Unconventional Reservoir Future Unconventional...Tinker, 2014 Unconventional Reservoirs U. S. Shale...

Tinker, 2014

URTeC Aug, 2014

Unconventional Reservoir Future

Science, Technology and Economics

Scott W. Tinker Bureau of Economic Geology

The University of Texas at Austin, Austin

Tinker, 2014

BEG Shale Reserves & Production Team

Dr. Svetlana Ikonnikova, co-PI

The Alfred P. Sloan Foundation

IHS & DrillingInfo for database access

For potential conflicts of interest see http://www.beg.utexas.edu/info/shale_rsrvs_prod.php

Acknowledgements

http://www.beg.utexas.edu/info/shale_rsrvs_prod.php

Tinker, 2014

Unconventional Reservoirs

U. S. Shale Gas and Shale Oil

Science, Technology & Economics

Outline

Tinker, 2014

Global Natural Gas

Resources v. Cost

QAe980

Source: IEA World Energy Outlook (2009)

0 3,000 6,000 12,000 9,000 15,000 30,000 18,000 21,000 24,000 27,000

Resources (TcF)

Pro

du

cti

on

co

st

(2008 $

/Mb

tu)

LNG

Sour

Arc

tic

De

ep

Wate

r

Shale C

oal

Bed

M

eth

an

e

Pro

du

ced

Co

nven

tio

na

l

Tight

15

10

5

0

Global Consumption

115 Tcfy

Tinker, 2014

Global Oil Resources v. Cost

0 2000 4000 10,000 6000 8000

140

20

0

Resources (billion barrels)

Pro

du

cti

on

co

st

(2008 $

)

Coal

to

liquids

Gas

to

liquids

Oil shales

Shale oil

Pro-

duced MENA

Other conventional

oil

Deepwater and

ultra-deepwater

40

60

80

100

120

Heavy

oil

&

bitumen

EOR

Arctic

CO2 EOR


Global Consumption

31 Bby

Tinker, 2014

5

10

15

20

25

30

Ma

rke

ted

Pro

du

cti

on

(Tc

f)

0 0

50

100

150

200

250

300

Pro

ve

d R

es

erv

es

(Tc

f)

U.S. Natural Gas Production and Reserves

Data: BP World Energy 2012

End-of-Year

U.S. Proved Reserves

Annual

U.S. Production

Tinker, 2014

U.S. Natural Gas Production (TcF)

http://www.eia.gov/energy_in_brief/about_shale_gas.cfm

0

5

10

15

20

25

1990 1995 2000 2005 2010

Shale gas

Coalbed methane

Tight gas

Non-associatedoffshoreAlaska

Associated with oil

Non-associatedonshore

14 TcF

9 TcF

23 TcF

Tinker, 2014

U.S. Natural Gas Production (TcF)

http://www.eia.gov/energy_in_brief/about_shale_gas.cfm

0

5

10

15

20

25

1990 1995 2000 2005 2010

Shale gas

Coalbed methane

Tight gas

Non-associatedoffshoreAlaska

Associated with oil

Non-associatedonshore

14 TcF

9 TcF

23 TcF

Conventional Gas

Total Natural Gas

From a 2004 Tinker Talk to the IPAA US Natural Gas 2004 forecast

Unconventional Gas

1949 1955 1961 1967 1973 1979 1985 1991 1997 2003 2009 2015

0

5,000

10,000

15,000

20,000

25,000

An

nu

al

Na

tura

l G

as P

rod

ucti

on

(B

cf)

EIA (1949-1990) and NPC (1991-2015)

15 TcF

10 TcF

25 TcF

An Anticipated Evolution

Tinker, 2014

Model: Rice University, Medlock, 2012

Actual

Shale Gas Forecast vs. Actual

B

F

H

M

Tinker, 2014

Annual US Oil Production

From: James D. Hamilton, Working Paper 17759, NATIONAL BUREAU OF ECONOMIC RESEARCH, 2012

Th

ou

san

d b

arr

els

/year

Tinker, 2014

Monterey Woodford/Anadarko

Utica Barnett

Uinta Niobrara

Permian Midland

Permian Delaware Granite wash

Eagle Ford

Bakken

2010 U.S. SHALE LIQUIDS

PROJECTION

5

4

3

2

1

0

2010

U.S

sh

ale

liq

uid

s p

roje

cte

d g

row

th

(Mb

pd

)

2012 2014 2016 2018 2022 2020

After Morse et. al., 2012, Energy 2020: North America, the new Middle

East: Citi GPS: Global Perspectives & Solutions, figure 14, p. 17.

