Techniques and Technology in the Evaluation of Unconventional Shale Gas Resources

1. Techniques and Technology in the Evaluation of Unconventional Shale Gas Resources Robert S. Kuchinski Weatherford Oil Tool Middle East 3rd India Unconventional Gas Forum (IUGF) - 2013 Mumbai, India January 18, 2013

2. Acknowledgements • I would like to express my gratitude to the following organizations for making this presentation possible: • The organizers of the 3rd India Unconventional Gas Forum (IUGF) - 2013 • Weatherford India

3. Key Learning’s from North America • Not all shale reservoirs are alike • Must understand core area of shale play • Completion costs consume 50 to 60% of well costs…and rising • Continuous learning thru data acquisition at every phase of well life is essential to maximize recovery from these reservoirs

4. Unconventional: Satisfaction Survey SHARE OF FRAC JOBS NOT MEETING PERFORMANCE EXPECTATIONS Source: Welling & Company

5. Root Cause to Challenges in Unconventional Exploitation ROOT CAUSE OF FRAC JOBS NOT MEETING PERFORMANCE EXPECTATIONS Source: Welling & Company

6. Shale Fabric Analysis Ultra-Thin Sections “Shale Reservoirs have large variation” 2D Nano-Scale Imaging Elemental Fabric Mapping

7. Evaluation of Unconventional Resources Intergranular Porosity and disassociation between rock and fluid Gus Archie 1907-1978 Increasing Gamma Ray Increasing Intragranular Porosity

8. Evaluation of Unconventional Resources • Shaley Gas Sandstone • Finer grain size and presence of clay reduce K • Clay content disrupts Sw Calculation • Sw equations modified to cope with clay • Logs required for mechanical properties • Hydraulic fracturing becomes be necessary • Diagenesis can limit K and mineralogy • Clean Gas Sandstone • Minimal Clay • Higher Energy Depositional Environment • Coarse grained -Well Sorted • Favorable Porosity and Permeability • Diagenesis can limit K • Log evaluation based on the disassociation between fluid and rock • Unconventional Clastic Gas • Variable Clay Content • Log evaluation not useful for fluid determination • Rocks required to complete analysis • Rocks and fluid associated

9. The Core Area • Critical to Understand the Resource Quality and to be able to grade it. • What is extent of the Core Area? • The Arial sweet spot • Highest concentration of gas • Most productive • Lowest cost to develop • Most valuable • What other areas are productive? • Gas concentration and Productivity vs. Core Area? • What is the extent of the fringe area? • What is Gas concentration and Productivity?

10. 2011 Shale AFE Breakdown 10,500’ TVD 14,100’ MD 3,600’ Lateral 12 Stages

11. 2012 Shale AFE Breakdown 10,500’ TVD 15,500’ MD 5,000’ Lateral 16 Stages

12. Resource Play Formation Evaluation Key Parameters Rock Properties  Organic richness and Gas in place Detailed gas composition  Delineates top and bottom of reservoir Elemental analysis  Brittleness evaluation Extensive core in labs and cutting evaluation in labs at wellsite while drilling DTS and DTC Geomechanical Attributes Borehole image  Natural fracture network Key downhole logging measurements Uranium content  TOC Hydraulic Frac extent  Productivity index

13. TOC Measures the present day organic richness of a rock Empirical relationship to Uranium content Maturation parameters are indicative of the maximum paleo-temperature that a source rock has reached The standard for maturity reporting is Vitrinite Reflectance (% Ro) Shale As a Reservoir Rock GRI Devonian Study: Uranium vs. Kerogen (TOC) TOC > 2.0%: This level allows for the generation of abundant gas Ro > 1.5%: This level avoids unfavorable relative permeability effects caused by oil blocking small pore throats and permeability

14. The Shale’s of India Source Oil & Maritine Journal by Dr. V.K. Rao

15. Shale As a Reservoir Rock • In addition to Knowledge of TOC and RO….favorable Reservoir Properties must be present: • Porosity > 3% • High reservoir pressure • Pack in more gas • Keep fractures open • Favorable In Situ Stress • Influences the permeability and the response to hydraulic fracturing • Understanding the mineralogy is essential to understand brittleness

16. Identification of Ductile Zones from Mineralogy MINERALOGY Quartz Carbonates Clays Others TPH / TOC (0-10) S1 S2 TOC Initiation of a frac proved unsuccessful in this zone with >50% clays Clays 1 sample per 20’ 16

17. Microseismic Understanding Fracture Growth….. Treatment Well 8-12 …….to Improve Frac Program Design Treatment and Observation Well 1-12 Treatment Well 16-1 Events located by horizontal and vertical arrays.

18. Continuous Learning • Second most important item next to establishing core area • Need relentless pursuit of efficiencies and cost reductions • Shale plays will require thousands of wells drilled over decades • Must first establish the most efficient manufacturing design • Early attention to best practices, appropriate to the specific shale play and emphasis on continuous learning are key • Development of effective multidisciplinary teams

19. Summary • Variability of shale is a fundamental controlling factor on weather a shale deposit will produce economic quantities of natural gas. • Variations within a shale deposit will determine the core area of a shale play and thus the value assigned to different locations within a shale play. • Following a process of “Good Science” allows for “Good Engineering” throughout the various stages of a shale project. • Continuous learning and refinement is a must in order to maintain economic viability.

20. Questions ???