CELLARS RANCH DEVELOPMENT PLAN

April 27, 2015

Group 1; Mitchell Meyer, Lauren Schumacher, Madeline Levy, Luke
Olson, Shitao Guan, Andrew Senko

TABLE OF CONTENTS
I. EXECUTIVE SUMMARY

I.

OPPORTUNITY OVERVIEW
II. KEY INVESTMENT HIGHLIGHTS

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II. BUSINESS DESCRIPTION

I.

COMPANY STRUCTURE / TECHNICAL TEAM

II. HISTORY OF CELLARS RANCH

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III. CELLARS RANCH - SUBSURFACE

I.

RESERVOIR CURRENT STATUS

II. DEVELOPMENT OPTIONS
III. FURTHER EVALUATED OPTIONS
IV. DEVELOPMENT DECISION
A. WELL ACTIVITY, FACILITY REQUIREMENTS, AND SCHEDULE
B. FORECAST
V. ECONOMICS
VI. SENSITIVITIES
VII. RISKS AND KEY UNCERTAINTIES

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IV. CELLARS RANCH - SURFACE

I.

FACILITY
A. KEY OBJECTIVES
B. CAPACITY
C. WATER TREATMENT
D. WATER SOFTENING
E. CHEMICAL STORAGE
F. CHEMICAL MIXING
II. DRILLING AND COMPLETIONS
III. NEXT STEPS

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V. APPENDICES

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I.

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ABBREVIATIONS
II. TECHNICAL TEAM RESUME (CV)
III. FIGURES
IV. TABLES
V. SUNDRIES
VI. REFERENCES

Cellars Ranch Development Plan

I. Executive Summary
i. Opportunity Overview
The Cellars Ranch field, located in Johnson County, Wyoming, has five currently
producing wells and one wastewater disposal well. Our team has evaluated various
potential EOR development programs including ASP, polymer, and water injection to
increase the productivity of the field. Using CMG simulation, the EOR methods were
tested using various injector/producer and new-drill configurations. After running
the simulation with various new-drill well placements, it was determined that the
additional production did not justify the cost of drilling new wells. Our development
plan involves and ASP injection with seven producing wells, three injectors, and one
wastewater disposal well. The new producers and injectors will be converted from
currently shut-in wells.

ii. Key Investment Highlights

The ASP flood has an after tax NVP10 of $9,624,000 with a 28% rate of return. The
maximum cash impairment is ($5,710,000) at year-end 2017 and our investment
budget is $7,000,000. From the CMG reservoir simulation, this ASP chemical flood is
expected to have an EUR of 10.1 MMbbl, which is much greater than the three other
design considerations (polymer injection, water injection, no injection). This results
in a recovery factor of ~35% with a final oil saturation of 47%. Incremental oil
production for this project is estimated at 3.2 MMbbl.

II. Business Description

i. Company Structure / Technical Team
Mitchell Meyer has taken the role of team lead. Prior to his role in our company he
has worked for EOG Resources and EnerVest in the fields of reservoir, production,
drilling, and completion engineering.
Luke Olson has been assigned the role of reservoir engineer. Luke has previously
worked for EOG Resources as a reservoir engineer.
Lauren Schumacher is responsible for the facilities needed for implementing a
chemical flood. Before joining our team, she worked for Whiting Petroleum as a
production engineer.
Madeline Levy is also responsible for the facilities needed for implementing a
chemical flood. She had previously worked as a Reservoir Engineer for Marathon
Oil.
Andrew Senko is responsible for well sundries and other appropriate legal forms. He
has previously worked for Xanadu Exploration Company in Productions operations
and data analysis, and has previous experience in completing forms including the
Application to Drill, Recomplete, Reenter, Flare Permit, Transition of Ownership,
Plugging Report, Cementing Report, Salt water Disposal permit, and AFEs.
Shitao Guan is responsible for risk and how it needs to be managed. He has field
experience through Colorado School of Mines field sessions.

ii. History of Cellars Ranch

Cellars Ranch was discovered in 1960 by Texaco Exploration & Production. Texaco
initially drilled 6 wells and put them onto production (see Figure 1). They would go
on to drill 8 more wells before selling the field to Citation Oil & Gas in 1995. Citation
drilled one well within its first year as operator, and later converted two wells to
injectors. In the time since the last batch of new well drills (1990), oil production has
been steadily declining, while water production has remained decently constant. At
year end 2014, Cellars Ranch had produced nearly 7 MMbbl of oil throughout its life
(see Figure 2). Currently, five wells are producing and one is used as a wastewater
disposal well.

