AnOverviewoftheAntrimShale:ABroadbasedEvaluationoftheNaturalGasResource JohnMaxwell GER396 November22,2011 1

TableofContents I. II. III. Abstract Introduction GeologicFeaturesoftheMichiganBasin a. SubsidencePatterns IV. GeologyoftheAntrimShale a. NaturalFractures V. HydrocarbonFormationofAntrimShale a. ThermogenicGeneration b. BiogenicGeneration VI. VII. AntrimShaleNaturalGasDevelopment ProductionandWellCompletion a. DrillingCost b. LowReservoirPressure c. WaterCoproduction d. HydraulicFracturing VIII. IX. RegulatoryEnvironment FutureoftheAntrimShale a. UseofVacuumPumps b. TechnologicalDevelopments c. AHybridApproachtoDrilling d. CO2SequestrationandEnhancedGasRecovery X. XI. XII. Conclusion Figures WorksCited

Abstract TheAntrimShaleisanunconventionalnaturalgasinthenorthofthelowerpeninsulaof Michigan.TherehavebeenestimatesoftheAntrimShalecontainingbetween35and76TCFof naturalgas.Upthrough2009,therehasbeenabout3.0TCFrecovered(Agrawal(2009)p. 12).Thepeakofproductionwasinthelate1990sasthegraphbelowillustrates.

AntrimShaleGasProduction19912010 (bcf)Source:(MSPC)
250 200 150 100 50 0

Themainreasonfortheboominthelate1990swasrigscomingonlinefromearlieryears drilling.TherewasarushofdrillingpermitsrightbeforetheendingofthefederalSection29 NonConventionalFuelsincometaxcreditwereexpiringintheearly1990s.Oncethecredits expired,thepermittingdroppedoffsubstantially.WhileoperatorsintheAntrimShalehaveused hydraulicfracturingformanyyears,theyhavedonesothoughusingtraditionalverticaldrilling toaccessthegas.Thereasonsforthisarethreefold:lowdrillingcost,lowreservoirpressureand highwatercoproduction.Ofthesefactors,lowreservoirpressureandhighwatercoproduction arebarrierstoincreasethepracticeofhorizontaldrilling.Deploymentofvacuumpumpsto increasereservoirpressure(currentlyunderMichiganregulation)andasuccessfulutilizationof ahybridverticalhorizontaldrillingtechniquecalledtheJshapemaybetheanswerstoextend thelifeofthereservoir.

Introduction TheaimofthepaperistocoverthedetailoftheAntrimShale,fromthepastgeologicfeatures throughthecurrentproductionandfinallythefutureofthismaturenaturalgasresourcethat hasproducedgasforthestateofMichigan.TheorganicrichblackshalesoftheAntrim sequencehasproducednaturalgassincethe1940s,butonlyinthepast20yearshasthescale ofproductionexpanded.[Figure1]TheAntrimShaleisanunconventionalreservoirthatis locatedintheMichiganBasin.ThisisaninterestingtimeintheAntrimShaleasthesequencehas propertiesthatmaketheindustrywidepracticeofhorizontaldrillingforgasinshalesvery difficultintheAntrimformation(Agrawal(2009)p.60).Thispaperwillcoverthosereasonsfor thelackofhorizontaldrillingadaptationaswellasthegeologyoftheMichiganBasin,its subsidencepatternandthegeologyoftheAntrimShale.Next,thenaturalfracturesand developmentofthenaturalgaswillbeexplored.Adiscussionofthenatureofformationofthe gas,thermogenicversusbiogenic,willalsobecovered.Thehistoryofproduction,currentwell completions,productiontechniques,andregulatoryenvironmentarethendiscussed.Lastly,an evaluationofpossibleoptionsforthefutureofthismaturebasinwillbeconsidered. GeologicFeaturesoftheMichiganBasin TheMichiganBasinisafairlyshallowbasinwhichcoversmostofthelowerpeninsulaofthe state.ItrangesintothesurroundingstatesofIllinois,Indiana,Ohio,andWisconsin.Therock structureofthebasinrangesinage.TheearliestbasementrocksareCambrianandtheyoungest inthebasinareglacialdeposits.[Figure2]Duetoiceages,thebasiniscoveredbythicklayerof glacialdeposits(Catacosinosetal.(1990)p.561).Havingacircularshape,thebasinhasa200km radiusandisabout5kmthick(Howell&vanderPlujm(1999)p.974).TheMichiganBasin formedbymarinesedimentaryrocksthathaveanaveragethicknessof4800m(Catacosinoset 4

