Reservoir Management

Related terms:

Reservoir Management
John R. Fanchi, in Shared Earth Modeling, 2002

15.3 Economics
Flow model predictions are frequently combined with price forecasts to estimate
how much revenue will be generated by a proposed reservoir management plan.
Other methods of predicting reservoir performance could be used, such as decline
curve analysis, but flow models based on detailed reservoir characterization provide
the most sophisticated technology for preparing economic forecasts.
One crucial economic measure used in reservoir management is net present value
(NPV). Net present value takes into account the time value of money, and may be
calculated from the expression
𝑁 𝑃𝑜𝑛𝑄𝑜𝑛 + 𝑃𝑔𝑛𝑄𝑔𝑛 − 𝐶𝐴𝑃𝐸𝑋𝑛 − 𝑂𝑃𝐸𝑋𝑛 − 𝑇 𝐴𝑋𝑛 (15.3.1)
𝑁𝑃𝑉 = ∑𝑛 = 1 𝑛
(1 + 𝑟 )

where
N Number of years
Pon Oil price during year n
Qon Oil production during year n
Pgn Gas price during year n
Qgn Gas production during year n
CAPEXnCapital expenses during year n
OPEXnOperating expenses during year n
TAXnTaxes during year n
r Discount rate
In many cases, resource managers have little influence on taxes and prices. On the
other hand, most resource managers can exert considerable influence on
production performance and expenses. Several strategies may be used to affect
NPV. Some strategies include accelerating production, increasing recovery, and
lowering operating costs. The reservoir management challenge is to optimize
economic measures like NPV.
Revenue stream forecasts are used to prepared both short and long term budgets.
They provide the production volumes needed in the NPV calculation. For this
reason, the asset management team may be expected to generate flow predictions
using a combination of reservoir parameters that yield a range of recoveries. The
sensitivity analysis is a useful process for determining the likelihood that any one
set of parameters will be realized. Sensitivity analyses form the basis for estimating
the probability distribution of reserves.
The shared earth model determines how much money will be available to pay for
wells, compressors, pipelines, platforms, processing facilities, and any other items
that are needed to implement the plan represented by the model. The revenue
stream is used to pay taxes, capital expenses, and operating expenses. The
economic performance of the project depends on the relationship between revenue
and expenses [see, for example, Thompson and Wright 1985; Mian, 1992; Bradley
and Wood, 1994; Newendorp and Schuyler, 2000]. Several economic criteria may
be considered in the evaluation of a project, such as NPV, internal rate of return
and profit-to-investment ratio. The selection of economic criteria is typically a
management function. Once criteria are defined, they can be applied to a range of
possible operating strategies. The strategies should include assessment of both
tangible and intangible factors. A comparative analysis of different operating
strategies gives decision making bodies valuable information for making informed
decisions.

Petroleum reservoir management processes

Abdus Satter, Ghulam M. Iqbal, in Reservoir Engineering, 2016

Reservoir management process

The reservoir management process can be characterized as integrated, dynamic,
and ongoing. The process is integrated because various technical, economic, and
other factors play important roles in managing a reservoir, all of which work in an
integrated manner. For instance, the management may decide when to initiate an
enhanced oil recovery (EOR) process on the basis of market conditions. Integration
also takes place among human skills, available technologies, data, and tools.
Reservoir management is dynamic because short- and long-term strategies to
manage a reservoir are updated on a regular basis depending on reservoir
performance. For example, the current reservoir behavior under waterflood may
suggest that water injection should be ramped up in a certain part of the reservoir
or infill wells need to be drilled that was not part of the original plan. The reservoir
management plan needs to be revised and implemented as new information about
the reservoir becomes available from reservoir surveillance and analyses. Reservoir
management is an ongoing process as the reservoir is monitored in real-time and
certain corrective actions are implemented by using automated tools and systems.
Besides, reservoir performance is reviewed regularly throughout the life of the
reservoir in order to manage it better. All the phases of the reservoir management
process can be executed through appropriate planning and paying close attention.
In the words of Satter and Thakur [2], “Reservoir management involves making it
happen and letting it happen. We can leave it to chance to generate some profit
from a reservoir operation without ongoing deliberate planning, or we can enhance
recovery and maximize profit from the same reservoir through sound management
practices.”
In a nutshell, the reservoir management process is accomplished by optimizing the
recovery of oil and gas while minimizing the capital investments and operating
expenses. Sound reservoir management practices are dependent on the use of
available resources. Effective utilization of human, technological, and financial
resources are needed to maximize the reservoir assets. Human skills needed in the
overall management of the reservoir are multidisciplinary and cross-functional.
Data Management
John R. Fanchi, in Integrated Reservoir Asset Management, 2010

