Fracturing Webinar Presentation v2 PDF

Hydraulic Fracturing:
Breaking Rocks to Unlock

New Energy
Philip Budzik
EIA

Steven P. Mathis
Chevron

December 5, 2013
2
Recent Developments Help Reduce Impact of
Hydraulic Fracturing
Steve Mathis
Senior Completions Advisor
Chevron Energy Technology Company

The Application of Hydraulic Fracturing to
U.S. & World Shale Gas & Tight Oil Deposits
Philip Budzik
Research Analyst, Exploration & Production Team
Office of Petroleum, Natural Gas & Biofuels Analysis
U.S. Energy Information Administration (EIA)
Todays Presentations
About the ASME Energy Forum
3
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5
During the Webinar
Please type all questions in the box at the bottom
of your screen.

We will answer as many questions as possible
during the event.

Speakers will answer as many questions as they
can via e-mail.
2013 Chevron U.S.A. Inc. All rights reserved
Recent Advances Reduce
Potential Impact of Hydraulic
Fracturing Operations
Steve Mathis, Sr. Advisor
ASME Energy Forum, December 5, 2013
Hydraulic fracturing: where
have we been?
Current concerns
Recent advances
Where to next?

Understanding of effort being expended by industry to continually improve hydraulic
fracturing operations.
Know that this advancement will not be stopping in near future.
Hydraulic fracturing is a well-established and
safe technology.
We are always looking to improve what we
do.
The industry has provided significant
advances in safety and efficiency of
hydraulic fracturing operations, with more to
come.
Discussion Topics Key Messages
Desired Outcomes
Objectives
7 2013 Chevron U.S.A. Inc. All rights reserved
Hydraulic Fracturing
A Proven and Safe Technology
8
Used safely in the U.S. since 1949 on more than 1.2 million wells.
90 percent of oil and gas wells use hydraulic fracturing technology worldwide.
Not a technique used exclusively on wells for natural gas from shale.
Natural gas from shale operations are not inherently different from traditional
drilling and completion operations.
Shale operations change the scale of hydraulic fracturing.

Even though already safe, hydraulic fracturing
technology continues to advance and improve.
New equipment becoming available to further reduce air emissions and
dust.
Natural gas and dual-fuel pumps becoming more available.
Practical silica dust suppression systems being developed.
New pumping technology may lead to the ability to use a reduced number
of lighter weight pumps.
Technology being developed to further improve well site operations.
Chevron-developed deconstructible tanks help to eliminate the need for
earthen pits.
Improvements in pad containment matting reduce the volume of material sent
to landfills.
New fueling system helps to further reduce risk of diesel spillage during re-
fueling operations.
Improved fracturing fluids and pumping techniques help to reduce
freshwater use.

9
Natural Gas or Dual-Fuel Frac Pumps Help Reduce Air
Emissions
Mixing natural gas with diesel
significantly reduces air
emissions. Best results with
100% natural gas.
Pump noise is also reduced.
Greater operational efficiency
leads to less re-fueling.
Some operators moving
towards operating off of field
gas.
10
New Generation Turbine Frac Pump
Capable of Running on Virtually any Fuel
(Including 100% Natural Gas)
Converted Diesel Engines Can Run on
Dual-Fuel Mixtures)
2013 GreenField Energy Services,
Used with Permission
2013 Baker Hughes Inc.,
New Approaches to Dust Control
NIOSH reports that silica dust exposure during
proppant transfer may present a potential
hazard.
Various methods to reduce dust:
Do not allow sand to fall excessive distances.
Include vacuum systems/filters.
Cover transport belts and hatches.
11
2013 Industrial Vacuum,
Used with permission
Lighter Weight Pumps Help to Reduce Road Wear
Turbine Frac Pump
For equivalent Hydraulic
Horsepower, turbine is
half the size of diesel
powered pump.
Can run fewer trucks for
same amount of
hydraulic horsepower.
Can carry 1 pump per
truck to reduce road load

12
Description TFP Diesel Frac
Size Single Frac 8 x 9 x 11 40 45 Trailer
Weight Single
Frac
32,000 lbs. 65,000 lbs +/-
Two Turbine Frac Pumps on Single Trailer
One Turbine Frac Pumps on Bob Tail Truck
Improvements in Water Handling and Materials
Chevron patent pending
deconstructable tanks help to
eliminate need for earthen pits.
Reduced pad size.
Improved reclamation.

