4D seismic and reservoir engineering, best friends or ... seismic and... · Definitions and Cautionary Note Reserves: Our use of the term “reserves” in this presentation means

Copyright of Shell U.K. Limited

4D seismic and reservoir engineering, best friends or annoying neighbours? – Examples from the North Sea

Mariano Floricich Shell U.K. Limited

1 October 2012

Definitions and Cautionary Note

Reserves: Our use of the term “reserves” in this presentation means SEC proved oil and gas reserves and SEC proven mining reserves.

Resources: Our use of the term “resources” in this presentation includes quantities of oil and gas not yet classified as SEC proved oil and gas reserves or SEC proven mining reserves. Resources are consistent with the Society of Petroleum Engineers 2P and 2C definitions and includes Oil Sands.

Organic: Our use of the term Organic includes SEC proved oil and gas reserves and SEC proven mining reserves excluding changes resulting from acquisitions, divestments and year-end pricing impact.

Identified Items: This presentation refers to Identified Items which have been excluded from CCS earnings and EPS calculations. Please see page 4 of the Quarterly Results Announcement for a listing of those items.

To facilitate a better understanding of underlying business performance, the financial results are also presented on an estimated current cost of supplies (CCS) basis as applied for the Oil Products and Chemicals segment earnings. Earnings on an estimated current cost of supplies basis provides useful information concerning the effect of changes in the cost of supplies on Royal Dutch Shell‟s results of operations and is a measure to manage the performance of the Oil Products and Chemicals segments but is not a measure of financial performance under IFRS.

This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell plc. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management‟s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell plc to market risks and statements expressing management‟s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as „„anticipate‟‟, „„believe‟‟, „„could‟‟, „„estimate‟‟, „„expect‟‟, „„intend‟‟, „„may‟‟, „„plan‟‟, „„objectives‟‟, „„outlook‟‟, „„probably‟‟, „„project‟‟, „„will‟‟, „„seek‟‟, „„target‟‟, „„risks‟‟, „„goals‟‟, „„should‟‟ and similar terms and phrases. Also included as forward-looking statements in this presentation is our disclosure of reserves, proved oil and gas reserves, proven mining reserves, resources, and all future estimates of refining capacity, oil and gas production, capital investment and expenditure, cash from operations, dividends, share buybacks and investments. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this presentation, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for the Group‟s products; (c) currency fluctuations; (d) drilling and production results; (e) reserve estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including potential litigation and regulatory effects arising from re-categorisation of reserves; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell‟s 20-F for the year ended December 31, 2008 (available at www.shell.com/investor and www.sec.gov). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this presentation. There can be no assurance that dividend payments will match or exceed those set out in this presentation in the future, or that they will be made at all.

The term “Shell interest”is used for convenience to indicate the direct and/or indirect (for example, through our 34% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.

The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation that SEC's guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.

Date 22/11/2012

http://www.shell.com/investor





http://www.sec.gov/

http://www.sec.gov/

http://www.sec.gov/

http://www.sec.gov/

http://www.sec.gov/

Let‟s start with a game...

Two identical boxes

One has half crayon inside

One has a full crayon inside

Question: Which box has the shortest crayon inside? (you cannot open the boxes)

The answer in a few minutes....

1 2

4D seismic interpretation

Building static/dynamic models and interpreting 4D seismic has been moving towards integration of all subsurface disciplines in the last 15 years

4 Date 22/11/2012

4D seismic – Integration is the key

Today subsurface disciplines work closely together to create the best representation of subsurface in a static/dynamic model

5 Date 22/11/2012

Geophysics

Geomechanics

Geology

Geostatistics

Geomatics

Reservoir Engineering

Petrophysics

Production Technology

Geochemistry

Well Engineering

....


OUTLINE

Introduction to 4D seismic

Back to the game...The answer!

Gannet-F – Big Value from a small field

Draugen – 4D seismic data identifies new infill targets in a mature field

Key learnings / concluding remarks

6 June 2012


What it is? Why we do it?

