RESOURCES AND RESERVES

© 2012 INSTITUTE OF TECHNOLOGY PETRONAS SDN BHDAll rights reserved. No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or otherwise) without the permission of the copyright owner.

Presentation Contents

• Reservoir Engineering– Primary functions– Applications

• Resources– Key Elements– Discovered Vs. Undiscovered

• Reserves– Classification– Development and Production status– Levels of uncertainty– Estimation

Reservoir

RESERVOIR ROCK

• A substance body of rock having sufficient porosity and permeability to store and transmit fluids .

RESERVOIR ENGINEERING

• The phase of engineering which deals with the transfer of fluids to, from or through the reservoirs

• It is located at the heart of many of the activities acting as a central coordinating role.

THE PRIMARY FUNCTIONS OF A RESERVOIR ENGINEER

The estimation of hydrocarbons in place

The calculation of a recovery factor

The attachment of a time scale to the recovery

GOAL OF RESERVOIR ENGINEERING.

Set up development project

Optimize hydrocarbons recovery

Study on production forecasting

CALCULATION OF HYDROCARBON VOLUMES

• Initially filled with liquid oil.• The oil volume in the reservoir (oil in place) is:

OIP = Vφ (1− Swc )(res.vol.)

• V = the net bulk volume of the reservoir rock• φ = the porosity, or volume fraction of the rock which is porous• Swc = the connate or irreducible water saturation and is expressed

as afraction of the pore volume.

THE STOCK TANK OIL INITIALLY IN PLACE

• To express oil volumes at stock tank (surface) conditions:

STOIIP = n = Vφ (1− Swc ) /Boi

• Boi is the oil formation volume factor, reservoir barrels/stock tank barrel (rb/stb).

RESERVOIR ENGINEERING APPLICATION

Determine HC in place

• Volumetric Method

• Material balance

Determine Reserves

• Primary Recovery Phase

• Supplemental Recovery Phase

Determine Rates

• Number of wells

• Well potential

RESERVOIR ENGINEERING APPLICATION

• Determine HC in place

Volumetric Method Area Thickness Porosity Saturation

Material balance

Production Data Fluid Properties

Fig(1) Anticline Petroleum Trap

RESERVOIR ENGINEERING APPLICATION

• Determine Reserves Primary Recovery

Gas cap drive Water drive Gravity drainage Combination

Supplementary Recovery Phase

Secondary Recovery EOR

• Determine Rates

Number of wells Well potential

Fig (2) CO2 Injection

Resources

Total quantity of discovered and undiscovered

petroleum at a specific date in a given area.

GENERAL DEFINITION OF RESOURCES

Total Petroleum Initially In Place (TPIIP Total Resources)

Undiscovered PIIPDiscovered PIIP

Recoverable• Production • Reserves • Contingent resources

Unrecoverable

Recoverable• Prospective recourses

Unrecoverable

KEY ELEMENTS OF RESOURCES

• quantity of petroleum that is estimated to exist originally in naturally occurring accumulations

• Discovered or yet to be discovered (equivalent to “total resources”)

TOTAL PETROLEUM INITIALLY-IN-PLACE (TPIIP)

DISCOVERED (PIIP)

The total estimated in place quantities of petroleum at a specific date to be contained in known accumulations, plus those quantities already produced from there

UNDISCOVERED (PIIP)

Quantity of petroleum that is estimated, as of a given

date, to be contained in known accumulations yet to

be discovered

DISCOVERED VS UNDISCOVERED PIIP

DISCOVERED RESOURCES

PRODUCTION

Cumulative quantity of petroleum that has been recovered up to a given date

RESERVES = ?

CONTINGENT RESOURCES

To be potentially recoverable from known accumulations, but the applied projects are not yet considered mature enough for commercial development due to one or more contingencies

UNDISCOVERED

PROSPECTIVE RESOURCESQuantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective Resources have both an associated chance of discovery and a chance of development.

