11 IFPTraining - RCM - Sem11 - Booklet

Formation professionnalisante

Reservoir Characterization
& Modeling

Semaine 11
Uncertainties on Reserves

Une formation IFP Training pour Sonatrach / IAP

Uncertainties on Reserves – Summary
 Introduction to Reserves Evaluation – Risks and Uncertainties p. 7
 Reserves Evaluation – Risks and Uncertainties p. 15
 Introduction to Field Development Projects and Reservoir
Uncertainties p. 21
 One method for Volumetric Evaluation p. 49
 Data Integration p. 81
 Summary of Rock and Fluid Properties p. 93
© 2014 ‐ IFP Training
 Geological Modeling p. 143
Sonatrach / IAP 3
 Reservoir Simulation – Upscaling p. 181
 Reservoir Simulation – Fundamentals p. 213
 Reserves and Resources Classification p. 213
 Principles of Upstream Economics p. 311
 Decline Curves and Correlations p. 335
 Primary Recovery by Natural Depletion – Material Balance p. 363

 Reservoir Simulation – History matching and Production
Forecasts p. 401
Sonatrach / IAP 4
 Static Model – Uncertainties p. 421
 Dynamic Uncertainty Studies p. 461
 Notions of Probability p. 485
 Statistical Description of Data & Common Continuous
Distributions p. 505
 Monte Carlo Simulation & The Parametric Method p. 545
 Unconventional Hydrocarbons p. 585
Sonatrach / IAP 5
Introduction to Reserves Evaluation
Risks and Uncertainties
Xavier LOPEZ
Sonatrach / IAP
Introduction
 Welcome to Mickey Mouse Petroleum !!
 Since you’ve just joined one of the world’s premier oil and gas
company…you everyday day job will consist on??
 …making decisions !! (or least recommending ones)
Sonatrach / IAP 8
Introduction
 The objective of this firm (or any…including state funded ones!) is to
create wealth
• By managing their current operations (what you’ve learned so far)
• By investing money into new projects that generate more money than
what they cost! (hopefully) (what you’ll be learning this week)
 Project/investment valuation is therefore critical
• To support you (or your boss) making the right decisions
• To ensure the company continues to exist
• To keep your job
 Decisions on new investments can be varied
• Drilling new wells
• Upgrading facilities
• Acquiring Data
• Acquiring another company
Sonatrach / IAP 9
Introduction
 Investments that create value
• The company invests 100M USD today in a project that generates a
stream of cash flow valued at 150M USD
• The investment generates an incremental 50M USD in wealth to its
shareholders
• The project has a net present value (NPV) of 50M USD
100M USD PROJECT 150M USD Value created: 150 – 100 = 50M USD
 Some preliminary questions
• How is this possible?
• Where did the 100M USD come from?
• If it’s that easy, why don’t we all do it?
Sonatrach / IAP 10
Introduction
 A good look back on industry performance may not be flattering
 « The last 10 years might be called a decade of unprofitable growth
for many upstream companies » (Ed Merrow, IPA)
• Based on the analysis of more than 1000 E&P projects
• 1 in 8 of all major offshore developments in the last decade falls into the
« disaster » category (financially speaking)
− >40% over cost
− >40% over time
− <50% expected initial production
• Record even worse for mega‐projects
 Why???
Sonatrach / IAP 11
Introduction
 Why???
• Projects are riskier nowadays? More difficult ?
• Because your job progression is better if you always are optimistic?
• Because you tell management what they want to hear?
• Because you did not have the right information?
 The E&P industry has been focused (too much!) on:
• Developing more and more complex tools and method to get ONE single
number, even more precisely
• Using probabilistic methods to « dress up » you initial guess
• Modeling uncertainties
 Not enough on:
• Understanding the difference between precision and accuracy
• Understanding the impact of uncertainty on decisions (risk versus
uncertainty)
Sonatrach / IAP 12
Introduction
 Your role is crucial
 Geoscientists provide information to support and
enable decisions (models, calculations,
knowledge)
 The choice between several alternatives is based
between 2 criteria
• Technical feasibility
• AND Economical feasibility
 Since you know your projects, you’re a key
element in that decision process
• You need to speak « management » language
• Understand that because a project is technically
good, it may not be financially
Sonatrach / IAP 13
Reserves Evaluation
Risks and Uncertainties
Xavier LOPEZ
Sonatrach / IAP
AGENDA
 INTRODUCTION
 BASICS OF RESERVOIR CHARACTERIZATION
E
X
 RESERVES DEFINITIONS E
R
C
 PRINCIPLE OF UPSTREAM PROJECT ECONOMICS I
S
E
 RESERVES ESTIMATIONS S
 RISKS AND UNCERTAINTIES
 SPECIAL TOPICS: RESERVES FOR EOR AND
UNCONVENTIONAL PROJECTS
Sonatrach / IAP 16
THE GOLDEN RULES
 There’s no stupid questions
 Respect for each other
 No mobile phones please!
 Please participate in the exercises: I already know this course!
 Comments/suggestions welcome
 Enjoy! After all this will be part of your job
Sonatrach / IAP 17
REFERENCES
« I have no desire for re‐invention » (Albert Einstein)
 Some material from this course has been kindly provided by
Salvatore Zammito (IFP Training)
 Some of the industry gurus/companies:
• Peter Rose (Rose and Associates)
• Ed Merrow (Independent Project Analysis)
• Steve Begg (Australian School of Petroleum)
• Dean Rietz (Ryder Scott Company)
• Reidar Bratvold (University of Stavanger and NTNU)
• … and plenty more
Sonatrach / IAP 18
REFERENCES
 Some good sites:
• SPE (no introduction! www.spe.org)
− Library
− PRMS
− Journals
− SPE Hydrocarbon Economics and Evaluation
• Independent Project Analysis (www.ipaglobal.com)
• US DOE (http://energy.gov/)
− Official US statistics (www.eia.doe.gov)
Sonatrach / IAP 19
Introduction to Field Development
Projects and Reservoir Uncertainties
Xavier Lopez
Sonatrach / IAP
Presentation Summary
 Field development projects
 Drainage Mechanisms
 Designing the plateau rate
 Economic Aspects
 Well Drilling and Completion
 Uncertainties in Reservoir Characterization
 One way to reduce uncertainties: Reservoir Management Plan
Sonatrach / IAP 22
Oil & Gas Field Development Phases
Field
Development Any additional development follows
Exploration
Appraisal the initial development process
Development Studies
Preliminary >20 y 3y
Conceptual
Pre-project
Project
Production profile
INVESTMENT
DECISION Field
1-3 y 3-4 y 3-4 y Field operations abandonment
Time
Discovery “First Oil” End of Restored
production Site
New business
Technical evaluation - preliminary / conceptual 15 days – 9 months
Sonatrach / IAP 23
Reservoir Models Workflow
Sonatrach / IAP 24
Model Building
 Building the geo‐models:

• Geophysical modeling: structural model and maps, including faults.
• Geological modeling:
− stratigraphic and sedimentological models
− and related maps.
− Populate the models with properties such as facies, Rock Types, PHI, K, Pc’s.
− This will lead to the Geological Model(s).
 Reservoir modeling:
• the Geological Model(s), after up‐scaling, will yield the Reservoir Simulation
Model(s).
• After initialization of the RSM, there will be interaction with geophysics and geology
to fine tune the models.
• This interaction will continue during the history matching process.
 Using the RSM for development optimization
Sonatrach / IAP 25
Evaluation of Drainage Mechanisms
The drainage
mechanism may be
the major dynamic
uncertainty
Sonatrach / IAP 26
Evaluation of Drainage Mechanisms
 We need to evaluate, from the onset, what could be the possible drainage
mechanisms:
• natural depletion
• or do we need assisted drainage (water or gas injection).
 However, assisted drainage is seldom implemented right from the beginning.
 It is preferable to start producing the field by natural depletion, even for a very
short period,
• in order to monitor and observe the field behavior
• and decide on the nature of the drainage mechanism from the dynamic
data.
 Uncertainties will remain.
Sonatrach / IAP 27
Designing the Plateau rate
 Once reserves have been assessed, and taking into account the market
constraints, we can set the Field plateau rate.
 In some countries, the plateau rate cannot be higher than a certain fraction of
the reserves and this has to be integrated in the plateau design.
• For instance, in the British North Sea, the plateau rate per annum cannot
exceed 17.5% of reserves.
• To the other extreme, in some Middle East countries, the plateau rate will
be in the order of 1 to 2% of reserves.
 In the absence of local rules, one can apply the following rules:
• oil field:
− Onshore: 5 to 10% of reserves
− Offshore: 10 to 20% of reserves
• Gas fields: around 5% of Gas in Place.
Sonatrach / IAP 28
Field Development & Production Profiles
 We can thus establish the number of needed wells, producers and injectors,
their spacing and location.
 Related production profiles are delivered by the simulation model.
 But remember that simulation model results should always be corroborated by
analytical analyses.
 Model building is a long and complex process and mistakes can easily be made.
As a summary, we have
 Estimated the Hydrocarbons in place,
 estimated the reserves, attaching a time scale to the hydrocarbons recovery
 and estimated the number and location of wells, producers and injectors.
 Thus we have covered the spectrum of Reservoir Engineering core activities.
Sonatrach / IAP 29
Economic Aspects
 Main criteria
• Net Present Value (10) [ NPV 10 ]
• Internal Rate of Return [ IRR ]
• Capital Profitability Index (10) [ CPI 10 ]
• Breakeven oil price (Oil price at which Project NPV (10) = 0)
 Other criteria
• Pay‐Out Time [ POT ]
• Maximum Capital Exposure [ MCE ]
• Technical cost per barrel
Sonatrach / IAP 30
Economic criteria
Sonatrach / IAP 31
Economic criteria
Sonatrach / IAP 32
Well drilling and completion
 The well architecture is first concerned with the drilling:

• Vertical, deviated, horizontal,
• multi‐branch,
• and more complex architecture.
 The second concern is the well completion:

• open hole, cased hole, gravel pack,
• tubing size and type,
• artificial lift,
• intelligent completions.
 Well engineering has evolved tremendously and may have a great impact on
flow insurance and improved oil recovery.
Sonatrach / IAP 33
Well drilling and completions
 A good example would be the extended reach wells in Tierra del Fuego
(Argentina) to tap oil reserves which otherwise could not be economically
produced.
Sonatrach / IAP 34
Well drilling and completions
 Another good example of the complexity of drilling is given in a field case in

Colombia:
• the most advanced techniques were used to drill in a tectonically complex
environment (in‐situ stress field, variations in rock resistance and pore
pressure).
• Problems of stability or fracturation by invasion, well collapse, cementation
problems.
• 20 to 30 million US$ per well,
more than 100 wells.
Sonatrach / IAP 35
Oseberg Case
 Horizontal Wells
OSEBERG 3D WELL
Sonatrach / IAP 36
Uncertainties in reservoir characterization
 A great number of uncertainties can be identified in this process. These can be

grouped into three main categories:
• Geophysical uncertainties that affect the reservoir envelope.
• Geological, sedimentary and petro physical uncertainties that impacts on
the content of envelope and the HC volume in‐place.
• Dynamic uncertainties that impact on the reserves and production profiles.
 For each case, all potential uncertainties

• must be identified
• and assessed in terms of their impact
• and then ranked so that only major uncertainties will be kept and integrated
into the whole process.
Sonatrach / IAP 37
What are the objectives
 Objective: Determine Optimal Development plan and Associated 1P ‐ 2P Reserves
• Taking into account all uncertainties
− Structural
− Petrophysical
− Dynamic
• With or without History Match
 Uncertainties assessment is necessary:
• To make good decisions
 Means: Reservoir Model
• Incorporating all subsurface data
• From Geophysics to Geology to Dynamics
• History Match if necessary
Dynamic model
Sonatrach / IAP 38
Uncertainties in Reservoir Characterisation
GEOPHYSICS GEOLOGY DYNAMICS

 Migration  Geological and Sedimentary  Fault Transmissivities
concept
 Velocity law  Extension of Barriers
 Extension and Orientation of
 Picking Sedimentary Bodies  K model
Time‐depth  Kv/Kh
  Distribution, Shape, Limits of
AE / RT
 Viscosity, PVT
 Seismic‐to‐well tie
 Populating the model : k,  Kr Shapes and End Points
 Faults Location phi, NTG, Sw...
 Aquifers
 Contacts
 Rock Compressibility
 …
 Well PI, II
 …
Sonatrach / IAP 39
Different Approaches
 Different Approaches:
•Deterministic approach
•Scalar Monte Carlo
•Spatial Monte Carlo
•Experimental Design and Response Surface
•Parametric Method
Sonatrach / IAP 40
Deterministic Approach
 Single Best estimate "Base Case"
• Input parameters
− Most likely structural interpretation
− Most likely geological point of view
− Most likely engineering parameters
 Sensitivities on uncertain parameters
− Most influent parameters set as unfavorable => 1P reserves
− Most influent parameters set as optimistic => 3P reserves
+ Advantages ‐ Problems
• Well known workflow • Subject to feeling of the estimator
• Adapted to some SEC rules ("Most likely ?")
• All input parameters well identified • No propagation in space of uncertainties (only
sensitivities)
• Simple method
Sonatrach / IAP 41
Scalar Monte Carlo Approach
 Analytical approach
 Reservoir considered as a cube
• Various uncertain variables
− Gross Rock Volume (GRV)
− Net To Gross (NTG)
Res = GRV**NTG*So*1/Bo*RF
− Porosity ()
− Oil saturation (So)
− 1/Bo
− Recovery Factor (RF)
• Range of variation for each of the parameters
• Correlation between parameters
• Random Monte Carlo draw (Crystal Ball)
+ Advantages
• Fast approach ‐ Problems
• First idea about • Little geology introduced in the computation
− Reserves Distribution • No spatial distribution (only a global figure)
Sonatrach / IAP 42
Spatial Monte Carlo Approach
Rather than a single (probably inaccurate) representation of the
reservoir, we consider all possible representations of it, on the
basis of the identified subsurface uncertainties.
STATISTICAL CUMULATIVE PRODUCTION PROFILES
1000
MIN
Geological and 900
800
q10
q20
q30
Reservoir
RECOVERABLE RESERVES .
700 q40
q50
Simulation 600
500
q60
q70
q80
400 q90
MAX
300
200
100
0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
TIME (YEARS)
 Systematic exploration (Spatial Monte Carlo)
 Planned exploration (Experimental Design Technique)
Sonatrach / IAP 43
GRV Probabilistic Distribution
 Results of Structural Uncertainties
• Distribution of Gross Rock Volume
• Ranking of Uncertainties
• Structural Maps
Sonatrach / IAP 44
HIIP Probabilistic Distribution ‐ G&G
 Results of Geological and Structural
Uncertainties
• Distribution of Hydrocarbons in
Place
• Range of Reservoir Models
Hrz permeability
Sonatrach / IAP 45
Experimental Design: Classical Workflow
N uncertain parameters (N<=32)
1‐ Screening & exp design Phase
‐ Uncertainty Ranking with respect to their impact N‐n param.
Flow simulation (ECL, ATHOS,...)
on the response
‐ Interactions calculations
2‐ Modelling Phase
‐ Multi‐variable Regression
n param. (minimum 3 levels per parameter)
Post‐Processing
3‐ Use Response Surface
(Crystal Ball...)
‐ Probabilistic Distribution For Prediction
(Monte Carlo)
Sonatrach / IAP 46
Global Workflow
 Static Uncertainties: HCIP
distribution
 Combine Static and Dynamic
Uncertainties
 Reserves distribution
Sonatrach / IAP 47
Reservoir Management Plan:
one tool to reduce uncertainties
 The RMP is a “Road Map” for the Asset team
 It is a synthetic document:
• On all main aspects related to the geosciences and reservoir engineering
• It pinpoints:
− The project objectives
− The project status and uncertainties
− The future actions and planning (data acquisition, development
strategy, monitoring, …)
 It should be approved by Management at headquarters and be used as a “law

enforcement” document within the subsidiary.
Sonatrach / IAP 48
One method for Volumetric
Evaluation
Xavier Lopez
Sonatrach / IAP
Presentation summary
 The Deterministic Evaluation
 An example
© 2014‐ IFP Training
Sonatrach / IAP 50
How much oil and gas are present?
Sonatrach / IAP 51
The Deterministic Evaluation
Sonatrach / IAP 52
Calculation method
 Deterministic method – Still much in use
• Optimised development scheme based on median geological
assumptions
• Sensitivity to various parameters/assumptions
• Robustness to Mini case
Sonatrach / IAP 53
DETERMINISTIC METHOD
THE PRINCIPLES ARE VERY SIMPLE….
GRV
HC in place Volume = Bulk rock volume BRV
(Surface conditions) *
Net / Gross N /G
HCIIP
OIIP *
GIIP Porosity Phi
*
Oil saturation So=
* 1 ‐ Sw
1/ Bo 1/FVF
1 mm
OIIP = BRV * N/G * Phi * So * (1/Bo)
OIIP = BRV reservoir above OWC * average (N/G) * average Phi * average So * average (1/Bo)
Sonatrach / IAP 54
Volumetric Calculation of Original-Oil-In-Place
7758 A h  (1-Swi)
OOIP =
Boi
OOIP = Original Oil-In-Place (stb)

Boi = Formation Volume Factor (rb/stb)
A = Area (acres)
h = Average Net Pay Thickness (feet)
 = Average Porosity (fraction)
Swi = Average Water Saturation (fraction)
7758 = Conversion: Acre-Feet to BBLS (43,560 ft2/acre, 5.6146 ft3/bbl)
Rule of Thumb
One acre-foot contains about 1000 stb of oil for typical
reservoir properties
Boi = 1.24 rb/stb 7758 bbl/ac-ft * 1 ac * 1 ft * 0.20 * (1 - 0.20)
A = 1 acre OOIP =
1.24 rb/stb
h = 1 foot
 = 0.20 OOIP = 1001 stb
Swi = 0.20
Sonatrach / IAP 55
Nomenclature
OOIP = Original Oil‐In‐Place (stb)

EUR = Estimated Ultimate Recovery (stb)
Boi = Formation Volume Factor (res vol/std vol)
(volumetric change from reservoir
to standard conditions)
A = Area (acres)
h = Average Net Pay Thickness (feet)
 = Average Porosity (fraction)
Sw = Average Water Saturation (fraction)
RF = Recovery Factor (frac of OOIP)
7758 = Conversion: Acre‐Feet to BBLS
(43,560 ft2/acre, 5.6146 ft3/bbl)
Sonatrach / IAP 56
Using Computers, calculations are very easy
OOIP cell = BRV cell
* N/G cell
* Phi cell
* So cell
* 1/Bo cell
OOIP layer = Sum (OOIP cells
meeting certain criteria)
OOIP reservoir = Sum (OOIP layers)
Sonatrach / IAP 57
Recoverable Oil Reserves
A h  (1‐Sw)
EUR = * RF
Boi
(Equation expressed in Stock Tank Barrels)
Sonatrach / IAP 58
Volumetric Parameters
• Rock Volume Mapped Parameters
Size of the reservoir (Geoscientist)
• Porosity
Pore (fluid) Volume
• Water Saturation
OOIP
Hydrocarbon Volume
(Petrophysicist)
Recovery Factor
Rock type/permeability
Reservoir geometry Reserves
Fluid properties (Reservoir Engineer)
Saturation functions
Reservoir drive mechanisms
Reservoir management
Over what parameter do the biggest arguments arise?
Which parameters have the greatest uncertainties?
Sonatrach / IAP 59
Reservoir Thickness Terms
Deviated Well
True Measured
Vertical
∆MD  ∆TVD  TVT  TST Depth
Depth
(MD)
(TVD)
True
Stratigraphic
MDtop
True Thickness
TVDtop
Vertical (TST)
Apparent Thickness
Thickness (TVT)
(TVD) Measured
Thickness
(MD)
MDbase Vertical Well: TVD = TVT = MD
TVDbase No Dip: TVD = TVT = TST
Sonatrach / IAP 60
Gross versus Net Reservoir Thickness
N/G = h/H = 0.75
H =
= h
Sonatrach / IAP 61
Reservoir Pay
GOC
Oil Column
A
C B C
A&B
C
A B
OWC
A = Gross Thickness
B = Gross (Oil) Pay
C = Net (Oil) Pay
Shale: compacted clay/silt/mud, very fine grained, non-reservoir rock

Gross Thickness = Total interval between top and base of the reservoir unit
Gross (Oil) Pay = Gross thickness less gas cap and water zone intervals
Net (Oil) Pay = Permeable zones lying between the GOC and the OWC
Sonatrach / IAP 62
Initial Hydrocarbons‐In‐Place
stock tank bbls of oil
Hydrocarbons‐in‐Place @ and
Stock Tank Conditions (STB, scf) standard cubic feet of gas
= Vhc / Bi
Gross Rock Volume
Vg = A* H H = gross thickness
Reservoir Volume
Vr = Vg * N/G = A*H *N/G = A*h
N/G = net‐to‐gross
(fraction that is reservoir rock)
Reservoir Pore Volume
Vp = Vr *  = A * h * 
Hydrocarbon Volume
Vhc = Vp * (1‐Sw)
= A * h *  * (1‐Sw) Hydrocarbons‐in‐Place @
Reservoir Conditions (RB)
Sonatrach / IAP 63
Reservoir Pay Terms
Net Pay: Rock from which we can extract
hydrocarbons at a profit
• Changes with time and technology
• No set rules for selection
Aquifer: Total volume of porous rock in
pressure communication with
the hydrocarbon reservoir
• Size and permeability will determine
how much water‐drive energy is
available
• Important to collect information
from “dry” holes
Sonatrach / IAP 64
Reservoir Volume
Structure Map(s)
Gross Sand Map
N/G Map
Net Sand Map
Net Pay Map
Depth‐Volume Curve
3‐D Geologic Numerical Models
•Petrel/ GOCAD/….
Sonatrach / IAP 65
Reservoir Volume: Wedge Zone
(Closely spaced contours:
rapid property change in
direction normal to the contour)
Sonatrach / IAP 66
Reservoir Volume: Double Wedge Zone
Sonatrach / IAP 67
Reservoir Volume: Faulted Zone
Sonatrach / IAP 68
Depth‐Volume Curves
Channel
Depth
Volume
What curve shape would a channel geometry have?
Sonatrach / IAP 69
Example
 Exploration well Ex‐1 has discovered gas and oil
0 GR 100 Depth 0.45 - - - - NPHI - - - - -0.15 140 DT 40 Depth Litho Fluid Poro Sw 0.2 - - - -LLD- - - 2000
6 - CALI - 16 SS 1.95 RHOB 2.95 SS logy 0.2 MSFL 2000
-80 SP 20 m 0 …….. PEF ……. 20 m
-3200 -3200
-3210 -3210
PEF
-3220 -3220
BS
CALI
GR
SP
RHOB
NPHI DT LLD
MSFL
-3230 -3230
Sonatrach / IAP 70
Example
 Exploration well Ex‐1 has discovered gas and oil
 The proven gas and oil zones are: Ex‐1
1PGas and 1POil
-3185 m
-3208 m
1PGas
?
1PGas 1PGas
-3210 m GDT
-3214 m OUT
?1P Oil 1POil ?

