Production Projections – Page 11

Permian Basin Update, February 24, 2022

02/25/202203/04/2022 D Coyne 322 Comments

Much of the information for this post comes from data at shaleprofile , and assessments by the USGS. In addition a paper published in Jan 2022 by Wardana Saputra et al was an excellent resource.

The basic method used in the is analysis is covered in an earlier post, essentially the convolution of average well profiles with the monthly completion rate over time is used to model future output. I focus on the period starting in Jan 2010 and consider only horizontal tight oil wells in the analysis. Future well profiles are estimated and several future scenarios for completion rate are used, clearly the future is unknown so future completion rates and estimated ultimate recovery (EUR) for wells completed in the future can only be guessed at.

In order to make such a guess I start with the USGS assessments for the Permian basin where the mean estimate for prospective net acres as of mid 2017 was about 50 million acres. I use an estimate for average acres per well of 300 acres (about 9500 feet lateral length with spacing of 1320 feet between laterals) which gives an estimate of about 167 thousand wells. There were about 14 thousand wells already completed in the Permian basin by June 2017 so total completions would be about 181 thousand wells, if oil prices were high enough to make every potential well location profitable. Using the mean UTRR estimate (70 Gb) and number of potential drilling locations (about 160 thousand as of Dec 21, 2021 based on the data at shale profile where about 21 thousand wells were completed from July 2017 to Dec 2021), I find and estimate for the future decrease in EUR per well that will result in a UTRR of 70 Gb if all potential wells were completed.

After that step a discounted cash flow analysis using guesses of future costs and prices is used to determine whether a well will be profitable to complete to arrive at an ERR for a given scenario, typically ERR is less than TRR, but in rare high oil price scenarios they could be nearly equal.

Average well profiles have been developed by fitting an Arps hyperbolic function to the data from shaleprofile.com for the average 2010 to 2012 well and then for each individual year from 2013 to 2020. In my scenarios I assume EUR starts to decrease after Dec 2020 and assume no further increase in lateral length or change in average well spacing.

US Recovery Boosts October Non-OPEC Oil Production

02/09/202202/09/2022 Ovi 219 Comments

A guest post by Ovi

Below are a number of oil, crude plus condensate (C + C ), production charts for Non-OPEC countries created from data provided by the EIA’s International Energy Statistics and updated to October 2021. Information from other sources such as OPEC, the STEO and country specific sites such as Russia, Brazil, Norway and China is used to provide a short term outlook for future output and direction for a few countries and the world.

September Non-OPEC Oil Production Slips

01/15/202201/21/2022 Ovi 193 Comments

A guest post by Ovi

Below are a number of oil, crude plus condensate (C + C ), production charts for Non-OPEC countries created from data provided by the EIA’s International Energy Statistics and updated to September 2021. Information from other sources such as OPEC, the STEO and country specific sites such as Russia, Brazil, Norway and China is used to provide a short term outlook for future output and direction for a few countries and the world.

Update on the Wilcox in the Offshore Northern Gulf of Mexico

01/08/202201/08/2022 Bob Meltz 195 Comments

A guest post by Bob Meltz

I’ll start with a brief overview of some northern offshore GOM production statistics, and then review what I see as the current state of Wilcox exploration and development projects and finish by discussing Wilcox production data. All production statistics are from BSEE/BOEM.

Cumulative production from the federal waters of the offshore Northern Gulf of Mexico (OCS) through 2020 is 22.7 BB (billion barrels) oil and 190 tcf gas. First production was in 1947. Production from deepwater (defined by BOEM as water depths > 1000’) is 9.6 BB oil, and 22.9 tcf gas. The first deepwater production was in 1979 from Shell’s Cognac platform in 1025’ of water.

The current annual peak in offshore oil production was in 2019. Average production was 1.9 mmbopd. 2020 production averaged about 1.64 mmbopd. So far in 2021 through October average oil production has been about 1.67. With the near term queue of Miocene projects set to come online in 2022 (Mad Dog 2, King’s Quay and Vito), and the queue of Wilcox projects set to come online in 2024-2025 (Anchor, Whale and perhaps North Platte), I believe we will see another peak in production in 2 to 6 years, and this could even exceed the 2019 peak.

The Wilcox, sometimes also called the Lower Tertiary, was thought by many to be the future hope for the offshore Gulf of Mexico, providing long-term production for years. As the shelf and flex trends played out, and as the deepwater Miocene fields started playing out, the Wilcox was going to pick up the slack and keep offshore production going.

I co-authored a paper with several Chevron colleagues in 2005 that led to some of this initial enthusiasm. Here is a link to that paper.

View PDF (searchanddiscovery.com)

The article indicates potential from the play of 3 to 15 billion barrels of recoverable oil. The high-end estimate of 15 billion barrels of recoverable oil generated a lot of industry buzz at the time, but I’m glad we also included the low estimate of 3 billion barrels. As you will see later, I currently believe the ultimate recovery from the Wilcox will be closer to that low estimate.

The oil industry has faced many challenges in pursuing the Wilcox. Some include the technical challenges of drilling and completing these wells. In many cases, they are drilled through thick salt canopies onto total depths exceeding 30,000’. They are some of the deepest wells in the world, and often the top of the reservoirs are encountered below 25,000’. The deepest well in the GOM was a Wilcox test drilled by Chevron in 2013 to 35,935’ TVD_SS. Usually the Wilcox reservoirs are quite thick, often over 1000’ of gross reservoir thickness and over 500’ of net oil pay. Successfully drilling and completing these wells is not for the faint of heart.

So, after 20 or so years of exploration and 11 years of production, how has the Wilcox been performing?

First I’ll discuss the exploration story of the Wilcox.

Below is a simplified stratigraphic column showing the primary producing intervals of the offshore Gulf of Mexico.

Figure 1 – Simplified stratigraphic column for the offshore Gulf of Mexico

EIA’s December Oil Production Outlooks

12/24/202112/25/2021 Ovi 278 Comments

A guest post by Ovi

Each month the EIA produces four reports which project oil output for the US and the World. The Short Term Energy Outlook (STEO) forecasts oil output for a period of 12 to 24 monthsg into the future for US and World oil production. A second report, the Drilling Productivity Report (DPR) forecasts the combined production for conventional and tight oil in the main tight oil basins, four months ahead of the EIA monthly report. Their third report, Light Tight Oil (LTO), reports on only the tight oil produced in seven tight oil basins and a few smaller ones. A fourth and final outlook is the Monthly Energy Review (MER) that forecasts US output two months past the official US production numbers, for this report that will be October and November.

Normally the Outlooks report appears at the end of the monthly US report. For this month it has been posted separately and early.

1) Short Term Energy Outlook

The December STEO provides projections for the next 15 months, starting with October 2021 to December 2022, for US C + C and other countries.