SPE 80927
Economic Comparisons of Multilateral and Horizontal Wells in Water-Drive Reservoirs
Nestor Rivera, SPE, Texas A&M U., Jerry L. Jensen, SPE, Texas A&M U., John P. Spivey, SPE, Schlumberger, and Mike
Jardon, SPE, Schlumberger
Copyright 2003, Society of Petroleum Engineers Inc.
This paper was prepared for presentation at the SPE Production and Operations Symposium
held in Oklahoma City, Oklahoma, U.S.A., 22–25 March 2003.
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Abstract
Reservoir studies can help determine what parameters or
configurations make multilateral wells (MLs) more
economical than single-branch horizontal wells (HWs). We
simulated 5 years of production from a water-drive reservoir
and evaluated the results, using a range of economic criteria.
The reservoir simulator uses a multisegment wellbore model
to enable better handling of complex well trajectories and
detailed description of pressure losses in the horizontal,
building angle, and vertical sections of the well. The study
compared Levels 3 and 6 ML junction configurations to HWs.
We modeled natural flow applications considering normal
gravity oil (20 to 29° API) in a homogeneous reservoir with
permeability ranging from 10 to 1,250 md. Detailed well-cost
estimates for each configuration included taxes, royalties, and
water-handling costs. We found that accounting for friction
and hydrostatic pressure losses through all the sections of the
well created more realistic models. For the cases we studied, a
two-branch ML produces 13% more oil than a HW in high-
permeability reservoirs and 80% more oil in low-permeability
formations with low viscosity oil (1 cp). In addition, the ML
well produces 10 to 15% less water than the HW. The extra
production of the ML over the HW increases to more than
50% in low-permeability and higher than 90% in low-
permeability. The ML has a higher net present value—20% or
greater—than the HW for all permeabilities. Using a profit-to-
investment ratio, the ML is more attractive than the HW in the
lower permeability cases. Results using other economic
metrics gave similar results.
Introduction
Multilateral technology continues expanding with some fields
being further developed exclusively with multilateral wells.
The Troll Olje field in the North Sea is an example where the
operator found multilateral technology more appropriate than
conventional horizontal techniques and decided to drain
additional reserves with 20 multilateral wells.1 In addition to
the incremental oil production and multiple-target options,
multilateral wells offer the added cost-benefit of slot
conservation in offshore applications. One operator in the
Arabian Gulf reports 35% savings per well, despite the 44%
extra cost of the multilateral well when compared to a single
horizontal.2
Published reservoir studies have covered important
aspects of ML technology such as performance prediction,3
pressure drops through horizontal and vertical sections,4
comparisons with horizontal wells,5 and effects of water-drive
mechanisms.6 The objective of this study is to provide a
comprehensive economic evaluation of multilateral and
horizontal wells for water drive-reservoirs, which includes
friction and hydrostatic pressure losses through the horizontal
and vertical sections of the well. We used a range of
economic indicators to determine the cases where each type of
completion is advantageous. We considered natural flow
situations, in which the production is typically controlled by
an optimal tubing head or separator pressure. This is generally
the case for the early life of many wells in normal-to
abnormal-pressure reservoirs. Our production and economic
scenarios considered five years of operation.
Reservoir Model and Well Configurations
The numerical reservoir simulator used for this study is
coupled with a multisegment well option to account for
hydrostatic and pressure losses in the horizontal and built
sections of the well (Fig. 1). This model was built from the
reservoir up to the ML junction position. The modeling from
the junction to the surface was performed in the regular format
of tubing tables generated by standard correlations and
coupled with the simulator as look-up tables. This process is
more accurate and less computer intensive than building
multisegments from reservoir to surface. We set the THP to a
constant value of 120 psia.
Two currently common multilateral configurations are
Levels 3 and 6. The Level 3 junction provides mechanical
integrity but not hydraulic isolation whereas the Level 6
provides both mechanical integrity and hydraulic isolation.
However, this advantage in Level 6 systems generates the loss
of a casing size. The 9 5/8-in. Level 6 junction limits the liner
size to 4 ½- or 5-in. diameters. A single horizontal well would
have a 8½-in. production hole with 7-in. liner below the 9 5/8-
in. casing shoe.
2 SPE 80927
To identify the various well configurations, we devised a
short-hand notation. The near-reservoir well configuration for
the HW is simply defined by its reservoir section length and
production liner size. The Level 6 ML is described by the
production liner sizes of each branch, the length of reservoir
section of the first branch, separation distance between the two
heels, and the reservoir section of the second branch, in that
order. Thus, a single horizontal well with a reservoir
penetration of 2,000 ft and 7-in. liner is defined as a 2,000-ft,
7-in. single horizontal. A multilateral Level 6 well with two
2,000-ft branches, separation distance of 1,000 ft, and 4 ½-in.
production liners is defined as a 2k-1k-2k, 4 ½-in. Level 6.
We used a similar convention for Level 3 MLs. In this study,
we used only two-branch MLs, 180° apart.
One important issue when comparing HWs and MLs is
