Economics of Effective Well Stimulation

Why Effective Acidizing Pays

The effective removal of formation damage and optimisation of production can greatly increase the net present value of a well. Use of technology which effectively removes the damage and optimises production can result in additional production worth millions of dollars per year. This is illustrated by the following example, which gives values for the production and calculated net present value of a well at 4 different skin values.

Assumptions:

Undamaged well potential 10,000 bpd
Reservoir pressure decline 15% p.a. from year 3 onwards
Facilities capacity 6,500 bpd
Oil price $55 / bbl
Lifting costs $15 / bbl
Pre-tax discount rate 8%

Effect of skin on initial production rate, rate after 3 years and NPV

Skin	Initial production (bopd)	Production after 3 years (bopd)	Comment	NPV of 20 years production ($M)
0	6,500	6,500	The undamaged well is still on plateau	$518 M
2	6,500	4,900	Well off plateau after 1.5 years	$429 M
10	4,200	3,100	Poor productivity	$269 M
30	2,100	1,900	Productivity is less than 30% of the undamaged well	$155 M

It can be seen that the presence of skin can significantly reduce the NPV of a well. Independent confirmation of the substantial financial benefits arising from damage removal and production enhancement is provided by SPE 30234.