Monday 08 April 2016

PETROLEUM RESOURCES AND

RESERVES
FOUNDATION AND PRINCIPLES

Indian Institute of Technology, Bombay.

08-04-2016 1
Department of Earth Sciences.
 Petroleum Resources - Outline
1. Petroleum Resources – Types
i. Conventional
ii. Unconventional
2. Volumes of Petroleum
i. In Reservoir
ii. At Point-of-Sale (Production)
3. Principles of Estimation
4. Standards and Terminology
5. Uncertainty and Assessment

Indian Institute of Technology, Bombay.

08-04-2016 2
Department of Earth Sciences.
Petroleum Resources & Reserves
• Estimated volumes of oil & gas in an area of
investigation.
• Determined indirectly from may different methods of
investigation
• Inherent uncertainty in the relationship between the
measurement – volumes of oil & gas exists
• The determined volumes and their value are of
strategic importance in company – national and global
economics
• Are treated as “Assets” in the company books
• Determines the valuation of the company and assets of
nations.

Indian Institute of Technology, Bombay.

08-04-2016 3
Department of Earth Sciences.
 Petroleum resource - types
• Petroleum resources are volumes of oil & gas that occur as
deposits in the layers of earth
• In principle these are similar to the other mineral deposits
• Rocks in the crust of earth have pore-space that is filled
with – i) Water ii) Gases and iii) Petroleum
– Petroleum occurs in 2 primary phases : i) Oil and ii) Gas
• Significant quantities (that can be discovered and
produced) occur in 2 types of deposits :
i) Conventional : discrete accumulations – with map
boundaries & distinct hydrodynamic realms
ii) Unconventional : continuous accumulations in a wide
area & not affected by or separated by distinct hydrodynamic
realm (from the pervasive water)

Indian Institute of Technology, Bombay.

08-04-2016 4
Department of Earth Sciences.
 Types of Petroleum Resources
Conventional Unconventional
Confined to clear areas of Petroleum Large unconfined areas have variable volumes

The difference in nature of these 2 types determines the

methods of assessment and recovery

5
 Types of Petroleum Resources
Conventional : discrete accumulations –
with map boundaries & distinct
hydrodynamic realms

Unconventional : continuous
accumulations in a wide area & not
affected by or separated by distinct
hydrodynamic realm
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Department of Earth Sciences.
 Volumes of Petroleum
Reservoir Reserves (Saleable)
• The amount of Oil & Gas that • The Amount of Oil & Gas that is
occurs in the subsurface or can be produced and sold at
– Yet to be discovered = given time.
Prospective (opportunity) – Discovered + Developed
– Discovered (Known) – Engineering and processing
facilities are built
• Undeveloped – Value yet to be
realized – Operational aspects of the
reservoir and its facilities are
• Developed – Value is realized known (in-place)
and mechanism to produce
and sell are in-place. • Volumes are in the surface
– Produced - Volumes conditions of extraction,
produced and sold processing, transportation and
(monetized) sale. (Reserves)
• Volumes are in the conditions – Field = Petroleum reservoir that is
of the deposit (Reservoir) developed and producing (ready).
– Reservoir = Petroleum Deposit – Reserves = Volumes a field is
in the subsurface. capable of production and sale.

Indian Institute of Technology, Bombay.

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Department of Earth Sciences.
 Resources : Reserves
Stages of Discovery and
Classification System Development
↑ Producing
↑ Developing
↑ Design
↑ Appraisal
↑ Discovery
↑ Prospect
↑ Play
↑ Basin
1. Resource = Not established for commercial recovery
a. Prospective = Not yet discovered – estimated from Geological Chance
b. Contingent = Discovered, yet not established as commercial project
2. Reserve = Established for commercial recovery
Indian Institute of Technology, Bombay.
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Department of Earth Sciences.
 Industry Classification of Resources –
Reserves

Field Prospect Play Basin

•Drilled and discovered HC •Discrete Accumulations •Identified components of •Large area with Petroleum
•Predicted volumes effective Petroleum System System

Indian Institute of Technology, Bombay.

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Department of Earth Sciences.
 E&P Organization & Reserves

Production & Operations

Field Development

Appraisal & Commerciality

Exploration (Basin, Play and

Prospect analysis)

Business Development (Acquire

Blocks)

Indian Institute of Technology, Bombay.

