... Oil Production Increases in Shale Formatios

Production Increases in Bakken, Eagle Ford Formations

The Double Eagle Pipeline, a joint venture between Magellan Midstream and Kinder Morgan, is now in service.

Based on Bentek Energy’s analysis, oil production from the Bakken and Eagle Ford shale formations increased by more than 86,000 barrels per day (b/d) in July.

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That amounted to a 3.4 percent increase for the month, according to Bentek, an analytics and forecasting unit of Platts, a leading global provider of energy, petrochemicals, metals and agriculture information.

In North Dakota, the active oil rig count is close to 200 and the highest level in nearly two years, according to Jack Weixel, Bentek Energy director of energy analysis.

“Oil production gains from the Bakken and Eagle Ford shale formations are a major reason why U.S. imports of crude oil have dropped to levels not seen since the mid-1990s,” Weixel says.

Bentek data analysis showed that from July 2013 to July 2014, total U.S. crude oil production increased more than 1.5 million b/d.

Crude oil production in the North Dakota section of the Bakken shale formation of the Williston Basin averaged nearly 1.2 million b/d in July, according to Bentek. This was 280,000 b/d higher than the July 2013 level. Oil production from the Eagle Ford formation averaged 1.5 million b/d last month, up 411,000 b/d from July 2013.

“Prices of Eagle Ford Shale crude dropped nearly $12 per barrel (/b) from mid-July through mid-August, while the price of Bakken crude fell $7.38/b during that time period,” says Richard Capuchino, Platts managing editor of Americas crude.

The Platts Eagle Ford Marker, a daily price assessment that was launched in October 2012 and reflects the value of oil from the Eagle Ford Shale formation in South Texas, was $98.77/b on Aug. 18 after reaching an intra-month high of $110.71/b on July 23. The downward price movement was largely attributed to weakness in the price of Light Louisiana Sweet (LLS), the basis for the Eagle Ford assessment.

The monthly price performance of oil from the Bakken formation at Williston, North Dakota, ranged from a low on Aug. 18 of $84.65/b and a high of $92.03/b on July 17, according to the Platts Bakken data.

The Platts Bakken, introduced earlier this year, is a daily assessment of price for oil closest to the wellhead prior to determination of transportation by rail or pipe. The assessment reflects a sulfur content of 0.2 percent or less and an American Petroleum Institute (API) gravity –a measure of how heavy or light a grade of crude oil is compared to water – of 42 or less, similar to the nature of North Dakota Light Sweet crude.

The Platts Eagle Ford Marker reflects the value of a median 47-API Eagle Ford crude barrel, based on the crude’s product yields and Platts product price assessments, adjusted for U.S. Gulf Coast logistics.

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