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SPE
SPE/DtE
8945
ECONOMICS
(F DEVONIAN
SHALE,COALSEAMAND
SIMILAR
SPECIAL
APPALACHIAN
GASSOURCES
his paper was presented at the 1980 SPEDLIE Symposwrn M unconventional Gas Recovery held In Pittsburgh. Pennsylvania, tdti~ 18-21, 1980. The material is subject to
]rrection by the author. Permission to copy is restricted to an abstract of not more than 300 words. Write: 6200 N. Central ExPwy., Dallas, Texas 75206
.
ABSTRACT
~-
0
0
Production
Production data are presented on the basis of
typical l~ighand lowyleld methann wells (Table 3).
The production data pertain solely to removing methane
from coalbede in advance oi miningby surface vertical
boreholes. The production profiles reflect composite
coalbed degasificationexperience from a group of
wells ~~ the Pocahontas NO .3 and Pittsburgh CoalThe production profiles represent wells
beds.
that inclu~e stimulation and continuing desline over
the 15 year analytical per%d.
It is recognized that
in an actual field project individual wells could vary
widely from the norm.
Results and Projections
The analytical results of the discounted cash
flow - return on investment computations are presented In Table 4.
The results show that production
from a higher volume production well is econo~ally
viable at al Pricesa
Unfortunately, experience is
unable to provide assurance of achieving production
The high volume
volumes as presente? in this case.
producer represents limited oper~cing experience in
the Pittsburgh coalbed where netural fracturing has
created unique production circumstances.
I!
~JillkIII
It is, therefoce,the bestf candidate for the development of methane extraction expansion within the
Appalachian vtates. At present 100 million cubic
feet per day (or approximately 36 bcf per year) of
methane is wasted co the atmosphere from the Pittsburgh vein alone.
If over the next 20 years ten
percent of the total 700b:? of methane were to be
recovered for commercial application then 70 bcf of
methane would be added to theproducible reserves.
Considering that a vertical well has about a 20 year
life and total producible reserves of 120 mmcf, then
the 70 bcf of methane could be recovered ~<th
Similarly, a vent shaft - horizontal
600 Wdb.
hole recovery system has about a five yea- premining
life span and 1,000 mmcf producible resemes and,
accordingly, 70 vent shafts would recover thy 70 bcf
producible reserves.
Since these few examples areinsufficient evidence of potential opportunities, the approach to
estimating future reserves must otherwise depend on
judgmental analysis.
Alternatively, eight groups containing 50 vertical wells spaced at 1,000 feet intervals,and
including 22 premifiingvent shafts with 6,000 lineal
feet each of horizontal boreholes would be sufficient
There
to recover this volume of methane (70 bcf).
are at least eight large operator..or utilities with
mining operations of sufficient zlze to achieve this
minimal recovery rate.
ECONL?fICSOF DEVONIAN SHALE, COAL SEAM AND SIMILAR SPECIAL APPALACHIAN GAS SOURCES
Production
At a price level of, say, $2.50/mcf the opportunity wi.tlbe present to induce tha necezsary experimentat3.on. At this price other constraining factors,
especially the gas rights issue, might beresolved
through cooperation, especially with suc ceding gas
price increasee. While any estimate # futcre producible reser~es must necessarily be based on factors
other than experience -- such as future mining
activity - it would appear that the required technology refinements wtiilenumerous, do not need tc be
major.
Alternatively, as reported, the higher cost producers, mainly the larger utilities, were not developing this source since the return did not justify
the investment at current prices. ~is result ia
.
190
. .
.
RICHARD M. MILLER AND NORMAN E. MUTCHLER
J
191
. .
ECONOMIC5 OF DEVONIAN SHALE, COAL SEAM AND SIMILAR SpECI~ APPALACHIAN GAS 8ovR~ES
192
Accordingly, at a price of $2.50/mcf with deregulation of difficultsource gss only, the potential
producing reserves over the next 20 years from
Other Difficult Sources may be in the range of
20-30 tcf, or an average of 1 to 1.5 tcf per year.
The bottom of the range (20 tcf) essentially corresponds to the potential from Devonian Shale.
The
similaritiesbetween the Devonian Shales and the
slightly more attractive low permeable shallow well
gas sources permit an order-of-magnitudeestimate
for Difficult Sources that corresponds to the more
rigorously derived Devonian Shale estimates. The
upper range (30 tcf) ie a very tentative estimate
reflecting the growing interest and hopefully potentials in deep well development, tight sandstones (and
some limestones).
It is noted, however, that the potentials for
expanding the recoverable reserve base may be
slightly higher in this category (20-30 tcf over
20 years) for the followiug reasons:
1. Other D3ifftcultSources encompasses all
other marginal gas sources at variotisdepths shallow to very deep.
2. Low permeable shallow wells, such as those
in the Berea, Clinton, Medina, etc., have
quick flush and slightly greater yields.
.,*
RICHARD M. MILLER AND NORMAN E. MUTCHLER
. .
