EME 580: Integrative Design of Energy & Mineral Engineering Systems

Economic Comparison of MultiLateral Drilling over Horizontal Drilling for Marcellus Shale Field Development
By, Click to edit Taha, Chew, Aditya, Ugur, Sarath, Date : 26th Amey, April 2011 Hadi

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Index
Problem Statement Concept Map Geology Reservoir Simulation Stimulation/Hydraulic Fracturing Well Design Water Management Economics Conclusion
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Problem Statement
Economic Comparison of Multi-Lateral Drilling

over Horizontal Drilling for Marcellus Shale Field Development

Compare Performance of Multilateral Well

Completion over Horizontal Well Completion

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33

Concept Map
Reservoir Properties # of Stag es Pad Fluid Choice of Proppant Multi Stage Fracking Stimulation Geology Reservoir Simulatio n Water Supply Economical Comparison of Multi lateral wells over Horizontal Wells Horizonta l Well Multilateral Well CMG Simulati ons Well Integr ity

Selectio n of Location

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Well Design Drill Bit Cementing/C asing Design Water Managemen t

Waste Water Treatment

Economic Analysis

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Geology

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Shale Gas Plays

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Isopach

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Stratigraphy
Formation
CATSKILL TRIMMERS ROCK TULLY MAHANTANGO MARCELLUS BUTTERMILK FALLS LIMESTONE ESOPUS RIDGELEY SHRIVER CHERT PORT EWEN SHALE MINISINK LIMESTONE NEW SCOTLAND COEYMANS RONDOUT DECKER BOSSARDVILLE LIMESTONE POXONO ISLAND BLOOMSBURG SHAWANGUNK MARTINSBURG UTICA SHALE POINT PLEASANT TRENTON LIMESTONE BLACK RIVER LIMESTONE BEEKMANTOWN Depth to the Top ( in Feet) 0 2945 5314 5366 7046 7748 8055 8510 8527 8580 8710 8725 8948 9085 9142 9224 9322 10254 11148 12560 13178 13286 13523 13724 13763 Depth to the Bottom in Feet) 2945 5314 5366 7046 7748 8055 8510 8527 8580 8710 8725 8948 9085 9142 9224 9322 10254 11148 12560 13178 13286 13523 13724 13763 ( Thickness in Feet) 2945 2369 52 1680 702 307 455 17 53 130 15 223 137 57 82 98 932 894 1412 618 108 237 201 39 (

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Marcellus Shale Formation

Properties:
Permeability : 1*10-5mD Porosity: 9% TOC( Total Organic Carbon) : 0.64 1.8 Ro( Vitrinile Reflectance) : ~4.5 ( Dry Gas) Fracture Spacing : 0.9 ft Reservoir Temperature : 1500F Initial Reservoir Pressure : 4500 Psia
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Lithology of Formation

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Reservoir Simulation

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Physical Attributes of CMG Model

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Horizontal Wells

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Gas Rate Case 2 (without Hydraulic Fracture)

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Multilateral wells

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Gas Rate Case 3 (Without Hydraulic Fracture)

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Comparative Study (Without Hydraulic Fracture)

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Well Stimulation
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Comparison of different Proppants

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Comparison of different Proppant and Fluid Combinations

S. No.
1

Fluid and Proppant used

Micropolymer (min. gel loading) + Brady (20/40)

Propped Pumping Rate + Half Length Propped Fracture Formation No. of Stages (ft) Height (ft) Width (in) FcD Permeability (mD)
30 bpm for 10 stages 30 bpm for 10 stages 211 210 215 213 292 293 295 203 194 182 421 420 430 425 664 672 692 626 391 466 0.61 0.58 0.82 0.93 1.26 1.22 1.3 1.09 0.92 0.94 400 400 400 400 400 400 400 400 400 400 1 * 10^-5 1 * 10^-5 1 * 10^-5 1 * 10^-5 1 * 10^-5 1 * 10^-5 1 * 10^-5 1 * 10^-5 1 * 10^-5 1 * 10^-5

Purgel (max. gel loading) + Brady 2 (20/40) 3 4

Purgel (max. gel loading) + Brady 100 bpm for 10 (20/40) stages Purgel (max. gel loading) + Brady 200 bpm for 10 (20/40) stages 300 bpm for 4 stages 250 bpm for 4 stages 200 bpm for 4 stages 150 bpm for 4 stages 65 bpm for 10 stages 65 bpm for 10 stages

