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SPE 146524

Reservoir Simulation: A Reliable Technology?


W.J. Lee, R.E. Sidle, and D.A. McVay, Texas A&M University

Copyright 2011, Society of Petroleum Engineers


This paper was prepared for presentation at the SPE Annual Technical Conference and Exhibition held in Denver, Colorado, USA, 30 October2 November 2011.
This paper was selected for presentation by an SPE program committee following review of information contained in an abstract submitted by the author(s). Contents of the paper have not been
reviewed by the Society of Petroleum Engineers and are subject to correction by the author(s). The material does not necessarily reflect any position of the Society of Petroleum Engineers, its
officers, or members. Electronic reproduction, distribution, or storage of any part of this paper without the written consent of the Society of Petroleum Engineers is prohibited. Permission to
reproduce in print is restricted to an abstract of not more than 300 words; illustrations may not be copied. The abstract must contain conspicuous acknowledgment of SPE copyright.

Abstract
Under pre-2009 SEC reserves reporting guidance, filers with the SEC had difficulty in persuading the SEC staff that
reservoir simulation met the reasonable certainty' standards required to classify resources as proved reserves. With
the modernization of the SECs reserves reporting rules, 'reliable technology,' including computational methods, is
allowed to establish the certainty level required for reporting reserves of any category. However, important questions
arise: can we consider reservoir simulation to be a reliable technology? If so, what conditions must be satisfied to
establish reliability? This paper concludes that simulation is indeed a potential reliable technology when we can
demonstrate that it satisfies the criteria of consistency and repeatability, difficult criteria to satisfy for a
computational method. The paper also concludes that the reserves analyst can demonstrate when simulation is
reliable by proceeding through the steps in the scientific method outlined by Sidle and Lee (2010a) which provide
guidelines to establish that a particular technology in question is consistent with the definition of a reliable
technology.
At the reasonable certainty level required for proved reserves, we must demonstrate with empirical evidence that
estimates of EUR based on simulation are much more likely than not to increase or remain constant as more
historical data become available. For 2P (proved plus probable) reserves, we must demonstrate that EUR forecasts
are as likely as not as more reservoir performance data become available, and for 3P reserves, EUR forecasts must
remain possible though not likely. Empirical evidence that the required level of certainty has been achieved can come
from either hind-casting (successfully predicting the future based on only a portion of historical data) or from
demonstrated success from applying the same simulation technology in analogous reservoirs, in which the same level
of rigor was applied to ensure that the geological model or models used as the basis for simulation is appropriate and
that it honors all available information.
When the industry broadly accepts reservoir simulation as a reliable technology (when applied appropriately) suitable
for use in reserves disclosures and when it provides persuasive arguments about reliability to regulatory agencies, the
interests of all stakeholders in reserves disclosure efforts will be enhanced.
Background
Across all of engineering, the reliability of measurement and analysis methods is important for the confident use of such
work. In petroleum engineering and, in particular, in forecasting future production rates and the resulting recoverable volume
estimation, confidence in the results of evaluation methods drives critical business decisions. But until the Modernization of
Oil and Gas Reporting (2008) issued by the U.S. Securities and Exchange Commission (SEC), there was no industry
recognized definition for a reliable technology. In the modernization document, the SEC provided its definition of a
reliable technology, stating Reliable technology is a grouping of one or more technologies (including computational
methods) that has been field tested and has been demonstrated to provide reasonably certain results with consistency and
repeatability in the formation being evaluated or in an analogous formation. (The word formation is best interpreted to
mean reservoir in the context of this paper.) Later, the SEC clarified in further guidance (Compliance and Disclosure
Interpretations, 2009) that the reference to reasonable certainty in this definition did not limit the use of reliable technology to
proved reserves, stating Reliable technology can be used to establish (1) that probable reserves in undeveloped locations are

