Petroleum & Coal ISSN 1337-7027 Available online at www.vurup.sk/petroleum-coal Petroleum & Coal 56(4) 383-394, 2014 EVALUATING THE INVESTMENT AND EXPECTED REVENUE IN AN OIL DEPLETED UNDERGROUND GAS STORAGE RESERVOIR WITH WATER INFLUX C. I. C. Anyadiegwu 1 , C. M. Muonagor 2 1 Department of Petroleum Engineering, Federal University of Technology, Owerri, Nigeria. drcicanyadiegwu@yahoo.com 2 Institute of Petroleum Studies, Port Harcourt, affiliated to Institut Francais du Petrole (IFP), France. tissadeking@yahoo.com Received May 19, 2014, Accepted July 28, 2014 Abstract Evaluating the investment and expected revenue in an oil depleted underground storage reservoir with water influx is analysed in this work. Data on a depleted oil reservoir located in the Niger Delta were used for the analysis. An economic analysis on the reservoir was performed by considering water influx in case 1 and no water influx in case 2. Economic factors as NPV, IRR, Pay-out and Break-even point were determined using model equations and Microsoft Visual Basic Computer Programs. From the analysis and computations made, it was shown that the water influx into the reservoir often reduces the storage capacity of the reservoir, and subsequently affects the internal rate of return on the investment. Keywords: economics, net present value, internal rate of return, pay-out, storage capacity, depleted reservoir 1. Introduction The water inflows resulting from gradual expansion of the aquifer continue in transient conditions over a relatively long period. The recovery from many oil/gas reservoirs is affected by water influx, either from the perimeters of the reservoirs or from below, or from both. An understanding of the interplay between aquifers and the oil/gas reservoirs is important to properly perform recovery calculations [13] . Water influx results from a reservoir pressure following oil/gas production. Water influx tends to maintain, either partially or wholly, the reservoir pressure. In general, both effectiveness of the pressure support system and the water influx rates are governed by the aquifer characteristics, which principally include permeability, thickness, areal extent and the pressure history along the original reservoir/aquifer boundary [6] . Before the effects of water influx on oil/gas reservoir behavior were completely understood, early derivations from a straight line on a plot of P/Z vs G p often were attributed to measurement errors. In some instances, errors in the field pressure measurements can mask the effects of water influx, especially if a weak water drive is percent [4] . In the effort to understand the fundamentals of natural gas storage, and the underlying motivations of the owners, it is often asked how much does the project cost and what is the profit [3] . Natural gas storage unit cost for various storage systems are [7] : - UGS in depleted fields: 0.70 – 1.75 dollars per m 3 . - Gas storage in water layers: 1.88 dollars per m 3 . - Gas storage in salt cavern (formation): 5.00 dollars per m 3 . - LNG storage: 4.60 dollars per m 3 . - Gas storage in propane: 1130 dollars per m 3 . - Natural gas storage in pipeline at 1600 psia: 1700 dollars per m 3 .