Reservoir Simulation Used to Plan Diatomite Developement in Mountainous Region

In Santa Barbara County, Santa Maria Pacific (an exploration and production company) is expanding their cyclic steam project in a diatomite reservoir. The hilly or mountainous topography and cut and fill restrictions have interfered with the company's ideal development plan. The steep hillsides prevent well pad development for about 22 vertical well locations in the 110 well expansion plan. Conventional production performs poorly in the area because the combination of relatively low permeability (1-10 md) and high viscosity (~220 cp) at the reservoir temperature. Cyclic steam injection has been widely used in diatomite reservoirs to take advantage of the diatomite rocks unique properties and lower the viscosity of the oil. Some companies used deviated wells for cyclic steam injection, but Santa Maria Pacific prefers the use only vertical wells for the expansion. Currently, the inability to create well pads above 22 vertical well target locations will result in an estimated $60,000,000 of lost revenue over a five year period.

The target locations could be developed with unstimulated deviated or horizontal wells, but expected well rates and expenses have not been estimated. In this work, I use a thermal reservoir simulator to estimate production based on five potential development cases. The first case represents no development other than the cyclic wells. This case is used to calibrate the model based on the pilot program performance and serves as a reference point for the other cases. Two of the cases simulate a deviated well with and without artificial lift next to a cyclic well, and the final two cases simulate a horizontal well segment with and without artificial lift next to a cyclic well.

The deviated well with artificial lift results in the highest NPV and profit after five years. The well experienced pressure support from the neighboring cyclic well and performed better with the cyclic well than without it. Adding 22 deviated wells with artificial lift will increase the project's net profit by an estimated $7,326,000 and NPV by $2,838,000 after five years.