US Oil and Gas companies have pioneered a number of new techniques in the last decade that have led to a resurgence of domestic production. Along with hydraulic fracturing and horizontal drilling, pad drilling has been one of the most important innovations.
Pad drilling is the practice of drilling multiple wellbores from a single surface location. Prior to the advent of pad drilling, an operator would drill a single well, disassemble the drilling rig, move it to a new location, and then repeat the process. Through pad drilling, 4, 10, 20 or more wells can be drilled from a single, compact piece of land. Doing so saves time and money that would be spent packing and moving the rig and preparing a new drilling site. It also means a smaller impact on the area landscape.
10, 9, 8, 7, 6…
In 2006, when pad drilling began to take off, multi-well pads made up about 5% of wells drilled in the nine unconventional plays covered by DI Analytics (Bakken, Barnett, Eagle Ford, Fayetteville, Haynesville, Marcellus, Niobrara, Permian, and Woodford). By the third quarter of 2013 the percentage had risen to 58%.
To clarify the definition, in the DI Analytics play datasets available to our clients, a pad drilled well requires BOTH that multiple wells be drilled on a single pad AND that multiple wells were drilled during a single visit by a drilling rig. For example, if a rig drilled four wells on a pad, then left and returned a year later to drill one additional well, the first four would be considered pad drilled, while the last would not. We make this distinction because much of the efficiency gains of pad drilling come from dividing the rig mobilization costs up among multiple wells.
Are There Differences in the Big Plays?
We gain additional insight into how the practice developed by splitting the numbers out by play. We see that, as with the other major unconventional breakthroughs, pad drilling was first widely implemented in the Barnett, beginning in 2006. The Barnett continues to be the most heavily pad drilled play, along with the Fayetteville, both with 80% to 90% of all wells being pad drilled.
The other plays are all seeing sustained increases in pad drilling, with the exception of the Permian, which still stands at 10%. Part of the reason why the Permian lags so far behind the rest of the plays is that vertical, rather than horizontal, wellbores are still the norm. When we limit the Permian data to only horizontal wellbores, the pad drill percentage jumps from 10% to 21%.
Pad drilling has also spread to the big two US unconventional plays – the Bakken and Eagle Ford. The development pattern has been similar for both, with pad drilling taking off in 2010 and currently making up about 75% of all wells drilled.
How is Pad Drilling Focused Within the Plays?
The map below shows the locations of all wells drilled since 2004 in the covered play areas. Wells that were pad drilled are in blue and single wells are in red. I’ve drawn blue wells on top of the red wells to highlight the areas with significant pad drilling. What we see is that pad drilling is most prevalent in the most productive areas of each play. This makes sense – because the core acreage is developed more intensely, the economies of scale brought by pad drilling become more pronounced.
The notion that pad drilling is most heavily used in the core acreage of each play is supported by the results of the DI Analytics acreage grading model, which assigns predictive productivity letter grades, A through J with A being the best, based on geologic inputs. The chart below shows pad drilling prevalence, broken out by grade in the Eagle Ford. The level of pad drilling is fairly consistent around 65% for grades A through E, but then drops sharply in the lower quality grades (the grade J does not appear on the chart because no J wells were drilled in the period evaluated).
Keeping our focus on the Eagle Ford, we also see a wide variation in the prevalence of pad drilling by operator. Among the larger operators, we see Anadarko on the high end at 95% pad drilled wells and Conoco on the low end at 32%.
Looking at the difference in prevalence of pad drilling both across the country and across operators, we can conclude that the rise of pad drilling has yet to fully play out. The primary area of growth to keep an eye on is the Permian, as it is the last major play yet to see extensive pad drilling. Once the market for pad drill becomes fully saturated, the next leg of the pad drilling story we may see is a continued rise in the number of wells drilled per pad, which we will cover in a future blog post.
What do you think? Are there looming factors that would reverse the shift toward pad drilling? What other practices are making a difference on your economies of scale? Leave a comment below.