SPE 10279
SPE
Statistical Decline Curve Analysis
by Robert R. McNulty*t and Roy M. Knapp, * University of Oklahoma
"Member SPE·AIME
tNow employed by Harper Oil Company.
(<;'")Copyright 1981, Society of Petroleum Engineers of AIME
This paper was presented at the 56th Annual Fall Technical Conference and Exhibition of the So~iety of Petroleum Eng.ineers of AIME, held in
San Antonio, Texas, October 5·7,1981. The material is subject to correction by the author. Permission to copy IS restricted to an abstract of
not more than 300 words. Write: 6200 N. Central Expressway, Dallas, Texas 75206.
The best hyperbolic curve is numerically fit to
production decline data from selected oil wells. A
non-linear optimization computer program finds the
three best values of the general hyperbolic para-
, a, and b using least squares regression.
By residuals, better history matching
is obtained than with previous least squares methods.
The future rate-time behavior of a well with only a
few months of production is predicted by an analogy
with other similar wells.
This production extrapolation method is super-
ior to graphical or type curve procedures since it
does not require engineering judgement until the un-
biased curve fit has been calculated from observed
production data. The program calculates consistent
results based only on production values. Then, the
evaluation engineer can use his judgement and experi-
ence to modify the prediction.
INTRODUCTION
The extrapolation of decline curves is a common
method of predicting the performance of a producIng
oil well or a group of similar wells. 1 ,2 However,
these methods usually involve some manipulation of the
data, such as adjusting scales with type curves
(Slider)l. Some introduce bias into the data previous
to the extrapolation, such as graphically choosing
one or two parameters to represent trends of widely
varying data. These and other decline analysis tech-
niques are discussed by Ramsay3, Gentry4, McC ray 5,
and Fetkovich 6 ,
By using an efficient curve-fitting computer
program, a general hyperbolic curve can be fit to the
raw monthly oil production data. A continuation of
this hyperbolic curve beyond the period of known pro-
duction gives an extrapolation based only on the
production values, and not on any interpretation by
the evaluation engineer. After this curve and its
Reference and illustrations at end of paper.
Society of Petroleun Engineef's of AIME
user he can then use his own judgement to accept or
adjust this prediction.
This investigation is based on the premise that
most declining oil production follows a line repre-
sentable by a hyperbolic equation. A drastic change
of conditions during the primary production of ewell
would upsPt this trend. Such changes include re-
completion in a ne\-l zone or mechanical problems.
Confidence intervals show the probable range of
errors of an extrapolation of the fit from the actual
future production. This interval is based on the
deviation of the known production from the calculated
fit and the regression calculations which derive the
hyperbolic curve.
Comparisons of predictions and confidence inter-
vals of »'ells in the same area show similarities.
Wells in the same geographical area and producing from
corresponding geological formations will have similar
characteristics in their hyperbolic fits. For example
some fields consist of wells which decline at a con-
stant rate of 12% per year; others decline steady at
first, then level out after the first year. These
similarities can be used to make more reliable pre-
dictions for newly completed wells.
THEORY
The general hyperbolic equation for oil produc-
tion rate (q) as a function of the (t) can be express-
ed as
1
q = qo (1 + a b (1)
The parameter q is the initial oil production rate at
time zero and hgs the same units as q. The parameter
a is the initial decline rate and has the same units
as t. The third parameter, b, has no units and con-
trols the degree of curvature of the hyperbolic line.
If b=O, there is an exponential decline of q with
respect to t: and if b=l, the relationship is termed
2 STATISTICAL DECLINE CURVE ANALYSIS
harmonic. The general hyperbolic form was chosen since
it incorporates the other common decline curves.
The hyperbolic equation was used to represent the
declining trends of eight Oklahoma oil wells. Monthly
oil production was known through abandoment for all
examples. The wells produce at low gas-oil ratio (GOR)
from the Mississippi limestone (4 wells), the Oswego
limestone (3 wells), and the Dutcher sandstone (1 well)
The hyperbolic parameters were calculated by a
non-linear regression technique. The hyperbolic eq-
uation which best fits the production data is found by
minimizing the variance between calculated values (<1)
