Has the Bakken Peaked?

May 13, 2015 Elizabeth Alford

The Energy Information Administration ( EIA) is predicting that oil production in the Bakken will begin to decline in June.

Shale producers have been reducing rigs, cutting budgets and laying off workers for months to compensate for low crude prices. Over the past year, the Bakken rig count has dropped by more than half, but until now production has remained at record levels, with the EIA reported 1.2 million barrels a day in February.

Related: Record Production for Bakken

In the EIA’s monthly productivity report for May, the agency reports that oil and gas production has probably peaked and they expect a 31,000 Mbbl/d drop in oil and 30,000 MMcf/d f drop for natural gas throughout June.

The Bakken had 80 oil rigs running last week zero gas rigs. WTI oil prices continued to climb trading at $59.39/bbl on Friday afternoon, a $.63 increase from the previous week and gas futures trading increased to $2.88/mmbtu.

Bakken Production Expected to Decline

April 14, 2015 Elizabeth Alford

For the first time since the Energy Information Administration (EIA) began tracking drilling productivity, the agency reported on Monday that oil and gas production will decrease for the Bakken and other shale formations across the country.

Shale production has been a major player in boosting US output to more that 4 million bpd and has played a key role in the collapse of oil prices worldwide in 2014.

Production from the Bakken formation has increased 28% year-over-year despite declining rig counts across the area.

The EIA estimates that the Bakken will experience a decline of 23,000 barrels of oil a day to 1.3 million in May. Natural gas will also decline by 21 million cubit feet per day.

“Speaking with Bloomberg, Carl Larry, head of oil and gas for Frost & Sullivan LP said, “We’re going off an inevitable cliff because of the shrinking rig counts. The question is how fast is the decline going to go. If it’s fast, if it’s steep, there could be a big jump in the market.”

Crude by Rail Up 1700%

March 31, 2015 Elizabeth Alford

The Energy Information Administration (EIA) released the latest data today for crude by rail (CBR) across the country that shows a significant increase over the last five years.

Total CBR movement in the United States and between the United States and Canada was more than 1 million barrels per day (bbl/d) in 2014, up from 55,000 bbl/d in 2010. The regional distribution of these movements has also changed over this period.

Crude by rail continues to be highly controversial as people question the safety for individuals and the environment. With production at an all time high, the CBR numbers will continue to escalate as producers must find a way to move their product.

The EIA developed a new tracking system that will gather data across all regions of the country and parts of Canada from January 2010 through the current month. CBR activity is tracked between pairs of Petroleum Administration for Defense District (PADD) regions (inter-PADD), within each region (intra-PADD), and across the U.S.-Canada border.

“EIA Administrator Adam Sieminski says that “EIA expects that the new data it has developed using information provided by the U.S. Surface Transportation Board (STB) along with data from other third-party sources and our own survey data, will provide key insights into oil-by-rail movements, including shipments to and from Canada.”

Record Production for Bakken

February 18, 2015 Elizabeth Alford

Despite declining rig counts across the country, oil production remains at record levels and is currently exceeding demand.

Related: Bakken-Three Forks rig count

According to the Energy Information Administration (EIA), US oil production hit a record 9,226,000 barrels per day last week, with production from the Bakken formation up to an average of 1.2 million barrels a day, a 28% year-over-year increase.

This record production is contributing to an international surplus and keeping crude prices low. It is estimated that oil supply is exceeding demand by over one million bbl/d in the global market.Inventories for U.S. commercial crude oil increased by 4.9 million barrels this week. At 417.9 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years. Consumption grew by 0.9 million bbl/d in 2014, averaging 92.1 million bbl/d for the year. EIA predicts global consumption to grow by 1.0 million bbl/d in both 2015 and 2016 and global oil inventories to continue to build in 2015.

“CNBC recently reported that, “The decline in the US rig count likely remains well short of the level required to slow US shale oil production to levels consistent with a balanced global market. Lower oil price will be required over the coming quarters to see the US production growth slowdown materializes.”

Bakken Shale Expected to Hit 1.19-Million b/d in Nov. 2014

October 16, 2014 Kirk Eggleston

The Bakken Shale is expected to produce 1.193-million b/d of oil in November, up 22% from the same time last year, according to the Energy Information Administration's (EIA) Drilling Productivity Report. October's total production from the play is expected to be 1.164-million b/d.

Despite lower crude prices, EIA data shows gains in production across all major U.S. shale fields. According to the International Energy Agency (IEA), only 4% of U.S. shale production needs prices above $80 for drillers to break even. In April of 2014, consultancy Wood Mackenzie issued a report that estimated break-even costs in the Bakken based on sub-plays. Break-even rates in the Sanish basin, one of the better areas for development in the Bakken, are estimated to average $58/bbl, according to the Wood Mackenzie report. Break-even costs were higher in other areas of the play.

Bakken operators continue the trend to be more efficient. EIA data for October shows new-well oil production per drilling rig is at 530. This is expected to increase to 537 by November.

Gains in Texas

In the Eagle Ford Shale in South Texas, and the Permian Basin in West Texas, gains were similar to the Bakken on a month-to-month basis.

The EIA estimates the Eagle Ford will produce 1.614-million b/d of oil November, up 29% from the same time last year. That's also a ~2% increase from October's expected production of 1.579-million b/d.

The Permian's October production is expected to be 7.765-million b/d, and increase ~2% to 1,807-million b/d in November.