Governments, companies, service providers, and many other stakeholders in the industry have realized the oil-price outlook may remain low for longer than expected and the need to plan accordingly.
The oil and gas industry is still adjusting to the significant change in oil and gas prices, and, unsurprisingly, many of the reserves- and asset-management papers published over the last 12 months focus on adding, optimizing, and protecting value. The papers have examined this task from many different perspectives, depending on the maturity of the asset, the circumstances of the company, and the local regulatory/political and economic environment. Governments, companies, service providers, and many other stakeholders in the industry have realized the oil-price outlook may remain low for longer than expected and the need to plan accordingly. Moreover, even if prices rise to higher levels than today, the focus on low-cost operations and value-generating projects must remain a priority. Further, there is a greater appreciation for project risk and uncertainty than ever before, and companies must recognize the worth of their assets and when projects should be continued or, indeed, when they should not. This is also in the context of changing community and political attitudes to energy production and usage. As a result, it is clear that all stakeholders recognize the need to work together more than ever before to ensure a robust, sustainable industry.
The suite of papers in this feature addresses various aspects of the theme of adding, optimizing, and protecting value. First, the importance of an integrated approach to addressing the reservoir, surface-network, and process issues associated with evaluating and understanding the interrelationship of all elements of an asset is presented in SPE 176322. The paper articulates the challenges and a very systematic approach to dealing with these interrelationships.
As new projects get harder to justify commercially, brownfield projects that add value to existing projects are becoming more common. SPE 176810 provides an example where subsurface visualization concepts have been incorporated into planning, assessing, and implementing plant upgrades, from relatively minor operational enhancements to major changes, so that preplanning and implementation time and cost show very practical savings.
Complex megaprojects also continue to have ongoing challenges during planning, design, and execution, especially where an organization or industry is handling several simultaneously. SPE 177860 provides the lessons learned from some recent experiences and offers some insights into how these learnings can be integrated, with a focus on the assurance process.
Assessing unconventional-reservoir developments and deciding whether they should proceed represent project decision making in the face of technical uncertainty, data unreliability, and a challenging price environment. SPE 179996 provides a thorough discussion of the issues. The paper provides an excellent overview of the theoretical basis for assessing whether such a project may be economically leveraging off similar analysis for conventional reservoir developments. In particular, it points out common misunderstandings between the range of uncertainty of individual-well estimates and the range of uncertainty of the mean, and it provides insight into the situation where an operator achieves a poor result from a pilot and will need to distinguish between it being a reservoir issue or a stimulation design/execution issue.
This Month's Technical Papers
Recommended Additional Reading
SPE 176405 Risk Analysis Significantly Reduces Drilling-Project Costs: Vital in the New Oil-Price Era by Roberto F. Aguilera, Curtin University, et al.
SPE 177215 Effect of Oil and Gas Prices in Unconventional-Resource Plays by M. Gibson, IDEAS, et al.
SPE 177244 Regrading Proven Reserves With PRMS by Bob Harrison, LR Senergy, et al.