Uncertainty and Risk Management: Getting Away from Separation Factors

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1 Uncertainty and Risk Management: Getting Away from Separation Factors 1

2 Speaker Information Marc Willerth VP Survey Technologies February 15, 2017 MagVAR / Surcon 2

3 Speaker Bio Marc Willerth Currently with Magnetic Variation Services Formerly with Scientific Drilling & Schlumberger Purdue University / Chemistry & Chemical Engineering Denver, CO Specialized in: Wellbore Positioning Survey Corrections Positional Uncertainty Models 3

4 Company / Affiliation Information MagVAR / Surcon Services: Magnetic Modelling High accuracy local magnetic models (IFR1) Real-time local magnetic observatories (IFR2) High Resolution Global Magnetic Model (MVHD) Survey Management Real-time survey corrections Survey quality monitoring Fit-for-purpose uncertainty modelling 4

5 The Survey Process and Positional Uncertainty Take angular measurements Construct position in piecewise fashion Survey Uncertainty Positional Uncertainty Positional Uncertainty Risk! Risk responsibility falls on Drilling Group 5

6 What The Drilling Group Delivers Example Well ft TVD 10000ft-12000ft VS 135⁰ Azimuth Drilled to Plan with MWD 2-Sigma Ellipse ±200ft lateral ±80ft vertical 6

7 What May Be Actually in the Ground 100 wells All on the line Consequence of EoU 7

8 Field Development Scenario Single wells finished In-fill drilling begins How close can we get? 660ft? 330ft? Drilling Risk Assessment! 8

9 Drilling Objectives Stay on plan Minimize Cost Minimize Time Don t Hurt Anyone In the Process 9

10 Can The Well Be Safely Drilled? Drilling Danger: Well-to-Well Collision Could be as simple as plug and redrill Could be as severe as loss of well control Risk Management Tool: Separation Factor 10

11 Calculating a Separation Factor Many formulas exist e.g. SF = ΔC R r+r o S m Specifics aren t important here K σ s 2 +σ d 2 Common to all is they are a ratio: Separation Distance_ Combined Uncertainty 11

12 Separation Factors Rules and 10K Laterals Policy typically set SF=1 as a limit Near Surface Close Proximity reduces SF Middle Depths Few Issues Near TD High Uncertainty reduces SF 12

13 Gunbarrel View Separation Factor TD 400ft separation 13

14 From 100 Wells to 100 Pairs of Wells 14

15 What Do We Really Get 200 wells safely drilled with Standard MWD All drilled to the line All separated by 400ft on paper What is a reasonable expectation? 15

16 One Bad Pair Technical Collision, Crossed Paths The event separation factors are designed to minimize is rare ~1 in 416 probability for a given pair; ~ 1 in 5 for a set of 100 pairs 16

17 Pairs Outside The Realm of Drilling Risk Close Well Pair: 135ft apart Distant Well Pair: 740ft apart 17

18 Pairs Outside The Realm of Drilling Risk Close proximity (<200ft) or Excessively spaced (>600ft) wells ~1 in 6 probability for a given pair; Virtually assured in a set of 100 pairs 18

19 What Are The Other Costs of Uncertainty? Fracture Communication Poor Geological Models Uncaptured Reserves Not Just Collisions! 19

20 The Multi-Million Dollar Question Should drilling risk really be the driving factor in uncertainty reduction? 20

21 Brief Aside King, G. E., Hydraulic Fracturing 101 SPE ; Hydraulic Fracturing 101: What Every Representative, Environmentalist, Regulator, Reporter, Investor, University Researcher, Neighbor and Engineer Should Know About Estimating Frac Risk and Improving Frac Performance in Unconventional Oil and Gas Wells Fractures intersecting other fractures or other wells at the same depth in a pay zone are likely as the wellbore spacing is diminished This type of fracture intersection was seen by the author on about 10% of wells in the Barnett during

22 How Can We Fix This? Discuss uncertainty with the all the stakeholders Determine the cost of uncertainty, set a spacing tolerance Ex: Say fracture half length is estimated at 200 ± 75ft Design for 95% CI of separation to be 400 ± 150ft Determine the uncertainty limit per well (In this case, ~106ft) 22

23 This is No Longer Good Enough! 23

24 Reducing Uncertainty Most effective when targeting the largest systematic errors Magnetic reference uncertainty In-Field Referencing (IFR) Measurement uncertainty Multi-station Analysis (MSA) Vertical uncertainty BHA Sag Enable uncertainty reductions of 40-60% in long laterals 24

25 Applying IFR1 + MSA + Sag 25

26 Applying IFR1 + MSA + Sag Horizontal Uncertainty ±98ft Spacing Uncertainty ±139ft 26

27 Looking Ahead Laterals are getting longer than just 10K Need Enhanced Survey Management Use all available data, come up with customized uncertainty solutions Groundshots Rotational Checkshots Continuous Inclination Overlapping Survey Data Further reductions of 20% or more may be possible! 27

28 Conclusion Decisions using well position must account for uncertainty Even outside the drilling group Cost / benefit of uncertainty reduction should be at the asset level Survey program designed to optimize asset value More emphasis on well spacing, not just collision avoidance 28

29 29 Thank You