III. Cellars Ranch - Subsurface

i. Reservoir Current Status
The Cellars Ranch Field began production shortly after 1960. Since then, it has
produced nearly 7 MMbbl of oil, or ~26% of the estimated OOIP. At this time, five
wells are producing, totaling ~150 BOPD with ~90% water cut. There is also one
well on the fringe of the field injecting wastewater (see Figure 1). The remaining
21+ MMbbl of oil is unevenly distributed throughout the reservoir (see Figure 2).
From our CMG simulation, there appears to be one elongated section of reservoir
that still contains over 75% oil saturation. Within the defined effective PV, there is

an average oil saturation of 66%. To the best of our knowledge, there is still plentiful
oil to be produced from Cellars Ranch if the right techniques are implemented.

ii. Development Options

To further develop the Cellars Ranch Field in order to tap into large amount of oil still
in place, a number of factors were considered in order to maximize project NPV. The
major development options included:

Drilling and completing of new production well(s)

Drilling and completing of new injection well(s)
Conversion of production well(s) to injection
Reactivation of shut in production well(s)
Shutting in of currently producing well(s)

All of the development options are centered on the flooding of the reservoir,
whether it is by chemical injection or simply produced water. Using the CMG
reservoir simulation, differing patterns of production and injection wells were
simulated. The placement of these wells was firstly dictated by the oil saturation
maps (such as Figure 2). Injection wells were placed on the edge of large oil banks,
opposite a production well. Using these constraints, a number of
production/injection patterns were simulated, evaluated against NPV10. In the end,
it was determined that the optimal development included the conversion of 3 wells
to injection wells and the reactivation of 3 shut in production wells (see Figure 3 for
proposed production/injection pattern). Given these changes, the field would have 4
injection wells and 7 production wells.
The drilling of new wells was considered in the simulation model. However, due to
such high drilling costs, ~MM$1.4 per vertical and ~MM$1.8 per horizontal, it was
found that the incremental production of a new drill would not offset the cost to drill
them.

iii. Further Evaluated Options

Taking development a step further, the team looked into EOR methods, and
associated oil production. After a neighboring field successfully implemented a
chemical flood, the team invested M$300 to acquire a chemical formulation, specific
to the Cellars Ranch Field. Using these numbers, a chemical flood was simulated in
CMG using 1.75 wt% alkali, 0.2 wt% surfactant, and 1500 PPM polymer. These
chemicals were injected at various rates through the 3 converted injection wells.
The fields current injection well was kept as a wastewater injection well, due to
inefficiencies within our water processing system (see Facilities section). After an
effective PV was defined from our development changes, it was decided that ASP
would be injected until 1/3 PV had been displaced. At that point, another 1/3 PV of
only polymer was injected, followed by water through the end of the simulation.

Simulated chemical injection rates ranged from 3600 bbl/day to 6600 bbl/day.
Incremental production was no longer increased after a rate higher than 5000
bbl/day, so this rate has been chosen for field development.
Apart from ASP injection, three other options were considered. These included:

Polymer flood 2/3 PV polymer injection followed by water

Water flood no chemical injection (no associated chemical facility cost)
Do nothing allow the field to deplete with no associated capital costs

The simulated flowrates for each of these four situations can be seen in Figure 4.

iv. Development Decision

a. Well Activity, Facility Requirements, and Schedule
After running the economics, it was decided that ASP was the best development
option, due to it having the largest NPV10. It also had a larger PVR than polymer,
but smaller than water. However, due to water floods NPV10 being so low, it was
not considered a viable option.
The implementation a successful chemical flood is a time consuming, capital
intensive process. The proposed development of the field for chemical EOR is as
follows:

