Undiscovered Oil and Gas Resources An Evaluation of the Department of the Interior's 1989 Assessment Procedures (1991) / Chapter Skim
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3 An Evaluation of the Department of the Interior's 1989 Resource Assessment
3 An Evaluation of the Department of the Interior's 1989 Resource Assessment
Pages 44-97
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From page 44... ...
But, more important, the estimates from the different years may have varied because of limitations of the assessment methodology. This chapter presents the Committee on Undiscovered Oil and Gas Resources' evaluation of the methodology used in the 1989 assessment.
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From page 45... ...
On the other hand, the DOI's decision to exclude unconventional natural gas resources presents problems. Natural gas deposits in low-permeability sandstones, fractured shale, and coal beds- sources the DOI labelled "unconventional" are making an important contribution to current production, variously estimated at about 1.5 to 2 trillion cubic feet (Tcf)
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From page 46... ...
While acknowledging some of the special characteristics of unconventional natural gas accumulations the committee concludes that it is both feasible and appropriate to include these resources in a national resource assessment.) Of course, the estimates of unconventional resources should be provided separately from estimates of conventional resources.
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From page 47... ...
The agencies should base their estimates of technically recoverable resources on in-place resources by applying recovery factors to in-place resource estimates. Economic Boundaries The assessment's economic boundaries hinged on the computation of a "minimum economic field size" (MEFS)
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From page 48... ...
USGS Economic Boundaries In its analysis of the lower 48 states onshore and the offshore state waters, the USGS defined plays using field sizes down to 1 million barrels of crude oil or the energy-equivalent volume of natural gas (denoted as Mmboe; 1 Mmboe is equal to 6 billion cubic feet (Bcf)
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From page 49... ...
For Alaska, economic constraints were even greater. For the overall assessment, in moving from technically recoverable to economically recoverable resources, applying the MEFS and the economic parameters (most notably the $18.00 per barrel crude oil price and the $1.80 per Mcf natural gas price)
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From page 50... ...
, to produce its final resource assessments. The PRESTO model produces a range of resource estimates with a corresponding estimate of the probability of occurrence.
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From page 51... ...
The estimated ultimate recovery (EUR) of oil and natural gas was compiled for six dates between 1977 and 1988 by year of discovery in groups of five years each.
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From page 53... ...
This section evaluates the quality of the USGS assessment for these areas. Organization and Staff Oil and gas resource assessments carried out by the USGS are the responsibility of the Office of Energy and Marine Geology in the Geologic Division.
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From page 54... ...
Current research interests of participating geologists rather than the resource assessment appeared to dictate staff allocations. This resulted in a concentration of attention on the Rocky Mountains, California, and Alaska and a comparatively low level of effort in the Gulf Coast, Midcontinent, and Illinois Basin areas.
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From page 55... ...
The assessment coordinating committee was assembled solely for this particular project; a permanent resource assessment group no longer exists in the USGS. In contrast to the considerable level of experience in the assessment coordinating committee, the amount of experience in play analysis and resource assessment among the province geologists varied greatly.
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From page 56... ...
In part because of the difficulty of obtaining data, it appears that the USGS used mostly its own information, from both published and unpublished sources, for the 1989 assessment. The committee recommends that in future assessments the USGS make a more consistent effort to seek out both published and unpublished information from state geological surveys.
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From page 57... ...
1. their overall impression of the adequacy of the geologic information used in defining plays and in carrying out play analysis; 2.
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From page 58... ...
These data files include Petroleum Information Corporation's PDS oil and gas field files, NRG Associates' Significant Oil and Gas Fields of the United States files, and state geological survey and state oil and gas commission field files. Such an audit is well within the scope of the resource surveys undertaken by the USGS and would enhance the credibility of future resource assessments.
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From page 59... ...
Inaccurate statistics, in turn, may lead to an inaccurate assessment of the play's potential to contain undiscovered resources. Canadian assessors have recognized that poor play definition or mixing of plays may distort statistical analysis (Podruski et al., 1988~.
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From page 60... ...
Play mixing could decrease resource estimates by biasing statistical computations so that the play appears mature, with many fields discovered and few remaining undiscovered fields (see the discussion below)
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From page 61... ...
Our analysis showed that partitioning the field discovery history of plays with mixed depositional systems into thirds, in the same manner as the USGS, using the same dates, yields a distribution that resembles the histogram of a play within which many fields have already been discovered, rather than a play with a greater proportion of undiscovered fields. It is likely that the mixing of dissimilar depositional systems in a play, with different characteristic size distributions for the reservoirs in each system within that play, can create a play that appears excessively mature in its discovery history.
