Eagle Ford Production to Keep Growing Through 2014

For this reason, more and more companies are including infrastructure costs in their capital budgets, Slimm told Rigzone, who reports seeing up to 30 percent of companies’ capital expenditures earmarked for infrastructure to handle production increases seen last year.

Statoil Takes ‘Holistic’ Approach to Technology Application

The company has taken a holistic approach to technology application in its U.S. onshore operations by focusing on three areas: increased efficiency, increased recovery, and social license to operate, or health, safety and environmental issues. Each day, the company looks at the proven and unproven technology that is commercially available on the market to Statoil. Tier 1 encompasses technology that can immediately improve operations – much of the technology development in this area revolves around operational efficiency. Technology that will take time to develop is grouped into Tiers 2, 3 and 4.

Over the past few years, Statoil has moved over 30 people involved in research, development and innovation to its Houston office. This group works closely with the company’s Eagle Ford operations to refine technology from Tiers 2-4 in a portfolio of 10 projects, said Kevin O’Donnell, vice president of asset management, development & production North America, U.S. onshore.

Statoil’s efforts to increase efficiency in its operations include reducing drilling days and average well costs by applying advanced ancillary drilling service technology and technology to remotely monitor well and facility performance. To enhance production recovery, Statoil is looking at pressure optimization technology, gas injection and chemical stimulation methods, more efficient proppants and advanced fracture characterization to optimize completion.

Statoil’s approach to its U.S. shale assets is one of “continuous evolution”. Prior to taking their first shale operatorship, Statoil formed an operations group for its Eagle Ford operations. The company had to build a fit-for-purpose system to establish processes for its three U.S. shale assets order to build reliability and repeatability to drill thousands of shale wells. The company also focused on building a capable workforce with lots of onshore experience.

Now in its leverage phase of operations, Statoil has undertaken deliberate improvement initiatives for U.S. to extend the learning curve in this phase of its operations. One such initiative is Statoil’s ‘Perfect Well’ technique. Based on an old Japanese manufacturing process, Single Minute Exchange of Dye, the company seeks to break down the drilling process into a lot of detail. During this process, questions are posed about why certain steps are taken, and whether these steps can be moved off the critical path and done before, after or during the drilling process on another path. By doing so, the drilling cycle can be shortened – either through technology or automation – saving time and money.

The discussions involving the Perfect Well technique start with the subsurface team. Typically, geoscience and reservoir engineers want a lot of data. In their discussions, Statoil found that data can be gathered with a cheaper tool or through a more simple process, such as only logging every fourth wells, or the amount of jewelry that’s wanted versus what’s actually needed.

“Sometimes, there are also just steps taken because ‘that’s the way people do things’, such as a wiper trip,” said O’Donnell.

To improve its drilling technique in U.S. shale plays, Statoil has started holding workshops focused on drilling. The workshops, which last three days, involve a dozen people intimately familiar with the operations. In these workshops, ideas to improve drilling are discussed. Statoil held its Eagle Ford drilling workshop in August, and plans to hold workshops on completion once it’s finished with drilling workshops.

“The workshops enable ‘good facilitation by people that know drilling with people actually doing the work and challenging them on every little thing. It’s about taking a harsh look at what is done with an open mind,” O’Donnell said.

The company has completed 23 of the mini-projects that have come out of the drilling workshops, and has 75 mini-projects from the list of improvement ideas left. Some of these mini-projects have included using synthetic drilling fluids. Most other Eagle Ford operators are using diesel mud; Statoil is using synthetic mud due to the fact that is more environmentally friendly.


The sweet spots in the Eagle Ford play are found in its condensate region in Karnes, Gonzales and into LaSalle and Dewitt counties. Companies such as Anadarko Petroleum Corp. and Rosetta Resources Inc. have had success with wells that are liquids-rich, but still gassier and therefore sensitive to natural gas liquids prices, Nick Shera, Eagle Ford analyst with GlobalData.

Some companies such as Halcon Resources are working to develop the Eagle Bine – and combination of the Eagle Ford and Woodbine plays – in the eastern portion of the Eagle Ford play in Robertson and Leon counties. Some operators are hoping to apply hydraulic fracturing technology to the Austin Chalk play, where drilling activity has taken place since the 1980s. 

Some pretty good wells have been drilled in the Austin chalk, with 1,000 barrels of oil per day at 24 hour rates. Operators are hopeful on the play, but a lot of work still remains. Some success has been seen in the Buda formation, which is more of a limestone formation a limestone formation, but a lot of failures have been seen in the Buda as well. Efficient operators can drill a well at a cost of $5 million, but some operators are still spending $9 million; in the northern portion of the play, some wells have been drilled at a cost of $4 million, but not in the most productive regions.

BHP’s Eagle Ford Assets Expected to Generate Significant Cash Flow

Another key Eagle Ford operator, BHP Billiton Ltd. (BHP), has had wells record an extremely high IRR, despite reported costs of $10 million per well in 2011. BHP is forecast to hit peak production of 210,000 boepd, according to GlobalData.

BHP’s U.S. onshore assets will become the primary source of free cash flow for the company by 2020, said Tim Cutt, president of BHP’s petroleum and potash business, at a media event in Houston late last year.

The company’s U.S. onshore shale assets will generate $6 billion in cash flow from calendar year 2013 to 2020. Over that time, the company’s cash flow will turn from negative to positive over that time to $3 billion per year as it reduces drilling costs and leverages technology to drive improvement in its estimate ultimate recovery for shale wells.


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