INDIAN INSTITUE OF TECHNOLOGY (ISM), DHANBAD

Team name: Ingenious

Team members: Aditya Singh (8298884039)
Arjit Kumar Prince (8083560582)
Saurabh Mishra (8409779884)

Reservoirs containing only free gas are termed gas reservoirs. Such a reservoir contains a
mixture of hydrocarbons, which exists wholly in the gaseous state. The mixture may be a dry,
wet, or condensate gas, depending on the composition of the gas, along with the pressure and
temperature at which the accumulation exists. Gas reservoirs may have water influx from a
contiguous water-bearing portion of the formation or may be volumetric (i.e., have no water
influx). Most gas engineering calculations involve the use of gas formation volume factor Bg
which is defined as the actual volume occupied by n moles of gas at a specified pressure and
temperature, divided by the volume occupied by the same amount of gas at standard
conditions.

Derivation of Bg –
From gas laws,

(P1V1)/(Z1T1) = (PsVs)/(ZsTs)

Here, the subscript 1 refers to conditions at a specific time and the subscript s refers to
standard conditions. By definition Bg is equal to volume in barrels at reservoir temperature and
pressure, occupied by one standard cubic foot of gas. Therefore, if V s is equal to one, then V1 in
the above equation becomes is equal to Bg, after conversion to barrel units. The calculation of
Bg is accomplished by use of the following equation:
Bg = (PsVsZ1T1)/(PsZsTs5.62) in rb/scf
As the quantities at standard conditions are known, this equation can be simplified as follows:
Bg= (14.7*1.0*Z1*T1)/(P1*1.0*520*5.62)……………… as Ps=14.7 psi Ts=520oR
Bg= 0.00504(Z1T1/P1)…………………………………………. Eq.1

The Z factor or the compressibility factor at different pressures and temperatures is calculated
using the graph between Z and pseudo reduced pressure at given pseudo reduced
temperatures.
Pseudo reduced pressure, Ppr = (Pgiven/Pc) where, Pc= critical pressure
Pgiven=given pressure

Pseudo critical temperature, Tpr= (Tgiven/Tc) where, Tc= critical temperature

Tgiven=given temperature
Production from the reservoir occurs by a reduction in pressure, with the reservoir temperature
changing a little, if any. Therefore, the gas is removed from the reservoir isothermally. Gas
reservoirs have two main mechanism-
1.Gas drive 2.Water drive
We have, in general, two approaches for estimating initial gas in place , gas reserves, and the
gas recovery for volumetric and water-drive mechanisms:
• Volumetric method
• Material balance approach

Volumetric Method
Data used to estimate the gas-bearing reservoir PV include, but are not limited to, well logs,
core analyses, bottom-hole pressure (BHP) and fluid sample information, along with well tests.
This data typically is used to develop various subsurface maps. Of these maps, structural and
stratigraphic cross-sectional maps help to establish the reservoir’s areal extent and to identify
reservoir discontinuities, such as pinch-outs, faults, or gas-water contacts. Subsurface contour
maps, usually drawn relative to a known or marker formation, are constructed with lines
connecting points of equal elevation and therefore portray the geologic structure. Subsurface
isopachous maps are constructed with lines of equal net gas-bearing formation thickness. With
these maps, the reservoir PV can then be estimated by planimetering the areas between the
isopachous lines and using an approximate volume calculation technique, such as the pyramidal
or trapezoidal method.
The volumetric equation is useful in reserve work for estimating gas in place at any stage of
depletion. During the development period before reservoir limits have been accurately defined,
it is convenient to calculate gas in place per acre-foot of bulk reservoir rock. Multiplication of
this unit figure by the best available estimate of bulk reservoir volume then gives gas in place
for the lease, tract, or reservoir under consideration. Later in the life of the reservoir, when the
reservoir volume is defined and performance data are available, volumetric calculations provide
valuable checks on gas in place estimates obtained from material balance methods.

