Hydraulically Fractured Horizontal Wells: A Technology Poised To Deliver Another Energy-Related Breakthrough of Enormous Scale

The development of efficient technologies for drilling and hydraulically fracturing horizontal wells has enabled the US to more than double hydrocarbon production since 2005 (Fig. 1), thereby providing unprecedented levels of energy security for America. America’s doubling of hydrocarbon output has also held down the price of energy worldwide, and by doing so, accelerated global economic growth. And it has helped reduce the greenhouse gas (GHG) intensity of energy production by backing out “dirtier” forms of energy, such as coal. Energy security—economic growth—reduced GHGs vented to the atmosphere: That’s a winning combination. One that America and many other countries have benefitted from immensely. Given the enormous positive contributions, it is worth noting that 20 years ago, few if any in our industry foresaw the immense potential of this technology, seeing it as being only applicable for extracting gas from ultratight reservoirs like the Barnett Shale, if they were aware of the technology at all. This oversight caused many companies to wait too long before deciding to pursue unconventional reservoirs and caused several of the “shale gas” pioneers to be late in recognizing that hydraulically fractured horizontal wells (HFHWs) could also be successfully applied in liquid-rich plays such as the Eagle Ford and Permian Basin. These are plays that today deliver far more value than that derived from the gas-prone reservoirs that comprised the initial suite of targets. And while events have proven beyond a doubt that HFHWs are a powerful tool for economically extracting hydrocarbons from both gas-prone and liquids-rich unconventional reservoirs, it seems likely that many in our industry are overlooking a third significant application of this technology: The use of HFHWs to extract heat from the Earth’s crust that can be utilized to generate electricity. What makes this third application particularly compelling as an investment opportunity is that the primary physical challenge that needs to be overcome to achieve attractive rates of return is strikingly similar to that which the oil and gas industry had to surmount to make both gas and liquids-rich unconventional reservoirs economic. The key to success in all of these cases boils down to an ability to create via hydraulic stimulation a sufficiently large amount of conductive, connected, fracture surface area. With this, one can reliably expect per-well production rates to be economic given the extremely slow rate at which hydrocarbons—and heat—move through unconventional reservoirs and the hot, dry, basement rocks that contain the bulk of the world’s geothermal resources. That converting from vertical to horizontal well geometries was critical for unlocking the potential of unconventional hydrocarbon reservoirs is now obvious, with this switch having allowed petroleum engineers to increase per-well fracture surface areas by several orders of magnitude. This move increased per-well flow rates by similar amounts (i.e., from subeconomic flow rates from hydraulically fractured vertical wells (HFVWs) to flow rates of thousands of BOE/D from HFHWs.