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Posted: June 11th, 2010 under Announcements, CEO Corner, New Features by kbarbaro

In January, we polled each of you and asked “what one thing can we do to make us better?”  Since we are now in May, I thought it time to give a periodic update.

1.  Include more old production data in the BASIC membership: Full historical cumulative production volumes are now available instead of cumulative volumes since regulatory agency source date.  Monthly production numbers are still restricted to TOPDI and PLUS members.

2. Print Better Maps: We now have a robust map labeling system (you all are labeling and printing 2000 big maps per month) and we just released “PDF Map”, which appears as a hyperlink on the right side above the map.  All layers displayed in the map should appear in the PDF map and will include Color Code/Histogram legends.  These PDF’s can be scaled for plotter size since they are vector files (except for the aerial photos, where you might see lower resolution) and can be used with graphics programs, including Adobe Acrobat to add you own legends and additional data.

3. Increase Truncation Default: Released January 15.  Default raised from 250 to 1000.

4. Add Water Production in Texas: Using the estimated water production from our allocated well production, we’ve rolled up the values on a monthly basis to the lease level and that data is now available to all members.

5.  Free RRC Logs and Reduced Log Prices: As always, PLUS members have access to all raster and depth registered logs in our database, now over 1 million strong.  BASIC members can now access RRC logs at no additional charge and all other raster logs are $4.00.

6. Add More Logs: 187k Louisiana well logs have been added, more coming soon.

7. Add Link to “Related Filings Page” from Virtual Scout Table View:  Released March 20.

8.  Add Unit Tract outlines for Panola and Harrison Counties: Released March 20.

9.  Make an Easy to Print Multiple Well Files: Two answers here.  In the “tools” dropdown in a Production Search result, the PDF generated will include the well header and production charts for the wells selected.  Option Two:  We released the bulk Well Report Generator for ALL members.  This prints out a full well report for all wells chosen.

10. Assign a Person to Implement Our Suggestions: Meet Steve Suehs!   A hell of a nice guy and developer extraordinaire.  Your wish is his command…

BETA RELEASE:

11.  Better Charting and Decline Curve Analysis: Production decline curves in our BETA are substantively more powerful and manipulatable.  In addition, they contain an “automatic” best-fit decline curve analysis that generates when you select a point on the curve.  This can be adjusted by clicking within the intital rate, b factor, or initial decline input forms and using your up and down key to animate.  Pretty cool.

IN PROGRESS:

12.  More Timely Data: Frankly, this one stumped us.  We are generally in front of everyone else.  We have begun to work on a project for the rest of the US to try to find data more and more quickly, but we are only as good as the reporting schedules.

13.  ”More Leasing” and “Add PA Leasing”: We are collecting PA leases, data forms are being finalized.  We will notifty you shortly of coverage areas as released.  We have added 6 counties in our regular coverage area since the first of the year and have Land Tracts in 208 counties and parishes.

14.  Add Completion Data for the Rest of the States:  Project is launched.  Expect to see states added throughout the next twelve months.

15.  Add Query and Download Cability on Completion Technique Detail such as Frac Types, Volumes, Proppants: We are working on Unconventional Horizontal Plays to begin with and that data will be available to PLUS members without restriction and Unconventional Play Platform members with download restrictions.

16.  Simple CSV (Excel) Download For Lease Level Production: Well by well is available already,  Bulk download is in queue.

17.  Search By Radius Using API: Available already in “Well Search” wizard, but not intuitively obvious.  Redesign to make clear.

18.  Provide Count of Available Logs and Docs in Well Table View: Currently in testing.  Using the “Well Search”, select the columns “well document count” and “well log count”.

19:  Improved Maps, More User-Friendly Map Interface: Project in progress to make maps more GIS/Google like.

20:  Easier Search Wizard/More Friendly/Fewer Clicks: Initial work has begun, landing page simplified.  Watch this over the next few months.

21:  Improved Performance/Faster Speeds/Fewer Timeouts: Huge server upgrade  currently and changing hosting facility.  ETA is late July/early August for final deploy of the Steve Austin Drillinginfo.  You know, Better, Faster, Stronger.  And married to Farrah Fawcett Majors.

