Vaca Muerta - The Leading Shale Play in Latin America

2-4 December | Buenos Aires, Argentina InterContinental Hotel

Assessment of Vaca Muerta Formation Shale Oil Production Decline-Curve Analysis

Direccin de Estudios
December, 2012

Anticlinal Picn Leuf

Nicols Gutierrez Schmidt, Julio C. Alonso y Adolfo Giusiano

www.energianeuquen.gov.ar

ngutierrez@neuquen.gov.ar jcalonso@neuquen.gov.ar agiusiano@neuquen.gov.ar

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Outline
Introduction to Neuqun Basin
Source Rocks of Neuqun Basin Vaca Muerta Formation: Ro, TOC, Tickness, Area

Oil production of Neuqun province

Production of Conventional and unconventional Oil Bajada del Palo a-7 well

Production decline-curve analysis

Analysis of Decline models Forecast of Vaca Muerta Shale Oil production

Discussions

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Neuqun Basin

Cuenca Neuquina

Baha Blanca

Buenos Aires

Neuqun

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Source Rocks of Neuqun Basin
Vaca Muerta
Upper Agrio Lower Agrio

Los Molles

Lower Quintuco

Vaca Muerta

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Vaca Muerta Formation

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Vaca Muerta Formation

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Vaca Muerta Formation

Vaca Muerta Formation

Area with potential for oil and gas exploration

Area: 3,508,900 acres (14,200 km2) Tickness: to 984 ft (300 m) Ro: 0.6 to 1.2 % (oil) TOC: 2 to 8 %

DRY GAS

WET GAS

OIL

Conventional and Unconventional Oil Production

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Conventional and Unconventional Oil Production
Oil and Condensate production in the Neuqun province was 115.5 Mbbl/d (18,386m3/d) in July, 2012.

Main fields: El Trapial-Curamched (Chevron Argentina S.R.L) Puesto Hernndez (Petrobras Energa S.A) Chihuido de la Sierra Negra (YPF S.A.)

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Bajada del Palo a-7 well
Target: Evaluation of Vaca Muerta (1983) Depth: 9,160 ft (2.792 mbbp)
Vaca Muerta Top

Ro=0,6 (oil window) TOC=4%. Thickness: 410ft (125m)

Shale Thickness (Passey et.al 1990)

Perforations Tordillos Top

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Bajada del Palo a-7 well
Fracture Fracture ?

August 2012
State: In effective production. Art. Lift: Beam Pump. Oil Prod. = 54.7 bblpd (8.7 m3/d) Oil. Cum = 752.3 Mbbl (119.6 Mm3) Prod. time: 27 years. Hyperbolic Match Di:0.024 A.n b: 1.5 Dmin: 6%/yr EUR @ 2030: 875.4 Mbbl

Plus Oil: 63Mbbl

Production forecasting Decline analysis

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Declination models

To take into account:

Very-low permeability reservoirs Wells with hydraulic fracture stimulation Flow transient for long time Drainage area is not necessarily circular What type should be used? Minimum production time for reliable forecast?

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Declination models

ARPS Hyperbolic Stretched Exponential Model Duong Model

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

ARPS Hyperbolic Curve

where: t: time (months) q(t): rate to time t (m3/d or bblpd) qi: initial rate (m3/d or bblpd) to t=0 b: Arps parameters Di: Initial decline

qi, Di y b

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

ARPS Hyperbolic Curve
50

To Di and qi constants

THEORETICAL BASIS FOR ARPS DECLINE EQUATION: Well or reservoir in boundarydominated flow (BDF) Production at constant BHP Constant radius drainage No transient flow data

bblpd

b= 1.8 b= 1.5
0.5 0

Solution for 0<b<1 In 24 months time there are no significant differences between in the curves with b from 1.5 to 1.8. Special attention on b estimation on short production periods.

b= 0.5
120 24 48 72 96

b= 1
144 168 192 216 240 264
month

288

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

ARPS Hyperbolic Curve
35000 30000 25000

32%

Cumulative (m3)

20000 15000 10000 5000 0 0 12 24 36 48 60 72 84 96 108 120 132 144 156 168 180 192 204 216 228 240 252 264 276 288 300 Month

For a period of 25 years, keeping constants Qi and Di, there is a difference of EUR of 32% between b=1.5 and b=1.8. Comparing the first b value with b=1, the difference is 47% less.

47%

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Modified Hyperbolic Model
VERY LOW PERMEABILITY RESERVOIRS: MODIFIED HYPERBOLIC MODEL Best-fit b values almost always > 1 In many cases EUR are over-estimated. Flow transient for large time periods.
100

10

m3/d

Dmin
1

0.1 144 192 240 288 336 Meses 384 0 48 96

Combination with exponential curve (minimum terminal decline rate, Dmin) makes the model applicable, giving a reasonable reserves to finite time.

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Bakken Shale Horizontal Well
Example: North Dakota Bakken

EUR @ 30 years 546Mbbl (86.000m3) Fracture stages: 28 to 32. Lateral length: 9,186 ft (2,800 mts)

qi = 459 bbl/d (73 m3/d) b= 1.4 Di= 0.197

Source: J. Mason Oil Production Potential of the North of Dakota Bakken (February, 2012)

ARPS parameters:

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Production decline-curve analysis Methodology
Estimation of b and Di parameters by fitting of production data with the mathematical model and by minimizing squared error (MS Solver Excel). The wells with more production history are used A maximum and minimum is considered for estimation of the type well. (Source: SEN Cap. IV)

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Production decline-curve analysis Study zone

Dry Gas

Lower Quintuco
Wet Gas

Oil

Vaca Muerta

Zone of production wells.

