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November 2011
Into Hot Water
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Water Over Oil
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the frst word on oilpatch innovation
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OPTIMIZING
OPTIMIZATION
New software technology
is revolutionizing
reservoir simulation
New Technology Magazine | November 2011 15
reservoir optimization
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A new software technology
is revolutionizing reservoir simulation
By Gordon Cope
optimizing
optimization
The frst solution to a reservoir simulation problem
is not necessarily the bestthere may be multiple,
equally valid ways of history matching simulation
models. Rather than stop at the frst viable solution
found, optimization will provide a number of versions
of the modellike parallel universesand determine
the optimal of those potential solutions.
16 newtechmagazine.com
reservoir optimization
E
very year, fnding and producing
oil gets more diffcult and more
expensive. Petroleum companies
spend billions of dollars drilling
remote prospects and developing
new ways of bringing crude to sur-
face, but the only sure bet is that
the fnancial risks are always
increasing. Companies spend a lot
of money getting reservoir infor-
mation, and they spend a lot to
develop reservoirs, says Greg
Walker, a senior reservoir engineer with Talisman
Energy Inc., Southeast Asia operations. One of
the big questions is always: Do we have a project we
can sanction, given the uncertainties? At the other
end is the question: Can we make operations as eff-
cient as possible?
Over the last several years, a new software tool has
emerged that is not only taking some of the uncer-
tainty out, but also improving the chances of success
and reducing the workload for geoscientists and engin-
eers. Optimization software costs money, but its
quick and effcient, says Walker. As an example, we
were asked to develop well targets for an offshore feld.
The frst time we did it, it took two months to pick
two well targets. Using optimization software, the sec-
ond time it took us one month to pick fve well targets.
Thats a tenfold increase in effciency, and [that makes
things] a lot more interesting for the engineers as they
can spend more time on investigation rather than
shepherding data through different, separate pieces.
Optimization software works hand-in-hand with
the simulation software that allows engineers to
model reservoir geology, potential oil and gas output,
and the most effcient surface facilities, pipeline net-
works and other infrastructure needed to produce a
feld. There is a lot of work going on in reservoir
optimization right now, says Tony Settari, a profes-
sor in the chemical and petroleum engineering
department at the University of Calgary. It is very
valuable. It gives you more certainty.
Simulation software has been around for several
decades. Some of the larger oil companies have
developed proprietary in-house systems, but the
majority of frms use vendor software ranging from
simple stand-alone programs to integrated suites
marketed by international service companies like
Schlumberger Limited and Halliburton.
Regardless of the origin, most reservoir simulation
modelling tools work in the same manner. They all
rely on geological data (such as well core and logs and
seismic) that geologists and geophysicists use to cre-
ate a static reservoir model of the feld. The produc-
tion engineer then uses the reservoir model to create
a production plan that will give a proftable net pres-
ent value to the operator. Information during the ini-
tial exploration stages is often scarce, however, so
geoscientists and engineers rely on experience and
judgment to make reasonable assumptions regarding
variables such as permeability, porosity and faulting
that might exist between data points. If preliminary production data is available,
several history-matching models can be run to compare actual production to what
the model predicts. If the ft is poor, the engineer can go back and manually mas-
sage the geological model until he achieves a reasonable match.
BEST-GUESS MESS
Manual-simulation modelling has several shortcomings, however. First, it is very
labour-intensive, often taking several weeks to choose reasonable assumptions for
feld variables. Secondly, even simple models require complex computations that
can take dozens of hours to run. As a result, the engineer must weigh time and
resources against likely outcome; in the end, relatively few models are run for any
one feld. The problem is, there are many non-unique solutions to the model,
and the engineer may not have found the best one, says David Millar, senior
vice-president, reservoir optimization, for SPT Group. So as soon as he gets a
reasonable match, the project is done.
Oil companies were aware that simulation models gave a best-guess solution
with an unknown margin of error, which tended to raise
skepticism regarding their value. They wanted a way of
reducing risk and uncertainty when it came to planning wells,
facilities and pipelines. Building upon academic research at
petroleum engineering and mathematics schools around the
world, BP plc, Chevron Corporation and other majors began
experimenting with probability optimization theorems to
improve the quality of simulation modelling.
