American Oil and Gas Reporter - September 2017 - 77

SpecialReport: Horizontal Wellbore Construction

Economic Analysis

expenditure by 20 percent and increasing
operating expenditures from $0.25 to
$0.60 an Mcf. With reduced CAPEX,
field NPV would peak at $86 million
with 1,300-foot spacing at a $3 gas price,
$108 million with 1,200-foot spacing at
$3.50, and $129 million with 1,100-foot
spacing at $4.00. Under the higher OPEX
scenario, well spacing in excess of 1,400
feet would be required at both $3.00 and
$3.50 gas prices. Since that theoretically
would mean pumping 4,000 pounds/foot
of proppant, spacing was capped at 1,400

TABLE 2
Base Case Forecasted EUR
Frac half-length (ft)

Sand/ft (lb/ft)

EUR (MMcf)

EUR/1,000' (Bcf/1,000')

400

1,000

16,599

2.37

450

1,500

18,666

2.67

500

2,000

20,730

2.96

550

2,500

22,793

3.26

600

3,000

24,852

3.55

650

3,500

26,909

3.84

700

4,000

28,963

4.14

FIGURE 3
History Match Results
15,500

20.50

15,000

20.00

14,500
14,000

19.50

13,500

19.00

13,000

1850

12,500
12,000

18.00

11,500

17.50

11,000
10,500

17.00

10,000

16.50

9,500

16.00

9,000
8,500

15.50

8,000

15.00

7,500
7,000

14.50

6,500

14.00

6,000

13.50

5,500
5,000

13.00

4,500

12.50
12.00

Pressure (psi)

The final step is using economic analysis to determine the optimum well spacing
for the base case. The first analytical
scenario was run at various flat gas prices
of $3.00, $3.50 and $4.00 an MMBtu. In
general, as gas prices increase, well
spacing decreases. Therefore, well spacing
analysis depends heavily on gas prices.
Table 3 summarizes the economic results
for the base case with the optimum case
for each gas price highlighted in green.
At $3/MMBtu, field NPV based on a
1,029-acre drainage area peaks around
$79.2 million when well spacing is 1,400
feet. Since 700 feet is the largest possible
half-length that can be reached pumping
4,000 pounds/foot of proppant, 1,400foot spacing is considered optimum at
this gas price. At $3.50/MMBtu, the optimum well spacing appears to be around
1,300 feet since the difference of field
NPVs between 1,300 and 1,400 feet spacing is only $3,850 and there are risks associated with pumping proppant loadings
higher than 4,000 pounds/foot. At
$4/MMBtu, the optimum well spacing
for the base case appears to be 1,200
since the difference between field NPVs
of 1,200 and 1,300 feet is only $2,307.
The second scenario was run to understand the impact of apparent dimensionless fracture conductivity on well
spacing by keeping all other parameters
constant and reducing FCD from 142 to
50. NPV at $3/MMBtu peaks at about
$73 million at 1,400-foot spacing. At
$3.50/MMBtu, the optimum case ($93
million NPV) is 1,200 feet, and at
$4/MMBtu, the optimum case ($113 million NPV) is 1,100 feet. Therefore, well
spacing decreases as apparent FCD decreases, indicating that more wells must
be placed to get the same conductivity.
A third scenario assessed permeability
and well spacing by increasing perme-

ability from 0.000198 to 0.0006 millidarcy.
At $3/MMBtu, optimal spacing ($87 million NPV) is 1,300 feet, decreasing to
1,100 feet at $3.50/MMBtu ($110 million
NPV) and 1,000 feet at $4/MMBtu ($133
million NPV). With increased permeability, drilling and completing more
wells will result in more upfront production
and it becomes economically justifiable
to tighten spacing to take advantage of
the higher permeability.
The final two scenarios examined the
well spacing impact of reducing capital

Cal. Rate (MMcf/d)

lateral length of 7,000 feet. Table 2 shows
the base case EUR forecasts. It is noteworthy that CONSOL Energy follows a
managed pressure drawdown strategy on
all of its deep, dry gas Utica wells. Therefore, all of the scenarios assume the wells
will flow at 20 MMcf/d until a flowing
BHP of 1,200 psi is reached and the well
starts declining.

4,000
December
2015

January

February

March

2016

April

May

June

3,500

SEPTEMBER 2017 77

American Oil and Gas Reporter - September 2017

Table of Contents for the Digital Edition of American Oil and Gas Reporter - September 2017