ARC 77-2-co-5246, Study on Dev@ian She;e, Coal Seara
3. Ohio, a major Appalachian industrial state, is
and Similar Special Appalachian as Energy Prospects
encouraging greater expansion of both low perand Opportunities.
In the
meable shallow wells and deep wells.
four yeare since its inception, the results
in terms of ticreaeed drilling - are quite
noticeable.
4. Deep well drilling, while a high risk venture,
may pay off in the discove~y of large volume
reserves.
1.
2.
3.
4.
CONCLUSIONS
7.
193
Congress of the United States, Office of Technology Assessment, Status Report or,the Gas
Potential from Devonian Shales of the Appalachian Basin, November, 1977.
,,,
TABLE 1
NATURALGAS PRODUCTIONAND USE
WITWIN
APPALACHIANREGION- 1976
BILLIONBTU
NaturalGaa
Production
State
Natural0ss
Use
Alabama
161,748
Georgia
46,627
63,375
Kentucky
Mississippi
26,910
75
9,164
1,619
54,455
752
25,515
21,334
Mmyisnd
New York
North Carolina
Ohio
40,996
104,048
Pennsylvania
89,975
274,583
38,795
26
124,661
SouthCaroline
Tennessee
Virginia
West Vf,rginia
Totals
6,937
11,568
146,311
104,276
350,066
1,003,600
Utility
small
LargeIndependent
Independent
Producer/Large
Producer-Consumer Producer
VerticalBoreholeMethod
ExtractionCoet
$52,000
$ 5.2,000
CollectionSystemCost
$14,300
$ 14,300
$33,500
$6,300
TOTAL,DEVELOPMENTCOST
$66,300
$66,300
$39.,80/,
Operationand Maintenance
(PerYear)
$ 1,00G
$1,000
ExtractionCoat
CollectionSystemCost
TOTAL,DEVELO=
COST
Operationand Maintenance
(PerYear)
:1,000
N/A
NJA
$566,000
$60,000
$626,000
4 2,500
TABLE 3
Year
..
ah
LOW Yield
Yield
13,900
6,800
13,300
6,500
6,100
U ,800
12,200
5,800
11,700
5,400
11,200
5,000
10,600
4,700
10,100
4,300
10
9,500
4,000
11
9,000
3,600
Ii
8,500
3,200
13
7,900
2,900
14
7,400
2,500
15
2,200 (i.e.
6,000 cfd)
TABLE 4
$2.00
$3.00
22.0
34.2
54.3
11.3
22.3
PRODUCTION
High Volume
Low Volume
.,
TABLE 5
TABLE6
-$XMFOSITE
REVIEWOF ECONOMICDATA
DEVONIANSHALE
TYPICAL
PRODUCTIONPROFILEFROM
PRODUCERTYPEi
DEVONIANSHALEWELL
(mcfper year)
(1977Dollare)
,.
DevelopmentCosts
$80,000
ProducerConsumer
Independent
Producer
!&&Q!
160,000
$50,000-.125,000
(small
Independent)
YEAR
-..
$S0,000- 160,000
(Large
Independent)
OperaRingCosts
Price
$500 - 2,000
$1,000-2,000
$0.295- 1.42hcf**
(Interstate)
3,
12,
18,
18,
18,
17,
16,
14,
11,
10
10,
11
9,
12
9,
13
9,
14
8,
15
8,
1
2
;**?nxmer
FERC ragulatadprice (1977).
TABLE 7
RETURNON INVESTMENT,AFTERTAXES
1
(Percent)
DEVONIANSHALE
WELLHEADPRICEPER MCF
$1.42
.
$1.75
~,
:0.5
12.4
21.3
10.0
17.6
14.9
NormalHydraulicFracturing
Low Coet - $117,500
AverageCcat- $140,400
High Cost . $162,500
.J
. ...
**.
TABLE8
DEVONIANSHALE
ESTIMATEDECONOMICRESERVEBASE
(1978- 1998)
Price
Number
of Wells
20 Year
Reserve
Addition
Baae Caae
$2.oo/mcf
14,36>
4.0
DeregulateAll Gaa
$2.25fmcf
25,565
7.0 tcf
$2.5olmcf
61,200
17.0 tcf
3 & DeregulateDifficult
3A
sources
4
TechnologyImprovemxit
tcf
*Undetermined,
but well tn exceaaof Scenario3; aarliestdate
equals19SS.
500
450
!
400
350
300
250
~.
200
150
100
70 bcf
MinimumBaee -
Case
50 --
...~
_~
~?
197s
1980
1985
Time
fn Years
1990
FIGURE1 - PROJECTEDAPPALACHIAN
MSTNANEGAS FROM COALB~S
I
1995
-f~
199s
.
....
.,1
24
(4) /
22
/
20
18
I
I
17 tcf
/
(3a)
16
/
/
14
12
/
10
8
6
PhaseI Expansion
..
4
2
0
1980
1985
Time in Years
199C
FIGURE2 - PROJECTEDAPPALACHIANDEVONIANSHALE
,J
1395
1996