RESERVOIR ENGINEERING/MANAGEMENT

Reservoir Management:
Principles and Practices
Rafi AI-Hussainy. SPE, Mobil E&P Technical Center,
and Neil Humphreys: SPE, Mobil-New Business Development

Summary have differing approaches to reservoir management, and no generally

Reservoir management is a method that seeks to maximize the value
of a hydrocarbon asset. However, different companies and authors
'Now with Mobil Equatorial Guinea Inc.
Copyright 1996 Society of Petroleum Engineers
Original SPE manuscript received for review 20 March 1995. Revised manuscript received
18 September 1996. Paper peer approved 26 September 1996. Paper (SPE 30144) first
presented at the 1995 SPE PetroVietnam held in Ho Chi Minh City, Vietnam, 1-3 March .
accepted definition of this activity exists within the industry. This pa-
per reviews some of the origins of reservoir management techniques
and provides an overview of reservoir management principles. Reser-
voir management is directed toward maximizing the value of a hydro-
carbon asset. The value of any reservoir is defined differently by dif-
ferent people at different times. To develop a reservoir optimally to
maximize its value, the exact meaning of "value" must be clearly un-
derstood. Also, the uncertainty always associated with the parameters

.J PT December 1996 1129

 Geologist

Geophysicist . . . Geologist . . . Engineer

Fig. 1-Sequential approach to reservoir development.

that determine the value of a reservoir must be clearly understood to

optimize its value. Different reservoir management approaches cov-
ering different time frames are typically used to optimize the develop-
ment of a field. The focus and organization of both short- and long-
term reservoir management activities are reviewed, along with Fig. 2-Reservoir management teams.
overall strategies for study and strategy implementation.
In the mid-1980's, the need to obtain the full involvement and
What Is Reservoir Management?
commitment of field operations staff in implementing plans for res-
Many authors 1-6 have attempted to define reservoir management
ervoir development became more apparent and led, increasingly, to
concisely and clearly. The fact that so many attempts have been their participation in the previously more technically oriented team.
made and that there is still no generally accepted definition of the Within the industry, this led to the acceptance of the reservoir man-
term emphasizes the range of viewpoints on exactly what reservoir agement team concept where a team comprising reservoir engi-
management is within our industry. Within Mobil, reservoir man- neers, geoscientists, production and facilities engineers, and field
agement is defined as " ... the marshalling of all. appropriat~ bus~­ operations staff is responsible for developing and implementing res-
ness, technical, and operating resources to explOit a reservOir opti- ervoir management plans. This generally represents the current state
mally from discovery to abandonment .... " It is thus regarded as an
of the industry in the application of reservoir management.
ongoing activity that is continued throughout the life of a field, not
as a one-time process. Reservoir Management: A Tool for the Future
If we return to fundamentals, Webster? defines management as Reservoir management is not an activity that is carried out once on
" ... to handle or direct with a degree of skill .... " Consequently, any a reservoir. Rather, it is a continuous process that starts when a field
definition of reservoir management should incorporate the concepts is discovered and stops only when the field is finally abandoned. To
of both setting direction and skillful application. There is no doubt realize the value of a hydrocarbon reservoir fully, it must be actively
that reservoir management is an art and skill as well as a science. No managed throughout its life. A typical field goes through a continu-
short cuts or easy numerical solutions exist for the complex problem um of development activities (Fig. 3) ranging from discovery,
of developing a hydrocarbon resource that adequately substitute for through appraisal, initial development, optimization, enhanced re-
skill, experience, and vision. covery, and finally abandonment. Although it is convenient to char-
It is worth looking at how the concept of reservoir management acterize these as different stages in the life of the reservoir, they are
has developed. Historically, the petroleum industry tended to be or- really a progression, with emphasis on differing activities at differ-
ganized along functional lines. This, combined with a traditional ent levels of development maturity. To optimize the development of
hierarchical corporate structure, led to a very sequential approach any field fully, all these activities must be managed as a unified pro-
to reservoir development. The geophysicist (Fig. 1) would develop cess throughout the life of the field.
a seismic interpretation of a field, which would then be handed to Although the point is obvious, it is essential to realize that reservoir
a geologist, who would develop an estimate of the reservoir's hydro- management cannot change what has happened to a reservoir in the
carbon pore volume. This estimate would then be handed to a reser-
voir engineer, who would predict reservoir performance. The result
of this segmented and sequential approach was that different por-
tions of a single organization working to develop a reservoir had un-
clear and often contradictory goals and partial or differing informa-
tion on field performance. Inevitably, this led to delays in
development decisions because interpretations had to be revised or
to less-than-optimal field development because inconsistencies in
information and models were ignored.
In the mid- to late-1970's in the North Sea, the complex nature of
the giant reservoirs being developed, combined with the enorm~us
costs incurred in these frontier developments, led to the formatIOn
of teams of engineers and geoscientists working together to plan
field development. This necessitated a breakdown in the traditional
hierarchical organizational structure and the formation of ad hoc
groups working together to describe and develop these fields.
Therefore, formation of the first reservoir management teams was
driven more by operational pressures than by a conscious decision
to improve the reservoir development process (Fig. 2). Once the re-
sult of increased interaction among professionals was recognized,
companies were quick to exploit it, and the use of combined teams
of engineers and geoscientists to make field development decisions
became standard in many companies during the mid- to late-1980's. Fig. 3-Field development activities.

