Maximizing the Value of Unconventional Reservoirs by Choosing the Optimal Appraisal Strategy

Abstract

Summary The choice of appraisal strategy for the decision whether to develop a reservoir largely determines the amount of uncertainty that is carried forward to the development and execution phase of the project. Hence, the selection of an appraisal strategy can indirectly influence later go/no-go decisions. Reservoirs are appraised by drilling and producing wells. In unconventional reservoirs, these wells represent a small subset of possible wells that could be monetized if the decision were made to develop the reservoir (i.e., the appraisal wells sample an underlying population of possible wells). This study explores how an optimal appraisal strategy can be designed in terms of the number of appraisal phases, the number of wells to be drilled in each appraisal stage, and how long to produce the appraisal wells before deciding whether to abandon the project or to proceed to the next stage. It is demonstrated how the view on the average expected ultimate recovery (EUR) of a well in an unconventional reservoir can be continually revised as new information surfaces. Production data from a large well set from the Montney Formation, which straddles British Columbia and Alberta, Canada, is used to assess how accurately initial production predicts the expected ultimate recovery of a single well.