Apresentação de Mike Dawson, da Dawson Energy Advisors, durante o evento promovido pelo Sistema FIEB, Fundamentos da Exploração e Produção de Não Convencionais: a Experiência Canadense.
Technological Innovation Creating Opportunities for Development
1. Alberta’s
Emerging Shale Gas Industry
Technological Innovation
Creating
Opportunities for Development
Dawson Energy Advisors Ltd.
November 2013
2. Major Driver for Unconventional Resource Development - Size of the Prize
Conventional hydrocarbon plays have
traditionally relied on the low hanging
fruit for success
Unconventional resource plays have
a large resource base but require
more advanced technology to
capture the reward
Dawson Energy Advisors Ltd.
November 2013
3. Key Messages that I hope to convey over the next 1 1/2 hours:
Successful shale gas development consists of application of
technology coupled with operational efficiencies
Management needs to be comfortable with the size of the investment
needed and the time required for a return on capital invested
A manufacturing mentality is necessary for commercial development
A thorough understanding of the reservoir is needed to quantify
variables and to match completion technology with reservoir
properties
The fundamental goal of all technologies employed is to maximize
reservoir contact resulting in optimal productivity and EUR
Dawson Energy Advisors Ltd.
November 2013
4. Topics to be Discussed
Foundation of Unconventional Reservoirs
Exploration Strategies
Contacting the Reservoir
Drilling Technologies
Hydraulic Fracture Stimulations
Microseismic Tools and Observations
Technological Success - Alberta Shale Gas
Dawson Energy Advisors Ltd.
November 2013
5. Topics to be Discussed
Foundation of Unconventional Reservoirs
Exploration Strategies
Contacting the Reservoir
Drilling Technologies
Hydraulic Fracture Stimulations
Microseismic Tools and Observations
Technological Success - Alberta Shale Gas
Dawson Energy Advisors Ltd.
November 2013
6. Fundamental Differences Between Conventional and Unconventional Reservoirs
1000 md
High
Quality
100 md
Medium
Quality
Tight
Oil
Larger Reservoirs
More Difficult to
Develop
1 md
Coalbed
Methane
0.1 md
Tight
Gas
Gas
Shales
0.001 md
Lower
Quality
Increased Technology Requirements
Smaller Reservoirs
Easier to Develop
Increased Cost to Develop
Natural Resources Triangle
0.00001 md
Gas Hydrates
modified from Schmezl, 2009
Dawson Energy Advisors Ltd.
November 2013
7. Unconventional Reservoirs
Conventional Reservoirs
Conventional
Oil or Gas Reservoirs
Tight Gas or Oil
Sandstone
Shale
Extremely Tight
0.0001
Natural Gas from Coal
Tight Oil in Limestone
Very Tight
0.001
Tight
0.01
Low
0.1
Moderate
1.0
High
10.0
100.0
Permeability (mD)
Poor
Granite
Quality of Reservoir
Sidewalk
Cement
Note: Natural Gas from Coal reservoirs are classified as unconventional due to type of gas storage
Dawson Energy Advisors Ltd.
Good
Volcanic Pumice
modified from US DOE
November 2013
8. Unconventional Reservoir Continuum
Conventional Gas
Reservoirs
Tight Gas
Reservoirs
“Hybrid”
Reservoirs
Shale Gas
Shale Oil
Coalbed Methane
Reservoirs
The shift from conventional to unconventional reservoirs reflects a change in
grain size from higher permeability, coarser grained rocks towards very fine
grained rocks with low permeability
Reservoir variability both vertical and geographically can lead to the
development of “sweet spots” of higher permeability in the finer grained
reservoir rocks
Core photos courtesy of Canadian Discovery
Dawson Energy Advisors Ltd.
November 2013
9. Shale is just not Shale
Organic-rich Black Shale
Silt - Laminated Shale or Hybrid
Highly Fractured Shale
Gas stored in shale and silt
Low to moderate TOC
Higher permeabilities in silty layers
High TOC & high adsorbed gas
Low matrix Sw
High matrix Sg
Gas stored as free & adsorbed
Mature Source Rock
Low TOC & low adsorbed gas
High matrix Sw
Low matrix Sg
Gas stored in fractures
Shale is the source rock
From Hall, 2008
Dawson Energy Advisors Ltd.
