It is time for Pad Drilling 2.0, the next iteration in a developmental drilling practice that has transformed how the oil and gas industry accesses tight formation hydrocarbons.
Pad drilling version 1.0, or the drilling of multiple wells from a single surface site, played a linch-pin role in opening up capital-intensive tight formation oil plays over the last four years as part of a broader revolution in drilling and completion techniques.
Pad drilling enabled the industry to employ factory-like economies of scale to shorten cycle time and increase rig productivity so that hydrocarbons are brought to market more quickly or, in the case of batch completions, in greater volume.
Pad drilling 1.0 reduced rig mobilization time between multiple wells from days down to hours, and allowed contractors to capture time savings by eliminating repetitive steps in the drilling process. For example, drilling a string of vertical boreholes on a pad allows contractors to maximize fluids that assist vertical drilling as one batch, then switch to fluids that assist horizontal drilling without having to clean or remix multiple times versus drilling single wells serially. Operators leveraged pad drilling by building centralized facilities to deliver water or power to multiple well sites, reducing vehicular traffic and repetitive infrastructure.
In its current iteration, pad drilling involves as few as two wells per location up to a range of four to six wells per pad in oil plays like the Eagle Ford or Bakken, and up to 10 to 12 wells in dry gas plays in Appalachia where a dozen-well pad can represent a $50 million industrial endeavor that unfolds over six to nine months.
Pad Drilling 2.0 will place less emphasis on how fast contractors can reach total measured depth underground and more emphasis on staying within a formation’s sweet spots along the lateral. Additionally, the process will incorporate optimal spacing between laterals to generate the greatest hydrocarbon recovery without interfering adjacent laterals. Ultimately Pad Drilling 2.0 will lower the cost per unit of hydrocarbon production, a subtle but crucial strategy in a low commodity price environment versus traditional operating strategies that seek only to lower total well costs.
The Pathway to Pad Drilling 2.0
For an event to be considered transformative, it must result in significant, identifiable changes on multiple levels. Pad drilling achieves that definition in multiple ways. For perspective, consider how quickly the development transpired. Oil and gas operators began talking about drilling efficiency improvements in midsummer 2012 as cycle times dropped from 45, or 50 days per well to 20 days or less as operators moved beyond the delineation phase of prospecting tight oil formations and into the optimization phase of solving the geologic and engineering challenges of tight formation oil and gas extraction. At year end 2012, pad drilling represented less than 20 percent of horizontal drilling activity. One year later, marketshare surged for pad drilling, reaching up to 80% of wells in specific plays like the Eagle Ford or Bakken shales. This re-polarization in market share across multiple tight formation plays constituted one of the most intense transformational events for any industrial sector in the modern era.
[contextly_sidebar id=”BN46qgJG6sPWHjGzds0AjQo2cg3Qj2dA”]The second impact occurred in transformative impacts to the domestic drilling fleet. Self-mobilization systems, either via walking or skidded systems, automation, top drives, high-volume mud pumps, the ability to rack large quantities of drill pipe on the rig floor, and enough hydraulic horsepower to bore laterals up to two miles in length shaped the type of drilling rig operators demanded. Consequently, Pad Drilling 1.0 transformed the nation’s drilling fleet, prompting a newbuild rig effort as operators sought specialized fit-for-purpose units. The overwhelming majority of the 175 new rigs slated for construction in 2014 involved 1,500 horsepower AC-VFD units with self-mobilization packages suited to pad drilling applications.
The pad drilling concept traces its roots to the 1970s on the Alaskan North Slope. However, the modern pad drilling iteration was based on an adaptation of techniques used on offshore platforms where operators drilled multiple directional wells from a single structure. That offshore model developed momentum in 2004 when the Williams Companies commissioned a skidded specialized rig system from Helmerich & Payne IDC that could directionally drill up to 22 Piceance Basin wells from a single location.
Initially, pad drilling was a way for the industry to grapple with natural gas development in difficult Rocky Mountain terrain. In Wyoming, pad drilling became a technique that allowed operators to work within drilling restrictions during animal migration seasons. Later, in the Barnett Shale, pad drilling allowed operators to access hydrocarbons in densely settled urban settings. Similarly pad drilling spread quickly in the Marcellus Shale as operators faced topography challenges.
However an important evolutionary step–think of it as Pad Drilling version 1.5–occurred in the Eagle Ford Shale where none of the restrictions of working in urban centers or in environmentally challenging topography existed. Operators discovered that pad drilling offered measurable performance improvement from scale economies and standardization of well site processes.
Thus pad drilling became the first of three transformational steps in the exploitation of tight formation hydrocarbon reserves. Step two involved the move to completion efficiency using techniques such as zipper fracs to eliminate non-productive time during the well stimulation process. A byproduct of zipper fracs, as part of a batch completion strategy, involved improved hydrocarbon recovery in certain circumstances. Today zipper fracs represent as much as two thirds of pad drilling completions. The third phase, and a topic better reserved for separate treatment, has been the recent emphasis on completion effectiveness through enhanced completion techniques.
Each downturn in the perpetual yin yang cycle of oil and gas creates new approaches to how the industry conducts business. Pad Drilling 2.0 offers an opportunity to navigate a low cost commodity price event by creating better wells at a lower cost per barrel.
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