Refracturing could be the next technology for shale drilling after hydraulic fracturing, as slump-stricken oil and natural gas operators seek to lower costs while boosting production, observers say. "I've seen a well get 10 fracs through the same perfs, and it appears that we're adding reserves every time," said Mike Vincent, consulting engineer at Insight Consulting, noting that the process usually leads to a more than 60% rise in oil recovery. According to a Bloomberg Intelligence analysis of approximately 80 wells, refracking resulted in an average production rate of over 30% more than the original completion.
Some state regulators are working toward tightening their rules for oil and natural gas operations in an effort to manage the rise in earthquakes. Contrary to some groups' beliefs, companies' wastewater disposal wells, and not hydraulic fracturing, are what is associated with small-magnitude earthquakes. However, whether these tremors can lead to bigger seismic activities is still unclear, said Stuart Ellsworth, petroleum engineer at the Colorado Oil and Gas Conservation Commission.
The Bureau of Land Management on Monday approved the route for Paiute Pipeline's proposed natural gas pipeline that would stretch about 35 miles from Elko, Nev., to a Ruby Pipeline compressor station. The Elko Expansion Project would need a temporary right-of-way measuring 75 feet in width during construction and a permanent one measuring 50 feet in width upon completion.
While Delta Air Lines refining unit Monroe Energy is set to import up to 5 million barrels of crude oil from Nigeria, the U.S. also needs to allow its producers to sell crude overseas, according to Producers for American Crude Oil Exports. PACE Executive Director George Baker said domestic producers do not share the same free-trade privilege as domestic refiners. "When we don't have a buyer, the price comes down, crude goes to storage, or we stop producing," Baker said.
Hilcorp Energy has entered into an agreement to buy some Middle Ground Shoal oilfield assets in Alaska from XTO Energy, said Lori Nelson, external affairs manager at Hilcorp Alaska. The assets include two platforms with a production capacity of 1,750 barrels of oil per day, a tank facility and offices on Kenai Peninsula, she said. "Pending all state and regulatory approval, we hope to close the transaction sometime this fall," Nelson said.
U.S. natural gas is a clean, flexible, low-cost and economically beneficial energy supply and fuel, and it will thrive regardless of low oil prices and stringent policies, writes Jude Clemente, principal at JTC Energy Research Associates. Gas will remain important in the domestic energy economy in spite of "very liberal policies" or "very conservative policies," while liquefied natural gas projects will continue to be profitable in the face of low oil prices due to long-term supply contracts, he notes. Gas, together with oil, will also remain responsible for about 65% of primary energy supply in the coming decades, Clemente writes.
Linn Energy said it reached a $281 million deal to divest its remaining holdings in the Permian Basin in Howard County, Texas. The transaction involves 6,400 net acres and existing production from 133 wells in the Wolfcamp area of the play. The company did not disclose details about the buyer.
Legacy Reserves has signed two separate deals to acquire Texas-based natural gas assets from Anadarko Petroleum and Western Gas Partners for a total of $440 million. The assets being acquired include a gas processing plant with a daily capacity of 502 million cubic feet equivalent and 567 miles of a high-pressure gas pipeline and low-pressure gathering pipelines. The company expects to complete the transactions in the third quarter.
The U.S. can no longer miss its opportunity to become "a global energy superpower" through crude oil exports, write Reps. Joe Barton, R-Texas, and Henry Cuellar, D-Texas. Government agencies and academic and policy institutes, through their studies, have already justified the benefits that the nation would get from lifting the ban on crude exports, they note. "Academics and business leaders have testified at numerous hearings on Capitol Hill and they confirmed, almost unanimously, that it will create jobs, increase U.S. oil production, lower gasoline prices and strengthen our national security," Barton and Cuellar add.
The California Department of Conservation's Division of Oil, Gas and Geothermal Resources last week implemented new rules regulating hydraulic fracturing operations in the state. The division issued the rules together with an environmental impact report suggesting the presence of "significant and unavoidable impacts" from the activity. Under the rules, oil companies are required to boost their water management efforts, perform wide analysis of the activity's impacts and disclose the chemicals they use in the fracking process.