tag:blogger.com,1999:blog-55526478394822653432024-03-14T06:46:03.729-04:00peak oil climate and sustainabilityUnknownnoreply@blogger.comBlogger28125tag:blogger.com,1999:blog-5552647839482265343.post-40756561216271416192016-02-22T08:36:00.000-05:002016-02-22T08:36:55.674-05:00<div class="MsoNormal">
<h2>
World Natural Gas Oil Shock Model</h2>
<o:p></o:p></div>
<div class="MsoNormal">
<span style="font-size: large;">This post was originally published at </span><a href="http://peakoilbarrel.com/world-natural-gas-shock-model/" target="_blank"><span style="font-size: large;">Peak Oil Barrel</span></a><span style="font-size: large;"> in July 2015</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">The post that follows relies heavily on the work of </span><a href="http://theoilconundrum.com/" target="_blank"><span style="font-size: large;">PaulPukite</span></a><span style="font-size: large;"> (aka Webhubbletelescope), </span><a href="http://aspofrance.viabloga.com/files/JL_2013_oilgasprodforecasts.pdf" target="_blank"><span style="font-size: large;">Jean Laherrere</span></a><span style="font-size: large;">, and </span><a href="http://www.theoildrum.com/node/6782" target="_blank"><span style="font-size: large;">Steve Mohr</span></a><span style="font-size: large;">. Any mistakes are my responsibility.</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">For World Natural Gas URR Steve Mohr estimates 3 cases, with
case 2 being his best estimate.</span><br />
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Case 1 URR= 14,000 TCF (trillion cubic feet)</span></div>
<div class="MsoNormal">
<span style="font-size: large;">Case 2 URR= 18,000 TCF</span></div>
<div class="MsoNormal">
<span style="font-size: large;">Case 3 URR= 27,000 TCF</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Jean Laherrere’s most recent World natural gas URR estimate
is close to Steve Mohr’s Case 1 at 13,000 TCF.</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">A Hubbert Linearization(HL) of World Conventional Natural
Gas from 1999 to 2014 suggests a URR of 11,000 TCF, an HL from 1982-1998 points
to a URR of 6000 TCF for conventional natural gas.</span><br />
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Note that “Conventional” natural gas subtracts US shale gas
and US coal bed methane (CBM) from gross output minus reinjected gas for the
World.</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">World Conventional Natural Gas HL (shale gas and CBM output
from US deducted)</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;"><img alt="WorldshockNatgas/" border="0" src="https://sites.google.com/site/dc78image/images/blog150728a.png" /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Currently World cumulative conventional natural gas output
(using gross minus reinjected gas following Jean Laherrere’s example) is 4200
TCF, about 38% of the URR.</span><br />
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">When shale gas and coalbed methane gas output in the US are
added to World Natural Gas, the HL points to a URR of 20,000 TCF, this implies
that shale gas, tight gas and CBM might have a combined URR of as much as 9000
TCF. This matches well with the EIA’s
7000 TCF TRR estimate for shale gas and Steve Mohr’s 2500 TCF estimate for
CBM. </span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">I suspect the combined shale gas
and CBM numbers will be lower(4000 TCF), but that conventional gas will be more
than 11,000 TCF (about 15,000 TCF) .</span></div>
<div class="MsoNormal">
<span style="font-size: large;">World Natural Gas HL below (includes all types of natural
gas)</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;"><img alt="WorldshockNatgas/" border="0" src="https://sites.google.com/site/dc78image/images/blog150728b.png" /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Note that the HL estimate is highly uncertain, the
conventional estimate could be a little low (Jean Laherrere estimates 12,000
TCF) and combined shale gas, tight gas, and coal bed methane could vary from
2000 to 9000 TCF. </span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">For the World the USGS
estimates about 16,000 TCF of conventional natural gas resources, the EIA
estimates 7000 TCF of shale gas resources, and Steve Mohr estimates 2500 TCF of
coalbed methane (CBM). The total of
these three is similar to Steve Mohr’s high case (case 3), I will use 26,000
TCF for my high case (case C).</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">The USGS estimates about 1000 TCF for US continuous gas
(tight gas, shale gas, and CBM) and my low estimate is that the rest of the
World will add another 1000 TCF from continuous natural gas resources.</span><br />
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">The total when added to the HL estimate for conventional
natural gas resources is about 13,000 TCF, which is my low case (case A).</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">I suggest 3 cases, with Case B (the average of case A and C)
as my best guess.</span><br />
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Case A URR=13,000 TCF</span></div>
<div class="MsoNormal">
<span style="font-size: large;">Case B URR=19,000 TCF</span></div>
<div class="MsoNormal">
<span style="font-size: large;">Case C URR=26,000 TCF</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Cumulative discovery data from 1900 to 2010 is used to estimate
a discovery model for each of the three cases.
The equation is Q=U/(1+(c/t)^6), where t is years after 1871 (1872=1,
1873=2, etc.), Q is cumulative discoveries of natural gas in TCF, U=URR in TCF,
and c is a constant found by a least squares fit to the data.</span><br />
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">URR (TCF) c</span></div>
<div class="MsoNormal">
<span style="font-size: large;">13000 112</span></div>
<div class="MsoNormal">
<span style="font-size: large;">19000 125</span></div>
<div class="MsoNormal">
<span style="font-size: large;">26000 136</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Chart with 3 discovery models and cumulative discovery data
below.</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;"><img alt="WorldshockNatgas/" border="0" src="https://sites.google.com/site/dc78image/images/blog150728c.png" /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">The gap between the discovery model and the discovery data
(for the 19000 and 26000 TCF cases) will be filled by backdated future reserve
growth of both conventional and unconventional natural gas discoveries.</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">As a quick reminder the maximum entropy probability
distribution is used to estimate the time from discovery to first production
and has the form p=1/k*exp(-t/k) where p is the probability that resources
discovered in year zero will become a producing reserve after t years(t=0.5,
1.5,…) and 1/k is the average number of years from discovery to first
production.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">Note that the median time from discovery to production is lower
than the average by about 63%. If 1/k=29 years, the median time from discovery to first production would be 18 years.</span><br />
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">For the models presented, case A has 1/k=25, case B 1/k=29,
and case C 1/k=32.</span></div>
<div class="MsoNormal">
<span style="font-size: large;">The three scenarios can be compared on the chart below.</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;"><img alt="WorldshockNatgas/" border="0" src="https://sites.google.com/site/dc78image/images/blog150728d.png" /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><a name='more'></a></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Details for the three cases are in the following three
charts, with extraction rates (from producing reserves) and annual decline
rates on the right axis. The gas output
is gross gas minus reinjected gas, dry gas will be about 91% of the gross minus
reinjected gas (1980-2011 average).</span><br />
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Case A below.</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;"><img alt="WorldshockNatgas/" border="0" src="https://sites.google.com/site/dc78image/images/blog150728e.png" /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Case B:</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;"><img alt="WorldshockNatgas/" border="0" src="https://sites.google.com/site/dc78image/images/blog150728f.png" /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Case C:</span></div>
<div class="MsoNormal">
<span style="font-size: large;"><img alt="WorldshockNatgas/" border="0" src="https://sites.google.com/site/dc78image/images/blog150728g.png" /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Below I present a few more charts with the focus on case B,
note that the eventual URR is highly uncertain but is likely to be between Case
A and C in my view, case B is just the average of the case A and case C URR. </span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">My
guess is that the World URR for natural gas will be between 17,000 and 21,000
TCF or +/- 10% of case B, future extraction rates and thus the shape of the
output curve after 2014 are unknown.</span><br />
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Producing reserves for case B (also called proved developed
producing (PDP) reserves):</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;"><img alt="WorldshockNatgas/" border="0" src="https://sites.google.com/site/dc78image/images/blog150728h.png" /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Case B discoveries, new producing reserves(n) added to
producing reserves (P) each year, and natural gas extracted from P each year
(x), aka production.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">The extraction rate
is e and x=e*P. </span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">Every year n reserves are added to P and x reserves are extracted, if n>x. then P increases and if n</span><x decreases.="" p=""><br /></x></div>
<div class="MsoNormal">
<span style="font-size: large;">If P1 is producing reserves in year 1 and P2 is producing
reserves in year 2, then</span></div>
<div class="MsoNormal">
<span style="font-size: large;">P2=P1+n2-x2.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">Often when the decline rate of the model is
lower than expected it is because we are forgetting about the new reserves that
are continually being developed. It is
unlikely that new reserves will stop being developed in the near term, so n is
not zero, it will gradually decrease unless disrupted by political or economic
crises.</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;"><img alt="WorldshockNatgas/" border="0" src="https://sites.google.com/site/dc78image/images/blog150728i.png" /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Summary</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">Natural Gas is at an earlier stage of development than crude
oil and there is greater uncertainty about eventual ultimately recoverable
resources (URR). Estimates range from
13,000 TCF (Jean Laherrere) to 28,000 TCF (combined EIA and USGS estimates for
conventional, shale, and tight gas plus Steve Mohr’s case 3 estimate for coal
bed methane.) </span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">I decided on matching
Laherrere’s estimate (13,000 TCF) for my low case based on Hubbert
Linearization for conventional natural gas and conservative estimates of World
shale gas, tight gas, and coal bed methane URR (2000 TCF total). For the high case I decided to use Mohr’s
case 2 estimate for coal bed methane along with USGS and EIA estimates for
other natural gas rescources, URR =26,000 TCF.
My best guess is just the average of the low and high case, the
scenarios presented peak in 2018, 2039, and 2049.</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Supplemental charts for Case A and C below:</span><br />
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Case A</span><br />
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Producing reserves</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;"><img alt="WorldshockNatgas/" border="0" src="https://sites.google.com/site/dc78image/images/blog150728j.png" /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Discoveries, new producing reserves, and production</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;"><img alt="WorldshockNatgas/" border="0" src="https://sites.google.com/site/dc78image/images/blog150728k.png" /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Case C charts:</span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;"><img alt="WorldshockNatgas/" border="0" src="https://sites.google.com/site/dc78image/images/blog150728l.png" /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"></span><br /></div>
<div class="MsoNormal">
<span style="font-size: large;"><img alt="WorldshockNatgas/" border="0" src="https://sites.google.com/site/dc78image/images/blog150728m.png" /></span></div>
<span style="font-size: large;"></span><br />
<div class="MsoNormal">
<br /></div>
Unknownnoreply@blogger.com16tag:blogger.com,1999:blog-5552647839482265343.post-49093680627897978702015-07-06T14:39:00.002-04:002015-07-06T14:39:55.653-04:00Oil Shock Models with Different Ultimately Recoverable Resources of Crude plus Condensate (3100 Gb to 3700 Gb)<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<v:shapetype coordsize="21600,21600" filled="f" id="_x0000_t75" o:preferrelative="t" o:spt="75" path="m@4@5l@4@11@9@11@9@5xe" stroked="f">
<v:stroke joinstyle="miter">
<v:formulas>
<v:f eqn="if lineDrawn pixelLineWidth 0">
<v:f eqn="sum @0 1 0">
<v:f eqn="sum 0 0 @1">
<v:f eqn="prod @2 1 2">
<v:f eqn="prod @3 21600 pixelWidth">
<v:f eqn="prod @3 21600 pixelHeight">
<v:f eqn="sum @0 0 1">
<v:f eqn="prod @6 1 2">
<v:f eqn="prod @7 21600 pixelWidth">
<v:f eqn="sum @8 21600 0">
<v:f eqn="prod @7 21600 pixelHeight">
<v:f eqn="sum @10 21600 0">
</v:f></v:f></v:f></v:f></v:f></v:f></v:f></v:f></v:f></v:f></v:f></v:f></v:formulas>
<v:path gradientshapeok="t" o:connecttype="rect" o:extrusionok="f">
<o:lock aspectratio="t" v:ext="edit">
</o:lock></v:path></v:stroke></v:shapetype><v:shape id="Picture_x0020_1" o:spid="_x0000_i1037" style="height: 216.75pt; mso-wrap-style: square; visibility: visible; width: 360.75pt;" type="#_x0000_t75">
<v:imagedata o:title="" src="file:///C:\Users\dad\AppData\Local\Temp\msohtmlclip1\01\clip_image001.png">
</v:imagedata></v:shape><o:p></o:p></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjr_HFT4pnzBOJi_K_0yu0KpE65actl5GbWn5OUao2Rmh2O9lFmT1aDfGmXfl3zxi9k7TYkRVS55LXgnAHisQUN6WalH495VzkzJDtys2CGp7fmj74Vbm2ayOs1n20Z3o5TKXgBMlRy3dnT/s1600/blog20150706b.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="384" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjr_HFT4pnzBOJi_K_0yu0KpE65actl5GbWn5OUao2Rmh2O9lFmT1aDfGmXfl3zxi9k7TYkRVS55LXgnAHisQUN6WalH495VzkzJDtys2CGp7fmj74Vbm2ayOs1n20Z3o5TKXgBMlRy3dnT/s640/blog20150706b.png" width="640" /></a></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<o:p><br /></o:p></div>
<div class="MsoNormal">
<o:p><br /></o:p></div>
<div class="MsoNormal">
<span style="font-size: large;">The post that follows relies heavily on the previous work of
both <a href="https://drive.google.com/file/d/0B-ycoDmNCe6wODQ5Mjc4ZGUtZTU5ZC00NjY1LWIwNTItMTY0YTJjYTg1Zjgz/view?usp=sharing" target="_blank">Paul Pukite</a> (aka Webhubbletelescope) and <a href="http://aspofrance.viabloga.com/files/JL_2013_oilgasprodforecasts.pdf" target="_blank">Jean Laherrere </a>and I thank them both
for sharing their knowledge, any mistakes are my responsibility. </span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">In a <a href="http://oilpeakclimate.blogspot.com/2015/02/the-oil-shock-model-with-dispersive.html" target="_blank">previous post</a> I presented a simplified
Oil Shock model that closely followed a 2013 estimate of World C+C Ultimately
Recoverable Resources (URR) by Jean Laherrere of 2700 Gb, where 2200 Gb was
from crude plus condensate less extra heavy oil (C+C-XH) and 500 Gb was from
extra heavy (XH) oil resources in the Canadian and Venezuelan oil sands.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">In the analysis here, I use the Hubbert Linearization (HL)
method to estimate World C+C-XH URR to be about 2500 Gb. The creaming curve method preferred by Jean
Laherrere suggests the lower URR of 2200 Gb, if we assume only 200 Gb of future
reserve growth and oil discovery. </span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">Previously, I have shown that <a href="http://peakoilbarrel.com/us-oil-reserve-growth-2/" target="_blank">US oil reserve growth</a> (of proved plus
probable reserves) was 63% from 1980 to 2005.
If we assume all of the 200 Gb of reserves added to the URR=2200 Gb
model are from oil discoveries and that in a URR=2500 Gb, oil discoveries are
also 200 Gb, then 300 Gb of reserve growth would be needed over all future
years (we will use 90 years to 2100) or about 35% reserve growth on the 850 Gb
of 2P (proved plus probable) reserves in 2010.
I conclude that a URR of 2500 Gb for C+C-XH is quite conservative.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;">A problem with the Hubbert Linearization method is that
there is a tendency to underestimate URR.<o:p></o:p></span></div>
<div class="MsoNormal">
</div>
<a name='more'></a><span style="font-size: large;"><br /></span><br />
<div class="MsoNormal">
<span style="font-size: large;">HL Analyses from 1998, 2005, and 2015 shown in the chart
below give URRs of 1600 Gb, 2000 Gb, and 2500 Gb respectively, so this leads
one to suspect the HL estimate is the minimum of future URR.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEie-oSZwYFHAQPJwdYwhqIZjQEqod94IKHDKVSLEn3qLTLuZ5X6DesT2_cESyFODqaXTGG0-PHgoHHBd6Tso4afSLZjt2yOo2VV1kOsI_KlJWncmlakTadc7c9bPQa1cIND3gI5VovQK3ca/s1600/blog20150706a.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" height="384" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEie-oSZwYFHAQPJwdYwhqIZjQEqod94IKHDKVSLEn3qLTLuZ5X6DesT2_cESyFODqaXTGG0-PHgoHHBd6Tso4afSLZjt2yOo2VV1kOsI_KlJWncmlakTadc7c9bPQa1cIND3gI5VovQK3ca/s640/blog20150706a.png" width="640" /></span></a></div>
<div class="MsoNormal" style="text-align: center;">
<span style="font-size: large;">Figure 2</span></div>
<div class="MsoNormal" style="text-align: left;">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: large;"><v:shape id="Picture_x0020_4" o:spid="_x0000_i1036" style="height: 216.75pt; mso-wrap-style: square; visibility: visible; width: 360.75pt;" type="#_x0000_t75">
<v:imagedata o:title="" src="file:///C:\Users\dad\AppData\Local\Temp\msohtmlclip1\01\clip_image002.png">
</v:imagedata></v:shape><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;">The United States Geological Survey gives an optimistic
World C+C-XH URR estimate of 3100 Gb, (600 Gb of <a href="http://www.usgs.gov/newsroom/article.asp?ID=3248#.VZq7WvlViko" target="_blank">reserve growth</a> and 500 Gb of <a href="http://pubs.usgs.gov/fs/2012/3042/" target="_blank">discoveries</a>) I believe this is too high and think the
average of the HL and USGS estimate may be reasonable at 2800 Gb for World
C+C-XH URR.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: large;">A second reason that a World C+C-XH URR may be higher than
the HL estimate is to consider the United States at its peak in 1970. The HL estimate for 1950 to 1970 pointed to a
C+C URR of 208 Gb. In 2007, the HL
estimate for 1950 to 2007 pointed to a URR of 226 Gb. After 2007, the large increase in US light
tight oil (LTO) output no longer follows the linear trend and the US C+C URR is
likely to be higher than 226 Gb. </span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">US HL
Chart below:<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh1hw74As55x9IDiETucfSPvVp3vpfWuR71ZBYcHxJQKEW7RrprwKI-DwEJbyVvq8Kj49Ki24yNr0OyyZnO3aqV9sjFBHabqlMH6gvlyKxsHPCFyBULCEtaAND2fmwvQ4HIlJDlfYjxYl_P/s1600/blog20150706c.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" height="354" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh1hw74As55x9IDiETucfSPvVp3vpfWuR71ZBYcHxJQKEW7RrprwKI-DwEJbyVvq8Kj49Ki24yNr0OyyZnO3aqV9sjFBHabqlMH6gvlyKxsHPCFyBULCEtaAND2fmwvQ4HIlJDlfYjxYl_P/s640/blog20150706c.png" width="640" /></span></a></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal" style="text-align: center;">
<span style="font-size: large;">Figure 3</span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><v:shape id="Picture_x0020_2" o:spid="_x0000_i1035" style="height: 216.75pt; mso-wrap-style: square; visibility: visible; width: 390.75pt;" type="#_x0000_t75">
<v:imagedata o:title="" src="file:///C:\Users\dad\AppData\Local\Temp\msohtmlclip1\01\clip_image003.png">
</v:imagedata></v:shape><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;">Simply using the 226/208 ratio indicates that the URR
estimate at peak output is likely to underestimate URR by at least 9%, so if we
increase the World URR HL estimate by 9% (2500*1.09) we get 2700 Gb for the
World C+C-XH URR estimate.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">Another perspective is to consider that at the 1970 peak for
US C+C output, the cumulative C+C output (Q=96 Gb) was about 42% of the current
(1950-2007) HL URR estimate (96/226). If
we assume 2014 is the peak for World C+C-XH output and that the current
cumulative C+C-XH of 1240 Gb is 42% of the eventual URR, then the World C+C-XH
URR would be (1240/0.42) 2950 Gb.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">As before, I would choose to average these two estimates of
World C+C-XH URR to 2825 Gb and then round to two significant digits, the final
estimate is 2800 Gb.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">What about extra heavy (XH) oil from the oil sands of Canada
and Venezuela? Jean Laherrere‘s estimate
for the XH URR is 500 Gb and the USGS estimate is 1000 Gb. Initially, I was tempted to estimate the XH
URR at 750 Gb, but conversations with Fernando Leanme (who is familiar with
production problems in the Orinoco belt) led me to reduce the XH URR estimate
to 600 Gb. </span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">The XH output scenario is
shown below, it is assumed that this scenario is unchanged by changes in the
C+C-XH scenario. This scenario is more conservative than previous XH scenarios
I have used, which were more similar to those of Jean Laherrere. Peak output is about 10.3 Mb/d in 2056 vs
earlier scenarios which peaked at 14 Mb/d in 2070.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEimEPnA54wOFn5Uamhgznud6rJ-vUsVXbIVCv04pDIFR3J_pEwo_yKwpqO_ePIqun4ZP7ubQiBkrVRekULzIcjDl-r-nePxnEwaqmoAbgGWK-4v9AJAx5UE29auURKpnbdjK-LhNBMUH95K/s1600/blog20150706d.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" height="448" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEimEPnA54wOFn5Uamhgznud6rJ-vUsVXbIVCv04pDIFR3J_pEwo_yKwpqO_ePIqun4ZP7ubQiBkrVRekULzIcjDl-r-nePxnEwaqmoAbgGWK-4v9AJAx5UE29auURKpnbdjK-LhNBMUH95K/s640/blog20150706d.png" width="640" /></span></a></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal" style="text-align: center;">
<o:p><span style="font-size: large;"> Figure 4</span></o:p></div>
<div class="MsoNormal">
<span style="font-size: large;"><v:shape id="Picture_x0020_3" o:spid="_x0000_i1034" style="height: 252.75pt; mso-wrap-style: square; visibility: visible; width: 360.75pt;" type="#_x0000_t75">
<v:imagedata o:title="" src="file:///C:\Users\dad\AppData\Local\Temp\msohtmlclip1\01\clip_image004.png">
</v:imagedata></v:shape><o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: large;">For comparison Jean Laherrere’s XH scenario is in the chart
below, peak of 15 Mb/d in 2070.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: large;"><v:shape id="Picture_x0020_13" o:spid="_x0000_i1033" style="height: 255pt; mso-wrap-style: square; visibility: visible; width: 5in;" type="#_x0000_t75">
<v:imagedata o:title="" src="file:///C:\Users\dad\AppData\Local\Temp\msohtmlclip1\01\clip_image005.png">
</v:imagedata></v:shape><o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<span style="font-size: large;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEir8u4_8HD-PTsr64cnAZJX6Qas4r6DTNqZHKG5kwOleKh8ZPKZ6EGClv9OrDHc4rvRTSwEDibcpIVnl_agX603PGt-yn1bCF9_j3qP-VlQwB_drgoPuCgYSNgI0iZcdzbpDBwyE722DiC8/s1600/blog20150706e.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="452" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEir8u4_8HD-PTsr64cnAZJX6Qas4r6DTNqZHKG5kwOleKh8ZPKZ6EGClv9OrDHc4rvRTSwEDibcpIVnl_agX603PGt-yn1bCF9_j3qP-VlQwB_drgoPuCgYSNgI0iZcdzbpDBwyE722DiC8/s640/blog20150706e.png" width="640" /></a></span></div>
<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="text-align: center;">
<span style="font-size: large;">Figure 5</span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">Jean Laherrere has provided the best data I have seen for
World proved plus probable (2P) reserves for C+C-XH. His Feb 2013 estimate for the end of 2010 for
C+C-XH 2P reserves was 850 Gb. The Oil
Shock model estimates proved producing reserves for the World. By using United States data from the EIA and
assuming that 2P reserves are 1.5 times higher than proved reserves, we find
that over the 1996 to 2008 period in the US, 52% of 2P reserves are producing
reserves. For the World, I have assumed
the ratio of producing reserves to 2P reserves is 50 to 51%, so in my Oil shock
models I aim for this ratio in 2010 where 2P reserves are well estimated at 850
Gb.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">I present 3 different scenarios below where the XH output
scenario is the same (600 Gb), but the C+C-XH URR varies from 2500 Gb to 3100
Gb, with an intermediate scenario of 2800 Gb.
In an earlier post, I presented a <a href="http://peakoilbarrel.com/oil-shock-model-dispersive-discovery-simplified/">simplified
oil shock model</a> where the maximum entropy probability distribution was
defined by a constant “k”, where 1/k is the mean time between oil discovery and
first production for the average oil field.
For the models presented below, 1/k is different for each of the models
in order for the ratio of producing reserves to 2P reserves in 2010 to remain
similar as we change the URR of the C+C-XH models over a range of 600 Gb.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">URR of Model 1/k<br />
2500 Gb 29 years<br />
2800 Gb 34 years<br />
3100 Gb 38 years<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">For all three models the percentage of producing reserves to
2P reserves at the end of 2010 is between 50 and 51%. The extraction rate was chosen so that the
model matched EIA C+C output from 1960 to 2014, for years earlier than 1960 a
single extraction rate was chosen so that the 1959 output level was consistent
with 1960 output. We do not know what
extraction rates will be after 2014, we can only guess. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">I used the increasing trend of extraction rate over the 2009
to 2014 period and fit a line to the extraction rates for these 5 years, I
assumed the trend would continue unless output was above 80 Mb/d, or the
extraction rate was above the previous maximum rate in 1979, or output had
peaked. If any of these three things
occurred the extraction rate would gradually level off and then would begin to
decline, these are guesses and are merely suggestive of what could occur. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">I expect that future high oil prices will cause economic
growth to slow and oil demand will decrease and thereby reduce the extraction
rate. There will also be some
substitution away from oil use for transport as oil prices rise which will also
reduce oil demand. It is not possible to
forecast these changes with any degree of accuracy.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: large;">The Scenario with URR=3400 Gb (including 600 Gb of XH oil)
is below, peak is 79 Mb/d in 2018.
Annual decline rates are 1% or less until 2032 and remain below 1.5%
until 2040 and stay between 1.5% and 1.83% until 2100. Cumulative C+C output is 2900 Gb in 2100.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivUbQ6IOXmu8Fc3pOsAm2Zg-8DwJb-eUAvJIBEzRYpwB7zLCPiVBAonSM24Gume_yzvIUL0i0x0fmVQukFqx37AMoeEK5XlLDAkpn-apcUt3jOf5g_DxYxYkcRfQdXvh8xOXhzghrWMo4p/s1600/blog20150706f.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" height="406" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivUbQ6IOXmu8Fc3pOsAm2Zg-8DwJb-eUAvJIBEzRYpwB7zLCPiVBAonSM24Gume_yzvIUL0i0x0fmVQukFqx37AMoeEK5XlLDAkpn-apcUt3jOf5g_DxYxYkcRfQdXvh8xOXhzghrWMo4p/s640/blog20150706f.png" width="640" /></span></a></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal" style="text-align: center;">
<span style="font-size: large;">Figure 6</span></div>
<div class="MsoNormal">
<span style="font-size: large;"><v:shape id="Picture_x0020_14" o:spid="_x0000_i1032" style="height: 230.25pt; mso-wrap-style: square; visibility: visible; width: 360.75pt;" type="#_x0000_t75">
<v:imagedata o:title="" src="file:///C:\Users\dad\AppData\Local\Temp\msohtmlclip1\01\clip_image006.png">
</v:imagedata></v:shape><o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: large;">The Scenario with a World C+C URR of 3100 Gb (600 Gb of XH
oil included) is presented below, the peak is in 2014 at 78 Mb/d and annual
decline rates remain below 1.75% from 2015 to 2100 and are less than 1.5% until
2028. Cumulative C+C output is 2600 Gb
in 2100.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: large;"><v:shape id="Picture_x0020_15" o:spid="_x0000_i1031" style="height: 230.25pt; mso-wrap-style: square; visibility: visible; width: 360.75pt;" type="#_x0000_t75">
<v:imagedata o:title="" src="file:///C:\Users\dad\AppData\Local\Temp\msohtmlclip1\01\clip_image007.png">
</v:imagedata></v:shape><o:p></o:p></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhRH9G1twH7vhK02UhbY1yhrUVkUDly7YC70iYcaSCOTlhQ9gBOP1XPFPOpZwH9ipj_TwUajbW8fgqpesd7ICrh4IhT3hMz9-59b0WL02JMRlvcJHdV2cTLj_eBDXEHPsVBPZepztWoQmWt/s1600/blog20150706g.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" height="406" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhRH9G1twH7vhK02UhbY1yhrUVkUDly7YC70iYcaSCOTlhQ9gBOP1XPFPOpZwH9ipj_TwUajbW8fgqpesd7ICrh4IhT3hMz9-59b0WL02JMRlvcJHdV2cTLj_eBDXEHPsVBPZepztWoQmWt/s640/blog20150706g.png" width="640" /></span></a></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="text-align: center;">
<o:p><span style="font-size: large;">Figure 7</span></o:p></div>
<div class="MsoNormal">
<o:p><span style="font-size: large;"><br /></span></o:p></div>
<div class="MsoNormal">
<o:p><span style="font-size: large;"><br /></span></o:p></div>
<div class="MsoNormal">
<span style="font-size: large;">The final scenario has a World C+C URR of 3700 Gb (with 600
Gb of XH oil), peak is 80 Mb/d in 2023.
Annual decline rates remain below 1% until 2042, under 1.5% until 2047
and remain under 1.62% until 2100.
Cumulative C+C output is 3000 Gb in 2100.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: large;"><v:shape id="Picture_x0020_16" o:spid="_x0000_i1030" style="height: 230.25pt; mso-wrap-style: square; visibility: visible; width: 360.75pt;" type="#_x0000_t75">
<v:imagedata o:title="" src="file:///C:\Users\dad\AppData\Local\Temp\msohtmlclip1\01\clip_image008.png">
</v:imagedata></v:shape><o:p></o:p></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjMrT5Qi_30ZZS6nuMnOeB4LqYQR6a6J_V5QntulTZ94qVyUhardQHWK0RCrSqqk24Ab6CVxMHVu0gC7G6E-59KEehyhtYBZDBrO2VgaZVEU3sbIHWvxSyEwHDZsqQ5acixlLXcewI56muV/s1600/blog20150706h.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" height="406" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjMrT5Qi_30ZZS6nuMnOeB4LqYQR6a6J_V5QntulTZ94qVyUhardQHWK0RCrSqqk24Ab6CVxMHVu0gC7G6E-59KEehyhtYBZDBrO2VgaZVEU3sbIHWvxSyEwHDZsqQ5acixlLXcewI56muV/s640/blog20150706h.png" width="640" /></span></a></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="text-align: center;">
<o:p><span style="font-size: large;">Figure 8</span></o:p></div>
<div class="MsoNormal">
<o:p><span style="font-size: large;"><br /></span></o:p></div>
<div class="MsoNormal">
<o:p><span style="font-size: large;"><br /></span></o:p></div>
<div class="MsoNormal">
<span style="font-size: large;">The three scenarios can be compared in the chart below.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4urIU9VlSC3fpdxpC_YSd9o0svN1ud4U2FPLDHisNdjSC6igw74FQ3hOqa6mxFv6NhpSJANqHvSooKmJXREbyqo_8Ibakn-2xYphpk6s-OcR6NDR9G6xNEDpXh007RZok5xmHFHU1RBOj/s1600/blog20150706b.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" height="384" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4urIU9VlSC3fpdxpC_YSd9o0svN1ud4U2FPLDHisNdjSC6igw74FQ3hOqa6mxFv6NhpSJANqHvSooKmJXREbyqo_8Ibakn-2xYphpk6s-OcR6NDR9G6xNEDpXh007RZok5xmHFHU1RBOj/s640/blog20150706b.png" width="640" /></span></a></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal" style="text-align: center;">
<o:p><span style="font-size: large;">Figure 10 </span></o:p></div>
<div class="MsoNormal">
<o:p><span style="font-size: large;"><br /></span></o:p></div>
<div class="MsoNormal">
<span style="font-size: large;"><v:shape id="Picture_x0020_17" o:spid="_x0000_i1029" style="height: 216.75pt; mso-wrap-style: square; visibility: visible; width: 360.75pt;" type="#_x0000_t75">
<v:imagedata o:title="" src="file:///C:\Users\dad\AppData\Local\Temp\msohtmlclip1\01\clip_image009.png">
</v:imagedata></v:shape><o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: large;">If there were no future oil shocks due to economic crises or
major wars and World C+C URR is in fact between 3100 Gb and 3700 Gb, then future
C+C output could follow an output path between the green and red curves in the
chart above. It is unlikely that there
will be no severe oil shocks in the future, though predicting the timing of
such shocks would be difficult.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: large;">The three excel files with the three scenarios presented
above can be found at the links below.
By adjusting the extraction rates to higher or lower values than I have
chosen you can create any scenario you choose.
