This chapter presents a historical review of reservoir management

practices and discusses technological advances made and computer tools

developed in recent years to facilitate better reservoir management. It
also provides a reservoir management definition, discusses synergy and
teamwork, examines the integration of geoscience and engineering, and
analyzes the timing for reservoir management.

DEFINITION OF RESERVOIR MANAGEMENT

There are many reservoir engineers, geologists, and geophysicists who

realize that the maximum coordination of their disciplines is essential
to the future success of the petroleum indusuy. With this in mind, they
follow the principles of reservoir management for maximizing economic
recovery Of Oil and gas.

One of the objectives of this section is to define reservoir management.

The WebsterDictionary defines management as the "judicious use of means
to accomplish an end." Thug, the management Of reservoirs can be
interpreted as the judicious use ofvarious means available to a
businessman in order to maximize his benefits (profits) from a reservoir.

Reservoir management has been defined by a number of other authors.2-5

Basically, sound reservoir management practice relies on the
utilizaüon of available resources (i.e., human, technological and
finanCial) to maximize profits/profitability index from a reservoir by
optimizing recovery while minimizing capital investments and operating
expenses (See Figure 2—1). Reservoir management involves making certain
choices. Either let it happen, or make it happen.2 We can leave it to
chance to generate some profit from a reservoir operation without
Ongoing deliberate planning, or we can enhance recovery and maximize
profit from the same reservoir through sound management practice.

HISTORY OF RESERVOIR MANAGEMENT

Most people considered reservoir management synonymous with reservvoir

engineering. As recently as the early 1970s, reservoir engineering was
considered the most important technical item in the management of
reservoirs. However, after understanding the value of geology, synergism
between geology and reservoir engineering became very popular and
proved to be quite beneficial.
Reservoir management has advanced through various stages in the past 30
years. The techniques are better, the background knowledge of
reservoir conditions has improved, and the automation using mainframe
computers and personal computers has helped data processing and
management. The developmental stages Of reservoir management could
be described as the following:

Stage 1—Before 1970, reservoir engineeringwas considered the most

important technical item in the management of reservoirs. In 1962,
Wyllie emphasized two key items: (l) clear thinking utilizing fundamen-
tal reservoir mechanics conceptS and (2) automation using basic comput-
ers.6 In 1965, Essley described "reservoir engineering" and concluded
that in spite of the technical advancement of reservoir engineering,
vital engineering considerations are often neglected or ignored.7
Stage 2—This covers the time period of the 1970s and 1980s. Craig
et al. (1977) and Harris and Hewitt (1977) explained the value of
synergism between engineering and geology. Craig emphasized the value
Of detailed reservoir description, utilizing geological, geophysical, and
reservoir simulation concepts.8 He challenged explorationists, with the
knowledge of geophysical tools, to provide a more accurate reservoir
description to be used in engineering calculations. Harris and Hewitt
presented a geological perspective of the synergism in reservoir manage
ment.9
They explained the reservoir heterogeneity due to complex variations of
reservoir continuity, thickness patterns, and pore-space properties
(e.g., porosity, permeability, and capillary• pressure).

FUNDAMENTALS OF RESERVOIR MANAGEMENT

Although the synergism provided by the interaction between geology and

reservoir engineering has been quite successful, reservoir management
has generally been unsuccessful in recognizing the value of other
disciplines (e.g., geophysics, production operations, drilling, and
different engineering functions).

The prime objective of reservoir management is the economic optimi-

zation of oil and gas recovery, which can be obtained by the following
steps:
Identify and define all individual reservoirs in a particular field
and their physical properties.
Deduce past and predict future reservoir performance.
Minimize drilling of unnecessary wells.
Define and modify (if necessary) wellbore and surface systems.
Initiate operating controls at the proper time.
Consider all pertinent economic and legal factors.

