Production in the Permian Basin Forecasting Production Quantity And Quality Across The Permian Basin To Determine Demand For Midstream Infrastructure In The Low Oil Price Environment Eric Peterson Senior Business Analyst
Introduction to ARB Midstream Denver based infrastructure development company providing midstream solutions Strong financial support from private equity Utilize in-depth quantitative analytics to identify value propositions of…
Observations Out look on crude production has many variables Despite 50% drop in horizontal rig count, crude production is forecasted to continue growth Increased horizontal drilling efficiencies Initial production rates show year…
Permian Basin Production
Variabilities in Production Upside Downside Stabilized or growing rig count Low or declining price of oil Increased drilling efficiencies Declining rig count Increase in IP Rates Drilled Uncompleted (DUCs) Improving price of oil…
Horizontal Rigs Now Account for Nearly 75% of all Permian Rigs 2015 YTD 400 350 300 Permian Rig Count by Type 250 200 150 100 50 0 Directional Horizontal Vertical Source: Baker Hughes 6
Horizontal Drill Times Are Down by an Average of 10 Days 45 40 35 30 Days to Drill Hz Well 25 20 Jun-14 Jun-15 15 10 5 0 Source: Rig Data 7
Water and Sand Usage in Hz Well Completion Up 54% and 66% in 24 months 7,000,000 4,000 Avg. Proppant Used in Hz Well (short tons) 6,000,000 3,500 Avg. Water Used in Hz Well (gals) 3,000 5,000,000 2,500 4,000,000…
Horizontal IP Rates Are Up an Average of 28% Year Over Year 450 +21.6% +30.3% 400 350 +20.9% 300 Hz 30 Day IP Rate 250 200 +40.9% 150 100 50 0 Perm NM TX 8 TX 7C TX 8A 2011 2012 2013 2014 Source: ARB, DI…
Largest IP Rates Focused in Western Permian 30 Day IP Rate Source: ARB, DI Desktop 10
7 Counties Represent 75% of Hz Drilling July 26, 2015 Hz Rigs Ver Rigs Dir Rigs Delaware Midland Permian Source: ARB, DI Desktop, EIA 11
7 Counties Account for 50% of All Permian Production +100 kbpd +75 kbpd +50 kbpd +25 kbpd +10 kbpd
Change and Acceleration in Production Point to Areas of Infrastructure Need Production Gain 25…
Permian Production Scenarios 3,400 Base Case things continue as they are 3,200 (IP Rates, Wells Drilled, efficiencies, etc) Crude Oil Production & Takeaway Capacity (Mbpd) 3,000 2,800 Growth Case increased IP rates by 5% 1MM…
Quality Midstream Is As Much About Quality As It Is Quantity
Where is the quality of production coming from Crude API Gravity Source: ARB Analytics, DI Desktop 16
Permian Basin Production by API January 2014 vs January 2015 320 Eagle Ford Bakken 280 DJ Basin 240 Crude Production (Mbpd) 200 160 120 80 40 - Crude API Gravity Jan-14 Jan-15 Source: ARB, DI Desktop 17
Majority of new production is 40 API Gravity and above 45 86% of growth 40 35 Change in Crude Production (Mbpd) 30 25 20 15 10 5 - (5) Crude API Gravity Source: ARB Analytics, DI Desktop 18
40-50 API is Growing While Most Other Grades are Declining 65% 8% 60% 7% 55% 6% 20 - 30 % of Total Permian Production % of Total Permian Production 50% 5% 45% 4% 40% 3% 35% 2% 30% 25% 1% +60 20% 0% Source:…
Permian Production Forecast by Quality Base Case Forecast Scenario 2,500 Forecast Crude Oil Forecast by Quality (Mbpd) 2,000 1,500 1,000 500 - API < 20 API < 30 API < 40 API < 50 API < 60 API + 60 Source:…
Permian Gateway Rail Facility
Permian Gateway Rail Located in Howard County Hz Rigs Ver Rigs BSG Pipeline Gateway Rail Source: ARB, Company Info, Rig Data 22
A Look at Permian Gateway Crude-by- Rail Terminal Multi-modal terminal Crude-by-Rail Phased development approach with initial operations targeted to begin in late Q1 2016 Phase I Manifest and Unit capability with construction of…
Conclusion Out look on crude production has many variables Despite 50% drop in horizontal rig count, crude production is forecasted to continue growth Increased horizontal drilling efficiencies Initial production rates show year…
Eric Peterson Senior Business Analyst eric.petersonarbmidstream.com
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