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.