Study: Refracturing not all it’s fracked up to be

HOUSTON — Refracturing likely won’t have a measurable impact on the oil market for the next five years or so, according to a new analysis by energy consulting group IHS.

Early chatter about the refracturing process, where drillers return to previously fractured shale wells and pump them full of sand and fluid again hoping to unlock even more oil, has had traders and oil market watchers wondering if the U.S. wells whose prolific production sparked a collapse in oil prices are sitting on a second bounty, just waiting to be tapped.

But while longer term advances in the techniques and technology of refracturing might change the calculus, a large-scale redo of oil wells won’t make sense until companies see better returns from returning to old wells than from drilling new ones, said Christopher Robart, IHS managing director of unconventional resources.

“We’re calling a niche market opportunity in the three-to-five year time period,” he said. Currently, “in just about every case, the returns are going to be significantly better in drilling a new well.”

Only about 600 horizontal wells have been refractured since 2000, a very small fraction of the roughly 90,000 horizontal wells that have been fractured over that time, IHS numbers showed. Most of those refractures have been cases where producers were going back and applying new techniques to wells that were fractured years ago when the completion process was relatively new.

In 2014 and 2015, only about 1 percent of total fracturing jobs performed wells done on wells that had been previously fractured, Robart said.

And those refractures yielded mixed results, he added. Bakken wells preformed relatively well, with initial production and decline rates comparable with new wells. Other plays underperformed, though, and it wasn’t clear whether the Bakken wells stood out because they may have been inefficiently fractured long ago.

Refracturing a well costs roughly $2 million — often less than a new well because the infrastructure needed for the process is already in place. But the uncertainty involved means many companies will be hesitant to pour money down existing holes when there are plenty of new ones waiting to be drilled, Robart said.

“Right now the variance of outcomes in refracturing is high,” he said. “Making this work is going to take time. It’s going to be a long-term process.”