From Texas to North Dakota, the method still stands to boost production from old, conventional wells where low permeability has restricted extraction to a fraction of their potential, an IHS Markit study showed. Of the 46,000 horizontal wells surveyed, only 10% were in tight conventional plays being drilled anew for more crude, signaling there’s considerable untapped potential across the industry, IHS Markit said.

“When you’ve got the vertical well already drilled and then you drill it horizontally, you don’t have all the costs of initially drilling the well,” said Stephen Trammel, director of North American well and production content at IHS Markit. “You’ve already got pipelines there, you’ve already got infrastructure.”

Thanks to a price rally of more than 70% since February, American producers have gone back to drilling in the past few weeks after idling more than 1,000 oil rigs since the start of last year. Rather than look for the next big discovery, Trammel said producers are likely to have better luck returning to older wells.

Global Implications

“You’re saving a tremendous amount of money,” he said. “I think it will have implications worldwide.”

The study looked into horizontal wells completed between 2010 and 2015.

IHS Markit hasn’t yet estimated how much oil could be recovered with horizontal drilling from tight conventional wells in North America due to their complexity and number, Trammel said. Elsewhere in the world, as much as 141 Bboe could potentially be recovered, he said.

The move may have significant implications for the North Sea oil market with many wells now uneconomical under current conditions. If proven, this new technology could see North Sea wells taken back into service with increased flow rates and additional volume.