The total production of tight oil in the United States in the month of November 2018 was 7,035 MMbbl per day which is 26% more than the same month in 2017. The main producing plays were Permian with 3,13MMbbl/day (where Spraberry produced 1,425 MMbbl/d, Wolfcamp 1,179 MMbbl/d and Bonespring 0,526 MMbl/d), Bakken with 1,02MMbbl/d, Eagle Ford with 1,28MMbbl/day and Niobrara-Codell with 0,47MMbbl/d according to the monthly report submitted by the EIA. These six shale plays produce 89% of the total tight oil production in the United States.
Emanuel Omar Martin
© Creative Commons
Figure 1 shows the United Stated Tight Oil Production in percentages. We can see here which are the main Tight Oil producers in U.S.: Spraberry, Bakken, Eagle Ford, Wolfcamp, Bonespring and Niobrara-Codell are the six biggest tight oil players in the United State controlling 89% of the total tight oil production in USA with Spraberry, Bakken, Eagle Ford and Wolfcamp producing near the 75% with 5,3 MMBbl per day.
United States historical production of Tight Oil
The historical production of Tight Oil in the United States had a smooth beginning with a constant production during the first years and since 2005 the implementation of the horizontal drilling combined with multi-stage hydraulic fracturing technology impulse the growth production. The recovery in the oil price from January 2009 produced a constant and aggressive increase in drilling activity in all Tight Oil Fields achieving an eight-fold increase in crude production in only six years from 0,57MMbbl/d in January 2009 to a maximum of 4,70MMbbl/d in March 2015.
Figure 2: Historical United States Tight Oil Production
From this value the oil production has begun to decline month after month to have reached 4,11 MMbbl/day in September 2016 as a result of the great disinvestment produced in the drilling activity after the barrel price fall in August 2014. With the increase in the oil price and the decrease of the drilling costs since the middle of 2016 the production has begun to recover reaching in November of this year 7,04MMbbl/day, which is set as a new world record in the shale oil production.
Figure 3 shows the historical drilling activity in United Stated by region. We see here how the Permian Basin is the main focus of the activity with 488 active rigs follow it by the Andarko region with 137 rigs, Eagle Ford with 95 rigs and Appalachia region with 75 rigs (Source: EIA).
Estimated Internal Rate of Return for tight oil plays in the United States
The progress achieved in the drilling and hydraulic fracture technology in the recent years turned the United States in the top oil producer in the World. In order to understand better how the economical scenarios of these plays are and why their production are growing more than any other plays in the planet we’re going to analyze the IRR of each play for a scenario of 50 dollars per barrel and a gas price of 2,50 dollars per MMbtu.
Figure 4 Estimated IRR at $50 oil, $2.50 gas and 34% of taxes.
There are three tight oil plays in the United States (Wolfcamp Delaware, Eagle Ford and Bone Sprinng ) with and IRR bigger than 100% with an oil price at 50 dollars per barrel. These plays are the more profitable in the USA with the biggest rigs activities and they have a minor vulnerability to weak oil prices. On the other hand STACK, Wolfcamp Midland, Bakken and SCOOP are less profitable with a high vulnerability in the play activity under a low oil cost scenario. Many parts of Permian Basin has a better breakaven price than conventional oilfields in the sea and still when others plays are more expensive than conventional fields they are more profitable and secure than other kind of business around the World, this give to the United States shale the big force to growth and be the OPEC headache.
Historical monthly production of Tight oil by play:
Permian Basin is the main basin producing tight oil in the United States with a current production of 3,13 million barrel per day. It’s located in the West Texas and Eastern New Mexico states and is constituted by three sub-basins (Delaware Basin, Midland Basin and Central Basin Platform) and multiples productive formations. The Midland Basin and Delaware Basin are the main focus of the activity where the more important plays are: Spraberry, Wolfcamp Delware, Wolfcamp Midland and BoneSpring.
The oil break-even prices in the basin are between $18 and $37 per boe (Czo 2018), which are better than many conventional fields in the world. There are around 407 active operators working in the basin being the more important by drilling activity:
- Endeavor Energy Resources (440)
- Pioneer Natural Resources (405)
- Occidental Petroleum (369)
- Apache Corporation (289)
- ExxonMobil (285)
- Diamondback Energy (230)
- Parsley Energy (211)
where the companies with the lowest oil break-even price (less than $26 per barrel) at lateral lengths between 7,560 and 10,500 feet are:
- EOG Resources
- Exxon Mobil
- XTO Energy
- Pionner Natural Resources
Figure 5: Permian Basin tight oil Production, November 2018.
Permian Basin by Play:
Spraberry Tight Oil
The Spraberry Tight Oil Play is the biggest tight oil producer in the United States. It’s located in the Texas State in the Midlan Basin and the main companies working in the play are:
- Pioneer Natural Resources
- Encana Corporation
- Parsley Energy
- Laredo Petroleum Inc
- XTO Energy
- Concho Resources.
The well types are different in the play between the companies and the place where the wells are drilled but we can separate they in horizontal and vertical wells:
Horizontal well types:
- well type 1 has a lateral length of 9,686 ft and average 30 day peak rate of 1,178Boepd with 86% of oil (Abraxas 2018)
- well type 2 has a lateral length of 7500ft with an EUR of 1020MBOE for a cost of $5,4 Million dollars and an operative cost of $7/boe (Encana 2017).
