Posted on 04/28/2011 5:01:23 AM PDT by thackney
Domestic oil production reversed decades-long decline in 2009 and 2010
Following declines in all but one year from 1986 to 2008, U.S. oil production (crude oil and lease condensate) increased in 2009 and again in 2010. Due in part to Hurricanes Ike and Gustav, average production dipped below 5.0 million barrels per day (bbl/d) in 2008, then climbed to 5.4 million bbl/d in 2009 and 5.5 million bbl/d in 2010, with 2010 volumes representing an 11 percent increase over 2008.
While much of the increase in 2009 was associated with deepwater developments in the Gulf of Mexico Federal Offshore, the increase in 2010 was driven primarily by escalating horizontal drilling programs at the the Bakken and other U.S. shale formations. Operators are combining horizontal wells and hydraulic fracturing-the same technologies used to significantly boost shale gas production-to do the same for oil. In North Dakota, for example, total oil production has approximately tripled since 2005 due largely to development of the Bakken (which extends into Montana and portions of Canada). Operators increased North Dakota's Bakken production from less than 3,000 bbl/d in 2005 to over 230,000 bbl/d in 2010. The Bakken's share of total North Dakota oil production rose from about 3 percent to about 75 percent over the same period.
Shale plays known primarily for natural gas production-or where horizontal drilling initially targeted natural gas-are also seeing accelerating oil-focused drilling. At the Barnett shale in Texas, overall oil production more than tripled from 2005 to 2010. Oil production from the Woodford shale in Oklahoma surpassed 4,000 bbl/d in 2010, up 42 percent from 2009 and nearly three times 2008 volumes. At the Eagle Ford shale formation in Texas, oil production, which was negligible in 2005, approached 30,000 bbl/d in 2010. Oil production from Appalachia's Marcellus shale more than doubled in 2010 from a year earlier and has grown nearly thirteen-fold since 2007.
This sharpening focus on oil developments in shale formations and other areas can be clearly seen in the significant redistribution of the Nation's rig fleet. The Baker Hughes rig count presently shows that there are more active oil-directed rigs than natural gas-directed rigs. Natural gas rigs generally accounted for between 80 and 90 percent of the total weekly rig count throughout most of the 2000s. However, starting in about mid-2009 (when the overall rig count fell to a low point after peaking in September 2008), the number of rigs targeting oil deposits has climbed significantly. The importance of horizontal drilling to increasing oil production is also underscored by the Baker Hughes rig count data. Horizontal rigs comprised less than one-third of oil-directed rigs in September 2008, and with a tripling of horizontal oil rigs since then, that share has increased to about 46 percent.
One factor responsible for this shift is an increase in crude oil prices relative to natural gas prices. The ratio between the spot prices of crude oil and natural gas gauges the fuels' relative market value. The crude oil-to-natural gas price ratio, which through mid-2009 averaged over 8 from 2000 through mid-2009, has since risen considerably. The ratio (calculated by dividing the Brent spot price of crude oil in dollars per barrel by the Henry Hub spot price of natural gas in dollars per MMBtu) surpassed 30 in September 2009 and averaged close to that in March 2011. At that price ratio, oil is five times more valuable than natural gas on an energy-equivalent basis.
Retail gasoline price rises for fifth straight week while diesel price falls
The U.S. average retail price of regular gasoline increased three and a half cents from last week to $3.88 per gallon. This is $1.03 per gallon higher than last year at this time and is the highest price in April since the U.S. Energy Information Administration began tracking weekly data in 1990. The Midwest tallied the biggest price gain, more than a nickel higher than the previous week, and was followed by the East Coast where prices increased over four cents. The Rocky Mountain region registered close to a three-cent gain. West Coast prices notched up about two cents to $4.10 per gallon; it remains the only major region in the country where the gasoline price averages more than $4 per gallon. Rounding out the regions, the Gulf Coast average gasoline price was almost flat on the week.
