Estimation of Oil & Gas Reserves

 

By definition, it is something kept back or saved for future something kept back or saved for future use a special purpose.

The term “Reserves” means different things to different people. To the oil & gas operators, reserves are volume of crude oil, natural gas, and associated products that can be reserved profitably in the future from subsurface reservoirs.

Reasons for Reserve Estimates :

Segments of the industry concerned with oil & gas reserves:

• Companies interested in exploration and development of oil and gas properties. 

•  Banks involved in the financing exploration, development, or purchase of oil and gas properties. 

• Agencies with regulatory or taxation authority over oil and gas operators. 

• Investors in oil and gas companies.

Depending on the scope of their operation, operators require reserve estimates:

• Sizing & design of equipment and facilities to process and transport them to market. 

•  Assigning the FDP and corresponding cost (Budget) 

• Establishing future production profiles 

• Quantifying impact of key uncertainties.

 

Uncertainties in Reserve Estimates :

Estimates of commercially recoverable hydrocarbons reserves are inherently uncertain (physical & commercial). 

• Physical uncertainties:  

-       Recovery from subsurface reservoirs depends largely on the heterogeneities of the reservoir rock.

-       Reservoir Extension

-      The type of reservoir drive mechanism, etc. 

•  Commercial uncertainties: 

-      The costs to acquire exploration and development rights (CAPEX)  

-     The costs to produce, process, and transport oil and gas to market (OPEX)

-      The market value of the volumes sold (Prices) 

Why is a reserves Definition Needed ?

·         Most of the parameters that define the reserves of a Reservoir cannot be measured directly, and must be determined indirectly through geological and reservoir engineering analysis and interpretations.

•   As a result, the estimates of oil and gas reserves have an intrinsic uncertainty. 
•   The definitions of reserves are designed to promote uniformity and standard measurement of the assets, providing a structure to quantify risk and uncertainty through its categorization.

Visual definition of resources and reserves :

Determining the resource and reserves at any time is a difficult task , and the values will change over time .

The resource might be technically recoverable, economics will dictate how much is produced at a given time and price . Because global and local economics change more a less continually, the amount of resource that is actually extracted  or extractable will also vary with time . It  is this amount of the resource that can be considered the reserves , both proven and probable .

Proven   (P)	Discovered reserves which can be produced under current economic conditions (80% chance). Developed and undeveloped
Probable   (P+P)	Discovered reserves which have a reasonable probability of production with present technology and economics (50% chance).
Possible (P+P+P)	Reserves not yet discovered with less chance to be produced (20% chance).

 

 Reserves are :

•  Reserves are those quantities of petroleum which are anticipated to be commercially recovered from known accumulations from a given date forward.
•  All reserve estimates involve some degree of uncertainty.
• The uncertainty depends chiefly on the amount of reliable geologic and engineering data available at the time of the estimate and the interpretation of these data.
• The relative degree of uncertainty may be conveyed by placing reserves into one of two principal classifications, either proved or unproved.
• Unproved reserves are less certain to be recovered than proved reserves and may be further sub-classified as probable and possible reserves to denote progressively increasing uncertainty in their recoverability.

 

1.  Proven Reserves:

·         Proven reserves are those reserves claimed to have a reasonable certainty (normally at least 90% confidence) of being recoverable under existing economic and political conditions, with existing technology. Industry specialists refer to this as P90 (having a 90% certainty of being produced). Proven reserves are also known in the industry as 1P.

• Proven reserves are further subdivided into "proven developed" and "proven undeveloped".
• Proven developed reserves are reserves that can be produced with existing wells and perforations, or from additional reservoirs where minimal additional investment (operating expense) is required.
• Proven undeveloped reserves require additional capital investment e.g., drilling new wells to bring the oil to the surface.
• Proven reserves can further be categorized on the basis of status of wells and reservoirs as developed and Undeveloped; producing and nonproducing. 

a.      Developed reserves:

Developed reserves are expected to be recovered from existing wells. Improved recovery reserves are considered developed only after the necessary equipment has been installed, or when the costs to do so are relatively minor. Developed reserves may be subcategorized as producing or non-producing.

®    Producing:  

    Reserves subcategorized as producing are expected to be recovered from completion intervals which are open and producing at the time of the estimate.

®    Non-producing:

Reserves subcategorized as non-producing include shut-in and behind-pipe reserves.

