UnconventionalRsuropprus ausrsFractured shale plays are emerging across the United States and around the world. As the largest acreage holder of Whangai-Waipawa shale in New Zealand, TAG Oil brings its technical and operational expertise to bear in unconventi onal gas and oil exploration. if ’s u, ud bpy irspshhrgh‘sy s g,’ hxprd prdudusry s rsgy urg sh…d hhgy f hydrufrurg…rsfrm urrsrrs mmry bprs. Technology-driven, unconventional resource plays—particularly projects in search ogas or oil production rom ractured shale—are sprouting up across the United States and around the world. As extraction technology improves, areas once thought to contain resources that would never see the light oday are today considered to be some othe most proliic and popular in the industry. Why have these unconventional reservoirs remained undeveloped, and what’s changing? Shale, which consists mainly oconsolidated clay-sized particles, is the Earth’s most common sedimentary rock. It looks like the slate oa chalkboard and gener- ally has ultra-low permeability. In many oil ields, shale orms the geologic seal that retains the oil and gas within conventional producing reservoirs, preventing hydrocarbons rom escaping to the surace. In a handul obasins, however, lay- ers oshale—sometimes hundreds oeet thick and covering millions oacres— are both the source rock and a reservoir sequence or oil and gas. These shales have one thing in common: they are rich in organic carbon. “add hgs hbbhd hg-dfyg rds e&P, wg mss dmsrsurs hrrd dprfrms, ghr zs, dpr wr, mrssrms, d rsgy mrusgs.” U.S. Department of Energy
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Advanced drilling and completion technology is responsible or the dramatic production increase in East Texas’ Barnett Shale and other developing ractured shale plays which share similarities to New Zealand’s Waipawa-Whangai shales.
Fractured Shale Opportunities in Australasia | August 2008 page 4
The Waipawa Black Shale is a ractured,
poorly bedded, organic-rich siltstone. Out-
crop sampling indicates an average total
organic carbon (TOC) value’s o 5% and
average Hydrogen Index (HI) o 245 with
maxima o 12% TOC and 550 HI, respec-
tively. The ormation occurs throughout
TAG Oil’s East Coast Basin acreage and has
also been identiied in other areas o New
Zealand. The Waipawa Black Shale is normal-
ly 30m or more thick and achieves a maxi-
mum thickness o 70m in Southern Hawke’s
Bay. The organic carbon is primarily o marine
origin, although signiicant terrestrial organic
matter is evident in some samples.
P rsrrs
ud sdss
f rus gs
d prss up
20% r mr
M urbd
f sdss
d shw-
mr ng
mss.
Wpw-Whg Sur Rk P
Whangai
Waipawa
0 25 50 75 100 125 150 175 2000
10 0
20 0
30 0
40 0
50 0
60 0
Type III
Type IIType 1
OI (mg CO /g TOC)2
) C O T
g / C H g m ( I H
Source: Geological &Nuclear Science
This Hydrogen Index has been created rom Waipawa-Whangai Formation outcrop samples.The results graphed help predict the Kerogen type o the samples, which are indicative o oil or gas as the hydrocarbon type associated with the Shale.In the case o the Waipawa-Whangai Formation this index suggests that the samples are
predominantly Type-I Kerogens that are more oil-prone than gas.
This oil-rich Waipawa Black Shale in outcrop demonstrates the prouse internal racturing within the ormation.
Fractured Shale Opportunities in Australasia | August 2008 page 5
th es cs Bs
s crus-
cz fr-r
bs sud r
h ausr-P
p mrg. Bs
f hs yp b
prf prdurs
f d gs, s
ids,
cfr d
hr p
mrgs wrdwd
th Wpw-
Whg Sh
Sysm pru
s mprb
toc d d g
mury s
frurd sh p
suh s h Bkk
Sh M
d h Br
Sh es txs
Wpw-Whg Sur Rk P
Whangai
WaipawaGOOD
GA S
8
6
2
4
H I 5 0
1050
0
15 20 25
OI L
H I0 50
H I0 30
H I
5 1
0
VERYGOOD
OILANDGAS
POOR
FAIR
EXCELLENT
S2 (mg HC/g ROCK)
) % t w ( C O T
The multiple racturing systems observed in the Whangai Formation at the Gaddums Hill outcrop.
Source: Geological & Nuclear Science
Samples taken rom the Waipawa Formation indicate high TOC values, indicative o good to excellent quality source rocks. Although the TOC values are lower in the Whangai than the Waipawa Formation, the immense thickness o the ormation, up to 1500 eet in some areas, more than compensates or the lower values. In some instances, the two ormations could work together as one system.
The Whangai Formation is a poorly bedded,
siliceous or slightly calcareous mudstone, withlocalized development o greensand and well
bedded calcareous acies. The ormation is
300 to 600 m thick throughout much o the
East Coast Basin. The basal and main Whan-
gai acies, Rakauroa Member, has an average
TOC o 0.8% in the western sub-belt, with
maximum TOC values o 1.7% and 336 HI.
Although its TOC content is lower than the
Waipawa Black Shale, the Whangai Formation
is heavily ractured and can be nearly twenty
times as thick.
th s d r fhydru frurg
With light sweet crude reaching more than
$80/bbl and natural gas rising above $6/
MMBtu in September, interest in develop-
ing exploration and extraction technologies
continues to grow.
Fracturing is achieved by using hydraulic
pressure created by pumping luid into open
cracks in the shale, and by keeping these
cracks open by injecting solid propping materi-
als (proppants) along with the luid pumped
into the ormation. The pumped luid, under
pressures o up to 8,000 psi, is enough to crackshale as much as 3,000 eet in each direction
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events or TAG Oil’s uture perormance. All statements other than statements o historical act may be orward-looking statements. Forward-looking statements are
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that may cause actual results or events to dier materially rom those anticipated in such orward-looking statements. TAG Oil believes that the expectations underly-
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statements included in this document should not be unduly relied upon. These statements speak only as o the date o this document.