The production results of half of offshore oil and gas fields are not meeting appraisal expectations when they go onstream, according to a Westwood Global Energy Group study of 70 producing fields.
The appraisal benchmarking study shows that this is mainly due to unexpected subsurface reservoir issues encountered once field production begins.
What’s more, these issues might have been identified earlier on, and prepared for, if companies had used better field appraisal practices.
“Appraisal efficiency can be improved through an appraisal program that addresses the key uncertainties that will impact development design and field performance,” Westwood said. “Historically the appraisal phase of E&P projects has not had the attention it deserves. This study shows that this must change.”
The U.K.-based research firm said 70% of the fields it studied, which had limited appraisal, were not performing according to the operator’s development plan. Most of the subsurface risks subsequently identified could have been gated before the start of a project with more effective appraisal, it concluded.
The Westwood study said 84% of the assets not matching expectations suffered from issues related to reservoir production performance, with 51% related to reservoir volume estimates.
The most common causes of non-performance were:
- Inaccurate prediction of in-place hydrocarbon volumes (49%);
- Inaccurate prediction of pressure support due to misdiagnosed connectivity between producing wells and the water injectors or water-leg (42%); and
- Different reservoir quality than predicted (35%).
Westwood showed that field size, hydrocarbon phase, reservoir and trap types have little correlation with the effectiveness of the appraisal, with a similar proportion of fields matching, exceeding and below production expectations for all parameters. Some 70% of the fields with fewer than five reservoir penetrations were found to not perform as expected.
“There is still room for improvements in appraisal practices that can increase the chance of success of future upstream projects,” the firm said.
The efficiency and effectiveness of an appraisal program is only apparent once the field comes on stream, often many years later since offshore development has long lead times. A misunderstanding of the subsurface due to inadequate appraisal can have a catastrophic impact on subsequent production performance, reserves and value.
Westwood said 43 of the 70 fields in its dataset demonstrated deviations in reserves and/or production of greater than 10%, above or below the plan that was forecast when the projects were sanctioned to go ahead—due to unexpected subsurface issues.
Some 50% of the fields were subject to 2P (probable) reserves revisions after production started. Average reserves changes went up 68% for those requiring increases, but a negative 60% for those with decreases.