Middle East/North Africa Region Focuses on Tight Gas

As the era of the easy extraction of conventional hydrocarbon is over, energy companies across the world are tapping into difficult resources and developing unconventional reserves, such as shale gas and tight gas.

In the Middle East and North Africa region, results from recent gas exploration and appraisal activities indicate that the region holds substantial resources of unconventional gas, especially tight gas. Regardless of the existence of highly productive conventional gas fields in this region, tight gas-related exploration and appraisal activities in several countries in the region have increased and are expected to pick up pace going forward.

With this background, the SPE Middle East Unconventional Gas Conference and Exhibition (UGAS) was held in Oman to address the best practices and techniques used for the development of unconventional resources in the region. Under the theme “Unconventional and Tight Gas: Bridging the Gap for Sustainable Economic Development,” the conference highlighted the latest developments related to tight gas and shared success stories about the development of tight wells from regions all over the world. The 3-day conference highlighted the criteria, challenges, and environment required for successful unconventional gas production and how it implicates the long-term global supply of natural gas. Thirteen technical sessions along with poster and e-poster stations offered 90 presentations from more than 35 companies and
18 countries.

Delivering the keynote speech, Zaid bin Khamis al Siyabi, director general of oil and gas exploration and production at the Ministry of Oil and Gas in the Sultanate of Oman, said the Sultanate recently began searching for and exploring unconventional gas resources, and needs to make more natural gas available to local industries. “The importance of unconventional resources for the sultanate is really huge,” al Siyabi said.

Al Siyabi revealed that oil companies operating in Oman—such as Petroleum Development Oman, Shell, and BP—have drilled approximately 50 wells to explore unconventional gas resources using the latest technologies.

Darryl Willis, vice president resources, North American Gas, BP, said in his presentation titled “Development of Unconventional Resources: Past, Present and Future” that unconventional gas continues to be a journey of discovery and challenge. “The future of our industry is increasingly unconventional. In the US, about 40% of the gas comes mainly from shale gas,” Willis said.

Darryl Willis, Vice President Resources, North American Gas, BP What lessons have been learned from US unconventional projects? You have to enter unconventional developments recognizing that in many cases they will be challenging projects. Development costs at the outset may be comparatively high. So you must be committed to continuously improving your ability to drill and complete and produce wells, and continuously improving your ability to access the reservoir, incorporating seismic and rock properties. One size does not fit all with these reservoirs. The subsurface ultimately drives the development, and the reservoir over time will tell you what is required for the full-field development. Experimentation and innovation are critical to adding long-term value. What are the main reasons behind the success of the unconventional gas development in the US compared with other parts of the world? Incentives and infrastructure have been a critical part of the unconventional journey in the United States. Back in early 1980s, the government established fiscal incentives to encourage companies to tackle the challenges of tight gas, tight oil, and coalbed methane; subsequently, in later years, the development of shale gas has been able to leverage the infrastructure, expertise, and resources created for the tight gas back in the 1980s. Fiscal incentives and access to a robust supply chain and technical expertise matter. What technology lessons have been learned? One of the key pieces of technology is seismic data. We typically associate seismic data with the development of conventional wells. We have realized in tight gas and shale gas developments that seismic data can assist in identifying sweet spots of a reservoir, and also can help with well placement, ensuring that horizontal wells are optimally placed. The sweet spots in an unconventional reservoir can become the cornerstone of the overall development. What are the success factors that Middle Eastern and North African companies should follow to be successful in developing unconventional resources? They should leverage their seismic data and microseismic datasets across a play. They should also experiment with the drill bit. Finally, it is important to think deeply about where to place your well and how the performance of those wells fit within the overall understanding of the subsurface. Do you see potential for BP in the Middle East and North Africa in the development of tight gas? Tight gas opportunities in the Middle East and North Africa region are extraordinary, and my hope is that we will continue to leverage our expertise from North America into this region. The rocks have no idea where they are, and our job as scientists is to take our learnings from places where we have deep insights, like North America, and transfer them to rocks in places like Oman, Jordan, or Algeria.

The industry is now capable of producing gas from difficult geological structures at reasonable cost, making such resources economically viable, Willis said. “Among the success factors is the application of conventional techniques to unconventional, including the sweet-spot identification, integrated reservoir description, as well as the long-term development,” he said.
The success of the development of unconventional gas in the US occurred in part because of the introduction of new technologies, leveraging of seismic data through reprocessing, and improvements in geosteering in complex structural areas, in addition to the microseismic used to determine fracture-height growth, he said.

Willis said companies have to manage the uncertainties around such projects. “Uncertainties should be expected when developing unconventional resources. Conventional footprint is often the foundation of unconventional success,” he said. “Unconventional gas is a long journey, which requires leveraging the technology, finding sweet spots, and learning from the reservoir. The continuous improvement drives value, where experimentation is part of the journey.”

