EVALUATION OF EOR PROJECTS

Prof. T. Kumar
Dept. of Petroleum Engg.,
IIT(ISM), Dhanbad 826004

When old oilfields approach the economic limit of production by secondary recovery, a re-evaluation
of the saturation distribution of the producing formation and its petro-physical properties frequently
leads to the rejuvenation of the field or implementation of new enhanced oil recovery techniques.
This helps in the (1) redevelopment of oilfields, (2) exploration for and recompletion in potential
reservoir stringers behind casing that had been passed up earlier, (3) monitoring production
behaviour and depletion, (4) proper planning of enhanced oil recovery projects, (5) determination of
residual oil saturation, and (6) evaluation and monitoring of infill and observation wells.
The planning of an EOR project demands a meticulous attention to many problems, thus
requiring considerable lead time for studies, evaluations, project design and, most of all, the
economics of these high cost EOR projects. By performing economic sensitivity analysis on key input
variables such as oil prices, the price of injection solvents, capital expenditures, operating expenses,
and oil recovery, the aim of the evaluation and monitoring of the EOR project is to develop sensitivity
analysis graphs for each variable to assess future engineering planning with regard to the economics
of the EOR projects. Economic optimization is the ultimate goal of reservoir engineering
management. With estimated production, capital, operating expenses, and financial data, project
economics are evaluated. Project funding could be applied to any EOR candidate reservoir
worldwide.
At present, the worldwide production statistics indicate that the average ultimate recovery
from light and medium gravity oils by conventional (primary/secondary) methods is around 25-35%
of the Original Oil in Place (OOIP), while from while heavy oil deposits on the average, only 10% OOIP
is recoverable. Hence leaving substantial percentage of oil in place non recoverable by the
conventional methods and these reaming reserves are the target of the EOR to increase the recovery
percentage.
The volume of reserves already discovered and the size of the sedimentary limit the extent to
which reserves can be increased by enhanced oil recovery schemes. As exploratory prospects
depleted and new discoveries more scarcely, the importance of increasing reserves through recovery
of a higher fraction of the oil in place by means of EOR is correspondingly increased. Preliminary EOR
studies indicate that the additional oil reserves attributable to enhanced recovery schemes in oil
reservoirs are significant, and thus the economics of these schemes are important. Results of some
studies show that many reservoirs lend themselves to the application of several EOR methods. No
matter what method is to be applied, availability of injection fluid, suitability, requirement and
economic feasibility must be considered early in the planning and design of an EOR project.
It has been indicated that the techniques of EOR chemical process are not cost-effective
because of the logistics of supplying large volumes of chemicals such as polymers, surfactants,
alkaline solutions, etc., to most field locations. Thermal processes are considered for some fields with
heavy oil but eliminated from further consideration in some other fields because the depth and
pressures of these reservoirs make the processes economically unattractive for light oil reservoirs.
Data from many reservoir studies indicate that gas injection pressures may be technically feasible.
Consequently, in such situations development and application of EOR technologies can be limited to
miscible flood schemes, such as miscible and immiscible CO2 flooding.
In India, ONGC has implemented a large scale polymer flood project in Sanand oil field which
lies in Ahmedabad-Mehsana block of Cambay Basin in India. Mangala is the largest discovered oil
field in the Barmer Basin. Its initial oil production began in September 2009, and an ASP started in
2010. Because of mobility contrast and low primary recovery, it was decided to go for polymer
flooding in Sanand field. In this field production increased from 100 M3/day to 400 M3/day. Water
cut reduced from 88% to 68%. WC remained constant for several years (63-68%). Initial recovery was
about 25%. Expected recovery from the project is 36% by 2030.
Viraj ASP Pilot: Based on the low primary recovery and mobility contrast and high acid number
of the crude, ASP pilot was decided in the Field. Field observation were as follows: Pilot was successful
with increase in production, there was preferential movement of chemical, water cut increased at
start of buffer and chase water injection. Simulation studies indicated slug size and polymer
concentration on low side.
OIL has been undertaking IOR / EOR initiatives in the form of water injection, gas injection,
polymer flooding etc. in its different oilfields from very early production phase. A polymer flood
project was concluded successfully which has resulted in an increased recovery of about 5 percent of
in place reserves of the reservoir apart from resulting in a significant reduction of formation water
production. MEOR jobs are being regularly done in the Kalol field in huff and puff fashion in the well
site and EOR technique is the primary requirement for the field to sustain the production.
ONGC is implementing thermal EOR techniques in Balol, Bechraji, Lanwa and Santhal fields.
Cairn India recognized the potential for chemical EOR such as polymer or alkaline surfactant polymer
(ASP) flooding with a potential to enhance recoveries from these fields by around 300 mmbbls.

