This is just idle rambling while waiting for the markets to open. I will be away from my computer and database all day Tuesday, so will do minimal posting until I get back home.
While waiting for the markets to open, you may enjoy looking at some results in the Alger field.
This was the first field I focused on when I saw some great BEXP wells being reported. The Alger field continues to be exciting.
There are several companies working in this field: EOG, BEXP, Hess, Whiting, and even Oasis, and one Fidelity well, although the field is dominated by EOG.
With all the companies working there, one gets a chance to compare initial production (IP) numbers. If you do visit the Alger field post, scroll down and compare the IPs -- they're easy to spot -- they are all in red.
Since the current boom began in 2006, the companies have been using different methods to complete wells (fracture stages and proppants) and different methods calculating and reporting IPs.
From my perspective, we've been at this long enough to start gathering data on whether high IPs or low IPs are "the way to go."
Some argue that "high IPs" are "inflated" and if due to excessive flowback, could actually dislodge the proppant from the fractures. Others suggest there are "good" reasons for low IPs. Some have suggested there are financial incentives to have lower production in the early years. I have no idea if there is any merit to that argument; it doesn't make sense to me, but I'm learning as I go along.
From my perspective, what's important is the cumulative oil produced at the three-year mark.
It's too early for a statistician to look through the data that the NDIC would have and publish a paper with the findings, comparing two-year and three-cumulative results for wells with low IPs and high IPs in the same field, or the same general area, but by the end of 2011, maybe we will see something. I think it is agreed that regardless of what the IPs are, most producers would like to see these wells paid for at the well-head by the end of the third year. (Yes, I know there are is a lot more to this than just cumulative production x estimated price of oil vs cost of the well, but it would be a data point that probably means a bit more than what the IPs mean.)
What is interesting is that I have not yet seen any wells drilled since 2006 that have been abandoned after being completed (oh, there might have been one or two that I missed, but I doubt it; I think I would have been surprised enough to note it). I'm sure there must be some, but I haven't seen any. To be hitting almost no "dry" holes and abandoning no wells in four years seems to be an interesting stat to this layman.
The Financial reasons are to pressure the royalty owners to sell back to the drilling company(working intrest) at a lower price to cover the up front drilling costs, to allow the drilling company, (operator) to gain a larger ownership of the field. The the flow rate seemes to go up!. It's the Oil Patch.
ReplyDeleteThat's what I had heard and thus the reason for my somewhat vague comment.
ReplyDeleteWhen I see IPs of 300 in the Bakken sweet spot right next to IPs of 3,000, one starts to wonder.
Couple that with the $10,000/acre that has been paid for some of these locations and IPs of 300 don't compute.
I am eager to see some 3-year cumulative totals by the end of this year.