Performance Gains in the Eagle Ford Shale â Customize Your ...
Performance Gains in the Eagle Ford Shale – Customize Your Manufacturing!
DUG Conference September 16, 2014 San Antonio, TX
Building The Resource Factory
SM
Evaluation & Data Capture
Manufacturing & Commercial Capture
Calibration Re-Calibration
Appraisal & Efficiency Capture
Development & Optimization Capture
2
Building The Resource Factory
SM
Evaluation & Data Capture
Manufacturing & Commercial Capture
Calibration Re-Calibration
Appraisal & Efficiency Capture
Development & Optimization Capture
3
Development & Manufacturing Phases Sub-surface Modeling Acquire 3D seismic Prepare integrated 3D geological / reservoir model and update with well data Develop reservoir simulation model & optimize Develop full scale economic models & sensitivities Re-calibrate reservoir performance to sub-surface models
Drilling & Evaluation Work rig efficiencies, optimize pad drilling, capture lessons-learned & time/cost efficiencies Enhance SCM-contractor alliances, sourcing, transportation, yards and offices Utilize 3D visualization for efficient geo-steering
Completions & Production Work completion and frac efficiencies, capture lessons-learned for optimized lateral lengths orientations, stages, spacing and recipe Optimize well counts, patterns and spacing tied to sub-surface models Calibrate production history and logs to sub-surface models Optimize artificial lift and treatment programs
Infrastructure & Marketing Optimize common water management system, facilities and flowlines Fine tune field infrastructure and capacity layouts, costs, schedules Ensure firm capacity commitments and commercial arrangements for transportation, processing and product sales
4
Challenges to Performance Gains What major performance drivers have we identified? How do we deal with the randomness that is inherent to shale plays?
Are we organized to quickly adapt to different areas? What are we doing to ensure we are learning and improving fast enough? Is “manufacturing mode” really what we should strive for?
• What are we preparing to build? 5
Challenges to Performance Gains – Cont. Manufacturing infers “Cookie Cutter”, “Routine” or “Assembly Line”
• Be wary of the division of labor tendency in manufacturing mode • Under-engineered and under-performing wells can result • Manufacturing pace can cause operators to “outrun their headlights”
Challenges to Performance Gains – Cont. To succeed in shale plays, simply reaching manufacturing mode is not good enough! To obtain high performance, we need to “Customize” our manufacturing • Optimize each area, accepting that conditions can change over a short distance • Learn Quickly…. Gain the fastest possible understanding of results • Treat each well as an individual investment that deserves Engineering Rigor • Commit to Optimizing things that add value and Economizing things that don’t
Diligence across all departments is required to ensure that the two are not confused
• Once an area is commercially viable, test the Technical Limits to understand true potential
Customize Your Manufacturing! Customized Manufacturing & Commercial Capture
Efficient Well Placement Using 3D Seismic, Attribute Analysis and Refined Geo-steering
9
Multi-Attribute 3D Visualization & Inversion Target Definition
“Seismic data displayed in this presentation is owned or controlled by CGGVeritas, Global Geophysical Services, Inc., Seismic Exchange, Inc., Seitel Data, Ltd., and Swift Energy Company; interpretation is that of Swift Energy Company” 10
