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The Life Cycle of an Unconventional Gas Opportunity: Quantifying Risk Versus Reward


Melvyn Giles1, Marcel M. deJong1, Daniel Nevin*2, P. Jeffrey Brown2


1Shell International E&P, Incorporated; 2Decision Strategies, Inc, *Speaker

The early phases of exploitation of an Unconventional Gas opportunity differ significantly from that for a conventional play.  Typically, the phases that precede full scale development are:

  • Exploration, to test the play concept and gain early insights into play extent
  • Appraisal, to establish existence of sufficient overall volumetric scope and to get early indications of per-well recovery and optimal completion practices
  • Pilot – determine if consistent economic per-well yields can be achieved.

This talk will discuss a probabilistic, decision-focused methodology that can be used to:

  • determine appropriate volume/rate thresholds for each phase
  • estimate the probability of exit at each decision gate (along with the risked capital exposure up to that point),
  • calculate the chance of proceeding post-pilot as well as the chance of a full project, full cycle economic return,  and the minimum average yield needed to assure an economic venture, and
  • gain insights into optimal pilot size.


AAPG Search and Discovery Article #90098©2009 AAPG Education Department, Houston, Texas 9-11 September 2009