DENVER, Nov. 25, 2015 /PRNewswire/ -- Oil production
from key shale formations in North
Dakota and Texas remained
relatively flat in October versus September, according to Platts
Bentek, an analytics and forecasting unit of Platts, a leading
global provider of energy, petrochemicals, metals and agriculture
information.
Oil production from the Eagle Ford shale basin in Texas continued flat streak in October,
increasing only 6000 barrels per day (b/d), or less than 1%, versus
the previous month, the latest analysis showed. The Eagle Ford
basin demonstrated production growth, albeit minimal, for the
fourth consecutive month. Similarly, crude oil production in the
Northeast Dakota section of the Bakken shale formation of the
Williston Basin grew less than 1%
month-on-month in October, marking a second flat month of
production, following a period of slight decline during the
summer.
The average oil production from the South Texas, Eagle Ford basin in October was
1.5 million barrels per day. On a year-over-year basis, that is up
close to 65,000 incremental barrels per day, or about 5% higher
than October 2014, according to
Sami Yahya, Bentek energy analyst.
The average crude oil production from the North Dakota section of the Bakken in October
was 1.2 million b/d, or about 13,000 b/d from year ago levels.
"In this challenging pricing environment, producers are doing
whatever they can to stay afloat," said Yahya. "Reducing the number
of days to drill a well and/or figuring out ways to bring down
completions costs has been on everyone's agenda most of this year.
But some producers are starting to target other formations within a
basin to bring costs down or to hold acreage by production."
For example, said Yahya, in the Eagle Ford, the production boom
traditionally targeted the Austin Chalk and Upper Eagle Ford,
before the Lower Eagle Ford was developed and yielded much better
returns. "However, with diminishing rates of return, some producers
are going back and targeting the Austin Chalk and Upper Eagle Ford
again, where it is shallower and cheaper to drill."
The Platts Bentek latest analysis noted another advantage of
drilling in the Austin Chalk or Upper Eagle Ford is to hold
acreage. Some acreage leases require producers to produce within a
set period of time or the lease would expire. With capital
expenditures cuts increasing, some producers are left with little
budget to continue drilling and producing from their best acreage
in the Lower Eagle Ford. Focusing on the shallower formations gives
them the opportunity to continue production while keeping the
status of the lease active.
"Much like the Eagle Ford, producers in the Bakken shale are
also consistently looking to reduce costs to hold production
steady," said Yahya. "In September
2014, 77% of the total wells drilled in the basin were
drilled in the core counties (McKenzie, Dunn, Williams and Mountrail) and that metric has since risen to
92% in October 2015. Beginning in
September 2015, producers have taken
this process a step further and are migrating within the core. The
number of wells drilled in Dunn
and McKenzie counties rose 20% for
the same time period. Conversely, the number of wells drilled in
Mountrail and Williams counties declined 20%."
Bentek analysis shows that from October
2014 to October 2015, total
U.S. crude oil production has increased by about 320,000
b/d.
Eagle Ford prices have also steadied with the October average at
$47.12/b, a marginal 2% decrease from
the January average, noted Luciano
Battistini, Platts managing editor of Americas crude.
"Prices for Eagle Ford crude were pretty stable for October,
similar to what we saw last month," Battistini said. "However, the
Louisiana Light Sweet (LLS) discount to Brent averaged $2 per barrel (/b), compared to just a penny in
October and that theoretically should have helped condensate
exports out of the U.S. Gulf Coast."
Eagle Ford crossed the $52/b mark
on July 23 and has continued to
slide, said Battistini. "Bakken prices at the Williston basin, received some support from
the Enbridge Line 9 reversal, rising 11% in October when compared
to January."
The Platts Eagle Ford Marker, a daily price assessment
launched in October 2012 and
reflecting the value of oil out of the Eagle Ford Shale formation
in South Texas, has decreased held
steady between January and October, with an average price of
$54.02/b for the first 10 months of
2015. But it is down 45% from year-ago levels. The marker has
ranged between $41.42/b and
$66.23/b since the beginning of this
year.
The price of oil out of the Bakken formation at Williston, North Dakota, was up 11% between
January and October, with an average price of $46.85/b for the first 10 months of 2015,
according to the Platts Bakken assessment. Platts
Bakken, however, is down 40% when compared to last year's
corresponding month. The wellhead assessment has ranged between
$33.35/b and $59.32/b since the beginning of January.
The Platts Bakken, introduced April 22,
2014, is a daily assessment of price for oil closest to the
wellhead prior to determination of transportation by rail or pipe.
The assessment reflects a sulfur content of 0.2% or less and an
American Petroleum Institute (API)** gravity of 42 or less, similar
to the nature of North Dakota Light Sweet crude. The Platts
Eagle Ford Marker reflects the value of a median 47-API Eagle Ford
crude barrel, based on the crude's product yields and Platts
product price assessments, adjusted for U.S. Gulf Coast
logistics.
Platts introduced the world's first independent daily price
reference valuing crude oil produced from a shale formation in
May 2010 when it began assessing
Bakken Blend shale oil injected into
pipelines at Clearbrook,
Minnesota, and Guernsey,
Wyoming.
For more information on Platts price assessments methodology
visit these links: Details of Platts Bakken and Platts
Eagle Ford Marker. Platts Bentek's shale oil production
figures are derived from proprietary data models using publicly
available data. For more information on data models, reports
or Platts Bentek's methodology, please contact info@platts
bentek.com.
Platts will publish monthly updates via press release on Bakken
and Eagle Ford shale oil production and price data.
* The Bakken formation spans North and
South Dakota, Montana, Saskatchewan, Manitoba and Alberta.
** API gravity is a measure
of how heavy or light a grade of crude oil is compared to
water.
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SOURCE Platts