URTeC '15: Unconventional operators finding new ways to tackle low prices

By KURT ABRAHAM, Executive Editor on 7/21/2015

Perhaps the proper term to describe the manner in which operators, in shale and other unconventional plays, are handling low oil prices is “adaptation.” That was certainly the message delivered Tuesday morning during the executive plenary session at URTeC (Unconventional Resources Technology Conference) in San Antonio.

Consistent with the prevailing theme at URTeC of “getting more for less,” Barry Biggs, V.P. for Onshore at Hess Corporation, said that his firm’s response to low oil prices has been to focus on the “sweet spots” in the Bakken (North Dakota) and Utica (Ohio/Pennsylvania) shales, while also implementing other measures, such as rig reductions and design optimization. “Most importantly, we retain our focus on technology,” added Biggs.

Amplifying on the current thinking at Hess, Biggs also said that Hess is “applying a ‘Lean Culture Model’ to develop our performance capability in any operating environment.” Hand-in-hand with that model, Hess has set up “Asset Collaboration” rooms, which feature structured communications, expedited decision-making and the removal of barriers to getting work done. All of this takes place, said Biggs, “with a focus on the metrics and the activities that are due in the next one to two weeks.”

And while Hess has further reduced its unconventional activity since first-quarter 2015, the remaining work in shale plays is showing the fruits of the company’s approach to business. “In the Bakken, we’ve explained Biggs. “We’ve also seen a 49% reduction in drilling and completions costs in the play during the same period. And in the Utica, we’ve achieved a 50% decrease in drilling costs, and a 41% reduction in completion expenses.”

Technology is definitely the key to keeping unconventional assets competitive in the low-price environment, noted Peter Richter, V.P. of Strategic Development at BHP Billiton. “Proper testing and evaluation of what we’re considering for implementation of new technology is absolutely critical, because one size does not fit all,” said Richter. “We’ve made a lot of progress on the drilling side—the next generation will see even more integration of functions.”

In addition to equipment and hardware advances, integrating data is also critical, added Richter. “The more data that you have available, the more precise and efficient your drilling and development plans can be. There are now several good software packages available that can do this data integration.”

“The ability to innovate is definitely leading this technology revolution,” said Manuj Nikhanj, managing director and head of Energy Research at Investment Technology Group. “But once you’re out in the field, understanding what sort of technologies were applied is necessary to understanding whether a well that you’ve drilled is good or bad.”

Another angle for operators to think about, said Biggs, is that “there’s going to be a whole lot of rock out there that has oil left in it, after the initial shale development. So, how to improve the recovery rate of those wells and reservoirs will be a priority. We’re also concerned about sharing knowledge to improve our efficiency wherever possible. So, we’ve had teams from the Bakken and Utica meet together, to compare lessons learned and shorten the time to share knowledge.”

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