1POil
-3221 m WOC
SHALE LAYER
Sonatrach / IAP 71
Example
 The shale layer being probably permeable (at geological time
scale), we can define the following situation
Ex-1
S2 S1
S3
-3185 m
Prob Gas
-3208 m
1PGas
1PGas
Prob Gas 1PGas
-3210 m
1/2 Prob Gas Prob Gas Prob Gas
1/2 Prob Oil Prob Oil Prob Oil -3214 m
Prob1POil
Oil 1POil Prob
1POil Oil
-3221 m
Sonatrach / IAP 72
Example
Ex-1
 1P and 2P volumes can
be defined as follows S1
S2
S3
-3185 m
Prob Gas
-3208 m
1PGas
1PGas
Prob Gas 1PGas
-3210 m
1/2 Prob Gas Prob Gas Prob Gas
1/2 Prob Oil Prob Oil Prob Oil -3214 m
Prob1POil
Oil 1POil Prob
1POil Oil
-3221 m
1P Gas is comprised between surfaces S1, S2, 3208 m and 3210 m
1P Oil is comprised between surfaces S3, 3214 m and 3221 m
2P Gas=(1P+Prob)Gas Vol1 is comprised between surfaces S1, S2 and 3212 m
2P Gas= Vol1+Vol2 Vol2 is comprised between surfaces S3 and 3212 m
2P Oil=(1P+Prob)Oil Vol3 is comprised between surfaces S1, S2, 3212 m and 3221 m
2P Oil= Vol3+Vol4 Vol4 is comprised between surfaces S3, 3212 m and 3221 m
Sonatrach / IAP 73
Example
 From the structural map, we derive the depth versus surface plot
from which volumes are estimated
EX-1
3208
3190
3200
3210
ISOBATHS - Top S1
3220
0 500 100
3230
3240
2
Surface Isobath 3230 m (SS) = 16.7 Km 3250
Sonatrach / IAP 74
Example
 From the structural map, we derive the depth versus surface plot for S1, from
which volumes can be estimated. The same plot is done for S2 and S3 by
isopach translation: respectively 2 m
depth versus surface
and 4m.
km2
0 2 4 6 8 10 12 14 16 18
3180
Depth (m) Depth (m) Depth (m)

surface S1 S2 S3 3190
(km2) 2 4
0.00 3189 3191 3195
0.40 3190 3192 3196
2.90 3200 3202 3206
3200
3.65 3202 3204 3208
4.40 3204 3206 3210
5.20 3206 3208 3212
5.95 3208 3210 3214 S1
meters
6.70 3210 3212 3216 3210 S2
7.60 3212 3214 3218 S3
8.45 3214 3216 3220
8.90 3215 3217 3221
10.70 3219 3221 3225
3220
11.20 3220 3222 3226
11.70 3221 3223 3227
16.70 3230 3232 3236
3230
3240
Sonatrach / IAP 75
Example
 From the structural map, we derive the depth versus surface plot
from which volumes are estimated
Bulk Volume
surface S1 below S1 below S1 surface S2 below S2 surface S3 below S3
(km2) (km2) 2 (km2) 4
Depth Mm3 Depth Mm3 Mm3
0 3189 0.00 0.00 0 3191 0.00 0.00 0 3195 0.00 0.00
0.4 3190 0.20 0.20 0.4 3192 0.20 0.20 0.4 3196 0.20 0.20
2.9 3200 16.50 16.70 2.9 3202 16.50 16.70 2.9 3206 16.50 16.70
3.65 3202 6.55 23.25 3.65 3204 6.55 23.25 3.65 3208 6.55 23.25
4.4 3204 8.05 31.30 4.4 3206 8.05 31.30 4.4 3210 8.05 31.30
5.2 3206 9.60 40.90 5.2 3208 9.60 40.90 5.2 3212 9.60 40.90
5.95 3208 11.15 52.05 5.95 3210 11.15 52.05 5.95 3214 11.15 52.05
6.7 3210 12.65 64.70 6.7 3212 12.65 64.70 6.7 3216 12.65 64.70
7.6 3212 14.30 79.00 7.6 3214 14.30 79.00 7.6 3218 14.30 79.00
8.45 3214 16.05 95.05 8.45 3216 16.05 95.05 8.45 3220 16.05 95.05
8.9 3215 8.68 103.73 8.9 3217 8.68 103.73 8.9 3221 8.68 103.73
10.7 3219 39.20 142.93 10.7 3221 39.20 142.93 10.7 3225 39.20 142.93
11.2 3220 10.95 153.88 11.2 3222 10.95 153.88 11.2 3226 10.95 153.88
11.7 3221 11.45 165.33 11.7 3223 11.45 165.33 11.7 3227 11.45 165.33
16.7 3230 127.80 293.13 16.7 3232 127.80 293.13 16.7 3236 127.80 293.13
Sonatrach / IAP 76
Some hints….
a area
S1
S1
V1
Contact C1
Contact C1
Depth
V1  S1  C1
Sonatrach / IAP 77
Some hints….
a area
V2 S1
V2 S1
S2
S2
Contact C1 Contact C1
Depth
V2  ( S1  C1 )  ( S 2  C1 )
Sonatrach / IAP 78
Some hints….
a area
S1
S1
Contact C2 S2 Contact C2
V3 S2 V3 V3
Contact C1 Contact C1
Depth
V3  [( S1  C1 )  ( S 2  C1 )]  [( S1  C2 )  ( S 2  C2 )]
Sonatrach / IAP 79
Some hints….
Ex‐1
-3185 m
-3208 m
1PGas
?
1PGas 1PGas
-3210 m GDT
-3214 m OUT
?1P Oil 1POil ?

1POil
-3221 m WOC
SHALE LAYER
Sonatrach / IAP 80
Data integration
Xavier Lopez
Sonatrach / IAP
INTEGRATION
 A few questions you could be asking yourselves

 What do disciplines as different as petrophysical analysis, core
measurements, pressure transient tests have in common?
 Do I really need to know about well test as much I know about log
analysis?
 Is permeability really permeability? (e.g. ktests = kcore?)
 What if the best core analysis actually disagrees with the results of the
best well test analysis?
 After 10 weeks of training, would you be able to forecast future

production of a field?
Sonatrach / IAP 82
INTEGRATION
 The objectives of a study, process, activity are what should be driving your
thoughts
 The obvious one being that producing oil and gas fields remains a
business => one where predicting rates, booking reserves, planning
investments is paramount
160
90000
140
80000
120
Production (bbl/d)
70000
100
60000 WTI light (nominal)
$/bbl
50000 80
Oil
40000
Water 60
30000
40
20000
20
10000
0 0
1946 1951 1956 1962 1967 1973 1978 1984 1989 1995 2000 2006 2011 2017
0 5 10 15 20 25 30
Year
 This usually means building a coherent picture of your reservoir to
gain sufficient understanding of its past and current behavior in order
to make “sensible” predictions on its future performance
Sonatrach / IAP 83
INTEGRATION
 The fashionable “integration”

 Much as been said in recent years about
geosciences integration: « vertical vs.
horizontal », « cross-boundary studies »,
« multi-disciplinary approach »…
 Could you actually do otherwise?
 Building a coherent, representative and
useful picture of reservoir requires that you
actually account (one way or another) for
every piece of information you have at your
disposal
 Traditionally (still), the integration of the
various results, information, analysis,
disciplines is attempted when trying to build
a reservoir model
Sonatrach / IAP 84
INTEGRATION
 It is more a question of “how” than “if” we should integrate

 Moving away from sequential analysis to a simultaneous one requires
a change of focus and minds…which usually does not happen
overnight
Geophysics Geology Petrophysics Reservoir Results
 Each discipline has its own objectives, methodology

 Each specialist has its own interpretation, level of details, timing
 And importantly each phase precisely starts when the previous one
ends
Sonatrach / IAP 85
INTEGRATION
 It is more a question of “how” than “if” we should integrate

 The key point becomes the understanding of the GLOBAL objectives
of a particular study
Geophysics
Geology Results Reservoir
Petrophysics
 But also that results and analysis may need to be re-visited a number
of times, each specialist be willing to compromise for the greater good
(on the level of details for example)
Sonatrach / IAP 86
INTEGRATION
 Reservoir Simulation - Integrator of Technologies

Seismic
Geophysics
Geologic Understanding
Physics
Geology Results Reservoir
Well logs Cores
Petrophysics
Sonatrach / IAP 87
INTEGRATION
 Integration is about data
 Reservoirs are complex objects that require many parameters to be

characterized adequately
 Data available is mostly indirect: other than core samples, you will
actually NEVER see what you are trying to model
 Data available is derived for limited length-scales: other than seismic,
it is usually inferred at smaller length-scale than your reservoir
 Data available can be extremely varied: in source, quantity, quality,
format!
 Data available can also be misinterpreted: the human factor
 Data available often contradicts itself: or does it?
 Take on the data integration challenge…for the rewards are great!
Sonatrach / IAP 88
INTEGRATION
 Integration is about data 10,000
Vertical Resolution, ft
Seismic
 Physics drives scale of reservoir data 1,000
 Overlapping resolution zones provide 100 Well Test
natural integration potential 10
Log
 What conclusions would you draw from 1.0
comparing porosity inferred from seismic Core

0.1
and that measured on core samples? 0.1 1.0 10 100 1,000 10,000
Areal Resolution, ft
 What about permeability from tests and
Scale of a typical flow
from cores? simulation model cell
Accuracy
 Always remember the difference
between accuracy and precision!
 Increasing the complexity of your analysis
Precision
does not make it more accurate
 More importantly, increasing the precision
of your results does not guarantee you will
achieve your objectives!
"True" value
Sonatrach / IAP 89
INTEGRATION
 Integration is about people
 You have a vested interest in understanding what your colleagues do (main
issues, results, methods,…) and accepting their point of view
 Very often poor project integration stems from poor communication and
understanding between the different disciplines
Sonatrach / IAP 90
INTEGRATION
 Some reasons for building and integrated reservoir model
 Generally to model phenomena that are too complex to model by other
means:
 Reserves & production forecasts impacted by reservoir heterogeneity/continuity
 Large pressure gradients across reservoir
 Water & gas coning /cusping impact on well performance
 Multiple reservoirs on the same aquifer
 Presence of dual porosity/permeability (fractures, vugs)
 Complex facility constraints, multiple reservoirs sharing common surface facilities
 …
 The « right » tool for the « right » job

 Complex reservoir simulation must serve the global study
objectives
 Beware: If the only tool you have is a hammer, then everything
starts looking like a nail!
Sonatrach / IAP 91
INTEGRATION
 Outline for Integration part
 Geological Modeling: Building a Static Model
 Properties Distribution
 Gridding Techniques
 Upscaling
 Vertical Layering
 The Reservoir Model: From static to dynamic

Sonatrach / IAP 92
Summary of Rock and Fluid Properties
Xavier LOPEZ
 Rock Properties
 Fluid Properties
Sonatrach / IAP 94
How Do Fluids Move in This Formation?
Sonatrach / IAP
AAPG Bulletin ‐ Volume 73/2 ‐ February 1989
Sonatrach / IAP
Sonatrach / IAP
Miocene Turbidites, Capistrano Fm., San Clemente, CA
How should this reservoir be developed?
Sonatrach / IAP
Measurement of Rock & Rock-Fluid Properties
 Core Analysis
• Direct, discrete measurements of porosity, permeability, and
capillary pressure in the laboratory
• Tests can be conducted at in situ conditions
 Well Logs
• Continuous but indirect measurements of properties at in situ
conditions
• Porosity inferred from nuclear or sonic properties
• Saturation inferred from electrical properties
 Well Test
• In situ measurement of permeability on a scale of 1’‐10’s to 100’s
of feet
• Permeability inferred from pressure transient data
Sonatrach / IAP
Porosity (
Bulk rock volume consists of rock grains, cementing
material and pore space
Pore Volume
Rock Porosity =
Grain Rock & Pore Volume
Pore Space Pore Volume
Porosity =
Bulk Volume
Porosity in reservoir‐quality rock typically
range from about 5‐ to 35+ percent
e.g., poorly‐sorted e.g., well‐sorted,
and/or well‐cemented unconsolidated
sandstone sandstone
Sonatrach / IAP
Effect of Net Confining Stress on Porosity
• Overburden compresses pores, decreasing porosity
• Changes in NCS can have a significant effect on porosity
• Porosity must be measured at the NCS corresponding to
in‐situ reservoir conditions
well cemented
1
(fraction of initial)
0.8
friable
unconsolidated
0.6
Porosity
0.4
0.2
0 2000 4000 6000 8000 10,000
0 Net Confining Stress (psi)
Sonatrach / IAP
Net Confining Stress (NCS)
Net Confining Stress =Overburden Stress - Reservoir P
Depth * [(~ 1 psi/ft) - (~ 0.433 psi/ft)]
Overburden Stress = “weight” of overburden above reservoir*
Reservoir Pressure = pore (i.e., fluid) pressure
Type of Reservoir Average Fluid Gradient
• “normally pressured” = 0.433 psi/ft
• “underpressured” < 0.433 psi/ft
• “overpressured” > 0.433 psi/ft
‐ Must consider “weight “ of the water in offshore fields
Sonatrach / IAP
Formation (Rock) Compressibility (cf)
10.5 Not Reflection
of Reservoir Cp Typical compressibility values (1/psi)
cp = ‐ (1/V) V/P
Pore Volume (cc)
PV
10.0 = (1/PV) PV/psi Fluids
 PV oil: 1‐ 2 x 10‐5
9.5  psi water: 3 x 10‐6
gas: ~ 1/P
9.0
Rocks
0 500 1000 1500 2000 2500 3000
consolidated sand: ~ 2 x 10‐6
Net Confining Stress (psi)
unconsolidated sand: 7.0 ‐ 100 x 10‐6
Notes:
Frequently, a compressibility of 1 x 10‐6 1/psi is referred to as one “microsip” (i.e., 10‐6 1/psi = 1 sip = one “microsip”)
Rock compressibility can be an important recovery drive mechanism in unconsolidated sands and chalk (e.g., 1/3rd of Cerro Negro
recovery attributed to rock compressibility effects)
Total Compressibility (ct)
ct = cf + co So + cg Sg + cw Sw
rock oil gas water
Note: ct is the compressibility used in reservoir engineering calculations and pressure transient analysis
Sonatrach / IAP
Properties of porous material
Permeability
 Measures the capacity and ability of the fluids to flow in the
porous media.
P1 P P2
Q K  A P
Q
Injection rate
 L
L
Darcy’s Law
: Fluid Viscosity (cP) K in Darcy=0.987 10 ‐12 m2
P: Differential Pressure (atm)
A: Cross sectional area (cm2) Typically: 0.1 < K < several Darcy
Q: Injection flow rate (cm3/s)
L: Length (cm)
Sonatrach / IAP 104
Permeability‐Porosity Correlation
K- relationship
K=f()
Rock-types
Sonatrach / IAP 105
Comparison of Porosity ‐ Permeability Crossplot
Comparison of data with analogue fields
Sonatrach / IAP
Porosity‐Permeability Crossplot
Facies Classification
10000
1b 2
1000 1a 3a
4a 3b
100
Permeability (mD)
10 3c
4b
1 Massive Sands
5
Clay Rich Sands
Laminated Sands,
0.1 Silts, Shales
0.0
0 10 20 30 40
Porosity (%)
Sonatrach / IAP
Typical Routine Core Analysis
Porosity, Permeability, Saturation and Grain Density
Sonatrach / IAP
Fluid Saturations (So, Sg, Sw)
Relative fraction of each phase present in the pore volume
oil gas Oil Volume

Oil Saturation =
Pore Volume
Gas Volume
Gas Saturation =
Pore Volume
Water Volume
Water Saturation =
Pore Volume
water rock
particle
0 < So, Sg, Sw < 100
So + Sg + Sw = 100
Sonatrach / IAP
Capillary Pressure (Pc)
Capillary pressure is defined as the difference between the pressure in
the non‐wetting phase and the pressure in the wetting phase, across the
interface of two immiscible fluids
Pc = Pnw ‐ Pw
Po
oil‐water: Pc = Po ‐ Pw
Pw
gas‐liquid: Pc = Pg ‐ Pliq
Note: By convention, the Pc in an oil‐water system is defined as

(Po ‐ Pw), independent of the wetting phase
Sonatrach / IAP
Notion of capillary pressure
2r
2σ cos θ
Pc = PA - PB =
r 
PB = Patm- h (w-air) g A
Pc= h (w-air) g B h
Air
Depends on :
 Wettability (
Water
 Pore diameter (2r)
 Interfacial tension ()
 The capillary pressure corresponds to the pressure difference
between two fluids in equilibrium in a capillary tube
Sonatrach / IAP 111
Statics of fluids in porous media
CAPILLARY PRESSURE IN A POROUS MEDIUM:
tubes analogy
2r
Air
PC
Air

A
h Pcd
B
0 SW 100
2 cos 
PC 
Water Water r
r : different pore radii PC=f (S)
For a fixed Pc we can calculate the corresponding r
Every pore with radius < r is filled with wetting phase
Sonatrach / IAP 112
Tubes Analogy
Sonatrach / IAP 113
Transition zone
Pc = Po-Pw
Reservoir at
or depth
Swirr
Po Pcd
Pc P entry
Pw
WOC Transition Pc
FWL
Bottom aquifer Swirr 100
Sw
WOC = Water Oil Contact (Sw=1)

FWL = Free Water Level (Pc=0)
Sonatrach / IAP 114
Practical use of electrical measurements
Sonatrach / IAP 115
Reconciling Sw data
Sonatrach / IAP 116
J‐Function
Same FWL
• Attempts to “collapse” several Pc curves into a single trend by
accounting for differences in k and  J  0.217  Pc  k
cos( )
• May need to zone the reservoir and develop different J‐
functions for each zone
• Zonation typically done by lithology, reservoir quality, or any
other means available
• “Normalize” Pc values for changes in k and 
• Plot data from several samples on a single plot and determine a
best‐fit J(Sw) curve
• Not to be confused with another J, (productivity index) = flow
rate / pressure drawdown
Sonatrach / IAP
Endpoint Saturations
When two or more immiscible phases are present in the pore space, the
saturation of any one phase is rarely zero or unity
Irreducible Water Saturation, Swirr Residual Oil Saturation, Sor
Immobile water Immobile oil (Practical & Minimum)
Typical initial reservoir condition far above OWC So cannot be reduced by further flushing with
or GWC water
Sonatrach / IAP
Wettability
Wettability is the tendency of a fluid to adhere to a solid surface
(i.e., “wet” the surface) in the presence of another immiscible fluid
 Function of surface chemistry and surface forces
 Affects the relative location of the fluids within the pores,

which in-turn affects multi-phase flow behavior
“Water Wet” “Neutral Wet” “Oil Wet”
( = 0 ‐ 60°) ( = 60 ‐ 120°) ( = 120 ‐ 180°)
 < 60°  = 90°  > 120°
oil
water
rock rock rock
Sonatrach / IAP
Pore-Level Schematic of Wettability Concept

Initial Reservoir Conditions
water wet
Water‐Wet Mixed‐Wet
oil wet
• All pores water wet • Large pore oil wet
• Small pores water wet
Sonatrach / IAP
Imbibition and Drainage
Imbibition
Wetting phase enters pores and displaces non-wetting phase
(e.g., water injection into oil zone in a water-wet or mixed-wet rocks)
Irreducible water Midway Residual Oil

Saturation Transition Saturation
Drainage
Non-wetting phase enters pores and displaces wetting phase
(e.g., hydrocarbon migration into aquifer over geologic time)

Sonatrach / IAP
Saturation Functions
2 Capillary pressure
vs. Sw for
water drainage
1.0 and imbibition
IRREDUCIBLE WATER
Water - Oil 1
RESIDUAL OIL
Relative permeability 3
Relative permeability, kro and krw
0.8
IRREDUCIBLE WATER
Capillary pressure Pc = Po - Pw
RESIDUAL OIL
0.6
Oil
Positive
Water
0.4 1
0 1.0
Negative
0.2
2
0.0
0.0 0.2 0.4 0.6 0.8 1.0
Water saturation, Sw 3
0.0 0.2 0.4 0.6 0.8 1.0
Water saturation, Sw
Sonatrach / IAP 122
Wettability & Hysteresis in Relative Permeability
1.0
1.0
kro
0.8 0.9
Relative Permeability (frac Ko @ Swi)

0.8 Hebron
mixed
0.6 wet 0.7
0.6
0.4 krw
0.5
Hibernia
water
0.2 wet
0.4
Hibernia
0.3
0.0
0 20 40 60 80 100 0.2
Hebron
Water Saturation 0.1
0
0.0 10 20 30 40 50 60 70 80 90 100
Water Saturation (frac PV)
Wettability is indicated by the crossing ‐
point Oil & krw, end‐point
Since Pc, Kr curves are saturation history‐dependent,
transition between primary drainage and imbibition should
be used as scanning curves.
Sonatrach / IAP
 Rock Properties
 Fluid Properties
Sonatrach / IAP 124
gas
Separator
Psep. ‐ Tsep. oil
Pt
Production tubing
Vo Reservoir : Pr, Tr
Pwf
Sonatrach / IAP 125
Vapor pressure curve of C2H6
60
C

Critical Pressure
50
Liquid
Pressure (bar)
40
30
Critical Temperature
20
Vapor
10
0
‐40 ‐20 0 20 40 60
Temperature (°C)
Sonatrach / IAP 126
PURE COMPONENT
Clapeyron P ‐ V Curve
Pressure
T3
T2
T1
A
C
L
V
Psat B R
Bubble Dew point
point
L+V Saturation curve

Volume
Sonatrach / IAP 127
3 dimensional diagram of pure component system
Sonatrach / IAP 128
Liq‐Vap equilibrium
Pc C
Pressure Pure component
L
Temperature Tc
Cricondenbar
C
Mixture Pc
L
Cricondentherm
Pressure
75% L + V
50%
25%
0% Liq V
Temperature Tc
Sonatrach / IAP 129
Phase envelope of a mixture P ‐ V
Pressure
T3
T2
T1
C
L
V
Psat Bubble
point
Dew point
L + V
Volume
Sonatrach / IAP 130
Under saturated oil
Under saturated
oil
Pres
C
Pressure
L + V
Tres.
Temperature
Sonatrach / IAP 131
Saturated oil
C
Pressure
Saturated
oil
Pres. L + V
Tres.
Temperature
Sonatrach / IAP 132
Condensate gas
Condensate
gas
Pres.
C
Pressure
L + V
Tres.
Temperature
Sonatrach / IAP 133
Wet gas
Wet
gas
Pres.
C
Pressure
L + V
Psep.
Tsep. Tres.
Temperature
Sonatrach / IAP 134
Dry gas
Dry
gas
Pres.
C
Pressure
L + V
Psep.
Tsep. Tres.
Temperature
Sonatrach / IAP 135
 Rock Properties
 Fluid Properties:
• Oil and gas behaviour between the reservoir and surface
Sonatrach / IAP 136
Main oil properties: example
Reservoir conditions 200 m³ gas
1 m³ oil Surface conditions
0,8 m³ oil
Formation volume factor (FVF) :
Bo = 1/0.8 = 1.25 m³/m³
Gas oil ratio :
GOR = 200/0.8 = 250 Sm³/m³
Sonatrach / IAP 137
Main oil properties
Bo
1.9
45°API
P sat
1.6
P sat
1.3 30°API
1.0
200 400 500 P (bar)

100 300
Sonatrach / IAP 138
Correlations
 From experimental data obtained from a great number of fluids,

various authors have established useful correlations concerning
hydrocarbons fluids
• Bubble point pressure
• Volumetric Factor
• Viscosities
• Densities
• Compressibility Factor
 Using little experimental data, one can obtain relatively precise

figures concerning fluid properties (whether it is oil or gas)
 PVT consistency (measurements) can be checked using
correlations
Sonatrach / IAP 139
Pb and GOR
GOR = 350 g = 0.75
T = 180°F
o = 30 API
Pb = 1900 psi
Sonatrach / IAP 140
Main gas properties
Reservoir conditions 200 m³ gas
1 m³ gas
Surface conditions
0,2 m³
condensate
Formation volume factor :
Bg = 1/200 m³/m³
Ratio condensate/gas :
CGR = 0.2/200 = 0.001 Sm³/m³
Sonatrach / IAP 141
Main gas properties
Vgres Pstd Tres

Bg = Pres x Vres = Z x R x Tres Bg = x Zx
Vgstd Pstd x Vstd = 1 x R x Tstd Tstd Pres
Eg = 1 / Bg
°R
Field Units
ZxT
Bg = 0.028269 x vol/vol
Pstd = 14.7 psia Tstd = 520 ° R
460 +60°F(T st.)
P psia
Metric Units °K
ZxT
Bg = 0.00352 x vol/vol
Pstd = 1.01325 barsa Tstd = 288 ° K
273+15(Tst)
P bars a
SI Units °K
ZxT
Bg = 351.8 x vol/vol
Pstd = 101325 Pa (a) Tstd = 288 ° K

P
Pa
Vol of 1 mole of gas at std conditions {1 atm, 288 K (15°C)} : 23.63 dm3
Vol of 1 mole of gas at normal conditions {1 atm, 273 K (0°C)} : 22.414 dm3
Sonatrach / IAP 142

Geological Modeling
Xavier LOPEZ
Sonatrach / IAP
OUTLINE
 INTRODUCTION
 KEY MODELING ASPECTS
 MODEL PROPERTIES: POROSITY
 MODEL PROPERTIES: PERMEABILITY

 MODEL QUALITY CHECK
Sonatrach / IAP 144
Objectives
Models are built to:
 To understand and capture the spatial distribution of rocks and
fluids
 Compute hydrocarbon accumulation in a reservoir
 Predict dynamic behaviour:
• production and
• reserves
 Contribute to the field development
Sonatrach / IAP 145
INTRODUCTION
 The Geological Model
 Our representation of the structure, stratigraphy,
and rock properties of a reservoir in the subsurface
 Or put it simply: a simplified approximation of a

complex and unknown reality
 A geocellular model is a collection (discretization)

of cells (3D grid) populated with rock property
information stored at the center of the cells (mainly
porosity, permeability and saturation)
 Most commonly used as input to reservoir dynamic

simulation to predict RATES & RECOVERABLE
VOLUMES in order to optimize field development

plans
Sonatrach / IAP 146
INTRODUCTION
 By definition static: the repository for all reservoir description and
characterization
Geologic
Outcrop Information Concepts
Core Data
Well Logs
3D Seismic
Sonatrach / IAP 147
INTRODUCTION
 But it’s also usually the « input » into the dynamic model (remember
the global objectives!)
 Porosity and permeability distributions
 If present, aquifer type, strength and size
 Location and throw of faults (vertical or inclined), sealing or open
 Vertical and areal reservoir compartments
 Fluid contacts (multiple contacts, PVT regions)
 Lithofacies and their petrophysical characteristics
Geological
Model
Upscaling
Reservoir Model
Sonatrach / IAP 148
INTRODUCTION
 Constructing a static model
 The construction of a reservoir static model (a.k.a. geocellular model)
is a key element in the traditional workflow:
 Build most-likely model up front
 Put in the model every possible detail you can think of
 Throw-over-fence to the reservoir engineer
 Get transferred to new project immediately! (and change name preferably)
 The « reservoir squeeze » effect*
Hard
Deadline
Planned Geologic Interpretation Geologic Modeling Engineering
Geologic
Actual Geologic Interpretation Modeling
Engineering
 Integration means it’s in everybody’s interest to work together
* An ExxonMobil proprietary process
Sonatrach / IAP 149
INTRODUCTION
 The scaling issue
 How would you build a model with
data that are measured or defined 10,000
entirely outside the resolution range

of your model? 1,000
ft
Seismic
Resolution,
Resolution, ft
 Scaling is not just a process between 100
the geological and reservoir grids Well Test

Vertical
10
Vertical
 Sometimes data need to be scaled- Log
down as much as up 1.0