Reactivation of wells 06021, 20932, and 20940 by year end, 2016 (sundries
found in appendix A)
Conversion of wells 20933, 06020, and 20290 to injection by year end, 2016
(sundries found in appendix A)
Construction of necessary facilities by year end, 2016 (see Facilities
section)

Expected chemical injection start date is January, 2017. At this point, there will be 3
wells injecting chemicals into the formation at a combined 5000 bbl/day. Well
20904W will be kept as a disposal well, where wastewater will be reinjected into the
formation. Oil production will come from 7 wells (see Figure 3). ASP injection will run
for nearly 4 years, before switching over to strictly polymer for another 4 years (see
Figure 5). Notice in this figure that injection rate drops every so often due to
individual injectors being shut-in rather than shutting all in at once. This figure also
includes wastewater injection, which is expected to be ~800 bbl/day. After the
polymer injection period, water is injected into all four injection wells for the
remainder of the simulation. Figure 6 shows polymer placement in the reservoir at
the end of polymer injection, prior to displacement by water.
b. Forecast
Production has been forecasted through 2050, with the last well shutting in around
2046 (see Figure 7). Liquid production will be limited to 5000 bbl/day due to storage
capacity, but is expected to begin declining around 2025 when the first of the

production wells shuts in due to too high of a water cut. At this time, reservoir
pressure begins to climb as more liquid is being injected into the formation than is
being produced. This is not realistic, and injection rates will be slowly brought down
versus being stepped down (as shown in Figure 5).
From the CMG reservoir simulation, this ASP chemical flood is expected to have an
EUR of 10.1 MMbbl, which is much greater than the three other design
considerations (see Figure 8). This results in a recovery factor of ~35% with a final
oil saturation of 47% (see Figure 9). Incremental oil production for this project is
estimated at 3.2 MMbbl.

v. Economics
An economic model was run using Excel and can be seen in Table A. Inputs to this
model included forecasted production (oil and water) from the CMG simulation,
volume of injected water and chemicals (alkali, polymer, and surfactant), tax rates
(ad valorem, severance, federal income), facility cost, and water softening costs. It
was requested by our manager to assume an oil price of $40.00 per barrel. It was
also assumed that produced gas costs are equivalent to gas revenue. The royalty
rate is 17%, ad valorem tax rate is 6.4%, severance tax rate is 6% (4% for the first
five years due to EOR tax credits), the federal income tax rate is 34%, and our
working interest is 100%.
Operational Expenses (OPEX) included transportation, water softening, oil and water
lifting and processing, and chemical costs. Transportation costs for oil is $1.31 per
bbl of oil produced, lifting costs for both oil and water are $0.85 per bbl of fluid
produced, water softening costs for a SAC system are $0.033 per bbl of water
injected, chemical costs for alkali, polymer, and surfactant are $0.15 per pound,
$1.45 per pound, and $1.65 per pound respectively. These costs are outlined in
Table B.
Intangible costs include the costs of converting producing or shut-in wells to
injectors and shut-in wells to producers. Three wells were converted to producers
for a cost of $200,000 each and three wells were converted to injectors for a cost of
$100,000 each in 2016. Because production for our company will be less than 1000
bbls per day, all intangible costs can be immediately deducted in the year that they
occur. Companies producing over 1000 bbls per day must amortize their intangible
costs over a number of years rather than deduct or depreciate it. The immediate
deduction we are allowed makes the project more economical than amortizing the
cost. These costs are outlined in Table C.
Capital costs include the facilities cost, which is divided between 2015 and 2016.
Our estimated cost to construct the facilities is $5,500,000 ($2,750,000 incurred in
2015 and $2,750,000 incurred in 2016). The facilities costs are subject to MACRS 7year depreciation. These costs are outlined in Table D.

The depletion taken is decided by the larger of either cost depletion or the lower of
either percentage depletion or the limit on percentage depletion. The limit on
percentage depletion for oil and gas extraction is 100% of taxable income
(Stermole). The depletion model can be better understood by the flowchart in
Figure 12. The cost depletion was going to be insignificant compared to the
percentage depletion, so the cost depletion was left out of the model and
percentage depletion was used for the actual depletion taken before taxes.

