Vose SoftwareModelChoice decision tree · Oil and gas
Mature Oil Field - Enhanced Oil Recovery Decision
For a mature oil field: CO₂ injection, water alternating gas, a polymer pilot, primary recovery, or decommissioning?
From the model’s decision tree
Best first decision: Continue Primary Recovery
The expected value of each first option when every later decision is also made well (the tree rolled back).
| First decision | Expected value | |
|---|---|---|
| CO2 Injection (Full Field) | $19,125,000 | |
| Water Alternating Gas (WAG) | $19,375,000 | |
| Polymer Flooding (Pilot) | $24,250,000 | |
| Continue Primary Recovery | $48,000,000 | ✔ best |
| Decommission | −$35,000,000 |
| Measure | Value |
|---|---|
| Expected value of the best strategy | $48,000,000 |
| Best outcome on the best strategy | $80,000,000 |
| Worst outcome on the best strategy | $15,000,000 |
S-curve (cumulative probability) of Continue Primary Recovery from the saved simulation.
The decision
An operator holds a mature onshore oil field (discovered 1985) currently producing 5,000 BOPD with declining output. Approximately 60% of the original oil in place (OOIP) remains trapped in the reservoir. The operator must decide whether to invest in enhanced oil recovery (EOR) to extend field life or begin decommissioning.
Objective
Maximize expected NPV. This model shows the late-life field decision with reservoir response uncertainty and oil price risk.
The options
- Option 1: CO2 Injection - Full Field ($120M)
Miscible CO2 flooding to mobilize trapped oil. Highest recovery potential (8-15% additional OOIP) but requires CO2 pipeline and injection infrastructure. Risk: CO2 may break through to producers without sweeping oil (15% chance).
- Option 2: Water Alternating Gas - WAG ($55M)
Alternating water and gas injection. Lower cost, proven technology. Moderate recovery improvement (4-8% additional OOIP).
- Option 3: Polymer Flooding Pilot ($15M)
Small-scale pilot to test polymer-augmented waterflood. If promising, decide whether to scale up ($60M) or sell the field with pilot data. Classic value-of-information approach.
- Option 4: Continue Primary Recovery
No new investment. Continue declining production until uneconomic.
- Option 5: Decommission ($35M cost)
Plug wells and restore site. Required eventually, question is when.
The decision tree
The tree has 3 decisions, 11 chance events and 31 outcomes. The best path is open: at every decision the best choice is marked, and the expected value beside each branch counts every cash flow from the start. Open any other branch to see what follows it.
DecisionChance event+$ cash flow on the branch
CO2 Injection (Full Field) −$120,000,000expected $19,125,000
Chance: CO2 Flood Response20% Excellent Responseexpected $167,500,000
Chance: Oil Price (Excellent EOR)- 25% High Price +$450,000,000payoff $330,000,000
- 50% Mid Price +$280,000,000payoff $160,000,000
- 25% Low Price +$140,000,000payoff $20,000,000
40% Good Responseexpected $62,500,000
Chance: Oil Price (Good EOR)- 25% High Price +$300,000,000payoff $180,000,000
- 50% Mid Price +$180,000,000payoff $60,000,000
- 25% Low Price +$70,000,000payoff −$50,000,000
25% Poor Responseexpected −$67,500,000
Chance: Oil Price (Poor EOR)- 25% High Price +$130,000,000payoff $10,000,000
- 50% Mid Price +$50,000,000payoff −$70,000,000
- 25% Low Price −$20,000,000payoff −$140,000,000
- 15% CO2 Breakthrough −$30,000,000payoff −$150,000,000
Water Alternating Gas (WAG) −$55,000,000expected $19,375,000
Chance: WAG Response35% Good Incremental Recoveryexpected $67,500,000
Chance: Oil Price (Good WAG)- 25% High Price +$200,000,000payoff $145,000,000
- 50% Mid Price +$120,000,000payoff $65,000,000
- 25% Low Price +$50,000,000payoff −$5,000,000
40% Moderate Recoveryexpected $17,500,000
Chance: Oil Price (Moderate WAG)- 25% High Price +$130,000,000payoff $75,000,000
- 50% Mid Price +$70,000,000payoff $15,000,000
- 25% Low Price +$20,000,000payoff −$35,000,000
- 25% Minimal Impact +$10,000,000payoff −$45,000,000
Polymer Flooding (Pilot) −$15,000,000expected $24,250,000
Chance: Polymer Pilot Results25% Very Promisingexpected $77,500,000
Decision: Scale Up Polymer?Full-Field Polymer Flood −$60,000,000expected $77,500,000 ✔ best
Chance: Oil Price (Full Polymer)- 25% High Price +$250,000,000payoff $175,000,000
- 50% Mid Price +$150,000,000payoff $75,000,000
- 25% Low Price +$60,000,000payoff −$15,000,000
- Sell Field with Pilot Data +$80,000,000payoff $65,000,000
35% Promisingexpected $27,500,000
Decision: Scale Up (Promising)?Expand Polymer Flood −$60,000,000expected $27,500,000 ✔ best
Chance: Oil Price (Expanded)- 25% High Price +$180,000,000payoff $105,000,000
- 50% Mid Price +$100,000,000payoff $25,000,000
- 25% Low Price +$30,000,000payoff −$45,000,000
- Continue Pilot Only +$25,000,000payoff $10,000,000
- 25% Inconclusive +$5,000,000payoff −$10,000,000
- 15% Failedpayoff −$15,000,000
Continue Primary Recoveryexpected $48,000,000 ✔ best
Chance: Decline Rate- 30% Slow Decline (8%/yr) +$80,000,000payoff $80,000,000
- 45% Normal Decline (12%/yr) +$45,000,000payoff $45,000,000
- 25% Fast Decline (18%/yr) +$15,000,000payoff $15,000,000
- Decommission −$35,000,000payoff −$35,000,000
Change the numbers. Open the workbook with ModelChoice, change a probability or a cost in the tree, and the best decision updates at once.
Key assumptions
| Assumption | Value | Notes |
|---|---|---|
| CO2 Flood Investment | $120,000,000 | Pipeline, compressors, injection wells |
| WAG Investment | $55,000,000 | Existing infrastructure partially reusable |
| Polymer Pilot | $15,000,000 | 4-well pilot, 18-month test |
| Polymer Scale-Up | $60,000,000 | Full-field polymer flood |
| Decommissioning Liability | $35,000,000 | Well P&A, site restoration |
| Remaining OOIP | ~50 MMbbl | 60% of original still in reservoir |
| CO2 EOR Recovery | 8-15% | Additional OOIP recovery factor |
| Primary Decline Rate | 8-18%/yr | Natural production decline |
| Oil Price Scenarios | $50/70/100 bbl | Low/Mid/High over project life |
The figures are illustrative: the companies and numbers are invented for teaching.
Try it in ModelChoice
- Strategy Table. Compare all EOR strategies with risk-return frontier
- Sensitivity Analysis. How does oil price affect the EOR vs decommission decision?
- Risk Profile. Is the polymer pilot's lower risk worth the information value?
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Further reading
Download the workbook and open it with ModelChoice. The free trial opens every example.
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An illustrative example: the figures are invented for teaching. Last updated 9 October 2026.