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as likely as not and (2) that possible reserves in undeveloped locations are possible but not likely. In the Petroleum
Resources Management System (PRMS, 2007), the term reliable technology is not defined, but the concept pervades and is
totally consistent with the philosophy expressed in the system.
Since the SEC provided no specific examples of such technologies or of a clear method to qualify a technology as reliable,
industry authors have offered suggested approaches to meet this new standard. Sidle and Lee (2010b) describe in SPE
129689 how the scientific method can be applied to demonstrate the consistency and repeatability required to satisfy the
reliability standard. This paper also includes the example of qualifying the pressure-gradient cross-plot technique for
calculating the elevation of an oil-water contact. Later, in SPE 134237, Sidle and Lee (2010c) show how a more complex
technology, seismic data analysis, can be qualified for estimating the location of a petroleum reservoirs water contact under
carefully screened conditions. In each of these examples, the challenge was to demonstrate that measurements made remote
from the actual location of the contact could be used to estimate the contact elevation. In these examples, the technologies
being qualified as reliable were used to establish the reliability of only one parameter, the OWC, that goes into a reserves
estimate. To our knowledge, there have been no demonstrations in the literature of how to qualify as reliable the technology
(or group of technologies) that generate the final reserves estimates. To do this requires establishing the reliability of the
reserves estimates themselves, i.e., the results in the definition of reliable technology. According to the SEC definition,
the reserves estimates (results) must be reasonably certain (if claimed to be proved reserves), consistent, and repeatable in
the formation being evaluated or in an analogous formation. Similarly, 2P reserves (proved plus probable, the usual business
forecast case) must be shown to be as likely as not, and 3P reserves must be shown to be possible, although not likely. This is
a significant challenge, not only for reservoir simulation but for any technology for generating reserves estimates that we
wish to qualify as reliable.
A reservoir simulation calculates fluid saturations and pressures across a broad area (the reservoir) and calculates how these
will change over time, as intra-reservoir migrations and fluid withdrawals (production) occur. This technology requires data
value estimation at all points over a large area (much away from well control) and the changes to these values over time make
the qualification as reliable a considerable challenge. Our testing and validation steps done as part of the application of the
scientific method must be complete and thorough to achieve the required consistency and repeatability. The required
consistency and repeatability are, of course, determined by the standard for the reserves classification. As noted above, a
simulation estimating 2P reserves will need to meet the standard that the resulting volumes are as likely as not to be
produced. The use of simulation as a reliable technology can result in proved, probable or possible reserves depending on the
level of confidence that can be demonstrated from the consistency and repeatability of the qualifying process.
In the past, the complexities of achieving a reliable reservoir simulation triggered cautionary statements from both the
Petroleum Resources Management System (PRMS) and the SEC. The PRMS (2007) states, While such modeling [as
reservoir simulation] can be a reliable predictor of reservoir behavior under a defined development program, the reliability of
input rock properties, reservoir geometry, relative permeability functions, and fluid properties are critical. Predictive models
are most reliable in estimating recoverable quantities when there is sufficient production history to validate the model
through history matching. The SEC, in its March 2001 website document Division of Corporation Finance: Frequently
Requested Accounting and Financial Reporting Interpretations and Guidance, Issues in the Extractive Industries - Definition
of Proved Reserves gives its then-current view of the limitations on reservoir simulation for proved reserves. The document
states, In a new reservoir with only a few wells, reservoir simulation would not be considered a reliable method to show
increased proved undeveloped reserves. With only a few wells as data points from which to build a geologic model and little
performance history to validate the results with an acceptable history match, the results of a simulation model would be
speculative in nature. The results of such a simulation model would not be considered to be reasonably certain to occur in
the field to the extent that additional proved undeveloped reserves could be recognized.
Important in these statements are the items of special focus: the validity of the static model construction (e.g., rock properties,
reservoir geometry and other property input data) and the demonstration of proper dynamics/physics modeling as shown by
an acceptable history match. Each of these will be an important element in the qualification of a reservoir simulation as a
reliable technology as discussed below in this paper. Also note that the SEC comments were specific for proved undeveloped
reserves, since all regulations of the day were limited to some form of proved reserves. A question then can be raised as to
what additional burden of validation is necessary for the use of simulation to support reserves of different categories. For
example, if a simulation model is built based on most likely or 2P case data, is it valid only for proved plus probable
reserves, or can 1P (proved) reserves be extracted from the results?
Procedure for Establishing Reservoir Simulation as a Reliable Technology
In this section we describe our recommended procedure for demonstrating that reservoir simulation is a reliable technology
for estimating reserves in a particular target formation. The procedure is based on the scientific method, as presented by Sidle
and Lee (2010b, 2010c). The steps are summarized as follows.

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1.
2.
3.
4.
5.

Identify the question to be answered (i.e., how can the reliable technology impact reserves estimation?).
Research the question and formulate a hypothesis (i.e., define the theoretical science behind the reliable technology
and hypothesize that the technology will be reliable under certain conditions).
Perform experiments, collect and analyze data (i.e., collect the empirical data to test the reliable technology).
Interpret the data, draw conclusions (i.e., validate or disprove the hypothesis) and document the results.
If necessary, revise the hypothesis and repeat steps 3 and 4 (especially important if the consistency and repeatability
of the results have not been demonstrated in the general case then a more limited or conditional application of a
revised hypothesis may be tested to narrow the situations when the technology may be reliable).

The scientific method starts with a question, the point of the work. For use in qualifying a reservoir simulation as reliable,
the generic question would be: Can the reservoir simulation model of Field X, Reservoir Y reliably predict future oil and gas
production rates until the end of productive life? Note a key point here: this paper will focus on the demonstration of
consistency and repeatability in the formation being evaluated, that is, the use of simulation as a performance trend
reserves estimation method where sufficient historical performance data can be used to validate model predictions.
Simulation can also be used in analog mode where the simulation model becomes the mathematical analog to the formation
being evaluated. Such analog use has different challenges for use in reserves estimation and is beyond the scope of this
paper.
The second step of the scientific method involves research of the question and the statement of a hypothesis. This may seem
a trivial step, but it can be quite important. If not properly considered, the simulation will never be successful. So what issues
need be addressed? Key characteristics of the reservoir to be modeled must be examined and understood. These may be
static model elements, such as complex fault positions or dual-porosity systems, or it could be dynamic elements, such as
compositionally complex fluid systems or handling thermal effects on the reservoir. The simulation software selected
obviously needs to have the capability to account for all important elements in the modeled reservoir and with the recovery
process. This capability should have been already demonstrated for other applications real fields or test cases to provide
confidence the simulation software will apply the correct physics given proper input data. This step also includes identifying
the key input data needed to provide the simulation software with the information needed for proper modeling. Once the key
elements are identified, the data required to initiate and/or enable the proper physics will be needed. For example, residual
oil saturation data will be needed to model a waterflood; gas-oil relative permeability data will be needed to model a gas
injection project. The more such key data are available to input into the simulation (as opposed to estimates from history
match adjustments), the higher the confidence we can have in the simulation predictions.
The hypothesis is that we can, within acceptable accuracy (e.g., within +/- 10%) forecast the EUR from the reservoir of
interest using a reservoir simulation model. In most cases, this hypothesis will require that at least two conditions be satisfied:
(1) that the static model (that is, the geological model and other input properties) is consistent with available data on the
reservoir and valid for use in a simulation model; and (2) that the simulation model dynamics are accurate representations of
the physics that will be encountered in producing the reservoirs as expected in the development plan.
Testing the hypothesis is the third step of the scientific method. This is commonly described as model review and validation.
This testing can include both hind-casting [matching only a portion of available historical data (e.g., half) and forecasting the
remainder to within acceptable accuracy, such as EUR predictions within 10% of observed performance] and forecasting
(predicting the future, and comparing predictions with actual reservoir performance as it unfolds, using similar critera for
validation). Alternatively, we can test the hypothesis with an analog reservoir [characteristics that control recovery efficiency
same in both target and analog reservoir, as explained by Sidle and Lee (2010a)] in which we use the same techniques to
build the static model and simulate the performance.
The final step of the scientific method is documentation of the conditions (simulation principles and practices) under which
reservoir simulation is a reliable technology for the target formation. As discussed above, the documentation should include
clear descriptions of original model construction, data sources, assumptions, adjustments, sensitivities, results and final
conclusions. It should also contain suggestions for key future data to secure to narrow uncertainties and improve the
consistency and repeatability of the model results. Documentation could also include how to use the technology properly in
updates to the target reservoir as well as in other applications. If the simulation is to be used for reserves estimation in future
periods, then annual updates including updated history matches are also needed. To remain a reliable technology, the
simulation must remain current with actual performance.
Reliable Reservoir Simulation Principles and Practices
In this section we describe what we believe to be reliable reservoir simulation principles and practices. In other words, if the
reservoir simulation principles and practices outlined in this section are followed, we believe that in most cases filers will be
able to qualify reservoir simulation as a reliable technology for estimating reserves in the target reservoir. However,

