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Permian Wolfcamp shale

General discussions of the systemic, societal and civilisational effects of depletion.

Re: Permian Wolfcamp shale

Unread postby rockdoc123 » Sun 20 Nov 2016, 15:03:25

Without ANY shred of doubt, when the USGS and EIA get around to updating the Utica, the Marcellus, and the Upper Devonian formations' potential output, people are gonna be shocked.
The past 12 months' production numbers from these sources is nothing short of breathtaking.


I think the USGS has already evaluated the Marcellus and Utica taking into account the full basin margins and a range of EUR's that captures the results to date. Not sure there is much additional information that can change their current assessment.

The big question to my mind is there may be a lot of potential resource but to develop it takes reasonable economics (a strong oil/gas price) and access to capital. More production means lower price so to some extent additional drilling is a self -defeating exercise. More importantly I suspect the access to capital from traditional sources (investment banks in the way of equity or loans) will stay quite tight for some time to come. Banks like Wells Fargo got burned pretty badly by the industry downturn so I would be surprised to see them willing to loan to the extent they once did. Companies could, of course, live within their cashflow but the shale business requires lots of wells and lots of expenditure up front so if a company is publicly traded and expected to grow quickly by its investors it needs access to capital well beyond it's annual cashflow.
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Re: Permian Wolfcamp shale

Unread postby AdamB » Sun 20 Nov 2016, 15:43:59

coffeeguyzz wrote:This thread, and the running comments by you three gentlmen, may illustrate exactly what is going on in this ' shale/unconventional revolition' and the profound changes unfolding before our eyes.

One year ago, the USGS doubled the TRR of the Barnett to 53 Tcf.


Sure. Just as they changed the Bakken from first 150 million to later 3.5 billion to 3.5 billion again, plus 3.5 billion for the Three Forks. The Marcellus they increased about 40X in 2011. They will do the exact same thing when they reassess the Eagle Ford probably.

coffeeguyzz wrote:Without ANY shred of doubt, when the USGS and EIA get around to updating the Utica, the Marcellus, and the Upper Devonian formations' potential output, people are gonna be shocked.
The past 12 months' production numbers from these sources is nothing short of breathtaking.


The EIA was already calculating inhouse Marcellus numbers far larger than the USGS, more in line with the Texas BEG.

Figure 6, back in 2014.

https://www.eia.gov/workingpapers/pdf/g ... encies.pdf

They were also demonstrating a product at the AAPG National back in 2014 to folks like Terry Engelder, the Texas BEG and some USGS folks, that was far more integrated in the size of the Marcellus, but I haven't seen that one out in the open or at their website yet.

As far as the Utica, the USGS number came out early, and the more definitive published work is the geologic study conducted out of WVU led by Doug Patchen.

http://nrcce.wvu.edu/wp-content/uploads ... 012015.pdf

In 2014 or 2015 (I forget which), there were companies at the AAPG convention that year who were making the statement that the Marcellus isn't the primary gas producing trend in the Appalachian Basin. You were left to wonder for yourself what #1 might be...while they had slides of the Utica plastered all over their presentation.
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Re: Permian Wolfcamp shale

Unread postby AdamB » Sun 20 Nov 2016, 15:46:01

rockdoc123 wrote:I think the USGS has already evaluated the Marcellus and Utica taking into account the full basin margins and a range of EUR's that captures the results to date. Not sure there is much additional information that can change their current assessment.


Infill drilling.
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Re: Permian Wolfcamp shale

Unread postby rockdoc123 » Sun 20 Nov 2016, 15:48:52

Infill drilling.


that is already taken into account in the USGS analyses. They take the total area of the basin, assume a drainage area per well, an EUR per well and then come up with a total EUR based on the number of wells to complete drainage. In this type of analysis drilling more wells doesn't increase ultimate reserves.
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Re: Permian Wolfcamp shale

Unread postby AdamB » Sun 20 Nov 2016, 16:03:08

rockdoc123 wrote:
Infill drilling.


that is already taken into account in the USGS analyses.


Perhaps I should be more specific.

The USGS utilizes non-interfering well spacing estimates for their well drainage areas. I am specifically referring to infill drilling of interfering wells.

rockdoc123 wrote: They take the total area of the basin, assume a drainage area per well, an EUR per well and then come up with a total EUR based on the number of wells to complete drainage. In this type of analysis drilling more wells doesn't increase ultimate reserves.


