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Insights across the energy value chain

US production of crude oil has risen dramatically over the past several years, surpassing that of even Russia and Saudi Arabia, making the US the largest global producer according to the EIA. The surge in production has been driven by fracking — more specifically, the combination of hydraulic fracturing and horizontal drilling — allowing US producers to unlock resources that were not previously accessible. Innovation in the shale patch continues to this day as operators continue to increase the productivity of their wells. The two main levers available to producers are increasing lateral lengths and increasing frac intensity. By pulling these levers, the quantity of oil that each well produces has continually increased.

The chart below is from Drillinginfo’s DPR, DI’s take on the EIA’s Drilling Productivity Report.  The purpose of the DPR is to give a short-term (three-month) outlook for oil and gas production from key unconventional plays around the country.  The selected chart shows how the production from the average Permian Basin crude well has risen over time.  As is clear in the chart, well productivity has continuously grown over the past several years.

But as shale plays have continued to be developed and operators begin to drill within the bounds of their existing wells (infill), an obstacle has appeared.  This obstacle, called parent-child interaction, could slow or even reverse the seemingly ever-increasing productivity of shale wells.

The problem of parent-child interaction occurs when operators drill and frac new wells (children) among existing wells (parents).  By fracking the well, operators open cracks in the rock through which hydrocarbons are pushed by pressure.  But if these new cracks encounter existing cracks, the result can be lower pressures for both the new child and the existing parent, reducing the ultimate recoverable amount of oil.  Schlumberger has estimated that these child wells now make up 50% of all wells in the Permian, by far the most productive US shale region.

A recent article from the Wall Street Journal, titled “A Fracking Experiment Fails to Pump as Predicted,” focuses on Encana’s cube project in the Permian Basin.  By drilling and completing many wells in a section or drilling unit in a single massive project, Encana sought to reduce costs while reducing the impact of the parent-child interaction.  Encana deployed this technology at its RAB Davidson lease in the Permian, pictured below.  The finding of the Journal’s article was that Encana was unsuccessful in overcoming the challenges posed by parent-child interaction.

Drillinginfo’s deep database of well-level production data allows users to analyze the performance of the Encana cube wells on their own.  The chart below leverages this data to generate production charts for the wells that made up Encana’s cube experiment in the Permian.  The chart presents the average well in each of the three cube attempts discussed in the article: RAB Davidson 22 (the first RAB Davidson phase), RAB Davidson 27 (the second) and Abbie Laine 30.  The analysis suggests that these wells, completed in 2016 and 2017, initially produced at a higher rate than Encana’s average Midland County vintage 2016 and 2017 wells.   After the initial burst of production, the RAB Davidson wells declined at a steeper rate than the average well.  Encana’s development at Abbie Laine featured wider spacing and showed a greater initial production rate, closer to that of the average 2018 vintage well.  However, it also declined at a steeper rate.  So while cube drilling may have lowered Encana’s cost on a per well basis, the data highlights the threat to future lofty Permian production targets if the parent-child problem cannot be solved.

Interested in more analysis of the parent-child issue?  Please join Drillinginfo on July 15 at 10:00 AM CDT as we focus on how this issue will impact the Permian Basin and answer questions such as:

  • What is the impact of parent-child and infill wells on productivity?
  • What does this imply for well-level economics?
  • How does this translate to volume forecasts for a midstream system? What is the volume risk?
  • How does the lower productivity impact development plans, especially in a world where E&Ps are focused on return to shareholders instead of growth?

To sign up, click here: https://upto.com/e/raUNO.

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Bert Gilbert

Bert Gilbert is a consultant for DrillingInfo focusing on oil production and crude and refined products movements.