Ebb Tide in Texan Oilfields – Watts Up With That?

David Archibald

To recap, peak oil was supposed to happen in 2005. Then the tight oil boom started and the civilisational party went on for another 20 years. That boom began in North Dakota but reached its full flower in the Permian Basin of Texas. One county in Texas though suggests the party is over. Howard County’s production decline is faster than its rise: 

Figure 1: Howard County Oil and Gas Production

Gas production is converted to its energy equivalent in barrels of oil at the rate of 6,000 cubic feet of gas per barrel of oil. Production peaked 18 months ago in July 2023.

Meanwhile Texas’ total oil production continued to rise:

Figure 2: The 11 largest oil-producing counties in Texas and total production in Texas

The explanation for Howard County’s departure from the pack is found in the following graph of the evolution in the ratio of gas production to oil production. To have such an abrupt change of trend, from a meandering rise changing to a straight-line decline in oil production accompanied by a blowout in the gas to oil ratio means that there is an underlying process that is happening county-wide:

Figure 3: Howard County Gas/Oil Ratio 2010 – 2024

In these tight oil fields, the pressure that drives oil out of the ground comes from thermal cracking of longer chain hydrocarbons. Because of the lack of permeability, the oil generated is trapped in the rock at higher than hydrostatic pressure. Some methane is also produced and is in solution in the oil. After being drilled and fracked and brought into production, the pressure in the reservoir starts falling and at some stage falls below the bubble point at which gas comes out of solution and forms bubbles. The tiny bubbles of methane are slipperier than oil and so travel through the rock faster. In turn this means that gas is produced preferentially to oil and the pressure decline in the reservoir accelerates in a positive feedback loop.

It seems that the bubble point in Howard County was reached in July 2023. Since that break of trend, Howard County’s oil production rate has been declining 150,000 barrels per day or 40% per annum:

Figure 4: Howard County Daily Oil and Gas Production

Howard County’s oil production tipped over into decline 18 months ago while gas production went sideways. Gas production is now also declining rapidly.

The relationship seen between the gas/oil ratio and production trend in Howard County also holds for some of Texas’ other major producing counties. The methodology can also used as a predictive tool, starting with Midland County.

Figure 5: Midland County Gas/Oil Ratio 2010 – 2024

While not as definitive as Howard County, the gas/oil ratio in Midland County has broken its lower bound.

Figure 6: Midland County Oil and Gas production 2010 – 2024

Midland County’s oil and gas production profiles have diverged whereas in Howard County oil production fell as gas production went sideways.

Figure 7: Midland County Daily Oil Production 2010 – 2024

Howard County’s production decline for the last 12 months has been 40% or 151,000 barrels per day. Applying a decline of 30% per annum to Midland County’s production profile results in a production decline of 185,000 barrels per day over the next 12 months.

Figure 8: Martin County Gas/Oil Ratio 2010 – 2024

Martin County is the second largest oil-producing county in Texas after Midland. This chart of Martin County’s gas/oil ratio shows a clear break of uptrend. 

Figure 9: Martin County Oil and Gas Production 2010 – 2024

As is seen in Midland County profile, gas production has diverged from oil production with gas production increasing due to a high gas/oil ratio despite falling oil production.

Figure 10: Martin County Oil Production 2010 – 2024

Now that Martin County’s oil production has tipped over into decline and applying a annual decline rate of 30%, production is projected to decline 190,000 barrels per day over the next 12 months.

Summary

President Trump has undertaken to increase US oil production by three million barrels per day. That is a heroic undertaking given that he is facing a headwind of a half million barrel per day decline from three counties in Texas alone.

My advice to the President is to start talking about a plutonium breeder reactor rollout combined with synthetic fuel production by applying the Bergius process to the country’s coal reserves. Energy for the electrolysis to produce the necessary hydrogen for the Bergius plants would come from the nuclear reactors. Everyone would be happy in that there would be nuclear, hydrogen and coal all in the one solution.

The President’s pick for Energy Secretary, Chris Wright, is particularly promising in that he is invested in a plutonium breeder reactor startup called Oklo. This suggests that he has a complete understanding of what is needed.

David Archibald is the author of The Anticancer Garden in Australia.

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