[seenmostofit]

$this->bbcode_second_pass_quote('Pops', 'S')ame report you posted before...

No that doesn't mean reserves doubled - LOL!

[Graeme]

Shale Oil Reserves Questioned Too

$this->bbcode_second_pass_quote('', 'T')he USGS recently released new EUR numbers for all shale gas plays in the country and the numbers were significantly lower than operator claims. (See previous post)

Interestingly, this same phenomenon is playing out in shale oil as well.

The Eagle Ford in south Texas has been touted to be perhaps even bigger than Prudhoe Bay as far as potential. But after careful scrutiny of shale oil, it looks to be little more than a shale gas makeover: same girl, different shade of lipstick.

As with all shale plays, whether dry gas or liquid rich, the hype is tremendous. That is because this exercise appears to be about drilling for dollars in the capital markets more than drilling for natural resources. It would be nice to see the hyperbole toned down and a more circumspect analysis forthcoming. I am not hopeful.


Further, the SPE report examines production data up through early 2012 so their numbers are timely. SPE’s conclusion?

“…the mean EUR per well [for the Eagle Ford] is 206,800 BOE and the median is 160,500 BOE”

That is four times less than operator claims of 850,000 BOE, a significant difference.


In short, SPE concluded that average EUR’s for the Eagle Ford are 206,800 BOE/well, significantly less than many operator claims of as much as 850,000 BOE. The decline profiles suggest high initial decline rates and little hyperbolic nature. In fact, the decline rates are very high indeed with some in excess of 90% in the first year. The per well EUR has not shown any general increase since mid-2010 in spite of heady comments by industry such as “we are very early in the game and recovery factors are being improved by leaps and bounds”, a comment made a mere two weeks ago in late summer 2012, a full two years after the historical production data “has not shown any general increase since mid-2010″. Frac size and perforated length turn out to have only a rough correlation to EUR rather than the certainty promised by industry. And SPE states that any reference to BOE should include better explanations than operators are currently providing.

[Pops]

Thanks Greame, just what a lot of people have been saying.

Look at where the profits are, from your link:
“EURs are going up substantially. Operators have rushed in…It’s going to take a very, very long time to develop all that acreage, perhaps a century…”
"making it impossible to predict with any certainty how much above $100,000 per acre we will see. "

Wow, $1,000 a year.

But it's really about the leases isn't it? Salt the mine and sell it to the next sucker.

[rockdoc123]

With reference to Graeme posts Shale Oil Reserves Questioned Too


I have access to SPE and read the paper. This guy has a really impressive resume but I have to say this presentation (it was a presentation so wasn’t peer reviewed) has a number of erroneous assumptions and I can only write it up to the fact he works for the State rather than oil companies who have the actual information, he is hence forced to guess. My quotes will come from the actual SPE paper.

$this->bbcode_second_pass_quote('', 'A')ddressing this, the lease EUR is simply divided by the well count. Most multiple well leases were
excluded from the normalizing work.

[Graeme]

Rockdoc, Thanks for your analysis. It's not clear though which paper you are referring to. I found this one. Was it the same one?

Eagle Ford Shale - An Early Look at Ultimate Recovery

$this->bbcode_second_pass_quote('', 'I')ndividual forecasts of the estimated ultimate recovery (EUR) were made for more than 1,000 horizontal wells in the South Texas Eagle Ford shale trend and statistics were developed for EUR in the 10 primary counties where development is occurring. The study used rate vs. time plots and included all the producing wells in the trend which have decline data believed to be sufficient to project EUR. Normalized decline curves were developed for each county and distributions of EUR were produced. In addition, for a portion of the wells, correlations were made between EUR, frac size, horizontal length and the date of first production.

The results show that for the 10 county trend, the average and median EUR per well were 206,779 barrels of oil equivalent (BOE) and 160,519 BOE, respectively. Of the counties with more than 50 wells, the best are DeWitt (403,715 BOE) and Karnes (210,801 BOE). Live Oak, with only 28 wells averages 248,818 BOE. The normalized rate vs. time plots show minor hyperbolic behavior. In fact, for all the wells in the study, the normalized oil decline was 76% and the gas 60%, with hyperbolic exponents of .25 and .40, respectively. The wells have clearly become better since the start of horizontal drilling, but the average performance has not shown much improvement since mid-2010 even as the frac sizes became larger. The best well performance has generally come from wells with horizontal legs in the 4,000 to 5,500 ft. range.


Conclusions:

• Estimated ultimate recovery from decline curves of horizontal wells indicates an average EUR for the Eagle Ford shale of 206,800 BOE/well including an estimate of NGL.

• The best counties appear to be De Witt (403,715 BOE), Live Oak (248,818 BOE – limited well count) and Karnes (210,801 BOE).

• The normalized decline profiles of all established wells in 10 counties, suggests high initial decline rates and little hyperbolic nature.

• The per well EUR has not shown any general increase after mid-2010.

• There are only rough correlations of EUR to frac size and perforated length.

• Any reference to barrels-of-oil-equivalent (BOE) should include an explanation of the gas-to-oil conversion and how NGL is handled.

[seahorse3]

RD, I have no reason to disagree that this guy did bad analysis. You conclude it is political. What would be his basis for being political? More specifically, it ifs political, who agenda is he pushing?

[Plantagenet]

$this->bbcode_second_pass_quote('Graeme', '
')
Eagle Ford Shale - An Early Look at Ultimate Recovery

[rockdoc123]

$this->bbcode_second_pass_quote('', 'I')t's not clear though which paper you are referring to.

[seahorse3]

RD, could you comment on Plant's post above that frakking works better without water?

[Plantagenet]

$this->bbcode_second_pass_quote('seahorse3', 'R')D, could you comment on Plant's post above that frakking works better without water?

[seahorse3]

I would still like a comment from RD. I'm interested.

[rockdoc123]

Plant is correct that in some cases if you have water sensitive clays in the shales (basically water gets inserted in the clay matrix and causes the clay to expand) a slick-water frac can be less than effective. I'm pretty sure this is a local phenomena because the Eagle Ford generally has a low clay fraction which makes it fraccable, hence the good results in most places (high initial production rates means that the frac worked so you can only use the slick-water frac doesn't work idea when the frac actually results in little to no production). It could be that what he is really pointing to with regards to using water is the fact that generally you leave some amount of frac fluid in the formation which can impede free flow of gas/oil. There are several things that can be done. The frac fluid can be energized with either Nitrogen or CO2 which usually results in better frac fluid returns. As well foamed fracs can improve on the problem with propent distribution/breakdown. In any event the technology is changing all the time. Hopefully I haven't been too confusing with this explanation.

[Graeme]

These figures released by Bloomberg clearly show that shale oil production has increased but what is not clear to me is just how long this will last.

$this->bbcode_second_pass_quote('', 'A')bout 300,000 barrels a day of Bakken oil is being shipped from North Dakota by rail, Al Monaco, Enbridge Inc.’s president, said in a July 11 presentation in Calgary. Some rail deliveries of Bakken are reaching Texas and Louisiana, Lee Klaskow, a Skillman, New Jersey-based analyst for Bloomberg Industries Research, said.

The Bakken formation, which stretches across parts of North Dakota, Montana and Saskatchewan, and the Eagle Ford formation in south Texas produce the majority of shale oil in the U.S., ahead of formations such as Niobrara in Wyoming and Colorado, Bone Spring in Texas and New Mexico and Monterey in California.

Eagle Ford produced about 283,000 barrels a day this June, up from about 98,000 barrels a day in June 2011 and no barrels in April 2008, according to the Railroad Commission of Texas, the state’s oil and gas regulator.