1. Going Beyond Exploration
Lecture 15
Going Beyond Exploration
Headlines:
Alpha Wildcat Finds Thick Oil Zone!
Block 7
Bonanza Basin
Discovery
Well 8
Salt
Diapir
Slide 1
Title slide – the Alpha wildcat discovers oil!
What happens next
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L 15 – Beyond Exploration

2. Our Exploration Flowchart
Management
Approved
Wildcat Well
Capture
Prime Areas
Identify
Opportunities
Acquire
Seismic Data
Process
Seismic Data
Wildcat
Drilled
Interpret
Seismic Data
Slide 2
Here is part of our exploration flow chart – up to making a discovery
We Have:
reviewed our Alpha prospect to management
they approved the expenditure for a wildcat well
we got a rig on-site to drill Alpha
we waited expectantly for the well to reach our target depth
the well encountered a thick oil-bearing interval – success!
Assess
Prospects
Success
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L 15 – Next Steps
L 15 – Beyond Exploration

3. Our Assessment Results
Alpha Prospect – Main Compartment - Risked
1.0
100
0.8
Gas Only
62 % COS
Gas Cap & Oil Leg
0.6
51 % Chance of
Finding More
Than the
Economic
Minimum
Slide 3
Just as a reminder… here is our pre-drill assessment
51% chance to exceed the economic minimum
0.4
Economic Minimum
Oil Only
0.2
0.0
100
200
300
400
500
Million Oil Equivalent Barrels
62% Chance to find any hydrocarbons
51% Chance to find 100 MBOE
5% Chance to find 400 MBOE
Courtesy of ExxonMobil
L 15 – Beyond Exploration

4. Congratulations! A Huge Success
Alpha Prospect
YOUR exploration well on the Alpha prospect discovered an estimated 325 MBO
Block 7
Bonanza Basin
Discovery
Well 8
Salt
Diapir
Slide 4
The well found oil down to a depth of 4500 meters – very close to our prediction
The net-to-gross and porosity of the sand is slightly better than we predicted – great
Our preliminary estimate is 325 MBO – our assessment was that there was a 20% chance to find this much
0.0
0.2
0.4
0.6
0.8
1.0
100
200
300
400
500
Million Oil Equivalent Barrels
Alpha Prospect – Main Compartment - Risked
Gas Cap & Oil Leg
Gas Only
62 % COS
Oil Only
Economic Minimum
Courtesy of ExxonMobil
L 15 – Beyond Exploration

5. What’s Next?
Exploration would drill one or two confirmation wells to verify there is enough HCs to make some money (Value > Costs)
If results continue to be good, the FIELD would pass on to Development or Production people
Success
Uneconomic
Drill
Wildcats
Assess
Prospects
Confirmation
Well
Interpret
Seismic Data
Process
Acquire
Capture
Prime Areas
Identify
Opportunities
To Development
Or Production
Slide 5
So what is next?
Still within exploration, we would drill one or more confirmation (aka delineation) wells
Before management approves $2 billion to build & install a platform, they want more proof that Alpha can make some money
The exploration folks will work the details of where to drill – mainly to address the biggest uncertainties
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L 15 – Beyond Exploration

6. Delineation Well 6 Months later…
Alpha Prospect
6 Months later…
A delineation well is completed to the NE
An OWC is found at 4500 m – the same depth as in the discovery well
The porosity is slightly better – 26% versus 23% in the discovery well
Block 7
Delineation
Well
Salt
Diapir
Discovery
Well
Slide 6
6 months later, a rig is on location to drill a second well
The biggest uncertainty is how much oil is NE of the major fault
We find the OWC is again at 4500 m – the fluids are in communication at a geologic time scale
We also find the porosity is a little better at the delineation well – more good news
Based on 2 wells, we revise the EUR (estimated ultimate recovery) to 34b MBO
Now management is ready to move Alpha from the Exploration phase to the field Development phase
Block 8
Bonanza Basin
The delineation well has confirmed enough oil to merit field development – EUR now set at 348 MBO
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L 15 – Beyond Exploration

