Oleh (Tim Dosen):

Dr. Ir. Eko Widianto, MT

Dr. Ir. Benyamin, MT
Dr. Ir. M. Burhannudinnur, MSc

Jurusan Teknik Geologi

Fakultas Teknologi Kebumian dan Energi
Universitas TRISAKTI

2013/2014

Geological Risk Analysis

 LECTURE MATERIALS
1 • Introduction
2 • Level of Petroleum Investigation – Plate Tectonic
3 • Petroleum Sedimentary Basin
4 • Hydrocarbon Source Rock
5 • Reservoir Rocks
6 • Hydrocarbon Trap and Seals
7 • Hydrocarbon Migration
8 • Exploration Risk Assessment
9 • Case Study
10 • Prospect Analysis
11 • Geological Risk Analysis
2
 The Concept of Risk

Uncertainty
Undesirable
consequence RISK

Risk = downside potential at

a certain probability level
DEFINITION

According to Webster’s Unabridged New

Universal Dictionary:

Risk is "the chance of injury, damage, or

loss; the degree of probability of loss, the
amount of possible loss.“

Uncertainty is "the quality or state of being

uncertain; lack of certainty; doubt."
Other Risks
• Fiscal
– Changes in fiscal terms
• Economic
– Exploration and development costs
– Hydrocarbon prices
• Political
- Nationalization
• Not illegal after international law
• Company gets compensation
- Policy and rule change
Exploration Risk
Geologic Risks - is there hydrocarbon there?
In the case of a structural trap prospect, explorationists can
assign probabilities to each of the following parameters:

· Existence of trap
· Source rock
· Thermal maturation
· Migration and timing
· Reservoir (storage capacity)
· Seals
· Productivity

Prob. of Hydrocarbon accumulation =

(Prob. of trap)*(Prob. of source)...*(Prob. of productivity)
Drilling Risk
The trend toward acquiring and analyzing historic data in
an effort to quantify the risk of stuck pipe, blowouts, lost
circulation, and other downhole problems is a fairly
recent development. On the other hand, drilling
engineers have always been involved with projecting well
costs as part of preparing Authorizations for Expenditure
(AFEs).They generally separate their costs into two
categories: planned costs and problem costs. They may
also include a category called Change of Scope to account
for expenses resulting from well plan revisions made after
drilling begins, which went beyond the original target and
drilling plan. They also acknowledge the important
variable of location.
Key variables associated with planned
drilling costs are:

· Water depth
· Proposed total depth
· Mud program
· Casing program
· Maximum hole angle
· True vertical depth
· Abnormally pressured zones
· Minimum hole size
Production Risk
Field size
The classic volumetric equation for oil-in-
place is:

N = 7758 A h f (1 - Sw)
Bo

where N = oil in place, STB

A = area, acres
h = net reservoir thickness, ft
f = porosity
Sw = water saturation
Bo = formation volume factor, Bbl/STB
Remember, in this risk assessment, we have addressed only
the geological aspects of the play type. For a true economic
assessment of the play type, we must also consider such
issues as the probability of :

 finding the play type,

 the number of such plays in the basin,
 the size of the reserves associated with the play
type and
 the costs of drilling, completing and producing a
well based on this play type.
Deterministic & Scenario Approaches
Most of us approach risk analysis from a disciplinary perspective.

Explorationists want to quantify the uncertainty associated with finding

hydrocarbons. They concentrate on basin analysis or play analysis. For a
given prospect, they estimate the likelihood of an adequate reservoir and
trap, and the proximity of thermally mature source material. Later, they
estimate reserves and their associated cash flows.

Drilling engineers examine historic data hoping not only to estimate

normal drilling costs, but also to quantify the risk of stuck pipe, blowouts,
lost circulation, and other problems encountered while drilling a well.

Reservoir and production engineers simulate field sizes, productivity

indices, decline rates, prices, development costs and operating costs. They
work with exploration and drilling team members to estimate schedules
and required capital investments (for drilling, platforms, pipelines, etc.).
EXAMPLE
To illustrate these approaches, let’s take the universal problem of the
volumetric estimate of reserves. We use a simplified equation:

Reserves = A *h *R (1)
where A = area
h = net reservoir thickness
R = recovery factor, which accounts for conversion of units, porosity, oil
saturation, formation volume factor and recovery efficiency.

