Niobrara (CO) - update until 2015-12

I've made the following update to the above presentation on the Niobrara in Weld county (Colorado):

  • Production data now runs until December 2015, which is provided by the COGCC. This data is still subject to future revisions, I estimate in the order of not more than a few percent though. The wells in the dataset here are responsible for almost 75% of the current oil production in Colorado.
  • Output from all well types are included, but only for wells that started production since 2010. On the well quality tab, the well productivity is shown only for horizontal wells. I changed the scale to logarithmic. This is less intuitive, but I belief it provides more clarity on the shape of the decline profile.
  • I made some improvements to the filters and tooltips, and added an overview of the top 5 producers in this area.

Although production held up well in 2015, there was quite a big drop in December. This drop may be somewhat reduced when production numbers are revised, but I still expect the drop to be large, and that the drop has continued in the months since, as we have seen so far for the Bakken as well. The drop shown here is in agreement, though somewhat larger, with what the EIA has reported for the Colorado and the Niobrara for December output (around 4.5% m-o-m decline vs around 3%).

As you can see from the total production chart, by the end of last year, 60% of the oil production came from wells that started production in 2015. This is because wells in the Niobrara decline much faster compared with what we’ve seen so far in the Bakken.

These wells do produce much more gas though, a glimpse of this can be seen from the tooltips in the overviews on the “Top companies” tab.

I plan another update on the Eagle Ford on coming Friday.

====BRIEF MANUAL====

The above presentation has many interactive features:

  • You can click through the blocks on the top to see the slides.
  • Each slide has filters that can be set, e.g. to select individual or groups of operators. You can first click “all” to deselect all items. You have to click the “apply” button at the bottom to enforce the changes. After that, click anywhere on the presentation.
  • Tooltips are shown by just hovering the mouse over parts of the presentation.
  • You can move the map around, and zoom in/out.
  • By clicking on the legend you can highlight selected items, and include or exclude categories.
  • Note that filters have to be set for each tab separately.
  • If you have any questions on how to use the interactivity, or how to analyze specific questions, please don’t hesitate to ask.

Discussion

  • E. Gadsby says:

    Nice site. Given that the well decline is not exactly exponential I think the well productivity would be better understood if the y axis was linear and zeroed, but a minor point either way.

    It looks like about 70 to 90 wells per month were needed to stay flat in early 2015, probably increasing as the sweet spots are getting used up. With only 15 rigs available by Baker Hughes today this seems unlikely to be achieved. 50 odd completions last month led to a 1000o bpd decline (4% per month or about 38% per year – although revisions will probably reduce these numbers). Decline seems likely to increase unless there are a large number of DUCs that can be cleared- are these listed for Colorado?

    1. Enno says:

      Thanks Gadsby,

      Good observations. The main improvement of the well productivity over the last 5 years appears to be an extra gain in initial production (similar as we’ve seen for the other basins), the decline afterwards hasn’t changed much, and so far 2015 wells on average are not performing better than 2014 wells. I also think the current rig count will not be able to keep production at the 2015 level.

      Colorado does provide some information on the status of uncompleted wells; In next months update I will check this data & try to say a little more on this.

      1. E. Gadsby says:

        The change in initial productivity could be technology (better / more fracking) but the decision to use the technology would be economic. There have been suggestions that especially through 2015 the producers went for wells that gave higher immediate returns, this is partly why they favoured the Permian, which gave them cash flow for the next month to continue operating. Iā€™m not clear how much can be surmised about expected well performance a) before drilling, b) before completion, and c) before production starts. They still drill dry holes but possibly only in new areas (i.e. effectively for exploration or delimination), but after drilling, with samples available enough is known to preferentially completed the better wells and leave others for later. There was a presentation in early 2015 about the Bakken bubble having burst, which turned out wrong by a year or so, but it did indicate that wells were tending to be worse performing as drillers moved away from the sweet spots, so this might be compensated by the fracking methods used.

        http://www.slideshare.net/CiaranNolan/bakken-production-cjn-feb-2015

        Ciaran Nolan works at Petroceltic which had a terrible year in 2015 and subsequently it has got worse, but it he has a lot of good information, but possibly missed the economic issue that all the producers and their creditors will always try as hard as possible to keep operating, with a view only from month to month.

        1. Enno says:

          Gadsby,

          Interesting, thanks. Yes, that was an excellent presentation from Ciaran Nolan. I’ve learned a great deal from that, and from private communication with him. Three months ago he made a thorough update of that presentation, which was published at several places, e.g. here:
          http://peakoilbarrel.com/bakken-single-well-economics/

  • Toolpush says:

    Enno,

    Looking at the well quality graph, there seems to a rapid increase in the decline rate for the 2013 & 2014 wells in the last few months. The decline rate for 2015, was already above the rate for 2014, and has since started the parallel the 2014 rate of decline, though at a lower level.
    To me, this would indicate the the wells were flowed too fast during early 2015, when everybody was making those amazing productivity “improvements”, and now the producers are now starting to pay the price, of over producing the wells. Any thoughts?

    PS.Thanks for the site. One could spend endless time looking through all the changes taking place.

    1. Enno says:

      Toolpush,

      Great to hear that you’re having almost as much as fun as me going over these graphs šŸ™‚

      I advice some caution on making conclusions on the movement of the tails in the “Well Quality” graphs, as not all the wells from those vintages have passed through that point in life yet. Because of the lower number of wells in those data points, the fluctuations are also larger (as you can clearly see). You can see the number of wells in each point on the graphs in the tooltips.

      A movement in the tails of several vintages can give us a hint though on what happened during the last couple of months. As we can see a drop in the performance in the tails of several vintages (2013/2014/2015), it could be that during last couple of months of 2015 at least some operators have throttled down the output of wells.

      1. Gerard McHale says:

        Enno/Push

        The Niobrara {Weld county) has significant differences in geology and operational parameters from both the Bakken and EF.
        Possibly the most significant is its relative shallowness 6,000′ +/- in the A bench.
        This would provide far lower ‘drive’ pressure to get the liquids into the wellbore. One countering effect is the lowered expense of drilling these wells. As the operators continue to access the deeper B and C benches, along with the deeper yet Codell, the output may show increasing trends.
        In contrast, the Middle bench in the Bakken is at about 10,000’+. The deeper Three Forks benches can exceed 11,000′ in depth and include a higher ratio of gas to oil.
        Most of the Niobrara wells to date have been about 5,000′ laterals, half the length of their Bakken counterparts.

        1. Enno says:

          Great info again, thanks Gerard.

          So lower depth, and shorter laterals are mostly behind the lower drilling cost of a well in this area.

          The production profiles of the wells here are, on a quick glance, similar with the wells in the Eagle Ford, just with about half the output level per well. If I get the time I would like to do a post in 1-2 months where I combine the data for these 4 basins, so that it becomes more easier to compare the profiles per basin/formation.

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