Unconventional resources account for a growing share of global oil and gas production. Their potential can be measured in the hundreds of billions of barrels of oil equivalent. But there are major technical, financial, environmental and social challenges to overcome to unlock these resources. We’re currently staking our claim with regard to a variety of assets, with one objective: to develop them on a large scale so that we can position ourselves as a major player in unconventional resources. And we have an array of tools to help us do just that, including state-of-the-art expertise, an active R&D program and a sustainable, responsible strategy for developing these resources.
Tackling Significant Challenges in Pursuit of Vast Resources
Long untapped, unconventional oil and gas offer immense potential — at least as much as the total conventional oil reserves extracted since the start of the oil industry. By 2030 they are expected to make up 25% of global gas production and 15% of global oil production, by volume.
This profound shift can be traced to the shale revolution in the United States, which has made the country a gas exporter and the world's top oil producer. The U.S. has cut its dependence on oil imports in half and will likely account for 40% of the growth in world production by 2022. That new energy landscape is having a major, long-term impact on every market, as the International Energy Agency has made clear: the number of LNG-importing countries is rising, while gas is displacing coal among major energy sources.
Though no official definition of unconventional oil and gas exists, the term usually encompasses resources from formations that lack the petrophysical properties of a reservoir. It includes shale (or source rock) gas and oil, tight gas and oil (compact formations) and coalbed methane (CBM).
The rock containing them features exceptionally low permeability. Shale gas and oil are trapped in the source rock where they formed. Tight gas and tight oil have migrated to low-permeability reservoirs that severely restrict their flow. Coalbed methane (CBM), meanwhile, is trapped in the rock matrix. So ways must be found to get unconventional oil and gas flowing at rates that will be cost-effective to produce. Hydraulic fracturing is the technique used to stimulate shale and tight formations. For CBM, the coal seams need to be dewatered before the adsorbed methane can be extracted.
Extracting unconventional oil and gas therefore poses three major challenges:
- Successfully transforming the resources into reserves and increasing the stimulated rock volume (SRV). It is essential to map the areas that can be stimulated and contain the right amount of fluids. That’s why it’s important to optimize the geometry of the rock stimulated to maximize productivity and reserves.
- Ensuring that resource development is financially profitable Over three-quarters of the cost of an unconventional field derives from the need to drill hundreds, even thousands, of horizontal wells over large areas At a time of volatile oil prices, that cost can be drastically reduced by conducting projects on an industrial scale, with the most economically viable number of wells, rigs and installations.
- Acting in a way that is responsible and acceptable to the community, while minimizing our environmental impact. Transparent dialogue and respect for extremely strict HSE processes are vital for gaining every stakeholder’s consent to extract these resources.
With that principle in mind, we are poised to produce unconventional resources on a large scale, with the aim of becoming an industry leader — particularly with regard to unconventional gas, which accounts for a large percentage of the world’s natural gas resources. It’s all part of our strategy to expand our gas portfolio so that it accounts for 60% of our production by 2035. By helping to reduce greenhouse gas emissions and combat global warming, natural gas is an essential energy source for tackling our future energy needs and reducing the carbon intensity of the energy mix.
Positioning Ourselves in Every Market for Unconventional Resources
Following the good results of the Aguada Pichana pilot project and a reduction in drilling costs, the first phase of development of the giant Vaca Muerta shale play was launched in July 2017. With a 27% share, our Argentine affiliate is operator.
In Australia, we are partners of Gladstone LNG (27.5%). This is an integrated gas production, transportation and liquefaction project from the Fairview, Roma, Scotia and Arcadia fields with a capacity of 7.8 Mt/y.
In China, we are partner of the South Sulige Block (49%), located in the Ordos Basin of Inner Mongolia. While the drilling of tight gas development wells is ongoing, our production was 15 kboe/d in 2017.
We acquired from Chesapeake its 75% stake in a joint venture operating the Barnett shale gas assets, in which we had already held a 25% interest. The production in 2017 was 600 Mcf/d. We also have a 25% stake in a joint venture also operated by Chesapeake in the Utica basin, that produces shale gas.
We are proficient in a variety of industrial production techniques for unconventional resources, thanks to extensive, long-standing experience on flagship projects, for example in South America. And we’ve won industry-wide recognition for our use of new technology in hydraulic fracturing: we pioneered multistage fracturing of horizontal wells in Argentina.
To accelerate and consolidate that expertise, we have partnered with several companies that play a prominent role in unconventional resources, including:
- Chesapeake Energy, a U.S.-based producer, in the Utica Shale gas and condensate play in the United States.
- PetroChina, on the South Sulige shale gas field in China.
- Santos, an Australian coalbed methane producer, with whom we are partnering on the Gladstone LNG project.
We’re now expanding our presence in the international market by continuing to develop as an operator. One example of that strategy is our acquisition of the Barnett Shale gas assets in northern Texas from Chesapeake Energy. And in Argentina, we expect to double production of unconventional oil and gas from our assets in the Vaca Muerta formation over the next five years. These include the Aguada Pichana tight gas field, the Aguada Pichana Este shale gas license and shale oil development projects in the promising San Roque, La Escalonada and Rincon La Ceniza licenses.
Multiple Assets for Cementing Our Leadership
Our strategy is backed by our expertise in the integrated project management (IPM) of major projects in terms of time, cost and performance. It is based on obtaining numerous exploration licenses and acquiring interests in a wide variety of geographically diverse assets that encompass every type of unconventional resource.
We’re also adapting our “science” culture to the challenges these projects pose, through our Try & Learn project management initiative. It’s an agile method that combines analytical skills and a practical approach to operations. The focus is on deploying new solutions in the field on a small scale, so as to make rapid progress through iterative learning and continuous improvement. Our goal is to tackle the unconventional sector by thinking outside the box and embracing a fresh perspective that’s informed by our experience in unlocking conventional oil and gas.
Integrated Know-How in SRV
Our experts in the geosciences are industry leaders in petrophysical and geomechanical characterization of unconventional formations. They have a detailed understanding of phenomena such as rock deformation, kerogen maturation, porosity, permeability and fluid flow in nanoporous media. That know-how, combined with our integrated workflow for modeling hydrocarbon extraction and predicting production profiles, lets us single out areas with the greatest potential within a field and identify the optimal fracture positioning throughout the field’s life, working in close conjunction with the operations teams.
Our expertise draws on a number of high-performance solutions we have developed in-house. By incorporating geomechanical factors, our Total Seismic to Reservoir Modeling platform, known as T-StoRM®, plays a key role in increasing SRV and the overall potential of the recoverable reserves per well. With our Laser-Induced Pyrolysis System (LIPS) applied to core samples, we can analyze total organic carbon (TOC) in promising formations with accuracy unmatched anywhere in the world. Our patented MRsat® technology, used to measure oil saturation in shales by means of nuclear magnetic resonance, produces measurements that are 10 times more precise than those of other current techniques. A further innovation is our focused ion beam scanning electron microscope (FIB-SEM), used to examine the porosity of source rock on a nanometric scale.
The Benefits of Smart Data
Improved cost-effectiveness for our unconventional projects requires optimal well performance. Our American affiliate has developed an exclusive tool that can more accurately predict performance levels. Backed by machine learning algorithms and the computing power of our Pangea supercomputer, our Smart Predictive Analytics (SPA) application generates thousands of profiles of future locations in less than a minute and identifies the best sites for drilling a well. SPA can predict field production levels with 90% accuracy when compared to actual production, versus just 50% accuracy for type curves.
With the construction of a remote operations center in Argentina, we’ll be able to oversee the operation of our various wells in the Vaca Muerta formation while simultaneously mining data in real time so as to make instant adjustments to drilling and fracturing parameters.
We’re also taking steps to enhance our development plans. Our goal is to cut costs and timeframes to improve profitability. That strategy involves adopting a simple set of guidelines designed with the unconventional sector in mind. By keeping configurations as small as possible and only using strictly fit for purpose facilities, we can generate economies of scale and save valuable time.
