Texas’ oil production rose to an estimated 5.4 million barrels per day (bpd) in December, a Rystad Energy analysis shows, and is expected to rise almost every month this year due to sufficient statewide fracking activity levels, but the growth’s pace is seen slowing ahead.
Although statewide oil output is currently reported only at 4.5 million bpd for December, Rystad Energy’s assessment of reporting delays and activity trends indicates that an additional production of about 900,000 bpd is still unreported.
“We see a monthly addition of 70,000 bpd in December in Texas. A flat oil production would be the most conservative scenario,” Rystad Energy’s Senior Shale Analyst Alexandre Ramos-Peon said, pointing out that the Eagle Ford area contributed most to the increase.
We estimate that South Texas oil production climbed by at least 50,000 bpd in December, whereas Permian Texas output added 20,000 to 30,000 bpd. A majority of the large Permian producers maintained a positive production trajectory in December.
Yet preliminary data indicate an outage of about 50,000 bpd for ExxonMobil, based only on the wells with production reports through December 2019. Close, lease-by-lease investigation suggests that a large number of ExxonMobil’s Permian producing leases showed signs of production irregularities in December 2019, though it remains to be seen if this was a real irregularity or a temporary peculiarity in reported data.
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New production additions from each monthly vintage in the state remain at 400,000 bpd. Statewide first-month base decline in Texas has increased dramatically from 150,000‒200,000 bpd in 2017, but stayed at 350,000 bpd or below throughout the second half of 2019. Hence, the statewide activity level remains sufficient to achieve production additions almost every month.
The pace of growth is set to decelerate naturally in the next few months amid a new phase of steepening in base decline. Further activity increases or an upward shift in average well productivity would be needed to achieve material growth in 1Q20. Both events are seen as unlikely in the current environment, but the present activity remains above the balancing point needed to maintain production.
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