Historically, wells have been drilled vertically into the earth to extract information or resources. Over time however, a new technique known as horizontal drilling has enabled us to capture and remove resources that could not have been extracted with vertical drilling.
Horizontal drilling refers to the ability to direct wells in the earth laterally versus vertically1. This seemingly uninteresting fact has dramatically increased the productive yield of wells around the world because it enables the well to have greater contact with the productive layer of strata than a vertical well2. A horizontal well yields approximately 3.2 times more output than a vertical well for only about twice the cost according to the U.S. Department of Energy2.
There are five major benefits to drilling horizontal wells, as stated by Geology.com, in terms of removing resources from the earth. Horizontal drilling enables our wells to recover resources more efficiently than a vertical well. Much of the resources being discovered today exist beneath regions such as cities or in ecological parks and reserves where drilling is forbidden. With horizontal drilling we can now drill outside of these areas and direct the well, deep beneath the earth, into the productive portions of the strata that exist in these areas as seen in the image below1.
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Target can't be reached by vertical drilling
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The second advantage of horizontal drilling is the reduced number of well pads needed to drain broad reserves. With a single well pad, utilizing horizontal drilling technology, we can now extract resources from broad areas of land with a minimal ‘footprint’ on the environment1.
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Drain a large area from one drill pad
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Horizontal drilling also enables us to drastically increase the productivity of existing reservoirs, as well as utilize reservoirs that were unproductive with vertical wells. In situations where the productive strata is a relatively thin area in the earth, the ability to turn the well to run parallel with the strata, as opposed to punching through it, can convert regions thought unproductive into viable sources of energy1.
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Increase the length of the "pay zone"
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Further benefits from horizontal drilling include improving the productivity from fractured reservoirs, sealing or relieving strains on disabled or ‘out-of-control’ wells, and it enables us to create underground utilities in places where we can not excavate1. In a fractured reservoir, horizontal drilling enables us to direct the well on the path that intersects with the maximum number of fractures in the rock formations, which is where most of the resources being mined are captured1.
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Improved production in a fractured reservoir
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Horizontal drilling technology enables us to quickly aid and relieve wells that may be over taxed or unstable by drilling a ‘relief well’ near the malfunctioning well and directing the relief well to intersect the existing well and alleviate the workload, reducing the risk of oil spills and refinery malfunctions that can damage the environment1.
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"Relief well" for an "out-of-control" well
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Horizontal drilling technology has drastically improved productivity of natural gas and oil wells around the world. The increased productivity has resulted in a greater global supply of energy resources. This is extremely important when considered from a financial market stand point. Because oil and natural gas are staples in the United States economy very few companies can do business without them. A greater supply could translate into a lower cost for those resources, in accordance with the supply and demand fundamentals. By lowering the cost of energy resources, companies could drastically lower their operating costs, which could translate into higher profits and improved stock performance in our financial markets.
References:
1. Directional and Horizontal Drilling in Oil and Gas Wells. Geology.com. Web. 4 March 2011.
2. Horizontal-Directional Oil & Gas Well Drilling. HorizontalDrilling.org. Web. 4 March 2011.