Leading-edge oil and gas firms have been to the mountain over the last six months and are now providing anecdotes to illustrate how the North American tight formation sector will evolve in a future made uncertain by volatile commodity prices.
That model calls for higher productivity from rapidly rising near-bore well harvest in exchange for fewer rigs and lowered cost per barrel. The gain, which appears to be evolutionary, is paramount in a world of softening commodity prices.
First-quarter 2017 data points identified nascent efforts with longer laterals in the Permian Basin, including about a dozen out to 15,000 feet, which follow on the heels of the pioneering Utica Shale extended lateral work in 2016.
The Permian is also witnessing the advent of factory-scale, full-field pad developments incorporating between 20 and 30 wells. These projects come with centralized infrastructure that includes large-scale water handling, unit train-sized portions of proppant, onsite power distribution and hydrocarbon takeaway—even while hosting multiple drilling and completion efforts simultaneously on a single geographic location.
Meanwhile, geosteering enables operators to precisely thread laterals through progressively thinner geologic zones and expand opportunity—and economics—in stacked pays such as the Anadarko Basin, where first-quarter 2017 announcements recapped success targeting newer, thinner formations such as the Sycamore and Osage.
These events follow the expanding use of data analytics to improve wellsite processes, sweet-spot targeting, and more efficient hydrocarbon exploitation through stacked and staggered laterals, and the sequencing of multiple completions on a pad to reduce well hits.
Greater near-bore well harvest incorporates leading edge perforation spacing (frack initiation points) down to 10 feet within individual stage spacing of 200 feet (vs. 300 feet just one year ago), while stack and stagger wellbore placement enables operators to slot laterals more closely together, creating synergies for efficiently extracting a greater percentage of hydrocarbons out of a 3-D cube.
Operators are experimenting with proppant loading approaching 2,500 pounds on newer wells—and above 3,000 pounds—for leading edge experimental wells. That proppant loading is growing more nuanced in an evolving completion recipe that incorporates early stage placement of micro-proppants such as 300 or 400 mesh powders, followed by ever coarser sands, all applied in a specific order, before being finished by a booster of gels and a pinch of manufactured proppant at the end of each stage to capture more hydrocarbons from rock with multi-diameter fractures.
This well stimulation process is aided at the well site by computer-controlled trailers that remotely blend sand and water and pump it through computer-actuated valves to deliver more volume more quickly while removing human contact from equipment operating at high pressure, developments similar to that underway on modern drilling rigs.
It is all about nuance. To understand where we are, it helps to recall what brought us here. There have been two traditional approaches to solving operational problems in the field. In the U.S., the answer to every challenge has been bigger iron at the well site. In contrast, winter weather-restricted Canada has explored efficiency and finesse to meet stricter site access schedules.
Those themes are converging. It is happening with equipment as cross border consolidation in drilling, workover and well stimulation allow technology and methodology to diffuse across geomarkets. Today, Canadian drillers compete in the Permian, the Rockies and Appalachia with highly desired pad optimal rigs while international well stimulation firms, including U.S.-based multinationals, compete for work in Canada. Service lines frequently work cross border for divisions of the same E&P.
Convergence involves more than just getting extra goody out of the ground. It is about doing so economically in a deflating price environment. Embracing large-scale inputs reduces non-productive time for traditional wellsite procedures, allowing the industry to add more stages and greater intensity at the well site.
Also key in the discussion of first-quarter earnings is the result. It is greater production, sustained for longer periods, which is upending the decline curve in an evolutionary development that has global consequences for energy.
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