Alex Novlesky Sr. Reservoir Simulation Engineer

Agenda • Shale Oil & Gas Production

• Why use Reservoir Simulation for modelling Tight reservoirs, including Shales?

• What Physics are being modelled in Tight & Shale plays?

• New Advances in Modelling Hydraulic Fractures

• How has simulation helped in understanding the physics & production/recovery mechanisms of these plays?

• Tight & Shale Reservoir Modelling: Challenges, Opportunities & Lessons Learned?

• Why use CMG for Modelling Tight & Shale plays?

North America Shale Plays

USA Shale & Tight Oil & Gas Production (2000-2013)

Source: EIA based on DrillingInfo and LCI Energy Insight

0

5

10

15

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25

30

35

2000 2002 2004 2006 2008 2010 2012 0.0

0.4

0.8

1.2

1.6

2.0

2.4

2.8

2000 2002 2004 2006 2008 2010 2012

Eagle Ford (TX) Bakken (MT & ND) Granite Wash (OK & TX) Bonespring (TX Permian) Wolfcamp (TX Permian) Spraberry (TX Permian) Niobrara-Codell (CO) Woodford (OK) Monterey (CA) Austin Chalk (LA & TX)

USA Shale & Tight Oil Production (mmbpd) USA Dry Shale Gas Production (bcfd)

Rest of US Marcellus (PA and WV) Haynesville (LA and TX) Eagle Ford (TX) Bakken (ND) Woodford (OK) Fayetteville (AR) Barnett (TX)

Antrim (MI, IN, and OH)

USA Gas Production (1990-2040)

Source: EIA, Annual Energy Outlook 2014 Early Release

5 Associated with oil Coalbed methane

Alaska Non-associated offshore

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15

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Tight gas

Shale gas

Non-associated onshore

History Projections 2012

Tcf/y

Bcf

/d

1990 1995 2000 2005 2010 2035 2040 2015 2020 2025 2030

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USA Oil Production (1990-2040) m

mbp

d

Source: EIA, Annual Energy Outlook 2014 Early Release

Alaska Other lower 48 onshore

Tight oil

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Lower 48 offshore

History Projections 2012

U.S. maximum production level of 9.6 million barrels per day in 1970

4

8

10

6

2

Why Use Reservoir Simulation? For Physics-based EUR’s & Optimization

• Long time to pseudo-steady-state • Multi-phase flow • Non-darcy (turbulent) flow • Multi-component phase behavior,

adsorption & diffusion • Compaction of fractures • Heterogeneous rock properties • Heterogeneous fractures • Geomechanics • Geochemistry

Why Use Reservoir Simulation? To Represent Current Development Practices

• Analyze & Forecast multi-well pad models exhibiting interference

• Model re-fracs & infill drilling • Interpret production

surveillance data • Simultaneously account for

many uncertain parameters

Commonly Modelled Physics Reservoir Description

• Matrix porosity & permeability • Natural & propped fractures • Pore volume compaction/dilation • Non-darcy (turbulent) flow

PVT • Black Oil

‒Primary production • EoS

‒Miscible gas injection EOR & near-critical fluids

Commonly Modelled Physics Adsorbed components

• Gas phase only, dry tight/shale gas • Multi-component gases & liquids

Diffusion • Multi-component gas • Miscible gas injection EOR

Rock Physics • Tight rock Rel Perm & Cap Press in

matrix • Straight line Rel Perm & no Cap

Press for fractures

Source: SPE 164132

Commonly Modelled Physics Simulation Model Gridding LS-LR-DK or Tartan Grids surrounding the propped fractures

• Transient multiphase fluid flow from matrix to natural fractures & from matrix to propped fracs

• Non-darcy flow in propped fracs near laterals Simulation Model Initialization Initialize propped & natural fracture network with water

• Flowback of injected fracture fluid

CMG’s LS-LR-DK “Tartan” Grids

The “key” to modelling “transient flow” from matrix to fractures!

Modelling Planar & Complex Geometry Propped Fractures

Planar Fractures in SRV Complex Fractures in SRV

Advanced Processes & Thermal Simulator

Compositional & Unconventional Reservoir Simulator

Three-Phase, Black-Oil Reservoir Simulator

Sensitivity Analysis, History Matching, Optimization & Uncertainty Analysis Tool

Integrated Production & Reservoir Simulation

Intelligent Segmented Wells

Phase Behaviour and Fluid Property Application

Pre-Processing: Simulation Model Building Application

Post-Processing: Visualization and Analysis Application

Product Suite

CMG has the Right Physics Physics IMEX GEM PVT BO, VO, GC, WG EOS

Adsorbed Components Gas Phase Multi-Comp

Molecular Diffusion w/ Dispersion - Multi-Comp/OWG Phases

Natural Fracs (NF) Dual Perm Dual Perm

Propped Fracs (PF) LS-LR in Matrix (MT) LS-LR in Matrix (MT)

