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Incremental Analysis in Petroleum Economics

This document discusses incremental project analysis for oil and gas field developments. It describes how multiple development scenarios can impact operations and cash flow differently. Incremental cash flows, which are the changes in cash flows from a new development, should be analyzed using metrics like NPV and IRR to evaluate economic viability. The document provides information on primary, secondary, and tertiary hydrocarbon recovery methods and expected recovery levels. It also lists some example development options that could be considered in a multi-development scenario analysis.

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362 views16 pages

Incremental Analysis in Petroleum Economics

This document discusses incremental project analysis for oil and gas field developments. It describes how multiple development scenarios can impact operations and cash flow differently. Incremental cash flows, which are the changes in cash flows from a new development, should be analyzed using metrics like NPV and IRR to evaluate economic viability. The document provides information on primary, secondary, and tertiary hydrocarbon recovery methods and expected recovery levels. It also lists some example development options that could be considered in a multi-development scenario analysis.

Uploaded by

ediwski
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

Petroleum Project

Economics
Econ210D
Presentation 5
Incremental Project Analysis
Date
1

Multi-developmental
Scenarios
Multiple potential developments of field
during production
Each has a different effect on operations
and cashflow
Which one(s) to choose?
Incremental Project Analysis Date

Types of Developments
Projects to boost production through an
increase in hydrocarbon recovery.
Measures to achieve cost savings
New development phases such as the
commissioning of gas production from a
hitherto oil producing field
Incremental Project Analysis Date

Incremental Cash Flows


To make an economic evaluation of a new
development pertaining to a oil or gas
field,

incremental

cash

flows

are

considered.
These are the changes in cash flows
associated with the new development.
Incremental Project Analysis Date

Incremental Cash Flows


Apply NPV and IRR to incremental cash
flows.
Submit the economic evaluation and
recommendation

to

the

management

team.
A decision is made.
Incremental Project Analysis Date

Oil and Gas Recovery


There are three levels of hydrcarbon recovery:
Primary recovery
Secondary recovery
Tertiary oil recovery

Incremental Project Analysis Date

Primary recovery
Primary recovery, where reservoir energy is
used to produce oil and gas. The average
recovery of this stage is about 15 to 20% of
OOIP.

Incremental Project Analysis Date

Secondary Recovery
Secondary recovery, where energy is given to
reservoir by injection of water or gas recovers an
additional 20 to 25% OOIP.

Incremental Project Analysis Date

Tertiary recovery
Tertiary oil recovery, which historically follows
secondary recovery, recovers an additional 15 to
20 % OOIP over secondary.

Incremental Project Analysis Date

Expected Oil Recovery


Factors ( % OOIP)
Primary Methods
Liquid and rock
expansion

Solution gas drive

20

Gas cap expansion

30

Gravity drainage

40

Water influx

60

Incremental Project Analysis Date

10

Expected Oil Recovery


Factors ( % OOIP)
Secondary Methods
Gas re-injection

Up to 70%

Water flooding

Up to 70%

Incremental Project Analysis Date

11

Expected Oil Recovery


Factors ( % OOIP)
Tertiary Methods
Thermal (Steam, Combustion,
Hot water)

Up to 80 %

Miscible (CO2, HC gases, N2,


Flue gas)

Up to 80 %

Chemical (Polymers,
Surfactants)

Up to 80 %

Incremental Project Analysis Date

12

Tertiary Recovery Methods


Thermal recovery, by adding heat to the
reservoir fluids to make them more mobile.
Gas injection for miscible sweep of the oil, is
achieved by injecting flue gases or CO2 ,which
dissolve in the oil, reducing its viscosity and
increasing its mobility.
Chemical injection, either using polymers to
thicken the injected water to increase its
viscosity and so improve water-flood efficiency,
or using surfactants, to improve the mobility of
the oil droplets Incremental
by reducing
the
Project Analysis
Datesurface tension. 13

Multi-developmental
Scenarios

Horizontal wells
Infill drilling
Workovers
Additional compression
Additional steam
Waterflood
Alkaline-Surfactant-Polymer flood
Microbes in wellbore
Incremental Project Analysis Date

14

Home Work
Using the data in the following slide,
together with the data from presentation 4
calculate incremental the cash inflow and
total cash outflow.
Using

the

incremental

cash

flows

determine: Payback, NPV and IRR.


15

Year
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005

Oil Production
MMbbls
0
0
0
0
0
2
4
8
15
14
14
12
9
10
9
8
7
6
5
0

Oil Price
($/BBL)
15.0
19.2
16.0
19.6
24.5
21.5
20.6
18.5
17.2
18.4
22.2
20.6
14.4
19.3
30.3
25.9
26.1
31.1
41.4
56.5

Total Capex Total Opex


$m
$m
-30
0
-22
0
-112
0
-110
0
-77
0
-10
-1.4
-7
-2.8
-4
-8.4
0
-19.6
0
-15.7
0
-13.3
-57
-11.3
-23
-9.6
0
-10.6
0
-9
0
-7.8
0
-6.8
0
-4.7
0
-3.3
0
0

16

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