In the past few years, producers in shale and tight-oil plays have made great strides in reducing their drilling costs and improving the productivity of their wells. But the trends toward much longer laterals and high-intensity well completions have significantly increased the volumes of sand being used—some individual well completions use enough sand to fill 100 railcars or more! An even bigger concern for many producers is the rising cost of disposing of produced water—that is, the water that emerges with hydrocarbons from these supersized wells. Today we begin a surfing-themed series that focuses on how the two key components of any beach vacation—sand and water—are impacting producer profitability.
Our initial focus is on sand. We’ll get to water-disposal costs later in this series. Put simply, the Shale Revolution would not have been possible without sand—and large volumes of it. As we said in Tales of the Tight Sand Laterals, freeing the vast amounts of oil, gas and natural gas liquids (NGLs) trapped in shale and tight sands requires horizontal drilling to access the long, horizontal layers where the trapped hydrocarbons reside, and proppant (natural sand, ceramics and resin-coated sand) that, when forced out of the horizontal portion of wells at high pressure (using water and other fluids), fracture openings in the surrounding shale/tight sands. When the pressure is released, the fractures attempt to close but the proppant contained in the fluids keeps them open, making a ready path for oil, gas and NGLs to flow into the well bore.
Variants of horizontal drilling and today’s proppants have been used for decades. Back in the day, a technique called slant-hole drilling (where the drill bored diagonally instead of vertically) was used to access conventional oil and gas reserves in instances where it would be difficult or impossible to place a rig directly overhead (or when a driller wanted to surreptitiously access his neighbor’s crude). And hydraulic fracturing (forcing proppant into shale and tight sands) has been used to stimulate (or get more oil and gas out of) vertical wells for many decades too. True horizontal drilling—the ability to drill straight down, then (gradually) make a 90-degree turn and continue drilling sideways—reached commercial viability in the 1980s. The breakthrough that George Mitchell (the pioneer of modern shale fracturing) made in the Barnett Shale near Fort Worth a few years later involved combining horizontal drilling with an innovative proppant mix that “cracked the code” and got the source rock shale to give up its natural gas. (The successful use of the same combo for wringing crude oil out of shale and tight sands followed.)