Two-phase flow, in which gas and liquid-water coexist within the pores, generally occurs in geothermal reservoirs in one of two ways. First, gravity segregation can cause the formation of a gas or steam cap near the top of the aquifer with single-phase liquid conditions prevailing at deepers levels. Squid condi tions prevailing at deeper levels. can cause the formation of a two-phase region adjacent to a production well in which both phases flow horizontally towards the well. Ef'such a twophase region forms, classical formulae which relate production rate to aquifer thickness, permeability, well diameter, fluid viscosity, and pressure drop no longer apply. The presence of a two-phase region will substantially increase the net resistance to fluid flow, reducing the production rate for a given downhole pressure.

In liquid dominated geothermal reservoirs, two distinct regimes are of principal interest. First, in hydrothermal systems, liquid water will boil due to production-induced pressure drop if the local pressure reaches the vapor pressure for the reservoir temperature. As pressure further declines, the temperature will begin to drop according to the saturation curve for water/steam mixtures, and the steam volume fraction ("steam saturation") will increase. Second, in geopressured systems such as those that underlie the Gulf Coast region, reservoir pressures typically exceed vapor pressure by hundreds of bars, so that steam will never form. However, geopressured reservoir fluids typically contain large quantities of dissolved natural gas, principally methane. Since the solubility of gases in water increases with pressure for a given temperature, the pressure drop induced by production may cause the evolution of free gas from solution, again creating a two-phase zone near the well.

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