The will to drill
How technology unlocks North American natural resources
Not so very long ago, after several decades of robust production, U.S. crude oil output was in a sharp decline as the country’s accessible oil reserves were being depleted. The U.S. was rapidly becoming increasingly dependent on foreign oil, eventually peaking in 2005.1 At the same time, supplies of natural gas also were vanishing. Thanks to scientific discovery and innovation in drilling techniques, all that has changed. Dramatically. But to grasp the significance of America’s changing energy picture, it helps to understand where these valuable resources come from, where they exist today and how we unlock them from deep below the earth’s surface.
The origins of energy
Two of the world’s most valuable natural resources, oil and natural gas are byproducts of decomposed plants and animals that died 10 million to 500 million years ago and sank into the mud and sand at the bottom of ancient oceans and other bodies of water. Over a long, long period of time, these carbon-rich, mostly microscopic plants and animals formed layers of fine-grained organic material.
Over the course of the next several million years, these organic layers were buried by hundreds – and more often thousands – of feet of sediment. In the process of being buried and subjected to elevated temperatures and pressures, the sediment became rock, such as coal or shale, and was thermally altered to generate and expel oil and natural gas. This type of rock is now called “source rock.” Much of the oil and gas stayed put in the source rock, but some migrated into more porous rock, such as limestone and sandstone, which we now call “reservoir rock.” Reservoir rock is located deep underneath the earth’s surface, under layers of salt, silt, rock and earth.
Conventional production & vertical drilling
Drilling for oil in America dates to the mid-1800s, first in Pennsylvania and later in Texas and eventually in many other states. But the methods for drilling have changed dramatically over time. Oil traditionally was produced from reservoirs using vertical drilling to a target directly below the drill site, and pulverized rock (drill cuttings) was brought to the surface by injecting a mixture of mud and water down a hollow drill pipe to a rotary bit. As the hole deepened, additional lengths of drill pipe were added. When certain depths were reached, casing (steel pipe that forms the walls of the well) was put into the hole to stabilize it and then cemented into place. Drilling resumed, with progressively smaller diameter layers of steel casing inserted as the well became deeper. In addition to stabilizing the well hole, these layers of casing also acted as barriers between freshwater aquifers and the material that would be used in the drilling process as well as the oil and gas the well would produce.
Once the desired vertical depth was reached, the drill pipe was removed and sophisticated tools were used by geologists to analyze the rock in the well to evaluate the existence of possible oil and gas deposits in the wellbore (the hole drilled by the bit). Based on their findings, the exploration companies decided whether to invest the additional capital to complete the well or plug and abandon the well. If the decision was made to complete the well, additional pipe was run to the bottom of the well and cemented in place.
Drilling for oil in America dates to the mid-1800s, first in Pennsylvania and later in Texas and eventually in many other states. But the methods for drilling have changed dramatically over time.
Hydraulic fracturing, a technique that has been in use since the 1940s (although optimized in design and application more recently), is used to extract oil and natural gas that is locked inside source rock’s unconnected pores. Once the well is completed, it is prepared for hydraulic fracturing simulation. Small charges are used to selectively create holes in the casing adjacent to the targeted reservoir rock. Next, water, sand and a small percentage of additives are pumped into the well at very high pressure. The pressurized fluid pushes against the rock, causing it to break, creating tiny micro-fractures in proximity to the wellbore and opening up channels within the rock. After the fluid has effectively fractured the rock, fluid injection stops and the pressure inside the rock recedes. The sand (also called proppant) that was pumped into the well holds the fractures open so oil, gas and water can flow from the rock into the wellbore and up to the surface. Pumps are used to extract oil and gas that have insufficient reservoir pressure to come to the surface naturally.
Fracturing a horizontal well
New waterless fracturing methods are emerging on the scene, albeit slowly. These little-noticed drilling techniques, which are being developed in Canada, use propane gel instead of water. The methodology, called liquefied propane gas (LPG) fracturing, is still awaiting a patent in the U.S., but has been used about 1,000 times in the Canadian provinces of Alberta, British Columbia and New Brunswick, and in a few test wells in the U.S. Unlike water, which has to be pumped back out, often bringing with it some amount of contaminants, the propane gel reverts to vapor pressure underground due to heat and pressure. It then returns to the surface along with the natural gas ― but minus the contaminants ― for collection, reuse and resale. At this stage of development, gas fracturing is both expensive and has little history, so it remains to be seen if this methodology will gain in popularity.
Sea change in production: horizontal drilling
For many years, the only way to get oil and natural gas out of underground reservoirs was to drill vertically, but by the 1930s, directional or deviated drilling (boring at a slant away from the borehole, rather than vertically) was being used at times to reach targets not directly below a drill site. It also enabled multiple drills to be bored at a single site.
