Shale Gas Experience from a Global Gas Company Perspective 25 - PowerPoint PPT Presentation

Shale Gas Experience from a Global Gas Company Perspective 25 October 2011 Alex Gabb

Agenda • BG Group business and Shale Gas. • Overview of Shale. • How is shale gas appraised and developed? • Technological challenges that BG considers need to be addressed in order to put more science into what has been a largely empirical understanding to date. 2

Global LNG: growing a global business UK USA Italy Japan Egypt Trinidad China & Tobago Singapore* Nigeria EG Tanzania Australia Brazil Chile *exclusive right to supply Equity position Existing long term supply source Liquefaction under construction Potential liquefaction Existing import capacity Potential import capacity Long term customer Global assets, supply and markets 3

Shale Gas Basins of the World 4

Shale – An Outcrop 5

What makes a good shale? Matrix Reservoir Pressure Porosity/Permeability Typically Overpressured; Porosity >4% & Micro/Nanodarcies 0.6 psi/ft upwards. Gas In Place Containment Free and Adsorbed Thermal Maturity Frac ’ Containment ‘Resource Density’ Degree of ‘Cooking’ ‘ Fracability ’ Able to Initiate and Organic Richness Propagate and High TOC >2% and Complex Fracture Adsorbed Gas Content Network Unlikely that you can get your shale to work if you don’t have all of these! 6

Shale Formations – Finding the right sort!!

Matrix Permeability & Porosity 100000 10000 Conventional Oil ~100 mD - 10D 1000 100 10 Permeability (mD) Conventional Gas ~100 – 0.1 mD 1 0.000 0.050 0.100 0.150 0.200 0.250 0.300 0.350 0.1 Typical Limit of ‘Standard Core’ Measurements. 0.01 0.001 Shale Gas ~0.001 – 0.0001 mD = Microdarcies – Nanodarcies! 0.0001 0.00001 Porosity (Frac.) Conventional Oil Shale 8

Shale in Microscopic Detail Quartz + Other Connected Pores (Blue); Kerogen (Green); Isolated Pores (Red) Minerals Phyllosilicates Pore Kerogen 500 nm • Pore structure has similar dimensions to the gas molecules themselves. • Darcy Flow versus Diffusive Flow. Gas within complex pore system with even more complex flow physics.

Adsorption/Desorption Mechanisms Adsorption – Adhesion of a single layer of gas molecules to the internal surface of the coal or shale matrix. – Physical Process versus Chemical Desorption – The process whereby adsorbed gas molecules become detached from the pore surfaces and take on the kinetic properties of free gas. 10

How do we measure Gas Content? • Determined from Canister Tests. 200 • At Reservoir Temperature? Possibly not! Antrim Shale Gas Content (scf/ton) 160 New Albany Shale • Lost Gas + Measured Gas + Crushed Gas. 120 • In shales this is a combination of free and 80 adsorbed gas. 40 • Varies according to TOC%; so need to take enough samples to characterise the 0 0 2 4 6 8 10 12 14 16 18 20 reservoir interval. This is more than one sample! TOC (Wt. %) Methane Isotherm Results 300 Methane Carbon Dioxide Ethane Mixture 70 48.5 scf/ton Methane Storage Capacity, scf/ton 200 250 Gas Storage Capacity, scf/ton 60 18.9 scf/ton 200 50 TOC = 4.97 wt. % 40 150 30 100 20 50 TOC = 1.98 wt. % 10 0 0 0 1,000 2,000 3,000 4,000 5,000 0 500 1,000 1,500 2,000 2,500 3,000 Pressure, psia Pressure, psia Data should be considered qualitative

Gas Transport in Shale : An Analogy 12

Shale Gas Log Responses Caliper/PEF GR 0-200 NPHI-RHOB DT RT-RXO • Borehole conditions are typically good; low clay content = hole stability. • GR is very high; Marcellus shales > 800 API • Density – Neutron – Less Shale separation; Cross-over due to gas kerogen and lack of water. • Resisitivity; Usually quite high > 20 ohmm – Low Rt caused by water-wet shales or graphite (in some over-mature areas) • PEF; Often > 30 due to heavy minerals USA Haynesville Kerogen Rock (Density Log) Total Porosity Total Porosity (GRI Method) Matrix V Clay Kerogen Clay Surfaces Small Clay Layers Bulk Minerals Large Pores & Interfaces Pores Hydration Capillary or Structural Water (OH) Water - Bound Water Hydrocarbon Pore Volume Irreducible or Immobile Water Total Saturation (GRI Method) Modified from Hill et al, 1969 13

