Encana RAB Davidson is spread over 16 acres and is made up of over 1 million pounds of drilling rigs, bulldozers, tanker trucks and other oilfield equipment. Encana photo.
“Cube development” by Encana taps multiple layers of Texas shale rock all at once
Calgary-based Encana has developed the RAB Davidson well pad in the Permian Basin in West Texas. The operation, estimated to cost $120 million, covers a 16-acre expanse and the 19 wells operating at the site pump almost 20,000 barrels of oil per day.
The company calls the technology “cube development”. After visiting Davidson last year, Gabriel Daoud, analyst at JPMorgan Chase & Co, told Bloomberg that it may be the supersized future of US fracking.
The system allows Encana to tap into multiple layers of shale rock all at once, improving on techniques used in the past.
This type of development allows operators to assemble projects with a dozen or more well bores which then hit multiple layers of shale simultaneously. The system taps the entire 3-D “cube” underneath the producer’s acreage.
Some critics say the technology is too aggressive and expensive. Others say there is a potential for logistical nightmares in going too big and some say that diagnosing problems on individual wells could be extremely difficult when a dozen or more are running at the same time.
EOG Resources says it will limit itself to six-to eight-well pads. Kimberly Ehmer, spokeswoman for EOG says “It’s all a question of return”, adding “The impact to returns is not clear-cut until you understand the impact to well productivity and other operations costs.”
But if Encana is correct, cube development could boost the Permian’s drilling boom which has helped push US production past 10 million barrels per day (b/d).
Devon Energy told Bloomberg it has over 10 multi-zone projects scheduled for 2018, including an 11-well pad in the Permian called “Boomslang” and a 24-well project dubbed “Showboat”in Oklahoma.
Concho Resources brought its Brass Monkey project online last year. The Permian operation is comprised of 10 wells that, once underground, spreads about two miles horizontally.
“We have just started to get into the manufacturing and harvest mode of the shale revolution,” Bloomberg reports Concho Chief Executive Officer Tim Leach said on a conference call. Daoud agrees, saying the Permian “is graduating”, adding “its all about entering the manufacturing mode.”
Cube development does cost more than traditional shale operations. Extra wells, bigger tank batteries, higher pumping power, extended pipeline networks and higher labour costs are some of the additional expenses.
But proponents argue that in the long run, cube development saves companies money due to economies of scale and improved well productivity rates. On a conference call in November, Encana reported that per-well costs dropped by a quarter at its Montney cube project located in Alberta and BC. Officials added that all of their 2018 wells will be part of large-scale pads.
According to Bloomberg, Encana CEO Doug Suttles told analysts that the alternative to cube development is “a high-cost, scattered approach to development” that “risks sterilizing resources in the long-run.”