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S. Macary, SPE, IPR Group of Companies

Introduction

This paper was prepared for presentation at the 2005 SPE Hydrocarbon Economics and

Evaluation Symposium held in Dallas, TX, U.S.A., 3 – 5 April 2005.

After many trials of trade off, both sides: geoscientists and

This paper was selected for presentation by an SPE Program Committee following review of

information contained in a proposal submitted by the author(s). Contents of the paper, as

reservoir engineers could come to a mutual agreement whether

presented, have not been reviewed by the Society of Petroleum Engineers and are subject to to accept the model, i.e., the static one for further use in

correction by the author(s). The material, as presented, does not necessarily reflect any position

of the Society of Petroleum Engineers, its officers, or members. Papers presented at SPE building the dynamic model. However, this does not mean,

meetings are subject to publication review by Editorial Committees of the Society of Petroleum

Engineers. Electronic reproduction, distribution, or storage of any part of this paper for

under any circumstances, that the accepted model is certain. In

commercial purposes without the written consent of the Society of Petroleum Engineers is taking this static model to the dynamics, the domain of

prohibited. Permission to reproduce in print is restricted to a proposal of not more than 300

words; illustrations may not be copied. The proposal must contain conspicuous acknowledgment uncertainties becomes wider. The main parameter that makes

of where and by whom the paper was presented. Write Librarian, SPE, P.O. Box 833836,

Richardson, TX 75083-3836, U.S.A., fax 01-972-952-9435.

the results of the dynamic model to be convergent is the

feasibility, which is, in turn, at high level of uncertainty, e.g.,

Abstract oil prices.

One of the most important outputs of the static model is the In almost all of the reservoir simulation studies you can

volumetrics of the original hydrocarbon in place (OHIP). find deterministic figures counting to the second decimal of

According to the type of reservoir driving mechanism, the MMBO or US$MM (i.e., ten thousand), which is sometimes as

reservoir engineer can assume the recovery factor and hence the small as daily production. The question is: how much

recoverable reserves. Most simulation studies are being accuracy and certainty in our input that allows us to come

conducted on fields considering a period of production up with such deterministic numbers? Murtha (1) said “Much

performance to determine the remaining reserves and the best of risk analysis consists of estimating something with a range

scenario of development to produce these reserves, which is the of values rather than with a single value. We report that the

main function of the dynamic model. wildcat well drilling will require between 56 and 87 days

The volumetrics could be approached using a Monte Carlo instead of saying it will take exactly 65 days. Instead of the

technique, the end product of which is a range of probable single-point estimate of US$ 34 MM, we say the water flood

OHIP and, consequently using the proper recovery factor, NPV is a normal distribution with a mean of US$34 MM and a

getting probability distribution of the recoverable reserves. standard deviation of US$1.7 MM” (equivalent to a range of 29

Therefore, using the probabilistic approach is superior in green to 39 MM US$).

fields rather than brown fields because it captures the full range

of reality and where models are not yet calibrated to dynamic The reliability of reserves estimates is the economic

data. foundation of the petroleum industry. This is the initial point

Sometimes, the dynamic data may take a surprise turn from where $ sign appears. A dependable foundation for reserves

the geological understanding. Different realizations, even the estimates helps to ensure sound choices and avoid errors in the

crazy ones, may help under the probability distribution development of potential oil and gas properties. This, in turn,

functions in defining some certainties that have not yet even positively affects the confidence of shareholders, corporate

been imagined. In addition, each of the dynamic model’s staff, suppliers and contractors, government agencies, and

scenarios yields extra recovery, the certainty of which can be society as a whole (2).

evaluated using the probability distribution curve of the

remaining reserves. This certainty has direct influence on the In the next paragraphs will follow a backward process that

economics approval of one scenario over the others. starts off by dynamic model results and ends with probabilistic

The current work introduces actual case histories reserves. The current work tries to tie the output of the

demonstrating how the probabilistic approach could be of real simulator with the probability distribution of reserves in terms

help in selecting the production enhancement scenario and how of uncertainty or the chance of success.

this tool also could be used to prioritize management interests.

No doubt that it will be a revolutionary approach if we

could use Monte Carlo simulation in dynamic models to

produce directly a distribution of uncertainty per each logic

scenario aiming recovery increase.

2 SPE 89983

Uncertain Reservoir Description Data less volatile than the percentage error in remaining reserves.