7. G&G in Development Questions:
Exploration has drilled a discovery and a delineation well.
The ultimate recover for Alpha is estimated to be 338 MBO,
which greatly exceeds the economic threshold of 100 MBO
Questions:
Can we refine our picture of the distribution of oil at Alpha?
Is the reservoir a single unit, or is it segmented (separate regions to drain)?
How many wells and where should they be drilled?
What sort of facilities (platform?) will we need?
How can we speed-up time to first oil?
What uncertainties remain?
Slide 7
Given the results of the discovery and one delineation well, Alpha is turned over to Development
In development, geoscientists are needed to answer questions such as:
Can we …………
Is the reservoir ……….
How many ………………
What sort ………….
How can we ………………
What uncertainties remains
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L 15 – Beyond Exploration

8. We Need More Detail Reservoir Map at the end of Exploration
Slide 8
To answer development questions, we need more detail on the reservoir, its properties, and the distribution of oil & gas
We want to understand where to place wells to get the most for the least cost
For exploration, we can live with a ‘broad brush’ picture of the reservoir
For development, we need considerably more detail
As shown on the right, we may drill some more wells during development – before placing a production platform
Reservoir Map
at the end of
Exploration
Reservoir Map
at the end of
Development
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L 15 – Beyond Exploration

9. Some Questions … #2 #3 Why did they drill well #3? #4 #1
Slide 9
Why might they have drilled the western development well (#3)?
Confirm the oil-water contact
See if reservoir quality changed (better or worse) at the western edge of the field
Why might they have drilled the eastern development well (#4)?
The oil is isolated from the rest – probably have to develop as a separate compartment
Is there enough oil to merit producing it – or is it cost-prohibitive
See if reservoir quality changed (better or worse) at the eastern edge of the field
If some big surprise occurs when drilling the development wells, it may be possible to cancel the development without too much loss
Why did they drill well #4?
Where would you place well #5?
Why?
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L 15 – Beyond Exploration

10. Data Used for Exploration Reshot for Development
Data for Development
We may need better quality data to address development needs
Slide 10
Data quality that was adequate for exploration may not be adequate for development issues
The seismic data may need to be reprocessed – using more sophisticated, expensive, time-consuming methods
We may have to reshoot a new survey to get acceptable data quality
Data on the right is ‘sharper’ and has better vertical resolution (red & black bands are thinner -> more stratigraphic detail)
Data Used for Exploration
Data Reprocessed or
Reshot for Development
And Production
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L 15 – Beyond Exploration

11. G&G in Production
Production has begun at Alpha.
The initial production rates are as expected.
Questions:
How should we manage the field so as to maximize our investments?
Can we monitor how oil is being swept out of the reservoir?
What about injection wells and enhanced recovery?
Is there more oil in the vicinity – either at deeper depths or in nearby traps?
Can we build a computer model of the field that matches existing production data? If so, we can test future recovery with different drilling scenarios.
Slide 11
The development department has a platform built, installed, and start to produce oil at Alpha
The initial production rates (barrels/day) are about what they predicted
Now the field is turned over to the Production Department
In production, geoscientists are needed to answer questions such as:
How should we …………
Can we ……….
What about ……..
Is there ………….
Can we build …….
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L 15 – Beyond Exploration

12. Reservoir Simulation HISTORY MATCH FEEDBACK INPUT Geologic Model
Oil Production
Actual in Blue
Slide 12
A very useful tool for production people is a reservoir simulation
A detailed geologic model of the reservoir is built – rock type/lithology, porosity, permeability, etc.
Then fluids are placed within each cell of the geologic model along with fluid properties
The reservoir simulator models how the fluids move through time
Until recently, the first simulation would be run after about 5 years of production time
The simulation would be calibrated by doing a history match - comparing the simulated production (red curve) with the actual production data (blue boxes)
If a reasonably good history match is obtained, the model is taken to be fairly accurate
Then we can simulate future production – 10, 20, 30 years into the future
We can do some ‘what if’ scenarios – e.g., if we placed 3 additional producers at these locations and 5 injectors at these locations, how much additional oil would we produce?
If the cost of these 8 wells is less than the value of the additional oil, we might do it
Obviously if the cost of the 8 additional wells would not be recovered, we would not do it – look for other ‘profitable’ scenarios
We can also look for portions of the reservoir that are not swept of oil (in the simulations) and target these locations with additional wells – if profitable
Modeled in Red
Production
Time
INPUT
Reservoir Simulation
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L 15 – Beyond Exploration

