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Suggested Citation:"PROCEDURE OF PANEL." National Research Council. 1976. Gas Reserve Estimation of Offshore Producible Shut-in Leases in the Gulf of Mexico: A Report. Washington, DC: The National Academies Press. doi: 10.17226/18500.
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Suggested Citation:"PROCEDURE OF PANEL." National Research Council. 1976. Gas Reserve Estimation of Offshore Producible Shut-in Leases in the Gulf of Mexico: A Report. Washington, DC: The National Academies Press. doi: 10.17226/18500.
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Page 13
Suggested Citation:"PROCEDURE OF PANEL." National Research Council. 1976. Gas Reserve Estimation of Offshore Producible Shut-in Leases in the Gulf of Mexico: A Report. Washington, DC: The National Academies Press. doi: 10.17226/18500.
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Page 14
Suggested Citation:"PROCEDURE OF PANEL." National Research Council. 1976. Gas Reserve Estimation of Offshore Producible Shut-in Leases in the Gulf of Mexico: A Report. Washington, DC: The National Academies Press. doi: 10.17226/18500.
×
Page 15
Suggested Citation:"PROCEDURE OF PANEL." National Research Council. 1976. Gas Reserve Estimation of Offshore Producible Shut-in Leases in the Gulf of Mexico: A Report. Washington, DC: The National Academies Press. doi: 10.17226/18500.
×
Page 16
Suggested Citation:"PROCEDURE OF PANEL." National Research Council. 1976. Gas Reserve Estimation of Offshore Producible Shut-in Leases in the Gulf of Mexico: A Report. Washington, DC: The National Academies Press. doi: 10.17226/18500.
×
Page 17
Suggested Citation:"PROCEDURE OF PANEL." National Research Council. 1976. Gas Reserve Estimation of Offshore Producible Shut-in Leases in the Gulf of Mexico: A Report. Washington, DC: The National Academies Press. doi: 10.17226/18500.
×
Page 18
Suggested Citation:"PROCEDURE OF PANEL." National Research Council. 1976. Gas Reserve Estimation of Offshore Producible Shut-in Leases in the Gulf of Mexico: A Report. Washington, DC: The National Academies Press. doi: 10.17226/18500.
×
Page 19
Suggested Citation:"PROCEDURE OF PANEL." National Research Council. 1976. Gas Reserve Estimation of Offshore Producible Shut-in Leases in the Gulf of Mexico: A Report. Washington, DC: The National Academies Press. doi: 10.17226/18500.
×
Page 20
Suggested Citation:"PROCEDURE OF PANEL." National Research Council. 1976. Gas Reserve Estimation of Offshore Producible Shut-in Leases in the Gulf of Mexico: A Report. Washington, DC: The National Academies Press. doi: 10.17226/18500.
×
Page 21
Suggested Citation:"PROCEDURE OF PANEL." National Research Council. 1976. Gas Reserve Estimation of Offshore Producible Shut-in Leases in the Gulf of Mexico: A Report. Washington, DC: The National Academies Press. doi: 10.17226/18500.
×
Page 22

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.

CHAPTER II PROCEDURE OF PANEL REVIEW OF TECHNIQUES AND PROCEDURES USED IN FPC ANALYSIS Three methods were used by the Panel to review the techniques and procedures which had been utilized to obtain the gas "reserve" figures reported in the FPC analysis. First, the Panel studied the FPC report. The Panel was then briefed on the development of the gas estimates by representatives of the FPC and USGS staffs who participated in the report. Second, the Panel examined the detailed development of gas estimates for two representative leases — a one-well, one-reservoir lease and a three- well, four-reservoir lease. The workup of each lease was presented by FPC and USGS staff, and the Panel had available for its reference, in coded form, all maps, work sheets, well logs, etc., contained in the file for each lease. Third, 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 33-lease representa- tive sample. In each comparative analysis, the Panel had reference in coded form to worksheets, maps, etc., utilized in each estimate derivation. Techniques and procedures used by the consultants were reviewed along with their independently derived gas "reserve" estimates and data sheets at a meeting with representatives of each firm in the Metairie offices of the USGS. 12

