Economic Optimization of Water and Gas Shut-Off Treatment in Oil Wells

Abstract

Abstract It is estimated that on the average, three barrels of water are produced for every barrel of oil. Billions of Dollars are spent each year in treating unwanted water and gas production in oil wells. Water and Gas Shut-Off (WGSO) treatment has helped to reduce cost and improve oil recovery in some cases, while in others, this method has failed to economically recover the remaining oil in the reservoir. Economics drives the oil and gas business because the objective is to take decision that will reduce cost and maximize profit. Any decision that is made without this consideration, may be an exercise in futility. Therefore, detailed economic evaluation as a diagnostic tool for WGSO treatment has become imperative. Despite the technical appeal, WGSO schemes can also be related to games of chance. Company has to decide whether to risk the money or not since it is not certain whether there will be a simultaneous increase oil and decrease in water/gas production. There is absolutely no 100% guarantee of success because the justification for the selection of any WGSO treatment method will be based on the probable incremental hydrocarbon production. Some water and gas control treatment can guarantee substantial production increase while others could be less successful. This introduces some degree of uncertainty, making WGSO treatment a risky venture. So, the quantification of risk and uncertainty is necessary. Though the optimal decisions in water and gas shut off application differ from company to company, the objective however is to obtain a condition under which the marginal and total revenue from water shut off will be equal to the marginal and total cost of the operation. To Optimize WGSO application in oil wells, we must determine the production rate that maximizes its total profits. Against this backdrop therefore, an economic model is developed that is used to evaluate water and gas shut-off candidates. This model incorporates Monte Carlo simulation and risk analysis on different reservoir parameters, incremental recovery and oil price to optimize WGSO applications. It allows for the determination of the probability distribution function for the different economic indicators that will help in ranking WGSO opportunities.