Guest Editorial: Managing Production to Weather the Storm

Abstract

Guest Editorial The recent plunge in oil prices has reinforced a number of truths about our industry. It is cyclical. Declining prices shift spending from capital expense to operating expense models. In depressed markets, operators turn their focus to high-value return on existing assets that meet the price threshold. Operators who successfully harvest production from those existing assets are well-positioned for the inevitable market upturn. While the advent of US unconventional plays has created nothing short of a seismic shift in our industry, these truths at least remain constant. And they all point to one fundamental certainty: In a “bust” cycle, production is king. It pays the bills. It helps keep the wheels of technology innovation turning. It is the foundation on which the next “boom” is built. The challenge, however, is in the approach to and execution of production enrichment programs. Balancing short- and long-term value from a producing asset depends on a long list of variables related to wellbore construction, fluid content, and oil composition. None of these variables exist in isolation. It takes a coordinated, planned approach to production if you want to reduce lifting costs, maximize productivity, and improve cash flow. But too often, planning for the production phase does not happen early enough in the life of a well. From the Beginning Like the smart little pig who built his house of bricks to withstand the wolf’s huffing and puffing, an optimum production management solution begins with initial well construction decisions. Factors such as depth, casing diameter, liner diameter, deviation, and length of the lateral can affect how the well is produced. The most effective production management strategies help operators reap the benefits of better drilling efficiencies and open up more of the reservoir to the wellbore without limiting artificial lift options over the life of the well. That is a tall order when you consider that drilling teams rarely consult production engineers before a well is drilled. Wellbore geometry, particularly in shale plays and other horizontal drilling and hydraulic fracturing operations, can be quite challenging for artificial lift. We have what I will call a space/time conundrum when it comes to production from unconventional wells. Are we drilling wells that have enough space to allow for the maximum production and reserves recovery over time? Unfortunately, too often the answer is no. For example, tight curve sections in horizontal wellbores are, in some cases, planned to save drilling costs and open additional pay zone to the wellbore, but this strategy has traditionally limited artificial lift options. The good news is that technology innovation is keeping up. A new electrical submersible pumping (ESP) system design was recently introduced that makes it possible for ESPs to be installed through deviations of up to 25°/100 ft, which meets or exceeds the capabilities of the industry’s best currently available directional drilling systems.