Unconventional and Conventional Hydrocarbon Resource Economics: A Look at the Fundamental Differences and How Countries Can Address the Needs of Unconventional Resource Exploitation

Abstract

North America is not unique in the abundance of unconventional hydrocarbon resources (in particular, shale), yet it is the only place thus far that has seen significant progress in their extraction and monetization. This success has been driven by a flexible land leasing system for drilling rights, a mature infrastructure network for oil and gas transportation, a favorable fiscal regime, a well-established and very active service industry, and easy access to capital and world leading technologies. To what extent are these attributes singular to North America, and to what extent can the extensive development of unconventional resources seen in North America be replicated in other parts of the world? Many countries have well established and successful conventional E&P activities and fiscal/contractual terms, but have struggled with the question as to how applicable these terms are to unconventional resource exploration, evaluation and development. This paper will seek to identify the key differences in the application of North America’s leasing, regulatory and fiscal regime to shale development, as compared to alternative systems applied elsewhere in the world. The authors start by examining the fundamental cost and production profiles of conventional and unconventional wells in two North American onshore plays, and then in two potentially competing North American capital investment opportunities in order to establish whether there is anything fundamental in the economics of unconventional exploitation that requires different treatment. This analysis is then used to consider economics under cost, regulatory and fiscal regimes outside of North America.

Spontaneous Imbibition of a Wetting Fluid Into a Fracture With Opposing Fractal Surfaces: Theory and Experimental Validation

“…They include low permeability gas shale's and tight gas sandstones, and are of growing economic importance. 1,2 The development of hydraulic fracturing, or "fracking", technology has been the key to exploiting unconventional reservoirs. This method is based on horizontal drilling, and involves the injection of large volumes of water, chemical additives, and suspended solids ("proppants") into the subsurface at high pressures.…”

Rock Fracture Sorptivity as Related to Aperture Width and Surface Roughness

“…Spontaneous imbibition is also relevant to unconventional reservoirs such as tight gas shales and sandstones (Cui et al, 2014; Alfarge et al, 2017). The main method used in exploiting these reservoirs is hydraulic fracturing, also known as fracking .…”