The financial models which support the decisions for the enhanced oil recovery projects implementation are mainly based on the theory of discounted cash flows, which yields the Net Present Value (NPV) and the Internal Rate of Return (IRR) as the most important indicators, this fact allow first to determine the economic feasibility of its execution or in any case compare, contrast and decide between different projects, schemes and / or scenarios.
Each company (NOC’s and IOC’s) or group of experts has designed their evaluation models based on their experience and lessons learned. This economic evaluation model considers the concept of the time value of money, which essentially reflects the simple issue that the value of money today, or the present value, is not the same as it will be in the future.
The reason for this is that idle resources lose value if they are not used, because there are always opportunities to invest and make a profit, even if all you do is put the money in a savings account in a bank. However, the evaluation of enhanced oil recovery (EOR) projects, given the large capital expenditures (CAPEX), is highly sensitive to the consideration of several technical (Heterogeneities, Well Arrangement, Spacing), operational (Available Energy Sources, Facilities, etc) and economic (price of a barrel of oil) variables.
For this reason, the use of project evaluation techniques such as the one proposed by Skinner, based on the decision hierarchy triangle (Policies, Strategies and Tactics) as well as the implementation of influence diagrams or decision trees to consider the impact of each variable on the main economic indicators (NPV, IRR, TP, EI, among others) is essential in order to adequately support the decision making process and even determine the moment from which it would not be beneficial to continue with the project, thus estimating the so-called economic limit. All of the above will allow a more assertive evaluation of the profitability during the implementation of enhanced recovery projects, as well as to prioritize the application of a certain technology or enhanced recovery scheme.
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