Prior to joining Talisman, Walker spent several years
working with BP to develop and deploy Top Down Reservoir
Model (TDRM), their proprietary optimization software.
BEST OF THE BEST
Black spheres on
the plots represent
possible (local)
solutions, but the
larger white spheres
represent the best
(global) solutions.
The engineer might
find the local
solutions and be
satisfied, but
optimization shows
there exist other,
better, solutions.
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New Technology Magazine | November 2011 17
reservoir optimization
For the companies, the attraction is linked to fnding
new targets, and as a general rule there are a lot more
small targets than there are big ones, he notes.
In turn, that forces two changes to the workfows; we
need a way of getting very accurate predictions and test-
ing a lot of small targets to confrm they exist. Most
[manual] production optimization modelling projects six
months into the future, and has a 1015 per cent uncer-
tainty factor. To get optimization to work, you need to
generate more than 100 reservoir models and reduce
uncertainty to one to two per cent.
Optimization relies on a variety of algorithms, or complex mathematical
equations; the choice of algorithm depends on the task in hand. A simple
optimizer is the gradient method, mimicking the rolling of a marble on an
uneven surface to fnd the nearest low point. More powerful techniques are
the genetic algorithm and evolution strategy methods, which mirror the pro-
cess of evolution where the best of each generation are used to father subse-
quent generations, says Millar. The best of these children then, in turn,
are used to create the next generation, resulting in a steady improvement in
the quality of the solution.
SPT Group was established in Norway several decades ago to create mod-
elling software that would help predict multi-phase fow from subsea felds.
It markets a suite of simulation modelling software that is widely used in the
oil and gas sector, including OLGA (multi-phase pipeline and wellbore
transient modelling), FORGAS (reservoirs, wells, surface facilities and
pipelines) and PIPEFLO (multi-phase steady-
state pipeline network design). The company
now has over 1,000 customers worldwide and
sales approaching US$100 million.
In the early 2000s, SPT Group began
developing Multi-purpose Environment for
Parallel Optimization (MEPO), a software
program originally developed for the nuclear
industry. The company tweaked the program
to automatically evaluate a large number of
geological variables in order to create a range
of potential outcomes. Last year, they launched a commercial version that
worked with FORGAS to allow engineers to evaluate a multitude of variables
quickly and effciently in order to create a range of potential production out-
comes. Originally, MEPO was used with reservoir modelling, says Mona
Trick, advisor, SPT Group Canada Ltd. Last year, we launched a model that
can handle any E&P [exploration and production] function, from O&G
[oil and gas] reservoirs, to wells and surface facilities and pipelines.
ADVANTAGES
Optimization benefts oil companies at several levels.
First, it allows companies to explore a wide range of res-
ervoir geological scenarios, from the best to the worst,
and pick the most favourable ones. This allows you to
bracket your space of uncertainty, says Jeffrey Yarus,
manager, Earth Modelling, Halliburton Landmark
Software and Services (which markets the DecisionSpace
suite of interpretive tools).
Secondly, it allows quick and effcient matching of
historical feld data to the simulation model in order to
predict future production. History matching can be
considered as a bridge between the reservoir modelling
and reservoir simulation, says Marko Maucec, research
fellow, Halliburton Landmark. Manual history match-
ing is usually performed on a single reservoir model.
This will give an idea on how to locally adjust the fow
properties of the model, but it doesnt take into account
the model uncertainty. Moreover, such manual history-
matched and adjusted models are frequently not suitable
for reservoir production forecast.
A computer-assisted history matching will generate
multiple statistically equally probable models in order to
capture uncertainty, says Maucec. Because history
matching is a mathematical inversion process, it can
never give an exact match, but it can minimize the
difference of observed and calculated data. You can intel-
ligently select the representative models that account for
a reliable reservoir production forecast and capture, as
widely as possible, the model uncertainty space.
