G. Alan Petzet
Senior Staff Writer
Horizontal drilling has become a significant, permanent fixture of the oil and gas industry.
Operators, service companies, regulatory agencies, royalty owners, and others are still adjusting their thinking to horizontal from vertical drilling, which most knowledgeable forecasters expect to remain the majority technology.
A technological synthesis the past 5 years has transformed horizontal drilling into an integral tool of the industry, even though some problems remain.
Horizontal wells are becoming "conventional" and must be considered a viable alternative to vertical wells in all future developments, says Dr. William C. Maurer, president, Maurer Engineering Inc., Houston.
First applied commercially outside the contiguous U.S., horizontal drilling has taken off in the Lower 48, mainly due to a frenzy in the Cretaceous Austin chalk trend of South Texas. About 10% of U.S. active land rigs are drilling horizontal holes. Nearly every oil producing state has at least one horizontal well.
Efforts to further advance the state of the art have led to a cooperative research project that commands what is believed to be among the largest participation in industry history.
Company sources say willingness to exchange information on drilling and operating practices has increased markedly the past few months in the U.S. However, many specifics on reservoir performance, reserves, well drilling and operating costs are still closely held.
USE SPREADING
Oil & Gas Journal's 1989 and 1990 worldwide surveys and more recent information show how operators are progressing along the horizontal drilling learning curve (OGJ, Feb. 26, 1990, p. 53; Feb. 27, 1989, p. 53).
Oryx Energy Co., Dallas, held the displacement record for medium radius wells in the 1990 survey with 4,164 ft at 2 Stroman-Harris in Pearsall field, Texas. Oryx earlier this month broke that record at 1 Haley, in Zavala County, Tex., where displacement was 4,242 ft.
Unocal Corp. set a horizontal displacement record for long radius wells by drilling 5,743 ft in the Miocene Monterey reservoir with the A-16 well in Point Pedernales field off California.
Displacement record at a short radius well is 1,221 ft at 5 Vega drilled by Montedison SpA in Vega field off Sicily.
Oryx tested its 1 Haley at a calculated rate of 6,144 b/d of oil on a 90 min test, the company's highest flow rate in Pearsall field.
The two OGJ surveys list a combined 263 wells with horizontal sections greater than 1,000 ft but were not meant to be comprehensive. A slight majority was in the U.S. in 1990, and a few more wells were elsewhere than in the U.S. in 1989.
In the 1990 survey, 39 companies listed plans to drill 376-393 long horizontal wells this year.
The first horizontal hole longer than 1,000 ft was drilled as part of an ARCO project in 1984-85. Primitive horizontal drilling technology appeared in the field in the late 1920s.
Not enough information is available on all areas and formations to predict how much better horizontal wells will perform than vertical wells, but Frank J. Schuh, president of Drilling Technology Inc. (DTI), Plano, Tex., reckons optimum lengths will generally be 2,000-4,000 ft.
ORYX'S LEARNING CURVE
Oryx set out in the mid 1980s to take extended reach drilling, commonly used for years on offshore platforms, and convert it to horizontal drilling, said James Roberts, vice president of production.
Converting an extended reach well directed at a particular reservoir objective some distance from a platform to a well drilled horizontally through a reservoir required several other pieces of technology.
The other technologies included the extended reach whipstock, measurement while drilling (MWD) with its computers on the rig floor, and mud driven downhole motors.
Another advance was a set of reservoir engineering and geoscience software for use with seismic data to help determine where to drill to intersect vertical fractures.
Roberts said, "The first well we drilled was a complete mechanical failure, the second got out about 200 ft and flowed 600-700 b/d, and the next got out even more.
"You learn by doing as much or more as you do from applying everything the industry has to offer. There's a new learning curve in each lease or each new field."
Oryx, which has about 200 Austin chalk wells, including 23 horizontal wells, still considers it has much to learn about horizontal drilling technology, Roberts said.
Nevertheless, Oryx has not drilled a dry hole in the chalk since it began commercial horizontal drilling there.
TECHNOLOGY EXCHANGE
Intense interest in horizontal drilling worldwide has led to what is believed to be the largest-in terms of company participation-jointly funded drilling research project in the industry's history.
About 95 oil companies and service companies are participating in Drilling Engineering Association-44, proposed by Phillips Petroleum Co. The participants are from 18 countries and include national oil firms.
Aims of the project are a literature search, development of personal computer programs related to drilling, completion, production, and reservoir engineering, and technology transfer.
Participants in DEA-44, conducted by Maurer Engineering, will stage a horizontal well technology forum May 2-4 in Houston.
Purposes are to identify the state of the art of horizontal drilling, reservoir predictions, production rates, and economics, and define problems and solutions.
