Spee Monograph 4 1l4w5o

SPEE Monograph 4 Workshop: CONVENTIONAL DECLINE CURVE ANALYSIS IN UNCONVENTIONAL WELLS (DCA) Chapter 5 CLAUDIO VIRUES - SR. RESERVOIR ENGINEER

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DISCLAIMER • This workshop will go through the courses notes of SPEE Monograph 4 course in June 4 thru 8 of 2016 • In an effort to expose our staff to Nexen Assets this workshop will provide additional Nexen examples which are consistent with Corporate Reserves internal principles and related methodologies. • The content of this workshop has been vetted by Corporate Reserves to ensure our staff is not misguided in the use of methodologies presented in it.

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SPEE Monograph 4 Committee •

SPEE Monograph 3 provided sound and logical guidance for estimating, Undeveloped reserves in resource plays.

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SPEE Monograph 4 attempts to provide an understanding of currently available methods to analyze well performance of developed unconventional plays and to estimate associated recoverable volumes

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SPEE Monograph 4 seeks to describe current methodologies in the context of consistent workflows to provide insight into unconventional well performance, estimation of recoverable hydrocarbon volumes, and the uncertainties surrounding those estimates

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The committee expect that evaluators will use this information in the context of their own opportunity set and within the bounds of available data

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Above all else, it is the professional judgement of those doing an evaluation that is the primary driver in estimation of recoverable volumes from any developed unconverntional resource play

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OUTLINE • • • • • • • • • •

Basic Decline Curve Analysis Theoretical Values of Arps Parameters Practical Use of Arps Alternate Plot Types Data Quality Aggregation Multi-Segment Decline Summary Application 1 – Horn River Shale Gas Application 2 – Eagle Ford Black Oil SPEE Monograph 4 Course Notes , June 4-8 2016 – Scott Wilson, Ryder Scott

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Basic decline curve analysis

• Simple to get…. • Adequate empirical match that leads to….. • Essentially universal adoption by….. – Practicing engineers – Software manufacturers – Financial backers

SPEE Monograph 4 Course Notes , June 4-8 2016 – Scott Wilson, Ryder Scott

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Basic decline curve analysis


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Basic decline curve analysis • Plots and b-factors that result in straight lines


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Straight lines on Arps plots • Exponential (b=0) – Cartesian time, log rate – Cartesian cumulative production, cartesian rate • Harmonic (b=1) – Late time only…Log time, log rate – Cartesian cumulative production, log rate


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Arps built on previous work • Arps was not the first to use these empirical forms – Lewis, J.O.,and Beal, C.H. 1918 – Cutler, W.W. Jr. 1924 • 20 year later… Arps consolidated and simplified existing empirical equations • Arps did not assert that these incorporated reservoir engineering fundamentals.


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Basic decline curve analysis • Compared to today’s standards, Arps worked with very poor quality data in 1940 • Most associated gas was flared or vented • Arps recommended that oil production data be recorded monthly, but “smoothed” to twice a year where the monthly data was erratic • Those studying b factors between 1920 and 1940 would not have seen high b factors because: – They had mostly single layer, high permeability reservoirs, – They didn’t see decline trends until the well was at least 2 years old (=3 data points!) SPEE Monograph 4 Course Notes , June 4-8 2016 – Scott Wilson, Ryder Scott

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Weaknesses in Arps’ 1940s-era data • Very poor quality • Most associated gas flared or vented • Production data recorded monthly – “Smoothed” to twice a year where monthly data was erratic • Consistenly low b-factors – Mostly single layer, high-permeability reservoirs – No decline trends until the well was at least 2 years* old * only 3 data points! SPEE Monograph 4 Course Notes , June 4-8 2016 – Scott Wilson, Ryder Scott

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Theoretical values of Arps parameters Production rate decline of a system •

Constraints – Constant fluid and rock compressibility – Constant flowing bottomhole pressure (FBHP) – Radial flow in a horizontal direction – Homogeneous, isotropic formation – Constant porosity – Small pressure gradients – Single-phase flow – Fixed size (fully bounded flow) – No influx, injection or phase change

It is unlikely that any well has ever fully met the rigorous criteria required to mesh Arps decline equations to the reservoir engineering fundamentals of fluid flow and material balance SPEE Monograph 4 Course Notes , June 4-8 2016 – Scott Wilson, Ryder Scott

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Theoretical values of Arps parameters • Perfect linear flow will show….


