Prospect To Reserves: De-Risking Unconventional Plays

Transcription

1 Prospect To Reserves: De-Risking Unconventional Plays March 14, 2013 London Mike Morgan, P. Eng. Slide 1

2 Major Concepts To be of economic interest, a reservoir must be capable of flowing hydrocarbons to a well and the well must be capable of producing those hydrocarbons. A production test is the only proof for the pudding. The only exception is a mining operation and there are very few hydrocarbon mining operations. But even mining operations require drilling delineation wells. There has never been, and likely never will be, a replacement for drilling and flowing to surface. In short, shareholders want you as the operator to prove to them the full value of the asset they own. This means you need to drill and test smartly. Slide 2

3 What is an Unconventional Play? Anything that is not yet routine! Less glibly Geographically large Requires thousands or tens of thousands of wells Requires stimulation Uneconomic at least 5 10 years ago The net pay is hard to determine Sustained development requirements: maybe decades of drilling Due to the high number of wells, reproducibility is key. Reservoir quality is never uniform. Not all resource plays are new! Slide 3

4 Triassic Sediments in the WCSB Panek 2000 Slide 4

5 2,000 Shallow Gas 70,000 60,000 1,600 1,400 1,200 50,000 40,000 1, ,000 20, ,000 Number of Producing Wells Total Gas Rate (MMcf/day) 1, Slide 5

6 Shallow Gas 1960s Slide 6

7 Shallow Gas 1970s Slide 7

8 Shallow Gas 1980s Slide 8

9 Shallow Gas 1990s Slide 9

10 Shallow Gas Early 2000s Slide 10

11 Shallow Gas Late 2000s Slide 11

12 Suffield Shallow Gas EUR/mi Looking at one of Canada s original resource plays, we can see that 25 years of technology have incrementally added EUR, but have not fundamentally changed the picture Slide 12

13 Shallow Gas Geostatistics Slide 13

14 Play-Wide Drilling Timetable Well Count Objective 1-2 Discovery! 5-10 Confirm geological extent and test possibility of profit Determine economic hydrocarbon price Build resource level confidence, area by area Build reserve level confidence, area by area 500+ Development, area by area Slide 14

15 Company Drilling Timetable Well Count Objective 1-2 Must have flowing hydrocarbons 5-10 Drill farther away and hope to get flowing hydrocarbons Drill near the good wells to confirm economics If you have success, push the distance limits. If you can build a variogram, jump to that distance as it s the biggest reserves/resource ROI. Continue drilling to demonstrate to regulators (and the investing public) that the results are economically viable and repeatable Land base is converted to reserves and developed, if still economic Slide 15

16 Total Oil Rate (bbl/day) 350, , , , , ,000 50, Number of Producing Wells 400,000 Beaverhill Lake Slide 16

17 Beaverhill Lake 1960s Slide 17

18 Beaverhill Lake 1970s Slide 18

19 Beaverhill Lake 1980s Slide 19

20 Beaverhill Lake 1990s Slide 20

21 Beaverhill Lake Early 2000s Slide 21

22 Beaverhill Lake Late 2000s Slide 22

23 Beaverhill Lake EUR/mi2 Slide 23

24 Montney 2, ,600 Number of Producing Wells Total Gas Rate (MMcf/day) 1, , ,200 1, Slide 24

25 Montney Drilling Up To 1990 Slide 25

26 Montney Drilling Up To 2000 Slide 26

27 Montney Drilling Up To 2005 Slide 27

28 Montney Drilling Up To 2008 Slide 28

29 Montney Drilling Up To 2010 Slide 29

30 Montney Drilling Up To 2012 Slide 30

31 Montney Liquids Yields Slide 31

32 Montney Gas Geostatistics Upper Montney Declustered Average Rates (2011) Lower Montney Declustered Average Rates (2011) 1,400 1,400 1,200 1,200 1,000 1,000 Rate (Mcf/d/frac) Rate (Mcf/d/frac) Test Rate 800 Peak Month Test Rate 600 Peak Month Peak Quarter 200 Peak Quarter ,000 2,000 3,000 4,000 5,000 6,000 Moving Window Width (m) 7,000 8,000 9,000 10, ,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Moving Window Width (m) Slide 32

33 Montney Contingent Resource Slide 33

34 Montney Prob. Reserves (purple) Slide 34

35 Montney Proved Reserves (green) Slide 35

36 Major Conclusions The appropriate correlation/booking distance is play dependant. Major resource plays may require tens of thousands of wells and decades to fully develop. Development may suddenly halt due to external forces, as seen in the shallow gas example. Development may restart due to changing conditions, as seen in the Beaverhill Lake example. The size of the resources is known early on, the economic value isn t. Smart operators will concentrate on delineating the expected economic outcome and making sure they don t miss anything! This will require a moderately large drilling and testing program, spaced at the appropriate correlation distance. Slide 36

37 Contact Us Keith Braaten Len Herchen Jodi Anhorn Mike Morgan Slide 37