SIPES-HOUSTON CHAPTER NEWSLETTER
APRIL 2015
Predicting Fluvial Systems
A Case Study Dr. Aislyn Trendall Barclay
March Luncheon Review Fred Hilterman
Shale Gas Truth Art Berman
Federal Fracking Rules
<$40/BO?
Energy Entrepreneurs Social
Iran’s Nuclear Deal & Oil
SIPES-Houston Newsletter | April 2015
SIPES HOUSTON CHAPTER 5535 Memorial Drive Suite F 654 Houston, Texas 77007 Tel: 713-651-1639 Fax: 713-951-9659 www.sipeshouston.org email: [email protected]
Chapter Officers 2015
Chapter Chair Jay Moffitt (713) -750-9485 x 104 [email protected]
Chair Elect James Mertz (281) 205-8141 [email protected]
Past Chair Jory Pacht (832) 338-5928 [email protected]
Secretary Russell Hamman (713) 526-7417 [email protected]
Treasurer William Smith (713) 650-3060 [email protected]
Website Chair James Allen (713) 871-2350 [email protected]
Technical Program Chair Grant Fergeson (832) 613-4009 grantferge-
Continuing Education Chair Kenneth Mallon (713) 705-7955 [email protected]
Hospitality Chair OPEN
Public Relations Chair Jeff Lund (713) 275-1664 [email protected]
Membership Chair(s) Chip Betz (713) 658-8096 x 17 [email protected] Patrick McCarthy (713) 650-0311 [email protected]
Newsletter Chair Jeff Allen (713) 871-2350 [email protected]
Deal Buyers List Chair Hans Sheline (281) 241-7271 [email protected]
Political Affairs Chair Ross Davis (713) 658-3131 [email protected]
Sponsor Coordinator Christine Milliner (562) 881-6326
National Directors Ralph Daigle (National Pres-ident) (281) 292-6859 [email protected] Mike Jones (713) 654-0080 [email protected] Jeff Lund (713) 275-1664 [email protected]
Office Manager B. K. Buongiorno (713) 651-1639 [email protected]
In This Issue April Luncheon Meeting 1 Dr. Aislyn Trendall Barclay
New Federal Fracking Rules 2
Saudi Rig Count Increasing 2
Art Berman’s Shale Gas Truth 3
March Luncheon Review 5 Russell Hamman
News From The Board 6 Russell Hamman
Pop Quiz 7 Jeff Allen
Oil Price Discussion 7 PLSX.com The Energy Entrepreneurs Social 8
The New Petroleum Club 9
Russia to China Pipeline 10
Iran’s Nuclear Deal & Oil 11
On the cover: On March 12th, 2015 the Turrialba Volcano in Costa Rica erupted sending ash through all the Central Valley closing schools, airports, and businesses. This is the most significant
activity since 1996. The volcano erupted again on the 13th of March. Want to be on the cover? Email Jeff Allen, the editor, at [email protected]
*The meeting will be at the new
Petroleum Club, 1201 Louisiana
Street on the top floor.
Abstract
Petroleum geologists often rely on dep-ositional models based on modern sys-tem analogues to predict the distribution of reservoirs in the subsurface. Existing fluvial models are problematic for appli-
cation in the subsurface because they are channel-focused, rather than basin-focused, and are based predominantly on modern fluvial systems in degrada-tional regimes. Recent work suggests that foreland basins contain distributive
fluvial systems rather than tributary flu-vial systems, and undergo relatively sys-tematic changes in fluvial style with dis-tance from the fluvial apex (Fig. 1). Re-finement of the distributive fluvial model
has resulted in increased recognition of these systems in the sedimentary rec-
ord. The Chinle Formation was deposited within a large back-arc basin across southwest United States during the Late Triassic (Fig. 2). It consists of paleosol-bearing alluvial strata whose characteris-
tics vary markedly through the strati-graphic record. The study succession records a progressive up-section increase in grain size, increase in channel depth and width, and
increase in lateral and vertical connectivity of channel deposits. Upsec-tion changes in fluvial style result in greater porosities and represent more continuous and
connected reservoir sand bodies. During this luncheon, tributary and distributary fluvial models will be compared and contrast-
ed. The characteristics of the Chinle Formation
at Petrified Forest Na-
tional Park will be discussed to deter-mine the best-fit model. This talk will combine paleoclimatic data, fluvial archi-tectural attributes, and petrology in or-der to better understand the depositional
processes and forcing mechanisms that
may account for evolving fluvial deposi-tion throughout the study interval.
