Beyond the Rig Count: Visualizing Patterns of Rig Activity

Beyond the Rig Count: Visualizing Patterns of Rig Activity

iStock_000025031656Small
The drilling rig industry has been busy since the last time I wrote about rig movement activity in March. Getting straight to the punchline – below is an animated time lapse of rig movements from March 1, 2014 to August 6, 2014.

This image shows the final frame of the time lapse, representing rig movements over the full time period.

RigMoves-140301-140806-1 Beyond the Rig Count

As with my last post on well starts over time, these visuals are the result of my continued exploration of R’s geospatial and animation capabilities. R is an open-source programming language that excels in statistical computing and graphical display.

We care about rig activity because it is a leading indicator of future production in an area. Rig activity in an area today signals new production from that area in the near-term.

In general, we see the same trends observed in the post from March. The Permian Basin in west Texas continues to suck in rigs, primarily from the neighboring Eagle Ford, Granite Wash, and Woodford plays. The Eaglebine, northeast of the Eagle Ford, has also increased its rig count recently, with many of those rigs also coming from the Eagle Ford.

Another observation, which makes intuitive sense, is that movements between active plays are relatively rare. The opportunity cost of the days spent on travel, rather than drilling, as well as long-term relationships between drilling contractors and operators, keep most rigs tethered to a home area. The result on the map is that the regions of high activity appear to glow from all the small rig movements in concentrated areas.

Because of this preference for short movements, semi-isolated regions of activity emerge. The Marcellus/Utica region of Pennsylvania/Ohio/West Virginia sees little exchange of rigs with the rest of the country. The same can be said for the rigs of California. This pattern of regional isolation was also apparent in my post back in March, which covered rig movements from January and February 2014. In contrast, the relatively concentrated areas of activity in the center of the country trade rigs more frequently.

We’ll continue to keep an eye on rig movement patterns for trend changes as the industry continues to evolve.

Your Turn

What do you think? Leave a comment below.

American Fireworks: The History of US Unconventional Play Development in One Map

American Fireworks: The History of US Unconventional Play Development in One Map

In honor of the Fourth of July, I put together a time-lapse map of new wells in the 11 American unconventional plays covered by DI Analytics (Bakken, Eagle Ford, Marcellus, Niobrara, Fayetteville, Haynesville, Barnett, Permian, Granite Wash, Mississippi Lime, and Woodford). Seeing them all together like this, rather than each play in isolation, helps me understand how the US unconventional story has unfolded over the last 15 years.

A couple of highlights:

  • It all starts with the Barnett in Texas, just north of Ft. Worth.
  • Development of the Bakken begins in eastern Montana in 2005, before shifting to western North Dakota – a change I covered in more detail in my last post.
  • The Marcellus first started to develop in southwestern Pennsylvania and West Virginia, before expanding to northeastern Pennsylvania.
  • The rise and decline of activity in the Haynesville in eastern Texas / western Louisiana is striking. Well starts ramp up from 2008 to 2012 and then decline heavily with the drop in natural gas prices.
  • The Eagle Ford starts late in the game. It doesn’t appear in south Texas until around 2010, but has roared into the lead for oil production.

For reference, here’s a map of the unconventional play areas:

Unconventional Play Areas

Although each play is unique, they are all part of an integrated development environment where what happens in one play can affect another. We also saw this in my rig movements post, which showed there is a fair amount of ongoing rig migration between plays.

Note: We identify unconventional wells by the reservoir they are targeting, rather than by any specific drilling or completion technique. Each play has a start date based on when unconventional drilling and completion started to be applied to these reservoirs. This why there is a pop of wells at the beginning of 2004, which is the start date for several of our plays.

Your Turn

What do you think? Did you notice anything about your favorite play? Leave a comment below.

Visualizing the Bakken Formation ’s Shifting Center of Activity

Visualizing the Bakken Formation ’s Shifting Center of Activity

Sometimes when I find myself staring at a giant table of data, trying to draw a conclusion, I’m reminded of a scene from the movie The Matrix. In the scene, the character Link watches multiple computer screens, each flashing an unintelligible stream of symbols. But what he sees in the screens is his team being chased around by the bad guys inside the Matrix. He’s able to interpret, visualize, and understand the incoming data in real time.

