Case Histories Of Actual Performances Vs. Appraised Prognostication - Petroleum Reservoirs

American Institute of Mining, Metallurgical, and Petroleum Engineers, Inc. This paper was prepared for the 38th Annual California Regional Meeting of the Society of Petroleum Engineers of AIME, to be held in Los Angeles, Calif., Oct. 26–27, 1967. Permission to copy is restricted to an abstract of not more than 300 words. Illustrations may not be copied. The abstract should contain conspicuous acknowledgment of where and by whom the paper is presented. Publication elsewhere after publication in the JOURNAL OF PETROLEUM TECHNOLOGY or the SOCIETY OF PETROLEUM ENGINEERS JOURNAL is usually granted upon request to the Editor of the appropriate journal provided agreement to give proper credit is made. Discussion of this paper is invited. Three copies of any discussion should be sent to the Society of Petroleum Engineers office. Such discussion may be presented at the above meeting and, with the paper, may be considered for publication in one of the two SPE magazines. Introduction In the producing segment of the petroleum industry, oil and gas reserve estimates and appraisals are vital requirements for sales, mergers, and all financing of oil and gas operations. Petroleum engineering techniques are utilized to estimate oil and gas reserves and to forecast producing rates. The basic parameters which the reservoir and petroleum engineer use are the areal extent of the reservoir or of drainage, the thickness of the producing zone, and the recovery factor per acre-foot. Utilizing these factors, together with the market demand for petroleum, availability of pipeline connections, prices of crude oil and gas, applicable development, and operating costs, value is determined. The most realistic value is resolved when the estimated reserves are proven. Proven reserves, based on the AIME definition as developed by J.J. Arps' committee and others, are:"The quantity of crude oil, natural gas, or natural gas liquids which analysis of geological and engineering data demonstrates with reasonable certainty to be recoverable in the future from an oil or gas reservoir under existing economic conditions and with conventional methods and equipment. They represent strictly technical judgments, and are not knowingly influenced by attitudes of conservatism or optimism."When values are determined from probable or possible reserves, the values must be clearly labeled and discounted to be comparable to realistic values resolved from proven reserves. Upon being assigned this subject I communicated with many representatives of organizations interested in studying and calculating oil and gas reserves. This included major and independent oil and gas companies, lending institutions, conservation commissions and consulting engineers. Their help and data made this paper possible. ADJUSTMENTS OF RESERVES In an effort to select representative oil pools, a statistical review of adjustments in oil reserves during the period between Jan. 1,1946, and Jan. 1, 1966, was undertaken. The data used were from the annual January issues of The Oil and Gas Journal. Gas pool data were suggested by several individuals. Before presenting the case histories I wish to discuss some of the factors which have been operative to adjust oil and gas reserves upward and downward.