A Global Perspective for IOR and

Primary in Unconventional Tight

Oil and Gas Reservoirs

Richard Baker May-13

1
Conclusions

1. There has been tremendous growth in tight oil and

gas rates and reserves.
2. Despite the rapid oil rate well counts and wells
drill in major plays are constant.
3. It is extremely difficult to forecast the future oil
production because the classic “S” shaped growth
curve and the Resource pyramid.
4. It is my opinion that growth in tight oil will level off
• Constant well counts (constant production profiles)
• Decreasing liquids from gas (CGR ↓ )
Conclusions

5. Most of these shale plays are not really shales

rather they are very low permeability plays (0.01
to 0.1 mD)
6. Estimates of recoverable oil in volumetric basis
are too high.
7. Pay Cut offs are way too pessimistic
 General Observations

Reservoir permeability is often higher than air

permeability (small fractures contributing) inflow tests and
pressure transient analysis
Most of the times we have more hydraulically induced
fractures than we need
No strong correlation between
number of induced fractures and IP or reserves
number of induced fractures and IP or reserves
but near wellbore permeability is huge variable
This may only be true for tight oil ( true shale gas???)

4
 Presentation Flow

Big picture (countries)

Medium size picture (basins)

Small picture (wells)

Summary

5
 Making Forecast using historical data

• Forecasting like this is a bit like only looking at the rudder

and determining where the boat goes
– Wind + waves

6
 Beware of all forecasts with developing
plays/technology

• Most shale oil and shale gas wells have only few years
production
• Most shale plays are developed in sweet spots first
• Shale plays are large areally and only portions of fields
have been developed
• Technology advancements will impact plays

U.S. Shale Gas and Shale Oil PlaysReview

of Emerging Resources: July 2011

CAUTION STATEMENT
7
 (big picture)

USA AND CANADIAN OIL

RATE TRENDS

8
USA Oil and Liquids forecast from IEA July 2011
 USA Oil + Liquids Production
US EIA website

14000
U.S. Oil Production Jan 1994 - Jan 2013
12000

10000
Thousands of Barrels/day

8000
US Total Oil Production

Crude Oil, NGPL, and Other

6000
Natural Gas Plant Liquids

4000

2000

0
1993 1997 2001 Year 2005 2009 2013
 USA Oil + Liquids Production
US EIA website

14000
U.S. Oil Production Jan 1994 - Jan 2013
12000
Oil+ liq. 11.8
MM bbl/d

10000
Thousands of Barrels/day

Oil+ liq. 8.5 MM

8000 bbl/d
US Total Oil Production

Crude Oil, NGPL, and Other

6000
Natural Gas Plant Liquids

4000

Initially liquids from gas wells

2000
Now growth from oil wells

0
1993 1997 2001 Year 2005 2009 2013
CAN Historical Oil Production

Mining
756000 bbl/day
(2010)

In-Situ stm
704000 bbl/day
(2010)

Source Geoscout
 All wells Canada Ends in 2012

13
Canadian Oil Production from Hz with 5 or
more fractures….includes SAGD
 (medium size picture)

BASIN ANALYSIS

15
 Source;
Review of
Emerging Resources:
U.S. Shale Gas and
Shale Oil Plays
16
© July 2011
 15%

Δqo= 1.6 MMbbl/d

14%

15%

7%

17
 Summary of Liquids Production (oil + ngl) vs.
Year Source; USA EIA

Sum of Annual Liquid Column Labels

BARNET EAGLE HAYNESVILL MARCELLUS NIOBRAR WOODFOR
Row Labels BAKKEN T FORD E /SH/ A D Grand Total
2005 7,368,710 86,401 7,455,111
2006 13,951,603 20,288 98,416 14,070,307
2007 19,183,264 87,996 63,122 11,558 19,345,940
2008 36,316,578 82,635 64,407 89,034 144,348 36,697,002
2009 57,047,968 94,663 122,849 139 160,498 237,092 57,663,209
2010 90,898,597 133,181 1,512,296 138 1,029,022 334,521 93,907,755
176,433,42
2011 127,302,933 79,384 42,381,008 48,851 5,689,780 931,469 5
355,484,11
2012 206,717,003 70,601 136,225,971 3,732 53,450 10,744,646 1,668,710 3
2013 34,203,131 3,961 13,815,503 912,971 1,157 48,936,723
809,993,58
Grand Total 592,989,787 572,709 194,122,034 3,732 102,578 18,873,890 3,328,855 5

206 MMbbl 136 MMbbl 10 MMbbl

206/355 = 38% = 3%
18
= 58%
 U.S. Shale Basins – 862 Tcf & 24 BBO TRR
(TRR -Technically Recoverable Resources by EIA)

