Primary funding is provided by

The SPE Foundation through member donations

and a contribution from Offshore Europe

The Society is grateful to those companies that allow their

professionals to serve as lecturers

Additional support provided by AIME

Society of Petroleum Engineers

Distinguished Lecturer Programwww.spe.org/dl

Society of Petroleum Engineers

Distinguished Lecturer Programwww.spe.org/dl

2

Dr. Jürgen Grötsch

Shell Global Solutions International B.V.

Integrated Reservoir Modelling for Carbonates

Quo Vadis?

Outline

• Integrated Reservoir Modelling (IRM) in Carbonates

• Carbonate versus clastic reservoirs

• Past - A brief history of IRM in Carbonates

– 1990’s – Example: Malampaya Buildup

– 2000’s – Example: Jurassic Arab Formation

– 2010’s – Example: North Sea Chalk

• Present – Current challenges

• Future – Where are we going?

3Grötsch, 2016

Why Do We Build Reservoir Models?

• To facilitate exploration, development and reservoir management decisions:

– Support of exploration and appraisal activities

– Field development planning

– Field development – additional phases

– Volumes in-place and Reserves reporting

– Uncertainty estimation and management

– Well Planning and Operations support

– Equity determinations (re-determinations)

– Farm in opportunities

– Joint venture or governance obligations

– Visualisation

4Grötsch, 2016

Integrated Reservoir Modelling

• What is Integrated Reservoir Modelling?

– Structural Model

– Facies Model

– Property Model

– Fluid Model

– Flow Model

• What else do we need from IRM?

5Grötsch, 2016

IRM – Input Data

6

0

100

200

300

400

500

600

700

800

900

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

GO

R s

cf/b

bl,

Wa

terc

ut

%

Oil

Ra

te b

bls

/d, B

HP

psi

a

Time

Ekulama F1000 Production History

Oil Rate bbl/d

BHP psia

Water Cut %

GOR scf/bbl

Field Performance Review

?Natih E

Channel Cut/Fill

Outcrop Analogue StudiesField Analogue Survey

Field Correlation

Seismic InterpretationCore Measurements

Conceptual Geological Model

Integrated Core Review

Recovery Mechanism

WOGD and viscous (fracflow)

Rim volume Y mil bbl

Gascap

ROS WF 30 -50%

Sor wo 25 -30%

WI

Sor og 15?%

Sor wog 15?%Vertical Equilibrium

High Sweep?

Current RF 35%, Ult. RF 45%?

Current state

Well Review

Grötsch, 2016

• What controls reservoirarchitecture?

– Depositional facies

– Diagenetic overprint(s)

– Fracturing

Carbonate Reservoirs

7

• Modelling workflow commonly includes:

– Discrimination of depositional and diagenetic controls

– Pore typing and rock typing to model permeability and saturation

– No simple N/G cut-off criteria

– Fracture models (Dual porosity: Dual permeability)

THE RESERVOIR Well BWell A

Grötsch, 2016

Porosity-Permeability Relationships

• Clastic Reservoirs– Porosity-permeability relationships are usually consistent in a

reservoir (mostly intergranular pores)

• Carbonate Reservoirs– Complex pore systems:

Often more than one porosity-permeability relationship

– ‘Mega-fabrics’ (fractures and karst) are poorly characterized from core data

– Correlations between core-based and well-test-derived permeability are complicated

– Permeability heterogeneity is complex , varies between scales

– Permeability upscaling and averaging can be important

8Grötsch, 2016

• Clastic Reservoirs

– Unimodal pore systems are most common

– Correlation between storage (oil column) and productivity is present.

– Oil transition zones are usually short

Bi- and Multi-Modal Pore Networks

9

• Carbonate Reservoirs

– Bi- and multi-modal pore networks are common in carbonates

– Big differences in production behaviour between the pore systems that provide storage (volumetrics) and the pore systems that provide productivity

– Microporous reservoirs have long transition zones

Grötsch, 2016

• Clastic Reservoirs

– Fractured reservoirs are uncommon (exception: tight gas)

– Faults commonly act as seals: clay smear, cataclasis and cementation effects. Fault compartments are common.

Fracturing Influences Flow Behaviour

10

• Carbonate Reservoirs

– Most reservoirs are fractured. Intensity and character widely varies.

– Tiny pore volume has potential for Darcy permeability.

– Fractures can dominate productivity and form high permeability pathways through the reservoir: Water and gas breakthrough.

– Faults and fractures create permeability anisotropy.

– Faults are more often associated with fractures and less often act as seals.

