Well Spacing Analysis By The Discounted Production Method

Publication Rights Reserved This paper is to be presented at the 36th Annual Fall Meeting of the Society of Petroleum Engineers of AIME in Dallas, October 8–11, 1961, and is considered the property of the Society of Petroleum Engineers. Permission to publish is hereby restricted to an abstract of not more than 300 words, with no illustrations, unless the paper is specifically released to the press by the Editor of the Journal of Petroleum Technology or the Executive Secretary. Such abstract should contain conspicuous acknowledgment of where and by whom the paper is presented. Publication elsewhere after publication in the Journal of Petroleum Technology or Society of Petroleum Engineers Journal is granted on request, providing proper credit is given that publication and the original presentation of the paper. Discussion of this paper is invited. Three copies of any discussion should be sent to the Society of Petroleum Engineers office. Such discussion may be presented at the above meeting and, with the paper, may be considered for publication in one of the two SPE magazines. The Discounted Production Method of analyzing well density is a means whereby the increase in the discounted net profit by acceleration of a reservoir's depletion can be calculated for each succeeding development well. With the generalized equation, the actual accelerated reserves, and hence the discounted net profit, can be computed for any contemplated development well, for any interest rate, for any type of declining or constant production, and for any initial and final production rate. This method has utility in that, it is a quick means of attaining the correct answer as to the number of wells that a pool should have in order to be properly developed by present worth standards. It also affords a ready comparison of discounted net profit and discounted profitability from potential development investments in different pools. Introduction After the exploration phase has passed and an oil pool is considered to be well enough defined to enter its development era, the problem is, how many additional wells are necessary to deplete the reserves. Although an inherent and Important part of this period is assuring that a maximum amount of oil be recovered from the reservoir, proper drainage of the oil is not the only consideration of those concerned with the economics of a development program. What then constitutes proper development? In the days prior to mineral conservation commissions, proper development might have consisted of merely drilling as many wells as there was room for on a particular tract of land, or it might have consisted of enough wells to deplete the reserves in a given period of time that was considered to be a standard reservoir life.