SPE 143843

Reserves Follow-up Using an Integrated Deterministic-Probabilistic

Approach
Hugo Araujo, Repsol-YPF and Aquiles Rattia, Repsol-YPF

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 October–2 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
Currently, the deterministic methods for reserves estimation are the preferred method for both, companies and the U.S.
Securities and Exchange Commission SEC. Last year, the SEC published the modernization rules for reporting oil and gas
reserves where both, the deterministic and probabilistic methods, were accepted as valid methods for reserves estimation. In
addition to the compulsory reporting of the oil and gas proved reserves, the probable and possible reserves were recognized
to be disclosed in SEC filings for the first time, although it is optional for these two categories. In this paper the integrated
deterministic-probabilistic approach is briefly reviewed, the cumulative probabilistic lognormal plots are used instead of a
full Monte_Carlo simulation, and a procedure is proposed using these plots to follow up the reserves evolution in time.
Plotting the deterministic reserves using probabilistic scale often reveals deviations with regards to the expected lognormal
cumulative probability distribution behaviour, shown by real case examples. The corrections to obtain a better fit for the
probabilistic distribution suggest to either changing the probable or the possible reserves or both. Furthermore, the slope of
the probabilistic plots appears to be related to the uncertainty level of the probable and possible reserves. This property was
used to follow up the reserves behaviour in time, finding consistency with the idea that as the fields are developed the level of
uncertainty should be progressively reduced. Examples of the reserves follow up are also presented. The contribution of this
paper is oriented to a practical use of an integrated deterministic-probabilistic approach as a complementary tool for reserves
estimation for consistency with the probabilistic behaviour. The follow-up procedure of the reserves resulted to be quick and
simple but powerful as indicator of the reserves evolution.

Introduction
The high risk investment in the petroleum industry has motivated the use of probabilistic methods as a tool to improve
results. The formal adoption of these probabilistic methods in exploration and production (E&P) began around the 1980’s9.
In the following years most companies chose to incorporate the methods of risk analysis as a standard tool in exploratory
projects. The mathematical methods that are predominantly deterministic have been used to estimate and classify reserves in
the production area. This is essential because an adequate valuation of the estimated reserves is needed for the decisions
taken during capital investment (acquiring fields, development of fields, etc).

The regulations from Securities Exchange Commission (SEC) of 1978-1982 were oriented towards the deterministic methods
and limited to proved reserves. As technology began to advance and develop, regulations began adopting modifications5.
Early on the year 2009 the SEC took a big step by publishing the modern definitions and regulations SEC33-899510, that was
effective on January 1, 2010. The modernization of the SEC regulations recognized probable and possible reserves and
allowed these to be published in addition to the proved reserves. The uses of deterministic and probabilistic methods were
also recognized as a tool to estimate and classify reserves. Capen1 proposed in 1993 to handle proved, probable and possible
reserves analytically by using a linear tendency in a lognormal probabilistic distribution. In 1994 Patricelli and Mc Michael8,
and later Nangea and Hunt7 in 1997, proposed to evaluate reserves through deterministic-probabilistic approximation using
the MonteCarlo simulation. In this paper the deterministic-probabilistic integrated approximation is applied using the
cumulative probability on a probabilistic lognormal graph instead of the MonteCarlo Simulation.

The results are meant to be a simple tool for the use of a correct diagnostic of the probabilistic behaviour of the reserves, and
to complement the estimation of the reserves from deterministic methods. Furthermore a new approximation is introduced
2 SPE 143843

that follows the evolution of the behaviour of the reserves through out time in a practical and simple manner.

Reserves and Probabilistic Definitions

The diagram in Figure 1 summarizes the classification of reserves and petroleum resources12 in accordance to the
SPE/WPC/AAPG/SPEE (PRMS)11. From left to right the level of uncertainty decreases and from bottom to top the maturity
of the projects increases until it reaches commercial levels. This paper analysis the projects that have reached commercial
maturity meaning proved, proved plus probable and proved plus probable plus possible reserves.
RESOURCES CLASSIFICATION SYSTEM Project Maturity

LOW RISK
COMMERCIAL PRODUCTION
TOTAL PETROLEUM INITIALLY IN PLACE (PIIP)

