1.0 INTRODUCTION ... 1
Charles Vanorsdale, Ron Harrell
2.0 PETROLEUM RESOURCES DEFINITIONS, CLASSIFICATION,
AND CATEGORIZATION GUIDELINES ... 4
Rich DuCharme, Dan Olds, and Xavier Troussaut
3.0 SEISMIC APPLICATIONS ... 26
Chuandong “Richard” Xu, Dan Maguire, Andrew Royle, David Johnston,
Eric Von Lunen, and Jean-Pierre Blangy
4.0 ASSESSMENT OF PETROLEUM RESOURCES USING
DETERMINISTIC PROCEDURES ... 57
Danilo Bandiziol, Dominique Salacz, Jes Christensen, Joel Turnbull, and Oluyemisi Jeje
5.0 PETROPHYSICS ..... 104
Luis Quintero, Javier Miranda, Joshua Oletu, Cecilia Flores, George Dames,
and Philip Gibbons
6.0 RESERVOIR SIMULATION ..... 124
Miles Palke, Avi Chakravarty, Ali Albinali, and Charles Vanorsdale
7.0 PROBABILISTIC RESOURCES ESTIMATION ... 146
Carolina Coll, David Elliott, Enrique Morales, Karl Stephen, and Richard Wheaton
8.0 AGGREGATION OF RESERVES AND RESOURCES .... 182
William J. Haskett and Tyler Schlosser
9.0 EVALUATION OF PETROLEUM RESERVES AND RESOURCES .... 216
Charles Vanorsdale
10.0 UNCONVENTIONAL RESOURCES ESTIMATION ... 240
Dilhan Ilk, Roberto Aguilera, Creties Jenkins, Christopher R. Clarkson,
John Etherington, and Charles Vanorsdale
11.0 PRODUCTION MEASUREMENT AND OPERATIONAL ISSUES ... 303
Mohammed Al Alshaikh
12.0 RESOURCES ENTITLEMENT AND RECOGNITION .... 314
Monica Clapauch Motta, Elliott Young and Regnald A. (Reggie) Boles
CONTENTS
1.0 INTRODUCTION ... 1
Charles Vanorsdale, Ron Harrell
1.1 Rationale for the Applications Guidelines Revision ...1
1.2 History of Petroleum Reserves and Resources Definitions ...2
1.3 References ...3
2.0 PETROLEUM RESOURCES DEFINITIONS, CLASSIFICATION,
AND CATEGORIZATION GUIDELINES ... 4
Rich DuCharme, Dan Olds, and Xavier Troussaut
2.1 Introduction ...4
2.1.1 Project-Based Classification System ...5
2.2 Defining a Project ...6
2.3 Project Classification ...9
2.4 Range of Uncertainty Categorization ...10
2.5 Methods for Estimating the Range of Uncertainty in Recoverable Quantities ...12
2.5.1 Deterministic “Scenario” Method ...12
2.5.2 Deterministic “Incremental” Method ...12
2.5.3 Geostatistical Method...13
2.5.4 Probabilistic Method ...13
2.5.5 Integrated Method ...13
2.6 Chance of Commerciality ...13
2.7 Project Maturity Sub-Classes ...15
2.8 Reserves Status ...18
2.9 Economic Status ...20
2.10 Estimated Ultimate Recovery and Technically Recoverable Resources ...21
2.11 Example Application of Commercial Maturity Sub-Classes ...23
2.12 Acknowledgments ...25
2.13 Reference ...25
3.0 SEISMIC APPLICATIONS ... 26
Chuandong “Richard” Xu, Dan Maguire, Andrew Royle, David Johnston,
Eric Von Lunen, and Jean-Pierre Blangy
3.1 Introduction and Overview ...26
3.2 Shared Earth Modeling ...26
3.2.1 Static Model—Geologic Framework Architecture ...27
3.2.2 Dynamic Model—Reservoir Simulation ...27
3.3 Volumetrics, Trap Geometry, and Gross Rock Volume ...28
3.3.1 Defining Seismic Data ...28
3.3.2 Uncertainty in GRV ...29
3.4 Amplitude Variation With Offset and Direct Hydrocarbon Indicator Analyses...30
3.4.1 Introduction ...30
3.4.2 Confidence Measures ...32
3.4.3 Evaluation of Resources Using Seismic and Well Data ...33
3.4.4 Recommended Guidelines for Using Seismic DHIs ...34
3.4.5 DHI Examples ...36
3.5 Seismic Inversion ...38
3.5.1 Concepts and Definitions...38
3.5.2 Well-to-Seismic Correlation via Synthetic Seismograms ...40
3.5.3 Rock Physics Modeling/Analysis ...41
3.5.4 Seismic Impedance Inversion...41
3.5.5 Stochastic Inversion ...44
3.5.6 Uncertainty Assessment...46
3.6 Seismic Surveillanc ...48
3.6.1 Seismic Surveillance Example A....50
3.6.2 Seismic Surveillance Example B ...52
3.6.3 Seismic Surveillance Example C...53
3.6.4 Seismic Surveillance Example D...54
3.7 Conclusion ...54
3.8 Acknowledgments ...55
3.9 References ...55
4.0 ASSESSMENT OF PETROLEUM RESOURCES USING
DETERMINISTIC PROCEDURES ... 57
Danilo Bandiziol, Dominique Salacz, Jes Christensen, Joel Turnbull, and Oluyemisi Jeje
4.1 Introduction ....57
4.2 Project Life Cycle .....58
4.3 Analogy-Based Assessment.....60
4.3.1 Purpose of Analogs ....61
4.3.2 Methodology for the Application of Analogy ....61
4.3.3 Application of Analogy to an Oil Example .....62
4.4 Volumetric Analysis .....64
4.4.1 Estimating Volumetric Parameters ....65
4.4.2 Application of Volumetrics to Oil Example.....68
4.5 Performance-Based Methods ....69
4.5.1 Material Balance ....70
4.5.2 Reserve Simulation ....78
4.5.3 Decline Curve Analysis ....78
4.6 Summary and Conclusions ...91
4.7 Acknowledgments ....92
4.8 References ....92
Appendix A: Special Considerations for Material Balance Analyses ..... 95
4A.1 Diagnostic Plots ....95
4A.2 Low-Permeability Reservoirs ...97
4A.3 Volatile Oils ....98
4A.4 Material Balance Pressure Data Quality ...98
4A.5 Abandonment Pressure and Compression .....98
4A.6 Nonlinear p/z Relationships .....99
4A.7 Overpressured Reservoirs ....100
4A.8 Waterdrive Reservoirs ....101
4A.9 Retrograde Condensate Reservoirs ....101
4A.9.1 Considerations Related to Liquid Comments ...102
5.0 PETROPHYSICS ..... 104
Luis Quintero, Javier Miranda, Joshua Oletu, Cecilia Flores, George Dames,
and Philip Gibbons
5.1 Introduction ....104
5.2 Volumetric Estimation of PIIP and Estimated Ultimate Recovery ...106
5.3 Petrophysical Evaluation ....106
5.4 What is “Net Pay”? ....106
5.4.1 Pay Cutoffs ....107
5.5 Core Analysis ....110
5.5.1 How Representative Is the Core Sample? ....110
5.5.2 Capillary Pressure ....111
5.5.3 Core Wettability ...112
5.5.4 Rock Typing .....114
5.5.5 Reservoir Continuity ...114
5.5.6 Quantifying Residual Oil Saturation ....116
5.6 Examples uu....117
5.6.1 Example A....117
5.6.2 Example B ....118
5.6.3 Example C....118
5.6.4 Example D.....119
5.6.5 Example E ....120
5.7 Conclusion ....121
5.8 Acknowledgments .....122
5.9 References .....122
6.0 RESERVOIR SIMULATION ..... 124
Miles Palke, Avi Chakravarty, Ali Albinali, and Charles Vanorsdale
6.1 Introduction....124
6.2 What is Reservoir Simulation ....124
6.3 Use of Simulation in Resource Estimation.....125
6.3.1 Immature Reservoirs ...126
6.3.2 Mature Reservoirs ....127
6.4 Fundamentals of Simulation Quality Assessment ...128
6.4.1 Static Model Construction ....128
6.4.2 Dynamic Data Integration ...132
6.4.3 History Matching ...133
6.4.4 Validity of the Predictions ...137
6.5 Proved (1P) Reserves Case ...141
6.5.1 Adjusting 2P Results for 1P Reporting ....142
6.5.2 Further Comment on Adjusting 2P Results for 1P Reporting ...143
6.6 Other Output from Simulation ......144
6.7 Acknowledgments ....144
6.8 References ....144
7.0 PROBABILISTIC RESOURCES ESTIMATION ... 146
Carolina Coll, David Elliott, Enrique Morales, Karl Stephen, and Richard Wheaton
7.1 Introduction ...146
7.2 Resources Uncertainty....148
7.2.1 Uncertainty in Input Parameters ....149
7.2.2 Project Uncertainties ....150
7.3 Deterministic Methods ....151
7.3.1 Deterministic Analysis ...151
7.3.2 Sensitivity Analysis and the Multiple-Realizations Method ...152
