Offshore projects can be very expensive and risky, especially in deep waters now being explored. This analysis was performed to determine the benefits which would be realized from extended reservoir testing of offshore prospects in the Gulf of Mexico prior to committing to full field development. The analysis investigates whether extended testing is beneficial where development costs are high (over ± $250MM) and possibly very risky.
When large reserves are discovered, will the expense of extended testing be justified? To determine this, test objectives are established. The expected production rates, reservoir size, and facilities needs are considered. Then a risk analysis of four specific test systems is performed to determine how valuable each would be in terms of reducing economic risk. These test systems alone can be very expensive, so the cost of each system must be justified by quantifying its value using risk analysis. Two examples are used to conclude that unless development costs are extremely high, elaborate and costly test systems cannot be justified a majority of the time, but the appropriate test system should be used in proportion to the investment.
This evaluation was first proposed to determine specific design criteria and objectives of extended tests in deep water prospects. Four specific test systems were considered: