Information Management in the Shale. Fred Kunzinger Upstream Practice Lead, Noah Consulting

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1 Information Management in the Shale Fred Kunzinger Upstream Practice Lead, Noah Consulting

2 Agenda Conventional vs. Unconventional The Rise of the Unconventional Play Challenges in the Shale Data Analysis Other things to consider Summary Copyright 2013 Noah Consulting LLC. All Rights Reserved. Page 2

3 Conventional vs. Unconventional Conventional Charge Reservoir Trap/Seal Prospects move along the Value Chain Exploration Development Production Challenge is finding the hydrocarbons Unconventional Shale plays all three roles: Charge, Reservoir, Trap/Seal High Volume / Lower Cost Development requires an contemporaneous integrated approach Challenge is finding the Sweet Spots Copyright 2013 Noah Consulting LLC. All Rights Reserved. Page 3

4 Conventional vs. Unconventional Schenk, C.J., and Pollastro, R.M., 2002, Natural gas production in the United States: U.S. Geological Survey Fact Sheet FS , January Copyright 2013 Noah Consulting LLC. All Rights Reserved. Page 4

5 Finding the Sweet Spot Mineralogy Clay models are essential for understanding where to go Thermal Maturity The economics of liquids versus gas vary greatly, as a wet gas is worth significantly more than a dry gas Fracture trends Drilling along the azimuth of the regional fracture trends will help to optimize the production Copyright 2013 Noah Consulting LLC. All Rights Reserved. Page 5

6 Orders of Magnitude Differences Major Gulf of Mexico Assets: Mars-Ursa 126 mi 2 Nepture 72 mi 2 Thunderhorse 72 mi 2 K2 63 mi 2 Major Shale Plays Marcellus 54,000 mi 2 Bakken* 24,000 mi 2 Eagle Ford 20,000 mi 2 Bazhenov**2,300,000 mi 2 *Sizes are based upon the number of blocks under which the asset lies (BOEM) *Size for North Dakota portion of Bakken ** Western Siberia Copyright 2013 Noah Consulting LLC. All Rights Reserved. Page 6

9 The Speed of the Business Business in the Shale is operating at previously unseen speeds Strain on operations Critical need for timely, accurate information Operating efficiency methods Re-thinking the conventional way Copyright 2013 Noah Consulting LLC. All Rights Reserved. Page 9

10 Logistics, Logistics, Logistics The drastic increase in drilling has created immense logistics challenges 450 Permain Basin Rig Count *Statistics from the Baker Hughes Rig Count Copyright 2013 Noah Consulting LLC. All Rights Reserved. Page 10

11 Logistics and Integration With the number of wells, the drilled footage, and production all on the rise, information requirements are changing... Access to timely and accurate land holding and expirations Supply chain issues for rigs, pipe, tubing, water, and other materials Product and by-product distribution issues Access to real-time drilling and completions data Scheduling requires re-thinking first come / first serve Safety... Safety... Safety This means that the Accounting, Procurement, Drilling, Land, Subsurface and Production systems all need to be fully integrated Copyright 2013 Noah Consulting LLC. All Rights Reserved. Page 11

12 Integration The speed of operations in the shale requires integration of all aspects of the data Drilling & Completions Finance & Accounting Supply Chain Well Master EH&S Geoscience Production Operations Copyright 2013 Noah Consulting LLC. All Rights Reserved. Page 12

13 Better Decision Making Capabilities Required The New Assembly Line Expanding Data Sources Challenging Integration Just in Time Management Expanded Data Coverage New data sources, e.g. Land, Production Challenging Integration Faster, higher volume and real-time Just In-Time Management Big Data, Predictive similar to the manufacturing process Continuous Improvement Copyright 2013 Noah Consulting LLC. All Rights Reserved. Page 13

14 Understanding the Assembly Line Some companies drill over 1000 wells a year in shale plays. The difference between $10,500,000 per well and $11,000,000 per well, over an entire year s operations is half a billion dollars! Data Analysis can help to create these efficiencies Reduce the number of trips (drill bits, muds, motor reliability) Geosteering (staying in the formation while drilling) Anti-Collision Advanced analytics to analyze and optimize the entire well lifecycle Copyright 2013 Noah Consulting LLC. All Rights Reserved. Page 14

15 More Data Analysis Many of the unconventional plays are in old mature areas Well logs date from the 1920 s, but well data predates the well log Stop Light Maps This requires integrated and spatially enabled data Accurate production information Actual production numbers need to be analyzed against the other information to continually assess the asset model Copyright 2013 Noah Consulting LLC. All Rights Reserved. Page 15

16 Other things to consider Governance: Do the existing models still work? Existing methodologies don t scale well with the amount of data Build data gathering into the asset plan JIT Is there a way to optimize the supply chain? Cannot manage / check everything need to manage by exception Apply data policies Resolve crossfunctional or crossregional data issues Define data & business rules with Data Content Owners / Stewards Monitor & sustain data quality through data governance policies Data Governance Activity End-to-end responsibility for at least one data subject area Define standardized data-related business performance measures Provide input into DQ program prioritization Work with DQ groups to ensure compliance with established standards & definitions Copyright 2013 Noah Consulting LLC. All Rights Reserved. Page 16

17 Summary Unconventional resources are playing an ever increasing role in the global energy picture Success depends upon efficient, integrated operations, which are dependent on readily available, integrated data Governance Integration Advanced Analytics Perspective Copyright 2013 Noah Consulting LLC. All Rights Reserved. Page 17