Most companies wouldn’t dream of drilling an expensive deepwater well without a reliable 3-D seismic survey to aid in understanding the geology. But the value of seismic in unconventional plays is still open to question.

While the geology of shale plays can be quite tricky (look at a cross section of the Marcellus if you don’t believe me), the general consensus is that the location of the shale is not an issue and therefore seismic doesn’t bring much to the table. The ability of seismic to locate sweet spots is still an art as much as a science, and many companies simply can’t justify the extra cost of a survey when the value of the information is in question.

It doesn’t all have to be guesswork, however. In a paper titled “Valuing Seismic at the Drilling Program Level for Sweet Spot Identification in Unconventional Resource,” Ellen Coopersmith of Decision Frameworks LP demonstrates a quantifiable procedure for determining the value of a drilling program with and without a seismic survey. Coopersmith detailed her findings during a presentation at the recent Unconventional Resources Technology Conference in Denver.

According to Coopersmith, a unique approach is required when determining a business case for shooting seismic in resource plays. “The key lies in the combination of sound understanding of the play, seismic technologies likely to provide some level of accuracy to interpret true reservoir quality attributes, and the ability to apply a structured thinking process and basic Bayesian theory to develop the business case comparison of seismic alternatives at a drilling program level,” she noted in her abstract.

The case outlined in the presentation involved a shale development with 100 well locations planned. The team was facing three options – not shooting a survey, shooting a conventional 3-D survey at a cost of US $10 million, or shooting a high-resolution 3-D survey at a cost of $15 million. The cost to drill and complete each well was estimated at $10 million. The net present values (NPVs) of the wells were estimated at $6.5 million for a good location, $1 million for a moderate location, and $2.5 million for a poor location.

To truly anticipate the usefulness of either survey requires an “interview” process that determines four key factors – resolution, geological complexity, ambiguity of production information, and seismic processing quality. For instance, the exercise might ask, “Given that the field location really is of good reservoir quality, what might you expect to see on the seismic?” In this case study the answer was high-frequency absorption and strong fracture indicators.

The exercise then determines the likelihood of these scenarios comparing the conventional survey to the high-resolution survey. For instance, if the reservoir quality really is good in a well location, the team will be able to correctly interpret that information about 60% of the time with the conventional survey, whereas the high-resolution survey would provide those results 80% of the time.

Ultimately this approach can help determine the actual dollar value of the three different scenarios. For instance, using the conventional 3-D survey was estimated to cost less than the high-resolution survey, but only because fewer well locations would be determined to be drillable. The final tally shows the NPV of the nonseismic program at $35 million, the conventional seismic at $69.12 million, and the high-resolution seismic at $96.55 million.

“Seismic will add value as long as its ability to help correctly identify reservoir quality characteristics is sufficient to change the decision to drill planned locations when poor reservoir quality is interpreted,” Coopersmith concluded. “In those instances, value is derived from sweet spot identification and high-grading the development drilling. As a result, it is critical that the project team take the time to properly think through their reliability of interpretation assessment for different seismic programs and utilize their combined years of experience and objective data to ensure a quality forecast of interpretation accuracy.”