IBP1979_12 RISK ANALYSIS FOR NEW PROJECTS IN BROWNFIELDS: APPLICATION OF A METHODOLOGY INTEGRATED WITH HISTORY MATCHING PROCESS Euripedes

B. Luz, Jr.,1 Cássio Pettan V. de Carvalho,2 Paula de F. Santos,3 Rildo M. de Oliveira,4 Luciano F. Camarão, Jr.,5 Guilherme do E. S. Dumas6
Copyright 2012, Instituto Brasileiro de Petróleo, Gás e Biocombustíveis - IBP This Technical Work was prepared for presentation at the Rio Oil & Gas Expo and Conference 2012, which is to be held between September 17, 2012 and September 20, 2012 in Rio de Janeiro. This Technical Work was selected for presentation by the event’s Technical Committee, following the author’s (or authors’) submission of the information contained within the complete work. The resulting submitted material does not necessarily reflect the opinions of the Instituto Brasileiro de Petróleo, Gás e Biocombustíveis or the Members and Representatives thereof. The author(s) know(s) of, and approve(s), the publication of this Technical Work in the Annals of the Rio Oil & Gas Expo and Conference 2012.

Summary
The challenges encountered by the industry in the E&P sector, as aggravated by the need for ever-increasing investment, has led companies to implement best practices for managing risk and uncertainty in several areas. The reservoir discipline stands out in regard to this need because large development projects are evaluated through it. For brownfields, in general, less effort is expended on these analyses than for new fields, as it is expected that a greater amount of information will have been acquired over a long period of time for a mature field. However, for this situation, it is more difficult to consider uncertainties because of the restrictions imposed by historical production data, which must be honored as much as possible by the models. This work proposes a practical methodology for analyzing risk for new projects, specifically dealing with mature fields, using the numerical flow simulation to determine these estimations. The scenarios generated and used in this work are validated through the production history for the wells found in the region of the project being studied in addition to the pertinent geological and geophysical data. The following are some examples of projects in mature fields: drilling of production or injector wells, various interventions in wells already drilled, re-completions, etc. Using the models defined, it is possible to evaluate the uncertainties and risks inherent to implementing a new project, defining oil increase-curve envelopes for the field. Representative models were also generated for the project being studied, identifying optimistic, expected, and pessimistic curves. Furthermore, different scenarios were defined for the project, which helps with its planning and development. The methodology’s validation is also presented through a retroactive analysis, as well as a case study for a real field, evaluating the drilling of new production wells for a mature reservoir in the Campo’s Basin.

1. Introduction
Although the concern for including a risk-analysis methodology when evaluating new oil industry projects is not recent, mainly in relation to the reservoir discipline, it must be noted that only a small portion of the industry actually implements it. New technical, economic, and financial challenges have forced E&P companies to move, in the most effective manner possible, in the direction of best practices for managing risks and uncertainties in several areas. A single well-characterized deterministic model is no longer sufficient for representation of a field. Today, it is necessary to establish and follow standards for analyzing risk and uncertainties, which are being developed by companies and which, theoretically, reflect the best market practices. As other works have indicated (Thiele 2010), for multimillion dollar investments, it is much more important to determine the real possibility of failure and to invest in the reduction of uncertainty than to acquire data that unduly increases the resolution of a single model.

______________________________ 1 Master Petroleum Engineer – Petrobras 2 Reservoir Consultant – Halliburton 3 Master Geologist – Petrobras 4 Master Geologist – Petrobras 5 Master Geologist – Petrobras 6 Petroleum Engineer – Petrobras

Rio Oil & Gas Expo and Conference 2012 Specifically for mature fields, the big challenge for risk analysis is the conditioning of uncertainty scenarios to the historical production data. In other words, with new fields, where there is little observed flow data, the risk analysis procedure is simpler, as, with respect to geological and geophysical interpretation, uncertainties may be inserted with fewer restrictions. However, when dealing with a field that has a long history of production, the commitment to giving consideration to historical flow data restricts and makes it difficult to define possible uncertainty scenarios. On the other hand, risk analyses for mature fields, in general, provide ranges that are less scattered than the results of analyses carried out for new fields, due to the fact that the various years of production restrict the possible uncertainties (Al Salhi et al. 2005). The numerical-flow simulator continues to be the most sophisticated tool that engineers use for these analyses, as well as for all reservoir management. The recent advances in the processing capacity of computers, together with the improvement of techniques for parallel and distributed computing, has allowed increasingly-complex models to be represented and simulated in a shorter period of time. The combination of these two factors enables the development and adoption of more detailed stochastic studies capable of more precisely representing the uncertainties associated with fielddevelopment projects.

