The goal of this presentation is to discuss the critical issues involved in developing an effective technology strategy for optimizing reservoirs. I’d like to focus more on unconventionals (shale gas, shale oil, tight gas, etc) because they really rely on new technologies in order to obtain commercial levels of oil and gas production. The reservoirs tend to have low permeability / low porosity and thus have been unproducible historically speaking. However, with the advent of new techniques of horizontal drilling and multi-staged hydraulic fracturing, with tight cluster patterns, along with infill drilling, stacked pays, pad drilling, it is possible to produce often almost astonishing volumes considering these are onshore, and previously unproducible zones. However, there are always challenges. The first is the fact that the new technologies are new – which means that someone gets to be a guinea pig. The early-adopters are going to benefit from the possibility of dominating the market or the technology-space. However, the price is high, and they may not be able to maintain their position as soon as high costs start to kick in. As the technology turns into a truly disruptive phenomenon, the innovators can win. However, they need to have a strategy in order to do so – otherwise, others will benefit from the expensive “lessons learned” and often painful victories. Similarly, those who purchase their entry into new technologies (and new plays), may find there are pitfalls if they do not have a good technology strategy in place. They may pay too much, acquire the wrong type of technology, or worse – they may obtain technology and a leasehold position that are not ideal, and ultimately cannot achieve goals.

1. Technology Strategy Considerations
in Reservoir Optimization
Susan Smith Nash, Ph.D.
AAPG

2. Real-Life Scenarios
Stage 1 Operations: Acquiring Acreage / Selecting
Locations / Managing Operations
Stage II Operations Beyond HBP: Strategic Development
Capital Issues: Investors, Partners, Mergers, Acquisitions

3. Realistic Concerns
• Fluctuating (and low) gas prices
• Rapid decline curves (and not sure why)
• Escalating drilling, completion, operating costs
• Extremely heterogeneous reservoir

4. Who are you talking to?
• Technical team (including specialists / managers)
• Executive level (since your strategy will shape the
overall trajectory of the company)
• Land and legal team

