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Permian Deep Dive Part 1: Production & DeclinesI've enjoyed the recent discussion regarding shale plays in general, and the Permian in particular. There is so much opaque and conflicting ‘information’ out there about the Permian that I decided to take a look at the historical data in order to satisfy myself as to what's happened historically with regard to production rates & declines.
In order to do that I had to get my hands on the historical production data, preferably on a monthly basis. Although far from perfect, the data on Enno’s ‘Shale Profile’ site seemed like a good place to start. The first step was to manually digitize the monthly data from Shale Profile’s production charts, the latest version of which is shown below:
Monthly production & well count data can be extracted from the above chart through a tedious process that involves hovering your mouse over the various points, and recording the corresponding information that’s displayed. I was ultimately able to accurately replicate Shale Profile’s data, with the result illustrated below: Now that I was in possession of the dataset with the desired level of granularity, I could analyze the undercurrents of what’s really happening with declines. I elected to individually assess declines for each year’s data from 2012 to 2019 inclusive. All Pre-2012 data was lumped into a single category. Shale Profile lets you view performance data in a variety of ways. Here's an example of the default production rate vs cumulative production data that they present (on a per-well basis): I was more interested in looking at the composite performance of the wells grouped by year, as shown in the following chart (note that in all of my charts, ‘m’ = 1,000, ‘mm’ = 1,000,000):
The historical production is useful only to the extent that it can facilitate forecasts. The shape of the curves in the above figure suggests that Permian wells decline in a hyberbolic manner. I won’t bore you with the details of what this means (primarily because as a former well testing / drilling / operations / business development guy, I’m one of the least qualified here to do so); those with an interest in knowing more about this can review the material at the following link: Through trial and error I determined that the various production tranches decline with ‘b’ values in the 1.25 – 1.35 range. Values > 1 don’t conform to traditional decline curves, but that’s okay because shale plays are obviously not conventional reservoirs. When 'b' > 1, the resulting curves have a a slight upward curvature when plotted on a graph of log rate vs. cumulative production. The figure below shows an example of the historical & simulated / forecast production for wells drilled in 2014, 2015, & 2016. The simulations / forecasts (hyperbolic equations - dashed lines) match the steady state segment of the historical production curves (solid lines) for each of the well groupings fairly well, so barring future changes in reservoir behavior the forecasts should be relatively good.
Here are the associated monthly production forecasts: The following figures show historical & forecast production for each of the eight defined well groupings: Finally, here are the composite charts for the eight well groupings combined. This is an estimate of what future production would look like if no more wells were drilled after 2018: I could have saved a lot of time and effort by just eyeballing a forecast based on Shale Profile's graph, but I wanted to get a better feel for the historical data, and add some science into the mix. That will improve the validity of any forecasts that I choose to generate based on various future development scenarios. Which is my next step (sometime over the next day or two), but I wanted to put this out there now as an FYI, any feedback would be welcomed. |
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Msg # | Subject | Author | Recs | Date Posted |
220367 | Re: Permian Deep Dive Part 1: Production & Declines | GreatSwami | 5 | 9/1/2019 4:56:02 PM |
220403 | Re: Permian Deep Dive Part 1: Production & Declines. The absolute beauty of Dr Fantazzini methodology | RedSpecOil | 15 | 9/2/2019 2:11:31 AM |