Well spacing is an important factor considered by exploration and production companies while drilling a new well in an existing oil formation. There is a clear guidance given by the regulatory authorities while seeking approval for drilling a new well with an aim to maximize the hydrocarbon recovery and ensure equal distribution of mineral assets among land owners. According to Alberta Energy Regulator, well spacing defines the number of subsurface drainage locations necessary to maximize hydrocarbon recovery in a pool or a formation. Spacing regulations promote conservation through efficient and orderly development of reservoirs and protect the mineral rights of the owners. Apart from these regulatory provisions, there are operational and commercial considerations that also determine the spacing between wells. While it is important to stick to regulatory requirements, a deft balance has to be struck on operational aspects as well in order to maximize production. Let us briefly see these factors that go into well spacing decisions.
It may be noted that each oil field is unique in terms of rock formations. Hence, there cannot be a standard approach to well spacing applicable for all reservoirs. But there are general factors that have to be taken into consideration while deciding on well spacing.
There are various theories and analysis on the factors that affect well spacing and ultimate recovery from an operational perspective. The main objective of any exploration and production company is to maximize production by increasing drainage locations on the surface and at the same time ensuring that the production opportunities of the existing wells are not affected. This is a challenge and hence well spacing is a complex technical matter. Many formulae and analysis go into well spacing apart from the regulatory requirements. The concept of well interference propagates the theory that a newly drilled well tends to interfere with the existing production well if not sufficiently spaced. To ascertain well interference, various well tests are conducted to find out the extent of interference in production.
Permeability is one of the factors that affect well spacing. The permeability of rocks indicates the extent fluids are allowed to pass through the rock formations. The higher the permeability, the easier it is for extraction of oil as hydrocarbons would flow through the rock formations easily. Low permeability restricts the flow and hence drilling has to be concentrated. From a well spacing perspective, low permeability will benefit from tighter spacing in form of acceleration. High permeability homogeneous reservoirs require low well spacing that will help in maximizing the production.
Homogeneity of the reservoir has an impact on the well spacing. If the oil field is homogeneous, then well spacing decisions would be easier as existing production wells are indicators of what is in store as far as quantum of reserves is concerned. However, when faced with heterogeneous rock formations, the challenge would be to first locate the sweet spot based on the established seismic techniques and formulate the well spacing in such a way that it does not affect the production volumes of the existing wells.
Various theories on well spacing
Well spacing has been a complex subject of constant research for oil experts. It dates back to 1924 when W.W. Cutler of the US Bureau of Mines published a paper on well spacing affecting the ultimate recovery prospects of existing wells. Based on his study, he concluded that the ultimate production for wells of equal size where there is interference, seem to approximately vary directly as the square roots of the areas drained by the wells. He propounded a formula called Cutler’s well spacing rule which states that the average recovery per acre shall be inversely proportional to the square root of the area drained. He opined that more drainage locations would ultimately affect the production capability of the wells.
His theory was contested by many other researchers and some concluded that there was no correlation between the well spacing and ultimate recovery based on data from a particular oil field. Hence, it can be safely established that well spacing affecting the production numbers varies among reservoirs as no two reservoirs are same. A lot of care is taken while deciding on the new wells based on reservoir characteristics such as permeability, porosity and homogeneity.
There is also a point of view that closer well spacing helps to achieve better oil recovery, extending the well life cycle, etc. It is found based on production data obtained from depleted oil fields, ultimate recovery had improved between 2% to 8% due to closer well spacing. However, these studies cannot be taken as common approach or best practices in well spacing to achieve better production as every oil field is unique.
Value drivers of well spacing
Exploration and production companies strive hard to increase their production by drilling new wells. However, this has to be done in such a way that the new drains do not affect the performance of the existing wells. Well spacing has to be optimum as either excessively restrained or uncontrolled spacing could impact the production leading to negative return on capital employed in drilling new wells.
Well spacing is primarily driven by legal considerations. Leading operators are of the view that if the restriction of wells per acreage is reduced, then more wells can be drilled in lesser area with down spacing. This might in a way affect the estimated ultimate recovery (EUR) of the wells, but help to achieve the overall recovery of the field.
Timing is also considered as a value driver while deciding the spacing. It is estimated that a new well will generally produce 50% of its potential during the first 18 months of its operation. Hence, the longer a well is interfered, the better it is from the payback and economics standpoint.
Well spacing is a complex process and there is no general rule available that can be applied to reservoirs. Various tests are conducted like micro seismic tests, chemical tests, and pressure tests to analyze the well interference pattern so that optimum well spacing can be achieved to maximize recovery. This is an essential upstream exercise both from operational and regulatory perspectives.