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Outline Reservoir Management Geostatistical Modeling
Integrated Reservoir Management
Watheq J. Al-Mudhafar, Ph.D.
Senior Chief Reservoir Engineer

Basrah Oil Company
Lectures prepared for the 4th year students

Basra University of Oil and Gas
Spring 2023
Watheq J. Al-Mudhafar, Ph.D. 1/132

Brief Biography
I Watheq Jasim Mohammed Al-Mudhafar
I B.Sc., M.Sc. Petroleum Engineering, Univesity of Baghdad, 2002, 2006
I PhD Petroleum Engineering (Major), Geology (Minor 1), and Applied
Statistics (Minor 2), Louisiana State Univesity, USA 2016
I Postdoctoral Researcher, Reservoir Characterization and EOR Modeling,
Louisiana State Univesity, USA June, 2016 - May, 2018
I Visiting Scholar, Unconventional Reservoir Modeling, The University of
Texas at Austin, USA June, 2018 - May, 2019
I Published 20+ Articles at SPE, Elsevier, and Springer Journals.
I Presented 100+ Papers at the Intenrational conferences of SPE, SPWLA,
AAPG, SIAM, IAMG, and OTC in the SIX continents.
I Reviewer and Editor for 50+ SCOPUS journals.
I Outstanding Reviewer at Fuel, GeoEnergy Science and Engineering, and
Gas Science and Engineering Journals.

Reservoir Management
Overview of Reservoir Management
Reservoir Management Process
Planning of Field Development
Reservoir Surveillance
Reservoir Management Leadership Team
Reservoir Management Case Studies
Geostatistical Modeling
Geomodeling to Engineering Workflow
Introduction to Geostatistics

Course Objectives
I Understanding the reservoir modeling workflow from construction of the
3D static reservoir model through upscaling for dynamic reservoir
simulation.
I Improving awareness of geostatistics and the situations where the
application of geostatistical techniques could add value.
I Learning how to gather and analyze the required data for geostatistical
techniques.
I Reviewing basic concepts of univariate, bivariate, and multivariate
statistical algorithms.
I Understanding the resulting geocellular models and the geostatistical
techniques.
I Outlining a systematic approach to a reservoir modeling study (layering,
rock type modeling, porosity modeling, permeability modeling).
I Understanding how the concepts carry over to commercial geostatistical
packages, specifically Petrel-SLB

Related References
1. www.onepetro.org
2. www.petrowiki.org
3. AAPG Datapages
4. www.earthdoc.org
5. www.segwiki.org
6. Wikipedia

1. Petroleum reservoir management is a dynamic process that recognizes the

uncertainties in reservoir performance resulting from our inability to fully
characterize reservoirs and flow processes.
2. Reservoir management seeks to mitigate the effects of these uncertainties
by optimizing reservoir performance through a systematic application of
integrated and multidisciplinary technologies.
3. Reservoir management addresses and controls the reservoir operations as
a system, rather than as a set of disconnected functions. As such, it is a
strategy for applying multiple technologies in an optimal way to achieve
synergy.
4. Reservoir management uses elements of geology, geophysics,
petrophysics, petroleum engineering, and computer science to predict and
manage the recovery of oil and natural gas from subsurface geosystems.


I Typically, a reservoir’s life begins with exploration, which leads to
discovery, reservoir delineation, field development, production by primary,
secondary and tertiary means, and abandonment.
Figure: Reservoir Life Cycle
I Therefore, reservoir managements requires synergized multidisciplinary

efforts addressed by team of engineers, geologists, geophysicists, and field
operations staff to attain a better understanding of the practical approach
to reservoir management.
Reservoir Management Process
Regardless how large

or mature the field, a
comprehensive program
for reservoir manage-
ment is highly desir-
able and should be im-
plemented to have bet-
ter monitoring, evalua-
tion, and less-cost in the
long-term development.
Figure: Reservoir Management Process

Establishing Purpose or Strategy
The key elements for setting reservoir management strategy are

reservoir characteristics, the total environment, and available
technology. Understanding these elements is a prerequisite to
establishing short- and long-term strategies for managing
reservoirs.
1. Characteristics: understanding the nature of the reservoir requires
knowledge of the geology, rock and fluid properties, fluid flow and
recovery mechanisms, drilling and well completions, and past production
performance.
2. Environment: understanding various environments is essential in
developing management strategy and effectiveness.
3. Technology: the success of reservoir management depends on the
reliability and proper use of the technology being applied in exploration,
drilling and completions, recovery processes, and production.

Establishing Purpose or Strategy
Figure: Technological Toolbox for Application in Exploration, Drilling and

Completions, Recovery Processes, and Production
Developing A Viable Comprehensive Plan
The next step in reservoir

management is formulat-
ing an economically viable
comprehensive plan that is
essential for project suc-
cess. That is implemented
through a synergized mul-
tidisciplinary team of vari-
ous professionals (RMT).
Figure: Reservoir Management Team (RMT) Skills



The plan should be carefully prepared as it involves many time-consuming
development steps:
I Development and Depletion Strategy
1. Oil recovery by primary and applicable secondary and tertiary methods.
2. Lifecycle stage of the reservoir.
3. In a new discovery, we need to address the question of how best to
develop the field-well spacing, well configuration, and recovery schemes.
4. If the reservoir has been depleted by primary means, secondary and even
tertiary recovery schemes need to be investigated.
I Environmental Considerations
1. In developing and subsequently operating a field, environmental and
ecological considerations have to be included.
2. Regulatory agency constraints must be also satisfied.
I Data Acquisition, Analysis, and Management
1. An enormous amount of data is collected and analyzed during the life of a
reservoir.
2. This process represents the organizing of raw and interpreted data into a
readily accessible form.