LS4

LS3

LS2

LS1

Grötsch, 2016

• Advent of 3D graphics computing

• Focus on tools – everybody made his own

– Subsurface disciplines (GPs, GGs, PPs, REs, PTs)

– Tool proliferation, limited integration

• Focus on reducing uncertainty

– Linking reservoir parameters

– 3D seismic Close-the-Loop – industry first

• Example: Malampaya, Philippines (appraisal & development)

Past: A brief history of IRM – 1990’s

11Grötsch, 2016

Example: Malampaya, Philippines

• Conceptual geological model

• 3D Seismic constrainedreservoir models

• Multiple realisations

• Rock type based

• 3D Seismic Close-the-Loop

12

Ref.: Grötsch & Mercadier, 1999: AAPG BulletinReal vs. synthetic seismic

Seismic constrained reservoir modelling

Grötsch, 2016

RRT-1

RRT-2

RRT-3

RRT-4

RRT-5

Example: Malampaya, Philippines

• Velocity = f (POR, Rock type)

• 3D Time/Depth conversion

• Reduce Uncertainty

13Ref.: Grötsch & Mercadier, 1999: AAPG Bulletin

Pessimistic Most Likely Optimistic

Grötsch, 2016

• Hardware gets more powerful – bigger models, more detail or area

• Focus on adding functionality

– Integration via using common 3D visualisation tools

– Geostatistics – how can it help?

– Carbonates require rock typing – how can we model this?

• Example: Arab Formation, UAE (brown field)

Past: A brief history of IRM – 2000’s

14Grötsch, 2016

Example: Arab Formation, UAE

• From conceptual geological models ..…

15

Ref.: Grötsch et al, 2003, Geoarabia

Depositional facies distribution

Grötsch, 2016

… to regional 3D reservoir models:

• Complex architecture

• Complex fluids

• Rock type based model

• Dynamic simulation

Example: Arab Formation, UAE

16

Ref.: Grötsch et al, 2003, Geoarabia

Static full-field model

Facies

Porosity

Perm

Rock Type

Dynamic full-field model

Year 2

Year 7

Year 17

Year 40

Pre

ss

ure

Grötsch, 2016

• Major steps forward in technology

• Tools get more complex and cumbersome

– Advent of “Frankenstein” models – one model fits all

– Anchoring on best guess models

– Modelling for comfort rather than analytical rigor

– Carbonates require “grain scale” models (i.e. pore networks)

– Unconventionals cannot be handled

• Conclusion: IRM did not address root cause challenges

• Example: North Sea Chalk (unconventionals, subtle traps)

Past: A brief history of IRM – 2010’s

17Grötsch, 2016

Example: Unconventional Carbonates

• Emmons (1921): Not all hydrocarbons are in anticlinal structures …

• Paradigm shift:In last ten years proven by production:IRM rules do not apply.

• “Unconventionals” are not new: Not followed up – until recently

– Example: “Tiroler Steinöl” in Austria: Triassic Seefeld Fm., Achensee National Park, carbonates mined >100 years

– Example: North Sea Chalk: Discovered after many years of conventional development

18

Modified after

Schenk & Pollastro, 2001

Thick source rock potential shale gas opportunity

Grötsch, 2016

Example: North Sea Chalk, Denmark

• HC accumulations in Chalk

• Originally: 4-Way closures only...

• 1999: Halfdan discovery – no closure

• HC distribution in low K Carbonates:Poorly understood

19

Ref.: S. Back, H. van Gent, L. Reuning, J. Grötsch,

J. Niederau, P. Kukla (2011)

Ref.: Fabricius et al., 2007

A

B

A B

Study Area

1

2

3

Grötsch, 2016

Example: North Sea Chalk, Denmark

20

0 0.5 1.0 1.5 2.0 2.5 km

1 Halfdan: Mound

linked to slumping

Iso-surface 2:

Chaos attribute

3

Northern Valley Channel

Bo-Jens Ridge

2

Mass-transport Complex

Ref.: S. Back, H. van Gent, L. Reuning, J. Grötsch, J. Niederau, P. Kukla (2011)Grötsch, 2016

• Base case assumption persists: We build on it with ever increasing detail

• Narrow range of production forecasts

• Model does not address key development decisions: Ill-defined decision criteria

• Perception of realism from model complexity

IRM – Where are we now?

21

Base case with

perturbations

Single

subsurface

concept

$

STOIIP based

Complex linear

workflow

Make

investment

decisionDynamic

Uncertainty only

Narrow range

of forecasts

Grötsch, 2016

• Personal biases: Geological concepts & RE multipliers

• Making the right models: Scaling

• Uncertainty management: Parameterization, end-to-end

• Linear versus iterative workflows: Enabler for integration

• Technical data management: Manage models, audit trails

• (T)ECOP: Neglecting more important value drivers and risks

– Non-technical risks (Economic, Commercial, Operational, Political)

