance in 2013

  • Significant Production Growth in Eagle Ford in 2013
  • 39,000 net boe/d in Eagle Ford in 2013
  • ~5% Q4 oil production increase to 139,660 b/d
  • ~20% total year oil production increase to 135,078 b/d

Murphy Oil's Eagle Ford Production in 2013

Murphy has outperformed in the Eagle Ford. At the beginning of 2013, the company had a target of 30,000 boe/d in the formation.

The company's Eagle Ford production in 2013 well surpassed its goal, hitting 39,000 boe/d. That's 30% higher than the company planned.

Murphy now expects to surpass 60,000 boe/d at some point in 2015.

Read more at Murphy.com

U.S. Headed For Energy Self-Sufficiency - Exxon CEO

Exxon Mobil's CEO Rex Tillerson believes the U.S. will be self sufficient and energy secure by 2020. The country is the largest natural gas producer in the world and is producing oil at rates not seen since the 1980s. Production of crude oil is expected to continue growing over the next few years and Tillerson thinks it's "realistic" that the U.S. will be secure in energy by the end of the decade. 

Tillerson discusses the difficulty of developing shale gas reserves in China. There is a lot of potential, but the formations are deeper and in more remote locations. There are a number of challenges that will delay development.

He also touches on unknown fiscal policy and how the uncertainty might be hurting economic growth here at home.

Rosetta Resources Plans to Spend $735 Million in the Eagle Ford in 2014

Rosetta Resources Eagle Ford Acreage Map By Area
Rosetta Resources Eagle Ford Acreage Map By Area

Rosetta Resources will spend approximately tw0-thirds of its $1.1 billion budget in 2014 in the Eagle Ford.

The company will spend $735 million running 4-5 rigs, with plans to drill and complete 90-95 gross wells. Approximately half of the activity will target the Eagle Ford from the company's Gates Ranch leases.

Read more:Rosetta Acquires Additional Eagle Ford Interests at Gates Ranch

As a result of Eagle Ford and Permian Basin growth, Rosetta expects production to grow 20-30% to 60,000-65,000 boe/d.

The 2014 capital plan is structured to deliver between 20 and 30 percent combined production growth from our Eagle Ford and Delaware Basin assets. The program reflects increasing activity as we initiate broader scale horizontal development in Reeves County and further expand development in new areas of our current Eagle Ford position,” said Jim Craddock, CEO. “We will continue to focus our efforts on integrating our West Texas assets while continuing to efficiently execute the development of our Eagle Ford leases.

Rosetta will run six rigs and spend $265 million in the Permian Basin in 2014.

Also read:Rosetta Has Yet To Complete 23% of Its Eagle Ford Wells

Fourth Quarter Operational Delays Impact Production

Rosetta's fourth quarter 2013 production was negatively affected several issues that are estimated to have lowered production by ~4,000 boe/d. Rosetta expects fourth quarter production will average 52,000 boe/d and full-year 2013 production will average 50,000 boe/d.

  • Operational issues on a third-party gathering system
  • Operational issues at a third-party processing plant
  • Wells shut-in due to adjacent well completions
  • Rosetta compressor station fire

Jim Craddock, CEO, commented, "Our strength is our people and our personnel have done a great job of minimizing the impacts of several external hurdles we faced this quarter. We look forward to discussing our fourth quarter results, as well as our outlook for 2014, with investors in February."