While the oil and gas industry has largely come to terms with the sustained low prices, it is clear from our review of the reserves/asset management papers published during the past 12 months or so that many companies are continuing to challenge many aspects of their business to manage the cycle. These challenges have been at the strategic, tactical, and operational levels, with companies not just trying to remain viable but also positioning themselves to take advantage of improved conditions when they return.
The papers highlighted in this article cover technical assessment of unconventional resource plays, portfolio optimization, and technology development, all very relevant in today’s environment.
Paper SPE 185053 advances a large body of work dealing with building type wells for unconventional resource plays. In particular, it recognizes that, early in the life of a resource play, it can be very difficult to build representative type wells because of the limited number of wells and the limited production history—something especially true outside of the United States. The paper presents an integrated work flow, including relating geological differences to drilling and completion type, assessing biases, and evaluating the key uncertainties that drive economic value.
Paper SPE 187162 provides a simple example of the issues associated with portfolio optimization, in particular obtaining a balance between a short-term operational focus and a longer-term outlook for capital project selection when there are marginal and complex projects to choose from. The temptation for companies in survival mode is to focus on the short term. The process explained within the paper provides an innovative approach and argues that decision makers need to consider the complexities of the system in portfolio management.
A factor not addressed but that we recommend you consider when assessing project maturity is how these projects fit within the framework of the SPE Petroleum Resources Management System (currently under revision) and how the range of uncertainty is represented for better decision making.
While technology development has been and will continue to be a hallmark of the oil and gas industry, paper OTC 27806 argues that it has not been as effective as it could be. With the current challenging economic times, it has become more critical to make fewer mistakes and mitigate the “valley of death”—the virtual chasm that separates innovation from commercial demonstration. The paper argues that holistically addressing technical and commercial factors in an integrated way can improve the efficiency and effectiveness of developing new technologies, and it presents some thought-provoking pillars of success for industry to cross the chasm and remain commercially competitive.
This Month's Technical Papers
Building Type Wells for Appraisal of Unconventional Resource Plays
Integrating Technology and Organizational Alignment for a Portfolio Implementation
A More-Holistic Approach to Oilfield Technology Development
Recommended Additional Reading
SPE 185496 Are We Reasonably Certain That Reasonable Certainty Adequately Defines Uncertainty in Our Reserves Estimates? by B. Harrison, Lloyd’s Register, et al.
OTC 27949 Bringing Upstream Projects to Final Investment Decision by Sandeep Khurana, Granherne, a KBR company, et al.
SPE 185056 Historical Terminal-Decline-Rates Review of Unconventional Reservoirs in the United States by Brent W. Hale, William M. Cobb and Associates, et al.
