Oilfield services companies are investing millions in technological innovations to make oil and natural gas wells cheaper to drill and more profitable to operate, but some of their products and solutions have a short shelf life, according to executives testifying before the U.S. House Subcommittee on Energy and Mineral Resources on Thursday.
Cary Ralston, vice president and general manager of the missile products division at Alliant Techsystems Inc. (ATK), testified that his company is developing a suite of tools for use in the energy industry, including one for waterless stimulation of oil and gas wells -- an alternative to the traditional definition of hydraulic fracturing (fracking).
According to Ralston, high-energy, coated propellant sticks -- each measuring about two feet in length -- are placed end-to-end in a well that has been drilled, cased and perforated in a similar manner in preparation for traditional fracking. The propellant sticks are deployed using a wireline truck and a small crane before being ignited.
"The propellant sticks generate a gas that is trapped by the fluids and associated pressures present in wells," Ralston said. In written testimony he added that "since the gas can't escape up the wellbore, it is forced through the well casing perforations. Unlike the current [fracking] process...propellant-generated gas is produced at volume and pressures to create its own path, overcoming the opposing rock formation to crack and lift the rock."
Ralston emphasized that there is no explosion when the propellant is used. "The rock is fractured using a highly regulated, controlled gas generation process," he said. "The same controlled gas generation that lifts rockets into space creates the pressure necessary to fracture the rock. No chemicals or proppant are needed, and the propellant burns to completion, leaving only naturally occurring gases in the well."
Ralston said that, to date, ATK and its partners have used the propellant stimulation tool at more than 600 wells in 11 states and four countries. He said preliminary results "have been impressive, yet as expected have also been variable.
"Field demonstrations clearly show the tool works, often with significantly higher output, but not every well has responded predictably. This is not a surprise due to the varying rock formations, and to date that we have only been utilizing a single pressure-versus-time design. What is needed, and what we are actively pursuing at this time, is more data so we can correlate and then tailor to match the local geologic formations."
James King, vice president for unconventional completions at Baker Hughes Inc., said his company's top 100 customers will spend more than $100 billion this year on oilfield services. For its part, King said Baker Hughes invested $556 million on research and development in 2013 and plans to do so again in 2014.
"We are introducing 130 new products this year -- essentially averaging a new product every 67 hours," King said. "Some of these products will have a commercial life of only 18 months, meaning that our industry faces development lifecycles similar to those in the hypercompetitive mobile phone business."
Donald Stoicovy, vice president for oil and gas and industrial gas services at Air Liquide Industrial U.S. LP, attributed the nation's energy renaissance to technological innovations in fracking and horizontal drilling.
"As with every energy production process, it is critical to manage the potential environmental impacts associated with shale gas development, and in this respect we believe innovation will lead the way," Stoicovy said. "We are proud to be at the forefront of innovative research and have successfully demonstrated the commercial application of industrial gas liquids in both [fracking] and coil tubing activities within the oil well service market.
"Specifically, the industry has found that nitrogen or carbon dioxide foam-based fracturing is well suited for depleted or depressurized formations. Additionally, formations that are sensitive to water favor the use of these foam-based fluids. Likewise, coil tubing is used in a variety of procedures necessary in horizontal drilling and [fracking] of wells.
"We must embrace new technologies, new applications for existing technologies and a willingness to reconsider long-used practices...overly burdensome, complicated [and] redundant regulations make it impossible to truly capitalize on the energy renaissance."
Subcommittee Chairman Rep. Doug Lamborn (R-CO) said "that's always a concern of our subcommittee -- trying to reduce the regulatory burden so that we strike that good balance between protecting the environment, but allowing innovation and jobs and production to go forward."
But Rep. Rush Holt (D-NJ), ranking member of the subcommittee, said the nation should be moving toward renewable energy solutions and away from fossil fuels.
"I hope that we will have a broader conversation about innovative technology and policy solutions that will enable us to overcome our dependence on carbon-intensive energy and move to a cleaner, sustainable energy future, rather than retreating to our energy past," Holt said. "We all support research into traditional fossil fuels. That would include [efforts] to cut fugitive emissions from natural gas [wells]."