Improved matting
Reduced risk of leakage.
Less waste material.
Lies flat, reduced tripping
hazard.
13
Contained Fueling System Protects Against Spills or
Vapors
Hot-fueling is the practice of fueling pumps
while they are in operation.
When done, this process has the potential for
spillage.
Vapors may also be released.
New fueling system by Frac Shack helps to
mitigate these risks.

14
2013 Frac Shack International Inc,
New Fluids and Pumping Techniques Reduce Water &
Proppant Use
New generation frac fluids help increase ability to re-use water.
Improved efficiency of proppant placement.
Newly developed fluids and pumping techniques could offer improved
conductivity with less proppant.

New generation frac sleeves increase the number of sleeves, resulting in
economic pinpoint fracturing with less over-displacement, and no pump
down operation.
15
Conventional fracturing HiWAY channel fracturing
Instead of flowing through the proppant pack, hydrocarbons flow thru
stable channels, increasing conductivity by orders of magnitude
Lf effective
Lf propped
Lf hydraulic
Lf effective = Lf propped = Lf hydraulic
2013 Schlumberger,
2013 Team Oil Tools,
Conclusions
Hydraulic Fracturing is not a new technology.
Has been used safely for a long time on a great many wells.
Shale fracturing operations are not significantly different than
traditional applications.
Differences in scale of operations.
Also location of many operations is important consideration.
Industry works toward continuous improvement.
Operators and service industry are actively working to reduce the
potential impact of hydraulic fracturing operations on surrounding area.
Protection of people & environment is paramount.
Reduction in potential community impacts is also important.
Significant advances have been made over the past few years, further
improvements are coming.
16
Areas of Recent Improvement
Air emissions
Efficient, non-polluting engines
Dust control
Dust suppression and vacuum
systems
Truck traffic
Small pumps
Fewer pumps
Smaller jobs
Well site management
Improved material storage and
containment
Water use
Greater water re-use
Non-aqueous frac fluids
Novel pumping materials and
techniques
17
Future Direction
Further reduction in freshwater use.
Assisted through the development of novel, environmentally friendly,
fracturing fluids.
Pinpoint fracturing.
Improved techniques for monitoring fracture propagation.
Improved formation characterization only stimulate productive rock.
Reduced amount of pumping equipment.
Pinpoint fracturing allows lower pump rate.
Advanced fracturing techniques can reduce proppant use.
Seeking advancements in noise reduction.
Next generation pumps.

18
Acknowledgements
I would like to thank Chevron for permission to present this material.
I would also like to thank the following Service Providers for
permission to use images of their technology:
GreenField Energy Services
Baker Hughes Inc.
Frac Shack International Inc.
Industrial Vacuum
Schlumberger Inc.
Team Oil Tools
19
Questions
20
www.eia.gov U.S. Energy Information Administration Independent Statistics & Analysis
The Application of Hydraulic
Fracturing to U.S. & World Shale Gas
& Tight Oil Deposits
for
American Society of Mechanical Engineers Webinar
December 5, 2013

by
Philip Budzik, EIA, Exploration and Production Analysis Team

Outline
Interplay of geology, technology, and economics
U.S. experience in producing oil & gas from low
permeability geologic formations
EIA Annual Energy Outlook 2013 shale gas & tight oil
production projections
Recent EIA estimates of foreign shale gas and shale oil
resources
ASME Hydraulic Fracturing Webinar
December 5, 2013
22
Geology, technology, and economics

