1

Estimation Tools - Decline Curve Analysis

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Performance Based Reserves Estimation

• If sufficient production data available
• Decline Curve Analysis (DCA)
• p/Z plots (Material Balance)
• History matched simulation
• Reality checks for DCA
• Need to understand the physics
• Need to explain why decline can be reliably used for prediction
• Forecast (prod rate vs time) should seamlessly match historical prod trends
• Remaining field life duration must be realistic
• Can deal with uncertainty
• Conservative extrapolation of trends for Proved reserves
• When aggregating wells/reservoirs, be aware of the compounding effect
• Arithmetically adding together many conservative DCA’s, will give an extremely
conservative aggregated value.
• Cross-check with field-level data, compare historical annual decline with predicted, and
check for inconsistencies
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Decline Curves

• When more than one type of decline is supported by the

data, the high confidence approach must be used for
Proved reserves; use of other decline functions requires a
compelling case supported by all of the following:
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Requirements for Decline Curve

• Trend of historical data

• Declines seen in other, more mature wells in the same
reservoir (based upon poorer performing wells)
• An understanding of the physics of the reservoir behavior
• Care must be taken to ensure that operational activities do
not mask an underlying or more appropriate trend
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Background and Overview

History
 Analysis involves projection of existing Forecast

production trends into the future Trend

 The basic assumption of all DCAs is that

Oil Rate
whatever controlled the trend of production in
the past will continue to govern the trend in the
future.
 Its simplicity and transparency is responsible
for its widespread usage and adoption from
regulatory agencies like the SEC. Cumulative Oil Produced

Clear decline trend

History History
Forecast 1 Forecast 1
Trend 1 Trend 1
Forecast 2 Forecast 2
Trend 2 Trend 2

Oil Rate
Oil Rate

Cumulative Oil Produced Cumulative Oil Produced

2 similar decline trends can be observed 2 different decline

trends
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Equations and Nomenclature

qi
Governing equation: qt  1
(1)
History

1  b  di  t 
 
b
Forecast
Trend

qt - production rate at time t History Forecast

Oil Rate
qi - initial production rate at (t = 0)
qi
b - hyperbolic exponent
qt
di - nominal decline factor

Integrating the governing equation between 0 di b

and t
yields cumulative oil produced (Nt) Date

qi   1

 1  1  b  d i  t  b  
1
Nt  (2)
d i 1  b  

DCA aims to determine qi, di and b from historical production data

qi - selected to ensure smooth transition from history to forecast

di - major parameter determined from historical data and used in the forecast

b - varies between 0 and 1, (determines the shape of the decline at late times),
two special cases: b  0 (exponential decline) b  1 (harmonic decline)
 7

Exponential Decline
Equation: qt  qi e  d i t when b0 (3)
qt  t (4)
Exponential decline is also referred to as constant decline function:  e di t
qt
qi  qt (5)
Similarly the cumulative oil produced is expressed Nt 
as: di
Equation (3) can be expressed as: ln qt   ln qi   d i  t (6)

In logarithmic expression, equation (6) can be rewritten as: log 10 qt   log 10 qi   Ci  d i  t (7)

Equation (5) can be expressed as a straight line equation: qt  qi  d i  N t (8)

Equations (7 and 8) are straight line expression that forms the basis of exponential decline analysis

Notes:

 Exponential declines are used for 1P reserve estimates (high confidence case)
 Exponential trends declines rapidly at late times as a result of the small value of hyperbolic exponent.

 Straight line trends on plots of oil rates vs. cumulative production (linear axes – equation 8) and oil rate vs.
time (semi-logarithmic axes – equation 7) are commonly used for analysing exponential declines
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Harmonic Decline
qi
Equation: qt  when b 1 (9)
1  d i  t 
q i qi (10)
Integrating equation (9), with respect to time to yield Nt: Nt  ln
d i qt
di
Equation (10) can be rearranged to give: ln qt   ln qi    Nt (11)
qi
Ci  d i  N t (12)
In logarithmic expression, equation (11) can be rewritten as: log 10 qt   log 10 qi  
qi

Equation (12) is a straight line expression when oil rate is plotted against cumulative production on
semi-logarithmic axes

Notes:

 Harmonic declines are used for 3P reserve estimates (low confidence case)
 Harmonic declines exhibit elongated tail at late times as a result of the high value (approaching 1) of the
hyperbolic exponent.
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Hyperbolic Decline
 Hyperbolic declines results when 0  b  1 there are no straight line trends associated with this plot

 The ratio between the rate at the start of a time step and the rate at the start of the preceding time step is a
declining function of t.