On Production
RESERVES
DISCOVERED PIIP

Approved for Development

1P 2P 3P

PROJECT MATURITY
PROVED PROBABLE POSSIBLE Justified for Development

Development Pending
SUB-COMMERCIAL

CONTINGENT RESOURCES Development Unclarified

or on Hold
1C 2C 3C
Development not Viable

UNRECOVERABLE

Prospect
UNDISCOVERED

HIGHER RISK
PROSPECTIVE RESOURCES
Lead
High
PIIP

Low Best
Estimate Estimate Estimate
Play

UNRECOVERABLE

LOW RANGE OF UNCERTAINTY HIGH

Figure 1. Petroleum resources classification

10
According to SEC , the definition of Oil and Gas Proved Reserves found in the Rule 4-10(2)(2) of the S-X Regulation of the
Securities Exchange Act of 1934 amended in 2008 states: Proved Oil and Gas Reserves are those quantities of oil and gas,
which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically
producible-from a given date forward, from known reservoirs, and under existing economic conditions, operating methods,
and government regulations-prior to the time at which contracts providing the right to operate expire, unless evidence
indicates that renewal is reasonable certain, regardless if whether deterministic or probabilistic methods are used for
estimation.
On the other hand, the rules of modernization of SEC10 states: “The concept of Reasonable Certainty implies that, if
deterministic methods are used, reasonable certainty means a high degree of confidence that the quantities will be recovered.
If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal
or exceed the estimate.
Petroleum companies were already and are still estimating the complete picture of their reserves internally. Now that the SEC
regulations have recently been updated, it is clear that proved reserves must be revealed publicly to financial markets while
probable and possible reserves have the option to be published or not. According to the modernization rules of SEC10 and in
conformity to the Petroleum Resources Management System (PRMS)11 definitions established by the
SPE/WPC/AAPG/SPEE , probable reserves are defined as:
Probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which,
together with proved reserves, are as likely as not to be recovered. When deterministic methods are used, it is as likely as not
that actual remaining quantities recovered will exceed the sum of estimated proved plus probable reserves. When
probabilistic methods are used, there should be at least a 50% probability that the actual quantities recovered will equal or
exceed the proved plus probable reserves estimates.
Lastly possible reserves10,11 are defined as:
Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. When
deterministic methods are used, the total quantities ultimately recovered from a project have a low probability of exceeding
proved plus probable plus possible reserves. When probabilistic methods are used, there should be at least a 10% probability
that the total quantities ultimately recovered will equal or exceed the proved plus probable plus possible reserves estimates.
From now on the following abbreviations will be used. Proved reserves will receive the nomenclature of P1 or 1P; probable
reserves will use P2, and possible reserves P3. Proved plus probable reserve will be assigned 2P. Proved plus probable plus
possible reserve will be assigned 3P.

Reserve Estimation Methods

Reserves estimation can be made by using one or various methods and it is even recommended and convenient to compare,
when possible, the different methods applied. Focusing on the available information, estimating reserves can be processed
SPE 143843 3

through static methods or dynamic methods. The equations used in these methods can either be through a deterministic or
probabilistic method. A very popular tool of the probabilistic method is the MonteCarlo simulation. The different methods
that can be used in estimating reserves are illustrated in Figure 2.

Reserves
Estimation
Methods

Static Dynamic

Material Production Numerical

Analogy Volumetric
Balance Decline Simulation

Figure 2. Reserves estimation most popular methods

The static method mainly refers to volumetric and analogy calculations which use information obtained from rock properties
and the geometry of the field. The dynamic method refers to techniques that use production information and pressure of the
wells. The level of certainty that each method provides depends on the quality and quantity of the information used. Since the
first stages of exploitation and development of a field lacks of sufficient production information and therefore does not
clearly indicate how the field will decline and/or how the reservoir will deplete. Given this case, it is recommended to apply a
volumetric or analogy method.

As a field develops, more is known about it which causes proved reserves to incorporate. More and new information about
the properties of the rock, the geometry of the field, and the registered production and pressure rates along time allow for the
correction of given estimated reserve values, establish the declining rates of the field and the type of reservoir energy. This is
why additional probable and possible reserves are distributed based on the level of certainty at a given time. From this
reasoning it is preferable to use static methods during the first phases of field development and dynamic methods of material
balance, decline curves and numerical simulation during the middle and mature levels of exploitation.

In addition to the deterministic methods mentioned there also exists a probabilistic method which is the probabilistic
application on the already mentioned methods. This means that instead of working with a set of points from the parameters of
each equation, a variability range of each parameter is used. This results in a broad range of the reserve’s probability where
proved reserves, proved plus probable reserves, and proved plus probable plus possible reserves are defined by particular
percentiles. In certain cases it is preferred to use the probabilistic method in early stages of development, but this does not
take away its value and utility in more advanced stages of development and exploitation of the field. Figure 3 illustrates in a
general manner which method is used on the different levels of development of the field.