the length of the horizontal sections. For any well, HW or
ML, this parameter will be limited by practical operational
issues. If an ML well is to be designed, we assumed that each
ML branch can reach the same length as the HW. This
reasoning is based on the premise that each branch will have
the same horizontal “drillability”. For example a 1,000-ft
(1k), 7-in. HW is compared with a 1k-1k-1k, 4 ½-in. Level 6
ML or a 1k-1k-1k, 7-in Level 3 ML. For Level 3 comparisons
we used the same well diameters for both the ML and the HW.
Table 1 shows the reservoir and well parameters used for this
study and Fig. 1 shows the well configurations.
We included a comparison of the performance of MLs
and HWs for different oil gravities. We used two PVT
models, one is 29 °API, 1 cp oil (PVT 1) and the second is a
20 °API oil with viscosity of 5 cp (PVT 2).
Production Performance
Each ML configuration was compared with its corresponding
HW configuration, as described above. Figure 2 shows the
cumulative oil production of Levels 3 and 6 and HW for
1,000-ft branches, with 7-in liners for Level 3 and HW and 4
½-in liner for Level 6. The Levels 3 and 6 produce 24% and
22% more oil than the single horizontal after 5 years,
respectively. The slightly better performance of the Level 3 is
due to less friction in the larger horizontal section.
One alternative to a single multilateral well is the drilling
of two single horizontals at the best locations of the drainage
area of interest. Figures 3 and 4 show the results comparing
Level 6 and one and two single horizontal wells for 250 and
10 md reservoir permeability, respectively. For the 250 md
case, the Level 6 outperforms the single horizontal well.
However, when drilling a second horizontal well (giving the
same amount of reservoir exposure as the Level 6), the two-
horizontal wells case outperforms the Level 6 ML. The two
horizontal wells will produce 45% more oil than the 1k-1k-1k
Level 6, and the Level 6 will produce 13% more than the
single horizontal. On the other hand, for 10 md permeability,
the two HW case produces only 4% more than the Level 6,
which produces 80% more than the single horizontal. The
Level 6 is more attractive from a production standpoint in low
permeability reservoirs for the well configurations discussed.
To investigate the effects of drainage area and
permeability, we ran 27 cases for OOIP of 31, 84 and 276
mmstb; permeability values of 10, 50 and 250 md for Level 6
and one and two single horizontal wells. The results are
shown in Table 2. When comparing the Level 6 with a single
horizontal well, the best incremental production results are
obtained for low permeabilities and small drainage areas, with
permeability being the most dominant parameter. These
results suggest that medium to low permeability reservoirs
with low viscosity fluids are the best cases for Level 6
configurations. In low permeability reservoirs, maximum
contact is important and in high permeability friction is
dominant because of high flow rates. Therefore adequate
wellbore diameter is key in achieving optimal production. In
these cases, if feasible, Level 3 systems would be the preferred
option since these systems can achieve similar wellbore
diameters as the ones obtained with conventional horizontal
drilling.
Figures 5 and 6 show the influence of fluid type. The oil
gravity differences, which translate directly into viscosity
differences, generate three main effects: 1) reservoir
productivity decreases with increasing viscosity. The
productivity of the 20 °API (5 cp) oil is 20% of the
productivity of the 29 °API (1 cp) case; 2) water coning is
more pronounced for the lower-gravity oil because of a higher
mobility ratio (Fig. 6); and 3) the friction losses along the liner
and casing strings increase for the higher-gravity oil. Each of
these three factors contributes to smaller production rates for
the higher-gravity oil. Figure 7 compares the production
results between the 1,000-ft HW and the ML Level 6, using
the 20° API (5 cp) oil, and 250 md reservoir permeability.
The extra production of the ML over the single horizontal is
57%, compared to 13% for the low viscosity case, for the
same well configurations. These results suggest that MLs may
also be appropriate for high permeability reservoirs with
intermediate viscosity oil.
We also investigated the performance of MLs in
heterogeneous formations. We used the homogenous model,
changing the reservoir permeability from a constant 250 md to
two permeability zones, dividing the reservoir in the x-
direction. One zone has 250 md and the other has 50 md.
Three columns of cells were used to create a transition
between the two zones (200, 150, and 100 md). We used PVT
model 1. Figure 8 shows the oil saturation profiles after 6
months and Figure 9 displays the water cut for each branch of
the ML well. Water encroaches quickly into the higher
permeability branch. If downhole control valves were
installed, this would allow better control of the water influx by
operating a valve controlling on the high permeability branch.
This valve could be placed at the junction position and does
not require its deployment in the reservoir section, for this
particular type of reservoir.
Economic Evaluation
Based on oil production, we have identified several situations
where MLs may be better than HWs. Now we include the
economic aspects for such wells to determine if these
advantages still apply.
We performed economic evaluations to compare the
performance of Level 6 versus one and two single horizontal
wells. The drilling time for the 1k-1k-1k Level 6 well was
estimated to be 80 days (50 days for the vertical section and
30 days for the two laterals). The total ML cost was estimated