. The degree of conservatism of a hyperbolic function is inversely proportional to the value of b. Low values of b
gives more conservative forecast than high values of b and are more likely to be used to support proved reserves

Diagnostic Plots
 The easiest trend for the human eye to identify is a straight line, as such when doing DCA straight line trends are
often as diagnostic plots.

 A preference for straight lines trends limits prospective analyses to either exponential or harmonic decline since there
are no simple plots that result in straight lines for hyperbolic functions.

 Straight line trends on logarithmic scales are effective in creating the illusion of a straight line which can
oftentimes be misleading, logarithmic scales also tend to “de-sensitize” data which may lead to an erroneous
selection of a representative decline trend.

 For the purpose of reserves reporting, the use of straight line plots is strongly recommended.
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Diagnostic Plots
1. Oil rate vs. Time (linear-axes)
 It is rare to use this plot for the purpose of DCA because
downtimes create gaps in the historical data.

 It is often difficult to see through the “downtime noise” to

the underlying reservoir related trend that determines
History
decline parameters. Forecast
Trend
 This plot is mostly used as a “final check” plot and for
quality control purposes. History Forecast

Oil Rate
 It is essential that this plot should include information such smooth transition
as historical production rates, the trend(s) fitted into the
license
historical data, the forecast(s) and truncation points. expiry
economic
 Points to consider when using this plot for quality control rate

are;
Date
 Transition from history into forecast

 End of the license period and life of facilities

 Economic oil rates

 Comparison of length of forecast to the length of

time used in selecting the trend.
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Diagnostic Plots
2. Oil rate vs. Time (Semi-logarithmic axes)

 This plot is often used for DCA downtime

gaps
rate
 Straight line on this plot corresponds to an History Forecast
exponential decline; this plot suffers from
the adverse effect of downtimes. smooth

Oil Rate
transition
 Downtimes exists as gaps in the historical
data, it also suffers from the limitations
discussed previously on logarithmic plots.
economic
 This plot can be used to support other History
rate license
types of plots, its is advised that this plot Forecast
expiry
should not be used solely as the analytical Trend
tool in DCA
. Date
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Diagnostic Plots
3. Oil rate vs. Cumulative production (linear-axes)
 This is one of the simplest and most useful plots for
DCA.

History
 It reduces (but does not totally eliminate) the adverse Forecast
downtime
effects of downtime experienced with rate vs. time plots. Trend
point

 Gaps in the production data during the periods of no History Forecast

production disappear. However some problems relating
to downtimes still persist with this method when

Oil Rate
determining whether to use “calendar-day rates” or
“producing-day” rates. smooth
transition
 For the vast majority of oil wells, this plot is very useful Economic
and is strongly recommended that this plot should be rate
made whenever DCA is being done.

license
 In this plot as well as other plots the influence of Cumulative Oil Produced expiry
hyperbolic exponent b becomes more pronounced later
on while early on, the curve is dominated by the nominal
decline factor di.
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Diagnostic Plots

4. Oil rate vs. Cumulative production (semi-logarithmic axes)

Downtime
 Straight line trends on this plot results in highly point
optimistic reserves (3P). History Forecast
Smooth
 This plot is rarely used for the determination of 1P transition
reserves unless compelling arguments can be

Oil Rate
provided to justify it.

