A Rationale for Reservoir Management Economics
- T.S. Hickman (T. Scott Hickman and Assocs. Inc.)
- Document ID
- Society of Petroleum Engineers
- Journal of Petroleum Technology
- Publication Date
- October 1995
- Document Type
- Journal Paper
- 886 - 890
- 1995. Society of Petroleum Engineers
- 5.7.5 Economic Evaluations, 5.4.1 Waterflooding, 5.1.5 Geologic Modeling, 5.8.7 Carbonate Reservoir, 1.6 Drilling Operations, 5.1 Reservoir Characterisation, 7.10 Capital Budgeting and Project Selection, 5.7.2 Recovery Factors, 5.4.2 Gas Injection Methods, 5.5 Reservoir Simulation
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Significant economic benefits can be derived from the application of reservoir management. The key elements in economical reservoir management are the efficient use of available resources and optimization of reservoir exploitation through a multidisciplined approach. This paper describes various aspects of and approaches to reservoir management and provides case histories that support the findings.
The genesis of this article was my participation in an SPE-sponsored reservoir management seminar in 1992. The invitation to speak on the economics of reservoir management arose from my experience in evaluating reservoir exploitation projects. However, after some reflection, I began to have doubts concerning what the economic considerations unique to reservoir management were. Reserve evaluations are not handled differently just because reservoir management is involved. Likewise, economic hurdle rates are unique to the particular company and have nothing to do with the study process. In a previous seminar, methods of financing projects were discussed. This was interesting but not normally the direct concern of those involved in reservoir management. What then are the unique economic aspects of reservoir management, if any? The answer seemed to lie within the reservoir management process itself.
What is reservoir management? Haven't reservoir engineers been doing this for years? Why all the hype about something that's not a new technology, not even a new concept? Most literature on reservoir management is centered around exploitation of large reservoirs in frontier areas of the world. Does reservoir management have a meaningful role in small reservoirs or mature producing basins? The leading advocates of reservoir management are usually experts in numeric simulation. Is reservoir modeling the essence of reservoir management? Only as these issues about the nature and use of reservoir management were examined did a rationale for the economic aspects develop.
What Is Reservoir Management?
Perhaps this question has been best answered in the negative. Reservoir management is neither a new technology nor the latest management consultant buzzword to justify corporate reorganization. While philosophical aspects to reservoir management exist, it is not an attempt to introduce Japanese management philosophy into petroleum engineering (e.g., total quality management).
Reservoir management has been described as (1) repackaging existing technology, (2) managing advanced technology, (3) long-range/strategic planning, (4) team approach to problem solving, and (5) common sense. All of these contain an element of truth.
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