How Fracking Creates Value: Three Insights From Three Frac Legends – Daneshy, Montgomery, and Smith
Originally published on September 13, 2022, on Forbes.com
Practical snippets from the lives of giants who have worked in fracking – not for years but for decades.
On September 7, 2022, NSI Technologies arranged a public Vimeo session with three Fracking Legends selected by the Society of Petroleum Engineers (SPE): Ali Daneshy, Carl Montgomery, and Mike Smith.
The topic was how you create value by using hydraulic fracturing, often referred to as fracking.
To me, one answer is that fracking historically increased oil and gas production from vertical wells by 3-4 times. Fracking was discovered by Amoco in 1947. A rumor exists that the manager decided that further study was unwarranted, but the engineers came back at night and did secret underground experiments that verified the concept.
At the other bookend is shale fracking where a horizontal well 2 miles long is fracked typically 40 separate times along its length. Shale is close to impermeable so shale wells are not even close to commercial unless they are heavily fracked. But the biggest shale gas well in the Marcellus made about 70 Mcfd after fracking. Two monster shale oil wells in the Permian were announced by Devon in 2018 making 11,000-12,000 boe/d in an early 24-hour period.
The value of fracking? In just 20 years, fracking was responsible for the shale revolution that made the US self-sufficient in oil and gas for the first time since 1947. The shale revolution has enabled the US to export oil and gas since 2016, and the US has become in 2022 the largest exporter of LNG (liquefied natural gas). And where does this LNG go? Right now the majority of it is going to Europe to shore up the gas supplies that Russia has been cutting.
Legends of Hydraulic Fracturing.
Ali Daneshy worked many years for Halliburton, a service company that provided services such as fracking to oil and gas companies. Then Ali became an international consultant in fracking and associated technologies.
Carl Montgomery worked for Dowell that became Dowell-Schlumberger, then Conoco-Phillips, Arco, and finally NSI. Carl has very broad expertise in well-stimulation and fracking. As an example of this, I worked with Carl on trying to adapt open-hole cavity completions, so successful in coalbed methane wells, to wells drilled in weak sands.
Mike Smith was in Amoco research for many years, then left with Ken Nolte to start NSI. They formulated a model for massive hydraulic fracturing of tight sandstones, which allowed for easy interpretation of pumping pressure behavior. I actually took one of the spots available when Mike and Ken left Amoco.
Ali said he was impressed with shale wells where hundreds of fracs are created around very long horizontal wells over a period of just a couple of weeks. They can do simultaneous frac operations in two or more wells, with remarkable efficiency that lowers significantly well completion costs.
The key, Daneshy says, is developing systems, materials, technologies, and alliances, even to the extent of real-time analysis of where fracs go by using pressure measurements in nearby wells. These pressure changes in offset wells are what he calls frac-driven interaction data.
Daneshy has even written a new book called Frac-Driven Interactions (FDI): Guides for Real-Time Analysis & Execution of Fracturing Treatments.
Carl discussed his experience in Siberia when he was charged with improving the frac treatments in four huge oilfields, each bigger than Prudhoe Bay.
The previous guidelines? There was an incentive to not screen out the frac job. This was more important than maximizing fracture conductivity.
In the 15 wells that were “value-treated” by Carl, oil rates were boosted by four times on average.
In a rather unusual step, Montgomery didn’t give away the secret of creating frac value in Siberia, but instead directed two questions to the audience:
- When you pay money for a fracking operation, what are you actually buying? Hint: it’s not the frac fluid, the proppant, or the pumping gear.
- Regarding a frac contract, who writes it, does it specify what you really want to buy, and has it documented how to achieve this?
The answers came later, during the Q&A session.
- Answer 1: You are buying frac conductivity. But Carl rarely sees this addressed, even nowadays. He says you use proppant, but what kind of proppant, and how much is required for maximum conductivity?
- Answer 2: Make sure you set up your frac contracts to maximize frac conductivity because that is the key that controls the flow rate of oil or gas from the reservoir.
Mike has fracked oil and gas wells in 46 countries around the world. His example of creating frac value is based on the Wattenberg field in the D-J Basin, central Colorado, which started drilling in the 1970s.
Smith used frac pressure analysis to diagnose a continuing screenout problem. Above a certain pressure, natural fractures opened up and increased the leakoff rate of the frac fluid being pumped. As the frac fluid leaked off, the proppant it carried got left behind and clogged up the flow, so the pressure rose sharply, the frac screened out, and the frac job had to be terminated.
Smith adjusted the frac parameters until he was able to get all the proppant pumped away. This “Revised Frac” had a lower pump rate, a third more proppant, and a third less fluid volume. Gas flow rates from the new wells shot up.
The new frac revolutionized gas production from the basin, as shown in the figure — the Revised Frac usage began at the vertical blue line. New wells produced 4 times that of previous wells.
The improvement in oil production was dramatic. In 2003, the Wattenberg field in Colorado was number 7 on the list of gas producers in the US (see figure). The key to creating frac value was Smith’s use of his new development (with Nolte): frac pressure analysis.
In the future, Smith would like to see more basic data collected to make easier interpretation of sophisticated but expensive diagnostic tools like microseismic, etc. By more basic data, he means stress tests, DFITS, mini-fracs, etc. plus routine recording in real-time of bottom-hole pressure in offset wells.
It is fascinating to reflect on these tiny snippets from the lives of giants who have worked in fracking – not for years but for decades.