Modeling the Risk of Commercial Failure for Hydraulic Fracturing Projects Due to Reservoir Heterogeneity

Hadi Parvizi, Sina Rezaei Gomari, Farhad Nabhani and Abolfazl Dehghan Monfared
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Hadi Parvizi: School of Science, Engineering and Design, Teesside University, Middleborough TS1 3BA, UK
Sina Rezaei Gomari: School of Science, Engineering and Design, Teesside University, Middleborough TS1 3BA, UK
Farhad Nabhani: School of Science, Engineering and Design, Teesside University, Middleborough TS1 3BA, UK
Abolfazl Dehghan Monfared: Department of Petroleum Engineering, Petroleum, Gas and Petrochemical Faculty, Persian Gulf University, Bushehr 75169-13817, Iran

Energies, 2018, vol. 11, issue 1, 1-14

Abstract: Hydraulic fracturing technologies play a major role in the global energy supply and affect oil pricing. The current oil price fluctuations within 40 to 55 USD per barrel have caused diminished economical margins for hydraulic fracturing projects. Hence, successful decision making the for execution of hydraulic fracturing projects requires a higher level of integration of technical, commercial, and uncertainty analyses. However, the complexity of hydraulic fracturing modeling, and the sensitivity and the effects of uncertainty of reservoir heterogeneity on well performance renders the integration of such studies rather impractical. The impact of reservoir heterogeneity on hydraulic fracturing performance has been quantified by the introduction of Heterogeneity Impact Factor (HIF) and formulas have been developed to forecast well performance using HIF. These advances provide a platform for introducing a practical approach for introducing the Risk of Commercial Failure (RCF) due to reservoir heterogeneity in hydraulic fracturing projects. This paper defines such a parameter and the methodology to calculate it in a time-efficient manner. The proposed approach has been exercised on a real project in which a RCF of 20% is computed. The analysis also covers the sensitivity on Capital Expenditure (CAPEX), Operational Expenditure (OPEX), gas price, HIF and discount rate.

Keywords: hydraulic fracturing; tight sand; Risk of Commercial Failure (RCF); heterogeneity; uncertainty; Net Present Value (NPV) (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2018
References: View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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