The past ten years have brought countless improvements to oil and gas drilling and completions
The American shale boom has come a long way since pioneers like George Mitchell established shale production as economically possible. Since then, companies have continually improved technologies and techniques, with ever-intensifying frac jobs and longer lateral wells.
While these changes have certainly improved results, their cumulative effect is not always clear. How far have operations in major U.S. basins really come?
A 2007 Effective Rig Count
Information on per-rig productivity in the major U.S. shale basins is available through January 2007, when the shale boom was just beginning to get revved up. At that time, most operations in shale basins were either vertical wells or relatively primitive unconventional development, but since then each basin has seen massive changes.
Popularity of basins varied widely in 2007
The degree of improvement in a given basin is highly dependent on how popular the basin was with operators in 2007, as some areas were already undergoing development while others were still relatively unknown.
Plays like the Permian and Anadarko basins have been around for many years, and were highly active at that time. The Marcellus, on the other hand, was still in its infancy. In January 2007 there were only 56 rigs active in Appalachia. While this may seem like a respectable rig count, given recent activity levels, Baker Hughes reports there were a 1,630 land rigs drilling that January, so the Marcellus was a minor basin at the time. The Bakken and Eagle Ford were even more unknown, with only 45 and 51 rigs, respectively.
2007 Effective Rig Count comes in at a whopping 8,874
EnerCom’s Effective Rig Count examines current rig productivity compared to productivity from January 2014 to determine the number of pre-downturn wells that would be needed to achieve current production. However, the same technique can be used to compare current activity to operations in the beginning of the shale boom.
When rig productivity levels are compared to January 2007, it is clear that all these technology improvements have had a massive effect on operations. Current rigs are yielding an average of 10 times more production than early 2007 rigs were. This means it would take nearly 8,900 rigs from 2007 to create the same level of production growth seen in the U.S last month.
Note that the EnerCom Effective Rig Count takes into account production derived from the area being drilled. Higher production is tied to completion technique, location being drilled, and wells being put on production.
Permian has second-most effective rigs
While one might assume the Permian would represent the largest share of the current “2007 Effective Rig Count,” this is not the case. Modern Permian completions still lag behind drilling operations, meaning new wells drilled do not immediately translate into new production, providing downward pressure on the basin’s per-rig productivity. It would take 2,351 Permian rigs from 2007 to create the massive growth seen in the Permian today.
Appalachia has come a long way, wins ‘most improved basin’; Bakken is a distant second most improved
Among individual basins, Appalachia is by far the most improved. While the Marcellus shale play was first discovered by Range Resources (ticker: RRC) in 2004, operations basin-wide were still not very successful in 2007, and the play was a far cry from the gas powerhouse it is today.
Today, everything has changed. Each modern rig in Appalachia is now producing nearly 35 times as much production as early 2007 rigs were. This is the largest productivity multiple by far, and demonstrates just how extensively companies have improved operations in the basin. To achieve current production growth, 2,688 January-2007 Appalachia rigs would be required.
Bakken is second-most improved
While no other basin reaches the productivity multiple seen in Appalachia, all are vastly improved from the beginning of the shale boom.
- The Bakken shows the second-largest improvement, with current operations yielding 14 times more production than those of January 2007.
- The Eagle Ford, Niobrara and Haynesville have also seen significant boosts in productivity, as rigs in each are currently yielding 8-9 times more production than those of 2007.
- The Anadarko and Permian, with some of the most established operations in the beginning of the shale boom, have seen the smallest improvements in the past ten years, but even in these basins rigs are yielding more than five times as much production as those from the beginning of the boom.
