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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Replies to This Discussion

Permalink Reply by BirdDawg, plain ole' idiot on October 18, 2008 at 17:05
Your right Skip, they probably have some knowledge regarding the curves. But I honestly think that it is a bit early to predict 5 year decline curves. They may be right, but I think right now they somewhat speculating on what will happen. There have been very few HS wells to evaluate, and none producing for an extended period of time. They may be accurate, but I will feel better about the curves in the next year or two (based on actual production figures). Hey, by the way, trying to get me and the dogs ready for a shoot. I'll be talking to you about that. I'm looking forward to it. Hey, how about a GoHaynesvilleShale Bird shoot?
Permalink Reply by Skip Peel - Mineral Consultant on October 19, 2008 at 6:09
Sounds good BirdDawg. However, if you host a GHS bird shoot, you might get a few more takers than you suspect. It's so hard to find that kind of opportunity these days. I am ready when you and the dogs are!
Permalink Reply by mary on October 21, 2008 at 15:19
You hit the nail on the head bird dog. There is no way they can give accurate information on anything at this early date.
Permalink Reply by Grice on October 18, 2008 at 16:37
Skip, since "they" are not online, please allow me to substitute my semi-conscience understanding of the report.

The decline rate is directly related to the IP rate, therefore, the higher the IP rate, the greater the decline rate.

Haynesville: IP=10.0 mmcfe / Decline=81%
Barnett: IP=2.5mmcfe / Decline=70%
Fayetteville: IP=1.9mmcfe / Decline=68%

Haynesville produces greater pressure that the other (Barnett and Fayetteville) plays, therefore gas flows in greater quantities. Due to that increased flow rate, there will be more loss in a given amount of time. Two wells (Haynesville vs Barnett) providing two individual pressure readings, will have two individual rate of loss. The one with greater pressure will decrease faster than the one with less pressure.
Permalink Reply by Skip Peel - Mineral Consultant on October 18, 2008 at 17:01
Thanks, Grice. The correlation between IP (Initial Production) rate and the decline curve would certainly be a logical relationship. My initial thought was that the higher pressure would take longer to decline especially under the control of a choke. And that the reservoir pressure would be maintained longer and decline would be more gradual. I have been waiting for some announcement of decline data in order to bring up the relationship of production decline to royalty income. The geophysics may not catch the attention of many of the members but they understand $$$$$$$! I would like them all to understand the relationship in order to manage their income wisely. Tomorrow I will try to post an example in $$$$$ and see if that draws a little more attention.
Permalink Reply by Grice on October 18, 2008 at 17:52
From my understanding, the IP rate is the unrestricted flow that a well is capable of producing. The IP rate does not account for the choke.
Permalink Reply by Skip Peel - Mineral Consultant on October 19, 2008 at 0:52
Grice, I think you are right about the IP rate. I seem to remember reading that. In the report, Aubrey M. stated that CHK had restricted the IP for competitive reasons. What do you think about the published figures? Taking into account that there is so little data compared to the Barnett Shale wells. Since CHK has about as much experience with production in shale formations with horizontal wells as any company, do you think they can predict accurately at this time?
Permalink Reply by Grice on October 19, 2008 at 1:14
I think there is enough data to calculate future potential, but I also think that the information is being suppressed by the operator. Just because information may not be provided to the general public, does not necessarily mean it is not available. Some operators have gone as far as to create their own testing facility. While they may claim this to be a economical move, my gut instincts tells me it was done to control (suppress) the data.

Most of what the average landowner has learned, has been obtained from production records. Remember, those production records are indications of the flow rate after the choke has been applied.
Permalink Reply by Les Bamburg on October 19, 2008 at 4:10
Grice, the testing facilities you refer to are for analyzing well cores and other geologic data. This type information is not publicly available so would not be used for supression purposes.

I concur that Chesapeake has sufficient information to project decline curves. Of course this will be fine tuned as they and others have more actual production data.
Permalink Reply by Bobi Carr ("parker") on October 19, 2008 at 6:52
Hi Les,

Are these tests available to the mineral owner of a well in their unit?
Permalink Reply by Les Bamburg on October 19, 2008 at 8:19
Parker, I believe confidential information such as core data should be available to unleased mineral owners in that section (unit) but not necessarily to royalty owners. The information available to leased parties (royalty owners) should be governed by the lease agreement.
Permalink Reply by Spring Branch,mineral owner on October 21, 2008 at 2:38
Assuming they use the same stage frac jobs, how do you account for the different IP rates for the Chesapeake wells (10 Million/day) and the Petrohawk wells (17-20 million/day). Does that mean one of them aren't telling the truth. Could it mean that Petrohawk's wells will have a greater decline rate than Chesapeake's wells. Believe me there is still a lot more to learn about this entire play. Several months ago I read that Chesapeake was using a 70-72% first year decline rate. When we have several operators....Chesapeake, Petrohawk, Encana, etc all saying about the same thing about decline rates and other issues, then we'll probably have fairly accurate information. Until then I say wait and see.

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