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irrespective of whether they are produced by natural reservoir
mechanisms or by waterflooding.
To obtain a waterflood, injection wells are drilled on an
approximately 1:1 ratio with producing wells. This would mean up
to 30 (25 if only 25 producing wells were drilled--as the
Memorandum called for) additional wells. Neither the Coburn
report nor the economic projections in the Stonehurst memorandum
accounted for the costs of drilling any such additional wells.
There was also no proposal for a water flood injection well
pattern.
The Coburn report also asserted that operating expenses for
a notional well would be $250 per month, which was too low in
1979 to include water flood operating costs required to support
the water injection required to obtain 518,400 barrels of
production over 15 years. Even the $290 per well per month
projected in the economic projections, which were then inflated
at 10 percent per year over 15 years, was too low for operating a
water flood.
Even with the problems described supra, the projected
reserve of 518,400 barrels, based upon 30 notional wells, is less
than the 757,500 barrels assumed by the economic projection A
described supra. The turnkey contract also only called for
drilling 25 wells in 1980, while the two economic projections
both assumed that a total of 55 wells would be drilled, of which
49 would be producers.
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