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North American shale producers continue to innovate in the area of drilling and completions, developing new operational practices that improve well productivity and help to drive costs lower. The monobore well design is one of such innovations.

In the context of a horizontal resource play, the term "monobore" typically refers to a well drilled as a single-diameter hole from the surface casing to total depth. By contrast, the traditional well design features a hole with changing diameters drilled to accommodate several casing strings.

PDC Energy (PDCE), a leading operator in the Niobrara/Codell play in the Wattenberg Field, has reported that it has almost fully transitioned to the monobore well design. The company estimates that it is saving a full day in drilling time and $50,000-100,000 in completed well cost per standard reach lateral (~4,200 feet). The well's cost is reduced to ~$2.5 million as a result. Savings are even more significant for wells with longer laterals. PDC expects that all of its standard reach and mid-reach laterals, which account for approximately two-thirds of the company's well count in 2016, will be drilled using monobore technology. The company is currently experimenting with monobores in its extra-long laterals (9,000+ feet).

PDC's previous well design featured a two-segment structure. The intermediate casing was cemented in from the end of the curve to the surface casing, with a 4.5-inch cemented liner running from the well's total depth back to the intermediate casing.

The monobore design effectively eliminates the intermediate casing. The well is drilled in one run, using a uniform hole diameter, from the surface casing to total depth. A larger, 5.5-inch casing is cemented in from the well's toe to the surface casing.

Reduced drilling time is not the only benefit of the monobore design. The approach results in a greater casing diameter in the lateral, which facilitates larger completion volumes and higher flow rates into the well. The larger diameter also provides for an easier re-entry into the well in the future. Some benefits are also realized in the supply chain. The monobore requires only one drillbit type and one bottom hole assembly configuration to reach total depth. On the tubulars side, one product specification is fully eliminated, whereas purchasing volumes for the other specification increase.

While in this case the transition to the monobore design does not require any new technology, the operator needs to make modifications to multiple elements of the well drilling and construction, including the choice of drillbits and directional drilling tools.

Other operators in the DJ Basin in Colorado are also actively experimenting with monobore technology. If the operational and cost advantages of the monobores are confirmed by other operators, the design may gain a broad adoption in the Niobrara/Codell play. Other significant operators include Noble Energy (NBL), Anadarko Petroleum (APC), Whiting Petroleum (WLL), Synergy Resources (SYRG), Bonanza Creek Energy (BCEI) and Bill Barrett Resources (BBG). Why the cost savings may appear modest, the impact on the drilling return may be as high as 5%, based on the current cost metrics, which would meaningfully improve the play's competitiveness in a low-price commodity environment.

Are monobores a game changer in the well design for U.S. shale plays?

While success in the use of the monobore design has been reported in multiple areas, from resource plays in Western Canada to the Wolfcamp play in the southern Midland Basin, the technology may not work equally well in all plays. One important factor is the stability of the formations in the vertical hole, as the vertical section of the wellbore has to remain open for an additional period of time while the lateral section is being drilled. The monobore approach may also be quite challenging in wells drilled to high-pressure formations.

Despite the natural limitations, the monobore technique appears quite promising and may end up applied in a wider range of plays over time. The much faster drilling times and more effective and reliable downhole tools are certainly contributing to the monobore's promise. In some plays, spud-to-TD times have been reduced three- or even four-fold in the past three years. Given that the monobore design may allow for additional gains in terms of drilling speed, the hole stability issues may be significantly reduced, making the monobore concept quite tempting.

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Disclaimer: Opinions expressed herein by the author are not an investment recommendation and are not meant to be relied upon in investment decisions. The author is not acting in an investment, tax, legal or any other advisory capacity. This is not an investment research report. The author's opinions expressed herein address only select aspects of potential investment in securities of the companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that potential and existing investors conduct thorough investment research of their own, including detailed review of the companies' SEC filings, and consult a qualified investment advisor. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author's best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

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