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Researchers Find 18 Tcf Left in Fayetteville at About $4/Mcf

The venerable Fayetteville Shale has about 38 Tcf of technically recoverable reserves left, and 18 Tcf of that can be had with gas prices near $4/Mcf, according to a study by the Bureau of Economic Geology (BEG) at The University of Texas at Austin (UT).

The Fayetteville will continue to be a major contributor to U.S. natural gas supplies for years to come, with economically recoverable reserves of 18 Tcf through 2050, the study found.

The assessment is part of a four-basin study of shale gas reserves funded by the Alfred P. Sloan Foundation and follows the same methodology as the BEG's 2013 assessment of natural gas production in the Barnett Shale (see Shale Daily, March 1, 2013). Both studies integrate engineering, geology and economics and are claimed to be among the most rigorous assessments to date of production in U.S. shale gas basins.

Drawing on production data from all of the individual wells drilled in the Fayetteville from 2005 to 2011, the assessment estimates technically recoverable gas reserves for the region at 38 Tcf, of which 18 Tcf will be economically feasible to recover at gas prices near $4/Mcf.

Most other assessments of shale gas reserves have taken a "top-down" view of production, relying on aggregate views of average production, according to BEG. In contrast, this study takes a "bottom-up" approach, starting with the production history of every well and then determining what areas remain to be drilled, said Scott Tinker, BEG director. The result is a more accurate and comprehensive view of the basin, he said.

Integral to the project, BEG said, is a new method of estimating ultimate production for each well based on the physics of the system rather than the traditional application of a mathematical decline curve (see Shale Daily, Nov. 20, 2013). The authors believe this innovation offers a more accurate means of forecasting production declines in shale wells in the Barnett, Fayetteville and other basins.

The BEG team further enhanced the view of the Fayetteville Shale by identifying and mapping six production-quality tiers in the basin and using those tiers to forecast future production. The economic feasibility of production varies tremendously across the basin depending upon production quality tier, researchers found. Using the tiers, the researchers created and mapped an inventory of future feasible drilling locations based on economics and estimated gas in place.

In the pricing scenario of $4/Mcf, production from the Fayetteville reaches a plateau during the period of 2012-2015 and begins a gradual decline as the annual well count decreases. The BEG model can adjust for higher gas prices (and several other parameters such as pace of technological innovation), but according to the authors, the production outlook for the Fayetteville is "only moderately sensitive" to gas prices.

"The higher productivity tiers are, not surprisingly, more developed," said co-principal investigator Svetlana Ikonnikova, an energy economist at BEG. "The lower tiers remain uneconomic at almost any foreseeable gas price." Even within the tiers, however, distinct areas of the Fayetteville Shale show great diversity in productivity, with high- and low-performing wells sometimes existing side-by-side within the same production blocks.

With recent increases in U.S. natural gas production and the ensuing fluctuations in price, some analysts have attempted to label entire shale basins as "economic" or "uneconomic." Tinker cautioned against such labels. "Just as you find in conventional oil and gas basins, some locations within the Fayetteville and Barnett are indeed uneconomic," he said, "but other locations are highly profitable."

BEG plans to complete assessments this year of the Haynesville and the Marcellus shales, followed by a study of U.S. shale oil reserves, all funded by the Sloan Foundation. For more information on the BEG assessments and upcoming studies, visit the BEG-Sloan Foundation Shale Gas Assessment Study website.

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