Copyright

by

John Williams

2004
An Analysis of Monte Carlo Simulation as an Estimator of Original Oil

In Place and Original Gas In Place

by

John David Williams, B.S.

Report
Presented to the Faculty of the Graduate School of

The University of Texas at Austin

in Partial Fulfillment

of the Requirements

for the Degree of

Master of Science in Engineering

The University of Texas at Austin

December 2004
An Analysis of Monte Carlo Simulation as an Estimator of Original Oil

In Place and Original Gas In Place

Approved by
Supervising Committee:
 Dedication

To my wife Shera, my parents Harry and Sarah Williams, and my children Justin and

Jenna.
 Abstract

An Analysis of Monte Carlo Simulation as an Estimator of Original Oil

In Place and Original Gas In Place
John David Williams, M.S.E.

The University of Texas at Austin, 2004

Supervisor: Larry W. Lake

The Monte Carlo Method has been increasingly used in the petroleum industry as

a means of quantifying uncertainty. Most commonly, this technique is used to calculate a

range of values for hydrocarbon volumes originally in place. The distributions of the

input variables input into the Monte Carlo simulator are estimated by obtaining a

sufficient number of measurements of reservoir and fluid properties. This report will

analyze several depleted or very mature fields for which the ultimate hydrocarbon

recovery is known. For each of these fields, distributions of porosity, water saturation,

reservoir thickness, and reservoir size are obtained from cores, openhole logs, seismic,

and other data. These distributions are input into the Crystal Ball computer program to

obtain the cumulative distribution function (CDF) and probability density function (PDF)

of oil or gas volume originally in place for each of the fields. By comparing the actual

ultimate recovered volumes of hydrocarbons to the range of original in place volumes

predicted by the Monte Carlo calculations, the accuracy of the Monte Carlo method will

be analyzed.

v
 Table of Contents

DEDICATION....................................................................................................... iv

ABSTRACT.............................................................................................................v

TABLE OF CONTENTS....................................................................................... vi

Chapter 1: Introduction ...........................................................................................1

Chapter 2: Literature Review..................................................................................3

2.1: Cumulative Distribution Functions..........................................................3
2.2: Probability Density Functions .................................................................4
2.3: Distribution Types ...................................................................................5
2.3.1: Normal Distribution.....................................................................5
2.3.2: Log-Normal Distribution .............................................................6
2.3.3: Triangular Distribution ................................................................7
2.3.4: Uniform Distribution ...................................................................9
2.3.5: Other Distribution Types ...........................................................10
2.4: Creating Empirical CDF's and PDF's From Data ..................................10
2.4.1: Analyzing the Empirical CDF's and PDF's................................12
2.5: Monte Carlo Method..............................................................................13
2.5.1: Volumetric Model......................................................................14
2.5.2: Correlation Between Input Variables ........................................15
2.5.3: Rank Correlation........................................................................17
2.5.4: Central Limit Theorem ..............................................................17

Chapter 3: Case Studies ........................................................................................19

3.1: Case1 - Gulf of Mexico Gas Reservoir..................................................19
3.2: Case 2 - Gulf of Mexico Oil Reservoir..................................................24
3.3: Case 3 - Gulf Coast Waterflood.............................................................29
3.4: Case 4 - Western Australia Oil Reservoir..............................................35
3.5: Case 5 - Gulf Coast Gas Reservoir ........................................................39

vi
Chapter 4: Results and Discussion........................................................................44

Chapter 5: Summary and Conclusion ...................................................................59

5.1: Suggestions for Further Work................................................................59

References..............................................................................................................60

Vita ......................................................................................................................62

vii
 List of Tables

Table 4-1: Summary OGIP Statistics for Case 1 Considering Correlation .......46

Table 4-2: Case 1 Values of F(x) for OGIP Considering Correlation ...............46

Table 4-3: OOIP Statistics for Case 2 Considering Correlation ........................48

Table 4-4: Case 2 Values of F(x) for OOIP Considering Correlation ...............49

Table 4-5: OOIP Summary Statistics for Case 3 Considering Correlation .......51

Table 4-6: Case 3 Values of F(x) for OOIP Considering Correlation ...............51

Table 4-7: OOIP Summary Statistics for Case 4 ...............................................53

Table 4-8: Case 4 F(x) Values for OOIP ...........................................................54

Table 4-9: Summary Statistics for Case 5 Considering Correlation..................55

Table 4-10: Case 5 F(x) Values for OGIP Considering Correlation ...................56

Table 4-11: Recovery Factor Calculations Based on Monte Carlo Simulation...57

Table 4-12: Typical Recovery Factors for Certain Reservoirs ............................58

viii
 List of Figures

Figure 2-1: Example CDF.......................................................................................3

Figure 2-2: Example PDF .......................................................................................5

Figure 2-3: PDF and CDF of a normal distribution................................................6

Figure 2-4: PDF and CDF of a log-normal distribution .........................................7

Figure 2-5: PDF and CDF of a triangular distribution............................................9

Figure 2-6: PDF and CDF of a uniform distribution ............................................10

Figure 3-1: Gas production plot for Case 1 ..........................................................19

Figure 3-2: Case 1 CDF for Porosity ....................................................................20

Figure 3-3: Case 1 PDF for Porosity.....................................................................21

Figure 3-4: Case 1 Probability Transform for Porosity ........................................21

Figure 3-5: Case 1 CDF for Water Saturation ......................................................22

Figure 3-6: Case 1 PDF for Water Saturation.......................................................22

Figure 3-7: Case 1 Probability Transform Plot for Water Saturation...................23

Figure 3-8: Case 1: Porosity vs Water Saturation………………………………...24

Figure 3-9: Case 2 Oil Production History ...........................................................25

Figure 3-10: Case 2 CDF for Porosity ..................................................................26

Figure 3-11: Case 2 PDF for Porosity...................................................................26

Figure 3-12: Case 2 Probability Transform Plot for Porosity...............................26

Figure 3-13: Case 2 CDF for Water Saturation ....................................................27

Figure 3-14: Case 2 PDF for Water Saturation.....................................................28

Figure 3-15: Case 2 Probability Transform Semi-Log Plot for Water Saturation28

Figure 3-16: Case2: Porosity vs Water Saturation……………………………….29

Figure 3-17: Case 3 Oil Production Plot...............................................................30

ix
Figure 3-18 Case 3 CDF for Porosity ...................................................................31

Figure 3-19: Case 3 CDF for Porosity ..................................................................31

Figure 3-20: Case 3 Probability Transform Plot for Porosity...............................32

Figure 3-21: Case 3 Probability Transform Semi-Log Plot for Porosity..............32

Figure 3-22: Case 3 CDF for Water Saturation ....................................................33

Figure 3-23: Case 3 PDF for Water Saturation.....................................................33

Figure 3-24: Case 3 Probability Transform Semi-Log Plot for Water Saturation34

Figure 3-25: Case 3: Porosity vs Water Saturation………………………………34

Figure 3-26: Case 4 CDF for Porosity ..................................................................35

Figure 3-27: Case 4 PDF for Porosity...................................................................36

Figure 3-28: Case 4 Probability Transform Plot for Porosity...............................36

Figure 3-29: Case 4 CDF for Water Saturation ....................................................37

Figure 3-30: Case 4 PDF for Water Saturation.....................................................37

Figure 3-31: Case 4 Probability Transform Plot for Water Saturation.................38

Figure 3-32: Case 4: Porosity vs Water Saturation………………………………38

Figure 3-33: Case 5 Gas Production History ........................................................39

Figure 3-34: Case 5 CDF for Porosity ..................................................................40