Non-Darcy (turbulent) Flow MT, NF & PF MT, NF & PF

Non-Darcy (slip) Flow - MT

Krel & Pc MT, NF, PF & time MT, NF, PF & time

Press-dependent Compaction MT, NF, PF & time MT, NF, PF & time

Stress-dependent Compaction - Geomechanics-based

Chemical Reactions - Ion Exchange & Geochemistry

Primary Production Primary Production & EOR

CMG Milestones in Unconventional Reservoir Modelling Capabilities & Workflows

Microseismic Data • Can use to estimate the extent of

the unpropped SRV during pumping & the geometry of its fractures

• Acquired to monitor or even control the treatment*

• Easily incorporated into Builder’s workflow using the Microseismic import wizard

* Reference: George King’s SPE course

Geomechanics

• Model permeability change, with hysteresis, as a function of stress change during production and shut-in periods

• Fracture opening during hydraulic fracturing treatments ‒ using GEOMECH’s Barton-Bandis feature

New Advancements In Hydraulic Fracture Modelling

Existing Situation Dataset keywords: **$ Fracture RESULTS FRACTURE BEGIN RESULTS FRACTURE WELLNAME ‘Well 1'

Refinements: 17 wells 117 stages 8,129 refined blocks 203,225 refinement cells 32,516 property specs

~ 720,000 lines of input deck

REFINE 303,343,7 INTO 2 5 1 CORNERS RG 303,343,7 7550.0000 2*7562.5000 7575.0000 7550.0000 2*7562.5000 7575.0000 7550.0000 2*7562.5000 7575.0000 7550.0000 2*7562.5000 7575.0000 7550.0000 2*7562.5000 7575.0000 7550.0000 2*7562.5000 7575.0000 7550.0000 2*7562.5000 7575.0000 7550.0000 2*7562.5000 7575.0000 7550.0000 2*7562.5000 7575.0000 7550.0000 2*7562.5000 7575.0000 7550.0000 2*7562.5000 7575.0000 7550.0000 2*7562.5000 7575.0000 7550.0000 2*7562.5000 7575.0000 7550.0000 2*7562.5000 7575.0000 7550.0000 2*7562.5000 7575.0000 7550.0000 2*7562.5000 7575.0000 7550.0000 2*7562.5000 7575.0000 7550.0000 2*7562.5000 7575.0000 7550.0000 2*7562.5000 7575.0000 7550.0000 2*7562.5000 7575.0000 4*8550.0000 8*8560.5481 8*8562.1952 8*8562.8048 8*8564.4519 4*8575.0000 4*8550.0000 8*8560.5481 8*8562.1952 8*8562.8048 8*8564.4519 4*8575.0000 472.5700 2*472.5335 472.4970 472.5770 2*472.5417 472.5065 472.5770 2*472.5417 472.5065 472.5780 2*472.5430 472.5080 472.5780 2*472.5430 472.5080 472.5785 2*472.5435 472.5086 472.5785 2*472.5435 472.5086 472.5795 2*472.5448 472.5101 472.5795 2*472.5448 472.5101 472.5865 2*472.5530 472.5196 474.5700 2*474.5335 474.4970 474.5770 2*474.5417 474.5065 474.5770 2*474.5417 474.5065 474.5780 2*474.5430 474.5080 474.5780 2*474.5430 474.5080 474.5785 2*474.5435 474.5086 474.5785 2*474.5435 474.5086 474.5795 2*474.5448 474.5101 474.5795 2*474.5448 474.5101 474.5865 2*474.5530 474.5196

Solution? • Concise Fracture Definitions

• Remove the refinements keywords from the datasets ─ Fractures created upon simulator initialization

• Builder and Simulator share the same code ─ What you see in Builder is exactly what the

simulator will create

While We’re At It… Fracture Templates

• Contain refinement definitions • Re-use multiple fractures or wells • Single place to parameterize in dataset

Make Hydraulic Fractures a simulator keyword • Apply different fracture templates • Fracture properties recognizable in dataset • Parameterization of fractures available outside Builder

Fractures defined as an ‘Object’ • Assign properties by fracture name • Block Groups allow for quick & easy defining/editing

