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Evaluation of Changes in Expected Ultimate Recovery for US Gulf of Mexico Oil and Gas Fields, 1975–2016

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Abstract

Quantifying the change in field expected ultimate recovery across time is an old and complex topic fraught with ambiguity and misinterpretation. In this paper, changes in recovery estimates performed by the Bureau of Ocean Energy Management in the US Gulf of Mexico are evaluated based on 782 offshore fields that began producing after 1975 and ceased production before 2017. At the time of first production, field expected ultimate recovery estimates totaled 6.3 billion barrels oil equivalent (38.6 exajoules), but by the end of their life, the fields produced 8.5 billion barrels oil equivalent (52 exajoules), a 35% growth. On an individual field basis, however, median recovery estimates grew less than 2%. The purpose of this paper is to explain the differences in these two statistics and quantify how expected ultimate recovery is influenced by field age, discovery year, reserve category, peak ratio, product type, size, and water depth to understand better the contribution of individual factors in reserves evaluation. Consistent interpretation of reserves category is probably the most important factor in application. Field age and size are positively correlated with changes in expected ultimate recovery in both the shallow water and deepwater regions of the US Gulf of Mexico, pre- and post-1988 evaluation periods are a significant factor, and a development variable referred to as peak ratio exhibits a meaningful correspondence. The results of this analysis show that Bureau of Ocean Energy Management procedures for expected ultimate recovery estimation in the US Gulf of Mexico post-1988 are consistent with the application of probable reserves classifications; these highlight the need for a precise understanding of factor inputs in reserves growth studies.

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Figure 1
Figure 2

Source: Data from BOEM (2020)

Figure 3

Source: BOEM

Figure 4

Source: Data from BOEM (BOEM 2018a, b)

Figure 5

Source: Data from BOEM (BOEM 2018a, b)

Figure 6

Source: Data from BOEM (BOEM 2018a, b)

Figure 7

Source: Data from BOEM (BOEM 2018a, b)

Figure 8

Source: Data from BOEM (BOEM 2018a, b)

Figure 9

Source: Data from BOEM (BOEM 2018a, b)

Figure 10

Source: Data from BOEM (BOEM 2018a, b)

Figure 11

Source: Data from BOEM (BOEM 2018a, b)

Figure 12

Source: Data from BOEM (BOEM 2018a, b)

Figure 13

Source: Data from BOEM (2018)

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Notes

  1. Previous studies often combine producing and idle fields in evaluation, and although it is easy to accommodate in the methodological framework, it is not the approach taken here.

  2. On a heat-equivalent basis, 1 boe = 6.12 million kilojoules = 6.12 × 109 J. 1 petajoule (PJ) = 1 x 1015 J; 1 exajoule (EJ) = 1 x 1018 J. On a volume basis, 6.29 barrels crude = 1 cubic meter (m3).

  3. BOEM officially uses a 1000 ft (305 m) water depth threshold to demarcate deepwater and 5000 ft (1524 m) water depth for ultra-deepwater.

  4. Companies perform reserves estimates regularly (annually or semi-annually) and report aggregate P1 estimates according to specific business units (e.g., country, region) in financial reports according to the regulatory requirements of the stock exchange in which its shares are listed.

  5. Email correspondence with Eric Kazanis, BOEM geologist. Sept 12, 2018; April 17, 2020.

  6. All fields have the same opportunity to benefit from new technology but, in practice, many differences arise depending on operator size and risk tolerance, capital budgets, geologic conditions, etc. Most of these conditions are unknown, unobservable, or not easily measured, so the use of discovery year as a proxy of technology application or similar metric, which is common practice in economic studies, is unlikely to be beneficial.

  7. In this study, higher EUR growth in GoM fields was shown to be more closely associated with reservoir area than with its thickness for non-piercement salt traps, and fields that grew the most were those in which the largest reservoir was not the first discovered.

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  1. Center for Energy Studies, Louisiana State University, Baton Rouge, LA, USA

    Mark J. Kaiser

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  1. Mark J. Kaiser
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Kaiser, M.J. Evaluation of Changes in Expected Ultimate Recovery for US Gulf of Mexico Oil and Gas Fields, 1975–2016. Nat Resour Res 30, 1229–1252 (2021). https://doi.org/10.1007/s11053-020-09756-7

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