Synopsis

It is tough to make new wells work in a sub-$50 oil environment, consequently most new Niobrara Shale drilling outside the DJ Basin core will be tied to acreage capture in 2015. Operators are focusing more on improving production in existing wells rather than drilling new wells and seeking ways to lower cost per barrel. Enhanced completions spread rapidly in the Niobrara in the last six months of 2014 with lateral length growing, more stages, placed more closely together, and a sharp increase in sand volumes. The next report on trends in downhole activity for the Rocky Mountain region outside the Bakken is scheduled for July 2015.

Part I. – Survey Findings

Among Survey Participants:

  • Slickwater Is Dominant in Niobrara [See Question 1 on Statistical Review]. Six of eight respondents reported slickwater dominates fracking practices in the deep Niobrara. However, one provider reported that gel is preferred and one respondent has equal clients for both.
    • Mid-Tier Service Provider: “Most clients settled in on slickwater fracs and began downspacing the stages to 250’ or less and increasing sand volumes.”
  • No Changes Expected in Near Term [See Question 2 on Statistical Review]. Eight respondents expect no changes in frac methods in the near term. Several respondents mentioned the intense focus on lowering the cost per barrel by increasing the production volumes from each well in the Niobrara.
    • Niobrara Operator: “We participated in a joint venture on several Niobrara wells with good results, but we are not currently drilling anything in the Rockies beyond our leasehold requirements. There are no changes we can implement to make $50 oil profitable from new wells. We will focus on production from existing wells until the price recovers.”
  • Spacing Between Frack Stages ~225-ft. [See Questions 3a, 3b on Statistical Review]. Spacing ranges between just under 200’ to 300’ in the play. The average spacing between stages has changed substantially in the past year.
    • Mid-Tier Service Provider: “We now see 30-40 stages per well in a 6,000-ft. to 7000-ft. lateral.”
  • Main Changes Implemented: Downspacing Stages and Increased Sand Volumes [See Question 3c on Statistical Review]. The second half of 2014 saw downspacing of the stages and increased sand volumes in the Niobrara. Three respondents reported using well testing and frack data to improve frack designs and increase production.
  • Plug and Perf or Combination of Plug and Perf and Sleeves Used in Niobrara [See Question 4 on Statistical Review]. One respondent reported that Plug and Perf completions are the standard fracking technique while the majority reported that sliding sleeves and plug and perf combinations are still common among their clients.
    • Mid-Tier Service Provider: “Niobrara still has equal numbers clients using both plug and perf and/or sleeves in their completions.”
  • Excessive Supply of Downhole Tools, Service Providers [See Question 5a and 5b on Statistical Review]. Five of eight respondents reported that the number of downhole tool providers is excessive for current demand within the region. No new downhole tools or methods were reported in the play.
    • Mid-Tier Operator: “There are no new tools in the play. With demand falling as quickly as it has, there seems to be a definite oversupply until demand recovers.”
  • Multi-Well Pads of 4-6 Wells Common in Niobrara [See Question 6 on Statistical Review]. Average number of Niobrara wells reported per pad is ~5. No estimates were made of how the slowdown will affect pad drilling.
  • Zipper Fracks Account for ~66% of Completions Reported [See Question 7 on Statistical Review]. The percentage of zipper frack completions among respondents is ~66%. The remaining 34% of wells are fracked using the Stack Frack method or solo frack on one well at a time.
  • Sand Remains Most Common Proppant in Area, Volumes Increase [See Question 8a and 8b on Statistical Review]. Sand is the most common proppant in the region and averages ~13 million pounds per well among respondents. This is a huge increase from the ~2 million pounds previously reported in 3Q 2014. Respondents said 40/70 and 100 mesh are most common and 20/40 and 30/50 were also mentioned in common usage. A total of 100% of proppant is natural sand, among respondents.

Survey Demographics

Hart Energy researchers completed interviews with eight industry participants in the downhole completions segment in the Niobrara region. Participants include five managers or sales engineers with well service companies, one completions consultant and two oil and gas operators. Interviews were conducted during second week of January 2015.

Part II. – Statistical Review

Total Respondents = 8 [Service Providers = 5, Operators = 2, Consultants = 1]

1. What common practices are used in your area for completions?

Slickwater: 6

Crosslink gel: 1

Equal use of both depending on client: 1

2. Do you see that changing over the next three to six months?

No changes expected: 8

3a. Is spacing between stages closer now than a year ago?

Closer stages: 8

3b. What is the average distance between frack stages in your area?

200’ -300’ spacing: 2

200’-250’ spacing: 3

200’ spacing: 3

Average: ~225-ft.

3c. How are you fine tuning your frack program downhole?

Closer stages and more sand: 5

Specialty well testing and innovative frack design: 3

4. What fracking technique is most common in your area?

Plug and Perf: 1

Combination of Plug and Perf and Sleeves: 7

5a. Would you characterize the supply of downhole tools in your area as excessive, sufficient or insufficient to meet early 2014 demand?

Sufficient: 3

Excessive: 5

5b. Are there any new downhole tools being tried in your area?

Nothing new: 8

6. What is the average number of wells being completed per pad in your area?

4-6 wells: 3

5 wells: 1

3-4 wells: 2

6 wells: 2

Average: ~5 wells per pad

7. What percentage of fracks drilled from pads are zipper fracks vs. individual fracks?

Zipper Frack Stack Frack # Responses

75% 25% 4

80% 20% 1

50% 50% 3

Avg 66% 34% 8

8a. How much proppant (in lbs.) are you using per well?

16 million lbs: 1

10-15 million lbs: 3

14-15 million lbs: 1

13.5 million lbs: 1

10 million lbs: 1

12 million lbs: 1

Average per well: ~13 million pounds

8b. On a percentage basis, how much proppant in your area is used by type?
Average Among Respondents

Natural sand*: 100%

*Respondents reported 40/70 and 100 mesh sand most common but 30/50 and 20/40 were also common among majority of respondents