November 2013
10. Conventional vs Continuous or Unconventional Type Accumulations
Lateral pervasiveness of hydrocarbon bearing strata results in large accumulations
The identification and development of the higher permeability “sweet spots” is an important
consideration in the overall project economics
Resource plays can be considered a statistical play where there will be a range of producibility well
profiles, and a large number of wells are required in order to achieve economic success
from Midnight Oil and Gas, 2009
Dawson Energy Advisors Ltd.
November 2013
11. Resource play development is a statistical play
Recognition that within the
oil or gas field there are
going to be both high volume
and low volume producers
Rely on statistical average to
achieve project economic
return on investment
Understanding reservoir
properties will decrease the
risk of completing low
volume producing wells
From Southwestern Energy, 2009
Dawson Energy Advisors Ltd.
November 2013
12. Aspects of Unconventional Reservoirs
Unconventional Reservoir
Conventional Reservoir
Lease area
Prospective reservoir area
Producing well
Non-producing well (dry hole)
Higher production area (sweet spot)
Dawson Energy Advisors Ltd.
Lease area
Fundamental Differences
Conventional reservoir areas constrained by geological
boundaries
Within the unconventional reservoir area are sweet spots of
higher productivity
Most wells in unconventional reservoir are productive but some
may not meet economic thresholds
Unconventional reservoirs require significant number of wells to
achieve statistical thresholds of economic production
November 2013
13. Unconventional Resource Exploration Area
Much of the prospective
reservoir area contains
productive hydrocarbons but
not necessarily at economic
rates
The identification of the
“sweet spots” of potentially
higher productivity wells is
an important element of
economic success
Lease area
Prospective reservoir area
Producing well
Non-producing well (dry hole)
Higher production area (sweet spot)
Dawson Energy Advisors Ltd.
A strong understanding of
reservoir properties and the
heterogeneity of the
reservoir across the lease
block helps in defining the
presence and location of the
sweet spots
November 2013
14. Other Aspects of Unconventional Resource Development
Risk of Success
Conventional Reservoirs
Risk of Success
Unconventional Reservoirs
Geoscience
Engineering
Geoscience
Much of the risk is concentrated in the
front end geoscience exploration and
the ability to locate natural gas
reservoirs of economic size
Dawson Energy Advisors Ltd.
Engineering
Risk is concentrated in the ability to
produce economic volumes from
laterally pervasive deposits of natural
gas where the risk of finding
hydrocarbons is low
November 2013
15. Typical Investment Profile for Unconventional Resource Development
Shale gas exploration is capital intensive with large volume of investment in the
early stages and return on investment throughout the life of the project
To achieve economic production companies require:
Strong commodity prices
Ideally existing infrastructure (pipelines, processing facilities etc.) to lower capital costs
Advanced technologies to optimize productivity while lowering costs
Availability of equipment and materials in sufficient quantity and stability of supply
< $ million annual cash flow >
Investor Cash Flow
Production
Cumulative
Cash Flow
Tax Paid
0
Operating Expenditure
Capital
Expenditure
Each bar = 1 year
From Shell E&P Technology, 2009
Dawson Energy Advisors Ltd.
November 2013
16. Typical Production Profiles
Conventional Reservoirs
Decline rates of production may
follow three types of curves and
generally are less than 20% per year
0
15
30
45 60 75 90 105 120
(months)
Unconventional Reservoirs
Commonly steep decline
rates up to 75 – 85% in
the first 18 months of
production
Dawson Energy Advisors Ltd.
November 2013
17. Other Aspects of Unconventional Resource Development
Production declines are relatively steep (60 to 80% in the first year)
Companies are compelled to be on a drilling treadmill to offset
production declines while at the same time growing production
As a result large land tracts of mineral tenure are required to allow
for the planning of an inventory of drillable locations
Dawson Energy Advisors Ltd.
November 2013
18. Observations about successful North American shale gas exploration projects
Shale gas exploration is capital intensive requiring several hundreds of millions of
$$ of investment before commercial production of scale is achieved
The application of key technologies that enables increased contact to the reservoir
is the key to commercial success
Integration of geology and engineering disciplines to recognize the influence of
geology on engineering design and ultimate productivity
Exploration and development will take a number of years to reach thresholds of
production
A well established exploration strategy is necessary to ensure that:
Reservoir properties that will influence production are identified
Optimum completion technologies are applied to demonstrate repeatability
The optimal target area is identified in the lease area (sweet spot if present)
Capital efficiency
Management understanding of risk, reward and time requirements
Dawson Energy Advisors Ltd.
