Technology Tomorrow: Reserves Growth: Torturous and Tortuous
- Roy Long (U.S. Dept. of Energy)
- Document ID
- Society of Petroleum Engineers
- Journal of Petroleum Technology
- Publication Date
- August 2006
- Document Type
- Journal Paper
- 26 - 28
- 2006. Copyright is retained by the author. This document is distributed by SPE with the permission of the author. Contact the author for permission to use material from this document.
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Editor’s note: This is the fourth installment of a yearlong series designed to stimulate discussion in energy research and development. This article focuses on near-term resource potential and processes for developing technologies to successfully develop this potential. Comments on articles in the Technology Tomorrow series are welcome. Please send any questions, comments, or ideas to firstname.lastname@example.org.
At the World Petroleum Congress in 2000, the U.S. Geological Survey (USGS) presented its World Oil and Gas Assessment, showing a global conventional reserves growth estimate (Table 1). The greatest significance of this estimate was the size. The U.S., in particular, is highlighted because the reserves growth estimate is more than twice the remaining reserves and at least comparable with the undiscovered resource estimate. As noted in the assessment, “In the U.S., which is one of the most intensely explored countries in the world, reserves growth is widely considered to be a major component of remaining oil and gas resources. It is hypothesized that reserves growth of similar proportions also could occur worldwide as exploration for new fields matures and the intense exploitation of existing fields becomes an increasingly viable approach to developing new reserves.”
A number of arguments have been made regarding the potential weakness of that hypothesis, but the significant impact of reserves growth is becoming more accepted. Notable in this assessment, as in all resource assessments, is the lack of discussion of the technologies and practices required to develop these resources in a timely manner. The challenge lies in the details of how we get there.
Despite the upside potential of reserves growth, the process of developing that potential can be quite painful without adequate technology to support development programs. Fig. 1 is a plot of development program costs in one of the most challenging environments in the world, the deepwater U.S. Gulf of Mexico (GOM), during the period before 2004 when oil and gas prices were beginning to rise. The driver for the cost estimates and overruns came from the days when deepwater drillships cost between U.S. $300,000 and $400,000 per day.
As bad an impact as an average 60% overrun might be on a $44 million AFE project, the real inhibitor of resource development in the GOM is the potential for spending more than three times the anticipated average AFE cost. This magnitude of risk might be referred to as “elephant torpedoes” in the deepwater search for elephant reservoirs with regard to the impact on exploration budgets. Today, those same deepwater ships cost closer to $500,000 per day, and the industry is charging forth again into deep water based on a $60+ per barrel “war chest,” but with only limited advancements in new technologies since the early 2004 time frame to aid in risk reduction. Success this time obviously will depend on lessons learned and human resources.
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