Mature Fields Ripe For Multi-stage Fracs, Say Producers

By: James Mahony

The success of multi-stage fracturing in northeast British Columbia is driving some producers further afield in search of other reservoirs that might benefit from the technology, Calgary oil and gas executives told a Toronto conference last week.

"Multi-stage fracturing is giving every [oil and gas] operator in the Western Canada Sedimentary Basin an opportunity to do more with what they own," said John Dielwart, president and chief executive officer of ARC Energy Trust. "It's giving us the opportunity to [look at] every asset and say, ‘how can we apply this new technology?’"

Agreeing the technique works best in resource plays, Dielwart said the ability to conduct multiple fracturing along a horizontal well has changed everything in the oilpatch. He and other producer executives were speaking at Peters & Co. Limited's North American oil and gas conference.

"When we drilled our first horizontal well at Dawson, B.C. in 2005, we brought in technology from the North Sea that had never been used in Canada. It worked, but the fracs we're doing today look dramatically different from even four years ago," he said, citing steady advances in fracturing technology.

Widely used in the Montney and in B.C.'s Horn River Basin, multi-stage fracs are now getting mileage in other reservoirs, including the Bakken. Among benefits the technology brings is increased well productivity and the ability to control the frac's reach, he said.

"Right now, we're drilling at Dawson. We drill a well, skid the rig over 20 metres, drill another, and skid it over [again]. We've got less landowner interface and less surface footprint," he said. Among mature fields he cited as candidates for multi-stage fracturing was the Pembina in Alberta, where he said the technology creates a significant, but not yet well-defined opportunity. Alberta's Redwater field could also benefit from the technology, he said.

Yet, even smaller fields might be fit for multi-stage fracturing. In Manitoba, ARC has owned the Goodlands property for three years, and has more than tripled production by adding two or three wells. Multi-stage fracturing has made the difference, and other producers agreed it could mean the difference between making money from a reservoir -- or not.

"We have the ability to get economic rates from historically uneconomic reservoirs," said Dale Shwed, president and chief executive officer of Crew Energy Inc., also active in B.C.'s Montney. "If you drill vertical wells, you won't make money. If you drill horizontals, you will, and you'll [also] reduce full-cycle capital requirements."

Shwed believes there is room for expansion of multi-stage fracs, in addition to geographic expansion. "The number of completion stages per well is basically limitless at the moment. Five hundred ton fracs are quite common in the U.S.," he told the audience of investors and analysts.

At the same time, he said, multi-stage fracs aren't the answer to every problem. In particular, producers that go overboard could run the risk of over-capitalizing their projects, he said.

"More fracs don't always get you what you want. Cost-control and economic viability are important, going forward, and I think technology will help on that front," he said, stressing the importance of geology in assessing whether or not multi-stage is the solution. "While geology is the driving force, not every formation is created equally," he said.

"You have to design your fracs for the reservoir at the time. There are hundreds of different combinations you could use to complete these wells and only time will tell [what works]," he said. Some executives speaking at the conference said costs in the service sector have been falling, but the main result was seen, not in lower bills for fracturing, but in getting more done for the same price.

"It's difficult to [say] how much of the cost savings are coming from the reduced cost of the service and how much from just getting better at it," said Jim Riddell, president and chief executive of Trilogy Energy Trust. Trilogy drilled wells with seven-stage fracs at the end of 2008 and the start of 2009 for $3.5 million each. Recently, the trust drilled two similar wells that cost less than $2.5 million, a reduction Riddell chalks up to experience.

"We got a lot better at it, and through that time, service costs were coming down. We're now back up to $3.5 million wells, but that's because we're doing much larger hole sizes, and we're doing 12-stage instead of seven-stage fracs. We're getting more for our dollar, but the overall cost is still $3.5 million per well," he told the conference.

At Celtic Exploration Ltd., management is also finding that bigger fracturing jobs are cheaper than they were. "We've been running more and more fracs with longer wells, and we've seen service costs come down over the last year," said Celtic president and chief executive David Wilson.

"What we see is that, instead of going with a five-stage frac, we're now up to 11-stage, with longer horizontals. Before, we were averaging 3,500-metre horizontals. Now, we're drilling from pads and whipping out a lot farther. It's not uncommon to have well over 4,000 metres measured depth, with horizontals up to 2,000 metres, and we've been able to keep our costs below $3.2 million" all inclusive, he added.

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