Unconventional gas

An unconventional gas reservoir is a term commonly used to refer to low-permeability natural gas reservoirs less than 1.0 millidarcy. Natural gas needs to flow through the pores of the rock matrix in order to travel into the well bore.  Darcy is a measure of permeability (how well the pores  in a rock matrix are connected). If the pores are not connected there are no "streets" for the gas to flow and each pore is an island of trapped gas. In such cases, stimulation techniques involve injecting pressurized water to mechanically fracture the reservoir, creating new flow channels for the gas to travel.

Another way to define unconventional gas is as “natural gas that cannot be produced at economic flow rates nor in economic volumes of natural gas unless the well is stimulated by a large hydraulic fracture treatment, a horizontal wellbore, or by using multilateral wellbores or some other technique to expose more of the reservoir to the wellbore.”

Many low permeability reservoirs developed in the past were tight gas reservoirs made from sandstone but significant quantities of gas are now also produced from ultra low permeability carbonates, shales, and coalbed methane reservoirs.

Unconventional gas reservoirs come in many varieties. They can be deep or shallow; high pressure or low pressure; high temperature or low temperature; blanket or lenticular; homogeneous or naturally fractured; and containing a single layer or multiple layers. The optimum drilling, completion, and stimulation methods for each well are a function of the reservoir characteristics and the economic situation. Unconventional gas reservoirs in south Texas may have reservoir properties that are significantly different from those in South America or the Middle East. The costs to drill, complete, and stimulate these wells, as well as the gas price and the gas market affect how tight-gas reservoirs are developed.

In general, a vertical well that has been drilled and completed in an unconventional gas reservoir must be successfully stimulated to produce at commercial gas flow rates and recover commercial gas volumes. Normally, a large hydraulic fracture treatment is used to achieve successful stimulation. In some naturally fractured unconventional gas reservoirs, horizontal wells can be drilled, but many of these wells also need to be stimulated with hydraulic fracturing methods. To optimize the development of an unconventional gas reservoir, a team of geoscientists and engineers must determine the optimum number and locations of wells to be drilled, as well as the drilling and completion procedures for each well. Often, more data and more engineering manpower are required to understand and develop unconventional gas reservoirs than are required for higher permeability, conventional reservoirs.

On an individual well basis, an unconventional gas reservoir will produce less gas over a longer period of time than will a well completed in a higher permeability, conventional reservoir. As such, many more wells with smaller well spacing must be drilled in an unconventional gas reservoir to recover a large percentage of the original gas in place, when compared to a conventional reservoir.

Types of Jobs Inside an Energy Company

Reservoir engineering is a branch of petroleum engineering that evaluates a hydrocarbon field performance by performing reservoir modeling studies and exploring opportunities to maximize the value of both exploration and production properties to enhance hydrocarbon production. The working tools of the reservoir engineer are subsurface geology, applied mathematics, and the basic laws of physics and chemistry governing the behavior of liquid and vapor phases of crude oil, natural gas, and water in reservoir rock.

Of particular interest to reservoir engineers is generating accurate reserve estimates for use in financial reporting to the SEC and other regulatory bodies. Other job responsibilities include numerical reservoir modeling, production forecasting, well testing, well drilling and workover planning, economic modeling, and PVT analysis of reservoir fluids.

Reservoir engineers also play a central role in field development planning, recommending appropriate and cost effective reservoir depletion schemes such as waterflooding or gas injection to maximize hydrocarbon recovery. Due to legislative changes in many hydrocarbon producing countries, they are also involved in the design and implementation of carbon sequestration projects in order to minimize the emission of greenhouse gases.

Typical responsibilities include:

• Estimating reserves and forecasting for property evaluations and development planning.
• Carrying out reservoir simulation studies to optimize recoveries.
• Predicting reserves and performance for well proposals.
• Predicting and evaluating waterflood and enhanced recovery performance.
• Developing and applying reservoir optimization techniques.
• Developing cost-effective reservoir monitoring and surveillance programs.
• Performing reservoir characterization studies.
• Analyzing pressure transients.
• Designing and coordinating petrophysical studies.
• Analyzing the economics and risk assessments of major development programs.
• Estimating reserves for producing properties.

 

Drilling engineers design and implement procedures to drill wells as safely and economically as possible. They work closely with the drilling contractor, service contractors, and compliance personnel, as well as with geologists and other technical specialists. The drilling engineer has the responsibility for ensuring that costs are minimized while getting information to evaluate the formations penetrated, protecting the health and safety of workers and other personnel, and protecting the environment.

Typical responsibilities include:

• Well design in support of a field development.
• Estimating costs and risk.
• Reporting and optimization.
• Application of technology and innovation in directional drilling, mud systems, casing and drill string design and completions.
• Supervising drilling, completion and workover operations.
• Managing the logistics and reporting of operations.

Completion engineers design and implement optimizing completion techniques to help maximize oil and gas production.

Typical responsibilities include:

• Modeling completion performance.
• Performing stimulation technologies (for example, acidizing, fracturing, water shutoff) based on well and reservoir diagnostics.
• Designing and installing sand control applications (for example, gravel packing, frac packing, consolidation).
• Optimizing completion and workover designs and operations.
• Designing horizontal and multilateral wells.
• Determining primary and remedial cementing procedures along with the design and installation of tubulars, packers, subsurface control and surveillance equipment.
• Evaluating and selecting appropriate equipment to achieve completion objectives.
• Designing through tubing/concentric workovers and intelligent completions.
• Preparing cost estimates and risk in terms of probability and potential remedies.

