OILX - U.S. September Oil Production New Record High
2023-12-07 05:56:00 ET
Summary
- U.S. September oil production increased by 224 kb/d to 13,236kb/d, a new record high by 236 kb/d over November 2019.
- The Drilling Productivity Report (DPR) uses recent data on the total number of drilling rigs in operation along with estimates of drilling productivity and estimated changes in production from existing oil wells to provide estimated changes in oil production for the principal tight oil regions.
- In the Permian, the monthly completion and drilling rates have been slowing since the March 2023 high of 545.
A guest post by Ovi
All of the Crude plus Condensate (C + C) production data for the US state charts comes from the EIA?s Petroleum Supply monthly PSM which provides updated information up to September 2023.
U.S. September oil production increased by 224 kb/d to 13,236kb/d, a new record high by 236 kb/d over November 2019. The increase was primarily due to increases in the GOM and North Dakota. Note that August production was revised down from 13,053 kb/d to 13,012 kb/d, which accounts for 41 kb/d of the 224 kb/d September increase .
The dark blue graph, taken from the November 2023 STEO, is the forecast for U.S. oil production from October 2023 to December 2024. Output for December 2024 is expected to reach 13,440 kb/d which is 43 kb/d higher than forecast last month. While September production came in at 13,236 kb/d, the EIA weekly production report has been reporting constant production of 13,200 kb/d from the week ending October 6 to November 24 and is consistent with the STEO’s estimate for October and November.
The red OLS line from June 2020 to September 2023 indicates a monthly production growth rate of 63.3 kb/d/mth or 760 kb/d/yr. Clearly the growth rate going forward into the rest of 2023 and 2024, shown by the dark blue graph, is lower than seen in the previous June 2020 to September 2023 time period. From October 2023 to December 2024, production is expected to grow by 245 kb/d. Production is expected to fall from December 2023 to July 2024 before beginning to rise.
While overall US oil production increased by 224 kb/d, the Onshore L48 had a production increase of 91 kb/d to 10,815 kb/d in September. Most of the 91 kb/d came from North Dakota, 79 kb/d.
The light blue graph is the STEO’s projection for output to December 2024 for the Onshore L48. From October 2023, to December 2024, production is expected to increase by 249 kb/d to 11,069 kb/d.
Oil Production Ranked by State
Listed above are the 10 states with the largest US oil production along with the Gulf of Mexico. These 10 states accounted for 81.9% of all U.S. oil production out of a total production of 13,236 kb/d in September 2023.
On a YoY basis, US production increased by 899 kb/d with the majority, 688 kb/d, coming from Texas, New Mexico and North Dakota. GOM was up 108 kb/d MoM and up 156 kb/d YoY.
State Oil Production Charts
Texas production decreased by 6 kb/d in September to 5,573 kb/d. However, relative to August’s production reported last month, 5,631 kb/d, September output is down by 58 kb/d. In the EIA’s September report, August was revised down by 62 kb/d to 5,579 kb/d.
New Mexico’s September production rose by 20 kb/d to 1,818 kb/d. The combined output from Lea and Eddy counties rose by 13 kb/d. It is interesting to see that the Lea + Eddy production trend is similar to the EIA’s for the last two months. The current gap between the NM production report and the EIA’s is 79 kb/d and the majority of that gap will be closed over the next six months as the producers update their information.
Of the EIA’s 1,818 kb/d output from New Mexico, 1,739 kb/d (95.7%) came from the Lea and Eddy counties. The Lea and Eddy county production data for September is not complete and will be updated over the next three months.
More production information from these two counties is reviewed in the special Permian section further down.
September’s output increased by 79 kb/d to 1,304 kb/d. This is the second post pandemic month in which North Dakota’s output exceeded October’s 2020 rebound production of 1,214 kb/d.
According to this source , production growth for October could be flat or a bit lower due to October snow storms.
“The state’s drilling rig count as of Tuesday was 35, up from an average of 33 in October. The rig count statewide is expected to gradually rise to the mid-forties over the next two years, according to the state Department of Mineral Resources.
Another rig moved out of the Fort Berthold Reservation, highlighting a trend of companies moving beyond the core area of oil production, Mineral Resources Director Lynn Helms said.
Well completion, which is the process needed to prepare a well for production, was at 96 in September, down from 129 in September .”
Alaska?s September output increased by 19 kb/d to 415 kb/d. Production YoY and two years ago is down by 15 kb/d.
Colorado?s September production decreased by 3 kb/d to 459 kb/d.
Oklahoma’s output in September decreased by 4 kb/d to 424 kb/d. Production remains 52 kb/d below the post pandemic July 2020 high of 476 kb/d. Output may be in a plateau/declining phase.
California?s September production rose by 1 kb/d to 307 kb/d.
Wyoming’s oil production in October and November 2022 reached a post pandemic high of 270 kb/d and then dropped. Its production has been rebounding since February 2023 and August’s and September’s oil production rose to 273 kb/d and 272 kb/d respectively, exceeding November 2022.