LE Seq. J
Lower Eagle Ford
LE Seq. S
Austin Chalk
Integrated Core and Log Analysis Tied to Inversion Drives Target Optimization
Buda
Target More Brittle Higher TOC Zone Photomicrograph from Rotary SWC Sample 14 – 9,995.9’ TOC (wt%) 5.87
Kerogen (vol%) 12.7
Calcite (vol%)
48
Clay (vol%)
12
Quartz (vol%)
23.1
Pyrite (vol%)
1.7
11
Importance of Geo-Steering & Longer Laterals As Drilled
Ideal Plan
Top of Lower EF
Target Zone
PCQ EF 3H
PCQ EF 3H
Drilling Path Out of zone
PCQ EF 7H
In zone
Buda
Lateral Length (ft)
Stages
3,300
10
6,400
19
PCQ EF 7H
1 Year Cumulative Production
160,000
PCQ 3H IP: 502 Boe/d PCQ 7H IP: 1,742 Boe/d
Boe
120,000 80,000
PCQ EF 3H (Old) PCQ EF 7H (New)
40,000 0 1
31
61
91
121
151
181 211 241 Normalized Days
271
301
331
361
Drilling Efficiency
13
Drilling Performance – Eagle Ford Drilling Well Days
Drilling Well Cost $5.0
45
$5.3
40 Days / Well
$4.5
$4.4
$4.0
$4.0
$3.5 $3.0
$3.1
30
$2.0
15
2012
2013
31 28
25
20
2011
41
35
$2.5
2014
23 2011
2012
2013
2014
Lateral Length Per Well 6,500 Lateral Feet / Well
Well Cost MM$
$5.5
6,410
6,000 5,500 5,000
5,718
5,744
2012
2013
5,268
4,500 4,000 2011
2014 14
Drilling Performance – Drilling Day Reduction 2010-2014 Add Days 50 40
Days
30 20 10 0
Save Days
Drilling Performance – Enhanced Target Zone
120'
120' Target Zone 50% In Target Zone
100'
100' Target Zone 70% In Target Zone
40'
40' Target Zone 95% In Target Zone Highest Quality Rock
30'
30' Drilling Target
Drilling Efficiencies – One Rig Year Lateral Length Increase Wells Per One Rig Year
120,000
18 16
Wells / Rig Year
12
12
10
13
9
6
2011 Lateral Length Longer Lateral Drilling Efficiencies
100,000 Lateral Feet / Rig Year
16
14
8
(Lateral Feet / One Rig Year)
102K 80,000 74K
60,000
40,000
67K
46K
4 20,000
2 0
-
2011
2012
2013
2014
2011
2012
2013YTD2014
Completion & Stimulation Efficiency
18
Major Performance Drivers / Learnings Longer Laterals are cost effective
• Extra drilling time is minimal • Additional frac stages, if properly designed, are worth the investment
Allows placing more proppant per foot of lateral Increases stimulated reservoir volume
Improved completion processes are cost efficient
• Streamlined toe prep operation saves $180k per well • Improved coil tubing drill out process saves $150k/well • Improved efficiency results in additional producing days within a budget cycle
19
Major Performance Drivers / Learnings Logging Laterals allows completions to be fully engineered and Customized
• Significant variability in rock quality is seen along the laterals • Allows selectively perforating and grouping quality pay sections • Allows larger more aggressive frac jobs • Prevents waste associated with completing in lower quality intervals
• Often eliminates one to two frac stages per well
20
Start with the Rock – Engineered Completions Geometric Frac Design – 3 Frac Stages
ΔpsiFG= 1,175
Customized Frac Design – 2 Frac Stages ΔpsiFG= 80
Frac Gradient, psi/ft Stage 5 SPF perforation Cluster (8/stage) Frac Plug (zonal isolation)
ΔpsiFG= 77
Benefits of Current Engineered Frac Design & Lateral Length
• Open hole logging allows
Geometric Frac
optimal grouping and perforating of frac intervals resulting in -
• Higher probability that each
cluster gets stimulated • Higher sand concentration and enhanced conductivity • Higher sand volumes and improved complexity
Engineered Frac
• Improved stimulated reservoir volume Graphics are for presentation purposes only and do not depict all relevant geologic and engineering information.
