NAPE: Geoscience gains hiking oil, gas recovery

By OGJ editors
HOUSTON, Feb. 4 -- Stiff gas-on-gas competition and a shakeout are approaching in the North American unconventional gas business, attendees were told Feb. 4 at an introductory session to the North American Prospect Expo in Houston.

The American Association of Petroleum Landmen, chief NAPE sponsor, was expecting a record number of attendees and exhibitors at the exploration and production event in spite of what one speaker described as the world's worst postwar financial climate.

The industry can drill only 1-2%/year of the 31 million acres leased for shales in North America the last few years, said Mike Bahorich, executive vice-president of exploration and production, Apache Corp.

"We're getting ready for a real slugfest," said Bahorich, who predicted that the winning combination will be the best execution on the best acreage.

The advent of high-volume shale gas wells in 2007 reversed a 10-year decline in the average peak production rate and average estimated ultimate recovery for US gas wells, said Pete Stark, vice-president, industry relations, of IHS Corp.

IHS is getting only the first rays of clarity in a worldwide inventory of shale source rocks, Stark said.

Carlos Macellari, Repsol Exploration worldwide director of geology, said companies will meet the challenge of finding new reserves as they have before, mainly by exploring where reserves already exist, as long as governments allow them access.

Linda Kinney, vice-president, business development, for IHS Herold, said upstream mergers and acquisitions fell dramatically as oil and gas prices plummeted in the second half of 2008, and companies are "reluctant to act until there's more clarity about the bottom of the cycle."

Technology gains
With low commodity prices, the industry will rely more on technology refinements and incremental improvements than new inventions, Bahorich predicted.

Technological advances in engineering, petrophysics, and geophysical imaging are vastly improving recovery efficiency, he noted.

Vertical shale wells with a single frac might have recovered 500 MMcf of gas in 2000, whereas horizontal wells with six fracs per well led to much higher initial production rates in 2007. Some wells get 15 frac stages, and 20 stages are probable in the next few years, Bahorich said.

It used to be that a horizontal well would recover three times the gas at twice the cost of a vertical well, but now the recovery can be as much as 10 times greater depending on the number of frac stages, Bahorich said. To avoid overoptimism, initial production should be normalized to the number of frac stages, he advised.

Typical now are six to seven frac stages in the East Texas Bossier tight sand play, five stages in western Oklahoma's Cleveland sands, and as many as 15 stages in northeast British Columbia's emerging Muskwa shale gas play, for example.

Apache sees several overseas areas in which its acreage probably has huge amounts of gas in place, but the domestic gas prices governments mandate in those areas would not support economic development, Bahorich said.

Gas recovery factors in shales are under debate. Early estimates were 8-16%, but microseismic monitoring of frac stimulations indicate that recovery may be as much as 50% or higher from the stimulated rock volume itself.

On the oil side, Bahorich said, Apache realized a 25% increase in initial rate to 400 b/d at Cretaceous Bahariya oil wells in Egypt's western desert from a simple oil frac redesign that calls for larger proppant at higher concentration.

Apache used to complete the full Bahariya interval in every well because it couldn't distinguish pay from nonpay on logs. A petrophysical advance that involved analyzing core, logs, and production led to a model for reasonably predicting permeability from an integrated log suite and from that predicting permeability thickness, an excellent indicator of pay.

Apache got cheap, high-quality seismic data in the western desert in a high-density test with 10 independent Vibroseis trucks that made a world record 6,500 shots/8 hr.

Among numerous geophysical firsts at Apache the past 2 years, with the falling cost of computer disk storage capacity the company has built up a 500 terabyte data base of gathers, formerly discarded as too costly to keep. The company can restack the data internally in a few days to a day.

Discoveries, acquisitions
The relationships between operating companies, service companies, and governments can create great inefficiency in periods of severe oil and gas price gyration, Repsol's Macellari noted.

Governments want greater stakes whether prices rise or fall, and when they fall fast service company agreements can trap operators into sustaining exploration after it becomes uneconomic to do so, he said. He called for greater cooperation and renegotiation.

Macellari noted that the outlook for adding new reserves looked flat in 1989 for the foreseeable future, but by 2005 the industry had added twice the volume of reserves from the 1989-existing fields as it had from exploration in 1989-2005.

In determining where to explore, organizations should examine each basin for inconsistencies in recovery. For instance, a geographic area of lower-than-average recovery in Argentina's Neuquen basin was found to be overlain by volcanics that blur seismic imaging, implying untapped potential if good data could be obtained.

Kinney said world upstream merger and acquisition activity accelerated dramatically in 2005 as commodity prices rose, and values stayed high for 3 years.

In 2006 the majority of asset transactions involved mostly gas for the first time in 5 years. Oil-weighted deals dominated in 2007, and in 2008 unconventional gas was the driver led by North American shale plays and Australian coal seam methane.

No US corporate transactions took place in the fourth quarter of 2008, she said.

Related Articles

Woodside to buy Apache’s interests in Wheatstone, Kitimat LNG for $2.75 billion

12/15/2014 Woodside Petroleum Ltd. has agreed to acquire interest in the Wheatstone LNG and Kitimat LNG projects, respectively in Western Australia and Britis...

FourPoint, EnerVest to purchase western Anadarko basin assets for $1.95 billion

11/03/2014 A joint venture of Denver-based startup FourPoint Energy LLC and privately held institutional affiliates of EnerVest Ltd., Houston, has agreed to a...

Apache planning exit of LNG projects in Australia, Canada

08/01/2014 In a move “consistent” with its “ongoing repositioning for profitable and repeatable North American onshore growth,” Houston independent Apache Cor...

Freeport-McMoRan completes $1.4 billion purchase of deepwater gulf assets

06/30/2014 Freeport-McMoRan Oil & Gas LLC, a subsidiary of Freeport-McMoRan Copper & Gold Inc., has completed its $1.4 billion acquisition of certain ...

Oil and gas midstream ripe for investment, Deloitte specialists say

05/14/2014 Surging US production has made oil and gas midstream operations attractive investment prospects, three Deloitte specialists said during the final d...

Freeport-McMoRan to buy deepwater gulf assets for $1.4 billion

05/08/2014 Freeport-McMoRan Oil & Gas LLC, a subsidiary of Freeport-McMoRan Copper & Gold Inc., has entered into a definitive purchase and sale agreem...

OTC: Ocean-bottom seismic improves resolution for offshore subsurface

05/05/2014 Streamer technology is not new, however, it has gone through many advances within the last 30 years. In 1980, 120 channels were considered advanced...

Apache to sell more Western Canada assets

03/31/2014 Houston independent Apache Corp. has agreed to sell its producing oil and gas assets in the Deep basin area of western Alberta and British Columbia...

Apache reports executive changes

02/14/2014

Houston independent Apache Corp. reported changes to its executive structure.

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts


On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected