Practical Applied Reservoir Engineering

DEVEX Aberdeen 8 May 2019

hayesm@petroleumre.co.uk

09/05/2019 DEVEX 2019 1

Presentation Outline

❑ Using “traditional analytical” techniques to complement Reservoir Simulation

❑ Particularly when working on-➢ M&A Data Rooms - with short timescales and limited or

incomplete data.➢ PEER Reviews - to validate forecasts quickly ➢ Resource Estimates & Production Profiles for prospect and

appraisal Project evaluations. ➢ Reserves Reporting - Independent Reserves auditors will

often use these sort of methods.

❑ The key outcome – how simple models can be applied to complex problems..

❑ Illustrated with a few case studies ➢ Displacement (waterflood)➢ Depletion (solution gas drive)➢ VLP/IPR➢ Flowing material balance

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Reservoir Simulation

Simulation Model

Static Description

• Porosity• Permeability• Net-to-Gross• Compressibility• Grid Geometry

ModelObjectives

Fluids

• Oil• Water• Gas

Rock/Fluid Interaction

• Relperms• Capillary Pressure

Initial Conditions

• Fluid contacts• Initial pressures• Initial saturations

Pressure Support

• Aquifer• Formation Compressibility

Production/Injection

• Well locations• Perforations, stimulation, workovers

etc• Production/injection rates• Well pressures (THP, BHP)• Well performance tables

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❑ Sense of False Precision

❑ Reconcile Uncertainty with Model Complexity

❑ Time consuming

❑ Possible material errors in a sea of numbers

❑ Model ownership

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Simulation Challenges

Evaluation Management

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Multiple Assets to cover ? Risk Matrix

M H High

L Med H

Low L M

Materiality (volume OR value if available)

Un

cert

ain

ty

❑ Rank Assets Materiality and Uncertainty

➢ Immature / Uncertain ➢ Generally Undeveloped➢ Unusual / Innovative technology or geology➢ Low appraisal levels➢ Marginal economics / price uncertainty➢ 100 % WI …. (lack of PEER group)➢ Non OCED➢ Major contracts or sanction outstanding ➢ mega projects

❑ Moderate Maturity ➢ Just on production ? ➢ Significant infill / activity planned

❑ Mature ➢ Stable Asset Base / Developed➢ Good analogs

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Risk Matrix➢ High - Focus for evaluation

➢ Likely to require some independent volumetric’s unless very mature

➢ Probably well based evaluation (at well or completion level)

➢ Attempt theoretical EUR evaluation ➢ Consider evaluating Reserves & Resources➢ Check analogs / benchmarking if available➢ PEER Review focus ….

➢ Medium➢ Consider simpler evaluation ?

➢ Low➢ Take as presented, do a simple consistency

check with FDP etc..➢ Simple quick look field level DCA➢ Consider central case only 1P = 2P = 3P …

etc ?

.

M H High

L Med H

Low L M

Materiality (volume OR value if sellers models available)

Un

cert

ain

ty

TIME & EFFORT SPENT HERE

IS TIME NOT SPENT ON HIGH FOCUS ASSETS

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Not practical ?

Spectrum of EvaluationCONSISTENCY AUDIT EVALUATION“Check the numbers” “check the evaluation” “do the evaluation”

Single point volumetric Analytical methods …DCA etc…Type well CPISingle Well ModelsGenerally accept Interpreted basic dataSubject to some checks (maps, well CPI, PVT)Make & Review Geomodel Maps

Check thru available documents FDP, Reserves Reports

All Raw Data Interpreted Full Geomodel & Simulation Workflow

Low focusMedium focus

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High focus

Data Considerations for M&A.

❑ Data availability and quality will depend on history of asset and seller ➢ Operated / Non operated

➢ Current and previous operator (NOC, major, small company)

➢ Assets with operator turnover can be a challenge

➢ Preliminary FAST TRACK evaluation for Key assets

• The amount of work required is not proportional to the amount of data ➢ Identify data requirements based on proposed evaluation method

➢ Request any missing data early (only ~ 50 % will arrive !)

➢ Review evaluation method if insufficient data

➢ Early scoping economics “what matters ?”

❑ Ensure accurate data / uncertainty ranges are used in evaluation and can be supported ➢ Maintain dialogue with the data provider throughout evaluation

➢ Check against raw data where ever possible, recognize difference between data & interpretation (interpreted map vs seismic)

➢ Obtain evidence to support key assertions in Memorandum of Understanding / Summary documents provided by seller

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Using SPE PRMS

❑ Remember PRMS as part of any evaluation process

➢ Vague terms often deliberately used

➢ Loose use of the word “RESERVES”

➢ Help to communicate uncertainty / maturity to stakeholders

➢ Can be simplified to make manageable

➢ 1P 2P 3P & 2C for Key asset only …

❑ MANY transactions done with a large Reserves shortfall after acquisition

➢ Severely impact lending base

➢ & Reserves replacement metrics

❑ Key hurdles to be clear on ….

➢ Chance of Discovery

➢ Chance of Development

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BaseBase Upside

Future GrowthEdge Targets

Investment Upside

?

Un Sanctioned & Incremental Projects (Contingent Resources 1C 2C 3C)

❑ Very Common Sources Of Value Inflation

➢ Un realistic schedule to sanction & first gas / oil

➢ Additional appraisal scope (required often not declared)

➢ Look for Sign of Maturity of Project

➢ CONCEPT REPORT / FEED / pre sanction spend in approved Budget

➢ Gas – commercial routes ? LNG, gas pipelines, contracting

❑ May Need to consider SCHEDULE RISK & CHANCE OF DEVELOPMENT

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75% of projects experience delay from 50 – 200 % after

end of Appraisal Average delay 95 %

Facilities & HSEQ

❑ In some countries Facilities & Environmental Issues can generally be left for later Due Diligence Phase

➢ Western Europe

➢ USA .. (GOM deep water)

➢ Norway etc..

❑ In other locations you may be surprised !

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1. Displacement (waterflood)

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➢ Generally not Used Enough

➢ DCA is a legacy of US Onshore dominated Solution gas drive

➢ Can be used in pure predictive model (no history)

➢ Applicable in water flood and where heterogeneity and/or mobility is a challenge

➢ See Dake chapter 5 … (Elsevier 36) can code in EXCEL….

➢ Practically suggest use WATERFLOOD from Petroleum Solutions www.petroleumsolutions.co.uk

➢ Caution

➢ CPI plots tend to use log k Reservoir uses linear k !

➢ Poro/perm crossplots tend to average extremes

➢ Buckley Leveret (homogenous / unfavourable mobility)

➢ Diffuse

➢ Segregated – (under gravity)

➢ Layered Systems

➢ Stiles – permeability - flooding order perm dominated

➢ Vertical Equilibrium – gravity dominated – bottom up

Fractional Flow

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https://petrowiki.org/Macroscopic_displacement_efficiency_of_a_linear_waterflood

Buckley Leveret Principles

Draw fw given known (or assumed) relative permeabilities and viscosities

Identify breakthrough from tangent

And from breakthrough to flood out

Assuming voidage (constant pressure) can convert to field rates …

Diffuse flow means that the viscous, or dynamic, forces are more dominant than the gravity forces, so that vertical variation in saturations may be neglected

More common condition of segregated flow is where the gravity forces are more dominant than the viscous, or dynamic, forces, so that vertical variations in saturations are significant.

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Think about what MBAL

does ?

Buckley Leveret

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D

A

A

B

B

C

C

D

Buckley Leveret Stiles (k order) VE - Vertical Equilibrium

5 mD100 mD1 mD

10 mD

Fw

Np/N

Increase in Uo

Fw

Np/N

Base (hi perm) top

Fw

Np/N

Increase in Uo

Fractional Flow Models

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Stiles OR VE - Principle

❑ Principles are the same, each layer floods out in order

❑ For M “close” to 1

❑ Only Kr end points & Uo,Uw needed

❑ only flooding order changes

❑ Review core / RFT data to decide on model

5 mD100 mD1 mD

10 mD

Stiles (k order) Vertical Equilibrium

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Fractional Flow - Asset Background

09/05/2019 I478a18TL Applied RE Tullow / PRE 1814 19

❑ You have been asked to evaluate a mature field and an adjacent undeveloped discovery as part of a potential acquisition. The field has been on production for a number of years under active waterflood and is quite mature with high watercuts. Initial production was from a part of the field and later ERD horizontal wells were successfully used to defer water breakthru. Production data is available and the FDP reported STOIIP is ~ 1bn bo. The offset discovery STOIIP has been checked by your geologist and is well defined at 50 mmstb.

❑ PVT data is different between the two fields in particular oil viscosity➢ Field = 0.9 cP➢ Discovery = 1.89 cP and Boi = 1.1

❑ The discovery has very similar geology and development plan (water injection) the production profiles in the data room are from simulation but the model is not available for you to run or review. Design rates are given in a draft FDP report

❑ What could you do to check the discovery profile ?

Workflow

❑ MATURE FIELD

➢ Match’s well with Fw STOIIP ~1050 mmstb (GnG reported as ~1000 mmstb)

➢ Remaining Oil estimated for end 2013 to 2034

➢ Fw analysis ~ 74 mmstb

➢ Log WOR vs cum (routine DCA) ~ 68 mmstb = good agreement

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Solution

❑ MATURE FIELD

➢ Match’s well with Fw STOIIP ~1050 mmstb (GnG reported as ~1000 mmstb)

➢ Remaining Oil estimated for end 2013 to 2034

➢ Fw analysis ~ 74 mmstb

➢ Log WOR vs cum routine DCA ~ 68 mmstb (pretty good agreement)

❑ DISCOVERY

➢ Good match to VDR profile

➢ Cum sim model profiles =

➢ 16 mmstb oil 88 mmbw

➢ Cum Fw model =

➢ 17 mmstb oil 65 mmbw

➢Well within ~ 5 %

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3. Depletion (Black Oil PVT)

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Muskat Method Solution gas drive

❑ Pure solution gas drive production for oil reservoir

➢ No (strong) aquifer

➢ No initial FREE gas cap

➢ PVT known or by correlation

➢ We ignore small energy terms (Cf, Cw)

➢ Krg/kro from APRS <- can we keep gas in the reservoir ?

➢ See DAKE Ex 3.3 for more details, simplification & reorg of basic equ.

➢ Add recovery above Pb

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ARP’s curves

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Best case - gas remain in reservoir / maintain pressure Steep dips / high perms / thick high NTG sands / fractures ? = Highest Rf

Worst case - gas is produced / pressure drops & GOR will rise rapidlyLow dips / low perms / vertical barriers = Lowest Rf

ARP’s curves

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Say Krg ~= kro at sl ~ 50 %

Don’t put “ROCK” relperms in MBAL !

Depletion + Asset Background

❑ Field XXXX is a large discovered undeveloped Middle East oil accumulation, It has been penetrated by a number of vertical appraisal wells which suggest good stratigraphic and pressure continuity. Pilot production is ongoing from ~ 5 wells at 20 + mbd and the well PI’s are reasonable (> 5 bopd/psi). Good PVT samples were acquired, the API is 33.

❑ A development plan is proposed by the Operator and a Reserves report has been prepared by a independent consultant which declared SPE PRMS reserves.

❑ There is limited water available regionally so a depletion development is planned. Offset data suggests very limited aquifer drive is expected. No gas lift or ESP’s are planned. You understand the forecast was prepared in ECLIPSE but the models are not available for review and the Operator profile is in EXCEL format only. This is a “dataroom” exercise with limited access to information

❑ Formation Dips are very low and the core data indicated the reservoir is quite heterogenous with a wide range of core perms (< 1mD to 1,000 mD), modest NTG and a number of discreet layers. The well test data suggests the field is not fractured.

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Solution

❑ Material Balance suggest reasonable Rf 15%+ can be achieved

❑ Vendor profiles look unusual ➢ Very modest GOR rise for 25 yrs

❑ Check gas using MUSKAT GOR vs cum …➢ Major difference in gas rates ?

❑ Subsequent check confirmed problem with model

❑ Cf = 3e-5 (routine say 3e-6) ➢ Strong compaction drive

created in error

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Sim model

Muskat QC

3. VLP/IPR

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Depletion + VLP/IPR - Asset Background

❑ Field ZZZZ is a large discovered undeveloped oil accumulation, It has been penetrated by a number of vertical appraisal wells which suggest good stratigraphic and pressure continuity. There is a single DST of a vertical well with a PI of ~ 1.6 bopd/psi. Good PVT samples were acquired, the API is low at 21.

