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September 19, 2013

US Crude oil production could be over 10 million bpd by the of 2015 and 12 million bpd by 2020




Texas oil production from just two fields, the Eagle Ford shale and the Permian Basin, is likely to total well over 2 million barrels of oil per day (MMbopd) this year, if recent output trends continue, and could approach 2.5 MMbopd sometime in 2014.

Production in the Eagle Ford play was about 599,000 barrels of oil per day (bopd) during the first six months of 2013, according to figures from the Texas Railroad Commission. Projections by the Wall Street Journal are that output will reach 930,000 bopd sometime this year. The Eagle Ford is expected to move well past the 1-million barrels-of-oil-per-day threshold by mid-2014.

Meanwhile, output in the Permian Basin, which contains both shale plays and conventional plays, was about 890,000 bopd during the first half of 2013. Output is projected reach as high as 1.4 million bopd sometime in 2013, according to Stephen Shepherd for investment banking firm Simmons & Co. International.

The current pace of annual increase in Texas was 30 percent or more, indicating production could surpass 3 million barrels per day by early 2014 and reach 4 million barrels per day by 2015.



The Gulf of Mexico should add another 1 million bpd by 2020 for a total of 2 million bpd from the Gulf. This would push Texas up over 5 million bpd.

North Dakota is projected to ultimately produce just under 1.6 million barrels of oil per day.

A lack of capacity in the refining market that could soften prices of Bakken crude, Helms said.

With the Bakken and the Eagle Ford shale in Texas producing more light, sweet crude, refineries can handle an additional 650,000 barrels of oil per day, Helms said.

“We’re going to gobble that up in a hurry,” he said.

North Dakota produced 874,460 barrels per day in July. Planned refineries in North Dakota won’t make much of a dent in that supply. A refinery under construction near Dickinson will have the ability to process 20,000 barrels per day.

That lack of refinery capacity means Bakken crude will need to compete with heavy, sour crude for refining and companies will need to incorporate potentially lower prices into their budgets for 2014, Helms said.

Helms told industry leaders the North Dakota Industrial Commission is working on policies to reduce natural gas flaring, which was at 30 percent in July.

The drilling rig count in North Dakota has stabilized at 185. Helms expects those rigs to continue drilling new wells for the next 20 years, adding 2,000 to 3,000 permanent jobs each year.


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