Value of Integrated Geophysics

An Unconventional View of Geophysics

Introduction

Unconventional resource plays are often considered statistical plays, which in the parlance of the recent E&P industry mean that they are simply drilled in a pattern without much thought or science applied as to where to drill. They are drilled with the expectation that an average well is economic. That was fine when the price of gas was high, because high gas prices covered the poor economics of many of these wells. However, in the current gas price environment, caused by the glut of gas from the shale gas explosion, many of these wells are no longer economic. “Oh, but we have moved on to shale oil”, they say. Have you read “The Prize”? Booms and busts are commonplace in the oil industry. Already the influx of Bakken shale oil has been driving down the price of WTI in North America relative to Brent oil. There have been differences of 20% until recently. Statistics is a science (I’ll dare to say since I have a degree in it), the study of data. Statistics was originally developed to help gentlemen beat the odds at the games they played so that they could beat their peers and take their money away from them. So, in historical terms, a statistical play should mean looking at how to beat the odds and improve the chance of success, not just drilling the wells randomly and hoping the first few wells are economic. Geophysics provides the data, specifically seismic, which can help you beat the odds in unconventional plays.

I have been working unconventional reservoirs for 15 years, ever since we developed the use of azimuthal AVO on 3D seismic data to detect fractures at Veritas, and we published our first paper on it (Gray et al, 1999). In the early days, it was tight gas sands and CBM. Now it is shale gas, shale oil (not oil shale, which is different) and oil sands. While working for [CGG] Veritas as a Senior Research Advisor until 2010, I participated in more than 120 unconventional projects of all these types, and [CGG]Veritas did many more. Seeing this many projects, I began to notice trends. One trend is that the resource is there. So many new companies developing unconventional resources don’t think that they need geophysics to find it anymore. I remember in the early 2000’s looking at many companies’ published results of success rates in tight gas sands in the Deep Basin. I could not find one company that claimed a success rate of less than 96%. That leaves no room for science of any kind, let alone geophysics. However, if you look at governmentpublished statistics of actual discovered gas in place for the Deep Basin, for the same area at the same time that these companies were exploring, only 15% of the pools held more than 0.25 BCF. Only 0.75% of the pools had reserves of more than 4 BCF. There is a major discrepancy here, which is whether or not the pool is an economic success. Eighty five percent or more of these pools have to be considered uneconomic. Historically, in the traditional conventional play, a success had typically meant finding oil and gas. If you discovered hydrocarbons, there was a high probability that the well would be successful, especially in a low-cost environment onshore. In unconventional plays, that is simply not the case, because they are not low-cost plays. Instead, it is whether or not that known resource will deliver up its oil or gas economically. This requires a complete rethink on the part of geophysicists and geophysical service providers about what we need to deliver. Furthermore, our clients have changed. In the previous find-and-develop age, the client was essentially the exploration VP, who would typically have been a geoscientist and therefore had at least a basic understanding of what geophysics brings to the table. Now, your clients are the engineers who develop these resources and their managers who are typically trained as engineers and/or in business or finance. We have to change the way we deliver the message to these new clients, because they know little or nothing about geophysics.

Stress, Geophysics and Hooke’s Law

In unconventional shale plays, stress is a critical factor. Stress controls whether and where the rock around the borehole fractures, whether or not that fracture, or frac in the current vernacular, extends into the formation, what direction that frac goes, and how large the frac is. This has significant implications for how much horsepower (read: equipment) and resources are required at the surface and for proppant size. Do you remember your first seismic class? The first thing that we did in mine was look at Hooke’s Law which relates stress to strain, through the tensor that we look at every day and call seismic data. In 2007, I was specifically asked by CGGVeritas to find a way to make seismic relevant to the people who were developing shale gas plays. That answer turned out to be geomechanics (Gray et al., 2010). Geophysicists forget that we were introduced to seismic via geomechanics, as Hooke’s Law, where stress is related to strain by a tensor (matrix) of stiffness constants containing the LMR coefficients, i.e. lambda, mu, and rho or compressibility, rigidity and density.

Hook's Law

σ=Cε or ε=Sσ

Where:
σ is stress
ε is strain
C is stiffness
S is compliance

That is stress = stiffness * strain or strain = compliance * stress. (Why C is stiffness and S is compliance rather than vice-versa isn’t a confusing trick, it is because much of the original work was done in Slovak and words for stiffness and compliance happen to start with the reverse letters in Slovak.) Geophysicists have forgotten the stress and strain part and spend all our time on the stiffnesses which contain the LMR coefficients (lambda – Lamé’s modulus, mu – shear modulus, and rho – density). The things that we deal with every day – like amplitudes, velocities, and AVO – are combinations of the LMR values; that is, the stiffness coefficients in Hooke’s Law. Seismic geomechanics simply means looking at the whole of Hooke’s Law again to get stresses. We demonstrate this in Gray et al., 2012. Quite simply, assume that the rock is bound and so the strains are zero and therefore the stresses fall out of Hooke’s Law. In its simplest isotropic form, σ_h = k* σ_v, where k is the stress ratio, k = ν/[1/ν] (Poisson’s ratio divided by one minus Poisson’s ratio), and σ_h and σ_v are the horizontal and vertical stresses respectively. Geophysicists have been deriving Poisson’s ratio when doing AVO work for a generation already (Shuey, 1985). Geomechanics was the first thing we learned in seismic class and we deal with geomechanical parameters every day, so geomechanics shouldn’t be difficult to grasp. I encourage all geophysicists to consider training in geomechanics and to start thinking about how geophysics can be used to enhance our understanding of the stresses in the subsurface. As usual, geophysical methods cover the whole subsurface with high spatial, though limited vertical resolution. That spatial coverage is the key advantage of using seismic for geomechanics. Geophysics tells you imprecisely about the geomechanical parameters – e.g. stresses, brittleness, frackability, etc. – everywhere. It’s the same argument that is made for geophysics every day. Only now that we are calculating these stresses, these results are relevant for resource plays.

