1

A brief report on the 3rd Expert Visit

to China Case Study

Exploration and Production Research Institute , SINOPEC

Southwest Branch Company , SINOPEC

20 June , 2005

2

Dr. Alfred Kjemperud20-24 April 2005Beijing, China

Modelling of Exploration Projects by Use GeoX 5.4

ContentsLecture

• Resource Assessment---General Principles• Play analysis methodology• Setting up GeoX5.4• Monte Carlo Analysis• General Prospect Evaluation• Risking of prospects and segments• Resource and Reserve Classification • Basic Economic Principles• Economic Modelling• Petroleum Fiscal Regimes • Risk Analysis and Exploration Economy

Exercise

• Demonstration A: Getting familiar with GeoX5.4• Demonstration B: Simple play analysis using GeoX5.4• Exercise A: Play analysis from a sedimentary basin• Exercise B: Simple prospect analysis from Sichuan basin• Exercise C: Prospect analysis (multiple segment analysis)• Exercise D: Economic analysis in spreadsheet based models• Exercise E: Deterministic full cycle modelling in GeoX5.4• Exercise F: Full cycle probabilistic analysis with emphasize on generating production curves• Exercise G: Probabilistic full cycle analysis using data from Sichuan basin• Exercise H: Fiscal modelling in GeoX5.4• Exercise I: gPortfolioV using Sichuan data• Exercise J: Economic analysis of plays

3

Benefit

1) Familiar with new functions and tools in GeoX5.4

2) Some new methods and concepts regarding the petroleum resource assessment and exploration economy have been introduced

Calculation of prospect numberPlay economic analysisMultiple segment analysisDHI riskingCorrelation of input dataProduction profile modelling

Application

1) Economic analysis of Xu2 play

2) DHI risking of Fengu prospect

3) Multiple segment anlysis of Dayuanbao and BailuchangProspects

4

Economic analysis of Xu2 Play

5

Source RockSource Rock TT33x, Tx, T33t+mt+m

Cap RockCap Rock TT33xx33 mudstonemudstoneTrap TypeTrap Type fracturalfractural--porousporousReservoir Reservoir LithologyLithology sandstonesandstonePorosity & PermeabilityPorosity & Permeability φφ=2=2--12%K=0.0212%K=0.02--10md10mdBuried DepthBuried Depth 45304530--4850m4850mProven Reserve in PlaceProven Reserve in Place 6.76.7××101099mm33

Upper Triassic Xu2 Sandstone Play

9

Step1 Calculating the Pool size distribution by rank ( gPlayR)

Step2 Economic evaluation for each prospect ( gFullcycle)

Step3 Economic analysis of Xu2 play (gPortfolioV)

6

Pool sizes by rank in Xu2 playMean(109m3) P90(109m3) P50(109m3) P10(109m3)

1 32.53 16.63 29.45 52.14

2 21.15 12.00 19.64 32.16

3 15.98 9.82 15.10 23.23

4 12.82 8.18 12.21 18.24

5 10.57 6.87 10.11 14.85

6 8.82 5.78 8.44 12.32

7 7.37 4.83 7.05 10.29

8 6.11 3.97 5.83 8.57

9 4.96 3.16 4.72 7.05

10 3.85 2.35 3.63 5.61

11 2.63 1.44 2.43 4.07

The details of gFullcycle analysis 1-11

7

Definition of portfolio value analysis in Xu2 play

The details of fullcycle analysis 1-11

8

Profiles of portfolio value analysis in Xu2 play

Parameters Mean F90 F50 F10

NPV(106 USD ) 604.6 469.2 590.3 742.5

Total Produced (106 OE) 52.8 43.3 52.0 65.7

Performance index of portfolio value analysis in Xu2 play

9

Estimation Problems

Could not locate the prospects calculated by pool sizes by rank in the map

Some input of economic parameters are extremely subjective

Project start yearTransportation cost etc.

DHI Risking of Fengu Prospect

10

XinchangK、J3P、J2S、

J2q 、 T3XDongtai

J3P

HexingchangJ3P、J2S、T3X

XiaoquanJ3P、J2S、T3x

YazhiheJ2q、 T3X

MajingK、 J3P

XinduJ3P

LuodaiJ3P、J2S

JingtangJ3P

ZhongjiangJ2S

FenguJ1Z、T3X

HuilongJ1Z

JingmaJ2S

WenjiangJ3p

XinshengJ2S

ChengduChengdu

MianyangMianyangDistribution map of gas fields and gas-bearing structures

The seismic amplitude map of B sand body in Xinchuan gas field

11

The μρmap of B sand body in Xinchuan gas field

The λρ map of B sand body in Xinchuan gas field

12

P(ind/ success gas and evaluated reservoir)Conditional probability of occurrence of the observed DHI given

that the prospect is a success gas accumulation with the evaluated reservoir

P(water)Conditional probability of finding water given that the prospect

is not a hydrocarbon accumulation

13

P(gas/DHI=present) = P(gas) P(DHI=present/gas)/ P(gas) P(DHI=present/gas)

+P(dry) P(DHI=present/dry)

Fengu prospect

Initial estimation with DHI

Succss Discovery(%) 36 62.8

Rec.Non Assoc. Resources (109m3) 14.3 14.3

Recovered Na Gas(%) 59 59

NPV (106 USD) 122.9 122.9

IRR (%) 36.2 36.2

EMV (106USA) 36.9 74.5

14

Multiple segment analysis of Dayuanbao and Bailuchang Prospects

15

Dayuanbao Prospect Bailuhang Prospect

Xu2 segment Xu2 segmentT2L segment T2L segment

Dayuanbao ProspectXU2 segment

P ( discovery,%) 32.3Ps (%) 31.7NA Gas Res. Resource (Mean 109m3) 18.7NPV (106 USD) 148.9IRR (%) 19.8EMV (106 USD) 41.4MER (106 USD) 10.2NTER (yr) 2.39

16

Dayuanbao ProspectT2L segment

P ( discovery,%) 15.9Ps (%) 15.2NA Gas Res. Resource (Mean 109m3) 31.8NPV (106 USD) 189.9IRR (%) 15.6EMV (106 USD) 11.8MER (106 USD) 32.3NTER (yr) 1.76

Bailuchang ProspectXu2 segment

P ( discovery,%) 32.3Ps (%) 26.8NA Gas Res. Resource (Mean 109m3) 8.03NPV (106 USD) 52.8IRR (%) 14.5EMV (106 USD) 4.14MER (106 USD) 10.3NTER (yr) 1.84

17

Bailuchang ProspectT2L segment

P ( discovery,%) 15.3Ps (%) 13.0NA Gas Res. Resource (Mean 109m3) 9.76NPV (106 USD) 58.4IRR (%) 13.2EMV (106 USD) -2.33MER (106 USD) 5.92NTER (yr) 1.53

Bailuchang Dayuanbao

In place resource (106m3 OE) 21.6 53.1Recoverable resource (106m3 OE) 9.50 25.1NPV (106 USD ) 13.2 87.7

18

Joint Segment Probability of Dayuanbao Prospect

Joint Segment Probability of Bailuchang Prospect

19

Play fractionals of Dayuanbao Prospect

Play fractionals of Bailuchang prospect

20

Conclusion

• Dayuanbao prospect has a better gas potential

•The probability that both Xu2 segment and T2L segment are discovery is very low

• Xu2 segment is the first priority for gas exploration