Shale technology could revitalize old wells
U.S. 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.This sounds like more bad news for OPEC. The cost of shale production has already put something of a ceiling on what OPEC can charge for its oil and this lowering of costs will further erode their market power. Because many OPEC countries use oil revenue to make up for a lack of economic activity in other sectors, those members will be especially hurt.
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. Of the 46,000 horizontal wells surveyed, only 10 percent were in so-called tight conventional plays being drilled anew for more crude, signaling there’s 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 percent 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.