13 33-LEASE REPRESENTATIVE SAMPLE The FPC made "reserve" estimates for each of the 168 leases classified by the USGS as producible shut-in leases as of January 22, 1974. Data available in the USGS files were utilized for estimating the gas "reserves" of 142 of the leases. The data in the records of the FPC for the remaining 26 leases were not utilized by the Panel in its analysis. The Panel selected a random sample of 33 leases for consulting firm analysis. Location and number of blocks for the leases selected is given in Table 1. This sample forms about one fifth (19.6 percent) of the 168 shut-in leases in question. The leases where the consulting firms had extensive previous knowledge of the reservoir(s) in question are not included in the sample. Also excluded are those leases considered to be sensitive by the USGS due to their proximity to areas involved in new federal leasing programs. The sample was chosen so that it had a lease-versus-reservoir dis- tribution similar to that of the 142 leases for which full data were on file in the USGS field office at Metairie, Louisiana. The lease-versus- reservoir distribution in 166 leases and in the sample is given in Table 2 and Figure 1. On about 38 percent of the leases, exploration to March, 1974 showed only one reservoir. The average number of reservoirs per lease is 3.1. There are 514 reservoirs on the 168 shut-in leases. The 33-lease sample, with 84 reservoirs, contains, therefore, 16.3 percent of the total reservoir population. Many leases are incompletely explored and have only one or two wells per lease. The average number of wells per lease is 4.4. The sample of

14 TABLE 1 Location of representative sample shut-in leases Lease Location Number of Blocks TEXAS Brazos Area 2 Galveston 1 High Island 2 LOUISIANA East Cameron 4 Eugene Island 5 Grand Isle 3 Main Pass 4 Ship Shoal 3 South Marsh Island 3 South Timbalier 2 Vermilion 2 West Cameron 2

15 TABLE 2 Lease Versus Reservoir Distribution 168* leases considered in Federal Power Commission report Representative sample of 33 leases selected by Panel No. Reservoirs Percent No. Leases Percent No. Leases No. Reservoirs 1 37.9 63 42.4 14 14 2 20.6 34 21.2 7 14 3 14.5 24 15.1 5 15 4 12.1 20 12.1 4 16 5 4.3 7 3.0 1 5 6. 2.4 *\ 7 1.2 2 > 3.0 1 7 8 0.7 i J 9 1.2 2 > 10 1.8 3 11 0 0 12 0 0 S 3.0 1 13 13 1.2 2 14. 0.7 1 15 0.7 1 16 0 0 17 and over 1.2 2 , 514 100.5 166 99.8 33 84 *Data on 2 leases missing

16 00

17 33 leases had a total of 130 wells, which is about 17.4 percent of the total number of wells (745) of the 168 shut-in leases. The distribution of wells in the sample and in the 168 shut-in leases is given in Figure 2. According to the FPC report, the 168 leases had proved "reserves" of 4,719,811 MMcf and probable "reserves" of 3,273,093 MMcf of gas. The 33-lease sample, according to the same data, had proved "reserves" of 1,073,421 MMcf and probable "reserves" of 386,853 MMcf of gas, giving a total of 1,460,274 MMcf. Hence the sample with 19.6 percent of the shut-in leases had 18.3 percent of the "reserves." In summary (Table 3), the sample of 33 leases, chosen to have a reservoir distribution comparable to that in the whole population of shut-in leases, formed 19.6 percent of the total population of 168 leases and was estimated to contain 16.3 percent of the reservoirs, 17.4 percent of the wells drilled, and, according to FPC estimates, 18.3 percent of the gas "reserves." It is, therefore, a reasonably representative sample. SELECTION OF CONSULTANTS TO DEVELOP INDEPENDENT ESTIMATES In order to evaluate the gas "reserve" estimates presented in the FPC report, the Panel concurred with opinion expressed by the BMR and CNR that it would be commensurate with the Panel's responsibility to select and obtain the services of two professional petroleum engineering consulting firms to provide independent gas "reserve" estimates for the representative sample of leases to be examined. Accordingly, the Panel selected and engaged the services of two consulting firms from among the several qualified consultants. Selection was based upon professional reputation,

18 LLJ _l < in A to U 2 3 O ta J* O o> > c/> oo o o CM fN CO CM S3SV3~| dO 'QiJ

19 TABLE 3 Shut-in leases Sample Percent Sample Analysis "Reserves" (FPC) Leases Reservoirs Wells MMcf 168 514 745 7,992,904 33 84* 133* 1,460,274 19.6 16.3 17.6 18.3 * Figures from USGS: all other data in Table 3 were supplied by FPC