QAe465

~ 1.4 Bby from

shale by 2022

10% IRR: $44/bbl

10% IRR: $50/bbl

10% IRR: $68/bbl

10% IRR: $44/bbl

10% IRR: $50/bbl

10% IRR: $51/bbl

IRR Source: Rystad Energy

United States

Consumption

~ 7 Bby

Actual

PB

B

EF

Tinker, 2014

Annual US Oil Production

From: James D. Hamilton, Working Paper 17759, NATIONAL BUREAU OF ECONOMIC RESEARCH, 2012

Th

ou

san

d b

arr

els

/year U.S. Production

~ 3.1 Bby Today!

Tinker, 2014




Outline

Tinker, 2014

Unconventional Resource Plays

Modified from: EIA and National Geographic QAei2915

Utica

HilliardBaxterMancos-Niobrara

Cody

Heath Fm

Hermosa

Mancos

Lewis

Niobrara Fm

Mowry

Monterey- T emblor Pierre- Niobrara

Monterey

Manning Canyon

Kreyenhagen

Gothic-Hovenweep

Miocene

Miocene-Oligocene

Eocene

Cenozoic

Cretaceous

Jurassic

T rassic

Mesozoic

Permian

Pennsylvanian

Mississippian-Penn

Mississippian-Devonian

Devonian

Ordovician

Mississippian Cambrian

Paleozoic

T ight sands

Basins

Utica

Marcellus

Bakken

Cline

W oodford

Bend

W olfcamp

Eagle Ford

New Albany

Niobrara Fm

Excello-Mulky

Fayetteville

Niobrara- Mowry

Gammon

(Midland)

Pearsall

W oodford-Caney

Chattanooga

Utica- Collingwood

Antrim

Antrim

Antrim

T uscaloosa

Haynesville

Floyd-Neal

Conasauga

Floyd-Chattanooga

Chattanooga

Barnett

A valon-Bone Spring W olfberry

W olfcamp (Delaware)

Barnett- W oodford

Tinker, 2014


Modified from: EIA and National Geographic QAei2915

Miocene

Miocene-Oligocene

Eocene

Cenozoic

Cretaceous

Jurassic

T rassic

Mesozoic

Permian

Pennsylvanian

Mississippian-Penn

Mississippian-Devonian

Devonian

Ordovician

Mississippian Cambrian

Paleozoic

T ight sands

Basins

Marcellus

Fayetteville

Haynesville

Barnett

Bakken

Eagle Ford

Permian

Basin

Tinker, 2014


Marcellus

Fayetteville

Haynesville

Barnett

Bakken

Eagle Ford

Permian

Basin

Middle

Devonian

From Blakey; http://cpgeosystems.com/paleomaps.html

Laurentia

&

Baltica

Bakken

Tinker, 2014

Bureau of Economic Geology

U.S. Shale Gas Integrated Study

What is the total resource base in place?

What portion is technically recoverable?

What potion is economically recoverable?

What is the long-term production outlook?

Tinker, 2014

Ikonnikova S., et al. 2013. SPE Res. Eval & Eng

Barnett Productivity

Tiers

Tinker, 2014

Well Profiles Vary by Tier

BEG Shale Reserves and Production Project

Barnett • Variable leases

• Multiple operators

• Wide range of

completion types

Tinker, 2014


Barnett Drilling by Tier

Tinker, 2014


Gas Price $4.00/mcf

45 Tcf

Tinker, 2014

$-

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0

0.5

1

1.5

2

2.5

1995 2000 2005 2010 2015 2020 2025 2030

He

nry

Hu

b $

20

10

Tcf

pe

r Y

ea

r

Tcf per Year (Base Case Sensitivity to Price)

Tcf @ $10 HH

Tcf @ $6 HH

Tcf @ $4 HH

Henry Hub $2010

Barnett

Production Forecast


45 Tcf

Tinker, 2014

0.000

0.005

0.010

0.015

0.020

0.025

0.030

0.035

0.040

0.045

0.050

29 34 39 44 49 55 60 65 70

Re

lati

ve

Fre

qu

en

cy

Cumulative Production (Tcf)