INITIAL EARLY MID LATE

METHOD APPRAISAL DEVELOPMENT PRODUCTION PRODUCTION PRODUCTION

PROBABILISTIC

ANALOGY

VOLUMETRIC

M.BALANCE

DECLINE

SIMULATION

Figure 3. Reserves estimation methods application according the field development and exploitation stage of a field.

Reserves Volumes Cycle

Reserve values are updated periodically, usually every year. In a given year there may exist half-yearly or quarterly updates
depending on the importance of movements and activities in a given company. From all these movements and activities there
are those that increase the value of the reserves and those that decrease the value.
4 SPE 143843

Movements that add reserves include the development of a discovered area, extensions found during the development of an
area, recent discoveries from explorations of the company, and the implementation of recovery methods. Other additions can
be through contracts and revisions of an already made contract that favours the increment of reserves by for example
extending the period of exploitation, acquisition of areas with proved reserves, or through the revision and corrections made
to previous estimations.
Movements that decrease the value of a reserve include the extracted production of fields in operations, sells of certain fields
or actions that were being undertaken in that field, contracts and revisions of an already made contract that reduces field
participation completely or by shortening the time frame for exploitation of a field. Revisions and corrections made to
previous estimations may also reduce the value of a reserve. All the previously described events are illustrated in Figure 4
with a plus or a minus sign identifying which actions increase and which decrease the value of a reserve.

+ +
t Impr
me n oved
elop Re
Dev +- co ve
ry

<<

R e & ts
Acquisitions Sales

ac

s
Reserves

io n
+ Reserves
n tr

-
Initial Co

vis
Final

+
Ex
t en
sio
ns
& tion
Dis
c ov
e
- Produc
rie
s

Figure 4. Events influencing the reserves during an estimation cycle

The final volumes of reserves are results of the expected production profile and the economic evaluation. The phase that
increases a reserve the most is during its first years when it is being developed and new wells are being drilled. An excess of
optimism will in a few years be noticeable and therefore the values must be corrected. This is why it must be noted what can
be done so that all profiles are consistent and actually represents the case.

Deterministic-probabilistic approach
How confident are we about changes, increases and decreases in reserve volumes that we are establishing for the new cycle?
Events and experience in industry have taught us that we must play safe when handling reserve volumes and cautious when
revising them. Being cautious does not necessarily mean being conservative since being too conservative will reduce the
value of a company. While working on the revisions certain concerns come up such as are production profiles consistent? Are
new production forecasts being corrected? Are the reserves overbooked or under booked? How consistent are the probable
and possible reserves? Are the reserves growing at a reasonable pace? Is the EUR consistent or too erratic? The following
steps can be used to obtain a quick view of the situation that will lead to answers that can be used as an aid during reserves
evaluation.

1) Check reserves and prediction profiles

2) Check Np + Reserves and EUR trends
3) Check the Cumulative Probability Distribution of deterministic reserves
4) Perform a Deterministic-Probabilistic Follow-up
These four steps are better illustrated in the following two real life cases.

Field Case 1

The field of interest has information about revised production profiles for each annual cycle that are linked to economic
evaluations. Figure 5 illustrates the reserve values 1P, 2P and 3P that correspond to the production profiles 1P, 2P and 3P of
Figure 6. Once the predicted production profiles are available as illustrated in Figure 6, how could we have a quick hint of the
level of accuracy in these prediction profiles?
SPE 143843 5

2010

250000

200000

OIL (kstb)
150000
2010
100000

50000

0
1P 2P 3P
Reserves

Figure 5. Current reserves for field Case 1

1000
History
Forecast
Oil Production (kstb/d)

100

10

1
2000 2010 2020 2030 2040
Year

Figure 6. Production profiles for the 1P reserves (green circles), 2P reserves (red squares) and 3P reserves (blue triangles). Production
history in green filled circles.

The proposed idea is to do a follow-up of previous profiles and verify the deviation level in relation to observed production
and if possible observe the corrections that were made. This is illustrated in Figure 7 in which we can appreciate the
production profiles that were in their moment the basis of reserves from previous years. The figure shows only the predicted
profiles of proved reserves production, 1P, every two years from 2001 to 2009 plus the profile from the end of the year 2010.
The same analysis can be made with profiles 2P and 3P. Note that these profiles have two revised contracts that extend the
time frame of exploitation of the reserve area exposed. In other cases there exist similar cuts due to economical reasons.
Observe how the profile for 2001 was optimistic, at least for the first years, in relation to the historical production.

