SPE 89382 A Guide to Chemical Oil Recovery for the Independent Operator

F. Eugene DeBons, SPE, Ron W. Braun and Will A. Ledoux, Reservoir Solutions, Inc.

Copyright 2004, Society of Petroleum Engineers Inc. This paper was prepared for presentation at the 2004 SPE/DOE Fourteenth Symposium on Improved Oil Recovery held in Tulsa, Oklahoma, U.S.A., 1721 April 2004. This paper was selected for presentation by an SPE Program Committee following review of information contained in a proposal submitted by the author(s). Contents of the paper, as presented, have not been reviewed by the Society of Petroleum Engineers and are subject to correction by the author(s). The material, as presented, does not necessarily reflect any position of the Society of Petroleum Engineers, its officers, or members. Papers presented at SPE meetings are subject to publication review by Editorial Committees of the Society of Petroleum Engineers. Electronic reproduction, distribution, or storage of any part of this paper for commercial purposes without the written consent of the Society of Petroleum Engineers is prohibited. Permission to reproduce in print is restricted to a proposal of not more than 300 words; illustrations may not be copied. The proposal must contain conspicuous acknowledgment of where and by whom the paper was presented. Write Librarian, SPE, P.O. Box 833836, Richardson, TX 75083-3836, U.S.A., fax 01-972-952-9435.

tests are used to develop surfactant-polymer processes, and single well chemical tracer tests can be performed to test the laboratory formulations in the target reservoir. The specific reservoir properties of salinity, temperature and crude oil composition are the major variables that affect the surfactantpolymer design. Surfactant-polymer flooding reduces the interfacial tension (IFT) between the trapped crude oil and its associated brine. Flow of the surfactant formulation through the reservoir allows the trapped oil droplets to deform and become mobile oil. These oil droplets then coalesce and form a new flowing oil bank. The more viscous polymer solution is used behind the surfactant to keep the surfactant and oil bank moving toward the producing wells. Surfactant-polymer processes result in a final oil saturation much lower than that produced by waterflooding. Many authors have addressed the economics of chemical flooding as an IOR method, using a wide variety of approaches. For instance, in 1984 the NPC sponsored a major study1 of the potential of enhanced oil recovery for the United States. The NPC study considered the three most common methods, chemical flooding, miscible flooding and thermal flooding. It applied these methods to a large group of U.S. fields representing two thirds of the OOIP discovered in the U.S. (325 billion barrels). The final report estimated the potential oil production and its timing over the 30-year scope of the project. The study employed both technical and economic criteria to predict that 14.5 billion barrels of oil could be produced using implemented technology. Other authors have used models to design chemical flood processes and to predict oil recovery performance. For example, Tomich, et al.2 examined technical and economic tradeoffs and explored the details of surfactant and polymer design and selection, leading to a field project design. White, et al.3, used reservoir and IOR process properties to develop a general procedure for estimating the oil price needed to support chemical flooding. Some have used complex mathematical approaches to design optimum economy in chemical flood processes. Barua, et al.4 used a combination of a surfactant flood model and an economic model before applying a new algorithm leading to an optimal engineering decision. Their optimal chemical flood design takes into account the uncertainty in both models and input data. A more recent study by Sanz and Miller5 used

Summary This paper is designed as a guide to independent operators considering advanced technology to extend the life and improve recovery in mid-continent fields. Chemical (surfactantpolymer) flooding is a way to recover additional oil after waterflooding. Based on field and laboratory experience, surfactant-polymer flooding is assumed to recover a large fraction of the remaining oil. Major factors impacting chemical flooding oil recovery and economics are identified. The magnitude and relative importance on economics of variations in these major factors are illustrated. An objective of the paper is to set practical limits on major parameters, and thereby define sets of operating and performance conditions required to make chemical flooding economical today. This study employs a simple, reliable, and inexpensive model to predict recoverable oil resulting from application of a surfactant-based chemical flood process. The model is the same Department of Energy (DOE) Chemical Flood Predictive Model (CFPM) used in the 1984 National Petroleum Council (NPC) study1 to predict oil recovery streams. This study applies the major cost elements of chemical flooding and assumes ranges of costs for each element. Independent operators will be able to evaluate their properties for chemical improved oil recovery (IOR) potential and predict their economics. Implementation of chemical flooding will increase the life of some major U.S. fields and produce additional oil unrecoverable by waterflooding. Introduction As discussed in this paper, chemical flooding refers to the IOR process that involves injection of a slug of a specially formulated surfactant followed by a larger slug of a more viscous mobility control polymer. As it is usually practiced, the surfactant system is formulated in brine, while the polymer is mixed in lower salinity water. Specially designed laboratory