Figure 3-35: Case 5 PDF for Porosity...................................................................40

Figure 3-36: Case 5 Probability Transform Plot for Porosity...............................40

Figure 3-37: Case 5 CDF for Water Saturation ....................................................41

Figure 3-38: Case 5 PDF for Water Saturation.....................................................41

Figure 3-39: Case 5 Probability Transform Plot for Water Saturation.................42

Figure 3-40: Case 5: Porosity vs Water Saturation………………………………42

Figure 4-1: Case 1 CDF for OGIP Considering Correlation ................................44

Figure 4-2: Case 1 PDF for OGIP Considering Correlation.................................45

x
Figure 4-3: Effect of Correlation on OGIP Calculation for Case 1 ......................47

Figure 4-4: Case 2 CDF for OGIP Considering Correlation ................................47

Figure 4-5: Case 2 PDF for OGIP Considering Correlation.................................48

Figure 4-6: Effect of Correlation on OOIP for Case 2..........................................49

Figure 4-7: Case 3 CDF for OOIP Considering Correlation ................................50

Figure 4-8: Case 3 PDF for OGIP Considering Correlation.................................50

Figure 4-9: Effect of Correlation on OOIP for Case 3..........................................52

Figure 4-10: Case 4 CDF for OOIP ......................................................................52

Figure 4-11: Case 4 PDF for OOIP ......................................................................53

Figure 4-12: Case 5 CDF for OGIP Considering Correlation ..............................54

Figure 4-13: Case 5 PDF for OGIP Considering Correlation...............................55

Figure 4-14: Effect of Correlation on OGIP for Case 5........................................56

xi
 Chapter 1: Introduction

Uncertainty is omnipresent in the petroleum industry. Hydrocarbon reservoirs are

often massive structures; and usually reliable data can be obtained within only a small

fraction of the volume they occupy. As a result, it is impossible to have a comprehensive

understanding of any reservoir. When millions of dollars are at stake, everyone involved

strives to understand as much as they possibly can about the inherent risks in pursuing

any investment or development plan. An accurate and usable method is needed for

quantifying the uncertainty of the original volumes of oil or gas in place in immature

reservoirs. Monte Carlo simulation has been used as a tool to provide a method of

quantifying this uncertainty.

Historically, the estimation of oil or gas in place has been done using

deterministic methods or the scenario approach.4 In a deterministic calculation, the result

is a single answer. For example, a core analysis in a reservoir may yield values of

porosity ranging from 8% to 35% with an average value of 20%. In the deterministic

situation, the reservoir porosity would be assumed to be a uniform value of 20%. A

scenario approach is one in which generally three separate deterministic scenarios are

considered, one to represent the extremes and a third to represent the “most likely.” In the

porosity example above, the three scenarios might be porosity equals 8, 20, and 35 %.

However, it would be valuable to know more about the porosity values, such as how

many measurements show the porosity to be 8%, 35%, or some value in between. This is

what statistics allows engineers to do.

The description of a set of data in a statistical manner is referred to as a

distribution of the data. The distribution which shows the frequency of occurrence of a

1
range of values can be used to determine the likelihood of any subsequent measurement

made to be within that range, and provides a description of the data of the entire

population. This is much more descriptive than assuming a uniform average value as in

deterministic methods, or restricting the possible values of a variable as done in the

scenario approach. With Monte Carlo, it is possible to generate probability distributions

of oil and gas in place. This study uses the software package Crystal Ball to perform the

Monte Carlo calculations.

2
 Chapter 2: Literature Review

2.1 Cumulative Distribution Functions2

In general terms the Cumulative Distribution Function is defined as:

F(x) = P(X ≤ x) (eq. 2-1)

where X is a continuous random variable and F(x) is the probability that a given value of

X is less than or equal to a specified value x. For example, if we define X as a

continuous random variable between 0 and 1, then F(1) = P(X ≤1) = 1. All CDF’s are

monotonically increasing and continuous from the right. The descriptive monotonically

increasing means that as x increases, F(X) must not decrease. Continuous from the right

means that small changes in x result in small changes in F(X). Additionally, for all

CDF’s, as x goes to infinity, F(X) approaches the value of 1 and as x goes to negative

infinity, F(X) approaches the value of zero. Figure 2-1 shows a sample CDF.

,
1.000

.750

.500

.250

.000

xÆ

Figure 2-1: Example CDF.

3
 When reservoir parameters are analyzed as random variables and distributions of

their values are created, it is possible to make statistical statements about the variables.

For example, it might be said of a given reservoir that 90% of the porosity values

measured will fall below 30%. This comes directly from the CDF. In this case, at the

point where F(x) = 0.9, the porosity equals 30%. Similar readings of the CDF can be

made and the corresponding values of porosity can be determined to have a certain

probability. In the example above, a porosity of 30% is considered the P(90) value. It is

common to note the P(10), P(50), and P(90) values for distributions since they give a

good representation of the entire distribution with just three numbers. By definition,

P(50) is equal to the median value of the distribution.

2.2 Probability Density Functions2

The Probability Density Function is the derivative of the CDF. The PDF displays

the same information as the CDF, but in a different format. A familiar types of PDF is the

histogram. PDFs relate the probability of occurrence of the variable f(x) for a small range

of x. The variable x should not be thought of as a fixed number, but as a small range of

values because the probability f(x) that x is any one exact number is zero. For all PDFs,

f(x) ≥ 0 for all x. Additionally, the sum of the values of f(x) over the infinite range, also

the area under the PDF curve, must be equal to one. An example of a PDF is shown in

Figure 2-2.

4
 xÆ
Figure 2-2: Example of PDF.

2.3 Distribution Types

There are many different shapes that the CDF and PDF can take depending on the
data they are describing. Mathematicians have developed models of the CDF and PDF for
certain distribution types that occur frequently in applications. We will use these models
to describe the reservoir data in the case studies.

2.3.1 Normal Distribution

The normal distribution has a PDF given by the following equation:

f(x) = (1/ 2πσ 2 )e[-(x-µ)2/(2σ2)], -∞ < x < +∞ (Eq. 2-2)

and CDF given by

F(x) = (1/ 2πσ 2 )∫ e[-(x-µ)2/(2σ2)] dx (Eq. 2-3)

where µ is the mean and σ is the standard deviation of x. The expected value of the

normally distributed random variable is equal to the mean. The normal distribution is also

called the Gaussian distribution and the PDF and CDF are symmetrical in shape.

5
Figure 2-3: PDF(left) and CDF(right) of a normal distribution.

Additionally, a plot of x vs F(x) on probability paper will yield a straight line if x

is normally distributed.

2.3.2 Log-Normal Distribution

The log-normal distribution is another common distribution in which the

logarithm of the random variable is normally distributed. The log-normal distribution is

frequently associated with processes that divide large quantities into smaller ones. This is

exactly the type of process that occurs during sediment deposition. Therefore, log-normal

distributions are common in the petroleum industry.8 The PDF for the log-normal

distribution is

1 e[-(x-µlnx)2/(2σ lnx 2)] (Eq. 2-4)

f(x) = xσ lnx 2π

and CDF given by

F(x) = 1 ∫ e[-(x-µlnx)2/(2σ lnx 2)] dx (Eq. 2-5)

xσ lnx 2π

6
 where µlnx is the mean of ln(x) and σ lnx is the standard deviation of ln(x). The

expected value of the distribution is given by

E(X) = e[µ lnx + σ lnx 2/2]. (Eq. 2-6)

The standard deviation is

SD(X) = (exp[2 µ lnx + σ lnx 2 ]exp[σ lnx 2 - 1]) (Eq. 2-7)

Figure 2-4 shows the shape of the PDF and CDF curves for a log-normal

distribution. The PDF of a log-normal distribution is said to be positively skewed, as is

seen by the large value of f(x) for small values of x and a long tail extending to the right.

