WTI $52.72 up $1.51. Twice in the last ten days the price has stalled around $54.00:
From Bloomberg:
Beset by falling prices, the oil industry is looking at about 50,000 existing wells in the U.S. that may be candidates for a second wave of fracking, using techniques that didn’t exist when they were first drilled.Previously:
New wells can cost as much as $8 million, while re-fracking costs about $2 million, significant savings when the price of crude is hovering close to $50 a barrel, according to Halliburton Co., the world’s biggest provider of hydraulic fracturing services.
While re-fracking offered mixed results in the past, earning it the nickname “pump and pray,” the oil crash is forcing companies to pursue new technologies to produce oil more cheaply. Analyzing reams of data from older wells has become a key piece of the puzzle, identifying the best candidates for re-fracking instead of picking them simply at random, said Hans-Christian Freitag, vice president of integrated technology at Baker Hughes Inc.
“You want to talk about the next step to increasing production without increasing costs?” said Carl Larry, Houston-based director of oil and natural gas at Frost & Sullivan, a consulting firm. “Re-fracking looks great.”
Fracking involves blasting water, sand and chemicals down wells to crack rock, letting oil and gas flow to the surface. This second wave of fracking is disappointing environmentalists who expected a slowdown in new drilling tied to the price slump. Critics say fracking leads to contamination, uses too much water and creates air pollution from the sand mining.
Environmental Issues
While fewer new wells would seem to mean less total fracking, the re-fracking phenomenon means there won’t be as big a reduction as some had expected.
Communities will continue to feel the impact from more natural resources being used, said Sharon Wilson, the Texas organizer for Earthworks, an environmental watchdog group. “It’s horribly disappointing,” she said by telephone.
Fracking techniques have come a long way since the North American shale revolution began more than a decade ago. Since those early, primitive wells were drilled, fracking specialists like Halliburton have gotten far better at figuring out where to put the cracks, and how wide and deep they need to be to get the most production.
Fracking projects have also become more complex and expensive as wells reached further underground and engineers figured out that the more cracks blasted into the reservoir, the more oil comes out.
64% Rise While the number of wells fracked in the U.S. last year climbed 64 percent to 18,200 compared to 2011, the total number of fracking stages -- the holes punched in the rock -- more than doubled, according to Houston-based industry adviser PacWest Consulting Partners, a unit of IHS Inc....MORE
Oil: It's Cheaper to Refrack (SLB; HAL; WFT)
As anyone who spends way to much time at this stuff knows: Refracking is the not-so-well-known income stream where the real money lies for the service companies.The RE-fracking Boom and the Second-best Correction Of the Day (HAL; SLB; BHI; WFT)
Of Schlumberger, Asian Tigers and $10 Oil (SLB; HAL)
EIA Drilling Productivity Report (e.g. higher initial, faster decline in the Eagle Ford)
The RE-fracking Boom and the Second-best Correction Of the Day (HAL; SLB; BHI; WFT)
Back in 2012 we glanced at the coming refracking boom:
Frackers: Sterne, Agee & Leach on the Oilfield Service Stocks (SLB; CAM; OIS; HAL)
Something to remember: All of the natural gas wells that were fracked over the last couple years will have to be re-fracked as the production rates decline, some wells will get fracked three or four times over their expected lives. It's like an annuity for the service companies, something I've not heard any analysts talk about....And:
Natural Gas: The Astounding Production Decline Rates of Shale Wells
I've mentioned we heard from landowners that their monthly royalty checks dropped 75% between month 1 and month 12 after completion. This is good news for gas bulls and good news for the well service companies who will be called in to re-frack the wells 4-5 times over their producing lives.
Not such good news for folks who want to see gas back under $2.00....
