San Antonio — Tens of thousands of new oil and gas wells have been drilled and hydraulically fractured in recent years — part of a shale boom that has spread across the U.S.
Could re-fracking some of those existing wells be the next big trend in the oil patch?
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 re-frack an existing well.
“The re-frack 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 on Tuesday at the St. Anthony Hotel.
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 oil and gas.
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.
Rod Skaufel, president of the Houston-based BHP Billiton Petroleum, the oil and gas arm of the Australian mining giant, said that he agrees with Drummond that there are many shale wells that could be candidates for re-fracturing — a process that would eliminate the cost to drill.
The company’s Eagle Ford wells cost about $4 million to drill and another $4 million to complete, a process that includes hydraulic fracturing.
“I would be surprised if there’s not a re-fracking opportunity in all fields,” Skaufel said. If the sand — the “proppant” that holds open the rock fissures so oil and gas molecules can escape — isn’t reaching into all parts of the rock that has been fractured, there’s a chance to improve that, which would in turn improve production.
“Intuitively you think there’s got to be an opportunity. We believe there is. How many wells is that? We haven’t counted. You’ve got to be thinking any well that is drilled prior to the last couple of years probably has used completion techniques that you would categorize as unoptimized.”
BHP works in partnership with Schlumberger in the Eagle Ford.
Skaufel said the company already has driven down costs on drilling and manufacturing. “The key questions that remain really come down to (well) spacing and frac design.” The company is running tests on both of those.
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. Wells in the Eagle Ford Shale make about 500 barrels per day, the same as they did a few years ago.
“That says a lot about the challenges we’re going to face as we get into the extreme edges of the reservoir,” Drummond said.
“The question really the industry is going to have to ask is, once we drill the sweet spots and reservoir conditions become even more challenging, it’s going to require more technology to make these plays economical.”
Re-fracking also could help address the “decline curve.” 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!”
“Now, here, you see, it takes all the running you can do, to keep in the same place,” the Red Queen says. “If you want to get somewhere else, you must run at least twice as fast as that!”
The development of tight shale formations happens only with hydraulic fracturing. Employees at Mitchell Energy & Development were the first to figure it out in North Texas’ Barnett Shale, working for 17 years to combine hydraulic fracturing with horizontal drilling to unlock natural gas.
Since then, a wave of horizontal drilling and fracking has spread to other oil and gas fields.