Drilling technology increasing Western Canada gas supply

Mark Pinney, Stephen Rodrigues
Canadian Association of Petroleum Producers
Calgary

While the demand for Western Canadian Sedimentary Basin (WCSB) gas is set to grow in the coming years, the petroleum industry, aided by improvements in drilling, production, and exploration technology, is expected to meet this challenge.

To ignore the impact technology has had, and will have, on natural gas supply, will inevitably lead to a dramatic under-evaluation of the resource base. Analysts have fallen into this trap before, most notably in the 1970s, which resulted in unfounded concerns.

The industry in Western Canada continues to look for and experiment with new production and exploration techniques that have the potential to improve access to natural gas reserves. This willingness to utilize new technologies bodes well for future gas-supply potential.

Pipeline expansion

With the recent completion of several large pipeline expansions that have significantly increased the takeaway capacity from Western Canada, this region is becoming increasingly integrated with the North American natural gas market.

The introduction of the Alliance Pipeline project and its associated 1.3 bcfd of export capacity in the year 2000, likely means that the process of integration will be complete as access from the WCSB to export markets will no longer be hindered by pipeline-capacity constraints.

Access to new markets in turn, places more demands on the basin in the form of higher production requirements. Thus, questions regarding the ability of the WCSB to meet these increased demands have been at the forefront of discussion within the natural gas industry.

Furthermore, some forecasters recently made announcements calling for the U.S. gas market to grow from current levels of about 22 tcf to 30 tcf by 2010.¹ The combination of both increased export capacity, as well as access to a growing market, has fueled the debate regarding the potential for the WCSB to meet the future levels of demand that will be placed upon it.

This debate is not a new one. Throughout its history, the ability of the natural gas industry to meet demand over the long term has been questioned, occasionally giving rise to a prevailing view that natural gas is a relatively scarce commodity.

The ability of the industry to continue to innovate and successfully implement new technologies will be the single most important determinant as to whether the natural gas industry in Western Canada can meet this growing demand.

The track record of the industry, with respect to technological advancement is sound, and as discussed below, there are no signs that the well of technological innovation is drying up.

The impacts of technological change serve to lower finding and development costs while improving gas recovery. Thus, advancements in the ability of producers to find gas directly increases the size of the resource base.

Lower development costs associated with technological change also add to the resource base as discovered resources, once considered uneconomic to produce, become profitable. The impact of advancing technology on the resource base can be seen in the National Energy Board's assessment of the gas resource base in Western Canada, which more than doubled over the past 20 years (Fig. 1 [99,704 bytes]).

Evidence of technological impact

It is not an easy task to directly quantify the impact of technological change on the natural gas industry. However, there are trends in the industry, especially in Western Canada, regarding its ability to add more reserves at lower costs. These trends indicate marked improvements in the way the industry goes about finding and developing natural gas reserves.

Since the early 1980s, there has been a pronounced upward trend in the WCSB regarding the amount of gas reserves that have been added per meter as related to exploratory drilling activities (Fig. 2 [84,485 bytes]). These data suggest that over time, the industry has become more successful in targeting the location of potential natural-gas deposits, obtaining more for its expended drilling effort.

In addition to being able to find more gas reserves per meter drilled, the gas industry is able to drill exploratory wells more quickly than was formerly the case. Fig. 3 [77,884 bytes] shows that the number of days taken by a rig to drill an exploratory well has fallen from more than 17 days in the early 1980s to less than 10 days today.

It is not surprising, therefore, that the number of meters drilled per day, per rig on average, has shown a sharp increase over this period from around 70 m/day to over 120 m currently.

Today, the industry is not only drilling wells quicker, but is also drilling exploratory wells cheaper than was the case only 2 decades ago. Fig. 4 [78,859 bytes] shows that in constant dollars, the cost of drilling an exploratory well in Western Canada has fallen from almost $600/meter in 1981 to less than $300/meter today.

The trends examined above show the impact that technological change has had on the industry. Today, the industry can find resources quicker and cheaper than was formerly the case. Those technologies that have been at the forefront in achieving these results are discussed below.

Drill bit innovations

Dramatic improvements in drill bit technology have played a major role in the industry's ability to drill wells more quickly and cheaply. As drill bits have become more durable, resulting in fewer trips to replace them, the amount of time spent in nondrilling activities has been substantially reduced.

Tri-cone rolling cutter bits have been a standard industry tool for a number of decades; however, recent improvements in cutting elements, through the introduction of tungsten carbide inserts and more recently through the development of polycrystalline diamond compact (PDC) technology, have helped drill bit performance.

To form the PDC material, graphite is mixed with a catalyst binder that is then subjected to pressures of 750,000 psi and temperatures in excess of 1,400° C. PDC wafers can be bonded to tungsten-carbide substrates and the recent ability to bond to nonsymmetrical and symmetrical curved surfaces has expanded the horizons for using this technology.