November 2013
19. Topics to be Discussed
Foundation of Unconventional Reservoirs
Exploration Strategies
Contacting the Reservoir
Drilling Technologies
Hydraulic Fracture Stimulations
Microseismic Tools and Observations
Technological Success - Alberta Shale Gas
Dawson Energy Advisors Ltd.
November 2013
20. Unconventional Gas Strategy is Critical to Success
Understanding the Play
Reservoir Characterization
Resource Assessment
Formation Properties & Analogs
Address the Resource Play Challenges
Which technologies, services or products are most appropriate
Operational Risk / Cost Assessment
Field Trials / Pilot
Build in Efficiencies of Operations and Material Management to Control Costs
Scale of operations is usually large (program drilling and completions)
Remote areas may add significant cost
Bundling of Services, Concurrent / Continuous Operations
Dawson Energy Advisors Ltd.
November 2013
21. Unconventional Resource Play Strategy
AN INTEGRATED APPROACH TO WELL DESIGN
Completion
Strategy
Reservoir
Characterization
Unlocking
the
Resource Play
Application of Technology
Wellbore
Architecture
from E. Schmelzel, 2008
Dawson Energy Advisors Ltd.
November 2013
22. The Key Questions
Reservoir Characterization
Reservoir modeling
THE GOAL
MAXIMIZED
Sweet Spot identification
Wellbore placement
RESERVOIR
EXPOSURE
Wellbore completion
from E. Schmelzel, 2008
Dawson Energy Advisors Ltd.
November 2013
23. Primary goals of initial exploration programs for unconventional plays are:
Define rock properties of the target zones to determine how much hydrocarbon
may be present
Define reservoir properties to guide in the development of the fracture stimulation
program
Undertake initial stimulation testing of primary zones to quantify initial productivity
Conduct extended reservoir testing to determine decline rates and changes in
reservoir pressure
Reserves
Exploration Activities
Initial Drilling
OGIP
Initial
Well Testing
IP
Initial
Well Stimulation
and Testing
Extended
Well
Testing
Multiple Wells
And
Reproducibility
Of Results
Resources
P10
Dawson Energy Advisors Ltd.
P50
Probability of Success
P90
November 2013
24. Determination of reservoir properties along with stimulation and production
optimization requires a number of years of testing and pilot projects
Time
Stage 1:
Stage 2:
Identification of
UCG Resource
Early Evaluation
Drilling
Exploration Tasks
Preliminary
geological
assessment to
determine
potential for
hydrocarbons
Stage 3:
Pilot Project Drilling
Vertical drilling to
obtain core samples for
reservoir properties
along with estimation of
resource potential and Early horizontal drilling
to evaluate well
geographic limits of
performance with
potential field
varying hydraulic
fracturing technologies
along with continued
reservoir testing to
determine engineering
properties
Dawson Energy Advisors Ltd.
Pace of development is largely
dependent on technical success,
economics and market conditions
and availability of equipment and
materials
Stage 4:
Pilot Production
Testing
Stage 5:
Advanced hydraulic
fracturing testing and
improvements of
productivity with
reduced expenditure
Commercial Development
Project
Reclamation
November 2013
25. Key Variables That Influence Overall Reservoir Performance
Permeability
Total Organic
Carbon
Reservoir
Producibility
Thermal
Maturation
Porosity
Shale Distribution
and Geological
Setting
Reservoir
Fracability
Regional Stress
Completion and stimulation choices will be influenced by there reservoir characteristics
as well as outside factors such as technology, materials and equipment availability
Dawson Energy Advisors Ltd.
November 2013
26. In order to be economically successful most unconventional resource play
projects require the adoption of a “manufacturing “ style of operations. This
is to ensure that the project achieves:
Optimization of Reservoir Production
Employs Economies of Scale and Economic Benefits
Continuous Improvement of Productivity while at the same time
reduction in production costs
Sufficient land base to support ongoing drilling and development plans
that account for steep decline of initial production rates
Service sector alliances that will allow continuous operations and
economies of scale
Dawson Energy Advisors Ltd.
November 2013
27. Pilot project testing is necessary:
To realize continue improvement of wellbore productivity and ultimate reserve recovery
Demonstrate technology repeatability for large scale commercial development
From Encana
Dawson Energy Advisors Ltd.
