Oil Field Life Cycle

Oil Field Life Cycle Blog

Field development stages

Each oil field is unique and requires an individual approach. Every oil field developer knows this truth.

At the same time, each oil field goes through a certain life cycle consisting of several characteristic stages. For example, at the stage of development an oil field passes through certain stages, which are called as follows: stages of field development.

The stages of oil field development are most clearly seen in the oil production chart (Figure 1). There are 4 stages of oil field development:

Stage I – stage of intensive oil field development

Stage II – peak production level

Stage III – stage of oil production decline

Stage IV – late (final) stage of development

Stage I is characterized by intensive drilling of the field. At this stage the main project well stock is put into operation and the development system provided for by the project is organized. Stage I is characterized by growth of oil production. As a rule oil is produced practically without water, though slight watering of well production is possible.

Stage II is the stage of keeping the achieved maximum annual level of oil production. At this stage remaining wells of the main fund and a considerable part of reserve wells are drilled and put into operation. In order to keep the oil production at the maximum level they perform a set of geological and technological measures on regulating the development process. This stage is not very long – about 4-5 years.

Stage III is the stage of oil production decline due to extraction of bigger part of reserves; at this stage in order to slow down production decline the impact system is further developed by means of development of additional wells for water injection, by continuing drilling of reserve wells, isolation jobs in wells, accelerated extraction of water from watered wells, other measures for management of development process. At this stage, more efficient geological and technical measures are implemented, taking into account the extensive study and detailed studies.

Stage IV completes the development period: further decline of oil production at a low rate of development; this stage is characterized by the same types of development control activities as the previous stages.

The first three stages make up the main development period. During this period 80-90% of the field’s recoverable oil reserves are withdrawn. The fourth stage is called the final period.

The duration of each stage and the volume of oil production are determined by the project documentation for field development.

Life cycle of oil field

In a broader perspective, in addition to the four stages of development, several more stages can be distinguished.

Before an oil field can be developed, it must be found. And not only find it, but also estimate its reserves and production potential. Only in case of presence of sufficient oil reserves and technological possibilities of their extraction the development of the field can begin. So, the search and exploration of oil field and evaluation of its potential can be separated into a separate stage. Let’s conditionally call this stage zero. At this stage we have no oil production, but we have the costs of various studies, drilling of reference, parametric, prospecting and exploratory wells.

One more important point not to forget is a set of operations to be performed after the field development is no longer profitable (due to reduction of oil production to the minimum level and/or reaching the limit of watering of well production). As oil reserves are extracted, oil production decreases and the watercut of the well production reaches its maximum values. Once further development of the field is no longer profitable, oil production is terminated, the wells are abandoned (or suspended), and the development license is returned to the appropriate government authorities. This stage is the final stage in the life cycle of an oil field.

Depending on the stage of their life cycle fields are divided into new (green fields) and mature (brown fields).

New fields include promising areas at the stage of prospecting and exploration, as well as fields at stages I or II of development. These fields require substantial capital investments if there is no or insufficient cash flow from oil production.

Mature fields are fields in stages III or IV of development. Such fields don’t require such significant capital investments as new fields. All the infrastructure has been built by that time and the development system has been realized. As a rule, mature fields generate a stable cash flow even taking into account costs to maintain oil production and expand infrastructure limitations.