Bakken Production Down 10K Bpd

| About: The United (USO)

Bakken oil production was down 10,119 barrels per day in September, and all North Dakota production was down 10,353 bpd in September.

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Bakken production continues to decline, though I expect it to level off soon.

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Barrels per day per well continue a steady decline. Bakken bpd per well fell 2 to 85, while all North Dakota bpd per well fell 2 to 74.

From the Director's Cut:

Oil Production

August 30,442,347 barrels = 982,011 barrels/day
September 29,149,737 barrels = 971,658 barrels/day (preliminary)
(all-time high was Dec 2014 at 1,227,483 barrels/day)
920,899 barrels per day or 95% from Bakken and Three Forks
50,759 barrels per day or 5% from legacy conventional pools

Producing Wells

August 13,295
September 13,367 (preliminary)(NEW all-time high)

Permitting

August 99 drilling and 1 seismic
September 63 drilling and 1 seismic
October 82 drilling and 1 seismic (all time high was 370 in 10/2012)

ND Sweet Crude Price

August $33.73/barrel
September $32.98/barrel
October $39.31/barrel
Today $34.75/barrel (all-time high was $136.29 7/3/2008)

Rig Count

August 32
September 34
October 33
Today's rig count is 38 (all-time high was 218 on 5/29/2012)

Comments:

The drilling rig count increased two from August to September, then decreased one from September to October, and is currently up five from October to today. Operators are shifting from running the minimum number of rigs to incremental increases throughout 2017 as long as oil prices remain below $60/barrel WTI.

The number of well completions rose from 63 (final) in August to 71 (preliminary) in September. Oil price weakness is the primary reason for the slow-down and is now anticipated to last into the second quarter of 2017.

There was one significant precipitation event, 10 days with wind speeds in excess of 35 mph (too high for completion work), and no days with temperatures below -10F.

Over 98% of drilling now targets the Bakken and Three Forks formations.

Estimated wells waiting on completion2 is 861, down 27 from the end of August to the end of September.

Estimated inactive well count3 is 1,514, unchanged from the end of August to the end of September.

Crude oil take away capacity remains dependent on rail deliveries to coastal refineries to remain adequate.

Low oil price associated with lifting of sanctions on Iran, a weak economy in China, and the Brexit are expected to lead to continued low drilling rig count. Utilization rate for rigs capable of 20,000+ feet is 25-30% and for shallow well rigs (7,000 feet or less) 1520%.

Drilling permit activity dropped sharply from August to September then increased from September to October. Operators are maintaining a permit inventory that will accommodate a return to the drilling price point within the next 12 months.

I Can See Clearly Now - Lessons Learned From Five Years Of Crude, Gas And NGL Forecasts

The Shale Revolution changed everything about U.S energy markets, and in the process made forecasting the production and pricing of crude oil, natural gas and NGLs a heck of a lot harder. But we all learn from experience...

Let's begin, as we did in our 2013 blog series, with a look at crude oil production in the Bakken. When we look back to the mid-2011 forecast (by Bentek; left graph in Figure 1), crude output in western North Dakota and eastern Montana (green shaded area) had already risen sharply (to ~500 Mb/d in 2011 from ~200 Mb/d in 2007), and the forecast was that Bakken production would climb to ~900 Mb/d in 2016 (blue shaded area). By mid-2011, crude output already had exceeded the play's pipeline takeaway capacity (black line), and planned pipeline capacity additions were not expected to relieve that constraint until early 2013. As a result, Bakken producers were already adding crude-by-rail (CBR) takeaway capacity (area between black and red lines; ~120 Mb/d as of 2011) as a solution to moving crude to market--and planning to add another 300 Mb/d of CBR capacity by 2013.

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Go to the link to read the rest of this article. It is very interesting. As you can see, they have the Bakken peaking in December 2014, with the yearly average peaking in 2015. Even their growth scenario levels out through 2018, and their contraction scenario projects a continued decline.

bakken-prediction

I did not save the link or date for this chart, but I am pretty sure it dates from late 2013 or early 2014. They have the Bakken peaking at 2 million bpd in 2023. I inserted the lines to show their peak date and where we should be right now in 2016. Predicting oil production is a fool's game, but I sometimes play the fool myself.

China's Foreign Oil Dependency Nightmare Intensifies

China's daily crude oil production in October fell to a more than seven-year low , data from the country's statistics bureau showed on Monday. The development comes as global oil prices are still off from $115/barrel in mid-summer 2014 to now hovering in the mid $40s range amid record high global oil output and historically high oil inventory levels.

Low oil prices have forced China's state-owned oil majors to trim oil exploration and production activities. Also, contributing to the country's falling oil output are maturing oil fields and aging infrastructure. However, the scenario will likely remain unchanged until oil prices can find a floor and start trending upward again around $60/barrel giving oil companies an incentive to drill for more oil.

On a daily basis, October production was 3.78 million barrels per day (bpd), the lowest since May 2009, and down from 3.89 million bpd in September.

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In September, it looked like China's decline had abated. However, their October production put them right back on the track projected by Seeking Alpha in August.

Note: The page OPEC Charts has been updated with production numbers for October. If you have comments on that data, please post it below, on this post, rather than below that page.

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OPEC continues to increase production. How long this can continue, I have no idea.

secondary-sources

However, exactly 100% of the increase this came from the recovery of Libya and Nigeria. Take away their numbers and OPEC production was flat.

world-oil-supply

Total world oil supply sits at very near its peak in November 2015. The average for 2016, however, is still well below the average of 2015.