Additional data (in the form of production data, if nothing else)

Bradley (3) and Sverdrup (4) stated that errors in reservoir helps narrow the range of uncertainty until late in the life of the

description data clearly contribute to errors in simulation model property. However, there is a point of irreducible uncertainty

results. Since the description data are never exactly known, one regardless of the amount of money and effort expended.

might infer that model results are necessarily erroneous and

unreliable. A number of considerations contribute, in Data Surveillance

contradiction of this inference, to model results being widely

used to select and to design oil-recovery processes and to A multireservoir field in the Western Desert-Egypt was the

forecast oil recovery. subject of an integrated engineering study in 2000; the point

forward date of the prediction runs was January 2001, while the

In any event, the pertinent question regarding reservoir- forecast termination is June 2006. The simulation study

description data is not related to correctness or uniqueness in an included 55 modules (scenarios) out of which only 37 were

absolute sense but it concerns the engineering significance of reported. Among these scenarios one can find well optimization

variations in parameter values within ranges of uncertainty. The (different workover jobs: add perforation, new completion,

simulation model itself might be useful in estimating this cleaning, etc), infill drilling (vertical or horizontal) and

significance. secondary projects (water injection).

Our case histories have a wide range of variations within Table 1 introduces a comparison of descriptive statistics of

lithology, driving mechanism, volume, rock and fluid Monte Carlo probabilistic simulation (Mean, Min, Max, P10,

properties. Regardless of the number of scenarios (modules) P50 and P90) versus the simulation study output (both OOIP

considered per each case, this study concerns only one and reserves) as calculated either volumetrically or by material

scenario/each reservoir that gave through simulation runs the balance (MBC) for all reservoirs, in addition to the total field

maximum incremental recovery above the base case, which is (aggregated probabilistically). The simulation study did not

“Do nothing”. It’s worth to mention that values used to provide complete picture of reserves through MBC due to the

calculate reserves probabilistically (volumetrics) were taken absence of pressure data. Anyhow, this is not the concern of the

from the averages considered in the simulation study. Monte current work.

Carlo simulation then was used to create probability

distributions using logic and industry experience assumptions Table 2 illustrates the production history of our concerned

for each variable of the volumetrics. case; December 2000 stands for the end of production history

match period used in the simulation study; December 2004 is

Probabilistic Reserves versus Deterministic Ones the last oil cumulative used in the analysis (current work). This

table also shows the incremental production for the last four

Many believe that for the first time, the official reserves years and the certainty of the cumulative production with

definitions allow for the use of probabilistic reserves though respect to the entire range of ultimate reserves. Table 3 shows

they do not require this methodology. Not true-reserves the incremental recovery from the best development scenarios,

estimates have always been probabilistic, whether or not the both individually and as a combined total field development

definition recognized that fact. Words such as “reasonably scenario.

certain”, “with high confidence”, “more likely than not” and

“possible” all lay tribute to the concept of probability. Discussion

For probable reserves, Capen (5) asked “What opportunities At that stage of the field age regarding the best scenarios

do I see in this field that I can move into the proved category concerned, the author believes as SPE (8) does that the

over the next 2 to 3 years?” For possible reserves, consider incremental recovery gained through simulation study scenarios

looking at a 4 to 6-year time horizon. How many new barrels belongs to the category of proved reserves (developed). In our

will begin their journey to the well bore during that time? These case (i.e., the best scenarios not all examined modules) there is

possible reserves define the optimistic end of the distribution. no step drilling, infill seismic,

Treating reserves probabilistically can provide useful

information for decision makers as they plan for future or pressure maintenance projects; the best scenarios are either

development and extension exploration. recompletion or ESP installation.

Idrobo (6) agreed that the correct use of the combination of the range of probabilistic reserves frequency distribution is

deterministic and stochastic methods along with consistent probably correct as any other one; the matter is how to narrow

reservoir engineering criteria guarantees healthy reservoir the range. Again, the older the reservoir is (more data) the more

management decisions. realistic are the ranges of properties used in the volumetrics

(porosity, Bo, RF and gross volumes, Sw). One interesting

approach to narrow reserves range was introduced by

Wright (7) concluded that uncertainty is a fact of life in Verbruggen (9) in which the ultimate recovery (UR) range is

reserve estimates, in which the percentage error is smaller and

SPE 89983 3

narrowed by setting the current cumulative production value at reservoir, the incremental production for 80% prediction period

the P100 value, i.e. 100% confidence level of achieving this is almost two folds the predicted recoverable reserves by

recovery. simulation. In addition, even December 2004 cumulative value

covers less than 1.5% from the probabilistic range. Hence, there

Analyzing the tabulated data we can make the following is up to 98% certainty to get bigger values of recoverable

comments: reserves, i.e., there is an extremely high chance of success to

feasibly develop this reservoir.

