U.S. shale producers are cramming more wells into the juiciest spots of their oil and gas fields in a move that may help keep the drilling boom going as prices plunge. Bloomberg reports the technique, known as downspacing, aims to pull more oil at less cost from each field, allowing companies to boost profit, attract more investment and arrange needed loans to continue drilling.
Energy companies see closely packed wells as their best chance to add billions more barrels of oil to U.S. production that’s already the highest in a quarter century. However, to make downspacing work, the industry must first solve a problem that for decades has required producers to carefully distance their wells.
Crowded wells may steal crude from each other without raising total production enough to make the extra drilling worthwhile. Too much of that cannibalization could propel the U.S. production revolution into a faster downturn.
In Louisiana’s Haynesville field, which mostly produces gas, data from producers and regulators shows that efforts to drill wells closer together has led to what industry insiders call “interference.” That’s when a second or third well drilled close to an existing location produces less than the first, according to an analysis of the practice by Drillinginfo, which collects and analyzes data on thousands of wells across the U.S. Closer spacing may mean that wells deplete faster, and ultimately produce less, leading to diminishing returns over the life of the field.