23
December 5, 2013
There are three main drivers of oil and natural gas production
and resource estimates
24
Technology Geology
Economics
December 5, 2013
Theory Experiment Practice
These three drivers impact resource estimation metrics
differently over time in an iterative process
25
Geology
Technology
Economics
Resources in
Place
(GIP)
Technically
Recoverable
Resources
(TRR)
Economically
Recoverable
Resources
(ERR)
Well-level data, incl. estimated ultimate recovery (EUR)
Thermal maturity Pressure Formation depth
Drilling costs Recompletions
Price of gas
P
Q
December 5, 2013

Technically recoverable resources (TRR)

26
Economic recoverability depends on
1. cost of drilling and completing wells
2. amount of hydrocarbon produced from an
average well over its lifetime, and
3. prices received for oil and gas production
could be produced with current
technology, but without consideration of
oil and natural gas prices and
production costs
Not to scale
proved reserves
(company financial assets)
unproved resources
(undiscovered or undeveloped)
December 5, 2013
Two approaches to determining unproved
technically recoverable resources (TRR)
27
U.S. estimates based on well
production data
Use statistical curve fitting of
a wells production history to
estimate the average
ultimate recovery (EUR) per
well; calculate average EUR
across all formation wells.
Use average well EUR with
other formation data (e.g.,
total acreage) to determine a
formations TRR
Foreign estimates based on
known geologic characteristics
Match foreign formation
geologic characteristics to a
U.S. formation analog
Calculation of original gas-
in-place
Determine recovery factor
based on clay content,
porosity, pressure, etc. to
calculate TRR
December 5, 2013
For the United States, EIA fits well production data to mixed
hyperbolic-exponential decline curves to estimate EUR
28
1985 vertical
well
EUR=1.41 bcf
2004 vertical well
EUR=0.46 bcf
2011 horizontal well
EUR=1.76 bcf
Classic hyperbolic decline curve
(Arps 1945):
Source: HPDI data from horizontal wells in the Newark East field in the Barnett Shale; EIA analysis
December 5, 2013
An average well in shale gas and other continuous resource plays
can also have steep decline curves, which require continued drilling
to grow production
29
0
500
1,000
1,500
2,000
0 5 10 15 20
Haynesville
Eagle Ford
Woodford
Marcellus
Fayetteville
million cubic feet per year
Source: EIA, Annual Energy Outlook 2012
1
December 5, 2013
Unproved technically recoverable resources (TRR) result from
the well analysis
30
Area (acres)
drainage area of a well
distribution of EUR/well
% of area not yet drilled
% area with potential

