What is Oil Initially in Place (OIIP)?
Oil Initially in Place (OIIP) represents the estimated total volume of crude oil present in a reservoir when initially discovered. Unlike oil reserves, OIIP pertains to the potential total oil present and not solely the extractable portion. To calculate OIIP, engineers evaluate the porosity of the surrounding rock, water saturation levels, and the reservoir’s net rock volume, often determined through a series of test wells.
The Nuances of Oil Initially in Place
Oil Initially in Place (OIIP) is sometimes referred to simply as Oil in Place (OIP) or, in specific contexts, under variations like Stock Tank Oil Initially in Place (STOIIP). STOIIP makes it explicit that the volume estimate is based on the oil’s volume at surface temperature and pressure, distinct from its compressed state in the reservoir. The term Original Gas in Place (OGIP) refers to similar calculations in natural gas reservoirs. Hydrocarbons Initially in Place (HCIIP) is a generic term encompassing both oil and gas estimates for potential drill sites.
The Importance of Oil Initially in Place (OIIP)
Understanding and assessing OIIP is pivotal in evaluating the viability of developing an oil field. OIIP provides an indication of a reservoir’s potential, forming the basis for initial economic assessments. Although knowing the total number of barrels in a reservoir is crucial, it merely begins the broader analysis needed for deciding whether to proceed with drilling. OIIP facilitates oil companies in estimating volumes under leases, aiding strategic planning.
Despite the apparent magnitude of OIIP, only a fraction is typically recoverable with current technologies, and the characteristics of the formation influence drilling costs. Hence, assessing OIIP triggers further analyses to determine technologically and economically recoverable volumes. These insights guide oil companies in deciding whether or not current market conditions justify drilling and production.
For instance, should modern extraction technologies allow for the recovery of only 50% of the OIIP, an oil firm might categorize those acres as probable reserves, deferring development awaiting better technological solutions or favorable market conditions. Conversely, rising global oil prices might turn previously marginal reservoirs viable and profitable, prompting re-evaluation and potential drilling. Consequently, oil companies continually refine their understanding of OIIP concerning market dynamics to optimize revenue and strategic drill decisions.
Related Terms: Stock Tank Oil Initially in Place (STOIIP), Original Gas in Place (OGIP), Hydrocarbons Initially in Place (HCIIP), Recoverable Reserves.