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a decision analysis approach to design an improved chemical flood for a specific field. Their study examined the sensitivities of economic criteria to both decision and stochastic variables. Still others have studied the potential for chemical flooding in very difficult targets with high operating costs, such as North Sea reservoirs. Jakobsen and Hovland6 and Bondor7 used high surfactant prices and quantities, along with the necessary high operating costs in the North Sea, and concluded that chemical flooding did not apply there. Approach Based on Field Pilot and Laboratory Experience This paper takes a different approach than any of the cited or uncited predecessors who have analyzed the economics of chemical flooding. This study focuses on both high oil recovery and positive economics. The two basic premises of this paper are that chemical flooding works, that is, it recovers residual oil, and that a certain project scale is required to obtain favorable economics. In addition, laboratory formulation and testing is effective in developing and optimizing low-cost surfactant-polymer IOR processes. Laboratory and field experience provide the basis for selecting surfactant and polymer quantity, project scale and oil recovery potential. A simplified computer model is used to predict a set of realistic oil recovery streams. However, the model is not used to design a surfactant-polymer oil recovery process. Experience has shown that effective surfactant formulations and IOR processes require laboratory design work. Chemical Flood Predictive Model The DOE Chemical Flood Predictive Model (CFPM) was developed to provide a simple, reliable and inexpensive estimate of recoverable oil from a reservoir, resulting from application of a surfactant-based chemical flood process.8 The model allows the user to supply parameters specific to the reservoir being evaluated. Paul, et al.9 compared CFPM with the results of three numerical simulations and with several surfactant flood field results. CFPM agreed well with the simulator and with the field results. Further, Barua, et al.4 state, in a trial run where both a finite-difference model and the CFPM were used on the same problem, the results agreed remarkably well though the simulator took nearly a million times longer to solve it! The CFPM models a surfactant-polymer flood in reservoirs that have been previously waterflooded. The model relies heavily on correlations derived from the results of numerical simulation to relate factors impacting oil recovery to reservoir and process data9. It accounts for surfactant adsorption, reservoir heterogeneity, reservoir wettability and other important parameters. The program uses oil-water fractional flow theory, augmented with an effective mobility ratio to represent heterogeneity, to estimate oil breakthrough time, time at peak oil production, and time at end of oil production.

An oil rate versus time curve is defined as the recoverable oil and is used to estimate the peak oil rate. The original CFPM, which is still available from the DOE, contains an extensive economic section to calculate after-tax cash flow for any size project. After-tax economic calculations are complex and vary from company to company. Therefore, only pre-tax economics were calculated in this paper, using estimates for capital investments and operating costs appropriate to mid-continent operators. The CFPM oil production curves were used to calculate revenue streams. To further simplify running of the CFPM model, we have converted the original CFPM to run in a spreadsheet format. The spreadsheet model is faithful to the original equations and formulas of CFPM and gives identical oil production curves. A second spreadsheet is linked to the CFPM output spreadsheet to calculate all of the economics presented here. Using this program, a surfactant-polymer field project can be evaluated in minimal time on a personal computer. Domestic Chemical Flood Experience Chemical flooding field projects have produced significant incremental oil.10 Analysis and compilation of prior chemical flood field pilots leads to an important correlation. Fig. 1 shows the correlation, which describes the relationship between the oil recovery from eleven field pilots and the quantity of surfactant injected. The surfactant quantity for these projects is normalized by a product of fractional pore volume (PV) of active surfactant times its concentration (C), in percent. In cases where alcohol was added to the surfactant as a cosurfactant or cosolvent, the PV x C includes it as part of the active surfactant. It is important to note that these eleven pilots represent some of the best-performing domestic chemical flood pilots documented in the literature. Thus, the correlation shown in Fig. 1 represents a best-case performance for field applications of chemical flooding. This figure shows that chemical floods have recovered over 60% of the waterflood residual oil in field pilots. Fig. 1 also shows recent laboratory coreflood results with a surfactant system that has been developed, field tested in a single well IOR evaluation, and recommended for a field project. The highest oil recovery from a Berea sandstone core (82%) requires a surfactant PV x C of 0.5. This level of recovery shows the potential of a properly formulated surfactant system to recover waterflood remaining oil from a confined core. The Berea oil recovery value is used as the CFPM displacement efficiency input. The Berea coreflood curve also shows the tendency for reduced oil recovery when lower quantities of surfactant are used. A suitable surfactant-polymer process, with an oil recovery potential like that shown in Fig. 1, must be developed and demonstrated in laboratory corefloods. Experience has shown that a high Berea recovery like the 82% shown in Fig. 1 for a surfactant PV x C of 0.5, will be reduced in a field application to a much lower recovery. The field experience curve of Fig.

