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Estimating Resources and Reserves inEstimating Resources and Reserves inEstimating Resources and Reserves in Estimating Resources and Reserves in Unconventional Gas ReservoirsUnconventional Gas Reservoirs
Creties JenkinsCreties JenkinsVice President, P.E., P.G.Vice President, P.E., P.G.
[email protected]@demac.com
DISCLAIMER
The opinions expressed in this presentation are those ofDeGolyer and MacNaughton alone These opinionsDeGolyer and MacNaughton alone. These opinionsrepresent D&M’s current understanding of the Securitiesand Exchange Commission’s “Modernization of Oil andGas Reporting; Final Rule” (the revised SEC reportingp g; ( p grules) in the Federal Register.
D&M’s OPINIONS DO NOT NECESSARILY REPRESENTTHOSE OF THE SEC.
D&M’s opinions are subject to revision after the SECissues clarifications and guidance to the new rulesissues clarifications and guidance to the new rules.
Reserves are the Basis of Corporate ValueReserves are the Basis of Corporate Value
•• Over 150 publiclyOver 150 publicly--owned U.S. oil and gas owned U.S. oil and gas producers file reserves data producers file reserves data pp
•• Their total reported oil and gas reserves are Their total reported oil and gas reserves are valued at over $3 trillionvalued at over $3 trillionvalued at over $3 trillionvalued at over $3 trillion
•• Proved reserves account of over 70 percent of Proved reserves account of over 70 percent of their total market valuetheir total market valuetheir total market valuetheir total market value
•• Inaccurate estimates cause serious problemsInaccurate estimates cause serious problems–– Reserve writeReserve write--downsdowns–– Poor planning and managerial decisionsPoor planning and managerial decisions
From B.G. Dharan, “Improving the Relevance and Reliability of Oil and Gas Reserves Disclosures,” Presented to U.S. House Committee on Financial Services
Resources and Reserves are Critical For…Resources and Reserves are Critical For…
•• Determining division of ownership Determining division of ownership
•• Calculating a fair market valueCalculating a fair market value
R i i it l f d l tR i i it l f d l t•• Raising capital for developmentRaising capital for development
•• Establishing sales contracts and pricesEstablishing sales contracts and pricesstab s g sa es co t acts a d p cesstab s g sa es co t acts a d p ces
•• Obtaining regulatory approvalsObtaining regulatory approvals
•• Designing and constructing facilitiesDesigning and constructing facilities
Differentiating Resources and ReservesDifferentiating Resources and Reserves
•• Prospective ResourcesProspective Resources–– Those quantities of petroleum which are estimated, as of a given Those quantities of petroleum which are estimated, as of a given
date to be potentially recoverable from undiscovereddate to be potentially recoverable from undiscovereddate, to be potentially recoverable from undiscovered date, to be potentially recoverable from undiscovered accumulations.accumulations.
•• Contingent ResourcesContingent Resourcesgg–– Those quantities of petroleum estimated, as of a given date, to Those quantities of petroleum estimated, as of a given date, to
be potentially recoverable from known accumulations by be potentially recoverable from known accumulations by application of development projects but which are not currently application of development projects but which are not currently considered to be commercially recoverable due to one or more considered to be commercially recoverable due to one or more contingenciescontingencies
•• ReservesReserves•• ReservesReserves–– Those quantities of petroleum anticipated to be commercially Those quantities of petroleum anticipated to be commercially
recoverable by application of development projects to known recoverable by application of development projects to known accumulations from a given date forward under definedaccumulations from a given date forward under definedaccumulations from a given date forward under defined accumulations from a given date forward under defined conditions. conditions.
