EIA: Texas is Largest Producer of Shale Natural Gas

December 2, 2014 Kirk Eggleston

Texas is the largest producer of shale natural gas, according to a report from the Energy Information Administration (EIA). From 2007 to 2013, shale gas production in Texas increased from 3 bcf/d to 11 bcf/d, with the majority of the shale gas produced coming from the Barnett, Eagle Ford, and Haynesville Shale formations.

In 2013, total natural gas gross withdrawals* in the U.S. hit 82 bcf/d, with shale gas wells becoming the largest source of natural gas production. According to the Natural Gas Annual, gross withdrawals from shale gas wells surpassed production from non-shale gas wells after volumes increased from 5 Bcf/d in 2007 to 33 Bcf/d in 2013, representing 40% of total natural gas production.

Natural gas prices have averaged ~$2.00 - ~$4.00 per mmbtu since 2011, which is a far cry from peak prices of nearly $13.00 per mmbtu during the Summer of 2008. New technology is enabling producers to shift focus to resources that are easier to reach and at lower costs, which is reflective of the lower commodity prices.

In 2007, shale well gas comprised only 8% of total U.S. production levels. The distribution across the nation since then, however, has changed significantly in areas such as Texas, Pennsylvania, Louisiana, and Arkansas. These states accounted for 79% of shale gas production in the U.S., or about 26 bcf/d.

Natural gas gross withdrawals - a measure of full well stream production including all natural gas liquids and non-hydrocarbon gases after oil, light liquid hydrocarbons, and water have been removed from the product.

EIA: Eagle Ford Shale Expected to Hit 1.614-Million b/d in Nov. 2014

October 17, 2014 Kirk Eggleston

EIA Eagle Ford Production Chart - Nov. 2014

The Eagle Ford Shale is expected to produce 1.614-million b/d of oil in November, which is a 29% increase from the same time last year, according to the Energy Information Administration's (EIA) Drilling Productivity Report. October's total production from the play is expected to be 1.579-million b/d.

Despite lower crude prices, EIA data shows gains in production across all major U.S. shale fields. According to the International Energy Agency (IEA), only 4% of U.S. shale production needs prices above $80 for drillers to break even. On October 17th, WTI was trading at ~$82.

Eagle Ford operators continue the trend to be more efficient. EIA data shows new-well oil production per rig increasing from 532 b/d in October to 540 b/d in November.

Gains in the Bakken and Permian Basin

The Bakken Shale in North Dakota and Montana is expected to produce 1.193-million b/d of oil in November, up 22% from the same time last year, according to the EIA. October's total production from the play is expected to be 1.164-million b/d.

Production in West Texas' Permian Basin in October is expected to be 7.765-million b/d, and increase ~2% to 1,807-million b/d in November.

Texas and North Dakota, which encompasses the most active area of the Bakken, currently make up almost half of the nation's crude oil supply.

EIA: Eagle Ford Oil Production Will Hit 1.5-Million b/d - Sept. 2014

August 14, 2014 Kirk Eggleston

The U.S. Energy Information Administration (EIA) predicts the Eagle Ford Shale will produce 1.51-million b/d crude oil in September 2014. That's an increase of ~31,000 b/d over August's expected production (1.48-million b/d), according to the EIA's monthly Drilling Productivity Report released this week.

In May, 2013, the Eagle Ford hit the 1-million b/d mark for total liquids production, and in August 2013, exceeded the 1-million b/d crude oil mark. Since 2011, when development of the play began ramping up, production has more than quadrupled.

Most research organizations predict Eagle Ford area production will reach between 1.6 and 2-million b/d sometime between 2017 and 2020. Among a number of factors, recent results from operators in the Eagle Ford's overlaying Austin Chalk have yielded positive results, and may help push the time-frame up quicker for hitting the 2-million b/d mark.

In April 2014, Texas' state-wide production surpassed the 3-million b/d crude oil mark, thanks to the Eagle Ford Shale and increased production in West Texas' Permian Basin. North Dakota, which encompasses the prolific Bakken Shale play, and Texas combined produced nearly half of all U.S. oil production during the same month. By 2015, the U.S. is predicted to become the top oil producer in the world, according to the International Energy Agency (IEA).

The EIA predicts U.S. shale plays are expected to produce 4.87-million b/d in September 2014. That's up from 4.77-million b/d in August 2014.

See the full report at eia.gov

U.S. is World's Largest Oil Producer

July 10, 2014 Kirk Eggleston

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.

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.

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.

Crude Supply Creates Demand for Storage Projects on USGC

July 8, 2014 Kirk Eggleston

The largest new oil storage facility along the Texas Gulf Coast is slated for Houston, TX, according to the Wall Street Journal (WSJ).

The paper's blog identified Houston-based Haddington Ventures LLC, a midstream oil and gas investment firm, as the designer/builder for the Pierce Junction crude oil storage project. Currently, the company is seeking a buyer for a majority stake in the project, which has already been designed and is slated for construction in late 2014.

Since 2008, crude inventories from the tight oil and shale gas revolution, have been piling up in Cushing, Oklahoma, a major oil trading and storage hub. However, TransCanada's Gulf Coast Pipeline, which came online in January of this year, helped significantly reduce inventories in Cushing, but pushed the crude to the U.S. Gulf Coast (USGC) area. As a result, crude inventories in the USGC have recently climbed to record levels according to the Energy Information Administration (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 projections are for total U.S. oil production to continue growing, and more midstream projects pushing oil to the USGC have been scheduled.

Haddington's Pierce Junction project, which will be in Southwest Houston, will utilize naturally existing salt domes in the area. The way it works is a well is drilled into the formation and large amounts of water are cycled through the well dissolving the salt. The brine is extracted, leaving a large empty space in the formation for storage purposes.

According to WSJ, a Houston investment bank predicts by 2016 projects along the Gulf Coast will accommodate an additional 55-million bbl. The Pierce Junction Project is included in that estimate.