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Bakken, Let’s Do The Math

There has been considerable dispute over how many new wells required to keep production flat in the Bakken and Eagle Ford. One college professor posted, over on Seeking Alpha , figures that it would take 114 rigs in the Bakken and 175 in Eagle Ford to keep production flat. He bases his analysis on David Hughes’ estimate that the legacy decline rate fir Bakken wells is 45% and 35% for Eagle Ford wells. And he says a rig can drill 18 wells a year, or about one well every 20.3 days. The EIA has comes up with different numbers. The data for the chart below was taken from the EIA’s Drilling Productivity Report . Legacy Decline The EIA has current legacy decline at about 6.3% per month for Bakken wells and about 7.7% per month for Eagle Ford wells. That works out to be about 54% per year for […]

Posted On : Published By : Tom Whipple
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Baker Hughes: US Oil Drillers Cut Rigs For 4th Straight Week

URL: http://www.rigzone.com/news/oil_gas/a/136609/Baker_Hughes_US_Oil_Drillers_Cut_Rigs_For_4th_Straight_Week The number of rigs drilling for oil in the US fell by 17 this week, as energy companies facing lower crude prices reduced the rig count for the fourth straight week, data from Baker Hughes shows. Jan 5 (Reuters) – The number of rigs drilling for oil in the United States fell by 17 this week, as energy companies facing lower crude prices reduced the rig count for the fourth straight week, data from oil services firm Baker Hughes showed on Monday. The oil rig count dropped to 1,482 in the week to Jan. 2, its lowest level since March, the data showed. The number of oil rigs has declined in nine of the last 12 weeks since hitting a record high of 1,609 in mid-October. The number of rigs remains up more than 100 from the same time last year, when there were 1,378 rigs seeking […]

Posted On : Published By : Tom Whipple
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Big Trouble in Store for Oil

ENLARGE If you want to know what 2015 has in store for oil prices, just look at where stores of oil ended last year. U.S. commercial stocks of crude oil and refined products—excluding the roughly 700 million barrels held in the Strategic Petroleum Reserve—were just shy of 1.14 billion barrels at the end of December, according to Energy Department data. More important than the absolute level is what happened to commercial stocks last month: They went up. Refiners tend to run down their tanks as year-end approaches to help minimize tax bills. That stocks rose regardless is a bad sign for those banking on an oil-price rebound. Looking back to 1980, U.S. commercial inventories of oil have risen in December in only two years: in 2014 and the financial crisis year of 2008. Even back then, as the global economy was seizing, stocks rose by just 4.7 million barrels, […]

Posted On : Published By : Tom Whipple
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Biggest Oil-Rig Drop Since 2009 Spells Tough Year Ahead

U.S. oil drillers laid down the most rigs in the fourth quarter since 2009. And things are about to get much worse. The rig count fell by 93 in the three months through Dec. 26, and lost another 17 last week, Baker Hughes Inc. (BHI) data show. About 200 more will be idled over the next quarter as U.S. oil explorers make good on their promises to curb spending, according to Moody’s Corp. Drillers are already running the fewest rigs in nine months after a 46 percent drop in U.S. benchmark West Texas Intermediate oil in 2014, the steepest decline in six years and the second-worst since the commodity began trading in 1983. The price slipped below $50 a barrel yesterday as U.S. producers and the Organization of Petroleum Exporting Countries remain in a standoff over market share. Meanwhile, production from Russia and Iraq last month reached the highest […]

Posted On : Published By : Tom Whipple
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Oilfield Writedowns Loom as Crude Slump Guts Drilling Values

