Otis and Schneidermann

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Evaluation
Same Play Adjacent Structure Same Play Nearby Structure Producing Area Delineation

Conventional
New Play - Same Trend Old Play - New Trend

Frontier
New Play - New Basin or Play with Negative Data Frontier Area Hydrocarbon System

Figure 5Risk categorization of rules of thumb for geologic risk assessment based on feedback from five years of drilling history.

Emerging Area Prospect Play

VERY LOW RISK 1:2

Avg. Pg= 0.75

LOW RISK

MODERATE RISK 1:4 1:8

HIGH RISK 1:16

VERY HIGH RISK

Avg. Pg= 0.05

Avg. Pg= 0.375 Avg. Pg= 0.183 Avg. Pg= 0.092 Pg= Probability of Geological Success

VOLUMETRICS Oil and gas volumes are expressed as a product of a number of individual parameters. Because of uncertainty in the value of each of the individual parameters, oil and gas volumes can be represented as a distribution. The distribution is generally assumed to be lognormal (Capen, 1993). In our process, the distribution represents the range of recoverable hydrocarbons (or reserves, in their most general sense) expected to be found when the well is drilled, assuming geologic success (sta-bilized flow of hydrocarbons on test). It is not the distribution representing the range of commercial reserves, proven reserves, or any other type of reserves tied to economic considerations. Note that we use the term reserves as being inter-changeable with recoverable volumes throughout this text based on the general definition of reserves being those quantities of hydrocarbons that are anticipated to be recovered from a given date forward. (Journal of Petroleum Technology, 1996, p. 694). We address commerciality during the economics phase of the process. One method that can be used to obtain this dis-tribution of reserves is Monte Carlo simulation. The distribution is obtained by specifying distributions for each of the individual parameters and then mul-tiplying randomly selected values together many times, thereby creating a highly sampled histogram that approximates the actual distribution. The number of estimates (iterations) necessary to obtain a satisfactory representation of the distribu-tion ranges from a few hundred to several thou-sand. Monte Carlo simulation programs are widely available and the calculation can be done in a few minutes, depending on the number of iterations used.

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An alternative method to Monte Carlo simula-tion was developed by J. E. Warren of Gulf Oil Corporation (Warren, 19801984, personal commu-nication). This method produces distributions that are essentially identical to Monte Carlo simulations, but requires no iterations and no assumptions about the distributions of the reserve parameters. We call the method the three-point method; it is explained in detail in Appendix 1. Briefly, the method uses as input a range for each parameter by specification of values corresponding to the 5, 50, and 95% proba-bility of occurrence. From these ranges, a mean and variance are estimated for each parameter using the Pearson-Tukey operator (Pearson and Tukey, 1965). The means and variances are com-bined to provide the mean and variance of the resultant reserve distribution. A lognormal distribu-tion is assumed for the reserves distribution and can be calculated from the estimated mean and variance. Advantages of this method are the speed of the calculation, which is essentially instantaneous on any spreadsheet computer program, and that it has no requirement for specifying the parameter distribution. The key to success with this method, there-fore, is correctly specifying the ranges. Guidelines include the following: (1) Selecting the 5% value, which is generally near the minimum value expected. For example, for porosity the 5% value would be near the mini-mum porosity observed in nearby wells; for area, the 5% value would be the area corresponding to the minimum hydrocarbon column expected. The explorationist should keep in mind that the odds of finding a value less than the selection are 1 in 20. (2) Selecting the 95% value, which is generally near the maximum value expected. For example, for porosity the 95% value would be near the maxi-mum porosity observed in nearby wells; for area, the 95% value would be the area corresponding to a maximum hydrocarbon column expected. Likewise, the explorationist should keep in mind that the odds of finding a value greater than the selection are 1 in 20. (3) Selecting the 50% value, which is generally near the middle of the expected range of values. The median is often the most difficult to choose and requires the support of data associated with the play or with an appropriate analog. Analogs should be used with caution. For example, in a purely continental basin, a partial analog with lacustrine source and marine reservoir does not apply. The explorationist should keep in mind that the odds of finding a value less than the selection is equal to the odds of finding a value greater that the selection.

After the ranges for the reserve parameters have been specified, the mean and variance for the reserve distribution are calculated. Figure 6 shows a spreadsheet with an example for a typical small prospect in a deltaic environment, such as the Niger Delta or the Mississippi Delta. The input ranges are as shown, and the output information includes the mean reserves and cases for a pes-simistic result (10% or P10) and an optimistic case (90% or P90). In addition to reserves, the spread-sheet calculates values for individual reservoir parameters, including porosity, area, and net pay, that, when multiplied together, will total the pes-simistic or optimistic reserve value for use during the engineering and economics phases of the pro-cess. These pessimistic and optimistic parameter values are consistent with the variances specified by their corresponding input ranges. Note that the parameter values are not the 10 and 90% values of the input ranges. Figure 6 also shows the cumula-tive reserve distribution and values for specific per-centiles, as well as the mean, median, and mode.

In practice, the mean value for the distribution is commonly less than the explorationists expecta-tion. At this point it is critical to keep in mind that this result is the consequence of the input parame-ter ranges. If the input ranges are based on good available data, it may be difficult to alter them sig-nificantly, and the explorationist may have to adjust expectations. This dilemma can be resolved by comparing the prospect reserve distribution to field-size distributions of the play or analogs. Questions that arise and responses to them often include the following: (1) Are the predicted values reasonably consis-tent with reserves found in analogs to date? If so, use the numbers obtained from the input parame-ter ranges. (2) Are the predicted reserves significantly small-er or larger than those found in analogs to date? If yes, then (3) Are there technical reasons to justify the dif-ference? If so, use the ranges as stated. (4) Are technical reasons for the difference lack-ing? If so, reconsider values assigned in previous steps and recalculate reserves. When the final reserve distribution is obtained, the information from the process moves to the engineering support and economics stages.

ENGINEERING SUPPORT AND ECONOMICS