What is Estimated Ultimate Recovery (EUR)?
Estimated Ultimate Recovery (EUR) is a term specifically used in the oil and gas industry. It is the estimate of the total quantity of oil and/or gas that can ultimately be recovered from an oil reserve or a field. Simply put, it is the estimated quantity of expected total production from an oil reserve or well.
- Estimated Ultimate Recovery (EUR) is an estimate of the total quantity of oil and/or gas that can ultimately be recovered from an oil reserve or a field.
- The EUR is classified into three different categories: proven reserves, probable reserves, and possible reserves.
- The change in EUR depends on a few factors that directly affect the production of oil and gas. They include time duration, changes in production technology, or changes in oil production infrastructure, changes in methods of oil recovery, and so on.
Estimated Ultimate Recovery – Purpose
The estimated ultimate recovery (EUR) measure is of very high importance in the oil and gas industry. Every oil and gas recovery project is required to perform a EUR assessment to determine its value. The project can then be assessed whether it will be feasible and profitable. It is the basic purpose of the EUR measure.
The EUR is sometimes also referred to as the net present value (NPV) metric of the oil and gas industry. It determines the net present value of an impending project and helps ascertain whether it is feasible and profitable or not.
Estimated Ultimate Recovery – Categories
The EUR is further classified into three different categories, each based on the potential recoverability of the oil from a reserve or a field using the current infrastructure and technology. The three categories are:
- Proven Reserves: Oil reserves with a 90% chance of recovering the oil
- Probable Reserves: Oil reserves with a 50% chance or greater of recovering the oil.
- Possible Reserves: Oil reserves with a recovery potential but of a less than 50% chance of recovering the oil.
The EUR is calculated using several different methods depending on the project to be carried out. However, it involves the use of the same few parameters including the cost of production, capital, the cost of oil, inputs, and technology used to extract oil, etc.
The production data sample that is taken is a minimum of several months. It is done because the EUR is an estimation or approximation, and several months’ data is required in order to avoid compromising the integrity of the approximation.
Changes in the EUR
The EUR never remains constant. For any production well, reservoir, or oil field, the value can change over time. The change in EUR depends on a few factors that directly affect the production of oil and gas. They include time duration, changes in production technology, changes in oil production infrastructure, changes in methods of oil recovery, and so on.
The unique aspect of oil reserves is that the potential of recoverability of an oil field can change over time. It is possible to convert the probable and possible reserves mentioned above into proven reserves with the passage of time and with the direct influence of the aforementioned factors.
Sources of Oil and Gas Production Data for Estimating the EUR
The prime source of domestic oil and gas production data for the purpose of estimating the EUR is the IHS Production Database from the IHS Energy Group, 2000. The group stores monthly oil and gas production data on a lease by lease basis.
In addition, oil and gas production data is also procured from the database of various state or governmental sources. After gathering all data, the EUR is estimated.
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