Refracking Fever Sweeps Across Shale Industry After Oil Collapse

For an industry hammered by a 50% drop in crude prices over the past year, refracking may provide a much needed sense of hope.
For an industry hammered by a 50% drop in crude prices over the past year, refracking may provide a much needed sense of hope.

(Bloomberg) -- The technique itself is nothing new. Oil crews across the world have been schooled on its simple principles for generations: Identify aging, low-output wells and hit them with a blast of sand and water to bolster the flow of crude. The idea originated somewhere in the plains of the American Midwest, back in the 1950s.

But as today’s engineers start applying the procedure to the horizontal wells that went up during the fracking boom that swept across U.S. shale fields over the past decade, something more powerful, more financially rewarding is happening.

The short life span of these wells, long thought to be perhaps the single biggest weakness of the shale industry, is being stretched out. 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.

If the word fracking has carved out a spot in the lexicon of Americans as the nation advances toward energy independence, then refracking, as roughnecks have begun calling it, could be next. And for an industry that has been hammered by the 50 percent drop in crude prices over the past year, the finding on the technique’s potential -- at a fraction of the cost of the initial well -- provides a much-needed sense of hope.

The risks abound -- from inadvertently siphoning oil from an adjacent well to ruining a whole reservoir -- and the sample size so far isn’t big enough to be conclusive, but oil giants like Marathon Oil Corp. and ConocoPhillips aren’t waiting to incorporate refracking into their shale operations.

The Octofrac

Mike Vincent, a well-completion engineer who teaches the technique to industry workers, said he’s been overwhelmed by the sudden interest in the class. He even had to abandon plans he had been making to spend a week fly-fishing in the Rocky Mountains over the summer. “I’m booked every week teaching refrack classes out to November,” said Vincent, who runs a Denver-based firm called Insight Consulting. “It’s amazing how much passion there is.”

Years of working on traditional wells have shown that they can be restimulated multiple times, Vincent said. In the industry’s lingo, a well that has been blasted five times is a “Cinco de Fraco.” Eight times gets you an “Octofrac.” When done right, the procedure not only boosts the flow of crude, but can also increase the estimate of reserves held in the well. Vincent said it’s common to see oil recovery climb 60 percent or more.

“I’ve seen a well get 10 fracs through the same perfs, and it appears that we’re adding reserves every time,” he said.

100,000 Wells

A study by Bloomberg Intelligence of about 80 wells that were originally tapped in North Dakota’s Bakken formation in 2008 or 2009 and then refracked again years later shows a clear pickup in output. The wells on average produced more than 30 percent more oil in the month after the refrack than they did after the original completion, according to analysts William Foiles and Peter Pulikkan.

While these kinds of increases are important to traditional drillers, they’re crucial in the shale industry, where output can start falling within days of a well being tapped. Companies such as EOG Resources Inc., the largest shale oil producer, have long acknowledged that they generally are recovering just a small fraction of the oil and gas in place in the biggest and most prolific reservoirs.

“We’ve seen big changes in completion technology, and it looks like that’s only going to continue,” said R.T. Dukes, an upstream analyst at Wood Mackenzie in Houston. He estimates that there are about 100,000 horizontal wells that could be restimulated. “At that point, it becomes significant.”

Many Risks

So far, a few hundred refracks of shale wells have been done in the U.S., a figure that Vincent predicts will grow to at least 3,000 over the next two years. And IHS Inc. forecasts they will come to make up as much as 11 percent of all hydraulic fracturing activity in the country by 2020.

The process to refrack a well isn’t that different than the original frac. Water, sand and other chemicals are pushed down the well, beyond the previously tapped areas, to create new fissures or to re-open clefts in the rocks that have closed.

It’s easy for things to go wrong. If poorly executed, the maneuver could take oil from the producing zones of other wells, or worse yet, ruin a reservoir. Then there’s the concern that some industry analysts have that a refrack only accelerates the flow without increasing the actual total output over the life of the well. EOG is among the drillers that remain reluctant to start using the procedure.


