Guidelinesforfielddevelopmentplanin 180309115948

Step-by-step Procedure for an
effective Field Development Plan

supported by the related Basic
Engineering Concepts
G. Moricca
Senior Petroleum Engineer
May 2017
moricca.guiseppe@libero.it
G. Moricca 1
Integrated Field Development Plan
Content
 Oil and gas project plan refers to the unique
requirements of managing science, technology,
engineering aspects and economical topics of projects
in the upstream oil and gas industry.
 The purpose of this document is to provide the step-by-

step project management techniques procedures for an
effective Field Development Plan. For a better
understanding, the step-by-step procedures are
supported by a comprehensive statement outlining of
the related basic engineering concepts.
May 2017 G. Moricca 2
Project Management
The basic elements of any project are the same. The detailed attention required for
each element will vary, depending upon the project’s size and complexity. What is
required for an efficient Project Management is the preparation of the following
documents and their implementation on the project:
1. Project Plan — a document which fully describes the basis for undertaking the
project.
2. Organizational Structure — organization charts and position descriptions that
define the complete organization.
3. Project Control Schedule — includes the work breakdown structure (WBS),
work package description sheets, milestone charts and networks.
4. Project Control Budget — related to the WBS, properly coded, structured to
recognize the manner in which costs are actually collected and with a system for
tracking contingency.
5. Project Procedure Manual — a document which presents the exact
management work procedures to be used, work scopes, responsibilities,
authorities, interfaces and reporting methods.
The Project Plan
The project plan states and defines the following items:
- objectives of the project,
- its primary features,
- technical basis,
- project constraints,
- primary schedules,
- budget considerations,
- management approach,
- organization,
- procurement and contracting strategy and any other information
needed to do the project work.

Organization
Selecting the correct project organization is one of the most important and difficult
tasks. The organization must be selected to meet the specific requirements of each
project.
Factors influencing the selection of the organizational structure could include:

- What is the size of the project?
- Is the completion schedule critical?
- Is the engineering to be subcontracted or performed as part of the project group?
- If the engineering is subcontracted will all purchasing be performed by the
engineering subcontractor?
- If so, what controls are required over purchasing?
- How are construction contracts to be awarded?
Once the basic organizational structure has been selected, all positions should be
identified, coded and a personnel mobilization schedule selected.

Project Control Schedules
 Project control schedules and their supporting work

breakdown structures are needed as early as possible
for preparation of the project control budget and other
start-up work.
 A complete work breakdown structure is developed as

a first step to give the basis for all subsequent
scheduling and budgeting.

Project Milestones and Authorization Process
 Project control schedules should include a master milestone bar-chart showing
major project milestones and project networks.
Field Development Activities

Conceptual Submission Drilling Production
Screening PDO/PIO Start Start
Appraisal Concept PDO approval Facilities

Feasibility Selection Contract Installation
Study Award
Time
PDO = Plan for Development and Operation (Hydrocarbon withdrawal)

PIO = Plan for Installation and Operation (Pipeline & Surface Infrastructure)

Project Control Budget
 Another important task during project start-up is the preparation of a
project control budget.
 The final control budget usually cannot be fully developed until

engineering design has progressed to a point allowing reasonable cost
estimation.
 It is still important to structure the entire project control budget, apply a

coding system and accomplish the costing as far as possible to enable
early completion of the control budget as design continues.
 Cost control can be no better than the project control budget with which
actual costs are compared.
 Sophisticated cost control techniques cannot correct the shortcomings of a

budget that is incomplete, not logically coded, employs poor cost data and
has inadequate contingency and escalation amounts.
Project Procedure Manual
Each project should have a project procedure manual which tells all project
participants what they have to do and how they should do it. The contents
of a typical Project Procedure Manual should include:
- Project objectives, including profitability and implementation
- Basic decision criteria, with focus on HSE, economy and technology
- Development solutions strategy
- Basic design criteria and relevant assumptions
- Reservoir development strategy
- Well completion strategy
- Production strategy
- Infrastructure: Tie-in to other fields or facilities expansion
- Uncertainty analyses for resource and technical solution
- Evaluation of risk elements for the concept(s) and implementation
- Evaluation of potential need to develop new technology and/or use
untraditional solutions

Peculiarities of the Upstream Oil and
Gas Industry
 The upstream industry is arguably the most complex of all the oil and gas business
sectors. As illustrated in the diagram, it is highly capital-intensive, highly risky,
and highly regulated. Upstream investments are high-risk, given that results of
every well drilled are unpredictable. Additional risk arises from safety and
environmental issues.
 Upstream is also High Risk - High Return

subject to global
forces of supply and Highly Regulated
demand, economic
growth and
Impact by Global Politics
recessions, and
crude production
quotas. Technology Intensive

Oil or gas field life cycle
 Reservoir  Drilling
structure  Completion  Production
 Reservoir  Flow Lines  Injection
Where connectivity  Facilities  Disposal Decom
 Reserves  Delivering
is the mission
field? ing
1 2 3 4 5
Discovery Appraisal Development Production Abandonment
1-3 years 1-5 years 10-50 years

- Geologic structure - Drilling & Completion - Production System Surveillance
- No of Flow units - Well Testing - Downhole Data Acquisition
- Rock Properties - On line reservoir model - Asset Management
- Fluids Properties updating and fine-tuning
- Driving Mechanism - Flow Lines
- No Producing wells - Surface Facilities for
- No of Injection wells produced and injected
- Expected workovers fluids: Separators,
Compressors, Pump
stations, Measuring System

Appraisal Phase
 It is the phase of petroleum operations that immediately follows
successful exploratory drilling.
 During appraisal, delineation wells might be drilled to determine the
size of the oil or gas field and collect cost-effective information
useful to decide if and how to develop it most efficiently.
May 2017 G. Moricca SacOil Holdings

12 Ltd
Field Appraisal Objective [1]
 The objective of performing appraisal activities on discovered
accumulation is to:
• Reduce the uncertainty in:
- Volume of hydrocarbon in place (OHIP)
- Description of the reservoir
• Provide information with which to make a decision on the nest
actions.
 The next action may be to:

- Undertake more appraisal
- Commence development
- Stop activities
- Sell the discovery

Field Appraisal Objective [2]
 Goal: Improving the quality of the data and reducing uncertainty.
 Outcome: Well fluid characteristics, OOIP, Recoverable oil, production

profile, with sufficient uncertainty.
 Method: More appraisal wells will be drilled, more measurements.
Reservoir Model Tuning PDF ‐ CDF Production & Pressure

Making Good Decision [1]
 The decision to undertake more appraisal activity is a cost-effective information
inly if the value of outcome with the appraisal information is grater than value of
the outcome without the information.
 Supposing:
- Cost of appraisal information is $[A]
- The profit of the development without the appraisal information is $[B]
- The profit (net present value, NPV) of the development with the appraisal
information is $[C]
The appraisal activity is worthwhile only if [C - A] > [B]
NPV
($)
Develop without
[B]
appraisal information
Cost of appraisal
$[A]
Develop with appraisal
[C]
information

Making Good Decision [2]
 The make economic analysis to make decision ‘to do’ or
‘not to do’, it is necessary to assume outcomes of the
appraisal in order to estimate the value of the
development with these outcomes.
 The reliability of the economic analysis, and

consequently the reliability of the decision to make
decision ‘to do’ or ‘not to do’, is strictly correlated to
the technical capability and awareness of the field
development team as well as management decision.

Activities to reach the First Oil
 FDP time scheduling
 Design of the
subsurface and surface
facilities
 Procurement of materials
 Fabrication of the facilities
 Installation of facilities
 Commissioning of all plant and equipment's

The main topics to be faced for a proper oil
or gas field development project
1. Understand the environment 4. Propose options and examine
- Location - Offshore
- Geotechnical - Onshore
- Market - Develop technical definition and cost estimate
- Infrastructure for each
- Fiscal and political regime
- Production-sharing contract terms 5. Commercial analysis
- Build economic model
2. Understand the reservoir and quantify - Use previous steps to examine various scenarios
uncertainties - Understand risked economics and economic
- Reserves drivers and sensitivities
- Number of wells
- Well rate
- Produced fluid composition; flow assurance
- Reservoir management strategy
3. Understand the drilling

- Well Architecture
- Cost per well
- Number of drill centers required
- Intervention frequency and cost
- Wet vs. dry trees (pros and cons)

Main Differences
Between
Onshore and Offshore
Field Development
Practices

Onshore vs Offshore Field Development
 One of the “fathers” of modern Petroleum Engineering
technology, L. P. Dake, states:
“A field is a field whether located beneath land or

water and the basic physics and mathematics
required in its description is naturally the same.
Where the main difference lies in the application of

reservoir engineering to field development is in
decision making: the nature, magnitude and timing
of decision being quite different in the offshore
environment.”

Onshore
 Governmental regulations permitting and provided there are
production facilities in the locality, the well should be tied back to
the nearest block station and produced at high rate on a
continuous basis.
 An obvious advantage is that it provides a positive cash flow from

day one of the project but of greater benefit is that it permits the
reservoirs to viewed under dynamic conditions from the earliest
possible date.
 Moreover, when each subsequent appraisal development well is

drilled, the conducting of drill-stem tests (DSTs) or, more
significantly, repeat formation tester (RFT) surveys will convey to
the engineer the degree of lateral and vertical pressure
communication: data that are indispensable in the planning of a
successful secondary recovery flood for water or gas injection.
Offshore
 In this environment the sequence of events in field developments
is much more compartmentalised than onshore.
 Following the discovery well on an accumulation a series of
appraisal wells is drilled to determine the volume of hydrocarbons
in place and assess the ease with which they can be produced: two
obvious requirements in deciding upon the commercial viability of
the project.
 Unfortunately, the appraisal wells, which may range in number
from one or two on a small accumulation to twenty or more on a
large, cannot usually be produced on a continuous basis from the
time of their drilling, since the offshore production and
hydrocarbon transportation facilities are not in existence at this
stage of the development.
Average Operational Costs
Economic component Onshore Offshore

50-100 up to
Average Drilling Cost per well - $ million 3 to 6
200
Average Completion Cost per well - $ million 1 to 2 10 to 20
Min suitable production rate - BOPD 100 - 250 2500 - 5000
Workover cost - $ million 1 to 2 5 to 10
Estimated break-even price @ 2015 $/bbl 25 - 30 50 - 70

Onshore vs Offshore Breakdown costs
- $/bbl - for regional oil production

Offshore vs Onshore Drilling Activities
 The basic equipment is similar for both onshore and offshore drilling. Both require
exploratory equipment, pumps, storage facilities and pipelines to drill and collect the oil.
One major difference for offshore drilling is the need for stability. Onshore drilling provides
natural stability in the form of the earth’s hard surface. Once anchored to the ground, the
rig remains stable and secure.
 Time Frame - Offshore drilling often takes much longer to complete than onshore drilling.
An onshore well typically takes only a matter of days to drill, meaning production can begin
much faster. An offshore well can take months or years to build. This means an onshore
project is up and running much faster than offshore facilities.
 Offshore drilling presents much more of a challenge due to the shear depth of the water
just to reach the earth’s surface. The force the waves, especially in deep, rough waters,
presents major stability issues. This activity requires a manmade working surface to hold
the drilling equipment and facilities with some type of anchoring to the ocean floor.
 Onshore drilling rigs are the more classic drilling equipment and come in different sizes
and strengths. They are generally classified by their maximum drilling depth and their
mobility. Conventional land rigs cannot be moved as a whole unit and are typically used in
the petroleum industry while mobile rigs are drilling systems that are mounted on wheeled
trucks and come in two different types, jackknife and portable mast.
Offshore vs Onshore Drilling Cost
 The costs for onshore versus offshore drilling are much different. Offshore drilling tends to
cost much more due to the increased difficulty of drilling in deep water. The specific cost
depends on a number of variables, including the specific location, any special
circumstances, well size, design and drilling depth.
 On average, an onshore oil well costs between $5.0 MM and $10.0 MM in total well
capital costs. Additional lease operating expenses between $1 MM and $3.5 MM may also
play into the cost over the life span of the well. The following breakdown shows a general
explanation of where those costs are dispersed:
- Drilling – 30 to 40% of costs: This category encompasses any tangible and intangible
costs associated with actually drilling the well.
- Completion - 55 to 70% of costs: The completion costs include both tangible and
intangible aspects of things like well perforations, fracking, water supply and disposal.
- Facilities - 7 to 8% of costs: Onshore drilling activities require storage and other facilities
and the associated expenses. This might include the equipment itself, site preparation
and road construction.
- Operations: The operations cost often come from the additional lease operation
expenses, which include well maintenance and delivery cost.
Offshore vs Onshore Drilling Rigs
 Offshore drilling rigs are classified differently, mainly based on their movability and how
deep the sea bed is. There are two types of offshore drilling rigs:
1. Bottom-supported units are rigs that have contact with the seafloor. There are
submersible bottom-supported units and also jack up units that are supported by
structured columns.
2. Floating units do not come in direct contact with the ocean floor and instead float
on the water. Some are partially submerged and anchored to the sea bed while
others are drilling ships which can drill at different water depths.
May 2017 Diagram

G. Moricca of different types of offshore drilling27rigs.
Offshore vs Onshore Storage and Transport
 Storage and Transport Methods - Onshore drilling offers more options for storage and
transport of the oil after it is extracted from the well. The solid ground surrounding the
wells allows for additional processing facilities on site. The location also allows for easy
accessibility by trucks and other vehicles, so the oil can easily be transported to other
facilities for processing and distribution.
- Offshore oil drilling presents more of a challenge to the storage and transport
process. This is particularly true for deepwater drilling that takes place far off the
shore. The circumstances require special equipment and methods for processing the
oil and transporting it after extraction.
- Offshore projects close enough to the shore can use a system of pipelines to bring
the oil directly to shore.
- For deep wells and those far off the shoreline, barges or tankers process and store the
oil until it is taken ashore. These vessels are called Floating Production, Storage and
Offloading units, or FPSO for short.
- As the name suggestions, FPSO units can handle the initial processing of the oil while
out on the water. The ship is also designed to store the oil until it is offloaded onto a
tanker. Each of these vessels holds 2.5 million barrels of oil. Some of these vessels only
store and offload the oil. Large offshore production areas may use multiple FPSO units
to keep up with the demand of the project.
Offshore vs Onshore Cost Differences
 Offshore oil wells cost significantly more and depend on factors such as well depth, water
depth, productivity and distance to the infrastructure. In the Miocene area with shallower
water and well depths, the average cost for drilling and completion is $120 MM. In the
deepest Jurassic projects, costs can be as high as $230 MM. The breakdown of costs varies
somewhat for offshore drilling activities. Those categories include:
- Drilling – 60% of costs: Drilling takes up a much larger portion of the costs for offshore
drilling activities.
- Completion - 40% of costs: The completion activities take up the remaining costs, which
include well perforations, rig hiring, transportation and well head equipment.
- Facilities - 7 to 8% of costs: Onshore drilling activities require storage and other facilities
and the associated expenses. This might include the equipment itself, site preparation
and road construction.
- Operations: Like onshore drilling activities, the operation costs fall into the lease
operating expenses for the well.

