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Permalink Reply by Philip Thackray on December 9, 2013 at 2:06am

David,

I completely agree with what you are saying.  The smaller companies with stock to push will definitely want to show the highest initial production.

The following personal experience illustrates some of the technical issues relating to initial production numbers.

I watched the well tenders start up the two Marcellus wells in the unit of which I am a part.  These are XTO wells and XTO has no need to announce high initial production rates or anything else for that matter.  Initial production is primarily limited by the choke but three secondary limitations apply:

1) The first element the well head gas sees on the well pad is a heater.  This is typically a horizontal tube a few feet in diameter filled with water.  Many pipes run back and forth inside carrying the well head output through the water bath which is heated by gas taken from the gathering lines that leave the pad.  Because a choke follows the heater, the well head output (which has LOTS of water) must be heated about 70 degrees F for every 1000 psi drop across the choke otherwise the water would freeze as it exits the choke.  The heater has a BTU limit so throughput is fundamentally limited.

The second element is the choke it self.

2) Following the choke is the separator - the vertical tower on the well pad.  In the separator the liquids (for this area water and some of the condensate) go to the bottom of the tower and gas to the top where it exits to the gathering line.  As the liquid level rises at some point it triggers a pump that moves the liquid to the large storage tanks on the well pad.  If gas and water flow too quickly into the separator the splashing liquid will falsely trigger the pump so again throughput must be limited.

3) Lastly, the output from the separator cannot overly affect the gathering line pressure.

All of that being said, the start up procedure used by XTO was very conservative.  Using the choke (which is adjustable) to set the flow at between 3 and 4 million cubic feet per day which seemed the comfortable limit for their well pad equipment.  From what I saw, XTO could not produce a well at the rates sometimes touted by Range, Rex and others.

I have noted that the XTO well pad setup differs from the local Rex setups.  Perhaps other setup allow for larger initial production numbers. 

Given the right setup it seems that almost any one day or five day initial production could be produced from a basically sound well.

On the other hand everyone has practical equipment on the well pad and the fundamental (non-choke) limitations listed above would apply.

Phil

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Permalink Reply by 015334grltd9m on December 9, 2013 at 2:23am

This is why I believe all formation wells derisked will produce similarly.

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Permalink Reply by David Cain on December 9, 2013 at 2:27pm

Phil,

 

Thanks for all the detail.  This is a great sight because so many people with different areas of knowledge are willing to share with others. Do you think restricting the flow has a positive affect on the decline curve - perhaps making the curve less steep or even pushing out the timeframe when the decline actually starts to occur?

 

Regards,

Dave

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Permalink Reply by Philip Brutz on December 8, 2013 at 1:42pm

This is the typical decline curve that Philip Thackray referred to.

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Permalink Reply by Philip Thackray on December 9, 2013 at 2:09am

Philip B,

That is it - thank you!

Phil

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Permalink Reply by Archer Man on December 10, 2013 at 2:39am

Phil: good info above. Is there a website I can reference to check Nat gas and oil commodity prices?

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Permalink Reply by Philip Thackray on December 10, 2013 at 3:20am

Archer Man,

For the kind of "back of the napkin" type of calculations that I do, I just use the numbers provided by Rex and Range from their corporate presentations.  For example Range's Nov 18, 2013 presentation pages 42, 44 and 45.  These are updated about monthly.

The oil and gas prices at the top of this blog come from 0il-Price.net .  NGL and condensate prices are not readily available.  The NGL price is a function of composition plus location.  The condensate price depends on "lease" condensate or "plant" condensate, composition and location.  For those reasons, what Range gets may differ from what say Gulfport gets and so on.  I don't think there is a simple market for NGLs and condensate.

Phil

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Permalink Reply by Archer Man on December 10, 2013 at 10:34am

Thanks again. I will check out the monthly updates and get familiar with the info and pricing. Happy holidays

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Permalink Reply by Philip Brutz on December 10, 2013 at 10:55am

Every Thursday the US Dept. of Energy posts a weekly natural gas update:

http://www.eia.gov/naturalgas/weekly/

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Permalink Reply by Philip Thackray on December 10, 2013 at 2:00am

David Cain,

The well tenders around here (Marcellus, XTO, Butler County, PA - Forward, Penn, Jefferson.... twsps) tell me that the goal (in time) is to have no choke.  This puts all the "resistive" pressure drop down in the formation where it is spread out axially from the bore and horizontally along the lateral.  The "low output resistance" formation near the bore is quickly drained and the subsequent gas comes from more restricted areas away from the bore.  This solves the problems with a choke at the surface.  This process occurs over a period of months.

So I don't think that the initial choking has much to do with ultimate production.  Although i'm guessing that a geologist looking at the early behavior of a well when choked can get some idea of the well's potential.

Phil

 

 

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Permalink Reply by Philip Brutz on December 10, 2013 at 6:16am

Phil,

Thank you for taking the time to answer our questions, it is greatly appreciated.

Best Philip

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Permalink Reply by Tom on January 18, 2014 at 11:27am

More good news for S.E. Guernsey County.  This one hasn't been put into the sales line yet, but the initial production reports look good.

Here is the link to the article.

Carizzo Oil & Gas Reports Initial Utica Shale Well Results.

HOUSTON, Jan. 16, 2014 (GLOBE NEWSWIRE) -- Carrizo Oil & Gas, Inc. (Nasdaq:CRZO) today announced results from its initial Utica Shale well, the Rector 1H.

Summary highlights

   -- The Rector 1H tested at a peak rate of 1,680 Bbl/d of condensate,
   5.2 MMcf/d of residue gas, and 266 Bbl/d of NGLs, assuming ethane
   rejection and a natural gas shrink of 7%, or 2,816 Boe/d on a 24/64 in. choke. 

Utica Shale Update

Earlier this month, Carrizo brought its initial Utica Shale well, the Rector 1H in Guernsey County, Ohio, online after its resting period. The Rector 1H was drilled to a true vertical depth of 7,456 ft. with an effective lateral of 7,890 ft. and was completed with 31 frac stages. The well tested at a peak gross rate of 1,680 Bbl/d of condensate and 5.6 MMcf/d of rich natural gas with a Btu content of 1,248 on a 24/64 in. choke. In ethane rejection mode, the gas stream is expected to yield 47 Bbl/d of NGLs per MMcf of gas and result in a natural gas shrink of 7%. Assuming full ethane recovery, the gas stream is expected to produce 111 Bbl/d of NGLs per MMcf of gas and result in a natural gas shrink of 17%. Carrizo plans to continue to conduct various flow and pressure tests on the well until it is hooked up to a sales pipeline later this year.

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