Permian – update through September 2018 - Shaleprofile

Permian – update through September 2018

This interactive presentation contains the latest oil & gas production data from all 17,997 horizontal wells in the Permian (Texas & New Mexico) that started producing since 2008/2009, through September.

Last week I planned a post on the Permian, but noticed that September data for New Mexico was still quite incomplete (100 kbo/d, or ~20% of production has not yet been reported). Unfortunately, it still is, but I did not want to delay this update any further.

The graph above shows clearly the astonishing rise in oil production in the Permian in the past 2 years, as oil production from horizontal wells more than doubled to over 2.8 million bo/d in September (which will be visible after upcoming revisions). More than 1.5 million bo/d in September came from ~3,200 horizontal wells that started in 2018.

In New Mexico a single operator seems to be responsible for most of the missing production in September: EOG, which is also the largest producer in this state. After you exclude EOG from the graph (using the ‘Operator’ selection), you will see that the apparent drop in September has almost disappeared.

In the ‘Well quality’ tab you’ll find the production profiles for all these wells. By default they are grouped and averaged by the year in which they started production. With this setting, you’ll find in the bottom plot that well productivity improved significantly in the past 5 years. Wells that started in 2013 recovered 77 thousand barrels of oil in the first 2 years, on average, while this more than doubled to 183 thousand barrels of oil for wells that started 3 years later.

Since 2016 the pace of improvements appears to have slowed down, as you’ll see by following the 2017/2018 curves.

The final tab shows the performance of the leading operators. You’ll see the effects of the acquisition of RSP Permian by Concho, and the missing production for EOG in New Mexico in September. The ranking in this overview is now based on only the production in the last 12 months. This is the reason that Cimarex and Devon have been replaced with Oxy & Anadarko.

The ‘Advanced Insights’ presentation is displayed below:

 

This “Ultimate recovery” overview shows the average production rate for these wells, plotted against their cumulative recovery. Wells are grouped by the year in which production started. This kind of plot doesn’t assume any kind of decline behavior, but a harmonic decline (b factor of 1), will show up as a straight line with the given settings.

The 2,215 horizontal wells that started in 2016 (light brown curve) are on track to recover each around 200 thousand barrels of oil, once they have declined to an average production rate of 100 bo/d. Newer wells appear to be on track to do slightly better than that.

Tomorrow we will have a new show at enelyst (live chat combined with images), where we will take a closer look at the latest Permian data. The show will be available here in the enelyst ShaleProfile Briefings channel. If you are not an enelyst member yet, you can sign up for free at enelyst.com.

Early next week we will have a post on all 10 covered states in the US.

Production data is subject to revisions.

Note that a significant portion of production in the Permian comes from vertical wells and/or wells that started production before 2008, which are excluded from these presentations.

For these presentations, I used data gathered from the following sources:

  • Texas RRC. Oil production is estimated for individual wells, based on a number of sources, such as lease & pending production data, well completion & inactivity reports, regular well tests and oil proration data.
  • OCD in New Mexico. Individual well production data is provided.
  • FracFocus.org

====BRIEF MANUAL====

The above presentations have many interactive features:

  • The above presentations have 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.
  • 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

  • Krishnan Viswnathan says:

    Why did EOG production fall so sharply in September? It fell from 182714 to 79982 barrels.

  • Enno says:

    Krishnan,

    Please read the post😀

  • Krishnan Viswnathan says:

    My question is what is the reason behind this drop?

  • Enno says:

    Sorry, I thought it was clear from the post.

    The state agency in New Mexico has so far not yet released EOGs production data for September, which is why there is a sudden drop.

  • Walter Cavinaw says:

    Hi,

    How are inactive wells defined, and why is the DUC number so different than that provided by the EIA? I tried searching your site for an answer but couldn’t find much

  • Enno says:

    Hi Walter,

    Inactive wells are defined by us: if a well doesn’t produce any gas or oil in a month, and it hasn’t been plugged yet, then its status is inactive. For the most recent month you can always see a bit of a jump, as some wells are not yet reported. In these cases we add zeros, until the actual production numbers come in.

    Regarding DUCs: we look at the actual completion numbers, while the EIA also models incomplete or missing data. Furthermore, we only cover horizontal wells, while the EIA also includes vertical wells. These are I believe the main factors behind this difference; there are a couple of smaller ones as well (e.g. if a well is too old, we no longer consider it a DUC anymore).

  • Ruy Riavitz says:

    Hi Enno,
    Congratulations for the site! I am trying to compare the Permian oil wells with the Vaca Muerta wells in Argentina and I wanted to clarify if the associated gas for the oil producing wells is converted to boes and summed to the oil production.
    Best

    Ruy

    1. Enno says:

      Thank you Ruy!

      Stefan just answered your question better than I could myself. At the top-right of most dashboards there is a toggle selection to either select the oil or the gas stream from the selected wells. I do not consider BOE a very useful metric, and will avoid it in my analyses.

    2. Stefan says:

      Production volumes in Enno’s chart are “2-stream” (oil, wet gas). Each product is plotted separately as specified by the user.

      You would need to do your own roll-ups and make shrink/yield assumptions for comparison to BOE numbers elsewhere.

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