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In this Petroleum Review article, Accenture discusses how companies developing unconventional reservoirs are discovering a new approach for creating investor value.
Conventionally, exploration and production (E&P) companies have relied on maximizing production from their asset base as the primary means of generating cash flow and investor returns. However, E&P companies developing unconventional reservoirs such as shale gas are discovering that production volumes are driven by manufacturing wells rather than a more intensive focus on engineering wells.
This article was first published in October 2012 in Petroleum Review and is reproduced by permission of the Energy Institute, 61 New Cavendish Street, London W1G 7AR.
The traditional, manufacturing wells approach to optimizing well production is to invest considerable time, engineering talent, technology and money to maximize the initial production rate from each new well. However, in unconventional basins, success will most often be predicated on maximizing field/basin production by optimizing the overall number of wells drilled while placing a premium on speed, predictability and cost management.
Unconventional E&P players need to shift their thinking and their actions. No longer is the most value-adding activity focused on “Where to drill the next big well?” and “What new technology is needed?” Instead, those companies must answer the question of “How to deliver a new well with the lowest per well cost?” that will generate the greatest return on their unconventional reservoir investments.
This new way of thinking requires:
Jeff MiersExecutive director-Energy, Accenture
JoAnn MeyerDirector-Energy, Accenture
Todd BlackfordManager-Management Consulting, Accenture
November 6, 2012
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