Statistical Methods for Estimating Petroleum Resources International Association for Mathematical Geology STUDIES IN MATHEMATICAL GEOLOGY 1. William B. Size, Editor Use and Abuse of Statistical Methods in the Earth Sciences 2. Lawrence J. Drew Oil and Gas Forecasting: Refl ections of a Petroleum Geologist 3. Ricardo A. Olea, Editor Geostatistical Glossary and Multilingual Dictionary 4. Regina L. Hunter and C. John Mann, Editors Techniques for Determining Probabilities of Geologic Events and Processes 5. John C. Davis and Ute Christina Herzfeld, Editors Computers in Geology—25 Years of Progress 6. George Christakos Modern Spatiotemporal Geostatistics 7. Vera Pawlowsky–Glahn and Ricardo Olea Geostatistical Analysis of Compositional Data 8. P. J. Lee Statistical Methods for Estimating Petroleum Resources STATISTICAL METHODS FOR ESTIMATING PETROLEUM RESOURCES P. J. Lee 3 2008 1 Oxford University Press, Inc., publishes works that further Oxford University’s objective of excellence in research, scholarship, and education. Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne Mexico City Nairobi New Delhi Shanghai Taipei Toronto With offi ces in Argentina Austria Brazil Chile Czech Republic France Greece Guatemala Hungary Italy Japan Poland Portugal Singapore South Korea Switzerland Thailand Turkey Ukraine Vietnam Copyright © 2008 by Oxford University Press, Inc. Published by Oxford University Press, Inc. 198 Madison Avenue, New York, New York 10016 www.oup.com Oxford is a registered trademark of Oxford University Press All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of Oxford University Press. Library of Congress Cataloging-in-Publication Data Lee, P. J. Statistical methods for estimating petroleum resources / P.J. Lee. p. cm. Includes bibliographical references and index. ISBN 978-0-19-533190-5 1. Petroleum—Statistics. 2. Petroleum reserves—Statistics. 3. Petroleum industry and trade—Statistics. I. Title. TN871.L374 2008 333.8′23015195—dc22 2007023993 9 8 7 6 5 4 3 2 1 Printed in the United States of America on acid-free paper Pei-Jen (P.J.) Lee 1934–1999 Oxford University Press mourns the loss of P.J. Lee, scholar, teacher, author, and friend. He completed work on this book just before his untimely death, and we gratefully dedicate it to him in recognition of his lifelong commitment to science. v This page intentionally left blank Foreword to the Series This series, Studies in Mathematical Geology (SMG), is issued under the auspices of the International Association for Mathematical Geology. It was established in 1984 by founding editor Richard B. McCammon to serve as an outlet for book-length contributions on topics of special interest to the geomathematical community and interdisciplinary branches that look to the Association for leadership in the application and use of mathematics in geoscience research and technology. SMG no. 8 describes the underlying statistical concepts and meth- odology used by the PETRIMES system for petroleum resource assess- ment. Research on PETRIMES was initiated in 1979 at the Geological Survey of Canada by P. J. Lee, who acknowledged Prof. Gordon Kaufman’s original discovery process model as his inspiration. The manuscript was written in 1999 during Prof. Lee’s tenure at the National Cheng Kung University of Taiwan, shortly before his regrettably early, unexpected death. Originally intended as a text for graduate students, Statistical Methods for Estimating Petroleum Resources summarizes Prof. Lee’s research on the topic. The PETRIMES system, widely used in the petroleum industry, continues to evolve. Jo Anne DeGraffenreid, Editor Baldwin City, Kansas, USA vii This page intentionally left blank Foreword Oil and gas discovery process modeling bloomed during the late 1970s and early 1980s. P. J. Lee was a principal gardener. He nourished its development with passion. P. J. insisted that forecasts of undiscovered oil and gas in petroleum plays that he analyzed be based on sound geol- ogy and accurate modeling. It is one thing to construct a model of oil and gas discovery in a petro- leum play and publish a paper describing how to apply it to one or two example plays. However, a much larger and more diffi cult undertaking is the construction of a smoothly functioning system for the projection of future discoveries in each of a hundred plays with widely varying geological characteristics and discovery histories based on models of oil and gas discovery. P. J. was an intellectual spark plug who, with single-minded intensity, insisted on logical rigor, careful calibration, and constant improvement of just such a system: PETRIMES. He and his longtime colleagues Richard Procter and Paul Wang created this fl agship of petroleum discovery systems. P. J. continued to modify and improve it until he left us—much too soon. We are fortunate that he chose to write for us this account of discov- ery process modeling. It refl ects his long and deep experience in appli- cations of PETRIMES to petroleum plays throughout the world, and to plays in Alberta’s Western Canada Sedimentary Basin in particular. In addition to being an invaluable record of research for a period of nearly 20 years, this manuscript is a benchmark for future research. It is required reading for the next generation of practitioners. I have always been struck by the elegant fashion in which the Geological Survey of Canada presents its periodic summaries of Canadian oil and gas remaining to be discovered. These publications bear P. J.’s mark. If he were still with us, I know that he would be an enthusiastic participant in applying the new wave of computational methods washing over computer modeling and simulation. I met P. J. soon after his arrival at the Institute of Sedimentary and Petroleum Geology. It was clear from the outset that he was beyond dedicated, driven perhaps, to understand and to get it right. Although I wish that I could have had more personal time with him, we maintained ix