strategic implications of estimating reserves gary howorth 1993

8/11/2019 Strategic Implications of Estimating Reserves Gary Howorth 1993

1/5

49

The Strategic Implications

of

Estimating Reserves

Gary Howorth

Arthu r Anderscn Petroleum Services. London, UK

S R A

I

/.1u/led

ono/ysis the No rth sea oil

o d

r v e s is p r o ~ i d e d . EsJimo/ing undis

rew rves. '

hic

h besubjO l quitediJJerem

isbeco

ming imponomjoc/or

1 ,lIh

ClJl/Jpl ies gQvemment /0 determin f:

straregies

I N R D U

~ v c l o r

of the

Nonh

Sca began in

(

mid 1960s with

I

first

produc tion

1

967 We

st Sole licld. Sincc

some 80

fields

started

r

o

u

c

110 1

Scven fa c il ities

nam

cly Argyll. Blair, C rawfo rd, D , In

nc

s,

Linn

hc

~ H l j

Pipcr havc already abandoned

and

[

2000

it

is estimatcd

I l

fu rthe r 2(),,30

li

clds wil1

abandon

ed.

l

' Ic

UKCS

ha

s

und

crgone rap id structural

changc in

rclatively

shon

timc

11111pllrcd

with o

ther areas orthe

world. Some

ar

eas like

{ Soulhem Ga

s

ba

s

in

s i d 10

mature and

while

others

likc Wesl

ofShel

l

and

s

still

. l l l l { l c d

rrontier or

embryonic

.

using UKC S as examp lc, thi s paper shows that qu anti

f)r

i

ng

ruturc

" I,'I'\'C >

wh ich Ih cir very naturc are unccnain and subjecl 10 wide rangcs

I ludgement.

I

I

IS

pa per

also identifies

how

re serve estimates have c

hanged

over timc

and

,tl\lu( es thal cstima

li

on

orundiscovcred

rcscrves

or Yct

10

Find

is

imp

o r

'.1,1 bOl h

indu

stry

and

govcrnmcnl

in

its stralegic managemcnt

1 'S rcscrvcs.

n h u Andcrscn Pctrolcum Scrvices

Group

analysed somc

170-180

ficlds in

1992, as thc conlinuaJ updating of its UK Up stream Pctroleum

t

I ,(t ta


2/5

50

Disco"cries

Y F

Stralegic

m l i i n s E s t i a t i l J g

ficlds

in

production thosc

which undcr

devcl

or

( I dcfinition)

_ Includes potcntially co mmercial ficlds

and othcr dlll

covcrics

_ Undiscovered rcscrvcs - l 10 Find"

BACKGROUND

Estimates rcserves havc changed

dramatically

sincc 1979 whcn total

rcserves werc 50 l l i barrels oi l equ ivalenl co

mp

ared wilh 74 bill l4ln

1992 (including oil, gas

and

view u d i s v d rcscrvcs which we

"

10

Find YfF).

Although rcscrvcs

have

moved

ca lcgo,",

another as

hav c

assessed scismic.

appraised and

f i n a l l y d c v c

1 1 ~

thc industry's pcrccption (

F has

increased as

( areas

analysed

in dctail. question

askcd is, [ how lon

this

in

crcase

continue and

howd

oes decidc

that

th e reserves plat

c:

..

This

will not

answer

thcsc

questions

directly

l

provides

some

into

the

potential probIems of

doing 50.

s

secn in Figure

1,

dril1ing

has

dccrcased ovc

rt h

c last few ycar1i

' 1 l timc high of 1990. This rcduction in dril1ing is sccn in both o i 1 I H I

exp lorat ion and appraisa\

although

we

anticipate

that gas activity co

u1d

p j ~ tI

in

,

next fcw ycars

duc {

in crcSI in gas markcting

and the

elc("t,k.'*

gcncration sector.

Ovcrall

trcnd ha

s

incrcasi

ngone,

thcrc forc it is

1

U i 0 1 l t l l l

10

incrcase in forecasl rcscrves.

Oi l Rcscrvcs

Vicws oil rcscrv

cs

gencra

ll

y increascd

throu

ghoul

(

years i'l

thc incrcasing

trcnd in

drilling.

Those

rcserves produccd o r

curre

ntly in

tion

make somc

40% ofthe estimatcd UKCS reserves.

evidcnce

fl\lllll'

Figures 1-3, suggcsts that reserves in

( UKCS

I rclH 11 1'1.

plateau.

Gas

Rcserves

Gas

reserves

also incrcascd sincc

1979 but

unlikc o

il

, \0

platcaued

.

Notc that thc

sizc

ofYTF

catcgory

has

doubI cd sil1ce

19

79 bHIIIII_

incrcascd

dramatically

sincc

19

88.

N 111C

casc of Ihc gus

rc

scrvcs il\

,II

C

thosc

current

ly

produccd

in

produ

ctiOl1lnakc HP cstima lcd 51%

UKCS gas rcscrvcs comparcd witll 40% for 011.

' " I / Implicatio s & I i m i n g Resen'/;'s

'

1

,.,

.

.

l\I6j

1\167

1969 1971 197 15175

1911

191:1 1915 1917

1\119

19\11

_

Exp1ora1ion

[ : J Appraisal

Figure

1. Exploration l d Appraisal Wells

$puddcd

51

I

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I

f

- .

1914 19115

1 1917 1911 1W\1

19')0 19\11

- Produced

t I l 1 2

D:'JTobcprodu


3/5

SJrotegic

mpl

catio lS Estimat;ng Rese,,'r'

'ed oil e s e r v e s ranged from 540-3395 milJion tonnes( which converts o 4 - 2 ~ I

barrels).