Thus, the basic purpose of reservoir management is to control

operations to obtain the maximum possible economic recovery from a
reservoir based on facts, information, and knowledge.
In 1963, Calhoun described the engineering system Of concern to the
petroleum engineer as being composed of three principal subsystems:
• Creation and operation of wells.
• Surface processing of the fluids.
• Fluids and their behavior within the reservoir.10
The first two subsystems depend on the third because the type of
fluids (i.e., oil, gas, and water) and their behavior in the rescrvoir
Will dictate how many wells to drill and where, and how they should be
produced and processed to maximize profits.
Since the goa] is to maximize profits, neglecting or de-emphasizing
any of the previous items couldjeopardize Our objective. For example, we
could do well in studying the fluids and their interaction with rock
(i.e.,reservoir engineering), but if the proper well and/or surface
system design is not considered, then recovery Of Oil and/or gas Will not
be optimized. Most people can cite examples of mistakes made in Our
business where we thoroughly studied various aspects of the reservoir and
made decisions that resulted in too many wells being drilled, improper
application Of well completion technology, inadequate surface facilities
available for future expansions, and so forth.
The suggested reservoir management approach emphasizes interaction
between various functions and their interaction with management,
economics, proration, and legal groups. The reservoir management
model that involves interdisciplinary functions has provided useful
results for many projects.

The following question-and-answer section provides reservoir management

philosophies:

l. When should reservoir management start?

The ideal time to start managing a reservoir is at its discovery.
However, it is never too early to start this program because early
initiation of a coordinated reservoir-management program not only
provides a better monitoring and evaluation tool, but also costs less in
the long run.

For example, a few early drill stem tests (DST) could help decide if and
where to set pipe. Sometimes these data can als0 provide the sarnc type
of information normally available by complex and expensive cased hole,
multiple zone testing. An extra log or an additional hour's time on a DST
may provide better informacion chan could be obtained from more
expensive core analysis.' Sometimes it is possible to do somc early tests
that can indicate the size of a reservoir. If it is of limited size,
drilling of unnecessary wells can be prevented.

We can draw an analogy between reservoir and health management.

It is not suficient for the reservoir managernent team to determine the
state Of a reservoir's health and then attempt to improve it. To be most
effective, the team must maintain the reservoir's and its sister
subsystems health from the start.

Most often reservoir management is not started early enough, and

the reservoir, Wells, and surface systems are ignored for a long time.
Many times we consider reservoir managemen t at the time of a tertiary
recovery operation. However, it is critical and a prerequisite for an
economically successful tertiary recovery operation to have a good
reservoir management program alREady in place.

In the Permian Basin, carbon dioxide (C02) flooding is receiving

more and more attention. An eficient reservoir managcment program
for C02 flooding (with a $2 per barrel injectant cost) is even more
critical compared to waterflooding (with a 5—10C per barrel cost for
water). Thus, it is very important that all injected C02 be properly
utilized in displacing oil to the production wells.

2. What, how, and when to collect data?

TO answer this question, we must follow an integrated approach Of

data collection involving all functions from the beginning. Before
collecting any data, we should ask the following questions:

• Are the data necessary, and what are we going to do with these
data? What decisions Will be made based on the results of the data
collection?
• are the benefits of these data, and how do we devise a plan
to obtain the necessary data at the minimum cost?

The reservoir management team must prepare a coordinated reser-

voir evaluation program to show the need for the data requirement,
along with their costs and benefits. Amyx et al. provides a detailed
review of data evaluation for reservoir engineering calculations.l

It must be emphasized that early definition and evaluation of the

reservoir system is a prerequisite to good reservoir management. The
team members must convince the management to obtain necessary• data
to evaluate the reservoir system. In addition, the team should
participare in making operating decisions.

3. What kinds of questions should be asked ifwe want to ensure the

right answer in the process of reservoir management?

Some example questions follow•.

What does the answer mean?
Does the answer fit all the facts; why or why not?
Are there other possible interpretations Of the data?
Were the assumptions reasonable?
Are the data reliable?
Are additional data necessary?
Has there been an adequate geological study?
Has the reservoir been adequately defined?

The modern reservoir management process involves goal setting,

planning, implementing, monitoring, evaluating, and revising plans.2
a reservoir management strategy requires knowledge of the reservoir,
availability of technology, and knowledge of the business,political, and
environmental climate. Formulating a comprehensive management plan
involves depletion and development strategies, data acquisition and
analyses, geological and numerical model studies, production and reserves
forecasts, facilities requirements, economic optimization, and management
approval. Implementing the plan requires management support, field
personnel commitment, and multidisciplinary, integrated teamwork. Success
of the project depends upon careful monitoring/surveillance and thorough,
ongoing evaluation ofits performance. if the actual behavior of the
project does not agree with the expected performance, the original plan
needs to be revised, and the cycle (i.e.,implementing, monitoring, and
evaluating) reactivated.

