Unconventional Oil Plays Opportunity vs Risk

Transcription

1 Unconventional Oil Plays Opportunity vs Risk EnerCom s London Oil & Gas Conference 4 June 14, 2012 Sofitel London Danny D. Simmons

2 1000 BOPD - What a great well! 10,000 1,000 BOPD /2009 1/2010 2/2010 3/2010 4/2010 5/2010 6/2010 7/2010 8/2010 9/ / / /2010 2

3 If only it was always so easy... 3

4 Fundamental Goals of Reservoir Engineering OOIP OGIP Ro How much oil and/or gas are wells going to make, and Can my Company make $ drilling wells? TOC Recovery per Incr. Lateral Foot Vertical vs. Lateral Natural Fractures Prices Costs Free Gas vs. Adsorbed Gas Hydraulic Fractures Porosity Rate 400 mbo Permeability - Natural Temperature Pressure Porosity vs. TOC 50 mbo Time Recovery Factor 200 mbo Well Spacing Permeability - Induced Fluid Analysis 4

5 General Principles More is Better GR RT GR D,N Storage Capacity (In-Place) 60 Quality Net Higher silt content (Rt and Rhob) Flow Capacity (Permeability) Reservoir Energy (Rec. Factor) Higher organic content (GR) Hydrocarbon Profile 430' Gross 250' Net < 2.5 g/cc 10 High Quality Net Higher silt content (Rt and Rhob) OGIP +/- 175 BCF/Sq Mi 5

6 Unconventional Oil Description: Oil resources not economical to produce using conventional oil and gas recovery techniques Sources: Heavy Oil (<20 API) Tight Oil Reservoirs Shales Low permeability sandstones and carbonates Oil Shale (solid rock) Oil Sands 6

7 High-Activity Unconventional Oil Plays Bakken/Three Forks Reservoirs Williston Basin Montana and North Dakota Niobrara Reservoir Denver-Julesburg Basin, Powder River Basin, Laramie Basin, Others Colorado and Wyoming Eagle Ford Reservoir South Texas Mississippian Reservoir Northern Oklahoma and Southern Kansas 7

8 Bakken Shale / Three Forks Reservoirs 8

9 Bakken/Three Forks Areal Extent 9

10 Bakken/Three Forks Lithology Source: Elm Coulee Oil Field Richland County, Montana Bakken Oil Well Frac Treatment 10

11 Bakken/Three Forks Why the Excitement? THREE FORKS, BAKKEN, AND SANISH OIL PRODUCTION AND WELL COUNT MONTANA AND NORTH DAKOTA 350, ,000 ND Sanish and Three Forks ND Sanish, Three Forks, and Bakken ND and MT Sanish, Three Forks, and Bakken Total Well Count 3,500 3, ,000 2,500 Oil (BBL/Day) 200, ,000 2,000 1,500 Well Count 100,000 1,000 50, Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 11

12 Bakken/Three Forks Fluid Properties Oil Density = Oil Viscosity = Initial Solution GOR = Solution GOR at 3 Years = Solution Gas Heating Value = 42 API (Sweet) 0.3 CP at Reservoir Conditions 500 to 800 SCF/BBL 800 to 1,100SCF/BBL 1,500 BTU/SCF 12

13 Bakken/Three Forks Example Well 13

14 Bakken Development Issues Pipeline Capacity Gas Processing Capacity Infrastructure Capacity Workforce Optimal Well Spacing 14

15 Niobrara Shale 15

16 Niobrara Producing Basins Powder River Basin DJ Basin Laramie Basin Hanna Basin Sand Wash Basin Piceance Basin North Park Basin San Juan Basin Raton Basin Source: Hart Energy 16

17 Denver-Julesburg Basin Niobrara Source: Adapted from Sonneburg,

18 Wells That Sparked the Niobrara Horizontal Drilling Play EOG Resources: #2-01H Jake, Weld Co. 3Q 2009; Max rate to sales 1,558 BOPD 3,800-ft lateral, TMD 11,838 ft. Made 50,000 BBLS in 1 st 90 days on line Noble Energy: #1-99H Gemini K, Weld Co. Made 60,000 BOE in 1 st 60 days on line SM Energy: #1-H Atlas, Laramie Co., WY Produced 1,700 BOPD 1 st week on line Source: PDC Energy Hart Energy DUO Conference, May

19 Horizontal vs. Vertical Performance Source: Adapted from Noble Energy, Inc. 19

20 Eagle Ford Shale 20

21 Eagle Ford Shale Play Source: 21

22 Stratigraphy 22

23 EOG Eagle Ford Wells Source: EOG Resources, Inc. 23

24 Eagle Ford Production History Source: 24

25 Eagle Ford Production History Source: 25

26 Eagle Ford Production History Source: 26

27 Drilling Activity Source: 27

28 Mississippian Lime Reservoir 28

29 Unconventional Opportunities Source: SandRidge Investor Presentation February

30 Geologic Model Source: SandRidge Investor Presentation February

31 Mississippian Vertical Type Log Woods County, OK Sandridge W E 1-31, Township 28 N, Range 13 W, Section 31 Induction Density-Neutron Pre-Pennsylvanian Unconformity Spergen D CUM: 34 mbo, 68 mmcfg Warsaw C Osage B Osage B Lower Mississippian Lime Compton Limestone Chattanooga Shale Kinderhook Woodford Shale Viola 31

32 SandRidge 2011 Play Definition Source: SandRidge Investor Presentation February

33 Industry Mississippian Horizontal Drilling Activity Source: SandRidge Investor Presentation February

34 Mississippian Production Characteristics Complex fluid distribution Inter-bedded oil, gas, and water Complex drive mechanism High water-cuts and GORs for the life of the wells Horizontal to vertical EUR ratios are not applicable Vertical wells generally develop local conventional structures in the chat Horizontal well generally develop the large-scale matrix Results are very statistical in nature 34

35 Mississippian Example Well 35

36 Shale Plays Evaluation Considerations Shale plays may require considerable initial capital expenditures to allow commercial access and determine economic feasibility. Geoscience costs tend to be very large early in shale plays: Seismic in areas without recent petroleum exploration activity Coring and laboratory analysis Learning curve earliest wells in new play may deliver poor results as drilling and completion technology is perfected. General shale play economics improve over time due to: More effective drilling and completion techniques Better understanding of reservoir and identification of "sweet spots" Long-term investment Shale plays have very large in-place volumes and very large drilling location inventories that may take decades to realize. 36

37 Keys to Success: Unconventional Oil Reservoirs Large Volumes of Oil-in-Place Successful Production Technology Development Stable, High Oil Prices Issues: Midstream Capacity Pipelines Gas Processing Water Disposal Service Capacity Materials Workforce Support Systems Optimal Well Density Optimal Completion and Drilling Plans 37

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