SPEE Monograph 4 Workshop

:
CONVENTIONAL DECLINE CURVE ANALYSIS IN
UNCONVENTIONAL WELLS (DCA)
Chapter 5
CLAUDIO VIRUES - SR. RESERVOIR ENGINEER

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DISCLAIMER

• This workshop will go through the courses notes of SPEE
Monograph 4 course in June 4 thru 8 of 2016
• In an effort to expose our staff to Nexen Assets this
workshop will provide additional Nexen examples which are
consistent with Corporate Reserves internal principles and
related methodologies.
• The content of this workshop has been vetted by Corporate
Reserves to ensure our staff is not misguided in the use of
methodologies presented in it.

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SPEE Monograph 4 Committee
• SPEE Monograph 3 provided sound and logical guidance for estimating,
Undeveloped reserves in resource plays.

• SPEE Monograph 4 attempts to provide an understanding of currently available
methods to analyze well performance of developed unconventional plays and to
estimate associated recoverable volumes

• SPEE Monograph 4 seeks to describe current methodologies in the context
of consistent workflows to provide insight into unconventional well performance,
estimation of recoverable hydrocarbon volumes, and the uncertainties
surrounding those estimates

• The committee expect that evaluators will use this information in the context of
their own opportunity set and within the bounds of available data

• Above all else, it is the professional judgement of those doing an evaluation
that is the primary driver in estimation of recoverable volumes from any
developed unconverntional resource play 3

OUTLINE • Basic Decline Curve Analysis • Theoretical Values of Arps Parameters • Practical Use of Arps • Alternate Plot Types • Data Quality • Aggregation • Multi-Segment Decline • Summary • Application 1 – Horn River Shale Gas • Application 2 – Eagle Ford Black Oil SPEE Monograph 4 Course Notes . June 4-8 2016 – Scott Wilson. Ryder Scott 1 .

June 4-8 2016 – Scott Wilson.Basic decline curve analysis • Simple to get…. • Adequate empirical match that leads to….. • Essentially universal adoption by…. Ryder Scott 5 . – Practicing engineers – Software manufacturers – Financial backers SPEE Monograph 4 Course Notes ..

June 4-8 2016 – Scott Wilson. Ryder Scott 6 .Basic decline curve analysis SPEE Monograph 4 Course Notes .

June 4-8 2016 – Scott Wilson. Ryder Scott 7 .Basic decline curve analysis • Plots and b-factors that result in straight lines SPEE Monograph 4 Course Notes .

Ryder Scott 8 . log rate – Cartesian cumulative production. log rate SPEE Monograph 4 Course Notes . June 4-8 2016 – Scott Wilson. cartesian rate • Harmonic (b=1) – Late time only…Log time.Straight lines on Arps plots • Exponential (b=0) – Cartesian time. log rate – Cartesian cumulative production.

J. Ryder Scott 9 ..H.O.and Beal.Arps built on previous work • Arps was not the first to use these empirical forms – Lewis. June 4-8 2016 – Scott Wilson. SPEE Monograph 4 Course Notes . C. W. 1924 • 20 year later… Arps consolidated and simplified existing empirical equations • Arps did not assert that these incorporated reservoir engineering fundamentals. Jr.W. 1918 – Cutler.

June 4-8 2016 – Scott Wilson.Basic decline curve analysis • Compared to today’s standards. but “smoothed” to twice a year where the monthly data was erratic • Those studying b factors between 1920 and 1940 would not have seen high b factors because: – They had mostly single layer. – They didn’t see decline trends until the well was at least 2 years old (=3 data points!) SPEE Monograph 4 Course Notes . Arps worked with very poor quality data in 1940 • Most associated gas was flared or vented • Arps recommended that oil production data be recorded monthly. high permeability reservoirs. Ryder Scott 10 .

Ryder Scott 11 .Weaknesses in Arps’ 1940s-era data • Very poor quality • Most associated gas flared or vented • Production data recorded monthly – “Smoothed” to twice a year where monthly data was erratic • Consistenly low b-factors – Mostly single layer. June 4-8 2016 – Scott Wilson. high-permeability reservoirs – No decline trends until the well was at least 2 years* old * only 3 data points! SPEE Monograph 4 Course Notes .

