1. Oil & Gas Growth Projections, Decline Curves, and Emissions Estimates
National Oil and Gas Emissions Committee Monthly Committee Call
September 14, 2017
Oil & Gas Growth Projections, Decline Curves, and Emissions Estimates
Tom Richardson
Rules & Planning Section
Air Quality Division, Oklahoma DEQ

2. Background
On August 24, 2017, EPA announced an updated methodology for oil and gas sector emissions projections.
This methodology will be used to project the 2011 inventory forward to 2023.
The 2023 projections will be used in modeling for the Kentucky FIP and, potentially, by states in developing Transport SIPs associated with the 2015 ozone NAAQS.
The new methodology was developed in response to comments submitted on the modeling platform NODA issued on January 6, A key concern was EPA’s use of regional oil and gas growth factors developed by the Energy Information Agency (EIA), rather than state-specific growth factors. (Production trends for individual states may vary substantially from regional averages.)

3. EPA’s Updated Methodology
To address those concerns, EPA developed an updated projection method that incorporates historical, state-specific changes in production and future regional trends.
The new methodology is a two-step process:
Track actual (historical) statewide production changes from 2011 to
Superimpose regional EIA Annual Energy Outlook (AEO) growth rates onto those production changes.
This approach will generate three growth projections for each state: (a) oil, (b) gas, and (c) combined (a weighted average of the oil and gas factors for use with SCCs not clearly oil or gas).
Details of this approach were included in the fact sheet “Updates to Methodology for Oil & Gas Sector Emission Projections,” 8/24/2017.

4. Application of Controls on Emissions Associated with New Production
After growing production, EPA plans on applying controls (due to, for example, the NSPS, Subpart OOOO requirement to control emissions from atmospheric storage tanks) on emissions associated only with activity that is projected to increase beyond the 2011 baseline.
This approach, applying controls exclusively to increased production, is consistent with the TSD EPA issued in December, 2016, “Updates to Emissions Inventories for the Version 6.3, 2011 Emissions Modeling Platform for the Year 2023.”
01/documents/2011v6.3_2023_update_emismod_tsd_dec2016_002.pdf

5. Decline Curves
Due to declining production as newly drilled oil and gas wells age, operators need to continually drill and complete new wells just to keep production constant. 
Horizontal wells combined with multi-stage hydraulic fracturing techniques show high initial production, but often have high year-to- year production declines after first flow.
Mike Kelly, PhD, Assistant Professor of Petroleum and Natural Gas Engineering, New Mexico Tech
Unraveling the Oil Conundrum: Productivity Improvements and Cost Declines in the U.S. Shale Oil Industry, Ryan Decker, Aaron Flaaen, and Maria Tito, U.S. Federal Reserve, March 22, 2016

6. Decline Curves
An EIA article about the Eagle Ford Shale includes this table showing the rates of production decline for wells drilled from  
Different regions will exhibit different rates of decline, but all regions experience some rate of decline in individual well production.

7. Implications Concerning Controls on Emissions Associated with New Production
To properly account for declining production, future emissions projections should take into consideration the need to drill new wells to maintain production.
Even declining total production from a region may require new wells (subject to control requirements) just to reduce the rate of production decline.
This approach would be SCC- specific and would likely require a significant amount of additional work to develop.

8. Goals for the Subcommittee
Develop an approach which combines decline curves, growth projections, and control scenarios to forecast emissions from the sector for use in future modeling work.
Organize emission source categories by activity.
Evaluate appropriate growth factors for each type of activity. Different states may warrant different approaches. (See the TCEQ presentation.)
Evaluate appropriate methods to forecast production decline and new drilling/recompletion rates needed to maintain or grow production.
Evaluate control scenarios available for each SCC.
Incorporate future growth and control applicability to forecast future emissions.
Decide whether to adjust growth within the Tool or external to the Tool.
Determine the appropriate level of granularity: state, basin, formation, county, well field, or individual well.