EIA director explains new drilling production model, Bakken shale

By Luke Geiver | October 23, 2013

Lynn Westfall and his team at the U.S. Energy Information Administration have been working for the past year on a new way to track oil production in the U.S. Westfall, director of energy markets, spoke with The Bakken magazine regarding the work put into the EIA’s Drilling Productivity Report and why the new report better reflects the country’s oil production.

“How all of this came about was the change in oil production. The old yardstick for measuring production just wasn’t useful anymore,” he said. In the old days, he explained, one drilling rig would drill one well that would create a long, stable production cycle and people used rig count to get an idea of where production was going. “If rig count was going up, they knew production in a certain area was going up, and if a rig count was going down, vice versa,” he said.

Two years ago, people started noticing that production in shale plays was going up, but rig counts were going down. “In this report, we tried to develop a new yardstick to provide more current data on where production is going,” he said. To do that, the team combined statistical information related to the number of new wells per drilling rig, initial production rates on new wells, decline rates on new wells, time duration related to drilling and more. “We have been working on this for the past year gathering data, analyzing it and building our models,” he added.

Part of the difficulty in doing so is the time delay in state-based production data. North Dakota is very good about providing data in a timely manner, Westfall said, but other states are as much as four to six months behind with their data. “Data that is four to six months old doesn’t really do much, particularly in fields that have a high decline rate such as shale plays,” he said.

The new EIA Drilling Productivity Report is meant to give a snapshot of the previous two months of production and the next two months of production in relation to each month the report is issued. The team will release the report every month and will update its modeling when older production data comes in.

“This is very exciting, not only intellectually,” Westfall told The Bakken magazine, “but I think it is providing some very useful data to the industry.”

In the Bakken, the data shows the impact of the decline rate on overall production. “One of the things that surprised us as we got into it was how many new wells you have to have just to stay even with the decline. If you looked at our data from Bakken for instance and do the math, it shows that for every 100 barrels you produce from new Bakken wells, 70 barrels of that go just to replace the decline from old wells,” he said.

But, although the decline rates are impacting production numbers, Westfall said the new data shows a positive trend for shale plays, specifically the Bakken. Although in the early life of most shale plays production increases as more steel is put into the ground, that trend is not the case anymore. Most production increases now are coming from more productive wells, not more steel, Westfall said. Wells are producing more because they are learning how to do hydraulic fracturing and horizontal drilling better, he added. “They are learning more about these new fields.” 

To view the full report, click here.