## Are you sure?

This action might not be possible to undo. Are you sure you want to continue?

•

SOCIETY OF PETROLEUM EVALUATION ENGINEERS

MONOGRAPH

3

GUIDELINES FOR THE PRACTICAL

**EvALUATION OF UNDEVELOPED RESERVES
**

IN RESOURCE PLAYS

~SPEE

Sl)(lln'OII'flQ..I\lIl"~IIOIIL~

LETTER FROM THE COMMITTEE T ABLE OF CONTENTS In 2008, the Society of Petroleum Evaluation Engineers (SPEE) recognized that few, if any, guidelines existed to assist evaluators with determining undeveloped reserves and resources for hydrocarbon reservoirs in Resource Plays. At the suggestion of past SPEE President T. Scott Hickman, 2008 SPEE President Frank Molyneaux formed a committee to develop such guidelines. Starting in 2009, the newly-formed SPEE Evaluation of Resource Plays Committee began a dialogue on issues associated with these types of oil and gas reservoirs. Quickly the committee recognized that the issues and problems surrounding Resource Plays were complex and could not be handled with a few simple empirical guidelines. To address the multiple facets of Resource Play evaluation, the committee decided to issue a series of guidance documents highlighting issues, problems, and a reasonable method for evaluating Resource Plays. This approach was fashioned after the SPEE Calgary Chapter process that successfully developed the COGEH evaluation guidelines and resulted in the creation of the chapters of this Monograph. While this committee remained mindful of the Petroleum Resource Management System (PRMS) and the U.s. Securities and Exchange Commission (SEC) modernization of oil and gas reporting rules while preparing these guidelines, the committee has not obtained any adoption of the guidelines by either the PRMS members or SEC. Although we believe the guidelines are reasonable and meaningful, they are by no means prescriptive: we recommend evaluators continue to apply intellectual rigor as they determine how to best apply the different definitions and procedures to individual evaluations. We hope this Monograph will help you formulate a logical and reasonable method for estimating undeveloped reserves and resources. This Monograph is NOT intended as a final authority on the procedure for estimating undeveloped recoverable hydrocarbons in Resource Plays, but we do believe the methods outlined represent a reasonable and sound practice. Furthermore, we hope the methods proposed herein will spark additional discussion and will serve as a foundation upon which to build into the future. The committee urges evaluators to be mindful of other analytical techniques that may be useful in Resource Plays such that meaningful petrophysical data continue to be collected. As technology and measurement methods improve, new and more precise evaluation methods will become available to the reservoir evaluator. With deep gratitude and humility, the SPEE Evaluation of Resource Plays Committee is pleased to present the following Monograph. Russell Hall - Russell K. Hall and Associates - Chairman Robin Bertram - AJM Petroleum Consultants Gary Gonzenbach - TRC Consultants Jim Gouveia - Rose & Associates Brent Hale - William M. Cobb and Associates Paul Lupardus - Chesapeake Energy Paul McDonald - Pioneer Natural Resources Bill Vail- DeGolyer and MacNaughton Marshall Watson - Texas Tech University

LETTER FROM THE COMMITTEE.

................................................

2 3 15 40 57 79

CHAPTER 1 - DEFINITION OF A RESOURCE PLAY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CHAPTER 2 - STATISTICS - A BRIEF LESSON...................................... CHAPTER 3 - DETERMINING PROVED AREAS IN A RESOURCE PLAY. . . . . . . . . . . . . .

CHAPTER 4 - ESTIMATING UNDEVELOPED RESERVES IN A RESOURCE PLAY..... APPENDIX........................................................................

© Copyright 2010 by the Society of Petroleum Evaluation Engineers Published December 2010

1

2

<;OOfTTOFI'fTiIJU'JIIE'I'.l.:.Ll.UlCIIIlIKiII'III£1S

6SPEE.

Chapter 1 Definition of a Resource Play

over time. Obviously, sufficient time is required to arrive at these conclusions - time for historical data to accumulate, and time to analyze the data. As a I?ractical matt~r, it is anticipated that Resource Plays will encompass more than 100 completed wells ill the reserv~u. There ~re two rationales for this: first, developing a usable statistical model in a Resource Play typically requues about 100 wells; and seecond, a reservoir that has sufficient areal extent to be considered a Resource Play will likely encompass a minimum of 100 wells. Tier 2 Criteria Although the following reservoir characteristics Resource Plays: . are not required, these are commonly observed in

**What is a Resource Play?
**

The term "Resource Play" first appeared in publications in the early 1990s. It was used to describe an accumulation of hydrocarbons known to exist over a large areal expanse. With this term, the oil and gas industry hoped to describe a new type of exploration and development opportunity that exhibited both low risk and repeatable results. This was in contrast to conventional exploration projects with higher geologic uncertainty. Some industry publications even compared this development opportunity to the experience of the manufacturing and farming sectors to describe the repeatable nature of activity within the play. Please note, the term Resource Playas used within this Monograph, does not describe the classification of the hydrocarbon deposits(reserves versus resources in the SPE PRMS nomenclature), but rather the continuous aspect of the hydrocarbon deposit over a large regional extent. This chapter offers descriptions, insights, and observations that apply to Resource Play reservoirs. Some actual reservoirs are examined to show how they satisfy the Tier 1 and some of the Tier 2 criteria for Resource Plays. Essentially, this chapter will facilitate an answer to the question, "Is the subject reservoir best described as a Resource Play?" If the guidelines offered herein allow the evaluator to confidently answer "YES," then the remainder of this Monograph will assist the evaluator in estimating reserves. However, if the criteria outlined within this chapter leave the evaluator unable to confidently affirm that the subject reservoir is a Resource Play, it is suggested that other methods be employed to estimate reserves.

5. Requires extensive stimulation to produce at economic rates. 6. Produces little in-situ water (except for Coalbed Methane and Tight Oil Reservoirs). 7. Does not exhibit an obvious seal or trap. 8. Low permeability « 0.1 md).

Although all of .t~e char~cteristics lis~e~ i~, Tier 1 an~ .Tier 2 are important in properly categorizing Resource Plays, It IS the first charactenstic, Wells exhibit a repeatable statistical distribution of EURs " that forms the focal point of the procedures for estimating reserves and resources outlined within this Monograph.

6.000

5,000

~

**Characteristics of Resource Plays
**

Tier 1 Criteria The following characteristics are nearly always observed in Resource Plays: 1. Wells exhibit a repeatable statistical distribution of estimated ultimate recoveries (EURs). 2. Offset well performance is not a reliable predictor of undeveloped 3. A continuous hydrocarbon system exists that is regional in extent. 4. Free hydrocarbons (non-sorbed) are not held in place by hydrodynamics.

2.000 4,000

I!

~

VI

A~. .

I

location performance.

!r' L:::s-«

~

1,000

~

~e:z:::-

II

~ .,.."

If the reservoir being evaluated satisfies these four criteria, there is a very good chance the reservoir is a Resource Play and can be evaluated using the techniques discussed within this Monograph. Conversely, if anyone of these characteristics is absent, it is quite likely the reservoir is NOT a Resource Play. The Tier 1 criteria are listed in order of significance and both geological and engineering data must support these criteria. If data conflicts exist, the evaluator should seriously consider if the guidelines and evaluation techniques outlined in this Monograph are applicable. The Tier 1 criteria possess aspects of engineering and geology, and determining whether a reservoir is a Resource Play requires consideration of both. The geological depositional model needs to describe a reservoir with regional extent, while the engineering data needs to show statistically repeatable EURs

~

7

~

I

~

o

P

~~

10%

20%

30%

40%

50%

60%

70%

90%

100%

CUMULA llVE 2004 COMPLETIONS 2005 COMPLETIONS

PERCENTAGE 2006 COMPLETIONS -2007 COMPLETIONS

I

4

Fig. 1.1 - Barnett Shale, Johnson 3

County, Texas Performance

The Statistical Nature of Resource Plays Resource Play reservoirs cover a large areal extent and have a continuous hydr~carbon a~cumulation throughout the reservoir. However, the reser"_'oir is no~ homogeneous; that IS, wells In the ~ame producing interval exhibit dramatic differences In produCIn~ .rates and E1!Rs. Consequently, neither geologic nor reservoir properties can be predicted at a specific well location. Fo: example, one we.ll might produce at rates and with a decline profile that suggests an EUR of 2 Bd while the same analysis for a nearby well suggests a much lower EUR of only. O.~ Bd .. The~e differences in. performance ar.e a function of reservoir geology, which includes variations In thickness, rock lithology. porOSIo/, permeability, in-situ stress, minerology, etc., and completi0r: efficiency, which enco~passe~ ~ydrauhc fracture geometry and length. At this time, both reservoIr. geology and comp~etion efficiency are sufficiently complex as to be unpredictable from one location to anot~er l?ca~on. Co~seque~tly, predicting the performance of any particular well. prior. to com'pl~tion IS :'Ir_tually impossible. Fortunately, we can characterize Resource Play reservoirs USIng a.stati~~cal description that.app:ars to change little over time, provided interference between wells IS minimal. The graph In FIg. 1.1 demonstrates this behavior. The graph in Fig. 1.1 shows the performance of horizontal Barnett shale gas wells in Johnson County, Texas, organized by year of completion from 2004 through 2007. The graph plots pe.ak monthly gas rate (an alternative for EUR) versus cumulative percentage. This presentatio.n nor~ahzes the number of wells drilled each year since the x-axis is expressed in perce~t~ge, a .non-.dI~enslon.al.measurement. You will notice that performance in the different years exhibits quite similar statis~cs. !he 50th percentile value is almost unchanged from year-to-ye~r as ar: t~e 10t~/90th percen.til: ratios. The consistency of statistical measurements over a geographIcal regIon IS a prune characteristic of Resource Play reservoirs.

program in 1968 to develop Devonian shale gas in the Appalachian basin. This project ultimately became the Eastern Gas Shales Project (1978) and recognized the importance of natural gas production from the Devonian age shales in the Appalachian, Illinois, and Michigan basins.? In a shale gas reservoir, the organic-rich shale acts as both the source and the reservoir for natural gas as most of the gas is derived from thermogenic processes. Unlike coalbed reservoirs, however, most of the gas in shale reservoirs occurs as free gas in the pore space; a smaller percentage is contained as sorbed gas. An exception is the Antrim shale, which is biogenic ally sourced and mostly sorbed gas. Shale reservoirs typically exhibit nano-darcy to micro-darcy permeability and can only produce due to large hydraulic fracture stimulations. To date, these stimulations are most successful in shales with low clay and high silica contents, as the clay tends to inhibit the induced permeability due to swelling and fines migration. Tight Gas Reservoirs In 1978, Lloyd E. Elkins described tight gas reservoirs as those "having in-situ permeability to gas of less than 0.1 millidarcies (100 microdarcies) and ranging down to 1 microdarcy."3 Although not part of the definition, Elkins did note that tight gas reservoirs required massive hydraulic fracture stimulations to produce at commercial quantities. His study identified 20 Ll.S. basins with tight gas sand resources with 13 additional basins considered speculative based upon then current information. Tight Oil Reservoirs Tight oil reservoirs are a fairly recent addition to the Resource Play category and are still debated by many as to whether or not they merit inclusion. However, the analyses of several oil reservoirs indicate that most of the fields reviewed fulfill the Tier 1 criteria, as well as many of the Tier 2 criteria. In general, this group includes thick sequences of vertically stacked, low permeability reservoirs that are sometimes laterally limited and may be interbedded with water-bearing reservoirs. Coalbed Methane Reservoirs Coals are sedimentary rocks composed mostly of organic matter. During the burial process, the organic matter transforms by heat and pressure into coal while volatile materials, like methane, are released. This process provides the thermogenic source of methane. A biogenic process can occur during peatification, and later in the maturation life of coals, by means of bacterial action from meteoric water. Methane is stored in sorbed state in the micro-porosity while free gas is stored in the macroporosity, cleats, and fractures. The sorbed gas accounts for most of the gas-in-place. In coalbed methane (CBM) reservoirs, the gas-in-place is primarily a function of thickness and sorbed gas content. The coalbed permeability is essentially a function of the cleat frequency, the width of the cleats, and the interconnectedness of the cleat system. Some coals are gas saturated, but most are undersaturated with moveable water occupying part or all of the cleat porosity. Methane is produced once its partial pressure, desorption or saturation pressure, is reduced to the point where the methane begins to desorb from the coal surface. The methane, after des orbing from the coal surface, diffuses through the coal matrix to the cleat or fracture system. This process, known as dewatering, can require many months before gas production commences. Basin Centered Gas Systems Ben E. Law, in a 2002 AAPG Bulletin article, described basin centered gas systems (BCGS) as "characterized by regionally pervasive accumulations that are gas saturated, abnormally pressured, commonly lack a down-dip water contact, and have low permeability reservoirs."! Law further commented that the term" tight gas reservoir" was used synonymously by many geologists with basin centered gas systems. However, the two are not entirely identical as some tight gas reservoirs include conventional traps with buoyant accumulations, whereas the basin centered gas systems lacked any

**Depositional Environments That Frequently Include Resource Plays
**

One of the defining aspects of Resource Play reservoirs is the existence _ofa continu~us hydrocarbon accumulation over a large areal extent. Generally speaking, unconventional reservoirs meet most of the criteria require for classification as Resource Plays. In 1977, the Energy Re~earch and Develop~ent Association (now Department of Energy) identified four types of unconventional gas accumulations: tight gas, Devonian shale, geopressured water, and .methane from coal'. Resource Plays frequently encompass the following types of hydrocarbon deposits: 1. Shale Gas Reservoirs. 2. Tight Gas Reservoirs. 3. Tight Oil Reservoirs. 4. Coalbed Methane Reservoirs.

5. Basin Centered Gas Systems. Again, much like the Tier 1 and Tier 2 reservoir characteristics noted previously, this list ~s N(~)T intended to exclude all other hydrocarbon deposits as potential Resource Plays. However, at this POInt in time, these hydrocarbons are good examples of likely Resource Plays. Shale Gas Reservoirs Shale gas is defined as natural gas from shale formations. A~though this source of unconventional gas is a fairly recent development to many, the Ll.S, Bureau of MInes (now Department of Energy) began a

5

6

7. The identified reservorrs are composed of s~dstone. 1. Law indicates the BCG~. the statistical distribution observed on this graph is a reliable indicator of how future wells will perform.1 mD observed by Elkins. some Resource Plays produce mostly oil. of the Tier 1 Resource Play reservoir characteristics. LP r .publIcatIon. Of course. only the Clearfork.000 250.r . Discovered in 1943.000 '-'!!h"'!l. Spraberry.000 wells and covers part of 10 west Texas counties. Wolfcamp.J 200. 1.2003 WELLS -+. Key assumptions and their implications are examined in greater detail in Chapter 4.000 ~ ~ W 4. including that for the 13 honzontal wells The data in Fig..~ ~ XX 20% 30% 40% 50% 60% 70% 80% 90% 100% 1.eak monthly gas rate is used instead of EUR because the data is publicly reported.300 wells and establis~ed the Fayette:ille ~h~le as a significant shale gas reservoir. In. and Dean formations. 1.2 ...e.2 illustrates the repeatable statistical distribution of peak monthly gas rates for horizontal wells drilled from 2005 through 2008. have abnormal pressures and no down-dip water. and most important.3 demonstrates a repeatable statistical distribution of oil EURs.. This illustrates the first. Historically.. However. The Spraberry Trend field of the Permian Basin encompasses the Clearfork.. ~ ~ .4 ~X'~ . and future exploration remains geographically confined. Table 2 of ~is .. "Exhibits a repeatable statistical distribution of EURs. which are in prox~mty to an a~tive gas source. P.2004 WELLS ---Fig.tI ~ .000 ~ ~ ~ 3.000 o 10% CUMULA llVE PERCENTAGE 0 0%) 10% 20% 30% 40% 50% 600/0 CUMULATIVE _2005 COMPLETIONS _2006 PERCENTAGE COMPLETIONS _2008 COMPLETIONS I-+. Fig. tests in 2001 proved the Wolfcamp formation... a thick sequence of sandstones and siltstones interbedded with impure limestone. Tight Oil Example Although Resource Plays tend to be gas bearing.Play sI~ce the reservoir satisfies all of the Tier 1 criteria.and in one singular instance.. ~nd Law uses the same upper p~rmeabilIty l~mt of <0..hydrodynamic buoyancy (i. s~tstone. and some Pennsylvanian formations." as it provides the basis for analysis of undrilled locations..Spraberry 2005 WELLS ---*- 2006 WELLS I COMPLETIONS _2007 Trend Field Performance Fig.. as are the ratio of the 10th to 90th percentile values. 1.000 50.J W ~ w (5 150. Law mclu~es an extensive list of recognized or suspected BCGS accumulations. Nearly all of the data. Arkansas.3 . with mostly . 8 7 . completed during the early phase of exploration in 2005. this assumes the technology used for future completions will be similar to current technology. carbonate. La~'s co~~nt on buoy~ncy is accurate and indicates that direct basin centered gas systems. and gas EU~ m this field is closely related to peak rate. there is no down-dip water contac~).c rt H ~ --"" .000 6. operators have completed over 2. 1. The Fayetteville shale is a R~s?urce . Since then. follow a similar distribution: the values at the 50th percentile are reasonably close from year-to-year. a low porosity detritus. were perforated. Some biogenic gas reservoirs are mcluded ill this category.res~rv. . Dean. the field now includes approximately 20... The Fayetteville shale reservoir expanse is quite large and until well density is sufficient to cause interference between wells.Fayetteville Shale Performance This graph plots peak monthly gas rate versus cumulative percentage of well completi~:ms'.000 .Olrs always exhibit low porosity and low permeability. Fig.000 300.000 100.. 350.000 ~ ::::> ..lffimo~ile conna~e water and often found down-dip from a water contact..3 depicts oil EURs for 160 Spraberry Trend completions drilled from 2003 through 2005 in the western Midland basin. The BCGS reservoirs are gas sa~rated.~ A' V / 2.000 Examples of Reservoirs That Are Resource Plays Shale Gas Example Southwestern Energy established production in the Fayetteville shale in May 2004 in Franklin County.000 J ~ 5. Spraberry. was also productive.000 en en .

S.~ .•.. I I Q .." "1lOO' ..! ~ •• •• •• .. .-__""'- . From the frequency plot in Fig. T I ! 1000000 -~ _. I --Lognorm r ! i ...8 Naximurn Nean Std Dey Values 616454.~. . but the main producing seams are at depths of 1... •. resulting in multi-seam wells with a combined thickness of 15 feet to 25 feet.Deerlick fit Comparison RiskLognorm( Creek EUR Cumulative Frequency Plot r-------------------------~ forCBM EUR 0. .0 .9642..-If . :... Steel.•• W. This coalbed methane example is classified as a Resource Play because all Tier 1 criteria are met.033 1. An extensive regional study determined that while thickness and permeability are poor predictors of productivity> in this field..0.. . 1.*.5000 Std Dev 326915....Black Warrior Basin and Deerlick 9 Creek Area Location Creek Field EUR Distribution Creek Field EUR Bubble Map 5 .. *:.. ~ . Fig... * 10 Values in Millions Fig.1. 1. .. Fig. Depths of the coal seams range from 500 feet to 4... 1. • • *•••• '!' * ..326915.• ...6-Deerlick Fig.*~.• " * * . 81l. Most wells are multi-seam vertical completions with three to five commingled seams./ --Input 100000 o Q l /' Q -..S.r....6.5 ..- .". shows randomness in EUR of the wells.I . . Gas EURs for the field's 283 wells are graphed as cumulative probability plot in Fig.•.l.7 . • •.. Cumulative Fig.. * • • ••••• ~ . 1... --.:.0000 Nlrurnurn ·· ••~ .7.0 o N Coalbed Methane Fields of the Black Wamor Basin Structure Contour Map on the Top of Pratt Cycl~e ~134402. .• .-.~ &SPEE Coalbed Methane Example Coalbed methane development began in the Black Warrior basin in 1976 when a 23 well pilot was drilled in the Oak Grove area by a joint venture between the U'.....IIIOIIIU"oil'll._.3749 32..253 .4 identifies a study area within the Deerlick Creek coalbed methane field.500 feet to 3..6 0.*. • .0000 Maximum +00 Nean 616724.'.S-..5 and as a frequency plot in Fig.0 0.··tII ... we can see that the mean gas EUR is 616 MMcf and the PI0jP90 ratio is approximately 3.• • •• .7..".5. 1..4545.IIInput Minimum 102308.. 1..500 feet. Bureau of Mines and U..IP' 81.~rrOfKTlQUlJIIIE'I"A.RisicSh ift:(-134402» ..L:...4 0.4700 I co (' 1. :... ..~.. Frequency '" Q q . peak producing rates and EUR can be correlated..*.. . tccncrm 1': > 0.4 .326915. as well as several of the Tier 2 criteria.••-.Deerlick :..3% 751126. An EUR bubble map prepared for the field... 1. 10000000 Fit Comparison for C8M EUR RiskLognorm(751126.*. 1. '.. 1...-.*..5. The individual productive seams range from 1 foot to 8 feet thick.000 feet...6 .•• 1 . The EURs follow a lognormal distribution in Fig. 1. Fig. 283 8 se ~ .••_ . 5.8300 2300698.. Since the pilot.6. several thousand wells have been drilled across the 18.•... RiskShift( -1344(2» 1.*.000 square mile basin.2 0.

