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URTeC Control ID Number: 1619066

An Analytic Approach to Optimizing Well Spacing and Completions in the Bakken/Three Forks Plays
Michael Roth, Murray Roth
Copyright 2013, Unconventional Resources Technology Conference (URTeC) This paper was prepared for presentation at the Unconventional Resources Technology Conference held in Denver, Colorado, USA, 12-14 August 2013. The URTeC Technical Program Committee accepted this presentation on the basis of information contained in an abstract submitted by the au thor(s). The contents of this paper have not been reviewed by URTeC and URTeC does not warrant the accuracy, reliability, or timeliness of any information herein . All information is the responsibility of, and, is subject to corrections by the author(s). Any person or entity that relies on any information obtained from this paper does so at their own risk. The information herein does not necessarily reflect any position of URTeC. Any reproduction, distribution, or storage of any part of this paper witho ut the written consent of URTeC is prohibited.

Summary As field development in the Williston Basin in North Dakota matures, understanding well spacing interaction between Bakken and Three Forks wells is becoming essential for production optimization. Numerous operators are developing the Middle Bakken and between one and four benches of the Three Forks formation with 24 or more horizontal wells per 1,280 acre (two section) production unit. Well spacings are being tested down to 660ft, for single formations and 330ft for adjacent formations. Investigation of oil and water production curves indicates strong evidence of frac communication between neighboring Middle Bakken, as well as with adjacent Three Forks wells, where treatment fluid from the completed well is being produced back by the adjacent Middle Bakken well. This communication between zones has been seen to affect oil production in the Middle Bakken wells and illuminates the fact that the Middle Bakken and Three Forks are a complex and intertwined production system. Well stimulated reservoir volumes can be estimated with microseismic data using a statistical density contour approach as an independent indication of horizontal well interaction. Analytic techniques can combine geologic and engineering information in a multi-variate analysis to isolate the impact of individual parameters on well performance. By comprehending the combined influence of well location and engineering decisions, insights are gained into the limits of well proximity for controlling well interaction and optimizing well recovery factors. Well completions are seen to routinely communicate with wells spaced 1,500ft or farther away, within the same formation. Similarly, wells in adjacent formations, such as the Middle Bakken and 1st Three Forks bench, are also seen to communicate during hydraulic fracturing at distances of 750ft and more. However, well production interference appears to be minimal at a spacing of 1,200ft, within the same formation, and increases approximately linearly with smaller spacings. Recovery factor efficiency and individual well economics support well spacings of 600ft for Bakken and Three Forks benches and or 300ft spacing for staggered well patterns across adjacent formations.

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Introduction Covering over 200,000 square miles predominantly across North Dakota, Montana and Saskatchewan, the combined Bakken and Three Forks formations constitute the Worlds largest (area) oilfield. The m ost recent USGS assessment estimates the Bakken/Three Forks play (US only) contains 7.375 billion barrels of oil, 6.723 trillion cubic feet of gas, and 527 million barrels of natural gas liquids. Doubling from an earlier 2008 assessment, the Mississippian/Devonian Middle Bakken is estimated to hold 3.65 billion barrels of recoverable oil, while the deeper Devonian Three Forks formation is estimated to hold slightly more at 3.73 billion barrels of recoverable oil. Operator estimates of the combined original oil in place for the Middle Bakken and four benches of the Three Forks are approaching one trillion barrels of oil. With such a large resource covering such a vast area, optimization of well spacing and other engineering decisions is of paramount importance for the economic development of the play. After more than 4,000 horizontal wells, considerable variability in well production is encountered with initial well production of more than 7,000 boe in the Middle Bakken and more than 3,600 boe in the Three Forks. Total estimated ultimate recoveries can exceed 1 million boe for certain wells. The varying Middle Bakken facies of sandstone, siltstone, dolomite, and mudstone (LeFever, 2008) range up to 90ft in thickness and are bracketed by the organically-rich Upper and Lower Bakken shales. The interbedded dolomitic mudstones, silty dolostones, and anhydrites of the Three Forks (Bottjer, 2011) can range up to 270ft in thickness. While a single horizontal well is justified in the thin Middle Bakken, multiple wells can be landed in the Three Forks formation. Multiple development optimization projects are underway that are testing between one and four-bench drilling of the Three Forks in tandem with Bakken horizontal wells. Method In this study, Middle Bakken wells that were within 3,000ft of an existing well at the time that the well was drilled and completed were analyzed to determine the impact of well spacing on performance. The production of the Middle Bakken wells varied from 7,000bbl to 70,000bbl of 3-month cumulative oil production. This 10-fold variation in production for the sample wells was a function of the differing engineering designs of the wells, the variability in geology across the Bakken, and the spacing of the wells. In order to isolate the impact of the well spacing on the production, the production first had to be normalized for the engineering and geology. Wells with closer well spacing distances are more likely to be newer, infill wells and therefore have the benefit of improved engineering and completions technique. As a result, wells with closer well spacing may appear to be better producing wells, and it could be erroneously concluded that well spacing does not have a significant impact on performance. In order to derive the actual impact of well spacing, the production needs to be normalized for the engineering and completion practices so as to remove the bias of improved engineering and completion practices over time. In order to increase the sample size for the study, wells across the Bakken play were considered. While increasing the sample size, this also had the negative effect of introducing geologic variability into the analysis; therefore production of the wells had to be normalized for the geology in addition to being normalized for engineering and completions practices. A common technique for normalizing production is to use a linear normalization technique where the production value is divided by the horizontal length of the well to derive a production per foot attribute. If there is a high correlation between horizontal length and production, then this is a valid technique. For the wells in this study, the correlation between horizontal length and production was only 0.299. No engineering or geologic attribute had a linear correlation greater than 0.37, and therefore the linear normalization technique could not be applied. This is typical of unconventional resource plays; there is a complex interplay of many different engineering and geologic factors. To truly normalize the production, many attributes must be considered at once. To perform the normalization of the production for the varying engineering, completions, and geology, a non-linear, multi-variate technique was applied. Key variables representing the engineering, completions, and geology were input into the multi-variate model along with an attribute of the well spacing. The engineering and completions

