While the oil and gas industry has largely come to terms with the sustained low prices, it is clear from our review of the reserves/asset management papers published during the past 12 months or so that many companies are continuing to challenge many aspects of their business to manage the cycle. These challenges have been at the strategic, tactical, and operational levels, with companies not just trying to remain viable but also positioning themselves to take advantage of improved conditions when they return.
The papers highlighted in this article cover technical assessment of unconventional resource plays, portfolio optimization, and technology development, all very relevant in today’s environment.
Paper SPE 185053 advances a large body of work dealing with building type wells for unconventional resource plays. In particular, it recognizes that, early in the life of a resource play, it can be very difficult to build representative type wells because of the limited number of wells and the limited production history—something especially true outside of the United States. The paper presents an integrated work flow, including relating geological differences to drilling and completion type, assessing biases, and evaluating the key uncertainties that drive economic value.
Paper SPE 187162 provides a simple example of the issues associated with portfolio optimization, in particular obtaining a balance between a short-term operational focus and a longer-term outlook for capital project selection when there are marginal and complex projects to choose from. The temptation for companies in survival mode is to focus on the short term. The process explained within the paper provides an innovative approach and argues that decision makers need to consider the complexities of the system in portfolio management.
A factor not addressed but that we recommend you consider when assessing project maturity is how these projects fit within the framework of the SPE Petroleum Resources Management System (currently under revision) and how the range of uncertainty is represented for better decision making.
While technology development has been and will continue to be a hallmark of the oil and gas industry, paper OTC 27806 argues that it has not been as effective as it could be. With the current challenging economic times, it has become more critical to make fewer mistakes and mitigate the “valley of death”—the virtual chasm that separates innovation from commercial demonstration. The paper argues that holistically addressing technical and commercial factors in an integrated way can improve the efficiency and effectiveness of developing new technologies, and it presents some thought-provoking pillars of success for industry to cross the chasm and remain commercially competitive.
This Month's Technical Papers
Recommended Additional Reading
SPE 185496 Are We Reasonably Certain That Reasonable Certainty Adequately Defines Uncertainty in Our Reserves Estimates? by B. Harrison, Lloyd’s Register, et al.
OTC 27949 Bringing Upstream Projects to Final Investment Decision by Sandeep Khurana, Granherne, a KBR company, et al.
SPE 185056 Historical Terminal-Decline-Rates Review of Unconventional Reservoirs in the United States by Brent W. Hale, William M. Cobb and Associates, et al.
Greg Horton, SPE, is retired from Santos after 33 years of reservoir-management responsibilities and maintains an active role in improving the SPE Petroleum Resources Management System (PRMS). He holds an honors degree in civil engineering from Adelaide University. Horton was a member of the SPE Oil and Gas Reserves Committee from 2011 to 2014, is a member of the SPE PRMS Improvements Subcommittee, and serves on the JPT Editorial Committee. He can be reached at firstname.lastname@example.org.
Barbara Pribyl, SPE, is reserves and resources manager at Santos. She has more than 20 years of experience as a geologist and in reserves and resources management, based in the Australian oil and gas, coal exploration, and coal-seam-gas industry. Pribyl holds an honors degree in geology from the University of Wollongong. Her focus in recent years has been on Australian and international oil and gas reserves and resources assurance and reporting. Pribyl has been a member of the SPE Oil and Gas Reserves Committee since 2014 and serves on the JPT Editorial Committee. She can be reached at email@example.com.
Greg Horton, SPE, Retired, and Barbara Pribyl, SPE, Reserves and Resources Manager, Santos
01 December 2017
Israel Hopes to Build on Success of First Bid Round
The second round will offer 19 offshore blocks clustered in five zones to continue natural gas development in the eastern Mediterranean’s Levant Basin.
Devon Pulls Up Its Roots, Goes All In on US Oil
Devon Energy will be getting simpler and smaller by selling two no-growth assets—gas acreage in the Barnett Shale in Texas and oil sand operations in Canada. Its future is staked on growing oil production in the Permian’s Delaware Basin and three other unconventional oil plays.
Chesapeake Teams with Analytics, ML Firm to Improve Asset Performance
The Oklahoma City independent has a new-look portfolio and new operational and financial priorities. And now it has enlisted an energy research firm to leverage advanced analytics and machine learning to help get the most out of its assets.
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