Unconventional Oil and Gas Definition – Call with EPA and USGS 11/5/2015

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Unconventional Oil and Gas Definition – Call with EPA and USGS (ERG Notes)

11/5/2015

Participants:

EPA, OW: Karen Milam, Jesse Pritts, Tom Born, Pooja Parikh, Scott Wilson

EPA, OC: Dan Chadwick

USGS: Chris Schenk

ERG: Sarah Yates

Shorthand used throughout notes: UOG – unconventional oil and gas; COG – conventional oil and gas

Chris Schenk, USGS Overview

- 35 years in Oil and Gas (now, Energy) Program

- Oil and gas assessments focused on “UOG” over last 20 years

- EPCA 2000 law requires these assessments

Chris’s initial reactions to API comment:

- In 1977 there was a tax incentive for tight gas (FERC) that defined <0.1 mD permeability as tight 

gas; it took a while for people to get passed that definition. There were a lot of issues with 

defining if this permeability was in-situ vs. on surface vs. other.

- USGS does not use permeability as a defining characteristic because there is a large range in 

permeability even within a formation.

o USGS would NOT support 0.1 mD permeability classification.

- Chris has never seen 0.001 mD permeability used (as is referred to in API’s comment).

USGS’s Oil and Gas Assessments:

- Completed on a rolling schedule (not annually), with focus on the biggest formations first (e.g., 

Barnett, Bakken, Eagle Ford).

- EIA is required to prepare annual reports, so they use some USGS data (where available for the 

past year) plus their own EIA data that they develop to supplement the USGS data.

- USGS takes a geologic and engineering approach to assessments. They try to determine where 

production is headed in future.

- USGS uses 18 characteristics/checks to try to determine if a formation is conventional or 

unconventional (i.e., continuous).

o Some of 18 Characteristics Associated with COG:

 Oil/gas is buoyant upon water column

 Well-defined gas/oil contact1

 Water production increases as petroleum production decreases

 Source rocks can be far away (hundreds of kilometers)

 

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Schlumberger Oilfield Glossary definition of “Gas Oil Contact”: A bounding surface in a reservoir above which 

predominantly gas occurs and below which predominantly oil occurs. Gas and oil are miscible, so the contact 

between gas and oil is transitional, forming a zone containing a mix of gas and oil.
Unconventional Oil and Gas Definition – Call with EPA and USGS 11/5/2015

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o 18 Characteristics Associated with UOG (i.e., “Continuous” Accumulations):

 Regional extent – may occur across basins

 No well-defined gas/oil contact

 Accumulations can be shale gas, shale oil, tight oil, coalbed methane, gas 

hydrates, etc.

 Not held in place by water

a. Water up dip from UOG formations (opposite of COG)

b. Not buoyant upon water column

 Normal formation pressures; sometimes under pressure, sometimes over 

pressure (although under pressure is common)

 Low matrix permeability (no numeric limit)

 Reservoirs are in close proximity to source rocks (can be one in the same)

 Few truly dry holes; most have production

 Variable water production – can have water production from zero to significant 

volumes depending on proximity to faults

 Geologic sweet spots where production is better

 No obvious seal/trap

 Existing fields merge into single, regional accumulation (e.g., Rockies)

 Large in-place resource numbers, but low recovery factors

 Use stimulation for production (e.g., fracturing is common)

 Production occurs regardless of structure (e.g., don’t need to be on Anticline)

 No natural reservoir drive

 Mean estimated ultimate recoveries (EURs) can be low compared to average

well in COG formation.

- USGS evaluates a formation to determine if it is considered “conventional” (COG) or 

“continuous” (UOG) using the above mentioned characteristics. There are transition zones and 

boundaries between COG and UOG that make this a very difficult distinction in some instances.

- USGS tries to determine conventional vs. continuous to determine the correct assessment 

methodology, which differs greatly between conventional and continuous accumulations.

- Original purpose: how much gas is under federal lands; how much restricted from drilling?

- Industry is not allowed to be involved in the assessment process.

- Horizontal well does not indicate UOG because COG wells are drilled horizontally now too.

- CBM excluded from rulemaking, but is considered UOG.

- Is the term “continuous accumulation” being used widely in US and overseas?

o Chris: No. For a while, folks wanted to get away from using the term “unconventional”

because it is hard to define, but more recently, folks are switching back to using the 

term “unconventional”.

- Shale oil, shale gas, tight oil, tight gas – are these words more accepted than unconventional?

o Chris – Yes, everyone now knows these terms, but these are equally hard to define.

- Do operators know if they’re drilling into conventional or unconventional? 

o Chris: Yes, they know what they’re after. Some horizontal wells can cost millions of 

dollars, so they know where they’re drilling.