Well Spacing: The distance between wells in a cube to maximize productivity. Petro.ai sees the solution in understanding drainage.
Capital Efficiency: How much is spent on developing wells and how much you’re getting in return. Petro.ai sees the solution in the subsurface.
Well spacing in the cube, multi-well pad operations continue to confound the industry. Reducing surface costs have been managed by years of engineering modifications. The subsurface, though, provides continuing cost challenges. The leaders in shale understand that capital efficiency is directly tied to development and understanding of the subsurface.
Dr. Troy Ruths, CEO of Petro.ai explains, “As the oil price goes up, you can put in more wells.You can increase the well density.Now one of the issues with unconventionals is the rapid decline of these wells.In a year, the decline rate drops about 80%.In the first five years, you have the majority of the production.In some cases, in the first two years, you’ve gotten the majority of the production for that well.It’s very different.People argue about curves.People argue about what’s the longevity of these wells. You really need to think about them as immediate, you put the money in, you get the money out in two years.”
Hart Energy observes, “It is time to get back to reservoir engineering, characterization and economics. The first critical step is modeling (predicting) the future production for various completion designs and the associated costs for each of those designs. Knowing how a change in design and costs affect future production enables optimizing the completion for economics, improving each well’s ROI. Reservoir and completion characterization reveal the drainage areas of each well and allow improved economic well spacing, further increasing ROI.”
Unconventionals relies on a completely different model than a conventional well that drains a wide area and lives productively for thirty or more years. The toughness of shale requires new insights built with tools that reveal a complete picture. A model with an understanding of intricate frac geometries and capital efficiency options.
“Unconventionals is a 3D world,” Ruths underscores. “These are complex well geometries in the middle of changes that are happening in the subsurface. That’s why we need analytics in Petro.ai and machine learning to connect together known data points to pull out the tradeoffs that are a part of every unconventional decision.
“Where Petro.ai really differentiates are the features that we calculate. We take the well’s diagnostic information and combine that with subsurface characterizations to develop a full picture of well/cube performance and anticipated future performance. Where should that next well be located is answered by a full view of cube development and reservoir drainage.”
Capital efficiency has always been important. But now that the honeymoon with shale is over, capital efficiency is even more critical. The industry expects returns on the investments they’ve already bought into. “Historically, shale has been a quick win. And because of the number of wells drilled in a cube, it’s been a wonderful system for rapid improvement,” Dr. Troy Ruths, CEO of Petro.ai explains. “But we’re at a point where the quick win has reached a limit. To break that barrier, we need better technical analysis. It’s going to be our downfall if we keep shaping the system the same way. We need to level up our analytics capability.
“The quick win of shale needs to be balanced with the analysis that goes deeper into the strategy. It needs to be paced to match the dollars that investors are both anticipating will be put in and wanting to minimize. What Petro.ai is providing is a mechanism to do a quick win analysis in a more thorough way.”
Petro.ai knows that connecting expenditure to best exploitation practices without a good productivity model is hard to optimize. Making the right development strategy for your specific capital goals is an integrated part of the Petro.ai platform model. Maybe your exploration changes depending on the kind of capital efficiency you need. Petro.ai marries forecasting reserves with a deep geotechnical workflow. Forecasting and economics in one spot for the rapid decision making needed in shale.
“Petro.ai is the best tool for looking at capital efficiency questions of the subsurface,” Dr. Ruths draws together the technical and the economic perspective. “Whether from an A&D point-of-view or an operator perspective, the leaders in shale understand that capital efficiency is directly tied to development. The parameters sitting in Petro.ai translate to a subset of scenarios which allow for quick, easy and accurate decision making. Petro.ai handles geology. Our economic well spacing is based on geology. That’s your greatest driving factor and everyone has geology they can optimize economically.
“Management struggles with making decisions quickly enough because information isn’t translated from complex pad to administration in a rapid, contextual manner. Petro.ai provides an economics trade off calculation. We do all the supporting technical work so executives can make a balanced decision.”