Oil & Gas Pro

Decline Curves: Barnett vs. Haynesville

The recently released Chesapeake report included Haynesville Shale decline curve data from the initial wells. I was surprised to see a steeper curve than the Barnett Shale data. I am interested in the reasons for the steepness of the HS production decline and feel that those who are about to be first time recipients of royalty income should be aware of the affect. It does appear that though the initial years' decline is greater, the HS curve is flatter over the productive life of a well. What formation conditions and/or production methods explain the difference and does the decline percentage correlate directly to royalty income?

Decline By Year:

1- Barnett - 56% HS - 81%
2 - " - 27% " - 34%
3 - " - 18% " - 22%
4 - " - 12% " - 17%
5 - " - 8% " - 13%

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Oil & Gas ProPermalink Reply by Les Bamburg on July 4, 2011 at 7:24

Sesport, I assume you are referring to the Lee's "Stretched Exponential" model.  I am not aware of it being widely adopted at this time.  I believe most companies are still using a hyberbolic decline modified with a minimum decline rate.

 

Lee's model would not have much impact on well economics but could reduce the well EUR. 


Oil & Gas ProPermalink Reply by Les Bamburg on July 5, 2011 at 7:17
Sesport, the best model for depicting the decline curve for horizontal shale gas wells is still up for debate but Dr Lee has stong credentials.  Most investors would probably view EUR and the decline curve as equally important since both factor into a company's financial performance.

landownerPermalink Reply by Bruce on January 4, 2009 at 20:35
Hi Les thanks for sharing the graph with everybody again, while Desoto Dude makes good points about nobody knowing for sure, it fits in with what people at Chesapeake think from what I have read. It also gives a mathematical layout for a ball-park projection on royalties. That is what I think is the most interesting part of your graph:)

landownerPermalink Reply by Spring Branch,mineral owner on January 5, 2009 at 3:40
I keep having to remind myself that with these huge IP rates of 20+million cu. ft/day, if it weren't for the decline rates being so high, a well with 6.5 billion cu. ft EUR would be depleted in a year or so. Other than for budgeting purposes, the decline rate doesn't seem nearly as important to me as the EUR does. If the average EUR of these wells is 6.5 Billion cu. ft of gas, then it means that is all you are going to get , whether over a one year period ar a twenty year period. If the decline rates in these Haynesville wells are not as high as is currently predicted, then it can only mean that the EUR per well is much higher than is currently predicted. Now that would be music to my ears! Somebody please check my math, but I think I'm right.

Oil & Gas ProPermalink Reply by Les Bamburg on January 5, 2009 at 10:25
SB, the 6.5 Bcf EUR correlated to a recovery of ~ 35%. If the bigger frac jobs push recovery closer to 50%, the EUR for 8 wells per section would be ~ 9.4 Bcf (12.5 Bcf for 6 wells/section). So we are probably still looking at a 30 year well life but just much higher recovery levels.

landownerPermalink Reply by Spring Branch,mineral owner on January 5, 2009 at 3:47
DeSoto Dude You and I were having the same thoughts about EUR....You just type faster than I do. Les B, Using your ten year decline curve, and IP starting point, have you calculated approx. how much actual gas that hypo well would have produced over that 10 year period?

Oil & Gas ProPermalink Reply by Les Bamburg on January 5, 2009 at 4:08
SB, the 10 year cumulative production is 4.7 Bcf.

landownerPermalink Reply by Spring Branch,mineral owner on January 5, 2009 at 4:30
Thank you, Les. What would the same Hypothetical well look like if it had an IP of 25 milion a day and same decline rate. What would the cumulative production look like after 120 months?

Oil & Gas ProPermalink Reply by Les Bamburg on January 5, 2009 at 10:16
SB, the 10 year cumulative production is 10.0 Bcf with the 25 MMcfd initial rate.

landownerPermalink Reply by Spring Branch,mineral owner on January 5, 2009 at 14:02
I'm assuming the primary difference in the two hypotheticals is that one ends @ 10 years and the other takes it to terminus. They both look attractive to me! Drill, baby drill!

landownerPermalink Reply by Spring Branch,mineral owner on January 6, 2009 at 5:15
Desoto dude, you and Les B have been very helpful in mapping out a potential upside to this play. Remember I said "potential". But the prospect is exciting nevertheless.

landownerPermalink Reply by Bobi Carr ("parker") on January 6, 2009 at 18:43
DeSoto Dude,

Is this EUR for 1 well?

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