Will refracking live up to its hype? The jury is still out.

Two oil workers
Source: DollarPhotoClub

Refracturing – it can ruin the reservoir or inadvertently siphon oil from an adjacent well, but when done well, some experts say that it can increase the estimate of reserves held in the well by 60 per cent or more.

The promise of a boost in production and the ability to revitalise aged wells has made E&P companies fall in love with the procedure which involves pushing water, sand, and chemicals into the well, beyond the previously tapped areas, to create new fissures or to re-open clefts in the rocks that have closed.

As Bloomberg reports, early evidence of the effects of restimulation suggests that the fields could actually contain enough reserves to last about 50 years, according to a calculation based on Wood Mackenzie Ltd and ITG Investment Research data.

This is significant, particularly in the low crude price climate, when operation companies are franticly looking for efficiencies and savings. Majors such as Marathon Oil Corp. and ConocoPhillips, as well as Sanchez Energy Corp., a Houston-based oil producer, have all expressed interest in restimulation jobs.

However, the jury is still out on whether refracturing is the game-changer that many want it to be.

On the one hand there is the study by Bloomberg Intelligence which looked at about 80 wells that were originally tapped in North Dakota’s Bakken formation in 2008 or 2009 and then refracked again years later. The study showed that on average the wells produced more than 30 per cent more oil in the month after the refrack than they did after the original completion, according to analysts William Foiles and Peter Pulikkan.

One the other hand, a recent IHS study came up with far less conclusive results. Refracturing success, said IHS, as measured by comparing refracturing initial production (IP) rates to original IP rates, is mixed. With the exception of the Bakken wells studied, most refractured wells have IP rates lower than the original IP rates.

The Bakken anomaly, noted IHS, is likely due to sub-optimal well specifications chosen for the original completion (not surprising, since the Bakken play was one of the early testing grounds for the initial horizontal drilling and fracturing technologies that have since been significantly improved).

Refracking is still in its “early days,” Robin Mann, global leader of the resource evaluation and advisory group in Deloitte LLP’s Houston office told Bloomberg. “There’s always a risk you’re going to damage the reservoir or create interference between wells.”

And yet, despite the uncertainties, shale explorers are willing to bet on refracking.

The promise of increased productivity from depleted wells is enticing, but what is more important is that the procedure is relatively inexpensive as it is used on wells which have already been drilled, and therefore, the major expense – of drilling the wells – has already been made. Any extra productivity brought on by refracking must seem like a bonus.

In conversation with Bloomberg, R.T. Dukes, an upstream analyst at Wood Mackenzie in Houston, estimated that there are about 100,000 horizontal wells that could be restimulated, while Chris Heinson, the senior vice president and COO of Sanchez Energy revealed that the company expects to spend between $1 million to $1.5 million per well when it starts carrying out its first horizontal-well refracks later this year. The company expects the procedure to result in as much as $2.5 million-worth of extra oil and gas from the currently depleted wells.

The E&P companies’ interest in refracking is certainly encouraging. The procedure is still not particularly well understood and it can only be honed through practice.

Christopher Robart, managing director of unconventional resources at IHS Energy, believes that there is still a lot to be done before refracturing lives up to its promise.

“What refracturing needs now is a new innovator to step up, invest capital, and take risks to refine the technologies and lower costs,” he said. “For refracturing to advance significantly, we need the next George Mitchell to come forward.”

Article continues below this message

Have your opinion heard with Shale Gas International

We accept interesting, well-written opinion and analysis articles of up to 1,500 words, that offer unique insights into the shale industry. The articles cannot be overtly promotional in nature and need to fit into at least one of our content categories.

If accepted, the article must be exclusive to Shale Gas International website and cannot appear on any other websites, publications, etc. Each article may contain up to three links to external websites relevant to the content discussed in the piece.

If you would like to contribute to Shale Gas International website, please contact us at: editor[at]mw-ep.com