22.  Make Table Columns Float As You Scroll: Still haven’t done this.  You have to have something to hate…

Posted: May 18th, 2010 under CEO Corner by agilmer

In the last 3 weeks, we have had 3 instances that, to the world at large, look like outages.  The most recent was this afternoon (April 21, which lasted around an hour, from approximately 3:30 to around 4:15 p.m. CST).  The outages were related to our “Public Site”, and NOT our web application.  The problem was that these pages were the ones that most people use to point to the Drillinginfo login page.  If you have the login page bookmarked, it wasn’t a problem.  Likewise, if you had a particular server bookmarked, such as www18.drillinginfo.com, it wouldn’t have popped up as a problem, but most people just go to www.drillinginfo.com.  That WAS a problem.

This, of course, is unacceptable to me.

The Drillinginfo website pre-login has always contained marketing and information about what we have to the non-member world with some information we hope you glance at, such as “What’s New” and the ever-popular (not) “CEO Corner” blog.  In any case, we separated the marketing content from our application because of the natural conflict between the need to add information to our outside site constantly and the measured release of tested code via our web application.  We remotely hosted the “public” site away from our internal application.

Three weeks ago, the Public Site went down for the first time in 3-4 years.  It was down for about two hours, between 6:30 a.m. and 8:30 a.m..  We decided to move the Public Site to our own hosting facility in order to minimize the opportunity for this reoccurring.  Before we could do so, the Public Site went down again.  We finally got it moved over to our side this last weekend, and, lo and behold, it went down under OUR watch this afternoon.

So what are we going to do about it?  From now on, when you go to www.drillinginfo.com, you will go straight to the login page.  You can choose to go the Public Site if you choose, but for most of you, we are just saving you a click.  Our Web Application is far more robust, and this should at least minimize the opportunity to be down… no more “weakest link”.  By June or July, we will have fully transitioned over to our new hardware and software environment that promises to be hugely robust and very fast.  At least that’s what the salesmen told me.  Just kidding.  Our Drillinginfo IT honchos told me as well.

In any case, know we are working hard and spending money like drunken sailors fixing these time out and performance issues, and the light is really visible.  Thanks for your patience here.  I don’t want to write another entry like this again.

Posted: April 21st, 2010 under CEO Corner by agilmer

I want to thank the thousands of users that took a few minutes to take our poll, which asked the following two questions:

1. “What is the likelihood, on a basis of 0-10, to recommend DI to a colleague”?
2. “What one thing could we do that would raise the score you gave us”?

The results are very telling, and have really helped us allocated and prioritize our resources this year.  This is exactly what we wanted in a poll.  So, without further adieu, here are the results:

Our overall average score was 8.6.  Our overall Net Promoter Score was 51% (Net Promoter Score is a score that helps determine customers satisfaction by taking the percentage of “promoters”, ie those that gave us 9s and 10s, and subtract the “demoters”, those that ranked is 6 or below, including takers with no response.  For more information, visit http://www.theultimatequestion.com/theultimatequestion/measuring_netpromoter.asp?groupcode=2).

“User Experience”- The largest bucket, was what we broadly call “User Experience”, in other words,  ideas on how to make the application more user friendly.  Of the myriad of suggestions provided in this bucket, the following , in order, were most important.

• Mapping Interface,  (Target Q2 2010, culminating in a much more functional and clean map interface),
• Search Wizard and Interface, (We have a beta design for this.  We will roll it out as an optional feature to existing users and as our go forward to new users.  Slotted following Mapping Interface,  2010),
• Fixed Table Column Header, (Not as easy as you might think.  Researching best way to do it),
• Increase Truncation Limits and make 1000 items automatic, (Done, Released), and
• Cleaning up and flattening the Related Filings Page (bring more data up to the page, less click throughs), (Complex redesign, Probably 3^rd Q, 2010).
• Faster Searches and data delivery (This is an important issue.  We are delivering tens of times more data in our map layers with the introduction of our LandTracts and Unit Tracts.  Also, certain searches we find really bog the system down.  We are working on this with a multiprong approach. First, we are working consistently on mapping interface optimization; Second, we are creating what we call “roll up tables” for the more complex or database intensive queries that bog down our database; Third, we are doubling our “performance” capital budget in  2010 over very healthy 2009 levels to create a more scalable , much faster infrastructure that has root speed of 5 x existing hardware speed.  I will keep you updated on our progress here).