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Department of Earth Sciences.
 Resources in-place

http://www.epgeology.com/general-discussion-f29/hciip-formula-t5776.html
Indian Institute of Technology, Bombay.
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Department of Earth Sciences.
 Equation for Resources in-place

http://www.epgeology.com/general-discussion-f29/hciip-formula-t5776.html
Indian Institute of Technology, Bombay.
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Department of Earth Sciences.
 Reservoir Volumes - HCIIP
In-Place Hydrocarbons Computing methods
• HCIIP = Volume of Petroleum in-place 1. GRV
within the reservoir
– Volume of Reservoir Rock (Gross-Rock - Area of the Closure
Volume GRV)
– Part of GRV that is made of Pore-Space - Average Thickness
(Pore-Rock Volume PRV)
– Part of PRV that is filled with Petroleum - 3D Volume above FWL
(Hydrocarbon Pore Volume HCPV)
• Reservoir are made of 3D of space
2. PRV
– GRV = Volume of Space - Porosity samples (Core/ well
– PRV = GRV * Average Porosity log)
– HCPV= PRV * Average Saturation Shc
• All these parameters are estimated 3. HCPV
from samples taken from 1 or more
wells drilled in the reservoir - Saturation measurements
– Geophysical methods like seismic support (well log)
the estimates
– Techniques like Well-Logs, Well-Tests, PVT - Saturation Height function
analysis etc. support (Reservoir Rock types)

Indian Institute of Technology, Bombay.

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Department of Earth Sciences.
 Uncertainty in Volumes and Potential :
Resources & Reserves
Parameters Nature of Uncertainty
All these are : 1. Sample distribution of the
parameters (GRV, NTG,Ø, Sg,
a. Spatial variables FVF)
b. Sampled mostly by wells ? Minimum
? Maximum
c. Estimated indirectly from
?Most-Likely
physical measurements
1. Reservoir Average of the
d. Change in different directions Parameters (Population)
-- Anisotropy 2. Other dependencies
e. Influenced by trends and 3. Methods of assessment of
other causes -- Non- Ranges
Stationary 4. Assessment of Quantification of
Uncertainty
f. Difficult to determine 5. Impact on Resource in-place
{Measure & bind} 6. Impact on Reserves

Indian Institute of Technology, Bombay.

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Department of Earth Sciences.
 Resource Estimation

Volumetric Map 3D Model

Equation Based Based
X,Y,p data X,Y,Z,p data

Model
Average & Ranges Map Framework
Framework

Distribution & Interpolation Parameter

Estimation Method Interpolation

Monte Carlo Geostatistics Simulation

Indian Institute of Technology, Bombay.

09-04-2016 15
Department of Earth Sciences.
 Towards Reserves
Geology: Faults & Development Scheme
Formation Volume Facies, Stratigraphy
Production
Factor (FVF) Rock-Fluid
interactions Operations

Wells (V|H) &

Spacing
Connectivity
Rate of Flow
HCIIP

Ease of Flow
Fluid Phases
(Permeability)

Indian Institute of Technology, Bombay.

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Department of Earth Sciences.
 Standards & Methods
PRMS (Petroleum Resource
Management System) Methods for estimation
• Standard classification 1. Analytical
methods – Analog
– SPE & AAPG 2. Volumetric
• Categories of “Uncertainty” – Equation
– Technical – Maps
• HCIIP – 3D Models
• Recovery Efficiency
3. Material Balance
– Commercial
• Market | Prices | Contracts 4. Production Performance
• Classification of Analysis
“Commerciality”

Indian Institute of Technology, Bombay.

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Department of Earth Sciences.
 Methods of Estimation
Deterministic Parameters & Results are Determined as most-likely
• A single value for each sample in the parameter
• Single value of HCIIP or Reserves estimated
• Classified as “Proved – Probable – Possible” or “1P – 2P – 3P”

Scenario Realizations Method. 3 or more deterministic estimates

• Using Deterministic Method as foundation
• Ranges of Parameters and Results are created as Scenarios
• Assigned Low-Medium-High case of likelihood

Probabilistic Statistical uncertainty of Samples, Parameters and Results

• Sample data for each Parameter is assessed for their Probability and Distributions
• Results are derived by random sampling of the parameters (Monte Carlo) or by Other statistical
simulation
• Large number of realizations are created and ranked (P10-P50-P90)

http://www.spe.org/industry/docs/PRMS_Guidelines_Nov2011.pdf Chapter-5
Indian Institute of Technology, Bombay.
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Department of Earth Sciences.
 At the End
• Reserve reporting is very sensitive aspect
regulatory reports in all E&P companies
• Reserves define “THE GOAL” and “THE RESULT”
of the E&P company
• It is nearly impossible to exactly estimate the
HCIIP or the Reserves
• Different methods carry sets of advantages and
disadvantages – there is no clear winner
• Integrity and Process plays important role in fair
and consistent assessment

Indian Institute of Technology, Bombay.