8 details the cumulative distribution of EUR and u:itial g~s rate for a numbe." Tier 1. Alt~ough the individual sand sequences are difficult to correlate from well to well. is discussed in the following chapter. 1. It IS considered a Resource Play. Wells exhibit a repeatable statistical distribution of estimated ultimate recoveries (EURs). criteria three. Free hydrocarbons system exists that is regional in extent. the Cottonwood Creek field was NOT a Resource Play reservoir and the initial assessment was inaccurate. Fig. one such filter. although penetrated by wells with gas shows. the surrounding shales and evaporites influence the measurements resulting in a misleading log presentation. The three most common ~as-bearillg zones WIt~ill the Upper Cretaceous are the Milk River. Recommendation 1: To be a Resource Play. Performance. The 10 vertical wells completed in the reservoir during the 1970s have each produced about 25 Mscf/D. However. How could evaluators have improved their analysis in this instance? Using a consistent filtering process can assist in making correct determinations about whether a reservoir should be evaluated as a Resource Play. they turn out not to be Resource Plays. Some of the beds are so thin that electric logs fail to properly measure the lithological properties. a horizontal well reported a test rate exceeding 4. Additional drilling eventually delineated the field extent both in net thickness and are ally (35 mi x 6 mi). Operators added several wells the following year alone. the overal~ accu:nulation cov~rs an area greater than 7.000 Mscf/D from the interval and drilling activity increased tremendously. 1. During the early development of the Cottonwood Creek field. In these situations. The importance of adequate well count. performance varied greatly between adjacent wells. and Second ~~te Specks each of whI~h are interspersed within a thick shale sequence. Gas in all three reservoirs I~ ~r?m both thermogemc and biogenic sources. a "Continuous hydrocarbon system exists that is regional in extent. the field lacked an essential characteristic of Resource Plays. a reservoir must include substantially minimal risk locations. Consequently. the lack of well penetrations meant the regional extent of the reservoir was not initially determined.Mcfjd 1. the lower Abo (designated as Wolfcamp by the regulatory agency) consists of multiple thin dolomitic beds. Further complicating log interpretation is a high gamma-ray radiation reading throughout much of the productive interval.000 square miles. was an overlooked reservoir. the following observation and recommendations are offered: Observation: It is not possible to determine if a reservoir is a Resource Play early in the exploration process due to the lack of well control. thereby creating a tough situation for reaching a proper determination. These reservoirs are relatively shallow and have a low initial pressure.8 . evaluators did not have the insights provided by Monograph 3. Admittedly.000 2.000 10. More than 52. many geologists and engineers believed it was a Resource Play reservoir because the field exhibited many Resource Play characteristics including meeting Tier 1 criteria one and four. Geologically.?: P30 ~ P40 6: '" "2 P60 :.Alderson Area Performance In the case of the Cottonwood Creek field. 1. plus Tier 2 criteria eight.Tight Gas Example The Upper Cretaceous shallow gas in southern Alberta was discovered w~en gas blo~s. Initial Raw Gas Rate __ Ultimate Raw Gas Reserves . was predominately controlled by pay thickness. the lower Abo. An example of this exists in the Cottonwood Creek (Wolfcamp) field of New Mexico. Then.r of co~n:in~le? wells in the Alderson area of southeastern Alberta. were encountered while drilling for fresh water. Overall. Therefore. but after further data becomes available. leading to the improper categorization of this field as a Resource Play. presumably due to the presence of natural fractures. All Time Cumulative Raw Gas Frequency Distribution Project . Offset well performance is not a reliable predictor of undeveloped 3. in early 2004. Ultimately. the reservoir exhibited very low permeability and required extensive stimulation to produce. u P70 PSO ~ P50 P90 P95 P99 10 100 Ultimate Raw Gas Reserves. However. although random in nature and highly influenced by localized fracturing. 11 12 . (non-sorbed) are not held in place by hydrodynamics. P1 EUR P5 p90: p50: PMean: pI0: MMCf 46 197 271 560 IP Mcfjd 68 133 152 251 PlO P20 . Medicine Hat.Gas Well Count: 2. in this example. location performance. and determined the reservoir could be geologically mapped using subsurface data. more than 100 Fig. As this gas field meets all the TIer 1 cntena.M~'cf -Initial Raw Gas Rate .000 wells have been drilled ill the area with average recoverable volumes of 224 MMscf per well. Continuous hydrocarbon 4.069 Reservoirs That Are Not Resource Plays Sometimes reservoirs exhibit behaviors that might indicate initial qualification as Resource Play reservoirs. Today it is recommended that the four Tier 1 criteria are all essential in defining a Resource Play reservoir.

errors in measuring production or determining EURs can be greatly amplified when this information is the primary data used to calculate reserves for undrilled locations. are public ally reported. A more rigorous solution. 86 no. McIntyre. the evaluator should gather other types of information (electric logs. 11 (November Final Considerations The examples outlined within this chapter focus on data of produced volumes and EURs. Jr." Paper SPE no. pressure tests. Ohio. 4. Komar. J. the evaluator should consider which method or methods best model their undeveloped locations. A. M. L. Natural Gas Reserves from Gas Bearing Shal. Obviously. gas hydrates. bitumen deposits. however." Bulletin 3008922. The goal of this Monograph is not to identify every Resource Play reservoir. 3. 2002. P~per SPE no. S. Pashin. 6364 presented at the 1976 Eastern Regional Meeting of the Society of Petroleum Engmeers in Columbus.. e. Elkins.H. etc.R. Play reservoir should Chapter 1 . Additional reservoir types and depositional environments exist which are not addressed with this chapter even though they may ultimately be considered Resource Plays (for example.W.1Jl. Recommendation 2: To establish a useful statistical model. M.. N. "Increasing Eastern U. "Basin-centered 2002). 5. etc. This substitution is appropriate if the evaluator determines a linear correlation exists between the peak gas rate and the gas EUR Peak gas rates are convenient since these are observed early in the life of wells and. Tuscaloosa. pp 1891-1919. usually. 7746 presented at the 1978 Production Technology Symposium in Hobbs.. Law. Groshong.es. Although the remainder of this Monograph focuses on these types of field data. but to provide the evaluator with procedures that may be applied to various reservoirs to help determine whether or not they are indeed Resource Plays. Department of Energy. would use EUR data as shown in the Spraberry Trend field example. 1978.. Ove~by. Finally.).) for ongoing analysis and increased accuracy..US 6SPEE. 1980. gas systems. 2003. As other procedures are developed." Alabama.. the methods outlined within this Monograph are considered a reasonable and sound approach for analyzing undeveloped locations in Resource Plays. Presented at the 20034 International Coalbed Methane Symposium. "Relationship Between Gas and Water Production and Structure in Southeastern Deerlick Creek Coalbed Methane Field Black Warrior Basin. 2. "Unconventional Gas Resources. M. "The Technology And Economics Of Gas Recovery From Tight Sands. 13 14 . a Resource encompass a regional area as determined by at least 50 to 100 drilled wells. as noted in the introductory letter from the SPEE Evaluation of Resource Plays Committee. 1976. J:RH. Cox." Article AAPG Bulletin v. S. cores. Morgantown Energy Technology Center. E.. U. William K.References 1. Ben E.e. This Monograph often uses peak gas rate as a proxy for gas EUR to demonstrate the repeatable nature of Resource Plays.llll!Jlfol'I. Alabama.SOCIETTQFK1ItU'JII~YIol.

six outcomes provide a sum of 7. 20+----Oi~--. This collection of 36 possible outcomes can be arranged to form a distribution that relates the outcome sum on the x-axis to its frequency of occurrence on the y-axis. Considering that various outcomes can produce a single sum. a 4 on the red die and a 3 on the blue die. the outcome of the first die has no influence whatsoever upon the outcome of the second die.3. In . is plotted on the y-axis. the probability of each die landing with any particular side up remains the same. Note that six outcomes provide a sum of This chapter provides overviews of the statistical tools that will help you organize and interpret well data in Resource Plays. When de Moivre graphed the experimental results. consider the outcome of rolling dice. at age 24.2S 0. we can see that there are 36 possible outcomes as presented in Fig. II ! Types of Distributions Frequency Distributions To understand frequency distributions. This chapter will provide the user with an overview of the statistics and statistical methods which will be used throughout the remainder of this Monograph. 2. aggregation of EURs is perhaps the most important aspect of statistics since this technique provides the foundation for forecasting PUD reserves in a Resource Play. SUM OF INDEPENDENT DISTRIBUTIONS I o 1 2 I 4 5 6 7 8 9 I I 10 11 12 120 g 100 ~ LL !!i 80 . Offset well performance is not a reliable predictor of undeveloped 3. each die continues to behave as an independent random variable. the error distribution.1. Gauss applied theoretical corrections to astronomical measurements as part of a method to predict DISTRIBUTIONS: TWO DICE ROLL celestial orbits. you could have a 6 on the red die and a 1 on the blue die. or 1/6 = 0. but is included because of the importance of statistical data and distributions to interpreting data in Resource Plays.----="---60 Fig. graphing techniques. 4. Upon rolling a die. location performance. 2.A Brief Lesson Introduction Statistics can be used to assess sets of related values and then predict future outcomes given similar occurrences. When a second die is included and both are rolled. Gauss calculated the path of this planet using his newly I1I2 developed technique.Two Dice Roll. sometimes. developed a theory of celestial movement using normally distributed errors. History of Statistics In the 18th century. A continuous hydrocarbon system exists that is regional in extent. but which was lost in the Sun's glare by mid-year. De Moivres solution is known as the "normal curve.du~ to . a 4 on the blue die and a 3 on the red. a Resource Play.both h~man errors and Imperfections ill instruments.167. The content covers distribution types. If you were to add the results from rolling two dice. Die two or at least within one-half of a degree. As presented in Fig. 2. 15 16 . a 5 on the red die and a 2 on the blue die. To test his theory.00 1 2 3 4 5 6 7 8 9 10 11 12 13 Outcome of Two Dice Summed N = 12 Fig 2. When a coin is flipped. The frequency. he predicted the path of Die one Ceres.4-Sum of Four Dice Roll. For example.---1"""'''' 9 Outcome 11 13 15 17 Dice 19 21 23 of Four Summed Fig.3. The Monograph discusses this important concept at the end of this chapter. The normal curve Outcome has been associated with Gauss' name ever since. to the point that this distribution is now commonly called the Fig. and furthermore. he obtained a graph similar to Fig. He proposed the question.Sum of Two Dice Roll. what is the likelihood it will land on heads 7 times or 9 times or all 12 times?" To resolve this question de Moivre flipped a coin hundreds of times and observed the outcome. De Moivre concluded that a mathematical expression should exist to describe this distribution as this expression could be used to predict other probability outcomes. . in particular. "If a fair coin is flipped 12 times.2.10 0. Each die will have an identical uniformly flat distribution as presented in Fig.Chapter 2 Statistics .Coin Flip Experiment. Carl Gauss h~pothesiz~d th~t ~rrors in astronomical observations of orbiting objects. and aggregation of well EURs. ThIS was partly a result of Galileo's observations some 150 years prior that errors in measurement appeared symmetrical. However. a 6 on the blue die and a 1 on the red die. 0. thereby reinforcing his reputation as a mathematical genius. 2. It is not an in-depth investigation of statistics. which was determined by dividing the number of occurrences by the total number of attempts.the early 19th century. a French born statistician and consultant to gamblers. a 5 on the blue die and a 2 on the red die. Carl Gauss. For the purposes of this Monograph. two outcomes are possible: the coin will land either on heads or on tails. that small errors were observed more often than large errors. In fact. a dwarf planet that was discovered in January 1801. 2.05 0. +------ The number of times the coin landed heads (of 12 coin flips) is plotted on the x-axis.2 . and the object was enthusiastically observed in late December 1801 at the predicted position.1. might follow de Moivres normal curve distribution. in fact. the PlO/P90ratio. the first characteristic of a Resource Play notes the importance of statistical distributions in determining if a reservoir is. 2. Wells exhibit a repeatable statistical distribution of estimated ultimate recoveries (EURs). examined the occurrence of coin flips and. Abraham de Moivre. That is. sample size.3 ." The normal curve is statistically important since many natural phenomena exhibit this distribution. the probability of landing with any particular side face up is one in six (six sides to a die).IS 0. 2.20 O. the likelihood a coin would land heads. the possible total sums range from two to twelve. Gaussian distribution or. Recall the criteria of the four Tier 1 criteria required to identify a Resource Play: 1. Free hydrocarbons (non-sorbed) are not held in place by hydrodynamics. 2. as the dice are independent of each other.

5. ~hIS il~ustrates a very useful principle: by adding independent random variab~es: the resulting distribution will tend towards a normal distribution. as presented in Fig. While true for symmetric distributions.the curve begins to smooth to form a bell-shaped. it makes it easier to begin forecasting future results. Building on the outcomes of the previous trial.-------------------------------------.ecalo~late result~ fro:n four di~e. It is the sum of the sample points divided by the number of samples. on a cumulative frequency curve. such as a normal distribution. A large standard deviation value indicates a wide spread of the data while. . outcome histogram. The central limit theorem is one of the most fundamental theorems of statistics and probability. the nature of the distribution changes dramatically. and 50 percent of the outcomes are less than the PSG. It states that the distribution of the average of samples of any distribution will tend toward a normal distribution given a large number of samples of that distribution. conversely. While the use of the mean value is technically correct.I«I£TfOfi'fTX'U'Jlfn'4W. As more dice outcomes are multiplied together (using four dice for instance). Just as was shown with the dice.:> '+- co Q) The mean is the arithmetic average of the data-set samples.:. rather than added. Cumulative frequency plots.f. present a reverse cumulative plot of the outcome of two summed dice. six is the mode value (most frequently occurring) or peak of the distribution. this is not the case for the key distributions in the exploration and production business that are often best represented by truncated lognormal.IlClIfUCiiMiIS 6SPEE seven. normal distribuhon as Illustrated ~n Fl? 2:4. By converting the y-axis to a cumulative probability percentage. Many distributions in the natural world result from multiplication of independent parameters. Die face 1 N Q) c. The common statistical measurements used to describe the shape and structure of data are the mode. This very powerful theorem can be extended to show that the sum of a large number of distributions (not necessarily normal) will also tend to a normal distribution.5 . or six. or beta distributions. 2. like the one shown in Fig. 2. a small standard deviation value suggests a narrow spread of the data. 2 3 4 5 6 7 8 9 Dice 10 11 12 Outcome of Two Summed It is useful to describe the probability of an outcome equal to or greater than (or less than) a certain value in relation to all of the possible 36 outcomes.7 . 2.8 . formation volume factor. and recovery efficiency factors.6 . nine different combinations result in products of four.6. peak rate. median. When the dice outcomes are multiplied together. The mode.80 o c Q) LL 6~ 60 40 20 TENDS TOWARD AN ASYMMETRICAL (LOGNORMAL) DISTRIBUTION f- o ~ 30 '!l <1) J: cr 20 o ]5 " E 10 o 200 400 600 of Product 800 1. field size distributions. The mode is correctly referred to as the "most likely" outcome of any single random sampling of a distribution. marking the highest point on the frequency of occurring vs. Product of Independent Distributions 120. such that 50 percent of the outcomes are greater. from a portfolio perspective it does not convey the uncertainty in outcomes to the decision maker. or change of slope. Mean Fig. methods are required to organize and communicate the characteristics of specific data. 2. In this case. this distribution smoothes. the resulting distributions for these naturally occurring phenomena often exhibit lognormal behavior. >. permeability-feet.000 1. A common error is to assume that the PSG is halfway through the range. if ".. the central peak has shifted to the left with a "tail" growing to the right.3 (outcome of two summed dice). 2. Mode The mode is the most frequently occurring value. o Fig. when the values on two die are multiplied together. 2. SUM 100% 90% fC? Terms of Statistical Measurement Fig. When the product of four dice rolls is plotted in a frequency plot. median. 2. Lognormal distributions are so named because the logarithm of the variables results in a normal distribution.Product of Independent Distributions. This reflects more small outcomes and fewer large outcomes. Cumulative Frequency Distribution SUM OF INDEPENDENT DISTRIBUTIONS ~-------------------------------. Compared to the symmetrical normal distribution of Fig 2. Deterministic economic assessments are typically based on the mean values. five. the result is a lognormal distribution. 18 17 . This is an example of the central limit theorem.8. The cumulative frequency plot's y-axis is converted to a cumulative percentage by dividing the cumulative frequency of the outcome by the total number of outcomes.Product of a Two Dice Roll. as presented in Fig. <1) ~ ~ 0 Median The median PSG is found halfway through the frequency. Examples include area estimates. 2.200 (3 Outcome of Four Dice o Fig. 80% 70% 60% 50% 40% 30% 20% 10% 0% 2 3 4 5 6 7 8 9 10 11 12 Outcome of Two Summed Dice E 2! W c. estimated ultimate recoverable reserves (EUR). mean. and standard deviation. DISTRIBUTIONS Statistics is the study and description of data. Note that the peak of a frequency curve becomes an inflection point.7 illustrates.Cumulative OF INDEPENDENT Frequency. Standard Deviation Statisticians use standard deviation as a measure of the dispersion of the data. The cumulative frequency plot is a running total of the outcomes. As Fig.Cumulative Percent Sum Of Two Dice Roll. and mean are measures of the central tendency of the data and the values around which the data are arranged. This type of display is termed a frequency histogram or diagram. Consequently.

production r~te.0 Fig. drainage area.Lognormal Probability Distribution. 95 percent within plus or minus two standard deviations. Subtract the mean from each data value and square the results. Lognormal Distrlbotioo p. and the median will always exceed the mode. the PlO.. and cycletime forecasts. it is necessary to apply truncations to reflect distributions that occur In nature. 2. 2. nght skew smce the mean IS skewed to the right of the mode. of data items. median.mode.11. Incorporating standard deviations to a normal distribution curve shows the percentage of the sample bounded by each deviation as shown in Fig. In a lognormal distribution. viscosity of oil and rec?very efficiency. it is the log of the value that follows these normal distribution rules. However. The purpose behind statistical analysis is to better communicate the analysis of the data to the decision maker. The mode.7 percent within plus or minus three standard deviations.10. PosIti:re correlations Increase uncertainty and negative correlations decrease ~nce. it is indicative of a normal distribution. 4.2. As such. most correlations are positive.-. 2. 2. capital cost estimates. and 99. which are unrealistically high. Thus approximately 68 percent of the data occurs within plus or minus one standard deviation. Add together all of the results from step 2 and divide by the number resultant value is known as the variance of a sampled data set. In practice.o 300. decision makers are typically not statisticians. porosity. F~r example. t~e_reare strong correlations between porosity and permeabill~. Fig. as Fig. the mean will always exceed the median. shown in Fig. is used to represent the standard deviation. Take the square root of the variance to calculate the standard deviation. randomly sampling a distribution. lognormal distributions result when independent variables are multiplied together. and mean are displayed on a common scale. 2. additive processes. the mathematical equation to derive sigma is: n When we are Distribution Function Eq. IS used to describe measurement error. rather than confuse.11 del?icts a situation where the values are positively s~e~ed. This is true in many equations including originaloil-in-place which is a product of netpay. 2. and our ~eserve calculation. The When there is symmetry on either side of the average outcome.10-Normal Probability Distribution. Jl-2u p. I~ reserv~ e.Pgo. In probability theory. !hIS IS termed a. and other factors. In 19 20 . be careful: these commonly known values apply only to normal distributions. the data. porOSIty a~~ water sat:rrati~n. 3.Normal Probability The lower case Greek letter sigma.rtaInty.. oil saturation. The range in a normal distribution is from negative infinity to positive infinity but in practic~.1 L i=1 (Xi- mean)2 n-1 Where: n is the number of data items in the sample. Building these known correlations mto mput vanables will Increase the uncertainty in our reserve calculations. Theoretical distribution allows for very large values (approaching infinity).3q.) Distribution Functions This section discusses commonly used probability distribution functions . CJ. engineers presenting means and standard deviations are not providing the decision maker with a thorough understanding of the inherent uncertainty in the opportunity they are being asked to authorize.the normal and lognormal distributions. Consequently.9. permeability and recovery efficiency. For lognormal distributions. The lognor~~l distributio_n shown ~ Fig. 2. (For example: when considering the PlO/P90EUR ratio discussed later. 2.-Iu Distribution Curve. think about this ratio as reflective of the reservoir heterogeneity and explain this concept to decision makers. the statistical measurements should be fully explained so they convey.11. Lognormal Function Probability Distribution Normal Distribution l!O~ 2ao. The lognormal distribution is the most important distribution in the upstream exploration and production business. we increase the level of granularity we see increasing correlation between input variabl~s. In Figs.10 and 2. median.9-Normal While statisticians use the mean and standard deviation. Determine the mean of the data. normal distribution. and mean are the same value in a normal distribution. A P90of 10 and a Plo of 100 are used to build these distributions for our illustration purposes. As mentioned previously. and many natural phenomena. The process to calculate standard deviation is: 1.valuations. It is commonly the best distribution for reserves. Measures of average outcomes are often well represented by a normal distribution.

This results in superior curve fitting relative to actual data.0 2.0 4. The four different are: • • • • The The The The graphical presentations Map 2. the gas EURs are sorted from lowest gas EUR value to highest gas EUR value and plotted at the respective cumulative percentage using the equal interval method. saturation.Cumulative Percentage 10. The beta distribution is ideal for those parameters that are expressed as bounded percentages including porosity. right or left skew and even a Ushape. this Monograph uses one data set and plots it in four different graphical presentations to acquaint you with each. and 2.1.0 3. It traverses an interval from zero to one and its curves can take on multiple shapes including uniform. Graph Type 2 .0 2.0 6. histogram.5 Bd. ~ J 0- 40 r""""' I-- 30 ~ r= l~ 20 10 I-- o r1Hn_.72 Bcf) but a few wells exhibit high EURs creating a shape skewed to the right.0 0.0 9.16 present the gas EURs for 463 Barnett shale wells that are located in the study ~rea of Map 2. 2. 1... and the x-axis is nondimensional. but the distribution can be uniquely defined using a mean and variance or two percentiles such as P90and Plo.Histogram In Fig. J.0 3.. 10 wells have EURs of 0. Fig. Statistical Graphs Any measurable value. 2. The study area is located in Tarrant and Johnson Counties of Texas near the Ouachita thrust. or EUR per foot of pay.. 7. most evaluators prefer graphical representations since plots allow easier and quicker analysis. Fig..0 to 1.12. gas EURs are plotted on the y-axis with cumulative percentage of wells on the x-axis. and so on.0 1.Barnett Shale Study Area. symmetric bell-shape.12. When the beta distribution matches data limited to the range of zero to one (0 percent to 100 percent).0 u. a characteristic of the lognormal distribution.13. the betapert distribution uses a beta probability distribution function in place of the linear extrapolation on either side of the mode.--I-- i3' C QJ 50 lJ. f V 10% I .0 0.-"" !--" en « o V 17 I .0 5.13. Variables that vary over a fixed range are often best represented with a beta distribution. can be analyzed using statistical methods. 2. The same data is plotted as EUR versus cumulative percentage graph in Fig. 2.Histogram for Barnett Shale Study Area.. recovery efficiencies. a good starting point for lognormal truncation is the P99for the low-end and the PI for the highend truncation. Although these values can be expressed numerically. To create this graph.15. Fig. Graph Type 1 . and net to gross ratios.0 8. maximum and the mode (often referred to as 'the most likely').. 2.0 4. including peak monthly rate.. or frequency is plotted versus the gas EUR (Bd).01 to 0.5 Bd. 2. The actual parameters that define the beta distribution are alpha and beta.0 10.0 8. This graph offers a simple presentation that most users can readily interpret.0 Bd.1.12. Because the same data may be plotted differently.. linear cumulative percentage probability chart. Beta Probability Distribution Function The beta probability distribution function is a flexible distribution that introduces an additional variable into the probability distribution function equation.. log cumulative probability chart using the Pro bit scale. Figs.. thereby allowing for comparison of different data sets. the well count. EUR. In the absence of analog data. the graph is easily created in Excel.16. Betapert allows the user to build probability distribution functions by inputting a minimum. 31 wells have an EUR of 0.0 5. it is usually easier to use than other distributions.0 9. 2.0 7.0 o III 0:: ::::l W I I ..- ~~ I i 20% 30% 40% 50% 60% 70% 80% 90% 100% CUMULATIVE PERCENTAGE OF WELLS Fig. 2. 2. This section discusses different ways to graphically analyze and present statistical data.12 .13-Cumulative percentage for Barnett Shale Study.5 to 1. The shape of the distribution is somewhat symmetrical around the median (2. However. 2.13. I I I VI 0% I I . 40 wells have an EUR of 1. 21 22 . Thus. 80 0 r80 .practice.0 6. EUR versus cumulative percentage. it is necessary to apply low-end and high-end truncations to model the right skewed distributions that are common in the exploration and production industry.0 GAS EUR (Bet) Fig.-. In this presentation.15. Fig. Betapert Probability Distribution Function The betapert probability distribution function is a recent type of distribution described with the same inputs as most triangular probability distribution functions. 2.

