Strategy for Reducing Dry Holes A Corporate Strategy for Reducing Dry Holes and Improving Resource and Reserve Estimates R. C. Shoup Chief Geologist Subsurface Consultants & Associates LLC www.scacompanies.com
Strategy for Reducing Dry Holes Introduction Causes of Dry Holes Investors Beware: (Bad Maps = Bad Investments) Strategy Training and Mentoring Pre-well Reviews Post-well Reviews Summary & Conclusions www.scacompanies.com
Strategy for Reducing Dry Holes Introduction Common Management Complaints My interpreters do not understand the geology of their plays or prospects My interpreters do not understand their maps www.scacompanies.com
Strategy for Reducing Dry Holes Introduction Common Management Complaints My interpreters do not understand the geology of their plays or prospects My interpreters do not understand their maps The impact is that there are many Bad Maps www.scacompanies.com
Strategy for Reducing Dry Holes Introduction Can not properly quantify the uncertainty or provide reasonable resource and reserve estimates with bad maps Can not account for Bad Maps by Increasing the Trap Risk The trap risk for a bad map = 0 www.scacompanies.com
Strategy for Reducing Dry Holes Introduction Can not properly quantify the uncertainty or provide reasonable resource and reserve estimates with bad maps Can not account for Bad Maps by Increasing the Trap Risk The trap risk for a bad map = 0 So how much do bad maps impact the industry? www.scacompanies.com
Strategy for Reducing Dry Holes Introduction Causes of Dry Holes Investors Beware: (Bad Maps = Bad Investments) Strategy Training and Mentoring Pre-well Reviews Post-well Reviews Summary & Conclusions www.scacompanies.com
Strategy for Reducing Dry Holes Causes of Dry Holes Reservoir 15% Reservoir 28% Trap & Seal Trap & Seal 55% 55% Charge Charge 30% 14% Multiple Basins North Sea Schlumberger 2006 - 2007 Mathieu, 2015 Post-well reviews of Post-well reviews for 98 20 Companies North Sea wells Trap & Seal failures account for 55% of the dry holes www.scacompanies.com
Strategy for Reducing Dry Holes Causes of Dry Holes Petroleum Reservoir System 31% 27% Trap & Seal Trap & Seal 54% 51% Reservoir 22% ExxonMobil GoM Rudolph and Goulding, 2017 Tearpock, 2006 Post-well reviews of all 1994 – Review of Post-mortem results for 2015 ExxonMobil wells a number of operators Trap & Seal failures account for 51 - 54% of the dry holes www.scacompanies.com
Strategy for Reducing Dry Holes Causes of Dry Holes Post-mortem studies indicate two principal causes of dry holes: Charge and Reservoir Failure ~ 50% Trap and Seal Failure ~ 50% www.scacompanies.com
Strategy for Reducing Dry Holes Causes of Dry Holes Reservoir 31% Map Failure GoM 54% Tearpock, 2006 Audits of the maps showed most trap and seal failures were map failures Mechanical 2.5% www.scacompanies.com
Strategy for Reducing Dry Holes Causes of Dry Holes Good Trap 26% Poor Trap 65% UK Atlantic Margin Fair Trap Loizou, 2003 9% Post-mortem reviews for 29 wells drilled in the North Sea 65% of the dry holes were drilled on traps that were poorly mapped www.scacompanies.com
Strategy for Reducing Dry Holes Causes of Dry Holes Post-mortem studies indicate two principal causes of dry holes: Failure in the Petroleum System ~ 50% Failure of the map ~ 50% www.scacompanies.com
Strategy for Reducing Dry Holes Causes of Dry Holes Post-mortem studies indicate two principal causes of dry holes: Failure in the Petroleum System ~ 50% Failure of the map ~ 50% Just how bad are the maps? www.scacompanies.com
Strategy for Reducing Dry Holes Introduction Causes of Dry Holes Investors Beware: (Bad Maps = Bad Investments) Strategy Training and Mentoring Pre-well Reviews Post-well Reviews Summary & Conclusions www.scacompanies.com
Strategy for Reducing Dry Holes Investors Beware Producing Field GENERATED FROM 2D SEISMIC DATA A proposed $5.5 MM well www.scacompanies.com Presenter's notes: Structure contour map generated with 2D seismic. Is it geometrically valid? Since we are dealing with a 2 dimensional map that is portraying a 3 dimensional surface, it takes more understanding, investigation and analysis to identify geometric problems.
