Reserves Definitions & Estimation Techniques

By
Harold L. Irby
May 1998

PARES Petroleum Engineering Services Sdn. Bhd.

Reserves - Presentation Outline

1)
2)
3)
4)
5)
6)
7)

Definitions
Companys Process
Categories
Uncertainties
Estimation Process
Estimation Techniques
Calculation Example

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Reserves Definition General

Hydrocarbon Reserves are the estimates of technically recoverable quantities of crude oil,
natural gas and natural gas liquids from naturally occurring
accumulations which have been delineated and characterized by a
combined analysis of available geo-scientific data (geological,
geophysical, petro-physical and reservoir engineering etc.). To be
developed, reserves must economically viable under the current and
prevailing business environment. All reserves estimates involve some
degree of uncertainty for which a reasonable assessment should be
attempted.

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Reserves Definition By Reserves Category

Proved Reserves -

Represents that portion of ultimate reserves which can be recovered with a high
degree of certainty and/or a level of confidence based on actual or similar field
performance (e.g. 80%) and using primary recovery, pressure maintenance and
enhanced oil recovery (EOR) methods where their successes have already been
demonstrated for that type of reservoir in that geological basin.

Probable Reserves Represent that portion of additional reserves which can be recovered through a
better than expected reservoir performance and/or reservoir engineering methods.
Probable Reserves have a reasonable degree of certainty and/or confidence (e.g.
50%). Recovery and production methods are based on the same technology
available for Proved Reserves.

Possible Reserves Represent the ultimately recoverable resources which can be recovered with a
relatively low degree of certainty and/or a minimal level of confidence (e.g. 15%).
Possible Reserves represent the maximum ultimate recovery estimated for a
known hydrocarbon accumulation once all testing, delineation and evaluation of
this accumulation has been completed. Possible reserves are also incremental
EOR Reserves not booked previously. Recovery and production methods are
based on the same technology available for Proved Reserves.

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Reserves Definition - SPE & SEC

Reserves (SPE) Reserves are estimated volumes of crude oil, condensate, natural gas,
natural gas liquids and associated substances/products anticipated to be
commercially recoverable from known accumulations from a given date
forward, under existing economic conditions, by established operating
practices and under current government regulations. Reserve estimates
are based on interpretation of geologic and/or engineering data available
at the time of the estimate.

Reserves (SEC) Proved Oil and Gas Reserves: Proved oil and gas reserves are the
estimated quantities of crude oil, natural gas and natural gas liquids
which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from know reservoirs under
existing economic and operating conditions, i.e., prices and costs as of
the date the estimate is made. Prices include consideration of changes in
existing prices provided only be by contractual arrangements, but not on
escalations based upon future conditions.
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Reserves Determination / Estimation Process

A COMPANY'S OIL & GAS RESERVES
SUPPORTING
ORGANIZATIONS

DELIVERABLES
Other Documents

Facility Scopes and

Cost Estimates
(Facilities & Tecnology)

Exploration Discoveries
(Exploration Department)

Exploration Finding Cost &

Historical Reserves Update
(Finance)
Ad Hoc Requests
(E&P Management)

Activities & Studies

For Deliverables.
Commerciality Studies
Exploration Finding Cost

Development Discoveries
& Pore Volume Maps
(Reservoir
Characterization)

Annual Update of
OIL & GAS Reserves

Approval of Year-end
Reserves Report
(E&P Management)

Review of
Reserves Report
with Management

Publications
Year-end
Reserves Report
(Corporate, E&P
Management)
Supplementary
Reserves Reports
(E&P Management)

Basic Reservoir
Data Update
(Reservoir Management)
Computer Programming
Support & Maintenance
(Computer Support)

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Summary of Reserves Inputs / Outputs

Input Parameters
Pore Volume (Pv)

Reservoir Basic Data

Reserves
System

OOIP/OGIP
Reserves

Production Data

Recovery Factors
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Categorization of Reserves & Resources