Figure 2-4: PDF(left) and CDF(right) of a log-normal distribution.

2.3.3 Triangular Distribution

The triangular distribution is useful when limited data are available. In this study,

the triangular distribution is used to describe the reservoir thickness in each case studied,
7
where the number of wells drilled limits the number of reliable data points. This

distribution gets its name from the fact that values are distributed between a minimum, a

maximum, and a most likely value. The equations for the PDF are

0 x<a
f(x) = 2 (x-a)/(b-a) a ≤ x < b (Eq. 2-8)
(c-a) (c-x)/(c-b) b ≤ x < c
0 c≤ x

The CDF is given by the following:

0 x<a
(x-a)2/[(c-a)(b-a)] a≤x<b (Eq. 2-9)
F(x) = 1 – (c-x)2/[(c-a)(c-b)] b ≤ x < c
1 c≤x

where a is the minimum, b is the most likely, and c is the maximum possible value of x.

The triangular distribution has an expected value given by the following equation:

E(X) = (a + b + c)/3 (Eq. 2-10)

and the standard deviation is given by

SD(X) = sqrt{ (a2 + b2 + c2 – ab – ac – bc)/18} (Eq. 2-11)

Figure 2-5 shows the shape of the PDF and CDF for the triangular distribution.

8
Figure 2-5: PDF(left) and CDF(right) of a triangular distribution.

2.3.4 Uniform Distribution

The uniform distribution is a two parameter distribution and is the simplest of all

distributions discussed here. It is useful when little is known about the distribution of the

subject parameter other than a maximum and a minimum. In this study, the uniform

distribution is used as an estimate for the aerial extent of the studied reservoirs. The PDF

of this distribution is given by

0 x<a
f(x) = 1/(b-a) a ≤ x < b (Eq. 2-12)
0 b≤x

The CDF is given as follows

0 x<a
F(x) = (x-a)/(b-a) a ≤ x < b (Eq. 2-13)
1 b≤x

9
 where a is the minimum possible value and b is the maximum possible value.

Figure 2-6 below shows the shape of the PDF and CDF for the uniform distribution.

Figure 2-6: PDF(left) and CDF(right) of a uniform distribution.

2.3.5 Other Distribution Types

There are many other distribution types found in the literature. However, for the

cases studied, it was found that the distribution types described here are sufficient to

describe the data. For a description of other distribution types, please refer to reference

number 19 in the references section of this paper.

2.4 Creating Empirical CDF’s and PDF’s From Data2

In order to determine which distribution model should be used by Crystal

Ball for the simulations, empirical CDF’s and PDF’s are created for porosity and water

saturation. In all cases, the reservoir thickness is assumed to have a triangular distribution

and the area is assumed to have a uniform distribution. Porosity and water saturation are

calculated from core data and from wireline logs. The number of data points available

from each well depends on the number of core measurements made. For each core

porosity measurement, a water saturation value is calculated by reading the resistivity and

gamma ray measurements from the log at the depth at which the core measurement was
10
made. The water saturation is calculated using either Archie’s equation or the Simandoux

equation.11

The triangular distributions for reservoir thickness are obtained by

calculating the thickness of the reservoir penetrated by each well using log analysis. The

minimum, maximum, and most likely values of the triangular distribution used to

describe reservoir thickness come directly from this analysis. The analysis of the

reservoir thickness and seismic data are used to create reservoir isopach maps. The

uniform distributions used to describe the reservoir area are based on the most pessimistic

and optimistic isopach map that can be created with the data. For example, in some cases

there are faults within the reservoir. The area of the reservoir in communication with the

wells depends on the sealing nature of the fault. Since it is not known for sure if these

faults are sealing, the actual area in communication with the wells is not precisely known.

Similarly, the original downdip limit of the reservoirs is not known if there is no water

contact observed by any of the wells.

To create an empirical CDF, the following steps are taken. First, the data is sorted

from smallest to largest, Xi=1 to Xi=N. Then, the corresponding value of F(x)i is calculated

by the following formula:

F(x)i = (Ni – 0.5) / N (Eq. 2-14)

where Ni is the rank of the data point and N is the total number of data measurements. A

plot of F(x) vs Xi yields the empirical CDF plot.

11
 To calculate the empirical PDF, representative ranges of values for the

data, or bins, are created. The size of the bins are equal, and are in general determined by

the formula

∆x = 5(XN – X1)/N (Eq. 2-15)

Then the data is examined to determine the number of occurrences of values that

fall into each bin. These occurrences are tabulated, and then the value of f(x) is calculated

by dividing the number of occurrences in each bin by the total number of data points. A

plot of f(x) vs Xi yields the empirical PDF plot.

2.4.1 Analyzing the Empirical CDF’s and PDF’s

Two tools are used to evaluate the empirical CDF’s and PDF’s. The first is visual

inspection and comparison to the idealized distribution CDF and PDF shapes. The

second, and more reliable tool, is to plot the data on probability paper. For a normal

distribution, the data forms a straight line on probability paper. For a log-normal

distribution, the logarithm of the data forms a straight line on probability paper.

Since common computer software does not easily allow creation of a probability
plot, an alternative, but equivalent method of performing this analysis was done. The

NORMSINV function in Excel is used to create a plot that mimics the behavior of the

data if it were plotted on probability paper. The resulting parameter is referred to as the

probability transform. The Excel function NORMSINV returns the inverse of the

standard normal cumulative distribution. The distribution has a mean of zero and a

standard deviation of one. In order to use this function to create the probability plot, first

the data is ordered and F(x) is calculated as was done in creating the empirical CDF’s.

12
Then two additional Excel columns are created. One is for frequency, which is the

number of times a certain value of the data occurs, and the other is for cumulative

frequency, which is the cumuluative sum of the frequencies. This is done to account for

data values that have more than one occurrence in the data set. Once the cumulative

frequency has been calculated, then the NORMSINV function is used to calculate the

inverse of the standard normal distribution with the cumulative frequency as the

argument. Plotting this on the x-axis with the parameter value on the y-axis gives the

same curve shape as if the data was plotted on probability paper.

2.5 Monte Carlo Method

The Monte Carlo method was originally developed by Nicholas Metropolis and

Stanislaw Ulam while working on the Manhattan Project in Los Alamos around the time

of World War II as a way to model the random behavior of sub atomic particles.7 Since
then, the theory has been used by numerous industries and for countless purposes to solve

deterministic problems through the use of random numbers.6 By the early 1970’s

petroleum engineers were beginning to use the technique to model reserves estimates.5

The Monte Carlo method has two requirements. The first is a mathematical model. The

second is knowledge of the CDF’s of the variables to be fed into the mathematical

model.4 When the CDF’s are known each variable needed in the model is randomly
sampled and the model is used to calculate the unknown quantity. This process, known as

a trial, is repeated many times until a sufficient number of trials have been made to create

a distribution of the unknown quantity. The process of performing an adequate number of

trials is called a Monte Carlo simulation.