Reserves

Reserves

Reserves

Classification

Proved Reserves

Probable Reserves

Possible Reserves

Development and production status

Developed Reserves

Producing Non-producing

Undeveloped Reserves

Levels of uncertainty

General Classification Requirements

DEFINITION OF RESERVESGENERAL OVERVIEW OF RESERVES

DEFINITION OF RESERVES

Quantities of petroleum

Anticipated to be COMMERCIALLY

RECOVERED

from KNOWN ACCUMULATIONS

(already discovered).

from a given date forward (excluding

previously produced amounts)

CONDITION FOR TO BE CALLED RESERVES

Oil and gas must be physically and economically producible

Since reservoir is not produced and is inaccessible, reserves cannot be measured, they can only be estimated

Since reserves are remaining, there is a time line associated with each reserve estimated

RESERVES ESTIMATION

• Analysis of drilling, geological, geophysical, and engineering data

• The use of established technology• Specified economic conditions, which are generally accepted

as being reasonable, and shall be disclosed

RESERVES CATEGORY

Reserves are classified according to the degree of certainty associated with the estimates.

POSIBBLE

PROBABLE

PROVED

RESERVES CATEGORY

PROVED RESERVES

• Reserves estimated with a high degree of certainty to be recoverable• Likely situation : Actual remaining quantity > estimated proved results

PROBABLE RESERVES

• Additional reserves that are less certain to be recovered than proved reserves• sum of estimated proved + probable reserves<Actual remaining quantity<sum

of estimated proved + probable reserves

POSSIBLE RESERVES

• Less certain to be recovered• Likely situation : Actual remaining quantity <sum of estimated proved

reserves+ probable reserves + Possible reserves

FURTHER CLASSIFICATION

Each of the reserves categories (proved, probable, and possible) may be further divided into developed and undeveloped categories.

DEVELOPED• expected to be recovered from

existing wells and installed facilities• Or if facilities have not been

installed, that would involve a low expenditure to put on production

RESERVESUNDEVELOPEDexpected to be recovered from known accumulations where a significant expenditure is required to render them capable of production.

DEVELOPED PRODUCING• expected to be recovered from

completion intervals open at the time of the estimate (Currently producing)

• If well is shut in, the date of resumption of production is known

DEVELOPED NON-PRODUCING• Is not put on production yet• produced before, but currently shut

in (date of resumption of production is unknown

LEVELS OF CERTAINTY IN REPORTED RESERVES

Reported reserves should target the following levels of certainty under a specific set of economic conditions:

POSIBBLE

PROBABLE

PROVED

Actual remaining reserves

LEVELS OF CERTAINTY IN REPORTED RESERVES

At least a 90 percent probability that the quantities actually recovered will equal or exceed the estimated proved reserves

POSIBBLE

PROBABLE

PROVED

Quantities actually

recovered

At least 90 percent probability

LEVELS OF CERTAINTY IN REPORTED RESERVES

At least a 50 percent probability that the quantities actually recovered will equal or exceed the sum of the estimated proved + probable reserves,

POSIBBLE

PROBABLE

PROVED

Quantities actually

recovered

At least 50 percent probability

LEVELS OF CERTAINTY IN REPORTED RESERVES

At least a 10 percent probability that the quantities actually recovered will equal or exceed the sum of the estimated proved + probable + possible reserves.

