Recently published research* from the MIT Energy Initiative has demonstrated significant bias in current unconventional oil and gas well modelling. Francis O’Sullivan, Mitei’s director of research, and researcher Justin Montgomery, have developed a statistical model that is claimed to ‘reliably distinguish’ between the impact of location, and completion technology, on well productivity.
Reporting on the research, MIT’s Kelly Travers writes that ‘continuing low prices have led to substantial uncertainty about future production levels of unconventional oil and gas and the long-term economic viability of these resources.’ Technological advances in drilling techniques and hydraulic fracturing are key to developing tight oil and gas. But operators are simultaneously raising average productivity by ‘sweet-spotting,’ i.e. cherry picking the best drilling locations.
Sweet spotting implicitly downgrades the remaining acreage and makes forecasting problematical. MIT applied a spatial error model and regression-kriging to public data from the Bakken formation in North Dakota to better understand the impact of sweet spotting and improve forecasting.
The statistical approach is popular in the earth science community but, according to the researchers ‘has never before been used in well productivity modeling.’ Regression kriging accounts for spatial variability at a high resolution and is said to improve on models that are currently used in the industry, notably by the US Energy Information Administration in its Annual Energy Outlook forecasts.
Five different models were trialed on 42 months of data from 4,000 Bakken wells. Current modeling techniques were found to be incapable of capturing the rapid spatial geological variability that underpins the sweet spots.
The EIA’s approach in particular was not flexible enough to account for short-distance variations. Half of the the gains in Bakken productivity were due to changes in where companies were drilling wells rather than how they were drilled.
MIT concluded that ‘current forecasts for future production and cost of US tight oil and shale gas may be overoptimistic due to unrealistic expectations of future technology-driven productivity gains.’
The researchers concluded that developing shale fields economically at current prices is ‘very challenging.’ The research ‘should help both policymakers and commercial entities better understand what can be expected from these important resources going forward.’
* Elsevier Applied Energy June 2017.
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