Subsurface Appraisal: The Road From Reservoir Uncertainty to Better Economics

Abstract

Abstract Subsurface or field appraisal is an activity aimed at reducing reservoir uncertainty. For optimal results from appraisal, it is necessary to have a clear understanding of appraisal, to distinguish between two types of appraisal, and to use a decision tool that ties reservoir uncertainty to potential economic consequences in the event of development. The tool proposed is "value of information" (VOI), which provides a consistent, auditable criterion for decision-making. In the case of optimization appraisal, VOI enables an analysis of the economic merits of a series of development scenarios with and without appraisal information. The probability distribution of the underlying uncertainty, e.g. reserves, is a key ingredient. A truly cross-disciplinary effort is called for. The ultimate goal in appraisal is to reduce economic risk with regard to field development. Introduction Reservoir uncertainty is inherent to all hydrocarbon prospects and fields, and is one of the most vexing problems facing technical staff and management alike. Once a discovery is made, the decision whether to go ahead with development, and how to develop, is plagued by a number of uncertainties, the chief among them the uncertainty related to reservoir. The ability to handle subsurface or reservoir uncertainty is a primary factor that determines economic viability of a development project. Furthermore, it is not enough that a project is economic; equally important, and more challenging, is whether the development is optimal that would allow the highest economic return from a reservoir standpoint. It is generally well recognized in the industry that subsurface appraisal is the key tool to resolve or reduce reservoir uncertainty. To this end, the industry spends huge sums of money every year to appraise and re-appraise fields. Often, results from such efforts are less than optimal because of poor understanding of what subsurface appraisal is and because of lack of established guidelines for appraisal decision. Appraisal problem is particularly acute in remote or deep offshore environments where drilling of appraisal wells is very costly or with small fields where appraisal drilling is often marginally economic. In such cases adverse economic consequences associated with under-appraisal may be as serious as those associated with over-appraisal. This paper emphasizes that appraisal decision should be guided by economic yardsticks pertinent to field development. A distinction is made between two types of appraisal, the first more germane to exploration and the second more akin to development. The emphasis in this paper is on the latter, being of greater interest for petroleum engineers. Uncertainty, Risk and Appraisal Reservoir uncertainties can be grouped under three categories: those related to hydrocarbon-in-place volume, e.g. structure, those related to recovery factor or productivity, e.g. aquifer strength, and those that pertain to fluid properties, e.g. viscosity (Fig. 1). These exclude operational uncertainties in the subsurface, e.g. feasibility of producing from a gravel-packed interval.