al.(1990)p.561).Thebasinsroundgeometryanditsmultiplelayersofsubsidencecannotbe attributedtoanyonespecificfactor.Themaindisputeintheformationofthebasinfocuseson theobservationthatthesubsidenceratesarenothomogenousthroughoutthebasin.Twoof thetheoriesthatareproposedare:subsidenceasaconsequenceofastressinducedcrustal weakeningmechanismandthermalcontractionthroughasubsidenceperiod(Howell&van derPluijm(1999)p.974).TheMichiganBasinisaninteriorcratonicbasin.Aninteriorcratonic basinisastableareaofcrustthathasbeenstableandimmobileformanymillionsofyears.The densecrustisstableinarelativesenseandhaskeptitspositioninrelationtosealevel.Astable cratoniczonemaybebuckled,butthecrusthasbeenimmobileandinasolidstateforavery longtime.TheMichiganBasinisasagbasin[Figure3](Leighton(1990)p.1&9).Someinterior cratonicbasinsliketheIllinoisandParisbasins,haveexperiencedswiftandfrequentsubsidence eventsintheirpast.Incontrast,theMichiganBasinhasexperiencedmanyeventsofsubsidence throughoutitshistoryincludinguptoneargeologictime(Howell&vanderPluijm(1999)p.974). TheareaofMichiganBasinis205km2andintermsofcratonicbasins,itissmallerthanthe WillistonbasininMontanaandsouthernCanada,butislargerthantheIllinoisbasin.The MichiganBasinwascreatedontopofaPrecambrianbasementrock(Leightonetal.(1990) p.729736).Thebasementsubsidencepatternscanhelptoshowtheageofthespecific stratigraphyofthedifferentareasofthebasin(Howell&vanderPlujm(1999)p.97677).The specificbasementrocksthatunderlietheMichiganBasinaregneiss,granites,maficintrusions, andvolcanics(Catacosinosetal.(1999)p.563). SubsidencePatterns Thebasinhastheuniquecircularstructurewithfourmaintypesofsubsidence:troughshaped, narrowbasincentered,broadbasincenteredandregionaltilting.Thetwobasincentered

subsidencepatternsarethemajorityofthesubsidenceseenintheMichiganBasin(Howell& vanderPlujm(1999)p.974).Howell&vanderPlujm(1999)identifiedsixmainsequencesin thebasinwithoneminorsequence.[Figure4]Amajorsequenceofsubsidencehasanageof UpperDevonianthroughMississippian.Inthissequence,thereisaregionaleastwardtilttothe subsidence.Therocktypesinthissequenceconsistof:shales,sandstonesandanhydrites.This sequencealsocontainstheAntrimshalegroupwhichwillbediscussedfurtherinthenext section(Howell&vanderPlujm(1999)p.9834).Thethinminorsequencethathasbeen identifiedisofUpperDevonianage,iscomprisedofsandstoneandshales.Italsohasabroad basincenteredsubsidencepattern(HowellandvanderPlujm(1999)p.9823).Overall,the MichiganBasinhashadmanyperiodsofgreatsubsidenceactivityandthennoactivity.Thebasin anditsrichorganichistoryhaveledtotheformationofsedimentarylayerswherehighly enrichedorganicrockswereformed.Thenextsectionwilldiscussthegeologyofoneofthe enrichedlayers:theAntrimShale. GeologyoftheAntrimShale NearlyalloftheLowerPeninsulaofMichiganhasAntrimShalebeneathit(Mangeretal.(1991) p.511).TheoverlyinglayeroftheAntrimiscalledtheEllsworthShale.Thelayerbeneaththe AntrimistheTraverseFormation.TheTraverseFormationismainlycomposedoflimestone,but hasalsobeencalledMudLakeGrayShale(Dellapenna(1991)p.1218).TheLowerAntrimShale withaDevonianMississippianagewascreatedasaresultofalargeseawhichisknownasthe BlackShaleSea,whichspreadthroughoutwhatisnowtheNorthAmericancontinent.Ontop oftheDevonianandMississippiansequencesisasectionofhundredsoffeetofglacialremnants [Figure5](Kuuskraaetal.(1992)p.210).ThemineralmakeupoftheAntrimis:5060%quartz, 2035%illite,515%kaolinite,05%chloriteand05%pyrite(Dellapenna(1991)p.8).The

Antrimshalehasacompositionoftwomaintypesofshales.Thefirstishighlyorganicblack shaleandthesecondisaloworganic,carbonatemixedgraygreenshale(Dellapenna(1991)p. i).Thesetwomaincategoriesarefurtherbrokenintofourcategories:lowergrayshalefacies, lowerblackshalefacies,middlegrayfaciesandupperblackshalefacies(Mangeretal.(1991) p.517).ThenamesoftheshaleslocatedintheAntrimsectionaretheNorwood,Paxtonand Lachinemembers(Kuuskraa(1992)p.2).TheLachineandNorwoodarethehydrocarbon productionareasandhavethehighestorganiccontent(Agrawal(2009)p.15).Themainareaof focusforthenaturalgasdevelopmentisintheblackshales,NorwoodandLachinewhichare highlyenrichedwithorganicmaterialandcontainup16wt.%totalorganiccontent(TOC) (Martinietal.(2008)p.328).TheTOCoftheshaleinfluencesthecoloroftheshaleinadirect way.TheshaleswhicharedarkesthavethehighestTOCwt.%(Dellapenna(1991)p.25).Interior cratonicbasinsareknowntocontainUpperDevoniansedimentationinthicklayersaswellas highTOCblackshales(Martinietal.(2003)p.1358).ThemeasurementoftheTOCoftheshales ismeasuredbythegammaraymagnitudeforwhichtheNorwoodandLachineformationshave thehighestrelativereading.[Figure6]TheformationofhydrocarbonsintheAntrimShalewill bediscussedinthefollowingsection.Someotherinteriorcratonicbasinshalesthatcontain blackshalessimilartotheAntrimFormationareNewAlbanyShale,WoodfordShale,and BakkenShale(Dellapenna(1991)p.18). NaturalFractures Althoughthesourceandreservoirrocksarethesameintheformation,theAntrimShaleisalso highlyfracturedwhichallowsforthemigrationandconcentrationofthegas(Martinietal. (2003)p.1359).Thesenaturalfracturesareverysignificanttotheproductionofshalegas.The naturalfracturesmaketheshalebrittleandallowforhydraulicfracturingtotakeplace.The