November 2013
28. Summary and Key Points
Shale gas exploration and development is capital intensive and requires a well
developed exploration strategy to enhance the probability of success
A staged exploration approach allows key reservoir knowledge to be obtained during
the exploration programs prior to corporate commercial decisions being made.
Understanding of the reservoir is critical to develop the most effective drilling and
completion technologies that will improve the prospects for commercial production
Development of repeatability as well as production optimization is necessary before
commercial development begins
Shale gas reservoirs are heterogeneous and there will be variability from region to
region. The key is to understand the reservoir properties to be able to identify
variables that will impact producibility
Dawson Energy Advisors Ltd.
November 2013
29. Topics to be Discussed
Foundation of Unconventional Reservoirs
Exploration Strategies
Contacting the Reservoir
Drilling Technologies
Hydraulic Fracture Stimulations
Microseismic Tools and Observations
Technological Success - Alberta Shale Gas
Dawson Energy Advisors Ltd.
November 2013
30. Three key technologies form the foundation upon which the
unconventional resource potential in Canada has been unlocked
Unconventional Gas Resources
Horizontal Drilling
Micro-Seismic Monitoring
Multi Stage Fracturing
Dawson Energy Advisors Ltd.
November 2013
31. Evolution of Drilling Technology
Increase in Reservoir Contact
$$$
$$
Horizontal
multilateral wells
Horizontal Wells
Unconventional
Resources
$
Vertical
wells
with
multiple
targets
Vertical
wells
Time
Dawson Energy Advisors Ltd.
November 2013
32. Drilling technology needs to be matched with the specific reservoir geometries
Vertical reservoir targets may be best intersected using vertical or deviated wells
Thick laterally persistent shale reservoirs are best intersected using horizontal wells
or horizontal with a multi-lateral configuration
Courtesy of Halliburton
Dawson Energy Advisors Ltd.
November 2013
33. Drilling Efficiencies and Savings have
been achieved through:
Speed of drilling using new bit technology
(PDC bits achieve penetration rates of up to
80 m/hr)
Multiple drill string assemblies that
reduce tripping time
Geosteering in real time in horizontal and
multilateral wells
Automation of rig floor equipment
eliminating additional manpower
Fit for purpose rigs that can move on site
without teardown
Improved drilling fluids for solids removal
and borehole stability
From Range Resources, 2010
Dawson Energy Advisors Ltd.
November 2013
34. Wellbore design for extended lateral length (>2000 m) requires proper design including
an understanding of reservoir properties, geological barriers and regional stress regimes
Drilling of horizontal wells with the horizontal
legs being up to 3500 m in length
Multi stage fracture stimulations using slick
water and sand to essentially “create reservoir”
in rock that would not have been previously been
considered reservoir quality
Dawson Energy Advisors Ltd.
November 2013
35. Rotary Steerable Systems consideration for efficiency gain (ROP) and
improved well bore quality (Logging/Completion activities).
Dawson Energy Advisors Ltd.
November 2013
36. LWD considerations for preferred placement within Duvernay Formation.
Dawson Energy Advisors Ltd.
November 2013
38. Application of multiple wells from single drilling pads reduces surface footprint
Requires accurate
downhole drilling
surveys to ensure
proper borehole
separation between
parallel horizontal
legs as well as
optimal reservoir
drainage
Multiple wells from a single pad
allow optimal materials
management and cost savings
through the employment of a
“manufacturing process”
Dawson Energy Advisors Ltd.
November 2013
39. Topics to be Discussed
Foundation of Unconventional Reservoirs
Exploration Strategies
Contacting the Reservoir
Drilling Technologies
Hydraulic Fracture Stimulations
Microseismic Tools and Observations
Technological Success - Alberta Shale Gas
Dawson Energy Advisors Ltd.
November 2013
40. Fracture stimulations are required for most unconventional
resource plays due to low permeabilities of the reservoirs
Type of fracture stimulation used is defined by:
Depth and number of reservoirs to be stimulated
Reservoir quality
Type of wellbore (vertical versus horizontal)
Fluid sensitivity
Geomechanical properties of the reservoir
Availability of equipment and materials
Economic assessment of wellbore deliverability
Dawson Energy Advisors Ltd.