1130 December 1996 • JPl'


Fig. 4-Factors affecting the monetary value of a field.
past. Rather, it is a method for understanding what has happened to
a reservoir historically, for predicting a range of possibilities of what
will happen to the reservoir in the future under various development
scenarios, and for selecting a development plan to maximize the value
of the reservoir. Calhoun 8 has drawn an analogy between reservoir
management and health care that is illuminating. In the same way that
a doctor will examine a patient, make a diagnosis, and recommend
future treatment to maximize the patient's health, a reservoir manage-
ment team will analyze and recommend future development for a res-
ervoir. However, the reservoir management team cannot undo the ef-
fects of any prior field development decisions any more than the
doctor can change the previous lifestyle of the patient. Both the reser-
voir management team and the doctor can, however, make a signifi-
cant improvement in the future life of the reservoir or patient
compared with the past and can frequently completely cure specific
ills that are currently causing problems.
What Is Value?
We have defined reservoir management as a process that maximizes
the value of a hydrocarbon asset. However, the value of a hydrocar-
bon reservoir is not an absolute and will mean different things to dif-
ferent people and at different times. To an oil company developing a
reservoir, its value will probably be expressed best in monetary terms.
However, to the government of the country where the reservoir is, its
value may be expressed primarily in terms of reserves. These are of
primary value as an asset to aid national development or to provide
security of energy supply rather than simply the monetary value they
can provide the government through taxes and production sharing.
The value of a field to a company will be determined primarily by
some monetary measure, most commonly the net present value
(NPV) of future profits from the field. Other, secondary, indicators
of value may also be important depending on the company's objec-
tives at a specific time. Typical primary value indicators are NPV
and return on capital used. Secondary value indicators may include
reserves, income after tax, and cash flow. Performance indicators
that may be used to determine how efficiently the value of a field is
being realized are usually volume related and include production
cost, profit margin, capital cost to develop reserves, and cost of
moving reserves from probable to proved, all typically expressed on
a cost-per-volume (dollars-per-barrel) basis.
The primary and secondary value indicators are often different for
different partners (both companies and governments) in a field devel-
opment. Consequently, the fundamental "value" that reservoir man-
agement is trying to maximize may be different for different partners
in a field development and may also change for those partners with
time. Understanding clearly what this value is must be a prerequisite
to any scheme to maximize its value. Similarly, a clear understanding
of the different values that all parties (corporate and government) in-
,J PT • December 1996
volved in field development place on the asset is crucial to developing
a consensus on an overall reservoir development strategy.
The monetary value of a hydrocarbon asset is normally deter-
mined by five factors.
1. The amount of hydrocarbons recoverable under a specific de-
velopment scheme.
2. The rate at which these hydrocarbons can be produced.
3. The cost of producing the hydrocarbons (includes capital and
expense).
4. The price that the hydrocarbons will fetch at market.
5. The fiscal regime under which the hydrocarbons will be produced.
Fig. 4 shows these diagrammatically. These parameters interact in
a complex fashion to determine the ultimate value of the asset. How-
ever, note that it is unlikely that a single value can be used to describe
any individual parameter. Rather, each parameter can have a range of
values, with varying uncertainties associated with individual values
within that range. Consequently, rather than a single value existing for
any hydrocarbon asset, a range of values exists for the asset, with va-
