Reserves Booking Practices. Conventional vs. Unconventional. EnerCom s London Oil & Gas Conference 5 June 11, 2013 Sofitel London

Transcription

1 Reserves Booking Practices Conventional vs. Unconventional EnerCom s London Oil & Gas Conference 5 June 11, 2013 Sofitel London Scott Rees Netherland, Sewell & Associates, Inc.

2 Disclaimer This presentation is for general information and illustrative purposes only its contents should be considered in context of the entire presentation and the date on which it is presented. All estimates, exhibits, and opinions presented herein are subject to change. As in all aspects of oil and gas evaluation, there are uncertainties inherent in the interpretation of engineering and geoscience data; therefore, our opinions necessarily represent only informed professional judgment. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, or suitability of the information contained herein; we will not be responsible for any consequence associated with the reliance on such information. Unless indicated otherwise, the information contained herein does not constitute professional advice or opinions, and it should be considered to be a work in progress. Netherland, Sewell & Associates, Inc. (NSAI) is a Texas Registered Engineering Firm, No. F Copyright 2012 NSAI. All rights reserved.

3 Resources Assessment Process Uncertainty and Risk Consistent Assessments Prospect Discovery Development Project Discovery Risk In-Place Uncertainty Commercial Risk Recovery Uncertainty Commercial Uncertainties Volume Value Estimated Ultimate Recovery Net Present Value Source: SPE Reserves ATW 3

4 Petroleum Resources Classification System Total Petroleum Initially-In-Place (PIIP) Discovered PIIP Undiscovered PIIP Commercial SUB-Commercial Not to scale Low Estimate PRODUCTION RESERVES 1P 2P 3P Proved Probable Possible CONTINGENT RESOURCES 1C 2C 3C UNRECOVERABLE PROSPECTIVE RESOURCES Best Estimate UNRECOVERABLE Range of Uncertainty 4 High Estimate Categorize based on Uncertainty Increasing Chance of Commerciality Classify based on Commercial Certainty Chance of Development Chance of Discovery Approved March 2007 Board of Directors, SPE Executive Board, WPC Executive Committee, AAPG Board of Directors, SPEE

5 Exploration Phase Conventional (Offshore) Unconventional Discovery defined by: Discovery defined by: Known oil/gas Known oil/gas Known net pay Logs & core data (porosity) Known porosity, So/Sg Some flow of oil/gas Known productivity Appraisal need for: Appraisal need for: Understanding net pay Ultimate trap size (area, contacts) Facility sizing Commercial threshold Commercial productivity Per-well drainage area Ultimate resource size (area) Facility sizing Commercial threshold 5

6 Exploration & Appraisal Phase Offshore Salt B Unpenetrated Fault Block (Prospective Resource or Probable/Possible Reserve) Seismic Amplitude A Wet Exploration Well defines LKG/LKO as 1P. Remaining amplitude in FB A typically as 2P and 3P

7 Exploration & Appraisal Phase Offshore Log: Entire sand is oil productive 1C Low Estimate 2C Best Estimate 3C High Estimate Exploratory (Prospective Resources) 7

8 Appraisal Phase Unconventional 200 BCF/mi 2 Gas-in-Place 200 BCF/mi 2 Gas-in-Place 200 Feet Thick 1 BCF/Foot 2,000 Feet Thick 0.1 BCF/Foot 8

9 Appraisal Phase Unconventional Define Variability GR RT GR D,N What is net pay? What is real drainage area? 60' Quality Net Higher silt content (Rt and Rhob) Are reserves new reserves? Is it consistent across area? Hydrocarbon Profile 430' Gross 250' Net < 2.5 g/cc OGIP +/ BCF/mi 2 Higher organic content (GR) 10' High Quality Net Higher silt content (Rt and Rhob) 9