Micropolymer (min. gel loading) + 5 Carbolite (20/40) 6 7 Micropolymer (min. gel loading) + Carbolite (20/40)

Micropolymer (min. gel loading) + Carbolite (20/40) Slick Water + WaterFrac + Carbolite(20/40) + 8 CarboProp(30/60) Slick Water + WaterFrac + Carbolite(20/40) + 9 CarboProp(30/60) Slick Water + WaterrFrac + CarboLite(20/40) + 10 CarbolProp(30/60)

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Model Parameters
Characteristics PAD fluid Fracturing Fluid Proppant Matrix Permeability (mD) Fracture Type Porosity Initial Reservoir Pressure Reservoir Temperature Value Slick Water Slick Water CarboLite + CarboProp 1 * 10-5 Infinite Acting 9% 4500 psia 1500F

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Lithology of Reservoir
Layer # Top of zone (ft) 0.0 2945.0 5314.0 5366.0 7046.0 7748.0 Lithology Fracture Toughness (psiin) 1000 2000 500 500 2000 500 Composite Layering Effect 1.00 1.00 1.00 1.00 1.00 1.00 1 2 3 4 5 6 Catskill Trimmer Rock Tully Mahantango Marcellus Buttermilk F

Layer # Top of zone (ft) 1 0.0 2 2945.0 3 5314.0 4 5366.0 5 7046.0 6 7748.0 4/26/2011

Stress Stress (psi) Gradien t (psi/ft) 1826 0.620 3097 0.750 3631 0.680 4220 0.680 5548 0.750 5269 0.680

Young's Poisson' Total Ct Pore Fluid modulus s ratio (ft/min) Perm. (psi) (mD) 5.0e+06 6.0e+06 1.0e+06 1.0e+06 6.0e+06 1.0e+06 0.20 0.25 0.30 0.30 0.25 0.30 6.726e-03 2.127e-03 3.008e-03 6.726e-03 2.127e-05 2.127e-03 1.00e+00 1.00e-01 2.00e-01 1.00e+00 1.00e-05 1.00e-01

Treatment Schedule

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Fracture Profile

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Results for Stimulation

Parameter Height of Fracture (ft) Propped Height (ft) Top Depth of Propped Fracture (ft) Bottom Depth of Propped Fracture (ft) Fracture Half Length (ft) Propped Fracture Half Length (ft) Average Fracture Width (ft) Initial Fracturing Pressure (psia) Volume of Fluid for single job (gallon) Total Volume of fluid required (gallon) 4/26/2011 Value 476 466 6931 7397 186 182 0.94 6390 180,000 1,440,000

Advantages of the Stimulation job

Lower Cost for Stimulation Less time required to complete Stimulation

job

Increasing sweep efficiency by increasing the

area in direct contact with the wellbore

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Structural Representation of Horizontal Well

Case 1

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Production Values Case 1

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Horizontal Well Case 2

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Production Values Case 2

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Structural Representation of Multilateral Well

Case 3

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CMG Model Grid Representation

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Production Values Case 3

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Comparision of Production Rates

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Well Design

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Drilling Procedure Drill Bits Selection Mud Design Casing Design Multilateral Junction Open Hole lateral

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Basic Multi-lateral Drilling

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Drill Bit Selection

PDC Bits with Optimized

Torque Management Technology, Cutting Structure Aggressiveness and Unique Roller Cone Steel Tooth better Torque management.

Higher ROP, WOB and

Although the capital cost

is 1.5 higher than Tungsten Carbide Bit, it 4/26/2011

Mud Design
Similar log close to well site that contains

similar strata
0 0 2 4 2 4 6 8

incorporated safety factor ofEMW vs Depth 1.2 Pressure vs Depth

10 12 0 0 2 4 6 8 10 12 2

4 Depth

Depth

6 8 10 12

10

Mud selection: 4/26/2011

water based mud Equvalent Mud Weight or potassiumchloride based mud (11.5- 12 ppg)
Pressure (psi)

12

Casing Design
Three design factors:
Factor Collapse Burst Tension Safety Factor (API Standard) 1.4 1.2 1.8

Options: J-55, C-75, N-80, C-90 and P-110 All casing grades are check first to so that is

can withstand the axial tension, burst pressure and collapse pressure at respective depth 4/26/2011 and cost effective.

