Dissolvable Frac Plug

A dissolvable frac plug system uses degradable plugs rather than composite plugs to eliminate mill-out procedures and reduce coiled tubing risk.

Hydraulic Fracturing & Dissolvable Frac Plugs

Hydraulic fracturing, also called fracking, fracing, hydrofracking, fraccing, frac’ing, and hydrofracturing is a key driver for the dissolvable frac plug market.  Hydraulic fracturing is a well stimulation technique involving the fracturing of bedrock formations by a pressurized liquid to increase production of the well, it is ideal for dissolvable frac technology. Hydraulic fracturing has changed the face of the oil & gas industry, no more than the Permian basin.

Oil & gas fracking typically starts at the toe, or end of the horizontal leg, and works back to the vertical part of the well. Frac plugs are designed as check valves between zones in multistage stimulation treatments.  The process is referred to as multi-stage hydraulic fracturing.  Oil & Gas Operators are performing longer lateral lengths that require hydraulic fracturing and they keen to adopt dissolvable frac plugs which can maximize production, save fracturing costs and align with environmental goals.

In benchmarking Oil & Gas Operators In the US & Canada are using dissolvable frac plug systems for longer lateral wellbore profiles.  Longer laterals are when an Operator completes more stages during fracing process, the goal Is to achieve greater reservoir coverage with every well, resulting in higher production per well. The post reviews the trend of measuring well productivity and cost per lateral foot in the Permian specifically the Delaware basin and the impact of dissolvable frac plugs have on the cost per lateral foot..

Wellbore Profiles & Longer laterals Measurement

It has become common practice to evaluate wells based on production per lateral foot of perforated length. All else being equal, we frequently see productivity per foot decline for longer laterals. And yet, the industry continues to move toward using longer laterals in the Permian. Why? Because operators strive to maximizing value, not production, and they balance well productivity against well costs. The Texas side of the Delaware Basin can be used to demonstrate the importance of using both productivity per foot and cost per foot to assess performance.

Not all well costs rise linearly with the length of the lateral. Even rig and OCTG cost are only partially scalable as the lateral length increases amid no changes in vertical depth. Several cost components are not related to the length of lateral at all, such as the connecting roads and pad construction. With this in mind, it is logical to expect lower drilling and completion cost per foot for long laterals compared to shorter laterals. Dissolvable frac plugs help solve the complicated mill out procedures created by the desire to have longer laterals.

What makes up cost per lateral foot?

The five key cost categories that together account per lateral foot and more than three quarters of the total costs for drilling and completing typical U.S. onshore wells. Rig and drilling fluids costs make up 15% of total costs, and include expenses incurred in overall drilling activity, driven by larger market conditions and the time required to drill the total well depth.

• Casing and cement costs total 11% of total costs, and relate to casing design required by local well conditions and the cost of materials.

• Frac Pumps, Equipment costs make up 24% of total costs, including the costs of equipment and horsepower required for the specific treatment.

• Proppant costs make up an average of 14% of total costs and include the amount and rates for the particular type of material introduced as proppant in the well.

• Completion fluids, flow back costs make up 12% of total costs, and include sourcing and disposal of the water and other materials used in hydraulic fracturing and other treatments that are dependent on geology and play location as well as available sources. The cost of the disposable frac plug is small in the total completion cost, but can have a big impact on coiled tubing cost and time to production.

The average per-foot cost to drill, complete and equip a well in the Delaware, among the operators sampled, is expected to be 41% greater than in the Midland in 2021, a narrower gap than the 59% higher costs seen in 2H20. We believe the Delaware Basin has more upside for efficiency improvements as the play is still in its transition to full-field development and has fewer multi-bench, large-scale developments than the Midland. The long laterals and the higher cost make it a great market to see the cost savings for dissolvable frac plugs.

