SHALE GAS DRILLING

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SHALE GAS SHALE GAS DRILLING DRILLING

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SHALE GAS DRILLING. EVER GET THESE EMAILS…. Here’s my problems with these well intended messages: Often quoted from the News Media Often quoted out of context Supposed “reserves” data given without stating what level of reserves those numbers are - PowerPoint PPT Presentation

Transcript of SHALE GAS DRILLING

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SHALE GAS SHALE GAS DRILLINGDRILLING

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Sent: Thu, February 10, 2011 11:33:09 AMSubject: Comments?

A new drilling technique is opening up vast fields of previously out-of-reach oil in the western United States, helping reverse a two-decade decline in domestic production of crude.

Companies are investing billions of dollars to get at oil deposits scattered across North Dakota, Colorado, Texas and California. By 2015, oil executives and analysts say, the new fields could yield as much as 2 million barrels of oil a day -- more than the entire Gulf of Mexico produces now….

> Here's an astonishing read. Important and verifiable information:>> About 6 months ago, the writer was watching a news program on oil and one of the Forbes Bros. was the guest. The host said to Forbes, "I am going to ask you a direct question and I would like a direct answer; how much oil does the U.S. have in the ground?" Forbes did not miss a beat, he said, "more than all the Middle East put together.">> The U. S. Geological Service issued a report in April 2008 that only scientists and oil men knew was coming, but man was it big…

EVER GET THESE EMAILS…EVER GET THESE EMAILS…Here’s my problems with Here’s my problems with

these well intended messages:these well intended messages:1.Often quoted from the News Media

2.Often quoted out of context

3.Supposed “reserves” data given without stating what level of reserves those numbers are

4.Claims made without knowledge of what the real energy picture is

5.It takes hours to unravel one of those emails, to cross check data, look up reserves, compare like terms, etc.

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Energy Overview

FrackingProblems

Well Design & Drilling

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ReservesAnalysis

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Energy OverviewEnergy Overview

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Estimated US Energy Use – 2009

Energy Energy WastedWasted

Energy Energy SourcesSources

Oil37%

Coal21%

Natural Gas25%

Nuclear9%c

Hydro3%

Other5%

Energy Energy UsesUses

Transport29%

Industrial23%

Commercial9%

Residential12%

58%

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Estimated US Energy Use – 2009Estimated US Energy Use – 2009

Energy Energy WastedWasted 58%

Electricity Generation

47.6%

Transportation(autos)

37.0

85% of Waste from 2 Sources

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Estimated US Energy Use – 2009Estimated US Energy Use – 2009

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Natural Gas OverviewNatural Gas Overview

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42% 53%

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Forecasted in April 2009

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№ Field name Country TCF*11 South Pars/North DomeSouth Pars/North Dome Iran and QatarIran and Qatar 1235123522 UrengoyUrengoy RussiaRussia 22222233 YamburgYamburg RussiaRussia 13813844 Hassi R’MelHassi R’Mel AlgeriaAlgeria 12312355 ShtokmanShtokman RussiaRussia 11011066 South Iolotan–OsmanSouth Iolotan–Osman TurkmenistanTurkmenistan 989877 ZapolyarnoyeZapolyarnoye RussiaRussia 959588 HugotonHugoton USA (TX-OK-KS)USA (TX-OK-KS) 818199 GroningenGroningen NetherlandsNetherlands 7373

1010 BovanenkoBovanenko RussiaRussia 70701111 MedvezhyeMedvezhye RussiaRussia 68681212 North ParsNorth Pars IranIran 48481313 Dauletabad-DonmezDauletabad-Donmez TurkmenistanTurkmenistan 47471414 KarachaganakKarachaganak KazakhstanKazakhstan 46461515 KishKish IranIran 45451616 OrenburgOrenburg RussiaRussia 45451717 KharsaveyKharsavey RussiaRussia 42421818 Shah DenizShah Deniz AzerbaijanAzerbaijan 42421919 GolshanGolshan IranIran 30302020 TabnakTabnak IranIran 22222121 KanganKangan IranIran 2020

LARGEST GAS RESERVESLARGEST GAS RESERVES

Current US Shale Gas Estimated

Reserves are 750 TCF

BUT comparing to this

chart might be comparing APPLES and ORANGES* Recoverable

Since Shale Gas Extraction is so new, this chart may not include ANY of the world’s

shale gas

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Source: US Energy Information Adminstration

This is a whopping

55% of the total

BUT!USGS came

back and revised the

EIA’s data for the Marcellus

down by 79.5% down by 79.5% to

84 TCF 84 TCF TotalTotal

US SHALE GAS RESERVESUS SHALE GAS RESERVES

Might Acutally be 153.6 TCF??

