This article discusses why comprehensive forecasts of oil and gas supply and activity are essential for the oil and gas industry – especially the service sector – to plan future investment. It describes the approach used by Globalshift Limited to achieve a quantitative analysis of past and future oil and gas production, drilled well numbers and associated activities. The discussion emphasises the importance of including and defining all types of hydrocarbon supply and demand in the analysis, along with drilled and active well numbers, to measure and project local and global industry activity. It also stresses the value of transparency in the methods of data collection and forecasting.
Globalshift publishes histories, and forecasts to 2050, of production volumes of hydrocarbon types by country and sedimentary basin, along with numbers of drilled and active wells by country. The forecasts are predicated on the behaviour of producing reservoirs in a finite hydrocarbon system, such as an oil field or a sedimentary basin. In such an environment extraction rates go up and then go down over an extended period. The shapes of the ensuing production and well number profiles always vary due to differences in the geology. In turn they are modified according to rates of investment in down-hole and surface facilities. This has been demonstrated many thousands of times in wells and fields and also in sedimentary basins and countries.
The production forecasts use a bottom-up method – by-field where the data are available – backed up by experiential analysis to discriminate reality from hearsay and cognitive bias. Regional historic and forecast drilling activities, in addition to past production and a range of subjective criteria, are used to provide estimates of potential future output and activity in the short and medium term.
Historic data are drawn from a very wide variety of open-file industry sources. These are inspected and scrutinised for reliability, missing values, ambiguity and reporting bias. Production rates and well numbers are forecast forwards in a variety of profiles dependent on location, data availability, hydrocarbon type, size of resource, history matching, and estimated local and global activity and demand levels.
Smith, M. R. (2015) Forecasting Oil & Gas Supply and Activity. The Oil Age 1 (1) 35-58.
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