Decline Curves for the Dummy Petroleum Engineer

Decline curve models

OurPastimes week is over, so it's time – past time (ba-dump-bump) – to move on to other collections of freelancers who excel mainly at stupidifying the internet. We haven't yet delved particularly deeply into the bunch at WiseGEEK.com (eighteen freelancers collecting twenty-five awards as of this writing), but it's pretty obvious that a lot of them are every bit as unqualified to write about their topics as the OurPastimes crowd. Plus, they don't have to publish their "references"! Which is probably why today's DotD, Toni Henthorn, got into trouble writing "What Is a Decline Curve?"

We have to imagine that Henthorn plugged the phrase "decline curve" into her favorite search engine and jumped on the first result. The problem, unfortunately, is that Toni's ignorance of decline curves led her to wax eloquent about a single curve; a descending curve in fact unrelated to the definition of decline curve. A decline curve, to quote Investopedia.com, is

"...a method for estimating reserves and predicting the rate of oil or gas production. It typically shows the pace at which production is expected to decline over the lifetime of an energy asset."

Reservoirs, fields, and individual wells can all be modeled with a decline curve. A reservoir engineer plots production on the vertical axis vs. time on the horizontal axis and fits a curve to the historical data. Extrapolation of the curve, following established curve-shape models, allows the engineer to extrapolate production into the future and determine when a property will no longer produce at an economic rate. That's what a decline curve is and why they're useful.

Henthorn, on the other hand, thinks that a decline curve is,

"...the descending portion of a bell curve, depicting the waning production of a nonrenewable natural resource, typically oil, as the continuing production depletes the supply. First proposed by M. King Hubbert in 1956, the bell curve model follows the pattern of petroleum production closely, with the ascending slope representing new oil discoveries and new infrastructure for removal and distribution of the oil."

Yup: Henthorn dug up a reference to Hubbert's Peak and decided it was the real decline curve: she was wrong. For one thing, no decline curve resembles the right-hand limb of a bell curve (see image above). For another, peak oil (the phenomenon Henthorn discusses) is both theoretical and dependent on external factors. A decline curve is an intrinsic factor. When someone asks, "What is a decline curve?" and gets an answer about Hubbert's Peak Oil theory, you know some freelancer has confused a specific example (and not a very good one) with a general definition. Look at it this way: if you asked some guy, "What is a rapper?" and he launched into several hundred words about the career of Justin Timberlake and his appearance on the Jimmy Fallon show, you'd be perfectly happy to call him the Dumbass of the Day, right?

Right...

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