SPE DISTINGUISHED LECTURER SERIES

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SPE DISTINGUISHED LECTURER SERIES is funded
principally through a grant of the SPE
FOUNDATION The Society gratefully
acknowledges those companies that support the
program by allowing their professionals to
participate as Lecturers. And special thanks to
The American Institute of Mining,
Metallurgical, and Petroleum Engineers (AIME) for
their contribution to the program.
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Enhanced Assessment Techniques for Unconventional
Resources

• John Lee
• Texas AM University

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Global Energy Opportunities Require Creative
Thinking

• We need increasing amounts of energy of right
  type at right place and right time
• Viability of many alternatives limited by
  practical considerations
• Unconventional resources play important role for
  most forecasters
• Improved assessment methodology a key to
  availability of needed unconventional resources

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Unconventional U.S. Gas Production Will Increase
History
Projections
10
Production, Tcf
0
1990 2025
Year
EIA 2005
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Dependence on Unconventional Resources to Grow in
United States

• As a result of technological improvements and
  rising natural gas prices, natural gas production
  from relatively abundant unconventional sources
  (tight sands, shale, and coalbed methane) is
  projected to increase
• from 35 percent of total lower 48 production in
  2003
• to 44 percent in 2025
• EIA Energy Outlook 2005

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Production From Unconventional Sources Will
Increase in U.S.
50
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Diminished supply of conventional resources
Production,
Rising natural gas prices
Technological improvements
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25
2003 2025
Time
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And Later in the World
Diminished supply of conventional resources
Production,
Rising natural gas prices
Technological improvements
Time
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How Do Conventional and Unconventional Resources
Differ?
Conventional
Unconventional
Massive stimulation treatments Special recovery
processes Leading-edge technologies
Added Costs
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Resource Distribution and Practical Permeability
Limit
Resources
Practical limit
permeability
After USGS, 2003
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Resource Distribution and Practical Cost Limit
Resources
Practical limit
cost
After USGS, 2003
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Need to Extend Practical Limits Through
Technology Advances
Cost
Permeability
Technology
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NPC Forecasts Technology Impact on Gas Production
NPC 2003
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NPC Model Assumes and Identifies Needed
Technology Improvements
Technology Area Annual, 25 years,
Exploration well success Development well success Ultimate per-well recovery Initial production rate 0.53 0.41 0.87 0.74 14 11 24 20

Drilling costs Completion costs Construction
costs Fixed operating cost
37 39 26 22
1.81 1.37 1.18 1.00
NPC 2003
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Improved Resource Assessment Key to Much
Unconventional Resource Development
Technology Area Annual, 25 years,
Exploration well success Development well success Ultimate per-well recovery Initial production rate 0.53 0.41 0.87 0.74 14 11 24 20

Drilling costs Completion costs Construction
costs Fixed operating cost
37 39 26 22
1.81 1.37 1.18 1.00
NPC 2003
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Active Projects in Resource Assessment

• Quantifying uncertainty in unconventional gas
  resource assessments in North America

• Estimating unconventional gas resources outside
  of North America

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Quantifying Uncertainty in Unconventional Gas
Resources in North America
Compile resource inventories and analyses
Provide methodology to operators
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USGS Applied Methodology for Undiscovered
Resources in 2003
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Oil and Gas Resources Occur in Vastly Different
Settings
USGS 2003
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Resource Assessment Methodology

• Identify areas within petroleum province that are
  total petroleum systems
• Hydrocarbon source rocks
• Reservoir rocks
• Hydrocarbon traps

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Classify Petroleum Systems as Conventional
USGS 2003
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or Continuous
USGS 2003
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Characteristics of Conventional Accumulations

• Relatively high matrix permeability
• Obvious seals and traps
• High recovery factors

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Characteristics of Continuous Accumulations

• Regional in extent
• Diffuse boundaries
• Low matrix permeabilities
• No obvious seals or traps
• No hydrocarbon/water contacts
• Abnormally close to source rocks
• Low recovery factors
• Includes tight sandstones, coalbed gas, oil and
  gas in fractured shale and chalk

