North American shale taking over the world?

[thackney]

North American shale taking over the world?
http://www.ogfj.com/articles/print/volume-14/issue-7/features/north-american-shale-taking-over-the-world.html
07/17/2017

THE GROWTH of US shale has an important effect on global oil supply and hence the profitability of large parts of the industry.

There is never a dull moment in the oil market. From 2003 to 2008, oil markets went through the age of resource scarcity when demand was driven upward by Chinese growth, and supply was constrained by underinvestment and contracting OPEC spare capacity. In June 2008, these conditions drove oil prices to $140 per barrel. Shortly thereafter the global financial crisis brought demand and prices crashing down. As the economy recovered in 2009, the US shale oil industry started blossoming. The rig count grew from 876 in June 2009 to 1,931 in November 2014, and US oil production nearly doubled from 5.1 million barrels per day (MMb/d) in January 2009 to 9.5 MMb/d in December 2014. US shale has been a game changer for the US oil industry and turned the US into a crucial player in global oil supply. Pad drilling, longer laterals, and increased intensity led to better well productivity and lower cost per barrel for US shale producers.

INCREASING US IMPORTANCE IN GLOBAL OIL

US shale has become the world's swing producer because it sits lower on the cost curve and has a shorter lead time than other global producers (six to eight months versus three years). For these reasons, US exploration and production (E&P) companies are becoming more important in global oil supply and will provide significant production growth. Within US shale, the Permian Basin has been at the forefront of the revolution. In fact, Rystad Energy stated that the US could now hold more oil reserves than Saudi Arabia due to the potential resources in the Wolfcamp area of the Permian Basin; estimates suggest more than 150 recoverable billion barrels of oil equivalent remain.

Indeed, from a cost curve perspective, the Permian Basin was the only US major shale formation to see production growth since the downturn began in November 2014. We continue to expect strong growth out of the Permian Basin, from around 2 MMb/d today to some 4 MMb/d in 2019. As a result, we are increasingly positive on US E&P companies....

[Joe Wooten]

Obama In 2012: ‘We Can’t Just Drill Our Way To Lower Gas Prices’

The lefties should have this thrown in their faces at EVERY opportunity.

[IsailedawayfromFR]

Indeed, from a cost curve perspective, the Permian Basin was the only US major shale formation to see production growth since the downturn began in November 2014. We continue to expect strong growth out of the Permian Basin, from around 2 MMb/d today to some 4 MMb/d in 2019. As a result, we are increasingly positive on US E&P companies....

I do not like it when some non-industry person pretends to know the industry.

The Permian is a major US shale formation?

What a stupid comment.

[Elderberry]

I do not like it when some non-industry person pretends to know the industry.

The Permian is a major US shale formation?

What a stupid comment.

Are you implying that the Permian Basin is not a major shale play(formation)?

Or do you just don't care for Fujun Wu saying such?

[Smokin Joe]

The lefties should have this thrown in their faces at EVERY opportunity.

That and "It will take ten years before any of that oil gets to market."

But they did do everything they could to stop pipelines and keep the trains from running on time...

[Smokin Joe]

Are you implying that the Permian Basin is not a major shale play(formation)?

Or do you just don't care for Fujun Wu saying such?

It's a biggie. It is pulling drilling money that would likely have gone into Bakken Development from leases held by production there to Texas. Williston Basin rig counts are creeping up, but the Permian is growing a lot faster.

[IsailedawayfromFR]

Are you implying that the Permian Basin is not a major shale play(formation)?

Or do you just don't care for Fujun Wu saying such?

I do not imply anything.

I KNOW that the Permian is

1. not a formation
2. Not a major shale play.

Any other questions?  Get me going now, or I will not like it.

@Elderberry

[Smokin Joe]

I do not imply anything.

I KNOW that the Permian is

1. not a formation
2. Not a major shale play.

Any other questions?  Get me going now, or I will not like it.

@Elderberry

Sure, I'll pipe up and ask. Yep it is a basin, not just a formation. I keep hearing about a big shale play there, so I am open to having that sorted out. What's your take?

[IsailedawayfromFR]

Sure, I'll pipe up and ask. Yep it is a basin, not just a formation. I keep hearing about a big shale play there, so I am open to having that sorted out. What's your take?

What is happening in the Permian is that the largest basin in the US is being redrilled from vertical to horizontal.  That's 90% of it.

I got tired of the Permian boys when I worked on the Williston telling me that what works in ND does not work in the Permian.  Horizontal wells, stage fracs, etc. 

The idiots have finally found out that it does.

The geos that I respect that know both basins tell me that what we did in the Williston will not work in the Permian.  Formations are not continuous in targeted zones, so a lateral cannot be steered like you do in the Bakken.  It will vacillate between shales and carbonates.  Not good.

Most operators are hoping that the laterals will magically 'frac' into the good zones if steered into shales.

