Introduction to petroleum engineering

Reserve Categories

Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, from a given date forward, based on:

• Analysis of drilling, geological, geophysical and engineering data,

• The use of established technology, and

• specified economic conditions, which are generally accepted as being reasonable and shall be disclosed.

Reserves are classified according to the degree of certainty associated with the estimates.

1.Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

2.Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.

3.Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves. Other criteria that must also be met for the categorization of reserves are provided in the accompanying

Definitions

Some commonly used definitions

Gross thickness: It is the thickness of the stratigraphically defined interval in which the reservoir beds occur, including such non-productive intervals as may be interbedded between the productive intervals.

Net pay (net productive) thickness: It is the thickness of those intervals in which porosity and permeability are known or supposed to be high enough for the interval to be able to produce oil or gas.

Net oil-bearing thickness: It includes those intervals in which oil is present in such saturation that the interval may be expected to produce oil, if penetrated by a properly completed well.

Development and Production Status of a Reservoir

Each of the reserves classifications (proved, probable and possible) may be divided into developed and undeveloped categories.

1.Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure ( e.g. when compared to the cost of drilling a well) to put the reserves on production. The developed category may be subdivided into producing and non producing:

2.Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.

3.Developed nonproducing reserves are those reserves that either have not been on production, or have previously been on production, but are shut-in, and the date of resumption of production is unknown.

4.Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (e.g. when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned.

5.In multi-well pools it may be appropriate to allocate total pool reserves between the developed and undeveloped categories or to subdivide the developed reserves for the pool between developed producing and developed non-producing. This allocation should be based on the estimator's assessment as to the reserves that will be recovered from specific wells, facilities and completion intervals in the pool and their respective development and production status.

Reserve Estimation

Procedure for estimation and classification of reserves

The process of reserves estimation falls into three broad categories: volumetric, material balance and decline analysis. Selection of the most appropriate reserves estimation procedures depends on the information that is available. Generally, the range of uncertainty associated with an estimate decreases and confidence level increases as more information becomes available and when the estimate is supported by more than one estimation method. Regardless of the estimation method(s) employed, the resulting reserves estimate should meet the certainty criteria in Definitions of Reserves.

1. Volumetric Methods

Volumetric methods involve the calculation of reservoir rock volume, the hydrocarbons in place in that rock volume and the estimation of the portion of the hydrocarbons in place that ultimately will be recovered. For various reservoir types at varied stages of development and depletion, the key unknown in volumetric reserves determinations may be rock volume, porosity, fluid saturation or Petroleum Society of CIM definitions-guidelines January 25 2002.doc 9 recovery factor. Important considerations affecting a volumetric reserves estimate are outlined below:

- Rock volume – may simply be determined as the product of a single well drainage area and wellbore net pay or by more complex geological mapping. Estimates must take into account geological characteristics, reservoir fluid properties and the drainage area that could be expected for the well or wells. Consideration must be given to any limitations indicated by geological, geophysical data or interpretations as well as pressure depletion or boundary conditions exhibited by test data.

- Elevation of Fluid Contacts - In the absence of data that clearly defines fluid contacts, the structural interval for volumetric calculations of proved reserves should be restricted by the lowest known structural elevation of occurrence of hydrocarbons (LKH) as defined by well logs, core analyses or formation testing.

- Porosity and fluid saturation and other reservoir parameters – determined from logs and core and well test data.

- Recovery factor - based on analysis of production behavior from the subject reservoir, by analogy with other producing reservoirs and/or by engineering analysis. In estimating recovery factors, the evaluator must consider factors that influence recoveries such as rock and fluid properties, hydrocarbons-in-place, drilling density, future changes in operating conditions, depletion mechanisms and economic factors.

2. Material Balance Methods

Material balance methods of reserves estimation involve the analysis of pressure behavior as reservoir fluids are withdrawn, and generally result in more reliable reserves estimates than volumetric estimates. Reserves may be based on material balance calculations when sufficient production and pressure data is available. Confident application of material balance methods requires knowledge of rock and fluid properties, aquifer characteristics and accurate average reservoir pressures. In complex situations, such as those involving water influx, multi-phase behavior, multilayered or low permeability reservoirs, material balance estimates alone may provide erroneous results. Computer reservoir modeling can be considered a sophisticated form of material balance analysis. While modeling can be a reliable predictor of reservoir behavior, the input rock properties, reservoir geometry and fluid properties are critical. Evaluators must be aware of the limitations of predictive models when using these results for reserves estimation. The portion of reserves estimated as proved, probable or possible should reflect the quantity and quality of the available data and the confidence in the associated estimate.

3. Production Decline Methods

Production decline analysis methods of reserves estimation involve the analysis of production behavior as reservoir fluids are withdrawn. Confident application of decline analysis methods requires a sufficient period of stable operating conditions after the wells in a reservoir have established drainage areas. In estimating reserves, evaluators must take into consideration factors affecting production decline behavior, such as reservoir rock and fluid properties, transient versus stabilized flow, changes in operating conditions (both past and future) and depletion mechanism.

Volumetric Calculations of a Reservoir

The following equation is used in the volumetric calculation of reserves:

{\text{STOIIP}}=V_{b}\times {\frac {N}{G}}\times \phi \times (1-S_{w})\times {\frac {1}{B_{o}}}\qquad (1)

where:

$V_{b}\,$ = bulk volume of the reservoir rock, bbl
$N/G\,$ = net/gross ratio of formation thickness, fraction
$\phi \,$ = porosity, fraction
$S_{w}\,$ = water saturation, fraction
$B_{o}\,$ = oil formation volume factor, rbbl/STB
STOIIP = stock-tank oil initially in place, STB

Equation 2 is used to calculate bulk volume of the reservoir $(V_{b})$

V_{b}=A\times h\qquad (2)