In retrospect, 2013 will go down as a third key inflection point in unconventional oil and gas development.The first inflection, in May 2009, involved the flip from vertical to nonvertical drilling as the activity driver in the domestic market, signaling the ascendancy of unconventional drilling as the main endeavor in oil and gas.

The second inflection involved the February 2011 repolarization in hydrocarbon target from gas to oil, reflected in the rig count, as operators allocated capital to “liquids-rich” plays, prompting the subsequent—and unexpected—rise in US crude oil production.

The magnitude of those first two inflection points is evident in industry metrics at the start of 2014. According to Baker Hughes Inc., the rig count for the US oil and gas industry was 78% horizontal and/or directional drilling, and 79% oil-directed.

However, what has not been recognized generally is the third inflection point, or the accelerated transition to pad drilling and batch completions.

“In the third quarter of 2013, 62% of wells were completed in some sort of batch approach, either using a zipper frac, fracing wells in series, or fracing wells in parallel,” says Christopher Robart, a principal at Houston-based PacWest Consulting Partners.“The number was 52% in second-quarter 2013, and 38% in first-quarter 2013.“

There is now enough data in the market to spotlight trends in pad drilling and batch completions. On a percentage basis, the practice is more advanced in domestic dry-gas basins. More than 70% of horizontal wells in the Fayetteville, Marcellus, Utica, DJ Basin and the Barnett were drilled on pads in the second half of 2013, according to PacWest. The Fayetteville shale led all basins with 92% of horizontal wells drilled on pads.

However, momentum for pad drilling and batch completions in 2013 shifted to oilier basins. Two of three wells in the Eagle Ford and Bakken shales were executed in batch settings in the second half of 2013, despite starting below 30% at the beginning of year, according to land drilling contractors.In multiple cases, operators in both the Eagle Ford and Bakken shales tell Oil and Gas Investor that they will drill 80% of their wells on pads in 2014, significant evidence that the plays have transitioned into the resource harvest mode of unconventional exploitation.

More is on the horizon.Of particular note is the Permian Basin, where operators drilled fewer than 20% of horizontal wells on pads in a region that is still in delineation mode. The early nature of the region's horizontal play exhibits fewer horizontal wells when compared to more mature basins, though the Permian will be a significant contributor to pad totals in the next two years, when operators enter the resource harvest mode.

Collectively, operator interest in zipper fracs is rising. The process involves completing adjacent stages in parallel laterals in stair-step fashion. Zipper fracs are most common in dry-gas basins, including the Barnett shale, where 73% of wells are completed using the methodology, and the Marcellus, where zipper fracs represent 68% of completions, according to PacWest.

But geographic scale alters the equation once again. Numerically, zipper fracs are most evident in the Eagle Ford, although they account for just a third of all Eagle Ford horizontal completions. Other top basins in zipper-frac well count include the Marcellus and the Bakken. Together, the Top Three—Eagle Ford, Marcellus and Bakken—account for 68% of horizontal wells completed with zipper fracs domestically.

What's on tap?The industry plateaued recently in terms of new completion technologies, Robart says. Operators have improved fluid systems, identified proppant mixes and narrowed lateral designs to fit specific programs.Operators are employing more, slightly smaller stages, often in clusters, as they work on completion efficiency.This means more consumables, like sand, are headed downhole. Robart cites the Eagle Ford, where slightly longer laterals and more stages created a 15% increase in proppant demand—overwhelmingly coarse sand supply—in the play in 2013.

“Aside from increasing batch completions of jobs and working hard on efficiencies, there is not a lot new in terms of new technologies over the last six months,” Robart says.“The focus has really been on process and operating practices as they relate to doing things better, faster, cheaper and improving the scheduling of all well services collectively so that everything works well and you get total D&C (drilling and completion) days down on average.”

Sand remains the basic currency in completions, accounting for 91% of total consumables, according to Robart. Resin-coated sands and ceramic proppants split the remaining market share.

“When you look at the average proppant mass per well over the past two years, it was fairly stable in early 2011 through 2012.It actually dipped a little bit in the second half of 2012 but has been very consistently increasing in 2013,” Robart says. PacWest recorded a 26% gain in proppant volume per horizontal well, from 3.5 million pounds in the third quarter of 2012 to 4.4 million pounds one year later.

A Hart Energy survey found the number of wells per pad average 4.3 in the Bakken and Eagle Ford, and 6.6 in the Marcellus. The Permian Basin is early in evolution with two wells per pad, though pad drilling accounts for less than 20% of Permian horizontal drilling.

The main trend in pad drilling no longer involves share.The practice now dominates horizontal drilling in unconventional development.Rather, it is the number of wells per pad.Several factors impact wells per pad, ranging from terrain to spacing with more wells per pad evident in gas basins where best-in-class examples pack 20 or more wells on a single location.Installation of artificial lift equipment tends to cap the number of wells per pad in oilier basins.

As for the future, the pad drilling process is still evolving even as it commands significant market penetration.The most advanced experiments involve downspacing of existing laterals to obtain optimum recovery of oil or gas while operators continue to experiment with clustering of stages in sweet spots along the lateral.A second innovation is extending lateral length beyond a mile when lease patterns permit.

On the horizon—and mostly in the discussion phase in investor presentations—is the use of stacked laterals to exploit multiple formations, a process that has implications for future resource recovery in Appalachia, the Anadarko Basin, and the Permian Basin.Theoretical models involve a dozen or more wells on a single pad, with groups of four (two opposing laterals) in separate vertically stacked geologic formations.

Pad drilling and batch completions have become the gateway through which the industry will increase the efficiency of resource recovery and produce new oil long after the last unconventional field has been discovered.

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