02-04_how-moe_T1.htm (Apr-2002)

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Table 2. Simple mitigation economics, all $ = 1,000 $
Year	0	1	2	3	4	5	6	7	8	9	10	11	Total
Do nothing (Note A)
H₂O, bbl/MMcf	0	30	30	40	40	50	50	60	60	70	70	80
Corrosion pit penetration, in.	0	0.276	0.276	0.276	0.276	0.276	0.276	0.276	0.276	0.276	0.276	0.276
Production, MMcf	0	15,000	11,700	6,000	3,200	1,500	700	12,000	8,000	4,000	2,000	600
Gross annual income, $	0	5,475	4,271	2,190	1,168	548	256	4,380	2,920	1,460	730	219
Expenses, $	– 117	– 50	– 50	– 50	– 50	– 50	– 50	– 50	– 50	– 50	– 50	0
Lost production, $	0	– 2,738	– 2,135	– 1,095	– 584	– 274	– 128	– 2,190	– 1,460	– 730	– 365	-110
Net income, $	– 117	2,688	2,085	1,045	534	224	78	2,140	1,410	680	315	110	11,191
Discounted income, – 10%	– 117	2,561	1,808	823	382	146	46	1,151	689	303	127	40	7,961
Batch treatment (Note B)
H₂O bbl/MMcf	0	30	30	40	40	50	50	60	60	70	70	80
Corrosion pit penetration, in.	0	0.035	0.07	0.105	0.14	0.175	0.21	0.035	0.07	0.105	0.14	0.175
Production, MMcf	0	15,000	11,700	6,000	3,200	1,500	700	12,000	8,000	4,000	2,000	600
Gross annual income, $	0	5,475	4,271	2,190	1,168	548	256	4,380	2,920	1,460	730	219
Expenses, $	– 117	– 72	– 72	– 72	– 72	– 72	– 191	– 24	– 24	– 24	– 24	– 24
Lost production, $	0	– 180	– 140	– 72	– 38	– 18	– 24	– 144	– 96	– 48	– 24	– 7
Net income, $	– 117	5,223	4,058	2,046	1,058	458	41	4,212	2,800	1,388	682	188	22,036
Discounted income, – 10%	– 117	4,978	3,518	1,612	757	298	24	2,266	1,369	618	276	69	15,668
Continuous treatment (Note C)
H₂O, bbl/MMcf	0	30	30	40	40	50	50	60	60	70	70	80
Corrosion pit penetration, in.	0	0.004	0.008	0.012	0.016	0.02	0.024	0.028	0.032	0.036	0.04	0.044
Production, MMcf	0	15,000	11,700	6,000	3,200	1,500	700	12,000	8,000	4,000	2,000	600
Gross annual income, $	0	5,475	4,271	2,190	1,168	548	256	4,380	2,920	1,460	730	219
Expenses, $	– 175	– 12	– 12	– 12	– 12	– 12	– 12	– 12	– 12	– 12	– 12	– 12
Lost production, $	0	0	0	0	0	0	0	0	0	0	0	0
Net income, $	– 175	5,463	4,259	2,178	1,156	536	244	4,368	2,908	1,448	718	207	23,309
Discounted income, – 10%	– 175	5,206	3,692	1,716	828	349	144	2,350	1,422	644	290	76	16,543
Corrosion resistant alloy (Note D)
H₂0 bbl/MMcf	0	30	30	40	40	50	50	60	60	70	70	80
Corrosion pit penetration, in.	0	0	0	0	0	0	0	0	0	0	0	0
Production, MMcf	0	15,000	11,700	6,000	3,200	1,500	700	12,000	8,000	4,000	2,000	600
Gross annual income, $	0	5,475	4,271	2,190	1,168	548	256	4,380	2,920	1,460	730	219
Expenses, $	– 1,200	0	0	0	0	0	0	0	0	0	0	600
Lost income, workover, $	0	0	0	0	0	0	0	0	0	0	0	0
Net income, $	– 1,200	5,475	4,271	2,190	1,168	548	256	4,380	2,920	1,460	730	819	23,016
Discounted income, – 10%	– 1,200	5,218	3,703	1,726	836	356	151	2,356	1,428	650	295	301	15,820
Note A: Workover every year; full penetration after three months; six months production/year lost. Tubing cost $117,000. Annual workover $50,000 plus tubing string. Note B: Batch treat monthly; lose one day production/month; workover Year 6. Tubing cost $117,000. $72,000 treating cost Years 1-5 due to high pressure. $24,000/yr Years 6-11 due to lower pressure. Workover to replace tubing Year 6. Note C: Facility ($3,000 injection); $45,000 capillary; $10,000 packer/wellhead. Tubing and capillary package cost $175,000. Treating cost $12,000/yr. Note D: Buy used CRA tubing at $80/ft, cost $1,200,000. Tubing salvage $600,000.

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