A Conference Note From Jon Gates

Background: Attendees included more than 3,000 representatives from oil and gas companies, oil field service companies, and technology suppliers engaged in the North America and international shale oil and gas industry. The conference featured plenary sessions and scores of specific technical presentations, along with an expo hall with more than 200 companies. OTR Global's notes on the event are combination of presentations and numerous off-mike conversations during the event.

Shale Market: “Efficiency or Bust”
Shale players are entering a new phase of survival going into 2H15 as oil prices remain volatile. While widespread cost cutting and big price reductions across supply chains were in the crosshairs for the past six months, it’s now all about embracing new technologies and practices that can drive further efficiency and production gains. Doing more for less was the key point across the event. Suppliers said attendance was about half of last year’s crowd, with one exhibitor saying the expo floor was like a ghost town compared to 2014.  

A Schlumberger Ltd. vice president at a plenary session pointed at the next layer of technologies that his company was embracing, including integrated drilling systems, integrated completion systems, custom-built technologies and multi-laterals. He also highlighted the company’s next generation of broadband products (diversion technologies for more accurate completions), including broadband sequence (composite fluids) and broadband precision (sliding sleeves and composite fluids), which are expected to show efficiency gains against plug and perf systems.

A vice president with Hess Corp. also in a plenary session emphasized that the company had done all the standard cost cutting (drilling and completions costs down 50%, spud to spud up 50%) but is now embarking on a technology-driven move toward greater efficiencies. He pointed out a new well design utilizing coil tubing in a 50 sliding sleeve stage lateral, technology supplied by NCS Multistage (OTR has cited a growing acceptance of that group’s sliding sleeve technology during the past year), which is a competitive product to Schlumberger’s broadband precision. Both systems provide pinpoint frac accuracies and reduce water (by 25-30% est.) and proppant volumes (by 40% est.), which adds to efficiency.

At a multi-company panel session, General Electric Co., ConocoPhillips, Schlumberger and Baker Hughes Inc. panelists each highlighted which technologies they thought would be most important going forward. GE Energy pushed themes like software analytics, performance optimization, integrated systems, system automation and condition-based maintenance. Conoco emphasized fiber optic cables outside the well casings for real time DAS (distributed acoustic sensing) for premature failure identifications and optimization testing.

There were also numerous presentations and exhibitors supplying analytics, fracturing simulators, nano imaging and other new technologies that are moving toward sub-surface shale operations. As nano imagery has been perfected during the past few years, players like FEI Co. introduced new products (perGeos) at URTeC.

Artificial Lift Expected to Capture Increased Spending
Session panelists identified production-oriented artificial lift technologies as a key investment area for operators, especially ESP (electric submerged pumps) systems. One panelist said, "In the '90s it was drilling; in 2010, it was fracturing. But in the last two years, I’ve been thinking that artificial lift will be the most important. Operators are saying it’s going to be a greater part of their [spending] going forward.” One panelist added, “Operators will be spending tens of millions of dollars on electricity for their artificial lift in the years ahead.”

One of the weakest areas for artificial lift that was talked about is that the systems are not doing a good job pulling production from the toe of the laterals, especially as laterals trend longer and longer. One panelist said the data showed that “75% of the [resource] flow is coming from 30%-40% of the fluid stages.”  Another said there is a “huge variability in how to leverage artificial lift to establish EUR (estimated ultimate recovery).”

Heard It on the Floor:

• One service company technician said he had heard that a major service company may be looking into integrating frac sand into its supply chain.

• A large frac sand mine operator is getting weekly solicitations to purchase frac sand mines that are under duress but still priced too high to make it viable.

• Re-fracs are not happening, according to four sources; one seismic specialist with an international firm said there have been about 30 re-fracs total across the shale regions, and they were problematic.

• A major service group director said operators in Barnett and Haynesville plays are starting to de-book significant resources due to the increased presence of water in their wells.

Is It Sustainable to Pump Large Volumes of Sand?
This technical session was presented by a former Halliburton Co. engineer, now a director with a fracturing consultancy. His presentation compared two direct-offset gas wells (depth 8,600 feet) in the Utica shale play. His basis compared the production output of two wells with the same capex value (cost neutral), though one used ceramic proppant and the other frac sand. Because ceramics cost more than sand on a same-sized well, they reduced the size of the ceramics lateral to compensate. His results showed the ceramics (30/50 mesh) maintaining a greater conductivity and outproducing the frac sand (30/50 and 100 mesh) lateral at the start and after 230 days. He showed similar results in a Marcellus test.

Multi-Stack Laterals
One E&P presented at a technical session, showing a shift in well design theory in the Mississippi Lime formation (Kansas/Oklahoma) where capex was reduced 25% by using a single vertical well bore and branching out into several different laterals at two landing depths within in a 450-foot thick reservoir. They controlled the lateral access points through gateways at the various landing zones, eliminating the need for several vertical bores. Multi-stack laterals were mentioned by two other conference attendees as well.

Area to Watch: Shale Water Propositions
Schlumberger unveiled its xWater fluid delivery service at URTeC, highlighting total water replacement in Bakken and Vaca Muerta shale case studies. Its presentation estimated that shale water (acquisition, transport, storage, disposal, treatment) consumes as much as 25% of shale spending ($9.2 billion of overall $37 billion capex). XWater is a produced water (fluid) that eliminates acquisition, storage, transfer (trucking) and disposal costs. OTR's Shale Water Services spending reports indicate that these costs represent more than 90% of operator expense. The product is targeted at replacing cross-linked gel in oil-rich hydrafrac operations. Tetra Technologies Inc. also showcased some of its shale water distribution infrastructure products at URTeC, some of which were being shipped to Pioneer Natural Resources Co. as that company continues to build out its water infrastructure.