THE NEAR BALANCED RESERVOIR DRILLING METHOD

HUGHES TOOL COMPANY

RETHINK EVALUATION OF UNCONVENTIONAL RESERVOIRS:

The current mindset in the upstream oil and gas industry is that unconventional reservoirs such as shales need to be hydraulically fractured because they are tight. If that premise were true then why were shale reservoirs such as the Monterey in California the Pierre in Colorado and the Marcellus in New York so productive in the early 1900's, long before hydraulic fracturing was ever invented? The answer is simple. They were drilled without overbalanced mud systems and even though they were vertical wells they still were able to encounter a small fraction of the formation's natural fracture system. Tectonically induced natural fractures initially propagate perpendicular to the bedding plane of a formation. Over time sedimentary beds with no dip can be tilted thereby also tilting the natural fracture system within the formation so that even a vertical well is able to intersect a few natural fractures. Given the high dip of many formations in California, vertical wells are technically high angle wells based on the definition of a horizontal well which is a wellbore drilled parallel to the bedding plane of a formation and not a wellbore drilled parallel to the surface of the earth.

Many early Monterey Shale wells exceeded 10,000 BOPD without fracing. How can that be if shales are too tight to produce without fracing? When most industry professionals talk about a shale reservoir being tight they are generally referring to the matrix which is a correct observation. What is not considered is the permeability contribution from natural micro and macro fractures that exists in all hard (brittle) sedimentary rocks such as shales. Determination of the "collective" permeability system is important to understanding why so-called tight rocks can produce without being hydraulically fractured. It is important to remember that a single natural fracture with an aperture of 25 microns has over 50 darcies of permeability.

One of the reasons the natural fracture system is often ignored is because everyone knows the fractures penetrated by a horizontal wellbore will be plugged up with drilling mud and rendered impermeable. First and foremost it is the job of a mud engineer to inflict maximum permeability damage upon the near wellbore region so that no hydrocarbons whatsoever enter the well while drilling. This is the reason for hydraulic fracturing, to reconnect the undamaged part of the reservoir to the wellbore. The CEO of Halliburton recently stated, "In 1947, Stanolind Oil and Gas called on Halliburton Co. to unclog a gas well in the Hugoton Basin in Grant County, Kansas". This raises the question, why clog up the natural permeability in the first place? Protecting the natural fracture permeability in shales is also ignored because our industry believes that fracing is the remedy for repairing formation damage caused by overbalanced drilling. Over many years fracing has achieved acceptable results in conventional reservoirs with good matrix permeability so there has been little concern about formation damage in unconventional reservoirs. Formation damage prevention should be addressed because poor quality reservoirs are unable to clean up like a good quality reservoir. Any formation damage in a poor quality reservoir can reduce the permeability to zero. Even fracing itself, causes severe "water block" damage in shales with high capillary pressures, which is why only 25% of frac water is ever recovered. Why do operators frac shales with water when the drilling industry has known for years that shales and clays react adversely to water?

The software required to understand "collective" permeability in a dual permeability system is called Discrete Natural Fracture Modeling (DNFM). The computer generated models show 10's to 100's of thousands of natural fractures over very short distances which can now be intersected with a horizontal wellbore. If the near wellbore fractures are protected from formation damage this would explain why unconventional reservoirs can produce naturally without fracing. For example the Spraberry formation in West Texas is described as a tight reservoir with permeability on the order of one-tenth of a millidarcy. It is also known to be naturally fractured having two distinct fracture sets. It has been determined using DNFM software that the collective permeability of the Spraberry in one direction is actually 30 millidarcies, which is sufficient to produce naturally, if not plugged up with drilling mud.

RETHINK HOW THE RESERVOIR SHOULD BE DRILLED:

Underbalanced drilling (UBD) is the drilling technique known in the industry for preventing formation damage from plugging caused by overbalanced drilling. The technique was originally developed not to improve productivity, but to reduce non productive time thereby improving drilling performance in the non-reservoir section of a vertical well. After horizontal drilling became commercial the technique was applied in the reservoir itself to improve productivity with great success as long as the well remained underbalanced 100% of the time. UBD has been applied primarily in conventional reservoirs, aka reservoirs with low capillary pressures where only one formation damage mechanism needs to be addressed.

