Charts and maps of America’s Amazing Shale Oil Revolution;

aei-ideas ^ | July 15th, 2014 | Mark J. Perry |

[ckilmer]

Charts and maps of America’s Amazing Shale Oil Revolution; and the new ‘Big Three’: Bakken, Eagle Ford and Permian

Mark J. Perry | July 15th, 2014

 

Skip to Responses

 

 

Below are four charts and two maps that help tell the story of America’s Amazing Shale Oil Revolution:

1. The Big Three. Yesterday, the Department of Energy’s Energy Information Administration (EIA) updated its monthly “Drilling Productivity Report” with new estimates of oil production through August in America’s three, super-giant oil fields, the “Big Three”: the Bakken in North Dakota and Eagle Ford Shale and Permian Basin in Texas. As the chart above shows, each of those three elite oil fields has been producing more than one million barrels of oil per day – Permian Basin since the summer of 2011, the Eagle Ford Shale since the summer of 2013, and the Bakken since the spring of this year. In all of human history, there have only been ten oil fields in the world that have ever reached the one million barrel per day milestone, and three of those ten are now active in the US – thanks to the advanced drilling techniques (fracking and horizontal drilling) that started accessing oceans of shale oil in Texas and North Dakota about five years ago.

2. The Big Three: More Than 4 Million Barrels Every Day. EIA estimates suggest that the combined crude oil output in those three elite US oil fields (Bakken, Eagle Ford, Permian) has exceeded 4 million barrels per day (bpd) in each of the last three months (June, July and August). Further, the combined oil production (Bakken, Eagle Ford, Permian) has increased four-fold in the last six years, from 1 million bpd in 2007 to more than 4 million bpd this year. At the current pace of production increases, the combined oil output could reach 5 million bpd by the summer of next year.

3. The Big Three – World’s No. 5 Oil Producer. The combined oil output from America’s “Big Three” super-giant shale oil fields (Bakken, Eagle Ford, Permian) surpassed Canada’s crude oil production last September for the first time ever, and has exceeded Canada’s output in each of the last seven months through March of 2014 (most recent month for international oil production statistics from the EIA). As a separate oil-producing nation, those three oil fields in March, with a combined production 3.83 million bpd, would have been the fifth largest crude oil producer in the world, behind only Russia (10M bpd), Saudi Arabia (9.7M bpd), US (8M bpd) and China (4.1M bpd).

4. Horizontal Drilling: “A Real Marvel of Engineering.” The process of hydraulic fracturing has a long history dating back to the 1940s, and by itself wasn’t revolutionary or responsible for the shale oil boom. The truly revolutionary oil extraction technology that led to America’s shale revolution was horizontal drilling in combination with hydraulic fracturing. David Blackmon explains here in one of his excellent Forbes articles — “Horizontal Drilling: A Technological Marvel Ignored“:

The truth is that, of the two technologies, horizontal drilling is the real marvel of engineering and scientific innovation. While impressive in its own right, the main innovations in “fracking” in recent years have been beefing up the generating horsepower to accommodate horizontal wells rather than vertical ones.

Think about what this advancement has meant just in terms of access to the resources:  When drilling into a hydrocarbon bearing formation 100 feet thick, vertical drilling would allow an operator to contact 100 feet of rock, which would limit your potential recovery to whatever oil or gas would flow into that length of pipe.

Horizontal drilling now allows these same operators to drill and set pipe for a mile or more horizontally through this same rock formation.  You are now contacting and “fracking” 5,200 feet of rock rather than 100 feet, which multiplies expected well recovery rates many times over.

The chart above displays rig count data from Baker-Hughes and shows the increased share of horizontal drilling that was largely responsible for the dramatic increases in US shale oil production that started around 2008. From less than a 10% share a decade ago, horizontal drilling now accounts for more than two-thirds of US oil rigs today.  Without the “technological marvel” of horizontal drilling, we would have never seen the dramatic increases in US oil production over the last six years, and the chart above helps to explain why the shale oil boom started in about 2008 – that’s when horizontal drilling started revolutionizing US oil production.

5. Active Drilling Rigs in Texas. Via oilfield services company Baker Hughes, the map above shows all of the current 898 “active drilling rigs” in Texas (blue triangles are oil rigs and red circles are gas drilling rigs), and helps to graphically highlight the shale oil booms in the Permian Basin area of West Texas, and the Eagle Ford Shale boom in the South-Central area of Texas. According to Baker Hughes, “active rigs” are those on location and drilling or ‘turning to the right’. A rig is active from the moment the well is initially “spudded” (when a oil drilling bit penetrates the surface) until it reaches its final “target depth.”
6. Active Drilling Rigs in North Dakota. Here’s another Baker Hughes drilling rig count map,showing the current drilling activity in the Bakken area of western North Dakota (172 active rigs), which is responsible for pushing the state’s oil production above one million barrels per day in recent months.

[bigbob]

And this doesn’t include anything in the D-J.