Optimists can have extraction rates go to 20% if they choose and
pessimists can make the extraction rates go to zero (which would mean no
output) if they wish. One would have to
explain why either of these would occur. We don’t want to assume a collapse in order to
have a collapse in oil output, and we shouldn’t assume that resources are
infinite to prove that there will be no peak in oil output. Each spreadsheet is about 3.5 megabytes (the
order is <a href="https://drive.google.com/file/d/0B4nArV09d398d0NBa3pQbldtYlk/view?usp=sharing" target="_blank">3400 Gb</a>, <a href="https://drive.google.com/file/d/0B4nArV09d398S01ZZl9WMWRySWM/view?usp=sharing" target="_blank">3100 Gb</a>, and <a href="https://drive.google.com/file/d/0B4nArV09d398Q1piX2tTbmlNcjA/view?usp=sharing" target="_blank">3700 Gb</a>).<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: large;">A pessimistic scenario is presented below with an “oil
shock” beginning in 2035 and similar in magnitude to the 1980-5 oil shock
(extraction rate falls by a similar percentage), we could envision a war in the
middle east where oil supplies from Iran, Iraq, Kuwait, and Saudia Arabia are
reduced to zero and the resulting recession reduces oil demand even further,
the URR is assumed to be 3400 Gb for this scenario. Peak is 79 Mb/d in 2018, annual decline rate
is less than 1.1% until 2035.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYsMzhYv_YuMHDrKJB2nlDHoiSOnyMFUe1NvdzD9hHbVZ9_6ikxLg2ed_w9-jCDGwQRCKpIK6ufFWiZl54AacT_BS-dO78HOQ3caZHqXztETvwpSjUM1OIdbJy0SaKbM1GgER-64_xA3vW/s1600/blog20150706i.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" height="406" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYsMzhYv_YuMHDrKJB2nlDHoiSOnyMFUe1NvdzD9hHbVZ9_6ikxLg2ed_w9-jCDGwQRCKpIK6ufFWiZl54AacT_BS-dO78HOQ3caZHqXztETvwpSjUM1OIdbJy0SaKbM1GgER-64_xA3vW/s640/blog20150706i.png" width="640" /></span></a></div>
<div class="separator" style="clear: both; text-align: center;">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal" style="text-align: center;">
<o:p><span style="font-size: large;"> Figure 11</span></o:p></div>
<div class="MsoNormal">
<span style="font-size: large;"><v:shape id="Picture_x0020_5" o:spid="_x0000_i1028" style="height: 230.25pt; mso-wrap-style: square; visibility: visible; width: 360.75pt;" type="#_x0000_t75">
<v:imagedata o:title="" src="file:///C:\Users\dad\AppData\Local\Temp\msohtmlclip1\01\clip_image010.png">
</v:imagedata></v:shape><o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: large;">An optimistic scenario is presented below where extraction
rates increase at the 2009-2014 trend until they are 10% higher than the
highest rate previously reached in 1979, then extraction rates remain at this
level until 2100. The C+C URR is 3400
Gb. Peak is 81 Mb/d in 2023 and annual
decline rate remains below 1.1% until 2035.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><img src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgch5dIRwDNleqgBwiJqJ1lrEMpioaCfJmnmKtj7LstrRuyDqMJliFmwtWzOAPIOTVuURzm-d3jxEieuqIz6dOGyNLRFQ1Cmb4Cw2IGZ40d6_QOtcV3IluEAMNeZISZAqz9lLaexey_wjg1/s640/blog20150706j.png" /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><v:shape id="Picture_x0020_6" o:spid="_x0000_i1027" style="height: 230.25pt; mso-wrap-style: square; visibility: visible; width: 360.75pt;" type="#_x0000_t75">
<v:imagedata o:title="" src="file:///C:\Users\dad\AppData\Local\Temp\msohtmlclip1\01\clip_image011.png">
</v:imagedata></v:shape><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: center;">
<o:p><span style="font-size: large;"> Figure 12</span></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: large;">A final “realistic”scenario has a less severe oil shock in
2035 with extraction rates decreasing only half as much as the “pessimistic”
scenario and with extraction rates continuing to decline, but less steeply
after 2045. This might result from a
severe financial crisis in 2034 with a depression following. Peak is 79 Mb/d in 2018 and annual decline
rates stay below 1.1% until 2036. Chart below.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<o:p><span style="font-size: large;"><br /></span></o:p></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWdWtNU4RfY196797OdPzEJ60-WzJNbw_iicJoL4dDSvYFYRuN7_W9pd4XrNrUKkBEgalwNXiPCd96eOJw6fNcY2OV6QgS78E7GPTCpgyWhqUMwB513MApl6GPjXdMci0qHMMvflLgAWMz/s1600/blog20150706k.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" height="406" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWdWtNU4RfY196797OdPzEJ60-WzJNbw_iicJoL4dDSvYFYRuN7_W9pd4XrNrUKkBEgalwNXiPCd96eOJw6fNcY2OV6QgS78E7GPTCpgyWhqUMwB513MApl6GPjXdMci0qHMMvflLgAWMz/s640/blog20150706k.png" width="640" /></span></a></div>
<div class="MsoNormal">
<o:p><span style="font-size: large;"><br /></span></o:p></div>
<div class="MsoNormal" style="text-align: center;">
<o:p><span style="font-size: large;">Figure 13</span></o:p></div>
<div class="MsoNormal">
<span style="font-size: large;"><v:shape id="Picture_x0020_10" o:spid="_x0000_i1026" style="height: 230.25pt; mso-wrap-style: square; visibility: visible; width: 360.75pt;" type="#_x0000_t75">
<v:imagedata o:title="" src="file:///C:\Users\dad\AppData\Local\Temp\msohtmlclip1\01\clip_image012.png">
</v:imagedata></v:shape><o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: large;">The chart below compares the optimistic and pessimistic
scenarios with my “realistic” scenario for a World C+C URR of 3400 Gb. Cumulative output of the optimistic scenario
is about 2900 Gb in 2100 and the pessimistic and realistic scenario has lower
cumulative output at about 2800 Gb in 2100.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhVAClGySpCygsrE8__5QN4U9HXbPjTC3XoL-a3dpmjai0HWu-CvR3E-np1Nxd1FrSorukEqW4ZueGbF5_bbktIk8AFSScrbhTP6UkX5UUC_3xBrP8jhExzwUN7YYR1odlQYYkIUK7q4-eI/s1600/blog20150706l.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" height="384" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhVAClGySpCygsrE8__5QN4U9HXbPjTC3XoL-a3dpmjai0HWu-CvR3E-np1Nxd1FrSorukEqW4ZueGbF5_bbktIk8AFSScrbhTP6UkX5UUC_3xBrP8jhExzwUN7YYR1odlQYYkIUK7q4-eI/s640/blog20150706l.png" width="640" /></span></a></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="text-align: center;">
<o:p><span style="font-size: large;">Figure 14</span></o:p></div>
<div class="MsoNormal">
<span style="font-size: large;"><v:shape id="Picture_x0020_11" o:spid="_x0000_i1025" style="height: 216.75pt; mso-wrap-style: square; visibility: visible; width: 360.75pt;" type="#_x0000_t75">
<v:imagedata o:title="" src="file:///C:\Users\dad\AppData\Local\Temp\msohtmlclip1\01\clip_image013.png">
</v:imagedata></v:shape><o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: large;">Excel files for <a href="https://drive.google.com/file/d/0B4nArV09d398N0pSQ1lHZ1VWTDg/view?usp=sharing" target="_blank">realistic</a>,<a href="https://drive.google.com/file/d/0B4nArV09d398VmQxNkdyMkhGU0U/view?usp=sharing" target="_blank"> pessimistic</a>, and <a href="https://drive.google.com/file/d/0B4nArV09d398aU9ZRnltTEk4cHc/view?usp=sharing" target="_blank">optimistic</a>
scenarios respectively are at the links.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
<br /></div>
Unknownnoreply@blogger.com25tag:blogger.com,1999:blog-5552647839482265343.post-55454244596682853862015-06-02T17:37:00.002-04:002015-06-02T17:38:21.870-04:00Eagle Ford, Permian Basin, and Bakken and Eagle Ford Scenarios<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-size: 12pt; line-height: 107%;"><span style="font-family: Calibri;">Increased
oil output in the US has kept World oil output from declining over the past few
years and a major question is how long this can continue.<span style="mso-spacerun: yes;"> </span>Poor estimates by both the US Energy
Information Administration (EIA) and the Railroad Commission of Texas (RRC) for
Texas state wide crude plus condensate (C+C) output make it difficult to
predict when a sustained decline in US output will begin.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-size: 12pt; line-height: 107%;"><span style="font-family: Calibri;">About 80 to
85% of Texas (TX) C+C output is from the Permian basin and the Eagle Ford play,
so estimating output from these two formations is crucial.<span style="mso-spacerun: yes;"> </span>I have used data from the production data
query (PDQ) at the RRC to find the percentage of TX C+C output from the Permian
(about 44% in Feb 2015) and Eagle Ford plays (40% in Feb 2015).<span style="mso-spacerun: yes;"> </span>Dean’s estimates of Texas C+C output are
excellent in my opinion and are close to EIA estimates through August
2014.<span style="mso-spacerun: yes;"> </span>I used EIA data for TX C+C output
through August 2014 and Dean’s best estimate from Sept 2014 to Feb 2015.<span style="mso-spacerun: yes;"> </span>By multiplying the % of C+C output from the
RRC data with the combined EIA and Dean estimate, I was able to estimate Eagle
Ford and Permian output.<span style="mso-spacerun: yes;"> </span>The chart below
shows this output in kb/d. <o:p></o:p></span></span></div>
<span style="font-size: 12pt; line-height: 107%;"><o:p><span style="font-family: Calibri;"> </span></o:p></span><br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUO1aflXgrNYuIQ3nO1tk1-vJ5Q0QaQ1r3zrgIYbW3gK4nvUGg82Bjt5Y24tC9AWVXbHIWRNv0ioC3ePC3plzh-yc4PF4hc2gC1Y-ER0s3uarE9yuIKpBCLUjbL0pNRP_CJ_5kyrQ9LK0_/s1600/blog150427a.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="384" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUO1aflXgrNYuIQ3nO1tk1-vJ5Q0QaQ1r3zrgIYbW3gK4nvUGg82Bjt5Y24tC9AWVXbHIWRNv0ioC3ePC3plzh-yc4PF4hc2gC1Y-ER0s3uarE9yuIKpBCLUjbL0pNRP_CJ_5kyrQ9LK0_/s640/blog150427a.png" width="640" /></a></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-size: 12pt; line-height: 107%;"><span style="font-family: Calibri;"></span></span> </div>
<a name='more'></a><br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-size: 12pt; line-height: 107%;"><o:p><span style="font-family: Calibri;"> </span></o:p></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-size: 12pt; line-height: 107%;"><span style="font-family: Calibri;">The
following chart shows the combined Permian and Eagle Ford output from 2012 to
2015 in kb/d, this chart is not zero scaled.<o:p></o:p></span></span></div>
<span style="font-size: 12pt; line-height: 107%;"><o:p><span style="font-family: Calibri;"> </span></o:p></span><br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi2TJtcqDZfz4CFyMlOLFGLIHiAkpbKU9XNZxeSWZUDa4Kvmjg3Nh5u5UKweRCgAM1jiDuTk23ihnLSja1YdP5w_CusNMXJzPpVRu-D1FIvswgsa3ytSDi-TdlHR0gA5Q4cAP_SyhayfpoG/s1600/blog150427b.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="380" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi2TJtcqDZfz4CFyMlOLFGLIHiAkpbKU9XNZxeSWZUDa4Kvmjg3Nh5u5UKweRCgAM1jiDuTk23ihnLSja1YdP5w_CusNMXJzPpVRu-D1FIvswgsa3ytSDi-TdlHR0gA5Q4cAP_SyhayfpoG/s640/blog150427b.png" width="640" /></a></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-size: 12pt; line-height: 107%;"><span style="font-family: Calibri;"><o:p></o:p></span></span> </div>
<span style="font-size: 12pt; line-height: 107%;"><o:p><span style="font-family: Calibri;"> </span></o:p></span><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-size: 12pt; line-height: 107%;"><span style="font-family: Calibri;">Below I have
created a few scenarios for the Bakken and Eagle Ford.<span style="mso-spacerun: yes;"> </span>This analysis is based on the pioneering work
by Rune Likvern at the Oil Drum (Red Queen series) and his blog at Fractional
Flow, any errors in analysis are mine.<span style="mso-spacerun: yes;"> </span>I
doubt that Mr. Likvern would speculate beyond 2 years forward in time (or he
has not done so in the past).<span style="mso-spacerun: yes;"> </span>My reason
for speculating beyond this are simply to see what the eventual resource
recovery would be if the assumptions of the model hold true in the future, though this is highly unlikely.</span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-size: 12pt; line-height: 107%;"><span style="font-family: Calibri;">For the
Bakken Scenario<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-size: 12pt; line-height: 107%;"><span style="font-family: Calibri;">OPEX=$4/b<br />
Other costs= $4/b<br />
Real Discount rate=7%<br />
Transport cost= $12/b<br />
Well Cost=$8 million<br />
Royalties+Taxes=26.5%<br />
Natural gas sales of about $3/b are used to offset OPEX and other costs.<span style="mso-spacerun: yes;"> </span>All costs in real 2015$.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-size: 12pt; line-height: 107%;"><span style="font-family: Calibri;">Oil prices
are shown on the right hand scale.<span style="mso-spacerun: yes;"> </span>The
average new well estimated ultimate recovery (EUR) rises from 350 kb in Jan
2013 to 430 kb in Dec 2014 and then gradually decreases starting in June 2015
reaching an annual rate of decrease of 7% in June 2016.<span style="mso-spacerun: yes;"> </span>New wells are added at a rate of 120 wells
per month from March 2015 to June 2023 and decrease to zero by May 2028.<span style="mso-spacerun: yes;"> </span>Total wells drilled are about 25,300.<span style="mso-spacerun: yes;"> </span>Chart with Scenario below (real oil price and
# new wells added each month on right axis).<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-size: 12pt; line-height: 107%;"><o:p><span style="font-family: Calibri;"> </span></o:p></span><br />
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Calibri;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgvYwTTKYg5sYDNCPELS5uTYtGw8iJ4BY47fcx1D8p44ZCJU-0P_vzM847YywSXSpSmVTTY-1KzCFesp17clyBeJrqXwsBz_dRusBCVUhKIvtuMum0e7Pl67GmWHRKT7dBu7KI0SxOe05rM/s1600/blog150427c.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="350" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgvYwTTKYg5sYDNCPELS5uTYtGw8iJ4BY47fcx1D8p44ZCJU-0P_vzM847YywSXSpSmVTTY-1KzCFesp17clyBeJrqXwsBz_dRusBCVUhKIvtuMum0e7Pl67GmWHRKT7dBu7KI0SxOe05rM/s640/blog150427c.png" width="640" /></a></span></div>
<br />
<br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-size: 12pt; line-height: 107%;"><span style="font-family: Calibri;">Eagle Ford
scenario has the same assumptions as the Bakken scenario except for the
following assumptions.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-size: 12pt; line-height: 107%;"><span style="font-family: Calibri;">Other Costs=
$2/b<br />
Transport Cost= $3/b<br />
Well Cost $7 million.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-size: 12pt; line-height: 107%;"><span style="font-family: Calibri;">It is
assumed higher associated gas sales are uses to reduce other costs and better
access to pipelines<span style="mso-spacerun: yes;"> </span>and refineries
reduces transport cost.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-size: 12pt; line-height: 107%;"><span style="font-family: Calibri;">Note that
David Hughes estimates about 7.8 Gb in Drilling Deeper from the Eagle Ford.<o:p></o:p></span></span></div>
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjnsZqLUypV2EEoF5a1VvBbkBJESAaBe32ftsX-WkscrPN51zZ-VUz6F397p2Aql-Et1J-RrmbKGIhcRtHPZtHUzVdCWBOkb28tWTkaAAiqWH2VNMiAtrz8UyhSpXgXiesGT7w_uL6Hwgzr/s1600/blog150427d.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="422" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjnsZqLUypV2EEoF5a1VvBbkBJESAaBe32ftsX-WkscrPN51zZ-VUz6F397p2Aql-Et1J-RrmbKGIhcRtHPZtHUzVdCWBOkb28tWTkaAAiqWH2VNMiAtrz8UyhSpXgXiesGT7w_uL6Hwgzr/s640/blog150427d.png" width="640" /></a></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-size: 12pt; line-height: 107%;"><span style="font-family: Calibri;"><o:p></o:p></span></span> </div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-size: 12pt; line-height: 107%;"><span style="font-family: Calibri;">In the Chart
below the two scenarios are combined, ERR is about 14 Gb through 2030.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-size: 12pt; line-height: 107%;"><span style="font-family: Calibri;">
</span></span><br />
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Calibri;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhzTtcDKTx9CV67GLvh06qPojDP5mggUY8Btv_EbB59qlj0FBr7hTMKsvaZMxJlPFgGpvoJMMigtcIQe6j4bJZsRl_obCbpwBMQETfjZ-ouDGUKeEzXwTu1qctMIp1GVXqBLUiIs38Og6uY/s1600/blog150427e.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="384" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhzTtcDKTx9CV67GLvh06qPojDP5mggUY8Btv_EbB59qlj0FBr7hTMKsvaZMxJlPFgGpvoJMMigtcIQe6j4bJZsRl_obCbpwBMQETfjZ-ouDGUKeEzXwTu1qctMIp1GVXqBLUiIs38Og6uY/s640/blog150427e.png" width="640" /></a></span></div>
<br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-size: 12pt; line-height: 107%;"><span style="font-family: Calibri;">If the
Permian Basin is able to remain on plateau and other US output remains
relatively flat, then US output may remain on a plateau until 2017 if oil
prices rise from $50/b today by about a 4.7% annual rate.<span style="mso-spacerun: yes;"> </span>I believe such a price scenario is relatively
conservative.<o:p></o:p></span></span></div>
</div>
</div>
Unknownnoreply@blogger.com46tag:blogger.com,1999:blog-5552647839482265343.post-77855377395947198992015-04-01T09:38:00.001-04:002015-04-02T09:59:30.819-04:00Oil Shock Model for the World - 4100 Gb<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">I recently used the Oil Shock Model to create a future oil
output scenario using Jean Laherrere’s estimate for World C+C URR of 2700
Gb.<span style="mso-spacerun: yes;"> </span>About 500 Gb of extra heavy oil from
Canadian Oil Sands and Orinoco Belt oil is included in the C+C URR estimate.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Calibri;"> </span></o:p><span style="font-family: Calibri;">The United States Geological Survey (USGS) estimates that
the World C+C URR is 4100 Gb, including 1000 Gb of extra heavy oil.<span style="mso-spacerun: yes;"> </span>The chart below is a new scenario created
using Paul Pukite’s (Webhubbletelescope’s) Oil Shock Model with Dispersive
Discovery.</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;"></span> </div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgomLrDN5VpN3ZHJqhbcMaXxPxmGyvz6EQOap_0kwDla4qxAp7RASbYawjj87p2NFzJGzgkScAPINVZGYZtPXbsX59J9wRsoKve0Jliw7CaGIeQEiaMD9_I92XF4-DyBOOZaDe8G_DfilKY/s1600/oilshockbig.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgomLrDN5VpN3ZHJqhbcMaXxPxmGyvz6EQOap_0kwDla4qxAp7RASbYawjj87p2NFzJGzgkScAPINVZGYZtPXbsX59J9wRsoKve0Jliw7CaGIeQEiaMD9_I92XF4-DyBOOZaDe8G_DfilKY/s1600/oilshockbig.png" height="412" width="640" /></a></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;"><o:p></o:p></span><br />
<br />
I intended this to be an April Fool's joke. I do not expect that extra heavy oil output will actually reach 28 Mb/d by 2100. Note however that Jean Laherrere's 2013 estimate for extra heavy oil(XH) has a peak of about 16 Mb/d in 2070, with a URR of 500 Gb for XH oil. <br />
<br />
I believe that the USGS estimate is too optimistic and think 3100 Gb for C+C-XH and 700 Gb for XH oil for a total C+C URR of 3800 Gb is as high as C+C output will go (my optimistic scenario).<br />
<br />
My pessimistic scenario is 2500 Gb of C+C-XH and 500 Gb of XH oil for a total C+C URR of 3000 Gb. My best guess is 2800 Gb of C+C-XH and 600 Gb of XH oil for a total C+C URR of 3400 Gb.</div>
Unknownnoreply@blogger.com6tag:blogger.com,1999:blog-5552647839482265343.post-47044400642982343632015-02-26T20:10:00.000-05:002015-06-02T17:39:14.013-04:00The Oil Shock Model with Dispersive Discovery- Simplified<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">The Oil Shock Model was first developed by
Webhubbletelescope and is explained in detail in </span><a href="http://entroplet.com/ref/foundation/TheOilConundrum.pdf"><span style="color: #0563c1; font-family: Calibri;">The Oil
Conundrum</span></a><span style="font-family: Calibri;">. (Note that this free book takes a while to download as it is
over 700 pages long.) The Oil Shock Model with Dispersive Discovery is covered
in the first half of the book.<span style="mso-spacerun: yes;"> </span>I have
made a few simplifications to the original model in an attempt to make it
easier to understand.<o:p></o:p></span></div>
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEimzkumjZFLH5AG2TtXf-u0XNS10cCSJBsnAPqqF_HBTgi87CXY8Ri52lAYSv3ISZMe-WuGv50F3T5FS_9jx-6rDT5ObPzDqvkynGrp7WrrEE-Ys0vAGBaCGmw83SbFV5PIxGKUJ-qCyOHW/s1600/blog201502fig1.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="448" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEimzkumjZFLH5AG2TtXf-u0XNS10cCSJBsnAPqqF_HBTgi87CXY8Ri52lAYSv3ISZMe-WuGv50F3T5FS_9jx-6rDT5ObPzDqvkynGrp7WrrEE-Ys0vAGBaCGmw83SbFV5PIxGKUJ-qCyOHW/s1600/blog201502fig1.png" width="640" /></a></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Figure 1<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">In a </span><a href="http://peakoilbarrel.com/author/dcoyne78/"><span style="color: #0563c1; font-family: Calibri;">previous
post</span></a><span style="font-family: Calibri;"> I explained convolution and its use in modelling oil output in the
Bakken/Three Forks and Eagle Ford LTO (light tight oil) fields.<span style="mso-spacerun: yes;"> </span>Briefly, an average hyperbolic well profile
(monthly oil output) is combined with the number of new wells completed each
month by means of convolution to find a model of LTO output.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<a name='more'></a><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">In the Oil Shock model the maximum entropy probability
distribution is analogous to the average well profile and the annual oil
discoveries are analogous to the number of new well completions in my LTO
models.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">The maximum entropy probability distribution is used when we
know there is a probability distribution but we have very little information about
what it looks like.<span style="mso-spacerun: yes;"> </span>In this case, the
only assumption that is made is that a probability distribution exists and that
it has a positive mean and a standard deviation.<span style="mso-spacerun: yes;"> </span>The maximum entropy probability distribution
sets the mean equal to the standard deviation and has the form<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">m=k*exp(-k*t)<o:p></o:p></span></div>
<span style="font-family: Calibri;">where</span><br />
<span style="font-family: Calibri;"> <o:p></o:p></span><br />
<span style="font-family: Calibri;">m=probability that a discovery will become a producing
reserve t years after discovery,</span><br />
<span style="font-family: Calibri;"><o:p></o:p></span><br />
<span style="font-family: Calibri;">k=a constant set at 0.05 in my models, where 1/k is the mean
number of years from discovery to producing reserve (20 years), and<o:p></o:p></span><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">t=years from discovery to producing reserve.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">This is also called the negative exponential distribution
see </span><a href="http://en.wikipedia.org/wiki/Exponential_distribution"><span style="color: #0563c1; font-family: Calibri;">http://en.wikipedia.org/wiki/Exponential_distribution</span></a><o:p></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">The maximum entropy principle was first proposed by E.T.
Jaynes see<o:p></o:p></span></div>
<a href="http://en.wikipedia.org/wiki/Edwin_Thompson_Jaynes"><span style="color: #0563c1; font-family: Calibri;">http://en.wikipedia.org/wiki/Edwin_Thompson_Jaynes</span></a><span style="font-family: Calibri;">.<o:p></o:p></span><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">If 1000 kb was discovered when t=0 and if m=0.049(or 4.9%) when
t=1, then 1000*0.049=49 kb of new producing reserves are added to cumulative
producing reserves in year 1. (Where year 1 means one year from the date of discovery.)</span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Chart below shows the Maximum Entropy Probability (MaxEnt),
m vs year from first discovery.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Calibri;"> </span></o:p><br />
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Calibri;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjO9hRhHhCV4D0Ayx-9iGWoRhRjFzjp8fGw8Y4CH8dHDWCZBAFm2EFdxIDVUEnVg_SpQf0I1eNf7pPiF2lYmqtWOpp0CPAXVWvpBQ8PQvGhZdw1yhNEv7b_RLBgHT6Lv6zu2lw0MTMPNEUA/s1600/blog201502fig2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="384" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjO9hRhHhCV4D0Ayx-9iGWoRhRjFzjp8fGw8Y4CH8dHDWCZBAFm2EFdxIDVUEnVg_SpQf0I1eNf7pPiF2lYmqtWOpp0CPAXVWvpBQ8PQvGhZdw1yhNEv7b_RLBgHT6Lv6zu2lw0MTMPNEUA/s1600/blog201502fig2.png" width="640" /></a></span></div>
<br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Figure 2<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Calibri;"> </span></o:p><br />
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Calibri;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjm-AKY0zYtfEUOy-YlS9NYwsjHuQYATFvVq1OJCG9rb7xIlni8jUEktp2CgUaYQcsIJz9BrmpwSlFqkVFaTvpRzTfmbCR49LTFQWmedGxyGv7UfCEz953sCKJcwJW8r10FHR_EGOTfXqXD/s1600/blog201502fig3.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="466" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjm-AKY0zYtfEUOy-YlS9NYwsjHuQYATFvVq1OJCG9rb7xIlni8jUEktp2CgUaYQcsIJz9BrmpwSlFqkVFaTvpRzTfmbCR49LTFQWmedGxyGv7UfCEz953sCKJcwJW8r10FHR_EGOTfXqXD/s1600/blog201502fig3.png" width="640" /></a></span></div>
<br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Figure 3<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<a href="http://www.theoildrum.com/node/10009"><span style="color: #0563c1; font-family: Calibri;">http://www.theoildrum.com/node/10009</span></a><o:p></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">The figure above is from Jean Laherrere’s final post at the
Oil Drum (figure 7). The figure below is figure 9 from the same Oil Drum post.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Calibri;"> </span></o:p><br />
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Calibri;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiU-5VAfa5hdqBV4eGXrQ5mt9kdElN6SFaY3ShuFiw-A0RPN_RDM2Brb16JqEYGma2ckTPt5617IXIrOfQf9JLOvFko1FMpcUl0ExGqqGbnxmsiaYDMHQpZN8s9p8lJquabPRI_5BzRh0eG/s1600/blog201502fig4.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="434" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiU-5VAfa5hdqBV4eGXrQ5mt9kdElN6SFaY3ShuFiw-A0RPN_RDM2Brb16JqEYGma2ckTPt5617IXIrOfQf9JLOvFko1FMpcUl0ExGqqGbnxmsiaYDMHQpZN8s9p8lJquabPRI_5BzRh0eG/s1600/blog201502fig4.png" width="640" /></a></span></div>
<br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Figure 4<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">These two charts were used to estimate backdated discoveries
of proved plus possible (2P) C+C excluding extra heavy(XH) oil reserves from
1901 to 2010, I read the data from the charts as best I could. (The green curves in both figure 3 and figure 4.) <span style="mso-spacerun: yes;"> </span>In my opinion Jean Laherrere provides the best oil discovery estimate
that is publicly available.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">In an attempt to match Jean Laherrere’s model, I used
Webhubbletelescope’s dispersive discovery model and fit this model to the
discovery data.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">The dispersive discovery model describes cumulative discovery,
D in the following equation<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">D=U/(1+C/t^6)<span style="mso-spacerun: yes;"> </span>where<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">U=URR=2,200,000 million barrels (for the model presented here),</span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">C=constant determined by best fit to discovery data, in this
case C=800 trillion, and</span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">t= year where t=0 is 1870, t=1 is 1871, etc.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">The rationale behind this equation is developed in </span><a href="http://entroplet.com/ref/foundation/TheOilConundrum.pdf"><span style="color: #0563c1; font-family: Calibri;">The Oil
Conundrum</span></a><span style="font-family: Calibri;"> in Chapter 9,<span style="mso-spacerun: yes;"> </span>pp 167-177,
particularly pp. 170-171 equations 9-25 and 9-28.<span style="mso-spacerun: yes;"> </span>The combination of those two equations is the
basis for the cumulative discovery(D) relationship above.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">The chart below shows the model fit to Jean Laherrere’s
discovery data.<span style="mso-spacerun: yes;"> </span>The vertical axis is
millions of cumulative barrels discovered.</span></div>
<o:p><span style="font-family: Calibri;"><br />
</span></o:p><div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Calibri;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgHlBt0NtB7zrEWtbOMT5loJ_pjhrRR40fW6ZZGxBa-opZkQLMYjnLbwYEo3ZZlgt5sNsnD_6dJEGfniMGEQCOZ1nA5TJzG6OqNzw2Qg-HZkQGK6ly4HEwlwVjUw2L5A12YUezvU14rv1wW/s1600/blog201502fig5.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="384" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgHlBt0NtB7zrEWtbOMT5loJ_pjhrRR40fW6ZZGxBa-opZkQLMYjnLbwYEo3ZZlgt5sNsnD_6dJEGfniMGEQCOZ1nA5TJzG6OqNzw2Qg-HZkQGK6ly4HEwlwVjUw2L5A12YUezvU14rv1wW/s1600/blog201502fig5.png" width="640" /></a></span></div>
<span style="font-family: Calibri;">
</span>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Figure 5<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">The following chart shows yearly discoveries(real), the
centered 25 year average for discoveries and the dispersive discovery model.
Vertical axis is millions of barrels per year.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Calibri;"> </span></o:p><br />
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Calibri;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBn6DwpM65xZJkry2ARgBPEfEiHRzoOnZI5LXbkb7oEWUj9Ty3hGN8IqZ8xn7U6L2dAJYCBrCoE-bU_qIN1D62TJyzlE3iu-E7UcRiZRyA4fC5kBKhhLl9l87AabKANyjnh5ZMjfK9B2-z/s1600/blog201502fig6.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBn6DwpM65xZJkry2ARgBPEfEiHRzoOnZI5LXbkb7oEWUj9Ty3hGN8IqZ8xn7U6L2dAJYCBrCoE-bU_qIN1D62TJyzlE3iu-E7UcRiZRyA4fC5kBKhhLl9l87AabKANyjnh5ZMjfK9B2-z/s1600/blog201502fig6.png" width="640" /></a></span></div>
<br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Figure 6<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">The discovery model can be convolved with the maximum
entropy probability distribution to find the new producing reserves (n) that
are added to the cumulative producing reserves (P) each year using a simple
spreadsheet to add it all up. In the chart below the vertical axis is millions of barrels per year of new producing reserves (reserves which begin producing in a given year.)</span></div>
<o:p><span style="font-family: Calibri;"><br />
</span></o:p><div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Calibri;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiNefjZgUl_1sCHd-N6trLVO9hIlxmOoIt7vpe4HwM3_GFCxCis7OMH7jx7yKkLDvM8a-i-d2hTEPU8pJu7nALvmTWATI9tA-jQNTDPmPPdgZyux_SC6pmhpR9QtRWnhU4MkHOugGhxPZEk/s1600/blog201502fig7.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="384" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiNefjZgUl_1sCHd-N6trLVO9hIlxmOoIt7vpe4HwM3_GFCxCis7OMH7jx7yKkLDvM8a-i-d2hTEPU8pJu7nALvmTWATI9tA-jQNTDPmPPdgZyux_SC6pmhpR9QtRWnhU4MkHOugGhxPZEk/s1600/blog201502fig7.png" width="640" /></a></span></div>
<span style="font-family: Calibri;">
</span>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Figure 7<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">The next step is to find the cumulative producing reserves,
P.<span style="mso-spacerun: yes;"> </span>Each year oil is extracted from P and
reserves are added (n).<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">P2=P1+n-e where<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">P2 are the cumulative producing reserves at the end of year
2<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">P1 are the cumulative producing reserves at the end of year
1<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">n= new producing reserves added to P1 in year 2<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">e= oil extracted (or produced) from P1 in year 2<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">r=e/P1= extraction rate<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Actual production data for C+C-XH is used to determine the
extraction rate necessary for the model to match the output data.<span style="mso-spacerun: yes;"> </span>The chart below shows the cumulative producing reserves
and extraction rate for C+C less extra heavy oil which matches the output data
from 1960 to 2014. </span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">The model from 2015 to 2050 is based on the underlying model for
new producing reserves added each year and the assumed extraction rates. These
rise a little from 2015 to 2021 from 5.5% to 5.8% and then remain flat. Over
the 2009 to 2015 period extraction rates rose from 4.7% to 5.5%.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Calibri;"> </span></o:p><br />
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Calibri;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhbDk2y3WlwYQPYzwLWUuHBxC9ZzLnFawZ9MqCn_9h2Jiq1CUUkwM3cXWVYTac2Zq0ikYkRDSqbuF4ULltMraY4T1BxceYoA_EDk8wioWYbjUJseIC4vTmv4JjeHRdC7iSYaRC9MBLmPkCJ/s1600/blog201502fig8.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="382" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhbDk2y3WlwYQPYzwLWUuHBxC9ZzLnFawZ9MqCn_9h2Jiq1CUUkwM3cXWVYTac2Zq0ikYkRDSqbuF4ULltMraY4T1BxceYoA_EDk8wioWYbjUJseIC4vTmv4JjeHRdC7iSYaRC9MBLmPkCJ/s1600/blog201502fig8.png" width="640" /></a></span></div>
<br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Figure 8<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Below is Jean Laherrere’s estimate of 2P technical reserves
for C+C-XH, from the Oil Drum Post referenced above.<o:p></o:p></span></div>
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBwCkpfl_4BQZmzYztSuTVaeSKOC9oQ_hxcSZqgT-y93PFiQExkvCcgJBZGJQK3ZZ7I2SqtbbBYP2TS6mRDvw2b5u6ogJl4UQhlZ4Z7Brs3kholzEXBjHIk7qx1YRmCsSMFLPVdJvaFTUB/s1600/blog201502fig9.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="458" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBwCkpfl_4BQZmzYztSuTVaeSKOC9oQ_hxcSZqgT-y93PFiQExkvCcgJBZGJQK3ZZ7I2SqtbbBYP2TS6mRDvw2b5u6ogJl4UQhlZ4Z7Brs3kholzEXBjHIk7qx1YRmCsSMFLPVdJvaFTUB/s1600/blog201502fig9.png" width="640" /></a></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Calibri;"> </span></o:p></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Figure 9<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">In 2010 the model producing reserves are about 62% of the 2P
technical reserves estimated by Jean Laherrere(850 Gb in 2010).<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">For more mature regions, such as the US and Norway,
producing reserves are about 78% to 80% of 2P reserves when we assume 2P
reserves are about 33% higher than 1P reserves for the US (Norway reports 2P
reserves, but the US EIA reports 1P reserves).<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">This model uses a separate model for extra heavy oil because
the time it takes to develop extra heavy oil resources is different from
C+C-XH. There are 500 Gb of extra heavy oil URR and 2200 Gb of C+C-XH URR for a World total C+C URR of 2700 Gb.</span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Calibri;"> </span></o:p><br />
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Calibri;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEimzkumjZFLH5AG2TtXf-u0XNS10cCSJBsnAPqqF_HBTgi87CXY8Ri52lAYSv3ISZMe-WuGv50F3T5FS_9jx-6rDT5ObPzDqvkynGrp7WrrEE-Ys0vAGBaCGmw83SbFV5PIxGKUJ-qCyOHW/s1600/blog201502fig1.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="448" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEimzkumjZFLH5AG2TtXf-u0XNS10cCSJBsnAPqqF_HBTgi87CXY8Ri52lAYSv3ISZMe-WuGv50F3T5FS_9jx-6rDT5ObPzDqvkynGrp7WrrEE-Ys0vAGBaCGmw83SbFV5PIxGKUJ-qCyOHW/s1600/blog201502fig1.png" width="640" /></a></span></div>
<br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Figure 1<o:p></o:p></span></div>
<span style="font-family: Calibri;"></span><br />
<span style="font-family: Calibri;">The following chart shows the discovery model, new producing
reserves, and C+C-XH output in Gb per year.<o:p></o:p></span><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Calibri;"> </span></o:p><br />
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Calibri;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjIguOJEgZNlFuZ7ZemY3tp-UYC1RsCEWq2pUDArMYpFH_8H6jYasvcqZhjrDfjXp2cGRUz-WU6AiUy8F63IFYhUtcLxUD68K_Uaf3conWVCj7oCJ9NMOsdIkv_lHroOYodSioXiUxZKPCn/s1600/blog201502fig10.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="384" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjIguOJEgZNlFuZ7ZemY3tp-UYC1RsCEWq2pUDArMYpFH_8H6jYasvcqZhjrDfjXp2cGRUz-WU6AiUy8F63IFYhUtcLxUD68K_Uaf3conWVCj7oCJ9NMOsdIkv_lHroOYodSioXiUxZKPCn/s1600/blog201502fig10.png" width="640" /></a></span></div>
<br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Figure 10<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">In the original Oil shock model there were several stages
between discovery and production called fallow, build, and mature.<span style="mso-spacerun: yes;"> </span>Each stage involved convolution similar to
the convolution I used here with the maximum entropy probability distribution
and the discovery data, but in the original model there were three such maxent
probability distributions and three convolutions rather than just one.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">It seemed too complicated to explain all that so I collapsed
the fallow, build, and maturation stages of the original model into a single
convolution where we go directly from the discovery stage to the new producing
reserve stage (which is essentially the same as the mature reserves of the
original model.)<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">In a future post I will show how potential reserve growth
could lead to a higher URR of C+C less extra heavy oil than suggested by Jean
Laherrere. This implies that the model presented here may be a little on the
pessimistic side.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Excel Spreadsheet with model at </span><a href="https://drive.google.com/file/d/0B4nArV09d398WkZEdlJ4bnhnVkE/view?usp=sharing"><span style="color: #0563c1; font-family: Calibri;">this
link</span></a><span style="font-family: Calibri;">.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Calibri;"> </span></o:p></div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
Unknownnoreply@blogger.com32tag:blogger.com,1999:blog-5552647839482265343.post-71835319753734764202014-06-23T16:18:00.000-04:002014-06-23T16:18:54.513-04:00Oil Field Models, Decline Rates and Convolution<span style="font-size: large;">The eventual peak and decline of light tight oil (LTO) output in the Bakken/ Three Forks play of North Dakota and Montana and the Eagle Ford play of Texas are topics of much conversation at Peak Oil Barrel and elsewhere. </span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"> The decline rates of individual wells are very steep, especially early in the life of the well (as much as 75% in the first year for the average Eagle Ford well), though the decline rates become lower over time and eventually stabilize at around 6 to 7% per year in the Bakken. </span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"> What is not obvious is that for the entire field (or play), the decline rates are not as steep as the decline rate for individual wells. I will present a couple of simple model to illustrate this concept.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">Much of the presentation is a review of ideas that I have learned from Rune Likvern and Paul Pukite (aka Webhubbletelescope), though any errors in the analysis are mine. </span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"> A key idea underlying the analysis is that of convolution. I will attempt an explanation of the concept which many people find difficult.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">I think the best way to present convolution is with pictures. Chart A below shows a relationship between oil output (in barrels per month) and months from the first oil output for the average well in an unspecified LTO play. </span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"> This relationship is a simple hyperbola of the form q=a/(1+kt), where a and k are constants of 13,000 and 0.25 respectively, t is time in months, and q is oil output. Chart A is often referred to as a well profile. The values for the constants were chosen to make the well profile fairly similar to an Eagle Ford average well profile. EUR30 is the estimated ultimate recovery from this average well over a 30 year well life.</span><br />
<br />
<img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617a.png" /><br />
<br />
<a name='more'></a><br />
<span style="font-size: large;">Chart B shows the relationship between the number of new wells that begin producing each month and the months from the start of production for the entire field.</span><br />
<br />
<img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617b.png" /><br />
<br />
<span style="font-size: large;">The convolution of the relationship shown in chart A and the relationship shown in chart B results in a third relationship between oil output and the number of months from the start of field output, which is shown in Chart C below . Output has been converted to kb/d from barrels per month.</span><br />
<br />
<img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617c.png" /><br />
<br />
<span style="font-size: large;">It is indeed strange that two very different shapes (a hyperbola and a trapezoid) would combine to form the shape shown in chart C. A spreadsheet can be downloaded <a href="https://drive.google.com/file/d/0B4nArV09d398TmxFTUM4VUdIdEk/edit?usp=sharing" target="_blank">here</a>, with the scenario above laid out.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">What was surprising to me when I first tried this analysis was that a combination of the average well profile with the number of wells added each month reproduced the oil output data fairly closely.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">To clarify this further, I have created a simple model. As before we have a hyperbolic well profile in chart 1 (slightly different than chart A above) and a the number of new wells added each month in chart 2, but in chart 2 this is over a short 6 month period. After that time no more new wells are added.</span><br />
<br />
<img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617d.png" /><br />
<br />
<img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617e.png" /><br />
<span style="font-size: large;">In the chart below I show the output for each group of wells that begins production in successive months. The output from all wells starting production in month 1 are labelled “month 1 wells”, there are 6 of these groups up to “month 6 wells”. The number of wells added each month is shown as a dashed line read off the right axis. Remember that 30 wells are added each month from month 1 to month 6 so output for “month x wells” will be 30 times month 1 of the well profile in month x and 30 times month 2 of the well profile in month x+1, etc.</span><br />
<br />
<img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617f.png" /><br />
<br />
<span style="font-size: large;">The convolution of Chart 1 and Chart 2 result in Simple oil model 1 shown below.</span><br />
<br />
<img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617g.png" /><br />
<br />
<span style="font-size: large;">This model is very simple in order to present how the principle works in a clear manner. When the annual decline rate for the “field” is compared to the average well’s annual decline rate, they are very similar for this simple 6 month model. More realistic models are presented later for comparison. </span><br />
<span style="font-size: large;">Note that month zero in the chart below is the month of maximum annual decline rate, for the average well the maximum annual decline rate happens in month 13 and for the field it occurs in month 18, the curves have been shifted to the left by 13 and 18 months so that the maximum decline rates match up at month zero for easy comparison.</span><br />
<br />
<img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617h.png" /><br />
<br />
<br />
<br />
<span style="font-size: large;">The spreadsheet for simple model 1 can be <a href="https://drive.google.com/file/d/0B4nArV09d398MldkT2R0SmlqSjg/edit?usp=sharing" target="_blank">downloaded here</a>.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">A second simple model with the number of wells added each month rising from 5 new wells per month to 30 new wells per month over 6 months and then falling back to no wells added by month 12 is shown below.</span><br />
<br />
<img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617i.png" /><br />
<br />
<br />
<img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617j.png" /><br />
<br />
<br />
<img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617k.png" /><br />
<br />
<span style="font-size: large;">Note that the “month 7 wells” output curve is the same as the “month 5 wells“ output curve, but shifted 2 months to the right. Likewise month 8 is month 4 shifted 4 months to the right and this same symmetry is true for months 9 and 3(6 month shift right), months 10 and 2, and months 11 and 1 where the shift right in the curve is equal to the difference in the month when the well started production (8 months and 10 months for the last two cases respectively). </span><br />
