Reservoir Management

Hydrocarbon Resources and
Reserves
Hydrocarbon Resource
 HC Resources are hydrocarbons which
may or may not be produced in the future.
 A resource number may be assigned to an
undrilled prospect or an un appraised
discovery.
 Appraisal by drilling additional delineation
wells or acquiring additional seismic data
will confirm the size of the field and lead to
a project sanction.
 At this point, the relevant Govt. body gives
the oil Co. a production license for the field
to be developed.
 This is the point at which oil reserves can
be formally booked.
Hydrocarbon Reserves
 Reserves are defined as those quantities
of petroleum, which are anticipated to be
commercially recovered from known
accumulations from a given date forward
under current economic conditions using
current technology.
Why estimate reserves?
Size of reserves have significant impact on
the decision making process of
governments, industries, public sector
undertakings, individual companies, private
investors and financial institutions.
The reserve estimate is mainly done
for :
1. National strategic planning
2. Valuation of the assets of oil companies.
3. Energy potential of a country.
Estimates of oil and gas are not only done
for existing oil & gas fields for short &
long term commitments but also for new
promising structures or new discovery for
long term energy planning.
Time of Estimation:
Reserve estimates are dynamic in nature &
should be determined periodically.
Their accuracy & confidence level depends

on quality & quantity of data that becomes
available.
Since data accumulates during the life of a

field, the reserve estimates become more &
more accurate with time.
The periods during which the
estimation is done are:
1. Prior to drilling of exploratory well.
2. During & after appraisal and delineation
drilling.
3. Prior to development strategy
optimization.
4. During production.
5. When the production is declining.
6. At depletion.
Classification of Reserves:
3 main categories:
a. Proved:
b. Probable
c. Possible
Classification of Reserves ( Cont….)
a. Proved Reserves: These reserves
are applicable to those quantities of
petroleum which by analysis of the
geological & engineering data can
be estimated with “reasonable
certainty” to be commercially
recoverable in the future from
known reservoirs under existing
economic conditions, operating
methods & government regulations.
a. Proved Reserves( Cont…..):
Proved Reserves are also known as

in the industry as 1P.
Some industry specialists refer it to

P90 i.e. having a 90% certainty of
being produced.
Proved reserves are divided into:
a. Proved Developed: A sub-category

of proved reserves, proved
developed reserves can be expected
to be recovered through existing
wells with proved equipment and
operating methods.
b. Proved Undeveloped: Proved
undeveloped reserves are exposed to
be recovered from:
(1) future drilling of wells
(2) deepening of existing wells to a
different reservoir, or
(3) the installation of an improved
recovery project. (Proved undeveloped
reserves require major capital
investment to enable production)
b. Probable Reserves:
They are those unproved reserves
which on analysis of geological &
engineering data suggest more
likely than not to be recoverable.
Some Industry specialists refer to
this as P50 – i.e. there should be at
least a 50% probability that the
quantities can be recovered. This is
also known in the industry as 2P or
Proven plus probable.
c. Possible Reserves:
Defined as oil & gas “having a chance
of being developed under favorable
circumstances”
Some Industry specialists refer to
this as P10 – i.e. having a 10%
certainty of being produced.
This is also known in the industry
as 3P or Proven plus probable plus
possible.
METHODS OF RESERVE
ESTIMATION
• The in place oil and gas quantities can be
estimated by:
1. Volumetric Method
2. Application of reservoir performance

techniques, which are :
(a)Material Balance
(b)Decline Curve Analysis
3. Monte Carlo Approach

15
VOLUMETRIC ESTIMATES
• The volumetric estimation of oil or gas consists
primarily of determining the volume of rock
holding hydrocarbons, the total voids in such
rock, the volume percentage of these
hydrocarbons are economically recoverable in the
stock tank.
• Reserves = N = A x h x  x 1- Sw x o MMT
o
where
A = Area Km2
h = Effective oil pay thickness in m.
 = Porosity in fraction
Sw = Water saturation in fraction.
o = Formation volume factor.

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= Density of oil.
PERFORMANCE TECHNIQUES
• This is mainly done during development
stage and during producing life of the
property.
• As new wells are drilled, the volume and
geometrical distribution of the reservoir
become more accurately defined as well
as the reservoir porosity and saturation
values becomes more accurately defined.
a. Material Balance Approach
b. Decline Curve Analysis
17
RESERVES ESTIMATION USING
MATERIAL BALANCE EQUATIONS
If sufficient pressure-production performance
data are recorded and PVT data describing the
reservoir fluid behavior are available, the
amount of oil or gas in place in a reservoir,
sometimes may be computed by Material
Balance method.
18
MATERIAL BALANCE EQUATIONS
• The Material Balance Method for a gas or oil
field uses an equation that relates the volume
of oil, water or gas that has been produced
from a reservoir and the change in reservoir
pressure to calculate the remaining oil and
gas.
• It assumes that as fluids from the reservoir
are produced , there will be a corresponding
change in the reservoir pressure that depends
on the remaining volume of oil and gas.
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DECLINE CURVE METHOD
• It is a plot of oil production rate versus time.
• The decline curve method uses production
data to fit a decline curve and estimate future
oil production.
• It is assumed that the production will decline
on a reasonably smooth curve with
allowances for well(s) shut in or temporary
production restrictions. The curve can be
expressed by mathematics or plotted on graph
paper with an arithmetic production scale to
estimate future production.
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Reservoir Management

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Reservoir Management

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Hydrocarbon Resources and

Their accuracy & confidence level depends

Since data accumulates during the life of a

Proved Reserves are also known as

Some industry specialists refer it to

a. Proved Developed: A sub-category

2. Application of reservoir performance

3. Monte Carlo Approach

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