production profile- reservoir model and well decline profile in excel.

**vinomarky** · 08-25-2010, 06:53 AM

If you are willing to assume/WAG values for variables such as;
- Appropriate BCF or drainage radius per Well required for field development,
- mmscf/day capacity per well,
- manually enter a drill schedule that takes into account logistical realities as well as production decline
- EUR & Abandonment rate/THP
- CGR

then you can surely get something along the lines of what you outline

I think where our lines are getting crossed is the notion that a generic sheet would calculate all of these for you - this will not be the case.

**Shakespear** · 08-25-2010, 09:55 AM

Maybe I have the wrong end of the stick here but I know Chevron already use a similar model to come up with a basic first cut.

As to can I give you a simple spreadsheet that takes into account all fiscal regimes... is a resounding yes. It wouldn't give you NPV correct to two decimal places, it would give you maybe a +- 30% accurate answer. Thats the kind of thing I am looking for. In RE terms that probably is +- 200% but I am willing to live with it. The first estimates on a field before anything is drilled will be wrong anyways. There is no way G&G and RE comes up with a correct view of a green field development in a frontier play without drilling even a well.

The assumptions that Chevron has in its spreadsheet are ones that CHEVRON CAN live with. If you took their spreadsheet and applied it to your company that may not be true. Why? Because the assumptions about resources to develop (drilling, facilities etc.) may be not be true for your company. I am thinking along the lines of what vinomarky says here

"- manually enter a drilling schedule that takes into account logistical realities as well as production decline "
This is serious money here. If your over optimistic and it takes longer to develop because you can not get the rigs there, can not build the pipeline fast enough, permits take longer than you assumed ...... And your job will be short with them. This is where pure experience comes in. People buying in MUST HAVE GOOD experience or else you will pay through the nose !!!! The other sides wants AS MUCH as possible, you want to pay as little as POSSIBLE. Experience can give you the edge with this.

Have a look at this paper to see how some reservoirs can look

[link Point to another website Only the registered members can access]

**petroengineer** · 08-26-2010, 11:54 AM

You can find a quite good conceptual field development software (DevModel-EPCI) in www.eastexpetroleum.com web page.
Petroengineer.

**Chee Koh Peh** · 08-26-2010, 01:01 PM

Let me share a perspective on this, having worked as a reserves auditor for an international PE consulting firm. I often saw old fields/prospects return with eager new investors thinking $$$ signs on the potential upside after slick marketing by the owner. The firm I worked for, would invariable be engaged to perform the technical due diligence for the "eager new investor" in the potential acquisition.

I got to the point, where I would ask the potential investors this question upfront, "What are the five (5) greatest technical/commercial risks with the old fields/prospects? When the client would reply they did not know I would ask again, and then a 3rd time. By that time the client would usually work out where I was coming from. Until you can list and to some point quantify the top five (5) technical/commercial risks, it is virtually impossible to assign a range of realistic commercial value to the old fields/prospects.

As mentioned above prior experience is the greatest teacher. We reservoir engineers never deal with deterministic (i.e. singular) answers, simply because we cannot see what is happening downhole, we draw inferences as to what is happening through indirect methods. If I were to give one piece of advice in this area for you dumdum it is Occam's razor (courtesy Wikipedia), which states, that the simplest explanation is usually the correct one. Simplest is not defined by the time or degree of calculations it takes to express the theory; "[simplest] is really referring to the theory with the fewest new assumptions.

The more complicated your reservoir modeling becomes, the more assumptions you are usually forced to make. I think Vinomarky's post was excellent on the modeling, this is what I did 90% of the time. The value in the modeling is identify the range of potential outcomes, that is to encapsulate the range of commercial risk in the acquisition/development, then the value become clearer.

Apologies if this seems obvious!

**Shakespear** · 08-26-2010, 05:13 PM

seems obvious

There is nothing obvious in our business as we never get close to seeing 99% of what it is we are studying.

If there was one piece of advice I would give dumdum it would be to CLEARLY always state your assumptions and with what data you are working and what you are lacking. This way you "cover your ass" because no one will do this for you !!!!

There will always be people who will want you to answer the question "So we can say that we will get this much production if we drill this well?". Your answer should be "No, we can not "say", we can "assume" based on ....".

Then you drag in the geologist, production engineer etc. to clarify to the one wanting A NUMBER how shaky the numbers are. They probable know this already but they need someone to hang the responsibility for the decision to buy, drill, farm or what ever. They want to be able to say "Eng. Dumdum told us ..."

