In a previous article I wrote, I reckoned, based on thirty-five years of experience, that the EIA estimates were too optimistic. This thesis was borne out of comments made by IEA boss Fatih Birol. Birol was quoted as saying US oil production grew by 864,000 barrels per day, according to weekly estimates, since October 2017. It was actually only 658,000 barrels per day from November 1, until the first week of February according to the weekly EIA reports.
When I heard what Birol said, my skepticism was based on the shear volume increase and the wild weekly swings. Even at the lower number above the annual increase would be in the order of 2.6 million barrels per day.
I was originally going to compare the period of September 1, 2017 to January 31, 2018 to look at the above claims. However, I am impatient and will present my thesis in two steps. The first will be based on state numbers up to and including November actuals. I’ll finish the report for January actuals at the end of April when these numbers are in.
To ground truth these numbers, I went to the state monthly oil production records of New Mexico (Permian), Texas (Eagleford and Permian) Wyoming and Colorado (Niobrara) and North Dakota (Bakken). I chose these states as they contain the vast majority of shale oil production. The data discussed herein has been seasoned to three months after the month of production to ensure that the data are “final.” Remember, production occurs in the current month, it is submitted by the end of the second month to state authorities, it is vetted by the state (and adjustments made for late filers) in the third month, and is final in the third month after production.
I chose September as the base month, because according to the EIA estimates, production really took off. But did it? Below are the data from each of the above states expressed in bpd:
|Wyoming & Co.||New Mexico||Texas||North Dakota||Total|
The EIA saw it somewhat differently. The weekly estimate rose from 9,547,000 bpd in Sept, 2017 to 9,707,000 bpd at the end November 2017, a rise of 160,000 bpd which jives nicely with state numbers. However, the weekly estimates have risen to 10,270,00 bpd as of the Feb 28, 2018 weekly report, a rise of 563,000 bpd in two and a half months! Could this be true? Part 2 of my analysis will ground truth this number. I should point out that North Dakota has leveled off after a big jump corresponding to the start up of the Dakota Access Pipeline.
But wait, it gets even more interesting. In its monthly report, EIA-914, the EIA estimated that US production rose from 9,485,000 bpd in September to 10,057,000 bpd in November an increase of 563,000 bpd. I should point out that the actual state numbers dispute this claim, although the weekly estimates are in line with reality, at least during the period of September 2017 to the end of November 2017. I think the EIA monthly estimates are in error, because they show Texas oil and condensate production of 3,933,00 bpd, whereas the real Texas Railroad Commission numbers are shown above. The discrepancy is only about 800,000 bpd!
The above data indicates that the EIA numbers have become out of whack in recent months and should be reset. The second conclusion we can draw from the data, is that US shale oil production is growing, but during this time-frame, nowhere near what has been bandied about. The data indicates that shale oil production is hovering around 5.5 Million bpd. Of course, we could see hockey stick growth from December to the end of January, but I don’t think so.
I’ll let you know in Part 2.
Randy Evanchuk, P. Eng., has 35 years of experience in the patch. From 2007 until he retired in 2015, Mr. Evanchuk was involved in all phases of of unconventional resource development including;evaluation, economics, production and facilities. As as senior consultant with Murphy’s Holdings, he evaluated their Montney holding as well was as a member of evaluation team. Mr. Evanchuk was the Vice President of new ventures at Daylight Energy where his team was successful in acquiring a substantial Duvernay position. At Seven Generations Energy he was Executive Vice President looking after facilities, marketing, production operations and long range facility and marketing planning