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Commentary: Texas and Eagle Ford – Where the Action Is

(Note: Commentaries do not necessarily represent the position of ASPO-USA.)

A lot has been made in the media about how rapidly oil production is increasing in North Dakota due to development of tight oil in the Bakken Shale region of the state. Less has been made of the rapidly increasing oil production in Texas.

According to United States Department of Energy/Energy Information Administration (US DOE/EIA) data, oil production is rising faster in Texas than it is in North Dakota: a 523,000 b/d increase for Texas versus a 243,000 b/d increase for North Dakota in 2012, relative to 2011, based upon US DOE/EIA data as of 2/28/13.

In Texas, most of the recent oil production increase has come from a shale formation called Eagle Ford. Figure 1 is a diagram showing where Eagle Ford is located within Texas.

Eagle Ford Shale Formation Shown in Green

Eagle Ford Shale

Figure 1

Eagle Ford actually has separate regions that produce dry gas, condensate and crude oil. Crude oil is produced on the north side of the formation, condensate in the middle and dry gas on the south side. Table I contains crude oil and condensate production data for Eagle Ford.

Eagle Ford Crude Oil and Condensate Production

Year

Crude Oil Production (b/d)

Condensate Production (b/d)

Sum of Crude Oil + Condensate Production (b/d)

Change in Production from Previous Year (b/d)

2008

358

0

358

 

2009

844

1,423

2,267

1,909

2010

11,986

13,708

25,694

23,427

2011

127,965

71,706

199,671

173,977

2012

352,127

71,748

423,875

224,204

2008-2012 Change

351,769

71,748

423,517

 

Table I* *Data from the Texas Railroad Commission as of 2/28/13

Among the interesting aspects of the data in Table I is the rapid rise of crude oil production in the last few years and the small increase for condensate production in 2012 relative to 2011. Is condensate production on the verge of declining? Time will time.

Table II illustrates, when compared to Table I, that most of the Texas oil (crude oil + condensate) production increase in the last few years has come from Eagle Ford.

Texas Oil Production Minus Eagle Ford

Year

Texas – Eagle Ford Crude Oil + Condensate Production (b/d)

Change in Production (b/d)

2008

1,108,720

 

2009

1,091,253

-17,467

2010

1,141,315

50,062

2011

1,211,954

70,639

2012

1,207,688

-4,266

2008-2012 Production Change

 

98,968

Table II* *Data from the Texas Railroad Commission as of 2/28/13

The data in Tables I and II show that the oil production increase for Eagle Ford was over 4 times that of Texas outside of Eagle Ford between 2008 and 2012.

An interesting aspect of oil production data for Texas is that there is a wide discrepancy between the data from the Texas Railroad Commission (TRC) and that from the US DOE/EIA over the last few years, illustrated in Table III. The oil production data in Table III is as of 2/28/13 for both agencies.

Texas Oil Production Data from the US DOE/EIA and TRC

Year

US DOE/EIA Texas Oil Production Data (mb/d)

TRC Data (mb/d)

Difference between US DOE/EIA Data and TRC Data (b/d)

2005

1.076

1.076

0

2006

1.075

1.075

0

2007

1.072

1.072

0

2008

1.109

1.109

0

2009

1.093

1.094

-1,000

2010

1.171

1.167

4,000

2011

1.463

1.411

52,000

2012

1.986

1.632

354,000

Table III

I’ve highlighted the US DOE/EIA’s production figures for 2011 and 2012 in Table III because the difference between the two numbers corresponds to 523,000 b/d, a number given in the second paragraph of this commentary for the 2012 production increase in Texas based upon US DOE/EIA data. By comparison, the increase based upon TRC data is 221,000 b/d, the difference between the highlighted values for TRC data in Table III.

I first recognized a discrepancy between US DOE/EIA and TRC data in early 2012. At the time, I attempted to contact both the US DOE/EIA and TRC to try and determine the source of the discrepancy. I was informed by a representative of the TRC that they send their data to the US DOE/EIA but he wasn’t sure why their posted production figures differed from those of the US DOE/EIA. I received no response from the US DOE/EIA.

I intend to monitor revisions in production data from the two agencies over the next few years to determine the magnitude of the revisions from the two agencies over time.

I have specifically included the date on which I recorded data because revisions can be made without it being obvious that changes were made.

An important question to ask, relative to Texas oil production, is when will production peak for Eagle Ford? To answer that question, it requires a reasonable estimate of the amount of economically recoverable oil in Eagle Ford.

Based upon claims by oil industry promoters, there is some huge quantity of oil in Eagle Ford, as well as other shale formations, and a peak would occur in the distant future. Oil industry promoters like to exaggerate, I suppose to lure gullible investors, so I don’t place any stock in their estimates.

Based upon a recent assessment by the US DOE/EIA, the technically recoverable amount of oil in the Eagle Ford formation is approximately 3.3 billion barrels (Gb). Since the technically recoverable amount assumes that there is no limit on the amount of money that can be spent on recovery, I don’t place a lot of stock in that value as being what will be economically recoverable.

But let’s assume 3.3 Gb is a reasonable estimate for the economically recoverable amount of oil in Eagle Ford. Figure II is a graph of Eagle Ford oil production with an Estimated Ultimate Recovery of 3.3 Gb and a 6% decline rate after peak.

Eagle Ford Production

Figure II

Based upon Figure II, peak production occurs in 2014. Of course the oil industry could choose to produce the oil more rapidly with a higher peak and a more rapid decline after the peak which would alter the peak date a little.

If the ultimate recovery is lower than 3.3 Gb, as I expect, the peak will likely be lower than ~600,000 b/d and the decline steeper.

If Figure II is a reasonably accurate assessment of future Eagle Ford oil production, a secondary peak in Texas oil production should occur around 2014 followed by declining production. To place current Texas oil production in perspective, peak production for Texas occurred in 1972 at 3.57 mb/d. Texas will never again reach a production level remotely close to that value.

As with Bakken, Eagle Ford oil production will be merely a bubble. Unfortunately, I wouldn’t expect the media to inform the public about the bubble until after the bubble has burst.

Roger Blanchard teaches chemistry at Lake Superior State University and authored the book “The Future of Global Oil Production: Facts, Figures, Trends and Projections by Region,” McFarland & Company (2005). His website Energy and Climate News is at http://climateandenergynews.zparking.net/.

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