Technology Focus: Hydraulic Fracturing (March 2011)
- Simon Chipperfield (Santos)
- Document ID
- Society of Petroleum Engineers
- Journal of Petroleum Technology
- Publication Date
- March 2011
- Document Type
- Journal Paper
- 58 - 58
- 2011. Copyright is retained by the author. This document is distributed by SPE with the permission of the author. Contact the author for permission to use material from this document.
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Beware the “Commoditization Trap”1!
Commoditization is the evolutionary process that reduces all products to their lowest common denominator. This process has many advantages in unconventional gas in which large resources can be developed efficiently with such “factory-style” development concepts. The commoditization-trap problem can arise when one becomes focused solely on producing a product more cheaply without consideration for the quality and new-product development.
The dangers of the Commoditization Trap can be observed when analyzing the SPE hydraulic-fracturing paper population, which, while increasing exponentially over the last 30 years, is now led by operators in less than 15% of cases (down from 37% operator driven in 1975).2 Lead-service-company contribution has, however, increased from 20 to 40% over the same period. This change high-lights the industry perception that fracturing requires little definition (a phase of increased operator involvement) and instead requires a focus on commoditization (a phase for increased service-company involvement).
Viewing fracturing as a commodity may seem reasonable considering that it has been in use for more than 60 years. However, the types of reservoirs on which this technology is used are changing rapidly and are challenging the fundamental assumptions upon which our existing candidate selection and design methodology are built.
Some operators are adapting learning processes to ensure against the Commoditization Trap.3 However, the constant shift in technical contribution from operator to service company clearly highlights that this is not an industry-wide view.
Hydraulic fracturing as a commodity is an industry misconception, and greater value can be added by those who have not fallen into the Commoditization Trap.
Hydraulic Fracturing additional reading available at OnePetro: www.onepetro.org
SPE 133456 “Thirty Years of Gas-Shale Fracturing: What Have We Learned?” by George E. King, SPE, Apache Corporation. (See JPT, November 2010, page 88.)
SPE 127888 “Modeling Fluid Invasion and Hydraulic-Fracture Propagation in Naturally Fractured Rock: A 3D Approach” by J. McLennan, SPE, University of Utah, et al.
SPE 137818 “Improved Proppant-Transport System for Slickwater Shale Fracturing” by N. Kostenuk, SPE, Trican Well Service, et al.
1http://www.imaginellc.com/avoiding-commoditization-part1, accessed 31 January 2011.
2This percentage refers to search results by company affiliation of the primary author of SPE papers.
3 The New Encana—http://www.encana.com/investors/presentations/pdfs/corporate-presentation.pdf, accessed 31 January 2011.
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