Integrating Reservoir Management and Reserves Governance
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Society of Petroleum Evaluation Engineers Annual Meeting 2004 – June 13-15, 2004 Welches, Oregon PowerPoint PPT Presentation


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Integrating Reservoir Management and Reserves Governance. Society of Petroleum Evaluation Engineers Annual Meeting 2004 – June 13-15, 2004 Welches, Oregon Dr. J.W. Ault Manager, ChevronTexaco Corporation Reserves. Presentation Outline. Reservoir Management

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Society of Petroleum Evaluation Engineers Annual Meeting 2004 – June 13-15, 2004 Welches, Oregon

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Society of petroleum evaluation engineers annual meeting 2004 june 13 15 2004 welches oregon

Integrating Reservoir Management and Reserves Governance

Society of Petroleum Evaluation Engineers

Annual Meeting 2004 – June 13-15, 2004

Welches, Oregon

Dr. J.W. Ault

Manager, ChevronTexaco Corporation Reserves


Presentation outline

Presentation Outline

  • Reservoir Management

    • ChevronTexaco Project Development and Execution Process (CPDEP)

    • 6P Reserve/Resource Categorization System

    • Uncertainty Management Plan (UMP)

    • Reservoir Resource Development Process (RDP)

  • Reserves Governance Process

    • Reserves Organization

    • Reserve Advisory Committee

    • Annual Reserves Reviews


  • Society of petroleum evaluation engineers annual meeting 2004 june 13 15 2004 welches oregon

    Technology

    Market

    Uncertainties Quantified

    New

    Information

    Regulations

    Oil / Gas

    Prices

    Teamwork

    Uncertainties Resolved

    Partnerships

    New

    Discoveries

    Reservoir Management Objective:Predict, control,

    and optimize the production of hydrocarbons while maximizing profits.


    Society of petroleum evaluation engineers annual meeting 2004 june 13 15 2004 welches oregon

    1

    2

    3

    4

    5

    DEVELOP

    PREFERRED

    ALTERNATIVE(S)

    GENERATE &

    SELECT

    ALTERNATIVE(S)

    IDENTIFY & ASSESS

    OPPORTUNITIES

    OPERATE &

    EVALUATE

    EXECUTE

    • Project Execution Plan

    • Technology Selection Plan

    • Uncertainty Management Plan

    • Development Plan

    • Full Cycle Depletion Plan

    • Reservoir Performance History

    • Project Execution Plan

    • Technology Selection Plan

    • Uncertainty Management Plan

    • Full Cycle Depletion Plan

    • Project Execution Plan

    • Technology Selection Plan

    • Uncertainty Management Plan

    • Development Plan

    • Full Cycle Depletion Plan

    • Project Execution Plan

    • Technology Selection Plan

    • Uncertainty Management Plan

    • Development Plan

    • Full Cycle Depletion Plan

    Project Execution Plan

    Final Engineering & Construction/ Development Drilling

    Concept Selection

    Front End Engineering

    Exploration/ Delineation Plan

    Operation

    Contingent Resources (P4, P5 and P6)

    Contingent Resources (P4, P5 and P6)

    to

    P1U, P2 and P3

    Contingent Resources (P4,P5 and P6)

    Prob (P2) & Poss (P3)

    to

    Prov Undev (P1U)

    Proved Undeveloped (P1U)

    to

    Proved Developed

    (P1D)

    Reserves/Resource Booking

    Aligned with Development Process


    Chevrontexaco 6p resource classification system

    ChevronTexaco 6P Resource Classification System

    Increasing Recovery Certainty

    Devel.

    Undevel.

    Reserves

    Increasing economic / political certainty, company commitment

    Commercial

    Commerciality Pending

    Contingent Resources


    Uncertainty management plan

    Uncertainty Management Plan

    A document prepared by the subsurface team that:

    • Identifies key uncertainties and ranges

    • Summarizes impact of each uncertainty on Reserves (Production, Value…)

    • Details specific resolution plans –

      • gather additional data, cost, timing, etc...

    • Discusses opportunities to

      • mitigate downside outcomes (Risk Mitigation) and

      • capitalize on upside outcomes (Options Planning).

