How then, do we move backwards? How does a society, with most of the people having no clue of future events, move from being dependent on a vast and intertwined network of goods and services produced by the indigenous people of whereever, to a local resource and renewable energy based society, and do so in the timeframe available (20-30 years using the most liberal extimates, 10-20 with resonable estimates, 5-10 with worst case scenarios), all the while prices on everything increasing, world politics getting more militaristic, governments continuously reducing civil liberties, shortages of goods on the market and weather patterns resembling bad Hollywood movies?
Posted: Mon Jan 23, 2006 8:54 pm Post subject: Re: I'm confused. How do you calculate and model this data?
If I plot the above data as a scatter plot which shows only fractional increases per year since the year of discovery it looks like the chart below. Note that this plot does not visualize the "multiplier" approach which A&R choose to do; IMO they do this rather unwisely, because it accentuates bad early estimates. The "fractional" approach is an accepted statistical way to look at this kind of data which avoids amplifying regions with poor statistics.
I also put in a 20-point moving average filter to guide the eye (not weighted by size of field). Notice that in the sweet spot right in the middle of the chart, where we get the best statistics, the "reserve growth" fluctuates around 1% per year. There is some growth for fields for fields older than ~80 years, but those have have worse sampling statistics than the rest. The latest data also exhibits poor sampling statistics.
Basically this is how you extrapolate what is assumed stationary data correctly.
Now, who is going to make the claim that 1% reserve growth will effectively compensate the 5% to 20% depletion rate per year routinely estimated for many fields?
Posted: Mon Jan 23, 2006 9:13 pm Post subject: Re: I'm confused. How do you calculate and model this data?
shakespear1 wrote:
The one thing you need to bare in mind is that we do not see the reservoir underground as you see your capacitor. Here is a way to visualize this.
Go to your back yard and take your drinking straw and make a hole of that diameter. Now based on what you see from the ground that you pulled out in the sample volume of that hole try to characterize the properties of the rest of your back yard under the grass. Now go "drill" a few more "wells" the same way and IMPROVE your estimate of what you think is going on spatially underground.
THIS IS WHAT we are doing in trying to evaluate the reserves in a field. Our bore hole diameters underground will be on the order of magnitude of 7 to 8 1/2 inches !!!
Hope that helps.
You might do a seach on my name of my oldest posts where I tried to explain in greater detail how we "petroleum" engineers do our work.
You put in a proportional number of straws to how big the field is. That is my only assumption in extraction, a kind of greedy estimate. I would think that discovery estimates use a bunch of different techniques that improve as knowledge advances over time.
I never claim that it works the same way as an RC electrical circuit, just that the math happens to come out the same way (a spring/damper system uses the same math too!). An electrical circuit is stochastic in the sense of populations of electrons working in some average way toward a lower potential field. A large set of oil fields is stochastic in the sense that the aggregate works together as a set of many independent decisions, modeled as Markov rate probabilities. If my approach helps people to visualize stuff, nothing wrong with that.
Posted: Mon Jan 23, 2006 9:23 pm Post subject: Re: I'm confused. How do you calculate and model this data?
WebHubbleTelescope wrote:
Now, who is going to make the claim that 1% reserve growth will effectively compensate the 5% to 20% depletion rate per year routinely estimated for many fields?
Nobody I know of claims that the data as presented by Attanasai and Root represents a 1% growth in reserves/ultimate. Not MMS, USGS, EIA, DOE or any one else who has published a paper on the subject using any of the proprietary reserve databases with which I am familiar thinks anything remotely resembling what you have just stated.
Could you explain your reasoning in a little more depth perhaps?
Posted: Mon Jan 23, 2006 9:33 pm Post subject: Re: I'm confused. How do you calculate and model this data?
WebHubbleTelescope wrote:
You put in a proportional number of straws to how big the field is. That is my only assumption in extraction, a kind of greedy estimate.
Saudi Arabia has perhaps what, 1500? 2000 production wells for a rate of 10 MBO/Day? The United States has perhaps hundreds of thousands of wells for a current rate of 5 MBO/Day?
Seems like one of several things should happen...the US shouldn't have any reserve growth because everyone knows everything, and this isn't true and can be easily demonstrated as recently as data differences between 95 and 2000.
