petroleum

1. Technical Evaluation and Management of an Unconventional
reservoir System.
Conventional reservoirs are those that can be produced at economic flow
rates and that will produce economic volumes of oil and gas without large
stimulation treatments or any special recovery process. A conventional
reservoir is essentially a high- to medium-permeability reservoir in which one
can drill a vertical well, perforate the pay interval, and then produce the well at
commercial flow rates and recover economic volumes of oil and gas.
An unconventional reservoir is one that cannot be produced at economic flow
rates or that does not produce economic volumes of oil and gas without
assistance from massive stimulation treatments or special recovery processes
and technologies, such as steam injection. Typical unconventional reservoirs
are tight-gas sands, coal-bed methane, heavy oil, and gas shales.
Masters and Gray published the concept of the resource triangle,
which says that oil and gas resources are distributed log normally in nature,
just like any other natural resource, such as gold, copper, and uranium. Figure
1 presents the concept of the resource triangle for oil and gas resources.
At the top of the resource triangle are the medium- to high-quality reservoirs.
These conventional reservoirs are normally small and easy to develop, but
difficult to find. Deeper into the resource triangle, one encounters
unconventional reservoirs that have large volumes of oil or gas in place but
are more difficult to develop. To produce these unconventional reservoirs,
increased oil and gas prices and/or improved technology are required. In the
last 20 to 30 years, substantial improvements in technology and increases in
oil and gas prices have allowed many operators to produce low-permeability
oil and gas fields, gas from coal-beds and shales, and heavy-oil deposits.
Because of the log-normal distribution of natural resources, the volumes of oil
and gas that are stored in these unconventional reservoirs are substantially
higher than the volumes of oil and gas found in conventional reservoirs.

2. Figure 1: The Resource pyramid
The issue is how long can we continue producing oil from conventional
reservoirs?” Figure 2, from the U.S. Dept. of Energy’s Energy Information
Admin. (EIA), shows projections for oil, natural gas, coal, renewables, and
nuclear energy between 2001 and 2025, along with history back to 1970. The
EIA projects that the world will need more oil, natural gas, and coal in the next
20 years. Natural-gas demand increases more rapidly than coal or oil
because most forecasts show that natural gas will be used to generate
electric power in an ever-increasing proportion to coal and other fuels. The
data in Fig. 2 clearly show that the oil and gas industry will need to produce
substantially more oil and natural gas to meet demand in the coming 20
years.
We can examine possible future scenarios in Figure 3, a graph from
MacKenzie that shows world oil production since 1950 and a forecast of
production through 2030. The units are in billion bbl per year. Notice that in
1950, world oil production was slightly less than 5 billion bbl per year.
Demand for oil increased steadily until about 1979, when demand declined.
The oil price in 1978 increased from approximately U.S. $12/bbl to more than
U.S. $30/bbl; as such, world demand and production declined from about 23
billion bbl per year to slightly less than 20 billion bbl per year. However, by the
late 1980s, world oil demand began increasing once again and by the year
2000, oil production was approximately 25 billion bbl per year.

3. MacKenzie shows three possible future scenarios for global oil production
from conventional reservoirs. The low case forecasts world ultimate recovery
at 1.8 trillion bbl. The medium case shows world cumulative oil production at
2.2 trillion bbl, while the high case indicates world oil ultimate recovery could
reach 2.6 trillion bbl. Notice that the peak in global oil production is predicted
to occur sometime between 2005 and 2020 for all three scenarios.
Figure 2: World forecast of energy need by 2025.
Figure 3: The three different cases of global oil production.