Geologic Model
Core
0.1
 Scale, and the effort (or rather 0.1 1.0 10 100 1,000 10,000
expected success) needed to adjust Areal Resolution, ft
the data should guide your choices
on how to populate de model cell

properties
Sonatrach / IAP 150
Main Challenge is to model heterogeneities
Scale
0 5m
DOLOMITE
Dolomitization
front
Bedding
LIMESTONE
Sonatrach / IAP 151
Main Challenge is to model heterogeneities
Sonatrach / IAP 152
KEY MODELING ASPECTS
 The model framework
 Essentially the “container” for all model properties
 Acts as the primary control on volume & fluid flow
 Typically most difficult & time-consuming step in modeling
 Integration dictates that the engineer must be involved with the
structure generation: Faults, Layering, Grid Orientation,…
Sonatrach / IAP 153

 The model framework
 Typical workflow:
 Add seismically-defined surfaces (Time or Depth domain - should include top &
base reservoir, if possible, for isochore control)
 Add faults (Time or Depth domain - Try to keep number as practical as possible)
 Set model grid cell size to form the model skeleton (hopefully in conjunction with
engineer)
 Add sub-seismic zones (Depth domain using well tops, isochores, surfaces,…) to
represent flow units, pressure compartments,…
 Add layering (architecture, thickness)
Zones
Sonatrach / IAP 154
 Geological Layering
 Objective is to find optimal number of layers in simulation model
 Must honor geological features
 Must honor well observations (RFT, PLT, logs)
 Must resolve well completion
 Flow units:
 Should correlative (recognizable on logs) & mappable at inter-well scale
 May be in communication with other flow units
 May exhibit only weak flow or no flow!
 Can be a mixture of lithologies
 Integration of data is needed!
A flow unit is a mappable portion of the total reservoir within which geological &
petrophysical properties that affect the flow of fluids are consistent & predictably
different from the properties of other reservoir rock volumes
Ebanks (1987)
Sonatrach / IAP 155

 Honoring observations: Example
3000 3100 3200 3000 3100 3200
I
I
ù ù
ù +10
ù
ù
ù 0
ù
ù
ù
ù ù -10
DEPTH (m) below OWC
ù
ù
ù
-20
ù
ù
ù
ù -30
ù ùù 210 kPa
-40
ù
ù
ù ù -50 550 kPa
ù
ù
-60
PRESSURE PRESSURE
0.721
0.722
0.723
0.724
, psi , psi
 Continuous layers of either very high permeability or very low permeability
must be respected:
 A thin very permeable layer must be represented
 A shale barrier is a good place for a layer interface
Sonatrach / IAP 156
 Each zone can be layered differently & independently
 Must consider geological as well as dynamic aspects: gas override,
contact movements,…
Top-conforming layering mimics

gross bedding & allows
continuous top reservoir
Base-conforming layering
counter to gross bedding &
creates pinch-outs
Sonatrach / IAP 157

 Modeling Faults
 Faults can cause blocks of the reservoir to move up, down or lateral
relative to one another
 As a results, they enhance, reduce and/or change the large-scale flow
characteristics of a field:
Compartmentalization
Juxtaposition of Reservoir
to Reservoir
Juxtaposition of Reservoir
to Non-reservoir
Enhanced Flow-Zones
Sonatrach / IAP 158
 Modeling Faults
 Since we think in an integrated manner, we realize that faults are
usually problematic in dynamic simulations
 Generally, the number of faults will have to be reduced when building
the dynamic simulation grid.
 Main considerations should be:
 Fault complexity (e.g., “Y” faults)
 Amount of throw (faults not juxtaposing reservoirs may not be needed)
 Do we need faults “outside” the hydrocarbon column?
 Perceived effect on flow
 Example:
Geological model Reservoir model
Sonatrach / IAP 159

 Modeling Faults
 Faults are often modeled as polylines with modified integer property
 “Faults” become transmissibility barriers/baffles in simulation
 Be careful: this cannot preserve juxtaposition cross-flow
Sonatrach / IAP 160
MODEL PROPERTIES
 POROSITY
 Porosity input into the geological
model is usually from core and log 10,000
values
 Resolution scale overlap allows for 1,000
ft
Seismic
calibration of datasets one against
Resolution,
Resolution, ft
another 100
Well Test
But areal size of common geological
Vertical
 10
models imposes scaling-up of values
Vertical
Log
1.0
Geologic Model
 Porosity between wells (i.e. aerially) Core
usually distributed in the model 0.1
either using interpolation between 0.1 1.0 10 100 1,000 10,000
wells or geostatistical techniques Areal Resolution, ft
(may be done on the entire model, as
well as per geological facies)
Sonatrach / IAP 161
MODEL PROPERTIES
 POROSITY J-2D
DEPTH
PHI_CORE_1
0.2 V/V 0
METRES
K_CORE_1 SWE_1 VOL_UWAT_1

0.01 MD 1000 1 V/V 0 0.2 V/V 0
Core vs. Log porosity

GR_1 RT_1 SWE_1 PHIE_1
 0 GAPI 100 0.01 OHMM 1000 1 V/V 0 0.2 V/V 0
Core porosity
1515
 Differences may be due to nature

of measurements: effective porosity 1520
vs. connected one

1525
 In general, should correlate well

in most wells 1530
 A good correspondence (as in our

Log porosity
1535
case) increases confidence in the

model adequacy 1540
 If sufficient core data was

1545
gathered, then the core porosity profile

may be used to condition the model 1550
(log profiles are used most commonly)

1555
Sonatrach / IAP 162
MODEL PROPERTIES
 PERMEABILITY
 Usually the trickiest and yet the most
important dynamic parameter 10,000
 Available dynamic data only come

from core plugs and well test results 1,000
ft
Seismic
(and possibly PLT’s if available)
Resolution,
Resolution, ft
100
 Understanding the relationship Well Test
between the test and core results is
Vertical
10
key to ensure the model will be
Vertical
Log
appropriate 1.0
Geologic Model
Core
 Scaling considerations suggest that 0.1
permeability values obtained from 0.1 1.0 10 100 1,000 10,000
tests to be some « average » of many Areal Resolution, ft

core permeability values
Sonatrach / IAP 163
MODEL PROPERTIES
 PERMEABILITY
 « K » usually means different things
to different people
 Core measurements usually refer to
absolute permeability (e.g. air
permeability)
 Results may be impacted by:

 Cleaning procedures
 Sampling representativeness
 Slippage correction
 Overburden correction
Sonatrach / IAP 164
MODEL PROPERTIES
 PERMEABILITY
 « K » usually means different things
to different people
 Well test measurements usually refer
to effective permeability (i.e. at
reservoir saturation, temperature and
pressure)
K eff  K abs
 Results may be impacted by: 10 2
 Large-scale heterogeneities  ps
 Data quality
 Multi-phase flow 10 1
 Flowing and shut-in periods
 p'st
 The interpreter!
10 0
10 -2 10 -1 10 0 10 1 10 2
t
 t HOURS
Sonatrach / IAP 165
MODEL PROPERTIES
 PERMEABILITY
 Averaging
 Dependent on the spatial
distribution of permeability
values
 Kharm < Kgeo < Karith
Harmonic average for flow perpendicular to layering

Arithmetic average for flow parallel to layering
1
k harm 
1 1 
k1   
k2
n kn 
k1
- Gives higher weight to the lower
k3 k2 permeability values
k3 - Used to calculate average k of

1
k arith   kn
composite core
- Often used to average vertical
n permeability
Sonatrach / IAP 166
MODEL PROPERTIES
 PERMEABILITY
 Averaging
 Various studies have shown that the aggregate absolute permeability
can be represented by a power average
K 

 i 1 Ki 
 1 n
power
n
 Statistically,  will vary between the lower harmonic bound ( = -1) to
upper arithmetic bound ( = +1)
 The questions remains: how to decide on the value of 
 For each well, determine the value of a that gives the best match to
the well test results:
 If consistent, use for all wells (homogeneity indication)
 If variable, investigate possible local differences (heterogeneity
indication)
Sonatrach / IAP 167
OUR CASE EXAMPLE: JOANA

 Joana-2 well
 Test results:
 Ktest = 2.62mD
Core results:
PERFS.DESCRIPTION_1

Karith = 19.9mD
CORE_NO_1
ELEVATION(TVD)
DST_2.DST_1
0 25

DST.DST_1
VOL_UWAT_1
0.25 V/V 0
Kharm = 0.1mD
S
SWE_1 PHI_CORE_1 PHIE_1

METRES
1 V/V 0 0.25 V/V 0 1 V/V 0P

GR_1 SWE_1 PHIE_1 VSH_1 RESE
0 GAPI 100 1 V/V 0 0.25 V/V 0 0 V/V 1
 K1/3 = 1.43mD
-1085   needed to fit Ktest : 
-1090
25
Fit line
20 Karith
K average (mD)
-1095
15
Kharm
-1100
K1/3
10
-1105
5
-1110
0
-1115 0 1 2 3 4 5
Ktest (mD)
Sonatrach / IAP 168
 Joana-3 well
 Test results:
 Ktest = 2.49mD
Core results:
PERFS.DESCRIPTION_1

Karith = 9.24mD
CORE_NO_1
ELEVATION(TVD)
DST_2.DST_1
0 10

DST.DST_1
VOL_UWAT_1
0.25 V/V 0
Kharm = 0.11mD
S

METRES
1 V/V 0 0.25 V/V 0 1 V/V 0

GR_1 SWE_1 PHIE_1 VSH_1 RES
0 GAPI 100 1 V/V 0 0.25 V/V 0 0 V/V 1
 K1/3 = 0.88mD
 needed to fit Ktest : 
-1085

-1090
20
18 Fit line
-1095
16 Karith
K average (mD)
14
-1100 12
Kharm
10 K1/3
-1105 8
6
4
-1110
2
-1115
0
0 1 2 3 4 5
-1120 Ktest (mD)
Sonatrach / IAP 169

 Joana-4 well
 Test results:
 Ktest = 1.13mD
Core results:
PERFS.DESCRIPTION_1

Karith = 6.22mD
CORE_NO_1
DST_2.DST_1
ELEVATION(TVD)
0 10

DST.DST_1
VOL_UWAT_1
0.25 V/V 0
Kharm = 0.1mD
SA

METRES
0
1 V/V 0 0.25 V/V 0 1 V/V 0P
0
GR_1 SWE_1 PHIE_1 VSH_1 RESE
0 GAPI 100 1 V/V 0 0.25 V/V 0 0 V/V 1 0
 K1/3 = 0.34mD
-1075
  needed to fit Ktest : 
-1080
20
18 Fit line
16 Karith
K average (mD)
-1085
14
12
Kharm
-1090
10 K1/3
8
-1095
6
4
-1100
2
0
-1105
0 1 2 3 4 5
Ktest (mD)
Sonatrach / IAP 170
 PERMEABILITY
 Joana interpretation
 How should we interpret the differences?
 Remember Ktest is based upon « interpretation »
 Well test analysis estimates Kh: h should be the contributing thickness
 Core averaging results suggest low permeability heterogeneities have a
strong impact on well flow
 Results for an average a value of 0.45 are quite close => local
heterogeneities distributed across the field
10
9 Fit line
8 K0.45 ‐ All wells
K average (mD)
7
6
5
4
3
2
1
0
0 1 2 3 4 5 6 7 8 9 10
Ktest (mD)
Sonatrach / IAP 171
OURResults
Final CASE EXAMPLE: JOANA
 Joana-2 well
ELEVATION(TVD)
ELEVATION(TVD)
PERFS.DESCRIPTION_1
FACIESLITH.VALUE_1
CORE_NO_1
SHOWS_1
RHO_MAA_1 K_CORE_1 PHI_CORE_1 CALCI_3MN_1 SAND_1

METRES
METRES
2.5 G/C3 3 0.01 MD 1000 0.2 V/V 0 100 0 0 1.4

DENS_CORE_1 RT_1 SWE_1 VOL_UWAT_1 PHIE_1 PAY_1
2.5 K
3 0.01 OHMM 1000 1 SW V/V PHIE
0 0.2 V/V 0 1 V/V 0 0 3
GR_1 K_EZT_1 SWE_1 PHIE_1 VSH_1 EF_EZT_1 RESERVOIR_1
0 GAPI 100 0.01 MD 1000 1 V/V 0 0.2 V/V 0 0 V/V 1 0 10 0 1.8
Call_Sup
-1095 -1095
Ktest
-1096
-1100 -1100
-1105 -1105
Call_Inf
-1110 -1110
-1115 -1115
-1118
-1120 -1120
Bathonien
-1125 -1125
Sonatrach / IAP
OURResults
 Joana-3 well
PERFS.DESCRIPTION_1
ELEVATION(TVD)
ELEVATION(TVD)
FACIESLITH.VALUE_1
CORE_NO_1
SHOWS_1
0 100 0
METRES
METRES
2.5 G/C3 3 0.01 MD 1000 0.2 V/V 0 1.4
2.5
GR_1
3 0.01
K K_EZT_1
OHMM 1000 1
SWSWE_1
V/V 0 0.2
PHIEPHIE_1
V/V 0 1 V/V
VSH_1
0
EF_EZT_1
0 3
RESERVOIR_1
0 GAPI 100 0.01 MD 1000 1 V/V 0 0.2 V/V 0 0 V/V 1 0 10 0 1.8
-1095 -1095
Call_Sup
-1100
Ktest -1100 -1100
-1105 -1105
-1110 -1110
Call_Inf
-1115 -1115
-1120 -1120
-1121
-1125 -1125
Bathonien
-1130 -1130
Sonatrach / IAP
OURResults
 Joana-4 well
PERFS.DESCRIPTION_1
ELEVATION(TVD)
ELEVATION(TVD)
FACIESLITH.VALUE_1
CORE_NO_1
SHOWS_1

0 100 0
METRES
METRES
2.5 G/C3 3 0.01 MD 1000 0.2 V/V 0 1.4

2.5 3 0.01 OHMM 1000 1 V/V 0 0.2 V/V 0 1 V/V 0 0 3
GR_1 K K_EZT_1 SWSWE_1 PHIE
PHIE_1 VSH_1 EF_EZT_1 RESERVOIR_1
0 GAPI 100 0.01 MD 1000 1 V/V 0 0.2 V/V 0 0 V/V 1 0 10 0 1.8
Ktest
-1085 -1085
Call_Sup
-1088
-1090 -1090
-1095 -1095
Call_Inf
-1100 -1100
-1105 -1105
-1110 -1110
-1110
-1115 -1115
Bathonien
-1120 -1120
Sonatrach / IAP
 PERMEABILITY
 Joana interpretation
 How should we interpret the differences?
 Remember Klog is based upon some pre-defined K- laws
 Tests results are still within observed range
1000 1000
CORE_SH.K_CORE_1 (MD)
100 100
10 10
1 1
0.1 0.1
0.01 0.01
0.050
0.100
0.150
0.000
0.200
Tests
CORE_SH.PHI_CORE_1 (V/V)
Rock-Types
0 9
Color: Maximum of FACIES_EZT.EF2ANDEXT_1
Wells:
Sonatrach / IAP 175
MODEL PROPERTIES
 PERMEABILITY
Logging Speed
 Flowmeter logging 4450 m/min
10 20 30
 Often run during production logging
 Allows for permeability profiles to be derived 4500
Isolation Profile
 Ideal for comparison with core measurements 4550
 Deviations between derived k profiles can be

indications of: 4600
 Skin/near wellbore effects

4650
 Large scale heterogeneities affecting flow Isolation Profile
RPS
4700
Perforations
4750
0 50 100
RPS
SPE 65122: Conditioning Geostatistical Models to Flow Meter Logs
Sonatrach / IAP 176
MODEL QUALITY CHECK
 MODEL INTERROGATION
 Quality control of a geologic model involves
 Checking that the model honors input data & concepts
 But also that the model reproduces known fluid behavior
(in a dynamic sense => global objectives)
 A model is BY NATURE non-unique
 Quality-checking models is also all about integration
 Sensible checks include (but not limited to):

 Model discrete statistics (compared with geological settings)
RPS
 Properties histogram (compared with core and log data)
Sonatrach / IAP 177
MODEL QUALITY CHECK


 Facies proportions (compared to input fractions)
RPS
 In-place volumes (compared to previous estimates, material balance)
Sonatrach / IAP 178
MODEL QUALITY CHECK

 Porosity-permeability crossplots (compared to core data)
RPS
 Visual inspection (compared with geological settings)
Sonatrach / IAP 179
SUMMARY
 GEOLOGICAL MODELING
 3D Geocellular models are one of the possible representations of the
subsurface Φ, K & Sw used as input to simulation
 A simplified approximation of a complex and unknown reality
 A «successful » modeling workflow invariably goes through

integration of data, disciplines, people
RPS
 Scale is a convenient guide for integrating results…but do not always

expect agreement between data/results
 Geological modeling is not just for geologists: engineering judgment

is also critical (structure, orientation, layering, faults,…)
Sonatrach / IAP 180
SUMMARY
 GEOLOGICAL MODELING
 Sufficient agreement between porosity data should exist
 Permeability usually remains the most difficult parameter to model:

impact of heterogeneities for example
 « Appropriate » averaging of core permeability may help comparison

(or not)
RPS
 Remember well test derived permeability values are also a question

of « interpretation »
 In the end, a « good model », is the simplest one that will reproduce
(and predict) dynamic results from your field
Sonatrach / IAP 181
Reservoir Simulation ‐ Upscaling
Xavier LOPEZ
OUTLINE
 INTRODUCTION
 CONCEPTS
 GRID AGGREGATION
 STATIC PROPERTY SCALING
 SINGLE-PHASE PROPERTY SCALING
 MULTI-PHASE PROPERTY SCALING

Sonatrach / IAP
INTRODUCTION
 The Geological Model: « input » into the dynamic model
 The repository for all reservoir description and characterization
 Usually not practical to run full-field simulation at the geological scale
 How long did it take for a full-field simulation model to run 15 years ago? => 1 night
 How long does it take for a full-field simulation model to run today? => 1 night!
 Today it takes about ~1day to run models with 500,000 cells, so it would take ~20days
to run a 10,000,000 cells model
 Need overnight turn-around to run large number of cases to optimize development or
history match field results in reasonable time
Geological
Model
Upscaling
Reservoir Model
Sonatrach / IAP
INTRODUCTION
 Back…to the scaling issue
 Rocks are heterogeneous at all scales
 Pore, cores, layers, bodies,…
4.9mD
 Measurements are made at all scales
 Plugs, logs, well tests, seismic
1270mD
 Models cannot account for all levels of

865mD
heterogeneities
 Homogenization is the process of bringing all 1.6mD
types of information to a « common » scale St

y lo
l ite
Minipermeameter
Sonatrach / IAP
CONCEPTS
 Questions you may be asking yourselves…
 Isn’t some homogenization taking place already when building
the geologic model? (after all, it’s not at the core-plug scale)
 YES!
 Geological model based upon core, log, dynamic information
 Averaging rules may be used to incorporate all the data
 Geostatistics are used to populate the entire model
 But model remains dependent on geological interpretation
Sonatrach / IAP
CONCEPTS
 Then, if we have to homogenize anyway, why not build one simpler,
less-detailed model to be used directly for simulation?
 It can be done
 Some company workflows use « common-scale » models for static and
dynamic models
 Homogenization is only performed once
 Facilitates workflow and model update (both engineers and geologist
working on same model)
Landis & Benson (ExxonMobil) 2005:

Reservoir Evaluation Time Reduction (RETR): An Iterative,
Common-Scale Modeling Approach (SPE- IPTC 10639)
 But, it is difficult to know in advance how much detail is needed (as a

result, grid may not capture essential features)
 Fine static models introduce greater geological realism
Sonatrach / IAP
CONCEPTS
 Are we not losing information in the process?
 YES
 Some loss of information is inevitable => cannot build a reservoir model
at the pore-scale!
 But remember the global objectives: how much information do we really
need to achieve our goals? (predicting field rates for example)
 Proper grid design is essential to retain level of detail and accuracy
 The golden standard is always to compare dynamic results between fine
a upscaled models (but it has a cost)
Oil Recovery (%)
Optimized
Geology
Geologic Fine grid
300 Layers Simulation grid Simulation

20 Layers
0 10 20 30
Years
Sonatrach / IAP
CONCEPTS
 Variables to upscale
 Homogenization difficulties varies depending on the properties of
interest
 Some properties are additives:
 , NTG, Sw (extensive variables)
 Volume averages can be used
 Other properties require more complex techniques:

 Absolute permeability
 Relative permeability
 Capillary pressure
 Dynamic properties usually require multi-method approach:

 Averaging
 Analytical solutions
 Small-scale simulations
Sonatrach / IAP
GRID AGGREGATION
 Grid Construction
 Usually the 1st step in homogenization process: deciding on the size of
the upscaled grid
 Aggregation rate typically used to quantify model cell reduction number
 Example: aggregation rate 5x5x4
 Deciding on appropriate aggregation is usually not a trivial exercise
Sonatrach / IAP
GRID AGGREGATION
 Grid Construction
 Suggestions
 Areal and vertical aggregation are better treated separately
 Correlation lengths of properties can be used as a guide

 Large-scale heterogeneities (barriers or drains) should not be entirely within
coarse cell
 If correlation length << than gridblock size, than homogenization theory will be
more accurate
 Suggested workflow: - Define geological concepts

- Build coarse grid and faults (this way faults won’t lie
inside grid cells)
- Refine grid to create geological grid
- Populate geological grid with properties
- Upscale properties back to original coarse grid
Sonatrach / IAP
GRID AGGREGATION
 Grid Considerations
 Cell size
 Small size cells may be required at wells to resolve rapid changes in
pressure and saturation: e.g. 30-50 m is often required when coning effects
are large
 Cell size must appropriately represent geological heterogeneities
 Areal grid must be fine enough to resolve thin oil rims
 Guidelines (when feasible):
 3+ cells across channels
 Simulation to be 2 geologic cells in width
 2+ cells between wells (excl. those containing the well itself)
 Faults
 Slanted vs. vertical
 In highly segmented reservoirs, it is often critical to accurately represent
fault geometries
Sonatrach / IAP
GRID AGGREGATION
 Upscaling and Gridding are intrinsically linked
 Grid choice will directly impact the upscaling process
 Number of cells (laterally and vertically) is usually a constraining parameter
 Judicious choice of grid can help resolve important geological features
without need for retaining large number of cells:
 Faults (slanted or vertical)
 Pinch-out, channels,...
 Can help eliminate « non-essential » cells
 Layering scheme
well
well
What grid would you chose to

represent coning behavior?
100 cells 96 cells
Sonatrach / IAP
GRID AGGREGATION
 Objective is to find optimal number of layers for simulation grid
 Preserving heterogeneity that influences flow behavior is key
 Layers ought to:
 Be thin enough to resolve completions
 Resolve contacts (very significant in oil rims)
 Thin layers may need to be preserved to resolve effects of gravity

on saturation
 Thin layers may need to be preserved above shales to represent
water at the bottom
 Thin layers may need to be preserved below shales to represent gas
at the top
 Thin layers may need to be preserved to resolve near-wellbore
movement of contacts
 Suggestions: 2-5 m seems should be adequate in many cases
Sonatrach / IAP
GRID AGGREGATION
 Example: Gas override
 Fine model: Kh = 300mD, Kv/Kh = 0.1, Dz = 0.5m
 Reservoir contacted by gas: 8%
 Breakthrough time: 170days
 Coarse model: Kh = 300mD, Kv/Kh = 0.1, Dz = 4m

 Coarse model: Kh = 300mD, Kv/Kh = 0.1, Dz = 0.5 &

4m

Sonatrach / IAP
GRID AGGREGATION
 Some optimization techniques exist
 Selection of optimized layering based on minimization of fine and upscaled
grid flow properties
 Example: ExxonMobil Optimized Layer Selection algorithm
Permeability, Geologic Model (100 Layers) Permeability, Simulation Model (20 Layers)
Optimization
Error in Sweep Efficiency

50
40
Error, %
30
20
10
0
Stern & Dawson(ExxonMobil) 1999:
0 20 40 60 80 100
A Technique for Generating Reservoir Simulation Grids
to Preserve Geologic Heterogeneity (SPE 51942) Number of Simulation Layers
Sonatrach / IAP
STATIC PROPERTY SCALING

 POROSITY UPSCALING
 Arithmetic average weighted by net volume
 coarse is upcaled using
n n
i  Vi net
i i i
  ntg  V bulk
 coarse  i 1
n
 i 1
n
Vi
i 1
net
 i i
ntg
i 1
 V bulk
 Requires prior knowledge of fine-scale net-to-gross values

 Should normally reduce variance around mean value of distribution
(porosity histogram for QC)

 Allows coarse pore volume to be computed: coarse x Vbulk x NTGcoarse
Sonatrach / IAP
 NET-TO-GROSS UPSCALING
 Arithmetic average weighted by bulk volume
 NTGcoarse is upcaled using
 i i
ntg  V bulk
NTGcoarse  i 1
n
V
i 1
i
bulk
 Fine-scale ntg computed from proportions of reservoir to non-reservoir

facies
 Correct if Vporous for non-reservoir facies is 0
 Remember fine-scale ntg are usually derived from choice of cut-off criteria
 Facies modeling may be used a substitute
Sonatrach / IAP

 FACIES UPSCALING
 Based on rock-type proportion: discrete mean (“most of”)
 Proportions should be pore-volume weighted
 Quality check should be performed at well and field levels
 Care should be taken if upscaling process used bulk-volume weighting
Sonatrach / IAP
SINGLE-PHASE PROPERTY SCALING
 ABSOLUTE PERMEABILITY UPSCALING
 The objective of homogenization is to reproduce single-phase flow
 Given the same boundary conditions, what effective permeability will give
rise to the same fluxes?
 Solutions include:
 Simple averaging methods
 Analytical methods
 Numerical methods
Sonatrach / IAP