Significantly Improved Operating Metrics Average Proppant/Stage (Lbs./Lateral ft.) Average Frac Stages 1,500
$6 1,240
1,250
20
970
1,000
880 790
750
Average Completion Well Cost ($MM)
16
5.3 4.2
4.0
2013
2014 YTD
$4
18
$3
15
500
$2
250
$1
0
$0
2011
4.8
$5
2012
2013
2014 YTD
2011
2012
Benefits of Customization – Fasken Gas 2,500
Cum. Gas Production (MMscf)
2,000 Customized Design
1,500 Enhanced Design
1,000 Original Design
500
0 0
30
60
90
120
150
180
Days 24
Fasken Results Exceeding Expectations Lateral Length (ft.) D&C Cost ($MM) EUR (Bcf) IP (MMcf/d) NPV (MM) IRR (%)
5,700 7,200 $8.30 $7.50 ` 6-9 ` 10-15 12 20 $3.5-$7.9 $10.3-$19.3 38-81% >100%
10 BCF EUR D&C ($MM)
Model
IRR Sensitivity (D&C & Henry Hub Price)(1)
Assumptions(1)
$6.50 $7.00 $7.50 $8.00 $8.50
$3.50 96% 78% 64% 54% 45%
$4.00 143% 116% 96% 81% 68%
$4.50 200% 164% 136% 114% 97%
$5.00 272% 222% 184% 154% 131%
Mcf/d
Enhanced Fasken Well Results (2) 24,000 20,000 16,000 12,000 8,000 4,000 0 0
15
30
45
60
75
Days on Production (1) Based on SFY internal calculations at $94/$4.50, does not include JV carry. (2) Production occasionally restricted by line pressures, shut-ins, operations, and facilities maintenance. For presentation purposes, production history recorded after final production test. Represents wells drilled with enhanced design prior to 1Q14.
90
Benefits of Customization – AWP Oil 100,000
Original:
90,000
5,700' Lateral / 16 stages 7.2 MM lbs
Cumulative Production - Boe
Enhanced: 6,000' Lateral / 20 stages 80,000
7.9 MM lbs.; + 4,000 Boe vs. Original
Customized: 5,600' Lateral / 18 stages
70,000
7.2 MM lbs.; +5,000 Boe vs. Enhanced
60,000 50,000 40,000 30,000 20,000 10,000
0 0
30
Days
60
90 26
AWP Eagle Ford Oil Delivering Strong Results IRR Sensitivity (D&C & EUR)(1)
Lateral Length (Ft). D&C Cost (MM$) EUR (Mboe) IP (Mboe/d) NPV (MM$) IRR (%)
Original 5,152 $9.00 320-370 855 $0.6-$2.1 11-20%
Enhanced 6,244 $7.10 413-463 1,120 $5.0-$6.6 60-93%
D&C ($MM)
Model Assumptions(1)
$6.5 $7.0 $7.5 $8.0 $8.5
EUR MBoe 400 450 78% 114% 63% 87% 48% 70% 40% 58% 32% 46%
350 51% 42% 32% 27% 21%
500 164% 121% 98% 81% 64%
Enhanced AWP Eagle Ford Oil Results(2) 1,250
Boe/d
1,000 750 500 250 0 0
15
30
45
Days on Production
60
75
90
(1) Model assumptions based on PCQ area wells for Illustrative Purposes, Based on SFY internal calculations at $94/$4.50. (2) For presentation purposes, production history recorded after final production test. Represents wells drilled with enhanced design prior to 2Q14.
Summary and Recommendations Be careful of the “manufacturing mode” concept
• Typically associated with mass production and cookie cutter approach • Under-engineered / under-performing wells can result • Easy to “outrun your headlights”
Accept that conditions may change over short distances • Agree to learn and optimize each area independently
• No single approach will work in all areas Devise ways to gain earliest possible understanding of results
• Requires involvement of all disciplines • Organization must be nimble • Develop and document best practices early
Write down what you know when you know it Although counter-intuitive…best practices should be constantly changing 28
Summary and Recommendations – Cont. Once an area is deemed viable, test the Technical Limits to understand true potential
Customize Your Manufacturing!!
29
Performance Gains in the Eagle Ford Shale – Customize Your Manufacturing!
