A Procedure for Assessing the Value of Oilfield Sensors

Abstract

Spurred by advances in reliability, cost, and accuracy, sensors offer a means of increasing expected ultimate hydrocarbon recovery in drilling, in current production and in planned projects. Ultimate hydrocarbon recoveries larger than currently experienced are possible, especially when sensors are used with advanced recovery methods. However, often it is unclear if the incremental revenue generated will justify the cost of installing the sensors. Estimating this value is the goal of the work reported here. Introduction Formal methods of valuing information (sometimes called monetizing information) have existed in the professional literature for many years. Most publications on value of information (VOI) have been in financial, economic, operations research or decision analysis journals; little has appeared in engineering publications, especially petroleum engineering publications.1 We take a small step towards addressing this imbalance here. The "information" here is that provided by sensors operating in real time. VOI methods are simple at the highest conceptual level: the value of a course of action without sensors is estimated and re-estimated by the same sequence with sensors. The difference between the expected values with and without sensors is the value of the sensor. If the difference between the two expected values is greater than the cost of using the sensors, they should be installed. VOI valuations have the following components:They account for uncertainty in the outcome of decisions. The existence of uncertainty is why the valuation is based on expected values.They capture the ability of the sensors to change a decision.They allow for the sensors to change the monetary outcome of a course of action even when a decision is not changed by the information. The purpose of this paper is to describe the results of an attempt to estimate the benefit of sensors in four different hydrocarbon recovery technologies: CO2 injection in mature oil reservoirs, steam assisted gravity drainage in heavy oil reservoirs, hydraulic fracturing in tight gas reservoirs, and waterflooding in deep-water sandstone reservoirs. Results show that sensors are of benefit in all applications, especially the latter, and that sensors are unlikely to change decisions about whether to implement these recovery technologies. Method Benefit of Sensors We categorize the benefit obtained by using sensors into three areas: Measurement. This category involves the accuracy, precision, reliability and cost of the measurements. Evidently, nearly everything (and more) that can be measured with conventional logging suites can be measured with sensors: pressure, temperature, saturation, flow rate and even some chemical compositions. These measurements appear to be accurate and precise. The main technical limits are the speed with which (what will ultimately prove to be) large quantities of data can be transmitted, and the range of conditions at which sensors can operate. Given that processes taking place within a reservoir occur slowly, data transmission issues are not as limiting as they would be in other applications. Current technology allows sensors to operate in temperatures up to 400o F and pressures of up to 16,000 psi.2