Or perhaps the Saudi's have no idea what they are sitting on, and could be subject to orders of magnitude more reserve growth because they haven't explored their areas under your "drill everywhere to know more" theory.
Unfortunately, capital investment of the magnitude your method suggests doesn't happen.
Posted: Mon Jan 23, 2006 9:44 pm Post subject: Re: I'm confused. How do you calculate and model this data?
ReserveGrowthRulz wrote:
WebHubbleTelescope wrote:
Now, who is going to make the claim that 1% reserve growth will effectively compensate the 5% to 20% depletion rate per year routinely estimated for many fields?
Nobody I know of claims that the data as presented by Attanasai and Root represents a 1% growth in reserves/ultimate. Not MMS, USGS, EIA, DOE or any one else who has published a paper on the subject using any of the proprietary reserve databases with which I am familiar thinks anything remotely resembling what you have just stated.
Could you explain your reasoning in a little more depth perhaps?
I don't know, maybe by looking at the data? It's sitting right there. I would only offer that maybe we need somebody like Khebab or pup or some other statistical wizards on this board for a second opinion.
So take a look at the row corresponding to the discoveries of 1930:
Notice that in this case the average yearly gowth is less than 1% from the previous year's estimate (actually way less). This is for "aged" discoveries ranging from 47 to 61 years. I essentially repeated this for the aggregate set of data. If the data is bad, hey, don't blame me, this stuff is from the government, according to A&R they got it as unpublished data from the EIA. And they saw fit to fill up 4 journal pages with the stuff, so it must have been used in their analysis, wouldn't you think?
Posted: Mon Jan 23, 2006 9:58 pm Post subject: Re: I'm confused. How do you calculate and model this data?
ReserveGrowthRulz wrote:
WebHubbleTelescope wrote:
You put in a proportional number of straws to how big the field is. That is my only assumption in extraction, a kind of greedy estimate.
Saudi Arabia has perhaps what, 1500? 2000 production wells for a rate of 10 MBO/Day? The United States has perhaps hundreds of thousands of wells for a current rate of 5 MBO/Day?
Seems like one of several things should happen...the US shouldn't have any reserve growth because everyone knows everything, and this isn't true and can be easily demonstrated as recently as data differences between 95 and 2000.
Or perhaps the Saudi's have no idea what they are sitting on, and could be subject to orders of magnitude more reserve growth because they haven't explored their areas under your "drill everywhere to know more" theory.
Unfortunately, capital investment of the magnitude your method suggests doesn't happen.
Yes, the Saudis and USA contribute to an exponential distribution of proportional extraction rates. Saudis filling up the high output level with minimal fields and the USA doing it with lots of stripper wells. Such is the nature of stochastic processes and a maximum entropy estimator.
I realize that it might be hard for everyone to grok how this stuff works out. However, take some classes in statistical mechanics and you will realize this is kids stuff in comparison.
Posted: Mon Jan 23, 2006 10:28 pm Post subject: Re: I'm confused. How do you calculate and model this data?
WebHubbleTelescope wrote:
ReserveGrowthRulz wrote:
WebHubbleTelescope wrote:
Now, who is going to make the claim that 1% reserve growth will effectively compensate the 5% to 20% depletion rate per year routinely estimated for many fields?
Nobody I know of claims that the data as presented by Attanasai and Root represents a 1% growth in reserves/ultimate. Not MMS, USGS, EIA, DOE or any one else who has published a paper on the subject using any of the proprietary reserve databases with which I am familiar thinks anything remotely resembling what you have just stated.
Could you explain your reasoning in a little more depth perhaps?
I don't know, maybe by looking at the data? It's sitting right there.
So take a look at the row corresponding to the discoveries of 1930:
Notice that in this case the average yearly gowth is less than 1% from the previous year's estimate (actually way less).
Okay, I see what you are doing. The data has to be parsed into separate lines on my screen, its a bit hard to read. But lets do better than selectively pull a subjective "Hubble" and do more than look at 1930 shall we?
1903. 9%
1904 5.4%
1906 19%
Maybe this is all too old of fields for your taste? Particularly since this is growth after the field is nearly what, 70 years old?
How about
1947? 15%
1950? 27%
1955? 30%
Maybe reserve growth was "cured" by modern technology?
