Petroleum resources reserves

PETROLEUM RESOURCES AND
RESERVES
FOUNDATION AND PRINCIPLES
Monday 08 April 2016
08-04-2016
Indian Institute of Technology, Bombay.
Department of Earth Sciences.
1

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

Petroleum Resources & Reserves
• Estimated volumes of oil & gas in an area of
investigation.
• Determined indirectly from may different methods of
investigation
• Inherent uncertainty in the relationship between the
measurement – volumes of oil & gas exists
• The determined volumes and their value are of
strategic importance in company – national and global
economics
• Are treated as “Assets” in the company books
• Determines the valuation of the company and assets of
nations.
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Petroleum resource - types
• Petroleum resources are volumes of oil & gas that occur as
deposits in the layers of earth
• In principle these are similar to the other mineral deposits
• Rocks in the crust of earth have pore-space that is filled
with – i) Water ii) Gases and iii) Petroleum
– Petroleum occurs in 2 primary phases : i) Oil and ii) Gas
• Significant quantities (that can be discovered and
produced) occur in 2 types of deposits :
i) Conventional : discrete accumulations – with map
boundaries & distinct hydrodynamic realms
ii) Unconventional : continuous accumulations in a wide
area & not affected by or separated by distinct hydrodynamic
realm (from the pervasive water)
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4

Types of Petroleum Resources
Conventional
Confined to clear areas of Petroleum
Unconventional
Large unconfined areas have variable volumes
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5
The difference in nature of these 2 types determines the
methods of assessment and recovery

Types of Petroleum Resources
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Conventional : discrete accumulations –
with map boundaries & distinct
hydrodynamic realms
Unconventional : continuous
accumulations in a wide area & not
affected by or separated by distinct
hydrodynamic realm

Volumes of Petroleum
Reservoir
• The amount of Oil & Gas that
occurs in the subsurface
– Yet to be discovered =
Prospective (opportunity)
– Discovered (Known)
• Undeveloped – Value yet to be
realized
• Developed – Value is realized
and mechanism to produce
and sell are in-place.
– Produced - Volumes
produced and sold
(monetized)
• Volumes are in the conditions
of the deposit (Reservoir)
– Reservoir = Petroleum Deposit
in the subsurface.
Reserves (Saleable)
• The Amount of Oil & Gas that is
or can be produced and sold at
given time.
– Discovered + Developed
– Engineering and processing
facilities are built
– Operational aspects of the
reservoir and its facilities are
known (in-place)
• Volumes are in the surface
conditions of extraction,
processing, transportation and
sale. (Reserves)
– Field = Petroleum reservoir that is
developed and producing (ready).
– Reserves = Volumes a field is
capable of production and sale.
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Resources : Reserves
Classification System
Stages of Discovery and
Development
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↑ Producing
↑ Developing
↑ Design
↑ Appraisal
↑ Discovery
↑ Prospect
↑ Play
↑ Basin
1. Resource = Not established for commercial recovery
a. Prospective = Not yet discovered – estimated from Geological Chance
b. Contingent = Discovered, yet not established as commercial project
2. Reserve = Established for commercial recovery

Industry Classification of Resources –
Reserves
Basin
•Large area with Petroleum
System
Play
•Identified components of
effective Petroleum System
Prospect
•Discrete Accumulations
•Predicted volumes
Field
•Drilled and discovered HC
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E&P Organization & Reserves
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Production & Operations
Field Development
Appraisal & Commerciality
Exploration (Basin, Play and
Prospect analysis)
Business Development (Acquire
Blocks)

Resources in-place
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11
http://www.epgeology.com/general-discussion-f29/hciip-formula-t5776.html

Equation for Resources in-place
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12
http://www.epgeology.com/general-discussion-f29/hciip-formula-t5776.html

