The Productivity of Oil and Gas Wells

The productivity of oil & gas wells is an important factor that determines how efficiently oil and gas can be produced from a reservoir. Well productivity can be optimized through a variety of techniques and strategies, including optimizing reservoir management, utilizing advanced technologies, conducting regular maintenance and monitoring, and several others.

However, it’s not just about maximizing the production rate of the well; the efficiency with which this production can be brought to surface is equally as important. Hence, the need for a more holistic approach to understanding and enhancing well performance.

To assess this performance, engineers rely on the Productivity Index (PI). This metric identifies the amount of oil that is produced for a given drop in reservoir pressure. PI is also commonly referred to as the “productivity coefficient” or “price-pressure ratio”.

A straight-line relationship between flow rate and pressure would be ideal, but real-world conditions are often more complex. For example, multiphase oil production involves a mixture of vapor and liquid, so the linear productivity index concept does not work for this scenario. Instead, engineers need to use other techniques to predict well performance.

In addition, the permeability of the formation and the degassing radius of the wellbore can influence a well’s ability to produce. In fact, for many reservoirs, a well’s PI may decrease over time due to the decline of reservoir pressure, changes in producing conditions or the presence of production problems.

The rig productivity oil & gas production testing in Canada metric, which is the new-well oil and natural gas production per rig, can become unstable when there are rapid decreases or increases in the number of drilling rigs or well completions. McKinsey’s analysis suggests that this metric provides an incomplete view of rig performance and may be misleading in interpreting longer-term trends.

Below-ground productivity, which reflects the actual production from new wells, has increased steadily over the past decade as companies honed hydraulic fracturing and horizontal drilling technologies. This has allowed them to access previously inaccessible shale and other tight rock formations and to increase oil and gas output without having to build additional production facilities.

This productivity boom has occurred even as crude oil prices have fallen and the number of rigs has declined. We suggest that the recent rise in rig productivity is mostly driven by below-ground productivity, with increases in production per drilled well driving overall drilling efficiencies. However, it is not clear whether these increases will continue to be sustainable at lower price levels. In fact, the steep drop in WTI oil prices earlier this year has already impacted below-ground productivity and is expected to impact future growth. Whether or not these trends will reversal remain in place depends on whether companies can achieve sufficient cost savings by improving operational model efficiency. To do so, they will need to optimize their functional processes and implement advanced technology solutions that can help them overcome challenges with data analytics and machine learning. This is an area where Seeq can provide valuable support.