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An example: 15,144 Barnett wells • All with b=2, changing dlim (effective limiting decline)


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Theoretical values of Arps parameters • A perfect linear system give b of exactly 2 (same as linear trend on sqrt(t) vs. 1/q) • A perfect bilinear system give b of 4 • Wells with a free gas surface in a homogeneous gravity drainage reservoir exhibit a b of exactly ½


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Flow regime changes will change well character


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Problems with Arps functional forms • Visual Bias on Semi-logs Plots


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Problems with Arps functional forms


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High b-factors with Arps functional forms


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Differences in b-factors when declines are shallow


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Cum production vs. time plot


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Rate-time and rate-cum plots


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Discounted future volume plot


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Higher data frequency shows well “personality”


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Aggregated data • Do the decline characteristics of one well look the same as that of a group of those wells?

• In this case, it is a mirror image! (a coincidence)


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ing for changing bhp


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ing for changing bhp


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Estimating bhp from whp


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ing for secondary phases


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Multisegment (modified hyperbolic decline) • Due to complex well history


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Multisegment (modified hyperbolic decline) • Due to reservoir characteristics (CBM example)


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Multisegment (modified hyperbolic decline) • Well events that create multisegment declines • Classic inflow performance…..


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Multisegment (modified hyperbolic decline) • Well events that create multisegment declines


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Multisegment (modified hyperbolic decline) • Well events that create multisegment declines


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Multisegment (modified hyperbolic decline) • Well events that create multi-segment declines


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Infill Interference in Np plot


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Using Type Curve Cross-plot peak rate vs EUR


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Summary • Characteristics of typical forecasts


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Summary – Recommended Practices • Use well-level, high frequency data • Plot all phases… in addition to casing, tubing and calculated FBHP. • Do not use hyperbolic exponents (b) higher that customary for the well and reservoir type • Use multiple-segment declines to for performancechanging events, • Determine terminal decline values (Dlim) from analogous wells. • Use a terminal decline rate (Dlim) on all hyperbolic forecasts.


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Application 1 – Horn River Shale Gas • • • • • • • •

Basic Decline Curve Analysis Theoretical Values of Arps Parameters Practical Use of Arps Alternate Plot Types Data Quality Aggregation Multi-Segment Decline Summary


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Field Overview – RTC NEBC

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Nexen Energy ULC has 60% WI and is the operator IGBC is our 40% WI JV partner

Field Activity Update – RTC NEBC APACHE

A-002-J

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• A-16-I & B-93-A (drilled Pre-2010 experimental scheme wells) • B-18-I • C-1-J (south) • B-77-H • D-37H (south) • C1J (north)

EOG

C-55-B

ENCANA

D-1-D APACHE APACHE

D-70-K

D-52-L

ENCANA

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In 2014, the north half of C-1-J pad (10 wells) was completed and commenced production in September/October

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No drilling took place in 2014 and the north half of D-37-H pad is planned to be completed at later day as per the AOP

D-70-J

APACHE

C-34-L

ENCANA ENCANA

At the end of 2013, there were a total of 61 wells producing from Dilly Creek:

B/C-63-K A-16-I

B-76-K DEVON

C-1-J B-18-I

B-99-G

B-77-H

D-37-H 93-A 42

Zooming in Nexen Activity – RTC NEBC

C-1-J North (On Stream 2014)

B-18-I (2010)

A-16-I (2009)

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In 2014, the north half of C-1-J pad (10 wells) was completed and commenced production in September/October

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No drilling took place in 2014 and the north half of D-37-H pad is planned to be completed at later day as per the AOP Current LNG Concept Select Stage evaluated

C-1-J South (2011)

B-77-H (2012)

• D-37-H NORTH (Drilled 2013; Not Completed yet

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Application 1 – Decline Curve Analysis • Different decline curve analysis methodologies are available: • Traditional Decline (Arps) (Figure 2) • Stretched Exponential • Duong • Multi-segment • Traditional Decline (Arps) with modified hyperbolic and terminal/limiting decline rate

