1. Reserve Evaluation for Enhance Oil Recovery Purposes Using Dynamic Reserve Evaluation Model Woodside Research Facility GPO Box U 1987 Perth West Australia 6845 BY CHAWARWAN HUSSEN Tuesday 22 September 2009 International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009

2. Reserve Evaluation for Enhance Oil Recovery Purposes Introduction and Objective of the presentation Reserve Definition and Reserve Growth Requirements of EOR response to CO2 injection from analogous reservoirs and Data Needed to Analysis for Analogy Method Estimation Incremental Increase and classification in Recovery Factor Estimation of Recovery Factor and Classification of Reserve Estimation of Dynamic Reserve Evaluation Model Estimation of Growth Rate and Estimation of Current Price of Oil Reserves Estimation of Petroleum Reserve Bankability 1) Booking price in term of growth rate 2) Booking price in term of money A case Study Conclusion Outline of The Presentation International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009

3. The first objective is the concept of EOR to make decision whether the reserve should be re-classified in terms of recoverable, commercially or potentially from known or unknown reservoir, therefore, add them again into the categorizations of reserves such as 1P, 2P and 3P or waiting for the development of market viability, technology advance or removal of other constraints to the development. The second objective is Dynamic Reserve Evaluation Model (DREM) will be a function of an economic analysis from forecasting economic conditions, reserve management and reporting reserves, based on petroleum reserve bankability to estimate the return on the investment of (DREM). Reserve Evaluation for Enhance Oil Recovery Purposes International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009 Introduction and Objective of the Presentation

4. Reserve Evaluation for Enhance Oil Recovery Purposes SPE and SEC regulations applicable to oil and gas reserves -Petroleum Reserve Definition 1997 -Petroleum Resource Classification and definition 2000 -Guidelines for the Evaluation of Petroleum Reserves and Resources 2001 -Accounting Series Release No. 257 -Financial Accounting Standard Board Reserve Definition and Reserve Growth Definition of Reserve: Reserves identified those accumulations that can be extracted profitably with existing technology under present economic conditions. Definition depends both on price, and on time frame of assessment International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009 Society of Petroleum Engineer (SPE) Securities and Exchange Commission (SEC)

5. Reserve Evaluation for Enhance Oil Recovery Purposes Reserve Definition and Reserve Growth Definition of Reserve Growth Reserve growth is the observed increase in reserves for fields over time. Initial estimates of reserves are lower than the ultimate volume of oil produced. Cause of Reserve Growth Factors that contribute to the reserve growth of fields can be grouped into five categories that are not independent of each other: a. Reserve calculation b. Recovery percentage c. Additional oil and gas in place d. Production Technology e. Political economic changes International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009

6. Reserve Evaluation for Enhance Oil Recovery Purposes After Field Discovery Analogy Method: The purpose of this method is to apply knowledge gained from analogous and mature reservoirs or recovery processes to estimate the performance in target reservoir. Especially when new recovery mechanism or enhancements are introduced to a field (e.g. CO2 flooding). Mostly this method will be applied at the early stage of evaluation when there is not enough definitive performance and/or geologic data available. The proof of this method, the rock and fluid properties of the target reservoir need to be equal to or more positive than the analogous reservoir properties in order to qualify for proven reserves. International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009

7. Reserve Evaluation for Enhance Oil Recovery Purposes Analogy Method Data Needed to Analysis for Analogy Method -Need a good estimate of OOIP (STB) for both the analogy reservoir and the reservoir being studied. - CO2 Flood Area OOIP - Initial Oil Formation Volume Factor - Current Oil Formation Volume Factor - Current Reservoir Temperature and Pressure - CO2 Formation Volume Factor - Initial and Residual Oil Saturation - Historical production and injection rates International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009

8. Reserve Evaluation for Enhance Oil Recovery Purposes Estimation of OIIP from Natural energy of the Reservoir. Requirements to estimate RF using volumetric equation Estimation OIIP from natural energy of the reservoir Estimation of OIIP after volumetric depletion at Pa Estimation of OIIP after CO2 injection at Pi - Area (A) - Thickness (h) - Average reservoir porosity, % - Average water saturation (Swi) - Oil formation volume factor (Boi) at initial reservoir pressure (Pi). -Oil saturation after CO2 injection (Sor)% Development Defines Field Limits International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009 Volumetric Method

9. Reserve Evaluation for Enhance Oil Recovery Purposes Reserves cannot be classified as proved undeveloped reserves based on improved recovery techniques until; Such time that they have been proved effective in that target reservoir already being studied in `the same geologic formation in the immediate area’. As the SEC guidelines state “the intent of the definition of proved reserves is interpreted as estimates that are more likely to result in a positive revision than a negative revision” immediately Estimation of Recovery Factor International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009 Securities and Exchange Commission (SEC)

10. Reserve Evaluation for Enhance Oil Recovery Purposes Estimation of Recovery Factor from Natural Energy of the Reservoir Estimation of Recovery Factor after CO2 injection at initial reservoir pressure Estimation of Incremental Increase in Recovery Factor According to the equation incremental increase in recovery factor of re-evaluated reserve will be categorized into three groups. 1- IIRF ≥ 50% (Good reserve) 2- 20% ≥ IIRF ≤ 50% (Intermediate reserve) 3- IIRF is less 10% ( Poor reserve) Estimation of Recovery Factor and Incremental Increase in Recovery Factor International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009

