Tight Gas Sand Resource Appraisal: Incorporating the Best Features of Current Resource Appraisal Methodologies

Vello A. Kuuskraa
Advanced Resources International, Inc., Arlington, VA
vkuuskraa@adv-res.com

Background. Currently, three organizations perform periodic assessments of tight gas sand resources, with a focus on technically recoverable resources. These organizations are:

• The Potential Gas Committee (PGC), that uses an experts approach to estimate recoverable gas resources for the major domestic natural gas plays, including major tight gas sand plays.
• The U.S. Geological Survey (USGS), that uses a “cell-based” approach to estimate technically recoverable resources for major domestic continuous-type natural gas petroleum systems, for most (but not all) major tight gas sand basins.
• Past and current work supported by the U.S. Department of Energy/National Energy Technology Laboratory (DOE/NETL), that seeks to estimate the resource in-place, for major tight gas sand basins and formations. Judgment and/or an internal recovery model is used to estimate technically recoverable resources.

Two additional organizations utilize the resource information generated from these three resource assessments, with augmentation by additional data gathering and outside resources and experts.

• The U.S. Energy Information Administration (EIA) uses a combination of USGS, PGC and its internal and contract expertise (Advanced Resources International) to make estimates of tight gas sand resources and annual projections of tight gas sand reserves and production.
• The National Petroleum Council (NPC) uses a combination of Gas Research Institute and USGS data and industry workshops to provide estimates of tight gas sand resources and periodic projections of tight gas sand production.

Observation of Past Resource Assessment Performance. The presentation takes a historical look at the resource assessments and the use of these assessments for projecting tight gas sand production. Not surprisingly, each of the assessment approaches have strengths as well as opportunities for improvement. A quick look at the past performance (to be pursued in more detail during the AAPG Vail 2005 Hedberg Research Conference) is that:

• The resource estimates of the Potential Gas Committee, the organization with the longest track record of resource assessments, have increased steadily as more emphasis has been placed on evaluating tight gas sand and other unconventional gas resources.
• The gas in-place resource estimates, performed for DOE/NETL first by USGS and currently by E2S, have yet to be widely used in national level studies or annual outlooks, although they provide a valuable foundation for future work.
• Resource estimates by the USGS, the most recent entry into tight gas resource assessments (starting with their 1995 National Assessment), have fluctuated greatly between the 1995 and the current, still underway, study.

A historical look at the use of these resource assessments by DOE/EIA in their “Annual Energy Outlooks” for projecting unconventional gas and tight gas sand production shows that, so far, these projections have been quite conservative when compared with actual performance and production data, as shown on Table 1. The use of these resource assessments by the National Petroleum Council are not sufficiently transparent to enable an outside analyst to provide an independent appraisal.

Purpose of the Presentation. The purpose of the presentation, “Tight Gas Sand Resource Appraisal: Incorporating the Best Features of Current Resource Appraisal Methodologies”, is to examine how resource appraisals, and particularly their use in making economics-based projections of domestic natural gas production, could be improved.

The main theme is that each of the current three major resource assessment methodologies has particular strengths. If these three methodologies could be combined into a single approach, they would provide a more sound and valuable basis for making natural gas supply projections and policy decisions, including making decisions on technology investment and resource access.

Foundation for the Presentation. The presentation will draw on recently completed work (by the author) that includes updating the resource assessments, performance (reserves per well, productivity, dry hole rates), and state of maturity of approximately 50 major domestic tight gas sand plays for use in the EIA National Energy Model (NEMs) and the upcoming DOE/EIA Annual Energy Outlook.

Table 1. Projected vs. actual production for 2000.