To produce the record amounts of oil the industry is currently seeing, it takes a pretty good idea of what lies below the surface as well as a solid plan to produce all of those hydrocarbons. But despite companies pumping out record amounts of production, at least one study claims operators aren’t hitting their expected production targets.

In a recent study of 70 worldwide onshore and offshore projects, Westwood Global Energy Group reported that half of oil and gas fields are not producing to expectations because of unexpected reservoir issues and 70% of the fields studied with limited appraisal were found not to perform to the development plan. The report stated that “most of the subsurface risks identified could have been mitigated before the start of a project with more effective well appraisal.”

Westwood benchmarked the appraisal programs of 70 producing fields to understand how production performance is related to the effectiveness of appraisal in reducing subsurface uncertainties, the study reported.

Westwood said the lesson learned with the report is the importance of a quality well appraisal strategy and its impact on field performance.

Halliburton’s Leo Sayavedra, director of mature fields consulting and project management, said in an exclusive interview with E&P that there is “some truth” to fields underperforming or not performing as expected, a result of several potential factors starting with the recent downturn and subsequent across-the-board funding cuts.

“What you find is there are cutbacks in capital and resources, not just for future projects but the ongoing development of projects,” he said. “Where you have senior personnel who can independently model these fields out and produce the predicted forecasts, you’ve got less of those people. They have been counseled out of their organizations for cost reasons or there hasn’t been enough work to do at that particular time. The quality of your models of production forecasts suffers as a result of that.”

As Westwood noted in its study, the effectiveness of a field appraisal program is only apparent once the field comes onstream, which is typically many years after its initial appraisal. Misunderstanding the subsurface and its potential recovery “could have a catastrophic impact on production performance,” Westwood reported.

Of the 70 fields studied, 43 demonstrated deviations in reserves and/or production of greater than 10% above or below the plan at the sanctioning part of the project planning, according to Westwood.

Sayavedra cited the importance for a company to have a “look-back” process on its field appraisal program that would enable them to test those initial assumptions through such mechanisms as a peer review. However, such mechanisms aren’t possible for many operators.

“A lot of organizations don’t have that infrastructure in place,” he said. “If you’re a midsize oil company, once you come up with a field development plan and the well test information comes in, maybe some of it will be used and it will help with perhaps how you structure the completions or where you land the wells. But you’re likely not going to have a rigorous peer review process where you have senior geologists and reservoir engineers who are really trying to question the assumptions that were made initially just because there’s not enough organizational will to do it.”

As the industry continues its climb out of the downturn doldrums, companies have been focused on improving drilling and completions efficiencies. But if production rates are, in fact, not meeting expected predictions, those same efforts that have led to lower development costs might find their way to figuring out production challenges.

Brian Walzel’s Completions and Production column originally appeared in the June 2018 issue of E&P.