One of the aspects of drilling and completing in oil shales is that no two shales are alike. What works in one shale play doesn’t always work in another. With all the new technologies being introduced on a regular basis, how do small- and mid-cap companies find the funds to invest in research to determine how to get the most bang for their buck out of those technologies?

As Tony Sanchez III told E&P, there is not a single answer for every area. Sanchez Energy is active in the Eagle Ford shale and just bought a position in the Tuscaloosa Marine shale. The company is doing some experimentation on its wells within the limits of its capital budget.

“We have to customize completions for each area. We are still tweaking our wells,” Sanchez said. “We have always tried to push the envelope of innovation company-wide. We’re not going out and spending [US] $100 million on R&D. We’re spending what you could classify as R&D, but we’re going to get production and reserves out of it. We don’t mind spending some R&D capital when the likely outcome is a well that does 1,000 b/d rather than 800 b/d,” he said.

Sanchez Energy tweaks its completions by trying different technologies on different wells. For example, the company would complete one well with a newer technology and then do an offset well with a more conventional type of completion. The results from the wells are compared to see which method works the best.

The company is doing things like hydraulically fracturing 18 stages at 300,000 lb of proppant per stage in one well. A second well will be completed with 30-plus stages at 150,000 lb per stage. Again, the results are measured and compared.

“We’re watching those wells over time to see if one outperforms the other, what happens to the pressure, what the decline curves look like, what the implications are for net present value for rate of return, and how fast we can get our money back,” Sanchez explained.

That’s not the only place Sanchez Energy is experimenting. The company hired a procurement specialist to centralize that function. Where would you go to find a procurement specialist in an industry that moves a lot of parts? The company went looking in the automotive industry and hired someone who used to work for General Motors, which has huge procurement needs.

“We liked the way he thought and the way he approached efficiency and cost savings in vendor relationships. If he saves us $200,000, he has already paid for himself this year,” he added.

The company also designed and implemented its own operational support system in-house. “I can tell you two years out what location is going to be drilled by what rig, and that scheduling allows us to optimize our resources,” Sanchez said. Innovation in the oil patch is alive and well.

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