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Optimize your CAPEX now to gain 5 wells’ worth of production with the total expenditure of 4.

Managing CAPEX and quickly getting a positive ROI in shale wells calls for proppants that dramatically boost BOE production from smaller fractures for longer periods.

Deeprop® is custom-engineered to maximize uplift at lower costs by propping open a shale formation’s vast network of secondary fractures. In nearly 200 wells, Deeprop® increased cumulative production by 25%-50%, while allowing operators to achieve payback in as little as 3 months.

We are proposing that you consider pumping DEEPROP® in a slurryin order to reduce costs.

 

We are suggesting the following (based on a 40 stage well):

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  • How efficiently operators use the reservoir pressure impacts the produced gas-oil-ratio, this in turn impacts how much waste gas is flared and vented.

  • DEEPROP® helps flatten GOR ratios by providing a more efficient flow path for fluids in the reservoir.

How efficiently operators use the reservoir pressure impacts their green-house-gas emissions. The lower the pressure efficiency, the higher the amount of CO₂e that is flared or vented per barrel of produced oil. DEEPROP® provides a more efficient flow path for the fluids in the reservoir, improving pressure efficiency, and flattens the gas-oil-ratio; reducing the amount of gas that is flared, or vented per barrel of produced oil.

 

When looking at how successful operating companies are at reducing greenhouse gas (GHG) emissions. I propose using how much pollution is emitted per barrel of hydrocarbons produced; CO₂e/bbl. Most of operators’ greenhouse gas emissions are caused by flaring, venting, or from pneumatic production devices. This is often done on oil, or liquids rich gas, wells to dispose of the cheaper, less valuable gas.


The amount of waste gas that is produced is a function of the solution gas-oil-ratio: the amount of gas that is dissolved in the oil; and the amount of mobile, or free gas, that is produced alongside the oil. There is really nothing that can be done to prevent the production of solution gas, but how efficiently operators utilize the reservoir pressure can impact how much free gas is produced.


flatter GOR profiles have been observed in trial wells treated with DEEPROP® compared to the direct offsets, indicating more efficient use of the reservoir pressure. More efficient use of the reservoir pressure would increase the time it takes to reach the bubble point pressure in the formation; the longer it takes to reach the bubble point pressure in the formation, the longer it would take to reach the critical gas saturation, where free gas becomes mobile. This would reduce the gas-oil-ratio, and in-turn the greenhouse gas emissions per barrel because there would be less gas to flare or vent per barrel of produced fluid.


By using the reservoir pressure more efficiently to lower decline rates and increase the time it takes to mobilize free gas, significant reductions in greenhouse gas emissions per barrel can be achieved. A gas-oil-ratio plot is presented to show what has been observed in trial wells pumped with DEEPROP®.

 

Woodford Tight Oil 9-Well Trial: 200-days, flat GOR profile

A comparison of several operator’s greenhouse gas emissions’ performance per barrel of hydrocarbons produced from 2015-2019 is illustrated below. There is a large difference in green-house-gas efficiency between operators. The data to create the chart was taken from the EPA’s website using company supplied emissions and production data.

 

CO₂e per Barrel Produced for several Permian Operators.

 

DEEPROP® allows operators to utilize the reservoir pressure more efficiently and lowers the producing gas-oil-ratios by slowing down how quickly free gas becomes mobile within the reservoir, this in turn reduces the amount of flaring and venting that is required for each well; lowering greenhouse gas emissions per barrel produced.


Combined with lower decline rates, that reduces the drilling and completions intensity required to maintain production, and lowers the amount of surface equipment required to produce each barrel. Using DEEPROP® can significantly improve green-house-gas efficiency per barrel of produced fluid.


If you would like to learn more about how DEEPROP® can be a solution for your company and lower your decline rates, please get in touch with me or send an email to info@deepropfrac.com


We’re also hosting a booth at URTeC, booth 4600 from July 26-28th! I would encourage you to stop by for a chat, we would love to meet you.


Thanks, and I will see you next week where I will explore how DEEPROP® provides a solution for one of the biggest challenges in the unconventional shale industry.





Updated: Apr 28, 2021

  • A strong base production reduces operators’ dependency on continuous drilling and completing new wells.

  • DEEPROP® lowers decline rates and improves operators’ base production making it less expensive to maintain production.

Operators rely on the expensive practice of continuously drilling and completing new wells because it is impossible to maintain production in unconventional shale otherwise. Trials wells utilizing DEEPROP have shown improvements in production decline rates that make it easier for operating companies to maintain, and grow production, less reliant upon the expensive practice of continuously drilling and completing new wells.

