WHY DRILL VERTICAL WELLS?
Why drill vertical wells? Answer: Better Economics.
First, they cost one-fourth or less of what a horizontal well will cost, lease acreage included. Second, as a group, they are more profitable than horizontal wells. Third, they are longer lived than a horizontal well. Fourth, their environmental impact is less than with a horizontal well.
- An 8,000’ vertical well can be drilled and completed for less than $900,000. If we find what we are looking for a typical return on our partner’s investment is less than 24 months and then provides a revenue stream for ten or more years. Some vertical wells are still producing after 40 years of service.
- A successful well is one that will make a profit. Running casing and spending millions in a completion attempt does NOT define success. The majority of horizontal wells don’t make a profit, but casing is run. In many instances, reporting services use this metric to classify a well as “successful” due to lack of proprietary data and by extension so does Wall Street. They are not!
- After 24 months most horizontal wells become a liability. They are producing prodigious amounts of water that must be disposed of and their hydrocarbon production has declined to a point that their sales are just covering the cost of operation, if that.
- Environmental issues make a long list beginning with the volume of potable water needed to drill and complete the wells. Add to that the large volumes of produced salt water that must be disposed of and the disposal of toxic chemicals used in the fracing and completion of the wells. Then there are challenges from nearby vertical well production having been invaded by “Frac Hits” that destroy the long-established production of the vertical wells. The surface area dedicated to the production facility is four times larger than that needed by a vertical well. This list goes on. As in this SPE paper: http://www.spe.org/industry/docs/RDChallengeLiroffEnvironment.pdf
Ranken’s vertical well drilling programs could be at least twice as profitable as a horizontal well drilling program, potential dry holes included. The revenue stream from vertical wells will be for years, not months as with horizontal wells. The environmental impact of vertical wells is well-known and manageable.