Economics and Technology Drive Development of Unconventional Oil and Gas Reservoirs: Lessons Learned in the United States

Abstract

Development of unconventional hydrocarbons is increasingly important as conventional resources decline and oil and gas demand increases. The concept of the energy resource triangle (Masters 1979) suggests unconventional oil and gas are abundant, but the exploitation of these resources is particularly sensitive to both technology and commodity prices. In this paper, we assess the effects of technology and various geopolitical and economic events on historic U.S. unconventional oil and gas production, in the context of Master's resource triangle theory (RTT). We used the Austin Chalk as the base case and then extended the study to seven other unconventional plays. The two approaches used to evaluate the RTT were: (1) correlation of commodity prices and technology with drilling activity, and (2) production forecasting using decline curve analysis. Spearman's Rank Correlation Coefficient was used technique to establish the dependence between active wells, rig count, and commodity price variables. Decline curve analyses allowed us to estimate the increase in production from different scenarios of high price or technology. Results support the RTT concept: higher commodity prices encouraged the introduction of new technologies, and increased drilling activity and boosted production from unconventional plays. For example, horizontal drilling revived older plays, such as the Austin Chalk. Moreover, the combination of horizontals wells and advanced fracture stimulation techniques led to the expansion of shale plays such as the Barnett and the Bakken. Correlation of commodity prices with drilling activity demonstrated that, during periods of high commodity prices, the number of producing wells increased an average of 75%. Using decline curve analysis, a maximum of $50 billion oil and gas production was forecasted via vertical, fractured wells (conventional technologies) and an economic cutoff of 5 BOE/d/well. However, current production plans, using improved technologies, suggest that the assessed plays may produce an additional $320 billion oil plus gas. U.S. production from unconventional reservoirs, stimulated by a federal tax credit, technology advances, and high commodity prices, encourage operators to dip lower into the resource triangle. Lessons learned in the U.S. may encourage the exploitation of unconventional oil and gas worldwide.

An Experimental Study of Ultrasonic Swave Polarization by Transmission Through Fractured Porous Media

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