document preview

Abstract
The economics of oil and gas field development can be improved significantly by using computational optimization to guide operations. In this work, we present a general work flow for applying optimization to the development of shale gas reservoirs. Starting with a detailed full-physics simulation model, which includes highly-resolved fracture networks, dual-porosity, dual-permeability regions, and gas desorption, the approach first entails the generation of a much simpler, and much more computationally efficient, reduced-physics surrogate model. The reduced-physics model is tuned using a history-matching procedure to provide results in close agreement with the full-physics model for a variety of field development scenarios. The surrogate model is then used for optimization. In the optimizations considered here, we apply a direct search technique (generalized pattern search) and seek to determine the optimal locations, lengths, and number of fracture stages for a set of horizontal wells. In two examples, involving two- dimensional models with properties representative of the Barnett Shale, optimization is shown to provide field development scenarios with net present values that are more than double those of base case designs. Finally, it is possible that the reduced-physics surrogate-modeling approach presented here could find use in other applications, such as uncertainty quantification.

Introduction
Natural gas production from North American shale reservoirs has been increasing rapidly in recent years and now accounts for more than 20% of total US gas production (EIA, 2011). Much of the early production was from dry gas fields such as the Barnett Shale in North Texas (Montgomery et al., 2005), but recent industry attention has shifted to gas condensate and light-oil bearing shale formations such as the Eagle Ford of South Texas and the Bakken in North Dakota (Pollastro et al., 2008). Horizontal drilling combined with multi-stage hydraulic fracturing techniques has been crucial to unlocking both gas and oil from shale reservoirs. These resource plays are characterized by large drilling programs involving hundreds of wells drilled per year.