Refracking Fever | Russell T. Rudy Energy LLC
The idea is almost as old as fracking itself. “World Oil” reports that since the 1950’s, operators have been identifying aging wells with diminishing output and blasting them with sand and water to enhance production. What is new is the application of this technique to shale reservoirs.
Shale wells are notorious for steep decline curves and relatively short lives. Consequently, operators have been compelled to keep drilling new wells in order to maintain production levels. Initial studies by the consulting group Wood Mackenzie Ltd., and ITG Investment Research, indicate that shale fields might actually have enough reserves to remain economically viable for about 50 years.
For an industry still reeling from a 50% drop in oil prices, refracking offers a ray of hope. Restoring production rates, and increasing well lives, at a fraction of the cost of the initial wells, could be a game changer. However, the practice is not without risks. These include siphoning off production from adjacent wells and, worse yet, ruining an entire reservoir.
While the data thus far is inconclusive, some players like Marathon and ConocoPhillips are moving forward with the process. It is well known that conventional wells have responded well to refracking and have been successfully re-stimulated multiple times. In fact, the terms “Cinco de Fraco” and “Octofrac” (wells that have been fracked 5 and 8 times respectively) are already part of the oilfield lexicon. Even 10 stimulations are not unheard of. In some cases, production rates are restored, and reserve estimates and ultimate recoveries increased by 60%.
What remains to be seen is whether this technique will work in horizontal shale wells. A study of 80 wells in North Dakota’s Bakken shale found that refracking depleting wells resulted in an increase of production rates of over 30%. Improvements such as these could be pivotal for shale operators who often see production rates start to fall off within days of completion, and ultimate recoveries of just a small fraction of a reservoir’s potential.
While Wood Mackenzie estimates that approximately 100,000 shale wells are good candidates for refracking, only a few hundred have been re-stimulated thus far. Some operators, such as EOG, remain reluctant to employ the technique, given the potential risks and uncertain benefits. However others, such as Sanchez Energy, have already budgeted $1-1.5 million for horizontal refracks later this year. In turn, they anticipate incremental revenues of up to $2.5 million per well in constant dollars.
According to Sanchez’s Senior VP and Chief Operating Officer, Chris Heinson, “It’s a compelling prize. There were a large number of wells out there that we know were originally completed with something that we could do better today. That’s really exciting.”
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