rying probabilities of attaining any value within this range.
Even a fundamental parameter, such as the amount of hydrocar-
bons recoverable from a reservoir, is not a fixed quantity. It is a func-
tion of the development scheme selected, the price that the hydro-
carbons will realize, and the amount of hydrocarbons initially
present in the subsurface. The development scheme selected for a
particular reservoir is not only a function of the price that the pro-
duced hydrocarbons will realize, but the projection of the prices that
the hydrocarbons will fetch in the future when they are produced.
For instance, a field might have reserves of 100 million bbl of oil
under primary depletion, 250 million bbl of oil under waterflood, or
300 million bbl of oil under a waterflood combined with crestal gas
injection. To select the development option that maximizes the value
of this asset is not simply a matter of selecting the option that maxi-
mizes the recoverable oil from the field. For instance, without know-
ing the investment and operating expense differential between the
waterflood development option, and the waterflood combined with
gas injection option, along with the forecast of future oil prices, it is
not possible to predict which development plan will have the higher
NPV, if this is the parameter one desires to maximize.
It is also important to understand that the amount of hydrocarbons
recoverable from a field, even under a specified development
scheme, will only be known when the field is abandoned. Until that
point, and certainly at the point when the decision is being made
among different development options, any reserve number is purely
a prediction. It is an estimate based on physical measurements, anal-
ogy, and past history, and it has uncertainty associated with it. There
is a risk either that it will not be achieved or that more hydrocarbons
than predicted will be recovered.
To return to Calhoun's8 medical analogy, just as there is no guaran-
tee that the course of treatment prescribed by a doctor will be effec-
tive, there is no firm assurance that a reservoir development plan will
perform as predicted. In truth, the likelihood is that it will not because
of the complexity of the problem being addressed. Just as uncertainty
exists about the volume of hydrocarbons that can ultimately be recov-
ered from a reservoir, uncertainty also exists about the rate at which
these hydrocarbons can be produced, the cost of producing them, the
price realized for the hydrocarbons, and the fiscal regime under which
production will occur. Consequently, uncertainty is associated with
every parameter that goes into determining the value of a hydrocar-
bon asset. It is essential that this uncertainty be addressed in reservoir
management decisions if they truly are to maximize asset value.
For instance, in the previous example, the decision whether the wa-
terflood option or the waterflood combined with gas injection option
maximizes value is not just a function of the NPV of the two cases.
The simple NPV assumes that the cases will be successful, but there
is a risk of failure. The water-injection program may be less success-
ful than anticipated because of stratification within the reservoir or
development of H2S owing to design inadequacies of surface equip-
ment or because of unforeseen interaction of injected and subsurface
waters necessitating a costly chemical treatment program. Similarly,
the gas-injection case may perform poorly as a result of early gas
breakthrough or an unforeseen increase in compressor maintenance
expense. Alternatively, the gas-injection plan may perform very
1131
 Not
J
l
Probability Risked
Vertical Movable
Present of success NPV
Value sweep.:: 011::. :
[ effiCiency· 'satuhi8';n:
~
~ ~ high [70o/~1 high [SO% 1 high [SIl%j
~ most
likely [65%1 most
likely
[55. 0;.
.• J most
likely
[~p6(ll
~ § ~
low [SQ-kj low low l:~~+::l
~
~ ~
• reservoir -vertical • rock type
geometry layering • penneability
-well
~
• permeability • porosity
geometry contrasts -initial oil
• mobility ratio • inter-layer saturation
• intra-layer • residual oil
saturation
Fig. 5-Effect of uncertainty on field development options. • wettability

