1. New Decline Curve Tool for GOM 3 /GOMsmart & “Forgotten Oil & Gas Study” 2012 GOM 3 User Conference at Anadarko John D. Grace, Ph.D. Earth Science Associates

2. New Tool Objectives Provide a robust tool for forecasting production & estimating remaining resources by completion/completion interval Introduce optional new method for refining decline curve analysis accounting for “breaks in regime” Internally, use tool in batch mode to identify opportunities for further production

3. Decline Curves Use regression analysis to forecast a production series beyond the last observation With forecast “integrate under the curve” for remaining resources ≥ abandonment level Use confidence intervals on regression to estimate confidence intervals on remaining Use analysis of breaks in time series to improve on “naïve” regression models

4. Stereotypical Decline Curve Barrels per day Oil Production 100 200 300 400 1 2 3 4 Years on Production

5. Fitting a Decline Curve Classical functional forms of decline curves – Exponential (rate vs. time) – Hyperbolic (rate vs. time) – Linear (rate vs. cumulative production) – P/Z vs. cumulative production (gas only) Where does the estimable decline start? – Global maximum production rate? – At the last significant structural break in regime?

6. Exponential Decline Model

7. Hyperbolic Decline Model

8. Linear Decline Model

9. (P/Z) Linear Model

10. Improving & Choosing Model Statistical measures of “goodness of fit” – R 2 and “predicted R 2 ” – Statistics on estimated parameter of decline – Still under research (e.g., retrospective forecast) Actuarial approach (cum. prob. den. function) Optimal choice of structural break – Last break – problem of shutting down well – Compare candidate breaks (& forms) against cdfs – Allow user to chose break point

11. Actuarial Approach to EUR 0 246 0.2 0.6 0.4 0.8 1 0 Cumulative Prob. Million bbls Oil 0 10 20 30 40 50 0.2 0.6 0.4 0.8 1 0 BCF Gas Conditioning Variables: Drilling date, perf thickness, geologic age, reservoir volume, reservoir permeability, GOR, oil viscosity, gas specific gravity, reservoir drive mechanism, operator (?)

12. Exploiting Structural Break in Regime Global Max Terminal Regime Break Default: We find break Option: You set break

13. Adding Water to Analysis

14. Tool Interface (in GOMsmart) Tool looks the same in GOM 3 & the GOMsmart Map but is called from the Hot Link Tool

15. Tool Output Charts Reports Excel Download

16. “Forgotten Oil & Gas Study” Motivated by running Decline Curve Tool in batch mode – ~60,000 completions/ completion intervals – Sensitivities to abandonment rate