Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.
SUMMARY In response to a directive from Rogers B. Morton, Secretary of the Interior, Vincent E. McKelvey, Director of the U.S. Geological Survey, requested the National Research Council to conduct an evaluation of the estimating techniques and procedures and of the gas reserve estimates for a representative sample of the 168 shut-in producible leases in the Gulf of Mexico which had been reported in an analysis by the Federal Power Commission. The Panel selected a representative sample of 33 leases for detailed study and engaged two consulting firms with extensive experience in the offshore region to make independent "best," "high," and "low" estimates of physically recoverable gas utilizing only those data available to the FPC staff at the time of its analysis. Following presentations on the development of the gas estimates by representatives of the FPC and USGS staffs who participated in the FPC report and presentations by the consultants, the Panel conducted a detailed comparative analysis of the three independent gas estimates derived by the two consulting firms and the FPC for each of 19 leases included in the sample. In each comparative analysis, the Panel had reference in coded form to worksheets, maps, logs, etc., utilized in each derivation. Resulting comparative figures show that for almost all individual leases, the total amounts of gas reported by the FPC are from two to three times higher than estimates of either of the consultants. The "best" estimates of the consultants for dry recoverable gas on the 33 leases were 30.8 percent and 44.6 percent of the amount reported
by the FPC. Excluding errors, the major differences in estimates of recoverable gas were due to interpretation of geological data in developing estimates of reservoir volume and the fraction of gas that could be physically recovered from a reservoir. The Panel also gave attention to the use of misleading terminology in the FPC report, noting that the terms reserves, paying quantities, and producible were used in a special sense which is not in accord with the generally accepted meaning of the terms. Thus, according to usage of terms in the FPC report, a statement on gas reserves in paying quantities on producible shut-in leases refers to gas which is physically recoverable in theory, without regard for economic considerations, from wells which may or may not be possible to relocate or re-enter. CONCLUSIONS Techniques and Procedures of Estimation It is the opinion of the Panel that 1. The FPC, in developing estimates of physically producible gas for the shut-in wells listed in its report, employed standard engineering techniques and procedures. 2. The practice used in the FPC reports of reporting a single figure for the estimate of physically recoverable gas, whether by reservoir or lease, tends to be misleading in that it fails to reflect the degree of uncertainty in the estimate.
Estimates of Physically Recoverable Gas It is the opinion of the Panel that 1. The FPC estimate of physically producible gas on these leases is too high on the basis of estimates for a representative sample of leases obtained independently by two consulting firms experienced in gas estimation in this region. 2. Excluding errors, the major differences in estimates of recoverable gas for the representative sample of leases were due to interpretation of geological data in developing estimates of reservoir volume and the fraction of gas that could be physically recovered from a reservoir. These judgmental differences in turn reflected the time constraints and offshore experience of the estimators, the quantity and quality of data that existed for determination of reservoir acreage and net sand thickness, and the degree of geologic fracturing in reducing reservoir volume. Agreement was good where informational control of the interpretation was adequate; but where information was sparse and more interpretation was required, FPC tended to give the highest estimates and Atuater the most conservative.
Misleading Terminology It is the opinion of the Panel that 1. In the FPC reports, redefinition and use of the term reserve to represent gas that is physically recoverable (under special technical assumptions) in place of the generally accepted sense of gas which is economically recoverable gives misleading economic implications and tends to confuse both professional and non-professional readers. 2. Although the term paying quantities connotes economic considerations, qualification requirements for gas well classification as "capable of producing in paying quantities," according to VSGS-OCS Order No. 4, are based upon physical parameters only and constitute a definition of the term paying quantities without mention of economic criteria. This is inconsistant and misleading. 3. The term producible in the classification producible shut- in lease is misleading in that a lease may retain this classification even after all underwater pipe of the qualifying well is plugged and shot off a minimum of 15 feet below the mudline with little or no possibility of re-entry even- if it could be located again.
RECOMMENDATIONS The Panel recommends that 1. high and low estimates as well as best estimates should be reported in similar future investigations; 2. in future investigations, the terms reserve, paying quantities, and produoible should be used in their generally accepted sense and not be redefined for restricted purposes. If these terms are to be used in a redefined sense for restricted purposes, however, they should be placed in quotation marks, underlined, set in italics, or otherwise distinguished to indicate any special meaning and help prevent misunderstanding.
