How much production of oil and gas is left in the major basins?

As you can imagine, operators, state agencies, financial services, and many other stakeholders are interested in this key question.

We all know that the Hubbert’s peak oil theory underestimated the impact of resource and technology growth.

One approach we have often heard to answer this question is examining well performance trends. If wells start becoming less productive, perhaps that is an indication that operators are running out of quality inventory, and production declines will logically follow.

Major basins peak oil production

We took a quick look at this in the major basins, and the story is definitely not so simple. In the oil plays, we have seen peaks in the Eagle Ford, Bakken, and DJ basins, with the Permian still making all time high oil rates:

In the above chart, we are looking at lateral length-normalized production, because lateral length changes have exerted a first-order effect on average oil rates. Clearly, peaks in oil production do not coincide with a decrease in well performance.

US natural gas production peak

But what about gas? We have had peaks in production in the Fayetteville and Barnett, whereas the Marcellus and Haynesville are still setting fresh peaks:

Again, no clear signal emerges from well performance trends, although interestingly in the Barnett, Fayetteville, and the “First Peak” of the Haynesville, well performance decreased after the field production peaked.

Conclusion

From this quick analysis, drilling activity shows up as clearly more important than well productivity. With tremendous production declines in the first year of an unconventional well, it should come as no surprise to anyone that the number of new wells has a huge impact on hydrocarbon production.

Understanding the trajectory of these plays requires a more sophisticated analysis, combined with sensitivities around operator activity levels. Previously, we have published studies on inventory exhaustion in the Williston and Midland Basins, which gives a more accurate view on the quality of locations remaining within a play.

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