35 Tcf

56 Tcf

OGIP 444 TcF

Browning, J. et al. 2013. SPE Econ & Mgmt

Barnett Monte Carlo Production Distribution

Tinker, 2014

Fayetteville Productivity Tiers

Tinker, 2014

Fayetteville

Production Forecast


Tinker, 2014

$-

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

2005 2010 2015 2020 2025 2030

He

nry

Hu

b $

20

10

Tcf

pe

r ye

ar

Tcf per Year (Base Case Sensitivity to Price) Tcf @ $10 HH

Tcf @ $6 HH

Tcf @ $4 HH

HH $2010

Fayetteville

Production Forecast


17 Tcf

Tinker, 2014

0

0.01

0.02

0.03

0.04

0.05

10 12 14 17 19 21 23 26 28

Re

lati

ve

Fre

qu

en

cy


Fayetteville Monte Carlo Production Distribution

13 Tcf 23 Tcf

OGIP 80 TcF


Tinker, 2014

Haynesville Productivity Tiers

Tinker, 2014

Haynesville Production Forecast


Tinker, 2014

Haynesville Production Forecast


37 Tcf

Tinker, 2014

0

0.005

0.01

0.015

0.02

0.025

0.03

0.035

0.04

0.045

0.05

0.055

14 24 33 43 52 62 72 81

Re

lati

ve

Fre

qu

en

cy


24 Tcf 62 Tcf

Haynesville Monte Carlo Production Distribution

OGIP 489 TcF


Tinker, 2014

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

Tier 1 Tier 2 Tier 3 Tier 4 Tier 5 Tier 6 Tier 7 Tier 8 Tier 9 Tier 10

Barnett Low Btu

Barnett High Btu

Fayetteville Shallow

Fayetteville Medium

Fayetteville Deep

Haynesville

Breakeven Economics 10% IRR

Economics by Tier (Bcf)


$4 Base Case

Tinker, 2014

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

Tier 1 Tier 2 Tier 3 Tier 4 Tier 5 Tier 6 Tier 7 Tier 8 Tier 9 Tier 10

Barnett Low Btu

Barnett High Btu

Fayetteville Shallow

Fayetteville Medium

Fayetteville Deep

Haynesville

Breakeven Economics 10% IRR

Economics by Tier (Bcf)


$6 Case

Tinker, 2014

1712 Tcf OGIP free


Marcellus OGIP

Barnett

OGIP 445

HVille

OGIP 489

FVille

OGIP 80

All Maps Shown with Common Distance Scale

Tinker, 2014

0

2

4

6

8

10

12

0

2

4

6

8

10

12

1995 2000 2005 2010 2015 2020 2025 2030

He

nry

Hu

b P

rice

($

20

12

/M

MB

tu)

TC

F

Marcellus

Haynesville

Fayetteville

Barnett

HH $2012

Base Case ($4) Stacked Production


45 TcF

37 TcF 17 TcF

U.S. Consumption

~ 25 TcF/Year

Tinker, 2014

EIA Price Case Stacked Production

0

2

4

6

8

10

12

0

2

4

6

8

10

12

1995 2000 2005 2010 2015 2020 2025 2030

He

nry

Hu

b P

rice

($

20

12

/M

MB

tu)

TC

F

Marcellus

Haynesville

Fayetteville

Barnett

HH $2012


45 TcF

37 TcF 17 TcF

U.S. Consumption

~ 25 TcF/Year

Tinker, 2014

$6 Case Stacked Production

0

2

4

6

8

10

12

0

2

4

6

8

10

12

1995 2000 2005 2010 2015 2020 2025 2030

He

nry

Hu

b P

rice

($

20

12

/M

MB

tu)

TC

F

Marcellus

Haynesville

Fayetteville

Barnett

HH $2012


45 TcF

37 TcF 17 TcF

U.S. Consumption

~ 25 TcF/Year

Tinker, 2014

Model: Rice University, Medlock, 2012

EIA

BEG EIA price deck

Forecast vs. Actual

Tinker, 2014

0 3,000 6,000 12,000 9,000 15,000 30,000 18,000 21,000 24,000 27,000

Resources (TcF)

Pro

du

cti

on

co

st

(2008 $

/Mb

tu)

