With the commodity price downturn, industry attention is turning with urgency to an age-old question: What works in the oil patch? When it comes to drilling oil and gas wells in a tough pricing environment, operators are now focused as much on process as on gee-whiz gadgets or new technology.

Hart Energy’s Market Intelligence program canvassed operators, consultants and a few service companies about technologies that were directly impacting drilling and completion efficiency. Initially the goal was to hear from customers about what was working in the field. However, the survey was conducted during another leg down in oil price, and commentary and respondents quickly shifted to what generates efficiencies in a challenging price environment.

Survey findings revealed operators pursuing a holistic process rather than seeking specific technologies, with the exception of multiple comments on higher efficiency mud motors.

Processes making a difference for operators include pad drilling and enhanced completion techniques. Secondarily, survey respondents cited improved mud motors for drilling and the steadily rising use of coil fracks and sliding sleeves to better pinpoint stage stimulation as impactful technologies. Coiled tubing (CT) conveyed sliding sleeves comprise a new and as yet small share of the overall market but one likely to grow in a difficult commodity price environment.

The holistic approach involves better collection of well data at the front end, which enables operators to custom-design both the drilling and completion process on a well-by-well basis. Successful operators are focusing on cost per barrel rather than individual well cost. It is an important distinction. Lower cost well stimulation techniques, for example, may reduce the cost of an individual well but can also sacrifice yield.

“Gel fracks with ceramics may cost more,” a completions engineer told Hart Energy, “but increasing long-term production by 25% lowers the cost per barrel produced.”

A Marcellus service provider summed up customer expectations when it came to execution in the current environment.

“Operators are expecting impeccable service, from advance planning and logistics to swift implementation. There is a three-strikes policy in force, and only the best will be accepted. We see well-planned logistics, high sand volumes for better production and zipper fracks on multiwell pads all driving efficiency.”

Survey respondents indicated pad drilling represents about 20% of total well cost and generates a 10% reduction in drilling cost per well vs. single well drilling. Additional savings originate from high-efficiency downhole mud motors, which can shave time from the drilling process and result in an additional 10% to 20% of savings on benchmark drilling costs. High-efficiency downhole motors amount to less than 2% of well costs but significantly impact efficiency.

Separately, enhanced completions now garner more than 60% of well cost. Higher sand volume seems to be a universal component of advanced completions, though again survey respondents are providing more frequent references to CT and pinpoint single-stage sliding sleeve completions.

Unlike the drilling side, enhanced completions do not reduce well cost. Rather, the process raises IP and extends EUR, resulting in a lower cost per barrel.

Said a Bakken engineering consultant, “We may use methods that cost more per well, but our average well produces 25% more than nearby wells with cheaper completions. We also produce less water through understanding the geology better. We should save everywhere we can by negotiating prices better, but cheaper technologies may not produce cheaper oil per barrel.”

Meanwhile, operators are extracting savings by renegotiating prices with vendors trying to seek an immediate 15% to 20% reduction in service costs. This, and a combination of using the right downhole motor and service providers, can further extend cost savings and help operators weather a low commodity price event.

• Best practices emphasize lower cost per barrel over lower well cost

• Operators cite efficiency gains from improved downhole motors and pad drilling

• Operators cite enhanced completions and zipper fracks for more effective completions

• CT fracks and single-stage sliding sleeve completions are gaining market share

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