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

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

FourPoint Energy to acquire Anadarko basin assets from Chesapeake

07/02/2015 FourPoint Energy LLC, a privately owned Denver company, plans to acquire oil and gas assets from Chesapeake Energy Corp. subsidiaries Chesapeake Ex...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

MARKET WATCH: Oil prices decline as US crude inventories post first gain in 9 weeks

07/01/2015 Oil prices on July 1 surrendered much of their gains from the day before after the release of a government report showing the first rise in US crud...

FWS issues Shell letter of authorization on Chukchi Sea lease

07/01/2015 The US Fish & Wildlife Service issued Shell Gulf of Mexico Inc. a letter of authorization (LOA) related to the potential disturbance of polar b...
White Papers

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts

On Demand

OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST


Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST


Emerson Micro Motion Videos

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