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SHALE GAS WHAT WE KNOW WHAT WE KNOW WE DO NOT KNOW WHAT DO WE NOT KNOW WE DO NOT KNOW

PETROTECH 2009: SHALE GAS FORUM. SHALE GAS WHAT WE KNOW WHAT WE KNOW WE DO NOT KNOW WHAT DO WE NOT KNOW WE DO NOT KNOW. Supratik Banerji Regional Technology Center (RTC) – Unconventional Gas Dallas, Texas Jan 11 th , 2009. DISCUSSION POINTS.

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SHALE GAS WHAT WE KNOW WHAT WE KNOW WE DO NOT KNOW WHAT DO WE NOT KNOW WE DO NOT KNOW

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  1. PETROTECH 2009: SHALE GAS FORUM SHALE GAS WHAT WE KNOW WHAT WE KNOW WE DO NOT KNOW WHAT DO WE NOT KNOW WE DO NOT KNOW Supratik Banerji Regional Technology Center (RTC) – Unconventional Gas Dallas, Texas Jan 11th, 2009

  2. DISCUSSION POINTS WHAT WE KNOWShale Gas World Examples: Barnett, Marcellus Critical factors in shale productivity optimization WHAT WE KNOW WE DO NOT KNOWCritical factors in shale productivity optimization Shale Gas Production Mechanism Fracture Propagation Model …WHAT WE DO NOT KNOW WE DO NOT KNOW …REGIONAL TECHNOLOGY CENTERResearch DirectionsCONCLUSIONS (wherever possible)

  3. Coal, Oil, and Natural Gas Will Remain Indispensable 1980 2004 2030 288 QUADRILLION BTU 445 QUADRILLION BTU 678 QUADRILLION BTU NATURAL GAS OIL COAL 1980 2004 2030 WIND / SOLAR / GEOTHERMAL HYDRO NUCLEAR BIOMASS Source: IEA REFERENCE CASE

  4. The US Gas World 2000 2007 25 33 350 442 21 19.3 23.1 27%  8%  $4.25 $6.50

  5. Conventional and Unconventional Shall Complement Premier clean energy source ‘unconventional’ and ‘conventional’ will complement US unconventional gas / Total gas: 46% 3.6 Trillion BoE in unconventional oil (heavy oil, CBM, shale gas and oil) double the undiscovered conventional 80% of new gas production in the US will be unconventional Shale gas (US only dominant player today) Reserve of 780 TCF (US) – grossly under-reported 40 – 200 BCF gas/sq mile (Barnett) 46,000+ wells drilled

  6. Marcellus: the most promising shale gas play ?? THE GOLD RUSH • XTO: Acquires 152,000 acres from Linn Energy at $600M (April 2008); additional production: 25 MMcfe/d, average well reserve: 2 Bcfe, Resource potential: 2-4 Tcfe • SouthWestern: to spend $26 M in drilling 3 vertical wells • Chesapeake: plans 165 wells by 2009, 6 times the current number • EXCO Resources: $150 M for additional acreage; • CNX Gas: estimates shale resources between 1.3 – 5.2 Tcf: • Rex Energy: 16,000 acres of additional acreage; • Atlas Energy: sees 4-6 Tcf from Marcellus with 150 vertical wells in the next 18 months; • Chief Oil and Gas: 4 more wells in ’07; • Cabot Oil and Gas (100,000 net acres leased, two vertical wells producing 800-1000 Mcf/d, 20 well program for 2008; • East Resources: 70 well program (mostly vertical) • THE RUN UP • Chesapeake, Range and others: Acreage positions • All operators: Good gas kick, but not commercially productive • Range Resources: December ’07 press release • PennState Univ: Reserves assessment (Jan ’08) • All others: We cannot miss the boat (again) • Rigs: ??, Pumping companies: 5 • SOME NUMBERS, IN NO PARTICULAR ORDER • 1 2.5 • 600 120 54000 6000 • 168-516 50 200 25 • 5 60

  7. Barnett -- The activity continues …

  8. Gas Shales: you mean they are ”reservoirs” ? What are they? • Organic-rich shales • Source rocks • TOC : Adsorbed and free gas Common traits of gas shale reservoirs • Abundant gas (40 to 150 BCF/section) • Low porosity (~ 5%) • Very low permeability (~ 200 nD) • Low recovery efficiency (8 to 12%) • Naturally fractured (mineralized ??) • Low water saturation (~ 20% ??) • Require fracture stimulation • Long well life and large developments • Challenges • Formation evaluation • Completion design • Modeling and forecasting

  9. Why are shale “reservoirs” challenging ? -- Heterogeneous and Anisotropic. -- Complex clay morphology -- Free and adsorbed gas -- Organic maturity and type. -- Complex fracture networks -- Sensitive to acids and frac fluids. Mixed siliceous/argillaceous (Reservoir) Clay Rich (Non-reservoir) Silica Rich (Reservoir) Calcite Rich (Non reservoir)

  10. So, what is the problem? Understand production mechanism • Physico-chemical processes • Characterize fluid and rock properties and interaction Reservoir characterization • Geomechanical modeling • Production forecasting Completion Design and Execution • 3D fracture design • Tailored products/processes for execution • Hz completion strategy

  11. Wish List for Successful Tight Gas Production • High gas saturation • High matrix permeability • High pore pressure • Low fluid sensitivity; especially shale gas • Fracturable (resulting in large surface area) • Easy to drill (strong and non-abrasive) • Continuous, homogeneous, and extensive

  12. Defining the Viability of a Tight Gas Play • The three most important elements in tight gas plays:  • Heterogeneity, Reservoir quality, and Completion quality.  • The three most important elements for defining Reservoir Quality:  • Gas in place (adsorbed and interstitial), Fluid saturation (gas, water, and mobile oil), and Permeability (Pore pressure would be 4th). The three most important elements defining Completion Quality Fracture containment Rock fracturability (?) Chemical sensitivity to fracturing fluids

  13. Technology Used: MicroSeismic and Simultaneous Fracturing

  14. Current Operating Procedures: Pumping the Pond

  15. Long & Trans Fractures: Low s‘ & sH ~ sh Transverse Fractures Only: sH >> sh No Fractures: High s’ No Fractures Long, Narrow Fracture Fairway Wide Fracture Fairway Fracture Geometry Information from Horizontal Image Logs Variable Induced Fractures Infers Variable Stress

  16. Work in progress

  17. Shale Gas Developments Understanding of complex fractures vs. longer simpler fractures Determine connected surface area created (fracture widths, fluid absorbed) Optimize fracture conductivities (fluid sensitivity, proppant transport, etc) Advance interpretation of micro-seismic data

  18. ISSUES • Why are the shales full of gas, and not water ? • Can we map shale continuity through surface methods? Seismic? Resistivity? • What is the production mechanism at such high CPs? Imbibition? Is there a better liquid than water? • How can we design and control fracture propagation? What is the best proppant? Fluid? How do we make them go around transverse fractures? • EGR using CO2? Gas desorption at higher temperature Experimental study of gas shale pyrolysis Relationship between maturity and porosity, fluid saturation

  19. Conclusions: Key Parameters for Gas Shale Plays Engineering Geology & Reservoir Thermal Maturity Saturations Storage Adjacent water bearing formations Mineralogy, Faults and Fractures Organic richness, Matrix Permeability Thickness Fluid compatibility Fracture containment Fracture orientationsHydraulic & natural Fracture complexity Fracture conductivity Stress

  20. Conclusions: Shale ≠ Shale ≠ Shale

  21. PETROTECH 2009: SHALE GAS FORUM THANK YOU

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