17 Economic Uncertainty And Risk Analysis

Thursday, 27 May 2010
1:30 PM - 4:30 PM
Platinum 10

A METHOD TO QUICKLY ESTIMATE THE PROBABLE VALUE OF A SHALE GAS WELL

Paper number: 17-3
Program: Theme Sessions
Time: 2:30 PM – 3:00 PM

Authors

Abstract

Producing shale gas requires intensive drilling and massive fracturing. Faced with rapid rate decline, limited funds and gas price fluctuations, deciding on number of wells to drill is problematic. First and foremost, a fast and reliable estimate of the probable range of a new well's value is needed. This paper demonstrates an evaluation method that integrates uncertain key factors ‑ price, costs, rate, reserves ‑ to give a probable value range. As a less expensive alternate to simulations, several authors have applied various PDA* (FMB** & production type‑curves) methods to analyze performance and forecast future production of CBM, shale and tight gas wells. We give test results from some of these methods using selected parameter estimation techniques. Comparisons to simulated and field data are given. A range of possible future gas prices are computed from predictive models. These are combined with production forecasts, and probable development and operating costs in a stochastic economic model to obtain profitability estimates. Unconventional gas wells are an important addition to US energy supplies. This paper refines the tools necessary to deal with the uncertainties of these supplies in this troubled economic environment.