much better than predicted because of favorable gravity segregation

of injected gas within the reservoir combined with lower-than-antici-
pated residual oil saturations to gas. The point is that uncertainty is
present when dealing with predictions of reservoir performance and
that, in any reservoir management scheme to maximize the value of
a reservoir, these uncertainties must be compared with whatever opti-
mization parameter is chosen.
Fig. 5 shows the use of a decision tree approach to determine the
value of three different approaches to field development. At the be-
ginning of production, the operator has three choices for developing
a field: do nothing, in which case the field will be produced under pri-
mary depletion: initiate a waterflood scheme; or initiate a combined
gas-/water-injeetion plan. Because of uncertainties associated with
predicting future reservoir performance, each of these schemes has
risk associated with it. If water injection is successful, it will yield a
reasonable additional recovery at only moderate risk. However, if the
combined water-/gas-injection is successful, a significantly higher re-
covery will be achieved, but the risk of failure is increased.
For instance, if the waterflood is very successful, it may generate
an NPV of $700 million. However, if it is only moderately successful,
it will generate an NPV of only $600 million and, if unsuccessful,
only $400 million (slightly more than the NPV for producing the field
on primary depletion). If the probability of the waterflood's bcing
highly, moderately, or poorly successful can be estimated, the risked
NPV for each of these outcomes can be estimated and cumulated to
yield a risked NPV for implementing a waterflood. This is done most
effectively with a stochastic approach, such as Monte Carlo simula-
tion. The detailed application of decision tree analysis is beyond the
scope of this paper, and the reader is referred to one of the excellent
texts available on this subject.
A very simplified approach is shown in Fig. 5, where the risked
NPV for the waterflood has been arrived at by multiplying the NPV
of each outcome (good, moderate, or poor success) by its probability
of success and summing these risked NPV's to generate a total
risked NPV for the waterflood. With this approach, the combined
gas and water injection scheme is seen to have a higher-risked NPV
($670 million) than either the waterflood ($595 million) or deple-
tion ($300 million) cases. Consequently, despite the fact that the
combined gas-/water-injection scheme has a higher risk than the
waterflood (lower probability of success) this is outweighed by the
higher profitability of the scheme.
Uncertainty in Reservoir Management
A simple example of how uncertainty in field development might
be handled is the case mentioned earlier of a reservoir where pres-
sure maintenance is to be initiated by use of either water or gas injec-
tion. Although predictions of the incremental oil recovery under
these two injection schemes can be made, these predictions are only
estimates and have uncertainties associated with them. While some
uncertainties may be common to both development schemes, others
will be specific to an individual scheme, leading to different proba-
bilities of success for the two development options. The choice of
which development option to implement must then be made, with
Fig. 6-Factors affecting recovery factor.
both the potential rewards of the development and the inherent risk
associated with it taken into consideration.
Assuming that sufficient volumes of gas and water are available
to meet voidage-replacement requirements, the effectiveness of a
pressure-maintenance scheme will depend on how effectively the
injected fluid sweeps the reservoir both areally and vertically and on
the theoretical efficiency with which the injected fluid displaces oil
at the microscopic (pore scale) level. The effect of these factors on
the overall recovery factor for the reservoir is defined by
RF = EA EV(SOI - Sord)/Soi' ........................ (I)
where Rp = recovery factor, EA = areal sweep efficiency, Ev = ver-
tical sweep efficiency, Soi = oil saturation at the beginning of the
flood, and Sord = residual oil saturation to the displacing fluid (oil
or gas). EA is a function of reservoir and well geometry and of the
mobility ratio between the injected fluid and reservoir oil. Ev is pri-
marily controlled by the vertical layering of the reservoir and the
subsequent variation in permeability both between and within dis-
crete reservoir layers. Soi will depend on the initial oil saturation in
the reservoir at discovery and on the production scheme that has
been applied to the reservoir since discovery. The original oil satura-
tion in the reservoir at discovery depends on hydrostatics and funda-
mental rock properties determined by pore size and geometry and
rock wettability. Similarly, Sord is a fundamental property deter-
mined by pore geometry and wettability. However, the ionic com-
position of the displacing fluid may also affect the residual oil satu-
ration even though the apparent wetting characteristics of the
displacing fluid do not change. It is speculated that changes in ionic
composition are responsible for suhtle changes in wettability at the
pore level, leading to changes in residual saturation.
Fig. 6 shows the range of outcomes that might result from studies
on initiating either a water- or gas-injection scheme in a reservoir.
If either scheme is implemented, it may be unsuccessful, moderately
successful, or highly successful. For instance, a waterflood could be
unsuccessful if designed with incorrect assumptions about the inter-
nal geometry of the reservuir; this would lead to poor vertical dis-
placement efficiency and result in low recovery factors. Conversely,
a high recovery factor may result from low residual oil saturations
to water in a rather homogeneous reservoir. Recovery factors are
calculated for the reservoir on the basis of various assumptions
about the reservoir properties used in the calculations. The level of
confidence in these assumptions is then used to develop the proba-
bility of a specific outcome.
The Hydrocarbon Asset
Historically, reservoir management studies have tended to concen-
trate on the subsurface hydrocarbon accumulation and have not fully
integrated information about the rest of the system that comprises the
oil or gas field. To optimize the value of a hydrocarbon asset, it is nec-
essary to take a holistic view of the complete system that gives this
asset value. As noted earlier, the value of the asset is a function not