= unproved TRR
December 5, 2013
U.S. shale gas & tight oil experience

31
December 5, 2013
Shale oil vs. tight oil nomenclature -
why EIA uses the term tight oil
32
Much U.S. oil production is incorrectly identified as shale oil
production (e.g., Bakken Middle Member).
Hydraulically fractured vertical wells often produce from
multiple formations, of which some are shales and some are
not (e.g., Niobraras constituent subformations include
shales, carbonates, tight sandstones).
Only the Eagle Ford formation is a true geologic shale.
Tight oil is more encompassing and therefore a more
correct nomenclature.
EIA does distinguish between tight gas and shale gas
resources and production.
December 5, 2013
33
http://www.eia.gov/pub/oil_gas/natural_gas/analysis_publications/maps/maps.htm
U.S. shale experience sets the stage for global shale gas and shale oil
development
December 5, 2013
U.S. shale gas production was 28.9 Bcf/d in June 2013
approximately 43% of total U.S. dry production
34
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
10
20
30
40
50
60
70
2000 2002 2004 2006 2008 2010 2012
Non-shale gas production
Rest of US
Bakken (ND)
Eagle Ford (TX)
Marcellus (PA and WV)
Haynesville (LA and TX)
Woodford (OK)
Fayetteville (AR)
Barnett (TX)
Antrim (MI, IN, and OH)
Shale gas % of total
Natural gas production (dry)
billion cubic feet per day
Shale gas production
as a percent of total natural gas production
Sources: LCI Energy Insight gross withdrawal estimates through June 2013 and converted to dry production
estimates with EIA-calculated average gross-to-dry shrinkage factors by state and/or shale play.
EIA Natural Gas Monthly data through April, and STEO (July 2013)
December 5, 2013
35
Source: Drilling Info, and EIA, through March 2013.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
1
2
3
4
5
6
7
8
2000 2002 2004 2006 2008 2010 2012
Non-tight oil production
Eagle Ford (TX)
Bakken (MT & ND)
Granite Wash (OK & TX)
Bonespring (TX Permian)
Wolfcamp (TX Permian)
Monterey (CA)
Woodford (OK)
Niobrara-Codell (CO)
Spraberry (TX Permian)
Austin Chalk (LA & TX)
Tight Oil % Total Oil Production
Tight oil production
as a percent of total U.S. oil production
Tight oil production
million barrels of oil per day
U.S. tight oil production was 2.4 mmbbl/d in March 2013
approximately 32 percent of total US oil production
December 5, 2013
Geologic characteristics crucial to successful
shale gas & tight oil production
36
Porosity > 2% of volume
Total organic carbon content > 2% weight
Thermal maturity of kerogen (lower for oil, higher for gas)
Formation thickness more is better
Low clay content (clay does not fracture; brittle rock is best)
Depth formation pressure (important to gas production)
Oil-Gas Ratio 75:25 (important to oil production)
Orientation/alignment of internal formation stresses and
natural fractures

December 5, 2013
Geologic characteristics of select gas shales
37
Formation
Name
Depth
(feet)
Thickness
(feet)
Porosity
(percent)
Total
Organic
Carbon
(percent)
Thermal
Maturity
(R
o
,
percent)
Barnett
6,500 to
9,000
100 to
600
4% to 5% 3% to 8%
1.2% to
2.2%
Fayetteville
1,500 to
7,000
20 to 300 2% to 8% 3% to 8% 1.2% to 4%
Haynesville
10,500 to
13,500
200 to 300 2% to 9% 3% to 5%
0.7% to
>1.5%
Marcellus
4,000 to
8,500
50 to 200 3% to 10% 2% to 12% 1% to 2.5%
Woodford
6,000 to
11,000
120 to 220 3% to 9% 1% to 14%
1.1% to
3.0%
December 5, 2013
Technologies important to shale gas and tight
oil production
38
Horizontal well drilling, with laterals reaching 10,000 feet in
length (~2 miles)
Multistage hydraulic fracturing, with up to 40 or more
separate stages
Proppants to keep the fractures opened, with ceramic
proppants used in deep, high pressure wells
Hydraulic fracturing water additives, to improve proppant
transportation into the fractures, to prevent rock/clay swelling,
to reduce viscosity, to prevent the growth of bacteria, etc.
Micro seismic technology to visualize the number of fractures
created, their orientation, and their length
December 5, 2013
Annual Energy Outlook 2013
shale gas and tight oil projections
39
December 5, 2013
Shale gas leads growth in total gas production through 2040
40
U.S. dry natural gas production
trillion cubic feet
Source: EIA, Annual Energy Outlook 2013 Early Release
0
5
10
15
20
25
30
35
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
Associated with oil
Coalbed methane
Tight gas
Shale gas
Alaska
Non-associated onshore
Non-associated offshore
Projections History
2011
December 5, 2013
U.S. tight oil production leads a growth in domestic production
of 2.6 million barrels per day between 2008 and 2019
41
U.S. crude oil production
million barrels per day
Source: EIA, Annual Energy Outlook 2013 Early Release and Short-Term Energy Outlook, February 2013
Projections History 2011
Alaska
Tight oil
Other lower 48 onshore
Lower 48 offshore
STEO Feb. 2013 U.S. crude oil projection
December 5, 2013
Recoverable shale gas and tight oil resources
are highly uncertain
42
Considerable variation in well production for neighboring
wells.
Oil production decline rates are highly uncertain, no long-
term history of production.
Of the formations that are producing shale gas and tight oil,
most have production from a limited number of wells,
clustered in a few areas. So a large portion of the formation
has not been extensively production tested.
A significant number of untested geologic formations.
Technological progress could make shale gas and tight oil
wells more productive and less costly in the future.
December 5, 2013
Technically recoverable shale gas and
shale oil resources outside the U.S.
43
December 5, 2013
Basins with assessed shale oil and shale gas formations within
42 countries, as of May 2013
44
Source: United States basins from U.S. Energy Information Administration and United States Geological Survey, other basins from ARI
based on data from various published studies
December 5, 2013
Volumetric approach (used for 2013 study)