LNG

Sour

Arc

tic

De

ep

Wate

r

Shale C

oal

Bed

M

eth

an

e

Pro

du

ced

Co

nven

tio

na

l

Tight

15

10

5

0

~5,600

Tcf

Global Natural Gas

Resources v. Cost

QAe980


Barnett Fayetteville Haynesville Marcellus Total

BEG Original Gas in Place (Tcf) 444 80 489 1712 2725 BEG ($4) Production – 2050 *Marcellus through 2070 45 17 37

Field Wide Recovery % 10% 21% 8%

Tinker, 2014




Outline

Tinker, 2014

The 5E Waltz

Energy Economy

Environment

Efficiency

Education

Tinker, 2014

The Radical Middle

Academia/NGO

Government

Industry

The

Radical

Middle

Tinker, 2014

• Can we re-complete existing wells economically?

• Will technology and economics allow for development of the large

OGIP and OOIP in middle tiers?

• Can we improve facilities and manage flaring, choking of wells and

other operational limitations?

• Can we improve fracture characterization and increase the number of

contributing stages?

• Do we understand rock mechanics and what creates surface area?

• Can we forecast and manage decline of production and improve our

estimates of EUR?

• Can we drill fewer wells from fewer pads?

• Can we use less water?

• What controls induced fracture morphology and can we improve our

imaging of fracture networks?

• Can we improve characterization of hydraulic fractures by deploying

smart nanosensors?

• Can we improve our understanding of adsorbed gas? Porosity?

Permeability?

Some Key Questions

Tinker, 2014

The Radical Middle

Economics

Technology

Science

Success

Porosity

Adsorption

Permeability

Characterization

Fracture Imaging

Recompletions

Middle Tiers

Facilities

Contributing Stages

Rock Mechanics

Manage Decline

Fewer Wells

Less Water

Tinker, 2014

Energy and the Economy

QAe963

Korea

Australia

Brazil

World

China

United States

0

TP

ER

pe

r cap

ita

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

GDP per capita

India

5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000

After: Rice World Gas Trade Model

Medlock, 2012

TPER = Total Primary Energy Requirement.

Energy needed to facilitate Total Final

Consumption (TFC does not include

conversion and transmission losses).

Japan

Tinker, 2014


QAe963

Korea

Australia

Brazil

World

China

United States

0

TP

ER

pe

r cap

ita

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

GDP per capita

India

5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000


Medlock, 2012





Japan

~3 billion

people

Tinker, 2014


A Global Challenge

QAe963

Korea

Australia

Brazil

World

United States

0

TP

ER

pe

r cap

ita

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

GDP per capita

India

5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000


Medlock, 2012





Japan

Developed Nations • Balance of Trade

Exports

Imports

• Regulation and Planning

Infrastructure

Resources

Permitting

• Emissions, Climate, Environment

• Energy Security

Developing Nations • Food

• Housing

• Clothing

• Education

• Healthcare

• Electricity

Tinker, 2014

Oil “Frontiers” Unconventional Technology for Conventional Reservoirs

0 2000 4000 10,000 6000 8000

140

20

0

Resources (billion barrels)

Pro

du

cti

on

co

st

(2008 $

)

Coal

to

liquids

Gas

to

liquids

Oil shales

Shale oil

Pro-

duced MENA

Other conventional

oil

Deepwater and

ultra-deepwater

40

60

80

100

120

Heavy

oil

&

bitumen

EOR

Arctic

CO2 EOR


Tinker, 2014

1. Governments, industry and academe must work together; we all play a role in objective, balanced energy education.

2. The scale of energy demand is difficult to comprehend; energy transitions take many, many decades.

3. Energy security — affordable, available, reliable, sustainable — drives the energy mix and should be the goal of energy policy.

4. Energy efficiency is underappreciated; individuals matter!

5. Diverse energy portfolios are inevitable and healthy.

6. Renewables are growing but will remain regional supplements until major advances are made in energy storage.

7. Shale will play a global role in the energy future; “above ground” challenges are as important as “below ground.”

8. Natural gas and nuclear are the new foundational energies.

9. Oil and coal are abundant at the right price, and difficult to replace as transportation and electricity fuels.

10. Energy, the economy and the environment are linked.

Tinker’s Top Ten

Unconventional Reservoir Future Unconventional...Tinker, 2014 Unconventional Reservoirs U. S. Shale...

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