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following these principles and practices does not establish reservoir simulation as reliable with certainty, and it does not
guarantee that reservoir simulation can be certified as reliable. As described in the preceding section, it is still incumbent on
the filer to provide sufficient evidence (e.g., hind-casts or forecasts compared to actual production) in the formation of
interest or analogous formations to substantiate that reserves predictions from reservoir simulation under certain specified
conditions are reliable at a standard commensurate with the reserves category.
The required evidence includes the following:
We must demonstrate that we have incorporated ALL data (geologic, engineering, static, dynamic, etc.) in the reservoir
model.
We must demonstrate that we have quantified the FULL range of uncertainty in EACH data item (geologic, engineering,
static, dynamic, etc.). Note that this includes considering the uncertainty in the pressure and production data that are
being matched.
If we use discrete (scenario) analysis (e.g., if we use three models representing the 1P (low estimate), 2P (most likely
estimate) and 3P (high estimate) cases), then we must demonstrate that the discrete approximations are representative of
the entire distribution (i.e., the 3 models fall at the appropriate spots on the entire distribution).
In the forecasts, we must demonstrate that the configuration of wells and well constraints matches the PROJECT under
which the reserves are being defined.
We must demonstrate that there is a smooth transition from history to forecasts. If reserves are being determined under
future conditions different from current conditions, we must first demonstrate in a status quo case that the transition is
smooth.
A good summary of key steps in model review and validation appears in SPE 96410 by Rietz and Usmani (2005). Although
this paper refers to issues related to qualifying a simulation model for SEC Proved reserves estimation under preModernization regulations, the steps listed are applicable to all reserves categories. We suggest additional considerations to
include with the steps listed by Rietz and Usmani on these topics:
Determine the intended ultimate use of the simulation model
Check for reasonableness in model construction, especially key input parameters
Review all variations in the model from the field data for proper justification (a physical reason why the adjustment
was made) also note the impact on the model predictions
Assess the history match Field level and local/well level for all measured reservoir performance data including
pressure and produced fluids
Investigate the transition from history match to forecast periods for status quo and other cases test model forecast
by matching only early history then forecasting later history
We elaborate on each of these points below.
1.

2.

3.

Intended use While the intended use of a simulation model within the context of this paper is quite clear to estimate
reserves the original purpose when the model was constructed may or may not have been the same. This is important
as a different original purpose could suggest model aspects that will need more thorough examination as the model is
adapted to reserves estimation.
Model construction The reliability of a simulation model must start with the confidence that the model construction is a
valid representation of the target field/reservoir. This requires adequate hard data, that is, direct measurements of
reservoir rock and fluid properties sufficiently sampled across the reservoir to provide a good characterization. These
data include, for example, core data, well log data, pressure data (including transient tests) and fluid samples. The data
can also include seismic data where the reliability of such data has been demonstrated (for example, see Sidle and Lee,
2010c). In a perfect world, ample hard data will be available to provide multiple sources of consistent measurements for
simulation input. But in the real world, there will be data gaps where other sources of input data will be needed or
where there are conflicts among the sources of hard data. In the documentation supporting model construction, these
situations should be noted and the chosen resolution explained. Also, a reasonable range for such input parameters
should be defined to limit the variations to rational values. One practice for such data gaps is to find needed data from
analogous reservoirs preferably as hard data, but also as derived from the analysis of the analogous reservoir (perhaps
via a history matched simulation). When this is not possible, then it may be necessary to use industry standard practice
methods. This should be based on rational assumptions and give physically realistic results. In this latter case, we should
analyze sensitivities to the assumptions made to define the basis for choosing a given case over the alternatives.
Model adjustments - Even when the initial model construction relies on ample hard data, it may be necessary to make
some adjustments to achieve a proper history match. These adjustments should be clearly documented including what
model aspect defined the need for a modification, what changes were made (describe each), and how these changes
impacted model results (both in the history match period and for the forecast). One good test of the appropriateness of
adjustments is: was the parameter adjusted initially defined by hard data or by an assumption made to fill a data gap?
Obviously, one would expect that an adjustment might be needed to fine-tune an assumption but it would be unusual to