DUG Conference September 16, 2014 San Antonio, TX
DUG Conference September 16, 2014 San Antonio, TX
Building The Resource Factory
SM
Evaluation & Data Capture
Manufacturing & Commercial Capture
Calibration Re-Calibration
Appraisal & Efficiency Capture
Development & Optimization Capture
2
Building The Resource Factory
SM
Evaluation & Data Capture
Manufacturing & Commercial Capture
Calibration Re-Calibration
Appraisal & Efficiency Capture
Development & Optimization Capture
3
Development & Manufacturing Phases Sub-surface Modeling Acquire 3D seismic Prepare integrated 3D geological / reservoir model and update with well data Develop reservoir simulation model & optimize Develop full scale economic models & sensitivities Re-calibrate reservoir performance to sub-surface models
Drilling & Evaluation Work rig efficiencies, optimize pad drilling, capture lessons-learned & time/cost efficiencies Enhance SCM-contractor alliances, sourcing, transportation, yards and offices Utilize 3D visualization for efficient geo-steering
Completions & Production Work completion and frac efficiencies, capture lessons-learned for optimized lateral lengths orientations, stages, spacing and recipe Optimize well counts, patterns and spacing tied to sub-surface models Calibrate production history and logs to sub-surface models Optimize artificial lift and treatment programs
Infrastructure & Marketing Optimize common water management system, facilities and flowlines Fine tune field infrastructure and capacity layouts, costs, schedules Ensure firm capacity commitments and commercial arrangements for transportation, processing and product sales
4
Challenges to Performance Gains What major performance drivers have we identified? How do we deal with the randomness that is inherent to shale plays?
Are we organized to quickly adapt to different areas? What are we doing to ensure we are learning and improving fast enough? Is “manufacturing mode” really what we should strive for?
• What are we preparing to build? 5
Challenges to Performance Gains – Cont. Manufacturing infers “Cookie Cutter”, “Routine” or “Assembly Line”
• Be wary of the division of labor tendency in manufacturing mode • Under-engineered and under-performing wells can result • Manufacturing pace can cause operators to “outrun their headlights”
Challenges to Performance Gains – Cont. To succeed in shale plays, simply reaching manufacturing mode is not good enough! To obtain high performance, we need to “Customize” our manufacturing • Optimize each area, accepting that conditions can change over a short distance • Learn Quickly…. Gain the fastest possible understanding of results • Treat each well as an individual investment that deserves Engineering Rigor • Commit to Optimizing things that add value and Economizing things that don’t
Diligence across all departments is required to ensure that the two are not confused
• Once an area is commercially viable, test the Technical Limits to understand true potential
Customize Your Manufacturing! Customized Manufacturing & Commercial Capture
Efficient Well Placement Using 3D Seismic, Attribute Analysis and Refined Geo-steering
9
Multi-Attribute 3D Visualization & Inversion Target Definition
“Seismic data displayed in this presentation is owned or controlled by CGGVeritas, Global Geophysical Services, Inc., Seismic Exchange, Inc., Seitel Data, Ltd., and Swift Energy Company; interpretation is that of Swift Energy Company” 10
LE Seq. J
Lower Eagle Ford