The Deterministic Approach

Suppose our best estimates for A, h and R happen to be 300 ac, 25 ft, and 200
STB/ac-ft. Our best estimate for reserves is then Reserves = 300 * 25 *200 =
1.5 MMSTB
This is a deterministic statement. It doesn’t tell us anything about the
likelihood that the reserves might be less than 1.0 MMSTB or greater than 2.0
MMSTB, for example. All we can say is that our most likely estimate is 1.5
MMSTB. Figure 1 illustrates the simplistic nature of this approach.
 A=
300 ac

H= Deterministic N = 1.5
25 ft Model MMSTB

R = 200
STB/ac-ft Simplistic Reserve Estimation
 A= The Scenario Approach
150 - 450 An improved method is to establish the
ac worst, most likely, and best case scenarios.
Thus, we assign three values to each
parameter, and calculate three values for
reserves ( Figure 2 ).

H=
Scenario N = 0.225 –
15 - 35
Model 4.725 MMSTB
ft

R= Scenario Approach of
100 - 300
STB/ac-ft Reserve Estimation
 RISK ASSESSMENT
POST DRILL
Testing a stabilized CONTRACT TERMS
REVIEW
flow of hydrocarbons

ENGINEERING
ECONOMIC
PLAY CONCEPT ANALYSIS DECISION
If success
Conceptual Cash flow compare
Source rock development plan Actual
Reservoir model
Facilities cost parameters
Trap Production profile
And value
To predicted,
Timing & Migration Recovery factor matrix
if Failure-
Optimization reason why?

VOLUMETRICS
COMMERCIAL
Volumetric distribution of ISSUES
Hydrocarbons
(In-place and estimated
Recoverable)
 GEOLOGIC RISK COMPONENT
Geologic risk is determined by considering the probability of the independent
existence of the independent existence of the four factors of the Play Concept :

Presence of mature source rock (hydrocarbon charge)

Presence of reservoir rock
Presence of trap
Play dynamics or the appropriate timing of trap formation relative to timing of
migration, pathways for migration of hydrocarbon from the source to the
reservoir and preservation of hydrocarbons to the present day

The Probability of Geologic Success is obtained by multiplying the probabilities

that each of the four play concept factors or “Risk Factors” occur :

Probability of Probability of Probability of Probability of Probability of

Geologic Success Source Reservoir Trap Timing & Migration

__________ = ________ X ________ X ________ X ___________

If any one of the probability factors is zero, the probability of geologic success is zero.
 Prospect Risk Analysis Sheet Prospect Ganesha
Business Unit ITB
Play Pre Tertiary Basement
Horizon/Level Pre Tertiary Basement
Trap Scenario Fault bounded anticline
Date 11/03/2009
Pg = chance that all minimum case geological attributes are present
Ps = chance that all minimum case geological attributes are present and sufficient to provide an accumulation
Could all Probability of
What level of evidence is
prospects in play What level of Confidence is there that the attributes described in finding at least
Input data in white highlighted areas; used in the interpretation to
fail due to this the minimum case inputs are present? the minimum
fill in risk matrix by putting an "x" in define the attribute?
the appropriate boxes. attribute? case input
YES NO In- Near Toss Un- Doubt-
Direct Inter. Certain >Adq =Adq Shared Local
Shared Local direct Certain up likely ful
Must be Can't be
SOURCE Direct Indirect
Quantity of Mature Source x x x 1,00
Thickness/areal extent of mature
source rock in the fetch area of the
prospect.
Quality/Richness/Potential x x x 1,00
Consider Source Type and Combined for
Depositional Environment. HI and Source: 1,00
ITOC are sufficient to generate and
RESERVOIR
Quantity x x x 0,89
Gross thickness, areal extent and
reservoir geometry over the area of
the prospect given the depositional
Quality x x x 0,72
Porosity,net/gross,Sw,Permeability, Combined for
reservoir connectivity, diagenetic Res. 0,64
effects.
TRAP
Mapping x x x 0,89
Data quality; imaging; time/depth
conversion; repeatability of mapping