Dissolvable Frac Plug Impact of Cost Per Lateral Foot

Wells in the Permian Basin continue to increase in technical complexity and lateral length, testing the limits of traditional completion practices in unconventional wells. Coiled tubing has been the standard method for drilling out frac plugs in the basin but has mechanical limitations in extended-reach and high-pressure laterals.  Operator want to effectively complete wells while keeping costs low, dissolvable frac plugs become a great solution. Operators use the standard, cemented liner plug-and-perf stimulation method; however, problems with wireline guns and issues while fishing plugs occur, resulting in additional time and labor costs. Dissolvable frac plugs conceptualization, design, development specific to the Permian can help address the issues of increased lateral well lengths.

Longer laterals has not come without challenges that can be addressed with dissolvable frac plug systems.  These challenges include inefficient hole cleaning & reduced tal ability.  Unnecessary wellbore interventions cost money and increase the well completion time. Reducing the costs of coiled tubing intervention  during the completion process and delaying the well from being put into production. 

The benefit of the fully dissolvable frac plug on multi lateral oil & gas wells Include;

• reduced cost per lateral foot
• increased production per lateral foot by delivering faster production times
• reduce mill-out times
• mitigate stimulation operational issues due to debris
• no mechanical intervention
• eliminates the need for the tubing- or Coil Tubing-conveyed perforating gun to fracture-stimulate

The case for dissolvable frac plugs in the Permian

According to the U.S. Energy Information Administration (EIA) study, the six basins in Texas represented 90 percent of the growth in O&G production in the United States.  In 2019, production of crude oil and lease condensate increased in the United States by 506 MMBbl (12.7%) from 2018’s production level. Crude oil imports decreased 353 MMBbl.  United States had 47,107 MMBbl of proved reserves of crude oil and lease condensate as of December 31, 2019

A sedimentary basin lying underneath the western part of Texas and the south-eastern part of New Mexico, the Permian Basin Shale covers roughly 75,000 square miles, almost half the size of California. 

The case for dissolvable Frac Plugs in the Delaware Basin

We consider six counties to be part of the Delaware TX: Culberson, Reeves, Loving, Winkler, Ward and Pecos. Reeves and Loving have seen the highest levels of recent activity and each has attracted a number of dedicated operators who are tackling unique operational challenges.

Perforated lateral length varies widely in the Delaware TX, with a large number of wells concentrated in the 4,000-5,000 ft category, the most common lateral length range for 1-mile spacing units. However, almost half the wells have a 2-mile design, residing in the 9,000-10,000’ and 10,000-11,000’ ranges. The

Bone Springs

Historically, the Permian Bone Springs formation of the New Mexico Delaware Basin essentially was a back-out zone for operators targeting the underlying Ellenburger and Morrow formations. Like many source rocks, the Bone Springs was not recognized as a viable prospect until advanced logs uncovered a pay zone thicker than that identified in earlier analyses. Consequently, following closely on the heels of the acceleration in horizontal drilling and hydraulic fracturing, operators began landing laterals with multi-stage fracs to access the then-potentially lucrative Bone Springs.

Of those first horizontal wells and those that followed exceeded initial expectations. Indeed, the U.S. Energy Information Administration (EIA) pinpoints Bone Springs as one of the primary contributors to the more than 60% production from the Permian Basin petroleum system. The EIA analysis said three-quarters of the increased oil production came from the Wolfcamp, the Bone Springs of the Delaware Basin and its Texas counterpart, the Spraberry.

Continued development in the Permian Bone Springs has led to working with frac plug manufactures to design dissolvable frac plugs to help reduce cost of completions. This approach to dissolvable frac plug design requires a series of steps that includes the conceptualization, design, development.

The chart shows a sample of Bone Springs wells drilled in 2021. Devon has drilled 5 wells greater that 16,000 feet.

Devon Energy Bone Springs

• Initial production (IP) rates over 30 days averaged 3,200 boe/d, 70% oil. Completed well costs at year’s end averaged around $560/lateral foot, a 40% reduction from 2018. 