The equation to calculate reservoir gas space, G (bbl. or m3) is-

G= 7758*A*h*Swc)……………………….. Eq. 2
where,
 A= area of reservoir (acres) h=thickness of payzone (ft)
porosity of reservoir Swc=connate water saturation
Hence the original gas in place can be calculated as-
OGIP= G/Bgi ................................Eq. 3
In the given problem statement, by performing suitable calculations using the given data, OGIP
by volumetric method comes out to be 40.358 BCF.
Material Balance Equation
The material balance equation for gas reservoir is expressed as
G/Bgi = Vg + G/Bg .................................................Eq. 4 Vg = cumulative gas produced, SCF
G, Bgi, Bg have usual meanings.
From gas laws,

P1V1/T1 = PsVs/Ts
Vs can also give gas in place as Vg= G/Bgi – G/Bg
Substituting the values of Bgi and Bg and rearranging the equation, we get..

P/Z= P1/Z1 – Vg [0.00504T1/G] ………………..Eq.5

With the given data, we can easily find the value of Z (compressibility factor) and subsequently
the value of P/Z for each pressure values
Using the slope of the graph between P/Z and Vg we can easily find the value of G at the given
temperature of 620oR which comes out to be 0.111 X 109 rb.

Hence OGIP= G/Bgi= 73.06 BCF

 We can see a vast difference between the values of OGIP calculated using the above two
methods out of which the value of OGIP is more accurate when found out using MBE.
Using the same P/Z v/s G plot, we can find out the cumulative production at abandonment
pressure, i.e. 200 psia.
Therefore, ultimate recovery = {(cum. Gas production to abandonment)/ OGIP} X100 %
Here in the given case the ultimate recovery comes out to be 89.726%

RESERVOIR ECONOMICS
The oil producers is in business to make money, hence the employees should confine their
activities to such projects which would yield the company significant profit.
In this regard, Net Present Value (NPV) and IRR (Internal Rate of Return) plays a significant role
in determining the credibility of any undertaken project.

Net Present Value (NPV) is the difference between the present value of cash inflows and the
present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of a
projected investment or project.

The following is the formula for calculating NPV:

Where,
Ct = net cash inflow during the period t
Co = total initial investment costs
r = discount rate, and
t = number of time periods

Internal rate of return (IRR) is a metric used in capital budgeting measuring the profitability of
potential investments. Internal rate of return is a discount rate that makes the net present
value (NPV) of all cash flows from a particular project equal to zero. IRR calculations rely on the
same formula as NPV does.
In the given sales data, we jump into conclusion that following number of wells must be drilled
at given time intervals for maximizing the profit while meeting the demands of 18MMSCFD.

Time, t(years) 0 1 2 3 4 5 6 7 8 9
Number of wells 2 1 1 2 1 1 1 1 2 1
 Total 13 wells must be drilled by the end of t=9.
For t=0
since production needs to be ramped up from 0 to 18 MMSCFD (assuming linear increment of
production rate), a total of (18X365)/2= 3.285 BCF gas is required to be produced. As one well
can only produce 2.810 BCF of gas, hence number of required wells= 3.25/2.810 or 1.15. Since
wells drilled must be in whole numbers, number of wells to be drilled must be 2 wells.

Certain assumptions have been taken

Assmp.1- the production unit can send only 18MMSCFD to the fertilizer company in accordance
with the GSA.
Assmp.2- Excess production of gas is flared out.

With proper analysis and calculation, profit at the end of each year is calculated

Time, t (years) 0 1 2 3 4 5 6 7 8 9
Profit (in $ 4.0455 6.8811 6.8811 5.6811 6.8811 6.8811 6.8811 6.8811 5.6811 6.8811
MM)

Initial investment cost= expenditure on pipelines + expenditure on initial drilled wells

Initial investment cost= 15+1.2 X 2 = 17.4 million dollars.
Assuming discount rate to be 6% (deciding factor of present value of money),

NPV =4.0455/1.06 + 6.8811/1.062 + 6.8811/1.063 + 5.6811/1.064 + 6.8811/1.065 + 6.8811/1.066 + 6.8811/1.067 +

6.8811/1.068 + 5.6811/1.069 +6.8811/1.0610 - (15+1.2X2) million dollars

NPV= $ MM 28.7852

Since NPV>0, the given project must be undertaken as it is giving significant profit.