NPV-Based Design for Coal Seam Reservoirs

Abstract

Abstract The production of natural gas from coal seam gas reservoirs has had a long and established history in the energy industry. Due to the relatively low permeability seen in many of these reservoirs, hydraulic fracturing is sometimes required to achieve economic production rates. The economic validity of hydraulic fracturing is dependent on a number of factors, including reservoir properties (and subsequent production rates), cost of stimulation services, as well as the type and quantity of materials. The justification of hydraulic fracturing is usually performed through net present value (NPV) analysis. NPV models for hydraulic fracturing in conventional and shale reservoirs are readily available in literature; however the same cannot be said for coal seam gas. This paper presents a NPV model adjusted to the coal seam gas environment. That is, it considers the effect of the dewatering period required before natural gas may be desorbed from the targeted formation. The model only considers the incremental production of hydraulic fracturing as well as the incremental cost to fracture, thereby demonstrating the true present value of the treatment. Included in the model is a break-even price required for sales gas. The production data represented within this paper was forecasted utilizing a pseudo three dimensional model that integrates unified fracture design (UFD). Sensitivity analyses were performed based on variances in reservoir properties (e.g. net pay, permeability, Langmuir isotherm) and stimulation design (e.g. proppant mass, type of proppant). This allows for greater understanding of the effects of the reservoir upon the economics of the project, as well as providing a means to economically optimize stimulation design.