E-v-e-r-y-t-h-i-n-g Has Got to Fit
Sound assessment of the reserves
potential of a wildcat prospect (as well as its derived profitability)
requires the exploration team to estimate many different geotechnical
and economic parameters (Table 1).
In nature, all
the geotechnical parameters "fit" -- that is, the various physical properties
of an undiscovered subsurface oil or gas reservoir are interrelated and
compatible with each other, as well as with the geological characteristics
of the parent trend or basin.
(Similarly, the
economic attributes of the region should fit current price and cost schedules
as well as historical ranges of variation -- but let's discuss economics
in a later column.)
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Sound assessment of the reserves
potential of a wildcat prospect (as well as its derived profitability)
requires the exploration team to estimate many different geotechnical
and economic parameters (Table 1).
In nature, all
the geotechnical parameters "fit" -- that is, the various physical properties
of an undiscovered subsurface oil or gas reservoir are interrelated and
compatible with each other, as well as with the geological characteristics
of the parent trend or basin.
(Similarly, the
economic attributes of the region should fit current price and cost schedules
as well as historical ranges of variation -- but let's discuss economics
in a later column.)
So whenever prospectors
make estimates of the key geotechnical parameters attending any prospect
-- ordinarily as probabilistic ranges -- all those parameters should fit.
(Actually, one
of the underappreciated virtues of probabilistic estimating is that it's
much easier to achieve such compatibility with ranges than with single-number
estimates.)
Moreover, when
the prospector has iterated and reiterated the various geotechnical parameters
until they are all compatible, the resulting prospect assessment is probably
just about right, given the uncertainties that always exist.
Of course, reality
checks and plausibility checks provide effective ways to affirm that geotechnical
forecasts are consistent with scientific principles and documented observations,
and credible with respect to known statistical distributions (exponential
or lognormal).
But substantial
additional benefit is realized when individual parameter forecasts are
reconciled with other related parameters.
Here are some
examples:
- Are the average net pay estimates compatible with the various productive
area estimates?
Often these exhibit
some dependency. A routine calculation and cross-check against net rock
volume can resolve this.
- Are the estimates of productive area (thus projected number of development
wells) appropriate for the corresponding P90, P50 and P10 reserves outcomes?
Remember that
P23 area corresponds to P10 reserves, and P77 area goes with P90 reserves.
- Is the P99 prospect reserves estimate consistent with a mediocre little
one-well field?
Characteristic
P99 values of field-size distributions in mature onshore trends range
from about 5,000 BOE to about 20,000 BOE. The most common cause of reserves
overestimation is not that the high-side estimate is too high, rather
that the low-side estimate is too high!
- Taking depth into account, are forecast ranges for HC-Recovery Factor
(bbl/af or mcf/af) compatible with analog producing fields in the trend?
- Is the P1 average porosity forecast less than about 30 percent? Is the
P99 average porosity forecast equal to your effective porosity cut-off?
Do forecasts of average porosity ranges fit with observed average porosities
for subject formations?
- Are forecasts of Initial Production Rate compatible with estimates of
prospect reserve volumes, thickness, HC-Recovery Factor and drive mechanism?
- Do percentage decline forecasts fit those of analog producing fields?
Are they compatible with reservoir type, HC-Recovery Factor and drive
mechanism?
Bottom line:
Remember that all such parameters fit in nature. If you take pains as
a professional prospector to be sure they all fit together in your prospect,
chances are that you've got the geotechnical picture -- and the prospect
evaluation -- about right.