Marcellus madness may have softened since the decline in natural gas prices in 2012, but operators and service providers are looking for a modest uptick in 2014 business on the basis of expanding activity in Ohio’s Utica shale, according to Hart Energy surveys in the region. Results from those surveys include:
Well servicing/workover. A rising pool of new wells is increasing demand for maintenance work. Contractors report demand for workover services is strong, though there are adequate equipment and more than enough service providers to supply the market and keep pricing from rising. The region has witnessed the arrival of coiled tubing for completions, though recent trends toward extended-reach horizontal laterals mean well service rigs still remain a preferred solution for horizontal completions. Service providers indicated they are working to push pricing, but an abundance of competitors means rates will remain flat in 1Q 2014.
Downhole completions. Slickwater fracs still dominate the completion picture in the Marcellus, although operators use crosslinked gel or hybrid solutions primarily in the Utica shale. The trend in the Utica, according to oil and gas operators in the Hart Energy survey, is toward a greater share of hybrid completions. Since the Utica is the source of regional activity growth in 2014, crosslinked gels and hybrid completions will gain regional market share. Operators are experimenting with longer laterals but clustering stimulation stages closer together. In doing so, they are keeping sand volumes static at around 2 MMlb per lateral, depending on the number of stages. Closer spacing means less sand per stage but more overall stages than prior completion techniques as a way of increasing well productivity.
Operators also are reporting a slight increase in the use of sliding sleeves, though plug-and-perf completions remain the predominant methodology. One operator reported productivity improvements by using a toe prep tool and sliding sleeves at the end of each lateral.
Meanwhile, pad drilling and batch completions have become the most common procedure on completions, with operators drilling a single lateral per well but clustering multiple wells on a single pad and using zipper fracs or stacked fracs to allow simultaneous operations.
Pressure pumping. With 2014 budgets mostly set among oil and gas operators, demand for well stimulation services will match 2013 in the Marcellus. A majority of service providers noted that the region still suffered from excessive capacity, and a few have sent equipment and crews to other regions awaiting an activity uptick in the Utica. Service providers report capacity of 1.9 million in hydraulic horsepower spread across 50 fleets in the Marcellus/Utica market, with 40% of capacity marketed by Halliburton, Schlumberger, and Baker Hughes.
Operators and service providers report average lateral lengths in the neighborhood of 1,524 m (5,000 ft) with an average 20 stages per lateral. Stimulation costs on a per-stage basis border on US $80,000, and nearly all companies expect pricing will remain flat in 1Q 2014.
Drilling market. Operators are expressing a preference for higher horsepower drilling rigs as lateral lengths increase, creating a modest tight-supply situation. Rigs with walking packages are in particular demand because of mobility and terrain issues in the Marcellus. The increase in pad drilling as a percentage of all drilling in the region means individual rigs are becoming more efficient in terms of the volume of wells generated in a year. However, the interest in higher specification rigs has sidelined a lot of traditional lower horsepower rigs. There may be a bright light for smaller units yet since many of the original five-year leases are destined for expiration in coming months, prompting a late flurry to generate production and extend the lease at favorable terms.
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