Tuesday, April 15, 2014

Eagle Ford Update

Figure 1

It has been a while since I have updated my estimate of actual output from the Eagle Ford.

Kevin Carter (KC at Peak Oil Barrel) graciously offered help pulling together data for the 39 fields which make up the Eagle Ford play (see this page at the RRC of TX, spreadsheet download here .)
Kevin has strong programming skills in Visual Basic for Applications (VBA) and has made the job of gathering the Eagle Ford data considerably easier.  Thank you Kevin!

My previous estimates only included the Eagleville fields (Eagle Ford 1 and Eagle Ford 2 and the inactive Eagle Ford and Eagle Ford Sour fields), Briscoe Ranch, Sugarkane, Dewitt, Gates Ranch, Hawkville, and Eagle Ridge fields.  Together these 10 fields produce about 99% of Eagle Ford C+C output so these previous estimates are not bad, this new estimate includes all Eagle Ford output reported by the RRC from June 1993 to January 2014.

Note that from June 1993 to Dec 2006 C+C monthly output from the Eagle Ford play was 12 b/d or less, which is why the chart starts at Jan 2007.

An Excel spreadsheet with the data can be downloaded here .  More below the fold.


A brief explanation of the EF EIA curve (red line on the chart) is in order.

I download EF RRC data and statewide TX RRC date from the Railroad Commission of Texas (RRC of TX) and find the percentage of all TX C+C which is produced in the Eagle Ford play.  In January 2014 Eagle Ford C+C was 943 kb/d (RRC data) and TX C+C was 2259 kb/d (RRC data) so 42% of TX C+C was produced in the Eagle Ford according to the RRC of TX.

Historically EIA estimates of TX C+C for the most recent 12 months have been much more accurate than data reported by the RRC of TX, so I use the TX C+C reported by the EIA (2874 kb/d in Jan 2014) and assume the % of output from the Eagle Ford based on RRC data is fairly close (it really is the best we can do, we have no other data).


Figure 2

Spreadsheet with past RRC data downloaded at different dates in the past can be downloaded here.

The EF EIA estimate is the TX EIA C+C multiplied by the %EF/TX(42% in Jan 2014) from RRC data.  In this case EF EIA=0.4175 times 2874=1200 kb/d in Jan 2014.

A final note is that although past estimates have proven conservative (Sept 2013 estimate for June 2013 was 998 kb/d vs. April 2014 estimate for June 2013 of 1024 kb/d), at some point the rapid increase in Eagle Ford output will slow down.   We can only speculate as to when that will occur, but when it does, this method of estimating Eagle Ford C+C output may prove too optimistic.

The EIA estimate of TX C+C has been a simple linear extrapolation of the past trend, this method has worked pretty well over the past 12 months, but there is no reason to expect that a linear increase in Texas oil output will continue indefinitely.  

My modelling (which is speculative) suggests about 6 Gb for a URR for the Eagle Ford with a decrease in new well EUR to begin in July 2014 and to gradually increase in rate from a flat new well EUR (no decrease in new well EUR) from 2010 to June 2014 (EUR30=200 kb over that period) to a 16.6% annual rate of decrease in new well EUR by Jan 2016.  Using the economic assumptions below we get the chart that follows for Eagle Ford output.


 
Real well cost
Oil Price
(2013$)
(2013$)
Jan-13
$8MM
$100
Feb-16
$6.2MM
$103
Dec-30
$6.2MM
$244
Ann. Discount Rate
7%
Royalties + Taxes
24%
Transport Cost
$3/barrel
OPEX
$4/barrel

 

Figure 3


2 comments:

  1. I watched the COP 4/10/2014 analyst call.

    http://www.media-server.com/m/p/jiousyws

    Probably no point in watching every company every year, but the first one gives a lot of insight. These guys are not dummies. In fact, I think they're more thoughtful than the typical peak oil blog writer or certainly commenter. Doesn't mean they're right about everything. And fine to take their comments with scrutiny. But there's definitely some insights into factors involved in oil production. And also into these people being thoughtful about what they're doing. I find them a lot more interesting really than the Gail/Watcher/Pops or even (gasp) Rockman crew. ;)

    Anyhow, fine to keep up with what you're doing, but maybe watching one of these (just like reading a company annual report) is worthwhile background.

    ReplyDelete
  2. rig count down in the Bakken. :(

    http://themilliondollarway.blogspot.com/2014/04/update-on-declining-number-of-rigs-in.html

    ReplyDelete