 Averaging methods
 Dependent on the spatial distribution of permeability values
 Arithmetic average for layering parallel to flow
1 n
K arith   Ki
n i 1
 Harmonic average for layering in series with flow
1
K harm 1  1 in1 Ki 
 Kharm < Karith n
 Statistically, one can show that the aggregate absolute permeability can
be represented by a power average
K 



1 n
 i  K 
n i 1
power
 Where  vary between the lower harmonic bound ( = -1) to upper

arithmetic bound ( = +1): but requires a-priori “knowledge” of 
Sonatrach / IAP
 Averaging methods: example
 Power average
K 

1 10 100 1


1 n
 i  K 
n i 1
power
Q 10 0 0 1
100
1
1
100
10
10
0
10
0
10
100
1
?
25  Kpower Kharm
‐1 0.33
20 ‐0.5 0.41
Kpower ‐0.33 0.48 Dominated by lower values
15
KC&D
Kpower
‐0.1 0.67
10 0 0.80
Kgeo
0.1 1.00
5
0.33 1.86
Dominated by higher values
0 0.5 3.25
‐1 ‐0,5 0 0,5 1 1 23.30
 Karith
Sonatrach / IAP

 Analytical methods
 Approach developed by Cardwell & Parsons (1945)
 Keff taken as geometric mean of defined upper and lower bounds
 Lower bound K-C&P : arithmetic average of (harmonic averages by row)
Q Kharm of rows Karith K-C&P
 Upper bound K+C&D : arithmetic average of (harmonic averages by row)
Q
Karith of columns Kharm K+C&P
 By construction: Kharm < K-C&D < KC&D < K+C&D < Karith
KC& P  K   K 
Sonatrach / IAP
 Analytical methods: example
 Cardwell & Parsons
1 10 100 1 KC& P  K   K 
Q 10 0 0 1
100
1
1
100
10
10
0
10
0
10
100
1
?
25 Karith
 K-C&P = 1.04 20
 K+C&P = 23.2 Kpower
15
KC&P = 4.91 KC&D
Kpower

  required to fit to power law? => 0.61 10
 Kharm < K-C&P < KC&P < K+C&P < Karith 5 KKC&P
C&D
Kharm
0
‐1 ‐0,5 0 0,5 1

Sonatrach / IAP

 Analytical methods: counter-example
 Cardwell & Parsons
1 10 100 0 KC& P  K   K 
Q 10 0 0 1
100
0
1
100
10
10
0
10
0
10
100
1
?
 K-C&P = 0
 K+C&P = 23.1
 KC&P = 0 ! (no flow…really ???!)
 The closer the bounds, the more accurate the approximation

 Warning: look out for 0 values of K-C&P and KC&P (may need to re-visit the
upscaling in part of your grid)
Sonatrach / IAP
 Analytical & averaging methods
 When to use them:
 When nothing else is available
 If upscaling only in 1D: arithmetic averaging for Kh and harmonic averaging
for Kv
 High aggregation rate (i.e. large grid cell number reduction)
 When the geological model is too big to attempt flow simulation
 Cardwell Parsons often quite accurate
 But…
 There are some counter-examples
 Beware of 0 values generated and large variance in Cardwell & Parsons
bounds
 Compare K-C&P to Kharm and K+C&P to Karith (they should be different)
 Numerical methods (flow-based) offer an alternative to circumvent these
issues
Sonatrach / IAP

 Numerical methods
 Flow-based simulations are used to generate effective permeability
values under different boundary conditions
 Can be solved using:
 Finite difference methods
 Finite element methods
 Analogous to measurement of core permeability (Warren & Price, 1961)
 k P   0
 
(  Boundary Conditions)
 
P1 P2
x
L
Q
Q Kx  
P1  P2 A
Sonatrach / IAP
 Numerical methods
 Choice of boundary conditions defines permeability  xx  xy  xz 
tensor  
   yx  yy  yz 
 No flow boundary perpendicular to global pressure  zx  zy  zz 
gradient
 Defines usual diagonal permeability tensor
P1 P2
 Used most commonly in simulation
 Tend to be close to Cardwell & Parsons results but
Q
with better handling of local discontinuities
 Should be used preferably
 Periodic or linear boundary conditions

 Flow in all directions defines full permeability tensor
 Simulation with off-diagonal elements will require
more (quite) CPU time P1 Q P2
 Tend to be close to arithmetic averaging Q
 Impact on simulation difficult to quantify but may exist
(cross-bedding for example)
Sonatrach / IAP

 Some warnings
 As already discussed, 0 value cells may introduce erroneous effective
property (harmonic averaging will give 0)
 Numerical methods may be used on specific sectors to remedy this pitfall
 If extensive across several cells, could be excluded from upscaling
process and modeled using 0 transmissibility values
 Inactive cells are also likely to create problems: quality-check of
upscaling results around these cells
 Some simulators (Eclipse for instance) may introduce NTG in

transmissibility calculations (in this case only for Kx and Ky)
=> instead of upscaling Kx and Ky, upscale Kx x ntg and Ky x ntg

=> Divide results by upscaled NTG before loading into Eclipse
Sonatrach / IAP
 Quality Check
 Essential to conclude homogenization process
 Remember the gold standard: direct simulation comparison between
geological and reservoir grid (can be difficult because of CPU
constraints)
 Histogram and crossplots: homogenization reduces variance around
mean values
 Remember permeability results will also depend on shape and size of
cells (upscaling around faults, pinch-out,…)
 Visualization is useful to compare reservoir model main features with
geological model
 Streamline simulation of tracer tests is very useful but requires some
prior expertise (use sector model simulation of fine grid as substitute)
 Run sensitivities (early in the process) on grid aggregation rate
Sonatrach / IAP
SUMMARY
 Why upscale?
 Usually not practical to run full-field simulation at the geological scale
 Need overnight turn-around to run large number of cases to optimize

development or history match field results in reasonable time
 Rocks are heterogeneous at all scales
 Models cannot account for all levels of heterogeneities
 Homogenization is the process of bringing all types of information to a

« common » scale
 What to upscale? => , NTG, Kabs, Kr, RT

Sonatrach / IAP
SUMMARY
 How to upscale?
 POROSITY UPSCALING
 Arithmetic average weighted by net volume
 NET-TO-GROSS UPSCALING
 Arithmetic average weighted by bulk volume
 FACIES UPSCALING
 Based on rock-type proportion: discrete mean (“most of”) weighted
by pore volume

 Analytical methods: averaging, Cardwell & Parsons
 Numerical methods: flux methods (diagonal or full tensor)
Sonatrach / IAP
Reservoir Simulation ‐ Fundamentals
Xavier LOPEZ
OUTLINE
 INTRODUCTION
 FUNDAMENTALS
 FORMULATION
 RESERVOIR SIMULATION DESIGN
 CONCLUSIONS
Sonatrach / IAP
INTRODUCTION
 What’s a dynamic reservoir simulation model?
 A mathematical model which accounts for physical, chemical and
thermal behavior of multi-phase fluid flow in the complex geology found
in reservoirs:
 Physical laws (mathematical equations) of the reservoir behavior
 Parameters of equations, representing the reservoir characteristics (rock, fluids,

wells) i.e., the static model
 Numerical tools to solve the equations

 Discretization (DX, DY, DZ, Dt) in space and time
 Resolution of linear systems
 Implementation in a computer environment

 Operating system, programming language
 Input devices
 Output devices
Sonatrach / IAP
INTRODUCTION
 What’s a dynamic reservoir simulation model?
 Integrator of technologies
Production Data
80000
Geologic Model OIL
P roduction Ra te
60000
(STBP D)
40000
WATER
Reservoir Simulation 20000
0
0 5 10 15 20
Ye a r
Fluid Properties
P
Facilities
T
Sonatrach / IAP
INTRODUCTION
 Historical Perspective
 A simulation model was not always “numerical”
 Analogical Model:
Model of hydrocarbon reservoir
(conductive gel)
Model of hydrocarbon reservoir

(electrical resistor model)
Sonatrach / IAP
INTRODUCTION
 Practical use of numerical models started to expand in the 1960’s
 Two aspects of computer science have been driving the development of
numerical reservoir simulation
 CPU power
 Input and output devices
Sonatrach / IAP
INTRODUCTION
 Nowadays, greatly driven by improving computing capabilities
 Improvement of input-output devices
 3D visualization
 VR rooms
 Creation of « virtual environments »
Sonatrach / IAP
FUNDAMENTALS
 The stirred tank analogy
 A reservoir simulation model (in 1-D) acts like a series of well-stirred
tanks
 Tanks are initially filled with one fluid
 A second fluid is introduced at one end and fluid is withdrawn from the
opposite end
 Fluids move from one tank to another as time passes
 Movement of fluid into a tank is determined by the fluid content in the
upstream tank
 Properties are homogeneous within each tank
Sonatrach / IAP
FUNDAMENTALS
 How a simulator works
 Each node is like a miniature reservoir
 Communication between adjacent nodes follows Darcy’s Law
 The basis for simulation equations (one for each phase):

 Material balance calculation for each node
 Flow from one node to another (connection)
 Source and sink rates within the node (wells)
Gas, Oil, Water
Sonatrach / IAP
FUNDAMENTALS
 The pressures in a node and its neighbors determine how much flows
into and out of it
 The result is an individual pressure equation for each node
 Critical step in most simulations is the solution of the resulting set of

equations
P
Sonatrach / IAP
FUNDAMENTALS
 Once pressures are obtained, saturations are computed
 Only two saturations are computed directly, the third is obtained by

material balance
 The equation for each node is relatively simple
 However, models can include up to a million nodes or more: result is a

large matrix equation with millions of unknown
So, Sg, Sw
Sonatrach / IAP
FUNDAMENTALS
 Geological data input
 Porosity and permeability distributions

 If present, aquifer type, strength and size
 Location and throw of faults (vertical or inclined); (sealing or open)
 Vertical and areal reservoir compartments
 Fluid contacts (multiple contacts, PVT regions)
 Lithofacies and their petrophysical characteristics
Sonatrach / IAP
FUNDAMENTALS
 Divide reservoir & aquifer into cells (nodes)
 Assign rock & fluid properties & sizes to nodes

 , k, kr
 , fluid properties, datum pressure
 Cell dimensions, depth, OWC, GOC
 Apply material balance to each node & Darcy's Law & kr to flow
between nodes
 Flow occurs along connections (Material Balance + Darcy's Law)
 Inject/produce fluids at well nodes
 Step through time, simultaneously solving flow effects of viscous,

gravity & capillary forces
 Display results - well & reservoir rates, pressure & saturation
distribution
Sonatrach / IAP
FORMULATION
 Reservoir Simulation
 Darcy’s Law
Akk ro  p o
qo   0 .001127 ( )
o L
 Drop conversion constant and add dip to reservoir

Akkro po
 qo   (   og sin )
o L
FORMULATION
 Darcy’s Law – differential form
Akk ro p o D
qo     og
( )
o x x
Sonatrach / IAP
FORMULATION
 Material Balance (Continuity Equation)
Well Flow
Source/Sink
Phase Flow In Accumulation Phase Flow Out
 (Phase Flow In) – (Phase Flow Out) = Accumulation
q ow

(q o ) x Ax (S o ) ( q o ) ( x + Dx )
t
Sonatrach / IAP
FORMULATION
 Material Balance (Continuity Equation)
q ow

(q o ) x Ax (S o ) ( q o ) ( x + Dx )
t
 Re-arraging and taking limits as x -> 0
qo 
  A (So )  qow
x t
Sonatrach / IAP
FORMULATION
 Combining Material Balance & Darcy’s Law
qo  and Akk ro p o D

  A (So )  qow qo   (  og )
x t o x x
 Substituting for Qo in Darcy’s Law
 Akk ro po D 
  og )]  A (So )
[ (
x  o x x t
Sonatrach / IAP
FORMULATION
 PVT Representation used in Reservoir Simulation
 Black-Oil:
 3 Phases (oil, water, gas)
 3 Components (oil, water, gas)
 Limited amount of mass transfer between phases
 Adequate for most recovery processes & reservoirs
 Compositional:
 3 Phases (oil, water, gas)
 Nc Components (C1, C2, C3, …., N2, CO2, H2S)
 Total mass transfer between phases
 More realistic, more complicated to set-up, and more expensive than a black-oil
model
 Miscible
 Thermal
Sonatrach / IAP
FORMULATION
 Numerical Solution Methods
 Formulation:
 Refers to type and structure of equations (how the flow is expressed in equations)
 May be designed to aid in the solution of the problem
 Not part of the solution method
 Coupled Implicit, Implicit Pressure Explicit Saturation, Sequential
 Equation Solving Methods:

 Linear algebra methods used in simultaneously solving the resulting linearized
equations
 Direct or Iterative Methods, SOR, LSOR, NF...
 Both differ in their impact on the reliability, cost, and accuracy of

simulator results
Sonatrach / IAP
FORMULATION
 Numerical Solution Methods
 Coupled Implicit (CI):
 Pressure and saturation equations are solved simultaneously
 IMPES or Sequential:
 Pressure and saturation equations are solved in series (sequentially)
 IMPES: Explicit saturation solution
 Sequential: Saturation solution includes “total flux” and linearization of equation
terms
 Relative computational work differ

 Selection of formulation impacts stability,
speed, and dispersion in the simulation
Sonatrach / IAP
FORMULATION
 Boundary Conditions
 Wells provide most-commonly used boundary conditions (production,
injection)
 Rate specified
 Pressure specified (rate can be determined using hydraulics calculations)
 Model boundary pressures and/or fluxes may also be specified
 Frequently an attached aquifer provides one the reservoir boundary

conditions
 Represented explicitly with extra nodes
 Represented implicitly using analytic expressions such as Hurst- Van Everdingen
solution to calculate flux
 It is good practice to specify at least one pressure boundary condition
Sonatrach / IAP
RESERVOIR SIMULATION DESIGN
 What questions will I try to answer with this model?

 Should this reservoir be developed?
 What is the optimal development plan?
 How can recovery be optimized?
 What should I include in the model?

 Is coning important? Should grid be refined around the wells?
 Should phase behavior be represented with a compositional model?
 Should fractures be modeled using dual-porosity?
 What should I exclude from the model?

 Is the grid too refined? Can it be coarsened up?
 Does putting in more detail affect the results?
 Is the model “fit for purpose”?
Sonatrach / IAP
 Some factors to consider

 Study objectives
 Gas vs. water injection pressure maintenance
 Flank vs. pattern waterflooding
 Areal / vertical sweep
 Coning / cusping effects
 Reserves / equity determination
 Long or short range production forecasts
 Enhanced recovery evaluation
 Potential audiences
 Quantity and quality of data
Sonatrach / IAP

 Reservoir description
 Single or dual porosity/permeability system
 Aquifer type, strength and size, if present
 Vertically stacked reservoirs
 Layers pinching out and re-appearing
 Faults (vertical or inclined)/(sealing or open)
 Vertical and areal reservoir compartments
 Fluid contacts (multiple contacts, PVT regions)
 Lithofacies and their petrophysical characteristics
 Initial fluid saturation distribution (tilted contacts,
perched water, multiple primary gas caps…)
Sonatrach / IAP

 Development Scheme
 Recovery mechanism(s)
.
 Natural depletion
 Waterflood
 Gas re-injection
 Gas and water injection
 Gravity drainage
 Miscible drive
 Thermal recovery (steamflood, combustion)
 Well spacing (infill drilling)

 Well type (vertical, horizontal, high-angle slanted)
 Completion intervals
Sonatrach / IAP
 Type of Models
 O-D: Tank Model

 Simplistic
 Instantaneous communication and equilibration assumed
 Good for estimating OOIP, GIP, and aquifer size / strength
 Can be used for scoping analysis
 1-D: Row Model

 No Cross-Flow
 Small and Easy to Run
 Investigate Displacement Process Mechanism
 Simulate Slim-Tube Experiments
Sonatrach / IAP
 Type of Models
 2-D: Areal Model

 Cross-sectional models
 Contact modeling
 Radial models for near wellbore modeling
 3-D: Field Model

 Sector models
 Full-field models
 Incorporate variability across field
 Incorporate interactions between wells

 Better integration with field facility constraints
Sonatrach / IAP

 Time and Cost Considerations
 Tank Models for Material Balance (0-D)

 Usually fast (1 or 2 days to a few weeks), low cost
 One-Dimensional (1-D)
 Fast (1 or 2 days to a few weeks), low cost
 Cross-Sectional or Areal (2-D)

 Moderate time needed (a few weeks), low cost
 Reservoir Element (3-D)

 Moderate time needed (a few weeks to several months), moderate cost
 Full-field (3-D)
 Long time needed (several months to a year), more costly
Sonatrach / IAP
CONCLUSIONS
 Reservoir Simulation: Integrator of Technologies
 By now, you’re hopefully convinced!
Production Data
80000
Geologic Model OIL
P roduction Ra te
60000
(STBP D)
40000
WATER
Reservoir Simulation 20000
0
0 5 10 15 20
Ye a r
Fluid Properties
P
Facilities
T
Sonatrach / IAP
CONCLUSIONS
 Some Challenges in Reservoir Simulation

 Myths about what simulation is…and what it is not
 Unclear study objectives
 Not working with geoscientists throughout process: remember integration?
 Invalid data
 Model design errors
 Over-design / excessive complexity
 Inadequate review of results
 Not getting expert advice
 Large number of wells/long history
 Copying model from another model to start with
Sonatrach / IAP
CONCLUSIONS
 Did you say myths?

 "Requires" lots of data (too many)
 Is only an “expert system” for specialists
 Defaults to physically realistic values
 Any model is better than no model
 Who needs a detailed geological description anyway? Just press

the button!
 A full-field model can address ALL and EVERY problems
 The number of grid blocks should be proportional to the amount of

reservoir description data: the bigger the model, the better!
 Review of the model rate performance is sufficient: as long as it

matches!
Sonatrach / IAP
CONCLUSIONS
 Some final thoughts
 ‘Simulation begins with a well-posed
question’ (Keith Coats)
 ‘The best design is the simplest model

that will represent the reservoir and the
recovery processes accurately and
realistically’ (Don Peaceman)
 ‘Modesty is under-rated as a matching
parameter!’ (your humble servant)
Sonatrach / IAP

Reserves and Resources
Classification
Xavier Lopez
 Introduction
 SPE Petroleum Resources Management System (PRMS)
 Security and Exchange Commission (SEC): some rules
 Example of an International Oil Company: TOTAL
 Some Evaluation Guidelines
Sonatrach / IAP 248

Introduction
Sonatrach / IAP 249
 Oil reserves are:

• the quantities of crude oil estimated recoverable
• Has to be economic
• With a specific development project
• from known accumulations
• under defined conditions.
 Reserves are further categorized:

• by the level of certainty associated with the
estimates.
Sonatrach / IAP 250

 This is contrasted with contingent resources
• which are those quantities of petroleum estimated
• to be potentially recoverable from known accumulations,
• but the project(s) are not yet mature enough
• for commercial development.
Sonatrach / IAP 251
 The total estimated amount of oil in a reservoir, is called oil in place:

• OOIP
• OIIP
• STOIIP
• ….
 The producible fraction is considered to be reserves.
 The ratio of oil reserves to total oil in place is the recovery factor.
 Recovery factors vary greatly among oil fields.
 The recovery factor of any particular field may change over time
• based on operating history
• and in response to changes in economics.
• It may also rise over time with improved oil recovery techniques.
Sonatrach / IAP 252

 Many oil‐producing nations do not reveal their reservoir engineering field data
and instead provide unaudited claims for their oil reserves.
Sonatrach / IAP 253
 Reserves are a crucial part of the O&G industry:

• Fundamental part of the oil business
• Major impact on any listed O&G company’s results:
− Confidence from our shareholders and
− from the market in terms of professionalism and integrity of the
company
− Company’s value in term of assets
Sonatrach / IAP 254

Why are Reserves Important?
Reserves occupy a central position in the Upstream asset base:
Sonatrach / IAP 255
Sonatrach / IAP 256

Sonatrach / IAP 257
Standard conditions for oil and gas
• U.S. Standard Conditions: 60 °F ‐ 14,787 psia= 1 atm

• Normal Standard Conditions : 0 °C ‐ 1 atm.(1.01325 bar)
• International Standard Conditions : 15,56 °C ‐ 1 atm.(1.01325 bar)
• French standard Conditions : 15 °C ‐ 1 bar
Reserves are
expressed in
Standard
Conditions Units
Sonatrach / IAP 258

Project identification
 Reserves are project based
Surface
Wells
Reservoir
Sonatrach / IAP 259
International Frameworks
US SEC UNFC SPE Based Systems

United Nations Framework
Classification
Protects investor’s Powerful for global

interest BUT does assessment of Project based &
not capture energies BUT too captures uncertainties,
complexity of complex & difficult to

today’s technical implement Audit Trail
environment
Sonatrach / IAP 260

Reserves category: probability distribution
Pdf: Probability Density function
Cumulative probability
1
f(x)
Most likely Mean
A
A
Q10 P( x A)   f ( x ) dx  10%
Q10 = P90 0

P90 P( x A)   f ( x ) dx  90%  1  P( x A)
A
Sonatrach / IAP 261
Reserves classification
Sonatrach / IAP 262

Proved reserves
 Proved reserves are those quantities of petroleum which, by analysis of
geological and engineering data, can be estimated with reasonable certainty to
be commercially recoverable, from known reservoirs and under current
economic conditions, operating methods, and government regulations.
 Proved reserves can be categorized as developed or undeveloped.
 If deterministic methods are used, the term reasonable certainty is intended to
express a high degree of confidence that the quantities will be recovered.
 If probabilistic methods are used, there should be a 90% probability that the

quantities actually recovered will equal or exceed the estimate.
Sonatrach / IAP 263
Other Considerations
Proved Reserves
Funding
• Projects require corporate commitment
Government / Regulatory Approvals

• Can be proved prior to approvals provided it is believed that there is a reasonable
certainty such approval will be granted.
Lease / Contract Terms
• Proved only to the end of contract or lease term except in rare cases where there is
reasonable certainty that terms will be extended under current or acceptable terms.
• Corporate Management approval is required to book proved reserves beyond
lease/contract terms.
Sonatrach / IAP 264

Probable reserves
 Probable reserves are those 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 equal or exceed the sum of estimated proved plus probable
reserves.
Sonatrach / IAP 265
Possible reserves
 Possible reserves are those 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 equal or exceed the sum of estimated proved plus probable plus
possible reserves.
Sonatrach / IAP 266

Volume in Resource Categories
Volume in Resource Categories
Sonatrach / IAP
Sonatrach / IAP
UNDISCOVERED POTENTIAL
C
PB
PD
S
PUD
UNDISCOVERED POTENTIAL
-
-
-
-
-
S
Static
PB S
Probable
PUD S DISCOVERED RESOURCE (STATIC)
Proved Developed
PD S
Proved Undeveloped
Cumulative Production
C PD S
PROBABLE STATIC
C PD S
C PD S
C PD PB S PROBABLE
PROVED STATIC
C PD PUD S
C PD S
PROVED PROVED
PROB STATIC
C PD S DEV UNDEV
Remote Gas Resource

C PD S
C PD S PROVED PROVED
STC
PRB
CUM
DEV UNDEV
C PD S
Development
S
Increasing Maturity, More Data, Decreasing Uncertainty
C PD
C PROVED PVD
PRB
PD PUD PB S
STC
CUM PROD
DEV UND
C PD PB S
C PD S
CUMULATIVE PRODUCTION
C
investment required
* No significant capital
Reserves Migration ‐ Reality is Complex
Reserves Migration ‐ Traditional Oil Field
268
267
© 2012 ‐ IFP Training © 2012 ‐ IFP Training

Change Drivers ‐ Activities
Financial
• Funding/Projects
• Fiscal Term Revisions
• Property Acquisition/Sales
• Price/Cost Changes
Work Programs
• Drilling
• Workovers Reserve
• Facility Modification Changes
Studies
• Reservoir Studies
• Remapping/Seismic
Depletion Strategies
• Reservoir surveillance
• Reservoir management
• Development plan revisions
Production
Sonatrach / IAP 269
Illustration of Reserve Change Types
+10 MBOE +5 MBOE

Tech Study Add Net Interest or
+ Entitlement Increase
Tech Changes = +10 MBOE
- Other Changes = (5) MBOE
Annual Prod = (20) MBOE
Total Change = (15) MBOE
(10) MBOE
Beginning Production
Year - Net Adjustment for
(20) MBOE
Prior Years Actual
Remaining Current Year End of Year
Estimated
100 MBOE Production Net Remaining
85 MBOE
Other Changes
End of Year
“Technical” Changes • Prod Adjustments Current Year
Beginning Year Net Remaining
Net Remaining
+ Discoveries, Extension + • Net Interest / - Estimated = (ex YE pricing
or Revisions Entitlement Production
adjustment)
• Other Corrections
Sonatrach / IAP 270

PRMS
SPE/WPC/AAPG/SPEE
Petroleum Resources Management
System
Extracted from a Presentation Prepared by the SPE Oil & Gas Reserves Committee
(OGRC)
Sonatrach / IAP 271
Scope of Projects
Align with the hydrocarbon finding, developing and producing business!
We require a system that will
support assessment processes
throughout the asset lifecycle
Sonatrach / IAP 273

PRMS ‐ Major Principles
 The System is "Project‐Based"
 Classification is based on project's chance of commerciality.
 Categorization is based on recoverable uncertainty
 Base case uses evaluator's forecast of future conditions
 Applies to both conventional and unconventional resources
Sonatrach / IAP 275
Separate Classification & Categorization
Classify by chance of
commerciality (Risk) of
project applied
categorize estimates based on uncertainty
of quantities associated with project
Sonatrach / IAP 276