I’m not to Link’s level yet, but I do realize the importance of visualizing data in a way that makes it accessible to the user. With this frame of reference in mind, I tried to answer a question that is relevant to understanding US unconventional oil production:

“How has well start activity changed over time in the Bakken?”

The Process

I started with our DI Analytics database of Bakken wells, a sample of which looks like this (colored to look more Matrix-like):

Bakken_dB Bakken Formation

Unless you are Link, the story of well starts probably isn’t quite clear yet. The story is in there, we just have the right way to tell it.

A Better Approach

To process and visualize the data, I turned to R – a statistical programming language that’s growing in popularity within the decidedly unpopular data nerd community. After some tinkering and trial and error, here’s what I came up with: an animated heat map of well start density over time.

To make the animation less jumpy I used a running 3-month grouping of well starts. The map coloring shows relative intensity of well starts within each frame.

Looking at the same data a different way, I ran the analysis using cumulative well starts over time. This shows the relative density of all wells drilled up to a particular point in time.

Key Takeaways

I think these maps tell the story on their own, but I’ll point out a couple turning points.

  • From 2004 through the end of 2007, activity is almost exclusively focused in the Elm Coulee / Billings Nose area of Richland County in eastern Montana.
  • Around the beginning of 2008, the center of activity shifts strongly over to Mountrail and Dunn Counties, east of Williston, North Dakota.
  • In 2011, Williams and McKenzie Counties, in the immediate vicinity of Williston, emerge as additional centers of activity, along with Mountrail and Dunn. This is when well starts (and production) from the Bakken really begin to take off, quadrupling from about 40 new wells per month in 2010 to about 160 new wells per month in 2012.
  • This four county area of Mountrail, Dunn, Williams, and McKenzie remains the focus of drilling activity today. All four of these counties were top US oil producers in 2013.

Hopefully, this method of analysis helps you understand the unfolding story of the Bakken formation. An important piece of information doesn’t do any good if it’s tucked away in a spreadsheet or database somewhere. Unlike in The Matrix, the computers still do our bidding for the time being and we can use them to turn raw data into actionable insights.

Your Turn

What do you think? Did anything catch your eye from these visualizations? Leave a comment below.

Half of US Natural Gas Production Comes from These 30 Counties

Half of US Natural Gas Production Comes from These 30 Counties

Gas_Pipeline US Natural Gas
My last post on top oil producing counties received a good response, so I’m following up today with a look at the top natural gas producing counties. The 30 counties below produced half of all US natural gas in 2013.

Top Producing Nat Gas 2013 3

Gas_Producing_Counties

As in my previous post, I’m using an expansive definition of county, so if you’re not into the whole brevity thing, feel free to mentally replace “county” with “county, quadrangle, or offshore protraction area”. There are no counties in the Gulf of Mexico (GoM), but the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) defines protraction areas which subdivide the gulf. Also, most of Alaska is lumped into a single “Unorganized Borough,” so I’m using US Geological Survey (USGS) quadrangles instead (http://ardf.wr.usgs.gov/quadmap.html).

Key Takeaways

Beechey Point, Alaska tops the gas list. However, these lists are based on gross withdrawals, rather than marketed production. Because of the geographic isolation of Alaska’s North Slope and the lack of transportation infrastructure, this gas is reinjected to maintain reservoir pressure, rather than sent to refineries. The fact that the most productive area of the country doesn’t contribute to our useable supply of natural gas highlights the importance of infrastructure constraints on supply.

The core producing counties of the well-known unconventional gas plays are all represented on the list.

  • Haynesville: DeSoto (#3), Panola (#13), and Red River (#19)
  • Barnett: Tarrant (#4), Johnson (#11), Wise (#21), and Denton (#28)
  • Marcellus: Bradford (#5), Susquehanna (#6), Lycoming (#10), Greene (#14), Washington (#22), and Tioga (#29)
  • Fayetteville: Van Buren (#16) and Conway (#27)

The list also contains a number of high producing counties in less well-known basins found in Wyoming, Utah, Colorado, and New Mexico.

