Technology and Economics Affecting Unconventional Reservoir Development

Worldwide, unconventional resources are important sources of oil and gas when most conventional resources are declining and demand for hydrocarbons is growing. The Masters? (1979) concept of the energy resource triangle suggest that the exploitation of unconventional reservoirs is particularly sensitive to both technology and commodity price parameters. In the United States, production from unconventional reservoirs has been stimulated by a combination of Federal tax credits, technical development programs -supported by government agencies and private organizations- and high commodity prices. In this work, the effect of technology and different economic events for selected unconventional oil and gas plays in the United States was evaluated according to the concept of the Resource Triangle Theory (RTT). Studies conducted in the Austin Chalk -our textbook case- and other seven unconventional plays in the United States have supported the RTT concept that high prices and better technologies do result in more drilling activity and more oil and gas production from unconventional reservoirs. For instance, two approaches were employed to support RTT concept: Correlation study and Forecasting graphs. On the first one, correlations of commodity prices and technology with drilling activity demonstrated that periods of high commodity prices coincide with increase in unconventional producing wells approximately 75% from selected plays in this study. The second one shows that high prices and technological advances also translate into additional oil and gas production and reserves. This behavior was observed through the analysis of a series of decline production curves using a VBA program in Excel that compute oil and gas production volumes and their corresponding economic values under specific conditions. The results indicated that maximum value of approximately $50 billion oil plus gas would have been possible using conventional hydraulic fracturing technology only. Moreover, subsequent episodes of high commodity allow the introduction of new technologies that have boosted even more oil and gas production from the plays. Great examples are the use of horizontal and multilateral wells which has opened up additional areas for development, such as the Barnett Shale and the Bakken Shale. Using horizontal wells has also revived older plays, such as the Austin Chalk. The combination of horizontal well technology and water fracturing technology has led to a dramatic increase in the development of both oil and gas from shale reservoirs. Current production schemes suggest that the plays could produce an additional of $320 billion when producing at rates higher than 5 BOE/day. Our results confirm the concept of the resource triangle that natural gas and oil resources can be produced from low quality resources when either product prices increase or when better technology is available. The seven oil and gas plays studied in this research are demonstrative examples.