Intelligent well technology, referring to the implementation of fundamental process control downhole, has advanced rapidly over the last decade in the upstream oil and gas industry. Application of this technology has continued to expand since recent installation results have demonstrated the value of these completions with a high success rate that operators find attractive.

In this paper, we present an economic evaluation procedure to quantify the benefit of Intelligent Well Systems based on net present value (NPV) calculations. Reducing well count and eliminating or reducing interventions by using Intelligent Well Systems has the potential to add many millions of dollars to well NPV, since drilling rig and workover costs may be very expensive, especially in offshore deepwater environments. Delayed revenue associated with production shut-in also must be considered and reduced by discount rate at the same time that intervention and well operating costs increase by inflation rate.

The use of Intelligent Well Systems not only reduces or eliminates some capital and operating costs, but also allows operators to accelerate oil production, increase the ultimate recovery and reduce water handling cost, which result in significant benefits in NPV of a project. Thus, Intelligent Well Systems are becoming economically attractive for modest-cost onshore operations as well as for the high-cost offshore environments for which they were initially deemed applicable.

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