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991-994 HEPcoversMAY_Layout 1 4/18/11 2:12 PM Page 991 E P M A G . C O
E P M A G . C O M M AY 2 0 1 1
E P M A G . C O M
M AY
2 0 1 1
Extending
Extending
Reservoir Life
Reservoir Life
Potential Fields
Potential Fields
Deepwater
Deepwater
Rig Advances
Rig Advances
Sand & Water
Sand & Water
Management
Management
Special Report:
Special Report:
BRAZIL
BRAZIL
SEA CHANGE
technology transforms
deepwater operations
2011
Meritorious Awards
for Engineering
Innovation

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EXPLORATION & PRODUCTION WORLDWIDE COVERAGE

MAY 2011

VOLUME 84

ISSUE 5

A HART ENERGY PUBLICATION

www.EPmag.com

84 ISSUE 5 A HART ENERGY PUBLICATION www.EPmag.com EXTENDING RESERVOIR LIFE 44 48 POTENTIAL FIELDS 50

EXTENDING RESERVOIR LIFE

44

48

POTENTIAL FIELDS

50

52

DEEPWATER RIG ADVANCES

57

60

COVER STORY

COVER STORY
32 Deepwater raises the bar for technology
32
Deepwater raises the
bar for technology
STORY 32 Deepwater raises the bar for technology As water depths increase, so do the challenges
As water depths increase, so do the challenges associated with extracting reserves. IndustryPULSE: 6 Deep
As water depths increase, so do
the challenges associated with
extracting reserves.
IndustryPULSE:
6
Deep water ahead?
Following a year of slow economic recovery, unstable
price fluctuations, and damaging incidents in the
GoM and China, the oil and gas industry is predicting
healthy investment in new exploration and market
opportunities over the next 12 months.
WorldVIEW:
11
New operator takes
the stage in Brazil
After only a year and a half of operations, OGX is
expecting the arrival of its first FPSO in July 2011 and
plans to begin production by August, with a year-end
production goal of 20,000 b/d.
Unconventional: Horn River
70 Horn River is a play
for the ages
Activity in the Horn River Basin is slow due to low gas
prices. But a change in market economics could turn
this play into a barnburner.

Failed waterflood effort provides lessons learned

Reservoir simulation, history matching extend reservoir life

The potential of potential fields

Multiple measurements lead to singular insight

Close observation improves drilling performance

New ultra-deepwater design boasts capacity, advanced automation

SAND & WATER MANAGEMENTultra-deepwater design boasts capacity, advanced automation 63 66 New water treatment technology minimizes offshore

63

66

New water treatment technology minimizes offshore footprint, costs

New technologies enhance water, sand management

REGIONAL REPORT: GULF OF MEXICO

106 Looking long term: One year on for the Gulf of Mexico

2011 MERITORIOUS AWARDS FOR ENGINEERING INNOVATION

79

term: One year on for the Gulf of Mexico 2011 MERITORIOUS AWARDS FOR ENGINEERING INNOVATION 79
93 SPECIAL REPORT: BRAZIL
93
SPECIAL REPORT: BRAZIL

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01-4 TOC_MAY_01-4 TOC_MAY 4/18/11 1:25 PM Page 2
01-4 TOC_MAY_01-4 TOC_MAY 4/18/11 1:25 PM Page 2 DEPARTMENTS AND COMMENTARY AS I SEE IT Getting
01-4 TOC_MAY_01-4 TOC_MAY 4/18/11 1:25 PM Page 2 DEPARTMENTS AND COMMENTARY AS I SEE IT Getting

DEPARTMENTS AND COMMENTARY

AS I SEE IT

Getting back to business in the GoM

5

MANAGEMENT REPORT

Benchmark survey reveals looming talent shortage

14

DIGITAL OIL FIELD

Collaboration is key enabler in Russia’s oil, gas field efficiency GPUs prove their worth in seismic interpretation

18

23

EXPLORATION TECHNOLOGY

It is time to disrupt the status quo

27

WELL CONSTRUCTION

Unconventional well construction moves to Poland

29

PRODUCTION OPTIMIZATION

Bugs, bacteria join the battle

31

TECH WATCH

CSEM identifies new prospectivity in an explored basin

87

TECH TRENDS

Innovations and new releases

90

INTERNATIONAL SPOTLIGHT

Mexico calls for E&P service contracts

105

INTERNATIONAL HIGHLIGHTS

Operators display global reach

112

ON THE MOVE/INDEX TO ADVERTISERS

115

LAST WORD

Together, we can speak volumes

116

115 LAST WORD Together, we can speak volumes 116 COMING NEXT MONTH The June issue of

COMING NEXT MONTH The June issue of E&P features a cover story on downhole systems and tools as well as the latest unconventional gas news from Poland. Additional features include fron- tier exploration, MWD/LWD, well testing and production management, and advances in mooring. The unconventional report discusses activity in the Monterey shale and the regional report highlights off- shore frontiers. The second installment of the three-part Special Report: Brazil also is included. While you’re waiting for the next copy of E&P, remember to visit www.EPmag.com for news, industry updates, and unique industry analysis.

