Oil and gas prices are strong and things are looking - down and out?
Well, in some cases, that's a good thing.
Down and out as in horizontal drilling - no longer a gee-whiz technology limited to a few specialized plays, and certainly not limited to one specific area.
An increasing number of companies, in an increasing number of places around the world, today consider horizontal drilling as an option in all kinds of plays, from coalbed methane to environmentally sensitive locales.
Through May 1999 Denver-based IHS Energy Group's databases contained records for 20,430 horizontal wells in 67 different countries. Impressive numbers - particularly when you consider that limited records are available from former communist-block countries and other countries like Saudi Arabia, which don't release individual well records, said Philip H. Stark, vice president of industry relations with IHS Energy.
Stark will present a paper titled "Horizontal Drilling - A Global Perspective," at the AAPG international meeting in Bali in October.
The United States has recorded the highest levels of horizontal drilling activity with 12,882 horizontal completions in 8,998 wells and 1,235 fields. Canada ranked second in horizontal drilling activity with 8,221 wells in 294 fields.
But what's interesting is that more than 3,000 horizontal wells in 693 fields have been recorded outside of North America.
The Driver Has Arrived
Horizontal drilling is certainly nothing new - the technique emerged in the 1920s, but technological development was slow and the practice was seldom used.
"By the 1950s horizontal drilling was still limited to very short-radius - less than 50 feet - drain-holes in shallow, unconsolidated reservoirs," Stark said.
However, he added, several factors helped trigger renewed interest in horizontal drilling during the late 1970s and early 1980s, including access to enhanced horizontal technologies from the U.S.S.R.; positive results in drilling long-radius, deviated wells from offshore platforms; and higher oil prices.
Pilot projects by Elf Acquitaine at Italy's Rospo Mare Field in 1982, BP and Arco at Prudhoe Bay in 1984, and Oryx, Mobil, Amoco and Union Pacific in the Texas Austin Chalk Trend starting in 1985 finally demonstrated the economic viability of horizontal drilling.
From just 51 wells in 1987, horizontal drilling has increase rapidly in the world's active producing provinces, peaking in 1997 when about 4,000 wells were completed worldwide.
"Operators have used horizontal drilling to revive economic production and to increase recovery from old producing fields," Stark said. "Horizontal wells also have been used to speed recovery and increase the rate of return - a primary driver for North American projects.
"Other operators have used horizontal wells to significantly reduce capital and operating costs," he continued. "Outside of North America maximizing total return through enhanced reservoir management, maximizing recoveries and minimizing long-term costs has been the primary driver for using horizontal methods."
Horizontal and extended-reach wells have been drilled to address various reservoir, economic and geological aspects of a play.
Seven geologic and reservoir types have been prime horizontal targets and have yielded positive results, including:
- The Bakken Shale in North Dakota.
- Factured chalk like the Austin Chalk in Texas and Louisiana.
- Stratigraphic traps such as the Niagara reef in Michigan.
- Paleokarst reservoirs like the San Andres and Yates in Texas.
- Thin beds such as those in the Red River of North Dakota and Montana.
- Coal seam methane.
- Heterogeneous sands.
In the United States, the Upper Cretaceous Austin Chalk has been the most successful play that has hinged on horizontal drilling. From 1985 through May 1999, 4,230 horizontal wells were completed in the Austin Chalk and collectively these wells had 6,887 completions.
"The Austin Chalk trend has undergone three development cycles over the last 60 years," Stark observed, "but the play didn't emerge as an important resource until horizontal drilling was applied in the last development cycle. The benefit of horizontal drilling technology in the play is obvious."
While Canada currently ranks second in horizontal wells, that country may soon overtake the United States as the leader in horizontal drilling activity, according to Stark.
Canadian operators have led the world in annual horizontal drilling activity since 1993, and they recorded a peak of 1,978 horizontal wells during 1997 - far ahead of the U.S. peak of 1,279 wells also in 1997.
Horizontal drilling has been widely used and yielded success in producing basins throughout the rest of the world as well.
IHS Energy records show that more than 3,200 horizontal wells contributed to the production of over 452 billion barrels of oil reserves from 693 fields.
Stark said if Ghawar and other Saudi Arabian fields with active horizontal well development programs were added, the total oil reserves being produced at least in part by horizontal wells could exceed 500 billion barrels.
