Technology and Economics Affecting Unconventional Reservoir Development

Worldwide, unconventional resources are important sources of oil and gas whenmost conventional resources are declining and demand for hydrocarbons is growing. TheMasters? (1979) concept of the energy resource triangle suggest that the exploitation ofunconventional reservoirs is particularly sensitive to both technology and commodityprice parameters.In the United States, production from unconventional reservoirs has been stimulatedby a combination of Federal tax credits, technical development programs -supported bygovernment agencies and private organizations- and high commodity prices. In this work,the effect of technology and different economic events for selected unconventional oiland gas plays in the United States was evaluated according to the concept of the ResourceTriangle Theory (RTT).Studies conducted in the Austin Chalk -our textbook case- and other seven unconventionalplays in the United States have supported the RTT concept that high prices andbetter technologies do result in more drilling activity and more oil and gas productionfrom unconventional reservoirs. For instance, two approaches were employed to supportRTT concept: Correlation study and Forecasting graphs. On the first one, correlations of commodity prices and technology with drilling activitydemonstrated that periods of high commodity prices coincide with increase in unconventionalproducing wells approximately 75% from selected plays in this study.The second one shows that high prices and technological advances also translate intoadditional oil and gas production and reserves. This behavior was observed through theanalysis of a series of decline production curves using a VBA program in Excel thatcompute oil and gas production volumes and their corresponding economic values underspecific conditions. The results indicated that maximum value of approximately $50 billionoil plus gas would have been possible using conventional hydraulic fracturing technologyonly. Moreover, subsequent episodes of high commodity allow the introductionof 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 additionalareas for development, such as the Barnett Shale and the Bakken Shale. Usinghorizontal wells has also revived older plays, such as the Austin Chalk. The combinationof horizontal well technology and water fracturing technology has led to a dramatic increasein the development of both oil and gas from shale reservoirs. Current productionschemes suggest that the plays could produce an additional of $320 billion when producingat rates higher than 5 BOE/day.Our results confirm the concept of the resource triangle that natural gas and oil resourcescan be produced from low quality resources when either product prices increaseor when better technology is available. The seven oil and gas plays studied in this researchare demonstrative examples.