DEVELOPMENT OF UNCONVENTIONAL RESERVOIRS IN PAKISTAN

By

Dr. M. Saeed Khan JadoonOGDCL, Islamabad

APRIL 11, 2011SERENA HOTEL ISLAMABAD

PROVOKING THOUHHTS

With the nuclear industry in crisis and oil prices on the rise, could the solution to our energy problems be in the ground at home? Daniel yergin on the promise of shale gas.

He ," states that the turmoil in the middle east is a "sea change" for the global oil market and that the U.S.A and emerging markets are most economically vulnerable to rising oil prices.

Outline of Presentation

Objectives Energy out Look Existing Indigenous Resource International Scenario Conventional & Unconventional Reservoirs Potential of Unconventional Resource Development Model Economic Consideration Summary

HOW TO MEET ENERGY REQUIREMENT OF THE COUNTRY

UNCONVENTIONAL ENERGY RESOURCE AVAILABILITY

DEVELOPMENT PHIL0SPHY

OBJECTIVES

Pakistan Energy Out Look

Pakistan Gas Out Look

Energy Resources Available To Us

Indigenous Resources of Oil & Gas

Hydroelectric

Nuclear

Solar & Wind Energy

Primary EnergySupplies By Source

Oil, 32.1%

Gas, 48.3%

LPG, 0.6%

Coal, 7.6%

Hydro Electricity, 10.6% Nuclear Electricity, 0.6%

Imported Electricity, 0.1%

Pakistan Indigenous Natural Reserves

Conventional Gas- 30 TCF

Oil 436, Million bbls

Tight Gas- 40 TCF Coal -185 Billion Tons

Sectoral EnergyConsumption By Source

INTERNATIONAL SCENARIOFOR UNCONVENTIONAL

RESERVOIR

World Un-Conventional Gas Resource

WORLDUN-CONVENTIONAL GAS

40-50 TCF Pakistan

European Unconventional Reservoir

India Shale Gas & CBM Projects

Started work on CBM 1993

Group of experts was formulated to collect and analyze data.

32 BLOCKS Have been given to different companies

Now India started Production from CBM

Next Few Years, Production will be 38 CM^3/day

ONGC had Recent Discovery of Shale Gas in West Bengal

Shale Gas Contribution in USA,18 % of the Total Production

Advance Resources International USA Gas Projected values from different Sources, 2009

INDIGNEOUS HYDROCARBON RESOURCES

Indigenous Oil & Gas Reservoirs

Conventional Reservoirs

Sandstone and carbonate Reservoirs.

With good reservoir properties have good capability of storage and Productivity

Reasonable Efforts for Exploration

Explored area is about 275,000 Sq km

550,000 Sq km is unexplored Current Production Oil: 60000-66000 bbl Gas: 4.15 BCF

Unconventional Reservoirs

Poor reservoir properties have capability of storage but poor Productivity

Tight Gas Reservoir

Shale Gas Reservoir

Coal Bed Methane

NOT DEVELOPED YET

Unconventional Reservoir Descriptions

Tight Gas Reservoir

Mostly Sandstone Reservoir

Good storage Capability but poor Producibility.

Distributed over Large Area of Pakistan

Advance Technology Need to Produce

Shale Gas reservoir

Exist in Shale

Source and Reservoir

Good storage Capability but poor Producibility

Distributed over Large Area of Pakistan

Advance Technology need to Produce

Unconventional Reservoirs

COAL BED METHAN (CBM) Gas is generated during Coalification Process

Gas Adsorbed on the Coal

Very poor conductivity

Distributed over Sindh & Punjab Province

Word 10 % Coal Deposits are in Sindh

Total Deposits are 185 billion tone.

