Tuesday, April 14, 2015

And The (Red Queen's) Race Is On

From the North Dakota Division of Oil and Gas:
Director’s Cut

Jan Oil 36,927,131 barrels = 1,191,198 barrels/day
Feb Oil 32,958,640 barrels = 1,177,094 barrels/day (preliminary)(all time high was Dec 2014 1,227,483 barrels/day)
1,116,325 barrels per day or 95% from Bakken and Three Forks
60,769 barrels per day or 5% from legacy conventional pools

Jan Gas 45,678,995 MCF = 1,473,516 MCF/day
Feb Gas 41,267,123 MCF = 1,473,826 MCF/day (preliminary)(all time high was Dec 2014 1,570,858 MCF/day)

Jan Producing Wells = 12,197
Feb Producing Wells = 12,198 (preliminary)(NEW all time high)
9,208 wells or 75% are now unconventional Bakken Three forks wells
2,990 wells or 24% produce from legacy conventional pools

Jan Permitting: 24
6 drilling and 0 seismic
Feb Permitting: 197 drilling and 0 seismic
Mar Permitting: 190 drilling and 0 seismic (all time high was 370 in 10/2012)

Jan Sweet Crude Price = $31.41/barrel
Feb Sweet Crude Price = $34.11/barrel
Mar Sweet Crude Price = $31.47/barrel
Today Sweet Crude Price = $36.25/barrel (lowest since Feb 2009) (all time high was $136.29 7/3/2008)

Jan rig count 160
Feb rig count 133
Mar rig count 108
Today’s rig count is 91 (lowest since January 2010)(all time high was 218 on 5/29/2012)
Going back to December, 1.163,352 barrels per day were produced from 8,826 wells in the Bakken formation.  That is 131.8 barrels per day per well.  In February, 1,116,325 barrels per day were produced from 9,208 wells in the Bakken.  That's 121.2 barrels per day per well.  With creditors realizing that they won't get paid back on all the money they dumped into production over the last 5 years, and with the rig count cut in half, there aren't enough new wells coming on line to make up for the depletion rate of the existing wells. 

The strange part is, the news is full of stories about a continuing surge in U.S. shale production.  I believe the Permian basin may still be increasing production (and the Marcellus in natural gas), but I anticipate that the Eagle Ford and the Bakken have peaked, at least until oil prices spike again.  However, with the lull in drilling and well completion, and the drying up of credit, I think you'll find that Alice isn't able to stay in the same place in the Red Queen's race.  I think the EIA and other bullish forecasters are way too optimistic.

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