Managing Risks Using Integrated Production Models: Applications
Authors: Chow C.V. , Arnondin M.C. , Wolcott K.D. , Ballard N.D. 
Published: June 2014

Technology Today Series articles are general, descriptive representations that summarize the state of the art in an area of technology by describing recent developments for readers who are not specialists in the topics discussed. Written by individuals recognized as experts in the area, these articles provide key references to more definitive work and present specific details only to illustrate the technology. Purpose: to inform the general readership of recent advances in various areas of petroleum engineering.

This paper presents applications of an asset-management analysis process that helps quantify and manage uncertainty to aid strategic decision-making over the life of a field. The dynamic and iterative nature of the process and tools allows for rapid, quantitative systems analysis of the impact of a wide number of options with their associated uncertainty. The result is a robust method to understand the risks and potential value of the prospective enterprise on an ongoing basis through development, operation, and expansion phases. Application of the process over the entire life cycle of an asset is discussed and illustrated with two case histories.

Introduction

The risk-based integrated-production-model (RIPM) analysis process was developed to help quantify and manage uncertainty during development, infrastructure implementation, and operation of a field project. The process quantifies the impact of subsystem (i.e., reservoir, well, or facility)performance with associated uncertainty on the entire system to facilitate strategic planning and decision-making. It is based on fundamental principles of integration, quantification, and validation: integration to evaluate anoption's effect on the entire system; quantification to compare several options on a consistent, absolute basis; and validation to define uncertainty and strategic avenues for improvement.

Ref. 1 introduced the concepts and tools used in the RIPM process, which uses dynamically linked (i.e., without user interface) models of the subsystems, called an integrated production model (IPM), to evaluate system performance quickly. Risk caused by uncertainty in assumptions, data, (e.g., physical parameters, economic data), or the model is also quantified when appropriate and integrated with the IPM to give an RIPM. The result is aniterative process that quickly evaluates alternative options for design and reacts to new data during implementation or operation phases of a project over the life of an asset.

This paper discusses application of the process over an asset's life cycle, presents process features required at different stages of the life cycle, and illustrates applications of the process with two case histories.

Range of Applications

As an asset advances through its life, changes can occur in the key technical and business drivers, uncertainty magnitude, and nature of operations. A flexible analysis process is needed to provide a common framework to guide decision-making over the asset life stages without hindering the asset's optimization. In development, where analysis focuses on design and planning, the process should quantify the system constraints and the system drivers for a multitude of options and their associated uncertainties. Otherwise, the design may be based on limited, previous experience, potentially resulting in many lost opportunities. In infrastructure implementation, where analysis focuses on validation and reducing uncertainty, the process should quickly identify both the local and global (system) impact of data collected and strategic forward direction if change is required. Otherwise, the tendency is either not to react or to overreact to new data, resulting, respectively, in the loss of key opportunities to enact change or inefficiency from waste. In operation, where analysis focus is on production and optimizing the value extracted, the process should quantify and validate performance and identify opportunities and risks. The tendency is to manage field events reactively rather than proactively and to extract value through passive inaction rather than through active optimization.

The RIPM process has the necessary features to provide the common framework described.1 It is applicable at different phases of an asset's life and can affect a wide range of decisions required during that time (Fig.1).Field Development. Evaluate various development scenarios and identify key system drivers.Field Evaluation and Expansion. Identify and optimize opportunities for expansion.Field Operation and Maintenance. Identify uplift opportunities, manage operations, and set depletion strategy with a proactive, fact-based approach.Field Acquisition or Exit. Quickly evaluate opportunities to acquire and dispose of assets.

Ideally, the RIPM process should be used to create a living model to manage a field during all phases of its life. The process is applied with an IPM to assess the potential value of a new or existing field and to examine design options with associated risk for field development. Local and global performance predictions, base assumptions, and input data are validated as subsystem designs are implemented and forward strategy is set. Validated models are then used to develop, monitor, and update depletion plans. The IPM is used throughout the operations phase to optimize daily production through maintenance of base decline and identification of uplift opportunities. Plans for field redevelopment or expansion result as opportunities to optimize extracted value through capital expenditure are identified. Finally, as value extraction approaches an economic limit, decisions on when and how to harvest the value can be assessed.