Regional reserves growth shows decline in annual rate of increase

Reserve growth comprises added resources in existing fields and new discoveries once they enter development.² Increases are refined during the field's life cycle. Studies in geology and engineering achieve reserve growth by several means:

• In known accumulations, improved recovery efficiency increases reserves and provides updated parameters for reserves computation.

• Continued exploration and appraisal expand reserves.

• Development drilling adds new discoveries, i.e. new pools and reservoirs.³

Techniques such as infill drilling, well stimulation, completions of bypassed zones, and recompletions are crucial to reserves growth. Quantitative evidence shows that a complete assessment of global resources requires a forecast of future reserve growth potential.

Reserves increases for countries or specific regions are quantified by a combination of the previous year's reserves, adding reserve growth, and new discoveries. Based on the study presented in this article, reserve growth volume has been higher than new discoveries' volume for the past 10 years.

Geological conditions and recovery efficiencies differ across regions. A precise forecast cannot rely on one reserve growth model. Our 2010 assessment studied factors influencing reserve growth in different regions of the world (Table 1). The petroleum resource-management system developed individual models for each of the dominant regions:

• North America.

• Former Soviet Union (Commonwealth of independent states or CIS).

• Northern Europe.

• Oceania.

The Oceania model assesses reserves growth of Australia, New Zealand, and Papua New Guinea (Fig. 2). The models provided a refined forecast of reserves growth when compared with the USGS 2000 report.⁴

Analogous assessment

The USGS reserve growth forecast with individual accumulation analysis in 2012 included considerations for recoverability and uncertainty in its assessment (Fig. 3).² Resulting reserve growth is represented by total production plus remaining and recoverable reserves.

The forecast presented in this article is based on the US reserve growth assessment. The method used generates probability distribution of reserves recoverability based on 68 US oil accumulations. It then applies this sampling distribution to oil accumulations outside the US, yielding a reserve growth of 665 billion bbl of oil, 40 tcm of natural gas, and 16 billion bbl of natural gas liquids.⁵

Geological conditions and reservoir engineering differ across regions. A direct application of the US assessment method will lead to biased results for reserve growth in other countries. More importantly, the USGS model does not consider time aspects in its forecast, which limits its usefulness in making reserve growth estimates for the next 10-30 years.

In the US, 70% of potential reserve growth is found in 68 assessed individual oil accumulations.⁶ Globally, giant fields (>500 MMboe) in 2014 numbered 1,186 and made up 74% of the world's recoverable 2P conventional reserves. This distinction highlights the importance of regionally focused reserve growth.

New assessment

The reserves growth assessment presented in this article classifies global oil and gas accumulations into eight regions:

• CIS.

• North America

• Europe

• Latin America

• Middle East

• Africa

• Asia

• Oceania

Our research applied a statistical method to build reserve growth models for each region and forecast growth to 30 years.

The study applied USGS's model to North America and the segment-accumulation multiple to build reserve growth models based on changes in recoverable reserves for giant fields in the remaining regions. These new models provide predictive rates of increase on a regional basis, making forecast results more credible.

Applied method

The segment-accumulation multiple method overcomes shortages and discontinuity of data inherent to historical reserves, especially in giant fields. The process begins with selection of a giant field with relatively abundant reserve history; i.e. data from IHS, Carbonates and Clastics Reservoirs Co., and the American Association of Petroleum Geologists. For each region our method:

• Built a database using available information.^7-10

• Calculated the age of each accumulation by years since discovery.

• Summed the recoverable reserve from each year's report.

Because reserve data is often sparse, we segmented computations of reserve growth factors in different stages for each oil and gas accumulation in the database. This process yielded a primary reserve growth factor (PGF). The weighted reserve growth factor (WGF) was computed from the summary statistics of PGF for oil and gas accumulations of similar age. Outliers were tossed out in summary statistics. We then used the cumulative multiple of WGF in consecutive segments to obtain the cumulative growth factors (CGF).

For example, as shown in Equation 1 (see box), the Halfaya oilfield in the Middle East is 17 years old, and its reserve growth in 30 years CGF (i, i+30) is the multiple of 6 consecutive WGFs.²

We applied regression analysis on CGF to build reserve growth models for large petroleum accumulations in each region (Fig. 4). The regression curves use the form described by Equation 2 as the curve with the best fitness results, where YSD is the number of years since discovery.¹ Table 2 summarizes Equation 2's regression parameters.

Assessing 30-year growth

IHS has 28,660 oil and gas fields in its database. By applying power functions (Equation 2) as a projection model to these fields in their corresponding region, we obtained the multiple of initial estimate of each field in the predicting year.

For example, a field was discovered in 2000 with recoverable reserve of 160 million bbl of oil reported in 2013. We calculated the ages of the field in 2013 by subtracting the year of discovery, i.e. 2013-2000=13, and continued this process through 2044. We then input these ages into a projection model for their corresponding region, which forecast multiples of initial estimates from 2014 to 2044 (factors of 2.2-3.6), generating reserve growth estimates for the next 30 years.