McClure

Wolfcamp

23 Significant Shale Basins in U.S. - over 55,000 producing wells

19 © 2013 Baker Hughes Incorporated. All Rights Reserved.
 660 M
bbl/d

Source: Baker Hughes

20 © 2013 Baker Hughes Incorporated. All Rights Reserved.
 520 M
bbl/d

 Rising oil
 Decreasing gas

Source: Baker Hughes

21 © 2013 Baker Hughes Incorporated. All Rights Reserved.
 19 M bbl/d

 Decreasing oil
 Decreasing gas

Note rapid decline in production

Source: Baker Hughes
22 © 2013 Baker Hughes Incorporated. All Rights Reserved.
 Rig Count (~drilled wells)

Jan. 2012 Jan. 2013

© 23
2012 Baker Hughes Incorporated. All Rights Reserved.
Major Shale Oil Play Data Comparison
PLAY BAKKEN EAGLE FORD NIOBRARA UTICA

Depth, ft 8,500 – 10,400 4,000 - 12,000 3,000 – 14,000 2,000 – 14,000

Thickness, ft 8 - 14 300 - 475 50 - 300 70 - 500

0.05 md @
Permeability, md Middle Bakken Up to 0.13 md 0.1 - 1 md 0.0003 md

1,000 Bopd +
IP Rate, BOPD 200 – 1,800 250 – 1,500 +/- 600
6 MMcfd

Avg Lateral, ft 10,000+ 5,000 – 7,000 3,300 – 10,000 5,500 – 7,500

4.5 3.0
Resources, BBO 3.5 1.5
(est to 20) (est to 5.5)

Niobrara and Utica very “early” data

Resources = Technically Recoverable (TRR) Source: EIA
24 © 2013 Baker Hughes Incorporated. All Rights Reserved.
 Definitions of Low Permeability vs. Shale
Permeability

© 25
2012 Baker Hughes Incorporated. All Rights Reserved.
Major Shale Oil Play Data Comparison
PLAY BAKKEN EAGLE FORD NIOBRARA UTICA

Depth, ft 8,500 – 10,400 4,000 - 12,000 3,000 – 14,000 2,000 – 14,000

Thickness, ft 8 - 14 300 - 475 50 - 300 70 - 500

0.05 md @
Permeability, md Middle Bakken Up to 0.13 md 0.1 - 1 md 0.0003 md

1,000 Bopd +
IP Rate, BOPD 200 – 1,800 250 – 1,500 +/- 600
6 MMcfd

Permeability Permeability (mD)

Classification
– 7,000 3,300 – 10,000 5,500 – 7,500
Avg Lateral, ft 10,000+ 5,000

Classification of reservoir4.5
type Very low < 0.01
3.0
Resources,
by absolute BBO
permeability. 3.5 1.5
(est From
to 20)
Low 0.01 – 1
(est to 5.5)
Golan (1991). Average 1 – 100
Niobrara and Utica very “early” data High 100 – 10000
Very high
Resources = Technically Recoverable (TRR) Source: EIA > 10000
26 © 2013 Baker Hughes Incorporated. All Rights Reserved.
Sample of Pembina Cardium Multi-Frac’d Wells
~65% decline rate in first year,
shallow decline after that

Initial rates show large scatter but

similar decline trend

Total trend 81 wells

 USA BAKKEN OIL RATE

~Arithmetic average~200bbl/d

28
 ABCs of Reservoir and Well Dynamics:
Controlling Factors

•Completion
•Fractures
•Near wellbore permeability

•Pressure support
Oil rates •Drive mechanism
•Far field permeability

time

First year production

 ABCs of Reservoir and Well Dynamics:
Controlling Factors
Decline rate is steep ~65%/yr in
first year, generally caused by:
Transient effects
•Completion Pressure depletion
•Fractures Increasing gas saturation
•Near wellbore permeability
Secondary recovery will
become critical to maintain a
higher plateau oil rate
•Pressure support Lack of drive energy
Oil rates •Drive mechanism
•Far field permeability

time

First year production

 Checks and Balances

Use available data in many ways:

• Model Building • Model Validation

– Image logs – Microseismic
– Fracture reports – Tracer surveys
– Shale petrophysics – Production logging
– Mechanical properties – Minifrac
– Formation structure – Transient tests
– Well geometry – Production rates and
– Fluid characterization pressures

31
 Finite difference numerical options

• Can capture most flow dynamics

• Need to be oriented along principle stresses

Micro Seismic Data

MFrac simulations

a. Tartan Grid (SPE 125530)

b. Variable Frac Conductivity (SPE 135262)

d. Shale Engineering (SPE 146912*)

c. Affected Rock Volume Modeling (SPE 138134)
32
 Advanced Reservoir Engineering for Shales

