In 2015-2016, the Resource Assessment team from the Bureau of Economic Geology of the University of Texas at Austin conducted its analysis of the Williston Basin and Eagle Ford play, providing the estimates of the resource in place, technically recoverable resource, and production outlook projections. The outlook projections for each play were found to be heavily dependent on the price environment and technological advances. Almost four years later, we revisit our results to check the accuracy of our original predictions, identify missing factors influencing each play development, and suggest ways to improve outlook modeling.
Notably, we focus on changes in individual well’s productivity and suggest a new procedure to improve productivity predictions and the accuracy of our outlook projections. Random forest machine learning algorithm is applied to the original database updated with additional geologic, production, and completion data. We also present a discussion on the importance of drilling financing modeling, a new block of the outlook model built to capture, explain, and enhance projections of both play’s development dynamics.
The oil and natural gas industry has witnessed a long history of production forecasting and production outlook projections. While forecasts or predictions suggest what one can expect in the future, projections play a different role. Projections allow us to investigate how the future may develop would the prices, technology, costs, and other relevant factors change. Hence, projections serve as an essential tool to investigate various questions: e.g., how much industry should push in technological progress to increase its profitability by X%; how resilient are operators to price or regulatory risks; or for how long can a play survive until it is exhausted given a specific price assumption. The nature of the questions suggest that projection models may affect the involved company’s behavioral, technological and market characteristics. As a result, the underlying assumptions and mechanisms in the models would become obsolete. To keep outlook models and projections relevant, regular validation analyses are needed. Such examinations would reveal whether underlying assumptions and parameters are still true and model’s mechanism captures the industry’s behavior, i.e. investing strategies. Namely, we have to consider whether additional modeling blocks are required to replicate operator’s decisions. In this context, our paper explores what, why, and how one should change and update in the Williston Basin (also referred to as Bakken) and the Eagle Ford play outlook models owing to the developments in the past 4 years.