Step-by-step Procedure
for an effective
Field Development Plan
according to the
Front-End-Loading (FEL)
Process
Front-End-Loading (FEL) Process [1]
 Front-end-loading (FEL) should be considered as a sound field development practice
that allows the optimum allocation of capital and human resources, reduces the
uncertainty of key information and ensures a holistic view to all field development plan
decisions.
 Front-end-loading methodology is a 3-step capital project planning process:
- FEL 1: The prefeasibility stage;
- FEL 2: The feasibility stage, and;
- FEL 3: The basic engineering and development stage.
FEL-1 FEL-2 FEL-3
May 2017 G. Moricca SPE 167655 L. Saputelli et others

31 - 2013
Front-End-Loading (FEL) Process [2]
 The FEL methodologies allow and actually force by process due diligence
the Oil & Gas companies to take better decisions during field
development planning process to improve the value of subsurface
resources while minimizing risk during field development execution
phase. The key advantages are:
- Ensure that the business objectives are aligned with the technical
objectives
- Human resources are better utilized
- Financial Risk is minimized
- Early production team participation
- Evaluate a large number of scenarios implies that some
opportunities
- Standard process for a well-defined decision making

Objectives and key activities of the phases
FEASEBILITY SELECT DEFINE EXECUTE OPERATE
G G G
1 2 3
FEL-1 FEL-2 FEL-3 Detailed Operations
Conceptual Preliminary Eng. Design Eng. Design Support
Engineering Engineering Fully define Implement Monitor
scope. execution plan. performance.
Clear frame Generate
goal. alternatives.
 Develop detailed  Final design  Final design
 Identify  Reduce execution plans.
opportunities. uncertainty and  Implement  Benchmark
quantify  Refine estimates execution plan. performance
 Preliminary associated risks. and economic against objectives
assessment of analysis to A/R  Collect, analyze, and competitors.
uncertainties,  Develop expected level. and share metrics
potential return, value for selected and lessons  Share results and
and associated alternatives.  Confirm expected learned. lessons learned.
risks. value meets
 Identify preferred
business  Continue
alternative(s).
 Plan for next objectives. performance
phase.  Plan for next assessment and
phase. identify
opportunities.
Cost accuracy Cost accuracy Cost accuracy
Cost accuracy
±40% ±25% ±15% ±5%
Field Development Planning G Stage Gate – Decision to Proceed

Front-end Loading Methodology
 In the past decades, various initiatives have been put in place to organize
project management knowledge with an emphasis on methodologies
outlined by the Project Management Institute (PMI) and Independent
Project Analysis (IPA).
 The oil and gas industry has consistently used the combination of both
methodologies of the PMI and IPA in the development of major projects,
with particular attention on the front-end loading methodology (FEL), which
combines an approach of so-called "rolling wave planning", with a vision of
technical and cost integration in the light of the IPA's empirical tools.
 The FEL methodology is focused on the early stages of a project, aiming at

progressively increasing the level of maturity of technical information,
limiting investment in each phase, and ensuring that the decision-making
about the continuity of the project in each phase can be developed based on
both technical and financial documentation.
Front-end Loading phases for full
field development project
 FEL 1: Opportunity identification - This is the business assessment phase, where the
verification of strategic alignment with the company’s business plan and market
opportunities takes place. This step involves the definition of the scope and
objectives of the project, as well as an initial estimate of the amount of investment
required, by providing a range of variation in cost.
 FEL 2: Conceptual engineering - This is the stage of development that includes the
evaluation and selection of conceptual alternatives. The main focus of this phase is
the development of conceptual engineering for options listed in FEL 1, in order to
compare the options and define, through the results of the financial-economic
assessment of each option, which alternative will make it through to the next phase.
 FEL 3: Basic engineering - In this phase, the focus is the construction and the
preparation of the project for its corporate approval and future implementation. The
basic engineering of the selected option in FEL 2 is performed, allowing the
calculation of project capex with greater precision. The engineering solution
selected in FEL 2 is technically detailed and more value improving practices are
considered in the development of the basic engineering design.
Tasks to be accomplished for a reliable Field
Development Plan
1
• Set an Integrated FDP Team and Define a clear Target Feasibility
Front End Loading (FEL-1)
2
• Data Acquisition, Data Storing and Data Validation
 Identify opportunities.
 Preliminary assessment.
3
• Development of a robust Reservoir Model  Conceptual Engineering
4
• Conceptual FDP Scenario – Qualitative evaluation
Selection
5
• Field Development Strategy Identification Front End Loading (FEL-2)
6
• Consolidation of FDP Scenario - Quantitative  Generate alternatives
6A
• Economic Evaluation  Identify preferred.
alternative.
6B
• Uncertainty Analysis
• Risk Analysis  Preliminary Engineering.

6C
6D
• Health, Safety and Environmental
6E
• Final Selection Field Development alternative
7
• Field Development Plan Approval
Contents of final FDP document
Typical Contents of a Field Development Plan document:
1. Executive Summary
2. Introduction
3. Field History and Background
4. Reservoir Characterization & Geological Modelling
5. Reservoir Simulation & Performance Prediction
6. Techno-Economic Evaluation of Prediction Scenarios
7. Executive Prediction Scenario
8. Drilling & Completion Proposal
9. Project Scope of Work & Execution Schedule
10. Project Cost Estimation
11. Quality Management System
12. Health, Safety, and Environment
13. Governing Standards
•Set an
Integrated FDP
Team and
1 Define a clear
Target

Identification and Assessment of Opportunities
G G G
1 2 3
goal. alternatives.
risks. value meets
 Identify preferred business  Continue
 Plan for next alternative(s). objectives. performance
phase.
 Plan for next assessment and
phase. identify
Cost accuracy Cost accuracy opportunities.
Cost accuracy Cost accuracy
±40% ±25% ±15% ±5%

May 2017
Stage 1: Identification and Assessment
of Opportunities [1]
 The field development begins when the exploration phase ends:
when an exploration well has made a discovery.
 Only this well can provide the certainty about whether crude oil
or natural gas really does exist in the explored area after the
seismic measurements have been conducted.
 When evaluation of the well data and analysis of the drill cores
come to the clear conclusion that oil or gas has been found, this
means a potential development project has been identified. The
next phase, field development, can now begin.
 The aim of the assessment phase is to highlight the technical and

commercial feasibility of the project.
Stage 1: Identification and Assessment
of Opportunities [2]
 To do so, it is necessary to find out as
much as possible about the reservoir and
to minimize the uncertainties. Actions that
help to do so dynamic reservoir models.
The reservoir engineers generate a 3D
model of the subsurface so that they can
estimate how much oil is hidden under the
surface.
 The engineers plan the entire production phase and address all sorts of
practical questions, such as: How many wells must be drilled and where?
Can the oil be recovered to the surface in an on-shore project with a
simple horse-head pump? Is the oil so corrosive that the pipes need a
special coating? How can the maximum production volume be achieved –
for example, by injecting water or gas into the reservoir? And when should
this procedure begin?
Field Development Planning (FDP)
Field Development Planning is the process of evaluating multiple
development options for a field and selecting the best option based
on assessing tradeoffs among multiple factors:
 Net present value, typically the key driver of decisions for

publicly-traded operators.
 Oil and gas recovery
 Operational flexibility and scalability
 Capital versus operating cost profiles
 Technical, operating and financial risks.

Feasibility Study
 The task is to identify opportunities and perform all required
studies (Feasibility Study) to generate a development plan that
satisfies an Operator’s commercial, strategic and risk objectives.
 The execution of the Feasibility Study involves a continuous

interaction between key elements:
- Subsurface
- Surface
- Business Sub
Surface
 The process requires
continuous and effective
collaboration and alignment
between reservoir, well Business Surface
construction, surface facilities
and commercial teams
Outcomes of the Feasibility Study
 The main objective of Feasibility study is to

identify opportunities and provide consistent
and reliable answers to question like:
- Does the technology exist ?
- Is it technically feasible?
- Can it be built to the required size?
- Can it be installed?
- Do the risks appear manageable?

Feasibility Study Working Plan
During the execution of the feasibility study, the engineers will:
- Investigate the multiple technologies to be used
- Evaluate the costs of each solution, especially during the total life cycle of the
project including capital expenditure for the construction (CAPEX) and
operational expenditure (OPEX) to run the plant
- Estimate construction challenges versus benefits in operations and vice versa
- Measure the impact on the environment (foot print, water and energy
consumption, CO2 emissions, local acceptance, decommissioning and
restoration costs)
- Draft planning corresponding to each solution to identify critical items
- Identify potential risks on the project and hazards for personnel
- List all the required offsite and utilities
- Determine all the infrastructures needed to bring in the feedstock and to export
the production
- Include local constraints about regulation, taxations, employment, content
FDP Integrated Team
An integrated, multidisciplinary team approach is
required for a proper Feasibility study and the others
activities connected with the FDP. The team should
include the following professionals:
 Geologists responsible for geological and petrophysical works.
 Reservoirs engineers responsible for providing production forecast and
economical evaluation.
 Drilling engineers responsible for drilling offshore drilling systems selection
and drilling operations.
 Completion engineers responsible completion design and operations.
 Surface engineers responsible for designing/selection surface and
processing facilities.
 Other professionals, if needed, such as pipeline engineers, land manager,
etc.
FDP Integrated Team
An integrated team is a group composed of members with varied but
complimentary experience, qualifications, and skills that contribute
to the achievement of the organization's specific objectives.
Reservoir
Engineer
Economic Geologist &
Expert Geophysicists
Minimum
components/skills FDP
Integrated Drilling
for an integrated FDP HSE Engineer
Team Engineer
Coordinator
multidisciplinary
team Facilities Completion
Engineer Engineer
Production
Engineer

Responsibility and Role of the Team
Coordinator
Responsibility:
 To successfully deliver a FDP, within the allocated budget,
human resources and timeframe.
Role:
 Be custodian of the objectives of project
 Identify priorities
 Allocate the assigned human resources
 Promote and facilitate the correct integration of permanent and
part-time team components
 Avoid lack of communication among the team component and
management
FDP Target Identification
 Identification of a clear target based on
the data collected during the field
appraisal and in line with company
strategy.
 Use the reservoir numerical model is a key

tool to determine the optimum technique
for recovering of the hydrocarbons from
the reservoir.
 Development plans are defined through simulation studies

considering either a probabilistic or a stochastic approach to
rank options using economic indicators, availability of injection
fluids (i.e., water and/or gas), and oil recovery and risk, among
other considerations.
Main causes of the Failure of FDP
 Incomplete or poor quality reservoir data: contaminated fluid
samples, poor PVT analysis, incomplete pressure survey, partial
knowledge of the areal distribution of fluids saturation, poor
knowledge of the vertical and horizontal areal transmissibility, etc.
 This means that project
teams are forced to make
assumptions about missing
data or about remaining
risks in their production
forecasts.
 Reservoir related problems
have the largest and most
lingering effect on
production.
January 2018 G. Moricca 50
Reservoir Model as the Standard Tool for FDP
 The success of oil and gas FDP is largely determined by the
reservoir: its size, complexity, productivity and the type and Reservoir Model
quantity of fluid it contains. To optimize a FDP, the Outcomes
characteristics of the reservoir must be well defined. dictate
Unfortunately, in some cases, a level of information available
is significantly less than that required for an accurate Volumes
description of the reservoir and estimates of the real situation
need to be made.
Rates
 Reservoir numerical model is a standard tool in petroleum Well

engineering for solving a variety of fluid flow problems involved Architecture
in recovery of oil and gas from the porous media of reservoirs.
Well
Completion
 Typical application of reservoir simulation is to predict future
performance of the reservoirs so that intelligent decisions can Surface
be made to optimize the economic recovery of hydrocarbons Facilities
from the reservoir. Reservoir simulation can also be used to
obtain insights into the dynamic behavior of a recovery process
or mechanism.
Typical Reservoir Study Contents
1. Reservoir Characterization
- Geological Setting
- Stratigraphic and Facies Analysis
- Petrophysical Analysis
- Reservoir Facies and Properties Maps
2. Reservoir Connectivity
- Reservoir Characterization and 3D Geologic Modeling
- Geological Inter-well Connectivity Evaluation
- Fluid and Saturation-Dependent Properties
- Initial Reservoir Pressure Estimation
- PVT Matching
- History Matching Reservoir Performance
3. Evaluation of Development Strategies

- Evaluation Recovery schemes: natural depletion;
natural depletion assisted by water (Water-flood),
gas injections, alternate water and gas injection, etc.
- Oil, Gas and Water Production Forecast
- Evaluation Infill Potential
Expected Reservoir Study Outcomes
- Original Hydrocarbon in place - OHIP
- Recoverable Hydrocarbons (Reserves and Reserves classification: Proven, Probable,
Possible)
- Oil, water and gas production profile (for field, well, flow units)
- Fluid Porosity map
- Permeability (vertical and horizontal) map
- Initial Static Pressure map
- Actual Static Pressure map (for brown fields)
- Fluids Saturation map
- Most probable reservoir drive mechanism and its strength
- Gas-Oil and the Oil-Water Contact depth
- Number of production wells to be drilled
- Duration of Natural Flow period for each well
- Identification of the most effective Secondary Hydrocarbon Recovery technique to be
adopted
- Number of injection wells to be drilled (if required)
- Number of disposal wells to be drilled (if required)
- Surface and downhole coordinates of planned wells to be drilled
- Water or Gas Injection profile (if required)
- Workover plan to sustain the hydrocarbon production during the field life cycle
•Data Acquisition
and Analysis
2

Data Acquisition
 All the available data coming from exploration, appraisal and
exploitation (in case of brown field) phases:
- Seismic
- Geologic
- Logging
- Coring
- Fluids
- Well Test
- Drilling History
- Completion History
- Production history (if available)
- Injection history (if available)
Should be collected in a Integrated Database to support the definition
of all activities (reservoir, drilling, completion, fluid transportation,
measuring devices selection, fluids processing) for a successful FDP.

The Integrated Database [from L. Cosentino 2001 Technimp]
 An Integrated database is a data repository system to interactively

store, retrieve and share E&P data, within a controlled and secure
environment.
 A Data Warehouse or Data Storage can be defined as an integrated,

non-volatile, time variant collection of data to support management
needs. From this viewpoint, it implies a reduced degree of interaction
with the end user.
 Data Management is the process of storing, organizing, retrieving and

delivering data/information from a database a Data Warehouse.
 The integrated database is one of the key issues in an integrated fiend

development team. The availability of high quality data, both static
and dynamic, and the rapidity of access to this data, is a crucial factor
for an successful a field development study.
Three Levels Database [from L. Cosentino 2001 Technip]
 Nowadays, in the E&P companies three levels of database are available:

- Corporate database
- Project database
- Application database
 Corporate database
- Corporate database stores the official data of the company.
- Data quality is high and the rate of change (volatility) is low.
- No new data is created within the Corporate database, and it does
not feed any application, except its own set of utilities for browsing,
selecting and exporting.
- Data are delivered in a format compatible with the Project database.
- Although the database can be accessed by anyone, changes in
content are controlled by an administrator.
- It usually resides in a mainframe and is characterized by the many
controls that are placed around it.
 Project database
- It contains data relevant to a particular project or asset.
- It is made up of information withdrawn from the Corporate database
and is accessed using software from different vendors.
- Its size is highly variable, from few to thousands of wells, and it may
contain multiple versions of the same data.
- All the professionals working on the team can access and modify the
database, so that the volatility is high.
- New data is generated through the interpretation stages.
- When the project has been completed, the interpreted data is
returned to the Corporate database and becomes the new reference
information.

 Application database
- It contains data relevant to a single application.
- It is normally accessed by any component of FDP integrated team,

working on a particular application and the information is therefore
highly volatile.
- Also, the information may not be easily shared with other

application databases, when vendors are different, unless a
dedicated interface software is available.
- When the interpretation is completed, the data is stored in the

Project database.