lf-----------i r-----------------------.9 99 . In this example. then a normal distribution would be a good represent~tion of the data for further modeling. the user should 10 1. as it is a plotting technique that creates a straight line for a normal distribution when a Fi2:. In Resource Plays. Graph Type 3 . variable completion practices. For this graph type.01 to a high of 99.Lognormal Probability I I -I -- P02 P01 P05 I P90 P80 P70 P60 P10 I I P20 P30 P40 P50 P50 P60 P70 P80 P40 P30 P20 A slight variation on the cumulative probability vs. In Fig. on the x-axis.\J':J I I 99. values are plotted using a linear x-axis. 2.. hence.1 points.000 1.1---------1 r--------------.000 100 10.while curvature is r-----------~L_---------~P90 seen above and below these .15.14-Cumulative Probabilitv vs. straight lines r-------------/-J1L----------I P80 are frequently observed between the P90 and PlO.1S-Cumulative Probability for Barnett Shale Study Area. where P90expresses a high confidence of equaling or exceeding a small value. 2. \J':J. When there is significant data.16. As illustrated in Fig.1 than an inferred distribution.000 determine whether the nonGAS EUR (MMCF) lognormal behavior is due to economic truncations. and Crystal Ball 10000 9000 8000 7000 8000 5000 4000 3000 1000 2000 can create distributions based on actual GAS EUR (MMCF) data. 2.15..99 percent./ " " _. This presentation graphs probability.15 is the cumulative probability vs. the plotting of the data to a probability of 0. 10 1. 2. they are not generally used by the exploration and production community.I 1/ .Normal Probability The well data shown in Fig. 2. . In the second probability plot Fig. Although other non-normal distribution ~ased versions of ~e probability (probit) scale exist. In Fig.000 100.I------------j P10 P05 P02 I I P90 P95 P98 P99 The normal probit probability scale is P01 10. Programs 0. a P90 should be interpreted as 90 percent of the wells have gas EURs which meet or exceed this value (1. . @Risk. In this example.1 PRMS Standards Probability Scale Convention Please observe the differences in the probability scale for Figs.. This is the less than or equal to (LE) convention and is not the plotting convention recognized by PRMS. log EUR for Barnett Shale of different completion technologies. 2. I' II ! III ~ When you have several hundred or more legitimate data points.. 1~~~~. The Petroleum Resource Management System (PRMS) convention acknowledges the greater than or equal to (GE) convention. if the data plots as a straight line.1 . P1 -----------~--------------------~/~--------~-- 1--------------------------------I J P2 r--------------IP5 P10 P20 P30 P40 r----------------J. the user should not assume the adherence of a dataset to a lognormal distribution (or any smooth distribution for that matter) automatically proves the data is free from variable geology.J'-~----jI:~~ I P50 >- 90 80 70 80 50 40 30 20 I- ~ f~ ~ ~ 0. linear scale is used on the x-axis.000 100 10 used throughout this Monograph. the probability values are preceded with a "P" on the axis as in "P90" or "Plo. data that plots as a straight line represents a lognormal distribution.01 and 99.01 like Toolbox. I 23 24 . or the mixing of geologic trends. Here a log scale replaces the coordinate scale for EURs of Fig. there is too much curvature to support a conclusion that the data is normally distributed. its preponderance in statistical journals and early exploration and production upstream literature. 2. EUR plot of Fig.15 and 2. always use the actual data The power of using the probit scale is that when the Fig..16. Pso is in the center with the percentile scales expanding both upwards and downwards. log EUR plot shown in Fig.14 the left hand y-axis represents the LE (less than or equal to) convention and the right hand yaxis represents the GE (greater than or equal to) convention. PlOis used to express a large value in which there is low confidence the value will be exceeded. the scale is representative of how far along the normal distribution one must go such that 10 percent of the area is sampled.13 as a cumulative percentage is plotted as a cumulative normal probability (Probit scale) in Fig. the completion practices and early abandonment of lower rate wells may be a significant cause of the observed curvature for the low EUR wells. 2.. Whenever there is marked I P95 r---------o~L---------------lp98 deviation away from a lognormal 8° ~----_--~~-~-----~----~P99 distribution. Statisticians frequently use the LE convention.16 . the emerging preferred convention is the" equal to or greater than (GE)" convention with P90 as a small number when compared to PlO. When scaled in deciles (tenths). on the y-axis. ./ /' / '"" . Unfortunately. The user should not assume lognormality. 2. 2.000 MMcf) while 10 percent of the wells will equal or be less than this value. Furthermore. the mixing Fig.I----------1 I----------------I-I--------~I 1----------------. 2. 102:EUR." In this graph type. 2. I I I' 'I The Pro bit Scale The normal probit probability scale is based on a normal distribution. timing effects. you are encouraged to use the actual data rather 0. and is linear in units of standard deviation. .16. To accurately plot within these bands requires thousands of data points.14.99 is an example of false precision and is strongly discouraged. or spatial clustering .2. the data exhibits a straight line if the data follows a lognormal distribution. the probability ranges from a low of 0.15.a-' ' .Cumulative Probability vs. P99 P98 P95 Graph Type 4 . If a logarithmic scale is used on the x-axis. Within the exploration and production industry. versus gas EUR.

global resource classification system uses the terms P90.19 is a gr~ph s~owing PlO/P90 ratios of peak monthly production rates for several North ~merIc. The observed high PlO/P90ratios are Alberta Alderson Area A B Alberta Alderson Area AB Fayetteville Shale /oR Atoka Sands A R Atoka 1 zone A R Atoka 2 zones A R Atoka 3 zones A R Atoka 4+ zones A R Code II C0 Niobrara . depletion. . Blue indicates distributions where geology. the American Association of Petroleum Geologists (AAPG) Petroleum World the and (WPC) have officially Congress adopted the greater than or equal (GE) convention to establish a PRMS The standard.. 2P as Proved plus Probable Reserves. ThIS graph u~es ~roduction data rather than EUR data since the production data IS publicly reported and reqUIres little interpretation. dil I I I I I !I III " I I i t Y Reserve Estimate lilT I -"" _:" 1111 III. The median is equivalent to the Pso.J 0 Q. thus in these ca~e. !.. T_ ".. o ~ 0 0:: . However. I II "I . P2 and P3 are acceptable notation for percentile values. 0 Cl) 0 ~ lE ::l W . The higher the PlO/P90ratio..17 .lPenn. ·Ii I I Spraberry Trend Spraberry TX Spraberry W Midland Basin TX Green River UT I ]1 PIOjP90 Ratios The informal exploration and production industry standard is the use ?f PlO/P90 ratios to refl~ct uncertainty in the data. c:: w 0:: ~ 0 « I0 I- PROSPECTIYE RlF.J $ o w RESERVES P 2P 3P 0:: 0:- [ w ~ a: w 0 lE :Ii: 1 ~ iU 0 o « .PRODUCTION . .19-PlofP90 Ratio for Selected Oil and Gas Fields using Peak Monthly Production Data. I I I I 'I -. 2. P2 (Probable) and P3 (Possible).E. CBM VA Poca. the notations PlOand P90refer to percentile values.PRMS Classification framework 'I' I: I I II 1 I i I iI I Reserve Classifications In Fig. while CBM reservoirs developed with vertical wells have exhibited higher PIO/P90ratios.SOl1RCES e 'iii Cl E t. are not defined w~thin PRMS an~ their continued use is not recommended. which were commonly used pre-PRMS.E '" w > 0 o t/) II I I! I z C Petroleum of Society The Evaluation Engineers (SPEE).OJ Basin C0 Williams Fork C0 Haynesville Horzontal LA Haynesville Vertical LA Antrim Shale MI SJB Chacra NM-CO SJB Dakota NM-CO SJB Mesaverde NM-CO SJB Pdured Cliffs NM-CO Eagle MT Clinton Sand OH Ohio-Huron Shale OH-WV-K Y Hunton 0 K Hunton HZOK Hunton VT OK Woodford Shale 0 K Woodford Shale HZ OK Woodford Shale VT OK Granite Wash OK-TX Granrte Wash Deep OK-TX Granrte Wash Shallow OK-TX Granrte Wash Panhandle OK-TX Austin Chalk Hor~ontal TX Austin Chalk Vertical TX Barnett Shale All Wells TX Barnett Vertical TX Barnett (no re-comp) VT TX Barnett Horizontal TX Barnett Johnson Co HZ TX Bossier TX Bossier Deep TX Cotton Valley TX Cotton Valley Carthage TX FriO TX Lobe Trend TX Marble Falls TX WilcoxTX Yegua TX Wasatch-Mesaverde UT Green Rwer Basin Dakota Wi GRB Frontier/Muddy Wi Echo Springs Almond Wi Echo Springs Lel'is Wi Echo Springs Mesaverde Wi Lance .. 2P.l . ~. monthly production rates correlate closely to EURs for many unconventional re~ervolf~. I I 1:1 I. Colorado C0 Niobrara .s.lPenn. 2. i I I : I .J 0 o cO ::> (/) '" o J::. the Society of Petroleum Engineers (SPE).. PRMS nomenclature uses the terms IP as Proved Reserves. 2. 1111 11 l I I I I i I I . and 3P reserves (see Fig. and 3P as Proved plus Probable plus Possible Reserves. 10/90 Ratio FIg. I I I II III I I' 'I II I I 'I I j I I I - ::l - UNRECOVERABLE Range of Uncertainty c :I I II l - I l I I I . and PIa in its reserve categories to correspond to IP. I I NOI to scale I I I Fig.~ Cl) .17). I I I ~1111 II1I III 11 I I I I I I 1000 . Howev~r. peak.PRMS Reserve Booking Categories. u 100 m P90 u I RESERVE BOOKING CATEGORIES PROVED RESERVES I I I i I11111 I I I 1III I l ! I I a t v II I : e p 0 P60 PROVED Plus PROBABLE RESERVES P2 II: i I II 11 Black Warrior Basin CBM AL BWB Deerlick Creek CBM AL Cherokee Basin CBM KS/OK Raton Basin CBM NM-CO San Juan Basin CBM NM-CO SJB CBM Central NM-CO SJB CBM Fairway NM-CO SJB CBM Fairway Pre '90 NM-CO SJB CBM Fairway Post '00 NM-CO SJB CBM La Plata NM-CO SJ B CBM S. The P90is the value on the distribution for which there is a 90 percent probability that a random selection from that distribution will be greater than or equal to that value this a small number within the distribution. Fig. the producti~n data is a good proxy.J Q. PI. the PlOis the value on the distribution for which there is a 10 percent probability that a random selection from that distribution will be greater than or equal to that value this is a large number within the probability distribution function. the greater is the uncertainty in the project's outcome. A more rigorous solution could use EUR values. 26 25 . I II I I .an reservoirs.lPenn.J Z j .Jonah Field Wi Lance .18. higher risk projects have PlO/P90ratios that can exceed 25. With all major professional GE the accepting bodies convention..In the GE convention. . Please note.18 . The terms PI (Proved). Non-Gob Pre'06 CBM Echo Springs MV Coal WY Powder River Basin CBM WY PRB CBM Anderson WY PRB CBM Canyon WY PRB CBM Wyodak WY PRB CBM Big George WY PRB CBM Big George Pre '06 WY I I " CPSM I 111111 I I . while ~lll 10 100 :I 1000 10 10/90 Ratio 100 1000 . 2. I I l I I! I Fig. :' I .. Non-Gob CBM VA Poca. Gob CBM VA Poca. Low variability projects generally have PlO/P90ratios between 2 and 5. e c: f= w . Basin NM-CO SJB CBM S Shallow NM-CO Hartshorne CBM OK Hartshorne CBM HZ OK Hartshorne CBM VT OK Ferron CBM UT Pocahontas/Penn. NM TX Permian Basin T ubb NM Wolfcamp NM Wolfcamp Cottonwood Ck NM Bakken Oil MT-ND Bamett Shale Oil TX Bamett Shale Oil Vertical TX Barnett Shale Oil Horizontal TX Conglomerate Hardeman Co TX Spraberry Trend Dean TX 100 III11 I l l a b .:: i= o U) 0 « (3 0:: :Ii: :Ii: « w CONTINGENT RESOURCES IC 2C UNRECOVERABLE E E o 3C . II . Pso..i PROVED Plus PROBABLE Plus POSSIBLE RESERVES P10 0 I I b II 10 Arbuckle Group KS Grayburg (post 1971) NM Permian Basin Atoka NM Penrian Basin Drinkard NM Penrian Basin Bene Spr."]1 11111 .Pinedale Ant~line Wi 11IIII l l I'I I I ill I I I! 'I i'Gas .. and data reporting may require additional review. 2. reservoirs developed WIth horizontal wells exhibit a PlO/P90 ratio typically ranging from 4 to 10.. the path forward has been set..

what is the target and second. or drilling in different geological environments..20. the target is the mean +/ .==~ . Since the mean of the data is 100. "How many data points are needed to validate the shape of the distribution. Whenever the P10/P90 ratio exceeds la. different distinct distributions may be area once considered a single Resource Play.2. IS no~ 17. or confidence interval. Thus. To understand this concept.g ~1O/P90 ratio of 8. However. Stationarity means the probability distribution function of a measured value remains unchanged throughout an area. but does not prove. or well spacing that is responsible for different distinct distributions which have been blended. for a large population of wells. two factors control this outcome. interference. and the P90.and PIO values?" The problem of minimum sample size encompasses two factors: first. For the 280 well output nearly 99 percent of the outcomes are bound by the target range. Peak distributions are being sampled and examine the underlying geological data. The 90 percent value could just as easily be set at 80 percent or 95 percent and reflects the uncertainty the evaluator (or management) is willing to accept. Modern software such as Toolbox. The 50 well output (blue graph) exhibits a wide range of outcomes with infrequent occurrences in each "chart bin" (column on the graph).5 10190 Rauo = 8 ~~'_. For example. then the target ranges from 90. Fig. Fig.Pso. 2.90 RaUo '" 17. P90El!R do n?t consistency in illustrated in ~s ." In other words.. can camouflage changes in EURs due to changing technology. ThIS IS the concept of stationarity. This situation. owever. The input function for the simulation is a lognormal population with a mean of 100. such as m~an. determining the statistical distribution is relatively simple. Statistical calculations applied to geological data ~ssume.20..and the accuracy of the archer.2-Fruitland Fig. the San Juan Fruitland coals example. if there are numerous data points. m.10 percent of the mean. The Fairway group s PlO/P90ratio. Unfortunately.21. well interference. the La ~lata group ~as a resultin. plots three probability distributions from a Monte Carlo simulation . different ge_ological trends. an evaluator should examine data from new wells before merging this information with historical data. ificantly over time' values are similar from year-to-year.000 and a PlO/P90 ratio of four. what is the accuracy in achieving the target. hence this choice represents too few wells. "8" 15 1<)253035"'''50556065701580'' Cumulative Percent ~ to""" Fig. in fact. the San Juan Fruitland coal would appear to have a P10/P90ratio of 48 ("All Wells" shown as green line in Fig. the cumulative probability plot within the PIOor P90 range. % Greater Than under 10% 10% to 25% 25% to 50% 50% to 75% 75% to 90% over 90% Coal Map .sly ~igh PlO/P90 ratio can occur when data IS arbitrarily plotted. As such. When a field is discovered we could ask.5. For the 50 well output only 78 percent of the outcomes lie within the target range. thus the appearance is a relatively flat shape. we could define the target as "the number of wells that are needed so the result is within +/ . By looking at the new wells separately.000. The goal is to hit the bullseye (target) with as many arrows as possible.small targets are more difficult to hit than large ones .1 --2027 --1991 __ 10. Psoand . al di . identified in an 27 .:~/:r:: __759 2708 Centra! Besn Wells 10i90 Ratio = 12. ~. 2. .San Juan Fruitland Coat Cumulative Month Rate Distribution. Alternative interpretations could be related to differ:nt completion technologies.one each for a 50 welt 100 welt and 280 well case. When there is curvature on the log EUR or peak rate vs. The well count in a mature play is large enough at the beginning of the year that additional drilling will not affect the overall statistical values significantly. what is the minimum number of wells that must be sampled so the mean of the sample is within +/ . This graph. . Three vertical lines identify these values on the graph. 2. and geolo~I~ co~ I~on~. it is necessary to leverage the analysis of analogs that are known to be statistically significant.the San Juan Fruitland coals. 2. Interestingly. the resulting ratios become 10 or less. In the case of . however. Th~ div~si?ns shown in Map 2. ThIS assumes vary SIgn I. expressed as the PlO/P90ratio. Honoring these geolo~Ical trends significantly reduces the uncertamty. two different 100000 '~-----:---:i1'----. that are driving the peak rate distributions and they. = -0- 7549 WeCs 10190 Ratio FairW"ayWeiS La Plata WriS 48. shown in Map 2.10 percent of the mean of the entire population? This condition becomes the target.I . After adjusting for depletion..::--+-. 2. such as two distinct geological facies. Fig 2.:. "How many wells must be drilled to determine the statistical distribution within a ninety percent confidence?" Obviously one or two wells are insufficient but are 10 or 20 enough? How about lOa? The root of these questions is really.21. A traditional archery target consists of concentric circles with the centermost circle termed the bullseye. or limited data.1 South Baso Wets 10190 Ratso :. Resource Plays often do not reflect this assumption across their entire area so we must subdivide the area into regions that have common geological and statistical properti~s.20 . there are clear geologIcal and production trends. As stated previously.:C. thus 28 10'5 ..000 (plus 10 percent). that ~he distribution is not lognormal.000 (minus 10 percent) to 110. the 280 well output (orange graph) exhibits a narrower band of outcomes with more frequent occurrences observed in the" chart bins" straddling the mean. @Risk. the evaluator will be better able to identify changes due to depletion.000.000 and 110. the size of the bullseye . In the following graph. within each trend. Targets and Confidence Intervals The challenge the exploration and production industry faces is not how to deal with statistical measurements using hindsight but how to make forecasts based on limited data.2 create populations WIth slffi~ar geological properties. Conversely. . is 90 percent. the area under each resulting probability distribution is equal.ust be plotted as distinct distributions. one should consider the possibility that. archery.San Juan Basin Year to Year Changes in Resource Plays In a Resource Play. the statistical measurements of performance. Because there is randomness in selecting the wells in the sample (one could select mostly low EUR wells or mostly high EUR wells from the population) the probability (confidence) in achieving the target must likewise be stated.20 illustrates how an err_oneou. H com letion practices. it suggests.'91) RaUO = 30.~1~.7 64 SOOih Sl'lallow WeJs 10. 26.7. The desired accuracy. thus the problem is to find the well count with a probability distribution where 90 percent of the outcomes fall between 90. a custom distribution based solely on the input data is the most accurate representation. or other factors. well spacing. To effectively apply foresight to limited data and result in sound engineering judgments. When analyzed as a whole..often a reflection of two sets of data.::::~:. The probability of achieving the target is termed the confidence level. we must define both the target and the accuracy as related to minimum sample size. and Crystal Ball can all build custom distributions based on actual data.6 In a mature Resource Play that features many thousands of wells.20). In Map 2. Fig.-------J :: . changing operations. consider the analogue from which the term "target" originates. t~e data originates from a unique population.10 percent.

The table offers GUIDELINES. _I~::::. the required well count sample size also increases.70 160 150 -140 130 120 1.0' _-----------I-----. where the target IS Confidence in Achieving 100 +/- 10% of the Mean vs. This is expected behavior since a high PlO/P90ratio is indicative of greater variability in well performance.s: QJ b. --:. 2.1O/P90 ratio of five (blue curve).. Sample Size.. As the P10/P90ratio increases. The 100 well case provides the best solution with. a PlO/P90ratio of five requires 75 well samples to achieve 90 percent confidence. Obviously. ~ QJ c: . Ultimately. If the PlO/P90 ratio climbs to 10. The table approximates a target of greater than mean less 10 percent and a confidence interval of 90 percent.. These are the MINIMUM well counts an evaluator should use. -90.. --- ·100.21.10 D MEAN100 Fit: Lognormal MEAN280 003 --..'000- r Fig.:_:::: ~_~_ ..I I I this options includes too many wells. .. the use of a low-side PlO/P90 ratio must be supported by professional judgment and the proven analog's geology and completion practices. the evaluator must decide what values are acceptable for these two variables.. 2. the two values are independent of each other.!.000. a higher confidence interval requires more wells in the sample size than does a smaller target. When the analog is unclear..--~---.--~.1 as the recommended minimum sample size for Resource Plays. In this presentatiOl:. The confidence level IS 91 percent for a target of the mean + / .curve depicts the sample size (well count) versus the confidence interval. A PlO/P90ratio of five or less lies at the lower end of the range observed in the field data presented on page 26 in Fig. 2. --~.' ...f------I - o - Fit: Gamma MEAN50 Fit: Lognormal _- 200 190 180 1.O :2 u « 0 QJ SO 40 30 20 10 c: QJ -c :. However. 30 29 . 2.22 . From a practical perspective.) As such. The following example problem demonstrates how to use this table.91 percent ~f the Monte Carlo outcomes falling within the desired target of 90. As illustrated in Table 2. . a PlO/P90ratio of 10 is recommended to achieve reasonable confidence. the terminology is not commonly used and evaluators sometimes confuse the two concepts. a P.! " Table 2.Confidence in Achieving +/- 10% of the Mean vs. Sample Size _.22. then nearly 200 well samples are required to achieve 90 percent confidence..10 percent.000 to 110. MEAN +1. Recommended Minimum Sample Size 0.'_ ---.21.a sample size of 50 wells gives a 75 percent confidence level of satisfymg the target. _. the SPEE Evaluation of Resource Plays Committee recommends using well counts from the Table 2..1.~ .10 percent. _ t!!! s: QJ 90 80 70 60 Please observe the following cautions in using this table: 1. As the preceding discussion suggests. This is the same target depicted in Fig 2. the ...:::: c: 0 u u o 25 50 75 100 Sample Size 125 150 175 200 Fig..._------. 2. Thus for.Aggregated Probability Distribution for Lognormal Distribution of P1c/P90 = 4 versus Well Count Another way to display this data is shown in Fig.19 (PlO/P90Ratio for Selected Oil and Gas Fields using Peak Monthly Production Data.10 PERCENT 220 210 the mean +/ .1 Recommended Minimum Sample Size 90 80 70 50 50 001 '0 30 20 10 P10/Pgo Ratio Recommended Sample Size Comments Ratio not likely to be seen Common Ratio Common Ratio Common Ratio Common Ratio Common Ratio Possible data quality / analogy issues Possible data quality / analogy issues Possible data quality / analogy issues Possible data quality / analogy issues 2 3 4 5 6 8 10 15 20 30 15 35 60 75 100 130 170 290 420 670 000 ._.0 -- i ~ Since the minimum sample size is a function of both target size and confidence interval.. decision makers must determine the certainty (probability) and target size they require in making economic decisions.

