Display on Chart - allows the user to display the decline line on the chart itself.
Decline Curve Start Date - when you want the decline curve to be DISPLAYED on the chart.
Initial Flowrate - in the context of the Exponential Decline Curve Analysis, this is the flowrate essentially on the first day of production, although the average flowrate for the first full month could also be used. Initial Flowrate is transferred to the Input Page of the Economic Analysis as the default, but can be changed at that point.
Final Flow Rate - This is OPTIONAL. IF you want the projected line to stop at a given flowrate, enter this here. Otherwise, the projected decline line will continue to ”1”. Important note: Final Flowrate is for graphical purposes only, and is not used in the Economic Analysis. The Economic Analysis determines the final flowrate for the economic purposes by testing for negative cashflow. The flowrate that is in effect the month before the cashflow turns negative becomes the final flowrate for the purposes of the Economic Analysis.
Redraw Chart - redraws the chart showing the decline line, starting at the Decline Curve Start Date, with the specified Instantaneous Flowrate, and continuing to the Final Flow Rate, or to a value ”1”.
Economic Analysis Start Date - the month and year on which the user desires the analysis to begin. Independent of where the projection line is drawn on the Chart.
Five Year Decline Rate Deck (New for V3.0)
This type of flowstream simulation can be helpful in areas where past experience shows that wells decline at decreasing annual rates over time, ie, 72% the first year, 50% the second year, 35% the third year, etc.
Simply input your estimated decline rate for each of the first 5 years.
The rate from year 5 or from the last year entered will be used for the remainder of the life of the well. For example, should only two years of rates be entered, the last rate entered in year two will be used for the remaining life of the well.
You must enter rates ”contiguously”, ie you cannot enter a decline rate for year two and three, but none for year one.
This decline rate deck can be saved and used again, to save input time, and also for recollection of what you used previously.
Hyperbolic Decline Curve Analysis (New for V3.0)
Due to the complexity of the math - and the software using the math - hyperbolic decline simulations have often been limited to the domain of reservoir engineers. Now any Drillinginfo user can simulate a flowstream using a hyperbolic model!
What is it, where is it used?
Low perm (tight gas, shale gas) reservoirs often decline steeply during their initial years, then ”level off” over time. In other words, the observed decline rate decreases over time. This type of decline, where the rate of decline is not constant but is proportional to the rate of production, is know as hyperbolic decline. The use of an exponential decline model for the early life of a hyperbolically declining well will generate an overly pessimistic analysis.
Our approach
The process of flowstream simulation using the V3.0 hyperbolic model requires several steps in an iterative or ”trial and error” fashion. Here’s the way it works:
1. You toggle the Hyperbolic Decline Curve option for flowstream modeling.
2. Shown are your left are four initial hyperbolic constant (b) choices, from 0.3 to 1.7. Leave these alone for now.
3. Enter an Initial Instantaneous Flowrate on the right. Note that, due to the math involved in the hyperbolic equation, this rate is usually much higher than the ”average daily rate for the first month”, and in fact can be somewhat higher than a well’s first day’s production. Think of it as the rate when the well is first put on sales. In the case of one Cotton Valley Sand (tight gas) well (42-203-32798) that made 18,393 mcf in its first full month, the Initial Instantaneous Flowrate that seems to simulate the well the best is about 850 mcf/d even though the average rate for the month was 604 mcf/d. Some experimentation is required, sometimes in conjunction with changes in the hyperbolic exponent, b.
4. Click on REDRAW.
5. Four curves are drawn, each representing the different b factors. If one of them simulates the actual production curve to your satisfaction, then ”you’re done” and you can toggle the radio button labeled ”Select For Analysis”, and the flowstream represented by this curve will be used in the Economic Analysis. Note: In order to see the curves better, you may need to expand the curves by entering, on a temporary basis, a relatively high Final Flowrate. In other words, even though you envision a Final Flowrate of 50 mcf/d, enter 200 mcf/d in order to see fewer years and thus an expanded graph.
6. If none of the curves simulate the actual production to your satisfaction, then you can ”play with” the Initial Instantaneous Flowrate, or try different b values. Here are some hints:
a. If the initial starting point of the curve is too low, raise the Initial Instantaneous Flowrate.
b. If the shape of the curve is ”too steep”, try a higher b value. Certain Cotton Valley Sands seem to be well simulated with b values between 1.7 and 2.2.
7. The Decline Curve Start Date is designed to default in the higher production month of the first and second months. This due to the fact that the first month’s production might only represent 1 day, if that well initiated production on the last day of the month. Of course, you can change the Decline Curve Start Date as you wish.
8. The Economic Analysis Start Date is the month and year that has the PRODUCTION RATE on the curve where you want to begin your flowstream model for the economic analysis. The Economic Analysis Start Date is not the DATE in which your Economic Analysis will begin, as all Economic Analyses begin with the current Fiscal Year. Examples:
a. ”New Well” Case: The Smith #1 lease begins production in 3/1985. Evidently this well came on late in 3/85, as the production for this month was much lower than that of 4/85. After 4/85 the well exhibited a characteristic hyperbolic decline, which we modeled by finding a suitable b value and Initial Instantaneous Flowrate. We want to propose drilling a well that we believe will have a flowstream quite similar to the Smith #1. It is currently 4/2005. So we set the Economic Analysis Start Date for 4/85 to generate the correct flowstream for our model, which will begin with Fiscal Year 2005 and will have a full 12 months of production. So, if we get the well on production in 6/2005, Fiscal Year 2005 will run from 6/2005 until 5/2006.
b. ”Existing Production” Case: Same Smith #1 well as above, but in this case we are buying the Smith #1 well, not drilling a well similar to it. So, to correctly model the flowstream for the Economic Analysis we want our Economic Analysis Start Date to be the effective date of the sale, or say perhaps 5/2005. The default is the last reported month of production.