1. SPE DISTINGUISHED LECTURER SERIES
is funded principally
through a grant of the
SPE FOUNDATION
The Society gratefully acknowledges
those companies that support the program
by allowing their professionals
to participate as Lecturers.
And special thanks to The American Institute of Mining, Metallurgical,
and Petroleum Engineers (AIME) for their contribution to the program.

2. Enhanced Assessment Techniques for Unconventional Resources
John Lee
Texas A&M University

3. Global Energy Opportunities Require Creative Thinking
We need increasing amounts of energy of right type at right place and right time
Viability of many alternatives limited by practical considerations
Unconventional resources play important role for most forecasters
Improved assessment methodology a key to availability of needed unconventional resources

4. Unconventional U.S. Gas Production Will Increase
History
Projections 10
US Lower 48 unconventional
US Lower 48 conventional onshore
Production, Tcf
US Lower 48 offshore
US Lower 48 associated
Alaska
Year
EIA 2005

5. Dependence on Unconventional Resources to Grow in United States
‘As a result of technological improvements and rising natural gas prices, natural gas production from relatively abundant unconventional sources (tight sands, shale, and coalbed methane) is projected to increase …
from 35 percent of total lower 48 production in 2003
to 44 percent in 2025’
EIA Energy Outlook 2005

6. Production From Unconventional Sources Will Increase in U.S.50
44%
Diminished supply of conventional resources
Production, %
Rising natural gas prices
Technological improvements
35% 25
Time

7. … And Later in the World Diminished supply of conventional resources
Production, %
Rising natural gas prices
Technological improvements
Time

8. How Do Conventional and Unconventional Resources Differ?
Massive stimulation treatments
Special recovery processes
Leading-edge technologies
Added Costs

9. Resource Distribution and Practical Permeability Limit
Resources
Resource size
High
Low
Reservoir quality
High
Low
Practical limit
permeability
After USGS, 2003

10. Resource Distribution and Practical Cost Limit
Resources
Resource size
High
Low
Reservoir quality
High
Low
Practical limit
cost
After USGS, 2003

11. Need to Extend Practical Limits Through Technology Advances
Cost
Permeability
Technology

12. NPC Forecasts Technology Impact on Gas Production32 22
Tcf
Year
With technology advancement
With no technology advancement
NPC 2003

13. NPC Model Assumes and Identifies Needed Technology Improvements
Technology Area
Annual, %
25 years,%
Exploration well success
Development well success
Ultimate per-well recovery
Initial production rate
0.53
0.41
0.87
0.74 14 11 24 20
Drilling costs
Completion costs
Construction costs
Fixed operating cost
1.81
1.37
1.18
1.00 37 39 26 22
NPC 2003

14. Improved Resource Assessment Key to Much Unconventional Resource Development
Technology Area
Annual, %
25 years,%
Exploration well success
Development well success
Ultimate per-well recovery
Initial production rate
0.53
0.41
0.87
0.74 14 11 24 20
Resource
Assessment
Drilling costs
Completion costs
Construction costs
Fixed operating cost
1.81
1.37
1.18
1.00 37 39 26 22
NPC 2003

15. Active Projects in Resource Assessment
Quantifying uncertainty in unconventional gas resource assessments in North America
Estimating unconventional gas resources outside of North America

16. Quantifying Uncertainty in Unconventional Gas Resources in North America
30 years of data
Recent, unanalyzed data on unconventional resources
Compile resource inventories and analyses
Develop assessment methodology
Well-developed, analyzed basins
Assess resources
Provide methodology to operators

17. USGS Applied Methodology for Undiscovered Resources in 2003
SAH97.165
Uinta
Piceance

18. Oil and Gas Resources Occur in Vastly Different Settings
USGS 2003

19. Resource Assessment Methodology
Identify areas within petroleum province that are ‘total petroleum systems’
Hydrocarbon source rocks
Reservoir rocks
Hydrocarbon traps

20. Classify Petroleum Systems as Conventional …
USGS 2003

21. …or Continuous
USGS 2003

22. Characteristics of ‘Conventional’ Accumulations
Relatively high matrix permeability
Obvious seals and traps
High recovery factors

23. Characteristics of ‘Continuous’ Accumulations
Regional in extent
Diffuse boundaries
Low matrix permeabilities
No obvious seals or traps
No hydrocarbon/water contacts
Abnormally close to source rocks
Low recovery factors
Includes tight sandstones, coalbed gas, oil and gas in fractured shale and chalk