Even with optimization, however, the old adage,
Garbage in, garbage out still applies; if geoscientists
and engineers start with a bad set of assumptions, they
can waste weeks chasing down the wrong alley. To that
end, software companies have added preview functions
that allow quick computations to see if users are in
the ballpark.
You dont have to run full physics
reservoir simulations in optimization
and uncertainty loops all the time,
says Dayal Gunasekera, reservoir
engineering marketing manager for
Schlumberger Information Systems (which markets the
Petrel and ECLIPSE suite of simulation modelling software).
You can capture the behaviour of the full model by
creating a simplifed proxy. You run the proxy a few times
to get a surface response, then you can run thousands of
evaluations of different geological scenarios and dynamic
design confgurations. This really speeds up the process.
Global optimal solution
False optima
Stagnation region
Starting point
Sub-optimal (local) solutions
OPTIMAL
SOLUTIONS
Engineers tend to
stop once they have
found just one
solution, while
optimization can
rapidly identify
multiple solutions
to a range of
engineering
problems before
arriving at a global
optimal solution.
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Images: SPT Group

MULTIPLE WAYS
OF LOOKING AT
THE DATA
Optimization
software can
quickly examine
hundreds of
scenarios using
multiple data
sources to narrow
down the best
possible outcomes.
18 newtechmagazine.com
reservoir optimization
USES
Optimization has been used in many different upstream-
to-midstream situations. For instance, a small gas feld in
Alberta had four wells producing gas at low pressure. In
order to make the feld economical, the operator had to
choose a production scenario with the best net present
value. The most important variables included the number
of infll wells, connector pipe size and compressor power.
Ordinarily, the production engineering department
might spend two weeks running simulation models to
fnd an adequate NPV [net present value], says Trick.
In half a day, MEPO analyzed over 100 scenarios
and came up with an NPV range with a worst caseof
$13 million and a best caseof $27 million.
In another case, an operator was looking to expand a
North Sea feld, and had done a traditional trial and error
reservoir simulation that indicated the feld needed six
new wells. SPT Group offered the company MEPO on a
one-month trial basis. The software quickly determined
that the feld had a high probability of producing just as
much oil using only fve new wells. It saved the company
US$25 million, says Millar.
BP has published a plethora of case
studies on TDRM. They note that
the typical BP engineer performed
an average 300 simulations per year
prior to TDRM; each engineer now
performs an average of 100,000. The
company estimates that the system
has added 20 per cent net present
value to its reservoirs.
BPs Azeri Field in the Caspian Sea had nine steeply
stacked reservoirs, some open, some sealed. There were
few wells and poor seismic, and huge uncertainty over
what production plan to pursue. Traditional fne model-
ling took 240 hours per iteration. The company used
TDRM, and in two days had thousands of simulation
cases that showed the best production prospects were
sealed reservoirs with well defned gas/oil contacts;
engineers were able to focus their production drilling
program on that aspect.
The Teak Oilfeld in Trinidad had been operating for
30 years, and it was time to drill infll wells. Traditional
manual history matching showed three locations could
add two million barrels each, but TDRM was able to
differentiate uncertainty and show well location #2 had
the greatest certainty, i.e. least risk. It also showed where
the need for more information was highest. It improved
certainty and reduced the work cycle by 90 per cent.
BP was exploring a carbonate reservoir in the North
Sea. Manual history matching gave poor results, due to
over 80 variables. TDRM got a good match in less than
one month, and showed 50 million to 150 million more
barrels present than the manual match.
Optimization can also be used on pipelines. OLGA is
used all over the world to develop multi-phase offshore
and onshore pipeline systems, says Trick. Its very good
at determining if problems might arise. MEPO works with OLGA to do
history matching of measured pressures and temperatures and optimization,
fnding the best combination of pipeline size, fow rates and other variables.
The engineer can quickly evaluate a range of pipe roughness values, sur-
roundings temperatures, heat transfer coeffcients and oil viscosity values to
see the effect on predicted upstream pressure.
