Saturday, March 24, 2012

Drilling Technology would create revolution / turnaround for U.S. Oil Output--By Shan Saeed

This is the only game changer for the US market going forward. This would jobs, living standards, productivity of work force and above all jump start the economic revival for the USA. Just a decade ago, complete wells were fracked at the same time with millions of gallons of water, sand and chemical gels. Now the wells are fracked in stages, with various kinds of plugs and balls used to isolate the bursting of rock one section at a time, allowing for longer-reaching, more productive horizontal wells. A well that once took two days to drill can now be drilled in seven hours. US would no longer need to import Oil from Saudi Arabia. That is the plan of American establishment for many years to have less dependence on saudis.

Who is leading from the front? Apache, yes its true. Apache Corporation began drilling in the 100,000-acre Deadwood field in the West Texas Permian basin in 2010, there had only been a trickle of production there. The deep shale, limestone and other hard rocks had potential, but for years they had not been considered economically viable. The rocks were so hard, they would have likely sheared off the usual diamond cutters on the blade of any drill bit attempting to cut through.

But new adhesives and harder alloys have made diamond cutters and drill bits tougher in recent years. Meanwhile, Apache experimented with powerful underground motors to rotate drilling bits at a faster rate. Now, a well that might have taken 30 days to drill can be drilled in just 10, for a savings of $500,000 a well. By saving that money, it can spend more on fracking, which translates into more sand and more stages and better productivity of labor force.

Apache has already drilled 213 wells in the field, producing 9,000 barrels a day. With 13 rigs running, it hopes to eventually drill more than 1,000 wells, and produce 20,000 barrels a day there. Its a revolution in the energy market and it is just started to scratch the surface now.

Discalimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK.

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