American Oil and Gas Reporter - July 2015 - 72

SpecialReport: New Products/Technology
The most popular approach to developing shale assets was built
on continuously drilling and fracturing horizontal wellbores on
multiwell pads. Because production from shale wells comes on
so strong and declines so rapidly-with annual decline rates as high
as 80 percent-new wells can become uneconomic within 18
months of initiating production. To offset volumes lost to decline
and to maintain constant production streams to meet revenue targets, operators have had to repeat the drilling and fracturing cycle in quick succession.
This, in turn, has driven business models that require operators to recoup all of a well's capital costs-which can exceed $7
million or more, depending on the play-within a short period. That,
understandably, has put the operational focus on achieving the
highest possible initial production rate.
However, the IP-focused continual drilling/fracturing approach
to developing unconventional resource plays has left as much as
90 percent of a well's potential production untapped. Even at high
prices, this approach is not sustainable. At prevailing commodity prices, it also is unprofitable, requiring the industry to adopt
a new strategic mind-set.
As oil prices began retreating last year, many shale operators
were faced with three rather unappealing options to stay in the game:
* Temporarily halting the drilling/fracturing cycle until
prices rebounded (recognizing that the decline curve invariably
would take a toll on output from existing producing wells);
* Continue drilling new wells, but leaving them uncompleted until prices improved (indefinitely postponing revenue
streams from new drills while also experiencing production declines on existing wells); or
* Refracturing wells without sufficient data or proven methods to produce consistently favorable results.

Strategic Rejuvenation
In the past, the production and net present value performance
of refractured wells have been so varied and unreliable that some
in the industry question its future role in unconventional resource
development. While significant inroads have been made in reducing construction costs on new wells, the opportunity for economic improvement may be even greater for operators who implement a strategic rejuvenation approach to leverage their existing well inventories.
600,000

400,000

Rejuvenated Production
200,000
Initial Stimulation
0

0

10

20

30

40

50

60

70

80

90

100

The steep decline curves in unconventional reservoirs typically result in 10 percent or less recovery of available reserves. By restoring connections to previously stimulated intervals and tapping into
zones that were missed in the initial stimulation treatment, a properly planned well rejuvenation program re-establishes production
levels and significantly increases total reserves recovery.

72 THE AMERICAN OIL & GAS REPORTER

To be effective, strategic rejuvenation efforts must address the
complex interactions among the well, the stimulated reservoir,
and the chemistry of produced fluids. There are several key premises underpinning the feasibility of a comprehensive strategic rejuvenation program. First, far more analysis, as well as a new and
more strategic way of thinking, are necessary to avoid disappointment from refracturing efforts.
Operators also must keep in mind that not all hydraulically fractured wells are good candidates for rejuvenation, so the first step
to successfully improving the results of rejuvenation is to efficiently screen and select those wells with the greatest potential
and the least amount of risk.
Moreover, it is important to recognize that refracturing is not
the only method of rejuvenating the performance of unconventional wells. Other methods include wellbore clean-outs, chemical treatments, recompletion, and artificial lift. To be successful, the operator must understand what type of rejuvenation is required to meet his specific recovery and business objectives.
Therefore, a thorough economic analysis of the technological
solution is required to maximize the value from underperforming
wells. The approach must view unconventional wells as "renewable" assets, and it requires a fact- and science-based workflow focused on both the well and the reservoir. The good news is that a
holistic, data-driven approach can make rejuvenation a viable business alternative to drilling new wells in tight oil and shale gas plays.
Approaching unconventional wells as renewable assets helps
oil and gas companies maximize value from their existing wells
by following a four-step workflow designed to significantly increase profitable recovery without drilling a large number of additional wells. The data-driven workflow makes it possible to look
at the operator's universe of wells, and then zero in on the highest-potential candidates for rejuvenation, implementing the best
technological and economic solution for each well, based on a
thorough analysis of its production history.
In some cases, production can be restored to desired levels with
a simple well clean-out program or artificial lift technology, and/or
chemical treatments. Refracturing to restore connections to previously stimulated intervals or to tap into zones that were bypassed
by the initial completion and stimulation treatment can not only
restore (and potentially increase) production, but also decreases the slope of the decline curve to improve ultimate recovery and
extend economic well life.

Four Prescribed Steps
The four prescribed steps in the strategic rejuvenation process
are:
* Screening and selecting the best possible candidate wells
(i.e., those wells with the greatest production potential);
* Diagnosing the condition and specific rejuvenation needs
of each candidate well;
* Selecting the optimal rejuvenation treatment for each well;
and
* Efficiently executing the rejuvenation treatment at the well
site.
Properly screening and selecting rejuvenation candidate wells
requires mining historical reservoir and production data, applying advanced statistical methods, and estimating each candidate
well's production potential. Often, the best rejuvenation candidates
are located in a field's sweet spots with historically high-performing wells. However, because of the heterogeneity of unconventional reservoirs, pinpointing the best candidates is challenging.
American Oil and Gas Reporter - July 2015

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