Improving Efficiency Through Reservoir Modelling And Production Simulation
Authors: Cope Gordon 
Published: March 2010

In 1997, Mark Smith was exploration manager of Rigel Petroleum UK, and one of the senior executives responsible for overseeing the company's North Sea exploration program. "Out in the North Sea, a rank wildcat can have a success rate of only one in ten," he notes. "Even when you make that discovery, there's still quite a bit of risk with follow-up wells, and if you can manage 50﹪ success, then you're doing quite well."
Rigel (which was purchased by Talisman in 1999) and its partners were drilling an offshore license east of Scotland when one of their wildcat wells penetrated a secondary reservoir in a lower Cretaceous sand. "We had limited well control, and it was a tough little sand to follow," recalls Smith. "No question about it, it was very high risk."
Wells in the North Sea can cost up to $14 million to drill, so there is very little room for error. "We needed to know as much as possible about the target," says Smith. "Using IESX (GeoQuest'seismic interpretation software application), we were able to derive critical data like the gas/oil/water contacts, reservoir thickness and erial extent, as well as defining porosity and permeability." Like thousands of other geoscientists around the world, Smith relies on state-of-the-art technology to do his job. In addition to Schlumberger's GeoQuest and Merak software divisions, petroleum exploration and production (E&P) software is marketed by a score of international companies, including Landmark, Paradigm, and GMA.
Most of the software is UNIX based, or typically runs on a highend PC, with 256 Mb of RAM. Depending on the number of users and applications, the software purchase price per license can range from under $50,000 to over $200,000; commonly with a 15 " 18﹪ maintenance fee. Training is generally available, and is conducted in sessions running from one day to one week. Most vendors also maintain help-desk services.
High-end 3D reservoir characterization and geocellular modelling software has proven very valuable in the industry. "There's been a lot of adoption over the last five years," reports Anne Siw Uberg, marketing manager for GeoQuest. "The medium-sized companies are really pushing the boundaries. I'd say about two thirds of all medium-sized and larger companies are quite heavily into this technology, one way or another. These days, every new reservoir discovered has to go through this evaluation process." he tremendous growth in third-party E&P software can be traced back to a decision by major oil companies to focus on their core competencies.
Over the last decade, oil companies have re-evaluated their internal business models in order to be more competitive in the capital markets. Where once they looked upon revenues and profits of the company as a whole, they now break down each operating section into discrete units and examine their separate return on investment. Is capital better spent on heavy oil, for instance, as opposed to offshore exploration?
Under this business model, companies compared the value of having proprietary knowledge vs. purchasing state-of-the-art technology from a service provider.