Extracting resources from the Earth’s crust using multi-stage, fraced horizontal wells: First gas, then oil, now heat

Multi-stage hydraulically fractured horizontal wells have proven to be a transformational technology for the oil & gas industry. The technology was first applied in the U.S. to rapidly ramp up shale gas production, which led to a doubling of total U.S. gas output in less than 20 years, Fig. 1.  

Then about a half-decade later, the technology was applied to U.S. “tight oil” reservoirs, yielding similarly spectacular results, Fig. 2. And the technology is now in the process of going global, with multi-stage hydraulically fractured horizontal wells having been used to grow production from unconventional reservoirs in Argentina, Canada, China and several other countries. 

Figures 1 (left) and 2 (right) show timing of the “shale gas” and “tight oil” breakthroughs related to the use of multi-stage hydraulically fractured horizontal wells to recover hydrocarbons from unconventional reservoirs. Source: Data from U.S. Energy Information Administration (EIA) website.

Given these outcomes, it seems worthwhile to consider whether there are other types of resources to which this technology can be applied. Such applications could extend the value proposition for companies within the oil and gas industry, which have become proficient at drilling and hydraulically fracturing horizontal wells.  

Helpfully, this is exactly what one company—Fervo Energy—did recently, using two hydraulically fractured horizontal wells to extract heat, rather than hydrocarbons, from the Earth’s crust.  

SIMILAR PHYSICS, SIMILAR RESULTS  

While there are a small number of places on our planet where rocks in the subsurface are hot enough, extensively fractured enough, and overpressured enough to flow hot water or steam to the surface naturally (e.g., at The Geysers in California), most large-scale, electricity-producing, geothermal projects require Enhanced Geothermal Systems (EGS) to be created, using artificial means.  

What is exciting about Fervo’s “experiment” with using multi-stage hydraulically fractured horizontal wells for this purpose is that not only did Fervo prove it was possible to efficiently drill and hydraulically stimulate horizontal wells in the hot, hard, rocks that comprise most of our planet’s geothermal “reservoirs”, their wells set a record for power output. They generated electricity at a peak rate of 3.5 MW during a 30-day flow test.  

That this is a breakthrough of potentially enormous scale is demonstrated by the fact that the geothermal industry has—for almost 50 years—attempted to use hydraulically fractured vertical or near-vertical wells to create enhanced geothermal systems with little success and many spectacular failures. They have never delivered rates as high as those achieved in Fervo’s first two horizontal EGS wells. 

This multi-decade-long history of disappointment is, of course, not dissimilar to the oil and gas industry’s experience with hydraulic fracturing of vertical wells in nano-darcy permeability unconventional reservoirs. These seldom achieved economically attractive flowrates, because the amount of connected, conductive, fracture surface area created was too small, given the rate at which hydrocarbons could move through the rock matrix.  

That converting from vertical to horizontal well geometries was critical for unlocking the potential of unconventional hydrocarbon reservoirs is now obvious, with this switch having allowed petroleum engineers to increase per-well fracture surface areas by several orders of magnitude. This increased per-well flowrates by similar amounts (i.e., from sub-economic flowrates to rates > 1,000 boed). 

It is, therefore, in some ways not surprising that Fervo achieved an EGS industry-best outcome by making a similar switch in well design, since the conductive flow of heat through rock occurs at a similar pace as to hydrocarbons through pores in unconventional reservoirs. However, as with any new technology application, it took courage to be first to adopt a new approach.  

MANY SIMILARITIES, BUT ALSO IMPORTANT DIFFERENCES  

While the key to extracting both hydrocarbons and heat from the subsurface using hydraulically fractured horizontal wells is the same, namely creating sufficient fracture surface area, there are several differences. The most important of these is that for EGS, heat is extracted by injecting water in one well and flowing the water through the fracture system to an adjacent production well(s).  

While flowing through fractures, the water “picks up” heat, and in so doing, cools the rock adjacent to the fractures. This creates a thermal gradient, with relatively cold temperatures at the injector end of a fracture grading into relatively hot temperatures at the point at which a fracture intersects the production well. 