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1 shows a field recovery near 40% for the same quantity of surfactant. The reduction in recovery from the laboratory to the field is due in large part to the lower contacted volume in the field flood. It is unlikely that a laboratory surfactant system giving a low oil recovery in a confined Berea core would produce enough oil in a field project to be economical. In addition to focusing on the oil recoveries obtained in the best pilot tests, it is important to note that very few "dry holes", with no oil produced, were obtained in chemical flood pilots. The operator knows his reservoir contains residual oil. The approximate volume of remaining oil is also known, and additional measurements can be made to refine this value. Assuming the chemical flood is performed in a field with an existing waterflood, a great deal will be known about reservoir fluid flow from the waterflood operation and performance. Other important factors in a successful field project are the development of a high oil recovery surfactant system like that illustrated in Fig. 1, a reasonable engineering design of the IOR process and its associated surface equipment, and careful implementation and operation of the flood. If these guidelines are followed, there will be little chance of a zero oil recovery from a field project. Field Project Scale Chemical flood field projects reported in the United States ranged from less than one acre to over 400 acres. Most of the projects were 5 to 20 acres, in confined, inverted 5-spot patterns. Many of these projects were designed to demonstrate new technologies and to obtain oil recovery results quickly. The small field pilots were not designed to be economical. However, in subsequent analyses, they were often criticized for not producing oil economically. Our unpublished analyses of field project scale indicate positive economics can be obtained using chemical flooding at a field scale of 80 to 100 acres. This areal scale includes the important assumption that the remaining target oil volume is at least one million barrels. Projects with less than one million barrels of oil in place will not produce enough oil to support the required investments in surfactant system development, mixing facilities, well work, and chemicals. Therefore, it is not surprising that previous small pilot tests were not economical. This study is based on a specific 90-acre mid-continent field project having a PV of 4.2 million barrels and a remaining oil volume of 1.36 million barrels. From our experience, this is larger than the minimum size necessary (1 million barrels of oil) to obtain positive economics. Improved economics result when chemical flooding is performed on a larger scale. This project can be considered a first stage commercial project, leading to a staged, field-wide flood. Economic advantages of a larger chemical flood include using the original surfactantpolymer IOR process, with no further development costs, and reusing the surfactant and polymer mixing plants in multiple stages. In the current project, all the surfactant-polymer design cost and mixing plant costs are included in the project economics. Staged expansion would not require these expenditures for the additional stages.

