Introduction

Scope and Objectives

Prepared By
Archana
Assistant Professor/PE
IIT(ISM), Dhanbad
2017-18
• Oil and gas are essential sources of energy in the
modern world

• Modern reservoir management relies on asset

management teams composed of people from a
variety of scientific and engineering backgrounds to
produce oil and gas

• Properly constituted asset management teams include

personnel with the expertise needed to accomplish all
of these tasks.

• These people are often specialists in their disciplines.

They must be able to communicate with one another
and work together toward a common objective.
Life Cycle of a Reservoir
• The analysis of the costs associated with the
development of an energy source should take into
account the initial capital expenditures and annual
operating expenses for the life of the system.
• This analysis is life cycle analysis, and the costs are life
cycle costs.
• Life cycle costing requires the analysis of all direct and
indirect costs associated with the system for the entire
expected life of the system.
• In the case of a reservoir, the life cycle begins when the
field becomes an exploration prospect, and it does not
end until the field is properly abandoned
A reservoir’s life begins with exploration that
leads to discovery, which is followed by
delineation of the reservoir, development of
the field, production by primary, secondary,
and tertiary means, and finally to
abandonment.
Reservoir Management
• Modern reservoir management is generally
defined as a continuous process that
optimizes the interaction between data and
decision making during the life cycle of a field
(Saleri, 2002).
• This definition covers the management of
hydrocarbon reservoirs and other reservoir
systems, including geothermal reservoirs and
reservoirs used for geological sequestration.
• Geological sequestration is the long term
storage of greenhouse gases, such as carbon
dioxide, in geological formations.
• The reservoir management plan should be
flexible enough to accommodate
technological advances, changes in economic
and environmental factors, and new
information obtained during the life of the
reservoir, and it should be able to address all
relevant operating issues, including
governmental regulations.
• Many disciplines contribute to the reservoir
management process.
• In the case of a hydrocarbon reservoir, successful
reservoir management requires
 understanding the structure of the reservoir
 the distribution of fluids within the reservoir
 drilling and maintaining wells that can produce fluids
from the reservoir
 transport and processing of produced fluids
 refining and marketing the fluids
 safely abandoning the reservoir when it can no longer
produce
 and mitigating the environmental impact of operations
throughout the life cycle of the reservoir.
• Reservoir flow modeling is the most sophisticated
methodology available for generating production profiles.
• A production profile presents fluid production as a function
of time.
• Fluid production can be expressed as flow rates or
cumulative production.
• By combining production profiles with hydrocarbon price
forecasts, it is possible to create cash flow projections. The
combination of production profile from flow modeling and
price forecast from economic modeling yields economic
forecasts that can be used to compare the economic value
of competing reservoir management concepts.
• This is essential information for the management of a
reservoir, and it can be used to determine reservoir
reserves.
Reserves Definitions
Proved Reserves
• Those quantities of petroleum, which by analysis
of geoscience and engineering data, can be
estimated with reasonable certainty to be
commercially recoverable, from a given date
forward, from known reservoirs and under
defined economic conditions, operating methods,
and government regulations.

There should be at least a 90 percent probability

(P90) that the quantities actually recovered will
equal or exceed the estimate.
Probable Reserves
• Those additional reserves that analysis of
geoscience and engineering data indicate are
less likely to be recovered than proved
reserves but more certain to be recovered
than possible reserves.
• There should be at least a 50 percent
probability (P50) that the quantities actually
recovered will equal or exceed the estimate.
Possible Reserves
• Those additional reserves that analysis of
geoscience and engineering data suggest are
less likely to be recoverable than probable
reserves.
• There should be at least a 10 percent
probability (P10) that the quantities actually
recovered will equal or exceed the estimate.
Reservoir Management and Economics
• An economic measure that is typically used to
evaluate cash flow associated with reservoir
management options is net present value
(NPV).
• The cash flow of an option is the net cash
generated or expended on the option as a
function of time.
• The time value of money is included in
economic analyses by applying a discount rate
to adjust the value of money to the value
during a base year.
• The NPV of the cash flow is the value of the
cash flow at a specified discount rate.
• The discount rate at which NPV is zero is called
the discounted cash flow return on investment
(DCFROI) or internal rate of return (IRR).
Thank You