Biography
Aislyn Trendell Barclay is currently work-ing as a geologist at Anadarko Petroleum Corporation in Houston. She received
her PhD in geology from Baylor Universi-ty in Waco, Texas, where her studies were focused on sedimentology and stratigraphy. She received B.S. (Geology) degree from McMaster Univer-sity in Ontario, Canada. Her PhD disser-tation focused on allocyclic and autocy-
clic mechanisms controlling fluvial style variations and resultant changes in res-
ervoir characteristics. At Anadarko, she currently works the Wolfcamp Shale For-mation in the Delaware Basin. She also worked as a summer intern for Pioneer Natural Resources and Talisman Energy
Inc. She is a recipient of scholarships from AAPG, GSA, RMAG, FWGS and vari-ous other societies. Her interests cur-rently include shale depositional sys-tems, stratigraphy and reservoir charac-
terization.
SUBSURFACE PREDICTION OF FLUVIAL SYSTEMS—A CASE STUDY OF THE LATE TRIASSIC CHINLE FORMATION IN THE PETRIFIED FOREST NATIONAL PARK DR. AISLYN TRENDALL BARCLAY
A P R I L S I P E S L U N C H E O N
Luncheon registration deadline
is Noon, Tuesday April 14th
$30 for Members and Affiliates
$35 for guests and non-
members
Additional $5 for walk-ups
No-shows will be billed.
Call, fax, or e-mail your reserva-
tion to the SIPES-Houston Office.
You can sign up online at
www.sipeshouston.org, but
payment is still required at the
luncheon or by mail.
Date: Thursday, April 16
Place: Petroleum Club
1201 Louisiana St.
Time: Social 11:15
1 SIPES-Houston Newsletter | April 2015
2 SIPES-Houston Newsletter | April 2015
This information comes from The New York Times.
The Obama administration on Friday, March 20th, un-
veiled the nation’s first major federal regulations on hy-draulic fracturing.
The states have jurisdiction over drilling on private and
state-owned land, where the vast majority of fracking is done in the United States. The new federal rules, by con-trast, will cover about 100,000 oil and gas wells drilled on public lands, according to the Interior Department.
“Current federal well-drilling regulations are more than 30
years old, and they simply have not kept pace with the technical complexities of today’s hydraulic fracturing op-erations,” said the interior secretary, Sally Jewell.
The regulations, which are to take effect in 90 days, will
allow government workers to inspect and validate the safety and integrity of the concrete barriers that line
fracking wells. They will require companies to publicly dis-close the chemicals used in the fracturing process within 30 days of completing fracking operations, using an in-dustry-run website called FracFocus.
The rules will also set safety standards for how companies
can store used fracking chemicals around well sites, and
will require companies to submit detailed information on
well geology to the Bureau of Land Management, a part of the Interior Department.
The Independent Petroleum Association of America (IPAA)
filed a lawsuit challenging the regulations, calling it “a reaction to unsubstantiated concerns” and requesting that the regulations be set aside. “From California to Pennsyl-
vania, the oil and natural gas industry has played a criti-cal role in reviving America’s economy, and hydraulic fracturing has been the key to this revival,” said Barry Russell, the chief executive of IPAA.
The agency also noted that it spent four years developing
the rules, in close consultation with oil and gas compa-
nies, state authorities and environmental groups. It has
reviewed more than 1.5 million public comments.
The Obama administration is expected to issue rules de-
signed to curb the release of methane, a greenhouse gas, from fracking wells.
The US rig count is in a steep decline. However, Saudi Arabia is increasing the number of rigs drilling for oil and gas despite weak prices. READ HERE
Riyadh is therefore keen to preserve what is known as its
spare capacity - the kingdom's unique ability to raise oil
output quickly at any given moment.
