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Upstream: Reserve Engineering & Geosciences: Reserve Evaluation Services

In 2014, the U.S. Department of Energy (DOE), the prime contractor in support of the Rocky Mountain Oilfield Testing Center (RMOTC), engaged Ralph E. Davis Associates (Davis) to provide an evaluation report of the Naval Petroleum Reserve No.3 (historically known as the Teapot Dome Oil Field), located in Natrona County, Wyoming. Davis was contracted to ascertain the oil and gas reserves in preparation for sale of the Teapot Dome Oil Field to a commercial operator.

The Teapot Dome Oil Field began production in the early 1900s. Designated as a Naval Petroleum Reserve in 1915, production was halted at various times for national security purposes.  In the 1920s, the field was immersed in a bribery scandal, involving the secret leasing of the naval reserves to private oil companies, and it was the largest political scandal in United States history at the time. The DOE took over operations from the U.S. Navy, who had operated the field from 1928 until 1977 but never under full production capacity.

In the early-1990s, the DOE began an additional mission with the RMOTC to operate the field as a research facility, providing the international oilfield industry the opportunity for testing techniques and equipment in an active oilfield environment.  In 2014, the DOE decided to sell the asset in order to maximize the value on the remaining reserves and undefined potential thought to exist in reservoirs capable of being exploited by new technology.

As part of the sale, Davis performed an evaluation of the remaining reserves, based upon current reporting guidelines and economic conditions, and identified upside potential in non-traditional sources, such as shales and tight sands.  A comprehensive development program was designed for a potential buyer to follow as a guide in maximizing economic returns following acquisition of the properties.  Thousands and thousands of printed documents and reports dating from the 1920s were reviewed and analyzed by the Davis staff, as well as terabytes of electronic data compiled by contract workers over the past several decades.  The Davis staff completed the entire report, from initial site visit to finalization, in five weeks.

Davis’ evaluation services delivered a report to an independent contractor who was selected to handle the presentation and sale of the properties on behalf of the DOE.  The Davis report was provided to interested purchasers, and the geological and engineering interpretations generated by Davis formed an integral part of the evaluation process. The final result of the bid process was a sale on behalf of the DOE of almost twice the pre-study sales estimate from the DOE senior staff representative.

Ralph E. Davis Associates provides engineering and geological studies, financial analysis and technical evaluations of oil and natural gas properties for use in annual reports, field development studies, sale or purchase, litigation or regulatory hearings.

Steve Hendrickson

PresidentRalph E. Davis Associates