<span style="font-size: large;">When all of these 11 curves are added up for each month (the convolution of the “well output of the average new well” chart and the “number of new wells added per month” chart) we get the Simple Oil Model 2 chart below.</span><br />
<br />
<br />
<img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617l.png" /><br />
<br />
<br />
<span style="font-size: large;">Simple model 2 can be <a href="https://drive.google.com/file/d/0B4nArV09d398dkNmXzlhQTBJcUk/edit?usp=sharing" target="_blank">downloaded here</a>.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">I now present a different model with a higher EUR well profile (than in chart A) and a lower rate of addition of new wells (than in chart B). This model’s well profile is similar to the average North Dakota Bakken well profile.</span><br />
<br />
<img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617m.png" /><br />
<br />
<img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617n.png" /><br />
<br />
<span style="font-size: large;">The convolution of the two charts above results in the field output shown below.</span><br />
<br />
<img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617o.png" /><br />
<br />
<br />
<span style="font-size: large;">How does the annual field decline rate compare to the average new well annual decline rate in this case? In the chart below we see that a slower decrease in the rate that new wells are added causes the annual field decline rate to be only 22% at most, about 3 times lower than the maximum annual well decline rate.</span><br />
<br />
<img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617p.png" /><br />
<br />
<br />
<span style="font-size: large;">The spread sheet for the model above can be <a href="https://drive.google.com/file/d/0B4nArV09d398TnVzQzlOU19WNlk/edit?usp=sharing" target="_blank">downloaded here</a>.</span><br />
<br />
<br />
<span style="font-size: large;">As this result is rather counterintuitive, I will try another modification to the model. The well profile remains unchanged, but there is a steeper reduction in the rate that new wells are added to field production.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">Such a scenario could occur if there was a steep drop in oil prices as in the early 1980s. It will also occur if there is a decrease in new well productivity which will reduce profits and the incentive to add more wells.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">The well profile chart is unchanged, the other two charts are as follows:</span><br />
<br />
<img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617q.png" /><br />
<br />
<br />
<span style="font-size: large;"><img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617r.png" /></span><br />
<br />
<span style="font-size: large;">Even in this case the maximum annual field decline rates are less than half the maximum well decline rate. This is because we have almost 15,000 wells added over an 11 year period and their decline behavior in the aggregate is much different than that of an individual well. See chart below.</span><br />
<br />
<img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617s.png" /><br />
<br />
<span style="font-size: large;">Note that the field decline rate is very high, close to a 30% maximum rate in this scenario. If the rate that new wells are added drops to zero over a 1 to 2 year period and no further wells are added, we would expect the field decline to behave like the gray curve in the chart above. Spreadsheet can be <a href="https://drive.google.com/file/d/0B4nArV09d398M0FDcnNuMmdOakU/edit?usp=sharing" target="_blank">downloaded here.</a></span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">Earlier I mentioned that when I first tried this method I was surprised that such a simple model could accurately match output from the Bakken or Eagle Ford fields. </span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"> Using data from the North Dakota Industrial Commission(NDIC) on oil output, the number of new wells added per month, and individual well data(from Rune Likvern initially and lately from Enno Peters) I attempted to match scenarios initially presented by Rune Likvern at the Oil Drum. </span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">Below I present the well profile and number of new wells added each month.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"><img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617aa.png" /></span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"><img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617bb.png" /></span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">When the two charts above are combined (convolved) we get the output curve below.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"><img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617cc.png" /></span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">Note that the sharp drop off in the number of producing wells added each month is not very realistic and is an artifact of the way I set up these simple models for illustration (they end at 130 months so the number of producing wells had to be ramped down very quickly). </span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">Such a scenario would be more likely if there was a sharp rise in well costs, or a sharp drop in oil prices or new well productivity (EUR). The field decline rate is somewhat similar to the previous scenario, rising quickly to a 28% annual decline rate which falls to 10% after 5 years and to 7% in 8 years.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"><img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617dd.png" /></span><br />
<span style="font-size: large;">.</span><br />
<span style="font-size: large;">Spreadsheet for the scenario above is <a href="https://drive.google.com/file/d/0B4nArV09d398Umd3RUJhNE9vbzQ/edit?usp=sharing" target="_blank">here.</a></span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">A fairly realistic scenario for the North Dakota Bakken is presented now for comparison to the model above. This scenario has an ERR (economically recoverable resource) of 5.3 Gb where the more likely range is 7 to 9 Gb, based on USGS estimates. The average well profile and number of new wells added each month are below.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"><img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617t.png" /></span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"><img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617u.png" /></span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">When we convolve the two charts above the following model output results. The match to the data is surprisingly good.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"><img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617v.png" /></span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">The annual field decline rate and well decline rate are shown below. In this case the maximum annual field decline is about 16% in 2021 and falls to 8% by 2026 and to 5% in 2031, the maximum annual well decline rate is 61%, the well decline rate is shown for a well starting production in Dec 2013.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"><img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617w.png" /></span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">The spreadsheet for the scenario above is quite large (21 MB) so if you have limited bandwidth skip it, download <a href="https://drive.google.com/file/d/0B4nArV09d398VWltN1FWU0FZelk/edit?usp=sharing" target="_blank">here.</a></span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">For the Eagle Ford play I was able to collect data on single well leases from the Railroad Commission of Texas, data on the number of producing wells in the play and output data. I developed an average well profile (shown below) and combined it with the number of new wells added each month to produce an output chart. Note that the output chart is for crude only and does not include condensate.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"><img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617x.png" /></span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"><img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617y.png" /></span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">The two charts above are combined (or convolved) to give the output chart below.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"><img alt="blog140617/" border="0" src="https://sites.google.com/site/dc78image/images/blog140617z.png" /></span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">Note that about 20% of Eagle Ford output is condensate, when this condensate is added to the URR above for crude only we get a URR of 5.1 Gb of C+C. As in the case of the North Dakota Bakken/Three Forks the match between the model and data is surprisingly good considering the simplicity of the model and the complexity of the real world.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">Eagle Ford spreadsheet is <a href="https://drive.google.com/file/d/0B4nArV09d398YTY3THpxZExOYnc/edit?usp=sharing" target="_blank">here.</a></span><br />
<span style="font-size: large;"></span><br />
<strong><span style="font-size: x-large;">Summary</span></strong><br />
<strong><span style="font-size: x-large;"></span></strong><br />
<span style="font-size: large;">Oil field output can be simulated with the convolution of the average well profile of newly added wells and the number of new wells added each month. I presented several simple models to demonstrate this concept. An obvious weakness of any attempt at forecasting is that the future average well profile may change over time and the number of new wells added in any future month is unknown.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">The decline rate of a field of wells will be considerably lower than the decline rate of the individual well. The field decline rate depends on several factors: the decline rate of individual wells, the total number of wells in the field, the period of time over which these older wells were added (whether the period was long or short), and finally the rate at which the number of new wells added decreases as the field begins to decline. </span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;">Several models were presented showing how the field decline rate might vary under differing circumstances.</span><br />
<br />
<span style="font-size: large;">The concepts presented were applied to scenarios which simulated both the Bakken and Eagle Ford shale plays with fairly good precision.</span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"></span><br />
<span style="font-size: large;"></span><br />
<br />
<br />
<br />
<br />
<br />
<span style="font-size: large;"></span><br />Unknownnoreply@blogger.com60tag:blogger.com,1999:blog-5552647839482265343.post-59961180163753905392014-05-13T13:40:00.000-04:002014-05-14T14:06:17.338-04:00Eagle Ford Output and Texas Condensate and Natural Gas<br />
<span style="font-family: Times, "Times New Roman", serif; font-size: large;">Edit: May 14, 2014 </span><br />
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"></span><br />
<span style="font-family: Times, "Times New Roman", serif; font-size: large;">Material was added on May 14 to update my Eagle Ford Model, see end of post.</span><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif; font-size: large;">This is a brief update on Eagle Ford Crude plus Condensate (C+C) output through February 2014. February Eagle Ford C+C output was about 1200 kb/d by my estimate.</span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhk2waInUtLdjumAOwvdmoiEhmiO8xltgpgdk_Rhj02ngAeIAOo9TpafSuaCQOttJa4WEWdElznxrZp13MttvN7hfpuvfMUJd2WspnB0XIrCHH4n9d2kp1ufivupBHqlZ96p03gEeJckX8x/s1600/blog140513fig1.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-family: Times, "Times New Roman", serif; font-size: large;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhk2waInUtLdjumAOwvdmoiEhmiO8xltgpgdk_Rhj02ngAeIAOo9TpafSuaCQOttJa4WEWdElznxrZp13MttvN7hfpuvfMUJd2WspnB0XIrCHH4n9d2kp1ufivupBHqlZ96p03gEeJckX8x/s1600/blog140513fig1.png" height="498" width="640" /></span></a></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Times, "Times New Roman", serif; font-size: large;"></span></o:p> </div>
<div style="text-align: center;">
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> Figure 1- RRC Data provided by Kevin Carter </span></div>
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"></span><br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">I have used my usual method of estimation where I find the percentage of total Texas(TX) C+C output that is from the Eagle Ford(EF) play (%EF/TX is the label that I use) and multiply this by the EIA’s estimate of TX C+C output.<span style="mso-spacerun: yes;"> </span>The chart shows the Railroad Commission of Texas (RRC) Eagle Ford estimate (EF RRC) in thousands of barrels per day (kb/d), the EF est (kb/d) as described above, the percentage of EF C+C that is condensate (EF %cond/C+C), and the %EF/TX also described above.<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span><span style="font-family: Times, "Times New Roman", serif; font-size: large;">As before I would like to thank Kevin Carter who created a method to simplify gathering the Eagle Ford data.</span><br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;"></span></span><br />
<a name='more'></a><span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;"><o:p></o:p></span></span><br />
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span><br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif; font-size: large;">I have done estimates of Eagle Ford output several times before (</span><a href="http://oilpeakclimate.blogspot.com/2014/04/eagle-ford-update.html" target="_blank"><span style="font-family: Times, "Times New Roman", serif; font-size: large;">April 2014</span></a><span style="font-family: Times, "Times New Roman", serif; font-size: large;"> and </span><a href="http://oilpeakclimate.blogspot.com/2013/08/eagle-ford-shale-may-soon-reach-1.html" target="_blank"><span style="font-family: Times, "Times New Roman", serif; font-size: large;">August 2013</span></a><span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">) and I would like to take a look back at those previous estimates to see how they compare with my most recent estimate.<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span><span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">Keep in mind that the initial RRC estimates (most recent 12 months) are not very accurate and for that reason the %EF/TX estimate for the Mar 2013 to Feb 2014 period are just a rough estimate with the most recent months having the greatest error.</span></span><br />
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;"><span style="mso-spacerun: yes;"> </span></span></span><br />
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;"><span style="mso-spacerun: yes;"> </span></span></span><span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">My assumption is that if the overall TX estimate is 20% too low, that the EF estimate will also be low by about 20%, if that is correct then the %EF/TX estimate may be close to correct.<span style="mso-spacerun: yes;"> </span>One possible problem is that because the percentage of TX C+C output from the EF play has been growing, the lag in accurate data may cause the %EF/TX estimate to be too low.<span style="mso-spacerun: yes;"> </span></span></span><br />
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;"><span style="mso-spacerun: yes;"></span></span></span><br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="mso-spacerun: yes;"><span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span></span><span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">On the other hand when EF output growth begins to slow down, the EIA estimates of TX C+C will tend to be too high because the EIA has assumed for the past 12 months that TX output has been increasing by about 48 kb each month.<span style="mso-spacerun: yes;"> </span></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;"><span style="mso-spacerun: yes;"></span></span></span><span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">These two effects may have balanced each other over the past 9 months or so, but it looks like Eagle Ford growth in output may be slowing down, if so the present estimate may be too high. <o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> Note that in the chart below the upper set of lines are the %EF/TX and are read off the right vertical axis (22% in Jan 2012 and 42% in Feb 2014).</span><br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjU70c0C89sqcb7UwyyPcgpcmoABWRmn8__CCZrZp3m9JB7OgBkP-ribmOEbCofHKr8pVV81HZj0Pv8aeReLyQYCYUy8GiD6PfvsDEWyCH2cwPtgX_58TFdqp7UQcaGcU4jSxAi505fvZh4/s1600/blog140513fig2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-family: Times, "Times New Roman", serif; font-size: large;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjU70c0C89sqcb7UwyyPcgpcmoABWRmn8__CCZrZp3m9JB7OgBkP-ribmOEbCofHKr8pVV81HZj0Pv8aeReLyQYCYUy8GiD6PfvsDEWyCH2cwPtgX_58TFdqp7UQcaGcU4jSxAi505fvZh4/s1600/blog140513fig2.png" height="570" width="640" /></span></a></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;"><o:p> </o:p>Figure 2- Chart by Dennis Coyne (with help from Kevin Carter)</span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"></span> </div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">Over the period from August 2013 to May 2014 my method for estimating Eagle Ford output has tended to give an estimate that was slightly on the low side, so the method may be conservative.</span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">Note that the estimates from August 2013 and January 2014 did not use the full Eagle Ford data set, but the Fields assessed account for about 99% of Eagle Ford C+C output in those earlier estimates.<span style="mso-spacerun: yes;"> </span>The April 2014 and May 2014 estimates include all Eagle Ford output reported by the RRC.</span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;"><o:p> </o:p></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;"><o:p><strong>Texas Condensate and Natural Gas</strong></o:p></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;"><o:p></o:p></span></span> </div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;"><o:p></o:p>Jeffrey Brown has done an estimate of worldwide condensate output based in part on Texas C+C data so I decided to investigate how Texas condensate output has changed over time (June 1993 to Feb 2014).</span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">In order to see how condensate output has changed we need to consider the output of natural gas in Texas as the condensate is a byproduct of natural gas production.<span style="mso-spacerun: yes;"> </span>There are two types of natural gas reported by the RRC of TX, natural gas from gas wells (called GW gas by the RRC) and associated gas from oil wells (called “casinghead” gas by the RRC).<span style="mso-spacerun: yes;"> </span></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="mso-spacerun: yes;"></span><span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">I combine these two types of natural gas and call it “all gas” and then look at how the percentage of casinghead gas to all gas (%casing/all) has changed over time.<span style="mso-spacerun: yes;"> </span>It has varied from 24% in 1993 to 8% in 2008 and rose back to 22% in 2014.<span style="mso-spacerun: yes;"> These values are read from the right vertical axis in the chart below.</span></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="mso-spacerun: yes;"></span><span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">I also report all TX natural gas output (all gas) in billions of cubic feet per day (BCF/d).<span style="mso-spacerun: yes;"> </span>In addition I look at the barrels of condensate produced per million cubic feet of GW gas produced [cond/GWgas(b/MMcf)], which has increased from 7 b/MMcf in 2009 to about 20 b/MMcf in 2014.<span style="mso-spacerun: yes;"> </span></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="mso-spacerun: yes;"></span><span style="font-family: Times, "Times New Roman", serif; font-size: large;">Lastly I considered the %cond/C+C for all of TX (I had looked at this only for the Eagle Ford above), this has increased steadily from 7% in 1995 to 15% in 2013 (this started well before Eagle Ford output took off in 2009) and has now fallen back to 13% in 2014. These values are read from the right vertical axis.</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"></span> </div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibGzzAk3L7h6fXHwV_xRmiq1qj_Ze_oNKWa3VivO_PXFUyHHuEXKS_XiKqPFb1Cm-Fj8eoTufGb-V9XSKKqB3iCd5oeM004FKnGLSa2BTraHvUWD3pxwqfTOPeo0xNJBZIXANU7XMGALzG/s1600/blog140513fig3.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-family: Times, "Times New Roman", serif; font-size: large;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibGzzAk3L7h6fXHwV_xRmiq1qj_Ze_oNKWa3VivO_PXFUyHHuEXKS_XiKqPFb1Cm-Fj8eoTufGb-V9XSKKqB3iCd5oeM004FKnGLSa2BTraHvUWD3pxwqfTOPeo0xNJBZIXANU7XMGALzG/s1600/blog140513fig3.png" height="498" width="640" /></span></a></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Times, "Times New Roman", serif; font-size: large;"></span></o:p> </div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
<o:p><span style="font-family: Times, "Times New Roman", serif; font-size: large;">Figure 3</span></o:p></div>
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span><br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Times, "Times New Roman", serif; font-size: large;"> Aside from Texas and OPEC we have little data worldwide on condensate output. </span></o:p></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Times, "Times New Roman", serif; font-size: large;">Output of C+C from OPEC and Texas accounted for about 45% of world C+C output in 2013 (EIA data), if the rest of the World has condensate output in similar proportions to OPEC and TX, then it is possible that the increase in world C+C output since 2005 has been all condensate and that crude output has not increased. </span></o:p></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Times, "Times New Roman", serif; font-size: large;">The problem is that we lack the data to verify this, so in my view the focus should remain on crude plus condensate output.</span></o:p></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Times; font-size: large;"></span></o:p> </div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Times; font-size: large;"><strong>Eagle Ford Model</strong></span></o:p></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Times; font-size: large;"></span></o:p><br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<br /></div>
<div class="separator" style="clear: both; margin: 0in 0in 8pt; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjqlvzJh7y6HoRrLTwAaOHVwCvbYhbvv8gvx-6kvuZRw9LIPsf7GmDJTVzB94eX7Db3WbOW5IWfKfm4DncrenejDrKU1_WP4ycsl_Qy9JfJK_-BZTOheVZwAvyiYPFAdrUwyWOVNsDqVNp5/s1600/blog140513fig4.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjqlvzJh7y6HoRrLTwAaOHVwCvbYhbvv8gvx-6kvuZRw9LIPsf7GmDJTVzB94eX7Db3WbOW5IWfKfm4DncrenejDrKU1_WP4ycsl_Qy9JfJK_-BZTOheVZwAvyiYPFAdrUwyWOVNsDqVNp5/s1600/blog140513fig4.png" height="448" width="640" /></a></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p> <br />
</o:p><br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">Figure 4<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">I have also decided to update my Eagle Ford model using the EIA’s 2014 Annual Energy Outlook(AEO) Reference Oil Price Scenario.<span style="mso-spacerun: yes;"> </span>The model I presented in April used an unrealistically high real oil price scenario.<span style="mso-spacerun: yes;"> </span>The models are compared above with the two different price scenarios.<span style="mso-spacerun: yes;"> </span>A couple of other changes were made to the model:<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span></div>
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">1.<span style="font-family: "Times New Roman"; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span></span><!--[endif]-->In the previous model the maximum number of wells added each month was 225 wells per month, in the present models the wells added gradually increases from 229 wells per month in Feb 2014 to a maximum of 270 wells per month in Jan 2017, this increases peak output by about 80 kb/d (1480 kb/d vs 1400 kb/d).<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span><br />
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">2.<span style="font-family: "Times New Roman"; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span></span><!--[endif]-->The maximum rate of decrease in new well estimated ultimate recovery(EUR) is reached over a 30 month period rather than 18 months in the previous model and a higher maximum monthly rate of decrease in new well EUR (2% per month maximum vs 1.5% per month in the previous model) was also used.<span style="mso-spacerun: yes;"> </span></span></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<span style="font-family: Times; font-size: large;"></span> </div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-align: left; text-indent: -0.25in;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;"> The TRR for these models is 6 Gb (when no economic assumptions are used), this is output in a World where oil companies do not care about profits.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span></div>
<div class="MsoListParagraphCxSpLast" style="margin: 0in 0in 8pt 0.5in;">
<o:p><span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span></o:p>
</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">Figures 5 and 6 below show the real oil price as a red line (read prices on right axis). The real net present value (NPV) of future oil output from the average new well, the real well cost, and real profits (NPV-cost) from an average new well are shown on the left axis in millions of 2013$.<span style="mso-spacerun: yes;"> </span>Economic assumptions are:<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span><br />
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span><span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span><span style="font-family: Times, "Times New Roman", serif; font-size: large;"></span><span style="font-family: Times, "Times New Roman", serif; font-size: large;"></span><span style="font-family: Times, "Times New Roman", serif; font-size: large;"></span><span style="font-family: Times, "Times New Roman", serif; font-size: large;"></span><span style="font-family: Times, "Times New Roman", serif; font-size: large;"></span><span style="font-family: Times, "Times New Roman", serif; font-size: large;"></span><span style="font-family: Times, "Times New Roman", serif; font-size: large;"></span><span style="font-family: Times, "Times New Roman", serif; font-size: large;"></span><span style="font-family: Times, "Times New Roman", serif; font-size: large;"></span><span style="font-family: Times, "Times New Roman", serif; font-size: large;"></span><span style="font-family: Times, "Times New Roman", serif; font-size: large;"></span><span style="font-family: Times, "Times New Roman", serif; font-size: large;"></span><span style="font-family: Times, "Times New Roman", serif; font-size: large;"></span><span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span><span style="font-family: Times, "Times New Roman", serif; font-size: large;"> Annual Discount Rate 7%</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times; font-size: large;"> Royalties and Taxes 24%</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times; font-size: large;"> Transport Cost $3/barrel </span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times; font-size: large;"> OPEX $4/barrel</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times; font-size: large;"> all $ are constant 2013$ (real dollars)</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFHvYRx7r0PttqNhBWKpkOeZ_GDhBlwKmIH8BDsaPwzqJ0IqzPNPXIO1orghwmsIuzBoFGb_vgJxJcLuWZdk_2R22Pbvhy-msFeTJ3kFZ0GJSA_26xuHeNrFpMsIPqwlzVQlSZGbbJAOHP/s1600/blog140513fig5.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFHvYRx7r0PttqNhBWKpkOeZ_GDhBlwKmIH8BDsaPwzqJ0IqzPNPXIO1orghwmsIuzBoFGb_vgJxJcLuWZdk_2R22Pbvhy-msFeTJ3kFZ0GJSA_26xuHeNrFpMsIPqwlzVQlSZGbbJAOHP/s1600/blog140513fig5.png" height="426" width="640" /></a></div>
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;"><span style="mso-no-proof: yes;"><v:shapetype coordsize="21600,21600" filled="f" id="_x0000_t75" o:preferrelative="t" o:spt="75" path="m@4@5l@4@11@9@11@9@5xe" stroked="f"> <v:stroke joinstyle="miter"> <v:formulas> <v:f eqn="if lineDrawn pixelLineWidth 0"> <v:f eqn="sum @0 1 0"> <v:f eqn="sum 0 0 @1"> <v:f eqn="prod @2 1 2"> <v:f eqn="prod @3 21600 pixelWidth"> <v:f eqn="prod @3 21600 pixelHeight"> <v:f eqn="sum @0 0 1"> <v:f eqn="prod @6 1 2"> <v:f eqn="prod @7 21600 pixelWidth"> <v:f eqn="sum @8 21600 0"> <v:f eqn="prod @7 21600 pixelHeight"> <v:f eqn="sum @10 21600 0"> </v:f> <v:path gradientshapeok="t" o:connecttype="rect" o:extrusionok="f"> <o:lock aspectratio="t" v:ext="edit"> </o:lock><v:shape id="Picture_x0020_11" o:spid="_x0000_i1028" style="height: 216.75pt; mso-wrap-style: square; visibility: visible; width: 324.75pt;" type="#_x0000_t75"> <v:imagedata o:title="" src="file:///C:\Users\dad\AppData\Local\Temp\msohtmlclip1\01\clip_image001.png"> </v:imagedata></v:shape></v:path></v:f></v:f></v:f></v:f></v:f></v:f></v:f></v:f></v:f></v:f></v:f></v:formulas></v:stroke></v:shapetype></span></span></span>
</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">Figure 5<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjsdW6-IUsU1L10E5ozrRC-vMrQYb3M_RD0aVaSBippyzLP9WvA08Zeak_E-qvxYV3Ye3q35-ROxSZ1XUkrG3qJAjHfox4IABbd2Mjw1Eqg6Tn9MuIwDWixVA1wyVl6UVymLM9drwIg_lq9/s1600/blog140513fig6.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjsdW6-IUsU1L10E5ozrRC-vMrQYb3M_RD0aVaSBippyzLP9WvA08Zeak_E-qvxYV3Ye3q35-ROxSZ1XUkrG3qJAjHfox4IABbd2Mjw1Eqg6Tn9MuIwDWixVA1wyVl6UVymLM9drwIg_lq9/s1600/blog140513fig6.png" height="426" width="640" /></a></div>
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;"><span style="mso-no-proof: yes;"><v:shape id="Picture_x0020_10" o:spid="_x0000_i1027" style="height: 216.75pt; mso-wrap-style: square; visibility: visible; width: 324.75pt;" type="#_x0000_t75"> <v:imagedata o:title="" src="file:///C:\Users\dad\AppData\Local\Temp\msohtmlclip1\01\clip_image002.png"> </v:imagedata></v:shape></span></span></span>
</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">Figure 6<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">In figure 7 below I present the average well profile for wells starting production in Jan 2013 and in Jan 2018, clearly the Jan 2018 well profile is only a guess.<span style="mso-spacerun: yes;"> </span>The January 2013 average well profile is assumed to have remained about the same from Jan 2010 to the present and to begin decreasing in August 2014.<span style="mso-spacerun: yes;"> </span></span></span><br />
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;"></span></span><br />
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">Each month from Aug 2014 to Dec 2017 (41 months) has a separate well profile, with each successive month slightly lower than the next.<span style="mso-spacerun: yes;"> </span>So between the blue and red curves shown in figure 7 there are 41 separate well profiles and they continue below the red curve as well.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span></o:p></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjeSpaII8IQJGbEPsAA_ppx6n81Xq7JfYR_X3UuGtN0JcXPpS9lwbg77MvcZYJ-V9LriG0gpE5ORdddek0oUTXTZoagYiOwwdiUjf3WsqSlpDgI52trWP0GjKZfjpk_8fbBaEyq8PY9P_Fv/s1600/blog140513fig7.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjeSpaII8IQJGbEPsAA_ppx6n81Xq7JfYR_X3UuGtN0JcXPpS9lwbg77MvcZYJ-V9LriG0gpE5ORdddek0oUTXTZoagYiOwwdiUjf3WsqSlpDgI52trWP0GjKZfjpk_8fbBaEyq8PY9P_Fv/s1600/blog140513fig7.png" height="480" width="640" /></a></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span>
</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">Figure 7<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">Note that the blue curve is based on actual well data from 317 Eagle Ford wells gathered from the RRC of TX online database.<span style="mso-spacerun: yes;"> </span>All wells have at least 12 months of data and started production between August 2010 and August 2012 and were either in the Eagle Ford 1 or Eagle Ford 2 fields.<span style="mso-spacerun: yes;"> </span>The average of these 317 wells is used to find the average new well profile, the data is shown in green in figure 7.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span>
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgrYQ8N3Mjbt9xInfKaurXOwufrht2qyIFcVyswUAXx2sCwnfbse-gPw044_6GxZWqKCo9JcmzcSK4Qf0g0kh7md4gRFpfKcwV9dxc6Kuph5ZvJ63uzKo1FWdAHpRvEzXQEzTP0RCsSRuyl/s1600/blog140513fig8.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgrYQ8N3Mjbt9xInfKaurXOwufrht2qyIFcVyswUAXx2sCwnfbse-gPw044_6GxZWqKCo9JcmzcSK4Qf0g0kh7md4gRFpfKcwV9dxc6Kuph5ZvJ63uzKo1FWdAHpRvEzXQEzTP0RCsSRuyl/s1600/blog140513fig8.png" height="384" width="640" /></a></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;"><span style="mso-no-proof: yes;"><v:shape id="Picture_x0020_18" o:spid="_x0000_i1025" style="height: 216.75pt; mso-wrap-style: square; visibility: visible; width: 360.75pt;" type="#_x0000_t75"> <v:imagedata o:title="" src="file:///C:\Users\dad\AppData\Local\Temp\msohtmlclip1\01\clip_image004.png"> </v:imagedata></v:shape></span></span></span>
</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">Figure 8<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">The chart above shows how the new well EUR changes over time, the changes in the annual rate of decrease in new well EUR (on right axis), and the number of new wells added each month.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">In the middle of 2014 it is assumed that the sweet spots will be fully drilled and oil companies will begin drilling in less productive areas, it is for this reason that the new well EUR will start to decrease after remaining roughly constant from 2010 to 2014.<span style="mso-spacerun: yes;"> </span>The maximum rate of addition of new wells and the maximum rate of annual decrease in new well EUR are reached in Jan 2017 and remain at that level until Jan 2018.<span style="mso-spacerun: yes;"> </span>Why do these rates then fall in magnitude after that date?<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif; font-size: large;"> </span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">The explanation is found in figure 5 above.<span style="mso-spacerun: yes;"> </span>Profits reach too low a level by early 2018 for some oil companies to think it worthwhile to continue drilling and they drill fewer wells, as profits approach zero in mid 2019 very few companies will be drilling and the rate that new wells are added falls by a factor of 10 over a 20 month period.<span style="mso-spacerun: yes;"> </span>The slower pace of drilling causes the rate of decrease of new well EUR to also fall by about a factor of 10.</span></span><br />
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;"><o:p></o:p></span></span> </div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-size: large;">Note that figures 7 and 8 are for the AEO Reference Oil Price case shown in Figures 4 and 5 where the ERR=5 Gb and real oil prices rise to $130/barrel in 2013$ by 2032 from about $100/barrel in 2015, a 1.5% annual rate of increase in real oil prices.</span></span></div>
</div>
</div>
Unknownnoreply@blogger.com5tag:blogger.com,1999:blog-5552647839482265343.post-87018318638984502362014-04-15T12:51:00.001-04:002014-04-15T17:02:32.290-04:00Eagle Ford Update<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjvC5r4IH1tssFMuYAe-WCzcBuoALdGMhveTUK3Evqz1MYsBmmitsjNt20ZbW8SzDIaiH8Pla3ICLiwh08ii5bMMxbKBZ4mdAQ3CITBBCrBuBdipP0aH1sV40XhMC99zhJuH_RwMHABHFgR/s1600/ef+chart.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjvC5r4IH1tssFMuYAe-WCzcBuoALdGMhveTUK3Evqz1MYsBmmitsjNt20ZbW8SzDIaiH8Pla3ICLiwh08ii5bMMxbKBZ4mdAQ3CITBBCrBuBdipP0aH1sV40XhMC99zhJuH_RwMHABHFgR/s1600/ef+chart.png" height="443" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 1</td></tr>
</tbody></table>
<br />
It has been a while since I have updated my estimate of actual output from the Eagle Ford.<br />
<br />
Kevin Carter (KC at Peak Oil Barrel) graciously offered help pulling together data for the 39 fields which make up the Eagle Ford play (see <a href="http://www.rrc.state.tx.us/eagleford/" rel="nofollow" target="_blank">this page</a> at the RRC of TX, spreadsheet download <a href="http://www.rrc.state.tx.us/eagleford/EagleFord_Fields_and_Counties_201403.xls" rel="nofollow" target="_blank">here</a> .)<br />
Kevin has strong programming skills in Visual Basic for Applications (VBA) and has made the job of gathering the Eagle Ford data considerably easier. Thank you Kevin!<br />
<br />
My <a href="http://oilpeakclimate.blogspot.com/2013/08/eagle-ford-shale-may-soon-reach-1.html" target="_blank">previous estimates</a> only included the Eagleville fields (Eagle Ford 1 and Eagle Ford 2 and the inactive Eagle Ford and Eagle Ford Sour fields), Briscoe Ranch, Sugarkane, Dewitt, Gates Ranch, Hawkville, and Eagle Ridge fields. Together these 10 fields produce about 99% of Eagle Ford C+C output so these previous estimates are not bad, this new estimate includes all Eagle Ford output reported by the RRC from June 1993 to January 2014.<br />
<br />
Note that from June 1993 to Dec 2006 C+C monthly output from the Eagle Ford play was 12 b/d or less, which is why the chart starts at Jan 2007.<br />
<br />
An Excel spreadsheet with the data can be <a href="https://drive.google.com/file/d/0B4nArV09d398MV9tWW4wMnhpTEk/edit?usp=sharing" target="_blank">downloaded here</a> . More below the fold.<br />
<a name='more'></a><br />
<br />
A brief explanation of the EF EIA curve (red line on the chart) is in order.<br />
<br />
I download EF RRC data and statewide TX RRC date from the Railroad Commission of Texas (RRC of TX) and find the percentage of all TX C+C which is produced in the Eagle Ford play. In January 2014 Eagle Ford C+C was 943 kb/d (RRC data) and TX C+C was 2259 kb/d (RRC data) so 42% of TX C+C was produced in the Eagle Ford according to the RRC of TX.<br />
<br />
Historically EIA estimates of TX C+C for the most recent 12 months have been much more accurate than data reported by the RRC of TX, so I use the TX C+C reported by the EIA (2874 kb/d in Jan 2014) and assume the % of output from the Eagle Ford based on RRC data is fairly close (it really is the best we can do, we have no other data).<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjbbJMAfB9BUjKWVgQd9grTMNoH-2yuIhe3FalliOIjjpcI8eTEQldynjuiSOl5HcIBD3OrzaqpjrqtGc3mT0urVqlHcfgJu68reYatHNz26zjEd69j8dz4UKEhd5XM1jV_g5gRPuMrKjEh/s1600/rrcdata2.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjbbJMAfB9BUjKWVgQd9grTMNoH-2yuIhe3FalliOIjjpcI8eTEQldynjuiSOl5HcIBD3OrzaqpjrqtGc3mT0urVqlHcfgJu68reYatHNz26zjEd69j8dz4UKEhd5XM1jV_g5gRPuMrKjEh/s1600/rrcdata2.png" height="384" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 2</td></tr>
</tbody></table>
<br />
Spreadsheet with past RRC data downloaded at different dates in the past can be <a href="https://drive.google.com/file/d/0B4nArV09d398ams5ZC1xYVJuMFk/edit?usp=sharing" target="_blank">downloaded here.</a><br />
<br />
The EF EIA estimate is the TX EIA C+C multiplied by the %EF/TX(42% in Jan 2014) from RRC data. In this case EF EIA=0.4175 times 2874=1200 kb/d in Jan 2014.<br />
<br />
A final note is that although past estimates have proven conservative (Sept 2013 estimate for June 2013 was 998 kb/d vs. April 2014 estimate for June 2013 of 1024 kb/d), at some point the rapid increase in Eagle Ford output will slow down. We can only speculate as to when that will occur, but when it does, this method of estimating Eagle Ford C+C output may prove too optimistic.<br />
<br />
The EIA estimate of TX C+C has been a simple linear extrapolation of the past trend, this method has worked pretty well over the past 12 months, but there is no reason to expect that a linear increase in Texas oil output will continue indefinitely. <br />
<br />
My modelling (which is speculative) suggests about 6 Gb for a URR for the Eagle Ford with a decrease in new well EUR to begin in July 2014 and to gradually increase in rate from a flat new well EUR (no decrease in new well EUR) from 2010 to June 2014 (EUR30=200 kb over that period) to a 16.6% annual rate of decrease in new well EUR by Jan 2016. Using the economic assumptions below we get the chart that follows for Eagle Ford output.<br />
<br />
<br />
<table border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 287px;">
<tbody>
<tr style="height: 15pt; mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 95pt;" valign="bottom" width="127"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;"><o:p></o:p></span></span> </div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 1in;" valign="bottom" width="96"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">Real well cost<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 48pt;" valign="bottom" width="64"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">Oil Price<o:p></o:p></span></span></div>
</td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 1;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 95pt;" valign="bottom" width="127"></td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 1in;" valign="bottom" width="96"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">(2013$)<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 48pt;" valign="bottom" width="64"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">(2013$)<o:p></o:p></span></span></div>
</td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 2;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 95pt;" valign="bottom" width="127"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">Jan-13<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 1in;" valign="bottom" width="96"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">$8MM<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 48pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">$100 <o:p></o:p></span></span></div>
</td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 3;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 95pt;" valign="bottom" width="127"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">Feb-16<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 1in;" valign="bottom" width="96"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">$6.2MM<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 48pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">$103 <o:p></o:p></span></span></div>
</td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 4;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 95pt;" valign="bottom" width="127"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">Dec-30<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 1in;" valign="bottom" width="96"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">$6.2MM<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 48pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">$244 <o:p></o:p></span></span></div>
</td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 5;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 95pt;" valign="bottom" width="127"></td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 1in;" valign="bottom" width="96"></td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 48pt;" valign="bottom" width="64"></td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 6;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 95pt;" valign="bottom" width="127"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">Ann. Discount Rate<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 1in;" valign="bottom" width="96"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">7%<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 48pt;" valign="bottom" width="64"></td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 7;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 95pt;" valign="bottom" width="127"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">Royalties + Taxes<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 1in;" valign="bottom" width="96"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">24%<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 48pt;" valign="bottom" width="64"></td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 8;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 95pt;" valign="bottom" width="127"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">Transport Cost<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 1in;" valign="bottom" width="96"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">$3/barrel<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 48pt;" valign="bottom" width="64"></td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 9; mso-yfti-lastrow: yes;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 95pt;" valign="bottom" width="127"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">OPEX<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 1in;" valign="bottom" width="96"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">$4/barrel</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 48pt;" valign="bottom" width="64"></td>
