• April 21st, 2016

Engineering

Paper, Order, or Assignment Requirements

Study the uploaded lecture and other background material on PRMS and basic oilfield Economics and answer the following questions. Please type your responses.

 

Question 1:

Explain the reserves classification system shown in the figure below.

Question 2:

You have a lease that is currently producing at 1,300 BOPD. It is expected to continue producing at this rate for 19 months and then decline at a rate of 30% per year (we would sometimes say that this is a loss ratio of 0.3). We have the following additional information:

 

Oil Price………………………………………………………………….. $28.00/bbl

Total Production Tax……………………………………………. 18% of Revenue

Royalty Interest………………………………………………………………… 20%

Operating Cost…………………………………………………….. $67,500/month

Your Working Interest……………………………………………………….. 100%

 

Consider only production taxes (ignore income or other taxes).

 

  1. Determine the operator’s next income for the first year.
  2. Determine the gross production in the second year.
  3. When the lease is on decline, the monthly exponential decline, the monthly exponential decline fraction is ____?
  4. What is the producing rate at the end of the third year?
  5. Determine the gross production in the third year.
  6. What is the economic limit?
  7. At what time does the lease reach its economic limit?
  8. What is the EUR (estimated ultimate recovery)?
  9. Over the life of the lease, what is the net income for the royalty owner?
  10. Over the life of the well, how much is paid in production taxes?

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