Timing / Migration Path x x x 0,72

Location of closure with respect to Combined for
effective migration path; Timing of Trap: 0,64
trap formation with respect to Timing
CONTAINMENT
Seal Capacity x x x 0,89
Top Seal capacity based on lithology
and burial depth. Fault seal capacity
based on Vshale and burial depth at
termination of faulting.Pressure
Preservation/Seal Integrity x x x 0,72
Consider areal extent and thickness
providing integrity.Chance of
breaching by erosion or faulting. Combined for
Chance of displacement by non- Contain. 0,64
YES NO In- Near Toss Un- Doubt-
Direct Inter. Certain >Adq =Adq
Shared Local direct Certain up likely ful

Risk Weightings Total Play / Prospect Group Chance (Shared Terms) 1,00
In- Greatest Risk in Risk Matrix Total Prospect Specific Chance (Local Terms) 0,26
Direct Inter. direct Reservoir Quality Pg for Prospect (Shared x Local Terms) 0,26
Certain 1,00 (enter as decimal percent; e.g. 0.4)
Near Certain 0,94 0,89 Certainty Value from HCIP : % of simulations with HIP >0
> Adequate 0,88 0,81 0,73 Ps for Prospect modified by simulation
= Adequate 0,79 0,72 0,64 Analog Fields: If Certainty Value =100% then Pg = Ps
Toss up 0,50 0,50 0,50
Unlikely 0,20 0,30 0,40 Historical Success Ratio:
Pg for Prospect 0,26
Doubtful 0,10 0,20 0,30 Analog Success Ratio:
Ps for Prospect
 1.0 0.0
PROBABILITY

0.9 0.1
0.8 0.2
0.7 0.3
0.6 0.4
0.5 0.5
0.4 0.5
0.3 0.7
0.2 0.8
0.1 0.9 RISK
0.0 1.0
Probability of one success
What number of wells would be needed to
be sure of at least one discovery at a
certain confidence level

The probability of at least one success

= 1 - the probability of all failures
CL = 1-(1-POS)n
CL = Desired confidence level
POS = Success probability
1-POS = probability of failure
n = No. of Exploration wells
 RISK CATEGORIES (1)

In general, probability of geologic success falls into five

broad categories. General “rules of thumb” are noted :

• Very low risk (Ph between 0.5 and 0.99 – better than
1:2) – All risk factors favorable. This category is
associated with wells which test proven plays which
are adjacent (<5 km) to existing production

• Low risk (Ph between 0.25 and 0.5 – between 1:4

and 1:2) – All risk factors encouraging to favorable.
This category is associated with wells which test
proven play near (5 – 10 km) existing production.
 RISK CATEGORIES (2)
• Moderate risk (Ph between 0.125 and 0.25 – between 1:8 and
1:4) – One or three risk factors encouraging to favorable – one or
two factors encouraging or neutral. This category is associated
with wells testing new plays in producing basins or proven plays
far (> 10 km) from existing production.

• High risk (Ph between 0.063 and 0.125 – between 1:16 and 1:8)
– One or two risk factors encouraging – two or three factors
neutral or encouraging to neutral. This category is associated
with wells testing new play in producing basins far (> 20 km)
from existing production or proven plays in an unproven area

• Very high risk (Ph between 0.01 and 0.063– worse than 1:16) –
Two to three risk factors neutral one or two factors questionable
or unfavorable. This category is associated with wells testing
new plays in unproven area basins far (> 50 km) from existing
production.
 Most of the exploration
possibilities are
Unsuccessful

 The Profit Margin for the Oil

Companies must be large
enough to accommodate
failures
Risk- & Non Risk-Takers
 Fiscal Terms must account for the large
Risk in the Oil Business

 Oil Companies are High Risk Takers

Companies reduce risk by diversification

 Governments are Low Risk Takers

Governments can reduce risk by
introducing a Regressive tax system
(Bonuses and Royalties)
Risk Management

• Risk Avoidance
• Avoid opportunities with to large risk
• Loss Prevention
• Understand and analyse the risk to prevent loss
• Risk Transfer
• Farmouts, Joint Ventures, Diversification
• Insurance
• Price dependant on risk
» Breach of Contract
» War and Civil Disturbance
1. Understand Alternatives and the risk
these alternatives involve

2. Evaluate the potential Consequences

perceived in the Situation

3. Assess the uncertainties involved in the

Decision

4. Recombining the judgement to develop a

consistent Strategy
When evaluating the prospectivity of an exploration area, we
need to consider three fundamental questions:

 Are hydrocarbon deposits present in the area?