November 2013
41. The primary goal of hydraulic fracture stimulation is to produce hydrocarbons from the
wellbore in an accelerated timeframe by creating a series of pathways from the wellbore to
the natural fracture or permeable flowpaths within the reservoir
In unconventional reservoirs, the hydraulic fracturing process is critical due to the low
permeability
Silt - Laminated Shale or Hybrid
Highly Fractured Shale
Organic-rich Black Shale
Migration of hydrocarbons to the induced fracture
Dawson Energy Advisors Ltd.
Modified from Hall, 2008
November 2013
42. Principle of Multi-Stage Fracture Stimulations
To effectively stimulate the entire length of the horizontal leg multi-stage
fracture technology is necessary
Single stage stimulations tend to leave much of the intersected reservoir
un-stimulated due to preferential flow of fracture fluids
Isolation technologies allow the horizontal leg to be divided into discrete
stages that can be stimulated individually
Stage fracturing ensures that the maximum amount of fracture energy can
be applied into a defined area thus making a more effective fracture with
greater number of fractures or a greater fracture half length
Radioactive tracer log indicates that only 3 of 6 perforations accepted fracture fluid
Dawson Energy Advisors Ltd.
From SPE 90697
November 2013
43. Typical coil tubing
unit used for multizone fracture
stimulation
Hydraulic fracturing operations are
completed on a large scale and require
specialized equipment
Completion techniques as well as size and
amount of equipment will be dependent on
the depth of the reservoir, size of fracture
stimulation and number of fracs designed
for the well
Dawson Energy Advisors Ltd.
November 2013
44. Fracture Stimulation Parameters
The main purpose of fracture stimulation is to create open
pathways for fluid flow within the reservoir either by
creation of fractures or intersection of existing fracture
systems
Ideally the reservoir rock should be “brittle” so that it
fractures easily
Mineral content of the shale component will determine “fracability” of
reservoir – ideally a silica rich shale is preferred
Sheared and slickensided fractures
Open vertical fractures
From Hall, 2008
Dawson Energy Advisors Ltd.
November 2013
45. Multi-Stage fracture stimulation allows more accurate placement
of frac with specific volumes of frac fluid and proppant
Dawson Energy Advisors Ltd.
November 2013
46. Understanding the Reservoir is
Key to
Optimizing Production and
Reserve Recovery
This is achieved through
continuous improvements and
experimentation in
drilling, completion and
production techniques
From Southwestern Energy, 2009
Dawson Energy Advisors Ltd.
November 2013
47. Downhole Technologies
The mechanism by which the fracture fluid and proppant are delivered into the specific
stages of the multi-stage fracturing operation is critical to the successful fracture
stimulation
There are many types of technologies that address the access to the reservoir with
minimization of formation damage. These systems are built around two fundamental
approaches:
Cemented Liner
Open Hole (non cemented liner or no liner)
Both of these approaches have advantages and disadvantages and may not be suitable
under all reservoir conditions
Dawson Energy Advisors Ltd.
November 2013
48. Downhole Technologies
Cemented Liners
Access to the reservoir is limited to the perforated zones and the fracture created beyond the
cemented liner
Provides stability to the wellbore and ensures proper isolation during fracturing stages
More cost effective (the frac job takes longer but downhole tools costs are signficantly lower
Most service companies provide varying types of multi-port borehole isolation technologies
for cases wellbores
Liner or production tubing is cemented
into the wellbore in the horizontal leg
Perforations penetrate through liner as well
as the wellbore cement into the formation
courtesy of Halliburton
Dawson Energy Advisors Ltd.
November 2013
49. Downhole Technologies
Open Hole Completions
Relies on mechanical packers to isolate stages of the wellbore for fracturing
Enables fracture fluid and proppant to travel into the natural fracture system
unconstrained by perforation locations
Ideally suited for operations where time is critical but usually more costly than
conventional cemented fracture stimulations
courtesy of PackersPlus
Dawson Energy Advisors Ltd.
November 2013
50. Reduction of Fines
Proppant technology continues to address the issues of:
Creation of fines from the proppant and reservoir
Integrity of the proppant material under pressure and temperature
From Carboceramics
Dawson Energy Advisors Ltd.
November 2013
51. Maximization of Reservoir Contact
The object of reservoir stimulation is to maximize
communication between the wellbore and the reservoir
Reservoir communication can be in the form of intersecting
existing fracture systems or creating a fracture network
in the reservoir rock surrounding the wellbore
Definition of Stimulated Rock Volume (SRV)
The amount of reservoir rock stimulated that contributes to the ultimate
recoverable volume of natural gas produced from the wellbore
Length of lateral stimulated
Fracture network width
Fracture height
SRV = fracture network height x fracture network width x length of stimulated lateral
Dawson Energy Advisors Ltd.
