Total researcher shows how to make money in shale

Hide the high decline rates and don't let the sweet spots go sour on you!

Speaking at a recent meeting of French oil and gas technologists (Aftp) Total’s Philippe Charlez* (Total) et Pierre Delfiner (Pétrodécisions) presented the outcome of a joint software project to evaluate nonconventional opportunities. The talk set out to demonstrate economic viability of shale with a comparison of a North American shale opportunity with a hypothetical European play. One problem with shale is the extremely high decline rate observed in a single well. This was addressed with an ingenious strategy of ramping up drilling operations, adapting the rig count to maintain a two year plateau of completions. At the end of which, some 1,000 wells had been drilled and completed from 100 surface locations.

The neat thing is that the build-up and plateau strategy turns the very high (up to 60%/year) decline rates of individual wells into a more manageable 10%/year for the whole project. There remains scope for improvement (and an increase in IRR and NPV) from better completions. Tax of course complicates things, here the EU situation is worse. Sweet spotting (concentrating drilling on more promising terrain) is advised against. Sweet spots are ‘like a very bad conventional reservoir.’ Conventional development is a phased process whereas nonconventional is a closed loop. You need to develop the whole area and find the sweet spots during development.

* Author of ‘Gaz et Pétrole de schist en questions,’ Editions Technip.

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