Optimization Of Petroleum Exploratory Wells Within A Basin

Abstract

Abstract From an economic standpoint the length of an exploratory drilling program which is most optimal can be chosen by determining the number of consecutive exploratory wells which have a corresponding positive expected value. Based on this premise a computer simulation model of the petroleum exploration process has been developed and applied to a hypothetical basin which is assumed to be geologically analogous to the upper Cook Inlet basin of south-central Alaska. The simulation program incorporates the probability Of discovering a new hydrocarbon accumulation with the reserve distribution from the Cook Inlet basin, the relationship between reserves and discounted present worth, and the discounted present worth of a dry hole. The simulation model calculates the expected present worth for each of 200 consecutive exploratory wells. Based on the economic assumptions incorporated into the simulation model, the optimized number of exploratory wells that can be economically justified in a basin, geologically similar to the upper Cook Inlet, at discount rates of5%, 10% and 15%, respective, have been analyzed. Introduction The process of determining the hydrocarbon potential of an unexplored basin presents many problems to the petroleum industry. The exploration process requires a large expenditure of financial and manpower resources before the ultimate reserve potential of a basin can be determined. Exploratory drilling may continue long after the last economic hydrocarbon accumulation in a basin has been discovered. Conversely, the exploration of a basin may be abandoned or temporarily suspended prior to the discovery of all economic fields in the basin. There is insufficient capital available to drill enough wells La test all possible hydrocarbon traps. The management often lacks the adequate manpower to plan, explore, drill and evaluate all of a basin's unexplored traps. The inherent uncertainty of petroleum exploration in an undeveloped basin greatly increases the financial risks. Because of these reasons, there is a strong emphasis within the petroleum industry to determine, prior to the start of exploration, the economic value of all possible outcomes, The range and magnitude of these parameters provides an understanding of the potential worth and risk associated with the basin. The financial rewards which a basin may provide directly affects how much of the limited financial and manpower resources should be allocated to the basin. The time, manpower and cost limitations required to analyze a wide variety of situations and alternatives in planning, designing and evaluating a hydrocarbon exploration program can be overcome with the application of simulation methods and using a digital computer. Because the digital computer can be programmed to simulate the situations which are 1O be analyzed, many alternatives can be evaluated in a relatively short time. Input variables to the computer model are easily changed and the resulting changes in the system can be evaluated. In this paper, a computer simulation of a petroleum exploration program in the upper Cook Inlet basin of south-central Alaska is presented. The simulation model calculates the probability that an exploratory well discovers a new hydrocarbon accumulation.