High gas prices continue to plague consumers and dominate social media, a topic Energy Fairness has covered quite a bit lately. Fortunately, U.S. drillers are finding new ways to produce crude oil economically, a development that should help place downward pressure on prices.
While the Biden Administration has called on the industry to increase production to reduce prices, U.S. drillers have been more than a little gun-shy about spending massive amounts of money on new development. Who could blame them? After oil prices tanked in 2020, the industry was forced to pay buyers to take excess oil off their hands. Additionally, the Biden Administration has been notoriously hostile to the U.S. oil industry, leaving drillers unsure of their future.
The solution? Shale producers are returning to previously fracked wells and giving them a second, high-pressure blast to retrieve any remaining oil. These so-called “re-fracs” have emerged as a way to raise production for a fraction of the cost of building a new well. Producers have dabbled in the technique in the past, but it is now winning broad support as companies try to do more with less.
“You go back and find where you maybe under-completed and under-fracked in the beginning,” says Catherine Oster, who manages Devon Energy’s mid-continent properties. Besides, “we’ve made the infrastructure investment. As you learn about your resource, you get those technical learnings” that help decide which wells will benefit from a second shot, she continued.
Re-fracking uses half as much steel and frac sand as building a new well. That’s a significant savings, considering that drill pipe, labor, and frac sand prices have driven the costs of new wells up 20% over the past year. The completion time is shorter, too, meaning that re-fracs can be scheduled between work on new wells.
Another benefit of re-fracking? No additional permits. Re-fracs require no new state permits or new negotiations with landowners, which means further savings. There is also less environmental disruption because existing well sites already have road access. Drillers can basically pick up where they left off.
“Considering inflation, supply chain issues, and rising wages, now is a great time for operators to start looking at wells for re-frac opportunities,” said Matt Johnson, CEO of energy consultancy Primary Vision Network.
U.S. drillers are leading the way toward getting fuel prices back down to acceptable levels. It will take some time for gas prices to return to normal, but we applaud the U.S. drilling industry for finding new ways to unlock our energy potential.