This paper presents a model for the economic assessment of the balanced secondary recovery of infill drilling. The optimum production rate will be reached when further increase in production rate by increasing the number of wells will no longer contribute to the measures of profitability values. The assessment relies on a developed recovery-process model for reasonable and accurate projections of the production profiles of different well densities that will be the basis of financial evaluations. This model, which was designed for microcomputer solution, may be separated into two distinct parts. The first part permits the analytical prediction of the production rate profile based on recovery efficiency, which is dependent on drilling density, equipment capacity, and reservoir capacity. The second part of the model is an economic analysis of the production profile. Revenues from production and oil price profiles are combined with costs to yield a net cash flow. The net cash flow is then discounted and it results in three measures of profitability values. A sample example has been worked out. The program Listing in FORTRAN IV language can be made available for potential users.
The only methods effective for large scale improvement of oil recovery are the balanced secondary recovery method of infill drilling and the application of heat in viscous oil reservoirs. Reservoirs are seldom homogeneous. Characteristics such as grain size, grain composition, sorting and diagenetic and authigenic history all play important roles in porosity, permeability, and effective drainage area. Lateral continuity is a major controlling factor in drainage area. Forrest F. Craig, Jr., gives details on how to express stratification quantitatively, but does not deal with the problem of changes in permeability caused by changes in the environment. Variation in rock quality, and uncertain reef reservoir continuity in Michigan required infill drilling to allow various porosity zones to be fully exploited within the flood pattern and to maintain a minimum well spacing for oil bank formation.
Well spacing is the key to solving recovery problems caused by heterogeneity. Infill drilling will permit production of oil from parts of the reservoir that might be bypassed by standard low density well spacing. On properties that have wells of varying ages, the production characteristics of older wells should be compared with those of new wells. It is not uncommon to find wells spaced in such a way that they are in very poor communication. This results from the fact that real reservoirs are heterogeneous.
Formulas and methods developed for homogeneous reservoirs, such as material balance calculations have been erroneously applied to heterogeneous reservoirs, resulting in unreliable estimates of oilin-place. Also, model study predictions are only as close to reality as the premises and assumptions used in developing the program for the model.
The collapse in oil prices during the past several years has drastically altered the economics associated with oil and gas projects. During this time of lower oil prices, only companies making well thought, sound investments will survive until the next boom. A recovery process model for reasonable and accurate projection of production profile, that will be the basis of financial evaluation is needed. Well bore flow efficiency under the expected modes of production operations, coupled with a detailed reservoir description, are necessary for an accurate evaluation of production rate forecast.