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Introduction

The Society of Petroleum Engineers (SPE1), American Association of Petroleum Geologists (AAPG2), Society of Exploration Geophysicists (SEG3), World Petroleum Council (WPC); and Society of Petroleum Evaluation Engineers (SPEE) have worked over many years to standardise the definitions of petroleum resources and how they are estimated, culminating in the jointly developed Petroleum Resources Management System in 2007 (SPE-PRMS). The definitions and guidelines in the SPE-PRMS are designed to provide a common reference for the international petroleum industry. The new Australian Security Exchange (ASX) reporting rules effective from 1 December 2013 are generally consistent with SPE-PRMS or provide additional clarification. The Glossary of Terms Used in Resources Evaluations included as Appendix A in the SPE-PRMS has therefore been adopted here, with minimal alteration.

Unconventional resources are defined in the SPE-PRMS as follows:

Unconventional resources exist in petroleum accumulations that are pervasive throughout a large area and that are not significantly affected by hydrodynamic influences (also called “continuous-type deposits”).

Examples include coal seam gas (CSG4), basin-centred gas, shale gas, gas hydrate, natural bitumen (tar sands), and oil shale deposits. Typically, such accumulations require specialised extraction technology (e.g. dewatering of CBM, massive fracturing programmes for shale gas, steam and/or solvents to mobilise bitumen for in-situ recovery, and, in some cases, mining activities). Moreover, the extracted petroleum may require significant processing prior to sale (e.g. bitumen upgraders).

The relationship of unconventional to conventional resources is illustrated by a resource triangle (Fig.1), modified from the figure published by Chan (20115). Unconventional gas resources are shown down the right side of the triangle. Coal gasification has been added to the base of the triangle as suitable coals can be converted to synthesis gas (‘syngas’) either underground (in-situ) or through mining and surface processing. Synthesis gas can then be further processed to manufacture high value synthetic diesel (liquid synfuel) and fertilizer. Oil shale and coal gasification resources differ from the other unconventional gas resources in that the enhancement of host rock reservoir quality through either de-pressurisation (as for shallow coal seam gas) or hydraulic fracture stimulation (as for shale gas, shale oil and CSG) is not the key to yield significant volumes of synthesis gas. Rather, thermal energy is the key to creating synthesis gas from oil shale and coal gasification.

Very large volumes of petroleum exist in unconventional reservoirs, but their commercial recovery often requires a combination of improved technology and higher product prices.

Resource triangle demonstrating the relationship of unconventional to conventional resources

Figure 1. Resource Triangle - modified from Chan (2011) and Holditch (2009)

Definitions

The basic characteristics of each of the unconventional gas resource categories, with the exception of gas hydrates, are summarised in Figure 1. Unconventional gas resources have been divided into two broad types – those in which gas has been generated by natural thermogenic and/or biogenic processes6, and those in which gas (synthesis gas) is synthetically generated underground or in a surface plant with a thermo-chemical process.

A more detailed description of the unconventional gas resource categories, including shale gas, tight gas, coal seam gas and coal gasification is referenced in the Glossary.

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Classification framework

The SPE-PRMS resources definitions, together with the classification system, are intended to be appropriate for all types of petroleum accumulations regardless of their in-place characteristics, extraction method applied, or degree of processing required. Consequently, both unconventional and conventional resources share the same classification framework for petroleum resources:

Resources classification framework diagram

Figure 2. Resources Classification Framework.
(Society of Petroleum Engineers – Petroleum Resources Management System (SPE-PRMS) 2007).

Despite sharing resource definitions, different approaches exist for the evaluation of in-place volumes and for evaluating development and production programs of unconventional resources. New techniques are required for unconventional resource and reserve estimation due to the differences in hydrocarbon accumulation and extraction, described below.

As in conventional resource assessments, those quantities of petroleum estimated, as of a given date, to be potentially recoverable from ‘Undiscovered’ accumulations are classified as Prospective Resources (shown in blue at the bottom of the Resources Classification Framework in Figure 2). A chance of discovery and a chance of development are both associated with Prospective Resources.

Those quantities of petroleum that are estimated, as of a given date, to be potentially recoverable from ‘Discovered’ accumulations, yet the applied project(s) are not yet considered mature enough for commercial development due to one or more contingencies, are classified as Contingent Resources (shown in grey at the centre of the Resources Classification Framework in Figure 2). For unconventional reservoirs, the accumulation may be classed as ‘Discovered’ based on evidence other than a flowing well test (e.g. sampling and/or logging). A ‘Discovered’ resource type may be identified in very large areas from the results of prior drilling and the use of analogs to determine production potential.

Those quantities of petroleum anticipated to be commercially recoverable by application of development projects to ‘Discovered’ accumulations from a given date forward under defined conditions are classified as Reserves (shown in green at the top of the Resources Classification Framework in Figure 2). Reserves must satisfy four criteria: they must be discovered, recoverable, commercial and remaining (as of the evaluation date) based on the development project(s) applied. Typically, an unconventional resource can be classified as a Reserve after pilot programs have confirmed the technical and economic potential of a project(s). Reserves should be allocated once capital has been assigned for development.

An estimate of the associated uncertainty must be included for an assessment of unconventional resource potential. As in conventional resource assessment, a low/best/high case probability is allocated based on the estimated uncertainty.

References

1 The SPE is the peak international professional representative body for petroleum engineers. The SPE has a very active local branch in South Australia.

2 The AAPG is the peak international professional representative body for petroleum geologists The Petroleum Exploration Society of Australia (PESA) is the AAPG’s local affiliate. PESA has a very active local branch in South Australia.

3 The SEG is the peak international professional representative body for exploration geophysicists. The Australian Society of Exploration Geophysicists (ASEG) is the SEG’s local affiliate. The ASEG has a very active local branch in South Australia.

4 CBM is synonymous with coal seam methane (CSM) and coal geam gas (CSG). CSG is the more widely used term in Australia.

5 Chan, P., Unconventional Resources Estimation – Introduction, Chapter 8 in Guidelines for the Application of the Petroleum Resources Management System, November 2011.

6 Biogenic gas is formed at shallow depths and low temperatures by anaerobic microbial decomposition of sedimentary organic matter. In contrast, thermogenic gas is formed at deeper depths by: (1) thermal cracking of sedimentary organic matter into hydrocarbon liquids and gas (this gas is co-genetic with oil, and is called "primary" thermogenic gas), and (2) thermal cracking of oil at high temperatures into gas ("secondary" thermogenic gas) and pyrobitumen. Biogenic gas is very dry (i.e. it consists almost entirely of methane). In contrast, thermogenic gas can be dry, or can contain significant concentrations of "wet gas" components (ethane, propane, butanes) and condensate (C5+ hydrocarbons). These definitions come from a subsidiary of Weatherford.

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