 What are our chances of finding them?
 If we do find hydrocarbons, will the discovery be
economic -- i.e., will the discovery warrant development?

A complete economic assessment of a play involves such issues as

 Budgetary limits
 Leases and land ownership
 Location logistics
 Size and depth of the prospect
 Drilling and completion constraints
 Distance from the discovery to markets, etc.

In this section, we are considering risk assessment from the geological

perspective, so our focus will be on the first question only.
The study was based on 4,500 kilometers of seismic data, combined with
data from 27 wells (Fig. 1). Water depths range from30 to 90 m. The work led
to a variety of data displays, including structural leads maps, source rock
distribution and maturation maps, depositional models and geohistory curves.
Well logs provided important lithological data ( Figure 2 ,)

Stratigraphic column and northwest-to-southeast cross section of Bass Basin

[wells located in Figure 1] Note: many of the volcanics are intrusive and are
considerably younger than the enclosing sediments]. while interpreted seismic
data provided critical structural information ( Figure 3 (BMR line 18 showing
structural interpretation and mapped prospects [shown as bars at top of
interpreted section].

Our task is to develop a risk assessment of the area and, based on the
results, recommend to management the next course of action -- either to
develop a complete economic analysis of the area and make an appropriate
bid, or pass on the opportunity as being too risky or uneconomic. To do this,
we must evaluate the essential play components -- source, maturation,
migration, reservoir, seal, trap and timing -- in this area.
RISK ASSESSMEMT
To perform a risk assessment, we consider each play
element independently and assign a value, between zero
and one, which reflects the probability of successfully
finding that particular play element in the basin. We then
multiply these probabilities together to obtain a total
probability for each play type. While this type of analysis
relies as much as possible on scientific data, often the
probabilities we assign to each play element are based on
past experience and gut-level responses. In such cases, it
is often best to consider a range of values for each play
element, leading to best- and worst-case scenarios, the
average of which may more accurately reflect the true
risks involved.
 Prospect Risk Analysis Sheet Prospect Ganesha
Business Unit ITB
Play Pre Tertiary Basement
Horizon/Level Pre Tertiary Basement
Trap Scenario Fault bounded anticline
Date 11/03/2009
Pg = chance that all minimum case geological attributes are present
Ps = chance that all minimum case geological attributes are present and sufficient to provide an accumulation
Could all Probability of
What level of evidence is
prospects in play What level of Confidence is there that the attributes described in finding at least
Input data in white highlighted areas; used in the interpretation to
fail due to this the minimum case inputs are present? the minimum
fill in risk matrix by putting an "x" in define the attribute?
the appropriate boxes. attribute? case input
YES NO In- Near Toss Un- Doubt-
Direct Inter. Certain >Adq =Adq Shared Local
Shared Local direct Certain up likely ful
Must be Can't be
SOURCE Direct Indirect
Quantity of Mature Source x x x 1,00
Thickness/areal extent of mature
source rock in the fetch area of the
prospect.
Quality/Richness/Potential x x x 1,00
Consider Source Type and Combined for
Depositional Environment. HI and Source: 1,00
ITOC are sufficient to generate and
RESERVOIR
Quantity x x x 0,89
Gross thickness, areal extent and
reservoir geometry over the area of
the prospect given the depositional
Quality x x x 0,72
Porosity,net/gross,Sw,Permeability, Combined for
reservoir connectivity, diagenetic Res. 0,64
effects.
TRAP
Mapping x x x 0,89
Data quality; imaging; time/depth
conversion; repeatability of mapping

Timing / Migration Path x x x 0,72

Location of closure with respect to Combined for
effective migration path; Timing of Trap: 0,64
trap formation with respect to Timing
CONTAINMENT
Seal Capacity x x x 0,89
Top Seal capacity based on lithology
and burial depth. Fault seal capacity
based on Vshale and burial depth at
termination of faulting.Pressure
Preservation/Seal Integrity x x x 0,72
Consider areal extent and thickness
providing integrity.Chance of
breaching by erosion or faulting. Combined for
Chance of displacement by non- Contain. 0,64
YES NO In- Near Toss Un- Doubt-
Direct Inter. Certain >Adq =Adq
Shared Local direct Certain up likely ful

