Economic Analysis and Risk Management in Development of Tight-Low Permeability Reservoir
Authors: Yu Tao , Li Baozhu , Lei Zhengdong , An Xiaoping , Wang Wenhuan , Jiao Jun , Hou Jianfeng , Bo Xiaosong 
Published: October 2019

Abstract

Objectives/Scope
PetroChina has gone through a journey of half century in the development of conventional reservoirs, most of which have been step into the late life with high water cut. However, the newly discovered resources tend to be inferior and on the margin of profitable development, especially tight-low permeability reservoirs (k&lt;1mD). Diversified development technologies have been adopted with discrepant dynamic characteristics. This paper investigates the economic feasibility and uncertainties of mainstream technologies in the development of tight-low permeability reservoirs, which is of great importance in risk mitigation under the unrest circumstance of oil price.

Methods, Procedures, Process
In this paper, three main technologies were firstly introduced in the development of tight low permeability reservoir in Ordos Basin, which is the second largest oil bearing basin in China. Secondly, real data of above-mentioned technologies from such mature fields was obtained and analyzed in order to characterize the production performance such as productivity capacity, decline curve and water cut analysis, etc. Numerical simulation was also conducted as a complementary method for production forecast. Thirdly, the production forecast and economic analysis integrated model considering CAPEX, OPEX and tax policy was build and run for each technological scenario. Finally, variable control method was adopted to investigate the economic feasibility for each development technology. We also conducted the sensitivity analysis for each scenario to explore the uncertainty and mitigate investment risk.

Results, Observations, Conclusions
Three main technologies includes: 1, waterflood with inverted nine-spot vertical well pattern (WFV); 2, waterflood with vertical injector and horizontal producer as 5-spot well pattern (WFHV); 3, natural depletion by horizontal well with massive hydraulic fracturing (NDHF). Production performance for each technology is different based on the analysis of real data, the third scenario (NDHF) has the most attractive productivity while declining in the highest rate, about 40% at the first year while the first scenario (WFV) produces in a more stable and slower speed but higher EUR. Economic model results shows that: for general tight low permeability reservoir, IRR for aforementioned technology is −2.52%, 4.52%, 10.43%, respectively. The minimum requirements for economic development with respect to cumulative oil production, oil price, OPEX, CAPEX are analyzed in detail. Economic sensitive analysis illustrates that oil price is the most sensitive factor for profitable development, followed by production rate, CAPEX and OPEX. Risk assessment indicates that for natural depletion by horizontal well with massive hydraulic fracturing, the investment uncertainty is extremely significant, about 4 times greater than that of WFV. Therefore, careful attention needs to be taken in choosing appropriate development strategy.

Novel/Additive Information
This paper provides an economic perspective on the development of tight-low permeability reservoir. It offers a glance at economic feasibility for different development technologies and their profitable operation requirement.