Tim Carr - West Virginia University

“Supposing is good, but finding out is better.”

Mark Twain

“Annual income twenty pounds, annual expenditures nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought six, result misery.”

Mr. Micawber in David Copperfield

Common Standards for Reserves & Resources Consistency, Transparency & Reliability Financial Stakeholders Regulatory Stakeholders Reporting Entities

Petroleum Resource Management System (PRMS) Developed by SPE, SPEE, WPC, AAPG Used by the US Securities and Exchange Commission

(SEC) Reserves, Contingent Resources, Prospective

Resources P10, P50, P90

Volumetrics Deterministic Determination Probabilistic Determination 2

Exploration Strategy

1. Global Basin Analysis

2. Develop Play Concepts

3. Define Exploration

Play Areas

4. Evaluate Prospects

5. Identify Drillable

Prospects

6. Drill Exploration

Wells

Complete Basin Studies

Acquire New Exploration Licenses

Compile Full Lead &

Prospect Inventory

Drillable

Prospects/

Well proposals

Drill

Exploration

Wells

= New Reserves 3

Rose, 2001 4

Rose, 2001 5

Project Success Project Potential Reality Check (10-90 Rules) Average Success Rate for Wells Drilled in Area

(History) Average Size (net pay, recovery per foot, areal

extent) Price Forecasts Costs (e.g., Drilling, Facilities, Seismic, Land) Production Rates

If you depart from past history, you better have good justification e.g., Better Technology, Lower Costs, Smarter

Show a Range of Possibilities 6

Rose, 2001 7

8 PRMS, 2011

9 PRMS, 2011

Proven

Probable or Possible ?

Probable or Possible ?

10

11 PRMS, 2011

Reservoir Rock Porosity & Permeability to Contain Extractable

Hydrocarbons

Contains Hydrocarbons

Controls Lithology

Maturity – Type of Hydrocarbon

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Volume of Reservoir Thickness of Reservoir Rock (h) & Areal Extent (A)

Porosity (𝝫)

Hydrocarbon Saturation (1-Sw)

𝑉ℎ = 𝐴ℎ𝝫 (1-Sw)

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Unit Equivalent in foot-units

SI Equivalent

1 Acre 43,560 ft2 4047 m2

1 barrel (bbl) 5.6154 ft3 159 liters

1 acre foot (oil) 1 acre foot (gas)

7758 bbls 43,560 ft3

1,233,522 liters (1,058 metric tons) 123.5 m3

𝑂𝑂𝐼𝑃 = 7758 𝐴ℎ𝝫 (1-Sw) bbl.

𝑂𝐺𝐼𝑃 = 43,560 𝐴ℎ𝝫 (1-Sw) ft3

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Net Pay (Net Sand): Thickness of permeable (clean), hydrocarbon-containing reservoir rock (h)

Gross Pay (Gross Sand): Thickness of reservoir irrespective if it is permeable (clean) or if it is hydrocarbon bearing,

Net to Gross Ratio: Measure of Reservoir Quality

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Reservoir Higher Temperatures and Pressures

Corrected for Compressibility of Oil and Gas Reservoir to Surface Conditions

Stock Tank (STOOIP & STOGIP)

Formation Volume Factors (FVF) Bo: Ratio of mass of oil in reservoir vs. surface

Bg: Ratio of volume of gas in reservoir vs. surface

𝑆𝑇𝑂𝑂𝐼𝑃 = (7758 𝐴ℎ𝝫 (1-Sw))/Bo bbl.

𝑆𝑇𝑂𝐺𝐼𝑃 = (43,560 𝐴ℎ𝝫 (1-Sw))/Bg ft3

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Area of Reservoir, A 2000 acres

Net Thickness, h 150 feet

Porosity, 𝝫 15%

Water Saturation, Sw 30%

Oil Formation vol. factor 1.4 RB/STB

𝑆𝑇𝑂𝑂𝐼𝑃 = (7758 𝐴ℎ𝝫 (1-Sw))/Bo bbl.

