From Marathon Oil –”Safe, cost-effective refinements in hydraulic fracturing (also known as fracking), horizontal drilling and other innovations now allow for the production of oil and natural gas from tight shale formations that previously were inaccessible. This animated video above introduces you to the proven techniques used to extract resources from these shale formations in a safe, environmentally responsible manner.”
At the end of the video, they explain what happens at the end of a well’s typical 20-40 year life: The land is returned to its original, natural condition before the drilling took place, and there is no evidence remaining that a oil or gas well was ever there.
It’s a great 6-minute animation of the revolutionary drilling technology that is responsible for America’s game-changing, shale-based energy bonanza, which has moved us away from the former mindset of “energy scarcity” that prevailed for generations to a new era of “energy abundance.” It originally appeared on CD back in 2012 and is now making its second appearance.
Related: Here are some interesting facts about a typical Bakken oil well drilled in 2012 at a cost of $9 million to complete, from the North Dakota Department of Mineral Resources (via this website):
- Expected active well life of 45 years and each well will:
- Produce about 665,000 barrels of oil
- Generate over $23 million in net profit
- Pay nearly $4.3 million in total taxes
- Pay royalties of $8.2 million to mineral rights owners
- Pay salaries and wages of $2.1 million
- Pay operating expenses of $2.3 million
http://www.ogj.com/articles/print/vol-110/issue-4/exploration-development/bakken-s-maximum.html
this is a good article about the production in the bakken.
chart 5 has some interesting implications for the payback and profit figures mark cites above.
looking at the cumulative production figures and the steep drop off of production, we see that somehting like half the overall production will take place in the first 6 years.
this is great news from a return on capital/payback standpoint.
the $9 million upfront costs look like they lead to about 100k bbls in year one, which is roughly $10 million in oil.
there will be costs, royalties, etc so it seems doubtful you get a one year payback, but it looks like you could easily cover the costs by the end of year 2 or 3 at the absolute latest..
i have spent some time out in the uintah basis in utah recently.
it’s booming out there. vernal and roosevelt are hopping.
of interest, many of the oil field service and equipment companies LOVE this rapid fall off in production.
they seem to feel ( and i agree) that it will make this boom less susceptible to overshooting as we have seen in past oil booms where a ton of capacity comes on line at once and gluts the market for a decade. that more or less cannot happen with these fracked shale wells.
you need to keep drilling them just to stand still.
but, if the unit economics of these individual wells are good, everyone can win doing that.
i have heard talk that more and more marginal wells are going in and payback on them may be lower or negative (though only online and from pundits not from the industry) and i do not know enough here to really have an opinion on if and when that will happen, but if the numbers being discussed above are even close to right, it seems to be a ways off.
The whole thing seems quite nebulous to me. Obviously fracking works, but this video leaves me more confused than before.
1) how does the concrete which is meant to seal off the drinking water aquifers dry while in contact with water?
2) what colossal amounts of force are required to pump concrete through a multiple mile long pipe and then make it leak out the other end and then push it all the way back multiple miles up the well?
3) since they’ve already sealed up the space between the pipeline and the well during the vertical drilling phase, how does the air escape while the horizontal section of the well is being pumped with concrete?
4) what is used to push the concrete? If they’re using concrete to push the concrete back up the well, then won’t the pipeline also be clogged with concrete?
5) how do the stoppers used during the fracturing process hold so tightly that the fluids fracture rock rather than pushing the stoppers out?
6) how to the multiple stoppers which are sealed behind multiple other stoppers suddenly let go and come to the surface when it’s time to start collecting oil?
7) if the horizontal well goes under the property of a person other than the one whose land the well is on, who gets the mineral rights money?
8) what happens if a worker accidentally falls into the well and ends up sliding all the way to the end of the horizontal section?
Okay, the last one was a joke, but the remaining are questions which make me think the video is just a PR effort made for the LCD.
@Oranje
1) Concrete doesn’t cure by drying. It cures by chemically reacting. Concrete can cure underwater.
“it’s booming out there. vernal and roosevelt are hopping“…
What?!?! No peak oil boogie man lurking in the area?
If these figures truly represent a typical well, then we will see no bust in domestic oil production—just very long-term steady growth.
My guess is that people will get even better at fracking, and extending the life of a well. Indeed, I expect an industry to pop up of guys who buy old wells, and have tricks to boost production a little bit.
We can get out of the Mideast and end ethanol–both federal efforts huge banes to taxpayers and consumers.
I am sure the GOP will lead the way.
Comment removed by a blog administrator for being extremely offensive, inflammatory and valueless, and not meeting the minimum standards for adult-level discourse.
I’m sure that there is some value in your comment but for the life of me I can’t figure it out.
Aiken Bob
If you find any, it will be the first time.
they are as moronic today as they were in high school and college.
Considering in high school I was already publishing in economic journals and, by the time I graduated college, I had 6 publications under my belt, along with 3 presentations, I’ll take that as a compliment.