The advent of natural gas production from unconventional reservoirs like shale formations has had a marked effect on natural gas prices and has put great focus on the technologies employed for extracting gas, such as hydraulic fracturing and horizontal drilling.

However, as the shale gas industry matures, it should look beyond these key drilling technologies and explore another technology innovation now appearing in the industry: the application of lean manufacturing methods, sometimes called the "shale gas factory." In particular, the factors for its success must be understood.

Production differences

There are several key differences between a typical gas field development and a shale gas field development, driven primarily by the characteristics of the gas well.

Well count. Most conventional gas wells exhibit a high flow ("flush flow") during initial production, followed by a long period of steadily declining flow. A decline curve will show a constant-slope decrease over time.

Shale gas fields need many more wells, where new wells add high initial flush flow followed by accumulating tail flow as the wells age.

The shale gas development will drill wells continuously to sustain production rates, with ultimate well numbers in the thousands, followed by long sustained production.

Well complexity. Shale gas wells tend to be relatively simple in design, relatively shallow, and set in fairly homogeneous layers. This is partly due to the nature of shale deposits and partly to the fact that drillers are developing the easiest geologic structures first. This relative simplicity and sameness makes drilling and the completion process amenable to continuous improvement.

Shale gas fields need many more wells than conventional fields. The illustration shows expansion of one well to 12 wells from two well pads a half-mile apart within the same square-mile area. (Image courtesy of frackingboom.com?)

There also might be significant benefits from correlating drilling and completion practices with the ultimate characteristics and productivity of the well, including flush rate peak, initial decline rate, and ultimate tail production rates. Similarly, the effect of production methods and techniques can be evaluated to improve production performance over time.

Logistics. A continuous drilling campaign means constant change. New wells mean new automation, new gathering lines, new monitoring, and reporting – daily.

Multiple drilling rigs, multiple fracing teams, numerous operations, and maintenance personnel mean constant activity in the field. The supply chain is immense.

All wastes must be removed and sites restored to near natural conditions. And every action requires proper permitting and reporting.

Continuous improvement. While all gas producers seek to improve the processes, the high well count and repetitive nature of shale gas development provides the opportunity for continuous improvement, both within and among each of the key steps of field development: exploration and appraisal, drilling, infrastructure build, production, reclamation, abandonment, and remediation.

Shale gas factory

That new approach is a shale gas factory that manufactures gas wells and measures success by the effectiveness of those wells. These need high production (strong flush

flow with long stable tail production), predictable performance, and highly reliable equipment that is easy to operate and maintain.

The other measure of performance is the operation of the factory itself. It must have low capital and operating costs, perform safely and reliably, and deliver its product on time while meeting all regulatory requirements. In short, the shale gas factory must behave like a classic, lean manufacturing facility by avoiding all the wastes that could plague any factory environment:

Poor quality. Making goods or services that do not meet demand; that is, making poor wells;

Transportation. Moving things not required;

Inventory. Having more supplies and materials, work-in-process, or completed but non-producing wells than absolutely necessary;

Motion. Equipment or people moving more than necessary to complete the work;

Waiting. Lags between production steps;

Overproduction. Producing or installing before required by demand;

Too much processing. Doing more than is required;

Defects. Costs of inspecting and correcting defects; and

Human talent. Failing to develop and use the capability of the work force.

These wastes, termed muda in Japanese, were developed by Toyota as part of its Toyota Production System (TPS). TPS was key to the growth of Toyota as a world supplier of automobiles.

Shale gas factory automation

Invensys and other automation providers, working with clients to develop shale gas and similar unconventional gas projects, have found five key areas where typical operations management systems fall short.

Scalability and flexibility. The operations management system must be scalable from the initial appraisal wells to thousands of production wells without needless replacement or reengineering and without being oversized for the early work. It must have the ability to add or modify on the fly to avoid needless delays and match demand.

Data volume. The capture of relevant information along the entire well production process, from exploration to drilling to operations, produces tremendous volumes of process and transactional data. Providing availability to all users in the context that each requires – without multiple historizations and data duplication – will be key to the analysis that leads to continuous improvement.

Asset performance. Captured data must be continuously analyzed for performance factors and made available to the personnel who have the most ability to control those factors. Information context must be available to experts where they are so that they can analyze problems, provide solutions, and monitor results without costly, time-consuming travel – with a goal to bring the problem to the expert.

Early alerts and workflow. A constantly changing physical environment and large volumes of data make effective surveillance of operations extremely difficult. The use of model-based technologies that monitor and identify deviations from expected performance coupled with context-directed alerting systems helps focus operation personnel's attention on potential problems promptly.

Alerts can trigger workflows and automatic escalation if needed. Comprehensive workflows assure that actions taken and results achieved are captured so that assessment and improvement are possible.

Collaborative environment, remote operation

Success in the shale gas field will require the cooperation of personnel from many functional groups such as safety and environmental, geosciences, drilling, operations, maintenance, governmental relations, procurement and contracting, transportation, and many more.

A geographically dispersed, collaborative environment whereby those people can meet, use their respective tools to analyze and explain, reach decisions, set actions, and monitor the results will be essential to success.

Reducing shale gas development costs

The characteristics of shale gas production open the opportunity for a revised development approach that will reduce cost and improve productivity in the field.

That revised development approach – the shale gas factory – uses the principles of lean manufacturing to eliminate the wastes of people, time, resources, and assets while improving quality of the final product: the shale gas well.

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