to be $3.83 million. The estimated time for the 1,000-ft
SPE 80927
horizontal (with 7-in. liner) is 65 days (50 days for the vertical
section and 15 days for the horizontal section), resulting in an
estimated cost of $3.09 million. The cost of two horizontal
wells is $6.18 million.
We performed economic analysis for the 27 simulation
runs presented in Table 2 (PVT 1) and 6 runs for PVT 2. For
each scenario, we performed economic evaluations to rank the
different alternatives. We used several criteria for comparison
purposes: 1) Cumulative oil; 2) NPV; and 3)Profit to
Investment Ratio (P/I). We used an oil price of $18/bbl,
interest rate 10%, operating costs $3/bbl, water treatment cost
$0.5/bbl, royalties 20%, and income tax of 30%. Figures 10
and 11 show the P/I ratio and NPV as a function of
permeability (k). The lines are best-fit empirical models of the
behavior shown by the points. The changing scatter in the
points going from the 10 md case to the 250 md case is the
result of boundary effects. None of the low-permeability
cases reach the reservoir limits, while the 50 md and 250 md
cases are affected and reduce the economic benefit for the
smaller reservoirs.
When using the P/I yardstick to compare alternatives (Fig.
10), the Level 6 is the best option for values of k < 100 md.
For values above 100 md, the best option is one single
horizontal well. When NPV is used to compare alternatives
(Fig. 11), the Level 6 is the best option for values of k < 15
md; for values above 15 md, the best option is the two
horizontal wells case. Note that the P/I ratio is highly
sensitive to the cost of the well, whereas the NPV is less
sensitive.
Figs. 12 and 13 compare Level 6 and single horizontal
wells as a function of k/µ, for differing OOIP values. The
effects of viscosity are not completely accounted for using k/µ
instead of k alone. The added effects of water production
reduce all the economic indicators. For the lower gravity oil
(5 cp), the ML P/I and NPV outperform the single horizontal
well results for the permeability range studied (10 to 1,250
md); the P/I is 55 % higher for 50 md, and 8 % for 1,250 md.
These results for the 5 cp fluid suggest that a 20% economic
advantage for a ML over a horizontal well can be obtained
over a wider range of conditions than the 1 cp case.
Discussion
Based strictly on oil production over five years, two HWs
always were best, with the MLs giving nearly-equal
performance for low permeability reservoirs. This
performance advantage continues if NPV is the economic
criterion. However, if a more capital-sensitive indicator such
as P/I is used, the MLs become advantageous over a broader
range of conditions. This range of applicability could be
extended if the costs of well slots are included.
Conclusions and Observations
1. If drillability is a constraint, we can replace n horizontal
wells with a ML having n branches. Of course, if
operationally feasible, as n goes up the ML gains an
advantage. This cost benefit would be especially
important in low permeability reservoirs.
2. For high-permeability, high-gravity reservoirs, the
horizontal well will be advantageous because of 1) larger
borehole size (higher productivity index), 2) larger
3
diameter completion liner (less friction along the
horizontal section). Furthermore, for the case of two
horizontal wells, the flow from bottom to surface will be
transported using two different lines (gaining a further
friction advantage). However for high-permeabilty,
intermediate-gravity MLs are advantageous because the
decreased productivity originated by the relative high
viscosity requires more reservoir contact for optimal
production.
3. As the OOIP gets smaller, the incremental production
gained by drilling two horizontal wells is reduced. The
advantage of the 2 horizontal wells decreases for smaller
drainage areas. Furthermore, a second horizontal well in
a particular region may then not be available to drain
another area (e.g., another fault block), which represents
reserves not recovered. One way to overcome some of
these advantages of horizontal wells in high permeability
reservoirs is to design ML’s with larger holes using a 13
3/8" junction. This allows the drilling of 8-½ in. holes
and the setting of 7-in. liners.
4. If the economic yardstick used to compare alternatives is
the P/I ratio (i.e. cases where the capital is limited), the
options to consider are a Level 6 versus a single
horizontal well. On the other hand, if NPV is the
yardstick to compare alternatives (i.e., unlimited capital),
we should find the optimal number of horizontal wells
and use a comparable number of multilateral wells and
branches.
Acknowledgments
The authors would like to express their gratitude to the
management of Schlumberger for sponsoring this study and
permission to publish this paper.
Nomenclature
k = reservoir permeability, md
kx = absolute permeability in the x direction, md
ky = absolute permeability in the y direction, md
kz = absolute permeability in the z direction, md
Nx = number of cells in the x direction
Ny = number of cells in the y direction
Nz = number of cells in the z direction
∆x = cell length in the x direction, ft
∆y = cell length in the y direction, ft
∆z = cell length in the z direction, ft
φ = porosity
µ = oil viscosity, cp
Swi = irreducible water saturation
pi = initial reservoir pressure, psia
BHP = bottomhole pressure, psia
P/I = Profit to Investment Ratio
NPV = Net Present Value
OOIP = original oil in place, mmstb
THP = Tubing head pressure, psia
References
1. Berge, F. and Hepburn, N.: “A New Generation Multilateral
System for the Troll Olje Field-Development and Case History,”
paper SPE 71837 presented at the 2001 SPE Offshore European
Oil and Gas Conference, Aberdeen, Scotland, 4-7 September.
4 SPE 80927