1,E+03
Oil Production (kstb/d)

1,E+02

1,E+01

1,E+00
End of
Contract

1,E-01
2000 2010 2020 2030 2040

Prod.Oil 1P 2001 Year 1P 2003 1P 2005

1P 2007 1P 2009 1P 2010

Figure 7. Production profiles of the 1P reserves for the years 2001, 2003, 2005, 2007, 2009 and 2010. Production history in green filled
circles.
6 SPE 143843

The corrections made during the next cycles were effective and realistic in adjusting the starting point although the
corrections made were conservative in relation to the real production for future years. So the corrections were progressive
which is why there is very little difference between predicted profiles from 2009 and 2010. This indicates a positive maturity
of field knowledge and adds trust to the values made during the last cycle.

The next step, check Np + reserves and EUR trends, consists of adding the cumulative production to the 1P and to the 3P
reserves and observe the trends. To understand what we are going to do we must first understand how the Estimated Ultimate
Recovery (EUR) works. According to SEC10 and the PRMS11, reasonable certainty implies high degree of confidence, that
quantities will be recovered, meaning that as new data becomes available, the EUR is much more likely to increase or
remain constant than to decrease.

To calculate the EUR value the approximation given by Swanson is used with the following equation:

EURSwanson = Np + 0.3 *1P + 0.4 *2P + 0.3 * 3P

Table 1 illustrates the values of the cumulative production Np for each cycle, the Np + reserves 1P, 2P, and 3P; the EUR
value, and the recovery maturity of oil. The recovery maturity can be calculated through the relationship between cumulative
productions, Np, and the last EUR, in this case the EUR estimated in 2010. The recovery maturity Np/EUR is the recovered
fraction of the estimated final EUR. This fraction must not be confused with the recovery factor which is a fraction of the
original oil in place. It is assumed that the last EUR value estimated is the most probable to be close the final real value.
Cumulative Reserves plus Cum Production Recovery
Year Production Maturity
Kstb Np + P1 Np + 2P Np + 3P Np / EUR 2010
EURSwanson
2003 115 141292 319015 396515 288948 0,0002
2004 3628 204725 446229 553938 406090 0,005
2005 17448 204725 415790 515793 382472 0,025
2006 37839 259405 555880 657326 497371 0,054
2007 64783 337424 631213 800045 593726 0,092
2008 100668 492788 698015 792072 664664 0,143
2009 136143 541766 698015 792072 679358 0,193
2010 178133 598762 708788 810412 706267 0,252

Table 1. Case 1. Field reserves and production data

The final EUR will only be known at the end of the field exploitation. Figure 8 illustrates Case 1 in which it can be observed
that the apparent final EUR tends to follow the value marked by the dashed blue line. This blue line was drawn by the mean
of the EUR points from the last four years.

The green triangles and the green dashed line indicate proved reserves, 1P + Np. The initial values are low as expected. As
the field is developed these reserve values increase and is consistent with the observation made with the production profiles
in Figure 6. The 3P + Np reserves are identified with red circles and a red dashed line. Initial values are too low contrary to
what would be expected to start at a higher value, above the blue EUR dashed line. As the field is developed the 3P reserves
were increasing, but only after the fifth year were the values above the blue EUR dashed line. During the last years the values
were somewhat constant and above the blue EUR line. Due to conservative values of 2P and 3P reserves, the EUR marked
with blue squares and a solid blue line has initial values that are too low.

1200000
Np + 1P ; Np + 3P ; EURSwan (kstb)

1000000

800000

600000

400000

200000

2006 2008 2010

0
0,0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9 1,0
Recovery of Recoverable Oil (fracc)

Np + P1 Np + 3P EURSwanson

Figure 8. EUR plot versus recovery of the recoverable oil.

SPE 143843 7

As we can see there is a cone shaped zone limited by an orange dashed line. This area is refered as the uncertainty bell. It was
constructed following the increasing trend of 1P + Np values and then extending the line until it reaches the blue EUR dashed
line. The upper part of the bell is a mirror of bottom trend. Looking at this bell we would expect that the 3P reserves should
have had higher values.

