As an investor in oil and gas minerals, one of your goals should be to get the best returns on the wells you’ve invested in. Technical advancements over the years have enabled oil well operators to extract oil and gas at a faster rate, which means a faster return on your investment. Newer wells have the potential of producing more oil and gas in 5 months than wells that have been producing for 80 months. Here are some of the advanced drilling techniques and how they relate to mineral rights investing.
Types of Advanced Drilling Technology
In order to understand the impact of advanced drilling technology, it’s important to gain a basic understanding of how it works. The most common techniques involve:
- Complex Path Drilling – this technique is often used at a single well instead of drilling at multiple locations. It’s a cost-effective option for investors as the well path takes various turns to extract as much oil and gas as possible from a single location.
- Extended Reach Drilling – with this drilling technique, wells have a reach of up to five miles from the well location. This technique is beneficial for extracting oil and gas minerals in locations where it’s not possible to drill a vertical well and on offshore locations.
- Horizontal Drilling – this technique begins with a traditional vertical well, but the path turns to create horizontal legs that can extend for more than two miles. This technology isn’t available in all drilling locations, but when it can be used, more oil and gas minerals can be extracted in less time and with fewer wells. Horizontal drilling is particularly popular in shale basins across the United States.
- Multilateral Drilling – simply put, this technique allows operators to drill at different depths to increase production from individual wells without having to move them.
Advanced Drilling Technology in Action
Drilling for Oklahoma minerals historically has been successful. However, when you see the impact advanced technology has made, it’s easy to get excited as an investor. Let’s take an example from a well in the year 2012 compared to the year 2019:
- Year 2012 – this well was in production for 87 months, covered 2,360,133 billion cubic feet of gas and used 3,141,489 pounds of frac-sand proppant. The total estimated amount of money made was $4,720,266.
- Year 2019 – this well was in production for 5 months, covered 2,660,904 billion cubic feet of gas and used 20,128,811 pounds of frac-sand proppant. The total estimated amount of money made was $5,321,808.
Note: both scenarios factor $2 natural gas prices
This example is a great indicator of how much drilling technology has advanced in just a 7-year period. The same amount was extracted, but it was extracted roughly 17-times faster.
Eckard Land & Acquisition is here to answer any questions you have about mineral rights investing, including how advanced drilling technology can improve your ROI. The average person doesn’t necessarily need to follow technology trends and how it impacts our industry, but we look at every aspect closely. When it comes to oil and gas minerals, it’s sometimes tricky knowing which piece of technology will be most impactful to your investments, so feel free to reach out to us at any time if you have any questions or concerns about something you’ve read or heard.