Home / 2018 / SIMOPs, continuous pumping may help operators create additional value as sizes of well pads expand

SIMOPs, continuous pumping may help operators create additional value as sizes of well pads expand

Scale of unconventional developments means that every single activity must be strictly for purpose, and obtaining social license to operate is critical for success

By Linda Hsieh, Managing Editor

Christophe Amadei is VP Unconventionals for Total, E&P Division.

What do you see as the most critical challenges facing the industry today?

The challenges are around four dimensions: safety, performance, cost efficiency and human resources development.

Christophe Amadei, VP Unconventionals, Total

Christophe Amadei, VP Unconventionals, Total

Within Total, we have identified safety as a value rather than as a priority. That’s because priorities can change due to environmental factors. For us, safety is a pillar on which we build everything else. We manage and control the risks associated with our activities, both for our employees and for the communities in which we undertake these activities. We also minimize their impact for future generations.

Additionally, I am a strong believer that you can’t have good technical or cost performance if you are not also performing well in HSE. Everything goes together.

The second area of challenges is around performance. Our industry is an industry of performance. It’s part of our DNA as engineers and technicians to seek continuous improvement, no matter how much progress we have already made.

Thirdly, performance cannot be disconnected from cost efficiency. We need to bring energy to the world, and we need to do it in the most cost-effective way possible.

Last but not least are human resources. The development of our teams is crucial. In fact, at Total we consider that our true asset is not our fields or acreage but our people. And we have to develop not only the Total team but all the people working with us so they can face the industry’s challenges.

Is the industry doing better on some of these challenges than others?

I think we have no choice but to face all four of these axes at the same time. They are interconnected, and there is not one that is more of a priority than the others. They are all pillars of our industry, and we need to tackle them all.

The industry has been able to quickly respond to the price drop that we encountered in late 2014, and the entire industry has been able to improve its performance significantly. Especially in the world of unconventionals, productivity improvements, along with reductions in HSE events, have been extremely impressive. We are all focused on our HSE goals, and the industry continues to make progress.

As VP of Unconventionals for Total, what role do you see unconventional resources playing in the future for global energy? 

The Vaca Muerta in Argentina continues to be a hot spot for unconventionals for Total. In 2017, the company sanctioned the development of the first phase of the operated Aguada Pichana Este license. Total sees this project as a key milestone in the eastern part of the Aguada Pichana concession, where pilot wells have indicated positive results. The development is also expected to benefit from the use of existing facilities, enabling the production of shale gas at a competitive cost.

The Vaca Muerta in Argentina continues to be a hot spot for unconventionals for Total. In 2017, the company sanctioned the development of the first phase of the operated Aguada Pichana Este license. Total sees this project as a key milestone in the eastern part of the Aguada Pichana concession, where pilot wells have indicated positive results. The development is also expected to benefit from the use of existing facilities, enabling the production of shale gas at a competitive cost.

Your question brings to mind a book by a French writer called “If Only It Were True.” If only it were true that unconventionals could become the new conventional. In fact, I believe that is already true. Some people still see the North American vision of unconventionals, but unconventionals are already a global business. Total, for example, has activities not just in the United States but also in countries like Argentina, where we sanctioned in 2017 the development of the Aguada Pichana Este license in the Vaca Muerta shale play. We are also co-operator with PetroChina in the South Sulige project in the Ordos Basin near Inner Mongolia. In Australia, we’re also partners with Santos to develop a coalbed methane field upstream of the Gladstone LNG project.

As long as our industry can demonstrate that it can face the environmental challenges associated with climate change, which is key to obtaining the social license to operate, I have no doubt that we will see unconventional developments all around the world. They will help us to bring affordable, reliable and clean energy to our customers.

Is the social license to operate especially important with unconventionals?

The dimension of unconventional developments puts a large spotlight on our industry because we are not talking about dozens or even hundreds of wells – we are talking about thousands of wells. In the United States, there are more than 100,000 wells associated within the unconventional revolution. Stakeholders have legitimate questions, and we need to answer those questions in order to get the social license to operate. This license is not a document; it comes with being accepted and you can build trust in what you are doing and the way you are doing it.