Tumbling crude prices will trigger a flood of oilfield writedowns starting this month after industry returns slumped to a 16-year low, calling into question half a decade of exploration. With crude prices down more than 50 percent from their 2014 peak, fields as far-flung as Kazakhstan and Australia are no longer worth pumping, said a team of Citigroup Inc. (C) analysts led by Alastair Syme. Companies on the hook for risky, high-cost projects that don’t make sense in a $50-a-barrel market include international titans such as Royal Dutch Shell Plc and small wildcatters like Sanchez Energy Corp. The impending writedowns represent the latest blow to an industry rocked by a combination of faltering demand growth and booming supplies from North American shale fields. The downturn threatens to wipe out more than $1.6 trillion in earnings for producing companies and nations this year. Oil explorers already are canceling drilling plans […]

Posted On : Published By : Tom Whipple
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Oil Below $55 May Force Norway to Cut Rates Again

As oil drops below $55 a barrel, speculation is growing that the central bank of western Europe ’s biggest crude producer will need to cut rates again. A 54 percent slump in Brent crude since a June high has pummeled the offshore industry in Norway , where oil and gas make up 22 percent of gross domestic product. Over the same period the krone has lost about 20 percent against the dollar and 8 percent against the euro. The OBX benchmark stock index is down about 12 percent. The central bank delivered a surprise rate cut last month it said was triggered by plunging crude prices. Since then the oil price development has proven even worse than the central bank anticipated. In an interview yesterday, Governor Oeystein Olsen said $55 oil is “clearly lower” than expected in December. At Norway’s biggest bank, DNB ASA (DNB) , economists say Olsen […]

Posted On : Published By : Tom Whipple
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Will Oil Continue to Fuel the Jobs Market?

ByJeffrey Sparshott The U.S. energy boom fueled jobs such as construction work on this pipeline outside Waford City, N.D. Getty Images Friday’s jobs report may offer some early hints about the impact of falling oil prices on jobs in the oil and gas industry. The U.S. energy boom has been an engine of growth through a lackluster economic recovery, creating thousands of jobs that pay above-average wages, spawning demand for a broad array of services and supporting local economic booms from North Dakota to Texas. But with oil prices dipping below $50 a barrel , exploration and production companies are slashing budgets and squeezing suppliers . Among recent examples: Houston-based Civeo Corp. , a lodging company for oilfield workers , at the end of December said it reduced U.S. payrolls by 45% from the level at the beginning of 2014 in response to falling demand, prompting its largest stakeholder […]

Posted On : Published By : Tom Whipple
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Sharp declines in well production typical in Ohio’s Utica Shale

In the world of shale gas in Ohio, the top-producing wells aren’t king of the hill for long. Take the Tippens 6HS well, for example. Located in Monroe County in southeastern Ohio, it produced more natural gas in the first quarter of 2014 than any other Utica Shale well in the state — some 1.117 billion cubic feet of the resource in 80 days, according to Ohio Department of Natural Resources records. That’s enough natural gas to fuel 12,000 houses for a year. But the well that gushed 13,972 thousand cubic feet of natural gas per day in the first three months of 2014 saw daily production drop 41 percent in the second quarter to 8,180 thousand cubic feet per day and another 26 percent in the third quarter to 6,015 thousand cubic feet per day. By autumn, the Tippens well was producing less than half the natural gas […]

Posted On : Published By : Tom Whipple
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The Next Decade Will Decide Peak Oil Outcome

The most attention-grabbing attempts to predict oil futures have come from geologists and environmental activists, who tend to look solely at production. An overlooked doctoral thesis by Christophe McGlade, Uncertainties in the outlook for oil and gas , in contrast, focuses on how both supply and demand might be constrained in the coming decades. Peak oil researchers should take note of McGlade’s thesis because he predicted, in November 2013, that oil prices would sink, and that they will stay low throughout the second half of this decade. I found this paper on Google Scholar and have no connection with the author, but I appreciate his careful consideration of peak oil arguments, and his ability to distance himself from the more narrow-minded aspects of both economic and geological thinking. Here’s a representative quote from the middle of the thesis, p. 216: The focus of much of the discussion of peak […]

Posted On : Published By : ASPO-USA