Hello gamblers: Another frac scam to lure in wary investors? ExxonMobile “bets” it can ramp up shitty results by refrac’ing. Not: Encana/Ovintiv refac’d, refrac’d and refrac’d Rosebud and other communities to hell and back, still lost masses of money and ran away to USA

ExxonMobil: New Fracking Technology Can Double Oil Output by Alex Kimani, Jun 04, 2023, Oilprice

  • U.S. shale producers have been struggling to ramp up production in 2023.
  • Oil major ExxonMobil bets that through technological advances, shale producers can manage to double crude output from their existing wells.
  • While refracturing has never really gone mainstream, the technique is seeing higher adoption as drilling technology improves, aging oilfields erode output, and companies try to do more with less.

The U.S. shale revolution dramatically reshaped the world energy markets. The shale boom was one of the most impressive growth stories, from take off in 2008 to the Permian stealing the mantle from Saudi Arabia’s Ghawar as the world’s highest producing oilfield in a little over a decade.  Overall, Reuters has estimated that, “U.S. petroleum production is at least 10-11 million bpd higher than it would have been without horizontal drilling and hydraulic fracturing.’’ 

Unfortunately, the shale patch has lately been struggling to ramp up production due to a litany of challenges including pressure from investors to boost returns,  limited equipment and workers as well as a lack of capital.

But shale giant ExxonMobil Corp. (NYSE:XOM) is now betting that shale producers can double crude output from their existing wells by employing novel fracking technologies.

There’s just a lot of oil being left in the ground. Fracking’s been around for a really long time, but the science of fracking is not well understood,” Exxon Chief Executive Officer Darren Woods said Thursday at the Bernstein Strategic Decisions conference. Woods has revealed that Exxon is currently working on two specific areas to improve fracking. First off, the company is trying to frack more precisely along the well so that more oil-soaked rock gets drained. It’s also looking for ways to keep the fracked cracks open longer so as to boost the flow of oil. 

Shale Refracs

Luckily, the U.S. Shale Patch won’t have to wait for Exxon to perfect its new fracking technologies. There’s already a proven technology for oil producers to return to existing wells and give them a second, high-pressure blast to increase output for a fraction of the cost of finishing a new well: shale well refracturing. 

Refracturing is an operation designed to restimulate a well after an initial period of production, and can But often does not while costing masses of money, pollution, potable water lost permanently from the hydrogeological cycle, and public and community health harms restore well productivity to near original or even higher rates of production as well as extend the productive life of a well. Re-fracking can be something of a booster shot for producers–a quick increase in output for a fraction of the cost of developing a new well.If industry were certain, they’d say “Re-fracking does” not “can.” I think this is just another scam to scoop money out of investors, to move into CEO and upper management pockets.

Oil Prices Climb As U.S. Rig Count Sees Another Double-Digit Decline

While refracturing has never really gone mainstream, the technique is seeing higher adoption as drilling technology improves, aging oilfields erode output, and companies try to do more with less. According to a report published in the Journal of Petroleum Technology, new research from the Eagle Ford Shale in south Texas shows that refractured wells using liners are even capable of outperforming new wells despite the latter benefiting from more modern completion designs.But, production falters fast, as is usual with frac’d wells

JPT also estimates that North Dakota’s Bakken Shale straddles some 400 openhole wells capable of generating an excess of $2 billion if refractured. Mind you, that estimate is derived from oil prices at $60/bbl vs. this year’s average oil price of almost $90/bbl. According to Garrett Fowler, chief operating officer for ResFrac, a refrac can be up to 40% cheaper than a new well and double or triple oil flows from aging wells.Come hither sweet investors, we want to devour your money!

How Refracs Work

Fowler says the most common re-frac method involves placing a steel liner inside the original well bore and then blasting holes through the steel casing to access the reservoir. The process typically uses half as much steel and frac sand than a new well

Refrac makes a lot of sense in the current inflationary environment. Back in April, Texas shale producer Callon Petroleum Company (NYSE: CPE) revealed that frac sand, drill pipe and labor costs have increased drilling and well-completion service costs ~20% Y/Y. Callon and Hess Corp. (NYSE: HES), both of which drill in North Dakota’s Bakken shale, have been forced to hike capital spending budgets over the costs with Callon adding $75 million to its original budget while Hess added $200 million to its spending,

Techniques like re-fracturing will allow the industry to continue to harvest the oil and gas out of these reservoirs,” said Stephen Ingram, a regional vice president at hydraulic fracturing firm Halliburton Company (NYSE: HAL).

Another key benefit: re-fracs do not require additional state permits or new negotiations with landowners. They are also less disruptive to the environment because well sites already have road access.Bullshit, the toxic harms to the surface are the same, while the toxic damages underground are likely astronomical, but no gambling man gonna mention that.

Considering inflation, supply chain issues, and rising wages, now is a great timeHe sounds like a snake oil salesman from the 30’sfor operators to start looking at wells for re-frac opportunities,” Matt Johnson, CEO of energy consultancy Primary Vision Network, has told Reuters.

