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| Map of oil basins around the world. Red indicates oil basins with reserves greater than 14 billion barrels. Green indicates minor oil basins. Source: Eni, Encyclopaedia of Hydrocarbons. |
Petroleum is not equally distributed around the world. The size and location of oilfields vary geographically. Questions such as how much oil is in the Earth? and how much supply of oil do we have left are often related to terms like recoverable or proven, reserves and resources.Estimating oil and gas reserves are the most important value driver for exploration and production companies. It creates a basis for operations, development and economic analysis. Nonetheless, it also influences geopolitics and the producing country’s financial outlook.
Estimating petroleum resources and reserves requires engineering calculations, analysing and interpreting a wide range of data. The term resources are the total petroleum deposits in the subsurface that have been discovered or undiscovered, recoverable and unrecoverable, including any produced quantities. Reserves are defined as the commercial viability of petroleum resources. It is the hydrocarbon volumes discovered that can be produced in the future under existing economic and technological conditions. For example, reserves will change with fluctuations in the oil price. Therefore, different types of reserves are identified due to the level of certainty.
Check our previous article for an insight on the different definitions of reserves: ‘Fundamentals of Petroleum Engineering: The Origin of Hydrocarbons’. alert-success
To provide a perspective, world’s total proved oil reserves are 1.73 trillion barrels, about 48% of the reserves are located in the Middle East. At end of 2019, world’s production was around 95 million barrels of oil per day, as per BP Statistical Review of World Energy 2020.
Below is a table of world’s top 10 countries with the largest oil reserves:
Rank | Country | Proved Oil Reserves (billions of barrels) |
1 | Venezuela | 303.8 |
2 | Saudi Arabia | 297.6 |
3 | Canada | 169.7 |
4 | Iran | 155.6 |
5 | Iraq | 145.0 |
6 | Russia | 107.2 |
7 | Kuwait | 101.5 |
8 | United Arab Emirates | 97.8 |
9 | United States | 68.9 |
10 | Libya | 48.4 |
| World's Total Proved Reserves by Country. Source: BP Statistical Review of World Energy 2020 |
Today, more than 65,000 oil and gas fields have been discovered since the drilling of the first commercial oil well in 1859 in Pennsylvania. Sometimes, these oilfields are classified based on their size.
Super-giant fields are all fields that contain at least 5 billion barrels of known recoverable crude oil - according to a report prepared for the Central Intelligence Agency by Richard Nehring in 1978
By the same report, giant fields – less than one order of magnitude – are those fields with at least 500 million barrels of ultimately recoverable oil.
There are about 923 giant oil and gas fields in the world. The world’s largest oil field is in Saudi Arabia – Ghawar, discovered in 1948. An audit conducted by DeGolyer and MacNaughton petroleum consultancy firm (D&M) in 2019, estimated remaining proved liquid reserves for the supergiant are around 48 billion barrels.
The impact of estimating these reserves is strong. One example is the initial public offering (IPO) of a private oil company as it determines the share price and be listed on the stock exchange, such as Saudi Aramco (Saudi Arabia’s national petroleum company).
So, What Are the Initial Stages in Calculating Hydrocarbon Resources?
This depends on the type and quality of engineering and geoscience data available. The procedures can be categorised into three main resource estimation methods:
- Analogy: this method compares analogous hydrocarbon fields in terms of similarities and differences. Mostly useful when limited information is available.
- Volumetric methods: this method is used in the early life of a hydrocarbon field to estimate reserves, when production data is unavailable. Reasonable amount of subsurface data is available to map the field.
- Performance methods: this technique consists of multiple practices, such as analysing the production history of individual and multiple wells, or the field as whole. It involves analytical and numerical techniques to make future predictions of the field based on previous performance.
To recognise which method is best to use, we must know at which stage we are in the oilfield lifecycle. Through modern techniques in petroleum engineering, the initial process – briefly – is as follows:
- In oil and gas exploration, oilfields are detected through seismic imaging.
- Once the location of the hydrocarbon is determined, a well is drilled, called exploration well. This is to confirm the presence of hydrocarbons, that oil is produced. Together, this assesses the interpretation of the seismic image, and the likelihood of economic oil production.
