Buffalo Field covers a large area on the southwestern flank of the Williston Basin, in the northwest corner of South Dakota. In 1987, 8,000 acres of the field were divided into two units to initiate improved oil recovery operations with two different methods: air injection and waterflooding. After collecting 18 years of production history a comparison has been made between the two projects to determine the relative success of both units.

In a previous paper (SPE 99454) the technical comparison of the projects was discussed and the superiority of the air injection project was demonstrated. This second paper addresses the economic analysis of both projects in terms of economic parameters such as net present value, payout time, incremental profit and rate of return. A sensitivity analysis on some of the key drivers of the project economics namely oil price, operating cost and capital investment was also performed.

In spite of being technically less successful, the West Buffalo "B" Red River Unit (WBBRRU) under waterflooding has shown greater economic benefit over its "twin" West Buffalo Red River Unit (WBRRU) under air injection. This results primarily from the low oil prices (less than $20/bbl) experienced during most of the life of the projects.

This case study shows that for an air injection project to be successful not only technically but also economically, a sufficiently high oil price (greater than $25/bbl) is needed due mainly to the high operating costs and capital investment.

Air injection can be an economically attractive IOR process in large prospects, particularly in deep, high pressure, low permeability reservoirs where water injectivity is limited and other recovery processes become uneconomic.

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