Object Reservoir Inc., a services company providing complex reservoir modeling in unconventional gas plays, is rapidly expanding its Collaborative Exploitation Project (CEP) for the Marcellus Shale in northeast Pennsylvania and is looking into starting up a similar effort in the southwestern part of the state.
New participants joining the project include Chesapeake Energy Corp., Southwestern Energy Co., Seneca Resources Corp. and Talisman Energy USA, bringing the total companies currently engaged in the collaborative process to eight with the prospect for gathering information on 50 wells per company, or 400 wells.
Some of the companies signing on early were EXCO Resources (PA) LLC, Royal Dutch Shell (which bought East Resources Inc.) and Ultra Petroleum Corp. The project will remain open for participants to sign on for a couple more months, said Hamish Nicol, vice president of Global Business Development for Houston-based Object Reservoir.
The company also has run collaborative projects in the Haynesville and Montney shales. "We are increasingly successful in getting the companies we want in the projects. There are a couple more we would like to have in the northeast Marcellus." Nicol said.
Object Reservoir's technology and software, designed specifically for analyzing the performance of shale plays, "will help companies better complete and forecast well performance. It analyzes the signature of pressure as it flows into the well bore, how long and how much it flows, and what is ultimately going to be the real decline rate and how soon can we reliably predict it."
"The big issue is downspacing," Nicol said. Companies want to know how many wells to drill in a section. "They want to know, 'What are my real investment options?'" It amounts to "derisking the process and providing more defendable forecasts."
In southwest Pennsylvania "there are loads of first wells in a section; now they have to figure out how to make serious money. The big challenge is to get one of these big service companies to negotiate appropriate bottom dollar rates, which they can only do if they can give them a significant amount of business. Nobody's going to come out and do one well. To get a good price, you need to get to the industrial scale. So we're part of that collapsing the time scales to get to industrial development of the shale resource," Nicol said.
Object Reservoir has collected a huge database and while that database is proprietary to its clients, the company's engineers gain experience in working with all the wells. "It gives us an ability to look at things. In the last three to four months we have looked at over 700 wells across seven different plays in the United States and Canada. We expect to see five times that number in the next year.
"Our next big focus area is the Eagle Ford Shale. Clients have asked us to do a similar collaborative in the Eagle Ford. Also, some of them want us to extend the project in the Haynesville and make it much larger."
Nicol pointed out that the projects are not just his company doing the work and turning over the results. "We have meetings and workshops with the clients to facilitate the exchange of views." And the clients also are given the technology and a road map so they can do added data mining on their own
As opposed to the "voodoo" of decline curve-based projections, "we've developed a physics-based way to analyze these wells and do performance prediction," Nicol said. The company uses its own "Limits" software to produce more credible projections for potential investors.