SPE 165708

Gas Factory: Operational Efficiencies in the Marcellus Shale Lead to

Exceptional Results
Boyd Huls, Baker Hughes, Michael Hurey, Cabot Oil & Gas, Jeffrey Johnson, Cabot Oil & Gas

Copyright 2013, Society of Petroleum Engineers

This paper was prepared for presentation at the SPE Eastern Regional Meeting held in Pittsburgh, Pennsylvania, USA, 20–22 August 2013.

This paper was selected for presentation by an SPE program committee following review of information contained in an abstract submitted by the author(s). Contents of the paper have not been
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Abstract
The natural gas boom in Northeast Pennsylvania over the past few years is directly related to the ability of the
petroleum industry to convert the once economically-challenged Marcellus Shale into a dynamic energy resource.
Those who have realized the potential and positive impacts of Marcellus Shale gas have described this boom as
nothing short of revolutionary. The development of this unconventional play has challenged operational thinking
and created an opportunity to implement innovative solutions to a variety of logistical challenges. Many of the
conventional paradigms have been adapted and refined to lower the unit cost and shorten the cycle duration time
from permit to production.

The quest has been to improve cost effective production while continuing a responsible regard for health, safety,
and the environment. The effort has been multi-dimensional and the result of a cooperative approach by the
producers, service companies, and every member of the supply chain. Once adopted, these operational efficiencies
become standard practice and are repeated pad to pad and well to well. This repetitive “assembly line” approach
used in high efficiency operations is now described as a “Gas Factory." In this paper we will present a case study
with emphasis on operational efficiencies resulting in remarkable growth activity and production optimization in
one of the premier gas plays in the world.

Introduction
Efficiency has been generally described as reaching a maximum level of performance with a minimum amount of
expense, effort, or waste. The economic climate within the industry today has challenged participants to focus on
ways to improve operational efficiencies. This opportunity to use process improvement to enhance current
industry standards will create an economic advantage and once established will ultimately lead to new best
practices. As operations are continually evaluated and steps taken to fine tune a procedure not only is that
particular efficiency enhanced but all ancillary processes are influenced by that improvement.

As change becomes central to the culture and needless downtime is eliminated or reduced repetitive behavior
becomes effective. The ability of an organization to promote and manage innovation allows for those newly
incorporated practices to become repeatable. As those systems are integrated in a sustainable way and transferred
throughout a company the processes take on a new scale. It is this dimensional adaptation to large scale that
denotes an assembly line approach and has created the term “Gas Factory”.

The application of this “Gas Factory” technique has been successful in the Marcellus Shale of Northeastern
Pennsylvania. The program in this case study involves a large number of wells with high density drilling and
increasing lateral length. The “Gas Factory” has created highly efficient operations with subsequent improved
resource management, cost reduction, and greater production commensurate with those efficiencies.
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Overview of Operational Demands & Efficiency Gains

The constant struggle operating company’s face is balancing the demand increase in stages/wells, wells/year, and
ultimately yearly production while the resources to achieve those goals seem to be on the decline (i.e. time,
money, equipment and qualified people). To combat this struggle efficiency gains are of the utmost importance.
For example initially single well pads with daylight only operations were the standard in the Marcellus Shale
resulting in pumping 2-3 stages (2-3 hour pump times) during daylight hours. However as multi-well pads were
implemented this allowed for pump down operations to occur at night increasing a daily stage count to 3-4 stages
per day with only one 12 hour frac crew needed. As demands continued to increase with limited equipment and
people a single fleet of frac equipment with two 12 hour crews rotating for continuous 24 hour operations allowed
operators to push the envelopes of 4-5 stages in a single day. Building upon that simultaneous pumpdown/frac
operations were added even greater pushing the envelope of efficient operations of 8-9 stages in a 24 hour period.
The increased demands required extra attention to detail to consistently and safely push the limits of fracture
operations efficiency. Those challenges and solutions are continually being identified as discussed below.

