Underlying Decline Rate Observed

Underlying Decline Rate Observed (UDRO) and Underlying Decline Observed (UDO) are terms coined by Freddy Hutter on the Trendlines Research website. As an oil field or petroleum province develops, some of its early wells or fields will undergo production decline even as the resource as a whole is growing or in plateau. This annual loss is described as Natural Decline by the IEA in its 2008 WEO. When Underlying Decline is augmented by Enhanced Oil Recovery (EOR) activities, Hutter calls the net loss a resource base's Underlying Decline Observed (UDO), usually quoted in millions of barrel per day (mbd). It is most often referred to in percentage terms and this is its Underlying Decline Rate Observed (UDRO).
According to Hutter, this loss factor became significantly noticeable after 1970, with UDRO ranging as high as 5.1% (1983) of All Liquids production. With current All Liquids annual production of 85-mbd and UDRO at 3.3%, the oil & gas sector must install 2.8-mbd of new capacity to sustain extraction at plateau level. In that regard, Producers have been commissioning an average 3.6-mbd per year of new facilities according to Oil Megaprojects tabulation.
Trendlines Research calculated that since 1970, the Energy Industry has constructed 115-mbd of new capacity. 40-mbd was required for increased Demand, and 75-mbd addressed the UDO factor.

Main Menu

See Also

Main Menu