• D&C costs ↓28% in Q4 2019 vs 2018 ($880/ft)

• Well design and cycle times driving enhanced results

• 10 Bone Spring wells in 2021 Avg. IP30: 3,000 BOED/well

Wolfcamp

The Wolfcamp Shale, a Wolfcampian-age organic-rich formation, extends in the subsurface under all three sub-basins of the Permian Basin (Delaware Basin, Midland Basin, and Central Basin Platform) and is the most prolific tight oil and shale gas-bearing formation contained within. The Wolfcamp Shale is divided into four sections, or benches, known as the Wolfcamp A, B, C, and D.

Increased oil and natural gas development in the Wolfcamp play has helped drive overall crude oil and natural gas production growth in the Permian Basin during the past decade. Drilling and completion operations within the Wolfcamp play have been responsible for much of the crude oil and natural gas production growth in the Permian Basin since 2007. As of September 2018, the Wolfcamp accounted for about 1 million barrels of crude oil per day (b/d) and 4 billion cubic feet of natural gas per day (Bcf/d). Crude oil production in the Wolfcamp accounts for nearly one-third of total Permian crude oil production and more than one-third of Permian natural gas production. Increased production rates and lower costs are part of the value of using disovable frac plugs in the Wolfcamp.

The chart is a summary of 100 wells drilled by Diamondback in the Wolfcap

Diamondback Resources Wolfcamp

• Current Delaware Basin D,C&E costs between $700 – $850 per lateral foot ($600 – $700 per foot D&C)

• 5,200 gross (3,170 net) horizontal locations with an average lateral length of ~7,600 feet

About the Dissolvable Frac Plug Market

Why Dissolvable frac plugs? Problems, such as wellbore instability, casing damage/deformation and a limited coiled-tubing mill-out safe operating range, along with high mill-out costs using traditional composite frac plugs. Traditional composite frac plugs are reliable, but they can be costly to mill out before production. The extended length of laterals being drilled also limit the safe operating range for coiled tubing. Dissolvable frac plugs are designed to dissolve in wellbore fluids after a frac operation, thus eliminating the need for milling.

Dissolvable frac plugs are new to the market and currently hold a diminutive share of the frac plugs market. … The Dissolvable frac plugs market size is likely to experience excellent double-digit growth over the next five years (2019-2024) to reach US$ 1,178.8 million in 2024. The growth of the dissolvable frac plug market is no more evident then in the Delaware basin were long laterals are diving down cost per foot of a well, but increasing the complexity of mill outs and coiled tubing.

Completion approaches using fracture plugs

1/ Use only composite fracture plugs in the full wellbore.

2/ Use only dissolvable fracture plugs in the wellbore. 

What’s next for dissolvable plugs? Like personal computers, the trend is ever smaller.  The compact design eliminates milling and post-frac cleanout, leaving no debris to remove from the well. By reducing materials to the absolute minimum, operators benefit from quick dissolve times and minimal wellbore debris at a price that competes with traditional composites. Coating & protects for the plug preventing early dissolution, enabling plug placement in the well several hours before isolation is required.  Design for all temperature applications. Sophisticated manufacturing and Quality Assurance system that can be customized to meet specifications.

The global dissolvable frac plugs market is likely to experience excellent double-digit growth over the next five years (2019-2024) to reach US$ 1,178.8 million in 2024. Increasing production of oil & gas, an expected recovery of wells and rigs counts in the coming years, increasing the number of frac stages per well, increasing the share of horizontal wells in the overall drilling activities where there is a requirement of more frac stages, increasing the lateral lengths of the wells, and reduction in mill out time as well as drilling cost are some of the key factors driving the global dissolvable frac plugs  market.

About Lateral Completions Dissolvable Frac Plug

We bring new ideas to market through Product development, Research & Design, and strategic partnerships with the industries up-and-comers.  New dissolvable frac plugs product management, is a series of steps that includes the conceptualization, design, development and marketing of newly created dissolvable frac plugs.  Dissolvable frac plugs product development is creative, the discipline requires a systematic approach to guide the processes that are required to get a new product to market.