"The Saudis are probably worried about everyone else
reducing capex as a result of low oil prices and about non-OPEC output falling off a cliff at some point. We all know that supply disruptions are unpredictable but they are
certain," said Gary Ross, executive chairman of New York
oil consultancy PIRA.
February 2015 saw a total Saudi rig count of 155, up from
150 in January and 146 in December, according to data from OPEC and U.S. oil services company Baker Hughes.
To ease pressure on its ageing giant fields, Ghawar and
Abqaiq, Aramco launched the Khurais and Manifa fields with total capacity of more than 2 million BPD. It plans to increase output from onshore fields - Shaybah and Khurais - by 550,000 BPD by 2017. It has also been ramping up drilling in offshore fields such as Safaniyah.
N e w F e d e r a l F r a c k i n g R u l e s S a u d i R i g C o u n t U P !
3 SIPES-Houston Newsletter | April 2015
ART BERMAN—SHALE PLAYS HAVE YEARS, NOT DECADES
On Monday, Feb 23rd, the HGS hosted Art Berman to give his per-spective on the current state and future of unconventional plays. You can view the entire presentation by clicking on the picture below. Here are some major points which will stir up conversation:
Both tight oil and shale gas will peak in 10 years. Current policy
favors exports based on a false belief of abundance. This will hasten and accentuate the difficult energy and economic realities of the next decade.
Removing sanctions on Iran will flood the oil market with even
more production.
The Russia to China gas/liquids pipeline will disrupt the market
and geopolitics.
Energy is the economy. Energy resources are the capital behind
currency. The economy will stop growing when there is only enough energy to meet basic needs.
World production may have peaked in 2005.
Net energy from shale gas and tight oil is less than from Solar.
The EIA says oil production will peak in 2016 and then start to
decline. Gas will peak in 2020.
The Marcellus is the only shale gas play not in decline.
LNG exports may become a bad idea forcing higher margins from
domestic sales.
Too many companies in the shale and tight oil plays are cash-
flow negative with unmanageable debt that can never be paid from a negative cash-flow.
E&P companies became the sub-prime derivative of the post-
financial crisis. The shale gas and tight oil companies had access
to almost unlimited capital with no performance requirement oth-er than to avoid debt covenants.
Gateway Exploration is Looking for
Prospects and Acquisi-tions in the Gulf Coast
4 SIPES-Houston Newsletter | April 2015
SIPESHOUSTON.ORG If you are not yet registered as a member on the site
please do so ASAP. You can now pay your national and local dues online. If
you have not paid them please do so ASAP. For events and announcements please visit the website.
Attendance confirmation and payment for luncheons can
be done through the website. Many growing pains with the website have now been
resolved. Any questions or issues with the website can be directed
5 SIPES-Houston Newsletter | April 2015
Dr. Jim Jennings spoke on “The Importance of Petro-physical Stratification on Fluid Flow Behavior in Carbonate Reservoirs.” This work represent many years of work at the University of Texas and Shell. The principle unit of investiga-tion is the flow unit. Flow units can be either separated by
contrasting physical properties, lateral persistence of vertical trends or flow barriers. The primary investigative tool is fluid flow simulation through an outcrop based two dimensional model that measures 30 feet high and 150 feet long. There were several scenarios analyzed – homogenous, spatially un-correlated, spatially correlated, vertical trend, vertical trend spatially correlated and vertical trend spatially uncorrelated.
One constant in the models is that the average permeability
remains the same. After describing several model results, the key to properly matching oil recovery results is described as capturing the proper vertical trend. Dr. Jennings remarked a few times that “we’d all be better off if we just made layer cake models.” He also pointed out the fact that model noise hides the vertical trends and that building good models re-
quires a good interpretation and understanding of the rock. Take a moment to reflect on those observations. All hydro-carbon reservoirs have at least two vertical trends – one in the rocks and another in the fluid. If you are able to under-stand those vertical trends and your rocks, your models will make physical sense. One factor to keep in mind when ob-serving the rocks is that some rock type identification systems
can hinder flow unit identification. The outcrop and log-based data demonstrate many
trends. The outcrop data set consists of 37 vertical transects
of core plug and mini-permeameter data from the Victorio Peak Formation of West Texas. The Victorio Peak Formation is the outcrop equivalent of the Clear Fork Formation in the
subsurface. The well log data is from South Wasson Field. Porosity and permeability vary on a small scale as a function of cementation. While a vertical trend may not be apparent on one transect, the average of 37 transects shows a strong trend. When coupled with stratigraphy, the individual para-sequences exhibit an upward increase in porosity and per-meability that correlates with sea level. Each cycle is a few
tens of feet thick so the model is much higher resolution than a seismic section. Looking within a flow unit, the top is more porous than the base although significant overlap ex-ists.