The advantages associated with North American unconventionals – low cost, fast cycle times – are well known. Do these same advantages apply for unconventional projects in other parts of the world?

There are four main factors that drove the shale revolution in the US. The first is an excellent knowledge of the subsurface. The second is full and constant political support, which is very important. Third, there is high competition among the contractors, which promotes performance and cost efficiency. Lastly, there are very favorable mining rules, where landowners also own the subsurface resources.

So if you’re asking whether the US shale revolution is repeatable in other geographical zones even if these four main factors are not there, I think we are already demonstrating that through the projects I mentioned earlier – in Argentina, China and Australia. You don’t need to have the same environment that you have in the States to develop unconventional resources in other countries.

However, there are also four challenges that we have to face. These challenges apply to conventional projects, as well, but the dimension of unconventional projects means that these four challenges must be addressed at the same time.

The first challenge is to maximize reserves. With unconventionals, we are not targeting reservoirs – we are creating the reservoirs. The rocks where unconventional resources accumulate are not considered reservoirs because they don’t have the petrophysical characteristics sufficient to flow. We are actually creating the reservoirs through stimulation techniques, creating the optimum stimulated reservoir volume (SRV).

The second challenge is to minimize the costs. This is especially important considering the dimension of unconventional activities. And when I say minimize costs, I don’t mean we sacrifice quality to save on costs. We still have to respect the pillars I mentioned earlier. The concept is to operate strictly for purpose – no more, no less – in every single activity.

This applies to both what we are doing and how we are doing it. What we are doing means we have to define the scope of work to be strictly fit for purpose. The design of our wells, our architecture and our development all have to comply with this concept. How we are doing it is associated with the contractual strategy and promoting positive competition to push for performance and cost efficiency.

The third challenge we have to address is to optimize value creation for all stakeholders. We need to see where the value is created so that no single player is capturing all the potential margins.

This means that we cannot focus on who will take the icing from the cake but on how we can make the cake as big as possible. We have to consider all industry segments – upstream, midstream and downstream – as well as the regulators, the host countries and, in fact, the full value chain. We have to work together to create conditions that will optimize value creation.

The last challenge is ensuring the social license to operate, and this includes taking the environment into account. Grouping wells on pads, for example, is crucial to minimize our impact on the surface. No seismic events underground, no fugitive gas leaks, strictly controlled emissions of greenhouse gases, using recycled or non-potable water whenever possible… We operate with very strict environmental targets.

In which countries do you see the next shale revolution happening?

I think everyone has Argentina in mind as the next one on the list, but as I mentioned, it is already a global business. Are unconventionals economical everywhere? We don’t know yet, but the potential is there. There were favorable factors in the States – especially the competitive market with drilling contractors and service companies. Of course, there will be entry barriers to the development of unconventionals in many countries, but we have to keep in mind the dimension of these developments. We’re not talking about limited traps or sweet spots. We’re talking about huge accumulations and large and continuous acreage. This will, of course, be associated with industrialization.

If you think of a pen, it’s closer to making a Bic than a Montblanc. Or if you think of cars, we are not making concept cars; we are making cars for everyone. By definition, we have to cut to the bone and respect what is strictly necessary.

What are your considerations in terms of performance improvements with your service providers?

What we target is continuous improvement, which ultimately translates into lower cost per barrel. With drilling contractors and service companies, what we need to focus on is performance improvement for the associated costs. It goes back to the same four fundamental pillars I mentioned before. We need to work on the human dimension – having efficient crews and taking advantage of new technologies – not to replace people but to improve their performance. We also have to look at the domain of digitalization – data analytics and artificial intelligence, for example.

What about the ways in which wells are designed, drilled and completed?

It seems that the trend today is going toward longer laterals, bigger fracs, and grouping large quantities of wells per pad. Look at the record lateral length set this year at longer than 19,000 ft, and the pads being drilled in the Permian where they’re grouping up to 64 wells per pad.