From “Petroleum Resources Management System”, 2007, document at www.spe.orgFrom “Petroleum Resources Management System”, 2007, document at www.spe.org
PRMS Classification FrameworkPRMS Classification Framework
From “Petroleum Resources Management System”, 2007, document at www.spe.orgFrom “Petroleum Resources Management System”, 2007, document at www.spe.org
Unconventional Reservoirs and PRMSUnconventional Reservoirs and PRMS
•• Unconventional resources exist in petroleum Unconventional resources exist in petroleum accumulations that are pervasive throughout a accumulations that are pervasive throughout a l d th t t i ifi tl ff t d bl d th t t i ifi tl ff t d blarge area and that are not significantly affected by large area and that are not significantly affected by hydrodynamic influences…hydrodynamic influences…
•• For these petroleum accumulations there typicallyFor these petroleum accumulations there typically•• For these petroleum accumulations, there typically For these petroleum accumulations, there typically is a need for increased sampling density to define is a need for increased sampling density to define uncertainty of inuncertainty of in--place volumes, variations in place volumes, variations in quality of reservoir and hydrocarbons and theirquality of reservoir and hydrocarbons and theirquality of reservoir and hydrocarbons, and their quality of reservoir and hydrocarbons, and their detailed spatial distribution…detailed spatial distribution…
•• Similar to improved recovery projects applied toSimilar to improved recovery projects applied toSimilar to improved recovery projects applied to Similar to improved recovery projects applied to conventional reservoirs, successful pilots or conventional reservoirs, successful pilots or operating projects in the subject reservoir or operating projects in the subject reservoir or successful projects in analogous reservoirs maysuccessful projects in analogous reservoirs maysuccessful projects in analogous reservoirs may successful projects in analogous reservoirs may be required to establish a distribution of recovery be required to establish a distribution of recovery efficiencies…efficiencies…
Types of Unconventional ReservoirsTypes of Unconventional Reservoirs
CoalbedCoalbedMethane
•• Deep Piceance BasinDeep Piceance BasinAlb t D B i (?)Alb t D B i (?)
•• Warrior BasinWarrior Basin
Hybrid
•• Alberta Deep Basin (?)Alberta Deep Basin (?)•• Wilcox SandsWilcox Sands
•• Drunkard’s WashDrunkard’s Wash
HybridSystems
Ti ht GTight Sands
GasShales
•• Bossier Shale (?)Bossier Shale (?)•• Bossier Shale (?)Bossier Shale (?)•• 22ndnd White Specks (?)White Specks (?)
From Jeff LevineFrom Jeff Levine
Data to Quantify Resources and ReservesData to Quantify Resources and Reserves
•• Static DataStatic Data–– Core descriptionCore description
TOC and Rock EvalTOC and Rock Eval
•• Dynamic data Dynamic data –– Drilling historyDrilling history
Well testingWell testing–– TOC and Rock Eval TOC and Rock Eval –– Sorbed gas capacitySorbed gas capacity–– Mechanical propertiesMechanical properties
–– Well testingWell testing•• Permeability, reservoir Permeability, reservoir
pressure, skin factorpressure, skin factor
–– Completion dataCompletion data–– Gas & water compositionGas & water composition–– Isotopic dataIsotopic data–– Maturity indicators (Ro, TAI, Maturity indicators (Ro, TAI,
Completion dataCompletion data•• Fracture diagnosticsFracture diagnostics•• Microseismic Microseismic •• Chemical TracersChemical Tracers
CAI, etc)CAI, etc)–– Petrography and XRDPetrography and XRD–– Porosity, K, Sw, So, and Sg Porosity, K, Sw, So, and Sg
Chemical TracersChemical Tracers
–– Production dataProduction data•• Daily gas and water ratesDaily gas and water rates•• Producing bottom holeProducing bottom hole
from corefrom core–– Electrical propertiesElectrical properties–– Wireline logsWireline logs
Producing bottom hole Producing bottom hole pressurespressures
•• Static bottom hole pressuresStatic bottom hole pressures•• Gradient surveysGradient surveys
•• Resistivity, Density, Neutron, Resistivity, Density, Neutron, Dipole Sonic, FMI, ECS, etc.Dipole Sonic, FMI, ECS, etc.
•• Surface facility constraintsSurface facility constraints•• Fluid entry surveysFluid entry surveys
Conventional Prospective Resources ApproachConventional Prospective Resources Approach
P10P10P10P10P10P10
P50P50
P10P10
P90P90
Field Size DistributionField Size DistributionProspectProspect
Probability of Geologic Success (Pg)Probability of Geologic Success (Pg) ––the probability of discovering the probability of discovering reservoirs that flow petroleum at a measurable rate. reservoirs that flow petroleum at a measurable rate.
