Twelve years of unconventional oil and gas development: production performance and economic analysis

Abstract

Unconventional formations have been actively developed in the US since 2008. However, it is challenging to quantify the impact of technological advancement and geology on production. In addition, the economics of unconventionals is not well-understood. In this paper, we studied five major unconventional formations in the US: the Bakken, Eagleford, Haynesville, Marcellus, and Wolfcamp formations. We used historical data to quantify the impact of technological and geological variations on production. To accomplish this, we identified four phases of unconventional development over the past 12 years during which drilling and completion technology, initial investment, and commodity prices were similar: Phases 1–4. Using statistical analysis, we compared well performance of each phase. Then, we generated type curves for each phase for economic studies. Initial analysis shows that between January 2008 and December 2019, 60,611 horizontal wells were completed in these formations, producing about 8.185 billion barrels of oil, 90 trillion cubic feet of gas, and generating an estimated $816 billion in gross revenue. For the statistical analysis, the level of uncertainty (\({P}_{10}/{P}_{90}\) ratio) reduced from Phase 1 to Phase 4 across all formations, suggesting consistent improvements in well productivity over time while county-level analysis shows spatial disparity in well performance. We infer that technology drives temporal changes while geology drives spatial differences in well performance. From economic analysis, Phase 4 type wells had the best production performance, partly, due to improved drilling and completion efficiency. It was also because operators targeted their best acreage to maximize their asset’s potential.

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Abbreviations

\({q}_{i}\) :

Initial production rate, L3 T1, volume/unit time

\(q\) :

Production rate after time \("t"\), L3 T1, volume/unit time

\({D}_{i}\) :

Initial nominal decline rate, T1, 1/time

\(\mathrm{De}\) :

Effective decline rate, T1, 1/time

\(b\) :

Hyperbolic exponent

\(t\) :

Time between \({q}_{i}\) and \(q\), T, time

\(f\) :

Time conversion factor

TOC:

Total organic carbon

D&C:

Drilling and completion

RQ:

Reservoir quality

CQ, CE:

Completion quality, completion efficiency

GIIP:

Gas initially in place, L3, volume

OOIP:

Oil originally in place, L3, volume

LWD:

Logging while drilling

NPV:

Net present value, $

ROR, IRR:

Rate of return, internal rate of return, %

ROI:

Return on investment

NCF:

Net cash flow, $

\({i}_{\mathrm{op}}\) :

Investment opportunity (or discount) rates, %

PVP:

Present value profile

EUR:

Estimated ultimate recovery, L3, volume

\({P}_{10}, {P}_{90}\) :

10%, 90% Probability to meet or exceed this value

PRMS:

Petroleum Resource Management System

BK, EF, HV, MC, WC:

Bakken, Eagleford, Haynesville, Marcellus, Wolfcamp

nD, mD:

Permeability, L2, nanodarcy, millidarcy

API:

American Petroleum Institute

TPS:

Total Petroleum System

TVD:

True vertical depth, L, ft

\({R}_{\mathrm{o}}\) :

Vitrinite reflectance

NGL:

Natural gas liquid

BTU:

British thermal unit, ML2 T−2

NPT:

Non-productive time, T, time

SPE:

Society of Petroleum Engineers

Opex:

Operating expenditure

\(\mathrm{Tcf},\mathrm{ Bcf},\mathrm{ MMcf},\mathrm{Mcf}\) :

\(\mathrm{Trillion},\mathrm{ billion},\mathrm{ million},\mathrm{ thousand cubic feet}\)

\(\mathrm{BBbl},\mathrm{ MMbbl},\mathrm{ Mbbl},\mathrm{ bbl }\) :

\(\mathrm{ Billion},\mathrm{ million},\mathrm{ thousand barrel},\mathrm{ barrel}\)

\(1\mathrm{ bbl }\) :

\(42\mathrm{ gal}=5.615 {\mathrm{ft}}^{3}=0.159 {\mathrm{m}}^{3}\)

\(1\mathrm{ ft }\) :

\(0.3048\mathrm{ m}\)

\(1\mathrm{ lbs }\) :

\(4.54 \times {10}^{-4}\mathrm{ Metric ton}\)

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Acknowledgements

The authors wish to acknowledge Enverus (formerly DrillingInfo) for providing datasets used for this research. We acknowledge the use of public license for R programming language, RStudio IDE for R, and contributed libraries. We also acknowledge TRC Consultants for providing license to their economic program, PHDWin.

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This research was not supported by any funding.

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Correspondence to M. E. Wigwe.

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The authors declare that they have no conflict of interest.

Availability of data and material (data transparency)

The data that support the findings of this study are publicly available from state agencies but were retrieved from DrillingInfo. But restrictions apply to the availability of these data from Drillinginfo (subscription required). Also, additional datasets generated and/or analysed during the current study are available publicaly in the Mendeley repository, [https://data.mendeley.com/datasets/rfkxk455mx/1].

Code availability (software application or custom code)

Data were analysed using PHDWIN for creating type curves. Other analyses were carried out using a custom code (in R language) that is available upon reasonable request. However, a web application developed for this paper can be used as well. It is based on the custom code. The link to the program is https://wimarshez.shinyapps.io/EcoSensi_App.

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Wigwe, M.E., Giussani, A. & Watson, M.C. Twelve years of unconventional oil and gas development: production performance and economic analysis. Int J Energy Environ Eng (2021). https://doi.org/10.1007/s40095-020-00367-9

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Keywords

  • Unconventional formations
  • Statistical performance
  • Economic analysis
  • Uncertainty assessment
  • Decline curve analysis