a) OOIP values from the simulation study do match with

both the Mean and P50 output of Monte Carlo (Table 1). This is Very interesting point is to compare between the

expected, as the avareges (most likely values of volumetrics uncertainties of remaining recoverable reserves in AD and RS.

parameters) are the same in both studies. However; It’s clear that the chance of success for RS reservoir to produce

reserves up to P50 (about 5.4 MMBO incremental) is much

b) Simulation study reserves show the following higher than the chance of AD to go to P90 reserves value (4

inequalities with respect to the Monte Carlo ones: AD >P50, MMBO incremental). The other reservoir AR/G has the same

DS > P30 and others are even less the P10 (Table 1). This property, very high chance of success to go to P50 with

complete dismatch could be a result of incorrectness of either incremental recovery of about 1.8 MMBO. Then, both

way: Monte Carlo overestimated recovery factor or simulation reservoirs can produce with high certainty two folds of what

study pessimism! Anyhow, this should be interpreted in the AD may produce with higher uncertainty.

light of OOIP match;

The purpose of the current work was just to compare

c) All reservoirs to date cumulative is higher than the numbers gained from both simulation study and probabilistic

simulation study UR (Table 2); however, this cumulative still Monte Carlo simulation using probability distribution functions

far less than P10 with the exception of AD; (PDF), we did not want to go into details like reservoir driving

mechanism, reservoir characterization, stratigraphy or any other

d) Almost all reservoirs for the last four years have parameters either favorable or not. However, the simple

produced more than two folds the predicted values through the example given above about certainty of producing some

best scenario calculated to June 2006 (Table 3). One may incremental oil lets us to have a look at the economics of the

attribute this positive situation to good reservoir management development by each scenario. It was found that the sum of

but it is better to evaluate what was the uncertainty in achieving investments to implement best scenario for both RS and AR/G

incremental production by applying one or another scenario. is just one sixth of the needed investment to develop AD. This

is another justification to highly prioitize developing these

Now, let us go to definite situations to judge the added reservoirs.

value driven from certainly levels. Both reservoirs AS because

of its small size and DS because of being shut in are not This combination of oil volumes, uncertainty analysis and

included in the next analysis. By any means, approaching economics could be effectively used in prioritizing

higher production with respect to predicted certain one by development schedule and making successful decisions.

Monte Carlo could be a result of better reservoir understanding Decision makers should take into account that the simulation

and management study is an ongoing process

that needs to be updated on regular basis as long as there is a

We start off by AD reservoir. Cumulative production to volume of data added. This will produce dynamic behavior of

December 2000 was 62.93 MMBO covering 72% from the reserves, which regardless of being a growth or a decline means

reserves range produced by Monte Carlo. Other words, this better understanding of the reservoirs attidude and capabilities.

means having just 28%

chance of success of getting more (see Fig. 1). In subtracting There’re another two points we need to highlight. First, any

the cumulative oil produced from the total range of new evaluation should start from two positions: certainty of

probabilistic reserves we got what we can call “Remaining produced volumes with respect to the total ultimate recovery

Reserves”. Figure 2 shows the frequency distribution of these and probability distribution of the remaining reserves. Figure 5

remaining reserves. The best scenario gave an incremental is the “Overlay Plot” illustrating the share of the three reservoir

recovery of 0.446 MMBO, which has just 24% certainty in the total remaining reserves, while Fig. 6 is a trend plot

(chance of success). In real life, the incremental recovery from showing a comparison between the remaining reserves in the

this reservoir (Jan. 2001-Dec. 2004) was only 0.15 MMBO-just three reservoirs expressed in terms of P10, P50 and P90. Both

one third of the predicted incremental and produced within plots confirm the above mentioned analysis about the

about 80% of the prediction interval (Jan. 2001-June 2006). superiority of some reservoirs above the others. The second

point is to use this trade off between the two concepts to tune

The other two reservoirs: AR/G and RS have a our decisions.

completely contradictory status in comparison with AD

reservoir. RS may have more superiority, as it’s three times Conclusions

bigger by volume as AR/G as illustrated in Figures 3 and 4.

Regardless this fact, they’re twins with respect to the analysis 1. Simulation engineer should use a pragmatic approach

tying simulation results with the probabilistic approach. For RS to quantify the uncertainty ranges around the base case.

4 SPE 89983

2. It’s an open invitation to simulator designers to build

Definitions” .

in some uncertainty analysis for further improvement of

probabilistic reserve estimates.

9. Rini Verbruggen et al: “Understanding Reserves Uncertainties

in a Mature Field by Reservoir Modeling”, SPE 77896 presented

3. Bigger reservoirs give better reasonable results in at the SPE Asia Pacific Oil & Gas Conference and Exhibition

comparison as they’re subjected to higher level of exploitation (APOGCE) held in Melbourne, Australia, Oct. 8-10, 2002.

activities.

quality check tool to evaluate the level of reservoir

management.

priorities in developing multiple choices.

economics could be effectively used in prioritizing

development schedule and making successful decisions.