November 2013
52. Key Elements of Hydraulic Fracture Stimulation Programs
Choosing the right technologies for the fracture stimulation is dependent
foremost on the reservoir itself.
The operator must have a good understanding of the reservoir properties
in order to design the proper fracture treatment program
Each reservoir will have its own unique characteristics and early stage
exploration activities are required to determine these reservoir
properties
Other factors determining the choice of fracture stimulation are:
Availability of equipment and technology
Availability of fracture fluids and proppant
Number of stages required the total size of each stage
Relative cost
Dawson Energy Advisors Ltd.
November 2013
53. Topics to be Discussed
Foundation of Unconventional Reservoirs
Exploration Strategies
Contacting the Reservoir
Drilling Technologies
Hydraulic Fracture Stimulations
Microseismic Tools and Observations
Technological Success - Alberta Shale Gas
Dawson Energy Advisors Ltd.
November 2013
54. Micro-Seismic to Determine Effectiveness of Stimulation
Measures micro seismic events related to the propagation of
fractures within the reservoir
Requires one or more observation wells to allow proper mapping of
location geographically and vertically of microseismic events
Can be run independently or as permanent seismic arrays in field to
be developed
Provides a 3D image of fracture propagation that can be measured in
real time during the fracture stages
Allows fracture propagation trends to be identified and adjusted for
additional stages so fractures can be contained within zone
Identifies areas of poor fracture generation or geological barriers to
effective stimulation
Dawson Energy Advisors Ltd.
November 2013
55. The validity and usefulness of microseismic data is highly dependent on
the design of the microseismic program
Observation Well Distance and number of observation sites
In Canada, typical distance from observation well to
stimulated well are:
Shallow Gas – 150 m
Foothills Tight Sands – 700 m
Issues
Same Pad Operations
Other Cultural Noise (e.g., Production)
Treatment Factors
Viewing Angle
Seeing As Much Of The Fracture As Required
Avoiding Breaking Into The Observation Well
Receiver Depth
Straddling
Above
Dawson Energy Advisors Ltd.
November 2013
57. Micro-seismic monitoring of the multi-stage fracture stimulation program allows:
Visualization in real time of fracture propagation enabling adjustments to be made during the
stages to ensure that the fractures are staying within zone
Identification of previously unrecognized geological barriers
Determination of optimal horizontal well spacing
Determination of stimulated rock volume (SRV) for reserve determination
Micro-seismic monitoring
of fracture events for each
staged stimulation allows
the lateral and vertical
envelope of the fracture
stimulated rock to be
determined
Dots represent individual
micro-seismic events that
occur during the
fracturing of the reservoir
Track of the horizontal wellbore
Courtesy of Nexen, 2011
Dawson Energy Advisors Ltd.
November 2013
58. Microseismic events can be used
to calculate stimulated rock
volume for reserve valuations
Production contribution from various
stages to overall wellbore
production can be observed and
calibrated to reservoir heterogeneity
or effectiveness of stimulation
techniques
Dawson Energy Advisors Ltd.
November 2013
59. Observations From Field Activities in North America
Microseismic Activity Is Very Limited For Rates < ~ 20 bpm
From An Offset Observation Well
Higher Stimulation Rates Generate More And Larger Microseisms
Larger Volumes Generate More And Larger Microseisms
Microseismic Activity In Horizontal Wells Is Increased By Limiting Fracture
Entrances
Uncemented Laterals Often Have Considerably Less Activity
Highly Tectonic Environments Often Are Good Microseismic Candidates
High Stresses, Large Shear, And More Fracture Planes (Oblique)
Thick Reservoirs Are Likely To Generate Stronger Microseisms
Vertical Fractures (Most Common) Will Be Larger (Larger Slip Area)
Dawson Energy Advisors Ltd.
November 2013
60. Topics to be Discussed
Foundation of Unconventional Reservoirs
Exploration Strategies
Contacting the Reservoir
Drilling Technologies
Hydraulic Fracture Stimulations
Microseismic Tools and Observations
Technological Success - Alberta Shale Gas
Dawson Energy Advisors Ltd.
