Reduced Costs Propel Shallow Gas Program in Southeast New Mexico

Abstract

A significant reduction of drilling and completion costs in the Eumont and Jalmat Fields of Lea County, New Mexico has resulted in the continuation of Conoco's development program in a soft gas price environment. Average 1995 costs for drilling, completion and facilities have been reduced to $180,000 for single zone completion wells and $240,000 for two completion wells. This paper focused on the process and equipment changes that resulted in the cost improvements as well as the method used to identify the improvements. Introduction Conoco Inc. operates ninety-five (95) active gas wells in the Eumont and Jalmat Fields of Lea County, New Mexico shown in Figure 1. Combined oil and gas rates from the wells are 25 BOPD and 28,719 MCFPD. Gas production is from the Permian age Yates, Seven Rivers, and Queen formations. Over the past three years, Conoco has maintained an active development program yielding 10 MMBOE's of reserve additions illustrated in Figure 2. During the period from 1993 to 1995, Conoco Inc. drilled and/or recompleted 60 wells to the Eumont and Jalmat gas pools. As the more economically attractive projects were finished, cost containment became increasingly important to ensure profitability and ensure continuation of the program. Additionally, lower gas prices during 1995 intensified cost control requirements. Conoco Inc.'s Hobbs Operating Unit met the challenge by blending the robust skills of a multi-discipline team. As seen in Figure 3, the team identified completion processes and equipment specification changes that resulted in 37% and 27% well cost reductions for single and two zone wells, respectively. Reservoir Description The Yates, Seven Rivers, and Queen Formations are mostly dolomite with inter-bedded sandstone lenses at depths ranging from 2,600' to 3,600'. Recent development has primarily been in the gas productive inter-bedded sand lenses shown on the type log in Figure 4. These zones are from 250' to 500' thick with permeabilities and porosities ranging from 1 to 12 md and 4% to 18% respectively. Reservoir pressure of sand zones varies from 150 psia to 500 psia. Utilization of advanced technology in energized sand fracturing is required to enable these wells to produce at commercial rates of 200 to 2,000 MCFPD. Cost management is critical to keep the projects economical at the low end of the reserve range (<1 BCF). Team Approach Cost control became so critical during early 1995, the shallow gas program was halted. A special multi-discipline team was formed to identify cost saving proposals to get the gas well program "back on the tracks." Composition of the team included everyone involved in executing a shallow gas well completion from Land/Right of Way to the Production Operator. First, every step of the process listed below was thoroughly discussed:staking/building of surface locationdrillingloggingrunning casingcementingperforatingstimulatingrunning tubinginstalling wellheadinstalling facilities including artificial lift