Devon

When crude oil prices crashed in the second half of 2014 and 2015, producers survived by becoming leaner and more efficient. That transition included drastic reductions in the rates paid to services companies while wringing ever more oil and gas out of each well and, in the process, permanently altering the economics of drilling and completion. This year, producers are again facing a lower-price environment; since early October (2018), crude prices have dropped more than 30%. In the current, more conservative investment environment, can producers do it again? Can additional value be squeezed out with bigger well pads and longer laterals? Today, we continue a series exploring the benefits and risks of these highly concentrated and highly complicated operations. 

Dominator. Showboat. Brass Monkey. These are not player names in the re-established XFL; these are project names given to colossally proportioned drilling pads in the Permian and Appalachia. A single one of these well pads can be home to 20, 30, even 60 or more permitted well spots, each with miles-long laterals branching out in multiple directions. In today’s blog, we begin a series exploring the motivations that sparked this trend to larger pads and discuss the impact they’re having on the upstream and midstream sectors. 

Between them the TransCanada Grand Rapids, Enbridge Norlite and Devon/MEG Access pipelines currently being planned and built out will be able to deliver an extra 1 MMb/d of diluent to oil sands producers by 2017. That’s more than producers currently expect to need until 2030. The diluent will be shipped north from Edmonton terminals to production plants and blended with bitumen before making the return trip as dilbit or railbit destined for long-haul transport by pipe or rail to U.S. and Canadian markets. Today we describe the pipeline build out plans.

Crude oil production in the Oklahoma and Kansas Anadarko basin increased by 50 Mb/d in 2012 and is expected to increase from 190 Mb/d in December 2012 to 240 Mb/d in December 2013 – another 50 Mb/d (source: Bentek). These numbers are slow and steady compared to the bigger Williston Basin to the north where production jumped by 230 Mb/d in 2012 and is expected to increase by a similar amount this year. And yet a hard core of producers is happily ensconced in the Anadarko enjoying solid returns from drilling. Today we ponder changing approaches to shale production.