Utica's production decline rate

Has anyone heard anything about the rate of production declining abnormally fast?  It was brought to my attention that there is some concern that production might fall off in Utica wells faster than in other shales.  Does anyone know if this is the case?

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Permalink Reply by Joseph-Ohio on October 22, 2012 at 3:51am

4k a month ain't too shabby.

Permalink Reply by Rick on October 22, 2012 at 6:41am

Right Joseph... especially after three years and the low price of gas... should be becoming more stable or even rising as the price of natural gas rises... good news I say.

Permalink Reply by Bluflame on October 22, 2012 at 4:15am

Matthew,

  At least a portion of the steep reduction in your royalty is due to the drastic decline in NG prices. Good news is that prices have rebounded nicely from the bottom, but are nowhere near prices of 3 yrs ago. 

  Its a supply and demand issue. Unfortunately the Marcellus proved to be TOO good and flooded the market. But, demand will catch up at some point!

BluFlame

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on October 22, 2012 at 10:21am

Darn, I already downsized my corporation.

After telling HR that I would rather shoot myself in the foot than to come back to work at their job site as a contractor, I may have burned that bridge.

I think I have something better than the lottery. Prove me wrong in 2 years when the production actually starts. Until then, in the words of the immortal Alfred E. Neuman, "What Me Worry?".

Permalink Reply by Rick on October 22, 2012 at 2:21am

Hi Meg, where have you heard this?

Permalink Reply by svb001 on October 22, 2012 at 4:47am

As a general rule when calculating the life of wells.  Assume 18.75% of EUR in year 1. 51.4% after year 5, and at the year of 10, 66% of the expected EUR has been produced.  That gives a reliable data plot.  In the utica region the learning curve is still steep.  Very little information and a few boomer wells have scewed the average output for the entire region.  Be careful and do your homework when jumping to conclusions of huge well production lasting forever.  This is all dependent upon pricing, if the output from longer legs is not economical, expect to see shorter laterals with more sand and pumping volumes to reduce over burden in expenses.  That also leads to less rig time, which for the landowner, means more wells drilled in a time frame. 

Permalink Reply by Erik V. on October 22, 2012 at 6:26am

Here is an interesting article.  Didn't know the state did this.   http://www.reuters.com/article/2012/10/22/us-ohio-shale-idUSBRE89L0...

Permalink Reply by Joseph-Ohio on October 22, 2012 at 11:13am

Classic example of how politicians / politics can taint the waters / trip up the action.

Permalink Reply by Rick on October 22, 2012 at 1:05pm

Classic example of government getting out of the way of big business. Why report at all to the public? Lots of people say, let business take care of business, less regulation, restrictions, etc., and they will do the right thing. Maybe they got a little too far out of the way of big business? Ha!

Permalink Reply by Joseph-Ohio on October 22, 2012 at 1:37pm

We both know appropriate regulation is in order.  You can't expect the fox to safeguard the henhouse - he'll only safeguard it for himself.

Too much regulation is not good for anyone and neither is too little.

No sense can be made arguing extreme positions.

We need a middle of the road no nonsense set of rules and regulations to follow - you know like the ones that got us this far - why argue with success ?

Politicians will argue with success in order to place themselves and cronies in way of the green.

In the mean time Rome burns. 

Permalink Reply by Rick on October 22, 2012 at 2:14pm

Joseph, I for one am glad I dont have to report to the public OR the government my production numbers. Also glad I dont have to report how much water I pump from my water wells. Seems the oil and gas industry has an obligation to report their production amounts.  But why? At this moment I dont know of another industry that has to do that.... but I am probably not thinking very hard about it.

Permalink Reply by Joseph-Ohio on October 23, 2012 at 12:20am

I wasn't thinking very hard about it either.

I wonder:

How long have the O&G companiesbeen required to report their production numbers to the government ?

How new is the requirement ?

Has it always been that way here in the U.S.A. since the beginning of the O&G market ?

Then I surmise:

Since the government uses so much of the production as the single largest domestic consumer; it seems to me that reporting production to the government would be in order to safeguard the government from being overcharged / gouged  - and then of course, all of us (as taxpayers who fund the government) would be 1st getting gouged as we pay the government's fuel bill and then getting gouged again as we pay our own. Actually, that's already happening and has been happening since the 70's hasn't it ?  

But then again - so much for the 'free market' principal - as we once again watch that idea go down the drain - HA ! 

But, all of that said, I have to add (in my opinion) that unless there is created a market to domestically use domestic production and infrastructure provided to facilitate it's use; development can't happen.  That's where the government really needs to step in and help.  Subsidy directed to create a consumer conversion on a grand scale here in the U.S.A. from Diesel and Gasoline to Compressed Natural Gas would help the market more than merely tracking production.  Typical to see the politicians arguing about the wrong topics.  I call it diversionary.

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