11

Tight Gas Sands

13 4

67

8 125

6 8

1.1. Illizi Basin: Illizi Basin: CambroCambro--ordovicianordovician22 Ah tAh t B iB i C bC b d i id i i ++Si iSi i G di iG di i ++ St iSt i2.2. AhnetAhnet Basin: Basin: CambroCambro--ordovicianordovician ++SiegenianSiegenian –– GedinnianGedinnian + + StrunianStrunian3.3. Bechar Bechar ––TimimounTimimoun Basin: Basin: CambroCambro--ordvicianordvician4.4. GassiGassi TouilTouil –– RhourdeRhourde NoussNouss Area: Area: CambroCambro--ordovicianordovician5.5. RegganeReggane Basin: Basin: CambroCambro--ordovicianordovician + + LowerLower DevonianDevonian6.6. Tindouf Basin : Tindouf Basin : CambroCambro--ordovicianordovician + + LowerLower DevonianDevonian7.7. Berkine Basin: Berkine Basin: CambroCambro--ordovicianordovician (Ultra (Ultra TightTight GasGas SandsSands))8.8. BoubernousBoubernous Area: Area: CambroCambro--ordovicianordovician (Ultra (Ultra TightTight GasGas SandsSands))The limits are established from a ranking of the sedimentary basins

Unconventional Resources Tight Sand/ BCGAOrdovician Illizi Basin Example

BCGA

33

Unconventional Resources - Tight Sand/ BCGA(Ordovician Ahnet & Reggane Basin)( gg )

Ahnet BasinReggane BasinSbaa Basin gg

Hamra Quartzite

AtchaneAtchane SandstoneSandstone

44

Unconventional Resources -Tight Sand/ BCGAOrdovician Reggane Basin Example

GIIP Ordovicien 80 BCMResources :50 BCM (TIO, AZS)

55

ACTION PLAN

DefinitionDefinition ofof thethe shaleshale gasgas playsplays:: ToTo makemake aa regionalregional evaluationevaluation byby usingusing allall thetheavailableavailable datadata (cores,(cores, logs,logs, seismicseismic maps,maps, showsshows andand others)others)..CompletedCompleted

ConsolidationConsolidation ofof thethe databasedatabase:: ToTo gathergather complementarycomplementary datadata inin variousvariousbasinsbasins specificspecific openopen holehole logslogs shaleshale gasgas logginglogging (Elemental(Elemental devicedevice“spectroscopy”,“spectroscopy”, ArrayArray induction,induction, MagneticMagnetic Resonance,Resonance, SonicSonic withwithanisotropicanisotropic determination,determination, GR,GR, Resistivity,Resistivity, ImageImage loglog && NeutronNeutron

))

CompletedCompleted

DensityDensity……))..

Confirmation of the Concept:Confirmation of the Concept:

D t il d St di f th h l t ti l f th i b iD t il d St di f th h l t ti l f th i b iDetailed Studies of the shale gas potential of the main basinsDetailed Studies of the shale gas potential of the main basins

To prove the concept on 2 or 3 pilot wells by carrying out the necessary To prove the concept on 2 or 3 pilot wells by carrying out the necessary operations : operations :

Productivity of the formation tests design and other measurementsProductivity of the formation tests design and other measurements

On On goinggoing

–– Productivity of the formation, tests design and other measurements.Productivity of the formation, tests design and other measurements.

–– DrillabilityDrillability of horizontal wellof horizontal well

–– Feasibility of stimulation: type of Feasibility of stimulation: type of fracsfracs (transverse, longitudinal)(transverse, longitudinal)

To estimate the resources and to make the economic evaluation in an To estimate the resources and to make the economic evaluation in an To estimate the resources and to make the economic evaluation in an To estimate the resources and to make the economic evaluation in an Algerian. Algerian.

DevelopmentDevelopment phasephase:: ThisThis phasephase whichwhich requiresrequires veryvery largelarge investments,investments, withwithregardregard toto thethe volumevolume ofof workwork toto bebe realizedrealized andand toto aa provenproven expertiseexpertiselong termlong term regardregard toto thethe volumevolume ofof workwork toto bebe realizedrealized andand toto aa provenproven expertiseexpertiseneededneeded wouldwould bebe consideredconsidered byby callingcalling uponupon specializedspecialized companiescompanies

long termlong term

Maturity maps of Silurian and Frasnian hot Shales

Silurian Frasnian

2 0< Ro< 3 5% (dry gas)

1.3< Ro< 2.0% (wet gas)

