SPE 9718

ECONOMIC FIELD DEVELOPMENT PLANNING

by Paul M. Bennett, Member SPE-AIME,
Keplinger & Associates, Inc.
SPE
Scciety of PetroIelrn Engineers of AIME
Copyright 1981 American Institute of Mining, Metallurgical, and Petroleum Engineers, Inc.
This paper was presented at the 1981 Permian Basin Oil and Gas Recovery Symposium of the Society of Petroleum Engineers of AIME, held in
Midland, Texas, March 12-13, 1981. The material is subject to c6rrection by the author. Permission to copy is restricted to an abstract of not
more than 300 words. Write to 6200 N. Central Expwy. Dallas, Texas 75206.
ABSTRACT
Once a field has been discovered and a gen-
eral method of reservoir exploitation selected,
there are many ways to attain the reservoir man-
agement goal, but some ways may cost twice as much
as others. The purpose of this paper is to discuss
the importance of in-depth, overview development
planning and to suggest the timing of such reviews.
In general, such planning should consider all field
development options rather than concentrate on
certain phases while ignoring others that may be
equally important. The pertinent development
options are listed then discussed with examples.
Too often after a field is discovered, major
economic decisions are made as to drilling of wells
and ordering of major facilities without conduct-
ing a complete overview study. Many times the
principal planning vehicle takes the form of an
or budget committee where comprehen-
sive planning is difficult. Rather than consider
all major development options and how re-
lates to the other, the emphasis is on drilling
plans with minimum attention given to future
operating problems or expense. In turn, this may
result in lower oil and gas recovery and at lower
rates than would be possible with proper planning.
It is difficult for engineers and geologists to
submit an authorization for expenditure (AFE) to
management for an in-depth planning study support-
ed by a neat payout justification. The conven-
tional way is to propose an AFE to drill another
offset or relatively safe stepout. Then, after
one, two or three wells are drilled, an AFE is
prepared to cover most major producing facilities
without making a concerted effort to tie the
development options together in a logical,
economical manner.
Major field development options are listed
below first in about the order in which they have
paper.
195
often been exercised, then, listed in a generally
preferred order designed to maximize economic
recovery.
1. Drill one or more offset wells to par-
tially define the field
2. Drill additional wells in relatively
safe locations to increase producing
capacity
3. Justify each expenditure by an AFE con-
taining a brief payout calculation or
results of a committee vote
4. Complete wells initially in the best zone
5. Dually complete as often as possible
6. Perform minor, wireline workovers
7. For flowing wells, lower first stage
separator pressure moderately (say to
350-500 psi)
8. Perform needed major workovers if and
when workover units are available
9. Remove minor flow restrictions from the
flow system
10. Install limited capacity dehydration
and/or desalination facilities
11. Lower first stage separator pressure to
150-250 psi and possibly install booster
pumps
12. Install permanent artificial lift when
field production declines seriously
and/or approaches economic limit
ECONOMIC FIELD DEVELOPMENT PLANNING SPE 9718
1. Where economically feasible, drill a
sufficient number of delineation wells to
define field limits
2. Obtain sufficient log, core and test data
to enable complete evaluation of all
early delineation wells
3. Obtain some performance history of early
wells, if practicable
4. Conduct serious, early planning studies
prior to ordering additional rigs or
major production facilities
5. Complete and space wells in a manner to
maximize recovery and minimize operating
problems; ie, where possible, minimize
dual completions, commingle similar zones,
and balance off takes within wells and
areally in the field
6. Design well configurations and surface
facilities initially to minimize flow
restrictions and long-term operational
problems
7. Remove any existing major flow r e s t r i ~
tions early in the life of the field
8. Update early planning studies periodi-
cally as indicated by well and field
performance
9. Perform major, as well as minor, workovers
as required to properly manage the reser-
voir
10. Lower first stage separator pressures
(in say 100 psi increments) to 150-250
psi to maintain producing capacity
11. Install kickoff artificial lift as soon
as needed
12. Install efficient dehydration-desalination
as needed to avoid shutting in wells
making moderate amounts of water and/or
salt
13. Lower first stage separator pressure to
50-100 psi and install permanent arti-
ficial lift
14. As the field approaches depletion, con-
sider drilling new wells and altering
facilities, as long as it is economical,
to increase producing capacity and ulti-
mate recovery
In general. once a discovery is made, the
drilling of wells is over emphasized in the early
stages of field development. The tendency is to
drill in relatively safe locations and to complete
196
wells in the most prolific zones only, to enhance
early production. Early planning is strongly
recommended to maximize ultimate recovery and
minimize future operating problems; for example, to
maximize flowing life and to minimize costs of
future workovers and/or conversion to artificial
lift. It is exciting for management to discuss
the daily drilling report, high initial potentials,
the number of rigs they are running, etc. You
don't hear many discussions over lunch at the
petroleum club about the results of long-range
planning studies or about the serious need for
more workover units and crews.
