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Defining Unconventional Resources

SPE recently held an Applied Tech­nology Workshop (ATW) on “SPE Petroleum Resources Management Systems (PRMS) Reserves and Resources Definitions–Applicable to Both Unconventional and Conventional Resources?” in Penang, Malaysia. The unprecedented growth in the exploration and production of unconventional resources in North America has sparked widespread interest in the Asia Pacific region. In parallel with the North American shale gas boom, the emergence of several mega coal seam gas to liquefied natural gas projects in Australia has also renewed interest in coalbed methane (CBM) in the region.

The differences in reservoir characteristics and producing mechanisms between conventional and unconventional resources have provided technical, developmental, and economic challenges to the industry, with consequential effects on resource assessment. The question therefore arises as to the suitability and applicability of the SPE PRMS to unconventional resources.
The workshop attracted 93 participants, representing 13 countries and 23 organizations. The program committee for the workshop consisted of 12 members:

Cochairpersons

  • Norhayati Hashim, Petronas
  • David Ahye, Gaffney, Cline and Associates

Committee members

  • Yousef Al-Shobaili, Saudi Aramco
  • Abdolrahim Ataei, Petronas
  • Kamarul Ariffin Buang, ExxonMobil E&P Malaysia
  • Bruce Gunn, RISC
  • Greg Horton, Santos
  • Krit Ngamkamollert, PTT Exploration and Production
  • Douglas Peacock, Gaffney, Cline and Associates
  • Aidil Shabudin, Petronas
  • Mike Reeder, RPS
  • Yang Hua, RIPED, China

Session 1: Introduction / Opening / Keynote Address

Hazli Sham Kassim, general manager of resources enhancement at the petroleum management unit of Petronas was the keynote speaker. He spoke about the background of the PRMS and its goal to provide a standardized and consistent approach to assessment of risk and uncertainties related to petroleum reserves and resources. He also recommended that the SPE considers introducing abbreviations for Prospective Resource categories, similar to 1C, 2C, and 3C, and 1P, 2P, and 3P and suggested the abbreviations 1U, 2U, and 3U, as currently used internally by Petronas.

Greg Horton, member of the SPE Oil and Gas Reserves Committee (OGRC), then gave an overview of the PRMS and the updated application guidelines document (published November 2011). He also presented an update on what other international professional societies were doing with regard to updating their own guidelines and alignment with the PRMS.

Session 2: Characteristics of Unconventional Reservoirs

Session 2 provided an introduction and overview of the major types of unconventional reservoirs to ensure a common understanding by all. An overview was provided on CBM, tight gas, and shale gas. The session also included an introduction to the application of the PRMS to unconventional reservoirs.

Coalbed Methane

Following the summary, discussion included:

  • Do PRMS guidelines provide guidance (yes) or definitive limits (no) for issues such as depth limits and extent of 1P, 2P, and 3P areas?
  • The length of time for production buildup depends on coal characteristics, e.g. saturation, permeability, etc.
  • Stress regimes were highlighted as an important issue.

Tight Gas and Shale Gas

Following the summaries, discussion included:

  • How can you determine the relative proportions of free and desorbed gas in production?
  • Mineralogy and geomechanics were highlighted as important issues in production characteristics.
  • The differences in porosity types (intergranular, micro- and fracture-) were highlighted.
  • Limited historical production times are available for shale gas wells.

PRMS and Unconventional Reservoirs

Several key issues and uncertainties were discussed including:

  • Discovery test issues for unconventional. How do you know when you have made a discovery?
  • The extent of 1P, 2P, and 3P areas, and also limits of CR areas were discussed

Session 3: Emerging Concepts/Techniques for Estimation of In-Place Volumes

This session reviewed the various methodologies employed for the estimation of in-place volumes for the key unconventional resource types. Some of the key issues discussed were as follows:

  • The differences in estimation techniques between free gas and adsorbed gas.
  • A method was presented for estimating contacted volume from the performance of shale gas wells, which can provide reliable results even in the early stages of well production history.
  • Free gas is more important in shale gas reservoirs than adsorbed gas as it is the dominant contributor to early production.
  • The importance of cutoffs for volume estimation in heavy oil reservoirs.
  • Capturing the whole range of uncertainty in estimating in-place volumes.

Session 4: Emerging Concepts/Techniques for Estimation of EUR Potential

This session reviewed the various methodologies employed for the estimation of ultimate recovery for the key unconventional resource types. Some of the key issues discussed were as follows:

  • The challenges of long-term forecasting for shale gas wells using type curves, given the variability in individual well performance.
  • Would the understanding of the physics help improve the type curve method?
  • Estimating recoverable gas for shale gas wells using rate and flowing surface pressure data. The method was supported by various examples from fields in the United States.
  • Numerical model representation of multistage hydraulically fractured horizontal wells located in shale gas reservoirs using neural networks.

