IHS: Refracking to remain a niche market

By The Bakken Magazine Staff | August 14, 2015

A recent study conducted by IHS Inc. found that horizontal well refracking will remain a niche market despite an increased interest from both exploration and production and oilfield service companies hoping the technology will reinvigorate drilling activity.

The IHS Energy Insight Report, “To Frac or Refrac: Prospects for Refracturing in the United States,” found that by 2020, refractured wells will account for roughly 11 percent of horizontal wells fractured in the U.S.

Team researchers examined the entire population of U.S. onshore horizontal wells fractured since 2000, and through a robust search and filter methodology, researchers were able to identify nearly 600 horizontal wells refractured. It reviewed current horizontal refracking technologies and approaches, as well as economics and effectiveness, then established baseline criteria and assessed the future potential of the technology using primary intelligence, rigorous research and proprietary data, according to IHS.

The IHS report found that the Bakken has the greatest number of refractured wells in the U.S. plays, followed by the Barnett and Marcellus plays. IHS measured refractured success by comparing refracturing initial production (IP) rates to original IP rates. With the exception of the Bakken, most refractured wells have IP rates lower than the original IP rates. The Bakken anomaly is likely due to sub-optimal well specifications chosen for the original completion, said IHS.

Due to the Bakken refracking results, and some over-performers in the Eagle Ford, IHS said that the overall average refractured well IP is equivalent to 98 percent of the original well IP. The refractured wells also saw better 12-month decline rate than original well completions.

“In response to lower oil prices, E&P service companies in particular, have shown increasing interest in horizontal well refracturing,” said Christopher Robart, managing director, unconventional resources at IHS Energy, and the report’s lead author. “However, while refracturing has potential to leverage improved completion techniques to increase production while avoiding drilling and facilities costs associated with a new well, HIS research indicates there is a great deal of uncertainty about the viability of large-scale refracturing that must first be overcome.”

“The companies with superior acreage for new well development are not presently the prime candidates for refracturing,” added Robart. “Operators with less attractive assets will likely be more interested in advancing this technology in the near-term.”

The report found that three refracking techniques, including diversion, coiled tubing, or mechanical isolation, were most often employed in the wells studied. But, the study points out that each method has its advantages and disadvantages and it’s unclear which technology will be dominant in refracking practices.

IHS noted that refracturing costs vary by method and job size, with the diversion method offering the lowest cost, but in turn, it offers limited control. Due to the technical challenges, uncertainties and costs associated with current refracturing methods, Robart said E&Ps that have a better portfolio of new well prospects are likely going to pursue those opportunities first, and save older assets for later.

“Refracturing technology is in its infancy, and a large-scale refracturing program is the most important step that can be taken to advance it; however, most E&P operators are cautious about investing significant capital before they see more positive results from other firsts,” said Robart. “To get better at something, you have to repeat it and refine the processes—you have to experiment. What refracturing needs now is a new innovator to step up, invest capital, and take risks to refine the technologies and lower costs. For refracturing to advance significantly, we need the next George Mitchell to come forward.”