Accurate Reserves Evaluation Ensures TNK-BP’s Future Success
Optimal solutions for resource base development as well as the overall growth strategy of any oil and gas company are defined based on accurate estimation of hydrocarbon reserves. On the other hand, if reserves estimation is inadequate state agencies may delay the approval of field development documentation, which entails additional license risks to subsoil users. In TNK-BP the reserves assurance process is performed in the Technology’s Reserves Management Dept.; its specialists are to ensure reliability of reserves estimation for the Company and its subsidiaries under Russian and international standards.
Valery Scherbakov
(VVShsherbakov@tnk-bp.com),
Russian Reserves Section Head,
Reserves Management Dept.,
Technical Assurance Division, Technology
Alexander Sorokin
(AVSorokin4@tnk-bp.com),
Western Reserves Section Head,
Reserves Management Dept.,
Technical Assurance Division, Technology
Svetlana Zhirnova
(SPJirnova@tnk-bp.com),
Manager, Russian Reserves Section,
Reserves Management Dept.,
Technical Assurance Division, Technology
Adilya Khangildina
(AMKhangildina@tnk-bp.com),
Chief Specialist, Russian Reserves Section, Reserves Management Dept.,
Technical Assurance Division, Technology
One of the key elements of TNK-BP’s long-term strategy to increase value is to add new proved reserves and resources and bring these into development. The resource base is estimated annually and thus the subsoil users can review its current status, track its changes and come up with recommendations on its further development.
The evolution of production technology along with the changes in the financial and economic environment both in Russia and globally result in corresponding updates of petroleum reserves and resources estimation systems. It is the Technology’s Reserves Management Dept. that monitors changes in reserves estimation requirements, supports subsidiaries in drafting presentations for Reserves Estimate Defense sessions held by the state agencies, and helps independent auditors consider specifics of the Company’s fields when estimating TNK-BP reserves under international standards.
In Line with the State Commission for Reserves
The effective Russian Subsoil legislation stipulates annual updates of hydrocarbon reserves data. Changes in reserves estimation may result from improved subsurface understanding during field development, geological data updates through seismic, exploration and development drilling and well interventions, as well as changes of the official status of subsoil blocks due to license acquisition or relinquishment.
In case reserves estimates conducted under orders of TNK-BP production subsidiaries are inadequate the state agencies may decline them; to mitigate these risks all papers first undergo in-house assurance by the Russian Reserves Section, Reserves Management Dept.
One of the key objectives of the team is to review the reserves estimation papers developed under orders of subsoil users, identify and eliminate all flaws prior to submitting the documents to the State Commission for Reserves (GKZ) Rosnedra. The recommendations issued by the team may be to complement the existing package with additional data including data on similar estimation targets, as well as considering alternatives or reinforcing critical points.
The in-house reserves estimation assurance process is particularly focused on justification of volumetrics. Standard techniques to determine volumetrics have been established for most of common reservoir types, yet there is nothing like that for certain local targets, one of the examples being AK horizons of Frolovskaya formation at Kamennoye field. Application of techniques that have been tested in different types of rock and/or reservoir implies a systematic and unjustified over- or underestimation of primary volumetrics (net pay,porosity, oil / gas saturation). Presenting the results of this work to GKZ Rosnedra may result in registration of inaccurate reserves values with the State Reserves Balance books or else failure to meetthe defense deadlines, which enhances the risk of non-compliance with license obligations.
The Russian Reserves Section helps specialists in the subsidiaries and drafters of reserves estimates to select the techniques to determine volumetrics that best fit the specific geological conditions or else to develop brand new techniques to be used individually for each of the unique targets. In case volumetrics justification and determination is very challenging, leading Russian experts who are indisputable authorities for GKZ Rosnedra are contacted to help develop most appropriate techniques.
The drafters of reserves estimates are also actively involved in justification of the selected techniques. Up until recently it was Tyumen Petroleum Research Center (TNNC) that was the general contractor for all subsoil users in TNK-BP.
Today TNNC is responsible for 25 strategic fields only, while less significant fields are outsourced to various contractors including Giprovostokneft, TatNIPIneft, VNIIneft, and other scientific and research institutes. The experience of these institutions with other Russian oil and gas companies will doubtlessly benefit TNK-BP’s effort in resource base estimation.
