CHAPTER ONE

INTRODUCTION                                                           

1.1                                                                            BACKGROUND OF THE STUDY

         The total estimated amount of oil in an oil reservoir, including both producible and non-producible oil, is called oil in place. However, because of reservoir characteristics and limitations in petroleum extraction technologies, only a fraction of this oil can be brought to the surface, and it is only this producible fraction that is considered to be reserves.Therefore, reserves are said to be estimated remaining quantities of oil and gas and related substances anticipated to be recoverable from known accumulations based on analysis of drilling, geological, geophysical, and engineering data; established technology; and specific economic conditions (Vol. 1, Canadian Oil and Gas Evaluation Handbook). Thus, reserves must satisfy four criteria: discovered, recoverable, commercial, and remaining ( Cronquist, 2001).

         According  to Demiren(2005), The petroleum engineer is often faced with the challenges of accurately determining this volume of hydrocarbon that is contained and the volume that is economically recoverable. Petroleum reserves cannot be measured directly. They are estimates of future production under certain conditions which may or may not be well specified, but which include economic assumptions, knowledge of the feasibility of projects to extract the resources, and geological information estimation of oil and gas reserves for a field is continuous throughout the producing life of the field.These reserves estimates involve input on:

• Economics( information about current costs, prices and taxes, for ‘proven’ reserves; assumptions or predictions about future costs, prices, taxes, for other categories);
• Feasibility (the feasible development schemes, which assume development technologies available and environmental impact constraints); and
• Geology (the petroleum initially-in-place estimates and reservoir characteristics)

           The volume of hydrocarbon reserves is a primary component of an energy company’s value. Estimating that volume is a complicated, but essential and regulated part of the resource industry’s business. Unlike the estimates of oil or gas in place, which are estimates of oil or gas in place, which are estimates of physical measurements, estimates of oil or gas reserves are therefore really predictions of production in the foreseeable future, combined with the record of past production, if any.

           An accurate description of the volume of fluid present is very important in quantifying the resources and selection of production techniques, production rates and overall management of the reservoir throughout its life and also enhances adequate schedule control. The information obtained is also the basis for resource development and plan making.

           All reserve estimates involve uncertainty depending on the amount of reliable geological and/or production data available and the interpretation ofthose data. Because the geology of the sub-surface cannot be examined directly, indirect technique must be used to estimate the size and recoverability of the resources. While new technologies have increased the accuracy of these techniques, significant uncertainties still remain. These uncertainties reduce from the exploratory stage to the ultimate recovery and abandonment as a result of acquisition of more data that enhance description of the reservoir(Olatunige, 2007).

The level of uncertainty in making such estimates is affected by the following factors

1. Reservoir type,
2. Source of reservoir energy ,
3. Quantity and quality of the geological, engineering, and geophysical data,

4.  Assumptions adopted when making the estimates,

5.  Available technology, and

6.  Experience and knowledge of the evaluator.

The magnitude of uncertainty, however, decreases with time until the economic limit is reached and the ultimate recovery is realized.

Figure 1: Magnitude of uncertainty in reserves estimates ( Demiren,2005)

1.2STATEMENT OF THE PROBLEM

`          Due to the uncertainties and complexities that characterize accurate description of the volume of fluid present which forms a very important part of reserve exploration and development, adequate management of the reservoir, guide for selection of production techniques and rates, schedule control and also the basis for development policy and decision making and the consequent loss of revenue, resources, time and disruption of planned production rates and economic plans if wrong estimates are made, there is need for careful and adequate study to obtain values that would enable comparative study and reveal the parameters or factors that hinder accurate reserve  quantification, at the same time recommend a sequence that would address the problem.Estimation of reserve is necessary and imperative to the government as it influences the policies in the sector. Estimates of reserve are also needed in the acquisition of drilling rights. One key issue in reserve estimation is reducing the level of uncertainty in the values projected.

 No doubt, several research work have been carried out with high degree of success, but they may not have predicted rightly the causes militating against the wrong estimate commonly encountered and a reliable approach that  would adequately resolve it as it relate to oil fields.

1.3 PURPOSE OF THE STUDY

         This project is aimed at using the data that will be obtained from the oil fields in the Niger Delta to:

• Compare the volumetric and decline curve analysis methods in estimating reserves.
•  Compare the results obtained; identify possible reasons for variance.
• Identify the constraints and challenges in these methods of  hydrocarbon reserves estimation  that results in the discrepancies observed in the estimated values, their relevance, also to recommend a possible sequence of estimation approach for a particular type of reservoir for effective economic planning.

1.4 SIGNIFICANCE OF THE STUDY

It is expected that the analysis from this study will be useful in minimizing the various errors militating against precise reserve estimation resulting to underestimation or overestimation of reserve. It would also be able to recommend a more robust, cost effective and time saving approach and possible sequence that would enhance a more accurate determination of oilin place.

1.5 SCOPE OF THE STUDY

The scope of the study will be on: estimating hydrocarbon reserves by the study of  different methods which include; volumetric approach and decline curve analysismethods and also solves the problem of identifying the best or most appropriate methods to be utilized at different stages of the life of a property, availability of data and inherent reservoir properties. However, As a result of stringent measures in obtaining data from multi-nationals and the limited time for this research, only oil fields in the Niger Delta will be considered and the result and recommendations will be based on the data collected.