2.0< Ro< 3.5% (dry gas)

0.5< Ro< 1.3% (Oil)( )

Ro équ.< 0.5 % (immature)77

Shale Gas Shale Gas ProspectivityProspectivity Maps Maps in the in the SaharanSaharan PlatformPlatform

FrasnianFrasnian hot Shalehot ShaleSilurianSilurian hot Shalehot Shale

Shale Oil (Condensat & Gaz humide)

Shale Gas (Methane)

Zone Prospective

Profondeur trop Elevée (objectif Shale Gas)

Gisement de Gaz

PARAMETERS :PARAMETERS :Thickness = >20mThickness = >20mTOC = >1% Prefer > 3 5%TOC = >1% Prefer > 3 5%Gisement de Gaz TOC = >1%, Prefer > 3.5%TOC = >1%, Prefer > 3.5%Maturity (VR) = 1.7 Maturity (VR) = 1.7 –– 3%3%Depth = < 3000 mDepth = < 3000 m

Well-1 Evaluation

TheThe UpperUpper HotHot ShaleShale hashas excellentexcellent petrophysicalpetrophysicalpropertiesproperties TheThe effectiveeffective porosity,porosity, KgasKgas,, andand SweffSweff arearevery,very, veryvery goodgood..

TheThe averageaverage TOCTOC valuevalue forfor thethe organicorganic shalesshales isis highhigh..

AllAll ofof thethe hothot shalesshales havehave veryvery highhigh clayclay contentcontent withwithnotablynotably highhigh kaolinitekaolinite,, chlorite,chlorite, andand smectitesmectite.. AverageAverageclayclay contentcontent isis ~~6060 wtwt%% ThisThis raisesraises concernconcern forfor proppantproppantclayclay contentcontent isis ~~6060 wtwt%%.. ThisThis raisesraises concernconcern forfor proppantproppantembedmentembedment..

HighHigh smectitesmectite contentcontent ((55 11 wtwt%% inin UpperUpper HotHot Shale)Shale)

Zone 2; Zone 2; Pay; 79 m or 260 ftAvg Porosity; 8.12 Avg TOC; 5.3% GIP; 140 BCF 

HighHigh smectitesmectite contentcontent ((55..11 wtwt%% inin UpperUpper HotHot Shale)Shale)suggestssuggests thatthat fracfrac fluidfluid compatibilitycompatibility shouldshould bebeevaluatedevaluated..

Avg Clay; 62% Avg Swelling Clay; 5%

KerogenKerogen isis completelycompletely convertedconverted:: DryDry GasGas productionproduction Zone 4; Zone 4; Pay; 15.8 m or 52 ftAvg Porosity; 7.3 Avg TOC; 3.9% GIP; 47 BCFGIP; 47 BCF 

Avg Clay; 50% Avg Swelling Clay; 4%

Preliminary results of the Frasnian Well -2

Zone 1; Pay; 60 m or 189 ft Avg Porosity; 7 1 %Avg Porosity; 7.1 %Avg TOC; 5.0% GIP; 95 BCF

Zone 2; Pay; 53 m or 174 ft Avg Porosity; 8 3 %Avg Porosity; 8.3 %Avg TOC; 5.9% GIP; 100 BCF

Zone 3; Pay; 23 m or 76 ft Avg Porosity; 6 6 %

Calcareous Zone

Pay; 23 m or 76 ft Avg Porosity; 6.6 %Avg TOC; 3.7% GIP; 45 BCF

Comparison of the Comparison of the AhnetAhnet FrasnianFrasnian gas shale (Algeria) gas shale (Algeria) with the main US Gas with the main US Gas ShalesShales (preliminary results) (preliminary results)

FormationFormation Net Ft. Net Ft. Avg. Eff. Avg. Eff. Avg. TOC Avg. TOC Avg. Sw Avg. Sw Avg. K Avg. K Total GIP Total GIP FormationFormation PayPaygg

Phi (%)Phi (%)gg

(wt%)(wt%)gg(%)(%)

gg(nD)(nD) ((BcfBcf/mi/mi22))

Marcellus Shale (Wash Co)Marcellus Shale (Wash Co) 7676 8.18.1 3.63.6 1919 567567 5959

B tt Sh l (C )B tt Sh l (C ) 133133 88 3 33 3 24 524 5 299299 139139Barnett Shale (Core)Barnett Shale (Core) 133133 88 3.33.3 24.524.5 299299 139139

