Porosity, Permeabilty, Darcy's Law, And All That Jazz -- July 28, 2019

Note: this got to be a very long note. By the time I was finishing, I was getting distracted. So I did not proofread it, nor do I know if it really flows. There is simply too much information in this one post, more than I can handle. So I will leave it as it is. The gift of it has huge positive implications for the Bakken and we may be happy some years down the road to have this in the archives.

Again, I'm getting some great feedback from readers.

It's my impression that land values (mineral rights) are holding, and probably even increasing in the Bakken. Several readers have written suggesting they are impressed with the offers they are now getting. With oil at $40/bbl (Bakken oil), one would think the prices for minerals might not hold.

After alluding to that, a reader who understands this a lot better than I do sent me a note. I didn't understand all of it, but instead of trying to decode it I thought it better to post it as is, so that the note is not lost. Over time, it will make more sense to me. Folks that understand porosity, permeability, size of carbon-based molecules, flow dynamics, etc., will understand it, I'm sure.

Important for the archives.

Here's the note:

Your reader's comment regarding unsolicited - and rising - offers to purchase mineral rights prompted an "Aha!" moment that may or not be connected to recent developments.

To wit: a few years back, then-CEO of Core Labs said only 10%, at most, of the matrix was being fractured by contemporary frac'ing techniques.

He was highly optimistic that evolving diversion processes combined with micro proppants would greatly increase the volume (Stimulated Reservoir Volume - SRV is the term used) of rock that was fractured.

One consequence of a huge increase in the "spider webby" fractures is that the pathways are infinitesimally tiny (immeasurably small). So tiny, in fact, that the larger hydrocarbon molecules (asphaltenes) cannot readily 'squeeze through' and start to block the pathways to the wellbore.

This results in higher and higher API numbers (specific gravity; Bakken already has a very high specific gravity) from the production stream along with a higher gas ratio as these lighter hydrocarbon molecules are smallest and are able to make it to the wellbore.

So, if Liberty is showing early, positive results from their test AND word is starting to spread, the ramifications could simply be enormous.

This speculation goes far beyond mere EOR as having a better grasp of "non-Darcy low velocity oil flow: it will reverbrate around ALL shale regions and - indeed - across the globe.

When I received the note I replied to the reader that "Darcy" was a new term for me -- a term I had just seen earlier today: Darcy's Law at this post.

There is so much packed into that note.

I googled "Core Labs 10% matrix" but was unsuccessful finding the specific article the writer alluded to. However, I did find this article which seems to be addressing the same issue raised by the reader. It's an old article (2017) and we've discussed the issue before but what caught my eye was the abstract as it were, echoing exactly what the reader said:

North American shale reservoirs contain billions of barrels of oil but the industry’s average recovery factor is typically well below 10%, compared with an average 30% for conventional reservoirs. Efforts to improve recovery from unconventional reservoirs are well under way.

Again, the specifics of the reader's note and the specifics of the linked EOG article (2017) may not quite match but in general these are my takeaways:

• both the reader and the operators are talking about the same problem
• as early as 2017 (and probably a lot earlier), operators were starting to work the problem
• now, two years later, it is possible we're starting to see some of those solutions working?
• if so, as the reader states, once this starts to be well known, "it changes everything"

There is a bit of irony here. The next USGS estimate of the Bakken is due out any day now. Wouldn't it be a hoot if the USGS estimates were already out-of-date?

By the way, for newbies, that 10% recovery rate is not trivial. In the early days of the boom, the talk on the street was that the recovery rate in shale was only going to be 1 - 3%. I think some operators will argue they are recovering in excess of 10% but I haven't heard / seen any recent numbers regarding percent of primary recovery in the Bakken.

With regard to Liberty Resources testing EOR, google "Liberty Resources" Bakken test. Much of this has been previously posted but I had forgotten much of it, and all of a sudden things again seem to be moving quickly in the Bakken.

By this time next year, perhaps we'll be hearing more about this in earnings conference calls.