Master of Advanced Studies in International Oil and Gas Leadership

Definitions of reserves and main

difference between conventional and
non-conventional resources
Giacomo Luciani

IEA Energy Training Week

Paris, April 4, 2013
 Decrease with time of uncertainty in reserve estimation

Estimated ultimate recovery, MMbbl

Exploration Appraisal Development / Production

High
estimate

Range
of
uncertainty

Best
estimate Cumulated
production

Low
estimate

Time
0
January 2013

2003
3
 Reserves
• Reserves are those quantities of petroleum which
are anticipated to be commercially recovered from
known accumulations from a given date forward.
• All reserve estimates involve some degree of
uncertainty.
• Classification according to the relative degree of
uncertainty:
 Proved reserves
 Unproved reserves
• Probable reserves
• Possible reserves

Source: Society of Petroleum Engineers (SPE) Inc., 2000

 Proved reserves (P90)

• Quantities of petroleum which, by analysis of

geological and engineering data, can be estimated
with reasonable certainty (90% probability) to be
commercially recoverable…
• Recoverable:
 From a given date forward,
 From known reservoirs, and
 Under current economic conditions, operating methods,
and government regulations.
• Proved reserves can be categorized as:
 Developed, or
 Undeveloped.

Source: Society of Petroleum Engineers (SPE) Inc., 2000

 Unproved reserves
• Based on geologic and/or engineering data similar
to that used in estimates of proved reserves;
• But technical, contractual, economic, or regulatory
uncertainties preclude such reserves being classified
as proved.
• Unproved reserves may be further classified as:
 Probable reserves, and
 Possible reserves.

Source: Society of Petroleum Engineers (SPE) Inc., 2000

 Probable reserves (P50)
• Unproved reserves which analysis of
geological and engineering data suggests
are more likely than not to be recoverable.
• There should be at least a 50% probability
that:
the quantities actually recovered will be ≥
estimated proved reserves + probable
reserves.
 Possible reserves (P10)
• Unproved reserves which analysis of
geological and engineering data suggests
are less likely to be recoverable than
probable reserves.
• There should be at least a 10% probability
that:
the quantities actually recovered will be ≥
estimated proved + probable + possible
reserves.
Source: Society of Petroleum Engineers (SPE) Inc., 2000
 Speculative or
Undiscovered Resources
• Estimates of petroleum that might exist in
a basin based on extrapolation of data on
discovered resources, exploration
intensity, number of wells drilled etc.
• Based on geological knowledge, but no
two basins are the same…
From resource in place to proved reserves
 Reserves “growth”
• Reserves are always estimated, they cannot
be exactly measured
• The estimate of the reserves in a field
changes with time, because our knowledge
of the field improves while producing the oil
from it
• Normally, the estimate increases, and
reserves are said to “grow”: it is not the
reserves that grow, it is just our knowledge
and consequently our estimate that changes
• But sometimes our estimate is reduced
© Copyright Giacomo Luciani

Given the current proven reserves base, a 1% increase in the

average recovery rate would add 1 year extra oil production
Source: IEA, World Energy Outlook 2005
 Unconventional vs. Conventional
Upside
• Low exploration risk
• Long-life reserves
• Stable, predictable
production
• Assembly-line development
• Long project life provides:
 opportunity to improve
recovery
 opportunity to improve
efficiency
 security of supply
• Gas decline rates decrease
with time
Downside
• Expensive drilling and
completion
• Oil upgrading is capital
intensive
• Low energy return on
investment
• Large greenhouse gas
emissions
• High oil recovery requires large
amounts of water
• High gas recovery requires
high well density
• Potential for groundwater
contamination
 Shale oil and Tight oil

 In contrast to shale oil, which remained trapped in the original shale source
rock, the producing area, like the Bakken, contains migrated oil trapped in
siltstone and sandstone between layers of shale. The Eagle Ford’s oil is
trapped in carbonate rocks overlying shale from which it migrated
 Tight shale oil: conventional oil extracted by unconventional means
because of lack of porosity and permeability
 Horizontal drilling & hydraulic fracturing: « fracking »
 The top three producing tight oil plays: Bakken, Eagle Ford, and Niobrara
account for 90% of total US tight oil output, currently about 620,000 b/d
 extensive areas, high first-year well decline rates varying from 65% to
90%, and low recovery efficiencies averaged over the entire play: 1-2%
for tight oil. For 'sweet-spots' in the play such as Elm Coulee field, oil
recoveries can reach 5-6%
 Potential in China, Australia, Middle East, Central Asia, Russia, Europe,
Argentina and Uruguay