I Data Acquisition, Analysis, and Managment
1. Data analysis requires a great deal of effort, scrutiny, and innovation.

2. The key steps are (I) to plan, justify, time, and prioritize; (2) to collect and analyze; and (3) to
validate/store the information.
3. Database for future use and should be accessible to all interdisciplinary users.
4. Quality assurance.


I Geological and Numerical Model Studies
Figure: Workflow of Geological and Flow Simulation Models


I Production and Depletion Plans
1. Depletion plans define how to use primary drive mechanisms and how,
when, or if these mechanisms should be supplemented for additional
recovery.
I Projected ultimate recoveries
I Producing rates of oil, gas, and water
I Changes in reservoir pressure
2. The depletion plan is updated periodically to include any changes needed
to better reflect how to optimize the depletion strategy.
I Drilling schedules and Well placement
I Individual well and total field off take rates
I Total and well injection volumes
I Wellbore utilization plans
3. Field development progressed from primary production to fluid injection,
such as water or immiscible gas, and then, miscible injection project. It is
important to determine the need for injection as early as possible to:
I Minimize depletion times
I Provide space for necessary equipment
I Avoid retrofitting facilities
I Facilities Requirements
1. Production performance results are used to estimate facilities

requirements.
2. Everything we do to the reservoir, we do through the facilities including
drilling, completion, pumping, injecting, processing, and storing.
3. Proper design and maintenance of facilities has a profound effect on
profitability.
4. The facilities must be capable of carrying out the reservoir management
plan, but they cannot be wastefully designed.
5. Estimates of the capital and operating costs based on the facilities
requirements are used for economic analyses.


I Economic Optimization
Figure: Steps of Economic Optimization

I Management Approval
1. The final step in developing a reservoir management plan requires

management approval and support.

Plan Implementation
I After management approval of the project development plan, the next
major assignment is to implement it to get production as soon as
possible. A project manager with full authority is needed to manage the
various activities as follows:
1. Design and install surface and subsurface facilities. This critical path for
the whole project requires tremendous efforts and experience to preplan,
monitor, and complete the project on time.
2. Develop a drilling/completion program.
3. Acquire and analyze necessary logging, coring, and initial well-test data
from the development wells to define reservoir characterization better.
4. Upgrade the reservoir database and revise production and reserves
forecasts.
I Keys for successfully implementing a plan include:
1. Make a flexible plan of action.
2. Have management support.
3. Get field personnel commitment.
4. Start the plan of action involving all functions.
5. It is critical to have periodic review meetings with all team members.

Monitoring and Surveillance

I For the monitoring and surveillance program to be successful, coordinated
efforts of the various functional groups are needed at the start of
production.
I Generally, the major areas of monitoring and surveillance involving data
acquisition and management include:
1. Oil, water, and gas production by wells
2. Gas and water injection by wells
3. Systematic and periodic static and flowing bottom hole pressure testing of
selected wells
4. Production and injection tests
5. Injection and production profiles
6. Recording of workover and results
7. Anything else that aids surveillance
I A periodic and systematic review of field performance should be
practiced. Surveillance includes periodic comparison of performance with
the prediction contained in the depletion plan.
I The performance factors reviewed include: Rates, Pressures, Recovery
levels, Injection volumes, and Contact movements.
Plan Evaluating
I The plan must be reviewed periodically to ensure it is being followed, it

is working, and it is still the best possible plan. Its success should be
evaluated by comparing actual and anticipated reservoir performance.
I Since it is unrealistic to expect the actual project performance to match
the planned behavior exactly, the functional groups should establish
certain technical and economic criteria to determine project success.
I How is the reservoir management plan working? The should routinely
compare the actual performance (e.g., reservoir pressure, GOR, WOR,
and production) with the expected one.
I In the final analysis, the economic staff will determine the success or
failure of the project.

Revision of Plans and Strategies
I Plans and strategies should be revised when reservoir performance does

not conform match to the management plan or when conditions change.
I Questions that evaluate performance must be asked and answered on an
ongoing basis for sound reservoir management.
Definition: Sound reservoir management practice aims to maximize economic recovery

while smartly reducing capital investments (CAPREX) and operational costs (OPEX),
optimizing the utilization of technology and talent.

Completing (Abandonment)
I The reservoir management plan should include the final task of reservoir
abandonment when all the depletion plans have been implemented.

I The reservoir management leadership team (RMLT) includes supervisors

and managers responsible for allocating resources and creating an
environment conducive to effective reservoir management.
1. Human resources
I Assess. Determine skills required to develop and manage a
reservoir, and then judge the current proficiency and need of
staff for improving such skills.
I Develop. Providing the (in-house) training and work
experiences needed to improve skills.
I Deploy. Allocating supervisory, operations, and technical staff
members consistent with established priorities and skill
requirements to maximize the value of a resource.