1132 December 1996. JPT


production
wells
Fig. 7-The hydrocarbon asset.
only of the amount of hydrocarbon that can be recovered, but also of
the recovery rate, cost of recovery, hydrocarbon price and price fore-
cast, and fiscal regime under which the asset is operated. All these fac-
tors must be considered in any reservoir management effort.
Generally, the price realized for the hydrocarbons and the fiscal
regime under which they are produced arc outside the control of the
producer. However, cases where the fiscal terms that a government
sets for a particular field development are renegotiated on the basis
of predictions of reservoir performance are becoming more com-
mon. Often, if a reservoir is shown to be uneconomical to produce
under existing fiscal terms, rencgotiation of terms is possible if de-
velopment can be shown to provide adequate value (both monetary
and otherwise) to both the company producing it and the host gov-
ernment under modified fiscal terms. Again, for this approach to be
viable, all parties involved in the development must have a clear un-
derstanding of the value that each places on the hydrocarbon asset.
Other than the fiscal terms and price, the physical plant used to
produce the hydrocarbons must be considered as an integral system
with the reservoir. The entire hydrocarbon asset (Fig. 7) comprises
the subsurface reservoir and the hydrocarbons it contains, produc-
tion wells, injection wells, surface production facilities (wellheads,
flowlines and manifolds, and separators), surface injection facilities
(treatment facilities, pumps and compressors, flowlines and man-
ifolds, and wellheads), processing facilities (liquefied petroleum
gas and liquefied natural gas plants), and export facilities (pumps,
meters, pipelines, storage, and loading terminals). Any portion of
this system can control the overall field performance, and failure to
include all portions of it in reservoir management strategies and
studies can lead to erroneous results.
Types of Reservoir Management Study
Just as different levels of corporate management have different time
frames within which they focus their activities (with executive man-
agement being focused on long-term strategic issues and line man-
agement on operational problems), different time frames are
associated with different levels of reservoir management activity.
Historically, reservoir management teams were convened to solve
specific problems in field development or to address particular oppor-
tunities at a point in time and were then disbanded. Increasingly, the
tendency is to have a core reservoir management team assigned to one
or more fields to implement a long-term strategy for each field and
to identify specific problems and opportunities as they occur. The res-
ervoir management strategy for a given field is a long-term plan
(more than 5 years) that dictates overall field development plans.
As specific problems and opportunities are identified, they may
be solved either by means of short-term (I to 3 months) or long-term
(3 months to 2 years) reservoir management studies. These studies
involve a more intense reservoir management effort than that re-
quired to implement the long-term strategy for the field and may in-
volve additional staff, including specialized technical staff and con-
sultants in various disciplines as needed. The scope and length of a
,J1Y l' • December 1996
study will depend on its focus, both in terms of the overall propor-
tion of the field that is being studied (what portion of a reservoir or
reservoirs) and the proportion of the overall producing system (res-
ervoir, wells, surface processing facilities, and export facilities) be-
ing studied. Consequently, there are three basic types of reservoir
management activity, all of which should include appropriate mem-
bers of the reservoir management team.
Reservoir Management Strategy. The reservoir management
strategy is an ongoing monitoring and study plan for the field that
implements a specific development plan. It is typically geared to the
long-term strategic direction for field development and is imple-
mented solely by the core reservoir management team. This strategy
must be clearly defined and articulated to all staff associated with
the field development because it forms the basis on which they
measure field performance and from which they identify field de-
velopment challenges and opportunities.
Long-Term Reservoir Management Study. This study typically is
conducted by a discrete team that will probably (but not necessarily)
involve some core team members. The outcome of the study will typi-
cally change the overall reservoir management strategy for the reser-
voir and is likely to include most aspects of the combined reservoir/
well/surface-facility system (e.g., an evaluation of tertiary recovery
with C02 or conversion of injection wells from vertical to horizontal
