Howard County Revisited

by David Archibald

1 February 2025

 

The following chart shows Howard County’s oil and gas production since 2010 in energy equivalent terms (6,000 cubic feet of gas has the energy content of one barrel of oil):

 

 

Howard County’s oil production fell from 418,000 BOPD (barrels of oil per day) to 256,000 BOPD from July 2023 to September 2024. That is an annualised decline of 33% per annum.

Howard County in Texas drew our attention because oil production there just plunged off a cliff, while total Texan oil production kept climbing:

 

 

As the graph shows, oil production in Texas is up near 500% over the last 15 years, which has done a lot to keep the world oil price down. The big question with respect to oil production in Texas is the outcome from here. Will be it be a long, happy plateau or will production plunge as fast as it rose? The latter result has big economic and geopolitical consequences. Howard County’s production is plunging fast now. If most of the rest of Texas follows that sort of decline, that is a going to be a problem for those who have come to rely upon cheap oil and natural gas.

Can we torture the Howard County data some more to see if it will tell us anything? As President Obama used to say, ‘yes we can’ and so we did:

 

 

The graph above shows Howard County’s gas-oil ratio in energy equivalent terms. From 2014, the gas-oil ratio started falling with production from new oilfields being brought on stream. Then it started rising from 2018 as those initial fields matured. From there the gas-oil ratio formed an ascending wedge on the chart up until July 2023, after which it took off on a new, steeper uptrend. That is also the month that gas production stopped rising. Oil production fell 39% from July 2023 to September 2024.

The physical explanation is that somehow there was a county-wide drop in reservoir pressure below the bubble point, which is the pressure at which gas starts to come out of solution in the oil. Gas molecules are much more slippery than oil molecules, so the gas bubbles in the reservoir move faster than the oil and gas is preferentially produced. The ongoing pressure drop in the reservoir exacerbates this process. Our theory on the physical basis of what we are seeing in the chart would get a lot of support if we could see the same thing in other counties. To quote President Obama again, yes we can:

 

 

Midland County’s gas-oil ratio formed an ascending wedge and broke up from it in December 2023.

 

 

Martin County is almost identical to Midland County, but with the breakout six months later in May 2024. They have now tipped over into flat gas production while oil production falls away.

 

 

Upton County formed an ascending wedge in its gas-oil ratio, but hasn’t made a clear break yet.

 

 

No trend evident in Loving County.

 

 

Karnes County has formed a well-defined ascending wedge, indicating that the process holds here also.

 

 

Reeves County shows a clear break up from May 2024, after which oil production fell by 48,000 BOPD to September 2024. That is an annualised decline of 69%.

The results of these graphs tell us that the trend reversal in oil production by county can be picked by the break in trend of the gas-oil ratio. The oil production decline, by county, will then be of the order of 50% per annum. The outlook for oil production in Texas is that it will fall just as fast as it rose. Plan accordingly.

 

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