Publisher Summary
Reservoir management is the most effective when as much relevant data as
possible from all sources are collected and integrated into a reservoir management
study. This requires the acquisition and management of data that can be expensive
to acquire. As a consequence, it is important to estimate the value of the data by
considering the cost of acquiring data in relation to the benefits that would result
from its acquisition. Databases can be used to collect and organize data. This
requires the expense of maintaining the database. A database should be updated
on a timely basis and provide data in a raw form with information about factors
that can affect data quality. It is also advisable to use only one database. Some
companies use more than one database because different disciplines may prefer
different databases for storing their data, and data may be stored at different
locations. If data are collected in two or more databases, it increases the possibility
that errors will occur in data entry or transfer, and corrections to one database may
not appear in other databases.

Introduction to Shared Earth Modeling

John R. Fanchi, in Shared Earth Modeling, 2002

1.5 The Value of Shared Earth Modeling

Reservoir management is often defined as the allocation of resources to optimize
hydrocarbon recovery from a reservoir while minimizing capital investments and
operating expenses [Wiggins and Startzman, 1990; Satter, et al., 1994; Al-Hussainy
and Humphreys, 1996; Thakur, 1996]. A good reservoir description is needed for
optimum reservoir management. The value of shared earth modeling within the
context of reservoir management is outlined here. We begin by briefly reviewing
the stages in the life of a reservoir.
A reservoir lifetime can be discussed in terms of stages by relating the stage to a
particular function (see Table 1-2). One of the objectives of each of the exploration,
discovery and delineation stages is to obtain information that can be used to
prepare a reservoir model. The reservoir model plays a central role in the
preparation of a development plan and the subsequent production of the resource.
Even in abandonment, it is necessary to understand the reservoir so that all wells
can be plugged and abandoned in an environmentally acceptable manner.

Table 1-2. Stages in the Life of a Reservoir

Stage Function

Exploration Identify resource prospects

Discovery Find resource

Delineation Determine size of resource

Development Prepare strategy for extracting resource

Production Produce resource

 Stage Function

Abandonment Leave resource location

A fundamental task of the reservoir characterization process is determining the

spatial distribution of reservoir parameters in a format that is suitable for use in a
reservoir flow simulator. The reservoir characterization process provides a
representation of a reservoir that begins with the acquisition of seismic data and
data at control points such as wells. The acquired data must be processed,
interpreted, contoured, and digitized. The resulting set of digitized maps can be
used as part of the input data set for a reservoir flow model.
A detailed description of the geological area of interest is usually required for a
reservoir flow model study. If a flow model is being used to evaluate flow concepts,
the geologic model can be less detailed than a flow model designed to identify
bypassed fluids and plan drilling and workover schedules. In addition to improved
knowledge and understanding, the most significant commercial product of the
shared earth modeling process is a model of the reservoir that can be used in
reservoir flow simulators to perform reservoir management studies.
A simulation study generally consists of two tasks: matching field history and
making predictions. The flow model begins with an initial reservoir description and
is then used to match reservoir performance. The reservoir description may have to
be modified within reasonable limits to achieve an acceptable match of reservoir
history. The history matching phase of the study is an iterative process that makes
it possible to integrate reservoir geoscience and engineering data. Once a model
has been history matched, it can be used to forecast the behavior of the reservoir
under a variety of reservoir management strategies. The steps of a flow model
study are discussed in more detail in later chapters.
The integration of data from different disciplines is being enhanced by the
development of flow models that include petrophysical calculations [Fanchi, 2000a].
An integrated flow model combines a traditional flow model with a petrophysical
model. The petrophysical model can estimate geomechanical properties.
Integrated flow models simplify the data transfer process between disciplines,
enhance consensus building, and provide performance predictions in a format that
is familiar to reservoir managers. They are a natural extension of the model-centric
methods that are being used to optimize subsurface resource management
decisions.
The shared earth modeling procedure presented in the following chapters is
designed to complement a reservoir management study using an integrated flow
model. A case study, the Valley Fill case study, is used to illustrate the shared earth
modeling process. A case study section and many of the exercises at the end of
each chapter apply the principles presented in that chapter to a synthetic but
realistic reservoir study. The Valley Fill case study illustrates the reservoir
management process from geologic conceptualization to performance predictions.

