Exploring for Shale ‘Sweet Spots’

David Bamford, bamford_windward@hotmail.com

Not a week seems to go by nowadays without an international ‘deal’ for the exploration for unconventional resources being announced in the ‘trade press’. So, for example, Exxon and Rosneft are about to start exploring the Bazhenov shale in Russia, Ukraine and Shell have just announced a $10bn agreement for the exploitation of shale resources in that country(1), and China has just announced that it has awarded the exploration rights of 19 shale gas blocks, through an auction process which started in September last year, to 16 companies(2). Equally, big numbers abound – consider for example the most recent announcements concerning the Arckaringa Basin in Australia(3).

Equally, the popular media continues to focus on the supposed downsides of ‘fracking’ – alleged aquifer contamination and potential micro-earthquakes, for example. And some politicians then respond to ‘popular’ reservations.

Of course, this interest is all triggered by the energy revolution that is taking place in North America, especially in the USA. And the large amount of froth generated by media coverage is, in my humble opinion, obscuring the fact that the revolution is in fact underpinned by some good ‘old fashioned’ geoscience. This is driven by the huge amount of data, especially well data – logs, cuttings, cores – available in almost every play, then lithology correlation with a sprinkling of petroleum geochemistry, and extensive knowledge of conventional, historical, production.

This poses two interesting and related questions, I believe. Will this approach actually translate into the international arena, especially in plays where there is relatively less data, and if Yes, do most companies have the geoscientists who would be capable of carrying out.

But first we have to pose a simpler question.

Why Does This Work at All?
Most geoscientists will be aware that the key idea behind shale gas and shale oil exploration is that not all the hydrocarbons generated by a source rock are expelled from that source rock and find their way into conventional traps or to the earth’s surface. However, understanding how much hydrocarbon a source rock might generate and then what proportion has migrated away compared with what proportion has stayed in, or very close to, the source rock itself demands significant insights in petroleum geochemistry – a much neglected science in seismic-dominated oil & gas companies.

Kimmeridge Energy has researched this topic extensively, taking a ‘mass balance’ approach. Their conclusions are summarized in the sketch above:

Using their global dataset of petroleum system mass balance calculations, they estimate that typically around 50% of hydrocarbons generated remain within the source rock, and that:
»    A significant amount is often trapped in closely associated lithofacies
»    Combined, the source rock and adjacent strata typically present the largest continuous accumulation of hydrocarbons in a given basin
»    Basins that have seen significant production of oil & gas from conventional fields are often the best places to look for new unconventional plays, as we can be 100% sure that at least one prolific source rock exists
»    Their estimates for recoverable unconventional resources in the largest global onshore basins show a potentially enormous prize that could equate to or exceed the amount of oil and gas discovered in onshore conventional fields

What is the Opportunity?
Again, I am grateful to Kimmeridge Energy for the map.

What follows from this is that it is possible to rank shale plays around the world, and here I have been able to draw on extensive work from Kimmeridge Energy themselves, Alliance Bernstein (who have access to large amounts of data and offer insightful analyses) and also a recent paper by Rystad Energy. All of these companies presented at a recent  Finding Petroleum Forum(4).

Well over 250 shale formations, worldwide outside North America, have been evaluated and reported on, with some countries having more than 10 candidates, others only one.
To highlight just two regions:

In the FSU, Russia, Kazakhstan, Turkmenistan and Ukraine offer large (Bboe) potential, figuring in the ‘top 20’ countries outside North America, with key basins being West Siberia (Bazhenov shale; Jurassic & Cretaceous shales; Lower Toarcian shales); Volga-Urals (Domanik shale); Timon-Pechora (Domanik shale); Amu-Drayu (Jurassic shales).

Incidentally, Russia, Ukraine and Kazakhstan also figure in the ‘top 12’ countries by size of Coal Bed Methane reserves.

In the Asia-Pacific region, China, Indonesia, India and Australia offer large (Bboe) potential, figuring in the ‘top 20’ countries outside North America, with key basins being Tarim (Cambrian, Ordovician, Carboniferous, Jurassic shales); Junggar (Permian lacustrine shales); Sichaun (Cambrian, Silurian, Permo-Triassic, Jurassic shales); Ordos (Paleozoic –> Mesozoic shales); Songliao (Cretaceous lacustrine shales); Cooper (Permian shales); Canning (Ordovician); KG (Permian shales); Cambay (Upper Cretaceous –> Tertiary shales).

