APACHE CORPORATION EXPERIENCES IN SHALE GAS EXPLORATION IN THE USA George E. King 9 August 2012.

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Presentation transcript:

APACHE CORPORATION EXPERIENCES IN SHALE GAS EXPLORATION IN THE USA George E. King 9 August 2012

 Liquids Rich Examples  Bakken, Eagle Ford, Monterey, Bone Springs, Avalon,  Utica?  Barnett Oil Window  Gas Examples  Marcellus, Barnett, Haynesville, Horn River, Fayetteville, Woodford, Montney 2 TOP 20 NORTH AMERICAN SHALE PLAYS: SOME SIMILARITIES & MANY DIFFERENCES

3

TECHNICALLY RECOVERABLE SHALE GAS 4 Kennedy, SPE In January 2012, US EIA Reduced TRR for shale gas from known reservoirs from 862 to 482 tcf Why? Factual data replaced the estimates in the first analysis – Drilling and Production gives much better information.

5 Worldwide Unconventional GIP Resources, from Kuuskra (EIA – 2011) – Kennedy SPE (Gas in place!)

Year % OGIP Recovery (OGIP = original gas in place) Technologies Applied Shale in Development Average gas price $/mmbtu Shale Gas Tech. Rec. Reserves (TRR) 1980’s1%Vertical wells, low rate gel fracsDevonian$1.98 <0.3 tcf 1990’s1.5 to 2%Foam fracs 1 st slick water in shaleDevonian$ to 4%High rate slick water fracsBarnett$ to 8%Horizontal well dominant, 2 to 4 fracsBarnett$ to 12% Horiz, 6 to 8 fracs, stimul fracs, water recycle trial Barnett$ to 30% 16+ fracs per well, Petrophysics increases Barnett$9- drop % to 40% Technology to flatten decline curve, feeling pinch for frac water Haynesville$ % to 45% (very play dep.) Pad development drains 6000 acres, salt water displacing fresh for fracs Horn River$4.00 Futureproject ?Green chemicals, salt water fracs, low disposal volume, reduced truck traffic, pad drilling, electric rigs and pumps NumerousDepends on market > 480 tcf 6 Source: King, SPE

Learning curve increases reflect the ability to invent, adapt and optimize technology to meet the challenges offered in each area. LEARNING CURVE – APPLICATION OF TECHNOLOGY

SHALE WELL COSTS 8 Lateral lengths, when not limited by lease size of shape, may surpass 10,000 ft.

9

DECLINE CURVES 10 Four Different Major Gas Shales – from the shallowest to the deepest Barnett Fayetteville Eagle Ford Haynesville

NORTH AMERICAN SHALE PLAYS

AVERAGE GAS RECOVERIES EUR (Estimated Ultimate Recoveries) will vary by an order of magnitude across a single shale play. EIA Figures

SHALE OIL RECOVERIES 13 Oil recovery from shale is also increasing as technology is improved.

 Macro – Large Picture:  Basin View  Maturity, Depth, Recoverable Reserves, “Sweet Spots”  Micro – Small Picture:  Shale Fabric  Mineralogy, Natural Fractures, Saturations, Reactions FIRST – MAP THE SHALE 14

SCALE DOWN TO THE BASIN. Conant and Swanson,

AREAL VIEW WITH SUBSURFACE EVENTS What has each of the events created that well completions and stimulation must take into consideration? Is production different on the high side of a fault from the low side? 16

Source: THE LITHOLOGY (ROCK SOURCE AND TYPE) 17

N => S & W => E As vertical views are examined, the effect of uplifts demonstrate their effects on shale thickness, formation pinch-outs, depth differences, frac barriers and perhaps some geologic factors. 18

FAULT SYSTEMS Faults confuse drilling and may concentrate or release stresses (definitely change them) – this impacts fracture placement and may adversely affect water production. Deep, extensive faults may act as conduits over time intervals for water influx and gas escape, raising potential for sub-optimum wells. 19

“SHALE” MINERALOGY – WIDE VARIANCE 20 Many different combinations of mineralogies can still be economic. You must modify the completion and stimulation to make it work, 20

ISOREFLECTANCE OR VITRINITE REFLECTANCE: MAP OF BARNETT MATURITY Approximate Maturity Ranges: <0.6 - Immature 0.6 to 1.1 – Oil generation 1.1 to 1.4 – oil to wet gas to drier gas >1.4 mostly dry gas  ~ 3 decomposition to CO 2 and H 2 S? Varies w/ kerogen type & other factors 21

