How many years will a Utica oil well produce?

They say a Macellus gas will produce Natural Gas for over 20 plus years.  What is the expect life of an oil well and does it have the same decline curve?

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Permalink Reply by PennCrude/NatGas Go! on December 9, 2012 at 5:14pm
It all depends on the permeability, pressure, the amount of free natural water, salt water and fracturing of the production formation. Some of the oil wells can continuously produce for at least half a century or more. Indiana and Oil Creek wells that Colonel Drake had drilled in (1859) are still producing as stripper wells. Stripper well is a seeping hole that collects roughly about 10 barrels a day or less. In Northwest, Pennsylvania there. Take for example the oil well in Titusville, Pa. Says that it is the oldest producing oil well in the world. Visited it couple of times. Sure enough, step inside that derrick house. Surely is running and produces crude oil. Good preventative maintenance and practice with an oil well should see a life expectancy of anywhere from 25-80+ years production. One of the biggest enemies of a well, whether it produces oil, natural gas or both is salt. Depending on elevations and where the site is drilled. The salt can start to form around the casing of the well. In turn the salt will begin crystallizing and accumulate on the casing pushing in on it. Won't literally happen overnight, but over time will eventually create so much pressure that it could indeed collapse the casing rendering the well almost useless or production numbers cut in half. When a work over/service rigs would be needed to pull casing to replace, if it was indeed worth fixing. Most wells in the Northwest, Pa. region experience this problem. Most go to the P.N.A. list. Plug and abandon. For the most part combating the salt happens every day on a lot of the wells all over. Use different methods of prevention to keep it at bay so to speak. Whether it be hot treated fresh water pumped to dissolve it. Or more serious cases require a rig with power swiveling to actually mill the salt out around the casing. That usually consists when plugging off the well though. Oil wells can certainly last a very long time with proper care and a good lease operator tending to it. As is same situation with natural gas wells. With the technological advancements and new equipment to extract the natural resources their after. Be safe to say that most of the wells drilled from 2008-up will be still around producing long after I'm at the age of retirement.
Permalink Reply by James T Monyak on December 9, 2012 at 5:26pm

Thank you for the detailed answer.  Are you saying that an unconventional shale oil well and a unconventional shale gas well have the same life  span and the same decline curve keeping things equal?

Permalink Reply by PennCrude/NatGas Go! on December 9, 2012 at 5:52pm
Could possibly have the same life span. Still having different areas of play and or drilling can have different results. Last I've seen in different projected areas of the United States, overall deposits of gas/oil in different regions will have a different lifespan. Since they are both new and still learning. Say that what the experts are projecting. Anywhere from 25-80+ years. Like I said earlier. With good preventive maintenance and good team keeping care of the wells, they could last a very long time.
Permalink Reply by Brian Powers on December 10, 2012 at 2:28am

Ryan -

When I began my engineering career 30 years ago in SW Kansas, part of our District's territory included the Panhandle Oilfield in Texas. These wells were drilled in the 1920's-1940's and many were still producing in the early 1980's. I'd guess that some are still productive today. One of the formations was extremely sensitive to fresh water; so we would rotary drill to near the base of the formation above, then switch out to a cable tool rig to drill the oil zone using old school percussive drilling techniques

 

These wells were completed in conventional rock, were generally unstimulated, and were all producing on beam lift. The biggest problem in my recollection, was paraffin wax in the crude, rod/pump problems, fill in the bottoms of the wells, etc. that had to be addressed by the maintenance teams.

 

Most of these wells were <10 bbl/day producers, the better wells would pay the electric and other unit expenses; expenses of the poorer producers were carried by the better wells. I remember one well that was about 50 bpd that made a significant percentage of the field's gross production for us.

 

Brian

Permalink Reply by PennCrude/NatGas Go! on December 9, 2012 at 5:31pm
James,

Another thing to keep in mind. With the Utica and Marcellus wells they are still learning new things about them every day. Even after it has been producing. The overall numbers of production value can swing in the positives and negatives. Where they begin to start bringing up the fresh water that was pumped down in during the hydraulic fracturing process. Also the natural byproducts along with it in fluid form. Majority is returned upstream during the flow-back procedure. Back to life expectations of the well? Like it has been called by all, "unconventional" the new method of horizontal drilling is being used for almost 90% of the wells being drilled in Northeast America. As theses wells progress with age new things and discoveries will be made with them and they will learn how to keep the individual wells producing efficiently and effectively. Only time will tell with the life span of these wells. Different drilling sites have speculating that these horizontal well can last anywhere from 30-50 years. Once that time comes, can look at history of the well and make forecasts for the new wells being drilled after those wells don't produce any longer. By then most likely find newer and better alternatives to extract natural gas from different formations.
Permalink Reply by James T Monyak on December 10, 2012 at 4:38am

Matthew,

Yes, I would be interested in the study. 

Thank you.

James

Permalink Reply by James T Monyak on December 10, 2012 at 9:19am

I found this out on the internet.

Analysis of shale gas decline curves indicates need for more drilling

G. Allen Brooks, Managing Director for PPHB, LP, provides an analysis of Texas shale gas wells showing decline curves may be even steeper than earlier predicted.  His numbers demonstrate that the value of a Barnett Shale gas well is largely realized early on, with 70 percent of the value produced in the first five years of its life.  This would indicate that with decreased drilling for natural gas nationwide over the last 18 months, we should expect to soon see a fall-off in production.  The data set appears rather small to draw broad-based assumptions, but if Mr. Brooks is right, expect continuous high drilling and completion activity to sustain US gas production rates as shale becomes an increasing percentage of the natural gas pie.

