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Death By EUR



This Novi chart above, I stole off Twitter. It is the only chart you need to see the rest of 2023. This is data from realized production reports filed with state regulatory agencies.


This chart is cumulative liquids (C+C) over time, normalized for lateral length, in the Delaware Basin for the last 3.5 years. Each year since the beginning of 2020, well quality has been declining, and not by an insignificant amount. EUR's are going down.


This chart proves that the 'longer lateral is better' mantra is likely a big lie and that this, below, from the president of Diamondback, is probably not true...



The Novi chart IS based on normalized lateral length and proves that a 3 mile well does not necessarily make more oil than a shorter lateral. "Extremely obvious," is a stretch. The first six months, perhaps, but not in the long run. Pay close attention to definitions, always.


Longer laterals mask, hide, cover up and otherwise distort bubble point problems in the Permian. Longer laterals make things look better than they really are. You must not be fooled by that.


And for the record, we're getting really close to reaching bubble point in lots of places in the Permian Basin, particularly the last frontier, the Delaware Basin, out west. In some core counties we are already at bubble point.


Remember, in very tight mudstone, or shaley carbonate like the Wolfcamp and Bone Springs, gas molecules can travel thru shitting rock, or shitty frac's, way better than a liquids like oil and water can. So avoid the BOE bull shit at all costs. BOE is the best tool in the Permian Basin tight oil sector's tool box. They use it all the time to make their wells look better than they are. The E in BOE does not help the American consumer get from point A to point B much. A lot of the E in BOE just gets wasted up a flare stack.


And one more thing from an old operator of a half century, please...longer laterals seem great at first, then they are not so great.


Once induced frac energy poops out and those longer lateral have to go on artificial lift, like gas lift, ESP, or even rod lift, things change drastically. It is impossible to create enough pressure drop (delta) at a cluster of perforations 2.5 miles away with artificial lift. Back perforations toward the toe of a long lateral stop contributing to the well after induced energy poops out; those propped up fractures then close and in the end offer very little in the EUR of things. 15,000 foot laterals create monster IP 6 and 12 month production stats, then start dropping like a rock and end up being 8,000 foot laterals before you know it.


A tight oil operator gets a bigger bang for his buck with a longer lateral, cash flow is quicker and maybe, but not for sure, the well gets to pay out faster. All good for a company, maybe not so good for our country.


Longer laterals probably reduce recovery rates of OIP. Perforated stages at the heel of lateral may recover 10% of oil in place in the SRV (stimulated container) but those stages toward the toe will struggle to have 5% RR of OIP. Will those back stages in a long lateral ever be re-drilled to recover that oil left behind? Hell no. Its lost forever.


How come we never hear about this kinda stuff? Why do we always hear how tight oil production rates keep going up but never how mismanaged this amazing resource is? Why do we never hear about how much of our nation's last remaining hydrocarbon resources are getting left behind from poor, profit driven operational mistakes? Or total lack of regulations?


Which is more important in the long run, what EOG's dividend is... or our country's long term energy security?


You can't let kids run wild in the playground. Somebody, ultimately, has to act like an adult and control the madness. Before somebody (the American public) gets hurt. Regulators like those in Texas have failed Texans, and the entire country. The oil we are leaving behind because of pressure depletion, parent/child relationships from spacing wells too close together, rising, mismanaged GOR and this longer lateral doo-d00, is NOT good. It's pretty much all...avoidable.




 

Sir James West, Lord De-La-Warr (1577-1618); the first governor of the first English settlement in America at Jamestown.


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