I think the next step will be to go to continuous pumping and stimulation. Today, the most common technique is plug and perf – we perforate one cluster, we stimulate it, we plug it and then we perforate a new cluster. But in order to maximize the SRV, we’re promoting the idea of continuous pumping and creating a continuous SRV. Rather than frac and stop, frac and stop, we start fracking from one side of the drain and do continuous stimulation to create a homogenous and continuous SRV. This is a concept we’re pushing across the industry – we don’t want it to be a competitive advantage. I think the whole industry would benefit from being able to create this continuous SRV along the drain, rather than doing it part by part as we are doing today.

Total bought out Chesapeake’s shares in the Barnett Shale in 2016. To emulate successes seen in plays like the Barnett, where the US shale revolution started, operators must find ways to maximize reserves while minimizing costs and ensuring that all stakeholders share in the margins. Further, impact to local communities must be minimized.

Total bought out Chesapeake’s shares in the Barnett Shale in 2016. To emulate successes seen in plays like the Barnett, where the US shale revolution started, operators must find ways to maximize reserves while minimizing costs and ensuring that all stakeholders share in the margins. Further, impact to local communities must be minimized.

What kind of impact could continuous pumping have on field developments in the future?

The industry is grouping large quantities of wells on the same well pad whenever possible, but we need to consider how that is impacting the time it takes for each well to begin producing. If you drill four wells per pad, it’s easy to work in sequence – you can drill your four wells, frac or stimulate them, and then connect and produce from them. But if you have 12, 24 or even 64 wells per pad and you work in sequence, you won’t see production from your first well until you’ve completed the connection of the 64th well. This loss of production can be counted in months or perhaps even years.

A way to create value is to bring on production of the first wells as early as it is available. To do this, we have to do simultaneous operations at a much higher level than what we do today. We need to develop additional SIMOPS techniques, procedures and know-how to be able to do SIMOPs more extensively in the unconventionals. We anticipate that in the coming months and years, SIMOPS could bring a step-change in the way developments are conducted.

So it’s a way of doing things rather than specific technologies?

Yes, but it is associated with technologies – with rig design, frac equipment design, etc. For example, we know how to do SIMOPS on large pads, where drilling activities are on one side and frac jobs are on the other. We now need to find a way of combining activities on a reduced-size pad. Perhaps we could think of an adaptation of the drilling units, the frac units or the wellheads in order to have efficient SIMOPs so that we can bring production online as soon as it is available, not at the end of the well pad completion.

How achievable is that in the near term?

On offshore platforms we are already used to organizing SIMOPs so we can do drilling and production at the same time. Perhaps not in the configuration of the fracs we are doing in the unconventionals, but this is where the industry should work together to face the challenge.

What is your perspective on the industry’s progress with digitalization and automation?

Digital technologies are opening a bright future for our industry. As an example, at Total, we have developed, using data analytics and artificial intelligence, an algorithm tool called smart predictive analytics, or SPA, to better predict production of new and existing wells. It combines data science and geoscience to better identify where to locate new wells and what will be the production of these wells. This is especially beneficial in an environment where we have gas plus condensate to identify fluid composition before drilling the wells.

The oil and gas industry has a reputation for being slow to adopt new technologies. Do you believe that the development and adoption rates of new technologies can be sped up?

If you consider what has happened in the past decade with regards to unconventionals, you would see that we are not a slow industry. And if you look at both the reactivity and proactivity of our industry for the last two and a half years and the significant improvements in the breakevens we’ve achieved, you can also see we are not a slow industry.

We are in a fast-moving environment, and in the coming years I think you will see the uptake of things like SIMOPS, predictive tools and the digitalization of our activities drive significant improvements. DC

About The Author

Linda Hsieh is a graduate of the journalism program at the University of Texas at Austin, where she also completed the Business Foundations program at the U.T. McCombs School of Business and minored in Asian Studies. She has been writing for Drilling Contractor since 2005.

    

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