American Oil and Gas Reporter - April 2016 - 66

SpecialReport: Drilling Technology
Conventional Renaissance

Wells Target A Variety Of Formations
By Al Pickett
Special Correspondent
Conventional projects may have been
a bit obscured in the oil and gas industry's
collective consciousness in recent years,
overshadowed by their prolific cuttingedge cousins in tight oil and shale gas
plays. However, even as North America's
unconventional revolution was revving
up and gaining speed, plenty of independent producers continued to aim at
traditional geology, often shallow formations drilled with vertical wells.
Now, with low commodity prices throttling back activity in all types of plays, a
number of independents report taking
comfort in the low price tags and risk
profiles associated with vertical drilling
in time-tested conventional formations,
while others are applying "shale" technologies and techniques to conventional
reservoirs in old fields. Some are even
capitalizing on opportunities that are surfacing while other operators take a breather
while waiting for markets to rebalance.
According to John Vance, chief executive officer of Fort Worth-based production data information provider Lasser
Inc., there is still a respectable amount
of vertical drilling in conventional reservoirs around the country. "Not necessarily
only shallow wells, either," he contends.
"They also are drilling into conventional
reservoirs that will drain with a vertical
well."
Vance admits surprise at the results of
his research into the number of vertical
well permits and completions in Oklahoma
and Texas from Jan. 1, 2015, until midFebruary of this year. "It was very educational," he describes. "There are very
few vertical completions in unconventional
plays such as the Eagle Ford and the
Woodford Shale. Historically, they have
not produced much with vertical drilling."
Meanwhile, Vance continues, although
Oklahoma contains thousands of longstanding vertical Mississippian wells, the
majority of new Mississippian Lime wells
continue to be horizontal for reasons of
cost-effectiveness. "Most vertical wells
in other Oklahoma formations are infill
wells into older oil reservoirs," he reports.
"The efficiency of horizontal wells in
unconventional plays simply produces so
66 THE AMERICAN OIL & GAS REPORTER

much more oil per well than vertical
wells. If operators are drilling vertical
wells, they are doing so in conventional
reservoirs with decent porosity and permeability."
In Texas, however, Vance's surprise
arose from the large number of vertical
wells drilled in unconventional formations.
"Historically, everything in the Permian
Basin has produced with vertical wells,"
he relates. "They just get better wells
with horizontals."
More than 13,000 vertical wells were
drilled and completed in Texas in 2015,
the six leading formations for which are
in the Permian Basin. Vance acknowledges
that some of the vertical wells may be
refractures, re-entries, or pilots for horizontal projects.
Another point Vance emphasizes is
the extent to which efficiency has become
the name of the game in today's economic
climate. For example, he observes, the
large amount of water produced from
Mississippian Lime wells has "pinched
economics" in that horizontal play in
Oklahoma. Meanwhile, Vance reasons,
those drilling shallow vertical wells in
conventional reservoirs face challenges,
except on a smaller scale.
"It is much cheaper to drill a vertical
well," he allows. "Operating costs are
lower, but the amount of oil and gas production is far lower, too."
The industry's efficiency improvements
are changing Lasser's observations, he
indicates. Step-change productivity improvements in multiwell pad horizontal
drilling are well documented, but he notes
that the industry continues to make speed
and efficiency strides on all types of
drilling projects. "You can drill a well
twice as fast today as five years ago because of technology," Vance offers. "We
are getting progressively better."
The oil and gas industry always improves efficiencies in difficult times, he
assesses, and that is happening again.
From Texas and the Mid-Continent to
other basins around the country, independents still are finding success drilling
vertical wells in conventional reservoirs.
A Smaller Scale
Nick Powell, president of Colt Energy
Inc., in Fairway, Ks., says his company

is focused on the shallow Squirrel and
Bartlesville oil zones (less than 1,300
feet) east of U.S. Highway 75 in eastern
Kansas.
Powell says Colt and a number of
other small Kansas operators are trying
to maintain a base line of activity in an
effort to retain employees. "We will drill
10 wells this year," he reports. "If prices
get back to the $40 range, we may drill
as many as 15."
According to Powell, Colt's approach
only makes sense. "We are tightening
our belt and trying to take advantage of
lower service costs," he relates. "Drilling
and completion costs have dropped 2030 percent, but that does not make up for
a 60-70 percent commodity price drop.
Service companies cannot stay in the
basement, and we understand that."
As he considers the outlook for the
broader industry, Powell-who also serves
as chairman of the Kansas Independent
Oil & Gas Association-says he worries
about the stress the industrywide slump
has placed on the service and supply
sector. When prices recover, he reflects,
depleted service and supply companies
may lack the wherewithal to suddenly
answer the call.
"It will be a balancing act to handle
the volatility," Powell allows. "We can
hedge our oil to soften some of that."
Old Play, New Technology
EnerVest Operating LLC is taking the
technology it has learned from its horizontal wells in the Utica and Marcellus
plays, and is applying it to conventional
wells in Ohio's Clinton formation.
"We have been actively finding ways
to create value with older conventional
assets in fields that have attributes similar
to the shale plays," explains Barry K.
Lay, senior vice president and general
manager for EnverVest's Appalachia North
Division. "The Clinton is a conventional
sandstone reservoir, but it has the same
characteristics as shale. It is very tight
with low permeability."
According to Lay, the East Canton
Field spans 214,000 total acres, has 3,000
active producing wells, and has produced
100 million barrels of oil since it was
discovered in 1947. However, he says a
2010 Ohio Geological Survey study esti-

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