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Scoop-Stack Playbook 2017

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SCOOP/STACK: PRODUCTION FORECAST 44 | September 2017 | hartenergy.com producing wells derived from historical produc- tion data. Curves are generated utilizing hyper- bolic fi tting, but this model's advantage includes Extended Kalman Filter (EKF) techniques incor- porated into the process. EKF emphasizes the most recent data, identifi es trends and adjusts logic on the fl y using a series of matrix math tech- niques, resulting in improved effi ciency and accu- racy. Wells are forecasted to their economic limit based on multiple parameters including estimated operating costs. Every month the new historical production volumes are updated into the data- base, then new forecast curves are generated for all active producing wells. The database is kept current and all wells are updated once a month. The Scoop/Stack dataset defi ned For this study, TGS took a comprehensive look at the last 10 years of well completions in the Scoop/ Stack play (Figure 1). The dataset used in this analysis consists of about 5,300 wells. The wells and corresponding data were extracted from TGS' Well Performance Database and specifi c criteria for including wells in the study were: • The location of the well had to fall within the county boundaries that constitute the geo- graphical description of Scoop/Stack; • The well was completed and put on IP after Jan. 1, 2007. TGS was looking at the last 10 years of activity in the play; and • The well is still actively producing. Future drilling activity What do future drilling activity levels look like in the play? Before analyzing historical produc- tion rates and EUR forecast trends of the com- pletions in the Scoop/Stack, let's take a look at expected upcoming drilling activity in the near term for our study area. Drilling permits, which are valid for six months from the date of approval in the state of Oklahoma, are a leading indicator of expected drilling activity. Analyzing recent drilling permit counts by month in the Scoop/Stack indicate high industry confidence in the continued ecomomic viability of our area of interest (Figure 2). While the industry as a whole and many basins individually saw an enor- mous crash in permit activity beginning in early 2015, the recent permit counts in the Scoop/ Stack have returned to remarkably high levels. In fact, March 2017 tallied 165 new approved permits-to-drill, which signifies the third high- est monthly level in the last five years of Scoop/ Stack permit activity. Where are the new locations? Drilling permit loca- tions in the Scoop/Stack approved in last fi ve years are color-coded in Figure 3 by the year the permit was approved. Red indicates the most recent permit locations—those approved in 2017. Spatial patterns indicate, as resource devel- opment matures and industry conditions trans- form, where the newer locations geographically focus. Although the play FIGURE 1. Last 10 Years of Well Completions

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