# Presentation: 685966

## EIA-914 Data Expansion Challenges to Include Crude Oil Production

**John Wood, Director**
**Reserves and Production Division**
**April 7, 2006**

## Purpose

- Solicit Committee Input on :
-  The proposal to modify the Form EIA-914 to also collect crude oil production data,
- How to select the states that will be estimated individually, and
- The proposed modification of the EIA-914 natural gas production estimation methodology.

## Domestic Oil Production Is Important

- Domestic crude oil production accounts for 34 percent of total U.S. crude oil supply.
- Increased attention will be devoted to domestic supplies in light of the continuing high crude oil prices and renewed interest in reducing imports.

## EIA needs a new crude oil production estimation system. 

- EIA is currently at a high risk of not being able to produce timely and accurate monthly crude oil production estimates at the state and national levels.
- First, the Monthly Oil Production Update (MOPUP) system that is currently used has been in need of replacement for several years although budget constraints did not allow that to happen.
- Second, MOPUP utilizes the monthly production data collected on Form EIA-182.
- The Form EIA-182 survey is going to be discontinued.
- Therefore, both a new crude oil production estimation system and a new survey instrument that captures monthly crude oil production data are needed.

## Approach

- EIA recently developed the Form EIA-914 system that has been very successful in producing natural gas production estimates.
- This system can be modified to collect crude oil production data and produce monthly crude oil production estimates.

## Modifying the EIA-914(1)

- EIA currently collects two types of natural gas production data on its Form EIA-914 "Monthly natural gas production report", gross withdrawals and lease production. Part I of this form collects survey respondent information, and
-  Part II collects the production data broken out for the six top producing areas and "Other States" (excluding Alaska).

## Modifying the EIA-914(2)

- A second report will be added to the Form EIA-914 family, the "Monthly Crude Oil and Lease Condensate Production Report". It will have a Part I with respondent information and a Part II that will also collect two types of production data, crude oil and lease condensate.
-  In order to have individual coverage for the six largest crude oil producing states, Alaska, California, and Colorado would have to be added to the list of states used for gas production data collection.

## Modifying the EIA-914(3)

- To have the top 10 natural gas producing areas, Kansas would have to be added, and
- To have the top 10 0il producing states North Dakota and Montana would have to be added, but this also provides coverage of the new oil shale plays in Montana and North Dakota.
-  To cover the offshore Pacific region, the Pacific Federal Offshore (which has significant oil production and substantial resources) would also have to be added.

## Slide 9

**Notes:**
Form is one page in EXCEL format. Extremely easy to fill out.
instructions are 2 pages and include this diagram – next slide.

We are collecting Gross Withdrawals to estimate final natural gas gross production.

Marketed (wet) production and dry natural gas production are in turn estimated from the gross production estimates.

Lease Production is a new data series for EIA and so far has only been used for quality assurance.

## The Modified Form EIA-914

## Slide 11

**Notes:**
Helps respondents visually understand what data we are asking them to report.

We ask for  the full well stream from all wells, less crude oil, lease  condensate, and water. 

This leaves Gross withdrawals which is fundamentally the data EIA has been collecting from the States.

We then ask them to exclude gas used for Repressuring and Reinjection, gas that is vented and flared or used on the lease, and nonhydrocarbons removed on the lease leaving Natural Gas Lease Production, our second data element. EIA does not have an historical series for this data.

## Respondent Burden

- When the Form EIA-914 survey was approved by OMB, EIA had stated that the error estimates could be kept in the 1 to 5 percent range with an operator sample in the 250-350 range.
-  It only takes a sample of 350 operators to meet the target errors for both crude oil and natural gas estimates.
-  This is possible because, as was illustrated in Figure 1, almost all wells produce both gas and oil and most large natural gas producers are also large crude oil producers, and
- Experience with the survey, along with improved modeling of  production estimates allow the error targets to be met with operator samples that  have a smaller percentage of the state total production.

## Survey System 

- The same formal methodology will be used as that used to make gas production estimates from the current Form EIA-914 survey data. A sample will be selected that covers roughly 85 percent of total production. The production from the sample will be used to estimate the production from the thousands of operators that are not sampled.

## Speaking of Challenges, Budget & OMB Come  to Mind

- There is a strong EIA consensus that the oil production data should be collected, but
- The FY 2006 budget is tight, tough decisions have been made, more tough decisions have to be made, and the EIA-914 modification project has not yet been funded.
- Nor have we gone through the OMB clearance process for the EIA-914 modification project, but we, of course, expect that to go smoothly and expeditiously.

## Target Error

**	****Our target is to have releasable gas production estimates 60 days after the close of a report month with a sampling error within 1% for the lower- 48 States and within 1% to 5% for these 16 areas:      ****Natural Gas Rank in Red   ****Crude Oil Rank in Blue**
**Source: HPDI**** **
**	**

**1, ****2**** Texas**
**2, ****3 ****Alaska**
**3, ****1 ****Federal Offshore Gulf of Mexico**
**4, ****7 ****Wyoming**
**5, ****6 ****New Mexico**
** ****6, ****12 ****Colorado**
**7, ****8 ****Oklahoma **
**8, ****5**** ****Louisiana**
**9, ****4**** ****California**
**10, ****11 ****Kansas**
**15, ****10**** ****Montana**
**16, ****9**** ****North Dakota**
**18, ****13**** ****Federal Offshore  Pacific **
**Other States (all remaining states).**
**Lower-48 States**
**U.S. Total**

**Notes:**
States in order of their production contribution to the total.

## Slide 16

## Slide 17

## Slide 18

## Total Natural Gas Production Model

- Total Production Rate

- Production Rate for Sampled Operators approximately 85% of Total

- t is Time

- Estimated Production Rate for All Operators not in Sample  approximately 15% of Total

## Non-Sampled Operators Production Estimate-Constant Ratio Model

- Estimated Production Rate for All Non-Sampled Operators

- Ratio of Non-Sampled to Sampled Operators in Calibration Year

- c is Calibration Year

- t is Time

- Production Rate for Sampled Operators or Subset of Sampled Operators

## Slide 21

## Variable Ratio Model with Variable Slope

- R, a, and b are Fit Parameters

- t is Time

- Variable Ratio

- Lower 40% of Sample Volume

- Drilling Parameter

- Non-Sampled Volume

## Slide 23

## Slide 24

## Slide 26

## Error in Total Estimates

**Test of 6 calibration years, for 72 monthly estimates, in third year out from calibration year for Texas. **
** ****Largest error in Production from Non-sampled operators = 4%**
**Non-sampled operators have 15% of total production**
**Largest Error in total production estimate = (0.15)X4% **
**= 0.6%**

## Error Causes

- Only small errors resulting from Sampling and Estimation Modeling
- Significant errors can occur because of operator  reporting errors and  initial model calibration because calibration year data at the operator level may be incomplete.