E&P Emphasis Is Now on the P
Authors: Rassenfoss Stephen 
Published: February 2015

Unconventional E&P

The focus in unconventional exploration and production is shifting to maximizing production. “The next big play is getting more out of what you have,” said Jay Ottoson, president and chief operating officer for SM Energy, at the recent Unconventional Resources Technology Conference in Denver.

The math is simple. Adding one percentage point to recoveries from the top unconventional formations for oil and gas in the United States will add billions of billions of barrels of oil production and tens of trillions of cubic feet of gas, he said.

There is plenty of room for improvement. The examples offered by Ottoson would increase the ultimate recovery rate in the biggest US oil plays from 5% to 6%. Comments by others during the conference, a joint project of SPE, AAPG, and SEG, indicated that range is not uncommon as companies look for ways to do better.

Even at those levels, the growing flow of oil and gas from these extensive formations has pushed the US up toward the top of the list of the world’s producers. Scott Key, chief executive officer of IHS, said that in a few years, the United States will again emerge as the world’s largest producer of oil and gas.

The production increase has been enough to boost the growth rate of the US economy, turning it into the low-cost producer in refining and chemical making and soon an exporter of liquefied natural gas, Key said.

Rick Bott Jr., president and chief operating officer of Continental Re - sources, described the company’s approach as “we have a simple sort of strategy, we drill a lot of horizontal wells.” Anadarko is drilling about one well a day in the Wattenburg field in Colorado, said Brad Holly, vice president for the Rockies at Anadarko Petroleum.

While the pace is steady, methods are constantly changing. Improvement is in the details. To begin with, the particulars include more precise drilling of clusters of wells that are spaced and fractured based on a growing understanding of how best to efficiently drain a formation.

Continental, which was a pioneer in the Bakken in North Dakota, and SM reported pilot projects on what Bott called “down spacing,” that is, seeking gains by drilling wells on a single pad site to varying depths. “The technology is changing monthly,” he said.

Coming are projects to enhance the output of older wells, such as installing downhole pumps and refracturing older wells. “We have not really started working on production enhancements,” Bott said.

Anadarko is drilling horizontal wells to revive a formation where new wells must be carefully drilled around many old ones. “We are operating among 17,000 vertical wells. We need to minimize interference with existing wells that are as little as 15 ft away,” Holly said.

Products displayed at the conference helped define the challenges of this sort of development. They promised information that could be used to make better development decisions, deliver it fast enough to keep up with rapid field work, and at a price that is in line with price-conscious mass production operations.

Unconventional exploration and production is a bit like farming, said Don Westacott, chief adviser for global unconventional reservoirs at Halliburton, who grew up on a farm in western Canada. Both can be profitable enterprises, but they require expensive inputs, the cooperation of nature, skill, and persistence.

And both farmers and oil companies can be so productive that they glut the market, driving down prices.

Schlumberger offered a reminder of the challenges of this business during a display at its booth. At the bottom of the screen during a video on its TelePacer drilling platform, which is designed to help drillers drill wells according to plan, was a constant reminder that 40% of wells are subeconomic and 35% of all fracture stages do not contribute.