Shale oil producers from West Texas and North Dakota have harvested enough crude to overwhelm the global oil market and force Saudi Arabia’s oil cartel to play offense on the world’s energy stage.
That belief lies partially in re-fracking – giving oil shale deposits a second blast of water, chemicals and sand – to get more oil out of depleted or under-performing wells. The process could be up to two-thirds cheaper than drilling a new well, which is an alluring possibility for cash-strapped U.S. producers who are straining to keep operational costs down and drilling operations intact.
Over the next few years, thousands of wells could be in play for re-fracking, said Priyesh Ranjan, who manages the re-frack business and technology development at Halliburton.
The technique has its skeptics. Re-fracking the wrong well or in the wrong way can damage it or the wells nearby. But this ongoing oil downturn might be the right time for experimentation, because the industry must learn how to coax more oil for fewer dollars, engineers say.
The oil bust this year has claimed thousands of jobs in Houston and across the globe, and oil companies have gutted spending budgets in North America because costs to drill shale wells are higher than older, vertical wells. The industry is now entering what may be the most ruthless phase yet of the downturn, as banks prepare to curtail oil companies’ credit lines and as billions in corporate debt weigh heavily on their balance sheets.
“All this will force companies that are over-levered to take drastic action,” said Stephen Trauber, an investment banker at Citigroup. The next few months, he said, will likely see more oil firms sell themselves or default on their debt.
A wave of re-fracking is one way companies could help mitigate the effects of the downturn, by pumping more oil for less money, oil field service companies say.
A little-advertised truth about the American shale movement is that, in each well, drillers have left behind all but about one tenth or less of the oil and gas stored in shale. That’s because in recent years, $100 oil spurred producers to adopt a “pump-and-pray” mentality that produced many nearly infertile wells in Texas and elsewhere. Re-fracking didn’t grab oil companies’ attention because it would have diverted resources from the non-stop drilling boom. But that sentiment is changing.
“Operators are moving away from a factory approach,” said Hans-Christian Freitag, vice president of integrated technology, global products and services at Baker Hughes. “They’re putting a lot more emphasis on understanding the reservoir. It’s a big change.”
Re-fracking can boost a well’s productivity by a third to half, reaching up to 12 percent of the oil stored underground. “Which is still quite deplorable,” Freitag said. But it’s comparable to amounts early oil companies were able to extract from sandstone nearly a century ago. The oil is down there, and as technology improves, drillers will eventually be able to reach it, he said.
Re-fracking in the field
At a Baker Hughes lab in Tomball, northwest of Houston, engineers from different fields of the oil business got a glimpse of the latest key ingredient used in re-fracking.
With fracking, which is the common term for hydraulic fracturing, producers deploy fleets of trucks with high-horsepower pumps to blast payloads of water, chemicals and sand underground to crack open shale plays and release oil and gas.
Elizabeth McCartney, a product champion and pressure pumping specialist at Baker Hughes, presented containers with so-called diverter chemicals – solid fine-grain biodegradable substances – that temporarily block the flow of oil and gas from existing fractures in a shale wellbore.
“In re-fracturing, we can pump these diverters and plug off existing fractures so we can access parts of the formation that haven’t previously been fracked,” McCartney said.
In other words, the second blast of fluid will go where the engineers want it to go, toward fresh rock that hasn’t been drained of oil and gas, and away from old pathways that naturally draw fluids because of their particular rock properties and subterranean pressure.
Out in the field, whether near Midland in Texas or Williston in North Dakota, a re-fracking job doesn’t look much different than the first one, except for the addition of the diverter chemical. But re-fracking requires more up-front planning and engineering.
Oil field service firms are using massive databases on hundreds of thousands of American oil wells to find the right candidates for a re-frack job. New programs can tell engineers if a poor-performing well was drilled in a productive region, or whether one highly productive well in another area suggests a whole batch of poorly performing wells nearby could benefit from a re-fracking job.
“We’re trying to reproduce those results across a large set of candidates – that’s what’s going to create the re-frack boom,” said Matt Lahman, a Halliburton specialist in enhancing oil and gas production.
The march of technology
Talk of re-fracking has grown in recent months, but it hasn’t hit it big yet.
Oil companies have re-fracked about 600 wells since 2000 – not a large number considering the 50,000 U.S. wells that got a first round of fracturing in the last few years.
For years, the problem has been that re-fracking is a gamble, even for wildcatters. If a driller re-fracks a well too close to an adjacent well, the fluid from the fractures may begin to spill into one another and ruin both wells, a phenomenon called a frack hit. The wells could start to produce water or natural pressures could dissipate.
“This technology is very much in its infancy and it’s not going to be something that’s going to change the game or move the needle at least in the near term,” said Jonathan Garrett, an analyst at Wood Mackenzie.
Nevertheless, re-fracturing has a lot of potential as research on the process continues to expand, said Christopher Robart, an analyst at IHS.
“It’s still early days,” he said. “What will make it more successful is undertaking a significantly larger number of re-frack jobs. A lot of that comes down to the E&P’s confidence and appetite for doing science with not-fully proven techniques on their own wells.”