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Shale Gas OverviewShale Gas Overview

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Forecasted in April 2009

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When the distance between the top of the

target shale and the bottom of the aquifer is small, ONLY experienced ONLY experienced

operators should be operators should be drillingdrilling!

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Fracking OverviewFracking Overview

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Production Decline CurveProduction Decline Curve

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• Production rates are a function of reservoir pressure.

• As production is removed from the reservoir, pressure decreases and therefore production decreases.

• At some point, the economic limit is reached and decisions about the reservoir/ well must be made.

Economic Uneconomic

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• Fracture reservoir rock (up to Fracture reservoir rock (up to 500’ from perforations) with 500’ from perforations) with high pressure fluid & place a high pressure fluid & place a permeable proppant material permeable proppant material into the fracture channel into the fracture channel

• Fracture remain open after Fracture remain open after pressure is reduced providing a pressure is reduced providing a high conductivity pathway for high conductivity pathway for reservoir fluids to flow to the reservoir fluids to flow to the wellwell

Production Enhancement

Hydraulic FracturingHydraulic Fracturing

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Production Enhancement

Hydraulic FracturingHydraulic Fracturing• In North America, 58 percent In North America, 58 percent

of new gas wells and 38 of new gas wells and 38 percent of new oil wells are percent of new oil wells are hydraulically fractured. hydraulically fractured.

• Hydraulic fracturing is also Hydraulic fracturing is also being used more often in being used more often in high permeability formationshigh permeability formations

58 % New 58 % New Gas WellsGas Wells

38 % New 38 % New Oil WellsOil Wells

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Production Enhancement

Hydraulic FracturingHydraulic Fracturing

A Frac Job takes considerable equipmentA Frac Job takes considerable equipment 28

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Environmental Environmental OverviewOverview

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Claims Against FrackingClaims Against Fracking

• Cows killed• Drinking water burns• Skin rashes• Contaminated soils• Air pollution• Dust

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Overview of One Experts OpinionOverview of One Experts Opinion

Conversation with Dr. Ian DuncanConversation with Dr. Ian DuncanAssociate Director, Texas Dept of Economic GeologyAssociate Director, Texas Dept of Economic Geology

•Areas of Dimock, PA have historical records of NATURAL methane seepage into underground aquifers

•He notes that the local Ag Extension service used and still do provide a warning brochure, which he has a copy of, advising prospective new residents of the area of the dangers of methane in their drinking water as home have blown up in the past as a result. This was a problem in the 1950’s and 60’s.

•Evidence shows that more often than not, it is the natural seepage of methane that is causing problems with their drinking water, not Fracking as reported by the News Media and YouTube

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Conversation with Dr. Ian DuncanConversation with Dr. Ian DuncanAssociate Director, Texas Dept of Economic GeologyAssociate Director, Texas Dept of Economic Geology

•Over 1000 supposed claims 1000 supposed claims of environmental disasters associated with Fracking

•Only 30-40 have been filed 30-40 have been filed with the Environmental Defense League

•6 identified as possible issues6 identified as possible issues

•3 found incorrectly attributed fracking 3 found incorrectly attributed fracking with naturally occuring methane seepage into underground aquifers

•3 found with bad cement jobs (Wyoming, Colorado, Ohio)3 found with bad cement jobs (Wyoming, Colorado, Ohio)

•2 of those had prior knowledge 2 of those had prior knowledge of the cement situation but Fracked anyway – of the cement situation but Fracked anyway – Therefore only 1 instance of fracking causing unintentional problems Therefore only 1 instance of fracking causing unintentional problems

Dr. Duncan notes that a paper will be published this year with his results

Separating FACT from FICTIONSeparating FACT from FICTION

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MASSACHUTTES INSTITUTE OF MASSACHUTTES INSTITUTE OF TECHNOLOGY – July 2011TECHNOLOGY – July 2011

(http://web.mit.edu/mitei/research/studies/documents/natural-gas-2011/NaturalGas_Chapter%201_Context.pdf )

““There has been concern that these fractures can also There has been concern that these fractures can also penetrate shallow freshwater zones and contaminate penetrate shallow freshwater zones and contaminate them with fracturing fluid, them with fracturing fluid, but there is no evidence that but there is no evidence that this is occurring.this is occurring. There is, however, evidence of There is, however, evidence of natural gas migration into freshwater zonesnatural gas migration into freshwater zonesin some areas, most likely as a result of substandard in some areas, most likely as a result of substandard well completion practices by a fewwell completion practices by a fewoperators.”operators.”