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Production decline-curve analysis Study zone
Vertical wells
Fracture stages: 3 h average: 330 ft (100 m)

Horizontal wells
Lateral length: 3,281ft (1,000 m) Fracture stages: 10 xf: 130 ft (40 m) h average: 164 ft (50 m)

Analysed wells results

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Vertical Wells - Fm Vaca Muerta
100

16,000 14,000
Max. well

Vertical-type well Vaca Muerta

Cumulative (m3)
Med. well Min well Nq.VMUT-2 Nq.VMUT-3 Nq.VMUT-4 Nq.VMUT-1 Cum. Max Cum. Med Cum. Min

Production rate (m3/d)

12,000
10

10,000 8,000

EUR @ 25 years: 176,120 bbl (28,000 m3) Range: 98 Mbbl 620 Mbbl Arps parameters: qi= 200 bbl/d (32 m3/d) Di=0.45 b= 1.8 Dmin= 6%/yr
EUR @ 25 yrs (m3) 42,500 27,900 15,600

6,000 4,000 2,000

0.1

0 0 12
Months

Max. Well Med. Well Min. Well

qi (m3/d) 54 32 28

b 1.69 1.81 1.30

Di n.yr 0.45 0.46 0.40

Dmin (%/yr) 6 6 6

24

t @ Dmin (yrs) 9.75 9.11 12.66

q @25 yrs (m3/d) 1.51 1.03 0.45

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Horizontal well - Fm Vaca Muerta
100 70,000

Production rate (m3/d)

40,000 10 30,000 20,000 10,000 1 0

Cumulative (m3)

Only a well with considerable production period.

60,000 50,000

Horizontal-typed well Vaca Muerta

EUR @ 25 years: 389,000 bbl (61,800 m3) Arps parameters: qi= 336.5 bbl/d (53.5 m3/d) Di=0.25 b= 1.8 Dmin= 6%/yr

Source: CAP IV SEN

0 12 24 36 48 60 72 84 96 108 120 132 144 156 168 180 192 204 216 228 240 252 264 276 288 300
Months

Nq.VMUT-5(h)

Horizontal well

Cum. Hor. Well

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Vertical wells Vs. Horizontal well - Fm Vaca Muerta
100

70,000

Horizontal Well vs. Vertical Wells

389Mbbl

60,000 50,000

Production rate (m3/d)

x 2.2

Cumulative (m3)

10

Vertical type well Nq.VMUT-2 Nq.VMUT-3 Nq.VMUT-4 Nq.VMUT-1 Horizontal well Nq.VMUT-5(h) Cum- Vert. Type well Cum. Hor. Well

40,000 30,000 20,000 10,000

176.1Mbbl 1

0.1

0 0 12 24 36 48 60 72 84 96 108 120 132 144 156 168 180 192 204 216 228 240 252 264 276 288 300
Months

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Horizontal well Lower Quintuco + Vaca Muerta
100

Production rate (m3/d)

Only a well with considerable production period.

140,000 120,000

80,000 10 60,000 40,000 20,000 1 0

Cumulative (m3)

100,000

Horizontal well Lower Quintuco + Vaca Muerta EUR @ 300 meses: 812,416 bbl (129,160 m3)

Months Hor. Well QTUC+VMUT

Sourse: CAP IV SEN

Nq.QTUC-VMUT-1

Cum. QTUC+VM Hor. Well

Arps parameters: qi= 500 bbl/d (80 m3/d) Di=0.125 b= 1.8 Dmin= 6%/yr

0 12 24 36 48 60 72 84 96 108 120 132 144 156 168 180 192 204 216 228 240 252 264 276 288 300

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Lower Quintuco + Vaca Muerta Vs. Vaca Muerta
100 140,000 812Mbbl 120,000

x 2.1
Production rate (m3/d)
10

100,000 80,000 447.8Mbbl 389Mbbl 60,000

x 2.2

40,000 176.1Mbbl 20,000

0.1

12

24

36

48

60

72

84

96

108

120

132

144

156

168

180

192

204

216

228

240

252

264

276

288

Months

300

Cumulative (m3)

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Discussions
Based on the study is considered that:
It can adjust with decline curves for the analyzed wells, obtaining values of EUR that differentiate the performance between horizontal and vertical wells and different producing intervals, besides giving results comparable to other shale plays. The approach taken in this study of rate production decline is comparable with that adopted in others basins, such as Bakken Shale. It is indicative that there would be better performance in the horizontal wells in the Vaca Muerta formation, increasing it by a factor of 2.2 from vertical wells, which are also increased by a factor of 2.1 with the participation of lower Quintuco.

Assessment of Vaca Muerta Formation Shale Oil: Production Decline-Curve Analysis

Discussions
The Arps parameters have values in the order of other shale plays estimations with a average value of b, for Vaca Muertas wells, of 1.8. The Di value can vary from 0.45 to 0.25.

Might be considered that a production period of at least two years can get production forecasts with significant reliability.

From the analyzed wells it would be indicator that the EUR is directly proportional to the initial production rate, being it related to well completion (fracture design and number of fracture stages).

Any questions?

Thanks for your attention