13. The Value of G&G to an Oil Company
G&G work is done to add HC reserves (volumes)
New discoveries
More from discovered producing zones
Additional producing zones
Get the most reserves at the lowest cost
Invest in the right basins
Drill in the optimum locations
Correctly assess what can be recovered
Avoid unnecessary wells
Slide 13
So geoscientists can have great value to an energy company
They can:
Do work that leads to added HC reserves – making new discoveries, getting more from producing zones, or finding additional zones to produce
They can get more reserves at lower costs
Investing in ……
Drilling in ………..
Correctly assessing ………
Avoiding …….
For example, say that:
I am on a team of 4 working production at the Alpha field
The initial plan was to drill 10 wells
Average cost for a well is $75 million
Through our team effort, we determine that we can get the same amount of oil with only 8 wells drilled in more optimum locations
The team of 4 saved the company $150 million (cost of 2 wells)
That would be enough to pay each person for 50+ years – they have certainly earned their keep!
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L 15 – Beyond Exploration

14. Let’s Fast Forward a Number of Years
The Alpha field has been producing for 5 years
We want to maximize production
Slide 14
Let’s go forward 5 years after the start of production (drawing fluids out of the reservoir)
Our main objective is to maximize production while minimizing the costs
We would build a computer model of the subsurface – with rocks and fluids
We would simulate how each well would produce fluids over the 5 years of production
We use the actual well production to calibrate the model (simulation)
If we get the model to match actual production, we build confidence that the model is close to reality
Then we can model production into the future
With the model, we can test ideas such as “what if we add to producers at locations A, B and C and an injector at location Z?”
Build a
Geologic
Model
Develop a
Reservoir
Simulation
Match
Past
Production
Model
Future
Production
Iterate to Match
Production History
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L 15 – Beyond Exploration

15. A Geologic Model
An integration of all geologic, geophysical, petrophysical and interpreted or conceptual information about a reservoir into a single 3D numerical description of that reservoir
Structural Interpretation
Stratigraphic Interpretation
Petrophysical Interpretation
Geophysical Interpretation
Slide 15
The subsurface (geologic model) is an integration of all geologic, geophysical, petrophysical and interpreted or conceptual information about the reservoir into a single 3D numerical description of that reservoir
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L 15 – Beyond Exploration

16. A Geologic Model 1m
75 m
Perm
250 mD
Sand
Shale
0.1 mD
50 m
Slide 16
Each cell in the model is assigned rock and fluid properties:
Rock type (lithology)
Porosity
Permeability
Fluid Saturation
Water properties
Oil properties
Gas properties
Etc.
Cell size can vary depending on the field size, computing resources, etc.
But they are typically about 50 to 100 m in X and Y and about 1 m in depth (Z)
Each cell can be populated with rock & fluid Properties:
Facies
Porosity
Permeability
Fluid Saturation
Etc.
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L 15 – Beyond Exploration

17. How do we use this information?
Using a Simulation
Past Production
Future Production
Time (yrs)
Oil Rate
Base Case
EOR
Infill Drilling
Actual
Modeled
Slide 17
The first task is to get a history match – a model (simulation) that matches the history of field production
If this is done, then we start to model future production
We can see the impact of using EOR – enhanced oil recovery methods
Or of doing infill drilling
The main question is will the cost of EOR and/or infill drilling going to result in enough extra production that the extra costs are more than recovered by the extra oil or gas to sell
How do we use this information?
Field development planning
Field production optimization
Reservoir surveillance
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L 15 – Beyond Exploration

18. The assignments are challenging, fast-paced, and multi-disciplined
In Summary
The O&G Industry needs top-notch scientists and engineers to work on a vast array of problems
The assignments are challenging, fast-paced, and multi-disciplined
Often your work is tested in the matter of months
Great Ideas + Good Science -> Success
Slide 18
In summary …..
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L 15 – Beyond Exploration