Improving project economics through the use of fibre-optic technology.
Has the energy sector crossed the threshold of capital efficiency for completions in the Canadian market? Many believe we are in the window of diminishing returns. A common industry metric that is used as a performance indicator is tonnes per meter, or t/m. This is the amount of sand pumped per meter of horizontal section completed. This metric alone has nearly quadrupled in the last 5 years.
Operators continue to push the limits of pumping, and completion design. In the race for high initial production rates, the following variables on design have changed the most, with respect to plug and perf and ball-drop designs:
- Cluster spacing
- Number of clusters per stage
- Stage spacing
- Lateral length
- Tonnage
Technology continues to evolve, allowing operators to push the limits of design, yet is this now resulting in erosion of capital? With the focus on high rates, what is the actual return on the dollar invested? Has ultimate recovery for the completed well increased, or are reserves simply being produced at a faster pace?
A common gauge for capital efficiency is the dollar invested per barrel of oil (equivalent) produced, or $/BOE. An economic analysis for Montney and Duvernay plays indicated that on a $/BOE basis, capital has become more intensive, with the same or relative return on production.
Not all operators indicate a degradation of capital, yet on an average basis – this holds true. Sand pumping intensity into smaller cluster spacing has increased significantly over the last few years. With the current state of the energy sector in Canada, can we afford to continue this trend?
The vast majority of producers have lowered their capital guidance for 2019 budgets due to poor outlook on commodity pricing – now is the time to review project efficiencies, lower cost and improve recoveries.
A key technology that is still emerging in Canada is fibre-optic installations for both oil and gas wells. This technology has been used successfully on 100’s of wells, yet the energy sector has not fully embraced the value that fibre can deliver.
What can you do with fibre to further optimize your completion? In a typical fibre project planning phase, we assist operators with well design in order to trial multiple variables for the stimulation. A common approach is to vary cluster spacing, tonnage and number of clusters over the length of the lateral.
During the stimulation, DAS and DTS fibre will show the operator the effect of each variable on the stimulation. The operator can then measure the impact of the variable changes on flowback. As an example, one may pump 100 tonnes into a 100m spaced stage (1.0 t/m), then 100 tonnes into a 50m spaced stage (2.0 t/m). On flowback, the effectiveness of doubling sand can be quantified with the fibre. From this, the operator can determine if there was value in pumping more sand.
Cost is a factor when planning a fibre completion – and one key element that many operators are unaware of is the Scientific Research and Experimental Development Program (SR&ED).
Under the SR&ED program, companies that install fibre-optics are eligible to claim the cost of the material, contractor costs and labor costs associated with the fibre. For a Canadian controlled private corporation (CCPC), 41.5% of the incurred cost can be claimed for tax credits and refundable cash.
There are many benefits to running fibre-optics, a key driver for the Canadian industry is cost. Investing in a fibre install will allow the operator to optimize their completion, reduce capital and potentially access additional reservoir.
If you’d like to learn more about how to optimize your completion, contact Fibre Completion Services today.