SOQETra:"'TIII)l[lJllrrll. P90 P80 P70 P60 II I I III I I III I I I II II P10 P20 P30 P40 Confidence of Achieving a Target I P50 I P50 P60 P40 P30 P20 I I II I I I I P70 P80 For . observe that the recommended minimum sample size is 75. the aggregated average well EUR ?utcome will approach the mean of the data set of the analogy wells. From this graph. Given thousands of wells.so) of the well-averaged outcomes will tends towards the mean.22. 2. Analysis Early in the Life of a Resource Play For fields in the early stages of development. two example plots are provided. 2. 2. the answer is 75 wells . 2.26 shows confidence of meeting or exceedmg the mean less 10 percent versus sample size.25 shows the confidence ?f meeting or :xceeding th~ Pso of a distribution versus sample size. Rank by size. I Eq. what the company needs to know is: "What is our confidence that we will meet or exceed our EUR target versus well count?" The answer obviously depends on what the target (reserves) is.2 I Midpoint Plotting P99 Position = (Rank . The portfolio :ffect of aggregation. initial rate).bSPEE. 2.000 MMcf and the PlOvalue at 5.16 (page 24).000 MMcf. Fig. Within this Monograph.. This is because achieving a 90 percent confidence interval for a target of the mean less 10 percent requires about 75 wells when the PlO/P90ratio is 5 (a typical value). Assume the distribution can be modeled as a truncated lognormal distribution.. Determine the plotting position for each sample using the mid-point number of data points: formula. the mid-point plotting approach is recommended rather than the equal interval method.000 I~ .'.000 Early Test in Green provide a representative distribution of the 40 plus well data set ! :/ 10"-'4 P01 P02 P05 P10 P20 P30 P40 -. As the aggregated well count mcreases.2.. 2. Therefore.. Prepare a table of well performance in Excel. where there are limited data sets of 50 data points or less. peak monthly rate. but this approach would not pass the reasonable certainty confidence test. To help illustrate these points. Fig. The P10/P90ratio is calculated to be 5 (5. largest to smallest (EUR.an evaluator needs a minimum sample of 75 analogous wells within the subject study area to prepare a statistical analysis that has a 90 percent confidence. I P10 P05 P02 I I I II III I I II I I P90 P95 P98 P01 I I I 1 10 100 1. or well count. economic considerations often take precedence over pure statistics.0. 2.23.". ~~'# t. the question may be: "What is the probability that we will meet or exceed an economic threshold 90 percent of the time?" This is a different question than addressed with Fig. 32 ~.5) X (100In) . 3. I 4. The 11 early shale gas wells (shown in green) were representative of the initial 40 well distribution. Later Time EUR Cumulative Probability Plot. -------------------~~~ 100 1. Essentially.23 . has a relatively greater impact as the PlO/P90 ratio mcreases. . The largest is rank 1.000 Probability P99 10.e~ploration and p~oduction companies.1 (page 30). discussed later (page 34).-----~:~i-~ :::: P99 10. Fig. where n is the Ii Fig. When assessmg whether or not to move forward with a Resource Play based on limited early data. the me~ian (p. the second largest rank 2. Plot the corresponding EUR and plot position value on a log probability curve cumulative using the probit scale. be effectively used for making business decisions. 2.000). It can however. it is frequently mentioned that 50 to 100 wells are needed to construct reliable statistical analysis in a Resource Play. P98 P95 II I II I II I I I P02 P01 P05 Fig.24 . From Table 2.---D--.. and how many wells will be drilled. EUR per foot.24 is an .Early Time vs. how many wells are needed to prepare a statistical analysis that has 90 percent accuracy? Solution: The data for the Barnett shale study area is plotted in Fig. 2. . The procedure is: 1.000/1.-~~'-+~-·-·~~F--:--------~.000 II' 'I I Fig.~11O!lUIWU:~1S Ii I' Example: In the previously cited Barnett shale example (page 24). ] .example of how early dat~ can be used to forecast future results.Example of Log Cumulative Graph Paper 31 . Swan Early EUR vs Total Pool EUR LOG PROBIT CHART 10"'3 I J . read the P90value at 1.jDf'-:::~-Df---:-----I--~1~~ -----. etc.

26 shows that 58 wells are required to achieve a 90 percent confidence interval that the target of 1. 33 34 I .~ 70 .-. For many companies. . I] . This plot shows well count versus confidence interval for a target that is equal to or greater than the mean less 10 percent of the distribution. . r I .266 for the distribution with a PlO/P9G ratio equal to five and the PSG equals 1.25.500 for t o f/I .U I e 40 30 SO 1 J..scc 0'<" . we assumed a mean of 1...350 is met or exceeded. we or observe the P10/P90 curve (red line) crosses the 90 percent confidence once 14 wells are drilled.26 considers the probability of meeting or exceeding the mean less 10 percent value.--..000 1. As with Fig. ----------+ 1.Impact of Aggregation on a Lognormal Distribution PW'P90 of 10.:E 1'0 IV u IV "0 .27 . After hundreds of Monte Carlo trials.1 Forocast -- 1.l I -'-'-LL LL.25.ttSPEE Examples Using the data plotted in Fig. the PSG of the type curve can be approximated as the square root of the PlO times P9G. Sample Size. These values are increased slightly in Table 2. I ~ .25-Confidence of Meeting a Target vs.. 2.-.0c0~ . Fig. I ' . . the number of wells required for realizing an average well outcome of PSG more can be determined. 2... If the PlO/P9G ratio is five (blue line). ' l II' .25.00 5.500. are based upon this graph. Sample Aggregation Aggregation is simply the adding of individual well reserve outcomes to create an overall expected reserve outcome.1 Recommended Minimum Sample Size (page 30). .500.. The target is the PSGof the per well type curve.25. This graph provides us the overall expected singi:eWe. .350 is met or exceeded.t_ o 10 20 30 40 50 Sample Size 60 70 80 90 100 Fig. 2.. Lf-t~LJI _J_l I LJ_j I' 50 60 I L. 00 6 3. ... On Fig. 2. Sample Size Fig.. w . For lognormal distributions.. then 140 wells are required to yield a 90 percent confidence that the target of 1.t. The PSGequals 1. This may be more or less than the PSG which was used to generate Fig.. we assumed a mean of 1. Sample Size -~r' I' I Ie: 'IV 1>0.. I . 2. 000 3. s.IV IV e: .0:: 60 --I e: 50 0 .L . Fig.064 for the distribution with a PlO/P9G ratio equal to 10.29 show examples of aggregate distributions.100 I.350. .-- ~. the target is defined as equaling or exceeding 1. Please notice the emphasis on outcomes: an outcome is the result predicted by a single Monte Carlo trial (a single computation cycle).LL 10 20 30 40 70 80 90 100 110 120 130 140 150 Size.. If the field data suggested a PlO/P9Gratio of 10. 2. the individual well EURs are calculated. . ••oro •._ ']' 1 j.aooQ 2.~L--:---:. 2. Next.. 0 bI) 80 . 5 -Pl0jP90 = 10 -Pl0jP90= .00 5. Sample Size average the PSGor more.25. V ~ " ~.200 -4. i '" 2.L. then it requires drilling 23 wells to have a 90 percent confidence that the _ _ '__ _ __' ' __' . the aggregate (or average) EUR is calculated for all of the wells included within a single trial.100 ~ O~I . 100 Confidence in Achieving (Mean less 10%) or More vs.25 shows it takes fewer wells to have a 90 percent confidence in achieving the PSGor more for the higher PlO/P9Gratio.2-00 '. To construct Fig.: . // / t> V / -: V .. 2. Fig. l_.400 ~ both PlO/P9Gcases (ratios of 5 and 10). 2..500.v V vV .. The values in Table 2.00 outcome.-program will Confidence in Achieving the P50 or More vs. the aggregate EURs are graphed as a probability distribution...200 II i "" e-.. 2. . During each Monte Carlo trial.27 and 2. I I .. For a PlO/P9Gratio of five.000. Fig.500 to calculate the values for this graph. 2. " z->: __.'" 1. Consequently. the target will not be the PSG. .200 § 1.26-Confidence in Achieving the Mean Less 10% or More vs. )( 90 . 2.. rather it -Pl0/P90 = 10 will be the value which is required I to support PUD bookings. " I I.1. which is 10 percent less than the mean value of 1. -. Figs. .

000 Q 160.000 ~ 1'((). ~lg. -. Booking Proved Reserves The evaluator sho~ld honor aggregati~n when booking proved reserves. At the 50 well mark.29 J?resents the data as ~ histogram in.00 ~J<l2: 5.200 2.00 200:000 . With a median Psoof 1.000 >.000 [ !!!.. 120.ooo~' MMSCF 3.--------------------r --1----------------------1 "0.D1 -F=l""--~---------------------. decreases as the well count increases.000 500.800 1.000 220. 35 36 . The central limits theorem indicates when independent distributions are aggregated. thereby showing the impact of aggregation on proved reserves as the size of the project increases.0. proved reserves are 351 MMscf.000 Fig. 2.500.00 2. 2.000 9.00 100 Well Program AggregaticxJ 0.00 3. will be produced.000 ~ 4. In this case.000. aggregation is the sum of projected outcomes for undrilled wells.000.000 ~.00 Fortunately. However if the acreage supports 30 locations.000 _ 4.30-Impact of Aggregation on PRMS Proved Reserves .00 1. ~n many Resou. single drilling spacing unit with one well on the property. 500. the confidence of achieving the Pso or more increases as the well count increases.OO 40.00 2. 8 7 .27 illustrates this for a type-well P10/P90ratio of 10.00 1.000 ___________________ --l S. Aggregation of individual well outcomes not only reduces program uncertainty but also increases the confidence of achieving the target.00 1. as represented by the PlO/P90 ratio.000.03 7.500. the aggregated curve of 30 wells can be represented as a normal distribution with minimal error.04 BCF 3.28 . D. c.000 180. As illustrated in Fig.500. 140.tXlO 40. 2. For a. of Wells 60 70 80 90 100 c:r.000.000 20.00 5.Type PltYP90of 10. 2.29 .. Examples of how the definition applies to a single well and a 30 well program are illustrated in Fig.00 1.000 8. the uncertainty ratio of PlO/P90has been reduced to 1.000 5. the resulting distribution of the aggregate will be more or less normally distributed.000. then 1.00 o Fig.500.000.00 4.30 illustrate the distribution for a 100 well program..00 4.000.500.000 100.000 2. the top graph.5 from the type-well ratio of 10.rce. 0 0 c.000.500.00 4..00 5.330 MMscf per well.SPEE 10 SPEE We cannot simply solve for the average EUR for existing wells (mean) and assume this is the aggregate per well EUR for undrilled wells. As illustrated in Fig.000.PltYP90of 10. o Fig.Q 60.00 5. A common rule of thumb is after adding 30 or more skewed distribution samples.000.000 times.-============1 Singl:e Well Forecast Initial P90 Equals PRMS Proved for a Single Well 2.Q 800 600 Fig.600 1.25 (page 33).000 6.00 3.~I.Q 60.400 11 . The values for existing and undrilled wells are NOT the same.500.500.28.000 ~ 160.000. a.500. the operator could book proved reserves of 1.000 240.27.000 3. and as reverse cumulative graph on the bottom.20~OOO ~ rl-------------------------J 4.500~OO 0..00 100. 2..--- -------+ Fig 2.486 and a mean of 1. or more.000 r----~~I-. 100 Well Pl'"ogram Aggn!tgstion • 10. 2. The histogram is of the resultant average well in a 30 well program that is drilled via Monte Carlo modeling 100.. 2.~ 0 6 5 4 3 2 1 0 0 10 20 30 40 50 No. Rather.000. 2.Initial Plol P90Ratio of 10 1.000 >0.500. 1.000.Plafs.196 MMscf per well may be booked since this is the P90of the project. 2..--------------I----------------l- 1.00 5.500.000 1.500. the well count for a particular project will exceed 100 wells. the aggregation tends toward a normal distribution. aggregation of the individual well outcomes results in reduced program uncertainty.000 1 ~ ------i .000.-----'----------------r- '00. Figs.I-I-.00 2.30 compares a smgle well project to a 100 well project.200 -g (I) ro . PRMS defines proved reserves as those with a 90 percent confidence that a particular volume.00 2.000 I PRMS Proved per Well Reserves for a 100 Well Program ~1--I--------------------------L2oo..29 and 2.Impact of Aggregation on 100 Well Program . the uncertainty.000 ~ 8O.

5.l):lQ Ul):I\ I.Puy'P'JO 10. The use of probabilistic aggregation increases the proved reserves as the size of the program increases.~.~~ T I I I I __j_ 1 i I I =8 I i II I I I I e n a g e 50% 40% 30% 20% -6. as the number of wells increases and the tendency towards a normal distribution as the aggregated well count mcreases. Fig. I '-1 i. HI : I i _J_J_ I I I' . .IJ::I\ I . .000 ~ < II) 50.J. I I I 1 . The probability of realizing such a value is so low that it is impractical. :I I II I I . then it is clear that you cannot arithmetically add the P90s of individual type curves to determine the P90of the aggregated wells.060 MMsC£ per well. I Hr+ i .000 ~ o c 60.000 70.Aggregation for 1.Aggregation EUR (MMCF) Program D 5 Well Program D 50 Well Program I -H I I I . Fig. the reserves would be set as the project P90so for a 100 well project.----------------------~ ~II~ IIXX> . the probability of rolling three ones simultaneously is 1 in 1000.Ql~ l---------f:r-~~t---------------------------------l. 2. The single well type curve has a P10/P90ratio of 10. If proved reserves are a 1 in 10 outcome or better. The more die added.-------~7!_---. i I I I .33 . !III_~So 5::0 I. . 5 and 50 wells on a P1!Y'P'JO Ratio of 10 Type Curve. I .The P" Estimate When the project size increases to 100 wells.2. This overlay plot demonstrates the reduction in uncertainty.34 presents the impact of aggregation from a different perspective. 2. and 50 wells.000 MMsC£.000 EUR (MMCF) o 200.. I I . Under PRMS. P? is defined as the average of the type-well Pso and mean EUR. \IX). ! I I .~ }------l--b""i. . Well Count 100 Well Program Agg~egation 90. I I I I I! . The purple band around the mean of 1.----------+A---------------------~.000 80.-+ I I I I The impact of aggregation can be counter intuitive.3 P" = (Pso+PMean)/2 Impact of Well Count on The Ratio of the Aggregated P90 Divided by The Initial P ~ Under PRMS. .X' 01:'1.33 presents the aggregation of 1. . 10. To clarify the impact of aggregation.31 the value of pA can be used as an approximation of the project P90 (the aggregated P90). the P90project reserves will exceed the individual typewell Pso reserves and approach a value that the Monograph terms P? (pronounced "P hat").-------------------------lIXX> !I '. --. the addition of 100 P90S would be 35. If the number of dice is increased . I I I I . As presented in Fig.I ! I I __ P10/P90 _P10/P90 \r-v+-r-: I =4 I I l-+ ~ I . As the type-well P90was 350 MMsC£.. of 38 ..500 MMsC£ £--------.000.ax' _'X:I\ ~ax. I . (. '-r I I . proved reserves are the P90 of the aggregated project reserves.. As a first estimation of the project P90the pA can used. I I I I I I Ii ._ I I I I! i I .00 Fig 2. . The equation for P A is: Eq.000~ i ::J 10."X. Think of the probability of rolling all ones when each well represents a die.:xx 1:X::\ll Ut:l\ l. I I .xlQ . the lower the probability all die will roll a one. the reserves are 133. the estimation error is five percent or less. The probability of rolling a one is 10 percent.32 presents the total Monte Carlo aggregated reserves for a 100 well program. For well counts over 30 and less than 100. 2. : I I H80 90 100 J Impact of 1. 10 I 1--t+T20 30 40 50 60 70 .34 .. and 50 wells Fig. J I I i I I 11-1' .-.32-Impact 37 of Aggregation on PRMS Proved Reserves ..31-Ratio of Aggregated P'JO/P" Vs. defined as the P10/P90 ratio. Fig.-. Other Aggregation Factors 110% R a 90% 100% . to three. o Well Count Fig. I I I I I o 1 Well Fig. '..D 40.000 3O. : . 2.--------------------l j-----+l--Hr. 2. with outcome results expressed on a per well basis in the histogram. . -+ -+ +t-I I I .. . 2. 5.. 2.~ l----------i-t--H----------------------l. To visualize its impact.000 ~ . consider a 10-sided die. I I 0 80% 70% 60% :. I III I I I I I I P e flY.

3. this chapter addresses the question Wha~ I~ the proved area within a Resource Play?" Our focus is on the area of the Resource Play containing proved reserves. Offset :veIl performance ISnot a reha~le pre~ict?r of undeveloped location performance. since these are located in a geologic subset. regions exhibiting different lithologies. the intent is clear: statistics can be exceedingly misleading. FIg. Exercise caution in statistical plays to assure that the play is truly statistical.Wells with common parameters of timing and technology and. We will find depleted zones (although the level of depletion should be less than experienced in tight gas sands with equivalent spacing) and our type curve for these partially depleted zones should be adjusted accordingly. to some extent. The person who says. On a single well basis (yellow) approximately 10 percent of the outcomes lie within +/ . some technical terms are defined to ensure a common u~derstandmg of nomenclature. 1. As industry down-spaces Resource Plays. Therefore. the red outlme. change with time. 1) Resource 2) Geologic Subset 3) Analogue Wells 4) Project Fig. or areas of changing fluid properties. 3..r explored the criteria for classification of Resource Plays. but this does not describe the time distribution." The quote addressing different levels of mendacity has been attributed to various authors including Mark Twain. he speaks the truth.1 as a gray area. geology. Graphs provide substantial information and help illustrate the distribution of data. Obviously. In the illustration.1 .hSPEE represents the range of plus or minus 10 percent from the mean. It is extremely important for the evaluator to identify characteristics which cause wells to be similar or production as determined by geologic data (for example lowest ~nown hydrocarbon). A continuous hydrocarbon system exists which ISregional in extent. "The man standing with one foot in a bucket of 40°F water and one foot in a bucket of 120°F water is.mIc c~ntrol. standing in water at 80°F. As the preceding example shows. British Prime Minister Benjamin Disraeli. are not analyzed separately. Free hydrocarbons (non-sorbed) are not held in place by hydrodynamics. one-half of the people will die in less than a year of the diagnosis. 2. the statement "The average American adult height is 5 ft 7. When a doctor reports the median mortality for a life threatening disease is one year. when an evaluator speaks of average porosity or average EURs. firs. lognormal. Analogous Wells . Thus. For example. These different geological subsets are designated m Fig. the evaluator should err on the side of providing too much information. would the man in the cold and hot water say he is comfortable? When mean values are discussed. For the purpose of this diagram. After 50 wells (blue) are aggregated approximately 90 percent of the data points fall within + / . Larger Frac Older Well.Typical Resource Play Diagram 40 39 . While the. seIs. Terms 1 through 4 are illustrated in the accompanying illustration. but fails to convey much meaningful information since two important groups. when communicating statistical information.5 inches" is accurate. which were termed Tier 1 criteria. These properties. Final Considerations "There are three types of lies . are: 1. Smaller Frac (not analogue wells) 2) Geologic 3) Analogue Wells Subset Area [If consistent geologic conditions 4) Project 3. the answer is extremely important.1. men and women. 3. a Resource Play?" In answering the question. Chapter 4 addresses the quantitq of these reserves. Resource Pla:y -. or the standard deviation of the data distribution should be described to help the reader understand the range of outcomes. Fig 3. and journalist Eliza Gutch. A similar problem arises for median values. 2. rather than not enough. Within the Resource Play there may be geologic areas separated by faults. Chapter 3 Determining Proved Areas of a Resource Play SOCIHfot'fTIIlUUIIIIVMW. and offer proper interpretations of the data used to evaluate a Resource Play. Regardless of who first spoke these words. The limit of subsurface. damned lies. average values alone can be misleading.10 percent of the mean value.l1Oll1_U5 Introduction Chap~er 1 :r?sed th~ question "What. we excluded in defining the Resource Play boundary since these can and ' • • Newer Well. is. Wells exhibit a repeatabl~ statistica~ distribution of estimated ultimate recoveries (EURs). four properties were Id. To facilitate clarity. Geological Subset .essing the subject of PUD locations. Nevertheless. 4. This confusion becomes most apparent with values of central tendency. To avoid any misleading statistics.entifIe~ which should be satisfied for a reservoir to be considered as a Resource Play. chapte. the evaluator should thoroughly discuss all assumptions. Key Concepts Before addr. and Resourc~ Play IS depI~ted by a economic or technological factors usually do. bi-modal) and spread PlO/P90 ratio.Areas of consistent geological conditions. on average. the distribution and shape of the data.1. explain the statistical data. lessons from our tight gas down-spacing should be acknowledged. and statistics.lies. The shape (normal. 3. many readers tend to interpret the average value without consideration of the distribution of the data. but how long will the other one-half live? Is it a few months more or several years more? For the person who just received the diagnosis. evaluators are encouraged to include well-labeled graphs when communicating about statistics in Resource Plays. they should also address. as there is a natural tendency to simplify a complex concept using only values of mean or median.10 percent of the mean value." is indeed correct.

f/D ~hilethe PlOis 2.mg.987 Mcf/D if all wells are considered.fajorfactors to cons~der include geology. sp~c. thereby yielding a PlO/P90ratio of 48.The number of wells needed to calculate a statistical measurement with a 90 percent confidence factor. but may not be necessary since many PUD wells are now one-offset locations.The specific economic opportunity associated with an individual provides additional discussion on this concept in PRMS section 1. Intermediate. 6.4. the experience of the SPEE Evaluation of Resource Plays Committee suggests PlO/P90 ratios at the upper end of this range may include more than one geological subset and should be examined for further separation. resulting in a poor well.observed for th~ entire . The Early Phase is typically characterized by geological exploration. but the differences should be relatively small. wide well spacmg. find the appropriate PUD well count to apply.2. Stati~tical. since performance data is sp~rse at this point in the Resource Play's development. the well count is normally less than the recommended minimum sample size (see Table 2. Resource Play Development . statistical analysis can likely define the mtenor proved area. P" or P hat . The value is empirically derived and is defined as the mid-point value between Psoand the mean of the analogous well EUR data set. the evaluator might ask. Every well has a story. The. and Mature. Geologic data must support each location. and minimal well production. and Mature) and the number of recommended PUD locations. Statistical. Ca~culate the :atio of producing analogous wells to the recommended minimum sample size. The recommended practice is: 1. Eq. e~aluator should separate Resource Play development into four phases . 4. Fro~ Fig. page 30.3. Additional analysis may be required to further differentiate wells into analogous groups (early time versus interference wells). Finally the Resource Play attains a Mature Phase where the geological subset is reasonably delineated and well de~sity is quite high. If that same story has any possibility of being repeated (including mechanical failures). the sample is likely composed of analogous wells. and producmg conditions (pumping. 3. Obviously these factors vary somew~at.Well Exclusion The evaluator must avoid the temptation to ignore or exclude poor performance wells from the evaluation. However. 3. due to the continued experimentation of operators. This is the Statistical Phase. In this phase. (PRMS Mc.f:om well to ~ell. line pressure.Although P/\ can represent different statistical variables. 3. Next a map is prepared of peak rate distribution with a color code to divide the distribution into different groups. owner. For example. analogous wells must have sufficient production history so as to provide an EUR. This value is determined using the P10/P90 ratio and Table. determine which maturity phase best describes the Resource Play. but many of these wells are not producing analogous wells. but current seismic interpretations cannot ensure other faults will not be encountered in future wells. Furthermore. rendering statistical analysis more difficult. since well EURs are needed for stati~tical distribution analysis.1. lateral length \for honzontal wells). Usmg the ratio from step 1 and Fig. If the ratio is greater than 10. The map of distributions is shown as Fig.analogous and group these wells together for statistical analysis. the well should be included as a valid statistical point. However. vmtage. completion procedure. The P10/P90 ratio of the EURs can "indicate" if the subject wells are indeed analogous. 2. page 30).1. Well count in this phase is sufficient for statistical analysis to define proved locations.1. in this Monograph it is an approximation of the P90 value of the aggregated per well EURs calculated by a Monte Carlo simulation when the well count is 30 or more. if post drilling analysis indicates a fault was encountered.San Juan Basin CBM Rate Distribution . well counts have increased significantly and many new wells are exploiting areas around existing production. 4.populatio~ with many ratios falling below 10. A quartile grouping is used.) 5. Caution . -N. 42 Example: Defining Analogous Wells A study of peak monthly production rates was prepared for 7. ThIS ratio exceeds the 10:1 recommended guideline so further investigation is required to determine if all the wells are indeed analogous. Intermediate. In this phase. then the faulted well should remain in the evaluation as an analogous well. etc. Geology indicates the log characteristics are similar as far as pay thickness and log responses across much of the area.:ells are devel_opment w~lls. but the PlO/P90ratio provides a good start.2. the sample is suspect and should be re-examined for problem (non-analogous) wells.549 coalbed methane wells producing in the San Juan basin. P" = (Pso + PMean) /2 % Greater Than under 10% 10% to 25% 25% to 50% 50% to 75% 75% to 90% over 90% Recommendation: The following tables summarize the four phases of Resource Play development (Early.24).Four Phases of Maturity Recommended Minimum Sample Size . interference (especially important in CBM). Calculate the PlO/P90ratio for the analogous wells. 2. the statistical measurement is mean minus 10 percent. 3. If the PlO/P90 ratio is between three and eight.1 (page no. 2. In the Intermediate Phase. but the bottom ten percent and top ten percent are further segregated.). to determine the recommended minimum sample size. An apparent color trend on the map suggests different geologic subsets likely exist within the San Juan basin field. 3.2.Early. Exploration drilling usually represents less than half of the new wells in this phase.3. although operators continue to examine the effects of well spacing ~d ~mor changes in completion procedures. The P90 is 62 41 Fig. The PlO/P90ratio is then used in Table 2. During this stage. 30) and is typically greater than 50. Regrouping wells into five geographical areas and solving for the PlO/P90ratio for each area results in markedly lower values than . even when production results are not completely understood.2 . most . Production interference may be noticed during this phase. Eventually the Resource Play reaches a well count (> 3X the recommended sample size) where statistical analysis becomes both meaningful and useful. Other factors may be SlgnlflCant dependmg on the particular Resource Play. well direction. Project . For this Monograph. The total well count is usually high. "How can one estimate the recommended minimum sample size?" A graphical solution to solve the PlO/P90 ratio using early time data appears in Chapter 2 on page 32 (Fig.