We are a nation rich in energy, poor in leadership.

[sarasmom]

Thank you for posting!

At what point will these increased supplies start translating into lower consumer prices and / or USA energy independence?

[Elderberry]

My oldest Son took a long time deciding what he wanted to do once he got out of the Navy. From Vegas police to Federal Mar shall. By the time he got out Dec2012 he had decided he wanted to be a directional drilling operator. He said it might take him ten years or more. He got picked up at Weatherford as a tech tearing down oil tools. This Apr he made field engineer. He is now on a rig in Eagle Ford. He supported one in Balken. The rest have been in Tx.

[ckilmer]

I went to EIA here http://www.eia.gov/petroleum/drilling/#tabs-summary-2

and looked up monthly oil production in thousands of barrels for the Permian basin. I don’t know what part of this is seasonality but one thing does stand out. There has been a steady rise this year in oil production which coincides with the rise in the number or rigs and horizontal wells
30 jul 2014
23 jun
21 may
13 april
11 mar
7 feb
6 jan 2014
1 dec
0 nov
1 oct 2013

[Elderberry]

Bakken

[ckilmer]

The rise in production in the D-J is pretty steep but its coming off a small base. If that keeps up for a year or two however, things will change. Same goes for Woodford Canna

[Born to Conserve]

Amazing! Higher oil prices support higher cost of production? Someone should call an economist.

[ckilmer]

Thank you for posting!

At what point will these increased supplies start translating into lower consumer prices and / or USA energy independence?
............
Hard to say. My WAG for now is not for several years.

Unlike natural gas which is priced locally. That is, natural gas is not as easily transportable as oil—so prices for natural gas tend to reflect supply and demand in the USA. Oil however, is a worldwide commodity because its easily transportable. That means that demand in China affect prices in the USA. Production disruptions in Iraq or Libya affect prices in the USA. Falling production in Mexico and Venezuela affect prices in the USA. Demand all over the world has been rising for oil. While production in the USA and Canada and Iraq have been rising—these are the exceptions. Most of the world’s oil fields are old. Their production is flat to down. Now Iraq’s internal difficulties mean that no one will invest new money into Iraq until that civil war subsides. That means that Iraq will not be raising production any time soon. That means that only The USA and Canada will be raising production for the next couple years. Set against rising world demand... I would not expect oil prices to fall for the next couple years.

For now, the US EIA Energy Information Agency expects oil production to rise by 1 million barrels @ day in each of 2014-2015 and then flatten out. However, it looks more and more likely that from 2016-2020 oil production will rise by at least 500,000 barrels@ day with the Permian Eagle Ford Baaken Gulf of Mexico and all others each kicking in 100,000 barrels @ year.

That puts oil independence at about 2019. There will be knock on effects like a strong dollar and balanced federal budgets.

After 2020 however, it looks more and more likely that oil prices will go into permanent secular decline abetted insignificantly by more oil worldwide oil fracking. But caused most significantly by worldwide change over to natural gas for transportation fuels. After 2025, if prices fall and convenience/driving distance continue to rise for electric cars then too electric cars will deliver the coup de grace permanently to high oil prices.

[ckilmer]

Judging by videos I’ve seen — steering drill bits as they snake underground looks like an interesting and lucrative job

[ckilmer]

Higher oil prices support higher cost of production?
...........
The numbers I posted myself from the EIA reflect higher Producton of oil — not higher costs of oil production.

Typically oil production prices decline as the companies derisk & industrialize an oil play.

[Star Traveler]

Hey ... where’s the Oklahoma map ... half the state is cut out ...

[billhilly]

I’m happy we are doing this in the USA, but why are we still paying $3-$4 per gallon at the pumps? I,m sure there is an answer to that.

[ROCKLOBSTER]

electric cars will deliver the coup de grace permanently to high oil prices.

So, you're saying coal-fired and nuclear power plants will make a big comeback?

[ROCKLOBSTER]

why are we still paying $3-$4 per gallon at the pumps?

Global prices on unleaded, determined by commodities speculators.

[USFRIENDINVICTORIA]

And, in turn, the speculators are speculating about supply and demand — which is up to producers and consumers.

[billhilly]

Thanks.

[ckilmer]

electric cars will deliver the coup de grace permanently to high oil prices.

So, you’re saying coal-fired and nuclear power plants will make a big comeback?

.............
There’s currently a worldwide race on to make the first lftr thorium reactor. There’s about seven small companies in the game. Three are from the USA. Plus Bill Gates has a competing design. These reactors are safe, produce almost no nuclear waste, can be designed to use spent nuclear fuel. they’re cheap to make and maintain. They’re portable. They’ll create electricity for 1/4-1/10 the cost of coal power plants.

The first test models will come out in a couple years.

When they’re ready for prime time—they’ll make coal uneconomical. That may be as much as 15 years away however.

[ckilmer]

Hey ... where’s the Oklahoma map ... half the state is cut out ...
.............
Good question. Beats me.