Probability of Economic Success (Pe)Probability of Economic Success (Pe)–– the probability that a given the probability that a given discovery will be economically viable.discovery will be economically viable.
From Bill Haskett, SPE 96879 From Bill Haskett, SPE 96879
Unconventional Prospective Resources ApproachUnconventional Prospective Resources Approach
10%10%
5%5%
2%2%
Low (P90)Low (P90)
Play Play 70%70%
60%60%
50%50%
40%40%
30%30%
20%20%15%15%
10%10%( )( )
Well Size Well Size DistributionDistribution
High (P10)High (P10)
Well Well i iti it
yyboundaryboundary
98%98%
95%95%
90%90%
85%85%80%80%
0.10.1 11 1010 1001000 1 1 0 10 1000 1 1 0 10 100
Well Size Well Size DistributionDistribution
spacing unitspacing unitEstimated Ultimate Recovery per Well (BCF)Estimated Ultimate Recovery per Well (BCF)
0.1 1.0 10 1000.1 1.0 10 100
Probability of ProductivityProbability of Productivity ––the probability that the play will produce the probability that the play will produce sustainable production somewhere within the play boundariessustainable production somewhere within the play boundaries
P b bilit f M t i litP b bilit f M t i lit th b bilit th t th t i d d tith b bilit th t th t i d d tiProbability of MaterialityProbability of Materiality---- the probability that the sustained production the probability that the sustained production will be large enough and consistent enough to constitute a viable playwill be large enough and consistent enough to constitute a viable play
From Bill Haskett, SPE 96879 From Bill Haskett, SPE 96879
A Shale Gas Prospective Resource AssessmentA Shale Gas Prospective Resource Assessment
Input Parameter Low (P90) Best (P50) High (P10)
Area (acres) 80 80 80
Sample Probabilistic Input DataThickness (feet) 320 585 960
Porosity (percent) 2 4 7Sa p e obab st c put ataInitial gas expansion factor (rcf/mscf) 220 244 270
Matrix gas saturation (percent) 30 50 80
Gas storage capacity (scf/ton) 10 30 75
Density of shale (g/cc), rho 2.25 2.37 2.61
R f 10 2Recovery factor, percent 5 10 25
•• You may also want to build in key dependencies such as a You may also want to build in key dependencies such as a positive correlation between matrix porosity and matrix gas positive correlation between matrix porosity and matrix gas saturationsaturation
Do Prospective Resources Have Value?Do Prospective Resources Have Value?
•• FarmFarm--insins
L lL l•• Lease salesLease sales
•• Share price and/or market capitalizationShare price and/or market capitalization
•• Expected Monetary Value (EMV) Expected Monetary Value (EMV) –– Can be calculated and used in investment /Can be calculated and used in investment /–– Can be calculated and used in investment / Can be calculated and used in investment /
drilling decisions, farmout decisions and internal drilling decisions, farmout decisions and internal rankingsrankings
–– Should approximate the real value IF enough Should approximate the real value IF enough similar opportunities are pursuedsimilar opportunities are pursued
Modified from Richard Moreton, Bell Exploration Ltd Modified from Richard Moreton, Bell Exploration Ltd
PRMS Gas Discovery FlowchartPRMS Gas Discovery Flowchart
• Prospective resources are undiscovered. In order to have contingent Prospective resources are undiscovered. In order to have contingent resources or reserves, we need to have a discovery!resources or reserves, we need to have a discovery!
Total GIIPTotal GIIP
Penetrated by a well?Penetrated by a well? NoNoPenetrated by a well?Penetrated by a well?
Significant quantity of Significant quantity of
YesYesNoNo
Undiscovered Undiscovered NoNopotentially moveable gas?potentially moveable gas?