Marcellus Shale - What's all the commotion about?

The Marcellus shale is a natural gas reservoir that extends over a wide geographic area underlying parts of Ohio, West Virginia, Pennsylvania and large areas of southern New York. The figure below is a map of the Marcellus shaded in gray.

For a long time, extracting natural gas from low-permeability shales like the Marcellus was  not seen as an attractive opportunity by e&p's given the technical challenges  associated with unconventional reservoirs. However, advancements in unconventional gas production methods such as horizontal hydraulic fracturing have made companies re-evaluate their  position on the economic potential of the Marcellus. The successful development of the Barnett in Texas also a low-permeability shale play, was proof of concept that reservoirs such as the Marcellus were viable opportunities.

Interest in the Marcellus was further heightened by studies from geologists like Terry Engelder (PSU) and Gary Lash (Suny Fredonia) who published estimates that placed a 50% probability that 489 trillion cubic feet (TCF) of natural gas could ultimately be recovered from the reservoir. The recovery estimate is around 250 TCF when the confidence interval is >90% probability of success but even this conservative estimate of 250 TCF took the e&p world by surprise when it was announced. Assuming a $6.00 per mmbtu price for natural gas, 250 TCF is equivalent to a  $1.54 trillion dollar resource making the Marcellus one of the richest deposits of hydrocarbons in the United States. To contextualize this, 500 TCF is roughly equal to 83 billion barrels of oil  equivalent whereas the combined oil and natural gas reserves of the North Sea is 98 billion barrels of oil equivalent. In other words, there is a 50% chance that the Marcellus is the about size of the North Sea and >90% chance that it is about half the size of the North Sea.  Since late 2009, the following deals have occurred:

• Shell acquired East Resources for $4.7 billion. 
• ExxonMobil acquired XTO for $40 billion. 
• Statoil bought a $253 million stake in Marcellus from Chesapeake Energy. 
• Atlas Energy and Reliance signed a $1.7 billion Marcellus JV.

Despite the economic promise of the Marcellus, environmental concern linger particularly over the large use of water (~2-4 millions gallons per well) needed in hydraulic fracturing operations. Like the empty space in a jar of marbles, natural gas is trapped within the pore spaces of the shale rock and water has to be injected down a well at high pressures to mechanically break/fracture the shale to allow the gas to flow and be recovered at the surface. Where will the water come from? More importantly, what will happen to the waste flow back fluid? A portion of the water that is injected ~15-20% returns back to the surface with contaminants. These are not terribly difficult challenges to over come and the environmental issues can be addressed just like they are at chemical plants, nuclear facilities, refineries, etc. The question is whether the regulation of these activities will be carried out in a sensible manner. More to come about this in follow up posts.

Where do oil, natural gas and coal come from?

Hydrocarbons (coal, natural gas, oil) come from the remains of living things. Intuitively, this may seem odd at first since we think of animal or plant material as decaying over time. The decaying process is called oxidation since oxygen chemically reacts with organic material. But what if organic material was not exposed to oxygen? When we preserve food in air tight bags or cans, we are trying to keep air out or more specifically oxygen from attacking and oxidizing the food. You can think of hydrocarbons as the product of organic materials that have been preserved in an anoxic or oxygen poor environment so that decay did not occur.

Oil is formed from the remains of animals and plants (diatoms) that lived millions of years ago in a marine environment before the dinosaurs. Over millions of years, the remains of these animals and plants were covered by layers of sand and silt. Heat and pressure from these layers helped the remains turn into what we today call crude oil. The word "petroleum" means "rock oil" or "oil from the earth." 

The main ingredient in natural gas is methane, a gas (or compound) composed of one carbon atom and four hydrogen atoms. Millions of years ago, the remains of plants and animals (diatoms) decayed and built up in thick layers. This decayed matter from plants and animals is called organic material — it was once alive.  Over time, the sand and silt changed to rock, covered the organic material, and trapped it beneath the rock.  Pressure and heat changed some of this organic material into coal, some into oil (petroleum), and some into natural gas — tiny bubbles of odorless gas.

The following passage might help clarify this process "The Petroleum Industry" Charles F. Conway (p20-21):

"Two conditions are necessary for oil and gas to have formed. First, is wholesale death is necessary to provide a sufficient volume of oil and gas. Second is the rapid burial of the dying organisms is necessary to prevent the bacteria from consuming them. A good present day example for an oil gas rich environment is the entrance of the  Black Sea by the Straits of Bosporus near Istanbul, Turkey. Currents from the Mediterranean rush through the strait into the Black Sea, and immediately plunge to great depths.  The waters are rich in micro-organisms that undergo wholesale death as they are carried downward into non-oxygenated waters.  The dead organisms sink to the bottom and are quickly buried by the rapid clay deposition in the area and this protects them from bacterial action."

Coal is a combustible black or brownish-black sedimentary rock composed mostly of carbon and hydrocarbons. It is the most abundant fossil fuel produced in the United States. Coal is a nonrenewable energy source because it takes millions of years to create. The energy in coal comes from the energy stored by plants that lived hundreds of millions of years ago, when the Earth was partly covered with swampy forests. For millions of years, a layer of dead plants at the bottom of the swamps was covered by layers of water and dirt, trapping the energy of the dead plants. The heat and pressure from the top layers helped the plant remains turn into what we today call coal.