Modern Reservoir Management Applications

John R. Fanchi, in Integrated Reservoir Asset Management, 2010

Publisher Summary
Reservoir management principles can be applied to subsurface resources other
than oil and gas. The first such application that is considered is geothermal energy.
Heat energy acquired from geological sources is called geothermal energy. The
earth's interior is divided into a solid inner core, molten outer core, mantle, and
crust. Drilling into the earth's crust has shown that the temperature of the crust
tends to increase linearly with depth. The interior of the earth is much hotter than
the crust. The source of heat energy is radioactive decay, and the earth's crust acts
as a thermal insulator to prevent heat from escaping into outerspace. Geothermal
power plants use steam or hot water from geothermal reservoirs to turn turbines
and generate electricity. Dry-steam power plants use steam directly from a
geothermal reservoir to turn turbines. Flash-steam power plants allow high-
pressure hot water from a geothermal reservoir to flash to steam in lower-pressure
tanks. The resulting steam is used to turn turbines.

Introduction to Reservoir Simulation

John R. Fanchi, in Principles of Applied Reservoir Simulation (Fourth Edition), 2018

Abstract
Hydrocarbon reservoir management includes recovery of oil and gas resources
using a variety of processes ranging from primary recovery to waterflooding,
immiscible gas injection, and enhanced oil recovery (EOR). Many disciplines
contribute to the reservoir management process. In the case of a hydrocarbon
reservoir, successful reservoir management requires understanding the structure
of the reservoir, the distribution of fluids within the reservoir, drilling and
maintaining wells which can produce fluids from the reservoir, transport and
processing of produced fluids, refining and marketing the fluids, safely
abandoning the reservoir when it can no longer produce, and mitigating the
environmental impact of operations throughout the life cycle of the reservoir.
Reservoir simulation helps integrate information from all of the disciplines and
provides quantitative reservoir performance forecasts.
Chapter 1 introduces the reader to the simulator IFLO that accompanies this book.
Simulator applications using IFLO illustrate many chapter concepts throughout the
text. Chapters 2 through 9 help you learn how to build a reservoir model and
execute a flow simulator. Chapters 10 through 14 show how to conduct a flow
model study.

