Drilling for Oil in the 21st Century

In the 1950s, drilling for hydrocarbons using traditional methods carried a 50/50 risk, and even “successful” wells (oil or gas found) were often commercially impractical. That reality has changed over the past twenty years. Advancements in technology and geophysical studies have transformed soft speculation into real, hard science. The U.S. Department of Energy describes the recent triumphs of the oil and gas industry as “logic defying.” It’s not just about drilling fewer dry holes. New methods are extending the life of wells, allowing more reserves to be extracted and boosting economic returns. As a result, much broader group of investors now has access to oil and gas as a viable investment option. I asked Bret L. Boteler, President of EnerMax Inc., to help me understand some of the principal changes in today’s oil and gas industry. Â

Since many of us know very little about the industry, I asked him to start simple and work towards the more complex. Bret Boteler began by defining his company’s business for me in layman’s terms: “If someone asked me what we do, I’d say we’re a joint venture manager. We put together joint ventures that develop, drill, and manage oil and gas drilling programs.”Â

Bret Boteler began EnerMax out of his home office in 2001. Five years later, Mr. Boteler and EnerMax occupy over 3,400 square feet of office space where he enjoys the company of seven employees. Last year marked the fourth straight year that Bret L. Boteler’s company has earned 50+% annual gains. Mr. Boteler attributes EnerMax’s substantial growth and success to two things: his talented, reliable staff and their use of modern technology.

Mr. Boteler described for me the significant role that today’s technology plays and the advantages won over methods twenty years ago. EnerMax Inc. participates in drilling wells discovered by reprocessed 3-D seismic data – a revolution in the drilling business. Companies that choose drill sites based on reprocessed 3-D seismic data are 75-80% accurate on average, as opposed to the 50-55% accuracy rate of older, two-dimensional data that has not been reprocessed. And according to Boteler, the majority of small, independent oil and natural gas companies still use the old-style data, thus falling under the 55% shadow.

These technologies also allow exploration companies to more accurately assess potential reserves, helping them select projects that fit a favorable risk/reward profile. Some of the best projects identified would have been condemned only a few years ago due to accessibility barriers. However, advanced drilling techniques in use today, such as horizontal drilling, are penetrating zones that were previously considered unreachable. For example, EnerMax is scheduled to drill a well this summer in a suburban neighborhood in Tarrant County, Texas, where they plan to drill in the prolific Barnett Shale to a depth of 6,500 vertical feet and 2,400 horizontal feet. The 2,400 horizontal leg will extend underneath nearby homes, allowing EnerMax to penetrate their target zone while leaving the neighborhood undisturbed. EnerMax will apply advanced frac and completion procedures to ensure the maximum recovery of hydrocarbons.Â

Technological advantages require significant financial resources. In 2004, EnerMax entered into an agreement with American Energy Partners, Inc. (AEPI) to join them in their efforts to reprocess 3-D data concentrated primarily along the Texas and Louisiana Gulf Coast. Because unprocessed 3-D seismic information can contain shadows and misleading images caused by equipment during the original recording, it is necessary to filter the data for clearer results. Geotrace Technologies, Inc., an industry leader in imaging and analyzing subsurface data, has been selected to reprocess the data using advanced analysis techniques such as High Frequency Imaging (HFI®), Frequency Absorption Response (FAR), and Amplitude versus Offset Analysis (AVO). Even though the reprocessing carries a significant price tag, it is well worth the price when you consider the 20-30% increased success rate.Â

When I asked Mr. Boteler about difficulties facing the industry today, he told me that one of the main issues is rig availability. Recent hurricanes and tropical storms damaged drilling rigs and oil refineries along the southern coast. The resulting reduction of oil and gas production in the United States heightened the disparity between supply and demand. Oil and gas companies are pushing to drill more wells while commodities are high, so there are times when a few months pass while waiting for a rig to drill your well. Yet in the light of the uncertainties oilmen faced in decades past, Bret Boteler counts himself and his company very blessed.Â

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Daniel Dessinger

Daniel is an avid people watcher and writer who shares regularly on his self-awareness site, DanielDessinger.com. Founder of CultureFeast.com in 2005. Co-Founder of Mommypotamus.com in 2009. He's on a mission to challenge the questions we ask and the assumptions we make.

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