New-Frontier Reservoirs I
With the current changes in the industry, are we seeing the demise of unconventional reservoir development? Let us review several recent industry indicators.
Numerous 2016 published outlooks still forecast unconventional production to increase from 10% in 2016 to greater than 25% by 2035 from sustained growth in North America and China. By 2040, it is also expected that unconventional supplies will account for nearly 90% of North American gas production. This increase in unconventional-gas demand is expected to be driven by a fundamental global requirement for energy in the medium term that is affordable, abundant, clean, and available.
Are these forecasts still realistic in the shorter term, when we are faced with a low oil price? I would argue that they are still realistic because, although the industry is contracting, it is quite clear that companies are rapidly adapting to the oil-price drop. Apache, for example, is quoting that unconventional-well costs have reduced by 45% below their 2014 average, with 50% of these savings as a result of new technologies. Shell is highlighting similar well-cost reductions of 30% year on year. The cost savings arise from many areas. These include new drill-bit technology; replacing diesel with cleaner and less-expensive natural gas for rig fuel; pad drilling; fracture-stimulation optimization, including fewer and smaller fracture stimulations; alternative proppant; and recycling more completion fluid. In other regions of the world, where unconventionals are more immature, such as Argentina, Saudi Arabia, and China, appraisal and exploration also continue for the most-attractive unconventional plays.
So, are we seeing the demise of unconventional developments? No, clearly not. The key frontiers or challenges for the unconventional industry to grow are technological, geographical, commercial, and geological. This feature highlights some of these key frontiers being explored around the world to ensure that the unconventional industry does not just survive but thrives.
Recommended Additional Reading
SPE 174754 Proving the Concept of Unconventional Gas Reservoirs in Saudi Arabia Through Multistage-Fractured Horizontal Wells by Ali Al-Momin, Saudi Aramco, et al.
OTC 25739 Offshore Methane Hydrates in the Gulf of Mexico: A Study in Economic Viability by Jaeger Wells, Kiewit Energy Group, et al.
SPE 176260 Unconventional Resources: The Next Generation—Assessing Coal to Liquids, Oil Shale, Underground Coal Gasification, Microbial Coal Conversion, and Other Technologies With the SPE-PRMS by Douglas Peacock, Gaffney, Cline, and Associates, et al.
Simon Chipperfield, SPE, is chief production engineer at Santos. During the past 20 years, he has held positions in petroleum engineering (drilling, completions, and stimulation), production engineering, and reservoir engineering. Chipperfield previously worked for Shell International Exploration and Production. He was awarded the 2007 SPE Cedric K. Ferguson Medal. Chipperfield has held a number of leadership positions and has authored or coauthored more than 20 technical publications in the areas of hydraulic fracturing, reservoir engineering, completion technology, and sand control. He holds a petroleum engineering degree with honors from the University of New South Wales. Chipperfield serves on the JPT Editorial Committee, serving as the hydraulic fracturing feature editor from 2006 to 2011, and on the SPE International Awards Committee and has served as a reviewer for SPE Production & Operations. He can be reached at firstname.lastname@example.org.
New-Frontier Reservoirs I
Simon Chipperfield, SPE, Chief Production Engineer, Santos
15 June 2016
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