- When the well is drilled, valuable information is obtained through fluid and rock sampling being brought to surface for analysis. As well as downhole measurements though well logging.
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| Offshore Seismic image acquisition process, same principle for onshore. Sound waves are sent through the rock, the returning waves are recorded, and they are different based on the properties of rock types. Through analysis of the seismic image, accumulations of hydrocarbons can then be detected. Source: KrisEnergy |
These activities provide valuable data, creating the perfect opportunity where the first consideration is to calculate how much oil is contained in the field. This is done through a quantity called oil initially in place (OIIP).
Finally! What Exactly is Oil Initially in Place?
OIIP, interchangeably, original oil in place (OOIP) is the estimated total amount of crude oil present in a hydrocarbon reservoir before any production. OIIP is different to oil reserves, not the amount of oil that can be recovered, but it is the total amount of oil potentially available in the subsurface reservoir.OIIP calculates the volume in the reservoir, but this oil is under high temperature and pressure conditions, in its compressed state deep in subsurface.
The pressure increase with depth is slightly experienced when you dive to the bottom of a swimming pool and feel a little pop due to extra pressure against your eardrums.In the surface, at its sale point the crude oil has gone through volumetric changes and is shrunk due to decrease in pressure. Thus, in engineering terms this oil is called being in stock tank conditions. OIIP is generally expressed in terms of stock tank oil initially in place (STOIIP).
N = (V∅So) / (Bo)
Where N is STOIIP.V is the gross rock volume or GRV. This is obtained from the seismic imaging data, also represents the thickness of the field, the portion of the rock that contains oil. Usually this term is expressed as Ah. where A is the area of the reservoir from map data, and h is the height or thickness of the oil-bearing rock obtained from log data. Logs are physical measurements made by tools lowered into the drilled well. Ghawar field’s estimates of reservoir area is around 1.15 million acres, with a net thickness of around 900 feet, as per 1990 year-end data from Greg Croft – a seismic interpretation company.
f is defined as porosity. Oil is contained within the pore spaces of the rock. An oilfield is not a lake or a pool full of oil in the ground. To imagine this, it is like having a sponge, the empty spaces in the holes are called pores, where fluid is contained. Thus, porosity is the fraction of the rock that contains these empty spaces, also called voids. Explicitly, the connected voids to allow this fluid to flow. The larger the voids, the higher the fraction. Typical porosities are between 10% - 25%. GRV multiplied by porosity gives net pore volume, NPV. This data is obtained from lab analysis of rock samples brought to surface, or down-hole log measurements.
So is the initial oil saturation. The fraction of the void space occupied by oil. Not all the pore space is filled with oil. The void spaces can be filled with water, gas and/or oil coexisting, due to the nature of oil generation and chemical transformation. Therefore, it is common to estimate the initial water saturation from rock samples in the lab, and log measurements. Then oil saturation is calculated by subtracting water saturation from one. Water saturation in oilfields initially range from 10 - 40%. NPV multiplied by initial oil saturation gives hydrocarbon pore volume, HCPV.
Bo is the oil formation volume factor at initial conditions. This is the term that converts volume of oil from reservoir to surface. The ratio of reservoir volume to surface volume. The range is from 1-2, as oil shrinks when it reaches to stock tank conditions. Bo is measured from fluid samples taken from the well.
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| Schematic of key terms in the STOIIP equation. Source: chapter24.one |
The OIIP or STOIIP volumetric method in estimating resources is widely used, it is simple but requires quality data and can be subject to considerable uncertainty. Which is why a probabilistic approach is preferred in volumetric estimations, where a range of possibilities for each parameter is estimated. This is then compared against analogues and reservoir performance methods when available.
Computing STOIIP creates the basis for reserve estimation. It allows engineers, analysts to evaluate the economics for oilfield development and its potential. The ultimate recovery of the oilfield is then determined by the product of STOIIP and recovery factor (RF). RF is largely a function of geological complexity of the field, nature of the reservoir, and development strategy under current technological and economical settings.
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