Shale gas is in.
Shale gas is out.
Shale oil is in.
No one would argue that the direction of this industry can change on a dime – and fortunately, most players have learned that you just gotta go with the flow.
Following the all-out drilling charge to punch down as many wellbores as possible – often to hold onto leases – in the still-relatively-new shale gas plays across the United States, there now is a massive inventory of clean-burning natural gas.
In fact, you might be tempted to make a buck or two by scouting for new facilities to store the burgeoning supply.
Best to cool your heels.
With all this new natural gas supply and $4/Mcf – give or take – looking tops for now, there’s talk of laying down some rigs. It’s not about resting on laurels and taking time off to chill, but to head for the other new best thing, i.e. oil shales and/or gas shales rich with liquids, such as the Eagle Ford in South Texas.
It’s a matter of simple math: oil continues to fetch a price generally in the upper $70/bbl range.
The Big Dude shale in the oil game is the Bakken shale oil play in Montana and North Dakota, which is becoming increasingly popular following a period of successful yet relatively low profile action.
Adding to the allure of this play is the U.S. Geological Survey assessment that revealed the Bakken harbors about 3.65 billion barrels of undiscovered technically recoverable oil along with 1.85 Tcf of associated/dissolved natural gas and 148 mbo of natural gas liquids.
The widespread Upper Devonian-Lower Mississippian Bakken formation is comprised of an upper and lower shale member and a mixed siliciclastic carbonate middle member, which is ordinarily referred to as a dolomitic sand or sandy dolomite.
This middle section is the target of the drill bits that ordinarily go down about 10,000 feet vertically before veering horizontally into the brittle dolomite, where multi-stage fracing is used to more efficiently produce the oil.
Not all wells are created equal.
“When you spend maybe $7 million on a horizontal well and bring it in at 200 to 300 barrels a day, that’s economic failure,” said AAPG member Scott Stockton, executive vice president of Vector Seismic Data Processing in Denver. “You need at least 1,000 barrels a day to be able to smile when you leave the wellhead.”
Oh, So Sweet
Enter multi-component seismic data to help ID the sweet spots.
In early 2009, Vector Seismic formed a consortium to evaluate the seismic signature of fractured reservoirs in the Middle Bakken. This ultimately led the company to determine that differences in the seismic image of shear waves over producing wells vs. dry holes in the Bakken formation are key for drilling success.
The Middle Bakken has proved elusive when it comes to detailed imaging from conventional surface seismic applications, for two reasons:
♦ With a thickness typically between 15 and 60 feet at a depth of 8,000 or so, it’s below resolution of conventional seismic methods.
♦ The P-wave response of seismic energy in the fractured vs. non-fractured rock is virtually identical.
Stockton noted that companies have acquired significant amounts of conventional seismic data in the play and are getting a great structural picture – but they haven’t been able to ID the fractures, which are required for reservoir to exist in the tight siltstone having little or no native porosity or permeability.
“We took a high resolution approach, going in very broadband,” Stockton said. “This does image the thin beds and small faults that are potentially indicative of the presence of fractures, but it doesn’t get you all the way home.”
They decided to use converted-wave recording, given there’s only one working set of shear wave vibrators available in the continental United States, according to Stockton. He noted these were unavailable at the last minute.
“In retrospect, I was glad,” he said. “If you do a converted wave (3-C) seismic survey, it means you have available to you all kinds of P-wave sources, such as dynamite and Vibroseis. If you can get as good an image with vibrators, you can save a lot of money.
“We recorded a high resolution line twice over the area of interest, once with vibrators and once with dynamite,” he noted.
A high resolution converted wave seismic profile tied the dry-hole Behm Energy well in Mountrail County in northwestern North Dakota with Bakken producing wells to the west in Parshall and Sanish fields. The seismic signature of the waveform on the converted-wave image shows marked differences that can be correlated to natural fractures in the Bakken formation and better production.
Hot and Haute
The MO in the Bakken play thus far has been to chase after tectonic fractures. Even though deep underground, e.g. 8,500 to 12,000 feet, they tend to “pop” on the surface showing up pretty much as straight lines, or lineaments.
The other fracture mechanism is hydraulic, which Stockton thinks is key to really prolific wells in the Middle Bakken.
It’s all about the Bakken petroleum system, which is a closed, self-sourced system.
The combo of a uniquely closed petroleum system, a high thermal gradient and volumetric expansion of the Upper and Lower Bakken kerogen into oil has resulted in high potential for creating in situ fractures parallel to bedding planes.
“When kerogen cooks out of the Bakken shale it experiences an intense volumetric increase of about 114 to 170 percent,” Stockton said. “There’s great energy stored in that volume increase and it wants to fracture the rock, mainly along bedding planes.”
He noted that the horizontal fractures can be a huge factor in terms of where the reservoir is and where it’s best.
“Where the tectonic fractures intersect the hydraulic, you get the best wells,” he emphasized. “You get great wells where you have both, good wells where you have hydraulic fractures, okay to good wells where you have vertical (tectonic) fractures.”
It’s all mighty hot and haute.
But the oil won’t do anyone any good if it just sits on site in tanks.
“The current interest in the Bakken might be called a frenzy,” Stockton exclaimed. “Now that we’ve shown that seismic can tell where the oil is, the big problem is the infrastructure – like, how do you get oil out to the market?”
In the advanced technology milieu of shale drilling and production, the current transport solution is so low-tech one is tempted to laugh.
But, hey, it works.
Plus, it’s a fine example of good old oil patch can-do.
Scott noted some of the companies bought a bunch of old rail lines and rail cars and basically have tanker trains that they load up with oil to transport to Oklahoma and elsewhere for refining.
“This is American ingenuity at its best,” he exclaimed. “It was one heckuva idea.
“This is a massive transportation issue,” he said, “and there are a lot of abandoned rail lines up there in North Dakota.”
Given the potential for so much more production in this play, perhaps some enterprising investors will figure out a way to go long on old rail cars.