With the shale boom nearing its end and overall oil recovery rates dwindling, U.S. oil and gas producers are driving the next big trend in the oil fields – refracking
The industry hopes that this new innovative process will limit steep drops in production suffered by wells drilled into tight oil deposits. Wells sunk as little as three years ago are now being fracked again, thanks considerably to the latest innovation in the technology-driven shale oil revolution.
Hydraulic fracturing pumps a mix of water and chemicals at high pressure to break the rock. Then sand is added to the fluid in increasing amounts to hold open the rock fissures, letting oil and gas flow up the well to the surface. But the sand doesn’t make it to all parts of the rock fissures, meaning that companies are leaving behind valuable oil and gas.
Robert Drummond, president of North America for oil-field service company Schlumberger, said that continually improving fracturing techniques will make companies question whether it makes more sense to spend money drilling a new well or refrack an existing well.
“The refrack model going forward will challenge the economics of drilling new wells in some fields,” said Drummond, who spoke at a World Oil breakfast event in San Antonio.
Drummond said that Schlumberger has technology to carry the sand further and open up better channels in the rock. “There’s tens of thousands of candidates throughout North America that have got the same issue here — they have failed to get all of the frack clusters to contribute,” said Drummond.
Making better shale wells is a critical issue for the industry. Around 40 percent of unconventional wells are money losers now, Drummond said. And although the lateral length of wells and the number of fracturing stages have doubled, he said that production remains flat.
Refracking could also help address the “decline curve.” Oil fields like BHP Billiton Petroleum’s Eagle Ford wells come in producing large amounts of oil or gas but drop like a roller coaster after a year — a more than 60 percent dip that experts say is inherent to shale production.
That sharp decline is one of the reasons — along with high profits — that tens of thousands of wells are predicted for South Texas: Companies must keep drilling to keep replacing their production. The phenomenon is called the Red Queen, named after the character in Lewis Carroll’s “Through the Looking-Glass” who tells Alice she must run, “Faster! Faster!”
The Oil and Gas industry hopes that this new development will help propel better oil extraction technologies in order to keep the trend moving. Oil companies like Exco believes the technology can be applied to 400 of its so-called “vintage” wells that were drilled several years ago using what is now outdated technology.
As for now, the energy industry is hoping this initial bump in the number of wells refracked presages a fresh boom whereby unconventional wells are given a jump start every few years to keep oil and gas as well as profits flowing. For the record, refracked wells have so far exceeded the industry’s expectations, delivering returns that are large enough to merit additional investment.
Excerpts from Reuters and Bakken
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