Nature and Importance of Technology Progress for Unconventional Gas

Introduction. At the core of every successful unconventional gas play are two common themes - - the continuous search for improvements in technology and the relentless pursuit of cost and operating efficiencies. It is these two themes that have transformed these previously overlooked uneconomic resources - - tight gas sands, coalbed methane and gas shales - - into today’s largest single source of domestic natural gas production. The basic process, repeated over and over again, is that one or more new technology “concepts” lead to breakthroughs that transform the play from a technical curiosity to economic feasibility; subsequent cost and operating efficiencies then permit aggressive commercial development and the extension of the play to lessfavorable reservoir environments. This cycle of initial technology “breakthroughs” followed by aggressive cost reductions can be seen in the evolution of per-well recoveries for unconventional gas plays. At first, the per-well recoveries are relatively low. Then, they improve as a key technology concept is customized and applied to the particular reservoir properties of the gas play. In the later, more mature stages of the play, development of per-well recoveries decline as the less favorable reservoir environments of the play are developed. However, cost and operating efficiencies (gained over years of experience) allow the play to remain economic. An example of this technology and per-well performance cycle is presented in Table 1 for two significant tight sand plays in the San Juan Basin - - the Pictured Cliffs (with 8.7 Tcf of cumulative gas production) and the Dakota (with 6.7 Tcf of cumulative gas production).