[FreddyH]

An oilfield commences to deplete from the drilling of its first well. Depletion is the rate at which a field or province is drained of its resource ... annually or cumulatively. Depletion of a field starts on the first day of operation.

A depleted field can come back to life due to economic change. New higher prices are reawakening "exhausted" fields every week. Part of what we call Reserve Growth is due to this second wind. And third wind. And fourth wind. As prices move ever higher.

In Y2k, the USGS boldly suggested that global reserves would rise at the rate of 54-Gb/yr from 1996 to 2025. BP is the hallmark of Reserve reporting. They calculate the Reserves at year-end 1995 was 1014-Gb. Consumption in the past 12 years was 346-Gb. If there had been no Discoveries or Reserve Growth since 1995, Reserves would today be at the level of 668-Gb.

But BP says Reserves today are 1372-Gb. This means Discoveries & Reserve Growth has yielded 704-Gb or 59-Gb/yr. The early McPeaksters that mocked the USGS forecast in those early years are seldom heard from today.

With respect, Mettezz, your thread question was most probably meant to ask "how does an oilfield decline?"

An oilfield is in Decline when its production is lower than the month, quarter or year preceding.

Each well in a field exhibits a typical Hubbert Curve production profile: build ... plateau/peak ... decline.

If a field had only one well, terminal decline would start the month when that well hit peak extraction. Before that happens, management adds a second well and production almost doubles, rising nearly 100%. A third well is added to the field and production rises almost 50%. A fourth well can incr production almost 33%. The fifth well of equal quality adds almost 20% supply. And so on...

Each new well increases the field extraction with diminishing percentage increments. After a while, it can be seen that new wells will only add less than 5%. Unfortunately, by that time, the first well (or two or three) are past their peak. On avg, according to Hubbert, each of them will decline at about 3.75%/yr. Via IEA studies, we know that if no new wells are added this cumulative decline gains momentum and rises with time to 8%.

Decline commences when the addition of a new well adds less annual new production than the cumulative loss from the existing wells. Also, empiracal evidence shows us that each new field is probably of lesser quality than its predecessors.

We can use this hypothetical field as an analogy to look at a petroleum province. A province is comprised of many fields. Then we can group the globe's provinces and see how global decline occurs.

It appears that the crossover where the rising underlying decline (3.6%/yr today) exceeds new annual capacity commissions will occur in 2013.

This event can be postponed (not averted) if the Industry increases its rate of new installations from its present rate of 4.5-mbd/yr to continually higher magnitudes. Underlying Decline has been increasing by 0.33-mbd annually since 1999.

[KillTheHumans]

$this->bbcode_second_pass_quote('FreddyH', '
')Each well in a field exhibits a typical Hubbert Curve production profile: build ... plateau/peak ... decline.

[ROCKMAN]

Freddy,

Don't take KTH comments as a real knock. You've obviously spent a lot of effort analyzing the situation. But as KTH implies you have to be carefull with the jump from generalities like H's curve to specifics like well/field performance. I deal with geologists and engineers ever day and even some of those with 20+ years of experience have difficulty grasping certain decline phenominon.

Another aspect of new production analysis worth remembering: a lot of reserve redevelopment is based on horizontal drilling and massive efforts to fracture old reservoirs by pumping hugh volmes of sand into them. The results of these efforts can be dramatic....in rare cases returning a field/well to a production rate not seen since it was discovered. On the otherhand, the declines rates of this new production stream will be drasticly different. It will commonly deplete many times faster than the original wells. Thus it's not uncommon for the new wells to ultimately produce cumulatively much less than those original completions. It's the high initial production rates that make these news well economically viable....not their ultimate recovery.

This is also true in the resource plays (tite sands and shale gas) that are hot now. Typically their ultimate recovery isn't as important as their big initial production rates. It's not uncommon for such wells to decline 50% or mare even in the first 12 months. But the good news for the players is the thousands of locations to be drilled. Revenue from the previous wells (along with the increased credit line) funds the next spat of drilling.

[FreddyH]

Guys, Mike Lynch wrote a very long time ago that only 1/3 of the national production profiles used by ASPO fit the Hubbert Curve bell curve profile. I concede; moreso at the well level.

But ridiculous as the curve is, nobody anywhere anytime has come up with a better profile, have they?

In the context of describing the issues of depletion and decline to a newbie, the standard bell curve is appropriate and understandable: build/peak-plateau/decline. Thanx for raising these caveats...

[ROCKMAN]

Freddy,

To be honest I need to go back and read Hubert's paper in detail. I need to see the details of his curve construction. But almost no well/field has ever produced a bell shaped curve. There's a wide range but a well/field will produce half of its reserves withn the first third or less of its commercial life. An extreme example is many of the resource plays (tite gas sand and shale gas). Inital rates are very high (often returning the investment in a year or less). But theyt may decline 50% to 70% in the first year. But they may continue to produce at very low levels for 20 to 30 years. In such cases the curve will be very asymetric....far from a bell shape.

I'll try to run down Hubert's work this weekend.

[FreddyH]

$this->bbcode_second_pass_quote('ROCKMAN', 'F')reddy,

To be honest I need to go back and read Hubert's paper in detail. I need to see the details of his curve construction. But almost no well/field has ever produced a bell shaped curve. There's a wide range but a well/field will produce half of its reserves withn the first third or less of its commercial life.
-snip-
In such cases the curve will be very asymetric....far from a bell shape.

I'll try to run down Hubert's work this weekend.

[KillTheHumans]

$this->bbcode_second_pass_quote('FreddyH', 'G')uys, Mike Lynch wrote a very long time ago that only 1/3 of the national production profiles used by ASPO fit the Hubbert Curve bell curve profile. I concede; moreso at the well level.

But ridiculous as the curve is, nobody anywhere anytime has come up with a better profile, have they?

[KillTheHumans]

$this->bbcode_second_pass_quote('ROCKMAN', '
')I'll try to run down Hubert's work this weekend.

[FreddyH]

Having reviewed Hubbert's work this weekend, i've made a major EDIT to clarify and correct my previous post...