1975? 160%
1977? 430%
1985? 173%
Well....now this brings up the question, who is always complaining about selective data displays?
I suppose it was unreasonable of you to actually recognize something which goes against what appears to be your natural subjectivity AGAINST reserve growth. Poor scientific method display I might venture.
Hundreds of percent of "bad guesses" early in the fields life it appears to me, and put together using the Root and Attanasai methodology, without much more than using a modification of the original Arrington method, it shows quite a bit of reserve growth. Quite a bit meaning NOT 1%, and mostly certainly in the 5X to 20X range I would venture.
Want to argue quantity of reserve growth now rather than trying to pretend that bad guesses should be fixed as petroleum engineers become less "conservative", by doubling the size of their initial estimates because someone told you thats some silly engineering "must" once?
Posted: Mon Jan 23, 2006 10:37 pm Post subject: Re: I'm confused. How do you calculate and model this data?
WebHubbleTelescope wrote:
Yes, the Saudis and USA contribute to an exponential distribution of proportional extraction rates. Saudis filling up the high output level with minimal fields and the USA doing it with lots of stripper wells. Such is the nature of stochastic processes and a maximum entropy estimator.
I realize that it might be hard for everyone to grok how this stuff works out. However, take some classes in statistical mechanics and you will realize this is kids stuff in comparison.
Holy crap, what the hell is "exponential distribution of proportional extraction rates" mean? Particularly when used as an answer to a simple question, which is why your "drill up eveything" theory doesn't jive with some basic production facts?
Maybe this is a way to conceal how far off base your original assumption is ..with no regard for capital expenditures of course, an idea I think you would find would be greated with much snickering and giggling if you ever expressed it to the people who write the checks for exploration and developement projects.
That makes about as much sense as whatever nitwit told you that using a 2X safety/conservative factor should cover any boo-boo's in reserves....when as best I can tell from the data YOU pulled from the Enigma paper reserve growth is more a 5X-15X function.
Posted: Mon Jan 23, 2006 10:49 pm Post subject: Re: I'm confused. How do you calculate and model this data?
ReserveGrowthRulz wrote:
WebHubbleTelescope wrote:
ReserveGrowthRulz wrote:
WebHubbleTelescope wrote:
Now, who is going to make the claim that 1% reserve growth will effectively compensate the 5% to 20% depletion rate per year routinely estimated for many fields?
Nobody I know of claims that the data as presented by Attanasai and Root represents a 1% growth in reserves/ultimate. Not MMS, USGS, EIA, DOE or any one else who has published a paper on the subject using any of the proprietary reserve databases with which I am familiar thinks anything remotely resembling what you have just stated.
Could you explain your reasoning in a little more depth perhaps?
I don't know, maybe by looking at the data? It's sitting right there.
So take a look at the row corresponding to the discoveries of 1930:
Notice that in this case the average yearly gowth is less than 1% from the previous year's estimate (actually way less).
Okay, I see what you are doing. The data has to be parsed into separate lines on my screen, its a bit hard to read. But lets do better than selectively pull a subjective "Hubble" and do more than look at 1930 shall we?
1903. 9%
1904 5.4%
1906 19%
Maybe this is all too old of fields for your taste? Particularly since this is growth after the field is nearly what, 70 years old?
How about
1947? 15%
1950? 27%
1955? 30%
Maybe reserve growth was "cured" by modern technology?
1975? 160%
1977? 430%
1985? 173%
Well....now this brings up the question, who is always complaining about selective data displays?
I suppose it was unreasonable of you to actually recognize something which goes against what appears to be your natural subjectivity AGAINST reserve growth. Poor scientific method display I might venture.
Hundreds of percent of "bad guesses" early in the fields life it appears to me, and put together using the Root and Attanasai methodology, without much more than using a modification of the original Arrington method, it shows quite a bit of reserve growth. Quite a bit meaning NOT 1%, and mostly certainly in the 5X to 20X range I would venture.
Want to argue quantity of reserve growth now rather than trying to pretend that bad guesses should be fixed as petroleum engineers become less "conservative", by doubling the size of their initial estimates because someone told you thats some silly engineering "must" once?