S ffi i t i f ti tS ffi i t i f ti t
YesYesGIIPGIIPNoNo
Sufficient information to Sufficient information to define a project ?define a project ? NoNo
YesYesDiscovered GIIPDiscovered GIIP
Modified from David Elliott, SPE 114160Modified from David Elliott, SPE 114160
PRMS Contingent Resource PRMS Contingent Resource Classification FlowchartClassification FlowchartDiscovered GIIPDiscovered GIIP Classification FlowchartClassification Flowchart
Project defined with Project defined with established technology?established technology? NoNo
Discovered GIIPDiscovered GIIP
Technology under Technology under development?development?
UnrecoverableUnrecoverableNoNoestablished technology?established technology?
Evaluation Mature?Evaluation Mature?
YesYesNoNo
development?development?
YesYesEconomic Status Economic Status
U d t i dU d t i dEvaluation Mature?Evaluation Mature?
Contingencies Present?Contingencies Present?YesYes
NoNo UndeterminedUndetermined
ReservesReservesNoNo
Contingencies Surmountable?Contingencies Surmountable? NoNo UnrecoverableUnrecoverableYesYes
SubmarginalSubmarginal
YesYesProjected to be Projected to be
Economic?Economic? NoNo
After David Elliott, SPE 114160After David Elliott, SPE 114160YesYes MarginalMarginal
Economic?Economic?
Examples of Project ContingenciesExamples of Project Contingencies
•• Contingencies that impede productionContingencies that impede production–– Permeabilities that are too lowPermeabilities that are too lowPermeabilities that are too lowPermeabilities that are too low–– Insufficient porosity or gas saturationInsufficient porosity or gas saturation–– Structural or stratigraphic complexitiesStructural or stratigraphic complexitiesg p pg p p–– Ineffective fracture stimulationsIneffective fracture stimulations
•• Contingencies that impede developmentContingencies that impede development•• Contingencies that impede developmentContingencies that impede development–– Low gas pricesLow gas prices
Gas treatment and transportGas treatment and transport–– Gas treatment and transportGas treatment and transport–– Lack of approvals by partners or regulatory agenciesLack of approvals by partners or regulatory agencies–– Lack of financing or commitmentLack of financing or commitmentLack of financing or commitmentLack of financing or commitment
A Tight Gas Contingent Resource AssessmentA Tight Gas Contingent Resource Assessment
ParameterParameter PP9090 PP5050 PP1010 MeanMean
Productive area, acresProductive area, acres 10,10410,104 10,68210,682 11,29111,291 10,69310,693
Net thickness, feetNet thickness, feet 5555 7474 100100 7676
Matrix porosityMatrix porosity 0.0160.016 0.0450.045 0.0800.080 0.0470.047
Gas saturationGas saturation 0 1960 196 0 3770 377 0 5560 556 0 3770 377Gas saturationGas saturation 0.1960.196 0.3770.377 0.5560.556 0.3770.377
Fm volume factorFm volume factor 180180 218218 263263 220220
Recovery efficiencyRecovery efficiency 0.100.10 0.190.19 0.300.30 0.200.20
Contingent OGIP, BCFContingent OGIP, BCF 34.334.3 112.2112.2 281.9281.9 139.5139.5
Contingent EUR, BCFContingent EUR, BCF 5.45.4 20.420.4 60.560.5 27.827.8
Important Caveats…Important Caveats…
•• Application of any risk factor to Application of any risk factor to contingent resources does not equatecontingent resources does not equatecontingent resources does not equate contingent resources does not equate them with reserves.them with reserves.
•• There is no certainty that it will be There is no certainty that it will be commercially viable to produce any commercially viable to produce any portion of the contingent resourcesportion of the contingent resourcesportion of the contingent resources portion of the contingent resources evaluated. evaluated.
But who wants to believe an auditorBut who wants to believe an auditorBut who wants to believe an auditor…But who wants to believe an auditor…
……Or a Political LeaderOr a Political Leader
“I believe in natural gas as a clean,I believe in natural gas as a clean, cheap alternative to fossil fuels”
House Speaker Nancy PelosiAugust 24, 2008
PRMS Classification FrameworkPRMS Classification Framework
From “Petroleum Resources Management System”, 2007, document at www.spe.org
Progressing Resources to ReservesProgressing Resources to Reserves
•• Unconventional Unconventional uncertainty is uncertainty is productionproductionproduction production dominated in a dominated in a typical gas playtypical gas playN d il tN d il t•• Need a pilot Need a pilot project to project to quantify rates quantify rates
d td tand costsand costs
From Bill Haskett, Decision Strategies From Bill Haskett, Decision Strategies
What’s the Purpose of a Pilot Project?What’s the Purpose of a Pilot Project?
