Permian – update until 2015-12


The above presentation contains oil production data for selected wells in the Permian, in both New Mexico and Texas, until December. Unlike in the last update, I was able to estimate the production for most individual wells, based on the reported lease production. Having this data allowed me to show now also underlying decline.

A few remarks/findings:

  • The total production overview shows the oil production from both horizontal (New Mexico + Texas) & vertical wells (Texas). December shows quite a big drop, but as always for Texas, I do expect revisions, especially for this month.
  • The “well quality” tab shows the productivity of only horizontal wells in the Permian. I find it interesting to see that wells appear to have improved in recent years, on average.┬áIf you you select the grouping “Quarter of first flow”, you can see that this process of improving initial production has continued steadily. However, these improvements (similar as for the other basins) seem to be mostly located in the first 12 months, after which the profiles converge. The profiles are now quite similar as to the ones seen in the Eagle Ford (I have not compared the difference in gas production).
  • If these impressions are correct, this would mean that the improvements are equal to a one-time gain, of which the size can be estimated from the difference in the first part of the cumulative profiles. E.g. we can see that the average horizontal well from 2010/11 does about 100 kbo by year 5. A typical 2014 well hits about the same production profile by end of year 2. By that time it has done about 100 kbo, vs about 65 kbo for the 2010/11 profile. Based on this I would currently expect these 2014 wells to do about 100 + (100-65) = 135 kbo by year 5. Wells starting in 2015 appear so far to do another 20 kbo on top of this.
  • Another conclusion we could draw from this (assuming it is true), is that this higher initial production would require less new wells to keep production up, especially initially. But given that their (e.g. comparing 2015 with 2014 wells) total production over a number of years may not be much greater, still almost the same number of wells are needed as in the past for the same amount of total output. This is a different conclusion than what I’ve seen in some media reports, which claimed that these improvements in initial production would require far less wells to keep production steady. I would be interested to hear what you think about these 2 ideas.

A few more technical remarks:

  • For the wells in New Mexico, the data is very accurate, whereas for Texas I had to estimate well production data based on lease production data. I have further fine-tuned this algorithm in several ways, which makes me belief that the well profiles shown here are quite accurate. Despite these improvements, the change in these well profiles compared with the last update doesn’t appear to be large (as you can check for yourself). There are still a number of wells that I had to exclude though : there are 5117 horizontal wells in the selected Texas leases that I’m using here, while for 4184 of those wells the production is shown. The reason why I had to exclude some of these wells is that the algorithm couldn’t handle the lack of detailed well information available for the leases in which they are. I’ll try to improve this further in the future, but there are limits to what is possible.
  • The total production overview (“how much is produced” tab), includes 2859 horizontal wells from New Mexico, 4184 horizontal & 13373 vertical wells in Texas. Because I had to omit some wells/leases, the total production shown now for the Permian is a little less than last update, but now the underlying decline can be shown.

I expect to have another update on the US up by next week 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.