Shallow – Here’s the best details I could find:
http://www.aogr.com/magazine/cover-stor ... elds-new-lNotice a couple of critical aspects. First, no new technology is being utilized. The report confirms they are doing the same type EOR that’s been done for many decades in the basin. Most important: they aren’t just CO2 flooding the ROZ but also the original reservoir. So here’s the $64,000 question no one can prove: how much of that 1400 bopd is coming from the ROZ and how much from the original reservoir that has produced millions of bbls of oil? 50%? 5%.? Anyone can speculate but no one can prove it one way or the other. Interesting that they don’t pose this obvious question themselves. Notice another glaring (IMHO) lack of info they aren’t providing: how much the CO2 injection is costing and how much water they are producing (and thus need to dispose). Gross production numbers not reduced for operating expenses, royalty and severance tax always look better than net income by a wide margin. And let’s remember there the cost of engineering the injection program: “Legado is deepening the wells by a couple hundred feet. “Once we are finished with all phases of the project, we expect to have 124 injector wells and 150 producers,” he adds.” So now you have the initial investment of 224 re-entries, drill deepers and completions. You have a better idea than most of what that will cost. I'll guess $50 million and I'm pretty sure that's a low estimate. Maybe very low.
And remember what I said about the time issue. As they point out: “One of the trademarks of Permian Basin CO2 EOR projects is a long life cycle that spans decades, and Cantwell suggests that the Goldsmith-Landreth MPZ-ROZ development will be no different. “Look at the SACROC Unit in Scurry County, Tx. (the Permian Basin’s oldest CO2 flood, operated by Kinder Morgan),” Cantwell offers. “It started in 1972 and it still is going strong. We undoubtedly will be producing oil in the Goldsmith-Landreth Unit for at least 30 years.”
So the good news: this field might produce for another 30 years. The bad news: it might take 30 years to recover the reserves they are estimating. Also notice who bought the field: Kinder Morgan…the company that had been selling them the CO2…at a profit of course. Now KM is using the CO2 they own for the project. How much profit do you think the KM production division is allowing the KM CO2 sales division to make? LOL.
The Goldsmith-Landreth project is a little different from other quaternary efforts because Legado is, from the onset of CO2 flooding, simultaneously injecting into both the MPZ and the deeper ROZ in an attempt to produce both at the same time, points out Tom Thurmond, engineering manager. “I believe we are the first to develop the ROZ contemporaneously with the MPZ. It is an opportunity to do something that, on one hand, has not been done before, but on the other hand, is an extension of technology that has been around for 30 years. We have made that our niche, doing something that is a little bit new by taking existing technology and expanding its application.”
The Goldsmith-Landreth project is a little different from other quaternary efforts because Legado is, from the onset of CO2 flooding, simultaneously injecting into both the MPZ and the deeper ROZ in an attempt to produce both at the same time, points out Tom Thurmond, engineering manager. “I believe we are the first to develop the ROZ contemporaneously with the MPZ. It is an opportunity to do something that, on one hand, has not been done before, but on the other hand, is an extension of technology that has been around for 30 years. We have made that our niche, doing something that is a little bit new by taking existing technology and expanding its application.”
Thurmond adds that it stands to reason that the saturation values appear to be the same in the MPZ and ROZ. “Considering that previous waterfloods have swept water through the main pay zone six times in most cases, it makes perfect sense that the saturation levels are practically identical to the ROZ,” he says.
None of what I offer implies that this effort won’t prove profitable. But again there’s the hype surrounding the big ultimate recovery numbers and nothing about how much the cumulative effect of all such projects will have on the daily production rate. As we often are reminded: PO isn’t about reserves or URR. It’s about production rates.
Again consider my project drilling horizontal wells to recover residual oil in a trend that has produced 4.5 billion bo. So if I say my approach can recover 20% more we're talking about 1 BILLION BBLS OF OIL!!! LOL. Not once in the dozen of times I presented my idea did I toss out such a statement. And for good reason: no one that would invest the $100+ million to develop the project would give a sh*t how much more oil could be produced. LOL. They wanted to know the estimated production rate which would allow an estimate of the return on investment. Just like you make decisions in your operations.