Reservoir Volumes - HCIIP
In-Place Hydrocarbons
• HCIIP = Volume of Petroleum in-place
within the reservoir
– Volume of Reservoir Rock (Gross-Rock
Volume GRV)
– Part of GRV that is made of Pore-Space
(Pore-Rock Volume PRV)
– Part of PRV that is filled with Petroleum
(Hydrocarbon Pore Volume HCPV)
• Reservoir are made of 3D of space
– GRV = Volume of Space
– PRV = GRV * Average Porosity
– HCPV= PRV * Average Saturation Shc
• All these parameters are estimated
from samples taken from 1 or more
wells drilled in the reservoir
– Geophysical methods like seismic support
the estimates
– Techniques like Well-Logs, Well-Tests, PVT
analysis etc. support
Computing methods
1. GRV
- Area of the Closure
- Average Thickness
- 3D Volume above FWL
2. PRV
- Porosity samples (Core/ well
log)
3. HCPV
- Saturation measurements
(well log)
- Saturation Height function
(Reservoir Rock types)
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Uncertainty in Volumes and Potential :
Resources & Reserves
Parameters
All these are :
a. Spatial variables
b. Sampled mostly by wells
c. Estimated indirectly from
physical measurements
d. Change in different directions
-- Anisotropy
e. Influenced by trends and
other causes -- Non-
Stationary
f. Difficult to determine
{Measure & bind}
Nature of Uncertainty
1. Sample distribution of the
parameters (GRV, NTG,Ø, Sg,
FVF)
? Minimum
? Maximum
?Most-Likely
1. Reservoir Average of the
Parameters (Population)
2. Other dependencies
3. Methods of assessment of
Ranges
4. Assessment of Quantification of
Uncertainty
5. Impact on Resource in-place
6. Impact on Reserves
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Resource Estimation
Volumetric
Equation
Average & Ranges
Distribution &
Estimation
Monte Carlo
Map
Based
X,Y,p data
Map Framework
Interpolation
Method
Geostatistics
3D Model
Based
X,Y,Z,p data
Model
Framework
Parameter
Interpolation
Simulation
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Towards Reserves
Development Scheme
Production
Operations
Geology: Faults &
Facies, Stratigraphy
Rock-Fluid
interactions
Formation Volume
Factor (FVF)
HCIIP
Connectivity
Wells (V|H) &
Spacing
Rate of Flow
Ease of Flow
(Permeability)
Fluid Phases
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Standards & Methods
PRMS (Petroleum Resource
Management System)
• Standard classification
methods
– SPE & AAPG
• Categories of “Uncertainty”
– Technical
• HCIIP
• Recovery Efficiency
– Commercial
• Market | Prices | Contracts
• Classification of
“Commerciality”
Methods for estimation
1. Analytical
– Analog
2. Volumetric
– Equation
– Maps
– 3D Models
3. Material Balance
4. Production Performance
Analysis
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Methods of Estimation
Parameters & Results are Determined as most-likelyDeterministic
•A single value for each sample in the parameter
•Single value of HCIIP or Reserves estimated
•Classified as “Proved – Probable – Possible” or “1P – 2P – 3P”
Realizations Method. 3 or more deterministic estimatesScenario
•Using Deterministic Method as foundation
•Ranges of Parameters and Results are created as Scenarios
•Assigned Low-Medium-High case of likelihood
Statistical uncertainty of Samples, Parameters and ResultsProbabilistic
•Sample data for each Parameter is assessed for their Probability and Distributions
•Results are derived by random sampling of the parameters (Monte Carlo) or by Other statistical
simulation
•Large number of realizations are created and ranked (P10-P50-P90)
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http://www.spe.org/industry/docs/PRMS_Guidelines_Nov2011.pdf Chapter-5

At the End
• Reserve reporting is very sensitive aspect
regulatory reports in all E&P companies
• Reserves define “THE GOAL” and “THE RESULT”
of the E&P company
• It is nearly impossible to exactly estimate the
HCIIP or the Reserves
• Different methods carry sets of advantages and
disadvantages – there is no clear winner
• Integrity and Process plays important role in fair
and consistent assessment
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An Example of Resource and
Reserve Estimation
A-For Apple Field
MMRA Reserve Analysis
Zone Name: Sandstone
Country: Ireland
Business Unit: Domestic 2
Basin:
Play: Stratigraphic
Analysis Run Date: 24-10-2012 18:03:47 by: K-Katy
Status: Prospect Pre-Drill
http://www.roseassoc.com/software-oil-gas-prospect-play-portfolio/multi-method-risk-analysis/

