INSTRUCTOR © 2017, John R. Fanchi All rights reserved. No part of this manual may be reproduced in any form without the express written permission of the author. © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

To the Instructor The set of files here are designed to help you prepare lectures for your own course using the text Introduction to Petroleum Engineering, J.R. Fanchi and R.L. Christiansen (Wiley, 2017) File format is kept simple so that you can customize the files with relative ease using your own style. You will need to supplement the files to complete the presentation topics.

THE FUTURE OF ENERGY © 2017, John R. Fanchi All rights reserved. No part of this manual may be reproduced in any form without the express written permission of the author. © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

Outline Oil and Gas Production and Consumption Resources and Reserves Conventional Oil and Gas Unconventional Oil and Gas Homework: IPE Ch. 2

OIL AND GAS PRODUCTION AND CONSUMPTION © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

Top 5 Oil Producing Nations as of 2014 [US EIA Petroleum, 2015; BP, 2015] © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

Top 5 Oil Consuming Nations as of 2014 [US EIA Petroleum, 2015; BP, 2015] © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

Top 5 Dry Natural Gas Producing Nations as of 2014 [US EIA Petroleum, 2015; BP 2015] © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

Top 5 Top 5 Dry Natural GAs Consuming Nations as of 2014 [US EIA Petroleum, 2015; BP, 2015] © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

RESOURCES AND RESERVES © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

Resource Pyramid

Hydrocarbon Resource Triangle Conventional: Smaller volume Easy to develop High Quality Medium Quality Low-perm oil Tight gas sands Unconventional: Larger volume Difficult to develop Gas shales Heavy oil Coal gas Unconventional reservoirs are formations that cannot be produced at economic flow rates or that do not produce economic volumes of oil and gas without stimulation treatments or special recovery processes and technologies Gas hydrates Oil shales After Fig. 1, SPE 143066 (2011) © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

Volumetric Reserves Volume of oil = (V ×  × So × R) / Bo Volume of gas = (V ×  × Sg × R) / Bg where V = reservoir volume  = porosity So = oil saturation Sg = gas saturation R = recovery factor Bo = oil FVF Bg = gas FVF

Ultimate Recovery = Past Production + Reserves Amount of Oil and/or Gas Produced over entire life Production Amount of Oil/Gas Produced to date Reserves Amount of Oil/Gas Forecast to be produced from date going forward

Deterministic and Probabilistic Reserves “When a single best estimation of reserves is made based upon known geological, engineering, and economic data” Probabilistic “When the known geological, engineering, and economic data are used to generate a range of estimates and their associated probabilities”

SPE/WPC Reserves Proved Probable Possible ● Those quantities of petroleum, which by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under defined economic conditions, operating methods, and government regulations. ● There should be at least a 90% probability (P90) that the quantities actually recovered will equal or exceed the estimate. Probable ● Those additional reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than Proved Reserves but more certain to be recovered than Possible Reserves. ● There should be at least a 50% probability (P50) that the quantities actually recovered will equal or exceed the estimate. Possible ● Those additional reserves which analysis of geoscience and engineering data suggests are less likely to be recoverable than Probable Reserves. ● There should be at least a 10% probability (P10) that the quantities actually recovered will equal or exceed the estimate. © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

Reserves and Probability for a Normal Distribution Proved Reserves = P90 = mean – 1.28×(std dev) Probable Reserves = P50 = mean Possible Reserves = P10 = mean + 1.28×(std dev) © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

PRMS Petroleum Resources Management System Initially-in-Place (PIP) Discovered PIP Commercial Production Reserves 1P 2P 3P Sub-Commercial Contingent Resources 1C 2C 3C Unrecoverable Undiscovered PIP Prospective Source: A.W. Stokes, paper SPE 170885, summarized in pp. 97-99, JPT [Dec 2014]

PRMS Resource Class (RC) Discovered PIP Production Project Maturity Subclasses RC Reserves On production 1 Approved for Development 2 Justified for Development 3 Contingent Resources Development Pending 4 Development Unclarified or on Hold 5 Development Not Viable 6 Unrecoverable 7 Undiscovered Prospective Prospect 8 Lead 9 Play 10 Increasing Chance to be Commercial Source: A.W. Stokes, paper SPE 170885, summarized in pp. 97-99, JPT [Dec 2014]

CONVENTIONAL OIL AND GAS © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

Nations with Largest Crude Oil and Natural Gas Proved Reserves in 2014 [US EIA Petroleum website, 2015] Crude Oil Reserves (billion barrels) Natural Gas Reserves (trillion cubic feet) World 1656 6972 Venezuela 298 Russia 1688 Saudi Arabia 268 Iran 1193 Canada 173 Qatar 885 157 United States 338 Iraq 140 291 Kuwait 104 Turkmenistan 265 United Arab Emirates 98 215 80 196 Libya 48 Nigeria 181 37 Algeria 159 36 China 155 Kazakhstan 30 112 © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

Regional Distribution of Crude Oil and Natural Gas Proved Reserves in 2014 [US EIA Petroleum website, 2015] Crude Oil Reserves (billion barrels) Natural Gas Reserves (trillion cubic feet) World 1656 6972 Middle East 804 2813 Central & South America 328 Eurasia 2178 North America 220 Africa 606 127 Asia & Oceania 540 119 422 46 277 Europe 12 136 © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

World Proved Reserves from 2000 - 2014 [US EIA Petroleum, 2015] © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

UNCONVENTIONAL OIL AND GAS © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

Nations with Largest Shale Oil Resources at the end of 2011 [WEC WER, 2013] (billion barrels) 2011 United States 3706 China 354 Russia 248 Congo 100 Brazil 82 © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

Shale Plays in the contiguous United States [Source: US EIA, 2015] © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

Natural Bitumen (Tar Sands) Total Original Oil in Place Nations with Largest Volumes of Natural Bitumen and Extra Heavy Oil at end 2008 [WEC, 2010, Tables 4-1 and 4-2] Natural Bitumen (Tar Sands) Total Original Oil in Place (billion barrels) Extra Heavy Oil Canada 2434 Venezuela 2446 Kazakhstan 421 United Kingdom 11.8 Russia 347 Azerbaijan 8.9 United States 53 China 8.8 Nigeria 38 Italy 2.7 © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

Size of Unconventional Gas Resources in the United States circa January 2009 [NGSA Unconventional Gas, 2009] Resource Trillion Cubic Feet Source Permeability Tight gas 309 US EIA microdarcy Shale gas 742 US FERC nanodarcy Coal gas 163 US PGC Cleats © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

A burning methane hydrate chunk - inlay is a lattice of the clathrate Methane Hydrate Structure USGS Burning_hydrate_inlay_US_Office_Naval_Research.jpg‎ Water Methane Burning ice From: http://geology.usgs.gov/connections/mms/joint_projects/methane.htm; A burning methane hydrate chunk - inlay is a lattice of the clathrate

The Gas Hydrates Resource Pyramid Source: Roy Boswell and Timothy S. Collett, “The Gas Hydrate Resource Pyramid,” Fire in the Ice, Methane Hydrate R&D Program Newsletter, Fall 2006.

Working with Communities ANSI – API Bulletin 100-3: Community Engagement Consequence of unconventional resource development Prepare communities for exploration activities Minimize disruption to communities Manage resources Source: J. Donnelly, “Community Engagement,” JPT, Sep. 14, pg. 18

QUESTIONS? © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

SUPPLEMENT © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.