 

In the past, the number of wells that were drilled by a company was determined by a production target, company’s would use type curves to predict, on average, how many wells they needed to drill to hit that target; If they came up short, they could just drill another well. In todays environment, most companies are looking to keep production flat and engineering teams must work within a budget to achieve this.


New technologies and design changes that lower production decline rates make it easier for engineering teams, and lowers the total CAPEX operators need to spend to maintain production. The economic benefit of lower production decline rates are strongly felt in unconventional shale plays, where the production of a new well can decline between +60% in the first year.


This is shown below, where I created a type-curve from 6 oil wells in the Wood Ford and established a development scenario where I would drill 10 wells a year for the first 5-years and then produce them over 10-years, to see how difficult it is to build a substantial production base in a high decline play; it is impossible to maintain production without continuously drilling and completing new wells.

 

Woodford (Shale Oil) Type Well: Trying to Build Base Production

To show how lowering decline rates improves base production, I created a type-curve from 3 oil wells in the Wood Ford that were treated with DEEPROP®. I used the same development scenario where I would drill 10 wells a year for the first 5-years and then produce them over 10-years. Lowering the decline rates by using new technologies, like DEEPROP®, makes it easier to establish a strong production base, reduces the CAPEX to maintain and grow production, and improves the plays economics. A plot of the raw production data is given below to show the relative production profiles between the DEEPROP® and Offset trial wells used to create these type curves.

 

Woodford (Shale Oil) DEEPROP® Type Well: Trying to Build Base Production

 

WoodFord DEEPPROP® trial, cumulative oil production.

 

WoodFord DEEPPROP® trial, Flatter oil production decline.

In an unconventional shale play, if an operating company’s objective is to hit a production target, it is easier and less expensive to hit that target when the wells have lower decline rates; operators can drill and complete fewer wells to maintain and grow the production, lowering costs per barrel.


Lowering decline rates and the resulting incremental production can have a large impact on CAPEX costs; it results in a higher profit, and capital efficiency. To show this, assume the same scenarios laid out in the previous blog; that there is an opportunity to increase the total production i.e., incremental production, by 16%, and it requires an allocation of $200,000 in capital. The CAPEX would increase from $4,000,000, to $4,200,000, the OPEX is; $6.05 per barrel, and assume a market price for oil of; $45.00 per barrel. The new cumulative production would increase from 192,000 barrels to 222,000 barrels. In comparison, assume a reduction in CAPEX of $200,000 can also be achieved; resulting in a CAPEX of $3,800,000, the OPEX would remain the same; $6.05 per barrel and the base production is 192,000 barrels. The values were taken from EOG’s corporate presentation.


The 2-year cost per barrel for the base case is $26.00 dollars per barrel, the 2-year cost per barrel for reducing the CAPEX by $200,000 is $25.00 dollars per barrel, and the 2-year cost per barrel for increasing CAPEX by $200,000 and achieving an incremental production of 16% is $24.00 per barrel; a reduction in costs per barrel from an increase in capital expenditure results in an increase in capital efficiency, a lower cost per barrel, and more profit. A visual comparison is shown below to illustrate this and is summarized in the following table.

 

Increase Productivity, Reduce Cost per Barrel.

In an unconventional shale play, if an operating company’s objective is to hit a production target, it is easier and less expensive to hit that target when the wells have lower decline rates; operators can drill and complete fewer wells to maintain and grow the production, lowering costs per barrel.


Summary of cost per barrel.

In hundreds of trials in 6-major U.S shale plays, DEEPROP® has been shown to reduce production decline rates, allowing operators to establish a stronger production base; less reliant upon the expensive practice of continuously drilling and completing new wells. DEEPROP® lowers the CAPEX costs to maintain, or grow, production by allowing operators to hit production targets with fewer wells and improves the well economics.


If you would like to learn more about how DEEPROP® can be a solution for your company and lower your decline rates, please get in touch with me or send an email to info@deepropfrac.com


We’re also hosting a booth at URTeC, booth 4600 from July 26-28th! I would encourage you to stop by for a chat, we would love to meet you.


Thanks, and we’ll see you next week where I will explore how DEEPROP® works!





  • Investors want to see operators generating a profit.

  • Accelerating recovery and reducing costs do not improve profit as much as incremental production.

  • DEEPROP® incrementally improves production by a significant margin.

Fiscal responsibility is a core focus area in the oil and gas industry post-2014. Engineering teams no longer have unrestricted access capital, and Investors are no longer interested in growth at any cost; they are looking for a return on investment, profit.


