Horizontal drilling assessment in Western Canada

Peter Catania and Malcolm Wilson

Applied Energy, 1999, vol. 64, issue 1-4, 343 pages

Abstract: The first horizontal well was drilled in Saskatchewan in 1987. Since then, the number of horizontal wells drilled has escalated rapidly, averaging approximately 500 per year since 1993. When combined with horizontal wells drilled in Alberta, the major Canadian oil-producing province, the total number drilled in 1995 was 978. This total exceeds the National Energy Board (NEB) projected maximum of 816 wells per year. The NEB projections were based on a break-even point for the drilling of horizontal wells of a return of CDN $285,000 using a discount rate of 15%. This corresponded to a cumulative production from each individual well of some 11,000 m3. The introduction of a royalty-free production volume of 12,000 m3 per horizontal well in Saskatchewan was instrumental in stimulating the rapid expansion in the use of horizontal wells and helping Canada to exceed the forecasted drilling level. Within Saskatchewan, daily production from 1964 active horizontal wells is in excess of 20,000 m3. Comparative analysis indicates that the average daily production per well has increased from approximately by 40% with the advent of horizontal wells. In total production terms, provincial production has increased from 11.7 million cubic metres in 1989 to 20.9 million m3 in 1996. This represents an increase of almost 79% based primarily on the extensive use of horizontal wells. In 1996, horizontal wells produced 36% of the province's oil from 12% of the active wells. In the southeastern producing area of Saskatchewan, the Williston Basin, declining oil-production has jumped 100%, with horizontal wells accounting for approximately 50% of total regional production. Pay zones in this area, as in most of the province, tend to be relatively thin, with net pay frequently less than 5 m. The modest investment of some CDN $5 million in government research funding 10 years ago to simulate the development of horizontal wells, combined with a favourable royalty structure, has been at least partially responsible for very significant benefits to the provincial economy. In Saskatchewan, horizontal wells have (i) paid over CDN $400 million in royalties since 1990, (ii) annually generated CDN $525 million in investment and (iii) sustained 4350 jobs. Details pertaining to the Winter Cummings Sand Pool and others as examples of the success of the horizontal well program in Saskatchewan are discussed in this paper.

Date: 1999
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