Speakers will be from Oryx, BP Alaska Inc., Ste. Nationale Elf Aquitaine, Sceptre Resources Ltd., and others. Attendance is limited to DEA-44 participants.
OTHER PROGRAMS
Joint studies are also under way on gravel packing horizontal wells and the Mississippian Bakken shale reservoir in the Williston basin.
Twelve operating and service companies began a 1 year project Jan. 31 to collect, compile, and distribute to the participants data on methods for gravel packing horizontal oil wells.
Activities include using a high pressure wellbore model to generate data on parameters of gravel packing, including gravel distribution and fluid flow rate, density, and pressure, and collecting and distributing to the participants video tapes of the experiments conducted during the program and written information summarizing the observations.
Marathon Oil Co. will conduct the project. Its representative is John Davis of Littleton, Colo., director of exploration and production technology.
Eighteen companies have joined and eight others are considering a reservoir study of Mississippian Bakken shale conducted by Simtech Consulting Services Inc., Golden, Colo.
Simtech is assembling a data base of Bakken vertical and horizontal penetrations and collecting detailed information on two areas.
One is the area lying between and including Elkhorn Ranch and Rough Rider fields in Billings and McKenzie counties, N.D., where nearly all Bakken horizontal drilling has occurred (OGJ, Nov. 6, 1989, p. 22).
The other is the area around Antelope field, farther north in McKenzie County, said Vernon Breit, a Simtech vice president.
TEXAS ACTION
Horizontal drilling is under way in other areas of Texas, but not with the gusto displayed in the Austin chalk trend.
Most drilling is between Dimmit and Burleson counties, but the trend, 20 or so miles wide and dotted with oil fields, winds across the southern U.S. from Maverick County, Tex., northeast into Central Louisiana.
More than 50 rigs were active last week in Texas Railroad Commission Dist. 1 in the heart of the trend, and industry sources have predicted that as many as 80 may work in the chalk soon.
It's not clear whether directional drilling services are available to support that level of activity. One operator reported waits of as long as 45 days for the services.
The Gonzales-Wilson-Karnes County area of the Austin chalk trend boasts the largest number of horizontal well locations permitted outside the five county Pearsall field area, says Paramount Petroleum Co., Houston.
Other operators active in the three county Gonzales area are Meridian Oil Inc. and Coastal Exploration Co., Houston; Tana Oil & Gas Co., Corpus Christi; Bass Enterprises Production Co. and Union Pacific Resources Corp., Fort Worth; Santa Fe Minerals Corp. and Petro-Hunt Corp., Dallas; Clayton W. Williams Jr., Midland; and Modern Exploration Co., Sherman, Tex.
Operators are also beginning to evaluate the Cretaceous Buda and Georgetown chalk zones below the Austin chalk.
Oryx, meanwhile, has assigned research and development to further completion efforts for several wells in Suggs Ellenburger field, Nolan County, Tex. Roberts said Oryx hopes by yearend to have a better feel for the future of that project, which involves attempts to connect permeable oil bearing reservoirs separated by barriers. Depth is about 7,000 ft.
CHALK COSTS, PAYOUTS
Cost comparisons between vertical and horizontal wells in the chalk are practically academic because vertical wells are uneconomic in most areas.
Oryx and Fossil Bay Petroleum Co., Dallas, which has drilled six chalk wells, provided generic authority for expenditure tables on Pearsall area medium radius chalk wells for this story.
Oryx's figures show a completed well cost of $1 million for a chalk well with 6,400 ft of vertical hole and a 3,000 ft horizontal section.
Fossil Bay's show a cost of $759,402 for a well with 7,000 ft of vertical hole and a 2,500 ft horizontal section. That includes drilling vertically through the chalk and running electric and porosity logs before kicking off to drill the horizontal section.
Normal drilling time is about 30 days/well. The operators said drilling problems can quickly push costs to $1.5 million/well.
A $1 million well has to produce 67,000 bbl of oil to pay back drilling/completion cost alone at a net $15/bbl.
High initial rate wells are capable of paying out in a few months.
A table in OGJ's 1990 survey showed 43 wells, mostly in the Giddings, Tex., area, operated by independents. TRC filings showed that initial potentials averaged 352 b/d of oil and 74 b/d of water.
Included in the average are two wells that had not produced and three with initial rates of more than 1,000 b/d of oil.
Including the two nonproducing wells, 20 on the list produced 100 b/d of oil or less initially. Rates at that level present an entirely different payout picture.
ORYX COMPLETIONS
Oryx last month produced its 1.2 millionth bbl of oil from horizontal wells in the Austin chalk since April 1988.
The company's largest cumulative production figure is 184,000 bbl at 13 Baggett, where expected ultimate recovery is more than double the present cumulative volume.
