Innovation and Resilience | Russell T. Rudy Energy LLC
Domestic shale producers continue to demonstrate an impressive degree of resilience and creativity in finding ways to cut costs and enhance oil and gas production. As oil has dropped back down to near $40 per barrel, this will help them maintain economic viability. “Rigzone” reports that Noble Energy, Devon Energy, Occidental Petroleum and Pioneer Natural Resources have all found ways to do more with less. Some savings has been the result of reduction in service company rates, but improved well designs and fracking techniques have been major factors in realizing more incremental production for every dollar spent.
Noble Energy planned to produce 390,000 barrels of oil equivalent per day (boepd) on spending of $1.5 billion. Now, the company expects to come in under budget and produce 415,000 boepd. CEO Dave Stover admitted that “It’s a bit surprising to me how we continue to still see improvements.”
Some productivity gains have come at additional cost, but experiments such as fracking with 3,000 pounds of sand per foot, several orders of magnitude greater than was the case a decade ago, have paid off. Also, operators are fracking rock more extensively around well bores than had previously been the case.
Occidental had hoped to increase production 4-6% from last year’s 652,000 boepd on spending of $3 billion. Now, CEO Vicki Hollub anticipates coming in on the high end in terms of output, and within budget. She attributes success to internally developed technological improvements and tying executive compensation to production targets.
Pioneer Natural Resources developed a process it called 2.0 which involved injecting more sand and water to increase initial well rates to 2,000 boepd, twice as much as previous wells produced. Now the company is employing a new completion technique it calls 3.0 which will involve even more injected material in hopes of further production enhancements.
Devon Energy has already cut drilling and completion costs on new wells by 40% and plans to reduce costs by $1 billion this year according to CEO Dave Hager. He estimates that roughly half the cost savings is due to internal technology and efficiency gains and half due to reduced service company rates. He concludes, “We believe a lot of the wins still left to get are just through attention to detail and through designing changes and through managing our business even better than we have in the past.”
To read the article in its entirety, please go to http://www.rigzone.com/news/oil_gas/a/146004/US_Frackers_Surprise_Themselves_As_Tweaks_Keep_Adding_Barrels/?all=HG2 .
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