These may be. therefore double once the Resource Play enters the Intermediate Phase. Test Set Wells are the non-anchor wells from a geologic subset of an analogous well group that are selected for comparison to anchor wells in a Resource Play. Furthermore.3 . Usually these are infill and stepout wells (direct offsets) from the anchor wells. we find this nomenclature helps in describing the development of a Resource Play and helps segregate analogous wells into groups for analysis. Large spacing is normal for these wells and will assist in the analysis. 3. let us introduce two terms: 1. These test set wells are further divided into subsets for statistical testing as will be described.A Statistical Solution to the PUD Area Problem Once a Resource Play enters the Statistical Phase. Evidence that EURs for anchor wells already drilled are predictive and reflect the overall statistical distribution of the Resource Play. As well count and control mcrease.5 . the higher side of the recommended range of PUD well counts for horizontal wells are recommended only with good geologic control such as 3D seismic. the first well completions in a Resource Play. At this point. Please note.. if the evaluator can show the statistical distribution of EURs for test set wells in a particular test set group is equal to the EUR distribution for anchor wells which is equal to the EUR distribution of the analogous wells. many undrilled locations are one-offset locations.. That is..4. At this point. mor~ PUD locations become appropriate and. the overlap in "Ratio of Analogous Producing Wells to Recommended Minimum Sample Size" between the Intermediate Phase and the Statistical Phase is intentional to allow for evaluator discretion. Proved Area Conclusion: To demonstrate an area is proved requires: Statistical Statistical l£RRY LYNN PHASE OF RESOURCE PLAY DEVELOPMENT Early RATIO OF ANALOGOUS PRODUCING WELLS TO RECOMMENDED MINIMUM SAMPLE SIZE P10/Pgo <4. see Fig.. As with the anchor wells. Eventually the Resource Play enters the Mature Phase. APPROXIMATE WELL COUNT WELL COUNT WELL COUNT Producing Intermediate Statistical Mature Very Large <1 < 50 < 50-200 < 200-700 1 to 4 100 100-400 200-1400 >3 150 150-600 600-2100 > 500 > 1000 > 4500 P10/Pgo 4 TO 10. 3. deeper well penetrations. the EUR distribution for the randomly selected anchor wells mirrors the EUR distribution for the analogous wells. . provided the subset satisfies the recommended minimum sample size..3. The area that contains the test set wells exhibits a similar statistical distribution of EURs as the analogue wells. 3. EUR Fig.. openhole logging.4 . traditional evaluation pra~tice of assigning PUDs to a one-offset location. test wells (in CBM). Anchor Wells are randomly selected wells from a geologic subset of an analogous well group which become the" anchor" points for future statistical comparison. A method for estimating the proved acreage using statistical methods is discussed later in this chapter. Quite simply... micro-seismic mapping.. 3. but do not have to be. the PUD values recommended for the Early Phase reflect the.Approximate Well Count at Various Stages of Resource Play Development PHASE OF RESOURCE PLAY DEVELOPMENT Early RECOMMENDED MAXIMUM NUMBER OF PUD OFFSETS PER PRODUCING WELL (VERTICAL WELLS) RECOMMENDED MAXIMUM NUMBER OF PUD OFFSETS PER PRODUCING WELL (HORIZONTAL WELLS) Fig. APPROXIMATE P10/Pgo 10 TO 30.TCKEU Center of Depositional If A = B and if B = C. 43 1. The number of anchor wells must be at least equal to the recommended minimum sample size. For our purposes. then A =C Our logic in determining the proved area in a Resource Play relies on a similar reasoning. etc. 2. This statement holds true for any randomly selected group of wells (a subset) within all analogous wells. . 2. 3.Spraberry Trend Field 44 . APPROXIMATE Fig. . the evaluator should consider the question "What is the proved area in a Resource Play?" Recall the first Tier 1 definition of a Resource Play: Wells exhibit a repeatable statistical distribution of estimated ultimate recoveries (EURs).Recommended Maximum Number Intermediate Statistical Statistical Mature Statistical 4 8 Kl!NT 2-4 4-8 of PUD Offsets at Various Stages of Resource Play Development Rationale for PUD Offset Method In Fig.. Study Area SCURRY I- . The Law of Transitive Properties states: . Once enough analogous wells are drilled in the Resource Play.. statistical analysis will render meaningful conclusions for undeveloped acreage and the reservoir enters the Statistical Phase. . then locations using the same spacing as the test set wells can be considered proved. the number of test set wells must be at least equal to the recommended minimum sample size. Although anchor and test set are not industry standard technical terms.

8 illustrates how wells. each small square bounds 40 acres or the typical spacing unit in this field. the data follows a lognormal statistical distribution.500 bbls. Thus a well is assigned to a test set based upon the nearest anchor well. o. Select wells for each test set. These values c~mpare to the analogous wells which have a Pmean of 79.o distribu tion for the anchor wells is EUR (barrels) depicted in Fig. However wells were historically drilled on 80 acre spacing. To help the evaluator understand how to properly apply the theory.w. Select a group of anchor wells within the geologic subset which satisfies the recommended minimum sample size requirement.13.. To begin a statistical analysis. measurements of mean and standard deviation can be used.LUUJ.--.oLtoo oL.). or graph type 4..000 bbls.L.5.6.-~-_~--r~2-_6-. thus we have "expanded" the near well set to include wells drilled on this larger 80 acre spacing. Wells which lie between two and four locations from the anchor well (shown as the blue area) are grouped into Test Set 2 while wells further than four locations (shown as the red area) reside in Test Set 3.14.000. a sub-basin of the Permian Basin. Fig. Prepare a statistical distribution for all analogous wells in the geological subset. 3. -Distribution o Data Points .L..0 geologic depositional setting from similar formations (upper Spraberry." Three wells are placed in Test Set 1. each well can only be used once in a test set. Fig. decline profile.42.2 • Mean .. two example problems are offered. P98 _.ll. Wells which are less than two locations from each anchor well (shown as the purple area) are grouped into Test Set 1.~o.6 are PlO = 145. Fig 2.8 .0 5.i-L1-<11. lower) Spraberry.000. 3.. the evaluator should consider what empirical measurement will provide a meaningful statistical distribution. Prepare a statistical distribution for the anchor wells. graph type 3. From the graph.o~-'-'-U. A slightly different technique (expanding concentric radii) is demonstrated in Example Problem Two.o-'--'-'-L.SPEE distributions are defined as equal if the Pmean of the distributions are within 10 percent of each other.4 Ht--r-ffiHittt-t-t-HitHt-t--t-f-ttItlHH-++H+I+1 P'O P20 P30 P40 -ee-P50 = 65594. The statistical r. plots EUR versus probability on a semi-log scale for all of the 162 analogous wells.oo-. However._ rl_---n-I---. then initial rate can be used as a proxy for EUR.>oo-.. Fig.ollJJoo.I.. Texas. Since the anchor wells are a subset of the analogous wells... .300 bbls.oo-o.-~-_~~~ ~~ ~~ __ ~~~ ::: P90 P95 c:! ath~imil~. but the procedure will work best if the wells are distributed randomly throughout the Resource Play. the EURs provide the best data for statistical analysis.200 bbls.000.67..L. This approach is attractive since initial rate can often be determined earlier in the life of a well than EUR.0 = 31201. 2.6 . the application of the process is fairly involved. P10 = -Distribution o Ht---t-ffiititt-+-t-t-titttt--t-+1~++H_+_++H+I+1 P50 P60 P70 P80 Data Points P99 = 16651 -162 ----j -------------/--- P2 P5 P'O P20 P30 P40 P50 P1 = 252722.1 137899.8 the anchor well is designated with an "X.o. The calculated values are Pmean = 79. This step essentially repeats the calculations and graph of step number four.. 3. Test set wells are all of the wells in the analogous well set that are example.000 bbls and P? = 73.J... since all of the 162 analogous wells are vertical completions with reasonably similar fracture stimulations. etc.Anchor Well Oil EUR Distribution thus the P" is calculated at 70. not anchor wells. for this example problem.i_. For 1. were drilled prior to 1979 and are considered as a distinct subset.LL. On the map.-. this Monograph recommends a graphical 45 Surrounding 6. f---+--+--+-++++I+---+--IILr-+--H-Htt--t___t_--i-+-t-t-t-H-I -----JJ ____ _ If EUR (bbls) ~ ____ believe the entire field satisfies all four Resource Play criteria and..Example 1 -Test Set Areas and only one well is placed in Test Set 3. but uses the data for each test set rather than for the 46 . consequently. This example reviews the performance of Spraberry Trend field wells located in southwestern Martin County. In the illustration shown in Fig. 3... however. Furthermore... inffimt-r--riiitHt---t-ffiititr-+-t-t-titttt--t--rl-.f-Hlf++H_+_++H+I+1 P90 P95 = 273439 f+----t--+-t-+-II-t++---+-t-H___t__H_ffi ~ ~~~ ~-~ ~~~ ~.o o.Oil EUR Distribution is a Resource Play. Dean. 3. The location of each well determines into which test set it will be placed.600 bbls and the Pmean is 76.L-LLJ... are grouped. but as these may not provide information about distribution shape. but this analysis is limited to the central portion of the Midland basin. page 22.graph type 2. 1.0 = 75996.7. Fig 2.800 bbls and the PlO/P90 ratio is 4. and Pso = 67. In addition..6 -ee-P90 -+-P50 = = 31215 67476 f+----t--+-t-+-f-+l++-I • Mean = 79049 -ee-P10 = 145857 P1 -----------M "'. the Pso is 65. Because the data exhibits a straight line. Calculate the statistical distribution for each test set. 3.-100.Example 1 . 3.~~ fL-_. Fig.-. 3. Fig 2. the evaluator should decide which plot type is most useful (see Chapter 2 .000. and upper Wolfcamp and are downhole commingled.800 bbls. Fig.u. Anchor Well Importantly.Spacing Unit Method Although the theory supporting the proved area in a Resource Play may be expressed succinctly.ooo._. the selected analogous wells exhibit similar producing characteristics (GOR.54 P2 P5 P99 . The anchor wells can be any wells. these values should be similar.. The values read directly from the graph in Fig.--.0 P98 '.o. reside within a common geological setting. Our challenge is to determine what area of this Resource Play is considered proved.7 . Estimate the ultimate recovery or other empirical measure of performance for each well.0 L__~_L~LlLU~~LL~rL~~~_'_L~~_L~LL ------J --.. page 23. Fig.o. 3. The study area is approximately 10 miles east-west and 17 :~~go:~rt::~~t~ro~~e solution. page 24. Following are the steps to resolve this question.. two wells are placed in Test Set 2.~o~~~.2-. For example. The Spraberry Trend field covers several counties of west Texas.. Test Set 1 includes wells located closest to the anchor wells.P90 = 17025.) Alternatively. We 4.-_~-_I\-.Example 1 . P90 = 31. The accompanying graph.--.15.000. For the Spraberry Trend field example. Example One . The proved area solution to the problem is not unique and selecting a different group of anchor wells may result in a somewhat different solution. if the evaluator can demonstrate a good correlation between initial rate and estimated ultimate recovery (EUR).L.050 bbls and a PlO/P90 ratio of 4.'- J ~-H___t__H_ffi __ __ __ _ 3. the wells have produced for many years and EUR data can be reliably calculated using rate-time decline curve analysis. '0.

3.000 -.source Play and (2) the area that contains the test set wells ex~i~its a ~~ilar sta~s~cal ~is~ibu~on of EURs as the analogue wells.400 bbls which is 10 percent less than the mean for the anchor wells of 76.9 also plots values for the PlO/P90ratio..Distribution of Anchor Wells and Test Sets Fig.700 bbls.:"-=-=-:. consequently. This does not address the reserve values which should be assigned to infill wells. Although a statistical value..n~s the mean value for the anchor wells while the values for each test set are plotted as individual points.. Conclusion: The Spraberry Trend study area for this example problem includes approximately 154 sections or 98.Ith a mean of 61. 100..0 0 0. Thus we observe wells located closer than four locations away from the anchor wells (those in Test Sets 1 and 2) are similar to the anchor wells while those located further away than four locations (those in Test Set 3) are dissimilar.Proved Area 7. if each area exhibits a similar statistical distribution of EURs.wells.:::::::::=======_----------------l . This topic is covered in Chapter 4. With values of 90. The area bound by producing wells is about 89.000 bbls and 84... falling below the prescribed threshold. As a final check.0 = 76.10 illustrates each anchor well at the center of the proved area (blue area).400 bbl '" a: . 68. MeanEUR Anchor Well Set 1 . Solve for values of PlO.9 is denoted by the dashed line at 68. such as Pso or pA could be used to test for similarity.Example Problem 1 . The threshold value in Fig. anchor ~ells)aEnUdReacfh test set.000 acre area contained within the producing well boundary is considered as proved.500 bbls and..560 acres. An inspection of the map shows a randomness of distribution. may be considered as proved.anchor wells. The line at 76. we recommend using the mean value. Although not required (but recommended)..P mean. 8. 3. fails the criteria.0 30.. Review the location of each test well set for reasonableness.000 bbls.Example 1 .__ P10/P90 Ratio Anchor Well Distribution Mean .000i.000 bbls.000 10 Percent Tolerance 8.. The anchor wells and the two well sets exhibit similar mean EUR values and...000 2.-. EUR/fi.. ~ .000 acres with the remaining 9. the number of wells in Test Set 3 falls below the recommended minimum sample size.0 1i: '" 0 • ----------~------___+ 4. the area must be part of the overall geological subset of the Resource Play an~. 3. the example In FIg.(1 s or anc or wells .000 . Compare the statistical distributions for the analogue .10 .560 acres situated along the perimeter of the study area. Furthermore. Although the anchor wells should exhibit a random pattern. then the data sets are considered similar.- -- - . review the location of each well. 3.. and the three groups of test set wells.700. Fig.I ------------.000 • <2 Locations Removed (40 wells) 2 . it is always a good idea to check for any undesired concentration of data points on a map. 50.000 bbl :c a: ::::J ~ w (5 70. Therefore. which is the desired outcome.0 . 60. the first two test sets (one and two) satisfy this requirement.-------------------------------------1 14.0 Fig.. peak rate) for the test set wells (or. while Test Set 3 (more than four locations removed) encompasses 24 we~ls '. Therefore the 89. 48 47 ---~-.. 3. A test set is considered similar if its mean value is at or greater than this value..anchor w~lls) is within 10 percent of the same value for the analogous well set. The graph shown in Fig.0 90. So how does the evaluator define similar? If the measured empirical value (EUR. ~.4 Locations • ..-------------r------------+ Removed (44 wells) > 4 Locations Removed (24 wells) 0.000 bbls rep~ese.9 . h Earlier in this chapter we stated an area could be considered proved if: ..bbls per well. Test Set 2 (between two and four locations removed) includes 44 wells WIth a mean of 84. reflect the overall statistical distribution of the analogous wells In the Re. Test Set 1 « two locations removed) contains 40 wells with a ~ean of 90.0 40.. satisfy the conditions of proving the area as previously stated.500 bbls per well.--. 6.000 t------~.. 3.0 10.9 illustrates the mean values for the anchor well set. and pA for each test set. 12.P90.. however the third test set has a mean of 61.

.t. .. they differ in the method used to select test set wells.12... To normalize the data and create an analogous well set.. > I~ s E " 60% "'" '''' 20% 1. .~. ....rr " ~..o.12 . Is . .11 illustrates the Fig. some evaluators may find the expanding concentric radii method easier to implement than the spacing unit method demonstrated in example one. .Examole Problem 2 ..Comparison of EUR and justification for this approach. 1. EUR/ft by Year 1500 'J'l'ar 4 reference is the mean. -.k "7J_.11 ... . . . Prepare a statistical distribution for the anchor wells.' ~ '""" """".12. I ---00 • _ Miles o Fig.' i •• lilt ~ \ / . ... • . 0 0 J 10· • o.. : . · .. . 80% IAnCh~r Set 1] 1M'" 7096 ~ >- 90% .. For this example.. a graph of EUR/ ft versus cumulative frequency on a coordinate graph..~.. .~"XI~ ------c.90% ..... 0 0 0 ~ . ... . .. V ~ --~ I V V '0 0 I-- I--o • ..W. t. Thus this randomly selected subset satisfies the Tier 1 criteria of Resource Plays to exhibit a repeatable statistical distribution.. ..Example 2 ... For lOOO sool------------------consistency...... <...t ~~ i > g_ 6O'l6 80%- ~ u " 70% 40% 60% I~ 5 30% ..' .Statistical Distribution for Anchor Wells 50 . The PlO/P90 ratio is approximately 5 so the recommended sample size is 75.~. .... ..14 f~r t~e a~chor se..~ . 3. the mean is 360 Mcf /ft while for the anchor wells the mean equals 370 Mcf/ft. the EUR for each well was divided by the lateral length.. . 3..... Prepare a statistical distribution for all analogous wells in the geological subset.. •• •• \ . ... . The following map...3. • • "!..Example Two . 1$ ········PSO~330 P-5CI. Fig.. . .Example 2 ....It shows good agreement with the analogue wells... Fig.....13. A second statistical distribution is g:aphed in Fig.. Fig..Expanding Concentric Radii Method With the ability to identify nearby wells in GIS mapping software.00 ... !lit '.. Select a group of anchor wells within the geologic subset which satisfies the recommended minimum sample size requirement. the Comparison 01 Average EUR and EUR/lt by Year EUR is proportional to lateral length. -.14 . resulting in higher initial gas rates and improved EURs..13 ..' o •• J ". 3..--40 o. 3. ecc '. 3 . 119 anchor wells (shown as red dots) are used.. . 3... ..000. as shown in Table 2. . the outcome is not a unique solution. .. see FIg... 3. ...._ <) AU w.1. 30% 20 .OIlC lEUR! FT Fig.. • .. In some reservoirs with horizontal wells. . "'" <. .. WJ 4.' . The comparison point of 49 0. then it may be necessary to normalize the performance by calculating EUR per foot..... Because the final solution is a function of the anchor wells selected.. ..-.. 3. "0\ -" ""1. For this example...... .. illustrates the statistical distribution for all of the analogue wells within the geologic subset of the Resource Play with a mean of 360 Mcf/ ft and a Pso of 330 Mcf/ ft.<OJ FiQ:. .. 1 .. . .... 3. lateral length was defined as the measured depth of the toe perforation minus the measured depth of the heel perforation.... For this example..Statistical Distribution for Analozous wells 10% 2.-. depicts a hypothetical Resource Play with about 475 wells.•· ..Anchor Wells in Resource Play IAll 474 Wells I 100% ~~~~. The anchor wells should be randomly distributed in the Resource Play.m". Legend Analogue Wells Anch or Set 1 Geologic Subset 1 LKH Resource Play 0 0 ( ..Example 2 . For the analogu~ wells. ... :. . . 0 50% 10% " 40% 10~ 1.... · \ • .... Estimate the ultimate recovery or other empirical measure of performance for each well.... 3. If lateral length is not similar between each well. operators began drilling longer laterals in the third year of development... . as the two distributions exhibit a difference in means of less than 10 percent. While both methods offer similar area results.. P' ..