4. So what does all this mean? Well, after the peak, approximately 50% of
ultimate world oil reserves from conventional reservoirs will have been
produced, and as shown in Fig. 3, the peak is anywhere from 2 to 17 years
away. Assuming that we have produced 930 billion bbl of oil, and know where
another 1 trillion bbl of oil can be produced, then there could be as much as
700 billion bbl of oil left to be discovered. However, as Campbell argues,
essentially all of this oil will come from additional exploration in known basins.
Using conventional oil production in the U.S. as a model, it is clear that once
world oil conventional production begins to decline, it will be very difficult to
arrest that decline. Even with higher oil prices and more rigs, most experts
believe that the decline, once it begins, will be permanent and continuous.
Assuming that demand will continue to increase, it is often speculated that
after world oil production from conventional reservoirs peaks and begins to
decline, oil prices will increase and remain high from that point forward.
So how do unconventional reservoirs fit into the world energy mix? Well,
Campbell and MacKenzie have forecasted only production from conventional
reservoirs and have not included the contributions of heavy oil, natural gas, or
natural-gas liquids. To look at the total energy mix, we need to factor in the
effects of natural gas, unconventional gas reservoirs, and heavy-oil
production.
The EIA published an oil demand forecast in 2001, which has been added to
Figure 3 and is presented as Figure 4. The EIA projected that demand for oil
in 2020 will be as high as 43 billion bbl per year. Because current production
is only 27 billion bbl per year, a substantial increase in production capacity will
be required between now and 2020.
It is clear from Fig. 4 that a gap between supply and demand will occur during
the next 10 to 20 years. To fill this pending gap between world oil demand and
oil production from conventional oil reservoirs, we are going to have to rely on
the following.
• Liquids from conventional natural-gas reservoirs. • Heavy-oil deposits.
• Liquids from unconventional gas, such as tight gas and coal-bed methane.
Renewable resources, such as wind, solar, and hydroelectric.

5. • Renewable resources, such as wind, solar, and hydroelectric.
Renewable resources are important and will become more important later in
the 21st century. However, for the foreseeable future, renewable resources
will not play a major role in satisfying demand for world energy, especially
liquids to power vehicles.
Figure 4: Show the space between demand and supply
Many individuals may think that unconventional reservoirs are not important
now but may be very important in the future. Actually, unconventional
reservoirs are very important now to many nations. The U.S. currently
produces substantial volumes of natural gas from tight sands, gas shales, and
coal-bed-methane reservoirs. Also, heavy-oil production, especially in
California, is quite important to the national economy. Other countries, such
as Canada, Venezuela, and Russia, produce substantial volumes of heavy oil,
while countries such as Australia, Argentina, Egypt, Canada, and Venezuela
produce gas from low-permeability reservoirs. Fig. 5 illustrates production
from U.S. unconventional gas reservoirs from 1980 through 2000. Notice that
in 1980, production was about 1.5 Tcf/year. By 2000, production reached
almost 5 Tcf/year. The U.S. uses about 22 Tcf/year of natural gas. Thus,
approximately 22% of the natural gas the U.S. uses each year is currently
produced from unconventional gas reservoirs.
Current natural-gas reserves in the U.S. are approximately 160 Tcf. Of that,
approximately 40 Tcf are gas reserves in unconventional reservoirs, and 120

6. Tcf represent gas reserves in conventional gas reservoirs. It is clear that
unconventional gas reservoirs are very important to the energy mix in the UK,
U.S. But what about the rest of the world? What role will natural gas play in
the future as conventional oil eventually peaks and begins to decline?
Making sound business decisions in one of the hottest domestic exploration
reservoirs, unconventional gas, offers a set of challenges not usually
encountered with more traditional opportunities. Unlike with standard prospect
and conventional reservoirs risk analysis, geologic chance is not a major
issue, and estimates of initial production, decline rates, mechanical efficiency,
and success planning dominate the analysis rather than traditional volumetric
determinations. The valuation and assessment of unconventional or
“continuous resource” opportunities is not feasible using traditional
probabilistic, volumetric-based methods.
A fully stochastic business, value-chain model is the best way to assess the
potential of an unconventional reservoir. Such an evaluation method allows
for multi-disciplinary and cost input that affords decision makers with the
appropriate data to make good decisions and effectively manage the
reservoir.
The boundaries of unconventional reservoirs extend well beyond the limits of
most individual acreage holdings.
The objective of the research is to provide world-class scientific coverage of
recent advances in knowledge and practices in the area of evaluation,
development and management of unconventional resources for researchers
and practicing engineers. An attempt will be make to bridge the gap between
theoretical knowledge and field development of unconventional resources,
such as tight gas, shale gas, liquid rich shales, tight oil, coal-bed methane,
gas hydrate,.
References
Campbell, Colin: The Coming Oil Crisis, Multi- Science Publishing Co. Ltd.,
Brentwood, Essex, U.K. (1997).
MacKenzie, James J.: Oil as a Finite Resource: When is Global Production Likely to
Peak?, World Resources Inst., Washington, D.C. (2000).
Masters, J.A.: “Deep Basin Gas Trap, Western Canada,” AAPG Bulletin (1979) 63,
No. 2, 152.