ABSTRACT recoverable oil reserves and a pro chart is presented (Fig. 1) showing
jection of future rates are: [a.] the the three periods in the life of an
This paper reviews the methods exploitation and development of an imaginary oil property. Time is
currently in use for estimating pri oil reservoir; [b.] the construction of shown on the horizontal axis, while
mary oil reserves and discusses the gasoline plants, pipelines and refiner the cumulative production and esti
principles on which these methods ies; [c.] the division of ownership in mated ultimate recovery are plotted
are based. Particular emphasis is unitized projects; [d.] the price to be vertically. No particular units are
placed on how these methods change paid in case of a sale or purchase of used and this schematical chart is
with the type of information avail an oil property, and the magnitude not to scale.
able during the life cycle o f an oil of the loan which it will support; During the first period, before any
property. This paper contains various [e.] the proper depreciation rate for wells are drilled on a property, any
novel estimating methods and short the investment in oil properties; and estimates will of necessity be of a
cuts heretofore unpublished. [f.] evaluation of the results of an very general nature, based on ex
exploration program. perience from similar pools o r wells
INTRODUCTION This discussion will be confined to in the same area, and usually ex
Estimating oil reserves is one of the various methods and tools which pressed in barrels per acre. This will
the most important phases of the are currently in use for estimating
work of a petroleum engineer since oil reserves to be obtained during the
the solutions to the problems he primary phase of an oilproducing
deals with usually depend on a com reservoir and for a projection of the
parison of the estimated cost in future production rates. Reserves
terms of dollars, with the anticipated which may be obtained by secondary
result in terms of barrels of oil. His recovery methods or fluid injection
recommendations to management re programs and gas and gas conden
garding the best course of action are sate reserves will not be discussed
therefore normally based on the most in this paper.
favorable balance between these Unfortunately, reliable oil reserve
two. figures are most urgently needed dur
ing the early stages when only a
Specific engineering problems minimum amount of information is
which require such a knowledge of available. Management's interest
in the oil recovery from a prop
Original manuveript received in Petroleum
Branch office on Feb. 26, 1956. Revised manu ertyaside from its use for account
script received June 29. 1956. Paper presented ing purposesusually declines when
at the Petroleum ConferenceEconomics and
Valuation, Dallas. Tex., March 2930. 1956. the property approaches its economic
Discussion of this and all following techni
cal papers is invited. Discussion in w r i t ~ n g( 3 limit, just at the time when the re
copies) may be sent to the offices of the
Journal of Petroleum Technology. Any dis liability of the estimates is at its best.
cussion offered after Dee. 31. lQ56, ghould hc
in the foim of a new paper. T o illustrate this general idea n
manner the cumulative oil production the vertical permeabilities for matrix
for Min K,,.,., 50 md; WOR = productive life. Cumulative produc
material are only a fraction of the tion and time are therefore normally
36.0, or 260.4 bbl/acreft. is com
horizontal permeabilities, a simple selected as independent variables, and
puted on Line 15, and for Min K,c,.,
 25, 10 and 0 md, respectively, calculation based on Darcy's law ap plotted as abscissae. A varying char
344.5, 418.3 and 55!),6 bb]/acreft, plied to a vertical tube with a cross acteristic of the well performance
on Lines 16, 17 and 18. A graphical section of 1 Sq cm shows that during which can be easily measured and re
presentation of the results of this com the anticipated lifetime of the field corded is then selected as dependent
putation in terms of 011 percentage in very substantial additional oil recov variable to produce a trend curve. For
extrapolation purposes this variable
has to meet two qualifications: (1)
TABLE 2COMPUTATION OF THE WATER DRIVE RECOVERY FACTOR FOR A TENSLEEP SAND its value must be a continuous func
RESERVOIR I N WYOMVNG B Y T H E "PERMEABILITYBLOCK" OR MODIFIED STILES METHOD
tion of the independent variable and
GROUP I 2 3 4 5 Total
~    change in a uniform manner; and (2)
1.
2.
Permeability Range ( m d )
Fraction of S a m p l e r
it must have a known end point.
3. Average Permeability (mdl By making a graph of the values
4. Capacity i n dorcy feet
5. Avg Porosity Fraction (I] of this continuously changing depend
6. Avg Resid. Oil Fraction IS,,)
8. Avg 1nte:stitial Woter Froc. ISl,) ent variable as ordinates against the
7. Relative Woter Perm. (KT,.) value of the independent variable
9. R e l a t i v e Oil Permeability ( K O )
10. E r t . U n i t Recovery Factor (bbl/acrefl) (cumulative production or time) as
I I. C u m . "Wet" Cap. Z (41
12. C u m . "Clean Oil" Cap.=3.243111) abscissae and graphically extrapolat
13. WaterOil Ratio ing the apparent trend until the known
14. Cum. Rec. WOR  15.5
Min Ka.,,r 100 end point is reached, an estimate of

:
15. C u m . Rec. WOR 36.0
Min K w c t

17.