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adjust an input parameter sourced from hard data beyond its likely range, at least until adjustments to all other less
certain input had been tried. Often sensitivities are run to fine-tune the final adjustment. These should also be noted in
the documentation. Each change away from the likely range of an initial input value, especially input from hard data,
should be justified as physically realistic including supporting information. Also, the changes should be made within the
range of uncertainty initially defined for input variable values. Changes made just because this gives a better match are
often questionable and reduce confidence in model predictions.
4.

History match Quite a lot of general history match guidance has been provided in other references [Rietz and Usmani
(2005); Mattox and Dalton (1990); Ertekin, Abou-Kassem and King (2001); Carlson (1997))]. These instructions should
be considered with the points made here as additional and complementary guidance.
First go back to intent and specifically what form the sought reserves will take. For example, if the reserves are for
ownership of an entire reservoir, then minor variations in individual well matches may be acceptable. But if the reserves
are for a single lease/well in the reservoir, then a good match for that local area must be achieved. Likewise consider if
the reserves are for producing wells where the simulator merely extends historical trends or for an undrilled location,
especially if distant from well control in such situations different tolerances will be allowed for the history match. For
example, a good prediction of initial rate is needed for the undeveloped reserves but will not be important for existing
wells. Also consider the dynamics important to the forecast period. Some examples: Does the simulation model show a
good match of water-cut and timing for downdip wells for a reservoir expected to experience water drive recovery from
a strong aquifer? Does the model handle gas production properly in updip wells for a reservoir where gas cap drive will
be important? Production and pressures are common match parameters, but other measured data may also be important.
For example, in a thermal recovery simulation, data from temperature observation wells and measurements of produced
fluid temperatures can also provide match confirmation. Perhaps 4-D seismic, if judged to be of high quality, can be
used. Also if tracers were used in an injection project, tracer break-through timing and well location are possible match
parameters.

5.

Assessment of Simulation Quality and Confidence In Rietz and Usmani (2005), this is the ninth step: Consider the
overall static model quality and dynamic model performance (history match) is it good enough for reserves estimation,
and if so, at what confidence level? Once the best match is achieved and the simulation work documented, the key
question becomes how well can this simulation predict future performance? While a judgment based on the quality of
the history match is always important, the demonstration of a successful hindcast test is strong evidence of reliability.
This test is done by forecasting later history based on a history match of early history. For example, use a portion of the
history data (half or two-thirds, enough for a viable match) to predict the remaining history (again enough to be a
meaningful test). This is, in fact, an important way of testing the hypothesis that the simulation of the reservoir of
interest is a reliable technology. An especially valuable period for a simulation prediction of history is a period of
significant operating change to the reservoir. Does the simulation physics match what really happened in the reservoir?
A very good example is a field shut-in period, especially when wells are equipped with down-hole pressure gauges. This
may a planned shut-in as for extended facilities maintenance or an unplanned shut-in for such as offshore for severe
weather (e.g., hurricanes/typhoons).
So how can we demonstrate achievement of the reliability standards of consistency and repeatability? Certainly the prior
use of the simulation software in comparable situations (e.g., reservoir geometry, recovery mechanism) is supportive.
But often the simulation will be unique to a reservoir setting. In such cases, the consistency of accurate hind-cast
results across the dimensions of space (across the reservoir) and time (both immediately after the match period until the
end of actual history) give confidence for this standard. Repeatability can be judged by varying key assumed input data
via sensitivity cases to show either (1) the variation has little/no impact on predictions (thus reserves) or (2) the variation
causes a clear deviation during the history match period (during or before the hind-cast period). Either of these
outcomes gives confidence that the simulation results are reasonable. If the outcome of this sensitivity is a material
impact on predictions while still giving a good history match, this does not necessarily invalidate the simulation, but it
does help quantify the range of uncertainty in the simulation results and can provide distinctly different 1P, 2P, and 3P
reserves estimates. If the necessary consistency and repeatability is shown, then that use of simulation will be a reliable
technology at the appropriate level of certainty (e.g., as likely as not for a 2P reserves estimate or much more likely
than not for a 1P estimate).
In the end, the assessment of the simulation including how much hard data went into the model, what adjustment was
made to the original data, how good is the history match and especially the hind-cast must be made to measure the
confidence of the prediction (i.e., reserves) against the standards of reserves definitions. This reliable technology may
achieve reasonable certainty or may be as likely as not. To improve confidence in simulation results, we can compare
these results to those from other methods of reserves/EUR estimation. When multiple methods, based on different
technologies or data confirm a reserve estimate, uncertainty is reduced.

