STACK(ed) CUBE
Encana's cube process to debut in state in April
Oklahoma's prairie landscape is about to take on a little bit different look. In April, a new player in the state's STACK play of the Anadarko Basin will debut a process it uses elsewhere to quickly and efficiently drill and complete shale field wells. Encana closed its $7.7 billion purchase of Newfield Exploration, a significant operator in the field, earlier this year. As the larger company continues its work, Oklahomans will notice similarities in the way its wells are developed. As has been traditional, each of the company's future pad developments will accommodate the drilling and completion of multiple wells. However, Encana's cube development process cuts the amount of time it takes to do that work to just a fraction of what it took before by using at least four (in some cases more) rigs to simultaneously drill. After that, it simultaneously completes those wells using multiple fracturing spread crews. A net effect of that change, Encana officials previously have said, will be the drawdown of the active number of rigs it will run in the STACK play from 10 that were operating when the deal closed in February to as few as four by later this year. Plus, the company still intends to drill and complete about as many wells in 2019 as Newfield had scheduled before the deal closed, said Steve Campbell, a senior vice president in Encana's investor and community relations division. “The more relevant numbers are the number of wells we can drill or spud and the amount of money we expect to save,” Campbell said. “Encana has some proven practices they have pioneered over time,” he said. “The goal
is to decrease the cost of each well by $1 million, and I think we will get there sooner, rather than later.” Campbell said the first cube project will spud in April and will have as many as four rigs drilling there at the same time. He said that style of development helps eliminate non-drilling pauses typically seen in drillers' days-to-depth curves. “By clustering all of your activity on a single pad, you reduce the flat times you used to see,” Campbell said.
Production growth key
Benefits of Encana's development style don't just include cheaper drilling and development costs. Better results matter too, and Encana sees potential for that in Oklahoma, given the STACK has multiple layers of hydrocarbon producing rock that can be developed in one pass. Using 3D optimizing, the company designs its wells to maximize their production by minimizing communication risks through the development of more complex networks of fractures. When crews move to a new location, it typically is miles away. As a completed location's wells produce over the next 12 to 18 months, the company analyzes data from those to create plans for future wells that someday will be drilled in an adjacent unit, aiming to boost their production expectations. “Our cube development model is delivering lower development costs and improving the recovery from the reservoir,” Doug Suttles, Encana's president and CEO, has said of the cube technique. “We believe this approach will become the industry standard for stacked pay development.” Suttles and other Encana officials have said they believe liquids production growth from the Anadarko Basin will keep pace with the company's two other liquids-rich plays — the Permian and the Montney — in 2019. They anticipate production will grow about 15 percent, year-overyear, from all three plays. Company officials said they plan to spend 75 percent of the $2.7 billion to $2.9 billion of 2019 capital expenditures in its Montney, Permian and Anadarko fields. The remainder will be spent on assets Encana is developing in the Eagle Ford Shale and the Duverney and Williston basins. “Encana's track record in the Montney and Permian can be instantly applied to the Anadarko,” Suttles told analysts during a recent call.
Costs savings detailed
Encana officials have said the company's development process saves drilling and completion costs because it allows for the sharing of common facilities and drive cost efficiencies. While some changes are obvious money-savers, additional tweaks often are made. Campbell said Encana, like Newfield before it, plans to continue using sand produced from Oklahoma mines to hydraulically fracture its wells. But unlike Newfield, Encana will deliver to and store sand on pad locations itself, rather than relying on well servicing companies for those services. Campbell said that change alone is expected to save the company about $300,000 in costs, per well. Other changes the company already has made to ongoing operations to help cut costs was to create traffic flow patterns at well locations that eliminate the need for trucks to have to back and reverse course when they leave a location. It also uses temporary lines to supply fuel from an off-site location during fracturing operations to avoid having to take time to have it trucked to the location. Meanwhile, Encana has taken some of what Newfield had been doing in the STACK and exporting that to other plays where it is active to approve operations in those fields. “The ultimate benefit is, you are reducing the time from first drilling to first revenue, and that enhances your returns in the field,” Campbell said. “It really is about fighting for those small wins at every stage of the operation, and it is all about margins.”