In-Place Shale Cash

Description Engineering flows

Shale Engineering Modeling

Based on geo-mechanics

Flow Physics

Pressure-dependent
properties
Matches
observed
performance

Interprets and
implements
micro-seismic

 Optimizes well design and field development

 Provides early predictions of long term production behavior
33 Based on: CSUG/SPE 146912
 What are the lessons learned from Fracture
Diagnostics and Reservoir Simulation
• Permeability is controlling factor
– Primary
– waterflood
• In lower permeability formations natural fractures increase
permeability
• Pay cut offs are way too high
• Reservoir drive energy is late stage controlling factor

34
With new technology

HISTORIC GROWTH CURVES

 Historic Growth Curves (organic growth)

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© 2012 Baker
 Historic Growth Curves (organic growth)
Only so many good
fields/infrastructure/political limitations

Rapid growth Reservoir depletion

Best fields being exploited

Few operators +
not much experience
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© 2012 Baker
US Thermal EOR Production Data (mainly California)
Source: Strosur (2003) till 1994, Conservation Committee of California Oil and Gas
Producers till 2003, DOE report till 2008 and Mohan et al (2011).

700

Rapid growth
600
Best fields being exploited Limitations on number
Thermal EOR Production 1000 bbls/day

500 good fields/infrasture

400
Reservoir depletion
300

200
Few operators +
not much experience
100

0
1980 1985 1990 1995 2000 2005 2010 2015
Year
 Historic Growth Curves (organic growth)
Only so many good
fields/infrastructure/political limitations

Rapid growth Reservoir depletion

Best fields being exploited

Few operators +
not much experience
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© 2012 Baker
 Note Oil rate Growth in West Texas
``s`` shaped curve in 1950’s

draft for discussion purposes only 40

5/27
 Oil Production from Saskatchewan’s
Horizontal Wells PTAC Report 2006
Flat plateau; decreasing costs
+ more poor res. quality

130 Mstb/d

Growth has been achieved by using horizontal

wells
5/27/2013 draft for discussion purposes only 41
 Alberta Tar Sands

750 MSTB/d
Not including
Cold Lake + >150
Approximately
~900 MSTB per day

Note Field Pilots, note growth oil rate

5/27/2013 draft for discussion purposes only 42
 Most growth in CO2 occurred in a low price environment…

US CO2 EOR Growth (2004$)

Price collapse
250 80

infrastructure
70
Monthly CO2 EOR Oil Production (1000

'World' Oil Price (2004$) / # of Projects

200
First large 60

field tests
50
150
bbls/d)

40

100
30

20
50

10

0 0
19 2
19 3
19 74
19 5
19 6
19 7
19 8
19 79
19 0
19 1
19 2
19 3
19 84
19 5
19 6
19 7
19 8
19 89
19 0
19 1
19 2
19 3
19 94
19 5
19 6
19 7
19 8
20 99
20 0
20 1
20 2
20 3
20 04
20 5
06
7
7

7
7
7
7

8
8
8
8

8
8
8
8

9
9
9
9

9
9
9
9

0
0
0
0

0
19

Year

Monthly CO2 Production (1000 bbls/d) World Oil Price # of Projects

J. Shaw EOR Presentation April 7, 2006 (Calgary EOR Forum)

and WTRG Economics
5/27/2013 draft for discussion purposes only 43
 There is always a much larger lower quality
resources compared to high quality resources

5/27/2013 draft for discussion purposes only

44
 USA Oil + Liquids Production
US EIA website plus RB view

14000
U.S. Oil Production Jan 1994 - Jan 2013
12000

10000
Why constant well
Thousands of Barrels/day

Count + infrastructure
8000
US Total Oil Production

Crude Oil, NGPL, and Other

6000
Natural Gas Plant Liquids

4000

2000

0
1993 1997 2001 Year 2005 2009 2013
Conclusions

The future forecast is sensitive to;

– Oil price and
– Technology
– Pressure support
Not in that order
The future of tight oil forecast is a function of IP, decline rate and
plateau oil rate of individual wells
• Geology
• Completion, well length
• OOIP
Shale Oil Development Requires Large Number of Wells

46
US Tight/Shale Oil Basins
An overiview

Fabián Vera (FVR)

Reservoir Engineer | Unconventional Resources Team
 References
• Kennedy, Robert. US Shale Basin Overview. Lecture given at Shale Academy. Februrary
2013. Internal document
• http://texasalliance.org/admin/assets/Eagle_Ford_Shale_Overview_by_Ramona_Hove
y,_Drilling_Info.pdf @ 03/07/2013
• http://certmapper.cr.usgs.gov/data/noga95/prov38/text/prov38.pdf @ 03/07/2013
• http://www.epa.ohio.gov/portals/30/Brownfield_Conference/docs/Presentations/1B-
Geology%20Updates.pdf @ 03/07/2013

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