This is what the data says -- yes, there are fairly large gains in the set, and these gains drop back after about 5 years to around 5% on the average. From there the growth drops to 1%. If I was looking at this as a a single investment, I would consider the 430% you quote as nice and the 1% not so good. But we are not looking at these as single investments; they are more like mutual funds where the collective gains matter. And the collective gains average around 1% per year, like it or not.
Go ahead and invest in your Enron, while I stay with my staid mutual fund.
(The only reason I picked the 1930 was because it was one of the biggest discovery years -- not because I cherry picked the data as you claim. You wanted to understand and evidently you got it.)
Posted: Tue Jan 24, 2006 3:32 pm Post subject: Re: I'm confused. How do you calculate and model this data?
My response is this....
Read the paper...the claim by the authors and their method, which you haven't said a single thing about, using all of the data you quoted is what? 10X 15X?
Seems like compounding reserve growth through time has a cumulative effect over, say, 100 years, similar to compounding interest.
It doesn't look like much at the individual increment level, but give it time and its katie bar the door.
This lends itself to the idea that while guessing new field sizes from their first estimate is amusing, it has nothing to do with the fields ultimate and final size, which is apparently 10X and 15X higher.
Do your models accomodate this growth of ultimate through time, or do you use a static initial number which doesn't increase with time or field depletion?
Oh...other references for the "googling challenged"...
"A New Reserve Growth Model for United States Oil and Gas Fields". M Verma, Natural Resources Research Vol 14, No 2, June-2005
And if its MASSIVE amounts of interesting data which you prefer, might I recommend AAPG Memoir 86, "Global Resource Estimates from Total Petroleum Systems", published in 2005 by AAPG.
SPE Paper # 62616 is okay as a prelude to M. Verma's above listed work as well.
And to top it off, a nice summary could be found in Natural Resources Research, Vol 14, No 3, Sept 2005 by T. Klett. "USGS's Reserve Growth Models and Their Implementation"
Posted: Fri Jan 27, 2006 9:19 pm Post subject: Re: I'm confused. How do you calculate and model this data?
ReserveGrowthRulz wrote:
My response is this....
Read the paper...the claim by the authors and their method, which you haven't said a single thing about, using all of the data you quoted is what? 10X 15X?
Seems like compounding reserve growth through time has a cumulative effect over, say, 100 years, similar to compounding interest.
Not compound growth by any stretch of the imagination. Compound growth in the traditional sense has a fixed proportional rate. This would give an accelerating slope. However, reserve growth has a decreasing rate which leads to a decelerating slope. Think of it this way -- if the growth rate follows 1/x, then any increase in x gets counterbalanced by a smaller proportional amount or ~(1+1/x)x. I plotted a 0.5/x curve (in green) on top of the moving-average fit below.
Having been away in Silicon Valley on business the past few days, I haven't had a chance to respond more quickly, but oddly enough, there is a strong silicon analogy to what I see in the way this works. Take for example, the work of Andy Grove, one of the co-founders of Intel, who did his thesis work in diffusion-limited oxide growth. In a nutshell, silicon dioxide needs a source of silicon to form, but as the SiO2 layer gets thicker, it becomes harder and takes longer for the Si atoms to diffuse to the surface and react with oxygen. This leads to a law of the following form, where F(t) is thickness as a function of time:
Code:
dF/dt = k/F(t)
F = sqrt (2kt)
Note that the fractional rate can be expressed as:
Code:
dF/dt / F = 0.5/t
Note that this follows the "reserve growth" curve fit fairly well, where the fractional growth is inversely proportional to time. This is called the parabolic growth law. For the Google-challenged, you can look it up in any standard microelectronics textbooks.
Now if we were stupid semiconductor neophytes living in the 1950's and thought that the oxide growth could only be "guessed" at, then we would never have been able to advance through the microelectronics revolution and process unpredictability would have killed us. We would still be working with crystal radio sets. None of the multi-million gate circuits would have ever gotten made!
