WorldWide Drilling Resource

34 JUNE 2014 WorldWide Drilling Resource ® Rethinking Rig Count to Forecast Production Adapted from Information from the U.S. Energy Information Administration Historically, the number of gas-ori- ented drilling rigs in an area has been a common criteria for estimating the over- all production of natural gas. However, the widespread use of recent technological advances and extraction techniques, such as horizontal directional drilling (HDD), have led to production numbers dramat- ically larger than previous estimates. These new extraction methods have been used widely since 2007, and natural gas production has steadily risen, while the number of active rigs characterized as targeting natural gas has fallen dra- matically. The number of wells drilled nation- wide producing both oil and natural gas increased from 37% in 2007, to 56% in 2012. This increase explains why natu- ral gas production rose even as the num- ber of rigs characterized as drilling for natural gas fell. Using historical data (starting from 2007, corresponding to large-scale adop- tion of HDD and multistage hydraulic frac- turing by industry), the Energy Information Administration (EIA) developed a process model to estimate production trends and volumes in six major shale plays, which is one part of EIA's monthly drilling pro- ductivity report (DPR). The DPR combines rig count data with well production data to calculate vari- ables such as: - Drilling efficiency (the number of wells drilled per rig per month) - Lag times between drilling and the start of production - Production declines from exist- ing wells - Initial rates of oil and natural gas production per well - Expected new production per rig observed To estimate production for the most recent months, the DPR uses the total ob- servable rig count, along with recent trends in the key relationships between drilling and production. Using the expected pro- ductivity from all drilling rigs to estimate the oil and gas production coming from all subsequent wells improves on simple rig count models. Specifically, it does not break drilling into categories based on drilling targets (oil or gas), well type (vertical, directional, horizontal), or oper- ator. The most relevant information for the DPR comes from the total number of rigs drilling, where those rigs are drilling, and the average efficiency and produc- tivity of those regions. ; !-$ ; 20311 127+% $%00)#* )- $)!,%2%0 : !6 $)!,%2%0 : )' /!)-2%$ 2. #312.,%0 1/%#1 3++ .32 !0, 0!)1%$ "7 $%00)#* : 230-2!"+% /.)-2 .320)''%01 1712%, 312.,)8)-' .2(%0 ./2).-1 !4!)+!"+% (.)#% .& /.5%0 3-)2 .0 203#*;1 20!-1&%0 #!1% %#* ,.3-2%$ &3%+ !-$ (7$0!3+)# 2!-* 3/%0 %.0'% 3#*%2 3'%0 (% 3/%0 %.0'% 3#*%2 3'%0 0)' )1 2(% /%0&%#2 0)' &.0 $0)++)-' .)+ &)%+$ #.-$3#2.0 (.+%1 (% 31 %#( 3/%0 %.0'% $0)++ 0)' )1 '0%!2 &.0 +!0'% $)!,%2%0 (.+%1 !-$ $0)++)-' $%/2(1 .& &%%2 !- (!4% ./2 ).-1 13#( !1 2(% (7$0!3+)# *%++7 /31(.32 /3++$.5- !11%,"+7 !-$ #312., ,!$% $0)++)-' "3#*%21 )-#.+- 20%%2 .6 9 % !01 .5! 9 !6 555 '31/%#( #., Get your products sold in our classified section. Contact Kathy for the best rates and coverage. (850) 547-0102 or kathy@ worldwidedrillingresource.com