20 ability to perform the task with high standards of excellence in the available time, and experience and knowledge of the specific subject matter and the general area of study. The two firms engaged were Atwater, Carter, Miller and Heffner of New Orleans, Louisiana, and Keplinger and Associates of Tulsa, Oklahoma. Both firms carried out their identical assignments independently during the eleven weeks from June 16, 1975 to August 31, 1975 and submitted final reports in early September, 1975. INSTRUCTIONS TO CONSULTANTS Following the Panel's briefing on April 9, 1975 by FPC and USGS staff on the techniques and procedures used in the determination of gas "reserve" estimates reported in the FPC analysis, the Panel developed a set of task performance instructions for the consultants. The instructions were designed both to insure operation within USGS security guidelines for protection of confidentiality of data and to enable the Panel to make the necessary comparison of results. Task performance instructions given by the Panel to each consultant firm (Subcontractor) were as follows: 1. Review all leases included in the report of the Federal Power Commission (Offshore Investigation: Producible Shut-In Leases (First Phase) January 1974 and Offshore Investigation: Producible Shut-In Leases as of January 1974 (Second Phase) FPC Bureau of Natural Gas Staff Reports dated March and July 1974) and identify those leases in which the Subcontractor has extensive knowledge of the reservoir(s) in question, based upon other studies. 2. Determine, using normal industry practices, the "physically producible" gas in each reservoir on each of approximately •'•Leases so identified by the consulting firms were not included in the representative sample of leases selected by the Panel for study.

21 33 designated leases. Designation is to be made by the Academy upon completion of the Subcontractor's review of the report. The term "physically producible" gas is used to convey the understanding that no economic parameters are to be included in the determinations. This definition is in contrast to normal practice where the term "gas reserves" would be appropriate. Exceptions to normal practice will also include the designation of reservoirs as "proved" or "probable." For purposes of this study all gas determined to be "physically producible" from a reservoir where some form of flow test or bottle test had been conducted on or before March 1, 1974, will be designated as "proved." Where no flow test or bottle test had been conducted the "physically producible" gas will be designated as "probable." 3. In addition to the determination of the "physically producible" gas reservoir and by lease, the Subcontractor will provide a range of estimates for each reservoir reflecting the confidence of the reported figures. 4. For each determination the Subcontractor will indicate the method(s) used in determining the geometry of the reservoir. This will be accomplished using a check list provided by the Academy. 5. It is agreed and understood that the following conditions shall apply to the work performed under this subcontract: a. All data that were available to the study conducted by the Federal Power Commission and the USGS will be available to the Subcontractor. These data will include copies of all logs obtained from each well, all available core data, drill stem tests, pressure data, and other test data from each well on each lease included in the study. Also available will be any similar information from adjacent leases. Structurally-contoured geophysical data, based upon a profile grid of a two-mile by two-mile spacing o ^Physically producible gas is the quantity calculated in the FPC report. 3Due to problems in maintaining confidentiality of map data, this instruction was voided and the consulting firm was instructed to include reservoir geometry determination information directly on maps to be retained at the USGS offices for Panel review.

22 are also available for approximately 95 percent of the leases. The data that will be used by the Subcontractor includes all information collected on or before March 1, 1974. b. The Subcontractor will examine any of the above described data only in the offices of the USGS during their regular working hours. No data in the files of the USGS may be removed from their premises. The Subcontractor may remove worksheets of information collected from an examination of the data providing the worksheets do not contain lease designation or other directly identifying characteristics. All worksheets will be coded and a cross reference lease- code file will be retained in the USGS offices. c. The Subcontractor will be provided with suitable work- ing space in the office of the USGS in Metairie, Louisiana (or other USGS offices) as may be determined by mutual agreement between the Subcontractor and the USGS. 6. Reporting requirements: One month after inception of work and each 30 days thereafter, the Subcontractor shall submit, in format acceptable to the Academy, a written status report, including the leases completed and problems encountered. On or before August 31, 1975, the Subcontractor shall submit, in format acceptable to the Academy, a final report.

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