| dc.description.abstract | During the past decade, the worldwide demand for energy has continued to
increase at a rapid rate. Natural gas has emerged as a primary source of US energy. The
technically recoverable natural gas resources in the United States have increased from
approximately 1,400 trillion cubic feet (Tcf) to approximately 2,100 trillion cubic feet
(Tcf) in 2010. The recent declines in gas prices have created short-term uncertainties and
increased the risk of developing natural gas fields, rendering a substantial portion of this
resource uneconomical at current gas prices.
This research quantifies the impact of changes in finding and development costs (FandDC), lease operating expenses (LOE), and gas prices, in the estimation of the
economically recoverable gas for unconventional plays. To develop our methodology,
we have performed an extensive economic analysis using data from the Barnett Shale, as
a representative case study. We have used the cumulative distribution function (CDF) of
the values of the Estimated Ultimate Recovery (EUR) for all the wells in a given gas
play, to determine the values of the P10 (10th percentile), P50 (50th percentile), and P90 (90th percentile) from the CDF. We then use these probability values to calculate the
technically recoverable resource (TRR) for the play, and determine the economically
recoverable resource (ERR) as a function of FandDC, LOE, and gas price. Our selected
investment hurdle for a development project is a 20 percent rate of return and a payout of 5
years or less. Using our methodology, we have developed software to solve the problem.
For the Barnett Shale data, at a FandDC of 3 Million dollars, we have found that 90 percent of the
Barnet shale gas is economically recoverable at a gas price of 46 dollars/Mcf, 50 percent of the
Barnet shale gas is economically recoverable at a gas price of 9.2 dollars/Mcf, and 10 percent of the
Barnet shale gas is economically recoverable at a gas price of 5.2 dollars/Mcf. The developed
methodology and software can be used to analyze other unconventional gas plays to
reduce short-term uncertainties and determine the values of FandDC and gas prices that
are required to recover economically a certain percentage of TRR. | en |