Target Reservoirs Independent operators are the current owners of many of the historically significant domestic oil fields. Independents generally do not have their own technical staffs to develop or assess chemical flooding schemes. However, industry and academic sources of chemical flooding information and technology are available. This study uses the properties of a mid-continent sandstone reservoir. For the most part, the field properties (Table 1) used in our model, and in our calculations of residual oil and recovered oil, are those of the Benoist Sand in the Salem Field, Illinois. This 8,800-acre field was discovered about 1938 and underwent an extensive waterflood for 40 years. In addition, several chemical flood pilot tests were performed in this field, the latest beginning in 1981 and ending in 1992.11 Chemical FloodingOil Recovery Variables A sufficient quantity of the surfactant slug must be injected in the field project, based on laboratory coreflood recoveries. A viscous polymer slug follows the surfactant to provide mobility control for the process. For this paper, a surfactant concentration of 2% active is formulated in field injection brine, and 0.25 PV is injected in the field pilot. The mobility control polymer is a continuously tapered slug with an initial concentration of 1,244 mg/L (ppm) and a total slug size of 0.75 PV. Produced brine is injected after the polymer slug until the end of oil production. Oil Recovery Efficiency. Based on field results, chemical flooding can recover a significant quantity of waterflood remaining oil. If the process fails to recover significant oil, the economic outcome will certainly be negative. The field pilot experience curve (Fig. 1) shows a field oil recovery of 40% for a surfactant quantity (PV x C) of 0.5. Because this study is based in large part upon industry field pilot experience, we selected 40% recovery as the mid-point value. To account for reasonable variations around that value, the lower recovery was set to 30% and the higher recovery was set at 50% for our typical mid-continent field. Current Oil Saturation. Waterfloods are not all equally efficient, and mid-continent fields are at various stages of waterflood completion. In addition, U.S. DOE figures indicate that the average domestic oilfield recovery factor is only 32%, unchanged over the last twenty years.12 The typical mid-continent field used here had an initial oil saturation of 71%. Applying a 32% recovery factor results in an average remaining oil saturation of 48%. To reflect lower oil saturation in the swept volume, we selected remaining oil saturation values from a low of 25% to a high of 40%, with a mid-point value of 32%. Pattern Area. Chemical floods require at least one pore volume throughput to obtain maximum oil recovery. Therefore, for a given field, pattern area is an important variable in calculating the timing of oil recovery. Since CFPM requires an inverted 5-spot pattern, the calculations were performed with three different pattern areas, 5-acre, 10acre, and 22.5-acre. Thus, the 90-acre project requires 18, 9,

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or 4 injection wells for these pattern areas. Since the injectivity per well is constant for this study, one PV of the 90acre project will be injected much faster when there are more injectors, i.e., smaller patterns. As a result, the oil is recovered faster, and the overall project life is shorter. Mid-continent fields have been drilled for waterflooding in various configurations, pore volumes and areas. We included 5-, 10- and 22.5-acre patterns in this study to encompass typical pattern sizes currently in operation. It was not our intent to recommend redrilling an existing waterflood, but only to demonstrate the effect of a variety of patterns on the economics of chemical flooding. The drilling costs assumed here will not support extensive redrilling. Chemical FloodingEconomic Variables No inflation factors were applied to chemical prices and operating costs. In addition, oil prices were held constant for each CFPM run for the life of the project. All prices quoted in this paper are in U.S. dollars. Surfactant Prices. The surfactant price can be expressed either as a price per pound of active material, or as a price per barrel of injected solution. Using a low salinity brine and a 2% active surfactant solution, the mass of active surfactant in a barrel of injected fluid is about 7 pounds. Based on discussions with surfactant suppliers, prices range from a low of $0.36 to a high of $0.715 per active pound, or $2.50 to $5.00 per barrel. The mid-point prices are $0.50 per pound and $3.50 per barrel. Polymer Prices. Commercial suppliers of polyacrylamides have provided polymer price estimates. One of the services available from the manufacturers is a self-contained polymer mixing plant. For an increase in the price per pound of polymer, the vendor can supply a polymer mixing plant. This provides an economic benefit by distributing the mixing plant costs over the duration of the polymer injection. The alternative is to build a polymer mixing plant and purchase polymer at a lower cost per pound. Polymer prices in this study were based on a vendor-supplied mixing plant. They were varied from a low of $1.05 per dry pound to a high of $1.30, with a mid-point case of $1.20. Discount Rate. A range of discount factors was chosen based on discussions with financial and independent oil company representatives. These are within a relatively narrow range and reflect current lending rates for oil and gas projects. The range of discount rates used in this study is 8 to 12%, with a mid-point value of 10%. Operating Costs. This study uses a range of operating costs that reflect current costs of a large, mid-continent waterflood project ($0.09 per barrel). The costs are based on fluid lifting, water treating for reinjection and personnel to monitor and operate the field. These costs are based on total fluid, not on barrels of oil produced. Thus, the costs are constant from the beginning of surfactant injection until the end of oil production. CFPM maintains a balanced injection and production volume for each pattern. The operating costs range

