Economic viability of shale gas production in the Marcellus Shale; indicated by production rates, costs and current natural gas prices

The U.S. natural gas industry has changed because of the recent ability to produce natural gas from unconventional shale deposits. One of the largest and most important deposits is the Marcellus Shale. Hydraulic fracturing and horizontal drilling have allowed for the technical feasibility of production, but concerns exist regarding the economics of shale gas production. These concerns are related to limited production and economic data for shale gas wells, declines in the rates of production, falling natural gas prices, oversupply issues coupled with slow growth in U.S. natural gas demand, and rising production costs. An attempt to determine profitability was done through the economic analysis of an average shale gas well using data that is representative of natural gas production from 2009 to 2011 in the Marcellus Shale. Despite the adverse conditions facing the shale gas industry it is concluded from the results of this analysis that a shale gas well in the Marcellus Shale is profitable based on NPV, IRR and breakeven price calculations.

IS THE U.S. SHALE GAS BOOM HAVING AN EFFECT ON THE EUROPEAN GAS MARKET?

This thesis focuses on the impact of the American shale gas boom on the European natural gas market. The study presents different tests in order to analyze the dynamics of natural gas prices in the U.S., U.K. and German natural gas market. The question of cointegration between these different markets are analyzed using several tests. More specifically, the ADF tests for the presence of a unit root. The error correction model test and the Johansen cointegration procedure are applied in order to accept or reject the hypothesis of an integrated market. The results suggest no evidence of cointegration between these markets. There currently is no evidence of an impact of the U.S. shale gas boom on the European market.

Sonic log prediction in carbonates

This work is conducted to study the complications associated with the sonic log prediction in carbonate logs and to investigate the possible solutions to accurately predict the sonic logs in Traverse Limestone. Well logs from fifty different wells were analyzed to define the mineralogy of the Traverse Limestone by using conventional 4-mineral and 3-mineral identification approaches. We modified the conventional 3-mineral identification approach (that completely neglects the gamma ray response) to correct the shale effects on the basis of gamma ray log before employing the 3-mineral identification. This modification helped to get the meaningful insight of the data when a plot was made between DGA (dry grain density) and UMA (Photoelectric Volumetric Cross-section) with the characteristic ternary diagram of the quartz, calcite and dolomite. The results were then compared with the 4-mineral identification approach. Contour maps of the average mineral fractions present in the Traverse Limestone were prepared to see the basin wide mineralogy of Traverse Limestone. In the second part, sonic response of Traverse Limestone was predicted in fifty randomly distributed wells. We used the modified time average equation that accounts for the shale effects on the basis of gamma ray log, and used it to predict the sonic behavior from density porosity and average porosity. To account for the secondary porosity of dolomite, we subtracted the dolomitic fraction of clean porosity from the total porosity. The pseudo-sonic logs were then compared with the measured sonic logs on the root mean square (RMS) basis. Addition of dolomite correction in modified time average equation improved the results of sonic prediction from neutron porosity and average porosity. The results demonstrated that sonic logs could be predicted in carbonate rocks with a root mean square error of about 4μsec/ft. We also attempted the use of individual mineral components for sonic log prediction but the ambiguities in mineral fractions and in the sonic properties of the minerals limited the accuracy of the results.

A PETROPHYSICAL EVALUATION OF THE TRENTON-BLACK RIVER FORMATION OF THE MICHIGAN BASIN

This work is conducted to study the geological and petrophysical features of the Trenton- Black River limestone formation. Log curves, crossplots and mineral identification methods using well-log data are used to determine the components and analyze changes in lithology. Thirty-five wells from the Michigan Basin are used to define the mineralogy of Trenton-Black River limestone. Using the different responses of a few log curves, especially gamma-ray, resistivity and neutron porosity, the formation tops for the Utica shale, the Trenton limestone, the Black River limestone and the Prairie du Chien sandstone are identified to confirm earlier authors’ work and provide a basis for my further work. From these, an isopach map showing the thickness of Trenton-Black River formation is created, indicating that its maximum thickness lies in the eastern basin and decreases gradually to the west. In order to obtain more detailed lithological information about the limestone formations at the thirty-five wells, (a) neutron-density and neutron-sonic crossplots, (b) mineral identification methods, including the M-N plot, MID plot, ϱmaa vs. Umaa MID plot, and the PEF plot, and (c) a modified mineral identification technique are applied to these wells. From this, compositions of the Trenton-Black River formation can be divided into three different rock types: pure limestone, partially dolomitized limestone, and shaly limestone. Maps showing the fraction of dolomite and shale indicate their geographic distribution, with dolomite present more in the western and southwestern basin, and shale more common in the north-central basin. Mineral identification is an independent check on the distribution found from other authors, who found similar distributions based on core descriptions. The Thomas Stieber method of analysis is best suited to sand-shale sequences, interpreting hree different distributions of shale within sand, including dispersed, laminated and structural. Since this method is commonly applied in clastic rocks, my work using the Thomas Stieber method is new, as an attempt to apply this technique, developed for clastics, to carbonate rocks. Based on the original assumption and equations with a corresponding change to the Trenton-Black River formation, feasibility of using the Thomas Stieber method in carbonates is tested. A graphical display of gamma-ray versus density porosity, using the properties of clean carbonate and pure shale, suggests the presence of laminated shale in fourteen wells in this study. Combined with Wilson’s study (2001), it is safe to conclude that when shale occurs in the Trenton-Black River formation, it tends to be laminated shale.

ECONOMIC PROFITABILITY OF THE BAKKEN, NORTH DAKOTA UNCONVENTIONAL OIL PLAYS BASED ON A TYPICAL WELL PERFORMANCE WITH CURRENT MARKET CONDITIONS

Increases in oil prices after the economic recession have been surprising for domestic oil production in the United States since the beginning of 2009. Not only did the conventional oil extraction increase, but unconventional oil production and exploration also improved greatly with the favorable economic conditions. This favorable economy encourages companies to invest in new reservoirs and technological developments. Recently, enhanced drilling techniques including hydraulic fracturing and horizontal drilling have been supporting the domestic economy by way of unconventional shale and tight oil from various U.S. locations. One of the main contributors to this oil boom is the unconventional oil production from the North Dakota Bakken field. Horizontal drilling has increased oil production in the Bakken field, but the economic issues of unconventional oil extraction are still debatable due to volatile oil prices, high decline rates of production, a limited production period, high production costs, and lack of transportation. The economic profitability and viability of the unconventional oil play in the North Dakota Bakken was tested with an economic analysis of average Bakken unconventional well features. Scenario analysis demonstrated that a typical North Dakota Bakken unconventional oil well is profitable and viable as shown by three financial metrics; net present value, internal rate of return, and break-even prices.