2. Al-Umair, N.A.: “The First Multilateral / Dual Completion Well

in Saudi Arabia,” paper IADC/SPE 62771 presented at the 2000
IADC/SPE Asia Pacific Drilling Technology, Kuala Lumpur,
Malasya, 11-13 September.
3. Salas, J.R., Clifford, P.J., and Jenkins, D.P.: “Multilateral Well
Performance Prediction,” paper SPE 35711 presented at the
1996 SPE Western Regional Meeting, Anchorage, Alaska, 22-24
May.
4. Zhu, D., Hill, A.D., and Landrum, W.R.: “Evaluation of
Crossflow Effects in Multilateral Wells,” paper SPE 75250
presented at the SPE/DOE Improved Oil Recovery Symposium,
Tulsa, Oklahoma, 13-17 April 2002.
5. Rivera, N., Kumar, A., Kumar A., and Jalali, Y.: “Application of
Multilateral Wells in Solution Gas-Drive Reservoirs,” paper
SPE 74377 presented at the SPE International Conference and
Exhibition in Mexico, Villahermaosa, 10-12 February 2002.
6. Renard, G. et al.: “Potential of Multilateral Wells in Water
Coning Situations,” paper SPE 39071 presented at the 1997
Fifth Latin American and Caribbean Petroleum Engineering
Conference and Exhibition, Rio de Janeiro, Brazil, 30 Aug – 3
September.

Table 1 – Well and Reservoir Parameters

φ 24 %
S wi 20 %
kx 250 md
ky 250 md
kz / kx 0.1
Nx 69
Ny 35
Nz 10
∆x 200 ft
∆y 200 ft
∆z 12 ft
pi at top of reservoir 3,925 psia
Depth to top of reservoir 9,190 ft
Reservoir thickness, ft 120 ft
Depth to horizontal sections
9,280 ft
of well
THP constraint 120 psia
Oil gravity 29/20 °API
Oil viscosity 1 / 5 cp
Cumulative production time 5 years
Casing size 9 5/8 in
Horizontal section liner size 4 ½, 7 in
SPE 80927 5

Table 2 - Cumulative production after 5 years, PVT 1; production liner for Level 6 is 4 ½-in; the single horizontal
wells are 1,000-ft long with 7-in. production liner, 29 °API, 1 cp oil

