The oil and gas industry has an amazing opportunity at present; the demand for energy around the globe is increasing and our industry has answered the call in the form of unconventional oil and gas production. Advancements in directional drilling and hydraulic fracturing have transformed low-quality resources into economically viable sources of energy. Over the past 7 years, exploration and production (E&P) companies have increased production rates, but not necessarily recovery rates, and therein lies the challenge.
Predicting and maximizing estimated ultimate recovery (EUR) is crucial for moving from efficient to effective unconventional shale completion operations. E&P companies are drilling and producing shale reservoirs at an increasing rate, which is contributing significantly to North American oil and natural gas; however, significant reserves are being left behind.
Techniques for predicting EUR vary by operator. Some calculate EUR by extrapolating from initial production rates while others may apply decline curve trends from one play to another. Each method has its advantages and each its caveats. Operators need 6 months to 1 year of production history to truly estimate EUR. However, extrapolation of initial production rates rarely tells the whole story. Some operators may have insufficient data to understand the longer-term behavior, and though traditional decline curve analysis has proven effective for prediction of conventional reservoir production, we are seeking different, more realistic methods to apply to unconventional shale reservoirs.
The variability in unconventional shale plays is leading to unpredictable performance from wells. Therefore, as an industry, we must realize that understanding the composition and behavior of the target geology during fracturing is essential to hit the “sweet spots” and ultimately will result in maximizing the amount of recoverable reserves.
One of the most important concepts that needs to be fully appreciated is that every well faces a unique set of circumstances. Well and stage spacing is at the forefront of maximizing the production and economics of each completion. We need to evaluate each distinct well to understand the relationship between EUR and well spacing, stage spacing, lateral lengths, and orientation to better optimize completions for each well. Services are needed for the recommendation of fracture treatment designs that maximize treatment efficiency, and a clear demonstration of the effect of completion designs on reservoir recovery. For instance, a technique that could predict initial production and EUR would enable operators to understand the economics of each well earlier to improve booked reserves.
Today, approximately 62% of all wells fractured in the United States are horizontal wells. In an effort to reduce costs, E&P companies are “factory mode” drilling these wells, which means they are using identical well spacing, orientation, and fracturing techniques for every well. It is a one-size-fits-all approach that may keep costs low by shaving days off of the drilling process, but is failing to adequately deplete the reservoir.
Only approximately 10% of gas in place and 5% of oil in place is being recovered today. In fact, as much as 25% to 35% of “factory mode” drilled wells do not even produce. Simply put, although this method has allowed for rapid field development, it is yielding lower productivity than expected, which is driving the need for efficiency gains and improved recovery methods.
The industry is facing a paradox as it strives to maintain high efficiencies and low costs, while spending more capital to advance technology to improve recovery factors. The bottom line is that technology development should be tailored to the unique production characteristics of the reservoir, which will increase recovery. Look for engineered completions designs to take the lead; these will entail optimizing individual stages and individual wells to maximize production as opposed to the standardized stage completion methods currently in use. This is a more efficient and effective approach that will drive the future of our industry.
Forthcoming technology solutions must offer results that are achievable and credible. Multidisciplinary technical services that address the needs of geophysicists and geologists, as well as the needs of geomechanics, completions, production, and reservoir engineers are ideal. These disciplines are interdependent and require an integrated understanding of geologic controls to interpret production behavior for future success.
Going forward, the industry will continue to develop technology to increase the effectiveness for completions operations and production enhancement. As we develop the science and technology to interpolate initial production and EUR in shale plays, we will be more knowledgeable where we place wells vertically and laterally; we will complete them with more confidence and more success. Also look for real-time evaluation methods to determine how each stage is performing and enable real-time changes to optimize outcomes.
As shale plays mature, it is becoming increasingly apparent that many well programs will need to be recompleted with new techniques. For wells that were monitored and evaluated using microseismic technology during initial fracturing, operators will have a quantifiable advantage. During the refracturing program, they will have a much better understanding of the geology and what did and did not work previously.
Real-time evaluation of these refracturing programs will ensure that the goals of the fracturing coverage area are achieved. We can also expect to see a greater use of data acquisition tools that will help with completions engineering and design. Although logging while drilling tools are valuable in the oil field, it is likely that less costly, nonintrusive technologies will emerge that do not enter the well, such as microseismic geophones, electromagnetics, and offset well fiber sensors.
Because US shale plays have been so financially lucrative, international shale development, particularly in Argentina, China, Europe, and Australia, has accelerated. While past successful technological methods in producing shale plays in the US will help fast-track production in these countries, the past US model cannot be replicated because of each shale’s unique characteristics. Operators drilling in the US and worldwide will exercise methods of understanding the heterogeneity of each play to optimize the completion of each well and maximize recovery.
As 2014 comes to a close, I am optimistic that we are closer than ever to successfully understanding how to forecast and maximize EUR. The industry is continually developing technology and solutions to make better real-time decisions while drilling and completing its wells, ultimately reducing the finding and development costs and maximizing recovery.
