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October 21, 2013

EIA to release new Drilling Productivity Report

Graph of shale gas and shale and tight oil production, as explained in the article text
Source: U.S. Energy Information Administration based on DrillingInfo and LCI Energy Insight
Note: Dry shale gas production data are based on LCI Energy Insight gross withdrawal estimates as of June 2013, converted to dry production estimates with EIA-calculated average gross-to-dry shrinkage factors by state and/or shale play.

In the past few years, the United States has experienced a rapid increase in natural gas production from shale resources and oil production from shale and other tight resources. This game-changing development has resulted in a significant reduction in the price of natural gas in the United States, both in absolute terms and compared with prices in other major consuming countries, as well as a significant decline in U.S. dependence on imported petroleum.

Recent U.S. production growth has centered largely in a few key regions and has been driven by advances in the application of horizontal drilling and hydraulic fracturing technologies. Given the importance of drilling productivity trends as a driver for future domestic production, EIA has been developing new approaches to assess the productivity of drilling operations.

Map of key tight oil and shale gas regions, as explained in the article text
Source: U.S. Energy Information Administration

Starting tomorrow, EIA will begin publication of a new monthly Drilling Productivity Report (DPR) to provide region-specific insights into rig efficiency, new well productivity, decline rates at previously existing wells, and overall production trends. The DPR information, which initially will cover six regions (see map above), will also inform EIA's own short-term production outlook. In 2011-12, these six regions accounted for 90% of domestic oil production growth and virtually all domestic natural gas production growth.

The DPR synthesizes several different types of information to shed light on the current rate of growth or decline in production based on indicators including the active rig count, drilling efficiency and the productivity of new wells, and production and depletion trends for previously producing wells. The DPR metrics are intended to be more informative than traditional indicators such as simple counts of oil-directed and gas-directed drilling rigs in use.

Tomorrow's Today in Energy (TIE) article will provide an overview of the DPR contents. Future TIE articles will discuss the individual metrics included in the DPR and explain their relationship to traditional measures. Additional articles will periodically report on significant changes in DPR data and estimates as warranted.

Principal contributors: Jozef Lieskovsky, Sam Gorgen