OTC: Shale, deepwater development present different challenges

The oil and gas industry continues to unlock greater resources both onshore and offshore—in shale formations and in deepwater. Growing production from these areas, particularly in the US, is the product of continuous innovation and the resources contained in both will play a critical role in meeting growing global energy demand.

These were some of the themes to arise during a May 5 panel discussion at the Offshore Technology Conference in Houston.

“The more we can cross-learn between the two segments, the faster we can improve,” said Torstein Hole, one of the panel members and a senior vice-president at Statoil ASA.

Hole said some technical aspects of shale development—such as research on rock mechanics and gas lift—have applications offshore as well.

David Eyton, group head of technology for BP PLC, added that companies can exploit technology synergies in areas “such as imaging, fracturing, sand consolidation, enhanced recovery, and artificial lift.”

Different approaches needed

However, operators must take different approaches to developing shale and deepwater resources due to the different nature of the reservoirs and the varying conditions present above-the-surface.

Shale development occurs onshore near population centers, requiring urban planning and greater public interaction. Shale is also characterized by fast-paced development using hundreds of wells, and a high degree of cost sensitivity.

Offshore development, meanwhile, calls for significantly longer project lead times, fewer wells, and significantly higher costs and risks.

Years of planning and preparation are required to bring a deepwater discovery online, but the potential payoff is much larger.

The resources extracted from a single shale well, represented in the form of estimated ultimate recovery (EUR), are relatively small compared with an offshore well. For onshore shale developments, “It is the collective wells in a region which constitutes a substantial prize,” said Doreen Chin, upstream surface advisor for Shell Exploration & Production Co., and Sandeep Khurana, senior project manager for Granherne Inc. The pair coauthored a technical paper for OTC that comparing shale to deepwater development.

Chin and Khurana wrote, “The motivation to consider deepwater investments includes the large resource sizes drainable with fewer wells and the resulting production with a longer payout profile.”

Eyton said deepwater is characterized by the sheer scale of individual developments with high upfront capital requirements. To be economical, he said, well productivities and drainage areas must be orders of magnitude greater than those for unconventional wells.

Shale wells, with their comparatively lower EURs, have much tighter margins than offshore wells and operators are keenly focused on lowing costs and becoming more efficient.

Darrell Hollek, a senior vice-president for Anadarko Petroleum Corp., said shale development is all about incremental economics. “If you can’t control your costs you won’t be an effective player in the onshore side,” he said.

Supply renaissance

The US is the largest producer of unconventional oil and natural gas in the world, and the US Energy Information Administration expects shale will help increase US oil production to 9.6 million b/d by 2016.

Lee Tillman, chief executive officer of Marathon Oil Corp., said both shale and deepwater are contributing to a US supply revolution. “Today we find ourselves in the midst of a supply renaissance,” he said.

Tillman said both shale and deepwater production are needed to meet the world’s growing energy needs.

Contact Rachael Seeley at rachaels@ogjonline.com.

Related Articles

EPA proposes voluntary methane reduction program for gas industry

07/24/2015 The US Environmental Protection Agency proposed a voluntary methane reduction program for the natural gas industry that would allow companies to ma...

Petrobras workers stage 24-hr strike

07/24/2015 Workers at beleaguered Petroleo Brasileiro SA (Petrobras) staged a 24-hr strike across Brazil to protest plans by the state-owned company to liquid...

MARKET WATCH: Oil futures hover below $49/bbl

07/24/2015 Light, sweet crude oil futures prices settled under $49/bbl July 23 on the New York market, which means US prices have slid more than 20% since the...

EQT reports high IP from Utica dry gas well

07/24/2015 EQT Corp., Pittsburgh, said a deep, dry gas Utica well averaged 72.9 MMcfd with an average flowing casing pressure of 8,641 psi during a 24-hr deli...

Separate Murkowski bill addresses crude exports, OCS revenue sharing

07/24/2015 US Senate Energy and Natural Resources Committee Chair Lisa Murkowski (R-Alas.) introduced legislation that would end the ban on US crude oil expor...

OGUK updates guidelines for well abandonments

07/23/2015

Oil & Gas UK has released updated guidelines for abandonment of wells, including cost estimates.

MARKET WATCH: Oil futures plunge below $50/bbl

07/23/2015

Light, sweet crude oil futures prices plunged lower to settle below $50/bbl on the New York market on July 22.

Cornyn calls for more US energy exports in wake of Iran deal

07/23/2015 US Senate Majority Whip John Cornyn (R-Tex.) said it would be geopolitically, economically, and strategically absurd for the US to maintain outmode...

Post-sanctions Iran initially won’t shake markets up, executive says

07/22/2015 Iran’s resumption of oil and gas exports, once sanctions are lifted under the recently negotiated nuclear limits agreement, probably won’t flood gl...
White Papers

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

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
Available Webcasts


The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.

register:WEBCAST



On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST


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


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