13
2.5.1 Volumetric Model

For the problem of interest, the model is the volumetric equations for oil and gas

reservoirs. The appropriate equations are:12

OOIP = 7758AhØ(1-Sw) / Boi (Eq. 2-16)

OGIP = 43.56AhØ(1-Sw) / Bgi (Eq. 2-17)

where A = Reservoir area [ acres ]

h = Reservoir thickness [ feet ]
Ø = Reservoir porosity [ fraction ]

Sw = Water saturation [ fraction ]

Boi = Initial formation oil volume factor [reservoir barrels per surface

barrels]

Bgi = Initial formation gas volume factor [reservoir ft3 per surface ft3]

OOIP = Original oil in place [ stock tank barrels ]

OGIP = Original Gas In Place [ millions of standard cubic feet ]

The input variables in the above equations are area, reservoir thickness, porosity,

water saturation, Bgi and Boi. In this study, area, thickness, porosity, and water saturation

are treated as random variables with known distributions based on the available data. Boi

and Bgi are treated as constants.

Crystal Ball can sample the distributions of the input variables and perform the

mathematical calculations as described by the model. To do this, the program generates a

random number between 0 and 1, which represents a value of F(x) on the CDF. Once the

random number has been generated, the program reads the corresponding data value from

14
the CDF plot and inserts it into the model. For each trial, a random number is generated,

and the corresponding parameter value is determined, for each of the four input variables,

area, thickness, porosity, and water saturation, required in the volumetric model. The

process is repeated for each trial. A total of 5,000 trials were performed for each

simulation in this paper.

2.5.2 Correlation Between Input Variables

Frequently, geologic parameters are dependent on one another.13 For example, in

many petroleum reservoirs, the permeability is related to and dependent upon the

porosity. Similar dependencies are known to exist in some reservoirs between aerial

extent and reservoir thickness and water saturation and porosity. When parameters such

as these exhibit a dependence on one another, they are said to be correlated. In this study,

only correlation between porosity and water saturation are considered. Correlations

between these variables are accounted for to assure the model accurately samples the

dependent distributions.

The correlation coefficient is a statistic that measures the degree of correlation

between variables.18 The correlation coefficient between two variables X and Y is

defined as follows:

r = COV(X,Y) / (σxσy) (Eq. 2-18)

where

COV(X,Y) = (1/n) ∑ [(Xi –Xmean) * (Yi – Ymean)] (Eq. 2-19)

15
 and Xmean and Ymean are the average values of the variables X and Y,

and σx and σy are the standard deviations of X and Y, respectively.

The correlation coefficient ranges in value from -1 to +1. A value of -1 indicates

perfect negative correlation and a value of +1 indicates perfect positive correlation. A

value of zero indicates the variables are completely independent. In general, stronger

correlations between input variables will result in a larger mean value of the resulting

distribution for the unknown quantity.13 Additionally, strong correlation between

variables will cause the standard deviation, or spread of the output distribution to

increase.

The degree of correlation between variables affects the way Crystal Ball generates

the random numbers needed to sample the input variable distributions. When no

correlation is present, Crystal Ball generates independent random numbers for each input

variable for each trial. However, when two variables are perfectly correlated, for

example, the same random number should be used for both variables for every trial of the

simulation.14 For variables that are correlated, but not perfectly correlated, there should
be a certain number of trials for which the random number used to sample the CDF’s is

the same for each variable to appropriately model the correlation. It has been shown that

the correlation coefficient can be used to determine the exact number of trials for which

this should be done. In the case of two variables being correlated with a correlation

coefficient of 0.5, exactly one-half of the trials should draw from the CDF’s using the

same random number and exactly one-half of the trials should use independent random

variables. Correlation between porosity and water saturation is accounted for in this

16
study. In general, cases where -0.4 < r < 0.4 can be attributed to statistical noise and in

this study those correlations were not taken into account.13

2.5.3 Rank Correlation

Crystal Ball also uses a procedure for accounting for correlated variables called

rank correlation.14 This procedure, first proposed by Spearman in 1904, uses the ranks of

the data according to magnitude instead of the data values in calculating the correlation

coefficient.15 This is done to avoid the circumstance in which one or a few data points can

artificially skew the calculation for the correlation coefficient. The rank correlation is

given by the following equation.

r’ = 1 – [6 ∑ d2 / [N(N-1)]] (Eq. 2-20)

where d is the difference in ranks between the correlated variables, and N is the total

number of data pairs.17

2.5.4 Central Limit Theorem

The central limit theorem states that a random variable X, created by the addition

of several independent random variables, will tend to have an approximate normal

distribution, regardless of the distributions of the component variables.2 Thus, if the

model of OOIP and OGIP were the result of adding area, thickness, porosity, and water

saturation distributions, we would expect the resulting distributions of OOIP and OGIP to

be approximately normal. However, the model requires that we multiply these

distributions together. Still, the central limit theorem can be used to predict the shape of

17
our resulting OOIP and OGIP distributions. To illustrate this, consider the random

variable Y generated by multiplying together distributions X1, X2, X3, and X4 as shown

Y = X1 X2 X3 X4 (Eq. 2-21)

The logarithm of each of these variables can be taken to arrive at the equivalent

expression

Log(Y) = Log(X1) + Log (X2)+Log(X3) + Log(X4) (Eq. 2-22)

The central limit theorem predicts that Log(Y) will have a normal distribution. But a log-

normal distribution is one in which the logarithm of the variable is normally distributed.

Therefore we can expect that our computed distributions of OOIP and OGIP will be log-

normally distributed.1 The PDF’s for OOIP and OGIP for the reservoirs modeled will
allow us to see this.

18
 Chapter 3: Case Studies

Data from five depleted or nearly depleted reservoirs were collected and analyzed.

In each case, distributions of porosity, water saturation, reservoir thickness, and aerial

extent of the reservoir were developed with the help of cores, wireline logs, and seismic

lines and geologic maps. Other data such as pressure-volume-temperature information

were used to estimate the parameters needed in the volumetric equations. The derived

distributions were loaded into the Crystal Ball Monte Carlo simulation software and

5,000 trials performed for each case.

3.1 Case 1 - Gulf of Mexico Gas Reservoir

The first case study is a gas reservoir located in the Gulf of Mexico. The reservoir

drive mechanism was water drive. The reservoir is at an average depth of 11,000 feet and

is a clean, unconsolidated sandstone. Seven wells produced this reservoir from 1962 until

1998 with an ultimate recovery of 117,798 MMcf. The production profile for the

reservoir is shown in Figure 3-1.

Figure 3-1: Gas production plot for Case 1.

19
 Core data was available for five of the wells. From the cores, an empirical CDF

and PDF of reservoir porosity was developed. Because the wells were drilled with a

water based mud, reliable estimates of water saturation could not be made from the core

data. As a result, the resistivity and gamma ray logs were analyzed and water saturation

was calculated using the Simandoux equation.11 Based on the known water-gas contact,

the downdip limit was established. Some uncertainty of the size of the reservoir exists

due to complex faulting. The net sand thickness was estimated from the sand thicknesses

as determined by the logs of the seven wells that penetrated and produced the reservoir.

Figures 3-2 and 3-3 show the CDF and PDF generated for porosity from the actual data.
1.00
0.90
0.80
0.70
0.60
F (x )

0.50
0.40
0.30
0.20
0.10
0.00
18 20 22 24 26 28 30 32

POROSITY %

Figure 3-2: Case 1 CDF for Porosity.

20
 0.45

0.4
0.35

0.3
0.25

f(x)
0.2
0.15

0.1
0.05

0
18 20 22 24 26 28 30 32 34
Porosity - %

Figure 3-3: Case 1 PDF for Porosity.

The CDF and PDF plots for porosity are characteristic of a normally distributed

variable. To check whether or not the distribution is truly normal, a plot of porosity

versus the probability transform is made. This plot is equivalent to a probability plot and
can be used to check for normality. This plot is shown in Figure 3-4. For a normally

distributed variable, a straight line is expected. Figure 3-4 shows that the data does lie in

a fairly straight line with some deviation in the tails.

