Oct 22 (Reuters) – In the U.S. shale oil race, the Eagle Ford formation in Texas has beaten North Dakota's Bakken to the 1 million barrel per day milestone, according to a U.S. Energy Information Administration report on Tuesday.
The new monthly report, which is the first national effort to lay out comparable monthly figures and projections from six major shale plays, highlighted the stunning speed with which the Eagle Ford region has overtaken the Bakken region that first showed how hydraulic fracturing and horizontal drilling technology could revolutionize the oil industry.
Total production from Eagle Ford hit 1 million bpd in August and is projected to rise to 1.07 million bpd in October and to 1.09 million bpd in November, the EIA report showed. The Bakken, mostly in North Dakota, is expected to produce 935,000 bpd in October and 960,000 bpd in November.
The Bakken is the more mature of the two, with drilling ongoing since 2003. The Eagle Ford, which initially was seen as a natural gas play, did not have notable oil drilling until early 2009, according to consultant IHS.
The EIA's report marks the first time the U.S. federal government has issued such data from the Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara and Permian basins.
The EIA's numbers differ, sometimes wildly, from other sources such as state regulators or analysts. The data also showed the difficulty in accurately pinning down the scope of the shale boom, which has consistently confounded analysts with the speed of production gains.
"A year ago if you'd asked if this would have happened, I wouldn't have seen such growth (in Eagle Ford)," said Wood Mackenzie analyst Phani Gadde.
"(But) the well performance has been really good. Production increased pretty dramatically as operators reduced the backlog of well completions. It increased relatively steeply at the beginning of this year," he said.
Wood Mackenzie forecasts for Eagle Ford are slightly lower than the EIA's at 940,000 and 950,000 bpd for October and November and higher for Bakken at 970,000 and 990,000 bpd for the same two months.
Rival consultants IHS put Eagle Ford output at 900,000 bpd as of August, ahead of the Bakken and Three Forks at 847,000 bpd, said Steve Trammel, research director and adviser.
NECK AND NECK?
Longer term, Gadde says, the consultancy is far more bullish than the EIA - the federal body sees total U.S. shale oil production of 2.8 million bpd by 2020 while Wood Mackenzie estimates it to be around 5 million bpd.
"We kind of have both plays going close, neck and neck through to 2020. Both players are offering very good returns," he said of Bakken and Eagle Ford.
He said the consultancy looks carefully at individual company plans and capital allocation and takes into account its own commodity price forecasts - a methodology that takes into account more commercial aspects than the EIA's methods.
The EIA says its data is extrapolated from rig counts, estimated additional production per rig and existing well production declines in contrast to new well production. http://www.eia.gov/petroleum/drilling/pdf/notes-sources.pdf
IHS says both plays are very close, with the Eagle Ford catching up.
"We feel like the Bakken's still slightly in front of the Eagle Ford, but the Eagle Ford will eventually start to catch up just because it's a younger play," Trammel said, noting that drilling in Eagle Ford began in 2009 compared to 2003 in Bakken.
"There is no question that the Bakken and the Eagle Ford are the two big blockbuster tight oil plays that have emerged," he said. "It's certainly going to be a challenge to offset natural projected declines in overall tight oil production in North America unless we find another couple blockbuster plays."
PERMIAN BETTER THAN FLAT?
Both analysts, however, are quite optimistic about the Permian Basin. The EIA data estimates production there as unchanged from October to November at 1.29 million barrels.
"We do not think it is flat, on the contrary, we're planning to increase our tight oil forecast in light of everything that is happening in the region," Gadde said, referring to operators in the basin who have indicated they will significantly increase drilling there.
IHS's Trammel said not only have drilling techniques and technology improved efficiency for the shale sector over all but the basin also has good potential for finding oil in different zones at different depths.
"We think these new additional reservoirs in the established petroleum systems are going to be really important."
(Additional reporting by Kristen Hays in Houston; Editing by Gerald E. McCormick, Lisa Von Ahn and Bob Burgdorfer)
Copyright 2017 Thomson Reuters. Click for Restrictions.
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