Updated December 2016
The analysis relates to the Bakken and Permian plays and looks at the averages.
To get the natural gas to oil ratio (GOR) , (wet) natural is expressed in boe here, assuming that one boe represents 5.8 Mcf.
Ten years ago, The Bakken play had just 5% of total North Dakota oil production. Now it’s 95%. In 2006 Bakken consisted essentially of ageing vertical wells with a natural gas (NG) to oil ratio of 24%.
The addition of new oil rich horizontal wells with an GOR (in boe) below 10% drove the average Bakken ratio down to 12% in 2008 before it started rising again.
The gas content of a producing well is rising over time and the initial gas content of new wells is also growing in the Bakken from year to year. The GOR of the 2007/2008 wells has nearly doubled and continues to rise by around 15% to 25% per year relative to the ratio at production start (IP30 month) – which means for example if the initial gas/oil ratio was 10%, it’s currently increasing by approx. 1.5% to 2.5% per year).
The average GOR in the first month of production of the approx. 2000 wells having IP30 in 2014 was 22.4% (corresponding to a rounded NG to total boe ratio of 18.5%), more than twice the amount of the horizontal wells drilled in 2007 and 2008. The ratio of the 2014 wells remained relatively stable in the first 6 months of production before starting to increase. At the end of the first production year (counted from the IP30 month), the ratio was 24.6% and at the end of the second year, it was near 30%. The data suggest that if the initial ratio is higher, the rate of increase (in absolute terms) is also higher.
The small amount of wells listed in the official North Dakota lateral well database for 1989 and 1990 show an average GOR of 1.2 (boe) now and those completed in 1991 to 1995 show an average ratio of 0.8 currently.
For the oil cost simulations, counting with a 30 year well life, it’s assumed that the GOR ratio at well production start and the evolution in the first 2 year corresponds to the observed values for the 2014 wells. After the second production year, it’s supposed that the ratio grows linearly and reaches close to 100% in year 30.
The ratio of gas sold to gas produced has also increased over time. In 2016, it’s oscillating around 85% for the Bakken play. Regulations demand a ratio of 90% in coming years.
The initial GOR , expressed in boe, in 2014 and 2015 was around 34% in the Permian vs 22.4 % in the Bakken. In % of boe, initial NG was 25.5%. The analysis of Permian data since 2009 reveals that the ratio tend to increase significantly faster compared to the Bakken.
Based on these observations, the cost model assumes that the average Permian GOR increases with a decreasing rate until the fifth production year, when it reaches 100%. Thereafter, a linear increase is assumed until year 30, the end of the well life. The final GOR is 320%.