These same four countries also figure in the ‘top 12’ countries by size of Coal Bed Methane reserves.

So far so good – but how do we explore these plays?

Finding the “Sweet Spot”
Kimmeridge Energy’s analyses(4) show that the economics of a US shale play can vary considerably depending whether you are in the ‘core’ or ‘non-core’ of that play. Post-drill of course definition of what is ‘core’ or ‘non-core’ is relatively straightforward, especially when there is a huge data base with which to work – of well logs, cuttings, core, flow rates etc; the whole lends itself to statistical analysis. In a data-rich basin, this analysis may even be possible pre-drill; as Kimmeridge Energy put it “defining the core relies on mapping optimal convergence of various technical attributes”, for example mineralogy, depth, thickness, porosity, permeability, fracturing, TOC/R0, S1 for the ‘target’ shale.

I find that I question how many North American players will be able to successfully translate their US and Canada experiences to the international scene? Costs are likely to be higher almost anywhere on the planet outside North America and so defining the ‘core’ – the ‘sweet spot’ – of a shale play pre-drill will be absolutely critical; to do this, companies promising to succeed internationally will need access to key skills, perhaps especially in petroleum geochemistry, that have been neglected in the pursuit of offshore, especially deepwater, provinces.

Also, the amount of data, and perhaps especially its quality, will be significantly less than that typically found in the USA.

And if we believe in historical analogues, we can point to the relative failure 20-25 years ago of many companies, with skills honed in the even then extremely, and relatively, data-rich USA and Canada, to succeed in international settings.

So whilst there has been a logical focus on exploitation issues in thinking about exporting the US ‘shale gale’ to the Rest of the World – whether the necessary drilling & completions equipment exist in the required numbers elsewhere, whether public and political opinion will support exploitation, whether the necessary supporting workforce and infrastructure exists – my focus is on whether we actually know how to explore for these so-called ‘resource plays’ in an international setting?

Can geophysics help, specifically seismic technology? The immediate answer seems to be Yes; there have been several studies of the geophysical properties of shales with several recent examples prompted by the ‘shale gale’(5). It’s somewhat different from say mapping channel geometries in deep water clastic systems, and then predicting fluid fill and porosities from acoustic impedance or AVO, but it can be done.

Historical data also show that well productivity is a function of the induced fracture extent and how well the formation can maintain those fractures. ‘Frackability’, the propensity of the formation to fracture and maintain the fracture, is directly correlated with brittleness and thus an important additional requirement of predicting shale ‘sweet spots’ is to forecast brittleness, identifying the reservoirs tendency to fail under stress and then to maintain a fracture.

This takes us into a novel area. The generation of oil or gas in a source rock generates micro-fractures and these fractures will then evolve under the action of natural differential stress in the earth, typically acquiring a preferred orientation over geological time. These micro-fractures then control first of all the likely movement of hydrocarbons within and through the source rock and also the innate brittleness of the rock. These aspects of geomechanics must then be linked to our ability to interpret seismic data; the simple summary is that three component (3C) seismic data brings an ability to use shear waves (and sometimes P wave velocity) to map fractures, an ability which cannot be achieved with conventional seismic data(6).

So, in principle seismic could be used to find ‘sweet spots’…………if it were not for the prices charged by cable-using seismic contractors!

Thus, at least in my humble opinion, two key questions are – can we use non-seismic techniques to focus our efforts in a play into a relatively small area, and then use cable-less seismic technology to acquire (3C) 3D at a “not losing your shirt” cost?
References
1. http://www.rigzone.com/news/oil_gas/a/123778/Ukraine_Shell_to_Sign_10_Billion_Shale_Gas_Deal
2. http://www.rigzone.com/news/oil_gas/a/123607/China_Awards_Shale_Exploration_Rights_of_19_Blocks_to_16_Companies
3. http://www.oilvoice.com/n/Linc_Energy_confirms_shale_oil_potential_in_the_Arckaringa_Basin/a1e5f880978b.aspx
4. http://www.findingpetroleum.com/event/Developments_with_unconventionals/260f5.aspx
5. http://tle.geoscienceworld.org/content/30/3/332.abstract
6. http://www.geoexpro.com/article/Reservoir_Dynamics_and_the_New_Geophysics/61d1026e.aspx