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Home / Issue Archive / 2007 / May #5 / Balancing the Pros and Cons of Hydrofracturing

№ 5 (May 2007)

Balancing the Pros and Cons of Hydrofracturing

Hydraulic fracturing is considered one of the most effective oil recovery enhancement methods, however for every admirer there is a critic blaming it for damage to wells and harm to the environment.

By Sergei Balashov

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Regardless, in Russia, it has been gaining ground rapidly with Gazprom Neft specialists stating that Russia is certainly one of the largest consumers of this service worldwide with the technique used to intensify oil recovery. "This is the main reason why hydraulic fracturing lures many new companies into the Russian market, they come from Russia as well as from the abroad," said Gazprom Neft representatives to OGE. Most notably, Weatherford revealed their plans to enter the Russian hydraulic fracturing market offering signs the technique is nowhere near getting out of demand. 

The technology of pumping fluids into the ground to create fractures allowing free flow of oil and gas from the rock pores to ease the recovery was invented by American oilfield service company Halliburton over 50 years ago and, as reported by The Los Angeles Times, it alone earns the company about $1.5 billion on a yearly basis making for 20 percent of its total revenue.

A good share of these operations is performed in Russia. As Gazprom Neft, one of Russia's top oil companies which employes fracturing as one of the leading techniques, revealed to OGE, the company has performed over 2,500 fracturing operations and the number is increasing by 500 a year with Halliburton, Schlumberger and BJ Services being the main providers of this service. Gazprom Neft's subsidiary Sibneft-Khantos performed the largest hydraulic fracture in Europe on Priobskoye oilfield with over 558 tons of proppant pumped into the ground.

"Fracturing and horizontal drilling/sidetracking are currently the most used technologies to increase production rates and recovery in Russia," says Chief Engineer of Pumping and Stimulation Department of PetroAlliance Max Mukidjam. "In other areas fracturing is sometimes the only method to stimulate well production."

"Hydraulic fracturing is classified as a well conditioning method, however we can consider it a recovery increase technology along with reagent and cleaning system injections," comments general director of service company CATConeft Alexander Prediger, "the usage of frac in Russia has seen skyrocketing growth."
And the reason for that, according to the service companies, lies within the same reason as the oil industry boom we've seen over the past years. "Oil prices increase lies within the realm of economics, it did indeed affect this industry," continues Prediger, "these economic trends made using frac on low profitable wells commercially feasible."

"When the oil prices are high, the pay-out time of a fracturing treatment is shorter, and the use of fracturing is thus more justified economically," explains Max Mukidjam. This comes in direct contradiction with arguments that hydraulic fracturing actually damages wells making it impossible to recover the deep reserves by deforming the reservoir and blocking access to oil containing pores. Industry experts have an answer for that as well.

Head of geological service of Newco Well Service Vladimir Slizov provides his insight: "I believe the opinion that hydraulic fracturing blocks access to deep reservoirs is completely incorrect as it speaks against the nature of this method as we shouldn't forget that frac is a technique creating sections with high conductivity." "By performing hydraulic fracturing we increase the inflow of fluids by hundreds of times compared to the diameter of the well. Our specialists think it actually helps boost the volume of recovered oil instead of damaging the well," continues Slizov.

Calculating the amount of energy resources by simply putting together the total amount of oil and gas reserves in the country is starting to become common practice. These actions trigger castigations of oil companies for performing techniques often deemed ineffective as they don't allow thorough extraction of all crude oil leaving much of it untouched, yet allowing fast recovery of the bulk of the oil hidden underground. This reasoning, which also includes accusations of undermining country's economy by stripping it of its most important strategic resource is quickly dismissed by oilfield servicemen.

"COE (coefficient of oil extraction) never reaches 1, or 100 percent recovery of oil," CATConeft experts say. "The normal COE for oilfields varies from 0.4 to 0.6. Depending on the geological conditions of the reservoir and economic feasibility some wells cannot be developed other than by the means of frac, it especially applies to the scattered oil reservoirs with low permeability."

Regarding the potential loss of oil, it is not specifically endemic for hydraulic fracturing, but can also occur as a result of implementing any other oil recovery method. "You should have the correct approach to trying any recovery technique, says deputy chief of the hydraulic fracturing service of CATConeft Sergei Belokon, there is a chance of loss of part of the well resource, however it is not a negative factor exclusively of hydraulic fracturing."