Retarding the pace at which the rocks adjacent to fractures cool is, therefore, critical for the longevity of EGS developments. If the rocks cool too quickly, the productive life of the project will fall short of the 15 or more years required for achieving attractive, mid-teens or higher rates of return. 

An inability to achieve the necessary “thermal longevity” turns out to have been the bane of most prior EGS projects, which were predicated on a paradigm. This paradigm anticipated that the fracturing of vertical wells would “reactivate pre-existing closed fractures” over a wide area, thereby allowing injected fluids to “spread out” and travel slowly between injector and producer. 

Unfortunately, based on both the rapid thermal decline rates seen in most prior EGS projects and knowledge acquired from O&G industry hydraulic fracturing characterization projects, what almost certainly happened instead was that a narrow, vertical, planar, “fracture superhighway” was created that injected fluids traveled along. This resulted in rapid cooling of adjacent reservoir rocks, leading to “thermal breakthroughs” that wrecked project economics. 

This failure mechanism is, of course, directly addressed by the orders-of-magnitude-greater fracture surface area created in hydraulically fractured horizontal wells that use multi-stage, plug-perf stimulation techniques, with Fervo’s results to date being enormously encouraging in this regard. However, it is still early days as far as proving beyond a doubt that this well type can deliver the thermal longevity needed.  

NOT STATISTICALLY ROBUST, BUT CONVINCING RESULTS ALL THE SAME 

In the world today, there is only one EGS injector-producer well pair that has been placed into production that is comprised of multi-stage hydraulically fractured horizontal wells. That well pair is the one drilled by Fervo for their Blue Mountain, Nev., demonstration project, Fig. 3. 

Fig. 3. Map and cross-sectional views of Fervo’s Blue Mountain Nevada demonstration project, which is the world’s first EGS development that uses multi-stage hydraulically fractured horizontal wells to extract heat from the Earth’s crust. Fevro’s demonstration project is just south of the Blue Mountain Geothermal field in an area that does not contain open natural fractures. Source: Picture reproduced with permission from Fervo Energy.

That a single well-pair is a very small sample size from which to draw conclusions about the robustness of a technology in a new application is inarguable. But what this single data point lacks with regard to “statistical robustness,” it more than makes up for with outstanding and exceptionally well-documented drilling, completion and production results. This well pair demonstrated that: 

• The use of modern O&G drilling technologies can dramatically reduce the time required to drill wells in hard, hot basement rock formations. 
• It is possible to both efficiently drill thousands of feet of horizontal section in these types of rocks and effectively hydraulically fracture them, using the approaches commonly deployed by the O&G industry in unconventional reservoirs. 
• Connectivity via hydraulic fractures can be established between horizontal injection and production wells located many hundreds of feet apart. 
• Reasonably consistent injection rates per perf cluster can be achieved along the entire length of an over 3,000-ft-long horizontal section, with no bias during injection towards perf clusters located near the heel of the horizontal section. 
• Record-setting geothermal production rates can be attained, using multi-stage hydraulically fractured horizontal wells.  

BUT WAIT, THERE’S MORE  

There are several additional reasons to be excited about EGS opportunities. One of the most compelling is that the volume of energy stored as heat within the Earth’s crust that could be extracted, using multi-stage hydraulically fractured horizontal wells, is mind-bogglingly large, equal to thousands of times the world’s annual consumption of primary energy, Fig. 4. 

Fig. 4. Map showing the distribution of identified hydrothermal sites (yellow dots) and the subsurface distribution of heat that could be used to generate electricity using enhanced geothermal systems, with red areas being most favorable. Source: Map produced by the U.S. National Renewable Energy Laboratory (NREL).

It is also helpful that the competencies critical for transforming the economics of EGS developments are ones that the upstream industry already possesses, namely being skillful at: 1) characterizing subsurface resources; 2) efficiently drilling and fracture-stimulating horizontal wells; 3) injecting large volumes of fluid into the subsurface for the purpose of recovering resources; and 4) managing large volumes of hot produced fluids and working with steam (such as is done in SAGD fields in Canada). 

