HGS General Lunch: Tight Gas Sand Exploration

The role of unconventional resources in the nation’s energy portfolio has been steadily increasing since the early 1900’s! Once the ugly duckling desperately seeking recognition, unconventional resources now make up more than 45% of total domestic production and that proportion is expected to grow. Within the suite of unconventional plays, tight-gas sandstones now account for between 35% and 40% of total unconventional production and exploration firms both large and small seek unconventional targets as part of their portfolio. For years, discussion of unconventional gas plays was restricted to sedimentary basins in North America, but as worldwide demand for natural gas increases, petroleum provinces throughout the world are being reexamined for their tight-gas potential. These international ventures reference North American analogs where subsurface and performance datasets are voluminous. To many, a discussion of tight-gas sandstone plays conjures an image of limited exploration risk and widespread drilling programs, where field boundaries are diffuse and where the predominant risk-element is assigned to the cost or efficacy of extraction technologies (drilling, completion, and transportation). To be sure, there are tight-gas plays that approach these characteristics, however, there are equally large and profitable tight-gas plays that carry all the subsurface risks commonly associated with more conventional petroleum systems in which fields are more aerially restricted and where exploration must be more surgical. Both types of tight-gas opportunities are capable of delivering large numbers of very long-lived producing wells providing an almost annuity-like financial profile. Cleary, appropriate exploration strategies must distinguish between these two very different types of investment categories if sound decisions are to be consistently made.