It’s been said that “Close only counts in horseshoes and hand grenades.” Well, pretty soon, it might not count in horseshoes either – at least not with regard to oil and gas. Industry leaders are honing in on the specific requirements to make horseshoe, or u-shaped, laterals a reality, and precision will be key.
As operators seek ways to more efficiently extract every last drop of resources from wells, reduction of surface footprints and associated costs – rig time, surface rights negotiations and payouts – has become an increasingly important goal. Eliminating the vertical well section for a horizontal seems, on the surface (pun intended), to be laughably impossible, but thanks to the work of a few pioneers, it’s quickly coming to fruition.
An Unconventional Solution
In actuality, “eliminating the vertical well section” is a bit tongue-in-cheek, as the vertical section isn’t eliminated, but instead shared between two laterals. Deviated and exploration wells have used this model in the past, but truly horizontal wells have avoided such a setup for a variety of reasons, including drilling, completion and production logistics. Instead, surface locations have moved closer in horizontal wells – often a hundred feet or less – but each well still has its own vertical section.
Innovations in drilling technology and techniques, however, have prompted operators to drill ever longer laterals: Two-mile laterals are now normal and four-mile laterals are not uncommon. The lure of reduced surface costs and more productive long wells has motivated some companies to explore using that extra lateral length to drill two laterals at once, connecting them with a 180-degree turn in the subsurface. And thus, the terms “horseshoe” and “u-shaped” laterals have entered our lexicon.
The idea for u-shaped laterals has been around for about a decade, but the method is only just now beginning to coincide somewhat frequently, realistically, intentionally and effectively with the madness. In 2019, Shell was forced to drill a u-shaped horizontal in the Permian using a rotary steerable system. The company couldn’t drill a vertical section for one of its planned wells due to excessive mud losses at shallow depths. It had two clear choices: abandon the well and miss that part of the reservoir or drill another well nearby and risk losing that well, too. Unhappy with either choice, engineers decided to utilize the one well they had successfully drilled to the absolute best of its potential by drilling what they called a “horseshoe lateral.”
Chesapeake Energy followed up in 2022, intentionally drilling a u-shaped well using a fully conventional directional assembly. I recall a colleague of mine, Willis Wilcoxon, came into my office at Great Western one day, and the conversation drifted into where horizontals and laterals were going. It was the first time I’d heard about a u-shaped lateral, but I immediately understood the appeal if it could be made to work.
Now, it seems there are several companies that think they can make horseshoe laterals worthwhile. Vital Energy, formerly Laredo, is looking to bring on approximately 135 horseshoe locations from a total of 84 short lateral locations because they see horseshoes lowering their breakeven prices (see sidebar). Hart Energy estimated the potential savings for the project at $140 million. The company plans also to convert some of its short-lateral locations and develop some of its new acreage with organic horseshoe additions. Similarly, Silverbow, a company whose predecessor is Swift, also announced it has drilled an 8,900-foot, u-shaped lateral in the Austin Chalk, bringing u-shaped laterals to the basin for the first time.
In a solid example of how sometimes the best innovations come from unexpected circumstances, what seemed to be a problem previously turned into an opportunity for the industry. A key component here, though, was that someone (likely many “someones” within Shell), was willing to greenlight an unconventional solution in the world of unconventionals. The research had already been done, and a plan was, at least partially, in place, so when the opportunity came up disguised as a problem, leaders were ready to execute. We will see, with time, how much horseshoe laterals can increase extraction efficiency and reduce companies’ operating expenses, the latter of which will become a huge focus when the current consolidation wave winds down.