ABSTRACT
Knowledge, experience, and judgment are basic keys to responsible petroleum reservoir engineering just as they are in all of the other phases of the industry, or of any industry. Companies and consultants earn a good reputation by the integrity of their employees and by consistently providing a quality service or product.
When times are tough in our industry – like now – a lot of formerly salaried engineers and geologists seem to turn to consulting to make a living. Sometimes, however, being a consultant in the petroleum industry isn't fun at all. Most of us begin practice with visions of pursuing excellence only to find it difficult to achieve. We can be almost perfect in forecasting that a wildcat well on a new prospect won't result in a commercial discovery. And we can be right most of the time when we caution that almost every wildcat well ought not be drilled. The trouble with these conclusions is that the odds are on our side, but the clients usually aren’t. Negative responses don't pay well and soon we may be looking for some other line of work.
Our professional society has developed and published a comprehensive library of practice and theory to explain in great – often excruciating – detail how to analyze and quantify flow of fluids in porous media along with many other measures of reservoir performance. We keep trying to write textbook how-to-do-it standards of acceptable definitions and procedures for estimating and reporting reserves. Some would think by now the only thing left is to turn on the computer and sign and seal the report.
Knowledge, experience, and judgment are basic keys to responsible petroleum reservoir engineering just as they are in all of the other phases of the industry, or of any industry. Companies and consultants earn a good reputation by the integrity of their employees and by consistently providing a quality service or product.
When times are tough in our industry – like now – a lot of formerly salaried engineers and geologists seem to turn to consulting to make a living. Sometimes, however, being a consultant in the petroleum industry isn't fun at all. Most of us begin practice with visions of pursuing excellence only to find it difficult to achieve. We can be almost perfect in forecasting that a wildcat well on a new prospect won't result in a commercial discovery. And we can be right most of the time when we caution that almost every wildcat well ought not be drilled. The trouble with these conclusions is that the odds are on our side, but the clients usually aren’t. Negative responses don't pay well and soon we may be looking for some other line of work.
Our professional society has developed and published a comprehensive library of practice and theory to explain in great – often excruciating – detail how to analyze and quantify flow of fluids in porous media along with many other measures of reservoir performance. We keep trying to write textbook how-to-do-it standards of acceptable definitions and procedures for estimating and reporting reserves. Some would think by now the only thing left is to turn on the computer and sign and seal the report.
That's about as far from the real world as one can get in this kind of effort. It's not black or white, thick or thin, good or bad, or any of the other opposites. Each well, each reservoir, each field has its own unique characteristics – like fingerprints, there are no two alike anywhere in the world. I think you will agree we always need and want more hard data because we never have quite enough. Yet a regression analysis is not a good way to report on the value of a prospect or on the market value of production. There may be some instances where we would like to pass and not play, but that opinion doesn't sell well so we may have to fall back on an often overworked technique called analogy. There, of course, are valid uses of analogy, but it also can signify that no or inadequate data were available, that the data were inconclusive, or that the final recourse was to call on a magic wand.
There are times when I feel that the whole process is getting a little out-of-hand. Today we can take all the variables to a computer, perhaps adequately programmed, and it produces an answer, even! generating future production, revenue, present value, risk adjustments, and market value, if asked to do so. But I don't think you can program instructions for correctly handling a reservoir volume, for example, of say 20,000 acre feet, based on factors obtained from measurements of two, or ten, one-inch core plugs, even using sophisticated readings from well logs. You can easily lose sight of the human factor that started the whole process and tend to believe that the computer output is the gospel without considering the thoroughness of the software quality control, if there is any. Besides, a computer 3-D simulation is very costly to construct and operate.
It is accepted generally by all of us in this profession that we are dealing with an inexact science and that honest differences of opinion almost always occur. It really is a shock to find any precise agreement. I am reminded of a court appearance my boss made some time ago on behalf of a client. The opposing smart young lawyer, having exposed a lot of the variations that could have occurred and expecting to drive home to the judge his clinching argument, said, "Well now, Mr. Murrell, have you ever written a report that was wrong?" to which the prompt answer was, "Why, hell yes, they have all been wrong; they are either too high or too low!" No further questions! We have to produce a lot of reports to get the law of averages to take care of the overs and unders – which it doesn't always do.
Few who see appraisal reports understand,. and may not even read, the qualifications and assumptions that are usually enumerated, in their haste to see the bottom line or the conclusions. Unless they disagree with the answer they may not look further, and without expert help it might not do them much good anyhow. What, then, if variances from "normal" are wider than seem reasonable, or there are two differing opinions? There is no place in the equation that shows how much "pride-of-authorship" or "client advocacy" could have crept into the numbers. On the other hand, an engineer who may have spent a month or two studying and analyzing all of the data can get so involved and enamored with his own work that he may be reluctant to agree that any other answer is possible.
We all have a critical and important part in furthering the well-being of our energy industry. We have the responsibility to do the very best we can when we do get the opportunity. I don't think there are very many times when we can point to a long life of future production and not worry too much about the answer just because we won't be here when they find what it really was. Even with 20/20 hindsight, there are not many chances to brag about how well we did or how close we were. Consistency in estimating and evaluating oil and gas reserves is an essential quality, but it is difficult to achieve and maintain.
Many companies have problems in sorting through various opportunities and making reasonable decisions and may want or need the support of an independent appraisal. We have to understand their problem first, collect all of the information that relates to the proposed analysis, and apply all of our knowledge, experience, and judgment to reach the conclusion. It would be easier to say the answer is somewhere in this range, but seldom, if ever, is it possible to avoid giving only one tough, independent answer.
The burden is on us all, consultants, petroleum engineers, and geologists, to keep our technical skills current, to review everything others are doing, to become familiar with new developments that may impact the future, and to make sure that we don't lose sight of the real economic value of our part in the total industry effort. A final thought I’d like to leave with you is in case you need a truly professional consultant to help you find the right answer, select one who can afford to tell you the truth.
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