2. Achieving a quality program

I Align. All persons involved in reservoir management understand its
importance, their role, and the quality objectives.
I Measure. Systematically measuring the quality of a reservoir management
program if it needs to be developed.
I Improve. Plans for improvements that lead to higher quality programs
would include executive issues, organizational structure changes, and the
identification of skill needs.
I Recognize. A vital part of the quality program is the continuing
recognition of both individual and team accomplishments.
3. Stewardship
I Communicate. These activities would involve various RMT and RMLT
members and appropriate management.
I Share. A corollary activity is the sharing of experiences between teams to
identify best practices and company-wide improvement needs.

1. McAllen Ranch Field, Texas, USA

I Geopressured Gas Field of 30 years old
I Declining production and concerns about substantial noncontributing
reserves
I RMT: cross functional team made up of engineers (reservoir, production,
petrophysics, and facilities); geologists; geophysicists; field operations,
personnel; land, permitting, and business/regulatory affairs staff; and tax
and legal staff.
I Targets: 3D seismic survey acquisition and interpretation, development
drilling, commingling (including regulatory approval), field producing
operations, and remedial-well work.
I Increase total field gas production rate to > 100 MMcflD
I Reduce noncontributing behind reserves by 50%.
I Complete 3D seismic interpretation and mapping and identify at least 10
new drilling locations.
I Reduce drilling costs by at least 10%.
I Commingle production from various zones.
I The team achieved or exceeded these targets by the end of the 2 years.

1. Brassey Oil Field, British Colombia, Canada

I Oil field with miscible flooding after two years from discovery
I RMT: engineering/geoscience
I Targets: geological model, seismically defined pool edges, continuity
information from well-test data, and material-balance calculations to
predict reservoir volume, areal extent, and continuity on the basis of an
integrated reservoir model
I Development of a sound reservoir model.
I Calculation of OOIP by engineering and geologic methods.
I Maintenance of reservoir pressure above the minimum miscibility pressure.
I Management of production and injection rates by tracer breakthrough
monitoring coupled with pressure, voidage, gas compositional analysis,
and GOR to minimize breakthrough problems and, in turn, maximize
utilization of existing injection compression facilities.

1. North Ward Estes Field, Texas, USA

I Large and mature
I RMT: Reservoir and Operation Engineers
I RMT: EOR project, and the improvement of existing waterfloods
I Design of a six section C02 project was completed.
I 100 of workover candidates were identified.
I Several waterflood modification projects were evaluated.
I C02 injection started in the six-section area within 15 months of project
initiation.

1. Means San Andres Unit, Texas, USA

I The reservoir management in this field started in 1935, just 1 year after
discovery.
I The reservoir had been produced by primary, secondary, and tertiary
methods.
I RMT: several groups of geologists and engineers and had management
support.
I Target: A detailed engineering and geologic study was conducted to
determine a new depletion plan.
I Provide the basis for a secondary surveillance program.
I Design and implementation of the C02 tertiary project.
I Develop continuous and floodable pay.
I Assist estimation of potential additional recovery from infill drilling.
I About 140 infill wells were drilled through 1981, which would recover >
15 million bbl of incremental oil.

1. Other case studies

I Teak Field
I Malaysia Fields
I Apache Inti. Corp. Projects
I Mitsue Field

Conclusions about Reservoir Management
I The presented workflow of RMT along with the case studies illustrate the
benefits of team effort in managing a reservoir. Some conclusions, insights, and
recommendations are outlines below for successful RMT projects:
I Technological advances and computer power are providing the tools to
manage reservoirs better to maximize economic hydrocarbon recovery.
I A team approach based on integration of geoscience and engineering
personnel, tools, technology, and data is essential for sound reservoir
management practice.
I The reservoir management practice involving goal setting, planning,
implementing, monitoring, evaluating, and revising initial plans holds the
key to successful operation of the reservoir throughout its entire life-from
exploration to abandonment.
I A better understanding of sound reservoir management practices can be
beneficial to Geoscientists, engineers, field operations staff, and managers.
I Every team effort should be screened by a cost/benefit analysis.
I Early start of crossfunctional reservoir management Team.
I Empowerment and reduced routine supervision.

References
I Satter, A., Varnon, J.E., and Hoang, M.T. 1994. Integrated Reservoir Management. J Pet Technol 46
(12): 1057–1064. SPE-22350–PA.
I Eden, A.L. and Fox, M.J. 1988. Optimum Plan of Depletion. SPE California Regional Meeting, Long
Beach, California. SPE–17458–MS.
I Hickman, T.S. 1995. A Rationale for Reservoir Management Economics. J Pet Technol 47 (10): 886–890.
SPE–26411–PA.
I Raza, S.H. 1990. Data Acquisition and Analysis for Efficient Reservoir Management. SPE Annual
Technical Conference and Exhibition, New Orleans, Louisiana. SPE–20749–MS.
I Stiles, L.H. and Magruder, J.B. 1992. Reservoir Management in the Means San Andres Unit. J Pet
Technol 44 (4): 469–475. SPE-20751-PA.
I Thakur, G.C. 1990. Implementation of a Reservoir Management Program. SPE Annual Technical
Conference and Exhibition, New Orleans, Louisiana. SPE–20748–MS.
I Torvund, T. 1989. The Oseberg Reservoir Management Planning: A Case History From the Oseberg Field.
Offshore Technology Conference, Houston, Texas. OTC–6140–MS.
I Wiggins, M.L. and Startzman, R.A. 1990. An Approach to Reservoir Management. Presented at the SPE
Annual Technical Conference and Exhibition, New Orleans, Louisiana. SPE-20747—MS.