7.4 Hybrid Methods ...154
7.4.1 Probability Tree Analysis ....154
7.4.2 Multi-Scenario Method ....157
7.5 Probabilistic Methods ....159
7.5.1 Monte Carlo Methods ....163
7.5.2 Experimental Design Methods and Response Surface Models ...164
7.5.3 Global Optimization Methods ....166
7.6 Probabilistic Workflows for Recoverable Resources Estimates .....167
7.6.1 Preproduction Phase ...167
7.6.2 Production Phase ...168
7.7 Consistency between Probabilistic and Deterministic Methods ...170
7.8 Commercial Considerations ...172
7.9 Final Considerations ...173
7.10 References ....174
7.11 Glossary and Definitions ...178
8.0 AGGREGATION OF RESERVES AND RESOURCES .... 182
William J. Haskett and Tyler Schlosser
8.1 Introduction ...182
8.1.1 Defining Reservoir Relationships ...184
8.2 Aggregating Over Reserves Levels ...185
8.2.1 Reservoir Performance ...185
8.2.2 Issues with Arithmetic Summation ...185
8.2.3 Correlations Between Estimates ...190
8.2.4 Dependency ...194
8.2.5 Higher-Level Aggregation ...199
8.3 Adding Proved Reserves....200
8.3.1 Pitfalls of Using Arithmetic Addition of Proved Reservoirs ...200
8.3.2 Arithmetic or Correlation Inclusive Summation ...200
8.3.3 Probabilistic Aggregation and the Portfolio Effect ...202
8.3.4 Simple Probabilistic, Stochastic Simulation, and Correlation Matrices ...203
8.4 Regional Aggregation .....207
8.5 Scenario Methods ....210
8.5.1 Tree-Based Example of Correlation Between Reservoir Elements ....210
8.6 Summary—Some Guidelines .....213
8.7 Acknowledgments ....214
8.8 References ...214
9.0 EVALUATION OF PETROLEUM RESERVES AND RESOURCES .... 216
Charles Vanorsdale
9.1 Introduction ...216
9.2 Net Cash-Flow Evaluation ...217
9.2.1 Step 1—Test That the Project Is Economic ....217
9.2.2 Step 2—Determine the Project Life ...218
9.3 Terminology of Cash-Flow-Based Evaluation ....219
9.3.1 Net Cash Flow (NCF) ....219
9.3.2 Abandonment Decommissioning, and Restoration (ADR) ...220
9.3.3 Economic Limit (EL) ...220
9.3.4 Economic Conditions ...221
9.3.5 Discount Rate ....222
9.3.6 Other Key Terms ....223
9.4 Required Input for a Cash-Flow-Based Evaluation ...224
9.4.1 Net Entitlement Sales Production Forecast ...224
9.4.2 Product Prices ....224
9.4.3 Project Capital Costs ....225
9.4.4 Operating Costs ....226
9.4.5 Ownership and Royalties ...227
9.4.6 Taxes ....227
9.4.7 Legal/Contract/Fiscal Terms ....227
9.5 Generating a Cash-Flow-Based Evaluation ....228
9.6 Analyzing a Cash-Flow-Based Evaluation ...231
9.6.1 Investment (Hurdle) Criteria ...231
9.6.2 Sunk Costs ....232
9.7 “Economic” Compared to “Commercial” ....232
9.8 Example ....233
9.9 Probabilistic Evaluation ...237
9.10 Environmental, Social, and Governance Issues ...237
9.10.1 ESG Within the PRMS Context ....237
9.10.2 ESG Impact on Economic Evaluation ....238
9.11 Conclusion ....238
9.12 Acknowledgments ....239
9.13 References ....239
9.14 Bibliography ...239
10.0 UNCONVENTIONAL RESOURCES ESTIMATION ... 240
Dilhan Ilk, Roberto Aguilera, Creties Jenkins, Christopher R. Clarkson,
John Etherington, and Charles Vanorsdale
10.1 Introduction ...240
10.1.1 Assessment and Classification Issues ...241
10.2 Tight Gas and Oil Formations ....243
10.2.1 Introduction ....243
10.2.2 Reservoir and Hydrocarbon Characteristics ...245
10.2.3 Assessment Methods ....247
10.2.4 Drilling, Completion, and Stimulation Issues ....249
10.2.5 Processing and Marketing ....250