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The suggestions above for establishing the validity of the model can appear to be overwhelming, and, in many cases,
cannot be fully achieved. While a validated static model, established with rigorous standards, certainly adds credibility,
we should keep in mind that the modernized SEC rules (which are consistent with PRMS in this respect) are principlesbased, which means that the focus is more on outcomes than on inputs derived by following rigidly prescribed
procedures. Thus, if either hind-casting or use of analogs demonstrates that our static model and dynamic modeling
procedures consistently (e.g., 90% of the time or more for 1P reserves) produces forecasts of EUR that vary by no more
than a specified amount (e.g., +/- 10%), then we have met the criterion for reliable technology because we have based
our method on sound scientific and engineering principles and we have demonstrated consistency and repeatability in
forecasting. In short, when we meet these conditions, we have established that simulation is a reliable technology in the
reservoir of interest using the approach we have proposed for establishing the static model and for modeling dynamic
reservoir performance.
Deterministic Reservoir Simulation for Reserves Estimation
In the sections above, we have outlined a deterministic approach to reservoir simulation and suggested use of scenarios,
leading to low (1P), most likely (2P), and high (3P) outcomes. An alternative is a full probabilistic approach, considering the
full range of outcomes; however, discussion of that approach is beyond the scope of this paper and could be the subject of a
future paper.
Because other approaches are clearly possible and potentially equally valid, we cannot claim that the simulation principles
and practices outlined above represent the only approach that can be used to certify reservoir simulation as reliable. However,
the process for certification of simulation as reliable would be the same. It would be necessary to demonstrate (by testing of
an appropriate hypothesis with a sufficient number of hind-casts or forecasts in the target formation or analogous formation)
that reserves are estimated reliably (at a certainty level appropriate for the reserves category).
Example Simulation Strategies
Case I Known static model, new recovery process Reservoir simulation can be a reliable predictor of reservoir
performance when the static model is well known but the recovery dynamics are complex. The simulator allows the
sometimes multiple elements of physics of a complicated producing operation to be represented properly in an integrated
analysis. Consider an example: An actual field that we shall call Field A produced from a shallow, very high quality sand that
was bounded by an updip fault and a moderate aquifer downdip. The reservoir was long in the strike direction and narrow
along the dip direction. To produce the medium heavy oil on primary, many wells were drilled and produced until the
advancing water reached the economic limiting water cut. With a poor mobility ratio, oil recovery was also poor, leaving a
significant residual oil saturation as an EOR target. With the data from the primary production period, an excellent static
model could be built including the evidence of connectivity across the reservoir. Using this model and a significant amount
of research laboratory work on physical models to understand the dynamics of a vertical steam displacement in this reservoir,
the technical basis for an EOR pilot was justified. The project required aquifer production wells to hold back water
production and achieve the low pressure needed for good steam injection and steam chest development. With the several
dynamic elements involved in the project, reservoir simulation became an important tool to monitor and predict performance.
After a pilot and initial development phase operations in a portion of the reservoir, the reservoir simulation model was built
and adjusted to match these several dynamic elements. This simulation model was used to predict performance in the
reservoir for continued steam injection operations. The uncertainties of the forecast production and reserves were more in
operational dynamics and were honored to create both a high-confidence case and a most-likely case. For cases where project
conditions were changed, such as alternative end-of-field-life operating strategies, most likely cases were modeled to
investigate the optimal strategy. So, for this example, reliability was achieved from a known geologic (static) model and
laboratory demonstrated process physics combined in a reservoir simulation that was matched to both a primary production
history (to validated the static model) and pilot/initial development results (to validate the simulation of the dynamic
process). Here a single model was used for both 1P and 2P scenarios with only operational conditions changed to represent
the principal remaining uncertainties.
Case II Uncertain static model, known recovery process In this case, the static model for the Field B was uncertain due
to limited well data across the field. But other data were then used to limit uncertainties for the simulation model predictions.
Specifically, as more performance data becomes available over the life of a producing field, the combination of this data from
a well-monitored field and the knowledge of the static model uncertainties of the reservoir can be analyzed by alternative
reservoir simulation cases to narrow forecast production and reserve uncertainties. In a large, water-drive, high permeability
gas field, this combination of data was used to define the high confidence reserves case. The field was developed by multiple
wells from two platforms at the westerly updip area with a large dipping flank to the aquifer on the east. While good seismic
data existed to map the eastern flank, the drilling data were confined to the western area. So there were some static model
elements where significant uncertainties remained during early years of production. The reserve evaluators built multiple
static models to represent a range of internally consistent scenarios from the most likely (2P) case to a worst case, i.e. one

