How is shale gas changing the rules of the energy game?

We are moving from targeting secondary accumulations of oil and gas to going straight to the original source rocks. This is a fundamental shift in the industry.

To understand the development potential of unconventionals, it is key to first identify the source rock in the existing prolific area, then look to see whether it has the characteristics which would allow that potential to be further unleashed and for the product to be commercially produced.

What characteristics do you look for? What capabilities and strategies are needed for success?

The rock needs to have the right parameters. It needs to have a sufficiently high organic content, have some porosity in which hydrocarbons may be able to be stored and mobilise. A favourable stress regime in the rock will facilitate the ability to effectively stimulate wells that are being drilled and in turn open up a sufficient surface area to allow very low permeability rocks to flow hydrocarbons at sufficient rates to be commercially viable.

Access to infrastructure is also critical, whether that is via existing pipelines or gas facilities, or service industries that can easily support your activities. You could have the best play in the world technically, but if you cannot sell the product without putting a long pipeline in place, you will struggle to commercialise it. To make money in this business, the cost base must be sufficiently low since the long-term flow potential of unconventionals can be lower than conventional sources.

All the aspects have to work well with each other to make it a success. Existing shale plays in the US can have very different parameters, but they can still work, as more favourable parameters can compensate for less favourable properties of the rock.

How can companies plan for commercialisation before drilling?

It is necessary to scope out the problem and using all the available data from historical data sources to define a set of assumptions, which will help to make or break that play as quickly and as cost effectively as possible. When evaluating the project, preconceived ideas on what will and will not work can point you in the wrong direction. It is important to keep an open mind and do your homework to figure out what you know and what you do not know, and build your programme around solving the problem.

What are some of the preconceived ideas that could lead to failure?

There are many things. It could be applying a technology which worked somewhere else without attempting to understand the application and whether it is also applicable to the problem at hand. It could also be assuming that since the technical fundamentals are in place that commerciality will follow, without acknowledging the hurdles to market entry.  

About the Oil & Gas Summit 2013

This unique forum will take place at the Pan Pacific Perth Hotel, Perth, Western Australia, 21 - 22 November 2013. Offering much more than any conference, exhibition or trade show, this exclusive meeting will bring together esteemed industry thought leaders and solution providers to a highly focused and interactive networking event.

The Summit provides a perfect balance between strategic presentations and technical sessions to achieve operational excellence at both upstream and downstream levels. A variety of topics will be discussed to provide key insights for developing a competitive edge, attracting experienced staff, improving asset management at strategic level, while delivering ultimate efficiency in technical operations from fracking technologies to LNG production optimisation and waste management.

For more information, please contact summits-apac@marcusevans.com or read more here.