Database Structure and data QC
 All the data relevant to the active project should be
carefully revised and validated before being inserted
in the DB.
L. Cosentino - Technip 2001

Project Data Analysis and Lesson Learning
 All the data relevant to the active project

should be collected, revised and analysed.
 A Lesson Learning Report should be

generated.
 The documentation should maintain an

adequate level of confidentiality, but should
be accessible for the whole FDP team
components.
Data required to build a reservoir model
Acquisition
Classification Data Responsibility
Timing
Structure, stratigraphy, faults, bed thickness, fluids, inter-well
Seismic heterogeneity
Exploration Seismologists, Geophysicist
Depositional environment, diagenesis, lithology, structure, Exploration, discovery Exploration & development
Geological faults, and fractures & development geologists
Depth, lithology, thickness, porosity, fluid saturation, gas/oil,

Geologists, petrohysicists, and
Logging water/oil and gas/water contacts, and well-to-well Drilling
engineers
correlations
Geologists, drilling and
Coring Drilling reservoir engineers, and
laboratory analysts
Depth, lithology, thickness, porosity, permeability, and residual
Basic fluid saturation
Relative permeability, capillary pressure, pore compressibility,
Special grain size, and pore size distribution
Discovery, delineation,
Formation volume factors, compressibilities, viscosities, Reservoir engineers and
Fluid chemical compositions, phase behavior, and specific gravities
development, and
laboratory analysts
production
Reservoir pressure, effective permeability-thickness, Discovery, delineation,

stratification, reservoir continuity, presence of fractures or development, and Reservoir and production
Well Test faults, productivity and injectivity index, and residual oil production and engineers
saturation injection
Oil, water, and gas production rates, and cumulative

Production & Production and reservoir
production, gas and water injection rates and cumulative Production & Injection
Injection engineers
injections, and injection and production profiles
From A. Satter & G. Thakur

•Development
of a robust
Reservoir
3 Model

Typical Application of the Reservoir Model
 The application of the reservoir model is varied and extensive.
The most typical are listed below.
Pitfalls or Other
Situation Expected Results
Considerations
New discoveries  Determine optimal number of  Limited data, sometime from only a
infilling wells single well
 Size and type of production facilities  Drive mechanism
 Decide whether to maximize  Terms of operating license or lease
production rate or ultimate recovery
Deepwater  Prospect evaluation  Limited data, no wells available

exploration  Scenario planning
Mature fields  Answers to sudden production  Relatively inexpensive way to extract
problems maximum value from development
costs
Implementation of  Determine appropriate recovery  Reservoirs to viewed under dynamic
secondary recovery method conditions from the earliest possible
date
Decommissioning or  Determine future production  Unanticipated future production
abandonment volumes problems might reduce property
May 2017 G. Moricca value 64
Major Tasks of the Reservoir Engineers
 How much oil and gas is originally in place?
 What are the drive mechanisms for the reservoir?
 What are the trapping mechanisms for the

reservoir?
 What will the recovery factor be for the reservoir by primary

depletion?
 What will future production rates from the

reservoir be?
 How can the recovery be increased economically?
 What supplementary data are needed to

answer these questions?
Why we need a Reservoir Simulation Model
From L. Cosentino 2001 Technip
 There are many reasons to perform a simulation study. Perhaps the most
important, from a commercial perspective, is the ability to generate oil
production profiles and hence cash flow predictions.
 In the framework of a reservoir study, the main objectives of numerical

simulation are generally related to the computation of hydrocarbon production
profiles under different exploitation options.
 In this context, there is little doubt that reservoir simulation is the only qualified
technique that allows for the achievement of such objectives. Simpler
techniques like material balance are particularly useful for evaluating the
reservoir mechanisms, but are not suited for reservoir forecasting.
 Reservoir simulation, on the other hand, offers the required flexibility to study
the performance of the field under defined production conditions. All
commercial simulators are provided with sophisticated well-management
routines that allow the engineer to specify the operating conditions at the levels
of producing interval, well, well group, reservoir and field.
Geological and Dynamic Reservoir Model
 The geological model defines the “geological units” and their continuity and
compartmentalization.
 The geological model

combined with the dynamic
model provides a means (the
reservoir model) of
understanding the current
performance and predicts the
future performance of the
reservoir under various “what
if” conditions so that better
reservoir exploitation
decisions can be made.

Geological Modelling Workflow

Info to be generated by Reservoir Study [1]
 Reservoir Characteristics
1. Areal and Vertical extent of production formation
2. Isopach map of gross and net pay
3. Correlation of layers and others zones
 Reservoir Rock Properties

1. Areal variation of average permeability, including directional
trends derived from geological interpretation.
2. Areal variation of porosity
3. Reservoir heterogeneity, particularly the variation of
permeability with thickness and zone
 Reservoir Fluid Properties

1. Gravity, FVF, and viscosity as a function of reservoir pressure

Info to be generated by Reservoir Study [2]
 Primary Producing Mechanism
1. Identification of producing mechanism, such as fluid expansion,
solution-gas drive, or water drive
2. Existence of gas cap or aquifers
3. Estimation of oil remaining to be produced under primary
operations
4. Pressure distribution in the reservoir
 Distribution of oil at beginning of waterfool

1. Trapped-gas saturation from solution-gas drive
2. Vertical variation of saturation as a result of gravity segregation
3. Presence of mobile connate water
4. Areas already waterflooded by natural water drive
 Rock/Fluid Properties
1. Relative permeability data for the reservoir rok
Integrated Team for Reservoir modelling
 Reservoir model is an integrated modelling tool, prepared jointly by
geoscientists and engineers.
 The integrated reservoir
model requires a thorough
knowledge of the geology,
rock and fluid properties.
 The geological model is

derived by extending
localized core and log
measurement to the full
reservoir using many
technologies such as
geophysics, mineralogy,
depositional environment,
and diagenesis.

Integrated planning for reservoir
studies
 To maximize team synergy and avoid delay, and integrated approach to
reservoir studies planning is recommended.
L. Cosentino - Technip 2001

Basic Petroleum Engineering
Concepts for a consistent FDP
 Reservoir modelling
 Original Hydrocarbon in Place
 Reserves Estimation
 Reserves Classification
 Reservoir Depletion Strategy
 Water Injection Strategy
 Waterflooding Strategy
 Well Architecture Strategy
 Well Completion Strategy
Reservoir
Modelling

Reservoir most common simplified
geological structures

Basic of Reservoir Modelling [1]
 Reservoir simulation is a technique in which a computer-based
mathematical representation of the reservoir is constructed and then
used to predict its dynamic behavior.
 The reservoir is gridded up into a number (thousands or millions) of grid
blocks.
 The reservoir rock properties (porosity, saturation and permeability), and
the fluid properties (viscosity and PVT properties) are specified for each
grid block.

Basic of Reservoir Modelling [2]
 The reservoir simulation operates based on the principles of balancing
the three main forces acting upon the fluid particles (viscosity, gravity
and capillary forces), and calculating fluid flow from one grid block to the
next, based on Darcy’s law.
 The driving force for the fluid flow is the pressure difference between
adjacent grid blocks.
 The calculation of fluid flow is repeatedly performed over short time
steps, and at the end of each time step the new fluid saturation and
pressure is calculated for every grid block.
From F. Jahn , M. Cook & M. Grahm - Elsevier 2008

Basic of Reservoir Model Initialization
 When the reservoir model (geological and dynamic) has been build, the model
Initialization is required to establish the initial pressure and saturation equilibrium
conditions.
 To initialize a reservoir simulation model, the initial oil, gas and water pressure
distribution and initial saturations must be defined in the reservoir model. Pressure data
are usually referenced to some datum depth. It is convenient to specify a pressure and
saturation at the datum depth and then to calculate phase pressures based on fluid
densities and depths
 The initialization of the reservoir simulation models is the process where the reservoir
simulation model is reviewed to make sure that all input data and volumetrics are
internally consistent with those in the geo-model. The reservoir simulation model should
normally be in dynamic equilibrium at the start of production, but there might be some
exceptions to that rule. Non-equilibrium at initial conditions may imply some data error
or the need to introduce pressure barriers (thresholds) between equilibrium regions.
 The initialisation phase allows for the calculation of the OOIP in the model, which is
then compared with the available volumetric figures.

Basic of Reservoir Model Validation
 At this step, the main objective is to verify that the reservoir simulation model
accurately represents the structure and properties in the geologic model. The
following validation steps are recommended:
- Visualize reservoir simulation grid, each grid layer and each cross-section,
to ensure that simulation grid is constructed correctly and all gridblocks
are suitable for reservoir simulations.
- Compare reservoir simulation grid with the geological grid and make sure
that reservoir simulation grid layers and fault geometries are consistent
with the structural depth maps used.
- Visualize and compare reservoir simulation model properties (porosity,
permeability, net-to-gross ration and fluid saturation) with those in the
geological model.
- Compare reservoir simulation model gross-rock-volume, pore volume,
and hydrocarbon in-place volumes with the geological model volumes.
- Verify that the wells are consistently represented in the reservoir
simulation grid.
Basic of History Match [1]
 Is the reservoir model reliable enough to generate information
useful for business purpose ?
 If the production history is available (Brown field), the History Match

give a very reasonable answer to the question.
 If the production history is not available (Green field), we can judge

the “consistency” but not the “reliability” of the outcomes generated
by reservoir model simulation. In these circumstances, the skillfulness
of reservoir engineers is a key factor.
 The accuracy of the results is related to a correct problem statement

and to the quantity and quality of the available input data (garbage
in, garbage out). The experience and knowledge of the engineers
involved in the study represent another important factors.

Basic of History Match [2]
 If the production history is available (Brown field), perform the History Match.
 The objective of history matching is to reproduce, as correctly as possible, the

historical field performance, in terms of measured rates and pressure. The
check should be always done both on a field and well basis.
 Basically, History Matching is a model validation procedure, which consists in

simulating the past performance of the reservoir and comparing the results
with actual historical data.
 When differences are found, modifications are made to the input data in order
to improve the match.
 More generally, history matching is a way of checking sensitivity to variations in

the input parameters and eventually of understanding the representativeness
of the model. From this point of view, the history matching process can be
considered to be a valuable technique to improve the overall reliability of the
simulation model which, if it is properly performed, will highlight flaws and
inconsistencies in the existing reservoir description.
Pressure and Saturation History Match
Workflow [L. Cosentino – Technip 2001]
[25] Toronyi RM, Saleri NG. Engineering control

on reservoir simulation. Part 2. SPE paper
17937.
[25] Toronyi RM, Saleri NG. Engineering control

on reservoir simulation. Part 2. SPE paper
17937.

History Match Example
Water Cut, Reservoir Pressure, Oil Rate and GOR history match

OHIP Estimation
by Reservoir
Model

Original Hydrocarbon in Place (OHIP)
Estimation
 The determination of the Original Hydrocarbon In Place (OHIP) is typically
the concluding phase of the geological study, when the reservoir
description is completed.
 Even though the economic importance of a project is obviously much

more closely related to the reserves of a given field (i.e., the producible
part of the OHIP), the OHIP is the parameter that gives the dearest view
of the extension of the hydrocarbon accumulation and consequently of
the foreseeable exploitation projects.
 In the framework of an integrated reservoir study, the importance of an

accurate determination of the OHIP value is also related to the potential
reservoir energy that the hydrocarbon volume represents, which is
dependent on the compressibility of the oil and gas phases.
Original Hydrocarbon in Place
(OHIP) estimation
 Two technique are available for OHIP calculation:
- Volumetric computation (no production data are
required)
- Material balance techniques (production data are
required)
 The volumetric computation of the OHIP can be

performed on a deterministic or probabilistic basis.

OHIP Estimation by Volumetric
Method - Deterministic Approach
 The deterministic evaluation is the technique that has
traditionally been applied for the computation of the
OHIP since the beginning of the oil industry.
 In this methodology, all the various input parameters

are calculated deterministically and no allowance is
given for any related uncertainty. In other words, the
distributions of the geological parameters are
considered free of error, even if this is obviously not
true.

OHIP Estimation by Volumetric Method
 At the very early stage, when the reservoir
model is not available yet, a preliminary project
evaluation can be made on the base of
reserves estimated by a volumetric calculation.
 The volumetric method for estimating

recoverable reserves consists of determining
the original hydrocarbon in place (OHIP) and
then multiply OHIP by an estimated recovery
factor.
 The OHIP is given by the bulk volume of the
reservoir, the porosity, the initial oil saturation,
and the oil formation volume factor.
 The bulk volume is determined from the

isopach map of the reservoir, average porosity
and oil saturation values from log and core
analysis data, and oil formation volume factor
from laboratory tests or correlations.

Data required for Reserves Estimation
by Volumetric Method
Areal Extent (productive limits of reservoir)
- Structure map
- Seismic
- Analogy
Net pay thickness

- Well logs
Porosity
- Well log and cores
Water saturation
- Well logs and/or cores
Recovery efficiency
- Analogy
- Drive mechanism
- Reservoir characteristics
OHIP Deterministic scenario
 When using the deterministic scenario method, typically there should also be low,
best, and high estimates, where such estimates are based on qualitative assessments
of relative uncertainty using consistent interpretation guidelines. Under the
deterministic incremental (risk-based) approach, quantities at each level of uncertainty
are estimated discretely and separately.
 It is customary in the industry to describe this uncertainty in terms of a low and high
range.
OHIP Estimation by Volumetric Method
Probabilistic (Stochastic) Approach
 The basic idea behind a probabilistic computation is to take into account
the uncertainties related to the various parameters involved in the
computation.
 The simplest approach is therefore to treat the variable of equation used

to calculate the OHIP [ A x h x ф x So ] in a probabilistic way, by assigning
them distribution functions, rather than a single, deterministic value.
 This is the so-called Monte Carlo approach. In its simplest, adimensional

application, it amounts to randomly sampling the input parameters
distributions, in order to generate a probability distribution function of
the variable of interest, the OHIP in this case.

How the Stochastic Models works [1]
 The very well known equation giving the OHIP is:
OHIP = A x h x ф x So
Where: (A) is the reservoir area average, (h) is the net hydrocarbon thickness, (φ)
the average porosity and (So) the oil saturation.
 Using the deterministic approach, OOIP can be estimated by simply multiplying

the “best estimate” for each parameter involved in the algebraic equation. The
deterministic approach assumes that the most likely value of every input is
encountered simultaneously, which is generally unrealistic.
 The presence of uncertainty in reservoir

modeling parameters and the stochastic
nature of those parameters encourage the
use of Monte Carlos Simulation, which
provides for this uncertainty through
random sampling of parameters that
cannot be assigned a discrete value.
How the Stochastic Models works [2]
 Monte Carlo Simulation approach can make use of independent probability
distribution to arrive at an overall probability distribution.
 Stochastic models (as Monte Carlo Simulation ) provide the average answer
(assuming that all input values represent the average input value) but tell us
nothing of the range or probability of possible answers.
A x h x ф x So = OOIP
 Obviously, if the input parameters are incorrect or not representative of

real distribution (limited number of measurements) or the associated
sampling model is not appropriate, the output reflect the intrinsic error or
uncertainties.
OHIP Estimation by Volumetric Method -
Stochastic Approach
 Probability distribution of the OHIP: no a single value, but a more
representative probabilistic distribution of the function (OHIP) of interest.
12.4 MMbbl
 The average expected oil reserve
is 12.4 million barrels
 The minimum expected oil
reserve is 5.26 million barrels
 The maximum expected oil
reserve is 26.24 million barrels
5.26 26.24
MMbbl MMbbl
Total Recoverable Oil (Millions BBL)

OHIP Stochastic Approach: P10 – P50 – P90
 It is customary in the industry to describe this uncertainty in terms of a low (P90) and
high (P10) range.
 The range of uncertainty of the recoverable and/or potentially recoverable volumes may
be represented by either deterministic scenarios or by a probability distribution. When
the range of uncertainty is represented by a probability distribution, a low, best, and
high estimate shall be provided such that:
- There should be at least a 90% probability (P90) that the quantities actually
recovered will equal or exceed the low estimate.
recovered will equal or exceed the best estimate.
recovered will equal or exceed the high estimate.
 For volume estimates, a low (P90) - high (P10) range is thus unambiguously defined by
statistics. The situation is more complex for a production forecast because the forecast
is a timeline and not a scalar. This has led to a variety of uncertainty definitions for the
forecast used in the industry, and has hampered progress in deriving the best methods,
tools and processes for deriving the forecast uncertainty range.