Woodford Shale (Arkoma)Woodford Shale (Arkoma) 6666 6.86.8 66 26.426.4 285285 5959

Atoka ShaleAtoka Shale 2121 9 69 6 2 62 6 4848 191191 5555Atoka ShaleAtoka Shale 2121 9.69.6 2.62.6 4848 191191 5555

Fayetteville ShaleFayetteville Shale 8484 7.27.2 3.63.6 29.129.1 288288 5353

Haynesville ShaleHaynesville Shale 112112 8.48.4 2.22.2 3939 270270 129129yy

Eagle Ford ShaleEagle Ford Shale 105105 6.66.6 2.72.7 2323 284.5284.5 9090

Algeria (area A)Algeria (area A) 108108 7.07.0 2.72.7 1818 350350 6565

Algeria (area B)Algeria (area B) 250250 8.68.6 4.14.1 23.223.2 360360 122122

Algeria (area C)Algeria (area C) 248248 9.09.0 4.04.0 2222 354354 122122

1111

Shale Shale GasGas DetailedDetailed EvaluationEvaluation

ConsultingConsulting

BecharBechar

J i tJ i t St diSt di

RegganeReggane

TindoufTindoufJoint Joint StudiesStudies

Areas to Areas to bebestudiedstudied

Potential of GIP in Prospective areas

PROSPECTIVE RESOURCES BASED ON GEOCHEMICALMODELING:

Considering that 10 to 40 % of the total volumegenerated from the two main source rocks (Silurian &

B i G (T f) Li id (Bbbl)

Frasnian hot shales) remains within the shale gasplays, result in a GIIP of 2650 to 10585 Tcf range froma total generated of 26450 Tcf.

Basin Gas (Tcf) Liquids (Bbbl)Ahnet 1902

Timimoun 1925 -Bechar 53Berkine 954 215Illizi * 106 33

TOTAL (GIIP) 4940 248

TECHNICALLY RECOVERABLE RESOURCES (TRR):TECHNICALLY RECOVERABLE RESOURCES (TRR):

ByBy usingusing aa recoveryrecovery factorfactor ofof 1515%%,, thethe totaltotal technicallytechnicallyrecoverablesrecoverables resourcesresources withinwithin thethe prospectivesprospectives areasareasofof thethe studiedstudied basinsbasins ((AhnetAhnet TimimounTimimoun BecharBecharofof thethe studiedstudied basinsbasins ((AhnetAhnet,, TimimounTimimoun,, Bechar,Bechar,BerkineBerkine andand Illizi)Illizi) isis:: 49404940**1515%%== 741741 TcfTcf..

ForFor comparisoncomparison,, TRRTRR ofof shaleshale gasgas forfor thethe USAUSA isis :: 665665 TcfTcf (source(source EIAEIA 20132013))..pp ,, gg (( ))RecoveryRecovery FactorsFactors:: 2020 toto 5050%% forfor BarnettBarnett shale,shale, 3030%% HaynesvilleHaynesville shale,shale, 2020 toto 4040%% MarcellusMarcellus shaleshale..

Unconventional Resources -Estimates of Shale plays

ORGANISATION/ COMPANY ESTIMATES DATE REMARKS

Wood MackenzieWood Mackenzie529.0 Tcf of

GIIP (Silurian only)September

2009

Estimates of gas-in-place: 529 Tcf. This studyconsiders only the Silurian hot shales extendingacross 26,452 square miles (68,000 km²). Theextent of the hot shale has been defined bythose areas where the thickness exceeds 10m.

PETRENELPETRENEL(Jessica Hill & (Jessica Hill &

StewartStewart WhiteleyWhiteley))

3954 Tcf Estimated Unrisked Shale

GIIP ResourcesApril 2010 3954 Tcf of unrisked shale GIIP for both the

Silurian and Devonian plays in Algeria.Stewart Stewart WhiteleyWhiteley)) GIIP Resources

DEGOLYER AND DEGOLYER AND MACNAUGHTONMACNAUGHTON

3409 Tcf Mean Estimate

644 Tcf of technically recoverable resources

December 2010

3400 Tcf of gas in place in the hot shale of theSilurian (only) across the whole Saharanplatform from which over 600 Tcf would beMACNAUGHTONMACNAUGHTON recoverable resources

(Silurian only)

platform from which over 600 Tcf would betechnically recoverable

EIA/ARI ResourceEIA/ARI Resource3419 Tcf of risked GIIP

June 20133419 Tcf of risked shale gas in-place, with 707Tcf as the risked technically recoverable shaleEIA/ARI Resource EIA/ARI Resource

Assessment (2013)Assessment (2013) 707 Tcf of technically recoverable resources

June 2013 Tcf as the risked, technically recoverable shalegas resource for the two significant sourcerocks (the Silurian & Devonian hot shales).