10 Appraisal Phase Conventional (Offshore) Unconventional Appraisal defines: Ultimate trap size Expected production rates Commercial issues Appraisal defines: Commercial productivity Per-well drainage area Potential resource size (area) Commercial thresholds To book reserves: Commercial project Expectation of Development Final Investment Decision (FID), government approvals for 1P To book reserves: Commercial per-well & project Expectation of Development Final Investment Decision (FID), government approvals for 1P 10

11 Performance Variability Impacts Reserves Gas EUR (BCF) Average Lateral Length Year P10 P25 Mean P50 P75 P90 (Feet) Count Pre ,167 1, ,073 1, , , , Economic Limits 5.0 BCF EUR B 3.0 BCF 2.0 BCF EUR 11

12 Resources Plays Reserves Bookings PDP PUD PROB POSS How should area away from well control be booked? New SEC PUDs beyond 1 offset away "can be claimed in a conventional accumulation or a continuous accumulation ": Property maturity Data rich/poor Consistency of results & methods Geologic understanding Analogy to other areas Economic robustness Leasehold ownership Development schedule Leverage effect Operator intent "Reliable Technology" 12

13 Resources Plays Example of Leverage with Horizontal Wells Tier 3 Tier 2 Tier 1 KEY: PDP PUD PROB POSS I I I I I I I I I 1. Property maturity Early Moderate Mature 2. Data rich/poor Poor Good Well Control Rich 3. Consistency? Good Very Good 4. Geologic understanding Low Still Learning High 5. Analogy to other areas Low Good Good 6. Economic robustness Marginal Strong (most wells) Very Strong 7. Leverage effect??? " Evidence using Reliable Technology " 13

14 Development Phase Conventional (Offshore) Unconventional Reserve Booking Opportunities: Reserve Booking Opportunities: 2P/3P 1P with production 2P/3P 1P with drilling Infill drilling Infill drilling Artificial lift Completion Optimization Horizontal drilling Horizontal drilling Step-outs Deeper drilling 14

15 Conclusions Property Maturity affects Reserve Bookings Unconventional Has Potential for High Leverage Conventional Has Potential from Growth from Production 15

16 Netherland, Sewell & Associates, Inc. Worldwide Petroleum Consultants Engineering, Geology, Geophysics, Petrophysics SINCE 1961 YEARS OF SERVICE Dallas: Houston:

17 Resources Definitions during Development Prospective Resources Contingent Resources Probable / Possible Proved Undeveloped Proved Developed Unproven Proved Undeveloped Proved Developed Exploration Development Producing Source: SPE Reserves ATW Increasing Certainty 17

18 Decline Curve Analysis Issues with Tight Reservoirs Flow regimes different Transient Flow versus Boundary flow for high permeability reservoirs Linear flow versus radial flow for high permeability reservoirs Dual porosity systems (fracture, matrix) Traditional decline curve for Boundary flow, radial flow, single porosity system n < 1.0 (often exponential or n=0) Hyperbolic or dual decline curve for Transient flow, linear flow, dual porosity system n can be > 1.0 (most estimators limit to max of 2.0) Requires minimum final decline limit 18 Stimulated Rock Volume Well Spacing Area High Permeability Reservoir Tight Reservoir

19 Volumetrics - Geology Proved (1P) - 10 m, 10 km 2 Probable + Proved (2P) - 15 m, 15 km 2 Proved Area Top View Possible + P + P - 30 m, 30 km 2 Shale Probable Area LKO LKO +1 LKO +2 Proved Shale Prob Poss Possible Area Water Sand Profile View 19

20 Offshore New SEC Rules Sand Juxtaposition Examples Thick Sand, significant juxtaposition Offset FB is upthrown Thick Sand, significant juxtaposition Offset FB is downthrown PROB POSS Thin Sand, minimal juxtaposition Offset FB is upthrown Thin Sand, minimal juxtaposition Offset FB is downthrown RESOURCE OR PROB? RESOURCE OR POSS?

21 Prospective Resources Categorization Low Best High 21