Refracs have also demonstrated higher recovery rates: in URTeC 3724057, Roberta Barba, a longtime completions consultant and CEO of Houston-based Integrated Energy Services, et al. share a case study from the Eagle Ford Shale in south Texas involving five refractured wells. The refractured wells had a combined average post-refrac EUR of 13.2% compared to an initial EUR of 7.4% average by seven new infill wells with modern completion designs. Robert Barba, a longtime completions consultant and CEO of Houston-based Integrated Energy Services (IES). Estimated ultimate recovery (EUR) refers to potential production expected from an oil well or deposit and is made up of three components: proven reserves; probable reserves; and possible reserves. 

The Authors of the paper say that despite the presumed advantages of a modern completion, refracs can increase stimulated reservoir volume “beyond what is achievable in a new completion”. This is attributed to the fact that as the reservoir depletes and pore pressure drops, fractures from a refrac tend to grow into a new direction and tap previously inaccessible portions of rock.

Niche Market

Despite these seemingly clear I don’t see anything but a scam to steal more billions from investorsbenefits, it’s surprising that refrac remains a fringe tech in the U.S. Shale Patch. Norwegian energy consultancy Rystad Energy has estimated that out of all the U.S. horizontal well stimulations performed through September, out of the 8,900 total stimulations from January to September, only 200, or a little over 2%, were refractured wells. The vast majority were in the Permian Basin spanning Texas and New Mexico and involved wells drilled before 2018. Rystad estimates that the count will rise to ~400 refracs by year’s end, or a little over 3% of total completions and comparable to last year’s final tally of 409 refracs.

It’s a very niche market. The companies that are doing it are probably going to continue to do it, but I don’t think refracs are going to explode in numbers next year. I see stable activity that is very similar to this year’s 2–3% of total completions,” Justin Mayorga, a senior analyst of shale research for Rystad, has told the Journal of Petroleum Technology.

Indeed, Rystad says many U.S. shale producers use refracs more to protect the outcomes on new child wells that share the same pad rather than to boost production from older wells. It’s not for lack of opportunity though: in the Permian Basin alone, Alfredo Sanchez, CEO of oil field equipment supplier MorphPackers, estimates that there are tens of thousands of wells that are good candidates for refracking.

Nevertheless, Barba is optimistic that the U.S. Shale Patch will shift toward higher rates of refracturing in the not-too-distant future for one key reason:

 “We are seeing higher recovery factors on refracs–cumulative oil plus the estimated ultimate recovery (EUR) of the refrac–than we are in new wells.”

Refer also to:

2023: U.S. Shale bites dust as Art Berman warned over a decade ago? Investors finally smartening up to the fraud that is frac’ing?

2019: Frac’ing is going the way Arthur Berman said it would – down into the gutter with tens of billions of dollars in losses; Banks, investors, investment firms running for frac-free hills.

2014: The Chevron Frac Guarantee: Our well won’t explode…or your pizza is free!

Bullies! Chevron, Aera Energy Sue to Block Monterey County, California’s Voter-Approved Frack Ban; Lakes Oil sues Victoria gov’t (Australia) for $2.7 billion in lost future possible profits because of frack ban

2017: Arthur Berman: The Shale Gas Revolution Is A Media Myth. Big banks are catching on. Will investors too?

2015: Art Berman: Shale Plays Have Years, Not Decades & The way of greed: Oil and gas companies face their creditors as Fracking Bubble Bursts (FUNNY!)

2013: ‘The Shale Gale Is a Retirement Party’, So concludes an expert analyst of the natural gas boom. Brace for bust

2012: The Natural Gas ‘Ponzi Scheme’

2012: A “War on Shale Gas”?

One of the first people to raise questions about shale gas’s potential was Arthur Berman, a former Amoco geologist who, at the time, was a long-time contributing editor for an industry magazine called World Oil. But when Berman raised important questions about the ways the shale gas industry calculated their reserves, his column was cancelled by the magazine — amidst pressure from shale gas companies like Petrohawk. Mr. Berman resigned in protest, and within a few days, his editor, Perry Fischer, was fired.

The industry denied that it was responsible — “It is doubtful that his termination was a direct result of comments made by Petrohawk,” the company’s Investor Relations Vice President Joan Dunlap told a Houston Chronicle reporter at the time – but those involved had something different to say. “Let me be clear: The decision to pull Art’s column was due to pressure from these two companies,” Fischer later wrote. Despite this, Arthur Berman was undeterred.

It’s worth noting that Art Berman’s analysis is looking highly prescient these days. Official government estimates for shale gas have been slashed significantly. And the most basic element of his thesis – that caution is in order because it’s too early to know for sure how much and how long fracked wells will produce — has even been echoed by an unexpected source: former CEO of ExxonMobil Lee Raymond.


This entry was posted in Global Frac News. Bookmark the permalink.