</tr>
</tbody></table>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMpZDIciU5PAFoheiBiLFrgrTfmI8RuwCLR6DWrJUmt1svzyA7CTa_NDwc6E6yTdrh-8vxYi63x9BUOUzBWHvrm23g3zF2abreP-8jHqjPbGSoT3cIXOsTkJRGKJU4zk-646h1cEJq9Sx1/s1600/efmodel2.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMpZDIciU5PAFoheiBiLFrgrTfmI8RuwCLR6DWrJUmt1svzyA7CTa_NDwc6E6yTdrh-8vxYi63x9BUOUzBWHvrm23g3zF2abreP-8jHqjPbGSoT3cIXOsTkJRGKJU4zk-646h1cEJq9Sx1/s1600/efmodel2.png" height="426" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 3</td></tr>
</tbody></table>
<br />
<br />Unknownnoreply@blogger.com2tag:blogger.com,1999:blog-5552647839482265343.post-20264275809233985482014-04-01T10:16:00.001-04:002014-04-15T09:34:13.323-04:00Bakken and Eagle Ford Revised ScenariosEdit: April 2, 2014 This post was a failed attempt at humor on April Fool's Day. When a "joke" has to be explained, clearly it is not funny. I apologize to those who took this seriously.<br />
<br />
Essentially I was trying to see what it would take to arrive at the 24 billion barrels of Bakken oil that Harold Hamm often claims. It takes 69,000 wells (at 2400 new wells per year) and no decrease in new well EUR (up to 2041) to accomplish this with a realistic well profile (similar to USGS estimates). I really thought that people would realize (given the date), that this should not be taken seriously. <br />
<br />
I was incorrect and again my apologies.<br />
<br />
Dennis Coyne<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhfhrf-fESDS6aY_k1KOIwnbcMsHuL9w1irdqTNve7aaStKcjCo2nMNM9GbCKdYCIzjMZb74l-V77d5TfSWBPprS4dQkk1tdkkQLzGzGbnbmZEXxew6akKAWlcUsQfVyIQJQbNOOTjIEK9C/s1600/blog140401a.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhfhrf-fESDS6aY_k1KOIwnbcMsHuL9w1irdqTNve7aaStKcjCo2nMNM9GbCKdYCIzjMZb74l-V77d5TfSWBPprS4dQkk1tdkkQLzGzGbnbmZEXxew6akKAWlcUsQfVyIQJQbNOOTjIEK9C/s1600/blog140401a.png" height="255" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 1</td></tr>
</tbody></table>
<br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;"><span style="font-size: large;">There has been a lot of discussion about the United States as the new Saudi Arabia.<span style="mso-spacerun: yes;"> </span>Output of crude plus condensate has been expanding rapidly in the light tight oil plays in North Dakota (Bakken) and Texas (Eagle Ford).<span style="mso-spacerun: yes;"> </span>In the past I have been very skeptical of how long this rapid increase could continue.<o:p></o:p></span></span></div>
<span style="font-size: large;"> </span><br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;"><span style="font-size: large;">The argument was basically that some areas are more productive than others and that these “sweet spots” would run out of room for new wells eventually and that well productivity would decrease.<o:p></o:p></span></span></div>
<span style="font-size: large;"> </span><br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;"><span style="font-size: large;">I have revised my thinking based on the continually upbeat predictions by CEO’s of successful oil companies such as Harold Hamm of Continental Resources.<span style="mso-spacerun: yes;"> </span>In addition, there have been several encouraging pilot projects suggesting that well spacing might be dramatically reduced.<span style="mso-spacerun: yes;"> </span>This will allow many more wells to be drilled than the 40,000 wells that I have often used in previous scenarios.<o:p></o:p></span></span></div>
<span style="font-size: large;"> </span><a name='more'></a><br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;"><span style="font-size: large;">Technological advancements will likely allow oil companies to keep well productivity at present levels for the foreseeable future, or possibly increase well productivity.<span style="mso-spacerun: yes;"> </span>To remain conservative I have assumed that the technological progress will balance any difficulties with lack of room in more productive areas and that new well productivity will remain constant rather than increase due to improved technologies and methods.<o:p></o:p></span></span></div>
<span style="font-size: large;"> </span><br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;"><span style="font-size: large;">For the Bakken I assume wells are added at about 2400 wells per year until about 2037 and then the rate that new wells are added begins to decrease, a total of about 69,000 producing wells are added by 2041.<o:p></o:p></span></span></div>
<span style="font-size: large;"> </span><br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri; font-size: large;">A peak of 2300 kb/d is reached in 2038 and total cumulative C+C output is 24 Gb.</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri; font-size: large;"></span> </div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiffPP06RJbqJlRCNmqastUBYGyE4zgdknbMfHyHoU-42FXnvQvKfzAPRuoAgiLKc25AaRCWpZaZtgnSN5UlhGKc5EVn-O6b9wDQpsZxuJ6lrOCnYylPxfYJQhRsPBN8n1vR2qYGuItk3JB/s1600/blog140401b.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><span style="font-size: large;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiffPP06RJbqJlRCNmqastUBYGyE4zgdknbMfHyHoU-42FXnvQvKfzAPRuoAgiLKc25AaRCWpZaZtgnSN5UlhGKc5EVn-O6b9wDQpsZxuJ6lrOCnYylPxfYJQhRsPBN8n1vR2qYGuItk3JB/s1600/blog140401b.png" height="426" width="640" /></span></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Figure 2</span></td></tr>
</tbody></table>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri; font-size: large;"><o:p></o:p></span> </div>
<span style="font-size: large;"> <span style="font-family: Calibri;">For the Eagle Ford Shale play the rate that wells are added is reduced gradually from 2600 wells per year to 2200 wells per year from 2014 to 2017 and then remains at this level until 2038 at which point the rate that new wells are added starts to decrease.<span style="mso-spacerun: yes;"> </span>About 64,000 producing wells is the maximum reached in 2041.<span style="mso-spacerun: yes;"> </span>The peak output is about 1500 kb/d in 2038 and total cumulative output is 17 Gb.<o:p></o:p></span></span><br />
<span style="font-size: large;"></span><span style="font-size: large;"> </span><br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjf-29mRtZmtukmJUXfafoMj6PbBIVuWJo_hoCrdqEQj6Tz3EYX4m-pEcEeJTa0bdKab6ZHxNGtylW1vK-uoEVYTtBiwwZpu9SYY73kz9un4CpI74SJ5aJhSms34xgWPy7vgJG-NyDpDOBE/s1600/blog140401c.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><span style="font-size: large;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjf-29mRtZmtukmJUXfafoMj6PbBIVuWJo_hoCrdqEQj6Tz3EYX4m-pEcEeJTa0bdKab6ZHxNGtylW1vK-uoEVYTtBiwwZpu9SYY73kz9un4CpI74SJ5aJhSms34xgWPy7vgJG-NyDpDOBE/s1600/blog140401c.png" height="410" width="640" /></span></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Figure 3</span><br />
<span style="font-size: large;"></span><br />
<div align="left">
<span style="font-size: large;"> </span></div>
<div align="left" class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;"><span style="font-size: large;">The combined output from the Bakken and Eagle Ford based on the two scenarios presented in figures 2 and 3 is presented in Figure 1 at the top of the post and repeated below.<o:p></o:p></span></span></div>
<div align="left">
<span style="font-size: large;"> </span></div>
<div align="left" class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri; font-size: large;">Development of other LTO plays in the United States will only add to this output possibly extending the plateau out to 2050.</span></div>
<span style="font-family: Calibri;"></span><br />
<div align="left" class="MsoNormal" style="margin: 0in 0in 8pt;">
<br />
<span style="font-family: Calibri;"><span style="font-size: large;"></span> <span style="font-family: Times New Roman;"></span><br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhfhrf-fESDS6aY_k1KOIwnbcMsHuL9w1irdqTNve7aaStKcjCo2nMNM9GbCKdYCIzjMZb74l-V77d5TfSWBPprS4dQkk1tdkkQLzGzGbnbmZEXxew6akKAWlcUsQfVyIQJQbNOOTjIEK9C/s1600/blog140401a.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><span style="font-family: Times New Roman;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhfhrf-fESDS6aY_k1KOIwnbcMsHuL9w1irdqTNve7aaStKcjCo2nMNM9GbCKdYCIzjMZb74l-V77d5TfSWBPprS4dQkk1tdkkQLzGzGbnbmZEXxew6akKAWlcUsQfVyIQJQbNOOTjIEK9C/s1600/blog140401a.png" height="408" width="640" /></span></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 1</td></tr>
</tbody></table>
</span></div>
</td></tr>
</tbody></table>
Unknownnoreply@blogger.com14tag:blogger.com,1999:blog-5552647839482265343.post-58604398253837505312014-02-07T15:58:00.000-05:002014-02-07T16:11:31.273-05:00North Dakota Bakken Scenarios<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifWHiCFChH9ocVSQNdYfQagc1H7mJizMXlG7Vf-T1SNkttW1uTbMpR_ZhL2WhRBQg8ewYs9GKPukPeqd9I48_PCxaIlG_ZQ6LEgwlAhx3x75CHceJ2CuCxWx6nzlqf5030HQ464QT7gOn5/s1600/blog140206fig1.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifWHiCFChH9ocVSQNdYfQagc1H7mJizMXlG7Vf-T1SNkttW1uTbMpR_ZhL2WhRBQg8ewYs9GKPukPeqd9I48_PCxaIlG_ZQ6LEgwlAhx3x75CHceJ2CuCxWx6nzlqf5030HQ464QT7gOn5/s1600/blog140206fig1.png" height="266" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Fig 1 TRR 6 to 11.3 Gb</td></tr>
</tbody></table>
<br />
A recent post at <a href="http://peakoilbarrel.com/oil-peak-north-dakota-montana-2/" target="_blank">Peak Oil Barrel</a> by Jean Laherrere suggested an ultimate recoverable resource(URR) for the North Dakota Bakken/Three Forks of about 2.5 Gb based on Hubbert Linearization. This conflicts with a recent (April 2013) USGS mean (F50) estimate of 8.4 Gb. I decided to update my scenarios based on the range of USGS estimates from F95=6 Gb to F5=11.3 Gb for the North Dakota(ND) Bakken/ Three Forks. Note that at year end 2011 there were 2.6 Gb of crude proven reserves in ND and at the end of 2007 about 0.5 Gb, I will assume all of this reserve increase came from the Bakken/ Three Forks, so 2.1 Gb of proven reserves added to 0.35 Gb of oil produced from the Bakken/ Three Forks gives us 2.45 Gb for a minimum URR. The Hubbert Linearization points to about 0.05 Gb of undiscovered oil whereas the USGS suggests 3.5 to 8.9 Gb of undiscovered technically recoverable resource(TRR) in the North Dakota Bakken/Three Forks.<br />
<br />
Note that Mr. Laherrere has forgotten more about geology than I know. He may have information that I don't have access to or has read the USGS April 2013 Bakken/Three Forks assessment and found that the report was not credible. I have assumed in my analysis that the USGS analysis is correct, if it is not then my analysis will also be flawed. I would love to hear from Mr. Laherrere about the specific problems he sees with the USGS analysis, I no doubt would learn much.<br />
<a name='more'></a><br />
In Figure 1 three scenarios are presented which represent the F95, F50, and F5 cases from the USGS analysis. F95 means there is a 95% probability that the TRR will be higher than 6 Gb and likewise for F50=8.4 Gb and F5=11.3 Gb. It is assumed in all three scenarios that 175 wells per month are added from Dec 2013 to Jan 2032, about 45,000 wells total. All oil fields have sweet spots, which are limited in area. When these more productive areas run out of space for more wells, then less productive areas must be chosen for drilling and the estimated ultimate recovery(EUR) of the average new well will decrease.<br />
<br />
The average new well EUR decrease can be thought of as a shift in the cumulative output curve. In the chart below, the average new well from Jan 2015 is compared against an average new well from Jan 2018. So far there is no evidence that such a decrease in new well EUR has begun, the average well through 2012 looks very much like the new wells from 2008, in my medium scenario I assume the average new well EUR remains at this 2008 to 2012 level until Jan 2015. In the figure below I have guessed at how the cumulative output curve might shift from Jan 2015 to Jan 2018.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEipfHwmAN9DhfIKcB3XtKPNnlrTUKMmzZ3w45f2pt9nkZne0DeRyatxiIoTOnJdgBcZEcS067wfqTbZY_0CSl9mqgev8BVC8FZCwqQPHC4n7zp7EUKOfM3BcKqyO4ngCuj7kwJNXRI5xsVv/s1600/blog140206fig2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEipfHwmAN9DhfIKcB3XtKPNnlrTUKMmzZ3w45f2pt9nkZne0DeRyatxiIoTOnJdgBcZEcS067wfqTbZY_0CSl9mqgev8BVC8FZCwqQPHC4n7zp7EUKOfM3BcKqyO4ngCuj7kwJNXRI5xsVv/s1600/blog140206fig2.png" height="192" width="320" /></a></div>
<div style="text-align: center;">
Figure 2(click on chart for larger view)</div>
<div style="text-align: center;">
</div>
<div style="text-align: left;">
</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;"><span style="mso-tab-count: 1;">My medium(8.4 Gb) scenario assumes that the average new well EUR remains at its present level of about 350 kb over 30 years until Jan 2015 and then the EUR starts to decrease. By Jan 2018 the cumulative output curve has shifted downward to the lower curve in Fig 2 (there are actually 35 of these curves between the two shown, one for each month, the chart would be a mess if they were all shown). A point of confusion is the distinction between decline rate and the rate of EUR decrease. In figure 2 the decline rate decrease for the Jan 2015 well is related to the slope of the upper curve and how it becomes less steep as one moves along the curve from left to right(steep near 0 months and flatter near 360 months). The number of months it takes to shift from the higher curve to the lower curve determines the rate of decrease in new well EUR. In a lower TRR scenario such a shift might take 6 months (a higher rate of decrease of new well EUR) and in a higher TRR scenario maybe 30 months (a lower rate of decrease).</span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;"><span style="mso-tab-count: 1;">So to create the three scenarios I arbitrarily assume the EUR decrease starts in December 2013 and goes from no decrease to its maximum rate of decrease over a 6 month period for the lowest scenario. Then I vary the maximum rate of EUR decrease so that the TRR is 6 Gb, in this case a 20.5% annual rate of decrease in new well EUR is the result. For the medium scenario the EUR decrease begins in Dec 2014 and reaches the maximum rate of new well EUR decrease of 14.5% per year in June 2016 and the high scenario the decrease in EUR begins in Dec 2016 and reaches the maximum rate of decrease of 9% per year in June 2018.</span></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjFEcRR7mCBTQAILhwtO-Dcy1pVvHo8RZQR68usPLpEZVvw_iIIsRlmN6i-OIf6VfYVFNurPjrc5xUF9bI0uy43ycXUujck8MP4Vt-J3e3pm_gAWQ3Snw6j9k7ENUBvephdUA0TM4d61FVp/s1600/blog140206fig3.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjFEcRR7mCBTQAILhwtO-Dcy1pVvHo8RZQR68usPLpEZVvw_iIIsRlmN6i-OIf6VfYVFNurPjrc5xUF9bI0uy43ycXUujck8MP4Vt-J3e3pm_gAWQ3Snw6j9k7ENUBvephdUA0TM4d61FVp/s1600/blog140206fig3.png" height="213" width="320" /></a></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
Figure 3 (click to enlarge)</div>
<div align="left" class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
Figure 3 shows how the new well EUR changes (blue curve) over time and the red curve shows how the annual rate of decrease in new well EUR (red curve right vertical axis) changes from Jan 2014 to Jan 2028. This is for the medium (F50) scenario.</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
Using the scenarios developed for figure 1, I will now introduce economic assumptions to determine the economically recoverable resource(ERR) for each of the low, medium and high scenarios, the ERR will always be less than or equal to the TRR. The figure below gives the real oil price in 2013$ per barrel on the right vertical axis and the real well cost, 30 year real net present value (NPV), and real profit in millions of 2013$, the oil price is based on the EIA's 2013 AEO reference case. This chart is from the medium scenario.</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh85qYJy_qpI3jk3tad3NNO3971onVvm-nwuX_cGQI05Gl-NgRqW3oL8lVeBUJun7DwagBK8dmqHeITemT1ycNYuUjHSBm9JzOiyqgauPycJ0o2MUMcaCGZ8yPljFgigzgw1cDLiCIjemqu/s1600/blog140206fig4.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh85qYJy_qpI3jk3tad3NNO3971onVvm-nwuX_cGQI05Gl-NgRqW3oL8lVeBUJun7DwagBK8dmqHeITemT1ycNYuUjHSBm9JzOiyqgauPycJ0o2MUMcaCGZ8yPljFgigzgw1cDLiCIjemqu/s1600/blog140206fig4.png" height="204" width="320" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
Fig 4-click to enlarge</div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div align="left" class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: left;">
The other economic assumptions are an annual discount rate of 15%, royalties and taxes are 26.5 %, operating expenses(OPEX) are $4/barrel, and transportation costs are $12/barrel where all $ are 2013$ and all calculations are in real (2013$) terms. See this <a href="http://oilpeakclimate.blogspot.com/2013/09/update-to-north-dakota-bakken-three.html" target="_blank">post</a> in the text after fig 3 for more information on how these figures are used. Previously other costs of $3/ barrel were included, but based on information from Rune Likvern, sales from natural gas output probably covers these "other costs" so they have been eliminated. Any of these economic assumptions will likely be incorrect and are impossible to predict over 5 years let alone 20 years, so these scenarios are very likely to be inaccurate over periods of more than 2 or three years. If any of the many guesses underlying these scenarios should prove correct then the scenarios might be accurate, that is part of the reason for including a range of scenarios. Prices, well costs, and transportation costs could all be lower or higher in the future than what I have chosen, lower transportation or well costs would tend to raise output and lower oil prices would tend to reduce output if all else remains equal.</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
Note the sharp bend in the profit and NPV curve in figure 4 in 2019, this is because the number of new wells added each month is reduced as profits approach zero, for the medium scenario for ERR we have:</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiMSQ8xGRqSjYrja5QfqDowoPMPIvIH92LAK__Dtj-59a2yHfAQYD5cOR9xiwsHfSlcOtwvwzIEK5wC4POriJ8GO3j5zZ5Ek_rncIp1zmKH7l10KtTRVNzXZGa4J550_yzATMZ02_2F_czd/s1600/blog140206fig5.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiMSQ8xGRqSjYrja5QfqDowoPMPIvIH92LAK__Dtj-59a2yHfAQYD5cOR9xiwsHfSlcOtwvwzIEK5wC4POriJ8GO3j5zZ5Ek_rncIp1zmKH7l10KtTRVNzXZGa4J550_yzATMZ02_2F_czd/s1600/blog140206fig5.png" height="233" width="320" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
Figure 5-click to enlarge</div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: left;">
Note the kink in the # of wells curve where the wells added each month is reduced substantially. This reduction in the number of wells added also reduces the rate of decrease in new well EUR as shown in the following chart for the medium scenario:</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjF52Udq2zarNq-QPRX5qPt5yUuNIW5JxdanWKXiVXX5GimDTq6l67nHAzakdkj8bgNEbnmQR6eMemU23JknE_HSR_DOrIX21TKslmQ7CRl74NEiqKXaZ2kJqHzRtULk9_hbdPrTVSfZkF-/s1600/blog140206fig6.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjF52Udq2zarNq-QPRX5qPt5yUuNIW5JxdanWKXiVXX5GimDTq6l67nHAzakdkj8bgNEbnmQR6eMemU23JknE_HSR_DOrIX21TKslmQ7CRl74NEiqKXaZ2kJqHzRtULk9_hbdPrTVSfZkF-/s1600/blog140206fig6.png" height="213" width="320" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
Figure 6-click to enlarge</div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: left;">
The chart below gives the range of output for the USGS F95 to F5 estimates when the economic assumptions above are used. The range of ERR estimates is 5.1 Gb to 10.7 Gb with a best estimate of 7.4 Gb. The medium scenario peaks in 2016 to 2017 with peak output of about 1.2 MMb/d.</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiaEi389XxPJ-MoN2GsLeXQBDU01sDZ2zwFYQpZAm1Qi0aCZyP2Wi2_L53bVYZMGrVtlqsJ_MbcMwxj5i9ocrohiXRLNR58shIrlm3gAYtL2x8HbpsVNSk9SI_olHl11cth3TLkk75Y8_Bs/s1600/blog140206fig7.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiaEi389XxPJ-MoN2GsLeXQBDU01sDZ2zwFYQpZAm1Qi0aCZyP2Wi2_L53bVYZMGrVtlqsJ_MbcMwxj5i9ocrohiXRLNR58shIrlm3gAYtL2x8HbpsVNSk9SI_olHl11cth3TLkk75Y8_Bs/s1600/blog140206fig7.png" height="242" width="320" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
Figure 7-click to enlarge</div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: left;">
It would be great to get some feedback from industry pros on the well costs, oil prices, and other economic assumptions I have used and any obvious problems with the analysis.</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
Dennis Coyne</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
</div>
Unknownnoreply@blogger.com3tag:blogger.com,1999:blog-5552647839482265343.post-36373024711806990152013-12-13T16:28:00.000-05:002013-12-14T13:27:57.718-05:00When will US LTO(light tight oil) Peak?The rapid rise in oil output since 2008 has the mainstream media claiming that the US will soon be energy independent. US Crude oil output has increased about 2.8 MMb/d (56%) since 2008 and about 2 MMb/d is from the shale plays in North Dakota ( Bakken/Three Forks) and Texas (Eagle Ford). My modeling suggests that a peak from these two plays may be reached by 2016, other shale plays (also known as light tight oil [LTO] plays) may be able to fill the gap left by declining Bakken and Eagle Ford output until 2020, beyond that point we will see a rapid decline.<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEih_ivw1UQKSotoaov8acoMzVdiWjGRQRvFxmjKmRjx6NTolwAi8XuO6hVl6c1ekimUKFg1l0f6TkaL8HzJstTlJKfp28Se23FHxd49NdksyjbDKKfxvvlN02RE2A7lHLwAUc0uzy24Slg9/s1600/ltofig3.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEih_ivw1UQKSotoaov8acoMzVdiWjGRQRvFxmjKmRjx6NTolwAi8XuO6hVl6c1ekimUKFg1l0f6TkaL8HzJstTlJKfp28Se23FHxd49NdksyjbDKKfxvvlN02RE2A7lHLwAUc0uzy24Slg9/s1600/ltofig3.png" height="266" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">US Light Tight Oil to 2040</td></tr>
</tbody></table>
<span style="font-family: Calibri;">There are two main views:</span> <br />
<div>
<ol>
<li><div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: Calibri;">There will be little crude plus condensate (C+C) output from any plays except the Bakken/Three Forks in North Dakota and Montana and the Eagle Ford of Texas.<o:p></o:p></span></div>
</li>
<li><div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: Calibri;">The other LTO plays will come to the rescue when the Bakken and Eagle Ford reach their peak and keep LTO near these peak levels to about 2020 with a slow decline in output out to 2040.</span></div>
</li>
</ol>
</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Where are these “other LTO plays”?<span style="mso-spacerun: yes;"> </span>There are a couple of these in Oklahoma and Texas (in the Permian basin, Granite Wash, Mississippian basin), the Appalachian, the Niobrara in Colorado, and others (see slide 17 of the USGS presentation link below).<span style="mso-spacerun: yes;"> </span>Is it possible for these LTO plays to offset future declines in the Bakken and Eagle Ford?<span style="mso-spacerun: yes;"> </span>I hope to answer that in this post.</span><br />
<a name='more'></a><br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">When doing my modeling of the Eagle Ford, I needed an estimate of the technically recoverable resource(TRR) for that play.<span style="mso-spacerun: yes;"> </span>The April 2013 USGS Bakken Three Forks Assessment roughly doubled their earlier assessment of that play (mostly this was due to not including the Three Forks in their earlier assessment.)<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">see slide 17 at the USGS Bakken/Three Forks Assessment <a href="http://energy.usgs.gov/Portals/0/Rooms/oil_and_gas/noga/multimedia/2013_Bakken_ThreeForks_Assessment.pdf" target="_blank">presentation.</a></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;"><span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span></span><span style="font-family: Calibri;">In light of this I decided to increase the earlier (1.73 Gb) Eagle Ford estimate of undiscovered technically recoverable resources(TRR) from the USGS by a factor of 2.3 to 4 Gb.<span style="mso-spacerun: yes;"> </span>To determine total TRR, the proved reserves and oil already produced need to be added to the undiscovered TRR, in the case of the Eagle Ford output to the end of 2011 was only 0.1 Gb and proved reserves were about 1 Gb (check the EIA data on the change in proved reserves since 2009 in <a href="http://www.eia.gov/dnav/pet/pet_crd_pres_dcu_RTX01_a.htm" target="_blank">districts 1</a> and <a href="http://www.eia.gov/dnav/pet/pet_crd_pres_dcu_RTX02_a.htm" target="_blank">district 2</a> of Texas):<o:p></o:p></span></div>
<span style="font-family: Calibri;">So for the Eagle Ford estimated TRR would be 4+1=5 Gb.</span><br />
<span style="font-family: Calibri;"><o:p></o:p></span><br />
<span style="font-family: Calibri;">For the North Dakota Bakken undiscovered TRR is 5.8 Gb, 2.2 Gb of proven reserves, and 0.5 Gb of oil produced for a Total TRR of 8.5 Gb. See my <a href="http://oilpeakclimate.blogspot.com/2013/09/update-to-north-dakota-bakken-three.html" target="_blank">previous post</a> for more details.<o:p></o:p></span><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">For the rest of the US we can deduct Bakken (7.38 Gb), Eagle Ford(1.73 Gb), and Alaska(0.94 Gb) from the US total (13 Gb) which leaves about 3 Gb, now assume that a reassessment by the USGS increases this by a factor of 2.3 to 7.2 Gb, then add the Montana Bakken/Three Forks (1.6 Gb) and reserves from the Permian basin and other plays (1.3 Gb) to get 9.2 Gb for a TRR estimate for US "other LTO"(Total LTO minus [North Dakota Bakken/Three Forks plus Eagle Ford play]). Total TRR for all US LTO is 22.7 Gb. (I have assumed LTO from Alaska's North Slope will not be produced.)</span></div>
<span style="font-family: Calibri;">For the North Dakota Bakken/Three Forks and Eagle Ford plays we use the following economic assumptions to find the Economically Recoverable Resource (ERR):</span><br />
<span style="font-family: Calibri;"></span><br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">OPEX (operating expenditure) is $4/barrel, royalty and tax payments are 24.5 % of wellhead revenue, annual discount rate is 12 % (used to find the net present value[NPV] of a well over its 30 year life). Transport costs are $12/barrel for the Bakken and $3/barrel for the Eagle Ford.<span style="mso-spacerun: yes;"> </span>Well costs are 9 million for the Bakken in Jan 2013 and fall by 8% per year to 7 million in 2016 and for the Eagle Ford well costs are $8 million in Jan 2013 and fall 8% per year to $6.5 million in mid 2017.<span style="mso-spacerun: yes;"> </span>Real oil prices follow the EIA’s 2013 Annual Energy Outlook reference case to 2040 and then continue to rise at the 2030 to 2040 rate to the end of the scenario.<span style="mso-spacerun: yes;"> </span>All costs and prices are in May 2013$ so they are real prices rather than nominal prices.</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">The concept of ERR is discussed in detail in <a href="http://oilpeakclimate.blogspot.com/2013/09/update-to-north-dakota-bakken-three.html" target="_blank">the Sept, 2013 post</a> after figure 3.</span><br />
<span style="font-family: Calibri;"></span><br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0lIPSoksC3kQjpCJDN1xssoWFD7mfxlw8_p1DGDpkcVj_00KQO-2jMvteQ5PBM7hSbApe_QzzLfIVvQW8tVZWuWrgBofLsXD-hdD5Ls6KXKdseZaRwMyP7lxLpMN1nylbiuY7XV-dMzAY/s1600/ltofig1.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"></a><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhGlgMltHK4Y_-TKmqLmpZbmyW8FUUhf8dFMvx-JOFS6ALHqdPdp_W_bsRCZFjVDpYnGj1x3AGid7PuO14WY0omUA6xoClcAsVUQtDjCoerUjhTjpa83LeQW1i2cM51vHj4MKfIe4IIBGIX/s1600/ltofig1.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhGlgMltHK4Y_-TKmqLmpZbmyW8FUUhf8dFMvx-JOFS6ALHqdPdp_W_bsRCZFjVDpYnGj1x3AGid7PuO14WY0omUA6xoClcAsVUQtDjCoerUjhTjpa83LeQW1i2cM51vHj4MKfIe4IIBGIX/s1600/ltofig1.png" height="266" width="400" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
Figure 1</div>
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0lIPSoksC3kQjpCJDN1xssoWFD7mfxlw8_p1DGDpkcVj_00KQO-2jMvteQ5PBM7hSbApe_QzzLfIVvQW8tVZWuWrgBofLsXD-hdD5Ls6KXKdseZaRwMyP7lxLpMN1nylbiuY7XV-dMzAY/s1600/ltofig1.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"> </a><br />
<br />
<span style="font-family: Calibri;">I will use the Eagle Ford play as my template because it has ramped up much more quickly than the Bakken, this is a very optimistic scenario and it is unlikely that there will be greater output from US LTO than the scenario I will present. </span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">The underlying assumptions are:</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">-the average well will look like the average Eagle Ford well</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">-ramp up of additional wells will be slow until the peak of combined Bakken and Eagle Ford output</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">-in 2015 the Bakken and Eagle Ford peak and reach break even levels of profitability by 2016</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">-in response to reaching break even the number of new wells per month added in both the ND (North Dakota) Bakken and the Eagle Ford are reduced substantially.</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">-new wells added in the other US LTO plays ramp up as the rate that wells added to the Bakken and EF are reduced</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">As before we adjust the decrease in new well EUR (both when it begins and how long it takes to reach its maximum) so that the TRR matches our estimate of 9.2 Gb.<span style="mso-spacerun: yes;"> </span>In this case the EUR starts to decrease in July 2018 and reaches its maximum monthly rate of decrease of 2.37 % in June 2020. The “other LTO” peaks in 2020 at about 2 MMb/d.</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">To determine ERR we make identical economic assumptions as our Eagle Ford case above except that we assume transport costs are $5/barrel on average ($3/barrel in EF case).<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
<o:p><span style="font-family: Calibri;"> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh8t9eveiMoVwkurSjgJAmPJqRncUlEfZjknrlgDCjlVdDOZhpKwD4HjvF6kYM84EyYLHIIkeVyJykAFp65ywWDCukGhN8OBPY0nZfEUnTpB_9SnoCc8A-cH9rheBUDMX_WwL9ehyOIsPhy/s1600/ltofig2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh8t9eveiMoVwkurSjgJAmPJqRncUlEfZjknrlgDCjlVdDOZhpKwD4HjvF6kYM84EyYLHIIkeVyJykAFp65ywWDCukGhN8OBPY0nZfEUnTpB_9SnoCc8A-cH9rheBUDMX_WwL9ehyOIsPhy/s1600/ltofig2.png" height="263" width="400" /></a></span></o:p></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
<o:p><span style="font-family: Calibri; font-size: x-small;">Figure 2</span></o:p></div>
<span style="font-family: Calibri;">When we combine our North Dakota Bakken/Three Forks, Eagle Ford, and “other LTO” models we get the following chart:<o:p></o:p></span><br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEih_ivw1UQKSotoaov8acoMzVdiWjGRQRvFxmjKmRjx6NTolwAi8XuO6hVl6c1ekimUKFg1l0f6TkaL8HzJstTlJKfp28Se23FHxd49NdksyjbDKKfxvvlN02RE2A7lHLwAUc0uzy24Slg9/s1600/ltofig3.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEih_ivw1UQKSotoaov8acoMzVdiWjGRQRvFxmjKmRjx6NTolwAi8XuO6hVl6c1ekimUKFg1l0f6TkaL8HzJstTlJKfp28Se23FHxd49NdksyjbDKKfxvvlN02RE2A7lHLwAUc0uzy24Slg9/s1600/ltofig3.png" height="266" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 3</td></tr>
</tbody></table>
<span style="font-family: Calibri;">This scenario is indeed optimistic, but not nearly as optimistic as the EIA’s scenario for LTO in the 2013 Annual Energy Outlook.<span style="mso-spacerun: yes;"> </span>For comparison I computed the ERR for 2013 to 2040 for my US LTO scenario, it was 17.6 Gb over that period, the EIA scenario has a total output of 24.5 Gb over the same period, 40% higher output than an already optimistic scenario.<span style="mso-spacerun: yes;"> </span>My guess is that reality will lie between the blue curve and the green curve with the most likely peak around 2018+/- 2 years at about 3.1+/- 0.2 MMb/d.</span><br />
<span style="font-family: Calibri;"></span><br />
<span style="font-family: Calibri;">Dennis Coyne<o:p></o:p></span><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Calibri;"> Appendix Bakken and Eagle Ford Details</span></o:p><br />
I am still working on this section, check back for details</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Using the USGS TRR estimates as our guide we assume new well estimated ultimate recovery (EUR) eventually decreases as the room for new wells in the most productive areas (the sweet spots) starts to run out.<span style="mso-spacerun: yes;"> </span>If new wells are producing an average of 450 kb over 30 years before this decrease begins, we assume at some point, say June 2014 the new well EUR starts to decrease maybe by 0.4% per month, the rate of decrease continues to increase for 18 months so that after 18 months the new well EUR is decreasing at a monthy rate of 7.2 %.</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;"></span><br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgyEn50HbWBrKaf46UExu_4FKOm54dR6HyskFgpuWb2ecrFW-Z69aBD9wCXEUQwnMcyJblEStTMaoiPK36IU-s3_x9GNFvRI5bPuI26JSgpjyPoQw_STc1yDsgUFmQhzJNlCefApm7UYphY/s1600/ltofig4.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgyEn50HbWBrKaf46UExu_4FKOm54dR6HyskFgpuWb2ecrFW-Z69aBD9wCXEUQwnMcyJblEStTMaoiPK36IU-s3_x9GNFvRI5bPuI26JSgpjyPoQw_STc1yDsgUFmQhzJNlCefApm7UYphY/s1600/ltofig4.png" height="266" width="400" /></a><br />
<br />
</div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<div style="text-align: center;">
<o:p><span style="font-family: Calibri;"> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEir1hywUCkToY15sb9bKY4x5Nh5sxLAN36HqCNCSRDrdoVydNYQY20dr33WAUI0iSSr9neYxqtaMJ3JwX5NyQWiygr8zpjQo-h0DXXwLBplNmImxJB6_y_ohSY-PwGl7dKimuFoDtbOgaU9/s1600/ltofig5.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEir1hywUCkToY15sb9bKY4x5Nh5sxLAN36HqCNCSRDrdoVydNYQY20dr33WAUI0iSSr9neYxqtaMJ3JwX5NyQWiygr8zpjQo-h0DXXwLBplNmImxJB6_y_ohSY-PwGl7dKimuFoDtbOgaU9/s1600/ltofig5.png" height="266" width="400" /></a></span></o:p></div>
<div style="text-align: center;">
<o:p><span style="font-family: Calibri;"></span></o:p> </div>
<div style="text-align: center;">
<o:p></o:p> </div>
<o:p><span style="font-family: Calibri;"></span></o:p><br />
<o:p></o:p> </div>
Unknownnoreply@blogger.com7tag:blogger.com,1999:blog-5552647839482265343.post-53734928678433979642013-10-23T09:27:00.002-04:002013-12-13T12:08:43.093-05:00Exploring Future Bakken Decrease in Estimated Ultimate Recovery (EUR)<br />
<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEht7-TuYYEvfmA0NeZjw10txAeEaumBEGTJP6LBkoUEWDJ62t0ENMiMFkMGy2U9ByWaDFSF7hyphenhyphenPWMGwcg5J3UXIHMRHElSrIL_0SMyignd0uyAg3gY2A5Ml7-z4OCijoVsmMg4d_re1Yxkj/s1600/blog131019f0.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEht7-TuYYEvfmA0NeZjw10txAeEaumBEGTJP6LBkoUEWDJ62t0ENMiMFkMGy2U9ByWaDFSF7hyphenhyphenPWMGwcg5J3UXIHMRHElSrIL_0SMyignd0uyAg3gY2A5Ml7-z4OCijoVsmMg4d_re1Yxkj/s1600/blog131019f0.png" height="311" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Fig 1</td></tr>
</tbody></table>
In this post I will explore a number of different scenarios for future North Dakota Bakken crude oil production using an updated interactive spreadsheet which can be downloaded <a href="https://docs.google.com/file/d/0B4nArV09d398Ylk1ZE83aXlRSFk/edit?usp=sharing">here</a>. More details can be found later in the post (scroll down to fig 12 and read the paragraph above that figure). The new spreadsheet allows the user to change when the decrease in new well EUR begins and the length of time from the start of the decrease in EUR to the maximum monthly rate of decrease. The earlier spreadsheet presented in my previous post had these two parameters fixed at 6 months after June 2013 for the start of the EUR decrease and 18 months for the length of time for the rate of EUR decrease to reach its maximum.<br />
<a name='more'></a><br />
In each of the cases presented below the start of the decrease in new well EUR is referenced with respect to June 30, 2013, so 6 months becomes Jan 2015 (or Dec 31, 2014) and 2 years to the start of the EUR decrease would mean June 2015.<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjynExdnPGJvN3uYYe9_A9VR9jlMZg8L8W3AtcDsxAs1A4RCpvqV7IFn7TRX0n8XMRwXdQS7gojoYrQgbQS4BqXwfrdlo4P-TemwUVorT-J7g2C8lprCZc_LxiQKLscvIDKDURxk-NsG2P4/s1600/blog131019f0.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjynExdnPGJvN3uYYe9_A9VR9jlMZg8L8W3AtcDsxAs1A4RCpvqV7IFn7TRX0n8XMRwXdQS7gojoYrQgbQS4BqXwfrdlo4P-TemwUVorT-J7g2C8lprCZc_LxiQKLscvIDKDURxk-NsG2P4/s1600/blog131019f0.png" height="311" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Fig 1</td></tr>
</tbody></table>
<span style="font-family: Calibri;">Case 1: EUR decrease begins in June 2015, the maximum
monthly rate of decrease in EUR is reached in June 2020 (C12=24 and C13=60 in
spreadsheet), maximum annual decrease in EUR is 18.5 %.<o:p></o:p></span><br />
<br />
<div class="separator" style="clear: both; margin: 0in 0in 8pt; text-align: center;">
<img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhyVNZUlh2daxUGEp_wRg6HJitT1CpE0PyO74gckgPAyqY9yG9JGvt7kWFU_8Gs5-Ojc8iufrpjCfQ6suYXXm1wuGUhT6dLeJgvQ95Qs_NoHZMT9iwiKAIGzuHkn10-ghb7s1ywIhhnU2Rh/s1600/blog131019fa.png" height="313" width="400" /></div>
<div align="center" class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;"><span style="mso-no-proof: yes;">Fig 2</span></span></div>
<span style="font-family: Calibri;">Case 2: EUR decrease begins in June 2015, the maximum
monthly rate of decrease in EUR is reached in June 2020 (C12=24 and C13=60 in
spreadsheet), note the lower maximum annual decrease in EUR of 6.3%( this is
the only change from case 1 to case 2.)<o:p></o:p></span><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">These two scenarios are quite optimistic, especially the
second which under reasonable economic assumptions never reaches breakeven and
thus all of these resources would be economically recoverable.<span style="mso-spacerun: yes;"> </span>Based on the estimates of the United States
Geological Survey(USGS), the chances of the technically recoverable resources (TRR)
being above 11.5 Gb are less than 5 %.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Even the first scenario with the lower TRR of 8.5 Gb (mean
USGS estimate) is fairly optimistic as it assumes that new well EUR does not
begin to decrease until June 2015 and then takes 5 years to reach the maximum
monthly rate of decrease in EUR.<span style="mso-spacerun: yes;"> </span>This
lower scenario reaches breakeven in 2021 and the economically recoverable
resources (ERR) would be somewhat lower than 8.5 Gb (likely about 7.5 Gb).<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">The cases that follow add 200 wells per month(which matches
the most recent two months of data) rather than 175 wells per month (as in case 1 and 2). Also there are
changes in when the new well EUR starts to decrease and the length of time it
takes to reach the maximum rate of decrease.</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
<span style="font-family: Calibri;"><o:p></o:p></span> <img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEixFzlVqB6at4lPUiukuqKrEMiTRhObB4tqUR3oUeO4IrMVq14dHHKuryimzEr0kn1N9NFEAEQjdtLMstBsVi1j3yMqEP_6qd7mpqMTm5B9CkAnGy5T7QwGXwizORwuY02xYYESBy4GPNfG/s1600/blog131019f1.png" height="313" width="400" /></div>
<div align="center">
<span style="font-family: Calibri;"><span style="mso-no-proof: yes;">Fig 3</span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Case 3: EUR Decrease starts Jan 2014(6 months), maximum
monthly EUR decrease in June 2015(24 months), maximum annual rate of EUR
decrease is 12.5 %.</span></div>
<div class="separator" style="clear: both; text-align: center;">
<img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhYRjbYAA6bHmw1fiiCHJH-EejC1w7edEo7MZhd2EQXBoE8WJuRmGO-ZMvRg7vmd8d3L_rZ88u0G4cSRAEASO_PKpGcBxFmO1XAMLIRsK9SxuGkrE698nlxsrPbC7YwWEbK-xc3oW352hj-/s1600/blog131019f2.png" height="313" width="400" /></div>
<div class="separator" style="clear: both; text-align: center;">
Fig 4</div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Case 4: EUR decrease starts in June 2015(2 years), maximum
monthly EUR decrease in June 2017(4 years), same as case 3 except for change in
start of EUR decrease (18 months later) and slower ramp up to maximum rate of
decrease (24 months instead of 18 months). Maximum annual rate of EUR decrease
is 12.5 %.<o:p></o:p></span></div>
<div class="separator" style="clear: both; text-align: center;">
<img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi8_vx2h3eA3W_AAhXqNhUwHXYK9wombU8rGttIIY-vhOLr9z80ywBxRcb4T-FShcxeWHum7J_UM4q7xMIhmXylzVGDOIjh8O8Z0Mi19QGBLq1JgFLKDnZ4VbFdElPpbjwAZ-lr299yZp9K/s1600/blog131019f3.png" height="313" width="400" /></div>
<div class="separator" style="clear: both; text-align: center;">
Fig 5</div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Case 5: EUR decrease starts in June 2016 (3 years), maximum
monthly rate of EUR decrease in June 2019 (6 years), otherwise same as case 3
and 4.<span style="mso-spacerun: yes;"> </span>The TRR is close the USGS F5
estimate of 11 Gb.<o:p></o:p></span></div>
<div class="separator" style="clear: both; text-align: center;">
<img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3wAa2DNOKBToiM4TTxj1LEYeBTeo9DR9rBTmtIPQbw2ebsdQCTcHJnSoEZZ6i_3mPHdh2-A6MyNZCHC82J3AUj-Y5G34tvST0SynlEEuVHFpJl9DqCxDA6SO5x05mAAbM79PwGzAURPNo/s1600/blog131019f4.png" height="311" width="400" /></div>
<div class="separator" style="clear: both; text-align: center;">
Fig 6</div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Case 6: EUR decrease starts in June 2016(3 years), maximum
monthly rate of EUR decrease in June 2019(6 years).<span style="mso-spacerun: yes;"> The maximum a</span>nnual rate of EUR decrease is 24 % in this
case, otherwise same as case 5.<o:p></o:p></span></div>
<div class="separator" style="clear: both; text-align: center;">
<img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjgdEvVeUYuDyTGZ3zqIDErzUFdY5vFZbzfxze_vC9K7zeL-ytY6T0E_O9TLCy00Mu3ouy6wfG8kSNphRR8X8O87m3xZ6QgGsqLE2GJ64T-sLIhU1oCObKWYY_50jakkfXoZfOhXBi8dpa-/s1600/blog131019f5.png" height="311" width="400" /></div>
<div class="separator" style="clear: both; text-align: center;">
Fig 7</div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Case 7: EUR Decrease starts Jan 2014(6 months), maximum
monthly EUR decrease in June 2015(24 months). Similar to case 3 except that the
maximum annual rate of EUR decrease is 24 % instead of 12.5 %.<span style="mso-spacerun: yes;"> </span>The TRR is close to the USGS F95 estimate of
6 Gb.<o:p></o:p></span></div>
<div class="separator" style="clear: both; text-align: center;">
<img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhCflfhLvBYuTyfV0jCKHtZc-dvGuHv5VzTwR6-UkjlJy_kloDBtnxCHj6SZZMT23VpRRE605HBTX60PX5278IqDBzE43mOKTPLAMkBDt-iRHsflu6jijpdnoOdeAkHZopp60lUBU3OAFrx/s1600/blog131019f6.png" height="311" width="400" /></div>
<div class="separator" style="clear: both; text-align: center;">
Fig 8</div>
<span style="font-family: Calibri;"><span style="mso-no-proof: yes;"></span></span><br />
<span style="font-family: Calibri;">Case 8: This scenario assumes no decrease in new well EUR, cases
3 to 8 assume about 48000 producing wells in 2030 and no more wells added after
reaching 48000 wells producing.<span style="mso-spacerun: yes;"> </span>This scenario is for those who ask, “what if technological advances allow us
to keep new well EUR from falling?”<span style="mso-spacerun: yes;"> </span>A
problem with the scenario presented in case 8 is that oil company profits per
well would be very high at the point that new wells are no longer added which
does not make sense. So I developed a more optimistic case.</span><br />
<span style="font-family: Calibri;"></span><br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<div class="separator" style="clear: both; text-align: center;">
<img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg59Dg3Hs4UL8ZpxT0eHMQQ4mjixJn9INb8jKrbV-4OTDdTZdVuZbdJcc8yN1YBjsoPA7RP3gegs3QOCFsmnYihv7cb696sohTWp_nmlGwZ56La1888FiVV30UIChGhHKJ1LYzvT0rDL-Ig/s1600/blog131019f7.png" height="311" width="400" /></div>
<div class="separator" style="clear: both; text-align: center;">
Fig 9</div>
<span style="font-family: Calibri;"></span><br />
<span style="font-family: Calibri;">Case 9: New well EUR decrease starts in June 2033(20 years),
maximum monthly EUR decrease is reached in June 2038(25 years). <span style="mso-spacerun: yes;"> </span>The maximum annual rate of new well EUR
decrease is 10 %.<span style="mso-spacerun: yes;"> </span>This scenario also
differs from case 8 because wells are added at faster rate of 250 wells per
month (3000 per year) and the total producing wells reaches almost 90,000
wells.<span style="mso-spacerun: yes;"> </span>Note that the x-axis scale has
been changed for case 9 in order to show the rapid drop in output after 2040.
