New tech drilling makes it harder to keep track

Fuel Fix:
People in the oil business knew for decades how to predict flow of oil and gas without the help of astrologers, clairvoyants or divining rods: Just count the number of rigs pumping the stuff out of the ground.

Oil field services titan Baker Hughes started doing that decades ago, and still does.

In the last few years, though, a U.S. production surge from Texas to North Dakota has mystified number crunchers: Oil and gas continue to flourish even as Baker Hughes’ once reliably predictive rig count declines.

New drilling technologies are breaking down that simple link between production and rig count, enabling oil and gas producers to drill more wells for every rig and prompting analysts to divine new metrics.

Getting the right answer is imperative: The industry and the nation need to know for strategic reasons how much energy is coming out of the ground and how much is left. What they already know is that producers are draining tight rock formations much faster than they did the sandstone reservoirs that fueled the world for more than a century — a fact sometimes lost as absolute production numbers soar.

In years past, U.S. producers drilled one? well per rig into large, predictable sandstone formations that declined? 3 percent a year on average.

Formations in North Dakota’s booming Bakken Shale, by contrast, decline 6 percent every month, said Lynn Westfall, director of energy markets and financial analysis for the Energy Information Administration — the U.S. Energy Department’s independent analytic arm.

“With swift declines like that, you need much more timely data,” Westfall said. For every 100 barrels of oil produced in the Bakken, he said,? 70 barrels simply replace declining production from old wells.

“You’re having to run faster to stay in place,” Westfall said.

In October, the agency marked a major shift in a central industry forecast when it released a new monthly report — a year in the making — on drilling productivity in the country’s six major shale plays, where newly exploited pools of oil and gas are accounting for much of the country’s production growth. It combines the rig count with a new calculation that includes the number of wells each rig drills, the productivity of those wells and the well depletion rates.

Meanwhile, in South Texas’ Eagle Ford Shale, daily production from new wells for each rig is expected to rise to 413 barrels in December, up from just over 200 last year. But at the same time, the region’s rig count has dipped from about 325 last year to 280.

Drilling from temporary rig foundations called pads, for example, makes it easier to drill multiple wells using one rig, boosts rig mobility and enables producers to drill wells faster. Pad drilling, now widely used in U.S. operations, probably is the biggest driver of improved drilling efficiency, said Eric Kuhle, an analyst at Wood Mackenzie.

Drillers originally used pads to cut drilling time in challenging environments, such as the Rocky Mountains in Colorado, and the technique quickly spread to regions including the Barnett Shale in North Texas, Kuhle said.

Pad drilling can save operators an average $500,000 per well.
There is more.

I think the directional drilling is the key to multiple wells from each site.  The same techniques are also used in offshore wells where the rig cost are even higher making he savings even greater.  On the land the rigs are much more portable.  They can be quickly moved to a new drill site after they have producing wells at their current site.


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