Our search performance has improved overall from its high in June over the year, but the spikes and variation has our focus

“Enhancements”- The second largest bucket was what we broadly refer to as“Enhancements”, which is comprised of either migrating more Plus functionality/data to Basic Members, expanded Plus functionality/data, or new overall functionality/data.  The five most popular requests were for the

• Well Report Generator to be migrated to Basic (AKA bulk printing of Well Files), (Done, Soon To Be Released),
• TX Water Production available to Basic on the lease level, (Done, Released),
• Pre-Regulatory cumulative production available to Basic rolled up to the lease level , (Done, Testing)
• Improved annotation and printing of maps, (In Beta Release as “PDF Download” on Map Tools.  Necessary enhancements In Progress)
• Improved data download functionality, (Lat Long to Selectable Columns for Plus Done, Soon to Be Released. Investigating additional changes through 2010)
• Better charting and economics, (First iteration in testing, Soon to be Released),
• Better Multiwell Charting, (Scheduled for Q3 Release), and
• Lower Cost Well Logs, Free RRC Logs for BASIC. (OK, dang it.  You got it.  Soon to be Released)

“Deeper Data”- The third largest group of requests fell into what we call the “Deeper Data” bucket.  These requests comprised:

• Adding more leasing details (this appears to be a real misunderstanding of what we already offer.  We were asked to provide what we already offer in most cases, and full title information in others; a full explanation to clear up misunderstanding of what we have here will be published this week in the Wireline) (Done, we currently cover full Title data in Northern Louisiana where there are prescription laws, full Title data would be a much enhanced price.  Let us know if you are interested),
• More old well scout file integration (will add much more during 2010),
• Completion information in those states where we don’t have it (Goal is to add 23 states of completion data during 2010.  They will be online state by state as we finish them).

“State Expansion”- Given that we have just acquired HPDI and added 23 more states of production data and permit data, and that we are focusing, during 2010, on adding most or all of the 23 states for completion information, this is probably a failure on our part to educating our members effectively of what we had done, what they currently have available, and what we are working on so… (Done, Released).

“Data Accuracy”- The fifth bucket was “Data Accuracy”. The particular issues most mentioned were:

• Mapping of data to older well locations and cleaning up the API 0000 issue, (Ongoing),
• Clean up and finish reconciling old NM production data coverage, (currently, it is releases as separate data streams attached to wells, needs to be “stitched”), (In Progress),
• clean up KB’s in Louisiana,
• better reconcile Texas pre-completion production,
• better reconcile the non-unique Gas ID problems, (this results in a production stream being attached to the wrong API, and occurs as a 1 in 2,000 occurrence problem), (In Progress, Soon to be released and fixed on an ongoing basis),
• Well locations (we have a similar issue with locations that don’t have X,Y or Lat Long or where the X,Y/Lat Long does not correspond with Footage Calls or Plat, where a 1:1000 occurrence data entry mistake places a well in an adjacent Section or Abstract). (Instituting data entry process fix that should result in 1:10,000 occurrence or better.  In Process, soon the be released and fixed on an ongoing basis, Released: Aerial Photography Layer for location QA/QC by user), and
• Design a better method to relate Preliminary Production to API’s prior to completion report being filed or Gas ID/Lease ID being assigned.  9% of new production, (this issue is more an intuitive user interface issue than a real data error, per se.  We have the data, it is available via a search, but it won’t map, and the API is not assigned. We currently assign 80% of these by hand, but the bigger problem is cleaning up and reconciling the data after it appears on the well master), (In Process, soon to be released).

“Cost”- Believe it or not, the last major bucket was “cost”.  Cost was much more an issue for small users than large, and, by adding many of the features above, we believe that many of you will hopefully appreciate the added value of the system.  We are investigating ways of making some sort of Regulatory Data Only DI membership available for non corporate users.

In any case, I want to thank all of you for participating.  For those that didn’t see their specific issue addressed, be assured we are aware and will incorporate those suggestions we can as we progress with this.  Next year, same place and same time, you will be able to tell us if we have met your expectations.  We recognize that we exist solely to make your job easier, more profitable, and more fun.  We also have a couple of neat new things coming this year that percolate from the fevered minds of some of us here that constitute our Wildcat philosophy… something no one asked for because they think it can’t be done.  Hope you like them!

