Permian Basin 2017

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PERMIAN BASIN: PRODUCTION FORECAST 76 | November 2017 | mately 5,500 ft while the Midland perf intervals are much higher at approximately 8,000 ft. One of the issues we have seen with older HBP (held by production) leaseholds is that the leasing doc- uments do not allow for longer laterals unless the lease is re-negotiated to the higher royalty rates that are today's standard. In areas that have less historic leasing we will begin to see longer laterals take charge as they are cheaper to drill and com- plete per foot due to economies of scale. There are still questions about longer laterals that have to be answered, such as efficiency in hydrocarbon recovery over time. The main comment we hear is that, "it is really dark down there" and the longer out the well goes the less control we have. In gas reservoirs the hydrocarbons are pushed by over- pressure; in oil reservoirs there can be other mech- anisms so as pressure drops we can see changes in types of hydrocarbons produced. Proppant on the other hand has jumped over the past few years. The most common proppant volume per foot across the U.S is approximately 1,300 lbs/ft. Both basins are exceeding that vol- ume in newer wells with some being tested north of 3,000 lbs/ft. Each formation is treated differently since the Permian is a mix of sands, carbonates and shales, so there is not a one-size-fits-all solution. By resolving wellbores to the bench of production— what Drillinginfo calls a Geology Zone—we can see that different formations are being treated differ- ently. This is a task that is easier said than done as it takes both a geologic model and software in order to compute the landing zone. It is critical to do this to understand the economics of each producing bench in each basin. Figure 9 shows the variation in proppants volume for different benches of the WolfCamp in different regions of the Delaware Basin. These variations can be required by varia- tions by minerology or operational considerations; some operators use a very consistent completion approach while others test large variabilities in proppant to determine which completion tech- niques are achieving optimal results. DUCs (drilled uncompleted wells) have been another topic of interest in many basins. The EIA reports that there are over 5,934 DUCs inside the U.S. which can a bit misleading. If one looks at when the wells were drilled one will notice that more than 4,664 of the wells were drilled since January 2017. Due to completion, flowback and regulatory filing FIGURE 9. Wolfcamp Proppant Intensity vs. Location —Delaware Basin

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