OHIP Estimation
by Material Balance
Technique

OHIP Estimation by Material Balance
Technique
 In all cases, the OHIP value determined from material balance computation
must be compared with the volumetric HOIP from the geological study.
The two estimations will never agree exactly and any difference greater
than, say, 10% should be investigated. When flaws in either technique are
ruled out and when robust material balance solution are available.
 Two cases may arise:
- The material balance gives lower OHIP than the volumetric
calculation. In this case, the inconsistency may be related to
differences in the reservoir volume being investigated, for example in
the presence of faulted reservoirs, where some of the fault blocks are
not in communication with the main producing part of the reservoir.
- The material balance gives higher OHIP than the volumetric
calculation. Since the material balance provides an estimation of what
Schilthuis called active oil, it is possible that too strong a cut-off has
been applied in the volumetric calculation and that some of the oil
trapped in the low porosity rocks actually contributes to the global
expansion.
OHIP estimation by Material Balance Method
 The Material Balance OHIP estimation is performed by the Havlena and Odeh techniques.
WD Function Plot Campbell Plot
Campbell plot (graphical diagnostic plot) re-arrange the material balance

The WD plot shows the dimensionless aquifer function versus type equation such that a plot of the ratio of net produced volumes (Prod –
curves. This plot indicates the location of the history data points in Aquifer Influx and /or injection) divided by expansion terms yields a
dimensionless coordinates. horizontal line with an intercept equal to initial volumes in place.
Energy Plot Analytical Plot
This is a plot of tank pressure against cumulative

The Energy plot shows the contribution of various phase produced (in this case oil). The data points are
May 2017
drive mechanisms tower production with time. G. Moricca 98
the historical pressure and cumulative rate data.
Recoverable oil
(Reserves) Estimation
when reservoir model is
not available

Estimating recoverable volume of oil or
gas if reservoir model is not available
 Recoverable oil or gas depends on reservoir quality and

reservoir drive.
 If reservoir model is not available, reservoir analogs help

narrow the range of values for variables that determine
recovery factor (RF). Use the equation below to estimate
the recoverable oil or gas in a reservoir:
Recoverable oil or gas = OHIP x RF

Estimating recovery factor
 Drive mechanism has the greatest geological impact on recovery factor.
Narrowing the range in recovery factor is a matter of estimating how
much difference pore type and reservoir heterogeneity impact the
efficiency of the drive mechanism. To estimate the recovery factor, use
the procedure below:
1. Decide which drive mechanism is most likely from the geology of

the prospective reservoir system and by comparing it with reservoir
systems of nearby analog fields or analog fields in other basins.
2. Multiply OOIP or OGIP by the recovery factor for the expected

drive.
3. Narrow the recovery factor range by predicting the thickness of

the reservoir by port type. Port type affects recovery rate. For
example, in a reservoir with strong water drive and macroporosity,
recovery will be up to 60%, mesoporosity recovery will be up to
20%, and microporosity recovery will be 0%.
Recovery factors for different drive
types mechanism
 The table below shows recovery factor percentages for different drive
mechanisms for oil vs. gas reservoirs.
Reservoir drive Percent ultimate recovery [%]

mechanism Gas Oil
Strong water 30–40 45–60
Partial water 40–50 30–45
Gas expansion 50–70 20–30
Solution gas N/A 15–25
Rock 60–80 10–60
Gravity drainage N/A 50–70

Reserves
Classification

Proven Reserves [1]
 Proved reserves are those quantities of petroleum which, by
analysis of geological and engineering data, can be estimated with
reasonable certainty to be commercially recoverable, from a given
date forward, from known reservoirs and under current economic
conditions, operating methods, and government regulations.
Proved reserves can be categorized as developed or undeveloped.
 If deterministic methods are
used, the term reasonable
certainty is intended to express
a high degree of confidence
that the quantities will be
recovered. If probabilistic
methods are used, there
should be at least a 90%
probability that the quantities
actually recovered will equal or
exceed the estimate.
Proven Reserves [2]
 In general, reserves are considered proved if the commercial
producibility of the reservoir is supported by actual production or
formation tests. In this context, the term proved refers to the
actual quantities of petroleum reserves and not just the
productivity of the well or reservoir.
 In certain cases, proved
reserves may be assigned
on the basis of well logs
and/or core analysis that
indicate the subject
reservoir is hydrocarbon
bearing and is analogous to
reservoirs in the same area
that are producing or have
demonstrated the ability to
produce on formation tests.
Proven Reserves [3]
 The area of the reservoir considered as proved includes (1) the area
delineated by drilling and defined by fluid contacts, if any, and (2)
the undrilled portions of the reservoir that can reasonably be
judged as commercially productive on the basis of available
geological and engineering data.
 In the absence of data
on fluid contacts, the
lowest known
occurrence of
hydrocarbons controls
the proved limit
unless otherwise
indicated by definitive
geological,
engineering or
performance data.
Proven Undeveloped Reserves
 Reserves in undeveloped locations may be classified as proved
undeveloped provided (1) the locations are direct offsets to wells
that have indicated commercial production in the objective
formation, (2) it is reasonably certain such locations are within the
known proved productive limits of the objective formation, (3) the
locations conform to existing well spacing regulations where
applicable, and (4) it is reasonably certain the locations will be
developed.
 Reserves from other locations are categorized as proved

undeveloped only where interpretations of geological and
engineering data from wells indicate with reasonable certainty
that the objective formation is laterally continuous and contains
commercially recoverable petroleum at locations beyond direct
offsets.
Production Forecast
Prediction Cases

Production Forecast
 Once the base case prediction run has been calibrated for the prevalent
or observed field conditions, a complete forecast simulation is performed.
The results of this run should be carefully checked for the presence of
errors, oversight and numerical instabilities. In addition, a check should be
made that the well management/drilling scheme has been correctly
implemented and that no unexpected departures are observed in the
resulting profiles.
 As far as the results are concerned, the analysis of a production forecast

can be made in a variety of ways, the most typical being tables and plots
of oil rates and cumulative oil production vs. time.
 A comparison of the results of the various cases will show at a glance the
most interesting (technical) exploitation options

Reservoir
Development Strategy

Field Flow Production Profile
 An oilfield typically exhibits the production profile seen in figure below. Some fields have short plateau
periods (reservoir with no pressure support = Natural Flow) , more resembling a single peak, while
others (reservoir with strong pressures support due to the presence of a strong active aquifer or
efficient pressure support by injection of water or gas according to the specific reservoir
characteristics) may keep production relatively constant for many years. But, at some point, all fields
will reach the onset of decline and begin to experience decreasing production.
 The decline of field flow rate can be against by appropriate depletion strategy involving a proper
pressure support according to the reservoir characteristics.
No pressure
support

Reservoir Drive Mechanisms
 Four type of driving mechanism are
possible:
1. Depletion or Solution gas drive

2. Gas cap drive
3. Water drive
4. Combination drive

Solutions Gas Drive
Reservoir Behavior
and Development
Strategy

Development Strategy for Depletion or
Solution Gas Drive Reservoirs [1]
 Solution drive occurs on a reservoir which contain no initial gas cap
or underlying active aquifer to support the pressure and therefore
oil is produced by the driving force due to the expansion of oil and
connate water, plus any compaction drive.
 The
contribution to Solution Gas Drive
Reservoir
drive energy
from
compaction and
connate water
is small, so the
oil
compressibility
initially
dominates the
drive energy.
Development Strategy for Solution
Gas Drive Reservoirs [2]
 Because the oil compressibility itself is low, pressure drops rapidly as
production takes place, until the pressure reach the bubble point.
 Once the bubble point is reached, solution gas starts to become liberated
from the oil, and since the liberated gas has a high compressibility, the
rate of decline of pressure per unit of production slow down.
F. Jahn , M. Cook & M. Grahm 2008

Development Strategy for Solution
Gas Drive Reservoirs [3]
 Once the liberated gas has overcome a critical gas saturation in the
pores, below which it is immobile in the reservoir, it can either
migrate to the crest of the reservoir under the influence of
buoyancy forces, or move toward the producing wells under the
influence of the hydrodynamic forces caused by the low pressure
created at the producing well.
 In order to make use of the high compressibility of the gas, it is

preferable that the gas forms a secondary gas cap and contributes
to the driving energy.
 This can be encouraged by reducing the pressure sink at the

producing wells (which means less production per well) and by
locating the producing wells away from the crest of the field.
Development Strategy for Solution Gas
Drive Reservoirs [4]
 In a steeply dipping field,
wells would be located
down-dip. However, in a
field with low dip, the
wells must be perforated
as low as possible to
keep away from a
secondary gas cap.
 There are three distinct

production phases,
defined by looking at the
oil production rate.

 After the first production date, there is a build-up period, during
which the development wells are being drilled and brought on
stream, and its shape is dependent on the drilling schedule.
 Once the plateau is reached, the facilities are filled and any extra
production potential from the wells is choked back.
 The facilities are usually designed for a plateau rate which

provides an optimum offtake from the field, where the optimum is
a balance between producing oil as early as possible and avoiding
unfavorable displacement in the reservoir, caused by producing too
fast, and thereby losing ultimate recovery (UR).
 Typical production rates during the plateau period vary between

2and 5% of STOIHP per year.
 Once the well potential can no longer sustain the plateau oil rate,
the decline period begins and continues until the abandonment
rate is reached.
 In the solution gas drive reservoirs, the producing GOR starts at the
initial solution GOR (Rsi), decreases until the critical gas saturation
is reached, and then increases rapidly as the liberated gas is
produced into the wells.
 The producing GOR may decline in later years as the remaining
volume of gas in the reservoir diminishes.
 Commonly the water cut remains small in solution gas drive

reservoirs, assuming that there is little pressure support provided
by the underlying aquifer.

 The typical Recovery Factor (RF) from a reservoir development by
solution gas drive is in the range 5-30%, depending largely on the
absolute reservoir pressure, the solution GOR of the crude, the
abandonment conditions and the reservoir dip.
 The upper end of this range may be achieved by a high dip
reservoir (allowing segregation of the secondary gas cap and the
oil), with high GOR, light crude and a high initial reservoir
pressure.
 Abandonment conditions are caused by high producing GORs and
lack of reservoir pressure to sustain production.
 The low RF may be boosted by implementing secondary recovery
techniques, particularly water injection, or gas injection, with the
aim of maintain reservoir pressure and prolonging plateau and
decline periods.
 The decision to implement these techniques is both technical and
economical.
 Technical considerations
would be the external
supply of gas, and the
feasibility of injecting
the fluids into the
reservoir.
 Multiple reservoir
simulation runs,
combined with an
adequate economic
analysis, are require to
define the problem and
identify a proper F. Jahn , M. Cook & M. Grahm 2008
optimized solution.
Solution Gas Drive
Reservoirs Performance
 Pressure (P), gas saturation (Sg).

producing GOR (R), and
cumulative producing GOR (Rps)
as a function of OOIP recovered
for a solution gas drive, black oil
reservoir.
 Pressure and producing GOR as a

function of OOIP recovered for a
Louisiana volatile-oil reservoir.
Gas Cap Drive
Reservoir Behavior
and Development
Strategy

Development Strategy for Gas Cap Drive
Reservoir [1]
 The initial condition for gas cap drive is an initial gas cap. The high
compressibility of gas provide drive energy for production, and
the larger the gas cap, the more energy is available
Gas Cap Drive Reservoir

Reservoir [1]
 The well position follow the same reasoning as for solution gas
drive; the objective being to locate the producing wells an their
perforations as far away from the gas cap (which will expand with
time) as possible but not so close to the OWC to allow significant
water production via coning.

Reservoir [2]
 Compared to the solution gas drive case, the typical production
profile for gas cap drive shows a much slower decline in reservoir
pressure, due to the energy provided by the highly compressible
gas cap, resulting in amore prolonged plateau and a slower
decline.

Reservoir [3]
 The producing GOR increase as the expanding gas cap
approaches the producing wells, and gas is coned or cusped into
the producer. Supposing a negligible aquifer movement, the water
cut remains low.
 Typical RFs for gas cap drive are in the range 20-60% influenced by
the field dip and the gas cap size.
 Abandonment conditions are caused by very high producing
GORs, or lack of reservoir pressure to maintain production, and
can be postponed by reducing the production from high GOR
wells, or by recompleting these wells to produce further away
from the gas cap.
 Natural gas cap drive may be supplemented by reinjection of
produced gas, with the possible addition of make-up gas from an
external source.
May 2017 G, Moricca 127
Reservoir [4]
 The gas injection well
would be located in the
crest of the structure,
injecting into the existing
gas cap.
simulation runs, combined
with an adequate
economic analysis, are
require to define the
problem and identify a
proper optimized solution.

Gas Cap Drive Reservoir Characteristics
 Broadly, gas caps

are classified as
segregating or
non-segregating.
 The table
summarizes the
distinguishing
characteristics of
each.
PetroWiki

Segregating Gas Caps Reservoir
 Distribution of water, oil, and gas and position of gas/oil contact (GOC) in a
segregating-gas-cap reservoir: (a) before production and (b) during depletion.
 Segregating gas caps are gas caps that grow and form an enlarged gas cap zone.
 The segregation-drive mechanisms can be augmented by crestal gas injection.
Non-Segregating Gas Caps Reservoir
 Distribution of water, oil, and gas in a non-segregating-gas-cap reservoir: (a) at

discovery and (b) during depletion.
 Non-segregating gas caps do not form an enlarged gas-cap zone, and their GOC
appears stationary.
 The gas-cap gas expands but the displacement efficiency is so poor that the
expanding gas appears to merely diffuse into the oil column.
Gas Cap Drive Reservoir
Performance
The effect of dimenstionless gas cap

size (m) on final primary oil recovery
and peak producing GOR for a west
Texas black oil reservoir. Recoveries
reported as percent of oil-leg OOIP.
Water Drive
Reservoir Behavior
and Development
Strategy

Development Strategy for Water Drive
Reservoir [1]
 Neural water drive occurs when the underlying aquifer is both large
(typically greater than ten times of the oil volume) and the water is
able to flow into the oil column, that is it has a communication path
and sufficiently permeable.
 If these conditions are Water Drive Reservoir

satisfied, then once
production from the
oil column creates a
pressure drop the
aquifer respond by
expanding, and water
moves into the oil
column to replace the
voidage created by
production.

Reservoir [2]
 Since the water is compressibility is low, the volume of water must be
large to make this process effective, hence the need for the large
connected aquifer. In this context, “large” would be 10 to 100 x the
volume of oil in place.
 The prediction of
the size and
permeability of the
aquifer is usually
difficult, since there
is typically little data
collected in the
water column.

Reservoir [3]
 Hence the prediction of aquifer response often remain a major
uncertainty during reservoir development planning.
 In order to see the reaction of an aquifer, it is necessary to

produce from the oil column, and measure the response in
terms of reservoir pressure and fluid contact movement.
 Use is made of the material balance technique to determine the

contribution to pressure support made by the aquifer. Typically 5%
of STOIIP must be produced to measure the response. This may
take a number of years.

Reservoir [4]
 According to the location of the
aquifer relative to the reservoir,
they are classified as :
- Peripheral waterdrive -- the
aquifer areally encircles the
reservoir, either partially or
wholly Edgewater drive aquifer
- Edgewater drive -- the aquifer

exclusively feeds one side or
flank of the reservoir
- Bottomwater drive -- the
aquifer underlays the
reservoir and feeds it from
beneath
May 2017 G. Moricca Bottomwater drive aquifer137
Reservoir [5]
 Water drive may be imposed by water injection into the reservoir,
preferably by injecting into the water column to avoid by-passing
down-dip oil.
simulation runs,
combined with an
adequate
economic analysis,
are require to
define the
problem and
identify a proper
optimized
solution. F. Jahn , M. Cook & M. Grahm 2008

Reservoir [6]
 If the permeability in the water leg is significantly reduced due to
compaction or diagenesis, it may be necessary to inject into the
oil column.
 A common solution is to initially produce the reservoir using
natural depletion, and to install water injection facilities in the
event of little aquifer support.
 The aquifer response (or impact of the water injection wells) may
maintain the reservoir pressure close to the initial pressure,
providing a long plateau period and slow decline of oil
production.
 The producing GOR may remain approximately at the solution
GOR if the reservoir pressure is maintained above the bubble
point.
Reservoir [7]
 The outstanding
feature of the
production
profile is the
large increase
in water cut
over the life of
the field, which
is usually the
main reason for
abandonment. F. Jahn , M. Cook & M. Grahm 2008

Waterflooding

Waterflooding
 Waterflooding is a process used to inject

water into an oil-bearing reservoir for pressure
maintenance as well as for displacing and
producing incremental oil. Since waterflooding
usually follows “primary” production, it is often
called a “secondary” recovery technique.

Basic of Waterflooding Process
 Waterfooding is the injection of water into a wellbore to push, or “drive” oil to another
well where it can be produced. The principal reason for waterflooding an oil reservoir is to
increase the oil-production rate and, ultimately, the oil recovery.
 This is accomplished by "voidage replacement"—injection of water to increase the

reservoir pressure to its initial level and maintain it near that pressure.
 The water displaces oil from the pore spaces,

but the efficiency of such displacement
depends on many factors (e.g., oil viscosity
and rock characteristics).
 Waterflooding is one of the most widely used

post-primary recovery method. Reservoir
engineers are responsible for waterfood
design, performance prediction, and reserves
estimation. They share responsibilities with
production engineers for the
implementation, operation.
William M. Cobb & Associates, Inc.

Immiscible displacement
 In the processes of immiscible displacement, the composition of the
displacement fluid (e.g. water) and the displaced fluid (oil) remains unaltered
and a separation interface is maintained throughout the entire process; water
and oil constitute two completely distinct fluid phases.
 A process of immiscible displacement can occur naturally where an active aquifer
is present, or can be induced by injecting water as the displacement fluid, as is
usually the case, or a dry gas.

Microscopic displacement efficiency
 Microscopic Displacement Efficiency (MDE) reflects the residual oil saturation
value, that is, the oil left behind in the formation after the passage of the
displacing fluid.
 Oil saturation refers to the fraction of the rock’s pore volume filled with oil, and
is dependent on the shape and dimensions of the pores, the properties of the oil,
and the interaction between the rock and the fluids governed by interfacial
tensions and wettability (the tendency of a fluid to stick to the rock’s surface.

