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Shale Oil: Running to Stay In Place

Discuss research and forecasts regarding hydrocarbon depletion.

Re: Shale Oil: Running to Stay In Place

Unread postby pstarr » Wed 30 Aug 2017, 14:03:03

Cash only, rock? Like a loanshark?
If you are not a curmudgeon. . . you are not awake.
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Re: Shale Oil: Running to Stay In Place

Unread postby shortonoil » Wed 30 Aug 2017, 14:55:22

The shale industry has never had a positive cash flow from its production, and has never turned a profit.


What a load of bollicks. The latest E&Y study on the top 50 companies indicates that statement is incorrect.


Are you talking about these companies? They even figured out how to turn a profit; stop trying to replace their reserves. Cut a $1 trillion out of Capex. Of course that means that they are going out of business, but the next quarters conference call will be happy tales, and the managements bonuses will be OK for another quarter. They definitely know how to prioritize.

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Re: Shale Oil: Running to Stay In Place

Unread postby rockdoc123 » Wed 30 Aug 2017, 16:38:33

Are you talking about these companies? They even figured out how to turn a profit; stop trying to replace their reserves. Cut a $1 trillion out of Capex. Of course that means that they are going out of business, but the next quarters conference call will be happy tales, and the managements bonuses will be OK for another quarter. They definitely know how to prioritize.


once again you post a document with no reference, so no idea how the numbers were calculated nor what is included. The E&Y study is detailed, garnered from company SEC filings which makes it easy to analyze.

EOG, a true shale player had 2016 revenues of 5,259 MM US, Production costs of 1,917 MM US, exploration expense of 126 MM US which results in pre-tax cash based income of 3,216 MM before taxes and 2,801 MM after taxes. It is only when you add in DD&A and impairments which are paper adjustments (and impairments are temporary) that they end up with a negative result of operations.

Pioneer another pure shale player had 2016 revenues of 3,108 MM US, production costs of 717 MM US, exploration expenses of 119 MM and G&A etc of 304 MM resulting in cash based income of 1,968 MM before tax and 1,563 MM after tax. Again it is only after you add in the paper adjustments of DD&A and reserve write downs (impairments) that you end up with a negative result of operations.

The only other pure shale player in your list is Southwestern and in 2016 they had a cash based results of operations of 574 MM

As I’ve said before when you look at your own home budget do you add in the depreciation on your vehicle or the change in the value of your home? Of course not. All you look at is your revenues from employment and investments minus your costs. That is the same as the cash based view of these companies and is appropriate in determining whether they are going concerns.

Not replacing their reserves you say? Horseshit.

In 2016 EOG replaced 183% of its produced reserves and 194% when revisions are excluded, Pioneer 128% of its reserves and 253 % when revisions were excluded.

For the top 50 companies, oil production replacement rates for the last 5 years have been 142% and 190% if revisions are ignored.
As an example, the company everyone likes to hate CHK started the year with 497 MMB and ended the year with 625 MMB, a 25% increase.

But don't let the facts stop you from posting random documents off the internet
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Re: Shale Oil: Running to Stay In Place

Unread postby coffeeguyzz » Wed 30 Aug 2017, 18:05:55

Don't know how many (if any) folks who frequent this site keep a close eye on production from unconventional wells, but some type of 'quiet revolution' seems to have been underway these past 18 months or so.

Besides the high grading and increasing length of laterals, both the diversion processes and microproppant use - along with restricted choking - are having significant impact on well production. (Check out Enno's Bakken profiles).
The operators are uniformly quiet about what is occurring, but the CEO of Core said that a doubling or more reservoir stimulation is possible with microproppant use, along with much slower decline.
Something is definitely going on to increase output per well.
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Re: Shale Oil: Running to Stay In Place

Unread postby ROCKMAN » Wed 30 Aug 2017, 18:15:11

Doc, Doc, Doc - Why are you trying to confuse the discussion with facts? You have no right to try to destroy the childish biased OPINIONS of others. You are obvious doing the work of the Devil...AKA ExxonMobil. LOL.
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Re: Shale Oil: Running to Stay In Place

Unread postby rockdoc123 » Wed 30 Aug 2017, 19:42:06

Something is definitely going on to increase output per well.