Venezuela, Oman, the United Arab Emirates and Nigeria are the leading countries outside North America for horizontal well completions.
Four of the top 10 fields for horizontal drilling are in Venezuela.
Lagunillas, the fourth Venezuelan field, is part of the giant Bolivar Coastal Fields complex in Lake Maricaibo.
Three more fields in the top 10, including Yibal and Lekwair in Oman and Zakum in the UAE, use horizontal wells to exploit prolific carbonate platform reservoirs.
The Nimr Field in Oman, the Rabi-Kounga Field in Gabon and the Dan Field in the Danish North Sea round out the list of leading fields for horizontal well production.
Stark pointed to several examples to illustrate the diversity of reservoir conditions in which horizontal wells have made positive contributions.
♦ Elf Acquitaine achieved early and pivotal economic success with its horizontal well experiments at the Rospo Mare Field in Italy during the early 1980s.
The horizontal well program consisted of 21 wells and helped boost oil production from about 2,000 barrels of oil a day in 1986 to a peak of nearly 29,000 barrels of oil daily in 1990.
Cumulative production hit 68.1 million barrels of oil in 1997.
♦ "The Dan Field in the Danish offshore sector provides an interesting comparison and contrast to Austin Chalk reservoirs in the United States," he said.
The early Cretaceous Dan Chalk reservoir records 28 percent porosity and .5 millidarcys of permeability. Reported reserves are 645 million barrels of oil equivalent and 860 billion cubic feet of gas. Most horizontal boreholes radiate from the center of the nearly circular, faulted domal structure.
"The 46-well horizontal program helped to boost production from approximately 60,000 barrels of oil a day in 1991 to more than 100,000 barrels daily in 1998," Stark said.
♦ Venezuela's Hamaca area illustrates the use of horizontal wells and steam processes to boost recoveries of heavy oil.
Hamaca is part of the well-known Orinoco tar belt and is estimated to contain 40 billion barrels of oil in place, with 5.6 billion barrels recoverable reserves. The heavy, seven degree API gravity oil is trapped in a faulted and folded monocline near the southern limit of the fluvio-deltaic early and middle Miocene Oficina sandstone reservoir.
"Recovering the heavy oil with vertical wells is difficult," he said.
"Approximately 780 wells, including at least 205 horizontal boreholes, have been drilled in the Hamaca area. Since the introduction of horizontal drilling during 1973, production more than doubled from 40,000 barrels of oil a day to about 90,000 barrels daily in 1996. Horizontal wells at the Hamaca Field reportedly produce as much as 2,000 barrels of oil per day when combined with steam injection."
About 40 percent of the pre-1990 horizontal well histories recorded in IHS databases were drilled in Asia.
Arco was the most active operator during this period with its horizontal well programs at the Bima and Arjuna fields on the Seribu Platform in NW Java.
At Bima field, a late Eocene - early Miocene karsted carbonate, Arco enjoyed promising results from its pioneering efforts - its 24 horizontal wells reduced gas and water coning and achieved two to three times the production rate of conventional directional wells with less than 20 percent increase in costs.
These results, however, failed to generate take up, and Asian horizontal drilling languished. Only five to 14 annual horizontal well completions were reported there from 1990-1995.
But buoyed by positive results from horizontal drilling programs in North America, North Europe and the Middle East - and armed with improved technologies - Asian operators finally ramped up their horizontal efforts in 1996.
At Widuri field, Indonesia's largest offshore field in the West Java Sea, Maxus used 3-D seismic to target fluvial channels in the U. Gita formation (L. Miocene). The B-14 horizontal well established initial production at 7,000 b/d, about three to four times that of vertical wells in the same reservoir facies.
To date, Unocal's horizontal program (38 wells through mid-1999) at the Attaka field in the Makassar Straight (Kalimantan) has been the region's largest single horizontal field development program. Indonesia ranked seventh among countries outside of North America in total horizontal wells completed through mid-1999.
Other noteworthy horizontal plays include the Erb West field in Malaysia, Panna field in India, Tarim Basin fields and the Shengli Field in China.
Australian operators also have used horizontal wells to develop several offshore fields (e.g. Pepper South, Stag) in the North Carnarvon Basin.