RESULTS PLNRTEMPLATE NAME 'Template_I_Direction' RESULTS PLNRTEMPLATE PRIMFRACWIDTH 0.0018 RESULTS PLNRTEMPLATE PRIMFRACPERM 100000 RESULTS PLNRTEMPLATE PRIMFRACTIP 100 RESULTS PLNRTEMPLATE END *PLNRFRAC_TEMPLATE 'Template_I_Direction' *PLNR REFINE *INTO 5 5 1 *BWHLEN 65 *IDIR *INNERWIDTH 0.6096 *LAYERSUP 0 *LAYERSDOWN 0 *PERMI MATRIX *FZ 295.3 0.2953 *PERMJ MATRIX *FZ 295.3 0.2953 *PERMK MATRIX *FZ 295.3 0.2953 *END_TEMPLATE

New Setup- Fracture Template Primary Width (Intrinsic) Fracture Perm (Intrinsic) Fracture Tip Perm Half-Length Direction Height (via Layers) Fracture Perm (Effective)

RESULTS PLNRSTAGE NAME 'Planar Stage 8' RESULTS PLNRSTAGE WELL ‘Well 1' RESULTS PLNRSTAGE DATE 2006-08-14 RESULTS PLNRSTAGE BASENAME ‘Well 1 - Frac' RESULTS PLNRSTAGE FRACS 'Well 1 - Frac 1' 'Well 1 - Frac 2' RESULTS PLNRSTAGE FRACS 'Well 1 - Frac 3' 'Well 1 - Frac 4' RESULTS PLNRSTAGE SLABS '262, 268, 275, 281' RESULTS PLNRSTAGE PERFOPTION 1 RESULTS PLNRSTAGE LAYERMIN 4 RESULTS PLNRSTAGE LAYERMAX 4 RESULTS PLNRSTAGE END *PLNRFRAC 'Template_I_Direction' 298,262,4 *BG_NAME 'Well 1 - Frac 1' *PLNRFRAC 'Template_I_Direction' 298,268,4 *BG_NAME 'Well 1 - Frac 2' *PLNRFRAC 'Template_I_Direction' 298,275,4 *BG_NAME 'Well 1 - Frac 3' *PLNRFRAC 'Template_I_Direction' 298,281,4 *BG_NAME 'Well 1 - Frac 4'

New Setup- Fracture Definition Fracture Name Well # of Fractures Template Application Block Group

Setup Comparison What does this imply?

Well with 4 stages:

~ 9500 lines of refinements ~ 5600 lines of property specif

Old:

New: 31 Lines Fast Loading

Fast Saving

Fast Generation

Block Groups Make Life Easier Refinements, permeability alterations, and non-Darcy flow corrections done automatically by simulator With Block Group definitions, apply additional properties to fractures:

• Relative Permeability Tables • Rock Types / Compaction Tables • Initial Saturations • Etc.

Define Block Groups by

Dual Permeability Systems • Matrix • Natural Fractures

Hydraulic Fractures • Main Fracture Conduit (Fractured Zone) • Enhanced Near-Fracture Region (Non-Fractured Zone)

Converting Old Datasets

• Builder and Results 3D views are the same as before

• Old datasets run with new simulator ─ No Conversion Required

• Old datasets can be converted to new syntax using Builder (automatically when saved) ─ May be easier and faster to work with

Workflow Demo

What is CMOST?

• Better understanding

• Identify important parameters

• Calibrate simulation model with field data

• Obtain multiple history-matched models

• Improve NPV, recovery, etc.

• Reduce cost

• Quantify uncertainty

• Understand and reduce risk

Easily Vary Propped Frac Properties & SRV Size

Propped Frac Properties: Half-length, Width, Perm, Spacing, Height & Perm Gradient

Stimulated Natural Frac Properties: Width, Perm

SRV Size & Shape: • # MS events per gridblock • MS Moment Magnitude • MS Confidence Value • Etc.

How is it Done? CMOST uses Master Datasets to specify parameters to be altered

• Datasets with CMOST keyword strings Files can be created:

• Manually • Through CMOST (CMM Editor) • Through Builder

Parameterization With CMOST

Physics-based EUR’s History-Match Run Progress Plot

Engineer only has to monitor History-Match progress……and so is free to work on other projects while CMOST does the rest!