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From page 62... ...
of accumulations o FIGURE 3~ e appraisal form that USGS assessors used to record geologic information about each play.
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From page 63... ...
The form included spaces for geologic risk factors, a distribution for the number of petroleum fields, separate field-size distributions for crude oil and natural gas, and gas/oil probabilities. The distributions that represent the field size and number of fields were specified in terms of an absolute maximum and minimum together with fifth, twenty-fifth, fiftieth, seventy-fifth, and ninety-fifth percentiles.
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From page 64... ...
Thus, the USGS ignored geochemical data in estimating resource volumes when petroleum had already been found in the area being assessed. The committee recommends that the USGS determine the potential impact on the assessment of omitting geochemical data in assigning risk to source timing and migration for plays with in-place petroleum accumulations.
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From page 65... ...
In evaluating source and maturity risks the USGS should use its own extensive geochemical research and other recently published research. Sizes of Undiscovered Fields i'' a Play The appraisal form required that analysts input separate size distributions for undiscovered oil and undiscovered gas fields.
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From page 66... ...
This largest size depends on the number of undiscovered fields (i.e., it is an "order statistical. Thus, the fitting procedure introduced two forms of dependence: dependence of the undiscovered size distribution's shape on the assessment of the number of undiscovered fields and a consequent probabilistic dependence between the uncertain quantities "undiscovered field size" and "number of undiscovered fields." The committee judges that it is a logical contradiction to treat the uncertain quantity "undiscovered field size" as independent of "number of undiscovered fields" in subsequent calculations.
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From page 67... ...
Presumably, the decision about whether an accumulation is gas or oil resulted from a binomial trial using the assigned probabilities. The committee judges that in future assessments a better approach would be to use separately specified distributions for the number of undiscovered oil fields and the number of undiscovered gas fields in a play.
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From page 68... ...
One problem with the USGS procedure for aggregating resources in a play was that it distilled evaluations of several analysts into one consensus result. Consensus was used to obtain both geologic risk factors and probability distributions showing the range of possible resource volumes thought to exist in the play.
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From page 69... ...
independence. The committee recommends that in future assessments the USGS and MMS standardize their procedures for aggregating resources.
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From page 70... ...
The recent USGS assessment method differed from that described in Circular 725 in two important ways: it adopted the petroleum play as the basic unit for analysis and it used key features of discovery process modeling as a guide to formulating subjective assessments. As discussed earlier in this chapter, each geologist subjectively appraised the size distribution of a plays undiscovered fields by choosing the parameters of a truncated, shifted Pareto distribution.
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From page 71... ...
3. Do the results adequately represent uncertainties about field-size distributions and numbers of undiscovered fields?
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From page 72... ...
The committee found that these shortcomings of the assessment procedure are symptomatic of the USGS's failure to maintain support for research and training over the long time periods necessary to carry out a credible oil and gas assessment; Because of the absence of a permanent resource assessment group. the assessment lacked continuity in structure a clearly defined assessment methodology that was unambiguously understood by all members of the assessment team and enough statistical support to carry out data management.
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From page 73... ...
especially for the North Slopes creates an imbalance in play analysis and resource assessment in an area with one of the highest resource potentials in the onshore United States. One way the USGS might augment its seismic data base is by increased cooperation with state government agencies and the petroleum industry.
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From page 74... ...
For future assessments, the vast amount of production history and data now available from the Endicott, Lisburne, Prudhoe Bay, and Kuparuk fields and the greater density of infill drilling and horizontal drilling should improve the determination of recovery factors. Economic Assumptions: Mi''imu~n Economic Field Size To determine economically recoverable resource volumes, the USGS applied a single minimum economic field size (MEFS)
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From page 75... ...
the committee recommends that the USGS study and refine the MEFS values it chooses for the North Slope. Cooperative studies between the USGS and the MMS could result in more realistic and consistent economic screening.
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From page 76... ...
Thus, the MMS is charged with assessing petroleum resource volumes on the OCS (see Box 3.2~. It is required to report these volumes to Congress every two years.
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From page 77... ...
The committee is concerned however that funding cutbacks caused by moratoria on lease sales will force the MMS to reduce personnel levels which could have a negative effect on its ability to conduct future assessments. For the most part, staff training and background for the 1989 assessment were adequate to enable the staff to interpret data competently and to translate their interpretations into resource assessments with credible results.
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From page 78... ...