 This plot suffers from the limitations of typical

logarithmic plots discussed earlier.
History
Forecast
 In this plot as well as other plots the influence of Trend
hyperbolic exponent b becomes more pronounced
later on while early on, the curve is dominated by
Cumulative Oil Produced
the nominal decline factor di.
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Diagnostic Plots
5. Water cut vs. Cumulative production (linear axes)
 This is the classic plot for a well whose oil
production rate is declining as a consequence of
increasing water-cut. Common in mature active
water-floods or natural aquifer influx. 8.0 1.0

Wcut (Frac)
Smooth
 Extrapolation of a water-cut trend can lead to 6.0
Transition
Economic
0.8

unreliable results if the trend is not well water cut

Liquid Rate
established. This plot should therefore be used as 0.6
the primary analysis tool when the water cut has 4.0 Actual Liq Rate
reached high values. 0.4 Forecast Liq Rate
Actual WCut
Forecast WCut
 This plot is only recommended when it is 2.0
Trend
0.2
established that water-cut development is the Forecast
License
History expiry
cause of declining oil rates.
0.0 0.0

 A major limitation of this plot is that it does not Cumulative Oil Produced
lead to an oil rate vs. time forecast (DCA’s main
objective).

 In order to estimate reserves using this plot a

forecast of liquid rates vs. time is needed. Often,
constant liquid rates is assumed.

 Straight line trend on this plot is exponential

decline.
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Diagnostic Plots
6. WOR vs. Cumulative production (semi-logarithmic axes)

 Straight line trends on this plot indicates Smooth

harmonic decline Economic Transition
WOR
 One of the major advantages of this plot is
that the upper limit of WOR is effectively Actual Liq Rate

Liquid Rate, WOR

infinite and this alleviates some of the Forecast Liq Rate
compression that occurs in a water-cut plot. Actual WOR
Forecast WOR
 This plot is particularly useful at high WOR Trend
History Forecast
values.

 As with the water cut plot, an assumption License

must be made concerning liquid rates in expiry
order to use this plot for reserves estimation.
Cumulative Oil Produced
 One of the limitations of this plot is that
straight line trends only become visible at
high WOR values. .
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Typical examples of DCA plots

Low water cut:
Well 1 15.0

15.0 1.0 History

 Well has low water cut as 12.0 1P Forecast
1P Trend
such water cut diagnostic

Oil Rate(Mstb/d)
12.0 Actual Liq Rate 0.8
Actual WCut

Wcut (Frac)
plots are unsuitable 9.0

QL (Mstb/d)
9.0 0.6

6.0

 Historical plot shows good 6.0 0.4

3.0
decline trend 3.0 0.2

0.0
0.0 0.0
 Same initial oil rates were 0 20 40 60 80 100
0 20 40
Np (MMstb)
60 80 100

used for all the profiles, thus Np (MMbbls)

Good decline trend; 1P Plot, Qo vs. Np

all the profiles start at the Low water cut
same point
100.0

History
15
History
 Since no straight line trends 1P Forecast 1P
1P Trend 12 2P
are hyperbolic, 2P forecasts
Oil Rate (Mstb/d)

10.0 3P
were determined as the

Oil Rate
9

arithmetic mean of the 1P

6
and 3P values 1.0

 Reserves at 2050 are: 0

0.1
1P: 14.2 MMstb 0 20 40 60 80 100 Jan-70 Jan-90 Jan-10 Jan-30 Jan-50

Date
2P: 20.3 MMstb Np (MMstb)

3P: 26.4 MMstb 3P Plot, Log Qo vs. Np 1P, 2P and 3P Forecasts till
2050
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Typical examples of DCA plots

Low water cut:
Well 2 1.5 1.0 1.5

Actual Liq Rate

History
1.2 Actual WCut 0.8 1.2
1P Forecast

 Well has low water cut as

Wcut (Frac)
1P Trend

Oil Rate (Mstb/d)

QL (Mstb/d)
0.9 0.6 0.9
such water cut diagnostic
plots are unsuitable 0.6 0.4 0.6

0.3 0.2 0.3

 Historical plot shows good
decline trend 0.0 0.0 0.0
0 1 2 3 4 5 6 0 2 4 6 8
Np (MMstb) Np (MMstb)

 Same initial oil rates were Low water cut Good decline trend; 1P Plot, Qo vs. Np
used for all the profiles, thus 10.0
all the profiles start at the 1.5
History
same point 3P Forecast History
1.2 1P
3P Trend
2P

Oil Rate (Mstb/d)