A few recommendations to guide the reader follow.
You must understand petrophysical stratification to create a
proper model. Do not let small scale noise distract you from the vertical trends. Do not take shortcuts on stratigraphy. And finally, do not rely on rock types to find flow units.
M a r c h L u n c h e o n R e v i e w b y R u s s e l l H a m m a n
Dr. Jim Jennings, The Presenter
James Mertz, Grant Ferguson, and Bud Tyner
N E W S F R O M T H E B O A R D R u s s e l l H a m m a n P i c t u r e s C o n t i n u e d
6 SIPES-Houston Newsletter | April 2015
The February luncheon had 65 in attendance, 60 registered and 12 walk-ins. There were 13 comps and 9 no-shows. Pintail Oil & gas and Seismic Ventures were the hospitality sponsors. We addressed the growing pains of the new pe-troleum club space and have elected to purchase our own
microphone and presentation aid. Plans for the Continuing Education Seminar continue with speakers and sponsors in process. If you know of any companies that are interested in being 2015 CES sponsors, please contact James Mertz. Newsletter submissions are appreciated. Jeff Allen is seek-ing both interesting photos and articles with an emphasis on dynamic content. News of members is also appreciated.
The next Independents’ Day celebration will take place in
early August. Once the date and venue are contracted, there will be much communication regarding this festive event. There will be an important change for this years’ event. While potential members will have free admission as always, now SIPES members and their guests will pay $20.00 for the event.
Our national directors gave a report from the recent meet-ing. The 2015 annual convention will be in Deer Valley, UT on June 15-18. The 2016 meeting is planned for San Diego, CA and the 2017 meeting is planned for Vail, CO. The na-
tional organization will be updating its website this year
which should lead to increased functionality for all members. Membership and bylaw updates are being discussed but re-main preliminary at this point. Public outreach continues with presentations scheduled to the five HISD energy academies. We are coordinating out-
reach with several other local schools as well. If you know of any interested schools, please contact Jeff Lund. Hospitality sponsors are needed for the coming year so if you have any favorite companies that you deal with, please pass those names and contact information along to our sponsorship coordinator Christine Milliner. The board is also
seeking a new hospitality chairman so if you are interested or know someone who may be interested, please contact B. K. Buongiorno.
The March Board meeting adjourned at 11:30 am
Jingjing Zong, Dr. Don Van Nieuwenhuise, Carlos Jorda, Kellie Rulong
Rick Cherrington, Russell Hamman, Gary Grinsfelder, David Wood
Rusty Winn, James Bloomqist
7 SIPES-Houston Newsletter | April 2015
P O P Q U I Z ! P E R F E C T S T O R M F O R < $ 4 0 / B O ?
What is the significance of this cross-section?
Send answers to the Newsletter Editor, [email protected]
Last Months Answer:
What reasons create such a dry and barren environment in Death Valley? The Sierra Nevada is the largest single block of rock in the United States. It takes the shape of a huge 400 mile long west-ward tilting range reaching elevations exceeding 14,000 feet. As such, it acts as a gigantic barrier to Pacific storms. The
lands to the east are dry and largely barren. One high moun-
tain range after another, like the White and Inyo Mountains, or the Panamints, capture what little precipitation remains, so that Death Valley is left as the driest place on the continent.
If storage capacity is full, rigs aren’t working, and demand weakens, how low will the price go? Did you know,
WTI broke and found a new floor @ $43.88, the lowest
close in six years.
Brent also fell 13% over the past month. The spread be-
tween the two benchmarks expanded, driven by security and supply differences.
Last winter had near-record draws of gas which created
huge price spikes. What happened this year? The price has either dropped or been flat even with record-breaking gas use during the coldest winter months in decades. This is
explained only by the record production and supply.
