Edmundolaportetaller

PETROLEUM RESOURCES MANAGEMENT SYSTEM: CERTIFICACIÓN DE RESERVAS

Presented at the COLOMBIAN OIL & GAS CONFERENCE “OFFSHORE: UNA VENTAJA COMPETITIVA”

Serving Energy and Environmental Clients With Worldwide Office Locations Headquarters: 340 S. Broadway Lexington, Kentucky 40508

859.233.2103 www.engrservices.com

ECSI, LLC

ECSI, LLC is a partnership between Lafayette Cumberland, Inc., and Ecology and Environment, Inc., (E & E) a Buffalo, New York-­‐based consulting firm with over forty years experience and an international reputation in environmental services.

ECSI, LLC’s predecessor, Engineering and Consulting Services Incorporated, an engineering company headquartered in Lexington, Kentucky, was founded in 1983. ECSI has been providing high quality engineering services for 30 years. Its personnel include engineers, geologists, biologists, scientists, and land surveyors, as well as environmental, health and safety specialists and assorted technical support personnel.

ECSI’s professionals are members of reputable international organizations such as the Society For Mining, Metallurgy and Exploration, the Society of Petroleum Engineers, the American Institute of Petroleum Geologists and have participated in oil & gas projects in the United States and abroad, having served private and publicly traded clients (NYSE, HKEx, TSX, LSE, etc.)

ECSI has international oil and gas experience in China (Ordos Basin), Brazil, Madagascar and Egypt, as well as multiple projects in the United States.

ECOLOGY & ENVIRONMENT, INC. E & E has over 40 years’ experience serving the oil and gas industry. It has a proven track record of developing cost effective solutions to help clients maintain drilling and construction schedules for unconventional shale oil and gas development, including coalbed methane and shale gas.

With offices in key shale oil and gas states and a depth of multidisciplinary staff resources, including trained compliance professionals, it offers established relationships with regulatory agencies, positive public image and credibility, and a comprehensive understanding of hydraulic fracturing and oil and gas upstream/ midstream and local/regional issues, particularly water issues.

E & E employs specialists in more than 85 scientific, engineering, and technical disciplines, based in offices in major cities across the United States and around the globe.

www.ene.com

ECSI/E&E RELEVANT SERVICES FOR THE OIL & GAS INDUSTRY • • • • • • •

Oil & Gas Resources Assessment and Valuations Due Diligence Assessments Water and Wastewater Management Engineering and Mitigation Environmental Assessments Environmental Compliance Database Development/ Management:

Reserves and Resources Definitions ü Petroleum Resources Management System (PRMS) ü US Securities and Exchange Commission (SEC) ü Canadian NI51-­‐101 (COGEH) ü Norwegian Petroleum Directorate (NPD) ü Chinese and Russian Systems ü Etc.

PROSPECT ASSESSMENT PROCESS

1. Define prospect elements 2. Estimating trap volume 3. HC Type 4. Assessment 5. Risk

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SEISMIC EXPLORATION

Horizon A

Good Seal Good Reservoir

W8 W1 Horizon B

W9 W5 W2

W3 W4 W6

W7

SEISMIC EXPLORATION OUTLINE

• Review causes of seismic response • Modeling the seismic response • What are seismic attributes?

• Overview of seismic attribute applications

SEISMIC EXPLORATION What causes a seismic response?

1. Changes in bulk-rock velocity or density • Lithology (e.g., sandstone, shale, limestone, salt)

Limestone

Shale

SEISMIC RESPONSE What causes a seismic response?

1. Changes in bulk-rock velocity or density • Lithology (e.g., sandstone, shale, limestone, salt) • Porosity (e.g., intrinsic, compaction, diagenesis)

Fast

Slow

SEISMIC RESPONSE

1. Changes in bulk-rock velocity or density • Lithology (e.g., sandstone, shale, limestone, salt) • Porosity (e.g., intrinsic, compaction, diagenesis) • Mineralogy (e.g., calcite vs. dolomite, carbonaceous shales)

SEISMIC EXPLORATION

1. Changes in bulk-rock velocity or density • Lithology (e.g., sandstone, shale, limestone, salt) • Porosity (e.g., intrinsic, compaction, diagenesis) • Mineralogy (e.g., calcite vs. dolomite, carbonaceous shales) • Fluid type and saturation (water, oil, gas) Sandstone with 30% Porosity: Pore Fluid Density Salt Water 2.164 Fresh Water 2.155 Oil 2.095 Gas 1.856

THE CONVOLUTION METHOD

Lithology

Velocity Density

Impedance

Reflection Wavelet Coefficients

Model

Shale

Sand

Shale

Sand

Shale

x

=

⇒

*

⇒

⇒

SEISMIC Â EXPLORATION Â

Conceptual Depositional Model: Prograding sands increase in porosity upwards before being capped by variable quality marine shale.