combined with a new water-injection facility). This type of study typ-
ically impacts the ultimate reservoir management strategy for the
field and usually recommends major operational changes or capital
investment programs, with associated changes in reserve and produc-
tion levels.
Short-Term Reservoir Management Study. A short-term study is
typically conducted by the core team to address specific operational
problems associated with implementation of a long-term reservoir
management strategy for the field. It is likely to be localized in terms
of study area and technical content (for example, scale problems in
a number of wells or a problem with reservoir pressure in one area
declining faster than anticipated). The study is conducted primarily
by the core reservoir management team for a field, with external
technical staff as needed.
Structuring a Reservoir Management Study
The first concern in developing plans for any reservoir management
study is to determine the study objectives. To set these objectives,
it is necessary to have a clear understanding of what indicators are
considered to be key in determining the value of the field. Is this a
field on which reservoir management is being used to optimize NPV
or are there other drivers?
Once the study objectives are determined, the overall study can be
structured. Specific items must be addressed in developing the struc-
ture for any reservoir management study. What are the business ob-
jectives of the study,) What are the technical objectives of the study?
Are these reasonable objectives, and can the expected study outcome
be achieved with reasonable certainty') Does the study adequately ad-
dress the relevant portions of the development system (reservoir,
wells, producing facilities, and export facilities)? Are the available
data compatible in quantity and quality with the study objectives?
What technical disciplines should be involved in the study? What re-
sources (time, technical manpower, support manpower, data acquisi-
tion, expenses, and computing resources) are required to meet the
study objectives') Is the investment of resources required commensu-
rate with the expected benefits of performing the study?
Fig. 8 shows the interaction of various parameters, both technical
and commercial, that may be involved in a typical reservoir manage-
ment study. In addition to those already discussed, the figure shows
some parameters whose impact on the value and objectives of a study
must be questioned at its outset. Once these questions have been
asked, the detailed study schedule can be formed. Most of these con-
cerns are simple, but three are worth discussing further.
Study Objectives. A meaningful set of study objectives can be
achieved only when they are clearly defined. It is then necessary to
1133
Fig. a-Factors integral to a reservoir management plan.
validate the reasonableness of the objectives and the expected study
outcome before structuring the study further. Setting objecti ves for a
study that are unreasonable or unrealistic is not logical. If this is done,
there is a likelihood that the study will not add value; it may either
generate a recommendation that is flawed or it may simply come to
an end with the conclusion that its objectives were not achievable.
Both these outcomes waste a significant amount of valuable technical
time and expense, and field development decisions that are detrimen-
tal to the value of the field may be made.
Data Quality and Quantity. An important precursor to any reser-
voir management study is an investigation of the data needed for the
study and the data available. If the objective of the study is, for
instance, to design a waterflood for a field, proceeding with the
study on anything other than the most conceptual basis if no water/
oil relative permeability data are available would be foolish. This
may seem to be an obvious statement. In both oil companies and
consultancies, however, too many examples exist of complex and
expensive studies (often involving the commitment of large simula-
tion resources) being conducted without critical data.
Defining the data that are important is essential. If a clear plan of
the steps involved in a reservoir management study is developed
when the study is being planned, the data required for each portion
of the study can be identified. If critical data are not available, a data-
acquisition program can be initiated as part of thc study to gather the
data needed to meet the study objectives. Alternatively, the study ob-
jectives may be modified to reflect the limitations of available data.
The decision to modify study objectives or spend money to acquire
additional data always depends on both the value of the study out-
come and the likelihood (risk) that this outcome will be realized.
Cost/Benefit. It is important that the expected outcome of a reser-
voir management study has a value commensurate with its costs. A
