Unconventional oil and gas implications for global field development

Unconventional Oil and Gas:Implications for Global Field Development

Murray Roth – VP Global Consulting

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 2

What is the greatest driver of oilfield innovation and value in the 21st Century?

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 3

Sand!

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 4

Lots of sand!

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 5

Sand – “Horses for Courses”

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 6

Current Fracking Locations

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 7

The Fracking Process

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 8

Perforating Tools Are Guided Down To Borehole

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 9

Water And Sand Mixture Is Injected Into The Borehole

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 10

The Proppant / Water Increases Size Of The Fissure

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 11

Proppant Holds Fissures Open

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 12

Open Fissures Allow Gas To Be Extracted

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 13

How much sand?

~5M lbs/well

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 14

How much sand?

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 15

How much fluid?

~100,000 bbl/well(4.2 million gallons)

(16 million litres)

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 16

How much fluid?

1 bbl

2/3 bbl

1/2 bbl

360 wells

7200 wells

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 17

Dramatic reversal of US Gas declineShale gas production may reach half of US output by 2040

trillion cubic feet

Source: EIA, Annual Energy Outlook 2014 Early Release

billion cubic feet per dayU.S. dry natural gas production

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 18

The Unconventional Myth…

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 19

The Myth dispelledReversing the US oil declineU.S. crude oil

production million barrels per day

Source: EIA, Annual Energy Outlook 2014 Early Release

U.S. maximum production level of9.6 million barrels per day in 1970

Tight oil

Lower 48 offshore

Alaska

Other lower 48 onshore

HistoryProjections

2013

Tight oil production has added 2M b/d to US production, reversing the decline since “peak oil” in 1970

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 20

US Oil and Gas Production versus Russia/Saudi Arabia

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 21

1792 Active US Drilling Rigs

ConventionalFields

Permian1921

DrillingInfo

Wattenberg1970

Bakken1957

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 22

1792 Active US Drilling Rigs

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 23

1792 Active US Drilling Rigs

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 24

U.S. production has rapidly increased from shale

Sources: EIA derived from state administrative data collected by DrillingInfo Inc. Data are through December 2013 and represent EIA’s official tight oil & shale gas estimates, but are not survey data. State abbreviations indicate primary state(s).

Conventional Fields

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 25

Pad-based Multi-level DevelopmentBakken/Three Forks Oil Development

Continetal

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 26

Shale Oil/Gas Myth

Only the unproven source rocks….

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 27

Putin sees the value….

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 28

Global Unconventional Opportunities

New or Mature, onshore Oil (light) and Gas Fields with low-flow (low permeability) zones

AlFin

Viking,

Cardium

Bakken

Permian

Brazhenov

Achimov

Wessex ?

Cooper

Sussex

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 29

Implications for Global Field Development

The Myth:Unconventional = Shale gas development where source rocks = reservoir = trap

The Reality:North American oil and gas development is returning to older, lower risk fields including the Canadian Pembina (1953), the Texas Permian (discovered 1921) and the North Dakota Bakken/Three Forks (discovered 1957) - in the form of multi-zone, horizontal well drilling and hydraulic fracturing.

The Opportunity:Previously uneconomic zones or peripheries of existing onshore fields in Europe, North Africa, the Middle East and beyond may now be developed as low-risk and high-value projects, applying proven horizontal drilling and completions technology

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 30

Global Unconventional Opportunities

>345 billion barrels of recoverable shale oil and 7.3 quadrillion cubic feet of recoverable shale gas (EIA 2013).

Copyright © 2014, Drilling Info, Inc. All right reserved. All brand names and trademarks are the properties of their respective companies. 31

Want To Learn More?

More Analysis on our Blog:

Tracking The Drilling Rig Feeding Frenzy

The Modern Landman: How to Leverage Today’s Technology

Well Interpretation: Structure and Stratigraphic Mapping