EnerCom’s London Oil & Gas Conference™ 4June 14, 2012Sofitel London
EnerCom’s London Oil & Gas Conference™ 4June 14, 2012Sofitel London
Unconventional Oil PlaysOpportunity vs Risk
Unconventional Oil PlaysOpportunity vs Risk
Danny D. Simmons
1000 BOPD - What a great well!1000 BOPD - What a great well!
10
100
1,000
10,000
12/2009 1/2010 2/2010 3/2010 4/2010 5/2010 6/2010 7/2010 8/2010 9/2010 10/2010 11/2010 12/2010
BO
PD
2
If only it was always so easy . . .If only it was always so easy . . .
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Time
Rat
e
50 mbo
400 mbo
200 mbo
• How much oil and/or gas are wells going to make, and
• Can my Company make $ drilling wells?
• How much oil and/or gas are wells going to make, and
• Can my Company make $ drilling wells?
Fundamental Goals of Reservoir EngineeringFundamental Goals of Reservoir Engineering
OOIPOOIP
OGIPOGIP
TemperatureTemperature
TOCTOC
Porosity vs. TOCPorosity vs. TOC
PorosityPorosity
PressurePressureFluid AnalysisFluid Analysis
Free Gas vs. Adsorbed GasFree Gas vs.
Adsorbed Gas
Natural FracturesNatural
FracturesHydraulic FracturesHydraulic FracturesRoRo
Permeability -Natural
Permeability -Natural
Permeability -Induced
Permeability -Induced
Well SpacingWell SpacingRecovery
FactorRecovery
Factor
Vertical vs. LateralVertical vs. LateralRecovery per Incr. Lateral Foot
Recovery per Incr. Lateral Foot
PricesPrices
CostsCosts
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GR GRRT D,N
10’High Quality Net
60’ Quality Net
General PrinciplesGeneral Principles
Higher silt content(Rt and Rhob)
Higher organic
content
(GR)
HydrocarbonProfile
Higher silt content
(Rt and Rhob)
430' Gross
250' Net < 2.5 g/cc
OGIP+/- 175 BCF/Sq Mi
More is Better…
Storage Capacity (In-Place)
Flow Capacity (Permeability)
Reservoir Energy (Rec. Factor)
More is Better…
Storage Capacity (In-Place)
Flow Capacity (Permeability)
Reservoir Energy (Rec. Factor)
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Unconventional OilUnconventional Oil
Description: Oil resources not economical to produce using conventional oil and gas recovery techniques
Sources: Heavy Oil (<20° API) Tight Oil Reservoirs
♦ Shales♦ Low permeability sandstones and carbonates
Oil Shale (solid rock) Oil Sands
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High-Activity Unconventional Oil PlaysHigh-Activity Unconventional Oil Plays
• Bakken/Three Forks Reservoirs Williston Basin Montana and North Dakota
• Niobrara Reservoir Denver-Julesburg Basin, Powder River Basin, Laramie
Basin, Others Colorado and Wyoming
• Eagle Ford Reservoir South Texas
• Mississippian Reservoir Northern Oklahoma and Southern Kansas
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Bakken Shale / Three Forks ReservoirsBakken Shale / Three Forks Reservoirs
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Bakken/Three Forks – Areal ExtentBakken/Three Forks – Areal Extent
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Bakken/Three Forks – LithologyBakken/Three Forks – Lithology
Source: “Elm Coulee” Oil Field Richland County, Montana Bakken Oil Well Frac Treatment
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Bakken/Three Forks – Why the Excitement?Bakken/Three Forks – Why the Excitement?THREE FORKS, BAKKEN, AND SANISH OIL PRODUCTION AND WELL COUNT
MONTANA AND NORTH DAKOTA
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50,000
100,000
150,000
200,000
250,000
300,000
350,000
Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12
Oil
(BBL
/Day
)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Wel
l Cou
nt
ND Sanish and Three ForksND Sanish, Three Forks, and BakkenND and MT Sanish, Three Forks, and BakkenTotal Well Count
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Bakken/Three Forks – Fluid PropertiesBakken/Three Forks – Fluid Properties
Oil Density = 42 API (Sweet)Oil Viscosity = 0.3 CP at Reservoir ConditionsInitial Solution GOR = 500 to 800 SCF/BBLSolution GOR at 3 Years = 800 to 1,100SCF/BBLSolution Gas Heating Value = 1,500 BTU/SCF
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Bakken/Three Forks Example WellBakken/Three Forks Example Well
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Bakken Development IssuesBakken Development Issues
• Pipeline Capacity• Gas Processing Capacity• Infrastructure Capacity• Workforce• Optimal Well Spacing
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Niobrara ShaleNiobrara Shale
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Niobrara Producing BasinsNiobrara Producing Basins
• Powder River Basin• DJ Basin • Laramie Basin• Hanna Basin• Sand Wash Basin• Piceance Basin• North Park Basin• San Juan Basin• Raton Basin
Source: Hart Energy
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Denver-Julesburg Basin NiobraraDenver-Julesburg Basin Niobrara
Source: Adapted from Sonneburg, 2010
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Wells That Sparked the Niobrara Horizontal Drilling PlayWells That Sparked the Niobrara Horizontal Drilling Play
• EOG Resources: #2-01H Jake, Weld Co. 3Q 2009; Max rate to sales 1,558
BOPD 3,800-ft lateral, TMD 11,838 ft. Made 50,000 BBLS in 1st 90 days on
line
• Noble Energy: #1-99H Gemini K, Weld Co. Made 60,000 BOE in 1st 60 days on
line
• SM Energy: #1-H Atlas, Laramie Co., WY Produced 1,700 BOPD 1st week on
line
Source: PDC Energy – Hart Energy DUO Conference, May 2011
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Horizontal vs. Vertical PerformanceHorizontal vs. Vertical Performance
Source: Adapted from Noble Energy, Inc.
