Original Economic Evaluation Technique For Quantification of Risk-Associated Multiple Parameter Uncertainty, with Probabilistic Application: Case Study of Delaware Basin Horizontal Stacked Shale Play Potential
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Publikationen: Thesis / Studienabschlussarbeiten und Habilitationsschriften › Masterarbeit
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TY - THES
T1 - Original Economic Evaluation Technique For Quantification of Risk-Associated Multiple Parameter Uncertainty, with Probabilistic Application: Case Study of Delaware Basin Horizontal Stacked Shale Play Potential
AU - El-Aayi, Yaseen
N1 - embargoed until null
PY - 2017
Y1 - 2017
N2 - The shale oil and gas revolution originated in days of more encouraging hydrocarbon prices, but the ensuing technological advancements in horizontal drilling and hydraulic fracturing, as well as a better understand of the reservoirs themselves have acted to transform the Petroleum Industry over the course of the past decades, and will continue to do so for decades to come. The increased attention to unconventional shale oil & gas plays is a result of innovative engineering and increased knowledge driven by research and development, allowing for these resource rich systems to be unlocked. This thesis begins by introducing reservoir engineering concepts associated with shale oil and gas, including total organic content (TOC), gas desorption, non-Darcy flow, the Klinkenberg Effect (gas slippage), and the governing equations for naturally fractured systems. For evaluation purposes, reservoir simulation techniques continue to improve for unconventional applications, but shale plays have no oil-water contact and are found to be so vastly extensive, heterogeneous and naturally fractured that accurate reservoir models have not yet been developed and made available for shale reservoirs. In North America, the standard technique for oil and gas economic evaluation continues to be well decline curve analysis (DCA), utilizing type curves and economic considerations to calculate a set of static economic results. Further, a sensitivity analysis can be conducted for the base case to determine the impacts of each parameter on the economic results. This thesis builds on the concept by developing a model capable of calculating a new net present value (NPV) resulting from the simultaneous modification of any desired input parameter. This includes oil and gas prices, price differentials, gas shrinkage, capital expenditures (CAPEX), operational expenses (OPEX), water disposal costs, over ridding royalty, combined production and ad valorem tax rate, abandonment cost, and oil, gas, and water production rates. This evaluation method is referred to as the 'El-Aayi Technique' and is capable of promptly deriving possible economic outcomes for minor as well as major adjustments made to all desired input parameters, with results exhibiting a reasonable error. The El-Aayi Model is further developed to incorporate Monte Carlo simulation by assigning ranges, distributions, and correlations for all desired parameters. The results illustrate the P90, P50, and P10 net present value probabilistic results. Although this work demonstrates the El-Aayi Method applied for the determination of a new net present value from modifications made to any combination of economic and production parameters, the Technique can also be applied to compute alternative economic indicators including reserves, discounted net present value, and rate of return. For the purpose of this thesis, the El-Aayi Technique is demonstrated through a case study of the Delaware Basin's horizontal stacked shale play potential. The Method is performed on the Wolfcamp and a comparison is made with the overlying Bone Spring (and Avalon combined) formation. Data is limited by actively producing, horizontal wells with beginning production between January 2016 and June 2017. A comparative analysis of the plays is conducted demonstrating relative performance results associated with reserves, economic results, and key driver. The work conducted in this thesis has applications for oil and gas operators, consulting firms, and financial institutions involved in the economic evaluation of petroleum assets (i.e. acquisitions and divestitures). In particular, those charged with modeling cases with high uncertainty or sensitive economics may benefit most from utilizing the El-Aayi technique.
