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ConocoPhillips to test new fracking tech

Supermajor working on pilot project with service providers to develop cost-effective multi-lateral fracking technology with test planned later this year

ConocoPhillips is working with major service companies to develop technology that will make it easier to fracture multi-lateral wellbores and plans its first test of the technique in its US Lower 48 tight oil holdings later this year.

The US tight oil giant has an ongoing pilot project with five different service providers focusing on getting better accuracy and control in the hydraulic fracturing process, chief technology officer Greg Leveille said at the CeraWeek conference in Houston.

“When you put the laterals in the ground it’s easy to produce them into the mother wellbore but actually stimulating across those junctions... has in the past been the most difficult challenge and has been very very expensive,” Leveille told Upstream on the sidelines of the conference. “So what ConocoPhillips is doing is working with a number of service companies to try to find ways to make it cost effective.”

That work has primarily focused on downhole tools that would allow ConocoPhillips to put greater pressure on the junctions between the vertical and horizontal wellbores and get a more effective fracture stimulation.

Leveille compared current multi-lateral fracking technology to the sophistication level of single-well lateral fracks a decade ago.

At that time, there was not nearly as much precision in the placement of the fracture stages and many fracture treatments were jokingly referred to as “pump and pray” jobs.

“But we think in the next three to five years, it will advance to the point where the devices are robust and you can do this at scale and it will really make a difference,” he said.

ConocoPhillips is planning its first multi-lateral test in the Lower 48 later this year, Leveille said, explaining that it would include two laterals drilled off the same vertical bore, though he declined to give further details on the locations of the wildcat.

“One of the wonderful things right now is we’re working with five different companies and all of them have somewhat different designs,” he said. “We don’t know yet which one of those will be the winner and probably we’re hoping that multiple designs will be effective.”

Ryan Lance, chief executive of Houston-based ConocoPhillips, singled out multi-lateral technology as the potential next technological breakthrough in the onshore tight oil plays that now make up the vast majority of the US independent’s assets.

“The technology and the innovation are not done in this business,” Lance said. “Multi-laterals in this business are going to be the next step-function change in terms of recovery, efficiency and productivity in unconventionals.”

Multi-laterals, where operators drill more than one wellbore from a single vertical “mother bore” have been used in conventional plays such as the North Slope in Alaska, the UK North Sea and in shallow heavy oil deposits in Venezuela.

Some operators, notably US independent SandRidge Energy and the US onshore unit of supermajor BP, have applied the technique to tight oil plays with lower pressures with some success, but it is not widely used by operators in shale gas and tight oil plays.

Leveille sees the most potential for savings from multi-laterals in areas with deep reservoirs and stacked producing formations.

In these places, not only would companies save on the costs of drilling the vertical section but they also may be able to avoid long, expensive strings of casing by using multi-laterals.

“If you are in an area that is shallow and a relatively thin section, a single lateral will be hard to beat but there will be certain applications where multi-laterals will have a very very significant impact in changing the cost of supply for these types of reservoirs,” he said.

One impetus for the pilot project is a cautious view of oil prices on the part of ConocoPhillips executives.

Earlier in the conference, Lance expressed some doubt that oil prices could rise to the $60 to $70 level over the next two to three years because the rapid pace of innovation by the industry is continually lowering costs.

“When I look at the technology and innovation... in our business, for less capital, we are keeping that production flat for a long period of time. The innovation is not just happening in the US, it’s happening around the world.”

Because of that uncertainty around price, ConocoPhillips is trying to continue to drive its own costs lower as insurance against another drop in oil prices.

“We don’t know what oil prices are going to do — there are so many drivers in oil prices that you can’t predict that,” Leveille said. “But you can predict if you are one of lowest cost of supply producers on the planet then you are going to be able to return to your shareholders a very good profit.”