Resource Category
R Proved Reserves
E
S
E Probable Reserves
R
V
E
Possible Reserves
S
R
E Potential Resources
S
O
U Conceptual Resources
R
C
E Speculative Resources
S

Degree of Geological Assurance

and Engineering Certainty

Economic Feasibility

A high probability

Definite

A modered probability

Definite

A low probability

Most Likely

Poor estimates of hydrocarbons

in-place

Marginal or
Undetermined (limited by data)

Well-defined or conceptual exploration

leads in a productive basin
Exploration leads in an untested basin

Undetermined
(limited data)
Undetermined
(lack of data)

8
Adapted from SPE and World Congress Publications

Reserves Uncertainties & General Categories

Technical Uncertainty Geological / Geophysical / Reservoir Engineering

Economic Uncertainty Facilities Cost Estimates / Future Market Prices

Geopolitical Uncertainty Fiscal Regime Change / Markets

General Categorizations Based upon combination of technical / economic

uncertainties and considerations:
Proved
Probable
Possible
Potential
Conceptual
Speculative

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Reserves Estimation Process - Time Line

Initial
Dev.

Development Stage

Expl

Risk

Very High
High

Possible

Reserves Estimation
Methods / Techniques
Reserves Type
Depletion Stage

Moderate

Probable

Low

Risk Analysis
Analogy
Volumetric
Model Studies
Performance/Material Balance
Decline Trend
Proved

Plateau

Rate (BPD)

Production Profile

Production Operations

Decline

Reserves
Economic Limit

Cumulative Production (STB)

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Reserves Estimation Techniques

Risk Considerations
Volumetric
Deterministic
Stochastic

Reservoir Analogy
Material Balance Computations
Decline Curve Analysis

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Reserves Estimation Risk Considerations

Geologic Risk and Uncertainty Geologic uncertainty depends upon four mutually exclusive variables:
Presence of Mature Source Rock (Ps)
Present of Reservoir Rock (Pr)
Presence of Hydrocarbon Trap (Pt)
Structural / Migration Dynamics (Pd)
The risk associated with Geologic Uncertainty (Pg) can be assessed by
these four mutually exclusive factors:
Pg = Ps * Pr * Pt * Pd
Qualitatively:
0.0 < Pg < 0.3 => Unfavorable
0.3 < Pg < 0.5 => Questionable
0.5 < Pg < 0.7 => Encouraging
0.7 < Pg < 1.0 => Favorable
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Reserves Estimation Risk Considerations

Engineering Risk and Uncertainty depends mainly on the amount and quality of geo-scientific / reservoir
engineering data and is also affected by geological complexity, stage of
development and degree of reservoir depletion.

Economic Risk and Uncertainty

Oil Prices
Development & Production Cost (CAPEX & OPEX)
Taxes and Royalties

Geo-Political Risk and Uncertainty is highly dependent upon the locale

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Deterministic Reserves Stochastic Reserves

Pore Volume
(A, h & )
Swi, Boi
Recovery Factor

Deterministic
Model

SINGLE
RESERVES
VALUE

Deterministic: Each INPUT and OUTPUT is determined as a single

numerical value (usually average reservoir parameter values) and a
single reserves number (i.e. an average) is derived.

Pore Volume
(A, h & )
Swi, Boi
Recovery Factor

Stochastic
Model

PROBALISTIC
RESERVES
DISTRIBUTION

Stochastic: Each INPUT and OUTPUT parameter is assumed to be a

random variable and can be represented by a probability distribution
curve by use of Monte Carlo or Latin Hypercube simulation.
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Deterministic Reserves Volumetric Equation

Volumetric Reserves Equation (Oil) OOIP = A h (1 - Swi ) / Boi = Pore Volume (1 - Swi ) / Boi
Reserves = OOIP (STB) x Recovery Factor (fraction)

Recovery Factor or Efficiency Recovery Factor = Displacement Efficiency (Ed) x

Vertical Sweep Efficiency (Ei) x
Areal Sweep Efficiency (Ea)
where:
Displacement Efficiency,
Ed = (Soi - Sor) / Soi
Volumetric Sweep Efficiency,
Ev = Ei x Ea

