Q: We have a lot of complexity in our DSU, how do we manage that?
A: As Dr. Brendon Hall, VP of Geoscience at Petro.ai says, “All uncomplicated DSUs are probably the same, but all complicated DSUs are complicated in different ways.” We’ll separate out and break down those complications over several blogs.
“Let’s talk about the aspects that contribute to complexity in terms of offset wells. And then how we systematically approach those,” Kyle LaMotta, VP of Analytics suggests as he walks us through the Petro.ai DSU Design Service approach.
“There’s a lot of things that can contribute to complexity. One is geology. Some of our clients are going into new areas where they don’t have a lot of data, where they don’t have many wells. They know that things are changing spatially in pretty small distances, so it’s hard to find analogs that would be representative of the new DSU that they’re drilling.
“Another aspect of complexity is what’s going on directly adjacent to the DSU. We have clients that want to drill near existing parent wells that already have production or right next to newly offset wells. So, when they drill the new wells, the offset wells will have just come online. There will be brand new producers directly next to it. That’s another thing that adds to complexity is either offset parent wells or sibling wells and the age of each of those wells is accounting for a parent that’s been producing for five years versus one that’s been producing for six months.
“Another challenging complexity for our clients that’s becoming more common, is a situation with two parent wells on both sides which are landing in different benches. So, which of those benches to develop and when is part of that challenge.
“One of the most important basic questions for our clients is how far away they should space the new wells from parents. At this point in time almost every DSU is going to have some interaction with a parent. There’s really no open land left to develop. There’s some relationship with a well nearby that has to be considered.
“We’ll look in general at how the model is predicting the relationship of parent and children. We’ll split the model in different ways:
- How accurate are the predictions overall.
- How accurate are they per interval.
- How accurate are they for child wells versus parent wells.
“Sometimes we’ll make predictions and we’ll see that on average the parent wells are predicting very well but the child wells might be under predicting. So, we’re not accounting for the extra degradation that the child wells are experiencing from being offset by a parent. In that case, we can add some additional features into the model like how long the parent well has been producing, how much oil and gas has the parent produced, and how many parents are nearby.
“If we see that the model isn’t capturing those secondary and tertiary effects of the parent child interaction, we can add additional features into the model to account for that. That becomes another step, accounting for child well degradation specifically.
“Then we move to answer other questions like which benches should be developed and how many wells per bench should they put in. Those typically start with a base design. Most operators have a standard design that they put in. That might be 4 wells per section, and they’ve developed say the Wolfcamp A and B. That would be a baseline design and we’re always comparing back to that baseline.
“If the standard design is 8 wells total, then we’ll consider anywhere from 1 well per section to 8 wells per section. We’ll look at the tradeoffs in things like production, economics, our client’s profit investment ratio which is how much you’ve made versus how much you’ve spent.Then we can break it down by well.
“The way that we systematically approach it is by changing one variable at a time and looking at the effect that variable has on the prediction. Rather than changing 3 or 4 things at once. When you do that, it makes it hard to compare and understand what’s driving the change.
“If you had unlimited inventory and unlimited capital you could put in as many wells as you wanted to for that extra dollar of NPV. Most of our clients are faced with the challenge of overhauling their portfolio based on a complete understanding of offset well planning. The question always is what’s the best use of capital to get the best economic return.”