Domestic and International Oil and Gas Advisory Services

the

SCOTIA GROUP, INC.

4th Quarter 2000
MARCH 2003 NEWSLETTER

In This Issue:
AVO The Basics Linking Rock Physics & Seismic Attributes Page 1

AVO The Basics Linking Rock Physics & Seismic Attributes

By Dan M. Cox

Scotia Announces Two New Additions to Spring 2003 Short-course Series Scotia Sedimentology Course Series Gets Birds-eye View Scotia Technical Paper Presentations Scotia Announces Election Of New Officers Scotia Web Site Calendar of Events Corporate Profile

Figure 1

Introduction
3 Direct identification of porosity and fluid effects with seismic data is of great interest in exploration and production. In the past 10 years, both E&P and service companies have made great efforts in using AVO (amplitude versus offset) techniques to greatly increase exploration success ratios. In more recent years, great advances have been made in reservoir characterization using AVO information such as elastic inversion for fluid identification and lithology discrimination. So what is AVO and why is 3D AVO the most important technology, after 3D seismic itself, to come along in the last 15 years?

4 4 4

Amplitudes
When seismic amplitude anomalies were discovered to identify gas, companies began to drill them wherever they occurred. However, many amplitudes have no ties to hydrocarbons. The amplitudes can be caused by geologic bed geometry, porosity, lithology, processing pitfalls, poor pre-stack interpretation and numerous other reasons. Early AVO workers in the Gulf of Mexico and onshore Gulf Coast U.S. found that these successful stack amplitudes that resulted in gas discoveries were different. The amplitudes were seen to come from not only the near angles on the shot record gathers, but also the far angles, greater than 25+ degrees. Stack seismic comes from summing and averaging all amplitudes on the shot record for one time sample. AVO was thus born.

Scotia Fall 2003 Insert Short-course Series Schedule and Instructors

integral part of any seismic interpretation project (see Figure 1).

AVO What Is It?

AVO is the change in amplitude versus angle of incidence of the seismic wave encountering the geologic boundary across which rock properties change (see Figure 2). The principle components of seismic waves are P (compressional) and S (shear). Particle motion from the P wave is parallel to the direction of wave propagation, while the S wave is perpendicular. As the angle of incidence increases, the S wave begins to contribute, via mode conversion, to the P wave energy returning to the surface. P wave and shear wave velocities are determined by rock compressibility and rigidity. The components of the rock, the minerals, the fluids, and the framework contribute to the overall compressibility and rigidity of the rock and directly influence P and S waves.

Figure 2

AVO
Key investigations and papers by Ostander (1984), Shuey (1985), Rutherford and Williams (1989), Smith and Gidlow (1987), Castagna, et al. (1993) and many others put AVO on the map. Over the last 15 years, the geoscience community has been very busy tying seismic AVO information, well log, core, rock lab measurements, surface geology or any type of data that increases the detailed descriptions of reservoir rock and fluid properties. Routine AVO analysis incorporates geologic, geophysical and petrophysical data about the reservoir and is an

AVO Gathers
When seismic data is acquired, the same area in the subsurface is sampled from many different directions and angles. The basic seismic data is the shot gather, which is all of the seismic samples that occur within a certain size area known as a bin (see
Continued on page 2

Geophysics
Synthetics Fault & horizon interpretation Attribute analysis

AVO The Basics Linking Rock Physics & Seismic Attributes Figure 3
Continued from page 1

SCOTIA I N T E G R AT I O N

Velocity analysis Depth mapping

Geology

Correlations

Figure 2). In AVO gather evaluation, the amplitudes are measured and plotted versus offset/angle of incidence, with a best-fit curve calculated. The slope of the best-fit curve is the gradient, referred to as G. The intercept, at zero degrees incidence angle or offset, is the P wave reflection or P. By measuring amplitudes versus offset at every time sample in the gather, all trends and anomalous changes in P and G can be tracked. P and G are the basic building blocks of all AVO attributes. Rutherford and Williams classified AVO responses as I, II, or III (see Figure 3). Class I AVO response is when the top of the reservoir is represented by an increase in impedance (peak). These gas sands show dim-outs in stack data. Class III AVO response is when the top of the reservoir is a decrease in impedance (trough). These are Gulf Coast bright spots. Class II AVO response is when the top of the reservoir is represented by a peak that decreases in amplitude, changing to a trough at far

CLASS 1
0.1

High-Impedance Reservoirs "Dim outs"

CLASS 2

Near Zero Impedance Reservoirs "Polarity Reversals" 0.1

Rock description

CLASS 3
0.2 Low-Impedance Reservoirs "Bright Spot"

