US - update until 2016-05

Above you’ll find another interactive presentation on the oil & gas production in the major US shale basins. You can see the total oil & gas production from 61652 selected horizontal wells, that started flowing since 2003, up until May 2016. Total oil production from these wells reached 5.3 Gbo, while cumulative gas production was 42.6 Tcf.

Some findings from an analysis of the latest data:

  • The decline in oil production accelerated in the 2nd quarter of this year. However, gas production made new highs in 2016 (by changing the “Product” to gas, you’ll see this).
  • Oil production from wells that started production since the beginning of 2015 contributed for more than half to the oil production in May.
  • As I have mentioned a couple of times earlier, but now show more directly, a significant development in the last few years has been that that average well productivity in the initial production phase (first 1-2 years) has risen, but that longer term performance has dropped, compared with earlier wells.

You can see this last finding in the “Well quality” tab, where I’ve selected the major oil basins, and wells that started to produce since 2003. Compared with the 2003-2009 wells, more recent wells have higher initial production on average, followed by a steeper decline, leading to an overall smaller total UR per well.

Important reasons for this are 1. completion techniques, 2. more wells areΒ  completed in basins that display faster declines (especially compared with the Bakken), and 3. that many more wells are being completed than in earlier years (> 100 times more in 2015 than in 2003, in my data).

I find it remarkable that this fact (reducing long term well productivity, measured in barrels of oil, despite gains in initial production) is very rarely mentioned, although the data is very clear in this regard. Important to note here is that there are major differences per basin/operator, which you can investigate by using the filters, and that I leave out well cost considerations.

A significant change in this update is that the production histories of wells in North Dakota have now been updated based on the annual production reports, released annually by the state (NDIC). In the past the production of especially confidential wells, of which only the data is only partially available, was not corrected once the actual data became available. Although the total deviation from actual production of the selected wells in the whole state, was only around 2%, this has now become much smaller (around 0.1%).

Coming Friday (September 9th), I plan another update on the Marcellus (PA).

A special thank you to Mike Shellman, who has helped me interpreting the Texas RRC data correctly.

After receiving several inquiries, I have now started to offer the data underlying these presentations. If you’re interested, you will find more information about this here.

Production data is subject to revisions, especially for the last few months in Texas. For this presentation, I used data gathered from the following sources:

  • DMR of North Dakota
  • Colorado OGCC
  • Texas RRC. Well profiles are estimated from well status & lease production data, as individual well production data is not provided.
  • OCD in New Mexico
  • BOGC of Montana
  • DEP of Pennsylvania
  • fracfocus.org

====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.
  • The operator who currently owns the well is designated by “operator (current)”. The operator who operated a well in a past month is designated by “operator (actual)”. This distinction is useful when the ownership of a well changed over time.
  • If you have any questions on how to use the interactivity, or how to analyze specific questions, please don’t hesitate to ask.

Discussion

  • Jim Brooker says:

    Enno-

    When you say the “decline in production accelerated in the 2nd quarter of this year”; does that incorporate the lag of 8 months history until you begin analysis? Or, is that only in the well performance section of your dashboard?

    I always get confused between RRC reporting, and your filtering, what is being included or excluded from a curve I am viewing.

    Jim

    1. Enno says:

      Jim,

      I referred to the speeding up of the decline, of total oil production, as can be seen in the total production overview (April & May 2016). Even taking some future revisions into account, I don’t expect that that will change this finding.

      I still need more Texas revision data to say more about it, but my impression is that a large part of the revisions have to do with new wells, that get reported late. If that is indeed the case, then I would not expect the well profiles to change much (except that some new wells will be later added to them).

      I am not sure I get your last statement:
      “I always get confused between RRC reporting, and your filtering, what is being included or excluded from a curve I am viewing. ”

      I am not filtering much: I try to pick out all horizontal wells in the whole of Texas (and elsewhere), that started production since 2009. Only in the Permian there are a couple of hundred wells (6% of total Permian horizontal wells) that I have to ignore, as I can’t estimate their production reliably. You don’t see them in any overview I show here. All the overviews are based on the same production data from all those horizontal wells. I don’t expect any of these overviews to change significantly after revision data has come in.

      If you want to be very cautious when looking at the “Well quality” overview, you can give less credence to the last couple of data points on each profile, which relates to the last couple of reported months.

      Let me know if this clarifies it.

      1. Jim Brooker says:

        Didn’t I read somewhere that you waited until 8 months of production history was logged before bringing wells in for some type of analysis? That is the filtering I was most interested in.

        Thanks for the response.

        1. Enno says:

          Jim,

          No, I don’t filter any wells based on a minimum amount of production history. It’s all there, out in the open πŸ™‚

  • The Examiner says:

    Enno,

    Love your site! I usually check the aggregate production figures against 10-Qs, as a sanity check. Quite often, there are large discrepancies – here is one I’ve just come across.

    Look at Operator=Whiting in tab “Total production”.

    The oil production was around 135 to 130K b/d in April-May 2016. The natural gas production was about 240 MMcf/d in May 2016.

    Check 10-Q for the second quarter of 2016, which you can see here:
    http://www.whiting.com/investor-relations/sec-filings/
    See p. 33, which in the file is actual page 35.

    In Q2 2016 according to 10-Q, Whiting’s oil production was 8.7 MMBbl of oil or 97K b/d. The production of natural gas was 10.8 Bcf or 120 MMcf/d.

    So, 10-Q says oil was at 97K b/d vs. this page at perhaps around 130K b/d. For natural gas, the discrepancy is greater: 120 MMcf/d in 10-Q compared to 240 MMcf/d in May 2016 on this page.

    Are this page’s numbers right? These are rather massive differences.

    I would greatly appreciate your insight.

    1. Enno says:

      Thanks for your comment.

      You raised a good question, which I will add to a FAQ I’m currently creating.

      I have not checked the difference that you reported, but I am pretty sure that it can be explained as follows:

      What I report on this site, are the total oil & gas volumes for horizontal wells, and I assign this (total, gross) production in full to each well operator.

      So, what are reasons that there are differences between the financial statements of a company, and the production reported here for operators:

      1. It is quite common that an operator doesn’t fully own a particular well; other parties may own an (working/royalty) interest in the well as well, and that production will not show up in the books of the operator. Only the net production volumes make it to the financial statements (unfortunately, as it would have given us more insight into these interests).
      2. Similarly as 1), companies may own non-operated interests in the wells of others. The production from those wells will show up in their books, but not here (at least not attributed to them).
      3. Operators may have production from vertical wells, or from wells outside my coverage area, which I don’t show.

      Very little (if any) information is made public about the exact interests in each well, so it is not possible for me to correct for these factors. Luckily, in general, operators tend to own a big piece of their wells.

      There may still be other reasons that I currently can’t think of. If others do, I hope they chime in.
      As mentioned, I will add this question & answer to a FAQ soon.

  • The Examiner says:

    Enno,

    Thank you very much for the explanation. I’ve looked into point (1) and found that it qualitatively resolved the discrepancy.

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