Wettability, Absolute Permeability, Relative
Permeability and Critical Saturation
 Wettability is a fundamental property, being that it influences the fluid
saturations and relative permeability.
 The relative permeability to a fluid is defined as the ratio between the effective
permeability to that fluid and the absolute permeability of the rock. Absolute
permeability is an intrinsic property of reservoir rock, and defines the ease with
which a fluid can flow through the interconnected pore spaces when the rock is
saturated in a single fluid, whereas effective permeability defines a fluid’s ability
to do the same in the presence of other fluids (water, gas, oil).
 Therefore, relative permeability is a property that is dependent on the fractions

or saturation degree of the different fluids present in the porous medium, and
by definition can vary between zero and one. The greater the percentage of fluid
present in the porous medium, the higher its relative permeability will be.
 On the other hand, every fluid has a saturation point, referred to as critical
saturation; below this point, the fluid is no longer mobile, though still present
within the porous medium; at that point the relative permeability becomes
zero.
Relative Permeability Curve
 During the viscous displacement flood the water saturation increases from its
irreducible value ( Swc ), at which it is immobile, to the maximum or flood-out
saturation ( Sw = 1 – Sorw ) at which the oil ceases to flow.
 Sorw , is the residual oil

1
saturation representing the
unconnected oil droplets
trapped in each pore space
by surface tension forces at
the end of the waterflood.
 This occurs in any flood in

which the fluids are
immiscible, that is they do not
physically or chemically mix.
 Consequently the maximum amount of oil than can be displaced (recovered)

during a waterflood is: MOV = PV (1 - Sorw - Swc)
Relative Permeability Laboratory
Measurements [1]
 The so-called rock relative permeability curves are measured in one-dimensional
core flooding experiments. After cleaning the core plug and flooding it with oil,
so that at initial conditions it contains oil and irreducible water, one of two
types of experiment is usually performed.
 The most common is the viscous displacement of oil by injected water

(unsteady-state type) and the second is the steady-state type of experiment in
which both oil and water are simultaneously injected into the plug at a
succession of different volume ratios (water flow rate increasing, oil rate
decreasing).
 The major difference in unsteady state techniques is that saturation equilibrium

is not achieved during the test.
 Since steady state is not reached, Darcy’s Law is not applicable. The Buckley-
Leverett equation for linear fluid displacement is the basis for all calculations of
relative permeability.
Relative Permeability Laboratory
Measurements [2]
 There are essentially five means by which relative permeability data can be
obtained:
- Direct measurement in the laboratory by a steady state fluid flow process
- Direct measurement in the laboratory by an unsteady state fluid flow
process
- Calculation of relative permeability data from capillary pressure data
- Calculation from field performance data
- Theoretical/empirical correlations
 Values obtained through laboratory measurements are usually preferred for

engineering calculations, since they are directly measured rather than estimated.
Steady state implies just that, values are not measured until the tested sample
has reached an agreed upon level of steady-state behavior. Subsequently,
unsteady-state measurements are taken while the system is still changing over
time. Unsteady state tests are popular because they require much less time and
money than steady state tests to operate.
Relative Permeability: Unsteady State
Techniques

Factors governing the
waterflooding process
 Three are the factors governing the oil recovery
efficiency achievable by the waterflooding
process. They are:
- Mobility ratio
- Heterogeneity
- Gravity

Mobility
ratio
𝑲𝒓𝒘 𝑲𝒓𝒐
𝑴= /
𝝁𝒘 𝝁𝒐

Mobility ratio M
𝒎𝒂𝒙𝒊𝒎𝒖𝒎 𝒗𝒆𝒍𝒐𝒄𝒊𝒕𝒚 𝒐𝒇 𝒕𝒉𝒆 𝒅𝒊𝒔𝒑𝒍𝒂𝒄𝒊𝒏𝒈 𝒑𝒉𝒂𝒔𝒆 (𝒗𝒂𝒕𝒆𝒓)
𝑴=
𝒎𝒂𝒙𝒊𝒎𝒖𝒎 𝒗𝒆𝒍𝒐𝒄𝒊𝒕𝒚 𝒐𝒇 𝒕𝒉𝒆 𝒅𝒊𝒔𝒑𝒍𝒂𝒄𝒆𝒅 𝒑𝒉𝒂𝒔𝒆 (𝒐𝒊𝒍)
𝑴= /
𝝁𝒘 𝝁𝒐
Krw = end point water relative permeability (dimensionless)
Kro = end point oil relative permeability (dimensionless)
µw = water viscosity (cp)
µo = oil viscosity (cp)
M ≤ 1 means that the injected water cannot travel faster than the
oil and therefor displaces the oil in perfect piston-like manner.
M ≤ 1 Stable displacement (piston-like displacement)
M > 1 Unstable displacement (water fingering, poor oil recovery)
Mobility ratio M
Using typical parameters for North Sea fields:
Krw = end point water relative permeability (dimensionless) = 0.3
Kro = end point oil relative permeability (dimensionless) = 1
µw = water viscosity (cp) = 0.4
µo = oil viscosity (cp) = 0.8
𝑴= / = 0.6
𝝁𝒘 𝝁𝒐
M ≤ 1 means that the injected water cannot travel faster than

the oil and therefor displaces the oil in perfect piston-
like manner, stable displacement , good oil recovery.
Mobility ratio M
M ≤ 1 resulting from low oil viscosity, the
displacement is piston-like and highly efficient
such that all the movable oil is recovered by the
injection of an equivalent volume of water.
M > 1 Alternatively, if the oil is viscous so that M > 1,

the flood is inefficient and it can take the
circulation of many MOVs of water to recover
the single MOV of oil.

Mobility ratio [M] impact on Sweep Efficiency
 Good sweep efficiency
 No by-passed oil
M≤1 Oil
Water
Good ‘piston
like’ flooding
 Poor sweep efficiency

 Early water breakthrough
 By-passed oil
M>1
Bad flooding Water Oil
‘water fingering’
Reservoir
Heterogeneity

Reservoir Heterogeneity
 All oil reservoirs are heterogeneous rock formations. The primary
geological consideration in waterflooding evaluation is to determine
the nature and degree of heterogeneities that exist in a particular
oil field.
 Matrix permeability variation in the vertical direction causes

displacing fluid to advance faster in zones of higher permeability and
results in earlier breakthrough in such layers.
 To achieve a good recovery factor, the displacement fluid, whether of

natural origin or induced by injection, must efficiently sweep the
hydrocarbons in the pore spaces and must also come into contact
with the greatest possible volume of the reservoir.
 The macroscopic displacement efficiency, in turn, is the product of

two elements: areal sweep efficiency and vertical invasion
efficiency.
Reservoir Heterogeneity
 Areal sweep efficiency. Areal sweep efficiency, is defined as the ratio
between the area of the reservoir with which the displacement fluid comes
into contact and the reservoir’s total area
 Vertical sweep efficiency. Vertical sweep efficiency is a parameter that
expresses the degree of displacement of the oil by the displacement fluid
along a vertical section of the reservoir at a specific moment in its
productive life.

Heterogeneity Unfavorable for Waterflooding
 Reservoir heterogeneities can take many forms, including
- Shale, anhydrite, or other impermeable layers that partly or completely separate the
porous and permeable reservoir layers.
- Interbedded hydrocarbon-bearing layers that have significantly different rock qualities —

sandstones or carbonates.
- Varying continuity, interconnection, and areal extent of porous and permeable layers
throughout the reservoir that can induces poor waterflooding efficiency.
- Directional permeability trends that are caused by the depositional environment or by

diagenetic changes that can induce poor sweep efficiency.
- Fractures or high permeability channels, that induce a channeling flow and a consequent
premature water breakthrough.
- Fault trends that affect the connection of one part of an oil reservoir to adjacent areas,
either because they are flow barriers or because they are open conduits that allow
unlimited flow along the fault plane, and consequently very poor waterflooding
efficiency.
Impact of Permeability Heterogeneity
on Oil Displacement Efficiency [1]
 The effect of different permeability distributions across a continuous reservoir
section can be illustrated considering three cases as follow.
Case (a): Coarsening upwards in permeability.

This case represents what might be described as the "super homogeneous"
reservoir.
At the injection well, the bulk of the water enters the top of the section. But
the viscous, driving force from the injection pumping decreases logarithmically
in the radial direction and before the water has travelled far into the formation
it diminishes to the extent that gravity takes over and dominates.
The water, which is continually replenished at the top of the formation, then
slumps to the base and the overall effect is the development of a sharp front
and perfect, piston-like displacement across the macroscopic section.

Case (b): The permeability increase with depth.
The majority of the injected water enters at the base of the
section at the injection wellbore and being heavier it stays there.
This leads to premature breakthrough and the circulation of large

volumes of water to recover all the oil trapped at the top of the
section.

Case (c) is intermediate between the two.
There is piston-like displacement across the lower part of the
section but a slow recovery of oil from the top.
This leads to premature breakthrough and the circulation of large

volumes of water to recover all the oil trapped at the top of the
section.

Impact of Permeability distribution across a continuous
reservoir section on Displacement Efficiency [From L. P. Dake – 2001]
]The Practice of Reservoir Engineering – L. P. Dake - 2001
Gravity segregation
May 2017 Gravity segregation G. Moricca 164

Recipe for evaluating vertical sweep efficiency in
heterogeneous reservoirs - The Practice of Reservoir Engineering – L. P. Dake
No matter what the nature of the vertical heterogeneity, the following
recipe is applied to assess the sweep efficiency in edge waterdrive
reservoirs.
- Divide the section in to N layers, each characterised by the following
parameters: hi , Ki , φi , Swci , Sori , K’rw , K’ro (the subscript “ i “
relates to the ith layer).
- Decide whether there is vertical pressure communication between the
layers or not.
- Decide upon the flooding order of the N layers and generate pseudo-
relative permeabilities to reduce the description of the macroscopic
displacement to one dimension.
- Use the pseudos to generate a fractional flow relationship which is
used in the Welge equation to calculate the oil recovery, Npd (PV), as a
function of cumulative .water influx, Wid (PV).
- Convert the oil volume to a fractional oil recovery, Np/N , and relate
this to the surface watercut, fws .
Recipe for evaluating vertical sweep efficiency in
heterogeneous reservoirs - The Practice of Reservoir Engineering – L. P. Dake
were:
- fws = fractional flow of water (dimensionless)
- hi = formation thickness ith layer (ft)
- Ki = permeability ith layer (mD)
- K’rw = end point relative water permeability ith layer (dimensionless)
- φi = porosity ith layer (fraction)
- Np = cumulative oil recovery (stb)
- Npd = dimensionless cumulative oil recovery (PV)
- Swci = connate water saturation ith layer (PV)
- Sori = residual oil saturation ith layer (PV)
- Wid = dimensionless cumulative water injected ith layer (PV)
- PV = pore volume

Gravity
Segregation
Water tongue

Vertical Equilibrium and Effect of
Gravity Forces
 Gravity effects always are present because for any potential
waterflood project, oil always is less dense than water, even more
so after the gas is included that is dissolved in the oil at reservoir
conditions.
 The distribution of fluids is dictated by gravity/capillary

equilibrium for a waterflood. When a reservoir is produced at low
rates and there is a large density difference between injected and
produced fluids, gravity forces dominate over viscous forces.
 The importance of gravity segregation of fluids can be determined

by the viscous-gravity time ratio, shown by:

Vertical Equilibrium and Effect of
Gravity Forces
 In all reservoirs, even those with close well spacing, the horizontal
distance between an injector well and a producer well is very long
relative to the vertical thickness of the reservoir pay interval.
 This means that gravity plays an important role in the water/oil-
displacement process, given that the fluids can move vertically
within the pay interval.
 Gravitational forces can be a major factor in oil recovery if the
reservoir has sufficient vertical relief and vertical permeability.
 The effectiveness of gravitational forces will be limited by the rate
at which fluids are withdrawn from the reservoir.
 If the rate of withdrawal is appreciably greater than the rate of
fluid segregation, then the effects of gravitational forces will be
minimized.
Vertical Displacement [From PetroWiki]
 To describe the Vertical Displacement in a waterflood,

three distinct situations should be considered:
- Stratified systems with non communicating
layers for various mobility ratios.
- Homogeneous systems with gravity (including

dipping beds).
- Stratified systems with communicating layers

and assumed vertical fluid equilibrium.

Stepwise Waterflooding Project
 The uncertainties of a waterflooding design coming from the
reservoir characteristics uncertainties that can be the source for a
very poor waterflooding efficiency and consequently technical
unsuccessful and economic disaster..
 Unfortunately, the waterflooding design has to be carryout when, in

many cases, we have limited information on reservoir
characteristics.
 The only way to face the problem is to:

- Perform an in deep analysis of the available information
- Adopt an phase approach for waterflooding project
implementation.

Well
Architecture

Well Architecture
 Today, thanks to the advanced drilling technologies it is possible to drill wells
having different shapes:
- Vertical
- Slanted Well Type by Shape
- S-shape
- Horizontal
- Multilateral
 This gives us the

flexibility to select
the most
appropriate,
according to the
production target
and the subsurface
formation
characteristics.
Well Drilling and Completion Planning
 The drilling of a well involves a major investment ranging from a few million US$ for
onshore well to 100 million US$ for a deepwater exploration well.
 Well engineering is aimed at maximizing the value of this investment by employing
the most appropriate technology and business process, to drill a ‘’fit for purpose”
well, at the minimum cost, without compromising safety or environmental standards.
 To optimize the design of a well it is desirable to have as accurate a picture as
possible of the subsurface: identification of boundaries, heterogeneities, and
anisotropies.
 The subsurface team will define
optimum location and well
architecture for the planned wells to
penetrate the trajectory through the
objective sequence.
 Completion engineering, as part of is
that part FDP integrated team, is
responsible of well completion design
aimed to maximize production (or M. J. Economides -A. D. Hill – C. Ehlig-Economides – D. Zhu
injection) in a cost-effective manner. Copyright © 2013 Pearson Education, Inc.

Well Architecture and Completion
Strategy
Petroleum Production System involves three distinct connected
systems:
1. Reservoir, which is a porous medium with unique storage and

flow characteristics
2. Subsurface artificial structures, which include the well, bottom

hole completion, reservoir completion and wellhead
assemblies connected with
3. Surface artificial structures, which include the surface gathering,

separation, and storage facilities.

Well Architecture and Completion
Strategy
Well Architecture makes reference to the well
shape (Vertical, Slanted, Horizontal, Multilateral,
Extended Reach) design to reach the target
(reservoir) in the most efficient and effective way.
Completion is the interface between reservoir

and surface production.

Vertical Well
 Vertical well is the ideal
solution to produce from
a single flow unit having a
large net pay or multiple
flow units can be
produced commingled.
 Easy to be drilled.
 Very good bottom hole

accessibility.
 Less expensive.
J-shape
J-shape wells are made up of a vertical
section, a deep kick off and a build up
to target. They are also called Deep
Kick off wells or J Profile wells (as they
are J - shaped).
The well is deflected at the kickoff

point, and inclination is continually
built through the target interval (Build).
The inclinations are usually high and
the horizontal departure low.
This type of well is generally used for

multiple sand zones, fault drilling, salt
dome drilling, and stratigraphic tests.

Horizontal Well
 Horizontal wells have been employed in a variety of reservoir applications:
- Thin zones
- Naturally fractured reservoirs,
- Reservoirs with water and gas coning problems
- Low permeability reservoirs
- Gas reservoirs
- Heavy oil reservoirs
- Waterflooding
- EOR applications.
 Disadvantages of horizontal wells

are:
- High cost as compared to a
vertical well.
- Generally only one zone at a time
can be produced using a
horizontal well.
- If the reservoir has multiple pay-
zones, especially with large
differences in vertical depth, or
large differences in permeability,
it is not easy to drain all the layers
using a single horizontal well..

Multilateral well
 A multilateral is a well with more
than one branch (lateral).
 Multilaterals find wide

applications:
- Compartmentalized reservoirs
- Stacked intervals
- Increased reservoir drainage
- Reducing drawdown
- Slot constrained platforms or
pads.
 A multilateral is well always carry

more risk than a single well. Risks
for multilateral should be
assessed in term of drilling,
completing, productivity,
operability and well intervention.
May 2017 J. Bellarby – ELSEVIER 2009 180
Well
Completion

Well Completion Strategy [1]
 Although
completion
expenditure is a
limited portion of
the total capital
costs of the field,
completion have
a huge effect on
revenues and
future operating
cost. Some of
basic economic
considerations
are shown in the
figure here
reported. J. Bellarby – ELSEVIER 2009

Well Completion Strategy [2]
 This does not necessarily mean that completions have to survive for the entire
field life. It may be optimum to design for tubing replacement or artificial lift
installation when the flow conditions (BHP, WC, GOR) change.
 The choice to spend more money on corrosion-resistant completion for the
initial completion or to install a cheaper completion to be replaced if failure will
occur is an economical matter.

