Saturday, May 14, 2016

Shale Gas Decline Case: The Barnett Shale

The Barnett Shale in north Texas offers an interesting example of the natural decline rates for gas when drilling is effectively curtailed.  Rig counts have been very low for years now, and the play now consists primarily of cohorts of old wells, long past the initial hyperbolic decline rates characteristic of the first year of shale production from horizontals.

The Texas Railroad Commission collects and reports the data, and typically takes about six months before the data is close to final, so 2016 numbers have to be considered incomplete.

Nevertheless, a look at production from the 4 core counties of the Barnett since 2013 indicates a fairly steady decline rate developing, which averages about 11%.  If that were to continue through 2016, another 0.3 to 0.4 BCFD would be subtracted from north American production by end of year.

Southwestern Energy's most recent quarterly call seemed to corroborate this in the Fayetteville Shale, where they have been running zero rigs, and saw a Q4 '15 decline over Q4 '14 of 125BCF to 112BCF.  No more detail was given, presumably they did complete some wells in 2015, but the raw numbers indicate a 10.4% decline YOY.