1212
To determine how many wells must be
8
10
8
10
wel
l)w
ell)
To determine how many wells must be drilled before we are confident that the average development well will exceed
the commerciality threshold
4
6
4
6
R (B
cf/w
R (B
cf/w
G2
4
2
4
No GoEUR
EUR Go3
0
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
0
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
From Bill Haskett, Decision Strategies
Number of WellsNumber of Wells
How Many Pilot Wells Do I Need?How Many Pilot Wells Do I Need?
Need to ensure that the Need to ensure that the piloting result is a truepiloting result is a truepiloting result is a true piloting result is a true
indicator of how the indicator of how the entire project will performentire project will perform
Optimal Number of WellsOptimal Number of WellsPilot Effectiveness
70%
80%
90%
100%Pilot Effectiveness
70%
80%
90%
100%
20%30%
40%
50%
60%
20%30%
40%
50%
60%
False results!False results!0%
10%
20%
0%
10%
20%
From Bill Haskett, Decision Strategies From Bill Haskett, Decision Strategies
False results!False results!
Reserves Estimation TechniquesReserves Estimation Techniques
•• Analogous reservoirsAnalogous reservoirs
•• Rules of thumbRules of thumb
•• Material balanceMaterial balance
•• Decline curve analysisDecline curve analysis
•• Performance based analysisPerformance based analysis•• Performance based analysis Performance based analysis
•• Numerical modelingNumerical modelingNumerical modelingNumerical modeling
CBM Plays: Daily Gas Rate by YearCBM Plays: Daily Gas Rate by Year
1.000 365 Bcf
0.100
d) 36.5 Bcf
100 Bcf
Dai
ly R
ate
(bcf
d 36 5 c
Total AnnualGas Production
0.010Tota
l D
Powder River CBMOak GroveDrunkards Wash CBM
3.65 Bcf
Ignacio Blanco CBMApp CBM CDX
0.0010 5 10 15 20 25 30
Years
0.365 Bcf
Reserves Estimation TechniquesReserves Estimation Techniques
•• Analogous reservoirsAnalogous reservoirs
•• Rules of thumbRules of thumb
•• Material balanceMaterial balance
•• Decline curve analysisDecline curve analysis
•• Performance based analysisPerformance based analysis•• Performance based analysis Performance based analysis
•• Numerical modelingNumerical modelingNumerical modelingNumerical modeling
Relationship Between IP and EURRelationship Between IP and EUR
10,000
1,000
.8 to 4 BCF
(MC
F/D
)
,
y Pr
oduc
tion
100
eak
Mon
thly
1010 100 1 000 10 000
Pe
10 100 1,000 10,000Horizontal WellsVertical Wells
Gas Ultimate (MMCF)
From Scott Rees, NSAI
Reserves Estimation TechniquesReserves Estimation Techniques
•• Analogous reservoirsAnalogous reservoirs
•• Rules of thumbRules of thumb
•• Material balanceMaterial balance
•• Decline curve analysisDecline curve analysis
•• Performance based analysisPerformance based analysis•• Performance based analysis Performance based analysis
•• Numerical modelingNumerical modelingNumerical modelingNumerical modeling
25000
20000
15000ia
Estimate of Estimate of OriginalOriginal--GasGas--
InIn--PlacePlaceE ti t E ti t 15000
10000p/Z*
, psi InIn--PlacePlaceEstimate Estimate
of of Initial Initial
PressurePressure5000
PressurePressure
0 1000 2000 3000 4000
Gp, mmcf5000 6000 7000 8000
0
N dNeed…• Accurate estimate of current average reservoir pressure• Accurate estimates of reservoir properties (Porosity, PV Compress, etc)• Accurate estimates of water influx
From John Seidle
• Accurate estimates of water influx • Reservoir to be initially saturated with respect to the isotherm
Reserves Estimation TechniquesReserves Estimation Techniques
•• Analogous reservoirsAnalogous reservoirs
•• Rules of thumbRules of thumb
•• Material balanceMaterial balance
•• Decline curve analysisDecline curve analysis
•• Performance based analysisPerformance based analysis•• Performance based analysis Performance based analysis
