Reserves Evaluation, Reporting and Sensitivity Analysis of Tight Gas Project Under Royalty & Tax System in British Columbia, Canada

Abstract

With the declination of production and increasing of fossil-fuel demand, petroleum companies strive to maximize production by conducting more advanced drilling operations, such as extended reach, horizontal and high-pressure/high-temperature (HP-HT) drilling and multistage hydraulic fracturing, which are expanding globally into unconventional resources drilling. Tight gas, which constitutes for a significant percentage of the natural gas resource base and offers tremendous potential for future reserve and production growth, was becoming an increasingly important asset for petroleum companies. Canada has an abundant tight gas resource, which attracted major international oil companies. Royalty & tax system is the main contract mode in Canada and different provinces have different royalty tax items. Royalty rate not only depends on gas price and production, but also relies on gas component, drilling zones, spud time, well type and well depth. Canadian royalty & tax system is the most complex system all over the world, coupled with complexity characteristics of tight gas reservoir. Therefore, reserves evaluation and reporting for tight gas reservoir in Canada are a significant problem. This paper takes a tight gas project in British Columbia (Canada) as an example, combining the characteristics of the tight gas reservoirs with royalty & tax policy of this region, the research on tight gas reserves evaluation and the principles of net reserves calculation under royalty & tax contract were carried out. The four main aspects such as technique, economy, commerce and engineering were studied to analyze the influence on net reserves from the following factors: production, declining rate, development plan, oil price, taxes, Opex (operating costs) and Capex (investment), etc. Sensibility analysis was conducted by adopting the most weighted factors, such as oil prices, production, Opex and Capex. All the effort was to put forward the corresponding suggestions on optimizing development strategy, solve the current reserves evaluation problems of tight gas, and provide reference for the tight gas assets transaction, development and perfection of reserves value evaluation.

Copyright 2018, Shaanxi Petroleum Society.

This paper was prepared for presentation at the 2018 International Field Exploration and Development Conference in Xi’an, China, 18–20 September 2018.

This paper was selected for presentation by the IFEDC Committee following review of information contained in an abstract submitted by the author(s). Contents of the paper, as presented, have not been reviewed by the IFEDC Committee and are subject to correction by the author(s). The material does not necessarily reflect any position of the IFEDC Committee, its members. Papers presented at the Conference are subject to publication review by Professional Committee of Petroleum Engineering of Shaanxi Petroleum Society. Electronic reproduction, distribution or storage of any part of this paper for commercial purposes without the written consent of Shaanxi Petroleum Society is prohibited. Permission to reproduce in print is restricted to an abstract of not more than 300 words; illustrations may not be copied. The abstract must contain conspicuous acknowledgment of IFEDC. Contact email: paper@ifedc.org.