Roadmap to Monetization of Unconventional Resources

Abstract

What has been regarded as unconventional by many has been conventional for the few that have developed viable, and in many cases, very profitable projects that succeeded in extending the envelope of recoverable hydrocarbons. The range of recoverable hydrocarbons is bounded by physical constraints like reservoir properties, unfavorable hydrocarbon characteristics, or in many cases, hydrocarbons still captured in the formations. The methods of extraction that have been devised to address such challenges frequently combine applications of enhanced recovery, intensive stimulation, or advanced drilling. The distinction between conventional and unconventional can be reasoned not in the context of new versus old, more or less prolific accumulation attributes, or the method of extraction, but in the approach that is followed. A conventional development approach would cover the entire field with increasing intensity; an unconventional approach would pursue intensive development sequentially from the more prolific to the less prolific parts of the field. Although it is easy to see the technical benefits of unconventional methods, their integration with economic and market parameters is necessary in order to provide a successful implementation. The purpose of this paper is to present a set of features that are found as common denominators in successful developments of such resources. These common features could be viewed as unconventional resource development principals that outline the areas where particular attention is required for their ultimate success. In that context, the influence of market pricing, cost structure and resource evaluation are examined and offer a platform for project implementation that can be viewed as a "road map". The basic premise in this reasoning is that while it is not possible to develop a universal technological solution, careful adaptation of technology to the subsurface and operational realities allow synergies to develop that improve the chance of economic success. The recognition of key risks in unconventional resource development is instrumental in addressing the reasoning in resource classification. In that sense, while geological risks are often viewed as key in conventional resources, unconventional resources carry more risks as more complex extraction methods are implemented. Once development commences, it could maintain a positive outlook with changing market conditions as the associated costs relate to some extent to fuel costs that are in turn dependent on the product prices. The long development cycle of such projects lasting more than 20 years reduces the exposure to fluctuating prices as long as a reasonable average trend is considered at the onset. With evolving methods of extraction, the oil industry is shifting focus from exploration into intensive exploitation. Inevitably, the terms unconventional resources and a non conventional approach present a new direction for realizing the fuel sources of the future.

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