Economic analyses were performed for the ASP injection, polymer injection, water
injection, and no injection (base case scenario) to understand the economic value of
each. The minimum rate of return is 10%. Figure 13 shows the cumulative
discounted net cash flow for each scenario over time. It is clear that ASP injection
results with the highest NPV10 of all of the development options of $9,624,000. The
base case scenario takes into account the production from the five currently
producing Cellars Ranch wells without any type of EOR, new drills, or workovers to
put shut-in wells back on production. Tables E, F, G, and H highlight the significant
economic details of each of the development options.

vi. Sensitivities
The sensitivities applied to our economic analysis include the uncertainty in oil and
water production, the cost of converting wells to producers and injectors, the cost of
water softening, oil transportation costs, oil lifting costs, and water lifting costs. The
price of crude oil was not included in the sensitivity analysis because a
predetermined price of $40.00 per bbl was provided to us by our manager. The
project distribution of the Net Present Value of the project discounted at a 10% is
shown in Figure 14. A tornado chart, shown in Figure 15, indicates that the water
lifting cost has the largest impact on the economics of the project followed by oil
production in 2018 (when oil production is at its peak during the project). The next
largest impact after oil production in 2019, 2020, and 2021, is the estimated facility
cost. The following section will explain how we accounted for our uncertainties.
When evaluating the value of the field, it is important to be aware of the possible
fluctuations of future income and costs. Recoverable reserve estimates were made
using reservoir simulation software, which involved many assumptions. Because it
is difficult to run a Monte Carlo simulation in the simulation software, the resulting
future production estimates were used as the median value while the maximum and
minimum values were chosen by a 15% increase and decrease of the median value.
The sensitivity follows a triangle shaped distribution and can be seen in Figures 16
and 17. As new engineers without an experienced engineer on our team to provide
insight on reserves uncertainty, these uncertainty values were chosen simply out of
speculation.

While it is possible to more accurately estimate future revenue by forecasting

production, predicting operating costs can sometimes be a little more difficult. The
many types of costs required to keep a field in operation will make the uncertainty
of future operational costs greater.
Considerations need to be made when
assessing the fields operating expenses. A triangular distribution was applied to
the expected OPEX costs (water softening costs, oil transportation costs, oil lifting
costs, water lifting costs) in our economic model with a median being the given cost
values, the minimum being 15% less than the median, and the maximum being
15% greater than the median. These distributions are shown in Figures 18, 19, 20,
and 21.
A number of the wells that are being converted to either a producer or injector are
currently in a shut-in state. It is possible that the reason these wells are shut in is
due to some sort of problem that we are unaware of. Possible well plugging or
corrosion may be an issue that we encounter. However, the provided price to
reactivate a production well seems pretty high ($200,000) for inspecting the tanks,
flow lines, and equipment and then opening a few valves. A triangular distribution
was applied to the expected intangible conversion costs with a median being the
given cost values, the minimum being 50% less than the median, and the maximum
being 25% greater than the median. These sensitivities are greater than the others
because there is a much wider range of possible costs that are associated with the
conversion operations. These distributions are shown in Figures 22 and 23.
The facilities cost was estimated based on required capacity. It is very possible that
the actual costs may be off given that nobody on our team has much experience
with facilities. A triangular distribution was applied to the expected facilities costs
with a median being the given cost values, the minimum being 50% less than the
median, and the maximum being 25% greater than the median. This distribution
can be seen in Figure 24.

vii. Risks and Key Uncertainties

Risks are inherent in nearly all operations in the petroleum industry, so it is
important to be aware of them and mitigate them if possible. A few risks may
include:

Injecting into a gas cap or water zone (can be mitigated by understanding the
geologic structure of the reservoir and knowing the reservoir pressures and
drive mechanisms)
Altering the mobility ratio in an unfavorable way causing reduced oil
production and increased water production
Shearing the polymer before it is injected into the formation
Inadequate water softening techniques could cause the chemicals to be less
effective
Spills at the facility are possible due to corrosion or leaks (berms, barriers, or
other spill management systems need to be in place)

Uncertainties within the CMG simulation model are mostly attributable to the
information we received from the third party chemical formulation provider. We
have to assume the study they conducted and the relative permeability curves
provided to us are accurate for our reservoir. Even if the simulation is accurate, it is
useless to us if we input bad data. Other uncertainties include well current status.
Our simulation assumes that any well that is shut in can be reactivated or converted
to injection. If it turns out that the wells and surrounding reservoir rock are in a
worse state than planned for, we might not be able to develop the field according to
the plan.

