Brief Overview to Well Completions Design Classification and Description of an Unconventional Well
CLASSIFICATION ISSUES ASSOCIATED WITH UNCONVENTIONAL … · 2011-02-07 · CLASSIFICATION ISSUES...
Transcript of CLASSIFICATION ISSUES ASSOCIATED WITH UNCONVENTIONAL … · 2011-02-07 · CLASSIFICATION ISSUES...
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CLASSIFICATION ISSUES ASSOCIATED WITH
UNCONVENTIONAL RESOURCES
David ElliottAlberta Securities Commission
28 April 2010
UNECE Expert Group on Resource ClassificationGeneva, 28-30 April 2010
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WHY CLASSIFY RESOURCES?
• Non-Reserves Portion of Hydrocarbon Assets are Increasing in Importance
• COMMUNICATION:• To Separate Resource Estimates Into Uncertainty/
Risk Categories for Making Decisions• To Identify Long-Term Opportunities• Resources Supply Planning
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DIFFERENT PERCEPTIONS(Simplified)
TIME FRAME PAYS TAXES, ROYALTIES?
PAYS FOR CREDIT RISK?
RESOURCE STUDIES LONG NO NO
GOVT. RESOURCES MGT.
LONG-MEDIUM NO NO
FINANCIAL NEEDS MEDIUM-SHORT YES YES
BUSINESS PROCESSES
SHORT YES YES
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CONVENTIONAL vs. UNCONVENTIONAL
CONVENTIONAL UNCONVENTIONAL
CONTROL LOCAL REGIONAL
TRAPPING BUOYANCY/STRUCTURE VARIOUS
BOUNDARIES DEFINED ILL-DEFINED (“DISPERSED”)
PRODUCTION LARGE LITTLE
ANALOGUES MANY FEW
GUIDELINES MANY FEW TO NONE
EXPERIENCE MUCH LITTLE
“UNCONVENTIONAL” :• USEFUL COLLOQUIAL TERM• NOT A FORMAL CLASSIFICATION
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CLASSIFICATIONS
• UNFC:– E: Social and Economic Viability– F: Project Feasibility– G: Geological Knowledge
• PRMS and COGEH (similar):– Project based
• Forecast of recovery, costs– Technical: drilling, testing, etc.– Economic: NPV
– CRIRSCO
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CLASSIFICATION CRITERIA
• Binary:– Either in a class or not in a class
• Probabilistic (Fuzzy classification):– In a class with a certain degree of probability
• E.g. , 80% probability that a hydrocarbon volume is a reserve, 20% probability that it is a contingent resource
– More reflective of the real world.
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QUANTITATIVE vs QUALITATIVE
• Quantitative Deterministic – clear but inflexible
• Quantitative probabilistic – requires statistical understanding
• Qualitative:– Subjective in interpretation
• E.g., “reasonable certainty” means a probability of 74% with an IQR 30% (AAPG SPE conference survey, 2007)– Flexible
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RULES vs PRINCIPLES
• Prescriptive Rules:– Clear, easy to apply – Little or no guidance needed– Inflexible and unable to deal with new issues
• Principles:– General, not as easy to apply– Considerable guidance needed– Flexible, better able to deal with new issues
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OPTIMUM
• Recognises that Resource Estimates are Estimates and Hence, Uncertain
• Balanced Combination Of:– Qualitative and Quantitative– Principles and Rules
• Finding This Balance Is Not Easy
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QUESTION
• Can volumes be classified in UNFC, PRMS, with:– Little uncertainty– Limited ambiguity– Insignificant differences between different individuals/
organisations?
• Yes no further action needed
• No specifications and guidelines needed
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PRMS
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GUIDANCE
• Guidance (PRMS, COGEH):– Mainly for Conventional Reserves– Limited For:
• Unconventional Resources• Categories Other Than Reserves• Unrecoverable Resources
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GUIDANCE
• Neither PRMS nor COGEH currently contain adequate guidance leading to consistent classification of:– Discovery status– Contingent resources
• No guidance to capture different grades of “Unrecoverable” volumes
• UNFC has better categories, but no guidance.
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CLASSIFICATION ISSUES
• Some Common Issues
• Discovery Status (Discovered Petroleum Initially-In-Place, DIIP):– Known accumulation
• Reserves
• Contingent Resources:– Contingencies– Technology under development
• Unrecoverable Resources
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COMMON ISSUE: EXTRAPOLATION(Areal assignment)
• How Far Can You Extrapolate From a Control Point?