35

30
P O R O S IT Y %

25

20

15
-3 -2 -1 0 1 2 3
PROBABILITY TRANSFORM

Figure 3-4: Case 1 Probability Transform Plot for Porosity.

21
 Based on the result of Figure 3-4, the porosity is estimated to be reasonably

normally distributed. Using Cyrstal Ball, a normal distribution is assumed with a mean of

26.41 % and a standard deviation of 2.55 %. Figures 3-5 and 3-6 show the CDF and PDF

for the water saturation data.

1.00
0.90
0.80
0.70
0.60
F(x)

0.50
0.40
0.30
0.20
0.10
0.00
10 15 20 25 30 35 40 45 50 55 60

Sw %

Figure 3-5: Case 1 CDF for Water Saturation.

0.2
0.18
0.16
0.14
0.12
f(x)

0.1
0.08
0.06
0.04
0.02
0
10 15 20 25 30 35 40 45 50

Sw %

Figure 3-6: Case 1 PDF for Water Saturation.

The CDF and PDF plots for water saturation appear similar in character to the
log-normal distribution, with the exception of the increased frequency of measured values

in the range of 35% to 47%. These values may be due to error in measurements. To
22
check if the distribution is truly log-normal, a plot of water saturation values versus the

probability transform on a semi-log plot is made. For a log-normal distribution, this plot

should be a straight line. The plot is shown in Figure 3-7. There is some deviation from a

true straight line on the right side of this curve due to the perceived measurement errors

described above. Otherwise, the data indicate that the distribution is indeed

approximately log-normal.

100
Sw %

10

1
-3 -2 -1 0 1 2 3
PROBABILITY TRANSFORM

Figure 3-7: Case 1 Probability Transform Plot for Water Saturation.

Based on the above analysis, water saturation is modeled as a log-normal

distribution with mean of 23.9% and standard deviation of 9.08%. This distribution is

input into the Crystal Ball software for use in the Monte Carlo simulation.

The reservoir thickness is modeled with a triangular distribution with minimum

value of 20 feet, most likely value of 49 feet, and maximum value of 98 feet. The area is
approximated with a uniform distribution varying from 1286 acres to 1402 acres. Initial

reservoir pressure was measured to be 5911 psi and the compressibility factor is 0.93.
The porosity and water saturation are checked for correlation by computing the

23
correlation coefficient. Figure 3-8 shows a crossplot of porosity and water saturation. The

correlation coefficient is -0.42.

Case 1: Porosity vs Water Saturation

33
31
29
27
Porosity %

25
23
21
19
17
15
0 10 20 30 40 50 60
Water Saturation %

Figure 3-8: Case 1 Plot of Porosity vs Water Saturation.

To check for the importance of the correlation between porosity and water

saturation on the prediction of OGIP, the simulation is run assuming a correlation

coefficient of -0.42 with respect to these variables and again assuming no correlation

between any variables. The required variable distributions are input into the simulator

and 5,000 trial calculations are made to create a distribution of the OGIP based on the

volumetric equation with correlation and with no correlation.

3.2 Case 2 - Gulf of Mexico Oil Reservoir

The second case study is an oil reservoir in the Gulf of Mexico. The drive

mechanism was water drive. This reservoir began producing in 1997 and has an ultimate

recovery of 1,218,000 barrels of oil. The reservoir is currently not producing. The

production profile for this reservoir is shown in Figure 3-8.

24
 Figure 3-9: Case 2 Oil Production History.

There are three well penetrations, all with core data. The core data is somewhat

limited although given the small size of the reservoir it is determined that the data is

sufficient to create a meaningful distribution. The reservoir is in an area with complicated

geology due to faulting caused by an underlying salt dome. As a result, the reservoir has a

very steep dip. Based on the core data, CDF’s and PDF’s for porosity were created. These

plots are shown in Figures 3-9 through 3-10 and the probability transform is plotted in

Figure 3-11. The PDF for the porosity has an unusual shape in that f(x) increases as
porosity increases to approximately 30% and then abruptly decreases. The peaks and

troughs likely represent holes in the data which would be filled if more cores had been

available. The probability transform for porosity indicates that an assumption of a normal

distribution for porosity is reasonable.

25
 1
0.8
0.6

F(x)
0.4
0.2
0
10 15 20 25 30 35 40
Porosity %

Figure 3-10: Case 2 CDF for Porosity.

0.2

0.15
f(x )

0.1

0.05

0
10 15 20 25 30 35 40
POROSITY %

Figure 3-11: Case 2 PDF for Porosity.

40
35
30
Porosity %

25
20
15
10
5
0
-3 -2 -1 0 1 2 3
Probability Transform

Figure 3-12: Case 2 Probability Transform Plot for Porosity.

26
 The porosity is estimated to be normally distributed with a mean of 25.42 % and a

standard deviation of 5.36 %. This distribution is input into the Crystal Ball simulator for

use in the Monte Carlo calculations.

Values of water saturation are obtained by a combination of core and log analysis.

The water saturation data are used to create CDF and PDF plots. These plots indicate that

the water saturation may be log-normally distributed in the reservoir, as is evidenced in

Figures 3-12 and 3-13. Note that the PDF for water saturation appears skewed to the left.

To check the assumption of a log-normal distribution, the probability transform is plotted

on a semi-log scale, shown in Figure 3-14. This plot yields a reasonably straight line.

Based on this, a log-normal distribution with mean of 26.45 % and standard deviation of

8.1 % is input into the simulation.

0.8

0.6
F(x)

0.4

0.2

0
0 10 20 30 40 50
Sw %

Figure 3-13: Case 2 CDF for Water Saturation.

27
 0.14
0.12
0.1
0.08

f(x)
0.06
0.04
0.02
0
0 10 20 30 40 50 60
Sw %

Figure 3-14: Case 2 PDF for Water Saturation.

100
Sw

10

1
-3 -2 -1 0 1 2 3
PROBABILITY TRANSFORM

Figure 3-15: Case 2 Probability Transform Semi Log Plot for Water Saturation.

The distribution for the reservoir thickness is derived based on the three wellbore
penetrations. A triangular distribution is assumed with a minimum thickness of 46 feet, a
maximum thickness of 142 feet and a most likely thickness of 52 feet. The area is
modeled with a uniform distribution assuming a minimum area of 50 acres and a

28
maximum area of 120 acres. Possible correlation between porosity and water saturation is

checked by calculating the correlation coefficient. Figure 3-X shows a plot of porosity vs

water saturation. The correlation coefficient is -0.63. The correlation between porosity

and water saturation may be important. To check this, the simulation is run assuming a

correlation between porosity and water saturation and again assuming no correlation.

Case 2: Porosity vs Water Saturation

40
35
30
Porosity %

25
20
15
10
5
0
0 20 40 60 80 100
Water Saturation %

Figure 3-16 : Case 2 Plot of Porosity vs Water Saturation.

Based on the parameter distributions, and a known value for the formation
volume factor of 1.27 reservoir barrels per stock tank barrel, the Monte Carlo simulation

is run through 5,000 trials.

3.3 Case 3 – Gulf Coast Waterflood

The third data set comes from an oil field that was produced as a

waterflood unit. At the time of writing, all water injection has ceased and the unit will

have a very limited economic remaining life. Figure 3-15 shows the production profile.

29
The current cumulative oil production is 14,641,000 barrels and the expected ultimate

recovery is 15,050,000 barrels.

Figure 3-17: Case 3 Oil Production Plot.