11. Reserve Evaluation for Enhance Oil Recovery Purposes Total Recovery Factor of Re-evaluated Reserve : Total Recovery Factor : Incremental Increase in Recovery Factor : Recovery Factor at Natural Reservoir According to the equation (TRF%) re-classification of the re-evaluated reserve will also be categorized into three groups. For example value of recovery factor: 1- If TRF is 90% (proved reserve) 2- TRF is 50 % (probable reserve) 3- TRF 10% (possible reserve) Estimation of Recovery Factor and Classification of Reserve International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009

12. Reserve Evaluation for Enhance Oil Recovery Purposes Petroleum Reserve Bankability : Booking price $ in term of growth rate : Booking price in term of money : Current price $ : Development price $ : Growth rate of cumulative oil produce for the reclassified reserve%. Estimation of Petroleum Reserve Bankability International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009

13. Reserve Evaluation for Enhance Oil Recovery Purposes Estimation of Dynamic Reserve Evaluation (DREM) Where - OIIP : Oil Initial in Place - TRF% : Total Recovery Factor Estimation of growth rate of Cumulative oil produced from the re-evaluated reserve. V(t 0 ) : start Volume, STB V(t n ) : finish volume, STB t n − t 0 : number of years International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009 Forecasting an Economic Limit

14. Reserve Evaluation for Enhance Oil Recovery Purposes Source: Chevillon and Rifflart (2009) Table: Independent Variable Variable Cumulated past supply in excess of demand outside OECD Past supply in excess of forecasted demand in OECD Cumulated past supply in excess of demand within OECD Change in OECD demand Difference between observed oil price and OPEC target price International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009 Estimation of Current Price Of Oil Reserves

15. Reserve Evaluation for Enhance Oil Recovery Purposes International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009 Estimation of Current Price Of Oil Reserves 24.2104

16. Reserve Evaluation for Enhance Oil Recovery Purposes Probability of volumetric factors Area26,700acres Thickness49 % Porosity8 % Average water saturation 45% Initial reservoir pressure Pi2980psia Abandonment pressure Pa300psia Oil formation volume factor at Pi1.68bbl/STB Oil formation volume factor at Pa1.15bbl/STB Gas saturation at Pa34 % Oil saturation after CO2 injection20 % International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009 Case Study of Application Model

17. Reserve Evaluation for Enhance Oil Recovery Purposes Firstly, calculating oil initial in place = 7758 * A * h = 7758 * 26700 * 49 = 10.15 MMMbbl 1- Oil initial in place by volumetric method 2- The oil in place after volumetric depletion to abandonment pressure: 3- The oil in place after CO2 injection at initial reservoir pressure: International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009

18. Reserve Evaluation for Enhance Oil Recovery Purposes 1- Estimation of Recovery Factor from Natural Energy of the Reservoir 2- Estimation of Recovery Factor after CO2 injection at initial reservoir pressure 3- Estimation of Incremental Increase in Recovery Factor 4- Estimation of Total Recovery Factor Secondly, Estimation of Recovery Factor International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009

19. Reserve Evaluation for Enhance Oil Recovery Purposes Thirdly, using Dynamic Reserve Evaluation for Estimating Reserve According to a case study, production rate of a well at time 0 is 100 BOPD, initial nominal exponential decline rate is 0.5/year, and hyperbolic exponent is 0.9. Assuming hyperbolic decline predict the amount of oil produced for five years. To find out the growth rate, production at the end of each year must be determined. YearsFlow RateCumulative ProductionYearly Production 01000- 200166.17629,52429524 200249.00950,24820724 200338.69966,11515867 200431.85478,91412799 200526.99289,60610692 International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009

20. Reserve Evaluation for Enhance Oil Recovery Purposes Thus, growth rate of the reserve for five year is: YearsFlow RateCumulative Production (MMP STB) Yearly Production (MMP STB) Current price $ 01000-0 200166.17629524 24.21$ 200249.009502482072450$ 200338.699661151586760$ 200431.854789141279990$ 200526.992896061069230$ Estimation of Current Oil Price, Based on the Excel Simulation Model to Forecast Oil Price for the Selected Five Years. International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009

21. Reserve Evaluation for Enhance Oil Recovery Purposes In the last step, petroleum reserve bankability YearCurrent price $ 124.21$0.0288%0.2592% 250$0.111%3.885% 360$0.1431%6.4395% 490$0.2391%170.9325% 530$0.0471%0.7065% International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009

22. Reserve Evaluation for Enhance Oil Recovery Purposes Conclusion This model deals with the estimation of the combined effects of the geological economical uncertainty of hydrocarbon reserves. The geological uncertainty is mainly associated with the quality and quantity of hydrocarbon reserves which is different according to the nature of rock and fluid properties, as well as the location offshore or onshore, or in shallow or deepwater. The economical uncertainty is associated with production rate, future cost and oil price. International Energy Agency Collaborative Project On Enhanced Oil Recovery 2009