Another negative factor in consideration is environment contamination. Whilst oil recovery benefits are obvious, and the statement that frac helps pump as much oil out of the ground as the contemporary level of technological development allows, environment protection is a major issue and possible ramifications from oilfield development are hard to ignore.

"The contamination or damage to the reservoir is preliminary due to usage of damaging chemicals/polymers as they are necessary to create a fluid that is able to create the fracture," admits Max Mukidjam. "As elimination is not possible as the moment, the harm can be limited by using chemicals and products which are compatible with the reservoir such as surfactants and clay-stabilizers along with restricting the volume of polymers involved in the process and using visco-elastic fluid systems together with breakers that can improve the retrieval of the used fracturing fluids."

"Going with lesser amounts of fluid and implementing improved or faster fracture clean-up practices are also crucial," adds Mukidjam.

Companies often minimize the possible harm by imposing restrictions on oilfield practices to prevent unnecessary side effects. "First of all we have to define the term 'environment'," says Sergei Belokon, "if the environment is the ground surface comprised of the well, the cluster square and the production area of the service company, then there isn't much harm we can afford doing as our company applies very strict rules of environmental safety. Even if we spill hazardous fluids, we don't spill that much and immediately clean up as we're supposed to if we go by the rules - otherwise we'd be risking to see parts of our salaries taken away."

If we go deeper than the surface, we'll detect concerns dealing with the activities carried out in the bowels of the earth that have to deal with using special substances to hold the fractures created in the ground still to keep the oil leaking through and up the wellbore. However, according to chief geologist of CATConeft Alexander Korolev, there is even less to worry about than above the ground.

"If environment means something more fundamental than just the area around the well, such as layers and ground formations, we'll find it confusing to even suppose that frac can be damaging to those," says Korolev. "Ceramic proppants are completely inert to the environment; as for other fluids processed into the well, the extreme temperatures inside of the ground formations destroys 50-90 percent of them and the residue gets cleaned out during the development procedures after the implementation of frac." Even more so, "further exploitation of the well removes any components brought into the ground during frac." CATConeft analysts insist the technology is not only relatively harmless, but also beneficial to the environment as opposed to analogue methods.

"There's a thing called 'skin-effect' which is a side effect of well development," says Alexander Korolev, "it results in concentration of hazardous elements such as pitches, asphalt and paraffin considerably damaging the ground; almost every hydraulic fracture prevents the 'skin effect', thus actually protecting the environment."

Being not more than one of well development and oil enhancement methods, hydraulic fracturing, according to PetroAlliance, has to rival "pump optimization, improved perforation practices, acidizing." Improved drilling practices and fluids, horizontal drilling, underbalanced drilling, improved injection techniques including steam, CO2 or nitrogen, fracturing can survive as a top technology only by improving its practices. And there indeed is plenty of room for improvement, which is taken advantage of by the service companies that introduce improvements to frac, which  allow driving up oil recovery, as well as limiting the amounts of chemicals involved and minimizing the contamination.
"Continuous improvements have been introduced to fracturing technology to increase its efficiency with regard to oil recovery, such as fracturing in horizontal wells, layered reservoirs, fracturing with low polymer-loading or visco-elastic fluid systems," explains Mukidjam. "We also use improved breaker systems, stronger proppants, fracturing with N2 or CO2 and improved fracture clean-up practices."

Steps are also being taken to eliminate potential side effects, which could lead to strict regulations on usage of frac, thus decreasing the amounts of recovered resources. "A lot of new technologies have been added to the fracturing technology lately," says Vladimir Slizov, "to prevent damage, we use fluids containing low amounts of polymer; for low pressure layers nitrogen aerated emulsions are in use."

"Heavy emphasis is put on ecological issues," continues Slizov, "this mostly means using less chemicals, which are hazardous for the environment, and disposing of residual chemicals used in frac operations."

Such hard efforts aimed at improving this already effective technology are more crucial for the survival of fracturing than it may seem. Advancement in well development means seeking not only improvements, but also alternatives for the already existing methods.

"Hydraulic fracturing is certainly not the panacea for all woes," says Sergei Belokon, "fracturing is in tough rivalry with horizontal well drilling/sidetracking, and let's not forget about geological measures like injection of polymer-dispersing and oil washing agents, vibration treatment, injection of various chemicals, etc."

Yet, improvements are not the only thing to decide the future of hydraulic fracturing as to whether it's to continue flourishing as a top recovery method or fade on the background. Legal regulation is one important topic, which draws the bulk of attention especially due to claims of improper fracture practices and lack of control over the oil and service companies as some are following Sibneft's path and are accused of prioritizing high revenue over public concerns, such as worker safety and environment protection. Opinions on this matter dissent from each other, even among fellow service companies.

