We know that when something is extinct it is no longer in existence. A less

commonly used word is “extant, “ which is the opposite of extinct. If you are not

extinct, you are extant and continue in existence. I have a small collection of old

“The Review of Reviews” magazines dating from 1916-1920, that I found in the

trash many years ago. The articles give an interesting insight into people’s

thinking during the pre– and post-WWI era. But just as interesting are the

advertisements in these magazines, such as the one above from November, 1916.

Are there any male readers of this newsletter that still use garters to hold up their

socks? I suspect that male garters are extinct, at least in the oil patch, having

been replaced by much more functional socks that use elastic fabrics.

Some methods for drilling and completing wells have also gone the way of men’s

garters. Drilling with cable tool rigs and shooting a well are nearly extinct

practices, while the rotary rig and hydraulic fracing are extant. In this era

dominated by unconventional plays, some thought conventional wells would

become extinct. Hardly so; as attested by Diversified Gas & Oil’s activities (page

3) and local operators who are taking risks and permitting new wells. But how

about your methods for picking new well locations? Are you strictly using

“closeology?” Some are. That can work, but what do you do when you run out of

good wells to directly offset? Are you paying more attention to anecdotes about

someone’s nearby production rather than collecting and mapping numerical data?

Some do. I think one difference between companies that become extinct and

those that remain extant is how well they incorporate improved methods of

acreage evaluation. Collect and evaluate the well logs, do the geology, and test if

your hunches are confirmed before and after you drill. Stay extant my friends.

In this issue

Extinct vs Extant P.1 2018 Conventional Permits P.2

In the Spotlight P.3 Logging Assists-Neutron Logs: p.4

About this Newsletter

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Consulting, PLLC which provides

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The Conventional Operator

Bi-Monthly Newsletter for Operators Exploring & Developing Conventional Oil & Gas Plays in Pennsylvania

ISSUE 22 Sep 2018

EXTINCT vs EXTANT?

2

Conventional Well Permits - Pennsylvania (2017 & 2018)

July showed a decline in permit activity over the

previous month of June. The July slowdown in

conventional well permit activity has been

observed every year since this newsletter started in

2015. However, the month of August made up for

that with 46 new permits. This makes August the

strongest month for permit activity thus far in

2018, and gets us to a total of 197 permits year-to-

date compared with a 2017 number of 198 permits

for the entire year. So, unless the Apocalypse

arrives, 2018 is certain to see an increase in

permits over 2017. Four counties in the northern

oil district account for 90 percent of all permits

thus far in 2018. Oil well permits make up 85

percent of all permits granted this year.

Finally, 91 percent of the conventional well permits

are for new wells, the rest being permit renewals.

Slow July, Then A Rip-Roaring August

2018 Conventional Permits by County

County No. Permits % of Total

Warren 80 40.6

McKean 57 28.9

Forest 29 14.7

Venango 12 6.1

Lawrence 4 2.0

Armstrong 3 1.5

Mercer 3 1.5

Butler 2 1.0

Fayette 2 1.0

Washington 2 1.0

Clarion 1 0.5

Clearfield 1 0.5

Indiana 1 0.5

Total 197 100.0

3

Success Stories, News, Announcements

In July, the

PADEP issued

orders to

three companies to plug 1058 non-producing

conventional wells between 2020 and 2023. Most of

these wells are now owned by Diversified Gas & Oil

PLC. Recent articles in the Pittsburgh Post-Gazette

and Bloomberg Environment state that Diversified

was surprised by the order.

Diversified, following its acquisitions since 2009, now

operates approximately 53,000 wells in Appalachia

with about 24,000 of those in Pennsylvania. This is

the largest inventory of wells in the Commonwealth

that is currently operated by one company. This large

inventory of wells, to eventually be plugged, concerns

the DEP should Diversified not have the funds in the

future to meet this liability. According to the

Pittsburg Post-Gazette article the cost of plugging a

shallow conventional well can range from $8,000 in a

relatively shallow, clean well to more than $100,000

for a wellbore that is more difficult to plug due to its

age, depth, and physical condition. Diversified is in

talks with the DEP regarding the plugging liability

issue. Additional information on can be found at:

https://news.bloombergenvironment.com/

environment-and-energy/diversified-gas-oil-startled-

by-pennsylvania-call-to-plug-wells-1

and

http://www.post-gazette.com/powersource/

companies/2018/08/06/Diversified-Pennsylvania-

fracking-gas-well-drilling-plugging-dry-DEP-shale/

stories/201808050073

The Briggs vs Southwestern Energy Production Co

case continues. In the May 2018 issue of “The

Conventional Operator” this

case, in which the

Pennsylvania Superior Court

overturned the legal principle

of “the rule of capture” for

hydraulically fractured wells,

was discussed. While the case

was specifically about a Marcellus Shale well, it seems

possible that any hydraulically fractured well,

conventional or unconventional, could be affected if

the court’s ruling is upheld. Southwestern asked to

have the case re-heard with the full panel of Superior

Court Judges, but this was denied in June Therefore,

in July, Southwestern petitioned the State Supreme

Court to hear the case and this was granted with a

date to be determined. In addition to hydrocarbon

production, Southwestern argues that the ruling

could interfere with the operation of gas storage and

waste water disposal wells. Southwestern Energy

Production Co is a

subsidiary of Southwestern

Energy Co.

