Economics

The technical ability to extract oil from underground is not enough. Economic feasibility is vital
for the success of any petroleum engineering project. One of the factors that affects the
implementation of any IOR idea is economics. No detailed economic evaluation of the LSWF was
found in the literature. However, the economic evaluation of any IOR ideas varies for different
places. Thus, the appropriate way to do the economic evaluation of any IOR project is to identify
the factors that affect the evaluation and make the proper assumptions accordingly. There are three
main factors that affect the economic evaluation of LSWF. These factors are oil gain volume, water
desalination cost and oil prices.

The first factor that affects the economic conclusion about the LSWF is oil gain volume. In order
to implement a new IOR idea in a reservoir, the reservoir needs to have a significant volume of
oil. It was shown in this report that LSWF can improve the recovery by more than 10% of OOIP.
The recovery percentage is not enough to determine the oil gain. In a giant reservoir, 4% of OOIP
for example could be a much larger volume than 40% of OOIP in a small reservoir.

The second factor that affects the economic conclusion about LSWF is water desalination cost. In
most of the waterflooding projects around the world, high salinity water is used from the available
sources around them. In order to implement LSWF, this water needs to be desalinated before
injection. Building and operating a water desalination plant for LSWF projects has an important
impact on the economics of these projects. However, the cost of water desalination could be
variable in different places around the world.

The third factor that affects the economic conclusion about the LSWF is oil prices. Oil prices in
the last three decades have changed dramatically. Managers and accountants of any petroleum
engineering company need to plan LSWF projects carefully and take into account the fluctuations
in oil prices. The implementation stage for LSWF projects could take years especially if it involves
water treatment plant construction. When the decision is made to execute the construction of these
projects, a realistic prediction of oil prices changes needs to be calculated.

It is important to understand that the economic evaluation of LSWF projects might vary drastically
from one field to another. The implementation of LSWF needs to be studied in field by field cases.
That way all the factors that affect the economic conclusions about that LSWF project can be
identified and given the appropriate weight.