In Figure 7 we can observe that the contract was extended twelve additional years starting on 2008. This contract extension
affected the apparent final EUR value that is now being traced. Since this option was not considered at early stages the 3P +
Np reserve initial values stayed very low. In any case, during the initial phases of 3P reserves evaluation an effort should be
done to also consider many possible events. This means that we should not be as conservative as we have been so far, but this
does not mean that we should not be cautious. As the knowledge and development of a field advances the uncertainty
decreases, the proved reserves + Np increases, and the 3P + Np reserves decreases in a converging direction towards the blue
EUR dashed line.

Step 3, check the deterministic reserves in the cumulative probability distribution, consists of plotting the deterministic values
of 1P + Np, 2P + Np and 3P + Np reserves on a cumulative probability lognormal plot. If the values are consistent a linear
trend should be observed. To verify this linearity a MonteCarlo simulation was performed for a gas reservoir using the
volumetric equation in Crystal Ball software by running 20,000 simulation runs for each realization until the deterministic 1P
was reached.

Reserves = [A * H * N/G * * (1-Sw) * FR * Bg]

Where

A Area [L2]
H Gross thickness [L]
N/G Net to gross ratio [fracc]
 Effective porosity [fracc]
Sw Water saturation [fracc]
FR Recovery Factor [fracc]
Bg Gas volume factor [estandar conditions / reservoir conditions]

Each parameter has a probabilistic distribution given in Table 2. The results are presented in Table 3 and 4.

Variable Units Distrib Mean Min Max Std.

Dev.
Area Acres Normal 1935 542 7054 6.35
Gross ft Lognormal 599 138 920 85
Thickness
Net/Gross Lognormal 0.536 0.1 0.8 0.01
Porosity fracc. Lognormal 0.057 0.02 0.08 0.1
Water fracc. Lognormal 0.37 0.14 0.65 0.1
Saturation
Volume scf/cf Uniform 215 210 220
Factor
Recovery fracción Lognormal 0.65 0.3 0.95 0.1
Factor

Table 2. Probability properties of the parameters used in the volumetric equation

8 SPE 143843

Units Results
Number of Runs 20.000
Std Dev 41526
Mean BCF 137.4
Median BCF 132.5
Mode BCF 123.0

Table 3 Main results of the MonteCarlo simulation

Percentil Results Percentil Results

BCF BCF
0.01% 32.4
10% 88.6 60% 143.1
20% 101.9 70% 154.6
30% 112.8 80% 169.8
40% 122.5 90% 193.3
50% 132.5 99.9% 407.1
Table 4 MonteCarlo simulation results

The reserves values corresponding to 10, 20, etc percentiles were graphed and are shown in Figure 9. As can be seen, the plot
has a probabilistic scale on the y-axis and a logarithmic scale on the x-axis (reserves). The results show a linear trend. If only
the P10, P50 and P90 percentiles were to be graphed it would follow the same linear trend. It must be noted that on the left
hand side of the graph the cumulative probability F(x) scale is increasing and on the right hand side of the graph the chance
of occurrence fln(x) scale is decreasing. This is due to the following property
fln(x) = 1 – F(x)

The corresponding reserves are as follows

1P = P90 = 10% Cum Probability = e-1.28

2P = P50 = 50% Cum Probability = e
3P = P10 = 90% Cum Probability = e+1.28

99.9 0.01
Cumulative Probability, Percent

Chance of Occurrence, %

99 1
98 2
94 6
90 10
80 3P 20

50 50
2P
20 60
10 90
1P
2 98
1 99

0.01 99.9
10 100 1.000
Reserves (BCF)

Figure 9 Cumulative probability plot of the reserves estimated using MonteCarlo simulations

This graph was produced with data from a field of the company. When plotting for several fields the deterministic reserves
1P + Np, 2P + Np and 3P + Np, it was found that in some cases this tendency is true with a close approximation, but in other
cases corrections needed to be made. Figure 10 shows the 2010 data points of 1P, 2P, 3P reserves of Case 1 that do not align.
If a line is drawn through points 1P and 2P, the extended line results in a higher value of 3P than the one reported with a
deterministic method. This means that if the value of 2P is accepted as valid and with more trust than the value of 3P then
SPE 143843 9

this last value should be corrected so that it maintains the linearity expected. Obviously this change cannot be directly done
without previously returning to the deterministic calculations and establishing if it is possible, with certain corrections, to
reach this corrected value.

