I am trying to understand how accurate this '50% chance of success' statement is based on the information we have.
I believe the '50% chance of success' solely relates to getting 100+ barrels out of Icewine 2 per day. If that happens, at today's oil prices the economics work.
Positives, Positives and more Positives.
I am no expert whatsoever in terms of fracking and geology. What I do know is what we have been told in recent presentations. So far all the puzzle pieces have fitted into place to indicate to us that this has a strong potential of flowing at the rates we need:
-We know the oil is there, lots of glorious oil.
-We know Alaska produces oil.
-We are above the sweet spot of the reservoir.
-We have Thermal Maturity - Volatile Oil.
-We know the viscosity is low.
-We know permeability is excellent.
-We know we have a good bottom seal and the pressure is good.
-We know porosity is good.
-We know the Top Seal is good.
-We know the rock mechanics are good?
-We also have an experienced fracking company on the job who will contribute in optimising the fracking of our reservoir so that it has the best chance of success.
Paul Basinski on Thermal Maturity/Volatile Oil/Viscosity/Sweet Spot: Being able to predict Volatile Oil is difficult because it's complicated. We have a model that is very robust, and effectively what we are seeing is - the volatile oil. We were able to see this phenomenon in the well. We have very high confidence that we have taken out the whole sweet spot.
Dave Wall on Thermal Maturity/Volatile Oil/Viscosity/Sweet Spot: During the drilling we saw condensate in the gas and heavy hydrocarbons, which meant we were getting into the thermal maturity zone that we predicted, where the gas and oil-condensate are in the right ratio so they are more viscous and can flow through the rock easier. We have a vapour phase where liquids are in a gaseous form and hence can flow at higher rates.
Dave Wall on Permeability: Eagle Ford is the Premier Oil play, the largest oil field in North America. We have 10x or more the permeability of the Eagle Ford. The Eagle Ford flows 1000 barrels a day, if they had our permeability they would get 2000 - 2500 barrels per day.
Dave Wall on Porosity: If you look at the thickness, and the amount of pay within that interval, we have something that isn't like any other resource play that we are aware of. 94% of the interval is pay where the porosity is exceptionally high. 30x Higher than the Eagle Ford. This gives us more of these pore spaces, which means more oil can be accessed by the well bore = better flow rates, better ultimate recovery, better economics.
Paul Basinski on our Top Seal: We got a damn good one! Top seals alone cause over 50% of shale plays to fail.
Dave Wall on our Bottom Seal: It's effective. You need seals. This relates to pore pressure, which is effectively energy within the rock which will help push out, and also helps the vapour phase.
My 2 Cents:
All the above is extremely positive, every aspect indicates high flow rates. Everything suggest this will flow like Niagara Falls. It will be shooting out Kim Jong Un's rockets. It will be exploding out like a man spending a night with Heidi Klum.
My 2 cents: We have no achilles heels? that's it - no risks now? Is that it - we just find the sweet spots. We know we are right above a sweet spot, most of it is a sweet spot as far I know. So it's just a matter of optimising the fracking and this will flow how we need it to - right?
There has to be an achilles heel.....this is supposed to have a 50% chance of failure, what are the negatives?.......
The question mark as far as I'm aware is Rock & Fluid Mechanics.
In one of the investor presentations Paul Basinski stated that Rock & Fluid mechanics are the last hurdle, the last part of the tic-tac-toe board.
He said...
At the end of the day it’s about the stimulated rock volume and the amount of hydrocarbon in the stimulated rock volume we can keep propped open. We can frack this thing, but how high (fractures?) does it go?
Is there proppant embedment? How long will it last as you bring down the pore pressure, because then effective stress goes up.
At the end of the day if we can’t stimulate it, we can’t keep it open and we can’t keep it propped then we’ve got a problem.
What do we know about our Rock Mechanics?....
Dave Wall on our Rock Mechanics: We have low clay content. We have a high percentage of brittle, non-swelling clay. This is very similar to Marcellus and Haynesville which are very successful shale plays in their own right, but are gas plays.
Energy News Bulletin on these brittle clays: 88E and its partner now understand that the rock properties appear to be similar to the Marcellus and Haynesville shales. There are clays, and the rocks are at the softer end of the spectrum, but they should be brittle and highly amenable to fracture stimulation operations.
My 2 Cents:
So Rock Mechanics are good?. We have brittle clays which should fracture stimulate. So should be no issues getting it to fracture? So what's the risk here with Rock Mechanics? What will prevent these fractures from becoming large and long? What are the usual causes that prevent the proppant embedding? Are these common or rare issues to come across and can you get around them if there are issues?
From one of the investor presentations it was clear that a lot of less reported detailed research has gone into Rock & Fluid Mechanics.
Paul Basinski said:
We’re looking at kerogen - comparing the visual kerogen to the pyrolysis (decomposition brought about by high temperatures) - we’re able to identify what the nature of the kerogen is, what its kinetics are, that tells you how much oil it’s going to produce, what phases it’s going to have.
On our core we have these ash beds we’ve done a lot of research on those - because it’s something we have to contemplate in our completion plan. We’ve looked at thorin - we’ve looked at all these other characteristics because what we have to understand is the holistic package and how it will frack.
I have no idea about Kerogen, Ash Beds, and Thorin, and how important these things are in relation to fracking success. Can anyone explain their relevance and there importance?
Paul Basinski has clearly learnt a lot from Eagle Ford, and that will help him and the fracking company to understand the best way to frack Icewine 2. It definitely seems the fracking stage is full of science, mathematics, physics, data.
I'm hoping that getting the rock to fracture how you want it to is just a matter of trial and error, and in the end you will get the process right. If everything is in place for the oil to flow, then it will flow once you get the fracturing to work with the specifics of your well. But I am likely talking dog's doodahs.
So, what potential negatives, achilles heels, issues are there that warrant giving Icewine 2 a 50% chance of failing?....
Are there any stats out there to back the 50% statement up?
Do 50% of fracks fail at this stage due to this last hurdle we have to cross? Are there any examples where a company has had all the positives we have, but the well failed to fracture stimulate and therefore failed to flow, so the project was scrapped? And if so - what was the issue?
Accuracy of Data?
What are the chances that 88E's data/research/information is inaccurate? Most, if not all of the information I have read in relation to 88E's findings has either been proved, confirmed, or PB and DW have high confidence in their data being accurate.
Rock & Fluid Mechanics?
I'd like to understand this better. What are the difficulties here? What has the potential of causing us problems?
We know that the Eagle Ford has low permeability yet it was still successfully fracked. We know our rocks should fracture stimulate as they are brittle, as well as also having 10x the permeability of Eagle Ford. I need to better understand proppant embedment success rates. I need to better understand other parameters that can cause total failure of a well.
By the look of things if Icewine 2 fractures successfully, stays fractured, and the proppant stays embedded - this surely has to flow, and flow like crazy.
Any thoughts on where the 50% chance of failure is coming from, is it warranted, what has the potential to prevent us getting at our prize?
(20min delay)