Marine Shale (seal)

Magenta

Porous Sand (reservoir)

Marine Shale (seal) Fluvial (reservoir)

Orange

Porous Sand (reservoir) Marine Shale (seal)

SEISMIC RESPONSE

Modeled Seismic Response Seismic modeling indicates the following response to changes in reservoir and seal quality: Good Seal Good Reservoir

Poor Seal Good Reservoir

Good Seal Poor Reservoir

Poor Seal Poor Reservoir

Strong Peak Strong Trough

Moderate Peak Strong Trough

Strong Peak Moderate Trough

Moderate Peak Moderate Trough

DISCOVERY EXAMPLE

Headlines: Alpha Wildcat Finds Thick Oil Zone!

Block 7

Discovery Well

Bonanza Basin

Salt Diapir

Block 8

EXPLORATION FLOWCHART

Identify Opportunities Acquire Seismic Data Interpret Seismic Data

Capture Prime Areas

Process Seismic Data Assess Prospects

Management Approved Wildcat Well

Wildcat Drilled

Success

EXPLORATION ASSESSMEENT RESULTS Alpha Prospect – Main Compartment - Risked 1.0

100 0.8

Economic Minimum

Gas Only

0.6 0.4 0.2 0.0 0

100

62 % COS

Gas Cap & Oil Leg

51 % Chance of Finding More Than the Economic Minimum

Oil Only

200

300

400

Million Oil Equivalent Barrels 62% Chance to find any hydrocarbons 51% Chance to find 100 MBOE 5% Chance to find 400 MBOE

500

EXPLORATION WELL RESULTS Alpha Prospect

YOUR exploration well on the Alpha prospect discovered an estimated 325 MBO

Block 7

Discovery Well

Salt Diapir

Alpha Prospect – Main Compartment - Risked 1.0

100 0.8

Gas Only Economic Minimum

Bonanza Basin

Block 8

0.6 0.4 0.2 0.0 0

100

62 % COS

Gas Cap & Oil Leg Oil Only

200

300

Million Oil Equivalent Barrels

400

500

WHAT’S NEXT? • Exploration would drill one or two confirmation wells to verify there is enough HCs to make some money (Value > Costs) • If results continue to be good, the FIELD would pass on to Development or Production people Identify Opportunities Acquire Seismic Data Interpret Seismic Data

Capture Prime Areas Process Seismic Data

Drill Wildcats Success

Assess Prospects

Confirmation Well Uneconomic

Success

To Development Or Production

DELINEATION WELL Alpha Prospect

6 Months later…

Block 7

Discovery Well

Bonanza Basin

Delineation Well

Salt Diapir

Block 8

A delineation well is completed to the NE An OWC is found at 4500 m – the same depth as in the discovery well The porosity is slightly better – 26% versus 23% in the discovery well

The delineation well has confirmed enough oil to merit field development – ESTIMATED ULTIMATE RECOVERY (EUR) now set at 348 MBO

EXPLORATION UNCERTAINTY

Reservoir Map at the end of Exploration

Reservoir Map at the end of Development

DATA USED FOR EXPLORATION

GEOLOGICAL MODELS An integration of all geologic, geophysical, petrophysical and interpreted or conceptual information about a reservoir into a single 3D numerical description of that reservoir

Geophysical Interpretation Stratigraphic Interpretation

Petrophysical Interpretation

Structural Interpretation

GEOLOGICAL MODELS

1m

75 m Sand Shale

Perm 250 mD

Perm 0.1 mD

Each cell can be populated with rock & fluid Properties: – – – – –

Facies Porosity Permeability Fluid Saturation Etc.

ITERATIVE PROCESS TO PREDICT PERFORMANCE

CONVENTIONAL AND UNCONVENTIONAL RESERVOIRS

Unconven'onal Gas

THE SCIENCE OF GEOLOGIC MODELING

HIGHLY CONFIDENTIAL

THE SCIENCE OF GEOLOGIC MODELING Let us consider a set of drilling intersections

THE SCIENCE OF GEOLOGIC MODELING

THE SCIENCE OF GEOLOGIC MODELING

THE SCIENCE OF GEOLOGIC MODELING

THE SCIENCE OF GEOLOGIC MODELING

THE SCIENCE OF GEOLOGIC MODELING

THE SCIENCE OF GEOLOGIC MODELING A geophysicist’s interpretation.

THE SCIENCE OF GEOLOGIC MODELING The engineer’s interpretation.