Separating FACT from FICTIONSeparating FACT from FICTION

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Environmental Protection AgencyEnvironmental Protection Agency

Study started in 2010Study started in 2010

Results due in 2012Results due in 2012

Separating FACT from FICTIONSeparating FACT from FICTION

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EPA STUDY IN PROGRESS

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EPA STUDY IN PROGRESS

EPA RSTUDY TO BE COMPLETED BY 2012

EPA RSTUDY TO BE COMPLETED BY 2012

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Well Design OverviewWell Design Overview

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Well Design and Drilling

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Well Design during drillingWell Design during drilling

``

Blowout Preventer

Surface

Casing Casing StringsStrings

Blowout Preventer – Monitor & Controls the pressure within each casing string of the well

Casing String – Successive sections of pipe of decreasing diameter set one inside the other and cemented in place

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How is Casing Installed?How is Casing Installed?

36”hole36”hole

•Drill 36” hole to design depthDrill 36” hole to design depth

•Slide 30” casing to depth Slide 30” casing to depth within 36” holewithin 36” hole

•Cement 30” casing to 36” Cement 30” casing to 36” holehole

•Drill 24” hole thru cement in Drill 24” hole thru cement in 30” casing to design depth30” casing to design depth

•Slide 20” casing to depth Slide 20” casing to depth within the 24” holewithin the 24” hole

•And so on ….And so on ….48

30” 30” CasingCasing

24”hole24”hole

20” 20” CasingCasing

Surface

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Typical Well Casing ProgramTypical Well Casing Program

30 in30 in(36”hole)(36”hole)

20 in20 in(26”hole)(26”hole)

13 3/8 in13 3/8 in(17 ½” hole)(17 ½” hole)

9 5/8 in9 5/8 in(12 ½” hole)(12 ½” hole)

500 ft500 ft

7,000 7,000 ftft

10,000 ft10,000 ft

3,000 3,000 ftft

7 in Liner7 in Liner(8½” hole)(8½” hole)

15,000 ft15,000 ft

DepthDepthCasing Casing SizeSize

•30” Casing 30” Casing = Conductor Pipe = Conductor Pipe (hung at surface; it is drilled or (hung at surface; it is drilled or driven)driven)

•20” Casing 20” Casing = Surface Casing = Surface Casing (hung at surface; may not be (hung at surface; may not be necessary, depends on geology)necessary, depends on geology)

•13 3/8” Casing 13 3/8” Casing = Intermediate = Intermediate Casing (hung at the surface)Casing (hung at the surface)

•9 5/8” Casing 9 5/8” Casing = Intermediate = Intermediate casing (depending on design, casing (depending on design, could be hung off of 13 3/8”)could be hung off of 13 3/8”)

•7” Liner 7” Liner = Not a casing per se = Not a casing per se because it is hung off the end of because it is hung off the end of the 9 5/8” casing; it doesn’t run to the 9 5/8” casing; it doesn’t run to the surfacethe surface 49

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Well Casing ProgramWell Casing Program

Why is casing Why is casing needed?needed?•Protect freshwater aquifers that Protect freshwater aquifers that might be present in the subsoilmight be present in the subsoil

•Prevents contamination between Prevents contamination between rock strata layersrock strata layers

•Contain any unusual pressure in Contain any unusual pressure in the layers of rock strata that the layers of rock strata that might be encounteredmight be encountered

•Prevent borehole collapse while Prevent borehole collapse while drilling deeperdrilling deeper

•Provide control of drilling mud Provide control of drilling mud being pumped down-holebeing pumped down-hole

Freshwater Aquifer

High Pressure Zone

Low Pressure Zone or future producing zone

Black Gold!Black Gold!