Geology Workflow
Workflow Tasks
I Database Review
I Quality Control
I Validation with dynamic
data
I Seismic/log interpretation
I 1-D stratigraphic and
facies analysis
I 2-D correlation and facies
analysis
I Facies proportion curves
I Depositional model

Geophysics Workflow
Workflow Tasks
I Data review
I Quality control
I Petrophysical analysis
I Rock physics checks
I Structural interpretation
I Attribute extraction
I Depth conversion
I Constrain geomodeling

Petrophysics Workflow
Workflow Tasks
I Data Review
I Quality Control
I Log normalization
I Petrophysical analysis
I Net pay identification
I Facies-units or flow-units
I Contacts, Phi-K
I Rock
physics/petrophysics
relations

Geomodeling Workflow
Workflow Tasks
I Database Review
I Horizons/faults surfaces
generation
I 3D stratigraphic grid
construction
I Spatial statistic analysis
I Facies distribution
I Distribution of
seismic/petro
relationships
I Permeability distribution
I Net-to-Gross estimation

Definitions of Statistics & Geostatistics
1. A population is a set of well-defined objects. We must be able, in

principle, to find every individual of the population.
2. A sample is some subset of a population. Sampling is the process of
selecting a sample from a population.
3. Descriptive statistics: numerical summaries of samples when we want to
summarize some data in a shorter form.
4. Inferential statistics: understanding from samples to populations when we
are trying to understand some process and maybe predict based on this
understanding.

1. A Statistics: ”The determination of the probable from the possible”

Davis, Statistics and data analysis in geology.
2. The most common example of geostatistical inference is the prediction of
some attribute at an unsampled point, based on some set of sampled
points.
In the next slide we show an example from the Meuse river floodplain in the
southern Netherlands. The copper (Cu) content of soil samples has been
measured at 155 points (left figure); from this we can predict at all points in
the area of interest (right figure).


Geostatistics
1. Kriging was introduced by Daniel G. Krige in the 1960’s to estimate the
spatial mineral distribution and then it was further developed by Georges
Matheron in the 1970’s. Primarily introduced to the petroleum industry
by Andre Journel in the 1980’s.
2. Srivastava (1989) geostatistics offers a way of describing the spatial
continuity of natural phenomena and provides adaptations of classical
regression techniques to take advantage of this continuity.
3. Olea (1999) geostatistics can be regarded as a collection of numerical
techniques that deal with the characterization of spatial attributes,
employing primarily random models in a manner similar to the way in
which time series analysis characterizes temporal data.
4. Deutsch (2002) geostatistics is study of phenomena that vary in space
and/or time.
5. Caers (2005) geostatistics is defined as the branch of statistical sciences
that studies spatial phenomena and capitalizes on spatial relationships to
model possible values of variable(s) at unobserved, unsampled locations.

What Can We Do with Geostatistics?
Geostatistics employes special statisitical tools for the modeling of

spatial property variation in order to predict at unobserved
locations.
1. We can build heterogeneous models taking into account heterogeneities
observed at different scales into the reservoir and affecting the fluid flow.
2. We can quantitatively and consistently integrate contributions from
different geo-disciplines.
3. We can consider and assess uncertainties in the distribution of reservoir
properties to conduct history matching and field development
optimization under geological uncertainties.

Geosspatial Continuity

Geosspatial Continuity
Why Geostatistics?
I The previous Figure depicts two images of hypothetical 2D distribution patterns
of porosity. Fig.a shows a random distribution of porosity values, while Fig.b is
highly organized, showing a preferred northwest/southeast direction of
continuity.
I While this difference is obvious to the eye, the classical descriptive-summary
statistics suggest that the two images are the same.
I That is, the number of red, green, yellow, and blue pixels in each image is the
same, as are the univariate statistical summaries such as the mean, median,
mode, variance, and standard deviation (Fig.c).
I We know that the geological features of reservoirs are not randomly distributed
in a spatial context. The reservoirs are heterogeneous and have directions of
continuity in both 2D and 3D space and are products of specific depositional,
structural, and diagenetic histories.
I Strangely, that these two images would appear identical in a classical statistical
analysis that inadequately describes phenomena that are both spatially
continuous and heterogeneous. Thus, use of classical statistical descriptors
alone to help characterize petroleum reservoirs often will result in an
unsatisfactory model.
Importance of Geostatistical Modeling


Comparison of the main model redicted from seismic inversion with two stochastic
simulations integrating both the seismic and the fine-scale well data (Nair et al. 2012).