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Eagle Ford ShaleEagle Ford Shale
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Eagle Ford Shale PlayEagle Ford Shale Play
Source: http://www.eia.gov/oil_gas/rpd/shaleusa9.pdf21
StratigraphyStratigraphy
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EOG Eagle Ford WellsEOG Eagle Ford Wells
Source: EOG Resources, Inc.
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Eagle Ford Production HistoryEagle Ford Production History
Source: http://www.rrc.state.tx.us/eagleford/index.php24
Eagle Ford Production HistoryEagle Ford Production History
Source: http://www.rrc.state.tx.us/eagleford/index.php25
Eagle Ford Production HistoryEagle Ford Production History
Source: http://www.rrc.state.tx.us/eagleford/index.php26
Drilling ActivityDrilling Activity
Source: http://www.rrc.state.tx.us/eagleford/index.php27
Mississippian Lime ReservoirMississippian Lime Reservoir
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Unconventional OpportunitiesUnconventional Opportunities
Source: SandRidge Investor Presentation February 2012
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Geologic ModelGeologic Model
Source: SandRidge Investor Presentation February 2012
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Mississippian Vertical Type Log – Woods County, OKMississippian Vertical Type Log – Woods County, OK
CUM: 34 mbo, 68 mmcfg
Induction Density-NeutronPre-Pennsylvanian Unconformity
Kinderhook
Woodford ShaleViola
Sandridge W E 1-31, Township 28 N, Range 13 W, Section 31
Mis
siss
ippi
an L
ime
Spergen D
Warsaw C
Osage B
Osage B
Lower
Compton Limestone
Cha
ttano
oga
Sha
le
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SandRidge 2011 Play DefinitionSandRidge 2011 Play Definition
Source: SandRidge Investor Presentation February 2012 32
Industry Mississippian Horizontal Drilling ActivityIndustry Mississippian Horizontal Drilling Activity
Source: SandRidge Investor Presentation February 201233
Mississippian Production Characteristics Mississippian Production Characteristics
• Complex fluid distribution Inter-bedded oil, gas, and water
• Complex drive mechanism High water-cuts and GORs for the life of the wells
• Horizontal to vertical EUR ratios are not applicable Vertical wells generally develop local conventional
structures in the chat Horizontal well generally develop the large-scale matrix
• Results are very statistical in nature
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Mississippian Example WellMississippian Example Well
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Shale PlaysEvaluation Considerations
Shale PlaysEvaluation Considerations
• Shale plays may require considerable initial capital expenditures to allow commercial access and determine economic feasibility.
• Geoscience costs tend to be very large early in shale plays: Seismic in areas without recent petroleum exploration activity Coring and laboratory analysis
• Learning curve – earliest wells in new play may deliver poor results as drilling and completion technology is perfected.
• General shale play economics improve over time due to: More effective drilling and completion techniques Better understanding of reservoir and identification of "sweet spots"
• Long-term investment Shale plays have very large in-place volumes and very large drilling
location inventories that may take decades to realize.
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Unconventional Oil ReservoirsUnconventional Oil ReservoirsKeys to Success:
Large Volumes of Oil-in-Place Successful Production Technology Development Stable, High Oil Prices
Issues: Midstream Capacity
♦ Pipelines♦ Gas Processing♦ Water Disposal
Service Capacity♦ Materials♦ Workforce♦ Support Systems
Optimal Well Density Optimal Completion and Drilling Plans
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