Although the MMS conducts resource assessments independently from lease sale evaluations, it is apparent that lease sale processes directly affect assessment procedures. For the 1989 assessment, priorities within the MMS limited detailed economic analysis of prospects mostly to tracts that had received bids.
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From page 79... ...
The highest density of seismic grid patterns is concentrated on and around acreage blocks associated with lease sales. In other areas where there has been little or no leasing or active exploration, such as the Northern California planning area, part of the eastern Gulf of Mexico area, and some parts of the Atlantic OCS, seismic data are sparse to non-existent.
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From page 80... ...
This would allow the MMS to update continuously its evaluations for those areas and would expand the data base for future assessments. One good example of where the MMS has already made full use of industry well data is in the Georges Bank area.
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From page 81... ...
The MMS did not always follow precise play definition, sometimes delineating plays by subdividing a region stratigraphically, such as in the Pacific Coast region. Despite gaps in date the committee advises that the MMS adhere more strictly to the definition of a play in grouping prospects for future assessments.
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From page 82... ...
However, in the cases we have examined, play mixing resulted in overly conservative resource estimates by obscuring gaps in field-size distributions. (For a further discussion of the possible effects of play mixing on resource estimates, see the discussion of the USGS's application of play analysis, earlier in Chapter 3.)
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From page 83... ...
The economics of developing and producing high-risk, difficult-to-identify conceptual plays, such as stratigraphic traps, tend to remove them from the economically recoverable resource estimates in Alaska. This is the dual effect of extremely high-cost development in the Alaska OCS, combined with the risk factors that cause such plays to fail
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From page 84... ...
It is not surprising that MMS assessors in Alaska focused on identifiable structural prospects and their aggregation into plays, given the total lack of economic production in this region. Without some evidence that some recoverable resources lie outside of identified structures, it may be difficult for them to justify postulating such plays.
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From page 85... ...
To determine the total volume of undiscovered recoverable resources for the 1989 assessment, the MMS modified its data base to remove the economic constraints and used statistical methods to extrapolate the size and number of all potential fields above 1 Mmboe. MMS assessors supplied the PRESTO input parameters differently from region to region.
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From page 86... ...
1. Pronounce: What is the probabil ity that at least one play in the province contains physical ly recoverable resources?
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From page 87... ...
I All 011 1 011 and Gas I All Gas Example: I Gas Fractlon I Example 0PR0B = 0.40 I Developed By I GPROB = 0.30 I PRESTO I 0.OO 1.00 FIGURE 3.4 Form B the second form that MMS assessors used to record PRESTO input parameters in Alaska.
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From page 88... ...
they are not appropriate when applied to resource assessments designed to evaluate undiscovered oil and gas in a play. Probabilistic Dependence The MMS's assessment procedure, like the USGS's procedure, did not incorporate a way to address possible probabilistic dependencies between uncertain quantities.
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From page 89... ...
The MMS should redesign assessment methods and forms to incorporate dependencies where present. Assumptions As discussed previously, the MMS's resource assessment method relied on many decisions regarding the selection of input parameters entered into PRESTO.
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From page 90... ...
Likewise, the MMS's assumptions regarding minimum economic field sizes appeared reasonable and well defined in the various operating areas. The determination of the MEFS for prospects in different plays, water depths, operating conditions, producing or frontier areas, and drilling depths is a major component of the PRESTO
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From page 91... ...
Statistical Methods Number of Undiscovered Fields MMS assessors obtained distributions showing the number of undiscovered fields by probabilistic sampling and economic screening of identified prospects.
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From page 92... ...
. The total number of undiscovered fields in a basin thus became a random fraction of the total number of identified and unidentified prospects.
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From page 93... ...
Geologic Risk Factors Not all zones or prospects are undiscovered fields. The MMS assessed this uncertainty through a hierarchy of risk numbers associated with the geologic hierarchy of zones, prospects, basins, and areas.
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From page 94... ...
The committee recommends that MMS assessors separate more clearly risk factors that are shared versus risk factors that behave independently. The risk numbers assigned to basins, and especially to areas, are extremely critical to the overall resource assessment.
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From page 95... ...
The sizes of these undiscovered fields were also probabilistically assigned from prospect-specific size distributions, as described above. For the economic resource estimate, some or all of the converted prospects did not survive the hierarchical economic screening, which was prospect-, basin-, and area-specific.
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From page 96... ...
Geological Survey and Minerals Management Service in their Assessment of U.S. Undiscovered, Conventionally Recoverable Oil and Gas Resources.
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From page 97... ...
1985. Estimates of Undiscovered, Economically Recoverable Oil and Gas Resources for the Outer Continental Shelf as of July 1984.
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