September’s production increased by 9 kb/d to 168 kb/d to another record high. For the first 4 months of 2023, Utah had 7 rigs operating. Since May, the number of operational rigs has bounced between 8 and 9, which may account for the increased production.
The increased production since February has come from the Uinta basin .
Louisiana’s output entered into a slow decline phase in October 2022. September’s production increased by 1 kb/d to 97 kb/d and is 8 kb/d lower than October 2022.
GOM production increased by 108 kb/d in September to 2,000 kb/d, a post pandemic high. From May to September, GOM output grew by 292 kb/d to 2,000 kb/d and is 44 kb/d lower than August 2019.
The November 2023 STEO projection for the GOM output has been added to this chart. It projects that over the next twelve months, production will fall close to 1,800 kb/d before rebounding to 1,960 kb/d in December 2024.
It is not known if the GOM decline shown after September 2023 is related to a combination of extensive maintenance and general decline of wells. Also disappointing production from some highly touted wells could be an issue according to this source .
“PowerNap looks like an even bigger disappointment and is declining towards zero having produced less than 5% of its original reserve estimate.”
A Different Perspective on US Oil Production
The Big Two states’ combined oil output for Texas and New Mexico.
September’s production in the Big Two states increased by a combined 14 kb/d to 7,391 kb/d with Texas dropping 6 kb/d while New Mexico added 20 kb/d. September production of 7,391 kb/d is 37 kb/d lower than reported last month for August, 7,428 kb/d.
Oil production by The Rest
September’s production in The Rest increased by 93 kb/d to 3,430 kb/d. This is a new high relative to the September 2020 high of 3,301 kb/d. The majority of the 93 kb/d increase came from North Dakota, 79 kb/d. A chart which shows On-Shore lower 48 W/O the big three shows a different trend, next chart.
The main takeaway from The Rest chart is that current production is 663 kb/d below the high of October 2019 and this appears to be a permanent loss that will never be recovered.
The On-Shore lower 48 W/O the big three shows a slow rising trend from the low of January 2022. It is still 32 kb/d lower than the post covid rebound to 2,158 in July 2020.
Permian Basin Report by Main Counties and Districts
This monthly Permian section has been added to the US report because of a range of views on whether Permian production will continue to grow or will peak over the next year or two. The issue was brought into focus recently by the Goehring & Rozencwajg Report which indicated that a few of the biggest Permian oil producing counties were close to peaking or past peak. Also comments by posters on this site have similar beliefs from hands on experience.
This section will focus on the four largest oil producing counties in the Permian, Lea, Eddy, Midland and Martin. It will track the oil and natural gas production and the associated Gas Oil Ratio (GOR) on a monthly basis. The data is taken from the state’s government agencies for Texas and New Mexico . Typically, the data for the latest two or three months is not complete and is revised upward as companies submit their updated information. Note that the natural gas production shown in the charts that is used to calculate the GOR is the gas coming from both the gas and oil wells .
Of particular interest will be the charts which plot oil production vs GOR for a county to see if a particular characteristic develops that indicates the field is close to entering the bubble point phase. While the GOR metric is best suited for characterizing individual wells, counties with closely spaced horizontal wells may display a behaviour similar to individual wells due to pressure cross talking. For further information on the bubble point and GOR, there are a few good thoughts on the intricacies of the GOR in an earlier POB comment . Also check this EIA topic on GOR.
This chart shows four oil production projections for the Permian basin. The gap between the DPR and LTO projections is there because the DPR projection includes both LTO oil along with oil from conventional wells in the basins that it covers.
The red and green graphs show production as published by the EIA’s DPR and the LTO offices. Comparing the two, it appears that the LTO office believes Permian LTO production is declining while the DPR office is showing a bit more growth before plateauing. The brown and blue markers are projections by D Coyne and yours truly respectively based on different methodologies.
The blue chart only uses two months of production data to make its first projection. A few more months of data is required to refine and modify the methodology.
New Mexico Permian
Over the past 5 weeks, drilling activity in Lea has been dropping while it has increased in Eddy county. For the week ending December 1, the rig count in both counties did not change. The total NM rig count is down by 6 from a high of 104 in August.
Over the last three months, gas production has risen faster than oil production in Lea county. September oil production saw a decrease of 8 kb/d to 1,044 kb/d.
After much zigging and zagging, oil production in Lea county stabilized above 1,000 kb/d while the GOR started to increase in February and exceeded the semi-bounded GOR in July while production remained relatively flat. The data for the last three months, July to September, is incomplete.
This pattern of a zigging and zagging GOR within a semi-bounded GOR while oil production increases to some stable level and then moves out to a higher GOR to the right has shown up in a number of counties . See an additional three cases below. This is the third month in which Lea county has registered a GOR outside the semi-bounded GOR range .
Eddy county oil production is showing early signs that is has peaked.
The Eddy county GOR pattern is similar to Lea county except that Eddy has broken out from the semi bounded range for a longer period while oil production has been dropping. Does the September reversal in the GOR indicate that most of the wells in this county are in the bubble point phase and most of the gas has been released?
