The Piceance Basin, located in Western Colorado, is a 6,000-square-mile basin consisting of vertically stacked sand-shale sequences. Gas-in-place estimates exceed 200 trillion cubic feet. The operator started developing its acreage in 1982 with 160-acre bottom-hole spacing. Over time, dictated by reservoir performance and enabled by drilling and completion technology, such as PDC bits and directional drilling, field development migrated to 10-acre bottom-hole spacing with surface locations consisting of three to four wells per pad. Historically, pricing pressures dictated the use of conventional mechanical drilling rigs. In recent years, as product prices increased and as well inventory in easily accessible areas became drilled up, the need to drill many wells from a single remote surface location became apparent. These purpose-built rigs facilitate this, plus bring multiple performance improvements, environmental benefits, and well cost reduction to the asset. This paper will be presented by E.S. Kolstad at the 2007 SPE/IADC Drilling Conference held in Amsterdam, The Netherlands, 20–22 February 2007. Introduction Rising natural-gas prices and Wall Street demands have come together to create a new culture of aggressiveness in natural-gas development for one operator in the Piceance Basin. As a result, the operator's drilling activity and production have grown significantly in recent years. Meeting and exceeding growing production targets has had significant challenges. Purpose-built efficiency rigs were designed by the rig contractor and the operator specifically to meet some of those challenges. For many years, local natural-gas prices in the region were suppressed. That revenue disadvantage meant that operators did not have access to many of the newest and best technologies, including the latest rig technologies. Performance indicators flattened in response to the lag in technology. The recent boom in natural-gas prices has affected the local market, making it possible for operators to take bigger technological strides and risks. The specific development program described in this paper is a mature field-development project challenged by difficult topography and other land-use complications. With the nature of the program in mind, the operator was faced with the challenge of significantly accelerating the development of assets with greater capital efficiency, safety, and environmental stewardship. A dramatic change in rig design was the only answer. The rig contractor wanted to establish a new operating area within the region and get more of its new-build technology to the market. It was the perfect opportunity for collaboration. Ready to take a technological stride, the operator signed a contract for multiple purpose-built efficiency rigs. Although many of the individual features of the new rigs had already been used in different parts of the world, the particular combination designed into the purpose-built efficiency rigs was a revolutionary application. In about one year from initial discussion to first spud, thousands of possible features were discussed, combined, separated, invented, added, or rejected. Additional features have been added and removed with knowledge gained since the first spud. Signing the contract involved considerable risk. The operator ordered ten rigs of a new design, signed three-year-term contracts that were elevated over other day rates available at the time, and designed budgets and performance goals based on expected but unknown capabilities. Those risks were undertaken with the understanding that purpose-built rigs have higher value in their particular application than any other rigs available. Commitment to the ideal of purpose-built rigs was strengthened by a confidence in the possibility of continued successful design collaboration between the operator's drilling team and the rig contractor. The decisive move in the face of a number of risks has led the operator to a competitive advantage with compounding effects.
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