SPE: Oil companies reviewing fracturing plans with low oil prices

Oil and gas companies are looking for innovation from their fracturing contractors, and producers are evaluating completion strategies given the prolonged oil price downturn, plenary session speakers told the SPE Hydraulic Fracturing Technology Conference in The Woodlands, Tex., on Feb. 9.

Steve Mueller, Southwestern Energy Co. chairman and former chief executive officer, noted that unconventional producers cannot learn about a particular play as fast when they are drilling fewer wells.

“At $90/bbl oil, you could learn at a very rapid pace,” Mueller said, noting that higher oil prices enabled companies to spend more on fracturing. He noted industry has transferred knowledge gained in certain less-expensive plays to other, more expensive plays.

“We couldn’t afford to learn at $10-12 million/well,” he said of Southwestern Energy. “We’ve got to use innovation, and you’re the guys who do the innovation,” he told representatives of service companies attending the SPE fracturing conference.

Mueller plans to retire in May. During January, Southwestern announced Bill Way, previously president and chief operating officer, was appointed president and chief executive officer.

Mark Pearson, Liberty Resources LLC president, said companies continue to do fracturing to hold acreage, support cash flow, and maintain their borrowing base.

Liberty Resources used slickwater designs and 100% ceramic proppant in 2010-11 in the Bakken formation in Williams County, ND, and obtained higher short-term production than other companies completing wells in the same area using different completion designs, Pearson said.

Liberty currently is using higher proppant concentrations to cut fluid volumes, he said, adding that Liberty also is using sand sometimes rather than all premium proppant. Still, Pearson urged companies to carefully consider the consequences of cutting corners on completion designs.

“Lower early production results in lower cumulative recovery rates,” Pearson said. “Horizontal well completion is critical to long-term recovery. Fracs designed today will define a well’s recovery over the next 30-40 years,” he said, adding, “Beware of making cuts on completion spending, thinking it’s just affecting initial production rates.”

Contact Paula Dittrick at paulad@ogjonline.com.

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