SPE 141176

Reserves Management System - Rapid Tool for Optimizing and Tracking

the Growth of Hydrocarbon Resources & Reserves
Mohammad AlBahar/Kuwait Oil Company, Dawood Kamal/Kuwait Oil Company, Haya AlMayyan/Kuwait Oil
Company, Anup Bora/Kuwait Oil Company

Copyright 2011, Society of Petroleum Engineers

This paper was prepared for presentation at the SPE Middle East Oil and Gas Show and Conference held in Manama, Bahrain, 25–28 September 2011.

This paper was selected for presentation by an SPE program committee following review of information contained in an abstract submitted by the author(s). Contents of the paper have not been
reviewed by the Society of Petroleum Engineers and are subject to correction by the author(s). The material does not necessarily reflect any position of the Society of Petroleum Engineers, its
officers, or members. Electronic reproduction, distribution, or storage of any part of this paper without the written consent of the Society of Petroleum Engineers is prohibited. Permission to
reproduce in print is restricted to an abstract of not more than 300 words; illustrations may not be copied. The abstract must contain conspicuous acknowledgment of SPE copyright.

Abstract

Kuwait’s resources and reserves to date are characterized by giant, large, massive oil and gas fields located in onshore and
offshore areas of Kuwait. These fields are under different stages of development like natural depletion, pressure maintenance
and enhance oil recovery (EOR) processes. Over the years, huge amount of resources and reserves data has been accumulated
from these fields. This has made Kuwait Oil Company (KOC) to re-evaluate its approaches towards management of these
huge volumes of data efficiently. With passage of time, it has become more challenging to manage these reserves and
resources volumes and promotions to meet company’s growth strategies.

Historically, KOC was managing its resources and reserves through a manual Reserves Management System (RMS)
spreadsheets for tracking, archiving, monitoring, reporting and managing the resources and reserves.With time, RMS has
become a very complex and involved process and it was felt necessary to introduce a new process and tool to manage the
overall RMS workflow efficiently to meet company’s business needs. Accordingly, KOC decided to introduce a systematic
workflow tool to streamline the process of managing hydrocarbon resources and reserves data. The new workflow process
consist of a robust multiusers database for archiving, managing and reporting which can be accessed by different teams at
different security levels. This enhanced system enabled KOC’s management and reserves evaluators to optimize the
company’s resources and identifying possible opportunities to meets its strategic goals.

Introduction

The oil and gas reserves and resources are the main asset of any national and international oil and gas company. These
resources help in maintaining the oil and gas production level of the company and to meet future long term strategic goals.
The reporting, tracking and managing these resources efficiently have become a challenging task for any oil and gas company
as more resources are developed and new pool being discovered.
The periodic reporting of these volumes accurately and consistently internally and externally is critical to the success of the
company’s operations since it provides the opportunity for new projects to be undertaken, making strategic decisions by
leadership for overall benefit of the company. Managing the oil and gas assets accurately and efficiently increases the trust
with the shareholders and enhanced the overall reputation of the company.
Databases are critical to most organizations for storing, retrieving and archiving key information of company’s assets values.
People throughout the organization depend on this database to have single reliable and accurate sources of critical data to
accomplish the targeted goals of the organization.
Over the years, a vast amount of data has been created coming from various sources viz., oil and gas reserves, resources,
production data, reservoirs parameters, and reserves and resources movement data. Additionally, new fields and reservoirs
are regularly added to this inventory. In order to handle this huge volume of data for evaluation/analysis, a single
companywide reliable and efficient online workflow and database are essential for strategic planning and key performance
measurement of the company. This workflow and database provides support and confidence in making aggressive
development plans to meet global energy demands.
The new RMS workflow process helps in managing the reserves movement between different categories and checking
alignment and consistency in the movement of reserves with production forecast and fulfillment of various guidelines and
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standards pertaining to reserves and resources classification as per various agencies such as OPEC, SPE and World
Petroleum congress and strategic requirements of the country.
The new RMS is described as secured multi user workflow relational database. This database is easy to use, customized for
data input and retrieval and data are stored in a consistent manner using company defined standard and processes. The well
designed workflow allows the reserves booked in different categories to be associated with economic value to support the
promotion and demotion of reserves from one category to another in an efficient and accurate manner. This helps in
achieving high degree of confidence in accuracy, security and transparency of reserves updates and retrieval process.
This enables KOC to better evaluate its hydrocarbon resources and related key performance measures such as reserves
replacement ratio and reserves growth targets and finding and development cost per barrel measure. The RMS has given
confidence in the reserves management reporting by consolidating reserves volumes, classification, status, and changes to
volumes into a single storage area. The system is tuned, aligned with reserves process workflow, can take care of any changes
that will be introduced in future.