Permalink Reply by PennCrude/NatGas Go! on December 10, 2012 at 1:46am
Matthew,

Thanks for that information. As to royalties after it becomes a stripper well? Probably not to much income. Possible to purchase it back from the company and try and do some good with it. If the individual had the available funds to give it a try. Not sure if they still give the landowners that option these days due to the potential of an accident or God forbid a spill. EPA would have a field day with something of that nature with a non licensed private landowner.

I'm not very familiar with the Bakken formation in the Dakota's. Will certainly do some research on it. Yes please do get the study. Like to read on that as well. One thing I've encountered, only, only handful of times and heard. Some have had their wells running continuously with the choke wide open off of the wellhead to the production equipment. That in turn can and will create a lot of static pressure in the wells pressures, can also contribute to stressed well conditions. Which ultimately declines the life expectancy of the well, be oil or gas. Some companies are seeking the best production totals from the wells by cranking out as much as possible. Usually when that happens the well just brings a "slug" of fluid, which would just temporarily cease production of gas. Trip a few alarms if equipped with monitoring devices. Just reset and start it up again. On other hand could be worse and with all that sudden demand for pressure just bursting upstream could bring sand. That's when things get literally plugged off completely. With the combination of bringing sand and extreme exasperate conditions could ultimately destroy the well down hole and render the well incapable of ever producing again. Something like that would take the lifespan down. Regardless of being a well or stripper well. Both technically producing wells whatever the total accumulation is. So I'd have to say if someone can keep a oil well running for let's say 25 years. Then the life expectation would be 25 years. Depending on what numbers they say is an effective well though. Any way look at it we're both correct. When it's decided by proficiency and a set goal on continuous value, I'd be wrong.
Permalink Reply by Jack Straw on December 10, 2012 at 10:51am

As has been pointed out the decline curves observed for the un-conventional shale wells have tended to be quite steep.

The first year's check buys the Ferrari; the check from year five won't cover the insurance on the Ferrari.

The problem with decline curves is that (to be accurate) they need to be seen through the "rear view mirror".

The decline curve for every well will be different. Natural Gas is more mobile than oil. Differing oils with different API gravities/viscosities will have differing mobility. The gas/oil ratio (GOR) will determine whether there is an assist in moving the oil. The mobility of all will be a function of the exact lithology of the shale at that location as well as the efficacy of the particular frac in that particular well. A generic decline curve will not be a “one size fits all”; I would not go as far to say that it would be a “one size fits most”.

There is the distinct possibility that the well will be re-fraced at some indeterminate time in the future ... and unforeseen technological advances might rejuvenate the well in a surprising manner.

To further complicate, the decline curve (and its extrapolation) measures (and/or predicts) production; unknown future commodity prices will determine the value of that production.

The good news is that a decline curve tends to (sooner or later) flatten out; promising a long revenue stream.

Further good news is that you tend to get much of your windfall early on; if it does not go to your head, you can enjoy the wealth while saving/investing for the future in a manner that ameliorates the inherent nature of the decline curve. Do things right and one can “have their cake and eat it too”.

 

All IMHO,

                    JS

 

 

Permalink Reply by James T Monyak on December 10, 2012 at 1:30pm

I  think there are a few things that would impact the value of the well besides the decline curve.

  • Future oil & gas prices
  • Methods used to increase or decrease well production
  • Decline Curve by geographical region
  • Additional stimulation to well
  • Oil & Gas not accounted for by errors, theft and leakage
  • Original fracking method used
  • The ability of the E&P company to market their oil & gas

Would be safe to say that one does not know how long or how much in total a specific well is going to produce with any degree of accuracy?

Permalink Reply by Madd man on December 10, 2012 at 2:02pm

From what I have heard, your royalties will fluctuate around roughly a 6-7 year cycle.  For example, an oil company sets up a pad and drills a leg in the given 640 or 1280 acre unit.  The production numbers will start off high and eventually peter off until the production is not as economical for the oil company.  At this point, which is roughly 6-7 years depending on location etc, the rig comes back to the pad and drills another leg in the production unit.  In result, your royalties increase greatly due to the increase in gross production of the well.  Then the cycle starts again and continues to repeat if all goes as planned.  That being said, the other legs drilled in the unit will continue to produce for many years to come (possibly 50-80 years some say).  The production numbers of the other legs will be much lower than the first 6-7 years of their existence but will likely remain steady.  The total number of legs can vary depending on unit size but I believe they are spaced 1000ft apart (up to 6-8 legs per 640 acre unit). That is what our buddy from Antero Resources has hinted at for awhile now.  Please correct me if I'm way off.

Merry Christmas

-Madd man

Permalink Reply by Bluflame on December 11, 2012 at 4:12am

Madd man,

  IMHO, you are generally correct except for a few items. 

1. The additional legs may be drilled at any time. I believe it will be more a matter of E&P economics than anything else. i.e., if well #1 is a "gusher", they may add all possible legs quickly.

2. In Ohio, some units have been approved with legs spaced as close together as 250 ft. 

BluFlame

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