Market analysts the EIA has said have a keen interest in understanding how crude oil production in key US states has been affected by recent changes in crude oil prices and drilling activity. The EIA develops state level production estimates for selected states that are based in part on state level data. However, data published by state agencies are often incomplete when first published due to a combination of late reporting and processing delays, mainly due to the filing of production reports that do not contain all the required information. Because EIA’s methodology for state level production estimates aims to anticipate and account for expected revisions to data collected by the states, state level production data published by EIA and state agencies can differ.
When it comes to Texas, production data is published by the EIA’s Petroleum Supply Monthly (PSM) and the Texas Railroad Commission (TRRC). The data published reflects differences in the treatment of incomplete and lagged data. Texas production data in the PSM and TRRC reports published in June this year are virtually identical through 2013, but there is a gap between the reported data for more recent months that grows larger for months closer to the present. Data reported by the TRRC has evolved over time as processing and filing proceeds, with significant upward revisions in the data for recent months covered in each report as later reports are issued. The EIA’s PSM estimates, which, given EIA’s efforts to account for expected revisions to state agency data in its initial estimates, generally do not show large revisions as later reports are issued.
On the down low
The EIA has said that there are several reasons why the TRRC’s initial reports tend to be low. One is that some reports are placed in a pending file while waiting for other state reported requirements to be satisfied. Two, there are always delinquent reports from oil and natural gas operators and reports with discrepancies that take time to resolve. Each month, Texas posts its own calculation of how low its initial estimated production values are. Three, EIA has for several years measured the change in reported volume from month 1 to month 24, illustrating an average increase of 30%. These issues are eventually resolved however, and the production data is incorporated into TRRC’s published reports, generally over the course of two years.
EIA has also pointed out that its published estimates include lease condensate, while some tables that TRRC provides tabulate crude oil and lease condensate separately. Condensate accounts for approximately 15% of the total crude oil and condensate volumes produced in the state of Texas.
At the start of the monthly reporting process, the EIA uses data from third party vendor, Drillinginfo Inc. When it comes to Texas, Drilliningo combines the accepted and pending file data records. This combination reduces the time lag between initial reporting and reasonably complete data from two years to approximately five months. During those five months, the difference in production volumes is generally attributed to late and incomplete data reporting.
The EIA uses the state’s preliminary data plus the pending file from TRRC as the starting point to make production estimates. The EIA also uses the first purchaser volumes of crude oil from the EIA-182 survey, ‘Domestic Crude Oil First Purchase Report,’ to make estimates of what will eventually be reported as complete production for the most recent months in an effort to account for data submitted late or incomplete to the TRRC.
Edited from press release by Claira Lloyd