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Big Four Shale Gas Plays Show Decline -- Not Plateau -- After 2020, Say University of Texas Researchers

The U.S. Energy Information Administration (EIA) and a bevy of independent analysts have predicted domestic natural gas production will climb rapidly over the long-term because of booming unconventional gas growth. However, the University of Texas at Austin (UT) is predicting production from the biggest shale gas plays -- Marcellus, Barnett, Fayetteville and Haynesville -- will peak by 2020 and decline thereafter.

About a dozen UT geoscientists, petroleum engineers and economists spent more than three years on a systematic set of studies of the major shale plays, and they have gradually disclosed their research through the school's Bureau of Economic Geology. A compilation of the research, funded by a $1.5 million grant from the Alfred P. Sloan Foundation, was covered in a news article published on Wednesday in Nature.

For its broad study, the UT researchers reviewed the big four gas shales, which together, and led by the Marcellus, already account for more than 30,000 wells and are responsible for around two-thirds of current U.S. unconventional gas output.

The Fayetteville study was published early this year, and the Barnett study was published in early 2013 (see Shale Daily, Jan. 9; March 1, 2013). UT last year also said it had found a way to model decline rates for Barnett wells, which could be used for other gas plays (see Shale Daily, Nov. 20, 2013).

The researchers compiled their own data, which differentiates from the final EIA Annual Energy Outlook 2014 (AEO2014), in which government forecasters substantially raised long-term expectations for shale gas (see Daily GPI, May 8). The EIA's reference case  indicated that production from the big four gas plays would continue rising quickly until 2020 then plateau for at least 20 years. Other shale gas plays would keep production escalating until 2040.

UT data, however, indicates that gas production from the Marcellus, Barnett, Fayetteville and Haynesville is going to peak in 2020 and decline -- not plateau. According to UT, the four shale plays would be producing about half as much as EIA’s reference case by 2030.

Why the difference? According to UT, EIA delineates each shale play by county and calculates the average well productivity. However, counties may be large enough to have thousands of wells. UT’s researchers delineated each play into one square mile, about 20 times higher resolution than EIA’s.

Sweet spots in individual plays may be yielding a lot of gas reserves, but they may be the only productive areas of a large shale field, UT researchers argue. And delineating the fringes of the sweet spots has not proved to be as productive.

The article said the lower forecasts from UT are in line with a few independent studies that include one by researchers at Louisiana State University in Baton Rouge and another by retired Geological Survey of Canada geologist David Hughes.

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