Models for CO2 storage: Faulted top structure map with seismic-based porosity model
and positions of injection wells:

Spatial Correlation
Multidisciplinary Data Integration
What is our Goal?

I Honor well data and reproduce small scale variability observed in well
logs/cores.
I Reproduce the large scale structure and continuity observed in seismic
data.
I Reproduce dynamic data (production, pressure and tracer data).
I Incorporate soft information: interval constraints, indirect information,
expert judgments.
I Allow for quantification of uncertainty.

Spatial Correlation
Data Required for Geostatistics
I Static:
1. Core data (high resolution/sparse in space)[Hard Data]
2. Well logs (local outcrop, sparse)[Hard Data]
3. 3D seismic (global coverage, low resolution/coarse)[Soft Data]
I Dynamic:
1. Well tests, tracers (lumped/average local-regional, sparse)
2. Production (lumped/averaged local-global, sparse)
3. 4D seismic (global coverage, low resolution/coarse)
I What else?
1. Geological Continuity Model

Spatial Correlation
Data Required for Geostatistics

I Core data (φ and by lithofacies)
I Well log data (stratigraphic surfaces, faults, measurements of
petrophysical properties).
I Seismic-derived structural data (surface grids / faults).
I Seismic-derived attributes (vertically averaged facies proportions and φ).
I Well test and production data (interpreted K thickness,channel widths,
connected flow paths, barriers).
I Sequence stratigraphic interpretation / layering (a definition of the
continuity and trends within each layer of the reservoir).
I Spatial patterns from regional geological interpretation.
I Analogue data from outcrops or densely drilled similar fields (size
distributions, measures of lateral continuity).
I Knowledge of geological processes / principles established through widely
accepted theories (forward geologic modeling).

Spatial Correlation
Data for Geostatistics

Spatial Correlation
Generic Reservoir Modelling Workflow

Spatial Correlation
Conventional Geostatistical Workflow

Spatial Correlation

Spatial Correlation
I Establish reservoir geometry and architecture using horizons and faults.

I Constrct a structure reservoir modeling.
I Build a 3D stratigraphic grid (cartesian or corner point) in the original
depositional space.
I The cartesian grid is populated with facies/rocktype and petrophysical
properties.
I The petrophysical properties are mapped back to the stratigraphic grid.

Spatial Correlation
Specific Geostatistical Workflow

Spatial Correlation
Geostatistical Models
1. Geostatistical models are used for spatial simulation of petrophysical

properties to build a 3D reservoir model (Gringarten and Deustch, 1999).
2. Since the spatial petrophysical property distribution has a direct affect on
the fluid flow through porous media, it should be efficiently implemented
through the variogram analysis and kriging algorithms.
3. Specifically, the variogram allows understanding the geometry and
continuity of the reservoir.
4. Kriging quantifies the influence of the known data on the unknown
location by the variogram or covariance (Arithmetic mean and
Inverse-Distance?).
5. Kriging represents the Best Linear Unbiased Estimator (BLUE).

Spatial Correlation
Geostatistical Models
1. Kriging uses the spatial covariance model between the known and
unknown data to estimate the missing variable values at new locations
based on their neighbors.
2. The kriging of two variables at one time is called co-kriging and can be
applied, for instance, using the relationship between the porosity and
permeability to estimate the primary parameter as a function of the
secondary one.
3. When there is full secondary variable distributed such as acoustic
impedance from the seismic attributes, porosity in some cases can be
estimated as a primary variable within the collocated co-kriging.
4. The collocated co-kriging does not require the covariance function of the
secondary data. However, it requires cross-covariance function
calculations.

Spatial Correlation
Basic Components of Geostatistics
I Variogram analysis: characterization of spatial correlation.

I Kriging: optimal interpolation; generates best linear unbiased estimate at
each location; employs semivariogram model.
I Stochastic simulation: generation of multiple equiprobable images of the
variable; also employs semivariogram model.

Spatial Correlation
Fundamentals

Spatial Correlation
Fundamentals

Spatial Correlation
Fundamentals

Spatial Correlation
Geostatistics (Estimation & Simulation)

Spatial Correlation

Spatial Correlation

Spatial Correlation
Dynamic Data Integration

Spatial Correlation

Spatial Correlation

Spatial Correlation

Spatial Correlation
Statistical Review

Spatial Correlation
Statistical Review

Spatial Correlation
Modeling Spatial Variation

Asume that variation in a property between two points depends
only on a vector distance, not on a location, then:

Spatial Correlation

Spatial Correlation
Variogram Calculation

Spatial Correlation
Variogram Definition

Spatial Correlation

In geostatistics, the assumption that a set of data comes from a
random process with a constant mean and varaince, and spatial
covariance that depends only on the distance and direction
separating any two locations.

Spatial Correlation
Variogram Terminology

Spatial Correlation
Computing Computations

Spatial Correlation
Computing Computations: How do I calculate the

variogram?
I Define a lag increment (or spacing between any two points in the data).
Say 100 ft.
I From the measurements, take all pairs of values separated 100 ft. apart.
For each pair calculate the difference, and then square it. Sum up all the
differences and divide by twice the number of pairs. This gives you the
value of the variogram for that particular lag increment or distance.
I Do the same for other lag distances, say 200 ft, 300 ft, 500 ft, and so on.
I Plot out the variogram value versus the lag distance. What you get is
called the experimental variogram, or simply the variogram.

