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The world of oil and gas was quite a different place
a quarter century ago. Production mostly came straight up out of vertical
holes. Though the Texans had drilled the first horizontal well in 1929, in
Canada horizontal drilling was still mostly an esoteric, unproved and
untested technology.
In 1987, all that began to change – so much so
that, during the last 25 years, it simultaneously emerged as a standard
production technique and revolutionized production. One result is that many
petroleum resources have become technology-driven plays. Another is that
reserves are way, way up.
In a sense, the most important uses of horizontal
drilling technologies are reverse images of each other. “What makes
horizontal drilling for nonconventional resources (like shale gas and tight
oil) so attractive to the financial community is the very high initial rate
of return. In the beginning, production rates are extremely high, although
they quickly taper off. You have to remember that these applications enable
you to get highly desirable hydrocarbons out of really poor
reservoirs,” according to Dave Russum, who is
director of geosciences at AJM Deloitte, a consultancy.
The oilsands represent the
mirror image of this situation. “You are drilling into tremendous
reservoir rocks – highly porous and very permeable, so there’s
plenty of oil in there. But until you process the stuff it isn’t a
particularly attractive commodity.”
The Bitumen Story
It’s true that in April 1978 Imperial Oil
drilled Canada’s first horizontal well into the Clearwater formation at
Cold Lake – a storied well overseen by Dr. Roger Butler in an early
test of a system of oilsands production now known
as steam-assisted gravity drainage (SAGD). After that test and a less
interesting effort by Texaco a couple of years later, in Canada the technique
mostly languished until 1987.
Then the advent of improved down-hole drilling
motors and the invention of other necessary supporting equipment, materials,
and technologies – particularly down-hole telemetry equipment, which
enabled rigs to drill straight on target – led to an explosion of new
applications for this technology. Producers and the drilling and service
firms that support them found endless new uses for directional drilling
– especially as it is used for horizontal
wells.
Appropriately, in Canada the first horizontal wells
drilled after Imperial’s early test were part of the Underground Test
Facility (UTF), which celebrated its official opening on June 29th,
1987. Developed by the Alberta Oil Sands Technology and Research Authority
(AOSTRA), the UTF involved a pair of tunnels driven into limestone 15 metres below the reservoir.
Within those tunnels, AOSTRA constructed large well
chambers. “Pairs of injection and production wells were drilled upwards
from the well chambers at a 170 slant,” according to the
mining engineer behind the project, Gerry Stephenson, “and deflected
horizontally into the base of the reservoir. The mobilized bitumen drained by
gravity from the steam chamber in the reservoir to the well head in the
tunnel and all of the production was pumped from a central location.”
Those tests proved Butler’s theories about SAGD beyond any possible
doubt.
Over its 15-year life, the UTF also evaluated other
recovery strategies, but nothing compared to its SAGD results.
“AOSTRA’s staff had estimated that the recovery might be
somewhere between 30 percent and 45 percent of the bitumen in place”
during the Phase A tests, according to Stephenson. “We actually got 65
percent recovery. The steam chambers formed by mobilization of the bitumen
spread way beyond the area we’d expected….Over the 10-year life
of the well pairs, Phase B got a steam/oil ratio, the most critical figure of
all, of 2.3 to one.”
The tests at the UTF forever transformed
Canada’s oilsands industry. Today, SAGD is
responsible for more than half of Canada’s bitumen production.
Ironically, Sceptre
Resources drilled the first horizontal well in Saskatchewan to test a
SAGD-like system at Tangleflags, just as the UTF
began its definitive tests. Drilled into the shallow (450-metre) Lloydminster
sandstone, this primitive application of a form of SAGD illustrated the kinds
of problems horizontal drilling could overcome. With an active aquifer below
and a gas cap above, the reservoir’s pay thickness was about 27 metres. The oil was heavy: about 13o API.
Primary production from the field had been meagre
(0.6% of the oil in place), and the use of cyclic steam stimulation, which
uses vertical production wells, had flopped when they tapped the aquifer and
started producing 99% water.
That was when the company decided to try SAGD
– not the technique we use today, but the primitive version Imperial
had tried out nine years earlier. Sceptre injected
steam through four vertical wells near the gas-oil contact, draining the
mobilized oil through a horizontal well. At the industry’s leading
edge, the company found itself with a technical and economic success.
Fast Production from Tight Reservoirs
More than any other series of innovations, the
technology-intensive processes that now surround directional drilling have
enabled the industry to get production out of otherwise unproductive rock. In
August of that same transformational year, Alberta Energy drilled the first
horizontal well into the Glauconitic formation at Suffield. This was the
first time a Canadian operator drilled horizontally into a conventional
oilfield.
Things then quickly sped up. In February 1998 alone,
three significant projects based on horizontal drilling took off. Amoco began
a 10-well horizontal drilling program at Athabasca, into the Wabiskaw formation. Canadian Hunter drilled gas wells at
Ansell (Alberta) into the Cardium formation and at
Helmet (British Columbia) into the Jean Marie. A few months later, Shell
Canada drilled for Mississippian oil in Saskatchewan, at Weyburn.
This early application of the technology was meant to connect isolated small
reservoirs or improving contact within heterogeneous rocks to enhance the
sweep efficiency.