The evolution of drilling and completions’ technologies and procedures, post 2014, drove a 46% boost to the cumulative production per lateral foot drilled: 12.2 to 17.7 barrels per-foot; and a 77% cumulative production increase: 61,044 to 108,209 barrels per-well. The industry also achieved a cost reduction of 64%: $128 to $46 per 1-year barrel. Shale operators were able to post lower breakeven pricing, and until 2018, increase production.

 

What WTI oil price does your firm need to profitably drill a new well?

Most cost reduction was achieved with advances in drilling technology; drillers developed high-performance rigs with larger drawworks, mud pumps, top drives, generators, and mast capacity; allowing operators to drill longer laterals, faster. Operational efficiency was improved with real-time automation to set performance targets and quantify the time it takes to perform repetitive drilling tasks; allowing operators to reduce non-productive time, and improve drilling efficiency.


Production improvements were achieved by drilling better prospects, increasing the number of stages, the mass of the proppant pumped, the volume of the fluid pumped and the rate at which the fluid is pumped during the completion. Fluid design has changed from expensive guar based, cross-linked fluids, to cheaper slickwater that is less damaging and enhances proppant delivery to the secondary fracture network.


However, several of these changes only served to accelerate recovery, rather than incrementally improve production. Recovery acceleration increases the rate at which the revenue is collected; incremental production, increases the total amount of revenue. Operators need to understand the design changes that cause acceleration, and those that cause incremental production; then evaluate their designs on the associated costs and revenues.


I want to ask the question: how should operators be allocating their capital, should they be focussing on cost reduction, acceleration, or incremental production?


Assume a CAPEX of $4,000,000 for drilling and completing a well and an OPEX of $6.05 per barrel; the numbers are taken from EOG’s corporate presentation. Assume a market price for oil of $45.00 per barrel, West Texas Intermediate, and a 2-year cumulative production of 192,000 barrels. The profit would be $3,600,000, without applying a discounted rate of return.


Now assume there is an opportunity to reduce CAPEX by $200,000. CAPEX would be $3,800,000, the OPEX would remain the same; $6.05 per barrel, and assume the same market price for oil; $45.00 per barrel. The cumulative production is 192,000 barrels, the profit is $3,800,000; This is an incremental profit of $200,000. Reducing the cost improves the profit by the amount saved in expenditures.


Accelerating production only adds profit through the time value of money, it does not generate additional revenue. Assume there is no time value of money and holding all variables constant; accelerating production would not increase the total revenue earned from a well, it only speeds up the rate that the revenue is collected. Rate acceleration is a dubious proposition for improving profitability – the numbers look bigger initially, but it all adds up to the same amount.


Finally, assume there is an opportunity to increase the total production i.e., incremental production, by 16%, and it requires an allocation of $200,000 in capital. The CAPEX would increase to $4,200,000, the OPEX would remain the same; $6.05 per barrel, and assume the same market price for oil; $45.00 per barrel. The new cumulative production would become 222,000 barrels and the profit would be $4,600,000; an incremental profit of $1,000,000 for a capital investment of $200,000. Allocating capital to incrementally increase production is a wise investment if you want to increase profit.


Productivity improvement i.e., incremental production, can add significant revenue compared to cost reduction or recovery acceleration. As the market price for oil improves, the revenue from improving productivity increases. Below is a bar chart race of the three scenarios explored above, to illustrate how fast incremental production improves profit.

 

Profit Comparisons of Different Development Scenarios

Allocating capital to incrementally improve production is a wise investment. Reducing cost also improves profit but only by the amount that is saved in expenditures. Accelerating production is not effective for improving profit, especially if the methods come at a high cost.


DEEPROP® is a micro-proppant product that has been trialed in 6 major U.S shale plays. The results have been incremental production improvements of between 20-40%. The figure below is a 10-year cumulative oil forecast for a DEEPROP® trial in the Utica. DEEPROP® increased the incremental production per thousand feet of lateral by between 7,000 to 13,000 barrels; an additional revenue of between $315,000 to $585,000 per thousand feet drilled.

 

10 Year Production Forecast: Deeprop® versus Offset

Get in touch with myself or send an email to info@deepropfrac.com for more information on how DEEPROP® can incrementally improve your production. Come visit us at URTeC 2021 | 26–28 July 2021 at the George R. Brown Convention Center; Houston, Texas to learn more about how we can incrementally improve the production of your wells!


In the next blog I will take a deeper look at costs per barrel and how DEEPROP® can reduce greenhouse gas emissions.



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