09-04-2016 19
Department of Earth Sciences.
 An Example of Resource and
Reserve Estimation
A-For Apple Field
MMRA Reserve Analysis
Zone Name: Sandstone
Country: Ireland
Business Unit: Domestic 2
Basin:
Play: Stratigraphic
Analysis Run Date: 24-10-2012 18:03:47 by: K-Katy
Status: Prospect Pre-Drill

http://www.roseassoc.com/software-oil-gas-prospect-play-portfolio/multi-method-risk-analysis/
Net Rock Volume A-For Apple Field, Sandstone, Domestic 2 24-Oct-12
P01
Set Net Rock Volume Notes P02
Net Rock Volume
P05
CROSSCHECK

Cumulative Probability >>>

Area P10
(for Net
Gross Percent Net to Net Pay
Average P20
Rock Trap Gross Rock CrossNet Pay P30
Volum e Fill Ratio Volum e Check)(Implied) P40
(Million (Million P50
cubic cubic P60
m etres) (%) (%) m etres) (sq km ) (m etres) P70
P80
P99 191.705 100.0 15.3 53.776 NA NA
P90 300.000 100.0 24.7 98.549 NA NA P90

P95
Mode 432.408 100.0 35.5 139.601 NA NA
P98
P50 519.615 100.0 37.3 189.110 NA NA
P99
Mean (P99- 10 100 1,000
>P01)
563.644 100.0 37.4 209.313 NA NA

P10 900.000 100.0 50.0 363.425 NA NA 0 200 400 600 800

0
P01 1,408.417 100.0 59.8 624.866 NA NA
1
Shape LOGNORMAL NORMAL NORMAL OUTPUT NA NA 2
P90=300.00 P90=100.00 P90=25.00 NR V P99 to P01
Input Values NA NA NA 3
P10=900.00 P10=100.00 P10=50.00 Gross Rock Volume
LClip=None LClip=None LClip=None 4 Net to Gross R atio
Clipping NA NA NA
HClip=None HClip=None HClip=None 5 Area

Correlation NA NA 0% to GRV NA NA NA Average N et Pay

6
Percent T rap F ill
Results above after Input Truncations are applied (0%->100%). 7 NR V Mean
Max % Fill Allowed is 100%

NRV P10/P90 = 3.7 NA NA

MMRA Analysis: A-For Apple Field,

08-04-2016 21
Sandstone (Domestic 2)
HC Recovery Yield A-For Apple Field, Sandstone, Domestic 2 24-Oct-12

Set HC Rec Yield Notes P01

HC Rec Yield P02
Surf P05
Reservoir Prim ary Oil Prim ary Gas Calculated Yield Oil Prop
Loss

Cumulative Probability >>>

Com ponents Com ponents (%) P10
Param eters Oil Raw Gas
(%)
P20

Factor (reservoir / stock

Total Raw Gas to Sales

Oil Recoverable Yield

(% of reservoir volume)
Solution Gas Recovery

Condensate Yield (bbls

Gas Expansion Factor

Condensate Recovery
Average Hydrocarbon

Oil Formation Volume

(MCF per acre-foot)

P30

(bbls per acre-foot)

Shrinkage & Surface

(standard / reservoir

Loss (Adjustment of
P40

Solution Gas Yield

Gas Recoverable
Primary Recovery

Primary Recovery

Cond per MMCF)

P50

(SCF/ Std bbl)

Saturation (%)

Efficiency (%)

Efficiency (%)

Efficiency (%)

Efficiency (%)

Oil Proportion
P60
Porosity (%)

tank units)
P70
Average

P80

units)