We then calculated recoverable reserves in 2014 (160 × 2.4/2.2=174.5 million bbl), and with the same method 2044 reserves equaled 261.8 million bbl. For the field in this example, 30-year reserves growth is 87.3 million bbl (difference of 261.8-174.5). As a final step, we summarized growth for each oil and gas accumulation within each region and then globally (Table 3).

North American reserves include only Alaska and US Federal Waters in this assessment. The conterminous states were excluded due to limited field data.

Based on our most recent assessment, recoverable reserves of hydrocarbon liquids equaled 2,851 billion bbl in 2014 and will increase to 3,461 billion bbl by 2044, a 21% increase. The Middle East will provide the largest increase, with 208 billion bbl added throughout the period. Latin America follows with growth of 181 billion bbl.

For natural gas, recoverable reserves equaled 329.9 tcm in 2014 with a 30-year forecast of 416.4 tcm, an increase of 86.5 tcm.

Forecast differences

Comparison among three forecasts-the USGS 2000 report, our previous 2010 forecast, and this current assessment-shows that world reserves' annual rate of increase is slowing.

The USGS estimated in 2000 a reserve growth of 654 billion bbl for oil and natural gas liquid in the next 30 years, based on 1993 recoverable reserves of 1,466 billion bbl, and an annual growth rate of 1.49%. Our 2010 assessment estimated an annual rate of 0.99%. The current assessment shows an annual growth rate of 0.71% (Fig. 5).

Similar results occur for natural gas, with the USGS estimating an annual growth rate of 2% in 2000, our 2010 assessment growth of 1.41%, and the current assessment's growth rate, 0.87%.

We also compared our result with the results of USGS's 2012 assessment. This report covered reserve growth for fields' entire life cycle, while our research estimated growth for the next 30 years. The USGS estimated reserve growth to be 723 billion bbl. Our current assessment estimates reserve growth to be 610 billion bbl, 16% lower than USGS's 2012 estimate.

Results analysis

Future reserve growth modeling will incorporate specific factors such as geological conditions and recovery technologies. As reserve growth models become more refined by regions representing different growth rates, the average rate of reserve growth will continue to decrease.

In addition, the rate of decrease will be more obvious for natural gas, suggesting reserve growth is lower for regions outside the US. Reserve volumes and the rate of increase in recent years may not provide the same stable growth as in earlier years. Reserve growth models will continue to be tested against known and developing fields and future investments in oil and gas exploration.

Acknowledgment

This study was underwritten by the National Science and Technology Major Project (No. 2011ZX05028-001-12), Chinese Ministry of Science and Technology. The authors would like to thank professor Zhou Huayao and professor Bai Guoping at China University of Petroleum, Beijing, who participated in the modeling presented in this study. The authors also wish to thank professor Tian Zuoji and Dr. Wu Yiping at the Research Institute of Petroleum Exploration and Development, PetroChina, for their assistance with data analysis and processing.

References

1. Klett, T.R., Cook, T.A., Charpentier, R.R., Tennyson, M.E., and Phuong, A.L., "U.S. Geological Survey Assessment of Reserve Growth Outside of the United States: Scientific Investigations Report 2015-5091," USGS, Dec. 21, 2015.

2. Klett, T.R., Attanasi, E.D., Charpentier, R.R., Cook, T.A., Freeman, P.A., Gautier, D.L., Le, P.A., Ryder, R.T., Schenk, C.J., Tennyson, M.E., and Verma, M.K., "New U.S. Geological Survey Method for the Assessment of Reserve Growth: U.S. Geological Survey Scientific Investigations Report 2011-5163," Nov. 8, 2011.

3. Wu, Y., Tian, Z., Tong, X., Bian, H., Zhang, Y., Xue, Z., and Zhao, L., "Evaluation method for increase of reserves in large oil-gas fields based on reserves growth model & probability analysis and its application in Middle East," Acta Petrolei Sinica, Vol. 35, No. 3, 2014, pp. 469-79.

4. Yu, G., Xu, J., Tong, X., and Chen, M., "Study on the reserve growth of known oil and gas fields in the world," Earth Science Frontiers, Vol. 21, No. 3, 2014, pp. 195-200.

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6. Klett, T.R., Cook, T.A., Charpentier, R.R., Tennyson, M.E., Attanasi, E.D., Freeman, P.A., Ryder, R.T., Gautier, D.L., Verma, M.K., Le, P.A., and Schenk, C.J., "Assessment of Potential Additions to Conventional Oil and Gas Resources in Discovered Fields of the United States from Reserve Growth," USGS Fact Sheet 2012-3108, Aug. 14, 2012.

7. Halbouty, M.T., "Geology of giant petroleum fields," AAPG Memoir 14, 1970.

8. Fitzgerald, T.A., "Giant oil and gas fields of the decade 1968-1978," AAPG Memoir 30, 1980.

9. Halbouty, M.T., "Giant oil and gas fields of the decade 1978-1988," AAPG Memoir 54, 1992.

10. Halbouty, M.T., "Giant oil and gas fields of the decade 1990-1999," AAPG Memoir 78, 2003.

The authors