Unconventional Assets The Global Resource Potential and Challenges for Egypt

Unconventional Assets The Global Resource Potential and Challenges for Egypt

The US sets up a great example to follow: The “unconventional resource asset revolution” represents a paradigm shift in energy supply that is reshaping global energy markets. In the U.S., unconventional resource plays have proven to be quickly producible in large volumes at a relatively low cost. The surge in hydrocarbon production from unconventional plays in the U.S. has resulted in abundant supplies of natural gas, oil (light tight oil), and natural gas liquids (NGL) that have reversed long-term declines in natural gas and oil production. Less than 10 years ago, most predictions for the U.S. forecast dramatic increases in LNG imports to meet increasing demand. Today, the U.S. is preparing to export LNG in the near future, and may become a net oil exporter around 2030.

Knowledge Transfer: The knowledge, services, and expertise gained from the rapid development in the United States is being transferred throughout the world and Egypt is no stranger. The map shows the locations where shale has potential to be developed. In many of these new shale locations, Halliburton, the leader in developing unconventional resource assets, has supported the customers to drill and/or complete their first shale wells, set up service centers, and bring in specialized unconventional resource expertise for the region. This approach is also applied in Egypt throughout the collaboration with Khalda/Apache group.

Challenge of High Drilling Activities: While estimates of in-place unconventional hydrocarbon resources can be enormous, Egypt has 525 TCF as per Energy Information Association, a large number of wells is needed to recover a sizeable portion of that resource. Wells drilled in unconventional (low-permeability) reservoirs typically have very high initial production decline rates; consequently, a large number of new wells (drilling intensity) is continually required just to sustain the current production rate in a field or area. For example, in the Bakken Formation, by December 2012, 90 new producing wells per month were required to maintain the oil production rate of 770,000 B/D. The U.S. has 60% of the global availability of drilling rigs and most of these rigs are capable of horizontal drilling. In 2012, the U.S. completed 45,500 oil and gas wells, compared with 3,900 in the rest of the world (excluding Canada).

To put the global exploration effort in perspective, the 4,000 tight oil wells brought online in the U.S. in 2012 exceeded the total number of conventional and unconventional wells drilled in the rest of the world (excluding Canada). For the past several years the disparity between the low price of natural gas and the higher price of oil has resulted in the migration of development to oil or liquids-rich plays, such as the Bakken and Eagle Ford Shales, which have higher rates of return. Between January 2009 and June 2012 the number of crude oil rotary rigs in operation increased from 328 to 1,409, while over the same period the number of natural gas rigs declined from 1,215 to 558.

Egypt needs to get ready for such activities if the unconventional exploration deemed economical. This represents a huge challenge not only on cost but also on availability of rigs that has ability to drill long reach horizontal wells.

The economic planning: In most unconventional oil and gas developments, conventional geoscience and engineering methodologies are largely ineffective in planning, evaluating, developing, and optimizing the heterogeneous shale and tight resource plays. Challenging economic margins, coupled with the disparate production characteristics of unconventional reservoirs, requires drilling multiple wells perfectly landed to target the sweet spots, engineering precise completions to generate maximum drainage while optimizing stimulation efforts, and sustaining production. These factors combined make economically developing shales the most difficult of any energy asset. Consequently, planning an unconventional exploration and development program requires a multi-disciplinary, full-asset life cycle approach to deliver the utmost value from these complex reservoirs.

Halliburton developed its integrated tool “CYPHER” to integrate all information from Seismic-to-Stimulation Service for Full-Field Development. As the recognized technology pacesetter in nearly all the global unconventional plays, Halliburton helps recover the maximum oil and gas flow from shale and tight reservoirs and deliver the maximum customer value, to which no single solution can compare, through the CYPHER Seismic-to-Stimulation Service. The CYPHER service is Halliburton’s answer for unconventional resource development. The CYPHER service tells operators four things:

Where to Drill

Where to Land

Where to Complete

How to Complete

Also, the service provides continuous optimization through well construction, completion and production through the entire life of the field. By delivering these decisions, the service:

Enhances asset profitability

Accelerates the learning curve

Leverages advanced modeling and simulation tools

Eliminates trial-and-error methods

Maximizes production while minimizing costs

With the award-winning CYPHER service, it all comes together in a completely integrated and collaborative approach aimed at discovering, locating, accessing, and recovering the maximum volume of hydrocarbons that unconventional reservoirs can yield. To account for the complexity of shale and tight reservoirs, data is collected and analyzed at all levels and then assembled to build a customized strategy enabling maximum recovery from every aspect of the well evaluation, construction, completion, and production process for the specific area and the total play. The CYPHER service extends well beyond the development of an effective well design or a single well stimulation design. The unrivaled CYPHER service combines geoscience analyses and engineering into a holistic, integrated, and optimized process encompassing the life of an asset.

The CYPHER Seismic-to-Stimulation Service has proven itself by enabling geoscientists and engineers to make better decisions more quickly and confidently, leading to early and sustained success. The complexity of an unconventional oil or gas field requires early studies to maximize the asset value from the outset. The more reservoir knowledge and basin insight operators have, the better decisions they can make to optimize productivity early in the development to maximize asset Net Present Value (NPV).

The multi-discipline approach of the CYPHER service generates comprehensive and area-specific solutions to promote subsurface understanding, reservoir optimization, production enhancement completion design, and optimized reservoir/well management for production sustainability, which is especially difficult in shale and tight resource plays. The integration of geology, geophysics, petrophysics, and reservoir engineering helps to pinpoint sweet spots and identify the most cost-effective well placement strategy.

Procurement Challenge: In the unconventional resource arena, procurement and logistics are critical to ensure sufficient materials are available and on location at the right time, thus avoiding non-productive time and keeping logistics costs within limits that are absolutely necessary. In its continuing efforts to acquire secure and adequate supplies long-term, Halliburton sources materials from diverse vendors throughout the world, which also helps support the local economies where the work is being conducted. A detailed worldwide vendor management process and system has been developed to help guarantee adherence to specific technical specifications and HSE standards on every single product that Halliburton delivers to its customers. Halliburton Global Procurement and Logistics provides customers with the unparalleled speed, reliability, and visibility needed to deliver efficiently in often adverse conditions.

Water Management Challenge: Water is a key to sustainable development, and nearly half the global population may be facing water scarcity; global demand may surpass supply by 40% by 2030. At the same time, water needs for energy production are growing at twice the rate of energy demand. As population and economic growth intensify competition for available water resources, water becomes an increasingly important criterion for assessing the viability of energy projects. Limited availability and constraints on water access, especially in arid regions, e.g., the U.S., Saudia Arabia, and China, may restrict unconventional development.

Again, Egypt is no stranger and we need to think about this issue early enough while planning for unconventional development.

More than 60% of the world’s shale and tight-gas reserves are located in countries with medium to extremely high baseline water stress. Extremely high water stress is defined as 80% of available water is already committed to municipal, industrial, and agricultural use. While the total amount of water consumed by unconventional development on a state or regional level may be relatively small (typically <2%), the impact can be much higher on the local level, where the availability of water may be more limited and there may be more competition from other water users. In order for unconventional energy developments to grow industry must understand water needs, and impacts and how best to manage them



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