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Hyperbolic Decline

Carrizo Decline Curve - Source: Global Hunter GHS 100 Energy Conference Presentation - June, 27, 2014

Carrizo Decline Curve – Source: Global Hunter GHS 100 Energy Conference Presentation – June, 27, 2014

Wells extracting oil from dense shale rock experience “hyperbolic decline rates,” Pitts said by telephone.

Shale Output Is Falling Faster Than Expected

by Joe Carroll – Bloomberg Business – April 14, 2015

Shale drillers will see production drop sooner than expected under a U.S. government forecast, a momentum change that hints at an eventual price rally.

Just five months after Saudi Arabia put the market into a tailspin by refusing to cut supply despite a global glut, the shale oil industry will record its first monthly dip since U.S. officials began weighing output in 2013.

The projected production drop is small, just 1 percent. Yet investors took note, pushing oilfield stocks to the top five spots in the Standard & Poor’s 500 Index on Tuesday, led by rig operators Ensco Plc and Diamond Offshore Drilling Inc. The decline lags the idling of rigs because of a backlog of already-drilled wells that have gradually been coming online.
“OPEC’s plan is playing out and price is correcting the oversupply,” said Michael Scialla, an analyst at Stifel Nicolaus & Co. in Denver, in a telephone interview.

West Texas Intermediate crude, the U.S. benchmark, climbed 3 percent to $53.47 a barrel at 2:03 p.m. in New York, extending the rising streak to a fourth trading session.

Shale fields make up about half of total U.S. production, which will continue growing this year and next, rising to 10.3 million barrels a day in 2025, according to a new longterm forecast by the Energy Department Tuesday.

Crude lost almost 60 percent of its value since late June, making some shale fields unprofitable to develop and forcing companies to cut back exploration prospects. Oil explorers were forced to shut down more than half the rigs drilling for crude in the U.S. since the Saudi statement in November, and canceled expansion plans to conserve cash.

‘Hyperbolic Decline’

“The question on everyone’s mind was would we see it in the second or third quarter, and I’m not surprised it’s happening in the earlier part of that range,” said David Pitts, chief financial officer at Houston-based producer Carrizo Oil & Gas Inc.

Continue reading story at Bloomberg Business

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Wyoming oil and gas drilling setback increase heads to vote

WyomingApril 14, 2015 – Associated Press

CASPER, Wyo. (AP) — Wyoming oil and gas regulators are set to decide whether the state should require oil and gas drilling to take place farther away from homes and businesses.

The current minimum distance is 350 feet. The Wyoming Oil and Gas Conservation Commission will consider Tuesday whether to expand that to 500 feet.

The petroleum industry says it can live with a 150-foot increase even though that will limit their options for drilling and cost more.

Others say a 500-foot setback distance is not enough to protect people from noise and air pollution. Environmental groups say the distance should be at least a quarter of a mile.

The proposal follows an oil boom that put drilling closer to homes in eastern Wyoming.

Read article at PennEnergy

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U.S. crude oil output to soar till 2020 despite price rout: EIA

Picture of ConocoPhillips Drill Rig drilling in the Niobrara Play - Image Credit ConocoPhillps

Picture of ConocoPhillips Drill Rig drilling in the Niobrara Play – Image Credit ConocoPhillps

(Reuters) – The U.S. government on Tuesday forecast domestic crude production will rise even more than expected a year ago, undeterred by the worst price rout since the financial crisis.

U.S. crude oil production will peak at 10.6 million barrels per day in 2020, a million barrels more than the high forecast a year earlier, according to the annual energy outlook by the Energy Information Administration, the statistical arm of the U.S. Energy Department.

Crude production will then moderate to 9.4 million bpd in 2040, 26 percent more than expected a year ago, the agency said.

The reference case in the report forecasts Brent prices LCOc1 of $56 a barrel in 2015, rising to about $91 a barrel in 2025, $10 a barrel less than levels expected a year ago. The report uses the 2013 value of the dollar as its measure.

Despite lower prices, higher production will result mainly from increased onshore oil output, predominantly from shale formations, the agency said.

Onshore production in lower 48 states is expected to reach 5.6 million bpd in 2020 in the reference case, 34 percent more than expected a year ago.

The agency expects a faster oil drilling pace this year than it saw last year.

“Producers continue to locate and target

the sweet spots of plays currently under development,” the report said.

As production continues to boom, net imports are expected to decline as a share of domestic consumption. Net imports are expected to account for 14 percent of domestic liquid fuels consumption in 2020, compared with 26 percent seen a year ago.

Continue reading story at Reuters

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U.S. shale oil output to fall in May, first drop in 4 years -EIA

oil-drop-dollarsign(Reuters) – Oil production from the fastest-growing U.S. shale plays is set to fall some 45,000 barrels per day to 4.98 million bpd in May from April, the first monthly decline in over four years, projections from the U.S. Energy Information Administration showed on Monday.

The projected slip from 5.02 million bpd in April underscores how record crude production from the U.S. shale boom may be backtracking after global markets saw prices effectively slashed by 60 percent since June on oversupply and lackluster demand.

Oil production from the Permian Basin of West Texas and New Mexico were forecast to rise 11,000 bpd to 1.99 million bpd, the smallest monthly increase since November 2013, according to the EIA’s drilling productivity report.