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Some Dont Accept USGS Model for Unconventional
Resources
Green River
Uinta
Piceance
Shanley et al. (2004)
Some low-permeability gas fields occur in
poor-quality rocks in conventional traps
SAH97.165
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Schematic of Assessment Area and
Petroleum-Charged Cells
USGS 2003
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Three Resource-Assessment Categories Depicted
USGS 2003
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Petroleum-Charged Cells

• Only untested cells with potential contribute
  to resource-base additions
• Assessment of these cells proceeds on basis of
  geologic understanding and petroleum engineering
  principles
• What we are looking for is untested sweet spots

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Production Decline Curves Used to Predict EUR
10,000
1,000
Production Rate, Bcf/month
100
10
1998 2000
Year
USGS 2003
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EUR Distribution for Continuous Accumulation
USGS 2003
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USGS Undiscovered Oil and Gas Estimates for
Uinta-Piceance Province, Utah-Colorado
Resource Type Oil, MMSTB Gas, Bscf
Conventional
Continuous
P95 7.15 P50 18.47 Mean 20.39 P5 40.44
P95 63.71 P50 191.12 Mean 213.12 P5 436.01
P95 12,145.49 P50 20,121.27 Mean 21,211.03 P5
33,978.81
P95 31.99 P50 37.57 Mean 38.78 P5 56.84
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U.S. and Non-U.S. Basins Selected for Further
Study

• U.S. basins studied will probably include
  frontier areas in Travis Peak and Barnett Shale
• Non-U.S. basins will include Neuquen and Cuyo
  basins (Argentina) and Sichuan basin (China)

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Estimating Non-U.S. Unconventional Gas Resources
Basin Analogs
Known
Known
Unknown
Known
International Basin
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Objectives and Challenges

• Objectives
• Develop methodology for identifying analogous
  basins
• Estimate potential resources in selected basins
• Challenges
• No public literature available
• General lack of data availability
• Large number of basins in North America
• Which parameter to use? What criteria?

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Data Collection

• Define criteria to find analog basins
• Include characteristics of international basins
• Enhance with VBA to compare L48 basins with
  international basins

Analog basin progress
Final Analog Basins
All NA basins
NA basins with unconventional gas potential
Analog rank ()
60 - 70 basins
31 basins
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Data Analysis
General basin information
Source rock information
Reservoir characteristics
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Point Calculation
1 WF1 1 WF1 1 WF1 1 WF2 0.1 WF2 0.8
WF2 1 WF3 0.1 WF3 0.75 WF3 1 WF4 0.7
WF4 0.7 WF4 1 WF5 0.8 WF5 1 WF5 1
WF6 1 WF6 0 WF6 Total Pts Basin 1 Basin 2
Nearness of match, not relative values
Highest scores most likely analogs
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Rank Result Sheet
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Summary Comments

• Unconventional resources, especially gas, to play
  leading role in U.S. energy supply in next 25
  years

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Summary Comments

• Unconventional resources also to play
  increasingly important role in world energy
  supply in coming decades

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Summary Comments

• Advances in technology key to developing
  potential of unconventional resources

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Summary Comments

• Ability to access resources better, identify
  potential sweet spots, quantify uncertainty
  important part of technology development

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Summary Comments

• USGS methodology for resource assessment good
  starting point

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Summary Comments

• Widespread applicability of continuous gas
  accumulation model questioned

x
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Summary Comments

• Final modified model to be applied in U.S., other
  countries to identify broad potential, specific
  target areas

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Enhanced Assessment Techniques for Unconventional
Resources

• John Lee
• Texas AM University

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Fall 2005 UG Enrollment
Class College Station Qatar
Fish 99 10
Freshman 44 8
Sophomore 75
Junior 69
Senior 50
Total 337 18
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Fall 2005 Graduate Enrollment
Degree Total Distance Learning
PhD 50 2
MS 93 2
ME 34 22
Non-Degree 14 14
Total 191 40