Understanding the Enigma of Reserves Growth: The Whys

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Abstract It is a common claim that reservoir engineers and geologists are too optimistic and overestimate reserves. To evaluate this claim, a total of 493 reservoirs of light/medium oil, heavy oil and gas were tracked over a period of more than 40 years, compiling Alberta Government records estimating ultimate recovery from 1961 to 2002. Recovery factors, well counts, actual production/injection data and implementation of improved recovery schemes were also tracked to determine the reasons for reserves growth. In addition, the effect of price on growth of reserves was also examined. Contrary to the claim, the study actually shows remarkable reserves growth in light/medium oil pools discovered in the 1950s. It was found that ultimate recoveries from over 73% of the light/medium oil pools were underestimated and that growth above the initial recovery estimates occurred. The light/medium oil pools averaged a 97% growth in reserves. Because of the mature state of depletion and extensive production history, we can see that the cumulative oil and gas produced to date is often well above the original ultimate recovery forecasted by earlier conservative techniques. Similar growth trends were discovered for heavy oil and gas pools discovered prior to the 1980s. Heavy oil pools averaged a phenomenal 1083% growth in reserves while gas pools averaged 86%. Light/medium and heavy oil pools tended to grow both in recovery factor and volumes in place (OOIP). Gas pool reserves grew mainly by volumes in place (OGIP). Although reserves growth phenomena have been studied before, this paper discusses the causes of reserves growth and shows the critical importance that improved recovery schemes, infill drilling information and new technology have on this growth. In conclusion, reservoir engineers and geologists are, if anything, too conservative in their estimates of ultimate recovery, although their production rate predictions may be overly optimistic. Introduction Interest in reserves growth is gaining momentum as petroleum experts around the world speculate on remaining oil and gas reserves. Additional reserves come not only from discovery of new pools, but also from existing pools. Currently, the majority of reserves additions arise from known resources. Many factors contribute to reserves growth which, to this point, have never been evaluated for the province of Alberta. In this paper, we attempt to understand not only the enigma of reserves growth and the reasons behind it, we also attempt to determine the main characteristics of reserves growth in Alberta based on the analysis of data obtained from the Alberta Energy and Utilities Board (AEUB). Background/Literature Review The oil and gas industry is widely divided with respect to reserves and their growth and there is an extensive body of research and literature on this issue. This review focuses on Canada and the United States. In the United States, Arrington(1) was the first to recognize the significance of reserves growth. He developed a methodology for estimating reserves growth in fields that are missing reserves data for the early years after discovery. Arrington found these ultimate recovery estimates useful for predicting the results of exploration programs and as a valuable management tool.