45

Geology cutoffs used to estimate volume and concentration
Minimum TOC (>=2%)
Prospective Depth Range (1,000 m to 5,000)
Thermal Maturity Windows
Shale Mineralogy
Other (Overpressure, Geologic Complexity, Volumetric Data)
Apply risk factors to estimate in-place volume
Apply recovery factors to estimate recoverable resource
Too thin
TOC >= 2.0
Oil window
December 5, 2013
Top ten countries with technically recoverable shale resources
not necessarily economically recoverable
46
Shale gas
Rank Country Trillion cubic feet
1 China 1,115
2 Argentina

802
3 Algeria 707
4 United States

665
5 Canada 573
6 Mexico 545
7 Australia 437
8 South Africa 390
9 Russia 285
10 Brazil 245
World total 7,299
Shale oil
Rank Country Billion barrels
1 Russia 75
2 United States

58
3 China 32
4 Argentina 27
5 Libya 26
6 Venezuela 13
7 Mexico 13
8 Pakistan 9
9 Canada 9
10 Indonesia 8
World total 345
Source: United States: EIA and USGS; Other basins: ARI.
Note: ARI estimates U.S. shale oil resources at 48 billion barrels and U.S. shale gas resources at 1,161 trillion cubic feet.
December 5, 2013
Technically recoverable shale oil and shale gas resources in the
context of total world resources
47

Crude oil
(billion barrels)
Wet natural gas
(trillion cubic feet)
Total World
Shale / tight oil and shale gas 345 7,299
Non-shale 3,012 15,583
Total 3,357 22,882
Increase in total resources due to
inclusion of shale oil and shale gas 11% 47%
Shale as a percent of total 10% 32%
Source: 1. ARI 2013; 2.O&GJ Dec. 2012 and USGS 2012; 3. U.S. EIA
Note: Recovery factors for shale oil (3% to 7%) tend to be lower than recovery factors
for shale gas (20% to 30%). One reason for this phenomenon is that oil molecules are
physically bigger than natural gas molecules, limiting movement through pore spaces.
December 5, 2013
Reproducibility of shale development may have limits
48
Many key factors support production from U.S. shale resources that
do not exist in many other countries.
Foreign resource quality and geology uncertainties - shale
productivity will remain highly uncertain until these formations
are production tested by a large number of wells
Foreign surface ownership and minerals rights are usually
severed, with the governments owning the mineral rights; joint
ownership as in the U.S. provides an incentive for development
Foreign availability of production companies and contractors
with critical expertise and technology
Pre-existing gathering and pipeline infrastructure
Public acceptance of hydraulic fracturing, land use, and
availability and disposal of water/wastewater
December 5, 2013
For more information
49
U.S. Energy Information Administration home page | www.eia.gov
Short-Term Energy Outlook | www.eia.gov/steo
Annual Energy Outlook | www.eia.gov/aeo
International Energy Outlook | www.eia.gov/ieo
Monthly Energy Review | www.eia.gov/mer
Today in Energy | www.eia.gov/todayinenergy
December 5, 2013
Additional Slides
50
December 5, 2013
Eagle Ford shales gas-to-oil ratio varies
dramatically across the formation.
51
December 5, 2013
Shale Resources | October 31, 2013
52
December 5, 2013
Shale gas and tight oil well design
Multiple-stacked formations that are several thousand feet
thick permit the use of either vertical or horizontal wells. The
Niobrara is an example of such a formation with multiple sub-
formations. The Permian Basin also has multiple stacked
formations.

