[Taskforce_Unity]

People i need your help, i am trying to come up with a good way to implement production from technological advances in my production model.

I have been looking at increased recovery rates for this but i am now at the point that i think that these numbers are totally off.

We have people saying that recovery rates are now around 35% worldwide(heard this from a variety of sources)

The increase would have been from around 22% in 1980 to 35% now.

As far as i understand reserves are calculated in this way:

(Technical) reserves = Oil initally in place * recovery rate

Reserves in 1980 were around 740 BB
Reserves in 2004 were around 1180 BB

In 1980 we ofcourse had discovered less oil then in 2004, this means that the OIIP (oil initally in place) was lower right?

Why is it then that:

1180 / 35 = 33.7

and

33.7 x 22 = 741

So by taking the recovery rate, reserves and OIIP of 2004 and translating that to a recovery rate of 22% (1980 number) we are getting the exact reserve number of 1980. Which should not be the case if i am correct.

Something smells fishy here, thus the economists were i got those numbers from seem to be calculating recovery rates in this way:

Recovery rate = (Technical) reserves / Oil initally in place

In that way it means that they are estimating world recovery rates by the reserves that are reported. Which means that since the reserves that are reported are totally flawed (Middle east reserve increases and no general accounting system) these recovery rates are also totally flawed and i cannot draw any conclusions on them......

So questions are:

Is my analysis correct?

How can i incorporate future technological oil production growth into a model?

[venky]

I'm a bit confused actually.

Perhaps it just could be a coincidence that the total OIP in 1980 and now is the same.

[backstop]

TF -

Sadly it's beyond me to say whether you've found a gross error /malpractice or have yet to incorporate some other factor that will make sense of the numbers.

There is some serious professional skill among the members, but some of those may not look in for a while - maybe it would be worth looking at past Dep. Mod threads and sending emails to anyone who interests you ?

Failing that, I think I'd polish up a clear short email letter to ASPO, who have to have an interest in responding to serious enquiries.

Good luck with it,

regards,

Backstop

[Antimatter]

Couple of comments.

OIIP refers to what was in the ground before production started ie. you have to add cumulative production onto the reserve figures, you have calculated remaining oil in place here. This would suggest that all the additions since 1980 have come through increases in recovery factor which obviously isnt true. Also recovery rate data is very fuzzy as its impossible to know exactly how much is in the ground short of strip mining the whole thing. Data from OPEC especially is poor. The UK DTI gives detailed figures...you might be able to work out changes in recovery rate from that but I don't think they give OIP or recovery rate figures. ExxonMObile says:

The absolute level of conventional oil-in-place is not precisely knowable, but is estimated to be between six and eight trillion barrels. Estimates of frontier resources are also very large.

6-8Tb would imply an eventual recovery rate of anywhere from 37.5-50% for a URR of 3 trillion and from 25-33% for a URR of 2 trillion (probably a little low). So theres quite a lot of uncertainty here.

I remember reading an API study where they said that the appropiate data was reported for US fields in the 60s IIRC and they were seeing increases of about 0.2%/year in average recovery rate...will try to find it again.

[Taskforce_Unity]

Couple of comments.

OIIP refers to what was in the ground before production started ie. you have to add cumulative production onto the reserve figures, you have calculated remaining oil in place here. This would suggest that all the additions since 1980 have come through increases in recovery factor which obviously isnt true.

I know that you should also figure in cumulative production. Thats why i think i smell something fishy in here. It appears as though the economists who put up these figures (22% recovery rate in 1980 and 35% in 2004) do not figure in cumulative production or OIIP from 1980 but from 2004 in their calculation.

I can't prove this case unfortunately because i have no OIIP data from 1980...

[rockdoc123]

