NSI Chairman’s Corner March 2021
It’s 4 am and I am thinking about….
Noun. The ability to produce a desired or intended result.
We all know the successful efficacy associated with the mRNA COVID vaccines. But do we have a similar understanding of the efficacy of hydraulic fracturing? I think not.
As you may be aware, NSI has hosted our Wed(NSI)days web sessions for the past 51 consecutive weeks. Starting December 2nd, I have hosted the first Wednesday of each month session. (You can find this and all other recorded sessions at: http://www.nsitech.com/wed-nsi-days )
Frac Legend Carl Montgomery was my first guest, and Carl made the observation that a fundamental problem with hydraulic fracturing is that it is too easy to get a positive production result, but it is very hard to optimize with all the variables involved. Too often the easy result (tweak what someone did across the fence-line) becomes the standard instead of the starting point.
Organizing the equivalent of what a drug company phase III clinical trial has never been done in the frac industry. Sure, there have been hundreds of SPE papers written on post-frac well performance, but none of the ones I have read come close to standing the test of statistical scrutiny that is applied to pharmaceutical trials. I would venture to say that there has never been a frac production analysis that would statistically support the authors’ conclusions of why their preferred completion method is the best thing to do. Too many variables. Too small a sample size. Too many assumptions.
Given the billions of dollars spent each year on drilling and completions, why is it that we don’t have a means for really understanding how to improve reservoir recovery?
I don’t think it is intellectual laziness on the part of engineers. I think it is more an issue that the problem requires a very large sample size, with high quality data, to have a chance of dealing with the intrinsic fuzzy variables. And while companies at the highest level promote their data science endeavors, I would still say none of these stand up to a test of being statistically meaningful.
Competition between companies is a partial answer to why such a study has never happened. Too many companies believe their “secret sauce” is really better than that of other companies. I am hugely skeptical of this. It is easier to find some outlier on the low side of productivity compared to nearby wells than a company that measurably out-performs the neighbors. But in either case, the root cause of the differences can as easily be explained by geology and/or production practices as by differences in completion designs. Certainly, design concepts have improved over time, but are we anywhere near understanding how to optimize a reservoir? Again, I think not.
How can we, as an industry, do measurably better? To me the best answer is to create a platform to share detailed data and analyses on a collaborative basis. From the geologic block model to the wellhead pressure and rate over time. The problem is breaking down the “special sauce” mindset. To do better, E&P companies have to first recognize they don't know the answer. They just know an answer.
This industry needs the equivalent of a Project Warp Speed to increase the % recovery of oil in place. Listening to Dan Yergin recently, he made the comment that if the US shale reservoirs could increase recovery of oil in place by a few percent (e.g. from 12% to 15%) without incremental D&C costs, the US would be second to only Saudi Arabia in lowest cost of oil extraction. That’s a startling observation because, in my mind, increasing recovery by several % is definitely achievable with a better understanding of each reservoir and application of technology.
While the drillers have made such incredible advances (the ability to drill 20,000 ft in a week just astounds me), frac technology has not come close to keeping pace. This is where our industry needs to make a substantial investment and, in a perfect world, like the COVID Project Warp Speed, there would be a public/private partnership to fund and accelerate the endeavor. But the odds of that happening today is, in round numbers, zero—even though a frac Project Warp Speed that resulted in a measurable increase in recovery of oil in place would have huge, positive, environmental impact. (Fewer wells/pads per million barrels of oil. Less water being consumed. Et cetera.) And would deliver a continuation of the massive positive economic benefit for the US that energy independence has provided.
As Carl points out, a fundamental problem with hydraulic fracturing is that it is too easy to get a good result and then, falsely, convince yourself you have achieved something unique. We need to step back and decide how and when the next stairstep improvement in oil and gas extraction will occur. The pieces of the puzzle are all in front of us. I think the quest for these solutions will be fascinating and there will be some tremendous opportunities to create value for those willing to come to terms with how far away we are from reservoir optimization.
On LinkedIn or by email (email@example.com), would love to hear your thoughts on how something akin to Project Warp Speed could be implemented for improving reservoir recovery. Next post I will consolidate our collective thoughts.
Be safe. Be well. Do good.
Steve7 | 0
I agree with your comments and I'd like to be part of a solution. Lets discuss how.