Affordable, Effective Technologies Being Applied by Indpendents
by Lance Cole, PTTC
Excerpts in PTTC Network News, 2nd Quarter 2003

Dr. Iraj Ershaghi, PTTC's West Coast Region Director, issued a challenge to independents to become familiar with and apply "smart well" technologies.

Major operators in large fields have employed smart well systems, and in doing so, they have reduced costs and improved recovery. Technology improvements are bringing the cost and complexity down. The goal is to change from episodic or reactive (after the fact) management to continual, real time, proactive management. This means monitoring parameters soon enough and frequently enough that early warning signs are seen so that changes can be made that prevent failures. 

Mark Reedy, Global Energy Partners, presented key insights from a recent study about reducing power consumption in California's old pumping oil wells. The study found that nearly 50% of the wells could benefit from optimization. For change to occur, old mindsets about continuing to operate "as is" versus investing for efficiency must be changed. Opportunities for power cost reduction fall into electrical or mechanical categories.

Key steps include examining motor efficiency, installing pump-off controllers, combating gas interference, monitoring performance and reducing water production. In California's case, this study led to a rebate program that reimburses operators for some of the investment required to become more energy efficient.

Bob Kiker, PTTC Permian Basin, described how operators there are changing their wellbore management programs to reduce failures, by as much as a factor of 10. Supported by several case studies, operators have found that structured programs requiring all involved (operators and appropriate vendors) to work closely in teams with defined accountability can have dramatic results. Open sharing of preferred practices or "what's working" is quite common in the Permian Basin, which only aids these structured programs. 

Modern reservoir simulation technology is user-friendly, PC-based, powerful (quick run times) and robust (can handle complex problems). This enables companies to get results quickly, resulting in more reservoirs being modeled and simulation results being used to aid in near real time decisions. 

Jim Erdle, Computer Modelling Group, made the point that for even majors, the historical practice has been to only perform reservoir simulation in "core" assets. But that practice is changing. He noted how one engineer with a major had, in just one year, simulated 25% of the profit center's reservoirs. Over a two-year period, an estimated 7 million BOE of reserves were added. In another example, he noted how simulation helped an independent make a timely decision about the level of steam injection (cut back or discontinue completely) during California's energy crisis in the winter of 2000-2001. A proven simulation model was on hand, so the operator's consultant could quickly perform "what if" scenarios. The operator cut back steam injection, saving $6.7 million within just six months, and changes were made with the confidence that long-term adverse impacts had been minimized.

Old plays can have new life with new technologies. Rodney Reynolds, PTTC's North Midcontinent Region Director, described how larger volume gel polymer treatments using MARCITsm technology and GasGunsm solid propellant stimulation treatments are increasing production in Kansas's very mature Arbuckle producing areas.

Reynolds noted that, since early 2001, more than 150 production wells had received large volume gel polymer treatments. Similarly, more than 50 operators had stimulated nearly 150 separate wells with GasGunsm treatments with about one-third of those being in the Arbuckle. Overall results with both technologies have been very positive. PTTC staff is working to further document case studies and periodic workshops keep producers aware of current activity and results.

New plays, like the Trenton-Black River in Appalachia, thrive on new information and data. Doug Patchen, PTTC's Appalachian Region Director, has organized several workshops, drawing more than 600 attendees. Free flow of information and interplay among participants has favorably influenced the evolution of exploration, drilling and completion concepts. There is consensus on future R&D and technology needs and a multidisciplinary study involving several regional organizations and multiple industry partners has been proposed to DOE.

DOE's oil and gas R&D program through the National Energy Technology Laboratory often plays a role in development and demonstration of technology as they would if the above Trenton-Black River proposal materializes. Providing evidence of the impact of DOE support, Gary Walker from NETL's National Petroleum Technology Office in Tulsa shared case study examples from recent programs, primarily the Class program. As a point of interest, DOE was also involved in one way or another in the immediately following examples about through-casing resistivity logging (early R&D) and horizontal drilling in Michigan (key demonstration well). 

Through-casing resistivity logging took a long time to develop, but once commercialized by Schlumberger with its Cased Hole Formation Resistivity (CHFR) log, usage has increased rapidly in California (more than 250 CHFR jobs). In the California geological environment with alternating zones of oil and water or zones where current oil saturations might be different than original, having current resistivity data is critical. In his presentation, Bill Heiam with Schlumberger also discussed other newer technologies that were working in the California environment. 

Bill Harrison and Robb Gillespie, representing the Michigan satellite of PTTC's Midwest Region, presented a timeline of Michigan horizontal activity. From the 1st horizontal well in 1982 through 1994, only 66 horizontal wells were drilled. Beginning in 1995 and at least partially fueled by a DOE-supported demonstration project, activity increased significantly and the reservoir targets/applications expanded. Activity, although fluctuating, has remained high and early 2003 data indicate that current levels are remaining very strong.

50% of Michigan horizontals have been for redevelopment in known oil and gas fields. Exploration and gas storage count for another 20% each. The Niagaran Reef is by far the most common target, representing 59% of horizontal wells. Other prominent reservoirs include the Antrim Shale and Michigan Stray Sandstone. Follow-up conversations with those attending PTTC horizontal drilling workshops (2001, 2002, 2003) indicate the presented technology insights and data resources of the Michigan Basin Core Research Laboratory have helped maintain the strong momentum. 

Sada Joshi, Joshi Technologies, Inc., summarized overall experience with horizontal wells in the U.S. (SPE 82621). Through December 2002, there were about 17,300 horizontals with 43% of those being in the Austin Chalk, followed by the Red River formation in North Dakota. Overall, he outlined nine application environments. The majority of U.S. wells are in carbonate reservoirs, contrasted with international experience where use in clastic reservoirs is most common. His assessment is that the current commercial success rate for U.S. horizontals is 65%, although he did note that success rate generally improves as more wells are drilled in a given formation in a given area. Horizontal drilling costs might be 1.5 to 2.5 times higher than for vertical wells, but finding costs for many horizontal projects are 25% to 50% below costs of buying proved reserves. With higher productivity, operating costs on a $/bbl basis for horizontals can be half or less of that experienced by vertical wells.

Acknowledgement: PTTC acknowledges and greatly appreciates the support of the "Independent's Day" presenters. Presentations of the afternoon speakers representing different PTTC regions can be viewed online (www.westcoastpttc.org/
presentations/02-03/052203/afternoonindex.htm)

Author: Lance Cole.  For further information, contact Lance Cole at lcole@pttc.org.