In regions with a single formation that is less than 500 feet
thick, horizontal wells are the preferred well design.
53
December 5, 2013
Estimated ultimate recovery (EUR) calculated from individual
natural gas well production data shows most wells are
concentrated around mean. Fort Worth Basin natural gas
54
bcf/well
Number
of wells
Average
EUR
minimum
maximum
25
th
percentile
mean
median
75
th
percentile
Source: EIA analysis, EUR = total projected production over 30 year life of wells
billion cubic feet/well
December 5, 2013
Fit individual wells distribution of EUR in North Dakota
Bakken play by county
55
MBbls
minimum
maximum
25
th
percentile
mean
median
75
th
percentile
Number
of wells
Average
EUR
December 5, 2013
EIAs projections focus is on the timing of production; the
modeling focuses on these parameters
56
average initial production (IP) rate per well
average decline curve (can vary by region and vintage)
IP & decline curve define the Estimated Ultimate Recovery (EUR)
per well, which is directly related to the formations TRR
Other parameters
well drilling, completion, and operating costs
number of active rigs
how many wells a rig can drill per year (rig productivity)
well spacing (acres per well)
remaining undrilled acreage
December 5, 2013
AEO2013 U.S. projected annual tight oil production
57
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2010 2015 2020 2025 2030 2035 2040
Niobrara
million barrels per day
Source: U.S. Energy Information Administration, Annual Energy Outlook 2013, Reference Case
Bakken
Eagle Ford
Permian Basin
Other
December 5, 2013
58
Q&A
Thank you for attending!
Continue the conversation about
fuel cell vehicles and stations by
participating in an ASME Group
on ASME.org.

Join us for the next webinar in
November on the topic of
Hydraulic Fracturing.
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Learn more:
60
Appendix
61
About the Presenters
Steve Mathis
Senior Completions Advisor

Steve Mathis is a Sr. Completions Advisor for Chevron Energy Technology
Co. in Houston Texas. He is responsible for providing the Chevron
Operating Companies with up-to-date information concerning technology
advances and best practices related to completing wells for shale
resources.

Prior to joining Chevron in 2011, Mr. Mathis spent the first 11 years of his
career with the Drilling and Completions Division of Exxon Production
Research Company, where he worked in the area of Drilling Mechanics and
Hydraulic Fracture modeling. Following that, he has worked the past 18
years with Baker Hughes in all areas related to Sand Control Systems. In
this role, he developed best practices and provided technical support to
field operations related to standalone screen installations, as well as
horizontal gravel pack, cased hole gravel pack and frac pack completions.

Mr. Mathis has a BSc and MSc in Geotechnical Engineering from the
University of Arizona. He has worked in the oil industry for 31 years.
62
About the Presenters
Philip Budzik
Research Analyst, Exploration & Production Team
Office of Petroleum, Natural Gas & Biofuels Analysis
U.S. Energy Information Administration (EIA)

Mr. Budzik has been with the Energy Information Administration (EIA)
since 2001. He currently works in EIA's Office of Petroleum, Natural Gas &
Biofuels Analysis. Prior to joining EIA, Mr. Budzik worked for 15 years at
the Natural Gas Supply Association (NGSA); leaving the NGSA as its Vice
President for Regulatory Affairs and Technical Analysis.

Mr. Budzik has also worked for the National Coal Association (now known
as the National Mining Association), Energy and Environmental Analysis
Inc., and the Mitre Corporation.

Mr. Budzik received a Bachelor of Science in Physics at the University of
Illinois (Urbana, Illinois) with High Honors in 1973, and a Master of Science
in Engineering from Thayer School of Engineering, Dartmouth College in
1976.

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Breaking Rocks to Unlock

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