Yield
P90
P95
P99 12.4 47.3 NA NA NA NA 41.8 255.7 NA NA NA 546.2 0.0 0.0
P98
P90 16.2 54.9 NA NA NA NA 50.1 280.0 NA NA NA 751.9 0.0 0.0 P99
100 1,000 10,000
Mode 20.6 63.3 NA NA NA NA 59.9 311.4 NA NA NA 1,134.1 0.0 0.0
Oil Recoverable Yield
P50 20.6 64.5 NA NA NA NA 60.0 311.7 NA NA NA 1,062.9 0.0 0.0 0 0 0 1 1 1
Mean (P99-
20.6 64.6 NA NA NA NA 60.0 311.8 NA NA NA 1,079.5 0.0 0.0
>P01)
P10 25.0 74.3 NA NA NA NA 70.1 343.8 NA NA NA 1,437.3 0.0 0.0

P01 28.7 82.2 NA NA NA NA 78.3 371.6 NA NA NA 1,833.8 0.0 0.0 Oil Y ield P 99 t o P01
Oil Rec. Eff .
Shape NORMAL NORMAL NA NA NA NA NORMAL NORMAL NA NA NA OUTPUT NORMAL BETA Poros ity
HC S at uration
Oil FV F
P90=16.00 P90=55.00 P90=50.00 P90=280.00 P90=0.00 P90=0.00
Input Values P10=25.00 P10=74.00
NA NA NA NA
P10=70.00 P10=344.00
NA NA NA NA
P10=0.00 P10=0.00
Oil Y ield M ean

Gas Recoverable Yield

LClip=None LClip=None LClip=None LClip=None LClip=None LClip=None
Clipping HClip=None HClip=None
NA NA NA NA
HClip=None HClip=None
NA NA NA NA
HClip=None HClip=None
0 500 1,000 1,500 2,000

0% to 0% to
Correlation NA
Porosity
NA NA NA NA
Porosity
NA NA NA NA NA NA NA

Selected Products: Primary Gas

HC Rec Yield Estimating
Secondary Products: Mode: COMPONENTS Gas Y ield P 99 t o P01
Poros ity
Gas Rec. Eff .
HC S at uration
Gas GEF
Gas Y ield M ean

O&G Recoverable Yield P10/P90 = NA 1.9

MMRA Analysis: A-For Apple Field,

08-04-2016 22
Sandstone (Domestic 2)
Resources A-For Apple Field, Sandstone, Domestic 2 24-Oct-12

Mode: EXPLORATION PROSPECT P01

Simulation Settings Notes
Resources P02

Cumulative Probability >>>

Original In Prospective Undiscovered Recoverable P05
Place Resources Above Above P10
Simulation Commercial Economic
P20
Liquids Sales Gas Total Threshold Threshold
Not Current Geologic (Option is (Option is
P30
P40
Raw Total Non- Pre-Drill OFF) OFF) P50
Oil Oil Soln
Gas Cond Assoc P60
MMB MMB MMB P70
BCF BCF BCF MMBOE MMBOE MMBOE
O O O P80
P99 0.00 79.75 0.00 0.00 47.57 0.00 7.93 NA NA P90
P95
P90 0.00 151.35 0.00 0.00 91.58 0.00 15.26 NA NA
P98
Mode 0.00 236.88 0.00 0.00 149.77 0.00 24.96 NA NA P99
1.00 10.00 100 .00 1,000.00
P50 0.00 319.40 0.00 0.00 198.28 0.00 33.05 NA NA
Economic reso urces M MBOE
Mean (P99-
>P01)
0.00 368.79 0.00 0.00 231.41 0.00 38.57 NA NA Comm ercial resources MM BOE
Geolo gic re source s MMBOE
P10 0.00 673.67 0.00 0.00 428.32 0.00 71.39 NA NA
Th reshold resource component MMBOE

P01 0.00 1183.24 0.00 0.00 769.65 0.00 128.27 NA NA In-place resources MM BOE

Current settings... Geologic EUR (Equivalent)

Estimating method: Pc- Chance of Pe- Chance of
Pg- Chance of 0 20 40 60 80 100 120 140
VOLUMETRIC (Net Rock Volume X HC Yield) Commercial Economic 0
Geologic
Intermediate Simulation: 5000 Iterations Chance of Success Success
Success (>=Ab 1
Resources Simulation: 15000 Iterations (>=MCFS) (>=MEFS)
Success >> Min resource)
Truncations: (Option is OFF) (Option is OFF) 2
Input= 0.00/1.00
Output= 0.00/1.00 3
31.1% NA NA EU R P99 to P0 1
Raw Gas Surface Loss: NONE
Simulation P10/P90 Ratio=4.7 versus 4 Ne t R ock Vol ume
Percentile Sorting: Each product sorted
Predicted: Ampl with Downdip Conformance: 2 - 4 Gas Yie ld
individually. (Warning...resource components 5
Oil Yi eld
will not sum across to HC Equiv.)
6 Pro ducti ve Area
Pro ducti ve Area
7 EU R Mea n

