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Economic Evaluation of Unconventional Tight Oil Resource
Subject area: Science,Engineering and Technology · Area of research: Tight Oil Resource Economic Evaluation
DOI: 10.64388/IREV10I4-1724114
Abstract
The Wolfcamp field, a significant tight oil play in the Permian Basin, exhibits a matrix permeability of approximately 0.0005 mD. In this research, hydraulic fracturing modelling and simulation was conducted on a targeted area of this field using PROSPER (Production System Performance) and CMG (Computer Modelling Group) software, resulting in a permeability improvement to 1.57 mD. This enhancement contributed to an improvement of the oil recovery factor by approximately 2.2% and of the gas recovery factor by about 10%, significantly boosting production potential. A detailed economic evaluation was performed using key financial metrics. The net present value (NPV) was found to be approximately $26 million, a strong indicator of profitability. Furthermore, the internal rate of return (IRR) was calculated to be approximately 34%, which is well above typical industry hurdle rates. The payback period of 2 years, 9 months and 14 days further supports the feasibility of the project by indicating a relatively quick capital recovery. A short payback period is particularly beneficial in the volatile oil and gas market, reducing financial risk and improving cash flow stability. Unconventional oil development is highly uncertain; to address these uncertainties, an advanced stochastic economic analysis was performed using Python, which allowed a more comprehensive evaluation than traditional tools such as Excel. Unlike conventional methods, Python enables simultaneous multivariable interaction, capturing the complex relationships between key economic parameters and project outcomes. This study demonstrated that Python-based stochastic modelling provides a 10% improvement in uncertainty quantification compared with the conventional Excel spreadsheet, enhancing decision-making accuracy. Therefore, to enhance production and ensure investment reliability in tight oil developments, integration of stochastic economic analysis is necessary.
Keywords
unconventional tight oil; hydraulic fracturing; reservoir simulation; economic evaluation; production forecasting; net present value (NPV); stochastic analysis; Monte Carlo simulation; sensitivity analysis; economic uncertainty
References
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How to cite this paper
@article{1724114,
author = {Wonah Gladys, Stephenie Nwosi-Anele, Onuoha Fidelis Wopara},
title = {Economic Evaluation of Unconventional Tight Oil Resource},
journal = {Iconic Research And Engineering Journals},
year = {2026},
volume = {10},
number = {4},
pages = {2906-2918},
issn = {2456-8880},
url = {https://www.irejournals.com/formatedpaper/1724114.pdf},
abstract = {The Wolfcamp field, a significant tight oil play in the Permian Basin, exhibits a matrix permeability of approximately 0.0005 mD. In this research, hydraulic fracturing modelling and simulation was conducted on a targeted area of this field using PROSPER (Production System Performance) and CMG (Computer Modelling Group) software, resulting in a permeability improvement to 1.57 mD. This enhancement contributed to an improvement of the oil recovery factor by approximately 2.2% and of the gas recovery factor by about 10%, significantly boosting production potential. A detailed economic evaluation was performed using key financial metrics. The net present value (NPV) was found to be approximately $26 million, a strong indicator of profitability. Furthermore, the internal rate of return (IRR) was calculated to be approximately 34%, which is well above typical industry hurdle rates. The payback period of 2 years, 9 months and 14 days further supports the feasibility of the project by indicating a relatively quick capital recovery. A short payback period is particularly beneficial in the volatile oil and gas market, reducing financial risk and improving cash flow stability. Unconventional oil development is highly uncertain; to address these uncertainties, an advanced stochastic economic analysis was performed using Python, which allowed a more comprehensive evaluation than traditional tools such as Excel. Unlike conventional methods, Python enables simultaneous multivariable interaction, capturing the complex relationships between key economic parameters and project outcomes. This study demonstrated that Python-based stochastic modelling provides a 10% improvement in uncertainty quantification compared with the conventional Excel spreadsheet, enhancing decision-making accuracy. Therefore, to enhance production and ensure investment reliability in tight oil developments, integration of stochastic economic analysis is necessary.},
keywords = {unconventional tight oil; hydraulic fracturing; reservoir simulation; economic evaluation; production forecasting; net present value (NPV); stochastic analysis; Monte Carlo simulation; sensitivity analysis; economic uncertainty},
month = {October},
doi = {https://doi.org/10.64388/IREV10I4-1724114}
}