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