Session 5: Emerging Technologies and Their Impact on Resource Estimation

This session focused on some emerging technologies and their impact on resource estimation. Some of the key issues discussed were as follows:

  • Pressure and fluid sampling techniques
  • Sedimentological reservoir anatomy, based on borehole image analysis
  • Adapting nuclear magnetic resonance (NMR) log measurement to organic shale reservoir petrophysical evaluation
  • Advances in seismic imaging for better hydrocarbon resource estimation

Session 6: Managing the Geological and Petrophysical Uncertainties

This session had a broader focus extending to conventional as well as unconventional situations. Some of the key issues discussed were as follows:

  • Assessments of EUR/reserves in shale assets with limited production histories for valuation purposes, given the shortcomings of conventional dca and well testing.
  • Need to develop type curves for shale gas and oil plays.
  • Assisted history matching can reduce the uncertainty ranges that exist in almost all the static and dynamic data.
  • Water saturation and water salinity measurements can have a significant impact on estimated original in-place volumes, leading to “negative reserves” conclusions in some mature fields. The need for proper coring and testing was discussed.

Session 7: Estimating the Reservoir Potential

This session was also intended to have a broader focus dealing with conventional as well as unconventional situations. Some of the key issues discussed were as follows:

  • Thin bed reservoirs play an important role in many areas. The resource classification requires integrated knowledge from different geoscience and reservoir engineering groups. A thin bed characterization workflow case study was discussed.
  • Paradigm shift in seismic data analysis for reservoir characterization in mature fields that examined the potential for extracting more information from existing seismic data.
  • In CBM, proper optimization and high grading can improve the ultimate recovery/well and gas initially in place/km2. This can lead to improvements in resource estimation at different scales from well level to field level and also in the final area development plan.

Session 8: Reserves and Resource Categorization and Classification

This session was devoted to further discussion on issues associated with reserve and resource categorization and classification, which had arisen during earlier sessions, and with reference to application of the updated guidelines. Particular attention was paid to CBM because of the interest in the region. Some of the key issues discussed were as follows:

  • Confusion between risk and uncertainty in the application document
  • Definition of a project, extending pilot results to the “full project”
  • Definition of a discovery in terms of unconventional reservoirs and the need for a stricter discovery test

Session 9: Breakout Session and Presentation

The participants were divided into four groups to discuss the key topics raised during the workshop and provide feedback to the committee. Discussions were lively and informative, and some of the main points are summarized below.

CBM Reserves Methodology

If a drainage area, square-based areal approach is to be used, the size of the drainage area (square) is critical. Support should be given to defining this size. It was also recognized that the size of the squares, or the well spacing, may vary away from existing well control. For example, a higher well density may be required in areas of lower permeability.

The current guidelines do not seem to be consistent with the basic principles of the PRMS, and seem to mix the risk and uncertainty axes. Reserves should be better linked with approved development plans and be more “project based.” This would make it more consistent with existing PRMS practice for conventional reserves.

  • The area for reserves should not depend on X well spacing from an appraisal/producing well, but on a defined project/development plan.
  • Of particular concern was the boundary between reserves and CR. It should be a commercial boundary and not based on technical uncertainty.
  • The issue of reserves is then closely linked with the definition of a project, which requires greater clarity in the guidelines.
  • The area may also be limited by technical considerations such as coal quality, depth, etc.
  • The 1P, 2P, and 3P ranges should then be based on technical uncertainties.

Since there seems to be some difficulty in fitting unconventional reserves into the PRMS definitions, it may be possible to come up with a different solution. Unconventional reserves can be defined in a different way, e.g. the existing “rings” approach could be retained but not necessarily under the PRMS. Another alternative would be to use the rings approach for reserves only and a technical uncertainty approach for CR and PR. Or we could simply start afresh with an unconventional-specific approach.

It was suggested that the guidelines do not describe the coal limits (200 m to 1000 m), but to describe in words how those limits may be derived.

Discovery Test

The concept of a discovery test worksheet was discussed and considered to be worthwhile developing further, though it would be challenging to define an internationally accepted “pass score.” It would be a good practice for companies to develop their own processes along these lines, perhaps with criteria tailored to suit their own situations.

Deterministic vs. Probabilistic Methods

There is still confusion in the industry about the differences between the two approaches and when they may be best applied.

It should be made clearer within the PRMS that resource estimates should not vary widely between the two approaches and there should be a requirement to cross-check results between the two methodologies. In principle, results should be governed more by quality/quantity of data and state of knowledge than by choosing a different calculation approach with the same data set.