University of Technology

Oil and Gas Engineering Department

Integrated Field Development &

Management

1st Lecture:

By :Prof.Dr.Fadhil S. Kadhim 1
 References

1. Petroleum Reservoir Management, by Jawad R. Rustum Al-

Assal, 2011

2. Integrated Reservoir Asset Management Principles and Best

Practices, John R. Fanchi,2010

3. Advanced Reservoir Management and Engineering, Tarek

Ahmed &Nathan Meehan, 2014

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Definition of Reservoir Management: There are many
definitions for Reservoir Management one of them
is: using all available resources (human, technological
and financial) to maximize profits from a reservoir by
optimizing recovery while minimizing capital
investments and operating expenses.

Reservoir Management involves making certain

choices. Either let it happen or make it happen, we
leave it to chance to generate some profit from a
reservoir operation without doing deliberate planning,

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OBGECTIVE OF RESEVOIR MANAGEMENT

The prime objective of Reservoir Management is the economic

optimization of oil and gas recovery, which can be obtained by the
following steps:

1. Identify and define all individual reservoirs in a particular field and

their physical properties.

2. Deduce past and predict future reservoir performance.

3. Minimize drilling of unnecessary wells.

4. Define and modify (if necessary) well and surface systems.

5. Initiate operating controls at the proper time.

6. Consider all pertinent economic and legal factors.

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 Life Cycle of Reservoir

As we know the reservoir's life begins with exploration that

leads to discovery, which is followed by delineation of reservoir,
development of the field, production by primary, secondary,
and tertiary means, and finally to abandonment as shown in
the following Figure

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So integrated, sound reservoir management is the key to a
successful operation throughout the reservoir life.

Even with tertiary means a vast amount of hydrocarbon

remains unrecoverable, and the reserves being declined,
but due to sound reservoir management a significant
additional amount being added to the US reserves

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 University of Technology
Oil and Gas Engineering Department

Integrated Field Development &

Management
2nd Lecture
By: Prof. Dr. Fadhil S. Kadhim

1
SYNERGY AND TEAM
Successful Reservoir Management requires synergy and
team efforts. Reservoir Management is not synonymous
with reservoir engineering and /or reservoir geology.
Success requires multidisciplinary team efforts.

The team must work together to ensure development

and execution of the management plan. The following
Figure shows the team of Reservoir Management.

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Reservoir Management Team 3
All development and operating decisions should be
made by the Reservoir Management team.
It is not necessary that all decisions be made by a
reservoir engineer, in fact, a team members who
considers the entire system, rather than just the
reservoir aspect, will be a more effective decision
maker.
A team approach Reservoir Management can be
enhanced by the following:

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Facilitate communication among various
engineering disciplines, geology, and operation staff
by :

a. Meeting periodically.
b. Interdisciplinary cooperation in teaching each
other's functional objectives.
c. Building trust and mutual respect.

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To some degree, the engineers must develop the geologist's
knowledge of rock characteristics and depositional
environment, and geologist must cultivate knowledge in
well completion and other engineering tasks, as they relate
to the project at hand.

Each team member must maintain a high level of

technical competence.

The team members must work as a well – coordinated “

basket ball team” rather than “relay team”. Reservoir
engineer should not wait on geologist to complete their
work and then start the reservoir engineering work.
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Today, it is becoming a common for large reservoir
studies to be integrated through a team does not
guarantee an integration that leads to success.
Team skills, team authority, team compatibility with line
management structure, and overall understanding of the
Reservoir Management process by all the team members
are essential for the success of the project.

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• The plan is then presented to production manager;
and after receiving the manager's feedback,
appropriate changes are made, next the plan is
published and all members follow the plan.

• The team members performance evaluation is

conducted by their functional heads with input from
the team leader and the production manager.

• Teams are rewarded recognition / cash award upon

timely and effective completion of their tasks.

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 INTEGRATION EXPLORATION AND DEVELOPMENT
TECHNOLOGY
New development in computer hardware, technology, and software
are enhancing integration of multidisciplinary skills and activities;
this development change the way of oil companies works.

For example advancements in 3-D seismic acquisition and

processing are credited to the massive number – crushing super
computer.

