Fracking moves offshore

The offshore oil rig.
Source: DollarPhotoClub

The application of horizontal drilling and hydraulic fracturing has turned the U.S. from a hydrocarbon importer to an exporter within just a decade. Now the energy exploration companies are increasingly using the controversial fracking technology offshore – Bloomberg reports.

Offshore hydraulic fracturing (fracking) has been around since at least the 1990s and it accounts for about five percent of the fracking market as a whole. Historically it has been used to boost productivity from ageing offshore oil and gas fields by providing improvements in well life and increased oil and gas recovery, but now oilfield companies are increasingly applying this technology to completely new exploration wells.

Hydraulic fracturing is moving offshore in places like Brazil, Africa, and even the Irish Sea, but the big new play that everybody is talking about is in the Gulf of Mexico. Here wells more than 100 miles from the coastline must traverse water depths of a mile or more and can cost almost $100 million to drill. Despite the cost, fracking in the Gulf of Mexico is expected to grow by more than 10 percent over a two year period ending in 2015, according Douglas Stephens, president of pressure pumping at Baker Hughes, which operates about a third of the world’s offshore fracking fleet.

Similarly to onshore shale exploration which combines horizontal drilling and multi-stage fracking, offshore fracking also combines two technologies to achieve increased productivity. In this case hydraulic fracturing is combined with gravel pack completion. Unlike on dry land, in many offshore regions, the geological formations that produce oil and gas are unconsolidated, which means the sand that makes up these formations is loose or poorly bonded, much like the sand on a beach. “As a result,” About Oil website explains, “this loose sand can end up inside production piping in the well or production equipment on the surface.”

Gravel packing completion acts as a filter in the well at the depth of the productive formation to stop sand infiltration.
Combining large, thick filters with hydraulic fracturing – a so-called “Frack Pack – considerably improves operational efficiency and oil and gas recovery.

While the doomsayers continue to predict the end to shale production, citing high rate of depletion of unconventional wells, finding new promising deposits is on the foreground of everybody’s minds. But this is not the only reason offshore fracking is attractive to investors.

Many oilfield companies have found it difficult to proceed with exploration in the face of anti-fracking protests and resistance from local residents and councils. This has been particularly pronounced in Europe, where protesters stopped Cuadrilla from conducting exploration work in the UK, and where countries like France, Germany, and Bulgaria banned fracking altogether. Drilling offshore attracts far less negative publicity.

What is more, major oil companies have been increasing efforts to maximize the return on their investments in existing fields through enhanced oil recovery technologies. As About Oil reports, David Eyton, BP’s head of technology, suggested that the industry had probably reached a point globally when the potential for enhanced oil recovery from known hydrocarbon resources exceeded the potential from new discoveries.

Past experiences show that there might be a lot at stake. A good example of successful enhanced oil recovery through fracking is that of ENI and its Kitina Field, offshore Congo. According to a case study by Schlumberger, which provided services to ENI for this project, production from the Kitina field before fracturing was approximately 590 bbl/d. Ninety days after treatment, there was an overall steady-state increase in production to 1950 bbl/d.

However, offshore fracking is not without problems. One is cost. The drive offshore is a boon to oilfield companies like Halliburton, Schlumberger, and Baker Hughes, which provide offshore fracking gear including so-called stimulation vessels. The market for the offshore fracking equipment is buoyant, which was reflected by oil service companies increasing the global fleet of fracking ships by 31 percent since 2007, according to a survey by Offshore Magazine. At this size the market is almost as large as Russia’s onshore industry. The pumping horsepower used to frack wells – a measure of supply – is expected to grow another 28 percent by the end of 2018, to 1.2 million horsepower, estimates Houston-based PacWest Consulting Partners.

All of this, however, comes with a price-tag. The high cost of operating offshore is prohibitive for small independent drilling companies which are usually at the forefront of innovation in exploration techniques. Offshore fracking will have to be the domain of oil majors with sufficiently deep pockets to finance the projects. But large oil companies don’t seem to be interested in the expensive unconventional resources, preferring to bet on conventional oil and gas deposits.

Another problem associated with offshore fracking is the potential environmental impact of the new technology. The way fracking works at sea, is that water flowing back from fracked wells is cleaned up on large platforms near the well by filtering out oil and other contaminants. The treated wastewater is then dumped overboard into the vast expanse of the Gulf of Mexico.

The oilfield companies in question are adamant that the dilution of the treated water renders it harmless, yet some scientists are concerned that chemicals used in the fracking fluid that’s released in the Gulf could harm sea life or upset the ecosystem.

“One of the key problems is that nobody has really looked at the environmental impacts of offshore fracking, and we find that incredibly concerning,” said Miyoko Sakashita, oceans director at the Centre for Biological Diversity. “Nobody knows what they’ve been discharging and in what amounts.”

The treatment process is mandated under Environmental Protection Agency regulations. In California, where producers are fracking offshore in existing fields, critics led by the Environmental Defense Center have asked federal regulators to ban the practice off the West Coast until more is known about its effects.

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