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GAS RESERVE ESTIMATION OF OFFSHORE PRODUCIBLE SHUT-IN LEASES IN THE GULF OF MEXICO A report prepared by the Panel on Gas Reserve Estimation â¢Board on Mineral Resources Commission on Natural Resources NATIONAL RESEARCH COUNCIL National Academy of Sciences Washington, D.C. March 1976 NAS-NAE MAR 2 5 1376 LIBRARY
NOTICE The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the Councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the Committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. This study was supported by the Department of the Interior ii
BOARD ON MINERAL RESOURCES Dr. Elburt F. Osborn (Chairman) Carnegie Institution Distinguished Professor Geophysical Laboratory Dr. Philip H. Abelson, President Carnegie Institution of Washington Dr. James Boyd, President Materials Associates Dr. William H. Dresher, Dean College of Mines University of Arizona Dr. Charles Fairhurst, Head Department of Civil and Mineral Engineering University of Minnesota Dr. Peter T. Flawn, President University of Texas Dr. John C. Frye Executive Secretary The Geological Society of America Dr. Douglas W. Fuerstenau, Chairman Department of Materials Science and Engineering University of California Dr. Philip W. Guild Research Geologist Office of Research Analysis U.S. Geological Survey Mr. Richard L. Jodry Senior Research Scientist Sun Oil Company Dr. Charles J. Mankin State Geologist, Oklahoma Director, School of Geology and Geophysics University of Oklahoma Dr. Ernest L. Ohle Consulting Geologist Hanna Mining Company Dr. John J. Schanz, Jr. Senior Research Associate Resources for the Future Dr. Lois Sharpe Administrator of Environmental Quality League of Women Voters Education Fund Dr. Leon T. Silver Professor of Geology California Institute of Technology Dr. Arnold J. Silverman Professor of Geology University of Montana Dr. Nathaniel Wollman, Dean College of Arts and Sciences University of New Mexico Mr. Paul Zinner (U.S. Bureau of Mines - Retired) iii
PANEL ON GAS RESERVE ESTIMATES Dr. Charles L. Drake (Chairman) Department of Geology Dartmouth College Professor Murray F. Hawkins, Head Department of Petroleum Engineering Louisiana State university Dr. Grover E. Murray, President Texas Tech University Dr. Francis J. Pettijohn Department of Earth & Planetary Sciences The Johns Hopkins University Dr. Hollis D. Hedberg Princeton University Dr. Charles J. Mankin State Geologist, Oklahoma Director, School of Geology and Geophysics University of Oklahoma Dr. Robert L. Whiting, Head Department of Petroleum Engineering Texas A&M University Dr. James T. Wilson, Director Institute of Science and Technology University of Michigan iv
United States Department of the Interior GEOLOGICAL SURVEY RESTON, VIRGINIA 22092 JAN 2 8 197 Dr. Philip Handler President, National Academy of Sciences 2101 Constitution Avenue Washington, D.C. 20418 Dear Dr. Handler: Because of concerns that Outer Continental Shelf (OCS) leases held significant supplies of natural gas which were being deliberately withheld from the market, the Federal Power Commission (FPC) conducted an investigation in 1974 of the data and information concerning shut-in gas wells on the OCS. The Geological Survey cooperated in the project and was the principal source of basic well data such as electric logs, well tests, and structure maps. The study was accomplished in eight weeks by the full-time work of three FPC personnel and one Survey geologist. The completed report was published in two volumes: Offshore Investigation: Producible Shut-in Leases (First Phase) January 1974' and Offshore Investigation: Producible Shut-in Leases as of January 1974 (Second Phase) as FPC bureau of Natural Gas Staff Reports dated March ana July 1974. The conclusions of this