    • Identifies signposts and details specific action plans

    • Communicates Uncertainties to Decision Makers


    Society of petroleum evaluation engineers annual meeting 2004 june 13 15 2004 welches oregon

    Discovered Reserve Opportunity

    Reserve/Resource Movement

    Production

    P1U

    P2

    P3

    P1D

    Unproved

    Proved

    P4

    P5

    P6

    Contingent Resources

    Field

    Appreciation


    Resource development process rdp

    Resource Development Process (RDP)

    • Business Unit identifies actions to move reserves and resources into production

    • Probabilistic forecast based on actions drives planning and reserves

    Exploration & Acquisitions

    Technology Plan

    Action Plans for → P1D

    Resource Base, P1-6

    Production & CAPEX Forecasts

    Business & Strategic Plans

    • Process is facilitated using templates


    Rdp an example method of tying an asset s work plan production and reserves together

    RDP:An example method of tying an asset’s work plan, production and reserves together

    This plot can be compared year-on-year to track performance

    MMBOE

    MBD

    Forecast

    2003 P1-6 based on probabilistic forecasts

    Forecast of future reserves / resource movement based on P1-6 definitions

    EV production forecast from probabilistic forecasts

    Field Study

    Drill Blk 5

    Secondary Recovery

    Field Expansion

    Milestones from action plans


    Resource development process rdp1

    Resource Development Process (RDP)

    • Improves the way we mature reserves/resources into production

    • Integrates strategic plan, business plan, and reserves

    • Provides templates for developing and documenting reservoir management action plans

    RDP enables the Asset Team to do the following:


    Society of petroleum evaluation engineers annual meeting 2004 june 13 15 2004 welches oregon

    Business Plan ConnectionWhen is a barrel a Reserve…and not a Resource?

    Key Tie Is the Long Term Asset Management Plan

    • A barrel could be a Proved, Probable or Possible reserve if:

      • Technical certainties and uncertainties are quantified

      • Project economic and clears company hurdles

      • First production in 10-year time frame

        • Exceptions approved by the RAC

      • Reservoir Management and Contingency Mitigation Plan developed, in-place and documented – Uncertainty Management Plan


    Society of petroleum evaluation engineers annual meeting 2004 june 13 15 2004 welches oregon

    Economic Reserves Value for

    Project Approval

    PROVED (P1)

    100%

    CF1D

    PROVED (P1) + PROBABLE (P2)

    CF1U

    Expected (Mean) Reserves =

    P1D + P1 U + 0.75 P2 + 0.25 P3

    CF2

    Cumulative Probability

    50

    PROVED (P1) + PROBABLE (P2) + POSSIBLE (P3)

    POM

    CF3

    10

    0%

    P1D

    P2

    Pmean

    P1U

    P3

    Reserves

    Assumes project has only Proved, Probable and Possible Reserves


    Society of petroleum evaluation engineers annual meeting 2004 june 13 15 2004 welches oregon

    Reserves/Resources Lifecycle

    Field before Production Begins

    100%

    CF1D

    CF1U

    CF2

    Cumulative Probability

    50

    LoM

    CF3

    10

    0%

    Pmean

    P1D

    P1U

    P2

    P3

    Reserves


    Society of petroleum evaluation engineers annual meeting 2004 june 13 15 2004 welches oregon

    Cum.

    Reserves/Resources Lifecycle

    Mature Field with Long Production History

    100%

    CF1D

    CF1U

    CF2

    Cumulative Probability

    LoM

    50

    CF3

    10

    0%

    P1D

    P3

    P1U

    P2

    Pmean

    Reserves


    Society of petroleum evaluation engineers annual meeting 2004 june 13 15 2004 welches oregon

    SEC Definition of Proved Reserves

    The estimated quantities of crude oil, condensate, natural gas, and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, i.e, prices and costs as of the date the estimate is made.

    • demonstrated economically producible by (actual) formation tests

    • delineated by fluid contacts or lowest known hydrocarbon (LKH)

    • in selected circumstances, fluid contacts can be inferred from:

      - electric logs and/or cores if local analogs are productive

      - seismic flat spots/amplitude anomalies

      - pressure gradient data

    • improved recovery volumes with successful pilot or installed program

    Taken from SEC Regulation S-X – Dec. 27, 1978


    Society of petroleum evaluation engineers annual meeting 2004 june 13 15 2004 welches oregon

    SEC Definition of Business Certainty

    “Issuers must demonstrate that there is reasonable certainty that a market exists for the hydrocarbons and that an economic method of extracting, treating, and transporting them to market exists or is feasibleand is likely to exist in the near future. A commitment by the company to develop the necessary production, treatment, and transportation infrastructure is essential to the attribution of proved undeveloped reserves. Reasonable certainty of procurement of project financing by the company is also a requirement for the attribution of proved reserves.”

