In the past 10 years, U.S. oil companies have revolutionized the oil and gas industry with new techniques and developments that have led to higher efficiencies in domestic oil and natural gas production. These technological advancements have allowed for producers to extract the hydrocarbons more efficiently, and at lower costs with lower environmental risks. Pad drilling is one of the most important advancements that has taken place in the industry and has completely altered conventional drilling.
Pad drilling is a technique that involves drilling multiple wellbores from only one drill site. This technique has been a major factor in reducing drilling times and improving shale well economics. Rig operators can drill groups of wells more efficiently due to the improvement of rig mobility, which in turn reduces the time it takes to move one well location to the next. This reduction in time and the elimination of repetitive steps allows for multiple wells to be drilled in a much shorter amount of time, which can save operators large amounts of capital and time wasted.
Conventional well drilling used to be a long, repetitive and very costly process. Operators had to break down the rig, move it to the new surface location and then reassemble the rig again even if the new location was less than a few yards away. This process had a large surface footprint and more impacts on the surrounding environment.
Pad drilling does not use as many drill sites which leads to less surface area at ground level being affected by the drilling process. There are less access roads, fewer pad sites, and less surface impact which is a huge improvement for surface owners. For example, with pad drilling there is one well pad site with only one access road, one drilling pit, and one frac water impoundment pond as opposed to single-well pad drilling with 24 5-acre well pad sites, 24 access roads, 24 drilling pits and multiple frac water impoundments.
Pad drilling is seen across multiple shale plays in the United States and the use of this unconventional drilling technique was quickly incorporated in oil and gas companies’ operations. In the first quarter of 2014, the industry saw an increase of 70% in the growth of pad drilling for horizontal wells and these efficiencies are paving the way for future advancements. The oil companies decided that they don’t need to have 1,800 operating rigs, they just need 900 of the best rigs that can drill as many wells back to back. This saves operators time and money and when prices are still low like they are today, pad drilling is a welcomed solution to saving costs.
For investors involved in multi-well pad drilling, your production costs will be lower due to cuts in well costs and you will receive more hydrocarbons faster and cheaper than conventional drilling. When you get involved today, you are participating in wells with costs down 25% to 35% and will not be paying for rig mobility or down time.
At Eckard Enterprises, we closely watch where operators are placing their multi-well pad sites which shows areas that will have continued production even in this price downturn. These areas will indicate where the “hot spots” are located in the trends and allows investors to analyze the best locations to select and become involved in the industry.
For individual investors, you don’t need to be an energy expert to know where the best shale plays and locations are, you just need to look at the public data and see where the remaining rigs are still in operation. These rigs are in the best locations, with the anticipation of the highest reserves, at the lowest cost per barrel of exploration with the best operators.