The reservoir is at approximately 12,000 feet. There are eleven total penetrations

and core data is available on seven of those wells. From the core data, the CDF and PDF

plots are constructed. The porosity has a mean of 16.27 % and a standard deviation of

6.27 %. The PDF character indicates a bimodal distribution, meaning that there are two

peaks in the plot. This is indicative of two distinct geologic depositional environments

within the reservoir. Each depositional environment is referred to as a parent. Plotting the

porosity against the probability transform gives further evidence that there are two

parents represented by this data.

Further inspection of the data does not indicate that there are certain areas of the

reservoir for which one parent dominates. For example, it might be expected that the

deeper sections of the reservoir underwent one type of deposition and the shallower

sections underwent another. If this were the case, it would be appropriate to separate the

reservoir accordingly and then perform two separate Monte Carlo simulations with
separate porosity, water saturation, thickness, and area distributions for each segment.

30
Because of the complexity of the geology of this reservoir, it is not possible to separate

the parents. Plotting the porosity values against the probability transform show that the

distribution cannot be accurately described by the normal or log-normal distribution.

These plots are shown in Figures 3-18 and 3-19. Nevertheless, in order to carry out the

Monte Carlo simulation, a normal distribution for porosity with a mean of 16.7 % and a

standard deviation of 6.27 % is assumed. It is noted that this input distribution is not

completely representative of the actual distribution in the reservoir, and the results from

this simulation will be analyzed to determine if this assumption affects the accuracy of
the calculations. Figures 3-16 and 3-17 show the CDF and PDF for porosity.

1.00
0.90
0.80
0.70
0.60
F(x)

0.50
0.40
0.30
0.20
0.10
0.00
0 5 10 15 20 25 30 35
Porosity %

Figure 3-18: Case 3 CDF for Porosity

0.140

0.120

0.100

0.080
f(x)

0.060

0.040

0.020

0.000
0 5 10 15 20 25 30 35
Poros ity %

Figure 3-19: Case 3 PDF for Porosity.

31
 30

25

20

Porosity
15

10

0
-3 -2 -1 0 1 2 3
Transform

Figure 3-20: Case 3 Probability Transform Plot for Porosity.

100
P oros ity

10

1
-3 -2 -1 0 1 2 3
Transform

Figure 3-21: Case 3 Probability Transform Semi-Log Plot for Porosity.

The water saturation CDF and PDF plots are created by analyzing the core and
wireline log data; these plots are shown in Figures 3-20 and 3-21. The CDF and PDF are

characteristic of a log-normal distribution. The PDF in particular shows a strongly

positive skewedness and a characteristic tail to the right. Plotting the water saturation
against the probability transform on a semi-log plot yields a relatively straight line. This

plot is shown in Figure 3-22. Based on this analysis, a log-normal distribution with a

32
mean of 20.57 % and a standard deviation of 7.4 % is used in the Monte Carlo simulation

for water saturation.

( )
1.00
0.90
0.80
0.70
0.60
F(x) 0.50
0.40
0.30
0.20
0.10
0.00
0 10 20 30 40 50 60
Sw %

Figure 3-22: Case 3 CDF for Water Saturation.

0.250

0.200

0.150
f(x)

0.100

0.050

0.000
0 10 20 30 40 50 60 70

Sw %

Figure 3-23: Case 3 PDF for Water Saturation.

33
 100.0

Sw %
10.0

1.0
-3 -2 -1 0 1 2 3
PROBABILITY TRANSFORM

Figure 3-24: Case 3 Probability Transform Semi-Log Plot for Water Saturation.

The thickness is assumed to have a triangular distribution with a minimum value

of 33 feet, a most likely value of 72 feet, and a maximum value of 159 feet. The area is
assumed to be uniformly distributed with values ranging from 1250 to 1550 acres. The
correlation coefficient between porosity and water saturation is -0.80, indicating strong
correlation. Figure 3-X shows a plot of porosity against water saturation for this

reservoir.

Case 3: Porosity vs Water Saturation

35

30

25
Porosity %

20

15

10

0
0 20 40 60 80 100
Water Saturation %

Figure 3-25: Case 3 Plot of Porosity vs Water Saturation

34
 To determine the effect of correlation, the simulation is run twice, once using the

correlation coefficient of -0.80 for the porosity-water saturation correlation, and again

assuming no correlation between variables. The overall reservoir distributions are input

into the Crystal Ball software and 5,000 trials are made for each case.

3.4 Case 4 - Western Australian Oil Reservoir

The data for the next case is taken from an oil reservoir in Australia. The drive

mechanism was depletion drive. The reservoir has 10 penetrations and core data is

available in three wells. The reservoir is approximately 6,500 feet deep and the ultimate

production is 29,100,000 barrels of oil. The porosity has a mean of 22.42% and a

standard deviation of 2.28%. The CDF, PDF, and probability transform plots show that

the porosity is normally distributed. The PDF shows that the majority of the porosity

values measured fall within a fairly narrow range and the shape is similar to the idealized

normal distribution. The plot of porosity against the probability transform yields a nearly

perfectly straight line. Based on this, a normal distribution with the mean and standard

deviation given above are input into the Crystal Ball simulator. Figures 3-23 through 3-25

show these plots.

0.8

0.6
F(x)

0.4

0.2

0
10 15 20 25 30
Poros ity %

Figure 3-26: Case 4 CDF for Porosity.

35
 0.3
0.25
f(x) 0.2
0.15
0.1
0.05
0
10 15 20 25 30 35
Porosity-%

Figure 3-27: Case 4 PDF for Porosity.

35

30

25
Po ro sity

20

15

10
5

0
-3 -2 -1 0 1 2 3
Probability Transform

Figure 3-28: Case 4 Probability Transform Plot for Porosity.

The water saturation CDF and PDF are also characteristic of a normally

distributed variable as shown in Figures 3-26 and 3-27. The probability transform plot

confirms that this is a good assumption as the data plots are nice straight lines with the
exception of a few outlying data points. The plot of the probability transform is shown in
36
Figure 3-28. A normal distribution is input into the Monte Carlo simulator with a mean of

34.62% and standard deviation of 6.39%.

1
0.9
0.8
0.7
0.6
F(x)

0.5
0.4
0.3
0.2
0.1
0
10 20 30 40 50 60 70
Sw (%)

Figure 3-29: Case 4 CDF for Water Saturation.

C S S ( C U )
0.14
0.12
0.1
0.08
f(x)

0.06
0.04
0.02
0
20 25 30 35 40 45 50 55
Sw-%

Figure 3-30: Case 4 PDF for Water Saturation.

37
 80
70

60
50

Sw %
40
30

20
10
0
-3 -2 -1 0 1 2 3
TRANSFORM

Figure 3-31: Probability Transform Plot for Water Saturation.

The reservoir thickness is modeled as a triangular distribution based on the pay

thicknesses seen in the existing wellbores. This distribution is assumed to have a
minimum value of 20 feet, a most likely value of 87 feet, and a maximum value of 116
feet. The aerial extent of the reservoir is assumed to be uniformly distributed based on the

seismic amplitude with a minimum value of 1800 acres and a maximum value of 2200
acres. The correlation coefficient porosity and water saturation is -0.14. A plot of porosity
against water saturation is shown in Table 3-X.
Case 4: Porosity vs Water Saturation

30

25
Porosity %

20

15

10
10 20 30 40 50 60 70 80
Water Saturation %

Figure 3-32: Case 4 : Porosity vs Water Saturation.

38
 The correlation between porosity and water saturation is very weak. Therefore,

correlation is ignored in this case. The distributions are input into the Monte Carlo

simulator and 5,000 trial are made to create the resulting distribution of OOIP.

