Southwestern Energy improves completion technology consistently

Implications: The Oil & Gas Journal reported in the issue of August 11 that Southwestern Energy Company of Houston was running 500 million cubic feet/day from its Fayetteville shale in north-central Arkansas. The company, with 857,000 net acres, estimated that ultimate recovery could be improved by up to 20% from horizontal wells with closer perforation spacing. The technique was tested in 38 wells during the first half of 2008 and will continue for the rest of the year. Today, 22 rigs are drilling longer laterals. Average length has increased from 2104 feet in 2007 to 3,562 feet now. Later this year the company plans to reduce the spacing of wells to 80 acres. Completion knowledge consistently improves. During the first quarter, 83 wells averaged 2.54 MMCF/D. Seventy-five wells averaged 2.15 MMCF/D after 30 days and 72 averaged 1.93 after 60 days. As of June 30, the company has completed 619 wells. Realized price was $8.17/MCF. Wells are located in 8 Arkansas counties.

Analysis:  Decline rates for shale gas wells follow a similar pattern whether they be in the Barnett, the Woodford, the Fayetteville, the Haynesville or any other shale formation where production characteristics are similar. But there are differences. For example,as near as can be determined, the Barnett shale in the Fort Worth basin has only free gas in the reservoir. But the Woodford shale in the Arkoma basin appears to have both free gas and adsorbed gas. Adsorbed gas is bound to the surface of the shale in a thin layer which only turns into free gas after the pressure has been lowered to some threshold level. Newfield Exploration Company has published type curves for the Woodford shale which include an example for an extended lateral (>3,000 feet) and a standard lateral (2,000-3,000 feet). Both curves show adsorbed gas coming into the flow stream after about 75 days of production. The Southwestern data do not tell if the Fayetteville shale contains adsorbed gas but the three points of data plot almost as a straight line on semi-log paper. Comparing the 60 day Fayetteville curve with Newfield’s 450 day Woodford curve allows an approximation of ultimate recovery. For the data presented, it appears the wells that Southwestern Energy is completing today will recover around 2.5 billion cubic feet over the life of the well. If they can extend that by 20%, then ultimate recovery could be about 3 billion, perhaps more. The question is whether gas production comes only from the fractured zones. If it does, and many think that is the case, then by reducing the spacing, the ultimate recovery could be significantly increased from the acreage under lease. Natural gas production from shale zones is a constantly evolving technology. Nobody really knows how much the ultimate recovery can be until all of the various techniques are tested.