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Cost Effective Completions - Oil & Gas Financial Journal

By L. Cantrell & R. Allen | Fri, 4 Jul 2014

Functional and financial reasons behind Plug-n-Perf

Luke Cantrell, Baker, Donelson, Bearman, Caldwell & Berkowitz PC, Memphis, Tenn.
Ryan Allen, Baker Hughes Inc., Houston

In early 2006, the oil and gas industry soared to never-explored heights and profitability. The cost of individual projects began to receive less scrutiny, and an arms race to develop the next industry-revolutionizing technology and grab the corresponding market share was on.

While the deepwater completions sector focused its attention on nitrogen-charged safety valves and intervention-less completion tools, the oil and gas industry in Texas and Oklahoma was making advances of its own. One technology that made a large initial impact and sent waves throughout the industry was the ball-actuated open hole completion systems used in horizontal multi-stage fracturing applications. The popular opinion at the time was that this technology was capable of challenging the more time-intensive and traditional plug-n-perf approach in the multi-stage horizontal well market. The concept made sense but appeared cost-prohibitive for large-scale service companies compared to competitors who specialized in this area and were able to minimize production costs.

THE INCREASE IN EFFICIENCY OF BALL-ACTUATED SYSTEMS

As most things in such a technology driven industry go, however, efficiencies increased and those involved found the best and most cost-effective use for each technology. For example, issues that were considered limiting factors early in the development of ball-actuated systems, such as a limited offering of frac ball sizes, became an afterthought as the technology evolved and neared perfection. At the same time industry experts quickly realized this technology was limited in application instead of being a one size fits all solution to multi-stage frac jobs. Therefore, the traditional plug-n-perf multi-stage systems which had weathered the threat of the en vogue ball-actuated completion systems, regained its place as the preferred choice for most multi-stage hydraulic fracturing applications.

This debate has contributed in part to the continued advancement of these technologies, and an oft-discussed issue still arises: are plug-n-perf completions or ball-actuated frac sleeves the best and most cost-effective strategy for multi-stage hydraulic fracturing? While it is widely accepted that the answer depends on the application, plug-n-perf completions have solidified their place as the go-to technology for all except the most challenging laterals found in the Bakken shale. Although often driven by customer preference, this article will briefly provide insight on some of the time-efficiency and cost-based reasons that have led to success of each of the two completion systems and the applications where they thrive. For brevity's sake, discussion will be limited to plug-n-perf and ball-actuated systems.

A TIME AND A PLACE FOR EVERYTHING

The success of each of these types of systems is their ability to effectively isolate multiple stages or zones in the well. Both ball-actuated and plug-n-perf completions have their fair share of limitations and corresponding applications where they excel. The remainder of this section will discuss these limitations and applications where each technology is well-suited.

LIMITATIONS OF AND APPLICATIONS WELL-SUITED FOR PLUG-N-PERF SYSTEMS

The primary limitation seen in plug-n-perf systems is that implementation is slow and cumbersome. Contributing to this limitation is that the coil tubing or wire line company is required to rig up and rig down between stages. In completions with a number of stages this can significantly increase the time necessary to complete the well. Also, because additional trips are required to locate and set each individual plug, pressure pumping is required at an ongoing and much higher rate. The composite plugs that are left behind then require the additional step of being milled out before the well can be put on production.

Despite these inefficiencies, a plug-n-perf completion strategy provides a great amount of flexibility. There is no limitation on the number of stages that can be implemented using this completion method. The only limitation is the capability of the wire line or coil tubing unit being utilized. Plug-n-perf systems also allow for very flexible placement and provide the opportunity for unlimited on-the-fly adjustments to stage placing. Finally, unlike the restrictions seen in ball-actuated systems, a plug-n-perf completion after millout allows for a full-bore flow and easy intervention once the well is put on production.

LIMITATIONS OF AND APPLICATIONS WELL SUITED FOR BALL-ACTUATED SYSTEMS

Although ball-actuated systems created a large commotion when they initially entered the market, these completion systems lose their competitive advantage in well geometries that can be handled efficiently by plug-n-perf completions.