Risk Weightings Total Play / Prospect Group Chance (Shared Terms) 1,00
In- Greatest Risk in Risk Matrix Total Prospect Specific Chance (Local Terms) 0,26
Direct Inter. direct Reservoir Quality Pg for Prospect (Shared x Local Terms) 0,26
Certain 1,00 (enter as decimal percent; e.g. 0.4)
Near Certain 0,94 0,89 Certainty Value from HCIP : % of simulations with HIP >0
> Adequate 0,88 0,81 0,73 Ps for Prospect modified by simulation
= Adequate 0,79 0,72 0,64 Analog Fields: If Certainty Value =100% then Pg = Ps
Toss up 0,50 0,50 0,50
Unlikely 0,20 0,30 0,40 Historical Success Ratio:
Pg for Prospect 0,26
Doubtful 0,10 0,20 0,30 Analog Success Ratio:
Ps for Prospect
SOURCE ROCK
We begin our risk analysis by considering the source, since without an
adequate source, the other play elements are incidental. We know that good,
oil-prone source rocks have been identified in analogous basins. We must
consider such questions as:

 Does the source have sufficient organic content to make it effective?

 Is the source unit present in sufficient volume to generate economic
accumulations of petroleum?
 Is the source likely to produce oil or gas?

Potential source rocks exist throughout the upper Eastern View Coal
Measures (EVCM), as well as in sections of the Otway Group. Source rock
analyses show that the EVCM contain both oil- and gas-prone source rocks.
All samples analyzed have greater than 0.5 percent TOC and most have TOC
contents greater than 1 percent. No maturation or source rock data exist for
the Late Cretaceous to Paleocene section of the EVCM, but rift-fill deposition
models suggest that suitable source rocks may have been deposited. Also, oil
and gas shows in several wells indicate that hydrocarbons have been
generated in the basin. So, being reasonably confident that a suitable source
rock exists, we assign the source play element a probability of ………..
SOURCE ROCK MATURATION

Having assigned a risk value to the source element, the next logical step is to
consider whether or not this source is mature. We rely on both well data and
basin modeling techniques to evaluate this play element. We consider such
questions as:

At what time did the source rock enter the oil window? The gas window?
Did the source mature before trap development? After trap development?

Geohistory studies show that the base of the EVCM was mature for petroleum
generation at 40 million years ago, by which time most structures were
already in place ( Figure 5 , Maturity map for base of Eastern View Coal
Measures at 40 Ma.)

Although parts of this section are now probably over-mature, most of the Late
Cretaceous and Paleocene portions of the EVCM are still in the mature zone
and could be present-day hydrocarbon sources. Vitrinite reflectance and TAI
data indicate that mature source rocks should exist at about 3,000 m in the
basin deeps and at around 2,000 m on the flanks and over basement highs.
We’ll assign this play element a value of ...........
MIGRATION
The next play element to consider is migration. Here, we use both seismic and
well data, since seismic data enable us to determine structure and dip, while
well data provide information about the juxtaposition of source and carrier units,
as well as lithologic data about the latter. When evaluating the migration play
element, we should consider the following questions:

Are carrier units present that can act as migration pathways?

What are the porosity and permeability of these carrier units?
Are the migration pathways in the optimal positions to charge potential
reservoir units?
When did migration occur relative to trap formation?
Can migration have occurred along fault planes?

Migration is a difficult play element to objectively evaluate. We may need to rely

on the success or failure of similar play types in similar structural settings to
assess the risks associated with migration. The lack of exploration success at
shallower levels suggests that vertical migration paths may be poorly
developed, reinforcing the need for additional exploration to focus on deeper
targets. Still, hydrocarbon shows do indicate that hydrocarbons have migrated
from source to reservoir units at some point during the basin.
We will assign this play element a value of .............
RESERVOIR
Our next concern is reservoir. Since our exploration area is a rifted margin, we
assume that at some point in the development of the basin a continental
source predominated. Clastic deposition may have created a sufficient number
of potential sandstone reservoirs. Here, we consider such questions as:

What porosity and permeability values can we expect for any potential
reservoir units?
What are the thicknesses and lateral extents of the reservoir units?
Are the reservoirs in contact with potential source units? If not, are there
viable conduits and migration pathways from source to reservoir?