Larry Ryan, Business Director of Dow Oil & Gas, says tough environmental conditions are dictating technology requirements in the Middle East and North Africa Harnessing the Environment Extracting oil from the ground is a tough job, and environmental conditions can make it even more difficult and challenging. This is the case in some parts of the Middle East and North Africa region, where high pressure, high salt, and high temperature can make drilling operations challenging. Management of wastewater used during the oil extraction is another issue facing the industry in the region. “I think one challenge that is key to the Middle East region is water management, especially wastewater recycling and treatment. For example, Saudi Arabia has started developing shale gas, which requires implementing an efficient water-management system,” said Larry Ryan, business director of Dow Oil & Gas. Ryan said he is seeing increased interest in enhanced oil recovery (EOR) in the Middle East. “Companies are asking how they can get their recovery factor up from their current recovery factors of 40 or 50%,” he said. “While the focus has been on discussing the benefits of using CO2 and other chemical EOR methods, the main challenge in the region is the high temperature and salinity of reservoirs, conditions which prevent the chemicals from working properly.” Dow is actively engaged in developing technologies to address these and other challenges the region faces, and Dow Chemical is well known for its involvement in the USD 20-billion Sadara project, a downstream joint venture between Dow and Saudi Aramco. The company recently launched the Neptune Advanced Subsea Flow Assurance Insulation System, an end-to-end flow-assurance technology that protects and insulates subsea equipment, line pipe, and field joints. “The increase in deepwater exploration, especially in north and west Africa and Europe, has resulted in deeper offshore wells and therefore higher-temperature, higher-pressure environments,” said Ryan. “The temperature variations caused by high-temperature extraction processes in very cold subsea environments make it even more important to have effective, long-lasting insulation for the pipelines.” In the Middle East, Dow is also expanding its Amine Management Program to support local efforts to produce export-quality, low-sulfur fuel while meeting environmental emission standards, he said. “The Amine Management Program from Dow employs advanced analytical and modeling tools to identify opportunities for more efficient removal of H2S and CO2 from refinery gas,” he said. The program, which is used in Japan, North America, and other regions, is compatible with traditional amine-management. “Varying crude slates and tightening environmental regulations for sulfur and CO2 emissions can put substantial pressure on refineries to meet margin expectations,” he said. Recommendations may include improving amine efficiency through the use of specialty solvents. The program also offers training and startup support.

Bill Roby, senior vice president of worldwide operations and production engineering for Occidental Oil & Gas, said in his presentation titled “Unconventional and Tight Gas—Bridging the Gap from North America to the Middle East,” that challenges in developing unconventional and tight gas lie mainly in finding the right target, the right economics, the right plan, and the ability to execute.

“Unconventional gas is not everywhere,” said Roby. “So gas targets require sufficient size to be economically viable. Also, you must understand the rocks as development costs are critical.”

Roby asserted that there are many challenges in developing unconventional gas, but by applying the correct technologies in the right places, these challenges can be addressed easily. Compared with conventional gas wells, the design cost of tight and unconventional gas wells are high, along with a high early-life production decline. In addition, fiscal agreements significantly impact the economics of developing unconventional gas. “In the end, economics drive unconventional gas development, as cost control is critical,” he said.

Having the right plan to develop unconventional gas is key. The overall field-development plan requires a good knowledge of reservoir quality and deliverability, and the well productivity, its type, and spacing. A good water-­management plan, knowledge of the completion needs and the gathering and processing needs, as well as the development-staging plans and pace are also needed.

The right plan also necessitates knowledge of the location, and whether it requires single or multiwell pads, and well design, which could be vertical or horizontal, a single lateral or multilateral, in addition to the lateral length. Knowing the completions requirements also is essential, he said, including flowback and testing, artificial lift, and water management. Several completion techniques can be used, he said, such as “plug and perf,” openhole multistage, or abrasive perf with sand/jet. “The frac design, which helps in overall field-development plan, also requires sand strength, volume, and other considerations.”

Service sector sourcing is a challenge facing companies developing unconventional and tight gas fields, he said. It is important to hire high-quality service providers that enable the manufacturing process to be repeatable, reliable, and cost conscious. “The strategic service sourcing should also include integrated services rather than a single service provider, in addition to the greater vertical integration of operator considerations,” Roby said.

Colin Davies, vice president, corporate strategy for Hess, highlighted in his presentation the transformation of the gas sector in the US and how the independents took the lead in this sector. Companies considering developing unconventional resources need to adopt a different approach than they would use with conventional projects, he said. “Because of the different nature of exploration risk, the requirement of a sustained investment profile, and the (need for) operational efficiency, it is important to have a new approach when developing unconventional gas,” he said.

In the US, the development of unconventional gas was done mainly by independents rather than major oil companies. “US independents were the pacesetters,” Davies said.

Davies also compared the US unconventional gas success with the Middle East’s potential. “While there are several similarities between the two regions, Middle East countries need to work more on the subsurface, economics, and regulatory factors,” said Davies.

Regarding the subsurface, new workflows are required to test low data-density plays at low cost. For economics, Davies said that innovative policies will likely emerge in the Middle East, and the region’s existing regulatory structure may need updating.