OREANDA-NEWS. July 28, 2015. How does one prompt more oil production in a time of lean budgets and low prices? In this week’s Oilgram News column, New Frontiers, Starr Spencer explains how some are trying to find success by revisiting horizontal wells.

If at first you don’t produce, frac, frac again. While hundreds of North American wells remain unfinished due to low oil prices, some operators are embracing technology to refracture horizontal wells in an attempt to eke out more production at a fraction of the cost.

For years, consultants and some oil companies had claimed that the technology, which has been used frequently on vertical wells, wasn’t quite ready to be deployed horizontally.

That may be changing. The drive to tap a potentially vast market for hydraulic refractures of wells — popularly called “refracs” — is getting a shot in the arm as oilfield service companies tout new technology and create what may be the next big industry trend during the current downturn.

“Hundreds of refracs are planned in the US for this year alone,” said Tim Leshchyshyn, president of FracKnowledge, which is building what he said will be industry’s only refrac database.

Although refracs have been performed on thousands of vertical wells for decades to coax more oil and gas bypassed in original completions, they have been less prominent on horizontal wells. Just a few hundred refracs have been tried on horizontals, sources say.

Many industry watchers were skeptical that refracturing technology was developed enough for wide-scale application on horizontal wells, which have gained momentum in the shale revolution since the early 2000s. But new technologies that can better pinpoint the areas of left-behind oil and gas from the original fracturing are being rapidly developed and oil service companies are betting big money on it, analysts say.

“There’s definitely been some advancements … that change how operators are assessing wells,” Colleen Kennedy, research analyst for E&P technology at market analyst Lux Research, said.

For example, in recent weeks, Halliburton released a new reservoir evaluation tool, while Baker Hughes, the third-largest oil services company soon to merge with Halliburton, has debuted a well integrity evaluation tool, Kennedy said.

With oil prices having retreated from the \\$60/barrel level to sub-\\$50/b this month and fewer wells being drilled due to slimmed-down upstream budgets, these technologies allow service providers to better analyze wells and original fracs with an eye to coaxing more oil and gas from them via refracs, and how and where to do it, Kennedy said.

For example, microseismic analysis and state-of-the-art tracers to monitor where proppants are directed can be applied to refracs, she said. Rock quality varies between basins and requires different approaches. Proppants are typically sand or ceramic to hold fracs open and allow greater hydrocarbon flows.

Since often 10% or less of a well’s hydrocarbons are captured the first time around, many in industry look to refracs as a relatively inexpensive way to hike output — particularly at a time of lower oil prices, since refracs typically run around 25-30% of the original well’s \\$6-\\$8 million price tag.

In the last 10 days, the two largest oilfield service providers indicated they were preparing for a wave of refracs.

Schlumberger, the world’s largest service company, has eight North American refracturing jobs in progress and is offering to assume more geological risk for customers in return for greater rewards based on incremental production. Meanwhile, Halliburton, second in size globally, said asset manager BlackRock would pour \\$500 million into a joint venture with the service company over three years to fund E&P companies’ refracs.

The key understanding in refracs is where a reservoir has been depleted and where current production comes from, said H.C. Freitag, Baker Hughes’ vice president of integrated technology.

Freitag claims that in some cases, Baker Hughes’ refractured or restimulated wells have debuted at multiple times the amount of the original initial production. Of course, well output still declines after that, and ultimate volumes cannot be known until they actually are produced. In any case, “we want to be definitely higher than [the original initial production], if not considerably higher,” added Freitag.

No one knows for sure how much refracs could hike North American production in the next few years, or just how large the market could be.

“The adoption rate among operators is too low now, and the distribution of outcomes from wells that have been restimulated in the field is too high,” Robert Clarke, research director for global unconventional oil and gas at consultants Wood Mackenzie, said.

Moreover, “the error bands around an assumption for the number of good candidate wells are too wide,” Clarke said. “Is it 1%, 5%, 10%, or 20% of mature producers? We just can’t say yet. That number, though, will determine how much incremental production operators can deliver.” — Starr Spencer