Cap Rock

Cap Rock

Wellbore thru the

rock strata

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Well Design during completionWell Design during completion

``

Surface

PerforationsPerforations

Xmas Tree– Monitor & Controls the pressure within the each casing of the well while allowing the well to flow to the surface

Perforations – Holes shot thru the casing to allow fluid to flow into the wellbore

Down-hole Completion Equipment – Devices & tools installed in the well to control which reservoir is produced and to give real-time data

Down-hole Down-hole Completion Completion Equipment`Equipment`

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Xmas Tree

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Well Design during completionWell Design during completion

``

Surface

PerforationsPerforations

Production Tubing – A string of pipe that runs from the producing zone to the wellhead in which oil and/or gas flows to the surface facilities

Down-hole Down-hole Completion Completion Equipment`Equipment`

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Xmas Tree

To Production Facilities

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Types of Well DesignTypes of Well Design

Black Gold!Black Gold!

Cap Rock

Cap Rock

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• “Straight-hole”

• Directional or “Deviated Well”

• “Horizontal Well”

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Deviated WellDeviated Well

Why drill a deviated Why drill a deviated well?well?

Black Gold!Black Gold!

Cap Rock

Cap Rock

High High Pressure Pressure

zones zones behind behind

faultfault

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Fault

• Known fault can cause an unplanned deviation from the projected drill path

• High pressure zones might exist to one side of a fault

• Subsurface “debris” like ancient reefs could cause a slower drill rate (ROP) than desired (time is money!)

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Deviated, Horizontal WellsDeviated, Horizontal Wells

Why drill a horizontal Why drill a horizontal well?well?

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• Low permeability reservoirs are best produced by horizontal wells, the ultimate in “deviated well”

• Three kinds of horizontal wells, long/short/medium radius:

• Long = 10 per 100ft• Medium = 20 per 100ft• Short = 40 per 100ft

Target ReservoirTarget Reservoir

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Horizontal Well ProcedureHorizontal Well Procedure

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• At start of deviation, replace drillbit with a “bent sub”, gyroscope, steerable mud motor & bit

• Add logging-while-drilling (LWD) unit & power pack within 20 ft of bit

• Slowly rotate drillstring to prevent “sticking” & start “pushing” steerable system forward while flowing mud to mud motor

• Drill while being pushed forward & steer system as need be to maintain horizontal direction

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Multilateral, Horizontal WellsMultilateral, Horizontal Wells

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• Added advantage of horizontal well design is to include “Multilaterals” (additional boreholes from the same drillsite)

• From one wellsite, several sections of the reservoir can be accessed & produced

Plan view

Drillsite

Significant Production

Increase

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Horizontal Drilling AdvantagesHorizontal Drilling Advantages

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• Increase in reserves in place by 2% of the Increase in reserves in place by 2% of the original oil in place (OIIP)**original oil in place (OIIP)**

• Cost ratio of horizontal versus vertical wells Cost ratio of horizontal versus vertical wells is approximately 2 to 1**is approximately 2 to 1**

• Production ratio for horizontal wells versus Production ratio for horizontal wells versus vertical wells is approximately 3.2 to 1**vertical wells is approximately 3.2 to 1**

• Inclusion of multilaterals increases Inclusion of multilaterals increases production ratio even more!!production ratio even more!!

** per U.S. Department of Energy

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Final Well ProgramFinal Well Program

• Well Schematic Well Schematic – Showing – Showing hole (bit) size, casing plan, hole (bit) size, casing plan, mud plan, planned TDmud plan, planned TD

• Drilling Time Estimate Drilling Time Estimate – – Breakdown total time into key Breakdown total time into key components to various depthscomponents to various depths

• Well Cost Estimate Well Cost Estimate – Listing – Listing of all expected costs for the of all expected costs for the wellwell

• Well Time VS. Depth Plot Well Time VS. Depth Plot – a – a “picture” of how much drilling “picture” of how much drilling time is planned for each casing time is planned for each casing runrun

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Drilling OverviewDrilling Overview

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Drilling

LETS GET STARTED

DRILLING!!61

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Drilling

OffshoreOnshore

Well Location?

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Drilling

On-structureOn-structure(“In-field”, Appraisal)(“In-field”, Appraisal)

ExploratoryExploratory(“Wildcat Well”)(“Wildcat Well”)

Normal Success Normal Success Rate = Rate = +/-+/- 1 in 10 1 in 10

toto +/- 3 in 10+/- 3 in 10

Normal Success Normal Success Rate = Rate = +/- 5 in 10 +/- 5 in 10

to to +/-+/- 9 in 109 in 10

Well Type?Well Type?