Thickness is often “constant” over a region but highly variable in a few specific locations. Nothing replaces a good geologic model and plenty of mapping. 22

DEPTH TO SHALE BASE (BARNETT) Darker shade is the Barnett core. Yellow shade indicates potential production (best are eastern Parker and most of Johnson Co.’s. Blue areas are generally poorly productive. 23

ONE COMPANY’S EVALUATION OF MARCELLUS ACREAGE 24

25

RIGHT DOWN TO MICROSCOPIC LEVEL - FLOW PASSAGES 26

IN GENERAL, PROSPECTIVE SHALES HAVE:  Limited clay constituents, usually less than 40%.  Static Young’s Modulus in excess of 3.5 x 10 6 psi.  Dynamic to Static Young’s Modulus consistent with clastic reservoirs, not ductile or high clay content shales.  Are fairly isotropic on the core plug scale (not many/any laminations evident.  Flow gas at effective confining conditions through an un-propped crack at reservoir stresses. 27

CANDIDATE SELECTION CHARACTERISTICS 28 Source: SPE

 Protecting the Environment – Yes, it is possible.  Emission Reductions in Frac flow back and production.  Low pressure gas recovery on flowback and production.  Minimize trucking  Well construction must be done right to protect air and water.  Alternate water supplies – salt water can be a good frac fluid.  Fracturing is the same as conventional fracturing - smallest chance of pollution of any major energy source enabler.  Horizontals give 93% reduction in environmental footprint. SHALE DEVELOPMENT CHALLENGES - ENVIRONMENT 29

VERTICAL OR HORIZONTAL WELLS? 9+ SQ. MILE AREA (6000 ACRES) Horizontal well advantages: Less land used Fewer surface penetrations Agreed on pad placement Less traffic, dust, & emissions Less urban & wildlife disturbance, All wells penetrate the ground in the same area – can be easily monitored Sharply lower methane vapor loss (using low press capture & compression) 6000 acres: ItemsVertical Wells Horizontal Well Pad Wells (80 acre spacing)7512 Roads (miles)282 Gas/Oil Pipelines (miles) 304 Frac Water supply pipeline (miles) 302 Facility Pads81 Trucking Miles (or 1400 w/ pipeline) Rig Mob/De-Mob751 Fresh water monitor area 6000 acres8 acres (99.9% reduction) Pad Footprint (acres)1506 (96% reduction) Total Development Footprint 566 acres45 (92% reduction) Total Production Footprint 491 acres33 (93% reduction)

 Many wells = economic dependency  Well costs – Drill, Complete, Frac, Produce  Water Supplies – treating and recycle?,  Total water cost  Water Storage – how, where, how long, how much  Transport – fresh, salty and waste  Proppant supplies – quality and quantity  People – Quality over quantity  Dry gas value in the market –  Cannot lower cost of operations much,  Can we enlarge the market? SHALE DEVELOPMENT CHALLENGES - ECONOMIC 31

 All Shale Developments are Technology Driven  Optimized sweet spots to select areal and vertical well position  Horizontal, Long lateral, multi-fractured well bores  Fit for purpose frac fluid (few additives, pumped at high rate), not recipes  Optimum production methods that maximize NPV.  Low cost drilling  Large number of low cost wells needed for shale development.  Some technology is transferable – Barnett technology MAY shorten learning curve, BUT specific technologies are needed for specific shales.  Large Differences in the Gas Shales – vertically and aerially  Shale gas is disruptive to other energy supplies and suppliers – it can produce enormous gas reserves, but takes technology, and technology development takes time and money. OBSERVATIONS 32

 Kennedy, R.L., Knecht, W.N., Georgi, D.T.: “Comparisons and Contrasts of Shale Gas and Tight Gas Developments, North American Experience and Trends,” SPE , SPE Saudi Arabia Section Technical Symposium and Exhibition, Al-Khobar, Sandi Arabia, 8-11 April  King, G.E.: “Thirty Years of Gas Shale Fracturing: What have We learned,” SPE , SPE AATCE, Florence, Italy, Sept  King, G.E.: “Hydraulic Fracturing 101:…,” SPE , SPE Hydraulic Fracturing Conference, The Woodlands, TX, USA, 7-8 February SHALE REFERENCES 33