Not developed Yet

No Conclusive Work

Known Tight Gas Reservoirs

Shale Sequence in Pakistan

Ghazij Shale Thickness (meters) Vastly Distributed- 100 -1200

Thalar Shale Vastly Distributed – 45 – 184

Samber Shale Vastly Distributed – 500- 600

Chichali Sahle Vastly Distributed – 35 – 130

Ghazij Shale Distribution

675

Dhodak

Pirkoh

LotiZin

Uch

J hal_Magsi

Sara_West

Badar

Qadirpur

340000 360000 380000 400000 420000 440000 460000 480000 500000 520000 540000 560000 580000 600000 620000 640000 660000

3040000

3060000

3080000

3100000

3120000

3140000

3160000

3180000

3200000

3220000

3240000

3260000

3280000

3300000

3320000

3340000

3360000

3380000

3400000

3420000

3440000

0 5000 10000 15000 20000 25000 30000m

1:420000

0751502253003754505256006757508259009751050112512001275

Thickness

Pakistan

Ghazij Shale

Scale

Contour inc1:420000

75

GHAZIJ SHALE ISOCHORE MAP

Talhar Shale

Ghazij Area

Chichali Area

Talhar Area

Coal Fields in Pakistan

Gas Potential in these Reservoirs

Source: Weatherford 2010

Unconventional Gas Resource

Tight Gas 40-50 TCF

Ghazig Shale Gas 20-30 TCF

Talhar Shale Gas 100 TCF

Coal Bed Methane 21 TCF (Recoverable- Cathy Oil Canada)

Samber Shale (Moin PPL) 60-80 TCF

TOTAL 241-281

Development Challenges

Evaluation Uncertainties

High Investment

Longer Production Time

Longer Payout Time

High Density of wells

Skilled Manpower

Environmental Issue

Political Stability

Will to Accept Challenges

Resolvable Success

Availability of Technology In World

Vertical & Horizontal well

Multilateral Wells

Hydraulic Fracturing

Stimulation Techniques

Multilateral Wells

DEVELOPMENT PHILOSPHY

Development Model-Integrated Approach

GOVT

Distribution Companies

ManufacturingIndustries

Power Producer

Exploration Companies

Exploration & Production Companies

Should Invest to Explore Tight and Shale gas

Exploration area for Tight and Shale Gas should be awarded to the companies

Price Incentives have been given

Freedom of Marketing of Gas to the Consumer

Manufacturing & Power Industries

Should have direct access to Energy Producer

Should have option of buying gas from Producer & paying Tariff to the distribution company for using the network if required

Reference Price should be according to the concession area

Distribution Companies should effectively assist for supply of gas to Industries

Consortium of Industry units to share the cost of energy.

Cost Effective Buisness Model

Exploration Companies- Consortium Work Program for next 3-4 years

• Drilling of Vertical, horizontal & Multilateral• Hydraulic Fracturing/Stimulation jobs

Service Providers-Consortium• Bring Relevant Technology• Efficient Execution of jobs• Cost effective Solution

Human Resource Development---Serious Consideration

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Need consortium of industry units for sharing of their cost of energy

No Misuse of Freedom

No Monopolization of any company weather it is service or distribution companies.

ECONOMIC EVALUATION

Production Challenge

Reference: Weatherford 2010

Probable Production Behavior

Brown Field with 8 year development

0

20

40

60

80

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Years of production

Gas M

MS

CF

D

Economic Model for Tight & Shale Gas(Brown Field )

GIIP: 1 TCF Recoverable Reserves: 240 BCF Number of wells: 25 Failure: 10% Gas Flow Rate: 5MMSCFD Development Time: 2 year Well Capex $: 478 Million Facilities: 50 Million Opex: 147 Million Field Life: 25 year GAS Price: $ 4.90/MMBTU IROR: 15 % Pay back: 8.5 year Royalty &Tex Included

Economic Model for Tight & Shale Gas(Green Field )

GIIP: 1 TCF Recoverable Reserves: 240 BCF Number of wells: 25 Failure: 10 % Gas Flow Rate: 5MMSCFD Development Time: 5 year Well Capex $: 478 Million Facilities: 124 Million Opex: 147 Million Field Life: 25 year GAS Price: $ 6.21/MMBTU IROR: 15 % Pay back: 6.5 years

SUMMARY

Enough unconventional Reservoir exist in the country

Unconventional Reservoirs are required to be evaluated by collection of more data by initiating Pilot Projects in Shale Gas as earliest as possible.

Exploration blocks may be awarded for unconventional reservoirs.

Economically, Projects in Shale & Tight Gas looks viable.

Human Resource Development to cater the demand of oil companies operating in Pkistan

Introduction of consortium concept of E & P companies for the planning of their work

Consortium of Service companies for cost effective solution of development of these Reservoirs.

Integrated Approach of all the stack holder is required to develop these unconventional Reservoirs

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THANKS