3-D seismic data along with computer- processed logs and core
analysis characterize or describe more realistically and accurately
the reservoir maps along with rock and fluid properties and
production / injection data to simulate reservoir performance and
to design depletion and development strategies for new and old
fields.
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 THE RESERVOIR MANAGEMENT PROCESS
The modern Reservoir Management process involves
establishing a purpose or strategy and developing a plan,
implementing and monitoring the plan, and evaluating the
results as shown in Figure.

None of the components of the reservoir management is

independent of the others. Integration of all these are
essential for successful reservoir management.

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Reservoir Management Process
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• Recognizing the specific need and setting a realistic
and achievable purpose is the first step in reservoir
management.
• The key elements for setting a reservoir management
goal are :
1. Reservoir characteristics
2. Total Environment.
3. Available Technology Understanding of each of these
elements is the pre requisite to establish short – and –
long – term strategies for managing reservoir.

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• Reservoir characteristics: The nature of the
reservoir being managed is vitally important in
setting the management strategy.

• Understanding the nature of the reservoir requires

a knowledge of the geology, rock and fluid
properties, fluid flow and recovery mechanisms,
drilling and well completions and past production
performance

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• Total Environment:
Understanding of the following environments is essential in
developing management strategy and effectiveness:
Corporate – goal, financial strength, culture, and attitude
Economic – business climate, oil/gas price, inflation, capital,
and personnel availability.
Xial – conservation, safety, and environmental regulations.

• Technology and Technological Toolbox

The success of reservoir management depends upon the
reliability and proper utilization of the technology being
applied concerning exploration, drilling and completions,
recovery process and production.

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 University of Technology
Oil and Gas Engineering Department

Integrated Field Development &

Management

3rd Lecture:

By :Prof. Dr. Fadhil S. Kadhim 1

 DEVELOPING PLAN AND ECONMICS
Formulating a comprehensive reservoir management plan is
essential for the success of project as shown in the below figure

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 Development and Depletion Strategy
The most important aspect of reservoir management
deals with the strategies for depletion the reservoir to
recover petroleum by primary and applicable secondary
and enhanced oil recovery methods.
Development and depletion strategies will depends upon
the reservoir's life stage.
In case of new discovery, we need to address the
question of how to best develop the field (i.e. well
spacing, number of wells, recovery schemes, primary,
and subsequently secondary and tertiary), if the
reservoir has been depleted by primary means,
secondary and even tertiary recovery schemes need to
be investigated.
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 Data Acquisition and Analysis
Reservoir management starting from developing a
plan, implementing the plan, monitoring and evaluating
the performance of the reservoir, requires a knowledge
of the reservoir that should be gained through an
integrated data acquisition and analysis program , the
following figure shows a list of data needed before and
during production.
Data analysis require a great deal of effort, scrutiny
and innovation. The key steps are :
1. Plan, justify, time, and prioritize.
2. Collect and analyze
3. Validate / store ( data base)
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Data Acquisition & Analysis 5
 Geological and Numerical Model Studies
The geological model is derived by extending localized
Core and Log measurements to full reservoir using
many technologies, such as geophysics, mineralogy,
depositional environment and digenesis.

The geological model, particularly the definition of

geological units and their continuity and
compartmentalization, is an integral part of geo-
statistical and ultimate reservoir simulation models.

The Following Figure shows a sample of geological

model
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Geological Model

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 Production and Reserves Forecast
The economic viability of a petroleum recovery project
is greatly influenced by the reservoir production
performance under the current and future operating
conditions.
Therefore, the evaluation of past and present reservoir
performance and forecast of its future behavior is an
essential aspect of the reservoir management process
(see below figure ) classic volumetric, material balance,
and decline – curve analysis methods, and high
technology black oil, compositional and enhanced oil
recovery, numerical simulator are used for analyzing
reservoir performance and estimating reserves.

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Production history
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Reservoir simulators play a very important role in formulating
initial development plans, history matching and optimizing future
production and planning and designing enhanced oil recovery.

( Reservoir simulation is the process of mimicking or inferring the

behavior of fluid flow in a petroleum reservoir system through the
use of either physical or mathematical models) the following
Figure shows different type of modeling

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Type of Modeling
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The following Figure shows the reservoir system, (reservoir system
include the reservoir rock and fluids, aquifer)

Petroleum Reservoir System

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 Facilities Requirements
Facilities are the physical link to the reservoir. Everything
we do to the reservoir, we do through the facilities.