Cumulative production, MMSTB Extra production, %

OOIP Perm. 1k-1k-1k One single Two single Level 6 over Two single hor Two single hor
MMSTB md Level 6 horiz horiz. single hor over Level 6 over single hor
276 250 16.89 14.97 24.48 12.9 44.9 63.5
276 50 11.56 8.21 14.05 40.7 21.6 71.1
276 10 5.21 2.89 5.39 80.2 3.5 86.5
84 250 14.70 12.87 19.49 14.2 32.6 51.4
84 50 10.49 7.27 12.31 44.3 17.3 69.3
84 10 4.97 2.67 5.12 85.8 3.1 91.5
31 250 10.75 9.26 12.33 16.2 14.7 33.2
31 50 8.37 5.58 9.21 49.9 10.0 64.9
31 10 4.51 2.37 4.60 90.1 2.0 93.9

Figure 1. 1,000-ft single horizontal and 1k-1k-1k Level 6 and well profiles
 6 SPE 80927

20,000 20,000
Level 3
16,000
Level 6 16,000
single hor

Cum oil, mstb

Cum. oil, mmstb

12,000
12,000 29 API, 1 cP oil

8,000 reservoir
8,000 tubing
effects
effects
4,000
4,000
20 API, 5 cP oil
0
0 0 1 2 3 4 5
0 1 2 3 4 5 Time, years
Time, years

Figure 2. Oil production comparison for Levels 3, 6 and single Figure 5. Cumulative oil production for the 1k-1k-1k Level 6 well,
horizontal, using 1,000 ft horizontal sections, k = 250 md using different oil gravities

30,000 0.70
Level 6, 1000-1000-1000 ft
Two single hor. wells 0.60
25,000
One single hor. well 20 API, 5 cP oil

Water cut, fraction

0.50
20,000
Cum oil, mstb

s 0.40
HW ML
15,000 Two el 6
Lev 0.30

10,000 One H
W 0.20 29 API, 1 cP oil

5,000 0.10

0.00
0
0 1 2 3 4 5
0 1 2 3 4 5 Time, years
Time, years

Figure 3. Cumulative oil for 1,000-ft, 7-in. liner horizontal and 4 ½-in. Figure 6. Water production for the 1k-1k-1k Level 6 well, using
liner Level 6 wells; 250 md different oil gravities

6,000 6,000
Level 6, 1000-1000-1000 ft
5,000 Two single hor. wells
One single hor. well
Cum oil, mstb

L 4,000
4,000
HW
s el 6M
Cum oil, mstb

Two Lev 1k-1k-1k Level 6

3,000
2,000
W
2,000 One H 1000-ft, 7-in liner single hor

1,000
0
0 1 2 3 4 5
0 Time, years
0 1 2 3 4 5
Time, years

Figure 4. Cumulative oil for 1,000-ft, 7-in. liner horizontal and 4 ½-in.
liner Level 6 wells; 10 md Figure 7. Production comparison using PVT 2 (20 °API, 5 cp)
SPE 80927 7

160
Level 6
140
O ne horizon tal
120
Tw o horizont als
100

NP V, m m $
s
HW
Tw o
80 6M L
L evel
60
HW
One
40

20

0
10 100 1000

P erm eab ility, m d

Figure 8. Water saturation distribution for the ML well, after 6 Figure 11. Net Present Value results as a function of Perm,
months, heterogeneous case, 250(left)/50(right) md; PVT 1 PVT 1

0.35 35
L eve l 6, 1 cp
0.30 30
Ho rizon ta l, 1 cp
250-md branch
Water cut, fraction

25 L eve l 6, 5 cp
0.25
Ho rizon ta l, 5 cp
20
0.20
P/I

15
50-md branch
0.15 , 1c
p
10 ML
, 1cp ML, 5 cp
0.10 HW
cp
5 HW, 5

0.05
0
10 1 00 1 ,0 00
0.00
0 1 2 3 4 5 k / µ , m d /cp
Time, years

Figure 9. Water production for each branch of the 1k-1k-1k Level 6 Figure 12. Profit to Investment ratio PVTs 1 and 2
multilateral well

30 120

Level 6, 1 c p
25 100
H orizontal, 1 c p
Level 6, 5 c p
80
20 H orizontal, 5 c p
NP V

60
P/I

15
6M
L , 1cp
el ML
Lev 40 p
, 1c
10
W HW ML, 5 cp
eH s Le vel 6
On HW 20
Two
5 O n e h oriz ont al HW, 5 cp
T w o h orizo nta ls 0
0 10 100 1,000
10 100 1000 k/ µ , m d /cp
P erm eability, m d

Figure 10. Profit to Investment ratio as a function of Perm, Figure 13. Net Present Value for PVTs 1 and 2
PVT 1