99,9 0,0

99 1
98 2

Chance of Occurrence, %
Cumulative Frequency, %
94 6
90 3P 10
80 3Pcorr 20

50 50
2P
20 80
10 90
1P
2 98
1 99

0,02 99,

10.000 100.000
Gas Reserves (BSCF)

Figure 10 Deterministic reserves of 2010 plotted in the cumulative probability plot

showing no linearity and the correction suggested for the 3P

An alternative is to accept the value of 3P as the most trusted one if we see that there are no conditions that increase 3P value.
Then we would assume that 2P reserve is off the line and it must be corrected by reducing its value so that all three points
create a straight line, the blue dashed line in Figure 11 . Lastly there is a possibility that a new line is to be drawn that passes
through all three points and establishes new values for 2P and 3P, red triangles and red dashed line in Figure 11. This
correction is recommended to the evaluators and will depend on the complete revision by the business sector that manages
the information to recalculation and establish the new values.

99,98 0,02
Chance of Occurrence, %
Cumulative Frequency, %

99 1
2
94 6
90 10
80 20

50 50

20 80
10 90

2 98
1 99

100.000 1.000.000 10.000.000

Oil Reserves (kbbl)

Figure 11 Deterministic reserves of 2010 plotted in the cumulative probability

plot showing no linearity and all possible corrections suggested

Step 4, perform a deterministic-probabilistic follow-up, consists of establishing a probabilistic behaviour for each past cycle
as was explained previously and with corrections if needed. For the example of Case 1 its 1P was considered as the pivot, 2P
as the accepted values and 3P corrected for cases in which there were notable deviations. Figure 12 shows the different
straight lines corresponding to the evaluated cycles of 2003, 2005, 2007, 2009 y 2010.
10 SPE 143843

99,98 0,02

99 1
98 2

Chance of Occurrence, %
Cumulative Frequency, %
94 6
90 10
80 20

50 50

20 80
10 90

2 98
1 2003 2005 99
2007 2009 2010

10.000 100.000 1.000.000 10.000.000

Oil Reserves (kbbl)

Figure 12 Deterministic-probabilistic follow up of the reserves

We can observe that as 1P + Np reserves are increasing as the years go by, the slopes of the lines are also increasing. To
easily see the effect of the changes these slopes were transferred to the bottom corner of the graph. As the development and
exploitation of a field advances and knowledge is gained, the slope of the lines increase. From this behaviour we can deduce
that with greater uncertainty the slopes will be less steep and with less uncertainty the slopes will be steeper.
Figure 13 shows the idealized behaviour of the reserves distribution and the slopes of the each distribution along time.

99,98 0,02

99 1
98 2
Chance of Occurrence, %
Cumulative Frequency, %

94 6
90 10
80 20

50 50

20 80
10 90

2 98
1 99

10.000 100.000 1.000.000 10.000.000

Oil Reserves (kbbl)

Figure 13. Idealization of the deterministic-probabilistic behaviour

of a field along the productive life.

During the first stages of production there would be a slope at a very low angle due to the low value of Np, a low
conservative value of 1P reserve, and a high optimistic value of 3P. At the middle stages there would be an intermediate
slope given that 1P reserve and Np have increased and 3P reserve has decreased. Close to the last phases of production the
line would be nearly vertical. In this idealized scenario 2P + Np reserves would be approaching the EUR values. During the
final phase the accumulated production should be equal to the EUR and all the points of the reserves, 1P +Np, 2P+Np and
3P+Np, would be equal creating a vertical line.

In this example the only proved scenario is that 1P + Np reserve had initially conservative values and then it always increases
and the slopes increase too. The estimated 3P reserves were not high enough at the beginning and its value began increasing
for a while, but then started to decrease. This is consistent with Figure 8 where the initial 3P reserves were insufficient.
Obviously at the beginning it was not suspected that the reserves would grow and increase the values over what was
considered as 3P reserve. As more cases can be studied a perception of the expected slope in the initial phases can be
obtained to then analyze the possibilities of 3P reserves as to not have values that are too low. In other words the probabilistic
behaviour of the slope from 2003 is considered to high for the high levels of uncertainty that is normally found in that phase.
There were also various cases where in addition to a low 3P reserve there exist reductions in the 1P reserves that regresses the
slopes to lower values instead of the usual growth in slope.

Inconsistencies found in one or more of the four steps alert us of the need to revise or not more deeply into the reserves
SPE 143843 11

estimations and make the adequate corrections. The consistency of production profiles and observed corrections, the
consistency in the EUR graphs, the consistency in the probabilistic graphs and the follow-up probabilistic graphs provide a
complementary tool useful when evaluating reserves.

Field Case 2

The gas field of interest has available information about revised production profiles for each annual cycle that is linked to
economic evaluations.