'hen g these cstimates thcrc will s o

a e a s .

like Ihe

mor ,

Southern North Sca (SNS)

and Nonhcrn Nonh

Sea (NNS). whereeXIC

\

l o g i c a l

and

geophysical stud ics havc out utilising the

8 ' "

titics

of

data

i l .

In othcrs the

of dala

r e q u i e d

fo

r thc't'

cs is always availabIe.

cserve sizes

of

discoveries and ficlds dcvelopcd have rcduced

tilYl('

I 6)

with the

e f e c

that gr

ca

tcr pcrccntagc

of

Ihc discoverics

and

Y II

Icss economic

than

in prcvious

c a s .

Although some screening of

rCSCI

as

made high Icvel e.g. exclude

1 l rc

servc sizcs less

than

sizc

1"

b a r c l s .

it is likely that

funher rc

scrves shown in the

f i g t

uncconomic.

stimatcs ofthe

o f Y F

in the UKCS havc dramatic effcct (111

gures shown above

and

{ conclusioos d rawn. Organis3tions will IHlv\,

pcrceptionsofthc

o f Y F in thc various areas.

Cenainlyw ll

clr

panies strong participants in

,

they likcly have

ben

ervicw

F than

others.

(17.1%) 1III"t...uctia.o

( l . 9 ' )

0 --_

(


4/5

Slrotegic p l i c m i o n s stimating R

esen es

()1911.)

Y F

Figure 5.

UK

Gas Reserves.

\0\

200

.1 roduclion f E UfI(\cr {)cvelopment

r l . u ~ 6. Distribution of lnitial Reserve Size Field Slalus.

fled

\ )

tl\cm. r

caso

n

forthis

is

\

thcsc ficlds

mak.ingcxIC

\

Cx1Slil\8

i"frastruclurc

. \1108C

c s c V C S

( l

\0 dcvcl

oped

in

{

half thc

d C C : H I ~ '

fOl'CClIst 10 risc. This is fortwo

main

rcasons; (i) thal rcservc s izcs

i l l l

r

1

IId

(ii) l

ficlds likc those

thc (Eastcm

Trough

Pr

ojc( l)

, , '

(e.g.

Mamock.

Mungo, Sco tcr, rcquirc

1 1 .

,frnslruclurc.

hough s o ofthc rises

'

unit coslS will reduccd utilising

ructu rc. unless fundamentally diffcrcnl

mcans

dcvcloping thc rcScl'V{'

: found. e s c r v costs likcly 10 risc ( making thcln 1\ I) Cli'

n rcgiOl)al basis

Ul\i1

ficld

COSIS

nlso

d i f c r

grcntl

y, For

exa mplc

i

1111

0 5

fie

ld

s whi c

ll

wc cnlcgo riscd IIS

po

lcntinlly co

mmcr

cl I.l \

10

dcvcloped il\ I l I


5/5

Slrategic

/ m / i

i s

0/ i n r a t i g esen

is

I

impa cl eSlimali ng Y F upon s t r a l c g l ~

tgement dccisions, becomes

important. For examp lc lel us u p p o

produclion

ofproducing

rcserves, Ihose 10 dcvcloped. and (

11

'1-

ies as shown in Figure 10, i

.c.

downward slopc. vicwoCYl1

ts exploilalion,

e.g.

case

I orcasc 2. will

slrong impact

a n y s t r a t c ~ ~

) perators

wish

10

follow in terms developing assets in

. " 01

8ple. should operators maintain infrastructure so that Ihey

lil the should

I

follow some slralegy that manages dcclil1c

'r

cl

f7S 191 ,971 ,910 1914 19t6 1911

PToduction S t a t

l t p c r b o c ( C a p c ~ )

r::J CostpcTOOc(OpcX)

_

Oil

pricc lboe

Figure 9. Averagc Rcal Cost

of

Developmcnts

. , . ,'

Producinl

C J Y F c . . t

, XIOl X O]

C J

Undor

Dcvc.lopmcnt

Y F C a 2

Flaure 10. Po ifll )le PI'OOtll.;tlOl\

r o l l l

1 1 1 " Mttltll 'e , .

Strategic mplicatiofI J

0/

Est;nrating Reserves

5)

Thus

, il is lop ic which will require atlention as regjons

an d dccline.

CONCLUSIONS

The main poinls

10

drawn

[

Ihis

: -

Views

Y F imponant

determinanl in eSlimaling

tOlaJ e s e r v e s

their

u Y F

un

ceJ1a

in

and

wide in rangc. Organisalions

wi

H differenl views.

There grcat regionaJ differences in Ihe

UKCS

Estimating will require attention as {

UKCS

matures

and

will

imponant

factor for manage ment

and

govemmenl in dctermining

stralcgies.

pubticalions Anhur

d r s e P c t o l c u m

Scrviccs arc bascd information and opi nions

s o u c c s

which havc

~ u b j e c t c d

verifica1ion, No

Tcpr

csentation

'3rranty is givcn Anhur Andcl"Sen

as

the accuracy of complClcncss of [hc

i n f o m a [ i o n

IInd

Qpll1

io ns cOnlaincd

'

suc h pubIica ions.

Anllur

Andcrscn do

S J s i b i

i t y

for

I

.ccu

racy sufficicn

cy

he

i n f o m a t i o n

or

orinions

or

dircct. indiTccl or conse

q

uer l1ia

t Joss or damagc su(fcred

n

person

as

resuJl of relying such pubIications

111C

t i o n and opinions

thcrcill.

C

opY Ti

ghl alt pubIi ca ions

A t h u r

Andcrsen t>elroleum Scrvices bctongs

10

Anhur

r J d r s e

strategic implications of estimating reserves gary howorth 1993

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