The test set wells reside in these concentric circles. Fig. 3. all of the wells located a distance of zero to one mile from the anchor well (wells that fall inside the blue circle) become part of Test Set 1. no well may be used more than once. Test Set 1 includes 204 wells with a mean value of 369 Mcf/ ft which is about 4 percent higher than that for the analogue wells. Test. and all of the wells located two to three miles from the anchor well (wells that fall inside the orange area) become part of Test Set 3. However.... Mean and Variance for Analogue 1 Mile Radius D'istribution 2 Mile Radius Distribution Fig. 0% .: ro > 100 ·10% ~ -15% 50 7.16 . etc... additional iterations of steps five to eight may find some distance between two and three miles that could be classified as proved if all the conditions are 52 51 . The well count satisfies the recommended minimum sample size. :J (. I:i: . <! 150 . ~1i ~ s: <t ""- . 400 \ \ 30% \ ..Example 2 . Thus a well located in the blue circle surrounding an anchor well and assigned to Test Set 1 may not also be included in the green area that Fig. this test set must satisfy the recommended minimum sample size (50 or more wells.. Anchor Wells.:) UJ . Repeat step six for each set of concentric radii until the test set well count in the evaluation area (expanding concentric radii) is less than the recommended minimum sample size. this process demonstrates that the area up to two miles from the anchor wells is potentially proved and that the area two miles to three miles from the anchor wells cannot be considered proved... Compare the statistical distributions for the analogue wells. If the first test set is fewer than 50.J:l VI t . The anchor wells exhibit almost the same mean value at 358 Mcf/ ft.. both the shape of the statistical distribution and the mean values are examined. 3. u.. -t-------------\------------... Thus. anchor wells and each test set.. Draw concentric circles around each of the anchor wells using the distance to be evaluated. For this example.17.Test Set 1 and Test Set 2 8c.Example Problem 2 . compares the pA values for the analogue wells. Fig. the blue circle represents the first test set wells using a one mile radius while the green radius encompasses the second test set wells using a two mile radius. uncertainty increases and the results become unreliable. Just remember... 3... t! ·20% N c <t u '" 1.. Calculate the mean empirical value (EUR/ ft for this example) for Test Set 1. 3. For this analysis. These wells are excluded because including these wells a second or third time will cause the statistical distribution to be biased due to the use of repeated data. those wells already counted as anchor wells or in Test Set 1 were excluded. C 250 4% 10% ~ tI: U Qj 5% " 3: 200 . all of the wells located one to two miles from the anchor well (wells that fall inside the green area) become part of Test Set 2...Well Count. 0 . Should this happen.set wells are the offset wells to the anchor wells..5. The test sets become fully defined once these expanding concentric radii have been drawn around all anchor wells.. and Test Set Wells '".15 illustrates an example of one anchor well and it's associated expanding concentric radii (ECR). or about one percent lower than for the analogue wells. 8b.. The mean for these wells is 352 Mcf/ ft... and three test sets. increase the Test Set 1 radii to include sufficient wells to satisfy the recommended minimum sample size. . 6..-----~------__I 100 \ -------~~-----------~---.15 . The goal is to demonstrate if each subset of independent wells behave in a predictable and repeatable fashion. Pmean ~WeliCount 355 350 \ 358 369 25% .Expanding Concentric Radii surrounds a different anchor well and is (ECR) Around Anchor Wells assigned to Test Set 2. so the two mile radius passes the test._ P mean verss \ \ 20% \ 300 \ 15% ::J .. Therefore. Test Set 2 consists of 100 wells found inside the second concentric circle (green in Fig. allowing each test set well to be assigned to one of the test set groups. The radii may be any distance that encompasses nearby offset wells. each well may only be counted once. the variance from the mean does not meet the 10 percent threshold for test sets.. s: '" ti .. ti ~ '" 1. In the example problem. Test Set 3 exhibits a mean of 296 Mcf/ ft and includes about 50 wells. For this example..Example 2 . .17 .:::. 1 ti Fig.. ti ITI t! Wells. Identify all the test set wells in the first group of concentric ci~cles (Test S~t 1).. 3. 8a. DO NOT include any anchor wells already evaluated in step four). This variance is within tolerance. 0 u ro QJ ·5% c .EUR Statistical Distribution for Test Set Wells ... but the mean is 17 percent lower than the analogue well's mean. anchor wells.. Remember. . A variance of 10 percent is the minimum threshold required to pass this test.. On the left of the graph is the value for analogue wells with a mean value of 355 Mcf/ ft. For the statistical analysis to be meaningful.. 8. . 3. The following chart.16) which is greater than one mile from the anchor well but less than 2 miles.

0:. Determine the final proved area. No prediction with any certainty can be made outside the perimeter of analogue wells due to the lack of well density which is needed to establish the required statistical relationship.. Project 2. o . and it is suggested that at least two overlapping areas f~om different anchor well sets be used to define the proved area. Map the proved area for the anchor set. and Non-Contiguous Drilling Area Wells drilling area to the main play area.tIoIflONU"._ ~_. draw a line from analogue well to analogue well within the two mile proved area radii around each anchor well.21 with a project area of 101. Consequently." At this point in the process. Noncontiguous and step-out areas should be retested under steps one through nine t? d~termine if these wells should be their own analogous well set. Legend • • Anchor Set 1 Analogue Geologic Wells Subset 1 Resource Play Fig.18 . . However. and Variance for Analogue Wells. c:: . o 20% '" 'ti . 3.20 shows the results of four different selections of anchor wells. The recommendation is to create" clipped polygons" to define the statistically proved area of the Resource Play. 10% 0% 2 Q) ::: i l -~------------------__ -_--_ -~-'-'-~ -.4 for determination of offset well locations.: '.6SPEE roooTOfP'[JlOlIUIIIYAl. the non-contiguous areas are not included in the final proved area. In the example problem. 10.Well Count. At the beginning of this discussion. In this example.~~~: ~ J::: ~ ~ Z'§<l c :l . If they do not meet the cntena of these steps.600 acres. Mean. and Project 4.. selecting a different anchor well set at the onset results in a slightly different" clipped polygon" solution. the fmal proved area is show in Fig. we recommend comparing the statistical distribution of the non-contiguous Non-Contiguous DriliingArea _Pmean -WellCollflt ~Pmeanvar% 9. refer to Fig 3.. 3.18." In cases like these. Fig. 3. 3. it was noted that each anchor well set generates a unique solution.~ ~ u . The resulting "clipped polygons" are slightly different.I'IU~ met. The accompanying map in Fig. 3. T~is interpretive process is illustrated in Fig.. Since the anchor wells are randomly choosen. Project ~.19 .18 contains two areas labeled "Non-Contiguous Drilling. which means good engineering geologic judgment still play an important role in the outcome of the process. Proved Area. it should be possible to find a set of anchor wells which generates the maximum area encompassed by the clipped polygons. The result is an "inside look" from outermost analogue wells towards the middle of the project. To do this.. 30% il '.. depicted as Project 1. 3. a slightly more conser"_'ative approach is recommended. 3. Obviously each selection of anchor wells results in a unique set of "clipped polygons. just the statistically proved area. This highlights the non-uniqueness of the process. the non-contiguous drilling areas are excluded in the final solution of the statistically verified proved area.Example 2 . This "clipped polygon" boundary does not define all of the proved area. The resulting map demonstrates the outsI~e statistical proved boundary as defined by connecting the outermost analogue wells.19 shows that the difference in the mean between the two areas exceeds 10 percent.Example 2 . Thus. the evaluator may be wondering which set of anchor wells gives the proper area. :l u '" a ro Fig. and Note t~e map shown as Fig.Clipped Polygons within Expanding Concentric Radii 53 54 .

Two examples offered slightly different techniques for selecting test set wells. .Example Problem 2 . a process that may be automated in GIS mapping software. 3.. . It is important to realize that knowing the area does not automatically determine the number of wells which should be drilled in the area or the associated reserves.. Well density.SOO!.Final Proved Area 55 56 .nQfI'[lXlJUII""'~_ 6SPEE Final Considerations The focus of Chapter 3 was on finding the proved area of a Resource Play. the examined wells are found in producing units and selecting these is a fairly mechanical process. the examined wells are identified by expanding concentric radii.21 . These issues.Overlapping Fig. are addressed in Chapter 4 .. surface culture.Example Problem 2 . 3. •• • • • Analogue Wells 3 I I I & II I I I D Clipped Polygons Resource Play Fig..Determining Reserves in a Resource Play . In the first. and topographic constraints are factors that influence actual well locations. In the second method. .20 . as well as several others..

ia~ons are the formation evaluation. 2. A continuous hydrocarbon 4. The chapter examines each of these steps. in particular. Repeatable suggests that a statistical distribution prepared for producing wells can be used to predict performance for locations that are as yet undrilled..Pso.1 . 57 58 -. In this resource play. stimulated with nitrogen energ~zed fluids. 4. Another operator drills the laterals in the top one-third of the section. ---~---= . As evaluators of a Resource Play. Analyzing data and deciphering the information required to identify changing factors in the early life of a Resource Play requires attention to details.r: . and PlO. and second.'" erroneous conclusions.. ~I U) .differen~es found within a Resour~e Play. Determine the number of drilling opportunities Prepare a Monte Carlo simulation. or well count. blue l~e in FIg. o . Chapter 2 discussed statistical analysis and. t~chnology v~nes between operators.Early Rate-Time Performance . to prepare a statistical model that can translate the historical relationships into statistical forecasts. ~YlV~. and offers an example problem to demonstrate how to apply the steps. the evaluator. This is similar to timing. Often. well performance often improves.. As an example.FOAM FRAC Techn?logy ~ Technology var. and geology....-- ----. P?orer wells are drilled early in the play's development as 01?erators are learnmg which . t~e historical data must derive from wells which are analogous to the undrilled locations. consider early horizontal wells in the Fayetteville shale formation I found in Arkansas. For example. ". Stated another way.e graph showing daily gas production versus time! is plotted f?r t~IS ~roup of wells (see. Create a statistical distribution for the analogous wells. Timing .In many oil a~d gas r~source plays. Chapter 3 defined analogous wells as those with common parameters of timing.. 4.. extreme patience. and explored aspects of these criteria in depth. . technology... 10.. . In this chapter we combine these concepts to estimate reserves. drilling procedures. 4. evaluator must acquire extensive . past performance can be used to determine future performance. Thus the .~~. and possible reserves using appropriate definitions. These first criteria form the basis for much of our analysis of Resource Plays and will provide a foundation for analysis throughout this chapter. 4. these four important concepts bear repeating.1).j·--I 1~1 . "' . . Although conceptually this sounds like a simple task. Obviously these two groups of wells are not analogous and should not be grouped together. A normalized ~ate~tim. o. or operational) within the same field..' Reserve Estimates for Undrilled Wells The evaluation method for estimating proved reserves for undrilled wells in a Resource Play is divided into five distinct steps: 1. As operators gain knowledge..I' . our goals are first to identify historical data in the subject field.1) and experienced improved performance in both higher initial gas rates and shallower decline rates.ne operator targets horizontal laterals in the top one-fourth of the gross pay thickness. s~ulates at a hIghe~ mJecti_o~ rate. Step 1 . Identify analogous wells. . -. 100 I o I 50 100 150 200 250 TIME (DAYS) FRAC - SLiCKWATER - . the probability concepts of P90.000 Introduction Reading through the first three chapters of this Monograph you have been introduced to the Tier 1 criteria which define a Resource Play.Chapter 3 addressed the issue of what is the proved area in a Resource Play.Identify Analogous Wells The first Tier 1 criteria states that in a Resource Play "wells exhibit a repeatable statistical distribution of EURs.::: above all else.geological mterpretations." To be useful. . in th~ Barnett shale... The Tier 1 criteria of a Resource Play are: 1. probable._ from the early phase of field o '" development can lead to . explains the rationale and the process. Calculate proved. completion.Chapter 4 Estimating Undeveloped Reserves in a Resource Play This step is focuse~ on . and. 3. for both reserves and performance.. I 2. Free hydrocarbons system exists which is regional in extent. the first several Fig." The key here is the word repeatable. completion procedure. and operational . location performance.. and locates perforations closer together. fracture stimulates at relatively low injection rates. coalbed methane (CBM) fields exhibit an interesting timing behavior where both de-watering and well communication often improves gas production during the first months or years of the field life. (non-sorbed) are not held in place by hydrodynamics. and limits the fracture stages to about one p:r 500 ft of late~al le~g~h. which are applicable to yet undrilled wells. 5.. and completion practices produce the best producmg wells. Because this chapter focuses on how undeveloped reserves are to be estimated in a resource play. Subsequent wells used slickwater fracs (shown as a red line in FIg.000 u 1. with each operator adopting a different preferred practice (drillmg.. a I z consistent methodology. These operators each decided to follow a uruque drillmg and completion practice based on individual company objectives.Fayetteville Shale horizontal wells were fracture . must make. For example.. the process includes many assumptions which you. 8 " Quickly reviewing information g: . but focuses mostly on d~ferences in practices .. Offset well performance is not a reliable predictor of undeveloped 3.. . data and evaluate this carefully for wells completed in the early life of a Resource Play.".. Wells exhibit a repeatable statistical distribution of estimated ultimate recoveries (EURs).the first of the ev~uator' s goals. to "identify historical data in the subject field.

a~n~2. two example problems were considered. Fig. The perforated interval and fracture stimulations are similar. thus. 4. these wells might appear analogous. Geologically all of the wells in this area are similar. :~ P5 P10 P20 . Data for the re-entries are plotted in green while data for the drill wells are plotted in red. / I P30 P40 P50 P60 I P70 P80 P90 P95 plot exhibits a slight curvature. One method to test a measured property (i. 4. with the reservoir of If the EUR data were lognormally distributed. most of the wells are operated by a single company. A lognormal probability plot for gas EURs of the 463 wells follows. 4. "When used to support proved reserves. use the actual data. Furthermore. the statistical model for the analogous wells is likely the same. J -7--1-I .Create a Statistical Distribution for Analogous Wells The second step in estimating reserves for PUD locations is to prepare a statistical distribution which accurately models performance for the producing analogous wells. +. empirical value IS most appropriate.I tests while 45 are newly drilled wells. the reservoir includes the upper Barnett shale. we will use the well data for the Barnett shale . In Chapter 3.Ouachita Thrust Study Area • • • • Same geological formation (but not necessarily in pressure communication interest). 1 ~--~:+I-----. The SEC states. The evaluator should de. the identifying characteristics noted are nonetheless appropriate. As an example. if ample data is available for statistical analysis. consider completions in the Wolfcamp formation located on the eastern margin of the Midland basin. 4.was a more appropriate choice. Although the SEC definitions are intended to support Fig. and presence and orientation of fractures.In preparing this Monograph the SPEE Evaluation of Resource Plays II I P99 Committee reviewed definitions 1. Of these.2 . Geology .about 24 . pe~k gas.3. permeability. it would plot as a straight line in Fig. Initially. The probability plot P60 depicts two distinct and separate groups of data and. porosity.Barnett Shale Study Area EUR vs.J ~M~. Same environment of deposition. DRILL WELLS • RECOMP geology a helpful guide. 463 have enough production data to forecast by rate-time decline curve analysis and estimate an ultimate recovery. we suggest the list should also include similar pay thickness. rate) ~h~ch repres~nts performance for the analogous wells. depicts a statistical analysis of oil EURs for these two groups of wells-.As another example.4.. Worth basin.2. However a significant difference exists in these wells . The model can use any empirical value (EUR. Independent analysis found the peak month gas production is correlative to gas EUR in this area. consider northern region of this Forestburg lime. Obviously wells producing in Wise County should not be considered analogous to wells producing in Johnson County.0 GAS EUR (BCF) Fig. Fig. Step 2 .000 promulgated by PRMS and SEC.1. If the evaluator has already solved for the proved area. this BARNETT SHALE _OUACHITA THRUST AREA F I I f' I To expand this definition to wells which possess analogous geology.000 10.~92~1~P99 __ 1. 1------~--~~----~+-~~+Y---F-~L-+~~~IP5 . we selected EUR as the best empirical indicator while for the second we found.Re-entry vs. EURI ft . A better solution is to use the actual data in a Monte Carlo model. the lower Barnett shale with gross reservoir thickness of approximately 800 feet>. hence fitting the data with a lognormal equation would introduce a slight error. porosity or EUR) for analogy is to plot the property's probability distribution function for a random group of wells in a study area and calculate mean and variance. 4. The techniques used herein. fluid saturations. In the first. and Same drive mechanism.Ouachita thrust study area previously discussed in Chapter 2 on page 21. and the Approximately 50 miles the East Newark (Barnett shale) field found in the Ft. In the field in Wise County. It is extremely important to verify the reservoir satisfies the four Tier 1 criteria which define a Resource Play.I The accompanying probability graph.. assume stationarity or analogy exists. 4.5. south in Johnson County.4 .Barnett Shale . fluid composition.3 . proximity and significance of faults. Texas near the Ouachita thrust. these wells are NOT analogous. Similar geological structure.000.~IP2 are re-entries in abandoned deep well . If the study area is analogous (or stationarity in statistical terms) the values should be similar. However.0 I P98 10. Probability 59 60 . Drill Wells in Midland Basin Wolfcamp Wells the comparison of two different hydrocarbon accumulations. thus peak monthly gas rate can be used as a proxy for gas EUR.000 100.termme whIch.~~~-+H----~~· .4. Repeat the process for a second set of randomly selected wells in the study area. EURI ft. A map showing the study area boundary is listed on this page as Fig. [ ~ 01 ~ 8° ~7''''' /. A lognormal probability plot of peak monthly gas rate is shown as a function of drilling vintage in Fig. Several hundred gas wells produce in the study area.. 4. The evaluator would err by combining these groups together. as d:scussed m Chapter 3. only the lowermost member remains and gross /. ~ L 7' . We Oil EUR (equiv barrels) found the SEC concept of analogous ---X1 Regression -X2 Regression . The study area is located in eastern Tarrant and Johnson Counties.e.ickness is approximately 250 to 300 feet. an analogous reservoir' refers to a reservoir that shares the following characteristics with the reservoir of interest: A-~~-+-+--___j----+--'----'-t--~I P98 I reservoir th. 4. Example: Statistical Model For this problem. Be aware that adjustments to the proved area (for example removing non-contiguous outlying areas) should also be reflected in the statistical distribution of the analogous wells.000 1. As we have repeatedly suggested. ~----+_--~I+I----~~~~~~~~~~~T-HP10 Fig.

600 acres and included 422 producing wells. I i I I i i i I. I 3' I- - W . The first year of drilling activity. P50var% 30% per section) because we 'F have included the higher _ 400 f\----------=--~ /----------. each PUD location is part of an overall project. 1. The Pso value for the 422 analogous wells is 344 Mcf/ft. 4.Peak Monthly Rate The Petroleum Resource Management System (PRMS) is a project based evaluation system where" each project applied to a specific reservoir generates a unique production and cash flow schedule">.~-' lil( t~ 01 I> 1 P1 I 1 i I I .. 10% ~ the Pso value is observed for ~300 "5% sections with three. Thereafter the recovery dropped 18 percent to 403 Mcf/ ft in sections with eight 1-\-t----+-=Jc--c-b-~~'lJ!_--__+---l___--Welis Per Section 0) o --LKH Resource 1 I I .Example Problem . Please note. and 2008 are similar. 2007. determine if interference reduces • 3 reserves in the more densely drilled • 4 sections. To solve this problem.Determine the Number Opportunities or Well Count of BARNETT SHALE· OUACHITA THRUST AREA Example: Well Count i I i I i : II I: 'I III ! I I 1 I I I 1 I ! ! I i I 1 I I : I 1 I 1 I I I! i I I I ~+-h~ i I . This method is appropriate if no deterioration in performance occurs due to interference between wells.. Note that no sections ·20% contained six wells. I I I i i ' ! '/jr I I I. Improvement in e. Hence the decision-making process changes and the two groups of wells should not be combined into a single project.. four.!! sections with seven wells ~ 100 -15% ~ each.. ----------- Fig.5 ..0 ~o I I I .7 . 4. '.. In a very simple method. ranging from a low of one honzontal well per sechon (119 sections) to nine horizontal wells per section (one section). in defining a project. and are below the desired target of 310 Mcf/ ft. geology should be considered in defining a project.2005 WELLS (43) . However subsequent sections exhibit a higher Pso value.-J~+.The statistical distributions for wells drilled in 2006. The problem to solve is "What is the well spacing to consider in determining the number of PUD locations in the proved area?" As a reminder.000 10. Management will likely view investing in an operated single well with a 100 percent working interest differently than 100 non-operated wells each with a one percent working interest.f. I I 1 i I i i I III . PUD well count is the proved area divided by the well spacing less the number of producing wells. Although the total investment amount might be the same.! I I I I ! I I II !! ! '. A similar presentation between the two graphs is expected since peak monthly rate and gas EUR are correlative . P2 P5 P10 P20 P30 P40 I I !I ! This example uses data from Chapter 3 Example 2 and is essentially a continuation of that problem (page 49).----------------------------------------~ 50% value is higher at 344 Mcf/ft 45% -+-P50 than in the lower density 40% sections (one or two wells 500 I . I i I I .:-.rl I 11! I I I I : I I I I ! I' I I I I I i I I. Furthermore. the "project represents the link between the petroleum accumulation and the decision-making process+ By applying the project concept to a Resource Play.Barnet Shale Study Area . 2005. consequently. Fig~ 4.. Play . I ! . I III 0 : . ownership and operational control should be similar between PUD locations in a project. The following example illustrates this method.6. 'I 1I I I I ! 1. 4. I I I I I . However. ~ o 0% five and seven wells with a 200 e -5% c: peak noted at 493 Mcf/ ft for -10% . i I I I P95 P98 P99 I 1 I I I I Dproject i I I 100 1. Throughout this Monograph we have stressed the importance of understanding the geological setting.. illustra~es the well count found in each section.6 .000 100.:. Values for sections with one and two wells drop to 270 Mcf/ft and 299 Mcf/ ft respectively. begin by investigating how well density influences reserves and in particular..""""''''''''''"".4. 4.following map. An example problem later in this chapter will show how to incorporate this data in a Monte Carlo simulation.Example Problem -Recovery versus Well Density 61 62 ...2006 WELLS (160) 02007 WELLS (316) ·2008 WELLS (424) I Fig. Once the project area is identified and the proved area is delineated (see chapter 3). I: ! i t/"': • :_kK I I I I I I I ! : I i I I I :"..000 PEAK MONTHLY GAS (MCFD) 1.. the data plots not as a straight line but with a slight curvature. I . First. I I I I I .Well Density also be used for this analysis with similar results.". I' . The surface location of each well is represented by a dot and color coded to correspond with the well density in the 640 acre section. A few common sense caveats should be recognized however. We see that geological differences are an important consideration in the decision-making process and. it must be combined with a thorough geological understanding. thereby satisfying the first requirement of the Tier 1 criteria. '25% density sections in the ti:: 20% average.7) illustrates the Pso empirical 3 measurement value. Step 3 . The accompanying graph • 5 o7 (Fig.% I I . and while it is an important tool. in Chapter 3 we determined the entire proved area was 101.15% Gi ~~---F--------------------~. for sections with increasing well count. This is the same tendency observed in Fig.' •I -A' I ' I i I I I ! P50 P60 P70 P80 P90 ' I i I . Secondly. exhibits poorer quality wells as operators experimented with drilling and completion practices. each PUD location becomes part of the analysis. . Statistical modeling alone is not sufficient in analyzing Resource Plays. The . wells drilled in subsequent years exhibit a similar statistical distribution. I I I ..1' I 0 • . geological differences must be considered in defining a project. expressed in • 8 I • 9 EUR/ ft.. The P mean or P/\ could Fig.. . Obviously the overall Pso 600 -. 4. the risk is not identical between the two opportunities.

