Economic Evaluation of Thermal Recovery Projects

Abstract

SPE Members Abstract This paper presents a technique of economic evaluation of enhanced oil recovery projects for steam injection and insitu combustion. In 1980, Williams and Ramey presented a model for the economic evaluation of steamfloods and in-situ combustion projects. Our study revises and updates their work. The oil recovery schedules for steam injection were generated using a modified Marx and Langenhiem model and the recovery for in-situ combustion was computed using the Gates and Ramey technique. These models allow the determination of oil recovery versus fluid injected for a given reservoir or pilot providing that the main reservoir parameters such as porosity, thickness and saturations are known. Some of the parameters needed for economic evaluation are not well known, and other parameters such as the recent price of oil may vary rapidly. A classic economic analysis is bound to be uncertain at best. In order to partially alleviate this problem our economic evaluation method includes a spreadsheet approach and a Monte Carlo simulation. A discounted net present value was obtained for each of the processes at different injection rates, and pattern sizes. The results are presented as a probability for a given net present value instead of a single value. An example using published data from the Belridge field is shown. For this field both in-situ combustion and steam injection were found to be economically competitive. The above mentioned technique can easily be modified for application to other fields or even other enhanced oil recovery processes. The models and economic calculations can easily be run on a microcomputer (IBM PC in our case). Introduction Thermal recovery is to date the best technique to produce heavy or even medium gravity oils. When thermal recovery operations began over 25 years ago a major question was whether continuous steam injection (steam drive) or in-situ combustion was the better enhanced recovery method. While both steam injection and in-situ combustion will enhance oil recovery, the contrasting nature of the two processes entails greatly different costs and costs patterns. Steam injection introduces heat in the reservoir via surface generated steam; in-situ combustion in contrast generates heat inside the reservoir by burning of the residual hydrocarbons. Steam injection is more energy intensive mainly because of heat losses during transportation of the steam to and in the reservoir; it also requires the use of steam generators with their attendant fuel, water treatment, maintenance and operating costs. In-situ combustion requires treatment and compression of the injected air. Although in-situ combustion is two to four times more energy efficient than steam drive, steam drive is in much wider use than combustion essentially for practical reasons. Operational experience gained from cyclic steam injection greatly benefits the steam drive process. However some quite large in-situ combustion projects are underway in Romania, Canada, Venezuela and the United States. The two processes are not equally effective in the same types of reservoirs (Ramey and Brigham); while steam drive works best in shallow, low pressure, thick reservoirs in-situ combustion seems to benefit from high pressure. In-situ combustion can be used in deeper and thinner resources. The only measure of the commercial success of an enhanced oil recovery technique is its cost effectiveness. Previous studies (Williams and Ramey), showed no significant differences in the discounted economics of steam drive and in-situ combustion. However no study has included the recently observed volatility in the price of oil. This is sure to have a great effect on the economics of any enhanced oil recovery method. This study incorporates the uncertainty in the market price of oil in the economic cash flow calculations, it also re-examines the comparative economics of the two techniques in light of recent technical and economic reports. It presents a general method for comparing the two mechanisms that is easily altered to suit specific field cases. P. 159^