Ahead of the curve

November 1, 2014

When a company sets out to change an industry standard, even one that will save millions, it doesn’t always find a receptive audience.

When Packers Plus Energy Services, a pioneer of the multistage fracturing technology that helped launch the shale gas revolution, saw an opportunity to improve the drilling and completions process in a way that would cut costs up to 30 per cent, it found just such an audience.

But the company, which Dan Themig, president and chief executive officer, describes as “well ahead of the curve,” is predisposed to envisioning technology that the industry, more often than not, doesn’t yet know it needs. And so it was with its StackFRAC (SF) Cementor stage collar, an enabling technology that allows drillers to shift from the tried-and-true use of intermediate casing and liners to monobore well construction.

“One of the things Packers has been really good at is, we are a good visionary company. We don’t just look at what the competition is doing and go and duplicate that. Our business model has been to try to figure out where we think the industry would really want to be two or three years from now. It’s a difficult place to be because quite often, when you are doing that, you are going to be doing things that nobody has ever done before, that a lot of people say aren’t possible, and that a lot of people in the industry would never let you try it on their well because they have never seen anything like it before.”

In the past, drillers would start a well with a large hole, run surface casing, drill a smaller hole to the target formation, run intermediate casing, and then run a liner down to the horizontal section of the well—a multi-step, and therefore more costly, process. “It’s generally a good process and the industry had adopted it all across Canada,” Themig says. But he felt it could be done better.

“What drives our industry are a couple of things; one is higher production and higher recovery, but the other thing is efficiencies in drilling and in well construction and in fracturing stimulation,” he says.

Cemented-back monobore well construction, in which the vertical and build sections of the well are cemented from the heel back to the surface with a stage tool rather than running intermediate casing, was seen as a way to cut well construction costs and eliminate the extra trips needed to remove the running string and install the fracture string.

Facing some resistance even within the company, Themig pressed ahead, launching the project that would lead to the SF Cementor. “Looking two or three years ahead, we could see that the industry would want to convert to monobore well construction, but the problem was that there was no technology that really would allow us to do it at the time. There were cementing stage tools, but they just weren’t designed for hydraulic fracturing, high pressure applications, for massive temperature cool downs and those kinds of things—they really were designed for a different place and time, where conditions really weren’t very challenging.”

Packers set out to try stage tools offered by companies large and small, and wasn’t impressed with the results. “The failure rate on cementing stage tools from any supplier was about 10 per cent—so very high risk, and very, very poor reliability. So we decided we needed to develop a stage tool that really changed the game and allowed a seamless implementation of monobore technologies.”

There were three main problems with the existing stage tools, Themig says: “First, their sealing mechanisms were not very reliable. Second, once you ran them, they were designed so they had pieces that you had to drill out, and when you did that it left a lot of debris in the well. Historically, nobody cared about the debris, because in vertical wells it would just fall to the bottom of the well. But in horizontal wells, things hang around, so this debris that was drilled up would then interfere with some fairly complex operations downhole.

“And the third was, if you did have a problem, there was no backup plan—basically if your stage tool failed, the well would sometimes be lost, or at least it would be marginalized.”

To some degree, Themig encountered resistance from within in designing a new tool. “Some of the technical people in Packers Plus did not want to be in the stage tool business. They said, ‘we are not experts, other companies are good at that,’ but I looked at the failure rate and I could see we couldn’t use other companies’ [tools] because they are not going to work.”

So Packers Plus developed a “totally different methodology,” Themig says. “We got rid of wiper plugs, we got rid of baffles that needed to be drilled out—and to my knowledge there had never been a stage tool built that didn’t require a plug to close the sleeve. Instead of closing the sleeve with a pumped down plug, we would close it by manipulating the casing, and we incorporated a secondary closing sleeve so if we had a problem, there was a built-in redundancy in the tool, and to the best of my knowledge that had never happened in our industry either.”

The SF Cementor is hydraulically activated and mechanically closed with compression of the tubular. It is accompanied by a debris sub, which accepts a standard Packers Plus actuation ball, to provide a barrier to cement stringers or debris during cementing and to serve as a platform for cleanup operations.

Initially, Packers Plus ran into industry resistance. When the SF Cementor was sent to Packers Plus service districts in both Red Deer, Alberta, and then to Midland, Texas, it sat unused for about six months, Themig says. Resistance likely resulted from the fact the company wasn’t recognized as one that provided cementing equipment to create monobore well construction, he says, and “that what we were doing looks so different from anything they had ever seen before, I think it scared a lot of people.”

But once someone broke the ice and its benefits began to become apparent, and Packers Plus built up a record of successes, the SF Cementor technology began to take hold. “At first the industry still wasn’t converting to monobore construction—it really took probably two more years before the conversion really took place. But once it took place, if you went to our districts now, almost 70 per cent of the wells that we complete now are monobore construction.”

In a recently published case study with Lightstream Resources Ltd. running openhole, cemented-back monobore horizontal wells in the Cardium formation of central Alberta, Packers Plus reports the operator completed more than 220 wells using the SF Cementor with 100 per cent success. In a comparison between monobore wells and those with intermediate casing in the East Pembina and Garrington fields, using extensive field data from more than 360 wells, overall drilling cost savings using monobore construction added up to $177,000 per well in the East Pembina, an 11 per cent savings, and $483,000 per well in the deeper Garrington, a 20 per cent savings.

The tool has been run in more than 35 formations, including the Montney, Cardium, Bakken, Marcellus and Eagle Ford, reporting savings as high as 30 per cent in some cases.

The system’s success is such that Packers Plus has now surpassed those companies that have been manufacturing stage tools for decades to become the biggest supplier of stage cementing equipment in western Canada. It has patented the technology and is now launching it worldwide. Packers Plus has run jobs in the Middle East and Indonesia and is rolling it out in Argentina and other regions this fall.

“I think we are going to see an adoption of this Canadian technology worldwide, and this will be one of the higher impact trends,” Themig says. “I think the reason it has been so impactful is the cost savings. On a total well construction basis, with roughly 20 per cent savings, you cut $1 million off a $5 million well.”

The technology-intensive company recently built advanced manufacturing facilities in Edmonton and Houston and now owns over 60 “families of patents based on innovative technology that mostly originated here in Canada,” says Themig, adding, “Our percentage of scientists and engineers compared to other companies in our field is nearly double. We have three core values, innovation, operational excellence and customer intimacy, and it all drives us toward innovation; it is really quite a unique culture we have in our company.”