Completion Planning
 Wells to be completed can be producers or injectors.
- A producer can be an oil or gas producer well.
- An injector can be an water, gas (hydrocarbon gas or waste products such as
carbon dioxide, Sulphur, hydrogen sulphide, etc.), steam well injector or
disposal well.
 Completion planning of a producer, involves:

- Defining the well architecture
- Defining the mode of formation fluid production: Natural flow or assisted
flow by Artificial Lift system.
- Choosing the equipment to be used
- Selecting materials
- Defining operational guidelines
 The completion planning for the injector is the same of the producer but
considering that the is in of “hydraulic injection flow condition” only.
 The completion design mast take into account the evolution of the
production/injection characteristics (BHFP, WC, GOR) of the well along the field
life time, according to the production/injection forecast.
Single Completion [1]
 Single zone completion is one of the
types of upper completion which allows
producing only one zone. Production
tubing is a flow path for fluid from a
reservoir to flow to the surface so it
protects the casing from corrosion and
maximizes the efficiency of the flow.
 In a single tubing string completion,

typically a packer is set on top of a
reservoir so the reservoir fluid can flow
up into the production tubing. Types of
packers are based on several factors as
temperature, pressure, reservoir fluid,
etc. Additionally, complexity of tubing and
packer installation is driven by objectives.
Single Completion [2]
 Features of a Single String
Completion are listed below:
- Through tubing perforation
can be performed.
- Packer can be set with x-mas
tree in place.
- Reservoir can be isolated and
workover operation can be
done.
- Downhole measurements can
be effectively conducted.
- Artificial lift methods as gas
lift, ESP, etc. can be deployed.
Multiple zone completion
Multiple zone completion is one type of
completion which allows operators to
selectively produce or comingle
reservoir fluid from different zones into
one well.
It is also possible to workover the upper

part of completion string without
removing the next interval completion.
Additionally, through tubing perforation

is can performed at the bottom zone.
A multiple zone completion can be

divided into two parts, which are single
string completion and multiple string
completion.
Single Multiple Zone Completion [1]
 A multiple-string configuration
consists of two or more
completion strings in one well.
 This is more expensive and

complicated to install than a
single-string configuration.
However, it has some advantages
such as the ability to
simultaneous produce or inject
into different zones in
commingled.

Dual Multi zone Completion [2]
 A multiple-string configuration
consists of two or more
completion strings in one well.
 This is more expensive and

complicated to install than a
single-string configuration.
However, it has some advantages
such as the ability to
simultaneous produce and inject
into different zones and has a
more accurate production
allocation than a single string
type.

Dual Completion
 The complexity of dual completions is their main drawback:
- Difficult to perforate the upper interval. Option include
oriented guns run through the short string, perforating prior to
running the completion and side-string perforating.
- Limited access to the upper interval (e.g. water shut-off within
the interval is near impossible).
- Complex artificial lift (e.g. gas lift requires tubing pressure
operated valves).
- Difficult (but not impossible) to integrate with sand control
reservoir.
 The completion is usually installed with both strings at the same

time.

Horizontal well typical Completion

Multilateral Completion
 Multilateral technology can be used in a variety of scenarios including:
- The development of in fill field programs with limited slots.
- The extension of field life by accessing new reserves.
- The development of deepwater plays.
1996
 Generally, multilaterals can be

divided into two categories:
- Re-entry - Where an existing well
is re-entered and multiple
branches are drilled off of the
existing well bore.
- New development -Where a new
well is designed and drilled,
utilizing multiple branches and
various completion types as
required.
 Design concepts
In a multilateral completion, a unique system may mechanically connect directional and
horizontal laterals to a parent well bore, allowing production from the individual laterals to
be selectively produced or commingled.
Offshore Wells
Completion
March 2017 G. Moricca 193

 For the dry tree system, trees are located on or close to the platform,
whereas wet trees can be anywhere in a field in terms of cluster, template,
or tie-back methods.
 Globally, more than 70% of the wells in deepwater developments that are
either in service or committed are wet tree systems.
Wet tree systems
 Subsea cluster wells gathers the production in the most efficient and
cost-effective way from nearby subsea wells, or from a remote
/distant subsea tie-back to an already existing infrastructure based on
either a FPSO or a FPU

Vertical Monobore
Subsea Tree
Systems

Subsea manifold

• Conceptual
Definition of
the Field
4 Development
Scenario

Conceptual definition of the Field
Development Scenario [1]
 The Conceptual Field Development Scenario for new field
development is identified based on data obtained from during the
exploration and appraisal phases such as:
- Reservoir geological setting
- Reservoir driving mechanism
- Rock properties (porosity, permeability, saturation, capillary

forces, heterogeneity, etc.)
- Fluid properties
- Hydrocarbon in place
 The main scope of the task is to:
- Take decision ‘to do’ or ‘not to do’, and
- Select the Field Development Scenario
 The decision to make investment for the field develop is

made based on the information provided by the reservoir
study: expected reserves and production profiles.
 The investment will be done if:

- The Project is supported by a positive economic and
- Reliable technology to produce the reservoir
resources are available.
 If the project is judged as feasible, this task provide the following main
outcomes:
- The base case production profile
- The high potential case
- The conservative case
- A preliminary cost (Opex and Capex) estimation for each production
profile (cost accuracy ±40%).
 The base case is derived by using the “most trustable” reservoir
parameter associate with P50 Proved Reserves.
 The high potential case is derived by using the “highest reservoir

potential”, associated with P30 Proved Reserves.
 The conservative case is derived by using the “most trustable” reservoir

parameter associated with P90 Proved Reserves.
Field Development Scenario Workflow
Cost accuracy
±40%

Gate 1 – Is the project feasible?
 Each phase ends with a gate review, which works as a clear transition
point, where the project, after being examined, is either allowed to move
to the next phase, return for a better definition or canceled.
 At the end of the feasibility study, the project (identified possible business
opportunity) will be submitted to the management for approval [Gate 1]. If
the feasibility study is approved, the conceptual engineering of the
identified options will be performed.
 The conceptual engineering of the

identified opportunities will be
performed to compare the options
and identify which alternative is the
most feasible from technical and
economical view point (assessment
stage).
•Setting the
Field
Development
5 Strategy

Analyze Alternatives for field Development
G G G
1 2 3
goal. alternatives.
risks. value meets
phase.
phase. identify
±40% ±25% ±15% ±5%

May 2017
Stage 2: Select among the possible
development scenario
 The project team evaluates all the development scenario using
criteria such as the production volumes expected, the
necessary investments, operating costs, economic feasibility,
HSE and the time needed until completion. Then the company
management chooses the most suitable concept based on
these criteria and makes the decision to develop this concept
further.
 There are many possibilities for developing a crude oil or
natural gas field. For instance, we could select between a
stand-alone platform, a subsea tie-back with an FPSO (Floating
Production, Storage and Offloading) or a subsea tie-back that is
linked to already existing host platforms. Eventually we will
have to choose one.
Strategy Typical Scenario to be investigated Outcomes
Natural Depletion
Ultimate
Depletion Natural Depletion followed by Water/Gas Inj. for Pressure Maintenance Recovery
Strategy
Natural Depletion followed by Water flooding for Secondary Recovery [UR]
Pre-drilling - Starting production at plateau rate Consolidated

Production Production
Short plateau rate
Strategy Profile
Long plateau rate
Natural flow at minimum wellhead flowing pressure

Lifting
Lifting Artificial lifting flow System to be
Strategy
Artificial lifting flow providing some extra surface blustering pressure adopted
Vertical / Deviated
Cost-effective
Well Architecture Horizontal way for fluids
Strategy
Multilateral withdrawal
Single Flow Unit

Effective
Perforating Commingled Flow Units reservoir
Strategy
Partial Penetration management
Completion Single Completion onshore - Dry Completion offshore Cost-effective

way for fluids
Strategy Dual Completion onshore – Subsea Completion offshore
withdrawal
Cost-effective
Surface Facilities Crude to be sent to pre-existing onshore Facilities
way for fluids
Strategy
May 2017 Dedicated in-situ Facilities (onshore or offshore) 208
treatment
Objective of Field Development Planning
 The main objective of field development planning is the selection of plan that
satisfies an operator’s commercial, strategic and risk requirements, subjected to
regional and site constraints, through a continuous and effective collaboration
and alignment amongst main stakeholders: Subsurface, Well Construction,
Surface Facility, Operation and Commercial Teams.
Subsurface
Characterization
Project
Objective
Surface Drilling
Facilities Completion

Items to be considered to define a
proper Field Development Strategy [1]
 A proper development strategies is strictly dependent from
reservoir characteristics and fluid behavior.
 The main questions to be addressed are:

- Hydrocarbon recovery scheme
- Primary and subsequently secondary and tertiary
hydrocarbon recovery technique
- Well spacing (Number of wells)
- Well Architecture
- Well Completion type
- Fluid transportation
- Fluid treatment

Items to be considered to define a
proper Field Development Strategy [2]
 For offshore development, the main question to be addressed are:
- Stand-alone development or subsea tie-in to existing
platform(s)
- Platform or subsea-to-land solution
- Platform concepts (e.g. floating or fixed, with and without
drilling facilities)
- Integration with existing platform(s) or infrastructure
- Transport solution for oil: pipeline transport or offshore
loading
- Transport solution for gas (compression demand, processing
requirements)
- Design for easy decommissioning and removal

FDP items and their impacts
 Reservoir Geometry and Geology (greatest impact)
- Recovery factor and flow rates.
- Well count, location and construction.
- Secondary recovery methods.
 Fluid Properties
- Subsea and topside design.
- Operation and maintenance( hydrate, wax and deposits,
corrosion).
 Drilling and Completion

- Well management and well intervention frequency.

FDP items and their effects
 Regional Considerations and Regulations
- Block size
- Infrastructure
- Contract
 Site Characteristics (offshore field)

- Water depth
- Metocean condition
- Bathymetry

In choosing a development concept
the following shall be taken into
consideration:
 Reservoir data
 Crude oil properties
 Drilling and Completion technologies to be adopted
 Risk of pollution
 Geographic location
 Water depth
 Distance from Shore Base and/or Terminal
 Environmental conditions
 Soil criteria
 Functional and operational requirements
 Governing Codes of Practice
 Special or unusual Design Codes
Identification of a FDP Clear Strategy
Identify the most effective strategy to reach the predefined Company Target
finding a proper answer to the questions like the following:
 Reservoir hydrocarbon withdrawal strategy:
- natural depletion ?
- water injection?
- gas injection ?
- water and/or gas injection ?
 Optimum wells location and spacing ?
 Optimum plateau rate ?
 Stand-alone development or subsea tie-in to existing platform(s) ?
 Platform or subsea-to-land solution ?
 Platform concepts (e.g. floating or fixed, with and without drilling facilities) ?
 Integration with existing platform(s) or infrastructure ?
 Transport solution for oil: pipeline transport or offshore loading ?
 Transport solution for gas (compression demand, processing requirements) ?
 Design for easy decommissioning and removal ?

Focus and Emphasis of Development
Strategy
Focus on
 To avoid uneconomic development
 To ensure safety for Person, Environment
 To ensure adequate economic return
 To derive maximum benefit from available data sets
 To improve reservoir recovery
Emphasis on
 Reduction of uncertainties
 Reduction of influence of uncertainties

Gate 2 – Is it the best scenario?
 Among the proposed solutions,

the company management
chooses the most suitable
development plan to be further
define from technical and
economics view point.

•Consolidation
of the
Reservoir
6 Development
Scenario

Consolidation of the Field Development
Scenario - Selection phase [1]
The main scope of consolidation task is analyze all the possible
alternative relevant to :
1. Depletion Strategy
- Natural Depletion
- Natural Depletion followed by Water/Gas Injection for Pressure Maintenance
- Natural Depletion followed by Waterflooding for Secondary Recovery
2. Production Srategy: Different Production Profile for the same UR

- Pre-drilling - Starting production at plateau rate
- Short plateau rate
- Long plateau rate
3. Lifting Strategy
- Natural flow at minimum wellhead flowing pressure
- Artificial lifting flow
- Artificial lifting flow providing some extra surface blustering pressure

Consolidation of the Field Development Scenario -
Selection phase [2]
4. Well Architecture Strategy
- Vertical
- Deviated
- Horizontal
- Multilateral
5. Perforation Strategy
- Single Flow Unit
- Commingled Flow Units
- Partial Penetration
6. Completion Strategy
- Single Completion onshore - Dry Completion offshore
- Dual Completion onshore – Subsea Completion offshore
7. Surface Facilities Strategy

- Crude to be sent to pre-existing onshore Facilities
- Dedicated in-situ Facilities (onshore or offshore)
Consolidation of the Field Development Scenario
Workflow - Case without production history [1]
Step 1 – Define a Depletion Strategy
Primary Recovery
Natural Flow Artificial Lift Conventional

Recovery
Secondary Recovery
Water Flooding Pressure Maintenance
Tertiary Recovery Enhanced

Recovery
Thermal Gas Injection Chemical Other
Steam CO2 Alkali Microbial

Hot Water Hydrocarbon Surfactant Acoustic
In-situ Combustion Nitrogen Polymer Electromagnetic

Step 2 - Define a provision (to be confirmed or changed after analysis)

subsurface development scheme:
- Well location
- Well architecture
- Sand face completion
Step 3 – Run reservoir model (sensitivity) to assess the minimum well number
required to produce the reservoir economically, as well as the optimal well
location and well type (e.g. vertical, slant, horizontal, multilateral, etc.).
Step 4 – Make the economic analysis of “minimum well number” development

scenario to be used as a reference.

Step 5 – Simulate different well-spacing and calculate rates and volumes.

Step 6 – Make the economic analysis for each well–spacing configuration and
identify the most cost-effective Ultimate Recover development scheme.
Profitability analysis for different well–spacing configuration A, B, C
 Development Cost [A]  Development Cost [B]  Development Cost [C]

 Ultimate Recover [X]  Ultimate Recover [Y]  Ultimate Recover [Z]
NPV NPV NPV

Higher Medium Lower

Step 7 – Make the Uncertainties-Risk analysis to:

- Identify reservoir characteristic uncertainties (extension, structure,
rock properties, fluid saturation)
- Define a preliminary drilling schedule combining the development
activities with data acquisition to reduce uncertainties
Step 8 – Consolidate a preliminary drilling schedule (No of wells to be drilled and

sequence) combining the field development activities with data
acquiring to reduce the uncertainties:
- Geological uncertainties and
- Engineering uncertainties (e.g. well performance, recovery factor)
Step 9 – Re-run the economic analysis to maintain under control the profitability
of the project.
G. Moricca 225
May 2017
Step 10 – Production build-up period and the duration of production plateau
optimization by adoption of appropriate drilling-time schedule.
- Profile [A] illustrates a gradual increase of production as the
producing wells are drilled and brought on stream; the duration of
the production build-up period is strictly related to the drilling
- Profile [B], in which schedule.
some wells have been
pre-drilled starts - Profile [C] is characterized by a plateau production rate longer
production at plateau than for case A and B. The vantage of profile C is that it requires
rate. The vantage of
pre-drilling is to smaller facilities and probably less wells to produce the same
advantage the UR. One additional advantage of profile Cis that the lower
production of oil, which production rate, and therefore slower displacement in the
improves the reservoir, may improve the UR.
production cashflow,
but the disadvantage
are that the cost of
drilling has been
advantaged, and that
the opportunity has
been lost to gather
early production
information from the
first few wells, which
may influence the
location of subsequent
wells. Economic criteria
are used to decide
whether to pre-drill.
F. Jahn – M. Cook & M. Grahm

May 2017 G. Moricca 226 2008
ELSEVIER
Step 11 – Make the economic and risk analysis for each production profile
Oil recovery for the three Production profiles scheme A, B, C
NPV [A] NPV [B] NPV [C]
Risk analysis [A] Risk analysis [B] Risk analysis [C]

Step 12 – Select the drilling time-schedule, and consequently the expected

production profile taking into consideration:
-The project profitability
- The Stakeholders strategy

•Economic
Evaluation
6A

Project Economic Evaluation
The task in project economic analysis require team efforts consisting of:
1. Setting an economic objective based on the company’s economic criteria. Reservoir
engineers are responsible for developing justification with the input from management.
2. Formulating scenarios for project development. Engineers and geologists are the primary
contributors with management guidance.
3. Collecting operation and
economic data (see the
dedicated Tab).
4. Making economic calculations.