But the fact was that material scientists and engineers like Andy Grove were able to characterize the phenomena within a few years time (mid to late 1960's) and get their process down to a gnat's eyelash speaks volumes about the difference between real engineers and the geologists who believe in magical, enigmatic reserve growth. (I don't know any fab engineer in a bunny suit who believes in "enigmatic" oxide growth)
I have a suggestion for the geologists and petroleum engineers. Figure out what the heck is going on in your measurements and estimates, and then perfect the formula to eliminate the magical guess work. The more I look at it, the more I seriously think that no one has figured out how to do estimates of volume correctly. Could they all be measuring the volume as an approximation to how much they have extracted, with the increase over time caused by diminishing returns? Much like a thick SiO2 layer prevents fast oxidation, that drilling "deeper" into a field starts to slows down further depletion and you need to work harder and wait longer times to get at it? It almost sounds as if no one wants to admit that a parabolic growth law has any kind of importance.
If done correctly, reserve growth would transform from magic to a measure of extractability over time. And this is all I have been saying on how crudely the estimates have been made in the past.
Posted: Sat Jan 28, 2006 12:06 am Post subject: Re: I'm confused. How do you calculate and model this data?
WebHubbleTelescope wrote:
But the fact was that material scientists and engineers like Andy Grove were able to characterize the phenomena within a few years time (mid to late 1960's) and get their process down to a gnat's eyelash speaks volumes about the difference between real engineers and the geologists who believe in magical, enigmatic reserve growth. (I don't know any fab engineer in a bunny suit who believes in "enigmatic" oxide growth)
While I can't comment on common engineering practices in other industries, I would venture the following.....it appears you beleive that those of us in industry are quite incompetent and know nothing about our own industry, well, nothing that couldn't be fixed by bringing in some "real" engineers.
I might ask, are you familiar with Hubberts estimates of reserve growth? Him believing in things both "magical" and "enigmatic" apparently?
And please, before you rush off and classify him a consultant from Canada or some other BS which just brings out my natural tendencies to bash amateurs, realize I consider him at least an equal to whatever "really smart guy" from some other industry you would like to bring into the conversation in the hopes that this somehow MEANS something to the oil and gas industry.
Posted: Sat Jan 28, 2006 1:34 am Post subject: Re: I'm confused. How do you calculate and model this data?
ReserveGrowthRulz wrote:
WebHubbleTelescope wrote:
But the fact was that material scientists and engineers like Andy Grove were able to characterize the phenomena within a few years time (mid to late 1960's) and get their process down to a gnat's eyelash speaks volumes about the difference between real engineers and the geologists who believe in magical, enigmatic reserve growth. (I don't know any fab engineer in a bunny suit who believes in "enigmatic" oxide growth)
While I can't comment on common engineering practices in other industries, I would venture the following.....it appears you beleive that those of us in industry are quite incompetent and know nothing about our own industry, well, nothing that couldn't be fixed by bringing in some "real" engineers.
I might ask, are you familiar with Hubberts estimates of reserve growth? Him believing in things both "magical" and "enigmatic" apparently?
And please, before you rush off and classify him a consultant from Canada or some other BS which just brings out my natural tendencies to bash amateurs, realize I consider him at least an equal to whatever "really smart guy" from some other industry you would like to bring into the conversation in the hopes that this somehow MEANS something to the oil and gas industry.
Hubbert is no hero of mine. He is just a guy who gave it a shot as far as I am concerned. The Canadian consultants provided some additional data that stressed that "heavy oil" gave much higher reserve growth. Go figure that oil sands fall into the heavy oil category.
Here is a plot of the A&R data using averaged delta corrections. The horizontal lines are +/- standard deviation.
Posted: Sat Jan 28, 2006 8:50 am Post subject: Re: I'm confused. How do you calculate and model this data?
WebHubbleTelescope wrote:
Hubbert is no hero of mine. He is just a guy who gave it a shot as far as I am concerned. The Canadian consultants provided some additional data that stressed that "heavy oil" gave much higher reserve growth. Go figure that oil sands fall into the heavy oil category.
Here is a plot of the A&R data using averaged delta corrections. The horizontal lines are +/- standard deviation.
So....now Hubbert....on a Peak Oil website qualifies as "hardly a hero"? Wow....talk about the amateurs thinking highly of themselves.
Three points, you really should stop referring to them as "Canadian consultants", reserve growth isn't limited to heavy oil as any of the articles I referenced demonstrates, and you never answered an original question, which was, if you don't like Root and Attanasi's reserve growth measurements, or Hubberts, or Verma's, then what might yours be, and how do you account for it within any of your modelling?
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