As an industry leader in the Bakken, Hess has proven its ability to deliver process improvements that create value. In a keynote address at the DUG Rockies oil and gas conference in Denver on March 10, Bakken Vice President Gerbert Schoonman described the company’s strategy for keeping that momentum going even in a down market.
In North Dakota, Lean efficiencies and supplier savings have helped Hess drive down costs to enable the company to profitably bring some 80 wells online this year, despite the low price of crude oil. “Lean has given us fantastic results in terms of driving our well costs down and giving us efficiencies, which has helped us a great deal working in an environment like this,” Schoonman said to about 1,000 attendees at the conference.
The company’s strategy, Schoonman said, is based simply on maximizing value. For example, Hess recently changed its standards from 35- to 50-stage fracs.
“We believe that adds value even in the current environment,” Schoonman said. “The productivity of our wells is expected to increase by about 20 percent because of that change and because we work on efficiencies with the contractors that are executing the fracs we can actually absorb the extra cost that comes with the increase of those extra 15 stages.”
A key to Hess’ success in the current price environment is that Hess has more Drilling Space Units (DSU) in the core of the middle Bakken than any other operator. Advanced subsurface modeling and big data are also important.
“All of these things work together and our understanding of the Bakken is increasing substantially,” he said. “We’re also looking at the spacing of our wells. Ultimately, we want to extract as much value as possible from each DSU that we operate. And that’s going to be done through a combination of tighter spacing, optimized completion techniques and perfect targeting of the zones.”
Schoonman also described the deployment of Lean into the operations and maintenance areas, known at Hess as Operations of the Future. “We are ahead of the pack when it comes to our Lean journey,” Schoonman said. “It gives us a significant competitive advantage.”