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| Please
take a quick moment to answer 2 survey questions and we will provide
a summary of the confidential responses in the next issue. |
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Last month we received 90.4% of our survey respondents indicating they were employed by Independents and 9.6% by Majors. We also received responses indicating that 85.4% of those that responded used rate of return as their discount rate for evaluating drilling and acquisition transactions. See Mike's Discussion Points. We will talk next issue about the correct application of ranking investment opportunities and the benefits and pitfalls of using one over the other. |
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| Did
you know you could use DST data to analyze basins or regions to identify
prospect leads? |
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CEC Energy Consultants assisted Tulsa-based Helmerich & Payne in the identification and evaluation of merger candidates, which resulted in a successful merger of H&P with Denver-based Key Production to form Cimarex Energy. CEC Energy Consultants combines with Rike Services to provide the US Commerce Department with training courses for Russian Oil & Gas Executives in the area of Concession Negotiation, Risk Assessment and Mitigation, and modern Economic Evaluation processes. CEC Energy Consultants combines with Rike Services to assist TotalFinaElf in providing 8-week training courses to train Indonesian nationals to become Well Operations Supervisors. |
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Let's
talk about a novel way to use industry software to identify acquisition
and drilling prospect leads. You can do this by obtaining an "equivalent"
or pseudo-kh value for each well in a region or basin. You can easily
obtain an equivalent pseudo-kh number without having to look at one
log, perform one calculation or obtain one core sample. Coming up
with a pseudo-kh number would allow you to identify anomalies that
may provide significant reserves. We all realize the benefit of having
a kh number for each well and productive interval in a field, basin
or region, but how many man-hours would that take, and how much money
would it cost? If we had such a number for each well in each productive
zone, we could create kh isopach maps that could overlay EUR maps
and immediately identify anomalies that might be worth pursuing as
acquisition or drilling prospects. If you were to perform this procedure
on your company's acreage position, recompletion or workover prospects
might also be developed, not to mention enhancing proved reserves
of the company's assets. The problem that exists with the old-fashioned way of obtaining kh is that it would take many people to perform this function, especially for an entire basin. If many geologists were looking at each log for the "h" part of the equation, it is obvious they each would not pick thickness in exactly the same way on each well, thus introducing some error to your effort. There are many problems associated with the picking of a porosity value or permeability number for the other part of this exercise, and the errors that would result are too numerous to go into in this article. Well it becomes obvious, this would be a difficult task to accomplish, and the answer you would get may be riddled with many sources of errors that would greatly taint your views when interpreting the results. But rather than use the tedious, old-fashioned method, acquisition and drilling prospect leads can be more efficiently generated by calculating pseudo-kh values. As you know, Darcy's radial flow equation exists in the following form for an oil well, which can also be used for gas wells with the gas form of the equation: Q = (7.08)(kh)(ΔP) / (Bo)(V)(ln re/rw) We can rework this equation slightly to produce the following results: Q/ΔP = (7.08)(kh) / (Bo)(V)(ln re/rw) This equation is normally recognized as the PI equation or the Productivity Index for a well. The only variable that really changes significantly enough to effect productivity on the right side of this equation, is kh, which is why kh is directly proportional to productivity of a reservoir. Therefore, a new way to come up with a pseudo-kh value is to use industry software such as Geoplus' Petra or Landmark's Geographix to perform this procedure in a very short order. There may be other software available that may do the same thing and equally as well, but I only mention these two due to my own personal experience with each of these, and the fact that they are fairly familiar packages in most engineering and exploration shops. Thus, you only need to use the program to create a zone that calculates the first two years of cumulative production (equivalent kh) for each well in each productive interval you are interested in evaluating. You can then use the statistical analysis aspect of the software to determine the min and max of the data to normalize your results, so that your results might be a number from 0-100, instead of bbls or mcf. You can then map this data just like you would if it were a real kh value and compare it with EUR's to look for anomalies that