Oryx's gross chalk production is more than 11,000 b/d of oil and 5 MMcfd of gas. It owns more than 180,000 net acres in Pearsall field.
Six recent completions, including a discovery well, flowed at a combined initial rate of nearly 8,000 b/d of oil and 3 MMcfd of gas.
The discovery well, 61 Frost National Bank, in Dimmit County, flowed 1,185 b/d of oil and 461 Mcfd of gas through a 36/64 in. choke with 300 psi flowing tubing pressure from upper and lower Austin chalk. Measured depth is 9,790 ft, horizontal displacement 3,173 ft.
Oryx's 2 E.B. Jones in Zavala County flowed 1,932 b/d and 418 Mcfd from a 3,113 ft horizontal displacement at 9,521 ft MD. And 3 E.B. Jones flowed 942 b/d and 390 Mcfd from a 2,981 ft horizontal section at 9,434 ft MD.
Also in Zavala County, 3 Lasater flowed 1,409 b/d and 435 Mcfd from 3,079 ft of horizontal displacement at 9,711 ft MD, and 5 Lasater tested 1,616 b/d and 944 Mcfd from 3,016 ft of hole at 9,484 ft.
The company's 2 Avant in Frio County flowed 794 b/d and 343 Mcfd from 2,526 ft of hole at 9,360 ft MD.
EXPLORATORY APPROACH
At least two operators in the Texas Austin chalk play are taking an exploratory approach to drilling.
There are exploratory opportunities partly because the chalk, whose approximate limits are known, is not densely drilled in all areas.
Oryx said 25 of 85 horizontal chalk wells it expects to drill between August 1989 and Dec. 31, 1990, will be exploratory wells.
Roberts said the exploration department supervises those wells because little or no nearby well control exists.
Paramount also is taking an exploratory approach, seeking partners to drill chalk prospects in Gonzales, Wilson, and Karnes counties (OGJ, Apr. 16, Newsletter).
The area was not nearly as densely drilled as the Pearsall and Giddings areas but appears to be a low risk exploration play for several reasons, said Steven W. Weller, Paramount geologist.
The Gonzales area had several excellent vertical chalk wells and many with higher cumulative production and initial flow rates than in the Pearsall area.
The three county Gonzales area also has Cretaceous Buda production and appears on reprocessed seismic to have fracture patterns superior to those in the Pearsall area, said Gus Fiongos, Paramount geophysicist.
John Faulkinberry, chief financial officer and a partner, said Paramount acquired leases for as little as $50-75/acre before prices shot up to the present $250-350/acre level. Pearsall is practically leased solid, and asking prices for remaining tracts at times exceed $500/acre.
SAFETY IN THE CHALK
Operators are concerned about two kinds of danger in the Austin chalk.
One is drilling underbalanced.
Oryx has seven rigs running in the chalk, a level it does not plan to expand this year because of safety concerns, Roberts said. The company assigns its best personnel to those rigs and drills with care, he said.
The chalk is sensitive to many drilling fluids and is drilled, usually with fresh water or brine, at circulating pressures lower than formation pressure. Many wells flow large volumes of oil and gas up the drillpipe annulus during drilling of the horizontal part of the hole, which can take 2 weeks or more.
"These people have to know their jobs very well," Roberts said.
Fossil Bay, drilling underbalanced in the Pearsall area, said it is possible to supersaturate brine drilling fluid to about 10 lb/gal. Sometimes that's not heavy enough to continue drilling safely.
One Fossil Bay well began to flow oil and gas during drilling at a calculated bottomhole pressure of 3,800 psi. Rubbers in the rotating head on the rig floor began to turn when surface pressure reached about 300 psi.
The crew closed the 3,000 psi blowout preventers and displaced a 600 lb., 150 ft polymer plug to the bottom of the hole to prevent further gas percolation, then built mud weight to 9.6 lb/gal with conventional mud.
Another well penetrated three vertical fractures. One contained a tar-like, almost dead, 19 gravity oil; the next a lighter, green oil; the third a black oil with a small amount of sulfur.
The other danger is to the industry's reputation. Operators say the impetus to grab leases has drawn promoters, some of whom offer interests in proposed horizontal wells too close to existing vertical wells to have much chance of paying out.
REGULATORY ISSUES
DTI's Schuh says regulations can seriously hamper horizontal well performance in two areas: the allowed direction of the horizontal well and spacing between wells.
Wells spaced too widely or too closely can result in significant interference in drainage as well as a very large area of undrained reservoir.
The Texas Railroad Commission established special field rules for Austin chalk horizontal wells in late 1989, then last February issued for comment a statewide horizontal drilling rule it hopes will largely eliminate the need for special field rules (OGJ, Mar. 5, p. 78).
