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What’s the Difference Between Tier 1 and Tier 2? Not Much

Financial reports have long lumped shale acreage like cuts of meat, with tier 1 for the best reservoir rock, and tiers 2 and 3 ranked as lower quality.

Tier 1 is rated superior to the lower tiers based on a handful of geological measures related to the oil in the ground and the ability to stimulate flow with fracturing.

Production tells another story. A recent study by the energy advisory arm of Deloitte of 35,000 wells in the Permian Basin and Eagle Ford found that production in regions outside tier 1 in those basins are not that different.

“We are starting to challenge that general notion that just investing in established tier 1 acreage drilling a longer lateral, pumping more proppant,” ensures wells that are both productive and profitable, said Tom Bonny, a managing director for Deloitte.

In the Eagle Ford shale, the breakdown in wells based on early production showed little difference between the tiers. Tier 1 wells had a slight edge in wells producing more than 1,500 BOE/D, but was also a bit higher in the percentage of wells at 500 BOE/D or less.

In the Midland Basin, the pie chart for tier acreage showed tier 1 outperformed lower tiers at both the high and low end.

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What’s the Difference Between Tier 1 and Tier 2? Not Much

Stephen Rassenfoss, JPT Emerging Technology Senior Editor

01 January 2020

Volume: 72 | Issue: 1

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