US oil companies underwent a shut-in of their own, curtailing production from thousands of wells in the US. It’s estimated that over 1.8 million barrels per day will be curtailed over the second quarter of this year, with the largest percentage of curtailments among the largest producers. 

These large-scale shut-ins have long-term consequences. Analysts vary on how long it will take for supply and demand to balance. In the meantime, as shut-in wells are brought back online, the data provides interesting implications for the future. 

It’s a fascinating problem. For conventional reservoirs, shutting in wells runs the very real risk of never getting them back, which lies in stark contrast of shutting in gas wells.  For low-producing conventional “stripper” wells, shut-ins may well be permanent, as it’s unlikely they will come back at a level that makes production economic. This, in turn, impacts communities relying on severance and ad valorem taxes.  In many rural communities, revenue from these wells provides a stable foundational portion of the tax base for fire and police, ambulances, schools and social funding.

A Happy Ending?
 
In an internal discussion with several Enverus producer members last month, they reported that their unconventional wells that are slowly being brought back on line as the spot price increases past $30.00 per barrel, are exhibiting higher rates than prior to shut-in, with one operator reporting new flows more than 2.5 times pre shut in rates. This “magical” behavior makes some sense. An unconventional oil well owes its ability to flow to being a “solution gas drive” reservoir. It produces oil as part of the gas coming out of solution as the pressure drops. It is the same mechanism an aerosol can exhibits to deliver its aerosolized liquids.   
 
The induced fractures surrounding the wellbore contain a lot of oil, and have higher relative permeability and porosity than the very small pores in the rocks themselves. The small molecular size of natural gas (mostly methane) relative to its liquid brethren allow it to preferentially seep from the rock pores into the fractures and “re-energize” the oil remaining. 
 
The question remains whether this enhanced production just accelerates the production of the recoverable oil in the wellbore or does it actually increase the Estimated Ultimate Recovery (EUR)? Will this Black Swan Cock Fight yield, in the end, a powerful new production management tool for unconventional wells to help counterbalance their rapid production declines? Maybe.  
 
It would certainly be an ironic, yet unintended response to Russian efforts to damage US unconventional production.  It will certainly accelerate our understanding of the reservoir and charge dynamics.  With demand still finding its foothold in the market, however, it could impact overall supply and supply overhang.

There is an old saying- “That which doesn’t kill us makes us stronger”. The pandemic is a stress test not just for medicine, but for the global economy. In hydrocarbons, what may be a death blow to a certain kind of well may very well be a shot of adrenaline to the heart of another. Given that North America is alone in producing consequential unconventional hydrocarbons, this could very well be wonderful news to a beleaguered class of producers. 
 
As is usually the case, policies or regulations that insist on “one size fits all” are a guarantee to be unoptimized overall, and, in some cases, tragically destructive. This applies to the economy at large as well. Data and experimental insight can help lead IF we use them objectively.  We should seek a day where we aren’t blindly reacting.
 
Full post

US oil companies underwent a shut-in of their own, curtailing production from thousands of wells in the US. It’s estimated that over 1.8 million barrels per day will be curtailed over the second quarter of this year, with the largest percentage of curtailments among the largest producers. 

These large-scale shut-ins have long-term consequences. Analysts vary on how long it will take for supply and demand to balance. In the meantime, as shut-in wells are brought back online, the data provides interesting implications for the future. 

It’s a fascinating problem. For conventional reservoirs, shutting in wells runs the very real risk of never getting them back, which lies in stark contrast of shutting in gas wells.  For low-producing conventional “stripper” wells, shut-ins may well be permanent, as it’s unlikely they will come back at a level that makes production economic. This, in turn, impacts communities relying on severance and ad valorem taxes.  In many rural communities, revenue from these wells provides a stable foundational portion of the tax base for fire and police, ambulances, schools and social funding.

A Happy Ending?
 
In an internal discussion with several Enverus producer members last month, they reported that their unconventional wells that are slowly being brought back on line as the spot price increases past $30.00 per barrel, are exhibiting higher rates than prior to shut-in, with one operator reporting new flows more than 2.5 times pre shut in rates. This “magical” behavior makes some sense. An unconventional oil well owes its ability to flow to being a “solution gas drive” reservoir. It produces oil as part of the gas coming out of solution as the pressure drops. It is the same mechanism an aerosol can exhibits to deliver its aerosolized liquids.   
 
The induced fractures surrounding the wellbore contain a lot of oil, and have higher relative permeability and porosity than the very small pores in the rocks themselves. The small molecular size of natural gas (mostly methane) relative to its liquid brethren allow it to preferentially seep from the rock pores into the fractures and “re-energize” the oil remaining. 
 
The question remains whether this enhanced production just accelerates the production of the recoverable oil in the wellbore or does it actually increase the Estimated Ultimate Recovery (EUR)? Will this Black Swan Cock Fight yield, in the end, a powerful new production management tool for unconventional wells to help counterbalance their rapid production declines? Maybe.  
 
It would certainly be an ironic, yet unintended response to Russian efforts to damage US unconventional production.  It will certainly accelerate our understanding of the reservoir and charge dynamics.  With demand still finding its foothold in the market, however, it could impact overall supply and supply overhang.