INTRODUCTION TO 4D SEISMIC 1.0

7 Mar 2011

Base 3D seismic survey

Principles of Time-Lapse Reservoir Imaging

Time

?

Monitor 3D seismic survey Base 3D seismic survey

“4D” time-lapse seismic measures changes in time

(changes in fluids, pressures, temperatures)

Principles of Time-Lapse Reservoir Imaging

Time

Why we do 4D seismic?

Reduce subsurface Uncertainty Drainage patterns Connectivity Compartmentalization Scenario choice

Improved static & dynamic model Better forecasts Better plans

Improve Field performance Better well positions (producers and injectors) Control existing wells to:

increase rates/UR, Avoid water breakthrough Reduce water/gas production

HSE Drill safely into partially depleted reservoir Blow-out monitoring Safe injection monitoring Safe disposal monitoring

Back to the game...

Two identical boxes

One has half crayon inside

One has a full crayon inside

Please, rise your hand if you think Box 2 has the shortest crayon inside

1 2

And the answer is .... Acquire 4D SEISMIC

Intuitively, we try to shake the box (i.e. send some vibrations to the earth) and listen (i.e. record the sound waves).

We do this two times, one for each box (i.e. at different production times)

We look at the difference in the sound to predict which one has the shortest crayon (i.e. look at the sound waves difference to assess changes in the reservoir).


GANNET-F: Big Value from a Small Field

2.0

13 Mar 2011

Gwilym Lynn, Christian Ellis, Jonathan Brain, Richard Parker, Gerd-Jan Lortzer and Sophie Michelet.

Shell U.K. Limited

UK


Gannet F

GANNET F LOCATION MAP

14 June 2012

Central North Sea field 180 km offshore Aberdeen Subsea satellite field to Gannet Alpha

platform First oil in 1997

Structural trap

Deep marine turbidite sands

Palaeocene and Eocene aged Forties,

Odin and Tay Sandstone Members


14 YEARS OF 4D AT THE GANNET CLUSTER

15 22 November 2012

E F

A

G

D

C

B

Seismic History First monitor: Gannet C 1998 Then 99(D), 00(ABG), 04(ABCDG), 06(EF), 08(D), 10(EF), 11(ABCG)

Water Sweep


GANNET F OVERVIEW

16 June 2012

OWC: 6644 ft TVDSS rim

100 mmstb Oil Initially In Place

Undersaturated Oil

38.9°API

Porosity: 28 % Permeability: 0.3 – 1 Darcy

Strong aquifer

2 producers drilled in 1997 and in 2006


STRUCTURAL CROSS-SECTION NORTH-SOUTH

17 June 2012


THE CASE FOR 4D – DERISKING INFILL OPPORTUNITIES

18 Mar 2011

2006 4D Signal GF-02 Production?

Horizontal well with likely protection from bottom water.

Production may have come from South

No target in N w/o 4D confirmation

Saddle area: good quality but thin sands (Forties & Odin).

Production effects likely from GF02

Down thrown blocks.

Originally targeted by GF02

– high sweep risk

Possible target area – high risk of

GF02 production effects

Flank target area – no

understanding of how far

aquifer has moved up dip

Southern area – too small;

possibly isolated

GF02 has been excellent producer but where to drill next ?


TIME LAPSE SEISMIC DATA OVER GANNET F

19 June 2012

Positioning Repeatability (Dsrc+Drec @ 1000m) for 2006 vs 2010

97 04 06 10

Baseline Production (GF01)

4D Swath Monitor Monitor 2 GF02

Summary

Repeatability good away from FPSO

Steerable streamers helped stay in the „tunnel‟ of acceptable feather and reduced infill to 2 lines

Dedicated 4D PSDM processing sequence for 3 vintages.

Turnaround < 3 months.

