Presentation 10


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Presentation 10

  1. 1. Petroleum Project Economics Econ210D Presentation 10 Government Regulations Week 10
  2. 2. Definition of reserves <ul><li>Reserves are an estimate of hydrocarbons existing and being producible under current economic conditions and technology. </li></ul><ul><li>There are three categories of reserves based on different probabilities or degrees of certainty. </li></ul>Government Regulations Week 10
  3. 3. Proven reserves <ul><li>This is defined as oil and gas &quot;Reasonably Certain&quot; to be producible using current technology at current prices, with current commercial terms and government consent- </li></ul><ul><li>Some Industry specialists refer to this as P90 - i.e having a 90% certainty of being produced. </li></ul><ul><li>This is also known in the industry as 1P. </li></ul>Government Regulations Week 10
  4. 4. Probable reserves <ul><li>These are defined as oil and gas &quot;Reasonably Probable&quot; of being produced using current or likely technology at current prices, with current commercial terms and government consent. </li></ul><ul><li>Some Industry specialists refer to this as P50 - i.e having a 50% certainty of being produced. </li></ul><ul><li>This is also known in the industry as 2P or Proven plus probable. </li></ul>Government Regulations Week 10
  5. 5. Possible reserves <ul><li>This refers to reserves that have a chance of being developed under favourable circumstances&quot; </li></ul><ul><li>Some industry specialists refer to this as P10 - i.e having a 10% certainty of being produced. </li></ul><ul><li>This is also known in the industry as 3P or Proven plus probable plus possible. </li></ul>Government Regulations Week 10
  6. 6. <ul><li>Proven reserves can be further categorized as follows: </li></ul><ul><li>Proved Developed Producing </li></ul><ul><li>Proved Developed Non-Producing </li></ul><ul><li>Proved Undeveloped </li></ul>Proven Reserve Categories Government Regulations Week 10
  7. 7. <ul><li>Structure maps & cross sections </li></ul><ul><li>Well logs </li></ul><ul><li>Core Analysis </li></ul><ul><li>Fluid Data </li></ul><ul><li>Well Histories </li></ul><ul><li>Current Production Data </li></ul>Estimating Remaining Reserves Government Regulations Week 10
  8. 8. <ul><li>Based on reserve estimates, production can be forecasted using the following methods: </li></ul><ul><li>Volumetric Analysis </li></ul><ul><li>Decline Curve Analysis </li></ul><ul><li>P/z </li></ul>Measuring Production Government Regulations Week 10
  9. 9. Exponential Decline <ul><li>Constant Percentage </li></ul><ul><li>d = (q i -q o ) </li></ul><ul><li>q i </li></ul><ul><li>Where: </li></ul><ul><li>d = effective decline or loss ratio, fraction </li></ul><ul><li>q i = rate at the start of the period, Stb </li></ul><ul><li>q o rate at the end of the period, Stb </li></ul>Government Regulations Week 10
  10. 10. Hyperbolic Decline <ul><li>D = D i (q/q i ) b </li></ul><ul><li>Production curves upwards in a concave fashion rather then decreasing in a straight line, the decline is hyperbolic.. </li></ul><ul><li>Decline rate decreasing with time </li></ul><ul><li>Curvature is defined by the hyperbolic exponent b , which is constant with time. </li></ul>Government Regulations Week 10
  11. 11. <ul><li>Projection of future production </li></ul><ul><li>Current and Projected Oil and Gas Prices </li></ul><ul><li>Capital and Operating costs </li></ul><ul><li>Inflation rate </li></ul><ul><li>Taxation </li></ul><ul><li>Discount Rates </li></ul>Economic Evaluation Government Regulations Week 10
  12. 12. Reserves Estimation <ul><li>Volumetric calculations </li></ul><ul><li>Historical Production & reservoir performance analysis (Decline curve analysis) </li></ul><ul><li>By analogy to similar reservoirs in close vicinity of the area under evaluation </li></ul><ul><li>Material balance calculations </li></ul><ul><li>Reservoir simulation </li></ul>Government Regulations Week 10
  13. 13. Volumetric Calculations - Original Oil in Place <ul><li>Where: </li></ul><ul><li>7,758=Reservoir bbls per ac-ft </li></ul><ul><li>Φ =Porosity, fraction </li></ul><ul><li>S w = Water saturation, fraction </li></ul><ul><li>A = Area, acres </li></ul><ul><li>h = Net thickness or height formation ft </li></ul><ul><li>B o = Formation Volume factor, RB/stb </li></ul>Government Regulations Week 10
  14. 14. Example <ul><li>A well has a net pay thickness of 30ft, 15% porosity , 25% water saturation and a formation volume factor of 1.2 RB/STB. The well is expected to drain 40 acres and has a primary recovery factor of 15%. </li></ul><ul><li>Calculate the OOIP and the recoverable reserves. </li></ul>Government Regulations Week 10
  15. 15. Solution <ul><li>OOIP = 872,775Stb </li></ul><ul><li>Recoverable Reserves = OOIP x RF </li></ul><ul><li>872,775 x 0.15 = 130,916 Stb </li></ul>Government Regulations Week 10
  16. 16. Volumetric Calculations - Original Gas in Place <ul><li>OGIP = 43,560 * φ * (1-S w )*Ah* B g </li></ul><ul><li>43,560 = cubic feet/acre feet </li></ul><ul><li>Φ = Porosity, fraction </li></ul><ul><li>S w = water saturation, fraction </li></ul><ul><li>A = Area, acres </li></ul><ul><li>h= thickness, ft </li></ul><ul><li>B g = Gas formation volume factor, SCF/CF </li></ul>Government Regulations Week 10
  17. 17. Example <ul><li>Mango Field, a new gas field has been discovered near Mayaro with an areal extent of 1,500 acres. Average thickness is 40ft, porosity is 22%, water saturation from logs is 23% and the gas FVF is 188 Scf/CF. The recovery factor is estimated to be 82%. Determine OGIP and the recoverable reserves. </li></ul>Government Regulations Week 10
  18. 18. Solution <ul><li>OGIP </li></ul><ul><li>= 43,560 x 0.22 x (1-0.23) x 40 x 1,500 x 188 </li></ul><ul><li>= 83.232MMMCF = 83.232 BCF </li></ul><ul><li>Recoverable reserves = 83.232 BCF x 0.82 </li></ul><ul><li>= 68.25 BCF </li></ul>Government Regulations Week 10