Spatial Correlation
Computing Computations: How do I calculate the

variogram?
I In general, at smaller lag distances, the value of the variogram would also
be smaller. For larger lag distances, the value of the variogram would be
larger. This is because, values separated at small distances tend to be
more similar compared to values separated at a larger distance.
I However, at a lag distance called the ”range” the variogram would
typically stabilize. The value of the variogram at this point is called the
sill. At distances greater than the range, any two pairs of values are
independent of each other.

Spatial Correlation

Spatial Correlation

Spatial Correlation
Variogram Interpretation: Spatial Correlation

Spatial Correlation
Variogram Interpretation: Spatial Correlation

Spatial Correlation
Variogram Interpretation: Geometric Anisotropy

I If the variable exhibits different ranges in different directions, then there is
a geometric anisotropy.
I For example, in an aeolian deposit, permeability might have a larger
range in the wind direction compared to the range perpendicular to the
wind direction.

Spatial Correlation
Variogram Interpretation: Cyclicity

Spatial Correlation
Variogram Interpretation: Cyclicity

Spatial Correlation
Variogram Interpretation: Zonal Anisotropy

I If the variable exhibits different sills in different directions, then there is a
zonal anisotropy.
I For example, a variogram in a vertical wellbore typically shows a bigger
sill than a variogram in the horizontal direction. Why?
I Some variograms are a combination of both geometric and zonal
anisotropies.

Spatial Correlation
Variogram-Based Geostatistical Simulation

I The variogram is the measure of dissimilarity as the distance increases
and mathematically is the expected squared difference between two data
values separated by a distance vector h (Deutsch, 2002).
2γ(h) = E [Y (u) − Y (u + h)]2
I Main variogram terminology are sill(the plateau that variogram reaches
the range), range (The distance at which the variogram is no longer
increases with distance increases), and nugget(measurement error when
distance is zero).
Figure: Variogram Structure(Gringarten and Deustch, 1999)

γ(h)Management
Integrated Reservoir = var (z) − cov (h)
Spatial Correlation
Geostatistical Reservoir Characterization
Ordinary Kriging is then used for spatial data distribution based on

best variogram fit.
I Let’s K is the covariance matrix between the known data
I Let’s k is the covariance vector between the known and unknown data
I Let’s λ is the kriging weights
     
cov (Z1 , Z1 ) cov (Z1 , Z2 ) ··· cov (Z1 , Zn ) cov (Z1 , Z0 ) λ1
···
cov (Z.2 , Z1 ) cov (Z2 , Z2 ) cov (Z2 , Zn )
cov (Z.2 , Z0 ) λ.2 
K = ;k = ; λ =
. .

.
. . . . .  .
. . . . . .
cov (Zn , Z1 ) cov (Zn , Z2 ) ··· cov (Zn , Zn ) cov (Zn , Z0 ) λn
I The final formula of simple krging is:

K × λ = k ⇒ λ = K −1 k
n
P n
P
z0 = λi zi where λi = 1.
i=1 i=1

Spatial Correlation
3D Geostatistical Lithofacies & Petrophysical Modeling
Sequential Indicator Simulation (SISIM)

SISIM is used for spatial Lithofacies modeling (Deutsch and Journel, 1992;
Caers and Zhang, 2004; Zhang, 2008; Liu et al., 2004; Deutsch and
Journel, 1998):
I SISIM can reduplicate connectivity in extreme values.
I Define indicators by creating cut-offs and binary coding.
I The Facies are distributed by sequentially sampled from the conditional
distribution that is derived from the simple kriging at each cut-off.
I Consider the indicator kriging to estimate the probability that un-sampled
location prevails given the indicators values at the surrounding locations.
Nh
γ(h) = 2N1 h (facies(h+i) − facies(h) )2
P
i=1

Spatial Correlation
3D Geostatistical Lithofacies Modeling

For spatial Lithofacies modeling, the Sequential Indicator Simulation (SIS) has been
adopted through the foloowing steps after establishing the grid network and
coordinate system:
I Transform all the original Facies data K to the Indicator I (Binary Coding)

0 if Z (x) > Zk
based on the threshold values. I (Zk ; x) =
1 if Z (x) ≤ Zk
Where I (Zk ; x) is the indicator random variable that is associated with
random function Z (x) for a threshold value Zk .
I Create the indicator variogram for each lag distance based on the binary
codes.
Nh
γ(h) = 2N1 h (facies(h+i) − facies(h) )2
P
i=1
The prior distribution function represents the density distribution of the
i−1
P
facies and it is calculated: F (zi ) = P(zj )
j=1
I Select randomly all the un-sampled locations to be simulated.
I Consider the indicator kriging to estimate the probability that un-sampled
location prevails given the indicators values at the surrounding locations.
Watheq J. I SpecifyPh.D.
Al-Mudhafar, the
indicator values to be either 0 or 1 randomly. 91/132
Integrated I
Reservoir Management
Spatial Correlation
First of all and in order to get the 3D Facies modeling, the Sequential
Indicator Simulation has been adopted considering four main steps:
I Upscaled well log data.
I Construct and fit indicator variogram.
I Random seed number.
I Frequency distribution of upscaled data points.
The Sequential Indicator Simulation considers the indicator kriging to

obtain the spatial correlation of each Lithotype in four different angles:
0o (horizontal), 45o , 90o (vertical), and 135o ). The spatial correlation of
each lithotype has been done versus lag distance in those directions.