Quite simply. Regardless of which well count solution the evaluator accepts. then use the actual data. well EUR on the graph and reading the corresponding Monte Carlo Trial probability. Therefore an evaluator who determines the number of PUD locations in the future will have a different perspective than the current day evaluator. Typically.0 GAS EUR (Bef) Fig. 4. only an approximation. Step 4 .0 2.- 10 t-- '-n-n-f_.8. while sections with eight or more wells (one section with nine wells and one section with eight wells) contain 17 wells." Monte Carlo methods were first developed by Los Alamos scientists seeking solutions to neutron movement in shielding materials which could not be solved by theoretical calculations. So how does the simulation program actually work? A cell in an Excel spreadsheet has a function which we will designate as: Eq. As drilling continues in this Resource Play.Typical Histogram Distribution .000 Md.Ouachita Thrust Area Johnson County. Consequently the number of PUD locations is five wells per 640 acre section.640). the Monte Carlo simulation selects a random number. By repeating this process of randomly choosing the independent variable several thousand times. the accompanying histogram. we urge the evaluator to employ common sense when identifying undrilled locations as difficult drilling locations may require significantly higher location costs or may be inaccessible. The gas EUR values mimic 9 the statistical distribu~on shown in the histogram of Fig. The average gas 10 EUR for the 10 wells IS 3.8.Typical fmdmg. that the lognormal distribution is an approximation for what we actually observe in nature. see FIg. Furthermore we noted the lognormal distribution is more commonly observed in Resource Plays than the normal distribution. y = ftx) Where y is the dependent variable and x is the independent variable. or in mountainous terrain) may not be viable locations. The entire process is repeated several thousands of times: .5 Bd) by 463 (the total number of wells).. Chapter 2 discussed common types of statistical distributions such as normal and lognormal. 1. the data available for this conclusion is sparse and may be misleading. what is the probability of obtaining an EUR of at least 2. the recommended minimum sample size must be satisfied for data to be statistically meaningful. sections with seven or more wells contain a total of 31 wells." Well sites with unfavorable topography (located in lakes. at best. Since well density already exceeds five wells per section in four sections. thus we calculate the number of sections at 159 sections (101.- r- 20 f-. The Monte Carlo simulation selects a random number for the 3 first cell and solves the ftx) value.--.ast 2. each actual undrilled location should be physically located on a topographic map and checked for" drillability. If sufficient actual data is available to define the statistical distribution. The function can be 63 64 . however. However the strength of the Monte ~arlo simulation is that it allows us to find answers for complex I---=~. ~he desired per.300 Md. the number of PUD locations per section in the remaining undrilled sections could increase. In a Resource Play.422). current data suggests interference does not impair reserves when seven or fewer wells are drilled on a section and only a slight reduction in reserves is noted for more densely drilled sections. If we wish to know the p~o?~bility of obtaining an EUR of at least 2. shows the probability of obtammg a certain gas EUR in the Barnett shale Ouachita thrust study area. are plotted to depict AVERAGE the overall probability. 8 the second well a value of 628. For WELL NO 1 example. but it is.4. An example of one iteration of this process can be found 7 in Fig. Although deterioration in recovery occurred when the well count exceeded seven wells per section.---+-~T~R~IA~L=----l problems which would be difficult.0 9. these results are called "outcomes. and repeats the process for each of the 10 5 c:lls. It is important to realize.731. but since 422 wells are already drilled and producing.and nine wells. in urban areas.579. The total proved area is 101. The recommended minimum sample size for this project is about 50 which is not met until we consider the sections with five or more wells.4) at 384 wells ((155 x 5) . Texas In the Monte Carlo simulation. the number of PUD locations is 373 wells (795 .391). a more rigorous solution could subtract this area and calculate the PUD locations for 155 sections (159 . = 80 0 - - r-- -- - - 60 . the Monte Carlo model creates a probability distribution for the dependent variables.0 10 40 ~O ao JO 8.8. the first well is assigned a value of 2. 4. 4.8 includes gas EURs for 463 wells. Although the well might make geological and economic sense.5 Bd per well when 10 wells are ~rilled? To solve this problem. The WWII secret computational technique was code named "Monte Carlo">. the number of sections with six or more wells should increase.600 acres. For example. The histogram plot shown in Fig. To answer the question of the probability of obtaining ~ ~UR of at le.1 a1_ly equation. then solves for y. T~e results of the 10 cells are averaged and stored as an outcome by the 6 SImulation program.0 10. The total number of proved well locations is 795 (159 x 5). However only one section had eight wells and only one section had nine wells.5 Bd. if not impossible.-f-- U QJ >- 50 C lL !!! :J 0" 40 r- f- 30 . Monte Carlo simulations incorporate formulas to define the relationship between the independent variable and the dependent variable. 4. In this example.9. thereby making certain these sections satisfy the minimum sample size of 50 wells. Starting at the most densely drilled sections and working backwards. substitutes the value for x. to solve directly. the ftx) formulas used in the Excel spreadsheet are frequently represented by statistical distributions. Continuing the countdown. the answer is 57 percent which was calculated by dividing 264 (the number of wells with an EUR greater than 2.5 Bd per well when 10 wells are drilled is determined by Fig. Nonetheless. The followmg example problem illustrates this procedure.Prepare a Monte Carlo Simulation A Monte Carlo simulation or model randomly selects an independent variable to solve for a dependent variable. Most oil and gas reservoirs can be represented by a lognormal distribution.All of the stored results. 4.600. Each cell acts independently from 2 each other cell.000 Md. and 51 wells are found in sections with five or more wells.. Importantly. selects another random number for the 4 second cell and solves the fix) value. the f(x) function is assigned 1 to 10 separate cells in an Excel spreadsheet. In sections with nine or more wells there are a total of nine wells. we add the total number of wells. the evaluator should model a statistical distribution for each PUD location. and so forth. or outcomes. 4. Of course this outcome assumes the Pso value will support such a conclusion. Once the number of wells in densely drilled sections (six or more producing wells) reaches the recommended minimum sample size.9. bu~ often the equation is an :~pression probability..

200 soo 0. 3.COO 3.COO. and tracking forecasts. enters the graph.4. shown as Fig." and on through "Trial No.11.COO 2. 2.1..m ~ 0.10 600 300 1~~ 2~~ 2~~ 2~~ 2~~ 2~~ 3~~ ~~ 34COO ~M ~~ 4~M 4~M 0.. 1.COO 4.0. --_11--------1----------~-II-----------I·---------- 3.000 distribution on the y-axis versus the gas EURs on the Value A ( Load Data .000 the left of this display and AREA VJELLS'! 'liI'li4"!1.000 6.IMR? 254. The shape of the histogram THRUST AREA EUR 110 0.02 -----------~1-----100 70 ~~L~ o 1 ci: 001 -----! .Q 40 TI '" '" 30 10 00» 1. ~ ".11 under the column titled "Trial No.600 3. respectively. 4. and 5000.COO 3.705.c GO" c 5O. The results of the Monte Carlo simulation are known as a trial and the results of the first trial are shown below in Fig. 5000.3..c 040 U 0.000 4.10.100 :. 4.~ 4. is noted on the right side of the graph.COO 1. The Monte Carlo simulator records the average gas EUR (known as the forecast) with each trial for future analysis. on the y-axis at this value and solves for the corresponding gas EUR value on the x-axis. and 2.4OO.Monte Carlo Results for Example Problem 65 66 .000 trials.000.800 ~------+I---------I------------ 4.12 depicts two graphical presentations of a Monte Carlo analysis of the 5. The first graph shows a histogram of the frequency of occurrence. Each column indicates the number of times the average EUR for the 10 wells fell within a certain range.800. Thankfully the Monte Carlo program automatically performs this myriad of operations . When the computations are complete. but with slIghtly different methods.. The graph depicts the cumulative relative 000 probability of the statistical o 2. 4.200 3.50 § ~.400 2.000__j The custom definition ::lR4 nnn I (known as a cell Fig.000 I is shown as a cell reference 360.. 4.800.COO 2. is repeated for each cell (which represent different drilling locations)..Custom Distribution for Example Problem assumption in this program) is repeated in each Excel cell that represents an undrilled location. A custom fit of the data appears below as Fig. 4.2. .00g__J on the right of the display.running 5. Fig. 4.500 Md.2OO. !---------I------------------1----------- § ." I 1 simulation presents the results. 4. This value. Some of the 463 Linked to: actual EURs are shown on 186000 ='THRUST 1 246. 4.000.600.c 1 . the Monte Carlo output (aggregation of the input curve).COO 3.000 trials (the AVERAGE forecast) as both a histogram and a cumulative probability graph.g ci: .COO [ 2.COO <l 0 100 om 000 4.300 Mcf.5 Bd per well when 10 Cumulative Custom wells are drilled?" The lognormal probability graph for gas EURs of analogous wells is shown as Fig.00 0. using a different random number.2IXl.COO 3.300 0.000. .100 2.~ '" 1.." "Trial No.10. The Monte Carlo simulation next picks a random number between 0 and 1..COO.600.800.10.679 Md.000.579.000 8.20 1.COO 4.4OO..Monte Carlo Trials for Example Problem :0 . the Fig.70 The average per well gas EUR of the 10 drilling locations is calculated for each trial and shown as 3.12. 3. 4. S64.c ~ .700 Md for Trials Nos." The entire calculation is repeated many times which are represented in this example as "Trial No. B~th p~esenta~ons plot the same data.928. also known as the frequency.0» l~M . MCF <l 0 Fig.SPEE Example: Monte Carlo Model using Excel Spreadsheet This example problem builds on the Barnett shale Ouachita thrust study area used earlier in this chapter (page 60) and addresses the question "What is the probability of obtaining an EUR of at least 2.COO 2. x-axis.30 0.000 I the link to all of the values ---I 324.Q 1.COO 2..800 . The process.2IXl. () c 3. TI " .218. calculating random numbers.

000 demonstration based on the example problem was also offered.000 is 4. then per well undeveloped reserves can be estimated with one or two additional mathematical calculations.891.000. and Possible Reserves using Appropriate Definitions (PRMS) Example: Calculating Proved. Both graphs note the P90. Similarly.500.933.500 of trials (90percent of 5.13 these are indicated by the red line and noted as proved reserves. However.P ro b a b'I't V versus W e II C ount " II 2.590.540. I Ir I I I the aggregation values are a . 4.000.000. Pso. This is because the total project includes all of the well locations so reserves can be calculated at the project Fig.540.14. The project is the recognized level for reserve reporting by both the PRMS and new SEC guidelines.500. The Pso EUR values (green line) remain relatively constant at about 2. if the empirical value considered in the Monte Carlo model is not EUR.000 Mcf per well. AAPG. and Possible Reserves from Probabilistic Estimates Fig. plots the P90.727. Thus for a 10 well drilling program.000. SPEE.200 Mcf per well.600 _ 2.000 If a b P10 Plus POSSIBLE RESERVES 30 40 50 WELL COUNT 60 70 80 90 100 Although the Monte Carlo simulation o calculates each well location outcome i Reserve Estimate separately. In Fig.5 Bcf per well for a 10 well drilling program is 80 percent. Thus each of the 10 wells in the proposed drilling program is assigned proved reserves of 2.933.distribution approximates a normal distribution or a bell-shape curve and is the expected shape predicted by the central limits theorem due to aggregation of values.200 607. I Probable reserves are the difference a between 2P and 1P reserves or. one-half of the EURs are less than 2. 4.338.000 I I drilled. Beyond this level.900 193. one can read 2.338.2. reserves are to be aggregated through simple addition.400 595. The PRMS describes proved plus probable reserves as those with" at least a 50 percent probability that the actual quantities recovered will equal or RESERVE BOOKING CATEGORIES c u 100 exceed the 2P estimate'". Likewise.400 Mcf. The P90EUR values (blue line) increase with ~creasmg well count while t~e PIOEUR values (red line) decrease with increasing well count.2P) No of Proved recovered. 4. Under the PRMS definitions. the Ouachita thrust example problem considered a 10 well drilling project. respectively.500 1. The Effects of Aggregation or How Well Count Changes Reserves The SPE.000 either fewer or more wells are I considered? Chapter 2 (page 34) addressed aggregation issues. Under the PRMS definitions.600 204. 4.14 illustrates the probabilistic distribution for a 10 well drilling program in the Ouachita thrust area example.338.700 Mcf.PRMS Reserve Calculations deviating very far from the P50 value when more wells are considered. Of course this assumes the prior criteria for the proved area are met. then the P90EUR is the proved value.400 Mcf. Thus Probable Possible Wells Reserves Reserves Reserves proved reserves are relatively low when only a few 2 wells are drilled and increase when many wells are 1. and 3. the difference between the Pso v e P60 and P90 reserve values.000 1. The P90. "What is the probability of obtaining an average gas EUR of at least 2. proved reserves are those "where there should be at least a 90 percent probability that the quantities actually recovered will equal or exceed the estimate". I--P90GASEUR--P50GASEUR __ Pl0GASEURI We prepared several Monte Carlo simulations using the Barnett shale Ouachita thrust probability distributions but with varying numbers of wells in the drilling project.338.500 drilled. rangmg from 1 to 100.400 or 595.914. Since the PRMS correlates low uncertainty 100 FI'g 414 . 80 percent of the aggregate values exceed 2. However ~he P90~nd PIOgas EUR va!ues exhibit a marked difference. 4.588.100 Mcf per well.000 summation of several independent I I outcomes from a Monte Carlo I I I I model. 4.Calculate Proved.13. and WPC jointly developed the PRMS reserve definitions.600 or 607. !\~ r--. Recall that aggregation is simply the 4. Another way of thinking about aggregation is to realize there is less chance of well performance (EUR. at the PIOvalue. the average EURs are shown on the x-axis./'~ function of the number of wells to be I 2.400 Mcf. and PIOpercentile values.Pmean.338.338. The new SEC rules follow PRMS guidelines in stating that probabilistic aggregation may be performed up to the field or property level. the aggregate value most accurately reflects the P90and Pso values for the entire project.400 Mcf.700 ._ 10 20 1 I I 1.. and a 5.Pso.933. proved reserves (lP) are equal to the P90 value or 2. Similarly. Thus. stated t otherwise. Probable. Step 5 . etc) Table 4. The accompanying graph. The 2P reserves m P90 PROVED RESERVES are shown with a green line in Fig.000.13 . The second graph plots both the cumulative probability (from one to zero) and the cumulative frequency on the y-axis.000 Mcf regardless of well count. Each outcome represents one 3.. 90 percent of the outcomes have EURs which are equal to or greater than the value. Let us again present the original question.1 . Since overall uncertainty changes with the number of well locations. hence the probability of achieving at least 2. possible reserves are the difference between the PIOand the Psovalues or 3. The probable reserves are calculated by subtracting the P90 value from the Pso value or 2.400 Mcf.PRMS Probabilistic Reserve Categories level. But how does the Monte Carlo simulation change if 6. Hence during the Monte Carlo simulation. At the P90value. 2. Thus the P90line is found at 2..600 Mcf. Since proved reserves are defined as those with a 90 percent or greater chance of being 1P (2P-1P) (3P . peak rate.000. As with the first graph. At the Pso value.600 67 68 . Fig.000 Mcf value on the x-axis and determine the corresponding cumulative probability is at 80 percent on the y-axis.226.338. and PIOvalues are read directly from the graph at 2.100 distribution. Both illustrate the effect of aggregation.. and PIO values at different well counts . 10 percent of the EURs are equal to or greater than the value. Per well undeveloped reserves are simply calculated by dividing the project undeveloped reserves by the undeveloped well count. b U So far. we are actually interested in the t Y aggregated results.5 Bcf when 10 wells are drilled?" From the second graph. possible PROVED Plus PROBABLE RESERVES reserves are the difference between the 3P p P2 r and 2P reserves or the difference between 0 PROVED Plus PROBABLE the PIOand Pso reserve values.000 I I well which could be drilled. regardless of the shape of the probability 10 2.500 Mcf while one-half of the EURs are greater than this value. Probable.500) were greater than 2. for example EUR/ ft.

at the lowest well count.0% - 1/ I V I I 110% I R 100% 40.0% 80.0% All of the SPEE Evaluation of Resource Plays Committee members are practical evaluators and realize that occasionally an evaluator may not wish to use a Monte Carlo simulator to estimate reserves in a Resource Play. From Fig. 4. P/\ = (P50 + PMeaJ /2 90. 10 wells.0% o I 10 20 30 40 P10/P90 3 P10/P90 -5 .4 percent error.4. the 3P reserves (PlO)are highest when well count is low and decrease as well count rises.f-+ . Table 4. P/\ is an empirical value and is defined as the mid-point value between Pso and the mean of the data set or Eq. Method 1 . Fig 4.and possible reserves equal to PlOminus Pso. I L v:~ !/~~. assuming lognormal distribution for . the P/\ method results fll+ . see Fig.000 Md well as well count rises (100 wells). 80% p 70% i 30.727.. respectively. one with a PlO/P90 .1.0% 50% IF'40% a C Example: Calculating P/\ 10. The P90 is calculated in a Monte Carlo model Impact of Well Count on ThQ Ratio of the Aeerecatcd P90 Divided by The Initial pI\. PIO!P90 8 in slightly optimistic values when the well count is greater than 100 It' wells.15.0% 60% e n 20.0% I 50. The following graph. This method will hold an appeal to ~valuators who are comforta~le using deterministic methods. Although a Monte Carlo simulation is the method recommended by this Monograph. The aggregation factor is dependent on the number of drilling locations (the wells to be aggregated) and the P10/P90 ratio of the analogous wells. The proceeding table. . As this -~. the Well Count Pso and PMean are found at 2.719 Bd and 2.14 and shows a P90value for 100 wells at 2.092 Bcf (higher than the Monte Carlo method) or about 3.15 . respectively. The difference between the two methods is 0. As expected. Fig. drilling many wells in a project reduces uncertainty with an increase in IP reserves. see Method 2 below.9 -P10/P90 . show the P/\ method has less than j-.probable reserves equal to Psominus P90..16 shows aggregation factors which allow an evaluator to estimate a probabilistic EUR from deterministic EUR data in a Resource Play reservoir. The midFig 4.13. I I I I I L I I I I l I I I I ~ ~ I I I I 60. t-t f+ five percent error once the well count exceeds 30 wells. it seems quite reasonable that the risk rises when few wells are drilled and the IP reserves decrease. /~ .Aggregate Factor versus Well Count for Various PlIy'P90Ratios 69 70 . 4. plots the ratio of P/\ to P90 as a function of well count. 100.000 Md per well (two wells).0% I Again we turn to the Barnett shale Ouachita thrust data for this o 10 20 40 50 60 70 80 90 30 100 example problem.(or risk) with the IP reserves and high uncertainty with the 3P reserves. 4 --PIO!P90 graph depicts. the following method approximates the Monte Carlo results. Both curves I-I.0% t 90% IV .2. I-fj.. ratio of four and a second with a -1 HI-~ r+ + PlO/P90 ratio of eight.0% 70.How to Make Probabilistic Estimates in Resource Plays using Deterministic Data Method 2 .11 Fig. This graph is repeated using different scales in the appendix (page 79) of the Monograph.0% Where: Pso and PMean are calculated from the analogous well EUR data set in the Resource Play. The preferred procedure is a Monte Carlo simulation which is shown in Fig. then applies an aggregation factor to estimate the P90(proved) value. Conversely. Interestingly. The P/\ (pronounced P hat) technique gives a good approximation of the P90value (proved reserves) when 30 or more wells are aggregated. but increase to 2.Ratio of P90to P" versus Well Count point or average of these two values is 2.588. the proved reserves (lP) are reduced to only 1. Reserves are calculated exactly the same as in the example problem with proved reserves equal to P90.7 P10/P90 . illustrates how reserves are calculated for three separate projects with two wells.820 Bd.728 Bd. and 100 wells..How to Make Probabilistic Estimates in Resource Plays Using Deterministic Data A ~econd method uses average EURs for analogous wells. two data sets.3. .. 4.. 4.16 . 4. 50 WELL COUNT 60 70 80 90 10C P1 0/P90 . If fewer than 30 PUD locations are being considered.921 Bd. 20% 30% + 0.

Divide the data into two groups (for example. etc. and solve for the Pmean. For a 15 well program. illustrates the percentage of the values found above and below the Pmean for various lognormal distributions.5 37. Thus the proved reserves are estimated at 77. Thus merely calculating the average EUR for offset wells and assigning this value to the undrilled locations will overstate the proved reserves. the computational time will be quickest for Approximation Method I. 4. A plot of EURs using actual data will provide the best estimate of the PlO/P90ratio.000 1. If one group is smaller than the recommended minimum sample size (the company operated wells for example) then assume the PlO/P90ratio for the smaller data set is equal to the PlO/P90ratio for the larger data set. read up to the appropriate P10/P90 ratio curve. Is there a method which allows one to determine if such a claim is accurate? In a Resource Play. A difference of less than 10 percent is within the margin of error for a small sample size. Approximation Method 1 (P/\) using the probability distribution or more PUD locations are considered. In Resource Plays which follow a lognormal distribution. To determine the proved reserves at the P90probability. The family of curves includes five PlO/P90ratios ranging from 3 to 11.16 were calculated for lognormal distributions and are reliable when the actual Resource Play distribution can be represented by a lognormal distribution.2 33. Solve for P90using analogous well EURs in a Monte Carlo simulator.19 (page 26) are a good guideline. Table 4. All three are appropriate depending upon the evaluator's objectives and constraints. 4. 1. Plot the performance Percent above Pmean 41. Other Considerations Plotting Technique The Lake Wobegon Effect and Applications of the Probability versus Reserves +--__'f. as measured in wells per acre. find the correction factor using Fig. fit a line through the data points. Although these reservoirs are usually low permeability with limited drainage areas surrounding each well. then calculate the PlO/P90ratio and Pmean for each group and determine if a difference exists.000 Oil EUR (equiv barrels) 1--160 ACRE WELLS -- 80 ACRE INFILL WELLS 1 Fig. inter-well pressure communication may occur. Approximation well EURs. the assumption of an unchanging statistical distribution which repeats for every vintage of newly drilled wells can be easily modified.000 100. the correction factor is approximately 85. 4.640 oil wells drilled on 160 acre spacing is shown in the accompanying graph. Multiply the average EUR for the analogous wells by the adjustment factor to estimate an equivalent probabilistic value at P90• The analogous wells should satisfy the recommended minimum sample size to provide a statistically meaningful subset. peak rate. Example: Adjusting Deterministic EURs to Probabilistic EURs An operator plans to drill 15 wells in the Spraberry Trend field in Martin County. 2. 3. SPEE evaluators with operators who believe their wells are superior to nearby wells operated by other companies. Recommended Method of Solving for Probabilistic Reserves in a Resource Play for estimating the P90 (proved) reserves for PUD Reserves Estimates in Mature Resource Play Reservoirs The Problem of Interference The Monograph presents three different methods locations in a Resource Play. Fig. In fact. many evaluators simply calculate the average EUR for nearby wells.800 bbls per well (91.0 group independently on a semi-log probability graph. In most slightly methods are used for analogous well EURs if 30 I Method 2 (Aggregation Factor) using the probability distribution for analogous instances. 80 acre Spacing 71 72 . as a purple line.0 measurement (EUR.6 35.5 percent using the PlO/P90= 3 curve (red line). All three methods routinely by the evaluators who prepared this Monograph.000. If the number of wells in each group Table 4. the data supports the conclusion of a meaningful difference between the two groups of wells.I SPEE .0. the statistically calculated proved reserves (P90)are always less than the average reserves or Pmean. Fortunately.) for each Percent below Pmean 58. This commonly observed phenomena has been experienced by many 10. P10/Pgo Ratio company operated wells versus non-company 3 5 7 9 11 operated wells).5 62. and then read the aggregation adjustment factor on the y-axis.855). wells are no longer unique "islands" that are isolated one from another so the method of analysis must change. well density. increase for Approximation Method 2. A plot of EURs for 1. rises.-- L/ ' /7 '/ / / / // /. '-I I / / LL1> 7- P5 P10 P20 I P30 P50 P60 P40 I P70 P80 P90 P95 As increasing numbers of wells are drilled in a Resource Play. and increase further for the Monte Carlo model. The curves in Fig. The accompanying table.8 66. the answer is yes and involves the semi-log probability plot. Analysis of existing wells reveals the area exhibits a PlO/P90ratio of about 3. These I ~ I P98 P99 The NPR broadcast Prairie Home Companion hails from the fictional town of Lake Wobegon where "all the women are strong. The Spraberry Trend field is a mature Resource Play located in the Permian Basin of west Texas. The evaluator may find the ratios shown in Fig. 4. Once inter-well pressure interference exists. Analysis of 80 nearby wells yields an average EUR of 91.17 . If the Pmean differs by more than 10 percent.4 64. 2.4 32.2 .15 illustrates. 4. this technique allows comparison of any two groups of producing wells in a Resource Play. Texas.6 68. we see the opposite of the Lake Wobegon effect occurring -v:ith most of the wells exhibiting EURs below the Pmean or average." The "Lake Wobegon effect" describes a tendency to believe all of a group are above average whether the data supports such a claim or not.2.000 x 0. and all the children are above average. When estimating deterministic reserves.Percent of Lognormal Distribution in Relationship to exceeds the recommended minimum sample Mean for various P1<iP90 Ratios size.000 bbls per well.16. read the number of undrilled proved wells on the x-axis (well count). all the men are good looking. This approach is NOT APPROPRIA TE for estimating proved reserves in Resource Play reservoirs without an adjustment.--~ L /L II ~ '/ / ----. As Fig.17. To use the graph.Selected Area in Spraberry Trend Field EURs 160 acre vs.