Sub‐classify by Project Maturity
Sonatrach / IAP 277
Securities and Exchange Commission
Sonatrach / IAP 278

Proved Reserves (1P): SEC Compliance
 Testing
• Economic productivity supported by actual production
• or conclusive formation test (MDT not sufficient)
• Gulf Of Mexico exemption:
− Log, core, MDT and seismic may suffice
 HDT / HUT (LKH / HKO)
• Proved in well
 Continuity of production
• 1P for undrilled units only if certainty of continuity of production
Sonatrach / IAP 279
Proved Reserves (1P): SEC Compliance
 Improved Recovery
• Injection or EOR need pilot or analogue (same reservoir in the area)
 Commitment to develop
• SEC proved reserves must be economic
• Signed sales contracts, for gas
• request for proposals to build facilities,
• MOU with governments,
• firm plans and timetables...
• Lack of progress may be evidence of lack of commitment
Sonatrach / IAP 280

SEC Compliance
Areas Where Compliance Could be an Issue
 Low Known Hydrocarbons
• Contact information must be established by well penetration
• Use of RFT / MDT pressure gradient data to establish contacts may not be
acceptable
 Probabilistic Assessments
• Probabilistic methodology may be used, provided reported volumes comply
with their proved definitions.
• Difficult to tie results of probabilistic assessments to specific map locations
Sonatrach / IAP 281
Impact of YE Price on Reserves
SEC interprets regulation SFAS 69 to require proved reserves be evaluated and
reported on the last day of each calendar year based on economic
conditions existing at that time projected into the future.
Beginning at year‐end 2004, EM reports proved reserves to shareholders based
on both internal planning assumptions and year‐end prices.
Nature of price impacts:
 Conventional fields ‐ Increasing prices may increase proved reserves due to
change in field and facility life assumptions.
 Production Sharing Contract/Sliding Scale Royalty areas ‐ Entitlement
calculation generally reduces net interest reserve share as a function of
increasing price through cost‐recovery provisions.
Sonatrach / IAP 283

Conceptual Illustration ‐ Conventional Field
Assumptions: Qi
Hypothetical Rate-Cum. Plot
 Conventional tax/royalty regime (e.g.
typical US)
RUR2
No significant changes to development Price
Rate

Impact
or operating plan
RUR1
 Abandonment driven by economic
considerations
Qa1
 Production trend follows approx rate ‐
cum relationship
new Qa2
Cum Prod EUR1
new EUR2
Conceptually: Limitations:
• Higher product prices may extend • Limited upside - no reengineering of
abandonment, with corresponding higher development plan or new developments.
EUR - provided EUR is limited by
• Does not comprehend technical or
economic, not technical, regulatory, or
mechanical limitations to production
political considerations.
extension.
Sonatrach / IAP 284
Categorization Example
Effect of Production License on Reserves Classification

Expiration
License
Probable
Proved
Date
Production “Tails”-
All Static
Proved + Probable Static

Time
Sonatrach / IAP 285

Example of Total
Sonatrach / IAP 286
TOTAL Reserves & Resources Classification (Example)
W2 W1
P3 P2 P1
 W1 successful:
• Feasibility study and economics give good results
• Development ensured
• Seismic shows three zones that define proven, probable and possible:
− P1: high amplitude
− P2: moderate amplitude
− P3: weak amplitude
 W2 successful:
• Feasibility study and economics give marginal results
Sonatrach / IAP 287
TOTAL Reserves & Resources Classification
Uncertainty Range
Development
Reserves 1P = P90 2P = P50 3P = P10
ensured
Discovered,
Contingent
Low # P90 Best # P50 High # P10 development not
Resources
ensured
Prospective
Min Mode Maxi Prospects
Resources
Sonatrach / IAP 288
Reserves & Resources status
Red: SEC Reserves
Sonatrach / IAP 289

Resources Enhancement Plan (PVR)
Increasing Uncertainties on a given Project
Decreasing maturity of Project

Class Nature Examples Comments
Fields/Projects for -Being developed or close
A P90 P50 P10 which 1P Reserves to sanction -Upside = Expected - P50
are already booked -Producing
Projects included in -Geological Upsides
-Infill, IOR (compression,
LTP (Not yet -Recovery Mechanism
B P90 P50 P10 exotic wells,…), EOR,
sanctioned, but we Upsides
Satellite, Step out
believe in them) -Near-by Explo
-Infill, EOR, Satellite, Step -Geological Upsides
Studies on-going.
out, Recent Discovery -Recovery Mechanism
C Low Med High Economics
-Licence Extension Upsides
uncertain
-Gas Contracts -Near-by Explo
-Thermal injection in Zuata
Non economic to- -Includes future
D Low Med High -Profile beyond economic
day technological progress
cut-off ,…
Sonatrach / IAP 290
Extract of TOTAL’s Registration Document 2007
A few interesting comments in the Total’s document:
 “Significant features of the reserves estimation process include:
• internal peer‐reviews of technical evaluations to ensure that the SEC
definitions and guidance are followed;
• and a requirement that management make significant funding
commitments toward the development of the reserves prior to booking.”
 “Proved reserves are the estimated quantities of TOTAL’s entitlement under
concession contracts, production sharing agreements or buyback agreements.
These estimated quantities may vary depending on oil and gas price.”
 “Reserves at year‐end 2007 (10449 Mboe) have been determined based on
the Brent price on December 31, 2007 ($93.72/b).”
 “if the Brent price at December 31, 2007 had been $58.93/b ( the year‐end
2006 price), reserves would have amounted to 10,674 Mboe.”
Sonatrach / IAP 293

TOTAL’s Reserves at end of 2010
 As of December 31, 2010, Total's combined proved reserves of crude oil and
natural gas were 10,695 Mboe (53% of which were proved developed
reserves):
• Liquids (crude oil, natural gas liquids and bitumen) represented
approximately 56% of these reserves and natural gas the remaining 44%.
• At the 2010 average rate of production, the reserve life is more than
twelve years.
• The definitions used for proved developed and proved undeveloped oil and
gas reserves are in accordance with the applicable United States Securities
& Exchange Commission (SEC) regulation, Rule 4‐10 of Regulation S‐X.
• Reserves at year‐end 2010 have been determined based on the Brent price
on December 31, 2010 ($79.02/b).
 Production, stable in 2010
• For the full year 2010, average daily oil and gas production was 2,378
kboe/d compared to 2,281 kboe/d in 2009.
Sonatrach / IAP 294
Reserves and Resources : 1P / 2P /3P
 Assuming field reserves follow a log‐normal law :
• 1P = Proved reserves
• 2P = Proved + probable reserves
• 3P = Proved + probable + possible reserves = « resources »
 1P reserves are mainly used in the SEC reporting. Companies tend to criticize
the narrow definition used by SEC which gives a poor idea of their assets :
• Technical progress in reservoir knowledge is not taken into account
 Internally, the Companies use 2P reserves :
• For their Long Term Plan
• For project economics as the base case (generally 1P and 3P cases will also
be run as respectively crash case and upside assessment)
 More and more Companies give indications of their 2P reserves and resources
in their communication
Sonatrach / IAP 295

2P / 1P ratio
A useful indicator is the 2P / 1P ratio (« reserves depth »),

generally in the range of 1.5 to 2
Source : Company annual report 2003, Shell resources on 31/12/ 2004, Wood Mackenzie 2P reserves estimates
Sonatrach / IAP 296
Evaluation guidelines
Sonatrach / IAP 297

Example of differences between 1P/2P/3P
Hydrocarbon Contacts
Sonatrach / IAP 300
Example of 1P/2P/3P evolution with delineation
Sonatrach / IAP 301

Categorization in Absence of Contacts

#1 #2
Well #2:
Proved /
• Wet with no
Probable?
observed
contacts
• Logs & MDT’s
High
known oil Proved
Low known oil
Probable
Well #1:
• No contacts seen in well Expected OWC
(From pressure
• Tested 1000 BOPD with no wtr.
gradient data)
• Logs & MDT’s
• Fluid samples from MDT’s; PVT analysis indicates undersaturated crude
but samples contaminated (oil base mud)
Sonatrach / IAP 302
Low Known Hydrocarbon ‐ MDT ‐ Example
Low Known @ -20,215’

TVDss
• Downdip proved oil limit is determined by lowest
known hydrocarbon in well #776-1
777-1
776-1
• Well #776-1 ST1 has penetrated water leg of
776-2
776-1 ST1 reservoir and has MDT pressures to determine
water gradient
Proved Reserves Polygon
Formation Pressure, psia

13250 13500 13750 14000 14250
-19000
Lowest Proven depth, -20,215’ TVDSS

-20000
Proved
Depth, TVDss ft
Probable
• Extrapolation of proved oil limit beyond low known -21000

in Well #776-1 using gradient data is not
acceptable Calculated OWC @ -20,949’ TVDSS

-22000
-23000
Sonatrach / IAP 303

Areal Extent Uncertainty - Spacing Unit
Proved Undeveloped
1 1 2 3
2
Proved Developed Probable
O/W O/W
O/W
O/W
• Well 1 - • Well 1 -
- Producing from reservoir - Producing from reservoir
- Proved down to observed water contact - Proved down to observed water contact
• Well 2 -
• Well 2 -
- Funded - offset to #1
- Funded - offset to #1
- Good quality seismic
- Good quality seismic
• Well 3 -
- less certain (rvr quality,thickness,faults, etc)
Sonatrach / IAP 304
PUD Reserves / Offset Spacing Units
Government - Mandated Spacing Example # 1
• Discovery wells define proved

developed area – one regulatory
spacing each
WOC
• Government regulations may define
minimum well spacing, here 640
acres for example
• Proved area limited to spacing unit

with well plus immediately adjacent
offsets
• Areas beyond one offset are not

proved; here probable
• Above observed WOC
• Within lease boundary
Proved
Proved
Probable
• Proved reserves estimated from total
volume in proved area x RF
Sonatrach / IAP 305

PUD Reserves / Offset Spacing Units
Government - Mandated Spacing Example
• Faulted anticline structure with

contact from well data
• Host gov’t regulations define

minimum well density (spacing)
800 meters between wells
• Proved area limited by “unit” with

well & adjacent offsets
• Areas outside this pattern are not

proved
Sonatrach / IAP 306
Seismic Utilization ‐ Example
Hoover 1stH oover 1

Ho o v e r - 1 s t Ho o v e r - 1 HA- 3 Piol t HA4 - BP2
HA-4 HA-1
HA- 4
HA- 1
00' 100' 2400' 1800' 200' 1300'

• Seismic data is integrated with existing information from
wells (logs, core, tests, fluids, pressures, etc.) to develop
structural maps and geologic models utilized in
P1 : 1 0 Ab a n d o n m e n t Sur f ac e
categorizing resources
Channel Com ple x M ar gin
V e rt i c a l S c a l e1 010" ' = 5 0 '

Ver t ci al Sc ale 1" = 50'
• Reservoir extent, fluid level and types are defined by well
DDe eep Wl S tcater
ea el r 1 F" a=Facies
1 00 '
e pV e r W
C hannel
Ch
t ci a a
De e p W a t e r Fa c ei s
a nChannel
n e l Com Co Cplmeomplex
c5 0 i' e s
x p le x
Channel Com ple x M ar
information in proved categorizations
Dis t r bi ut ar y Channel Com ple x Ax si of Channel Com ple x Ch a nO nv ere bank l Co m p l e x
C hannel C omplex
Ov e rbDis at r nbi utkar y Sheet s
Margin
Overbank
Di s t ri b u t a ry S h e e • Proved area is confined to spacing unit/offset limits until
pressure information can confirm continuity beyond
spacing limits
• Seismic data is not utilized in proved category to define

hydrocarbon limits beyond well control, fluid types or fluid
contacts
Sonatrach / IAP 307

Structural Uncertainty
• Uncertainty in structural interpretation Structure Map

can be booked as Probable.
Uncertainty in Areal extent of -

2550’ contour.
PROVED
Developed Undev. Probable
OWC
Reasonably Expected
Certain
Sonatrach / IAP 308
Assessment Methods & Cross‐Checks
Increasing Maturity (Data & Performance) Allows Multiple

Assessment Methods
Volumetric “Reserves”
Basin
Analysis
Prospect
Generation GPF
Discovery
Cross- Checks
Assessment
Appraisal,
Development
Best Practices
Geological Field
Modeling Optimization
Reservoir Enhanced
Simulation Recovery
Surveillance &
Perform. Analysis
Decline,
Abandonment
+
Performance
”Reserves"
Sonatrach / IAP 309

Performance Methods
• Decline curve analysis

– Late life
– Continued operations
– Well-by-well or entire reservoir Reserves
• Material Balance
– In-place
– P/Z (gas only) In-place and reserves
• IPM
– Integrates Material Balance, well behavior, and facility limits
– Individual modules tuned (history matched) independently
Reserves
• Simulation
– Requires maps or geocellular model
– History-matched to performance In-place and reserves
RF in volumetric methods
Sonatrach / IAP 310

Principles of Upstream Economics
Xavier Lopez
Sonatrach / IAP
ECONOMICS OVERVIEW - KEY POINTS

 Economics and Economic Analysis are Vital to the success of the Corporation
 Expense projects - Maintain reserves or production

 Capital projects - Attain reserves or production
 The difference between NCF and ‘Book’ economics is the timing of investments
and taxes
 NCF analysis used for tax / government reporting
 Book economics used for financial reporting
 Incremental Analysis and the ‘Do-nothing’ case are key to evaluating economic
viability
Sonatrach / IAP 312
Why Economics ?
• You perform engineering analysis using all the tools learned

in this course
• Integrate all the technical analysis into a recommendation(s)
• Evaluate the recommendation(s) for profit potential with an
economic analysis using company guidelines
• Make a final recommendation(s) to management based on
technical and economic evaluations
Economics is typically the focal point of all the technical work - The Bottom
Line.
Sonatrach / IAP 313
CASH FLOW
Cash Flow (CF) = Cash Inflows - Cash Outflows
Cash Flows are classified as:
Revenues = (+) R
Investments = (-) I
Expenses = (-) E
Federal Income Tax = (-) FIT
Sonatrach / IAP 314
REVENUE
Revenue
Production (R) Price
OPEC $
 Sale of Oil, Gas, & Other products (NGL’s, CO2, sulfur, etc.)
 Sale of Surplus Equipment
Sale of Producing Properties

 Expense reduction
Sonatrach / IAP 315
INVESTMENTS
Investments (I)
 Bonuses (Purchase Leases)
 Exploration (Seismic, Drilling)
 Tangible investment (Pipe, Eqpt., Platform)
 Intangible Drilling costs
 Intangible other investment
Sonatrach / IAP 316
CAPITAL vs EXPENSE
In a Net Cash Flow (NCF) analysis, we consider the large initial cash outlays as
Investment. Investments can be categorized based on their treatment for
Federal Income tax purposes.
 Expense projects - Cash outlays required to
Maintain Reserves or Production
 Capital projects - Cash Outlays required to

Attain Reserves or Production
Sonatrach / IAP 317
EXPENSES
Expenses (E)
Direct operating costs
 Differ from investments, may be discontinued at any time to shut in
production
 Should include expenses caused by the proposed investment
 Are expressed as a fixed amount per well, fixed amount per field, or
variable amount per unit of production
Other Direct costs - Non routine or

anticipated periodic costs
 Periodic expense workovers

 Plug and abandonment costs
Sonatrach / IAP 318
EXPENSES
Other Expenses (E)

 Production taxes
 Ad Valorem taxes
 Tariffs
 Transportation fees
 Indirect Expenses
 Money required to run the business above the field level
 Costs for salaries, offices, supplies, and equipment
Sonatrach / IAP 319
NET CASH FLOW
Net Cash Flow = R - I - E - FIT = NCF

[ The term Net refers to some reductions may have been made to reflect only the owners perspective. ]
 Economic yardsticks are then developed from the NCF
-  NCF by year = Actual Present Value
- Discounting is used to determine NPV, P/I, DCFR

Sonatrach / IAP 320
NCF Summary
Elements of NCF Summary

Revenue Investments Expenses Fed IncTax / [Outside Share]
 Sale of Oil & Gas  Drilling  Operating costs  Taxes

 Sale of Other Products  Eqpt. purchase  Maintenance costs
 Sale of Surplus Eqpt.  Pipelines  Overhead [Taxes / Royalties / Govt Take]
 Sale of Prod. Properties  Platforms  Eqpt. Replacement
 Repair workovers
 Fuel costs
 P & A costs
NCF = R - I - E - FIT
Sonatrach / IAP 321
ECONOMIC YARDSTICKS
Profit or Actual Value Profit (AVP)

Profit (AVP) = All Cash In - All Cash out
Actual Value Profit (AVP) =  NCF by year
Profit to Investment Ratio (P/I)

P/I = Profit / Investment
P/I = AVP / I
Sonatrach / IAP 322
ECONOMIC YARDSTICKS
Payout
How long does it take to break even?
How long is the investment at risk?
Payout = Length of time required for the total cash outlay to be recovered
through the profit generated by the project.
 Measured from the time of first investment

 Indicates the riskiness of the opportunity
 Not a good yardstick to compare large and small opportunities
Sonatrach / IAP 323
NCF EXAMPLE
Cumulative
Year Revenue Investment Expense FIT NCF NCF
0 10 -10 -10
1 20 14 1 5 -5
2 20 14 1 5 0
3 20 14 1 5 5
4 20 14 1 5 10
5 20 14 1 5 15
Total 100 10 70 5 15
 AVP =  NCF =
 P/I = AVP/I =
 Payout =
Sonatrach / IAP 324
DISCOUNTING / TIME VALUE OF MONEY
 In order to evaluate future profit, we need to ‘discount’ future $ to ‘today’ $. By
discounting NCF, we develop discounted cash flow, DCF, and various discounted cash
flow yardsticks.
DCF: Discounted cash flow is the concept which recognizes the time value of
money by discounting future outlays and inflows to a present value reference
(usually time zero).
End of Year Discounting

Discount Factors
F = P( 1 + i ) n
1/( 1 + i ) n end of year
P = F( 1 + i ) -n
1/( 1 + i ) n - 0.5 mid year
Mid Year Discounting
where:
F F = Future value
P= n - 0.5 P = Present value
(1+i) i = Annual interest rate (frac.)
n = Number of years
Sonatrach / IAP 325
ECONOMIC YARDSTICKS
Net Present Value (NPV)

NPV =  annual DCF values
NPV to Investment Ratio (NPV/I) or PVP/PVI

NPV/I = PVP / Investment
( PVP/PVI, PVI = present value of the investment stream)
Sonatrach / IAP 326
DCF EXAMPLE
Cumulative Mid Year Cumulative
Year Revenue Investment Expense FIT NCF NCF D.F. @ 12% DCF DCF
0 10 -10 -10 1.0000 -10.0 -10.0
1 20 14 1 5 -5 0.9449 4.7 -5.3
2 20 14 1 5 0 0.8437 4.2 -1.1
3 20 14 1 5 5 0.7533 3.8 2.7
4 20 14 1 5 10 0.6726 3.4 6.1
5 20 14 1 5 15 0.6005 3.0 9.1
Total 100 10 70 5 15 9.1
Note: No discounting in year zero
 NPV(12%) =  annual DCF values =

NPV(12%)/I =

Sonatrach / IAP 327
ECONOMIC YARDSTICKS
Discounted Cash Flow Rate of Return (DCFR)

DCFR = Discount rate at which PVP=0.0
 DCFR is the bank rate of interest made on an investment in a project, or the interest
rate that discounts the sum of net cash flows of the project to zero.
 DCFR is also known as, IRR, IIR, ROR, DCFROR, or simply Return.
 To determine the DCFR:

 NCF is discounted at various discount rates => various NPV’s
 Find the discount rate at which NPV=0
 Iterative process to solve for DCFR

Graphical presentation is a Present Value Profile
Sonatrach / IAP 328
DCF EXAMPLE
Cumulative Mid Year Cumulative
Year Revenue Investment Expense FIT NCF NCF D.F. @ 12% DCF DCF
0 10 -10 -10 1.0000 -10.0 -10.0
1 20 14 1 5 -5 0.9449 4.7 -5.3
2 20 14 1 5 0 0.8437 4.2 -1.1
3 20 14 1 5 5 0.7533 3.8 2.7
4 20 14 1 5 10 0.6726 3.4 6.1
5 20 14 1 5 15 0.6005 3.0 9.1
Total 100 10 70 5 15 9.1

Discount
Rate
% NPV
0 15.0
10 9.9
12 9.1
20 6.4
30 3.9
40 2.0 NPV’s calculated at various
50 0.6 discount rates =>
55.5 0.0
60 -0.5 Net Present Value Profile
70 -1.3
80 -2.1
90 -2.7
100 -3.1
Sonatrach / IAP 329
PRESENT VALUE PROFILE
Present Value Profile
16
14 AVP = 15.0
12
10
8 (12%) = 9.1
6
PVP
4 DCFR = 55.5%
2
0
-2
-4
-6
0 10 20 30 40 50 60 70 80 90 100
Discount Rate - %
 DCFR is between 50% and 60% => 55.5%

 AVP, and NPV at any discount rate also available from the present value profile
Sonatrach / IAP 330
Key Drivers - Sensitivity Analysis
 Evaluate key drivers with sensitivity analysis
 Tornado chart or spider diagram is a very good way to visualize the sensitivities
and magnitude of impact
Tornado Chart Spider Diagram

100
DCFR change from base
90
-3 -2 -1 0 1 2 3 4
80 Reserves Price
+$0.50/Bbl 70
Expenses
60
+/- 20% Capex
Bonus
DCFR, % 50
Royalty
+/- 20% Opex
40
Drilling
+/- 10% Oil Prod 30
+/- 10% Gas Prod 20
10
Uplift 1 Yr earlier
0
-30 -20 -10 0 10 20 30
Change from base case, %
Sonatrach / IAP 331
Incremental Analysis
 Incremental Analysis:
- Evaluates the incremental impact of an investment or cost savings
opportunity.
- Helps distinguish between alternatives. © 2014 ‐ IFP Training
Sonatrach / IAP 332
Incremental Analysis - Choosing Alternatives
Replace Repair
 Case 1 has a higher AVP, NPV. Case 2
Case 1 Case 2 Incremental NCF has a higher P/I and DCFR.
NCF NCF Case 1 - Case2  Compare these 2 alternatives using an
Year $k $k $k incremental analysis.
0 -460 -190 -270
1 100 50 50
2 100 50 50
3 100 50 50
4 200 75 125
 Incremental analysis shows the
5 450 200 250
additional $270k investment is not as
Totals 490 235 255
attractive as either Case 1 or Case 2.
AVP - $k 490 235 255
Payout - Yrs 3.8 3.5 4.0
P/I 1.07 1.24 0.94
PVP(12%) 199 108 91
PVP/I 0.43 0.57 0.34
DCFR - % 26 31 23
Sonatrach / IAP 333
Generating Alternatives
The arithmetic of incremental economics is the easy part.

Finding the opportunities and designing the analyses is the hard part. It
requires technical expertise from all members of the asset level team.
Some examples of typical alternatives:
 How deep to drill an exploration or development well?

 Single or dual completion?
 Stimulate or not?
 Complete 1 or 2 sets of perfs?
 Develop the field or abandon the acreage?
 New Drillwell, Recomplete or sidetrack old well, farmout the lease, or
do nothing?
 Build new plant, upgrade old plant, or do nothing?

