Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

Is Peak Permian only 3 years away?

By Tsvetana Paraskova - posted Thursday, 16 November 2017


The world's hottest shale basin, the Permian, is leading the second U.S. wave of tight oil production growth and will continue to do so for years to come, all analysts say.

However, signs have started to emerge that the relentless intensification of drilling leads to diminishing returns, Simon Flowers, Chairman and Chief Analyst at Wood Mackenzie, said in an article this week. Pumping twice as much sand as usual into Permian wells and drilling longer laterals doesn't deliver commensurate volumes of oil, Flowers notes.

"Drilling costs rise exponentially with depth, and there's a suspicion that longer wells are hitting a cost efficiency ceiling," WoodMac's chief analyst writes.

Advertisement

Moreover, after the early production-exuberance stage, drillers are now much more focused on delivering profits and higher profit margins. They now favor quality over quantity, and value over volumes.

"Might the Permian be reaching the limits of well size and design? Maybe—as Star Trek's Scotty might observe of an underwhelming high intensity completion ‘you cannae change the laws of physics, Jim'," Flowers says. But WoodMac suggests that drillers could ‘change the laws of physics' and that these signs of setbacks may actually be growing pains.

The energy consultancy's Director of L48 Research, Rob Clarke, argues that there are two basic and very sound reasons that the fading lateral drilling and proppant metrics might be just growing pains. One is much more advanced proppant placement, and the other is the oil majors' move into the Permian, set to change things.

"Now, pinpoint frac technology can place the proppant exactly where it's wanted. Science is also being applied to identify the most effective proppant grain size and shape as well as drill bit design and fluid chemistry, all with the aim of boosting EUR," according to WoodMac.

In addition, ExxonMobil significantly boosted its Permian position earlier this year, and Exxon has "global expertise in extra-long laterals—including a 39,000 footer in Russia," WoodMac says.

ExxonMobil has already drilled a 12,500-foot well in the Permian and "will no doubt ramp up longer still to test the diminishing returns theory," Clarke noted.

Advertisement

Now the next challenge will be to deliver an effective completion of such a long well.

"The application of the Majors' capital and industrial approach will test whether the thousands of wells to be drilled in the future enable the Permian to deliver on the bold growth targets," WoodMac said.

Two months ago, Wood Mackenzie warned that as drillers are set to continuously develop the hottest U.S. shale play, they may soon start to test the region's geological limits. And if E&P companies can't overcome the geological constraints with tech breakthroughs, Permian production could peak in 2021, putting more than 1.5 million bpd of future production in question, and potentially significantly influencing oil prices.

  1. Pages:
  2. Page 1
  3. 2
  4. All

This article was first published on OilPrice.com.



Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

2 posts so far.

Share this:
reddit this reddit thisbookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Tsvetana Paraskova writes for OilPrice.com.

Other articles by this Author

All articles by Tsvetana Paraskova

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Article Tools
Comment 2 comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Advertisement

About Us Search Discuss Feedback Legals Privacy