Posted: February 2nd, 2010 under CEO Corner by agilmer

Thanks in advance to all of you that choose to participate in our “Two Question Poll”.  I was introduced to this recently and really like it, because it doesn’t bias your responses with what we want to hear, but what you really think.  I will share the results in this column soon.

I do want to address a couple of things that I touched on last month… added data.  As you should know, we acquired HPDI in November.  HPDI got us nationwide production data quickly.  It also got us a cool software platform that makes doing big queries and large set analyses very fast and easy… it bypasses the limitations of today’s browser technology.

Whereas every ALL STATE customer is getting expanded production data and permit data (and completion data as the year progresses) for all these new states at no added cost until renewal, and the option to upgrade from our 8 core states to the 30+ states for 25% more come renewal time via the Drillinginfo system, our PLUS customers additionally get the HPDI software.  Call us up or go to www.hpdi.com to download your app.

Of the myriad of items I see thus far in the polling, a couple of things will make you happy in this week’s deploy.  No more 250 automatic truncation limit.  Choose “1000″ and it will stay your default from now on.  And for those of you that didn’t know… we have a lot of new states in our coverage.  Check ‘em out.

Several of you want us to take various PLUS features and add them to Basic.  That begs the question…  why are features in PLUS in the first place?

Basically data is in PLUS because we spent a lot of money developing them and we didn’t think the user base in general would support the overall cost amortization of these big ticket items, especially the smaller users.  Allocated production took us two years to get right, historical production a couple of million bucks, well logs  a couple of million, land tracts and unit tracts an ongoing multimillion dollar expense and growing out to the rest of the US several million.  We made these optional modules. We then bundled all of them into PLUS in order to provide a discount over the straight modular price.  The data will show up in BASIC accounts when one of two things occur… we recover our original investment in the data, OR we write the effort off as a “dry hole”.  This might be the only case where “dry holes” are good for our members, if not for Drillinginfo!  Fortunately, you, our members, have supported us in these capital investments we continue to make by upgrading to PLUS membership.  This allows us to add more and more data and create even more functions and utilities.  And yes, a couple of PLUS features are ready to migrate to BASIC over the next couple of months.

I recognize that PLUS is currently not affordable to the 1 and 2 man shops.  We are working on a solution that some of you will like.   I will let you know when we are ready.

We are VERY close to making a step change in how sophisticated Drillinginfo members use and create value from our various data and integrated workflow tools.  Our goal at Drillinginfo is that our members realize huge returns from their Drillinginfo membership fees.   As such, you need to avail yourself to as much training as possible.  Some of you have heard my “Ferrari and the Horsebuggy” analogy.  You can use a Ferrari as a horsebuggy, but it might not make the greatest horsebuggy….   it’s heavy and you don’t have an obvious place to hook up the horse.  If your goal is to drive a horsebuggy, we might not be the best solution for you.  However, if your goal is to get to your destination as fast and fun as you can, then you should be happy with Drillinginfo and it’s BASIC and PLUS offerings.  It’s not free, but it is a great deal for most of you, and hopefully, soon, all of you.  We look forward to being a part of your efforts to produce US oil and gas.

Regards,

Allen Gilmer

CEO, Drilling Info, Inc.

Posted: January 5th, 2010 under CEO Corner by agilmer

We added a ton of items.  Searchable mineral royalty ownership in Texas linked to wells (yes, we would do other states if they would release the tax data!), surface tract coverage, aerial photographs as layers, allocated production, map labeling, map-driven statistical histogramming (want to see the bell curve of average 24 month declines, anyone?), and dozens of new counties for our mineral tract and unit layers.  The question remains, “Is it worth it?”

We spend a lot of money adding these items, but it is hard to tell, in a bundled pricing model, whether people really care about these items, or any others for that matter.  It is such an all-encompassing product, and people use such small pieces of it that if we cut one minor thing, I can be guaranteed that 1 or 2 or 3 dozen people would holler.  I’ve got some ideas on how we can internally value these items, but am still working out the details.

Adding features or data is like drilling a well.  It may be popular, it may not ever pay out , or it could be a dry hole.  Fortunately, we only have a couple of “dry holes” that never saw the light of day, but we do have plenty of head-scratchers.

I think I will cover each of the major items we did in 2009 here and give a rationale of why we did them… Stay tuned.