Shut-in reserves are expected to be recovered from:

• completion intervals which are open at the time of the estimate but which have not started producing,
• wells which were shut-in for market conditions or pipeline connections, or
• wells not capable of production for mechanical reasons. Behind-pipe reserves are expected to be recovered from zones in existing wells, which will require additional completion work or future recompletion prior to the start of production.

 b.      Undeveloped Reserves:

Undeveloped reserves are expected to be recovered:

•     from new wells on undrilled acreage,
•     from deepening existing wells to a different reservoir, or where a relatively large expenditure is required to: 
• recomplete an existing well or
• install production or transportation facilities for primary or improved recovery projects.

 2.      Unproven Reserves:

•      Unproven reserves are based on geological and/or engineering data similar to that used in estimates of proven reserves, but technical, contractual, or regulatory uncertainties make such reserves being classified as unproven.
•         Unproven reserves may be used internally by oil companies and government agencies for future planning purposes but are not routinely compiled. They are sub-classified as probable and possible

a.      Probable:

Probable reserves are attributed to known accumulations and claim a 50% confidence level of recovery. Industry specialists refer to them as P50 (having a 50% certainty of being produced). These reserves are also referred to in the industry as 2P (proven plus probable).

b.      Possible:

Possible reserves are attributed to known accumulations that have a less likely chance of being recovered than probable reserves. This term is often used for reserves which are claimed to have at least a 10% certainty of being produced (P10).

Reasons for classifying reserves as possible include varying interpretations of geology, reserves not producible at commercial rates, uncertainty due to reserve infill (seepage

from adjacent areas) and projected reserves based on future recovery methods. They are referred to in the industry as 3P (proven plus probable plus possible).

Reservoir Characteristics and Petroleum

It is note quite sufficient   to say that to be  a reservoir , a rock requires porosity  and permeability . Reservoir behavior relative to oil  and gas accumulation and production certainly involves  porosity and permeability , but its performance is based  upon several  important engineering  factors . 

Porosity : 

Porosity represents the amount of void space in a rock and is measured as a percentage of the rock  volume. Connected  porosity where void space  has flow-through potential is called effective porosity .

Noneffective porosity is isolated .Summation of effective and noneffective  porosity produces  total porosity , which  represents all of the void space  in a rock . 

Pore space in rocks at the time of deposition  is original , or primary porosity . It is usually a function  of the amount of space between rock -forming grains . Original porosity is reduced by compaction and groundwater -related diagenetic processes .

Grownd water solution , recrystallization , and fracturing cause secondary porosity , which develops after sediments are deposited . 

Effective , noneffective , and total porosity

 

Permeability : 

A rock that contains connected porosity and allows the passage of fluids through it is permeable .Some rocks are more permeable than others because their intergranular  porosity , or fracture porosity , allows fluids to pass through them easily .

Permeability is measured in darcies . A rock that has a permeability  of 1 Darcy permits 1 cc of fluid with a viscosity  of  1 centipoise (viscosity  of water  at 68⁰ F) to flow through one square centimeter of its surface for a distance of 1 centimeter in 1 second with  a pressure drop of 14.7 pounds per sequare inch . 

Permeability is usually expressed in millidarcies since few rocks have a permeability of 1 Darcy . Intergranular material  in a rock , such as clay  minerals or cement , can reduce permeability and diminish  its reservoir potential . It is evident , however that mineral grains must  be cemented to some degree to form coherent rock and that permeability will reduce to some extent in the process . 

Fluid flow through Permeable Sand 

 

Clay cement and porosity and permeability 

Relative Permeability : 

When water , oil , and gas are flowing through  permeable reservoirs , their rates of flow will be altered by the presence  of the other fluids . One  of the fluids will flow through a rock at  a certain rate by itself . However , in the presence of one or both of the other fluids , its rate of flow can be changed .

The flow rate of each fluid is affected by the amounts of the other fluids , how they reduce pore space , and to what extent they saturate the rock. Comparison of the flow rate of a single fluid through a rock its that same flow rate , at the same pressure drop , in the presence of another  fluid determines the relative permeability of the system .

When rock pores decrease in size , the surface tension of fluids in the rock increases . 

If there are several fluids in the rock , each has a different surface tension , which exercises a pressure variation between them .This pressure is called capillary pressure and is often sufficient to prevent the flow of one fluid in the pressure of another .    