C u m . Rec. WOR  76.5
Min K n . , , t
C u m . Rec. WOR
25 

307.9
life can be obtained. The basic as
sumption in this procedure is that
Min K,,.,.t : 10 whatever causes governed the trend
18. Cum. Rec. WOR =. '/i
Min I= 0 of a curve in the past will continue to
govern its trend in the future in a uni timc is a constant fraction of the pro types of decline curves the decline
form manner. duction rate. fraction is instantaneous and theoret
This extrapolation procedure is With hyperbolic decline the drop ically applies only to a very short time
therefore strictly of an empirical na in production per unit of time as a interval.
ture, and a mathematical expression fraction of the production rate is pro An analysis of a large number of
of the curve based on physical con portional to a fractional power of the actual production decline curves as
siderations of the reservoir can only production rate, this power being be sembled by W. W. Cutler, Jr.'3 indi
he set up for a few simple cases. The tween 0 and 1. cates that most decline curves nor
dependent variables most commonly With harmonic decline the drop in mally encountered are of the hyper
selected, and their extrapolation, are production per unit of time as a frac bolic type, with values for the ex
as follows. tion of the production rate is directly ponent n between 0 and .7, while the
proportional to the production rate. majority fall between 0 and .4. The
Integration of the basic differential occurrence of harmonic decline ( n =
Rate of production is by far the equations leads to ratetime rclation 1) is apparently rare.
most popular dependent variable used ships, as shown o n the classification As a matter of convenience the
when production is not restricted. In of production decline curves of Fig. 3. semilog paper is most often used for
that case one commonly refers t o pro After integrating these ratetime ratetime extrapolations, while regu
duction decline curves. The two main equations a second time the rate lar coordinate paper is favored for
types are ratetime and ratecumula cumulative relationships shown in ratecumulative extrapolations. Since
tive curves for each of the two inde this same table are obtained. On the straight line extrapolation in these
pendent variables. Rate of production chart of Fig. 4 arc shown the trends cases assumes a constant percentage
has the advantage of always being of these three types of ratetime and decline, it will be obvious that such
readily available and accurately re ratecumulative curves on regular co extrapolations therefore generally
corded. When no major changes in ordinate paper, semilog paper, and provide results which are too conserv
operating procedure are made, and no loglog paper. ative. Experienced engineers usually
stimulation treatments are applied, Inspection of this chart shows that allow for this by graphically flattening
the curves normally show a fairly in the case of constant percentage de the declinc slope in the later stages.
smooth declining trcnd over extended cline thc ratetime curve becomes a
periods. This trend usually lends itself straight line on semilog paper, while
well to extrapolation. T h e second re the ratecumulative curve straightens Another popular variable which is
quirement is also easily met, since out on regular coordinate paper. I n oftentimes substituted for the pro
known o r estimated operating costs either case the tangent of the angle of duction rate in water drive fields is the
make it possible to determine the eco slope is equal t o the decline fraction. oil percentage of the total fluid pro
nomic limit rate, o r the end point of I n the case of hyperbolictype dc duced. Since projections of this oil
the curve. This economic limit rate is cline curves the ratetime relation percentage vs time are not often
the production rate which will just ship as well as the ratecumulative re required, one usually finds this oil
meet the direct operating expenses of lationship can be straightened out percentage variable o n l y plotted
a well. In determining this economic after shifting to become straight lines against cumulative. An example of
limit it is often advisable not t o use on loglog paper. T h e shifted rate this o n semilog paper is shown for a
the operating expenditures charged t o cumulative curve in this case assumes T a r Springs reservoir in the Calvin
a well but to analyze these costs a reverse slope. Besides the extra field of Illinois in Fig. 5. The end
closely and determine how much work involved in shifting, this type of point in this case is the lowest oil
would actually be saved if the well paper also has the disadvantage that percentage which, combined with the
were abandoned. This saving yields a the horizontal scale on which the un fluidproducing capacity of the lease,
more reliablc yardstick of the true known variable is plotted usually will just cover operating expenses.