Sequence stratigraphy

Deposition architecture

Structure interpretation Reservoir mapping Volumetrics

References Castagna, J.P., Batzle, M.L., and Kan, T.K., 1993, Rock physics the link between rock physics and AVO response, Offset-dependent reflectivity-theory and practice of AVO analysis, edited by Castagna, J.P. and Backus, M.M., 135-171. Ostrander, W.J., 1984, Plane-wave reflection coefficients for gas sands at non-normal angles of incidence, Geophysics, 49, 1637-1648. Rutherford, S.R. and Williams, R.H., 1989, Amplitude-versus-offset in gas sands, Geophysics, Vol. 54, p680-688. Smith, G.C., and Gidlow, P.M., 1987, Weighted stacking from rock property estimation and detection of gas, Geophys. Prosp., Vol. 35, 993-1014. Shuey, R.T., 1985, A simplification of the Zoeppritz equations, Geophysics, 50, 609-614. Mr. Cox is founder and Principal Geophysicist of the on-line econsulting service known as avoavaz.com, specializing in real-time AVO modeling and 3D AVO analysis. He is currently working with Scotia Group as a Senior AVO Specialist on a PEMEX contract, which focuses on reservoir characterization and defining of reservoir limits for new discoveries in the Burgos and Sabinas basins. Mr. Cox will teach a one-day short-course entitled Basics of AVO Interpretation Workshop on March 24, 2003 as part of Scotias Spring 2003 Executive Short-course Series (see insert).

Figure 4

Petrophysics
Curve editing

Routine & SCAL core

Petrophysical model Permeability model Rock properties

Attribute modeling

Reservoir Engineering

Reservoir properties

angles/offset. On stack seismic these gas sands are invisible. With careful AVO processing, these gas sands can be seen directly and nearly as robustly as Class III bright spots.

Production maintenance Productivity analysis Reserves analysis

AVO Attributes
Mathematical manipulation of the basic AVO components, P and G, lead to numerous AVO attributes that are applicable to various reservoir types (see Figure 4). P * G cross-plotting, for example, can be used over a prospect or the entire 3D cube (see Figure 5).

Predictive estimates Economics and risk

Conclusions
AVO technology is the leading edge seismic tool in the oil and gas exploration/development community. Exciting changes are currently taking place, including AVO pre-stack elastic inversion for rock property mapping, 3-term inversion for Density volumes and AVAZ (Amplitude versus Angle and Azimuth) for calibration and prediction of fracture spacing and azimuthal direction. Give it a look.

Figure 5

Well Completions
Perforating and testing Pre-frac design Hydraulic fracing Post-frac diagnostics

Scotia Announces Two New Additions to Spring 2003 Short-course Series

Scotia is pleased to announce two new additions to its March 2003 Executive Short-course Series. Mr. Dan M. Cox, founder and Principal Geophysicist of the on-line econsulting service known as avoavaz.com, will present a course entitled Basics of AVO Interpretation Workshop. The course will present the methods by which geophysical, geological, and petrophysical data are incorporated into introductory level AVO data interpretation. The course will include both lectures and hands-on exercises, using software and actual AVO data. Mr. Jerry Tabb, formerly with Texacos Corporate Reserve Group, will join Mr. Dave Crossley in presenting an expanded two-day course entitled Oil & Gas Reserves SEC Requirements and Beyond. In addition to a full review of SEC proved reserves and economic requirements including a detailed discussion of the SEC Standardized Measure, the two-day course will give an overview of how and why oil and gas reserves are estimated, changed, and compared and how they influence company earnings. A course offering which includes a listing of instructors with background information and a registration form is included as an insert in this Newsletter and can also be found on Scotias website at www.scotia-group.com.

Scotia Announces Election of New Officers

The Board of Directors of Scotia Group has announced the election of the following new officers: Mark A. Cocker has been elected Chief Operating Officer of the firm. Mark joined the firm in 1992 and has been responsible for all aspects of geological and petrophysical work within the company, heading up reservoir simulation studies and business development efforts with emphasis on Mexico and Latin America. He has over 28 years of industry experience. Patrick H. Lowry has been elected President of the company. Patrick has been associated with the firm since 1996 and has been responsible for Scotias reservoir characterization and analytical support efforts for reservoir simulation. His specialties include statistical analysis of reservoir parameters, numerical surface modeling, and reservoir model development. Patrick has over 24 years of industry experience. Gene B. Wiggins has been elected Executive Vice President. Gene joined the firm in 2000 and has been responsible for business development efforts in addition to reservoir engineering, production engineering, and reserves estimation work and engineering contributions to integrated study teams. He is a former National President of SPEE. Gene has over 25 years of industry experience. Both David I. Heather and Robert H. Caldwell, co-founders of the firm, will continue to play active roles in the company and will remain on the Board of Directors.

