Transforming Rockies Gas Resources to Supplies: Implications of Gas Production Performance Factors

Philip H. Stark
Energy, IHS, Englewood, CO

Rocky Mountain region gas production increased by 4.9 Bcfd from January 1997 through May 2007 and development plans signal that production could increase by another 2.7 Bcfd by 2015. This positive outlook is bolstered by pending completion of the Rockies Express pipeline which will boost export volumes while also reducing the Cheyenne Hub price basis differential. Analysis of vintaged gas production for 25 key Rockies gas plays, though, reveals trends that merit concern. The increase in Rockies gas production since 1997 was accomplished by doubling the number of active gas wells to some 55,000 producers by mid-2007. Much of this increase resulted from reduced well spacing--from 80 acres to 20 and even 10 acres in the most productive plays. Of concern is the observation that average peak well production decreased by 52% to 464 Mcfd and average reserves per new well decreased by 44% to 264 Mcfd over this same period. These numbers represent the composite of all types and depths of gas wells in the region. Nevertheless, these parameters deteriorated in essentially all of the plays that were analyzed. This was not a concern in 2005 when high gas prices generated substantial incremental well head margins for most Rockies gas plays. But with subsequent 49% increase in a Capital Cost Index and the outlook for moderate gas prices, Rockies operators cannot be complacent. Operators must continue to apply new technologies to improve recoveries, reduce expenditures, develop new plays and improve deliverability across the supply chain while minimizing environmental impacts. This presentation summarizes cost and gas productivity parameters that must be considered to sustain the conversion of Rockies unconventional gas resources to reserves.

AAPG Search and Discovery Article #90092©2009 AAPG Rocky Mountain Section, July 9-11, 2008, Denver, Colorado