from $0.09 to $0.30 per barrel, with a mid-point value of $0.15. The mid-point value of $0.15 per barrel is higher than the quoted waterflood cost because chemical floods require more monitoring than waterfloods. Additional Costs. In our economic calculations, the first project expenditures began nine months before surfactant injection. A surfactant-polymer development cost of $35,000 per month was included for five months. A surfactant mixing plant was estimated to cost $600,000, and this cost was applied as six equal increments over the six months before surfactant injection. Because of the importance of injecting the surfactant and polymer into the proper zones, either workovers or redrilling will probably be necessary for old water injection wells. Therefore, charges of $50,000 per injection well were applied to this project. This sum can be allocated to workovers or to a combination of workovers and new wells. The well work expenditures were applied in equal increments over six months, beginning eight months before chemical injection. Oil Price. For approximately two years, the target oil price range set by OPEC has been $22 to $28 per barrel. OPEC reaffirmed this range in December 2003. The actual crude oil price has remained about $30 per barrel since 2001. For this study we selected an oil price range of $22 to $30, with a midpoint value of $26. To simplify this study, the selected oil price for each case was held constant for the duration of the project. Results of Economic Calculations The CFPM runs were performed using the field parameters from Table 1 and the eight variables listed in Table 2. The mid-range values shown in the table were used to generate a base case monthly oil stream. Typical cumulative oil recovery curves are shown in Fig. 2. The three curves illustrate the effect of varying oil recovery efficiency on the rate of cumulative oil production. The volumes of oil recovered for these cases were 408,000 (30%), 543,000 (40%), and 679,000 (50%) barrels from the remaining oil volume of 1.36 million barrels. The revenue stream was calculated using the monthly volume of oil recovered times the constant mid-range oil price ($26 per barrel). The monthly net cash flows were discounted back to the start of the project using the mid-range discount rate of 10% to generate the discounted net present value (NPV) as defined by Stermole13. A second economic criterion calculated was the benefit cost ratio (B/C Ratio).13 This ratio is the present worth net revenues divided by the present worth net costs. A B/C Ratio of 1.0 equates to a breakeven project, with a rate of return equal to the discount rate. To generate economic and technical sensitivities, one variable at a time, from Table 2, was changed from the base case to a lower or a higher value. The NPV and B/C Ratio for each run were calculated using the appropriate discount rate. The base case generates a positive NPV of $4.267 million and a B/C

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Ratio of 1.92. Figs. 3 to 6 show all the sensitivity runs produced positive NPVs and favorable B/C Ratios. The overall range of NPVs for the variables used is $1.096 to $7.022 million. The corresponding range of B/C Ratios was also positive, 1.23 to 2.55. Figs. 3 to 6 illustrate the magnitude of the sensitivity of the chemical flood to the oil recovery and economic variables. The slope of the lines indicates the relative effect, with greater slope indicating a greater effect on either NPV or B/C Ratio. Oil price, recovery efficiency and starting oil saturation are the three most significant factors in this economic analysis. Surfactant price is the next most important variable. The relative effect on project NPV of each variable is shown in Fig. 7 as a tornado diagram. The general sensitivity results obtained in this study (Fig. 7) are not a surprise. Oil price and recovery efficiency have always been found to be among the most important variables in the economic success of a chemical flood. In this study, starting oil saturation also becomes a major variable because it relates directly to the volume of oil recovered. Some of the simplifying assumptions, based upon our experience and a literature review, have reduced the importance of other variables like surfactant quantity and price. This results from using a practical, low-cost, laboratory-developed surfactant formulation having an oil recovery performance like that shown in Fig. 1. To illustrate the economic impact if two major factors combined in the same direction, additional CFPM runs were performed. In the case of a 50% recovery from a project with a remaining oil saturation of 40%, the NPV was found to be $10.075 million. Combining a recovery of 50% and an oil price of $30, the NPV was $9.007 million. On the other hand, if the remaining oil saturation is low, 25%, and the recovery efficiency is only 30%, the NPV is a negative $1.043 million. If the average remaining oil saturation in the field is less than 25%, obtaining positive economics will be very difficult. Once the program was set up with the appropriate input data, it was simple and quick to run multiple cases and examine specific sensitivities. Adapting to Other Fields The base case results obtained here for our model midcontinent field will likely not be identical to any specific field. One way to use these results for another field is to scale them by a pore volume comparison. Chemical flooding can be characterized as being directly related to pore volume. A specific fractional pore volume of surfactant and polymer is injected and pushed through the reservoir to producing wells. The volume of oil recovered is a fraction of the oil remaining. The results presented here for the 90-acre project are based on a project pore volume of 4.245 million barrels. The base case oil recovery was 543,000 barrels, which lead to a positive NPV of $4.267 million. An operator with a reservoir much different in thickness or porosity can simply scale the total oil recovery given here to a representative area of his field by using a pore volume ratio.

