Impact of Low Prices on Shale Gas Production Strategies

Ikonnikova, Svetlana; Gülen, Gürcan

doi:10.5547/01956574.36.si1.siko

Cited by 6 publications

(3 citation statements)

References 16 publications

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“…These results, in general, suggest that prices, infrastructure, and geologic variables play important roles in operators' decisions to complete unconventional gas wells. This is consistent with the results in recent literature where prices and geologic factors are reported to be significant determinants of unconventional oil and gas production decisions (Mason and Roberts, 2018;Kleinberg et al, 2018;Ikonnikova and Gülen, 2015).…”

Section: Duc Duration Status Analysissupporting

confidence: 93%

All the DUCs in a Row: Natural Gas Production in U.S.

Mugabe¹,

Elbakidze²,

Carr³

2021

The Energy Journal

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Using data from seven shale gas regions in the United States, we examine natural gas production in terms of drilling rig activity and well completion rates. Our objective is to examine the determinants of well completion decisions in the U.S. natural gas production. We observe that in recent years, the explanatory power of drilling rig count has declined. On the other hand, the number of producing wells remains a significant factor for explaining the variation in gas production. We find that an increase in the number of drilled but uncompleted wells (DUCs) plays a significant role in natural gas supply. The number of DUCs depends on drilling rig activity and futures prices of oil and natural gas. Also, our results indicate that well completion decisions and the duration of DUC status depend on oil and gas prices, pipeline capacity, producing well type and well depth.

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Section: Duc Duration Status Analysissupporting

confidence: 93%

All the DUCs in a Row: Natural Gas Production in U.S.

Mugabe¹,

Elbakidze²,

Carr³

2021

The Energy Journal

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“…Therefore, we complement the HF and FP water study with well-profitability analysis. We use a standard discounted cash-flow model to define how operational profits depend on oil and gas production; energy prices; and costs of processing, transportation, and water handling. , The investment costs are set to depend on drilling depth and length, HF water volumes, and proppant volumes, which are in agreement with the U.S. Energy Information Administration (EIA) report on trends in drilling and completion costs . For 2014, based on operators’ reports, we found that the completion-fluid and flow-back costs are on average about $1 M (million).…”

Section: Materials and Methodsmentioning

confidence: 99%

Projecting the Water Footprint Associated with Shale Resource Production: Eagle Ford Shale Case Study

Ikonnikova

Columbu

Scanlon

et al. 2017

Environ. Sci. Technol.

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Production of oil from shale and tight reservoirs accounted for almost 50% of 2016 total U.S. production and is projected to continue growing. The objective of our analysis was to quantify the water outlook for future shale oil development using the Eagle Ford Shale as a case study. We developed a water outlook model that projects water use for hydraulic fracturing (HF) and flowback and produced water (FP) volumes based on expected energy prices; historical oil, natural gas, and water-production decline data per well; projected well spacing; and well economics. The number of wells projected to be drilled in the Eagle Ford through 2045 is almost linearly related to oil price, ranging from 20 000 wells at $30/barrel (bbl) oil to 97 000 wells at $100/bbl oil. Projected FP water volumes range from 20% to 40% of HF across the play. Our base reference oil price of $50/bbl would result in 40 000 additional wells and related HF of 265 × 10 gal and FP of 85 × 10 gal. The presented water outlooks for HF and FP water volumes can be used to assess future water sourcing and wastewater disposal or reuse, and to inform policy discussions.

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“…Mason and Roberts (2018) consider three margins on which natural gas producers may react to changes in natural gas prices: intra-well production rates, initial-production rate and well-drilling rates, showing that the decline rates of shale wells in Wyoming can be explained by pattern of falling natural gas prices. Ikonnikova and Gulen (2015) look at shale gas productivity changes, focusing on the relationship between gas prices and the completion practices of the industry (namely, the activities necessary for gas to flow after the drilling of a well). Scholars have also noted the dynamics of the DUC wells, which has been rising till spring 2020 then reducing again, investigating their impact on the supply and casting doubt on the drilling-production relationship.…”

Section: Background Literaturementioning

confidence: 99%

The Asymmetric Relationship between Conventional/Shale Rig Counts and WTI Oil Prices

Caporin¹,

Fontini²,

Romaniello³

2024

The Energy Journal

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This work analyses the asymmetric response of conventional and shale oil rig counts to WTI oil price returns. Our analysis shows that the rig count time series exhibited a structural change after the oil glut of 2014. All series are non-stationary in each sub-period but not cointegrated. Therefore, after controlling for possible confounding factors, a vector auto regressive (VAR) model is set up. Our specification accounts for the possible role of oil production and distinguishes between positive and negative oil price changes. It is shown that shale and conventional rig counts reacted differently in each subperiod to signed changes in oil price. Subsequently, by evaluating the response of rig counts to oil price shocks, their intensity and duration over time, we observe that the shale oil rig count reacts more intensively to positive than to negative oil price changes. On the contrary, the conventional rig count exhibits a modest reaction only to positive price changes. Finally, we robustify our findings by focusing on the data of the Permian basin, on the one hand, and the Anadarko, Bakken, Eagle Ford and Niobrara, on the other hand, which are characterized by different patterns in the number of Drilled but not Completed wells.

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Impact of Low Prices on Shale Gas Production Strategies

Cited by 6 publications

References 16 publications

All the DUCs in a Row: Natural Gas Production in U.S.

All the DUCs in a Row: Natural Gas Production in U.S.

Projecting the Water Footprint Associated with Shale Resource Production: Eagle Ford Shale Case Study

The Asymmetric Relationship between Conventional/Shale Rig Counts and WTI Oil Prices

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