2. Related Works
For mature fields, with a large number of drilled wells and several years of production, the standards for analyzing the most common uncertainties in the oil industry are neither practical nor easy to apply. The methods described by Swinkels et al. (2011), for example, are very viable if applied to fields with production history. However, neither the creation of various outputs and different scenarios nor the matching of historical data for each case is an easy task to implement, especially if done manually. Al Salhi et al. (2005) presented a case study for dealing with uncertainties based on an experimental design and response surface models. The study was carried out at a gigantic field in Oman, with over 35 years of production. In the same manner as proposed in this work, the authors took advantage of the production data to restrict uncertainties using history matching. Emerick et al. (2011) developed and implemented a method that was based on the Kalman filter for history matching, which resulted in the creation of various adjusted models. The predictive capacities of these models were retroactively evaluated, with significant results being seen from application of the proposed technique. Becerra et al. (2011) applied, in the Marimbá field of the Campos Basin, a methodology for history matching and forecasting with uncertainties, comparing different commercial applications. Note the comments in their conclusions, highlighting the importance of stochastic analysis instead of deterministic analyses, as well as the relevance of integrated work for the field team amongst engineers, geologists, and geophysicists. Zorzanelli et al. (2011) presented a modified standard methodology for analyzing uncertainties adapted to the conditions for wells with production history. The authors, following the standard, divided the analysis into two stages, first dealing with uncertainties related to geological outputs and scenarios and then with dynamic uncertainties. History matching was used in the selection of outputs and scenarios, choosing only the best-fitted models, reducing the number of evaluations required over the entire process. Romeu et al. (2011) extensively reviewed the state of the art in regard to history matching, uncertainty analysis, and optimization. The work highlighted the current trend toward multiple rounds in comparison with the past usage of deterministic models. It also demonstrated the use of history matching methodologies that generated multiple scenarios and which, therefore, help with uncertainty-analysis processes, in addition to a review of methodologies with the Kalman filter.

3. Methodology
In this work, the entire uncertainty-analysis process is accomplished through numerical-flow simulation, with the commitment of history matching for the wells surrounding the project. Therefore, the choice of uncertainties must be made locally in the area of influence of the well or the project being studied. These variations are inserted directly into the simulation model through specific software that allows practical preparation and evaluation of the uncertainties. From a large number of created possibilities, scenarios are only selected if they present history matching better or close to the actual adjustment for the field (i.e., the deterministic model adjusted by the engineers of the field). Consequently, the project’s performance is evaluated with different possible outputs, quantifying the risk of implementing the project being studied.

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Rio Oil & Gas Expo and Conference 2012 3.1 Premises The methodology presented is used to quantify the risks for new projects through the variation of uncertain attributes, this being an activity that involves studies from geological, geophysical, and engineering teams. The integrated work of the multidisciplinary group is of great importance for the correct compilation of information, which aids in the evaluation of project risks. Another aspect of this study is the need for changes made to the model to be consistent with geological conditions, carefully observing logs of neighboring wells, for example. Nevertheless, these changes should not negatively influence the current history matching for the field, as scenarios with simulated curves deviating from the observed data will be discarded, which will be explained in the next sections. Moreover, if the development to be evaluated has more than one project, each one must be studied individually at the initial stage, making it possible to evaluate them together in the next step. This separation reduces the total number of simulations required during the analysis, in addition to making it possible to determine individual performance for each project. 3.2 Flowchart Figure 1 is a flowchart of the main steps for the proposed methodology. Basically, seven steps are performed sequentially, resulting in curves that represent the field oil increment for the project being studied.