I think it is a combination of the longer laterals with more fracks which translates directly into greater flow into the well bore at lower drawdown and the fact companies are concentrating in the absolute best spots.
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Re: Shale Oil: Running to Stay In Place

Unread postby coffeeguyzz » Wed 30 Aug 2017, 22:40:38

Doc

Bakken lateral length has been about 9,500' or so for years.
Appalachian Basin lateral length is increasing a bit, but the production numbers are way high for the 15/20% extra iron.

No, something else is going on.
Few years back, Whiting was evaluating 3 versus 5 perf clusters per 350' long stage.
Now, stages are regularly 150/200 foot long wth clusters as close as 15 to 30 feet apart.
The only way this could be accomplished is by effectively employing both near wellbore and far field diversion material.
This would allow VERY extensive rubbilizing while reducing both stress shadowing and controlling half length of frac.

This 200/400 mesh microproppant is fairly recent stuff and the CEO of Core Lab says it will double area of stimulation as it scours tiny fissures and enables 100 mesh to enter and prop.
This is where all the extra sand is going.

In addition, the complexity of these microscopic fissures means the oil has a long way to travel to reach the wellbore, so the decline curve will flatten.
So he says.
All I know is that the initial output from Bakken and AB wells is WAY up (Check shaleprofiledotcom) and the drop off is not occurring nearly as sharply as years gone by.
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Re: Shale Oil: Running to Stay In Place

Unread postby ROCKMAN » Thu 31 Aug 2017, 10:48:46

coffee - You guys keep throwing out that techno babble like Doc and trying to confuse our armchair warriors here that know it's all still a scam. Shame on you!!!

OTOH trying to teach a pig to roller skate only frustrates you and pisses the pig off. LOL.
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Re: Shale Oil: Running to Stay In Place

Unread postby coffeeguyzz » Thu 31 Aug 2017, 11:07:54

RM

Hope you and yours are faring as well as possible with all the events happening down your way.
Glad to see you are able to post.

There seems to be something going on with the completion process that may involve increasing formation pressure with new fracs.

Bruce Oksol, on his milliondollarway site, has been tracking the Bakken for years on practically a well by well basis. (He is a Williston native, retired military).
He coined the term 'halo effect' years ago to describe the big jump in production from parent wells (older) when child wells (newer) were frac'd.
This may be playing a role, but the extensive downtime in older wells pre new fracs, along with repressurization with water to protect from frac hit damage by new fracturing may be involved in this significant uptick in new output along with older wells producing much more.

I do not know what to make of it but these newer Bakken wells are now regularly producing 100k/150k barrels oil first few months online.

The AB wells? 3 Bcf first 6 months, 15 MMcfd for a year is becoming routine.
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Re: Shale Oil: Running to Stay In Place

Unread postby Tanada » Thu 01 Feb 2018, 01:31:17

Plantagenet wrote:To be fair, the "running in place" aspect of frakking has some positive benefits.

Frakking is very labor intensive. It generates lots of good-paying jobs. Its been one of the few bright spots in the US economy over the last 4 years.

The rapid decline of frakked wells means new drilling has to go on constantly, creating jobs for folks who work on drilling rigs, truck driving, steel-pipe making, frakking, well-logging, land men, surveyors, with halo effects for hotels, restaurants, laundries, hardware and supply stores, etc. etc.---- the Bakken areas of North Dakota are having an economic boom while the rest of the US staggers along with no growth---- the unemployment rate in much of North Dakota is ca. 2%.


Does anyone remember this graph from shortly before the Glut messed with drilling rates for 2015-present?
Image

The key data on the graph is not the ultimate recovery rate, that was skewed by the much lower drilling rate in 2H 2015, all 2016 and 1Q-3Q 2017. The key data to my way of understanding is the total drillable location limit of 21,474 for the Bakken and 37,052 for the Eagle Ford. This projection was made when those were the two dominant plays being drilled in the USA, since then the Permian has moved into first place. Keep in mind however the number of drillable locations is not something that will increase with time and a slower drilling rate for the last 30 months coupled with more rigs moving to the Permian means the eagle Ford and Bakken will get drilled to completion a little slower, not that running out of drill sites is no longer a factor.