The TRR is this case is 29 Gb almost 3 times higher than the USGS F5 (5 %
probability) estimate.<span style="mso-spacerun: yes;"> </span>To call this
scenario wildly optimistic would be an understatement.<span style="mso-spacerun: yes;"> </span></span> </div>
<div class="separator" style="clear: both; text-align: center;">
<img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifxdLpMQNezRjErseRd4vZe44zP9dmG8j0PHu9CQh3DhbkdEN7QjHEcbNR2Xny8sS5bxA_wlbCX6aDI3wrJbpliOHYRebZeQF8C-NVY5S8fi6II-7z6EJ4k8oJmXyNuwFIBOqmKdmBkF4t/s1600/blog131019f8.png" height="311" width="400" /></div>
<div class="separator" style="clear: both; text-align: center;">
Fig 10</div>
<span style="font-family: Calibri;"><span style="mso-no-proof: yes;"></span></span><br />
<span style="font-family: Calibri;">Case 10:<span style="mso-spacerun: yes;"> </span>To balance
the very optimistic case 9, I created the case 10 scenario.<span style="mso-spacerun: yes;"> </span>EUR decrease begins in Jan 2014 (6 months)
and the maximum rate of EUR decrease is reached in Jan 2015 (18 months), the
maximum annual rate of decrease is 40 % and new wells are only added for 180
months (15 years) and the rate that new wells are added is 175 wells/month
rather than 200 wells/month.<span style="mso-spacerun: yes;"> </span>Total
producing wells reaches about 38,000 wells compared to 48,000 wells in cases 3
to 8.<span style="mso-spacerun: yes;"> </span>Breakeven is reached in the middle
of 2015 so fewer wells will be added beyond that date when economics are
considered.</span><br />
<span style="font-family: Calibri;"><o:p></o:p></span><br />
<div class="separator" style="clear: both; text-align: center;">
<img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjXZINhhdlyDmC7_gKE5LcNbwguFUPxR07kUyCqYj42ZyrNSJYhoMV-hHgFqnAjxazZ6Ig8ZXQDjy-Yj_slfwHfV2n2yxwImC0QYPjEnnuIPrHJCnVoFvcxsrlJJBQ50rRe1SYLVkQR0HeO/s1600/blog131019f9.png" height="311" width="400" /></div>
<div class="separator" style="clear: both; text-align: center;">
Fig 11</div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Case 11:<span style="mso-spacerun: yes;"> </span>This case
considers the economically recoverable resources (ERR) for case 10, note that
the future wells per month of 175 wells/month only applies up to Dec 2014. <span style="mso-spacerun: yes;"> </span>After that, wells added per month are reduced
by 10 each month in order to keep profits positive. <span style="mso-spacerun: yes;"> </span>From May 2016 to Aug 2040 only 9 new wells per
month are added and total producing wells reach about 13000 wells in 2040.<span style="mso-spacerun: yes;"> </span>At this point new wells are no longer
profitable unless real oil prices continue to rise. <span style="mso-spacerun: yes;"> </span>Note that as the wells added per month falls to
9 wells/mo, the rate of decrease in new well EUR also falls to an annual rate
of 2.5 % per year over the period of 2017 to 2040 from a maximum of 33 % in
2015.<o:p></o:p></span></div>
The economic assumptions used for case 11 (all $ amounts are in May 2013 $) are: $9 million for Jan 2013 well cost falling by 8 % per year to $7 million (in Feb 2016) and remaining at that level in real $, real oil prices follow the EIA's AEO 2013 reference case, OPEX are $4/barrel, other costs are $3/barrel, transport costs are $12/barrel, royalty and taxes are 20 % of wellhead revenue (refinery gate price minus transport cost times number of barrels), and the annual discount rate is 12.5 %.<br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;"><span style="mso-spacerun: yes;"> </span>I think that cases 10
and 11 are implausible, but I am trying to cover both the pessimistic and optimistic
view points.<span style="mso-spacerun: yes;"> </span>I do think that that case
11 is more likely than case 9, but note that the TRR of case 10 is 67% of the
F95 USGS estimate (6 Gb) so it is also a low probability scenario (probably less than 1 % probability if the USGS estimates are correct).<o:p></o:p></span></div>
<span style="font-family: Calibri;">The most realistic cases would have economically recoverable
resources between 6 and 10 Gb, with the best estimate around 8 Gb.<span style="mso-spacerun: yes;"> </span>Cases 1 and 3 are the most realistic
presented in this post, case 6 is overly optimistic in my view, I would expect
new well EUR decrease to begin sooner than 3 years and to reach its maximum
monthly rate of decrease more quickly than in case 6 where the maximum monthly
EUR decrease is not reached for about 6 years (in 2019).<o:p></o:p></span><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<o:p><span style="font-family: Calibri;"> </span></o:p><span style="font-family: Calibri;">These scenarios were created using a new interactive
spreadsheet.<span style="mso-spacerun: yes;"> (A link to the spreadsheet is near the top of the post.) </span>It allows the user to input
the number of months after June 2013 that the decrease in new well EUR begins
and the number of months it takes to reach the maximum monthly rate of decrease
in new well EUR.<span style="mso-spacerun: yes;"> </span>These were fixed at 6
months and 18 months in my previous spreadsheet. As in the previous spreadsheet, the maximum rate of decrease in new well EUR can be adjusted, the number of new wells added per month can be changed, and the number of future months that new wells are added can be changed (up to a maximum of 335 months.)</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<br /></div>
<div class="separator" style="clear: both; margin: 0in 0in 8pt; text-align: center;">
<img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjjJfHackceo_cylgpIdLAerr_m_lFyk12CBSr47hOHv-_-VVgy04fZ0xS8ksqP2bkO7cjjlo3QpupjSF02aL9UeltZncUjzml_7Itdry7wDp7ExL_ishVh8RxFbWobgCGqHYL47MpWsfP4/s1600/blog131019f10.png" height="435" width="800" /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
<span style="font-family: Calibri;"><span style="mso-no-proof: yes;"><o:p></o:p></span></span> Fig 12</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
Several other scenarios were explored and the data for these scenarios (figs 13 to 16) can be viewed <a href="https://docs.google.com/file/d/0B4nArV09d398TUNpVGl6aGo0bzQ/edit?usp=sharing">here</a> in an Excel spreadsheet.</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<span style="font-family: Calibri;">All cases presented below add 175 wells/month for 250
months, total producing wells 49,900.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<br /></div>
<div class="separator" style="clear: both; margin: 0in 0in 8pt; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUKhuz_j24c79tO8EQJoiAAGTvHnutiiPjoq9oEsj6Yy3CEXodokwGk4vawMGMDUwOmDo8MfN4-YRi75w5sNZzyrFW_J8MljYwBjxiycO_tggIHx8hMEhpkUGfhIIchrOSek8BwjCC5L8l/s1600/blog131019f11.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUKhuz_j24c79tO8EQJoiAAGTvHnutiiPjoq9oEsj6Yy3CEXodokwGk4vawMGMDUwOmDo8MfN4-YRi75w5sNZzyrFW_J8MljYwBjxiycO_tggIHx8hMEhpkUGfhIIchrOSek8BwjCC5L8l/s1600/blog131019f11.png" height="311" width="400" /></a></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
<span style="font-family: Calibri;">Fig 13</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<table border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 581px;">
<tbody>
<tr style="height: 15pt; mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 250pt;" valign="bottom" width="333"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">months from 6/2013 to
start of EUR decrease<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 40pt;" valign="bottom" width="53"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">6<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 41pt;" valign="bottom" width="55"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">15<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 38pt;" valign="bottom" width="51"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">30<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 0.5in;" valign="bottom" width="48"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">45<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 31pt;" valign="bottom" width="41"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">72<o:p></o:p></span></span></div>
</td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 1;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 250pt;" valign="bottom" width="333"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">months to max EUR decrease
(from start of EUR decrease)<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 40pt;" valign="bottom" width="53"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">6<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 41pt;" valign="bottom" width="55"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">15<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 38pt;" valign="bottom" width="51"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">30<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 0.5in;" valign="bottom" width="48"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">45<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 31pt;" valign="bottom" width="41"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">72<o:p></o:p></span></span></div>
</td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 2;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 250pt;" valign="bottom" width="333"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">TRR(Gb)<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 40pt;" valign="bottom" width="53"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">6<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 41pt;" valign="bottom" width="55"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">7<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 38pt;" valign="bottom" width="51"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">8.4<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 0.5in;" valign="bottom" width="48"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">10<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 31pt;" valign="bottom" width="41"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">12<o:p></o:p></span></span></div>
</td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 3; mso-yfti-lastrow: yes;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 250pt;" valign="bottom" width="333"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">Maximum Annual Rate of
Decrease of EUR<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 40pt;" valign="bottom" width="53"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">17%<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 41pt;" valign="bottom" width="55"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">17%<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 38pt;" valign="bottom" width="51"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">17%<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 0.5in;" valign="bottom" width="48"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">17%<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 31pt;" valign="bottom" width="41"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">17%<o:p></o:p></span></span></div>
</td>
</tr>
</tbody></table>
</div>
<div align="center" class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
</div>
<div align="center" class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
<o:p><span style="font-family: Calibri;"> </span></o:p><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgKDqaaFfCjFq-BQyrQtCq5mYZOoYAByNvSyJKLJ6-QivHIiqJzZyzVI-HDzA4XAuVPIHdHJdIXrNCd2fypnK55fLDF3JtVOkO82DKpqSSyxeSO36axDO14OHB5i4CQ8wLyArE3hzGKlMvU/s1600/blog131019f12.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgKDqaaFfCjFq-BQyrQtCq5mYZOoYAByNvSyJKLJ6-QivHIiqJzZyzVI-HDzA4XAuVPIHdHJdIXrNCd2fypnK55fLDF3JtVOkO82DKpqSSyxeSO36axDO14OHB5i4CQ8wLyArE3hzGKlMvU/s1600/blog131019f12.png" height="311" width="400" /></a></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
<span style="font-family: Calibri;">Fig 14</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<table border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 581px;">
<tbody>
<tr style="height: 15pt; mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 250pt;" valign="bottom" width="333"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">months from 6/2013 to
start of EUR decrease<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 40pt;" valign="bottom" width="53"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">24<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 41pt;" valign="bottom" width="55"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">24<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 38pt;" valign="bottom" width="51"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">24<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 0.5in;" valign="bottom" width="48"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">24<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 31pt;" valign="bottom" width="41"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">24<o:p></o:p></span></span></div>
</td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 1;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 250pt;" valign="bottom" width="333"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">months to max EUR decrease(from start of EUR decrease)<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 40pt;" valign="bottom" width="53"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">24<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 41pt;" valign="bottom" width="55"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">24<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 38pt;" valign="bottom" width="51"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">24<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 0.5in;" valign="bottom" width="48"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">24<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 31pt;" valign="bottom" width="41"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">24<o:p></o:p></span></span></div>
</td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 2;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 250pt;" valign="bottom" width="333"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">TRR(Gb)</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 40pt;" valign="bottom" width="53"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">6<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 41pt;" valign="bottom" width="55"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">7<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 38pt;" valign="bottom" width="51"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">8.4<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 0.5in;" valign="bottom" width="48"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">10<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 31pt;" valign="bottom" width="41"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">11<o:p></o:p></span></span></div>
</td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 3; mso-yfti-lastrow: yes;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 250pt;" valign="bottom" width="333"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">Maximum Annual Rate of
Decrease of EUR<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 40pt;" valign="bottom" width="53"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">30.0%<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 41pt;" valign="bottom" width="55"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">20.0%<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 38pt;" valign="bottom" width="51"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">15.0%<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 0.5in;" valign="bottom" width="48"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">10.0%<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 31pt;" valign="bottom" width="41"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">7.5%<o:p></o:p></span></span></div>
</td>
</tr>
</tbody></table>
</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
<o:p><span style="font-family: Calibri;"> </span></o:p><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPAuQDyZ_9C_6zEiwfjkRNhACiZskoph-26z6l-rLKKuXEIAvoHgq_4d22M_xsrrBkLIVJoO7oougmJ0H8go7yOiO8QB_7FAwl4sbfCddLdAFqBeokHrfLDBhKunRZMQO5uCkhpKup5A0t/s1600/blog131019f13.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPAuQDyZ_9C_6zEiwfjkRNhACiZskoph-26z6l-rLKKuXEIAvoHgq_4d22M_xsrrBkLIVJoO7oougmJ0H8go7yOiO8QB_7FAwl4sbfCddLdAFqBeokHrfLDBhKunRZMQO5uCkhpKup5A0t/s1600/blog131019f13.png" height="311" width="400" /></a></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
<span style="font-family: Calibri;">Fig 17</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<table border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 581px;">
<tbody>
<tr style="height: 15pt; mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 250pt;" valign="bottom" width="333"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">months from 6/2013 to
start of EUR decrease<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 40pt;" valign="bottom" width="53"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">6<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 41pt;" valign="bottom" width="55"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">15<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 38pt;" valign="bottom" width="51"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">27<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 0.5in;" valign="bottom" width="48"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">45<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 31pt;" valign="bottom" width="41"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">72<o:p></o:p></span></span></div>
</td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 1;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 250pt;" valign="bottom" width="333"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">months to max EUR decrease(from start of EUR decrease)<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 40pt;" valign="bottom" width="53"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">6<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 41pt;" valign="bottom" width="55"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">15<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 38pt;" valign="bottom" width="51"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">27<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 0.5in;" valign="bottom" width="48"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">45<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 31pt;" valign="bottom" width="41"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">72<o:p></o:p></span></span></div>
</td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 2;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 250pt;" valign="bottom" width="333"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">TRR(Gb)<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 40pt;" valign="bottom" width="53"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">4.5<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 41pt;" valign="bottom" width="55"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">6.5<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 38pt;" valign="bottom" width="51"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">8.4<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 0.5in;" valign="bottom" width="48"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">11.5<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 31pt;" valign="bottom" width="41"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">14<o:p></o:p></span></span></div>
</td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 3; mso-yfti-lastrow: yes;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 250pt;" valign="bottom" width="333"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">Maximum Annual Rate of
Decrease of EUR<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 40pt;" valign="bottom" width="53"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">30.0%<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 41pt;" valign="bottom" width="55"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">20.0%<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 38pt;" valign="bottom" width="51"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">16.0%<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 0.5in;" valign="bottom" width="48"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">10.0%<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 31pt;" valign="bottom" width="41"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">7.5%<o:p></o:p></span></span></div>
</td>
</tr>
</tbody></table>
</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
Note that the low (TRR=4.5 Gb) and high (TRR=14 Gb) cases in Fig 17 are both very unlikely.</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
<o:p><span style="font-family: Calibri;"> </span></o:p><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiziLHJhhS5OwKwHaJBy1jOnQ1jqnvCcjV2PA-v-HsEj-pRmcsokC8QpIYKrW4bFZUJLTdNTnFvpo34xrwmQZwPB9nKukCf4t5Q7NeEmAWHEh_RxA1sV2uNQJoWWDSlt_5LAz26GDg89ZTe/s1600/blog131019f14.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiziLHJhhS5OwKwHaJBy1jOnQ1jqnvCcjV2PA-v-HsEj-pRmcsokC8QpIYKrW4bFZUJLTdNTnFvpo34xrwmQZwPB9nKukCf4t5Q7NeEmAWHEh_RxA1sV2uNQJoWWDSlt_5LAz26GDg89ZTe/s1600/blog131019f14.png" height="311" width="400" /></a></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: center;">
<span style="font-family: Calibri;">Fig 16</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<table border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 492px;">
<tbody>
<tr style="height: 15pt; mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 250pt;" valign="bottom" width="333"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">months from 6/2013 to
start of EUR decrease<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 40pt;" valign="bottom" width="53"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">60<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 41pt;" valign="bottom" width="55"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">36<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 38pt;" valign="bottom" width="51"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">12<o:p></o:p></span></span></div>
</td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 1;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 250pt;" valign="bottom" width="333"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">months to max EUR decrease
(from start of EUR decrease)<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 40pt;" valign="bottom" width="53"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">60<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 41pt;" valign="bottom" width="55"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">36<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 38pt;" valign="bottom" width="51"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">12<o:p></o:p></span></span></div>
</td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 2;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 250pt;" valign="bottom" width="333"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">Maximum annual rate of decrease of EUR</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 40pt;" valign="bottom" width="53"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">40.0%<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 41pt;" valign="bottom" width="55"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">19.0%<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 38pt;" valign="bottom" width="51"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">11.3%<o:p></o:p></span></span></div>
</td>
</tr>
<tr style="height: 15pt; mso-yfti-irow: 3; mso-yfti-lastrow: yes;">
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 250pt;" valign="bottom" width="333"><div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">TRR (Gb)<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 40pt;" valign="bottom" width="53"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">8.5<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 41pt;" valign="bottom" width="55"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">8.5<o:p></o:p></span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: rgb(0, 0, 0); height: 15pt; padding: 0in 5.4pt; width: 38pt;" valign="bottom" width="51"><div align="right" class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: right;">
<span style="color: black; font-size: 10pt; mso-ascii-font-family: Calibri; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;"><span style="font-family: Calibri;">8.5<o:p></o:p></span></span></div>
</td>
</tr>
</tbody></table>
</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<o:p><span style="font-family: Calibri;"> The cases in figure 16 with a maximum annual decrease of EUR between 11 % and 19 % are more realistic in my view.</span></o:p><br />
<o:p><span style="font-family: Calibri;"></span></o:p><br />
<o:p><span style="font-family: Calibri;">Dennis Coyne</span></o:p></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<br /></div>
<div class="separator" style="clear: both; margin: 0in 0in 8pt; text-align: center;">
</div>
<span style="font-family: Calibri;"><span style="mso-no-proof: yes;"></span></span><br />Unknownnoreply@blogger.com2tag:blogger.com,1999:blog-5552647839482265343.post-14375635423873487742013-10-16T12:45:00.000-04:002013-12-13T12:09:24.583-05:00Cool Tools for considering Future Bakken Output<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<a href="https://www.blogger.com/" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"></a><span style="font-family: Calibri;">Webster Hubble Telescope (WHT) has a new blog called </span><a href="http://contextearth.com/2013/10/06/bakken-projections/"><span style="color: #0563c1; font-family: Calibri;">Context Earth</span></a><span style="font-family: Calibri;">
with a <a href="http://contextearth.com/entroplet-dcs-server/" target="_blank"><span style="color: #3d85c6;">cloud hosted server</span></a> with some of his <a href="http://23.23.137.157/context_select/navigate?category=reservoir" target="_blank"><span style="background-color: white;"><span style="color: #3d85c6;">oil reserve models</span></span></a>. See the Red Queen tight oil model 2.<span style="mso-spacerun: yes;"> </span>This inspired me to create an interactive
spreadsheet which does something similar.<span style="mso-spacerun: yes;">
</span><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">The spreadsheet is called bakken2.xlsx and can be found </span><a href="https://docs.google.com/file/d/0B4nArV09d398TVRDd0t4dFpjN28/edit?usp=sharing"><span style="color: #0563c1; font-family: Calibri;">here</span></a><span style="font-family: Calibri;">
on Google Drive.</span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">One difference between WHT’s “red queen tight oil model 2” and my
bakken2 model is that the EUR of new wells is about 280 kb in his model and 340
kb for my model at 30 years.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">A second difference is that my model allows the new well EUR
to decrease at any annual rate from -0.1 to .99 (10 % increase to a 99 %
decrease) starting in Jan 2014 and rising to the maximum monthly rate by June
2015.</span><br />
<span style="font-family: Calibri;"></span><a name='more'></a><br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3zzlnxPiFX3kKztn-QBXZjzzEz5L8-9oNRSNnSvt6fgLp88rim-wSjlR-vvv2NDMJXTvF_nvWI9fZDdg6Lydcff5aiCniyDnVzol-0GWp3JEB92lN8MozpKD5e9npQ1eBqw9epBdIy39s/s1600/blog1310fig1.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3zzlnxPiFX3kKztn-QBXZjzzEz5L8-9oNRSNnSvt6fgLp88rim-wSjlR-vvv2NDMJXTvF_nvWI9fZDdg6Lydcff5aiCniyDnVzol-0GWp3JEB92lN8MozpKD5e9npQ1eBqw9epBdIy39s/s1600/blog1310fig1.png" height="344" width="640" /></a></div>
<br />
<br />
<span style="font-family: Calibri;">How to use this spreadsheet:<span style="mso-tab-count: 6;"> </span><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">The blue highlighted cells can be changed. Cell C6 is an
estimate of the new well estimated ultimate recovery (EUR). The EUR will decrease
as the better drilling locations become scarce.<span style="mso-spacerun: yes;">
</span>Values between 5 and 20 percent (0.05 to 0.20) are suggested.<span style="mso-tab-count: 5;"> </span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">Cell C10 is wells added per month, cell C11 is the number of months
new wells are added<span style="mso-tab-count: 2;"> </span><o:p></o:p></span></div>
<span style="font-family: Calibri;">Notes:<span style="mso-tab-count: 6;"> </span><o:p></o:p></span><br />
<span style="font-family: Calibri;"></span><br />
<span style="font-family: Calibri;">The model assumes that new well EUR starts to decrease in
Jan 2014 and attains the maximum monthly rate of decrease by June 2015.<span style="mso-tab-count: 1;"> </span>Wells are added at the North Dakota Industrial
Commission (NDIC) expected rate of 2000 wells per year until the total
producing wells reach 48,000 wells in 2034.<span style="mso-spacerun: yes;">
</span>The NDIC expects between 45,000 and 50,000 producing wells as the
maximum expected total.<span style="mso-tab-count: 1;"> </span><o:p></o:p></span><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">As a final note, an EUR decrease of 10.3 % per year matched
the USGS mean estimate for the Bakken/Three Forks in North Dakota of 8.5 Gb for
the TRR (technically recoverable resource.)<span style="mso-tab-count: 1;"> </span><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">An EUR decrease of 6 %/year is close to the F5 USGS estimate
and an EUR decrease of 19 %/year is close to the F95 USGS estimate when 168
wells per month are added from Sept 2013 to mid 2034.</span><br />
<span style="font-family: Calibri;"></span><br />
<span style="font-family: Calibri;">Red Queen Tight Oil Model 2</span><br />
<span style="font-family: Calibri;"></span><br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhC5X8tY8HlWhKSNPwd34t9GG-iLfRORa1h_wYFxsctiudvLJJPqTJFUfY05lusQYA0c4Fih8NsmxPDbK19QBX71beqcBxaXGmgTsY57Tez0VBN0htWNSf9NdRGexVRzG4M5ZZvw_JW1rsr/s1600/blog1310fig2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhC5X8tY8HlWhKSNPwd34t9GG-iLfRORa1h_wYFxsctiudvLJJPqTJFUfY05lusQYA0c4Fih8NsmxPDbK19QBX71beqcBxaXGmgTsY57Tez0VBN0htWNSf9NdRGexVRzG4M5ZZvw_JW1rsr/s1600/blog1310fig2.png" height="344" width="640" /></a></div>
<span style="font-family: Calibri;"><o:p></o:p></span><br />
<span style="font-family: Calibri;"><o:p>Bakken2 Model (x-axis scaled to match Red Queen 2 Model above)</o:p></span><br />
<span style="font-family: Calibri;"><o:p></o:p></span><br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgji4ZAG7YBNQuU3L8zsmHxufZYbgascw4kJMEq8PiA49HHcoGv9GSCNwl6mGfjrE-EiZE40AZVrbZuHhPPEp0LaoLil5rSy7I4dIY2_fWj7L_bTOn3xpaZZfWKmp8H6lIFPI3bba5HyM6p/s1600/blog1310fig1.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"></a> </div>
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEge00qQ3L9al36tNkabpBesUdtmnUTasT-mYl_PE3mFGGRsoCm0nkmzaTolb43huHKmXKeq1tjwRQFIklCLB2Qo07tPiMkzkipa1Ehu4SDc50y-7AkF3KlUUDDkGydBCnGIQZwLG6Xj_xvs/s1600/blog1310fig3.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEge00qQ3L9al36tNkabpBesUdtmnUTasT-mYl_PE3mFGGRsoCm0nkmzaTolb43huHKmXKeq1tjwRQFIklCLB2Qo07tPiMkzkipa1Ehu4SDc50y-7AkF3KlUUDDkGydBCnGIQZwLG6Xj_xvs/s1600/blog1310fig3.png" height="248" width="320" /></a></div>
<div align="left" class="separator" style="clear: both; text-align: center;">
</div>
<div align="left" class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
The chart above is scaled in a similar way to WHT's Red Queen 2 Model so they can be compared. Both models add 150 wells per month for 280 months, my ND Bakken/Three Forks scenario includes a 1 % annual decrease in new well EUR to adjust for the higher well EUR in my model.</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
The x-axis scaling in my spreadsheet will be from Jan 2009 to Jan 2039, the chart above is shown below with different x-axis scaling, TRR=15 Gb from 1953 to 2073:</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjlZDP9f9CZ1QDDvjqLgFn67cFCdp4QuQJt2StsiFujjpIDg3lTt5UCR1WC7GZ1nhI9jJdyj5PcLatl_4Pj9SWg8hxrDoJs_BGp7M-UaqE_QOGm6HVYwCM24BqmLpiF9thAZTYVZdELafD0/s1600/blog1310fig4.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjlZDP9f9CZ1QDDvjqLgFn67cFCdp4QuQJt2StsiFujjpIDg3lTt5UCR1WC7GZ1nhI9jJdyj5PcLatl_4Pj9SWg8hxrDoJs_BGp7M-UaqE_QOGm6HVYwCM24BqmLpiF9thAZTYVZdELafD0/s1600/blog1310fig4.png" height="298" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Annual decrease in new well EUR is 1 %, 150 wells added per month for 278 months</td></tr>
</tbody></table>
<div class="separator" style="clear: both; text-align: left;">
The scenario below has a maximum annual new well EUR decrease of 10.2 %, adds 168 wells per month for 249 months(see lower right part of the chart), and has a TRR of 8.5 Gb from 1953 to 2073 matching the mean USGS estimate for the North Dakota Bakken/Three Forks.</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPa0dXeIWAyg3ZLbBl98XSWwK3GvOz79QjEkPxap_OxRWiw6miEYIGNBceyBlBELmLoLFpoSt4X1Zzun06bcrVU4Vv6Rcr9YxNKSrmEodgS4tC0jp1x4xb5l50ATSoGrj7faDWmyBAWNba/s1600/blog1310fig5.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPa0dXeIWAyg3ZLbBl98XSWwK3GvOz79QjEkPxap_OxRWiw6miEYIGNBceyBlBELmLoLFpoSt4X1Zzun06bcrVU4Vv6Rcr9YxNKSrmEodgS4tC0jp1x4xb5l50ATSoGrj7faDWmyBAWNba/s1600/blog1310fig5.png" height="298" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Annual Decrease in new well EUR 10.2 %, 168 wells/month added for 249 months</td></tr>
</tbody></table>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
Also in the spreadsheet is a chart tab called breakeven, for the scenario above it looks like this:</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiAVw4mdSnVUiUx6x03NyYcdRRXbbZ8xJxLEfGX1hy7djRUKpJOCqrksVz3Vjw6QxaEyTSGdUKWDQ9HSKc_jcY_6pBu4KFf2fbhPsErPv2ABzIthQ9cwbwHdyYCUPnLMcPMY7HQY7-2mT6J/s1600/blog1310fig6.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiAVw4mdSnVUiUx6x03NyYcdRRXbbZ8xJxLEfGX1hy7djRUKpJOCqrksVz3Vjw6QxaEyTSGdUKWDQ9HSKc_jcY_6pBu4KFf2fbhPsErPv2ABzIthQ9cwbwHdyYCUPnLMcPMY7HQY7-2mT6J/s1600/blog1310fig6.png" height="464" width="640" /></a></div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
When economics are considered, the rate that new wells are added will be less than 168 wells per month as profits approach zero, in my previous modeling I assumed the rate that new wells are added would gradually be reduced once profits fall to about half of their peak value, I have not yet figured out a way to automate this process because as fewer wells are added, the rate of decrease in new well EUR will be smaller so there are a lot of moving parts. If the wells are simply added at a constant rate new wells will stop being added in 2022, but reality is more complex, wells can be added at any rate between 0 and 168. I may add the ability to adjust the rate that new wells are added so other more complex scenarios can be created. </div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
Dennis Coyne</div>
<span style="font-family: Calibri;"><o:p></o:p></span> </div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;"></span> </div>
Unknownnoreply@blogger.com2tag:blogger.com,1999:blog-5552647839482265343.post-87056887663776822922013-09-25T10:02:00.000-04:002013-12-13T12:10:46.142-05:00Update to North Dakota Bakken / Three Forks Scenarios<div align="center">
<br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<span style="font-family: Calibri;"><a href="http://www.rigzone.com/news/oil_gas/a/126179/USGS_Estimate_of_Bakken_Three_Forks_Double">http://www.rigzone.com/news/oil_gas/a/126179/USGS_Estimate_of_Bakken_Three_Forks_Double</a></span></div>
<div style="text-align: left;">
<br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<span style="font-family: Calibri;">The link above is to a Rigzone article discussing the April
2013 USGS Bakken/Three Forks estimate, which was referenced by Robert Rapier at<o:p></o:p></span></div>
<div style="text-align: left;">
<br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<span style="font-family: Calibri;"><a href="http://www.energytrendsinsider.com/2013/05/07/estimate-for-williston-basin-oil-resources-is-doubled/#more-13934">http://www.energytrendsinsider.com/2013/05/07/estimate-for-williston-basin-oil-resources-is-doubled/#more-13934</a></span></div>
<div style="text-align: left;">
<br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<span style="font-family: Calibri;">The USGS slide presentation can be found at<o:p></o:p></span></div>
<div style="text-align: left;">
<br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<span style="font-family: Calibri;"><a href="http://energy.usgs.gov/Miscellaneous/Articles/tabid/98/ID/247/USGS-Releases-Updated-Bakken-and-New-Three-Forks-Oil-and-Gas-Assessment.aspx">http://energy.usgs.gov/Miscellaneous/Articles/tabid/98/ID/247/USGS-Releases-Updated-Bakken-and-New-Three-Forks-Oil-and-Gas-Assessment.aspx</a></span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<span style="font-family: Calibri;"></span><br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<span style="font-family: Calibri;">and click on the slide presentation pdf link near the bottom of that page.<o:p></o:p></span></div>
<div style="text-align: left;">
