Common Geologic Issues
Joe Magoto, Parkman Whaling, LLC
The Principles based New SEC guidelines allow a significant increased amount of Geologic interpretation to be incorporated into Proved Reserve estimates. The optional Disclosure of Probable / Possible reserves will also greatly increase the amount of exposure modern Geologic tools / interpretation will have on reserves disclosure.
This makes the following “Common Geologic Issues” that have always existed even more important to handle correctly. In the past, a number of these issues resulted in significant reserve write-downs, which in my opinion had a contribution in causing the SEC to very closely and strictly monitor all Oil companies Proved reserves.
Outline of specific Issues & Examples
1. Use or lack thereof for Porosity & Sw cutoffs
a. Porosity cutoffs
i. Columbian example
ii. North Sea example
iii. Importance of documenting cut-off basis
iv. Importance of refreshing cut-off basis
b. Water Saturation cutoffs
i. Very arbitrary
ii. Calibration critical
1. Gulf of Alaska example (rel-perm curves vs. Sw cutoff)
2. Analogues critical
2. Use of Geol-statistical Modeling for Reserves and simulation
a. Calibration to well data still critical
b. Gulf of Alaska – Petrel example
3. Acquisitions and Divestures
a. Stale PUDs
b. Lack of Geology Model that fits Performance
AAPG Search and Discovery Article #90098©2009 AAPG Education Department, Houston, Texas 9-11 September 2009