A Holistic Approach to the Appraisal Stage of Shale Gas Resources

Navarette, Mike; Chorn, Larry; Maučec, Marko

doi:10.2118/167009-ms

Cited by 6 publications

(1 citation statement)

References 8 publications

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“…• Reserves can be recognized with only a fraction of the capital required to develop, enabling the corporation to manage its development (the investment) within the time requirements of a regulatory agency (US SEC requires development within 5 years of recognition as a proved, undeveloped reserve (PUD)). • Early stage wells (appraisal wells in the conventional resource vernacular) describe the resource, optimize drilling, completion, and stimulation requirements that lead to lower future costs and better production performance (Navarette et al 2013). …”

Section: Portfolio Management Modelmentioning

confidence: 99%

Integrating Unconventional Resource Opportunities into an Exploration and Production Portfolio

Chorn

Dusterhoft

2014

SPE Annual Technical Conference and Exhibition

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Basin-centered and tight oil source rock reservoirs are abundant across the world, but their potential and contribution have only been recognized and considered for exploitation within the last 15 years. Fundamental differences exist between conventional and unconventional resources (UR) lifecycles; these differences require conceptual changes by management and strategic planners in energy companies.Unconventional resources lack a traditional exploration phase because the presence of shales and tight formations are widely known as a result of exploration activities for conventional resources. In addition, the variability of geologic properties in UR accumulations forces operators into a time-consuming appraisal phase to determine best practices for the particular character of the UR under study. After a development program has been sanctioned by management, the organization assumes a multi-decade program of drilling and stimulation, gathering system extension over a large area, and surface facility flexibility. Therefore, unconventional resources have been described as 'statistical plays.' This is true unless and until the operator has achieved static and dynamic models of the asset and is no longer hostage to local mean values and, more importantly, large standard deviations.Consequently, UR capital commitments differ from those of conventional opportunities. URs have much longer economic lives and require nearly continuous capital investment. URs provide management with the opportunity to begin a development program, and then suspend and resume it in the future because each investment in a UR can be considered to be a unique portfolio entity. This paper addresses the strategic planning issues associated with capital commitments, resource and reserve recognition, and production forecasting in each stage in the lifecycle of a UR opportunity. The paper uses a basic, probabilistic planning model to evaluate the various approaches. The intent is to understand how UR opportunities can be blended into a portfolio containing conventional portfolio entities.

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Section: Portfolio Management Modelmentioning

confidence: 99%

Integrating Unconventional Resource Opportunities into an Exploration and Production Portfolio

Chorn

Dusterhoft

2014

SPE Annual Technical Conference and Exhibition

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A Holistic Approach to Screening Stage of Shale Gas Resources

2013

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Source rock reservoirs (SRRs) are found in conventional oil and gas basins. The exploration for and the evaluation of an SRR depends on the geology, geochemistry, and petrophysical and geomechanical parameters, as well as economic constraints in the targeted area. The SRR exploration methodology is fundamentally different from conventional exploration as SRR objectives require a program that includes a data-acquisition focused effort in the early stages of exploration and appraisal. This paper highlights a holistic approach to shale gas development that has been developed in detail, encompassing more than 25 years of service company experience in US shale plays. Unconventional SRRs impose significant engineering constraints because reserves are spread out across large compartmentalized, stacked, or layered reservoirs, which are highly heterogeneous (faulted and fractured) and confine wide ranges of mineralogy. The objective of this work is to provide a better understanding of SRR quality and deliverability to assist with maximizing well productivity, improving hydraulic fracturing stimulation, and optimizing drilling and completion efficiency. This paper identifies critical paths and key technical elements or tasks associated with SRR basin screening and evaluation. Commercially successful analogs are used to evaluate and benchmark potential hydrocarbon reserves. A methodical approach that addresses the following key tasks is presented: Determine critical SRR attributes.Map selected attributes in the SRR model.High-grade the regions in the basin with the best potential. This work provides a proven road map for the evaluation and development of SRRs. Critical paths with the associated key technical elements address and provide a project scope of challenges, which enable a holistic solution to successful unconventional SRR development.

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Appraisal and Valuation for Proven Shale Play Acquisition Opportunities

Chorn

Bharali

Murali

2014

Day 1 Mon, May 19, 2014

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Shale asset property consolidation, fractional acquisition of proven properties, and outright company acquisitions generate a growing demand for technical-economic appraisal support. Proven concept plays, attractive to larger oil and gas companies and investment firms, often have large amounts of geology and geophysical data, but may have limited production histories in as many as 100 wells within the regional play. Acquirers must address data management needs, secureaccess to experienced shale professionals, and meet timeconstraints to review, interpret, understand, and value the opportunity. The acquirer must validate the seller’s technical work and assessments, gather additional supporting technical data, develop an economic model from decline curve analyses (including CAPEX and OPEX insights), establish relevant transaction benchmarks, and qualitatively evaluate the operator’s capabilities. Key components of the appraisal and valuation effort include setting technical and business metric thresholds, organizing key professionals’ work product and interactions, managing data inventory, validating existing analyses, filling in missing data with insights from analog plays, and consolidating results into actionable recommendations. The results of the appraisal and valuation exercise includes an itemization of positives, negatives, and residual uncertainties that the acquirer must incorporate into their portfolio evaluation process and estimate the value created, if the acquisition is consummated. This paper uses a recent successful acquisition to illustrate a workflow that compresses the time required to screen and evaluate a shale play acquisition in the US.

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A Holistic Approach to the Appraisal Stage of Shale Gas Resources

Cited by 6 publications

References 8 publications

Integrating Unconventional Resource Opportunities into an Exploration and Production Portfolio

Integrating Unconventional Resource Opportunities into an Exploration and Production Portfolio

A Holistic Approach to Screening Stage of Shale Gas Resources

Appraisal and Valuation for Proven Shale Play Acquisition Opportunities

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