New, Rigorous Assessment of Shale Gas Reserves Forecasts Reliable Supply from Barnett Shale Through 2030

Feb. 28, 2013

AUSTIN, Texas — A new study, believed to be the most thorough assessment yet of the natural gas production potential of the Barnett Shale, foresees slowly declining production through the year 2030 and beyond and total recovery at greater than three times cumulative production to date. This forecast has broad implications for the future of U.S energy production and policy.

Production Outlook for the Barnett Shale Through 2030The study, conducted by the Bureau of Economic Geology (BEG) at The University of Texas at Austin and funded by the Alfred P. Sloan Foundation, integrates engineering, geology and economics in a numerical model that allows for scenario testing based on many input parameters. In the base case, the study forecasts a cumulative 44 trillion cubic feet (TCF) of recoverable reserves from the Barnett, with annual production declining in a predictable curve from the current peak of 2 TCF per year to about 900 billion cubic feet (BCF) per year by 2030.

This forecast falls in between some of the more optimistic and pessimistic predictions of production from the Barnett and suggests that the formation will continue to be a major contributor to U.S. natural gas production through 2030.

The Bureau of Economic Geology will be completing similar studies of three other major U.S. shale gas basins by the end of this year.

The BEG study examines actual production data from more than 16,000 individual wells drilled in the Barnett play through mid-2011. Other assessments of the Barnett have relied on aggregate views of average production, offering a “top down” view of production, says Scott Tinker, director of the BEG and co-principal investigator for the study.

The BEG study, in contrast, takes a “bottom up” approach, starting with the production history of every well and then determining what areas remain to be drilled. The result is a more accurate and comprehensive view of the basin. The BEG team enhanced the view by identifying and assessing the potential in 10 production quality tiers and then using those tiers to more accurately forecast future production. The economic feasibility of production varies tremendously across the basin depending upon production quality tier.

The study’s model centers around a base case assuming average natural gas prices of $4 for a thousand cubic feet but allows for variations in price, volume drained by each well, economic limit of a well, advances in technology, gas plant processing incentives and many other factors to determine how much natural gas operators will be able to extract economically.

“We have created a very dynamic and granular model that accounts for the key geologic, engineering and economic parameters, and this adds significant rigor to the forecasts,” said Svetlana Ikonnikova, energy economist at the BEG and co-principal investigator of the project.

Whereas thickness and porosity affect the reserves greatly, price is a dominant factor affecting production. While the BEG model shows the correlation between price and production, it suggests that price sensitivity is not overly dramatic, at least in the early phase of a formation’s development. This is because there are still many locations to drill in the better rock, explains Tinker, which is cost effective even at lower prices.

“Drilling in the better rock won’t last forever,” says Tinker, “but there are still a few more years of development remaining in the better rock quality areas.”

The data in the model stop at the end of 2010, after approximately 15,000 wells were drilled in the field. In the base case, the assessment forecasts another 13,000 wells would be drilled through 2030. In 2011 and 2012 more than 2900 wells were actually drilled, in line with the forecast, leaving just over 10,000 wells remaining to be drilled through 2030 in the base case. Wells range widely in their ultimate recovery of natural gas, a factor the study takes into account.

A new method of estimating production for each well, based on the physics of the system, was integral to the project and should offer a more accurate method of forecasting production declines in shale gas wells. This method, along with several other components in the work flow, has been submitted in several manuscripts to peer-reviewed journals.

The papers have already undergone a form of professional peer review built into the BEG research process. Before submitting the papers to journals, the BEG team invited an independent review panel with members from government, industry and academia to critique their research. At an open day for academics and industry scientists, 100 attendees were invited to offer additional feedback. Scientists and engineers from two of the larger producers in the Barnett — Devon Energy and ExxonMobil — offered critical feedback on the methodology during two in-house corporate review days. Finally, the BEG hired a private consulting firm to individually critique the draft manuscripts and offer suggestions for improvement of the work.

Overall, the rigorous assessment of the country’s second most productive shale gas formation reaffirms the transformative, long-term impact of shale and other unconventional reservoirs of oil and gas on U.S. energy markets.

Tinker compares the expansion of hydrocarbon reserves from shale gas to the expansion of global oil reserves from deep-water exploration that has happened in the past several decades.

“Drilling into unconventional reserves is potentially analogous to offshore oil in terms of impact,” Tinker says.

For more information on the study and the team that conducted it, please see the accompanying FAQ.