Well I think you've taken on a task that is extremely challenging.....there is a lot hidden in the general rollup numbers that are published. For example the so-called average recovery factor has a huge standard deviation....all the way from about 5% currently in some of the heavy oil pools in Syria and other parts of the Middle East up to highs of 60-70% in fields with strong water drives, light oil etc. Given that you might have huge pools like Shedgun and Ain Dur with 60% recovery and a bunch of small fields with 15% recovery factors the actual recovery in terms of volume at the end of the day would be masked by a simple average.The average really needs to be a weighted average, I think, but I've yet to see a number like that.
Also it probably is worthwhile to walk through the various definitions applied to reserves and resources and illustrate the potential for confusion and concomittent misunderstanding.
Resource is usually used to refer to the total hydrocarbon in the ground and can often be used interchangably with original oil/gas in place
Reserves is used to refer to the actual amount of the resource that can be got from the ground...used interchangably with ultimate recoverable reserves
OOIP/OOGP...is the original amount of hydrocarbon in the ground in a given trap. There are huge uncertainties in most cases at calculating this number...with further drilling the uncertainty becomes less but it is still present. Factors that can improve estimates of in place volumes are availability of high resolution 3D seismic, lots of wells, pressures from the hydrocarbon column and the water leg etc.
Recoverable reserves....is the amount of the OOIP that can be recovered. Ultimate recoverable refers to what can be got after all efforts such as secondary and tertiary recovery are applied. Early in a fields history recovery factors are determined based on on reservoir and fluid properties, well density, drawdown and a host of other factors. As a consequence this estimate is not very accurate early on. As field production history is achieved it is possible to determine material balance of the field based on production and pressure declines...this is generally very accurate for fields with depletion drives but less possible for fields with strong water drives (no pressure drop).
Economically recoverable reserves is used to describe at any point in time what can be recovered from a field before field operating costs exceed field revenues. To some extent this is a moving target due to price fluctuations, related cost fluctuations and technology changes.
Reserves are reported under the guidance from the SPE. 1P reserves are proven reserves and refer to that which you are 90% sure can be economically recovered, 2P are probable reserves and refer to those which you are 50% sure can be recovered and 3P are geologically indicated reserves and refer to the ultimate recoverable reserves for that field...this value would only have a 10% confidence factor associated with it. When you see reserves reported on company balance sheets these may be proven plus probable or sometimes proven plus half probable....there is no rule but usually the fine print tells you what is referred to. In initial press releases what is reported is likely to be geologically indicated reserves or estimated oil in place ....one has to be careful in reading the release in order to figure out exactly what they are refering to in most cases. As the reserves are varified by third parties (companies such as DeGolyer and McNaughton or Ryder Scott) the numbers reported are generally 2P or probable reserves. SEC requirements only are for 2P reserves....3P are not reported in 10Ks or annual reports.
Now that you are totally confused here is a typical scenario.....I make an oil discovery...using my sparse seismic control, core data, wireline log data and drill stem test data I estimate the OOIP of a trap and then plug the appropriate values into a simulator to come up with recovery factor. I might make a press release saying how potentially big the trap is (3P or OOIP) but if I have only one well then the proven reserves I can book would be limited to the drainage area around that well. If I follow up with a second successful well that seeks to find the limits of the field I would be able to book additional proven reserves and some probable reserves. What would not be reported would be the geologically possible reserves which might either be present on the flank of the drilled structure, in a separate compartment etc. As I continue to develop the field I would be able to move geologically possible reserves to probable reserves and probable reserves to proven reserves. As production continues in the field I would have a better handle on ultimate recovery. As some point I might decide to implement water injection, gas injection or WAG which would change the depletion profile and increase recovery factor. Not all fields respond the same to secondary or tertiary recovery methods so there is no way of accurately predicting the increase. In fact in many fields they are put on water injection immediately so there is really no possible increase in recovery unless it is due to some other technology such as horizontal wells, multi laterals etc. To complicate matters more there maybe potential for hydrocarbons sitting in wells in formations that have not as yet been tested. This can be substantial. As an example there is a field in Egypt called Belayim Marine. This field had original recoverable reserves estimated at 750 MMB....about 15 years into its production history improvements in 3D technology indicated they should deepend some of the in-fill wells, they did and discovered an additional 400 MMB in a deeper reservoir. If you were "on the outside lookin in" you would see this as an important increase in recovery factor when in fact what has happened is the OOIP has increased....recovery factor may have stayed the same.

So the problems you are dealing with boil down to: what number am I actually looking at, what part of the production/appraisal part of the history of the field am I looking at and finally what technology is appropriate, if any, to enhance recovery.

I hope the above helps to outline the kind of error bars we need to put on the various depletion analyses we see.

[Ming]

First, I must say I think your production model (Model) is a great job.

But I’m a little confused over this problem.
I think that if you include past production in your calculations the coincidence vanishes…
i.e.: If you use:
1980 OIIP = 740 *100/22 – past prod. (as of 1980)
And:
2004 OIIP = 1180 *100/35 – past prod. (as of 2004)
(You will really obtain a greater OIIP for 2004…)

Anyway the reserve number cited for 1980 is a real 1980 number, not a recent number “backdated” (right?).
So, I don’t understand how this coincidence can result from a (present time) methodological error …

[Taskforce_Unity]

Thanks for the explanation Rockdoc123 (as always your information is really usefull)

Anyway the reserve number cited for 1980 is a real 1980 number, not a recent number “backdated” (right?).
So, I don’t understand how this coincidence can result from a (present time) methodological error …

Well i don't know if it is a real 1980 number. That's the whole problem, nobody shows how they come up with these numbers they just assume they are correct. I am doubting this, especially given the fact that we don't know anything about the Middle East.

As an example Saudi Arabia claims that they have an average recovery factor of 51% (given 261 billion barrels of reserves, 700 billion barrels OIIP and 131 billion barrels already produced).

I have some more numbers now thanks to IHS Energy (As usual they are the greatest ).

It's also funny that all these numbers are "free" on the internet.

By the way the official version of my model is going to be released on the internet next week. Expect some pretty big additions!

[rockdoc123]

As an example Saudi Arabia claims that they have an average recovery factor of 51%

Aramco listed the following recovery factors:

Ghawar 48%, Shaybah 5%, Haradh 10%, Marjan 13%, Zuluf 16%, Abu Sa'fah 21%, Sabariya 26%, Berri 20%, A'in Dur and Shadgun 60%, Abqaiq 73%.

They suggest eventually getting 70% out of A'in dur and Shadgun and Shaybah will likely be in the 60% + range as it is superlight oil and they are developing it will long reach horizontals. Now if we only knew the reserves for each of these

[Ming]

By the way the official version of my model is going to be released on the internet next week. Expect some pretty big additions!

Cool, hope you announce the new version here!

[Taskforce_Unity]

Ofcourse i will announce it here , my main reader base!

anyway its finished and now going through the "improving the english" fase....

I fixed the recovery rate stuff by taking some stuff based on past experience and making some "optimistic" assumptions and implementing a technological scenario (so the technies can be happy.... i hope).

[RedViking]

For information about calculation and evolution of recovery rates in Norway, take a look at the NPD report: Petroleum Resources 2005