Abstract
The shale oil revolution in the United States had an irreversible impact upon the global oil market and was a key factor determining oil price reduction in 2014-2016. One of the main reasons for the rapid growth of the shale oil production in the US was the development of extracting technologies, which reduced the cost of production to an acceptable level. This article studies the problems of long-term forecasting in shale oil production and the productivity of drilling rigs. This research applies the fitting of an asymmetric bell-shaped function using an OLS approach. This function is derived as an analytical solution of the differential equation for oil production.Another innovation of this study is the asymmetric function, which correlates better with data on the extraction of traditional and non-traditional oil resources. An analysis of the empirical data with the derived asymmetrical bell-shaped curve shows that the productivity of drilling rigs will peak by 2026 at 1,200 bbl per day, which is 2 times higher than the current level. The peak of production would correspond to the maximum oil production of 11.3 mln bbl per day and to technically recoverable resources of 96 bln bbl. This could mean that starting from 2023, the volume of shale oil production in the US may not be enough to meet the growing global demand for oil and other resources with even higher production costs should be developed. The theoretically grounded and practically tested asymmetrical bell-shaped curve can serve as one of the tools for assessing the long-term impact of technological innovation and the growth of equipment productivity upon the development of oil production in the US in the course of Foresight studies.
Highlights
An analysis of the empirical data with the derived asymmetrical bell-shaped curve shows that the productivity of drilling rigs would peak by 2026 at 1,200 bbl per day, which is two times higher than the current level
0 Niobrara the most rapid rate, while Permian’s contribution to the growth of shale oil production reached 72%. This is followed by the Eagle Ford and Bakken fields (20% and 18%, respectively), with a much more modest contribution to production growth. This is due to the reduced number of operating drilling rigs, so production only grows due to increased per rig output
In our previous study [Malanichev, 2017a] we considered a set of assumptions for describing a theoretical oil production and drilling rigs productivity model using a symmetric bell-shaped curve proposed in 1838 for modeling population size [Verhulst, 1838] and for predicting oil production volume in the United States [Hubbert, 1956]
Summary
Of hydrocarbon production in the United States, which was the reason why the oil recovery rate in the US over the past 20-30 years grew from 25-28% to 40%. As a result of the falling oil prices in 2014-2016, the number of active drilling rigs dropped from 1,549 in October 2014 to 317 in May 2016 Such a rapid decrease resulted in an fast increase in productivity, which by August 2016 peaked at 711 bbl./d, mainly due to cyclical rather than technological factors [Rystad Energy, 2016]. This is followed by the Eagle Ford and Bakken fields (20% and 18%, respectively), with a much more modest contribution to production growth (at 4% and 10%, respectively) This is due to the reduced number of operating drilling rigs, so production only grows due to increased per rig output. The number of DUC wells by the end of 2017 exceeded 7,000 [EIA, 2018], raising legitimate concerns about a significant increase in production when these wells are commissioned (completed) during an upward trend in oil prices [Ivanov, 2017b] Such expectations are subject to high uncertainty.
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