The national average diesel price fell almost a penny this week to $4.10 per gallon. This was only the second weekly decrease since December 6, 2010. The diesel price is $1.02 per gallon higher than last year at this time. The West Coast price was down more than a penny, the biggest decline among the regions. However, diesel prices on the West Coast are still the highest in the country at $4.31 per gallon. The Gulf Coast, Midwest, and East Coast all registered decreases of less than penny on the week. The only major region to see an increase was the Rocky Mountains, where the average price was up about a penny. This is the twenty-second straight weekly increase for the region.
Propane inventories gain slightly
Total U.S. inventories of propane rose by a small margin last week, gaining roughly 0.1 million barrels to end at 26.5 million barrels total. The Midwest region accounted for the largest build of 0.3 million barrels, while the Gulf Coast region added 0.1 million barrels. The East Coast regional inventories dropped 0.3 million barrels and the Rocky Mountain/West Coast stocks were down slightly. Propylene non-fuel use inventories represented 5.9 percent of total propane inventories.
And...I don’t think Eagle Ford is anywhere near fully developed. Is that correct?
Bakken is still growing but has had years to start getting the infrastructure like pipelines going. They still have more to build.
Wow.... great piece.
So, the President is right. He is hiding behind this info to appease his wacko base.
What’s the difference between a gas rig and oil rig?
Since it takes years to get rigs online, thank goodness Messrs. Bush and Cheney were adults who encouraged oil production. One thing is for sure: Hussein had DICK to do with getting more oil to market.
Product mainly.
Depending on the field pressure the “auxiliary” equipment to handle initial entry into the field.
I pinged a couple that probably know more.
Most of my work comes after the drilling is complete and needs to be tied into production facilities.
The big jump increases are from platforms like Thunderhorse coming online. The deep drops are from Hurricanes.
First someone makes the financial decision to enter into an area. Then the leases are purchased. Then Seismic survey is done. Then exploratory drilling is done. Then analysis of the core samples. Then production drilling begins (multiple wells) while engineering is done, equipment purchased, pipelines constructed, receiving at refinery built, modification to refinery if crude is a different quality than currently being processed, etc...
Or a rig that drills for oil and gas. Keep in mind that a great deal of the nat gas produced comes from oil wells that also produce nat gas.
OTOH, the Eagle Ford formation mentioned in the article produces nat gas with oil mixed in.
Correct. The boundaries of the EF are well known, but right now some companies with large land leases seem to be searching for the “sweet spots.” As I look forward to five years from now, I think you will be amazed by the oil production coming from that area.
I do not agree with that. Exploratory wells continue to find play extending now south into Mexico and North of Houston.
Depends what part you drill in.
Thanks for the good stats thackney.
Are you familiar with the methods the Israeli claim that they have used, with great effect, to extract oil from shale? How does it compare to the US approach? They are making it sound like they have discovered something radically different.
No, if you have a link I would appreciate it. Estonia, Brazil, China have decades of experience retorting shale for petroleum. Hard to believe that some think we cannot match the technical expertise of Estonia.
All of the shale production described in this thread is not retorting. It is using drilling to reach bands of oil and gas that have already separated from the shale. It is essential tradition production methods combined with steerable horizontal drilling and hydraulic fracturing. Modern techniques to reach the oil and gas but still mostly tradition methods of production past that point.
http://lady-light.blogspot.com/2011/03/israel-next-major-global-oil-exporter.htmle
They claim that it is radical improvement. A lot less water, too
How does horizontal drilling affect access in older, supposedly depleted oil fields?? Can production from them also be increased??
Reading the source article:
http://www.jpost.com/Features/FrontLines/Article.aspx?id=211676
rather than the over-hyping, little info blog, it appears they are using the technique similar to the one developed by Shell in their pilot project in Colorado.
http://www.shell.com/static/usa/downloads/about_shell/upstream/chronology_fact_sheet.pdf
http://www.shell.us/home/content/usa/aboutshell/projects_locations/mahogany/
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