American Oil and Gas Reporter - January 2012 - 59

Oil & Gas Shales
I think it is clear from the Eagle Ford in South Texas, the
Bakken play in the Williston Basin, and the activity in the Permian Basin in West Texas that these low-quality formations can,
indeed, produce economic volumes of oil using current technology. For now, horizontal drilling and hydraulic fracturing have
been the key technologies that allow the industry to produce
enough oil and gas to be economic. However, other technologies-such as microseismic analyses and real-time fracture treatment analyses-have allowed engineers to see and compute how
a formation is reacting to fracture treatment in real time so that
drilling, completing and stimulating each well can be optimized.

Your career has focused largely on completing and
stimulating wells in unconventional geology. What are the
most critical lessons learned to date in stimulating shale and
tight-sands wells? How would you grade the state of completion
and stimulation practices for these wells today, and how can
stimulation designs be further refined to optimize production and
recoveries-especially as reserves become more liquid?
The most important time in the life of a well completed in
an unconventional reservoir is when the fracture treatments are
pumped. You can have perfect geology and drilling, run the perfect casing string, and build the perfect pipeline, but if the optimum fracture treatment is not designed and pumped, the operator can leave a lot of money on the table. Many times, the
operator does not even know it.
It is possible to have problems in the field that result in a lessthan-optimum fracture treatment. However, the well may still
produce at high flow rates and recover enough oil or gas to make
the investment very attractive, and consequently, the operator is
pleased. However, if the optimum treatment had been pumped,
the return on investment could have been even more.
I have seen too many times when an operator just keeps
pumping the same old treatments because "it seems to be working." However, I have based my career as a production engineer on optimizing both the design and execution of each and
every treatment, and then looking back to learn how to improve
the next treatment.
I recommend that every operator form a well completion and
fracture treatment optimization group that is focused on nothing except analyzing in detail every fracture treatment and the
production data from every well. The operator then should use
this information to continually improve operations on the next
well in the drilling and completion program.

Unconventional reservoirs need "special" processes to
make them commercial, since they cannot produce
economic rates without horizontal drilling, hydraulic fracturing
and other procedures. What kind of technological advancements do
you envision that can improve asset performance materially, slow
decline curves, increase recoveries and reduce costs? Are there
potential game-changing solutions on the horizon that can help
optimize the economics of developing unconventional resources?
Obviously, better technology will be needed in the future,
and I am confident it will come. Right now, drilling, comple-

tion and hydraulic fracturing technologies are adequate, but the
cost of drilling many wells in the Eagle Ford Shale play is $8
million-$10 million or more. This is acceptable when drilling
to hold acreage and the price of oil is $100 a barrel, but much
of the Eagle Ford cannot be developed economically until the
industry figures out how to reduce drilling and completion costs.
At today's natural gas price levels, many areas in the Haynesville Shale are not profitable to drill and complete at current rig and fracture treatment costs. There is a substantial
amount of technically recoverable gas in many formations such
as the Haynesville and Eagle Ford that cannot be produced unless finding and development costs can be reduced, or gas prices
increase.
I am confident costs will come down as competition among
service companies increases and the industry gains more experience. I am certain the industry will continue to develop better
fluids, greener fluids, better proppants and improved techniques
to complete wells at a lower overall cost.
One operational item of importance is that producers can increase recovery by flowing wells on small chokes during the
first few months or years after a fracture treatment, especially
in deep and high-pressured reservoirs. We learned this in deep,
tight gas formations in the 1980s. If you open a well on a large
choke to impress Wall Street or the banker, you put the hydraulic fracture and the formation around the well bore under
its maximum possible stress. When this occurs, the hydraulic
fracture is damaged, as are possibly the natural fractures that
were opened during the fracture treatment. Once damaged, the
flow rates and recoveries will be diminished.

STEVEN FARRIS, ANGA

Demand-Side Forces

Since the development in the first shale gas play-the
Barnett-began in earnest a decade ago, annual U.S.
natural gas production has climbed to an all-time high and
proven reserves have grown by more than 60 percent. How big
of a "game changer" is unconventional gas in the domestic
energy market? What does America's Natural Gas Alliance
believe it means to the future of the natural gas industry, and
what are the broader long-term ramifications for the U.S.
economy?
It is an extraordinarily positive story. Five years ago, the
United States was looking to import upward of $100 billion a
year in natural gas from overseas. In that time, improvements
in drilling technologies have enabled us to unlock vast supplies
of previously unrecoverable natural gas in deep shale deposits
across the country, and we have surpassed Russia as the world's
leading producer of natural gas.
The long-term ramifications of domestic natural gas production to the economy are very promising. Shale gas contributed
$76 billion to the nation's economy in 2010, a number that will
swell to $231 billion by 2035 as development and production
JANUARY 2012 59

American Oil and Gas Reporter - January 2012

Table of Contents for the Digital Edition of American Oil and Gas Reporter - January 2012