Shale petrophysics and ’survivor bias'

Visage president warns of difficulty of correctly evaluating production from public data sources.

In an interesting blog post, Visage president and co-founder Bertrand Groulx expounds on the problem of ‘survivor bias’ in evaluating production numbers from public data sources. Survivor bias occurs as depleted wells are excluded from the monthly average production calculation. This means that the monthly reported production per-well is biased towards the ‘survivors’ i.e. those wells that are still producing. Survivor bias shows up in what Visage terms the ‘type-well curve,’ that is used to estimate average production for a basin. Groulx’s blog demonstrates visually how, using data from IHS’ Information Hub, survivor bias causes type well production to increases as time goes on. Groulx states that most software makes it hard to account for survivor bias. Visage uses a ‘period of non-production’ to characterize a depleted well.

Looking forward, the sustained low price environment is making it harder to identifying depleted wells as companies may shut-in wells waiting for prices to recover. It now becomes necessary to allow for a variable window of non-production to get a valid type well.

Comment: Survivor bias likely contributes to the reported production gains from shale areas that may be attributed to improvements in technology. You need to read the small print!

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