economic limit of production, since becomes rather crowded at the point CUMULATIVE GAS VERSUS
certain expenses may have to be con where the answer is desired. F o r this CUMULATIVE OIL
tinued if other wells on the lease are reason, special graph paper for hyper
kept in operation. T h e following is a It is a characteristic of most oil
bolic decline was designed", making
sample calculation of the economic reservoirs that only a fraction of the
it possible t o plot either time or cumu
limit for a well: oil in place is recoverable by primary
lative on a linear scale and still obtain
Crude Price per bbl $2.80 production methods. Gas, on the
Gar Revenue per bbl $0.20 the advantage of straight line extra
other hand, moves much more freely
Total $3.00 polation. through the reservoir and it can gen
Royalty (12.5 per cent) $0.375
Local Taxer (per h ' bbl) $0.125 In the case of harmonic decline it
erally be assumed that at abandon
Leaves N e t Income per Gross Barrel $2.50 may be noted that the ratetime rela
Ertimatsd direct operating cost ment time only the solution gas in the
ot Economic Limit $250 per month tionship can also be straightened out remaining oil at the thenprevailing
Estimated Economic o n loglog paper after shifting, and
Limit Rote 100 gross bbl/month pressure plus the free gas at that same
T h e mathematical background of assumcs a slope of 45". It may be of
pressure are left in the reservoir. In
these ratetime and ratecumulative interest that in this specific case a plot other words, even though it is not
curves in connection with the so of the inverse of the production rate known exactly how much oil may be
called loss ratio method of extrapola versus time on a linear scale should recovered, a much firmcr idea is gen
tion has been discussed in detail in a also yield a straight line. T h e rate erally available of the amount of gas
previous publication". cumulative relationship for harmonic
decline becomes a straight line on that will be produced during the pri
Three types of decline curves are mary production period. This pro
commonly recognized: constant per semilog paper. T h e decline fraction
in this case is equal to the rate times vides us with the possibility of an end
centage decline, hyperbolic decline
and harmonic decline. the tangent of the slope angle. point to ;I performance curve. The
With constant percentage decline It should be stressed that in this cumulative gascumulative oil method
the drop in production per unit of mathematical treatment of different is illustrated with the chart on Fig. 6.
II HYPERBOLIC m. HARMONIC
DECLINE DECLINE DECLINE
I 
BASIC
CHARACTERISTIC
I DECLINE I S CONSTANT
ao
D E C L I N E I S PROPORTIONAL
TO A F R A C T I O N A L POWER (R 1
OF T H E P R O D U C T I O N R A T E
D E C L I N E IS PROPORTIONAL.
TO PRODUCTION R A T E
a = 8
I I o < n
D:,.qOz  dkr
1 FOR INITILL CONOITIONS ( FOR WITIK CONOITIONS:
I 1 a, = L I
RELATIONSHIP D I
1
I D  D e c l ~ n e as o f r o c t l o n o f productLon r o t e ql = Productron rote o t tbme t
1 t = Time n = Exponent
FIG.3CLASSIFICATION
OF PRODUCTION
DECLINE
CURVES.
 
R A T E  TIME CURVES
COORDINATE
R A T E  CUMULATIVE CURVES
COORMNkTE SEMILOG
100
I '
.,
100.000 o 04000 100 tpoo IOWO 100.000
CUMULLTIVE 101 CUYULLTIVE (01 LOG CUMULATNE 101
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"The Effect of the Relative Per placement in Sands," T r a n s . AIME ( 1949) 186, 9.
meability Ratio, the Oil Gravity, AIME (1942) 146, 107. 12. Arps, J. J.: "Analysis of Decline
and the Solution GasOil Ratio 8. Pirson, S. J.: Elements of Oil Curves," Trans. AIME (1945)
on the Primary Recovery from a Reservoir Engineering, McGraw 160, 228.
Depletion Type Reservoir," Hi11 (1950) 285. 13. Cutlcr, W. W., Jr.: "Estimation
Trans. AlME (1955) 204, 120. 9. Welge, H. J.: "A Simplified of Underground Oil Reserves by
4. "Letter Symbols for Reservoir Method for Computing Oil Re Well Production Curves," USBM
Engineering," Jour. of Pet. Tech. covery by Gas or Water Drive," Bull. 228 (1924).
(Jan., 1955) 38. Trans. AIME (1952) 195, 91. 14. Babson, E. C.: "Prediction of
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High Pressures in the D7 Zone er, M. H.: " I h e Use of Multiple oratory Data," Trans. AIME
of the Ventura Avenue Field," Correlation Analyses for Inter ( 1944) 155, 120.
Trans. AIME ( 1948) 174, 19 1. preting Petroleum Engineering 15. Tarner, 5 . : "How Different Size
6. Katz, D. L.: "Possibilities of Data," API Paper 90131G, Gas Caps and Pressurc Mainte
Secondary Recovery for the New Orleans, La. ( M a r c h , nance Programs Affect Amount
Oklahoma City Wilcox Sand," 1955). of Recoverable Oil," Oil Weekly
Trans. AIME (1942) 146,28. 11. Stiles, W. E.: "Use of Permea (June 12, 1944) 32.
7. Buckley, S. E., and Leverett, M. bility Distribution in Water ***