5. Match Technology to Overall Goal
• Common understanding of organizational
mission / vision
• Predictable financial behavior (if you’re a
public company, Wall Street hates
uncertainty; if you’re looking to sell, so do
potential buyers)
• Leadership:
• 10 years in the future
• 20 years in the future
Susan Smith Nash, Ph.D.
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6. Field/Reservoir Development
• Capacity-building infrastructure, built for future
financial flexibility
• Assume continued ownership
• Assume eventual merger or divestiture
• Assume “proof of concept” flipping
• Assume NOC partnering (and “selling” your
ability to train and perform effective technology
transfer to build technological know-how and
capacity within their human capital)
Susan Smith Nash, Ph.D.
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7. Leadership
• Simultaneous Scenarios
• Long-term
• Near-term
Susan Smith Nash, Ph.D.
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8. Leadership: Current Volatility
• Political climate: does this affect the types of approaches
you can take to identify sweet spots and exploit them?
• Environmental climate: aquifers? Water quality?
Droughts? Induced seismicity?
• Unpopular reconnaissance tactics
• Unpopular drilling approaches
• Unpopular completions
• Unpopular Enhanced Oil Recovery
• The Shock of the New
• The “Freshness Factor”
• The Allure of the Fantastic
Susan Smith Nash, Ph.D.
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9. Technology Strategy
“What do you think is the single technology that will
make the most significant difference in optimizing oil and
gas shale production in North America?” (World Oil /
Shale Technology Review, July 2013)
•Hydraulic fracturing
• Optimizing frac stages: reduce water and proppant per
well
• Horizontal lift to dewater horizontal gas wells
•Water management
•Drilling optimization
Susan Smith Nash, Ph.D.
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10. Strategy & Definitions (“Sweet Spots”)
Recognizing the definitions are functions of current
technological limitations (or perceptions of such)
• Unconventionals / Shale Plays
• Brittleness (and ways of determining it)
• Fracture networks
• Faults and other structural determiners
• Porosity (granular / secondary / dolomitization,
etc.)
• Permeability
• TOC and maturation factors
Susan Smith Nash, Ph.D.
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11. Strategy & Definitions (“Sweet Spots”)
Recognizing the definitions are functions of current
technological limitations (or perceptions of such)
• Deepwater
• Turbidite architectures
• Compartmentalization due to permeability barriers
• Salt deformation, etc.
Susan Smith Nash, Ph.D.
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12. Business Drivers: Technology Strategy
• Can impede sweet spot-driven approach (need to hold
the acreage or continuous drilling clause, as in some
unconventionals and also in offshore blocks)
• Can restrict the type and amount of technology used
(need partner “buy-in” for expensive seismic
acquisition and/or processing / re-processing)
• Cost-benefit analysis / ROI for each important set of
data and/or test
• List and include in AFE and/or Joint Operating
Agreement
• Can cause one to miss the window for the tests / data
gathering (example: seismic, cores, logs, etc.)
Susan Smith Nash, Ph.D.
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13. Partners, Teams, & Technology Strategy
• Partner issues (disagreements, non-payment, election
not to participate) can lead to the wrong focus in belt-
tightening – need to re-think the “difficult choices”
• Engineers and geologists must be able to see through
some tactics used in well-timed production
manipulations (just before earnings reports, etc.)
• Lack of midstream facilities can skew numbers, and
weaken case for new locations and/or tests: Service
companies recommending a path of action need to be
well aware of any and all midstream issues, and also
the big picture
Susan Smith Nash, Ph.D.
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14. Monitoring Progress As You Go
• Measurements and Analytics
• What metrics do you gather as you go?
• How do you know they’re appropriate?
• Meshing metrics / cluster analyses
• Decisions that must be made as you go
• Cluttered, undifferentiated, potentially obfuscating data
• The danger of oversimplification
Susan Smith Nash, Ph.D.
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15. Multi-Disciplinary Strategies
• Examining “multi-disciplinary”
• Blending
• Overlaps
• New lenses
• How is multi-disciplinary strategic?
• Requires an approach to do it well
• Leadership is a must
• Visionary leadership
• Emulatory leadership
Susan Smith Nash, Ph.D.
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16. Benefiting from
MultiDisciplinary Strategic Decisions
• Technological breakthroughs
• New adoptions: of technique and also in new
applications / places
• Where something “must” be done, due to time /
cost / depth / complications
• Examples: new types of core analyses / innovative
frac techniques / processes / imaging / logs /
integration
Susan Smith Nash, Ph.D.
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17. How Do You Gain an Edge?
• Consortium?
• University of Oklahoma (shales / geomechanics)
• Colorado School of Mines (play-based: Niobrara / Bakken /
Vaca Muerta)
• BEG (deepwater / Marcellus)
• DIY research?
• ExxonMobil’s upstream research lab
• Service companies?
• Breadth of knowledge, experience, hands-on
• Sometimes under pressure
• Consultants?
• Experience, vision, may be booked up
• Contractors?
• Ephemeral resource?
Susan Smith Nash, Ph.D.
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18. Achieving Strategic Objectives with
Technology
• Geology / Geophysics
• As many studies as you can
• Cores / reservoirs / analytical tools / logs / petrophysics
• Nano-scale
• Smart sensors (drilling, frac’ing, production)
• Drilling / Completions “Proof of Concept”
• Integrate geology / structure / fractures with drilling data /
production data (fractures / joint sets / pressures
• Integrate & bring together data sets, seek patterns
• Seismic / microseis / cores / petrophysics / imaging
• Tie to production
Susan Smith Nash, Ph.D.
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19. Analytics / Big Data: The Road Ahead
• Cluster analysis
• Patterns
• Integration of different knowledge sets
• What’s relevant? What’s not?
Susan Smith Nash, Ph.D.
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20. Reality
• Must think ahead to potential business-
driver impediments and be sure to
anticipate
• Develop a preemptive strategy to be able to
obtain the data needed to make good
decisions based on best practices and
utilization of best technologies
Susan Smith Nash, Ph.D.
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