Ryder Scott 12 . isotropic formation – Constant porosity – Small pressure gradients – Single-phase flow – Fixed size (fully bounded flow) – No influx.Theoretical values of Arps parameters Production rate decline of a system • Constraints – Constant fluid and rock compressibility – Constant flowing bottomhole pressure (FBHP) – Radial flow in a horizontal direction – Homogeneous. June 4-8 2016 – Scott Wilson. injection or phase change It is unlikely that any well has ever fully met the rigorous criteria required to mesh Arps decline equations to the reservoir engineering fundamentals of fluid flow and material balance SPEE Monograph 4 Course Notes .

Theoretical values of Arps parameters • Perfect linear flow will show…. SPEE Monograph 4 Course Notes . Ryder Scott 13 . June 4-8 2016 – Scott Wilson.

144 Barnett wells • All with b=2. changing dlim (effective limiting decline) SPEE Monograph 4 Course Notes . June 4-8 2016 – Scott Wilson. Ryder Scott 14 .An example: 15.

1/q) • A perfect bilinear system give b of 4 • Wells with a free gas surface in a homogeneous gravity drainage reservoir exhibit a b of exactly ½ SPEE Monograph 4 Course Notes .Theoretical values of Arps parameters • A perfect linear system give b of exactly 2 (same as linear trend on sqrt(t) vs. June 4-8 2016 – Scott Wilson. Ryder Scott 15 .

Flow regime changes will change well character SPEE Monograph 4 Course Notes . June 4-8 2016 – Scott Wilson. Ryder Scott 16 .

Problems with Arps functional forms • Visual Bias on Semi-logs Plots SPEE Monograph 4 Course Notes . June 4-8 2016 – Scott Wilson. Ryder Scott 17 .

June 4-8 2016 – Scott Wilson.Problems with Arps functional forms SPEE Monograph 4 Course Notes . Ryder Scott 18 .

High b-factors with Arps functional forms SPEE Monograph 4 Course Notes . June 4-8 2016 – Scott Wilson. Ryder Scott 19 .

Ryder Scott 20 .Differences in b-factors when declines are shallow SPEE Monograph 4 Course Notes . June 4-8 2016 – Scott Wilson.

June 4-8 2016 – Scott Wilson. Ryder Scott 21 . time plot SPEE Monograph 4 Course Notes .Cum production vs.

Ryder Scott 22 .Rate-time and rate-cum plots SPEE Monograph 4 Course Notes . June 4-8 2016 – Scott Wilson.

Ryder Scott 23 .Discounted future volume plot SPEE Monograph 4 Course Notes . June 4-8 2016 – Scott Wilson.

Ryder Scott 24 . June 4-8 2016 – Scott Wilson.Higher data frequency shows well “personality” SPEE Monograph 4 Course Notes .

Aggregated data • Do the decline characteristics of one well look the same as that of a group of those wells? • In this case. it is a mirror image! (a coincidence) SPEE Monograph 4 Course Notes . June 4-8 2016 – Scott Wilson. Ryder Scott 25 .

Ryder Scott 26 . June 4-8 2016 – Scott Wilson.Accounting for changing bhp SPEE Monograph 4 Course Notes .

Ryder Scott 27 . June 4-8 2016 – Scott Wilson.Accounting for changing bhp SPEE Monograph 4 Course Notes .

Estimating bhp from whp SPEE Monograph 4 Course Notes . June 4-8 2016 – Scott Wilson. Ryder Scott 28 .

Ryder Scott 29 . June 4-8 2016 – Scott Wilson.Accounting for secondary phases SPEE Monograph 4 Course Notes .

Ryder Scott 30 .Multisegment (modified hyperbolic decline) • Due to complex well history SPEE Monograph 4 Course Notes . June 4-8 2016 – Scott Wilson.

Multisegment (modified hyperbolic decline) • Due to reservoir characteristics (CBM example) SPEE Monograph 4 Course Notes . Ryder Scott 31 . June 4-8 2016 – Scott Wilson.

Multisegment (modified hyperbolic decline) • Well events that create multisegment declines • Classic inflow performance….. June 4-8 2016 – Scott Wilson. SPEE Monograph 4 Course Notes . Ryder Scott 32 .

Ryder Scott 33 . June 4-8 2016 – Scott Wilson.Multisegment (modified hyperbolic decline) • Well events that create multisegment declines SPEE Monograph 4 Course Notes .

Ryder Scott 34 .Multisegment (modified hyperbolic decline) • Well events that create multisegment declines SPEE Monograph 4 Course Notes . June 4-8 2016 – Scott Wilson.

June 4-8 2016 – Scott Wilson.Multisegment (modified hyperbolic decline) • Well events that create multi-segment declines SPEE Monograph 4 Course Notes . Ryder Scott 35 .

