Did The Red Queen Just Fall Off Her Treadmill? -- October 2, 2015

Updates

Later, 1:45 p.m. Central Time: A reader wrote:
Choking, and the control of the flow, is not a new thing obviously, but this is the first I have read that talks about the effects of choking to improve the well. Less pressure rush at the beginning helps keep the sand in place (rather than being rushed out with the burst) allowing the well to produce more oil over time. From the article:

 "When Newfield Exploration Co. opened new wells in the Bakken formation in North Dakota, it found the pressure difference created flows so strong they would sweep along the sand meant to prop open cracks in the shale, said Danny Aguirre, the company’s head of investor relations. By using pressure control, Newfield gets more oil over the life of the well and can save money by not having to add as much artificial pressure, he said in an interview." 

I replied:

This might explain OXY's wells. You know that I give OXY a lot of grief for their lousy wells -- based on IPs. I may have been wrong all along -- when you go back and look at OXY wells one and two years out -- especially two years out -- they seem to compare well with Statoil wells, which compared to their huge IPs are relatively disappointing. I track OXY wells here.

The take-home from this is that the Bakken operators continue to learn....makes it exciting.  

Original Post

 

Bloomberg/Reuters is reporting:

Encana Corp. wants to ensure the shale-oil boom keeps booming. The Canadian producer is among a growing number of companies that are restricting initial output -- a process known as choking back -- in basins from North Dakota to Texas.

They’re conceding huge up-front gushers of crude in exchange for smaller production declines over time so that the wells ultimately generate more oil.

The strategy sacrifices one of the biggest benefits from shale. The early gushers paid back investments fast, allowing companies to pour capital into new projects. Instead, Encana and others envision a future with a more stable flow from wells, so that they don’t always have to keep drilling simply to maintain output.

The Red Queen (again):

Curbing initial production allows companies to maintain the pressure and integrity in their wells, which means output doesn’t fall as fast.

Shifting to the technique can avoid steep declines, a phenomenon known in the oil world as the Red Queen, the character in Lewis Carroll’s “Through the Looking-Glass” who tells Alice, “It takes all the running you can do, to keep in the same place.”

Choke management is among a number of strategies -- including moving to richer parts of fields, completing wells with more sand and water, and refracking -- that U.S. drillers have used to stave off a collapse in production.

Output has fallen just 5 percent from its peak even though companies have shelved more than half their rigs amid a price slump. The oil industry is “finding ways to continue marginal production in a way that would have defied probability and reasoning before companies took the kinds of actions they’ve taken,” said Ed Morse, the head of global commodity research at Citigroup Inc., in an interview.

Much, much more at the link. The article will be archived at the source.