Oil and gas companies are always on the lookout for ways to get more oil out of the ground. Because tight oil resources like the Bakken shale are still pretty new, companies are still figuring things out. One way they are extending the growth of the play is through downspacing.
Basically, downspacing decreases the space between each well. Instead of having one well on a section, a company will drill a number of wells on each section in order to extract more oil This increases the number of available drilling locations, as well as the oil production potential of the company's acreage.
As the following slide from Oasis Petroleum (NYSE:OAS) shows, the company can drill more wells on each section through downspacing, and by tapping into additional benches of the Three Forks formation.
Oasis is just one of a number of Bakken companies engaged in downspacing activities in the basin. While it is testing up to seven wells per formation in the Bakken and Three Forks, it's finding that four to six wells per formation works best, depending on the location.
Others in the industry are testing up to eight wells per zone. For example, Continental Resources (NYSE:CLR) has an eight-well test through all branches of the Three Forks, as well as a number of four and six well tests. These pilot density projects are testing spacing of 1,320 feet and 660 feet, as the slide below shows.
So far, the results are encouraging; one of the company's major density projects, Hawkinson, produced an average rate of 14,850 barrels of oil equivalent per day from 14 wells. Looking ahead, Continental sees this enabling it to use megapads to drill as many as 30 wells per pad.
Another producer working on a downspacing pilot project is Kodiak Oil & Gas (NYSE:KOG). The company's Polar Pilot Project has completed two downspacing pilot programs with a dozen wells in each 1,280-acre drilling spacing unit. Kodiak Oil & Gas is now on to Polar Pilot Project 2.0, which has it analyzing the results of 16 wells on a 1,280-acre unit. That project should wrap up in the first half of next year.
Successful downspacing has many producers planning for a future focused on drilling wells closer together. This will enable companies to get more oil out of these tight plays, and to improve returns. Furthermore, by increasing the number of potential drilling locations, while also not stealing production from other wells, these companies can extend America's energy boom.
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