Acknowledgments

permission upon using the data of the simulation study in

addition to the access to the current production performance.

He also does thank IPR Group of Company for supporting the

publication of this paper. Many other thanks are to be addressed

to Dr. Jim Pollin upon his valuable comments and Mr. Dale

Hinshaw upon his instructive directions.

References

Future”, SPE 37932 presented at the SPE ATCE, San Antonio,

TX, Oct. 5-8, 1997.

2. W. Gary McGilvray: “Independent Evaluation for Reliable

Reserves Estimates”, JPT, Dec. 2004.

3. Howard Bradley: “Petroleum Engineering Handbook”, Third

Edition, Richardson, TX, USA, 1992.

Aug. 2004, pp. 69-72.

SPE Reservoir Evaluation & Engineering, Oct. 2001, pp. 387-94.

Probabilistic Reserves from Production Trends”, SPE 68597

presented at SPE Hydrocarbon Economics and Evaluation

Symposium, Dallas, TX, Apr. 2001.

Reserve Estimates”, SPE 84146 presented at SPE ATCE, Denver,

CO, Oct. 5-8, 2003.

SPE 89983 5

NAME MEAN MIN MAX P10 P50 P90 Determ. MBC

MMSTB

OOIP 17.13 5.00 27.50 12.86 16.90 21.79 17.48 N.A.

1 AR/G

Reserves 4.27 1.20 7.20 2.93 4.21 5.68 1.788

OOIP 39.89 15.00 65.00 28.85 39.61 51.39 45.071 N.A.

2 RS

Reserves 12.95 5.90 22.50 9.17 11.99 17.15 5.83

OOIP 11.83 2.50 20.00 8.17 11.65 15.82 12.737 12.51

3 DS

Reserves 4.16 1.00 8.00 2.72 4.17 5.64 3.501

OOIP 189.55 125.00 250.00 164.48 189.16 214.72 192.966 209.84

4 AD

Reserves 59.58 40.00 80.00 50.98 59.53 67.16 62.881

OOIP 6.99 3.00 12.00 4.98 6.86 9.28 7.193 N.A.

5 AS

Reserves 1.06 0.38 2.50 0.73 1.06 1.42 0.09

OOIP 265.80 200.00 350.00 238.62 271.17 292.55 270.11

Total Field

Reserves 82.35 60.00 105.00 72.64 81.98 92.38 74.09

Cum Des. 2000 Cum Dec. 2004 Incremental

Reservoirs Date of Qi Certainty

MSTB MSTB MSTB

AR/G 1988 1,788 2,440 < P10 652

RS 1981 5,829 6,610 < P10 781

DS 1974 3,501 3,501 P30 < 3.5 < P50 0

AD 1968 62,930 63,079 P70 < 63.1 < P80 149

AS 1996 94 134 < P10 40

Total Field 74,142 75,764 P20 < 76.3 < P30 1,622

Reservoir Incremental Recovery, 01.2001-06.2006, MSTB

RS 264 404

DS 0 50

AD 76 446

AS 87 161

6 SPE 89983

.036 36

.027 27

.018 18

.009 9

Mean = 59.27

.000 0

Certainty is 28.31% from 62.93 to 80.00 MMSTB

.746 718

.560 538.5

.373 359

.187 179.5

.000 0

Certainty is 24.22% from 0.42 to 9.00 MMBO

.029 29

.022 21.75

.015 14.5

.007 7.25

Mean = 4.25

.000 0

Certainty is 97.99% from 2.40 to 7.20 MMSTB

Fig. 3– Reservoir AR/G Probabilistic Reserves and Certainty of Cumulative Oil Produced

SPE 89983 7

.032 32

.024 24

.016 16

.008 8

Mean = 12.94

.000 0

Certainty is 98.69% from 6.93 to 22.50 MMSTB

Overlay Chart

Frequency Comparison

.212

3-Reservoirs Remaining Reserves

.159

.106

RS Remaining Reserves

.053

.000

Fig. 5 – Overlay Plot Showing the Share of each Reservoir in the Remaining Reserves

Trend Chart

Trend Chart: P10, P50 and P90 for the Three Reservoirs

15.00

90%

10.00

50%

5.00

10%

0.00

Dolomite Remaining Reserves

RS Remaining Reserves

Fig. 6 – Trend Chart Showing How Much Certainty of Remaining Reserves within Each Reservoir

8 SPE 89983

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