Price, Rigs and Production | Russell T. Rudy Energy LLC
A recent article in “Rigzone” cites several studies that deal with the relationship between crude price, rig count and production levels. The economic blog “Zero Hedge” contends that there is a 4-6 month lag between crude prices and their reflection in rig counts, and current experience seems to bear this out. However, a study by the Berkley Research Group found that there can be a 10-25% reduction in the number of producing wells without materially affecting production levels in the aggregate.
The Berkley Research Group maintains that even with current prices, and dropping rig counts, production will still increase, but not as rapidly as was previously the case. If prices remain at current levels operators will start focusing on “sweet spots” in formations being drilled. There will also be an increasing emphasis on efficiency by maximizing the production rate from a smaller number of wells.
According to the U. S. Energy Information Administration (EIA), average production on a per well basis will increase by 3 barrels per day from December 2014 to January 2015. The Berkley Research Center projects an even greater increase, 5-8 barrels per day per well during the same period, for new wells in the Bakken (North Dakota), Eagle Ford (South Texas), Permian (West Texas), Niobrara (Colorado) and Utica (Ohio) plays.
To read the article in its entirety, please go to www.rigzone.com/news/oil_gas/a/136445/EIA .