You are correct. Which is why their estimates are designed conservative in this regard. Unlike their recent work in reserve growth, where changes in existing recovery factors determine additional potential resource, in their continuous resource estimates they do not allow any second pass at the pore volumes within any given pressure cell. If they did, the assessed volumes would increase.
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Re: Permian Wolfcamp shale

Unread postby rockdoc123 » Sun 20 Nov 2016, 17:18:29

You are correct. Which is why their estimates are designed conservative in this regard. Unlike their recent work in reserve growth, where changes in existing recovery factors determine additional potential resource, in their continuous resource estimates they do not allow any second pass at the pore volumes within any given pressure cell. If they did, the assessed volumes would increase


Using the Wolfcamp study as a guide it wasn't bottom up calculations. They simply took a range of EUR/well and a range of radius of investigation. That EUR/well covered the full range from the worst (Berman estimates) to the best (estimates by some of the key players) so the Monte Carlo should capture the range. Using the same analysis in the Marcellus would do the same as long as they captured the full range of EUR's that have been suggested.
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Re: Permian Wolfcamp shale

Unread postby coffeeguyzz » Sun 20 Nov 2016, 17:52:36

Rockdoc
I sure can't speak for the methodologies of all the analysts, but I do try to understand what they're up to.
Went over the UVW Utica study twice, but all those Fred Flintstone type descriptions kinda makes my eyes glaze over.

Been keeping close watch on the Marcellus and the Utica production this past year, though, since all those huge IPs came out several months back.

Couple of observations ...
Up to two years ago, 24 hr IPs of 15/20 MMcf we're considered huge.
As of Sept. 2016, currently almost 50 Marcellus/Utica wells are FLOWING 15 MMcfd from between two weeks to three YEARS online.
9 of those wells are flowing over 20 MMcfd ... one for over a year.

When Shell, operating as SWEPI, announced a couple of successful Utica wells, a few years back way east in Tioga county, people were surprised as it was thought to be cooked off up there. ( This is a couple hundred miles north east of the huge Utica wells in Greene and Washington counties).
Shell has since brought online a couple dozen Utica wells there with the newest ones showing increasing output.
About a hundred miles west, in Potter county, JKLM drilled the first/only Utica well. This Sweden Valley well has produced 3Bcf in less than 9 months.

Range just brought online a five well pad, the Eakin, Sandra, that has cumulatively produced 9 Bcf in four months.
Cabot is doing the same type of operations in northeast Susquehannah county.

The recent Bcf results from several Genesee, Burket, and Rhinestreet sourced wells is prompting the operators to incorporate UD development simultaneous to Marcellus' drilling.

Years from now, this Appalachian Basin will be recognized as possibly the largest gaseous source of hydrocarbons on the planet.
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Re: Permian Wolfcamp shale

Unread postby AdamB » Sun 20 Nov 2016, 18:02:49

rockdoc123 wrote:
You are correct. Which is why their estimates are designed conservative in this regard. Unlike their recent work in reserve growth, where changes in existing recovery factors determine additional potential resource, in their continuous resource estimates they do not allow any second pass at the pore volumes within any given pressure cell. If they did, the assessed volumes would increase


Using the Wolfcamp study as a guide it wasn't bottom up calculations. They simply took a range of EUR/well and a range of radius of investigation.


I know. Even more interestingly, when they use identical EUR distributions, they are using a common population of wells from which to pull, because EUR distributions of even similar formations are never identical.

rockdoc123 wrote:
That EUR/well covered the full range from the worst (Berman estimates) to the best (estimates by some of the key players) so the Monte Carlo should capture the range.


Whether those EUR estimates came from the players involved, or the petroleum engineer on the assessment team, is not clear. Certainly which is which is not mentioned in the text.

rockdoc123 wrote:Using the same analysis in the Marcellus would do the same as long as they captured the full range of EUR's that have been suggested.


Not quite sure about what this means. The EUR distributions the Survey uses aren't full ranges. They are uncertainty around the average.

Page 5. Bottom left hand corner.

"The average EUR in the untested sweet spots is estimated
by the distribution in line 5b. Because thousands to hundreds
of thousands of wells are involved in this calculation, only the
average EUR and its uncertainty are relevant"

http://pubs.usgs.gov/ds/547/downloads/DS547v2.pdf
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Mature ‘super basin’ in US breaks 44-year oil record

Unread postby AdamB » Mon 01 Jan 2018, 22:33:23

A mature ‘super basin’ located in Texas and New Mexico has set a new oil-production record, beating its previous peak set in 1973. The Permian Basin has reached a new production volume of at least 815 million barrels in 2017, far exceeding its previous peak of 790 million barrels, according to new analysis from information firm IHS Markit. In 1973, the basin produced an average of nearly 66 million barrels of oil per month – peak liquids production occurred in September with slightly more than 68 million barrels produced. By the middle of the past year, average monthly production already exceeded the best month of Permian production during the former peak period. Since July, Permian liquids production exceeded 484 million barrels, around an average of slightly more than 69 million barrels per month. Reed Olmstead, Director of Energy Research and Analysis at IHS Markit, said:


Mature ‘super basin’ in US breaks 44-year oil record
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Re: Permian Wolfcamp shale

Unread postby Subjectivist » Tue 02 Jan 2018, 08:33:49

Wow! No wonder Texas is doing so well financially, and the Permian is not their only field, just the biggest!
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Re: Permian Wolfcamp shale

Unread postby Tanada » Tue 30 Jan 2018, 13:47:40

More text plus graphs and pictures at link below the quote.

