2.2.

Issues that have arisen since last time.

Our most challenging task besides figuring out the CMG computer program was to

collect the data, as the data that was given to us by EORI lacks some fundamental properties,
such as interfacial tension data. Since we are missing a lot of data we will use assumptions based
on either similar fields or research papers, where people we doing ChEOR and had the exact
properties for their fields.
Another challenge was to figure out how CMG would work for each particular field.
Because we were running several fields and while our data input was consistent with those fields
that worked, some fields turned out to be not working and we had no idea why. We did manage
to get 1 or 2 fields showing the results, and thats what we will present on this Progress Report
#1.
To ensure the accuracy of the results, we want to run as many fields as we can. So far the
goal is around 10 fields. A 10 sample result would give us more certainty that our results are
right. After that we could come up with some early conclusions, which is the general goal for this
project. Based on the 2 fields that we run, the early conclusion is that waterflooding in general
brings in the most effect of the recovery, while the ASP or Polymer do not add a significant
contribution towards the greater oil recovery. One of our next tasks should be to evaluate fields
with different permeabilities to see how chemicals would help in the very low permeability
environments.
Ideally we should come up with a process in which we input data into CMG, get the
production data, then trying that data with the different price of oil and see the total revenue
(using Excel).

After analyzing the Deadman Creek field, we came to a conclusion that our bottom hope
pressure may be too low, because we see the water production at too high rates.

1.6.

Economic Potential
Our economic evaluation methodology. First of all, we needed to get the overall oil

production based on the results we got from simulation in CMG. We consider a cumulative
production times the price of oil as the revenue.
Prices. We used an 8% discount rate (or the interest rate). Another assumed taxes were: the
severance tax in Wyoming at 6%, royalty tax at 15% (assumed an average value, as royalty taxes
may vary). Other costs included the water (at $0.85/bbl). As for the price of oil and gas, that
could vary greatly on day-to-day basis, so our assumptions were based on what the price was the
time of the report. Compared to the last semester it was dropped by about $20 already. The price
of gas per Mscf was about $4.59.
The discounted cash flow formula was Revenue Cost divided by the (1+the discounted rate) to
the power of the number of years that the field has been producing or is going to be produced.
After summing it up we will get the Net Present Value.
RevenueCost
Number of years
(1+0.08[ a discount rate])
Our cost included the water disposal, paying off the royalties and taxes.

Chemicals come into play only at a certain points in time, thats when we take them into
calculation. The prices for Alkali, Surfactants and Polymer were 0.20, 0.70 and 1.00 $/lbm
respectively. An example to that could be when in Deadman Creeks simulation, the chemicals
were introduced only at 1/12022 and stopped at 1/1/2027. There could also be the period when
only certain types of chemicals are injected, such as only polymer and alkali injected but not
surfactant. Otherwise, without consideration of chemical costs, our primary cost is water
recycling. {{just a thought: that perhaps we could implement a water treatment facility right at
the drilling site, where it could purify, desalinize it and then we could sell the water}?}
Furthermore we would like to research the cost for the operations that service companies charge
and the chemical facilities costs. Once these are know they could be implemented into the costs,
which will probably reduce our revenue further. However, for the economic modelling purposes
the assumptions we have made so far we believe is sufficient to show the model in theory should
work.

APPENDIX C. STAKEHOLDERS
Since the end of last semester nothing much has changed in terms of who we would be
dealing with, or the place of the operations. What did change was the overall economic
environment, where the price of oil dipped even since the last time we were preparing this report,
which was about 3 months ago. Since then, the oil dropped from about $70 to $50. That negative
oil price change perhaps could lead to a weaker oil operations activity in the areas, and it would
change the dynamics of all stakeholders involved. Now the investors would invest less into oil,
and service companies will buy fewer chemicals. Maybe due to this the price of chemicals would
go down due to a weaker demand. And having the potential lower cost of chemicals could
partially offset the dropping oil price when calculating the overall cost and benefit for the
ChEOR. If there are communities that were opposed to the oil boom or fracking, now with the
fewer activities they may be more satisfied with that.
1. Investors they are starting to invest less money into it as they see less returns on it.
Investors could be anyone, completely unrelated to oil or technical fields. They only care about
return and dont care about the oil or petroleum technology. For them if they see fewer returns
they are not going to invest into it anymore. In a future it will hurt the oil industry as it is always
in need of new technologies to keep producing new oil from a developed fields
2. Economic market as mentioned before, the price dipped even more, and energy
industry needs to be prepared for more decline. However, some believe that the price of oil may
have hit the bottom, so itll either stay at the bottom or rise just a little above it.

3. Chemicals as was suggested above, the price of chemicals may drop due to lower
demand. With that its availability may increase as bigger supply would predict.
4. Operations team or servicing company as these companies hitting recession, theyre
reducing the workforce and the budget. In those conditions the pace of operations may slow
down. If the price will go down even lower they may completely refuse to do the work, and
therefore they will drop from our stakeholders list.
5. Government and regulatory agencies No changes there. We may speculate that
perhaps some of the tougher rules could be eased to encourage the oil development during the
hard times. Other than that itll stay the same as per last semesters report.
6. Local municipalities, towns, public they may notice a slowed down activity in the
region. Those who opposed the Big Oil may be satisfied, but those were for the oil development,
may want those companies to come back, and perhaps encourage local governments to
implement new rules to ease the operations rules or life some restrictions that were in the past
preventing the oil companies of conducting the operations easily.