Step 1. Figure 14 shows the predicted production profiles of the years 2000, 2004, 2008 and 2010. The profile of the year
2000 ends in 2023 due to an end of contract. The profile of 2010 ends in the year 2027 due to extension of the contract, and
the profiles of 2004 and 2008 end earlier due to economical reasons.

10000
GAS Production (Mscf/d)

1000

100
End of
Contract

10
2000 2005 2010 2015 2020 2025 2030
Year
Prod. Gas 1P 2010 1P 2008 1P 2004 1P 2000

Figure 14. Production profiles of the 1P reserves for the years 2000, 2004, 2008
and 2010. Production history in green filled circles.

The profile of the year 2000 predicted correctly about the development plans during the next years until it reaches the year
2006 where it deviates from historical production. The profile of the year 2004 corrects the defects of the previous profile and
is well adjusted until the year 2010. On the other hand the profile of the year 2008 adjusts very well with the observed
production from the year 2009 but not with the year 2010 and is even more conservative than the profile of 2004 until the
year 2014, which is the year these profiles join together. The predicted profile of the year 2010 coincides with the profile of
2004 for the year 2011 but then it is more conservative for the following years. The profile of the year 2004 should be
reconsidered and the differences and conservative tendencies of the profiles of 2008 and 2010 should be analyzed. During
the last years of exploitation of the field the differences are quite noticeable, nonetheless because the production values are
already decreasing the differences of the reserves will be small.

Step 2. Table 5 shows the values of 1P+Gp, 2P+Gp, and 3P+Gp reserves, the cumulative production for each cycle, the
calculated EUR using Swanson equation and the maturity of gas recovery.
Reserves plus cumulative Production
Reovery
Cumul Gas EUR Swanson
Maturity
Year MSCF Gp + P1 Gp + 2P Gp + 3P BSCF
Gp / EUR 2010

1999 0 7 0 0 2 0,00
2000 766508 12613 20198 21559 18331 0,04
2001 1134393 13755 15658 19766 16320 0,06
2002 1555623 13698 17074 20409 17062 0,09
2003 2144276 16772 16812 19795 17695 0,12
2004 2813934 16195 16624 22590 18285 0,16
2005 3517032 15107 20309 21523 19113 0,20
2006 4352003 14261 17523 19494 17136 0,24
2007 5245026 14216 17254 19494 17015 0,29
2008 6161285 14216 17254 19494 17015 0,34
2009 7069514 14246 18192 20347 17655 0,40
2010 7994325 14535 18442 20437 17868 0,45

Tabla 5 Case 2 Field reserves and production data

12 SPE 143843

The graph of the EUR and 1P + Gp and 3P + Gp reserves is shown in Figure 15. The 1P + Gp reserve slowly grows between
the years 2000 and 2002, but in 2003 there is a noticeable increment that seems to have been an overestimate since in later
years it is reduced. Starting on 2006 the reserves + Gp maintain the same range with a slow increase. The EUR oscillates
maintaining itself in the same trend and the 3P + Gp reserves are above the EUR from the very beginning. It must be noted
that the year that 1P + Gp reserves strongly increase a strong decrease is produced in the 3P + Gp reserves. We could say that
the 3P + Gp were reduced way too much between the years 2006 and 2008 to then normalize in between the ranges expected
by the uncertainty bell created.

The green doted line denotes the tendency expected in 2005 for 1P + Gp reserves which are quite different than the expected
tendencies for the estimated values of 2006 and later on. If the tendencies and apparent median value of the EUR were to be
correct we could say that due to the strong correction of the reserves for the years 2004 to 2006 the estimates for the previous
years were done very cautiously.

30000
Gp + 1P , Gp + 3P & EURSwan (BSCF)

25000

20000

15000

10000

2000 2003 2005 2007 2009

5000
0,0 0,2 0,4 0,6 0,8 1,0
Recovery of the Recoverable Gas (fracc)
Gp + P1 Gp + 3P EURSwanson

Figure 15. EUR plot versus recovery of the recoverable oil.

Step 3. When the values of the 1P + Gp, 2P + Gp and 3P +Gp reserves are graphed on a cumulative lognormal probability
plot the data points do not align. See Figure 16. If a straight line is drawn through points 1P + Gp and 2P + Gp the extension
of the line results in a higher value of 3P than the reported value by the business sector using a deterministic method. This
means that if the value of 2P is accepted valid and with more assurance than the 3P value, then the 3P value should be
corrected to obtain a linear trend. See Figure 16. This implies that the deterministic calculations should be revised to establish
whether it is possible through certain corrections to achieve the corrected value proposed.