More details on this

important case can be found at the following links:

https://www.eenews.net/stories/1060091449

and

http://www.post-gazette.com/powersource/policy-

powersource/2018/07/11/Southwestern-Energy-Pa-

Supreme-Court-restore-rule-of-capture-shale-drilling/

stories/201807100131

4

In previous issues I’ve reviewed some of the basics about Gamma Ray, Temperature, Resisitivity, and Density logs In this

issue I want to begin tackling Neutron Porosity logging. This is perhaps the least understood of the common logging tools

used in shallow conventional wells. I hope this article and future ones shed light on the real benefits that Neutron tools

provide in interpreting your well logs and your reservoirs. First things first, though. This article will discuss Neutron logs

run in open holes only; and will not discuss older (generally pre-1960) Neutron logging tools or their interpretation

practices. Those topics may be left for future articles.

Neutron Porosity tools bombard the formation with high energy neutrons from an onboard radioactive source. These

neutrons are scattered and slowed down when they collide with atoms in the formation. As they lose energy they emit

lower energy gamma ray radiation, some of which is absorbed by the formation and some of which is picked up by the

gamma ray detector in the Neutron tool. The hydrogen atoms in water and oil molecules are effective in absorbing the

energy released from neutron collisions, resulting in fewer gamma rays making it back to the tool detector. Therefore, a

formation with a high concentration of hydrogen atoms will show a high Neutron Porosity because it has high saturations

of water and/or oil. Low porosity formations lack the pore space to hold much water or oil and thus the Neutron tool will

provide a low porosity reading in such formations. An important exception to this is in the case of natural gas. High

porosity formations with a high gas saturation will produce low porosity readings. This is because the gas phase is much

less density with respect to hydrogen atoms that absorb the neutrons emitted from the tool. Therefore, in the case of

gas more gamma rays make it back to the tool’s detector, which the tool interprets as being caused by low porosity. This

is what produces the useful cross-over effect between the Density Porosity and Neutron Porosity in reservoirs with high

gas saturation. The cross-over

affect is highlighted in red in

Figure 1 with the Neutron

Porosity curve reading at 2 to 4

percent porosity. In general,

the greater the width of the

Neutron-Density cross-over,

the greater is the gas

saturation causing it. The separation in this example is about five divisions on the log grid or a 10 percent porosity

difference. Also note that the Neutron Porosity averages about 12 percent in the shales above and below the gas

reservoir. This is because of the presence of water molecules bound to the abundant clay minerals in the shale., which

causes the Neutron tool to read high porosity.

(Continued on Page 5)

Topic 19: Neutron Porosity Logs: Introduction

Logging Assists:

Figure 1, (Herzing, 1993)

5

(Continued from Page 4).

Again, abundant water or oil in a formation will result in a high Neutron Porosity being computed. The Neutron Porosity

is affected by fluid content in the formation within a few inches of the wellbore, the wellbore diameter and fluid salinity

if water-filled, the shaliness of the formation , the formation lithology, and formation temperature. Therefore, a raw

Neutron curve does not provide a true formation porosity. Many of these environmental affects can be corrected for,

but the chief ones to take into account are the formation lithology, wellbore fluid type and salinity, and type of fluid in

the formation if the well was drilled on-air. Using the Neutron Porosity in quantitative log analysis requires that it be

combined with the Density Porosity determined from the Bulk Density log (more about these topics in future issues).

Because the neutrons emitted from the Neutron Porosity tool respond similarly to water and oil, it is not possible to

determine an oil zone from a water zone from this log alone as they will give similar Neutron Porosity responses all else

being equal. The resistivity tool is handy in these cases as a clean sandstone reservoir with high oil saturation will usually

have a high resistivity value, while the same reservoir with a high salt water saturation will have a low resisitivity value.

Figure 2 below shows an oil sandstone from 1640 to 1688 feet. The Neutron Porosity is about 6 percent and high

Resisitivity (averaging about 65 ohm-m) indicate that the fluids in this zone are likely to have high oil saturation from

1650 to 1664 feet. Note that the separation of the Neutron from the Density Porosity is just one to two divisions on the

log grid, corresponding to two to four porosity percentage points difference between the Density and Neutron porosities.

The actual difference will be even less when the raw Neutron Porosity curves are corrected for lithology.

In future issues of “The Conventional Operator” I will cover the lithology corrections needed for most Neutron Porosity

logs in the Upper Devonian Sandstone Play as well as how to correct the Neutron Porosity log for shaliness and how to

combine it with the Density Porosity log to come up with an Average and an Effective Porosity value, which can be used

in determining water and hydrocarbon saturations in your reservoirs.

Reference Cited:

Herzing, Paul M., 1993. Basic Log Interpretation Manual, 2nd Ed., 98 p.

Figure 2

6

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