By Mike Mueller
VP Technology & Development
The enabling technologies in the shale revolution are horizontal drilling and hydraulic fracturing. As the revolution has progressed, the focus has been on applying more and more of these two technologies. From this, the industry has progressed from drilling a single lateral with a moderate amount of hydraulic fracturing stages along that lateral, to multi-laterals from a single surface location, called a pad, and dozens and dozens of fracturing stages in each lateral. Further, the laterals are longer, now often more than one mile in length, and the stage fluid and proppant volumes and rates continue to go up. The thinking regarding hydraulic fracturing is ‘more is more’.
Other key supporting technologies include geosteering and high-spec rigs with the ability to skid. Geosteering, an ongoing, precise bit direction control process, is used to ensure the laterals stay in the proper shale zone. High-spec and skid capable rigs were developed, allowing for more efficient and automated drilling on multi-lateral pads. Today there is almost no drilling down time between laterals on the pad by eliminating rig disassembly and utilizing skidding in any direction. The pad size and number of pads are reduced minimizing footprint.
These technologies are applied in a shale development world where operators acquire large acreage positions and, once appraisal drilling has resulted in an appropriate D&C plan, factory-mode drilling typically is utilized. Several rigs are simultaneously deployed and a deep pad inventory must be continuously prepared to minimize rig nonproductive time. The overall approach fuels the ‘more is more’ mindset.
Ultimately these shale development technologies became possible due to the stimulus of high and rising crude oil prices since 2002 with the exception of the recession in 2008-9.
The challenges of highly variable initial production (IP) from pad to pad and large production decline rates, often 75% or more in the first year, mean that, to continue to grow production, the drilling schedule must remain full. The economics of this situation is often understood in terms of IP, but a recent Reuters review of the shale plays finds that the estimated ultimate recovery (EUR) is a much better driver for understanding shale economics. “From a financial standpoint, rapid decline rates are not a problem. What matters is the EUR. Still, it remains notoriously tricky to predict ultimate production accurately from initial flow rates because there is so much variability and the data is not readily available.” John Kemp, Reuters.
Now, the industry is entering the latest rendition of its time-worn price cycle challenge. In recent months, crude prices have come down some 25% from the low $100s to the $70s. While it is currently believed that most North American shale oil plays will remain cash positive and close to recent activity levels above $70 oil, clearly profit margins will be significantly reduced.
The question of technology utilization will become even more important to continued success: will ‘have to have’ technologies such as horizontal drilling and hydrofracturing remain, while perceived ‘nice to have’ and emerging support technologies get deferred or cancelled? Should shale drilling and completion activity soften due to the oil price correction; the role of hydrofrac monitoring (HFM), as the best tool industry has to understand the reservoir volume accessed or fracture area created due to stimulation, will increase in value. HFM tells us that not all stimulation results in the same or even similar reservoir access or fracture area outcomes even when wells and pads are completed with the exact same plan.
This variability is routinely revealed with MSI’s BuriedArray® HFM service utilizing pad to full-acreage scale monitoring with a single array. With MSI’s BuriedArray, operators have the opportunity, in real-time, to see their variable reservoir access and mitigate or plan later redevelopment to improve development effectiveness. Further, microseismic pointsets are then analyzed stage-by-stage with FracRx™ to precisely evaluate treatment geometry and optimize fluid and proppant volumes. PermIndex™ is available to determine system permeability further helping operators understand stage-by-stage production variability. The role for optimizing reservoir access is ultimately a continuous one!