The Shtokman feld is located 560 kilometres offshore Russia in the
Barents Sea. It contains an estimated 3.8 trillion cubic metres of gas and 37
million tonnes of gas condensate. Since its discovery in the late 1980s, various
companies have devised numerous development plans. The current operations
group (a joint venture between Gazprom, Total and Statoil) hopes to have the
feld under production by 2016. The plans include a foating production platform
and a 560-kilometre two-phase pipeline system. Severe Arctic weather and
steep ocean bottom topography add a great deal of complexity to operating the
pipeline, however, including hydrate buildup, maximum allowable fow, mini-
mum allowable fow, temperature, pressure and liquid buildup. Shtokman
operations group used OLGA and MEPO to run uncertainty analysis on as
many variables as possible. They discovered that the most critical parameters
to successful operation were pressure drops and fuid buildup.
PROBLEMS
Optimization is not without its shortcomings. One of the dangers of tradi-
tional reservoir modelling is that it can give you a false sense of security,
says Millar. When youre extrapolating a few wells over many miles,
there may not be enough information to make an informed decision using
traditional simulation. We were asked by a company that was looking at
buying an offshore lease to help them out.
There were a few wells drilled, and the traditional simulation model
showed that it had potential, but when we ran MEPO for them, they
BEST-CASE
SCENARIO
Steam chambers
in SAGD
development,
designed
and optimized with
Schlumberger's
Petrel and ECLIPSE.
REDUCING
UNCERTAINTY
A complex well
with multilaterals
and inflow control
devices, designed
and optimized
with Petrel and
ECLIPSE.
Image: Schlumberger Information Services
Images: Schlumberger Information Services
Page 19
1/2 page horz
763102-76
Cathedral Services Ltd.
New Technology Magazine | November 2011 19
reservoir optimization
realized that even a smallpercentage lessin their
assumptions regardingporosity or permeability made it
economically untenable. There was simply too little
information to rule out that probability. They ended up
shooting some seismic, and the new information con-
frmed poor reservoir quality in some areas. They ended
up passing on the deal, and saved themselves a lot of
money, Millar says.
Industry has taken a pragmatic approach, in that
they see how a few types of reservoirs respond to several
types of algorithms, and have
used that information to experi-
ment with optimization to
develop an empirical solution,
says Walker. But there are
many different types of reser-
voirs, and the industry may be
blind to how those
reservoirs are grouped.
Companies that arent familiar
with the techniques can easily
view the tools as a black box
that isnt understood. With the
amount of value hanging on decisions, all it takes is one situation in which the
technology is used incorrectly to ruin its reputation.
More engineers have to learn about optimization, to get an understanding
about what the optimization methods can do, and how to use the technology,
agrees Trick. To that end, SPT has an academic licence program that
distributes MEPO software free to universities with major petroleum
engineering departments in North America and Europe.
FUTURE
In the near future, optimization will become more and
more common, not only because it saves engineers time
and improves results, but for fnancial reasons. In the
past, the fnancial departments in many oil companies
have been satisfed with one reasonable answer, says
Millar. Now, they are starting to demand to see a
range of models, from worst to best, before approving
expenditures.
Over the next decade, new wrinkles will be added.
Geomechanics are not included in optimization, says the
University of Calgarys Settari. When you look at feld
development in the Gulf of Mexico, for instance, your goal
is to get as much out as fast as possible. But as the feld is
produced, it causes reservoir compaction and seismicity
along existing faults. You need to take that into account
and mitigate it, but it is not refected in the reservoir opti-
mization. That will be the next horizon they will look at.
SPT notes that around 150 customers currently use
MEPO and sales are growing strongly. We are very
optimistic about the future, says Millar. Currently,
optimization is applied to perhaps 10 per cent of O&G
modelling scenarios. I foresee that, within a decade, the
majority of modelling cases will use optimization.
CONTACT FOR MORE INFORMATION
David Millar, SPT Group, Tel: 403-277-6688,
Email: david.millar@sptgroup.com
FLOW-THROUGH
BENEFITS
Schlumberger
used SPT's MEPO
to optimize the
pipeline and
compression
system for a small
gas field in Alberta.
Image: SPT Group
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