Month: July 2009

The injection of a pressurized fluid (such as air, gas, or water) into oil and gas reservoir formations to effect greater ultimate recovery

Pressure of the fluids in a porous sub-surface reservoir horizon

A representation of a reservoir that incorporates all data pertinent to its ability to store and produce oil and gas. Geoscientists and engineers use reservoir modeling to simulate the movement of the oil and gas under various circumstances to ultimately determine optimal production techniques for the reservoir. The ultimate aim of reservoir modeling is to provide a forecast of reservoir behavior under production conditions. A reservoir model is a mathematical simulation which predicts the production performance of the field and is used to formulate an optimum development plan. One needs to remember this is a model or an estimate, not reality.

The continuing process of integrating and interpreting geological, geophysical, petrophysical, fluid and performance data to form a unified, consistent description of a reservoir.

A subsurface, porous, permeable or naturally fractured rock body in which oil or gas are stored. Most reservoir rocks are limestones, dolomites, sandstones, or a combination of these. An oil reservoir generally contains three fluids – gas, oil, and water – with oil the dominant product. In the typical oil reservoir, these fluids become vertically segregated because of their different densities. Gas, the lightest, occupies the upper part of the reservoir rocks; water, the lower part; and oil, the intermediate section. In addition to its occurrence as a cap or in solution, gas may accumulate independently of the oil; if so, the reservoir is called a gas reservoir. In the typical dry gas reservoir natural gas exists only as a gas and production is only gas plus fresh water

O&G companies are required to keep a report of their oil and gas reserves, mostly focusing on the proven reserves (see proven reserves). The reserve report is for both internal company purposes as well as for the financial world, owners of contiguous territory and the general public. A key problem in structuring information about reserves is that relatively objective estimates of reservoir characteristics must be combined with subjective forecasts of project feasibility and commerciality, since for instance a proven reserve is only as it is nominated if the reserves can be brought to market economically. In its degree of disclosure of information the report should balance the requirement of shareholders to learn more about the underlying value of their investment against the requirement of the company to maintain a level of confidentiality to maintain its competitive edge (see also reserves disclosure)

The disclosure of an O&G company’s reserves should provide a better reflection of the underlying value of the company than its balance sheet. The balance sheet records the historical costs associated with drilling for, development of or acquisition of oil, and not the value of the oil and gas interests. The reserves disclosure, while not perfect, helps investors to fill this information gap. Thus by monitoring movements in the reserves report in terms of both volume and value, the investor should have a clearer understanding of both the current value and the historical performance of the management in adding value (see also reserves report). Some reserves are booked at project sanction – normally a low case number – then more reserves are usually booked during field life as more production data becomes available – these are known as reserves addition or reserves growth. Booking is done in accordance with the US SEC guidelines as well as the national guidelines in some countries. Most important, for booking to take place, the reserves must be economically recoverable using current technology and economic assumptions within a sanctioned project which has all the regulatory approvals in place