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Event
SPE Permian Basin - Section Meeting - March 21 2019
Petroleum Club of Midland
March 21, 2019
11:30am to 1:00pm
Ryan Duman
The follow-on effects of faster tight oil decline rates: growing project spend and more M&A
Abstract - Decline rates in Permian wells are accelerating. At a project level, continued downspacing, more intensive completions, higher stimulated rock volumes, and aggressive lift strategies have resulted in positive impacts to early well life productivity, but they may be coming at the expense of late-life volumes. Upsized completions have contributed to double-digit improvements in early cumulative 180 day volumes, but the longer term implications are less ideal with lower EURs. We have observed this in b-factor benchmarking and type curve analysis.
Is this acceleration of early volumes combined with forecast increases in drilling and completions activity across the entire Permian creating an even steeper treadmill effect for operators? How are changing well profiles going to impact the ability for the Permian region to sustain growth? Will companies need to invest more to keep growing at the pace they did in 2018? Wood Mackenzie's base case view is that the Permian Basin production profile begins to plateau as early as 2023, but if today's well underperform as they mature, the cost to continue this growth will materially rise regarding both capex/boe as well as total drilling and completion expenses across the entire region.
One outcome could be an extended period of M&A, where consolidation helps fill production gaps that emerge.
Bio - Ryan Duman is a principal analyst in Wood Mackenzie's U.S. Lower 48 Upstream team, where he works with specifically with E&P's, service companies and investors in the Rocky Mountain region. Mr. Duman specializes in basin characterization, decline curve analysis, economic modeling, and competitor intelligence. He has previously managed the North American supply team and has extensive experience modeling E&P company positions and building short- and long-term oil and gas supply forecasts. Mr. Duman holds a bachelor's degree in environmental science from the University of Michigan and a master's degree in natural resource economics from Michigan Tech University.
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LocationPetroleum Club of Midland (View)
501 W Wall St.
Midland, TX 79701
United States
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