 Lease or purchase equipment?
Sonatrach / IAP 334
EXAMPLE
Case 1 Case 2
Gas Lift No Gaslift Incremental NCF  This gas lift installation is a very
NCF NCF Case 1 - Case2 attractive economic opportunity.
Year $k $k $k
0 -100 0 -100
1 120 100 20
2 120 100 20  Need to ask what will the well do
3 120 100 20
without gas lift, and evaluate the
4 120 100 20
5 120 100 20
incremental gas lift impact.
6 120 100 20
Totals 620 600 20  The correct economic yardsticks of
gas lift impact are the incremental
AVP - $k 620 600 20
economics.
Payout - Yrs 0.8 -- 5.0
P/I 6.20 -- 0.20
PVP(12%) 422 435 -13
 The gas lift installation in this case is
PVP/I 4.22 -- -0.13 not attractive.
DCFR - % > 200 -- 6.5
 The do nothing case is important for
incremental economics.
Sonatrach / IAP 335

Decline Curves and Correlations
Xavier LOPEZ
 Decline Curves
 Correlations
Sonatrach / IAP 336
Introduction
FORECASTING
reserves et profiles
PRODUCTION FORECASTING METHODS
 Simplified Methods
 Material Balance
 Decline Curves
 Comprehensive Methods
 Numerical models / Dynamic Reservoir Simulation
Sonatrach / IAP 338
Methods versus Field Status
Decline laws
Models
Material balance
Analogues
0 1 2 5 10 15 20 years
Production
Sonatrach / IAP 339
Reserves assessment – Different methods
 Decline curve analyses
• In many reservoirs, and particularly in older ones, data are
insufficient for conventional material balance calculations or even
more for Dynamic Reservoir Simulation.
• In such reservoirs, reserves estimates must be based mostly on
decline‐curve analysis.
 Decline‐curve methods should be supplemented by other
reservoir engineering tools, whenever possible.
 On the other hand, decline‐curve analysis can serve as a quality
check of other types of calculations.
Sonatrach / IAP 340
Decline analysis
 Decline curve analysis (or Trend analysis)
• For a decline‐curve to represent maximum accuracy, the operating
conditions of the well, or the reservoir, must remain constant.
• Observe and analyze Trends (oil, gas rates, GOR, WOR, Pressure) vs
time, injected volumes, cumulative productions, …
• Estimate Decline rate
Sonatrach / IAP 341
Decline rate
 The analysis of decline‐curve is based on the :
• Decline rate defined as the fractional decline of the rate per unit of
time ( ∆q / q ):
q / q dq / q
D 
t dt
 If D is constant, then,
d ln q 2.3 d log q
as dq / q = d ln q ,
D 
dt dt
 We can use a semi‐log plot of rate vs time to estimate D.
Sonatrach / IAP 342
Decline Curve Analysis
Oil production rate of a field (or a well) cannot be sustained for ever. A
decline of oil production occurs over time because of:
• Decrease of reservoir pressure
• Increase of WOR or GOR (Water or Gas production)
Decline Curve analysis = Derive a representative law from the historical
data to be able to predict and extrapolate history
Remaining Reserves Assessment
Field production predictions
Sonatrach / IAP 344
Decline analysis: Flow rate versus time
Exponential
Harmonic
Hyperbolic
Sonatrach / IAP 346
Decline analysis: Cumulative production versus time
Exponential Np
Harmonic Np
Hyperbolic Np
Sonatrach / IAP 347
Decline analysis: Flow rate versus Cumulative production
Exponential q
Harmonic Ln q
Hyperbolic q1‐b
Sonatrach / IAP 348
Decline Curves
EXAMPLE for D=10% decline
0,8
exp
0,6 hyperbolic(b=1)
0,4 hyperbolic(b=0.5)
hyperbolic(b=0.1)
0,2
0
0 5 10 15 20
time (years)
Sonatrach / IAP 354
Field Application
Hyperbolic This law applies particularly for solution gas drive, gas
cap expansion, large gas caps, especially for tail
productions (very mature fields)
Exponential This law applies for initial decline. Forecasts are
pessimistic for tail productions (very mature fields)
Harmonic This law applies particularly for water drive, when
BSW increases. This method is rather optimistic and is
not convenient if solution gas drive is the main
mechanism
Sonatrach / IAP 355
Exercises
Sonatrach / IAP 356
Oil Reservoirs typical behavior
 Natural depletion: exponential
curves qo vs Np
 Dissolved Gas Expansion : exponential or hyperbolic (b # 0.3)
curves qo vs Np
 Active aquifer : exponential
curves fw or WOR vs Np
357
 Gas Cap Expansion: Hyperbolic as long as gas oil contact has not reached
perforations
curves log GOR vs Np
 Water injection: exponential then Harmonic
curves fo vs Np rather than qo vs Np
At the end of field life: log fo or log WOR vs. Np

358
Gas reservoirs typical behaviour
Curve P/Z vs. Gp very often used:
 It is a straight line for closed reservoirs (i.e. no aquifer)
PV=ZRT or P/Z=RT/V
 The straight line becomes exponential in case of active aquifer
P
Z
we  0
active aquifer
relatively inactive aquifer
we = 0
no aquifer
Gas produced Gp
Sonatrach / IAP 359
 Decline Curves
 Correlations
Sonatrach / IAP 360
Correlations: for solution gas drive fields
Recovery efficiency based on actual field results (68)
k pb R
RF  7.93 log( )  0.373( )  0.182S wi  0.149  0.0006d  0.0045( sb )
o pa Bob
RF is the recovery efficiency as % of the original oil in place
k
( ) dry air permeability divided by the oil viscosity (cp) at the bubble point
o
pb bubble point pressure (psia) divide by the abandonement pressure
( )
p a (psia)
S wi connate water saturation, %
 porosity, %
d reservoir depth, ft
Rsb solution gas oil ratio at bubble point (scf/stb) divided by the oil volume
( )
Bob factor at bubble point (rb/stb)
Sonatrach / IAP 361
Correlations: for water drive fields
Recovery efficiency based on actual field results (73)
E N  0.2719 log(k )  0.133 log( )  1.5380  0.0003488h  0.25669S wi  0.112130
 EN is the recovery efficiency, fraction of the original oil in place
 k permeability , mD
  oil viscosity, cp
 Swi connate water saturation, fraction
  porosity,fraction
h reservoir thickness, ft
Sonatrach / IAP 362
Primary Recovery by Natural Depletion
Material Balance
Xavier LOPEZ
Sonatrach / IAP
 Introduction
 Generalized expression of Material Balance
 Monophasic expansion
 Solution gas drive
 Gas Cap drive
 Natural water drive
 Compaction drive
 Gas Reservoirs
 Summary and conclusions
Sonatrach / IAP 364
INTRODUCTION
Sonatrach / IAP 365
Pressure Regimes
OP=FP+GP
OP=overburden pressure
BURIAL
FP=fluid pressure
GP=grain pressure
OP gradient is about 1 psi/ft
FP gradient is about 0.45 psi/ft
Sonatrach / IAP 366
Pressure Regimes
 A porous reservoir can be abnormally pressured with respect to normal

hydrostatic pressure
 For this to happen, the reservoir must be sealed off from the surrounding
strata
 One important conclusion is that abnormal pressure regime is indicative of a

confined reservoir, and during the production phase, the aquifer activity will
be most probably negligible
Sonatrach / IAP 367
Pressure Regimes
 If the reservoir contains water, oil and gas, the fluid pressure gradients are
(typical figures):
• (dP/dD) water= 0.45 psi/ft
• (dP/dD) oil= 0.35 psi/ft
• (dP/dD) gas= 0.08 psi/ft
Pressure
(dP/dD) gas
GOC
(dP/dD) oil
WOC
(dP/dD) water
Depth
Sonatrach / IAP 368
Pressure Regimes
OP=FP+GP
Production
 When the reservoir is produced, without pressure maintenance, the FP

decreases
 Therefore the GP increases and the pore volume contracts
 This is called reservoir COMPACTION, which can be high for some reservoirs,
resulting in surface SUBSIDENCE
Sonatrach / IAP 369
Introduction
 Drive mechanism refers to the nature of the energy needed to
drive the fluids out of the reservoir, into the wellbore.
 Primary mechanisms have to be understood / evaluated as early
as possible in the field history. They include:
• Monophasic fluid expansion (& rock compressibility)
• Solution gas expansion
• Gas cap expansion
• Water expansion / influx (active aquifer)
Sonatrach / IAP 370
Reservoir Natural Drainage
Initial conditions After production: Np, Gp, Wp
Initial conditions After production: Np, Gp, Wp
Rock compaction & connate water expansion/
Net water influx
Rock compaction & connate water expansion/
Net water influx
Sonatrach / IAP 371
Generalized Expression of Material Balance
 The general form of the material balance equation is derived as a
volume balance which equates:
• the cumulative observed production, expressed as an underground
withdrawal,
• to the expansion of the fluids in the reservoir resulting from a finite
pressure drop,
• plus the reduction in HCPV due to connate water expansion and
decrease in the pore volume due to the rock compaction
Sonatrach / IAP 372
Some definitions:
 N is the initial oil in place in stock tank barrels
m is the ratio =
 Np is the cumulative oil production in stock tank barrels
Rp is the cumulative gas oil ratio =
 We =Cumulative water influx from the aquifer into the reservoir, stb
Wp =Cumulative amount of aquifer water produced, stb
Sonatrach / IAP 373
 The general form of the material balance equation can be written as:
F  N ( Eo  mE g  E f , w )  We Bw © 2014‐ IFP Training
Sonatrach / IAP 374
With:
 F , the underground withdrawal F  N p (Bo  (Rp  Rs )Bg )  Wp Bw
 the expansion of the oil and its originally dissolved gas is
NEo  N [( Bo  Boi )  ( Rsi  Rs ) Bg ]
Bg
 The term describing the expansion of the gas‐cap is NmEg  NmBoi (  1)
Bgi
 the expansion of the connate water and reduction in the pore
c S  cf
volume is NE f , w  N [(1  m) Boi ( w wc )p]
1  S wc
 The term describing the water entries is W Bw
e
Sonatrach / IAP 375
Undersaturated Oil Reservoir: monophasic expansion
 In the general case of monophasic expansion:
Bo  Boi Cw S wc  c f
• We have N p Bo  NBoi [  p ]
Boi 1  S wc
Bo  Boi
• Knowing co 
Boi p
1
• And regrouping ce  (co So  cw S wc  c f )
1  S wc
• The mat bal equation is then
N p Bo  NBoi ce p
 If Cw and Cf are negligible, then
N p Bo  N ( Bo  Boi ) Pi>Pb
Pf>=Pb
Sonatrach / IAP 376
Undersaturated Oil Reservoir: monophasic expansion
Remarks
 Compressibilities
• Co : from lab PVT, up to 20 10‐6 psi‐1
• Cw : from correlations
• Cf : from lab measurements or from Hall’s correlations
• Cw and Cf: usually 3 to 4 10‐6 psi‐1
 The recovery from monophasic expansion is very low: a few %
Sonatrach / IAP 377
Reservoir Natural Drainage
Pi>=Pb
Pf<Pb
Sonatrach / IAP 378
Solution gas drive
 The material balance equation can be simplified as:
Np ( Bo  Boi )  ( Rsi  Rs ) Bg

N Bo  ( R p  Rs ) Bg
 There is an inverse relationship between the oil recovery and the
cumulative gas oil ratio Rp.
Np/N
30%
10%
Rp
 Conclusion: to obtain a good recovery, as much gas as possible
should be kept in the reservoir.
Sonatrach / IAP 379
Gas Cap drive
 With some assumptions, the material balance equation can be written as:
Bg
N p [ Bo  ( R p  Rs ) Bg ]  N [( Bo  Boi )  ( Rsi  Rs ) Bg  mBoi (  1)]
Bgi
 In which the right hand side contains the term describing the expansion of the
oil plus originally dissolved gas together with the term for the expansion of the
gas‐cap gas.
 The equation is rather cumbersome and does not provide any clear picture of
the principles involved in the gas‐cap drive mechanism.
 However, because of the gas‐cap expansion, the pressure decline is less severe
than for a solution gas drive reservoir and generally the oil recovery is greater,
typically in the range 25‐35 %, depending on the size of the gas‐cap.
Sonatrach / IAP 382
Oil reservoir with natural water influx
 Production drive:
As the reservoir is depleted, water influx from the aquifer provides
energy to produce the oil. The water movement comes from the
pore compaction and water expansion in the aquifer.
Sonatrach / IAP 383
Oil reservoir with natural water influx
Assuming Pb << P (undersaturated oil),
For a pressure drop Pi → P, following a produc on NP :

a) Oil volume expands
b) Water volume expands
c) Pore volume decreases
d) Aquifer expands => Water entry We
e) Water production Wp
Oil production = a + b + c + d – e
NpBo = NBoiCe ΔP + We ‐ WpBw

''Monophasic oil expansion'' Equation Water Entry Water Production
Sonatrach / IAP 384
Compaction drive
 As a reservoir gets depleted, its fluid pressure decreases (by p),

hence the effective pressure on the rock grains increases (by p).
Therefore the compaction of the rock is seen as a contraction of
the pore volume Vf :
V f
 c f p
Vf
 Where Cf, also called Cp, is the pore compressibility.
 For most rocks, Cf is of the order of 3 to 10 10‐6 psi‐1 .
 However, for some reservoirs, Cf can be much greater and
compaction becomes significant as a drive mechanism.
Sonatrach / IAP 387
Compaction drive
 One such field is Bachaquero near Maracaibo (Venezuela)
 Bachaquero is one of the fields on the Bolivar Coast, where compaction

reportedly yields oil recovery of up to 20%.
 The chalk fields of the North Sea are also well known for compaction/
subsidence, one of them being Ekofisk.
Sonatrach / IAP 388
Compaction drive
Sonatrach / IAP 389
Ekofisk Subsidence
Sonatrach / IAP 391
Gas reservoirs
Sonatrach / IAP 392
Gas field
Sonatrach / IAP 393
Gas field
With no water entry,
When pressure decreases from Pi to P, the volume occupied by gas under
reservoir conditions does not change. The material balance equation is:
 Bgi 
G Bgi = (G ‐ Gp) Bg Gp  G1  
 Bg 
G : initial accumulation at standard conditions
Gp : gas production at standard conditions
 Zi P 
Bgi

Zi P Gp  G  1  x 
x
Bg Pi Z  Pi Z 
Sonatrach / IAP 394
Gas material balance
This, of course, assumes that all the reservoir depletes in the same manner with P
same everywhere.
Sonatrach / IAP 395
Gas field
 In case of active aquifer (water entry), the straight line becomes exponential:
P
Z
we  0
active aquifer
relatively inactive aquifer
we = 0
no aquifer
Gas produced Gp
Be aware of wrong evaluation of gas in place, if aquifer action not detected!
Necessity of observation wells.
Sonatrach / IAP 397
Summary
 Natural drainage mechanisms for oil reservoirs:
• Monophasic expansion RF few %
• Solution Gas Drive RF 10‐25 %
• Gas cap drive RF 25‐35 %
• Natural water drive RF up to 50‐60 %
• Compaction drive RF 0‐20 %
 Natural drainage mechanisms for gas reservoirs:
• No aquifer RF 60 to 95 %
• With active aquifer RF 50 to 70 %
Sonatrach / IAP 398
Conclusions
Key points to keep in mind
 Material Balance is the basic tool for the Reservoir Engineer to:
• Check production data consistency
• Check consistency between geological evaluation and reservoir

behaviour (Fluid in place calculation)
• Understand the reservoir behaviour
• To design a future complementary development plan
• To forecast production and recovery
Sonatrach / IAP 399
Reservoir Simulation
History matching and Production Forecasts
Xavier LOPEZ
 History matching
 Production forecasts
Sonatrach / IAP 402
History Match
 Objective: Validate (Calibrate) the reservoir characterization by

comparing performance of the model with historical performance
(rates, pressures, saturations)
Sonatrach / IAP 403
History matching: Main issues
 Observed flows are imposed on wells during the history period
 One expects to reproduce:

• Pressure evolution
• WOR and GOR
• WOC and GOC contacts
 This is not a simple work
 It is possible to distinguish between two main types of problems:

• Pressure match
• Saturation match
Sonatrach / IAP 404
History matching: Schematic workflow
NEW GEOLOGICAL
INITIAL MODEL
MODEL
SIMULATION RUN MODIFICATION OF
PARAMETERS
YES
NO
GOOD NO MODIFICATION OF
GEOLOGICAL MODEL
MATCH
YES
FORECAST RUNS
Sonatrach / IAP 405
History matching: Data to match – Pressures
 Shut‐in pressure of wells

• Look at pressure curves to estimate the pressure in the cell
 RFT in wells drilled after the start of production

• Differential depletion by interval
• Communication through faults
 Observation wells
• Shut‐in wells should be changed to observation wells
 WHP of wells not usually used

(flow in tubing difficult to match exactly, interference with
surface flow lines)
Sonatrach / IAP 406
History matching strategy
First phase: pressure match
 Look at total fluid production and average pressure (kind of

material balance)
• Of the whole field
• Of parts of the field (compartments, or zones determined from the
geological analysis, layers)
 Change first the more uncertain parameters by zone

• Aquifer transmissibility (kh), storativity (kh ct)
• Reservoir permeability
− Multiplying factor to reproduce pressure gradients
− Vertical connections to account for pressure discrepancies between
layers (RFT useful)
Connections through faults to account for different pressure regimes
Sonatrach / IAP 407
Fluid distribution matching

 By zones (compartments, or zones determined from the geological analysis,
layers) look at contacts movements, WOR and GOR of wells. Try to match fluid
BT (break‐through), fluid produced volumes
 Adjust first the permeability distribution

• Vertical distribution by layer and connection between layers (vertical
permeability)
• Areal distribution of permeability (barriers, high permeability zones,
sealing or conductive faults)
 Change Kr only if changes in permeability distribution cannot achieve a

satisfactory match
• First check if initial water saturation is correctly represented
• Look at the possibility of hysteresis
Sonatrach / IAP 408
Final step: well by well match
 Once the global and zonal matches are correct, look at each well
 Check if the cell size is not the cause of an incorrect match
 Check if coning can be suspected and is not taken into account by

specific well Kr functions
 Check if the discrepancy does not reveal a completion problem

(cement or casing leak, fluid entry from another interval)
 Corrections should remain in the vicinity of the well
Sonatrach / IAP 409
First step – General field match – Run 1
5000
3000
1000
Wrong initial
10
Pressure drop 8
6
4
2
0
100
80
60
40
20
0
0000
0
81 83 85 87 89 91 93 95 97
Sonatrach / IAP 410
Next step – General field match – Run 2
Aquifer potential increase
5000
3000
1000
Good Initial
10
Pressure drop 8
6
4
2
0
100
80
60 Early Water Prod.
40
20
0
0000
0
81 83 85 87 89 91 93 95 97
Sonatrach / IAP 411
Final step – General field match – Run 3

Oil permeability increase
5000
3000
1000
Good match of 10
pressure profile 8
6
4
2
0
100
80
60 Moderate Water Prod.
40
20
0
0000
Oil production
match
0
81 83 85 87 89 91 93 95 97
Sonatrach / IAP 412
Pressure match: Material balance (1)
 Objective
• Get a correct evolution with time of the average reservoir pressure
 Main parameters
• Volumes Originally in Place
• Aquifer size & water influx
• Pore & Fluid Compressibility
 Important notice
• The material balance should address the whole reservoir voidage
(no material balance per fluid in surface conditions)
• It is useful to get an energy balance to have an estimation of the
importance of each individual production mechanisms (pore
volume contraction, fluid expansion, water sweep, gas sweep…)
Sonatrach / IAP 413
Pressure match: Material balance (2)
 Reservoir voidage calculation
Q res = Qo . Bo (P) + {Qg ‐ Rs (P) . Qo (P)}. Bg (P) + Qw . Bw (P)
 Important notice
• Reservoir voidage has to be calculated and depends on the
reservoir pressure.
• ECLIPSE keyword for reservoir voidage is VRES
Sonatrach / IAP 414
History matching: Conclusion
 Keep a consistent geological model
 Do not match one parameter while ignoring the others
 Do not discard data which do not match !!!
 Avoid “torturing” the Kr curves
 Do not look for a perfect match
Sonatrach / IAP 415
Outline
 History matching
 Production forecasts
Sonatrach / IAP 416
Introduction
 Good Production forecasts will depend on

• Good history match
• Good integration of well performance and production constraints
 Well performance
• Inflow curves
− Productivity index or complete curve
• Outflow curves
− VFP tables
 Production constraints
• Constraints related to flow
− Maximum water‐cut or maximum GOR per well
− Maximum water production or gas production for a group of wells
• Constraints related to pressure
− Minimum bottom hole flowing pressure
− Minimum well head pressure
Sonatrach / IAP 417
Well Controls
Principal uses in forecast mode
 Main controls
• Imposed Flow rate
− Oil, Water, Gas, Liquid, Reservoir voidage
• Imposed pressure
− Tubing Head Flowing pressure
− Bottom hole flowing pressure
 Secondary controls
• Flow rates
− Economic limits
− Rates upper limit per phase
− Maximum ratios (Wcut, GOR, WGR)
• Pressures
− BHP and THP limit (lower for a producer, upper for an injector)
− Maximum drawdown
 VFP tables are used to relate bottom hole to well head pressures
Sonatrach / IAP 418
Conclusion
 Simulation models are only tools
 Use simple material balance tools to check your data

 Check the geological validity of the data
 Check result validity
 A good model is one that provides an accurate flow
representation, with:
• An adapted 3D grid
• A realistic set of petrophysical parameters
• A successful upscaling
Sonatrach / IAP 419
Static Model
Uncertainties
Xavier LOPEZ
 Structural Uncertainties
• Uncertain parameters identification
• Uncertain parameters quantification
• Uncertainties processing
 Geological Uncertainties
• Deterministic method
• Geostatistical Monte Carlo methods
• Populating the model
− Sedimentology and facies
− Petrophysical properties
− Fluids and contacts
• Static models selection
 Towards the dynamic studies
Sonatrach / IAP 422
Methodology for structural uncertainties
 Identify uncertainties:
• Analysis of data
 Quantify their magnitude:
• Geo‐statistical techniques
• rank them in terms of impact on the results & keep the most
influential,
• combine them together
 Process the uncertainties
• Dedicated tools
• Simulation
• GRV calculation
Sonatrach / IAP 423
Uncertain Parameters Identification
Sonatrach / IAP 424
Seismic processing Uncertainty example: Migration type
Sonatrach / IAP 425
Fault Picking Uncertainty
Sonatrach / IAP 426
Interpolation Uncertainty example: Mapping from 2D seismic
Sonatrach / IAP 427
Uncertain Parameters Quantification
Usually 2 main parameters:
the seismic picking
the depth conversion
Sonatrach / IAP 428
Combining Uncertainties
Depth uncertainty
Picking uncertainty Velocity uncertainty
Combination of variances
if independence
8-
Sonatrach / IAP 429
Processing
Principle of structural simulation
Sonatrach / IAP 430
Simulation
Sonatrach / IAP 431
Structural Uncertainties Results of Structural Simulation
Sonatrach / IAP 432
 Structural Uncertainties
• Uncertain parameters identification
• Uncertain parameters quantification
• Uncertainties processing
 Geological Uncertainties
• Deterministic method
• Geostatistical Monte Carlo methods
• Populating the model
− Sedimentology and facies
− Petrophysical properties
− Fluids and contacts
• Static models selection
 Towards the dynamic studies
Sonatrach / IAP 433
Deterministic method
 Description:
• optimistic hypotheses = « maxi case »
• reasonable hypotheses = « most likely case »
• pessimistic hypotheses = « mini case »
 Advantages :
• each parameter is controlled from knowledge
• well suited for major choices or meta‐scenarios
(geological scheme, fault pattern, ...)
 Drawbacks :
• difficult to associate probability for the HIP of each case,
• Not suitable for variables which vary continuously in an uncertainty range
• uncertainty on HIP is often over‐estimated
Sonatrach / IAP 434
Mapping Monte Carlo method: description
 Description :
• the reservoir is described with 3D maps randomized with geostatistics
• Multi realizations of geo‐models
 Advantages :
• formal quantification of uncertainties,
• the uncertainty on spatial distribution of volumes can be assessed.
 Drawbacks :
• a single volume can be obtained with different sets of realization, «mini maps» or «maxi
maps» notions are meaningless
• selected realizations for extreme cases depend on envisioned criteria (GRV, HIP, reserves,
production profile);
Q10 for reserves is not necessarily Q10 for HIP or GRV
• coherency problems may occur and must be treated
Sonatrach / IAP 435
Geological uncertainties Nested simulation principle
NESTED SIMULATIONS
Geometry: Surfaces, thickness
Sedimentary: Multi‐level embedded facies modeling
Petrophysics: Porosity, N/G, Kx, Ky, Kz and any user‐defined variable…
Contacts: OWC, GOC
Fluids: Water Saturation, Bo…
Sonatrach / IAP 436
Populating the model: Principles
 The objective is to determine for each cell :
• Porosity
• N/G
• Facies and Rock Types
• Sw
 The sedimentology, the petrophysical and fluid data can be the source of
geological uncertainties
Sonatrach / IAP 437
Populating the model: Principles
 The general workflow:
• Generate the stratigraphic model (s)
• Generate sedimentological model (s) with geological bodies and/or facies
• Proportions and trends from well data and regional knowledge.
• Sometimes, the seismic can help.
• Generate porosity model (s) with well data and possibly seismic data (co‐simulation).
• Porosity together with Rock Types, will be the source for generating Permeability model
(s) and Pc’s (which in turn will generate Sw’s)
• The link between K and porosity can be simple analytical functions or cloud transforms
(Gaussian distributions?)
• Make sure that Sw’s honour the well log data
Sonatrach / IAP 438
Facies and petrophysical filling: facies proportions
different facies realizations
 extreme cases for volumetrics are extreme
cases for proportions of facies in
environments
Sonatrach / IAP 439
Facies and petrophysical filling: seismic constrained
a facies model example:  step 1: data analysis
 step 2: environment simulation
Seismic data analysis (IP/IS crossplot)
environments from impedances (IP/IS)
Sonatrach / IAP 440
Geological uncertainties Examples
Sonatrach / IAP 441
Petrophysical uncertainties
Example of data uncertainty from log analysis :
Saturation log Sw derived with Archie's law
a Rw
Swn  . Rw = water resistivity
 Rt
m Rt = global resistivity log
a, m, n Archie's parameters
Optimistic
Most likely
pessimistic different parameter sets
Sonatrach / IAP 442
Petrophysical uncertainties
 What is interpreted from the logs is
 We deduce
 The absolute values of uncertainties are
 The relative uncertainties are
 Example
dSw dSw/Sw dSo dSo/So
So=0.9 0.03 3%
Sw=0.1 0.03 30%
Sonatrach / IAP 443
Fluids filling : 3 main aspects
 Saturations: transition zone uncertainty
 Contacts uncertainties
 PVT uncertainty
Sonatrach / IAP 444
Uncertainty on transition zone
 A lot of uncertainties on Swat are resulting from other uncertainties, induced
uncertainties:
• h is varying from structural uncertainties and contacts uncertainties
• Pc is varying from fluid densities and interfacial tension uncertainties
Sonatrach / IAP 445
Water saturation modeling with transition zone
Sonatrach / IAP 446
Fluid filling: identified contact
 The fluid contact has been observed at wells:
• no uncertainty ????
• the remaining uncertainty is measurement uncertainty (different wells with different
contacts, uncertainty on pressure gradients intersection)
Sonatrach / IAP 447
Fluid filling: not identified contact
 The fluid contact has not been observed at wells:
• define the bounds of the uncertainty domain:
− for water oil contact (WOC): water up to (WUT), oil down to (ODT)
− for gas oil contact (GOC): oil up to (OUT), gaz down to (GDT)
− for gas water contact (GWC): water up to (WUT), gaz down to (GDT)
Sonatrach / IAP 448
Fluid filling: contacts uncertainties distribution type
 Use bounded distribution
 If no information on more probable values,
use uniform distribution
 If some information on more
probable values, use triangular
or beta distribution
 If top structural and/or spill point are used and if
there is a structural uncertainty, bounds can vary
from one realization to another
Sonatrach / IAP 449
Fluids filling: PVT characteristics, an example
Sonatrach / IAP 450
Static Models Selection
Sonatrach / IAP 451
Why Simulate Several Models?
Help History Matching
 Classical study : Fixed Geological model
 Need to strongly modify dynamic parameters
• Local modifications
• Input of new barriers
• …
=> to get a correct match
 Even with the whole set of dynamic parameters
the history match is sometimes difficult or even impossible.
 Remember: the main uncertainty is the static model
Sonatrach / IAP 452
Models Selection Criteria: History match (Vincent et al, 1998)
200
History-match objective function
150
100
Base case map

