Physics-based Modeling of Hydraulic Fracture Propagation And Permeability Evolution of Fracture Network In Shale Gas Formation Hai Huang, Earl Mattson and Rob Podgorney Shale gas production is enabled by horizontal drilling, hydraulic fracturing and fracture propping, but despite many innovations, recovery factors are low. Thus a robust and reliable numerical model for fracture initiation and propagation, which includes the interactions between hydraulic fractures and natural existing fractures and the coupling between deformation, fracturing and fluid flow in fracture apertures and in the permeable rock matrix, would be an important tool for developing a better understanding of hydraulic fracturing process and for practical applications. We have developed a physics-based simulator for hydraulic fracturing by coupling a quasi-static discrete element model (DEM) for deformation and fracturing with both Darcy flow and pore network models for fluid flow. In the quasi-static DEM model, the rock matrix is represented by a network of discrete mechanical elements connected by “bonds” such as springs, elastic beams or bonds that have more complex properties such as stress-dependent elastic constants. Fracturing is represented explicitly by removing broken bonds from the network to represent microcracks. Initiation of new microfractures and growth and coalescence of the microcracks leads to the formation of macroscopic fractures when external and/or internal loads are applied. Naturally preexisting fractures are conveniently represented by removal of bonds along line segments in 2D or planes in 3D. To simulate fluid flow, a more physics-based network flow model that uses a flow network conjugate to the DEM network and accounts for flow in both the fractures and matrix was developed and coupled to the DEM model. The coupled DEM-flow model reproduces a variety of fracture growth patterns, including bi-wing fracture growth, dendritic fractures, and bi-wing fractures with branching and curving. The effects of in situ stress, fluid viscosity, heterogeneity of rock mechanical properties and injection rate on the fracture patterns will be discussed. Under suitable combinations of in situ stress and injection rate, it is feasible to generate a net like fracture pattern. The simulation also indicates only reactivated natural fractures that intersect the hydraulic fractures contribute significantly for fluid flow.