To that end, well configurations are being standardized, with the use of identical drilling and completion solutions (casings, packers) and the broader adoption of slimhole drilling. The number of surface installations is being reduced, by potentially grouping up to 30 wells on a single production pad; moreover, those pads are equipped with identical modules. Modular plants offer the option of phased increases in oil and gas production capacity over time. We’re also streamlining logistics. In Argentina, for example, produced water is being piped to the production plant alongside the gas, while frac water will eventually be carried via aqueduct. The proppants injected into the rock, meanwhile, are being replaced with locally sourced natural sand, a solution that has significantly less impact on the environment and is less costly as well.
Our Unconventional Factory Development Simulator (UFDsim) is a modeling tool developed in-house. It aggregates and interprets well production profiles to determine the optimal phasing and sequencing of a development’s construction. As a result, we can begin simultaneous fracturing and drilling operations (SIMOPS) on different geological layers with greater confidence.
Responsible, Long-Term Management
As a responsible operator, we are committed to reducing the negative impact of unconventional oil and gas extraction in order to earn our social license to operate.
- As soon as we are awarded an exploration license, we initiate an open dialogue with every stakeholder, to explain how we operate and make changes as needed.
- We use environmentally friendly fracturing additives that have exceptionally low levels of volatile organic compounds and polycyclic aromatic hydrocarbons.
- We conduct routine measurements to monitor fugitive gas emissions.
- We reduce the number of well clusters and our surface footprint by installing dozens of wells on a single pad.
- We capture and purify fracturing and produced water, using innovative treatment methods, then reuse the water to reduce our reliance on water we draw from the environment.
More about our Environmental & Societal responsibilities.
At the Forefront of Technological Advances
Promising Research & Development
When it comes to identifying areas with the greatest potential and producing their resources efficiently, our researchers are developing multiple solutions to ensure we maintain cutting-edge expertise. The Stanford-Total Enhanced Modeling of Source Rock (STEMS) project, a joint initiative with California’s Stanford University, is studying how source rock functions and the mechanisms by which shale oil and gas are generated. STEMS researchers developed an X-ray-transparent HP/HT triaxial cell — the only one of its kind in the world — that can render the mechanical properties of source rock as a voxel in an array.
Another breakthrough involves a new algorithm for solving linear systems for coupled geomechanics reservoir simulations; this will slash the time needed to model fluid flows and rock deformation.
We’re also exploring ways to model the effects of mechanical stimulation of rocks to improve SRV and recovery rates. To that end, since 2015 we have been taking part in the Hydraulic Fracturing Test Site research program led by the Gas Technology Institute (GTI). That research, designed to verify the safety
and reliability of the technology under study, will be used to produce a detailed map of fracture patterns. Moreover, in conjunction with the Massachusetts Institute of Technology we recently notched a significant victory, successfully using the meshfree smoothed particle hydrodynamics (SPH) method to model the propagation of hydraulic fracturing and its interaction with natural fracturing.
More about the Unconventional Resources R&D program.
Two New Pilots in Argentina
This year, the Vaca Muerta formation will be the setting for two major new Total initiatives:
- The industrial pilot for WTLog, a low-cost, data-based method for testing wells that generates an injectivity profile for the entire length of the well, using measurements taken at the surface. Offering faster results than a production logging tool at a tenth the cost, WTLog is based on continuously circulating fluids of different viscosities in the well annulus. The method also yields a greater volume of data, so that fractures can be positioned for maximum effectiveness.
A pilot project involving continuous pumping, a new technique that’s considerably more effective than the plug-and-perf method. It uses a single ball to continuously stimulate several layers of rock along the horizontal well by means of sliding sleeve tools, without a plug or wireline. That significantly reduces the duration and cost of operations while improving SRV connectivity and productivity.
Vaca Muerta, a Bold Development
LIPS: Tracking Organic Carbon to the Nearest Centimeter