The average drilling time for a gas well in the Fayetteville Shale formation fell from 17.5 days in 2007 to 6.2 days in 2013. The whopping efficiency gain in the Arkansas field is the product of experience-fueled know-how combined with technological innovation.
“There have been great advances, especially with these unconventional plays,” said Marty Carley, vice president SWN Drilling Services, a subsidiary of Southwest Energy Co. of Houston.
Those advances have enabled companies to drill deeper and more complex wells to tap the gas shale, too. Mixed in with the drilling improvements are new fracking techniques that increase the productivity of wells. (See Fracking Techniques Deemed Corporate Secret.)
New drilling rigs are capable of more lateral boring and more wells per pad with a smaller footprint while operating at speeds that slash the time it takes to drill these more complex wells from 13 days to seven.
New models can even “walk” short distances to drill a new well. The added mobility saves time that would’ve been spent to break down and reassemble the rig.
Such remarkable improvements save money in the long run, but they don’t come cheap. Each new drilling rig costs $16.2 million to build, according to Carley. But the demand for the units is so hot that the early-bird ordered equipment carries an appraised value of $20 million.
Bill Way, executive vice president and chief operating officer for Southwest Energy, noted during the company’s May 2 earnings conference call that the first of seven new drilling rigs began operating in the Fayetteville Shale on April 29.
“The rigs are scheduled to be delivered every 45 days, and the last one is being delivered in December,” Way said during the teleconference. “We expect that these new AC-powered, dual-fuel rigs will trim a full day out of the drilling curve, further reducing our drilling costs.”
The surging demand for these new alternating current-powered rigs by SWN Drilling and other companies was a godsend to England Oil Field Services Inc. Employment at the Lonoke County facility boomed from 14 last year to 113 today.
“We’ve got so much stuff coming down the tunnel,” said Michael Minnie, vice president of operations at England Oil Field Services. “Right now, I have work all the way through June 2015.”
Deals that include a 50-rig order are in the offing that could significantly extend the company’s book of business.
Workers at England Oil Field Services are busy fabricating, painting and wiring the rig components. Each new drilling rig has a 35-day turnaround to complete the assembly and testing process before shipping.
After the final check-off, 12-13 flatbed trailers worth of equipment roll out of the loading yard and head onto U.S. 165.
“They take it straight from here to the location and start drilling,” Minnie said. “It’s very well engineered, easy to move and easy to rig up. Everything is clean. It’s a small compact rig, an 8-foot-wide load instead of 12 feet.”
SWN Drilling beat the stampede of orders that set the production of 80-plus new rigs in motion in Texas, Oklahoma and Arkansas.
“We got started building these rigs last October, which was a perfect time,” Minnie said. “They got in there before everyone else did.”
SWN Drilling has taken de-livery of four of the new drilling rigs from England Oil Field, and three more should be deployed in the Fayetteville Shale field by the end of the year.
“They have been a key, integral part of our rig building program,” said Carley, of SWN Drilling. “We’ve now broadened our play because the big rigs are more economical.”
The control cab of the drilling rig, featuring joystick technology with touch screen applications, has been likened to the cockpit of a Star Wars spacecraft. The setup is appealing to the new generation of drilling operators, who cut their teeth as kids on gaming platforms powered by microchip processors.
The movement toward electronic-computerized systems and away from old-school mechanical rigs requiring constant human intervention is historic.
“We’re seeing a complete shift in wellbore technology from what’s been around since the 1950s,” Carley said.
The automated process, which affords more consistency and repeatability, is making the drilling job better and easier. It’s a big component of the higher efficiency, major cost-savings equation for energy companies.
The new drilling rigs also sport an automated pipe racking system that contributes to safety and reduces incidents of pipe damage from human error. A rigger no longer has to climb the derrick to latch and unlatch sections of pipe, and new equipment can handle longer pipe, up to 90-foot sections.
Another component of the new drilling rigs that is cutting operational costs is a conventional, albeit modern power plant with an added twist. The dual-fuel generators can run on natural gas as well as diesel.
New drilling rigs typically use three or four of these power plants. Caterpillar showcased its “dynamic gas blending” kit at the 2013 Offshore Technology Conference in Houston.
“It’s going to be very popular,” said John Riggs, president and CEO of Little Rock’s J.A. Riggs Tractor Co., Arkansas Caterpillar distributor. “They can tap into the natural gas as they’re drilling and cut their operating costs substantially. It’s been foolproof so far.”
The kits can be retrofitted on conventional generators used in drilling and fracking. In addition to reduced fuel costs, the units are touted as operating cleaner and with no loss in horsepower.
Unlike drilling, fracking is a variable speed operation. The new generation of dual-fuel power plants features a self-monitoring system that can blend diesel and natural gas to maintain appropriate outputs.
“It’s rare when you have new technology come out of the gates and work as well as it did,” Carley said. “It’s nothing short of amazing.”
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