currentnaturalfracturesystemandthehydraulicfracturingallowforconnectionofthegas generationareatorecoveryarea(Matson(2010)p.5).ThefracturesintheNorwoodandLachine membersaremostsignificant(Goodman&Maness(2008)p.23).[Figure7]Thesefractures werelikelycreatedbytheglacialprocessthattookplaceinthePleistoceneandthesubsequent meltingofthoseglaciers.Therecurrenceofglaciersmovingbackandforthacrossnorthern Michigan,aidedintheexpansionofexistingfractures(Martinietal.(1998)p.1719).[Figure8] ThenorthernmarginoftheAntrimShaleisauniqueshalereservoirinthatitsenvironmenthas lowthermalmaturityandsystemofnaturallyformedfractures.Thefractureshavebeena catalystintheflowofglacialwatertorechargeandthehydrocarbonstotransmigrateto reservoirrock(Martiniet.al(2003)p.1359).Themassofthemovementofmultipleglacial eventsonthebasinmayhavebeenthecontributingfactorforthecreationofthefractures.The waterfromthemeltedglaciersmovedintothesefracturesandprovidedaninfluxoffluid.These fluidswithlowsalinecontentareconducivetoanenvironmentformicrobialactivity.This positiverelationshipofthewaterandbacterialactivityhasbeenthekeytogasformation(Shurr &Ridgley(2002)p.1959). HydrocarbonFormation Thereisevidencethattheinteriorcratonicbasinsarecontainersforthedevelopmentand storageofhydrocarbons(Leighton(1990)p.13).IntheAntrimShale,theprimaryhydrocarbon developedisnaturalgas.Thesourcerocksofthegasarethehighlyorganicblackshalesthat werediscussedintheprevioussection(Dolton&Quinn(1996)p.4).Unlikeconventionalnatural gasbasins,wherethereissignificantmigrationofhydrocarbonsfromsourcerockstoreservoir rocks,theblackshalesareunconventionalasthegasiscreatedandstoredinthesamerock (Martinietal.(2003)p.1359).Thedatashowsthattherehasnotbeenmigrationonasignificant

scale.WithintheAntrimShale,approximately7075%ofthegasisreleasedfromtheorganic materialintheshale.Fracturesandporositymakesupthebalance.TheAntrimShaleissimilar tothepropertiesofcoalbedmethanereservoirs.Someofthesesharedfeaturesofthegas productionare:generationandstorageinsitu,ahigherreservoirfractionofCO2(Martinietal. (2008p.330).Therearethreemethodsthatleadtothecreationofnaturalgas.Firstisthe thermalcrackingofkerogen.Second,issecondarycrackingofoil.Thelastisbiogenic creationfrombacteria.ThenaturalgasintheAntrimShaleisthoughttohavebeenproduced boththermogenicallyandbiogenically.Thetoolusedtodistinguishbetweentheproductionof thetwodifferenttypesofgasistoobservethe13Cisotopes(Martinietal.(1998)p.1699 1701). ThermogenicGasProduction Thesourceforthermogenicgenerationofnaturalgasiskerogen.ThekerogenintheAntrim ShaleismainlyTypeI.TheTypeIkerogenisknownasliptinite.Thelipinitehasahighhydrogen tocarbonratio,howevertheoxygenamountissmall.Kerogenofthistypeisformedbyalgae anditsadulterationintogasisduetothecrackingofthekerogen.Theoptimalformation environmentisindarkmudswithlowoxygencontent(Dellapenna(1991)p.589).Therangeof the13Cvaluesinathermogenicgasproductionenvironmentisbetween55to40%(Martiniet al.(1998)p.1701).ThethermogenicgascomponentoftheAntrimShalehasbeenimportant, buttherealproductionofnaturalgashasfocusedonthenaturalgasthatoriginatedbiogenically (Shurr&Ridgley(2002)p.1957). BiogenicGasProduction Biogenicgasproductioniscreatedbyaprocessknownasmethanogenisis.Therearetwo processesforthistooccur.OneprocessisknownasCO2reduction.Intheformationofthegas 9

intheAntrimShale,thehypothesisisthatitwasproducedviaCO2reduction.[Figure9]The processneedsnonorganicallyproducedCO2andfourH2moleculeswhichthenaretransformed viabacterialactivityintotwoH2OmoleculesandCH4.Thisisasimplificationofalongerseriesof reactions,buttheprocessissimilartowhathappenswhenthereismethanegasgeneration withinalandfill(Martinietal.(1998)p.171516).Todetermineifnaturalgashasbeencreated biogenically,onemustlookforevidence.Theevidenceofanaturalgasthatwascreatedby bacteriaistoexploretheisotopesoftheproducedgasandwaterandthenfitthatdataintoa frameworkofpastgasandwatersamples.Gaswithanincidenceof13Cvaluesof<55permil (carbonisotopes)arethesignatureofbiogenicgasproduction(Martinietal.(2003)p.1356). InitiallyithadbeenthoughtthatthenaturalgasintheAntrimShalewasmainlyofthermogenic origin.However,theresearchhasshownthatthestructureofthegasleansmoretowarda biogenicoriginofthegasduetothefactthatAntrimShalenaturalgashasa13Cvaluesinof approximately50permil(Martinietal.(1998)p.1699).Also,thewatersinthegasreservoirs arecomparedtoglacialgroundwaterstolookforevidenceofmicrobialactivity.Thehighvalues of13Cinthewaterproducedfromthegaswellsrelativetoglacialwatersfurthercementsthe conclusionofbiogenicgasproductionfortheAntrimShale(Martinietal.(1998)p.1714).The evidenceconductedontheAntrimShalegasputstheratioofgasformationat80%biogenicand therestthermogenic.DuetothegeologyoftheAntrimShaleandthepresenceoflargeamounts ofwater,microbialgasproductiontakesplaceatamuchyoungertimeperiodthanthatof conventionaltypeofmethaneproduction.Thisprocessalsocanberepeatedmanytimesover whenthecorrectconditionsmanifest.IntheAntrimShaletheformationofthebiogenicgasin themosteconomicaccumulationsareinthenorthernpartofthestateknownasthenorthern margin(Shurr&Ridgley(2002)p.1956).[Figure10] 10