You learn this with TIME.

**coyee** · 08-26-2010, 10:46 PM

Thanks for your advice, Shakespear.. I'll remember this: "No, we can not "say", we can "assume" based on ...."

**dumdum01** · 08-27-2010, 01:51 PM

Originally Posted by Chee Koh Peh

Let me share a perspective on this, having worked as a reserves auditor for an international PE consulting firm. I often saw old fields/prospects return with eager new investors thinking $$$ signs on the potential upside after slick marketing by the owner. The firm I worked for, would invariable be engaged to perform the technical due diligence for the "eager new investor" in the potential acquisition.

I got to the point, where I would ask the potential investors this question upfront, "What are the five (5) greatest technical/commercial risks with the old fields/prospects? When the client would reply they did not know I would ask again, and then a 3rd time. By that time the client would usually work out where I was coming from. Until you can list and to some point quantify the top five (5) technical/commercial risks, it is virtually impossible to assign a range of realistic commercial value to the old fields/prospects.

As mentioned above prior experience is the greatest teacher. We reservoir engineers never deal with deterministic (i.e. singular) answers, simply because we cannot see what is happening downhole, we draw inferences as to what is happening through indirect methods. If I were to give one piece of advice in this area for you dumdum it is Occam's razor (courtesy Wikipedia), which states, that the simplest explanation is usually the correct one. Simplest is not defined by the time or degree of calculations it takes to express the theory; "[simplest] is really referring to the theory with the fewest new assumptions.

The more complicated your reservoir modeling becomes, the more assumptions you are usually forced to make. I think Vinomarky's post was excellent on the modeling, this is what I did 90% of the time. The value in the modeling is identify the range of potential outcomes, that is to encapsulate the range of commercial risk in the acquisition/development, then the value become clearer.

Apologies if this seems obvious!

That is a great way to sum it. ( I will try and incorporate it as part of the thinking. Thank you.)

**dumdum01** · 08-27-2010, 01:52 PM

Originally Posted by Shakespear

There is nothing obvious in our business as we never get close to seeing 99% of what it is we are studying.

If there was one piece of advice I would give dumdum it would be to CLEARLY always state your assumptions and with what data you are working and what you are lacking. This way you "cover your ass" because no one will do this for you !!!!

There will always be people who will want you to answer the question "So we can say that we will get this much production if we drill this well?". Your answer should be "No, we can not "say", we can "assume" based on ....".

Then you drag in the geologist, production engineer etc. to clarify to the one wanting A NUMBER how shaky the numbers are. They probable know this already but they need someone to hang the responsibility for the decision to buy, drill, farm or what ever. They want to be able to say "Eng. Dumdum told us ..."

You learn this with TIME.

Haha... I know the feeling.

**dumdum01** · 08-27-2010, 01:58 PM

OK someone help me with the chain of thought here.

I know.
1. Reservoir Pressure
2. Wellhead Pressure I need to keep going, bottomhole pressure and so in effect abandonment pressure.
3. CGR
4.porosity/permeability data.
5.A production profile for the reservoir.

1. How do I get (Drainage radius per well) (ASSUME NO FAULT LINES!!!...Tank model)
2. Well deliverability and decline rate (given this data.)

3.

**Shakespear** · 08-27-2010, 04:18 PM

dumdum

You need to get down to the basics. Look in a reservoir engineering book or the net

[link Point to another website Only the registered members can access]

**dumdum01** · 08-27-2010, 04:58 PM

Originally Posted by Shakespear

dumdum

You need to get down to the basics. Look in a reservoir engineering book or the net

[link Point to another website Only the registered members can access]

FANTASTIC WEBPAGE!! Thanks for that. I have been reading the petroleum engineering handbook. But most of the calculations require a lot of data which I dont have(yes, you have impressed this point onto me... but now it is a personal thing, not a project anymore. I gotta DO THIS!!)

Thats why i specified all the variables I have. But thanks a lot)))))

**dumdum01** · 09-06-2010, 11:38 AM

Hi Again Guys,

With the help of our Moderator (Shakespeare) and all of you who have shared your expert knowledge, I have been able to come up with well profiles and a reservoir profile.

Now, I need to be able to "optimise" the number of wells for a given production profile.

Anyone has any excel spreadsheets lying around which goes through this kind of an optimisation process. Is the solver tool in excel a good way to do this?

Thanks again as always,
dumdum.