“In the 1990s the big push was to explore
conventional carbonate rocks, especially from the Mississippian in
Saskatchewan,” according to AJM Deloitte’s Russum.
“The idea was to develop known reservoirs where the rock quality was
variable, using horizontal wells to extract more oil from those
formations…. Many different companies hopped on to the horizontal
drilling band wagon in Saskatchewan with more than 500 wells drilled into the
Mississippian in 1997 alone. In that year more than 1300 horizontal oil wells
were drilled across the basin – a tally that was not beaten until
2007.”
Horizontal drilling also began to tap the heavier
oils in Saskatchewan and southeastern Alberta in the 1990s, and there was a
lot of experimentation in other reservoirs. Also, of course, in that decade
SAGD began to be developed in its modern form.
As horizontal drilling became more commonplace, the
petroleum industry began combining it with innovations in both drilling and
well completion technologies and ideas. The result has been like a snowball
rolling downhill. Horizontal drilling has been enhanced by geo-steering,
measurement-while-drilling, coil tubing, down-hole motors and new bit design,
for example. Also, producers can now drill multilateral horizontal wells from
a single drilling pad.
Perhaps the important recent development on the
drilling side is the monobore. Monobore
drilling involves running a casing string, then forcing a steel cone down the
well to expand it in the hole. This process is repeated with identical casing
strings. Thus, monobore completions have the
revolutionary characteristic of installing a string with the same interior
diameter from top to bottom. “These are making a huge
difference,” said Russum. “In the past
you had to drill a vertical well, then run the casing to the bottom and wait
for the casing to set before you could begin to drill the horizontal leg. Monobores help reduce those time-consuming steps.”
Although technologies like microseismic
are also making a difference, the most important developments on the
completion side have involved the increasing power and sophistication of
hydraulic fracturing. Better fracking has developed
because of new packers, better pumping equipment and better treatment fluids
and proppants. “It’s now easier to
isolate horizontal wells and to put fractures into certain points of the
formation,” according to Russum. “In
the early days, each stage of multistage fracking
would take a whole day. Each frack would have to be
tested separately before you proceeded to the next one. Today it’s a
continuous process.”
These clusters of technological breakthroughs first
created the shale gas revolution. Pioneered by an American, George Mitchell,
in the Barnett shale in Texas, tight gas reservoirs began yielding highly
economic volumes of natural gas – and, not incidentally, drove down the
price of gas. Some observers now describe natural gas as a low-value
by-product encountered in shale reservoirs in the quest for natural gas
liquids.
From a production perspective, the other great outcome from this cluster of
technologies has been the development of tight oil from shale – what Russum prefers to call “conventional oil from more shaley, low-permeability reservoirs.” One outcome
is that both western Canada and the US are experiencing growing light oil
production for the first time in decades – much of it coming from the Bakken play in North Dakota and Montana. After decades of
decline in Alberta, for example, light oil production has recently risen to
ten year highs.
An Explosion of Uses
These new technologies are changing almost
everything about Canada’s petroleum industry. For example, horizontal
wells are now a huge part of gas storage. “You can store gas very
quickly into those wells,” said Russum,
“and you can extract it quickly, too. Then there is the whole area of
trying to reduce surface impact. I think we’re going to see more and
more of that. Surface owners are more and more reluctant to have pumpjacks and other surface equipment on their land, and
horizontal wells are less likely to disturb natural habitat. There is also
extended reach, so you can reach under lakes and towns and cities. You can
use it to reduce water production in a thin reservoir located over an
aquifer.”
The economics of the horizontal well are also
greatly improved, especially when you are planning production from a narrow
reservoir – ten metres thick, for example.
Horizontal wells provide much greater contact with the reservoir per dollar
of drilling than do their vertical kin. And when they are drilled in search
of unconventional resources like shale gas and tight oil, the producer gets a
quick payback because initial production rates are so high.
Still not convinced? Then let the numbers tell the
tale. According to an AJM Deloitte study which is complete to late 2011, more
than 30,000 horizontal wells have produced conventional oil or gas in Western
Canada over the past twenty five years. Of that tally, 4,300 were completed
in 2011. This set a record for horizontal oil drilling: nearly 3,500 wells
(led by the Cardium, Viking and Bakken),
and an additional 800 wells focused on gas – mainly attracted by the
high liquids content in the Montney and Middle Mannville. Today, half of Western Canada’s wells
are being drilled horizontally.
Is horizontal drilling helping bring about any other
changes? Perhaps it is even changing the way corporations work.
“Companies that fail to adequately research the geology are putting
themselves at considerable risk if they assume all resource plays are alike
and that more and larger fracks are the solution to
economic production,” according to Russum.
Even so, engineers are increasingly replacing geologists in the executive
suite.
Traditional geologists who spent entire careers
looking for conventional reservoirs are now more interested in minor
variations in rock properties, in stress regimes and in proximity to source
rock. In terms of traditional petro-geology this is a difficult concept to
grasp, but to a large extent it is a response to the revolution spawned by
horizontal drilling.
Oilsands companies in particular,
but also other companies involved in modern resource plays are basing their
business plans on step-by-step, decades-long development of vast and
well-defined resources. This means traditional wheeling-and-dealing is at
least partly on the decline – to a large extent replaced by courting
cash-rich foreign companies with deep pockets and the desire to support these
capital-intensive activities
Peter McKenzie-Brown
Language Instinct
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