Ryder Scott 36 . June 4-8 2016 – Scott Wilson.Infill Interference in Np plot SPEE Monograph 4 Course Notes .

June 4-8 2016 – Scott Wilson. Ryder Scott 37 .Using Type Curve Cross-plot peak rate vs EUR SPEE Monograph 4 Course Notes .

June 4-8 2016 – Scott Wilson. Ryder Scott 38 .Summary • Characteristics of typical forecasts SPEE Monograph 4 Course Notes .

• Do not use hyperbolic exponents (b) higher that customary for the well and reservoir type • Use multiple-segment declines to account for performance- changing events. June 4-8 2016 – Scott Wilson. • Use a terminal decline rate (Dlim) on all hyperbolic forecasts. tubing and calculated FBHP. high frequency data • Plot all phases… in addition to casing. Ryder Scott 39 . • Determine terminal decline values (Dlim) from analogous wells.Summary – Recommended Practices • Use well-level. SPEE Monograph 4 Course Notes .

Ryder Scott 40 .Application 1 – Horn River Shale Gas • Basic Decline Curve Analysis • Theoretical Values of Arps Parameters • Practical Use of Arps • Alternate Plot Types • Data Quality • Aggregation • Multi-Segment Decline • Summary SPEE Monograph 4 Course Notes . June 4-8 2016 – Scott Wilson.

Field Overview – RTC NEBC • Nexen Energy ULC has 60% WI and is the operator • IGBC is our 40% WI JV partner .

Field Activity Update – RTC NEBC APACHE A-002-J • At the end of 2013. the north half of C-1-J pad APACHE D-70-J (10 wells) was completed and C-34-L ENCANA commenced production in ENCANA B/C-63-K September/October B-76-K A-16-I DEVON C-1-J B-99-G B-18-I • No drilling took place in 2014 and the north half of D-37-H pad is B-77-H planned to be completed at later day as per the AOP D-37-H 93-A 42 . there were a total of 61 wells producing from Dilly Creek: • A-16-I & B-93-A (drilled Pre-2010 experimental scheme wells) • B-18-I EOG ENCANA C-55-B • C-1-J (south) D-1-D • B-77-H • D-37H (south) APACHE • C1J (north) APACHE D-70-K D-52-L ENCANA • In 2014.

Not Completed yet 43 . the north half of C-1-J pad C-1-J South (10 wells) was completed and (2011) commenced production in September/October B-77-H (2012) • No drilling took place in 2014 and the north half of D-37-H pad is planned to be completed at later day as per the AOP • Current LNG Concept Select Stage D-37-H NORTH evaluated (Drilled 2013.Zooming in Nexen Activity – RTC NEBC A-16-I C-1-J North B-18-I (2009) (On Stream 2014) (2010) • In 2014.

Application 1 – Decline Curve Analysis • Different decline curve analysis methodologies are available: • Traditional Decline (Arps) (Figure 2) • Stretched Exponential • Duong • Multi-segment • Traditional Decline (Arps) with modified hyperbolic and terminal/limiting decline rate 44 .

CK1J (C1J North) Log Log HALF SLOPE PERIOD SELECTED Source : RTC NEBC 2015 Presentation .

CK1J (C1J North) Selected Points SELECTED POINTS PERIOD SELECTED Source : RTC NEBC 2015 Presentation .

CK1J (C1J North) EUR Source : RTC NEBC 2015 Presentation .

BF77H (B77H Pad) Log Log D37H SOUTH HALF COMING ON SLOPE UNIT SLOPE UNIT SLOPE TUBING INSTALL PERIOD SELECTED .

BF77H (B77H Pad) Selected Points

SELECTED
POINTS

Source : RTC NEBC 2015 Presentation PERIOD
SELECTED

BF77H (B77H Pad) EUR

Source : RTC NEBC 2015 Presentation

BB18I (B18I) Log Log

HALF C1J SOUTH
SLOPE COMING ON DROP IN
RATE
UNIT
SLOPE

UNIT
SLOPE

HIGHER
THAN
UNIT
SLOPE

Source : RTC NEBC 2015 Presentation PERIOD
SELECTED

BB18I (B18I) Selected Points SELECTED POINTS Source : RTC NEBC 2015 Presentation PERIOD SELECTED .

BB18I (B18I) EUR Source : RTC NEBC 2015 Presentation .

Pad/Well/Formation Level – B77H/BH77H/Evie Examples where analysis is incorrect Source : RTC NEBC 2015 Presentation 54 .

Pad/Well/Formation Level – B77H/BI77H/Evie Examples where analysis is incorrect Source : RTC NEBC 2015 Presentation 55 .