stand out for further evaluation. The normalized first two years of production gives you a very good value that relates directly to overall productivity and kh, and an excellent indicator of EUR's and/or permeability. This method is a much better indicator than cum's or IP's, that continue to be commonly used in the industry. This method's obvious limitation is application to new wells and wells that had restricted flow in early life. I have made a comparison of these computer generated pseudo-kh numbers vs EUR's in many detailed field studies and have found the results to be surprisingly similar to laboratory and log-calculated results. This method should only be used as a screening device, but once prospect leads are developed, further land, geologic and engineering expertise can be applied. There are also many other things you could also do with Darcy's equation such as calculating a PI or estimating theoretical production for each well, and comparing those values to actual producing flow rates, or applying the same principles outlined above to identify anomalies. I will talk more about these exercises in upcoming articles. I hope these few ideas will bring new inspiration and success in your quest to find oil and gas with today's technological tools. Lastly, I want to apologize for our last issue coming to you several times. We were attempting to test all of the email addresses in our database before we made our first publishing, and were assured the database software wouldn't actually send a copy of the newsletter but only test each email address in the database, but as we became painfully aware, that was NOT true. Hope to see you at the SPE annual conference in Denver or the AAPG Mid-Continent meeting in Tulsa later this month. Best Wishes! Mike Cherry, P. E. |
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|
A&D
Highlights |
| United
States Exploration to be Acquired by DGL Acquisition Corp for $53.3
million Unocal to Sell Gulf of Mexico Fields to Forest Oil for $295 million |
|
News
Highlights |
| Statoil
appoints new Chief Financial Officer Court Sides with Counties on Oil & Gas Drilling Rules |
|
Upcoming
Events |
| SPE
Annual Technical Conference October 5-8,2003 Denver, Colorado 2003 Oil & Gas Investment Symposium October 7-8, 2003 San Francisco, California AAPG Mid-Continent Conference October 13-15, 2003 Tulsa, Oklahoma |
| CEC
Energy Consultants 6700 Woodlands Parkway Suite 230-304 The Woodlands, Texas 77382 Office - 281.298.9961 Fax - 281.419.1046 Cell - 713-502-9235 www.CECEnergyConsultants.com Mike.Cherry@CECEnergyConsultants.com |
| Since
1999, CEC Energy Consultants has been an engineering
project management firm that allows you to outsource operations, engineering,
and business development projects while maintaining project control.
Outsourcing maximizes your profitability by allowing you to allocate
your key employee personnel to the company's strategic projects, ensuring
operational success and safety. CEC uses industry software such as Geoplus Corporation's Petra Workstations for both geologic and engineering functions, to enhance the identification of new business development opportunities with existing or newly acquired assets. Petra is unparalleled in its ability to build isopach maps and log cross-sections, but more importantly from an engineering standpoint, to analyze and screen public data sources for acquisition and drilling prospect leads as well as other advanced geologic and engineering functions. CEC Energy Consultant's expertise in using the latest technology application tools will result in reserve additions and well productivity enhancements to your asset base. Visit our website to learn more about CEC Energy Consultants incredible new technological, engineering and operations capabilities. If you feel this newsletter would be of benefit to someone you know, please feel free to forward a copy as well as distribute anything I make available in these newsletters to your staff and employees. |
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Do
you realize you can now identify high profitability acquisition
candidates within a matter of days and not months? It is easy to
use industry software to calculate Bcf/1000 psi or MMbo/1000 psi
for each well and productive interval in an entire basin and essentially
come up with a Productivity Index (PI) that you can analyze and
map, to enable you to find acquisition candidates. You can even
accomplish this without having any EUR's to work with. These comparisons
will result in acquisition candidates that will outperform all your
previous acquisition transactions. Expand your horizons and learn
some new skills, that will enable you to use industry software to
help make you a more efficient oil finder. Stay tuned and next time
we will show you how. |
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| Rike
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SPE Annual Conference October 5-8, 2003 Denver, Colorado Booth 145 AAPG Mid-Continent Conference October 13-15, 2003 Tulsa, Oklahoma Speaker on “Using Industry Applications Software for Analyzing Data to High Grade Acquisition and Drilling Prospects” |
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