The Midnight Oil

This weeks oil & gas news

In the oil market, prices rose as Saudi Arabia announced further voluntary output cuts of one million barrels per day, while OPEC+ maintained its planned production cuts for the year.

Despite near-record gas output and reduced gas flow to LNG export plants, natural gas futures in the U.S. soared by 5% on Monday due to forecasts of low wind power, warmer weather, and higher air conditioning demand. This, along with rising exports to Mexico and a global surge in gas prices, contributed to the price increase.

To meet this demand, the Railroad Commission of Texas issued 805 drilling permits in May 2023, 702 of which are for wells to be drilled.

These developments highlight the interconnectedness of global energy markets and the impact of different factors on prices.

Will laterals get longer, or stimulation more efficient?

When it comes to U.S. production, not much can rival a high producing lateral well in a rich pay zone. Miles of stimulated pay with IP rates in the thousands of barrels per day! Have we reached peak production from these wells, or can we get even more?

Coming out of the 2014/2015 downturn technology improved and lateral lengths increased. Two to three mile laterals were not unusual, and frac crews were eagerly awaited stimulating them to the fullest, improving IP rates and putting US production ahead of the curve. Out of necessity, operators had gotten better at extracting oil with the capital they had at hand. However, extraction rates of under 50% were common the majority of wells!

Today, that still holds true, and in carbonates ~33% is a more accurate figure. Meaning 2/3 of the oil is still left down hole. So what? Well when we talk about lowering emissions, and increasing energy security, one must ask… can we improve incremental barrels in wells that we have already drilled? Even a few % difference in recovery can greatly improve barrels delivered up hole.

How we do that is the million dollar question… so where can we start? Likely with improved modeling, better stimulation designs, and orchestrated data from drilling to production, or that is at least what this writer thinks! What are your thoughts for improving wells?

What we are following this week…

This weeks inspiration comes from Admiral William H. McRaven, and his latest book “The Wisdom of the Bullfrog: Leadership Made Simple (But Not Easy)” where he shares leadership lessons collected over the past 4 decades as a Navy SEAL.

A relatively quick read, I actually listened to this one on Audible in just a few days, this book is chalk full of simple but powerful lessons.