Don’t Miss the Unconventional Resource Revolution’s Next Wave
Posted by D Nathan Meehan June 30, 2015

Why Strategic Well Rejuvenation is the Key to Sustained Profitability in

Today’s Oil and Gas Market

This blog entry was originally published as a white paper by Baker Hughes and was authored by H. C. Freitag and his team.

ABSTRACT

In the North American shale plays, the most popular approach to developing assets is built on a cycle of repeatedly drilling, completing, and fracturing wells. As production from older wells declines, new wells are drilled and stimulated so operators can maintain constant production streams to meet their revenue targets. And because unconventional production rates decline so quickly that a well can become uneconomic in as little as 18 months, this cycle tends to repeat itself in rapid succession.
As a result, most E&P companies working in these plays are burdened with a business model that requires them to recoup all of a well’s CAPEX costs in a short period of time—leaving as much as 90% of a well’s potential production untapped. And in today’s climate of depressed oil prices, that model is both unprofitable and unsustainable.
Faced with this reality, many operators believe they have to choose one of three options just to stay in the game:

  • Keep drilling and completing more wells, trying to manage until production declines to uneconomic levels
  • Continuing to produce at low rates, hoping for oil prices to rebound
  • Practicing the “pump and pray” approach, restimulating wells and getting inconsistent results.

But there is a fourth option. And in many cases, it is a better option.
By adopting data-driven processes, following best practices, and constructing better, refrac-ready wells versus drilling more wells, operators can reinvent their business models for unconventional assets.
This white paper details the process of strategic well rejuvenation—a data-driven, science-based method that helps operators understand the reservoir rock, uncover the reasons behind poor well performance, and identify and implement the most profitable well rejuvenation programs.

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Traditionally, the short life of an unconventional well meant that all of its costs—including construction and infrastructure—had to be recouped quickly, thereby increasing lifting costs. In comparison, the lifting costs from the incremental production of a rejuvenated well benefit from the elimination of many start-up costs.

STRATEGIC WELL REJUVENATION: IMAGINATION IN A DEPRESSED MARKET

Well rejuvenation is the process of restoring production in existing wells through methods that can include wellbore cleanup, chemical treatments, artificial lift, or recompletion and restimulation. Already, the industry has seen positive results from rejuvenation projects that have generated production rates that equal or even exceed the well’s initial peak production, often with less rapid decline rates. And as oil prices plummet, rejuvenation is gaining more traction with operators in unconventional plays.
The simple truth, however, is that not every well is a good candidate for rejuvenation.
With thousands of potential rejuvenation candidates, success depends on selecting only the right ones. The strategic well rejuvenation process helps operators do just that, giving them answers to some critical questions:

  • Which wells have the greatest potential to be restored to, and to even exceed, initial production levels?
  • Which wells offer the least risk?
  • What are the optimal selection criteria in choosing a candidate well?
  • What is the most effective means for rejuvenating the well?
  • Is the desired rejuvenation treatment method economically feasible?

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By restoring connections to previously stimulated intervals and tapping into zones that were missed by the initial completion and stimulation, a successful strategic well rejuvenation project can not only restore–and potentially increase–production, but also decrease the slope of the decline curve, thus improving ultimate recovery and extending the well life cycle.

The process follows four prescribed steps:
1. Screen and select candidate wells; wells with the greatest production potential
2. Diagnose the condition and specific rejuvenation needs of each of those wells
3. Prescribe the optimal rejuvenation treatment
4. Execute the rejuvenation treatment at the wellsite

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In the next entry we will look at four steps to “make it happen”

ABOUT THE AUTHOR

Hans-Christian Freitag is Vice President of Integrated Technology for the
Global Products and Services group at Baker Hughes. He joined Atlas Wireline Services in 1989 and has worked in operations, geoscience, and management positions around the world. In 2002, he moved to Baker Hughes INTEQ and oversaw the development and market introduction of advanced logging while drilling technology. From 2005 to 2008 he was responsible for formation evaluation in North America. From 2008 to the end of 2013 he held a number of senior and executive management positions with
Baker Hughes in the Middle East and Asia Pacific. Before assuming his current role, he was Vice President for the Unconventional Resources group in the Eastern Hemisphere. He has authored publications on open-hole and cased-hole formation evaluation for the Society of Petrophysicists and Well Log Analysts and the Society of Petroleum Engineers. Freitag holds an MSc in Geophysics and a BSc in Physics from TU Berlin
and TU Clausthal in Germany.

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