99,9 0,0

99 1
98 2
Chance of Occurrence, %
Cumulative Frequency, %

94 6
90 3P 10
80 3Pcorr 20

50 50
2P
20 80
10 90
1P
2 98
1 99

0,02 99,

10.000 100.000
Gas Reserves (BSCF)

Figure 16. Deterministic reserves of 2010 plotted in the cumulative

probability plot showing no linearity and the correction suggested for the 3P
SPE 143843 13

Alternatively if the 3P value is accepted as more truthful and there are no conditions that can increase 3P then the 2P reserve
would be the data point that is off and should be corrected by reducing its value such that it creates the linear trend expected,
see blue dashed line in Figure 17. Lastly there is the possibility of tracing a median line that passes through all three points
and establishes new 2P and 3P values, red triangles and red dashed line in Figure 17.

99,9 0,0

99 1
98 2

Chance of Occurrence, %
Cumulative Frequency, %

94 6
90 10
80 20

50 50

20 80
10 90
1P
2 98
1 99

0,02 99,

10.000 100.000
Gas Reserves (BSCF)

Figure 17. Deterministic reserves of 2010 plotted in the cumulative probability

plot showing no linearity and all possible corrections suggested

Not always is the 3P value more conservative. In some cases, as illustrated in Figure 18, the value of 2P is the more
conservative one and correcting the value of 3P would result in a line with a very steep slope. The figure shows the correction
of 2P when accepting the value of 3P as truer than the value of 2P. In this case the value of 3P is considered too conservative
since the values come from early development stage and should have a lower slope with an expected greater 3P value.

99,9 0,0

99 1
98 2
Chance of Occurrence, %
Cumulative Frequency, %

94 6
90 10
80
3P 20

50 50
2P 2Pcorr
20 80
10 90
1P
2 98
1 99

0,02 99,

10.000 100.000
Gas Reserves (BSCF)

Figure 18. Deterministic reserves plotted in the cumulative probability

plot showing no linearity and suggested correction.

Step 4. To continue the deterministic-probabilistic follow-up this time the 2P+Gp value was corrected always taking 1P+Np
as the pivot and accepting the value of 3P+Gp as truer than the 2P+Gp. Once this was done for all the cycles a follow-up of
the slopes is illustrated in Figure 19. The arrows on the left hand side of the graph indicate how the reserve values moved
backward. We can also observe that not all slopes were consistently increasing throughout the subsequent cycles. In 2003
there was a strong increase of reserves that increased the slope noticeably in comparison with last year’s slope. The numbers
1, 2, etc below the slope lines on the left hand side of the graph mean year 2001, 2002, etc. The arrows on the right hand side
of the graph indicate how the slopes moved forward and backward. In the year 2005, as we have already mentioned, the
reserves moved backwards and the slope decreased, opposite of what was expected. In the year 2007 the reserves moved
backwards opposite of what was expected and the slope increased. In the next two cycles, although the reserves slightly
increased, the slope of 2009 decreased and the slope of 2010 slightly increased. As we can see there are several
inconsistencies in this Case 2.
14 SPE 143843

99,9 0,0

99 1
98 2

Chance of Occurrence, %
Cumulative Frequency, %
94 6
90 10
80 20

50 50

20 80
10 90

2 98
1 99
1 279 5 3
10

0,02 99,
10.000 100.000
Gas Reserves (BSCF)

Figure 19. Deterministic-probabilistic follow-up of the reserves

If these four steps of the deterministic-probabilistic approach could be monitored during the reserves evaluations then
unexpected changes in reserves values and slopes could act as a warning sign and motivate some kind of investigation and or
correction. The important aspect of this kind of monitoring is that it functions as a complementary aid for the reserves
evaluation.

Conclusions
The deterministic-probabilistic approach presented has shown to be a simple and quick tool that can be used as a
complementary support for reserves evaluation. Production profiles consistency adds confidence to the estimated reserves
volumes. Monitor the reserves and the EUR with time aids to identifying overestimations or underestimations. Integrating the
deterministic reserves into the cumulative probability plot helps to identify the confidence of probable and possible reserves.
As development of a field is completed the knowledge increases as well as the confidence of the estimated reserves, showing
higher slope on the cumulative probability plot. Follow-up of the reserves slopes can be used as indicator to ensure a
consistent and confidence reserves estimates.

Acknowledgment
The authors would like to thank Repsol-YPF for permission to publish this paper

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