Projecting US shale oil & gas production (after July 2017)

In this post I would like to shed some light on how existing horizontal wells in the main US shale plays are likely going to perform in the future. This is a similar exercise as done in earlier posts (e.g. here and here ).

I will describe both of the available views in the above interactive presentation (‘Projected production’ & ‘Production profiles’), and then describe the method used.

But before I do that, I would like to announce a new service that we are working on: ShaleProfile Analytics. With ShaleProfile Analytics we will provide access to all data gathered and structured by the ShaleProfile data platform. We will present this with the nice visual and analytics capabilities of Tableau, which is the tool used for all the interactive overviews that you have encountered here. It will be easy to use, and available from your browser, supporting different devices and screen sizes.

We plan to make this service available in Q3. If you would like to stay informed on this service you can leave your email here: %CODENewToolUpdate%

If you would like to play an active role in this by providing input, and feedback on early versions, please contact me directly here.

Projected production

Here you can see the projected oil output from 76,204 horizontal wells in 9 US states, that started before July 2017. Of the 10 states that we currently cover, West Virginia is excluded as data for 2017 is not yet available. The view is split at July 2017, at which point the projection starts.

The goal of this overview is to give an impression on how much oil & gas can be expected from these existing, producing, wells in the coming years. Any production from newer wells is not considered.

Total oil production from these wells drops from 4.3 million bo/d per day in June last year, to about 0.5 million bo/d in 2030, the last year available in this projection.

By selecting ‘gas’ in the ‘Product’ selection you can get a similar graph for natural gas production.

As usual, with the selection boxes you can filter on specific areas or operators, and tooltips are available with more information.

Production profiles

In this 2nd overview, the historical and projected production profiles are shown for almost all these wells. Wells are grouped by the year in which production started, and the average production rate is plotted against cumulative production. You can see these profiles for either oil or gas, using the ‘Product’ selection.

The production profiles for about 4.5k wells (6% of the total shown in the first overview)  are not available here, as I will explain further down. These are especially more recent wells, and therefore the results for 2016/2017 should be considered with some caution.

I have preselected the oil plays, but you could use the ‘basin’ selection to change which areas are included.

If you click on a particular year in the color legend, the related curve will be highlighted. You will then also see the gap between the historical, and the projected performance, which is plotted with a lighter color.

Note that this time the vertical axes start at 1 bo/d for oil, and 1 Mcf/d for natural gas. I would have preferred to set this to 5 bo/d, and 50 Mcf/d respectively, but I ran into a bug, and am working with Tableau to resolve this. I consider the projected performance around these low levels as highly speculative, as little data exists so far on how such wells behave, and when operators will shut them in.

Method

The results shown here were obtained by the following steps

1) Take the latest actual production data for these wells

2) Group wells by county, operator and year of first production

3) Exclude wells that have not yet declined by at least 50% or that have been refracked, to avoid spurious results.

4) Apply a decline curve analysis method based on fitting a hyperbolic decline (Arps), for both the oil and the gas stream separately.

5) Switch to an exponential decline once the annual decline rate reaches 8% (Robertson).

6) Once the average production rate for a group reaches a level below 5 bo/d and 50 Mcf/d, it is assumed that the wells will be abandoned, and production is set to 0.

Because of step 3) for about 6% of wells no projection was available. Based on some simple heuristics (by applying a similar decline curve), I did estimate the production for these wells in the first overview (“Projected production”), but not in the 2nd one.

You may notice some discontinuities between the historical and projected profiles. In future versions I aim to further improve this.

Finally

Later this week I plan to have a post on North Dakota.

For this presentation, I used data gathered from the following sources:

  • FracFocus.org
  • Colorado Oil & Gas Conservation Commission
  • Louisiana Department of Natural Resources. Unit production is allocated over wells in order to estimate their individual production histories.
  • Montana Board of Oil and Gas
  • New Mexico Oil Conservation Commission
  • North Dakota Department of Natural Resources
  • Ohio Department of Natural Resources
  • Pennsylvania Department of Environmental Protection
  • Texas Railroad Commission. Individual well production is estimated through the allocation of lease production data over the wells in a lease, and from pending lease production data.
  • Wyoming Oil & Gas Conservation Commission

====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.
  • Tool tips 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.
  • 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.