Again, well data are essential. Core data suggest that porous and permeable
reservoirs exist in both the Otway Group and upper EVCM. Porosity values
within the EVCM average between 17 and 19 percent, but can be as high as
30 percent. Permeability values vary considerably, from 0.1 to 9,200
millidarcies. However, these well data are for depths shallower than the ones
at which the reservoirs are likely to be encountered in our play type, so we
must hope that these characteristics are maintained at greater depths. In this
case, we’ll assume that well control suggests that good-quality reservoirs are
present. We’ll assign the reservoir play element a value of ……...
SEAL
Next, let’s consider the seal. Well data indicate that thick shales are present
above our prospective reservoir unit. Again, we must extrapolate these well
data to our area, but it is likely that sand and shale deposition will have
occurred in cycles, and we feel confident that we have reservoir and seal units
in close association. Some of the questions we should ask ourselves are:

Are the seals laterally extensive?

Are the seals thick enough to effectively trap hydrocarbons?
Are the seals in the proper structural positions to be effective?
Have the seals been breached by subsequent tectonic activity such as
faulting?

Again, let’s assume that well control indicates good-quality seals are present.
Several potential seals exist in the pre-Eocene section. Shales formed in flood
basins are the most common seal. Faults or changes in porosity due to facies
changes may also be effective seals. However, on our seismic sections we
recognize several faults that reach the surface, indicating recent tectonic
activity may have breached some of these seals. So we may be less confident
of seals in this area.

We’ll assign the seal play element a value of ...........

TRAP
The next important play element is the trap. Using seismic data, we can
confirm the presence of prospective rollover anticlines. We are also able to
estimate the size and extent of these traps. Still, we have several questions to
address:
When did these traps form -- before or after the source rocks were mature and
generating hydrocarbons?
Are these traps in a migration pathway that would enable hydrocarbons to
enter the traps?
What sort of mechanism are we depending on to source these traps -- for
example, do we need faults to act as hydrocarbon conduits?
What sort of sealing mechanism are we counting on -- are we requiring faults
to act as both hydrocarbon conduits and sealing units?

Normal faulting is the dominant structural style in the basin. Structural relief is
significant at the Upper Jurassic and middle Cretaceous unconformities. For
example, at the Paleocene level, mapped structures have vertical closures of
approximately 200 m at depths of 2,500 and 3,000 m ( Figure 6 ). These
structures are well-defined on seismic data, but with only moderate well control.
Geohistory models indicate that these traps were in place early on in the
history of the basin.
Let’s assign this play element a value of .............
TIMING
Finally, we need to consider the play element of timing. Here, we combine
both geological and geophysical data to construct regional cross sections. By
using these cross sections, together with maps of any regional
unconformities seen in the seismic and well data, we can reconstruct the
tectonic history of the area. We can determine when structuring occurred and
how this period of structuring relates to source rock maturation. Timing ties
together many of our previous concerns, as well as the following:

When were the traps formed -- before or after source rock maturation?
Were adequate seals present at the time the traps were charged?
Have more recent tectonic events breached the original traps?

Burial history curves reflect initial warping of the basin about 140 million
years ago, leading to the deposition of the Otway Group. Extensional faulting
culminated about 100 to 90 million years ago. Geohistory studies show that
the base of the EVCM entered the maturation window by the time most of the
structuring had ceased.

We’ll assign the timing play element a value of ..........

Now that we have assigned
values to each play element, the
final step is to multiply the
probability of each element
together to determine the overall
risk associated with the play itself.
 Assigned
Play Element Comments
Value

Source Potential source rocks exist throughout section; high TOC values; 0.7
hydrogen shows indicate presence of mature source

Maturation Well data and basin models indicate potential mature source rocks 0.7
exist at depth; source rocks generated hydrocarbons after structuring

Migration Hydrocarbon shows indicate viable migration pathways; lack of 0.5

success at shallow depths supports idea of potential targets at deeper
levels

Reservoir Well data indicate good porosity and permeability in shallower section; 0.7
unknown at depth

Seal Well data indicate shale sequences viable seals; recent tectonic 0.5
activity may breach these seals

Trap Gross closure is assured; traps present for significant portion of basin 0.8
history

Timing Traps in place early on in basin history, prior to source maturation 0.7

Total 0.048