There is an old saying- “That which doesn’t kill us makes us stronger”. The pandemic is a stress test not just for medicine, but for the global economy. In hydrocarbons, what may be a death blow to a certain kind of well may very well be a shot of adrenaline to the heart of another. Given that North America is alone in producing consequential unconventional hydrocarbons, this could very well be wonderful news to a beleaguered class of producers. 
 
As is usually the case, policies or regulations that insist on “one size fits all” are a guarantee to be unoptimized overall, and, in some cases, tragically destructive. This applies to the economy at large as well. Data and experimental insight can help lead IF we use them objectively.  We should seek a day where we aren’t blindly reacting.
 
Full post

US oil companies underwent a shut-in of their own, curtailing production from thousands of wells in the US. It’s estimated that over 1.8 million barrels per day will be curtailed over the second quarter of this year, with the largest percentage of curtailments among the largest producers. 

These large-scale shut-ins have long-term consequences. Analysts vary on how long it will take for supply and demand to balance. In the meantime, as shut-in wells are brought back online, the data provides interesting implications for the future. 

It’s a fascinating problem. For conventional reservoirs, shutting in wells runs the very real risk of never getting them back, which lies in stark contrast of shutting in gas wells.  For low-producing conventional “stripper” wells, shut-ins may well be permanent, as it’s unlikely they will come back at a level that makes production economic. This, in turn, impacts communities relying on severance and ad valorem taxes.  In many rural communities, revenue from these wells provides a stable foundational portion of the tax base for fire and police, ambulances, schools and social funding.

A Happy Ending?
 
In an internal discussion with several Enverus producer members last month, they reported that their unconventional wells that are slowly being brought back on line as the spot price increases past $30.00 per barrel, are exhibiting higher rates than prior to shut-in, with one operator reporting new flows more than 2.5 times pre shut in rates. This “magical” behavior makes some sense. An unconventional oil well owes its ability to flow to being a “solution gas drive” reservoir. It produces oil as part of the gas coming out of solution as the pressure drops. It is the same mechanism an aerosol can exhibits to deliver its aerosolized liquids.   
 
The induced fractures surrounding the wellbore contain a lot of oil, and have higher relative permeability and porosity than the very small pores in the rocks themselves. The small molecular size of natural gas (mostly methane) relative to its liquid brethren allow it to preferentially seep from the rock pores into the fractures and “re-energize” the oil remaining. 
 
The question remains whether this enhanced production just accelerates the production of the recoverable oil in the wellbore or does it actually increase the Estimated Ultimate Recovery (EUR)? Will this Black Swan Cock Fight yield, in the end, a powerful new production management tool for unconventional wells to help counterbalance their rapid production declines? Maybe.  
 
It would certainly be an ironic, yet unintended response to Russian efforts to damage US unconventional production.  It will certainly accelerate our understanding of the reservoir and charge dynamics.  With demand still finding its foothold in the market, however, it could impact overall supply and supply overhang.

There is an old saying- “That which doesn’t kill us makes us stronger”. The pandemic is a stress test not just for medicine, but for the global economy. In hydrocarbons, what may be a death blow to a certain kind of well may very well be a shot of adrenaline to the heart of another. Given that North America is alone in producing consequential unconventional hydrocarbons, this could very well be wonderful news to a beleaguered class of producers. 
 
As is usually the case, policies or regulations that insist on “one size fits all” are a guarantee to be unoptimized overall, and, in some cases, tragically destructive. This applies to the economy at large as well. Data and experimental insight can help lead IF we use them objectively.  We should seek a day where we aren’t blindly reacting.
 
Full post

There is an old saying- “That which doesn’t kill us makes us stronger”. The pandemic is a stress test not just for medicine, but for the global economy. In hydrocarbons, what may be a death blow to a certain kind of well may very well be a shot of adrenaline to the heart of another. Given that North America is alone in producing consequential unconventional hydrocarbons, this could very well be wonderful news to a beleaguered class of producers. 
 
As is usually the case, policies or regulations that insist on “one size fits all” are a guarantee to be unoptimized overall, and, in some cases, tragically destructive. This applies to the economy at large as well. Data and experimental insight can help lead IF we use them objectively.  We should seek a day where we aren’t blindly reacting.
 
Full post

There is an old saying- “That which doesn’t kill us makes us stronger”. The pandemic is a stress test not just for medicine, but for the global economy. In hydrocarbons, what may be a death blow to a certain kind of well may very well be a shot of adrenaline to the heart of another. Given that North America is alone in producing consequential unconventional hydrocarbons, this could very well be wonderful news to a beleaguered class of producers. 
 
As is usually the case, policies or regulations that insist on “one size fits all” are a guarantee to be unoptimized overall, and, in some cases, tragically destructive. This applies to the economy at large as well. Data and experimental insight can help lead IF we use them objectively.  We should seek a day where we aren’t blindly reacting.
 
Full post

There is an old saying- “That which doesn’t kill us makes us stronger”. The pandemic is a stress test not just for medicine, but for the global economy. In hydrocarbons, what may be a death blow to a certain kind of well may very well be a shot of adrenaline to the heart of another. Given that North America is alone in producing consequential unconventional hydrocarbons, this could very well be wonderful news to a beleaguered class of producers. 
 
As is usually the case, policies or regulations that insist on “one size fits all” are a guarantee to be unoptimized overall, and, in some cases, tragically destructive. This applies to the economy at large as well. Data and experimental insight can help lead IF we use them objectively.  We should seek a day where we aren’t blindly reacting.
 
Full post