Posted: November 16th, 2009 under CEO Corner by agilmer

Allen Gilmer, Ramona Hovey, and Jason Simmons,Drilling Info, Inc. Energy Strategy Partners

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It was with great interest that we read Arthur Berman’s commentary “Lessons from the Barnett Shale suggest caution in other shale plays” in World Oil’s August 2009 edition.  From examining production data, Mr. Berman makes a variety of declaratory statements about the Barnett Shale, and thus Gas Shales in general, which are superficially real, yet disintegrate as predictive factors upon further examination.  Whereas we typically do not respond to the claims or methodologies of E&P analysts and pundits, and reserve our expertise for our clients benefit, Mr. Berman’s conclusions need to be examined and responded to where necessary. The cost of superficial analysis has very real consequences in terms of energy policy today like never before.

The thrust of Mr. Berman’s article is that the Barnett is an uneconomic play in general, that various technologies don’t provide a return on investment, and that the play itself is unpredictable, thus all other shale plays are unpredictable. Mr. Berman’s major claims are that 1) core areas do not have appreciably higher average EUR’s than the play, overall,  2) there is little correlation between IP rates and EUR’s,  3) horizontal wells do not produce substantively more than vertical wells 4) the volumes of commercially recoverable reserves are greatly over-estimated,  5) average well performance has decreased consistently since 2003 for horizontal wells, and  6) hyperbolic predictions overestimate reserves.  Left entirely unaddressed in his analysis is the entire concept of a marginal producer, the statistical effect poor producers have on raw data, and whether it is proper to analyze un-normalized data, since many factors can be quantified  to alter production tremendously, such as corrections  for lateral length, number of frac stages, and the results of simulfracs, among others.

CORE AREAS DO NOT HAVE APPRECIABLY HIGHER AVERAGE EUR’S THAN THE PLAY OVERALL- In making this statement, Mr. Berman analyzed horizontal wells in Tarrant and Johnson Counties.  Analysts used the very broad brush of “Core”, “Tier 1”, “Tier 2”, and “Non-Core” early on when describing the potential productivity of the Barnett Shale.  This broad brush approach is not an appropriate discriminator for potential production because it isn’t related to anything other than a non-robust early estimate of Barnett thickness combined with a very poorly sampled grid representing potential thermal maturity.  A more robust method to define potential productivity is necessary; one that actually predicts potential on a well by well basis. For instance, we use Net Feet of Barnett Shale combined with a “Cooking Index”, which is derived from GOR that we call Graded Potential of Acreage (GPA), and that is updated periodically from new results.  From our analysis, Tarrant County itself, which is considered “Core” using the broad brush approach actually contains 8 of 10 grades of potentially productive shale by our more localized approach.  Choosing Tarrant County by itself thus does not represent a natural high grading of acreage, rather it is a random grab bag of various quality acreage.  Comparing the production quality of wells from several non-discriminated grades of acreage is a bad start.  Should Mr. Berman choose to look at production responses from a more meaningful subset of acreage, such as our methodology, he would see substantive differentiation in raw productivity between acreage grades.

Figure 1.  Note the strong correlation of production responses to GPA (Graded Potential of Acreage) which uses Net Barnett Thickness and a cooking index derived from the GOR of Barnett producers. Sample size is all Barnett Horizontal Wells in the FWB.

Figure 2.  Note the correlation of average cumulative production to GPA.  These cumulative are raw, actual numbers.  In order to derive PREDICTIVE POTENTIAL productivity, production would need to be normalized for operator learning effects, horizontal lateral length, and Best Practices operations.  

THERE IS LITTLE CORRELATION BETWEEN IP RATES AND EURs – Mr. Berman is correct in this statement if he means test AOF IP data, the least predictive of IP measurments.  However, the correlation between “IP” data and EUR begins to tighten up significantly if one were to use 2nd Month actual production as “IP”, and even more (90% correlation coefficient) using Maximum Monthly production rate as “IP”. The reason for this effect is because it often takes several months for a well to “clean up” after initial stimulation.  Also, using this methodology, maximum monthly rate correlates closely to  6, 12, 24, and 60 month cumulatives production amounts, and is thus an excellent proxy for EUR.

Figure 1.  Although Reported AOF IP doesn’t correlate strongly to EUR (cc=46%), Maximum Monthly Production Rate does (cc=86%).  This is due to the fact that it often takes months for the production stream to clean up after stimulation (sample size is all Barnett wells in the FWB since 2002).