Who are our clients?

We all have clients. Clients are the people who make a decision about whether or not to buy our product. Who are a geophysicist’s clients? They have changed. We all have clients whether we work for a contractor, E&P company, or in academia. If you don’t work for a service company, you might not think you have clients, but you do in the people to whom your work is summarized and presented. Our clients are management, partners, the government, environmentalists, the local population, stockholders, and other stakeholders. These people can have a material impact on our projects. They impact whether or not projects go ahead. Some of them must “buy” into the development project, or that project will not go ahead, and then neither will the geophysics. That is why we present to them. The clearest example is the contractor presenting to the E&P geophysicist, but E&P geophysicists also present to managers and stakeholders who decide whether or not they’ll approve the budget required for the proposed seismic program. These managers and stakeholders are your clients. Often now they are no longer the Exploration VP’s, who at least had some idea of the purpose of geophysics, but instead engineers, managers, the government and stakeholders like Farmer Joe and Environmentalist Sally all of whom likely have little or no exposure to geophysics. I studied in Ontario and when I told somebody there that I was studying geophysics, the most common responses I received were: “What is that?” and, “You must be really smart.” Most people do not understand what geophysicists do. We have to simplify results into terms that are understandable. This idea was brought home to me when, a decade ago, I had to make a case for the funding of geophysical methods to the Alberta government. I could not use the old “look at how much better this section looks than that one” approach; I had to use ideas that they understood. Things like 4D seismic will allow Alberta to produce X billion more barrels of oil, or that 3D seismic increases the probability of finding oil pools in Alberta by Y%. Simplification is necessary, even if some precision is lost in describing the benefits. Unfortunately, the kinds of statistics needed to make this argument to the Alberta government are hard to come by. Even though most of the oil industry knows that 3D seismic improves the probability of finding oil pools, there is little published evidence that can convince somebody from outside of the oil industry, like a politician, of this. There are no numbers, which is why I made a plea for more statistics on the value and success of geophysical methods in Gray (2011). We must start talking to our neighbors, stakeholders, etc., about these kinds of things. Remember that you can keep that precision in your detailed work to make sure everything is above-board but to communicate to your team members and Joe and Sally, you have to put it in terms that they understand. This means different things to different people. To management and Joe, whose field you want to use, this might mean dollars. To your engineers, fracture breakdown pressure or closure stress. To Sally, perhaps the factor of safety will give comfort about your proposed project. It is important to address each individual or group on a case by case basis, and this is where more work is required. For engineers, produce the stress estimates. For management, provide anticipated production volumes. Meanwhile, tell Joe how much money the well you are drilling will pay out on a monthly basis. Convert the stresses into a factor of safety for Sally, and prove to her that those frac jobs cannot impact the groundwater she is concerned about and that they cannot impact it anywhere, because the geophysical data covers the entire area. This means more work, but all the extra work shows the value of geophysics to the various stakeholders. This translates to more projects down the road. After seeing that the geophysics done on the current project addresses their concerns, they will ask for the geophysical work to be done on future projects; and that means geophysics has value.

Summary

In summary, in the world of unconventional reservoirs, there is a need for more geophysics not less. This is, basically, the same geophysics that we have been practicing throughout our careers, expressed differently to different stakeholders. All geophysicists have the skills to do this. A lot of what we need, we learned in our very first seismic class. In my opinion, geophysicists should be key players in beating the odds in unconventional resource plays.

References

Gray, F.D., Head, K.J., Chamberlain, C.K., Olson, G., Sinclair, J. and Besler, C., 1999, Using 3-D Seismic to Identify Spatially Variant Fracture Orientation in the Manderson Field: 1999 Canadian SEG Convention Technical Abstracts, 59-63, http://www.cseg.org/events/meetings/abstracts/1999/rmcs_ch4.pdf.

Gray, D., Anderson, P., Logel, J., Delbecq, F., and Schmidt, D., 2010, Estimating in-situ, anisotropic, principal stresses from 3D seismic, 72nd Mtg.: Eur. Assn. Geosci. Eng., Extended Abstracts, http://www.cggveritas.com/technicalDocuments/cggv_0000008423.pdf.

Gray, D., 2011, Quantify the Economic Value of Geophysical Information, CSEG RECORDER, 36, 3, 29-32. http://csegrecorder.com/articles/view/quantify-the-economic-value-of-geophysical-information

Gray, D., Anderson, P., Logel, J., Delbecq, F., Schmidt, D., and Schmid, R, 2012, Estimation of stress and geomechanical properties using 3D seismic data, First Break, Vol. 30, No. 3. http://fb.eage.org/publication/content?id=56675

Shuey, R.T., 1985, A simplification of the Zoeppritz equations, Geophysics, Vol. 50, pp. 609-614.

Yergin, D, 1991, The Prize: The Epic Quest for Oil, Money, and Power, Simon & Schuster