Engineers and geologists are
primarily responsible.
5. Making risk analysis and

choosing optimum project.
Both engineers and geologists
are primarily responsible for
analysis. Engineers, geologists,
operations staff, and
management work together to
decide on the optimum
project.
Input Data for the Project
Economic Evaluation
Data Source / Comment
Expected oil and gas production Reservoir engineers
Rates vs. time Reservoir and production engineers
Oil and gas price Finance and economics professionals

Capital investment(tangible, intangible) and Facilities, operations and engineering
operating costs professional
Royalty/production sharing Unique to each project
Discount and inflation rate Finance and economics professionals
State and local taxes (production,

Accountants
severance, ad valorem, etc.)
Income taxes, depletion, and amortization Accountants
schedules
Economic Evaluation Criteria
 Each company has its own economic evaluation criteria with
required minimum values to fit its strategy for doing business
profitability.
 Acceptance or rejection of individual proposals are largely governed
by the company’s economic criteria.
 The Key Economic Parameters commonly used are:
1. Payout of Time
2. Profit-to-Investment Ratio
3. Present Worth Net Profit (PWNP)
4. Investment Efficiency or Present Worth Index or Profitability
Index
5. Discounted Cash Flow Return on Investment or Internal Rate
of Return.

Key Economic Parameters [1]
 Payout of time is the time needed to recovery the investment.
- It is the time when the cumulative undiscounted or discounted
cash flow (CF = revenue – capital investment – operating
expenses) is equal zero.
- The shorter the payout time (2 to 5 years), the more attractive

the project.
- Although it is an easy and simple criterion, it does not give the

ultimate lifetime profitability of the project, and it should not
used solely for assessing the economic viability of project.

 Profit-to-Investment Ratio is the undiscounted cash flow
without capital investment divided by the total investment.
Unlike the payout time, it reflects total profitability; however, it
does not recognize the tine value of money.
 Present Worth Net Profit (PWNP) is the present value of the

entire cash flow discounted at a specified discount rate.
 Profitability Index or Investment Efficiency or Present Worth

Index is the total discounted cash flow divided by the total
discounted investment. The value of this parameter in the range of
0.5 to 0.75 is considered favorable.

 Internal Rate of Return or Discounted Cash Flow Return on
Investment is the maximum discount rate that needs to be
charged for the investment capital to produce a break-even. This
can be also expressed as the discount rate at which the total
discounted cash flow, excluding investments, is equal to the
discounted investments over the life of the project.

Selection of the Business Cases
based on Economic Analysis
 For each cases make an economic evaluation of the
profitability of the project based on revenue and
expenditure items.
Revenue Items Expenditure Items
 Gross revenues  Capital expenditure (CAPEX), e.g. platform,

from sales of wells, surface facilities
hydrocarbon
 Operating costs (OPEX), e.g. maintenance,
 Payment for salaries, insurance, tariff paid
farming out a
project or part of a  Government take, e.g. royalty, tax, social
project contributions

Basic Economic Evaluation Procedure
1. Calculate annual revenues using oil and gas sales from productions and unit
sales prices.
2. Calculate year-by-year total costs including capital, drilling, completion,
operating, and production taxes.
3. Calculate annual undiscounted cash flow by subtracting total costs from the
total revenues.
4. Calculate annual discounted cash flow by multiplying the undiscounted cash
flow by the discounted factor at a specified discount rate.

Project Economic Evaluation Example [1]
[1]x[2]/1000 [4]x[5]/1000 [3]+[6]
[1] [2] [3] [4] [5] [6] [7] [8]
Time Oil Oil Oil Gas Gas Gas Total Capital
(period) Prod. Price Revenue Prod. Price Revenue Revenue Cost
Year Year (MSTB) ($/BBL) ($MM) (MMSCF) ($/MSCF) ($MM) ($MM) ($MM)
2018 1 0 50.0 0.0 0 1.5 0.0 0.0 5.7
2019 2 0 50.0 0.0 0 1.5 0.0 0.0 64.7
2020 3 5,405 50.0 270.3 3,276 1.5 4.9 275.2 244.0
2021 4 8,079 50.0 404.0 5,934 1.5 8.9 412.9 74.2
2022 5 9,024 50.0 451.2 7,208 1.5 10.8 462.0 0.0
2023 6 9,068 50.0 453.4 5,848 1.5 8.8 462.2 0.0
2024 7 7,021 50.0 351.0 2,968 1.5 4.5 355.5 0.0
2025 8 4,004 50.0 200.2 2,031 1.5 3.0 203.3 0.0
2026 9 2,511 50.0 125.6 2,179 1.5 3.3 128.8 0.0
2027 10 1,803 50.0 90.2 3,469 1.5 5.2 95.4 0.0
2028 11 1,306 50.0 65.3 4,763 1.5 7.1 72.5 0.0
2029 12 972 50.0 48.6 3,364 1.5 5.0 53.6 0.0
2030 13 685 50.0 34.3 2,200 1.5 3.3 37.6 0.0
2031 14 620 50.0 31.0 1,087 1.5 1.6 32.6 6.4
2032 15 500 50.0 25.0 1,087 1.5 1.6 26.6 6.4
Total 51,000 2,550.0 45,415.3 68.1 2,618.1 401.3

Project Economic Evaluation Example [2]
[8]+[9]+[10] [7]-[11] [12]x[13] [12]x[15] [12]x[17]
[9] [10] [11] [12] [13] [14] [15] [16] [17] [18]
Discaunt Discaunted Discaunt Discaunted Discaunt Discaunted
Operating Prod. Total Undiscaunted
Factor Cash Flow Factor Cash Flow Factor Cash Flow
Cost Tax Cost Cash Flow
@12% @ 12% @ 20% @ 20% @ 30% @ 30%
Year ($MM) ($MM) ($MM) ($MM) Fraction ($MM) Fraction ($MM) Fraction ($MM)
2018 0.0 0.0 5.7 -5.7 0.9449 -5.4 0.9129 -5.2 0.8771 -5.0
2019 0.0 0.0 64.7 -64.7 0.8437 -54.6 0.7607 -49.2 0.6747 -43.6
2020 21.6 55.0 320.6 -45.5 0.7533 -34.2 0.6339 -28.8 0.5190 -23.6
2021 32.3 82.6 189.1 223.8 0.6726 150.5 0.5283 118.2 0.3992 89.3
2022 36.1 92.4 128.5 333.5 0.6005 200.3 0.4402 146.8 0.3071 102.4
2023 36.3 92.4 128.7 333.5 0.5362 178.8 0.3669 122.3 0.2362 78.8
2024 28.1 71.1 99.2 256.3 0.4787 122.7 0.3057 78.4 0.1817 46.6
2025 16.0 40.7 56.7 146.6 0.4274 62.7 0.2548 37.3 0.1398 20.5
2026 16.0 25.8 41.8 87.0 0.3816 33.2 0.2123 18.5 0.1075 9.4
2027 16.0 19.1 35.1 60.3 0.3407 20.5 0.1769 10.7 0.0827 5.0
2028 16.0 14.5 30.5 42.0 0.3042 12.8 0.1474 6.2 0.0636 2.7
2029 16.0 10.7 26.7 26.9 0.2716 7.3 0.1229 3.3 0.0489 1.3
2030 16.0 7.5 23.5 14.0 0.2425 3.4 0.1024 1.4 0.0376 0.5
2031 16.0 6.5 28.9 3.7 0.2165 0.8 0.0853 0.3 0.0290 0.1
2032 16.0 5.3 27.7 -1.1 0.1933 -0.2 0.0711 -0.1 0.0223 0.0
Total 282.5 523.6 1,207.5 1,410.6 698.5 460.2 284.3
Project Net Cash Flow @ 12% = 698.5 million

Project Cash Flow at different discount rate (oil price 50 $/BBL)
220.0
 Payout Time 2.7 year
200.0
 Project Net Cash Flow @ 12% = 698.5 million
180.0
160.0
140.0
120.0
Net Cash Flow ($ million)
100.0
80.0
60.0
40.0
20.0
0.0
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
-20.0
-40.0
-60.0
Discaunted Discaunted Cum

Cash Flow Cash Flow Discaunted
@ 12% @ 20% Cash Flow
@ 30%

Project Cash Flow at Oil price: 25 to 75 $/BBL
325.0
300.0  The project is profitable also at 25 $/BBL
275.0  Project NPV @ 12% 148,7 $million
250.0  Payout Time 2.1 year @ 75 $/BBL
225.0
 Payout Time 3.2 year @ 25 $/BBL
200.0
175.0
150.0
125.0
100.0
75.0
50.0
25.0
0.0
-25.0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
-50.0
-75.0
-100.0
-125.0
Discaunted Discaunted Discaunted Discaunted Discaunted Discaunted Discaunted Discaunted

Cash Flow Cash Flow Cash Flow Cash Flow Cash Flow Cash Flow Cash Flow Cash Flow
@ 12% @ 12% @ 12% @ 12% @ 12% @ 12% @ 12% @ 12%
25 $BBL 30 $BBL 40 $BBL 50 $BBL 60 $BBL 65 $BBL 70 $BBL 75 $BBL

 Pessimistic scenario: Oil price: 25 $/BBL – Uncertainty in UR
 At 25 $/BBL, the project remain profitable if the recovered oil is higher
than 70% of the estimated oil reserves.
 Recovered oil -50% Project NPV @ 12% = -74,4 $million
160
 Recovered oil -25% Project NPV @ 12% = - 8.9 $million
 Recovered oil -30% Project NPV @ 12% = 13.6 $million
120  Recovered oil -15% Project NPV @ 12% = 81.2 $million
 Recovered oil +10% Project NPV @ 12% = 193.8 $million
80
40
0
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
-40
Discaunted Discaunted Discaunted Discaunted

-80 Cash Flow @ 12% Cash Flow @ 12% Cash Flow @ 12% Cash Flow @ 12%
Oil 25.5 MMBBL Oil 30.9 MMBBL Oil 35.7 MMBBL Oil 43.35 MMBBL
- 50% - 40% - 30% - 15%
-120 Discaunted Discaunted Discaunted Discaunted
Cash Flow @ 12% Cash Flow @ 12% Cash Flow @ 12% Cash Flow @ 12%
Oil 51.0 MMBBL Oil 56.1 MMBBL Oil 61.2 MMBBL Oil 66.3 MMBBL
-160May 2017 G. Moricca+10% +20% +30% 242
•Uncertainty
Analysis
6B

Uncertainties vs Risk
Cambridge Dictionary definition:
 Uncertainty: a situation in which something
is not known.
 Risk: a risk is a danger, or the possibility of

danger, defeat, or loss; a risk is also someone
or something that could cause a problem or
loss.
Uncertainties can generate risks!

Uncertainties vs Risk
Uncertainty Risk
Uncertainty
All risks are uncertainties,
however, not all
Risk
uncertainties are risks
Risk Uncertainty

Typical Uncertainties in Upstream
Oil Industry
 Petroleum exploration and production are inherently
risky activities. Decisions regarding those activities
depend on the forecast of the future hydrocarbon
production revenue.
 Such uncertainties involve all activities required to define

a comprehensive FDP and, just for a better
understanding, can be differentiated in:
 Technical uncertainties
 Economical uncertainties
Typical Technical uncertainties
 Typical technical uncertainties can include, but not only:
- Reservoir geometry and the spatial distribution of petro-
physical properties (porosity, permeability, net pay, fluids
saturation, capillary pressure, etc.)
- Reservoir compartmentalization
- Vertical and horizontal hydraulic communication
- Presence of fault and its sealing characteristics
- Reservoir fluid properties (Bo, Pb, Rs, Viscosity, etc.)
- Reservoir fluids drive mechanism(s) and its strength
- Modeling limitations
- Measurement errors
- Evaluation of the environmental impact
Typical Economical uncertainties
 Typical technical uncertainties can include, but not only:
- Future hydrocarbon price
- Future maintenance services cost
- Future capital cost

Uncertainty Measurement
Quantifying Uncertainty
 The uncertainty can be quantified by a set of possible states or
outcomes where probabilities are assigned to each possible state
or outcome. Mathematically, the uncertainty his expressed by a
probability density function.
Probability Density Function

 In probability theory, a probability density function (PDF) is a
function, whose value at any given sample (or point) in the sample
space (the set of possible values taken by the random variable) can
be interpreted as providing a relative likelihood that the value of
the random variable would equal that sample.

Probability Density Function (PDF)
Mathematical definition
Let x be a continuous variable (e.g. porosity). Then a probability
distribution or probability density function (PDF) of x is a function f (x)
such that for any two numbers a and b with a ≤ b,
𝑏
PDF ( a < x < b ) = 𝑎
𝑓 𝑥 𝑑𝑥
PDF ( 60 < x < 70 )

Probability Density Function
An practical example: Supposing that a certain number of experimental porosity measurements
are available, the plot reported below can be generated
 Few points (10) are characterised by low
porosity (12%) – Low PDF
 As well as, few points (10) are
Groups of core plug
characterised by high porosity (34%) –
samples having the
same porosity
Low PDF
 The largest number (120) of
measurement are characterised by
porosity 24% - Highest PDF
 Among the 620 measured points, the
majority (500) are characterised by: 18 <
Porosity > 28%
 If the values of x-axis is a continuous
rather than discrete values, a continuous
PDF is obtained.
 The probability density function (PDF) allows to calculate the probability of x value in an
interval (a, b). The probability is precisely the area under its PDF in the interval (a, b).
Cumulative Probability
 Cumulative Probability curve refers to the probability that a random
variable is less than or equal to a specified value.
 The Cumulative probability is derived
from the Probability Density Function as
following:
- There is 100% of probability
(cumulative probability = 1) that
porosity is higher than x min
- Equally, there is 0% of probability
(cumulative probability = 0) that
porosity is higher than x max
- From the continuous PDF one would
estimate that approximately 70% core
plug have a permeability higher than
x1
- The Cumulative Permeability is also as
the Expectation Curve

Cumulative Probability
 The shape of the Cumulative Probability Curve provides very useful information:
- Case [A] - Very well defined

case since the range of
uncertainty in STOIIP values
is small (less than 100
MMstb).
- Case [B] – represents a
poorly defined discovery,
with much broader range of
uncertainty in STIIOP
definition.
- To reduce the uncertainty
of case [B] more appraisal
activity should be done
before committing to a
development plan.

Quantifying Uncertainty related to
the Reservoir Model Outcomes
 Monte Carlo Simulation model is a very popular technique used
to assess the overall uncertainties (coming from the specific
uncertainty of each parameter required for the evaluation)
related to the reserves estimation and the associated production
profiles.
 This is done by generating a number of simulations varying some

of the input parameters, by considering for each one a
‘reference’, a ‘pessimistic’, and an ‘optimistic’ value.
 To be statistically significant, the uncertainties assessment

requires large number of simulation runs, especially if the
analysis is related to an undeveloped field (new field) without
historical history match.
Quantifying Uncertainty by a
Stochastic approach
 Monte Carlo Simulation model is extensively used for oil in place assessment,
based on the associated geological attributes uncertainties.

Uncertainty generates Risk and Opportunity
 Risk is an undesirable consequence of uncertainty, but the upside
potential of uncertainty is an “opportunity ” if it is captured (e.g.
higher OOIP than expected).
Possible consequences
of uncertainty
Risk Opportunity
- Possibility of loss or injury - Possibility of exceeding expectation
- A dangerous element or factor - Upside potential
- The probability of loss - An attractive element or factor

Benefice of performing the Uncertainty
Assessment
 Integrate all subsurface uncertainties and understand
how they impact reservoir management decisions.
 Identify the most important reservoir parameters, so we

can focus team resources on relevant issues and
maintain the right level of technical detail, saving time
and money.
 Efficiently investigation of the alternatives through a

combination of scenarios and stochastic simulations.
 Identify potential opportunities.

