Re: THE Fracking Thread pt 4
Posted: Wed 19 Sep 2018, 06:06:24
Rockman,
I am far from perfect but I think my calculation is sound. As an aside there has been a recent study by WoodMac on Permian decline rates, especially the terminal decline rates. I cannot post the article but the JPT has a a posting on the subject here which makes for very interesting reading indeed. Your thoughts on the matter would be welcome.
https://www.spe.org/en/jpt/jpt-article-detail/?art=4532
Here is the gist of the article:
The long-term outlook for Permian Basin producers may not be so bright, based on a new study showing production from older tight oil wells sinking faster than expected.
The study by Wood Mackenzie, Everything is Accelerating in the Permian, Including Decline Rates says the “terminal decline rate” is far greater than the widely used rule of thumb of 5-10% a year.
“For Wolfcamp wells in terminal decline… the most common occurrence is a decline rate of 14% a year,” said Robert Clarke. research director for Lower 48 Upstream at Wood Mackenzie.
Unconventional wells are known for rapid decline rates. Permian wells often produce 40% of the oil and gas they are expected to produce over their lifetime in 36 months, according to the report. But the conventional wisdom has been that sometime after year 5, the decline rate flattens out for a slow, steady decline lasting for decades.
Decline rates of 14% could be a problem because the report authors say estimated ultimate recovery (EUR) calculations are generally based on the 5-10% rule of thumb, with many companies assuming a 5% rate.
“The push for 5% is very aggressive,” said Ryan Duman, a principal analyst for Wood Mackenzie who co-authored the report, adding that “from an EUR perspective that can have a dramatic impact on what you are showcasing.”
This chart (Fig. 1) is an example of that. There is a nearly a 100,000 bbl difference in the EUR of the 5% and the 15% decline rate wells. The difference in the later years is even sharper if one considers that about half the production occurs during the first 5 years.
I am far from perfect but I think my calculation is sound. As an aside there has been a recent study by WoodMac on Permian decline rates, especially the terminal decline rates. I cannot post the article but the JPT has a a posting on the subject here which makes for very interesting reading indeed. Your thoughts on the matter would be welcome.
https://www.spe.org/en/jpt/jpt-article-detail/?art=4532
Here is the gist of the article:
The long-term outlook for Permian Basin producers may not be so bright, based on a new study showing production from older tight oil wells sinking faster than expected.
The study by Wood Mackenzie, Everything is Accelerating in the Permian, Including Decline Rates says the “terminal decline rate” is far greater than the widely used rule of thumb of 5-10% a year.
“For Wolfcamp wells in terminal decline… the most common occurrence is a decline rate of 14% a year,” said Robert Clarke. research director for Lower 48 Upstream at Wood Mackenzie.
Unconventional wells are known for rapid decline rates. Permian wells often produce 40% of the oil and gas they are expected to produce over their lifetime in 36 months, according to the report. But the conventional wisdom has been that sometime after year 5, the decline rate flattens out for a slow, steady decline lasting for decades.
Decline rates of 14% could be a problem because the report authors say estimated ultimate recovery (EUR) calculations are generally based on the 5-10% rule of thumb, with many companies assuming a 5% rate.
“The push for 5% is very aggressive,” said Ryan Duman, a principal analyst for Wood Mackenzie who co-authored the report, adding that “from an EUR perspective that can have a dramatic impact on what you are showcasing.”
This chart (Fig. 1) is an example of that. There is a nearly a 100,000 bbl difference in the EUR of the 5% and the 15% decline rate wells. The difference in the later years is even sharper if one considers that about half the production occurs during the first 5 years.