and observed values (qT) for each month of known pro-
duction, as shown in Figure 1.
One element of the objective function can be ex-
pressed as
1
T T
Uti qi) :::: qo (1 + a
b - qi (2)
At every month t for which production is known. The
sum of squares is then
n
SQSUM == (3)
where n is the total months for which production is
assumed to be known.
The objective function was modified to weight
the deviations at each point equivalently, instead
of letting the higher earlier production values domin-
ate the sum of squares. This means that the later
years of production will have just as much effect on
the regression as the first. The sum of squares ob-
jective function, modified for use in this procedure,
is
SQSUM;;:
n (q.-q~)2
~ ~ (4)
qi
Weighting the least squares residual is recogn-
ized as a good way to reduce the effect of large terms
in a least squares calculation 7 . The use of weighted
residuals eliminates many of the shortcomings of
least squares fitting expressed by Ramsay and Guerrero 8
The sum of squares (SQSUM) is minimized by a
pattern search technique. The optimization procedure
was developed by Hooke and Jeeves 9 , and has been
changed slightly to solve this problem more efficient-
ly. This method readily handles the interdependencies
of the parameters (q ,a,b) and can be easily pro-
grammed for a computgr 10. All three parameters are
corrected with each searching step towards the opti-
mum combination. After each step, SQSUM is calculated
using the newly corrected par~eters. The search
accelerates along the direction which is minimizing
SQSUM.
The only information required by the pattern
search is known oil production. It is organized in
ordered pairs consisting of a month of oil flow and
its corresponding number of months since onset of
production. No interpretations or graphical measure-
ments are necessary; the resulting parameters are
unique and repeatable. The parameters have been
tested by using several different starting points for
the same problem. The ability of the algorithm to
SPE 10179
properly fit a known decline curve with unique para-
meters was tested by fitting such data corrupted with
normally distributed errors and properly ex-
ponential, harmonic and more general hyperbolic curves.
The continuation of the hyperbolic line describ-
ed by the optimum parameters is taken to be a predic-
tion of the well's performance beyond its known pro-
duction history. The reliability of this extrapola-
tion depends on the goodness of fit to the known pro-
duction. A standard indicator of this is the stand-
ard deviation (OR)' defined as
SUM OF SQUARES ~
(DEGREES OF FREEDOM)
(5)
A well which has data which is more widely scattered
from the best fit will have a higher o. Constant
ratio confidence limits of one standar~ deviation
above and below the fit, are calculated by
q < q < q+ (6)
If the true future values are distributed normally on
either side of the extrapolation, the confidence in-
terval contains 68% of them ll . Examining the inter-
vals for different wells, the goodness of fit and
roughness of input data can be compared between differ
ent wells. Confidence limits that are one standard
deviation (OR) on either side of the fitted curve
are extended with the same limits on either side of
the extrapolated curve, by Equation (6). The produc-
tion from the first 24 months of two wells are shown
with these hyperbolic fits and confidence intervals in
Figures 2 and 3. The well with rough data, Figure 2,
whose 24 points deviate more from its best hyperbolic
fit, has a wider confidence interval. In fact, the
future production from this well was predictably more
erratic than the well with smoother initial production.
Once the curve fitting and confidence interval
algorithms were converted to suitable FORTRAN pro-
grams lO , they were tested on several field cases. The
complete producing histories of all wells were known.
The pattern search optimization routine was used
to fit the best hyperbolic curve to each well at
different times in their production histories. Some
cases were more successful than others in predicting
future behavior from only the first two or three
years' data. This usually depends on the roughness
of the initial data and the amount of available pro-
duction history.
Figure 4 shows a hyperbolic fit for production
from the Dutcher sandstone. This graph shows the
best curve fit that was calcuated from the first
54 months of production. In this case, the continua-
tion of the calculated line is a good approximation
of later production.
A common method of predicting the future be-
havior of a new well has been to compare the behavior
of several analogous wells, then to determine the
typical behavior for a well producing from that for-
SPE 10279 ROBERT R. McNULTY AND ROY M. KNAPP