Pad/Well/Formation Level – B77H/BM77H/Evie Examples where analysis is incorrect Source : RTC NEBC 2015 Presentation 56 .

Pad/Well/Formation Level – B77H/BP77H/Evie Examples where analysis is incorrect Source : RTC NEBC 2015 Presentation 57 .

Lazy A Cotulla – Well Spacing Study Source : 2015 OOGC Well Spacing Study Presentation .

Application 2 – Decline Curve Analysis • Different decline curve analysis methodologies are available: • Traditional Decline (Arps) (Figure 2) • Stretched Exponential • Duong • Multi-segment • Traditional Decline (Arps) with modified hyperbolic and terminal/limiting decline rate 59 .

Application 2 – Stretched Exponential (SPE 134231) • Variation of traditional Arps Exponential Method • Better suited to Unconventional reservoirs due to its bounded nature • Benefit of the model is to give a finite value of EUR even if no abandonment constraints are used in time or rate 60 .

Application 2 – Duong (SPE 137748) • Developed for Unconventional reservoirs with very low permeability • Shape of the curve is suited for well that exhibit long periods of transient flow • More conservative than Arps with hyperbolic b values >1 61 .

Application 2 – Well Spacing – Lazy A Cotulla (Supporting Evidence/Diagnostic Plots) • INFILL WELL – LOG LOG Source : 2015 OOGC Well Spacing Study Presentation 62 .

Application 2 – Well Spacing – Lazy A Cotulla (Modified Arps/Stretched Exponential) • INFILL WELL • DCA Source : 2015 OOGC Well Spacing Study Presentation 63 .

Application 2 – Well Spacing – Lazy A Cotulla (Supporting Evidence/Diagnostic Plots) • INFILL WELL LOG LOG Source : 2015 OOGC Well Spacing Study Presentation 64 .

Application 2 – Well Spacing/Lazy A Cotulla Duong • INFILL WELL Extremely difficult to fit Duong applying Log Log Source : 2015 OOGC Well Spacing Study Presentation 65 .

Application 2 – Well Spacing/Lazy A Cotulla ASSUMPTIONS • Decline Curve Analysis is only valid when wells are subjected to constant bottom-hole pressures for a long period of time • For this study. Log Log plots have been used to validate flow regime identification. • With the help of Log log plots identification of linear flow is observed in the infill wells Source : 2015 OOGC Well Spacing Study Presentation 66 . Infill wells are only presented.

Application 2 – Well Spacing/Lazy A Cotulla DISCUSSION OF ALL APPLICABLE LEARNING/LEANING • Production can be characterized as having initial transient flow followed by BDF. however the well needs to be at high drawdown against relatively constant flowing pressure which rarely occurs in the field. Stretched Exponential Method assumes the reservoir is bounded with very short or negligible linear flow period. • Arps is the single most often used as primary technique for forecasting existing shale gas wells. while Duong Method assumes the reservoir is not bounded with very long linear flow period. Source : 2015 OOGC Well Spacing Study Presentation 67 . • Arps with modified hyperbolic decline with terminal/limiting decline rate allows modeling not only the transient flow regime but also the Boundary Dominated Flow. Decline Curve Analysis should be constrained by other methods such as Rate Transient Analysis. Analytical Models and Numerical Models.

however they have assumptions. Source : 2015 OOGC Well Spacing Study Presentation 68 . limitations. • Other methods such as multi-segment or probabilistic approach should be investigated. Arps and Duong seem to constrain the wide variety of outcomes. advantages and disadvantages.Application 2 – Well Spacing/Lazy A Cotulla VALIDATION / RECOMMENDATION OF DIFFERENT APPROACH • Stretched Exponential.

69 Source : 2015 OOGC Well Spacing Study Presentation . • Figures show results from Stretched Exponential and Arps respectively for an infill well. Application 2 – Well Spacing/Lazy A Cotulla • Production Forecasts provide input to run economics /constrain the uncertainty in EUR estimation.

Application 2 – Well Spacing/Lazy A Cotulla • Duong Methodology was very difficult to apply for the after infill case (The Initial character of the wellbore production decline after frac hit does not give a good and valid way to be modeled) • Duong is considered very optimistic by assuming linear flow for the entire life of the wellbore production. 70 Source : 2015 OOGC Well Spacing Study Presentation .

Corporate Reserves 71 . IQRE . Analyst .Acknowledgements (Review) • Ian McDonald. Corporate Reserves • Charishe Amante.