AB - The shale oil and gas revolution originated in days of more encouraging hydrocarbon prices, but the ensuing technological advancements in horizontal drilling and hydraulic fracturing, as well as a better understand of the reservoirs themselves have acted to transform the Petroleum Industry over the course of the past decades, and will continue to do so for decades to come. The increased attention to unconventional shale oil & gas plays is a result of innovative engineering and increased knowledge driven by research and development, allowing for these resource rich systems to be unlocked. This thesis begins by introducing reservoir engineering concepts associated with shale oil and gas, including total organic content (TOC), gas desorption, non-Darcy flow, the Klinkenberg Effect (gas slippage), and the governing equations for naturally fractured systems. For evaluation purposes, reservoir simulation techniques continue to improve for unconventional applications, but shale plays have no oil-water contact and are found to be so vastly extensive, heterogeneous and naturally fractured that accurate reservoir models have not yet been developed and made available for shale reservoirs. In North America, the standard technique for oil and gas economic evaluation continues to be well decline curve analysis (DCA), utilizing type curves and economic considerations to calculate a set of static economic results. Further, a sensitivity analysis can be conducted for the base case to determine the impacts of each parameter on the economic results. This thesis builds on the concept by developing a model capable of calculating a new net present value (NPV) resulting from the simultaneous modification of any desired input parameter. This includes oil and gas prices, price differentials, gas shrinkage, capital expenditures (CAPEX), operational expenses (OPEX), water disposal costs, over ridding royalty, combined production and ad valorem tax rate, abandonment cost, and oil, gas, and water production rates. This evaluation method is referred to as the 'El-Aayi Technique' and is capable of promptly deriving possible economic outcomes for minor as well as major adjustments made to all desired input parameters, with results exhibiting a reasonable error. The El-Aayi Model is further developed to incorporate Monte Carlo simulation by assigning ranges, distributions, and correlations for all desired parameters. The results illustrate the P90, P50, and P10 net present value probabilistic results. Although this work demonstrates the El-Aayi Method applied for the determination of a new net present value from modifications made to any combination of economic and production parameters, the Technique can also be applied to compute alternative economic indicators including reserves, discounted net present value, and rate of return. For the purpose of this thesis, the El-Aayi Technique is demonstrated through a case study of the Delaware Basin's horizontal stacked shale play potential. The Method is performed on the Wolfcamp and a comparison is made with the overlying Bone Spring (and Avalon combined) formation. Data is limited by actively producing, horizontal wells with beginning production between January 2016 and June 2017. A comparative analysis of the plays is conducted demonstrating relative performance results associated with reserves, economic results, and key driver. The work conducted in this thesis has applications for oil and gas operators, consulting firms, and financial institutions involved in the economic evaluation of petroleum assets (i.e. acquisitions and divestitures). In particular, those charged with modeling cases with high uncertainty or sensitive economics may benefit most from utilizing the El-Aayi technique.
KW - unconventional
KW - shale oil
KW - shale gas
KW - shale play
KW - tight plays
KW - tight oil
KW - tight sand
KW - economic evaluation
KW - decline curve analysis
KW - production forecasting
KW - type curve
KW - sensitivity analysis
KW - oil and gas appraisal
KW - oil and gas evaluation
KW - single well
KW - economic parameters
KW - horizontal
KW - Permian
KW - Delaware Basin
KW - Wolfcamp
KW - Bone Spring
KW - Avalon
KW - Reeves County
KW - Loving County
KW - Eddy County
KW - Culberson County
KW - Lea County
KW - Pecos County
KW - Ward County
KW - Winkler County
KW - Texas
KW - New Mexico
KW - multiple linear sensitivity correlation
KW - MLSC
KW - DrillingInfo
KW - Aries
KW - @Risk
KW - net present value
KW - rate of return
KW - ROR
KW - NPV
KW - discounted NPV
KW - key drivers
KW - economic drivers
KW - reserve engineer
KW - economics engineer
KW - reservoir engineer
KW - acquisitions and divestitures
KW - economic model
KW - base case
KW - U.S. shale
KW - El-Aayi Technique
KW - El-Aayi Method
KW - El-Aayi Model
KW - Monte Carlo
KW - simulation
KW - P90
KW - P50
KW - P10
KW - distribution
KW - correlation
KW - probability
KW - probabilistics
KW - risk
KW - uncertainty
KW - uunconventional
KW - shale oil
KW - shale gas
KW - shale play
KW - tight plays
KW - tight oil
KW - tight sand
KW - economic evaluation
KW - decline curve analysis
KW - production forecasting
KW - type curve
KW - sensitivity analysis
KW - oil and gas appraisal
KW - oil and gas evaluation
KW - single well
KW - economic parameters
KW - horizontal
KW - Permian
KW - Delaware Basin
KW - Wolfcamp
KW - Bone Spring
KW - Avalon
KW - Reeves County
KW - Loving County
KW - Eddy County
KW - Culberson County
KW - Lea County
KW - Pecos County
KW - Ward County
KW - Winkler County
KW - Texas
KW - New Mexico
KW - multiple linear sensitivity correlation
KW - MLSC
KW - DrillingInfo
KW - Aries
KW - @Risk
KW - net present value
KW - rate of return
KW - ROR
KW - NPV
KW - discounted NPV
KW - key drivers
KW - economic drivers
KW - reserve engineer
KW - economics engineer
KW - reservoir engineer
KW - acquisitions and divestitures
KW - economic model
KW - base case
KW - U.S. shale
KW - El-Aayi Technique
KW - El-Aayi Method
KW - El-Aayi Model
KW - Monte Carlo
KW - simulation
KW - P90
KW - P50
KW - P10
KW - distribution
KW - correlation
KW - probability
KW - probabilistics
KW - risk
KW - uncertainty
M3 - Master's Thesis
ER -
