While we are talking about the oil field, we should probably talk
about what the oil field is. Upstream
operations mostly take place at a wellpad.
Modern fracked wells require relatively large amounts of space, as shown
in this picture on the left. This is
done to accommodate all the equipment needed to drill and complete a well. "Completion" is a process whereby rock is perforated and stimulated (fractured & cleaned up). Once completed, a well enters production
phase—as represented by the picture on below.
Oil wells are not static entities either; once drilled their
production decreases over time. Just as
a juice box becomes harder and hard to drink from as you pull out all the fluid, the same is true with oil coming out of the ground. After some time, usually a few months, artificial
lift is installed to keep the oil flowing.
Artificial lift is a generic
term for a pumping unit, but usually takes the form of a pump jack, like the
ones below. Also on site you’ll find
tanks for holding oil and water, heater treaters (basically a system to
separate oil from water and associated gas), flare stacks, and of course an
onsite generator. While all of the
equipment onsite is necessary, without a generator all activities on site come
to a stop.
Early on, while the Bakken was being developed, (for political,
legal, and strategic reasons) most wells were drilled with only one well on any
given pad. Today operators are doing
what’s called infill drilling, where they packing together wells as densely as
possible. Without going into a detailed
description of the geology and science of drilling and fracking, one thing is
clear: there is more than one well per pad being drilled today. This is important because each well typically
needs 50-75kW of power. Numbers vary,
with as few as three wells per pad but we saw one pad with nine wells on
site. Each operator has their own secret
number which is highly correlated to the reservoir engineering that is going on
below the ground.
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| Kodiak Oil & Gas Corp Howard Weil Energy Conference, March 2014 http://www.kodiakog.com/pdf/KOG_Mar2014.pdf |
After the first six months (as shown from the chart on
right), a typical well will be producing $30,000 in oil a day (or $1,250 an
hour). I think it is interesting to note
that on that well pad with 9 pumpjacks, we saw one generator, which rented for
roughly $20,000 a month. Each hour of
downtime from that generator at that wellpad amounted to $10k—and a good
generator averages a day and a half of downtime a month. More on this next time.