for news, industry updates, and unique industry analysis. ABOUT THE COVER The main photo shows the

ABOUT THE COVER The main photo shows the Pride Angola in West Africa,

currently on a five-year contract with Total (photo by Ken Childress Photography,

courtesy of Pride International). On the left, the gorgeous Paradise Beach in Morro

de São Paulo, Brazil, and a colorful toucan herald the potentially bright future of off-

shore Brazil. (cover design by Laura J. Williams)

E&P (ISSN 1527-4063) (PM40036185) is published monthly by Hart Energy Publishing, LP, 1616 S. Voss Road, Suite 1000, Houston, Texas 77057. Periodicals postage paid at Houston, TX, and additional mailing offices. Subscription rates: 1 year (12 issues), US $149; 2 years (24 issues), US $279. Single copies are US $18 (prepayment required). Advertising rates furnished upon request. POSTMASTER: Send address changes to E&P, PO Box 5800, Harlan, IA 51593. Address all non-subscriber correspondence to E&P, 1616 S. Voss Road, Suite 1000, Houston, Texas 77057; Telephone:

713-260-6442. All subscriber inquiries should be addressed to E&P, PO Box 5800, Harlan, IA 51593; Telephone: 713-260-6442 Fax: 713-840-1449 custserv@hartenergy.com Copyright © Hart Energy Publishing, LP, 2011. Hart Energy Publishing, LP reserves all rights to editorial matter in this magazine. No article may be reproduced or transmitted in whole or in parts by any means without written permission of the publisher, excepting that permission to photocopy is granted to users registered with Copyright Clearance Center/0164-8322/91 $3/$2. Indexed by Applied Science, Technology Index and Engineering Index Inc. Federal copyright law prohibits unauthorized reproduction by any means and imposes fines of up to $25,000 for violations.

Federal copyright law prohibits unauthorized reproduction by any means and imposes fines of up to $25,000

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ONLINE CONTENT MAY 2011

PREMIUM CONTENT Subscribe @ EPmag.com/explorationhighlights Two intervals reported at Syrian exploration well by
PREMIUM CONTENT
Subscribe @ EPmag.com/explorationhighlights
Two intervals reported at Syrian
exploration well by Gulfsands
London-based Gulfsands Petroleum found oil
in two intervals of the #1-Twaiba exploration
well in Syria.
South Poland shales produce for LNG Energy
LNG Energy of Vancouver announced that the #1-S Wytowno well
had 725 ft (221 m) of gas shows in Lower Silurian, Ordovician, and
Cambrian shales and 1,476 ft (450 m) of gas shows in the middle
and upper Silurian.
Appraisal well results increase reserve
estimates for Perla field in Venezuela
Rome-based Eni has upgraded its reserves at
the Perla field in the shallow-water Gulf of
Venezuela following the successful appraisal
at the #4-Perla well.
AVAILABLE ONLY ONLINE
WEBINARS
Recent
A Gulf of Mexico milestone: first new
deepwater plan approved since oil spill
Advances
in Reservoir
By Nancy Miller, Online Editor
Modeling
US regulators green-lighted the first exploration
plan since the nation’s deep waters in the
Gulf were declared “open for business” in
October 2010, following a near six-month
drilling moratorium.
and Subsea
Instrumentation
Opportunities
for Better
Real-Time
Drill-Head
and Equipment
TransCanada sets the record
straight on the Keystone Pipeline
Data Use
By Judy Murray, Editor
Marcellus
Opposition to the Keystone Pipeline has
hindered progress, but according to
TransCanada, many of the criticisms are
not based on facts.
Midstream –
Embracing the
READ
Marcellus
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LATEST
EPmag.com
Drilling down on upstream
innovation in the Gulf of Mexico
INDUSTRY
NEWS
By Gerry Love, Scottish
Development International
Scotland delivers another year of key
industry research and innovation at
OTC 2011.
Scottish Development International Scotland delivers another year of key industry research and innovation at OTC 2011.

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05 AsISeeIt_05 AsISeeIt 4/18/11 1:25 PM Page 5 1616 S. VOSS ROAD, STE 1000 HOUSTON, TEXAS
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1616 S. VOSS ROAD, STE 1000 HOUSTON, TEXAS 77057 TEL: +1 713.260.6400 FAX: +1 713.840.0923 www.EPmag.com

Editor

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May 2011

Officer RICHARD A. EICHLER EPmag.com | May 2011 As I JUDY MURRAY Editor jmurray@hartenergy.com Read

As I

JUDY MURRAY Editor jmurray@hartenergy.com Read more commentary at EPmag.com SEE IT

JUDY MURRAY

Editor

jmurray@hartenergy.com

Read more commentary at

EPmag.com

SEE IT

Read more commentary at EPmag.com SEE IT Getting back to business in the GoM O TC

Getting back to business in the GoM

O TC 2010 was somber – the industry stunned by an accident nobody thought could happen.