Spatial Correlation
Figure: Indicator Variogram for the three Facies in Four Directions

Spatial Correlation
Figure: Indicator Variogram for the three Facies in Four Directions

Spatial Correlation
3D Geostatistical Petrophysical Modeling

Unlike the simple kriging, the Sequential Gaussian Simulation is randomly
select the location of estimation based on the seed number to generate multiple
equaprobable stochastic images. Also, the estimated values are used for
estimation the next missing values. Consequently, the main procedure steps for
the Conditional SGS can be summarized by the following steps (Deutsch,
2002):
I Transform all the original sampled data into Gaussian distribution with
mean µ = 0 and variance σ 2 = 1 via the normal score transformation
(Z-distribution).
I Generate the Variogram for the sampled data.
I Select randomly the location of estimation based on the seed number.
I Estimate the variable value and the related error variance at that location
by the simple kriging.
I Create the local conditional cumulative distribution function for the
variable at that location for randomly selection the values based on the
that function.
I Repeat the process for all other locations of estimation.
I Repeat the procedure for other realizations
Spatial Correlation
I The stochastic Sequential Gaussian Simulation (SGSIM) honors all the

data, parameter distribution, variogram, and trend.
I The data should be upscaled first in order to be used for spatial modeling.
Based on the property-related histogram, the arithmetic mean is usually
considered for porosity upscaling; however, the harmonic mean is adopted
for the permeability upscaling.
I Prior to use the SGSIM, the variogram for the petrophysical properties
given all the facies should be constructed and modeled.
I After fitting the variogram, the standard values of sill, range, and nugget
in addition to the seed number are then honored in the SGSIM for Spatial
modeling.
I The variograms have been constructed conditioning to all the Facies
created by SIS. Therefore, 12 different variograms should be created for
each parameter to capture the variance in four different directions
(0o , 45o , 90o , and135o ) given the facies.

Spatial Correlation
Figure: Horizontal Permeability Variogram Given the Facies in Four Directions

Spatial Correlation
Figure: Horizontal Permeability Variogram Given the Facies in Four Directions

Spatial Correlation
Upscaling in Reservoir Modelling
I Upscaling converts a set of fine scale geological properties into a

representative single property value for a given volume of interest, usually
a fluid flow simulation grid block.
I Optimum level of and techniques for upscaling to minimize errors.
I Gridding and upscaling are interconnected.

Spatial Correlation

Spatial Correlation

Spatial Correlation
Geostatistics
Relevance of Geostatistics to Reservoir Management:
I Target oil location and distribution.
I Recovery design and optimization.
I Process efficiency: sweep and displacement.
I Economic Viability.
Pros and Cons of Geostatistics:

I Geostatistics Does Not:
1. Replace/reduce need for good data
2. Eliminate subjectivity
3. Substitute geologic ignorance
I Geostatistics Does:
1. Provide models consistent with data and prior interpretation
2. Maximize use of existing data
3. Quantify uncertainty

Spatial Correlation
Steps of Geostatistical Modeling
I Define a layering scheme (e.g. seismic surfaces, chrono-stratigraphic

markers).
I Model genetic sand body units (e.g. fluvial channels, mouth bars, shore
faces etc).
I Model rock type variations within units.
I Within each rocktype or lithofacies, distribute petrophysical properties
(e.g. porosity, permeability).

Spatial Correlation
Geostatistical Modeling: Field Example
1. Buena Vista Hills Field

I San Joaquin Basin, California.
I Monterrery Formation.
I Heterogeneous siliceous shale
2. Goal
I Construct 3-D distribution of porosity and permeability using well logs
and markers

Spatial Correlation
Geostatistical Modeling: Methodology
1. Define area/collect data.

2. Model spatial variation
I Compute and fit experimental variograms.
3. Estimate spatial distributions/ assess uncertainty
I Kriging/Cokriging.
I Stochastic simulations.

Spatial Correlation
Geostatistical Modeling: Well Data

Spatial Correlation

Wells with Marker TMC and P1B1

Spatial Correlation

Porosity Logs for 3 wells with Markers

Spatial Correlation
Geostatistical Modeling: Step1
Define Marker Surfaces

1. Import marker surfaces based on seismic or geologic data.
and/or,
2. Construct marker surfaces based on well data.
I Define spatial continuity (Variograms)
I Interpolate (Kriging)

Spatial Correlation
Geostatistical Modeling: Marker Variogram

Spatial Correlation
Geostatistical Modeling: Marker Surface: Top

Spatial Correlation
Geostatistical Modeling: Marker Surface: Bottom

Spatial Correlation
Property Modeling
1. Perform univariate analysis of the data
I Identify distribution
I Transform data, if necessary
2. Perform bivariate analysis
I Model spatial continuity (variograms)
I Identify and model anisotropy
3. Interpolate properties
I Kriging

