Techno Economic Analysis of Heavy Oil Field in Nigeria

Abstract

The main challenge of heavy oil (bitumen) is the high viscosity making it not flow easily to production wells at normal reservoir conditions. Thermal recovery methods are used to exploit heavy oil reservoirs, where oil viscosity is very high and mobility low at the reservoir temperature. It is desirable to reduce the oil viscosity by increasing its temperature. The main processes that use thermal methods for heavy oil recovery are Steam methods, like Cyclic Steam Stimulation (CSS), and Steam Assisted Gravity Drainage (SAGD). Nigeria is blessed with high reserve of heavy oil (bitumen), yet it is not commercially produced. These recovery methods are capital intensive and as such need intensive studies and forecast about their outcomes therefore the need to have an effective or the most economical EOR for high viscous oil reservoir cannot be over emphasized. The primary objectives of this study are to evaluate existing EOR methods for heavy oil, conducting economic analysis for selected EOR methods for heavy oil and selecting the most productive EOR method for heavy oil. An economic analysis was carried out to evaluate if the two methods are economically profitable by building an economic model. Projected production along with price, royalty and tax were the input data fed into the economic model. The results of the economic analysis indicated for SAGD a payback period of about 5years with an Internal Rate of Return of 34% and a Net Present Value of $51.69 million USD using a 10% discount rate, While that of CSS a payback period of 7.5years with an Internal Rate of Return of 14% and a Net Present Value of $4.84 million USD using a 10% discount rate. The major finding of this study is that investment in exploration and production of bitumen in Nigeria is a wise economic decision because it is profitable.