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  1. Worldwide Shale Gas Potential

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- I believe everyone in today's audience is well aware of the paradigm shift that's taken place not just in the Americas, but in the world, due to the development of unconventional oil and gas resources. Although not the sole reason for the current drop in worldwide oil prices which reached lows of less than $50 a barrel and are currently below $60 a barrel, it's certainly a contributing factor. What most people are not aware of is that there are key geologic and nongeologic factors required to make for a successful target for hydrocarbon exploitation. This four-part presentation is a review of both the key geologic and nongeologic factors required to make for a successful unconventional play. This is a broad topic with most slides presented today having the ability to form the foundation for individual talks. As we only have a limited amount of time I won't be going into that sort of detail. As mentioned this presentation on geologic factors required for an unconventional play has been divided into four parts. Today's presentation, part one, will review an estimate made by the Energy Information Association of the US government, the EIA, of worldwide potential for unconventionals in specific basins. The second part of today's presentation will discuss critical factors required in any resource play in order to make that play successful. In part two, we'll do a comparison of conventional reservoirs as compared to unconventional reservoirs. What's the difference? What makes an unconventional unconventional? And then what's changed? What's allowed us to take this that previously was considered either the source frog or a seal and actually turned it into the reservoir? How is that possible? In part three, we'll talk about specific geologic elements required for a successful shale gas play or unconventional play. There's specific geologic factors required to make one of these formations such that it can be produced economically. We'll cover each one of those in detail, both organic and inorganic. And finally on part three, we'll discuss a geologic example where these elements have come together such that we have a successful basin development. In part four, what else matters? The geology is extremely important, but it's not the only thing that matters and we need to understand the nongeologic factors before we go into any one of these plays and we'll finish up on conclusions. This world map comes from a 2013 EIA study of the unconventional potential for the basins highlighted here in red. You'll notice that they looked at 41 countries, 95 basins, and 137 formations in this study. The colors you see in red on this map are those that were used to define the upcoming volumes. The areas in tan are those that were reviewed, but there was insufficient data from which to put an actual volume number and all the areas in white simply were not studied. Now from this study the EIA estimates that there's over 31,000 Tcf of in-place unconventional gas with associated 345 billion barrels of oil. Notice that's very specific number. I wouldn't put a great deal of faith in the actual number, but what is said is there's a huge amount of resource available worldwide in unconventionals. It's also very important to notice that when I say there are over 7,000 technically recoverable Tcf of gas, that's technically recovered, not economically recoverable. By saying technically recoverable, what we're saying is that using today's technology you could produce those hydrocarbons, but they're not sensitive to price. That would be an economic limit and obviously that 7,000 Tcf number would be much smaller. Also notice that though this study by the EIA is very extensive it does not cover the entire world. It does not cover every basin in the world. I can tell you from my personal experience that I've looked at a number of areas on this map that are colored in white, that have a great deal of potential. You'll also notice that these volumes are defined as being risked. As such they should be considered conservative. So we have a huge potential here. What do we do to produce it? Based on the 2013 EIA worldwide study of unconventionals, we realize there are all these untapped resources available. What does it take to develop those volumes? As with any exploration or development venture, two factors are critical. First, we need to have an understanding of the resource we're working with. What are the key factors both geologic and nongeologic associated with this asset? These issues vary widely and an early understanding will be critical in making forward development plans. Once you have a clear understanding of the resource applying the most recent technology in its development becomes the second critical factor. By applying the most recent modern technology we lower the development cost and thus realize the most favorable economic cutoff. Bottom line is by gaining an early understanding of the resource and then applying the appropriate technology in its exploitation, we maximize efficiency and thus profit will be realized, maximum profit, and thus maximum profit will be realized. So what do we need to understand about unconventional plays? In the next section, we'll gain a better understanding of the resource under investigation by reviewing geologic differences between conventional reservoirs and unconventional reservoirs. We'll also look at the technology that has allowed a formation that was one considered either the source frog for the hydrocarbons or seals for conventional plays and turns them into the reservoir for unconventionals.