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Copyright 2016 Bloomberg News.


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Ron Craik | Jul. 13, 2015
Over the last five years I have heard countless references to lost productivity, usually around 40%, pertaining to horizontal wells. It is still a mystery and no-one has been able to say that it was due to one particular thing. My back ground is 25 years of Drill Stem Testing (DST) on vertical wells both land and offshore. One comment that always came up prior to horizontal wells was once a vertical well was completed and put on production it quite often only did 50% of the flow rate that it showed when it was being tested open hole (DST) for that zone. When I started to hear this same comment for horizontal wells of an elusive 40% of production that was lost it didn’t sound that strange to me. There could be a multitude of reasons why a horizontal well is not performing. This could be said of each of the many stages (frac spacing) or laterals (parallel horizontal legs). Let’s list some of the possibilities: the well bore was drilled in and out of the formation, contacts with water and/or non-productive formations, the cheapest mud system was used resulting in near well bore damage, the hole was drilled too small 6.25 instead of 7.875 inches to save money, a weird completion string was run that provided no access through the center of the wellbore (Internal Diameter / I.D.) for remedial work or surveys, the frac sand washed away or was degraded close to the well bore so the fractures closed and healed cutting off production, etc. The common thread for all these issues or any other that you can come up with is short term thinking and lack of initiative to investigate. The personnel and corporations were just too busy drilling new wells at $100.00 per barrel that it just didn’t matter; any mistakes wouldn’t show up for years, they could make money regardless; it wasn’t going to affect their next quarterly bonus. There is a new price regime for the near future and that is $55-65 per barrel oil. As we have seen no one is willing to do unconventional drilling at these prices since there isn’t any way to recover their investment from the early flush production phase (first three months). Someone started asking the important questions: can we do better, should we gather more data on the horizontal well bore, did we by-pass any pay? There are some fields in Texas that are on their third Re-Fracks. That statement by itself says a lot about the viability of Re-Fracking. Our Slim Hole 3.5 inch Re-Frack tool system can be used to isolate the stage frac and evaluate the reservoir parameters such as: permeability, reservoir pressure, fracture half lengths, etc., prior to any completion string or stimulation program. It can then be used to evaluate after any remedial work has been done. This is an E-coil system but it can be run on jointed pipe as well, which we have done over the last 15 years here in Canada and USA. Over 1500 DSTs done so far in all kinds of well bore conditions and with many different test objectives (vertical, deviated and 6.25 inch open hole). Most of the horizontal wells that have been drilled in North America have not utilized tracers. The operators have just followed the whims of the big service companies like “Big Blue” or whoever they hired for their frac jobs. Unfortunately little attention was paid to doing it correctly the first time. No real science was done so very little was understood, hence the phrase ‘Indiscriminate Fracing’. The situation has changed with oil in the $55-65 / BBL range. Everyone has to pay attention to doing it right the first time. Our system is more like a surgical tool than a giant sledge hammer. Everyone in our industry is prone to using a bigger hammer: more stages, more sand, bigger pumps, drop more balls, etc. That is not the best methodology at lower prices and for maximizing recoverable reserves. We propose our system be run in to the last stage at the toe and the packers set to isolate that stage and a draw down and build up done to see what the reservoir pressure is and what that stage has contributed in fluids and flow rates. An analysis of the data and full evaluation would be done on the fly, during the test. If remedial work is required it would be identified and carried out prior to moving up-hole to the next stage. This process would be continued until there was a map of the entire well bore. This will show where the production was coming from, where improvements could be made and those procedures could be carried out using our system on the same run. Acidizing, nitrogen clean-up of near well bore damage or re-fracking at various levels as required and specialized for each stage in order to restore flush production levels at greatly reduced costs. How about recovering your re-fracking costs in the first 3 weeks instead of 2 months? So let’s embrace the new paradigm shift to $55-65 per barrel oil and put on our thinking caps. Leave the giant sledge hammers at home; forget about the $500,000 micro-seismic and ‘Black Box’ software


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