Texas Permian
During November, drilling activity increased in Midland county while it dropped in Martin county. Since these two counties are adjacent, could these rigs just be moving between counties?
Both natural gas and oil production are dropping in Midland county. Cannot find any explanation for the July spike in oil and gas production.
Oil production is dropping and the GOR is increasing. It appears that Midland has entered the bubble phase?
Both natural gas and oil production are increasing in Martin county.
Martin county is displaying a new trend of increasing oil production and a decreasing GOR.
Three of the four oil production vs. GOR charts above are exhibiting characteristics indicating that three of the largest oil producing counties in the Permian are in the bubble point phase and are close to or past their peak? Not clear as to what is happening in Martin County.
Eagle Ford’s Biggest Oil producing County
Both oil and gas production are falling in Karnes county and both are down close to 30% from the peak.
This is the GOR vs. oil production for Karnes county but the GOR is still within its typical range while production is dropping. This may indicate that Karnes county wells have not entered the bubble point phase or weren’t very gassy to start with.
Drilling Productivity Report
The Drilling Productivity Report (DPR) uses recent data on the total number of drilling rigs in operation along with estimates of drilling productivity and estimated changes in production from existing oil wells to provide estimated changes in oil production for the principal tight oil regions. The November DPR report forecasts production to December 2023 and the following charts are updated to December 2023. The DUC charts and Drilled Wells charts are updated to October 2023.
Above is the total oil production projected to December 2023 for the 7 DPR basins that the EIA tracks. Note that DPR production includes both LTO oil and oil from conventional wells.
The DPR is projecting that oil output for December 2023 will decrease by 2 kb/d to 9,652 kb/d.
While the green graph shows DPR production being essentially flat since September, it also had a significant upward revision to its production since the last report, red graph. For November, total DPR production has been revised up by 101 kb/d, from 9,553 kb/d to 9,654 kb/d with the biggest increase occurring in the Permian basin.
According to the EIA’s DPR report, Permian output growth continued its slow rise in December. It is expected to increase by 5 kb/d to 5,981 kb/d. The last four months of production data clearly shows a dropping trend in monthly production growth.
In addition to the small production increase in December, Permian production was revised up. November production in the previous report, red markers, has been revised up from 5,901 kb/d to 5,976 kb/d, an increase of 75 kb/d.
During October, 438 wells were drilled and 449 were completed in the Permian. (Note that October is the latest month for DUC information). The completed wells added 408 kb/d to October’s output for an average of 909 b/d/well. The overall decline was 395 kb/d which resulted in a net increase for Permian output in October of 13 kb/d. Of the 449 completed wells in October, 434 were required to offset the decline .
This chart shows the average first month total production from Permian wells tracked on a monthly basis. The total monthly production from the newest Permian wells in December is expected to be 410 kb/d. This is an 11% production increase over the rate reported last month, red markers.
Recall that this production of 410 kb/d is offset by a decline of 405 kb/d for a net overall output increase in the Permian basin of 5 kb/d.
Output in the Eagle Ford basin has been in a downtrend since August. December’s forecast projects output to decrease by 3 kb/d to 1,151 kb/d. The Eagle Ford’s output for November was also revised up by 35 kb/d from the previous report.
At the beginning of the year 2023, 68 rigs were operating in the Eagle Ford basin. The rig count began to drop in mid-March to 60 and slowly dropped further to 47 in November.
The DPR forecasts Bakken output in December will be 1,272 kb/d, 2 kb/d higher than November. December production is now projected to be 27 kb/d higher than the post pandemic peak of 1,245 kb/d in October 2020.
The North Dakota government reported that September production increased by 54 kb/d to 1,278 kb/d. Note that in the Bakken chart above, August production shows a similar spike in production, 46 kb/d.
Output in the Niobrara continues to increase slowly. December’s output increased by 1 kb/d to 692 kb/d.
Production increased due to the addition of rigs into the basin but stabilized at 16 ± 1 rigs in March and April. However, from August to November, the rig count has dropped to 14.
DUCs and Drilled Wells
The number of DUCs available for completion in the Permian and the four major DPR oil basins has fallen every month since July 2020. October DUCs decreased by 73 to 2,317. The average DUC decline rate since March has been 89 DUCs/mth. Of the 73 DUCs decrease, 27 came from the Niobrara followed by 18 and 17 from the Bakken and Eagle Ford respectively.
In these 4 basins, 766 wells were completed while 693 were drilled. Both drilled wells and completions are down from higher levels in early 2023.
In the Permian, the monthly completion and drilling rates have been slowing since the March 2023 high of 545.
In October 2023, 449 wells were completed while 438 new wells were drilled. The gap between completed and drilled wells in the Permian is now very small compared to late 2022 and early 2023.
The Permian, as of October, had 832 DUCs remaining and the completion rate was 449 wells/mth. This means the current cycle time between drilling and completions is 1.85 months or 56 days.
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
For further details see:
U.S. September Oil Production New Record High