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Abstract Drilling exploration wells depend on the uncertainty we perceive. With some simplification, this uncertainty is about the value of producible hydrocarbons. To drill a prospect, the expected benefits from producing and selling hydrocarbons should outweigh the costs. This principle also applies to clusters of interrelated exploration targets. Here, the benefits of drilling each prospect is information about the neighbouring prospects, proving producible hydrocarbons, or both; these benefits should outweigh the aggregate costs. In practice, estimating the expected benefit could be challenging especially when multiple smaller discoveries are developed under a joint development scheme. With these interrelationships, what is the optimal drilling strategy? In addition, what is the economic value of a group of prospects? This paper discusses the effect of joint development economics on perceived uncertainty and drilling decisions. We suggest a framework for valuation of correlated prospects.
SPE, _ (Society of Petroleum Engineers) | AAPG, _ (American Association of Petroleum Geologists) | WPC, _ (World Petroleum Council) | SPEE, _ (Society of Petroleum Evaluation Engineers) | SEG, _ (Society of Exploration Geophysicists)
Society of Petroleum Engineers (SPE)
American Association of Petroleum Geologists (AAPG)
World Petroleum Council (WPC)
Society of Petroleum Evaluation Engineers (SPEE)
Society of Exploration Geophysicists (SEG)
1.1 Rationale for New Applications Guidelines
SPE has been at the forefront of leadership in developing common standards for petroleum resource definitions. There has been recognition in the oil and gas and mineral extractive industries for some time that a set of unified common standard definitions is required that can be applied consistently by international financial, regulatory, and reporting entities. An agreed set of definitions would benefit all stakeholders and provide increased
A milestone in standardization was achieved in 1997 when SPE and the World Petroleum Council (WPC) jointly approved the “Petroleum Reserves Definitions.” Since then, SPE has been continuously engaged in keeping the definitions updated. The definitions were updated in 2000 and approved by SPE, WPC, and the American Association of Petroleum Geologists (AAPG) as the “Petroleum Resources Classification System and Definitions.” These were updated further in 2007 and approved by SPE, WPC, AAPG, and the Society of Petroleum Evaluation Engineers (SPEE). This culminated in the publication of the current “Petroleum Resources Management System,” globally known as PRMS. PRMS has been acknowledged as the oil and gas industry standard for reference and has been used by the US Securities and Exchange Commission (SEC) as a guide for their updated rules, “Modernization of Oil and Gas Reporting,” published 31 December 2008.
SPE recognized that new applications guidelines were required for the PRMS that would supersede the 2001 Guidelines for the Evaluation of Petroleum Reserves and Resources. The original guidelines document was the starting point for this work, and has been updated significantly with addition of the following new chapters:
Estimation of Petroleum Resources Using Deterministic Procedures (Chap. 4)
Unconventional Resources (Chap. 8)
In addition, other chapters have been updated to reflect current technology and enhanced with examples. The document has been considerably expanded to provide a useful handbook for many reserves applications. The intent of these guidelines is not to provide a comprehensive document that covers all aspects of reserves calculations because that would not be possible in a short, precise update of the 2001 document. However, these expanded new guidelines serve as a very useful reference for petroleum professionals.
Chap. 2 provides specific details of PRMS, focusing on the updated information. SEG Oil and Gas Reserves Committee has taken an active role in the preparation of Chap. 3, which addresses geoscience issues during evaluation of resource volumes. The chapter has been specifically updated with recent technological advances. Chap. 4 covers deterministic estimation methodologies in considerable detail and can be considered as a stand-alone document for deterministic reserves calculations. Chap. 5 covers approaches used in probabilistic estimation procedures and has been completely revised. Aggregation of petroleum resources within an individual project and across several projects is covered in Chap. 6, which has also been updated. Chap. 7 covers commercial evaluations.
Chap. 8 addresses some special problems associated with unconventional reservoirs, which have become an industry focus in recent years. The topics covered in this chapter are a work in progress, and only a high-level overview could be given. However, detailed sections on coalbed methane and shale gas are included. The intent is to expand this chapter and add details on heavy oil, bitumen, tight gas, gas hydrates as well as coalbed methane and shale as the best practices evolve.
Production measurement and operations issues are covered in Chapter 9 while Chapter 10 contains details of resources entitlement and ownership considerations. The intent here is not to provide a comprehensive list of all scenarios but furnish sufficient details to provide guidance on how to apply the PRMS.A list of Reference Terms used in resources evaluations is included at the end of the guidelines. The list does not replace the PRMS Glossary, but is intended to indicate the chapters and sections where the terms are used in these Guidelines.