mation.
In the following example, three Mississippi
limestone wells (A,B and C) have been producing for
several years. Another nearby well (D) has only been
producing for six months. Well D does not have enough
data to allow confident prediction of future produc-
tion. Fits other of the three wells' production are
given in Table 1.
A fit for the new Well (D) would expected to
have an "a" of 3.85 to 4.00 and "b" from 0.70 to 1.4.
Values chosen to be average for the geographical area
of these wells could be a 3.90 and b 1.00. The
very low value of "a" for Well (C) is ignored since
this is probably a function of the initial flow rate;
Fell (D) produced only 3,000 barrels of oil in its SQSUM
first and highest month. An unbiased value of q
3,746 bbl/mo is found by fitting the first six m8nths
of data with a and b held constant at 3.90 and 1.00,
respectively.
ACKNOWLEDGEMENTS
This prediction is compared with the fit after
six years in Figure 5. The estimated fit gave a
standard deviation, (OR), of 0.261 after 72 months; support of the U.S. Department of Health, Education
the actual fit after 72 months had a oR of 0.205.
This indicates that decline curve analysis is still a and Welfare. Both authors than the University of
useful prediction method for new wells with short pro- Oklahoma Computing Services for the resources pro-
vided by it.
duction histories.
The pattern search optimization routine was used 1.
to fit the best hyperbolic curve to each well at diff-
erent points in their producing lives. Figures 6 and
7 show curves which were determined using production
records up to 24, 48 and 72 months and near abandon- 2.
ment for wells A and D. It can be seen that the
character of decline in the first few years reflects
the later behavior of a well; a hyperbolic curve 3.
which fits earlier years is a good representation of
future production. Empirically, consistent reliabil-
ity is probable with 24 or more months of data.
4.
(1) The general hyperbolic equation is a reason
able representation of oil production decline curves. 5.
(2) The pattern search optimization method is
an efficient way to solve non-linear relationships.
Specifically. it is directly applicable to solving
this curve-fitting problem with three highly inter-
dependent parameters.
(3) The use of weighted residuals tends to equalize
the effects of individual points on regression cal- 6.
culations. This reduces the impact of the early high
rates of production and better reflects the long
term trends.
(4) Confidence intervals for decline curve extra- 7.
polations follow directly from regression calculations
They represent the expected range of deviations of
future production from the extrapolated curve. The 8.
roughness of the known production values is reflected
in these intervals.
(5) Extension of the hyperbolic curve fit into
future months is a good predictor of oil production
rates as long as production conditions are not sub- 9.
stantially altered.
(6) Analogies between similar wells are simplified
by comparing hyperbolic parameters which represent
nearby production. Typical parameters can be applied
to a new well's first few months of production.
3
a Initial decline rate - second hyperbolic
parameter, months
b Curvature exponent third hyperbolic
parameter, unit1ess
n Total number of production history values
n-4 Degrees of freedom
q Oil flow rate. barrels per month
qo First hyperbolic parameter, barrels per
month
T
q Actual oil flow rate, barrels per month
q Calculated oil flow rate, barrels per
month
Sum of squares
t Time since start of production, mont£s
OR Standard deviation of the ratio (q-q )/q
The first author acknowledges the financial
Slider, H.C., "A Simplified Method of Hyperbolic
Decline Curve Analysis," Journal of Petrolemn
March 1968, pp 38-41.
Arps, J.J., "Analysis of Decline Curves,"
1945, v. 160, pp. 228-247.
Ramsay, H.J., Jr., "The Ability of Rate-Time
Decline Curves to Predict Future Production
Rates", M.S. Thesis, University of Tulsa (Tulsa,
Oklahoma), 1968.
Gentry, R.W., "Decline Curve Analysis," J. Petro
, January 1972, pp. 38-41.
McCray, A.W. and Comer, A.G., "Statistical Basis
for Choice Among Hyperbolic Decline Curves and
Computer Applications in Calculating Confidence
Limits of Reserve Predictions," SPE Paper f!l930
(SPE 42nd Annual Fall Meeting), Houston, Texas,
October 1967.
Fetkovi tch, }f. J., "Decline Curve Analysis Using
Type Curves," , June 1980. pp.
1067-1077.
Himmelblau, D.M.,
John Wilem
Ramsay, H.J. and Guerrero, E.T., "The Ability of
Rate-Time Decline Curves to Predict Production
Rates", J. Petro. Tech., February 1969, pp. 139-
141.
Hooke, R. and Jeeves, T.A., "Direct Search
Solution of Numerical and Statistical Problems",
1961, v. 8,
4 STATISTICAL DECLINE CURVE ANALYSIS SPE 10279

