Can Refracs Bring New Life to the Haynesville?

February 20th, 2015 |

Drilling and completion technology continues to evolve in North America. In the Marcellus and Haynesville interest has re-emerged in technology  for recompletions and refracs because the way wells are completed and produced has changed dramatically since the plays were originally developed.

BTU Analytics’ latest forecast for Northwest LA, which contains mostly Haynesville development, is calling for natural gas production declines to slow and come to a halt.  Production is expected to fall  to 3.57 Bcf/d around the end of 2016 before climbing back to 3.7 Bcf/d by the end of 2019 as natural gas prices rise with new demand from exports and gas-fired power generation.

Refracs - Haynesville Production Outlook

One upside risk to this forecast is the potential for producers to use refracing to arrest the production decline of existing wells.  Could refracing technology bring new life to the Haynesville and ultimately other shale plays as they mature?

Encana has been experimenting with refracs in the Haynesville.  For approximately $1.0M per well, Encana is refracing wells whose production has dropped to a few thousand cubic feet per day (Mcf) and returning gas production from those wells to a few million cubic feet per day (MMcf).  While the total EUR impact remains unknown, returns from refracing could potentially rival the other investments in their portfolio.

But will there be a need for additional Haynesville gas if Marcellus producers explore recompletions of existing wells in that play as another potential weapon in their arsenal?

Consol Energy highlights the recompletion opportunity in a slide from one of their investor presentations. Consol has over 200 Marcellus wells that were completed with older technology which incorporated 300 to 500 foot stage lengths, while the current technology employed by the company has stages for every 150 feet of lateral.  (The current technology is commonly referred to as Reduced Cluster Spacing (RCS) or Short Stage Lengths (SSL) to distinguish it from the previous completion technology.)Refracs - CNX Marcellus Shale Completion Designs

Consol highlights the opportunity on another slide that shows production history for a well that was completed with the old technology and was expected to produce a 3.9 Bcfe EUR.  After recompletion, the well is now expected to produce 6.0 Bcfe, a 2.1 Bcfe increase.

Refracs - CNX Recompletions in the Marcellus

These recompletions appear to call for new perforations and stimulation, which would add cost, and Consol estimates the cost to be around $2.0MM per recompletion.  The rates of return on capital spent on recompletions could rival or potentially beat the return on capital from new drilling if the type of results achieved by Consol in its inital test are predictable and repeatable.  With over 2,000 wells were drilled in the Marcellus prior to 2013,  a large inventory of potential opportunities awaits.

Part 2: Can refracs Bring New Life to the Haynesville Results & Economics

Author: Kathryn Downey Miller

Kathryn Downey Miller is President of BTU Analytics where she leads the firm’s consulting and analytics groups in delivering market advisory services to clients across all sectors of the industry. Additionally, Kathryn oversees strategic planning, financial budgeting and analyst development for the company. Prior to founding BTU Analytics, Kathryn built market expertise in a diverse set of prior industry roles, including buyside investment research at an energy focused hedge fund, energy market fundamentals consulting at Bentek Energy, investor relations strategy consulting for E&P companies and investment banking at Citigroup. She speaks frequently at industry events on North American energy markets and is a CFA charterholder.