Tuesday, April 24, 2012

RBN Energy: Overview of the Eagle Ford -- And A New Number for the Bakken

Updates

Later, 9:51 am: I posted the story below earlier this morning, posting it quickly to get it to readers while waiting for the day to start, not thinking much about it.  But on the way into Boston this a.m. I thought about the article again, and three thoughts came to mind:
a) regardless of how this plays out (Eagle Ford vs Bakken), this is really quite something. For Texas, the story is "lost" because it was already known as an oil state; this just adds another chapter. For North Dakota, it is amazing (for me) to see North Dakota playing at the same level as Texas when it comes to oil. Not many have associated North Dakota with oil;
b) by Texas standards, that really is not much of a difference between 1,300- and 1,500-thousand bbls/day, especially when they are just projections and anything can happen; and,
c) for North Dakota -- well, at least for me -- 1,300-thousand -- 1.3 million bbls of oil per day really is a huge number. I think it's a "new" number, and it's not very far off -- 2016? 
I don't know about you, but almost tripling "our" output between now and 2016 is quite remarkable. Think of the pipeline that needs to be laid, the unit trains that will be added, and the number of F-350's on the back roads being driven by women who need to check the status of the wells, the pipelines, and just about everything else.  

Original Post
Link here to RBN Energy.
Last week we covered the incredible growth and potential of the Bakken, where production is just over 600 MB/d headed toward 1,300 Mb/d in 2016 based on Bentek forecasts.    
We were immediately inundated with demands for equal time from that other super-high-growth tight oil play – the Eagle Ford.  “Hey”, say the Eaglefordians – “We are now the most active horizontal oil play, blowing past the Willison Basin late last year. Don’t you think we deserve just as much airtime?”  Yes, they do.  This week the total Eagle Ford rig count came in at 274 with 202 targeting oil.  According to www.eaglefordshale.com, both numbers are records.
The numbers are definitely off the scale. From only 50 Mb/d as recently as April 2010, Eagle Ford production is now over 500 Mb/d (yes, 10X in two years) and according to Bentek headed to 1,500 Mb/d in 2016, or a couple of hundred thousand barrels per day over the Bakken.  
For investors, the opportunities have increased several-fold.

8 comments:

  1. As an investor in Eagle Ford and Bakken companies as well as MLPs, those 2016 numbers are mindboggling.

    The population of the PERMIAN basin, which has just over 1200 Mbpd is about 400,000. The economy of that area is effectively oil and almost nothing else.

    It stands to reason that the population of the Bakken region over time would approach that type number as the service sector grows in retail, education, medicine etc. Midland-Odessa do have somewhat of a corporate base that the Bakken doesn't (Midland's skyline is impressive), so the Bakken likely won't have the white collar base that Midland does.

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    1. Thank you for taking time to comment.

      About a year ago or so, I had the opportunity to visit Midland-Odessa (a story in itself). I have said at least once before: the city fathers (and mothers) of Williston, Minot, and Dickinson need to visit Midland-Odessa, the sooner, the better.

      The numbers are mindboggling, as you noted. The boom and bust cycle of the oil industry, I think, still leads many of us (myself included) to think that this cannot be sustained.

      But the tea leaves, and everything I read, suggests that oil is not going to go away any time soon.

      I'm glad to see you mention MLPs: I think there are opportunities there Jim Cramer and the entire CNBC production staff are missing.

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    2. Cramer doesn't like the smaller MLPs, but small is relative. Have invested in Markwest (Marcellus and Utica), Crosstex for Texas nat gas and NGLs, Atlas Partners, and now ONEOK partners (increasinly a Bakken MLP) and Copano (mostly Eagle Ford). Markwest, Atlas, and Crosstex were all left for dead in 2009.

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    3. ...and that's where Cramer and CNBC are doing a disservice for the "smaller" retail investor. Not exposing their viewers to opportunities other than Green Mountain Coffee, RIMM, Yahoo, AAPL, Starbucks, etc.

      Wow, don't get me started. Smile.

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    4. Actually, the article said that Eagle Ford was going to reach the 500,000 bpd point in March 2012 which would bring daily rate equivalent to Bakken.

      With more than 200 active horizontal rigs drilling for oil, another 75 still drilling for gas/liquids, and > 50 rigs on order, the Eagle Ford should be hitting 1 million bpd by election time (production doubled twice in 2011).

      That million barrels is ON TOP of the 1 million produced by the rest of the state. If Bakken kicks in a million bpd by the end of the year, tight oil will finish the year at production rate of 2 million bpd. EIA is having to go back and massage current and predictions every month.

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    5. And pretty much all on private land; imagine where the nation could be if federal onshore/offshore showed the same growth in production. Maybe it has, and I'm just not aware of it; probably depends on whom one listens to. Smile.

      It's interesting you mention "75 rigs still drilling for gas/liquids"; notwithstanding the horrendous price action for natural gas, it's very possible, the natural gas will be the big story going forward as chemical industry and utilities take advantage of cheap natural gas.

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    6. Midland's skyline isn't impressive.

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    7. All in the eye of the beholder .....

      ... compared to...?

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