Elements of the Reserves Management System

The key elements of KOC’s RMS are the 1) process, 2)

assets, 3) users, and 4) the database as shown in Figure-1. The
integrations of these element plays major role in the success
and efficiency of the system. Many company’s reserves
management system has same or similar elements.

The Process
Figure-1: Elements of RMS
The reserves management process should be clearly defined to suit the internal and external reserves management and
reporting needs of the company. The process should follow the industry standards such as classifications, reporting,
documentations and audit trail.

The main approach followed by KOC for oil and gas reserve promotion from prospect to proven category of reserves is based
on Segment Approach. The definition of the segment is based on combination of geophysical, geological and engineering
criteria and, in general controlled by the understanding of the size of the prospect, its structural complexity and degree of
lateral heterogeneity in the reservoir. With drilling and different development activities these segments are promoted to
different categories of resource and reserves with passing of time.

The reserves promotion process has been developed over the years based on experience and laid down guidelines as per
company’s strategic objectives. This promotion process is in broad agreement with SPE PRMS system of 2007. The
movement of reserves is a dynamic process and its monitored quarterly, and on annual basis.

The process have also a periodic cycle for any given the reserves activities throughout the life of the fields. The process is
designed in way that optimizes the integrations of all resources and reserves management processes, database updates and
Key Performance Indicator (KPI) to enable a company to efficiently track changes in reserves estimations, movement, and
classification. Then this system enable management to make decisions on property portfolios, including acquisitions and
divestitures, exploration and development, reservoir and field management and other upstream activities.

The following diagram is an example of reserves management process cycle:

SPE 141176 3

Q1 Q2 Q3 Q4
Leader Ship Leader Ship Leader Ship Leader Ship
Approval or Approval or updated with updated with
Modification Modification progress progress

Reporting
Consolidation
and Report Progress on Consolidation and Consolidation and
Discussion of Work Program & KPI, Discussion of Discussion of
Reserve Propose Future Work Progress Progress
Growth & Program & KPI & KPI
Exploration
Targets & and Technical
Close Out Report Actual
Production Figures Reviews
Figures

Revise Reserves Report

Prepare Initial Report
Growth Targets as Progress
Reserves Growth & Progress
necessary and towards
Targets and Close towards
Implement Work Reserve
Out Figures Reserve
Activities Growth
Growth

Leadership   
Reserves Administrator  
Reserves Coordinator

Figure-2: Reserves Management Process Cycle

Figure-2 shows typical reserves management cycle calander showing different activities to be completed and endorsed by
different approval levels. Opening dates and closing dates must be set according to the company fiscal year and this will be
the basis for archiving the yearly activities within the system.

Another important factor is the continual reserves management, which is a collection of business rules, strong corporate
philosophy, improved technology, and business workflows. The most important component is corporate commitment to
accurate and timely updates to the system. As with any system, there will be many differences between companies, but any
continual reserves management system will need some basic building blocks.1

In KOC, the reserves and production data are updated on yearly basis after it goes through frequency of reserves review per
each reservoir. The concept is to conduct a reserves audit trail prior booking reserves figures in the system. These reserves
audit trail follows standards as per company’s guidelines and needs such as reserves addition, revisions, promotion and
reduction between reserves categories. Also the process shall capture Key Performance Measure (KPM) targets and year end
achievements since one of the RMS objectives is to act like key performance measurement tool. This can be done through
allocating yearly targets input in the system and to be compared at year end with actual closeout booking to work out
different company’s yearly requirements such as reserves growth achievements, reserve promotions from non-proven
categories to non-proven, prospective resources to reserves promotions due to discoveries, reserves replacement ratio (RRR)
and finding and development cost per barel of oil,

Users

In reserves process cycle diagram at Figure-2, the fiscal year is divided into four quarters and each quarter has activities to
track and approve reserves changes before year end and closeout. It can be noticed that there are three main parties that
participate in the reserves management process, the field development team of each assets, reservoir management team and
reserves management committee comprising the top leadership of the company.