November 2013
61. Distribution of Canada’s Unconventional Hydrocarbon Resources
Canadian Unconventional Resource Estimates**
** Based upon CSUG 2010 Appraisal of Original Gas in Place (OGIP)
Natural Gas from Coal
Shale Gas
Tight Gas
801 Tcf
1111 Tcf
1411 Tcf
Major Sedimentary Basins containing
potential unconventional hydrocarbon
resources (excluding gas hydrates)
Identified Resource Play Targets
Natural Gas from Coal (NGC)
Shale Gas
Liard
Basin
Tight Gas (sands and carbonates)
Tight Oil
Bowser
Basin
Western
Canada
Sedimentary
Basin
Anticosti
Basin
May 12, 2011
Appalachian
Basin
Maritimes
Basin
Sydney
Basin
February 2013
62. Development of Canada’s unconventional resources
has embraced technology and innovation as well as
addressing market challenges and environmental
considerations
2004-2006
2006-2008
Reservoir
Characterization
“Science of the
reservoir”
Technological
Application
“How do we
produce the
resource”
Technological progression in
resource development is based
upon continuous improvement
to achieve greater economic
returns but influenced by
outside forces such as market,
environment and opportunity
Dawson Energy Advisors Ltd.
2009-2010
Technological
Evolution
“How do we
produce the
resource at
economic rates
given the North
American
market issues”
2011-2012
2013 - ?
Technological
Innovation
“How do we
produce the
resource in a
responsible
manner that
respects
industry
commitment to
society and the
environment”
Technological
Transfer
“How can we
transfer our
knowledge to
new plays in
different
geological
settings as well
as geographic
environments”
November 2013
63. Alberta’s Emerging
Unconventional Resource
Opportunities
Montney Fm tight gas
Duvernay Fm shale gas
Cardium Fm tight oil
Viking Fm tight oil
Exshaw Fm tight oil
Note: Exshaw Fm is stratigraphic
equivalent to Bakken Fm in
Saskatchewan
Map does not illustrate coalbed
methane potential in province
Dawson Energy Advisors Ltd.
November 2013
64. Commercial shale gas development benefits
from multiple operations from multi-well pads
Reduced environmental footprint
Effective materials management for continuous operations
Equipment and operational efficiency
Surface infrastructure efficiencies for long term production
From Encana
Dawson Energy Advisors Ltd.
November 2013
65. Companies are demonstrating improvement through cost reduction and increased
productivity in response to downward market pressure in North America
Montney Performance History
$MMCDN
3.5
$6.45
7
Cost/Interval
Supply Cost*
6
$4.55
2.5
5
$4.10
$3.20
$3.40
$3.17
4
$3.15
$2.76
1.5
1.0
3
NYMEX
DCT costs / interval
3.0
2.0
$/MMBtu
2
$1.50
0.5
$0.94
$0.81
$0.63
$0.51
$0.55
1
$0.50
0.0
0
2006
Vertical
2006
2007
4
6
2008
8
2009
2010
2011
9
13
14
2012F
15
Completion
Stages
*Supply Cost is defined as the flat NYMEX price that yields a risked IRR of 9% and does not include land or G&A costs.
Courtesy of Encana
Dawson Energy Advisors Ltd.
November 2013
66. Technological Development
Driven by Price
Reservoir Quality
Higher Quality Reservoirs
Discreet Pool Size
$5 - $20 / bb/ Vertical wells
$20 - $60 / bbl
Vertical wells
with Fracture Stimulation
$20 - $60 / bbl
Horizontal wells
$60 - $120 / bbl
Horizontal wells
with Staged Fracture
Stimulation
$120 / bbl+
Key technologies of horizontal
drilling and multi-stage fracturing
Vertical
Vertical with Frac
Horizontal
Horizontal with Multi-Stage Frac
Low Quality Reservoir
Larger Geographic Distribution of
Resources
modified from Penn West, 2011
Dawson Energy Advisors Ltd.
November 2013
67. Social Media and the need for Factual Information
The societal issues of shale gas exploration and
hydraulic fracturing has dominated the
headlines in many geographic regions,
particularly in areas that do not have a long
history of oil and gas exploration
Most of the
concerns are
predicated on
misinformation for
example “Gasland”
Dawson Energy Advisors Ltd.