With the industry now focused on unconventional reservoirs the next generation of "non-damaging reservoir drilling" is needed to address other kinds of formation damage that are common to unconventional reservoirs. It is no longer good enough to just prevent plugging from overbalanced mud systems because there are several other damage mechanisms inherent to poor quality reservoirs. Tight reservoirs have high capillary pressures meaning a reservoir can still suffer permeability damage from plugging even if the wellbore is underbalanced. This is because imbibition forces can exceed the underbalanced condition in an under saturated reservoir. Dirty water that is often used as a drilling fluid can be imbibed and reduce permeability to zero. Fines migration is another documented damage mechanism in shales because of their high clay content. In a typical underbalanced operation this becomes a real formation damage problem because UBD wells are often overproduced to keep the annular wellhead pressure from getting too high while drilling. Opening the choke to reduce the pressure on the Rotating Control Device (RCD) causes fines to mobilize and then bridge off at the wellbore.

Non-damaging reservoir drilling has many extraction and injection applications. With respect to the recovery of oil and gas near balanced reservoir drilling should be considered as a completion technique for reservoirs that are too shallow or too deep to frac, in extended reach applications where the reservoir is too far away to frac, in areas where fracing has been banned and in reservoirs where fracing has been applied but left the large majority of the oil and gas in the ground. Shell Oil has acknowledged the non-damaging reservoir drilling approach has the potential to improve well production by up to 800%. The bar set by hydraulic fracturing is low, given the extremely high decline rates and low recovery factors. Unfortunately, the oil and gas industry is very slow to accept change. When will operators recognize the impact formation damage from traditional drilling has on productivity and begin thinking about drilling the horizontal in a different manner? After all the reward for preventing formation damage while drilling in the reservoir is the elimination of hydraulic fracturing.

Preventing formation damage while drilling is also critically important when injecting gases or fluids into a formation for environmental (Environmental Social Governance / ESG) related reasons. The same “protecting the reservoir” logic applies whether producing from or injecting into a rock formation because a sealed off wellbore prevents flow in either direction. The benefits from the NBRD method will support the effort to make natural gas more environmentally friendly. The desire for natural gas to be environmentally friendly has led to a new term emerging within the industry, “Green Natural Gas”. It can have multiple meanings that include natural gas that is not produced from fraced wells, natural gas whose CO2 by-product is sequestered or natural gas (methane) that is produced from biomass. For example, if an LNG exporter purchases natural gas from wells that have not been fraced then they can claim their gas is “Green” aka “frac-free natural gas”. If a natural gas power plant sequesters their CO2 emissions then the utility can claim the natural gas used to generate electrical power is “green” because their power plant is carbon neutral. The NBRD technology provides an environmental solution for power plants because sequestering wells can be drilled on the same location as a natural gas power plant thus eliminating the need for a pipeline to sequester CO2 at a remote location. Another application for “green natural gas” is the generation of hydrogen. Natural gas is a key component in the hydrogen manufacturing process. If the CO2 by-product is sequestered then the new term for carbon neutral hydrogen is “Blue Hydrogen”. The NBRD technology is able to deliver “Cyan Hydrogen” (blue-green) which is hydrogen whose CO2 by-product is sequestered (blue) for a carbon neutral footprint and the natural gas used to make the hydrogen is frac-free (green) natural gas.

CONCLUSION:

The origin of formation damage began 100 years ago, and its cause was attributed to the original Hughes Tool Company. The company's roller cone bit design forever changed how the oil and gas industry drilled wells. Before rotary drilling, wells were drilled with cable tools, which mechanically removed cuttings from the wellbore. To remove cuttings from a well being drilled with the Hughes roller cone bit required the circulation of drilling fluid down the drill pipe through the bit returning to the surface via the annulus. This was a major change that unknowingly at the time caused damage to the near wellbore permeability of a reservoir. Formation damage caused by overbalanced drilling as it is known today eventually led to the development of hydraulic fracturing, a completion technique that attempts to undo the damage. Today's Hughes Tool Company will change how the reservoir is drilled by using its "near balanced reservoir drilling" technology. After all, in our day and time we now have the ability to drill horizontally into the reservoir. This means an operator can switch from drilling the non-reservoir vertical section of the well using conventional overbalanced drilling methods to using the "near balanced" technique to drill horizontally into the reservoir.

CONTACT:
W. James Hughes | Email: nbrd@hughestool.company | Phone: (303) 802-6710
Michael D. Reilly | Email: michael@hughestool.company | Phone: (303) 543-2201