Reservoir Engineering – General - Estimation of Primary Oil Reserves

This paper reviews the methods currently in use for estimating primary oil reserves and discusses the principles on which these methods are based. Particular emphasis is placed on how these methods change with the type of information available during the life cycle of an oil property. This paper contains various novel estimating methods and shortcuts heretofore unpublished. INTRODUCTION Estimating oil reserves is one of the most important phases of the work of a petroleum engineer since the solutions to the problems he deals with usually depend on a comparison of the estimated cost in terms of dollars, with the anticipated result in terms of barrels of oil. His recommendations to management regarding the best course of action are therefore normally based on the most favorable balance between these two. Specific engineering problems which require such a knowledge of recoverable oil reserves and a projection of future rates are: [a.] the exploitation and development of an oil reservoir; [b.] the construction of gasoline plants, pipelines and refineries; [c.] the division of ownership in unitized projects; [d.] the price to be paid in case of a sale or purchase of an oil property, and the magnitude of the loan which it will support; [e.] the proper depreciation rate for the investment in oil properties; and [f.] evaluation of the results of an exploration program. This discussion will be confined to the various methods and tools which are currently in use for estimating oil reserves to be obtained during the primary phase of an oil-producing reservoir and for a projection of the future production rates. Reserves which may be obtained by secondary recovery methods or fluid injection programs and gas and gas condensate reserves will not be discussed in this paper. Unfortunately, reliable oil reserve figures are most urgently needed during the early stages when only a minimum amount of information is available. Management's interest in the oil recovery from a property—aside from its use for accounting purposes—usually declines when the property approaches its economic limit, just at the time when the reliability of the estimates is at its best. To illustrate this general idea a chart is presented (Fig. 1) showing the three periods in the life of an imaginary oil property. Time is shown on the horizontal axis, while the cumulative production and estimated ultimate recovery are plotted vertically. No particular units are used and this schematical chart is not to scale. During the first period, before any wells are drilled on a property, any estimates will of necessity be of a very general nature, based on experience from similar pools or wells in the same area, and usually expressed in barrels per acre. This will