<br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<o:p><span style="font-family: Calibri;"> </span></o:p><span style="font-family: Calibri;">Near the end of that slide presentation it breaks out the
7.4 BBO for all of the US Bakken/Three Forks into Montana and North Dakota sections of the play.<span style="mso-spacerun: yes;"> </span>North Dakota has a mean estimate of 5.8 BBO
of undiscovered technologically recoverable resources (TRR) in the Bakken/
Three Forks.<o:p></o:p></span></div>
<div style="text-align: left;">
<br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<span style="font-family: Calibri;">I had been ignoring the "undiscovered" and was
incorrectly interpreting the estimate as the full TRR, until I read the
following in the Rigzone article:</span><br />
<span style="font-family: Calibri;"></span><a name='more'></a><span style="font-family: Calibri;"><o:p></o:p></span><br />
</div>
<div style="text-align: left;">
<br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<span style="font-family: Calibri;">"While the estimates for Bakken oil resources would
appear to be the same for 2008 and 2013, the size of the Bakken estimate
increased as well, a USGS spokesperson told Rigzone in an email statement."<o:p></o:p></span></div>
<div style="text-align: left;">
<br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<span style="font-family: Calibri;">"It's deceptive, because although our current estimate
of 3.65 billion barrels of oil for the Bakken is numerically the same as the
2008 assessment for the Bakken, you have to remember that oil companies have
been producing millions of barrels of oil since the 2008 assessment, gradually
transforming the undiscovered resources to the proven reserves then production
barrels," the spokesperson commented. "Because our assessments do not
include proven reserves or produced barrels of oil, the 3.65 billion does
represent an increase."</span></div>
<div style="text-align: left;">
<br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<o:p><span style="font-family: Calibri;"> </span></o:p><span style="font-family: Calibri;">About 2.2 BBO of proven reserves have been added in North
Dakota since 2005 (from 0.4 BBO in Dec 2005 to 2.6 BBO in Dec 2011 according to
the EIA).<span style="mso-spacerun: yes;"> </span>If it is assumed that all of
these reserves were due to the Bakken/ Three Forks play, then a mean estimate for
the total TRR for North Dakota might be as large as 8 BBO and the F5 estimate
(or 3P estimate) for total TRR might be as large as 11 BBO.<span style="mso-spacerun: yes;"> </span>The F95 (or 1P) estimate of total TRR for the
Bakken/Three Forks is about 6 BBO.<o:p></o:p></span></div>
<div style="text-align: left;">
<br /></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<span style="font-family: Calibri;">Based on this, many of my recent Bakken scenarios might underestimate
future Bakken output so I have revised them accordingly.<o:p></o:p></span></div>
<div style="text-align: left;">
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg47tE_AtOOUwO1bQkhbpULA5MYuYAkq9VB4X_hZFMTQ9kVjdiiP-o4ZLLM4S84pk_UY8KWAlH4vrIzsprPZtpdI628eDT_rS91yIaMpK-FSB340q154x9VebxvOO8VovEV8M-OUQ77NG9Y/s1600/130923c1.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg47tE_AtOOUwO1bQkhbpULA5MYuYAkq9VB4X_hZFMTQ9kVjdiiP-o4ZLLM4S84pk_UY8KWAlH4vrIzsprPZtpdI628eDT_rS91yIaMpK-FSB340q154x9VebxvOO8VovEV8M-OUQ77NG9Y/s1600/130923c1.png" height="342" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 1<br />
<br />
<div align="left">
</div>
</td></tr>
</tbody></table>
<div style="text-align: left;">
The range of the TRR from the low to high scenario is quite close to the USGS F95 and F5 estimates of 6 to 11 BBO. These scenarios all increase the new wells added to an annual rate of 2200 wells per year by mid 2016 (185 wells/month starting in June 2016). Previous scenarios added wells at a rate of 1800 wells per year until Dec 2014 and then increased the wells added to a maximum of 2000 wells per year in mid 2016. Note that the NDIC (North Dakota Industrial Commission) expects the future wells added per year to be between 1800 and 3000 wells/year. I have also presented scenarios at peakoil.com (Shale Oil Boom thread) and peakoilbarrel.com where the wells added per year remain at the present level of 1800 new wells per year.</div>
</div>
<div style="text-align: left;">
<div style="text-align: left;">
</div>
<div style="text-align: left;">
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgIVGk7hSb_fGRzlHNhORgCWYjSCzeHsNdx3cuoRl74yQz_IRJogcsF63OKr37_A-UPLvwEuUQ0gtnLjKtnbmk8yvhqSbsXcJUU2ary-m_EAmdlHVDSlOA3qZmMaVpYp1KvUfI3gtgXHcqo/s1600/130923c2.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgIVGk7hSb_fGRzlHNhORgCWYjSCzeHsNdx3cuoRl74yQz_IRJogcsF63OKr37_A-UPLvwEuUQ0gtnLjKtnbmk8yvhqSbsXcJUU2ary-m_EAmdlHVDSlOA3qZmMaVpYp1KvUfI3gtgXHcqo/s1600/130923c2.png" height="342" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure2</td></tr>
</tbody></table>
</div>
<div style="text-align: left;">
I decided to use three different well profiles to give my low, medium, and high scenarios, note that these well profiles are different from my <a href="http://oilpeakclimate.blogspot.com/2013/06/future-bakken-output-and-average-well.html" target="_blank">previous post</a>.</div>
<div style="text-align: left;">
</div>
<div style="text-align: left;">
</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<span style="font-family: Calibri;">Med TRR- qi=10570, b=0.81, di=0.0883, EUR(10)=259 kb, EUR(20)=311
kb, EUR(30)=339 kb</span></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<span style="font-family: Calibri;">High TRR- qi=11750, b=1.26, di=0.145, EUR(10)=283 kb,
EUR(20)=371 kb, EUR(30)=430 kb</span></div>
<div style="text-align: left;">
<span style="font-family: Calibri;">Low TRR- qi=10500, b=0.45, di=0.069, EUR(10)=235 kb,
EUR(20)=256 kb, EUR(30)=264 kb<o:p></o:p></span></div>
<div style="text-align: left;">
</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<span style="font-family: Calibri;">These well profiles are Arps hyperbolics with equations of
the form (in Excel notation):<o:p></o:p></span></div>
<div style="text-align: left;">
<span style="font-family: Calibri;">Monthly output=qi/(POWER((1+b*di*t),(1/b))), and t is months
from first output and output is in barrels per month.<span style="mso-spacerun: yes;"> </span>I use t at mid month so t=0.5, 1.5,…..,
359.5.<o:p></o:p></span></div>
<div style="text-align: left;">
</div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhkkFAEwVpAiFEyPBqEtcrAhw2niktcPbIeeaxnRPJc_v7fzMZxd5ZvAr_52rUZhCAwzxvKi7W_4Mx2gr9METOW1uYkaPoavZZeWtpAlQGjUBJJhcrhbWct5f6De46FAtQFfljcN-PePL4H/s1600/130923c3.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhkkFAEwVpAiFEyPBqEtcrAhw2niktcPbIeeaxnRPJc_v7fzMZxd5ZvAr_52rUZhCAwzxvKi7W_4Mx2gr9METOW1uYkaPoavZZeWtpAlQGjUBJJhcrhbWct5f6De46FAtQFfljcN-PePL4H/s1600/130923c3.png" height="342" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 3</td></tr>
</tbody></table>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
Well productivity (EUR) for all three TRR scenarios is given in figure 3 above.</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<span style="font-family: Times New Roman;"></span> When we consider economically recoverable reserves (ERR) we need to make assumptions about real oil prices, average well cost, transport costs, royalty and tax payments, operating expenses (OPEX), and other costs.<span style="mso-spacerun: yes;"> </span>We also need to assume an annual discount rate used to calculate the net present value (NPV) of future income streams from sales of output from a given well.<o:p></o:p></div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<span style="font-family: Times New Roman;"></span>I assume transport costs of $9/ barrel, OPEX of $4/barrel, royalty and taxes of 20 % of well head revenue (refinery gate revenue-transport costs), other costs of $3/barrel, and an annual discount rate of 12.5 %.<span style="mso-spacerun: yes;"> </span>Real Oil prices follow the EIA’s AEO 2013 reference case adjusted to May 2013 $, and well costs are assumed to fall from $9 million per well in Jan 2013 to $7 million in Feb 2016 (about 8% per year) and then remain at that level.</div>
<span style="font-family: Calibri;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEielc_rFMjmenexVfXe4n-m25cs0tgZB9Fhyt-uWN6ndQVX4qEJesVogDtm-Dpgk9iA97-hm_cTSDFlgJyv4v8L60mpYuJOsQIV-V5sKqxa85Rrls4z3kfuXLl302lNtWAeHhyOaTE59aAF/s1600/130923c4.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEielc_rFMjmenexVfXe4n-m25cs0tgZB9Fhyt-uWN6ndQVX4qEJesVogDtm-Dpgk9iA97-hm_cTSDFlgJyv4v8L60mpYuJOsQIV-V5sKqxa85Rrls4z3kfuXLl302lNtWAeHhyOaTE59aAF/s1600/130923c4.png" height="342" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 4</td></tr>
</tbody></table>
<span style="font-family: Times New Roman;">
</span></span><br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;">As profits fall below $1 million per well in 2019, it is
assumed that fewer new wells are added per day and this reduces the rate of
decrease in well EUR.<span style="mso-spacerun: yes;"> </span>The following
chart shows the progression of new well EUR over time when economics are
introduced as well as the changes in the annual rate of decrease of new well
EUR and how this corresponds to the number of new wells added per day.<o:p></o:p></span></div>
<span style="font-family: Calibri;">
<span style="font-family: Times New Roman;">
</span><span style="mso-no-proof: yes;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg0FTsyKMDmrCgy7S1PxzM8u03vVSuQtV6l5jIbF5TcRam3cJhjBLEc7vsBzfkZedSmym9suJyTZY18VnzWSvvthDBKB2LGqfEDk0-svNnZBr_gf1HAbbaAvk5GNewY8ZpE76IS3iW_4ZRG/s1600/130923c5.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg0FTsyKMDmrCgy7S1PxzM8u03vVSuQtV6l5jIbF5TcRam3cJhjBLEc7vsBzfkZedSmym9suJyTZY18VnzWSvvthDBKB2LGqfEDk0-svNnZBr_gf1HAbbaAvk5GNewY8ZpE76IS3iW_4ZRG/s1600/130923c5.png" height="342" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 5</td></tr>
</tbody></table>
<span style="font-family: Times New Roman;">
</span>
</span></span><br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;"><span style="mso-no-proof: yes;">Note that the Maximum rate that wells are added over the mid
2016 to mid 2018 period is 2200 new wells per year (about 6 new wells per day),
by 2025 the rate that new wells are added has fallen by a factor of 6.<span style="mso-spacerun: yes;"> </span>After 2040 prices are assumed to remain flat
and it is no longer profitable to add new wells, total producing wells reach a
maximum of about 26000 wells in late 2040.<o:p></o:p></span></span></div>
<span style="font-family: Calibri;"><span style="mso-no-proof: yes;">
<span style="font-family: Times New Roman;">
</span>
</span></span><br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: Calibri;"><span style="mso-no-proof: yes;">Below is a chart of the ERR for all three scenarios with the
same underlying economic assumptions used for the Low TRR and high TRR cases.<o:p></o:p></span></span></div>
<span style="font-family: Calibri;"><span style="mso-no-proof: yes;">
<span style="font-family: Times New Roman;">
</span>
<v:shapetype coordsize="21600,21600" filled="f" id="_x0000_t75" o:preferrelative="t" o:spt="75" path="m@4@5l@4@11@9@11@9@5xe" stroked="f"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEimOAa8qV7P2-K9bDE-gi-m_Z-tdGyUqn4XeUJxcSe9hw2Js1w5WTuFciICVbnayIE_hxheqNo-EKD8XdeeKgVzQas4gAMD-lxIuZCgbIBYZdseWrSEcbbpH2BtEtJGWvMgXnEhoxr_oI2z/s1600/130923c6.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEimOAa8qV7P2-K9bDE-gi-m_Z-tdGyUqn4XeUJxcSe9hw2Js1w5WTuFciICVbnayIE_hxheqNo-EKD8XdeeKgVzQas4gAMD-lxIuZCgbIBYZdseWrSEcbbpH2BtEtJGWvMgXnEhoxr_oI2z/s1600/130923c6.png" height="342" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 6</td></tr>
</tbody></table>
</v:shapetype></span></span><br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<span style="font-family: Calibri;"><span style="mso-no-proof: yes;">Clearly there are many assumptions which have been made to create these scenarios. All may be proven wrong by future events. Well costs may not decrease as fast as I have assumed (or they may decrease faster), well productivity decrease is assumed to begin in Jan 2014 and gradually increase to an annual rate of decrease of 16 % ( my guess is that the range is likely to be between 12 % and 24 %), this guess could also be either low or high. Real oil prices could follow the EIA's AEO 2013 low or high price case rather than the reference case assumed here. In the future I may explore a few of these possibilities, clearly high prices are more likely under the low scenario and low prices are more likely in the case of the high scenario. </span></span></div>
<span style="font-family: Calibri;"><span style="mso-no-proof: yes;">
</span></span><div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
<span style="font-family: Calibri;"><span style="mso-no-proof: yes;">A final note on the decrease in EUR of the average new well. The 16 % annual rate was not chosen randomly, the recent USGS mean estimate for the North Dakota portion of the Bakken/Three Forks was chosen as the target for my medium TRR scenario. It was assumed that this decrease in EUR would gradually accelerate beginning in Jan 2014 and the shape of the % EUR curve in figure 3 above was thought to be reasonable and results in a TRR very close to my target. </span></span></div>
<span style="font-family: Calibri;"><span style="mso-no-proof: yes;">
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
</div>
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: left;">
DC</div>
</span>
</span><br /></div>
Unknownnoreply@blogger.com5tag:blogger.com,1999:blog-5552647839482265343.post-19764065758137132822013-08-29T14:40:00.000-04:002014-01-16T11:36:41.310-05:00Eagle Ford Shale may soon reach 1 million barrels per day(C+C)I have made a number of comments about the Eagle Ford Shale (EFS) and possible underreporting by the Texas Railroad Commission (TRRC) of crude plus condensate (C+C) output. See my comments at <a href="http://peakoil.com/forums/the-shale-oil-boom-paper-by-leonardo-maugeri-t68536-120.html" target="_blank">peak oil.com</a> (fourth comment by dcoyne78 on that page) and at <a href="http://peakoilbarrel.com/test-post/">peakoilbarrel.com</a> (see my response to Mike's comment in the comments section.)<br />
<br />
The first point is that the TRRC data for Texas(TX) statewide C+C is quite different from the data reported by the US Energy Information Administration (EIA) for TX C+C.<br />
<br />
Which data should we believe? <br />
Edit (Jan 16, 2014) see new chart at bottom of post.<br />
<a name='more'></a><br />
An article by <a href="http://www.resilience.org/stories/2013-03-19/commentary-texas-and-eagle-ford-where-the-action-is">Roger Blanchard</a> posted at Resilience.org got me thinking about the discrepancy between the EIA and TRRC data so I downloaded data from both sources in March to compare with future data. I failed to realize at the time that I had some earlier data from Jan 2013 (which I have now utilized) and I downloaded more data in early August when checking on recent EFS data. A final download of TRRC data was done in late August.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgVV6DhL0WoFf46zccS0qoncI4_h6jArBal476CozEBW7q0oF4aX1gHd77AiVpbuxGAmKArwtjo4XlJL35H3jpEmbLq6ZeGJhc0ELzwTlvjRGr61vIu0Hk2LiX3ps3eiIgrTrElLtwKRcf6/s1600/rrceia4.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgVV6DhL0WoFf46zccS0qoncI4_h6jArBal476CozEBW7q0oF4aX1gHd77AiVpbuxGAmKArwtjo4XlJL35H3jpEmbLq6ZeGJhc0ELzwTlvjRGr61vIu0Hk2LiX3ps3eiIgrTrElLtwKRcf6/s1600/rrceia4.png" height="386" unselectable="on" width="400" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<br />
My interpretation of this data is that the EIA data changes very little over time, but the TRRC data changes quite a bit. My conclusion is that when considering TX C+C the EIA estimate is much better especially in the near term where the TRRC data may be off by as much as 33 %.<br />
<br />
When attempting to estimate the EFS C+C we must rely on TRRC data, but I decided to adjust the TRRC data for the EFS. I tabulate TRRC C+C data for both all TX and the EFS and determine the proportion of output from the EFS relative to the TX statewide total for each month in the data series. I call this % EF/TX (C+C) in my spreadsheets. Then I multiply this proportion by the EIA TX C+C estimate to get my EFS estimate.<br />
<br />
Last month's data suggested the % EF /TX (C+C) was 36.1 % in May 2013, today's update shows a higher number of 37.8 % for May and 38.8 % for June, so the EFS estimate rises to about 955 kb/d for May 2013 and 998 kb/d for June 2013.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0SQuRbtwyXL-tJS6m1BUJDdIHGacEH-Ej-Jc0-m6Iu-2o7wA8DaGQNMo6VBPuKFQVI6dIM6uOP3cRCw6sYJ75PBDggNQZD4kClcC-HwG_Mbj87J_yf-DAcHYMRwYq1Pkv4_aKH9jejHzG/s1600/efsC+C4.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0SQuRbtwyXL-tJS6m1BUJDdIHGacEH-Ej-Jc0-m6Iu-2o7wA8DaGQNMo6VBPuKFQVI6dIM6uOP3cRCw6sYJ75PBDggNQZD4kClcC-HwG_Mbj87J_yf-DAcHYMRwYq1Pkv4_aKH9jejHzG/s1600/efsC+C4.png" height="332" unselectable="on" width="400" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<div align="left" class="separator" style="clear: both; text-align: center;">
</div>
<div align="left" class="separator" style="clear: both; text-align: center;">
</div>
A spreadsheet with the EFS data can be found at <a href="https://sites.google.com/site/dc78image/files-1">https://sites.google.com/site/dc78image/files-1</a><br />
<br />
it is named "efsCCdata2.xlsx". Files are listed alphabetically and are downloaded by clicking the down arrow on the right side of the page (next to the X).<br />
<br />
Note that I upated this post 8/29/2013 at 4:20 EDST because I found the EIA TX C+C data for June, the EIA data has not changed except for the added June data point for TX, the difference between the red dashed line and the blue line is due to an increase in the % of output coming from the EFS.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUpFeDss4g01xT558t2fhTsd31HlZNH6W4AWwlKNBaMFsMfKcyPk5ScqMvku3Z1aSHy0_wm8cDwzkk1AmHalyrcSNH3U9UQQZZN0ZGOXedLwfkOhihbUfU07YqZk-lEOSPO34rugBG01A5/s1600/efsC+C4.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"></a><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjIGzY7dvmdLjD23JWSgfRMQvxWQRHxgOF5Ud_cQcufDmMK-owEgCFPmxCKVAcB4KEKzwoTl5yylSQXOs-JkFnZpFXDfqw-Rh1zEi2arV4txSyfmqqBMFsW-gKZXXdn9GymllIzKa7wK7Br/s1600/efspercent2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjIGzY7dvmdLjD23JWSgfRMQvxWQRHxgOF5Ud_cQcufDmMK-owEgCFPmxCKVAcB4KEKzwoTl5yylSQXOs-JkFnZpFXDfqw-Rh1zEi2arV4txSyfmqqBMFsW-gKZXXdn9GymllIzKa7wK7Br/s1600/efspercent2.png" height="286" width="400" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
New Chart below with data in kb/d</div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg9MM88i-x0bjLPbnsgIM_2YL_5R9HXZIvuL6o9gv6YPJQy-fbYl96aJRCb3t3d9BqjlpgYOdhQXXamtoLhzgFAxc3vpw05kOmGpo9wJf35dpA0vdgZN9adKyu8kkPKod3WEWFRS80RdIp9/s1600/texasCCEIArrc1311.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg9MM88i-x0bjLPbnsgIM_2YL_5R9HXZIvuL6o9gv6YPJQy-fbYl96aJRCb3t3d9BqjlpgYOdhQXXamtoLhzgFAxc3vpw05kOmGpo9wJf35dpA0vdgZN9adKyu8kkPKod3WEWFRS80RdIp9/s1600/texasCCEIArrc1311.png" height="284" width="320" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
Click on chart to see larger version</div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<br />
<br />
<br />
DCUnknownnoreply@blogger.com1tag:blogger.com,1999:blog-5552647839482265343.post-73976480329159691372013-06-17T15:12:00.003-04:002013-12-13T12:18:04.134-05:00Future Bakken Output and the Average Well Profile<div class="separator" style="clear: both; text-align: left;">
In my June 14 post I discussed future decreases in average well productivity based on a single average well profile to create scenarios which would match the range of technically recoverable resources (TRR) in a recent USGS estimate for the Bakken/ Three Forks.</div>
<br />
A recent <a href="http://www.theoildrum.com/node/10035#comment-966573" target="_blank">discussion</a> at the June 15, 2013 Drumbeat at the Oil Drum was very interesting with Rune Likvern providing great insight (as usual) into recent data on Bakken output in North Dakota.<br />
<br />
Mr Likvern believes that we may be seeing a decrease in average well productivity because a simulation with wells added at a rate of 125 well per month from Jan 2013 to April 2013 is showing greater output than recent data with 70 fewer wells added (500 for simulation vs 570 actual). A decrease in average well productivity is one possible explanation. An alternative possibility is that the average well profile may be different from the average well profile that Mr. Likvern has chosen.<br />
<br />
I have created various well profiles in an attempt to match James Mason's work, Rune Likvern's work, the NDIC typical well, and the actual production data from the NDIC. I have recently created some newer well profiles by using a minimization of the sum of the squared residuals between the model and data over the period from Jan 2010 to April 2013. When no constraints are put on the minimization we get qi=11070, b=0.41, and d=0.078 (I call this model 7). <br />
<a name='more'></a><br />
In Excel format, q=qi/(POWER((1+b*d*t),(1/b)))<br />
<br />
where q is output in barrels/month in month t,<br />
t is months from first output <br />
<br />
(I use t=0.5 for my first month and then increase by 1 for future months so that I get mid month output.) The well profiles can be easily reproduced in a spreadsheet.<br />
<br />
As an alternative I constrained b to be less than 1 (as originally specified by Arps) and qi=>13750(greater than or equal to 13750) and the solution was qi=13750, b=0.999, d=0.615 (model 6). Mr. Likvern's well profile matches well with qi=14700, b=1.48, d=0.28. Graphically we have:<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjOEKnsBy3RTyEak4r6x9ON8LcQIQdcCUkKaf8IDXM5T8j6Rfvbn9zTZwZQNqcT9IVKHg6N6_8a3CE42na4H2E0OaxNj4wymteYHywaGYBTjDrIXGw6-52W6m7_K_J-brbBlLInmi7BPa8R/s1600/bakwells2.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjOEKnsBy3RTyEak4r6x9ON8LcQIQdcCUkKaf8IDXM5T8j6Rfvbn9zTZwZQNqcT9IVKHg6N6_8a3CE42na4H2E0OaxNj4wymteYHywaGYBTjDrIXGw6-52W6m7_K_J-brbBlLInmi7BPa8R/s1600/bakwells2.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 1- Bakken Well Profiles</td></tr>
</tbody></table>
<br />
For the first 3 years these different well profiles are nearly identical (in terms of cumulative output), after 5 years model 1 can be distinguished from models 6 and 7 and it takes 6.5 years before models 6 and 7 start to show a significant difference. <br />
<br />
I have used these profiles and created some new scenarios where it is assumed that up to Dec 2014 there is no decrease in average well productivity and that from May 2013 to Dec 2014 150 net wells are added each month (1800 wells per year). <br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEihC_eZStIH8T1z678QHMPU61Fw_Jdf8bBC2_fpyDCvTgRLZK1I9xr_Lcp_iZNPLqYlDZM0X68iq4UozD5takJ_JqGh-yx8iOMTUUiO8_PkyJQ_8DrvHeiAQDHnoyVmhG0TXSpDDSvZm0ti/s1600/bak150pm.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEihC_eZStIH8T1z678QHMPU61Fw_Jdf8bBC2_fpyDCvTgRLZK1I9xr_Lcp_iZNPLqYlDZM0X68iq4UozD5takJ_JqGh-yx8iOMTUUiO8_PkyJQ_8DrvHeiAQDHnoyVmhG0TXSpDDSvZm0ti/s1600/bak150pm.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 2</td></tr>
</tbody></table>
Note how closely the 3 models match up to October 2013, if the data starts to match models 6 or 7 in future months it may be that well productivity has decreased or it might mean that the well profile matches with model 6 or 7. As we get more data on wells for years 3 and later we will be able to define the average well profile with greater certainty. Mr Likvern has done the most work in this area, but to my knowledge he only has data up to about 28 months, I have only seen numbers though Year 2 (from Mr. Likvern) and I do not have the month by month data, only yearly totals for year 1 and year 2.<br />
<br />
All of this got me thinking about my previous post and trying to match the range of USGS estimates from F5 to F95 by varying the decrease in well productivity. Maybe we can do this a little differently and create a single scenario which matches the USGS Mean TRR for model 6 (the middle curve in figure 1). We leave the scenario the same as in figure 2 up to Dec 2014 (no decrease in well productivity up to that point and 150 wells/month 5/13 to 12/14). Then the number of wells per month ramps up to 167/month by April 2016 and remains at that level until we reach 42500 wells in 2032. For model 6 and a Mean TRR of 5.8 BBO well productivity decreases as follows:<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3jblTn3IxVqjYJMXWISlcP2vlSaUhk0F_kbBrcjouGdPiB38r3TFqmzcwcyTy91HXcby2Gq79Bi8rv3nrZAvohjXiTNW8cDy2OADL-4k501H0LVggcNTPQcHTeUEUi5n2BA66Iy49yvq7/s1600/bakwelpro8.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3jblTn3IxVqjYJMXWISlcP2vlSaUhk0F_kbBrcjouGdPiB38r3TFqmzcwcyTy91HXcby2Gq79Bi8rv3nrZAvohjXiTNW8cDy2OADL-4k501H0LVggcNTPQcHTeUEUi5n2BA66Iy49yvq7/s1600/bakwelpro8.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 3</td></tr>
</tbody></table>
<br />
We use this same decrease in well productivity for model 1, 6 and 7 to create the following 3 scenarios:<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_aQ2xsbLxUqJjQnxtj1OLcQDmc02oHUil0zzxhByubEs6PSi2LQByX9csn6fRv0f8wnVto2DCmCCjYuSuGwFrUd0JULqeerDpciRJyYk-oeS37YeocGCQHKjD1aXrEJMbSNvyN3rtGG0y/s1600/bakscen2.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_aQ2xsbLxUqJjQnxtj1OLcQDmc02oHUil0zzxhByubEs6PSi2LQByX9csn6fRv0f8wnVto2DCmCCjYuSuGwFrUd0JULqeerDpciRJyYk-oeS37YeocGCQHKjD1aXrEJMbSNvyN3rtGG0y/s1600/bakscen2.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 4</td></tr>
</tbody></table>
<div class="separator" style="clear: both; text-align: left;">
These scenarios do a good job of covering the range of the USGS estimate (3.5 to 9 BBO) and range from 3.6 to 8.8 BBO. I have not attempted to include prices, but may introduce my low price scenario (close to the EIA reference price case) to see how profitability considerations will reduce the URR. </div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
A question for any one in the oil business, how low can we get well completion costs in the Bakken over the next 20 years, is it realistic to assume we can get from $9 million/well down to $4.5 million per well (in Jan 2013 $) by 2033? If not, what number is realistic?</div>
<br />
I am hoping to introduce technology into my model and I plan to use well completion costs as a proxy for technological advances.<br />
<br />
Edit: 6/18/2013<br />
<br />
Many of my previous scenarios used model 3, so I am presenting a comparison of model 6 and 3 where all of the same assumptions were used as in figure 4 above:<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgpZN-P-R2zvSsFYw39mHskEbRQ0TmytAhYHDJDnJhhgvi1ktOPJxtETRR6gqmlz1KUJvvUmebWRM2ksPbeak4lGQMWx0eVvYEB-AucuF5sZGWc88B5p0RTXGXgb0Vb5h9XCR9mpqoPJVPF/s1600/bakscen3.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgpZN-P-R2zvSsFYw39mHskEbRQ0TmytAhYHDJDnJhhgvi1ktOPJxtETRR6gqmlz1KUJvvUmebWRM2ksPbeak4lGQMWx0eVvYEB-AucuF5sZGWc88B5p0RTXGXgb0Vb5h9XCR9mpqoPJVPF/s1600/bakscen3.png" /></a></div>
<br />
DCUnknownnoreply@blogger.com3tag:blogger.com,1999:blog-5552647839482265343.post-76046593586546004012013-06-14T13:31:00.000-04:002013-12-13T12:18:36.564-05:00Future Bakken Crude Oil Output, Oil Price, USGS Estimates, and Decreases in Well Productivity<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiypVT9FlFge9Sc_oEBbRkOBMExcje6mGEygH3cj8g7_orXtMozNbQq6MIR-QefQ9vwhHLILX8I0_jBCpqr1wg4sQVjmO2qaVQrcE9C4PaTOX3CZFcT5F5sSh5JGWeYy2EBYXGoZCNzrA_M/s1600/baksum.png" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiypVT9FlFge9Sc_oEBbRkOBMExcje6mGEygH3cj8g7_orXtMozNbQq6MIR-QefQ9vwhHLILX8I0_jBCpqr1wg4sQVjmO2qaVQrcE9C4PaTOX3CZFcT5F5sSh5JGWeYy2EBYXGoZCNzrA_M/s400/baksum.png" height="224" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Summary Chart ND Bakken/Three Forks Scenarios</td></tr>
</tbody></table>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
There is quite a bit of optimism in the US about potential future crude oil output. Due to the media reports that the US will become self sufficient in oil output, many Americans believe that oil prices are likely to decline in the future due to the abundance of oil resources. This view may be too optimistic.<br />
<br />
The enthusiasm is based on the success in the North Dakota portion of the Bakken/Three Forks play since 2008. The high oil prices over most of the period from 2008 to 2012 has made the high cost oil from North Dakota profitable. Bakken/Three Forks output in North Dakota has expanded from 43 kb/d in Mar 2008 to 719 kb/d in Mar 2013, a 16 fold increase over 5 years. The media believes these increases will continue, but the rate of increase is slowing considerably.<br />
<br />
As a cautionary tale, consider Bakken/ Three Forks crude output in <a href="http://www.bogc.dnrc.mt.gov/WebApps/DataMiner/Production/ProdAnnualField.aspx" target="_blank">Montana</a> (at link click on formation code in left most drop down box and type "bak" in search box, most output is from the Elm Coulee fields (all charts can be clicked to enlarge):<br />
<a name='more'></a><br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZYjoLjVvgWD4VoutWXP7tbbMiy_VDG1w3SRjPzaezkPWGEOXTmjsiEXstJZrqsIvvfFWPBiywOVt99x8sMObP8sQF1TDH4C9rwTF51w-7JR8OikRC2sdA4VqrX3yS_p71BDB-LXNivkMo/s1600/montana+crude.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZYjoLjVvgWD4VoutWXP7tbbMiy_VDG1w3SRjPzaezkPWGEOXTmjsiEXstJZrqsIvvfFWPBiywOVt99x8sMObP8sQF1TDH4C9rwTF51w-7JR8OikRC2sdA4VqrX3yS_p71BDB-LXNivkMo/s640/montana+crude.png" height="384" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;"> </span></td></tr>
</tbody></table>
Future output from the Bakken/ Three Forks Play in North Dakota (about 94 % of total Bakken output in 2012) will depend on future oil prices and the decrease in average well productivity as high productivity areas (sweet spots) run out of room for new wells. We can only guess at future oil prices and average well productivity by creating future scenarios where we make reasonable assumptions about real oil prices (always in Jan 2013 $ unless otherwise noted) and future average well productivity.<br />
<br />
Two reports were used to guide the assumptions about future well productivity and oil prices. The first is from the <a href="http://energy.usgs.gov/Portals/0/Rooms/oil_and_gas/noga/multimedia/2013_Bakken_ThreeForks_Assessment.pdf" target="_blank">United States Geological Survey (USGS)</a> ( see slides 16-18) and estimates 5.8 billion barrels of oil (BBO) from the North Dakota portion of the Bakken/Three Forks play (F95=3.5 BBO, F5=9 BBO). We use this estimate to create low TRR (technically recoverable resource), mean TRR, and high TRR scenarios where decreases in well productivity are created to match these scenarios. The second report is the most recent <a href="http://www.eia.gov/forecasts/aeo/IF_all.cfm#oil_price" target="_blank">Annual Energy Outlook</a> (AEO) 2013 produced by the US Energy Information Administration (EIA) which gives oil price forecasts. We have modified the price forecasts slightly because historically the EIA forecasts for oil price have tended to be too low.<br />
<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjA9zkmk041F6AVHoCLKqPpBX1qyZW_CD_jQarii4g0lX3hFsP33C6JOl7iryfLbndplmjyhD2W47AQ9A-vRPpIZfFErWjv_3gAo173_6FT63-sZQkf9002Ui2wFc_dJdyYyK5fhIxzFx9Z/s1600/aeoprice.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjA9zkmk041F6AVHoCLKqPpBX1qyZW_CD_jQarii4g0lX3hFsP33C6JOl7iryfLbndplmjyhD2W47AQ9A-vRPpIZfFErWjv_3gAo173_6FT63-sZQkf9002Ui2wFc_dJdyYyK5fhIxzFx9Z/s1600/aeoprice.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Figure 1- Future Price Scenarios</span></td></tr>
</tbody></table>
Based on the USGS estimate and using the North Dakota Industrial Commission (NDIC) estimates of 42,500 total wells and 2000 wells added per year, along with decreases in average well productivity as sweet spots become fully drilled we have:<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg7hmAv1STrx9mC8EkOWgk9xHH_gI0BNTzlxSdsaLA5ha61_HDsnE6cpF-Evi0E50smBxGAV3FlQFmszX78lRXwftHo9hctTd20Y5Vg1xDFpsNIO41WMSKuJxntGAYtJhcsu4kvBSfz2Kj7/s1600/bakmedtrr.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg7hmAv1STrx9mC8EkOWgk9xHH_gI0BNTzlxSdsaLA5ha61_HDsnE6cpF-Evi0E50smBxGAV3FlQFmszX78lRXwftHo9hctTd20Y5Vg1xDFpsNIO41WMSKuJxntGAYtJhcsu4kvBSfz2Kj7/s1600/bakmedtrr.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Figure 2</span></td></tr>
</tbody></table>
Note that Model 3 is an average well profile discussed in <a href="http://oilpeakclimate.blogspot.com/2013/05/updated-well-profile-for-north-dakota.html" target="_blank">my previous post</a> (see figure 3 below).<br />
<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhnoT9QJpZIZbziLVzodk_1gpH_f2XWJDo51uR4TvBApLXL-ySxaoutb-8iKjEJkdReD5VFIYFBYrYFvt7jz0nFjTa14eTgdq9yY24Ok1aCEWUqR5Sg2WmF3NFU3YiMU7dhN-ubEPR6RUMq/s1600/bakwelprojan13.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhnoT9QJpZIZbziLVzodk_1gpH_f2XWJDo51uR4TvBApLXL-ySxaoutb-8iKjEJkdReD5VFIYFBYrYFvt7jz0nFjTa14eTgdq9yY24Ok1aCEWUqR5Sg2WmF3NFU3YiMU7dhN-ubEPR6RUMq/s1600/bakwelprojan13.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Figure 3 - Model 3 Avg Well Profile</span></td></tr>
</tbody></table>
Well productivity declines in a manner which results in total output from 1953 to 2073 of 5.8 BBO, matching the mean USGS estimate for TRR:<br />
<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgs3kCZzlfKc__qamEzOocDuj8YlsCJeOduiwP52eHm5jsFx8AEABOucc0WS_tOy5v_U6EHfy4y2VQmSFszsI2PWYKDulRfro-rooNdWU5TaIizhNnxB4oPBTbiBpgloe4YuNUiTwahUkh_/s1600/bakwelpro1.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgs3kCZzlfKc__qamEzOocDuj8YlsCJeOduiwP52eHm5jsFx8AEABOucc0WS_tOy5v_U6EHfy4y2VQmSFszsI2PWYKDulRfro-rooNdWU5TaIizhNnxB4oPBTbiBpgloe4YuNUiTwahUkh_/s1600/bakwelpro1.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Figure 4</span></td></tr>
</tbody></table>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKh54LRPKZ5PzvAqnSwc7a1kYbJ4K1McnQb7zslMYLMoRrniq0nrFASRMw3zTPtWm5wmqmoLZlUtGGC3ODKlqPHO2ClbcuSM6GDT-sfNdvWL_02Lm0NwqGus4VYzxZ_B1YcRnjVF-VO22C/s1600/beprice1.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKh54LRPKZ5PzvAqnSwc7a1kYbJ4K1McnQb7zslMYLMoRrniq0nrFASRMw3zTPtWm5wmqmoLZlUtGGC3ODKlqPHO2ClbcuSM6GDT-sfNdvWL_02Lm0NwqGus4VYzxZ_B1YcRnjVF-VO22C/s1600/beprice1.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Figure 5</span></td></tr>
</tbody></table>
<br />
<br />
Figure 2 does not account for economics, in order for output to be profitable I determined break even real oil prices in Jan 2013 $ and compare this with real oil prices increasing by 6.68 % per year.<br />
<br />
To calculate break even oil prices at the refinery gate, we assume well drilling and fracking costs are $9 million per well, OPEX plus financial costs are $7/barrel, transportation cost is $12/barrel, and royalty and taxes are 25 % of the well head revenue (refinery gate revenue minus transportation costs). Then we use a discount rate of 10 % to find the net present value of the net revenue (revenue-cost) stream from oil output over an assumed 30 year well life. I have calculated the real break even price based on revenue in real dollars (Jan 2013 $), it is assumed real oil prices follow the red dotted line in figure 4, these inflation adjusted prices are used in the break even calculations. <br />
<br />
Note that in different scenarios there are different real oil price scenarios, as the oil price scenario changes, the real break even oil price will also change because of both the price itself and the change in the net revenue stream in real dollars.<br />
<br />
<em>Mean TRR and Medium Prices</em><br />
<em></em><br />
To account for the fact that real oil prices are not likely to reach $2000/barrel and that a 6.68 % rise per year in real oil prices would lead to a reduction in real GDP worldwide, I constructed a more realistic scenario (medium scenario, Figure 1)where real oil prices rise by 3.29 %/year and adjusted the number of wells added per year so that oil production would remain profitable (break even oil prices are less than real oil prices). Prices reach $411/barrel (Jan 2013 $) by 2056 and rise no further (substitutes for oil become cost competitive and demand decreases as a result). Note that the decrease in well productivity is different because it is a function of the number of new wells drilled. If the well productivity decreases by 8 %/year when 2000 wells/year are added, it decreases by 4 % per year decrease if only 1000 wells per year are added. To match output with break even oil prices, fewer new wells were added after the break even oil price was reached, this resulted in a less rapid decrease in well productivity compared with the steady addition of 2000 wells per year.<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhnPYoVkGMC168q2OoDI8cQhSVIzU-PW3nvjph0B2IxHylmbKyuDj4qoaiJidt82N4uSj2j_uQJ2M5t5I57A9PgmiItPtp2SJtHZo1aWIGyEFs3CoTS0E5rhN7qr06EOeGhuKA0RO-yJhUd/s1600/bakmedtrrmedp.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhnPYoVkGMC168q2OoDI8cQhSVIzU-PW3nvjph0B2IxHylmbKyuDj4qoaiJidt82N4uSj2j_uQJ2M5t5I57A9PgmiItPtp2SJtHZo1aWIGyEFs3CoTS0E5rhN7qr06EOeGhuKA0RO-yJhUd/s1600/bakmedtrrmedp.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Figure 6 Mean TRR (5.8 BBO) Med Price</span></td></tr>
</tbody></table>
<br />
<br />
<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi84Z94Em712hKkBlWbzBKjstyhPnMQk1k7qN4sCBmbj4KCr8ekNWuSamfPlTKeYZ4_vvSJ4x3e2uN-K6AvERpGRayKwK0UaHFH6fQIkEa4mN7MiHXfYSsRRUKozwgckr0cSDxeSJqIZRQ4/s1600/beprice4.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi84Z94Em712hKkBlWbzBKjstyhPnMQk1k7qN4sCBmbj4KCr8ekNWuSamfPlTKeYZ4_vvSJ4x3e2uN-K6AvERpGRayKwK0UaHFH6fQIkEa4mN7MiHXfYSsRRUKozwgckr0cSDxeSJqIZRQ4/s1600/beprice4.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Figure 7 - Break even oil price, medium scenario</span></td></tr>