50
0
4 6 8 10 12 14 16 18
Realizations with
OOIP (Million Sm3)
smaller OIP provide
the best match!
Sonatrach / IAP 453
Models Selection Criteria: Geological scenarios
 Same number of Realisations per Scenario
 Regular sampling for each Scenario (every X‐tile)
Sonatrach / IAP 454
Selection of mini, median maxi models (Charles et al, 2001)
OOIP / RECOVERABLE RESERVES CORRELATION

1
0.9
NORMALIZED PRODUCTION
0.8
0.7
0.6 q90
0.5
q50
0.4
0.3 q10 q90
q50
0.2
q10
0.1
0
0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
NORMALIZED OOIP
Sonatrach / IAP 455
Towards the dynamic studies
Sonatrach / IAP 456
GRV Probabilistic Distribution ‐ Geophysics
 Results of Structural Uncertainties
• Distribution of Gross Rock Volume
• Structural Maps
Sonatrach / IAP 457
HIIP Probabilistic Distribution ‐ G&G
 Results of Geological and Structural
Uncertainties
• Distribution of Hydrocarbons in Place
• Reservoir Models © 20124‐ IFP Training
Hrz permeability
Sonatrach / IAP 458
Positioning in the Global Workflow
 Static Uncertainties: HCIP distribution
 Combine Static and Dynamic
Uncertainties
 Reserves distribution
Sonatrach / IAP 459
Dynamic Uncertainty Studies
Xavier LOPEZ
 Introduction
 Exercise
 Sensitivity analysis and experimental designs: some notions
 Summary of methodologies
Sonatrach / IAP 462
Introduction
Sonatrach / IAP 463
Introduction: experimental design and response surface
 First introduced in reservoir engineering in the early nineties.
 The purpose is
• to obtain maximum information
• at the minimum cost (minimum number of runs)
• with a pre‐determined plan (for runs)
 Since then, the experimental design and response surface method have been
used in petroleum industry for many purposes.
Sonatrach / IAP 464
 Statement of the problem:
• There are uncertainties on some of the dynamic parameters (Xi)
• We need to establish a range for Response (e.g. reserves):
− P90, Mode, P50, Mean, P10
• These are needed for development decision
• Experimental design and Response surface
− help determine the Response range
Reservoir:
Development Plan Uncertain parameters Response=f(Xi)
Xi
Sonatrach / IAP 465
 The response can be:
• Reserves
• Plateau duration
• Production profile
• Financial Net Present Value
(NPV)
• ….
Sonatrach / IAP 466
• Reserves
(NPV)
• ….
Sonatrach / IAP 467
• Reserves
(NPV)
• ….
Sonatrach / IAP 468
Experimental Design: Classical Workflow
N uncertain parameters (N<=32)
1‐ Screening & exp design Phase
‐ Uncertainty Ranking with respect to their impact N‐n param.
Flow simulation (ECL, ATHOS,...)
on the response
‐ Interactions calculations
2‐ Modelling Phase
‐ Multi‐variable Regression
n param. (minimum 3 levels per parameter)
Post‐Processing
3‐ Use Response Surface
(Crystal Ball...)
‐ Probabilistic Distribution For Response
(Monte Carlo)
Sonatrach / IAP 469
Exercise: sensitivity and interaction
Sonatrach / IAP 470
Sensitivity and experimental design:
some notions…
Sonatrach / IAP 471
Uncertain Parameters
 Dynamic Uncertain Parameters Xi :
• Level of absolute permeability
• Relative permeabilities
• Fault transmissivity
• Barriers to vertical flow transmissivity
• PVT
• Wells skin, etc.
• ……
 Each Xi is assigned symbolic values:
• ‐1: pessimistic value
• 0 : base case value
• +1: optimistic value
Sonatrach / IAP 472
Sensitivity Analysis
 1st step
• is to identify the uncertain reservoir parameters. (e.g. N)
 2nd step
• to identify the most influential reservoir parameters. (e.g. n)
• Usually 2*N+1 simulation runs are needed
• n uncertain parameters kept for the rest of study
 The Tornado diagram can help to identify the influential reservoir parameters
Example of 2
parameters
Sonatrach / IAP 473
Tornado Chart: Example
2n+1 reservoir simulation runs
RESERVES TORNADO CHART
permeability
Parameters with Kv/Kh
major impact
Sorw
Parameters Oil Column

with little
impact OIIP
-400 -300 -200 -100 0 100 200 300 400

Sonatrach / IAP 474
 Designs
• Most commonly used designs:
− Factorial and composite designs
• Factorial designs have been particularly popular
• The following figure illustrates the application of a factorial design with two
parameters.
• If we have n parameters with two levels of change (the pessimistic and the
optimistic value), 2n experiments need to be conducted.
Conduct experiments
at the corners
Predict the outcome for
the entire area
Sonatrach / IAP 475
 Designs
• Usually, each parameter has three levels of change (the pessimistic, the
most likely, and the optimistic value)
• in this situation, we should conduct 3n experiments.
• Even for a modest set of 5 variables,
− the total number of experiments would be 243.
• Conducting this many experiments is too time consuming and expensive.
• One compromise is to use the so‐called Composite Designs.
• These consist of 2n factorial designs augmented by 2n star points.
• Plus 1 central point (all the variables at their most likely values).
Sonatrach / IAP 476
Example of composite design
 Designs
• There are n=4 parameters in the composite design in following figure.
• Thus it has 24 = 16 factorial designs, 2x4 = 8 star points, and 1 central point. The total
number of designs is 25.
INTERACTION
SENSITIVITY
Sonatrach / IAP 477
Composite design
 Conduct Experiments
• After the design is finished, the next step is to conduct the experiments.
• Each experiment needs one reservoir simulation run.
Sonatrach / IAP 478
Response Surface Methodology
 Example with 2 parameters
 Sensitivity runs: 5
 Interaction Experiments:
• 4 runs
In this case,
9 simulation
runs are
used
Sonatrach / IAP 479
Response Surface Methodology
 Response Surface fit
• The response surface model is usually a polynomial fit with linear
regression:
y  b0  b
i
i
xi  b
i j
ij x ix j  b
i
ii x i2  
Sonatrach / IAP 480
Why a Model of Models: Monte Carlo Simulation
 Probabilistic Response
Distribution
• Dynamic parameters
distribution
• With corresponding Surrogate
Model
• Monte Carlo Random Draws
FRS ,reserves ( X 1 , X 2 )
Y = FRS(X1,X2)
Sonatrach / IAP 481
Why a Model of Models: Monte Carlo Simulation
 Probabilistic Response
Distribution
• Dynamic parameters
distribution
• With corresponding Surrogate
Model
• Monte Carlo Random Draws
Y = FRS(X1,X2)
FRS , production ( X 1 , X 2 )
Sonatrach / IAP 482
APPENDIX: Summary of methodologies
Sonatrach / IAP 483
Summary: second thoughts
 Summary
Complex methods
• Many structural models Time consuming
• 1000 or more geomodels Expensive
• TOTAL nb of runs: Valid for 1 development plan
− 100? 200?
But comprehensive….. © 2014 ‐ IFP Training
Sonatrach / IAP 484
Notions of Probability
Xavier LOPEZ
 Risk and uncertainty
 Main concepts of probability
 Probability calculation rules
 Expected value
 Decision trees
 On the use and abuse of extrapolation
 General Multiplication Rule
 Exercises
Sonatrach / IAP 486
Risk and Uncertainty
TWO BASIC NOTIONS
1) RISK
• Risk is the probability that the parameter of interest fails to work at the minimum expected
level
• Example of application: exploration, “Fiches Prospect”, Decision Trees
• E.g. Will this well find oil?  probability
2) UNCERTAINTY
• Uncertainty is the variation in the range of possible outcomes
• Used for development decisions
• E.g. How much oil will it produce?  range of values
LOTS OF THINGS ARE UNCERTAIN, BUT WE DON’T
KNOW HOW MANY BECAUSE WE CAN’T SEE THEM
487
Sonatrach / IAP
Probability Functions © 2012 ‐ IFP Training
Sonatrach / IAP 488
Probability ‐ Discrete Case
 The probability of an event represents the percentage of time that this event is
expected to happen when the experiment is repeated over and over again,
independently and under the same conditions.
 Discrete number of equiprobable outcomes
number of favorable cases
P(A) = total number of cases
 Examples
• Coin P(heads) = 1/2 P(tails) = 1/2
• Die P(outcome=3) = 1/6
• Marbles A box contains 30 red marbles and 70 black marbles.
The probability of drawing a red marble at random from the box is
30 /100
489
/ IAP
Quiz
There is a 10% chance that project A is a success.
Same for project B. Projects A and B are independent.
Therefore the chance that A and B are successes is:
□ 1% □ 10% □ 20%
A well has a probability of success of 1/2.
Therefore with 2 wells we are sure to strike oil:
□ True □ False
Sonatrach / IAP 490
The Need for Formal Concepts
 To answer these questions we cannot rely on intuition.
 We need some formal concepts.
Sonatrach / IAP 491
Probability ‐ General Case
General definition
 A probability is a positive number assigned to an event A with the
following rules
• 0  P(A)  1
• P(impossible event) = 0 P(sure event) = 1
• P(not A) = 1 ‐ P(A)
• P(AB) = P(A) + P(B) if A and B are mutually exclusive
A or B
Two events A and B are mutually
exclusive if they cannot occur together.
Sonatrach / IAP 492

Independence
 Two events are independent if the chances for the second one
stay the same no matter how the first one turns out.
 Examples:
• Successive tosses of a coin are independent.
• Successive rolls of a die are independent.
• Successive draws from an urn without replacement are dependent.
• The values at nearby points in space are generally dependent.
 For independent events the probability of A and B is given by
P(AB) = P(A and B) = P(A) x P(B)
Sonatrach / IAP 493
Summary of Calculation Rules
 COMPLEMENTATION RULE
• The probability that A does NOT occur is
P(not A) = 1‐ P(A)
 ADDITION RULE
• If A and B are mutually exclusive the probability that A or B occur is the sum
of probabilities
P(A or B) = P(A) + P(B)
 MULTIPLICATION RULE
• If A and B are independent the probability that A and B both happen is the
product of probabilities
P(A and B) = P(A) x P(B)
Sonatrach / IAP 494
Answer to the quiz (1/3)
There is a 10% chance that project A is a success.
Same for project B. Projects A and B are independent.
Therefore the chance that A and B are successes is:
□ 1% □ 10% □ 20%
 MULTIPLICATION RULE
• If A and B are independent the probability that A and B both happen
is the product of probabilities
P(A and B) = P(A) x P(B)
 P(A and В) = 0.1 x 0.1 = 1%
Sonatrach / IAP 495
A well has a probability of success of 1/2.
Therefore with 2 wells we are sure to strike oil.
□ True  False
 Addition rule
• If A and B are mutually exclusive the probability that A or B occur is the
sum of probabilities
• A = {Well 1 is a success} A and B are NOT mutually exclusive
• B = {Well 2 is a success} since it is possible to have more than 1
success, so the addition rule does not apply
A P(A  B) = P(A) + P(B) ‐ P(A  B)

Sonatrach / IAP 496
event A = {Well 1 is a success} A, B independent
event B = {Well 2 is a success} P(A) = P(B) = 1/2
P(A or B) = P (at least one success) = 1 – P (all wells fail)
P (all wells fail) = (1‐P(A))x(1‐P(B))=(1/2) x (1/2) = 1/4
P (at least one success) = 1 ‐ 1/4 = 3/4 = 75%
So with 2 wells we are only 75% sure of a success, not 100% sure!
Generally, with n wells P(A1 or A2 or….An)=1‐(1/2)n <1 …(never 100% sure)
Alternatively
P(A  B) = P(A) + P(B) ‐ P(A  B) = 1/2+1/2‐1/4 = 3/4
Sonatrach / IAP 497
Expected Value of a Discrete Variable
 The expected value E(X) of a discrete random variable X is the
probability‐weighted average of all possible outcome values.
Value of X x1 x2 x3 ■■■
xn
Probability p1 p2 p3 ■■■
pn
E(X) = p1 x1 + p2 x2 + p3 x3 +... + pn xn
 Similarly, we can define the Expected Monetary Value EMV:
• It is the probability weighted average of all possible (NPV)i
Sonatrach / IAP 498
Decision Tree
 A graphical tool to model decisions and chance outcomes
Upper path EMV = 0.105 x 110 + 0.14 x 50 + 0.105 x 20 + 0.65 x (‐10) = $14.15 M
= 0.35 x 59 + 0.65 x (‐10)
Lower path EMV = 0
Sonatrach / IAP 499
On the use and abuse of extrapolation
Quiz extracted from the Black Swan (Nassim Nicholas Taleb)
 Facilitator: Assume that a coin is fair, i.e., has an equal probability
of coming up heads or tails when flipped. I flip it ninety‐nine
times and get heads each time. What are the odds of getting tails
on the next throw?
 Dr. John: Trivial question. One half of course, since you are
assuming 50 percent odds for each and independence between
draws.
 “Fat” Tony: I’d say no more than 1 percent, of course.
 Who do you think is right: Dr. John or “Fat” Tony ?
Sonatrach / IAP 500
The Black Swan Quiz
Quiz extracted from the Black Swan (Nassim Nicholas Taleb)
 Additional comments from “Fat” Tony: You are either full of crap
or a pure sucker to buy that “50 percent” business. The coin gotta
be loaded. It can’t be a fair game. (Translation: it is far more likely
that your assumptions about the fairness are wrong since the coin
delivered ninety‐nine heads in ninety‐nine throws.)
 This book is about trying to formalize, in mathematical terms, the
unpredictable. Economists, including some who have been
awarded the Noble prize, take a good beating from the author.
 The Black Swans are the wild random events that underlie our
lives. Their impact is huge; they are nearly impossible to predict;
yet after they happen, we always try to rationalize them
Sonatrach / IAP 501
Conditional Probability
 Often we are interested in the probability of an event given that another one
has occured.
 Examples:
• Probability of gas given a seismic anomaly
• Probability that reserves > X given discovery
Event of interest Conditioning
Event
Sonatrach / IAP 502
Conditional Probability Definition
 By definition the probability of the event B given that A has occurred, also
called conditional probability of B given A, is the probability of the event B
restricted to cases where the event A has occurred.
 Also
Sonatrach / IAP 503
General Multiplication Rule
 The probability that two things both happen is equal to the probability that the
first thing happens multiplied by the probability that the second happens given
that the first has happened:
P A  B   P A* PB.given. A
P A  B   PB * P A.given.B 
Sonatrach / IAP 504
Statistical Description of Data &
Common Continuous Distributions
Xavier LOPEZ
 Descriptive statistics
• Histogram, location, dispersion
• Quantiles, probabilistic reserves
 Theoretical models
• Population and samples
• Expected value
• Probability density function, S‐curve
 Common Continuous Distributions
• Normal
• Log‐normal
• Triangular and Uniform
Sonatrach / IAP 506
Deterministic or Probabilistic?
 There are two worlds:
• In an ideal world we can give a single correct answer.
• In a real world there are uncertainties and we can only give a range of
values.
 Probability distributions are the meaningful way to quantify uncertainty.
DETERMINISTIC: a single value PROBABILISTIC: a range of values
Sonatrach / IAP 507
Uncertainty and Ignorance
 An individual outcome is unpredictable.
However, the distribution of outcomes can be determined with some precision.
Uncertainty is not the same as ignorance.
The probability distribution defines exactly what we know.
a single value: unpredictable a distribution of values: predictable
Sonatrach / IAP 508
Histograms
 A histogram is a very powerful summary of large amounts of data
histogram cumulative histogram
area of each bin proportional to % of samples; percentage of samples < x
total area represents 100% increases from 0% to 100%
bin width: tradeoff between resolution and integral of histogram
stability
Sonatrach / IAP 509
Descriptive Statistics
 There are two main characteristics of a histogram: location and dispersion.
 Location parameters
• mean = sum / count sensitive to outliers
• median = value dividing the population in two halves robust against outliers
• mode = most frequent value may not be unique
symmetric distribution skewed distribution
location parameters are location parameters are
the same different
Sonatrach / IAP 510
Central Tendency Comparisons
DATA MEAN MODE MEDIAN
10, 20, 30, 40, 50 30 NA 30
10, 20, 30, 40, 50, 50 33.33 50 35
1, 3, 3, 3, 7, 23, 100 20 3 3
1, 1, 2, 3, 3 2 tie: 1, 3 2
2, 2, 40, 4000 1011 2 21
Sonatrach / IAP 511
Descriptive Statistics: Dispersion
 Dispersion parameters
• maximum ‐ minimum too extreme
• P90 and P10 "reasonable" mini and maxi
• variance = mean square of deviations from the mean in squared units
• standard deviation = variance (, sigma, SD) same units as the data
• coefficient of variation =  / mean (variable > 0) dimensionless
Observed values are
rarely more than 2 or 3
standard deviations away
from the mean
Sonatrach / IAP 512
Calculation of Sample Variance: Exercise
Xi Xi ‐ mean squared squared Xi Mean square

minus square
27 9 81 729 of the mean
0 ‐18 324 0
19 1 1 361
4 ‐14 196 16
13 ‐5 25 169
50 32 1024 2500
8 ‐10 100 64
13 ‐5 25 169
35 17 289 1225
11 ‐7 49 121
sum 180 0 ??? ???
mean 18 0 ???
???
Var(X) = ???
Stdv(X) = ???
Sonatrach / IAP 513
Properties of Variance
Does not change if all data are shifted
by the same amount (change of
origin).
If all data are multiplied by b the
variance is multiplied by b2 and the
standard deviation by b (rescaling).
Quiz: What can you say about X when Var (X) = 0?
X Deterministic
X Probabilistic
Sonatrach / IAP 514
Outline
• Expected value
Sonatrach / IAP 515
Quantiles
 The Q quantile is a value such that % of the data lies below Q .
quantile name percentage below

Q10 10th percentile = first decile 10%
Q50 50th percentile = median 50%
Q90 90th percentile = ninth decile 90%
 In the Petroleum Industry the definition is usually reversed and P  values are
defined such that  % of the population lies ABOVE!!!
• P90 = 90% of the values exceed P90 i.e. P90 = Q10
Note: generally P50  mode !!! (this is a common error)
Sonatrach / IAP 516
Reserves Distribution 1 (Ascending Cumulative Distribution
Function)
Sonatrach / IAP 517
Reserves Distribution 2 (Descending CDF)
Sonatrach / IAP 518
Deterministic vs Probabilistic Definitions
Deterministic Probabilistic
1P Proved P 90 (usually > 1P)
2P Proved + Probable
P 50 (roughly = 2P)
(most likely / best guess)
3P Proved + Probable +
P 10 (usually < 3P)
Possible
Sonatrach / IAP 519
Outline
• Expected value
Sonatrach / IAP 520
Sampling
The available data are samples from a population (the reservoir)
Population Sample
In geosciences, samples usually represent a very small fraction of the population.
Cores 10‐9 Population 10 M
A factor of 100
Cuttings 7.10‐9 Sample 1000
to 100000 !
Logs 10‐6 Ratio 10‐4
Typical oil field Typical opinion poll
Sonatrach / IAP 521
Estimation
We are interested in the properties of the population
Population Sample
Fixed but unknown Random
• Sample data are finite, the population is potentially infinite
• Sample data change with the sampling, the population is fixed
• Sample data are discrete values, population values may be
continuous
Sonatrach / IAP 522
Sample and Population Statistics
SAMPLE POPULATION
Mean sample mean expected value
Variance sample variance population variance
probability density function,
Histogram,
Distribution cumulative distribution
cumulative histogram
function
Sonatrach / IAP 523
Outline
• Expected value
Sonatrach / IAP 524
Expected Value Versus Sample Mean
 X = random variable = quantity of interest
E(X) = expected value = population mean
 X = sample mean
= an estimate of the population mean
Sonatrach / IAP 525
Expected Value of a Discrete Variable
 The expected value E(X) of a discrete random variable X is the
probability‐weighted average of all possible outcome values.
Value of X x1 x2 x3 ■■■
xn
Probability p1 p2 p3 ■■■
pn
E(X) = p1 x1 + p2 x2 + p3 x3 +... + pn xn
 E(X) is the long term average of X when sampled repeatedly.
Sonatrach / IAP 526
Outline
• Expected value
Sonatrach / IAP 527
Probability Density Function
 A smooth fitted curve is used as a
theoretical model for the histogram
 f(x) is a density of probability NOT a
probability P( x  X  x  dx )  f ( x ) dx
P( x  X  x  dx )  f ( x ) dx
f( X )
 Probability of X in interval x x + dx
• The probability of an interval is the
area under the curve
• The total area under the p.d.f. curve is
1
• The probability of exactly x is 0
because dx = 0
Sonatrach / IAP 528
Cumulative Distribution Function
 The integral of the density of probability distribution function
f( X )
 F(x) = P( X < x) = Probability that X < x x
P( 0 X  x )   f ( X ) dX
0
Sonatrach / IAP 529
First Two Moments of a Continuous Variable
 Population Mean
E(X) =  x f(x) dx = m
 Population Mean square
E(X2) =  x2 f(x) dx
 Population Variance
Var(X) = E(X ‐ m)2 =  (x ‐m)2 f(x) dx
 Additivity
E(X2) = Var(X) + [E(X)]2
Sonatrach / IAP 530
Murphy's Laws: Probabilistic Version
The chance of the buttered side of the bread falling face
down is directly proportional to the cost of the carpet!
Sonatrach / IAP 531
Calculation of Sample Variance: Solution
Xi Xi ‐ mean squared squared Xi Mean square

minus square
27 9 81 729 of the mean
0 ‐18 324 0
19 1 1 361
4 ‐14 196 16
13 ‐5 25 169
50 32 1024 2500
8 ‐10 100 64
13 ‐5 25 169
35 17 289 1225
11 ‐7 49 121
sum 180 0 2114 5354

mean 18 0 535
211
Var(X) = 211 = 535 ‐ 182 = 535 ‐ 324 = 211
Stdv(X) =  211 = 14.54
Sonatrach / IAP 532
• Normal
• Lognormal
• Triangular and uniform
Sonatrach / IAP 533
Normal Distribution
Gaussian distribution, bell‐shaped curve  population mean
N(,)
The most used  standard deviation
distribution
standard normal:  = 0,  = 1
95% of the area under the curve
total of 5% of the area under the curve
The prototypical symmetric distribution ± 68 %

 ± 1.28  80 %
Porosity, Net to Gross, errors ...
 ± 1.65  90 %
(usually truncated)
 ± 1.96  95 %
 ± 2.58  99 %
Sonatrach / IAP 534
Outline
• Normal
• Lognormal
Sonatrach / IAP 535
Lognormal Distribution
Distribution of X = eY when Y is normal
The prototypical right‐skewed distribution
Hc in place, reserves, size of
fields, costs.
Sonatrach / IAP 536
Moments of Lognormal Distribution
Scale logarithmic arithmetic

