Enverus Blog

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The unconventional oil boom and off-the-chart production increases that occurred between 2008 and 2014 in the U.S. were driven mostly by technology, and chief among these technologies were horizontal drilling (which allowed E&P operators to follow the prevailing formations laterally), hydraulic fracturing (which allowed the operators to increase the permeability and porosity of tighter geologic formations), and the use of proppant (sand and fluid designed to keep the fractured pathways to the wellbore open).

The high price of oil during that period kept broad experimentation economically feasible, and the nature of the financing game kept most operators focused on the huge gains available in initial production, perhaps even at the expense of steeper decline rates.

The oilfield in 2016

What a difference 18 months can make.

One thing that hasn’t changed is the rock – players that leased positions early enough in strong acreage to get fantastic deals still have a tremendous advantage (unless they miss their held by production quotas).

But as the price of oil continues to hover in the $40s, most of the high dollar hedges have been played out, the financial sector is paying a lot closer attention to valuations and expected returns, and we’re again looking to technology to help us win the day.

Companies that are focusing on technological progression are going to have a natural advantage in reducing cost and getting to market, so let’s take a look at a few of the technologies that are being leveraged in the oilfield today, and what we might expect in the near future.

Enhanced Oil Recovery (EOR)

Previously, we’ve talked a bit about Enhanced Oil Recovery (EOR), and some of the advantages that “flooding” existing wells can have in a down market. Although lately there have been more tests with polymers and surfactants, nitrates, and even microbial methods, by and large we’re still seeing standard methods using steam (for heavy oil) and miscible gases (CO2 and HC) for lighter production.

Perhaps the strongest banner carrier for EOR right now is EOG, who are widely regarded as way ahead of their peers in terms of high-return unconventional E&P. The way they have it figured, they have a $15-$20/barrel cost advantage over the rest of the industry, derived from some of the very best acreage, the fiscal patience to wait out wells until they can deliver a 30% return, and a very promising EOR pilot program in the Eagle Ford using natural gas as the flood.

Artificial Lift

Artificial Lift refers to the “lifting” of hydrocarbons to the surface – in the classic case for oil we think of the “nodding donkey” oil pumps. Nowadays, we are making quite a few advancements, like

  • Electrical Submerged Pumps (ESP) systems with downhole pumps for the longer runs prevalent in todays’ oilfield, that also have the flexibility to adapt to the wider variations in production caused by the steeper declines of modern methods
  • Real-time monitoring – the internet of things can alert operators when problems are occurring, or even likely to occur
  • Materials such as carbon fiber sucker rods are more tolerant to the sand and chemicals (and hydrocarbons) that cause mechanical downtime
  • Modern power sources like the FlexGen Generator that can provide a more economical and secure power source to the pump stations.

Additionally, we will see many operators describe “overpressured” situations that imply that we have to spend even less energy in getting those hydrocarbons to the surface.

Completion Technologies

We have discussed the stages of well completions in some detail. Here are a few techniques that are getting some attention.

Sliding Sleeve vs. Plug N Perf

The debate between Sliding Sleeve vs. Plug and Perf (PNP) completions is all the rage right now. Sliding sleeve is a less common (newer) method that is in theory quicker, and arguably cheaper after the initial system purchase and set-up. Rather than taking the time to plug the next stage, perforate, and then do the next, the Sliding Sleeve method is applied to the open hole, and the mechanical sleeves direct the fracking on demand from a constant downhole pressure. A few of the operational risks and safety concerns sliding sleeve overcomes are

  • tripping in and out is non-productive time (NPT), and may trigger problems
  • detonations that don’t go off as expected create long delays
  • milling out the plugs can present problems

To address those issues, newer PNP systems have a few new tricks. For example, the new Gator Perforating System doesn’t use explosives, and Schlumberger has a new dissolving frack plug system that prevents the operator from having to mill out the perfs.

Monobore

Monobore, or single-string completions, have come into usage in some of the North American unconventional plays. Since you don’t have to transition the casing sizes, there is less down time in the drilling operation, and if you’re using larger casings, your flow rates will be increased.

Other tech to look for

  • New subsurface imaging techniques, like eEM from Deep Imaging, allow you to see enhanced visualization of your fracked volume.
  • New proppant additives like CARBO GUARD help preserve equipment life downhole.
  • Probabalistic data analysis deals with information quality issues, data resolution, limitations of data, and helps you get to the best answer, fast.
  • Drillbit technology improvements and quicker geosteering feedback have great potential for reducing NPT.
  • Zipper Fracking – I’ll talk about zipper fracking in a future article.

Conclusion

Technology improvements continue to be a major driver in the oil and gas industry, with the current downturn providing the opportunity to build those improvements around efficiency. Less waste is good for the operators, for the financial backers, and most of all for the long term energy needs of our world.

Your Turn

What do you think? Leave a comment below.

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Eric Roach

Eric Roach is the editor of Drillinginfo's blog, which was selected as the Top Oil & Gas Industry Blog based on visibility, engagement and relevance. He also prepares a weekly newsletter of top industry news for blog subscribers, and would be grateful if you would subscribe and tell your friends. (There's a box on the upper right of the page where you can subscribe).