Casing Design
Conductor (30ft):

- 30 ft 1200 ft

J55, 13-3/8

Surface (1200ft):

P110, 9-5/8 [21.85 lb/ft]

Intermediate

- 5200 ft 7250 ft 7600 ft

(5200ft) : P110, 75/8 [15.52lb/ft]

Production
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(7250/7600 ft): P110 ft, [14lb/ft]

Contd
Rate of build angle:
5000 5500 6000 6500 7000 7500 8000 8500 9000 9500 10000

Well Profile
0 2 4 6 8 10 12

50/50ft

2 pseudo-zone

targets:
1. L1 7572.5 ft 2. L2 7221.5 ft .KOP(Kick off Point): 1. L1 6750 ft 2. L2 6350 ft
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Depth (ft)

Lateral Length (ft)

Multilateral Junction
Shale formation:
unexpected plugging of the lower

lateral

Implement Tieback junction

sleeve (TBJS)

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Cementing
Class H cement v from surface to 8000 ft v can be used with typical Additive: GAS CHECK -Halliburton v Specially for gas drilling

accelerator and retarder

operation
v Avoid gas flow into the
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annulus after cement has

Open Hole, Multi-stage Fracturing (OHMS)

Instead of cemented liner plug and perf, OHMS is applied No cement is required Increased the drainage area of the well Increase production by 30% [Barnett Shale] New to Marcellus Shale Availability: Packer Plus Inc.
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Water Management

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Water and Wastewater management

Location of the reservoir : Hawley borough (border between

Pike county and Wayne county)

Nearest City : Milford, Pike County, PA (distance approx 34

miles)

Major watersheds
Delaware River which flows beside Milford Township

adjoining areas (average water demand 185,000 to 4/26/2011 195,000 gallons per day)

Milford springs serves the Borough of Milford and

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Milford Township Pike County

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Regulations pertaining to water withdrawal

The Delaware River Basin Commission (DRBC) is the primary agency

overseeing water-related activities in the Delaware River Basin.

The responsibilities of the commission include water quality

protection, water supply allocation, regulatory review/permitting, water conservation initiatives, watershed planning 100,000 gallons per day (gpd), based on a 30-day average.

The DRBC requires approval for surface water withdrawals exceeding They also require approval for a withdrawal from groundwater wells

in the DRB exceeding 100,000 gpd, based on a 30-day average, outside of the Southeastern Pennsylvania Groundwater Protection Area.

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 Water trucks and trailers from the DRB to provide water to

be used for different purposes.

Water would then be pumped into lined storage

impoundments(pits) and stored until it is transported by temporary ground piping to the well pad locations for a fracture treatment.(Example of such a pit is given below)

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Water reuse
Considering the fact that the figures presented before, for subsequent fracture jobs huge amount of fresh water supplies would be required. This compels us to use the option of recycling the water and treat it so that it can be blended with less fresh water for fracing new wells instead of using the same amount of fresh water. But there are some issues related to water treatment and reuse:
The main mechanism is water/salt separation process called

as demineralization with membranes.

Demineralization can be achieved with thermal systems or

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Drilling fluids disposal

Drilling fluids are an important part of the drilling

process as they circulate the rock cuttings to the surface to clear the borehole, cool and lubricate the drill bit as well as maintain downhole pressure.

The drilling fluids are also stored in steel storage tanks

to prevent infiltration to the surrounding land or groundwater sources.

This also helps in containing to some extent the spread

of Naturally Occurring Radioactive Materials (NORMs) such as Ra-226 and Ra-228 which are usually found in low concentrations in most of the drilling fluid wastes as they are brought to the surface.
These have to be disposed off in licensed disposal pits
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around PA which are equipped with radiation monitors

Technical Capabilities of RO
In general, RO can treat water TDS concentrations

up to 50,000 mg/L. Latest RO technologies can treat up to 60,000 mg/L TDS, at a rate of approximately 6,300 BPD.
RO treatment can be effective in removing sand,

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silt, clay, algae, protozoa (5 to 15 microns), bacteria (0.4 to 30 microns), viruses (0.004 to 6 microns), humic acids, organic/inorganic chemicals, and metal/nonmetal ions.