•Risk
Analysis
6C

Reservoir Development Decision Tree
The operational context and the competitive environment in which companies do business nowadays impose a
level of certainty in our decisions as never before. In spite of the level of effort to reduce the downside risk and
maximize the upside risk in our enterprises, bad decisions eventually are made. Bad decisions can erode our
financial performance and competitive position, adversely impact our projects, programs and portfolios, and
eventually jeopardize our survivability. From here, the importance of implementing a decision making process
(DMP) that systematically and consistently addresses the different key drivers that affect the outcome in terms
of upside and downside risk.
Management 2013, 3(3): 142-151
Figure 2 represents an overview of the overall field

development concept selection process. The first
steps
involve collecting, documenting and validating all
assumptions, premises, requirements and
objectives of the
proposed development; identifying and clearly
defining the
different concepts to be evaluated; and in some
cases, depending on the number of eva luated
concepts or “family
concepts”, performing a pre-screening process

Project Risk Management
(Project Management Institute, 2013).
 Project risk is defined as “…an uncertain event or

condition that, if it occurs, has a positive or negative
effect on one or more project objectives such as scope,
schedule, cost, and quality”
 The aim of project risk management is to identify and

minimize the impact that risks have on a project. The
challenge with risk management is that risks are
uncertain events
 In the management of projects, organizations attempt to

reduce their exposure to these uncertain events through
risk management.
Project Risk Management
(Project Management Institute, 2019).
 Petroleum exploration and production are inherently technical and

commercial risky activities.
 At field development stage major investment decision are taking in
the anticipation of future return over along period of time. So it is
important that careful technical and commercial risk analysis is
performed.
 Project Risk Management is usually done through a formal
management process which consists of the following steps:
1. Plan risk management,
2. Identify risks
3. Perform qualitative risk analysis
4. Perform quantitative risk analysis
5. Plan risk responses (risk mitigation)
6. Control risks
Possible Risks
 Possible economic risk events:
- Profit loss
 Possible risk events associated to the operations:
- Negative HSE events
- Delay in well location preparation
- Delay due to unexpected operational (drilling, completion,
installation) problems
- Equipment failure during commissioning or starting up
- Infrastructure/pipelines failure during installation
- Control system failures during operation
- Flow assurance problems
 The risk analysis should includes also the identification
positive aspect as the up-side potential of the project.
Quantitative Risk Assessment [QRA]
 Quantitative risk management in project management

is the process of converting the impact of risk on the
project into numerical terms. This numerical
information is frequently used to determine the cost and
time contingencies of the project.
 Quantitative Risk Assessment is defined as:

Risk = Impact x Probability
and expressed in monetary terms.

Project Risk Matrix
 Technical and non-technical team components brainstorming is a valuable
approach to identify risks and opportunities, and build the Project Risk
Matrix. Some of the most original ides can come from non-discipline team
members.
 Design a dedicated Risk Matrix for the specific project-stage, and, if
required, for sub-stage: e.g. field development strategy, well architecture,
well completion, surface facilities, etc.
 The dimension of the risk is evaluated in monetary terms.

Risk Analysis Step-by-Step Procedure
1. Perform the risk analysis at several stages and at any time it is
required.
2. Identify the potential risks for the selected stage as well as the
risks which each option could occur.
3. Design a dedicated Risk Matrix for the specific purpose.
4. Perform qualitative risk analysis based on:
- Occurrence probability
- Impact time schedule
Impact Definitions
- Impact on Budget Rating --> Very Low Low Moderate High Very High
Cost Impact of Insignificant < 5% cost 5-10% cost 10-20% cost > 20% cost
Risk cost increase increase increase increase increase
Cost Impact of Insignificant < 1% cost 1-3% cost 3-5% cost > 5% cost
Opportunity cost reduction decrease decrease decrease decrease
Time Schedule Insignificant <1 month 1-3 months 3-6 months > 6 months
Impact of Risk slippage slippage slippage slippage slippage
Time Schedule
Insignificant < 1 month 1-2 months 2-3 months > 3 months
Impact of
improvement improvement improvement improvement improvement
Opportunity
Probability 1–9% 10–19% 20–39% 40–59% 60–99%

5. Perform the risk scoring combining the:
- Severity of the risk
- Occurrence
- Impact
Risk Matrix
5 - Very High 5 10 20 35 50
4 - High 4 8 16 28 40
Probability
3 - Moderate 3 6 12 21 30
Rating
2 - Low 2 4 8 14 20
1 - Very Low 1 2 4 7 10
Quantitative Risk Assessment Very Low Low Moderate High Very High
Risk = Impact x Probability 1 2 4 7 10
Impact Rating

6. Perform quantitative risk analysis in monetary terms based on:
- Cost impact– will the project be completed within the

allocated budget?
- Time impact – will the project be completed within the
planned timeframe?
- Performance impact – will the output from the project
satisfy the business and technical goals of the project?
The risks should be quantified in monetary terms to enable the

project team to develop effective mitigation strategies for the
risks, or to include appropriate contingencies in the project
estimate.
7. Register the main item on the Risk Register and detail the item
by discipline, and include actions for risk mitigation and define
the responsible party who will follow-up on each item.

Risk Register
The Risk Register aims to do the following:
 Identify and record all risks related to a project.
 Gather relevant information on each of the risks.
 Capture derived information based on analysis and prioritization of
the risks.
 Capture mitigation strategies planned for the risks.
 Track the status of each of the risks.
Risk Register
Risk
Risk Quantitative Risk Assessment
Quantitative
Worst Case Qualitative Evaluation [QRA] Risk Last
Ref Date Risk Risk Evaluation Action Current
Scenario Mitigation Revie
No Logged Type Descripion Impact Impact Probability Impact Risk Gross Owner Status
Description Actions w
Occurence time on Rating Rating Rating Value NPV
schedule Budget 1 to 5 1 to 10 Prob x Imp $ $
R1 Management
R2 Financial
R3 Operational
R4 Technology

Risks
Mitigation

Risks Mitigation
Definition: Risk mitigation planning is the process of developing options and actions
to enhance opportunities and reduce threats to project objectives.
[Project Management Institute, Inc.].
May 2017 [Project Management Institute, Inc.]

G. Moricca 270
Risks Mitigation Strategy
Risk mitigation strategies for negative risks or threats include:
 Assume/Accept: Acknowledge the existence of a particular risk,
and make a deliberate decision to accept it without engaging in
special efforts to control it. Approval of project or program
leaders is required.
 Avoid: Adjust program requirements or constraints to eliminate
or reduce the risk. This adjustment could be accommodated by a
change in funding, schedule, or technical requirements.
 Control: Implement actions to minimize the impact or likelihood
of the risk.
 Transfer: Reassign organizational accountability, responsibility,
and authority to another stakeholder willing to accept the risk.
 Watch/Monitor: Monitor the environment for changes that
affect the nature and/or the impact of the risk.
Risks Mitigation Strategy
Avoid Mitigate
Eliminate cause of risk Reduce probability or impact of risk
(impact or the probability is high)
Risk
Accept Transfer
Contingency plan for (risk is low in Third party (insurance) take on
terms of probability and impact) responsibility (risk impact is high but
To be included in a watch list the probability is low)

Strategies for positive risks or Opportunities
Going in parallel order to the explanation of the four risk strategies of negative
risks above, you have:
Accept / Reject: If the probability of an opportunity is low and the impact on the
project would be low, then you should not actively pursue it because that would
be waste of resources, but rather watch out for it and take advantage of it if it
occurs.
Exploit: If the probability of an opportunity is high and the positive impact on the
project would be high as well, then you should identify and maximize the
probability of occurrence of those events that which would trigger an opportunity
in order to exploit it.
Share: If you have an opportunity that has low probability of occurring, but would
have a high positive impact on the project, you would share the opportunity with
a third party that could best capture the opportunity in order to benefit the
project. Examples of this include forming risk-sharing partnerships, teams,
special-purpose companies or joint ventures.
Enhance: If there is an opportunity that has low probability of occurring, then it
might be worthwhile to add resources to increase the probability of its occurring.
Strategies for positive risks or Opportunities
Exploit Enhance
Make sure opportunity occurs Only If it is highly probable (the
opportunity is real) and has good
impact
Opport
unity
Accept Share
Allocate resource for further If good impact but low probable to
investigation occur, give third party ownership of
probability

Methods and Strategies to reduce
Uncertainty
 There are several methods and strategies to reduce uncertainty. There is a
trade off between capital cost and uncertainty.
 Methods:
- Drill stem test.
- More appraisal wells.
- Extended well test.
- Early production.
- Staged development.
 Application depends on:

- Reservoir size and Char.
- Operator Strategy
- Available Technology.

Summary of Risks, Uncertainties and
Mitigations actions
Geological uncertainties could be
mitigated by the data acquired during the
project implementation phase
Dynamic reservoir
performance can be
Reservoir Geology assessed by robust
- Limited resources Reservoir Performance reservoir simulator
- Lack of communication
- Lack of analysis Rock Good formation
To be avoided Organisational evaluation during the
Properties appraisal and
exploitation phase
The HSE risks can Risk
be strongly Uncertainty Fluid Crude oil sampling
mitigated by the HSE Mitigation and consistent PVT
adoption of best Properties analysis are crucial
practices actions
Stringent economic Can be preliminarily

Drive assessed by analogy.
analysis considering Commercial
market volatility Mechanism Good reservoir
monitoring plan is
mandatory.
Only consolidated Technical
technologies should
May 2017
selected G. Moricca 276
•Health, Safety
and
6D Environmental

Health Safety and Environmental
(HSE) Considerations
 In developing and subsequently operating a field,
safety and environmental consideration has to be
included.
 Regulatory agency constrain s will also to be satisfied.
 The most common HSE rules will mentioned on the

coming snapshots and some emphasis to the Arctic
environment will be dedicated.

HSE common principles
 Work according to applicable laws, codes and regulations
 Comply with approved procedures, rules and instructions
 Provide all necessary information, instruction and supervision
 Use trained and competent people for the tasks they are expected to
complete
 Provide Safe Systems of Work (SSOW) facilitated by efficient
planning, robust risk assessment and effective management of
change
 All incidents must be reported and investigated and remedial actions
assigned and completed
 Clear objectives to be settled
 Documentation to be reviewed in accordance with a scheduled
program or after a significant change
Safety and Environment
 Safety and Environment have become important elements of
all part of field life cycle, and involve all of the technical and
support functions in the oil company.
 The Piper Alpha disaster in North Sea in 1988 triggered a

major change in the approach to management of safety within
the industry.
 Companies recognize that good safety and environmental

management make economic sense and are essential to
guaranteeing long-term presence in the market.
 Stakeholders, be they governments, non-government

organizations (NGOs) or financing entities will scrutinize the
HSE (health, safety and environment) performance of an
operator on a continuous basis.
 Many techniques have been developed for the safety and

environmental impact of operations.
Safety Performance Standards
 Safety Performance is measured by companies in many
different ways. To benchmark safety performance on an
industry wide scale, globally recognized standard are
required.
 A commonly used method is the recording of the number of

accidents, or lost time incidents (LTI).
 An LTI is an incident which causes a person to stay away from

work for one ore more days.
 Recordable injury frequency (RIF) is the number of injuries

that require medical treatment per 100 employee.
Gate 2 – Work quality and
economics ok?
 At the end of project selection phase, based on
production volumes expected, the necessary
investments, operating costs, economic feasibility, HSE
and the time needed until completion criteria, the
company management chooses the most suitable
concept and makes the decision to develop this
concept further.

•Final Selection
of preferred
alternative for
6E the Field
Development

Feasibility Study
G G G
1 2 3
goal. alternatives.
risks. value meets
phase.
phase. identify
±40% ±25% ±15% ±5%

May 2017
Stage 3: DEFINE
 Once the field development concept has been
selected, the engineers take over the detailed field
development and prepare the so-called Front End
Engineering & Design (FEED).
 They now elaborate on the concept to include every

last detail. Using simulations and construction
programs, they draw up precise plans for the
production wells that will recover the hydrocarbons,
the production plants and the other infrastructure
requirements, of the oil and gas produced.

Define Project details of
the Oil Recovery Scheme
Primary Recovery
Natural Flow Artificial Lift Conventional

Recovery
Secondary Recovery
Water Flooding Pressure Maintenance
Tertiary Recovery Enhanced

Recovery
Thermal Gas Injection Chemical Other
Steam CO2 Alkali Microbial

Hot Water Hydrocarbon Surfactant Acoustic
In-situ Combustion Nitrogen Polymer Electromagnetic

Identification of most cost-effective UR
 Define a Business Cases Oil in Place
Scenario based on:
- Oil in Place
- Oil Recovery Scheme Oil recovery scheme A, B, C
- Preliminary estimation of the No
of required wells for the field
development (preliminary Well
Developm Developm Developm
Spacing) ent Costs ent Cost s
ent Cost s
A B C
- Preliminary Costs estimation for
the field development
 Select the base case based on NPV NPV NPV

A B C
economic criteria and risk Higher Medium Lower
analysis considerations.
Production build-up period and the duration
of Production Plateau optimization
Oil in Place
 Three scenarios can be taken into
consideration: Oil recovery scheme A, B, C
- Short production plateau [A]
- Pre-drilling - Starting production Developm Developm Developm

at plateau rate [B] ent Cost ent Cost ent Cost
A B C
- Long production plateau rate [C]
NPV NPV NPV
A B C
Higher Medium Lower
 Select the base case based on
economic criteria, as well as
reservoir management Production Profile A, B, C
optimization and risk analysis
considerations. NPV NPV NPV
A B C
Higher Medium Lower
•Project
Approval
7

Management Project approval
The FDP final approval is typically is made
based on economic evaluation of the
profitability of the project.
Revenue Items Expenditure Items
 Gross revenues  Capital expenditure (CAPEX), e.g. platform,

from sales of wells, surface facilities
hydrocarbon
 Operating costs (OPEX), e.g. maintenance,
 Payment for salaries, insurance, tariff paid
farming out a
project or part of a  Government take, e.g. royalty, tax, social
project contributions

Field Development Roadmap
to reach the project target
Infrastructures
and Constraints
Target
Strategy
FDP
Knowledge
Organization
Dear Reader,
I get bored to enjoy my beautiful garden,
so, I am looking to come back in the real game to help E&P
Companies in daily attempt to generate value.
Thank you for your attention

Giuseppe Moricca
If you are interested in receiving my services, please contact me at

moricca.giuseppe@libero.it

Guidelinesforfielddevelopmentplanin 180309115948

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Guidelinesforfielddevelopmentplanin 180309115948

Загружено:

Авторское право:

Доступные форматы

Step-by-step Procedure for an

effective Field Development Plan

 The purpose of this document is to provide the step-by-

May 2017 G. Moricca 4

Factors influencing the selection of the organizational structure could include:

May 2017 G. Moricca 5

 Project control schedules and their supporting work

 A complete work breakdown structure is developed as

May 2017 G. Moricca 6

Field Development Activities

Appraisal Concept PDO approval Facilities

PDO = Plan for Development and Operation (Hydrocarbon withdrawal)

May 2017 G. Moricca 7

 The final control budget usually cannot be fully developed until

 It is still important to structure the entire project control budget, apply a

 Sophisticated cost control techniques cannot correct the shortcomings of a

May 2017 G. Moricca 9

 Upstream is also High Risk - High Return

May 2017 G. Moricca 10

1-3 years 1-5 years 10-50 years

May 2017 G. Moricca 11

May 2017 G. Moricca SacOil Holdings

 The next action may be to:

May 2017 G. Moricca 13

 Outcome: Well fluid characteristics, OOIP, Recoverable oil, production

 Method: More appraisal wells will be drilled, more measurements.

Reservoir Model Tuning PDF ‐ CDF Production & Pressure

May 2017 G. Moricca 14

May 2017 G. Moricca 15

 The reliability of the economic analysis, and

May 2017 G. Moricca 16

 Fabrication of the facilities

 Commissioning of all plant and equipment's

3. Understand the drilling

May 2017 G. Moricca 18

May 2017 G. Moricca 19

“A field is a field whether located beneath land or

Where the main difference lies in the application of

May 2017 G. Moricca 20

 An obvious advantage is that it provides a positive cash flow from

 Moreover, when each subsequent appraisal development well is

Economic component Onshore Offshore

Average Completion Cost per well - $ million 1 to 2 10 to 20

Min suitable production rate - BOPD 100 - 250 2500 - 5000

Workover cost - $ million 1 to 2 5 to 10

Estimated break-even price @ 2015 $/bbl 25 - 30 50 - 70

May 2017 G. Moricca 23

May 2017 G. Moricca 24

May 2017 Diagram

May 2017 G. Moricca 29

FEL-1 FEL-2 FEL-3

May 2017 G. Moricca SPE 167655 L. Saputelli et others

May 2017 G. Moricca 32

Field Development Planning G Stage Gate – Decision to Proceed

 The FEL methodology is focused on the early stages of a project, aiming at

• Risk Analysis  Preliminary Engineering.

May 2017 G. Moricca 38

FEASEBILITY SELECT DEFINE EXECUTE OPERATE

Field Development Planning G Stage Gate – Decision to Proceed

 The aim of the assessment phase is to highlight the technical and

 Net present value, typically the key driver of decisions for

 Oil and gas recovery

 Operational flexibility and scalability