– Formation Presence ���� (often)
– Productivity � (usually)
• Depends on the Geology, But Just Because a Formation is There - Doesn’t Mean It Is:– Hydrocarbon Bearing, if it is, it is – Productive.
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DISCOVERED PETROLEUM INTIALLY-IN-PLACE
• DIIP, “estimated, as of a given date, to be contained in known accumulations prior to production”. May be:– Commercial: Reserves– Sub-Commercial: Contingent Resources– Unrecoverable
• Must be in “known accumulation”
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KNOWN ACCUMULATION (PRMS)
• Accumulation: “an individual body of petroleum-in-place.”
• “… penetrated by a well that has established through testing, sampling, or logging the existence of a significant quantity of recoverable hydrocarbons.”
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KNOWN ACCUMULATION (COGEH)
• “… penetrated by a well.”
• “… well must have demonstrated the existence of hydrocarbons by flow testing.”
• “However, where log and/or core data exist, and there is good analogy to a nearby and geologically comparable accumulation, this may suffice.”
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ISSUES: KNOWN ACCUMULATION
• For an unconventional resource, what is: – “an individual body”– a “significant quantity”– “recoverable hydrocarbons”, how much, under what
conditions, what process, when?– a “good analogy”– “nearby”– “geologically comparable”?
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ISSUES: KNOWN ACCUMLATION
• Is laboratory work sufficient?
• Is log analysis sufficient?
• What weight should be put on simulation?
• Is it “known” if drilling and testing is still required?
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ISSUE: TIMING
• Often lots of wells to establish in-place volumes but it may be one or two years before flow information (e.g. pilot tests) is available
• Until test information available, classify as:– Undiscovered?– Unrecoverable?– Contingent (on drilling, test results)?
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RESERVES
• Same criteria as “conventional” resources, but;
• May be more “loosely” applied for unconventional resources:– Analogs– Extrapolation
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CONTINGENT RESOURCE (PRMS)
• “… potentially recoverable from known accumulations by application of development projects”
• “…not currently considered to be commercially recoverable”
• “… due to one or more contingencies” (also COGEH)– “… economic, marketing, legal, environmental,
social, and governmental factors”
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CONTINGENT RESOURCE (COGEH)
• “potentially recoverable from known accumulations:– using established technology or technology under
development, but– not currently considered to be commercially
recoverable due to one or more contingencies”.
• “… discovered recoverable quantities associated with a project in the early evaluation stage.”
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ISSUES: CONTINGENCIES
• Non-technical contingencies:– Guidance probably adequate
• Non-technical contingencies:– Guidance not adequate to capture the range of
uncertainty:– Contingent on:
• Successful test?• Development of technology?
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TECHNOLOGY UNDER DEVELOPMENT (COGEH)
• “technology that has been developed and verified by testing as feasible for future commercial applications to the subject reservoir”
• Not defined under PRMS
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ISSUES: TECHNOLOGY UNDER DEVELOPMENT
• Lack of clarity, ability to differentiate levels of development
• Established technology in not, or poorly, analogous reservoir, e.g.:– SAGD in carbonates– Barnett shale completions in other shales
• New technology, e.g.:– THAI, Electrothermal processes for bitumen– In-situ thermal cracking of oil shale kerogen
• Blue sky:– Methane hydrate – In-situ bacterial upgrading
• Laboratory work only?
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EXAMPLE: BARNETT SHALE
"There was a time you all were told that any of the 17 counties in the Barnett Shale play would be just as good as any other county," McClendon said. "We found out there are about two or two and a half counties where you really want to be.”
-- Bloomberg News October 14, 2009
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EXAMPLES
• North American OilSands:– Two independent estimates, one four times the
size of the other.
• Other Non-Public Examples
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UNRECOVERABLE RESOURCES
• Not all the same
• Residual hydrocarbons
• Technology:– None at the present time– Experimental – Existing but not for a specific reservoir …
• Economics:– Needs $100/bbl, $500/bbl …
• Etc.
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ACTION
• Review of PRMS Classes
• Guidance (PRMS, COGEH) that: – Promotes consistency– Sufficiently detailed to distinguish levels of uncertainty
• Governance process to deal with emerging issues, provide guidance
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Alberta Securities Commission4th Floor, 300 – 5th Avenue S.W.Calgary, Alberta CanadaT2P 3C4
Tel: 403.297.4008Fax: [email protected]
David Elliott, Ph.D., P. Geol.Chief Petroleum Advisor
HOW TO CONTACT DAVID ELLIOTT