Figure 2.  This relationship is demonstrably true throughout every producing grade of acreage in the Barnett, with correlation coefficient exceeding 90% in several cases (sample size is all Barnett Wells in FWB since 2002).

HORIZONTAL WELLS DO NOT HAVE APPRECIABLY HIGHER EUR’S THAN VERTICAL WELLS- This statement left us a bit puzzled. The charts below illustrate both the raw and normalized maximum monthly production rates that we can definitely tie to EUR.  The only thing we can conjecture is that Mr. Berman is looking at the exceptional response of multiple frac stages over time in vertical wells and comparing these to horizontals.  By the way, the frac response post initial frac can be statistically modeled as well, and evidence is emerging that horizontal wells can exhibit the same behavior.

Figure 3.  As we previously saw, there is a strong correlation between maximum monthly production rates and EUR.  Here we see average raw maximum monthly rates for horizontal wells exceeding vertical wells by a factor of 2 or more depending upon acreage grade.  All Barnett wells drilled since 2002. 

Figure  4.  The maximum monthly production rates after being corrected for operator learning curve.  Note that this is a BIG correction.  As shown in Figure 6, it typically takes operators a year or more to maximize their production.  Wells drilled at the top of the curve typically produce more than twice those drilled at the bottom.  The average boost across all grades of horizontals is a 94% improvement in maximum monthly production rates when corrected for learning curve and 77% improvement in vertical wellbores.

Figure  5.  Same figure as above but after normalizing for operator learning effect AND a 3000’ lateral length.  This corrects an average of 4% across all grades, but can be as high 10% depending on acreage grade.

Figure 6.  Basin wide Learning Curve.  To normalize for predictive analysis, we adjust wells drilled early in the learning stage to perform as well as wells late in the learning stage.  If production declines later on, this is taken as an indication of drainage and not that the operator is getting worse.  This is calculated for each of the top 20 operators and the basin-wide average applied to all other operators.

MARGINAL PRODUCER- Unlike conventional reservoirs, the economics of shale plays highly favor operators that invest in engineering and ongoing experimentation in optimizing their drilling, completion, and stimulation practices.  The saying “One Man’s Gold is another Man’s Garbage” is especially true for these plays.  For an equivalent grade of acreage, the best operators statistically produce 40% or more than the average operator, and up to 4 or 5 times more than a inefficient operator.  Learning curves and operator comparisons are real and quantifiable throughout.  As acreage expires, and the “land rush” acreages are released, the optimal operators will successfully step into “another man’s garbage”.

Figure 7.  In this actual example of the GPA type curves from two different operators, both would appear to be essentially equal.  Company A is considered, and is indeed, a good operator. Company B, with substantively lower GPA acreage, has extracted the same amount of production from much lower grade acreage.

Figure 8.  Now let’s compare the same production type curves from company A to company B for similar quality acreage (same GPA).  Company B is achieving nearly 50% more gas from the same quality acreage as Company A.

HORIZONTAL WELLS ARE NOT ALL THE SAME- There is a strong correlation between lateral lengths and production rates, especially at higher acreage grades.  These need to be normalized before meaningful analysis of horizontal well performance can be made.

Figure 9.  Note the strong correlation between lateral length and productivity.  This needs to be normalized in order to make meaningful performance comparisons for horizontal wells. 

THE VOLUMES OF COMMERCIALLY RECOVERABLE RESERVES ARE GREATLY OVERESTIMATED – This is a very definitive statement for which the jury is still out.  Mr. Berman is absolutely correct at current drilling and completion costs combined with $2.50 MCFG wellhead price.  However, resource turns into undeveloped reserves fairly quickly as wellhead product price goes up or costs come down.  Reducing the cost of drilling and completing a well by 50% is the economic equivalent of doubling the lifetime wellhead price.  It helps to think of breakthroughs in reducing drill, complete, and stimulation costs as “permanent hedges”.  One cannot address any play on wellhead cost alone.  We know that there is a 80 to 100 x differential in play reserves between static D,C,&S costs and $7/MCFG at the wellhead and $2.50/MCFG at the wellhead.

AVERAGE WELL PERFORMANCE HAS DECREASED CONSISTENTLY SINCE 2003 FOR HORIZONTAL WELLS – Has it?  On the surface, Mr. Berman is correct.  However, the quality of acreage being drilled horizontally has also been steadily decreasing as a proportion of acreage drilled.  Once wells are properly allocated to their proper GPA, normalized for lateral length, normalized for operator learning curve, that effect disappears.

