Denver/Julesberg (DJ) Basin – Colorado Production levels of both oil and gas in this key shale basin are also setting records in recent months. Bernadette Johnson, Vice President for Market Intelligence at DrillingInfo told an audience in Littleton, Colorado in June: “Since December, we have seen oil grow by nearly 10,000 bpd every month,” and DrillingInfo expects the rebound to continue in the coming months based on continued strong commodity prices.
Bakken Shale – North Dakota/Montana After a brief minor decline in March, Bakken Shale production of both crude oil and natural gas rose in April, with natural gas production setting a record high for the play. Crude production of 1.224 million barrels of oil per day (bpd) came within 3,000 bpd of the all-time high, set in December 2014. The gains were achieved on the strength of rising crude prices, which briefly topped $72 a barrel during April before dropping into the high $60s range in May. The rise in the Bakken’s fortunes has also been facilitated by the presence of the Dakota Access Pipeline (DAPL), which celebrated its anniversary of full operation in June. The presence of the DAPL, with its takeaway capacity of 570,000 bpd, has cleared previously-existing transportation bottlenecks, lowered overall transportation costs, thus helping the basin to become increasingly productive.
Permian Basin – Texas/New Mexico The Permian Basin continues to be the main driver behind U.S. oil production, which sets new records with each passing month. However, a shortage of pipeline takeaway capacity for both oil and natural gas threatens to slow the Permian’s rapid growth in the coming months. Former Pioneer Natural Resources CEO Scott Sheffield told an audience in late June that he expects the region’s pipeline system to reach full capacity in late summer/early fall, and that producers who lack reserved capacity on the various pipeline systems will soon begin to forego new drilling projects and begin to shut-in some wells. With more than a dozen new pipeline projects currently in the planning or construction phases, this bottleneck will be relieved within a year, but in the meantime, it appears certain that the boom in the Permian will be slowed significantly.
Eagle Ford Shale – Texas The full extent of the oil and gas reserves present in the Eagle Ford formation became a bit more clear in late June, as the United States Geological Survey (USGS) released an update to its resource assessment for the basin. According to the USGS, the “Eagle Ford Group of Texas” contains 8.5 billion barrels of oil, 66 trillion cubic feet (TCF) of natural gas and 1.9 billion barrels of natural gas liquids that are “undiscovered” and “technically recoverable.” What those last two terms mean is that these volumes of resource are known today to be in place and can be produced using current technology. Given that technology in the oil and gas industry advances every day, this means that even this updated estimate of the Eagle Ford’s potential is significantly understated. Placed in context, the most prolific single underground formation in U.S. history – the East Texas Field – has produced a little more than 7 billion barrels of oil since its discovery in the early 1930s. Production from the Eagle Ford Shale recently topped the 3-billion-barrel mark since its inception 2008. Added to the 8.5 billion technically recoverable barrels estimated by the USGS that would mean we can expect ultimate recoveries from the formation to exceed 11.5 billion barrels of oil. It’s not the Permian Basin, but the Eagle Ford is a phenomenally rich formation.
Marcellus Shale – Pennsylvania/West Virginia/Ohio Three new academic studies released in a span of five weeks in May and June revealed that a decade of drilling in the Appalachian Basin – including the Marcellus Shale – has had no negative impact on the region’s ground water. The most recent study, conducted by scientists at Yale University, noted that much of the region’s groundwater has historically contained measurable traces of methane, but went on to note that our observations suggest that [shale gas development] was an unlikely source of methane in our valley wells.” These three studies add to the body of knowledge gained from a series of previous similar studies conducted since Marcellus drilling began. None of these myriad studies – some of them funded by anti-gas activists – have ever been able to find any real impacts to the region’s ground water from oil and gas operations.
Haynesville Shale – Louisiana/East Texas A recovering natural gas price and the proximity to Cheniere Energy’s Sabine Pass LNG export facility has led to a modest resurgence in production from the Haynesville Shale region. Natural Gas Intelligence (NGI) projects that production from the Haynesville will rise by “235 MMcf/d m/m [month over month] to 8.97 Bcf/d in July.” Meanwhile, Investors Business Daily reported in early June that super-majors like Shell, Chevron and BP were competing to be the highest bidder for the shale assets of BHP Billiton, which have been up for sale for several months now. BHP’s assets include very significant Haynesville holdings, and are ultimately expected to fetch more than $10 billion.
SCOOP/STACK Play – Oklahoma The rig count for the SCOOP/STACK play remained relatively static over the past two months in the wake of the new production tax increase passed by the Oklahoma state legislature in April. Chad Wilkerson, Vice President and Oklahoma City Branch Executive for the Kansas City Federal Reserve branch, reports that Oklahoma’s oil production rose to an all-time high in December 2017 and is expected to continue to grow throughout the remainder of 2018. In addition, the state’s natural gas production has reached an all-time high in recent months. Wilkerson notes that these increases are being achieved despite a significantly lower number of active drilling rigs and resultant oil and gas-related jobs in the state when compared to mid-2014, attributing that to significant advances in technology that have taken place since that time.
About the author: David Blackmon is the Editor of SHALE Oil & Gas Business Magazine. He previously spent 37 years in the oil and natural gas industry in a variety of roles — the last 22 years engaging in public policy issues at the state and national levels. Contact David Blackmon at email@example.com.