Production forecasting expectations

A production forecast is an estimate of gross and net volumes (oil, gas, and water) expected to be produced from a hydrocarbon accumulation over its remaining life time, as well as fluids injected to produce these volumes (water, gas, and steam). The forecast must be aligned with the hydrocarbon lifecycle development strategy and plans.

Perfect production forecasting

Imagine you had a time machine and you could travel 30 years into the future. You could observe the production of your asset to the end of its field life and know exactly what your field has produced over time. You could come back to the present and make the perfect forecast. As a forecaster, it is your job to approximate this forecast as closely as possible. Of course, in the future you would also find out that there is no such thing as a perfect forecast and that your forecast deviates from the actual production because today you have imperfect information. Important assumptions like fluids in place, subsurface model, well performance, well and project schedules, facility uptime, as well as cost and product price relevant for the forecast, will be quite different than you can possibly know today. As a forecaster it is your job not only to forecast this future production as closely as possible, but also to determine an uncertainty range that reflects the imperfections in your data and perhaps the inadequacy in the tools you use. This implies that every forecast must be made with an uncertainty range.

Production forecasting minimum expectations

As a minimum a quality production forecast must:

• Be based on available field data or appropriate analogs for input parameters.
• Honor production system constraints as well as commercial, economic or technical limitations.
• Realistically model system availability and activity scheduling.
• Use a consistent set of assumptions for forecasts of all fluids (liquids and gases) produced and injected. There should be a smooth transition between history, short-term forecast and long-term forecast. Investment should be justified using true incremental production (taking into account interference with existing production).
• Recognize uncertainty always exists and therefore give a range on expected outcome.
• Reflect understanding of actual performance against past forecasts and anticipate future changes, both positive and negative, preferably through a linked asset risk/opportunity register. A regular comparison should be made of forecast vs. actual for each component of the forecast to continually improve the forecast.
• Involve all stakeholders who have an impact on the forecast; a multidiscipline approach is essential. Assumptions in a forecast need to be agreed upon, clearly documented and stored appropriately for future reference.

Noteworthy books

Society of Petroleum Engineers (U.S.). 2011. Production forecasting. Richardson, Tex: Society of Petroleum Engineers. WorldCat or SPE Bookstore

External links

Production forecasts and reserves estimates in unconventional resources. Society of Petroleum Engineers. http://www.spe.org/training/courses/FPE.php

Production Forecasts and Reserves Estimates in Unconventional Resources. Society of Petroleum Engineers. http://www.spe.org/training/courses/FPE1.php

See also

Production forecasting glossary

Aggregation of forecasts

Challenging the current barriers to forecast improvement

Commercial and economic assumptions in production forecasting

Controllable verses non controllable forecast factors

Discounting and risking in production forecasting

Documentation and reporting in production forecasting

Empirical methods in production forecasting

Establishing input for production forecasting

Integrated asset modelling in production forecasting

Long term verses short term production forecast

Look backs and forecast verification

Material balance models in production forecasting

Probabilistic verses deterministic in production forecasting

Production forecasting activity scheduling

Production forecasting analog methods

Production forecasting building blocks

Production forecasting decline curve analysis

Production forecasting expectations

Production forecasting flowchart

Production forecasting frequently asked questions and examples

Production forecasting in the financial markets

Production forecasting principles and definition

Production forecasting purpose

Production forecasting system constraints

Quality assurance in forecast

Reservoir simulation models in production forecasting

Types of decline analysis in production forecasting

Uncertainty analysis in creating production forecast

Uncertainty range in production forecasting

Using multiple methodologies in production forecasting