investigation have been challenged and the Secretary of Interior has asked that I request the National Research Council (NEC) to conduct an evaluation of the estimating techniques and procedures and of the gas reserves estimates for a representative sample of the OCS shut-in leases reported in the FPC analysis. I have discussed this orally with Messrs. Jack Boiler and Micah Naftalin of the NRC staff and members of my staff have also met with Messrs. Jack Boiler, Robert Long, and Cyrus Klingsberg concerning the proposal. I understand from these conversations that the NRC might be willing to undertake such an evaluation, and I ask that you arrange to appoint a panel of experts for this purpose. It is my thought that the size and method of selecting a "representative sample" and the methodology used in the analysis should be left to the discretion of the NRC. All data available to the Survey will be made available to the NRC for its use. However, certain of the data are considered to be confidential or proprietary by both the lease operator and the Geological Survey and should be handled in accordance with OCS Order No. 12 (August 13, 1971) Public Inspection of Records and Section 552 of Title 5, U.S. Code as amended by Public Law 90-23 (Public Information Act). The Survey will be glad to furnish expertise (geologist assistance in data retrieval and interpretation) if required and requested. Funding will be available and will be discussed at such time as desired by the NRC. Let's Clean Up America For Our 200th Birthday
I have designated Messrs. Robert Rioux and Gayle Oglesby of our staff as the persons to be contacted to assist the NRC in anyway possible in this analysis. It is highly desirable that the study be completed by early fall. Please do not hesitate to contact me if further information is needed. Sincerely yours, Director Copy: Mr. Jack W. Boiler Dr. Cyrus -' Klingsberg Mr. Robert Long Mr. 'Micah Naftalin -2- vl
TABLE OF CONTENTS SUMMARY 1 Conclusions 2 Recommendations 5 INTRODUCTION 6 History 6 Formation of Study Panel 7 Panel Assignment 8 CHAPTER I - THE FPC REPORT ON OFFSHORE PRODUCIBLE SHUT-IN LEASES .... 9 First Phase (March 1974) 9 Second Phase (July 1974) 10 Update of FPC Study Statistics 11 CHAPTER II - PROCEDURE OF PANEL 12 ⢠Review of Techniques and Procedures Used in FPC Analysis 12 33-Lease Representative Sample 13 Selection of Consultants to Develop Independent Estimates 17 Instructions to Consultants . 20 CHAPTER III - PRINCIPAL FINDINGS 23 Misleading Terminology 23 Proved and Probable "Reserves" 23 Gas in "Paying Quantities" 25 Gas Estimation 29 Techniques and Procedures 29 Estimates of Physically Producible Gas 32 vii
APPENDIX A - FPC STAFF REPORTS Offshore Investigation: Producible Shut-In Leases (First Phase) January 1974 38 Offshore Investigation: Producible Shut-In Leases as of January 1974 (Second Phase) 98 APPENDIX B - RESERVE ESTIMATES Narrative from Report of Atwater, Carter, Miller and Heffner . . 122 Narrative from Report of Keplinger and Associates, Inc 139 Data Forms 146 Comparative Gas Reserve Estimates 149 APPENDIX C - GAS RESERVOIRS AND GAS RECOVERY Gas Recovery Factors: Murray F. Hawkins, Louisiana State University 159 Reservoir Characteristics & Glossary of Terms: Charles J. Mankin, University of Oklahoma 165 Reservoir Characteristics 165 Glossary of Terms 168 viii
LIST OF TABLES AND FIGURES TABLE 1 - LOCATION OF REPRESENTATIVE SAMPLE SHUT-IN LEASES 14 TABLE 2 - LEASE VERSUS RESERVOIR DISTRIBUTION 15 TABLE 3 - SAMPLE ANALYSIS 19 TABLE 4 - DRY RECOVERABLE GAS (MMcF) 33 TABLE 5 - EXAMPLES OF VARIATION IN ESTIMATES . 34 FIGURE 1 - LEASES VERSUS WELLS 16 FIGURE 2 - LEASES VERSUS RESERVOIRS 18 FIGURE 3 - ACRE-FEET VERSUS LEASE CODE 35 FIGURE 4 - DRY RECOVERABLE GAS VERSUS LEASE CODE ........... 36
