Multi-Well Pad Drilling Technology and North America’s Shale Oil Boom

Multi-well pad drilling—when multiple wells are drilled from a single drill site—is allowing companies to produce oil more efficiently and at a significant cost savings, resulting in record production for shale oil producers.

The market for multi-well pad drilling technology is expected to surpass US$180 billion by 2024, according to a report by Global Market Insights, as oil & gas sector companies look to more unconventional extraction methods to meet rising demand for energy resources. Analysts expect to see the most growth in the North American onshore market segment due to the large number of shale exploration and production projects.

“U.S. producers are enjoying a second wave of growth so extraordinary that in 2018 their increase in liquids production could equal global demand growth,” the International Energy Agency (IEA) said in a February report. “We are seeing United States production rising very, very dramatically before our very eyes and that’s likely to continue in 2018,” Neil Atkinson, head of the IEA oil industry and markets division, told CNBC. The IEA believes the United States may well surpass Saudi Arabia and Russia as the world’s leading energy producer by 2019.

Not to be outdone, Canada’s oil producers are also working hard to grab a bigger piece of the global oil market, with a focus on the Duvernay and Montney formations, which “could rival the most prolific U.S. shale fields,” reports the Financial Post. “Canada, by contrast, offers many of the same advantages that allowed oil firms to launch the shale revolution in the United States: numerous private energy firms with appetite for risk; deep capital markets; infrastructure to transport oil; low population in regions that contain shale reserves; and plentiful water to pump into shale wells.”

Multi-well pad technology behind shale oil boom

Traditional extraction methods involve drilling down vertically from a new pad—the location that houses the wellhead—for each new well, which means that even if the new location is merely a few yards away the rig needs to be disassembled, hauled to the next pad and then reassembled. This entire process can be time and labor intensive not to mention costly to both the company and the environment.

“Pad drilling allows producers to target a significant area of underground resources while minimizing impact on the surface,” states the U.S. Energy Information Administration (EIA). “Concentrating the wellheads also helps the producer reduce costs associated with managing the resources above-ground and moving the production to market.”

Multi-well pad drilling has “played a linchpin role in opening up capital-intensive tight formation oil plays . . . as part of a broader revolution in drilling and completion techniques,” according to Richard Mason, Chief Technical Director for industry publisher Hart Energy. “Pad drilling enabled the industry to employ factory-like economies of scale to shorten cycle time and increase rig productivity so that hydrocarbons are brought to market more quickly or, in the case of batch completions, in greater volume.”

Two innovations in the oil & gas sector are driving the market for multi-well drill pad technology: horizontal drilling and hydraulic walking systems.

Game-changer: horizontal drilling

Advancements in horizontal drilling is a close second to hydraulic fracking in terms of the technologies behind the increased levels of crude oil production in the United States and Canada over the past decade. The EIA recently reported that increasing nationwide oil production over the last few years has been largely driven by new shale oil well production which accounted for 54 percent of the country’s overall oil production in 2017. According to the EIA, higher productivity can be linked to growing use of hydraulic fracturing and the increased drilling of longer horizontal wells, which have brought down costs sharply.

Horizontal drilling has reduced the amount of time it takes to drill wells and is especially suited to unconventional oil plays such as shale, Leonard D. Jaroszuk, President and CEO of Enterprise Group Inc (TSX:E), told INN. “Well pockets can have multiple zones at various depths, the product in the ground can be extracted from multiple points horizontally or side pockets that may have been missed in past single well sites.” Enterprise Group provides access to specialized, high-end technology and equipment for companies in the energy industry.

Majority of multi-well pad drill rigs designed with a hydraulic walking system

“One of the industry’s more recent innovations, pad-to-pad moves, underscores the efficiency gains from rig mobility and pad drilling,” according to the EIA. These pad-to-pad moves were made possible by the advent of hydraulic walking systems, or walking rigs, which were first employed in shale operations in 2004.

Walking rigs are equipped with hydraulic rams that lift the drill rig and a track system that moves the rig to another location. This technological advancement allows companies to transport fully-assembled drill rigs from pad to pad without the cost and loss of productivity associated with rigging down and rigging back up. Drill rigs that can walk themselves to the next well site have also led to the design of more efficient and versatile pad configurations, cutting the time needed to drill multiple wells.

While multi-well pads using walking rigs accounted for about 5 percent of wells drilled in U.S. unconventional plays, by 2013 that number had reached 58 percent. “Today the number of these new mobile rigs has surpassed the number of older conventional units,” reported E&P Magazine.

Increasing efficiency, reducing costs and minimizing environmental footprint

The idea for onshore pad drilling has its roots in offshore drilling operations, where multiple direction wellbores are drilled from one platform. The advent of horizontal drilling coupled with improved rig mobility made possible by hydraulic walking systems allows companies to drill multiple wells (as many as five to ten) going in different directions from a single pad at surface—targeting several formations from a central location—while at the same time reducing both operational and environmental costs.

Pad technology allows companies to split containment and completion costs across multiple wells. “Multi-well pads lower site moving costs and improve efficiency as equipment is used on the same site for multiple wells and projects. This method drills several wells horizontally on one large pad rather than a vast number of singular wells spaced out across the frontier,”Jaroszuk told INN.

Rigs can be mobilized within a matter of hours rather than days, and only one pipe line is needed for multiple wells at one site, rather than a pipeline for each single well location. “A large and long-time client of ours, that is working in the Montney formation of Alberta and BC, has seen significant increases in downhole production and efficiencies in site costs over the years after transitioning from single well sites to multi-well pads. These benefits have played a big role in further implementation of multi-well pads,” said Jaroszuk. “We have grown alongside
this shift and have adapted and built our equipment to facilitate these pad site requirements and efficiencies.”

While a single pad can house as many as 10 to 12 wells, oil companies are finding the “sweet spot” is between four and six wells per pad. According to a report by Transparency Market Research, the multi-well pad market is forecast to expand significantly by 2025 with much of that growth being “dominated by the less than 6 pad size.”

Drilling multiple wells from one location also has environmental benefits in that it causes significantly less surface disturbance and means less road construction and less truck traffic—which translates into decreased diesel emissions. “Accessing multiple wells at one location also minimizes the environmental footprint because significantly less land surface is disturbed. Companies only need to build one road to a multi-well pad, whereas single well locations each need their own road access,” explained Jaroszuk.

The Takeaway

Multi-well pads, horizontal drilling and walking rig technologies have allowed the North American shale oil producers to compete as leaders in the global markets. With the growing demand for energy and fuel, that trend is likely to continue as US and Canadian oil companies find more ways to maximize production efficiencies through cost-cutting technologies.