Oil and gas

1. Reservoir Management
Lecture 6: Reservoir Development
Objectives and Considerations

2. • Oil- and gas-bearing countries have three options to explore
and develop their petroleum resources:
a) Create their national companies, for example, Saudi Arabia,
China, Venezuela, Iran, Kuwait, Indian, and so forth.
b) Allow private sector companies to undertake E&P operations,
for example, the US, the UK, Russia, Brazil, Canada, and so
forth.
c) Use a mix of the above two systems, for example, Nigeria,
Azerbaija n, Kazakhsta n, India, and so forth.

3. • Commercia l agreements can be classified into four categories:
1. Concessions
2. Joint Ventures
3. Production-Sharing Agreements or Production Sharing
Contracts
4. Service contracts

4. The term paper you will write during the semester
contains several parts. The title of paper will be
" Reservoir Management in Kurdistan Region of
Iraq". The first part of the term paper will be about
Production Sharing Agreement in Kurdistan. The
second part of the paper will be the objectives of
reservoir management.

5. • Reservoir Development Objectives
• Management Questions and Objectives
• Conceptual Development Plan
• Initial Development Plan
• M id-term Development Plan
• Final Development Plan

6. • The discovery of oil and
gas is excellent and
welcome news for
everyone in a country.
• It portends hope for a better
future in underdeveloped
countries and reassurance of
energy supplies in
developed countries.

7. • Discovery gives rise to a flurry of pre-development
activities since operating compa nies are usually
interested in fast-tracking oil
and gas production for the following reason:
Generate a quick cash flow for the company and
support the economy.
Complement the energy supply to the national or
international market
Develop local infrastructure and strengthen the local
market
Generate employment, training, and development
opportunities for people

8. • It is a good idea for the development tea m to be
proactive and think through the challenges it can face in
developing an oil or gas field.
• Critical management and operationa l decisions need to
be made at each stage relating to schedule, cost, drilling,
production, technology, training, and so forth.
• Undoing an action is impossible; it can only be corrected
with associated consequences in time delays, cost
overruns, and lost capital and opportunities.

9. • Short-to long-term impacts of the
development activities must be considered
thoroughly.
• Large-scale corrections to the development plans
can result in wastage or money and inventory, missed
targets, and reduced credibility.
• Since development and production activities for
primary and secondary recovery may continue for 30
to 40 years and involve huge capital expenditure, it is
good to split the plan into phases.

10. • Each phase would require a detailed development
plan that can be prepared with a reasonable
degree of confidence about activities and
expenditure and lower the risk to investments.
• These Development Plans would usually be
operative for 10 to 12 years.

11. • Even before the implementation of the very first phase of
development starts, the compa ny must be in a position to
address the following fundamental questions:
Is the organization capable of managing the project in terms
of capital, technology, and human resource?
How will the major oilfield operations (seismic surveys, well
drilling, oil and gas production, processing, and
transportation) be carried out?
What commercia l agreements/contra cts will be required for
oilfield services and the sale of oil or gas, and by what time?

12. • Even before the implementation of the very first phase of
development starts, the company must be in a position to
address the following fundamental questions:
 What pace of development is necessary? The following
will determine it:
 The urgency of oil or gas requirement
 Reservoir depth, type, and number of wells to be drilled
Number of drilling rigs and equipment/materia l availa
bility
 What technologies are necessary, and how the gap, if
any, will be bridged?

13. • Even before the implementation of the very first phase of
development starts, the company must be in a position to address
the following funda mental questions:
Is the company fully aware of petroleum legislation,
environmental regulations, local labor laws, and taxation
systems?
Does everyone involved in the project understand HSE
policies and issues clearly?
Does the company have financial resilience to absorb the
CAPEXand OPEX until the payout period?
How deeply is the company going to be involved in fulfilling
social objectives?

14. • Once a positive answer to the previous questions is
ascertained, the stage is set to move forwa rd with
the Development Planning.
• A Conceptua l Development Plan {CDP) is based on data
acquired from wells drilled in the exploration and
delineation phase and an outlook of development
activities for the next 5 to 10 yea rs.

15. Key Technical Considerations:
 Type of hydroca rbon (oil, free gas, or condensate)
 Type of reservoirs: elastic or carbonate, single or
multiple, sheet, stacked or staggered
 Size of the resource and uncertainty associated
with the estimates {P90, PSO, or PlO)
 Size and strength of the aquifer and gas cap if
present

16. Key T
echnical Considerations:
 At what rate the fluids will be withdrawn from the
reservoir
 Production capacity of the wells and reservoir(s)
 Natural operating drive mechanism and its efficiency
 Assessment of pressure depletion
 The need and timing of pressure maintenance
 Oil, gas, and water production profiles with estimates of
recovery
 Depletion policy

17. Key Technical Considerations:
 Well-completion strategy (technica l,
economic considerations)
 Number of wells (production, injection, and disposal}, well
type (vertical, horizonta l, deviated, multi-latera l},
completion type (openhole, cased hole, single or dual)
 Estimated Ultimate Recovery Factor {EURF) under
primary recovery and well spacing
 Facility capacity required to handle oil, gas, and water
production
 Options and strategy for disposal of produced water

18. Key Technical Considerations:
 Well-hook up arrangements, contracts, and so forth
 Possible use and discussion of Artificial Lift (AL) methods
 Crude storage and dispatch, transportation to export/sa
le point
 Possible risks associated with the CDP
, and the
mitigation plan
 An essentia l piece of information for the CDP is the
pressure and production variation with time, also known as
pressure production history. All this knowledge is compiled
and used to prepare the CDP
.

19. • An Initial Development Plan is based on the data acquired in
the early stages of the development phase.
• It presents an outlook of development activities for the next
5 to 10 years.
• It is an update/revision of the CDP after a thorough analysis
of what went right or wrong in the early development phase.