3.5 Case 5 - Gulf Coast Gas Reservoir

Case 5 is a gas reservoir located in the Gulf coast of Louisiana. The drive

mechanism was depletion drive. The reservoir is at approximately 10,000 feet and has
good core data from the three penetrations, and the available data is somewhat limited.

The reservoir produced 22,476 MMcf from 1943 to 1953. Figure 3-29 shows the

production history data.

1,000,000
GAS PRODUCTION, MCF/MO

100,000

10,000
J-43 J-44 J-45 J-46 J-47 J-48 J-49 J-50 J-51 J-52 J-53 J-54

TIME

Figure 3-33: Case 5 Gas Production Plot.

The core data are used to construct the PDF, CDF, and probability transform plots
for porosity. These plots are shown in Figures 3-30 through 3-32. There is a cluster of
porosity values around 30%, as can be seen on the PDF plot. The probability transform

plots as a reasonably straight line, and it is determined that the porosity is approximately
normal with a mean of 27.2 % and a standard deviation of 5.4%.

39
 100%

80%

% Less Than
60%

40%
20%
0%
10 15 20 25 30 35

Porosity (%)

Figure 3-34: Case 5 CDF for Porosity.

0.3
0.25
0.2
f(x)

0.15
0.1
0.05
0
15 20 25 30 35
POROSITY %

Figure 3-35: Case 5 PDF for Porosity.

35
30
25
POROSITY

20
15
10
5
0
-2 -1 0 1 2
PROBABILITY TRANSFORM

Figure 3-36: Case 5 Probability Transform Plot for Porosity.

40
 The water saturation data is obtained from wireline log measurements in

conjunction with the core porosity data. The CDF, PDF, and probability plots are shown

in Figures 3-33 through 3-35. Based on the positively skewed PDF plot and the

reasonably straight line seen on the semi-log plot of the probability transform, the water

saturation is assumed to be log-normally distributed. The water saturation has a mean of

20.97 % and a standard deviation of 6.5 %.

100%

80%
% Less Than

60%

40%

20%

0%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%
Porosity (%)

Figure 3-37: Case 5 CDF for Water Saturation.

0.6

0.5

0.4
f(x)

0.3

0.2

0.1

0
0.0 10.0 20.0 30.0 40.0 50.0
Sw %

Figure 3-38: Case 5 PDF for Water Saturation.

41
 100.00

POROSITY

10.00

1.00
-2 -1.5 -1 -0.5 0 0.5 1
PROBABILITY TRANSFORM

Figure 3-39: Case 5 Probability Transform Plot for Water Saturation.

The reservoir thickness is modeled as a triangular distribution based on the pay

thicknesses seen in the existing wellbores with a minimum value of 15 feet, a most likely

value of 41 feet, and a maximum value of 71 feet. The aerial extent of the reservoir is
estimated with uniform distribution between 375 and 450 acres. Figure 3-X shows a plot
of porosity against water saturation for this reservoir. The correlation coefficient between
these variables is -0.69.

Case 5: Porosity vs Water Saturation

35
30
25
Porosity %

20
15
10
5
0
0 10 20 30 40 50 60

Water Saturation %

Figure 3-40: Case 5 : Porosity vs Water Saturation.

42
 Based on the value of the correlation coefficient, porosity and water saturation are

correlated strongly enough to make two separate simulations to determine the effect of

the correlation on the OGIP distribution. The parameter distributions are input into the

Monte Carlo simulator and 5,000 trial calculations are made for the case of correlated

porosity and water saturation and also for the case assuming no correlation of variables.

43
 Chapter 4: Results and Discussion

In four out of the five cases, porosity and water saturation were correlated to such

a degree that it was considered necessary to consider this factor when running the Monte

Carlo simulations. These correlations were always between porosity and water saturation.

Based on the comparison of the distributions between the simulations including

correlation and the simulations not including correlation, it is concluded that correlation

has a very small effect on the calculations. However, the effect of correlation between the

variables manifests itself in the form of distributions with larger standard deviations and

larger mean values.

The CDF and PDF of the OGIP distribution in Case 1 when correlation is taken

into account is shown in Figures 4-1 and 4-2.

Figure 4-1: Case 1 CDF for OGIP Considering Correlation.

44
 Figure 4-2: Case 1 PDF for OGIP Considering Correlation.

Table 4-1 shows some summary statistics of the OGIP distribution. Statistics such
as the mean, median, mode, variance, and standard deviation are well known. Others such
as skewness, kurtosis, coefficient of variability, and mean standard error may not be.
Therefore a brief description is given here. The kurtosis is a measure of the peakedness of
a distribution. The ideal normal distribution has a kurtosis of zero. Distributions with a
positive kurtosis, i.e. flatter than the standard normal distribution are said to be
leptokurtic and those with a negative kurtosis are said to be platykurtic. Skewness is a
measure of the asymmetry of the distribution. A negative skewness indicates the
distribution is skewed to the right. The normal distribution has zero skewness. The
coefficient of variation is a measure of the dispersion of a distribution. It is defined as the
standard deviation divided by the mean. Lastly, the mean standard error is simply the
standard deviation divided by the square root of the sample size.18

Table 4-2 shows certain probabilities of the magnitude of OGIP. The range is
bounded by P(0) and P(100). As mentioned previously, P(50) is the median of the
distribution.

45
 Table 4-1: Summary OGIP Statistics for Case 1 Considering Correlation.

Table 4-2: Case 1 Values of F(x) for OGIP Considering Correlation.

The results of the simulation when no correlation between water saturation and

porosity is assumed are very similar to the calculations of OGIP when correlation is

considered. A plot of F(x) vs OGIP for both simulations, shown as Figure 4-3, illustrates

this fact.

46
 100%

80%

60%

F(x)
NO CORR
CORR
40%

20%

0%
0 100,000 200,000 300,000 400,000 500,000 600,000
OGIP (MMCF)

Figure 4-3: Effect of Correlation on OGIP Calculation for Case 1.

The resulting CDF and PDF of original oil in place for Case 2 accounting for the

correlation between porosity and water saturation, along with the relevant statistics of the

distribution is shown below in Figures 4-4 and 4-5 and in Tables 4-3 and 4-4.

Figure 4-4: Case 2 CDF for OOIP Considering Correlation.

47
Figure 4-5: Case 2 PDF for OOIP Considering Correlation.

Table 4-3: OOIP Summary Statistics for Case 2 Considering Correlation.

48
 Table 4-4: Case 2 Values of F(x) for OOIP Considering Correlation.

To check the effect of correlation, F(x) vs OOIP is plotted for the correlated and

the uncorrelated cases. Figure 4-6 shows this plot. Correlation has a small effect on the

calculations and is not an important consideration in this case. However the correlated

distribution is slightly more dispersed.

100%
90%
80%
70%
60%
F(x)

NO CORR
50%
CORR
40%
30%
20%
10%
0%
0 5,000 10,000 15,000 20,000 25,000 30,000
OOIP (MBBLS)

Figure 4-6: Effect of Correlation on OOIP for Case 2.

The resulting CDF and PDF for the third case are generated for each case. For the

case considering correlation, these plots are displayed in Figures 4-7 and 4-8.

49
 Figure 4-7: Case 3 CDF for OOIP Considering Correlation.

Figure 4-8: Case 3 PDF for OOIP Considering Correlation.

A statistical summary of these results is shown in Tables 4-5 and 4-6.

50
 Table 4-5: OOIP Summary Statistics for Case 3 Considering Correlation.

Table 4-6: Case 3 values of F(x) for OOIP Considering Correlation.

