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Texas Permitting, Completions Strong as Production Declines

Texas oil and gas well permitting and completion activity remained strong in October while preliminary oil and gas production data for September showed declines from August preliminary and actual production figures.

Preliminary September crude oil production averaged 2.19 million b/d, up from 1.80 million b/d in September 2013 and down from the corresponding August 2014 figure of 2.23 million b/d. Total crude production for September is estimated at 65.82 million bbl, up from 53.90 million bbl reported in the year-ago period.

Texas oil and gas wells produced 595.60 Bcf of gas based upon preliminary figures for September, up from the September 2013 preliminary total of 577.61 Bcf but down from the August 2014 preliminary total of 621.51 Bcf/d. September gas production averaged 19.85 Bcf/d, according to preliminary data, and came from 150,497 oil wells and 88,551 gas wells, according to the latest RRC data.

RRC estimated final production for September is 77.63 million bbl of crude oil (down from 81.45 million bbl estimated for August) and 505.79 Bcf of gas well gas (down from 524.27 Bcf estimated for August).

Estimated final production numbers were derived by multiplying preliminary September production totals of 65.82 million bbl of crude oil and 444.65 Bcf of gas well gas by an adjustment factor of 1.1794 for crude oil and 1.1375 for gas well gas. These totals did not include casinghead gas or condensate.

Actual production figures for August are 75.67 million bbl of crude oil and 668.47 Bcf of natural gas total (493.72 Bcf of gas well gas). In the last 12 months, total Texas reported production was 851 million bbl of oil and 8.0 Tcf of natural gas.

The RRC issued 3,046 original drilling permits in October, up sharply from 1,735 in October 2013 and slightly higher from 3,013 issued in September 2014 (see Daily GPIOct. 30). The October total included 2,741 permits to drill new oil and gas wells, 40 to re-enter existing well bores and 265 for recompletions. Permits issued in October included 885 oil, 181 gas, 1,829 oil and gas, 115 injection, two service and 34 other permits.

In October operators reported 2,035 oil, 354 gas, 63 injection and three "other" well completions compared with 1,758 oil, 493 gas, 64 injection and three other completions in October 2013. Overall, completions were down slightly from the prior month's 2,048. Well completions year to date are 25,604, up almost 20% from 21,432 recorded during the same period in 2013.

Associated gas production in Texas has grown from just under 9% of total gas production in January 2009 to more than 25% in September 2014, according to RRC data, thanks in large part to rise in drilling in the Eagle Ford Shale and Permian Basin. This activity, along with the rapid expansion in the Marcellus and Utica shales, has been the main contributor to the growth in overall U.S. gas production in recent quarters.

It remains to be seen what the falloff in West Texas Intermediate prices over the last two months will do to oil drilling and therefore associated gas production in Texas, but that question should start being answered in the weeks ahead, as companies set their drilling capital expenditure budgets for 2015.

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