The Importance of Data to Unconventional Oil and Gas

INDUSTRY - Oil and Gas, SOLUTION - Information Management, SOLUTIONS - Industry Solutions

AUTHOR

Fred Kunzinger, Senior Principal - Noah Consulting


With conventional resources, geoscientists evaluate plays to find areas with a hydrocarbon charge, a reservoir, and a trapping mechanism. The desired acreage is pursued, prospects are high-graded, and the best ones are drilled. Each function does its job and passes the results to the next function. The departmentalized nature of the work, the unhurried pace at which prospects are evaluated, and the rate at which wells are drilled, leaves time to manage the data as a prospect works its way through the life-cycle. In the unconventional world, all three factors (charge, reservoir, and seal) are combined in the one shale. Hydrocarbons are generated and retained within the shale without the migration and separate trapping of conventional reservoirs. Finding the hydrocarbons in a shale play is not the difficult part -- the challenge lies in finding the most productive “sweet spots” within the shale. Unconventional reservoirs shift the focus from mapping structural and stratigraphic traps to modeling the shale’s mineralogy and fractures. The race for acreage makes early entry into unconventional plays and locating their sweet spots critical. Prospective shales tend to cover large expanses, with wells spudded into them daily and drilled by the hundreds. Success depends on a model-based approach that holistically considers fractures, well design, mineralogy, production data and reservoir patterns. With the business operating at such a pace, sustainable success requires the implementation of well-defined data management capabilities. Data management success in the unconventional world hinges on three components: governance, integration, and analytics. "Governance" is a term that borders on overuse, however, data governance remains lacking in many companies. Implementing data governance does not mean creating a data-focused bureaucracy. It means translating business needs into adhered-to data management processes. It means defining roles and responsibilities for collecting and managing data. It means applying data standards transcending individual disciplines. Data governance also means understanding what data will be needed to make critical business decisions. In most companies, data integration means merging data from the production and accounting worlds. For the unconventional play, this level of integration falls woefully short. Because of the model-based nature of successful unconventional developments, the integration of data must span the entire value chain. Since drilling along the azimuth of the regional fracture pattern significantly increases production in unconventional reservoirs, providing the drilling department with surface and target locations is not enough. Drillers must understand the fracture patterns to design the well for optimum production. This alone will not ensure success, however. The fractures must be monitored after completion using production logs, tracers and microseismic. Mapping mineralogy and thermal maturity will help find the most commercial sweet spots (with wet gas as much as 75% more profitable than dry gas at current prices). The well’s production profile must be monitored and correlated to the geologic understanding of the shale. The monitoring of scaling in the well needs to be tied to water usage (source, chemistry and volumes). Linking the many data repositories associated with unconventional wells depends on master data management. Well data needs to be tracked consistently throughout systems, from prospect to divestiture, linking the traditional panoply of well identifiers such as “drilling spacing unit”, well name, unique identifier, government id, or ERP number. The unconventional play is more than the sum of its parts -- it is a way of doing business that is fully integrated with the ability to correlate data across the enterprise. The shale play is the new assembly line. After managing and integrating the data, the business can take operational efficiency to the next level through analytics. Analyzing drill bit performance, motor reliability, and mud composition can reduce trips and thereby reduce costs; analyzing multi-stage frack jobs can determine what works best for a particular area; and advanced analytics can optimize the entire well lifecycle. These analyses must not be limited to traditional methods because existing systems do not easily scale. The sheer volume of data requires systems capable of performing multivariate analyses in a timely manner. New technologies need to be tested and utilized. Some companies drill over 1000 wells a year in shale plays, completing over two wells per day. The difference between $10,500,000 per well and $11,000,000 per well over an entire year’s operations is half a billion dollars! Shale plays have a significant impact on oil and gas in North America. For these plays to be successful, energy companies need better data management capabilities to optimize their development and production efforts. Optimization depends on viewing the data as pieces in a much larger puzzle; a puzzle that makes more sense when viewed collectively rather than individually. Build data gathering into your unconventional resource development plan. Know the data you are going to need to solve problems and optimize efficiencies. Prepare to continually use the data to identify root answers. Most importantly, working in a holistic, model-based manner rather than in separate silos will contribute to success. Data governance, integration, and analytics will help companies operate safely and successfully in the fast-paced world of shale oil and gas.


ABOUT THE AUTHOR

Fred Kunzinger is a Senior Principal and Upstream Subject Matter Expert with Noah Consulting. Prior to joining Noah in the summer of 2012, Fred retired from Hess Corporation where he worked for nearly 23 years with postings in Tulsa, London and Houston with his most recent position being that of Senior Manager for Global Data Management. He has been a PPDM Board member for five years and is currently serving as the Chairman of the Board of the Association. Fred has a B.S. in geology from Notre Dame and an M.S. in geology from Old Dominion. Previous positions included time with Phillips Petroleum as well as the Defense Mapping Agency (a predecessor to the Geospatial Intelligence Agency). In 2011, Fred was a recipient of the Upstream Data Management Cornerstone Award at the 15th International Conference on Petroleum Data Integration, Data and Information Management, and has presented papers at the PPDM and PNEC Conferences as well as the Keynote at the 2011 TGS GeoForum in Houston. In his spare time, Fred enjoys golf and working with Habitat for Humanity.

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