Net Rock Volume A-For Apple Field, Sandstone, Domestic 2
Gross
Rock
Volume
Percent
Trap
Fill
Net to
Gross
Ratio
Net
Rock
Volume
Area
(for Net
Pay
Cross
Check)
Average
Net Pay
(Implied)
(Million
cubic
metres) (%) (%)
(Million
cubic
metres) (sq km) (metres)
P99 191.705 100.0 15.3 53.776 NA NA
P90 300.000 100.0 24.7 98.549 NA NA
Mode 432.408 100.0 35.5 139.601 NA NA
P50 519.615 100.0 37.3 189.110 NA NA
Mean (P99-
>P01)
563.644 100.0 37.4 209.313 NA NA
P10 900.000 100.0 50.0 363.425 NA NA
P01 1,408.417 100.0 59.8 624.866 NA NA
Shape LOGNORMAL NORMAL NORMAL OUTPUT NA NA
Input Values
P90=300.00
P10=900.00
P90=100.00
P10=100.00
P90=25.00
P10=50.00
NA NA NA
Clipping
LClip=None
HClip=None
LClip=None
HClip=None
LClip=None
HClip=None
NA NA NA
Correlation NA NA 0% to GRV NA NA NA
Results above after Input Truncations are applied (0%->100%).
Max % Fill Allowed is 100%
NRV P10/P90 = 3.7 NA NA
CROSSCHECK
24-Oct-12
P99
P98
P95
P90
P80
P70
P60
P50
P40
P30
P20
P10
P05
P02
P01
10 100 1,000
CumulativeProbability>>>
Net Rock Volume
0
1
2
3
4
5
6
7
0 200 400 600 800
NRV P99 to P01
Gross Rock Volume
Net to Gross Ratio
Area
Average Net Pay
Percent Trap Fill
NRV Mean
NotesSet Net Rock Volume
MMRA Analysis: A-For Apple Field,
Sandstone (Domestic 2)
08-04-2016 21