Boomtown

Last week, my day job took me to the Permian Basin. A colleague and I arrived late at night at our hotel in Fort Stockton, Texas. The hotel parking lot was full. The vehicles in the parking lot represented every type of oilfield-related business imaginable.

A Century of Production

After the oil price crash that began in mid-2014, crude oil production growth in the U.S. stalled. In 2016, annual production in the Bakken and Eagle Ford formations fell by 10-20%, but production in the Permian Basin continued to grow.

Amazingly, the Permian is approaching its 100th year of oil production. At present, production has reached a record 2.8 million barrels per day (BPD), making it the world's second-most-prolific field, behind the legendary Ghawar in Saudi Arabia.

The Texas side of the Permian has already produced 30 billion barrels of crude and 75 trillion cubic feet (Tcf) of natural gas. Since 2012, Permian Basin production has increased by nearly 2 million BPD – which is a larger increase than any other oilfield in the world. This is why I consider the Permian Basin to be the world's hottest oil play.

The Permian Basin is a cold, windy and desolate place — but it's making a lot of people very wealthy.


FORBES

The article above really bugs me for the same reason so many media reports bug me. It is a purely subjective review of what the reporter saw with not a single hard number projection to be found anywhere. In one way this is good because it just lays out what is going on in the old tradition of what reporting is supposed to mean. On the other hand it leaves readers, and investors, with the impression that the golden goose has been captured and is willing to lay an unlimited number of eggs for as long as the reader can wish into the future.

Certainly it is useful to know that the Permian formation has now been exploited for a century. It is also worth absorbing that production has almost tripled since 2012. However there isn't a hint that a century old formation that is now producing at massive rates compared to the previous average could be fully exploited any time in the future. IMO the casual reader of this article is left with the impression that the Permian has been producing for a century so that must mean it will keep producing for another century. That is just the way the human mind works unless there is an explicit statement otherwise. Throw in the tripling of production over the last six years and Wallah, the Permian will produce 3 times as much oil in the 21st century as it has already produced. So if it has produced 20 Gbbl so far it will produce another 90 Gbbl this century and Happy Motoring can go on forever. Why not include the official EIA economic reserves estimate?

DrillingInfo dot com founder Allen Gilmer is even promoting the idea that the Permian contains from 500 Gbbl to 2,000 Gbbl of economically recoverable oil, though he also states he thinks the infrastructure limit on exploitation will keep production down to 3 MM/bbl/d. In effect they are pushing the idea that the Permian will yield twice to four times what Gahwar in the KSA has already and will in the future yield.
Gilmer: We Should View The Permian Basin As A Permanent Resource
FORBES Gilmer Interview

With this sort of reporting it is no wonder the financial institutions believe oil will never be a limit on growth in the USA.
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Re: Permian Wolfcamp shale

Unread postby AdamB » Tue 30 Jan 2018, 15:46:08

Subjectivist wrote:Wow! No wonder Texas is doing so well financially, and the Permian is not their only field, just the biggest!


The Permian isn't a field. It is a basin.
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Re: Permian Wolfcamp shale

Unread postby Subjectivist » Wed 31 Jan 2018, 01:38:51

AdamB wrote:
Subjectivist wrote:Wow! No wonder Texas is doing so well financially, and the Permian is not their only field, just the biggest!


The Permian isn't a field. It is a basin.


Now you are being pedantic for the heck of it. Sure you are technically correct, but I am confident you knew what I meant with the terminology I used.
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Re: Permian Wolfcamp shale

Unread postby radon1 » Sun 04 Feb 2018, 03:32:46

Isn't Permian an entire class of reservoirs related to the Permian period?
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Re: Permian Wolfcamp shale

Unread postby rockdoc123 » Sun 04 Feb 2018, 12:14:47

Isn't Permian an entire class of reservoirs related to the Permian period?


when oil and gas people say "the Permian" they are referencing the basin and the stacked reservoirs including the Wolfcamp, Spraberry, Leonard, First bone, Brushy canyon, Grayburg etc. The formation names change quite a bit across the basin although many of the producing zones with different names are synchronous.

The term Permian on it's own refers to the time period 289 MYa to 252 MYa. It was a time where there were only two continents, the largest of which was Pangea which the Permian basin was a part of. There are other important hydrocarbon and coal deposits of Permian age around the world (eg. the Rotliegend in Germany).

such is the English language, subject to shortcuts and abuse.
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