Spatial Diligence for Drilling

Winter NAPE is over, the deals have been made and it is time to think about development. 

Of course there is a lot more due diligence that has to be performed before the drilling commences. Much of the effort is ensuring ownership and mineral rights, not only for the new operations but interacting with other operators nearby. Perhaps the new development will involve horizontal wells, so there is the issue of collision avoidance; drilling through other properties and past other wells to get to the target(s). Maybe there is ongoing production nearby or in another play above which may raise regulatory concerns.

It is a complicated world sub-surface and the one common aspect of every effort is the need to understand all the spatial relationships.

I decided to do a focused evaluation in Midland Counties’ Pegasus Field. This is a very densely populated field with lots of vertical wells, many operators, complex ownership and one of the key stacked play horizontal development areas in the Permian. It includes areas held by both single and multiple operators either in shared production or producing in different zones.

I looked first at areas intermixed with lateral and vertical wells as I wanted to examine the sub-surface complexity, both horizontally and vertically. I mined the Texas RRC data and found an interesting area where a horizontal well was permitted, but later cancelled. I do not know the exact reason it was cancelled, but the sub-surface environment was certainly spatially challenging. The planned well is highlighted in black. I picked a 5000 foot perimeter around the planned well path and examined every well within the perimeter.

There were a total of 11 operators and 230 wells; including current production and historical plugged and abandoned.  Wells originate and terminate within and without, even crossing through the perimeter. 

There were a number of observations made during the evaluation but some of the more important ones were:

• 99 of the wells had miss located surface positions; representing 43% of the total, with movement between 10’ and 363’
• 38 historical wells had unverifiable surface positions; representing 16% of the total
• 148 of the 230 wells could be verified to an actual well-head in imagery
• 43 of the wells were verified in older imagery to a well pad

Having applied my previously discussed standard to this data set, adjustments to well-locations resulted in 15 of the surface well locations falling within 500 feet of the planned well path. In looking at the well bores 8 wells (vertical and horizontal) terminated at depth within 500 feet of the proposed well path.

Besides actually knowing where the wells are, there is also need to understand how the plan fits within the existing legal boundaries and how well the regulated boundaries coincide with the designed survey.

In the next image, we can see the survey plat as submitted for permitting the planned well. The plat uses lease corners to post the starting drilling location, the key points along the well bore including the production points and the terminus bottom-hole position.

When the well coordinates from the plat are georeferenced to the stated Coordinate Reference System’s projected coordinates, there is a slight difference between the survey plat lease lines and the Texas Natural Resource published lease lines which are tied to the Texas National Geodetic Network. In this case the difference is minimal ~20’ – 25’. When reviewing various vintages of survey plats in the area, the coordinate differences were more pronounced depending on both the source and age of the section line creation and dates that the surveys were conducted. The proposed bottom-hole position stops on one version of the section line and crosses into the next section of the other one. The planned final take-point was designed to fall 30 feet within the lease boundary as displayed on the plat but the difference in the lease boundaries places that buffer in question.

As I mentioned earlier there might also be possible regulatory issues. Regulations are often complex and driven by many competing factions and their desired goals. Spatial regulations are typically defined to clearly establish ownership of mineral rights and where necessary how multiple operators may develop common properties or be protected from other operator’s developments. We’ve all heard of one operator claiming another is taking production or perhaps evidence of another's fracking sand in their production.

The regulations in Texas were historically based on vertical well production and to some extent vertical zones of production. With the advent of horizontal drilling, new rules have been added which define aspects of proximity between production points. For Horizontal Drainhole wells, there is a specific limitation on how close to another operator’s production or take points an operator can place theirs. There are many rules outlined in Title 16 relating to spatial issues. These are primarily dealt with by an operator’s legal and land departments; however knowing existing relationships and potential relationships with existing wells becomes even more important when ensuring compliance with the regulatory mandates. 

In our example we have a number of wells classified as “Drainhole”, with take points along their well paths. The need to understand the placement of those points with respect to the new well designs becomes important. 

The following is an excerpt from Title 16 commenting on “Take Point” spacing:

TITLE 16. ECONOMIC REGULATION

PART 1. RAILROAD COMMISSION OF TEXAS

CHAPTER 3. OIL AND GAS DIVISION

16 TAC §3.79, §3.86

(b) Drainhole spacing.

(1) No point on a horizontal drainhole shall be drilled nearer than 1,200 feet (horizontal displacement), or other between-well spacing requirement under applicable rules for the field, to any point along any other horizontal drainhole in another well, or to any other well completed or drilled [drilling] in the same field on the same lease, pooled unit, PSA tract, or unitized tract.

The related view shows our “planned” well with its two take points and other operator wells take points along their well paths. The circles are 1200’ and show overlap with each other. Six take points from other wells are inside the 1200 foot regulatory limit of the designed first and last take point in the planned well. In all likelihood there would need to be a production sharing agreement (PSA) to cover issues between operators relating to proximity for this well to be drilled. 

I cannot say any of these issues had any effect on cancelling the planned well. However there is sufficient complexity within that small area to cause one to evaluate the spatial relationships. Perhaps this knowledge could have impacted the drilling plan, how the well would be drilled and how the production sharing agreement(s) might be established.

The point of this post is not to promote due diligence in planning because we all know it is essential to do so. The point is the issues involved are complex and spatial relationships are critical. All coordinate representations can be questionable and therefore they should be questioned. Some operators have multiple departments assigned to resolving these issues and some companies have a couple of people and rely heavily on stated or published information. In my efforts at pointing out the issues with surface location as the growth in horizontal drilling continues, the issues can only become more complex and the need for higher accuracy in positioning data becomes essential. If you don't have a spatial diligence plan, put one in place. If you need assistance getting one in place, I can help.