A field in North Africa had been producing for
about eight years. It was assumed that the field
was defined; hence, a reservoir study to determine
the best plan for water injection was commissioned.
Six locations for "flank" injected wells were spe-
cified by the operator. During the course of the
study, some of the flank locations were drilled.
Each one extended the field, so the principal study
recommendation was to place the new wells on pro-
duction, continue drilling delineation wells until
the field is defined -- then revise final field
exploitation planning.
A promoter, independent in Oklahoma drilled
into a tight formation and completed two or three
wells for initial potentials of 25 to 100 barrels
of oil per day on a block of 7000 to 8000 acres.
An additional 20 to 25 wells were drilled and
half were placed on production. A minimum of
basic data was gathered on the wells and many
producing problems were encountered. Nevertheless,
drilling continued at a pace of six to eight wells
per month. Only three or four delineation wells
were drilled to partially define the extent of
production. One core analysis, along with ques-
tionable well performance, indicated that no addi-
tional wells should be drilled, except possibly
a few delineation wells, until existing wells have
been produced for several months. In fact, there
is considerable doubt that any of the wells will
ever payout. The operator's primary game plan
was to drill at a rapid pace and obtain financing
for an additional 200 wells . . and he may well get
it.
In general, wells should be completed and
designed to permit relatively high rates of pro-
duction, to minimize flow restrictions, etc. --
while keeping in mind future options such as
artificial lift and alternate zones of completion.
To increase ultimate recovery and to balance
fluid withdrawal, pressures, water levels, etc., a
productive zone should be completed in as many
wells as can be economically justified. Where
possible, dual completions are to be avoided.
As a rule, higher rates can be obtained from a
properly designed single completion than from both
sides of a dual completion, and with much fewer
operating problems. Duals may be justified when
SPE 9718
PAUL M. BENNETT
regulations prevent commingling and where the zones
are similar and have a long flowing life.
EXAMPLE Itl
In a North African field, three or four wells
had been drilled and very low gas-oil ratios in-
dicated artificial lift would be required very
early. The total productive zone was about 1000
feet thick. Although there are several shale
breaks extending over most of the field, all zones
are similar. The operator proposed dual comple-
tions for purposes of reservoir control. This
meant that artificial lift was restricted to gas
lift only, with a very questionable gas supply
even with a closed system. Further, dual gas
lift installations are expected to have not twice,
but four times as many operating problems as
single installation. In a thick section, it
would also be easier to monitor production from
a single completion by the use of flowmeters,
graviometers and other production tools.
Perforation Density In West Texas San Andres
fields, some operators perforate possibly 20 holes
over a 100 to 200 foot interval and treat such that
each hole is open. On the other hand, some off-
shore Gulf of Mexico operators 1 are now perforat-
ing with eight to twelve holes per foot, gravel
packing and producing gas wells at rates of 20 to
40 MMcfd and oil wells at 3000 to 4000 bpd.
In a large Middle East field, 7" and 9-5/8"
casing had been perforated with expendable
jet guns. Study of flowmeter results indicated
that one-third of all perforated intervals con-
tributed nothing and that possibly not more than
one shot in ten reached the formation.
Workovers
As indicated above, when recompletions or
other major workovers are indicated, they should
be done to prevent permanent loss of reserves.
Again, it is easier to drill adiitional wells than
to perform major workovers.
In a Middle East country, plans were made to
increase the number of drilling rigs to 45 or 50.
By comparison, only five or six workover rigs and
one hydraulic snubbing unit were available. A
much better combination would have been about 30
drilling rigs and 20 workover rigs and snubbing
units. Literally hundreds of workovers were
needed to open up non-contributing zones, stimu-
late producing zones, shut off high gas-oil or
water-oil ratio zones, etc.
Flow restrictions should be minimized through-
out the flow system from the bottom of the hole
through the s u ~ f a c e lines and vessels. In general,
the reduction of flow restrictions is the most
197
economical way to increase well or field capacity.