As posted over on the Bakken thread a day or so ago the production rate is in the range of 1.2 MM/bbl/d and rising as drilling picks back up. That puts the Bakken rate a little higher than the projection which raises the question, is the ultimate economic recovery still projected to be 4.5 Gbbl? I can't find agreement between sources on this issue but at the current rate the Bakken is producing circa 440 MM/bbl/year so that 4.5 Gbbl would effectively be produced in about a decade and numbers hit these over a million levels in late 2014 so 2025ish?

Eagle Ford is producing more and in this projection clocks in with 60% more drillable locations to exploit. It also has the advantage of being in Texas where infrastructure is more available to exploit those drilling sites as prices will support. Like the Bakken the 6.5 Gbbl exploitable resource is extremely difficult to confirm because it seems like every article I find has a different figure in it. The eagle Ford is close to the Bakken in production rate current projected to be around 1.2 MM/bbl/d as well so at current production rates that 6.5 Gbbl would be produced within 15 years.

Yes I know production does not plateau and hold then drop off a cliff, however I also saw how both plays responded to the lower drilling in 2016 with a pretty steep decline rate for about 16 months before drilling picked up and production began slowly increasing again. I take this as an indication that production will remain fairly high for some time, then as drillable sites start running out the production will start dropping. Depending on how 'sour' the average drilling location is by then production may have already fallen quite a bit with the bulk of the 6.5 Gbbl ultimate recovery front loaded by sweet spot exploitation. Just a reminder, when prices are low only the sweet spots get drilled and completed because the less sweet can not pay back their costs at lower prices.

So anyone got believable ultimate recovery estimates that contradict these which total 11 Gbbl? 11 Billion barrels is a lot of oil, but exploiting it at over a million barrels a day it doesn't last as long as you would intuitively expect.
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Re: Shale Oil: Running to Stay In Place

Unread postby AdamB » Thu 01 Feb 2018, 16:23:00

Tanada wrote:So anyone got believable ultimate recovery estimates that contradict these which total 11 Gbbl?


Yes. But the question is, of what value is better information when you don't have a good system/process/mechanism to model it? URR and fitting bell curves or bulges or random shapes was a halfassed approximation of resource development even when Hubbert did it. As we know now, it has nothing to do with aggregate development profiles at all.

Even your graphic ignores prior cycles of development in the Bakken, back when no one was willing to even venture that resource play development would be able to reverse "irreversible" US oil production decline, let alone the stuff becoming a majority of US oil production, and create yet more US peak oils.
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Re: Shale Oil: Running to Stay In Place

Unread postby coffeeguyzz » Fri 02 Feb 2018, 10:11:07

Tanada
Don't know where you got that 21,000 figure for the number drillable locations in the Bakken.
That is simply WAY off.
Numbers thrown around regarding ultimate Bakken wells range from 60,000 to over 100,000 depending on a wide range of parameters.

And being familiar with the parameters is crucial to understanding how this stuff plays out.

Start with a pretty widely accepted figure of how much oil is sitting there, Origional Oil In Place - OOIP.
Now, price operator gets for it. If that price is $20/bbl, versus $200, different amounts will come out of the ground.
Now, cost to produce.
Taking 60 days to drill one well, 3 weeks to fracture 30 stages, building pads, tamks, pipelines for water and hydrocarbon takeaway, access roads, etc, is a whole different ballgame when wells are drilled simultaneously in 7 to 10 days on the same pad, 60 to 85 stages are frac'd in a few days with WAY more precise, increased stimulation, and the product is processed into existing infrastructure.
All this, and 90% of the oil is - for the moment - still being left behind.

Small suggestion ... Go back to the 2010/2012 timeframe and read a bit on the wildly inaccurate predictions.
If you can discern WHY those guys got it so wrong, you may get a better picture of what is to come.
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