In addition, the rate of oil recovery can be scaled from the curves shown in Fig. 2. Conclusions 1. Chemical flooding can be economical today for the independent operator. 2. All twenty-four cases evaluated in this study generated positive NPVs, with a range of $1.096 million to $7.022 million. This study shows positive before-tax economics for a 90acre chemical flood in a mid-continent field containing 1.36 million barrels of remaining oil. However, better economics will result if the chemical flood is performed on a larger, staged project. An independent operator, using a personal computer, can plan and evaluate the potential of a chemical flood with a simple chemical flood model available from the DOE.

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References
1. 2. National Petroleum Council, Enhanced Oil Recovery, (1984). Tomich, J. F., Laplante, D. L., and Snow, T. M., Technical and Economic Complexities Associated with Surfactant Flooding, 12th World Petroleum Congress, Houston, 4/26/87-5/1/87, Proc. (1987) V3, 337-346. White, J. R., Gorring, R. L. and Odeh, A. S. A General Approach to Estimating the Cost of Recovering Crude Oil by Surfactant Waterflood Techniques, JPT (February 1986) 208216. Barua, J., Prescott, T. and Haldorsen, H. H.: Financial and Technical Decision Making for Surfactant Flooding, paper SPE 15074 presented at 56th California Regional Meeting of the Society of Petroleum Engineers, Oakland, April 2-4, 1986. Sanz, C. A. and Miller, M. A., A Decision Analysis Approach to the Design of a Chemical Flooding Process, paper SPE 27036 presented at the 3rd SPE Latin American and Caribbean Petroleum Engineering Conference, Buenos Aires, Argentina, 4/26-29/94, Proc. V1 (1994) 347-359. Jakobsen, S. R. and Hovland, F. Surfactant Flooding: Technical and Economical Conditions to Succeed, paper SPE 27824 presented at the 9th SPE/DOE Improved Oil Recovery Symposium, Tulsa, 4/17-20/94, Proc. V2 (1994) 457-468. Bondor, P. L., Dilute Surfactant Flooding for North Sea ApplicationsTechnical and Economic Considerations, 6th European Symposium on Improved Oil Recovery, Stavanger, Norway, 5/21-23/91, Proc. V1 (1991) 749-758. Supporting Technology for Enhanced Oil Recovery Chemical Flood Predictive Model, Report DOE/BC-86/11/SP (December 1986). Paul, G. W., Lake, L. W., Pope, G. A. and Young, G. B.: A Simplified Predictive Model for Micellar-Polymer Flooding, paper SPE 10733 presented at California Regional Meeting of the Society of Petroleum Engineers, San Francisco, March 2429, 1982.