POSIBBLE

PROBABLE

PROVED

Quantities actually

recovered

At least 10 percent probability

RESERVE ESTIMATION – RECOVERY FACTOR

We can never recover 100% oil and gas reserves at any given reservoir

How much hydrocarbons can be recovered and the recovery factor are dependent on: Properties of the reservoir rock and its variation

throughout the reservoir Properties of hydrocarbons Properties of the displacing substance Shape and extent of the reservoir

RESERVE ESTIMATION – RECOVERY FACTOR

• Ultimate Recovery (UR) - the sum of the proven reserves at a specific time and the cumulative production up to that time

UR = HCIIP x Recovery Factor (RF)

Reserves = UR – Cumulative Production

WORLDWIDE END-OF-YEAR PROVED OIL RESERVES

PROVEN OIL RESERVES DISTRIBUTION

RELATION BETWEEN RESOURCES AND RESERVES

RISKS RELATED TO RESOURCES

What is ‘Chance of commerciality’? The likelihood that a project will achieve commerciality

Reserves: To be classified as reserves, estimated recoverable quantities must be associated with a project(s) that has demonstrated commercial viability.

CHANCE OF COMMERCIALITY

Contingent Resources: Not all technically feasible development plans will be commercial. The commercial viability of a development project is dependent on the forecast of fiscal conditions over the life of the project.

CHANCE OF DISCOVERY

Prospective Resources: The chance that an exploration project will result in the discovery of petroleum is referred to as the “chance of discovery.”

Chance of commerciality = chance of discovery x chance of development

RECOURCES CLASSIFICATION FRAMEWORK

Current Resources

General requirements for classification of reservoirs

Classification Requirements

Ownership

Drilling

Testing

RegulatoryInfrastructure

and market conditions

Timing of production

and development

Economic requirements

Procedure for reserve estimation

Volumetric Method Material Balance

Production Decline Analysis

Future Drilling and Planned Enhanced Recovery Projects

Volumetric Method

• Early stage of reservoir development• Geology, Geophysics, Rock and Fluid properties• Recovery Factor (RF) assigned arbitrarily• No time dependency, No Production data

Material Balance

• Involve the analysis of pressure behavior as reservoir fluids are withdrawn

• A = Increase in HCPV due to the expansion of the oil phase (oil + dissolved gas).• B = Increase in HCPV due to the expansion of the gas phase (free gas in the gas cap).• C = decrease in HCPV due to the combined effects of the expansion of the connate water and the reduction in reservoir pore volume.• D = decrease in HCPV due to water encroachment (from aquifer)

Underground withdrawal(oil + gas + water) = Expansion of oil + dissolved gas (A)+ Expansion of gas-cap gas (B)+ Reduction in HCPV (C)+ Cumulative water influx (D)

Production Decline Analysis

• Involves the analysis of production behavior as reservoir fluids are withdrawn.

• Later stage of development, when production rate undergoes natural decline.

• Mostly Production data• Time dependent

Future Drilling and Planned Enhanced Recovery Projects

Additional Reserves Related to Future Drillingfactors to be considered in classifying reserves estimates associated with future drilling as proved, probable, or possible:• whether the proposed location directly offsets existing wells or acreage with proved or

probable reserves assigned,• the expected degree of geological continuity within the reservoir unit containing the reserves,• the likelihood that the location will be drilled.

Reserves Related to Planned Enhanced Recovery Projectsfactors to be considered in classifying reserves estimates associated with future drilling as proved, probable, or possible:• Repeated commercial success of the enhanced recovery process has been demonstrated in

reservoirs in the area with analogous rock and fluid properties.• The project is highly likely to be carried out in the near future. This may be demonstrated by

factors such as the commitment of project funding.• Where required, either regulatory approvals have been obtained or no regulatory impediments

are expected, as clearly demonstrated by the approval of analogous projects.

Validation of reserves estimates

Through periodic reserves reconciliation of both entity and aggregate estimates. The tests described below should be applied to the same entities or groups of entities over time, excluding revisions due to differing economic assumptions:

• Revisions to proved reserves estimates should generally be positive as new information becomes available.

• Revisions to proved + probable reserves estimates should generally be neutral as new information becomes available.

• Revisions to proved + probable + possible reserves estimates should generally be negative as new information becomes available.

THANK YOU© 2013 INSTITUTE OF TECHNOLOGY PETRONAS SDN BHDAll rights reserved. No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or otherwise) without the permission of the copyright owner.