American Oil and Gas Reporter - June 2020 - 32

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SpecialReport: Production Restarts
During the initial triage process, separating technical risk
from purely financial risk is a reasonably straightforward
process. The purely fiscal decisions that are made regarding the
choice of wells to shut in (or from which to restrict flow) are
well known, and include the aggressiveness and terms of
hedging programs in place, the degree and nature of offset
competitive activity, held by production (HBP) issues, and contractual lease and midstream obligations. Other issues also
taken into consideration are of varying degrees of importance.
For example, some regulatory entities have momentarily
relaxed restrictions on temporary abandonment, active well
definitions and reporting requirements. The operator's capital
funding source, under some circumstances, can impose an overriding (and even debilitating) set of restrictions on the various
options available. Royalty owners can cause difficulties if the
lease does not have a shut-in royalty provision or amendment.
Occasionally, even public perception issues can become enablers
for decisions on shut-ins and slowdowns.
Technical Considerations
The technical issues that an operator faces in well shut-in
and production restoration are not as clear cut as the purely
fiscal drivers, and nice, clean net present value calculations are
not really possible for each and every branch of a given decision
tree. Large operators with several active operations and multiple
plays can slash budgets for their development drilling and completion programs, but not indiscriminately.
Undrilled proved-but-undeveloped (PUD) and drilled-butuncompleted (DUC) locations that are located immediately adjacent to existing producers are at substantial risk of pressurerelated, asymmetric-induced fracturing in the future as new

wells are hydraulically stimulated. The asymmetric fracturing
results in the sharing of reserves between the DUC (child) and
the existing parent producer as well as a statistical loss of
reserves, typically on the order of 10-25% of expected estimated
ultimate recoveries. In addition, intense competitive activity
along lease line borders can be a very real issue in "rule of
capture" scenarios, especially when shutdowns and restarts do
not occur in parallel time frames.
Recently stimulated completions in many plays demonstrate
a marked resilience when it comes to retained productivity
after extended shutdowns. The Bakken, in particular, has experienced multiple midstream related production interruptions
with negligible reported degradation in production decline
curve character after re-opening. Public data on Wolfcamp
and Spraberry production is often difficult to interpret, but individual testimonies suggest that newer wells have their production restored after shut ins with no negative repercussions,
as long as immediate offsets undergo the same shut ins over
the same period.
Recently completed oil wells face an operational hazard that
is unique to their age and to the means of applying artificial lift.
Electric submersible pumps generally are deployed in a wellbore
after the bottom-hole producing pressure drops close to the hydrostatic head (weight) of the column of produced fluids. Even
after several years of continuous improvement to ESP design
and engineering, these pumps can be finicky if they suddenly
are asked to start again after a prolonged shutdown. In addition,
ESPs typically operate within a relatively tight band of production
rates, and therefore slowdowns can be problematic.
It is well known that conventional vertical wells perforated
in multiple stacked reservoirs almost always will experience

FIGURE 1
Technical Risks of Negative Flow Restoration Impacts

32 THE AMERICAN OIL & GAS REPORTER



American Oil and Gas Reporter - June 2020

Table of Contents for the Digital Edition of American Oil and Gas Reporter - June 2020

Contents
American Oil and Gas Reporter - June 2020 - Intro
American Oil and Gas Reporter - June 2020 - 1
American Oil and Gas Reporter - June 2020 - 2
American Oil and Gas Reporter - June 2020 - Contents
American Oil and Gas Reporter - June 2020 - 4
American Oil and Gas Reporter - June 2020 - 5
American Oil and Gas Reporter - June 2020 - 6
American Oil and Gas Reporter - June 2020 - 7
American Oil and Gas Reporter - June 2020 - 8
American Oil and Gas Reporter - June 2020 - 9
American Oil and Gas Reporter - June 2020 - 10
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