Using PDC bits, operators are reporting increased rates of penetration, particularly in shale sections, with commensurate savings in costs.² Technology has also been applied to create more durable bearings for the roller-cone bit, thus making tri-cone bits more capable of handling the higher revolutions per minute required for horizontal drilling work.

Operators are reporting results with these recent advancements in drill bits of more than a third better drilling time performance.²

Improvements to drill bit technology are still being made, specifically with the application of computer-simulated designs to build bits for specific purposes. Other areas of research involve enhancements to tungsten-carbide tooth bits that use varying levels of cobalt in their construction to make them less susceptible to fracturing. This application has resulted in the improved maintenance of an in-gauge gauge hole.

Coiled-tubing drilling

Another recent drilling innovation is the use of coiled tubing instead of conventional drill pipe that comes in stacked segments. This technology has recently been employed primarily in the drilling of shallow gas wells in Western Canada and the initial results show penetration rates double that of conventional rig rates. ³

Even more recently, advances are being made with respect to materials used to manufacture coiled tubing. For example, composite coiled tubing (CCT), made of braided carbon and glass fibers and weighing 60% less than steel coil, is publicized to have 10 times longer life. Up to 4,000 m of CCT can be run on a reel, triple the current limitation.⁴

Casing drilling

Another idea that is in the very early stages of its introduction to the industry in Western Canada is a drilling technique known as casing drilling (OGJ, May 17, p. 58). Casing drilling is intended to eliminate the use of drillstring as defined in conventional rotary drilling.

Instead, the drillstring consists of standard oil field casing that is used to simultaneously drill and case the well. Spinning the casing with a top drive rotates the drill bit. Furthermore, the casing does not have to be tripped for bit and bottom-hole assembly changes, as these are performed through wire line retrieval.

Proponents of this technology claim that retrieval of bottom-hole assembly, which on average comprises 35% of the total time to drill a well, will be 5-10 times faster than conventional drill pipe tripping.⁵

Horizontal and underbalanced drilling

Over the past 20 years, horizontal drilling has progressed from an exotic technology to a standard industry tool. Drilling a well horizontally through the pay interval exposes as much reservoir as possible to the well bore, normally resulting in increased well productivity.

This practice has itself benefited from technological gains in other areas such as improved drilling muds, downhole motors, and measuring-while-drilling instrumentation. The emergence of horizontal drilling has enhanced the productivity of individual pools all over the WCSB and has been credited with significantly boosting the basin's economically recoverable reserves.⁶

While horizontal drilling has most commonly been associated with oil wells, it is also used in gas production, and more so now with the emergence of underbalanced drilling (UBD). In UBD, the hydrostatic pressure of the drilling fluid is maintained lower than the reservoir pressure, reducing the risk of formation damage by preventing drilling mud and cuttings from invading the pay zone.

Underbalanced conditions are usually achieved by injecting gas into the drilling fluid in order to reduce the weight of the fluid column. In the WCSB today, the majority of horizontal UBD activity is being used for gas wells rather than oil.⁷

Seismic technologies

Most of the technologies discussed so far have been related to drilling. However, technology has also significantly changed exploration methods so that when drilling does occur, the likelihood of drilling dry holes is reduced.

A significant innovation over the last 15 years is the use of three-dimensional (3D) images from seismic surveys. While more expensive that traditional 2D seismic in terms of up front costs, 3D seismic saves on other costs because companies can identify the best targets for exploratory drilling and production-enhancement programs.

The tremendous gains in computer technology have dramatically reduced the costs of data processing involved in these activities. The Petroleum Communication Foundation reports that the cost of interpreting some types of seismic data has dropped 80% in a decade.⁸

There are numerous examples in the WCSB where the use of 3D seismic has resulted in successes where older methods have failed. In the foothills regions of Alberta, Canadian 88, an active producer in this region, was able to tap an extensive, deep sour gas reservoir as a result of advanced interpretation of 3D seismic mapping. Other companies previously active in this region of the foothills had poor results but did little, if any 3D seismic work in the area.⁹

References

1. Annual Energy Outlook 1999, the Energy Information Administration.
2. Sword, M., "Tips of the Industry-Bit Technology works on Continuous Improvement," Nickles New Technology Magazine, December 1997, p. 40.
3. Creighton, J., "This Immortal Coil? New Rigs Duel Against Singles," Nickles New Technology Magazine, December 1998, p. 24.
4. Creighton, J., "Coiled Tubing Ideas Linking World," Nickles New Technology Magazine, October 1997, p. 14.
5. Marsters, S., "You say you want a revolution," Nickles New Technology Magazine, December 1998, p. 14.
6. Koch, G., "Horizontal's Happening," Oilweek, November 1996, p. 24.
7. Marsters, S., "Technology Counters the Cost of Underbalanced Drilling," Nickles New Technology Magazine, December 1998, p. 38.
8. "Technology for Exploration and Production: a Backgrounder," Public Information Paper, Petroleum Communication Foundation, May 1996.
9. Lamb, M., "Busy Season," Oilweek, Jan. 5, 1998, p. 16.

The Authors