President’s Column – September 2010

Title: The Rockies and Unconventional Natural Gas Resources
Author: Jerry Cuzella
Publication: The Outcrop, September 2010, p. 4, 9

As we enter the month of September, it’s hard to believe that the year is now two-thirds over. The winter and 3D symposiums have come and gone; the national AAPG convention in New Orleans and Rocky Mountain Section meeting in Durango along with the joint COGA-RMAG Energy Epicenter meeting in July are now all for the history books. Each conference and symposium brought to the geologic community a technical program of contemporary and relevant topics. Yet to come is the fall symposium on “New Drilling & Completion Techniques to Crack Tough Resource Plays” which is scheduled for September 30th and will be held downtown at the Marriott City Center. The technical program will showcase contemporary topics in drilling, planning, geomechanics, micro-seismic, stage-completions, and hydrofracturing styles.

Unconventional resource plays have emerged as a significant portion of U.S. natural gas production. Ten of the twelve largest, U.S. lower-48 gas fields produce from unconventional resources and 60% of those are located in the Rockies specifically: the San Juan Basin Gas Area (Mesaverde-Fruitland), the Greater Green River Basin-Pinedale-Jonah Fields (Lance), the Powder River Basin Wyodak – Big George Fairway (CBM), the Piceance Basin Gas Area (Mesaverde – Williams Fork), the Uinta Basin – Natural Buttes Field (Wasatch-Mesaverde), and the Denver Basin Wattenberg Field (J Sands, Codell/Niobrara) (Kuuskraa, 2009). As resource plays have come to dominate the natural gas supply, unconventional gas from tight sandstones, CBM, and shales accounts for 47% of the U.S. production with projections that in the next 30 years, gas volumes produced from unconventional sources in the U.S. will increase to 56% (Oil & Gas Journal, 2010). For this to happen, new unconventional plays will have to be identified, drilling in already producing fields will have to intensify, and advances in new technologies will have to transpire in areas such as reservoir characterization, drilling, completion, and extraction technology that will increase recoverable reserves. Most of the technology developed to exploit unconventional gas reservoirs has come from North America, and with more than half of the unconventional resource plays located in the Rocky Mountain region, clearly the technology honed in the Rockies will be at the vanguard of those new development efforts.

The common perception is that in descending down the resource pyramid more hydrocarbon resources are available from poorer quality reservoirs. Correspondingly, the cost to find and produce them would also increase. Unconventional resources would fit in those lower compartments of the pyramid characterized as poor quality reservoirs, with high finding and development costs. Kuuskraa (2009) presented evidence that over time, technological advances and the cost to find and produce these unconventional resources remains relatively constant while supply increases. The volume of the available resource in its respective compartment of the “Resource Pyramid” in effect increases. He called this effect the “Paradigm Shift.” Eventually, operators overcome the technical challenges in drilling and completion and also gain a better understanding of the reservoirs’ characteristics. As a result an expansion of the resource base is driven by innovation, improved efficiencies, and with expanded knowledge, there is recognition of plays elsewhere that previously would have never been considered.

Unconventional reservoirs will continue to be a major source of natural gas in the U.S. for some time to come; recognition of it being a viable resource is now expanding to other countries as well. With a history rooted in the Rockies, a transfer of technology on development of unconventional gas resource plays outside the U.S. could have a major impact on global geopolitics. The upcoming Fall Symposium will be an opportunity to gain insights on the evolving technology that is driving these plays. A Registration Form appears elsewhere in this Outcrop edition.


REFERENCES

Kuuskraa, Vello., 2009, Paradigm Shift in the Domestic Natural Gas Resource Base: Clean Technology 2009, JAF028059.DOC, ADVANCED RESOURCES INTERNATIONAL, INC. Arlington, VA, Powerpoint Presentation, 21 slides. http://www.adv-res.com/pdf/KuuskraaNatGasCleanTechMAY52009Houston.pdf

Oil & Gas Journal, June 1, 2009, EIA Global Outlook Sees More Use of Unconventional Sources: http://www.ogj.com/index/article-display/363618/articles/oil-gas-journal/volume-107/issue-21/general-interest/eia-global-outlook-sees-more-use-of-unconventional-sources.html.

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