IV. Cellars Ranch - Surface

i. Facility
a. Key Objectives
The goal for this facility is to obtain produced water from our wells in order to
treat the water for removal of oil and then soften the water to efficiently mix in
surfactants and chemicals to create an Alkaline-Surfactant-Polymer (ASP) flood. The
first step is to treat the produced water with a horizontal heater treater so as to
separate the oil and gas from the water. Through the assistance of added heat to
the system fluids are separated based on density. Next, the water is further
separated from the oil and gas through the use of an Induced Gas Floatation (IGF)
System. This further decreases the percent of oil in the fluid. The final step in
separating the oil from the water is a Walnut Shell Filtration System. After the water
has been separated from the oil to a minimal amount remaining, the fluid is put
through a water softening system (a SAC system) to remove Magnesium and
Calcium from the fluid. From this point, the additives are mixed with the fluid, first
the surfactant and alkali, then the polymer. After this point, the fluid is ready to be
injected into our wells for enhanced oil recovery.
b. Capacity
The capacity of this ASP flood will be 5,000 BBLS/Day. The facility will have
chemical storage available for two weeks (Table I). This means having at least 1074
bbls of Sodium Carbonate, 123 bbls of surfactant, and 19 super sacks of polymer on
location biweekly.
c. Water Treatment
The first step in water treatment is to run the produced fluids through a
heater treater. Pipelines will bring all production to a centralized location, therefore
a horizontal heater treater will be needed in order to handle the volume of
production (Figure 25). The horizontal heater treater uses a long U shaped
firetube in order to add heat to increase the separation of emulsified fluids process.
This firetube allows for a greater heating capacity, in turn, creating a faster treating
time. This stage of separation will allow for adequate separation of gas, oil, and
water, to help prevent fouling of the softeners, and at the end will produce water
streams of about 100-300 mg/L of suspended oil and grease (Diverse Energy
Systems). After this process, an Induced Gas Flotation (IGF) separator will be used.

This will allow for the reduction of oil content within the water to decrease to a value
of around 25 to 50 mg/L based upon gas being added to the system thus binding
the oil dissolved in fluid and bringing it to the top of the separator where the oil will
then be skimmed off (Process Group). A schematic of this process can be seen in
Figure 26. The last step of the water treatment system will be a walnut shell filter.
This will allow for the oil content to be reduced to about 5-10 mg/L and will allow for
the water to begin its softening treatment. This is done through running the fluid
through a walnut shell filter, and their enhanced filtration ability to remove the
remaining oil (Siemens). A schematic of this process can be seen in Figure 27
(Surtek). At the end of this process any remaining the backwash water will be
returned to the heater treater for additional separation while the walnut shell
filtration process will begin again from water taken from the produced water tank
holding water from after the IGF process (Siemens). This overall process can be
seen in the facilities schematic shown in Figure 28.
d. Water Softening
It is important to remove the Magnesium and Calcium from water we are
injecting into our wells because these minerals will prevent the mixtures of
substances we are adding to the solution from mixing well. In order to decrease the
hardness of the water we are injecting into our wells, there are two options- Strong
Acid Cation (SAC) and Weak Acid Cation (WAC). SAC is characterized by filtering the
water for removal of calcium (Ca) and Magnesium (Mg) through a strong acid cation
exchange sodium resin in sodium form, as shown in Figure 29. On the other hand, a
WAC softening system is characterized by filtering the water twice; first through a
weak acid cation exchange resin in sodium form and then again through a weak
acid cation exchange resin in hydrogen form. As seen in the SAC process, this
filtering is for the removal of the Ca and Mg, see Figure 30 (Surtek).
While WAC is a better option when reusing produced water from the reservoir
as it is more efficient through its two-step process in washing off the un-separated
oil, it is also significantly more expensive. The projected cost for water softening
through WAC, based on the average water hardness of 610 ppm and an average
salinity of 1530 ppm (WOGCC) (Table J and Figures 31, 32, and 33), would be
approximately
$.395/bbl while SAC would be $0.033/bbl (Figure 34). When
efficiency of water softening is taken into account the incremental cost would not be
worth the incremental decreased water hardness. Figure 35 shows that the
efficiency of SAC is 85% versus that of WAC, which is 94% (Surtek). Thus, the
savings of a SAC system seems to outweigh the minimal difference in efficiency and
cost due to the size of the field at hand.
Water for this process will be pulled from the filtered water tank after the
correct filtration process is complete. Upon completion of the SAC process the
approved water will continue onto the softened water tank while the dirty water will
go through pipes to the disposal pump where it will then be pumped to a
wastewater storage tank. This will then be trucked off location when needed. This
process can be seen in the facilities schematic shown in Figure 28.
e. Chemical Storage
The chemicals for the ASP flood will be stored in three different ways. The
dry form Sodium Carbonate (Na2CO3) used for the alkali portion of the flood will be
stored in a storage tank made by Columbian Tec Tank. This tank will be a steel,
welded together tank that is 12 ft in diameter, 66 ft in height, and a 60 degree

