Unlike conventional wells which, once drilled sometimes produce for ten or twenty years without significant overhaul, wells in North Dakota often have a short economic run. Producers must constantly drill, fracture and lift to keep production steady. In a climate of very low oil prices where one well cannot quickly pay itself off and finance ＿the ＿next, ＿capital needs to＿-continuously be raised to keep a lease going. The central question addressed in this paper is: what would happen if the money supply dried up and the state and its producers were faced with the prospect of no more capital to drill? How long would current production last? Would some producers or counties fare better than others? And finally, once shut in, what would be the investment necessary to bring production back up?
Knowing how production will decline in the face of no new investment should be of paramount importance to anyone passively dependent on its revenues, such as royalty owners, state and civic governments, lien holders and non-operating production partners. Few of these parties have a say in if or how capital is deployed, yet all have an interest in knowing how revenues are likely to drop in a worst case scenario. Instead of confronting the unique production requirements of unconventional wells, people still tend to think and plan in terms of metrics that make sense in a world of assets that depreciate slowly. The usual ways of talking about production are in terms of flowing barrels per day of oil equivalent (boepd) and total reserves. In places like North Dakota, it might be more productive to think of an asset in terms of flowing barrels and its half-life. "Half-life" here is defined exactly as it is in chemistry: the amount of time it will take before boepd is half of the amount it is currently. Equivalently, it is the amount of time over which half of the production in play must be replaced in order to keep overall production steady. This metric can be applied to a single well, a group of wells owned by a particular entity, or an entire county, state or nation. Although analysts often work with decline rates and show graphs of the rise and fall of oil fields, the half-life of a project is very rarely reported.