10. McNulty, R.R., "Statistical Decline Curve 11. Snedecor, G.W. and Cochran, W.G., Statistical
Analysis", M.S. Thesis, University of Methods, Iowa State University Press (Ames,
Oklahoma (Norman, Ok1ahema), 1981. Iowa), 6th Ed., 1978.

TABLE 1. MISSISSIPPI LIMESTONE WELLS A,B AND C.

Months of STD. DEV.

b

A 96 1,620 4.02 0.708 .404

B 95 5,023 3.84 0.739 .198
C 54 12,900 0.394 1. 37 0.092

o ACTUAL PRODUCTION RATE, 9T

9'
~

~
"I CALCULATED PRODUCTION RATE,

~6---t;1 __
W
~
CY

Z
o
t; "
:J
o
o
c::!:
Q.

..J
o

TIME (..i) ---~..

-

Fig. 1 - Comparison of actual data and calculated decline curve.

 10"

HISTORY

:r: CONFIDENCE LIMIT

t-
2- CO\IFIDENCE LIMIT
o
:l:
0:::
w
(L

.-J
o
::3
---
W
0:::
0:::
<{
III
10'2

------- ------

10'
o

Fig. 2 Twenty-four month fit of Mississippi limestone Well A.

10'3

::I:
t-
Z
0
:l:
a:::
w
(L

....I
0
(f)
.-J
101:
W
0:::
0:::
<t
rn ---

TIME MONTHS

Fig. 3 - Twenty-four month fit of Oswego limestone well.

 10' PRODUCTION HISTORY

I FIT
.....
Z
0
::2
cr::
W
0..
....J
0
------------- ---- --
(f)
....J
IO~
W
cr::
cr::
4
ro

10'
o

Fig. 4 - Fifty-four month fit of Dutcher sandstone well.

r---- PRODUCTION HISTORY

10'3

I
I-
Z
0
::2
cr:
W
0..

(f)
..J
W
cr::
cr:
101- -- ---
«
ro

10'
o
TIME I MONTHS

Fig. 5 Comparison of actual 72-month fit and analogy estimate for Mississippi limestone
Well D.
 24~MONTH FIT

48~MONTH FIT
10?
72-MONTH FIT
::t:
91-M:
d
I-
Z
o
::!:
a::
lIJ
a..
....I
5
~ 10'2.
-~
--- ----
----
w
a::
a::
d:
rn

o 24 48 72 96
TIME , MONTHS

Fig. 6 - Successive fits for Mississippi limestone Well D.

10"!>

::t:
I-
Z
0
::!:
ct:
W
(L

....I
0
(j) 101-
....I
W
a::
a::
d:
co

o 24 72 96
TIME MONTHS

Fig. 7 Successive fits for Mississippi limestone Well A.