– Access to reserves

– Short-term gains versus long-term success

Present – Current Challenges

22Grötsch, 2016

• Carbonate technology development

– Model scaling

– Unconventional & subtle traps

– Grain scale & pore network modelling

– End-to-end Uncertainty handling and management

• Process development

– Focus on business decisions

– End-to-end integration

– Scenario management

• Collaboration platform

– Decision Framework Tool (DFT)

– Decision Framework Model (DFM)

– Technical Data Management (TDM)

The Challenges of the Future

24

IRM building blocks

Decision

Driven

Modelling

Strategy

Iterative

Model

Testing

Scaled,

Integrated

Workflows

Grötsch, 2016

Unconventionals & Subtle Traps

• Carbonate Slope Geometries

• Reservoir propertyproxy from seismic

25

Ref.: Reuning, L., Back, S., Schulz, H., Hirsch, M., Kukla, P., Grötsch, J. (2009)

Eocene carbonate slope, Browse Basin, NWS, Australia

3D view (x5 vertical)Map view

Cross section along channel axis Cross Section

Grötsch, 2016

Grain Scale & Pore Networks

26

Ref.: Knackstedt et al, 2010

Ref.: Grötsch et al., 1998

Reservoir Rock Typing

Pore Network Modelling

Grötsch, 2016

End-to-end Uncertainty Handling

Experimental design and beyond

27

Create HM proxies Create Forecast proxies

Cum

Oil

Time

P10

P50

P90

Single Step

Range of forecasts constrained by history matchRange of cases with acceptable history match

Grötsch, 2016

Fast Iterations – An Enabler

• Faster and shorter iterations

• Develop better understanding around key uncertainties

• Make more robust decisions

28

- Continuous

Base case with

perturbations

Single

Geological

Concept

Long linear

workflow• Long-winded

• Narrow uncertainty

range

• Over confidence in

base case

Small solution space

Too much precisionLinear

STOIIP based

L

M

H

Realistic solution space

Short

iterations in

workflow

• Short iterations

• Representative

uncertainty range

• Robust decision

evaluation

- Categorical

- Continuous

Iterative

L

H

M

Multiple

Geological

Concept

Grötsch, 2016

Scenario Management

29

Evaluate Options

DevelopmentConcepts

Capture Uncertainties

SubsurfaceRealisations +

DevelopmentScenarios=

Decision

Framework

Model

Focus on Value

Grötsch, 2016

Must Have

30

Content & Context Management

Modelling Tools&

Feedback Loops

DecisionFramework

ScenarioManagement

S = DC + RModelPlan

Decide

Manage DataGrötsch, 2016

Optimization & Focus on Value

The end in mind …

… still a long way to go31

Subsurface

Surface

Grötsch, 2016

Improving IRM– Increasing Efficiency

From

To

DGx

Thinking whilst model building – complex single model realization

MFEOFW ITR

More Efficient Modeling & Uncertainty

Analysis

Improved Understanding

&Planning

OFW MFE ITR

DGx

More Time For Evaluation

Thinking Model Building & Uncertainty Evaluation

Time Saving

32Grötsch, 2016

IRM – The Three Pillars

33

Decision

Makers

Front-end

Manager

Content

Experts

People

Decision

Framework

Content and

Context

Modelling

tools

Tools

Decision

Quality

Process

Opportunity

Realisation

Standard

Key challenge: Fast iterative feedback loops

Grötsch, 2016

• IRM is more than building models - Linking People, Processes & Tools

• IRM: Tremendous progress in last 25 years - key challenges ahead

• The Future of Integrated Reservoir Modelling:

– New technologies

– Decisions based IRM

– Focus on model requirements & scales

– Need for end-to-end integration

– Need for scenario management

– From linear workflows to iterative loops

Conclusions

34Grötsch, 2016

Acknowledgements

• Shell Global Solutions International B.V.

• Shell Learning & Development

• My colleagues in industry and academia:- Hans Goeyenbier- Paul Wagner- John Brint- Henk-Jaap Kloosterman- Tim Woodhead- Christoph Ramshorn- and many more …..

35Grötsch, 2016

Q&A

36

Definitions & Cautionary Note

Reserves: Our use of the term “reserves” in this presentation means SEC proved oil and gas 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. Resources are consistent with the Society of Petroleum Engineers 2P and 2C definitions.

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

Resources plays: Our use of the term ‘resources plays’ refers to tight, shale and coal bed methane oil and gas acreage.

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this presentation “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this presentation refer to companies in which Royal Dutch Shell either directly or indirectly has control. Companies over which Shell has joint control are generally referred to as “joint ventures” and companies over which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.

This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. 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 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. 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 Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves 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 measures as a result of climate changes; (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 31 December, 2014 (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, 19 August, 2015. 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.

We use certain terms in this presentation, such as discovery potential, that the United States Securities and Exchange Commission (SEC) 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 this form from the SEC by calling 1-800-SEC-0330.

37

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