Well spacing is an important factor considered by exploration and production companies when drilling a new well in an existing oil formation. According to the Alberta Energy Regulator, well spacing defines the number of subsurface drainage locations necessary to maximize hydrocarbon recovery in a pool or formation.

There is clear guidance given by the regulatory authorities when seeking approval to drill a new well with the aim to maximize the hydrocarbon recovery and ensure equal distribution of mineral assets among land owners. Spacing regulations promote conservation through efficient and orderly development of reservoirs, and protect the mineral rights of the owners. (For more on this topic, see The Lowdown on Oil and Gas Lease Contracts.)

Apart from these regulatory provisions, there are operational and commercial considerations that also determine the spacing between wells. While it is important to adhere to regulatory requirements, a deft balance should be struck on operational aspects to maximize production.

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 when deciding on well spacing.

Let us briefly see these factors that go into well spacing decisions.

Well Interference

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 ensure 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 formulas 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 any 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.

Rock Permeability

Permeability is one of the factors that affect well spacing. The permeability of rocks indicates the extent to which fluids are allowed to pass through the rock formations. (To find out why some rocks are more permeable than others are, read Grasping the Concept of Rock Permeability.) The higher the permeability, the easier it is to extract oil because it flows 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 a tighter spacing. High permeability homogeneous reservoirs require low well spacing that helps to maximize production.

Reservoir Homogeneity

The reservoir's homogeneity has an impact on the well spacing. If the oil field is homogeneous, then well spacing decisions are easier because 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 is to first locate the sweet spot based on established seismic techniques and formulate the well spacing in such a way that it does not affect the production volumes of the existing wells. (Learn more about seismic techniques in Seismic Mapping: Technology that has Changed Oil Production Surveys.)

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 approximately varies 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 is 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 well spacing and ultimate recovery based on data from a particular oil field. Hence, it was asserted that well spacing affecting the production numbers varies among reservoirs because no two reservoirs are the same. Much care is taken based on reservoir characteristics such as permeability, porosity and homogeneity.

There is also a point of view that closer well spacing achieves better oil recovery and extends the well lifecycle. Based on production data obtained from depleted oil fields, it was found that ultimate recovery improved two to eight percent due to closer well spacing. However, these studies cannot be taken as a common approach or best practice because every oil field is unique.

Value Drivers of Well Spacing

Exploration and production companies strive 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 must be optimized because excessively restrained or uncontrolled spacing can affect the production, leading to a negative return on capital after drilling new wells.

Well spacing is primarily driven by legal considerations. Leading operators are of the view that if the restriction of wells per acre is reduced, then more wells can be drilled in a smaller area with down spacing. This might affect the estimated ultimate recovery (EUR) of the wells, but help to achieve the overall recovery of the field.

Timing is also considered a value driver while planning the spacing. It is estimated that a new well will generally produce 50 percent of its potential during the first 18 months of its operation. Hence, the longer a well is interfered the better it is from a payback and economics standpoint.

Concluding Thoughts

Well spacing is a complex process, and there are no general rules available that can be applied to every reservoir. Various tests, such as micro seismic tests, chemical tests and pressure tests, are conducted to analyze the well interference pattern so that well spacing is optimized to maximize recovery. This is an essential upstream exercise from both an operational and a regulatory perspective.