This paper addresses the risks and rewards associated with Devonian shale gas wells in West Virginia, Ohio, and Kentucky. In the development thereof, both geoscience and geostatistical studies were pursued. A geoscience approach was used to identify the plays or groups of counties in each of the three states having similar geology. Within these plays, data from existing wells were acquired to quantify reservoir parameters (pressure, depth, well spacing, and productive interval). Afterwards, a dual-porosity, productive interval). Afterwards, a dual-porosity, single-phase simulator was used to forecast expected performance from stimulated wells. Using these performance from stimulated wells. Using these curves, reserves were estimated for each play.
A geostatistical approach was used to rank and quantify the risk (probability of production) associated with drilling and producing Devonian shale wells in selected plays. The rewards associated with new well drilling ventures were addressed in the economic parameters of payout time and return on investment. parameters of payout time and return on investment. This study should be of interest to Appalachian independents and businesses considering development of shale gas wells. It should reduce considerable uncertainty relative to areas worthy of drilling and, within them, options for stimulation.
The recent downturn in petroleum and natural gas prices has depressed the development of Devonian prices has depressed the development of Devonian shale reserves within the Appalachian Basin. The high-risk nature of drilling Devonian shale wells exists because of a lack of operator knowledge on prediction of natural fracture spacing orientation prediction of natural fracture spacing orientation and occurrence, proper well pattern and spacing, and expected reservoir performance from a variety of stimulation technologies.
The Department of Energy's eastern gas shales project has established the geologic framework of Devonian shale stratigraphy over the entire Appalachian Basin such that operators can high grade areas of greater organic-rich shale from maps. In addition, over 20,000 feet of oriented cores and well logs from 35 wells have been analyzed for geologic reservoir properties such as porosity, permeability, natural properties such as porosity, permeability, natural fracture spacing, gas content, and mineralogical analysis to permit engineering studies to be made. In this effort, reservoir simulators like "SUGAR" have been developed to predict reservoir performance using the core and well log data. Key features of the SUGAR model include the ability to model matrix and natural fracture fluid flow as well as desorption of gas from a tight shale matrix.
Recent industry surveys on investment analysis indicate that nondiscounted methods like payback period and return on investment are key indicators for decision making.
In order to understand the impact of extraction technology on the development of Devonian shale gas resources, a systematic geoscience approach was developed to partition the regional extent of Devonian shale gas resources in a three-state area of West Virginia, Ohio, and Kentucky. Key technical issues to be addressed include identification of key geotechnical variables that distinguish one region from another. The approach taken was to assemble horizontal stress trajectory, natural fracture orientation, mechanic fabric trend, and permeability anisotropy data to partition areas expected to have similar shale geology (Figure 1). Within these partitioned areas, expected gas recovery for different partitioned areas, expected gas recovery for different stimulation methods were predicted and risk/reward related to them were calculated to evaluate future drilling ventures in a specific area.