Abstract

A forecasting model which projects natural gas production from conventional sources was developed to production from conventional sources was developed to analyze future domestic supplies. The model simulates the dynamics of gas supply systems from exploration through production. The cost of producing new discoveries is also calculated.

Two projections of gas production through the year 2000 were developed to bracket the probably range of future supplies. In one case, exploratory drilling was continued at current levels and production fell significantly. In a second case, exploration was expanded until constrained by equipment availability. Production still fell, but eventually leveled off. Production still fell, but eventually leveled off. Production costs calculated for these projections suggest that anticipated future wellhead prices probably provide sufficient incentive to increase onshore probably provide sufficient incentive to increase onshore exploration to the limit allowed by available equipment But anticipated prices are not high enough to make offshore gas exploration commercially attractive.

Introduction

The present natural gas supply-demand imbalance in the United States has aroused Federal interest in gas production from unconventional sources such as tight production from unconventional sources such as tight sands, shale, coal beds and geopressured aquifers. To provide a rational basis for supporting research and development in these areas, the Department of Energy ordered an analysis of gas production potential from conventional sources. That investigation, which was completed late in 1978, is summarized in this paper.

Forcon, a forecasting model which projects natural gas production potential from conventional sources, was developed to assist in the analysis. Forcon simulates the dynamics of natural gas supply systems by modeling exploration, discovery, development of new reserves, and production from existing reserves and new discoveries.

FORECASTING NEW DISCOVERIES

The model postulates that as exploratory drilling increases within a producing region, cumulative gas discoveries approach the ultimate recoverable resources of the region in an inverse exponential manner. That is, reserves found are related to exploratory footage drilled through the expression:

(1)

where Gi = cumulative recoverable gas-in-place discovered from some initial year through year i

R = present undiscovered recoverable resources

Di = cumulative exploratory gas footage drilled from initial year through year i

b = scaling constant, in units of reciprocal footage.

Such a formulation is compatible with the finite nature of fossil fuel resources, with studies that show that there is a rapid drop-off in size in the world's sedimentary basins from the largest field to the smaller ones, and with the common observation that in general the larger reservoirs in a basin are discovered first.

We propose that for mature producing regions, the best indicator of future behavior is a comprehensive analysis of the past. Therefore, we determine the equation of the discovery curve for each region by regressing on historical data of cumulative reserves discovered versus cumulative exploratory footage drilled. An example of such a cumulative discovery curve is shown in Figure 1.

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