Abstract

Unconventional resource plays are breaking the rules of conventional decision wisdom. Rules of thumb developed over years of producing conventional assets are no longer always applicable and teams are struggling to uncover the new protocols. In unconventional, the demarcation line between appraisal and development is blurred as teams attempt to simultaneously hold acreage, explore, appraise and develop, ever striving to increase the pace to commercial sanction.

This paper presents a pragmatic approach to frame, evaluate and compare appraisal strategies in resource plays. The unique approach starts with framing the overall field appraisal plan, holistically, and then progresses to evaluating the most commonly encountered individual appraisal decisions, enabling teams to answer the following questions:

  • What are our key uncertainties and which appraisal options should we consider to resolve them?

  • Is there value in running a pilot to determine the optimal well spacing and, if so, what is the best pilot design?

  • Do we want to run a completions pilot and how should we configure it?

  • Do we need to pilot where to and how to orient our laterals?

  • Can we justify seismic to high grade our drilling program?

Appraisal framing is particularly valuable when taking on big acreage projects, helping teams identify new alternatives, organize options and look for interesting and innovative combinations. It also serves as a great tool to help teams work together. From surface to drilling, the process is inclusive, which is an important aspect in unconventional resources where cross discipline integration is so important.

The appraisal part of resource plays is as much or more about finding the exit points for different parts of the play as it is about learning and optimizing the commercial developments. Sometimes there may be no benefit of the new information from a Net Present Value (NPV) perspective and yet there is benefit to understanding the uncertainty reduction potential of different programs and knowing when projects are on the right path. This methodology is different than simply projecting learning curves on a development strategy and going forward. With this approach, teams clearly understand their walk points and rationale for them—helping compare different spending programs in order to understand and optimize recommended plans.

This paper provides an example of appraisal excellence in unconventional resource plays through an example which demonstrates some of the practical tips, tricks and tools which have proven to be effective for teams wrestling with these types of issues.

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