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Unconventional Natural Gas Development

Unconventional Natural Gas Development. Robert Fisher, PG April 16, 2013. Discussion Topics. Unconventional Gas Barnett Shale/Economics Example Plays How Fracking Works Production of Natural Gas Issues and Concerns. What is “Unconventional Gas”?.

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Unconventional Natural Gas Development

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  1. Unconventional Natural Gas Development Robert Fisher, PG April 16, 2013

  2. Discussion Topics • Unconventional Gas • Barnett Shale/Economics • Example Plays • How Fracking Works • Production of Natural Gas • Issues and Concerns

  3. What is “Unconventional Gas”? • Definition: Natural gas reserves that are more difficult or less economical to extract than conventional reserves • Types today • Deep Natural Gas (>15,000 feet deep) • Shale Gas (and associated condensate/crude) • Tight Gas • Coal Bed Methane • Methane Hydrates

  4. Why is Unconventional Gas Development so important? • US & global reserves are huge • Energy will come largely from fossil fuels for the rest of our lifetimes • Depressed natural gas prices ($3/Mcf) are currently boosting the economy.

  5. US Unconventional Shale Gas Development • 750+ trillion cf of gas • Annual US demand = 23 tcf • 20+ billion boe (crude) • Annual US demand = 7.3 bboe • 46% of US gas by 2035 • 20 known shale plays in US • Marcellus • Bakken • Barnett • Eagle Ford

  6. Unique Features of Unconventional Oil & Gas Development • Uses new techniques (including horizontal drilling) to access oil & gas reserves in “tight” formations • Requires a significant volume of water for hydraulic fracturing during well development to release the oil and/or gas • Requires treatment of returned frac water prior to reuse or disposal (similar to produced water) • Often occurs in areas that never experienced oil & gas development in the past, leading to new challenges

  7. Barnett Shale • First Barnett well drilled in 1981 • Mitchell Energy pioneered development techniques in Barnett • Major development began in 2003 with horizontal drilling combined with hydraulic fracturing • Numerous wells in urban areas of DFW Metroplex including DFW Airport

  8. Barnett Shale • Production from Barnett Shale in 13 North Texas Counties • Current drilling activity is about 1/3 of the peak rig count in 2008 (approximately 50 active rigs)

  9. Barnett Shale • Statistics • Average reserves: ~25 Mcf/acre • Average lifetime of each well: 7.5 years (some lasting 15 years) • Drilling depths: up to 6,000 feet • Horizontal drilling lengths: 1 to 2 miles • Completion costs: $2MM to $3MM per well • Well yields: 1 to 2Mcf/day (highest recorded yield – 17Mcf/day over 30 day period) • Average lifetime well yield: 0.84Bcf • Opportunity for Mineral Rights Holders • Sign-on bonuses and royalty payments • $2,500 to $3,000 per acre, with possibilities up to $5000 to $7000/acre (Note: historic highs were $25,000/acre in 2007 or so) • Royalty rates are 20 to 25% • Access to off-property gas development • Develop your own gas resources

  10. DFW Example

  11. Hydraulic Fracturing • “Fracking” - Hydraulic fracturing of a subsurface geologic unit by high-pressure water, proppant (sand), and chemicals to improve permeability in the shale, tight sand, or other formation that hold gas or oil

  12. Hydraulic Fracturing • Fracking has been used in oil and gas wells since the 1940s • Fracking combined with horizontal drilling began in the 1980s

  13. Hydraulic Fracturing • Typically deep: 4,000 to 9,000 feet. • Usually well below production aquifers.

  14. Fracking Fluid Composition Chemical Additives, 0.5% • Dilute acids • Sodium chloride • Polyacrylamide • Ethylene glycol • Borate salts • Sodium/potassium carbonate • Glutaraldehyde • Guar gum • Citric acid • Isopropanol

  15. Why Fracking Fluids Contain these Chemical Additives

  16. Hydraulic Fracturing Layout

  17. Hydraulic Fracturing

  18. Production of Unconventional Gas • Nearly identical to production of conventional gas once fracking is completed • Primary difference is fracking fluid flowback early in well’s life with unconventional gas Same for either gas type: • Well Heads • Separators • Condensate Tanks • Produced Water tanks • Compressors • Gas Metering • Gathering Lines

  19. Main Issues of Concern

  20. Special Challenges • Air permitting/impacts • Nuisance concerns (light, noise, dust, etc.) • Water withdrawal • Groundwater protection • Water disposal • Waste disposal • Pipelines, compressor stations & storage • Habitat and endangered species protection • Daily people/equipment/truck ingress/egress

  21. The Future • 750+ trillion cubic feet (tcf) • 23 tcf annual US demand • 46% of US gas production by 2035 • 20 known shale plays in the US • - Marcellus • - Bakken • - Barnett • - Eagle Ford

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