Shale and other low permeability formations have reversed a 40-year decline in North American oil and gas production and survived a severe price downturn. However, play maturation and exhaustion have led to productivity declines. Technology will determine how the shale revolution progresses, panelists said at CERAWeek by IHS Markit Mar. 12 in Houston.
Most of the oil is still in ground, said Mark G. Papa, Centennial Resource Development Inc. chairman and chief executive officer and founder and former chairman and chief executive officer of EOG Resources, but the industry has “maxed out” its lateral length and optimality of proppant intensity, it has refined the fracturing fluid, it has the proppant type right, “so as I look at the levers the industry can pull today, I’d say we’re in the seventh inning out of a nine-inning game.
“I’m not particularly optimistic that over the next 5 years that the industry is going to be able to show the year over year improvements in well recoveries that we’ve seen over the past 10 years. In fact, I think that we’re going to see evolutionary improvements and not revolutionary improvements,” Papa said.
As the industry has developed the higher quality shales, he said, “on a go forward basis, it’s going to be very hard to show year over year quality improvements in the wells. Obviously, we’re throwing a lot more technology into [operations], and we’re going to have technology improvements, but against that you’ve got degradation in shale quality, you’re got parent well-child well issues, and I’d submit that those factors are going to outweigh technology improvements over time.”
Greg Powers, Halliburton vice-president of innovation took a different view. “We’re in the on-deck circle,” not yet up to bat, he said. Despite the activity and results to date, much remains to be learned.
“There became this learning curve that we went up without actually understanding too many of the fundamentals,” Powers said. The chemistry of hydraulic fracturing, for example, is still a big unknown. “The ultimate recovery is going to end up being a geophysics and a geochemistry question,” he said.
Answers to these questions—potentially through advances in technology—could prolong the expansion of oil and gas production from tight formations.
Thus far, the industry has worked through trial and error. Now it’s moving from experimenting to studying in-situ.
Operators can drill 1,000-ft laterals and hit a target within a couple of feet. Operators know how to stay in the zone and what the zone is, Powers said. Now, they are thinking about getting ahead of the bit. “The future will be looking forward…steering into the best productive zones.”
Moving beyond trial and error may help solve parent well-child well issues, he said. “It’s going to have to be better formation evaluation and understanding, rock dynamics that are hard to predict in shale, we’re going to have to have better in-situ diagnostics and controlled fracturing.” For a little more money, Powers said, operators can run fiber optics in wells while fracturing and assess what happens in the well rather than on the surface.
Centennial’s Papa cited opportunity for improvement in frac-stage efficiency. “A typical fracturing job may involve 50 stages. You run a flow meter afterwards and find only 30 of those stages are producing a reasonable amount of oil. What happened to the other 20? How do we track 50 stages and have the well contributing 50 equal increments of flow coming back? How do you make sure that 50 increments come back and not just 60% of that?”
Among current improvements, Papa said, is secondary recovery. EOG is using huff-and-puff gas injection to improve recovery by more than 50%, he noted, saying he expects recovery factors to rise over time.
Technology breakthroughs could come from a collaboration of exploration and production companies, service providers, and academia, the panelists said. At major oil companies, some of which have taken large positions in tight and gas plays, research and development will push improvements in shale recovery and technology, Papa said—something that wasn’t seen in the first 10 years of shale development. “In the next 10 years [majors] are going to weigh in in a big way, and you can expect to see some significant improvements,” he said. But operators still must weigh that against such obstacles as second and third-tier geologic locations, parent well-child well issues, and reservoir limitations.
Contact Mikaila Adams at [email protected].