 AntrimShaleNaturalGasDevelopment TheAntrimShalemainhydrocarbonisnaturalgas.Thegasplaysarenumbered6319and6320 respectively.Theplaystogethermakeupanareaofabout39,000squaremiles(Dolton&Quinn (1996)p.1).TheAntrimShalemayhavebeenoneofthefirstshaleformationstobedrilledfor gasinthe1920s(Agrawal(2009)p.52).TheAntrimShalehasbeenknowntohavereservesof gassincethe1940s.Therewasnotanylargescaleproductionofthegasuntilaboutthe1980s whenextractiontechnologywasdevelopedandtheU.S.federalSection29NonConventional Fuelsincometaxcreditswereenacted[Figure11](Goodman&Maness(2008)p.1).Thepermits peakedin1992,theyearbeforethecreditwindowclosed.Thetaxcreditmadeproducingthis gaseconomic.Themainproductionliesalongthenorthernproductiontrend(NPT)alsocalled thefairway.Thegroupofhydrocarbonscanbeviewedasacollectionofcellswhen economicallydefinetheboundariesoftheAntrimShaleplay(Dolton&Quinn(1996)p.6).The NPTareahasseenanexplosionofproductiongaswellsbetween1986and2008.Asof2010, therewereroughly9700wellsproducingintheAntrimplay.The2010productionamountofgas was120.2BCF.TheproductionoftheAntrimShalepeakedin1999at199.5BCFofproduction. [Figure12]Asof2010only53permitshadbeenissueddownfrom1210permitsin1993(MSPC 1(2011)).ThetotalnaturalgasresourceestimateintheAntrimShaleisbetween35and76TCF with2.6TCFhavingbeenproducedthrough2008(Agrawal(2009)p.12).Astandardwellfieldin theAntrimShalewillhavenumerouswellswiththespacingatanaverageof100acres,produce itspeakwaterinaboutfivemonths,andpeakgaswithin20months(Goodman&Maness(2008) p.38).AsofJuly2011,thelargestoperatorintheAntrimShaleisChevronMichigan.[Figure13] 11

 ProductionandWellCompletion Asanunconventionalreservoir,theAntrimShaleblendsfeaturesofcoalbedmethane reservoirsanddrygasshales(Hopkinsetal.(1998)p.177).AlthoughmostshalesintheUnited Statesareproducedviahorizontaldrilling,thedistinctpropertiesoftheAntrimShalemakeit difficulttoproducethegaswiththehorizontaldrillingmethod.TheAntrimShaleistheonly majorshalegasresourcethatdoesnotemployhorizontaldrillingasthemaintechnique,vertical drillingistheonlymethodusedforthesethreereasons:minimaldrillingcost,lowreservoir pressureandhighwatercoproduction(Agrawal(2009)p.60). DrillingCost Thecostoftheverticaldrillingisminimalduetotheshallowlocationofthegas.Thegasis producedfromdepthsbetween500and2,300ft.(Hopkinsetal.(1998)p.177).Horizontal drillingismoreexpensivethanverticaldrillingbyafactoroftwo(Agrawal(2009)p.60).Atypical projectintheAntrimplayhasaverticalwelldrillingcostofapproximately$350,000(Goodman &Maness(2008)p.38). LowReservoirPressure LowreservoirpressureintheAntrimShale,withapressureof400psimaycompromisethe stabilityofhorizontalwellbore.Thepressuregradientoftheshalerangesfrom0.35psi/ft.to 0.38psi/ft.Thislowpressureislessthannormalhydrostaticpressuresotheverticalwells produceabsorbedgasalongwithfreegas(Agrawal(2009)p.17,5960).

12

WaterCoproduction Thefinalreasonistheelevatedwaterrateswhichincreasethecoststooperatethewell.The productioncanreachupto500BW/D(Hopkinsetal.(1998)p.178).Themeanamountofwater producedis110BW/Dwhichcomplicatestheproduction(Agrawal(2009)p.53&60).Wateris producedfromthesystemandthepressurewilldecline.Asthewaterproductionratedeclines withremoval,thegasproductionwillriseasthegasisfreedfromtheshale.Ifthewellsare crowdedneareachother,thismayhelpclearthewaterquicker,butwilldecreasethetotal productionofthegas(Jenkins&Boyer(2008)p.94).Anoperatorshouldbalancethesetwo forces.Inadditiontothecostsassociatedwiththeinitialdewateringofthewell,separate disposalwellsarealsoneedtostorethewater(Hopkinsetal.(1998)p.178).Inthemid1990sa horizontalwellwasattemptedintheAntrimShale.Althoughitdemonstratedthatfracingcould beaccomplished,theeconomicsdidnotmakesenseatthattime(Fink(1998)p.191).Recently, therehavebeenhorizontalwellsdrilledbutduetothepropertiesoftheshaleadipcouldform andblockthedrillhole.Lowpressureatthebottomcombinedwiththeabundantpresenceof watercausesthesectionofthewelltobeinaccessibleforproduction(Kreh(2008)p.1&4). Besidesthepresenceofwater,horizontaldrillingalsopresentsdifficultiesintheformofcuttings removal.Asthecuttingsaccrueinthewellbore,agroundedtypeofshalemudbeginstoform. Asshalesareinert,attemptstouseacidforremovalareineffective(Wood&Quinlan(2009)p. 1415). HydraulicFracturing DuetothegeologyoftheAntrimShale,eventheverticallydrilledwellsdonotbecome economicaluntilthereissomeformofstimulantplacedinthewellsystem.Hydraulicfracturing hasbeenusedinMichigansincethe1960s.(MDEQ(2011)p.23)Intheearlydays,theinitial 13

