Shale Plays – The New Paradigms on Exploring, Risking and ... · Shale Plays – The New...
Transcript of Shale Plays – The New Paradigms on Exploring, Risking and ... · Shale Plays – The New...
Shale Plays – The New Paradigms
on Exploring, Risking and Special
Skill Sets Required to Evaluate Them
Lynn Strickland
Vice President Asia Pacific,
Russia Caspian Exploration
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Cautionary Statement
FOR THE PURPOSESOF THE “SAFE HARBOR” PROVISIONSOF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The following presentation includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
which are intended to be covered by the safe harbors created thereby.
These statements relate to future events, such as anticipated revenues,
earnings, business strategies, competitive position or other aspects of
our operations or operating results. Actual outcomes and results may
differ materially from what is expressed or forecast in such forward-
looking statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions
that are difficult to predict such as oil and gas prices; operational hazards
and drilling risks; potential failure to achieve, and potential delays in
achieving expected reserves or production levels from existing and
future oil and gas development projects; unsuccessful exploratory
activities; unexpected cost increases or technical difficulties in
constructing, maintaining or modifying company facilities; international
monetary conditions and exchange controls; potential liability for
remedial actions under existing or future environmental regulations or
from pending or future litigation; limited access to capital or significantly
higher cost of capital related to illiquidity or uncertainty in the domestic
or international financial markets; general domestic and international
economic and political conditions, as well as changes in tax,
environmental and other laws applicable to ConocoPhillips’ business and
other economic, business, competitive and/or regulatory factors
affecting ConocoPhillips’ business generally as set forth in ConocoPhillips’
filings with the Securities and Exchange Commission (SEC). Unless legally
required, ConocoPhillips undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise.
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No two shale plays are alike
Not every shale play is going to work
Those that work have well defined sweet-spots
Exploration includes extended and expensive appraisal
Special skill sets needed for evaluating shales
Discussion Topics
Shale Plays are Not Without Risk
1962 1972 1982 1992 2002 2012 2022 2032
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U.S. Oil Production Growth: Driven by the "Big Three" Shale Oil Plays
U.S. production has risen from 6.5 million barrels per day in 2008
To 8.5 million barrels per day at present, and is still rising rapidly
Bakken4-24 BBOE
Permian Basin
10-30 BBOE
Eagle Ford22-30 BBOE
= Oil Wells = Gas Wells = Cond. Wells = Dry Holes0
12,000
10,000
8,000
6,000
4,000
2,000
14,000
U.S. Oil Production
(thousands of barrels per day)
History Prediction
1970: U.S. Peak Oil
Sources: Historical U.S. production data from BP statistical review of world energy 2012 andU.S. EIA; oil production numbers include condensate and NGLs; Prediction from PIRA Energy
Wolfcamp
� Also have acreage in the Barnett, Canol, Niobrara,
Duvernay and other plays
� Over 3 billion BOE of resources in North America
Strong International Shale Presence
� Early Mover in Poland Shale with 3 vertical and 2
horizontal wells
� Drilling Second Vertical well in Canning Basin of
Australia
� Partnerships with Sinopec and CNPC in Sichuan Basin in
China
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Oil
High yield gas/volatile oil
Gas
Avalon Barnett
Eagle Ford
Canol
Horn River
Montney
Duvernay
Bakken
Niobrara
San Juan
ConocoPhillips’ Shale Plays
ConocoPhillips is an industry leader in shale
exploration & development in North America
� Big position in big three liquid rich plays (Eagle Ford,
Bakken and Permian Basin)
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Identifying the Risk
Source Rock(TOC, Kerogen Type, Maturity, Rock Eval)
+
Reservoir Rock = storage capacity(Facies, GRI Porosity, Saturation, Permeability)
+
Brittle Fracable Rock(Mineralogy, Contiguous Thickness, Depth, Pressure, Stress Regime)
+
Containment
(Seal Presence & Thickness, Thru Going Faults, Isolation from Formation Water)
YOU NEED ALL FOUR TO BE SUCCESSFUL
AND THESE WILL NOT EXIST OVER THE ENTIRE SHALE BASIN
Reservoir Mineralogy Risk
Quartz
Carbonate
Ohio
Barnett 2
Marcellus
Woodford
Caney
Huron
Normal Shale Seal
Clay
Muskwa
Montney
High Risk
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They may all look the same
but they behave differently
Haynesville
Barnett 3
Posidonia
Niobrara
Eagleford
SWS
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Fracability Risk
Grieser USGS
Can you break the rock and will the proppant keep the fracture open
Andrews 2009
Bottom Seal Containment Risk
Need 3D Seismic
Potential Collapse Area
40ms =
250’ karst
featureEllenberger Below Barnett Shale
Possible Source of Water
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Eagleford -- The Perfect Storm