After the reserves estimates have undergone the in-house assurance at TNK-BP Corporate Center they are submitted to GKZ Rosnedra for expert review and approval. However, the job of the Russian Reserves Section is not over yet: the team supports specialists from TNK-BP subsidiaries at every stage of defense sessions on reserves estimates and updates in the state agencies and actively participates in the process. This helps mitigate the risks of delayed review and approval of reserves estimation papers. In its turn, timely reserves registration defines timelines for design documentation approval and/or update, which is obligatory to start and/or continue field development.
Under International Standards
In 2003, TNK-BP was one of the first Russian oil and gas companies to start reserves estimation under international standards established by the US Securities and Exchange Commission (SEC) and the Society of Petroleum Engineers (SPE, since 2007 known as PRMS, Petroleum Resources Management System).
Unlike Russian reserves classification, the international standards consider both subsurface characteristics and production economics including profitability under the current financial and economic conditions and production technology status. According to the international criteria, proved reserves are divided into developed and undeveloped depending on their historic production in appropriate areas. The proved undeveloped reserves are further divided according to the expected investments to recover these reserves (Fig. 1): proved undeveloped (PUD) reserves require drilling additional wellbores while proved developed non-producing (PDNP) reserves call for recompletions. To estimate proved undeveloped reserves which potentially can be progressed to proved developed category the efficiency of intended operations should be assessed in terms of production profitability, which should correspond to the subsoil user’s plans and the comprehensive asset development project. For each of the mentioned reserves categories, the recovery efficiency estimates should be supported both through engineering evaluation and analysis of actual performance including decline rates, water flooding efficiency, experience in similar fields, etc. (Fig. 2). The engineering evaluation may rely on geological and reservoir models, material balance estimation and various well tests (interference tests, reservoir pressure measurement, pressure build-up test, level build-up curve); these may be used to prove the development pattern efficiency and hydrocarbons production potential.
A portion of forecasted production which is unproved but feasible under appropriate conditions (confirmation of the target’s geological structure and economics, etc.) falls into probable or possible reserves depending on certainty of occurrence of each case and is considered independently.
TNK-BP independent reserves audit under international standards is performed by DeGolyer&MacNaughton, which consults other Russian oil and gas majors as well. The Reserves Management specialists in the Corporate Center and TNNC contribute a lot to the process: they provide DeGolyer&MacNaughton with relevant exploration and production statistics and OPEX / CAPEX data as well as performing preliminary estimation or re-estimation of in-place volumes and oil reserves following development drilling, wellwork and geological and reservoir model updates. They also provide the auditors with all-round information support and consultations while DeGolyer&MacNaughton uses thus obtained data to estimate TNK-BP reserves with the account for their economic development (Fig. 3).
For the time being, the major objective for the Reserves Management specialists in the Corporate Center and TNNC is to provide the auditors with relevant data to perform the reserves audit under international standards. Yet they are gradually mastering the western methods and start to estimate reserves parallel to the effort by DeGolyer&MacNaughton. Thus, in 2010, TNK-BP launched a program to introduce a tool for in-house western reserves estimation and alignment with the Russian Reserves Balance (6GR form).
The project is carried out jointly with Schlumberger and provides for the development of in-house reserves estimation software. It will comprise a hydrocarbon reserves estimation block and engineering tools to forecast reserves recovery profiles including Merak Peep application aimed to analyze project cost efficiency and build production decline curves and Merak VOLTS application designed to record and track resource base changes and draft reserves estimation reports. The new system is planned to be implemented by the end of 2010 and in 2011 TNK-BP expects to start with the pilot reserves estimation under international standards on its own. In 2012, the Company will estimate reserves in its fields on its own and present the results to an independent international auditor.
It is widely accepted in the international oil and gas industry that a company is only as good as its reserves, which can be brought to production in future. TNK-BP has experienced and highly skilled professionals in its Technology’s Reserves Management Dept. and can therefore be assured of the quality of its resource base and long-term success both in Russia and internationally.
Published with thanks to TNK-BP and Innovator Magazine