attemptatthestimulationoftheshaleswasasimplefracturingwithawateronlyarrangement (Fink(1998)p.187).Intheearly1990sexperimentsweretakenontodeterminewhatwasthe mosteffectiveformofstimulationtoyieldgasproductionintheAntrimShale.Theteststhat wereundertakenwereacidballout,highenergygasfracturingandhydraulicfracturing(Reeves etal.(1993)p.6).Thestandardpracticeinthesequencethatwasdevelopedinthe1990swas atwostagefoamfracwithasandconsolidatingagenttopreventsandflowback(Fink(1998) p.187).Withabout90%ofthegasdissolvedinorganicsandtherestinnaturalfracturespores spaces,thetwostagetechniquetofreethegaswasagreatsuccess(Hopkinsetal.(1998) p.177).ThisformoffracingisstillinpracticetodayintheAntrimShale(Goodman&Maness (2008)p.39).TheAntrimShalehasnaturalfracturesthroughoutthesequence,hydraulic fracturingisalsoutilizedtoreachthesenaturalfracturesandtosmoothoutpressuregradients inthewellbore(Hopkinsetal.(1998)p.178).Thisformoffracturingwasverysuccessfulfrom themidtolate1990sandprovidedthegreatestproductionfromtheAntrimShale. RegulatoryEnvironment ThestateofMichiganhashighlyregulatedenvironmentforthedevelopmentofshaleresources. Therearetwoagenciesresponsibleforregulation:MichiganDepartmentofEnvironmentQuality (MDEQ)whichregulatesoil,gasandwater.Inaddition,theMichiganPublicServiceCommission (MPSC)regulatesgasandCO2(MSPC(2011)).Sincemuchoftheleaseholdacreageisonstate ownedforestland,thereisalsointeractionwiththeMichiganDepartmentofNaturalResources (DNR).Therehasbeenpublicconcernwiththemigrationofgasorfracturefluids,oneofthe rulesthattheMDEQhasissuedrequiresthatsurfacecasingandcementbeplaced100feetinto bedrockandalso100feetbelowafreshwatertable(MDEQ(2011)p.23).Theserequirements applytoallwellsregardlessoffracturingactivity.Recently,theMDEQhasalsoaddedruleson

14

theonesalreadyinplace.Theuseofwateringasproductionisexemptfromwaterwithdrawal, butifanoperatoruses100,000gallonsofwaterperdayovera30dayaverage,itisconsidered ahighvolumewellcompletion.Iftheoperationfallsunderthisdesignationawatersourceand amountassessmentmustbedisclosed.Theothertwomajorrulesthathavebeenrecently releasedare,one:adisclosureoffracingchemicalsandtheimpactstohumanhealthand,two:a disclosureofrecordsoftherates,volumesandpressuresofthefracturing.Also,another regulationthatappliestothenaturalgasindustryisarulethatstates:Nogaswell,pool,orfield shallbeplacedundervacuumexceptwiththeapprovalofthecommission.(MSPC(2010) p.39) FutureoftheAntrimShale AlthoughtheAntrimShaleisconsideredamatureplay,therehavebeendevelopmentsthat seektoextendtheproductivelifeoftheshale.Sinceonlyaround3.0TCFhavebeenrecovered, thisrepresentsonly8%ofthe35TCFestimateofthetotalresource.Therehavebeenattempts torevisepolicyandusetechnologytoprolongthelifeoftheAntrimShale. UseofVacuumPumps Therearefewareaswherepolicychangescouldincreasetheviabilityoftheresource.Thefirst policychangethathasbeenexploredistoreformthevacuumregulationtoallowvacuum pumpstobeused.Vacuumpumpscanincreasetheabilitytoseparatethegasfromtheother materialsproducedandraisethepressureinthereservoir,thusincreasingrecovery.Therewere severaloperatorswhowishedtohavetheirwellsplacedundervacuum.Allapplicationswere withdrawnduetotheMPSCandoperatorstocometoanagreement(MSPC(2010)p.34). Amongtheoperators,thereseemstobeconsensustoallowthewellstobeplacedunder

