The Hierarchy of Oily Conductivity
Authors: Gallagher David G. 
Published: February 2015

Guest editorial

In 2010, the US petroleum industry accomplished a feat that not many thought was possible only a few years ago—annual production of crude oil on American soil rose two consecutive years for the first time in almost 25 years. This is incredible, considering the battering this industry suffered during the 2008 financial crisis.

The sustainability of this achievement likely will depend on successful economic exploitation of a handful of oil-rich resource plays, all of which will require hydraulic fracture stimulation. These fracs provide conductive paths from the wellbore to the fracture surface area in the formation. However, in most reservoirs fractures are known to collapse if not sufficiently propped. The induced conductivity is intended to convert the wells to successful economic ventures. Economic conductivity principally will be provided (or not) through the type and quality of proppant employed.

A simple way to define economic conductivity is “the incremental investment made by an E&P operator in higher quality proppant in the pursuit of a superior financial return achieved through an increase in production rates and elevated EURs.” When the price of oil is north of USD 50/bbl, the internal rate of return tends to increase rapidly for a nominal incremental investment in conductivity.

The benefits of increased conductivity have been documented in more than 200 SPE technical papers. Enhanced return on investment has been achieved in all types of reservoirs. From shallow to deep, from North Dakota to south Texas to the Far East, oil and gas investors have been rewarded for following good engineering practices and banking on conductivity.

The history of proppant use in the field of hydraulic fracturing is well known. The search for higher strength proppant was initiated in the mid-1970s by E. Claude Cook of Exxon Production Research, and resulted in a patented hydraulic fracturing method using sintered bauxite. Ceramic proppant was born. Curable resin-coated sands were introduced in 1975 to reduce flowback of critical propping materials, and pre-cured resins were soon applied to sand to encapsulate crushed sand particles and prevent migration and the resulting loss of conductivity. For many decades, though, the utilization of high quality proppant was mainly limited to deep, hot, vertical gas wells. Increased usage was noted in 2003, when the price of natural gas pushed through the USD 4/MBTU level. As the economics of natural gas production improved, the employment of higher quality proppant, especially ceramics, increased. This industry trend continued steadily from 2003 through 2007. What occurred next changed the proppant industry permanently.

By 2008, several oil and gas operators had begun experimenting with fracturing long horizontal sections in the natural gas bearing Haynesville formation located in north Louisiana and east Texas. Most experts recognized that to maximize the area contacted by the wellbore, hydraulic fractures would need to be purposely designed to propagate transversely from the horizontal wellbores. However, transverse fractures provide only a limited intersection with the wellbore, resulting in tremendously high produced fluid velocity within the proppant pack. These phenomena increased the need for obtaining maximum fracture conductivity which in turn catapulted the usage of ceramic proppant.