ADVERTISEMENT

Flowing Shale Wells Sooner Would Add Billions to Sector Cash Flow

A lone drilling rig stands in the Delaware Basin. Source: XTO/ExxonMobil.

Trimming the time that exists from the day drilling begins to the delivery of first oil represents a largely overlooked opportunity for US shale producers to improve free cash flow. In the Delaware Basin alone, accelerating this cycle time would save the shale sector more than a billion dollars. 

This is according to a recently published study from Westwood Global Energy Group and the Project Production Institute (PPI), a San Francisco-based non-profit that promotes a method called “operations science” for major capital planning and management projects. Their findings offer a new quantitative look at the hidden costs of the shale sector’s nonproducing asset base.

The biggest issues boil down to two periods in the life of a shale well: when it is a drilled-but-uncompleted (DUC) well, and after it is completed but still waiting to be attached to a sales line. Holding too large an inventory of these dormant properties means locking up large sums of capital indefinitely. On the other hand, a lower balance of DUCs coupled with achieving initial production on a quicker basis frees more of that sunk capital to generate revenue.

DUCs and completed wells awaiting hookup are categorized in the study as a single measurable called “work in process.” This metric includes drilling and completions, but it is the nonoperational days where producers have the most room to improve. Excessive work in process also includes drilling permits sitting idle, pads that are built but not yet drilled upon, well design lead times, and other delays.

...
This article is reserved for SPE members and JPT subscribers.
If you would like to continue reading,
please Sign In, JOIN SPE or Subscribe to JPT

Flowing Shale Wells Sooner Would Add Billions to Sector Cash Flow

Trent Jacobs, JPT Digital Editor

25 October 2019

Volume: 71 | Issue: 12

ADVERTISEMENT


STAY CONNECTED

Don't miss out on the latest technology delivered to your email weekly.  Sign up for the JPT newsletter.  If you are not logged in, you will receive a confirmation email that you will need to click on to confirm you want to receive the newsletter.

 

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT