EM152066 DOI: 10.

2118/152066-PA Date: 1-February-13

Stage:

Page: 5

Total Pages: 12

Resource Evaluation for Shale

Gas Reservoirs
Z. Dong, SPE, S.A. Holditch, SPE, and D.A. McVay, SPE, Texas A&M University

Summary
Many shale gas reservoirs have been previously thought of as
source rocks, but the industry now finds these source rocks still
contain large volumes of natural gas and liquids that can be produced by use of horizontal drilling and hydraulic fracturing. However, one of the most uncertain aspects of shale gas development
is our ability to accurately forecast gas resources and shale gas development economics. The uncertainty of the problem begs for a
probabilistic solution.
The objective of our work was to develop the data sets, methodology, and tools to determine values of original gas in place
(OGIP), technically recoverable resources (TRR), recovery factor
(RF), and economic viability in highly uncertain and risky shale
gas reservoirs. Existing approaches for determining values of
TRR, such as the use of decline curves or even volumetric analyses, may not be reliable early on because there may not be enough
production history for decline curves to work well or the uncertainty in the reservoir properties may be too large for volumetric
analyses to be useful.
To achieve our research objective, we developed a computer
program, Unconventional Gas Resource Assessment System
(UGRAS). In the program, we integrated Monte Carlo technique
with an analytical reservoir simulator to estimate the original volume in place, predict production performance, and estimate the
fraction of TRR that are economically recoverable resources
(ERR) for a variety of economic situations. We applied UGRAS
to dry gas wells in the Barnett shale and the Eagle Ford shale to
determine the probabilistic distribution of their resource potential
and economic viability. On the basis of our assumptions, the
Eagle Ford shale in the dry-gas portion of the play has more technically recoverable resources than the Barnett shale. However, the
Eagle Ford shale is currently not as profitable as the Barnett shale
because of the higher drilling costs in the Eagle Ford dry-gas
window.
We anticipate that the tools and methodologies developed in
this work will be applicable to any shale gas reservoir that has sufficient data available. These tools should ultimately be able to
allow determination of technically and economically recoverable
resources from shale gas reservoirs globally.
Introduction
Many gas shale plays are currently under development in the US
oil and gas industry. The use of horizontal drilling in conjunction
with hydraulic fracturing has greatly expanded the ability of producers to profitably produce natural gas from low-permeability
geologic formations, particularly shale formations. We have previously analyzed 15 basins in North America where shale gas
resources have been evaluated, and the results have been published (Dong et al. 2011). The total volume of original shale gas
in place for those 15 North American basins was estimated at
4,774 to 7,341 Tcf. It is clear that there are abundant volumes of
natural gas in North America. The question we now need to answer is what portion of the gas resource is technically and economically recoverable. The objective of our work was to develop
C 2013 Society of Petroleum Engineers
Copyright V

This paper (SPE 152066) was accepted for presentation at the SPE Hydraulic Fracturing
Technology Conference, The Woodlands, Texas, USA, 68 February 2012, and revised for
publication. Original manuscript received for review 9 February 2012. Revised manuscript
received for review 30 October 2012. Paper peer approved 3 December 2012.

the data sets, methodology, and tools to determine values of

OGIP, TRR, RF, and economic viability in highly uncertain and
risky shale gas reservoirs.
Petroleum Resources Management System (PRMS). The
terms resources and reserves have previously been used, and
continue to be used to represent various categories of mineral
and/or hydrocarbon deposits. In March 2007, SPE, the American
Association of Petroleum Geologists, the World Petroleum Council, and the Society of Petroleum Evaluation Engineers jointly
published the PRMS to provide an international standard for classification of oil and gas reserves and resources (Fig. 1a). It is important to remember that the broadest categories are also the least
precise. As one moves toward the categories at the bottom of the
chart, the associated estimates of the amount of natural gas in
those categories become more and more uncertain. However,
TRR and ERR are not formally classified in the system.
Energy Information Administration (EIA) Classification
System. According to the EIA, TRR are the subset of the total
resource base that is recoverable with existing technology. The
term resources represents the total quantity of hydrocarbons
that are estimated, at a particular time, to be contained in known
accumulations and accumulations that have yet to be discovered
(prospective resources). ERR are those resources for which there
are economic incentives for production. It is important to note
that, at some time in the future, economically unrecoverable
resources may become recoverable, as soon as the technology to
produce them becomes less expensive or the characteristics of the
market are such that companies can ensure a fair return on their
investment by extracting the resources. For our purposes, we considered TTR to be the resources that can be produced within a 25year time period.
We rearranged categories of PRMS and present an overview
of how the estimates of TRR and ERR are broken down (Fig. 1b).
Those commercial resources, including cumulative production
and reserves, are ERR. TRR are the subset of the total resource
base that includes commercial resources, contingent resources,
and prospective resources. Estimated ultimate recovery is not a
resources category, but a term that refers to the quantities of petroleum that are estimated to be potentially recoverable from an
accumulation, including those quantities that have already been
produced. For the remainder of this paper, we consider only naturalgas resources.
Monte Carlo Probabilistic Approach. Shale gas plays are generally characterized by low geologic risk and high commercial
risk. Uncertainty exists in geologic and engineering data and, consequently, in the results of calculations made with these data.
Probabilistic approaches are required to provide an assessment of
uncertainty in resource estimates.
Decline-curve analysis (DCA) is commonly used for futureperformance prediction and resource estimation when production
data are available. However, several studies (e.g., Ilk et al. 2008)
have pointed out that the Arps method provides optimistic solutions for unconventional reservoirs because boundary-dominated
flow (assumed in the Arps DCA model) is not reached within reasonable times in these reservoirs. Some authors have applied
probabilistic approaches to DCA to quantify the uncertainty

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1C

2C

3C

UNRECOVERABLE
PROSPECTIVE
RESOURCES
Low

Best

High

UNRECOVERABLE
Range of Uncertainty
(a) Resource Classification of PRMS

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Total Pages: 12

PRODUCTION
RESERVES

ERR

1P
2P
3P
PROVED PROBABLE POSSIBLE
CONTINGENT
RESOURCES
1C

2C

3C

PROSPECTIVE
RESOURCES
Low

Best

High

TRR

Increasing Chance of Commerciality

CONTINGENT
RESOURCES

SubEconomical

PROVED PROBABLE POSSIBLE

Undiscovered

3P

Technically Recoverable

2P

Technically
Unrecoverable

1P

Total Oil & Gas Resource Base

RESERVES

COMMERCIAL

Stage:

PRODUCTION

Increasing Chance of Commerciality

Sub-COMMERCIAL COMMERCIAL

DISCOVERED PIIP

UNDISCOVERED
PIIP

Total Oil & Gas Resource Base (PIIP)

EM152066 DOI: 10.2118/152066-PA Date: 1-February-13

DISCOVERED
OGIP UNDISCOVERED
Range of Uncertainty

(b) EIA definitions mapped to PRMS categories

Fig. 1Flow chart and generalized division of resource and reserves categories. (a) Resource classification of PRMS. (b) EIA definitions mapped to PRMS categories.

resulting from use of these imperfect methods (Jochen and Spivey

1996; Cheng et al. 2010).
Reservoir simulation coupled with stochastic methods (e.g.,
Monte Carlo) has provided an excellent means to predict production profiles for a wide variety of reservoir characteristics and producing conditions. The uncertainty is assessed by generating a
large number of simulations, sampling from distributions of uncertain geologic, engineering, and other important parameters. This
topic has been an object of study for some time in conventional
reservoirs (MacMillan et al. 1999; Sawyer et al. 1999; Nakayama
2000). However, few applications to unconventional reservoirs
can be found in the literature. Oudinot et al. (2005) coupled Monte
Carlo simulation with a fractured reservoir simulator, COMET3,
to assess the EUR in coalbed-methane reservoirs. Schepers et al.
(2009) successfully applied this Monte Carlo/COMET3 procedure
to forecast EUR for the Utica shale.
Analytical Model. Given the complex nature of hydraulic-fracture growth, the extremely low permeability of the matrix rock in
many shale gas reservoirs, and the predominance of horizontal
completions, reservoir simulation is commonly the preferred
method to predict and evaluate well performance. Analytical solutions for fluid flow in naturally fractured reservoirs were published
by Warren and Root (1963) and Kazemi (1969). Semianalytical
solutions for hydraulically fractured horizontal wells in fractured
reservoirs have been published (Medeiros et al. 2008). PMTx
(PMTx version 2.0 2010), with a number of modeling options,
such as the transient dual-porosity reservoir model (Kazemi 1969),
is an analytical unconventional-gas-reservoir simulator designed
to quickly and easily model single-well, single-phase gas production on the basis of near-wellbore reservoir performance under
specified well-completion scenarios. One of the important applications of PMTx 2.0 is to estimate ultimate gas recovery for horizontal wells with transverse fractures in a rectangular shale gas
reservoir.
Economics Determination. Almadani (2010) presented a methodology to determine the percentage of TRR that is economically
recoverable from the Barnett shale as a function of gas price and
finding and development costs (F&DC). For ERR, he applied economic criteria of minimum 20% internal rate of return (IRR) and
maximum 5-year payout to recover the initial investment, which
6

are hurdles commonly required by investors in the oil and gas

industry. The author suggested that if you could not achieve payout in 5 years or less, the well would not be a wise investment.
We developed UGRAS to help us determine the values of
ERR. In the program, we integrated Monte Carlo simulation with
an analytical reservoir simulator, PMTx 2.0, to estimate the original volume in place, predict production performance, and estimate
the fraction of TRR that are ERR for a variety of economic situations. In the following sections, we present the workflow of
UGRAS and apply UGRAS to assess the resource potential and
evaluate economic viability of gas in the Barnett shale and in the
dry-gas window in the Eagle Ford shale.
Methodology
Shale gas reservoirs are highly heterogeneous, and well productivity depends on reservoir properties as well as completion and
stimulation parameters. Even if finite-difference reservoir simulators are available, it can be time consuming to perform a large reservoir-simulation study. In our study, we applied UGRAS to
generate gas-production profiles for a variety of reservoir, well,
and hydraulic-fracture scenarios. Thousands of simulations can be
automatically run to explore combinations of unknown reservoir
and well parameters across their ranges of uncertainty. We use the
investment hurdles of IRR more than 20% and payout time less
than 5 years, applied on an individual-well basis, to determine the
fraction of TRR that is ERR for a variety of economic situations.
In future analyses, we plan to conduct sensitivity studies on these
values of IRR and payout. However, for this paper, we have made
the assumption that if a well does not pay out in 5 years or less, it
is probably not worth drilling at this time. Other places to drill
and spend capital should be more profitable.
The workflow of our probabilistic reservoir model UGRAS is
outlined in Fig. 2. First, an input file is created and uncertain
parameters are assigned probability distributions. There is no limitation to the number of parameters that can be varied. The distributions are typically normal, uniform, triangular, exponential,
or log-normal. These distributions are sampled for volumetric
analysis and flow simulation to determine OGIP, TRR, and RF.
Then, these steps are repeated many times to generate frequency
and cumulative density plots for OGIP, TRR, and RF. Finally,
economic analysis was run to calculate the production from wells
that meet economic criteria (IRR more than 20% before federal
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Define simulation input file

Run reservoir simulation

(PMTx2.0)
Probability
distribution
of TRR

Total Pages: 12

Specifications

Monte Carlo Sampling for

reservoir properties

Probability
distribution of
OGIP

Page: 7

TABLE 1RESERVOIR MODEL FOR SHALE GAS PLAYS

Define probability density

function for uncertain
reservoir properties

Volumetric Analysis

Stage:

Probability
distribution
of RF

Economic viability analysis

(ERR/ERR vs gas price etc.)
Fig. 2Flow chart of UGRAS.

income tax, payout less than 5 years) over production from all
wells according to different F&DC.
Shale-Gas-Reservoir Model
Today, shale gas reservoirs are typically developed with horizontal wells that are hydraulically fractured with multiple stages. As
more knowledge is gained through microseismic monitoring of
these fracture treatments, it appears that they are more likely creating a network of fractures. Thus, shale reservoirs may behave as
a transient dual-porosity system, with the secondary porosity system (matrix) contributing to the primary porosity system (system)
consisting of the created fracture network and possible existing
natural fractures. Transient dual-porosity systems have been used
to model naturally fractured reservoirs (Kazemi 1969; Swaan
1976). This model can also be used for modeling shale gas reservoirs where multistage-fracture completions have created the fracture network. In the transient dual-porosity model, there are two
transientsone moving through the fracture system and the other
moving through the matrix toward the interior of the matrix
blocks.
The transient dual-porosity model is characterized by the storativity ratio and the interporosity flow coefficient. The storativity
ratio, x, is the fraction of pore volume (PV) in the fractures compared with the total PV (Eq. 1). The interporosity flow coefficient,
k, is proportional to the ratio of permeabilities between the matrix
and the fractures (Eq. 2), and it determines the timing and magni-

Descriptions

Porosity
Fracture conductivity
Inner boundary
Outer boundary
Lithology
Pressure step
Permeability
Well location

Transient dual porosity, slab blocks

Infinite
Horizontal TransFracs
Rectangle
Shale
Constant
Isotropic
Centered

tude of the contribution from the matrix to the fractures. A large

value indicates that fluids flow easily between the two porous
media, whereas a small value indicates that flow between the
media is restricted. We could not find any literature reporting the
values of k and x for gas shales. The storativity ratio is usually in
the range of 0.01 to 0.1; we assumed a value of 0.01 to be representative of shales because of small PV of the fractures. The interporosity flow coefficient for dual-porosity reservoirs is usually in
the range of 104 to 108 (Fekete Associates Inc. 2012). The range
between 106 and 108 is assumed to be representative of shales
because of the large contrast between the permeabilities of the
fractures and the matrix. The outer boundary is defined as a closed
rectangle, and the well is centered in the drainage area. Table 1
summarizes the reservoir model used for shale-gas-reservoir
simulation.
x

/ct f
/ct f /ct m

k 4nn 2

. . . . . . . . . . . . . . . . . . . . . . . 1

rw2 km
For slab blocks;
L2 kf

n 1: . . . . . . 2

Resource Distribution of Barnett Shale

The Barnett Shale produces primarily dry gas. In this work, we
have considered only gas production and have not included any
wells that may be in the oil window. Vertical wells were first
drilled in the Barnett shale in the early 1980s, but development of
the Barnett shale play was not seriously considered until almost
2 decades later with the advent of horizontal drilling in 2003
(Fig. 3). As of December 2011, the Barnett shale play had more
than 12,561 wells, including 9,449 horizontal wells and 3,112 vertical wells. More than 8,270 Bcf of gas has been produced, of
which 75% is from horizontal wells.
Completion History of Horizontal Wells. Horizontal wellbores
are typically oriented northwest/southeast to take advantage of
10000

2000
Horizontal Well Count
Production, Bcf

1500

Vertical Well Production

7500

Horizontal Well Production

1000

5000

500

2500

Producing Wells

Vertical Well Count

0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Year

Fig. 3Production has rapidly increased in the Barnett shale by horizontal wells (HPDI 2011).
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EM152066 DOI: 10.2118/152066-PA Date: 1-February-13

(a)

Cemented-liner, multi-stage fracturing method

(Initial Barnett shale well completion)

(b)

Stage:

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Open-hole, multi-stage system (OHMS) completion

(Latest Barnett shale well completion)

Fig. 4Lower-damage, more-intensively-stimulated horizontal-well completions (Kuuskraa 2009). (a) Cemented-liner, multistagefracturing method; initial Barnett shale well completion. (b) OHMS completion; latest Barnett shale well completion.

natural productivity in the Barnett shale (Hale 2010). Lateral

lengths increased from approximately 3,000 ft in 2003 to as long
as 8,965 ft in 2009, with an average value of 4,000 ft (Powell
2010). Typical fracture half-length of the Barnett shale is between
300 and 400 ft, with seven to nine fracture stages (Kennedy
2010).
Initially, cemented liners and multistage fracturing techniques
were used in the Barnett shale (Fig. 4a). This type of completion
involves cementing casing in the horizontal wellbore and by use
of plug-and-perf stimulation. The inherent costs of multiple
interventions with coiled tubing, perforating guns, and deployment of fracturing equipment needed for each stage are extremely
high, not to mention inefficient consumption. Production by use
of this method can also be limited, because cementing the wellbore closes many of the natural fractures and fissures that would
otherwise contribute to overall production (Lohoefer et al. 2010).
Between 2004 and 2006, a new openhole, multistage system
(OHMS) completion technology (Fig. 4b) was run in Denton
County, Texas (Lohoefer et al. 2006). This type of completion, on
average, performed better than the cemented completion method
(Lohoefer et al. 2010). The major advantage of OHMS is that all
the fracture treatments can be performed in a single, continuous
pumping operation without the need for a drilling rig, saving
costs.
Reservoir Parameters. Both thickness and reservoir pressure
increase in the southwest/northeast direction, implying a significant increase in potential production rate from southwest to northeast. The thickness of the Barnett shale ranges from 100 to 600 ft
(Hayden and Pursell 2005; Grieser et al. 2008). Pressure gradient
is in the overpressured category, typically 0.53 psi/ft (Lafollette
et al. 2012). The most common reservoir pressure used for Barnett
shale reservoir simulation is 3,000 to 5,000 psi (Chong et al.
2010). The average reservoir temperature is 200 F (Transform
Software & Services 2011). The average porosity in productive
portions of the Barnett shale ranges from 4 to 5% (Hayden and
Pursell 2005). Published values for average permeability have

TABLE 2SUMMARY OF RESERVOIR PARAMETERS

REPORTED FROM LITERATURE FOR THE BARNETT SHALE
Parameter
Net pay (ft)
Porosity (%)
System permeability (md)
Water saturation (%)
Gas content (scf/ton)
Depth (ft)
Reservoir pressure (psi)
Well spacing (acres)
Vitrinite reflectance (%)
TOC* (%)
*

TOC total organic carbon.

variously been reported to be 0.00007 to 0.005 md (Grieser et al.

2008). Productive, organic-rich portions of the Barnett shale average 25 to 43% water saturation (Bruner and Smosna 2011). The
organic matter in the shale was first reported to contain 60 scf/ton,
but this could be as high as 125 scf/ton (Montgomery et al. 2005).
It is reported that typical well spacing in the Barnett shale is 60 to
160 acres (Hayden and Pursell 2005). Table 2 summarizes the
reservoir parameters reported from literature for the Barnett shale.
In our modeling, we used a reservoir size of 4,800  1,000 ft (111
acres/well), with a lateral length of 4,000 ft, fracture half-length
of 350 ft, and 10 stages. Table 3 shows the fixed reservoir parameters used for the Barnett shale single-well reservoir simulations.
Model Verification. We used the HPDI (2011) database as our
source for production data. Since 2004, 1,492 horizontal wells in
the Barnett shale have been completed and produced more than
60 months. Initially, uniform distributions were assigned for six
key uncertain parametersnet pay, initial pressure, permeability,
porosity, water saturation, and gas content (Table 4)honoring
their reported ranges from the literature documented in Table 2.
We did not consider possible correlation among these parameters.
The distributions for three of these uncertain parametersnet
pay, permeability, and gas contentwere refined until a reasonable match between simulated and actual 5-year cumulative production was obtained (Fig. 5). We did not have to make large
changes in these distributions to achieve the match. Table 4
also summarizes the final distributions for the six uncertain
parameters.
The red curve in Fig. 5 shows the distribution of 5-year cumulative production from the 1,492 horizontal wells. The blue curve
is the distribution from 1,000 random realizations of 5-year cumulative production simulated by UGRAS with the parameters in
Table 3 and the final distributions in Table 4.
As a further check of the model, we compared simulated and
actual production-decline trends. We calculated the average well
monthly gas production from the 1,492 wells over the first 60
months (Fig. 6). From the probabilistic model described in Tables
3 and 4, we plotted well production curves corresponding to the

TABLE 3FIXED PARAMETERS FOR THE BARNETT

SHALE SIMULATION

Range
100600
45
0.000070.005
2543
60125
6,5008,500
3,0005,000
60160
0.61.6
2.45.1

Layer Data

Value

Reservoir temperature ( F)
Flowing bottomhole pressure (psia)
Reservoir length (ft)
Reservoir width (ft)
Fracture half-length (ft)
Horizontal-well length (ft)
Number of fracture stages
k (dimensionless)
x (dimensionless)
Bulk density (g/cm3)

200
500
4,800
1,000
350
4,000
10
7  107
0.01
2.5

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TABLE 4INITIAL AND FINAL DISTRIBUTIONS FOR UNCERTAIN BARNETT SHALE PARAMETERS
Initial Uniform Distributions
Parameters

Minimum

Net pay (ft)

Initial pressure (psi)
System permeability (md)
Water saturation (fraction)
Porosity (fraction)
Gas content (scf/ton)

100
3,000
0.00007
0.25
0.04
60

Final Distributions

Maximum

Distribution Type

Minimum

Median

Maximum

600
5,000
0.005
0.43
0.05
125

Log-normal
Uniform
Log-normal
Uniform
Uniform
Triangular

200

50

0.0005

0.0005

3,000

0.25
0.04
60

5,000

0.43
0.05
125

100

Loglogistic (c, b, a) log-logistic distribution with location parameter c, scale parameter b, and shape parameter a.
Lognorm (l, r) log-normal distribution with specified mean and standard deviation.

Percentile, %

100
90
80
70
60
50
40
30
20
10
0
0

2
3
5-year Cumulative Production, Bcf/well
Field Data

Simulation Result

Fig. 5Probability distribution of cumulative-gas-production (5-year) match result for the Barnett shale.

mean, P10, P50, and P90 5-year cumulative production values

(Fig. 6). The simulated production curves were run out to 25 years
to observe the long-term production trends. Both the actual and
simulated production profiles show high initial production rate
with steep production decline in the first year and significant
decrease in the decline rate in subsequent years.
OGIP, TRR, and RF. Detailed geologic and reservoir data were
assembled to establish the free gas and adsorbed gas in place for
the Barnett shale. Free gas becomes the dominant in-place
resource for deeper, higher-clastic-content shales. Eq. 3 is used to
calculate the free gas in place for shale gas reservoirs:
Free GIP

43; 560Ah/1  Sw
. . . . . . . . . . . . . . . . 3
Bgi

0:02329 ZT
p
In addition to free gas, shale can hold significant quantities of
gas adsorbed on the surface of the organics in the shale formation.
Adsorbed gas can be the dominant in-place resource for shallow,
organic-rich shales. A Langmuir isotherm is established for the
prospective area of the basin by use of available data on TOC and
thermal maturity to establish the Langmuir volume (VL) and pressure (PL).
Adsorbed gas in place (GIP) is then calculated by use of Eq. 4:
where Bgi

Adsorbed GIP 43; 560Ahqc Gc 1  / . . . . . . . . . . . 4

where Gc

VL  p
.
PL p

1.E+05
Field Data From Barnett Shale
Simulated by UGRAS(P90)
Production, Mcf/Month

Simulated by UGRAS(Mean)
Simulated by UGRAS(P50)
Simulated by UGRAS(P10)
1.E+04

1.E+03
0

50

100

150

200

250

300

Month
Fig. 6Average Barnett shale gas production of 1,492 wells overlaid by the simulated TRR distribution.
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OGIP Simulated by UGRAS

Loglogistic (1.5,10.6,5.3)

50

OGIP, Bcf

Fig. 7Probabilistic distribution of OGIP/111 acres for the Barnett shale.

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
0.4

Total Pages: 12

TRR Simulated by UGRAS

Lognorm(2.5,1.5,Shift(0.05))

4
TRR, Bcf

Fig. 8Probabilistic distribution of TRR/111 acres with a 25year life for the Barnett shale.

TABLE 5ECONOMIC PARAMETERS FOR BARNETT SHALE

Percentile

Operating Cost

20

40
60
Recovery Factor, %

80

USD/Mcf

Working interest
Royalty burden
Severance taxes
Gas shrinkage

Simulated by UGRAS
Lognorm(20,10,Shift(0.3))

100

Fig. 9Probabilistic distribution of RF with a 25-year life for the

Barnett shale.

The probability distributions for OGIP, TRR, and RF are generated by reservoir parameters in Table 2 and finalized density
functions in Table 3. The P10, P50, and P90 values of OGIP are
8.4, 12.2, and 17.8 Bcf/111 acres, respectively (Fig. 7).
We chose a 25-year production history rather than 30 or 40
years. In the current economic environment, no one really cares
how much gas will be on the books 40 years from now. However,
in future work, we plan to vary the well life to determine whether
it really makes a difference in terms of both TRR and ERR.
1

0.8
ERR/TRR, Bcf/Bcf

Page: 10

Percentile

Percentile

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Stage:

0.6

0.4

0.2

100%
25%
7%
6%

The simulation results yielded a TRR distribution with a P10

value of 1.1 Bcf/111 acres, a P50 of 2.2 Bcf/111 acres, and a P90
of 4.5 Bcf/111 acres (Fig. 8). The distribution is quite wide, indicating significant uncertainty in forecasting Barnett shale gas production. RF of Barnett shale also follows a log-normal
distribution (Fig. 9), with P10, P50, and P90 values of 10, 18, and
35%, respectively.
Economic Evaluation. We next examined the economic impact
of different gas prices and F&DC on ERR in the Barnett shale. To
do this, for each realization we determine the gas price required to
just meet the economic hurdles for particular F&DC. The economic analysis is performed at the assumptions listed in Table 5.
Gas shrinkage results from the usage of a percentage of produced
gas for mechanical compression along the pipeline.
Ranking the realizations, we can determine the fraction of
TRR that is economically recoverable for a particular combination of gas price and F&DC. We then repeat this to determine the
ratio of ERR/TRR over a range of gas prices and F&DC (Fig. 10).
With typical F&DC of USD 3 million for Barnett shale wells and
a gas price of USD 4/Mcf, 20% of the Barnett shale gas TRR is
economically recoverable. If we increase the gas price, we will
increase the fraction of technically recoverable resource that is
economically recoverable.
With an estimated acreage of 3.2 million acres and assumed
well spacing of 111 acres, 29,000 wells could be drilled in the
Barnett shale. Thus, the resource potential for the entire Barnett
shale is estimated at 352 Tcf of OGIP (P50), 63 Tcf of TRR
(P50), and 12 Tcf of ERR (20% of TRR) at USD 4.0/Mcf gas
price and USD 3 million/well F&DC (Table 6).

0
1

10
Gas Price, $/Mcf
F&DC = 5, MMS
F&DC = 1, MMS
F&DC = 6, MMS
F&DC = 2, MMS
F&DC = 7, MMS
F&DC = 3, MMS
F&DC = 4, MMS

Fig. 10Ratio of ERR/TRR as a function of gas price and F&DC

for the Barnett shale.
10

TABLE 6RESOURCE POTENTIAL FOR THE BARNETT

SHALE PLAY
Category

P10

P50

P90

OGIP (Tcf)
TRR (Tcf)
ERR (Tcf)

242
32
6

352
63
12

513
130
26

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Fig. 11Eagle Ford extends across south Texas with updip oil, middip condensate, and downdip gas windows.

Resource Distribution in the Gas Window of the

Eagle Ford
The Eagle Ford shale in south Texas is in its infancy in terms of
development compared with other shale plays in the US. The
Eagle Ford shale is directly beneath the Austin chalk. Wells in the
Eagle Ford shale produce from depths between 4,000 and 14,000
ft. The Eagle Ford dips toward the Gulf of Mexico. It is considered to be the source rock for the Austin chalk. The Eagle Ford is
best known for producing variable amounts of dry gas, wet gas,
natural-gas liquids, condensate, and oil. In late 2008, the first few
exploration wells in the Eagle Ford were drilled in LaSalle
County in the gas window of the play (Fig. 11). In this paper, we
have evaluated only the dry-gas portion of the Eagle Ford, which
is also the deepest portion of the play where drilling costs are the

8000

Well Count
Gas

200

300

100

150

Well Count

450

300

Laternal Length, ft

600

400

Production, Bcf

highest. In future work, we plan to evaluate the gas-condensate

window and the oil window in the Eagle Ford. For now, all results
in this paper were computed by use of gas-production data only
from the dry-gas portion of the Eagle Ford.
In the Eagle Ford shale, there were seven producing gas wells
in 2008 and more than 509 wells producing in 2011 (Fig. 12). As
of December 2011, more than 434 Bcf of dry gas has been produced. Fig. 12 shows dry-gas production from the Eagle Ford shale
is increasing annually. But because of the low gas price, the average daily dry-gas production reached only 854 MMcf/D in 2011.
The average lateral length of gas wells in the Eagle Ford was
5,600 ft in 2011 (Fig. 13). Unlike many other shale plays, the

6000

4000

2000

0
0

0
2008

2009

2010

2008

2009

2011

2010

2011

Year

Year
Fig. 12Annual dry-gas production in the Eagle Ford shale
(HPDI 2011).

Fig. 13The trend of average lateral length of Eagle Ford horizontal wells over time (data provided by Unconventional
Resources LLC, personal communication with G. Vonieff).

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TABLE 7RESERVOIR PARAMETERS OF THE EAGLE FORD SHALE*

Upper Eagle Ford

Depth (ft)
Net pay (ft)
System permeability (md)
Water saturation (%)
Porosity (%)
Gas content (scf/ton)
Bulk density (g/cm3)
TOC (%)

Lower Eagle Ford

Range

Mean

Range

Mean

5,50014,300
3236
0.00010.0005
1244
39
796
2.442.65
0.34.0

11,700
100
0.0003
23
6
41
2.55
1.9

5,80014,400
8326
0.00010.0007
944
312
18118
2.362.63
0.75.4

11,800
163
0.0004
18
8
82
2.46
3.6

*Personal communication. 2011. Houston: W.D. Von Gonten & Company.

TABLE 8THE FIXED PARAMETERS AND RESERVOIR

MODEL FOR EAGLE FORD SHALE SIMULATION
Layer Data

Value


Reservoir temperature ( F)
Flowing bottomhole pressure (psia)
Reservoir length (ft)
Reservoir width (ft)
Fracture half-length (ft)
Horizontal-well length (ft)
Fracture stage
k (dimensionless)
x (dimensionless)
Bulk density (g/cm3)

247
500
6,400
1,000
350
5,600
18
106
0.01
2.51

Eagle Ford shale does not exhibit natural fracturing within the formation. The carbonate content of the Eagle Ford can be as high as
70%. The high carbonate content and consequently lower clay
content make the Eagle Ford more brittle and easier to stimulate
through hydraulic fracturing than other shales with less carbonate.
Typical fracture half-length of the Eagle Ford shale is 350 ft, with
8 to 10 fracture stages (Kennedy 2010).

Ford shale have been completed and produced for more than 12
months. We initially assigned uniform density functions for net
pay, initial pressure, water saturation, porosity, permeability, and
gas content within their parameter ranges (Table 9). We did not
consider possible correlation among these parameters. These six
density functions were refined until a reasonable match between
simulated and actual 1-year cumulative production was obtained.
Table 9 also summarizes the final distributions for the six uncertain parameters.
The red curve in Fig. 14 shows the cumulative probability distribution of 1-year cumulative production from the 152 horizontal
wells. The blue curve is the cumulative probability distribution
from 1,000 random realizations of 1-year cumulative production
simulated by UGRAS with the parameters in Table 8 and final
distributions in Table 9.
As a further check of the model, we compared simulated and
actual production-decline trends. We calculated the average well
monthly gas production from the 152 wells over the first 12
months (Fig. 15). From the probabilistic model described in
Tables 7 and 8, we plotted well production curves corresponding
to the mean, P10, P50, and P90 1-year cumulative production values (Fig. 15). The simulated production curves were run out to 25
years to observe the long-term production trends.

Reservoir Parameters. We obtained the ranges of reservoir parameters from 121 horizontal gas wells in the Eagle Ford shale
(Table 7). Table 8 lists the fixed parameters used for the Eagle
Ford shale simulation. The case was modeled on a well with 11
multistage hydraulic transverse fractures, with fracture half-length
of 350 ft and a total wellbore length of approximately 5,600 ft,
producing natural gas for a period of 25 years. The assumed well
spacing is 147 acres/well.

Resource Assessment. Figs. 16 through 18 show the probability

distributions for OGIP, TRR, and RF generated by reservoir parameters in Table 7 and finalized density functions in Table 8.
The values of OGIP range from 7.5 (P10) to 25.3 (P90) Bcf/147
acres. TRR for a 25-year recovery period range from 2.3 (P10) to
8.5 (P90) Bcf/147 acres. Eagle Ford RF ranges from 25 (P10) to
40% (P90). Again, we chose 25 years to determine TRR as a reasonable well life that is of interest to us now. In the future, we
will run sensitivity studies to determine whether the answers
change significantly for other values, such as 30 or 40 years.

Model Verification. We used the HPDI database as our source

for production data. Since 2010, 152 horizontal wells in the Eagle

Economic Evaluation. The economic analysis for the Eagle

Ford shale was performed at the assumptions in Table 10. The

TABLE 9INITIAL AND FINAL DISTRIBUTIONS FOR UNCERTAIN EAGLE FORD SHALE PARAMETERS
Initial Uniform Distribution
Parameters
Net pay (ft)
Initial pressure (psi)
Water saturation (fraction)
Porosity (fraction)
System permeability (md)
Gas content (scf/ton)

Minimum
3
4,300
0.09
0.03
0.0001
7

Final Distribution

Maximum

Distribution Type

Shift

326
10,900
0.44
0.12
0.0007
120

Log-normal
Log-normal
Gamma
Inverse Gaussian
Log-normal
Gamma

130
7,200
0.17
0.1
0.0004
49

50
1,100
0.06
6.8
0.0001
19

3.8

0.03

0.06
0.04

Invgauss (l, k) inverse Gaussian distribution with mean l and shape parameter k.
Pearson 5 (a, b) Pearson-type V (or inverse gamma) distribution with shape parameter a and scale parameter b.

12

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Percentile, %

100
90
80
70
60
50
40
30
20
10
0
0

0.3

0.6
0.9
1.2
1.5
1-year Cumulative Production, Bcf/well
Field Data

1.8

Simulation Result

Fig. 14Distribution of cumulative production (1-year) match result.

Field Data From Eagle Ford Shale

Simulated by UGRAS(P90)
Simulated by UGRAS(Mean)
Simulated by UGRAS(P50)
Simulated by UGRAS(P10)

1.E+05

1.E+04

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Percentile

Production, Mcf/Month

1.E+06

Simulated by UGRAS
Loglogistic(1.6,12,3)
3

1.E+03
0

50

100

150
Month

200

250

30
OGIP, Bcf

300

Fig. 16Probabilistic distribution of OGIP/147 acres for the

Eagle Ford shale gas window.

Fig. 15Average Eagle Ford dry-gas production of 152 wells

overlaid by the simulated TRR.

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Percentile

Percentile

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Simulated by GURAS
Invgauss(5,17)
1

Simulated by UGRAS
Pearson5(43,1651,Shift(7.6))

20

10
TRR, Bcf

30

40
50
Recovery Factor, %

60

70

Fig. 17Probabilistic distribution of TRR/147 acres with a 25year life for the Eagle Ford shale gas window.

Fig. 18Probabilistic distribution of RF with a 25-year life for

the Eagle Ford shale gas window.

ERR/TRR ratio in the dry-gas portion of the Eagle Ford shale for
different gas prices and F&DC is shown in Fig. 19. With typical
F&DC of USD 9 million and gas price of USD 4/Mcf, only a
small fraction of TRR in the dry-gas portion of the Eagle Ford

shale is economically recoverable. It is clear that either higher gas

prices or better technology to increase average well recovery or
decrease well costs is required to economically produce the large
amount of natural gas in the dry-gas portion of the Eagle Ford.
Because of the economic environment, it can be observed that
virtually all current drilling (other than to hold acreage) is occurring in the gas-condensate window or the oil window in the Eagle
Ford (Fig. 11). The addition of liquid production to the naturalgas production significantly improves the average product price
and the economic profitability of these Eagle Ford wells. In addition, the gas-condensate and oil portions of the Eagle Ford are
shallower than the dry-gas portion; thus, drilling costs are lower
in the shallower portion of the play.
In the dry-gas window, the estimated productive acreage is
estimated to be 3 million acres. If we assume an average well
spacing of 147 acres, 20,000 wells could be drilled in the dry-gas

TABLE 10ECONOMIC PARAMETERS FOR EAGLE

FORD SHALE
Operating Cost
Working interest
Royalty burden
Severance taxes
Gas shrinkage

USD 1.3/Mcf
100%
25%
7%
6%

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ERR/TRR, Bcf/Bcf

0.6

0.4

0.2

0
1

10
Gas Price, $/Mcf
F&DC = 6, MMS
F&DC = 7, MMS

F&DC = 10, MMS

F&DC = 11, MMS

F&DC = 8, MMS

F&DC = 12, MMS

F&DC = 9, MMS
Fig. 19Ratio of ERR/TRR as a function of gas price and F&DC
for the Eagle Ford shale.

portion of the Eagle Ford shale. Thus, the resource potential for
the entire Eagle Ford dry-gas window is 278 Tcf of OGIP (P50)
and 90 Tcf of TRR (P50) (Table 11). The value of ERR will be a
function of the average gas price in the future. Currently, the natural-gas price is approximately USD 4/Mcf or less, which suggests
that many of these wells are not economic. However, the industry
is working to increase natural-gas demand, which should increase
the natural-gas price. As such, much of the TRR will be recovered
whenever the natural-gas price increases to a point at which more
drilling will occur.
Discussion
The portion of the Eagle Ford shale in the dry-gas window has
more TRR per well on average than the wells in the Barnett shale,
TABLE 12OPPORTUNITIES FOR INCREASING
THE ERR/TRR RATIO
Barnett Shale

Eagle Ford Gas Window

ERR/
TRR

F&DC (USD
106/well)

Gas Price
(USD/Mcf)

F&DC (USD
106/well)

Gas Price
(USD/Mcf)

75%

1
2
3
4
5
6
1
2
3
4
5
6
1
2
3
4
5
6

3.1
5.1
7.1
9.0
10.5
12.0
2.8
4.0
5.1
7.0
8.0
9.8
2.1
3.1
4.1
5.0
6.0
7.0

6
7
8
9
10
11
6
7
8
9
10
11
6
7
8
9
10
11

6.5
7.2
8.3
9.0
10.0
10.6
5.2
6.0
7.0
7.2
8.0
9.0
4.2
5.0
5.5
6.0
6.2
7.0

25%

14

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TABLE 11RESOURCE POTENTIAL FOR DRY GAS IN THE

EAGLE FORD SHALE PLAY

0.8

50%

Stage:

Category

P10

P50

P90

OGIP (Tcf)
TRR (Tcf)

153
47

278
90

516
173

first because the reservoir pressures are greater. Second, it appears

that operators generally drill longer laterals with more stages and
use larger fluid and proppant volumes per stage in the hydraulicfracturing treatments pumped in Eagle Ford dry-gas wells (thus,
our assumed well spacing of 147 acres/well for the Eagle Ford
gas window vs. 111 acres/well for the Barnett shale). These two
reasons are more likely to have a greater impact in the TRR difference than differences in petrophysical properties between
basins (Baihly et al. 2010). Higher reservoir pressure in the Eagle
Ford gas window is the main reason that Eagle Ford has higher
RF than Barnett shale.
Table 12 lists opportunities for increasing ERR in both the
Barnett shale and Eagle Ford shale gas window by increasing gas
prices and/or decreasing F&DC. For instance, by decreasing
F&DC cost to USD 2 million/well, 50% of TRR could be economically recoverable from the Barnett Shale at a gas price of
USD 4/Mcf. If gas price increases to USD 6/Mcf, 25% of TRR
could be recovered economically in the Eagle Ford gas window at
an F&DC of USD 9 million/well.
The technology and tools described in this paper can be useful
in assessing TRR and ERR in shale gas plays. However, it is important to acknowledge the assumptions and uncertainties inherent in the results presented in this paper. First, we assumed a 25year well life for calculation of TRR and economic hurdles of
IRR of more than 20% and payout time of less than 5 years for
calculation of ERR. Although we believe these are reasonable criteria and many operators and investors in shale gas plays use similar values, we acknowledge that other operators may use different
criteria and, thus, may obtain different results.
Our resource assessments are high-level assessments.
Although we estimate resources for entire plays, we do not model
reservoir and well properties on a well-by-well basis. Instead, we
model each play as a whole, by use of probability distributions
that encompass the variability in reservoir properties across the
field as well as the uncertainty in these properties. For example,
the OGIP varies from county to county because of differences in
net thickness and other properties across the field. The distribution
of net thickness we used in the Barnett study covered the greater
net thickness in Tarrant County and the lower net thickness in the
southwestern Barnett shale. Another limitation of our high-level
assessments is related to vertical variability in properties. We did
not consider vertical variations in properties, such as fracturability, throughout the zones evaluated. In some areas, the net thickness of the shale gas plays is so great that the entire pay zone
cannot be completed and produced. However, we used the same
distributions of net pay for the OGIP calculation and TRR prediction for the Barnett and Eagle Ford shales in this study.
We also acknowledge the uncertainty in the production forecasts generated by the probabilistic analytical simulator. The input
parameters used to generate production forecasts for both the Barnett and the Eagle Ford gas window were obtained from the literature and well data. Operators and reserves evaluators reviewed
the parameter values and forecasts in these plays to verify their
reasonableness. The probabilistic forecasts for the Barnett shale
were calibrated against actual 5-year cumulative production data,
although this of course does not guarantee the accuracy of 25-year
forecasts. Few performance data exist for the Eagle Ford shale.
Even though we calibrated the Eagle Ford dry-gas forecasts
against actual production data, there is uncertainty in these
forecasts.
The ERR/TRR ratio was calculated on an individual-well basis. That is, ERR/TRR is the TRR from wells that individually
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meet the economic hurdles at a particular gas price and particular

F&DC divided by the TRR from all wells. This does not account
for the practice of budgeting and drilling packages of wells in
statistical shale gas plays. Because there is a lot of variability in
individual shale-gas well performance, a package of wells may
meet the economic hurdles overall, whereas some wells will individually meet the economic hurdles and some will not. Once
drilled, wells will be allowed to continue producing to a net-cashflow economic limit even if they do not meet the economic hurdles previously specified. Thus, actual ERR/TRR ratios for the
Barnett and Eagle Ford gas window are potentially greater than
the ERR/TRR ratios presented in this paper.
Finally, although a probabilistic reservoir model was used in
this work, the ERR/TRR ratios presented in this paper are deterministic and do not capture the uncertainties described in the preceding paragraphs. We plan to address these limitations in future
work.
Conclusions
In this study, we have evaluated resource potential and economic
viability in the Barnett shale and the dry-gas window in the Eagle
Ford shale by use of a probabilistic, analytical reservoir model.
We conclude the following.
1. The median (P50) resource potential of the Barnett shale is
estimated at 352 Tcf of OGIP and 63 Tcf of TRR. The value
for ERR is a function of F&DC and gas prices.
2. The median (P50) resource potential of the gas window in the
Eagle Ford shale is 278 Tcf of OGIP and 90 Tcf of TRR. The
value of ERR is a function of F&DC and gas prices.
3. The natural-gas window in the Eagle Ford shale has more technically recoverable resources than the Barnett shale. However,
the natural-gas window in the Eagle Ford shale will not be
fully developed until drilling costs are reduced and/or naturalgas prices increase from the current USD 4/Mcf range.

Nomenclature
A area, acres
Bgi gas formation volumetric factor, cf/scf
ct total compressibility, 1/psi
d fracture spacing, ft
Gc initial gas content, scf/lbm
H net pay, ft
kf fracture permeability, md
km matrix permeability, md
L characteristic length of a matrix block
n number of flow dimensions, dimensionless
P10, P50, P90 values for which the probability is 10, 50, or
90% that the value will not be exceeded, indicated by the 10th, 50th, or 90th percentile on a
cumulative probability plot
rw wellbore radius
Sw water saturation
k interporosity flow coefficient, dimensionless
l mean
qc bulk density, lbm/cf
r standard deviation
/ formation porosity
x storativity ratio, dimensionless

Acknowledgments
We thank the Research Partnership to Secure Energy for America
and the Crisman Institute in the Department of Petroleum Engineering at Texas A&M University for supporting this research.
We would like to acknowledge William D. Von Gonten with
W.D. Von Gonten & Company for providing relevant data sets
and valuable feedback to calibrate our research findings and analysis. We thank John P. Spivey with Phoenix Reservoir Engineering for providing PMTx 2.0 for this research.

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Americas Largest Shale Gas Reservoirs. http://www.transformsw.
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Zhenzhen Dong works as a reservoir engineer with Schlumberger Consulting Services. She holds a PhD degree in petroleum engineering from Texas A&M University; an MS degree in
petroleum engineering from Research Institute of Petroleum
Exploration and Development, PetroChina; and a BS degree
in mathematics from Northeast Petroleum University, China.
Dong has focused her research in areas involving unconventional gas reservoirs, reserves and resource assessment, well
testing, and performance analysis.
Stephen A. Holditch is the Director of the Texas A&M Energy
Institute, the Director of the Crisman Institute for Petroleum
Research, and a professor of petroleum engineering. He was
head of the Harold Vance Department of Petroleum Engineering from January 2004 until January 2012. Holditch was SPE
President in 2002 and SPE Vice PresidentFinance and a member of the Board of Directors 19982003. In addition, he served
as a trustee for the American Institute of Mining, Metallurgical,
and Petroleum Engineers (AIME) during 199798. Holditch has
received numerous awards in recognition of his technical
achievements and leadership. In 1995, he was elected to the
National Academy of Engineering and in 1997 to the Russian
Academy of Natural Sciences. In 1998, Holditch was elected
to the Petroleum Engineering Academy of Distinguished Graduates. He was elected an SPE and AIME Honorary Member in
2006. In 2010, Holditch was honored as an Outstanding Graduate of the College of Engineering at Texas A&M University. He
currently serves as Editor-in-Chief of SPEs peer-reviewed technical journals.
Duane McVay is the Rob L. Adams 40 Professor in the Department of Petroleum Engineering at Texas A&M University in College Station, Texas. His research interests include reservoir
simulation, uncertainty quantification, and unconventional
reservoirs. Previously, McVay spent 16 years with S.A. Holditch
& Associates, a petroleum engineering consulting firm. He is a
Distinguished Member of SPE and earned BS, MS, and PhD
degrees in petroleum engineering from Texas A&M University.

January 2013 SPE Economics & Management

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