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10. Lowry, P. H., Ferrell, H. H., and Dauben, D. L., A Review and Statistical Analysis of Micellar-Polymer Field Test Data, Report DOE/BC/10830-4, November 1986. 11. Widmyer, R. H., Williams, D. B., and Ware, J. W., Performance Evaluation of the Salem Unit Surfactant/Polymer Pilot, JPT (September 1988) 1217-26. 12. U.S. Department Of Energy Web http://www.fossil.energy.gov/oil_gas/res_efficiency/ Investment Decision Methods, 7th Edition, Evaluations Corp., Golden, Colorado (1990). Site,

13. Stermole, F. J. and Stermole, J. M., Economic Evaluation and

Investment

SI Metric Conversion Factors Acre x 4.046873 E+03 = m2 API 141.5/(131.5+API) = g/cm3 bbl x 1.589873 E-01 = m3 cp x 1.0* E-03 = Pas F (F-32)/1.8 = C ft x 3.048* E-01 = m lbm x 4.535924 E-01 = kg *Conversion factor is exact List of Figures Fig. 1. Laboratory and Successful Field Project Recovery Efficiency vs. Surfactant Quantity Fig. 2. Cumulative Oil Recovery Curves at Various Recovery Efficiencies Fig. 3. Sensitivity of NPV to Oil Recovery Variables Fig. 4. Sensitivity of NPV to Economic Variables Fig. 5. Sensitivity of Benefit-Cost Ratio to Oil Recovery Variables Fig. 6. Sensitivity of Benefit-Cost Ratio to Economic Variables Fig. 7. Relative Effect of the Eight Variables on NPV

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TABLE 1INPUT FIELD PROPERTIES

Formation Depth Reservoir Temperature Formation Porosity Permeability Clay Content, weight fraction Dykstra-Parsons Coefficient Net Pay Oil Viscosity at Res. Temperature Oil Gravity Pattern Injection Rate Project Area Project Pore Volume Original Oil in Place 1750 ft 82F 0.179 216 md 0.1 0.594 30.5 ft 3.6 cp 36.0 API 404 RB/D 90 acres 4.245 MMRB 2.683 MMSTB

TABLE 2VARIABLE RANGES

Low Recovery Efficiency - % Starting Oil Saturation Oil Price - $/bbl Surfactant Cost $/active lbm Pattern Area surface acres Operations Cost $/bbl of fluid lifted Discount Rate annual % Polymer Cost - $/active lbm 30 0.25 22 0.36 5 0.09 8 1.05 Base 40 0.32 26 0.50 10 0.15 10 1.20 High 50 0.40 30 0.715 22.5 0.30 12 1.30

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90 Laboratory Corefloods 80 70 Tertiary Oil Recovery, % 60 50 40 Field Projects 30 20 10 0 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1 Surfactant Quantity, PV x C

Fig. 1. Laboratory and Successful Field Project Recovery Efficiency vs. Surfactant Quantity

700 50% 600 Oil, thousands of bbls 40% 500 400 300 200 100 0 0 1 2 3 4 5 6 7 8 Time from Project Start, Years 30%

Fig. 2. Cumulative Oil Recovery Curves at Various Recovery Efficiencies

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8.00 7.00 Recovery Efficiency 6.00 5.00 4.00 3.00 2.00 1.00 0.00 -60% Starting Oil Saturation

NPV (MM$)

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Fig. 3. Sensitivity of NPV to Oil Recovery Variables

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2.80 2.60 Starting Oil Saturation 2.40 Benefit-Cost Ratio 2.20 2.00 Well Spacing 1.80 1.60 1.40 1.20 1.00 -60% Re covery Efficiency

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Fig. 5. Sensitivity of Benefit-Cost Ratio to Oil Recovery Variables

2.80 2.60 2.40 Benefit-Cost Ratio 2.20 2.00 Operations Cost 1.80 1.60 1.40 1.20 1.00 -60% Polymer Price Discount Rate Surfactant Price Oil Price

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Fig. 6. Sensitivity of Benefit-Cost Ratio to Economic Variables

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11

Recovery Efficiency Starting Oil Saturation Oil Price Surfactant Price Surface Acres Operating Cost Discount Rate Polymer Price 0 1 2 3 4 NPV (MM$) 5 6 7 8

Fig. 7. Relative Effect of the Eight Variables on NPV

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