Shale Refracs: Next Big Thing, or a Piece of the Big Puzzle?

Abstract

A number of recent studies from the US shale sector are arguing that refracturing is a generally successful practice and that high oil prices make that even more true. New research from the Eagle Ford Shale in south Texas shows that refractured wells using liners can even outperform new wells benefiting from more modern completion designs. The developers of the liners and packers specially designed for refracs are also reporting increased interest for their technologies as the industry leans toward more sophisticated mechanical isolation techniques. In terms of the very lowest-hanging fruit, it is believed operators in North Dakota’s Bakken Shale are sitting on some 400 openhole wells that if refractured would generate in excess of $2 billion—and that’s at $60/bbl vs. this year’s average oil price of almost $90/bbl. But despite the apparent progress and size of the prize, it does not appear that US shale producers are any closer to refracturing on a large scale than they were 5 years ago. Out of all the US horizontal well stimulations performed through September of this year, a little over 2% were refracs. The figure comes from Rystad Energy which identified in public data roughly 200 refractured wells out of the 8,900 total stimulations from January to September. Most of these refracs were in the Permian Basin spanning Texas and New Mexico and involved wells of a 2018 vintage or earlier. And most of the operators active in this space completed just between 1–4 refracs during the reporting period. The consultancy expects that as more data filters in, the count will be around 400 refracs by year’s end. That would likely be a little over 3% of total completions and roughly in line with last year’s final tally of 409 refracs. On a percentage basis, 2022 might also look similar to the 2018 peak of 570 refracs, or 3.3% of that year’s 17,000 completions. Justin Mayorga, a senior analyst of shale research for Rystad, said the data reflect that a healthy level of activity exists in the refrac space—but there’s little chance the 2018 record will be broken anytime soon. “It’s a very niche market,” he said. “The companies that are doing it are probably going to continue to do it, but I don’t think refracs are going to explode in numbers next year. I see stable activity that is very similar to this year’s 2–3% of total completions.” One reason refracs hold just a fraction of the overall completions market is because they’ve only been able to establish a limited business case in a sector that remains laser-focused on bringing in new wells. To this end, many operators active in refracturing describe how they use the technique not to boost production from older wells but more so to protect the outcomes on new child wells that share the same pad. But the biggest obstacle facing greater refrac activity in the US, according to Rystad and other analysts, is the lack of spare pumping horsepower.