Abstract
During exploration and production phases, the life of a hydrocarbon field can be distinguished by five main stages: Exploration, appraisal, development, production and abandonment. Of particular interest is the appraisal stage, where billions of dollars are spent across the oil and gas industry on data gathering activities with a view to reducing subsurface uncertainties towards optimizing reservoir development and management. However, very limited attention is often paid to assessing the Value of Information (VOI) during data acquisition requirement planning, before requesting for such information. Appraisal, when conducted optimally, leads to informed sequential decisions resulting in a development plan that optimizes cost, hydrocarbon recovery and attempts to maximize Net Present Value (NPV). On the contrary, suboptimal appraisal, either in the form of under, or over appraisal, impacts project economics. Individual oil and gas companies use their own strategies, procedures and metrics to optimize subsurface appraisals and safeguard profitability and hence there are no industry standards. The capital intensiveness of the industry and emerging low oil price regime has necessitated scrutiny on every dollar spent on data gathering in the current business terrain. Appraisal should be optimized by way of case specific activity of data acquisition to ensure project deliverability under maximum residual uncertainties achieved by minimum appraisal cost. To ensure that the appraisal strategy is value driven, an effort has been made to briefly recapitulate the different components of appraisal strategy necessary for appraisal framing and evaluation workflow. The appraisal locations selection and their sequencing combines uncertainty reduction, probability of success with VOI technique to determine the number of appraisal wells, their sequence of drilling and their justification that is based on economic merit. The effectiveness of this systematic approach has been illustrated through some real field examples. This workflow along with periodic look-back analysis, during appraisal to development phases, has proven to be highly useful for (1) improving the understanding of geological model; (2) assess VOI from appraisal; (3) reduce subsurface uncertainties and (4) improve decision quality and whole cycle project economics.
Highlights
The phases associated with the search and the production of hydrocarbon reservoirs are known as the Exploration and Production (E&P) phases
The appraisal locations selection and their sequencing combines uncertainty reduction, probability of success with Value of Information (VOI) technique to determine the number of appraisal wells, their sequence of drilling and their justification that is based on economic merit
A welldeveloped appraisal strategy developed using multidisciplinary team of geoscientists, engineers and economics specialists, ensures that data/information collection is focused on the data that allows uncertainty reduction and create value by affecting the future decision makings and helps to avoid situations where data is acquired for uncertainty reduction but does not add value
Summary
The phases associated with the search and the production of hydrocarbon reservoirs are known as the Exploration and Production (E&P) phases. A hydrocarbon field undergoes five major stages during the E&P phases: Exploration, appraisal, development, production and abandonment. Because each stage depends on the prior, a combination of successful exploration, effective appraisal and commercial extraction is needed to ensure a successful E&P cycle. A successful exploration well may demonstrate that an oil reservoir exists, but there are typically still too many uncertainties around that resource to proceed directly to development decision. The minimum required resources or Economic Threshold Limit are estimated using standard discounted cash-flow model in which a relation between technically recoverable resources and NPV is established for the full project life cycle considering the most likely development scenario and minimum field size (Peacock and Jennings, 2014; Stigliano et al, 2016). During appraisal a series of activities such as drilling appraisal wells, geologic and seismic studies, 3D reservoir modelling and simulations etc. are carried to obtain further information about the shape, size, storage, fluid properties and dynamic behaviour etc. to support informed decision
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