Updated: Apr 14, 2020
OG BRIEF #5
March 5, 2020
Less Crews, More Stages
Last OG BRIEF I wrote about how drillers are setting records in well length. This time around, I’d like to give kudos to my friends...the frac’ers (without a ‘K’, don't be rude).
There's an old adage that in industrial processes, operations can be done safe, cheap, or quick but not all three. Well, that's changing in today's oilfield and I'll cover a little bit on how frac'ing technologies are redefining this.
Compared to last year, US rig count is down roughly 25% while frac crews are down nearly 33%. Years ago, one frac crew could service roughly 2 drilling rigs. But, due to advancements in rig abilities to drill longer wells and frac'ing more stages faster than ever, one frac crew now services about 2.5-3 rigs.
The industry is now frac'ing more than 500,000 stages per year, twice as many stages as in 2010, and 20 times more than in 1970. And all this, while many crews are idle.
The Zipper Frac: Revolutionizing the Shale Revolution
Of course, a fundamental driver for more stages being completed is well design and an increase in number of wells drilled, but at the heart of it is the impact of innovation and efficiency. The dawn of multi-well pads and the "Zipper Frac" has truly revolutionized the business. (Dare I say revolutionizing the Shale Revolution?)
Zipper frac'ing, is simply described in the excerpt below from an SPE paper written by Hemali Patel (and Jeff Wampler, a colleague of mine) which was presented at the Unconventional Resources Technology Conference (URTEC) in 2016.
"Many operators have implemented multi-well completion techniques to maximize operational efficiency, especially in plug and perf designed completions. The most popular method seen to date in multi-well completions is referred to as zipper fracking, where wells are completed in a back and forth manner, one well pumping while the other well is performing wireline operations.
On multiple well pads, the zippering technique is used on horizontal well plug and perf completions. During the pumping operations of a frac stage, wireline is rigged up on an offset well running in hole to set a plug and perforate casing. At the conclusion of the stimulation job, wireline rigs down from the offset well and moves to the next well on the pad to prep for pumping operations. The crews then isolate the wells that have a completed stage and redirect the pumps to frac the well that was just prepared with wireline. The sequence is reminiscent of a zipper closing to link the protruding teeth along the seams of a jacket – one by one each stage is completed in an alternating sequence."
5 Key Trends & Technologies
Below are 5 key trends and technologies that have made frac'ing faster and safer than ever:
Plug-and-perf completions have become widely adopted and efficiencies improved.
Multi-well pads reduce the frequency of crew mobilization and increase synergies.
“Zipper" valve manifolds eliminate the need for redundant rigging up to each well.
Hydraulically controlled remote wellhead valves, greasing systems, and RigLock remove personnel from the high pressure “red zone,” and allow safe simultaneous operations.
Autofueling systems keep frac pump fuel tanks full, saving time and increasing safety by eliminating dangerous “hot fueling” - an obsolete method of fueling while pumping.
These innovations are a win-win for both the operator/producer (the company that owns the well) and the service company (the company that owns the equipment), because it reduces safety risk and cost for both companies while accelerating revenue for the pressure pumping provider (the company that owns the frac pumping trucks) who’s business model is to charge per stage. More stages pumped per day means more revenue with less overhead for them.
However, most of the cost burden is on the producer to pay for these technologies typically provided by third-party service companies not the pressure pumper, but it benefits the pressure pumper just as much, if not more.
One dynamic to watch for is if frac companies start to shift towards a "day-rate” rather than a "stage-rate” charge to offset for slower operators that haven't adopted these efficiency measures and in order to offset overhead losses due to slower or single-well pad operations.
OG BRIEF Podcast
According to Enverus, "There are 819 rigs running in the US as of Feb. 26, which is down by two from a week ago, down by three in the last month and down 247, or 23%, in the last year.
The Anadarko Basin has lost 62% of its active rigs in the last year (down 83 to 51), Appalachia has lost 39% (down 29 to 46), the Gulf Coast Basin including the Eagle Ford has lost 24% (down 29 to 93), and the Williston Basin and DJ Basin have each lost 17% (down 10 to 49 for the Williston; down five to 24 for the DJ).
The Permian has been fairly resilient, dropping only 6% (down 25 to 392). Notably, seven rigs were added in the Permian over the last month. ExxonMobil, Laredo Petroleum and WPX Energy have each added two Permian rigs since the end of January and now have 56, four and seven running in the basin, respectively."