</tbody></table>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguyQj58vlis0aUSzAAHN1TxiKQw5Vfon2HltPMqiT1oi_EM63bJBYHOCUtCN1Lsri4TkF7QvL2ZzPhQjeCQrs95MkvdQ8d_cohILZLYnpFaNL2DeAuQ7SkuEDW-aNLCJZnt300E33tnxBW/s1600/bakwelpro5.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguyQj58vlis0aUSzAAHN1TxiKQw5Vfon2HltPMqiT1oi_EM63bJBYHOCUtCN1Lsri4TkF7QvL2ZzPhQjeCQrs95MkvdQ8d_cohILZLYnpFaNL2DeAuQ7SkuEDW-aNLCJZnt300E33tnxBW/s1600/bakwelpro5.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Figure 8 - Well Productivity Decrease, med scenario</span></td></tr>
</tbody></table>
Only 24,800 producing wells are reached in this scenario as break even oil prices rise above the real oil price $411/barrel (Jan 2013$) by 2056. Output of crude plus condensate (C+C) from 1953 to 2073 is 5.3 BBO. Note that current US crude input to refineries is 15 million barrels per day or about 5.5 BBO per year, so the total ND Bakken output (over 60 years) is less than one year of current crude oil input to US refineries.<br />
<br />
<em>Low TRR Case and Higher Prices</em><br />
<em></em><br />
We will now consider the case where the TRR is at the low end of the USGS estimate for the ND Bakken/Three Forks, which is 3.5 BBO.<br />
<br />
If prices can rise to whatever level will cause the oil to be profitable or if we just ignore economics altogether we have the following:<br />
<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiSXiYKoAd6T5nFk2TNmPlUm6PnIDj0FtuN2UnXWGYcyazNLsPPJzjo4qvF4ut2g67tTQvCA0sTKPLisUng5UBU0fH76yPVp3SjTCvr43eyj6HkUI1St-doL1tmYmLqt0Dct6bwc4CZXpQQ/s1600/Baklowtrr.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiSXiYKoAd6T5nFk2TNmPlUm6PnIDj0FtuN2UnXWGYcyazNLsPPJzjo4qvF4ut2g67tTQvCA0sTKPLisUng5UBU0fH76yPVp3SjTCvr43eyj6HkUI1St-doL1tmYmLqt0Dct6bwc4CZXpQQ/s1600/Baklowtrr.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Figure 9 - Low TRR Case</span></td></tr>
</tbody></table>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYvXCHS41rEXhwnbZTd_KkDgbvLDwbuY-85_6RGdbGNlDNP4kqr6Ve6ytL4b8LYxwvkBLCScpJqJad5w21_Dn1HpWpWPTbIzw_GldXZ9JCY1uRY4n7i6UqA0lwjyBFt278NWSGlcYbp3Kq/s1600/bakwelpro3.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYvXCHS41rEXhwnbZTd_KkDgbvLDwbuY-85_6RGdbGNlDNP4kqr6Ve6ytL4b8LYxwvkBLCScpJqJad5w21_Dn1HpWpWPTbIzw_GldXZ9JCY1uRY4n7i6UqA0lwjyBFt278NWSGlcYbp3Kq/s1600/bakwelpro3.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Figure 10 - Well Productivity Low TRR Case</span></td></tr>
</tbody></table>
Compared to the previous case using the same well profile (figure 3 above), the well productivity decreases much more quickly. This could be due to sweet spots being smaller than anticipated or that the areas outside of the sweet spots are less productive than anticipated in the mean TRR case.<br />
<br />
The lower oil output would likely lead to higher overall real oil prices so we will consider a higher price path than our Mean TRR/ Medium Price case (high scenario, figure 1). Real oil prices rise by 0.54 % per month (about 6.676 % per year) from Jan 2013 to July 2034. At that point real oil prices have quadrupled from the average 2012 level of $102.5/barrel to $411/barrel. From July 2034 to Dec 2073 it is assumed that real oil prices do not rise above $411/barrel.<br />
<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi_222ITO7Rv3Y4ks2qYyTKKg0o7-T_bnQGoZ7n7se-mNhfdQ7u2IxfRwiapJIMqzxukr_CskLXkIy46BGS7Cd2h0Ovf9ZuJ4f0wIlHl9lhQxVcQGfU3r8tec1BRNfB-M8hB9ee-vM4FCF2/s1600/baklowtrrhighp.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi_222ITO7Rv3Y4ks2qYyTKKg0o7-T_bnQGoZ7n7se-mNhfdQ7u2IxfRwiapJIMqzxukr_CskLXkIy46BGS7Cd2h0Ovf9ZuJ4f0wIlHl9lhQxVcQGfU3r8tec1BRNfB-M8hB9ee-vM4FCF2/s1600/baklowtrrhighp.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Figure 11- Low TRR, High Price Case</span></td></tr>
</tbody></table>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiHOoMQm8oSn_-fYU_jvnvcZirsNU8JUafVgvQHkMwqLJ77q8KQgm-ANB8pzNI8Jj3r9TfWl-gfECFgkQ-8ejrnxjCpet1fnJf9dVwrKtDgQCIIGigMbWY-ATSo3W5NVsv1r1aBXpIHWSUo/s1600/beprice3.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiHOoMQm8oSn_-fYU_jvnvcZirsNU8JUafVgvQHkMwqLJ77q8KQgm-ANB8pzNI8Jj3r9TfWl-gfECFgkQ-8ejrnxjCpet1fnJf9dVwrKtDgQCIIGigMbWY-ATSo3W5NVsv1r1aBXpIHWSUo/s1600/beprice3.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Figure 12 - Break even Oil Prices, Low TRR, High Price</span></td></tr>
</tbody></table>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhR4cklSm5ZikDYFwwm3SZpiRV9MEfU4ot3A-UnQmQMkUe538UW16KleeDDDj3j88CbbypsIrl9mns1g5a-_HhbnRcmZDMqc5rXQGhZqLOzIGxkpMed_wa-1KjbaZ8wZKc9fNrvPlm29V8q/s1600/bakwelpro4.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhR4cklSm5ZikDYFwwm3SZpiRV9MEfU4ot3A-UnQmQMkUe538UW16KleeDDDj3j88CbbypsIrl9mns1g5a-_HhbnRcmZDMqc5rXQGhZqLOzIGxkpMed_wa-1KjbaZ8wZKc9fNrvPlm29V8q/s1600/bakwelpro4.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Figure 13 - Well Productivity - Low TRR, HighPrice</span></td></tr>
</tbody></table>
Note that the URR from 1953 to 2073 only decreases by 0.1 BBO from 3.5 BBO (in the Low TRR case of figure 9) to 3.4 BBO if real oil prices follow the high price trajectory that I have outlined. The difference in the rate of decrease in well productivity between figures 10 and 13 is explained by the different rates that wells are added in figures 9 and 11. In figure 9 between 2020 and 2033 wells are added at about 2000 per year, but in figure 11 the rate over the same period is only 163 wells/a (wells per year). The well productivity decreases more quickly if new wells are added at a faster pace.<br />
<br />
<em>High TRR, Low Price Case</em><br />
<em></em><br />
For those who are opimistic about future US Oil output, we consider the USGS F5 case where the TRR for the ND Bakken/Three Forks is 9 BBO. Well Productivity decreases less rapidly than the mean TRR case, 42500 wells are brought into production and a maximum of 2000 wells/a are added.<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiqeg_3w4jo4pb7oKlbS8EIkFpW1oHUmqn-8eFZyXMUMC15xCUY-b_2wSwEu7Bytz-eL6E8SVqgJ0HvKAh5y8U_gKgBsy8zLpyQXde7LnjleT9JqLbSPqTOh1nKBvcJtu71KGm8RP5UkZcS/s1600/bakhightrr.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiqeg_3w4jo4pb7oKlbS8EIkFpW1oHUmqn-8eFZyXMUMC15xCUY-b_2wSwEu7Bytz-eL6E8SVqgJ0HvKAh5y8U_gKgBsy8zLpyQXde7LnjleT9JqLbSPqTOh1nKBvcJtu71KGm8RP5UkZcS/s1600/bakhightrr.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Figure 14 - High TRR (9BBO)</span></td></tr>
</tbody></table>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhxKd9BZS6nWF2XuEFHfcQzpomz7rQntkRPIQXSF2ttbG_xHJKFllx9YJsRtaewKODul0Ja-IX6Zi8JQbLMSqlb8tUre97USEo9mRUx59dJ9mab42Km9-KANk1ZE-Ov8tli5dT7vZfGlFil/s1600/bakwelpro7.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhxKd9BZS6nWF2XuEFHfcQzpomz7rQntkRPIQXSF2ttbG_xHJKFllx9YJsRtaewKODul0Ja-IX6Zi8JQbLMSqlb8tUre97USEo9mRUx59dJ9mab42Km9-KANk1ZE-Ov8tli5dT7vZfGlFil/s1600/bakwelpro7.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Figure 15</span></td></tr>
</tbody></table>
<br />
<div class="separator" style="clear: both; text-align: left;">
Now we assume prices will rise less quickly than in previous cases due to the abundance of oil (low scenario, figure 1). Prices remain at $102.5/ barrel (Jan 2013 $) until Sept 2018 and then rise at about 2 % per year until 2065 (where they reach $269/barrel in real terms), at that point 42,350 wells are producing and no more wells are added.</div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgLGjhiUzmGOLpT9sPt02Y_Kj5P0sOiyRtKnVNXNwyNlNfd4U1UZ1WDpSue_i8ZaFSBkHYU0DEKGUXbKmXyI00u9sc6h2LbPeOG72QTT8w2BeydVmVWKlN7UcfDSaJuf2B2brBBCbleNa5a/s1600/bakhightrrlowp.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgLGjhiUzmGOLpT9sPt02Y_Kj5P0sOiyRtKnVNXNwyNlNfd4U1UZ1WDpSue_i8ZaFSBkHYU0DEKGUXbKmXyI00u9sc6h2LbPeOG72QTT8w2BeydVmVWKlN7UcfDSaJuf2B2brBBCbleNa5a/s1600/bakhightrrlowp.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Figure 16 - High TRR/ Low Price</span></td></tr>
</tbody></table>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhGnbqiLszt-ej3JnkIHyuleIkFhy7CQulygXM_PHguihb9msZbPrd9s9euIw8t6JqHXhmHPEerodo6G1tal6MOkmrBhvoLf5ZKXlhN6s6OXHPY9d8zHktfL0GmKm3reGyiXI26Gon-VAwV/s1600/beprice5.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhGnbqiLszt-ej3JnkIHyuleIkFhy7CQulygXM_PHguihb9msZbPrd9s9euIw8t6JqHXhmHPEerodo6G1tal6MOkmrBhvoLf5ZKXlhN6s6OXHPY9d8zHktfL0GmKm3reGyiXI26Gon-VAwV/s1600/beprice5.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Figure 17 - Break even Oil Prices - High TRR/Low Price</span></td></tr>
</tbody></table>
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjKVkIIIECBy6Ko91l2G4pS4Cz2ICxhRb7ICbZd0m4xtT087_Kf8ugAT80IOKzPcxn4ccawqFTE8RbfHMV7X1olBYLeln-vmU3YInLDTQYzTFNpin8oXEjfC0UiYQdNCywK_ol9_wKOhz4S/s1600/bakwelpro6.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjKVkIIIECBy6Ko91l2G4pS4Cz2ICxhRb7ICbZd0m4xtT087_Kf8ugAT80IOKzPcxn4ccawqFTE8RbfHMV7X1olBYLeln-vmU3YInLDTQYzTFNpin8oXEjfC0UiYQdNCywK_ol9_wKOhz4S/s1600/bakwelpro6.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small;">Figure 18 - Well Productivity, High TRR/Low Price</span></td></tr>
</tbody></table>
<br />
<br />
One final note is that these scenarios are not forecasts, they are possible futures based on a set of assumptions. There are several short comings with these scenarios, technology has been assumed not to progress further, any progress might allow higher output, and the model for average well productivity is based on only two years of data and future average well productivity could be higher or lower than shown in model 3. Finally, I have assumed that well productivity will begin decreasing in March 2013, so far there is not conclusive evidence that the average well brought online in March 2013 is less productive than the average well brought online in Jan 2013, a possible improvement would be to hold average well productivity constant until Dec 2013 and then model well productivity decrease from that point. A subject for a future post.<br />
<br />
DC<br />
<br />
<br />
<br />
<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<br />
<br />
Unknownnoreply@blogger.com1United States43.068887774169625 -68.9062517.546853274169624 -110.214844 68.590922274169628 -27.597656tag:blogger.com,1999:blog-5552647839482265343.post-19711664013058853382013-05-21T17:51:00.000-04:002013-12-13T12:19:13.757-05:00Real Oil Prices and the Effect on Future ND Bakken OutputI often read The Oil Drum blog and pointed readers of the Drum Beat to my most recent post here. Rune Likvern asked a question about how future oil prices will effect my scenarios. This is an excellent question because it is often claimed that the recent surge in US oil output may lead to lower oil prices. I expect there is a little too much optimism about future output from the Bakken/Three Forks and Eagle Ford plays, but let's consider two scenarios proposed by Mr. Likvern.<br />
<br />
Scenario 1 considers a slower rise in real oil prices than I proposed in my previous post, real oil prices rise to $120/barrel (Jan 2013$) by Jan 2018.<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhhI5BlrY5EmOIM1vxX-dtH7NSYGut5L33X8MDO2QNZ9T6TruwxVViehN1fQLEsOi22gAqX1AvXF-02I4THDLC8vgCHxBuVWccFc_A_2oeg18j8Bva995qpP0Pdhr774z8flsuDVBqrk4T3/s1600/bak120scen.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhhI5BlrY5EmOIM1vxX-dtH7NSYGut5L33X8MDO2QNZ9T6TruwxVViehN1fQLEsOi22gAqX1AvXF-02I4THDLC8vgCHxBuVWccFc_A_2oeg18j8Bva995qpP0Pdhr774z8flsuDVBqrk4T3/s400/bak120scen.png" height="241" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 1</td></tr>
</tbody></table>
Figure 1 requires some explanation. Break even oil prices rise to the real market oil price by Sept 2016 at $115 per barrel and the wells added ramp down to zero by Dec 2017. It is assumed that real oil prices continue to rise at 3.29 % per year and that the decrease in well productivity slows to zero as no new wells are drilled. Eventually the real oil price rises above the break even price and it is assumed that when the real oil price is 110 % or more of the break even oil price that new wells are added and well productivity then continues to decrease. This cycle repeats 3 times between 2018 and 2037 and explains the bumps in output in 2021-2, 2027-8, and 2033-4.<br />
<a name='more'></a><br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEif3ferc0YA2fpq5Z4CuJq9s-pFR72vg6uiCct_hkeorTOdt96K2wdrEC_2OAU16ti53b3osXPyao2dzh67XCB-G62yIdLJWN2fquANmfgdV164_hwJTDldY60f-vr1RxFL-d31N2hanNOv/s1600/wellprod120.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEif3ferc0YA2fpq5Z4CuJq9s-pFR72vg6uiCct_hkeorTOdt96K2wdrEC_2OAU16ti53b3osXPyao2dzh67XCB-G62yIdLJWN2fquANmfgdV164_hwJTDldY60f-vr1RxFL-d31N2hanNOv/s400/wellprod120.png" height="251" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 2</td></tr>
</tbody></table>
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiXIVVulkHo862DxRQULuZ1XMeiOsOu-90YS0FLAKcZenPB1K4pg7Nl36FY1d61QufSyAB3SXP3hLfLSmVxuEeQvYDkJjwQ7wUhln9-sT30fD-KyAWPh8jgtNl0zescx4O1ViND8IZc20yJ/s1600/beprice120.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiXIVVulkHo862DxRQULuZ1XMeiOsOu-90YS0FLAKcZenPB1K4pg7Nl36FY1d61QufSyAB3SXP3hLfLSmVxuEeQvYDkJjwQ7wUhln9-sT30fD-KyAWPh8jgtNl0zescx4O1ViND8IZc20yJ/s400/beprice120.png" height="233" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 3</td></tr>
</tbody></table>
<br />
<br />
For scenario 2, I will keep it simple and assume real oil prices cannot rise above $102.50/barrel (Jan 2013 $).<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjINNniQPMxhOpUazqamrxjjk09n_r9eNu4PzvPvlYj9oQLKUIXQG9AH8WbolrHw4cXaf-46CQH4phNdAQ4s9zrB2exVzKUobO-BitO4cX4CZEMYwCxBkf5wjMi_BbWONI1SgpVoZObQ4D-/s1600/bakhyp102.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjINNniQPMxhOpUazqamrxjjk09n_r9eNu4PzvPvlYj9oQLKUIXQG9AH8WbolrHw4cXaf-46CQH4phNdAQ4s9zrB2exVzKUobO-BitO4cX4CZEMYwCxBkf5wjMi_BbWONI1SgpVoZObQ4D-/s400/bakhyp102.png" height="241" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 4</td></tr>
</tbody></table>
Note that Model 3 from my previous post was used for the average well profile in both Scenario 1 and 2. For scenario 2, well productivity decreases as in figure 10 from the previous post up to Jan 2016 and then levels off at 64 % of the Jan 2013 average well, if there was a rise in prices we would see cyclical increases in output as in Scenario 1.<br />
<br />
I find it interesting that a rise in real oil prices to $200/ barrel (Jan 2013 $) by 2033 only results in an extra 1.2 BBO from 1953 to 2073 in Scenario 1 (4.9 BBO) when compared to Scenario 2 (3.7 BBO)where real oil prices remain constant.<br />
<br />
DC<br />
<br />
<br />Unknownnoreply@blogger.com2tag:blogger.com,1999:blog-5552647839482265343.post-83106952401199438212013-05-16T09:19:00.000-04:002013-12-13T12:20:16.725-05:00Updated Well Profile for the North Dakota Bakken and the Effect on future scenarios<div class="separator" style="clear: both; text-align: center;">
<br /></div>
Note that all of the "Bakken" Scenarios I have presented, in this post and previous posts only cover the North Dakota portion of the Bakken/Three Forks play. <br />
<br />
A recent post by Rune Likvern at the Oil Drum entitled, <a href="http://www.theoildrum.com/node/9954#more">Is the Typical NDIC Bakken Tight Oil Well a Sales Pitch?</a> has provided some new information which I will use to update my recent scenario for future Bakken output. <br />
<br />
Another post by Mr. Likvern from which I gathered considerable knowledge is entitled <a href="http://www.theoildrum.com/node/9506">Is Shale Oil Production from Bakken Headed for a Run with “The Red Queen”?</a> . In addition a post by <a href="http://www.theoildrum.com/node/9821">Heading Out at the Oil Drum</a> had a number of helpful comments by both <a href="http://www.theoildrum.com/node/9821#comment-945242">Mr Likvern</a> and <a href="http://www.theoildrum.com/node/9821#comment-945259">Webhubbletelescope</a>, the entire thread has comments of interest. There are also a number of posts on the Bakken at <a href="http://theoilconundrum.blogspot.com/">The Oil conunDRUM</a> blog(written by Webhubbletelescope) from which I have learned much. I am indebted to both Webhubbletelescope and Mr Likvern for sharing their knowledge.<br />
<a name='more'></a><br />
Previous research by Mr. Likvern suggested that average well productivity had been declining by as much as 20 % per year. Recently this decline has stabilized at around 85 kb for the first year of output from the average well, the second year of output is about 45 kb for a 2 year EUR of 130 kb. The well profile is below (note that any chart can be clicked to enlarge):<br />
<div class="separator" style="clear: both; text-align: left;">
<br /></div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibHbV8AtneMjfx1hUB54pY7ES7mLdqSSeLapw37L7AMD2Mban-i76UwahezTslqgtAtE-30-yXPI0Xomi2z4pOp5PCr7fKwRgy-v-d5HxRW2pCZY3cm9ZI6XkgAZl3RxJB41f3lqt6mG7e/s1600/likvern_chart.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibHbV8AtneMjfx1hUB54pY7ES7mLdqSSeLapw37L7AMD2Mban-i76UwahezTslqgtAtE-30-yXPI0Xomi2z4pOp5PCr7fKwRgy-v-d5HxRW2pCZY3cm9ZI6XkgAZl3RxJB41f3lqt6mG7e/s400/likvern_chart.png" height="225" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure1</td></tr>
</tbody></table>
<br />
I attempted to match this profile for Jan 2008 to Jan 2013 below:<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjj5f706J77Za_cD5vHnM5eYuRw8vkFSAS_FR6C9xiIFjm7WkBgZKP6nmvGc-0Pi9jHhyZKPY8qxU8Cnj-7KoAVcSfzd-u_DCmrs9Hs406SfJMtz5bslJO6Q7-sRRCZzYQN7wgzitVOT3rf/s1600/bakwellikv.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjj5f706J77Za_cD5vHnM5eYuRw8vkFSAS_FR6C9xiIFjm7WkBgZKP6nmvGc-0Pi9jHhyZKPY8qxU8Cnj-7KoAVcSfzd-u_DCmrs9Hs406SfJMtz5bslJO6Q7-sRRCZzYQN7wgzitVOT3rf/s400/bakwellikv.png" height="265" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 2- Model 1 Avg Well Profile</td></tr>
</tbody></table>
<div class="separator" style="clear: both; text-align: center;">
</div>
Note that the left scale is different on my chart and the monthly output rather than yearly average output is shown, only the highest monthly output curve and cumulative output (Jan 08 to Jan 13) should be compared with Mr. Likvern's curves. The agreement between the two cumulative curves is fairly close, with the 20 year EUR about 380 kb for each well profile.<br />
<br />
For comparison, the well profile I use is somewhat less optimistic:<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0C0KFPE6qsumaMmyYV4nqM9bx3JXlNo6KkvK9kCNudDMxUjobOURFjbQ9f1RoMAnFBCDr5anWWiGFcisH0BwJo3t9byoUzvU9gcOdgsgdrA9NafGpWxHr2d_lxSOe6S7uPae4sBBY_sE4/s1600/bakwell5.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0C0KFPE6qsumaMmyYV4nqM9bx3JXlNo6KkvK9kCNudDMxUjobOURFjbQ9f1RoMAnFBCDr5anWWiGFcisH0BwJo3t9byoUzvU9gcOdgsgdrA9NafGpWxHr2d_lxSOe6S7uPae4sBBY_sE4/s400/bakwell5.png" height="265" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 3 - Model 3 Avg Well Profile</td></tr>
</tbody></table>
<br />
<br />
The 20 year EUR is about 284 kb. A concise summary of the Arps equations used for modelling the decline of an oil or gas well by Dr Steven W. Posten is entitled <a href="http://www.hamiltongroup.org/documents/Decline%20Curves%20-%20Dr%20Stephen%20Poston.pdf">Decline Curves.</a><br />
<br />
The hyperbolic decline curve matching Mr Likvern's average well has qi=14,700 barrels/month, b=1.48, and Di=0.28, note that this curve violates the rule suggesting b should be between 0 and 1, such curves are unrealistic in the sense that the cumulative output will approach infinity over long time periods.<br />
<br />
My well profile has qi=14,925 b/month, b=0.95, and Di=0.19.<br />
<br />
The following charts compares the NDIC well profile (qi=21,500 b/m, b=1.094, and Di=0.185), with the NDIC Typical Well presented in the <a href="https://www.dmr.nd.gov/oilgas/presentations/EmmonsCoFB101512.pdf">Emmons Presentation</a> at the NDIC website (slide 29), Rune Likvern's data (read from figure 1), the hyperbolic (Model 1) which closely matches it, my model (Model 3), and an intermediate model (Model 2).<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjY_m1A6dCjPVG2QudbcpLztCkb4-61Rb0iAgWBSMNC5D_TfMfL4gI1QXT8_dXQIYb0bHfdPFfb7xAJGrWupntXbtWSqsDbqxkzMG00FeXy9Yyw_qTpPQIAoZzm7jAC_pKWUBwtnNWPXlPg/s1600/avgwell+prof.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjY_m1A6dCjPVG2QudbcpLztCkb4-61Rb0iAgWBSMNC5D_TfMfL4gI1QXT8_dXQIYb0bHfdPFfb7xAJGrWupntXbtWSqsDbqxkzMG00FeXy9Yyw_qTpPQIAoZzm7jAC_pKWUBwtnNWPXlPg/s400/avgwell+prof.png" height="275" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 4</td></tr>
</tbody></table>
<div class="separator" style="clear: both; text-align: center;">
</div>
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWhv_Aafr0ULN3F3gL03eHfjdDGUI0bGiwZSrVIfUDxXklnvoj4znuY9YqixaIzU24WrvIRA2FAqhePx84aB35AjLLX5_cY5o4mOdka4duZuR-L7m6jQts5ZeZbz1UAzUOLcIx6VH5EVDO/s1600/baklong.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWhv_Aafr0ULN3F3gL03eHfjdDGUI0bGiwZSrVIfUDxXklnvoj4znuY9YqixaIzU24WrvIRA2FAqhePx84aB35AjLLX5_cY5o4mOdka4duZuR-L7m6jQts5ZeZbz1UAzUOLcIx6VH5EVDO/s400/baklong.png" height="265" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 5</td></tr>
</tbody></table>
The chart above is for illustration only(I do not think any wells will produce beyond 50 years of first output and most will be shut in before 30 years). Note that Model 1 does not level off much with time and at 45 years is still producing 12 barrels per day and at 1000 years output is still 1.5 barrels per day. Model 3 is not a lot more realistic as output is 1.5 barrels per day at 113 years and 3.8 b/d at 45 years.<br />
<br />
Using the well profiles presented in figures 2 and 3 and <a href="https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats.pdf">NDIC data</a> for Bakken/Three Forks oil output in North Dakota, we can check how well these well profiles match the data. For Model 1 we have:<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhrdvX3NATSbiVk2gnUN5ZupOQtTeSjnSDeF_KX5pHuzD3JilbBujvmCD4lgN-LlwcOw3BdfaDwbcLYqTFkIfkZC1KjUk7iKi6F1VxDJfjGfY1LT4oiLdTVVb-hRF5nX9ZvwT5IWsF2kSMb/s1600/bakmod1data.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhrdvX3NATSbiVk2gnUN5ZupOQtTeSjnSDeF_KX5pHuzD3JilbBujvmCD4lgN-LlwcOw3BdfaDwbcLYqTFkIfkZC1KjUk7iKi6F1VxDJfjGfY1LT4oiLdTVVb-hRF5nX9ZvwT5IWsF2kSMb/s400/bakmod1data.png" height="243" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 6<br />
</td></tr>
</tbody></table>
<span style="font-family: "Times New Roman","serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman";">For Model 3 we have:</span><br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjo7cB-ewl-a-i7VAgEa6ejYlEM4wmovWqLRYqe5oopCaDP3LtoZfzThyphenhyphenekFM64Jefldd_Ltpp-1rnZqunWuINk0zLXWOxOoyv4Bl86SrOFFmoOsqfhvqTPvl51mIAMxChFLZ-tFa_yOS5k/s1600/bakdatamod3.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjo7cB-ewl-a-i7VAgEa6ejYlEM4wmovWqLRYqe5oopCaDP3LtoZfzThyphenhyphenekFM64Jefldd_Ltpp-1rnZqunWuINk0zLXWOxOoyv4Bl86SrOFFmoOsqfhvqTPvl51mIAMxChFLZ-tFa_yOS5k/s400/bakdatamod3.png" height="243" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 7</td></tr>
</tbody></table>
<a href="http://energy.usgs.gov/Portals/0/Rooms/oil_and_gas/noga/multimedia/2013_Bakken_ThreeForks_Assessment.pdf">Recent USGS</a> Mean Estimates (released April 30, 2013) suggest 7.4 BBO (billion barrels of oil) for the entire Bakken/Three Forks (slide 16) with a range of 4.4 to 11.4 BBO at the F5 and F95 levels respectively. For the North Dakota portion of the play the mean estimate is 5.8 BBO(slide 18).<br />
<br />
I have adjusted my medium scenario to try to match this mean estimate by adjusting the rate that average well productivity decreases and not allowing the rate of increase in producing wells to increase beyond 2000 net wells added per year (currently the rate is 1769/year). For Model 3 we have:<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh-Q-Hltfe6tWLtevO-bv-t-AmOSntvXxe3el7HEF9umVA-g6pdlZ1K_EqaQTtrRA_vgT1bMohZMrfEhqjqauBNOSH7JC2-OpylIgPhAFcX49pI-z24VT7gvbiWUMNotMy_LpxsVlA9lwHV/s1600/bakmodel3.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh-Q-Hltfe6tWLtevO-bv-t-AmOSntvXxe3el7HEF9umVA-g6pdlZ1K_EqaQTtrRA_vgT1bMohZMrfEhqjqauBNOSH7JC2-OpylIgPhAFcX49pI-z24VT7gvbiWUMNotMy_LpxsVlA9lwHV/s400/bakmodel3.png" height="241" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 8</td></tr>
</tbody></table>
This scenario ignores economics and assumes oil prices will rise enough to keep breakeven oil prices below market prices so that new wells remaine profitable, essentially it assumes all technically recoverable reserves (TRR) will be economically recoverable (profitable). If we leave all assumptions the same as in Figure 8 with the exception of using Model 1 for our well profile we get the following scenario (Figure 9):<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjlf9spD3FCviuQaR9H4rvQH2EqVuQa0Rz9UfQm1Hmq8CN_PoHORNSC_o1q_J0761fDFlaPePUuJf6712LhT8ubazBj2uMxsyhiYunWLf5MczjzkadLtqmhc27GKggGD0-g1tp-teTjjMvx/s1600/bakmodel1.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjlf9spD3FCviuQaR9H4rvQH2EqVuQa0Rz9UfQm1Hmq8CN_PoHORNSC_o1q_J0761fDFlaPePUuJf6712LhT8ubazBj2uMxsyhiYunWLf5MczjzkadLtqmhc27GKggGD0-g1tp-teTjjMvx/s400/bakmodel1.png" height="241" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 9</td></tr>
</tbody></table>
Note that both these scenarios (in figures 8 and 9) follow the NDIC prediction of 42,500 producing wells and that the expected number of wells added per year will be 2000 wells/year (see slide 28 in the <a href="https://www.dmr.nd.gov/oilgas/presentations/EmmonsCoFB101512.pdf" target="_blank">Emmons Presentation </a>). Both scenarios start at about 1800 wells/year in 2013 and remain at that level to 2015, then ramp slowly to 2000 wells per year by the end of 2018. Also note the increase in output over the 1953 to 2073 period for Model 1 (9.6 BBO) vs Model 3 (5.9 BBO), a 63 % increase.<br />
<br />
In order to match the USGS Mean estimate for TRR while also following the NDIC's future scenarios for rate of producing wells added per year and total number of producing wells the productivity of the average new well had to decrease as follows:<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjnRzg3LKA2d2bPvU_qFrLay0Du7cXe9IfQTPvISOqpM-pHHnX034TAW7PZOvNpdD4LAZm-ipiJEp0-0kGgVHxXlOIHl9AQuaCvFUg7X6C-cZS0GWALOKF1jPQ0ePwxhxguhwWkQgaHmQHN/s1600/bakwellprod.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjnRzg3LKA2d2bPvU_qFrLay0Du7cXe9IfQTPvISOqpM-pHHnX034TAW7PZOvNpdD4LAZm-ipiJEp0-0kGgVHxXlOIHl9AQuaCvFUg7X6C-cZS0GWALOKF1jPQ0ePwxhxguhwWkQgaHmQHN/s400/bakwellprod.png" height="251" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 10</td></tr>
</tbody></table>
<br />
By 2028 average well productivity falls to 8 % of the Jan 2013 level. To make the scenario more realistic, we now attempt to consider profitability. We initially assume a fairly rapid rise in real oil prices (2013 $) of 7.57 % per year from 2013 to 2037. We also assume that new wells are only added if the real break even oil price of the average well is lower than the real price of oil. To calculate break even oil prices at the refinery gate, we assume well drilling and fracking costs are $9 million per well, OPEX plus financial costs are $7/barrel, transportation cost is $12/barrel, and royalty and taxes are 25 % of the well head revenue (refinery gate revenue minus transportation costs). Then we use a discount rate of 10 % to find the net present value of the net revenue (revenue-cost) stream from oil output over an assumed 30 year well life.<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgQ5tLTFuFxt7JctaIcJpEV8lYBkTn_BY_ZYAt4szN0Po8ymft1pDYr9KbAbcUlgBWhsYucnHhYcKBRJRkDgEYKnhBspnaZ2VS_jZvqmyLmgiawt3guo3ONoCr0vZCazUg4xauYfwRe4Arm/s1600/oil+price.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgQ5tLTFuFxt7JctaIcJpEV8lYBkTn_BY_ZYAt4szN0Po8ymft1pDYr9KbAbcUlgBWhsYucnHhYcKBRJRkDgEYKnhBspnaZ2VS_jZvqmyLmgiawt3guo3ONoCr0vZCazUg4xauYfwRe4Arm/s400/oil+price.png" height="227" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 11</td></tr>
</tbody></table>
Note that the breakeven prices are based on Model 3 and average well productivity decreases as shown in figure 10 above. Based on the assumptions for oil prices, break even oil prices, and well productivity decreases and using the scenario presented in figure 8 above, we expect that new wells will no longer be added after early 2018 because they would not be profitable. The following scenario is the result:<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjh-7Muh8o6YqNy397kSHwojz30t8oYvaeqB71jf8Y-bww4JzGrf86BHhU6y3HVbKGSVYGkTrrbjKnn-AaqNDgJt3fChQbePpbOSITHbjozu6wvUsQxuLGdS49ILx8LH-xcUUtZkz_vpXa0/s1600/bakmod3be.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjh-7Muh8o6YqNy397kSHwojz30t8oYvaeqB71jf8Y-bww4JzGrf86BHhU6y3HVbKGSVYGkTrrbjKnn-AaqNDgJt3fChQbePpbOSITHbjozu6wvUsQxuLGdS49ILx8LH-xcUUtZkz_vpXa0/s400/bakmod3be.png" height="241" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 12</td></tr>
</tbody></table>
Replacing the Model 3 well profile with Model 1 (and no other changes) we have:<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUzMQMKiyNkn457dcJunVd46Qr_05I_-ing_1UWUCMKXEP6MVNaNWTcOBmERTs7Qaz_ij2kXSwZKltHyt3uytZ68u4MdXimoq5nPCxn9dYjfE2Rcb0v6q8ro-9h5ccdlLXX7zNHcDZeCF3/s1600/bakmod1be.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUzMQMKiyNkn457dcJunVd46Qr_05I_-ing_1UWUCMKXEP6MVNaNWTcOBmERTs7Qaz_ij2kXSwZKltHyt3uytZ68u4MdXimoq5nPCxn9dYjfE2Rcb0v6q8ro-9h5ccdlLXX7zNHcDZeCF3/s400/bakmod1be.png" height="241" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 13</td></tr>
</tbody></table>
The introduction of break even prices lowers the output from 1953 to 2073 to 4.7 BBO from 5.9 BBO in the initial scenario (TRR) for Model 3. Model 1 output from 1953 to 2073 would be 7.7 BBO if oil prices rise at a slower rate than I assumed such that the breakeven price of $129/barrel is above the real oil price by early 2018. Note that the higher well profile of Model 1 would lead to a lower break even price of $129, if this well profile is correct then the USGS mean estimate would be likely be surpassed unless prices rise much more slowly.<br />
<br />
The Model 1 well profile may be too high and Model 3 may be more realistic, future data will help to sort this out. I created a scenario using the Model 1 well profile which results in output similar to the USGS mean estimate of 5.8 BBO over the period from 1953 to 2073. The scenario assumes that prices remain below the Jan 2017 break even price of $107/barrel so that new wells are no longer added after early 2017 and that 1500 wells are added per year from 2013 to 2016. Total wells are 11,000 and output from 1953 to 2073 is 5.9 BBO, well productivity decreases as in figure 10. See figure 14 below:<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQxFgWWEFXsWHKfy_4f83NVie94CTtg7Ba96pFeC-X38NDw-A5XDIOebtChfhldfNCagQSVUeLv4ogrjrp4cr5wvD7mUuhqE3rsQgTCiNgCd3ulT04gZBzoQeJmmeOOSizlMTt1h58aTHP/s1600/baklikvbelow.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQxFgWWEFXsWHKfy_4f83NVie94CTtg7Ba96pFeC-X38NDw-A5XDIOebtChfhldfNCagQSVUeLv4ogrjrp4cr5wvD7mUuhqE3rsQgTCiNgCd3ulT04gZBzoQeJmmeOOSizlMTt1h58aTHP/s400/baklikvbelow.png" height="237" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 14</td></tr>
</tbody></table>
If we use the scenario above, but change the average well profile to Model 3 we get:<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgDS66sc8WAX72HcgmfUBAhUqeNaQsBNvkHDqAZXFo5SVN3KqDqmF4a6gkAW2eAQt9d3s6zH3TYVVhrMyeZy_UoXSOLOm_O1D5H9-2MYmhFi3MYCcLg-n1Shyphenhyphencji99RedTI0_cif-g4Co1E/s1600/bakhypbelow.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgDS66sc8WAX72HcgmfUBAhUqeNaQsBNvkHDqAZXFo5SVN3KqDqmF4a6gkAW2eAQt9d3s6zH3TYVVhrMyeZy_UoXSOLOm_O1D5H9-2MYmhFi3MYCcLg-n1Shyphenhyphencji99RedTI0_cif-g4Co1E/s400/bakhypbelow.png" height="237" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Figure 15</td></tr>
</tbody></table>
<br />
In this case prices would need to rise to $112/barrel by July 2016 in order for new wells to be added profitably. Output from 1953 to 2073 falls to 3.6 BBO from 5.9 BBO using Model 1(figure 14).<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
In a future post I will look at scenarios which would match the USGS high and low estimates using Model 3 and assuming that F5 and F95 estimates for the total Bakken/Three Forks can be used to estimate F5 and F95 for the North Dakota portion.<br />
<br />
This is a revision of a very rough draft I posted on May 16, 2013, I apologize to anyone who read it, I will do a better job of editing before posting in the future.<br />
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
DC</div>
<br />
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 192px;">
<colgroup><col span="3" style="width: 48pt;" width="64"></col>
<tbody>
<tr height="19" style="height: 14.4pt;">
<td align="right" height="19" style="background-color: transparent; border: 0px black; height: 14.4pt; width: 48pt;" width="64"><span style="font-family: Calibri;"></span> </td>
<td align="right" style="background-color: transparent; border: 0px black; width: 48pt;" width="64"><span style="font-family: Calibri;"></span><br /></td>
<td align="right" style="background-color: transparent; border: 0px black; width: 48pt;" width="64"><span style="font-family: Calibri;"></span><br /></td>
</tr>
</tbody></colgroup></table>
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 192px;">
<colgroup><col span="3" style="width: 48pt;" width="64"></col>
<tbody>
<tr height="19" style="height: 14.4pt;">
<td align="right" height="19" style="background-color: transparent; border: 0px black; height: 14.4pt; width: 48pt;" width="64"><span style="font-family: Calibri;"></span><br /></td>
<td align="right" style="background-color: transparent; border: 0px black; width: 48pt;" width="64"><span style="font-family: Calibri;"> </span></td>
<td align="right" style="background-color: transparent; border: 0px black; width: 48pt;" width="64"><span style="font-family: Calibri;"></span><br /></td>
</tr>
</tbody></colgroup></table>
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 192px;">
<colgroup><col span="3" style="width: 48pt;" width="64"></col>
<tbody>
<tr height="19" style="height: 14.4pt;">
<td align="right" height="19" style="background-color: transparent; border: 0px black; height: 14.4pt; width: 48pt;" width="64"><span style="font-family: Calibri;"></span><br /></td>
<td align="right" style="background-color: transparent; border: 0px black; width: 48pt;" width="64"><span style="font-family: Calibri;"></span><br /></td>
<td align="right" style="background-color: transparent; border: 0px black; width: 48pt;" width="64"><span style="font-family: Calibri; font-size: large;"></span><br /></td>
</tr>
</tbody></colgroup></table>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5552647839482265343.post-89511854592679368232013-04-26T15:12:00.003-04:002013-12-13T12:20:54.611-05:00Bakken Model Suggests 7 Billion barrels total, enough for 1.3 years of US Crude inputs<span style="color: black;"></span><br />
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh295o5fHccMl7NhUswIkxDykgVTY4qQWbpNx4ruZhL67t03lTzB93XQq4EjeYl_KsS7it9UvJamO4VuUc0NPOQ56z6PF_kBteBauMfSPXIVPJDCdp6G6KD8b0phNFBsXxbNE5KeRE_NmpZ/s1600/bakmedhypmod.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh295o5fHccMl7NhUswIkxDykgVTY4qQWbpNx4ruZhL67t03lTzB93XQq4EjeYl_KsS7it9UvJamO4VuUc0NPOQ56z6PF_kBteBauMfSPXIVPJDCdp6G6KD8b0phNFBsXxbNE5KeRE_NmpZ/s400/bakmedhypmod.png" height="289" width="400" /><br />
</a><br />
<div class="separator" style="clear: both; text-align: left;">
Note that all images can be enlarged with a mouse click.</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
Above is one possible scenario for future output from the Bakken which suggests a total cumulative output of 7 billion barrels (Gb) from 1953 to 2073. Current US crude oil inputs to refineries is about <a href="http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=wcrrius2&f=w" target="_blank">15 million barrels per day </a> (52 week average above 14.9 MMb/d for past 6 months) which is 5.475 Gb per year, the total Bakken output of 7 Gb would supply current refinery inputs for 1.27 years. When we account for the 0.57 Gb of Bakken which has been produced we are left with about 1.2 years of crude inputs at current levels.</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
The above estimate is based on a <a href="https://www.dmr.nd.gov/oilgas/presentations/EmmonsCoFB101512.pdf" target="_blank">presentation</a> from the North Dakota Industrial Commission (NDIC) Oil and Gas Division (see slides 25 to 30). This presentation suggests about 41,000 wells will be drilled in the Bakken at a rate of 1500-3000 wells per year, I chose 2460 wells per year and a total of 42,000 wells drilled by Sept 2028.</div>
<div class="separator" style="clear: both; text-align: left;">
<a name='more'></a><br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZ07vrgrAzwNYlljypem9lmyW21BP4SfgQSua6SjCfwAsMRB8pM4dtbekliaQhqSrUzAiep-8s8ip0vTfH5OpW80waSKbSxWZycAHgqwcsgJeHdRIjGa1Hha2cDXPmBPjaO4pvjPr71qR_/s1600/bakhypavgwell.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZ07vrgrAzwNYlljypem9lmyW21BP4SfgQSua6SjCfwAsMRB8pM4dtbekliaQhqSrUzAiep-8s8ip0vTfH5OpW80waSKbSxWZycAHgqwcsgJeHdRIjGa1Hha2cDXPmBPjaO4pvjPr71qR_/s400/bakhypavgwell.png" height="265" width="400" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: left;">