Excellent results with NRMS <11%

Triton arrives

Gannet E Gannet F

Triton FPSO

NRMS 1500-2500ms for 2006 vs 2010 0

0.5

repeata

bility

06-10

97-06

97-10

NRMS 10% 20%

100-2

00

0–50

>200

50-1

00

good o

k p

oor


4D RESULTS

20 Mar 2011

4D Quadrature Difference 2010-1997

W E

GF01

GF02

2006-1997

2010-2006

GF01

GF02

W E

W

E


4D RESULTS – MAXIMUM AMPLITUDE EXTRACTIONS

21 June 2012

1997-2006 2006-2010 1997-2010


4D RESULTS

22 June 2012

Southern Reservoirs 4D signal observed in individual

reservoirs. Interpreted to be signal of water

replacing oil. Requires a communication path between

reservoirs.

Forties Odin Tay

Water replacing Oil


CONNECTIVITY CONCEPTS

23 June 2012

Injectites

Erosional Contacts between Sands

Fault Sand-Sand Juxtaposition

Fault Vertical Conduit Damage Zone Flow

No Vertical Connectivity

4D

HM

DM

4D

HM

DM

4D

HM

DM

4D

HM

DM ?

4D

HM

DM

Forties Formation

Odin Fm

Tay Fm

HM – history match

DM – depositional model


CONNECTIVITY CONCEPTS

24 June 2012

Fault Sand-Sand Juxtaposition

Number of sand-sand juxtapositions through crestal faults

Provides a simple communication route between reservoirs

Considered the most likely mechanism to connect different reservoirs

Possible to history match

Depth Slice just

above OWC

S N


HISTORY MATCHING 4D SYNTHETIC SEISMIC

25 August 2011

Measured Synthetic


SUMMARY

26 June 2012

Time-lapse seismic data has generated significant value and enabled further

development at Gannet F by:

Optimal well placement to drain the main Forties accumulation

Identifying unexpected fluid flow between unpenetrated reservoirs

Inter-reservoir connectivity is interpreted to be dominated by sand - sand

communication through fault juxtaposition.

Integration with static and dynamic models, conceptual geological models

and other geophysical techniques has allowed further infill opportunities to

be identified, specifically targeting the southern reservoir units.


ACKNOWLEDGEMENTS

27 June 2012

The authors would like to thank the Gannet F field partners: Shell U.K. Limited and Esso Exploration and Production UK Limited for permission to publish.

We would like to acknowledge other past and present Gannet F team members for their contribution to the Gannet F Field Development.


DRAUGEN FIELD: WORLD-CLASS 4D SEISMIC DATA IDENTIFIES NEW INFILL TARGETS IN A MATURE FIELD

3.0

28 Mar 2011

Ingrid Kullberg, Jabeen Zainuddin, Rasa Venslovaite, Jorrit Glastra, Linzey Cartwright (A/S Norske Shell), Uwe Klein-Helmkamp (Sawarak Shell – formerly A/S Norske Shell), Raed Kawar (Petroleum Development Oman LLC - formerly A/S Norske Shell), Jon Brain (Shell U.K. Limited), Hans Dankbaar (Nederlandse Aardolie Maatschappij B.V.)

UK


Draugen Field information

29 NPF Kristiansand -March 2012

NPD Fact pages: Production start 1993

Reserves 68 MSm3

Original Field Life 20 years

Jurassic Rogn and Garn sands

Excellent N/G >90%

Good porosity ~30%

Excellent permeabilities 0.5-5 D

Large structure 22x8 km

Central platform wells

+2 subsea producers

Lateral water injection N/S

Aquifer support

Sattelites in west and south

Reserves today 143MSm3

4D played a large role


Undershoot picture

Seismic

Surveys:

1990

1998

2001

2004

2009

Water comes in from injection areas to the north and south.

Preferential flooding of the western side of the field compared to Dynamic Reservoir Model

Invalidates original A4 location – relocate – tested 12,200Sm3/day

Seismic difference

1990-1998

Different Dynamic

saturation

difference

scenarios

Updated Dynamic

model resulting in

different well

placement - testing

12200 Sm3/day

1998 – surprises and optimisation

4D seismic 1998-2001 – water progressing

North south balance

Drillling of 2 wells in the west in 2001

Drilling of 2 wells to the south in 2002

32 NPF Kristiansand – March 2012

Seismic difference1998-2001 Dynamic saturations modelled into

seismic1998-2001 Seismic difference1990-2001

4D seismic 2004 and 2009 : small attics forming 2004:

First Undershoot

Main water front continues to move towards the platform

Production in west and south

One well in west 2008

One well in south 2008

EastFlank appraisal not drilled

Seismic difference 2001-2004


2009:

Platform Undershoot

Main water front closes under the platform

East Flank showing 4D signal

Signal in Garn West


Reflection Seismic – 1990 data reprocessed in 2009 -

Quadrature of Difference – zero crossings above and below the blue loop are top and base of water flood


Top Spekk

Top Rogn

Top Garn

FITTING THE PUZZLE TOGETHER

90-98

98-01

01-04

04-09

90-09

2009: Integration between dynamic model and 4D seismic Use 2001-2009 difference, rather than 2004-2009 signal

As before: Dynamic results converted into Seismic (comparison in the seismic domain)

But now also Seismic into Dynamic as additional constrain

Difference maps

4D seismic inverted fluid volumes –> three maps



Saturation differences modelled into seismic dfferences (no noise) 2001-2009



Detailed Well Planning

36 NPF March 2012

Top Rogn Depth

Attic Thickness from 4D Seismic - hot is thick

Quadrature of Seismic Difference 2001-2009 (in time) – blue is water Saturation 2009 from dynamic reservoir model (in time) – hot is oil


SUMMARY

Must integrate all information

Four monitor surveys –

Each adding information and value

4th essential to attic drilling

Would not drill some of the wells planned for 2013 without it

Thank you to

my colleagues from A/S Norske Shell

and the Draugen license partners Petoro, BP, Chevron and Shell


KEY LEARNINGS AND CONCLUDING REMARKS

4.0

38 Mar 2011

Key learnings

4D time-lapse seismic has become a frequent tool for reservoir monitoring in the North Sea

Mainly for Paleocene/Eocene deepwater turbidites reservoirs

But also some examples from:

Cretaceous (chalk) reservoirs

Jurassic/Triassic reservoirs

4D time-lapse should become a frequent tool for asset optimization

Impact the right HSE and business decisions at the right time

Integration of all available information is key (easy to say but not always easy to do)

Key learnings: Integration and Close The Loop

We need to start with a good understanding of the 3D static subsurface model

Structure (i.e. Seismic interpretation, depth conversion, geological setting)

Facies and petrophysical properties (probabilistic seismic inversion for properties prediction)

Volumes in place (are those volumes supported by Material Balance?)

Seismic,

horizons,

properties in

time

Seismic,

horizons,

properties in

depth

Static

model

Dynamic

model

(upscaled)

T/Z

Logs CtL

Dynamic CtL

Log data

Structural CtL

Properties CtL

Close The Loops

Key learnings: Fast updates to reservoir models

We need to start with a good understanding of the 3D static subsurface model

Structure (i.e. Seismic interpretation, depth conversion, geological setting)

Facies and petrophysical properties (probabilistic seismic inversion for properties prediction)

Volumes in place (are those volumes supported by Material Balance?)

The challenge is to generate workflows that allow fast and efficient updates of static and dynamic models every time new data arrive (i.e. 4D seismic inversion to update history matched dynamic model)

Acknowledgements

I would like to thanks many of my colleagues at Shell:

Dave Kemshell, Helmut Friesacher, Cees Corsten, Jonathan Brain, Gwilym Lynn, Christian Ellis, Richard Parker, Gerd-Jan Lortzer, Sophie Michelet, Ingrid Kullberg, Jabeen Zainuddin, Rasa Venslovaite, Jorrit Glastra, Linzey Cartwright, Uwe Klein-Helmkamp, Raed Kawar, Hans Dankbaar

Thanks to the Gannet-F and Draugen teams for their contributions

Thanks to the Gannet-F field partners (Shell U.K. Limited and Esso Exploration and Production UK Limited) and Draugen field partners (Shell, Petoro, BP and Chevron) for permission to publish


Q & A

43 June 2012

Documents

4D seismic and reservoir engineering, best friends or ... seismic and... · Definitions and Cautionary Note Reserves: Our use of the term “reserves” in this presentation means