Storage, Production, and Shut-in Strategy Development
Sifting through the Challenges is Daunting, but Doable.
As oil and gas activity has sharply declined due to the overwhelming surplus of crude oil, operators are forced to either shut-in wells to reduce production or have their output hauled away—both are costly decisions.
On one hand, shut-in wells often must be re frac’ed upon reopening and may be subject to diminished future oil recovery, and on the other, operators may face exorbitant and punitive take-away fees to simply transport and store oil.
Further, many operators are required to continue producing due to existing contracts. In early 2020, analysts feared that the oversupply of crude would inundate the world’s storage tanks and that the US crude hub in Cushing, OK would hit maximum capacity. Although crude oil traders believe the worst is behind us and that prices should stabilize, 2020 oil price volatility, recovery from a public health crisis, and uncertain demand profiles continue to fuel the flames of market uncertainty. Identifying novel and cost-effective storage optionality can help mitigate price volatility impacts, and enhance negotiating positions in turbulent markets.
And that’s where EnergyMakers can help.
Our expert geoscientists and financial analysts can quickly help you determine your company’s options, which might include:
The Texas Railroad Commission (RRC) recently released temporary exceptions for oil and gas storage wells:
“16 Texas Administrative Code § 3.95: An exception authorizing underground hydrocarbon storage facility located in a geological formation other than an underground salt formation.”
This eases regulations for operators looking to permit a storage well, technically a Class II UIC well, as long as they can prove the receiving formation is adequately sealed off from other formations, specifically water bearing formations, and can prove capacity for the intended hydrocarbon load. This may be pivotal for operators that do not have direct access to pipelines or sufficient storage tanks and also allowing the conversion of injection wells to storage wells.