SYNERGY AND TEAM

Successful reservoir managernent requires synergy and team efforts. lt is

recognized more and more that reservoir management is not synonymous with
reservoir engineering and/or reservoir geology. Success requires
multidisciplinary, integrated team efforts. The players are every body
who has anything to do with the reservoir (see Figure 2—2).2 The
team members must work together to ensure development and execution
of the management plan. By crossing the traditional boundaries and
integrating their functions, corporate resources are better utilized to
achieve the common goal.
All development and operating decisions should be made by the reservoir
management team, which recognizes the dependence of the entire
system upon the nature and behavior of the reservoir. lt is not necessary
that all decisions be made by a reservoir engineer; in fact. a team
member who considers the entire system, rather than just the reservoir
aspect, Will be a more effective decision maker. lt Will help
tremendously if the person has a background knowledge Of reservoir
engineering, geology, production and drilling engineering, well
completion and performance, and surface facilities. Not many people in an
organization have knowledge in all areas.

However, many persons develop an intuition for the entire system and know
when to ask for technical advice regarding various elements Of the
system.
The team effort in resewoir management cannot be overemphasized.
It is even more necessary now than it has ever been because the current
trend of the oil industry is not one Of expansion. Most companies are
carrying on their production activities with a staff much smaller than
had existed just five years ago.

Also, with the advent of technology and the complex nature of

different subsystems, it is difficult for anyone to become an expert in
all areas. Therefore, it is obvious that the reduction of talent and the
increasingly complex technologies must be offset by an increase in
quality, productivity, and emphasis on the team efTort.

A team approach to reservoir management can be enhanced by the following

:

• Facilitate communication among various engineering disciplines,

geology, and operations staff by: (a) meeting periodically, (b)
interdisciplinary cooperation in teaching each other's functional
objectives, and (c) building trust and mutual respect. Also, each
member of the team should learn to be a good teacher.

• To some degree, the engineer must develop the geologist's

knowledge of rock characteristics and depositional environment,
and a geologist must cultivate knowledge in well completion and
other engineering tasks, as they relate to the project at hand.

• Each member should subordinate their ambitions and egos to

the goals of the reservoir management team.
• Each team member must maintain a high level of technical
Competence.

• The team members must work as a well-coordinated "basketball team"

rather than a "relay team." Resen'0ir engineers should not
wait on geologists to complete their work and then start the
reservoir engineering work. Rather, a constant interaction between the
functional groups should take place. For example, it is better to know
early if the isopach and cumulative oil/gas production maps do not agree
rather than finalize all isopach maps and then find Out that cumulative
production maps are indicating another interpretation of the reservoir.
Using an integrated approach to reservoir management along with the
latest technological advances Will allow companies to extract the utmost
economic recovery during the life of an oil field. It can prolong
the economic life of the reservoir.l
In summary, the synergism of the team approach can yield a "whole
greater than the sum of its parts."
Today, it is becoming common for large reservoir studies to be
integrated through a team approach. However, creating a team does not
guarantee an integration that leads to success. Team skills, team
authority, team compatibility with the line management structure, and
overall understanding of the reservoir management process by all team
members are essential for the success of the project. Also, most
reservoir management teams are being assembled only at key investment
times. Missing today are ongoing multidisciplinary reservoir management
efforts for all significant reservoirs.

Synergy is not a new concept. Halbouty, chairman and CEO Of

Michael T. Halbouty Energy Co. in Houston, a long-time advocate of
synergy and team approach, recognized this concept as basic to future
petroleum reserves and production.14 According to Sneider, "synergy
means that geologists, geophysicists, petroleum engineers and others
work together on a project more effectively and efficiently as a team
than working as a group of individuals."'5 Talash advocated that teamwork
between reservoir and production/operation engineers is essential to
waterflood project management. The team approach to reservoir management
is essential and involves the interaction between management,
engineering, geoscience, research, and service functions.' We emphasize
again that the team members should work as a well-coordinatcd "basket-
ball team" rather than a "relay team."