Gas In Place (GIP) Analysis Shows Greatest Potential in SW PA per RRC

See RRC's October 29, 2013 Presentation that shows the GIP (Gas In Place) for the Utica/Point Pleasant, Upper Devonian and Marcellus Shales:

http://phx.corporate-ir.net/phoenix.zhtml?c=101196&p=irol-prese...

Views: 5551

▶ Reply to This

Replies to This Discussion

Permalink Reply by Charles Randolph on October 30, 2013 at 2:30am

Thanks for the URL, Todd !!

Permalink Reply by Todd on October 30, 2013 at 4:02am

You're welcome Charles... this should get plenty of hits!

Permalink Reply by Tim Tarr on October 30, 2013 at 6:34pm

Here's the link for todays call transcript.

http://seekingalpha.com/article/1789792-range-resources-management-...

Well worth reading. one BIG thing there saying 40-45% EUR's potential.

Permalink Reply by David Perotto on October 30, 2013 at 10:33pm
In Range's presentation, they speak to this. Their decline curve is much less than reported virtually everywhere else. I am curious if their procedures are responsible or is it the super rich Marcellus? Or combination of both?
Permalink Reply by Philip Thackray on October 31, 2013 at 2:18am

Marcellus shale freaks,

From the Oct 29 company presentation on page 11, Range’s best Marcellus GIP averages 150 billion cubic feet per square mile.  And from the associated investor call transcript, the estimated recoverable amount is 25% to 35% so I’ll use 30%.  One square mile is 640 acres.  So the estimated lifetime production for a typical 80 acre well is:

150 Bcf/640acres x 80acres x 0.3(30%) = 5.6 Bcf

But on pages 24 or 27 of the presentation, Range states the EUR of an 80 acre well at >12 billion cubic feet.  Where did the additional 6 Bcf or so come from??

 

Phil

Permalink Reply by Craig Cooper on October 31, 2013 at 4:02am

Their 12.3 figure is bcfe; i.e. bcf 'equivalents'. They've converted condensate & liquids volumes to cubic feet equivalent volumes. So, their 12.3 bcfe = 6.4 bcf gas + 27,000 bbls condensate + 951,000 bbls NGLs = 6.4 bcf + ~0.162 bcfe + ~5.706 bcfe = ~12.268 bcfe =~12.3 bcfe.

GIP numbers are just that, 'gas in place'. So, depending on where you are located in the play, you'll need to account for the volume of produced liquids in order to get a more complete view of overall potential.

Permalink Reply by Philip Thackray on October 31, 2013 at 7:29am

Graig,

I completely agree with how to reach 12.3 Bcfe from the component break out listed on page 24 Southwestern PA (wet gas case).  “Equivalents” are BTU equivalents where 1 barrel of oil, condensate or NGL equal 6000 cubic feet of methane.

Just to eliminate the wet complication look at page 27 where Range claims 12.2 Bcf dry gas from an 80 acre well.  The calculation I made above should surely apply to that situation but we see a number about twice as large as I calculate from the Range numbers on page 11.

The fact that a wet well and a dry well have about the same BTU content is not surprising as a dry well was once a wet well where the heavier components have converted to methane approximately keeping the BTU content the same.  This fact means that a map like the one on page 11 could be written in terms of BTU equivalents without regards to the 1050 BTU line.  However, the numbers that Range has given on page 11 don’t calculate out to the numbers presented on page 24 or 27.  So something is amiss.

Regards,

Phil

Permalink Reply by Craig Cooper on October 31, 2013 at 10:41am

Philip,

Thanks for the clarification. I think if you have a look at Ventura's & Farquharson's comments from the telecon you'll get the sense that they believe they're getting much higher recoveries than the industry average 25% - 35%.

Ventura states that "... we think that you're going to possibly see us a significantly higher recovery there ..." and Farquharson follows up with additional 'color' about their infill wells (i.e. 500' spacing) with "... up into the low- to mid- 40's".

So, going back to their Marcellus GIP map p11, the top range is 125 bcf - 175 bcf and assuming better recovery (i.e. 45%) per your equation you get a range 7 bcf - 9.8+ bcf. Still lower than their 12.2 bcf figure but closer. 

Also, IMO, it's important to understand that their 12.2 bcf figure is an EUR (see p41) derived from a type (production) curve. So the 12.2 bcf is the current estimated ultimate recovery after 20+ years.

The volumes were estimated two different ways and both are certain to be 'wrong' :-)

In the first case, they used a standard formula to calculate GIP. This is fine but there are uncertainties associated with input parameters and a couple of them are significant. The two with the largest uncertainties, IMO, are the recovery factor & the gas saturation; both are really tough to determine with confidence in shales.

In the second case, they used the most current production data and then extrapolated production rate over time. This method also has a number of uncertainties associated with it. The two with the largest uncertainties, IMO, are production decline rate & how it varies over time.

Bottom line, at least for me is: both estimates appear reasonable and good, they will change with improved operational efficiencies & technologies (probably grow larger) and Range appears to be gaining a good understanding of the reservoir(s).

Permalink Reply by Philip Thackray on October 31, 2013 at 12:34pm

Graig,

Thank you for the additional information and commentary.  As a landowner in several Southern Butler County, PA townships, this new Range GIP data is quite encouraging.  I hope their numbers are close.

Regards,

Phil

Permalink Reply by Tim Tarr on October 31, 2013 at 7:47am

Here's the good news:

   Those GIP #'s are based on pre12/31/2012 numbers. Look at bottom of maps on pages 11,12 and 13 just above Ranges logo.

   As recent as June 2013 they were using 8.7 Bcfe EUR #'s. In  July 2013 that changed to       12.3 Bcfe. So those GIP #'s are higher now. I expect those to go even higher, especially Utica/PP. also of note in that conference call it was said that porosity, permeability etc. being "better" where the high GIP numbers are. ~35-40% EUR even talking higher. I thought 25-30% was too high.

  Best of all is we're talking "just" Shale (source rock). Not even into reservoir rock yet! 

 

Permalink Reply by Philip Thackray on October 31, 2013 at 8:05am

Tim,

I took that date as referring to the highlighted townships.  So you think these numbers predate the switch from 8.7 Bcf to 12.7 Bcf – that would be good news for sure.  This is the first time they released the GIP numbers (as far as I know) so I assumed everything was up to date.  One question, why go into an investor conference call with less than your best data (best falsification LOL).

What formations are considered economic reservoir layers?

Thanks for the information.

Phil

Permalink Reply by Tim Tarr on October 31, 2013 at 10:44am

Phil,

One question, why go into an investor conference call with less than your best data

My best guess is they were added a bit late. I will not be surprised to see they acquired some acreage lately.

What formations are considered economic reservoir layers?

Those legacy formations (Venango, Bradford and Elk) is best place to start. Depending on location. Venango is "depleted" in my area. Than again with horizontal drilling and/or enhanced recovery (EOR)? But that Elk is just above Rhinestreet Shale and Brailler is just below it.

RSS

© 2024   Created by Keith Mauck (Site Publisher).   Powered by

Badges  |  Report an Issue  |  Terms of Service