- well type 3 has a lateral length of 9500ft using 2000-3000 lbs/ft of proppant and 50 bbls/ft of fluid given an EUR of 1,0MMBoe with a well cost of $7,5 Million dollars (production costs per well are between $4/BOE and $5/BOE) (Pioneer Natural Resources 2017).
Vertical well type
- Here the wells are drilled to a depth of 9000ft with 8 fracture stages using around 0,8 MM Lbs of proppant and 0,8 MM gallons of fluid with an average EUR of 185,136Boe and a cost of $2,5MM (Energen and Diamondback 2016).
The Spraberry break-even price for the tight oil production is around 24 dollars per barrel (WTI, Pioneer Resources 2018).
Figure 6: Spraberry tight oil Production, November 2018.
The Spraberry large-scale development began in 2010 from which it has maintained a sustained growth reaching a current production of 1,425MMBcf/day in November of this year.
WolfcampTight Oil Play
The Wolfcamp Tight Oil Play is the fourth biggest tight oil producer in the United States and the second biggest in the Permian basin after Spraberry Play by production. It’s located in the Texas and New Mexico States where the top companies working in the play are:
- Concho Resources
- Anadarko Petroleum
- Noble Energy
- Jagged Peak Energy
- Centennial Development
- Occidental Petroleum.
The Wolfcamp formation is divided in four facies: Wolfcamp A, Wolfcamp B (Upper and Lower) Wolfcamp C and Wolfcamp D according with its depth.
Wolfcamp’s wells type:
- Well type 1 has a lateral length of 7000ft an EUR of 1330MBoe (53% oil, 20% NGL and 27% gas) with a well cost of $7,4 MM (EOG 2018).
- Well type 1 has a lateral length of 4880ft an EUR of 680MBoe (77% oil) with a well cost of 7,3$ MM (Abraxas 2018).
- Well type 2 has a lateral length of 7000ft, 42 fractures stages an EUR of 1648 MBoe with a well cost of 9,5$ MM and an operative cost of $7,65/boe (CRZO 2018).
- Well type 3 has a lateral length of 7500ft an EUR of 980 MBoe (74-90% oil) with a well cost of 9,5$ MM and an operative cost of $7,65/boe (CRZO 2018).
- Well type 1 has a lateral length of 4820ft an EUR of 535MBoe (85% oil) with a well cost of 7,3$ MM (Abraxas 2018).
- Well type 2 it has a lateral length of 7000ft, 42 fractures stages an EUR of 1461 MBoe with a well cost of 9,5$ MM and an operative cost of $8,62 per boe (CRZO 2018).
The Wolfcamp break-even prices for the tight oil production are between $26,50 and $31,50 dollars per barrel (WTI, Crzo 2018).
Figure 7: Wolfcamp tight oil Production, November 2018.
The Wolfcamp large-scale development began in 2011 from which it has maintained a sustained growth reaching a current production of 1,179MMBcf per day in November of this year.
Bonespring Tight oil play
The Bonespring Tight Oil Play is the fifth biggest tight oil producer in the United States and the third biggest play in the Permian basin after Wolfcamp Play by production. It’s located in the Texas and New Mexico States.
Bonespring’s Well types:
- In the first BoneSpring the average well type has a lateral length of 7,000 ft with an average EUR of 1,185Mboe (55% oil, 26% NGL and 19% gas) and a well cost of $7,3 MM (EOG 2018).
- In the second BoneSpring the average well type has a lateral length of 7,000 ft with an average EUR of 950Mboe (62% oil, 16% and 22% gas) and a well cost of $7,3 MM (EOG 2018).
- In the third BoneSpring the average well type has a lateral length of 4,820 ft with an average EUR of 660Mboe and a well cost of $7,3 MM (Abraxas 2018).
Figure 8: Bonespring tight oil Production, November 2018.
The Bonespring large-scale development began in 2010 from which it had a sustained growth reaching a maximum production of 0,32MMbbl/d in September 2015 and since this month it started to decline to 0,27 MMbbl/day in September 2016. With the increase of the oil price the activity in the play started to grow again reaching a production of 0,526 MMbbl per day in November of this year.
Bakken Tight Oil Play
The Bakken Tight Oil Play is the second biggest tight oil producer in the United States. It’s located in the North Dakota and Montana States in the Williston Basin where the main companies working in the play are:
- Continental resourses
- EOG Resources
- Pioneer Natural Resources
- XTO Energy
- HESS Corporation
- Whiting Petroleum
Bakken’s Well types:
- well type 1 has a lateral length of 10000ft, 55 fracture stages (hybrid slick/water and 1100lb of proppant per foot), an EUR of 1,100MMboe (80% Oil) and a well cost of $7,9MM (Continental Resourses 2018).
- well type 2 has a lateral length of 8400ft, an EUR of 745MMboe (70% oil, 15% NGL and 15% gas) and a well cost of $4,0MM (EOG 2018)
- well type 3 has a lateral length of 9800ft, 60 fracture stages an EUR of 1,200MMboe and a well cost of $8,4MM (Continental Resources 2018)
Figure 9: Bakken tight oil Production November 2018.
The Bakken large-scale development began in 2005 from which it had a sustained growth reaching a maximum production of 1,20MMbbl/d in June 2015 and since this month it started to decline to reach 0,93MMbbl per day in December 2016. With the recovery of the oil prices the production is growing slowly with 1,383 MMbbl per day in November of this year.