Physics-based Optimization

# of Wells NPV

(MMUSD) 1 13.0 3 39.0 5 64.6 7 85.3 9 80.7

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1 3 5 7 9

NPV

, MM

USD

# of Wells

Time (Date)

Cum

ulat

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Oil S

C (b

bl)

2015 2020 2025 2030 2035 2040 20450.00e+0

1.00e+6

2.00e+6

3.00e+6

4.00e+6

5.00e+6

6.00e+6

Cumulative Oil SC OPT_1 WellCumulative Oil SC OPT_3 WellsCumulative Oil SC OPT_5 WellsCumulative Oil SC OPT_7 WellsCumulative Oil SC OPT_9 Wells

Cum Oil & NPV after 30 years vs # of Wells

Benefits of Reservoir Simulation Understand and predict tight & shale well production

• Reservoir heterogeneity • Well complexity • Physics of fluid flow & heat flow • Geomechanics • Geochemistry

Enable “physics-based” analysis and optimization of tight & shale plays in an efficient manner, when using CMOST:

• EUR Calculation & Validation • Well Completion Design Optimization • Well Spacing Optimization

Tight & Shale Reservoir Modelling: Challenges

• Lack of PVT data in Shale Liquids plays • Lack of BHP data • Shale reservoir property measurement is uncertain,

costly & time-consuming • Microseismic data acquisition and analysis is

not well understood or accepted • Frac Treatment design software lacks proper

modelling initiation and propagation of naturally fractured rocks

• Costly to acquire reservoir rock geomechanical properties and initial stress states

• Not enough Reservoir Engineers: • To conduct physics-based reservoir modelling work • Are cross-trained in Production/Well Completions Technology

and/or Geomechanics

• Technology discipline silos inhibit learning between companies and even within companies

Tight & Shale Reservoir Modelling: Challenges

• Constrain reservoir parameters using known relationships between natural frac geometry, width, perm & density

• These should not be independent variables

• Constrain rock-physics relationships • Rel perm & cap pressure should not be independent functions

• Natural fracture characterization via Discrete Fracture Network (DFN) modelling

Tight & Shale Reservoir Modelling: Opportunities

• Correlate Seismic Attributes & Microseismic analysis with “Fracability”

• Monitor production using Distributed Temperature Sensors & Tracer Surveys

• Incorporate production logging data into reservoir simulation history matching

• Predict optimum well locations and design multiple coincident well treatments using Geomechanics

• E.g. Simultaneous Fracs like Zipper Fracs

Tight & Shale Reservoir Modelling: Opportunities

Tight & Shale Reservoir Modelling: Lessons Learned Statistical Analysis of “early time rates” and “unqualified EUR’s” can lead to new oilfield “myths” that incorrectly become “rule of thumb”

• 30-day, 90-day, 180-day rate versus cumulative well plots that aren’t normalized for flowing pressure (BHP or WHP) and for “effective” propped fracture parameters are very misleading

• EUR versus cumulative production plots can be even more misleading given the uncertainty with which EURs are generally being determined using analytical-solution based production decline analysis methods

Tight & Shale Reservoir Modelling: Lessons Learned Reservoir Simulation can also be misleading if model design and physics is not appropriate for the problem at hand

• Shale well models that don’t use Logarithmically-Spaced grids yield misleading results

• Similar to models that don’t use radial grids around wells to model pressure transient tests

• Those models cannot properly model transient inflow performance behavior (IPRs)

Effect of Not Using LS-LR-DK Grids

Well-1 shale gas model constant perm fcd 60.irf

Time (Date)

Wel

l Bot

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essu

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si)

2000-2 2000-3 2000-4 2000-5 2000-6 2000-7 2000-8 2000-9 2000-10-1,000

0

1,000

2,000

3,000

Well Bottom-hole Pressure shale gas model_constant perm_fcd_60.irfWell Bottom-hole Pressure Shale Gas Model_Simple DK.irf

Simple DK approach cannot model the initial transient correctly because the grid blocks are too large!

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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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Canada USA ROW

Companies using CMG to Model Unconventional Reservoirs

2014 SPE Papers featuring CMG Reservoir Simulation Technology • 216 papers • 54 Unconventional, Tight or Shale, including

6 on Gas Injection EOR

1. CMG has the physics required to understand and forecast production from Unconventional Wells & Reservoirs

2. Import geologic models from geologic modelling software to jump-start your modelling workflows

3. Add planar, complex or mixed geometry propped and stimulated natural fractures to your models

4. Use microseismic data in the model building process

Why use CMG for Modelling Tight & Shale Plays?

5. Add only the LGR required to model transient flow from matrix to fractures

6. Easily and efficiently build single and multi-well models

7. Parameterize matrix & fracture properties & dimensions when doing history-matching & optimization,

• No limitations to only a few half-lengths, spacings, etc. • No need to manually pre-create

8. CMG’s track record of continually enhancing our capabilities and workflows for Unconventional Wells & Reservoirs

Why use CMG for Modelling Tight & Shale Plays?

Training

• Register for courses on www.cmgl.ca/training

• Available at worldwide CMG offices or on-site

• All skill levels • Contact: training@cmgl.ca

Vision: To be the leading developer and supplier of dynamic reservoir technologies in the WORLD

For more information: Please contact sales@cmgl.ca

www.cmgl.ca