US Natural Gas vs. Oil

Natural gas production is not as heavily concentrated geographically as oil production. I had to extend the list from the top 20 to the top 30 to capture half of gas production. Looking further down the list of counties, 80% of US oil in 2013 was produced from 79 counties, whereas 80% of gas came from 108 counties.

Another takeaway is that there’s not a great deal of overlap between top oil counties and gas counties. Only five of the top 30 gas counties show up on the top 20 oil counties list: Beechey Point (#1), Weld (#18), Eddy (#23), Mississippi Canyon (#25), and La Salle (#30). The map below shows the locations of both the top gas counties and top oil counties. Together, these areas produced just over half of all US gas and oil in 2013.

Top Producing Oil and Natural Gas 3

As with oil, the majority of natural gas production is concentrated in a relatively small number of counties. Not all of these areas receive equal media attention, so some of the counties on the list may be a surprise to you, as they were to me.

Your Turn

What do you think? Did any of these counties surprise you? How do you think the list will change a year from now? Leave a comment below.

Half of US Oil Production Comes from These 20 Counties

Half of US Oil Production Comes from These 20 Counties

Top Producing Counties - Areas - 2013 - Fixed - US Oil Production

The 80/20 rule, also known as the Pareto Principle, is a concept used to describe a highly nonlinear relationship between cause and effect. In other words, a minority of the causes (20%) account for a majority of the results (80%).

The spatial distribution of US oil production follows a version of the 80/20 rule. In this case, we’ll call it the 52/2 rule. 52% of all US oil production (as well as 20% of all US natural gas production) in 2013 came from these 20 counties, which make up only 2% of all producing counties.

TopProducingCounties - List - US Oil Production

As you can see from the Type column in the table above, I’m taking some dramatic license with the term county. There are no counties in the Gulf of Mexico (GoM), but the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) defines Protraction Areas which subdivide the gulf. Also, most of Alaska is lumped into a single “Unorganized Borough,” so I’m using US Geological Survey (USGS) quadrangles instead (http://ardf.wr.usgs.gov/quadmap.html).

Conventional US Oil Production Tops the List

One surprising result is that, for all the attention unconventional oil production has been receiving, the top four spots all go to conventional production areas in the GoM, Alaska, and California.

  • Three GoM areas make the top 20: Green Canyon (#1), Mississippi Canyon (#4), and Alaminos Canyon (#20). Given the high costs of offshore drilling, these areas are characterized by a small number of wells producing at very high rates.
  • Alaska is represented by two North Slope quadrangles: Beechey Point (#2) and Harrison Bay (#18). North Slope production has been in decline since the late 1980s, so these areas are likely to slip further down the rankings in the years to come.
  • Kern County, California, home to several prolific fields including Midway-Sunset, Kern River, and South Belridge, takes 3rd place. The fact that Kern is near the top of the list is all the more impressive given that some of these fields have been producing for over 100 years.

Unconventional is Coming on Strong

Unconventional areas begin to dominate starting at the 5th spot with McKenzie County, in the heart of the Bakken/Three Forks play.

  • McKenzie, along with neighboring Mountrail (#6), Dunn (#10), and Williams (#12) counties form the core of the Bakken/Three Forks area.
  • The Eagle Ford takes the prize for the play with the most counties in the top 20 with Karnes (#7), LaSalle (#9), Dewitt (#13), Dimmit (#14), Gonzales (#15), and McMullen (#19) counties all making the list. The levels of rig activity in these counties indicate that they will likely rise in the rankings in 2014.

The resurgent Permian Basin is represented by three of the counties on the list: Eddy (#8), Lea (#16), and Andrews (#17). These areas are a mix of legacy conventional production and newly added unconventional production.

Summary

This list illuminates where American oil production is currently coming from, both across the country and within the key producing areas. It is striking that so much of our production comes from a relatively small geographic space. We can expect this list to continue to change in 2014 as unconventional areas continue to ramp up, while some older areas continue their decline.

Your Turn

What do you think? Which of these counties surprised you? Are there areas you think will be on the list in 2014 that didn’t make it in 2013? Leave a comment below.