An oil executive talking in the heart of the Gulf Coast pointed to an unexpected locale in forecasting the “it” place for future gas production.
His pick to be the soon-to-be-crowned king of natural gas: the Rocky Mountains.
A seemingly unconventional observation, perhaps, but then “unconventional” is the buzzword these days in the Oil Patch.
Want to be perceived as hip and cool? Finding and drilling for unconventional hydrocarbons should do it -- perhaps one more reason why the Rockies have become the domestic industry’s hot topic.
Even some of the majors are taking on the challenge of going after these often-complex and sometimes mystifying reservoirs, which acquired bad reputations early on, e.g., too small to bother with or too difficult and pricey to drill and produce.
That was then.
Today, the volumes being produced from unconventional reservoirs are having an impressive impact on the domestic hydrocarbon supply, according to Peter Dea, president and CEO of Western Gas Resources.
“There’s a growing importance of unconventional gas resource plays,” said Dea, the featured speaker at the EMD luncheon held at the recent AAPG annual meeting in Houston.
“We now see about 35 percent of the technically recoverable reserves in the U.S. from unconventional plays,” Dea said. “Nearly a third of U.S. gas production is from unconventional reservoirs and growing rapidly, totaling nearly 500 Tcf.
“This is dominated by tight sands, followed by coalbed methane and shale gas, and the latter is quickly catching up,” he added.
It is noteworthy, in deed, that the Rockies are becoming the number one gas-producing region in the United States. In fact, Dea said the region will surpass the Gulf Coast between now and 2008, largely due to unconventional gas production.
‘Think Shallow and Small ... ’
The search for unconventional hydrocarbons demands a number of traits on the part of the explorers, including:
- The focus to stay on course.
- Calculated risks.
These traits apparently were lacking in a number of well-known cases “back when.”
During the 1950s to the 1980s, 5,000 wells blew right through the coalbed methane deposits in the Powder River Basin, Dea noted. Yet results in the 1990s showed more than 20 Tcf of recoverable gas.
Likewise, in the now-active Pinedale-Jonah area, Dea said the wildcatters smelled it as far back as the 1950s but went home hungry (see related story, page 14). Then in the 1990s, tens of Tcf were discovered.
“Early comers exit, and late comers arrive,” Dea said. “It’s not always necessary to be the leader.”
Patience and perseverance can break through the paradigms long-associated with unconventionals. In fact, there have been a number of paradigm shifts relative to the past when tight sands were deemed too complex with excessively low permeability, coals had low gas content or were too permeable or too tight, and shale was defined as only a source rock.
“Think shallow and small, like ‘Plankton plays,’ because it can take a lot of little things to add up to something significant,” Dea said. “Some of these plays are less than 3,000 feet deep with subtle gas shows and low rates.
“However, you must think deep and tight as well,” he noted, “because some of these animals are real wells, maybe 20,000 feet total depth and 10-20 million a day IPs.
“Some plays are tens of thousands to millions of acres,” Dea added, “meaning you must lease far and wide and think on a fairway scale.
“They’re all different, so keep on thinking.”
Things to Remember
Issues to keep in mind when zeroing in on unconventional deposits include:
- Prospect size and initial discovery reserves estimates are often low by several orders of magnitude.
- Reservoir areal extent often grows.
- The vertical column expands.
- Structure turns out to be more complex than anticipated.
Unconventional reservoirs often are comprised of interbedded sandstone, siltstone, mudstone and coals, so it’s wise to think in terms of rock packages. And it’s highly important to understand the geological system and the pressure regime, as well as the sequence stratigraphy and the fracture system.
Investors have become enamored of unconventionals -- for a number of good reasons, as Dea pointed out:
- High returns.
- Repeatable low risk development drilling.
- Long-term drilling inventory.
- Low finding and development costs.
- Low lease operating expense.
- Field size grows over time.