= (7758 ∗ 2000 ∗ 150 ∗ 0.15 ∗ (1-0.3))/1.4 bbl. = 174,555,000 = 174.6 mmbbl.

Why is Bo > 1?? 244.4 mmbbl without Bo 17

Area of Reservoir, A 2000 acres

Net Thickness, h 150 feet

Porosity, 𝝫 15%

Water Saturation, Sw 30%

Oil Formation vol. factor 0.0035 RCF/STCF 𝑆𝑇𝑂𝐺𝐼𝑃 = (43,560 𝐴ℎ𝝫 (1-Sw))/Bg ft

3

= (43,560 ∗ 2000 ∗ 150 ∗ 0.15 ∗ (1-0.3))/0.0035 ft3 = 392,040,000,000 = 392.04 billion ft3 (Bcf)

Why is Bg << 1?? 1.372 Bcf without Bg 18

Bo – Oil (Dead) 1.0 to 1.1 Bo – Gassy (Moderate) ~1.2 (Very) ~1.4 Boi = 1.05 + (GOR/100 * 0.05)

GOR: Gas Oil Ratio (cf/bbl)

Bg – Normal Pressure (Hydrostatic =0.433 psi/ft) Usually <10-3 for reservoirs > 1,000 psi Bg = 36.9/Depth ft. VERY GROSS ESTIMATE

Ex: At 5,000 ft. Bg = 36.9/5,000 ft = 0.00738

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Resources (In-Place)

Reserves (Economically Producible) OOIP*RF or OGIP*RF

Recovery Factor (RF) Reservoir Quality

Homogenous Fluid Movement (Larger Pore Throats)

Depth, Pressure, Temperature Fluid Properties Drive Mechanism Reservoir Management

Estimated Ultimate Recovery (EUR)

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Oil Poor Reservoir (Low Porosity-Permeability <10% Dual Porosity (Low Matrix to Fracture) ~20% Good Porosity-Permeability ~30% Excellent Reservoir (Good Water Support) ~40-50% Ideal (Reservoir Quality, Management) ~60-80%

Gas Shale Gas, Coalbed Methane ~10% Good Quality ~70% Excellent (Depletion & Management) ~90%

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Calculate Total Adsorbed Gas (not a function of porosity)

G = 1359.7 A h ρc Gc h = Thickness, feet G = Gas-in-Place, scf A = Reservoir Area, acres ρc = Average In-Situ Shale Density, g/cm3 GC = Average In-Situ Gas Content, scf/ton

Determine the free (conventional) gas Calculate the porosity responsible for holding

the conventional gas Sum Free and Conventional Gas

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23 PRMS, 2011

24 PRMS, 2011

25 PRMS, 2011

26

Seismic Amplitude Monte Carlo Modeling

PRMS, 2011

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Near Offset Far Offset

PRMS, 2011

28

Time 1

PRMS, 2011

Time 2

29 PRMS, 2011

30 PRMS, 2011

31 PRMS, 2011

Resources versus Reserves Uncertainty

Commerciality

Maturity

Volumetric Estimates Original Hydrocarbons in Place (OOIP, OGIP)

Reservoir Volumes vs. Surface Volumes

Recovery Factors

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“Professor may I be excused. My brain is full.”

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Assignments Reading for this week

Take a look at PRMS

http://geodc.aapg.org/PRMS_Guidelines_Nov2011.pdf or

http://www.spe.org (Need membership – Free as student)

Exercise – Picking Faults with 3D Seismic Due on Friday 4/17 (Get it In ASAP – Today_

Discuss Current Energy Events Read Today in Energy for Friday (4/21) at

http://www.eia.gov/

Be Prepared to Discuss in Class – Monday (4/20)

Discussion Leader – Jared Bailey

Last Quiz Wednesday 4/29 Open at 1:00pm – Close at 11:00 on 5/1