Merriam-Webster’s dictionary defines “trivial” as meaning “of little worth or importance.” Apparently the analysts at Bernstein see the role of refracturing in shale plays to be virtually useless. Service companies are not happy with this declaration.
After defining what refracks are, the report, titled “Bernstein E&Ps: the role of refracks in the shale oil revolution – trivial,” noted that the literature on the topic is “success-based.” “Much of the literature is from service providers or E&P operators that achieved some success,” it noted. “In addition, much of the market talk around refracks is similarly skewed positive.”
Secondly, it targeted a Baker Hughes presentation, noting that this economic analysis “shows refracking economics are mediocre.” The analysts determined that even with 100% adoption, refracking would account for only about 2% of U.S. supply and that refracks will dilute capex spend broadly rather than harming a specific subsegment.
The Bernstein analysts are not the only ones who are bearish about the technology. In a May 4 conference call, EOG Resources Chairman and CEO Bill Thomas said he considers the procedure to be “really technical” and that his company prefers to drill new wells. But other companies are beginning to embrace the technology. SM Energy Co., for example, is said in a Simmons & Co. report to be “very optimistic about the potential for refracks” and is participating in an industry consortium that is refracking wells in the Eagle Ford.
In a May 5 earnings call, Jason Pigott, Chesapeake Energy Corp.’s executive vice president of the southern division, said, “Within our retained portfolio, Chesapeake has drilled 6,750 horizontal wells since 2004. Of these wells, nearly 4,600 were drilled prior to 2012, and we consider these wells under-stimulated compared to our current designs and based on their vintage.”
Is it rejuvenation or damage?
One of the primary concerns expressed about refracking is the potential to cause damage to the refrack candidate or even nearby wells. The Bernstein report lists the potential for reservoir and wellbore issues. And even proponents of the technology note that it must be carried out carefully.
In a paper presented at the recent Hydraulic Fracturing Technology Conference, authors from Pioneer Natural Resources and Barree & Associates discussed the complexity of performing the procedure. “Refracturing an old horizontal well with 5,000-ft [1,524-m] lateral length and more than 800 existing perforation holes in the casing is very challenging and requires a careful integration of reservoir knowledge, completions skills and experience,” the authors noted.
Due to this, Pioneer has developed a workflow that includes identifying the lower pressure areas along the lateral, identifying which wells within the drilling schedule are offsetting wells with high cumulative production and designing a single fracturing job with substages separated by diverting agents.
It’s this integrated approach that service companies are extolling. All of the major pressure pumping companies have developed sophisticated workflows that take multiple criteria into consideration to select the candidates that will be the most likely to benefit from refracking.
Refracturing is a remedial production operation often done either because the original fracturing failed to contribute any significant amount of flow, the initial completion’s performance degraded over time below economically acceptable limits or significant unfractured pay exists in the well.
Weatherford’s approach to refracturing puts emphasis on evaluating current well performance, candidate well selection and the refracture design. For instance, it is critical to evaluate if the well’s low performance is associated with “completion inefficiency” or with poor “reservoir quality” because completion inefficiency can be improved.
In a paper by BP America Production Co. presented at the hydraulic fracturing conference, the authors noted that the popularity of the plug-and-perf completion technique, while allowing rapid operations, might not always result in the best completion job.
“As many of these shale plays now mature, it is becoming increasingly apparent that the majority of the wells have not been effectively stimulated,” the authors noted. “Fracture interference and cluster efficiency [are] among the key concerns with the completion approach, with high efficiency rarely being achieved, resulting in only partial coverage. In fulfilling the desire to complete these wells in a timely manner, it is now apparent that there likely remains a significant portion of unstimulated pay in a typical well post-completion.”
Added David Sobernheim, North American stimulation domain manager for Schlumberger, “One of the key reasons for refracturing is simply that current plug-and-perf methods typically only yield about two-thirds of the perforation clusters producing. We are working to address this going forward on new wells, but the backlog of wells drilled in past years has potential candidates.”
By focusing on accurate stimulation modeling and real-time control during execution based upon reservoir response, Sobernheim expects the success rate from refracturing to become more reliable and routine.
In a rebuttal to the Bernstein report, Sergey Kotov, manager of integrated technology for Baker Hughes’ NextWave solution, said that the analysts only told part of the story when quoting the Baker Hughes paper. “The 51% of the story that was not told by those statistics was what Baker Hughes learned from the industry’s studies on refracturing and from the company’s study of previously refractured Eagle Ford and Bakken wells:
- that far more analysis and new and more strategic ways of thinking are necessary to avoid disappointment from refracturing efforts;
- that the first step to successfully improving production, reserves recovery and economics from rejuvenation efforts is to efficiently screen and select the best candidates to invest only in those wells with the greatest potential and the least risk;
- that not all hydraulically fractured wells are candidates for rejuvenation;
- that it is important to understand what type of rejuvenation is required to meet operators’ recovery and business objectives. Rejuvenation options, alone or in combination, may include wellbore cleanout, chemical treatment, recompletion, refracturing and artificial lift;
- that a thorough economic analysis of the technological solution is required to maximize the value from the existing underperforming wells;
- that the new approach must view unconventional wells as renewable assets and requires a fact- and science-based workflow focused on both the well and the reservoir; and
- that when using a holistic, data-driven approach, rejuvenation could be a viable alternative to drilling new wells.”
These learnings, he added, led to the development of the NextWave solution, which he said is already improving well performance, even in current market conditions. “At the same time, we are also working to address another key issue mentioned in the SPE paper—that if refracturing is to be implemented in a larger scale, wells must be completed in a way that makes subsequent rejuvenation much easier.”
For Thomas Roesner, Cameron global business development manager, CAMSHALE Completions, there are a few reasons why refracturing is still a very small part of the market. “This is like what happened in conventional wells in the late ’90s and early 2000s with the development of directional drilling,” he said. “People went into vertical wells, sidetracked them with the casing-exit whipstock technology, and started drilling horizontals.
“It’s a well intervention technology.”
He’s also convinced that if the major service companies throw their R&D money at a new technology, it’s worth a look. “I’m a firm believer that people within the service companies have the talent and the data to engage the operators,” he said. “I think the value of refracturing a well at $1 million to $2 million makes sense, and I’m hoping it’s something that will pick up in 2016.
“There is an opportunity for the industry to innovate and change the quality of these wells.”