The asset level reserves coordinator and reservoir management team is responsible for data entry and approval for any actions
in the system at different hierarchal levels. For any changes or update in the system, approval is based on the following chain
(reserves estimator Æ reserves coordinator Æ reserves administrator Æ leadership). The following Figure-3 illustrates the
different contributes to the system and their roles:
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Reserves  Reserves  Reserves  Company 

Estimator Coordinator Administrator leadership

Categorize the  Consolidate All 
Collect  Reserves  Approve  Reserves 
Reserves &  Reservoirs  
estimations  & Resources 
Resources  per  Reserves Data 
Technical Data Changes 
reservoir  Entry

Reserves Prepare Reserves  Review  & Approve Yearly 

Estimations &  & Resources Final 
Run Audit Trail  Targets
Evaluations Data 

Approval for data 
Highlight Reserves 
Develop Forecasts  reporting from   Workout future 
Issues  & 
and Economics  Line dept.  Strategies
Corporate status
Manager

Document   Data Entry to  Develop External reporting 

Portfolio per 
RMS General reports  & Announcement
Reservoir

Figure-3: Reserves Management System Users

Assets

KOC’s operation is divided into number of assets covering different geographical areas of the country. It’s mainly divided
into South and East Kuwait, West Kuwait and North Kuwait assets including Exploration group and there is also recently
created Gas development group and Heavy Oil group. These assets are having a number of fields and reservoirs under its
inventory. The asset distribution and hierarchy of Area/ Field/Reservoirs within the asset must be defined in the database. An
example of common hierarchy has been shown Figure-4:

Figure-4: Assets Hierarchy

Next, the system has been designed to include all product and by-product such as oil, associated gas, gas condensate and non-
associated gas, in all geographic location for all resources, and under different categories in various stages of exploration and
development.

The relationship between each product and by-product must be clearly defined with proper conversion factors based on
technically approved calculations such as condensate yield, gas oil ratio…etc. The aggregation of reserves figure at different
hierarchy must follow standards rules weather it’s based on probabilistic or deterministic estimation methods and scenarios.
SPE 141176 5

Figure-5: Hydrocarbon Products Hierarchy Example

Database:

The RMS is basically online integration workflow between database, hardware, software and reserves management process
that covers whole company resources and reserves inventories over the years. The main core of the system is the database
structure which is built on an electronic secured database with limited access given to selected personnel from assets,
leadership, and system administrator from reservoir management team.

Reserves Management is a continuous process and the database supports any changes made to system in terms of
reclassification, revisions, new additions based on new information such as drilling and testing of new wells, results of pilot
EOR study etc.
Some of the salient features of the database are as follows:

• The access to the database is restricted based on certain level of data hierarchy.
• Record is created for any change is made to the database enabling to identify the person making the change
and why the change was introduced.
• A standardized approval process has been designed by system administrator for the whole company.
• It can monitor and generate report indicating the name of the persons who have accessed the database.
• Data cannot be changed by the user. Data archiving is fast and reliable and easy to use.
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The security of the system is managed by firewall access as seen in the Figure-6:

Determine 
Categorize  Forecast 
Technical 
Reserves Production
Reserves

Data Updates Leadership
Administrator
Firewall
Consolidate All  Approve  
Reservoirs   Reserves & 
Resources 
Reserves Data 
Consolidations Database Changes 
Entry
Modifications Final Approval
Review  & Approve Yearly 
Run Audit Trail  Targets
Data Updates
Maintenance
Reserves 
Workout 
Issues  & 
future 
Corporate 
Strategies
status

Internal  External 
Reporting reporting

Figure-6: Database and System Access & Security

In any company, the confidentiality and data security issues are the most important component of an effective reserves
management system. The system got to be designed so admin can grant varying permissions and privileges to the user base
that enable users to see, create, report, or edit only the data that is directly relevant to their work. This security feature can
also facilitates an audit trail—an electronic record of who has changed the reserves, when, and why. This ability to maintain
an audit trail ensures corporate data integrity and is one of the most important factors in the success of the system. Firewall o
isolated network is one of the options to increase the security level of the system.

The database structure is broken down into four major class types:

• Reserves & Resources data

• Movement and Revision data
• Reservoir Properties data
• Key Performance Measures

Company can also add any more class of data as needed since the database is flexible to accommodate of any data types and
needs.

