Encana Corp. on Tuesday announced that it has increased its type curves in the Permian Basin by 20% and added 700 “premium return” drilling locations to its inventory in the play, a result of the company's "cube" approach to stacked pay development, management said.
The Calgary-based super independent said its total inventory of premium return locations in the Permian now stands at 3,450, an inventory large enough that the exploration and production (E&P) company only expects to develop less than 30% of it through 2021, the time frame covered by its current five-year plan. The 700 additional locations represent five times what Encana expects to develop in 2017.
"Through our focus on operational excellence, innovation and quality corporate returns we continue to make Encana more valuable and resilient," CEO Doug Suttles said. "The company's world-class Permian asset comprises thousands of feet of stacked resource. Our cube development is delivering leading well performance and efficiencies. We believe this approach will become the industry standard for stacked pay development."
Management said Encana's cube approach "targets multiple stacked pay zones from a single location to deliver significant value above ground as well as below ground." The company said the approach has led to drilling and completion cost savings of around $1.2 million per well versus "traditional single well development." The E&P said it expects Permian well costs to remain flat year/year in 2017 on a like-for-like basis.
"Below ground in the reservoir, cube development maximizes production and resource recovery and minimizes or eliminates risk of value erosion connected with infill drilling and offset hydraulic fracturing interference," management said.
Encana said tighter well density, precision targeting, advanced completions and longer laterals are all helping to achieve the improved type curves and expanded inventory of premium return locations in the play.
The company said it started using its advanced completion designs in the Permian during the second quarter after seeing well performance improvements of up to 60% from advanced completions at its Eagle Ford and Montney shale locations.
Encana launched a five-year growth plan last October that saw the onshore producer shift more of its focus to liquids and oil, with the Permian representing its top target. The company said during a 1Q2017 conference call that it plans to return to growth this year, projecting a 20% year/year production increase from its core assets in 4Q2017.
Encana has maintained a multi-play development plan centered around the Permian, Eagle Ford Shale and the Montney and Duvernay formations in Western Canada. The E&P recently agreed to sell its natural gas assets in Colorado's Piceance Basin to Denver-based Caerus Oil and Gas LLC for $735 million.