Figure 10.  Note the steady decrease in acreage quality drilled by horizontal wells since mid 2003, bottoming out in mid 2007, and increasing slightly since then.

HYPERBOLIC PREDICTIONS OVERESTIMATE RESERVES - Mr. Berman is absolutely correct here.  This is also usually the case for conventional reserves.  Hyperbolic predictions typically provide a ceiling estimate.

CONCLUSIONS – As we discovered when we began analyzing the Barnett, analyzing shale plays is like peeling onions.  Once a layer is exposed, another presents itself.   Many factors need to be normalized to really address the economics and behaviors of these plays in a predictive sense.  Good acreage grade alone is not a recipe for success.  Decent acreage grade needs to be combined with strong, holistic drilling, completion, and stimulation practices that are constantly tested for optimization to create a real repeatable recipe for success and large economic reserve accumulation.  Great operations equate to better recoverable resources/reserves for these plays, not more operators or even more wells.

Raw data combines good operations with bad, early parts of the learning curve results with later, and good acreage with bad.  Making forward-looking predictions of behavior from this soup assumes that every bad habit is propagated forward, and that no operator is better than another. Expanding that conclusion to other plays based on this assumption misses the big picture. What the Barnett is capable of producing is different from what it is producing now.  How it can be optimized can only be determined by identifying who is optimizing it and by how much.  It is ironic that we are concerned about profitability and deliverability since it was only a few years ago when we were told that Hubbert’s Peak was close at hand for US natural gas.  Yes, there will be a lot of dead producers when all is said and done, but for those that invest in operational excellence, the Barnett Field and other unconventional plays will go on making tens or hundreds or thousands of people very wealthy, and providing much needed domestic hydrocarbons for years to come.

For more information, check out  http://www.info.drillinginfo.com/demos/flashDemos/fwbasin/index.htm

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Posted: September 5th, 2009 under CEO Corner by agilmer

You know, Drillinginfo was originally founded to democratize the digital oil and gas information industry, providing everyone with access to the data and tools to effectively compete in our industry. Imagine, the small independent or consultant with the same relative access to the knowledge as a major oil company. Today, folks take that power for granted, and Drillinginfo is a major reason why.Throughout our history we have remained sensitive to our core mission. In today’s challenging environment we are holding the line on your subscription fees while plowing ahead with the enrichment and expansion of our products and features. In other words, you are getting more than ever before at the same price.

Throughout this newsletter you will find real examples of this. By expanding our coverage to the Bakken, increasing our LandTrac coverage, adding Pending Permits and Annotations, and releasing our mid-term update on the Barnett Shale, Drillinginfo is stepping up to provide you an even more valuable and effective decision support platform. And we are not letting up.

In the weeks and months to come you will see even more examples of how Drillinginfo is far and away the best investment you can make during this transitional time in our industry. Contrary to popular belief, fortunes in the oilpatch are always built during the busts. They are only realized in the booms. What you do or don’t do today will be the basis of your success or failure tomorrow. No matter where you fall in the spectrum of independent oil and gas companies and professions you will find Drillinginfo a trusted ally.

All of us at DI are committed to you and our industry.