TYPICAL CONTENTS OF A COMPETENT PERSON’S REPORT 1. Table of contents 2. Executive summary 3. Introduction 4. Summary of Assets 5. Discussion:— 6. Field(s), license(s) and asset(s) 7. Business 8. Economic evaluation 9. Social and Environmental 10. Basis of opinion 11. Illustrations

An Overview of the Petroleum Resources Management System The PRMS is an initiative sponsored by:

• Society of Petroleum Engineers (SPE) • American Association of Petroleum Geologists (AAPG) • World Petroleum Council (WPC) • Society of Petroleum Evaluation Engineers (SPEE) Free Download @ www.spe.org

It provides a measure of comparability and reduces the subjective nature of resources estimation.

It has been designed to provide a common reference for the international petroleum industry, including national reporting and regulatory disclosure agencies, and to support petroleum project and portfolio management requirements.

Brief History of PRMS

1997-­‐2001 SPE,WPC, AAPG Joint effort to incorporate resources classes

2011 Guidelines for application of PRMS sponsored /endorsed

by SPE, SPEE, WPC, AAPG and SEG.

PRMS and Audit Standards .published SPEE becomes a sponsor.

1937. API Definitio n Created

1962. SPE Committee for property evaluation

PRMS is Designed to Support Asset Management – “Cradle to Grave”

The Contents of PRMS

1.

2.

3.

4.

Introduction Petroleum Resources Seismic application Assessment of petroleum resources using deterministic approach 5. Probabilistic reserves estimation.

6. Aggregation of reserves.

7. Evaluation of petroleum reserve and resources (financial ) 8. Uncongenial resources estimation 9. Production measurements and operational issues.

10. Resources Entitlement and Recognition

PRMS -­‐ Major Principles

Project category & Status

The System is “Project–Based”

ü Classification is based on project’s chance of commerciality Categorization is based on recoverable uncertainty ü Base case uses evaluator’s forecast of future conditions ü Estimates based on deterministic and/or probabilistic methods ü Applies to both conventional and unconventional resources ü Reserves /resources are estimated in terms of the sales products

Reserves

Contingent Resources Prospective Resources Unrecoverable

PRMS -­‐ Major Principles

PRMS -­‐ Major Principles

Project category & Status

Reserves

Contingent Resources

Prospective Resources Unrecoverable

Volumetric Estimation OIL RESERVOIRS the original oil-­‐inplace (OOIP) volumetric calculation is: Metric: OOIP (m3) =Rock Volume * Φ* (1-­‐ Sw) * 1/Bo Where: Rock Volume (m3) = 104 * A * h (A = Drainage area, (1 ha = 104m2) h = Net pay thickness, Φ = Porosity, Sw = Volume fraction of porosity filled with interstitial water, Bo = Formation volume factor (m3/m3).

Solu&on gas drive: 5 – 30% Gas cap drive: 20 – 60% Natural Water drive: 35 – 70% Gravity drive : 20 -­‐ 85% Combina&on drive.

Typical primary recoveries are in the 25-­‐40% range (maximum 75%).

Volumetric Estimation GAS RESERVOIRS the original gasin-­‐ place (OGIP) volumetric calculation is: Metric: Bg OGIP (103m3) =Rock Volume * Φ* (1-­‐ Sw) *[(Ts * Pi)/(Ps * Tf * Zi)] Where: Rock Volume (m3) = 104 * A * h (A = Drainage area, hectares (1 ha = 04m2) h = Net pay thickness, metres Φ = Porosity, fraction of rock volume, Sw = Volume fraction of porosity filled with interstitial water, Ts = Base temperature, standard, conditions, °Kelvin (273° + 15°C) Ps = Base pressure, standard conditions, (101.35 kPaa), Tf = Formation temperature, °Kelvin, (273° + °C at formation depth) Pi = Initial Reservoir pressure, kPaa, Zi = Bg Compressibility at Pi and Tf

Recoverable Gas Volumes: Gas expansion drive: 70-­‐90% Water drive: 35-­‐65%

Absolute Range of Uncertainty Should Diminish as Project Proceeds

1P 2P 3P

Units MMSTB OIIP Recovery factor Recoverable oil (EUR)

Reserves Categories 1P 2P 3P 771.2 1,271.00 1,753.00 35% 40% 45% 269.92

508.4

788.85

1P

Area of 1P

Area of 2P Area of 3P Units MMSTB OIIP Recovery factor Recoverable oil (EUR)

Reserves Categories 1P 1P developed undeveloped 1P 1,429.60 514.70 915.00 40% 40% 40% 571.84

205.88

366

Absolute Range of Uncertainty Should Diminish as Project Proceeds

The evaluation is dynamic process and depends on the field development and best practice method over time

Reserves/resources are estimated in terms of the sales products “Project-­‐Based”

Question and Discussion