Forecasting Product Stream

An oil/gas property estimation goes through several development

stages. At each of stage, a different reserve estimate is developed
with a different degree of confidence.

• The first stage is the exploratory stage. The reserve estimates are based on
analogy with other similar prospects and geologic setting.

• Once the first well is drilled and reservoir identified, more physical information
about the rock and fluid properties can be obtained.

• After the first well starts producing oil/gas, reservoir pressure and production
performance become available.

• Every new well into the same reservoir provides added information.
Terminology for oil/gas reserve estimates:

• Initial in place (OIIP or GIIP) – the total estimated volume of hydrocarbon

accumulation.

• Ultimate oil recovery – the total volume of hydrocarbons eventually

produced/recovered over the economic productive life of the reservoir.

• Cumulative oil/gas production – when a property starts producing, the

production of oil, gas, and water is accumulated on a daily, monthly, and
yearly basis.
• Remaining oil/gas reserves – the reserves produced after a certain point in
time .
Volumetric Calculation

N=STOIIP (stb) G = GIIP (scf)

Bo=Formation Volume Factor (rb/stb)
A= reservoir area (acer)
h = reservoir thickness (ft)
Sw = water saturation (fraction)
f = porosity (fraction)
Bg=Formation Volume Factor (cf/scf)
A= reservoir area (acer)
h = reservoir thickness (ft)
Sw = water saturation (fraction)
f = porosity (fraction)

The porosity and water saturation are obtained from well logs or core analysis.
The formation thickness is from resistivity logs or from geologic maps.
The drainage area is estimated based on type of driving mechanism, analogy to wells
producing from similar horizons in other areas, and from geologic maps.
Formation volume factor is determined in the laboratory from fluid analysis or empirical
correlations.
Example

An oil well has been drilled and completed. The productive zone has
been encountered at a depth of 7815-7830 feet. The log analysis
showed an average porosity of 15% and an average water saturation
of 35%. The oil formation volume factor is determined in the laboratory
to be 1.215 rb/stb. Experience shows other reservoirs of about the
same properties drain 80 acres with a recovery factor of 12%.
Compute the OOIP and the ultimate oil recovery.
Decline Curve Analysis

The purpose of decline curve analysis is to determine future production and

therefore ultimate recovery for wells according to production history.

• Sufficient past production performance is available in order to

make a reasonable match of this performance and extrapolating
its future performance.

• This past production history is based on capacity (unrestricted)

production with no changes in operational policy.

Finding a curve that approximates the past production history and

extrapolating this curve into future.
Three rate-time decline curves:
• Exponential decline
• Hyperbolic decline
• Harmonic decline

The rate-time curves are commonly plotted on semi-logarithmic paper as

log(q) vs. t.

• First plot the monthly or daily production on semi-logarithmic

graph paper.

• A declining pattern is observed and future trend is forecasted by

extrapolated to the economic limit (EL) of the property
The EL is the production rate below which the net cash flow is negative.

ELoil=economic limit for oil well, bbls/month

Po, Pg= oil and gas prices, $/stb and $/Mscf.
LOE=lease operating expenses, $/well/month
WI=working interest, fraction
NRI=net revenue interest, fraction
GOR=gas-oil ration, scf/stb
To, Tg=oil and gas production taxes, fraction
T=Ad valoren tax, fraction
• Exponential decline
Exponential decline is also referred to as constant percentage decline. The
mathematical expression is an exponential equation of the form 𝑦 = 𝑎𝑒 𝑏𝑥 . It
plots as a straight line one semi-logarithmic graph paper (production on log
scale and time on linear scale).

qi = rate at the beginning of time period, stb/month

t = time period, years
Np = cumulative production during time period, stb
a = nominal decline rate, fraction
Example: ED1

A well has declined from 100 stb/day to 96 stb/day during a one-month

period, use the exponential decline model to perform the following:

a) Predict the production rate after 11 more months

b) Calculate the amount of oil produced during the first year

c) Project the yearly production for the well for the next 5 years.
a) Production rate after 11 more months:

Rate at end of one year

b) The amount of oil produced during the first year:

Assuming 30 days per month

c) Yearly production for the next 2 years:
Example: ED2

There is a rate time plot of actual oil production for years 1997 through
2001 and the forecasted oil production thereafter The cumulative oil
production (Np) on 12/31/2001 is 78,044 stb. Calculate

a) decline rate, q1/1/2002 and q1/1/2003 are read as 843 stb/month and 717
stb/month, respectively.

