Offsetting Depletion | Russell T. Rudy Energy LLC
Almost half of Lower 48 crude produced last year came from wells drilled since the start of 2014, according to an article in “Oil Voice”. The good news is that as new horizontal drilling and completion techniques enabled the shale revolution, production from low permeability tight reservoirs increased dramatically. Tight reservoirs which include, but are not limited to shale, accounted for 4 million barrels of oil per day (bopd), or almost half of our production in 2015. These wells have very high initial production rates.
The bad news is that wells completed in tight reservoirs, such as shale, have very steep decline rates. To fully exploit the potential of these plays, constant drilling and development of new wells is required to maintain initial production. More bad news is that low prices forced operators to cut back on capital and staffing which led to falling rig counts and fewer new wells.
The U. S. Energy Information Administration (EIA) tracks rig counts and initial production rates for new wells as these are leading indicators of future oil production. Drilled but uncompleted (DUC) wells, and potential recompletions of existing wells, can also affect future production, but to a lesser extent.
In the fall of 2014, there were nearly 1,600 rigs looking for oil in the U. S. However, by February of 2016, the oil rig count had fallen to 413. Despite encouraging initial production rates on the new wells that are being drilled, there just are not enough of them to sustain production at former levels.
Consequently, the EIA foresees U. S. oil production falling from its recent level of about 9 million bopd to 8.7 million bopd this year, and 8.2 million bopd in 2017.
To read the article in its entirety, please go to http://www.oilvoice.com/n/Wells-drilled-since-start-of-2014-provided-nearly-half-of-Lower-48-oil-production-in-2015/86ce01ef911b.aspx?src=sideslides .
Russell T. Rudy Energy, LLC buys oil, gas and mineral interests nationwide. Please call (800-880-0940), or write (info@rudyenergy.com ) to let us know if you agree, disagree or would just like to comment on this, or any of our posts.
