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Page added on September 21, 2017

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Permian could top out in 2021

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The world’s hottest oil field could run out of steam in just a few years if shale drillers can’t overcome the natural constraints of the region’s geology, a new study says.

By 2021, oil production could peak in Permian Basin, as rapid drilling and fracking exhaust underground pressure in the most prolific areas of the West Texas play, according to one scenario outlined by energy research firm Wood Mackenzie.

In five years, the firm said, oil companies could be drilling wells that pump as much as 30 percent less crude than the ones that kicked off the region’s oil boom.

“We’re drilling so many wells and with such tight spacing, should we really expect well No. 5,000 to perform like well No. 5 did?” Robert Clarke, a research director at energy consultancy Wood Mackenzie in Dallas.

It’s impossible to predict exactly when drillers will reach the limits of the Permian Basin. Some believe that day is still far off. But it wouldn’t be the first major U.S. oil field to slow down after a few go-go years.

In South Texas, oil companies discovered the sweet spots of the Eagle Ford Shale were much smaller than anticipated. The industry had expected the Haynesville Shale, primarily in northwestern Louisiana, to thrive for years. But development there slowed dramatically after natural gas prices tumbled. North Dakota’s Bakken Shale also has not yet lived up to early projections, Clarke said.

In a few years, the problem in the Permian could be so-called child wells, the offspring of the region’s first horizontal wells. They produce less oil than so-called parent wells because some amount of reservoir pressure depletes as drillers exploit an oil field.

Wood Mac believes oil production in the Permian Basin could peak around 3.5 million barrels a day in 2021 unless drillers can continue to develop technologies to boost production. Roughly half a decade in the life of several major U.S. shale plays, “something happens, and the growth slows,” he said.

That’s not to say the Permian Basin’s oil production will drop dramatically after reaching its peak. The firm expects the region’s output to continue to pump a little less than 3 million barrels a day out to 2030.

And Wood Mac also laid out another scenario, in which drilling and fracking technology outpaced the Permian’s geological constraints. In that scenario, the region’s output would peak at 5 million barrels a day in 2025.

“They’ve got to keep pushing on technology,” Clarke said. “A higher oil price would absolutely help. If you can control costs, you might have more big wells that become profitable to drill.”

Chron



5 Comments on "Permian could top out in 2021"

  1. Apneaman on Thu, 21st Sep 2017 10:37 am 

    Far away from any witnesses, my small town is being poisoned by fracking waste

    In a tiny south-eastern Ohio town in the Appalachian foothills, the Hazel Ginsburg Well is holding waste from out-of-state fracking operations – a sludge of toxic chemicals and undrinkable water

    https://www.theguardian.com/us-news/2017/sep/21/appalachia-ohio-fracking-wells-toxic

    Sorry Hazel, but you’ve been externalized.

  2. Anonymous on Thu, 21st Sep 2017 9:55 pm 

    Permian hz wells have gotten better up to about April 2016. Since then, they have been ~flat depending on the time frame cum that you use to look at it. Down a little but then back up. Seems fair to say they have not kept getting better, but not to say they have gotten worse. Also, the number of wells completed has been going up (so holding their own on quality while lowgrading seems good).

    Source: shaleprofile.com, Permian post, advanced insights,productivity over time: 6 and 3 month cums.

    As far as the Haynesville and Bakken, there is no indication that decline has come from location exhaustion or average well quality going down. And really the H has stabilized for the last 4 years (and starting to turn up a bit now, and this at low prices). Bakken still in decline but rate of decline has gone down also. Not that far off of flat.

    So, net net doesn’t seem to be any evidence that shale is running out of steam other than price limits. And they are getting more and more competitive at what price they tolerate, at least if you look on a time frame of years.

  3. Dredd on Fri, 22nd Sep 2017 10:23 am 

    Perhaps the earthquakes they are causing will dig up some “more” (Is A New Age Of Pressure Upon Us? – 13).

  4. Boat on Fri, 22nd Sep 2017 11:03 am 

    amouse,586

    Did you know there are over 7,000 drilled but uncompleted wells?

    Did you know new well production topped at 660 pd a few months and is now at 586?

    Follow this report.

    https://www.eia.gov/petroleum/drilling/

  5. Jean Paul Getty on Sat, 23rd Sep 2017 10:37 am 

    According to operators like PXD & PE, the Gas-Oil-Ratio (GOR) of their Wolfcamp wells is unexpectedly climbing at an exponential rate.

    What does this mean?

    It means that the Wolfcamp’s reservoir pressure is being depleted below the Reservoir’s Bubble-Point much faster than anticipated. The Wolfcamp’s reservoir drive mechanism (Solution Gas Drive) is not capable of sustaining the desired / anticipated production rates.

    In other words, the Wolfcamp’s decline curves will prove to be much steeper than analysts now believe.

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