❑ A development plan is proposed by the Operator and a Reserves report has been prepared by a independent consultant which declared SPE PRMS reserves. No artificial lift is planned

❑ There is limited water available regionally so a depletion development is planned. Offset data suggests very limited aquifer drive is expected. Horizontal wells are planned with a Pih/Piv = 2 estimated. No gas lift or ESP’s are planned. You understand the forecast was prepared in MBAL but the models are not available for review and the Operator Development plan is in powerpoint “overview” format only. This is a “dataroom” exercise with limited access to information

❑ Formation Dips are very low and the core data indicated the reservoir is quite heterogenous with a wide range of core perms (< 1mD to 1,000 mD), modest NTG and a number of discreet layers. The well test data suggests the field is not fractured.

❑ The reported profile cums a 14 % RF

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Solution #1 ARPS / MUSKAT forecasts

❑ Natural flow VLP suggests well will not flow below Pres ~ 2800 psi.

❑ Worst (expected ?) case APRS curves used

❑ Well cannot flow reservoir pressure to below Pb ?

❑ MBAL model had no lift curves notional BHFP of 1000 psi “assumed”

❑ Low API oil (low Pb) that cannot flow below Pb lead to exceptionally low Rf

❑ Circa 3 to 4 % expected

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4. Flowing Material Balance (gas)

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Flowing Material Balance #1

❑ For gas reservoirs / very useful with large declines in FWHP❑ Not for tight gas / transient flow

❑ FBHP = തP − q bpss❑ Convert FWHP to FBHP using VLP models ❑ Calculate z-factor for each pressure point❑ Take the P/z value for each FBHP and the P/z value from the static

plot for each time

❑ Calculate PI =1

bpss=

qPz static

− Pz FBHP

for each pressure point

❑ Plot PI vs. cumulative gas production❑ Adjust the gradient of the static P/z line and repeat until the PI plot

has a gradient of zero❑ The intercept of the P/z plot with the x-axis is the GIIP

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Flowing Material Balance #2

❑ Achieving an ultimate zero gradient on the productivity index plot suggests a gradient of -490 on the P/z plot

❑ This leads to an estimated GIIP of 10.5 Bscf❑ Useful with no downhole pressures, ❑ BUT moderate to high perm only & dry (no water) ….

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

Pro

du

cti

vit

y I

nd

ex

Gp (Bscf)

y = -490x + 5128.70

1

2

3

4

5

6

0 2 4 6 8

10

12

P/z

(th

ou

san

d p

sia

)

Gp (Bscf)

Flowing Material Balance

Pi/Zi

Flowing P/z

Estimated GIIP

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Flowing Material Balance #3

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WH

P (

Psia

)

Ga

s r

ate

(M

Mscfd

)

K - 1 Production data

Daily prod. Oct_Dec 2014 Prod P90 Prediction P50 Prediction

P10 Prediction FWHP P50 Prediction FWHP

Check FWHP continuity

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FMB for WELL ON PLATEAU

❑ HPHT well on plateau / no rate decline for DCA

❑ Match FWHP data for yr 1

❑ 2 tank model GIIP, inter-tank PI & kh … (tight gas ? Compartment)

❑ Excel model PVT by correlation, only 4 match parms..

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Tank 1 Tank 2 VLP

tank PI Well PI

Forecast for 2018 & rem life

❑ FWHP continued to decline in 2018 ➢ Modelled as average by quarter

➢ Good match to 2018 actuals rates

❑ LOF forecast allows for future compressor rewheel, ➢ Reduced WHFP, cums within 5 % of operator fcst.

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Conclusions

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Conclusions

❑ Analytical Methods have their place ➢ When short of data / time ➢ To “rescale & benchmark” analogue & simulation data➢ Fractional Flow has some advantages over DCA ?

➢ Some physics / can use core PVT / analog & facilities rescale / reschedule➢ Simple QC of complex simulation results

❑ DO I UNDERSTAND MY PROBLEM ENOUGH TO REPRESENT IT IN A SIMPLE WAY ?❑ suggested Practice

➢ Keep focus on Key Assets / Projects – Use PRMS ➢ Examine basic data and isolate critical issue

➢ Depletion / displacement / mobility / heterogeneity / productivity / VLP performance ?

➢ Don’t ASSUME OR ANCHOR DO THE ARITHMETIC➢ Model critical issues and look to be with +/- 10 to 20 %

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