Chapter 8 Insights: TWP Construction

Part IV of Monograph 5 is the turning point where theoretical discussions transition into practical application. After establishing fundamental principles, statistical considerations, and potential biases in earlier sections, this part focuses on the actual construction of Type Well Profiles (TWPs). Chapter 8 serves as the foundation of this section, outlining the core methodologies used to build TWPs while setting the stage for the more detailed workflows presented in Chapters 9 and 10.

Given the widespread use of TWPs in technical evaluations, business planning, and investment decisions, the construction methodology directly impacts their reliability. Chapter 8 establishes the key methods, explains their strengths and limitations, and underscores the importance of uncertainty management and proper documentation. Without a firm grasp of these concepts, misapplications of TWPs can lead to misleading forecasts and poor decision-making.

Key Methods of TWP Construction

The chapter introduces three primary approaches to building TWPs, each with distinct advantages and challenges:

1. Production Averaging Method – The most widely used approach, this method aggregates production rate-time data from selected analog wells and averages them to create a representative TWP. It is simple and intuitive but highly sensitive to selection bias, data conditioning, and production truncation. While this method often represents the arithmetic mean of the underlying wells, it can be modified to generate probabilistic TWPs (e.g., P90-P50-P10 EUR profiles).
2. Parameterization Method – Instead of averaging production data directly, this approach aggregates decline parameters (e.g., initial production rate, decline rate, hyperbolic exponent) from individual wells and reconstructs a TWP using those parameters. This method preserves key reservoir and completion characteristics but is less effective for wells with erratic production histories. It is particularly useful in cases where well performance varies significantly.
3. Model-Based Methods – These approaches utilize reservoir simulation and rate-transient analysis (RTA) to construct TWPs, making them valuable when analog production history is limited. While computationally demanding, model-based methods can be particularly useful for early-stage resource plays.

Beyond Construction: Uncertainty, Truncation, and Documentation

Beyond simply defining construction methods, Chapter 8 introduces broader considerations critical to the integrity of TWPs:

• Uncertainty Management – TWPs are inherently predictive tools, and their usefulness depends on accurately representing the range of possible outcomes. The chapter introduces key uncertainty concerns, with later sections of Part V expanding on quantification techniques.
• TWP Truncation – How and when to truncate production data is a crucial decision that can significantly affect the TWP’s reliability. This section discusses best practices for handling technical truncations and ensuring TWPs remain adaptable across economic scenarios.
• Documentation Requirements – Proper documentation is essential for transparency, reproducibility, and defensibility. The chapter outlines key elements that should be recorded in the TWP creation process, with later chapters providing more detailed recommendations.

As the first chapter in Part IV, Chapter 8 serves as the structural backbone for the practical implementation of TWPs. It introduces the primary construction methodologies, highlights their respective strengths and weaknesses, and emphasizes the importance of uncertainty management and documentation. The methods outlined here are expanded in Chapters 9 and 10, which provide deeper insights into their workflows and applications.

Next week's topic - The Production Averaging Method