Figure 1. Methodology Flowchart This workflow has been implemented using a commercial software for uncertainty analysis and optimization, as well as the numerical-flow simulator. Each of the steps is described below. 3.3. Steps 3.3.1. Identification of Uncertain Properties and Creation of Scenarios The first step of this methodology consists of identifying the main uncertainties of the region in which it is intended to evaluate the project. During this phase, the integration among the disciplines (geology, geophysics, operations) is essential, as it helps to determine which factors represent the most risk for the results. The following are some examples of parameters that may be chosen and directly evaluated in the simulation model: thicknesses of layers, fault transmissibility and displacement, contact heights, the presence of channels, isolation between the areas, etc. Thus, combining the listed properties and the respective variations of each one, various scenarios may be created, making it possible to carry out the analyses that take place during the following steps. Figure 2 illustrates some examples of uncertainties that may be incorporated directly into the numerical model for the flow simulation.

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Figure 2. Examples of Possible Uncertainties to Consider 3.3.2. Determination of Wells in the Region of Influence Having selected the uncertain properties, the next step is to determine the wells that will be considered during the history matching to be executed. In other words, to evaluate changes to the adjustment, it is not necessary to verify all the field’s wells, as property changes are performed locally. The production data of these wells will make up the objective function, as explained in the next step. The criteria for well selection is the influence by the uncertain attributes, meaning that a producing well must be selected if its production curves are altered by the uncertainties considered. 3.3.3. Simulations over the Historical Period for the Scenarios Created In this stage, the first flow simulations are carried out, being evaluated only over the field’s historical period. The simulations must be executed and the results of pertinent wells must be saved. This data will make up an objective function responsible for evaluating each of the scenarios created, in accordance with the proximity between results simulated and the observed historical production data. This objective function is calculated in this work using the BSW curves of the wells selected in the prior step, but other properties may also be chosen. Calculation of the objective function will result in a single value, which must be associated with the respective scenario that was evaluated, with a lower value representing better quality for the history matching obtained. Another aspect to be noted is that there are different approaches for this step: complete enumeration or selection of scenarios through a sampling method. That is, depending on the total number of created scenarios, computational resources, and available time, it is possible to either evaluate the entire set of solutions or not do so. For selection via sampling, probability considerations must already be given at this stage for each created scenario and these values must be linked to the probabilities of the variables that make up each case. For the complete enumeration approach, the probability for each scenario is only considered later on, during identification of the representative models. 3.3.4. Selection of Adjusted Models With simulations having been performed over the historical period, it is possible to determine the best historymatched scenarios, through a plot between each scenario and the respective value of the objective function, as calculated in the prior step. Models considered to be adjusted, and, therefore, used to evaluate the extrapolation period, are those that improve the matching presented by the base case or that approximate the objective function. In other words, scenarios that negatively influence the current history matching for the field are excluded from the analysis, as they do not serve to evaluate the performance of the project being studied. It is worthwhile to point out that the base case is the deterministic model for the field, which does not contemplate any variations in uncertain properties. Figure 3 is a schematic for selecting models, which is executed during this step, where the models with poor matching (in blue) are not considered during extrapolation.

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Figure 3. Schematic for Selecting Matched Models If the selection carried out during this step results in an unsatisfactory number of models, it is necessary to return to the first step. Thus, new uncertainties, and especially new ranges and discretizations for these uncertainties, must be considered, restarting the workflow. 3.3.5. Simulations over the Extrapolation Period Once the reliable scenarios have been defined, the next step is to evaluate the models over the extrapolation period, where the project in question is introduced into the analysis. Each simulation is then performed over this interval, and the project performances for the various created situations are verified. 3.3.6. Evaluations of the Base Model for the Created Scenarios In addition, for correct identification of the project’s outcome, it is necessary to calculate the increase in oil that is added to the field. As a result, each selected uncertainty scenario must be reevaluated during the extrapolation period, although, this time, without the inclusion of the project. This analysis is necessary since the unique observation of the production curve of the new well might lead to erroneous conclusions. For example, there could be a high cumulative oil production for the well in study but a reduction in the cumulative oil of the neighboring wells. This incremental evaluation cancels out this type of effect. 3.3.7. Identification of Representative Curves (P90, P50, and P10) Having calculated the gain for the project in each scenario, it is possible to construct an uncertainty curve for the performed study. This is a very common type of graph in the oil industry, which represents the possible ranges of results and their respective probabilities. In this display, the scenarios are arranged in ascending order, in light of the increase in oil for the field, and the cumulative probabilities are calculated. It is valid to note that the probability of each scenario is weighted by the respective probabilities for the uncertainty variables that make up each model, such as in the derivation tree schematic shown by Silva (2011). In this manner, the representative models P10, P50, and P90 are defined, which will be used for evaluation of the project, showing its risks and variations. Using these models, it will be possible to generate representative production curves, which is the final objective of this methodology and represent the geological uncertainties but also contemplate the dynamic data of the field.

