Expert Evaluations Are Essential In Shale Oil Plays

Economic success in shale oil plays depends on an operator’s ability to evaluate acreage rapidly, determine how much oil is in place, identify the key production drivers, design proper completions, and predict how much a typical well could produce over time and at what cost.

However, most of the nation’s shale plays to date have been developed by smaller operators, where professionals on staff often lack the time, expertise, or tools necessary to carry out this type of work, especially under urgent internal and external deadlines. New players face a daunting learning curve. Even experienced operators find they only have sufficient infrastructure and financial resources to develop a portion of their unconventional acreage. Ultimately, the strategic decision to develop or to divest a specific lease depends on the quality of the technical evaluation.

To supplement limited internal expertise and ensure maximum return on unconventional oil investments, some independent operators seek to form joint ventures. Others turn to external consulting firms, whose geotechnical specialists have extensive knowledge in unconventional plays of all kinds.

Evaluating Eagle Ford acreage

An independent operator with prior experience developing other reservoirs in South Texas had acquired a number of leases in the “oil window” of the nearby Eagle Ford shale play. In 2010, the Eagle Ford proved to be the second most prolific producer of unconventional oil in the US after the Bakken. Currently, about 160 rigs have drilled more than 1,200 wells in the Eagle Ford. The play produces approximately 100,000 b/d of crude oil and condensate. According to one industry analyst, that rate could increase fivefold by 2015.

The small operator holding some of these promising Eagle Ford leases found itself facing an impending deadline to make a strategic economic decision about the fate of its assets. Questions that senior management urgently needed to answer included, “What are the key production drivers here? How much oil is in place? What is the effective drainage area of a typical horizontal well with multistage fracture completions? How much oil could we recover over 10 years, or longer?”

Not only were decision-makers facing a deadline – they had one month to reach a decision – but they also faced major technical constraints. Well data available for petrophysical analysis were limited both in number and quality, and no cores were available for calibration. Despite the current practice of drilling horizontal laterals with multistage hydraulic fracture completions, the operator’s existing well and production data came only from a few vertical wells with single-stage completions. Also, like many of its peers just entering unconventional plays, technical personnel on staff lacked the time, experience, and appropriate modeling tools to conduct a detailed evaluation themselves. To obtain the information they needed, management engaged consultants who had both local expertise in the Eagle Ford and the right technology to deliver a thorough and reliable “quick look” evaluation of its assets – despite limited time and data.

First, a multidomain team of geotechnical specialists rapidly collected and reviewed all available data within the acreage under consideration. Second, they performed a detailed petrophysical analysis of digital log data from 21 vertical wells, supplementing the operator’s information with knowledge gained from working a wide range of shale projects in the area. Third, using an E&P software platform, they built a 3-D static reservoir model and populated it with petrophysical properties to calculate original oil in place.

Since no horizontal wells or multistage completion data were available for analysis, consultants developed a unique approach to predict production rates and long-term recovery. Using a reservoir simulator, they constructed a typical vertical well simulation model and performed history-matching with production data from eight vertical wells to derive formation permeability and estimate completion effectiveness and drainage area. They then modified the completion in the vertical well model to represent a single-stage hydraulic fracture treatment and ran the model to predict oil and gas production over a 10-year period.

Next, the team constructed a typical 1,525-m (5,000-ft) Eagle Ford horizontal well simulation model, with a 14-stage hydraulic fracture treatment – assuming each stage was identical to the single-stage frac modeled in the vertical well – and ran the model again to forecast potential oil and gas recovery. Finally, they performed sensitivity analysis that enabled them to rank the main production drivers in the study area and specify uncertainties.

The consultants successfully completed a highly detailed Eagle Ford asset evaluation in three weeks’ time, providing solid answers to all of the operator’s primary questions within stated ranges of uncertainty. For example, the results of petrophysical analysis and reservoir modeling indicated the Eagle Ford acreage under consideration appeared to contain significant volumes of oil in place – as much as 4.6 Bbbl. The report provided a reliable range of stock tank barrels of oil per acre and the effective drainage area of each well. Geotechnical experts determined that the two highest-ranking production drivers in the study area were natural fractures and hydrocarbon pore volume. They were able to forecast low, median, and high oil and gas cumulative production estimates for up to 30 years. They found that a properly designed and fracture-stimulated 1,525-m horizontal well in the area could potentially recover more than 600,000 bbl over a 30-year period.

More informed investment decisions

By tapping outside expertise in the Eagle Ford shale play, the operator’s management team was able to obtain a working model of the asset, estimate its long-term potential, and make a well-informed economic decision in time to meet the deadline. As a result, it developed a firm plan to maximize the asset’s value and meet the company’s strategic business objectives going forward.

With extensive experience in unconventional plays and access to specialized software tools, multidomain consulting teams can rapidly deploy both proven workflows and innovative solutions to identify the reservoir and completion risks and variables that most impact production and profits from challenging shale oil plays like the Eagle Ford. Having seasoned experts with the right tools at their fingertips enables even the smallest operators to make more informed investment decisions from the data they have, even if it is uncertain or incomplete.