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attributes input into the model were the horizontal length of the well, the fracture stage spacing, and the proppant placed per foot. The geologic attributes provided into the model were the thickness and the depth of the Middle Bakken formation. The final attribute provided to the model was the average well spacing for each Middle Bakken well to the nearest neighboring well at the time that the well was drilled and completed. For each of the six attributes, the model determined the best-fit relationship between the attribute and production. Using these attributes, the multi-variate model achieved a correlation of 0.723 between actual and predicted production. Figure 1 shows the multi-variate relationships derived by the model for each of the six attributes. The first five plots illustrate the relationships for the engineering, completions, and geologic parameters that were used to normalize the production. The simple, monotonic relationships derived for the engineering and completions parameters show that production increases as the well lengths grow longer, more stages are added, and more proppant is placed. The combination of these three plots were used to normalize each well in the study so that they were no longer biased by how the well was designed and fraced. The geologic relationships show that as the Bakken formation grows deeper (increased pressure thermal maturity) and thicker, the production of the wells in the formation increases. These trends were used to normalize the production for the variations in geology.

Figure 1: Non-linear relationships between each engineering, completion, and geologic attribute derived from multi-variate analysis. The relationships in plots 1-5 were used to normalize production and plot 6 shows the isolated impact of well spacing on well performance after this normalization.

The final plot in Figure 1 shows the isolated impact of well spacing on production after the production has been normalized by the engineering, completions, and geology relationships. The model determined that production interference appears to be minimal at a spacing of 1,200ft within the same formation and increases approximately linearly with smaller spacings. The overall effect of moving from 1,200ft to 600ft spacing is predicted to be a 25% reduction in the 3-month cumulative oil production, assuming that the well is engineered and completed the same at either spacing. This indicates that infill wells will produce less than an identically drilled and completed parent well located in the same formation. To provide support for the trends determined by the multi-variate model, decline curves were investigated for wells spaced closer than 1,500ft apart. Figure 2 shows the areal layout of three wells: two Middle Bakken wells and a single well located in the deeper Three Forks formation. The Middle Bakken wells are an average of 1,500ft apart,

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and the Middle Bakken and Three Forks wells are an average of 750ft but are as close as 250ft apart at the heels of the wells. The first well (green) was a Middle Bakken well and produced for a year before the second Middle Bakken well (orange) was drilled and completed nearby. The Three Forks well (blue) was drilled and completed six months after the second Middle Bakken well.