4. Applications
This methodology was validated and applied at a gigantic field in the Campos Basin, with a reservoir that has been producing for 20 years (i.e., since 1991) and has more than 200 wells drilled since it began production. With the data gathered over all the years in which the field has been producing, it has been verified that there are geological and structural heterogeneities that are highly impactful on the performance of new projects, which makes the reservoir suitable for application of this workflow. 4.1. Validation To validate the proposed steps, a retroactive analysis was carried out for a well that is already drilled and producing. This well was drilled in 2006 and began producing in the same year. The purpose of this retroactive analysis was to extrapolate the envelope of possible production curves and to compare it with the observed performance of the well, beginning in its opening date. 5

Rio Oil & Gas Expo and Conference 2012 This well presented a divergence in production behavior in comparison with what was forecast for it at the time of project, with high BSW from startup. Such a variation could have been estimated beforehand through an uncertainty analysis methodology, as proposed is this work. In this validation study, the uncertainties selected for inclusion in the simulation model were basically the following: communication between the different stratigraphic zones in the well’s region (four in total) and transmissibility and displacement for the various faults in the region. Because it was a very large selection, with a high number of variables and level of uncertainty, the sampling method was selected for creating scenarios and runs for history matching. The objective function used for the history matching was calculated by using the difference between the simulated and observed WCUT for the seven wells selected in the study region, with there being 200 scenarios for the simulations during the historical period and with Latin Hypercube sampling being used. This quantity was defined because it was possible to conduct the study in a feasible amount of time, as well as to cover, in a representative manner, all the uncertainties considered. Related to the workflow, there were executed all the proposed phases up to the “Simulations Over the Extrapolation Period” step. This is because, as the objective was to verify compatibility between the production curves forecasted by the methodology and the production curves observed for the well, the next steps were not carried out to evaluate the increase in oil for the field. 4.2. Application As for the effects of application, a practical example is presented in this work, dealing with the evaluation of risk for an infill drilling project, for which it is intended to drill six new producing wells for the field being studied. As Figure 4 shows, these new wells (highlighted in red) are found in regions with a large number of other wells that have already been drilled and are producing, which demonstrates the need for the methodology proposed.

Figure 4. Well Positioning for the Project Being Studied The uncertainties considered for each new well are summarized in Table 1. Besides the geological uncertainties, three possible variations in productivity index are considered for each well, which are only introduced into the work flow during the extrapolation rounds, which extend out to 2025. Table 1. Uncertainties Considered in the Case Study

Location
P4 Region’s Net-to-Gross Fault Displacement, Next to the Location

Uncertainties Considered
Fault Transmissibility in the Well Region Communication Between the Region’s Upper/Lower Zones Productivity Index

P1

Transmissibility of Nearby Fault

Communication Between the Region’s Upper/Lower Zones

Productivity Index

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Rio Oil & Gas Expo and Conference 2012 Gas-Oil Contact Height Region’s Porous Volume Region’s Net-to-Gross Region’s Reservoir Thickness Transmissibility of Fault, Next to the Well Transmissibility of Fault in the Well Region Displacement of Two Communication Productivity Faults, Next to the Between the Region’s Index Location Upper/Lower Zones Fault Communication Between Displacement the Region’s Productivity Index in the Region Upper/Lower Zones Communication Between the Region’s Upper/Lower Zones Transmissibility of Two Faults in the Region Productivity Index