"Whilst fracturing in Russia is mainly done with western expertise, there certainly should be a government standard introduced, this will help both service companies and their clients," says Mukidjam dissenting from CATConeft experts who tend to think the procedure is already overregulated.

"There are strong restrictions already in place when it comes to this technique. Before developing a field, you have to put together and file documentation, which includes field development schemes and field development project," explain CATConeft specialists, "these documents are supposed to include the projected recovery levels and the list of geological measures to be carried out at the oilfield. Then the documents have to be approved by the Central Development Commission of the Russian Government; we have to go over this procedure more than once throughout the entire period of field development."
Such strong argumentation of the both sides depicts the ongoing dispute, which comes down to the necessity to introduce a certain government standard for one particular technology. Fracturing remains in focus leaving other methods on the background only due to its meteoric spread throughout the country and the dividends the oil companies derive from it. As for Gazprom Neft, the company indicates that fracturing is not implemented universally, but is used for a specific purpose to revive old or underdeveloped wells. Gazprom Neft specialists have told OGE that the amount of frac operations will be gradually decreasing on the oilfields undergoing the third and the fourth stages of development, but the technology will still be used on drilled out areas, prior to putting wells into operation. With regard to midrange plans, they have said that the company intends to keep the amount of fracturing operations at its current level.

Proppant Producers Choose Russia

The high demand for fracturing operations doesn't just attract service companies such as Weatherford heating up the competition in this market. The current trends also mobilize both domestic and foreign producers of proppant, which is used to hold up the fractures in the subterranean formations after hydraulic fracturing is conducted thus being an integral part of the process. Just like the service companies and oil producers such as Gazprom Neft, proppant manufacturers admit that if you're involved in fracturing, Russia should be among the top places to do business in.

"Our business has been growing every year at least for the past decade as fracturing technology is gaining more and more importance all over the world," says Dmitry Zavoruev, technical adviser for CARBO Ceramics, one of the leading manufacturers of environmentally friendly ceramic proppants. "While North America actually is for sure the biggest fracturing market in the world right now in the number of fracturing jobs and volume of proppant pumped, Russia is probably fracturing market #2 in the world and is growing at a fast pace." The main premises for this growth are a large number of underdeveloped oilfields in East Siberia, which prompts the service companies present in the Russian market to drive up the number of their fleets to keep up with the fracturing jobs they get orders for. "Not only that, but the volume of proppant pumped per fracturing job is also increasing," adds Zavoruev.

Not only that, but the overall proppant imports have also been expanding. As reported by information agency CredInform, the volumes of imported proppant jumped from 4,000 to over 23,000 tons from 2002 to 2004 alone and show no signs of decline, which could drastically change the situation in the domestic market where Russian producers, such as Borovichi Refractory Plant and FORES Refractory Plant, are still enjoying privileges unlike their foreign competitors, e.g. Brazilian Mineracao Curimbaba and American Saint-Gobain Proppants. "Right now Russian proppant manufacturers control most part of Russian proppant market as opposed to their foreign competitors, mostly because of high customs duties imposed on importing proppant into Russia," explains Dmitry Zavoruev.

CARBO Ceramics, which already produces over a half of the total proppant imported to Russia, is taking decisive steps to deepen its commitment to Russian market. Back in March 2005 the Irving, TX based company announced the construction of a new manufacturing facility in Russian town of Kopeysk in Chelyabinsk region. As of today, the first phase of the plant, which is expected to have the annual producing capacity of 48,000 tons has been completed. "We expect to see great demand for our products, and we are planning to increase our plant's capacity," comments Zavoruev.

To provide a wide range of services for its customers, CARBO has acquired Pinnacle Technologies, a leading fracturing consulting company, which is famous for its stimulation modeling software FracproPT and fracturing mapping technologies.

For companies like CARBO Ceramics, activities in Russia are a compelling part of their future development strategy. "We are committed to have business relationships with all service companies working in Russia," comments Zavoruev, "and we see a very big interest from almost all service and operating companies in Russia, as CARBO Ceramics is well known around the world for the quality of its products."

As challenging as the market is and will be in the future, CARBO believe they already have all the answers. Dmitry Zavoruev offers his insight: "In Russia we are expecting to see big demand for light ceramic proppants and curable resin coated ceramic proppants, and we are ready to offer these products immediately. We are eager to respond to market needs."

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