hopper, which will allow for easy distribution of the product. The overall capacity of
this storage tank will be 6,187 ft3, or 1,100 bbls (Figure 36). Having this size of tank
will allow for at least two weeks of material to be on site at all times (Table I). Due to
the cold climate, the base of this tank will need to be heated to eliminate the
potential for moisture occurrence. Some additional potential concerns that come
from this type of storage are pneumatic transfer and dust if there is not an
appropriate filter, vibration of the equipment causing packing of the chemical and
crystal formation occurring in the storage tank due to temperature drop (Surtek).
This will all be taken into account and an appropriate filter and dispenser system
will be used.
The surfactant will be in liquid form and will be stored in an epoxy coated
steel tank. This tank will again come from Columbian TecTank and will be a welded
tank that is 8 ft diameter, 24 ft height, and a 45 degree hopper, which will allow for
easy distribution of the product. The overall capacity of this storage tank will be 768
ft3, or 137 bbls (Figure 36). Again, having this size of tank will allow for at least two
weeks of material to be on site (Table I). An agitator will also be added into the
bottom of this tank to allow for maximum efficiency of chemical storage. Some
potential concerns taken into account will be the corrosion and dissolution of iron
and oxygen that can occur within this chemical. Additionally, having heterogeneity
between different shipments caused concern; therefore chemicals will be tested
upon delivery for consistency (Surtek).
Lastly, the Polymer will be in dry form stacked in super sacks. These super
sacks are 750 kgs each, therefore 19 super sacks will be delivered biweekly (Table
I). These will be stored in the dry polymer storage area (Figure 28), and will be
transported with a warehouse forklift. One potential concern when working with the
dry polymer is dust, therefore, masks should be worn.
f. Chemical Mixing
When preparing the mixture for the ASP flood, many considerations need to
be taken into account. In this instance, the Surfactant will be added into the mixture
first (Figure 28). When mixing in the Surfactant heat is required to efficiently
dissolve the chemical within the water. In addition a static mixer will be used to aid
in the dissolution process. Once this chemical is mixed together in the surfactant
mixing station, it will continue onto the surfactant pump which will be pushed down
the line for the addition of the Alkali. However, in between the surfactant pump and
the alkali pump a 5 micron cartridge filter will be used to eliminate anything that
should not be in the system.
Continuing on, the Alkali will be mixed in next. When hydrating the Alkali one
must understand that this chemical dissolves quickly in water. In addition, the heat
of the solution will increase upon addition of the alkali. After this chemical is mixed
together in the Alkali mixing station, the mixture will continue to flow to the polymer
addition section. In between the alkali feed pump and the polymer hydration, more
5 micron cartridge filters will be in place again to eliminate materials intruding in
the system as well as any insoluble chemicals from the previous steps.
Lastly, the solution will be flowed to the polymer station. When mixing the
polymer solution, time must be considered as this process often times can take up
to 1 hour for complete hydration. In addition, this mixture must be carefully worked
with as it is a shear thinning fluid, therefore, if too much stress is added to the

system the fluid will shear and the viscosity will decrease, leaving for an inefficient
fluid. In addition to the concern of shearing the polymer, this solution should not be
exposed to iron and oxygen as it can cause problems. After this is hydrated and
mixed in with the overall solution, the mixture will be put through a 50 micron
cartridge filter to eliminate any fish eyes that may have occurred within the process
(Surtek).
This final mixture will then continue on to the injection pump, found in Figure
28, which will then be pipelines to the injection wells.