Allen Gilmer

CEO and Founder

Posted: June 25th, 2009 under CEO Corner by redmondson

I spent the last week in Singapore at the South East Asian Petroleum Exploration Conference, where the motto was “A Drinking Society with an Exploration Problem” with Nick Robinson, Malcolm Steel, Mike Dyer, and Mark Harris and his team to announce the unveiling of DI International. Wow.  What a time.  The SEAPEX folks really know how to throw a party!  I cannot tell you how excited we are here at Drilling Info to partner with such a fine group of folks as Nick et al.  Mark Harris, a remarkably nice fellow, started Geo Solutions Asia out of Singapore three years ago.  He joined the DI International team and is now our anchor in this very exciting and increasingly important part of the world. Most of the exploration and production takes place offshore, with wells ranging from $15 million to over $100 million to drill and complete.  Depending on the country,  government takes range from a tax/royalty system like we have here to cost-recovery contracts where the takes can exceed 80%.  Players range from National Oil Companies, Majors, Large Independents to Small Independents… although “small” there is a lot larger than “small” here.  Although some really smart folks get by cycling $20-30 million, $200 million looks like the price to play and not lose on a portfolio basis as a simpleton. Jakarta, Indonesia is home to over 150 oil companies, where Kuala Lampur (or KL), is home to 20-30.  Singapore is the HQ and staging area for most of the various drilling and service companies.  Singapore is a fascinating and clean amalgam of Chinese, Indonesian, Indian, and “Straits” Chinese.  Many refer to it as Disney Asia, since it is so commercialized, modern, and clean.  I am going to re-read Yergin’s book “The Commanding Heights” to see what he concludes about this island-nation, because clearly things work here where they do not elsewhere. I had my obligatory $23 Singapore dollar ($16 or so US dollar) Singapore Sling at the Long Bar at the Raffles Hotel. Although I had to wash it down with Irish whiskey to get the cloying sweet taste out of my mouth. Our initial product is an internet platform and GIS layer delivery expansion of Mark’s amazing scouting service with maps and well information over the last three years.  Mark’s team keeps up with new licensing, farmouts, exploration drilling, rigs, rig rates, and more for the myriad of SE Asian basins on a daily basis.  We have some exciting data enhancements and functionality we plan on rolling out over the next year to the 30+ existing customers Geo Solutions Asia already has! A real treat was running into old friends that I had no idea were working in the region… Gary Guthrie, now VP Exploration for Marathon Indonesia, Mark Forsyth, now with PGS, Joe Lambiase, who is now President of SE Asia section of AAPG, Gene Nosal, now with Geokinetics in Dubai,  and dozens of new friends.  All in all, a really great fraternity of folks I enjoyed immensely, and with whom I am proud to be associated.  Special Kudos (and apologies) to Phil Hollands of Mitra, Joey Yeow of Nexus, and Dee Patterson of Moyes who “benefited” not at all from my golfing skills…

Posted: April 26th, 2009 under CEO Corner by agilmer

We have had a few messages from folks that don’t like the fact that you cannot login on the home page, but rather, a log in page.  The way around this is to bookmark the log-in page and go around the front page altogether.  You can always revisit it after login if you care to.

Second, our “experiment” with PLS content has yielded interesting results.  A lot of you HATED it, a lot of you LOVED it, and there was very little in-between.  We are really NOT an ad site, and don’t want to be, with one important proviso.  We want our members to be exposed to opportunities or items that can make them ‘Mo’ Money’.   I personally think the PLS content makes our map too cluttered.  As such, we will make this content so that you choose to show it or hide it.

Arkansas production is coming your way soon, and Montana and North Dakota will follow ASAP.  DNA is looking good… a lot of you are using it, and I love some of the suggestions you are sending in.

 Ramona Hovey and the DI ESP group are finalizing the ARC SDE layers and the Spotfire files for the Barnett Shale Research Platform and it’s initial results.  I know that a lot of you have been waiting impatiently for this, and I promise you won’t be disappointed.  It is truly something like I have never seen before.  As one Major Oil Co. bus dev person told me… “This is truly incredible.  We are going to use this along with Gene Powell’s newsletter.  Even though we don’t have holdings in this play, we can keep up with it better and be presented with entry points that we hadn’t even thought of.  If one strikes our fancy, I can quickly upgrade to the source data and files to give our own technical teams are light years ahead of where they would be otherwise”.

Or, as someone at a Mega-Independent told me… “This really allows our team to focus on making great decisions quickly.  For less than the cost of an engineer or a geoscientist, we get formatted data, interpretations and insights, and statistical analysis focused on the meat and potatoes of our business.  Plus, hundreds of map layers and statistical source data.  It would have taken us years to do this, and now we can merely build on it”.

In this industry, our professional expertise is going up in price lock-step with the price of oil.  Our focus here at Drillinginfo with this Research Platform series is to provide low-level to technical expert foundations on which to jump-start or accelerate the interpretive capabilities of your inhouse resources so you can get to a decision point faster.  We want to enable Drillinginfo members to be the fastest to recognize and implement “Best Practices”.  That is  our defined value prop … to make you better, faster, stronger.  Wait.  That was Oscar Goldman’s value prop to Steve Austin, the $ 6 million dollar man.  Oh well.  Call us Oscar.

Posted: June 13th, 2008 under CEO Corner by agilmer