Net Pay and Cutoff Sensitivity

Net Pay Depends on a Choice

Net pay is rock that is clean, porous, and hydrocarbon-bearing. But clean enough and porous enough are choices. Cutoffs, a minimum porosity, a maximum shale volume, a maximum water saturation, decide which rock counts as pay. They come partly from physics (a permeability floor below which the rock will not flow) and partly from judgement, and the judgement moves the answer.

The Sensitivity

The widget sweeps the porosity cutoff and tracks two things: the net-to-gross and the hydrocarbon pore volume, the quantity $\sum \phi,(1-S_w)$ over the net cells that ultimately sets the oil in place. Tighten the cutoff and both fall, sometimes sharply. The same well can yield a materially different booked volume depending purely on where the analyst draws the line.

Why We Report It

Because the cutoffs are partly subjective and the volume is sensitive to them, a careful study does not quote a single number; it reports the cutoff sensitivity alongside the estimate. This is one of several subjective choices, the conceptual model was another, that propagate into the in-place volumes and the uncertainty around them. We return to that uncertainty in the volumetrics chapter.