To gauge the success of the shale gale, one needs tolook no farther than natural gas prices in North Amer-

ica. Areas like the Marcellus have been so successful thatthe market has been flooded, pushing prices down andoperators into oilier plays. But success does not alwaysequal maximized production or cost effectiveness. “When we look at unconventional reservoir develop-ment, one of the key aspects is maximizing the contactof the well bore with the reservoir. This is enabled byhorizontal wells with multistage hydraulic fracturing.But first you need to know where the best productionwill come from in that reservoir,” said Keith Tushing-

ham, unconventional and microseismic director forSchlumberger Information Solutions.Tushingham added that in addition to maximizingreservoir contact, it is also about minimizing develop-ment costs because the economics are very tight in thesereservoirs. So there also has to be a strong spotlight oncost. This means making certain the completions areoptimally planned and that there is an appropriate focuson supply chain management. Research done at Schlumberger reveals that 70% ofthe production of a standard shale well comes from 30%of the perforations. “That means that 70% of the perfo-rations aren’t performing,” said Tushingham. “That tellsyou something, such as some perforation clusters are inthe wrong place. Stimulating nonproductive rock is

June 2012 | EPmag.com

UNCONVENTIONALRESOURCE DEVELOPMENT

Combining shale characteristics allows the asset team to plan the well trajectory, steer wells accurately, engineer the completion

program, and optimally hydraulically fracture and stimulate the rock. (Images courtesy of Schlumberger Information Systems)

Cost effectiveness requires science and execution excellence

A statistical approach has been successful in shale plays. As the gas surplus continues, combining upfront integrated analysis and execution management is essential.

Rhonda Duey, Executive Editor

EPmag.com | June 2012

UNCONVENTIONALRESOURCE DEVELOPMENT

expensive and doesn’t contribute to production.“If you use the science to thoroughly characterize thereservoir quality and preferentially complete a well tohit the sweet spots, does it make a difference overdrilling as many wells as possible, fracing the entire hori-zontal section, and checking the production after thefact? It is impossible to say whether a more scientificapproach would have been more cost-effective in plays

where operators used a statistical approach. However, wedo know that fractures often close immediately afterthey’ve been stimulated and that a large amount ofproppant is wasted.”

ModelingThe first part of the scientific approach comes before awell is drilled. Reservoir modeling is nothing new to theindustry, but it has not been used widely in shale playsbecause operators know where the source rock is. “It’s no surprise that shales present significantexploitation challenges. Production is variable, fractureeffectiveness is impacted by geomechanics, and a highwell count is required to make these plays work,” Tush-ingham said. “Taking advantage of the data allows us tomeasure reservoir quality to define the sweet spots.” He added that in shale exploration it is important toestablish kerogen types and hydrocarbon maturity to

acquire and drill the optimal acreage. For developmentand production, geomechanically based analyses supportunderstanding the natural and induced fracture pat-terns. Combining shale qualities, kerogen distribution,and fracture character allows the asset team to plan thewell trajectory, steer wells accurately, engineer the com-pletion program, and optimally hydraulically fractureand stimulate the rock.

“You geosteer into the sweet spots and stay in thatzone as long as you can,” Tushingham said. Tushinghamillustrated with examples from the Bakken, where wellbores snaked in and out of the reservoir zone through-out the entire lateral section. MWD technology can helpoperators stay in zone, he said.In shale wells, 50% of the cost and effort goes into thecompletions. For example, a recent frac job in the Mar-cellus had eight frac stages and used more than 4 mil-lion pounds of sand and 3 million gallons of water. Thisrequired 165 frac tanks and 623 truckloads of water forone well. “Fracturing selectively can significantly reducethe amount of sand and water required as well as relatedmaterials management costs,” Tushingham said.

Production loggingProduction logs measure fluids in or around the bore-hole during production or injection. They are used to

Microseismic offers a validation method whereby changes to the stimulation and completion program can be illustrated.

UNCONVENTIONALRESOURCE DEVELOPMENT

analyze dynamic well performance and the productivityor injectivity of different zones, diagnose problem wells,or monitor the results of a stimulation or completion. Tushingham said that production logging can go along way toward validating a science-based approach toshale development since operators can clearly see whichperforations are contributing to production. However,operators need to be able to evaluate the trade-offbetween spending the extra time and money up frontagainst performing unnecessary completions. The other method of validation is microseismic, whichcan illustrate immediate changes to the stimulation andcompletion program or changes in orientation on thenext well, he added.Some companies will not be convinced until they canprove that these methods will increase efficiency. “It’s allabout economics,” Tushingham said. “Everybody’s try-ing to drive down costs and increase production. Goingforward, the right combination of science and executionmanagement will win the day. Because of the high wellcount and complexity of shale operations, there is mas-sive scope to increase efficiency.”

Supply chain managementThere are huge opportunities in shale plays to reducethe cost of operations by leveraging materials manage-ment, logistics, and execution management.“Maintaining and managing large inventories of wellequipment isn’t a core business for operators,” Tushing-ham said. One potential strategy could be partneringwith service providers to take on inventory risk andguarantee on-time supply of equipment that oil compa-nies have traditionally held in inventory such as prop-pant, cement, or acid. A related approach that borrowsfrom other industries would be using warehouses withsophisticated systems and tracking capabilities.Another significant opportunity lies in improving the efficiency of trucking logistics from suppliers to thefield and for infield water hauling and equipment deliv-ery. Expert practices developed and implemented bylogistics companies could make a big difference in theoil field. Further, most companies use Excel-based tools tomanage planning and scheduling of development andproduction activities – planning, permitting, drilling,completions, and putting wells into production. Withthousands of wells to manage through the variousstages of planning and execution at any given time,there is a real need for an integrated software solutionto provide metrics for cost, time, and inventory at everystage in the process.

Best of both worldsAt the end of the day, it makes sense to understand thereservoir to target drilling and completions and to planwells and completions as judiciously as possible. Spend-ing money to get the right data and conducting thor-ough analyses supports cost-effective well placement andselective fracing. Combining science with smart logisticsand execution can go a long way toward maximizingproduction and ensuring better economics.However, getting the balance right between upfrontplanning and execution excellence also is important.Recent discussions with various operators have con-vinced Tushingham that more of them are becomingconvinced that a scientific approach provides the mostcost-effective results. One operator noted that the great majority of the valueis in the earth model and well evaluation and, to a lesserextent, in well execution. If digital models are not beingbuilt, the company ends up wasting capital and will notachieve optimal production. In other words, excellence inexecution will not make up for a lack of upfront analysisto understand where to drill and complete wells.Summarizing comments from this and other opera-tors, Tushingham said he is hearing more and more thatconsistent production performance is related to highlyintegrated subsurface teams performing thorough earthmodeling and using consistent and rigorous well designprocesses. Further, this upfront planning must then becombined with well-informed wellsite teams with excel-lent remote support. Finally, costs above the authoriza-tion for expenditure are usually caused by lack of earlyintegrated evaluation and a less-than-consistent wellplanning process.

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