Before Treatment TDS concentratio n (mg/L) Chloride (mg/L) TSS (mg/L) Barium (mg/L) 13,833

After Efficiency Treatment 128 99.1 %

8393 64,5 34,9

27 0 0

99.7 % 100 % 100 %

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Technical Limitations
RO membranes are subject to fouling if

proper pre treatments are not in place and can have low water recovery efficiencies. ( Approximately 40% and 65%)
When high TDS concentration ( >50,000

mg/L) the result is a higher brine stream, which will increase the disposal costs. However, high recovery rates ( 75%-90%) can be obtained when TDS concentration is 4/26/2011 below 25,000 mg/L.

Commercial RO Systems for Shale Gas Reservoirs

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Water Requirement
Amount of water required for fracking = gallons 1,500,000 Total amount of water (drilling + fracking) = 2,000,000 gallons From the literature, 30% to 50% of flowback returns to the surface (over a period of time) Amount of fracwater generated = 750,000 gallons (approximate average)
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Cost
RO water treatment systems require less energy compared

to other systems such as, thermal treatment process and other membrane technologies.

In RO treatment, the capital cost ranges from approximately

$3 to $7/gpd depending on the size, location, construction cost etc. The operation cost is about $2.50 per 1,000 gallons.

According to the approximate cost range the capital cost of

RO system would be $3,750,000 and the operation cost would be $37,500.

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Economic s
Income Tangible Cost Intangible Cost Discount Cash Flow Analysis

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Recap : 4 categories of economic viewpoints Development economics / Heads up

Carried interest/ Overriding Royalty Farm-out Farm-in

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Estimated Tangible Cost

Casing
24 conductor casing 0.5 thickness $64 per foot (6/1/10) [30ft] - $1920

20 intermediate casing 0.5 thickness $48 per foot (6/1/10) [1200 ft] - $57600

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Estimated Intangible Costs

Site Preparation ~ $100k Drilling Contractor Services ~

$120k

Materials & Supplies ~ $50k Logging, Stimulation,

Perforations ~ 400k $3700k

Power, Water disposal ~ Installation, Completion,

Labor ~ $40k
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Total Income

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Linear Regression Model

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6666

Future Price Prediction

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Discount Cash Flow Analysis

Feasible if NPV > 0

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Net Revenue vs Discount Rate

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NPV vs Discount Rate

~42 % per annum

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Conclusion
Minimum Rate of Return = 42% per annum Breakeven Time for avg ROR (10%) =

8/11/2015

Multilateral well with hydraulic fracturing is

most profitable

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References
Ro and TOC values taken from

http://www.dcnr.state.pa.us/topogeo/oilandga s/display/Pike.pdf eolmag/pdfs/v38n1.pdf DCNR.pdf

http://www.dcnr.state.pa.us/topogeo/pub/pag http://www.marcellus.psu.edu/resources/PDFs/ Isopach data taken from

http://geology.com/articles/marcellus/marcell us-shale-map.gif
Bill Greier and Jim Bray,Halliburton
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Identification of Production Potential in

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References

Benny Peodjono, John Zabaldano, Irina

Shevchenko and Christpopher Jamerson. "Case Studies in the Applicaion of Pad Design in Marcellus Shale." SPE 139045 (2010): 9. Howell and Greg Vargus. "Optimizing Open Hole Completion Technique for orizontal FoamDrilled Wells." SPE 125642 (2009): 17.

Dave allison, Don Folds, David Harless, Mat

Dosinmu, E.J Idiodemise and A. "A Model for

Completion Selection for Multilateral and Multibranched Well." 2007.

Jack Johnson Jr., SPE, Sonat Exploration, et al. 4/26/2011 7373

References

Pike County: Where

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People, Land and Water Meet :A Citizens Guide to Clean Water : Pike County Conservation

7474

Appendix

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Well Casing design

Length Segment (ft) Type 2945 2369 52 1856 1542 Cemented Casing Cemented Casing Cemented Casing Cemented Casing Cemented Casing Casing ID (in) 11.514 9.582 7.628 5.620 5.290 Casing OD Weight Grade (in) (lb/ft) 12.000 10.000 8.000 6.000 5.750 30.510 21.850 15.520 12.000 14.000 J-55 J-55 P-110 P-110 P-110

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