Another factor that makes the present moment seemingly the right time for upstream companies to pursue EGS development is that a considerable amount of additional data on the applicability of using multi-stage, hydraulically fractured, horizontal wells to develop geothermal reservoirs has recently been acquired by both the DOE-funded Utah FORGE consortium and by Fervo at their Cape Project. The latter is the first-ever large-scale geothermal development using horizontal wells, with data from these two ventures expected to be available soon in the public domain.  

In addition, the ability to experiment relatively cheaply with well designs and operational practices, and rapidly incorporate learnings into future development plans, will almost certainly be an enormously positive driver of value creation for EGS just as it has been for unconventional reservoirs. The lack of appreciation for the importance of this rapid-feedback learning mechanism has caused O&G industry experts for over a decade to underpredict the degree to which innovations could drive down cost of supply.  

Finally, when it comes to low-carbon technologies, which many upstream companies are pursuing, few technologies seem better aligned from a portfolio perspective since EGS can deliver clean, abundant, base-load energy. Conversely, most other low-carbon technologies are either ones that upstream has little chance of being competitive at (onshore wind and solar; batteries) or are technologies that don’t produce energy, with hydrogen being an energy storage and transportation medium, and CCS being a waste disposal business.  

THERE WILL BE CHALLENGES 

As noted previously, thermal breakthroughs resulting from injected fluids traveling along one or a few fractures has undermined the viability of many prior EGS developments. The use of multi-stage, hydraulically fractured, horizontal wells should minimize the probability of this failure mechanism occurring for all the same reasons that the technology was transformational in the production of oil and gas from unconventional reservoirs. 

Further mitigations available include the ability of operators to 1) change well design parameters (e.g. lateral length, well spacing, perf cluster spacing, proppant type and volumes); 2) use extreme limited-entry perforation techniques; 3) deploy flow control technologies to restrict flow into thief zones; and 4) refrac “problem wells.” 

Another challenge has been with managing induced seismicity, with at least two EGS projects, one in Switzerland and one in Korea, having been shut down after magnitude 5 seismic events occurred. That there will be seismicity induced during hydraulic fracturing and production operations is certain, since some level of seismicity occurs whenever large volumes of fluid are injected into the subsurface.  

This will create a need for continuous monitoring, which is a best practice that Fervo followed on their Blue Mountain demonstration project, during which no events greater than magnitude 2 were recorded, Fig. 5. 

Fig. 5. Plot showing the magnitude of seismic events recorded at the Fervo Energy Blue Mountain Nevada demonstration site during drilling, hydraulic fracturing and production operations. The energy released during the entire period was negligible, with most events registering as less than magnitude zero on the Richter scale and only slightly more than a handful of events being greater than magnitude one. Source: Picture reproduced with permission from Fervo Energy.

Importantly, it is also worth noting that there are ways to minimize the amount and scale of induced seismicity via site selection. Perhaps the most important consideration being to avoid pervasively faulted and fractured formations, which ironically is exactly opposite to the approach employed over the past 50 years by the geothermal industry, wherein reactivating preexisting faults and fractures was the goal for most projects.

CLOSING THOUGHTS: DON’T BE AN ESG LAGGARD 

As the O&G industry’s experience with unconventional reservoirs demonstrated, early movers generally secure the greatest portion of value created by a new technology (as was the case with “shale gas”) or the application of a proven technology to a new class of opportunities (as occurred with “tight oil”). It is, therefore, surprising that few large upstream companies are yet pursuing the use of multi-stage hydraulically fractured horizontal wells to extract heat from the Earth’s crust. 

This is especially perplexing, given that our planet’s geothermal resources can be used to generate low-carbon, base-load electricity. This is exactly the type of energy required in abundance, if mankind is to limit the impacts of climate change. 

Encouragingly, Devon—which was an early mover in unconventional reservoirs— invested in Fervo in April 2023. This may be a signpost that a flood of investment is about to occur. 

However, far too many companies are seemingly holding back, waiting for uncertainty to be reduced and long-term performance determined. In some cases, this might be a prudent strategy, but in this case probably risks missing a golden opportunity. This is an opportunity that could enable the much-heralded energy transition to take place and create enormous amounts of value for companies involved.