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Drilling

Main Components of DrillingMain Components of Drilling

DerrickDerrick

Drill BitDrill Bit64Drill MudDrill Mud

Traveling Traveling Block/SwivelBlock/SwivelTurntable/Kelly/ Turntable/Kelly/

Kelly BushingKelly Bushing

Casing (different Casing (different sizes)sizes)

Blowout PreventerBlowout Preventer

Drill StringDrill String

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Drilling

Drilling MudDrilling MudWhat is Drilling MudWhat is Drilling MudA mixture of clay with either water, oil, oil and A mixture of clay with either water, oil, oil and water, or synthetic organic matter and water. water, or synthetic organic matter and water. To this, various viscosity and density To this, various viscosity and density enhancers and additives to achieve specific enhancers and additives to achieve specific objectives (adjust pH, control bacteria, de-objectives (adjust pH, control bacteria, de-foam, filtrate reducers, etc.) are added.foam, filtrate reducers, etc.) are added.

How does it get in the How does it get in the well?well?Mud is pumped into the drill pipe, flows down Mud is pumped into the drill pipe, flows down the pipe, exits out the drill bit, and flows, the pipe, exits out the drill bit, and flows, along with rock cuttings, up the borehole along with rock cuttings, up the borehole back to the rig.back to the rig.

Drill BitDrill Bit

Mu

d o

ut

Mu

d o

utMudMud

ININ

Well Well borebore

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Drilling

What is the Drilling Mud System?What is the Drilling Mud System?

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1. Mud Pit or Tanks

1. Mud Pit or Tanks

4. Circulate Mud down drillstring and

back up borehole exit below Blowout

Preventer

4. Circulate Mud down drillstring and

back up borehole exit below Blowout

Preventer

A ‘CLOSED SYSTEM’ where the drilling mud

is mixed & pumped:

•from the mud pit/tanks,

•up into the mud hose

•down into the drillstring,

•thru the drillbit,

•up the wellbore,

•over the shellshakers and

•back to the mud pit/tanks

A ‘CLOSED SYSTEM’ where the drilling mud

is mixed & pumped:

•from the mud pit/tanks,

•up into the mud hose

•down into the drillstring,

•thru the drillbit,

•up the wellbore,

•over the shellshakers and

•back to the mud pit/tanks

2. Mud Pump

2. Mud Pump

3. Mud Hose

3. Mud Hose

5. Shale shakers5. Shale shakers

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Drilling

What does Drilling Mud do?What does Drilling Mud do?

• Cools drill-bitCools drill-bit

• Stabilizes borehole wallsStabilizes borehole walls

• Transports rock cuttings (“cuttings”) to Transports rock cuttings (“cuttings”) to surface (mud engineer examines cuttings surface (mud engineer examines cuttings w/microscope to check for oil and porosity)w/microscope to check for oil and porosity)

• Offsets hydrostatic/reservoir pressureOffsets hydrostatic/reservoir pressure

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Drilling Plan

How Critical is How Critical is Drilling Mud?Drilling Mud?

SG

TV

DB

DF

(m

)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0 2.1 2.2 2.3

20"

13.5/8"

10.3/4" x 9.7/8"

• Blue line is Pore Pressure (the Blue line is Pore Pressure (the pressure from the overburden)pressure from the overburden)

• Red line is the Pressure that will Red line is the Pressure that will fracture the Reservoirfracture the Reservoir

• Yellow line is Mud Weight Yellow line is Mud Weight pressurepressure

• If Mud weight is too hi, it will If Mud weight is too hi, it will damage the reservoir; if too low, damage the reservoir; if too low, a well blowout is possible!a well blowout is possible!

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OverpressuOverpressurere

zoneszones

Specific Gravity

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Drilling Plan

Drilling Plan ComponentsDrilling Plan Components• Location & coordinates of wellLocation & coordinates of well

• Anticipated time for each major activityAnticipated time for each major activity

• Drill-bit Plan (what size to what depth)Drill-bit Plan (what size to what depth)

• Casing Plan (what size to what depth)Casing Plan (what size to what depth)

• Planned mud weight to offset hydrostatic/ Planned mud weight to offset hydrostatic/ reservoir pressurereservoir pressure

• Testing/logging planTesting/logging plan

• Signoff plan for Non-Operator repsSignoff plan for Non-Operator reps

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Drilling

Drilling Contract TypesDrilling Contract Types

• Costs per Day (Costs per Day (DAY RATEDAY RATE))

• Costs per Foot (Costs per Foot (FOOTAGE RATEFOOTAGE RATE))

• Set Costs (Set Costs (TURNKEY BASISTURNKEY BASIS))