24. Some Don’t Accept USGS Model for Unconventional Resources
Green
River
Uinta
Piceance
Shanley et al. (2004):
Some low-permeability gas fields occur in poor-quality rocks in conventional traps
SAH97.165

25. Schematic of Assessment Area and Petroleum-Charged Cells
Boundary of assessment area
USGS 2003

26. Three Resource-Assessment Categories Depicted
Assessment area boundary
Areas of untested cells
Cells tested by drilling
Untested cells with potential to add to reserves in next 30 years
USGS 2003

27. Petroleum-Charged Cells
Only ‘untested cells with potential’ contribute to resource-base additions
Assessment of these cells proceeds on basis of geologic understanding and petroleum engineering principles
What we are looking for is untested sweet spots

28. Production Decline Curves Used to Predict EUR
10,000
Gas
1,000
Production Rate, Bcf/month
Oil
Water
100 10
Year
USGS 2003

29. EUR Distribution for Continuous Accumulation
100,000
EUR, MMcf or 1,000 bbl
Percent of Sample
1,000
10,000
100
USGS 2003

30. USGS Undiscovered Oil and Gas Estimates for Uinta-Piceance Province, Utah-Colorado
Resource Type
Oil, MMSTB
Gas, Bscf
Conventional
Continuous P P
Mean 20.39 P P P
Mean P
P95 12,145.49
P50 20,121.27
Mean 21,211.03
P5 33,978.81 P P
Mean 38.78 P

31. U.S. and Non-U.S. Basins Selected for Further Study
U.S. basins studied will probably include frontier areas in Travis Peak and Barnett Shale
Non-U.S. basins will include Neuquen and Cuyo basins (Argentina) and Sichuan basin (China)

32. Estimating Non-U.S. Unconventional Gas Resources
Basin Analogs
U.S. Basin
Conventional
Unconventional
Conventional
Unconventional
Known
Known
Unknown
Known
International Basin

33. Objectives and Challenges
Develop methodology for identifying analogous basins
Estimate potential resources in selected basins
Challenges
No public literature available
General lack of data availability
Large number of basins in North America
Which parameter to use? What criteria?

34. Data Collection Build database of reservoir properties
Define criteria to find analog basins
Include characteristics of international basins
Enhance with VBA to compare L48 basins with international basins
Analog basin progress
Final Analog Basins
All
NA basins:
NA basins with
unconventional
gas potential
basins
Analog rank (%)
31 basins

35. Data Analysis General basin information Source rock information
Reservoir characteristics

36. Point Calculation Nearness of match, not relative values
1 × WF1 1 × WF1 1 × WF1
1 × WF2 0.1 × WF2 0.8 × WF2
1 × WF3 0.1 × WF × WF3
1 × WF4 0.7 × WF4 0.7 × WF4
1 × WF5 0.8 × WF5 1 × WF5
1 × WF6 1 × WF6 0 × WF6
Total Pts Basin 1 Basin 2
Nearness of match, not relative values
Highest scores most
likely analogs

37. Rank Result Sheet

38. Summary Comments
Unconventional resources, especially gas, to play leading role in U.S. energy supply in next 25 years 10
Production, Tcf
Year
History
Projections
US Lower 48 conventional onshore
US Lower 48 offshore
US Lower 48 associated
Alaska
US Lower 48 unconventional

39. Summary Comments
Unconventional resources also to play increasingly important role in world energy supply in coming decades

40. With no technology advancement
Summary Comments
Advances in technology key to developing potential of unconventional resources
With no technology advancement
With technology advancement 32 22
Tcf
Year

41. Summary Comments
Ability to access resources better, identify potential ‘sweet spots,’ quantify uncertainty important part of technology development

42. Summary Comments
USGS methodology for resource assessment good starting point

43. Summary Comments
Widespread applicability of continuous gas accumulation model questioned x

44. Summary Comments
Final modified model to be applied in U.S., other countries to identify broad potential, specific target areas

45. Enhanced Assessment Techniques for Unconventional Resources
John Lee
Texas A&M University

46. Fall 2005 UG Enrollment Class College Station Qatar Fish 99 10
Freshman 44 8
Sophomore 75
Junior 69
Senior 50
Total
337 18

47. Fall 2005 Graduate Enrollment
Degree
Total
Distance Learning
PhD 50 2 MS 93 ME 34 22
Non-Degree 14
191 40