Type curves are not the only important metric in oil and gas evaluation
EnerCom Dallas Attendees heard RS Energy’s Oma Wilkie describe the company’s views on the oil and gas industry, based on RS Energy’s Hardcore reports.
According to RS Energy, one mistake often observed in the industry is an overfocus on type curves. While the productivity of each well is very important, it is not the only consideration when examining cost and projecting production. Drill times are also tremendously important. Wilkie presented an example of the effects of drill times, saying even if the well type curves were totally unchanged, speedier rig activities alone would improve per-rig results by 10% to 15%.
Spread of frac designs can indicate if a field has further improvements available
RS Energy also mentioned a unique method for analyzing the level of frac design improvements may be left in a given play. In the early stages of a play, different companies often run significantly different frac designs, as companies try to determine the ideal design. As companies settle on an ideal frac intensity, one that balances cost and productivity, the range between designs in a given play becomes smaller.
RS Energy analyzes different designs in the play, examining the range between the most and least intense operations. The spread, and the trend of the spread, in frac designs in a play shows how close to a final procedure companies are. According to Wilkie, many parts of the Midland basin are already approaching consensus, so the sort of massive productivity gains previously seen may not continue. In the Delaware, on the other hand, operators still demonstrate a wide margin of designs. This suggests the overall industry has not settled on an ideal completions design, so overall improvements are likely to continue in the Delaware.
US may have 200 billion barrels and two quadrillion cubic feet left in unconventional plays
Based on RS’ analysis, there is a significant amount of oil and gas left in U.S. shale waiting to be produced. The company estimates that existing plays like the Permian and Bakken have a total of 200 billion barrels of oil still recoverable. The Marcellus, Haynesville and other major plays have even more impressive volumes of gas left to produce. RS estimates that U.S. plays will produce over 2,000 Tcf, or two quadrillion cubic feet in the future.
The EIA has a similar view, and expects U.S. production will grow significantly in the coming years, on the strength of shale. The EIA predicts shale oil output will grow through the next three decades, reaching 8.2 MMBOPD in the early 2040s. This will account for nearly 70% of total U.S. oil production, compared to 54% now.
American gas production will follow a similar trend, with tight gas accounting for an ever-increasing share of total output. The primary difference between oil and gas production is that tight gas already makes up the vast majority of total production, while oil production currently accounts for roughly half of total oil output.
