American Oil and Gas Reporter - April 2015 - 120

SpecialReport: Performance Drilling
Project Economics
Ray Walker, executive vice president
and chief operating officer of Range Resources Corporation, says individual well
cost and performance metrics are obviously important, but overall project economics are the most critical factor in horizontal pad drilling.
Range, which has about 1.6 million net
acres of stack pay potential for the Marcellus, Utica and Upper Devonian shales
in southwestern and northeastern Pennsylvania, has been pad drilling in the state
since 2007.
"Early on, we realized we had to do
more with less, especially in terms of the
surface pad," Walker relates. "We realized
economy of scale matters, and infrastructure matters, whether it is water, roads,
pipelines or production facilities. It is helpful if you can amortize expenses over a
larger number of wells, but you have to
manage the overall economics. You have
to balance the number of wells to keep
whole project costs as low as possible."
Those efforts have evolved over time,
he states, beginning with Range's use of
top-hole air rigs that have a low day cost
to do surface work and set casing to the
horizontal section. The larger rig is then
brought in to drill the laterals.
"We also have developed a very efficient process for completions," Walker
says, adding that has allowed Range to
pump six-eight frac jobs in 24 hours, which
is record time.
Range uses one crew per pad, but employs zipper fracturing. For example,
Walker says if there are five wells on a

pad, the crew will fracture stage one on
each well and then move to stage two on
each well, etc. He says Range's crews are
able to pump six to eight stages a day, and
have done as many as nine.
He also notes that the first walking rig
that can literally walk itself from one well
to the next on the pad-now standard in the
industry-was designed for Range to use
in the Marcellus.
"In southwestern Pennsylvania, we are
drilling 114 percent longer laterals at 60
percent less cost on a per foot basis, compared with 2011," Walker claims.
He says Range averages 6,000-foot laterals, compared with the industry standard
of 2,000-3,000 feet in 2011.
Walker says Range has standardized
production facilities as well. "A lot of our
equipment is prefabricated," he offers. "All
our engineering is done in-house. It not
only is cheaper, but it also is more efficient
because the production equipment on
every pad is prefabricated and brought to
the location for assembly."
He says Range has drilled Marcellus
and Upper Devonian laterals off the same
pad, although it doesn't have any such
dual-zone pads planned this year. That is
not a matter of efficiency, however, but a
byproduct of low prices. "We literally are
pursuing only the very best opportunities
and what we need to do this year to optimize our capital efficiency in this price environment," Walker states. "We have cut
our capital budget 45 percent for 2015, but
we still plan to grow our production by 20
percent. That is a testament to our efficiency, the quality and diversity of our assets,

Range Resources Corporation utilizes zipper fracturing on its Marcellus Shale pad locations. The crew will fracture stage one on each well of a multiwell pad, then move to stage
two on each well, etc. Executive Vice President and Chief Operating Officer Ray Walker
says Range is able to pump six to eight stages a day, and has done as many as nine.

120 THE AMERICAN OIL & GAS REPORTER

and the exceptional performance and
track record of our team. In this environment, you have to pay attention to every
penny."
He says Range has a diverse position
in Pennsylvania, including super-rich liquids, wet gas, and dry gas, giving the company the flexibility to shift with the economics as commodity prices change. Although the infrastructure required varies
depending on the type of production,
Walker says the company's standard pad
design is the same, regardless whether
Range is exploiting wet or dry gas, and is
focused on the most efficient use of available technology.
Better Efficiency, EUR
"It is not often that you can improve operational efficiency and get better estimated ultimate recovery at the same time," reflects Joey Hall, executive vice president
for Southern Wolfcamp operations for Pioneer Natural Resources Company in the
Permian Basin. "But with pad drilling, the
improvement in efficiency combined with
the complex fracture networks created by
zipper fractures adds significant value. It
is a win-win: You are saving money and
getting better production."
Pad operations enable batch drilling,
Hall points out. "If you are using a waterbased drilling fluid for the intermediate
string and an oil-based mud for the lateral, for example, you can skid the rig over
and in a short time drill all the surface and
intermediate sections with one fluid system, then come back and drill all the lateral sections with a different mud system,"
he explains. "That means less downtime.
"The only downside to pad drilling is
the delay in starting production from the
first well," he allows. "You are delaying
the cash flow stream until all wells are
ready to commence production."
Before moving to Pioneer's Southern
Wolfcamp operations, Hall headed the
company's Eagle Ford Shale efforts in
South Texas. He says the development and
drilling processes are essentially the same
in both plays.
"You start trying to nail down the leasehold and appraise the field," he outlines.
"You are appraising broadly to get as much
information as possible. A single well
without any interference from nearby
wells is the best base line. When you start
well spacing tests and zipper fracs in pad
drilling, the number of variables that can
impact performance goes up significantly."

American Oil and Gas Reporter - April 2015

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