20. Key Technical Consideration:
 Construction of a geologica l model with structure,
faults, properties, and fluid distribution
 The revised deterministic and probabilistic estimates {P90,
 PSO, PlO) of Hydrocarbon-in-place volumes of oil and gas
 Revised well-completion strategy based on the
experience gained in the earlier phase
 Review of the production capacity of the field/reservoir(s)
 Confirmation of aquifer/gas cap (if present) size and
strength from reservoir performance data.

21. Key Technical Consideration:
 Evidence for the need and timing of pressure maintenance
 Construction of a reservoir simulation model and
its calibration with dyna mic data
 Revised EUR with and without pressure maintena nce
 Assessment of possible development options and selection
of the optimum variant
 Required number and type of production wells, completion
strategy, well spacing

22. Key Technical Consideration:
Drilling schedule, plateau rate, timing, and plateau period
Injection strategy (periphera l or pattern) and injector
locations
>- Water/gas injection schedule and rate forecast for
maintaining the target reservoir pressure
>- EUR with and without pressure maintena nce
>- Long-term and Life of Field {LOF) oil, gas, and water
production forecasts

23. Key Technical Consideration:
Application of standard/classical reservoir engineering methods to
crosscheck in-place volumes, recovery factor, decline rates, and so forth
Availability and compatibility of injection fluids (water or gas), injectivity
testing
Pilot test proposal for pressure maintenance and outlook for expansion
of the project
Type of drilling and workover rigs required, an estimated load of the
drilling and workover rigs, rigless workover activities
Type of AL, timing, and details of the AL plan
Effluent Water Disposal (EWD) plan
Possible risks associated with the initial development plan and the
mitigation plan

24. • A Mid-Term Development Plan is based on a review of
activities carried out during the Initial Development Plan
phase.
• The idea is to check what went according to the plan and
what didn't.
• It also presents an outlook of development activities for the
next 10 to 15 years.

25. Key Technical Considerations:
 Revise deterministic and probabilistic estimates (P90, PSO,
P lO) of hydrocarbon-in-place volumes
 Review of well-completion strategy based on the
experience gained during the Initial Development
Plan phase
 Design and test one or more water/gas injection pilots,
evaluate results
 Assessment of initial water/gas injection performance and
implementation schedule of the full-fledged waterflood
development plan according to the injection scheme,
revised EUR, and production profiles
 )Review of production and injection capability of the
reservoir(s) with water/ga s injection.

26. Key Technical Considerations:
Review of EW disposal/utilization strategy. Continue with
EW water disposal into the subsurface or utilize for
reinjection?
Revisit the makeup volumes and the need for treatment before disposal.
Determine suitability of water for injection from other sources, need for
filtration and treatment. In the case of pressure maintenance by gas
injection, ensure gas availability and need for processing, if any.
Justify water/gas injection costs based on incremental oil recovery
obtained by coreflood studies and well logs {Sorw or Sorg) before
starting the water/gas injection.
Need for correction/refinement of anything not doing well during the
Initial Development Phase.

27. Key Technical Considerations:
Refine static and dyna mic models with newly acquired data a
nd finetune the simulation results -
 T
o confirm the techno-economic suitability of the
development plan
 T
o finalize the development plan locations
 T
o estimate EUR with and without pressure maintena nce
 T
o forecast the long-term and Life of Field (LOF) oil,
gas, and water production and water/ga s injection
forecasts
 Implement the AL plan if necessary
 Estimated load of the rig and rigless workover activities
 Assessment of after-effects of EWD, risk mitigation if
necessa ry
 T
echno-economics of the project
 Screening for EOR methods

28. • A Final Development Plan is based on the activities carried
out until the end of the Mid-Term Development Plan.
• This plan should generally visualize and freeze all further
capital expenditure on development activities required to be
completed under the secondary recovery phase.
• All preparatory work to find a suitable EOR method that
started at the end of the previous phase must be pursued
further.

29. Key Technical Considerations:
 Need for correction/refinement of anything not doing well
during the Mid-Term Development Phase
 Final estimates of hydrocarbon-in-place volume (P90, PSO, P lO)
and reserves
 Well calibrated reservoir model with consistent volumes of
oil-in-place and EURdetermined by other methods
 Final development plan with well locations and production
profiles
 Review of expenditure made on wells, flowlines, AL, oilfield
services, and other items
 Estimates of spending on future wells, flowlines, facility
upgrades/ modifications/construction to handle oil,
gas, water, and other projects
 T
echno-economic parameters and estimated cost of the primary
and secondary oil Assessment of EOR potential based on the
results of the screening study Recommendations for laboratory
studies to decide the most suitable EOR method

30. Key Considerations:
 Collect information for a feasibility study on EOR-
 The laboratory efforts must establish the incremental oil
recovery in the lab based on the corefloods
 Identify and test wells to determine Sor with the proposed
EORagent
 Best time to implement the EOR scheme
 Logistics of EOR project, handling of EOR production and
injection streams upstream and downstrea m of wells, need for
the refurbishment of facilities
 Estimated cost of the EOR oil
 Likely size and configuration of injection production patterns

31. • Final Development Plan is not the end of the development
planning, as the name may imply.
• This plan is also subject to further revision(s) based on new
information or surprises such as a further extension or even
shrinking of fields.
• This plan should nearly sum up the pressure
maintena nce/secondary recovery plan and expenditure to
be incurred on the field development.

32. • It is also a good time to initiate a feasibility study for EOR,
depending on the positive results of the pre-work.
• EOR methods may require slight modification in the quality
of injection water or a completely new injectant in place of
water as established by the laboratory experiments.
• This consideration is, however, dependent on the economic
viability of the process.