Page 134 - Well Logging and Formation Evaluation

124 Well Logging and Formation Evaluation

Exercise 8.1. Decision Tree Analysis

Consider the following scenario:
You are trying to decide whether to run a thermal decay time (TDT)
tool in an old producing land well. Log costs are $20,000 (including cost
of mobile wireline unit, lubricator, etc.). The well is currently producing
200 barrels of oil per day (bopd) from zone A in the well. With no inter-
vention it is anticipated that the well will produce a further 60,000 barrels.
However, zone B, which was never perforated in this well, may still be
producible. There is a 50% chance that it is already flushed, but if it is
not, then it might be expected to produce 600bopd a year, or a total of
180,000 barrels.
After running the TDT, you have the option to decide whether to leave
things as they are or to spend $1 million doing a workover, which will
entail abandoning zone A. The formation water is not very saline, and
there is no base TDT log to compare with. Therefore, reliability of the
results is estimated at only 70%. If you were to recomplete the well,
believing zone B to be not flushed when in fact it was, the well would
have to be abandoned.
For the purposes of the VOI exercise, assume an oil value of $20 per
barrel (after tax).

1. Is the TDT justified? If not, at what level of reliability would the tool
run be justified?
2. Repeat the calculations for the situation in which there is a 30% chance
that the zone is already flushed, and for a 70% chance.
3. Consider the case that there is a 50% chance that the zone is flushed,
but while the chance of the tool correctly indicating a nonflushed zone
to be nonflushed is 70%, the chance of the tool correctly indicating a
flushed zone to be flushed is only 60%.