| Sick joke told in the oil patch.
An exploration manager is interviewing prospective employees.
He asks them how much is 2+2?
The geologist says it's more than 3 and less than 5.
The geophysicist calculates it's approximately 3.9999.
The project manager shuts the door, unplugs the telephone,
and whispers “How much do you want it to be?”
Imagine this sort of hokey-poke foolishness in medicine. Maybe you've got cancer, maybe not. It might be a pimple. Let's flip a couple thousand coins and compute the stochastic probability of a correct diagnosis. Since oil pays the freight for health care, pharmaceuticals, universities and teaching hospitals, that medical analogy is pretty damn scary.
No oil = no food, water, transport or trade; no national defense.
The Problem
• Too many dry holes (Conoco 43% in 2009, up from 10% in 2008)
• Too many low probability plays (Rockhopper, Callon)
• Rubber stamp 'competent person reports' inflate OOIP x RF
• Geologists sidelined, coarsening/fining/faulting ignored
• Drilling on false AVO 'direct hydrocarbon indicators'
The Solution
• Face reality – 6 mcf does not equal a barrel of API 40 crude
• Eliminate gross acreage 'probable reserves' (Exxon, HK)
• No reserves booked without well penetration to OWC or LKH
• No reservoir acreage unless horizons are tied to well picks
• Wildcat risk is binary – cannot be expressed as a percentage
I apologize for using arcane acronyms like OWC (oil-water contact) and LKH (lowest known hydrocarbon). The foregoing was addressed to our peers in the oil industry, who ought to know better than to headfake Monte Carlo P3 “risked” prospectivity.
There are two kinds of methods used to estimate recoverable hydrocarbons (oil & gas). The first makes general assumptions about the basin or trend, perhaps with specific information about nearby wells and seismic data, then uses type curves and Monte Carlo probability to build a best case, worst case, and statistical "more probable than not" 2P valuation.
The second method rejects statistical magic and uses rigorous, so-called "deterministic" geoscience to establish areal extent and recoverable hydrocarbon potential. The following is the deterministic workflow we use as exploration consultants:
1. Due diligence and data QC.
Well data locations
Land and legal
Seismic data acquisition and processing parameters
2. Seismic Interpretation
Tie well data to seismic using available rock velocity measurements (checkshots, VSP vertical seismic profile, or sonic logs)
Structural interpretation should be geologically robust and fit with regional trend and basin tectonic history.
Nearby wells should be correlated and reservoir characteristics should be studied.
Structural prospects can be identified from seismic mapping and depth conversion. Stratigraphic prospects are much riskier because depositional patterns of reservoir quality sands must be inferred from regional study of seismic attributes.
Seismic attributes can indicate rock response such as acoustic impedance contrasts between sand and shale beds. Rock responses in undrilled prospective areas can be inferred only from the well ties and correlation of reservoir parameters to seismic response at already
drilled well locations.
3. Reserves Estimates
Reserves estimates are calculated as the possible volume of hydrocarbons that could be contained within a structurally or stratigraphically confined area and gross reservoir thickness. While 3D seismic interpretation and mapping can constrain this area and
thickness somewhat reliably, other parameters used as input for volumetrics can be risky assumptions with a wide range of uncertainty. These other unknown parameters include rock and fluid properties which affect the physical recoverability of the hydrocarbons.
Estimates of reservoir properties at an undrilled prospect location are based on assumptions from nearby well data. Sparsity and proximity of available well data affect the validity of assumptions. Densely drilled areas such as the Gulf of Mexico present less ambiguity in estimating reservoir presence and parameters such as porosity and permeability than sparsely drilled or completely undrilled greenfield basins. |
