1332 Technology Advances in Exploration and Production

The second important reason why incorrect predictions were made about future gas markets and why today's views are quite different relates to how gas extraction technologies have advanced dramatically in the last two decades and how we now believe that these advances will continue to make an ongoing contribution to low-cost gas supplies in the future. A significant variety of technological advances contributed to increasing low-cost gas supplies. Flat oil and gas prices forced operators to implement programs to dramatically reduce expenditures and streamline operations. These technology advances include:

• The introduction of three-dimensional and four-dimensional seismic technology that reduces dry hole rates and improves overall reservoir performance. For example, recent work sponsored by the Gas Research Institute (GRI) showed that three-dimensional seismic tests in older onshore fields in the Gulf typically resulted in a three- to fourfold increase in production over that for fields where it was not applied (Caldwell, 1996).

• The application of horizontal drilling is making considerable improvements in cost effective recovery in a wide variety of settings. Since the mid-1980s, horizontal drilling has grown in application from almost nothing in 1990 to over 2700 horizontal wells drilled worldwide (Chambers, 1998).

• Developments in completion and stimulation technology in the past decade dramatically changed the economics of producing gas resources, especially in the unconventional gas resources in coal seams, shales, and low permeability sands.

• Improved drilling technologies including longer-life drill bits and improved control systems are dramatically reducing drilling costs and improving both initial productivity and ultimate recoveries per well.

• A significant contribution to the improved economics of offshore discoveries is the reduction in cycle time from exploration success to first production. Using Shell as an example, this time was reduced from seven to four years during the 1980s. Today, the average time between offshore discovery and first production is typically between one to two years depending on the size of the discovery (Funk, 1995).

A number of studies, including the 1992 natural gas study conducted by the National Petroleum Council, demonstrated that drilling costs in the U.S. have exhibited a 2 to 4% real decline per year after accounting for fluctuations in oil and gas prices, rig utilization rates, and other factors. This decline is believed to be largely attributable to technological advances (National Petroleum Council, 1992).

All of this resulted in an increase in the volume of gas reserves discovered per well. Average reserve additions from new gas wells increased from about 1 billion cubic feet (Bcf) per well in the 1980s to over 2 Bcf per well on average. In terms of gas discoveries per exploratory gas well drilled, reserve additions increased from between 5 and 10 Bcf in the 1980s to over 20 Bcf per well today. This obviously means that gas reserve additions, to a large extent, kept pace with production despite the fact that we are drilling half as many gas wells today as we were in the late 1970s and early 1980s. Since 1993, gas reserve additions in the U.S. have exceeded production. This is the first time in decades that production has been replaced on an annual and sustained basis.

Moreover, much of these reserve additions come from development drilling rather than new exploration. In fact, today over 40% of reserve additions in the U.S. are attributable to lower cost development drilling compared to an approximately 10% contribution in the early 1980s. This has led to significant increases in our estimates of remaining reserves in discovered fields. Some estimates suggest that initial discovery will grow by a factor of ten through additional delineation, infill development, and application of improved technology. These modern developments resulted in substantial reductions in finding and production costs. According to the EIA, real gas finding costs decreased by nearly 60% since the mid-1980s from about $2.00 to $2.25/Mcf in 1985 to $0.60 to $0.90/Mcf today. Production costs also dropped almost by half, from $1.50 to $1.75/Mcf in 1985 to $0.40 to $0.80/Mcf today.

It is likely that major technological developments will continue. These advances appear to be offsetting the impacts of resource depletion. Moreover, improved understanding of the resource base is expanding developments into more challenging settings. Finally, trends toward a more competitive and efficient energy industry are influencing a tremendous amount of innovation, not only in technologies but also fundamentally in how the North American gas market works now and, possibly, in the future.

13.4 Conventional Liquid Petroleum Fuels (Diesel and Kerosene, Naptha)

Solar Stirling Engine Basics Explained

Solar Stirling Engine Basics Explained

The solar Stirling engine is progressively becoming a viable alternative to solar panels for its higher efficiency. Stirling engines might be the best way to harvest the power provided by the sun. This is an easy-to-understand explanation of how Stirling engines work, the different types, and why they are more efficient than steam engines.

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