[stratocaster]

Googling around, I found an article in the Journal of Energy Security on the diminishing returns on increased drilling for boosting production. I thought people here might be interested in it, if they haven't already seen it.

The upshot of the analysis is that, taking a macro view, increased drilling brings very little in the way of increased production in a mature region like the United States. The increased drilling seems to mostly bring on marginal and small new reserves. Not what the "drill, baby, drill" crowd wants to hear!

I'd be curious to hear the thoughts of others who have read the article. For anyone interested, it's at:

http://www.ensec.org/index.php?option=c ... temid=334/

[GoghGoner]

This article was also on the front page of this website, yesterday. Don't have to google too much.

One graph that I have often seen posted on peak oil sites is the U.S. production vs. oil rig counts during the 1970s. Increased drilling did not stop the decline in U.S. production. This is a lesson we learned thirty years ago and folks still say "Drill, baby, drill". I see bumper stickers that say "Drill Here, Drill Now". My first, middle, and last thought is that person is a moron.

[Starvid]

How is this news?

Everyone knows that increased drilling in a mature peaked out province only slows the decline.

[stratocaster]

Perhaps it's not news to anyone clearsighted enough. But I've never seen an analysis as rigorous.

And the fact that the production response is a power law and that it is a fairly tight relationship means you can now tell someone in quantitative detail exactly how little you can squeeze out of a mature region by squeezing harder. (Well, "by drilling, fracing and sucking harder" would be more accurate, I suppose.)

I still like seeing new cogent articles whenever they appear, because, unfortunately, everyone does not know that increased drilling is not fairly futile. There are still a lot of people (in the United States. anyway) who are easily swaying by chants of "drill, baby, drill!" They really think that if we just poke more holes everywhere, they can drive their giant Suburbans all they want and forever.

(Of course, come to think of it, those sorts of people are not likely to appreciate the predictive possibilities that a tight diminishing power law of production response to increased drilling effort allows...)

[stratocaster]

Minor correction, I meant to say:

"...unfortunately everyone does not know that increased drilling is fairly futile..."

I confused myself with my own double negative (must remember: never post when undercaffeinated!).

[Plantagenet]

everyone does not know that increased drilling is not fairly futile. There are still a lot of people (in the United States. anyway) who are easily swaying by chants of "drill, baby, drill!" They really think that if we just poke more holes everywhere, they can drive their giant Suburbans all they want and forever.

There are also people who do not know that stopping or excessively restricting oil drilling is even more futile, as it results in even more rapid drops in domestic oil production and hence more dependence on foreign oil sources.

PS: WELCOME to PeakOil, stratocaster. This is a very interesting topic you've started.

[rockdoc123]

When I read the article I saw some fairly glaring misconceptions. They mention the fact that even though drilling decreased from 1955 through 1970 production was increasing and use this as a proxy to indicate increased drilling doesn't result in increased production but fail to recognize that discoveries made today are not turned into immediate production. Dependant on the size of the discovery there will be a period during which the field is appraised, there will be a period during which the development plan is put together and approved and there will be a period where the field is brought on stream. Traditionally you could say that it takes anywhere from 3-5 years from discovery to production startup and for particularily large fields even longer. As well they lump all of the Baker Hughes rotary rig numbers into one pile without pulling out rigs used for exploration, rigs used for development drilling and rigs which are being used for workovers/redrills.
Much of the drilling that has occurred in the US is infill. Fields went from 80 acre spacing down to 40 acre spacing and then down to 20 acre spacing. As one poster mentioned this drilling happens well after peak production has been reached and all this drilling does is effectively help to flatten out the depletion curve.

[stratocaster]

Plantagenet:
- you definitely have a point, both sides of the drilling debate are far too polarized -- but that's what I liked about the article, it got into some quantitative detail and tried to answer how much we can expect to gain from increased drilling.

rockdoc123:
- While I think you may be right that there is no distinction between exploratory drilling and infill (is there good data on this, and is the distinction always simple?) I believe the article is at least not counting workover rigs (the figure says "rotary drill rigs").

- Also, you mentioned the delay from drilling to production, and the article does say that it used a 5 year delay from drilling and production. It said this was the best fit delay to the oil production data -- although it doesn't say how this was determined. Interestingly, this is right in line with your own stated 3-5 year range....


In general, the article takes a macro perspective that I think is interesting, although the downside is that it may leave out some fine points that matter "around the edges". The distinction between the outlook for oil and gas was better stated than I've seen elsewhere, although to those inside the industry it may be old news, I guess. But for energy security analysis the details that matter to an petroleum geologist may not be the most important points (not that they aren't important, it's just that they often get "averaged out" in the macro data).

I definitely think the energy debt idea at the end of the article is worth thinking about. And the strategic point, that there is a well-defined and severely diminishing quantitative relationship between increased drilling (at a national level) and production from that effort is, I think, underappreciated by political types at least. I think trying to get a handle on it quantitatively, even with a broad brush, is a worthwhile effort. IMO, the debate on drilling has to get past the "More!" and "Less!" stage, and into the "how much" to be more useful and predictive. (This gets to Plantagenet's point again.)

[jamest]

I must admit that I read the study only briefly, but it strikes me as being deeply flawed for three reasons:

1) It does not distinguish the difference between exploratory wells and development wells (including infill wells). This is a hugely important distinction when analyzing drilling statistics, and it is an easy one to make. (Every new well in the U.S. is classified as being a development well, new pool exploratory well, or a new field exploratory well before it is permitted.) Development wells far outnumber exploratory wells, an inclusion of them in the analysis very strongly skews the data. As a field matures, the incremental reserves (and production rate) per development well drops dramatically. Thus, production will decline even as the number of wells increases. This has nothing to do with measuring the effectiveness of exploratory drilling on production rates, which is what the author implies.

2) It does not take into account the relationship between drilling activity, target size, and oil price. When oil price is high, wells are drilled for smaller reserve targets than would be drilled otherwise. As a result, the average reserve addition per well drops. (The development of the Bakken Shale is a good example of this). When oil price drops, only large targets are drilled, and overall drilling activity decreases, but the reserve addition per well tends to increase.

3) It does not consider the impact of limiting access to prospective acreage on production levels. That is the essence of the somewhat simplistic "drill, baby, drill" argument, which would have been better stated as "lease, baby, lease." Exploratory drilling in the U.S. has been restricted to established producing provinces for decades. It should come as no surprise to observe continuously diminishing returns from additional drilling in them - except for during periods of high price, which accommodates the drilling of economically marginal reservoirs (again, the Bakken Shale is a good example). What the author does not consider is what the drilling/reserve relationship would look like if new areas, such as ANWAR and the eastern Gulf of Mexico, were to become available for leasing.