full-field, long-term reservoir study may cost $5 million to $7 mil-
lion when the true manpower costs associated with the study are in-
cluded. The expected return from investing this amount of money
in a reservoir study must be attractive comparcd with invcsting it in,
for instance, well workovers to increase producing rate. Just like any
other investment opportunity facing a company's management, in-
vesting money in a reservoir management study is a business deci-
sion and should be evaluated with the same business criteria.
The benefits of an appropriately structured long-term reservoir
management strategy for a field are inevitably worthwhile. Howev-
er, the key here is that the level of investment be appropriate to the
rcturn on the field. For small reservoirs, this may dictate that field
performance be compared with some base only every 6 months and
remedial action taken as necessary. For a large, profitable field, it
may mean that a team of 20 professionals is working the field on a
daily basis, optimizing individual flood patterns and continuously
fine tuning field performance.
1134
Fig. 9-0verall plan for a reservoir management study;
GIIP=gas initially in place (from Ref. 1).
The benefits of short - and long-term reservoir management studies
will, again, almost always be competitive with other investment op-
portunities if the key questions regarding the structure and objectives
of the study have been answered before structuring the study. If these
have not been addressed, it is easy to develop an unnecessarily com-
plex and expensive study that will be of limited business value. An
example of the value of planning a reservoir management study prop-
erly can be illustrated by a recent study carried out within Mobil to
examine a field for application of tertiary recovery. The prime study
objective was to maximize the value of the field by developing a strat-
egy for implementing tertiary enhanced oil recovery (EOR).
The field was a mature waterflood, and initial plans called for con-
ducting a comprehensive reservoir description study of the field, eva-
luating initial oil in place, and rationalizing volumetric and perfor-
mance oil-in-place estimates. Reservoir studies were then to be carried
out to evaluate the application of a series of EOR technologies in the
field, followed by economic analysis of the impact of these technolo-
gies on field performance. The company projected that the reservoir
management study would take a team of five people from 6 months to
I year to complete, depending on the detailed study plan chosen.
An initial survey to validate the study objectives and examine
available data revealed that reservoir conditions (temperature, pres-
sure, depth, and remaining oil saturation) severely limited the EOR
technologies that were applicable. Consequently, the study objectives
were revised to define which EOR technologies had any potential ap-
plication and to evaluate their economics on the basis of both ex-
pected and upside estimates of remaining oil in place in the reservoir.
This study was completed in a 3-month period and required only 7
man-months of effort. It demonstrated that EOR technologies were
not commercially attractive for application in this field and recom-
mended continuing the current development strategy for the field. By
validation of the study's objectives before initiating the study, the
team was able to save a significant expenditure of time and money on
a study whose results would have been, at best, inconclusive.
This example serves to illustrate the need for careful planning and
structuring of the study in its earliest stages. If the study objectives
and resources needed to meet them are not clearly defined in the
planning stage, the probability is that the eventual study will either
not meet its objectives or will have reached them in a less-than-cost-
effective manner.
Study Scheduling
Once the objectives of a reservoir management study have been set, it
is necessary to develop the study schedule. This is best achieved with
an interdisciplinary team representing all the technical and operational
areas that will be addressed in the study. This staff does not need to be
the team who will be physically working on the study, although it is de-
December 1996 • .Jye
 ,La'>Offi'my,nea,,",e,nentof 'm'and '0' tCN~7}
Fig. 1Q-Oetailed plan for a reservoir management study (from Ref. 1).
sirable that a significant number will eventually be assigned to the study
team. The team should work together toward the following.
1. Break the study down into individual sections, each with an
associated set of objectives, cost, and time line.
2. Define specific deliverables from individual sections of the study.
3. Define interactions between individual study portions (i.e.,
where information gathered or generated in one portion of the study
needs to be passed to another portion).
4. Clearly assign responsibility for deliverables where overlap
