Shale update: Bakken, Eagle Ford production up slightly in July

From July 2014 to July 2015 total U.S. crude oil production has increased by about 550,000 b/d, mostly from shale basins

Oil production from key shale formations in North Dakota and Texas increased slightly in July from June, according to Bentek Energy.

Photo by Shaun T. Polczer.

Oil production from the Eagle Ford Basin in Texas remained relatively strong in July, up 10,000 barrels per day (b/d), ), but less than 1 per cent, from June, the latest analysis showed. This increase followed the growth trend that has been set by the basin since January of this year when oil production showed the first (and so far only) sign of decline when it decreased 14,000 b/d month on month.

Crude oil production in the North Dakota section of the Bakken shale formation of the Williston Basin remained flat, increasing less than 500 barrels b/d, or less than 1% in July vs. June, said Bentek, an analytics and forecasting unit of Platts, in a press release.

The average oil production from the Eagle Ford Basin last month was 1.6 million b/d. On a year-over-year basis, that is up a little less than than the incremental 250,000 b/d, or about 17% higher than July 2014, according to Sami Yahya, Bentek energy analyst.

The average crude oil production from the North Dakota section of the Bakken formation in July was 1.2 million b/d, or up approximately 90,000 b/d from year-ago levels.

“It is the flight to quality and higher returns that is keeping crude production going in those two key shale basins,” said Yahya. “Initial production (IP) rates have been improving, especially in the oily window of the Eagle Ford Basin.”

Yahya says producers in the Eagle Ford are currently drilling 2.5 wells per rig per month, which is higher than the national average of 1.5 wells. Drill times have been improved from an average of 15 days per well in 2014 to roughly 11 days per well in 2015.

The Bakken shale formation follows closely behind the Eagle Ford Basin in terms of efficiency gains and internal rates of return, said Yahya. Drill times in this basin have dropped from about 15 days per well in late 2014 to about 13 days per well during the second quarter of this year, he said.

“Substantial cost savings protocols alongside reduced drill times have kept internal rates of return (IRR) in the Bakken shale formation among the best in the country,” explained Yahya.  “Current rates of return in the Bakken shale formation are around 15 per cent, which is comparable to the 18 per cent found in the Eagle Ford Basin.”

Bentek analysis shows that from July 2014 to July 2015, total U.S. crude oil production has increased by about 550,000 b/d.

“Prices continue to slide for both of these shale crudes with the daily price decrease in July averaging at 52 cents/b for Eagle Ford and 61.5 cents/b for Bakken, representing a 206 per cent and 779 per cent respective acceleration in its daily price decrease when compared to June,” said Luciano Battistini, Platts managing editor of Americas crude.

Eagle Ford and Bakken prices, however, have ranged from $49.77/b to $60.22/b and $42.71/b to $54.05/b, respectively, and they were still within the high-low range for the year, according to Battistini.

The Platts Eagle Ford Marker, a daily price assessment launched in October 2012 and reflecting the value of oil out of the Eagle Ford Shale formation in South Texas, has increased 5% between January and July, with an average price of $48.14/b for the first seven months of 2015. But it is down 49% from year-ago levels. The marker has ranged between $46.22/b and $66.23/b since the beginning of this year.

The price of oil out of the Bakken formation at Williston, North Dakota, was up 12% between January and July, with an average price of $48.14/b for the first seven months of 2015, according to the Platts Bakken  assessment. Platts Bakken, however, is down 49% when compared to last year’s corresponding month. The wellhead assessment has ranged between $37.67/b and $59.32/b since the beginning of January.

The Platts Bakken, introduced April 22, 2014, is a daily assessment of price for oil closest to the wellhead prior to determination of transportation by rail or pipe. The assessment reflects a sulfur content of 0.2% or less and an American Petroleum Institute (API)** gravity of 42 or less, similar to the nature of North Dakota Light Sweet crude. The Platts Eagle Ford Marker reflects the value of a median 47-API Eagle Ford crude barrel, based on the crude’s product yields and Platts product price assessments, adjusted for U.S. Gulf Coast logistics.