Non-conventional gas exploration is ramping up in Australia, and it’s not just coal seam gas deposits that are attracting attention. Beukelman & Associates Engineering Director Paul Beukelman outlines non-conventional gas exploration and production options, drawing upon the United States’ experience to date.
Non-conventional oil and gas is a relatively new concept to the petroleum industry. It relates not to the characteristics of the oil or gas but rather to where the oil and gas is held and produced from underground.
Non-conventional reservoirs are those units which, although bearing hydrocarbons, have previously been bypassed due to low permeability or poor hydrocarbon recovery test results.
While conventional reservoirs require the presence of the seal and a geological structure to accumulate gas, this is not strictly the case for non-conventional reservoirs.
It is generally accepted that there are four types of non-conventional gas: coal seam gas (CSG), shale gas, tight gas and methane hydrates. The first three of these are traditionally developed from onshore fields, to enable a lower cost base to be maintained.
Coal seam gas
In the case of coal seams, gas is generated within the seam during the coalification process. Whilst the majority of the gas is expelled and migrates to conventional traps or escapes to the atmosphere, some is absorbed by the surface of the coal.
The amount of gas stored is related to the properties of the coal and the hydrostatic pressure of water in the coal seam. Gas production occurs when water is removed from the coal seam. This lowers the pressure in the seam, causing gas to desorb from the surface of the coal and produce to the well. Coal seams found in commercial fields have a high absorption capacity. The range is usually 100-800 cubic feet per tonne for most coal seams found in the US.
The opportunities for CSG production are well known in Australia as production is currently booming in Australia’s east coast, with this growth being located in the Queensland and northern New South Wales coal deposits. CSG production is supplementing conventional gas production to meet domestic demand. Excess CSG production is also being ramped up for future LNG export opportunities.
Shale, although having a degree of gas absorption similar to coal, is more like tight rock in that the majority of gas is stored in void space in the reservoir, identical to conventional reservoirs. The difference is that shale rock has very low permeability. This can result in an inability to produce gas at economic rates and recoveries without considerable fracturing stimulation.
Shale gas development has predominantly been taking place in the US and Canada. There the technical advancements in hydraulic fracturing and horizontal drilling have been used to maximise the borehole contact surface area with the shale, to improve the productivity and hence economics of the wells. There are well over 15,000 producing shale gas wells in the US.
The opportunities for shale gas in Australia are currently being evaluated by numerous players, especially in the Cooper Basin. Other prospective areas are the Perth and Canning basins in Western Australia and the Beetaloo Basin in the Northern Territory. At present there is no commercial production of shale gas in Australia.
In simple terms, tight gas is conventional gas which is difficult to extract. Tight reservoir units generally have low porosity and very low permeability.
In a tight reservoir the porosity and permeability may have been greatly reduced as a result of compaction, cementation and recrystallisation in the formation. The reservoirs are typically sandstone and carbonates with a matrix porosity of 8-10 per cent or less and permeability of 0.1 millidarcy or less, exclusive of fracture permeability.
This low permeability means that many more wells are needed to effectively drain a tight gas field. In addition, the wells need to connect with as much of the reservoir as possible. Techniques such as fracture stimulation or horizontal drilling are used to increase connection of the well with the low permeability rock. Multilateral wells may also be used, involving several horizontal wells being drilled in different directions, originating from a single vertical well. Some wells have ‘fishbone’ geometries, with a central ‘spine’ and up to 30 small boreholes drilled off at the sides.
The opportunities for tight gas in Australia are currently also being evaluated by numerous players, with the Perth, Cooper and Gippsland basins already having proven tight gas reserves. As at present there is no commercial production of tight gas in Australia.
Methane hydrates are methane trapped in a crystal structure with water. These occur in cold sea water or are formed during gas processing at high pressures. The production of methane hydrates is still considered technically challenging and is not economically viable at present.
Supply and demand
EnergyQuest puts Australian domestic demand for gas in 2009-10 at 1,036 petajoules per annum (PJ/a). An additional 902 PJ is exported as LNG from Western Australia and the Northern Territory. CSG supplies 195 PJ – equivalent to 10 per cent of total demand – and is sourced predominantly from Queensland. As there is no current shale gas, tight gas or methane hydrate production, the remaining
90 per cent of supply is sourced from conventional fields.
The United States is the world leader in non-conventional gas production. A high-level review (as reported by CIGI Energy Blue Print, March 2010) indicated that in 2008 natural gas production in the United States was 19.4 trillion cubic feet (Tcf). (Note 1 Tcf ~1,000 PJ.)
This was broken down as follows;
- Conventional gas production: 55 per cent
- Tight gas production: 30 per cent
- CSG production: 9 per cent
- Shale gas production: 6 per cent
Australian growth opportunities
From the US figures it can be readily seen there is a considerable upside to tight gas and shale gas, which are yet to be commercially produced in Australia.
In the US, growth of non-conventional gas production was promoted by federal tax credits and technology research sponsored by the Department of Energy and the Gas Research Institute.
Other factors stimulating the sector in the United States include the availability of nearby gas gathering infrastructure, high gas prices from 2003 to mid-2008 and cost-effective drilling rigs and related oil field services, including fracture stimulation equipment.
In comparison, Australia to date has had low domestic gas prices (approximately $3 per gigajoule), deep tight fields, comparatively easier access to alternative sources of gas, limited gas infrastructure near the non-conventional gas fields and limited availability of drilling rigs.
However, the Australian gas price has been rising and pressure has been placed on alternative sources of gas supply in order to increase the level of supply security.
In addition, the Australian Government, along with state governments, is promoting non-conventional gas developments. As an example, the Western Australian Department of Mines and Petroleum has committed $80 million to promote the development of non-conventional fields through its Exploration Incentive Scheme, which includes funding for innovative drilling in greenfield areas, geophysical and geochemical surveys, and 3D mapping. A review is also being undertaken of the resource royalty regime for non-conventional gas.
Given the United States’ level of non-conventional gas supply, Australian federal and state government initiatives and Australia’s desire to have alternative sources of gas supply, it would be fair to say that the future for non-conventional, gas in Australia is bright.