•• Numerical modelingNumerical modelingNumerical modelingNumerical modeling
Haynesville Shale Performance PossibilitiesHaynesville Shale Performance Possibilities
Shale Gas Decline Curve Forecast Using 1.5 years of Production10
b = 1.0 (Harmonic)
5.7 Bcf b = 1.5 (Super-harmonic)7.0 Bcf1
Gas{b=1.50}
Gas{b=1 0}
Points = Actual Production
CFD
1
Well Count Gas{b=0.0}Gas{b=0.5}
Gas{b=1.0}
b = 0.0 (Exponential)3 7 B f b = 0 5 (Hyperbolic)R
ate,
MM
C
3.7 Bcf b 0.5 (Hyperbolic)
4.2 Bcf
R
.011 2 3 4 5 6 7 8 9 10
Year1 2 3 4 5 6 7 8 9 10
Reserves Estimation TechniquesReserves Estimation Techniques
•• Analogous reservoirsAnalogous reservoirs
•• Rules of thumbRules of thumb
•• Material balanceMaterial balance
•• Decline curve analysisDecline curve analysis
•• Performance based analysisPerformance based analysis•• Performance based analysisPerformance based analysis
•• Numerical modelingNumerical modelingNumerical modelingNumerical modeling
Reserves Estimation TechniquesReserves Estimation Techniques
•• Analogous reservoirsAnalogous reservoirs
•• Rules of thumbRules of thumb
•• Material balanceMaterial balance
•• Decline curve analysisDecline curve analysis
•• Performance based analysisPerformance based analysis•• Performance based analysis Performance based analysis
•• Numerical modelingNumerical modelingNumerical modelingNumerical modeling
Numerical Modeling Techniques
•Solution at the cell nodesFinite Element Modeling
•Linear interpolation inside•Properties at boundaries•Need just a few cells to
•
Need just a few cells to represent linear gradients
Finite Difference Modeling•Solution at block centers•Properties discontinuous at bl k b d iblock boundaries
•Need lots of grid blocks for near-frac accuracy
History Matching and ForecastingHistory Matching and Forecasting
0
5
0
5
e G
ase
Gas
SCF)
SCF) Make a Make a
productionproduction0
5
0
5
mul
ativ
em
ulat
ive
lum
e (B
Slu
me
(BS production production
forecast after the forecast after the history match is history match is
0
5
0 2500 5000 7500 10000 125000
5
0 2500 5000 7500 10000 12500
Time in DaysTime in Days
Cum
Cum Vo
lVo
l yycompletedcompleted
Assess theAssess the
yy
Assess the Assess the pressure pressure
distribution at distribution at EUREUR
SEC and PRMSSEC and PRMS
•• The SEC Rules have been modernized The SEC Rules have been modernized –– They go into affect at the end of this year They go into affect at the end of this year y g yy g y
•• Changes bring the SEC rules closer to PRMSChanges bring the SEC rules closer to PRMS
•• Some of the new SEC requirements…Some of the new SEC requirements…–– Optional disclosure of probable & possible reservesOptional disclosure of probable & possible reservesp p pp p p–– Disclosure of technologies used to establish reservesDisclosure of technologies used to establish reserves–– Must list qualifications of the person primarilyMust list qualifications of the person primarilyMust list qualifications of the person primarily Must list qualifications of the person primarily
responsible for overseeing the preparation or audit responsible for overseeing the preparation or audit –– Average year pricing instead of endAverage year pricing instead of end--ofof--year pricingyear pricing–– Use of Use of reliable technologyreliable technology to expand PUD’sto expand PUD’s
SEC Reserves under the “Old Rules”SEC Reserves under the “Old Rules”
•• Reserves on undrilled Reserves on undrilled acreage shall be limited to acreage shall be limited to ggthose drilling units offsetting those drilling units offsetting productive units that are productive units that are reasonably certain ofreasonably certain of
PUDPUD
reasonably certain of reasonably certain of production when drilled. production when drilled.