LE Seq. S
Austin Chalk
Integrated Core and Log Analysis Tied to Inversion Drives Target Optimization
Buda
Target More Brittle Higher TOC Zone Photomicrograph from Rotary SWC Sample 14 – 9,995.9’ TOC (wt%) 5.87
Kerogen (vol%) 12.7
Calcite (vol%)
48
Clay (vol%)
12
Quartz (vol%)
23.1
Pyrite (vol%)
1.7
11
Importance of Geo-Steering & Longer Laterals As Drilled
Ideal Plan
Top of Lower EF
Target Zone
PCQ EF 3H
PCQ EF 3H
Drilling Path Out of zone
PCQ EF 7H
In zone
Buda
Lateral Length (ft)
Stages
3,300
10
6,400
19
PCQ EF 7H
1 Year Cumulative Production
160,000
PCQ 3H IP: 502 Boe/d PCQ 7H IP: 1,742 Boe/d
Boe
120,000 80,000
PCQ EF 3H (Old) PCQ EF 7H (New)
40,000 0 1
31
61
91
121
151
181 211 241 Normalized Days
271
301
331
361
Drilling Efficiency
13
Drilling Performance – Eagle Ford Drilling Well Days
Drilling Well Cost $5.0
45
$5.3
40 Days / Well
$4.5
$4.4
$4.0
$4.0
$3.5 $3.0
$3.1
30
$2.0
15
2012
2013
31 28
25
20
2011
41
35
$2.5
2014
23 2011
2012
2013
2014
Lateral Length Per Well 6,500 Lateral Feet / Well
Well Cost MM$
$5.5
6,410
6,000 5,500 5,000
5,718
5,744
2012
2013
5,268
4,500 4,000 2011
2014 14
Drilling Performance – Drilling Day Reduction 2010-2014 Add Days 50 40
Days
30 20 10 0
Save Days
Drilling Performance – Enhanced Target Zone
120'
120' Target Zone 50% In Target Zone
100'
100' Target Zone 70% In Target Zone
40'
40' Target Zone 95% In Target Zone Highest Quality Rock
30'
30' Drilling Target
Drilling Efficiencies – One Rig Year Lateral Length Increase Wells Per One Rig Year
120,000
18 16
Wells / Rig Year
12
12
10
13
9
6
2011 Lateral Length Longer Lateral Drilling Efficiencies
100,000 Lateral Feet / Rig Year
16
14
8
(Lateral Feet / One Rig Year)
102K 80,000 74K
60,000
40,000
67K
46K
4 20,000
2 0
-
2011
2012
2013
2014
2011
2012
2013YTD2014
Completion & Stimulation Efficiency
18
Major Performance Drivers / Learnings Longer Laterals are cost effective
• Extra drilling time is minimal • Additional frac stages, if properly designed, are worth the investment
Allows placing more proppant per foot of lateral Increases stimulated reservoir volume
Improved completion processes are cost efficient
• Streamlined toe prep operation saves $180k per well • Improved coil tubing drill out process saves $150k/well • Improved efficiency results in additional producing days within a budget cycle
19
Major Performance Drivers / Learnings Logging Laterals allows completions to be fully engineered and Customized
• Significant variability in rock quality is seen along the laterals • Allows selectively perforating and grouping quality pay sections • Allows larger more aggressive frac jobs • Prevents waste associated with completing in lower quality intervals
• Often eliminates one to two frac stages per well
20
Start with the Rock – Engineered Completions Geometric Frac Design – 3 Frac Stages
ΔpsiFG= 1,175
Customized Frac Design – 2 Frac Stages ΔpsiFG= 80
Frac Gradient, psi/ft Stage 5 SPF perforation Cluster (8/stage) Frac Plug (zonal isolation)
ΔpsiFG= 77
Benefits of Current Engineered Frac Design & Lateral Length
• Open hole logging allows
Geometric Frac
optimal grouping and perforating of frac intervals resulting in -
• Higher probability that each
cluster gets stimulated • Higher sand concentration and enhanced conductivity • Higher sand volumes and improved complexity
Engineered Frac
• Improved stimulated reservoir volume Graphics are for presentation purposes only and do not depict all relevant geologic and engineering information.