These include drilling, completion, pumping, injecting,

processing, storing. Proper design and maintenance of
facilities has a profound effect on profitability.

The facilities must be capable of carrying out the reservoir

management plan, but they cannot be wastefully designed

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 Management Approval

Many support and field personnel commitment are

essential for the success of a project.

Approval management is the process of ensuring that

work is reviewed and approved by the right staff before it
moves onto the next stage.

It involves setting up a clear and structured approval

process, with different review steps and different
stakeholders involved along the way.

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 Economic Optimization
Economic optimization is the ultimate goal selected for reservoir
management. The below Figure presents the key steps involved
in economic optimization.

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 University of Technology
Oil and Gas Engineering Department

Integrated Field Development &

Management

4th Lecture:

By :Prof. Dr. Fadhil S. Kadhim 1

 Economic Optimization
Economic optimization is the ultimate goal selected for reservoir
management. The below Figure presents the key steps involved
in economic optimization.

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• The economic value of a project is influenced by
many factors, some of which can be measured. An
economic measure that is typically used to evaluate
cash flow associated with reservoir management
options is net present value (NPV).

• The cash flow of an option is the net cash generated

or expended on the option as a function of time. The
time value of money is included in economic analyses
by applying a discount rate to adjust the value of
money to the value during a base year.

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• Discount rate is the adjustment factor, and the
resulting cash flow is called the discounted cash flow.
The NPV of the cash flow is the value of the cash flow
at a specified discount rate.

• The discount rate at which NPV is zero is called the

discounted cash flow return on investment (DCFROI)
or internal rate of return (IRR).

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The following Figure shows a typical plot of NPV as a function
of time. The early time part of the figure shows a negative NPV
and indicates that the project is operating at a loss.
The loss is usually associated with initial capital investments
and operating expenses that are incurred before the project
begins to generate revenue.

The reduction in loss and eventual growth in positive NPV is

due to the generation of revenue in excess of expenses. The point
in time on the graph where the NPV is zero after the project has
begun is the discounted payout time.

Discounted payout time in below Figure is approximately four

years. 5
Typical cash flow
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• The Following Table presents the definitions of
several commonly used economic measures. DCFROI
and discounted payout time are measures of the
economic viability of a project.
• Another measure is the profit-to-investment (PI)
ratio, which is a measure of profitability. It is defined
as the total undiscounted cash flow without capital
investment divided by total investment.
• Unlike the DCFROI, the PI ratio does not take into
account the time value of money. Useful plots include
a plot of NPV versus time and a plot of NPV versus
discount rate.
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• Where DR(k) is the revenue obtained during time
period k, and i is the annual interest or discount rate.

• Above equations include the assumptions that i and

i0 are constants over the life of the project, but i and i0
are not necessarily equal.

• These assumptions let us compute the present value of

money expended relative to a given inflation rate i0
and compare the result to the present value of revenue
associated with a specified interest or discount rate i.
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• In many cases, resource managers have little influence
on taxes and prices. On the other hand, most resource
managers can exert considerable influence on
production performance and expenses.

• Several strategies may be used to affect NPV. Some

strategies include accelerating production, increasing
recovery, and lowering operating costs. One reservoir
management challenge is to optimize economic
measures like NPV.

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• Revenue stream forecasts are used to prepare both
short- and long-term budgets. They provide the
production volumes needed in the NPV calculation.
• For this reason, the asset management team may be
expected to generate flow predictions using a
combination of reservoir parameters that yield a
range of recoveries.
• Uncertainty analysis is a useful process for
determining the likelihood that any one set of
parameters will be realized and estimating the
probability distribution of reserves.

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• Reservoir management must consider how much
money will be available to pay for wells, compressors,
pipelines, platforms, processing facilities, and any
other items that are needed to implement the plan
represented by the model.
• The revenue stream is used to pay taxes, capital
expenses, and operating expenses. The economic
performance of the project depends on the
relationship between revenue and expenses. Several
economic criteria may be considered in the evaluation
of a project, such as NPV, internal rate of return, and
profit-to-investment ratio.
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• The selection of economic criteria is typically a
management function. Once the criteria are defined,
they can be applied to a range of possible operating
strategies. The strategies should include assessment of
both tangible and intangible factors.

• A comparative analysis of different operating

strategies gives decision-making bodies valuable
information for making informed decisions.

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