Abstract
The worth of undertaking a sidetrack well for an already producing oil field is examined in terms of the chances the sidetrack will fail and also the chances the sidetrack, even if successful, will kill already producing wells. The decision to proceed with such a sidetrack is shown to be sensitive to the residual producible reserves, the costs of the sidetrack, and its costs per bbl of oil relative to the costs through already producing wells and to the total cash flow achieved to date. In addition, the types of uncertainty ascribed to the future estimates made for production influence the decision, as do the ranges of uncertainty for unknown components, such as the chances of a successful sidetrack and the chances of killing producing wells. Simple numerical illustrations are provided to show how such uncertainties can be used to assess the inherent risk, and also to show how corporate mandates of minimum acceptable chance of success constrain the needed net value for the sidetrack situation. The general problem, with all parameters included, can be set up as a simple Excel spreadsheet calculation, so that recourse to massive computing power is not needed. In this way, and with the help of superposed Crystal Ball types of programs for assessing the influence of parameter value ranges and distribution types, one can quickly find out which parameters need to be better constrained to improve the assessment of whether a sidetrack is preferable to not undertaking such a development.