# Presentation: 559152

## Unconventional Natural Gas: Industry or BridgeUnconventional Gas Technology Issues

**EIA Energy Outlook and Modeling Conference**
**March 27, 2006**
**Washington, DC**
**Kent Perry**
**Gas Technology Institute**

## Unconventional Gas Issues and Trends

**Large Resource**
**Resource is of Extreme Complexity**
**Technical Approach - Precision is Replacing Horsepower**
**Lower Reserves Per Well Over Time**
**Many Wells Required **
**Significant Drilling Cost Reductions**
**New Strategies Need/Being Developed**
**Environmental Issues Ongoing**

## Large Gas Resource

**Technically Recoverable **
**Resource Base**
**1,969 Tcf**

**284**

**329**

**303**

**  ****Deeper on Land**
**  ****Tighter Rocks**
**  ****Unconventional**
**  ****Deeper in Water**
**  ****Less Accessible**
**  ****Heavily Explored**

**NPC 2003**

**But:**

**Therefore Technically**
**Challenging **

**Notes:**
The resource base while large and diverse, is also heavily explored and difficult to access. 

Gas is found in rocks that are deeper in depth onshore >15,000 ft.
Gas is found in lower permeability formations.
Gas is found in deeper waters offshore.

Gas is located in environmentally sensitive areas (Rocky Mountains) and is at greater distances from gas markets (Alaska).

All of these factors combine to the point where our large Technically Recoverable resource is also Technically Challenging.

The resource is there however.... and located within North America.     Our  natural gas endowment is a considerable asset and is being overlooked. 

## Nonconventional Gas Growth

**Non-Arctic U.S. and Canadian Production Outlook**

**2003 NPC Study**

## Extreme Complexity 

**Small Compartments**
**Low k**
**Natural Fractures**
**Lenticular**
**Produced Water**
**Gas Content**
**Stimulation Challenges**
**Depth**
**Over/Under Pressured**

## Precision Replaces Horsepower

## Lower Gas Reserves Per Well

**  ****Western Canada  **

**BCF per Gas Connection**

**Lower - 48**

- NPC 2003

**Plans For 1500 Wells**
**10 Acre Spacing**
**Subtle Structure,  Low k,**
**Environmental Sensitivity**

- Courtesy AEC

## Hydraulic Fracturing and Fracture Diagnostics

## Hydraulic Fracturing – More Complicated Than Once Thought

**Wellbore**

- Ideal World

- Real World

**Wellbore**

- Pay

- Pay

- Multiple Hydraulic Fratures

- Fracture Height Growth

- Proppant Convection

- From Pinnacle Technology

## Piceance Basin Fracture Diagnostics Experiment

## +350 Wells in 2005

**+350 Wells in 2005**
**Over 1000 Wells Monitored**
**with Tiltmeters**

## Many New Wells Required

**0**

**5**

**10**

**15**

**20**

**25**

**30**

**2000**

**2005**

**2010**

**2015**

**2020**

**2025**

**Tcf/Year**

**Proved**

**Growth**

**Future **
**Drilling Required**

**Undiscovered**
**Conventional**** **

**Undiscovered**
**Nonconventional**** **

**2003 NPC Study**

**13,000 Unconventional **
**Wells per Year **
**By 2025**

## Fit For Purpose Drilling Rigs 

**   ****Rig Features**
**Handles 1” thru 2 5/8 ” Coiled Tubing**
**5000’ Depth Capability**
**Zero Discharge Mud**
**System**
**Handles 7 5/8” R3 Casing**

## Benefits of Rig Utilization

**Efficient Rig Mobilization**
**Small Environmental Footprint**
**Rapid Drilling**
**Good Hole Quality and Cement**
**Rig Capable of Drilling, Running Casing, Tool Handling, Logging **
**Benefits of Continuous Tubing**
**Low Noise, Emissions**
**Mud Reuse and Minimum Cuttings and Zero Discharge if Required**
**Improved Safety**** **

**Saves Money, Environment and Enables Marginal Resources**

## Activity Trend

**  ****Rig Has Drilled + 220 Wells in 2005**
**  ****Colorado – Kansas**
**   ****3000 Ft. Wells Drilled in One Day**
**   ****Drilling Faster Than Permitting**** **

## New Strategies -  New High Angle/Horizontal Wellbore From Existing Well

**Texas Panhandle**
**Cleveland Sand**
**Low k, Faulted Gas Pay **

**Sealing Faults**

**Original**
**Pressure**
**Compartment**

## New Strategies -  No-Frac Completion

**Hydraulic**
**Fracture**

**Gas**

**Water**

**Kansas Niobrara**
**Thin, Low k Gas Pay **
**Near Water**

## From Wilderness Society

## Environmental Concerns

**Endangered Species**

**Roads, Compressors, Pipelines**
**Produced Water Impact**
**Land Access**

***Research Need:***** **
**Environmental Research**
**Air, Water, Land**

## Reduce Environmental Footprint

**Reduce Environmental Footprint**

## Slide 22

##   Unconventional Gas - Top Ten  Technology Needs

**Shale**

**Low-k Sands**

**Coal Seams**

**San Juan**
**Permian**
**Mid-Continent**
**Appalachian**
**Rocky Mountains**

**Reservoir Characterization, Imaging**
**Stimulation**
**Resource Assessment**
**Data Mining**
**Producibility Models**
**Produced Water Handling**
**Extending Well Life**
**Drilling Cost Reduction**
**Horizontal Well Completion**
**Expert Systems**

## Technology Can Have a Significant Impact

**High Technology Resource Base**
**Fuel Flexibility**
**High Supply Technology**
**Low Economic Growth**
**Increased Access**
**High LNG Imports**
**Less Access**

**Change in Price**
**vs. Baseline**
**$2002**

**Change in Volumes **
**(Bcf/Year)**
**vs. Baseline**

**-2.00**

**-4.00**

**2.00**

**4.00**

**0.00**

**-4,000**

**4,000**

**0**

**2,000**

**-2,000**

**Values shown are averages for the 2011 to 2025 period**

**2003 NPC Study**

## Unconventional Gas Research

**The Energy Policy Act of 2005**
**Research, Development and Demonstration Program for Unconventional Gas**
**As Enacted:****	****   $50 Million/Year for 10 Years**
**$12.5 Million DOE In-House Research**
**$16.2 Million for Unconventional **
**$17.5 Million for Ultra-deep Water**
**$  3.8 Million for Small Producer Program**
**Program to Be Industry Advised/Managed Through Research Consortium**

## Summary

**Unconventional Gas Growing in Importance**
**Large Resource**
**Technically Challenging**
**New Approaches Require Innovative Thinking**
**Integration of Technology Will Continue to be Important**
**Engineers, Geologists, Land Use**
**Environmental Technology Response to Environmental Challenges Will Continue To Be Important**
**Less Gas/Well...*****Therefore*****...More Wells...*****Therefore*****... ****Need for Well Cost and Environmental Footprint Control **