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Source: Wood Mackenzie
YearProduction(BCFED) Operators
Breakeven Gas Price (Nominal)(US$/mcf)
Cumulative CAPEX(US$b) Rigs
Average Houston Ship Channel Prices (US$/mcf)
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Production(BCFED) Operators
Breakeven Gas Price (Nominal) (US$/mcf)
Cumulative CAPEX(US$b) Rigs
Average Houston Ship Channel Prices (US$/mcf)
Production(BCFED) Operators
Breakeven Gas Price (Nominal) (US$/mcf)
Cumulative CAPEX(US$b) Rigs
Average Houston Ship Channel Prices (US$/mcf)
Production(BCFED) Operators
Breakeven Gas Price (Nominal) (US$/mcf)
Cumulative CAPEX(US$b) Rigs
Average Houston Ship Channel Prices (US$/mcf)
Production(BCFED) Operators
Breakeven Gas Price (Nominal) (US$/mcf)
Cumulative CAPEX(US$b) Rigs
Average Houston Ship Channel Prices (US$/mcf)
Production(BCFED) Operators
Breakeven Gas Price (Nominal) (US$/mcf)
Cumulative CAPEX(US$b) Rigs
Average Houston Ship Channel Prices (US$/mcf)
0.4 21
0.6 30 3.67
0.9 11 1 28 5.40
1.1 23 2 46 5.75
1.4 43 3 72 8.00
2 66 5.50 4 104 6.35
3.1 72 5.00 7 161 6.62
4.5 81 4.60 12 174 8.54
5 58 4.12 18 125 3.70
5.2 50 4.16 22 78 4.33
5.8 39 4.29 28 58 3.94
5.9 31 4.32 35 49 2.71
5.5 35 4.29 38 29 3.70
5 26 3.61 39 19 4.31
4.3 7 3.02 41 5 2.73
Large year-over-year changes in average well productivity occurred twice. First in the initial delineation phase of the play around 2003, and later around
2012 when prices collapsed and producers paused to refocus.
41,685Cumulative CAPEX (US$m)
106,000The
fracture stages pumped transformed a quantity of rock equal to the size of Mt. Everest. That same rock volume would fill the Dallas Cowboys’ stadium 450 times.
Production declines 4 years after rig count starts to fall
At 2014 drilling speeds, it would take 1 rig, drilling 24 hours a day, 660 years to drill all the horizontal Barnett wells again.
Breakeven prices remain above the HSC gas price. Operators and rigs evacuate the play.
Percentage of activity in the
“core” area 82%
In 2005, the Barnett’s cumulative gas production equals Mexico’s entire annual gas demand for the same year.
Breakeven prices edge higher as all the best well locations are used up.
Exploratory rig count peaks in 2007 at 30 units.
Horizontal drilling takes off in earnest
28% increase: from 2007 to 2008, gas prices and the number of new wells drilled both jumped by the same proportion
were used to develop the play, 60% more than have ever been drilled in the entire North Sea. The Barnett wells were also drilled in 1/3 of the time.
16,000 wells
150 different operators have drilled Barnett wells.Double the number that have ever operated assets in the Gulf of Mexico.
Annual production exceeds half of Texas’ total natural gas consumption.
Comparing the Barnett’s Core and Extension areas
Core Cash Flow 88%
Core Drilling 72%
Extension Drilling28%
Extension Cash Flow12%
The core area is 1/5 the size of the extension play, but it holds 72% of all wells and generates 88% of cash flow.
Entry costs varied widely
Aver
age
leas
e co
sts
(inde
xed)
2004 2005 2006 2007 2008 2009 2010 2011 2012 20142013
400
200
300
100
350
150
250
50
0
28x the city of Ft. Worth’s annual budget
or 1.5x the construction cost of China’s Three Gorges Dam
Examining the Barnett Shale over a 15 year window reveals the true scale of the field and how massive shale plays can be. Drilling activity rose to nearly 200 rigs at its peak, 16,000 wells were brought online, and US$30 billion of assets changed hands.
As commodity prices changed, operational metrics evolved, but they didn’t always move in a uniform direction. Core acreage ended up outperforming extension areas in every regard. The Barnett rig count has now faded back down to almost zero, presenting an excellent opportunity to study the full lifecycle of a shale play.
Lifecycle of a Shale Play202020202020202020202020202020
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