For this case some of the values of OOIP calculated in the Monte Carlo runs are
negative. It is obviously physically impossible to have a negative OOIP. To explain this,

the input distributions were reviewed. The porosity was assumed to be normally

distributed even though it was pointed out that the reservoir distribution was inadequately

described by this assumption. As a result, some of the porosity values generated by

Crystal Ball using the normal distribution for porosity are negative. Therefore, the

inaccurate description of the reservoir porosity is causing this problem. While it is

51
unsettling to have this problem, the overall distribution of OOIP is considered relevant

for OOIP values larger than 25 million barrels. The values of F(x) vs calculated values of

OOIP for the correlated and uncorrelated simulations are plotted to check for the

significance of correlation on the results. This plot is shown in Figure 4-9.

100%
90%
80%
70%
60%
F(x)

NO CORR
50%
CORR
40%
30%
20%
10%
0%
-25,000 25,000 75,000 125,000 175,000 225,000
OOIP (MBBLS)

Figure 4-9: Effect of Correlation on OOIP for Case 3.

The resulting CDF and PDF plots for the fourth case study are shown in Figures

4-10 and 4-11.

Figure 4-10: Case 4 CDF for OOIP.

52
 Figure 4-11: Case 4 PDF for OOIP.

Statistics from this simulation are shown in Tables 4-7 and 4-8.

Table 4-7: OOIP Summary Statistics for Case 4.

53
 Table 4-8: Case 4 F(x) Values for OOIP.

The resulting CDF and PDF of OGIP in the fifth case study when correlation is

considered are shown in Figures 4-12 and 4-13 and some of the critical results of the

simulation are shown in Tables 4-9 and 4-10.

Figure 4-12: Case 5 CDF for OGIP Considering Correlation.

54
Figure 4-13: Case 5 PDF for OGIP Considering Correlation.

Table 4-9: Summary Statistics for Case 5 Considering Correlation.

55
 Table 4-10: Case 5 F(x) Values for OGIP Considering Correlation.

The values of F(x) vs calculated values of OGIP for the correlated and

uncorrelated simulations are plotted to check for the significance of correlation on the

results. This plot is shown in Figure 4-14.

100%
90%
80%
70%
60%
F(x)

NO CORRELATION
50%
CORRELATION
40%
30%
20%
10%
0%
0 20,000 40,000 60,000 80,000 100,000 120,000
PREDICTED OGIP (MMcf)

Figure 4-14: Effect of Correlation on OGIP for Case 5.

The distributions for OOIP and OGIP obtained from the Monte Carlo simulation
for each case can now be compared to the actual production histories for each of these
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reservoirs. The recovery factor is the percentage of oil or gas in the ground actually

produced. Table 4-11 shows the recovery factors of each case based on the actual

volumes produced corresponding to the calculated P(10), P(50), and P(90) values of oil

or gas in place as calculated in the Monte Carlo simulations. When correlation was

considered, those values of OOIP or OGIP were used when calculating the recovery

factors.

Table 4-11: Recovery Factor Calculations Based on Monte Carlo Simulation.

Real recovery factors vary from 5% to 90% depending on the reservoir fluid

properties and the reservoir drive mechanism. The recovery factors shown in Table 4-11

are considered reasonable for the drive mechanism of the reservoirs and the associated

fluid types. None of the Monte Carlo simulation results shown in Table 4-11 predict

greater than 100% recovery, which would be impossible. In this respect, the results

indicate that the Monte Carlo simulations provide reliable estimates of hydrocarbons

originally in-place. There have been attempts made to estimate reasonable ranges of

recovery factors in the literature. A compilation of some of these attempts is shown in

Table 4-12. The values given in Table 4-12 are estimates only and there may be cases

where the actual recovery factor of a reservoir is outside of the ranges given.

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 Table 4-12: Typical Recovery Factors for Certain Reservoirs.

In particular, by examining the median values of OOIP or OGIP, which is by

definition the P(50) value of the distribution, and calculating the resulting recovery, the

predictions of oil and gas in place are in fact quite good. The recovery factors calculated
against the P(50) values of OOIP or OGIP are considered to be typical.

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 Chapter 5: Summary and Conclusions

Monte Carlo simulation was applied to five mature or depleted reservoirs to

determine its effectiveness as an estimator of oil and gas in place. The resulting

distributions from the simulations allow us to conclude that the procedure worked well in

predicting the OOIP and OGIP for the reservoirs studied. The back calculated recovery

factors in general fall within accepted ranges of what would be expected from the

reservoirs given their drive mechanism and hydrocarbon properties. By inspection of the

PDFs of OOIP and OGIP, the distributions appear to be approximately log-normally

distributed as predicted by the Central Limit Theorem. The effect of correlation between

variables does not appear to have a large effect on the distributions, though in cases

where correlation was considered, the mean value of the distribution tended to be larger

than in cases where no correlation was considered. Additionally, distributions with

correlation built in to the volumetric model tended to be more dispersed than those

distributions with no correlation considered.

5.1 Suggestions For Further Work

A review of the literature reveals that an analysis of this type has not been done in

any great detail. Only one case study was found3 in which a probabilistic study was

analyzed for its accuracy. I believe that since the Monte Carlo method is so widely used

in the petroleum industry today that further verification of its accuracy by performing

similar types of analysis on a broad range of reservoirs is a worthwhile pursuit.

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References

1. James Murtha. 2002. “Sums and Products of Distributions: Rules of Thumb and
Applications.” SPE paper 77422

2. Jensen, Lake, et al. 1997. Statistics for Petroleum Engineers and Geoscientists.

3. John Wright. 1997. “Actual Performance Compared to a 20 Year Old Probabilistic

Reserve Estimate.” SPE paper 38802

4. James Murtha. 1994. “Incorporating Historical Data Into Monte Carlo Simulation.”
SPE paper 26245

5. Evers and Jennings. 1973. “How to Use Monte Carlo Simulation in Profitability
Analysis.” SPE paper 4401

6. Gentle, J.E. 1998. “Random Number Generation and Monte Carlo Methods.”
Springer- Verlag New York, Inc., 1998, 247 pp.

7. Metropolis, N. and Ulam, S. 1949. “The Monte Carlo Method.” J. Amer. Stat. Assoc.
44, 335-341.

8. Harbaugh, Doveton, Davis. 1977. Probability Methods in Oil Exploration. pp.20-30

9. Volk. 1958. Applied Statistics for Engineers, pp.47-50

10. James Murtha. 1997. “Monte Carlo Simulation: Its Status and Future.” SPE paper
37932
11. Bassiouni. 1994. Theory, Measurement, and Interpretation of Well Logs. pp. 16-17
12. Craft and Hawkins. 1959. Applied Petroleum Reservoir Engineering
13. James Murtha. 2004. “When Does Correlation Matter?”
14. David Morgan. 2004. “What To Do When You Need 240 Correlations.” Proceedings
of the 2004 Crystal Ball User Conference
15. J.J. Arps and T.G. Roberts. 1955. Journal of Petroleum Technology p. 124
16. J.J. Arps. 1956. “Estimation of Primary Oil Reserves.” AIME 4331
17. D. Vose. 1996. Quantitative Risk Analysis. p 53-54
18. Decioneering. 1996. Crystal Ball Manual, Version 3.

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19. Merran Evans. 2000. Statistical Distributions, 3rd Edition

61
 Vita

John Williams was born on June 30, 1972 in West Allis, Wisconsin, son of Harry

and Sarah Williams. He was awarded a Bachelor of Science degree in Petroleum

Engineering from The University of Texas in 1995. He has worked in the petroleum

industry as a reservoir engineer since 1996.

Permanent address: 3010 Glenwood Drive, Pearland, TX 77584

This report was typed by John Williams

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