Relative permeability From Clark , 1969. Copyright 1969, SPE-AIME

 

Core Analysis

Objective :

The  objective of every coring operation is to gather information that leads to more efficient oil or gas production . 

some specific tasks might include the :

Geological objectives : 

• Geologic maps 
• Fracture orientation 
• Lithological information  :

• Rock type
• Depositional environment  
• Pore type  
• Mineralogy/ Geochemistry  

  Petrophysical  and reservoir engineering :

• Capillary pressure data  
• Permeability information :  

• Permeability / Porosity  correlation 
• Relative Permeability

•  Data for refining log calculations :

• Electrical properties 

• Grain density

• Core Gamma Log 

• Mineralogy and cation exchange capacity   

• Enhanced oil recovery studies
• Reserve estimate : 

• Porosity

• Fluid saturations

 Drilling and completions : 

• Fluid/ formation compatibility studies 
• Grain size  data for gravel pack design 
• Rock mechanics data 

 Why Core Analysis is important for Development Plan ? 

 Exploration :

• Exploration of structures  and determination of their physical  characteristics. 

•  Estimate of production  possibilities  for wildcats, extension wells  and edge wells .

Well completion and workover operations : 

• Selection of intervals for testing . 

• Interpretation of tests during drilling -Comparison results -Explanation of test anomalies etc.  

• Determination of the best combinations for order of completions when there are several horizons . 

• Selection of intervals and choice of depths if plugs , packers , cement plugs  etc.  are installed to keep out water and gas influxes . 

• Selection of intervals for perforations or acidizing . 

• Estimation of completion efficiency . 

• Selection of intervals for recompletion . 

Field Development : 

• Determination of optimal spacing . 

• Determination of the location  of new wells . 

• Definition of field boundaries . 

• Estimate of production for determination of field equipment . 

• Definition of contact zones for the various fluids . 

• Structural  and stratigraphic correlations . 

• Sampling and bases of interpretation for other well logging . 

• Selection of intervals for optimum completion . 

Well and reservoir evaluation :

• Determination of net pay zone . 

• Estimate of initial productivity 

• Estimate of water production rates and injection pressures . 

• Estimate of decompression zones invaded bay water or gas , and simultaneous  production of various  zones . 

• Estimate of probable recovery . 

• Estimate of oil or gas  reserves in place . 

• Estimates for equitable shares in unitization operations . 

• Reservoir engineering and programming for maintaining pressure or secondary recovery . 

• Forecasts for optimum well completion and maximum future recovery .  

 

 Core Analysis Tests : 

The  experiments done on core sample are as following :

• Routine Test
• special test
• Geo-mechanics tests 
• Formation damage tests

1. Routine Test : 

• Porosity measurements 
• Permeability measurements
• Saturation's measurements 
• Grain density 

These measurements are made to correct the well logs results and use this correction in non-cored  intervals , as example :

• Tyne the Archie's equation  constants (a, m ,n) until having matching to core saturation.
• Get a correlation between porosity and permeability .
• Rock Typing .

2. Special Test : 

•  Relative permeability : used for multiphase modelling in case of having saturation less than 100 % .

• Capillary pressure : used to determine the thickness of transition zone and the saturation distribution in this interval .

• Wettability : used a criteria in EOR applications screening .

• Rock compressibility : used especially for material balance calculations to estimate oil recovery and also in geomechanically applications . 

• Acoustic properties : used to tune the Archie's equation constants to estimate the saturation and porosity from ell logs.

• Other tests like XRD  and SEM . 

3. Geomechanics Test : 

Geomechanics has an important role to play in assessing formation integrity during well construction and completion and in the response of the reservoir  to oil production , water injection and depletion .
The tests most commonly used to determine  fundamental rock mechanics parameters are described including : 

• Unconfined compressive strength 

• Thick Wall Cylinder .

• Tensile Strength.

• Triaxial Tests .

• Pore Volume Compressibility .

• Elastic Moduli.

• Particle Size Analysis . 

Application of Core Analysis Data: 

 

• Permeability Modelling .  

• Facies distribution modelling .

• Production prediction . 

• Residual Oil Saturation targeted by EOR . 

•  STOIP calculation . 

•  Sand control . 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

Introduction to the Petroleum Industry

The oil and Gas Industry is divided into 3 categories : 

•  Upstream
• Midstream
• Downstream 

 

What does Upstream , Midstream and Downstream mean in the oil Industry ? 