15

vacuumwith49%infavor,39%opposedand12%undecided(MSPC(2010)p.36).Anotherpolicy areathatcouldberevisedisthepermittingenvironment. TechnologicalDevelopments Duetothehighwatercontentoftheshale,horizontaldrillinghasbeendifficultandgenerally uneconomicintheAntrimShale.Thenaturaldipsandtrapshaveslowedtheuseofhorizontal drilling.But,therehavebeentechniquesdevelopedrecentlythatseektoavoidthetraps.An elementaryprogramthathasbeendevelopedtakestheTrueVerticalDepth(TVD)atvarious intervalsandnotesthechangefrompreviousintervals.Ifthereisnopresenceofatrap,theTVD deltawillremainnegative.Ifitflipsbetweennegativeandpositivechanges,thereislikelyadip. Avoidingtheseareasiscentraltodevelopingasuccessfulwell(Kreh(2008)p.2).Apracticeused toavoidthesedipsiscalledthebypassmethod.Thefirstpartofthismethodistoemploya smallerstring.Thiscouldbedifficultifthetrapislocatedtoofaroutintothewellbore(Kreh (2008)p.4).Ifthetrapisdistantandthesmallerdrillstringdoesnotwork,thenextstepwould betousenitrogentoclearthetrap.Thiscanbeusedovermultipleintervalstocontinueto removethewaterfromthewell(Kreh(2008)p.4).Theemploymentofthesimplemodeland nitrogentrapclearingisaninterestingresearchopportunityfortheAntrimShale. AHybridApproachtoDrilling SincemuchofthegasintheAntrimShaleisshallow,verticalwellsareoptimalforextraction. However,thisalsopresentsachallengeassurfaceconcernsconstrainthedevelopmentofa clusterofverticalwells.Thereisaneedtoprovetothestatethatadesigndemandinglesswells andamoreeffectivedrainageareatoallowanexpansionofthistypeofdrilling(Wood& Quinlan(2009)p.18).Ifthepermittingapplicationsforwellswererestructured,therecouldbea possibilityofahybridapproachcombiningverticalandhorizontaldrilling.Thedifficultiesof 16

horizontaldrillingintheAntrimShalehavebeenmentioned:watertraps,shalemudpasteand cheaperrelativecostofverticalwells.Atestofthehybridapproach,calledtheJshape,was performedbyJordanDevelopmentCompanyinwhichaverticalwellwasdrilledandthenbegan ahorizontalorientation.Thelateralwellwasdrilledatanangleof90degrees.Thiswell,like othertruehorizontalsintheAntrimShalewasunsuccessful.However,whenJordanuseda higherangle,between75and80degrees,thegasproductionwasgreatlyimproved.This technique,knownastheJdesignwasmoresuccessfulatavoidingthewatertrapsasshale pastewhichhaspersistedinmanyhorizontalwellsdrilledintheAntrimShaleinthepast.[Figure 14]Fromthegeneralmodel,atestofthehybridapproachattheColfax29well,wasattempted whichresultedinthefirsttimethatalateralhasbeenusedtoproduceAntrimgas.[Figure 15](Wood&Quinlan(2009)p.167).Anexpansionofthiswelltypemaybeakeyfactorinthe continuationoftheAntrimShaleasaproductivegasreservoir. CO2SequestrationandEnhancedGasRecovery Giventhatdepletednaturalgasfieldsareworthrelativelylittle,CO2sequestrationandstorage couldbeattractivetooperators(AlHasamietal.(2005)p.2).TheAntrimShaleismatureand duetoallofthatproduction,thebottomholepressurehasdecreasedinthesequencearea (Kreh(2008)p.1).TheinjectionofCO2inoilreservoirshasbeenwidelyexplored,butCO2 injectionforenhancedgasrecovery(EGR)hasnotbeenresearchedasmuch.TheAntrimShale couldbenefitfromahasteningofproductionandleadtoagreateroverallrecovery(AlHasami etal.(2005)p.2).TheAntrimShalehasanaturaloccurrenceofCO2asabyproductofproduction (Goodman&Maness(2008)p.57).ThismeansthatnearbyoilfieldstotheAntrimShalelikethe NiagaranBrownformationaswellasmorematuregasfieldscouldbenefitfromthispipeline qualityCO2inlargequantitiesandproximity(Toelleetal.(2008)p.1).Although,therehasbeen

17

concernsthattheCO2couldmixwiththenaturalgas,CO2isdenserthannaturalgas(atreservoir conditions)andtheCO2ismoresolubleinwaterthanthenaturalgas(AlHasamietal.(2005) p.2).BothofthesepropertiesareveryfavorabletotheAntrimShaleasthereisahighwater contentandlowpressurethroughouttheplay. Conclusion TheMichiganBasinisaninteriorcratonicbasinwhichthroughsedimentaryprocessesand subsidencehasabowlshape.Oneofthegeologicsequenceswithinthebasinisanorganically richshaleknownastheAntrimShale.Thisshaleisimportantbecauseithaseconomic concentrationsofbiogenicnaturalgas.Thetwosectionswiththehighestconcentrationofgas theNorwoodandLachinemembers.Thistypeofshaleisuniquebecauseitwasoneofthefirst reservoirstoproducenaturalgasthroughtheemploymentunconventionalproductionknownas hydraulicfracturing.Fracturesprovideapathforthewaterandbacteriatoformandtrapthe naturalgas.Thisshalehasbeenaveryproductiveresourcefortheproductionofnaturalgas. Althoughtheproductionhasdeclinedsincethelate1990s,thetotalproductionofnaturalgas outoftheAntrimShaleis~3.0TCF.Whilefracinghasbeenusedinthesequence,horizontal drillinghasnothadmuchsuccess.Themainreasonsforthisarelowverticalwellcompletion costs,lowoverallreservoirpressureandlargeamountsofwatercoproduction.Recentpolicies andregulationswithinthestateofMichiganhavemadeproductionalittlemorecostly.The futureoftheAntrimShalelooksfairlybrightwithoptionsonthetablethatcouldincreasethe recoveryofthegas.Anallowanceofvacuumpumpsbythestate,anadaptationofdip avoidancetechnologies,anincreaseinthepracticedrillingofJshapewells,andCO2 sequestrationforenhancedgasrecoveryarealloptionsthatareonthetablethatcouldextend thelifeoftheAntrimShalegasreservoir.