ii. Drilling and Completions

After running the simulation with various new-drill well placements, it was
determined that the additional production did not justify the cost of drilling new
wells. As a result, no permits such as the APD were required to perform our chosen
development plan.

iii. Next Steps

Upon project approval, our proposed development plan will be implemented within
the next one and a half years and is expected to be online by January of 2017.
Adjustments to the development plan will be made if obstacles are encountered or a
more economic method becomes available.

V. Appendices
i. Abbreviations
APD Application for Permit to Drill
ASP Alkaline-Surfactant-Polymer
bbl or bbls Barrel or barrels
BOPD Barrel of Oil per Day
BTU British Thermal Unit
Ca Calcium
CMG Computer Modeling Group
EOR Enhanced Oil Recovery
EUR Estimated Ultimate Recovery
HH Henry Hub
IGF Induced Gas Flotation
NGL Natural Gas Liquid
M Thousand (1000)
MACRS Modified Accelerated Cost Recovery System
Mg Magnesium
Na2CO3 Sodium Carbonate
NGL Natural Gas Liquid
NPV Net Present Value
NPV10 Net Present Value at a 10% Discount
OOIP Original Oil In Place
OPEX Operating Expenses
PPM Parts Per Million
PV Pore Volume
PVR Present Value Ratio (NPV10/Max Cash Impairment)
SAC Strong Acid Cation
T&G Transportation and Gathering
TOC Total Organic Carbon
WAC Weak Acid Cation
WOGCC Wyoming Oil and Gas Conservation Commission
WOR Water Oil Ratio
WTI West Texas Intermediate

ii. Technical Team Resume (CV)

iii. Figures

Figure 1: Map View of Field with Current Well Status

Figure 2: Simulated Reservoir Oil Saturation on 1/1/2015 (current status)

Figure 3: Map View of Field with Proposed Well Status/Facility Location

Figure 4: Simulated Oil Production Rates for Four Development Scenarios

Figure 5: Chemical and Water Injection Rates

Figure 6: Polymer Concentration on 1/1/2025

Figure 7: Oil and Total Liquid Production Rates with Forecasted Reservoir
Pressure

Figure 8: Cumulative Oil Production for Four Development Scenarios

Figure 9: Oil Saturation at Project End

Figure 10: Oil Saturation on 7/1/2022 (shortly after polymer injection

start)

Figure 11: Forecasted Oil and Water Production Rates for 06017

Figure 12: Flowchart of which depletion should be taken as the allowed

depletion.

Figure 13: Cumulative Discounted Net Cash Flow for all development
options.

Figure 14: The distribution of the Net Present Value at a 10% discount.
This model ran 10,000 iterations.

Figure 15: Tornado chart of the Net Present Value at a 10% discount
showing which parameters affect the economics more or less. A greater
impact is indicated by wider bars.

Figure 16: This oil production distribution for the year 2018 has a triangle
shaped curve with a mean reflecting the predicted oil production of 266
Mbbls, a minimum of 226 Mbbls, and a maximum of 306 Mbbls.

Figure 17: This water production distribution for the year 2018 has a
triangle shaped curve with a mean reflecting the predicted water
production of 1522 Mbbls, a minimum of 1294 Mbbls, and a maximum of
1751 Mbbls.

Figure 18: This oil lifting cost distribution has a triangle shaped curve with
a mean reflecting the provided oil lifting cost of $0.85 per bbl, a minimum
of $0.72 per bbl, and a maximum of $0.98 per bbl.

Figure 19: This water lifting cost distribution has a triangle shaped curve
with a mean reflecting the provided water lifting cost of $0.85 per bbl, a
minimum of $0.72 per bbl, and a maximum of $0.98 per bbl.