    SEC Accounting and Financial Reporting Interpretations and Guidance – March 31, 2001


    Worldwide reserves responsibilities

    Worldwide Reserves Responsibilities

    ChevronTexaco Board of Directors

    ChevronTexaco

    North America

    ChevronTexaco

    Overseas

    Reserves Advisory

    Committee (RAC)

    Dr. J. W. Ault

    RAC Chairman

    North America Reserves

    International Reserves

    Reserves Manager

    Reserves Manager

    Corporate Reserves

    Business UnitReserves Coordinators

    Business Unit Reserves Coordinators


    Reserves review process

    Reserves Review Process

    Reserves

    Estimation

    Opco / RAC

    Review &

    Consolidation

    Corporate

    Consolidation

    Reporting

    March - December

    Asset

    Teams

    Opco reserves staff and selected RAC members

    December

    RAC members and Opco reserves

    managers only

    Review Changes with SPC

    January

    SBU Reserves

    Review Meetings (22 Locations)

    Policy Meeting (1)

    Corporation

    annual report

    SPC – Strategic Planning Committee


    Reserves advisory committee rac responsibilities

    Reserves Advisory Committee (RAC) Responsibilities

    • Advisory body to Corporate Senior Management

    • Ensure reserves are estimated and reported on a sound and uniform basis consistent with SEC guidelines

    • Act as custodian of professional standards for estimating reserves

    • Issue and maintain manual of standards and procedures

    • Initiate 3rd party reserves audits

    • Provide an impartial and objective review of recommended Business Unit changes and additions to ChevronTexaco worldwide reserves and resources base

    • Annually review reserves and changes with PricewaterhouseCoopers


    Rac profile

    RAC Profile

    Industry Experience

    Position Level

    Manager / Team Leader

    37%

    Fellows 10%

    General Manager 24%

    Average 26 Years – Cumulative 574 Years

    Other Technical 29%

    Organizational

    Professional Background

    Financial 5%

    Geological & Geophysical 33%

    Engineering

    62%


    Reserves activities

    Reserves Activities

    JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

    • Reserves Advisory Committee:Annual Business Unit Reviews

    • Reserves Advisory Committee: Major Field Reviews

    • Reservoir Asset Management Team: New Upstream Project Reviews

    • Exploration Review Team / Reservoir Asset Management Team /Reserves Advisory Committee: Post Drill Reviews

    • Reserves Advisory Committee / Opco Reserves Groups: Reserves Record Reviews and Third Party Reserves Reviews


    Annual rac review locations

    Annual RAC Review Locations

    Canada

    Europe

    Kazakhstan

    6 U.S. Locations

    China

    PNZ

    Thailand

    Nigeria

    Colombia

    Indonesia

    Angola

    Australia


    Reservoir asset management ram upstream subsurface assessment process

    Reservoir Asset Management (RAM):Upstream Subsurface Assessment Process

    • RAM team works with the Business Units to assure the technical quality of reservoir management activities, subsurface evaluations, and forecasts for:

    • Major Development Projects

    • Acquisitions

    • Producing Assets

  • RAM Team uses a formalized set of review sessions:

    • Subsurface Planning Assist

    • Subsurface Technical Review

    • Reservoir Management Quality Fitness Review


  • Exploration review team ert

    Exploration Review Team (ERT)

    • The Mission of the ERT is as follows:

    • Assure standardized and consistent risk and volume assessment for the ChevronTexaco (CVX) Worldwide Exploration Portfolio

    • Assess and improve the predictive accuracy of risk and volumes in the CVX Worldwide Exploration Portfolio


    Society of petroleum evaluation engineers annual meeting 2004 june 13 15 2004 welches oregon

    Organizational Capability: The Key to Improving Reservoir Management and Reserves Governance

    Business Units

    Dynamic leaders

    Skilled employees

    World-class processes and organizations

    Recognition and accountability

    Technology and Partnerships

    Learning & Innovation

    Best Practice Sharing

    Reserves Advisory Committee

    Exploration Review Team

    Reservoir Asset Management

    Technology Companies

    • Technology development and services

    • Training

    • Standards

    • Reviews


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