Economic Feasibility Analysis of Horizontal Well Planning in the Onshore Mahakam Delta, Field A - East Kalimantan

Field A is located in the Onshore Mahakam Delta, Kutei Basin, East Kalimantan where actively producing oil and gas under Sanga Sanga Working Area that operated by PT. X. This field contributes more than half of the company productions by intensive development activities. Regardless the annual production target was achieved, the increment trend was still lower than expected. PT. X recognizes that this condition caused by the reservoir depletion due to drainage from the similar and / or existing area repeatedly by offset well placement concept and limited technology application to have optimal recovery efficiency. By understanding the challenges, PT. X is looking forward into the less drained reservoir and adapting technology advancement which not optimally recovered by conventional drilling and completion method. As a key initiative, PT. X plans to initiate horizontal well drilling through gas reservoir J.01. This reservoir is still not optimally recovered through eight conventional wells by the cumulative gas production of 1.83 Bcf, representing 24% recovery factor. Low-quality of reservoir properties is the main influence factor to the production performances. This research bridges the feasibility with technical and economic evaluations through the implementation of horizontal well in the Field A. It involves subsurface maturation, well planning, and capital budgeting. Subsurface maturation helps to estimate gas volume of the reservoir and understand the production performances. Well planning is guided by the understanding gained from the subsurface maturation, directly influences both capital and operational cost, which limited to determine the length of horizontal section for optimal incremental reserves using sensitivity analysis. The common practice in the PT. X for capital budgeting analysis is limited to Discounted Cash Flow (DCF) method by deterministic approach assisted by sensitivity analysis. This assumes a certain condition, without consider the range of uncertainty as a risk. Uncertainty analysis addresses the limitations of deterministic approach through multiple probability scenarios that influence the results of capital budgeting decisions. It applies a probabilistic approach using monte-carlo simulation to have better understanding through the range of possible results and quantify the probability to meet the objectives. The implementation of horizontal well significantly improving recovery efficiency by 3.59 Bcf gas incremental reserves or equal to 48% recovery factor with 1300 feet horizontal length along reservoir J.01. The integration between deterministic and probabilistic approaches for economic feasibility deal with the limitation of DCF method, providing a more detailed representation of the uncertainties. Based on the deterministic approach, through the base case implementation of horizontal well represents the NPV of 7.66 million USD. According to the probabilistic approach, the P50 value for each incremental reserve cases indicate an uncertainty range between low (1.93 Bcf), base (3.59 Bcf), and high (4.45 Bcf) cases, with the corresponding expected NPV’s of 1.57 million USD (low case), 6.74 million USD (base case), and 9.47 million USD).