With oil prices continuing to languish, companies like Halliburton and Schlumberger have started talking up a way to get more shale oil and gas for less money: re-fracking wells drilled over the past 10 years, kick-starting flagging production and pumping out more shale oil and gas while spending less than the cost of a new well.

Excitement has spread among oil companies and investment analysts alike.

“You want to talk about the next step to increasing production without increasing costs?” Carl Larry, director of oil and natural gas at Frost & Sullivan, a consulting firm, told Bloomberg. “Re-fracking looks great.”

“In terms of the market potential, I think you’re talking billions in terms of revenue opportunities over an extended period of time,” Schlumberger CEO Paal Kibsgaard told investors during a quarterly conference call this year. “[I]n terms of how many wells, I would say there are thousands of wells in North America land that are candidates for refracturing, and this is both shale liquids and shale gas.”

“If you look at the top operators across North America that we work with, there’s not a single one of them that’s not talking about re-fracks today,” David Adams, a Halliburton vice president, told Bloomberg.

“E&Ps are no longer on a treadmill,” IHS Energy Senior Consultant James Coan, announced on May 20, according to E&P Magazine, (E&P refers to Exploration and Production oil and gas companies).

Despite the headlines touting re-fracking as a ticket to solvency for drillers despite low oil prices, many are skeptical that the technology is nearly as ready as the oil industry would like it to be. Early efforts to re-fracture wells have repeatedly run into stumbling blocks, earning it the nickname “pump and pray” within the industry.

So oilfield services companies are experimenting with re-fracking techniques, hoping that they will figure out how to make re-fracking less financially risky. The push to find new ways to re-frack wells is being compared by some to the onset of the shale rush itself.

“Who is going to be the George Mitchell of re-frack?,” Mr. Coan asked during webinar last month, referring to the wildcatter who first produced substantial amounts of gas from the Barnett shale.

If you believe the hype, an enormous number of shale wells could wind up being re-fracked – bringing rigs, truck traffic, and all the associated impacts of fracking right back to wells that were drilled just a few years earlier. At least 50,000 existing wells nationwide are considered candidates for re-fracking, according to Bloomberg. An IHS analysis predicts that refracks will rise 20 percent over the next several years, up from just one percent of current wells.

The dash to experiment with re-fracking at wells nationwide is also raising concern that re-stimulating wells could put unanticipated stresses on aging wells and that state regulators are unprepared to regulate the myriad of techniques that may be used – and for the sheer volume of additional water consumed by the re-fracking process and the additional wastewater that would be produced.

The drive to re-fracture old wells also renews doubts about drillers’ claims to investors that the shale wells they drilled would produce at profitable volumes for up to 65 years – since some of the wells being touted as re-fracking successes are as little as two years old.

Investors have long known that shale wells have a notoriously fast decline – dropping off 60 to 70 percent after just a couple of years. But when drillers calculate their reserves and report them to the Securities and Exchange Commission, they assume that shale wells will keep pumping out profitable levels of oil and gas for decades – a claim no one can prove or disprove with certainty because even the first shale wells are under 15 years old and drillers argue that those wells didn’t use current technologies.

While those predictions remain unproven, it is clearly established that shale wells generally have dazzling initial production rates that fizzle fast, and that fast decline has been the main reason that many companies are caught up in the need to continually drill more wells to replace the drop-off in production from older wells. It’s what industry analysts like Mr. Coan call a “drilling treadmill,” where companies must constantly keep drilling new wells just to stay in one place.

Instead of escaping the treadmill cycle, companies that re-fracture could wind up caught on a different treadmill, where each individual well requires additional millions of dollars’ worth of re-fracking just to keep it pumping out oil. (A round of re-fracking generally costs about $2 million, Halliburton Co. estimates.) Since the process is only recently being applied to shale wells, no one can say for certain how long the boost from re-fracking will last, or if a well’s production will quickly plummet just like it does with the first frack job. (Platts reported predicted drops of up to 70 percent, which would be roughly the same as an initial frack job).

In years past, re-fracking was largely confined to vertical well bores, but companies are now experimenting with methods that let them re-stimulate horizontally drilled shale wells, making far more wells potential candidates for re-fracking.

Companies are trying out many different tactics to re-stimulate shale wells. They sometimes simply pump more sand, water and chemicals into an existing well, re-opening fractures that have been forced shut by the enormous weight of the rock around them. Other times, re-fracking means creating new fractures between existing ones. Or it can mean pumping special plastic bits into a well, in the hopes that fractures with little oil or gas flowing out of them will get clogged, raising the overall pressure of the well.

Many industry analysts remain skeptical that re-fracking can turn unprofitable wells into the next gusher – or even bring poorly performing wells into the black. “While operators can make a good return on the best candidates, those wells can be difficult to identify and it can be even harder to convince partners that making a significant investment in a producing well is best,” wrote Wood Mackenzie analyst RT Dukes. “A general rule of thumb did emerge: if it doesn’t make sense to drill and complete wells, it probably doesn’t make sense to recomplete them in earnest either.”

That’s bad news for shale investors, since up to 40 percent of shale wells are money-losers when oil prices are low, according to Robert Drummond, President of North America for Schlumberger, who dropped that statistic during a World Oil breakfast talk last year.

It’s also bad news for landowners hoping for royalty checks. Already, a wave of bankruptcies has begun to sweep across the industry, leaving Quicksilver Resources and at least three others insolvent and analysts predicting more to come. 

The downturn has also slashed expectations that the shale rush would bring jobs to many communities, as workers are now being laid off instead of hired. As of March, over 75,000 workers had lost their jobs due to the oil bust.

Facing this kind of financial pressure, some drillers have described their early experiments as extremely successful as they try to keep investors interested and capital flowing in.

“We’ve seen such a dramatic improvement in our completion results with the newer technology,” Tony Vaughn, a vice president for exploration of Devon, told Reuters last month.

And some investors, it seems, have been listening.

“We’ve been re-fracking in essence for a couple of years, and we actually see this as a natural extension with the maturing of unconventional wells overtime,” Jeff Miller, president of Halliburton Co. told investors on an April 20 conference call. “I would say what has changed in terms of giving it energy right now, more energy is the current market and access to capital.”

If re-fracking catches on, a few impacts seem inevitable – the shale industry will consume more water overall than previously expected based on one round of fracking per well. That means much more wastewater, this time contaminated with naturally occurring toxic and radioactive materials plus potentially a mix of chemicals from two different rounds of fracking.

There are other potential impacts about while little is known, due to lack of study, and for which state regulators seem as unprepared as they were at the start of the initial shale rush.

What impact will re-fracking (and additional wastewater disposal) have on earthquakes? What chemicals, proppants and other materials will companies use to re-stimulate shale wells and what risks do they pose to workers or if spills or leaks occur? Is it safe to re-frack where there are multiple wells all bored from the same pad, or will fractures from one well accidentally connect with fractures from an adjacent well? How will the concrete and steel well casings hold up under repeated pressurization? How many times can a well be re-fracked before it begins to crack and leak under the added pressure?

“It sort of shows how much we don’t know about fracking,” Andrew Logan, director of Ceres’ oil and gas program, told Reuters last year, “and why it fails sometimes.”

Photo Credit: “American Oil Industry” via Shutterstock.