Figure 20: This oil transportation cost distribution has a triangle shaped
curve with a mean reflecting the provided transportation cost of $1.31 per
bbl, a minimum of $1.11 per bbl, and a maximum of $1.51 per bbl.

Figure 21: This water softening cost distribution has a triangle shaped
curve with a mean reflecting the determined softening cost of $0.033 per
bbl, a minimum of $0.028 per bbl, and a maximum of $0.038 per bbl.

Figure 22: This producer conversion cost distribution has a triangle

shaped curve with a mean reflecting the provided conversion cost of
$200,000, a minimum of $100,000, and a maximum of $250,000.

Figure 23: This injector conversion cost distribution has a triangle shaped
curve with a mean reflecting the provided conversion cost of $100,000, a
minimum of $50,000, and a maximum of $125,000.

Figure 24: This facility cost distribution has a triangle shaped curve with a
mean reflecting the estimated facility cost of $5,500,000, a minimum of
$5,000,000, and a maximum of $6,000,000.

Figure 25 Horizontal Heater Treater Schematic

Figure 26: Induced Gas Flotation Separator Schematic

Figure 27: Walnut Shell Filtering Schematic

Figure 28: Facilities Schematic

Figure 29: SAC Water Softening Process

Figure 30: WAC Water Softening Process

Figure 31: Water Sample for Well with API Number 049-019-20904

Figure 32: Water Sample for Well with API Number 049-019-20923

Figure 33: Water Sample for Well with API Number 049-019-06020

Figure 34: Water Treatment Cost versus Hardness for WAC and SAC Water
Softening Processes

Figure 35: Ion Exchange Water Recovery Efficiency versus Hardness for
WAC and SAC Water Treatment

Figure 36: Columbian Tec Tank Capacity Chart for Factory Welded Tanks

iv. Tables
Table A: Economic Model Summary

Table B: Operating Expenses until 2026. See spreadsheet for expenses

beyond 2026.

Table C: Intangible Costs until 2026. There are no intangible costs beyond
2026.

Table D: Capital Costs until 2026. There are no capital costs beyond 2026.

Table E: ASP injection economic results and outputs.

Table F: Polymer injection economic results and outputs.

Table G: Water injection economic results and outputs.

Table H: Base Case economic results and outputs.

Table I: Chemical Volumes Needed for Two Weeks

Table J: Summary of Water Salinity and Hardness from Samples Taken out
of Cellars Ranch

Well API Number

Hardness
(ppm)

Classification
(low/High)

Salinity
(ppm)

Classification
(Good/Poor)

049-019-20904
049-019-20923
049-019-20904
Average

1050
520
260
610

Low
Low
Low
Low

1250
2100
1230
1527

Good
Good
Good
Good

Table K: Project 2 Deliverables

v. Sundries

Well sundry for API No. 49-019-20940.

Well sundry for API No. 49-019-20932.

Well sundry for API No. 49-019-06021.

Well sundry for API No. 49-019-20933.

Well sundry for API No. 49-019-06020.

Well sundry for API No. 49-019-20290.

vi. References
Dean, E. (Director) (2015, March 19). Lecture 9: Chemical EOR. Lecture conducted from
Surtek, Colorado School of
Mines.
Diverse Energy Systems | From Wellbore to Pipeline. (2013, January 1). Retrieved April 20,
2015, from
http://www.des-co.com/
Process Group. (2012, January 1). Induced Gas Flotation. Retrieved April 20, 2015, from
http://www.processgroupintl.com/media/downloads/D04_Gas_Flotation_rev_11-12.pdf

Siemens. (2015, January 1). Monosep High-Flow Walnut Shell Filtration System. Retrieved
April 20, 2015, from
http://www.energy.siemens.com/us/en/industries-utilities/oil-gas/portfolio/watersolutions/monosep.htm

Stermole. Economic Evaluation and Investment Decision Methods. 14th Edition, 2014.

Welded Storage Tanks. (2015, January 1). Retrieved April 20, 2015, from
http://www.cstindustries.com/products/welded-storage-tanks/

Wyoming Oil and Gas Conservation Commission. Retrieved April 10, 2015.
http://wogcc.state.wy.us