Shale Oil Production in Bakken, Eagle Ford Grew Marginally in July: Platts' Bentek Energy
Production From These Two Prolific Shale Plays Up 13% Versus July 2014
DENVER and HOUSTON, Aug. 21, 2015 /PRNewswire/ -- Oil production from key shale formations in North Dakota and Texas increased slightly in July from June, according to Bentek Energy, an analytics and forecasting unit of Platts. Platts is a leading global provider of energy, petrochemicals, metals and agriculture information.
Oil production from the Eagle Ford Basin in Texas remained relatively strong in July, up 10,000 barrels per day (b/d), ), but less than 1%, from June, the latest analysis showed. This increase followed the growth trend that has been set by the basin since January of this year when oil production showed the first (and so far only) sign of decline when it decreased 14,000 b/d month on month.
Crude oil production in the North Dakota section of the Bakken shale formation of the Williston Basin remained flat, increasing less than 500 barrels b/d, or less than 1% in July vs June.
The average oil production from the Eagle Ford Basin last month was 1.6 million barrels per day. On a year-over-year basis, that is up a little less than than the incremental 250,000 b/d, or about 17% higher than July 2014, according to Sami Yahya, Bentek energy analyst. The average crude oil production from the North Dakota section of the Bakken formation in July was 1.2 million b/d, or up approximately 90,000 b/d from year-ago levels.
"It is the flight to quality and higher returns that is keeping crude production going in those two key shale basins," said Yahya. "Initial production (IP) rates have been improving, especially in the oily window of the Eagle Ford Basin. As well, producers in the Eagle Ford are currently drilling 2.5 wells per rig per month, which is higher than the national average of 1.5 wells. Drill times have been improved from an average of 15 days per well in 2014 to roughly 11 days per well in 2015."
The Bakken shale formation follows closely behind the Eagle Ford Basin in terms of efficiency gains and internal rates of return, noted Yahya. Drill times in this basin have dropped from about 15 days per well in late 2014 to about 13 days per well during the second quarter of this year, he said.
"Substantial cost savings protocols alongside reduced drill times have kept internal rates of return (IRR) in the Bakken shale formation among the best in the country," explained Yahya. "Current rates of return in the Bakken shale formation are around 15%, which is comparable to the 18% found in the Eagle Ford Basin."
Bentek analysis shows that from July 2014 to July 2015, total U.S. crude oil production has increased by about 550,000 b/d.
"Prices continue to slide for both of these shale crudes with the daily price decrease in July averaging at 52 cents per barrel (/b) for Eagle Ford and 61.5 cents/b for Bakken, representing a 206% and 779% respective acceleration in its daily price decrease when compared to June," said Luciano Battistini, Platts managing editor of Americas crude. "Eagle Ford and Bakken prices, however, have ranged from $49.77/b to $60.22/b and $42.71/b to $54.05/b, respectively, and they were still within the high-low range for the year."
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 increased 5% between January and July, with an average price of $48.14/b for the first seven months of 2015. But it is down 49% from year-ago levels. The marker has ranged between $46.22/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 12% between January and July, with an average price of $48.14/b for the first seven months of 2015, according to the Platts Bakken assessment. Platts Bakken, however, is down 49% when compared to last year's corresponding month. The wellhead assessment has ranged between $37.67/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. Bentek Energy's shale oil production figures are derived from proprietary data models using publicly available data. For more information on data models, reports or Bentek's methodology, please contact [email protected].
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.
About Platts: Founded in 1909, Platts is a leading global provider of energy, petrochemicals, metals and agriculture information and a premier source of benchmark prices for the physical and futures markets. Platts' news, pricing, analytics, commentary and conferences help customers make better-informed trading and business decisions and help the markets operate with greater transparency and efficiency. Customers in more than 150 countries benefit from Platts' coverage of the biofuels, carbon emissions, coal, electricity, oil, natural gas, metals, nuclear power, petrochemical, shipping and sugar markets. A division of McGraw Hill Financial, Platts is based in London with more than 1000 employees in more than 15 offices worldwide. Additional information is available at http://www.platts.com.
About McGraw Hill Financial: McGraw Hill Financial (NYSE: MHFI) is a leading financial intelligence company providing the global capital and commodity markets with independent benchmarks, credit ratings, portfolio and enterprise risk solutions, and analytics. The Company's iconic brands include: Standard & Poor's Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL and J.D. Power. The Company has approximately 17,000 employees in 30 countries. Additional information is available at www.mhfi.com.
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Global, Americas: Kathleen Tanzy, + 1 917 331 4607, [email protected]
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