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Deterministic Reserves Sweep Efficiency

Illustration of Water Flood Displacement Efficiency
Producer

Injector
Areal Sweep, Ea = 90%
Zone 1

Ei = 70%

Zone 2

Ei = 100%

Zone 3

Ei = 50%

Oil
Water

Vertical Sweep Efficiency: Ei = 0.25 x 0.70 + 0.5 x 1.0 + 0.25 x 0.5 = 0.80 or 80%
Volumetric Sweep Efficiency: Ev = Ei x Ea = 0.80 x 0.90 = 0.72 or 72%
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Stochastic Reserves Probability Distribution

100
Recovery
Reserves Value Probability Factor
Category (MMSTB)
(%)
(%OOIP)

90
PROVED

80

Proved
X = 677
Probable Y = 745
Potential Z = 880

80
50
20

50
55
65

70
where

OOIP = 1,355 BSTB

60
50

PROVED + PROBABLE

40
30
PROVED+PROBABLE+POTENTIAL

20
10
X

0
0

100

200

300

400

500

600

700

800

900

1000

ORIGINAL RESERVES (MMBSTB)

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1100

1200

1350

1450

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Reserves Estimation Field/Reservoir Analogy

Field / Reservoir Analogy For undeveloped reservoirs without detailed reservoir engineering
studies but with minimal geological / geophysical and petro-physical data
then correlations established from model results and/or production
histories of adjacent and/or similar fields within the geological basin may
be used to estimate recovery factors and reserves.

Example Field / Reservoir Correlations Reservoir Analogy: (data shown in graphical form follows)
RF = ( % OOIP ) = -18.97 + 14.08 * LN ( kh / oi )
Facies Analogy: (data shown in graphical form follows)
RF = ( % OOIP ) = +31.41 + 7.15 * LN ( kh / oi )

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Recovery Factor vs. Reservoir Transmissibility

80

Legend
70

Field 1 Reservoir A
Field 2 Reservoir A
Field 3 Reservoir A

60

Field 4 Reservoir A
Field 5 Reservoir A
Field 6 Reservoir A

50

40

30

20

Recovery Factor Correlation Developed by Using

Carbonate Reservoir Data ( Under Water Injection / Drive )
RF = (%OOIP) = -18.97 + 14.08 * ln ( kh / oi )

10

with r
= 0.98 & Standard Error of Estimated = 5% @ 95% Confidence Level
and it may not be valid for (kh / oi ) < 50.

0
10

100

TRANSMISSIBILITY, kh /

1000

( darcy - ft/cp )

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Recovery Factor vs. Reservoir Transmissibility

80

Legend
Reservoir 1 Facies A

2B

Reservoir 2 Facies A

70

2B

2B

Reservoir 3 Facies A

Reservoir 4 Facies A
60

2A

2A

Reservoir 5 Facies A
UD

Reservoir 6 Facies A

50

UC

2A

3A
3A
3B

40

3A

LC

3B

30
5

20
3B

Recovery Factor Correlation Developed by Using

Carbonate Reservoir Data ( Under Water Injection / Drive )
RF = (%OOIP) = 31.41 + 7.15 * ln ( kh / oi )

10

with r

= 0.87 & Standard Error of Estimated = 13% @ 95% Confidence Level

0
0.1

10

TRANSMISSIBILITY, kh /

100

(darcy-ft/cp)

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1000

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API Correlations Field / Reservoir Analogy

1. Water Drive Reservoirs
(1 S wi )
RE (%OOIP) = 54.898

B
oi

(70 Sandstone Fields c. 1867 API)

0.0422

K wi

oi

0.0770

0.1903 Pi
(S wi )

Pa

0.2159

r 2 = 0.92 & Standard Error of Estimate = 32% @ 95% Confidence Level.

with

2. Solution Gas Drive Reservoirs (Sandstones and Carbonates

- 80 Reservoirs with 13 on Carbonates c. 1967 API)

(1 S wi )
RE (%OOIP) = 41.815

B
ob

with

0.1611

ob

0.3722 Pb
(S wi )

Pa

0.1741

r 2 = 0.87 & Standard Error of Estimate = 40% @ 95% Confidence Level.