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with the lowest potential gas recovery. At first, even the worst case model could be history-matched with the early year data.
In these years, well rates, pressures and the absence of water produced in the most down dip wells could fit any of the cases.
In later years, some simulation models were shown clearly wrong. For example, the model began producing water when the
field had not. Also, other dynamic data from the interference of the two producing areas were not matched. As time
progressed and more data became available, other static model cases were eliminated as viable matches. By now the
performance data included gas and water production rates, pressures and results of 4-D seismic to identify areas of poor
recovery. Each year, an updated history match of all remaining viable models is done to eliminate any cases where the static
model is shown inconsistent with known recovery physics and the performance data. Then future production and proved
reserves are estimated using the most conservative simulation case that does fit the data.
In this example, the 1P case was the most conservation simulation model that gave a good history match of the performance
data to the date of reserve estimation. The 2P case was the scenario judged most likely and which also had a good history
match but had a higher estimate of reserves.
Summary and Concluding Remarks
Simulation can be validated as a reliable technology and thus used to estimate reserves of any category for a specific
reservoir using a specified methodology for building the static reservoir model and for modeling dynamic reservoir
performance. The validation broadly comes from application of the scientific method to determine whether a proposed
approach is reliable or not. More specifically, the scientific method requires that we use the most appropriate technology
available and that we use data in our computations that are consistent with all measurements available, honoring appropriate
ranges of uncertainty. Since the modernized SEC reserves reporting rules are now principles-based (as are PRMS
definitions), the validation step in the scientific method is more focused on outcomes than on inputs (as long as the inputs are
based on solid science). When we can demonstrate, by either hind-casting or analogy, that our methodology produces results
at the appropriate certainty level, we have then demonstrated that simulation is a reliable technology as applied in the
reservoir of interest. We do not have any basis for generalizing this conclusion.
In the paper, we raised the question: Can 1P reserves be extracted from a simulation designed to estimate 2P reserves? The
answer: yes, if the results from the simulation meet the certainty standards required for 1P reserves, particularly that the
simulation produces EUR forecasts to within specified tolerance of accuracy, much more often than not (e.g., more than 90%
of the time). We must focus on outcomes.
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SPE 146524

Sidle, R.E. and Lee, W.J.: Demonstrating reasonable certainty under principles-based oil and gas reserves regulations. Paper 146530
presented at the SPE Annual Technical Conference and Exhibition held in Denver, CO, 30 October 2 November 2011. SPE 146530PP.