Refracking Fever Sweeps Across Shale Industry After Oil Collapse
Refracking is still in its “early days,” said Robin Mann, global leader of the resource evaluation and advisory group in Deloitte LLP’s Houston office. “There’s always a risk you’re going to damage the reservoir or create interference between wells.”
‘Compelling Prize’
But in an industry that is desperately trying to cut expenses after oil fell below $60 a barrel from over $100 a year ago, the technique’s low cost has great appeal. Because the first step in the fracking process is already done -- the drilling of the wellbore -- the outlay is just a fraction of the $8 million or so it costs to tap a new well.
West Texas Intermediate for August delivery added 42 cents to $52.95 a barrel in electronic trading on the New York Mercantile Exchange at 12:02 p.m. Singapore time.
Sanchez Energy Corp., a Houston-based oil producer, 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 extra oil and gas it will pull out from each one as a result, meanwhile, could have a value, when measured in today’s dollars, of as much as $2.5 million, according to Chris Heinson, the company’s senior vice president and chief operating officer.
“It’s a compelling prize,” Heinson said in an interview last month. “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.”
To contact the reporters on this story: Dan Murtaugh in Houston at dmurtaugh@bloomberg.net; Lynn Doan in San Francisco at ldoan6@bloomberg.net; Bradley Olson in Houston at bradleyolson@bloomberg.net. To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net David Papadopoulos
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