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This Country Is Drilling Its First Unconventional Well

On my recent trip to Asia, I heard firsthand how unconventional drilling is taking off here. With advanced technology like geosteering and hydraulic fracturing helping spur new oil and gas developments in the region.

We got further proof this week that Asia may indeed be where it's at when it comes to unconventional. With one nation here announcing it will drill its first-ever horizontal well for production from shale.

That's Japan. Where Japan Petroleum Exploration (Japex) announced it is gearing up for a groundbreaking program at its Fukumezawa onshore oil field in the country's northwest.

To be sure, Japan is far from a heavyweight when it comes to petroleum production. But the country does have several producing basins that have been operating for a number of decades.

Japex plans to test the power of advanced drilling techniques to unlock more output from these fields. With the company getting ready to kick off a 2,300 metre horizontal hole later in May. The firm also plans to complete this well with a multi-stage frack job, later in 2014.

The results of this program will be extremely interesting. Both from a technical and a financial perspective.

Japan is one place outside of North America that might be able to carry out advanced drilling at affordable rates. The country has access to a well-developed industrial sector. And yet years of deflation have made professional labor and supplies here relatively cheap, compared to other developed nations.

That could be a big advantage for unconventional drilling. Where specialized expertise and equipment contribute significantly to overall costs.

If Japex can make horizontals work here, the prize could be significant. The company estimates there are 100 million barrels of recoverable oil still in place across Akita prefecture, where the firm operates.

That won't change the global oil market. But it could be very profitable. And set an example for successful unconventional development in a frontier beyond North America.

That's a development worth watching.

Here's to the land of the rising shale,

Dave Forest




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