Take the case of hydraulic fracturing. It’s been around
for nearly 70 years, and began transforming oil and gas production again in
the 1980s, when horizontal drilling and new downhole fracture technologies
began to develop. This radically changed petroleum operations. It increased
bitumen production, of course, but it also enabled the industry to produce
hydrocarbons from shale and tight sands. This turned the natural gas business
upside down: surpluses developed and prices cratered – from about US$17 per
thousand cubic feet in 2005 to $2.73 at this writing.
Companies got bigger through mergers and acquisitions,
and the resulting economies of scale helped them deal better with lower
prices. They could better finance the multi-million dollar wells and
production systems, with their rapid payouts, that came to dominate much of
the new world of petroleum production. Indeed, gas production became a
sideshow as companies drilled and fracked for higher-priced gas liquids,
selling the associated natural gas for whatever they could get. Fracking made
old fields productive, uneconomic ones profitable.
More change: Of course, in this industry things
constantly change. Changes in global supply have put the boots to oil prices,
as Saudi Arabia ramped up output to crush shale oil frackers, whose success
had taken American oil output to a 25-year high. The result? Prices are half
the level of two years ago.
In response, fracking has taken another turn.
“Re-fracking” is the latest innovation in the shale oil revolution, with
operators redoing wells drilled only three years ago. Doing so can turn
production rates around. It can also limit steep drops in production from
fractured wells in tight deposits, but it needs a lot of thought. Only 15-20%
of re-fractured wells produce additional yield. When it does work, however,
it improves production rates and ultimate recovery and provides an economical
alternative to infill drilling.
In re-fracking, the propping agents go to the cracks with
the least amount of pressure. By bypassing higher-pressure cracks they boost
pressure throughout the well. The outcome? Output climbs. The main challenge
presented with re-fracturing shale formations is the sheer number of wells
that can exist in a given field. Selecting the well that will yield the most
gas is not an easy task.
But that’s just the beginning. According to Dan Allan,
executive VP of the Canadian Society of Unconventional Resources (CSUR),
today’s resource revolution is a function of sophisticated technologies
hurried along by the lower prices of oil and gas.
Sproule engineer Richard Brekke is a big fan of
rejigging waterflood and gasflood in this environment. At a recent CSUR
workshop, he summed up the situation well.
To decide whether to pursue a project in this
environment, he said, the project operator needs to be sure the project is
technically reasonable; to conduct suitable feasibility studies; to be sure
the proposed process has been successful in the past analogous rock and fluid
properties; to be reasonably sure the project will go ahead. Also, of course,
the proponent should not expect any regulatory impediments. Those are the
cautions.
According to CSUR’s Allan, Brekke’s presentation
convincingly illustrates the importance of these developments. “What’s new is
that we’re fast-tracking our use of secondary and tertiary recovery schemes,”
he said. Developing unconventional resources through horizontal drilling,
fracking, waterflood and so on aims at “lower-quality resources – resources
with low permeability and porosity.”
“When you have price pressure, the focus of an
exploration and production company is to get as much out of an existing field
as possible, rather than try to find new stuff,” Allan says; “new oil is
higher cost. So they retrench back and try to optimize the stuff they already
have. They look at ways to increase existing production from reservoirs where
they already have production.”
As the potential of the new underground technologies
became clearer, most companies wanted a piece of the action. They acquired
lands to establish positions in these resources, and used new technologies to
develop them. With oil prices now well below levels at the beginning of last
year, producers have begun to apply new strategies. “They are redeveloping
reserves they already own and already have on production,” said Allan. “But
more importantly, because of price pressures they are developing them at the
lowest possible cost.”
Because of the nature of oil’s flow characteristics –
how it adheres to rock, its surface tension – in short, its miscibility –
most of the industry can only recover a small percentage of the oil in place
in unconventional reservoirs. Unlike gas, where recovery efficiencies are in
the order of 60 to 80%, oil recovery is in the 8% to 15% range; “we leave a
lot of oil behind.”
For that reason, “the cheapest barrel of oil that you
can bring on production is the one you already own. You can take an existing
pool and increase its recovery efficiency by re-fracking,” which increases
the sweep from an oil pool, he said. It lets “you extract the highest value
from an asset you already own at the lowest possible cost,” which is what the
current resource revolution is all about.
Waterfloods and gasfloods: Reservoir flooding has also
been around for a long time. In different ways, they increase recovery degree
by increasing reservoir pressure, but also by making the oil more mobile.
“They work best when you have uniform porosity and good porosity,” Allan
said, but “Mother Nature, dictates [porosity and permeability], and Mother
Nature is never kind enough to us that she makes all of those reservoir
characteristics perfect.” Older reservoirs still have a lot of oil in place
“and right now, with these new waterfloods, we are getting recovery in the
range of 18-30%.”
To do this, some operators have taken a new angle. One
twist is to convert horizontal wells once used for oil production into water
injection wells, and then develop other parts of the pool for waterflooding.
Using horizontal production wells is especially more productive if the
earlier injection wells were vertical.
Another company is doing the same thing with gas
injection, Allan says. “They’re using horizontal wells – previously used for
oil production – for gas injection.” This stimulates the well but, he says,
in this case it is not a totally unconventional well since the reservoirs
porosity and permeability are still “pretty good.” As it has done since the
middle of the last century, gas injection repressurizes the reservoir. “One
of the main reasons why recovery efficiencies are dropping so fast is that
the reservoir is losing pressure, he says. “If you can add pressure back
[through gas injection,] you enhance production.”
Allan is now on his game. “By injecting gas you create a
flood front in the reservoir,” he says. “Oil globules are in the rock, and
natural gas helps coax them out. It directs the oil away from your injection
well toward a producing well, sweeping the oil. That’s done just with the
nature of fluid you are injecting, whether it’s water or gas.
Another enhanced recovery process, tertiary recovery,
involves the use of steam, fire, chemicals, miscible gases, bacteria and
other techniques to provide a better sweep mechanism. Although it’s less
common, Allan says, some operators are adapting tertiary strategies in the
lower-price environment.
