“Pulling the Plug” on the U.S. Oil Boom

Today, I want to share with you a vital piece of America’s energy comeback. Indeed, without this important cog, America wouldn’t be enjoying a resurgence in oil and gas production — fact is, without this essential service, those oft-talked-about shale wells would be quite literally “plugged” up!

No, I’m not talking about fracking. But as you’ll see, this little-known oil field service is just as important to releasing America’s hydrocarbon bounty…

It’s called coil tubing, but you can think of it as the “Roto-Rooter” of the drilling industry.

On a residential scale, a company like Roto-Rooter puts a small tube or “snake” down a pipe to help clear any blockage. If you’ve ever had a clogged septic line or sewer drain, you know what I mean. Roto-Rooter sends its tool down the hole and unclogs the pipe. Problem solved!

In a similar sense to picking up the phone and calling Roto-Rooter, the coil tubing sector has been the “redheaded stepchild” of the oil industry. In years past when you needed to call a coil tubing unit there was likely a problem with your well. Maybe your well had a blockage or got gunked up over years of production. “Ugh, time to call the coil tubing company.”

Today, the negative mindset surrounding coil tubing is being turned upside down. That’s because in today’s oil and gas industry, the blockage of a well is man-made.

You see, during a hydraulic fracturing, or “fracking,” operation, completion crews will fracture the shale well on average 20-30 times. In between each of those fracking stages, the completion crew places what is essentially a rubber stopper or “plug” — this way, each stage is isolated from the previous.

Long story short, after a well has been fracked, the plugs are still stuck in the well.

Plug Diagram for Shale Fracking

If you’re keeping score at home, you know that oil and gas won’t flow to the surface if you’ve still got plugs in the well, that’s for sure!

So how do they get those plugs out? Glad you asked!

To remove those bothersome plugs, companies use a “coil tubing” unit. Indeed, this is an altogether different call to the coil tubing company than in years past, it’s the one you want to make. “Time to get this well producing its first oil, call the coil tubing unit!”

Coil tubing is a fancy name for flexible metal pipe. They call it coil tubing because it’s flexible enough to bend, unlike rigid pipe. But, don’t get me wrong. If you put your hand on this tubing, it’d feel just like a regular lead pipe to you. Trust me, I’ve felt the cold, heavy metal.

For an idea of what I mean, take a look here:

Truck With Coil Tubing

The image above shows a spool of coil tubing on a tractor-trailer — and yes, it’s a wide load.

The tubing itself isn’t something you’d think could even bend. Heck, when I got my hands on a few lengths of the pipe, it was heavy stuff! It runs about 5 pounds per foot. Here’s an up-close look:

Coil Tubing

Back to the Roto-Rooter line of thinking above, this coil tubing is sent down the oil or gas well to clear any obstructions, or, in this case, frack plugs.

At the front end of the tubing, a drill bit is attached (yeah, we’re talking about a drill bit that goes inside an already existing well). The drill bit spins, and as the coil spools down the well, it mills out each plug. When the drill bit hits the plug, it grinds it into little pieces, which are then pumped out of the well.

Plug Parts

Once all of the “Roto-Rootering” is done and all of the plugs are out, the well is ready to be put into production.

And yeah, you guessed it: A well can’t be put on production until the plugs are removed.

In that sense, coil tubing is as vital a part of the oil and gas boom as any other part of the process. And the companies that can do it the best have a superb chance to cash in on America’s energy comeback.

Keep your boots muddy,

Matt Insley
for The Daily Reckoning

P.S. Just recently we released the name our favorite play in this field. And readers of my Daily Resource Hunter email edition had a chance to discover for themselves exactly what it was. It’s just one small benefit of being a reader of my FREE Daily Resource Hunter email edition. Not a Resource reader? Sign up for free, right here.

Original article posted on Daily Resource Hunter

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