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CK1J (C1J North) Log Log

HALF SLOPE

PERIOD SELECTED

Source : RTC NEBC 2015 Presentation

CK1J (C1J North) Selected Points

SELECTED POINTS

PERIOD SELECTED


CK1J (C1J North) EUR


BF77H (B77H Pad) Log Log

D37H SOUTH COMING ON

HALF SLOPE UNIT SLOPE

UNIT SLOPE

TUBING INSTALL

PERIOD SELECTED

BF77H (B77H Pad) Selected Points

SELECTED POINTS


PERIOD SELECTED

BF77H (B77H Pad) EUR


BB18I (B18I) Log Log

HALF SLOPE

C1J SOUTH COMING ON

DROP IN RATE UNIT SLOPE

UNIT SLOPE

HIGHER THAN UNIT SLOPE Source : RTC NEBC 2015 Presentation

PERIOD SELECTED

BB18I (B18I) Selected Points

SELECTED POINTS


PERIOD SELECTED

BB18I (B18I) EUR


Pad/Well/Formation Level – B77H/BH77H/Evie

Examples where analysis is incorrect


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Pad/Well/Formation Level – B77H/BI77H/Evie



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Pad/Well/Formation Level – B77H/BM77H/Evie



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Pad/Well/Formation Level – B77H/BP77H/Evie



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Lazy A Cotulla – Well Spacing Study

Source : 2015 OOGC Well Spacing Study Presentation

Application 2 – Decline Curve Analysis • Different decline curve analysis methodologies are available: • Traditional Decline (Arps) (Figure 2) • Stretched Exponential • Duong • Multi-segment • Traditional Decline (Arps) with modified hyperbolic and terminal/limiting decline rate 59

Application 2 – Stretched Exponential (SPE 134231) • Variation of traditional Arps Exponential Method • Better suited to Unconventional reservoirs due to its bounded nature • Benefit of the model is to give a finite value of EUR even if no abandonment constraints are used in time or rate

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Application 2 – Duong (SPE 137748) • Developed for Unconventional reservoirs with very low permeability • Shape of the curve is suited for well that exhibit long periods of transient flow • More conservative than Arps with hyperbolic b values >1

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Application 2 – Well Spacing – Lazy A Cotulla (ing Evidence/Diagnostic Plots)

• INFILL WELL – LOG LOG


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Application 2 – Well Spacing – Lazy A Cotulla (Modified Arps/Stretched Exponential)

• INFILL WELL • DCA


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Application 2 – Well Spacing – Lazy A Cotulla (ing Evidence/Diagnostic Plots)

• INFILL WELL LOG LOG


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Application 2 – Well Spacing/Lazy A Cotulla Duong • INFILL WELL

Extremely difficult to fit Duong applying Log Log


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Application 2 – Well Spacing/Lazy A Cotulla ASSUMPTIONS • Decline Curve Analysis is only valid when wells are subjected to constant bottom-hole pressures for a long period of time • For this study, Infill wells are only presented. Log Log plots have been used to validate flow regime identification. • With the help of Log log plots identification of linear flow is observed in the infill wells


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Application 2 – Well Spacing/Lazy A Cotulla DISCUSSION OF ALL APPLICABLE LEARNING/LEANING •

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Production can be characterized as having initial transient flow followed by BDF. Stretched Exponential Method assumes the reservoir is bounded with very short or negligible linear flow period, while Duong Method assumes the reservoir is not bounded with very long linear flow period. Arps is the single most often used as primary technique for forecasting existing shale gas wells, however the well needs to be at high drawdown against relatively constant flowing pressure which rarely occurs in the field. Arps with modified hyperbolic decline with terminal/limiting decline rate allows modeling not only the transient flow regime but also the Boundary Dominated Flow. Decline Curve Analysis should be constrained by other methods such as Rate Transient Analysis, Analytical Models and Numerical Models.


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Application 2 – Well Spacing/Lazy A Cotulla VALIDATION / RECOMMENDATION OF DIFFERENT APPROACH

• Stretched Exponential, Arps and Duong seem to constrain the wide variety of outcomes, however they have assumptions, limitations, advantages and disadvantages. • Other methods such as multi-segment or probabilistic approach should be investigated.


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Application 2 – Well Spacing/Lazy A Cotulla • •

Production Forecasts provide input to run economics /constrain the uncertainty in EUR estimation. Figures show results from Stretched Exponential and Arps respectively for an infill well.


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Application 2 – Well Spacing/Lazy A Cotulla

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Duong Methodology was very difficult to apply for the after infill case (The Initial character of the wellbore production decline after frac hit does not give a good and valid way to be modeled) Duong is considered very optimistic by assuming linear flow for the entire life of the wellbore production. Source : 2015 OOGC Well Spacing Study Presentation

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Acknowledgements (Review) • Ian McDonald, IQRE , Corporate Reserves • Charishe Amante, Analyst , Corporate Reserves

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