Searching for Tight Gas Reservoirs By Alex Chakhmakhchev and Kris McKnight

Transcription

1 Searching for Tight Gas Reservoirs By Alex Chakhmakhchev and Kris McKnight Along with coal bed methane (CBM) and shale gas, tight gas is becoming a hot exploration target around the globe. This paper examines how IHS products and workflows can be used to help locate and evaluate tight gas reserves outside North America. Pilot production projects in Asia and Europe show that both the U.S. and Australian business models can be successfully applied in various regions. 1 A global search performed in IHS Global Exploration and Production Services (GEPS) reveals more than 100 reports covering recent tight gas licensing activity and exploration efforts in Europe, Australasia and Latin America. Tight gas search in GEPS

2 A breakdown of tight gas exploration locations Searching for Tight Gas Reservoirs in EDIN The international database IHS EDIN contains a number of reservoir characteristics including thickness, depth, age, lithology, porosity, permeability and reserves volume by reservoir. This data can help users easily identify tight reservoirs by applying certain criteria. To begin, users can start at the field level. Using free restrictions, and under the Field Reservoir sub-subject, they can set HC Type equal to Gas and then set average permeability to less than 1 to pull out all reservoirs and their characteristics meeting the selection criteria. Reservoir characteristics in EDIN Because data availability varies in different locations, the data population for average permeability in the focus area may not be satisfactory. Users can create additional data sets using maximum permeability set to less than 1 and/or a combination of two filters: minimum permeability less than 1 and average porosity less than 13 percent.

3 Querying tight gas reservoirs using reservoir characteristics in EDIN In some areas, data availability may vary and data population for average porosity and permeability may not allow for the generation of reliable results. In these instances, users can also employ minimum and maximum values available in ad hoc or userdefined reports. For the selected area of interest, all available values of reservoir characteristics including average, minimum and maximum can be downloaded and then filtered in third-party applications such as Microsoft Excel or Microsoft Access. User-defined report builder in EDIN Once all tight reservoirs combining minimum, average and maximum values for porosity and permeability have been identified, information on their location, lithology, age and gas reserves by reservoir can be downloaded, allowing for the analysis as shown in the map below.

4 Worldwide tight gas reserves excluding U.S. and Canada onshore Tight Gas Program in Argentina The Neuquen Province governor recently announced that pilot studies have revealed that the province has 21 trillion cubic feet (Tcf) of unconventional gas potential. The reserves are mostly in the form of tight gas sands and shale gas. However, Argentina has been providing incentives to tight gas producers since According to IHS Petroleum Economics & Policy Solutions (PEPS), in 2008 the government passed new legislation in order to encourage investment in the upstream sector (both oil and gas). With respect to gas production, the government launched a plan called Gas Plus (resolution 24/08 dated March 6, 2008), aimed at encouraging the development of tight gas reserves and gas coming from non-traditional sources. The production under this plan must be sold to the domestic market and will benefit from an improved pricing scenario. Eligible projects need to be approved by the Energy Secretariat before they can take advantage of this plan. When gas under these projects comes online, the operators are able to charge a higher price for it than for the other gas produced in the country. Since 2002, the government has effectively set price controls on natural gas production resulting in the sale of most natural gas at US$1 US$2 per MMbtu; Gas Plus-approved projects can sell gas at rates of US$4 US$5 per MMbtu.

5 Tight gas blocks in Argentina Escalating exploration activity in many countries is due not only to favourable geological factors, but also attractive fiscal terms and low political risk. PEPS can be used to understand the contractual and fiscal details of E&P operations in different countries. And because it ranks countries E&P risks based on prospectivity, political climate and fiscal severity, it is an excellent tool for screening global business opportunities.

6 PEPS references to Argentinean laws and contracts Country ranking in PEPS based on E&P risks and fiscal and political ratings Argentina is one of the few countries that are providing incentives to companies involved in the exploration and production of unconventional resources. The fiscal regime in

7 Argentina is based on a royalty/tax concession system that looks more attractive compared to the systems of other countries in the region as shown below in a graph built based on PEPS results. The graph compares major and significant producers in South America using the results of after-tax calculations in the PEPS fiscal detail gateway, which are based on a hypothetical gas project with marginal pre-tax economics. State take value in Argentina compared to other countries in Latin America As demonstrated in this article, the IHS E&P database EDIN offers insight into the geological description of tight gas reservoirs globally, while the scouting service GEPS supplies critical information covering current E&P activities including the licensing and drilling of tight gas plays. Furthermore, PEPS explains fiscal terms and contractual details, and based on an above-ground risks evaluation, ranks both oil and gas global business opportunities. Together, these products can provide deep insight into tight gas opportunities and risks. For more information on any of the IHS products in this article, please contact us. References 1 Alex Chakhmakhchev and Bob Fryklund. Critical Success Factors of CBM Development Implications of Two Strategies to Global Development. Presented at the 19 th World Petroleum Congress, Madrid, Alex Chakhmakhchev is Senior Manager, Customer Care, at IHS. Kris McKnight is Senior Data Advisor, Customer Care, at IHS.