HC Recovery Yield A-For Apple Field, Sandstone, Domestic 2
Calculated Yield
Oil Raw Gas
Average
Porosity(%)
AverageHydrocarbon
Saturation(%)
PrimaryRecovery
Efficiency(%)
OilFormationVolume
Factor(reservoir/stock
tankunits)
SolutionGasYield
(SCF/Stdbbl)
SolutionGasRecovery
Efficiency(%)
PrimaryRecovery
Efficiency(%)
GasExpansionFactor
(standard/reservoir
units)
CondensateYield(bbls
CondperMMCF)
CondensateRecovery
Efficiency(%)
OilRecoverableYield
(bblsperacre-foot)
GasRecoverable
Yield
(MCFperacre-foot)
Shrinkage&Surface
Loss(Adjustmentof
TotalRawGastoSales
OilProportion
(%ofreservoirvolume)
P99 12.4 47.3 NA NA NA NA 41.8 255.7 NA NA NA 546.2 0.0 0.0
P90 16.2 54.9 NA NA NA NA 50.1 280.0 NA NA NA 751.9 0.0 0.0
Mode 20.6 63.3 NA NA NA NA 59.9 311.4 NA NA NA 1,134.1 0.0 0.0
P50 20.6 64.5 NA NA NA NA 60.0 311.7 NA NA NA 1,062.9 0.0 0.0
Mean (P99-
>P01)
20.6 64.6 NA NA NA NA 60.0 311.8 NA NA NA 1,079.5 0.0 0.0
Shape NORMAL NORMAL NA NA NA NA NORMAL NORMAL NA NA NA OUTPUT NORMAL BETA
Input Values
P90=16.00
P10=25.00
P90=55.00
P10=74.00
NA NA NA NA
P90=50.00
P10=70.00
P90=280.00
P10=344.00
NA NA NA NA
P90=0.00
P10=0.00
P90=0.00
P10=0.00
Clipping
LClip=None
HClip=None
LClip=None
HClip=None
NA NA NA NA
LClip=None
HClip=None
LClip=None
HClip=None
NA NA NA NA
LClip=None
HClip=None
LClip=None
HClip=None
Correlation NA
0% to
Porosity
NA NA NA NA
0% to
Porosity
NA NA NA NA NA NA NA
Selected Products:
Secondary Products:
O&G Recoverable Yield P10/P90 = NA 1.9
Reservoir
Parameters
24-Oct-12
Surf
Loss
(%)
Oil Prop
(%)
HC Rec Yield Estimating
Mode: COMPONENTS
Primary Oil
Components
Primary Gas
Components
Primary Gas
P99
P98
P95
P90
P80
P70
P60
P50
P40
P30
P20
P10
P05
P02
P01
100 1,000 10,000
HC Rec Yield
0 0 0 1 1 1
Oil Recoverable Yield
Oil Yield P99 to P01
Oil Rec. Eff.
Porosity
HCSaturation
Oil FVF
Oil Yield M ean
0 500 1,000 1,500 2,000
Gas Recoverable Yield
Gas Yield P99 to P01
Porosity
Gas Rec. Eff.
HCSaturation
Gas GEF
Gas Yield M ean
NotesSet HC Rec Yield
08-04-2016 22

A-For Apple Field, Sandstone, Domestic 2
Oil
Raw
Gas
Oil
Total
Cond
Non-
Assoc
Soln
MMB
O
BCF
MMB
O
MMB
O
BCF BCF MMBOE MMBOE MMBOE
P99 0.00 79.75 0.00 0.00 47.57 0.00 7.93 NA NA
P90 0.00 151.35 0.00 0.00 91.58 0.00 15.26 NA NA
Mode 0.00 236.88 0.00 0.00 149.77 0.00 24.96 NA NA
P50 0.00 319.40 0.00 0.00 198.28 0.00 33.05 NA NA
Mean (P99-
>P01)
0.00 368.79 0.00 0.00 231.41 0.00 38.57 NA NA
P10 0.00 673.67 0.00 0.00 428.32 0.00 71.39 NA NA
P01 0.00 1183.24 0.00 0.00 769.65 0.00 128.27 NA NA
Pg- Chance of
Geologic
Success (>=Ab
Min resource)
Pc- Chance of
Commercial
Success
(>=MCFS)
(Option is OFF)
Pe- Chance of
Economic
Success
(>=MEFS)
(Option is OFF)
31.1% NA NA
24-Oct-12
Simulation P10/P90 Ratio=4.7 versus
Predicted: Ampl with Downdip Conformance: 2 - 4
Liquids Sales Gas
Above
Commercial
Threshold
(Option is
OFF)
Current settings...
Estimating method:
VOLUMETRIC (Net Rock Volume X HC Yield)
Intermediate Simulation: 5000 Iterations
Resources Simulation: 15000 Iterations
Truncations:
Input= 0.00/1.00
Output= 0.00/1.00
Raw Gas Surface Loss: NONE
Percentile Sorting: Each product sorted
individually. (Warning...resource components
will not sum across to HC Equiv.)
Chance of
Success >>
Above
Economic
Threshold
(Option is
OFF)
Simulation
Not Current
Resources
Prospective Undiscovered Recoverable
Resources
Original In
Place
Total
Geologic
Pre-Drill
Mode: EXPLORATION PROSPECT
P99
P98
P95
P90
P80
P70
P60
P50
P40
P30
P20
P10
P05
P02
P01
1.00 10.00 100.00 1,000.00
Resources
Economic reso urces M MBOE
Comm ercial resources MM BOE
Geolo gic re source s MMBOE
Th reshold resource component MMBOE
In-place resources MM BOE
0
1
2
3
4
5
6
7
0 20 40 60 80 100 120 140
Geologic EUR (Equivalent)
EUR P99 to P01
Net Rock Volume
Gas Yield
Oil Yield
Productive Area
Productive Area
EUR Mean
Simulation Settings Notes
08-04-2016 23

