An Acid Test for Spacing Decisions Complete 44 Wells With 129 Miles of Laterals on a 3×2-Mile Lease in the Midland Basin

Abstract

ConocoPhillips has an increasingly rare opportunity in the Permian—6 square miles of land over multiple layers of prime, undeveloped shale. The scale of this Midland Basin project is huge—44 wells with laterals running the 3-mile length of the lease—as is the company’s patience. Last fall, when a ConocoPhillips panel described the megaproject at the SPE Permian Basin Energy Conference in Midland, they said they were about 70% done with drilling. Fracturing would begin as drilling was ending and would take about 8 months to complete. Only then would the wells in this geologic tank go into production, limiting any interactions with older wells inside the lease lines. However, outside that boundary there are older wells that could interact. Brady Kolb, a staff geologist for ConocoPhillips who led off the panel discussion, explained, “All the zones communicate in some shape or form, so we take the whole tank and deliver it at the same time to maximize resource capture.” The gains come from avoiding harmful interactions with older wells and the depleted zones they create, as well as the rock left undeveloped to create wide buffer zones around parents. In addition, they are deploying innovative technology to reduce fuel costs and emissions, from grid power for two of its five drilling rigs to processing field gas to create the rich gas needed to run fracturing equipment. And they are using the flood of data gathered while drilling to continuously improve work on later wells. On one level, it will certainly succeed. ConocoPhillips needed to begin drilling to hold on to a valuable lease with prime targets in the Wolfcamp and Spraberry formations. “We had a pretty significant drilling obligation on the ranch and had to drill quite a few wells,” said Carl Warren, a senior reservoir engineer for ConocoPhillips, during the Permian conference panel discussion. For ConocoPhillips this is a high-profile example of its approach to maximizing the value of its shale development with longer laterals and graduating all the wells to production at about the same time, also known as “co-development.” “Co-development allows us to minimize the parent-child impacts while improving recovery, as well as capital efficiency. And we’ve demonstrated over the past 4 years, both in the Midland Basin as well as the Delaware Basin, improved performance there,” said Nick Olds, executive vice president Lower 48 for Conoco Phillips during an earnings call last November. ConocoPhillips will complete 129 miles of laterals in a zone that covers 1,300 ft of rock (8,500 to 9,800-ft total vertical depth) within the 3×2-mile area to test what it has learned about placing wells and to maximize the return on investment. Those with long memories are likely to remember past efforts at mass development, known as cube or tank developments. Those were examples of a good concept undermined by a blunder—those pioneers crammed far too many closely spaced horizontal wells into a formation.