November 2013
68. North American Markets is the Biggest The Challenge
Oversupply of
natural gas into the
North American
market has led to a
dramatic price
collapse where the
current economics
of natural gas
production are
challenged
Companies have
responded by
shifting their
focus to higher
priced
commodities such
as tight oil and
liquids rich
natural gas
Government of Nebraska website
Dawson Energy Advisors Ltd.
November 2013
69. Alberta Opportunities and Challenges
Alberta contains significant amounts of unconventional hydrocarbon
resources, both shale gas, liquids rich shale gas and tight oil
Competitive production from other basins within North America has meant
that companies exploring for these resources have needed to achieve
improvements in productivity whole at the same time lowering production
costs to remain competitive
Applications of new technologies in drilling, completions and production as
well as analytical techniques has enabled many operators to achieve
economic rates of return even in a price constrained market
As commodity prices recover, the continued application of these
technologies will enhance the economics of these unconventional resource
plays
Many exploration and service companies are looking at deploying these
technologies internationally into emerging unconventional global resource
plays
Dawson Energy Advisors Ltd.
November 2013
70. Key Elements of Shale Gas Exploration
Shale gas production is a statistical play. While there will be high volume producers (in the
technical “sweet spot of the reservoir geographic area)a there will also be wells that
underperform in terms of gas production.
Understanding the geological variability of the reservoir both vertically and geographically is
critical to optimizing productivity of the individual wellbores.
Placement of horizontal wells within the reservoir to intersect the most prospective layers
within the shale reservoir and to recognize the implications of horizontal stress is an important
aspect of the drilling.
Geophysical logging and petrophysics is required to identify reservoir properties that will
influence the fracture propagation and effectiveness
Knowledge of reservoir properties is critical in designing an fracture stimulation program that
will link into the natural fracture network of the strata
Micro-seismic monitoring is an integral part of shale gas exploration to effectively visualize the
placement of the fractures as well as determine the volume of reservoir stimulated for reserve
calculation
Dawson Energy Advisors Ltd.
November 2013
71. Determination of reservoir properties along with stimulation and production
optimization requires a number of years of testing and pilot projects
Time
Stage 1:
Stage 2:
Identification of
UCG Resource
Early Evaluation
Drilling
Exploration Tasks
Preliminary
geological
assessment to
determine
potential for
hydrocarbons
Stage 3:
Pilot Project Drilling
Vertical drilling to obtain
core samples for reservoir
properties along with
estimation of resource
potential and geographic Early horizontal drilling to
evaluate well
limits of potential field
performance with varying
hydraulic fracturing
technologies along with
continued reservoir
testing to determine
engineering properties
Dawson Energy Advisors Ltd.
Pace of development is largely
dependent on technical
success, economics and market
conditions and availability of
equipment and materials
Stage 4:
Pilot Production
Testing
Stage 5:
Advanced hydraulic
fracturing testing and
improvements of
productivity with
reduced expenditure
Commercial Development
Project
Reclamation
November 2013
72. Key Messages
Canada has abundant natural gas resources to enable natural gas to be part of a comprehensive
national energy strategy
Technological achievements in horizontal drilling, multi-stage fracture stimulation and microseismic monitoring are enabling the economic development of numerous low permeability
reservoirs in Western Canada
Over supply into a market constrained North American market has led to short term economic
challenges for industry and government
Industry has responded by becoming more efficient as well as employing technological
innovation to remain competitive
Government has tailored their royalty and fiscal regime to include the unique aspects of
unconventional resource development
The key to long term sustainability is to expand export opportunities to beyond North America
and to increase the domestic utilization of natural gas through transportation and power
generation
Dawson Energy Advisors Ltd.
November 2013
73. In South America there appears to
be substantial potential for
unconventional resources
From the Canadian experience, companies
and government need to recognize:
Capital requirements will be much higher
than originally anticipated
A minimum of 4 to 5 years will be
needed to complete exploration prior to
making a commercial decision
Analogues from existing producing shale
basins are valuable but understanding
the unique reservoir properties of the
basin itself is critical for success
Application of core technologies such as
horizontal drilling, multi-stage fracturing
and microseismic form the foundation
but the unique reservoir properties of a
specific basin will require innovation and
experimentation to optimize productivity
Source: EIA World Shale Gas Resources Report, April 2011
Dawson Energy Advisors Ltd.
November 2013
74. Alberta’s
Emerging Shale Gas Industry
Technological Innovation
Creating
Opportunities for Development
Thank You for your Attention
Dawson Energy Advisors Ltd.
November 2013