A Ryder Scott simulation of the Fanny field in Ecuador not only helped operator City Investing Co. understand reservoir behavior but presentation of the model was instrumental in persuading the government to increase pipeline allowables. "Based on the wells proposed in the simulation and supported by seismic maps, the model helped persuade the regulatory agency in Ecuador to increase allowables," said Rene Mensias, the City Investing engineer who works with the model.

The Ecuadorian National Hydrocarbons Directorate increased allocation in the Trans-Ecuadorian (SOTE) pipeline from 19,000 BOPD to 25,000 BOPD during the last six months of 1998. The new allowables permit added production from five wells drilled from the Fanny 20 pad during the first half of 1998.

City Investing asked for the increase after completing construction of the 130,000-B/D main production facility (MPF) last November. In addition, City, as well as the other private operators in Ecuador, was awaiting the latest allowable revision from the government expected in February.

The capacities of the MPF were based on predicted production rates. "Since the model can predict the future behavior of the wells, water-disposal wells included, the production facilities were constructed partly on the basis of model results," said Mensias. "The model helped us redefine the production facilities based on proposed wells and allowables and the corresponding production forecasts."

He added that the use of the model and subsequent internal refinement helped City Investing understand that the Fanny Field is a complicated combination of faults and facies affected by strong aquifer action. The structural architecture of the field plays a significant role in the movement of water during depletion.

The series of structurally low channels, created by the succession of anticlines and synclines and by differential compaction, provides avenues for water advancement, said Herman Acuña, the Ryder Scott engineer who constructed the model. The model demonstrated to all parties that water production was caused by the inherent reservoir characteristics typical of a highly permeable sandstone reservoir with a strong edge aquifer drive and not by existing field-operating practices.

But more importantly, the model addressed regulatory concerns that higher initial production might lower sweep efficiencies, decrease ultimate recoveries and revenues and ultimately reduce government royalties. That scenario would have supported the continuance of restricted allowables.

"Using the active drilling case as the reference point, the model showed that oil recovery would be slightly improved by producing wells at high initial rates," said Acuña. He conducted sensitivity runs of the 3D, black-oil model under various development schemes.

"We demonstrated to the authorities that we could have easily lost around 25 million to 30 million barrels of oil by the end of the contract, if we would have been forced to produce under the reduced allowables," said Mensias. "The modeling report’s conclusion that the optimization of reserve recovery could be achieved through high production rates aided us in convincing the government authorities to let us use high-capacity pumps and to increase our allowables."

City Investing also used the model to analyze recoveries of different offset-well spacings. The operator recently drilled a second horizontal well based on geophysical analysis of 3D seismic while using the main reservoir parameters from the model.

"In addition, the model predicts the behavior of disposal wells and how they affect the final recovery of offset wells. We have seen different recoveries from the wells offsetting the disposal wells," said Mensias.

Ryder Scott carefully integrated core, PVT data, saturation tables, historical data and aquifer characteristics in the construction and calibration of the model. As a result from the start, the predicted performance agreed closely with actual performance.

However, the difference grew to 9 percent, because the model is geared to natural production decline whereas SOTE pipeline constraints have forced City Investing, a subsidiary of Canadian company Pacalta Resource Ltd., to curtail production, said Mensias. Transport bottlenecks are common in Ecuador.

Ryder Scott designed the model to be flexible so Mensias could update it to account for the effects of planned drilling. "The model very easily handles updates for more wells, core data and production history," he said.

Acuña and Ryder Scott geologist George Dames spent a week at Ryder Scott offices with Mensias to review how the reservoir model was built and what parameters were used in the geological model.