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Page added on September 21, 2015
Fracking Productivity Doubling Every Two Years
From fewer than 50 barrels a day in 2009 to 400 barrels today, fracking technology has advanced at a pace that has doubled oil well production every 2 years. That pace of productivity improvement is almost identical to the computer industry’s Moore’s Law, which expects the speed of processing chip to double every 2 years.
The iPhone 3G state-of–the-art smartphone in 2009 had a computer processing chip rated at 412 MHZ. The new Apple iPhone 6S sports the A9 processor with dual 1.8 GHZ processors. Although Apple markets the speed as “amazingly fast,” the improvement is just on pace with the average improvement for processor chips.
Gordon E. Moore predicted in 1975 that the processing speed for the average computer would double every two years. Despite all the nay-saying by so-called industry “experts” at the time, computer speeds have consistently doubled about every two years for the last four decades. Moore’s problematic prediction is now called “Moore’s Law,” because the pace of innovation has doubled computer speeds every 2 years and is expected to continue at the same pace into the future.
Likewise, the nay-saying energy experts in 2009 claimed the world had suffered “peak oil” two decades earlier, and production was in terminal decline. But U.S. oil production has more than doubled in the last six years because technological innovations continue roughly to double the productivity of fracking about every two years.
It is now well known that the initial oil production from fracked wells has improved by over 800 percent in just six years. But what is not understood is that the decline in oil production in fracked wells has fallen by 80 percent over the same period. In 2009, production from fracked wells fell from 50 barrels a day to 25 barrels per day in 6 months, and was not commercially viable after one year. But for wells fracked in Texas’ Eagle Ford region in 2014, initial production only fell from 400 barrels a day to 250 after six months, and the wells are expected to continue to be commercially viable for 4 years.
Because of concerns with productivity, fracked wells in 2009 were required to have at least 500 feet of spacing. But recent trends are allowing fracking with just 100 feet of spacing,
This Moore’s Law-like tech driven productivity improvement explains why U.S. oil production has continued to remain high despite the U.S. price of oil falling to $45 a barrel over the last 15 months (about a 55 percent price decline). That is even more impressive, given that the number of oil rigs running in the U.S. fell from a peak of about 1,600 a day in October 2014 to about 675 today.
Most of the fracking boom was paid for with the issuance of junk bonds, and Moody’s credit rating service warns that about one in eight of those are at risk of filing for bankruptcy at current oil prices. Despite how much money bondholders may lose on financing all the fracking exploration and leasehold purchases, banks are still going to continue to fund fracking production on established wells sites until the cash flow turns negative.
The price of oil adjusted for inflation over the last 140 years averaged $30 a barrel; since 1946 it averaged $42 a barrel; since 1980 it averaged $53 a barrel, and from 2000 it averaged $64.50 a barrel.
21 Comments on "Fracking Productivity Doubling Every Two Years"
ghung on Mon, 21st Sep 2015 2:25 pm
One word: breitbart.
Nony on Mon, 21st Sep 2015 2:36 pm
Have to use all that ethane the shale boys are digging up.
https://www.youtube.com/watch?v=PSxihhBzCjk
Davy on Mon, 21st Sep 2015 2:58 pm
When the NOoo’s message is empty he tries to be funny
Nony on Mon, 21st Sep 2015 3:30 pm
Tries? 🙁
yoananda on Mon, 21st Sep 2015 4:21 pm
so if productivity is doubling every 2 year, why production is falling ?
We don’t care about rig, it just tell future production, not current. they have concentrated on sweet spots.
What are the thecnological improvments he speaks of ?
technocopism to reassure banks and get more credit.
apneaman on Mon, 21st Sep 2015 4:51 pm
breitbart.
shortonoil on Mon, 21st Sep 2015 6:39 pm
“advanced at a pace that has doubled oil well production every 2 years.”
That was BEFORE prices dropped 55%. How much it will increase in the future will depend upon how long it will take for them to go into receivership! The $trillion in debt they piled up (which they can’t repay) is likely to cut those gain down significantly!
SilentRunning on Mon, 21st Sep 2015 10:58 pm
GREAT!! With productivity doubling every 2 years, we shouldn’t have to drill any new wells. What’s more, after only a few decades, we can produce the entire world’s needs with only a SINGLE WELL!!
yoananda on Tue, 22nd Sep 2015 1:29 am
who is breitbart ? (for those who are unfamiliar with him)
apneaman on Tue, 22nd Sep 2015 1:38 am
yoananda, Andrew breitbart was a highly paranoid conservative (normal for them) mouth piece. He died of a heart attack. It was not his first one, but his conspiracy minded readers still believe he was “whacked” by…hell I don’t even remember – some evil doers.
The site is a clown show. Visit and read the comments. Very entertaining.
Banjo on Tue, 22nd Sep 2015 2:09 am
Computer cpus clocked out at around 3000mhz. Adding two computer chips together is not doubling the transistors on a cpu. Which is what Moore’s law is about. I read this article a big LOL and a heavy sigh. We are screwed six ways to Sunday
tita on Tue, 22nd Sep 2015 2:18 am
Just stupid comparison. The improvement in diggin holes hasn’t much changed in the last 50 years. We just now better where to dig. But it’s a one time improvement. In the computer field, the improvement is continous.
meld on Tue, 22nd Sep 2015 2:23 am
I agree with Banjo about Moore’s Law. I remeber the PC scene in the late 90s early 2000s when if your pc was more than a couple of years old it was almost unusable. Now I’m running a 2.4ghz core 2 duo PC built in 2008 and have had no need to upgrade. Sticking more cpus on a board and doing some nacky trickery to make them work together and to keep the cooler is not the same as a clock speed increase.
