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Transcript of 1 Presented at the Annual Meeting of the Society of Petroleum Evaluation Engineers Santa Fe, New...
1
Presented at the
Annual Meeting of theSociety of Petroleum Evaluation Engineers
Santa Fe, New MexicoJune 13-16, 2009
George Schaefer
Senior Vice President
Miller and Lents, Ltd.
Russian Oil & Gas Reserve Definitions
2
Russia
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Russian Oil & Gas Reserves
1. Russia has been and will continue to be a strategic resource to world economies.
2. How do Russian authorities define petroleum reserves?
3. How do their definitions compare with the West (SPE and SEC)?
4
World Proved Oil Reserves as ofJanuary 1, 2008
(Billion Barrels) Country Oil ReservesSaudi Arabia 266.8Canada 178.6Iran 138.4Iraq 115.0Kuwait 104.0United Arab Emirates 97.8Venezuela 87.0
Russia 79.0Libya 41.5Nigeria 36.2Kazakhstan 30.0United States 21.0China 16.0Qatar 15.2Algeria 12.2Brazil 12.2Mexico 11.7Angola 9.0Azerbaijan 7.0Norway 6.9Rest of World 46.5______________________World Total 1,332.0
Source: “World Factbook” by United States CIA
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World Natural Gas Reserves as ofJanuary 1, 2008
(Trillion Cubic Feet)
Country Gas Reserves % of World TotalWorld 6,186 100.0Top 20 Countries 5,606 90.6
Russia 1,680 27.2Iran 948 15.3Qatar 905 14.6Saudi Arabia 253 4.1United Arab Emirates 214 3.5United States 211 3.4Nigeria 184 3.0Venezuela 166 2.7Algeria 159 2.6Iraq 112 1.8Turkmenistan 100 1.6Kazakhstan 100 1.6Indonesia 94 1.5Malaysia 83 1.3China 80 1.3Norway 79 1.3Uzbekistan 65 1.1Egypt 59 0.9Canada 58 0.9Kuwait 56 0.9Rest of World 580 9.4
Source: “Worldwide Look at Reserves and Production,” Oil &Gas Journal, Vol. 105, No. 48 (December 24, 2007), pp. 24-25.
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Annual Russian Oil Production
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1975 1980 1985 1990 1995 2000 2005 2010
Years of Production
An
nu
al O
il P
rod
ucti
on
- t
ho
usa
nd
bar
rels
per
day
Source: United States Energy Information Administration
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8
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Russian Oil & Gas Reserves
1. Russia has been and will continue to be a strategic resource to world economies.
2. How do Russian authorities define petroleum reserves?
3. How do their definitions compare with the West (SPE and SEC)?
10
Russian Strategic Motivators
1. Respect / National Pride
2. National Security
3. Economic Recoverability
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Reserve Life Index
Reserve Life Index = Proved Reserves Production Rate
For Russia:Reserve Life Index = 23 on oil productionReserve Life Index = 74 on natural gas
For Western Companies:Reserve Life Index = 11
12
Economic Recoverability
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Russian Proved Oil Reserves
Proved Undeveloped
36%Proved
Producing44%
Proved Nonproducing
20%
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Typical Russian Reservoir ModelAverage Reservoir Parameters
Permeability 69 md
Porosity 23.9 percent
Pay Thickness 8.1 meters
Oil Viscosity 1.647 cp
Water Viscosity 0.430 cp
Oil Saturation 0.59
Formation Volume Factor 1.178 reservoir barrels per stock tank barrel
Reservoir Temperature 1.65° F (74° C)
Initial Pressure 2,893 psi
Assumed Parameters
Residual Oil Saturation 0.25
Coefficient of Permeability Variation 0.75
Mobility Ratio 1.0
Injection Pressure 4,400 psi
Producing Pressure 1,000 psi
Distance Between Wells 500 meters
Model Area 4,000,000 m2 (400 hectares)
Model Original Oil in Place 25 million barrels
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Recovery Factor Correlation for Western Siberian Basin For Reservoirs with Greater Than 75% Depletion
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Russian Oil & Gas Reserves
1. Russia has been and will continue to be a strategic resource to world economies.
2. How do Russian authorities define petroleum reserves?
3. How do their definitions compare with the West (SPE and SEC)?
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Russian approach to reserve classification recognizes the natural progression of resource identification, delineation and conversion to reserves. Resources and reserves are classified by where a reservoir, field, or region is located within this sequence of events.
Category ID Activity
D2 - Regional Analysis
D1 - Regional Exploration
C3 - Prospect Identification / Wildcat Drilling
C2 - New Field Discovery / Infield Exploration
C1 - Delineation Drilling
B - Development Plan
A - Production
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Russian Reserves Classifications
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Comparison of Russian Reserve Definitions With Western Standards
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Russian Federation Classification Scheme
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Russian & Western Classification of Reserves
Russia
West(SPE, SEC)
Technical recoverability
Commercial recoverability
Key Criteria
• Geophysical and geological exploration completed
• Proved by exploration and production operations
• Commercially viable
• Geophysical and geological exploration completed
• Proved by drilling
• Projected commercial viability
• Geophysical & geological exploration completed
• Minimum drilling data available
• Paper estimates are partially proven
• Assumed to be existent based on presence of favorable data, structures and analogs
• Geological and engineering (or production) data available to fully prove commercial viability of development 1)
• Studies not fully completed, namely:
• Well explored producing adjacent areas
• Unexplored areas analog to explored properties
• Commercially viable in existing economic and technological environment
• Assumed to be existent in:
• Unexplored areas based on analog data from similar fields
• Assumed to be commercially viable in existing economic and technological environment
1) SPE and SEC classification of proved reserves slightly differs as SEC ‘proven reserve’ requirements are more stringent (offset rule) resulting in more conservative estimates
А В С1 + С2 D
Proved Probable Possible
Proved Possible
30% С1 70% С1
Probable
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Russian Oil & Gas ReservesConclusions
1. Russia will continue to be a major energy supplier in the globalization of world economies.
2. Russian authorities define petroleum reserves as best illustrated using the McKelvey Box.
3. Russia is a strong competitor and formidable adversary with abundant supply of natural resources and a talented, educated work force.