The model is based on the average well profiles above. The well profile from Dec 2004 to Dec 2007 is 50 % of the well profile from Jan 2008 to Jan 2013. From Feb 2013 to Sept 2028 the average well profile decreases by 1 % each month or 12.4 % per year. There are over 180 separate well profiles between 2013 and 2028, I have presented 2 in the chart above (Jan 2018 and Jan 2023). The 30 year estimated ultimate recovery(EUR) is 303.5 kb, 166 kb, and 91.8 kb in Jan 2013, 2018, and 2023 respectively. In Jan 2018 the EUR is 55 % of Jan 2013, in Jan 2023 it falls to 30 % and by Jan 2028 it is 17 % of Jan 2013. This compares with a 30 year EUR of 570 kb for the NDIC typical well and for <a href="http://www.google.com/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=1&cad=rja&ved=0CDEQFjAA&url=http%3A%2F%2Fsolarplan.org%2FResearch%2FMason_Oil%2520Production%2520Potential%2520of%2520the%2520North%2520Dakota%2520Bakken_OGJ%2520Article_10%2520February%25202012.pdf&ei=hI15UbbKBcLf0gHrqYC4AQ&usg=AFQjCNGCB5APJtfCmfe93elJuVO5f3HPcg&sig2=DQN1oLlMqN9pWgZwpVZyLQ" target="_blank">Mason's model</a> (PDF, see pp5-6, but note that data in figure 5 is incorrect) the 30 year EUR is 500 kb (using Di=0.197, b=1.4, and qi=14,225 and the Arps hyperbolic equation on p 6). The hyperbolic model of the "Bakken Average Well" uses Di=0.19, b=0.95, and qi=14,225. Based on Arps, b should be between 0 and 1, not 1.1 and 1.4 as Mason suggests, for b>=1 the EUR is unbounded (infinite) as time appoachs infinity.</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjwYhCh5Gd6sEiIqoJVcaB3QpDChS_-feh_UxU9sTIwChWKHCi8GMp_3caIcZwmfebOwVLiNdaelO0VRy9-YZGM79ubeCl9M8cMgKLefQ67j90CC5eZPXehGyWD4nGn7Ix509RdU_nE5mfw/s1600/bakhypmod.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjwYhCh5Gd6sEiIqoJVcaB3QpDChS_-feh_UxU9sTIwChWKHCi8GMp_3caIcZwmfebOwVLiNdaelO0VRy9-YZGM79ubeCl9M8cMgKLefQ67j90CC5eZPXehGyWD4nGn7Ix509RdU_nE5mfw/s400/bakhypmod.png" height="244" width="400" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjH4zkey1Qxet55RXrTTKw4sjx6LoxF_dRDh3ycEvBZYwSf0ayazFe-tckjTzCjVyTs_LMCa0dTV14NQzIj-QGoRZQniJbw843xOt2x2b1n05UnOsJyLoN2KaVd8gZvZw0HipRHlo9_Bmn2/s1600/bakhypmodlog.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img alt="" border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjH4zkey1Qxet55RXrTTKw4sjx6LoxF_dRDh3ycEvBZYwSf0ayazFe-tckjTzCjVyTs_LMCa0dTV14NQzIj-QGoRZQniJbw843xOt2x2b1n05UnOsJyLoN2KaVd8gZvZw0HipRHlo9_Bmn2/s400/bakhypmodlog.png" height="244" title="" width="400" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div align="left" class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: left;">
Each of these plots uses the average well profiles presented previously in combination with Bakken historical <a href="https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats.pdf" target="_blank">data</a> from the NDIC, the model matches the data fairly well from 2007 to 2013.</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
If we substitute the NDIC typical well or Mason's model for the "average Bakken well" we find:</div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiSpVZ5SZheKXQvA2rpaIzqEgaTerjtW1eke1h2PrSyQcDOZIBNzT6D_j-zOvVz7RJjq860Sb67gIEg4wYW0r6imkpVExp-nmUgXTCChTBF06Siroy1G2rH83HFcJ9smX95w28QcGkiHINd/s1600/bakndicmas.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiSpVZ5SZheKXQvA2rpaIzqEgaTerjtW1eke1h2PrSyQcDOZIBNzT6D_j-zOvVz7RJjq860Sb67gIEg4wYW0r6imkpVExp-nmUgXTCChTBF06Siroy1G2rH83HFcJ9smX95w28QcGkiHINd/s400/bakndicmas.png" height="269" width="400" /></a></div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
If we extend these using my original scenario:</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhztuulMu5me4TPoJLZEv7_znKwVW9Y5DRKRGjJ02IEJn3X2jISd4MHLfg4RED9CAOy7Q2Nz7Gn9FdBhbO3KywbYasVx0-n90_uFOKjHrfh1FfWpFBublrgaNgk0vLalx5qmBo9dK-O93xD/s1600/bakndicmas2.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhztuulMu5me4TPoJLZEv7_znKwVW9Y5DRKRGjJ02IEJn3X2jISd4MHLfg4RED9CAOy7Q2Nz7Gn9FdBhbO3KywbYasVx0-n90_uFOKjHrfh1FfWpFBublrgaNgk0vLalx5qmBo9dK-O93xD/s400/bakndicmas2.png" height="293" width="400" /></a></div>
<div class="separator" style="clear: both; text-align: left;">
The lowest of these three curves matches the data much better than the NDIC Typical Well or the model presented in James Mason's paper. As a side note, the NDIC typical well matches a hyperbolic with qi=27500, Di=0.19, and b=0.95(see chart below), the hyperbolic matching the data uses the same qi as Mason's model, but uses the Di, and b matching the NDIC typical well, so it is a hybrid of the two.</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjn3cW6lAAGr1E2HOwXBCOXCTcY_48q7I8sdeXDn9xhzfZ3PzVZu_5-sosILZAxcnX7aXL6AqvnjM6F0APyfMviBsc9VVkSMz_90KtHeGiJ_-mlPJDo2cqYp6dS8A8opRMpqQ5Im52K4B0j/s1600/ndicbakmod2.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjn3cW6lAAGr1E2HOwXBCOXCTcY_48q7I8sdeXDn9xhzfZ3PzVZu_5-sosILZAxcnX7aXL6AqvnjM6F0APyfMviBsc9VVkSMz_90KtHeGiJ_-mlPJDo2cqYp6dS8A8opRMpqQ5Im52K4B0j/s400/ndicbakmod2.png" height="300" width="400" /></a></div>
<div align="left" class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: left;">
Finally the model presented in the first chart is rescaled so that it can be more easily compared with scenarios presented in previous posts. Most of these scenarios had a less rapid decrease in productivity of the average well after Jan 2013 (usually 0.5 % each month or 6 % per year). The earlier scenarios also increased the number of new wells more rapidly and topped out at a rate of 3000 new wells per year, the model below reaches 2460 new wells per year (205 per month) in June 2016 and remains at that level for 10 years.</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjugp9R_cheZtWb7aZi7_1P1t05qmfeIbCio-pglXhkO-WmOb9_sf8hRae1-UKx3Svem2Qo2H0HVNgb2afWkRL7Fs25Yoc8To4A_JXNQ1Yj4OILVOpjVm3ei1VqLgs-z_9kkchiW9M_Fqv0/s1600/bakmedhypmod2.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjugp9R_cheZtWb7aZi7_1P1t05qmfeIbCio-pglXhkO-WmOb9_sf8hRae1-UKx3Svem2Qo2H0HVNgb2afWkRL7Fs25Yoc8To4A_JXNQ1Yj4OILVOpjVm3ei1VqLgs-z_9kkchiW9M_Fqv0/s400/bakmedhypmod2.png" height="251" width="400" /></a></div>
<div class="separator" style="clear: both; text-align: left;">
We will explore a few variations in future scenarios in an upcoming post.</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: left;">
DC</div>
</div>
Unknownnoreply@blogger.com6tag:blogger.com,1999:blog-5552647839482265343.post-70836659404346580882012-12-15T14:57:00.000-05:002012-12-15T14:57:02.800-05:00Quick update to tight oil modelsI have extended both the Bakken and Eagle Ford Shale models out to 2040. I have assumed no other significant tight oil plays are developed in the US besides these two, this is a somewhat pessimistic assumption, though most other assumptions are relatively optimistic. These may balance out in the long run.<br />
<br />
As the Bakken becomes fully drilled up at about 40,000 wells (around the end of 2024) it is assumed that drilling rigs are moved to Texas from North Dakota to work the Eagle Ford play and that there is a ramp up in the number of wells drilled there per month as a result.<br />
<br />
In this current scenario, the tight oil output comes close to matching the EIA 2013 outlook (red diamonds in figure below) from 2018 to 2028, but the output is lower both before and after that period.<br />
<br />
Bakken:<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgVv1oySN78apkyU1v6SWDYJDz6uvzMpQVGnHr21YdYu9IYuvU4f_SdKoqHvwMARy29gUIcJXtKvj0ZIldoj1e04ubj9PrrvSQhOHhAV7c_zBTmlx2x3ItnFVzlNUib2FPjuEAC7X3sD3C6/s1600/bakkenmodel3.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="355" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgVv1oySN78apkyU1v6SWDYJDz6uvzMpQVGnHr21YdYu9IYuvU4f_SdKoqHvwMARy29gUIcJXtKvj0ZIldoj1e04ubj9PrrvSQhOHhAV7c_zBTmlx2x3ItnFVzlNUib2FPjuEAC7X3sD3C6/s640/bakkenmodel3.png" width="640" /></a></div>
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
Eagle Ford:<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZDeSu2ZZYTQ0OyFolupffwSTkFbAKglDH-R_1l4UwLmO0vbC2mTsbTb-wGVt9M5lOWgm1-qjPT4oBhF7eYVwaPBEVFbgUDZEejNejk4PUzeuUiTag33lb7CLSRsoL7NAhyP6AUoAuXefd/s1600/eagleford2.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="348" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZDeSu2ZZYTQ0OyFolupffwSTkFbAKglDH-R_1l4UwLmO0vbC2mTsbTb-wGVt9M5lOWgm1-qjPT4oBhF7eYVwaPBEVFbgUDZEejNejk4PUzeuUiTag33lb7CLSRsoL7NAhyP6AUoAuXefd/s640/eagleford2.png" width="640" /></a></div>
<br />
<div align="left" class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: left;">
US Tight Oil:</div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEidhSS7B5s74DMd6Y_D1y-6xoBAOjL4Wb0cvBds_GiDKjBgX9dtmUW082VArEIbUaA0yLbRWebGndP-2vj8mLsbgkmjWdmiGUJ_DLbmx1XWpKkFSTw9gzJAsy6K-l4M-UUGt4HTVlhadz9Y/s1600/ustightoil2.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"></a><br /></div>
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEidhSS7B5s74DMd6Y_D1y-6xoBAOjL4Wb0cvBds_GiDKjBgX9dtmUW082VArEIbUaA0yLbRWebGndP-2vj8mLsbgkmjWdmiGUJ_DLbmx1XWpKkFSTw9gzJAsy6K-l4M-UUGt4HTVlhadz9Y/s1600/ustightoil2.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><img border="0" height="356" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEidhSS7B5s74DMd6Y_D1y-6xoBAOjL4Wb0cvBds_GiDKjBgX9dtmUW082VArEIbUaA0yLbRWebGndP-2vj8mLsbgkmjWdmiGUJ_DLbmx1XWpKkFSTw9gzJAsy6K-l4M-UUGt4HTVlhadz9Y/s640/ustightoil2.png" style="margin-left: auto; margin-right: auto;" width="640" /></td></tr>
<tr><td class="tr-caption" style="text-align: center;"></td></tr>
</tbody></table>
<br />
<br />
DC</a><br />
<div class="separator" style="clear: both; text-align: left;">
DC</div>
<div align="left" class="separator" style="clear: both; text-align: center;">
</div>
<div align="left" class="separator" style="clear: both; text-align: center;">
</div>
Unknownnoreply@blogger.com3tag:blogger.com,1999:blog-5552647839482265343.post-18192704946555698322012-12-02T14:53:00.001-05:002012-12-09T13:08:42.825-05:00Update on Bakken Model using hyperbolic declineThe recent World Energy Outlook (WEO) published by the International Energy Agency (IEA) predicts that US unconventional output will rise to 5 million barrels per day (Mb/d) in 2020. This increased crude plus condensate (C+C) output will primarily come from tight oil in the Bakken trend in North Dakota and the Eagle Ford trend in Texas.<br />
<br />
I decided to update my model of the Bakken based on information learned while attempting to model the Eagle Ford trend in Texas. One thing I discovered in my modelling of the Eagle Ford was that the hyperbolic decline model seems to give a better approximation of the Eagle Ford then the Dispersive Discovery Model that I used in my <a href="http://oilpeakclimate.blogspot.com/2012/10/using-dispersive-diffusion-model-for.html" target="_blank">previous Bakken Model</a>. For this reason I used a hyperbolic decline model for my updated Bakken Model.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-A_eRkiG_w66NMiCVPqTPYFRMW25SRZzqTbF5A-NFZg-EBVZvYnkJ0EeLc0RkNFsyz2zeeH4x3XmKuY__1k3WFeiCvLFS0-n-YVCT7KPt74Ha_Fc9oxWEaqODbj0Pm1SAOyqmSfvNuEBB/s1600/bakwell.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="334" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-A_eRkiG_w66NMiCVPqTPYFRMW25SRZzqTbF5A-NFZg-EBVZvYnkJ0EeLc0RkNFsyz2zeeH4x3XmKuY__1k3WFeiCvLFS0-n-YVCT7KPt74Ha_Fc9oxWEaqODbj0Pm1SAOyqmSfvNuEBB/s640/bakwell.png" width="640" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<br />
The early wells from 2004 to 2007 have a lower well profile with cumulative output about half that of wells starting production between 2008 and 2012. My previous model had decreases in well productivity of 1 % each month from 2013 to 2019 with new wells starting production in Dec 2019 producing 45 % less cumulative oil than those beginning production in Dec 2012. <br />
<br />
I decided that this was too large a decrease in well productivity to be realistic. For the updated model, wells starting production in Feb 2013 produce a cumulative output about 0.5 % less than those which started producing the previous month. Each year the well productivity profile decreases by about 6 % compared to new wells from 1 year earlier. By Dec 2019 new well productivity has decreased by 66 % compared to new wells from Jan 2013. The chart above only shows 3 cumulative output curves with one curve (Jun-16) between the Jan 2008 to Dec 2012 cumulative and the <br />
Dec-2019 cumulative curves. In fact there are 94 curves between the Jan-13 cumulative curve and the Dec-19 cumulative curve one for each month.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjnimZlm_82ztXg4xz25lHMG0Cx9vJDvNPBoU93Pj1B8pOdt3GtYVxXab7rbgJl1vMeE_9A7YKnrgsJlVpg7TPkcHRZ1pIOA0_Zj0hKWa_24ALh6Pz2TXftzaO3rVdUgcWk_hCms6z__w1Y/s1600/bakmodel2.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="353" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjnimZlm_82ztXg4xz25lHMG0Cx9vJDvNPBoU93Pj1B8pOdt3GtYVxXab7rbgJl1vMeE_9A7YKnrgsJlVpg7TPkcHRZ1pIOA0_Zj0hKWa_24ALh6Pz2TXftzaO3rVdUgcWk_hCms6z__w1Y/s640/bakmodel2.png" width="640" /></a></div>
<br />
The data for C+C output in barrels per day and number of producing wells can be found <a href="https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats.pdf" target="_blank">here.</a> <br />
<br />
In order to forecast future output we assume the average well profile remains unchanged for new wells from Jan 2008 until Jan 2013 and then declines for each month from Feb 2013 to Dec 2019 by 0.5 % as discussed above. <br />
<br />
To estimate the number of producing wells in Oct 2012 we use the average of the change in the number of producing wells (delta # of wells) for the previous 7 months which is 162. This number is added to the 4629 wells producing in Sept 2012, thereafter the delta # of wells producing is assumed to increase by 3 each month up to Dec 2013 (162, 165, .... , 201, 204) to a total of 7374 producing wells. Note that between Jan 2010 and Sept 2012 the trend in the increase in delta # of wells was 4 per month. So the increase in the delta # of wells producing of 3 represents a decrease from the previous trend. <br />
<br />
This rate of increase of delta # of wells is decreased further to 2 each month from Jan 2014 to Dec 2015 to reach a total # of producing wells of 12870. The rate of increase of the delta # of wells producing decreases again to 1 per month from Jan 2016 to Dec 2017 and producing wells increase to 19218. From Jan 2018 to Dec 2019 the delta # of wells producing stays steady at 276 with the total number of wells reaching 25842. <br />
<br />
The model by James Mason suggests 40000 wells would be the saturation point for the Bakken with little room for any further increase in producing wells. In the chart below notice the rapid dropoff in output after Dec 2019 when new wells are no longer added. If wells continue to be added at 276 new wells per month then 40000 wells are reached in April 2024, at that point (if Mason's model and my model are both correct) we would see a rapid drop in oil production.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOJWiCTsO9aJu1_y6jOIrK3RHQtpRGJM0Jwdy7MyMkRd1PWYiW3CmZYrEC82K1TdZvogV7QImAbTGbAdQ63l75HvNCd-JX8QDZxRqiZD7NyEJFxVKuMPDs-atlWaaAG9pO7x3ksPhlkSrl/s1600/bakkenmodel2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="354" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOJWiCTsO9aJu1_y6jOIrK3RHQtpRGJM0Jwdy7MyMkRd1PWYiW3CmZYrEC82K1TdZvogV7QImAbTGbAdQ63l75HvNCd-JX8QDZxRqiZD7NyEJFxVKuMPDs-atlWaaAG9pO7x3ksPhlkSrl/s640/bakkenmodel2.png" width="640" /></a></div>
<br />
Output peaks at 1.35 Mb/d in early 2019 and then remains on plateau until Dec 2019, this is an example of Rune Likvern's "Red Queen" effect.<br />
<br />
I hope to publish a post on the Eagle Ford soon. For some flavor of this, consider this chart:<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQBxkO_2B8gBG1PqctF9x92NFHNuIr66axnFcBRo248IlvGprmUeeS6Tayn5Lf2fl2hN4aYvlSmEXTbTYuMlRYpr8eNxQUcn5FB0GUixMeIEbrZB6cxr_-mCHUpWOG3nRebxJZB3h6ftkd/s1600/eagleford.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="364" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQBxkO_2B8gBG1PqctF9x92NFHNuIr66axnFcBRo248IlvGprmUeeS6Tayn5Lf2fl2hN4aYvlSmEXTbTYuMlRYpr8eNxQUcn5FB0GUixMeIEbrZB6cxr_-mCHUpWOG3nRebxJZB3h6ftkd/s640/eagleford.png" width="640" /></a></div>
<br />
The Texas RRC database was used to develop the average well profile. Note that data is estimated from a combination of Texas RRC data and EIA data. The Texas data was used to estimate the percentage of all Texas oil coming from the Eagle Ford trend, then this percentage was multiplied by EIA Texas output to estimate Eagle Ford oil output.<br />
<br />
Based on these models I think the upper limit to tight oil output from the Bakken and Eagle Ford in 2020 is about 2.7 Mb/d rather than the 5 Mb/d predicted by the IEA. Note that these estimates are quite optimistic and should be thought of as an upper bound to what may be attainable. This is an increase of about 1.6 Mb/d over current US tight oil output of about 1.14 Mb/d. A more realistic scenario might be a doubling of output to 2.3 Mb/d in 2020.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
DCUnknownnoreply@blogger.com2tag:blogger.com,1999:blog-5552647839482265343.post-51669306192253536892012-10-03T16:44:00.001-04:002012-10-05T22:16:49.908-04:00Using a Dispersive Diffusion Model for Bakken Oil ScenariosThere is a great deal of excitement about the increased oil output from the Bakken Oil field in North Dakota. A recent <a href="http://www.theoildrum.com/node/9506" target="_blank">post by Rune Likvern</a> at the Oil Drum sparked my interest in this topic. The <a href="http://www.eia.gov/forecasts/aeo/source_oil_all.cfm#increases" target="_blank">EIA</a> estimates that under an optimistic high technically recoverable resource (TRR) case that the Bakken might produce as much as 1 Mb/d by 2021 and then remain at that level until 2035. A paper by <a href="http://www.sbpipeline.com/images/pdf/Mason_Oil%20Production%20Potential%20of%20the%20North%20Dakota%20Bakken_OGJ%20Article_10%20February%202012.pdf" target="_blank">James Mason</a> presents a scenario where Bakken output rises to 1.5 Mb/d by 2020 and remains at this level out to 2045.<br />
<br />
At the Oil Conundrum, Webhubbletelescope (WHT) presents <a href="http://theoilconundrum.blogspot.com/2012/07/bakken-dispersive-diffusion-oil.html" target="_blank">a dispersive diffusion model</a> to model Bakken output, based on the data presented in Mason's paper. He tells us that P-naught(P0) is 2.6 million barrels, but he leaves it to the reader to determine D-naught(D0).<br />
<br />
P(t)= P0/(1+1/(sqrt(D0*t)) <br />
<br />
is the equation describing the model and its derivation is presented at the Oil ConunDRUM (link is above).<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjNAHTnzFAG6Ppn6B3cJOeaU1Gt63DwdJRYHWe61v8_ePwIQcT0rl3LmU90SiaTZuIqgK2osxGAdg7JrqO8MlqwG7Tvqcpkw0gnB_v0SWdrF0uJLa1T7lyaExn6MOk9Jwo2_Zk09jfJhmtB/s1600/bakken_mason_diffusional_model.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjNAHTnzFAG6Ppn6B3cJOeaU1Gt63DwdJRYHWe61v8_ePwIQcT0rl3LmU90SiaTZuIqgK2osxGAdg7JrqO8MlqwG7Tvqcpkw0gnB_v0SWdrF0uJLa1T7lyaExn6MOk9Jwo2_Zk09jfJhmtB/s1600/bakken_mason_diffusional_model.png" /></a></div>
<br />
By trial and error we find D0=0.0023, for month 1 we get a different value from the 580 b/d in the chart above (it should be 1166 b/d), other than that the model agrees.<br />
<br />
The North Dakota Department of Mineral Resources estimates the <a href="http://en.wikipedia.org/wiki/Bakken_formation" target="_blank">Bakken original oil in place</a> (ooip)at 167 Gb, Mason suggests total development will lead to 40,000 wells producing which suggests 4.175 Mb of ooip per well. I chose P0=4.175 Mb and D0=0.00045 (high model) in order to model the <a href="https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats.pdf" target="_blank">Bakken oil data</a> from the North Dakota government. A low model was also created with P0=4.175 Mb and D0=0.0001.<br />
<br />
The models (high, low, and 2.6) are below(2.6 is WHT's original model):<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg7G1c1yyO2diNWPdg64ZdIAj-yycmLICDo9dr57RXaJg6GgBxrQG07qE7PvPob87n35ipw9_irlh6MzZ5Q85ow9Ipy1sZslV52o_fdZtQN6SHYVOst6_fHdxNWJl4GHd3k0iMYJ3efuj-H/s1600/bakken8.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg7G1c1yyO2diNWPdg64ZdIAj-yycmLICDo9dr57RXaJg6GgBxrQG07qE7PvPob87n35ipw9_irlh6MzZ5Q85ow9Ipy1sZslV52o_fdZtQN6SHYVOst6_fHdxNWJl4GHd3k0iMYJ3efuj-H/s1600/bakken8.png" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4w8VUpM5QU5U0jDZuM5hI1DQC1r0BU1K3xp5EvJKlr13VWJAOrtXz7ggYXC-ummp9BzeAx-dZTHQ3nEZCfOTZ3i423VEZjD8U2dHPs9o6i-4q1WIUCYM6H_DxczGjXsY37ZGozMi5WpfZ/s1600/bakken9.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4w8VUpM5QU5U0jDZuM5hI1DQC1r0BU1K3xp5EvJKlr13VWJAOrtXz7ggYXC-ummp9BzeAx-dZTHQ3nEZCfOTZ3i423VEZjD8U2dHPs9o6i-4q1WIUCYM6H_DxczGjXsY37ZGozMi5WpfZ/s1600/bakken9.png" /></a></div>
<br />
<br />
In order to create this model I made a number of simplifying assumptions. We have the number of wells producing oil for every month from Dec 1953 to July 2012 and the number of barrels produced each of those months. We are particularly interested in the recent increase in output which began in January 2005.<br />
<br />
Using the Bakken Production Model developed by WHT and assuming that the average well follows this model we can create our model in a spreadsheet. We first find the change in the number of producing wells each month and then assume any increase in the number of producing wells is due to new wells being brought online. We also assume all wells are average wells and we know what the output for every future month will be from those new wells (because we assume they behave as the model predicts.) Keep in mind that the only input to the model is the change in the number of wells producing each month and two parameters P0=4,175,000 barrels and D0=0.00045, in the equation derived by WHT (see above.)<br />
<br />
The first cut is below:<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjAspCyVTwq7xnKaidacH99W8X9jGl7ZxER4Ib4uF83E4SOuflBXGTvB7BU198b5hz3vlKt1RWcZqTtwfD_wUWqPmYaq8Ukn_LsorwavaXitBai8i2MFcJLAQ3GIrjgMzTRMkHoNFca_lvn/s1600/bakken2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjAspCyVTwq7xnKaidacH99W8X9jGl7ZxER4Ib4uF83E4SOuflBXGTvB7BU198b5hz3vlKt1RWcZqTtwfD_wUWqPmYaq8Ukn_LsorwavaXitBai8i2MFcJLAQ3GIrjgMzTRMkHoNFca_lvn/s1600/bakken2.png" /></a></div>
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4w8VUpM5QU5U0jDZuM5hI1DQC1r0BU1K3xp5EvJKlr13VWJAOrtXz7ggYXC-ummp9BzeAx-dZTHQ3nEZCfOTZ3i423VEZjD8U2dHPs9o6i-4q1WIUCYM6H_DxczGjXsY37ZGozMi5WpfZ/s1600/bakken9.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"></a> </div>
The model matches the data quite well from Jan 2010 to July 2012. The early part of the data from Jan 2005 to Dec 2007 may not be modelled properly by the "high" model. The differences are more apparent in the following semi-log plot. (The plot beyond July 2012 is a future scenario discussed below.)<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhjrMo_3YCx9hbCiQKlzaCBT0x6t_YWppp-7Fh86J8K3OO9InD9TcLDmQO-I0ysBKP0sTJCiF8PTJL19SCvmTpWLWOt0HGbHTIV1qVcePehgPr6O7o3tchHJ_VZgTldkyUGEnt4HJC0jQRZ/s1600/bakken1.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhjrMo_3YCx9hbCiQKlzaCBT0x6t_YWppp-7Fh86J8K3OO9InD9TcLDmQO-I0ysBKP0sTJCiF8PTJL19SCvmTpWLWOt0HGbHTIV1qVcePehgPr6O7o3tchHJ_VZgTldkyUGEnt4HJC0jQRZ/s1600/bakken1.png" /></a></div>
<br />
In order to improve the early (before 2010) part of the model I created a "low" model where output per well is about half the level of the "high" model. This low model was used for wells which started production between Dec 2004 and Dec 2007.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_QCK1mushLwrj3XR28Q6JIPq0akyotxD2ZEzzzww_WOb_GbcE_ZilVzmhoaPnESvNBW0wS19BDpCSztIFHCJmi5xj8kZflipLKdzBY4JyDq-0nRygj_ZLo4AHNwtTeCHSjnZjfRTs7o3_/s1600/bakken3.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_QCK1mushLwrj3XR28Q6JIPq0akyotxD2ZEzzzww_WOb_GbcE_ZilVzmhoaPnESvNBW0wS19BDpCSztIFHCJmi5xj8kZflipLKdzBY4JyDq-0nRygj_ZLo4AHNwtTeCHSjnZjfRTs7o3_/s1600/bakken3.png" /></a></div>
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhqPM4CQHMZ0jIli6ldkFEluzwHJc1_gfp0Rc6IiPCpXzP-4E28QbbJY4YvTP84FMnitwo-Orwoh7dQeHTPoUgoaFTEot2SaPnuc5jtwatUfxV00plnVAxm9VRyyYSV5iS787efVCCdF-J4/s1600/bakken5.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhqPM4CQHMZ0jIli6ldkFEluzwHJc1_gfp0Rc6IiPCpXzP-4E28QbbJY4YvTP84FMnitwo-Orwoh7dQeHTPoUgoaFTEot2SaPnuc5jtwatUfxV00plnVAxm9VRyyYSV5iS787efVCCdF-J4/s1600/bakken5.png" /></a></div>
<br />
The fit is improved for 2007, 2008, and 2009. From Jan 2007 to July 2012 the number of producing wells increased at about 4.1 % each month. To create a future scenario I assumed the "high" model would continue to describe the average well. This assumption may be problematic as sweet spots become saturated with wells, in the future the low model or some "medium" model may be more appropriate. The rate of increase of new wells was assumed to decrease by 2.3% each month( so we multiply last month's rate of increase by 0.977 for every future month). We assume August 2012 will be a 4 % increase in # of wells, Sept 2012 would be 4 times 0.977=3.908%. We continue in this manner from Aug 2012 to Dec 2017. The following x-y plot is easier for reading the data:<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_QCK1mushLwrj3XR28Q6JIPq0akyotxD2ZEzzzww_WOb_GbcE_ZilVzmhoaPnESvNBW0wS19BDpCSztIFHCJmi5xj8kZflipLKdzBY4JyDq-0nRygj_ZLo4AHNwtTeCHSjnZjfRTs7o3_/s1600/bakken3.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"></a> </div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4w8VUpM5QU5U0jDZuM5hI1DQC1r0BU1K3xp5EvJKlr13VWJAOrtXz7ggYXC-ummp9BzeAx-dZTHQ3nEZCfOTZ3i423VEZjD8U2dHPs9o6i-4q1WIUCYM6H_DxczGjXsY37ZGozMi5WpfZ/s1600/bakken9.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"></a> </div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiNU23w6Yy2qn8IQ2NQGUdu-wxZAhVbhxygZ63qJ4hkY_3_-AzyJ7vXrHR91twjAdUCJMYxBHNfQHBm_t_YbQ24FfTGE85_xRgXEPKBF2RnhH2hLpwyULtCzqekSkwLeUEmtFKOZ-nNLhpH/s1600/bakken6.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiNU23w6Yy2qn8IQ2NQGUdu-wxZAhVbhxygZ63qJ4hkY_3_-AzyJ7vXrHR91twjAdUCJMYxBHNfQHBm_t_YbQ24FfTGE85_xRgXEPKBF2RnhH2hLpwyULtCzqekSkwLeUEmtFKOZ-nNLhpH/s1600/bakken6.png" /></a></div>
<br />
Under these assumptions we see that future output from the Bakken would roughly double by Dec 2017 to 1.3 Mb/d. This scenario is about midway between the EIA's optimistic scenario of 1 Mb/d by 2021 and Mason's middle scenario of 1.5 Mb/d by 2020, though it reaches the plateau 3 to 4 years earlier than those other scenarios.<br />
<br />
The following chart shows contributions to output from various years:<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjhRLquDIkU1bC1MiZasPXmx3cXgbEu5AndgOUXLazrEQea088tLJB3bTkz9R7RQnkZiS-B9BKViQqx_H_Hmk1tnA0LPBKFQACLNcfQ4qtd7aM3il1Ly64Ipcd1uC6iWb90UkTqrI_XRxrG/s1600/bakken4.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjhRLquDIkU1bC1MiZasPXmx3cXgbEu5AndgOUXLazrEQea088tLJB3bTkz9R7RQnkZiS-B9BKViQqx_H_Hmk1tnA0LPBKFQACLNcfQ4qtd7aM3il1Ly64Ipcd1uC6iWb90UkTqrI_XRxrG/s1600/bakken4.png" /></a></div>
<br />
<br />
Further modelling could guess at future production models which would likely fall between the high and low models presented here.<br />
<br />
Edit 10-4-2012<br />
<br />
In response to a question at the Oil Drum, I have decided to do a crude approximation of falling well productivity in future years. I did this by assuming the "high" well profile remains valid until Dec 2014. Abruptly in Jan 2015 all new wells follow the "low" well profile as presented above. The rate that new wells are added also increases to compensate for the fall in well productivity. Clearly in the real world these changes would happen gradually, but this is a rough approximation of reality.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiyVFMnMzTH6UX6jBEzIHQOnDPq4xZlYGRgn5RF1NyCECgA0Sm2PV6HiincpkKmX0q2QRfcK6-VUqB_I4Ok0qHGk5fhhP1abKOzXKgz6A0LGiWrbNuXzPDnVOrlmoRuvauhlXB-qXOCt1j4/s1600/bakken10.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiyVFMnMzTH6UX6jBEzIHQOnDPq4xZlYGRgn5RF1NyCECgA0Sm2PV6HiincpkKmX0q2QRfcK6-VUqB_I4Ok0qHGk5fhhP1abKOzXKgz6A0LGiWrbNuXzPDnVOrlmoRuvauhlXB-qXOCt1j4/s1600/bakken10.png" /></a></div>
<br />
I also have added two more years to Dec 2019 to this model and I show how output would decline if new wells are no longer added. If this model approximates reality (a rather large if), the plateau could be maintained until April 2023. At that point we reach 40000 wells and if Mason's analysis is correct, no more wells would be added in the North Dakota Bakken and decline would begin. The decline would be a little flatter than shown above due to the extra 9500 wells.<br />
<br />
Another update:<br />
<br />
In response to further comments at the Oil Drum, I have attempted to make the model more realistic by creating several average well profiles that decrease by 10 % each year from 2013 to 2019, I also interpolated between the yearly profiles on a monthly basis to make the transition to lower output somewhat smoother. The rate of increase in wells falls from 4 % to 1 % from Aug 2012 to Dec 2019.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEheOwqkuDQA-9ylHPCLUyIvAy3M6Ney7ZvQLaoRQt-odUGCLJ36HyqB9MWW7Yb1BSNyVH0JQJyieIgD1KcLG3Ar5ycBtwBJHk1Z3d2M87Z1OD47902XZFZGSFhL6w2kIF0zpta1FEJw-a-z/s1600/bakken10a.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEheOwqkuDQA-9ylHPCLUyIvAy3M6Ney7ZvQLaoRQt-odUGCLJ36HyqB9MWW7Yb1BSNyVH0JQJyieIgD1KcLG3Ar5ycBtwBJHk1Z3d2M87Z1OD47902XZFZGSFhL6w2kIF0zpta1FEJw-a-z/s1600/bakken10a.png" /></a></div>
<br />
DCUnknownnoreply@blogger.com11tag:blogger.com,1999:blog-5552647839482265343.post-83721126401214679662012-08-29T15:32:00.000-04:002012-08-29T15:50:16.649-04:00World Natural Gas and Natural Gas Liquids In order to model World Oil Production, we need to consider other liquid fuel besides crude plus condensate(C+C). One of the largest additions to Total Petroleum Supply besides C+C is Natural Gas Liquids(NGL). A <a href="http://www.peakoil.net/JL/BerlinMay20.pdf">paper</a> by Jean Laherrere points to a stable relationship between NGL and Natural Gas production (see figure 1 in the paper linked above.) A <a href="http://europe.theoildrum.com/node/4829">post</a> by Rune Likvern also investigates future NGL output and suggests that the output of NGL per unit volume of natural gas will likely decline in the future. <br />
<br />
Despite the work by Likvern, so far through 2011 the world trend has been either stable (1996 to 2011) or positive (1980 to 2011) based on data from the 2012 BP Statistical Review of World Energy for Natural Gas and the US EIA for NGL. I am also attempting to create optimistic scenarios to reduce the possibility of underestimating the length of a possible continued plateau in oil output.<br />
<br />
Two scenarios for NGL output have been created. The first (low case) assumes that the world production of NGL per unit volume of Natural Gas output remains at the average level of 1994 to 2011 (27.5 barrels per million cubic feet(b/mcf) of natural gas). The second (high case) scenario assumes that the slow rise in NGL per unit volume of natural gas continues (using the linear trend from 1980 to 2011) until the world level reaches the average US level from 1983 to 2011 (34.5 b/mcf of natural gas.)<br />
<br />
The chart below is for the world:<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEglHnwWoAWtCSHPK9K8_l0ia1aluu2dLRdcf2FFWfD8-uYPl3Rn3xvfupTaLTXyd0GRhsNGoVLYzBBkXM7ODG2AmbY4us57u5hO9MTVJRPcsawI9qQstW6sXcR7fYmENl2tDfepN79auGUb/s1600/nglfromng.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEglHnwWoAWtCSHPK9K8_l0ia1aluu2dLRdcf2FFWfD8-uYPl3Rn3xvfupTaLTXyd0GRhsNGoVLYzBBkXM7ODG2AmbY4us57u5hO9MTVJRPcsawI9qQstW6sXcR7fYmENl2tDfepN79auGUb/s1600/nglfromng.png" /></a></div>
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjbjGaSAZgBIUAwmlIfz_LIUlD0NXld8vXFhrZrDWzAFSarljdGE4KGp7YnqA-o6pxxHfVvxW5YT6841WCO44RdvygTbXI2OwWvSTeK6H2ggDVUQOOD-8mNGDeX6xkPcRa2yYx11f3kF6hH/s1600/usnglvng.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjbjGaSAZgBIUAwmlIfz_LIUlD0NXld8vXFhrZrDWzAFSarljdGE4KGp7YnqA-o6pxxHfVvxW5YT6841WCO44RdvygTbXI2OwWvSTeK6H2ggDVUQOOD-8mNGDeX6xkPcRa2yYx11f3kF6hH/s1600/usnglvng.png" /></a></div>
<br />
In order to forecast natural gas output, I used a Shock Model for Natural Gas (fallow, build, and mature periods 10 years). This model was based on discovery data from Jean Laherrere and the middle (best guess) case in Steve Mohr's <a href="http://www.theoildrum.com/node/6782">thesis</a> for natural gas URR=16730 trillion cubic feet (tcf). A dispersive discovery model (<a href="http://mobjectivist.blogspot.com/2011/01/oil-conundrum.html">see Oil Conundrum</a>)<br />
was used to fill in discovery data after 2005. The <a href="http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/O/2012_BP-Energy-Outlook-2030-summary-tables.xls">BP outlook</a> (xls file) was used as a basis for natural gas production from 2015 to 2030 in developing this model (the data points for 2015 to 2030 are from this forecast).<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYwm8b0IfNgmmGA1SyLpQm5Z88UvRR-aC25VByYUyNIyVguPG2SyKpR8t-Egf2XDuxELDBfQimZrQihhdPrUiAJFOXYYrmSEms4u6vl6L7B3WYRuGLY9d4kqMDVytueTpdNxfZIFL8sO3f/s1600/worldgasmed.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYwm8b0IfNgmmGA1SyLpQm5Z88UvRR-aC25VByYUyNIyVguPG2SyKpR8t-Egf2XDuxELDBfQimZrQihhdPrUiAJFOXYYrmSEms4u6vl6L7B3WYRuGLY9d4kqMDVytueTpdNxfZIFL8sO3f/s1600/worldgasmed.png" /></a></div>
<br />
This scenario for world natural gas is likely to be optimistic, a more realistic scenario would limit the rise in extraction rate to about 7 %. A lower case which matches Steve Mohr's dynamic scenario (case 2) is presented below:<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUwkVw_yEzSl0YdkgLZ3FqslFlr95ohtl0Lp-dCb7E2WdduZZt_oxcxsKWb4nHBNhjaqZXHvN9X2eJgppCIMkznL-tJj7AX4vkmcEwBQ74W7jlQKKdnjzIYZmYBVSJcxHp90t6k-_UjWbS/s1600/worldnatgaslow.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUwkVw_yEzSl0YdkgLZ3FqslFlr95ohtl0Lp-dCb7E2WdduZZt_oxcxsKWb4nHBNhjaqZXHvN9X2eJgppCIMkznL-tJj7AX4vkmcEwBQ74W7jlQKKdnjzIYZmYBVSJcxHp90t6k-_UjWbS/s1600/worldnatgaslow.png" /></a></div>
<br />
The higher natural gas case is used for a high NGL scenario and the low natural gas case is used as the basis for a low NGL scenario. Both are presented in the chart below. Note that the NGL is in barrels of oil equivalent which accounts for the lower energy content of NGL (70 % based on EIA heat content data).<br />
<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjuzDVKx2kGQVCKaf42NudnSMQr6_OMy8XyEFILVN2iJWOYvDFz8Il4yW8jPH4NM-QXy54MEdFtAvccg4V0sIUWKRVQP_6OkK6MT7IYpOotN7Itp5WCk-QQF0wj5fu-JeEDY3UGawh6B684/s1600/nglfromng.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjuzDVKx2kGQVCKaf42NudnSMQr6_OMy8XyEFILVN2iJWOYvDFz8Il4yW8jPH4NM-QXy54MEdFtAvccg4V0sIUWKRVQP_6OkK6MT7IYpOotN7Itp5WCk-QQF0wj5fu-JeEDY3UGawh6B684/s1600/nglfromng.png" /></a></div>
<br />
Using these scenarios for NGL (low case URR=313 Gb, high case URR=359 Gb) scenarios for C+C+NGL can be developed. Stay tuned...<br />
<br />
Excel speadsheet named worldgasmedngl1 at <a href="https://sites.google.com/site/dc78image/files-1?pli=1" target="_blank">this link</a><br />
<br />
DCUnknownnoreply@blogger.com4tag:blogger.com,1999:blog-5552647839482265343.post-66217765339996278912012-08-27T10:29:00.000-04:002012-11-08T12:53:33.831-05:00Extraction Rates and Developed Reserves If there are a given amount of developed oil reserves, let's say 900 billion barrels and the extraction rate is 3 % then 27 billion barrels of oil per year (bb/a) will be produced. If the reserves fall to 800 billion barrels and the extraction rate is unchanged, output falls to 24 bb/a. Consider a rise in extraction rates to attempt to maintain output at 27 bb/a as reserves deplete. If extraction rates could be increased to 3.375 %, we would remain at 27 bb/a.<br />
<br />
In reality, the extraction rate will rise and fall based on economic conditions, oil prices and the resulting level of oil demand. As we reach the eventual peak in oil output, we will likely see a rise in extraction rate while developed reserves are declining (because we are producing oil at a higher rate than we can develop oil reserves). <br />
<br />
For a while the increased extraction rate could counteract the smaller level of reserves and enable either a plateau in output (like C+C since 2005) or possibly a slow rise in output. Eventually we will be unable to maintain a plateau or increase output further because there is some limit to how high extraction rates can rise. Eventually developed reserves will fall from the near plateau they have been on since 2004. Consider the following model:<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhci1Lm7faDf_DkpILc716NdoSRIFZQSpGDcwAr3rNoGFQi2ozdHSrtwe2__YEHK-OQ9lLCFMhICGkCx8jmcP5We1tQVMWuYD-z0EwtOBD6z2tiX_VoF-HUZt3oR_Hr9RKzKOFYipPD5IGE/s1600/reserves2800.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhci1Lm7faDf_DkpILc716NdoSRIFZQSpGDcwAr3rNoGFQi2ozdHSrtwe2__YEHK-OQ9lLCFMhICGkCx8jmcP5We1tQVMWuYD-z0EwtOBD6z2tiX_VoF-HUZt3oR_Hr9RKzKOFYipPD5IGE/s1600/reserves2800.png" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
</div>
From the reserves and extraction rate above we get the C+C output below:<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-15caAh4dc9-ajX_tHqRodoZoE0hOflJm5cf4jtvlgUH43-U93cMCblx4aF-ia7UhQzyJ2sgUfCuqueAlhJ0dxqpbIcoUy9EEEiJ5GIZeQ8gHBmp0Z5aOV_Pxt57faKwysiLMPzcgYmLO/s1600/plateau2800.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-15caAh4dc9-ajX_tHqRodoZoE0hOflJm5cf4jtvlgUH43-U93cMCblx4aF-ia7UhQzyJ2sgUfCuqueAlhJ0dxqpbIcoUy9EEEiJ5GIZeQ8gHBmp0Z5aOV_Pxt57faKwysiLMPzcgYmLO/s1600/plateau2800.png" /></a></div>
<br />
If extraction rates are limited to 4.5 %, the plateau would end in 2035 and a limit of 4 % would mean the plateau would end in 2030 for the scenario where the URR for C+C (including oil sands at 350 Gb and Orinoco belt at 250 Gb) is 2800 Gb. See posts below for more conservative estimates.<br />
<br />
DCUnknownnoreply@blogger.com0