Over the past month US production has increased by
140,000 BOPD to 9.37 MMBOPD. Will the drop in rigs affect this? Yes, but not as dramatically as in recent years with multi-well pad drilling and a large national inventory of un-completed wells.
However, a combination of a strong dollar, higher interest
rates, and slow growth may keep commodity prices in check for 2015.
Data from PLSX.com Contact Ronald Wise
8 SIPES-Houston Newsletter | April 2015
9 SIPES-Houston Newsletter | April 2015
The New Petroleum Club
1201 Louisiana Street
The New South View!
10 SIPES-Houston Newsletter | April 2015
The Russian government has approved a bill on gas supplies to China via the Power of Siberia pipeline. It will be de-livering the estimated 38 billion cubic
meters of gas annually as a part of a $400 billion deal. This deal has far-reaching implications in both geopolitics and the energy market. Russia wants to lessen any western in-
fluence—the value of the ruble is falling because of western sanctions. Russia
needs a long-term customer. With this deal, China becomes Russia’s number one customer, pushing Germany to the second biggest customer.
China wants to have a secure supply of energy. Diplomatically, Beijing remains neutral in the Russian-Ukrainian con-frontation, calling for a peaceful settle-ment of the conflict. But it is an open secret that the Chinese policy elites are
sympathetic to Russia, partly due to their conceptualization that the United States, the North Atlantic Treaty Organi-zation (NATO) and other Western coun-tries are primarily responsible for desta-
bilizing Ukraine in the first place.
The mere prospect of large volumes of Russian gas coming to China in the near future has created a more competitive environment for LNG producers from North America, Australia and the Middle East. Together with the sharp drop in
global oil prices in recent months, which negatively impacted gas prices, the LNG price in Asia has already dropped to around $10 per mcf (Reuters, December 11, 2014). The latest volatility in energy prices indicates that the Russians did not obtain that bad a deal after all, as-
suming the Chinese keep their side of
the bargain in the next round of negoti-ations. READ MORE HERE & HERE
R U S S I A ’ S P I P E L I N E T O C H I N A b y J e f f A l l e n
11 SIPES-Houston Newsletter | April 2015
I r a n ’ s N u c l e a r D e a l & O i l
The Petroleum History Institute (PHI) will be holding its annual Oil
History Symposium in Tulsa, OK from April 30-May 2, 2015. We are contacting oil and gas operators in the area with the hope of obtaining sponsorships for our symposium. If you have any questions, please feel free to contact me at [email protected] 281 731-5823 or Ray Sorenson at [email protected] 713 410-3998.
Jeff Spencer 2015 PHI president.
Click on the Image for the full story from Market Watch
Iran, the U.S. and its allies are pushing ahead with talks
over a nuclear deal that would change many things —
perhaps none faster than the price of oil
Iranian exports in recent years have been essentially
capped by Western sanctions aimed at pressuring Teh-ran over its nuclear ambitions. A deal easing those sanc-tions could eventually translate into half a million barrels or more in Iranian crude heading into a currently glutted global market, analysts estimate.
“In case the international sanctions against Iran are lift-
ed, one million barrels a day will be added to the coun-
try’s crude-oil production and exports in several months,” Mr. Zanganeh was quoted as saying by his ministry’s news agency Shana.
“What happens with Iran is important because of the
direct impact on oil supply,” said David Hufton at Lon-don brokerage PVM.
12 SIPES-Houston Newsletter | April 2015
SIPES 52ND ANNUAL MEETING & CONVENTION
CLCIK ON THE IMAGE TO REGISTER AND LEARN
SIPES Houston Chapter, 5535 Memorial Drive, Suite F654, Houston, Texas 77007 Tel: 713-651-1639 Fax: 713-951-9659 www.sipeshouston.org e-mail: [email protected]
Upcoming SIPES Events
April 16th: SIPES Luncheon @ the new Petroleum Club, located at 1201 Louisiana
Upcoming HGS Events
Visit HGS.org
Science-Based Events in Houston Museum of Natural Science Lectures
Please support your local museums and arts. University of Houston Free Lectures
* * *