Spatial Correlation
Porosity Histograms: Data Transformations

Spatial Correlation

Areal Variograms: Identifying Anisotropy

Spatial Correlation

Vertical Variogram

Spatial Correlation
3-D Porosity Distribution: Kriging

I Observation: Kriging results are unrealistically smooth

Spatial Correlation
Quantifying Uncertainty
1. Kriging results are too smooth: underestimates heterogeneity
2. Conditional simulation generates multiple ’plausible’ realizations that:
I Satisfy spatial statistics
I Incorporate spatial variability
I Quantify uncertainty

Spatial Correlation
3-D Porosity Distribution: Conditional Simulation

I Observation: Multiple realizations quantify uncertainty

Spatial Correlation
Porosity Cross-section: NW-SE

Spatial Correlation
Porosity Cross-section: NE-SW

Spatial Correlation
Porosity Cross-section: E-W

Spatial Correlation
Porosity Cross-section: N-S

Spatial Correlation
Permeability Modeling: Cloud Transform

I Cloud Transform
I Preserves the Porosity-Permeability Trend
I Preserves the scatter (Spread)

Spatial Correlation

Porosity-Permeability Scatter Plot

Spatial Correlation

Permeability From Cloud Transform

Spatial Correlation

Spatial Correlation
Permeability Cross-section: NW-SE

Spatial Correlation
Permeability Cross-section: NE-SW

Spatial Correlation
Geostatistical Modeling: Step+
I Incorporating facies information

I Constraining models to seismic data
I Reconciling models with production data (History Matching)

Spatial Correlation
Geostatistical Modeling: Recap
I Geostatistics provides us with a systematic approach to model building

that is consistent a wide variety of data.
I Can account for hard/soft information (qualitative knowledge, expert
judgements).
I Can generate multiple ’plausible’ models that can quantify uncertainty in
reservoir characterization and forecasting.

Spatial Correlation
Geostatistics
1. C.V. Deutsch, 2002, Geostatistical Reservoir Modeling, Oxford University
Press, 376 pages.
Focuses specifically on modeling of facies, porosity, and permeability for
reservoir simulation.
2. P. Goovaerts, 1997, Geostatistics for Natural Resources Evaluation,
Oxford University Press, 483 pages.
A nice introduction with examples focused on an environmental chemistry
dataset; includes more advanced topics like factorial kriging.
3. E.H. Isaaks and R.M. Srivastava, 1989, An Introduction to Applied
Geostatistics, Oxford University Press, 561 pages.
Probably the best introductory geostatistics textbook; development of
concepts from first principles with clear examples at every step.
4. M. Kelkar and G. Perez, 2002, Applied Geostatistics for Reservoir
Characterization, Society of Petroleum Engineers Inc., 264 pages.
Covers much the same territory as Deutsch’s 2002 book; jam-packed with
figures illustrating concepts.
5. R.A. Olea, 1999, Geostatistics for Engineers and Earth Scientists, Kluwer
Academic
Watheq J. Al-Mudhafar, Publishers, 303 pages.
Ph.D. 132/132
StepManagement
Integrated Reservoir by step mathematical development of key concepts, with clearly

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Outline Reservoir Management Geostatistical Modeling

Integrated Reservoir Management

Watheq J. Al-Mudhafar, Ph.D.

Senior Chief Reservoir Engineer

Lectures prepared for the 4th year students

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Overview of Reservoir Management

1. Petroleum reservoir management is a dynamic process that recognizes the

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Overview of Reservoir Management

Figure: Reservoir Life Cycle

I Therefore, reservoir managements requires synergized multidisciplinary

Reservoir Management Process

Regardless how large

Figure: Reservoir Management Process

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Establishing Purpose or Strategy

The key elements for setting reservoir management strategy are

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Establishing Purpose or Strategy

Figure: Technological Toolbox for Application in Exploration, Drilling and

Developing A Viable Comprehensive Plan

The next step in reservoir

Figure: Reservoir Management Team (RMT) Skills

Developing A Viable Comprehensive Plan

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Developing A Viable Comprehensive Plan

Developing A Viable Comprehensive Plan

1. Data analysis requires a great deal of effort, scrutiny, and innovation.

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Developing A Viable Comprehensive Plan

Figure: Workflow of Geological and Flow Simulation Models

Developing A Viable Comprehensive Plan

Developing A Viable Comprehensive Plan

1. Production performance results are used to estimate facilities

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Developing A Viable Comprehensive Plan

Figure: Steps of Economic Optimization

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Developing A Viable Comprehensive Plan

1. The final step in developing a reservoir management plan requires

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Monitoring and Surveillance

I The plan must be reviewed periodically to ensure it is being followed, it

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Revision of Plans and Strategies

I Plans and strategies should be revised when reservoir performance does

Definition: Sound reservoir management practice aims to maximize economic recovery

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Reservoir Management Leadership Team

I The reservoir management leadership team (RMLT) includes supervisors

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Reservoir Management Leadership Team

2. Achieving a quality program

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Reservoir Management Case Studies

1. McAllen Ranch Field, Texas, USA

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