When using a ball-actuated system, the obvious limitation is the number of stages available. This limitation is directly related to the availability of size increments of the frac balls, although this has become less of a limitation as the evolution of this technology continued. Early systems topped out at 12 balls (and 12 corresponding stages), but newer systems have capabilities that exceed 30 stages. Another limitation is the fixed-stage placement: once you have established placement of the completion tools, there is no flexibility available to change the location of the isolated zones. This placement must be determined before running the completion string down hole. A final limitation is the restricted ID created by the ball seats of the tools. The restricted ID not only limits flow when the well is put on production, but if problems arise, the tools available for intervention are limited to those that can navigate the restrictive ID of the tools.

On the other hand, ball-actuated systems provide the primary benefit of allowing nonstop hydraulic fracturing operations without the time inefficiencies caused by rigging up and rigging down wire line or coil tubing between each stage. In contrast to plug-n-perf systems, pressure pumping is only required when fracturing is occurring.

PLUG-N-PERF COMPLETIONS ARE GENERALLY MORE COST-EFFECTIVE

In almost every situation, a plug-n-perf completion is the cheaper option up front, but it is the slower option as well. The disparity in cost is instead seen in the services and man hours required to effectively implement each of the given systems. This results in different completion techniques being more cost-effective for different applications.

As previously discussed, the one exception to the general rule that plug-and-perf completions are more cost-effective is found in the Bakken shale. The ball-actuated approach excels where laterals are much longer and the number of stages in a completion regularly reaches the twenties or thirties. Although the completion tools have a higher initial cost, the ability to conduct nonstop hydraulic fracturing operations ultimately results in a cost savings.

To illustrate this cost savings, assume that one hour is allocated for stimulation of each stage in a 30-stage frac job. Once the completion tools are in place, the stimulation should only take 30 hours assuming everything goes as planned. In comparison, a plug-n-perf completion strategy applied to the same well requires rig up and rig down between all thirty stages. Even assuming a very conservative two hours to complete this process, the total time required for stimulation triples, and a two- to three-day job takes over a week to complete.

As the number of stages involved decreases, the cost-savings shifts toward plug-n-perf completions. To illustrate this principal, assume that the frac job only contains four stages. While the stimulation should only take four hours using the ball-actuated system, the same job can still be completed within a day using a plug-n-perf completion strategy. The cost savings that is readily apparent due to the shortened duration of the ball-actuated approach to the thirty-stage frac job is minimized in the four-stage job, and the lesser up-front costs and flexibility of the plug-and-perf completion regularly win out.

CONTINUED INNOVATION IN PLUG-N-PERF COMPLETION TECHNOLOGY

There is growing support in the industry for the idea that the entry points into the reservoir created by the perforations of plug-n-perf completions provide a better way to fracture the reservoir and ultimately returns more hydrocarbons. Over the past six months, operators in the Bakken shale are even moving toward plug-n-perf style completions. This migration is being caused by the over saturation of the pressure pumping market in the region and the belief that plug-n-perf completions more thoroughly stimulate the reservoir than ball activated completion systems.

In the never-ending cycle of innovation, one service company is launching a product that borrows the best features of both plug-n-perf and ball-actuated completion systems. The new system combines ball-actuated technology, which allows for continuous fracturing operations, with an unrestricted inside diameter for maximized production flow. The frac balls, which disintegrate when exposed to produced fluids, and the metal make-up of the plugs eliminate the use of coiled tubing for milling operations. In a limited number of field tests, dramatic time and cost-savings were witnessed.

As the oil and gas industry continues to see innovations and increased efficiency in existing technology, plug-n-perf based completion technologies further solidify their cost-effectiveness and strengthen their hold on the multi-stage hydraulic fracturing market.

About the authors

Luke Cantrell

Luke Cantrell is an attorney in the Memphis office of Baker, Donelson, Bearman, Caldwell & Berkowitz PC. He has an undergraduate degree in mechanical engineering from Mississippi State University and completed law school at the University of Mississippi. Prior to his legal career, Cantrell worked as a completions engineer for Baker Hughes in Lafayette, La., and Kilgore, Texas. During that time, he was involved in dozens of successful multi-stage completions utilizing both plug-n-perf and first generation frac point ball-actuated completion systems throughout Texas and Oklahoma.

Ryan Allen

Ryan Allen is the global product line manager for Wireline Conveyed Completion Systems at Baker Hughes Inc. He earned an undergraduate degree in electrical engineering from Mississippi State University in 2006 and completed his MBA degree from Rice University in 2013. Allen's began his career with Baker Hughes began in 2006 and has been primarily focused on unconventional completion methods across the globe.

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