RESERVOIR MECHANISMS

SENSITIVITY OF GAS RECOVERY TO PRODUCING RATE

A gas reservoir contains 650 Bcf of original gas-in-place (OGIP). Regional geology and offset field performance
suggest a large influx will cause this reservoir to have water influx. The geologic maps indicate that only a few
flow barriers are present and that the reservoir is reasonably homogeneous and of high permeability. Log analysis
indicates an initial water saturation of 25% and special core analysis in similar reservoirs suggests a residual gas
saturation to water displacement of 30%. Other reservoir and fluid parameters include,

1. Reservoir Temperature 150 deg F

2. Initial Pressure 4,050 psia
3. Reservoir Gas Gravity 0.65

The initial development plan anticipates a water drive will provide significant pressure support. If 10 wells are drilled,
the reservoir pressure is calculated to decline and stabilize at 2,750 psia prior to abandonment.

Estimate the ultimate recovery for this development scenario.

An alternative development plan considers infill drilling such that 20 wells will be used to develop the reservoir. For this
scenario, material balance and water influx equations suggest that the reservoir pressure will decline and stabilize at
1,750 psia.

Estimate the ultimate recovery for this second development scenario.

Each well costs about $6 million to drill, complete and equip to produce. The gas price (net of royalties and operating
expenses) is about $2.50 / Mcf.

Which of the 2 development options appears more attractive economically and should be the
subject of more detailed studies?
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 RESERVOIR MECHANISMS

SENSITIVITY OF GAS RECOVERY TO PRODUCING RATE

1. The formula that determines the recovery efficiency for a gas reservoir is the following

R.E. = (Ed * Ea * Ev) + (1.0 - Ed * Ea * Ev) * (Bga - Bgi) / Bga

2. Since water displacing gas has a highly favorable mobility ratio, the displacement efficiency is close to

Ed = (Sgi - Sgr) / Sgi

Ed = (0.75 - 0.30) / 0.75 = 0.60

3. In the absence of reservoir simulation, there is no precise way to estimate the volumetric sweep
efficiency (i.e. the product of Ea * Ev). However, experience indicates that in a high permeability,
homogeneous reservoir, the volumetric sweep efficiency can approach 90+%. In this case, the
absence of information relating to the degree of closure and the potential for water coning implies that
a range of recoveries should be evaluated to test the sensitivity of the results to volumetric sweep
efficiency. For this reason, a range of volumetric sweep efficiencies is selected as follows

Ea * Ev = Evol = 0.70 to 0.90

Therefore, the water displacement efficency (Ed * Ea * Ev) ranges from 0.42 to 0.54

4. To account for the pressure depeletion effects on the residual gas volume, the gas formation volume
factor or p/z must be calculated. This is done using standard industry correlations such as are used
in the P3 program.

Bgi (at 4,050 psia) = 0.003872 rcf/scf

Bga (at 2,750 psia) = 0.005306 rcf/scf
Bga (at 1,750 psia) = 0.008405 rcf/scf

The pressure depletion factor (Bga - Bgi) / Bga for the two development scenarios are the following.

10 Well Scenario: (Bga - Bgi) / Bga = 0.270

20 Well Scenario: (Bga - Bgi) / Bga = 0.539

5. The overall recovery efficiency for the two scenarios from the formula is step 1 is shown below for the two
assumed volumetric sweep efficiencies.

Evol=0.70 Evol=0.90

10 Well Scenario Overall Recovery Efficiency = 0.577 0.664

20 Well Scenario Overall Recovery Efficiency = 0.733 0.788

6. The estimated ultimate recovery associated with each case is based on the OGIP of 650 Bcf and the
recovery factor from the previous step.

Evol=0.70 Evol=0.90

10 Well Scenario Ultimate Recovery (Bcf) = 374.9 431.8

20 Well Scenario Ultimate Recovery (Bcf) = 476.3 512.3

7. The decision on the correct scenario depends on how the reservoir will perform with 10 versus 20 wells.
If the volumetric sweep efficiency is unchanged by the addition of 10 more wells, then the economics
look favorable for either volumetric sweep efficiency case (even though the overall ultimate recovery is not
the same).
Incremental (20 Wells Versus 10 Wells)
Recovery Revenue Cost Profit
Volumetric Sweep (Bcf) (MM$) (MM$) (MM$)

Evol = 0.70 101.4 253.6 60.0 193.6

Evol=0.90 80.4 201.1 60.0 141.1

If the volumetric sweep efficiency is improved by the additional wells which is possible then the
economics look even more favorable than a comparison assuming the sweep efficiency remains the
same.

It is only if the sweep efficiency deteriorates with more wells (which is unlikely) that the economics of
additional drilling are not justified.