The average person on the street still sees oil gushing through the top of the derrick when a successful well is drilled, an image much like that of J.R. Ewing of the TV series Dallas as the typical oil man. Of course nothing can be further from the truth. For decades the oil and gas industry has spent billions of dollars researching new technologies to grow and develop the domestic oil and gas industry.
The reasons for spending these billions range from environmental to fiscal. Especially in the U.S., there has been a tremendous push to protect the environment. Long gone are the days of oil shooting out of the derrick and spilling on the ground. We are now in an age where more oil is spilled from your outboard motor than is spilled from an offshore platform. Also long gone are the days of inexpensive exploration. Oil and gas reserves are getting more difficult to find and produce. The Gulf of Mexico is the single most expensive place to produce a barrel of oil in the world. Innovation is necessary to make production financially feasible.
One of the most recent discoveries in north Louisiana is a perfect example of how technology has changed the capability of this industry. The Haynesville Shale play has been touted as the largest natural gas discovery in the U.S. and the fourth largest in the world. In April 2008 when the leasing was exploding and payments reached as high as $27,500/acre, people began asking the questions: “When was the shale discovered?” and “Why has it taken so long to drill it?” The shale is located at a depth between 10,000 and 13,000 feet below the surface, depending on location.
The answer to these questions is very simple but shows just how important technology research and development can be. The Haynesville Shale has always been there, and companies have known about it for many years. The reason we could not produce the massive gas reserves is that we simply did not have the technology we have today. A typical vertical completion in the Haynesville was un-economical. What has changed from the past, that makes us able to drill and produce the Haynesville Shale? Horizontal drilling and hydraulic fracturing.
Horizontal drilling is considered by many to be the most valuable technology ever introduced to the oil and gas industry. Horizontal drilling is different from slant drilling: it takes a slant drilled well about 2,000 feet in order to complete the turn, while a horizontal well can make the 90 degree turn in just a few hundred feet.
Horizontal drilling now accounts for about 8 percent of onshore wells drilled in the U.S., and this percentage increases each year. The two main reasons for the increase are environmental and financial. The environmental benefit is that areas can be reached without affecting the surface. Wells can be drilled horizontally to reach areas under parks, buildings and other areas without disrupting their surface areas. Also, multiple horizontal wells can be drilled from the same well bore allowing for far greater access from a single well site.
The economic benefits are the most important. The Department of Energy has indicated that drilling a horizontal well can increase a well’s reserves by 2 percent, which in a tight market is substantial. The DOE also indicated that the production ratio for horizontal wells is 3.2 to 1 while the cost ratio is only 2 to 1. Haynesville Shale wells are some of the most expensive onshore wells in the country. Companies are drilling horizontal wells that extend as far out as 4,000 feet horizontally, and there are rumors of extending that as far as 8,000 feet.
It is because of horizontal drilling that the Haynesville Shale and other shale plays around the country are being exploited. It seems that every year a new shale gas play comes on to the scene, but they are not the only beneficiaries of horizontal drilling — it plays a big role in offshore exploration. Deepwater wells in the Gulf of Mexico will employ horizontal drilling to gain access to large fields from one platform, greatly reducing their costs. It is easy to see why many consider this to be such an important technological advancement.
Hydraulic fracturing or fracking is a method used to create fractures in rock formations that allow for a significant increase in production. In order to fracture or crack the rock formation, a water mixture is injected under extreme pressure. Fracking was first used in production in 1947 and has become a mainstay of the oil and gas industry
In order to frac a well, an explosive device (perforating gun) is lowered into the wellbore and, when ignited, punctures holes in the pipe casing. Once the holes are created, the water mixture is injected into the well bore. The fluid fills all the crevices and spaces in the rock and eventually causes the formation to crack. In order to keep the cracks open, propant (sand or ceramic beads) is injected into the well and forced into the cracks. The propant keeps the cracks from closing and allows the oil or gas to flow more easily. This process can be repeated multiple times in a single well bore by placing a plug above the frac area. Once all fracs have been completed, the plugs are removed allowing the oil or gas to flow up the wellbore.
While the process from well to well may be very similar, the fluids and propant will vary from company to company, and even well to well. The most important part of determining fluid and propant to be used is the type of formation that will be fracked, i.e., a tighter higher pressure sand will need stronger propant to maintain the cracks. Each company also has its own recipe it believes provides the best results. While the companies are required to maintain a list of the chemicals used in their water mixture, the particular blend is proprietary.
One of the challenges with hydraulic fracturing, especially in the Haynesville and other shale gas plays, is the amount of water required to frac the well. Haynesville wells are typically fracked for about 3,000 feet, though as mentioned, this is increasing. A Haynesville well frac uses about 3 million gallons of water, of which only a small portion returns to the surface.
Some say the other challenge is that when the fluids are injected under pressure they have a chance of contaminating the drinking water supply. Over the past 50 years more than 1 million wells have been drilled using this technique, and not one verifiable case of contamination has been reported. In 2005, the U.S. Congress passed the Energy Security Act, which explicitly stated that hydraulic fracturing was to remain exempt from the Safe Drinking Water Act. The environmental groups are now trying to change that rule. If successful, it would increase drilling costs approximately $100,000 per well and therefore reduce the number of wells drilled.
It is only through the combination of both horizontal drilling and hydraulic fracturing that the Haynesville Shale is now being produced. We have always known about the potential, but we couldn’t extract the gas in a cost-effective manner. The potential that the U.S. has with its vast shale resources is endless. Many have referred to the Haynesville as the Saudi Arabia of natural gas. In order to really understand how important these innovations are, consider this: In the 1980s it was assumed that the U.S. had about nine years worth of natural gas supply remaining. Twenty-eight years of growth and expansion later, it is estimated that we have 109 years of natural gas supply remaining, and that number grows with each shale discovery.
If you would like to see an excellent animation of horizontal drilling and hydraulic fracturing please visit http://www.loga.la/drilling.html .
To view drilling diagram click here .
The Louisiana Oil and Gas Association’s vice president, Gifford Briggs has been with the association for two years and focuses his efforts on building relationships with the Louisiana Legislature and the executive branch of state government.
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