Probabilistic analysis of the value of a smart well for sequential production of a stacked reservoir

Abstract Smart wells enable a quick reaction to unexpected events during the life of a reservoir, and have the potential to positively influence the net present value (NPV) of a project development. To quantify this potential, we examined the influence of a smart completion on the probability density functions (PDFs) of cumulative oil, gas and water production and incremental NPV. We considered a one-well development of a stacked reservoir consisting of four blocks with comparable pressure regimes, but with large uncertainties in the gas–oil and oil–water contacts. A Monte Carlo analysis of 2×500 paired simulations was performed in a reservoir simulator for a sequential production scenario with a conventional and a smart well completion. The smart well was equipped with on–off inflow control valves (ICVs) in each zone, which were opened and closed alternatingly to maximize the oil rate while staying below pre-set limits for gas and water production. In addition, we took into account the uncertainty in the reliability of the ICVs. For the scenario and the economic parameters considered, we concluded that smart well technology results in an increase of the incremental NPV. The mean cumulative oil production of the conventional scenario was between 831×10 3 and 866×10 3 m 3 (5.23×10 6 and 5.45×10 6 bbl) with 99% confidence. Assuming fully reliable ICVs, the mean of the differences in cumulative oil production for the smart and the conventional scenarios was positive with a value between 102×10 3 and 109×10 3 m 3 (640×10 3 and 683×10 3 bbl) with 99% confidence. Furthermore, water and gas production both decreased significantly. For the given economic parameters (which include an oil price of US$12/bbl and a discount rate of 7%), and perfect valves, the mean of the incremental NPV distribution was positive with 99% confidence limits of US$10.57 million and US$11.00 million. When, in addition, an infant mortality probability of 5% was taken into account for the individual ICVs, assuming them permanently closed at failure, the mean of the difference in cumulative oil production remained positive with a 99% confidence interval between 35.3×10 3 and 67.7×10 3 m 3 (222×10 3 and 426×10 3 bbl). Also water and gas production were still lower than in the conventional scenario. As a result, while taking into account the risk of valve failure, the mean of the incremental NPV remained positive with 99% confidence limits of US$7.70 million and US$9.15 million.