Morse argues that oil companies are getting better and better at hydraulic fracturing, the method used to drill in shale, and hence the worries about current decline rates are exaggerated.
So if that truly is making a difference in lowering the decline rates, why isn’t that happening?
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beats me. I guess that’s the inverse of asking the question....if the decline rates are so steep—why is production going nearly straight up in many places.
The answer has to be “that oil companies are getting better and better at hydraulic fracturing”
That likely means for example that there’s some benefit to drilling 30 wells on one pad rather than one. As well they’re learning how to set pads down at the exact intersection of half a dozen stacked plays so they can drill at half a dozen depths and directions.
This is certainly what’s happening in the Baaken.
What puzzles me is that the mother of all stacked plays is in the Permian basin. And yet drilling results don’t seem to reflect any great improvements.
The answer has to be “that oil companies are getting better and better at hydraulic fracturing”
That likely means for example that there’s some benefit to drilling 30 wells on one pad rather than one.
We did a lot wells from single pads in Alaska. It is in no way related to hydraulic fracturing. It is from very good directional-steerable drilling and good 3D seismic. It lowers the cost of drilling, it does nothing related to production decline rates.
Now the fact that at that point you have good directional-steerable drilling also means you have better control on putting more well-bore in the better production zones of the play.
ckilmer, thanks for the near daily posts on energy topics. lately rather than peruse the usual energy/business sites, I just search energy here on FR and see what you and thackney have found.
on the decline curve matter in shales, the article probably refers to the criticism the industry has received from allegedly inflating 30+ year recovery based on extrapolating short term (3-5 yrs) average well production. early on in the shale boom there were and still are some awful plays in certain areas, uneconomic prospects. Once wide spaced leasehold drilling slowed down a couple years ago as land positions were secured, operators stopped drilling in poor reservoir quality and focused on drilling in better reservoir quality. when you stop dragging down the average with bad wells and increase the wells in the sweet spots, the average well decline curves improved.
on a single well basis, companies are not getting better per se at hydraulic fracturing. that technology only makes a major leap every 3-5 years, and then only limited suppliers possess the latest improvement. where people are making a lot of progress is better distributing the frac treatments along long horizontal wells exposing more productive rock to wellbores than 2-3 years ago. it’s been more the changes in the well completion process than changes to frac treatments themselves, along with the better wellsite and target selections, that improved the decline curves.
at the same time, the completion efficiency has improved fast, addressing the well/field economics.
The NYT did a nasty hit piece on the industry a few years back, basically calling the CEOs of shale developers con men concerning well decline curves. they had a basis for criticism with independent consultants saying truthfully that the average well production was less than advertised in stock reports and press releases. what they did not consider was the E&P companies tossed out the dog wells in their estimates, knowing where they were never going to drill those targets again and having learned from prior mistakes on wells. toss out the dogs, factor in steady improvement and all of the sudden you have better, but still steep, production declines.
another technical development improving decline curves and recovery estimates is the understanding of phases of production from low permeability fractured horizontals and applying different math to each period. the old method of using a single equation, or 2 at most, for the whole well life just does not work. this can cut both ways.