Updated: Jun 26, 2020
OG BRIEF #4
February 20, 2020
Milestones in Horizontal Drilling
In horizontal Shale well drilling, the terminal depth of a well is called the “toe,” while the section near the curve of the "lateral" is called the “heel.” A decade ago, lateral lengths were drilled at about a mile or less. Today, thanks to advancements in technology, rig capabilities, new learnings, and land configurations, drilling multi-mile laterals is not uncommon and the trend continues to grow across each basin, each quarter.
Quite a milestone in industry, and kudos to US drillers.
Impacts of Lateral Length
I often speak to clients who ask about macro trends and impacts on the upstream business. "Lateral length", the section from toe-to-heel, is quite important because it can be directly correlated with production. As you drill longer wells, more oil & gas can be produced, a fundamental driver in draining shale resources with less wells, and a smaller surface impact.
The key here is that more oil can be produced with LESS wells. So what does this mean?
As investors continue to demand capital austerity, one solution is to drill less wells but longer in length. This is because, especially in prolific reservoirs, return on capital employed (ROCE) for additional lateral length drilled has proven to be significantly greater than many other well design factors.
However, longer wells do come with their own complexities and risks that certainly increase with length. There are risks of getting stuck while drilling, difficulties in targeting the geologic pay-zone, running casing to bottom, cementing casing in place, increasing number of interventions or “trips" needed for plug-and-perf completions, milling of those plugs, in addition to limitations on plug milling reach, and potential risks to production from undulating wells or obstructions from sand or debris.
There have been huge advances in technologies that have helped solve many of these challenges, and engineers continue to prove that longer wells are viable to producing more from less wells: a key trend in 2020.