Chance Checklist A-For Apple Field, Sandstone, Domestic 2 24-Oct-12
EXPLORATION PROSPECT Chance Success Ratings ( 0.00-1.00 )
Confidence of P99 Resources: 7.93 MMBO
0.80
0.80
MINIMUM FACTOR 0.80 High Good Lots
0.90
0.90
0.90
MINIMUM FACTOR 0.90
0.70
0.60
0.60 Low Bad Good Poor Limited
Reservoir MINIMUM FACTOR 0.60 News News
0.90 "Coin Toss"
0.90
0.90
MINIMUM FACTOR 0.90 Fwd $ Ready to Drill ($MM):
Confidence of P99 Resources: 7.93 MMBO Value of Information EMV ($MM):
0.85 Date:
0.80 G&G/Eng Estimator(s): 24-Oct-12
0.90 Peer Review:
0.90 RCT Review:
MINIMUM FACTOR 0.80 Manager Review:
31.1%
31.1%
Directions: The default value for each chance factor is 1.0. Use the Chance Adequacy Matrix shown below to guide the assessment of each factor or sub-factor (not the overall chance of geologic, appraisal or
development success. This program uses the “weak link” (i.e. – the smallest sub-factor is used whenever values for more than one are entered) approach in assigning values for each factor. Enter comments by clicking
the Comments icon.
SOURCE COMPONENTS
Quantity/Volume (include Monetizable Product)
Quality/Richness
CHANCE ADEQUACY MATRIXMaturation
Timing of Expulsion
0.0 - 0.2
TIMING/ MIGRATION COMPONENTS
Timing of Closure / Trap 0.8 - 1.0
0.4 - 0.6 0.6 - 0.8
Effective Migration Pathway
0.2 - 0.4
If additional technical work is required to move this prospect to Ready-To-Drill
status, capture details in the Risk Mitigation section of the Comments icon.Data Quality
Reservoir Performance
RESERVOIR COMPONENTS
0.3 - 0.45 0.45 - 0.55Presence
Quality
0.55 - 0.7
CLOSURE COMPONENTS
Map Reliability & Control
Presence
CONTAINMENT COMPONENTS
Top / Base Seal Effectiveness
EXPLORATION PROSPECT Chance of Success (calculated)
Preservation from Spillage or Depletion
Preservation from Degradation
Uncertainty Index: 0.50
EXPLORATION PROSPECT Chance of Success OVERRIDE
FINAL Chance of Success
Participants:
K-KatyLateral Seal Effectiveness
Reservoir
Critical Chance Factor(s):
Confidencelevel
Quality
Quantity
Control
NotesClear Chance SubComponents
08-04-2016 24

References
1. http://petroleumsys.blogspot.in/2010/06/petroleum-system-analysis.html
2. http://www.powershow.com/view/34434-
MzVlO/SPEWPCAAPGSPEE_Petroleum_Resources_Management_System_powerpoint_ppt_presentation
3. http://www.epgeology.com/general-discussion-f29/hciip-formula-t5776.html
4. SPE Reserves : http://www.spe.org/industry/reserves.php
5. PRMS quick overview: http://www.spe.org/industry/docs/PRMS_guide_non_tech.pdf
6. PRMS guide: http://www.spe.org/industry/docs/Petroleum_Resources_Management_System_2007.pdf
7. PRMS Guidelines 2011: http://www.spe.org/industry/docs/PRMS_Guidelines_Nov2011.pdf
8. MMRA: http://www.roseassoc.com/software-oil-gas-prospect-play-portfolio/multi-method-risk-
analysis/
09-04-2016
25

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