Scotia Sedimentology Course Series Gets Birds-eye View

Last October, Scotia Group hosted a field trip for nineteen PEMEX Geologists across the Grijalva Delta in Tabasco State. The trip was the highlight of a six-week course series in sedimentology presented by Scotia and held in Villahermosa, which included many classroom lectures, a core workshop and mentoring of students as they worked their own projects. The field trip combined aerial reconnaissance with on-the-ground investigation of modern siliciclastic depositional systems. PEMEX provided a large Bell helicopter for access to remote areas and a birds-eye view of many settings, including braided and meandering rivers, delta plain complex and coastal barrier/strandplain systems. Following an awards ceremony for course graduates, PEMEX hosted a banquet luncheon for course graduates, Scotia instructors and PEMEX management. More photos of the course series are available on our web site at www.scotia-group.com.

Scotia Technical Paper Presentations

Burgos Basin Play Analysis Reveals FrioVicksburg Exploration Focus Areas was presented by Mark Cocker, Scotia Chief Operating Officer, to a packed house of the Houston Geological Societys monthly luncheon meeting on January 29, 2003. The presentation outlined the considerable exploration potential and reserves growth opportunities that exist from field rehabilitation in Mexicos Burgos Basin. Coauthors of the paper included Lynne R. Goodoff, The Scotia Group; J. Antonio Cuevas Leree, Ricardo Martinez Sierra, and J. Javier Hernandez Mendoza of Pemex Exploration and Production; and Douglas S. Hamilton of Hamilton Geosciences. They Paid How Much for that Producing Property? by David L. Heather, Scotia Partner, and Gene B. Wiggins, Scotia Executive Vice President, was presented by Mr. Wiggins to a joint meeting of the Oklahoma City SPE and SPEE chapters on December 19, 2002. Over 120 attendees, one of the largest crowds at recent Oklahoma City meetings, listened to Mr. Wiggins discuss the typical discount rates that successful companies are using today to secure winning bids for producing properties and the factors that successful bidders consider in arriving at their bids.

Scotia Web Site

Learn more about Scotia Group who we are and what we do on our website at www.scotia-group.com. The site has detailed resumes of our staff members, gives complete information on the services we offer, and provides a partial listing of clients weve worked for as well as recent projects weve completed. In addition, there is complete information on our upcoming Spring 2003 Short-course Series. We also continue to offer free downloads from our site, including our M&A database, historical oil and gas prices, and acquisition price trends. A Spanish translation of the web site is also available. We invite you to visit our web site and welcome your comments and suggestions!

Free Downloads
Scotia offers at no cost its databases of mergers and acquisitions, oil prices and gas prices. In addition, historical oil and gas price graphs are available for download. All data provided is from public domain information. The databases can be accessed through our website at www.scotia-group.com.

2003 Calendar of Events

March April
SIPES Annual Meeting, 2-4, Midland SPE Hydrocarbon Economics and Evaluation Symposium, 5-8, Dallas

May
OTC, 5-8, Houston AAPG Annual Meeting, 11-14, Salt Lake City SPEE Annual Meeting, 18-20, Charleston

June
AAPL Annual Meeting, 5-7, Denver IPAA Mid-year Meeting, 18-27, Boca Raton SPWLA 44th Annual Symposium, 22-25, Galveston

July

August

September
AAPG International Conference & Exhibition, 21-24, Barcelona

October
SPE Annual Technical Conference & Exhibition, 5-8, Denver API Annual Meeting, 19-21, New Orleans GCAGS Conference, 22-24, Baton Rouge SEG International Exposition & Annual Meeting, 26-31, Dallas IPAA Annual Meeting, 27-29, New Orleans

November
GSA Annual Meeting, 2-5, Seattle

Corporate Profile
Scotia is a full service oil and gas advisory firm founded in 1981, employing geologists, geophysicists, engineers, petrophysicists and computer specialists with extensive worldwide experience. Services provided include expert opinion reports, acquisition valuation, exploration analysis, reservoir studies and simulation, research and technology applications, strategic planning and risk analysis, and reserves analysis and property valuation. The firms clients include major and independent oil companies, financial institutions, government agencies, and the legal community. Scotias work for clients has been equally divided between the U.S. (all major producing basins) and international locations including South America, Southeast Asia, Africa, and Eastern and Western Europe. To learn more about our firm, we invite you to visit our website at www.scotia-group.com or contact Gene Wiggins in our Houston office or Dave Heather in our Dallas office.

THE SCOTIA GROUP, INC. 363 North Sam Houston Parkway East, Suite 790 Houston, Texas 77060 Phone: 281-448-6188; Fax: 281-448-6189 Dallas, Texas; Phone: 214-987-1042 E-mail: Houston@scotia-group.com Web site: www.scotia-group.com

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