10.2.6 Commerciality Issues ....250
10.2.7 Classification and Reporting Issues ....250
10.3 Shale Gas and Oil...251
10.3.1 Introduction .....251
10.3.2 Reservoir Characteristics ...252
10.3.3 Drilling and Completions ...253
10.3.4 Commerciality Issues ....254
10.4 Evaluation Methodologies for Tight/Shale Oil and Gas ....255
10.4.1 Introduction ....255
10.4.2 Overview ....255
10.4.3 Production Diagnostics ...260
10.4.4 Model-Based Analysis ....262
10.4.5 Well Performance Analysis and Forecasting Example ...263
10.4.6 Estimating Recoverable Quantities in Unconventional Resources ...270
10.5 Coalbed Methane ....273
10.5.1 Introduction ....273
10.5.2 CBM Reservoir Characteristics ...273
10.5.3 Drilling and Completions ...279
10.5.4 Evaluation Methods for Reserves/Resource Estimation ...279
10.5.5 Additional Exploration and Development Considerations ...288
10.5.6 Commerciality Issues ...289
10.5.7 Classification and Reporting Issues ...289
10.6 Other Unconventional Oil ...290
10.6.1 Introduction ....290
10.6.2 Reservoir Characteristics, Risk, and Uncertainty....291
10.7 References ...294
11.0 PRODUCTION MEASUREMENT AND OPERATIONAL ISSUES ... 303
Mohammed Al Alshaikh
11.1 Introduction ....303
11.2 Background ....303
11.3 Reference Point ...305
11.4 Consumed Operations (CIO) ...306
11.5 Associated Non-Hydrocarbon Components ...307
11.6 Natural Gas Reinjection ...308
11.7 Underground Natural Gas Storage ...308
11.8 Production Balancing ....309
11.8.1 Production Imbalances (Overlift/Underlift) ...309
11.8.2 Gas Balancing ...309
11.9 Shared Processing Facilities ....309
11.10 Hydrocarbon Equivalence Issues ....310
11.10.1 Gas Conversion to Oil Equivalent ...310
11.10.2 Liquid Conversion to Oil Equivalent ....311
11.11 Example ....312
11.12 Acknowledgments ....313
11.13 References ....313
12.0 RESOURCES ENTITLEMENT AND RECOGNITION .... 314
Monica Clapauch Motta, Elliott Young and Regnald A. (Reggie) Boles
12.1 Foreword ....314
12.2 Introduction ....314
12.3 Regulations, Standards, and Definitions ....315
12.4 Reserves and Resources Recognition Under the PRMS ....316
12.4.1 Reserves and Resources Entitlement Elements ....316
12.4.2 Working Interest and Economic Interest ....317
12.4.3 Mineral Property Conveyances ...319
12.5 Agreements and Contracts ....319
12.5.1 Concessions, Mineral Leases, and Permits ....320
12.5.2 Production-Sharing Contracts ....321
12.5.3 Revenue-Sharing Contracts ....325
12.5.4 Risked-Service Contracts ....326
12.5.5 Pure-Service Contracts .....327
12.5.6 Loan Agreements ...328
12.5.7 Production Loans, Forward Sales, and Similar Arrangements ...328
12.5.8 Carried Interests ...329
12.5.9 Entitlement with Interest Before Payout and Interest After Payout Example ...330
12.5.10 Purchase Contracts ....330
12.5.11 Volume-Denominated Production Payments ....331
12.5.12 Other Contracts and Agreements....331
12.6 Other Concerns of Resources Entitlement and Recognition ...332
12.6.1 Taxes and Reserves/Resources ...332
12.6.2 Royalties, Overriding Royalty, and Government Fixed Volume
Entitlement and Reserves/Resources ....332
12.6.3 Unitization Agreements ....337
12.6.4 Contract Extensions or Renewals ...344
12.6.5 Appropriate Date on Which to Recognize Entitlement for Reserves
Estimates in Specific Cases ....345
12.7 Example Case ....346
12.7.1 Reserves in a PSC....346
12.8 Summary ...352
12.9 Acknowledgments ...353
12.10 References ....353
12.11 Bibliography .....354
GLOSSARY ..... 355