THE FUTURE OF FRACKINGWith billions of dollars laying in shale oil reserves
and the rate of technological advances in this industry
I feel juniors like Anglo who have positioned themselves accordingly
have a great future ahead of them
should be an interesting summer ahead
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BMO InvestorLine Alerts
Anglo Canadian Oil Corp (ACG:TSXV) - Over performs the TSX/COMP
by 3.91% over the last day as of 11:25AM ET 04/05/2011..
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THE FUTURE OFFRACKING
APRIL 5,2011
Dear OGIB reader,
A new development in “fracking” willmean lower costs and higher oil and gas recoveries, says Dan Themig, Presidentof Packers Plus, a privately owned completions (fracking) company based inCalgary, Alberta. This would mean higher profits for energyproducers.
Themig’s new product – QuickFRAC® – is part of a new trend infracking that is moving away from using more horsepower and taking a smarterapproach to increasing the amount of oil and gas recovered from a well, i.e. theRecovery Factor (RF). Most wells only recover 5%-20% of the Original Oil inPlace (OOIP).
“We don’t believe the sledgehammer approach to fracturingis the way of the future,” says Themig.
“Fracking,” or hydraulicfracturing, involves pumping a mix of sand (proppant) and fluid (water) down awell and into the reservoir at ultra-high pressure to create fractures intightly packed sand formations, or shale rock formations, to free up the oil andgas to flow up the well.
Fracking has allowed billions of barrels ofoil previously thought to be uneconomic to become not only produce-able, buthighly profitable. It has become a global game changer in the oilpatch, and hascreated hundreds of billions of dollars in capital gains for investors. (Andwe’re still in the early stages of this growing industry!)
The size ofindividual fracking operations has increased 10 times in the last decade, as theindustry has grown and learned how to more effectively apply thetechnology.
Themig says the “sledgehammer approach” of more horsepower(in the form of pumping trucks at surface), more fluid and more proppant hasbeen the industry norm for the last five years, but now the industry is gettingsmarter in order to increase production from wells.
“We want to reducethe amount of fluid used and maybe the amount of proppant. We can reduce thetime and number of stages and get a more effective RecoveryFactor.”
This is the size of a frack job in2004.
This is the size of a frack job in2008.
In the new, ever-longer horizontal wells being drilled,fracking is done in multiple stages – often every 100 metres. Each stage offracking takes a certain amount of time, from roughly 30 minutes to four hours,depending on how hard the surrounding rock is (the harder the rock or tighterthe sand, the more time it takes).
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Themig says the new “QuickFRAC” technology is able to frack two to eight ofthose 100 metre stages at the same time, using the same amount of fluid andproppant.
“We can evenly distribute the fluid and divide it by thenumber of stages set to open,” he says.
QuickFrac can do multiple stages of fracks at thesame time.
Themig says that completing several fracking stages atonce saves so much time, QuickFRAC can save 10% on overall well costs for aproducer – often a $500,000 saving per well.
Having several fracks gointo the formation at the same time also increases the amount of oil recoveredfrom the well, Themig says. That’s because the rock holding the oil is beinghit by huge pressures and vibrations on different sides at the same time, whichcreates more fractures in the rock.
“We drilled a $5 million well anddecreased costs 10% by doing 24 stages in 10 hours,” Themig says. “Previouslythat would have taken 4-5 days using cement liners in the wellbore, and two dayswith our regular StackFRAC® technology.”
“And we increased the RecoveryFactor by 30%-40%.”
Rene Laprade is Senior Vice President Operations ofPetrobakken Ltd. (PBN-TSX), and they have used QuickFrac in the Horn River gasplay and Montney gas play, both in western Canada.
“We save at leasttwo days over a conventional stack frac system and up to 5 days over a plug andperf system,” he told me in an interview. “This results in a costs saving toPetroBakken of up to 30% over other fracture stimulationmethods.”
Themig says they are able to do all this with only a minorincrease in horsepower, but also use up to 30% less water perwell.
Themig says The Future is using longer horizontal wells, anddoing more frack stages per well, and QuickFRAC is positioned to help theindustry make the evolution easy and profitable.
“The number of fracksare now far more than we ever thought it was going to be. In 2001 we thought5-6 fracks be enough to frack a well. Then the industry moved to 12-15 per wellnow to over 30. Some customers want 40-60 fracks – consider how long it wouldtake to do 60 fracks that are 4 hours each. The future looks like 60-100 stagesin a lot of wells, depending on geologic needs.”
The goal, he says, isto increase the Recovery Factor – get more oil or gas out of the ground perwell. “You look at the Haynesville (shale gas formation in Louisiana) and theyhave big initial production (IP) rates but high declines, sometimes a 90%reduction in production in the first year. We think we can significantlyimprove on those numbers using QuickFRAC.”
A side benefit of QuickFRAC is that the frack companies like TriCan,Calfrac etc. will be able to do a job in shorter time, so they will be able todo more jobs in a year than previously. Producers save time and money whileincreasing cash flow from more oil, and frack companies have less downtime andmore revenue days per rig. It makes the whole industry moreefficient.
- Keith