b) Remaining oil reserves from 1/1/2002 to EL of 200 barrels per month

c) Time required producing the oil calculated in (b)

d) Production rate at the end of year 2004

e) Ultimate oil recovery

a) Effective and nominal decline rate, q1/1/2002 and q1/1/2003 are read as 843
stb/month and 717 stb/month, respectively.

b) Remaining oil reserves from 1/1/2002 to EL of 200 barrels per month

c) Time required producing the oil calculated in (b)

d) Production rate at the end of year 2004

e) Ultimate oil recovery

Example: ED3

Given initial rate and EL of the well are 1680 stb/month and 200 stb/month,
how long it will take the well to reach the EL? Assuming a =0.01 per month.
Decline Identification
q Np

q
t
• Harmonic Decline

Harmonic Decline is a special case of hyperbolic decline (b=1.0).

Np

q
• Hyperbolic Decline

The hyperbolic decline model is more general, the other two models are
degenerations of the hyperbolic decline model. These three models are
related through the following relative decline rate equation

where b and d are empirical constants to be determined based on production data.

• d = 0 degenerates to an exponential decline model,

• and d = 1 yields a harmonic decline model.

• 0 < d < 1 is for a hyperbolic decline model.

0 < d < 1, integration gives:

which results in

or

t
N p   qdt
0
Model Identification

Production data can be plotted in different ways to identify a representative

decline model.
• If the plot of log(q) versus t shows a straight line, the decline data follow
an exponential decline model.
• If the plot of q versus Np shows a straight line, an exponential decline
model should be adopted.
• If the plot of Np versus log(q) shows a straight line, the harmonic decline
model should be used.
• If no straight line is seen in these plots, the hyperbolic decline model
may be verified by plotting the relative decline rate.

1 dq
 bq d
q dt
A plot of relative decline rate versus production rate
Determination of Model Parameters

Once a decline model is identified, the model parameters a and b can be

determined by fitting the data to the selected model.

• For the exponential decline model, the a-value can be estimated by

• For the harmonic decline model, the a-value can be estimated by

• For the hyperbolic decline model, the a- and b-values can be estimated by

1. Select points (t1, q1)

and (t2, q2)

2. Read t3 at q3  q1 q 2 q
 b  t  t  2t 3
3. Calculate    1 2 2
a t 3  t1 t 2
4. Find q0 at t = 0 1

5. Pick up any point (t*, q*) q3 (t*, q*)

6. Use  q0 
log   2
q0
a  q* 
q* 
 b 
a
 b 
1   t*  log 1   t * 
 a   a 
t3
b
7. Finally b   a
a t
Illustrative Example I:
For the data given, identify a suitable decline model, determine model
parameters, and production rate until the EL of 25 stb/day.
Solution I:
A plot of log(q) versus t is presented in following Figure (a) which shows a
straight line. Then, the exponential decline model is applicable. This is further
evidenced by the relative decline rate shown in Figure (b).

(a) (b)
Select points on the trend line:
t1= 5 months, q1 = 607 STB/D, and t2= 20 months, q2 = 135 STB/D

Decline rate is calculated with

Illustrative Example II:
For the data given, identify a
suitable decline model, determine
model parameters, and
production rate until the end of 5
years.
Solution II:
A plot shows a straight line. Then, the harmonic decline model is applicable.
On the trend line, select:
q0 = 10,000 stb/day at t = 0, and q1 = 5,680 stb/day at t = 2 years

Decline rate is calculated with

Illustrative Example III:
For the data given, identify a
suitable decline model, determine
model parameters, and production
rate until the end of 5 years.
Solution III:
A plot of relative decline rate is shown in the figure below, which clearly
indicates a hyperbolic decline model.
select:
t1 = 0.2 year , q1 = 9,280 stb/day, and
t2 = 3.8 years, q2 = 3,490 stb/day

q3  (9,280)(3,490)  5,670 stb/day

Read from decline curve t3 = 1.75 years at q3 =

5,670 stb/day.
 b  0.2  3.8  2(1.75)
   0.217
 a  (1.75)  (0.2)(3.8)
2

Read from decline curve q0 = 10,000 stb/day at t0 = 0, and pick up point (t* = 1.4 years, q* = 6,280
stb/day).
 10,000 
log 
a  6,280 
 1.75 b  0.217(1.758)  0.38
log 1  0.217 (1.4) 