Figure 2: Areal view of two Middle Bakken wells and a Three Forks well for which frac communication and production communication were observed

Figure 3 shows the daily water and oil production for the three wells. The first Middle Bakken well initially has high water production as it produces back the hydraulic fracture fluid used during completion and then reaches a nominal rate until the second Middle Bakken well comes online a year later. The second Middle Bakken well also has high water production initially as it produces back its hydraulic fracture fluid. The first Middle Bakken well has a spike in water production that coincides with the completion of the second well which demonstrates that the hydraulic fracture fluid is traveling 1,500ft and is being picked up by the first Middle Bakken well. This indicates that the frac width of the Middle Bakken well is as at least 750ft, though proppant may not be carried out to the furthest extents.

Figure 3: Daily water and oil production decline curves for two Middle Bakken wells and a Three Forks well illustrating fluid communication and production communication

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The multi-variate model indicated that negative effects on production do not begin until the wells are within 1,200ft and therefore would have predicted that these two Middle Bakken wells would not have production interference. Examining the daily oil decline curve in Figure 3, the second Middle Bakken well comes online at a comparable rate as the first Middle Bakken well. Also, the second Middle Bakken well does not seem to drastically alter the production rate of the first Middle Bakken well. Despite fluid communication between these two wells at 1,500ft, there seems to be no negative impact on production as they are outside of the 1,200ft spacing distance. The fluid communication between Middle Bakken wells during completion provides evidence that fluid stimulation and potentially proppant placement would overlap between wells at 1,200ft spacing and there could be partial depletion of the reservoir by the time the second well begins producing. This provides the mechanism by which wells spaced closer than 1,200ft have poorer performance according to the statistical model. As part of the study, the interplay between Middle Bakken and Three Forks wells was also considered. Figure 3 shows that when the third well, which was a Three Forks well, was completed, both Middle Bakken wells saw an increase in water production as they produced back the hydraulic fracture fluid of the Three Forks well. This indicates that the Lower Bakken Shale is not a frac barrier as fluid is able to reach the Middle Bakken wells. The completion of the Three Forks well had an interesting effect on the production of the first Middle Bakken well, which was located an average of 750ft away and as close as 250ft. The Middle Bakken well exhibits and increase of 100bbl/day (50% increase) that corresponds with the completion of the Three Forks well, and this increased level of production continued for the following 10 months. One possible explanation for the phenomenon is that when the fluid pushed through the Lower Bakken Shale, it carried proppant into the Middle Bakken formation. This essentially served as a re-frac for the older Middle Bakken well. This behavior was observed in 25% of the cases examined where Middle Bakken and Three Forks wells were spaced within 1,000ft. As independent confirmation of inter-well models, microseismic data presents a tool for mapping stimulated reservoir volumes and well-to-well overlap. Using surface microseismic data from a DOE sponsored study, a geocellular model was defined around two nearby horizontal wells to statistically count microseismic events. A three-dimensional contour model is created of released microseismic energy which serves as a proxy for fracture permeability created around treated wells (Figure 4).

Figure 4: Surface microseismic data recorded for two nearby horizontal wells are statistically binned to create 3D contour maps of effective fracture permeability

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Interactively calibrating the microseismic stimulation volume with engineering and production data generates reliable estimates of stimulated reservoir volumes. For the microseismic data in this study, stimulated reservoir volumes were estimated to be less than 1,500ft in width which justifies well-to-well spacing of less than 1,500ft. These findings agree with the analytic results generated with multi-variate statistics. Conclusions Multi-variate analysis of well spacing performed in the context of engineering, completions, and geology, indicates that as Middle Bakken well spacing is increased from 500ft to 1,200ft, the oil production improves but with no further improvement beyond 1,200ft spacing. Decline curves show that within 1,500ft spacing fracture fluid communicates between Middle Bakken wells. Microseismic data also confirms that 1,500ft spacing limits the overlap of stimulated reservoir volumes for neighboring wells. Interspaced Three Forks wells also flow frac fluid to Bakken wells, occasionally increasing Bakken well production, through what is assumed to be a re-frac effect. With an upper-bound spacing of 1,200ft identified for efficient field development, the search is on to determine the lower economic bound for optimizing reservoir recovery factor. While a 25% reduction in well performance is predicted with a reduction to 600ft spacing, these wells remain economic while boosting the local recovery factor. More data is required from Three Forks wells to ascertain how many benches can be economically developed and whether a staggered pattern of 600ft within formations and 300ft across formations is economically viable. Acknowledgements The authors wish to acknowledge: - Transform Software and Services for provision of analytic and interpretation software - DrillingInfo for provision of well log, production and completions engineering data - North Dakota Industrial Commission for wellbore and production decline data