E&P Notes (September 2017)

Abstract

E&P Notes Researchers: Models Overstate Technology Impact, Understate Location Impact for Unconventional Wells Joel Parshall, JPT Features Editor The role of new technological improvements in the increasing productivity of tight oil and shale gas wells is likely being overestimated because of models that inadequately consider the influence of drilling in reservoir core areas, a pair of researchers at the Massachusetts Institute of Technology Energy Initiative (MITEI) have said in a new paper. With the steep fall in oil prices since late 2014, field operators are drilling fewer wells and have shifted their targets to only the most prospective acreage. The oil industry’s often well-publicized gains in well productivity significantly reflect the impact of drilling and hydraulic fracturing operations focused on reservoir “sweet spots,” MITEI’s Justin Montgomery and Francis O’Sullivan write in a paper in Applied Energy. Drilling Boom Goes Flat Stephen Rassenfoss, JPT Emerging Technology Senior Editor Growth in the US rig count stalled in mid-July, in what could be a sign of things to come. After doubling over the previous 12 months, the rig count remained flat, slipping to 949 as of 11 August, according to the Baker Hughes Rig Count. But surveys of industry insiders by the Federal Reserve banks of Dallas and Kansas City see that rally running out, with shrinking spending on capital expenditures (Capex) and drilling. “We see the expected Capex and expected drilling number are still positive. It is a lot less positive than in the first quarter and certainly in the fourth quarter of last year,” said Chad Wilkerson, the branch executive and economist at the Kansas City Fed’s Oklahoma City branch, adding, “Leveling seems to be the story.” US Daily Oil Production To Break Record in 2018 Joel Parshall, JPT Features Editor Average total crude oil production in the United States is expected to reach a record level of 9.9 million B/D in 2018, the US Energy Information Administration (EIA) said in its latest forecast. The projected output would surpass the 9.6 million B/D that the US produced in 1970. The forecast said that total US crude oil production will average 9.3 million B/D this year, an increase of 500,000 B/D from 2016. Most of the production growth from June through the end of next year is expected to come from tight rock formations in the Permian region of Texas and from the Federal Offshore Gulf of Mexico (GOM). IEA: US May Be Top LNG Exporter by 2022 Trent Jacobs, JPT Digital Editor The US may become the global leader in liquefied natural gas (LNG) exports, according to a new report by the International Energy Agency (IEA). To ascend to the top spot, US LNG shipments must surpass today’s leading exporters, Australia and Qatar. The IEA called US LNG a “catalyst for change” and highlighted how production from tight shale gas fields is transforming the world’s natural gas marketplace. The Paris-based organization also said the country’s exports will help fuel economic growth in developing countries.