🚨 USA Shale 🚨
My latest math & model
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This model is via EIA DPR.
It's based on averages and therefor is an estimate.
Let's dive in! The EIA has the Drilling Productivity Report at 9 million barrels oil per day ...continued 1/8
Shale wells decline AVERAGE 60% per year with 40% of production remaining in the following year. I can get more precise but for simple example this is very close.
So 9M oil .6 declines so .4 remains.
9M ×.6 = 5.4M bbl/d needs replacement per year. (2/8)
On the 2022 dark blue line I have 160k bbl year 1 average across USA. ÷365= 438.3bbl/d per well.
5.4M decline ÷ 438.3= 12,320 wells to offset. More granular data lowers this to 5.0M + less decline is more conservative. Simply put wells older than 3yrs have lower decline (3/8)
So how many wells are we drilling?
11,516 × 438.3= 5,050,000bbl/d
So on the conservative side 5M lost bbl/d is met by 5.05M bbl/d supply.
Therefor shale is maxed out. (4/8)
Can they increase well productivity? Largely NO. Why? Because they are almost at full % weight to the Permian oil feild.
They are using the longest wells. The fastest drills, the heaviest frac + most injected material. So it's like trying to make a Formula 1 car faster (5/8)
What if they use more equipment? Say 1000/month if they can?
12k×438.3=5.260. +200k but 60% declines so without doing another 12k wells you'd loose 120k bbl/d if you did re drill 12k you'd have 80k additional decline . And a hypothetical what if all wells were Permian (6/8)
100% Permian hypothetical (aka if all oil wells got better)
So 175k bbl/yr1 = 480bbl/d
11,516×480= +5.5M so +500k
500k=316k needing replacement the following year. The treadmill effect. (7/8)
So summary.
9Mbbl/d =5M bbl/d decline
11,6k wells x438.3bbl/d =5.05M
USA outside of shale is declining.
At highest % to Permian
At full equipment capacity
At peak tech
Land getting chewed up.
Peak USA is here. (8/8)
News article on the data above.
argusmedia.com/en/news/238346…
How could this have happened?!?!
Probably not going to add equipment and further depress their secondary resource price .
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