Nothing contributes more to increasing flowing
rates or extending flowing life than the lowering
of first stage separator pressure. Another severe
bottleneck results from flOWing into a multi-phase
trunkline system.
Calculations and experience indicate that as
first stage separator pressures are lowered, the
ratio of bottom hole pressure (BHP) drop to well-
head pressure (WHP) drop may be in the range of
two to one, as first stage separator pressure is
lowered from about 700 to 600 psi. When separator
pressure is lowered from say 150 to 50 psi, however,
the ratio ofBHP drop to WHP drop is in the range
of four to one. Usually this will extend flowing
life substantially, possibly for several years.
In the Middle East, four wells were flowed
through individual 6-inch flow lines into a 12-
inch trunkline. Various combinations of tests
while flowing two, three or four wells clearly
indicated the impossibility to produce all wells
at capacity into the trunk system. On some tests,
two wells would produce at higher rates than when
all four wells were open.
2
In general, permanent artificial lift is not
justified merely to increase production. There
are exceptions, of course, particularly nowadays
with higher and higher oil prices. Usually, con-
tinuous artificial lift is justified only when
flowing wells tend to die. Often a system to per-
mit artificial lift kickoff may extend flowing life
for years. In the case of gas lift, first stage
separator pressure should be reduced to say 50 to
100 psi where possible. In any case, future arti-
ficial lift considerations should be kept in mind
while planning initial completions and surface
facility installations. Operating costs as well
as initial cost should always be taken into
account. The life of small, low pressure gas wells
may be extended for years by installing pumping
units, or other artificial lift, to remove water
production.
In a field in the Persian Gulf, the cost of
installing submergible electric pumps was about
$1,000,000 per well including rig costs. Annual
operating costs were about $750,000 based on an
average of 1.7 failures per well per year. After
several years of electric submergible pumping,
gas lift is now being considered in anticipation
that operating costs will be reduced markedly.
In some fields. it has been found that gas from
the producing zone's gas cap can be used for gas
lift kickoff for many years without the need for
compression.
ECONOMIC FIELD DEVELOPMENT PLANNING SPE 9718
Dehydration - Desalination
In many fields, it is not economical to handle
large volumes of water production until late in the
field's life. For most oil fields, however, it
is economical to utilize facilities to dehydrate
and/or desalinate crude throughout the life of the
field. Again, the primary purpose of planning for
adequate dehydration-desalination is to prevent
premature shutting in of wells with the resulting
permanent loss of oil recovery.
Model studies can be useful, but generally
only in predicting general block and layer per-
formance. They have only limited value in pre-
dicting well by well behavior.
A comprehensive, three-dimensional, multi-
phase, ten-layer model study was conducted on a
large Middle East field. The reservoir engineers
and geologists did a good job in describing the
reservoir and matching history. The prediction
guidelines used, however, resulted in completely
unrealistic timing and placement of new wells.
The study indicated that only 10 new wells would
be required over the next 10 years. For budget
purposes, another case was run "by hand" taking
into account block and layer performance pre-
dicted by the model but utilizing more practical
forecast guidelines. This final planning study
indicated that 85 wells would be needed in the
next seven years. Arrangements were made to
provide rigs for an 85 plus well program. One
year later it appeared that the number of re-
quired wells should be increased from 85 to 100.
Field development planning studies are
needed in one form or another after the dis-
198
covery well is drilled. Such overview planning
should be expanded following the drilling of
a few confirmation wells and/or after early
performance data is available. If the field is
large and warrants a comprehensive geological
and reservoir engineering study to select the
method of reservoir exploitation, in-depth
field development planning should then be done
to bridge the gap between the reservoir study
and the development drilling and mechanical
design phases of field development.
In order to minimize capital and operating
costs and to increase ultimate recovery, the
field development planning studies or reviews
should consider all development options in terms
of their timing and relation to each other.
Field development options should include drilling
and completion methods, workover methods, loca-
tion and number of production centers, design of
well and surface facilities to minimize flow
restrictions, separator pressures, dehydration-
desalination, artificial lift, injection systems,
etc.
REFERENCES
1. Crouch, E. C. and Pack, K. J. "Systems
Analysis Use for the Design and Evaluation
of High-Rate Gas Wells", SPE 9424, Pre-
sented at the 55th Annual Fall Technical
Conference of the SPE of ArME, Dallas,
Texas, September 21-24, 1980.
2. Bennett, Paul M. "Artificial Lift Concepts
and Timing", Petroleum Engineer Interna-
tional, pp. 144-162, May, 1980.