Increased lateral lengths have been a major driver of increased production in unconventional plays over the last decade. But looking across the Lower 48, we find large differences in current mix and historical trends. What's going on?
All the unconventional plays, with the exception of the Williston, primarily had average lateral lengths of ~1 mile ten years ago. The Williston, with good geology for drilling horizontals and a regulatory environment that made it easier to pool leases into 2 mile x 1 mile units, had an average lateral length of two miles even back in 2012.
Today, the undisputed champ of long laterals is Appalachia, with a majority of the recent wells being longer than two miles, and over a third reaching 3 miles or longer. With strong production efficiencies for long laterals and surface constraints pushing towards more reservoir access from fewer sites, operators have continually increased lateral lengths. (I am guessing the highly competitive economic environment also encourages innovation, but maybe some readers more familiar with the in-basin situation can chime in).
The Permian, Eagle Ford, Powder River, and Haynesville have all seen continual increases in lateral length. If you've been listening to any recent IR calls, you'll know that ability to drill longer laterals has continually been brought up as synergies for M&A activity.
Interestingly, even the Barnett and Arkoma, two of the original unconventional plays, have seen longer laterals in recent years. Although the overall number of new wells in those basins is very small, operators have managed to drill longer laterals there.
Very cool! We have been studying these with our models, and will have more to report in the new year. As we are now getting more longer-term data on 3+ mile laterals, we can start to have an opinion about how they will perform later in life.
#permian #marcellus #oilgas
