To determine the development mode of layered sandstone reservoir, a system economic model was established, which thought the layer in production and its upper (downer) layer as a system, and the overall benefits of the two modes were contrasted using the existing well (UEWM) or the method of drilling a new well (DNWM); then, the upper (downer) oil layer development mode could be determined quickly by the model. The method can avoid the chemical agent effect of the upper target layer, which also makes the calculation more accurate. In the model, the cumulative oil production limits of the producing layer are described at different oil prices of DNWM and UEWM methods. Then, an economic ultimate water cut (EUWC) model is established. According to this model, when the water cut attains to EUWC, the oilfield should be abandoned. Meantime, the arctangent prediction model for water cut is combined with the water drive curve method, to forecast the accumulative oil from the planning time of the upper target layer production to the abandonment time of the first production layer of oilfield. And then, the development mode could be decided through contrast with the cumulative oil production limit. When the oil price is 40$/bbl, the EUWC of the block is 97.55%, and time is May 2020, earlier than the planned upper layer production time January 2023, so its rest cumulative production would be 0.0 × 10 4   t , which is less than the cumulative production limit of 32 × 10 4   t . Hence, the UEWM should be chosen. When the oil price is $70/bbl, EUWC is 98.93%, and the corresponding time is August 2027. From the planned return time of January 2023 to August 2027, the block has cumulative oil production of 25.54 × 10 4   t , greater than the cumulative oil limitation of 10.8 × 10 4   t . The old exiting well still has larger economic productivity; hence, the DNWM method should be chosen. This work provides theoretical support for up (down) formation development mode of production layer. It is of great significance to guide the development of layered sandstone reservoirs. The system economic model established can decide development mode with drilling wells or using exiting well, and it was first created in the field of oil reservoirs. This method fills up the theoretical blank of development mode for upper or downer layer of the producing layer in layered sandstone reservoir.

To determine the development mode of different oil field in layered sandstone reservoir, a system economic model was established, including the primary production layer section and the upper layer. The cumulative oil production limits of the primary layer were described under different oil prices, using the existing well method (UEWM) and drilling new well method (DNWM). The first layer’s oil production limit for DNWM and UEWM was determined. The established economic ultimate water cut (EUWC) model, the solution prediction model of water cut arctangent, and the water drive curve were combined, to calculate the accumulative oil production from planning time of the upper layer production to the economic limited water cut of block. When the oil price is 40$/BBL, the SME block should be developed by UEWM method. While for 70$/BBL, DNWM should be adopted. This work provides theoretical support for the optimization of up (down) layer return development mode. It is of great significance to guide the development of layered sandstone reservoir.