Makati1 on Tue, 22nd Sep 2015 5:13 am
tita, is it? Or has the wall been hit where there is little room for any improvement? All I have seen is new aps for old equipment. And it will all be gone in the next decade anyway. What good is a computer if you are starving and have no power source? LOL
Mike989 on Tue, 22nd Sep 2015 10:37 am
Remember, with a MASSIVE Taxpayer Robbery scheme.
Tax Loopholes the gas industry takes out of your pocket:
Intangible Drilling Costs,
Intangible Completion Costs,
Depreciation and
Depletion Allowance.
They take the profit, you take the pollution.
Because, this is really the POLLUTION industry.
That’s their primary product, energy is secondary.
Roman on Tue, 22nd Sep 2015 12:06 pm
So my pc should be 16 GHz by now.
tita on Wed, 23rd Sep 2015 1:50 am
Clock speed hit a wall a long time ago. Just a problem with light speed and the time needed for information to travel on the motherboard from processor to memory between 2 ticks. It didn’t stop the computers to improve.
But yes, there is physical limits on the way to improve the computing speed.
That doesn’t erase the fact that in 50 years, the moore’s law was more or less followed, continously.
I just point the fact that you can’t relate it to any other sector.
apneaman on Wed, 23rd Sep 2015 2:31 am
It’s a very econ 101 type of thing to try and dress up their ideology as real scientific laws and theories in an attempt to legitimize and justify. Worked quite well for them too. Course these clowns are amateurs, but it will suffice to confirm their readership bias.
meld on Wed, 23rd Sep 2015 4:55 am
Moore’s Law isn’t a law anyway. It’s barely a theory. It’s a hypothesis, one that will eventually be proven false.
rockman on Wed, 23rd Sep 2015 8:08 am
“But U.S. oil production has more than doubled in the last six years because technological innovations continue roughly to double the productivity of fracking about every two years.”
Folks are free to believe what they want. But one would think that the words of those with significant ACTUALLY experience might carry a bit more weight. The Rockman has been involved if this progress for more than 40 years. The Rockman understands the technology better than 99% of the folks on this site because he used it throughout his career. While there has been some tweaking of the methodology over the last 20 or so years, such as slick water frac’ng, there has been no major tech innovations. The tech that was used to drill and frac Eagle Ford wells last year existed before the boom in shale production. That can’t be disputed. If someone wants to try…go ahead…make my day. LOL.
But that doesn’t discount that here were improvements in productivity as stated in the article. But it’s rather important ant to understand how that came about. And, more important, to understand that it wasn’t due to any significant tech advances…a very critical distinction IMHO.
A significant portion of the improvement from the early days was developing several important learning curves. First was finding the sweet spots in the EFS play. The first EFS wells were produced in the 1940’s. Not much to brag about with those vertical wells. The Rockman drilled and frac’d his first EFS over 30 years ago…again nothing to brag about. But everyone knew the key was finding the natural fractures in the formation. That reality was well learned over 20 years ago when the oil patch fell in love with drilling the fractured Austin Chalk formation. BTW much of the EFS play sits just several hundred feet vertically from the AC. Thus it took a certain amount of drilling to determine where to focus drilling efforts and where to avoid. Next came the learning curve as to which portion of the EFS formation to drill a horizontal well. The nature formation varies significantly. In time it was learned that the more brittle section of the formation produced the better wells. And the reality it wasn’t the shale content that made that portion of the formation more prolific but the carbonate (limestone type minerals) rich interval.
Once that knowledge developed then came the question of how far to drill the laterals. In the early days they were shorter. In time they became longer: 1,000’ or 2,000’ feet to 5,000’+. No tech improvements there: long before the EFS boom the oil patch was routinely drilling 30,000’+ laterals. And AC laterals were being drilled to comparable depths as the EFS 2 decades ago. This was a huge increase in productivity because it decreased the number of vertical portions of the wells as well as surface locations and production facilities that had to be built. This was a HUGE savings in capex that gives the appearance of much improved efficiency/economic value.
The next step in the evolution was increasing the number of separate frac stages pumped into each lateral. Early days…4 or 6. Last year 64+ stages were not uncommon by some operators. While this also gave the appearance of a great improvement in efficiency it was at a huge cost. Early wells might have cost $4 – $6 million to drill and $2 million to frac. But more recent well costing $6+ million to drill and $4 -$6 million to frac. Much improved productivity but the economic gain was nearly as impressive.
Of course now that the rig count has plunged and demand for frac has collapsed those costs have come down a good bit. OTOH so has the price of oil. So yes: productivity, and to a lesser degree economic value, did significantly improve over time from the early days of the EFS boom. But not due to tech advances but from learning how to better drill and frac the formation. But that knowledge is now in the can and can be readily applied whenever prices recover. But the Rockman does not know of any new tech even being fantasized about that would change the game. As pointed out above in detail there was very little new tech that allowed the play to boom in the first place. Just a better understanding of how to handle the formation.
KingM on Wed, 23rd Sep 2015 12:55 pm
Just keep doubling and soon enough we’ll get a billion barrels per well per day. All our problems are solved!