Source: « evaluating production potential of mature US oil shale plays », Rafael Sandrea, IPC Petroleum
Consultants Inc., Dec 2012
Tight Oil Production for selected plays in the US

Source: Oil & Gas Journal, Dec 3, 2012

 Heavy, Extra-Heavy Oil and Oil Sands

 Essential component of oil resources

 OIP estimated between 4,000 and 5,000 Gb
 Reserves up to 600 Gb

 80% of all heavy oils are in fact extra-heavy

 Oil sands are included in this category

 Accumulations in all parts of the world: Russia, USA, Middle East, Africa, Cuba,
Mexico, China, Brazil, Madagascar, Europe, Indonesia
 The largest are located in Venezuela (The Orinoco Belt) and Canada (Province of
Alberta

 Heavy oil is oil that has become extremely viscous as result of biodegradation
 Bacteria active at low temperatures associated with shallow deposits consume the
lighter hydrocarbons, leaving behind the more complex compounds such as resins &
asphaltenes
Heavy Oil Classification

Canada
d°API: 7° << 12°
viscosity: 10 000
cPo<< 8 000 000
cPo) = non mobile.
Mining up to 100 m. Venezuela
Deeper, Thermal
recovery methods

d°API: between 7° and 20°

Viscosity: between 100 cPo and 10 000
cPo = mobile at reservoir conditions –
can be recovered using Cold production methods

Light > 31

20,0

°API = 141.5/ density - 131.5

Source: F. Cupcic (TOTAL) - ASPO 2003

 Orinoco Belt versus Alberta: same order of magnitude for the
reserves

 IOIP: 1400 Gb (source: PDVSA)  IOIP: 1800 Gb (Source: AEUB)

 Reserves: 180 Gb* (source: PDVSA)  Reserves: 160 Gb (Proven)

* Proven reserves with a mixed cold / thermal technology

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Source: PDVSA, AEUB (Alberta Energy and Utilities Board), BeicipFranlab 2012
Oil Sands: Production Techniques

Surface Mining
 Depth < 100m
 20% of deposit
 50% of today production
 Lower energy intensity
 Lower relative GHG
emissions
SAGD production

In situ
 Depth > 100m
 80% of deposit
 50% of today production
 Higher energy intensity
 Higher relative GHG
emissions
 Higher break even point

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Source: Total
Surface Mining (1)

5 M$ each – 400 t

 Technical cost
 40%: mining
 37%: separation bitumen from sand
 23%: upgrading
In Situ
 In-Situ Exploitation

 By Steam water
 Recovery rate
 20-25% Cycling injection: 1 well alternatively for injection and
production
 40-60% Steam Assisted Gravity Drainange (SAGD)
 Scale: 50 000 b/d
 Usually no upgrading but diluted bitumen
 Huge quantity of water required
 1 b of water / 1 b of bitumen
 to produce the steam water (energy source: natural gas)

 Other techniques of injection (R&D)

 Solvant injection
 Combustion in-situ

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Oil Sands production Technologies: IN SITU (1) (thermal)

Cyclic Steam Stimulation (CSS) since 1985

CSS: better adapted to heterogeneous reservoirs and less viscous fluids of the
Cold Lake Area

Source: Total 28
Oil Sands production Technologies: IN SITU (2) (thermal)
Steam Assisted Gravity Drainage (SAGD) since 2001

 Steam is injected into the oil producing reservoir

 As the steam permeates the sand, the oil is heated and becomes less viscous
 The oil flows more freely through the wellbore's slotted liner and is pumped to the surface
 Better adapted to homogeneous reservoirs and highly viscous fluids of the north & south
Athabasca area
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Source: Total
 Processes from Production to Refining
Synthetic Crude
Upgrading Oil (SCO)
Mining Extraction Naphta (for
transportation
Sand
Water
50% Bitumen
Bitumen Refinery
Tailing Pond
SCO or Naphta
(for commercialization)
in-situ

Diluted Bitumen:
50% Dilution Dilbit (75+ Bit. + 25%
Naphta) / Synbit
(50% Bit. + 50% SCO)

 The bitumen extracted from the oil sands is very heavy and viscous. Once extracted, lighter
hydrocarbons (Naphta) can be added to the bitumen in order to be further processed or upgraded into a
form of synthetic crude oil (SCO) that is less viscous. After that, it can be sold to a traditional oil
refinery, though some bitumen is also sold in raw form for the production of heavy products like tar and
asphalt

 Currently 5 operational upgraders in Alberta, 2 of which commenced commercial operation in 2009 –

Horizon & Long Lake

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© Copyright Giacomo Luciani

Production costs