1.0
Oil Rate (Mstb/d)

3P
 Economic cut-off rate of 50 0.9

stb/d is reached at year 2047

0.6
before the end of the license 0.1

period - 2050 0.3

0.0
0.0
 Reserves at 2050 are: 0 2 4 6 8
Jan-70 Jan-90 Jan-10 Jan-30 Jan-50
Date
Np (MMstb)
1P: 1.5 MMstb
2P: 1.8 MMstb 3P Plot, Log Qo vs. Np 1P, 2P and 3P Forecasts till economic cut
3P: 2.1 MMstb off rate of 50 stb/d is reached
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Typical examples of DCA plots

Low water cut:
Well 3 8.0 1.0
Actual Liq Rate 5.0
Actual WCut 0.8 History
6.0 1P Forecast
4.0

Wcut (Frac)
QL (Mstb/d)
1P Trend

Well has low water cut as

0.6


Oil Rate (Mstb/d)

4.0 3.0

such water cut diagnostic 0.4

plots are unsuitable 2.0

2.0

0.2
1.0

 Historical plot shows good 0.0 0.0

decline trend
0.0
0 5 10 15 20 25 30 35
Np (MMstb) 0 10 20 30 40
Np (MMstb)

Low water cut Good decline trend; 1P Plot, Qo vs. Np

 Same initial oil rates were
used for all the profiles, 100.0
5.0
thus all the profiles start History History

at the same point 3P Forecast 1P

4.0
10.0 2P

Oil Rate (Mstb/d)

3P Trend
3P
Oil Rate (Mstb/d)

3.0

 Reserves at 2050 are: 1.0

2.0
1P: 10.4 MMstb
2P: 11.6 MMstb 0.1 1.0

3P: 12.8 MMstb 0.0

0.0 Jan-70 Jan-90 Jan-10 Jan-30 Jan-50
0 10 20 30 40 Date
Np (MMstb)

1P, 2P and 3P Forecasts till economic cut

3P Plot, Log Qo vs. Np off rate of 50 stb/d is reached
 19

Typical examples of DCA plots

High water cut:
Well 4
1P - (WCut vs. Np)

Well shows high and

7.0 1.0 3P - (Log WOR vs. Np)
 100.00

established water cut

6.0
0.8

trend, good decline trends 5.0

Wcut (Frac)

QL (Mstb/d), WOR (stb/stb)

10.00

are also observed on the oil

QL (Mstb/d)
0.6
4.0

plots 3.0
0.4
1.00
Actual Liq Rate
Actual Liq Rate

 Reserves from the two

Forecast Liq Rate
2.0 Forecast Liq Rate
Actual WOR
0.10

methods (water cut and oil

0.2 Actual WCut
Forecast WOR
1.0 Forecast WCut
Trend

plots)
Trend
0.0 0.0
0.01
0 5 10 15 20

Comparison of reserves
0 5 10 15 20 25
 Np (MMbbls) Np (MMbbls)

(MMstb) at license expiry

Established water cut trend; 1P – WCut vs. 3P Plot: Log WOR vs. Np
for the two methods are: Np
100.0

Res. WCut Oil-Plot 6.0

History
1P 3.1 1.7 5.0
History 3P Forecast
10.0

Oil Rate (Mstb/d)

1P Forecast 3P Trend
2P 3.6 2.6
Oil Rate (Mstb/d)

1P Trend
4.0
3P 4.2 3.5
3.0 1.0

 WCut plot reserves are

higher than oil plots
2.0

 WCut reserves are 1.0 0.1

0 5 10 15 20
preferred because longer 0.0
Np (MMstb)

period (6 – 13 MMstb) were 0 5 10 15 20

3P Plot: Log Qo vs. Np
projected from history into Np (MMstb)

forecast 1P Plot: Qo vs. Np

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Typical examples of DCA plots

High water cut:
Well 5
1P - (WCut vs. Np) 3P - (Log WOR vs. Np)

 Well shows high and 5.0 1.0

100.00

established water cut 4.0 0.8

trend, good decline trends

QL (Mstb/d), WOR (stb/stb)

10.00

Wcut (Frac)
are also observed on the oil

QL (Mstb/d)
3.0 0.6

plots
1.00 Actual Liq Rate
2.0 0.4 Forecast Liq Rate
Actual Liq Rate Actual WOR
Forecast Liq Rate 0.10 Forecast WOR
1.0 0.2 Trend

Reserves from the two

Actual WCut
 Forecast WCut

methods (water cut and oil

Trend
0.0 0.0 0.01
0 2 4 6 8 0 2 4 6 8

plots) Np (MMbbls)
Np (MMbbls)