Upstream Oil and Gas : 

is E&P (Exploration and Production ) , involves the drilling off exploration wells and drilling into established wells to recover oil and gas .

• Exploration 
• Field Development 
• Production Operation 

 

Midstream : 

involves  the transportation , storage , and processing of oil and gas . Once resources  are recovered , it has to be transported to a refinery , which is often in completely different geographic region compared to the oil and gas reserves . Transportation can include anything from tanker ships to pipelines and trucking fleets .

• Transportation 
• Storage  and distribution 

 

Downstream : 

Refers to the filtering of the raw materials obtained  during the upstream phase . The marketing and commercial distribution  of these products to consumers and end users in a number of forms including natural gas , diesel oil , petrol , gasoline , lubricants  , kerosene , jet fuel , asphalt , heating oil , LPG ( Liquefied Petroleum Gas ) as well as a number of other types of petrochemicals .

• Refining 
• Marketing              

 

 

Clay Mineralogy

 

Clay minerals are hydrous aluminium silicates, sometimes with variable amounts of iron, magnesium, alkali metals, alkaline earths, and other cations.

 

Clays form flat hexagonal sheets similar to the micas. Clay minerals are common weathering products (including weathering of feldspar) and low temperature hydrothermal alteration products.

Clay-rich shales has been usually called “shales” while non-clay shales have been called “silts”. Petrophysical analysis deals with minerals, not particle size, so it is confusing when a zone is geologically described to be shale when the logs show little clay is present.

Clay minerals include the following groups :

1.   Kaolin group which includes the minerals kaolinite, dickite, halloysite, and nacrite (polymorphs of Al₂Si₂O₅(OH)₄). Some sources include the kaolinite-serpentine group due to structural similarities. Usually occurs in the pore system as discrete particles, which do not attach securely to sand grains, so when become dislodged they clog the pore throats.  

 

 

 2.   Smectite group which includes dioctahedral smectites such as montmorillonite and nontronite and trioctahedral smectites for example saponite.

If in contact with water it swells by retaining a good amount of water between layers, plugging the pore throats.

 

 3. Illite group which includes the clay-micas. Illite is the only common mineral.

4. Chlorite group includes a wide variety of similar minerals with considerable chemical variation. Usually occurs as a pore lining around individual sand grains or in clusters.

CLAY TYPES

 

One 

One of the most controversial problems in formation evaluation is the shale effect in reservoir rocks. An accurate determination of formation porosity and fluid saturation is subjected to many uncertain parameters, all are induced by the existence of shale in pay formation.

Aside from shale effects on porosity and permeability, the electrical properties of reservoir rocks, consequently their fluid saturation are sensitively affected by the existence of shale. The way shaliness affects log responses depends on the proportion of shale, the physical properties of shale, and the way it is distributed in the host layer. 

Shaly material can be distributed in the host layer in three ways : 

-   Laminar: Thin streaks of clay deposited between units of reservoir rock. They do not change the effective porosity, the water saturation or the horizontal permeability of the reservoir layer, but destroy vertical permeability between reservoir layers. 

 -  Structural: clay particles constitute part of the rock matrix, and are distributed within it. It has similar general properties to laminar clays, as they have been subjected to the same constraints. However, they behave more like dispersed clays in respect of their permeability and resistivity properties.

-   Dispersed: clay in the open spaces between the grains of the clastic matrix. The permeability is significantly reduced because clays occupy the pore space and the water wetness of clays is generally higher than that of quartz. The result is an increased water saturation and a decreased fluid mobility.

 There are two types of shale:

-   Effective shale ( montmorillonite and bentonite ) : has significant CEC (cation exchangecapacities), and can be identified by most of the shale indicator tools.

-     Passive shale ( kaolinite and chlorite) : has essentially zero CEC, and recognized only by neutron tool.

Shale is a fine-grained, clastic sedimentary rock composed of mud that is a mix of flakes of    clay minerals and tiny fragments (silt-sized particles) of other minerals, especially quartz and  calcite. The ratio of clay to other minerals is variable. 

 

Shale is characterized by breaks along thin laminae or parallel layering or bedding less than one centimeter in thickness, called fissility. Mudstones, on the other hand, are similar in composition but do not show the fissility.