Shale Revolution Extends to Old Wells, Unleashes Output

Shale Revolution Extends to   Old Wells, Unleashes OutputShale Revolution Extends to   Old Wells, Unleashes Output

US oil explorers are yet to fully reap all the rewards of horizontal drilling techniques that helped trigger the shale boom, research firm IHS Markit Energy said.

From Texas to North Dakota, the method still stands to boost production from old, conventional wells where low permeability has restricted extraction to a fraction of their potential, an IHS Markit study showed, Oil Price reported. Of the 46,000 horizontal wells surveyed, only 10% were in tight conventional plays being drilled anew for more crude, signaling there is considerable untapped potential across the country, IHS Markit said.

"When you’ve got the vertical well already drilled and then you drill it horizontally, you don’t have all the costs of initially drilling the well," said Stephen Trammel, director of North American well and production content at IHS Markit. "You’ve already got pipelines there, you’ve already got infrastructure."

Thanks to a price rally of more than 70% since February, American producers have gone back to drilling in the past few weeks after idling more than 1,000 oil rigs since the start of last year.  Rather than look for the next big discovery, Trammel said producers are likely to have better luck returning to older wells.

"You’re saving a tremendous amount of money," he said. "I think it will have implications worldwide."

The study looked into horizontal wells completed between 2010 and 2015.

  Complex Situation

IHS Markit has not yet estimated how much oil could be recovered with horizontal drilling from tight conventional wells in North America due to their complexity and number, Trammel said.

The US Energy Information Administration says the future of American shale drilling hinges on whether engineers can build on the technological breakthroughs that unlocked a huge bounty of energy under small Texas towns and unexpected places across the United States. The next 25 years could bring a severe slump in oil production from the nation's shale fields or a sharp rise in output, depending on the pace of technological change and the trajectory of energy prices, which ultimately spur innovation.

The original breakthrough, combining horizontal drilling and hydraulic fracturing to drain oil and gas out of dense shale rocks, nearly doubled the nation's proven oil reserves and began an oil and gas drilling boom that lasted almost a decade.