 Comparison of reserves
(MMstb) at license expiry 5.0 100.0

History History
for the two methods are: 4.0 1P Forecast
3P Forecast
3P Trend
1P Trend
Oil Rate (Mstb/d)

Res. WCut Oil-Plot

10.0

Oil Rate (Mstb/d)

3.0
1P 1.5 0.4
2.0
2P 1.8 1.0 1.0

3P 2.1 1.6 1.0

0.1
0.0 0 1 2 3 4 5 6
 WCut plot reserves are 0 1 2 3 4 5 6 Np (MMstb)

higher than oil plots as Np (MMstb)

observed in Well 4
 21

80
Typical examples of DCA plots 1P (Qg vs. Gp)
History
1P Forecast
Gas Fields: 60
1P Trend

Gas Rate (MMscf/d)

Well 1
40

 This example is from a North Sea gas field

20

 Same methodology as with oil fields, diagnostic plot is:

Cumulative gas produced (Gp in Bscf) vs. Gas rate (Qg 0
in MMscf/d). 100 130 160 190 220 250
Gp (Bscf)

 Water-Gas plots are not used here because there are

no water production historical data. 1000
3P (Qg vs. Gp)
History
 Refer to the provided spreadsheet for full analysis 3P Forecast
3P Trend
Gas Rate (MMscf/d) 100
 The table below shows the calculated 1P, 2P and 3P
reserves.

Res. Bscf 10

1P 15
2P 38
3P 61
1
100 130 160 190 220 250
Gp (Bscf)
 22

Typical examples of DCA plots

Gas Fields: 300
Well 2 1P (Qg vs. Gp)

250 History
1P Forecast
 This example is from a North Sea gas field 200

Gas Rate (MMscf/d)

1P Trend

 Same methodology as with oil fields, diagnostic plot 150

is: Cumulative gas produced (Gp in Bscf) vs. Gas rate 100
(Qg in MMscf/d).
50

 Water-Gas plots are not used here because there

are no water production historical data. Also there
0
0 200 400 600 800
are fluid ratio conversion challenges associated with Gp (Bscf)

water-gas diagnostic plots.

1000

 Refer to the provided spreadsheet for full analysis 3P (Qg vs. Gp)
History
3P Forecast
3P Trend
 The table below shows the calculated 1P, 2P and 3P 100

Gas Rate (MMscf/d)

reserves.

Res. Bscf
10
1P 59
2P 134
3P 213 1
0 200 400 600 800
Gp (Bscf)
 23

Typical examples of DCA plots

Gas Fields: 50
1P (Qg vs. Gp)
Well 3
History
40
1P Forecast

 This example is from a North Sea gas field 1P Trend

Gas Rate (MMscf/d)

30

 Same methodology as with oil fields, diagnostic plot 20

is: Cumulative gas produced (Gp in Bscf) vs. Gas rate
(Qg in MMscf/d).
10

 Water-Gas plots are not used here because there

are no water production historical data. Also there
0
0 10 20 30 40 50 60
are fluid ratio conversion challenges associated with Gp (Bscf)
water-gas diagnostic plots.
1000
 Refer to the provided spreadsheet for full analysis 3P (Qg vs. Gp)
History
3P Forecast

 The table below shows the calculated 1P, 2P and 3P 100

3P Trend

reserves.
Gas Rate (MMscf/d)

Res. Bscf
10
1P 4.3
2P 13.6
3P 22.9 1
0 10 20 30 40 50 60
Gp (Bscf)
 24

Conclusions
 DCA is the most widely used tool in reserves estimation and production
forecasting

 It is best to estimate reserves at the lowest level possible (at the

completion or well level)

 Since the basic assumption underlying all DCA is that whatever governs
decline in the past will continue in the future, this assumption may not be
valid if DCA is carried out at the reservoir or field level especially is there
is changing well count.

 Different diagnostic plots can give different results (Well 4 example), it is

recommended that appropriate criteria should be used in selecting the
suitable plot. For example diagnostic plots with better trends can be
used, the more the historical data projected into forecast the better the
estimated reserves
 25

From Art Berman

 26

From Art Berman

 27

Thank You