That won't happen. We know that, as a frac will not propogate into those malleable shales.

The Permian is overhyped as an unconventional area. 

Some of the zones targeted, like the Bone Springs, have been known for many years, but were never realized as horizontals were no-nos in the Permian. 

The Permian is where the last drop of oil in North America will be produced.  So much oil, there is bound to be some good successes, and it shows.

@Smokin Joe

[Smokin Joe]

@IsailedawayfromFR

Thanks! I have a friend who worked a well down there using mass spec instead of the usual total gas/Chromatograph, and they found a slew of different zones down there that no one had noticed before. That may be the key to navigation, versus just trying to stay in a particular zone by GR. The more tools you hang out there, the harder it is to keep everything working, and the more expensive it is, so someone will have to bite the bullet first and prove the concept. Never easy to persuade people to do, and once you get it to work, you don't necessarily want to tell anyone else or you'll get mobbed.

I am well familiar with the Williston Basin, having been on wells from the Greenhorn to the Granite Wash, and 202 of the wells I worked have been in the Williston. I never worked the Permian Basin though, which is why I asked.

I think the staged frac horizontal concept is probably viable if the target is right in most any unconventional play, with a little frac fluid tweaking and some well design adjustments for the geology involved.

The only time I have intentionally steered in a shale was a 1 foot thick stringer in the middle of a bench in the Three Forks. There was a lot of pyrite in the sandy dolomite near the stringer, and at the top and bottom, but the shale, once we got lined up on it was good, fast drilling until the folks in the office got nervous and ordered us to drill out of the shale stringer into the sandy dolomite, where we trashed another bit and mud motor in short order. With a 6 inch hole that left 4, maybe 5 inches to frac through of hard shale, and I think that one did pretty well.

[IsailedawayfromFR]

@IsailedawayfromFR

Thanks! I have a friend who worked a well down there using mass spec instead of the usual total gas/Chromatograph, and they found a slew of different zones down there that no one had noticed before. That may be the key to navigation, versus just trying to stay in a particular zone by GR. The more tools you hang out there, the harder it is to keep everything working, and the more expensive it is, so someone will have to bite the bullet first and prove the concept. Never easy to persuade people to do, and once you get it to work, you don't necessarily want to tell anyone else or you'll get mobbed.

I am well familiar with the Williston Basin, having been on wells from the Greenhorn to the Granite Wash, and 202 of the wells I worked have been in the Williston. I never worked the Permian Basin though, which is why I asked.

I think the staged frac horizontal concept is probably viable if the target is right in most any unconventional play, with a little frac fluid tweaking and some well design adjustments for the geology involved.

The only time I have intentionally steered in a shale was a 1 foot thick stringer in the middle of a bench in the Three Forks. There was a lot of pyrite in the sandy dolomite near the stringer, and at the top and bottom, but the shale, once we got lined up on it was good, fast drilling until the folks in the office got nervous and ordered us to drill out of the shale stringer into the sandy dolomite, where we trashed another bit and mud motor in short order. With a 6 inch hole that left 4, maybe 5 inches to frac through of hard shale, and I think that one did pretty well.

That was brazen, steering into a shale.  Most people think we want to drill into shales, but you and I know better.  They suck for being drillable or fraccable, generally.

[MajorClay]

Wonder what the drilled but not completed numbers look like these days?  I imagine they have worked through the backlog, looking at the production numbers.

[IsailedawayfromFR]

Wonder what the drilled but not completed numbers look like these days?  I imagine they have worked through the backlog, looking at the production numbers.

@thackney ?

[IsailedawayfromFR]

Wonder what the drilled but not completed numbers look like these days?  I imagine they have worked through the backlog, looking at the production numbers.

Way to many unfracced wells to have worked through them all, I believe.

Takes 10-25 days to frac a well, and there were over 4000 unfracced wells.  That will take some time.....

[Smokin Joe]

That was brazen, steering into a shale.  Most people think we want to drill into shales, but you and I know better.  They suck for being drillable or fraccable, generally.

Yep. This is a pretty hard shale in the Three Forks, but not silicified and cherty like the Vinini over in Nevada, just very well compacted. But the little stringers in there had a skin effect that caused the accumulation of pyrite. That one footer in the middle of the reservoir, once inside, was nearly pyrite free and actually drilled better than that consolidated siliceous dolomite, without the pyrite damage. I figured the perf guns would get through a couple of inches of shale into the reservoir (6 inch hole, 5 inch liner) and the frac would take care of the rest. With trips taking 14 hours (TOH to the curve, displace with heavy weight brine because there is no ECD while tripping, and come out, break out and lay down tools, pick up tools, orient tools, trip in to the curve, displace and save the heavy brine, trip to bottom circulate out gas, and the tool tests along the way) just to wreck a mud motor in 1-2000 feet, it seemed like a good idea at the time. It worked, and that's what counts.