• Success often depends on quality Success often depends on quality & experience of Operator& experience of Operator

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Drilling

Drilling OperationsDrilling Operations• Survey well locationSurvey well location

• Build roads, clear and level groundBuild roads, clear and level ground

• Drill water well (optional)Drill water well (optional)

• Layout casing pipe/drill string & Layout casing pipe/drill string & equipmentequipment

• Prepare drilling mudPrepare drilling mud

• Assemble RigAssemble Rig

• Drill each segment; set casing & Drill each segment; set casing & cementcement

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Drilling

Drilling Operations (cont’d)Drilling Operations (cont’d)

• UnplannedUnplanned drill breaks: stuck pipe,lost drill breaks: stuck pipe,lost circulation, required fishing trip, etc.circulation, required fishing trip, etc.

• PlannedPlanned drill breaks: layout and position drill breaks: layout and position casing on deck, circulate bottom to remove casing on deck, circulate bottom to remove cuttings, coring, drill stem testing, etc.cuttings, coring, drill stem testing, etc.

• Let’s look at POSSIBLE DRILLING Let’s look at POSSIBLE DRILLING PROBLEMS, CORING and WELL LOGGINGPROBLEMS, CORING and WELL LOGGING

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Drilling

Possible Drilling Problems• Lost tool Lost tool (something breaks off or is dropped in well)(something breaks off or is dropped in well)

• Stuck Pipe Stuck Pipe (drill pipe adheres to well walls due to (drill pipe adheres to well walls due to suction/differential pressure or dogleg in wellbore)suction/differential pressure or dogleg in wellbore)

• Sloughing shale Sloughing shale (swelling of shales, drops to bottom, can’t (swelling of shales, drops to bottom, can’t circulate out)circulate out)

• Lost circulation Lost circulation (high porosity zone/cavernous zone)(high porosity zone/cavernous zone)

• Corrosive gases encountered Corrosive gases encountered (hydrogen sulfide)(hydrogen sulfide)

• Abnormal high pressure Abnormal high pressure (drill into/through a high press (drill into/through a high press zone)zone)

• Blowout Blowout (mud weight not sufficient to hold back abnormal (mud weight not sufficient to hold back abnormal high pressure gas; gas flows to surface and ignites high pressure gas; gas flows to surface and ignites unexpectedly)unexpectedly)

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Reserves OverviewReserves Overview

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Classification of Reserves is key!Classification of Reserves is key!

What are Reserves?What are Reserves?The amount of oil & gas in a reservoir currently available for production

There are several different reserves names used:There are several different reserves names used:• Reserves in Place Reserves in Place (physically contained in the reservoir; remember

that only 25 to 30% of that can actually be recovered with conventional technologies; OOIP)

• Recoverable Reserves Recoverable Reserves (estimate of what can be produced from the reservoir)

• Proven Reserves, Developed or Undeveloped Proven Reserves, Developed or Undeveloped (reserves that can be calculated with reasonable certainty because the field has been defined by appraisal well(s) that have been tested)

• Proved Behind-Pipe Reserves Proved Behind-Pipe Reserves (undeveloped, proven reserves calculated behind the casing)

• Proved (P90), Probable (P50) and Possible (P10) Proved (P90), Probable (P50) and Possible (P10) ReservesReserves

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Classification of Reserves is key!Classification of Reserves is key!

• Proved (P90) Reserves – 90 % chance or greater that the reserves are there; must have “very high certainty” that reserves can be “economically” recovered with current technology. SEC allows only reporting of P90

• Probable (P50) Reserves- 50 % chance that the reserves are there

• Possible (P10) Reserves - 10 % chance that the reserves are there

• Remember estimates are based on data from a location as much as 2 miles below the surface, and on characteristics of a hole 6” in diameter extrapolated over several hundred acres of reservoir…

Reserves estimating is more of an art than a science!

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http://water.epa.gov/type/groundwater/uic/class2/hydraulicfracturing/index.cfmhttp://www.dec.ny.gov/docs/materials_minerals_pdf/ogdsgeischap5.pdfhttp://www.netl.doe.gov/technologies/oil-gas/publications/epreports/shale_gas_primer_2009.pdfhttp://www.cbsnews.com/video/watch/?id=7054210n&tag=related;photovideohttp://video.pbs.org/video/1801494624 http://blogs.telegraph.co.uk/finance/rowenamason/100006602/shale-gas-pollution-fears-leave-americans-with-another-energy-headache/#