Redundancy
As with any exploratory field, the required infrastructure required to be able to efficiently develop the Marcellus
had to be developed along with the field itself. With a developing supply chain being able to quickly and
efficiently address any operational issues requires a proactive approach. Fixed costs are exactly that, you can’t
eliminate them but by streamlining the process as a whole you can greatly minimize them. Redundancy and non-
complacency have to become the standard to ensure a quality of work that is both timely and can be relied upon
but should a tool or piece of equipment need to be replaced it can efficiently be done.

Redundancy can be utilized to minimize downtime in numerous ways. For example, ensuring a spare set of fully
operational frac stack valves on location makes certain a quick remedy in the event a valve isn’t functioning
properly. By having a spare blender rigged up and ready to go can prevent a well from being screened out if an
issue arises with the primary blender. Using a dual sided T-belt adds back up without excess footprint to secure
continuous sand delivery to the blender for the job. Utilizing multiple water sources can ensure the frac
operations continue should something prevent one of the sources from being used. Insisting on extra horsepower
being rigged up can be the difference between being able to continue pumping a stage to design or having to
shutdown operations for a significant period of time. Even as far as identifying secondary containment under
equipment where spills are prone to occur will help in efficiently cleaning up any EH&S concerns that may arise
without hindering operations. Each operator will have their own specific set of circumstances so each operator’s
process must be studied individually.

By studying the process in place and also by learning as you go, weak points can be identified and spare parts and
services can be acquired and ready in the event that they are needed. Redundancy standards can and should be
developed and implemented from pad to pad. This facilitates a cohesive, effective, and easily repeatable
relationship for all parties involved which greatly aids in fostering the assembly line approach.

Logistical Challenges
One of the biggest obstacles facing efficient operations in horizontal completions is water management. As
operations have evolved from 12 hour daylight operations to 24 hour simultaneous zipper operations water
management has become exponentially challenging. What was once requiring water volumes for 2-3 stages/day
has now advanced to the limits of 8-9 stages/day creating strain on the water management team looking for
solutions for both water logistics and water storage. Without water impoundments within the infrastructure the
challenge becomes ever greater. Key solutions have been found in nearby tank farm pads and better organization
with trucking logistics. Nearby tank farm pads that were once 100+ of the 500 bbl frac tanks have been
minimized through logistic efficiencies to consist of approximately 70-80 tanks with the implementation of onsite
“water pushers” directing traffic and working real time with water truck coordinators. Having a strong
coordinated team has advantages of identifying real time “bottlenecks” created by weather, road conditions, traffic
restrictions, etc. and making the necessary decisions to adjust to those situations as they come up. Another key
addition in water logistics is using real time GPS monitoring which helps for a relatively smooth operation
considering water delivery can fluctuate from 250-700 loads of water on a daily basis. A significant lesson has
been in understanding that often times "less is more" as water trucks themselves can hinder trucks in and out of
SPE 165708 3

location. Another vital initiative was having the ability to redirect trucks at refill stations in order for “on-the-fly”
adjustments to meet water needs at multiple locations at the same time.

An advancement in the tank farm approach has been using a large 40,000 bbl tank to replace the 500 bbl tanks
themselves which drastically reduces footprint/cost and also allows for a faster and easier mobilization. These
large tanks can be assembled/disassembled in hours and only require a few trucks to transport. A typical rig up
would involve approximately ten 500 bbl tanks used to load water that is then pumped into the larger tank saving
time and money. An additional advantage of these larger tanks is that the large volume can dilute any
contaminated off loads and most importantly have a more accurate measurement of real time water
volumes. Major risks involve contamination of the entire volume or leaks that could result in a failure of the
vessel. As a result it is a recommended best practice to use such a large tank for freshwater storage only.

Lastly in preparation for a potential dry season it is recommended to have enough storage to last the anticipated
“drought” which varies by geographical area. For example in the northeast region of Pennsylvania water
withdrawals can “dry up” during the summer months and having a large 7-10 million gallon capacity
impoundment is crucial in avoiding delays or even stopping operations all together.