Significantly Improved Operating Metrics Average Proppant/Stage (Lbs./Lateral ft.) Average Frac Stages 1,500
$6 1,240
1,250
20
970
1,000
880 790
750
Average Completion Well Cost ($MM)
16
5.3 4.2
4.0
2013
2014 YTD
$4
18
$3
15
500
$2
250
$1
0
$0
2011
4.8
$5
2012
2013
2014 YTD
2011
2012
Benefits of Customization – Fasken Gas 2,500
Cum. Gas Production (MMscf)
2,000 Customized Design
1,500 Enhanced Design
1,000 Original Design
500
0 0
30
60
90
120
150
180
Days 24
Fasken Results Exceeding Expectations Lateral Length (ft.) D&C Cost ($MM) EUR (Bcf) IP (MMcf/d) NPV (MM) IRR (%)
5,700 7,200 $8.30 $7.50 ` 6-9 ` 10-15 12 20 $3.5-$7.9 $10.3-$19.3 38-81% >100%
10 BCF EUR D&C ($MM)
Model
IRR Sensitivity (D&C & Henry Hub Price)(1)
Assumptions(1)
$6.50 $7.00 $7.50 $8.00 $8.50
$3.50 96% 78% 64% 54% 45%
$4.00 143% 116% 96% 81% 68%
$4.50 200% 164% 136% 114% 97%
$5.00 272% 222% 184% 154% 131%
Mcf/d
Enhanced Fasken Well Results (2) 24,000 20,000 16,000 12,000 8,000 4,000 0 0
15
30
45
60
75
Days on Production (1) Based on SFY internal calculations at $94/$4.50, does not include JV carry. (2) Production occasionally restricted by line pressures, shut-ins, operations, and facilities maintenance. For presentation purposes, production history recorded after final production test. Represents wells drilled with enhanced design prior to 1Q14.
90
Benefits of Customization – AWP Oil 100,000
Original:
90,000
5,700' Lateral / 16 stages 7.2 MM lbs
Cumulative Production - Boe
Enhanced: 6,000' Lateral / 20 stages 80,000
7.9 MM lbs.; + 4,000 Boe vs. Original
Customized: 5,600' Lateral / 18 stages
70,000
7.2 MM lbs.; +5,000 Boe vs. Enhanced
60,000 50,000 40,000 30,000 20,000 10,000
0 0
30
Days
60
90 26
AWP Eagle Ford Oil Delivering Strong Results IRR Sensitivity (D&C & EUR)(1)
Lateral Length (Ft). D&C Cost (MM$) EUR (Mboe) IP (Mboe/d) NPV (MM$) IRR (%)
Original 5,152 $9.00 320-370 855 $0.6-$2.1 11-20%
Enhanced 6,244 $7.10 413-463 1,120 $5.0-$6.6 60-93%
D&C ($MM)
Model Assumptions(1)
$6.5 $7.0 $7.5 $8.0 $8.5
EUR MBoe 400 450 78% 114% 63% 87% 48% 70% 40% 58% 32% 46%
350 51% 42% 32% 27% 21%
500 164% 121% 98% 81% 64%
Enhanced AWP Eagle Ford Oil Results(2) 1,250
Boe/d
1,000 750 500 250 0 0
15
30
45
Days on Production
60
75
90
(1) Model assumptions based on PCQ area wells for Illustrative Purposes, Based on SFY internal calculations at $94/$4.50. (2) For presentation purposes, production history recorded after final production test. Represents wells drilled with enhanced design prior to 2Q14.
Summary and Recommendations Be careful of the “manufacturing mode” concept
• Typically associated with mass production and cookie cutter approach • Under-engineered / under-performing wells can result • Easy to “outrun your headlights”
Accept that conditions may change over short distances • Agree to learn and optimize each area independently
• No single approach will work in all areas Devise ways to gain earliest possible understanding of results
• Requires involvement of all disciplines • Organization must be nimble • Develop and document best practices early
Write down what you know when you know it Although counter-intuitive…best practices should be constantly changing 28
Summary and Recommendations – Cont. Once an area is deemed viable, test the Technical Limits to understand true potential
Customize Your Manufacturing!!
29
Performance Gains in the Eagle Ford Shale – Customize Your Manufacturing!
DUG Conference September 16, 2014 San Antonio, TX
