EnerCom's London Oil & Gas Conference 16 June 2011 London, England Danny D. Simmons

Transcription

1 Overview of Shale Plays EnerCom's London Oil & Gas Conference 16 June 2011 London, England Danny D. Simmons

2 Daily Gas Production (BCFD) Barnett Shale Historical Gas Production Rig Count Gas Production Rig Count Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 0

3 Gas Rate (MMCFD) Barnett Shale Chronology of Completion Techniques Recent horizontal well with newer light-sand based fracture stimulation Newer vertical well with newer light-sand based fracture stimulation Older vertical well with older gel-based fracture stimulation Refrac treatment of older vertical well with newer light-sand based fracture stimulation Cum 1,362 MMCF Cum 857 MMCF Cum 692 MMCF 0.0 Jan-95 Jan-96 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05

4 Gross Gas (MCF/Month) Gross Gas (MCF/Month) Well Count Well Count 100, ,000 Barnett Barnett Shale Type Shale Curve Northeast Wise Wise County ,000 Barnett Shale Variation in Well Performance Barnett Shale Northeast Wise County Wide range of performance trends for wells in close proximity 120 EURs range from 0.3 Bcf to 3.6 Bcf Average EUR is 1.5 Bcf 100 There may not be a 'typical' well 80 10, ,000 1, Average of 107 wells Projection of Average Production Well Count Time (Months) Time (Months)

5 Gas Estimated Ultimate Recovery (MMCF) Barnett Shale Variation in Well Performance 14,000 13,000 12,000 11,000 10,000 Yearly Gas Ultimate Distribution Barnett Shale Tier 1 Area Gas EUR (MMCF) Year P25 Mean P50 P75 Avg. Lateral Length (Feet) 2002 and Earlier 1,814 1,533 1, , ,729 1,999 1, , ,775 2,172 1,812 1,005 1, ,074 2,238 1,853 1,054 2, ,011 2,217 1,968 1,004 2, ,591 2,704 2,452 1,462 2,930 9,000 8,000 Completion Improvements 7,000 6,000 5,000 4,000 3,000 ` Lateral Length No. of Fracs Type of Proppant 2,000 1, Greater Than (Percent) 2002 and Earlier

6 Shale Gas Comparison between Plays Play Age Depth (feet) Thickness (Net feet) Pressure (psi) TOC (%) Porosity Net (%) BCFE/D (Jan 2011) Barnett Mississippian 6,500-8, ,500-6, Fayetteville Mississippian 4,000-7, ,000-4, Haynesville Jurassic 10,500-13, ,500-12, Marcellus Devonian Eagle Ford Cretaceous 4,000-8, ,000-6,000 6,000-13, ,500-10,

7 Rate Simplistic Goals of Reservoir Engineer OOIP OGIP How much oil and/or gas are wells going to make, and Can my Company make $ drilling wells? TOC Recovery per Incr. Lateral Foot Vertical vs. Lateral Prices Costs Free Gas vs. Adsorbed Gas Ro Natural Fracture Hydraulic Fracture Porosity Permeability - Natural Temperature Pressure 50 mbo 400 mbo 200 mbo Permeability - Induced Porosity vs. TOC Time Recovery Factor Well Spacing Fluid Analysis

8 General Principles More is Better GR RT GR D,N Storage Capacity (In-Place) 60 Quality Net Higher silt content (Rt and Rhob) Flow Capacity (Perm) Reservoir Energy (Rec. Factor) Higher organic content (GR) Hydrocarbon Profile 430' Gross 250' Net < 2.5 g/cc 10 High Quality Net Higher silt content (Rt and Rhob) OGIP +/- 175 BCF/Sq Mi

9 Schlumberger Private Shale Gas Storage System Gas Storage & Production Mechanisms Naturally Fractured, Organic-Bearing Shale Reservoirs Adsorbed Gas Bcf/mi2 Free Gas Bcf/mi2 associated with TOC Organic Carbon Gas Storage & Production Mechanism Naturally Fractured, Organic-Bearing Matrix Organic Carbon associated with matrix porosity Natural Fractures Matrix Natural Fractures Hydraulic Fracture Desorption From Internal Surfaces TOC - Total Organic Carbon Reed et al., Texas BEG; Presented by Bob Loucks, AAPG San Antonio 2008; Submitted for publication 2008 SPE Mid-Continent Section May 15, 2003 Submicroscopic porosity associated with conversion of TOC to hydrocarbons Flow Through Flow in the Natural the Desorption Matrix From Fracture Network Internal Nanopores Surfaces Porosity Density & Spacing Permeability Net TOC TOC Thickness - Total Organic Reservoir Pressure Carbon Flow Through the Matrix Porosity Permeability Net Thickness Reservoir Pressure Standard porosity associated with space between grains or shale particles SPE Mid-Continent Section May 15, 2003 Flow in the Natur Fracture Networ Density & Spacin

10 Organic Material-Porosity Relationship 3% by weight equates to 6% volume (reading on the standard porosity log) Nanopores TOC Log Porosity (Volume %) = TOC (wt%) + Real Porosity (Volume %) This is the single most significant difference between Shale Free gas analysis and conventional reservoir Free Gas analysis

11 Natural Fracture Density Increased density increases porosity, increases cross-sectional area, decreases distance fluid has to flow

12 Reservoir Permeability (md) Gas Reservoir Permeability vs. Recovery Factor 10, Gas Reservoir Permeability vs Recovery Factor 1, Conventional Recovery Factors 50 to 95% Unconventional Tight Recovery Factors 30 to 50% Shale Recovery Factors 5 to 30% % 5% 10% 15% 20% 25% 30% 35% Porosity

13 Maximizing Drainage Area dy Increasing Frac Stages Increasing Frac Density Downspacing dx Contributing Volumes Less than 100% Gross Rock Volume

14 Horizontal Drilling Schematic

15 Shale Gas Evaluation Considerations Shale plays may require considerable initial capital expenditures to allow commercial access and determine economic feasibility. Geoscience costs tend to be very large early in shale plays: Seismic in areas without recent petroleum exploration activity Coring and laboratory analysis Learning curve earliest wells in new play may deliver poor results as drilling and completion technology is perfected. General shale play economics improve over time due to: More effective drilling and completion techniques Better understanding of reservoir and identification of "sweet spots" Long-term investment Shale gas plays have very large in-place volumes and very large drilling location inventories that may take decades to realize.

16 Two-day seminar (no registration cost) Dallas May 2012 London June 2012 Dates and locations will be announced in early 2012 Pre-register on-line at

17 Netherland, Sewell & Associates, Inc. Because there is a difference. Dallas Thanksgiving Tower 1601 Elm Street Suite 4500 Dallas, Texas Houston 4 Houston Center 1221 Lamar Suite 1200 Houston, Texas info@nsai-petro.com