1414

SCALE COMPARISON: ALGERIA vs US Shale Gas PlaysSCALE COMPARISON: ALGERIA vs US Shale Gas Plays

1000km

1000km

1000km

Drivers and indicators for shale gas development in Algeria

Wood McKenzie (2009) : Over 500 Tcf of gas in place in the hot shale of the Silurian

Large Resources

PETRENEL (2010) : 4000 Tcf of unrisked

DeGolyer & MacNaughton (2010) : 3400 Tcf of gas in place in the hot shale of the Silurian acrossthe whole Saharan platform from which over 600 Tcf would be technically recoverable

PETRENEL (2010) : 4000 Tcf of unriskedshale gas in place in the hot shale of theSilurian and Frasnian.⇒ >30 Bcf/mi2 required for commercialqsuccess.

EIA (2011) annual report :231 Tcf of technically recoverable gas in the231 Tcf of technically recoverable gas in thehot shale of Berkine, Illizi and Tindoufbasins.(the most prospective basins such as Ahnetand Gourara are not included)

EIA (2013) annual report:707 Tcf of technically recoverable gas in the From “Shale Gas Potential of North Africa and the Near East”, by

Stewart Whiteley & Jessica Hill, PETRENEL, Presented at the SMIUnconventional Gas Conference, London 16th-17th March 2011

707 Tcf of technically recoverable gas in thehot shale in Algeria

Drivers and indicators for shale gas development in Algeria

1. Large resources : International organizations estimations of Algerian shale gas resources are confirmed by regional screening studies and evaluation results on several wells (logs and cores) carried out by Sonatrachseveral wells (logs and cores) carried out by Sonatrach

2. Evaluating and developing shale gas in Algeria is becoming a priority: Several shale gas evaluation projects concerning different basins are in process or have been finalized ⇒ regional screening completed pilot wells drilled and completed infinalized ⇒ regional screening completed, pilot wells drilled and completed in 2013.

3. Possibility to produce dry gas and liquids : wide range of maturity → dry and wet i th t b i d h l il ith hi h i i th tgas in the western basins and shale oil with high reservoir pressures in the eastern

basins

4. Possibility to develop different sands in synergy, increasing commerciality and y p y gy, g ymaximizing benefits : Presence of conventional and tight sands formations beneath or above the hot shale intervals of the Silurian and the Frasnian.

5 Availability of water : aquifers with huge volumes of water extending over large5. Availability of water : aquifers with huge volumes of water extending over large areas (from eastern border of Algeria to the western basin of Ahnet)…but industrial usage for shale gas development is regulated.

Drivers and indicators for shale gas development in Algeria

6. increasing activity of drilling and hydraulic fracturing operations and new pipeline construction projects (western basins) : this is due to several conventional and/or tight sands fields to be developed in the near future (ex. Ah t Ti h t )Ahnet, Tinhert ….)

7. Opportunity for developing shale gas with reduced investment (eastern basins) :Availability of infrastructure, surface facilities and pipeline network withysignificant capacities

8. Increasing gas demand worldwide (particularly in Europe)

9. Historical partnership of Sonatrach with international oil and gas companies :well-known concession procedures, collaboration and shared experience …etc

10 Resources are owned by government10.Resources are owned by government

11.Adapted legislation ( 2013 )

12 Large concession block12.Large concession block

13. No surface use concerns

14.Social acceptance : historical oil and gas industry in Algeria

Some general concerns for shale gas development

• Technology transfer of and know-how : Although Sonatrach has acquired asignificant experience in hydraulic fracturing (since 90s), a program forg p y g ( ) p gpreparing a qualified human resources in shale gas evaluation anddevelopment is undertaken by Sonatrach. In addition, collaboration withexperienced oil and gas companies in shale gas development as well asservice companies is an option to achieve technology transfer objectives.

• Availability of drilling rig frac units etc : currently there is no major• Availability of drilling rig, frac units…etc : currently, there is no majorcompetitive climate between service companies ⇒ costs are kept high but withincreasing activity they will be reduced

• Flow back (frac water) treatment and disposal and other HSE concerns

• Economics : what is the economical breakeven ?Further evaluation work has to be carried out to reduce uncertainties (pilot

wells)wells)