P2

P3 P5

P6

Presence of Shale within the Well’s Zone

Displacement of Two Faults, Next to the Location

Productivity Index

The study for each well was carried out separately in a first phase, which is a premise of the methodology that allowed for evaluation of individual performance. For each well, there was a complete enumeration during creation of scenarios and simulations for history matching, which was feasible in terms of effort and computational time required. During the second step, a combined analysis of the project was carried out, selecting and combining different adjusted scenarios for each well. A total of 200 combinations were sampled in all, which generated the final curves for the project.

5. Results
The following sections show the results of the applications carried out. For reasons of confidentiality, all graphs and data were normalized without compromising the display of results. 5.1. Validation Of the 200 scenarios created and simulated for the historical period (between 1991 and 2006), during validation, only 32 were selected, improving or approximating the history matching for the field’s deterministic model. These adjusted models were evaluated, with the presence of the well being studied, during the “extrapolation” period (i.e., between 2006 and 2011), with the observed production data. Figure 5 demonstrates the selection of models, in terms of the objective function of history matching, and also the production curves obtained for the well (cumulative oil and BSW).

Figure 5. Validation Results 7

Rio Oil & Gas Expo and Conference 2012 It can be seen that the history matching procedure excluded many of the created scenarios, only keeping 16% of the evaluated possibilities. This percentage might serve as a parameter for restarting the workflow, reselecting new uncertainties and variation ranges. However, for the purposes of validation, the number of models selected for extrapolation was satisfactory. Regarding the production curves, it is clear that the historical data remained covered by the curve envelope created by the methodology, which is indicative of the flow’s validation. It is worth noting that these created envelopes presented a determined dispersion that was directly related to the quantity and variability of scenarios selected. 5.2. Application For the application of the methodology, the first results were related to the performance of each well belonging to the project. Table 2 presents the number of scenarios used and defined for individual evaluations. Table 2. Number of Models for Each Step Number of Models Evaluated over the Historical Period 162 216 145 216 140 192 Number of Adjusted Models 112 56 11 56 16 24

P2 P5 P1 P4 P3 P6

These scenarios were simulated during extrapolation, with and without the presence of wells, making it possible to calculate the increase in oil for the field, as well as, therefore, to construct uncertainty curves for each case. The data were presented in a normalized ratio, in relation to the respective P50 models, but in practice they represent the increase in oil for the field, at present value. Figure 6 shows the resulting curves for each well.

Figure 6. Results from Individual Evaluation of Each Well

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Rio Oil & Gas Expo and Conference 2012 It may be seen that some wells had more scattered results than others, which indicates greater risk for their implementation. This may be a result of several factors, such as higher uncertainty in terms of edge wells, less versatile geometry in comparison to other cases, etc. The P1 well, for example, has the greatest variation in terms of results, although, in absolute terms, the entire range of gains for the field proved to be economically viable. Thus, all wells were kept for the next step’s evaluation, which might not have been the case if poor results were found. The next step consisted of combining the scenarios created for each well, thereby verifying the behavior of the project as a whole. In this manner, consideration was given, in addition to individual contributions, to the interference among the wells, both in light of the reservoir and in regard to surface installations. A total of 200 combinations of selected scenarios were then simulated during extrapolation and under two conditions: one with and one without the project being studied. This permitted an incremental analysis of the results. Figure 7 shows the uncertainty curve obtained for the project through which were identified the representative models, as well as the possible range of results.

Figure 7. Uncertainty Curve for Evaluation of the Project as a Whole Results were also obtained in terms of incremental oil curves (over time) for the field, which is interesting data for purposes of economic evaluation. Figure 8 shows the curves for this oil in a cumulative format, normalized in relation to the P50 curve.