Graph the EURs for the infill wells (which may be few in number) on the log-probability plot.640 proration units on 80 acre spacing.. although infill well performance decreased at tighter well spacing. interference occurs sooner than in the larger fieldwide spacing..1. ... The following discussion presupposes similar behavior will occur in most Resource Plays. The SPEE Evaluation of Resource Plays Committee believes the behavior observed in the Spraberry Trend field is likely to be replicated in many Resource Plays. ~' ~~ I I ~ . the water and gas are produced simultaneously as the water from the cleats is produced and gas is desorbing and diffusing into the cleat system. ~i~ . when infill drilling reduced the well spacing to 40 acres per well. the PlO/P90 ratio remained relatively consistent.. _· j-o-.. PlO/P90 ratio to his advantage Resource Plays to predict the performance of infill wells which are in pressure communication. Thus. Step 3 . Later.llM£TIUll. This performance brings out an 73 74 . Well 'Uewat". but with nearly constant PlO/P90ratios. However. Examples of conditions where dependent performance is often observed include (1) coalbed methane projects (dewatering) and (2) interference due to pressure communication (partial depletion).I'oOII-"t'i &SPEE wells represent the first completions on the quarter-section proration units. which is termed dependency. begins to desorb from the coal surface. I I 1~ . facility limitations can cause a dependent relationship between wells and should be considered by the evaluator. Phase II Phase III Methane in coal is.. .. The PlO/P90 ratio is about 4. .. To lower the pressure to obtain the saturation pressure. few other Resource Play reservoirs have yet to enter a mature phase where pressure interference is commonplace and.. infill drilling produced wells with decreasing reserves. The outer wells act as a means to interfere with water influx and cause inter-well interference.. or Pso. In contrast. or at least fairly constant.4 for this group of wells.I " .. _L. consequently.J. At this point the methane flows through the reservoir as in conventional gas reservoirs. This --. One interpretation of the similar PlO/P90ratio observed during downspacing is that the ratio represents reservoir properties (permeability variation.. J ~ 1. This interference causes a rapid drop in reservoir pressure resulting in gas desorption. absorbed at the surface of the coal.: ~ l"T pressure of the reservoir ~ '. gas is not present in the initial dewatermg phase.1.5. f· . An equal number of infill oil wells were later drilled in each of the 1.The ratio between the two lines (original wells versus infill wells) is constant. However. ...___ . 4. However the slope of the infill line. for the most part. Although less common.__ Gas reduced to the point where the methane --.ed"' _-_ which were Step 2 . and the coal cleat system is initially 100 percent water saturated.. water from the cleat system must first be produced.-pressure is termed saturation pressure or desorption pressure. Two subsequent studies in different locations in the Spraberry Trend field evidenced similar results.I LL C .Gas and Water Production in Typically.6 (the first group of 40 acre infill wells yielded the first ratio while the second group of 40 acre infill wells yielded the second ratio). In both cases. The EUR analysis for this group of infill wells is shown as a blue line . coalbed methane reservoirs are Coal Bed Methane Reservoirs undersaturated. The methane.J I () 10. The infill well line (blue) shifted left of the existing well line (purple). · · . The diffusion Time process takes place through pore throats that are only a few microns in diameter. . The graph now depicts the statistically expected results for the infill drilling locations. 4.' II .s During Phase I. net pay variation.. the PlO/P90 ratio for the new infill wells was calculated at 4. gradually extending the 1"'. diffuses through the coal matrix to the cleat or fracture system.r I v-r: JI - ..Jf ' ··t.»OfTTOfPll'll. ~ ~-.. especially in projects with rapidly expanding production. Methane is produced once its partial pressure is ../ .~. in Dependent performance is frequently observed in coalbed methane projects. ' Dependent or Independent Performance Thus far. Fig. pA. Because pilot wells are spaced close together.. It ..) which are statistically similar throughout the Resource Play regardless of well spacing.000 1997 1998 1999 2000 1. the Monograph has only examined the analysis of independent Monte Carlo models where the performance of each drilling location is independent from each other location.000 that is initiated when ~L ~ production begins. is relatively unchanged at 4. and does not occur until a significant amount of volume around the wellbore is less than the saturation pressure.San Juan Basin . ""_ .4 to 4. into the reservoir. there is a pressure transient Florida Mesa Area Historical Production 100. Transfer the PlO/P90 ratio determined in Step 1 to these data points.19 . after des orbing from the coal surface... near the wellbore deeper ~' . 1.. minimal empirical data exists to confirm this hypothesis.-l ••• -- ..18 . ( :-: .18 dem~nstrates the methane production process. .J" -'2004 100 Qj =: ~ i 10 2002 2003 2001 Fig. The evaluator can use the unchanging..Florida Mesa Improvement in CBM Production due to Beneficial Interference CBM pilots are usually patterns of one well surrounded by four or more interference wells. porosity variation. etc. In Phase II. many reservoirs actually exhibit a connectedness between well performance. the recovery (measured by EUR) is significantly influenced by both reservoir pressure and relative permeability which change as the reservoir experiences depletion.000 ~ . As in conventional reservoirs.000 1. as calculated by the PlO/P90 ratio. thereby indicating the infill wells encountered a partially depleted reservoir. Thus the ratio calculated at PlO is the same as the ratio calculated at Pmean. Consequently the statistical expression for the infill wells is simply a ratio of the statistical expression for the original wells . 4. .Graph the EUR (or other performance measurement) for the early completions NOT in pressure communication on a log-probability plot and determine the PlO/P90ratio. Step 1 .

Thus proved undeveloped reserves are. each project should be evaluated independently. we explored various definitions and many. and P3 reserves per well for our Table 4.. "You can't check your brains at the door when working on Resource Plays. we journeyed down dead-end paths. An example of this situation would exist if a company owned a one percent working interest in 100 non-operated wells and a 100 percent working interest in a single company operated well.13 with well count. Therefore it is worthwhile to get the PDP reserve estimates as accurate as current data and techniques permit. then wells in the Resource Play should be considered as multiple projects. deals with estimating reserves for undeveloped locations in Resource Plays. we believe.41 minus P9o) for Small Company will be greater than for Big . For example. and in particular this chapter. that is."4 If the difference in working interest is sufficient to cause management to exercise a different decision-making process for a group of wells. represent reasonable and sound practices. Situation 2 . Although these wells are in the same Resource Play. Evaluators should be especially thoughtful in calculating terminal decline rates for PDP wells in Resource Plays as slight differences in the final decline can significantly influence the EURs.As already noted. ~SPEE SOCEl'(I'~!'I'loIlIo\llOIflM:iilllUS Final Considerations This Monograph.81 4. the Monte Carlo simulation technique is. There was no industry consensus on what constituted a Resource Play or which undeveloped offsetting wells might be considered proved.Ouachita thrust example. Although these might be located in a single Resource Play reservoir. thus the probable reserves (Pso 1. and debating the results. With each. we advocate using multiple analytical methods when the data allows. a project is the largest evaluated entity. Consequently the committee urges evaluators to constantly be attentive for new and improving procedures that can enhance the Ownership Issues .3 . . assume two drilling opportunities for Small Company and 100 drilling opportunities for Big Company.72 2. management would likely view the uncertainty in drilling a single 100 percent ownership well differently than in drilling 100 small ownership wells. Early time data in low permeability reservoirs may suggest wells are isolated from each other. Furthermore the "project represents the link between the petroleum accumulation and the decision-making process.19. the evaluator should recognize two different projects exist and prepare two different Monte Carlo simulations. we tested the results using real world data (some proprietary and exceptionally helpful) to ensure reliability and accuracy.wells (shown as a red line) increased when infill wells surrounding them (shown as a blue line) were drilled. Remember. This Monograph results from the contributions of these dedicated industry professionals. Suppose you are evaluating a Resource Play for two different working interest owners called Big Company and Small Company. However. recall that 2P reserves change minimally 2. your undeveloped reserve estimates are only as good as your PDP reserves estimates. P2. Therefore we encourage each evaluator to use the best and most current evaluation methods available to estimate producing well reserves. Because Resource Plays exhibit repeatable EURs. the reduced number of drilling opportunities creates increased uncertainty Per well and this uncertainty is quantified via the PRMS 1P 2P 3P Reserves reserve process as lower proved reserves. Big Company owns interests in dozens or even hundreds of wells in a Resource Play reservoir while Small Company owns interests in only a few wells. Much industry discussion is ongoing about how best to evaluate producing wells in these unusual regimes. All of the techniques discussed herein were empirically derived using field measured data and.Company. Consequently reliable estimates of EURs for producing wells are paramount for ALL reserve estimates in Resource Play reservoirs. Although this approach might seem unfairly harsh to the Small Company.SPEE interesting aspect of CBM reservoirs. the path forward was totally unchartered. Resource Plays encompass many different types of reservoirs. Each should be compared to generate the most reliable EURs. and in fact may be some of the same wells. Furthermore. this document does not suggest how the evaluator should best determine reserves for the producing wells. In this case. 75 76 . This situation creates some interesting dil~mmas for evaluators when d~ferent working interest owners are considered. forecasting wells. At the first meeting. a fact evident by the many empirical relationships developed during the 1950s and 1960s that are still used today. However the advent of improved technology or the discovery of additional data may render some of our established and accepted empirical methods obsolete. where. dependent upon total well count.A slightly different dilemma arises when an interest owner has varying ownerships in many well locations in a single Resource Play reservoir.Big Company versus Small Company hypothetical Big Company and Small Company Per Well Reserve Calculations using the Barnett shale . the decision-making process is unique for each group of wells. For this table. at least in part. the proved reserves for Small Company are lower than for Big Company. a mirror which reflects producing well data. the producti?n from old. Reserves Reserves Reserves (Bet) However. running Monte Carlo simulators. 4. aggregation of PUD wells in a project causes the proved reserves (P90)to increase with higher well counts.Identifying the Project Situation 1 . are the proved reserves for the two interest owners the same? Because aggregation of only a few PUD wells results in a lower P90value. The accompanying table illustrates PI. As one member of the SPEE Evaluation of Resource Plays Committee has repeatedly stated. Under PRMS. Like any complete analysis. Fortunately. management might employ one set of decision-making criteria for non-operated low interest ownership wells and a different set of criteria for company operated high interest ownership wells." This observation especially applies to PDP reserve estimates.. it merely notes these values drive the accuracy of the EURs assigned to the undeveloped wells. the beneficial interference in existing wells from infill drilling. only to back up and start afresh. thus each set of wells should be regarded as a separate project.59 Small Co 2. reserves can be projected for undrilled wells with reasonable certainty using statistical tools. These empirical equations may remain reliable for many. Although the total inveshnent in both groups of wells might be identical. In many cases. Over the course of two years. at its core. . This Monograph assumes the EURs for the analogous producing wells are reasonably certain. A Few More Closing Comments The SPEE Evaluation of Resource Plays Committee began an amazing journey in 2008. However. however most are low permeability and radial fluid flow may not be encountered for many years. the committee included many creative and passionately committed individuals who invested numerous hours doing research. One tool for making these calculations is the Monte Carlo simulator. An example of this phenomenon is shown in Fig. The oil and gas industry frequently relies upon empirical data to determine relationships and codifies these relationships via equations. Consequently the proved reserves for each should be calculated separately. many years. However the evaluator should investigate the ultimate drainage area to see if this behavior is likely over the life of the wells. many analytical techniques.92 Big Co 3.

Soci:ty of. Project-Based Resources Evaluations. Because physical data related to well performance changes with time. Intelligent Solutions. Morgantown. Ronald J." Presented at the Class notes for seminar sponsored by GTI. Hall. 4. 125-130. 2008. Petroleum Engineers/American Association of Petroleum Geologists/World Petroleum C01. and Craig W. The realm of Resource Play evaluation continued enhancements seem likely. Southwestern Energy Corp. .15 August 2001. Engineering Texas. 15 p. proved area. pp 4 . R.. and even distribution type can change with time. ' 6. Barnett-Paleozoic total petroleum system. 91 no. Empirical data implies data collected from physical sources. 2.. Inc. 13 . "Coalbed Methane Reservoir Engineering Short Course. July 13.~nCll/SoCletyof Petroleum Evaluation Engineers. Article AAPG Bulletin v. is just beginning and Chapter 4 . Midland. Jarvie. work notes for western Midland 3. Richard M. Adams. 2006. Mohaghegh and K. Energy Provides Update on Fayetteville basin Wolfcamp analysis. updated forecasts.analytical techniques offered herein. No." Bend archFort Worth basin. "Southwestern Shale Play Activities in Arkansas. 4 (April 2007). "The Beginning of the Monte Carlo Method. pp 405-436. drainage area. 2007." Los Alamos Science. evaluators should recognize that conclusions realized at a fixed point in time will likely change as new data (additional drilling. 2007. Thus evaluators of Resource Plays are encouraged to update ALL of the factors in their reserve estimates periodically as assumptions about spacing. Polla~tr?. Nick Metropolis.5.) become available. S. Hill. etc.Da~iel M.References 1. 5. 77 78 . Petroleum Resources Management System. WV. 1987. "Geologic framework of the MISSIssIppIan Barnett Shale. Aminian." Press Release.

In a deck of cards. oil density versus viscosity. Mean -. this reduces the data to practical size.A graphical representation of a distribution such that the X'axis is expressed in a log scale. ~~ density versus molecular weight. if one is Sample -.3x P90 + OAx Pso + O.The median is the value in a set of numbers which occurs at the midpoint of the set. the grouped data will yield the same statistical results as handling each data point separately. it is the class mark of the class interval with the highest frequency. Var.Variables in a system whose values depend one upon the other. the controlling var~able IS called the mdependent variable. You cannot have a tails if you have flipped a heads. Log Cumulative Probability Plot . A rectangular distribution is one with equally likely events.A three point approximation of the arithmetic mean based on the PIO. it is the value at the peak. and the controlled variable is called the dependent vanable. Independent variables will show a complete scatter. In a functional relationship.Orderly arrangement of data.saturation. 79 80 . An example might be the flipping of a coin.a sample versus the other variable from that sample.Data collected which have not been organized in any specific numerical fashion.Two or more events are independent if the occurrence of one event in no way affects or is affected by the occurrence of the other event. Array -. Relative Frequency -. each card dealt would be an element.&SPEE Appendix Swanson's Mean .3x PlO Median -. A fairly symmetrical distribution curve will show little difference among the mode. thickness.A single value or a group of values drawn from the total population. Mutually exclusive events have no points of the population in common. Distribution .An asymmetric distribution typically with the mode at very low values. Element -. Glossary of Probabilistic Terms Population -. For example. and mean De~endent . or is a function of.The occurrence of any given event excludes the occurrence of all other events. These data are usually plotted to an ogive.The fraction or percent of all observations having values less than or more than the class boundary. For example. The arithmetic mean is simply the sum of the sample values in the population divided by the total number of samples. the population is 52 made up of the 52 cards.The hypothetical set of all possible observations of the type being investigated. of Mutually Exclusive Events -. Independent Events -. If the total amount of data is cumbersome. These data are usually plotted on normal or lognormal probability paper. Complete dependent var~ables will line up very well on the plot. It is sometimes called a listing of all of the possible values of the variable that might be observed. Other central tendency measurements. and for~aho~ permeabilI~ versus well productivity.A single numerical value existing in a sample space. rolling a one on a die does not affect the second roll. Mode -. dealt a hand. Cumulative Frequency -. while partially dependent variables will appear to fall within boundaries but will exhibit some trend. On a continuous distribution curve.This is the sum of all observations possessing values less than or more than the class boundary. porosity versus water . porosity. Relative Cumulative Frequency -. including that class interval. Frequency Distribution -. including that class interval.A symmetric. The median is exceeded by one-half of the values in the array of numbers and exceeds one-half. lognormal . that hand would be considered a sample with each card being an element of that sample. Raw Data -. etc. "bell-shaped" distribution resulting from the addition of mdependent random variables where the mean = median = mode Equally Likely Events -. area. gas volume depends on. If the proper number of classes or groups is chosen.The mode is the value which occurs with the greatest frequency. plotting cumulative frequency versus the class mark.The term "mean" is a common contraction for arithmetic mean. also exist. median. If one is dealt a hand from a deck of cards.This is a description where each event has the same probability occurrence. resulting from the multiplication of independent random variables such that the mean> median> mode. of raw numerical data in some ascending or descending order of Variable -. Distribution. For grouped data.:ariables -. An example might be that in a standard deck of cards. such as geometric mean or harmonic mean.Iables which have partial dependency one on the other can be identified by plotting one var~able fr~m .The relative frequency of a class is the number of elements in the class divided by the total number of elements in all classes.Any value of a given set of elements such as permeability.An arrangement magnitude.Pso and P90 values as per the Swanson's mean equation: Msw = O. Partial dependency is usually observed in porosity versus permeability. pressure.Raw data are usually assembled into an array of ascending or descending order so that the raw data can be segmented into representative groups. lognormal . while the y-axis shows the probability of exceeding that value. Di~tribution.

100% I Probability Distribution sampled data. 75% > o tl: 70% well reserve outcomes to create an a distribution.Aggregation is the adding of individual overall expected reserve outcome. Also.Monte Carlo Simulation . For PRMS 2 o <t u. Function . A simple proxy for standard 65% P" -In this monograph. guidelines. PlO . Aggregation .A measure deviation of uncertainty ill z >= <t o o w ffi <t Cl o w rl. P10/P90 Ratio . I I I " II I I IIII IIII 1111 85% I I I I W. binomial.A process whereby individual distributions are sampled using a random number selections with user-defined mathematical operation to define a single point of an output distribution. P90 . kurtosis measurement indicates the data includes infrequent yet extreme deviations. For PRMS guidelines.The value in a PDF where 10 percent of the values are greater than the value. For PRMS guidelines. one-half of the values are less than the value. Some of these are Poisson. the term represents an approximation of wells which follow a lognormal distribution.The PDF describes the probability distribution for the 95% 1 I I I I I I I I I IIII I I Probability Distribution .The measurement of the "peakedness" of a probability distribution function. the P90values represents Proved Reserves or 1P Reserves.The probability distribution describes the likelihood of a random variable falling within a particular interval. normal. PlOvalues represent Proved plus Probable plus Possible Reserves or 3P Reserves. . and chi. There are literally dozens of probability distributions identified by statisticians. of the P90value for an aggregated 60% I II I 55% I I 50% o 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 WELL COUNT --P10/P90 = 3 -P10/P90 = 5 -P10/P90 = 7 -P10/P90 =9 -P10/P90 = 11 81 82 . the value where one-half of the values are greater than the value. beta.The value in a PDF where 90 percent of the values are greater than the value. Kurtosis . logarithmic. " II I I . the Pso values represents Proved plus Probable Reserves or 2P Reserves. tl: 80% I PSO . A high 90% .In a PDF.

75 • 80 85 90 95 100 I --P10/P90 =3 -P10/P90=5 -P10/P90= 7 -P10/P90=9 -P10/P90= 11 I 83 - .- - 6SPEE 100% 95% 90% 85% 80% 75% 70% 65% 0 fU LL I III I I I II I I W II I I III I I ~ JiI 0:: 60% 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 WELL COUNT II « z 0 >= « o UJ o o « 0 UJ 0:: > 0 0:: a.

- Fundamentals of Petrophysics Ch 6-11
- Fundamentals of Petrophysics Ch 1-5
- Reserves Estimation and Classification
- Honarpour - Relative Permeability of Petroleum Reservoir
- Spee Monograph 4
- SPEE Monograph 3 Discussion
- Monograph 3 SPEE
- COGEHs.5DefinitionsofOilandGasResourcesandReserves
- Petroleum Exploration and Production Rights
- Arps Decline Curve Analysis
- Petroleum Economics
- Petroleum Society Monograph 1- Determination of Oil and Gas Reserves
- Monte Carlo Oil and Gas Reserve Estimation 080601
- SPEE
- Reservoir Stimulation - Economides
- Guide to Petrophysical Interpretation
- PROSPER Complete
- Geology of Carbonates Reservoir
- Guidelines Evaluation Reserves Resources 2001
- ions O&G Resources and Reserves Per COGEH Vol 1
- Petroleum Reserves Definitions
- UserGuides Tutorials Examples OFM 2014
- SPE-164820-MS - Probabilistic and Deterministic Methods Applicability in Unconventional Reservoirs
- Hydraulic Fracturing
- Rate Transient Analysis
- 40 - Estimation of Oil and Gas Reserves
- Petrel Fundamentals
- Hydrocarbon Reserve Estimation Technigues
- Basic Well Log Analysis, 2nd Edition AAPG

- Особенности Термогидродинамических Процессов в Горизонтальных Скважинах
- Oil Money 2015 Brochure
- Permeability from Production logs - Method and Application
- A Novel Approach to Shale Gas Evaluation Using a Cased Hole Pulsed Neutron Tool
- Petrophysical Engineering
- Horizontal Logging for Mechanical Anisotropy Effects
- The electrical resistivity log as an aid in determining some reservoir characteristics
- Система «ГДИ-эффект».doc
- Method and Application of Cyclic well testing with production logging
- Merkulov Maket
- [Honarpour M., Koederitz L.] Relative Permeability(Bookos.org)
- Siliciclastic Sequence Stratigraphy in Well Logs, Cores and Outcrops
- Whitson PVT SPE Phase Behaviour Monograph
- Oil Field in Ukraine
- Oil Fields of Kaspiy
- Black Oil, Heavy Oil and Tar in One Oil Column Understood by Simple Asphsltene Nanocsience Douglas
- Foundations of Engineering Geology

Sign up to vote on this title

UsefulNot usefulClose Dialog## Are you sure?

This action might not be possible to undo. Are you sure you want to continue?

Loading