A surge in US tight crude oil production has reached 2 mb/d; and it is expected to reach 2.8 mb/d by 2015 and 3.1 mb/d 2020, London based Barclays noted in a report.The improvement in drilling efficiency gains across some key tight oil plays is meritorious and contributes directly to the current surge in tight oil production, there are growing risks of this momentum approaching inflection points in the future (depending on rig availability) at which steep decline rates start to offset these efficiency gains.
This is noteworthy given that just five years ago 500 thousand b/d had barely been breached. Much of this growth has come from geological formations in North Dakota and Texas.
Oil from these formations does not rise to the top cheaply or easily. These are unconventional barrels, and the associated plays are indeed gearing up for unconventional experiments for efficiency in an oil-drilling context.
With the advent of technological innovations, Barclays expects more productive gains. “We feel the rate at which they (crude oil companies) will come through will likely see diminishing returns as the largest leaps in advancement are likely to fade,” Barclays said.
Combined with this, the fact that producers are focusing on the most fertile fields and easy-to access regions first implies that the remaining terrains already pose the challenge of diminished productivity.
“Overall, we expect the highest growth momentum in tight oil production to likely fade over the next two years with growth expected to decelerate beyond 2015,” Barclays noted.
In North Dakota, the previously linear relationship between average rig count and number of spuds started in a particular month has broken down.
This has been especially noticeable since the summer of 2011, from when the number of spuds and average daily production kept increasing but the number of rigs stalled or even decreased on occasion.
Source: Barclays