Applications of Economic Analysis in EOR Research
Authors: Bondor P.L. 
Published: December 2007

Summary
Enhanced recovery ha been a subject of interest for the last 30 years. The oil-price shocks of the 1970's generated research and field tests on a wide variety of EOR methods with various levels of success. With lower oil prices and less favorable price forecasts for the coming years, interest in EOR waned. Yet the logic behind EOR - to improve substantially recovery from the present resource base - has not changed. Thus, EOR is still essential in the long run. However, EOR projects must prove themselves economical under much more stringent criteria than previously. This paper demonstrates how economic analysis on currently uneconomical EOR processes can be used to determine the most effective direction for research. Economic analysis can help determine (1) whether fundamental technical limitations preclude development of a practical process, (2) the features of the process to which the process economics are most sensitive, and (3) the influence of timing on process economics. By defining the most crucial questions, we can focus the research effort and maximize the probability of success.

Introduction
One of the first steps in planning EOR research usually is the application of a set of technical screening parameters, developed to provide general guidelines for the applicability of a given process to a given oil accumulation or to an inventory of fields with known general characteristics. For example, if a large fraction of a company's oil in place (OIP) is light oil in sandstone reservoirs, surfactant or miscible flooding might be considered in these EOR prospects. If the company's resource base is largely in heavy oils and tar sands, thermal methods might be identified as appropriate. These technical screens, however, should not replace an economic screen early in the research effort.
Research performed solely on the basis of a technical screen may result in a process that can recover a large fraction of the OIP under laboratory conditions but that has an intrinsic cost that exceeds the current oil price when applications are considered. The net result of the research is then a report indicating the potential reserves recoverable if the oil price (ever) reaches a given benchmark level. While such a result may be of interest on a global perspective, it will not add reserves to the company base.
On the other hand, if an economic screen is carried out, crucial parameters, both technical and economic, may be identified before a significant research commitment is made.
To perform an economic screen, one develops a model of the selected EOR process and applies it (albeit in a simplistic form) to a model reservoir representative of the target accumulations. This model should include the reservoir engineering aspects of the process and such information as the EOR facilities necessary and proposed well patterns and spacing (and thus the capital expenditures required). With a more comprehensive model, the sensitivity of the project economics to a variety of parameters can be assessed better and the research effort focused more narrowly, It may become evident that the most critical parameter is not a technical one associated with the process but a capital or operating expense or an alternative method for increasing the reservoir's ultimate recovery. Two examples are considered to illustrate these points.