Continued experimentation on drilling techniques in Weld County has led to substantial growth for Noble Energy, so much so that the company is already tweaking its drilling program for the rest of the year.
Officials from Noble on Thursday discussed first-quarter earnings and production results. On the whole — including U.S. onshore drilling plus its work in west Africa, Israel and the Gulf of Mexico — the company’s sales volumes and production grew 20 percent from the same time last year.
In its Colorado program — the company’s Denver-Julesburg Basin work — and East Coast drilling programs (which comprise half of the company’s volumes), production from horizontal drilling increased 60 percent from the same time last year to over 100,000 barrels of oil equivalent per day.
Company officials noted that they dealt with a tough winter in the DJ Basin with weather extremes, slowing down production. Production is back online now, however, and the company is ramping up with a new drilling recipe that should increase production through the rest of the year.
“I’m excited with where the DJ program is headed,” said company President and COO David Stover, who will take over as CEO later this year. “The second half of the year should experience 15 percent to 20 percent growth over the first half as winter is behind us, fuel facilities are in place, an increasing percentage of extended-reach laterals come online and gas processing and handling capacity is expanded.”
In the first quarter, the company was running 10 drilling rigs and drilled 67 horizontal wells in Weld County. Later this year, the company will move one of those rigs to its exploratory field in northeastern Nevada, as the company drills fewer wells than originally anticipated in Weld.
The company plans for growth, while reducing the number of wells to drill in Weld. The original plan for the year was to drill 320 wells; they’ve reduced that to 287.
The answer lies in its new drilling methods.
In the past several months, the company has been experimenting with a combination of drilling approaches in spacing per section and lateral lengths to improve efficiency.
Specifically, the company has tried varying lateral lengths, ranging from 4,000 to 9,000 feet, to get the most production from its wells. Horizontal drilling starts vertical, but juts laterally into the rock from which it produces. Long lateral wells have seen estimated ultimate recovery 2 ½ times that of a standard-length well, with values close to 3 ½ times a standard well, officials said.
Based on early success this quarter, company officials have opted to ramp up their extended reach lateral drilling program through the rest of the year. The company plans to drill 96 extended reach laterals, up from 58 that were originally planned. The big reduction will be in the normal lateral-length wells, which now will be 191, down from 262 that were originally planned.
“On a cost basis, we’ve adjusted the program, and re-looked at it in such a way so we don’t see any increase to this year’s capital program,” Stover said. “We’re still expecting same costs, with fewer wells now, but actually the same or more total footage.”
The company also has spent months experimenting with the number of horizontal wells it drills per section of land (from 16 up to 32), called downspacing.
“We’re excited about these results and look forward to additional downspacing,” Stover stated. “Positive results will lead to an enhancement in recoverable resources as well as increased efficiencies as we determine the optimal development of our (integrated development programs). Between the downspace activity and extended-reach lateral program, over 60 percent of our wells are focused on upside in the DJ.”
CEO Chuck Davidson explained that rapid change in the DJ Basin program came as a result of new information.
“When we lay out a plan … it’s based on what we know at that time,” Davidson said. “And these long laterals and ... increased density are providing some really good hints that we need to keep pushing the program in that way. And that’s going to mean that there will be an evolving growth. And as we say, this should certainly lead to some great improvement in value and, certainly, resources and opportunities going forward.”