18

Figure 1: Development History of Antrim Shale Production Area Source: Goodman and Maness (2008) p. 11-14

19

Figure 2: Michigan Basin Stratigraphic Column Source: Catacosinos et al. (1990) p.564

20

Figure 3: Illustration of Sag Basin (Michigan Basin as Case Study) Source: Martini et al. (1998) p.1708

21

Figure 4: Stratigraphic Column of Subsidence Sequences of Michigan Basin Source: Howell and van der Plujm 1(999) p. 977

22

Figure 5: Subset of Michigan stratigraphic column Source: Wood and Quinlan (2009) p. 25

23

Figure 6: Gamma Ray Log of Antrim Shale Source: Manger et al. (1991) p. 517

24

Figure 7: Fracture Orientations of Antrim Shale - Lachine and Norwood Members Source: Goodman and Maness (2008) p. 23

25

Figure 8: Illustration of Antrim Trap of Gas Source: Goodman and Maness (2008) p. 26

26

Figure 9: Chemical Reaction to from natural gas (methane) Source: Martini et al. (1998) p. 1701

Figure 10: Map of Michigan Basin Northern Margin Production Zone Source: Martini et al. (2008) p. 329

27

Figure 11: Antrim Producing Area: Permits, Wells Drilled, Well Connection Permits, Daily Production Aurora Oil & Gas Corporation RPSEA/GTI Shales Forum 6/4/2009

28

Figure 12: Yearly Production of the Antrim Shale Natural Gas Source: MSPC Website 2011

29

Figure 13: Production by Company Source: MSPC Website 2011

MICHIGAN PUBLIC SERVICE COMMISSION

MONTHLY GAS PRODUCTION SUMMARY

REPORTER CHEVRON MICHIGAN LLC LINN OPERATING, INC. TERRA BreitBurn WARD LAKE ENER MUSKEGON TRENDWELL JORDAN DEVELOPMENT MERIT ENERGY COMPANY DELTA ENERVEST OPERATING LLC OILFIELD HRF SRW PAXTON RESOURCES NORTHSTAR ENERGY LLC YOHE NUENERGY OPERATING INC J5 PRESIDIUM ANTRIM WEST, L ANTRIM DEVELOP SCHMUDE OIL BABCOCK and BROWN ENER DEVONIAN ENERGY JDB ENERGY LLC SAVOY ENERGY LP AZTEC PRODUCTION COMPA JAGUAR ENERGY, LLC OMIMEX DYNAMIC DEVELOPMENT MONTHLY TOTALS TOTAL MONTHLY GAS PRODUCTION
(MCF)

J ULY 2011
AVERAGE DAILY GAS PRODUCTION
(MCFD)

ANTRIM

TOTAL NUMBER OF WELLS ONLINE 1,678 1,624 797 780 849 602 423 353 315 413 343 235 120 246 145 165 122 74 61 44 74 13 26 39 19 3 1 2 2 1 9,569

TOTAL NUMBER OF PROJECTS ONLINE 104 84 52 77 147 33 27 24 24 26 31 28 32 16 27 15 9 3 6 7 3 4 1 2 3 1 1 1 2 1 791

DAILY WELL PRODUCTION AVERAGES

(MCFD/WELL)

1,656,868 1,636,392 844,200 808,014 708,240 706,069 468,834 379,645 332,039 317,721 263,378 252,663 224,585 190,159 147,317 145,475 119,657 91,098 77,648 53,789 39,987 20,312 18,689 17,148 14,907 7,435 2,807 2,000 905 175 9,548,156

53,447 52,786 27,232 26,064 22,846 22,776 15,123 12,246 10,710 10,249 8,496 8,150 7,244 6,134 4,752 4,692 3,859 2,938 2,504 1,735 1,289 655 602 553 480 239 90 64 29 5 308,005

31 32 34 33 26 37 35 34 34 24 24 34 60 24 32 28 31 39 41 39 17 50 23 14 25 79 90 32 14 5 32

Gas volumes are reported at 14.73 psia and 60 degrees F This report is available on the Internet at this address: http://cis.state.mi.us/mpsc/gas/prodrpts.htm Report Date: September 30, 2011

30

Figure 14: Example of Hybrid Approach J-shape drilling Source: Wood and Quinlan (2009) p. 29

31

Figure 15: Actual Test Well Design of J-shaped Hybrid Well Source: Wood et al. (2009) p. 106

32

WorksCited Agrawal,A.(2009).ATechnicalandEconomicStudyofCompletionTechniquesInFiveEmergingU.S.Gas ShalePlays.,TexasA&MUniversityp.1137. AlHasami,A.,S.Ren,etal.(2005).CO2InjectionforEnhancedGasRecoveryandGeoStorage:Reservoir SimulationandEconomics.SPEEuropec/EAGEAnnualConference.Madrid,Spain,Societyof PetroleumEngineers.P.17 Catacosinos,P.A.,P.A.Daniels,Jr.,etal.(1990)."Structure,stratigraphy,andpetroleumgeologyofthe MichiganBasin."AAPGMemoir51:p.561601. Dellapenna,T.M.(1991).Sedimentological,structural,andorganicgeochemicalcontrolsonnaturalgas occurrenceintheAntrimFormationinOtsegoCounty,Michigan.p.1147 Dolton,J.C.,Quinn,G.L.(1996)."AnInitialResourceAssessmentoftheUpperDevonianAntrimShalein theMichiganBasin."UnitedStatesDepartmentoftheInterior:U.S.GeologicalSurvey:p.123. Fink,K.T.(1998).CaseHistory:CasedHoleHorizontalAntrimWellFracturedinMultipleIntervals.SPE EasternRegionalMeeting.Pittsburgh,Pennsylvania.p.187195 Goodman,W.R.andT.R.Maness(2008)."Michigan'sAntrimShaleplay;atwodecadetemplatefor successfulDevoniangasshaledevelopment."Abstracts:AnnualMeetingAmericanAssociation ofPetroleumGeologists2008.p.169 Hopkins,C.W.,R.L.Rosen,etal.(1998).CharacterizationofanInducedHydraulicFractureCompletion inaNaturallyFracturedAntrimShaleReservoir.SPEEasternRegionalMeeting.Pittsburgh, Pennsylvania,1998Copyright1998,SocietyofPetroleumEngineersInc.p.19 Howell,P.D.andB.A.vanderPluijm(1999)."Structuralsequencesandstylesofsubsidenceinthe MichiganBasin."GeologicalSocietyofAmericaBulletin111(7):p.974991. Jenkins,C.D.andC.M.Boyer.II(2008)."CoalbedandShaleGasReservoirs."SPEJournalofPetroleum Technology(02).p.9299 Kreh,K.A.(2008).Identifying,Bypassing,andAvoidingGasTrapsinHorizontalWells.SPEEastern Regional/AAPGEasternSectionJointMeeting.Pittsburgh,Pennsylvania,USA.p.14 Kuuskraa,V.A.,D.E.Wicks,etal.(1992).GeologicandReservoirMechanismsControllingGasRecovery FromtheAntrimShale.SPEAnnualTechnicalConferenceandExhibition.Washington,D.C.,1992 Copyright1992,SocietyofPetroleumEngineersInc.p.209224 Leighton,M.W.(1990)."Introductiontointeriorcratonicbasins."AAPGMemoir51:p.124. 33

 Leighton,M.W.andD.R.Kolata(1990)."Selectedinteriorcratonicbasinsandtheirplaceinthescheme ofglobaltectonics;asynthesis."AAPGMemoir51:p.729797. Manger,K.C.,S.J.P.Oliver,etal.(1991).GeologicInfluencesontheLocationandProductionofAntrim ShaleGas,MichiganBasin.LowPermeabilityReservoirsSymposium.Denver,Colorado.p.110 Martini,A.M.,L.M.Walter,etal.(1998)."Geneticandtemporalrelationsbetweenformationwaters andbiogenicmethane;UpperDevonianAntrimShale,MichiganBasin,USA."Geochimicaet CosmochimicaActa62(10):p.16991720. Martini,A.M.,L.M.Walter,etal.(2003)."Microbialproductionandmodificationofgasesin sedimentarybasins;ageochemicalcasestudyfromaDevonianshalegasplay,MichiganBasin." AAPGBulletin87(8):p.13551375. Martini,A.M.,L.M.Walter,etal.(2008)."Identificationofmicrobialandthermogenicgascomponents fromUpperDevonianblackshalecores,IllinoisandMichiganBasins."AAPGBulletin92(3):P. 327339. Matson,M.M.(2011)."TheOriginofNaturalFracturesintheAntrimShale,Michigan."P.151. MichiganDepartmentofEnvironmentalQuality(MDEQ).(2011).HighVolumeHydraulicFracturingWell Completions.M.D.o.E.Quality:p.13. (MSPC)MichiganPublicServiceCommission(2010).MICHIGANANTRIMSHALEPRODUCTION:HISTORY ANDPHYSICALATTRIBUTESASITRELATESTOU16230:p.145. (MSPC),MichiganPublicServiceCommission(2011)."AboutMichigan'sNaturalGasIndustry: ExplorationandProduction."http://www.dleg.state.mi.us/mpsc/gas/about1.htm(lastrevised Oct.142011) (MSPC1),MichiganPublicServiceCommission(2011)."MPSCGasWellConnectionPermitsIssued. http://www.dleg.state.mi.us/mpsc/gas/pesec1.htm(lastrevisedMarch022011) Reeves,S.R.,D.G.Hill,etal.(1993).ProductionOptimizationintheAntrimShale.SPEProduction OperationsSymposium.OklahomaCity,Oklahoma.p.495505 Shurr,G.W.andJ.L.Ridgley(2002)."Unconventionalshallowbiogenicgassystems."AAPGBulletin 86(11):p.19391969. Toelle,B.,L.J.Pekot,etal.(2008).EORPotentialoftheMichiganSilurianReefsUsingCO2.SPE/DOE SymposiumonImprovedOilRecovery.Tulsa,Oklahoma,USA,SocietyofPetroleumEngineers.p. 17 Wood,J.R.,Quinlan.W.C.(2009)."AnApproachtoRecoverHydrocarbonsfromCurrentlyOffLimit AreasoftheAntrimFormation,MIUsingLowImpactTechnologies:FinalReport."p.160. 34

 Wood,J.R.,C.J.,Asiala,WilliamC.Quinlan,WilliamB.Harrison(2009)."LINGOAntrimPlay:Handbook DevelopedasanoutcomeoftheProjectAnApproachtoRecoverHydrocarbonsfromCurrently OffLimitAreasoftheAntrimFormation,MIUsingLowImpactTechnologies."p.1179.

35