Variable Y = Ln(X) X = exp(Y)
Distribution normal lognormal
Q10  ‐ 1.28  exp ( ‐ 1.28 )
Q90  + 1.28  exp ( + 1.28 )
Q50  exp ()
Mode  exp ( ‐  2)
Mean  exp ( + 1/2  2)
Variance 2 Mx 2 [exp ( 2) ‐ 1]
Sonatrach / IAP 537
Swanson's Formula
Sonatrach / IAP 538
Fitting a Lognormal From Q10 and Q90
P(X < Q10) = 10 % P(X < Q50) = 50% P(X < Q90) = 90 %
If X is log normal Y = ln (X) is normal N(, 2)
P(Y <  ‐ 1.28  ) = 0.10
P(Y <  + 1.28  ) = 0.90 P(Y < ) = 0.50
Since the log function is order‐preserving
In (Q10) + In (Q90)
ln (Q10) =  ‐ 1.28  =
2
In (Q90) ‐ In (Q10)
ln (Q90) =  + 1.28  =
2.56
Q90 = Q50 x factor Q10 = Q50 / factor Q50 = Q10 x Q90
2
Mean = exp( +  /2)  0.3 Q10 + 0.4 Q50 + 0.3 Q90
Sonatrach / IAP 539
Exercise: Fitting a Lognormal
 Compute the missing terms from the following lognormal data
(1) Q10 = 50 Q50 = ? Q90 = 200 Mean ?
(2) Q10 = 75 Q5 = ? Q50 = 130 Q95 = ? Q90 = 225
Hints (all necessary values are provided)
Q5 = exp ( ‐ 1.65 ) Q95 = exp ( + 1.65 )
Sonatrach / IAP 540
Outline
• Normal
• Lognormal
Sonatrach / IAP 541
Triangular and Uniform Distributions
UNIFORM
parameters: mini, maxi
mean: (mini + maxi) / 2
variance: (maxi ‐ mini)2 /12
f(x) = constant for mini < x < maxi
TRIANGULAR
Parameters: mini, mode, maxi (a,b,c)
mean: (mini + mode + maxi) / 3
variance: (a2 + b2 + c2 ‐ ab ‐ ac ‐ bc) /18
f(x) = equation of the triangle
Sonatrach / IAP 542
Answers: Fitting a Lognormal
Sonatrach / IAP 543
Monte Carlo Simulation &
The Parametric Method
Xavier LOPEZ
Sonatrach / IAP
 Principle of the Monte Carlo approach
 Simulating reserves (@Risk, Crystal Ball)
 Reserves aggregation
 Important properties
• The effect of correlation on sums and products
• Central limit theorem for sums and products
 The Parametric method
 Exercise (Crystal Ball)
 Exercise (Parametric Method)
Sonatrach / IAP 546
The Monte Carlo Simulation Approach
etc….
See next Draw random values for each:
slide… GRV , N / G ,  , S hc ,1 / Bo , RF Repeat
n
times
Combine to calculate reserves from:
1
Re s  GRV * N / G *  * S hc * * RF
Bo
OUTPUT: Reserves c.p.d.
•Probability distribution of reserves
•Cum.Prob.Distribution of reserves
Sonatrach / IAP 547
Sampling From a Continuous Distribution
Assume we have a random number generator producing values between 0 and 1.
Problem Simulate a random variable X with a given continuous c.d.f. F(x).
Solution Simulate a uniform random number U between 0 and 1 and compute
the inverse transform X = F‐1 (U)
We know how to simulate
uniform values between 0
and 1
Sonatrach / IAP 548
Sampling From a Discrete Distribution
Problem Simulate X taking n discrete values x1 x2, …, xn with probabilities p1, p2, …, pn
Solution On the Y axis define segments of length p1, p2, …, pn. Simulate a uniform
U[0,1] and select the value corresponding to the segment in which the
random point lands.
Sonatrach / IAP 549
Outline
 Simulating reserves

The Parametric method
 Exercises
Sonatrach / IAP 550
Scalar Approach to Reserves Calculation
 Developing a simple model on an Excel worksheet
• Stock Tank barrels of recoverable reserves= OIIP*RF
Reserves = GRV x N/G x Phi x (1 ‐ Sw) x 1/Bo x RF x 6.29
• Assignment of a distribution function (triangular, uniform ...) to each variable
• Implementation of a correlation matrix, independent or dependent variables
 Running a simulation
 Interpreting the results (Crystal Ball, @Risk)
• Statistics and Reports for inputs and outputs
• Sensitivity analysis
• Graphics outputs
Sonatrach / IAP 551
Inputs to Monte Carlo
THAMAMA A MINI MODE MAXI @Risk (mean)

AREA ( Km2 ) 220 260 300
THICKNESS (m ) 15 18 25
Gr Rock Vol. (10^6 m3) 3300 4680 7500 5 251
NET/GROSS 95% 97% 100% 97%
PHI 18% 21% 25% 21%
So 70% 72% 75% 72%
Bo 1.60 1.62 1.64 1.62
STOOIP 1 553 2 665 5 393 3 074
RF 10% 15% 30% 19%
Reserves ( M bbl) 155 400 1 618 583
New Matrix (2x2) PHI RF
PHI 1 0.5
RF 0.5 1
Sonatrach / IAP 552
@Risk ‐ Reserves Results
PHI and RF independent correlated (0.5)

Name Reserves ( M bbl) Reserves ( M bbl)
Description Output Output
Cell F15 F15
Minimum 158.92 158.06
Maximum 1588.04 1531.22
Mean 546.86 552.44
Std Deviation 191.47 210.38
Variance 36661.65 44258.14
Skewness 0.83 0.91
Kurtosis 3.74 3.78
Errors Calculated 0.00 0.00
Mode 359.40 350.65
5% Perc 287.38 277.42
10% Perc 326.10 316.13
15% Perc 357.11 345.38
20% Perc 383.95 370.97
25% Perc 406.65 393.97
30% Perc 429.73 418.29
35% Perc 450.75 443.10
40% Perc 472.44 466.75
45% Perc 493.78 491.79
50% Perc 513.85 517.22
55% Perc 539.61 543.55
60% Perc 564.85 569.76
65% Perc 590.73 599.81
70% Perc 621.41 633.90
75% Perc 659.20 668.36
80% Perc 699.42 714.12
85% Perc 745.43 769.36
90% Perc 811.13 841.72
95% Perc 909.44 954.99
Sonatrach / IAP 553
Examples (Crystal Ball)
Sonatrach / IAP 554
Sonatrach / IAP 555
Sonatrach / IAP 556
Sonatrach / IAP 557
Sonatrach / IAP 558
Sonatrach / IAP 559
Sonatrach / IAP 560
Sonatrach / IAP 561
Outline

The Parametric method
 Exercises
Sonatrach / IAP 562
Illegal Addition of Proved Reserves
PROBABILISTIC PROVED RESERVES (P90)
AREA GLOBAL GROUPS
DEVELOPED 2,291
UNDEVELOPED 793
TOTAL (BCF) 3,325 3,084

difference 241
Why is a much larger figure
obtained when considering a single
area rather than two!?
Sonatrach / IAP 563
Quantiles Are Not Additive
P90+P90= ???
P10+P10= ???
……..but
Mean+Mean=Mean
Variance+Variance=Variance
If reserves are
independent
SEC reporting is different !?
Sonatrach / IAP 564
Perfect Dependence
Adding matching quantiles = perfect dependence
 Adding matching quantiles assumes that the two fields are in a one‐to‐one
relationship, associating the k‐th smallest reserves of one field with the k‐th
smallest reserves of the other field. This is a very strong assumption!
Sonatrach / IAP 565
Independence of Random Variables
 Two random variables X and Y are independent if information on the value of X
does not give any information on the value of Y, and vice versa.
Technically X and Y are independent if and only if
P( X< x and Y < y ) = P(X < x) * P(Y < y )
The pdf of the pair (X,Y) is the product of the pdfs of X and Y f(x,y) = f(x) g(y)
Independence Dependence
Sonatrach / IAP 566
Independent Probabilistic Addition
Draw a value of reserves
for each field by Monte
Carlo
and add the results…..
………Repeat thousands of
times
Sonatrach / IAP 567
Addition of Reserves
Reservoir P90 P50 P10

Units mmbbl mmbbl mmbbl
Thamama A 326 513 811

Thamama B 3 180 4 550 6 500
Thamama C 414 600 870
Probabilistic 4 308 5 736 7 683

Arithmetic 3 920 5 663 8 181
% error ‐9% ‐1% 6%
Independent reservoirs
Sonatrach / IAP 568
Sonatrach / IAP 569
Sonatrach / IAP 570
Outline

 Exercises
Sonatrach / IAP 571
Sum of Independent Variables
Mean
E (X + Y) = E(X) + E(Y)
Variance
Var (X + Y) = Var (X) + Var (Y)
Variances add up NOT
standard deviations
Sonatrach / IAP 572
Sum of Correlated Variables
Mean Correlation of X and Y
E (X + Y) = E(X) + E(Y)
>>> extra term
Variance
2x+y = 2x+ 2y + 2 X y
Consequences
•  = 0 variances add up 2x+y = 2x+ 2y
•  > 0 increases the dispersion of the sum 2x+y > 2x+ 2y
•  = 1 standard deviations add up (worst case) x+y = x+ y
•  < 0 decreases the dispersion of the sum
Sonatrach / IAP 573
Product of Correlated Variables
X and Y independent
E (XY) = E (X) x E (Y)
X and Y correlated
E (XY) = E (X) x E (Y) + x y
In general the mean of a product is NOT equal to the product of the means
Sonatrach / IAP 574
Variance of a Product of Independent Variables
E(X) = mx Var(X) = x2 Kx = x/ mx
E(Y) = mY Var (Y) = Y2 KY = Y/ mY

Z = XY
E(Z) = mZ Var(Z) = Z2 KZ = Z/ mZ
Mean E (XY)= E(X) E(Y)

For independent X
and Y
Coefficient of variation (1 + KZ2) = (1 + KX2)(1 + KY2)
Example. X is known with a relative uncertainty of 20% and Y of 30%. What is the
relative uncertainty on the product XY?
KX= 0.2, KY=0.3 So (1 + KZ2) = (1 +0.22) (1 + 0.32) =1.13. So KZ = 0.13 = 36%.
Sonatrach / IAP 575
Outline
 Exercises
Sonatrach / IAP 576
Central Limit Theorem for a Sum
 When independent random numbers are added the normal distribution appears.
Y = X1 + X2 + … + Xn
 Note The sum of normal random variables is always normal.
The Central Limit Theorem makes this result true even when the
individual variables are not normally distributed.
 Condition: No single variable should dominate the others.
Sonatrach / IAP 577
Central Limit Theorem for a Product
 The product of a large number of independent random variables tends to follow
the lognormal distribution
Y = X1 x X2 x ... x Xn
log Y = log X1 + log X2 + ...+ log Xn
The result breaks down when one variable dominates the other,
for example when the Gross Rock Volume variable is very non‐
lognormal while other parameters are held nearly constant.
Sonatrach / IAP 578
Outline

 Exercises
Sonatrach / IAP 579
 SPE 26056: The quantification and management of uncertainty in reserves .
 The "Parametric Method" comprises a simple set of statistical rules for combining
distributions. It is an alternative to Monte Carlo for estimating oil in place, and can be
extended to give reserves. In contrast to Monte Carlo, its simplicity allows access to the
ranking of individual parameters which contribute to overall uncertainty.
 In hydrocarbon recovery predictions, the three types of distribution which are
particularly useful are Normal, Log‐Normal, and Triangular distributions. The first two
may be described by a simple equation which is a function of two parameters, the mean
(), and standard deviation (). The standard deviation is defined in the usual way, with
for example 68% of values lying within one standard deviation either side of the mean
for a normal distribution. For arithmetic convenience in the Parametric Method, a third
parameter called the coefficient of variation (K) is defined as

 K (eq 1)

Sonatrach / IAP 580
 The Parametric Method uses ,  and K to combine distributions according to the
following six exact statistical rules. The first three describe a sum of distributions, the
final three a multiplication of distributions:
 Rule 1 : The sum of independent distributions, of whatever form, tends towards a
Normal distribution.
 Rule 2 : The mean of the sum of distributions is the sum of the means.(Even if
dependent)
  t   i (eq 2)
 Rule 3 : The variance of the sum of independent distributions is the sum of the variances
  t2   i2 (eq 3)
Sonatrach / IAP 581
 Rule 4 : The product of independent distributions, of whatever form, tends towards a
Log‐Normal distribution.
 Rule 5: The mean of the product of independent distributions is the product of the
means.
  t   i (eq 4)
 Rule 6: The value (1+K2) of the product of independent distributions is the product of
the individual (1+K2) values.

(1  K t2 )   (1  K i2 ) (eq 5)
 These rules can be used to deduce the mean and coefficient of variation for the
distribution in oil in place and reserves.
Sonatrach / IAP 582
Comments on the Monte Carlo and Parametric Methods
 Monte Carlo simulation is a powerful tool for exploring uncertainty
• Easy to implement
• Can be used in complex problems where analytical approach not feasible
• Can identify the factors that influence the result the most (Tornado charts)
 The "Parametric Method"
• comprises a simple set of statistical rules for combining distributions.
• It is an alternative to Monte Carlo for estimating oil in place, and can be
extended to give reserves.
• In contrast to Monte Carlo, its simplicity allows access to the ranking of
individual parameters which contribute to overall uncertainty.
• However, it is constrained by the “independence of parameters”
Sonatrach / IAP 583
Warnings
 Beware of "magic"
• Monte Carlo does not allow you "to read the future"
• Monte Carlo does not guarantee good decisions
 Beware of black box
• Relate the results to concrete cases
 The most important thing is the model you put in, especially
• The right scales
• The right dependencies
• Multiple working hypotheses
 Fields are not scalars
• Maps and grids cannot be reduced to a single number
Sonatrach / IAP 584
Unconventional Hydrocarbons
Xavier LOPEZ
 Introduction: the Hydrocarbon Genesis
 Definitions
• Gas shale
• Tight gas sands
• Oil shale……
 World statistics
 Miscellaneous
Sonatrach / IAP 586
Did you say unconventional Gas…
 The possibility of hydrocarbon seas on Titan was confirmed when data from Hubble and
other observations suggested the existence of liquid methane on Titan, either in
disconnected pockets or on the scale of oceans, similar to water on Earth
Sonatrach / IAP 587
Did you say unconventional Gas…
 A graph detailing temperature, pressure, and other aspects of Titan's climate. The
atmospheric haze lowers the temperature in the lower atmosphere, while methane
raises the temperature at the surface. Cryovolcanoes erupt methane into the
atmosphere, which then rains down onto the surface, forming lakes.
Sonatrach / IAP 588
The Resource Triangle
Sonatrach / IAP 589
Hydrocarbon Genesis
 Most animal or plant material is consumed by other animals, e.g.

bacteria,
 So preservation requires quick burial in an anoxic environment that

will inhibit scavengers.
 Even in these settings, anaerobic micro‐organisms can feed off the

buried organic matter, producing biogenic methane.
 The organic matter slowly cooks as temperature increases with on‐

going burial.
 The organic matter is transformed into kerogen.
 Depending on the type of kerogen produced, further increases of

temperature and time will yield oil or gas.
 Kerogen comprises 4 groups;

• Type I: mostly from lacustrine environment
• Type II: mostly from marine environment
• Type III: derived from terrestrial plant debris
• Type IV: typically from older sediments re‐deposited after

erosion, it is a form of “dead carbon”
Sonatrach / IAP 590
Hydrocarbon Genesis
 In general:
• marine or lacustrine kerogens (types I
and II) tend to produce oils,
• Kerogens of terrestrial origin (type III)
tend to produce gas.
 The process of burial, conversion of organic

matter, then kerogen and generation of
hydrocarbons can be summed up in 3 steps:
• Diagenesis: chemical and
bacteriological processes. Biogenic gas
and kerogen are formed. It is an
immature zone.
• Catagenesis: kerogen is transformed
into oil (type I and II) or gas (type III).
• Metagenesis: late methane is evolved,
along with non‐HC gases (CO2, N2, H2S).
 The Oil Window is between about 60° and

110°C.
Sonatrach / IAP 591
It is important to note…
 The hydrocarbon generation process is the same for conventional and

unconventional resources;
 the difference is location:

• Conventional: HC can be produced from the permeable trap where HC has
naturally migrated
• Unconventional: HC must be produced from the practically impermeable
source rock.
 The difference is worth emphasizing:

• Conventional: permeabilities range between 1 and thousands of milli‐
Darcies.
• Unconventional: permeabilities range between 10 and 1000 nano‐Darcy. (1
nano = 10‐6 milli‐Darcy)
• It has been suggested that 100 nano‐Darcy can be defined as a lower
economic limit for production of shale gas.
Sonatrach / IAP 592
How oil can be turned into Extra‐Heavy Oil
 The world’s largest deposits of heavy‐oil (1700 Bstb)
 Marine sediments in the basin (purple) become source rock for oil and gas
 These migrate into sediments (orange) eroded from newly built mountains
 Bacteria in these relatively cool sediments bio‐degrade the oil, forming heavy oil and bitumen (tar
sands)
Sonatrach / IAP 593
Definitions: Tight Bodies
Flow without
stimulation
Permeability (mD)
Not
produced
Porosity (%)
Sonatrach / IAP 594
Definitions
 Oil shale can be:
• The immature type source rock, in which case it is kerogen‐bearing rock
• The mature type source rock, in which case it is oil‐bearing rock
• In what follows, by oil shale we refer to the kerogen‐bearing rock
 Oil shales are very different from tar sands:
• Oil shales: rock permeabilities are in the order of a few 100’s of nano‐Darcy
• Tar sands: rock permeabilities are in the order of a few 10’s of Darcies. However fluid cannot
flow because of viscosities around 1 million cp.
 Gas shales: they are gas‐bearing source rock with permeabilities in the range of a few 100’s of
nano‐Darcy
 Tight gas sands: they are gas‐bearing sandstones with permeabilities in the range of 0.001 to 0.1
milli‐Darcy
 (1 nano = 10‐6 milli‐Darcy)
Sonatrach / IAP 595
Definitions
K (mD) K normal (mD) SandStone
Oil shale 100 E‐6 100
Tar sand* 10000 100
Tight gas sand 0.001 to 0.1 10
Gas shale 100 E‐6 10
* visc= up to E+6 cp or more
Sonatrach / IAP 596
World Energy Data
TOTAL = 1333 Bstb
Sonatrach / IAP 597
Conventional Oil Proved Reserves
Sonatrach / IAP 598
Conventional Gas Proved Reserves
6600 Tcf
Production 2010 112.7 Tcf
Consumption 2010 111.9 Tcf
Sonatrach / IAP 599
World energy balance
world consumption
350 renewable
300 hydro
biomass
Millions boe/d
250
nuclear
200
coal
150
gas
100
oil
50
0
2010 2020 2030 100%
renewable
90%
hydro
80%
biomass
70%
nuclear
60%
coal
50%
gas
40%
oil
30%
20%
Source: 10%
0%
2010 2020 2030
Sonatrach / IAP 600
Extra Heavy Oil
 Orinoco Belt (Venezuela):
• First exploration campaigns in the 1930’s
• The second largest extra heavy crude oil deposits in the world
• 1200 Bstb oil in place, 54000 km2
• Recoverable reserves 100 Bstb
• Estimated potential reserves of around 300 Bstb (post 2020)
• Extra heavy crude oil (8 ‐ 10° API), with high sulphur content
• Shallow sand reservoirs
Sonatrach / IAP 601
Extra Heavy Oil (Tar Sands)
 Canada oil sands
Athabasca 1340 billion stb 213 billion m3

Cold Lake 202 billion stb 32 billion m3
Peace River 158 billion stb 25 billion m3
TOTAL 1700 billion stb 270billion m3 © 2014 ‐ IFP Training
Sonatrach / IAP 602
World oil shale resources, « In Place » (Bstb)
Total= 2820 Bstb
Sonatrach / IAP 603
World unconventional gas resources, « In Place » (Tcf)
7,000
Tight Gas
6,000 Coalbed Methane
Gas Shales
5,000
4,000
3,000
2,000
1,000
0
North & Eastern & Former Middle Sub- China
South Western Soviet East & Saharan

America Europe Union North Africa
Africa Rogner 1997
Sonatrach / IAP 604
World unconventional gas resources, « In Place » (Tcf)
Rogner, 1997
Sonatrach / IAP 605
World unconventional resources, « In Place »
Resources Sub‐total
Oil Shales 2820 Bstb
Gas Shales 16112 Tcf

Coal Bed Methane 9051 Tcf
Tight Gas Sands 7406 Tcf 32506* Tcf
* 5 times the conventional
gas proven reserves
Sonatrach / IAP 606
Major shale gas basins in the USA
Sonatrach / IAP 607
Projected unconventional gas production in N.A.
Sonatrach / IAP 608
Unconventional Gas Production in North America
 Gas shales are only one of the unconventional gas resources.
 Coalbed methane provides about 5 Bcfd in North America
 Tight Gas Sands provides nearly 18 Bcfd in the USA
 Total unconventional gas may provide, in 2020, 52 Bcfd and

account for nearly 2/3 of North American natural gas
Sonatrach / IAP 609
Shale Gas: EIA (ARI) evaluation
 EIA: Energy Information Administration, April 2011
 ARI: Advanced Resources International (contractor to EIA)
 Evaluation done for 32 countries
 Excludes: USA (In Place 3284 and reserves 820 Tcf, EIA July 2011),
 Also excludes: IRAN, QATAR, FSU
 Out of 624 Tcf in Europe, 180 are in France and 187 are in Poland
Sonatrach / IAP 610
Shale Gas Basins in 32 countries
Sonatrach / IAP 611
Comparison between Rogner and EIA: shale gas In‐Place
 EIA: February 17, 2011
 H.H. Rogner: Annu.Rev.Energy Envir., 1997
Sonatrach / IAP 612
Outcropping oil shales
Sonatrach / IAP 613
Oil Shale Rocks
Source Rock:
•Rich in fossil organic particles
•Fine grain sediment
1m
Woodford shale, Devonian (Oklahoma, USA)
Sonatrach / IAP 614
Oil Shales
 AMSO, 50% owned by TOTAL, proposes to use the CCR Conduction, Convection
and Reflux process to recover shale oil.
 The heating well is at the base and the producer at the top.
 Heat causes the kerogen to decompose, lighter products rise and condense,
effectively heating a large volume of rock.
 Thermo‐mechanical fracturing creates permeability for the convective heat
transfer.
 This method isolates production zones from protected sources of ground‐water
From AMSO (TOTAL)
Sonatrach / IAP 615
Oil Shales
 The AMSO concept for

commercial scale production.
 The operation is projected to

produce about 1 billion bbl of
shaleoil over a 25 years
period.
From AMSO (TOTAL)
Sonatrach / IAP 616
Oil Shales
Sonatrach / IAP 617
Oil Shales
 The ExxonMobil Electrofrac
process:
• The horizontal sections
are hydraulically fractured
and filled with electrically
conductive proppant
• Field testing has shown it
is possible to create an
electrically conductive
fracture and heat it for
several months.
• The electric charge is
applied between the plus
and minus
From ExxonMobil
Sonatrach / IAP 618
Oil Shales
Sonatrach / IAP 619
Oil Shales: mining and surface retorting
Sonatrach / IAP 620
Tight Gas
 Tight sands reservoirs represent an enormous potential
 Unconventional gas = difficult reserves

• Coalbed methane, gas shales, tight sands
• From complex & low permeability bodies
• Need for alternative technology, high technical costs
 Production tools
• Horizontal wells
• Multi‐drains
• Hydraulic fracturing (cryogeny, proppants, process to be improved)
Diagenesis
Sonatrach / IAP 621
Basic Principles in fracturing
 A fracture is a rupture in traction mode.
 The frac plan is thus perpendicular to the minimum stress
 Below 500‐600 m, the maximum stress is vertical (overburden)
 => Most of the time the fracture plan is vertical
 max
 min  min
 intermediate
Sonatrach / IAP 622
Gas Shales: massive frac job
 More than 100 frac tanks (full of Water) were needed…….
Sonatrach / IAP 623
Shale Gas Production
Non migrated Migrated
gas gas
Gas source rock
624
Sonatrach / IAP 624
Shale Oil Fracturing
2008
Sonatrach / IAP 625
Cost of Production versus Reserves
Sonatrach / IAP 626

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 Introduction to Reserves Evaluation – Risks and Uncertainties p. 7

 Reserves Evaluation – Risks and Uncertainties p. 15

Uncertainties on Reserves – Summary

 Reservoir Simulation – Upscaling p. 181

 Reservoir Simulation – Fundamentals p. 213

 Primary Recovery by Natural Depletion – Material Balance p. 363

 Static Model – Uncertainties p. 421

100M USD PROJECT 150M USD Value created: 150 – 100 = 50M USD

Discovery “First Oil” End of Restored

 Building the geo‐models:

 Using the RSM for development optimization

 However, assisted drainage is seldom implemented right from the beginning.

 Uncertainties will remain.

 The well architecture is first concerned with the drilling:

 The second concern is the well completion:

 Another good example of the complexity of drilling is given in a field case in

 A great number of uncertainties can be identified in this process. These can be

 For each case, all potential uncertainties

GEOPHYSICS GEOLOGY DYNAMICS

 The RMP is a “Road Map” for the Asset team

 It should be approved by Management at headquarters and be used as a “law

 The Deterministic Evaluation

OOIP = Original Oil-In-Place (stb)

Boi = 1.24 rb/stb 7758 bbl/ac-ft * 1 ac * 1 ft * 0.20 * (1 - 0.20)

OOIP = Original Oil‐In‐Place (stb)

Shale: compacted clay/silt/mud, very fine grained, non-reservoir rock

?1P Oil 1POil ?

1P Gas is comprised between surfaces S1, S2, 3208 m and 3210 m

1P Oil is comprised between surfaces S3, 3214 m and 3221 m

2P Gas=(1P+Prob)Gas Vol1 is comprised between surfaces S1, S2 and 3212 m

Depth (m) Depth (m) Depth (m)

?1P Oil 1POil ?

 A few questions you could be asking yourselves

 Is permeability really permeability? (e.g. ktests = kcore?)

 After 10 weeks of training, would you be able to forecast future

 The fashionable “integration”

 It is more a question of “how” than “if” we should integrate

Geophysics Geology Petrophysics Reservoir Results

 Each discipline has its own objectives, methodology

 It is more a question of “how” than “if” we should integrate

Geology Results Reservoir

 Reservoir Simulation - Integrator of Technologies

 Reservoirs are complex objects that require many parameters to be

 Take on the data integration challenge…for the rewards are great!

 Overlapping resolution zones provide 100 Well Test

natural integration potential 10

comparing porosity inferred from seismic Core

 The « right » tool for the « right » job

 Geological Modeling: Building a Static Model

 The Reservoir Model: From static to dynamic

Net Confining Stress (NCS)

Net Confining Stress =Overburden Stress - Reservoir P

Depth * [(~ 1 psi/ft) - (~ 0.433 psi/ft)]

ct = cf + co So + cg Sg + cw Sw

Relative fraction of each phase present in the pore volume

oil gas Oil Volume

Capillary Pressure (Pc)

Note: By convention, the Pc in an oil‐water system is defined as

 Interfacial tension ()

WOC = Water Oil Contact (Sw=1)

 Function of surface chemistry and surface forces

 Affects the relative location of the fluids within the pores,

Pore-Level Schematic of Wettability Concept