The Evolution of Estimated Ultimate Recovery (EUR) Estimates Over the Project Life Cycle: Lessons Learnt from three Examples

Abstract

Abstract Estimated Ultimate Recovery (EUR) of oil and gas projects is an important quantity to track over the project life to help understand and mitigate any deviations in project performance. In general, the range of uncertainty narrows over time as more data is available to constrain the estimates. However, this is not always the case. This paper presents three examples covering both gas and oil fields at different stages of their lives, which show how EUR and the corresponding range of EUR uncertainty varies over the life of each field. The lesson from these examples is that the range of uncertainty tends to be too narrow, both in the appraisal phase, as well as in the production phase. EUR estimates may be too narrow in the appraisal phase due to the lack of available datapoints to constrain the volumetric based assumptions. In the production phase where forecasts are often based on simulation models, a limited number of geological realizations will naturally constrain the range of results from simulation, even when many realizations of lesser parameters are conducted. In one of the examples, there was a sudden increase in the range of EUR, and the paper discusses the reasons for this, which are mostly attributed to additional data. The paper further notes the possibility of an anchoring bias underlying the results and provides multiple reasons on why EUR and Reserve estimates may be affected by this bias, such as continuity of the project team, as well as internal/external pressures. It is thus important for technical personal, management, investors and lenders to keep an open mind, and not be pigeonholed into overly narrow ranges of uncertainty. Be brave to challenge the estimator to justify apparently narrow ranges of EUR uncertainty, as well as any suspected anchor bias in the ever-evolving EUR estimates.