As field operations switch from an exploration to infill drilling future enhancements will include more centrally
located 300,000+ barrel impoundments to further reduce transportation distances and costs with an increase in
storage capacity. Building upon that will be a water impoundment system that is interconnected via pipelines thus
further diminishing truck traffic, costs and the associated risks.

A one-sided approach to efficiency at this level is impractical. The quality and quantity of chemicals, sand,
hydraulic horsepower, and manpower supplied by the service company must meet the expectations of the
operator. The original 2-3 stages per day were able to be managed on a local level but as this number doubled and
even tripled with the advent of multi-well pads and simultaneous zipper operations assessment of the supply chain
needs to be re-evaluated on a national level. The supply chain requires transformation into a new operating model.
Sourcing and procurement options need to be expanded. Bulk products such as sand need to be stored in multiple
terminals in the vicinity of the work. This decreases turn around time, reduces truck traffic and increases safety.
Trucks can be supported by multiple rail sidings and barge transit. Along with these physical adjustments on-site
sand coordinators ensure consistent truck movement and communication with transport personnel to preclude a
lapse in service.

Preventative Maintenance
Equipment maintenance schedules have to be adapted also. It was once acceptable practice to replace pump unit
valves and seats at the point of failure. The hydraulic horsepower requirements and high pump rates coupled with
limited space for horsepower reserve have eliminated that practice in highly efficient operations. If the metric for
valve and seat life is 18 stages those parts will be replaced at 15 stages on all units before failure. High pressure
stages and increased pump times may reduce that number. Suction manifolds are now inspected and flushed to
remove rocks or other pieces of large mechanical debris. The quality of parts is being assessed as the quantity of
stages in a short time span allows for real time comparison. Parts are now bar coded so that upon use an order for
replacements is accurate and timely. Specialized assigned lube trucks are being utilized to insure adherence to
preventive maintenance schedules. Engine fluids (oil, hydraulic fluid, transmission oil, and power end fluid) are
collected regularly and sent for analysis to predict wear prior to failure. Field mechanic head count has been
increased with assigned specialists for pump maintenance and training programs have been expanded to meet the
demands with a relatively “young” workforce. Anther item that needed improvement was more frequesnt iron
certificiation. Under “conventional” completion operations it was thought acceptable to recertify iron on a yearly
basis but as the frac stage sizes and number of stages/day have increased that may no longer acceptable. As a
safeguard to failure iron certification has been reduced from yearly to bi-annually and now quarterly as operation
wear has increased.

Another area of preventive maintenance to be of concern with is wireline pumpdown operations. This takes place
as early of the well preparation with a coil tubing clean out run (recommended to use a tricone bit and string mill).
4 SPE 165708

Not only does the cleanout run ensure a clean wellbore it also identifies any restrictions due to casing damage
from drilling operations. The extended string mill BHA length would acknowledge any unusual wellbore
curvature that might hinder the wireline guns/plug assembly from getting to depth. During onsite wireline
operations it is recommended to rehead at a minimum of every three plug and perf operation or right after unusual
pull has been required. Another aspect of preventative maintenance occurs with the frac stacks themselves. Not
only do they need to be inspected, torn down and rebuilt after every well but continual greasing of valves must
occur at least once a day (roughly 3-4 stages) or as required if resistance is noticed. Along with greasing it is a
common practice to retightening the bolts on a daily basis.

Conclusions
With the development of a world-class unconventional resource play great challenges must be met with ardent
attention to detail to increase efficiency yet do it in a responsible conscientious manner for health, safety and
environment. Key focal points for efficiency gains have been found in having sufficient back up
equipment/personnel in key components, implementing a proper preventative maintenance schedule for
equipment and identifying and solving logistical challenges that could significantly delay operations. With
meticulous analysis of each of these components and the repetition of best practices it is possible to establish a
larger scale operation assembly line approach called the “Gas Factory”.

Acknowledgements
The authors wish to acknowledge Cabot Oil & Gas and Baker Hughes for their cooperation in writing this paper.