Kemp: Why The Shale Revolution Is Not About To End

For example, one well examined by the EIA was predicted ultimately to yield 574,000 barrels of oil based on the first year of monthly production data, but that was later slashed to just 189,000 barrels once four years of data was available.

In another case, an initial EUR of 105,000 barrels based on 12 months of production data was raised to 224,000 barrels based on four years of data.

In general, however, it is possible to make a reasonably stable and accurate forecast of EUR after about three years, when almost all wells will have produced more than half their eventual output, according to the EIA ("U.S. tight oil production: alternative supply projections and an overview of the EIA's analysis of well-level data", April 2014).

Productivity Boom

There is plenty of evidence that oil and gas production companies are improving productivity and extracting more oil and gas from each shale well.

The EIA analysed EURs from more than 5,000 wells drilled into the Eagle Ford shale formation in Texas . The average EUR was almost 170,000 barrels, but it has been rising, with wells drilled in 2012 (191,000 barrels) and 2013 (169,000 barrels) far more productive than wells drilled near the start of the play in 2009 (57,000 barrels) and 2010 (117,000 barrels).

There is enormous variability in the play, with wells in DeWitt county expected to average 334,000 barrels compared with 226,000 in Karnes and 80,000 in Webb. Even in DeWitt, EUR varies from 98,000 barrels (25th percentile) to 440,000 (75th percentile).

But across the United States there is a clear trend of rising average EUR from shale wells.


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