The University of Texas at Austin is committed to transparency and disclosure of all potential conflicts of interest of its researchers. Co-Principal Investigator Scott Tinker sits on advisory boards of three oil and gas companies — BP's Technical Advisory Council, Geo Fossil Fuel's Advisory Committee, and P&P LLC's Advisory Board — and receives compensation from them. Tinker also serves on the Geosciences Advisory Board of Sandia National Lab and several university and professional society boards, foundations and advisory committees, and speaks on occasion to industry groups or private companies for honorarium. Team members Eric Potter and John Browning hold stock in oil and gas companies. The university is not aware of potential conflicts of interest for any of the other team members.

For more information, contact: J.B. Bird, University of Texas at Austin, 512-750-3512 (cell), 512 471 4550;  John Bird, Office of the President, 512-471-4550.

16 Comments to "New, Rigorous Assessment of Shale Gas Reserves Forecasts Reliable Supply from Barnett Shale Through 2030"

1.  Peter Chipman said on Feb. 28, 2013

Is it possible to obtain/purchase copies of this research?


2.  Louis W Powers said on Feb. 28, 2013

For the wells completed todate can you tell me what their average ultimate reserves will be. Same question for the Wells to be drilled in the future. For the Wells currently Producing what was their total cost to develop per well average. For the future wells what was their total per well average cost. I assume you used some type of price escalation for gas and operating costs. What were they. Thanks

Lou Powers

3.  Michael Williams said on Feb. 28, 2013

How can one get a copy of the report.

With best regards,
Michael Williams

4.  Ron Wagner said on Feb. 28, 2013

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5.  Loriano Bocini said on March 1, 2013

I would like to know whether a study on proppants to be used in shale gas has been carried on, in particular on advantages that quality proppants may have.
Thank you

6.  Bob Linden said on March 1, 2013

Could you share your gas price assumptions behind this production forecast? I expect the production curve would have very different shapes and cumulative values under different price scenarios.

7.  Tony Imhof said on March 1, 2013

Of course it is all about the decline rate. In trying to estimate from your 'Production Outlook' graph it appears that the decline of any given years first to second year's production looks in the order of 33 %. Isn't the published decline rate more in the 60 to 70 % range?

8.  yt75 said on March 1, 2013

A bit of fresh air (scientific honesty), in the current hysteric propaganda, thanks for that

9.  ek said on March 1, 2013

Is the study public information?

10.  Jay Pollard said on March 2, 2013

How can I obtain a copy of the full report and study?

11.  Clifford Gaddy said on March 3, 2013

What is the title of the actual report, and how does one obtain a copy?

12.  Vince Matthews said on March 3, 2013

In ten years (2000-2010), 15,000 wells increased production in the Barnett to 1.9 TCF. If no further wells are drilled, the model predicts a drop in production over the next ten years (2010-2020) of about 1.5 TCF. With the drilling of 13,000 additional wells, Barnett production will still drop 0.3 TCF by 2020.
These data and the BEG model should give this country pause in putting all of our energy eggs into the shale-gas basket.

13.  Steve Evanchik said on March 4, 2013

Does the report address the possibility of drilling new wells between wells that are existing?

To clarify, was the spacing between wells (which were drilled in 2008 appropriate, for given 5 more years of experience would there be an opportunity to drill between these wells and or at different elevations within the shale?

Existing wells were described as ELEPHANTS in the Barnett shale.

14.  Chris Neil said on March 4, 2013

Is it possible to get on an email list to receive future announcements of your work in this area?
The Marcellus study sounds very interesting because of the possible size of the area. Several aspects of the Marcellus seem less defined that the Barnett, Haynesville or Fayetteville.
Is there a chance that you will be able to extend your work to tight oil formations?

15.  Stan Scobie said on March 5, 2013

A number of news outlets are reporting on this study, including a fairly extensive report in the Wall Street Journal.

However, the study itself is apparently not available; this was confirmed bt the WSJ reporter, Mr. Gold.

I am at a complete loss to understand how the University could be promulgating the results of an unavailable work in the full knowledge that news media would be taking the offered results and conclusions based on a summary with no possibility of confirmation.

Could you please comment?

Thank you.

Stanley R. Scobie, Senior Fellow, PSE Healthy Energy;;
Binghamton, NY

16.  Ryan said on March 10, 2013

Is this study available? I still can't find it anywhere, I'd love to read it.