Figure 8. Cumulative Oil Production Curves of Representative Models (normalized) These results were used to evaluate the project, mainly during the approval stage. The total increment of oil for the field proved very favorable, with variations restricted within the range of interest for the project. 9

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6. Conclusions
Through the methodology created, it is possible to incorporate uncertainties into initially deterministic approaches for mature fields. A workflow was defined that maps a restricted universe of risks and uncertainties verifying what is feasible for the field. This reduces the number of possibilities, thereby increasing the reliability of results. Thus, each one of the models obtained at the end of the flow respects, or even improves, the history matching for the field, a fundamental criteria for mature reservoir studies. The validation carried out in this work shows the applicability of the proposed steps, with satisfactory results being found in a retroactive study. The example of application of the methodology demonstrates the method’s use, helping with identification of higher-risk projects, which is essential from the time of approval up to implementation of the project. In a study like this one, where six new producing wells were evaluated, more than 1,500 flow simulations were carried out, which was made possible by the use of parallel runs. The application of the proposed procedure may help reservoir engineers with planning tasks for new projects, eliminating, or restructuring those that are too risky. Identification of these possibilities, during the initial phases of any project, is essential for avoiding failures, or at least to reduce their frequency through exhaustive evaluations using the numerical flow simulator. Furthermore, additional steps, such as optimizations with uncertainties, may be carried out with the help of the representative scenarios defined by the methodology. As for future suggestions, beyond the exclusion method, other techniques might be evaluated for the selection of adjusted models, dealing probabilistically with each one. The step of identifying and creating uncertainty scenarios might also be studied through the use of other criteria, such as considerations regarding the level of discretization for each variable.

7. Acknowledgments
The authors would like to thank all those who contributed to the preparation and validation of this workflow, as well as Petrobras and Halliburton, regarding the conditions for execution and publication of this work.

8. References
AL SALHI, M.S., VAN RIJEN, M.F., ALIAS, Z.A., VISSER, F., DUJK, H., LEE, H.M., TIMMERMAN, R.H., UPADHYAYA, A.A., WEI, L. 2005. Reservoir Modeling for Redevelopment of a Giant Fractured Carbonate Field, Oman: Experimental Design for Uncertainty Management and Production Forecasting, International Petroleum Technology Conference, Doha, Qatar, 21–23 November. BECERRA, G.G., MODENESI, A.P., LISBOA, E.F.A., MASSULO, D., REIS, L.C. 2011. Ajuste de Histórico e Previsão sob Incerteza, uma aplicação no Campo de Marimbá (History Matching and Forecasting with Uncertainty, as Applied in the Marimbá Field). Reserves and Reservoir Seminar, Petrobras, Salvador. EMERICK, A.A., REYNOLDS, A.C. 2011. History Matching a Field Case Using the Ensemble Kalman Filter with Covariance Localization. Paper SPE 141216 presented at the SPE Reservoir Simulation Symposium, The Woodlands, Texas, USA, 21–23 February. ROMEU, R.K., RODRIGUES, J.R.P., EMERICK, A.A., SILVA, F.P.T., CARDOSO, M.A., BECERRA, G.G., MORAES, R.J., OLIVEIRA, D.F.B. 2011. Avanços Recentes em Ajuste de Histórico e Otimização sob Incertezas (Recent Advances in History Matching and Optimization with Uncertainties), Reserves and Reservoir Seminar, Petrobras, Salvador. SILVA, L.S., SCHIOZER, D.J. 2011. Integração de Análise de Incertezas e Ajuste de Histórico: Aplicação em um Caso Complexo (Integration of Uncertainty Analysis and History Matching: Application in a Complex Case), Reserves and Reservoir Seminar, Petrobras, Salvador. SWINKELS, W.J.A.M. et al. 2011. Guidelines for Application of the Petroleum Resources Management System, SPE Oil and Gas Reserves Committee, pp. 78–91. THIELE, M.R. 2010. Streamline Simulation for Modern Reservoir Engineering Workflows, Journal of Petroleum Technology 6, pp. 64–70. ZORZANELLI, I. B., PINTO, I. A., DEL REY, A.C., FALCONE, C.M., SILVA, J.G.R. 2011. Metodologia de estudos de análise de risco com ajuste de histórico aplicadas no Campo de Jubarte (Methodology for Risk Analysis Studies, with History Matching in the Jubarte Field), Reserves and Reservoir Seminar, Petrobras, Salvador.

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