Strategy for Reducing Dry Holes Investors Beware Producing Field GENERATED FROM 2D SEISMIC DATA The map was not just wrong, it is geometrically impossible www.scacompanies.com
Strategy for Reducing Dry Holes Investors Beware The Fault Surface map, had it been constructed, would have shown that the structure was geometrically impossible -7000 -5000 -6500 -5500 -6000 -6000 -5500 -6500 -5000 -7000 www.scacompanies.com
Strategy for Reducing Dry Holes Investors Beware The Fault Surface map, had it been constructed, would have shown that the structure was geometrically impossible -7000 -5000 -6500 -5500 -6000 -6000 -5500 -6500 -5000 -7000 The majority of interpreters today do not construct Fault Surface Maps www.scacompanies.com
Strategy for Reducing Dry Holes Investors Beware Producing Field Dry Hole GENERATED FROM 2D SEISMIC DATA GENERATED FROM 2D SEISMIC DATA Two separate faults mapped as one, no trap www.scacompanies.com Presenter's notes: Screw Faults indicate 2 faults have been mapped as 1 fault. Faced with a loss of $5 MM, management asked How can our people make such BAD Maps? Answer: Did not map the fault, picked fault and posted polygons.
Strategy for Reducing Dry Holes Investors Beware Gulf of Mexico Field for Sale 10 BCF Remaining Reserves $15 MM ($1.50 / mcf ) 10 BCF Resource $ 5 MM ($0.50 / mcf ) Seller accepts $20 MM 3D Seismic 12 wells www.scacompanies.com Presenter's notes: This field has been producing for almost a decade, at which time the company sold the field along with several other assets.
Strategy for Reducing Dry Holes Investors Beware Gulf of Mexico Field for Sale No Fault Surface map was constructed Fault Traces are incorrect The map is wrong 3D Seismic 12 wells www.scacompanies.com
Strategy for Reducing Dry Holes Investors Beware Purchasing company made a fault surface map and integrated it with the horizon. The original fault position was based on a fault shadow, The corrected fault position added >20 BCF Reserves. Seller lost $30 MM 3D Seismic 12 wells www.scacompanies.com
Strategy for Reducing Dry Holes Investors Beware STOIIP = 170 MMBO 29 wells Limited 2D Fault propagation Fold Mapped in Petrel www.scacompanies.com
Strategy for Reducing Dry Holes Investors Beware STOIIP = 170 MMBO 29 wells Limited 2D Fault propagation Fold Mapped in Petrel The map was not just wrong, it is geologically improbable www.scacompanies.com
Strategy for Reducing Dry Holes Investors Beware STOIIP = 170 MMBO STOIIP = 138 MMBO 29 wells Limited 2D Fault propagation Fold Mapped in Petrel STOIIP Overbooked by 30% www.scacompanies.com
Strategy for Reducing Dry Holes Investors Beware STOIIP = 170 MMBO STOIIP = 138 MMBO 29 wells Limited 2D Fault propagation Fold Mapped in Petrel STOIIP Overbooked by 30% www.scacompanies.com
Strategy for Reducing Dry Holes Investors Beware Based on the Net Pay Isochore, this reservoir has 6.25 MMBO Reserves You are willing to invest $50.00 / bbl $312.5 MM Net Pay Isochore 7 wells 3D data www.scacompanies.com
Strategy for Reducing Dry Holes Investors Beware Based on the Net Pay Isochore, this reservoir has 6.25 MMBO Reserves You are willing to invest $50.00 / bbl $312.5 MM Net Pay Isochore 7 wells 3D data The map is wrong www.scacompanies.com
Strategy for Reducing Dry Holes Investors Beware Corrected Net Pay Isochore indicates 5.5 MMBO Reserves At $50.00 / bbl $275.0 MM Net Pay Isochore 7 wells 3D data A loss of $37.5 MM www.scacompanies.com
Strategy for Reducing Dry Holes Investors Beware Post-mortem studies indicate two principal causes of dry holes: Failure in the Petroleum System ~ 50% Failure of the map ~ 50% Just how bad are the maps? www.scacompanies.com
Strategy for Reducing Dry Holes Investors Beware Post-mortem studies indicate two principal causes of dry holes: Failure in the Petroleum System ~ 50% Failure of the map ~ 50% Pretty bad www.scacompanies.com
Strategy for Reducing Dry Holes Investors Beware Post-mortem studies indicate two principal causes of dry holes: Failure in the Petroleum System ~ 50% Failure of the map ~ 50% ~50% of the dry holes can be avoided if we ensure the structure maps are valid www.scacompanies.com
Strategy for Reducing Dry Holes Introduction Causes of Dry Holes Investors Beware: (Bad Maps = Bad Investments) Strategy Training and Mentoring Pre-well Reviews Post-well Reviews Summary & Conclusions www.scacompanies.com
Strategy for Reducing Dry Holes Strategy Any strategy aimed at reducing dry holes and improving resource and reserve estimates must focus on improving the quality and validity of the maps and interpretations www.scacompanies.com
Strategy for Reducing Dry Holes Strategy Training and Mentoring Pre - drill Review Post - drill Review www.scacompanies.com
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