occurs between study sections.
5. Develop a plan for ensuring continuous communication within
the study team and between the team and management.
6. Define critical-path items on the study time line.
7. Define external resources (consultants, support staff, comput-
er, and other resources) required to complete the study.
8. Define milestones where study progress can be measured
clearly against the planned study time line and budget and reported.
9. Define reporting milestones both for interim reports and for
whatever final study documentation will be generated.
For smaller studies, only a portion of this list will be necessary;
it must be modified as necessary to suit the complexity of the study.
Figs. 9 and 10, respectively, give examples of the initial breakdown
of a study into individual sections and the subsequent detailed study
schedule taken from these sections.
Conclusions
Reservoir management is a method that is essential for maximizing
the value of hydrocarbon developments. Reservoir management acti-
vities fall into two main categories: an overall reservoir management
strategy for a field, which dictates the development of the field over
an extended period of time, and shorter, more-problem-focused reser-
voir management studies that address specific challenges or opportu-
nities in reservoir development. When the results of these more fo-
cused studies are implemented, they are likely to modify the overall
long-term reservoir management strategy for the field.
To be successful, any reservoir management study must have
clearly defined, measurable, and achievable objectives. These must
address the entire system that is used in field development. This in-
cludes both the subsurface reservoir; wells; and surface production,
processing, and export faculties for hydrocarbons. Individual por-
tions of the system interact in determining its overall value and can-
not be regarded in isolation.
Reservoir management studies are by nature interdisciplinary
team efforts. However, to ensure their success, the communication
between members of the team, between the team and external
groups, and between the team and management must be planned
into the study at the outset.
JJYl' • December 1996
Reservoir management studies represent an investment of a signifi-
cant amount of time and expense in a field. As with any other invest-
ment, the expenditure must have projected benefits that are competitive
with other investment opportunities and must be managed and con-
trolled in the same way as any other investment opportunity. JPT
Acknowledgment
We thank the management of Mobil Oil Corp. for permission to pub-
lish this paper.
References
I. Humphreys, N.V.: "A Synergistic Approach to Reservoir Management-
North Sumatra," paper presented at the 1986 Indonesian Petroleum Assn.
15th Annual Convention, Jakarta, 7-9 October.
2. Talash, A.W.: "An Overview of Waterflood Surveillance and Monitor-
ing," JPT (December 1988) 1539; Trans., AIME, 285.
3. Thakur. G.c.: "Reservoir Management, a Synergistic Approach" paper
SPE 20138 presented at the 1990 SPE Permian Basin Oil and Gas Confer-
ence, Midland, Texas, 8-9 March.
4. Thakur, G.c.: "Implementation of a Reservoir Management Program,"
paper SPE 20748 presented at the 1990 SPE Annual Technical Confer-
ence and Exhibition, New Orleans, 23-26 September.
5. Caldwell, P.L. and AI-Hussainy, R.: "Strategic Management of Tech nolo-
gy and Resources-A View from Mobil's E&P Technical Center," paper
presented at the 1994 Indonesian Petroleum Assn. 23rd Annual Conven-
tion, Jakarta, October.
6. Satter, A. and Thakur, G.C. : llltegrated Petroleum Reservoir Manage-
ment, PennWell Books, Tulsa, Oklahoma (1994).
7. Webster~' Ninth Ne\\' Collegiate Dictionary, Merriam-Webster, Spring-
field, Massachusetts (1988) 722.
8. Calhoun, J.e. Jr.: "A Definition of Petroleum Engineering," JPT (July
1963) 725.
SI Metric Conversion Factors
bbl x 1.589 873 E-OI =m 3
Rofi AI-Hussoiny is Senior Consultant at
Mobil E&P Technical Center in Dallas. He
joined Mobil in 1966 and has held nu-
merous technical and management
positions in R&D and E&P in the U.S. and
overseas. His interests are in reseNoir
characterization. engineering. and
management. AI-Hussainy holds a PhD
degree from Texas A&M U. Neil Hum-
phreys is a Reservoir Engineering Consul-
AI-Hussainy Humphreys tant with Mobil Equatorial Guinea Inc ..
currently working on development of
the Zafiro field. offshore Equatorial Guinea. He has over 20 years experience in the
North Sea. Asia. Africa. and the U.S. His interests include reservoir management.
formation evaluation. and gas condensate reservoir engineering. Humphreys holds
a BS degree in chemical engineering from the U. of Birmingham. U.K. He is a member
of the Editorial Review Commiffee and was cochairman of the first SPE conference
held in Vietnam in 1995.
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