EOR ECONOMIC MODEL

An economic model should evaluate various production strategies. As prediction of future market
trends is nearly a crystal ball game, then we should make prediction under diverse economic
scenarios to get a good feel for the sensitivity of the expected net revenues to the vagaries of the
market. Economic models have been designed to simulate the development and operation of actual
EOR projects. The characteristics of the reservoir and the cost of producing EOR oil in that reservoir
are entered in to the model, which then generate estimate of:
The quantity of crude oil that will be produced from the project;
A price sufficient to reimburse all costs of the project and provide an adequate Return on
Investment (ROI);
The timing at which reserves in the reservoir will be produced.

These estimates are then aggregated for the overall estimates of daily production, cumulative
production, and ultimate recovery.

STRUCTURE OF THE ECONOMIC MODEL

The estimate of the amount to be recovered through EOR application is based on actual reservoir
parameters of oil saturation, pore volume and previous primary and secondary recovery, and the
actual recovery calculation differs among techniques. This estimate is displayed a total incremental
EOR production and incremental production per year from the time the project was initiated.
The oil recoveries obtained by using compositional reservoir simulation model. The estimate
of price is based on the projection of cash flows and a set of rate of return. Cash inflows are generated
by the production of oil. Cash outflows comprise of the following investment and operating costs:
field development expenditures, equipment expenditures, operating and maintenance costs,
injection material costs and other costs.
The cash flows are expressed as the amount of money per year from the time of project
initiation. They are based on development characteristics, numerous technique specific and general
cost parameters, and several assumptions such as date of cost assessment, sharing of costs,
allocation of general and administrative overhead costs, distribution of tangible and intangible costs
for drilling and completion etc. The production estimate is matched with investment and operating
costs and various rates of return to calculate the required price of the oil.
Conversely, the models compute the rate of return yielded at series of fixed prices. The
quantities of oil are aggregated by price to construct the price-supply curves. Individual price-supply
curves for each technique and an overall price-supply curve for EOR recovery are generated. Based
on selected prices and development assumption, these price-supply curves are converted to the
timing at which reserves become proved and are produced. These curves are then extrapolated
based on remaining oil in place and then the aggregated quantities of oil are aggregated by price to
construct the price supply curves.

EOR RECOVERY AND RISK ASSESSMENT

In EOR recovery, the failures are generally economic failures where the recovery was insufficient, too
slow, or too costly in relation to the price of oil. Three considerations are considered in the
formulation of the economic model which account for technical risk. These include (1) empirical
construction from actual field experiences, therefore averaging the marginal and highly successful
projects, (2) elimination of the least favourable reservoirs with the highest technical risks) and
consideration of technical failures analogous to the allocation of dry hole cost to successful wells.
While EOR projects are considered risky and carry a higher target of rate of return, an analysis
indicates that the economic effects of risk and failure may be lower than generally perceived. These
effects stem from the reservoir development practices used for EOR recovery, which serves to
minimize the total of capital at risk. Typically, companies initiate a pilot project prior to full reservoir
development. Therefore, actual investment losses can be held to the costs of pilots, minimizing the
risk of reservoir wide failure.

The risk premium can be calculated based on the following two equations:

(Investment cost per acre for the pilot) x (Pilot acreage) x (probability of failure) (1)
And,
(Investment cost per acre) x (full EOR acre) x (1-probability of failure) (2)

The actual risk premium for any particular reservoir could, of course, vary widely from this
hypothetical case. In one example case when CO2 flood was considered favourable choice, it was
found that eventually the miscible flood turned to become immiscible flood and also eventually
forming secondary gas cap. As a part of overall economics the gas cap was blown up to produce gas
by treating former oil reservoir as a gas reservoir. It was concluded that it could be a viable option in
most of reservoir profiles and financial evaluation. The difference is that marketing of the rich
hydrocarbon gases as they are first produced or delaying their sale until they are first used for EOR
have very different net present value. Where CO2 is the solvent gas, the operating company has the
choice of recycling the produced gases (CO2+Hydrocarbon gases mixture after CO2 breakthrough)
without separation or separating the hydrocarbons for marketing and internal use (of methane as
compressor fuel).