Source Characteristics� High TOC 3-6� Type II Kerogen� Perfect maturity Range Oil-Condensate Window� High HI
Reservoir Characteristics� Restricted Marine Setting� GRI Porosity 8-10%� GRI Saturation 70-85%� Permeability 100-300nd
Fraccability� Lithology = Cretaceous organic silica and carbonate rich� Clay 10-20%� Depth Range = 10-12000 ft� Contiguous thickness 100+ ft� Overpressure 0.65-0.75 psi/ft
� SHmax = SHmin thus a SRV fracture pattern on stimulation
Meets All Criteria for Good Shale Play
COP Eagle Ford Acreage
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Eagle Ford Outcrop Photo
Frac fluids can alter rock and/or
reservoir fluid propertiesEagle Ford Outcrop Photo
Eagleford Sweet-spot Identification
Rock properties can vary rapidly
laterally and vertically
Fluid properties can change
appreciably over short distances
Fluid properties can change
over a well’s productive life
Frac fluids may or may not be
produced back
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Not all Barnett wells are successful, relatively small sweet-spot
Barnett Sweet-spot Identification
Pollastro, 2003
Ro=1.1 Gas Window
Jarvie 2004
thin
thin
Youngs Modulus
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Pressure
Depth
Montney Sweet-spot Identification
Regional
Water line
ConventionalWater
Source: Dahl and Lefebvre 2012
Not the typical parameters exploration
geologists think about
� Optimize well
spacing, well
Manufacturi
ng Phase
Exploration
Phase
Appraisal
Phase
Initial
DevelopmentPhase
Acreage
AcquisitionPhase
� Accumulate land
position
� Acquire data
required to position
exploration wells
� Drill vertical wells to
test extent of play
� Drill horizontal wells
to determine
production rate
� Drill horizontal wells � Drill initial
to determine development area
commercial well
design
design, etc.
� Run rigs and frac
spreads at optimal
pace
� Continuous
development
activities
Unlike Most Conventional Plays Shale Exploration Involves
Expensive Pilot Programs before Sanctioning Development
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10 to 20 years2 to 5 years2 to 4 years
Produce
Typical Shale Lifecycle
Exploration
Value
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Securing the Best Acreage within the Best Plays
Eagle Ford is amongst the best
liquids-rich plays
Not all parts of the Eagle Ford
are equally valuable
Factors controlling value:
�
�
�
�
Hydrocarbon type
Hydrocarbons in place
Pore pressure
Rock properties
ConocoPhillips’ acreage is
optimally positioned
Eagle FordPlay Area
NW
SE
Low
SE
High
Oil Cond. Gas
NW
Value curve geometry based upon ITG’s May 2012 “Eagle Ford Shale: The Regal Eagle” report and data published by Marathon and other operators;Curve is an approximation and shows general trends in value; Results for specific operators may vary from trend line.
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Optimizing the Development Plan
Critical decisions include:
�
�
�
�
�
Well length
Completion design
Well spacing
Gathering & processing
Commercial arrangements
Controlled experiments can
vastly accelerate learning
Learn from others via:
� Data in public domain
� Data trades
Eagle Ford Well Spacing Pilot Design
Map view
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Managing the Field
Focus on safety and efficiency
It helps if you are already good at
managing large operations:
ConocoPhillips San Juan Basin
� 10,000 operated wells
� 2,200 compressors
� 950 miles of gathering lines
� 17 salt water disposal facilities
Utilizing "integrated operations" approach
on new developments like Eagle Ford
Eagle Ford Well Head
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Keys to Shale Exploration Success
Be an operator in multiple shale plays in North America
Understand critical subsurface elements to successful shale plays
�Comprehensive petroleum system analysis
�Detailed petrophysical evaluation and calibration to core
�Rock mechanics - collecting and analyzing the core
Fracture Treatment analysis- conducting experiments and tests to
better understand shale response
Micro-Seismic integration, evaluating and experimenting with
differing responsesand correlation to frac designs
Special Skill Sets Needed for Shale Evaluation
NW SE
Petrophysics – The Integration of Logs and Core
- 8000’
-
10400’
-
12800’Must calibrate logs to core, need GRI porosity ,
saturation and permeability data to define pay
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Wellbore Array
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frac treatments go is paramount
Micro-Seismic – A Different Type of Geophysics
Buried ArrayCourtesy of Microseismic
Surface ArrayCourtesy of Microseismic
Understanding where the
Vertical Frac = Single Frac
Horizontal Multiwell
Multi-Stage Frac
After 30 yr
Understanding of Reservoir Engineering
Stimulated Rock Volume
Horizontal Multi-Stage
Frac
Need to understand which drilling
method and fracture treatment opens
up the most Stimulated Rock Volume
red - original reservoir pressure
dark blue – later time flowing bottom hole
pressure
The Key to Commercial Success in
Unconventional production
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Plays