Introduction
John R. Fanchi, in Integrated Reservoir Asset Management, 2010

1.2 Reservoir Management

Modern reservoir management is generally defined as a continuous process that
optimizes the interaction between data and decision making during the life cycle of
a field (Saleri, 2002). This definition covers the management of hydrocarbon
reservoirs and other reservoir systems, including geothermal reservoirs and
reservoirs used for geological sequestration. Geological sequestration is the long-
term storage of greenhouse gases, such as carbon dioxide, in geological
formations. The reservoir management plan should be flexible enough to
accommodate technological advances, changes in economic and environmental
factors, and new information obtained during the life of the reservoir, and it should
be able to address all relevant operating issues, including governmental
regulations.
Many disciplines contribute to the reservoir management process. In the case of a
hydrocarbon reservoir, successful reservoir management requires understanding
the structure of the reservoir, the distribution of fluids within the reservoir, drilling
and maintaining wells that can produce fluids from the reservoir, transport and
processing of produced fluids, refining and marketing the fluids, safely
abandoning the reservoir when it can no longer produce, and mitigating the
environmental impact of operations throughout the life cycle of the reservoir.
Properly constituted asset management teams include personnel with the expertise
needed to accomplish all of these tasks. These people are often specialists in their
disciplines. They must be able to communicate with one another and work
together toward a common objective.
Reservoir management studies are important when significant choices must be
made. The choices can range from “business as usual” to major changes in
investment strategy. For example, decision makers may have to choose between
investing in a new project or investing in an existing project that requires changes
in operations to maximize return on investment. By studying a range of scenarios,
decision makers will have information that can help them decide how to commit
limited resources to activities that can achieve management objectives.
Reservoir flow modeling is the most sophisticated methodology available for
generating production profiles. A production profile presents fluid production as a
function of time. Fluid production can be expressed as flow rates or cumulative
production. By combining production profiles with hydrocarbon price forecasts, it
is possible to create cash flow projections. The combination of production profile
from flow modeling and price forecast from economic modeling yields economic
forecasts that can be used to compare the economic value of competing reservoir
management concepts. This is essential information for the management of a
reservoir, and it can be used to determine reservoir reserves. The definition of
reserves is summarized in Table 1.1 (SPE-PRMS, 2007).

Table 1.1. SPE/WPC Reserves Definitions

Proved • Those quantities of petroleum, which by analysis of geoscience

Reserves
and engineering data, can be estimated with reasonable certainty
to be commercially recoverable, from a given date forward, from
known reservoirs and under defined economic conditions,
operating methods, and government regulations.
• There should be at least a 90 percent probability (P90) that the
quantities actually recovered will equal or exceed the estimate.

Probable • Those additional reserves that analysis of geoscience and

Reserves
engineering data indicate are less likely to be recovered than
proved reserves but more certain to be recovered than possible
reserves.
• There should be at least a 50 percent probability (P50) that the
quantities actually recovered will equal or exceed the estimate.

Possible • Those additional reserves that analysis of geoscience and

Reserves
engineering data suggest are less likely to be recoverable than
probable reserves.
• There should be at least a 10 percent probability (P10) that the
quantities actually recovered will equal or exceed the estimate.

The probability distribution associated with the SPE-PRMS reserves definitions can
be illustrated using a normal distribution. We assume that several statistically
independent models of the reservoir have been developed and used to estimate
reserves. In the absence of data to the contrary, a reasonable first approximation is
that each model has been sampled from a normal distribution of reserves. Given
this assumption, an average μ and standard derivation σ may be calculated to
prepare a normal distribution of reserves. For a normal distribution with mean μ
and standard deviation σ, the SPE-PRMS reserves definitions are
Proved reserves = 𝑃90 = μ − 1.28σ (1.2.1)
Probable reserves = 𝑃50 = μ
Possible reserves = 𝑃10 = μ + 1.28σ

Figure 1.3 shows a normal distribution for a mean of 189 MMSTBO and a standard
deviation of 78 MMSTBO. The SPE-PRMS reserves from this distribution are

Figure 1.3. The production system.

Proved reserves = 𝑃90 = 88MMSTBO (1.2.2)

Probable reserves = 𝑃50 = 189MMSTBO
Possible reserves = 𝑃10 = 289MMSTBO

In this case, the normal distribution is used to associate an estimate of the

likelihood of occurrence of any particular prediction case with its corresponding
economic forecast. For example, we use Figure 1.3 to see that a reserves estimate
of 200 MMSTBO corresponds to a probability of approximately 𝑃43 .

