Underbalanced drilling is becoming one of the fastest growing technologies in the drilling industry. The benefits of this technology are intuitive. Formation damage can be minimized if proper circulating fluids and operating parameters are chosen. There is an opportunity for reservoir evaluation while drilling, lost circulation and differential sticking can be avoided, and higher penetration rates may be performed. Since 1998, the need to use underbalanced drilling in Algeria as an alternative to overbalanced drilling becomes apparent. In as much as some zones in Hassi Messaoud field are depleted sandstone reservoirs, conventional drilling operations will lead to an impairment of the subject pay zones. This study describes the process of how underbalanced drilling can be implemented in Hassi Messaoud field, assessing the operational feasibility and economic benefits to the company due to improved oil production. Operationally, it is essential to determine bottom-hole pressure profile and optimize nitrogen injection rates in order to achieve both true underbalanced conditions and good hole cleaning. In today's business environment, some projects, while technically feasible, may not be economically feasible. In the economic analysis, the competitiveness of underbalanced drilling versus conventional drilling is evaluated. Factors such as footage cost, net present value, and payout time are considered for a future five-well project over 5-year period. Two zones are selected based on pore pressure and the amount of the recoverable oil in place. The production rate related to underbalanced drilling project is found to be 2.14 folds greater than that obtained from conventional project. In addition, this study revealed that the net present value associated to this project is less severely affected by the incremental equipment cost, whereas, it is drastically affected by the degree of formation impairment.

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