Application of Risk Analysis to Enhanced Recovery Pilot Testing Decisions
- M.L. Anderson (Mobil Research and Development Corp.)
- Document ID
- Society of Petroleum Engineers
- Journal of Petroleum Technology
- Publication Date
- December 1979
- Document Type
- Journal Paper
- 1,525 - 1,530
- 1979. Society of Petroleum Engineers
- 5.5 Reservoir Simulation, 5.4.6 Thermal Methods, 5.7.5 Economic Evaluations, 5.1.1 Exploration, Development, Structural Geology, 5.4.1 Waterflooding, 5.2.1 Phase Behavior and PVT Measurements, 2.5.2 Fracturing Materials (Fluids, Proppant), 7.2.1 Risk, Uncertainty and Risk Assessment, 7.10 Capital Budgeting and Project Selection
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Enhanced recovery pilot tests are run for a variety of reasons, such as obtaining design data and reducing commercial risk. Probability-of-success estimates made prior to such tests usually are biased on the high side. This paper presents a risk analysis method for making unbiased probability-of-success estimates in addition to the usual profitability probability-of-success estimates in addition to the usual profitability estimates.
Increasing U.S. dependence on high-priced imported oil has focused attention on maximizing recovery from existing oil fields. Recovery methods that were previously uneconomical now can be justified in previously uneconomical now can be justified in many cases. These advanced recovery techniques usually follow reservoir exploitation by primary and secondary waterflooding or pressure maintenance methods. Consequently, they have been called tertiary recovery, but more recently the term enhanced oil recovery (EOR) has come into use.
Examples of EOR processes include surfactant or low-tension waterflooding, generally used in light-oil reservoirs, and thermal methods such as steam flooding or in-situ combustion, generally used in heavy-oil reservoirs. One common characteristic of EOR processes is the requirement for high front-end investment. For chemical waterflooding processes, if the project is a failure for any reason, the investment in chemicals is lost completely and surface facilities value is reduced substantially.
Prospective EOR projects are preceded by a pilot test to reduce risk of commercial failure and consequent investment loss. This is not the only reason for conducting pilot tests. Pilot test results also are needed to provide information for design of the commercial operation.
Industry, with and without U.S. DOE support, currently is conducting a number of EOR pilots, and more will be started in future years. Many tests are described in the literature. Government and industry have a common interest in maximizing the number of pilots that are successful by selecting the best EOR process for reservoirs with the highest profit potential. This paper shows how this goal can profit potential. This paper shows how this goal can be accomplished by applying risk analysis prior to pilot test initiation. It also describes a risk analysis pilot test initiation. It also describes a risk analysis algorithm and illustrates its application with a hypothetical example involving a decision to pilot test a surfactant waterflooding process. Risk analysis results are compared with a conventional economic sensitivity analysis. As will be demonstrated, an important risk analysis output is an unbiased estimate of probability of success of the pilot test that, along with the economic results, can provide the basis for project selection and scheduling. Finally, conclusions are drawn on the merits of risk analysis for aiding pilot test decision-making.
Risk Analysis Algorithm
Risk analysis as applied to economic studies is a Monte Carlo simulation procedure whereby probability distributions and expected values of probability distributions and expected values of economic indicators, such as discounted cash flow rate of return (DCFROR) and net present value are calculated when two or more of the input variables, such as reserves and chemical requirement, are random and have estimated probability distributions.
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