Quantifying the Economic Impact of 4D Seismic Projects

Summary

Time-lapse 3D, or 4D, seismic imaging has been analyzed by the industry for more than a decade, with a growing number of successful cases being reported in the literature. Two of the most recent 4D case studies1 reporting success are Draugen in the Norwegian North Sea and Gannet-C on the U.K. continental shelf. Both have been technical successes, providing good images of time-lapse changes in the reservoir. These 4D results have changed drilling locations and reduced the risk associated with costly fielddevelopment decisions. (Note: from this point forward, "4D" is used to refer to time-lapse seismic imaging.)

The focus of this paper is quantifying the economic impact of 4D. After reviewing some ways that 4D can impact reservoir management, an economic model is developed that can quantify that impact. The decision tree model uses Bayes' theorem to compute the modified probabilities resulting from 4D. The model indicates that, for the case of drilling an infill well, 4D information adds considerable value to the project, even considering that the 4D information is not perfect.

Introduction

Time-lapse 3D, or 4D, seismic imaging has been reported as "successful" in several recent publications,1-3 but what does "successful"a actually mean? One definition can be that a 4D seismic difference image was calculated and validated with known reservoir conditions at the wells. Such a result would be a technical success because the reservoir change generated a seismic difference that was strong enough to be observed above the seismic repeatability noise.4

But did the 4D result impact the management of the reservoir? If not, the 4D project would have been largely an academic exercise, and it would be hard to justify the cost of the project. But, if the 4D results were used to impact reservoir management (e.g., by helping to make or change reservoir development or production decisions), the 4D project could also be termed a business success.5

But did the improved reservoir management generate more revenue for the company than the 4D project cost the company? If not, one would have to question, as the accountants surely will, whether the company actually benefited from the 4D project. However, if the revenue exceeded the cost, then the project would also be considered an economic success.

This line of reasoning suggests that the ultimate success of a 4D project is at least as dependent on reservoir management and economic issues as it is on technical issues. Further, projects are increasingly expected not only to be economic successes, but also to quantify the likely economic impact before project funding is approved. Therefore, it is important to know how to quantify the predicted economic impact of 4D projects.

However, before quantifying an economic impact, the reservoir management impact must be quantified. For example, a commonly stated impact of 4D is saving the cost of a well, for which an economic benefit is fairly easy to quantify as the cost of the well. However, another impact could be to confirm assumptions about the presence and sealing characteristics of faults. But, if nothing changes, has there been an impact? Perhaps, if the confirmation reduces the level of uncertainty associated with future production estimates and development decisions. Uncertainty can kill projects, so reducing that uncertainty can allow projects to proceed and add value to the company.

These two issues, defining reservoir management impact and quantifying economic impact, will be discussed in the sections that follow. It is assumed in this paper that 4D projects have been, are, or will be technical successes; this is done to allow a focus on the economic issues of quantifying value. The issues of technical risk have been well discussed elsewhere.4,6,7

Defining Reservoir Management Impact

Information must be used to impact reservoir management, but there are many different potential uses, some more obvious than others. While it is not possible to generate an exhaustive list, this section lists and discusses some of the most beneficial and common impacts.

In general, field economics can be improved by accelerating production, increasing or extending plateau production rate, reducing the rate of decline after plateau, or extending field life to delay abandonment. A new well, properly placed, can achieve all of these benefits, although the plateau production rate is often limited by external constraints and is thus not changeable. If poorly placed, the well may encounter high water saturation immediately, or it may water out rapidly, for example. Given the resulting range of possible economic outcomes, information such as 4D that helps to guide the placement of the well can have a significant, and quantifiable, value.

Avoiding Poor Well Placement.

4D results can prevent poor well placement by assessing the state of the reservoir at a planned well location. If oil has been produced from the location, or soon will be, it would not be an economic location for the well. The value of this 4D information is saving the cost of an unnecessary well. In areas in which the cost of drilling wells is greater than the cost of a 4D project, this alone can be a significant impact.

Optimizing Placement of New Wells.

When 4D results are used to plan a new well location, it is possible to optimize the placement of that well. When undrained compartments are identified by 4D, one can locate a well within the compartment to access the additional reserves. Alternatively, wells can be located away from advancing fluid fronts and/or protected from fronts by natural flow barriers within the field. By doing so, it may be possible to extend plateau production or decrease the decline rate after plateau.

Locating Undrained Reservoir Compartments.

When 4D indicates no reservoir change in areas expected to be in production, it is likely that those areas of the reservoir are isolated reservoir compartments. This represents oil that was booked as recoverable but will not be recovered with the current well pattern, resulting in a shortening of plateau production and lower ultimate recovery. By locating the compartment, 4D serves to quantify the lost reserves and allow placement of a well to access it.

Identifying Drained Areas/Fluid Fronts.

Locating drained areas and fluid fronts with 4D gives a direct indication of the flow units in the reservoir. With this information, it is possible to anticipate early breakthrough, potentially in time to adjust field production rates to prevent breakthrough from occurring. This information is also important for locating new wells away from fluid fronts to extend the plateau and accelerate production.