Reservoir Flow Simulation

John R. Fanchi, in Shared Earth Modeling, 2002

14.1 Reservoir Flow Modeling

A modern, comprehensive reservoir management study is usually quantified using
a computer program or set of computer programs that integrate relevant and
available data. The reservoir characterization process should provide the reservoir
model that is included in the model of fluid flow. If a geostatistical study is being
used, the reservoir characterization process should provide a set of realizations that
can be used in a flow model. The fluid flow model can be thought of as four
interacting models: the reservoir model, the well model, the wellbore model, and
the surface model.
The reservoir model represents fluid flow within the reservoir. The reservoir is
modeled by subdividing the reservoir volume into an array, or grid, of smaller
volume elements (Figure 14-1). Many names are used to denote the individual
volume elements, for example, grid block, cell or node. The set of all volume
elements is known by such names as grid, mesh, or lattice.

Figure 14-1. Subdivide Reservoir

Every practical reservoir simulator includes both a reservoir model and a well
model. The well model is a term in the fluid flow equations that represents the
extraction of fluids from the reservoir or the withdrawal of fluids into the reservoir.
The reservoir model and well model can be used to determine inflow performance
relationships that establish the relationship between flow rate and wellbore flowing
pressure. Simpler analytical inflow performance relationships such as Vogel's
method [Economides, et al., 1994; Ahmed, 2000] are often used instead of flow
simulators for production engineering work, but do not account for all of the
effects that are included in a flow simulator. Full featured commercial simulators
also include a wellbore model and a surface facility model. The wellbore model
represents flow from the sandface to the surface. The surface model represents
constraints associated with surface facilities, such as platform and separator
limitations.
The mathematical algorithms associated with each model depend on physical
conservation laws and empirical relationships. Computer simulators are based on
conservation of mass, momentum, and energy. The most widely used simulators
assume the reservoir is isothermal, that is, constant temperature. If we are
modeling a reservoir where thermal effects are important, such as a recovery
process where heat is injected into the reservoir in some form, then we need to use
a simulator that accounts for temperature variation and associated thermodynamic
effects. The set of algorithms used to model fluid flow in porous media is
sufficiently complex that high speed computers are the only practical means of
solving the mathematics associated with a reservoir simulation study.
Coats, one of the pioneers of reservoir simulation, identified a set of prerequisites
that should be satisfied before a model study is undertaken [Coats, 1969]. Reservoir
simulation within the context of reservoir management is a commercial enterprise.
It is therefore important, from a business perspective, to require the existence of a
problem of economic importance before beginning a reservoir simulation study.
One of the objectives of a model study usually includes finding a solution to an
economic problem.
Once the objectives are defined, the modeler should decide if the objectives of the
study can be achieved using simpler techniques. If less expensive techniques, such
as decline curve analysis or the Buckley-Leverett waterflood displacement
algorithm can provide adequate results, then more sophisticated and costly
methods are not justified.
LDA-Measurements of the Turbulence in and Around a
Venturi
R.F. Mudde, ... H.R.E. van Maanen, in Engineering Turbulence Modelling and
Experiments 6, 2005

