In world’s energy future, unconventional gas is a must, not a maybe

Operators worldwide are recognizing the importance of natural gas in the global energy future and are switching from being “oil” companies to “gas” companies, said Bojan Milkovic, CEO and E&P executive director for INA Naftaplin, in the opening-day keynote speech at the IADC World Drilling 2010 Conference on 16 June in Budapest. His own company is one example, he said, where natural gas now comprises a third of total production.

While the peak of oil discoveries happened in the 1960s, the peak of gas discoveries is still yet to come. “Oil production in the future will come down; gas production is coming up,” he said.

When unconventional gas sources are brought into the picture, they further brighten the outlook for natural gas. Mr Milkovic cited statistics that put proven conventional natural gas reserves at approximately 6,250 trillion cu ft; that numbers bumps up to more than 32,000 trillion cu ft when talking about unconventional natural gas resources, not including methane hydrates. The potential of methane hydrates is estimated to be more than 73,000 trillion cu ft, he said.

This means that unconventional reservoirs are becoming more and more attractive, he said. In North America, much investment has already been made to produce from these reservoirs and are showing excellent results: Unconventional gas production is estimated to account for more than 40% of total US gas production and is increasing.

On the European side, he said, there are only a few active unconventional projects, though some countries are trying to attract entrepreneurs to invest in unconventionals and push for more projects, according to Mr Milkovic. Yet he believes that governments could do more to stimulate growth in this segment, perhaps by passing legislation that would differentiate E&P for unconventionals versus conventionals.

In Croatia alone, estimates put unconventional gas reserves at 6 to 10 trillion cu ft. Mr Milkovic believes those numbers are conservative, however. “Our estimations are bigger,” he said.

He pointed to the Drava and Mura Depressions as the most promising areas for tight sands and shale gas resources in Croatia, although obstacles remain in exploiting these reservoirs, such as reservoir pressure and temperature, he said. “Research and development is needed to develop technology to produce our reservoirs.”

He cited the following currently available technologies as having been improved:

• Data collection during drilling, completions, stimulations and production.

• 3D fracture analysis and modeling.

• New fracturing fluids.

• Hydraulic fracturing in horizontal wells.

• Micro-seismic fracture mapping.

• Post-fracture diagnostics.

• Horizontal and multilateral drilling.

• Produced water-handling, processing and disposal.

• Environmental technologies.

These technologies are in need of further R&D, he said:

• 3D seismic applications for natural fractures imaging.

• Reservoir modeling of fractured reservoirs.

• Real-time sweet spot detection while drilling.

• Coil tubing drilling.

• Water disposal concepts.

• Deep horizontal and directional drilling.

• Enhanced coalbed methane recovery by CO2 injection.

• Completion and fracturing technology.

• Enhanced production technology.

In closing, Mr Milkovic said, “We have to go to unconventional reservoirs. That is a ‘must,’ not a ‘might.’ We need heavy research and development. (Governments) have to find and create legislation to bring entrepreneurs to Europe to create attractive areas and to make the gas business much better than it is now.”