•• Proved reserves for otherProved reserves for otherPDPPDP
•• Proved reserves for other Proved reserves for other undrilled units can be undrilled units can be claimed only where it can be claimed only where it can be demonstrated with certainty demonstrated with certainty that there is continuity of that there is continuity of productionproductionpp
Possible Scenario Under the “New Rules”…Possible Scenario Under the “New Rules”…
•• Reserves on undrilled acreage Reserves on undrilled acreage shall be limited to those directly shall be limited to those directly offsetting development spacing offsetting development spacing
PUDPUDg p p gg p p g
areas that are reasonably certain areas that are reasonably certain of production when drilled, unless of production when drilled, unless reliable technologyreliable technology establishes establishes
bl t i t f ibl t i t f ireasonable certainty of economic reasonable certainty of economic producibility at greater distances. producibility at greater distances.
•• Reliable technologyReliable technology is a grouping is a grouping PDPPDPgygy g p gg p gof one or more technologies of one or more technologies (including computational (including computational methods) that has been field methods) that has been field tested and has been demonstratedtested and has been demonstratedtested and has been demonstrated tested and has been demonstrated to provide reasonably certain to provide reasonably certain results (90% accuracy) with results (90% accuracy) with consistency and repeatability inconsistency and repeatability inconsistency and repeatability in consistency and repeatability in the formation being evaluated or the formation being evaluated or in an analogous formation.in an analogous formation.
Some Examples of Reliable Technology Some Examples of Reliable Technology
•• Interference testsInterference tests
•• Static reservoir pressuresStatic reservoir pressures
•• Producing gas and water ratesProducing gas and water ratesg gg g
•• 33--D seismic dataD seismic data
•• Well correlation sections Well correlation sections
•• Structure contour and thickness mapsStructure contour and thickness maps
•• Core descriptions and analysesCore descriptions and analyses
A Cautionary Tale from a CBM Pilot A Cautionary Tale from a CBM Pilot
Given the huge permeability variations in the four closely-spaced offset wells below, how can PUD’s be b k d t i ifi t di t f th t ll?
Seam 4 = 2 md6
booked at significant distances from the center well?
Seam 4 = 4 mdSeam 8 = 62 md
Seam 8 = 39 mdSeam 9 = 14 md
57
9 Seam 4 = 1 mdSeam 8 = 7 mdSeam 9 = 2 md
Seam 4 = 1 md
Seam 4 = 3 mdSeam 8 = 9 mdSeam 9 = 4 md
Seam 8 62 md
8
9
Scale in Meters
Seam 4 1 mdSeam 8 = 450 mdSeam 9 = 150 md
0 200 400 600 800
Key Steps in Unconventional Gas Growth Key Steps in Unconventional Gas Growth
•• Understanding the fundamentals Understanding the fundamentals –– How do these reservoirs work?How do these reservoirs work?
•• Choosing where to playChoosing where to play–– What are my prospective resources?What are my prospective resources?
•• Drilling appraisal wellsDrilling appraisal wells–– What data do I need to gather and analyze?What data do I need to gather and analyze?
•• Quantifying what’s been foundQuantifying what’s been found–– What are my contingent resources?What are my contingent resources?
F l ti th d l t lF l ti th d l t l•• Formulating the development planFormulating the development plan–– What type, spacing, and number of wells do I need?What type, spacing, and number of wells do I need?
•• Reaping the bountyReaping the bounty•• Reaping the bountyReaping the bounty–– What are my reserves and how do I report them?What are my reserves and how do I report them?
Estimating Resources and Reserves inEstimating Resources and Reserves inEstimating Resources and Reserves in Estimating Resources and Reserves in Unconventional Gas ReservoirsUnconventional Gas Reservoirs
Creties JenkinsCreties JenkinsVice President, P.E., P.G.Vice President, P.E., P.G.
[email protected]@demac.com