Production from the Bakken formation of North Dakota will fall 23,000 bpd to 1.3 million bpd. Eagle Ford oil production in South Texas will fall 33,000 bpd to 1.69 million bpd, the largest monthly drop since EIA began tracking the data in 2007.

Meanwhile, new-well oil production has accelerated as drillers look to squeeze more oil from rigs.

In the Eagle Ford, new-well oil production per rig rose by 20 bpd to 700 bpd in May. A month earlier, it rose by 22 bpd to 680 bpd, the fastest increase on record with the EIA.

Similarly, Permian new-well oil production per rig rose by 36 bpd to 240 bpd in April and by 25 bpd to 265 bpd in May, the fastest increases on record with the EIA.

Continue reading story at Reuters

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Noble gets a $7.8 million reduction in its 2012 Weld County tax bill

NobleEnergyLogoBy Mark Jaffe – The Denver Post – April 13, 2015

Noble Energy, one of the largest oil and gas operators on the Front Range, received an 11 percent cut in its 2012 Weld County tax bill Monday worth $7.8 million.

That cut will be shared by 130 taxing districts — towns, schools, fire departments — in reduced checks set to go out in April, according to Christopher Woodruff, the county assessor.

The Weld County Commission approved the Houston-based company’s petition for an abatement on its tax bill, which is calculated based on the number of wells and their production minus expenses.

A key to the reduced the bill was allowable expenses that Noble had not taken, Woodruff said.

Continue reading story at The Denver Post

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Noble Energy to cut jobs in Colorado, U.S.

NobleEnergyLogoCathy Proctor – Reporter- Denver Business Journal – April 7, 2015

Noble Energy Inc., one of the biggest oil and gas companies working in Colorado, on Tuesday said it “is implementing an organizational realignment of its U.S. operations,” a move that will cut jobs in Denver, Greeley, Houston and Canonburg, Pennsylvania, according to a company spokesman.

Steve Silvers, a spokesman for Noble (NYSE: NBL) in Denver, said the company is cutting about 220 positions across the U.S., with about half of those losses coming from its Colorado operations.

The cuts represent about 10 percent of the company’s 2,200 U.S. employees, Silvers said.

“This realignment puts Noble Energy’s organizational structure and workforce size in line with expected activity levels in each area, and is accomplished by both centralizing resources and reducing our workforce as appropriate,” Silvers said.

About 80 positions will be eliminated in Denver; about 20 positions will be cut in Greeley, and about 100 jobs were eliminated in Houston, he said.

Continue reading story at The Denver Business Journal

 

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Shale Players are “Coring Up”

DUG_PermianBasin and more logosApril 1, 2015 – In response to the drastically reduced price of oil, U.S. shale producers are “Coring up” said Tim Rezvan, Managing Director at Sterne Agee, speaking at the 2015 DUG Bakken and Niobrara conference today at the Colorado Convention Center.  Tim Rezvan went on to explain that efforts to reduce costs was steering drillers to their most cost effective acreage in the core shale areas where yields were generally high and existing pipeline infrastructure was already in place to carry away oil.   Gibson Scott, Director of Energy Research at ITG, also on the “Economics Lessons in The Rockies” panel, had data showing that 90% of the rigs in the Bakken were now running in core.

The common theme coming from all the speakers at the conference was a focus on lowering costs, understanding the dynamics of their play, and becoming more efficient in producing oil.

Jim Volker, Chairman and CEO of Whiting Petroleum said confidently during his talk that he was rigging the company to run profitably at $45 – $55 oil.  Whiting Petroleum is active in both the Bakken and Niobrara plays.  On their Niobrara Redtail program, Whiting is averaging 400 BOE/d in 120 days from the Niobrara C bench and the Fort Hays/Codell formations.

In a big picture view, Tom Petrie of Petrie Partners LLC. and author of the book “Following Oil” (read review from Oil and Gas Journal) who was speaking about oil and geopolitics, said that he did not think that Saudi Arabia’s ability to sustain low oil prices was unlimited, considering that they are now fighting a two front war with ISIL and Houthis rebels in Yemen.  He was of the opinion that oil prices would rebound to the range of $70 to $85 bbl well before the end of the decade.

Jim Volker’s parting comment in his talk echoed a sentiment that was shared by many in the audience, “Keep your chins up, things are going to get better”

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EIA: U.S. oil production growth in 2014 was largest in more than 100 years

Source: Penn Energy Staff - EIA Energy Information Administration

Source: Penn Energy Staff – EIA Energy Information Administration

March 30, 2015 – 

U.S. crude oil production (including lease condensate) increased during 2014 by 1.2 million barrels per day (bbl/d) to 8.7 million bbl/d, the largest volume increase since recordkeeping began in 1900. On a percentage basis, output in 2014 increased by 16.2%, the highest growth rate since 1940. Most of the increase during 2014 came from tight oil plays in North Dakota, Texas, and New Mexico where hydraulic fracturing and horizontal drilling were used to produce oil from shale formations.

In percentage terms, the 2014 increase is the largest in more than six decades. Annual increases in crude oil production regularly surpassed 15% in the first half of the 20th century, but those changes were relatively less in absolute terms because production levels were much lower than they are now. Crude oil production in the United States has increased in each of the previous six years. This trend follows a period from 1985 to 2008 in which crude oil production fell in every year (except one).

Continue reading at Penn Energy

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