Shale Gas Reservoir Core Analysis Core Description Wellsite Canister Homogeneous Wholecore sections (0.3 to 0.5m, canisters at reservoir temp.) Wireline or fast retrieval of core recommended to minimised lost gas Measure Gas Composition during Desorption (90 days approx.) Langmuir Isotherm Halve and quarter sample using diamond saw Analysis Select Fresh State Half canister sample Wholecore Samples for Quarter canister Quarter canister sample Rock Mechanics Tests sample (Triaxial Static Tests, Vp Grain Density, Porosity, Total Organic Content, Rock Eval Residual/Crushed Gas & Vs) Pyrolysis, Vitrinite Reflectance, XRD & XRF Mineralogy Analysis Select Fresh State Core Samples Fresh State Bulk Density (approx 500g) Matrix Permeability Grain Volume and Crush Sample Dean-Stark Analysis for Sw, So & Sg Grain Density High Pressure Mercury Injection SEM (Argon/iron beam milling of surface) Fluid Sensitivity Tests (Clay swelling & fracture flow tests)

Gas Shale Core Analysis • Standard or conventional methods of core analysis for porosity, saturations, and permeability are unsuitable for Gas Shales • Porosity requires sample cleaning of a plug and a Boyle’s Law porosity using Helium – Difficult to take plugs in many shales due to bedding plane partings – Measurement requires equilibrium to be obtained which requires a long time in nano-darcy permeability and diffusion rates • Permeability measurements on plugs have the same problem and must use pressure decay techniques for the low permeability ranges

Principals of Hydraulic Fracturing Objective: Create a high conductivity crack within the reservoir • Rock is split using liquid that is pumped under high pressure • Tiny split or fracture held open using proppant • Gas flows from the fracture It is also imperative that the fracture system stays open. 16

What System Do We End Up with? Complex Fracture System Complex Well Geometry in a Tight Reservoir Complex Pore System 17

Key Differences : Conventional and Shale Gas Characteristic Conventional Gas Shale Gas is generated in the source rock and then migrates Gas is generated and trapped within the source rock. Gas Generation into the reservoir. Compression. Compression and adsorption. Gas Storage Mechanism Free gas only. Free and adsorbed gas. Gas Produced • Minimal transient period followed by a long boundary- • Very long transient (linear) flow period that can extend many dominated flow period. years. In some cases, it is debatable if boundary-dominated • Production rates are mainly relatable to permeability flow will ever be fully realized. Production Performance and declining reservoir pressure.. • Production rates are mainly relatable to the success of creating a large fracture network around a long horizontal wellbore and to the matrix permeability. • Recovery factor = 50% – 90% • Recovery factor = 15% – 40% Recovery Factors Conventional Gas Shale Gas 18

What did Arps intend? And what do we do? • Most decline curve analysis is based on the Arps Equation (or set of equations!) which was presented in 1945. b = 0; Exponential Decline 0 < b < 1; Hyperbolic Decline b = 1; Harmonic Decline • Supposed to be a constant pressure steady-state solution; in a shale gas well typically we would not have this condition. • b = 1 intended as a special case since implies infinite recovery at infinite time; this implies an unbounded system; the use of b>1 is common place in the production analysis of shale gas wells. • Shale Gas well is almost always in TRANSIENT FLOW .. Arps is intended for a STABILISED FLOW scenario. 19

Typical gas shale production profiles 25000 Field Haynesville Marcellus IP (mscf/d) 20000 5000 Typical Duration of Production Dataset Di (%) 80 68 20000 B 1.1 1.3 Dt (%) 6 6 EUR30 (bscf) 7.380 4.301 15000 IP30 (mscf/d) 17676 4537 Gas Rate (mscf/d) 10000 Typical Duration of Production Forecast (with minimal understanding of reservoir physics!!) Risks • Water and/or Condensate Hold-Up. 5000 • Well Integrity (or Lack of) • Reservoir Compaction 0 0 5 10 15 20 25 30 Year Haynesville Marcellus Gas Desorption and Diffusive Flow leads to long production ‘tail’ 20

Rate Transient Analysis 10 100s 2 1 days days 5000 4500 4000 3500 1 Characterized by quasi-steady Characterized by infinite-acting linear flow into 3000 depletion of SRV Gas Rate (mscf/d) exposed fracture surface area . 2500 2000 1500 2 1000 3 500 4 3 4 0 0 1 2 3 4 5 6 7 8 9 10 Year 10000s 1000s days days Characterized by transient infinite-acting linear Boundary-dominated flow characterized by quasi- flow into external faces of SRV. steady flow from the depletion volume into external faces of SRV