Uncertainties.
Ok, I'll try but there are a lot of variables involved.
it's coal, let's assume laterally extensive and equally so in thickness of the seams. 2 extreme possibilities, vertical wells intersecting multiple seams or horizontal wells attacking the thicker ones. one could go for multistacked laterals, but as with single horizontal wells one would need information on the direction of the butts and cleats (fractures). if they are consistent in orientation, horizontal wells can be optimally directed perpendicular to these fractures, optimizing on permeability and therefor flow capacity. And then of course slanted wells, you get the drift.
Either way, horizontal or vertical, given a certain variability of the coal seams, a uniform spacing of the wells will tackle any uncertainties in these variations, it becomes a statistical exercise, the more wells you drill the more information you get the lower the risk. Why does this work in CSG? Coz the wells are comparatively low cost, you can drill lots of them.
So we sort of covered the local coal variations with well count and spacing. The structure appears benign, a gentle syncline, no major deformation or folding. The depths of the coals are controlled, thru seismic and appraisal wells, in the past we used a potential depth cut-off of around 900 to 1500 meters, fractures start to close again, coal becomes more dense, decreasing the permeability, the coals seem generally shallower then that.
another thing I need to add, emphasizing the statistical aspect, we are still talking about coal. Properties of coal can vary a lot within seams and between seams, so the possibly lower quality of one well does not affect the forecast properties of the next wells, until one has drilled a significant amount of wells across a significant area, and then when they show a consistent picture that's when one is able to satisfactorily describe the low, mean and high property values. until then no-one knows for sure where we lie on the distribution curve.
So in a nut shell, and generalizing a bit, main uncertainty from geo point of view, is there coal, if there is, and it is sufficient to develop, we should. Uncertainty in properties are tackled through shear well count, pattern drilling (compare cluster bombing)
To be honest (I am a subsurface development person), I would see the surface stuff, the plumbing, contracts, markets, getting clients as the higher risk but given proximity to market and clients, the extremely benign topography, no lock the gate or knitting nannies issues, I would rank these uncertainties as fairly low as well. The one thing I am not sure about is political issues.
apologies for the long winded answer, hope it helps, I am stoked about this opportunity and the leaders we have in the company.
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