Free Production Scenario Analysis Tool

October 13th, 2015 |

Have you ever wondered what an additional 20% decrease in wells drilled in the Marcellus & Utica would do to overall US gas production?  Or, maybe what a 15% increase in IPs would look like for Marcellus & Utica at the same time.  We get these types of questions all the time and subsequently developed a production scenario tool so that we could quickly and easily provide our clients with answers.  In doing so, we realized that there are likely many other people who have the same questions but may not be interested in speaking to us (we get it, it’s the digital age).  Thus, we have developed a complimentary (see: free) online tool that anyone can use to see the results of increased or decreased wells and IP rates in the major plays across the US utilizing BTU Analytics’ proprietary production model.  *If you would like to skip straight to the tool, click HERE.

base prod app chart

 

First, how do we derive our production forecasts each month?  BTU Analytics’  production forecasts utilize well level production data as aggregated by Drilling Info from each state, real time drilling activity as reported by RigData, and historical completions data from FracFocus to create peer-leading insights into the future outlook for natural gas, natural gas liquids, and crude oil production. BTU Analytics’ analysts aggregate well production by month of production for 90+ individual sub locations and use their knowledge of play maturity, well inventory, and other factors to create representative type curves from the aggregated well data. Historical production is declined using these curves and production from new drilling is projected into the future using a combination of BTU Analytics’ outlook for commodity pricing, well-by-well play economics, and midstream infrastructure developments. Additionally, BTU Analytics analyzes the historical relationships between the number of new wells drilled by play versus the number of completions in each play to estimate well back-logs in each play and combs through investor presentations for insights into how operators will work through their respective backlog of wells to determine when to expect those wells to be completed and turned to sales.

Now that we’re all comfortable with our methodology, let’s take a look at the above scenarios and see how they would play out in our Production Scenario Analyzer.  First, a 20% decrease in wells in the Marcellus & Utica.

prod app blog chart 1

You can see the delta between our base case (the grey area) and the 20% decrease in Marcellus & Utica wells drilled scenario (the blue line) would represent a total US production decrease of 4 Bcf/d and 37 Mb/d of oil by the end of 2020.

Next, let’s layer in a Marcellus & Utica IP increase of 15% on top of the 20% decrease in wells drilled.  It’s no secret that IPs in the Marcellus and Utica have been steadily on the rise over the past several years, and the expectation is that when times are lean, companies will continue to run their best crews in their best acreage.  No longer do you need to hypothesize and guess at the overall US production implications of such a scenario, now it’s as easy as the click of a couple buttons and, voila!

prod app blog chart 2

A 15% increase in IPs in the Marcellus & Utica on top of a 20% decrease in drilling would result in only a 3% (or 2 Bcf/d) drop in US dry gas production and would land December 2020 average daily US Dry gas production at roughly 79.5 Bcf/d.

If we wanted to expand this analysis to include decreases in wells drilled within other major plays, it’s as easy as clicking the areas we would like to analyze, selecting “Change View”, and entering your desired percentage changes for each area.  Or, enter a blanket scenario where all of the US experiences an increase or a decrease in wells drilled or IPs realized.

We invite you to check out the functionality of our Production Scenario Analyzer and hope it takes a lot of the guess work out of your scenario analysis.

Author: Mason Ender

Mason Ender is a partner at BTU Analytics, LLC and managing director of business development overseeing client relations, marketing, and sales. Prior to joining BTU Analytics, he was the Manager of Sales for Bentek Energy, a division of Platts. Mason has worked with energy companies both domestically and internationally to implement effective fundamental energy analytic solutions. Mason also routinely presents energy market dynamics informing the market of upcoming risks and opportunities.