By contrast drilling into the Bakken Shales (upper or lower) means a sidetrack if you aren't extremely lucky, and hole problems if you are. But those are source rock and have a high pore pressure and slough and trap the drill string in a heartbeat. One of the signs you have just made puppies is that the drill rate takes off and WOB goes to nothing. If you're paying attention, you catch that even before you can see the GR go up. Ideally, though, you never end up there.

[IsailedawayfromFR]

Yep. This is a pretty hard shale in the Three Forks, but not silicified and cherty like the Vinini over in Nevada, just very well compacted. But the little stringers in there had a skin effect that caused the accumulation of pyrite. That one footer in the middle of the reservoir, once inside, was nearly pyrite free and actually drilled better than that consolidated siliceous dolomite, without the pyrite damage. I figured the perf guns would get through a couple of inches of shale into the reservoir (6 inch hole, 5 inch liner) and the frac would take care of the rest. With trips taking 14 hours (TOH to the curve, displace with heavy weight brine because there is no ECD while tripping, and come out, break out and lay down tools, pick up tools, orient tools, trip in to the curve, displace and save the heavy brine, trip to bottom circulate out gas, and the tool tests along the way) just to wreck a mud motor in 1-2000 feet, it seemed like a good idea at the time. It worked, and that's what counts.

By contrast drilling into the Bakken Shales (upper or lower) means a sidetrack if you aren't extremely lucky, and hole problems if you are. But those are source rock and have a high pore pressure and slough and trap the drill string in a heartbeat. One of the signs you have just made puppies is that the drill rate takes off and WOB goes to nothing. If you're paying attention, you catch that even before you can see the GR go up. Ideally, though, you never end up there.

We cut a lot of teeth seeing those strays into the UB or LB shales.  Glad I did not have to get up too often at night, as engineers can get sleep. 

[Smokin Joe]

Wonder what the drilled but not completed numbers look like these days?  I imagine they have worked through the backlog, looking at the production numbers.

A little over 800 in the Williston Basin (Bakken/Three Forks), as of 7/14

[Smokin Joe]

We cut a lot of teeth seeing those strays into the UB or LB shales.  Glad I did not have to get up too often at night, as engineers can get sleep. 

LOL! That's what days off are for! 

The thing that will save you from grief, especially where you have structure (and there is more out there than people think, and just where you don't want it) is a good Directional crew. I have met some who were excellent, and others that never should have come nearer the wellhead than the nearest bar. If you get geology and directional working together and both are good, you have it made, and the sidetracks will be few and far between.

The worst I ever saw was six in one lateral (not mine!--and I'm not sure who was driving there), but when we drilled one headed the other direction (South to North, parallel) on an adjacent lease, there was something really screwy going on there. Screwy enough I suspect there was an impact or collapse structure involved. There is an impact structure (Red Wing Creek) about 20 miles west of there, so it isn't so crazy to think a piece spalled off...

[IsailedawayfromFR]

LOL! That's what days off are for! 

The thing that will save you from grief, especially where you have structure (and there is more out there than people think, and just where you don't want it) is a good Directional crew. I have met some who were excellent, and others that never should have come nearer the wellhead than the nearest bar. If you get geology and directional working together and both are good, you have it made, and the sidetracks will be few and far between.

The worst I ever saw was six in one lateral (not mine!--and I'm not sure who was driving there), but when we drilled one headed the other direction (South to North, parallel) on an adjacent lease, there was something really screwy going on there. Screwy enough I suspect there was an impact or collapse structure involved. There is an impact structure (Red Wing Creek) about 20 miles west of there, so it isn't so crazy to think a piece spalled off...

Yep, the directional boys are worth their cost when steering.  Mudloggers too.

[thackney]

Wonder what the drilled but not completed numbers look like these days?  I imagine they have worked through the backlog, looking at the production numbers.

@MajorClay @IsailedawayfromFR

In Nov 2016, the count dropped to the recent low of 4,880 across the major shale plays.
In June 2017, the count has risen to 6,031.  This is an all-time high since the data has been tracked starting Dec 2013.

Drilling Productivity Report
https://www.eia.gov/petroleum/drilling/
DUC data (aggregated by region)

[Joe Wooten]

That and "It will take ten years before any of that oil gets to market."

But they did do everything they could to stop pipelines and keep the trains from running on time...

The major difference with the Permian Basin is that damn near all the necessary infrastructure is already in place.

[Smokin Joe]

The major difference with the Permian Basin is that damn near all the necessary infrastructure is already in place.

Well, we had rail lines, even some pipelines, just not enough for ten times the previous capacity.
The pipe lines were held up by the Obama Administration while Warren Buffett's BNSF rolled up freight profits, and that gravy train didn't end despite protests, until DAPL went into operation (still only enough takeaway capacity for half the Basin's oil production, so BNSF is still making money and the rail terminals are still loading tank cars).