Page 340 - Fundamentals of Gas Shale Reservoirs

320 RESOURCE ESTIMATION FOR SHALE GAS RESERVOIRS

(other than to hold acreage) was occurring in the gas conden- uncertainty in these properties. For example, the OGIP var-
sate window or the oil window in the Eagle Ford. The ies from county to county because of differences in net
addition of liquids production to the natural gas production thickness and other properties across the field. The distribu-
significantly improves the average product price and the tion of net thickness they used in the Barnett study covered
economic profitability of these Eagle Ford wells. In addition, the greater net thickness in Tarrant County and the lower net
the gas condensate and oil portions of the Eagle Ford are thickness in the southwestern Barnett shale. Another limita-
shallower than the dry gas portion; thus, drilling costs are tion of the high‐level assessments is related to vertical vari-
lower in the shallower portion of the play. ability in properties. They did not consider vertical variations
The Marcellus Shale has the highest recovery (Fig. 14.22). in properties, such as fracturability, throughout the zones
With a typical F&DC of US$6 million for the Marcellus evaluated. In some areas the net thickness of the shale gas
Shale wells and a gas price of US$4.0/Mcf, 38% of the plays are so thick that the entire pay zone cannot be com-
Marcellus Shale gas TRR is economically recoverable pleted and produced. However, they used the same
(Fig. 14.26), which is as economic recoverable as the distributions of net pay for the OGIP calculation and TRR
Haynesville shale. prediction for the four shale gas plays in this study.
The value of ERR will be a function of the average gas They also acknowledged the uncertainty in the produc-
price in the future. If we increase the gas price, we will tion forecasts generated by the probabilistic analytical simu-
increase the fraction of TRR that is economically recover- lator. The input parameters used to generate production
able. In 2013, the natural gas price was about US$4/Mcf or forecasts for four shale gas plays were obtained from the
less, which means many of these wells are not economic. literature and well data. The parameter values and forecasts
However, the industry is working to increase natural gas were reviewed by operators and reserves evaluators in these
demand, which may increase the natural gas price after the plays to verify their reasonableness. For instance, the proba-
year 2013. Therefore, much of the TRR will be recovered bilistic forecasts for the Barnett Shale were calibrated against
whenever the natural gas price increases to a point where actual 5‐year cumulative production data (Fig. 14.2),
more drilling will occur. although this, of course, does not guarantee the accuracy of
25‐year forecasts. Little performance data exists for the
Eagle Ford and Marcellus Shale—only one year production
14.4 DISCUSSION history was available at the time of the Dong et al. (2012)
study. Even though they calibrated the Eagle Ford and
The technology and tools described in this chapter can be Marcellus dry gas forecasts against actual production data,
useful in assessing technically and ERR in shale gas plays. there is uncertainty in these forecasts.
However, it is important to acknowledge the assumptions Table 14.15 lists opportunities for increasing ERR in
and uncertainties inherent in the results presented in this the Barnett, Haynesville, Eagle Ford gas window, and
chapter, particularly in the work of Dong et al (2013). First, Marcellus shales by increasing gas prices and/or decreasing
they assumed a 25‐year well life for calculation of TRR and F&DC. For instance, if F&DC were decreased to 2 MM$/
economic hurdles of IRR >20% and payout time <5 years well, 50% of TRR could be economically recoverable
for calculation of ERR. These are reasonable criteria, and from the Barnett Shale at a gas price of US$4.0/Mcf. If gas
similar values are used by many smaller companies and price increased to US$6.0/Mcf, 25% of TRR could be
investors that have tended to take the lead in developing recovered economically in the Eagle Ford gas window at a
shale gas plays, with larger companies, which often use dif- F&DC of 9 MM$/well.
ferent investment evaluation yardsticks, tending to enter the Dong et al. (2013) calculated the ratio ERR/TRR on an
plays later. Dong et al. (2013) chose a 25‐year production individual‐well basis. That is, ERR/TRR is the TRR from
history rather than 30 or 50 years. In the 2013 economic wells that individually meet the economic hurdles at a
environment, many independent operators invest on the particular gas price and F&DC divided by the TRR from all
basis of payout time and internal rate of return. Therefore, wells. This does not account for the practice of budgeting
production during the first 5–10 years is critically important and drilling “packages” of wells in statistical shale gas plays.
to many independent operators. Other operators may use dif- Because there is a lot of variability in individual shale gas
ferent criteria, some with a longer‐term focus and, thus, may well performance, a package of wells may meet the economic
obtain different results. hurdles overall while some wells will individually meet the
The Dong et al. (2013) resource assessments are of high economic hurdles and some will not. Once drilled, wells will
level. Although they estimated resources for entire plays, be allowed to continue producing to a net‐cash‐flow
they did not model reservoir and well properties on a well‐ economic limit even if they do not meet the economic hur-
by‐well basis. Instead, they modeled each play as a whole, dles specified earlier. Thus, actual ERR/TRR ratios for the
using probability distributions that encompassed the vari- Barnett and Eagle Ford gas window are potentially greater
ability in reservoir properties across the field as well as the than the ERR/TRR ratios presented in this chapter.