Well spacing isn't usually a regulatory problem offshore or overseas, but states like Oklahoma in which well depth determines spacing may need to change the law to accommodate horizontal drilling, says Sada Joshi, president, Joshi Production Technologies Inc., Tulsa.
Hole length presents another dilemma.
Oryx's Roberts said, "in some areas of the country the length laterally makes a huge difference. In some areas it does not. So we have to continue to experiment with it."
Schuh points out that the cost of drilling even a short horizontal hole is significantly greater than a vertical well because of the cost to drill the build curve and reach a horizontal hole angle. As hole length is increased, the cost rises at a very low rate until formation and equipment limits are reached.
Hole length also will affect the way reserves are calculated. "We haven't drilled enough wells to come up with a good number for Pearsall, but we will by June," Roberts said.
Horizontal drilling in the chalk appears to be altering drainage patterns.
Oryx's Roberts said, "I don't know if it's true or not, but we drilled a Pearsall well near an operator with a 40 b/d well. He called me the day after we completed it and said his well went from 40 b/d to 175 b/d.
Ness said Fossil Bay pumped about 10,000 bbl of brine and 8,000 bbl of fresh water into one Pearsall area well, none of which has shown up since the well went on production.
CANADIAN ACTION
More information has been forthcoming on performance of horizontal wells in the Western Canadian sedimentary basin.
The Alberta Energy Resource Conservation Board showed one horizontal well drilled in the province this year through mid March, 26 in 1989, 12 in 1988, two in 1987, and five in 1978-86.
Two horizontal wells were drilled in Saskatchewan this year, another five are licensed, and 18 permit applications were pending as of mid-March, the Saskatchewan Energy Department said. Operators drilled 13 last year, 3 in 1988, 1 in 1987.
Lasmo Canada Inc., Calgary, said the lower Cretaceous sand in Winter field of western Saskatchewan could see one of the largest single applications of horizontal drilling.
Lasmo and partners participated in two 1989 wells in Winter with horizontal lengths of about 2,300 ft. That followed drilling of three horizontal wells last year and two in 1988. The companies conducted detailed seismic programs in the area, where they leased more acreage contiguous to the field's original 5 sq miles at a Crown sale in first quarter 1990.
Ranchmen's Resources Ltd., Calgary, plans to drill several horizontal wells this year to thick lower Cretaceous Dina sandstone in Alberta. The company holds 20-100% interests in Dina oil reservoirs in Amisk, Czar, Bellshill Lake, Hayter, and South Hayter fields.
A Dina reservoir engineering study conducted since mid 1989 showed that horizontal drilling may be more effective than reducing well spacing to increase ultimate recovery, the company said.
SCEPTRE'S PROGRAM
Horizontal drilling has become a major component of a plan to increase production and reserves for Sceptre Resources Ltd., Calgary.
A horizontal well Sceptre drilled in 1987 in Tangleflags field in Saskatchewan produced 252,000 bbl of heavy oil through yearend 1989, Steam is injected into adjacent vertical holes, and oil is produced through the horizontal well.
Sceptre believes ultimate recovery from the reservoir could reach a gross 17 million bbl of oil using steam flooding and a series of horizontal wells. Sceptre's interest in the project is 50%.
In October 1989, Sceptre expanded horizontal well operations to the Carboniferous Alida formation in Gainsborough field of Southeast Saskatchewan. Production from its first 100% owned horizontal well averaged 1,072 b/d of light crude in 1989. The well had produced 79,500 bbl of oil by yearend and continued to produce 1,000 b/d of oil.
Sceptre completed two more Gainsborough horizontal wells and said preliminary results show similar levels of productivity. Incremental recoverable reserves are an estimated 1 million bbl for the first well and 1.5 million bbl for the other two wells.
Sceptre's plans call for 10 horizontal wells in four western Canadian oil reservoirs.
THE FUTURE
No one can yet quantify it, but Maurer says horizontal drilling is destined to yield a major increase in world hydrocarbon recovery.
He said horizontal well technology advances will include multibranch, medium radius wells, downhole thrusters to increase drilling distances, horizontal sections 5,000-10,000 ft long, and "joy stick" guided drilling systems.
What share of wells will be drilled horizontally?
Baker Hughes Inc., which says about 250 horizontal wells were drilled in 1989, predicts that at least 5,000/year will be drilled by 2000. But it says as many as 20,000/year could be drilled by 2000.
Maurer expects the number to be 10,000-20,000/year by 2,000, about 20-40% of the world drilling in 1989.
Joshi said gas reservoirs may hold wider application potential for horizontal wells than oil reservoirs. That's because of a horizontal well's ability to tap multiple lenticular sand bodies, connect reservoirs interrupted by permeability barriers, and reduce near wellbore velocity in highly permeable gas reservoirs.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.