Example of the workflow for tracking and booking of reserves growth data:

Let us assume for given a reservoir, the reserves growth targets (reserves addition due to revision in Proven, promotion from
Non-proven category based on re-evaluation work of modeling and simulation, infill drilling, geological studies etc.,) are set
by the field owner (reservoir engineer, G&G) at the beginning of a year. Then these targets will be reviewed by the reservoir
management team before it is entered into the system. All the target new additions from different reservoirs/fields are then
summarized and put before Reserves Management Committee (RMC) for final approval as targets for KPM(Key
Performance Measure) for that particular year. After approval, the reserves growth targets are electronically approved by
system administrator at the database level. Later on during the year, the reservoir management team tracks the activities
related to these reserves addition by conducting a number of review meetings. The outcomes of the progress review meetings
are highlighted to the leadership for appraisal and actions and to flag any possible shortfall in achieving targets. Then at year
end of fourth quarter of the Plan Year, the final reserves additions figures along with cumulative production from each
SPE 141176 7

reservoir are updated with relevant documentations in the database. The whole process is endorsed by Reserves Management
committee of the company to close out the year activities electronically. The system allows smooth monitoring of the
performance by different assets in terms of reserves addition.

Reporting

Different types of report templates are generated as per statutory requirement for reporting internally and externally covering
both deterministic and probabilistic reserves estimates as per company’s reserves management guidelines and governmental
regulatory guidelines. In the past, generating report was time consuming processes involving manual consolidations of data
from all company assets. Today the new system hierarchy setups allow KOC to generate reports in different formats and for
different parameters in reasonably short period of time based on data smart linkage.

Most of the company have different statutory requirement like reporting to SEC in USA, Alberta Securities Commission in
Canada, OPEC countries reporting to their governments .etc.

As an example, The Canada's National Instrument 51-101 model for reserves reporting as shown in Figure-7 lays down
standards of disclosure for oil and gas activities, has been developed from the recommendations of the Alberta Securities
Commission Taskforce, a 27-member group, with the close involvement of the CIM (Canadian Institute of Mining,
Metallurgy, & Petroleum, better known under the name The Petroleum Society).2 This model of reserves management
process is similar to KOC’s system of managing reserve and resources which helps in conducting the regulatory external
audit trails.

Conclusion

RMS is a robust, multiuser workflow database with accuracy and speed for sorting, monitoring and retrieval of data. This
process helps in tracking reserves and resources booking records, performance trends over long period of history in a very
short period of time. This system plays a vital role in tracking reservoir depletion plans, future growth opportunities from
portfolios of reservoirs by ranking them into different categories following criteria set by the users. The depletion plan for
any reservoir is based on booked reserves and its reserves growth opportunities and future possible additions. The future
production profiles to meet strategic targets will require contributions from all possible resources. This system will help in
tracking, managing and identifying possible opportunities and this will help in saving lots of time and efforts.

It helps in carrying out analysis of various parameters to track the movement of reserves from one category to another,
estimation of Reserves Replacement ratio, growth of reserves over the years, status of reserves under different category of
Proven and Non- proven. It also tracks the movement of Resources to reserves based on exploration activities. It can track
those reservoirs where there is no activity for a long period of time and bringing it to focus in order to plan and implement.

The RMS database has been successfully implemented in KOC. It has reduced the time required for annual close out figures
for reserves reporting to a considerable amount. These reports are to be given to leadership committee and also to be
submitted to the outside agencies. The new database has given tremendous boosts towards accuracy, speed and timely
completion of various reports as per statutory requirements. This system can handle huge volumes of data in a reasonable
short period of time which has led to efficiency and accuracy of the process.

In summary, the RMS system will provide techniques to evaluate, reconcile, update, reports and manage hydrocarbon
reserves and resource volumes of the company. As Reserves Management is a continuous process involving huge volume of
data, complex calculations and compliant with company guidelines, the new system will supports this process with high
degree of confidence due to its functionality, efficiency and accuracy.

Acknowledgment

Our gratitude goes to the management of Kuwait Oil Company and Ministry of Oil of the State of Kuwait for their support
and permission to publish this paper.

References

1. Tim Loser, ‘Improving Reserves Systems through Continuous Reserves Management’, SPE 130174, March 2010.
2. Albert Leganlt, ‘Assessing the need for better reserves reporting system’, Oil and Gas Financial Journal, September
2004.
3. Society of Petroleum Engineer, ‘Petroleum Resources Management System’, 2007.
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Figure-7: Canada's National Instrument 51-101