Horizontal wells begin with a vertical wellbore. But once the desired depth is reached, the well bore changes direction, arcing from a vertical trajectory to a horizontal one and extending for thousands of feet, allowing maximum exposure to the targeted reservoir rock. For example, if a 50-foot thick reservoir rock several thousand feet below the surface is penetrated by a vertical well, the well will be exposed to 50 feet of reservoir rock contributing to production. Conversely, if the same reservoir is reached vertically and then drilled 6,000 feet horizontally, the well will have 6,000 feet of reservoir rock contributing to production. Layers of casing and cement serve as barriers to shallow underground freshwater aquifers, which are thousands of feet above the targeted oil and gas reservoirs. Throughout the process, state-of-the-art technologies are used to monitor the depth, rate of penetration, pressure, inclination of the drill bit and other variables to ensure accurate, efficient and safe operations.
Innovations in drilling yield greater volumes
There is significant potential to increase the volume of oil recovered by drilling more wells per section of land. Multi-well pad drilling was first used in the early days of production in the rugged Prudhoe Bay in Alaska in response to environmental concerns and the need to minimize surface impacts.2 It came into widespread application in the Bakken in the last few years, as advancements in drilling technologies made multi-well pad drilling more economically feasible. This type of production involves drilling multiple wells from one site, providing access to large portions of tight formations from a single location. The method is particularly effective in fields such as the Bakken, where reservoirs are thin but horizontally expansive. When a rig has completed one well, it moves only 20 or 30 feet to drill a second well. This translates into less construction traffic and less time to disassemble and move a rig from one pad to another one at some distance, where it would have to be reconstructed before drilling could begin. More wells at a single site means fewer roads and pipelines connecting to drilling sites, which decreases construction costs and improves operating efficiencies for producers and results in smaller surface disturbance and better land use efficiency for surrounding communities.
Another method that is proving exceptionally successful is extended lateral reach drilling (or extended reach drilling). Most oil and gas reservoirs are much wider than they are deep, so extending the length of a well provides access to more resource-rich rock and thereby more crude oil and/or natural gas. As horizontal drilling has increased, so have the drilling depths and lengths of horizontal wells. In the Bakken, for example, horizontal laterals are now typically 1,000 feet in length and are hydraulically fractured in as many as 30 stages. The Marcellus has horizontal wells that extend laterally as much as 5,000 feet, but one operator there drilled a well stretching 10,684 feet – nearly two miles – in 2013.3
Extended lateral drilling of multiple horizontal wells at different depths and in different directions is yet another technique being increasingly used to increase production potential. These types of wells are more expensive to drill, but the benefits typically offset those higher costs. Producers can use a single platform or drilling pad to drill multiple extended-reach wells, again minimizing the number of well-pad facilities, construction costs and environment disruptions.
Extended lateral drilling is also used in areas where it is impractical or prohibitively expensive to drill from a location directly above the target formations. For example, it is far less expensive to drill a shore-based horizontal well with extended laterals targeting an offshore formation than it is to erect an offshore rig and drill vertically. In 2009, extended reach drilling was used to create a 7.6 mile-long well in Russia’s Chayvo offshore oil and gas field, at that time the world’s longest well.3
Drilling in action
It’s easy to see why horizontal wells typically result in much higher production volumes – sometimes more than triple the volumes produced by vertical wells – but they also cost two to three times as much to drill and complete. Despite this, the number of horizontal wells in the U.S. has proliferated in recent years.
Throughout the drilling process, state-of-the-art technologies are used to monitor the depth, rate of penetration, pressure, inclination of the drill bit and other variables to ensure accurate, efficient and safe operations.
Father of the Barnett
The earliest work around hydraulic fracturing combined with horizontal drilling took place in the Barnett shale of North Texas and was the effort of one company in particular – Mitchell Energy, owned by George Mitchell, later dubbed “the father of the Barnett.” Mitchell Energy had produced gas from a shallow formation that had first been tapped in the 1950s using traditional methods, but by 1982, production was waning as the easily accessible drilling opportunities using the then-current technologies had been tapped. Operating on the belief that the shale contained abundant gas reserves that were locked into smaller pores of the source rock – in part because drillers had noticed “kicks of gas” while drilling through the formation – Mitchell Energy began experimenting with unconventional production that paired horizontal drilling, which came into use in the 1980s, with hydraulic fracturing, which was pioneered in the 1940s. Results were mixed, but Mitchell persisted, trying different fracturing fluids, fine-tuning drilling techniques and investing hundreds of millions of dollars in the process, before becoming successful.
By 2003, Mitchell’s success in the Barnett shale had become well known, and the combination of horizontal drilling with hydraulic fracturing gained momentum as independent energy companies increasingly applied the winning combination methodology to oil and gas basins across North America. By 2008, the major integrated oil and gas production companies had embraced the approach, and the North American energy transformation was underway.
By 2003, Mitchell’s success in the Barnett shale had become well known, and the combination of horizontal drilling with hydraulic fracturing gained momentum as independent energy companies increasingly applied the winning combination methodology to oil and gas basins across North America.
The proliferation of horizontal wells in the last decade has been nothing short of breathtaking. This sea change in oil and natural gas extraction placed the U.S. squarely on the path towards greater energy independence. What’s more, unconventional gas production has comprised more than half of U.S. total natural gas supplies. The numbers are just as dramatic when it comes to oil.
This sea change in oil and natural gas extraction placed the U.S. squarely on the path towards greater energy independence.
- Energy Information Administration
- Exxon Mobile