MMRA Analysis: A-For Apple Field,

08-04-2016 23
Sandstone (Domestic 2)
Chance Checklist A-For Apple Field, Sandstone, Domestic 2 24-Oct-12
Directions: The default value for each chance factor is 1.0. Use the Chance Adequacy Matrix shown below to guide the assessment of each factor or sub-factor (not the overall chance of geologic, appraisal or
development success. This program uses the “weak link” (i.e. – the smallest sub-factor is used whenever values for more than one are entered) approach in assigning values for each factor. Enter comments by clicking
the Comments icon.
EXPLORATION PROSPECT Chance Success Ratings ( 0.00-1.00 )
Clear Chance SubComponents Notes
SOURCE COMPONENTS Confidence of P99 Resources: 7.93 MMBO

Quantity/Volume (include Monetizable Product) 0.80

Quality/Richness 0.80
Maturation CHANCE ADEQUACY MATRIX
MINIMUM FACTOR 0.80 High Good Lots
TIMING/ MIGRATION COMPONENTS Confidence of P99 Resources: 7.93 MMBO

Timing of Closure / Trap 0.90 0.0 - 0.2 0.8 - 1.0

Confidence level
Timing of Expulsion 0.90

Quantity

Control
Quality
Effective Migration Pathway 0.90
0.2 - 0.4 0.4 - 0.6 0.6 - 0.8
MINIMUM FACTOR 0.90
RESERVOIR COMPONENTS Confidence of P99 Resources: 7.93 MMBO

Presence 0.70 0.3 - 0.45 0.45 - 0.55 0.55 - 0.7

Quality 0.60
Reservoir Performance 0.60 Low Bad Good Poor Limited
Reservoir MINIMUM FACTOR 0.60 News News
CLOSURE COMPONENTS Confidence of P99 Resources: 7.93 MMBO
Map Reliability & Control 0.90 "Coin Toss"
Presence 0.90 If additional technical work is required to move this prospect to Ready-To-Drill
Data Quality 0.90 status, capture details in the Risk Mitigation section of the Comments icon.
MINIMUM FACTOR 0.90 Fwd $ Ready to Drill ($MM):
CONTAINMENT COMPONENTS Confidence of P99 Resources: 7.93 MMBO Value of Information EMV ($MM):
Top / Base Seal Effectiveness 0.85 Participants: Date:
Lateral Seal Effectiveness 0.80 G&G/Eng Estimator(s): K-Katy 24-Oct-12
Preservation from Spillage or Depletion 0.90 Peer Review:
Preservation from Degradation 0.90 RCT Review:
MINIMUM FACTOR 0.80 Manager Review:
EXPLORATION PROSPECT Chance of Success (calculated) 31.1% Critical Chance Factor(s):
EXPLORATION PROSPECT Chance of Success OVERRIDE Reservoir
FINAL Chance of Success 31.1% Uncertainty Index: 0.50

MMRA Analysis: A-For Apple Field,

08-04-2016 24
Sandstone (Domestic 2)
 References
1. http://petroleumsys.blogspot.in/2010/06/petroleum-system-analysis.html
2. http://www.powershow.com/view/34434-
MzVlO/SPEWPCAAPGSPEE_Petroleum_Resources_Management_System_powerpoint_ppt_presentation
3. http://www.epgeology.com/general-discussion-f29/hciip-formula-t5776.html
4. SPE Reserves : http://www.spe.org/industry/reserves.php
5. PRMS quick overview: http://www.spe.org/industry/docs/PRMS_guide_non_tech.pdf
6. PRMS guide: http://www.spe.org/industry/docs/Petroleum_Resources_Management_System_2007.pdf
7. PRMS Guidelines 2011: http://www.spe.org/industry/docs/PRMS_Guidelines_Nov2011.pdf
8. MMRA: http://www.roseassoc.com/software-oil-gas-prospect-play-portfolio/multi-method-risk-
analysis/

Indian Institute of Technology, Bombay.

09-04-2016 25
Department of Earth Sciences.