3. Water Drive Reservoirs

(Carbonates - 19 Reservoirs - c. 1983)

(1 S wi )
RE (% OOIP ) = 52 . 70

B oi

with

0.0979

0 . 4068

K oi

wi

0 . 0337

(S wi )

0 . 04096

r 2 = 0.58 & Standard Error of Estimate = 20% @ 95% Confidence Level.

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Source: A Statistical Study of Recovery Efficiency, API Bulletin D14, October 1967. Based on limited number of reservoir case histories in U.S.A. only.

Recovery Factor (Primary) Material Balance

Sg(v/v)

So(v/v)

Sw(v/v)

Np/N(v/v)

120%

0.60

Solution Gas Drive Reservoir

OOIP
1.84 MMBbls
Pres
1350 psia
Pb
850 psia
Rec. Fac.
19 %
Reserves 350 MBbls

100%

80%

0.50

0.40

60%

0.30

40%

0.20

20%

0.10

0%
1350

1160

960

760

560

360

310

260

210

160

0.00
110

P(psia)

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Deterministic Reserves Decline Curve Analysis

100

M ODEL OOIP
DATA
M e thod
10

ECONOM IC LIM IT
RES ERV ES
RECOV ERY FACTOR

: 2 0 .7 3 BS TB
: Long-Te rm P re dic tion
(w ith Ga s Lift)
: De c line Curve Ana lys is
(Ha rm onic )
: 5 % Oil Cut
: 1 5 .2 BS TB
: 7 3 .3 % OOIP

Re se rv e s

7000

8000

9000

10000

11000

12 000

13000

14000

15000

N p, C U M U LA TIV E P R O D U C TIO N (M M S TB )
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16000

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Calculation of Oil In Place - Example

Step 1: Calculate Original Oil In Place
OOIP = Pore Volume x Oil Saturation x Oil Shrinkage = Oil Volume x Oil Shrinkage
BULK VOLUME =
Rock & Fluid
Volumes

ORIGINAL
CONDITIONS

END OF
WATERFLOOD

ROCK

ROCK

OIL
WATER
PORE VOLUME =
Oil & Water Volumes
EXAMPLE
Bulk Volume BV (MM Barrels)
Rock Volume RV (MM Barrels)
Pore Volume PV (% BV=Porosity)
Pore Volume (MM Barrels)
Water Volume (% PV=Water Saturation)
Water Volume (MM Barrels)
Oil Volume (% PV=Oil Saturation)
Oil Volume (MM Barrels)
Oil Gravity ( API )
Oil Shrinkage (Fraction)
OOIP (MM Stock Tank Barrels)

100
80
20
20
15
3
85
17
36
0.67
11

(assumed)
%
%
% (initial)
API

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100
80
20 %
20
70 %
14
30 % (residual)
6
36 API
0.67
4 (EOR)24

Calculation of Recovery Factor and Reserves

Step 2: Calculate Recovery Factor and Reserves

OIL RESERVES = OOIP (barrels) x Recovery Factor (fraction)

Recovery Factor = Displacement Efficiency

(Ed) x
Volumetric Sweep Efficiency (Ev)
Ed

= (Soi - Sor) / Soi or

= (Original Oil Vol. Remaining Oil Vol.) / Original Oil Volume
= (0.85 - 0.30) / 0.85 or (17 - 6) / 17 = 0.65 or 65% OOIP

Ev

= Vertical Sweep Efficiency x Areal Sweep Efficiency

= 0.80 x 0.90 = 0.72 or 72% (see illustration of water flood figure)

Recovery Factor = 0.65 x 0.72 = 0.47 or 47% OOIP

OIL RESERVES = (11 x 0.47) = 5 MM Stock Tank Barrels
Summary of Example Calculation:
VOLUME
:
Bulk
MM BBL
:
100

Pore
20

OOIP
11

Reserves
5

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 Thank You

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