INTRODUCTION
For the optimum production and reservoir management of oil and gas fields,
continuous measurement of the flow rates of individual wells is required. However,
all these flows are multi-phase. Despite many years of research, multiphase flow
metering is still under development. The traditional technique is to use so-called
test-separators which basically are big settling tanks, in which gravity separates the
various phases. After this separation, single-phase flow rates are determined by
ordinary flow meters. Although the test-separator is a simple device, it has several
disadvantages: costs, size and a limited operation range. Because of its costs, a
test-separator is a ”shared” meter, which means that each well is only monitored
during a short period, after which another well will be measured. This means that
during extended periods of time no metering is available for the well, hampering
optimal operation of the connected wells. Thus, there is a need in oil and gas
production for a robust device that is able to provide continuous readings for many
years in off-shore applications without any need for maintenance.
Worldwide, the production of natural gas is increasing. Natural gas is regarded as a
clean fuel and large resources are still available. However, the number of wells
producing only gas is negligible. Practically all reservoirs produce gas in
combination with condensate (liquid consisting of hydrocarbons) and water. Below
a certain temperature and pressure, these two products will condense in the flow
line, requiring multi-phase metering. A Venturi flow meter is being considered as a
good, robust candidate for measuring such multi-phase flows with a high (> 90%)
Gas Volume Fraction, so-called wet gas. However, the geometry of a Venturi will
influence the turbulence of the flowing medium in a complicated way. CFD
calculations for single phase flows have been shown to be inaccurate and very
sensitive to the closure relations used. In order to understand the behaviour of the
Venturi in multiphase flows, a deep understanding of properties of single phase
flow in the Venturi will be helpful. Therefore an experimental program has been
initiated to get a better understanding of the turbulence in and around a Venturi in
a single phase flow. This will form a basis for assessing the operation of the Venturi
in the case of a wet gas.
The Venturi is a constriction in the flow line that consists of a contraction followed
by a smooth diffusor. Detailed information about the flow properties, including the
turbulence close to the wall are scarce in literature. This prompted us to perform
LDA experiments in and around a Venturi. As the flow in wet-gas flow lines is
highly turbulent, we have concentrated on high Reynolds numbers. Our Venturi
(throat diameter 60 mm) is placed in a flow line with a diameter of 100 mm. The
experiments are performed with water at a Reynolds number of 1.9 · 105, well into
the turbulent flow regime. The objective is to provide reliable LDA data in and
around the Venturi. Special attention is given to the flow properties close to the
wall. Therefore, LDA with a high spatial and temporal resolution is needed. This
study deals with optimizing the LDA set up and measuring and analysing the
development of the flow from 2 diameters upstream to 5 diameters downstream of
the Venturi.
Applications of Rock-Fluid Interactions
John R. Fanchi, in Shared Earth Modeling, 2002

8.4 Transition Zone Volumetrics and Numerical Simulation

Numerical simulators are powerful tools for enhancing reservoir management
decisions. A numerical simulator of fluid flow in porous media solves the
nonlinear, partial differential equations that describes the physics of fluid flow.
Numerical flow simulators are discussed in more detail in a later chapter. A
numerical simulator is used here to validate the analysis of incremental reserves
presented in Section 8.3.
Typically, capillary pressure and relative permeability core test measurements with
a constant residual oil saturation are used in reservoir model studies. However, a
limited set of data in the literature suggests that proper modeling of the trapped
oil relationship requires that the flow simulator account for a depth dependent
residual oil saturation. This effect can be achieved in existing simulators, but the
process is arduous. In particular, a layer cake grid consisting of planes of grid
blocks is used to represent the reservoir. Vertical variations in reservoir properties
such as porosity and permeability can still be entered. Each layer is treated as a
Rock Region, that is, each layer is assigned its own set of relative permeability and
capillary pressure curves. The flow model can then be initialized.
The analysis presented in Section 8.3 shows that relative permeability curves
should account for the variation in residual oil saturation. If not, the amount of
recoverable oil (or gas) in a transition zone will be underestimated. The variation of
residual oil saturation as a function of depth can be achieved in existing flow
simulators by normalizing the measured curves and then denormalizing the curves
for the saturation end points assigned to each Rock Region.
To verify this procedure, a vertical column model of the transition zone at the base
of an undersaturated oil reservoir was run using an extended black oil simulator. A
production well was placed at the top of the column and a water injection well was
assigned to the lowermost grid block. Initial saturations were based on the
saturation profiles presented in Figure 8-4. For example, the original oil in place in
the model with the quadratic saturation profile was 3.01 MMSTB. The model with
a constant residual oil saturation Sor produced 0.90 MMSTB oil before a limiting
water-oil ratio of 5 STB water/STB oil was reached. The corresponding model with
a variable Sor produced 1.24 MMSTB oil before reaching the WOR limit. The
fractional increase in oil recovery was approximately 38%, which is in good
agreement with the value predicted in the previous section.