Today’s discussion involves evaluating or rating any existing or potential shale prospect. There are a number of important factors to consider, and we will attempt to discuss them during this article. However, there are a few essential terms which we must first digest before we can have an intelligent discussion on the subject. They are as follows:

Important terms-
1) Migration – the process by which hydrocarbons naturally rise from deep in the Earth’s core and move toward the surface.
2) Porosity – the quality or degree of having minute holes or spaces through which hydrocarbons (or other materials) may enter and be absorbed into a reservoir, in a sponge-like manner.
3) Permeability – the state or quality of a material which allows hydrocarbons (or other materials) to pass through and continue upwards towards the Earth’s surface.
4) TOC (Total Organic Content) – a measure of the total amount of carbon or carbon-like materials (organic compounds) which exists in shale or conventional reservoirs.
5) Kerogen – a solid, insoluble organic matter that exists in sedimentary rocks. It consists of organic matter including plants, algae and other microorganisms that have been compressed and heated by geological processes. Type 1 and 2 kerogen are most promising for the formation of petrocarbons - Type 1 being derived from lipid-derived material, commonly from algae deposited in oxygen-deprived environments. Type 2 kerogen is planktonic, meaning it is derived primarily from marine organic materials deposited in reduced sedimentary environments. Either is a good indicator of oil, condensate, or natural gas liquids.
6) Oil in place – an estimate as to the total oil or petrocarbon content of an oil reservoir (conventional or unconventional).
7) Recoverable reserves – the amount of oil and gas reserves which are economically and technically feasible to extract at the existing price of oil.
8) Biogenesis – the process whereby tiny marine plants and animals are buried under sand, sediment and water, and are fed upon by micro-organisms, breaking them down and decomposing them in order to create oi and/or gas. This is the basic premise behind the formation of “fossil fuels”.
9) Thermal maturity – the extent and level to which organic material is subject to the pressures and temperatures of the Earth’s crust and is “cooked” to create, or destroy petrocarbons.

Now we can proceed to discuss how we can rate ours, or any shale play.

Important factors include -
1) Where and how much shale is present (i.e. the depth and structure thickness).
2) How much organic matter or material does it contain (TOC level).
3) What type of organic material is present – is it gas shale or oil-rich shale?
4) The amount or clay and other materials it contains, especially with regard to carbonate level.
5) How deeply was it buried and “cooked”?
6) How susceptible is it to artificial stimulation (fracking). Is it brittle or ductile? Does it contain significant natural fractures?
7) Is it high in porosity and low in permeability? Will it trap and absorb petrocarbons?
8) What is its Kerogen content? Our preference is for type 1 or 2 so that we can expect the more valuable liquid contents and/or oil.
9) What is the estimated oil-in-place, i.e. what amount of petrocarbons can reasonably be expected for recovery?

Factors conducive to the formation of petrocarbons -
1) The formation of sediments and fossil-remains high in kerogen must be existent.
2) They must be buried and subject to the pressure and temperatures of the earth’s core at appropriate depths and temperatures.
3) Their environment must have the appropriate balance of carbon/oxygen levels. They must exist in an oxygen depleted environment.
4) The more organic material present, assuming other factors are conducive, the more likely the formations will contain oil or natural gas liquids (LNG’s).

The importance of thermal maturity….
1) Even if all other factors are present, shale can still be either under or over “cooked” – either immature and not ready for production, or literally destroyed or burned-up by the pressure underlying the Earth’s crust.
2) Optimal temperature for oil (and some gas) is approximately 190 degrees Fahrenheit.
3) Temperatures above 480 degrees Fahrenheit typically destroy rather than create hydrocarbons. Regarding depth and pressure, and the length of time that they are buried, fossils first become oil. As more time progresses, they become NGL’s or condensate. Buried even longer, they become natural gas. If they are buried for too long, they become basically a worthless organic-fee vapor.
4) Ideal conditions include a high carbonate content and a reservoir buried at a favorable depth, with favorable pressure and temperatures. Structure thickness is also an important determining factor as to potential productivity.
5) Depth is not a determining factor, other than as to exploration costs, so long as appropriate temperature and pressure levels exist.

What do America’s best shale plays have in common i.e.the Eagle Ford (TX), the Bakken/Twin Forks (N. Dakota, S. Dakota, Montana), and the Utica (OH)?
1) All are rich in oil and LNG’s, with significant natural gas present to stimulate migration
2) All have remarkably similar structure maps, with an oil window to the West, a centrally located wet-gas zone, and a dry gas zone to the East.
3) Similar clay content and brittleness/ductility allowing each to borrow productive frack methods from one another.
4) All contain higher natural porosity and permeability than other known shale formations – they successfully trap and absorb petrocarbons.
5) Each allows the opportunity to explore existing well bores (abandoned or marginal wells) which can be re-entered at great cost savings and which provide a tremendous volume of information available through existing well logs.
6) All have favorable access to infrastructure (pipelines and refineries) and have significant facility construction underway or completed.
7) None are true shale plays. Instead, they are basically limestone interbedded with shale, otherwise described as “tongues of calcareous strata separated by shalier tongues”

That’s the basics folks. Remember, as my good friend Thomas Ellis often says - we want peanut brittle, not peanut butter.