A year later, the collective mood is staid but not subdued. Companies have faced the challenge of improving safety head on, and there has been remarkably rapid progress. Technology development targeting spill prevention and response was fast tracked, and the advances that resulted are changing the face of the industry. Read- ers who are interested to know more about the tangible results of the industry’s efforts can read about some of them in International Editor Mark Thomas’ Gulf of Mexico (GoM) regional report in this issue (page 106). While everyone would like to put the Macondo incident behind them, it contin- ues to impact business and will do so for quite some time. The accident, in fact, served as the impetus to many of the advances in deepwater technology that are addressed in this month’s cover story (page 32). The moratorium and its lingering repercussions will be with the industry for years, and speculation will continue about the impact it will have on future E&P and US energy security. Bobby Parker, chairman of Parker Drilling, shared some of his views recently at the Decisions Strategies Oilfield Breakfast Forum in Houston. Gasoline prices are “the one single thing the US public judges the industry on,” Parker said, and given that domestic offshore E&P activity was practically non-exis- tent for nearly a year, the US should expect prices to rise. In addition to limited pro- duction from the GoM, he said, instability in many countries that have large oil reserves does not bode well for prices. “We’re probably in for more and more nega- tive publicity.” Steve Thurston, vice president, deepwater and projects business unit at Chevron, who also spoke at the forum, agreed with Parker. “The Gulf of Mexico is important to the US,” he said. “We can and will develop the deepwater safely.” That means more permits need to be issued, but at present there is a huge backlog. Although a number of permits have been granted, the pace is “painfully slow,” Thurston said, and this has stalled the tremendous investment in the GoM. “We’ve got billions of dollars invested and at stake, and if we can’t put it to work in the Gulf of Mexico, we will have to go elsewhere.” With Chevron’s large acreage holdings in the GoM, it will be inconvenient at best to go somewhere else. Thurston said the way forward will be paved by a highly competent US regulatory agency that will allow work in the deepwater GoM to resume at a much more rapid pace. This is critically important, he said, because the future remains in deep water.

to resume at a much more rapid pace. This is critically important, he said, because the
to resume at a much more rapid pace. This is critically important, he said, because the

5

to resume at a much more rapid pace. This is critically important, he said, because the
to resume at a much more rapid pace. This is critically important, he said, because the

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industry

PULSE

Deep water ahead?

Following a year of slow economic recovery, unstable price fluctuations, and damaging incidents in the GoM and China, the oil and gas industry is predicting healthy investment in new exploration and market opportunities over the next 12 months.

John Wishart, GL Noble Denton

T he offshore market is looking up, according to a new report on the future of the sector published by the

Economist Intelligence Unit and sponsored by GL Noble Denton. Despite concerns over tougher industry regulation and increased operating costs, the 194 board-level exec- utives and policymakers from some of the industry’s leading international companies surveyed for the report are optimistic that 2011 will be a key turning point as operators prepare to drill deeper in new geographies. Indeed, 76% of respondents to the survey described themselves as either “highly” or “somewhat” confident about their company’s business outlook. Only 8% were Indeed, 76% of respondents to the survey described “highly” or “somewhat” pessimistic. This renewed “highly” or “somewhat” pessimistic. This renewed confidence is largely due to a period of relative price stability, particularly in North America, and the fast-growth economies in Asia. The largest por- tion of industry executives questioned (32%) saw South- east Asia as offering the greatest opportunities for their businesses in 2011, while nearly 30% of respondents identified North America as the most significant region.

about when new legislation would appear and what effect it might have. A large portion (72%) of respon- dents said they expect regulation to become more strin- gent in North America in particular, while a substantial majority (68%) expects cost increases in general. During a roundtable discussion organized by GL Noble Denton in London to discuss the findings of the Economist Intelligence Unit report, European industry leaders voiced concerns that the increased cost of post- Macondo regulatory compliance could price smaller operators out of the market. Certainly, rising costs are most likely to be more prob- lematic for smaller E&P companies. Nearly two-thirds of production in the GoM is accounted for by such compa- nies, and proposals to raise the US $75 million cap on liabilities related to offshore oil spills will most likely hit them hardest as insurance becomes impossible or too costly to obtain. Rising demand for energy means companies also increasingly are required to develop resources in more challenging environments, such as deep water. With 20% of major oil companies’ portfolios now coming from deepwater positions, this clearly will have an impact on spending.

positions, this clearly will have an impact on spending. 6 Regulation uncertainty The industry still values

6

Regulation uncertainty

The industry still values the potential of North American pro- duction. For larger oil companies in particular, the Gulf of Mexico (GoM) remains an attractive province. The potential impact of regulatory changes following the biggest oil disaster in US history continues to feature heavily in industry debate a year after the Deepwater Horizon incident. Survey results reflect the industry’s feel- ing of uncertainty about the effect of future legislation. The oil and gas industry recog- nizes that increased regulation will follow the Macondo incident, but respondents seemed unclear

For larger oil companies in particular, the GoM remains an attractive province. (Images courtesy of
For larger oil companies in particular,
the GoM remains an attractive
province. (Images courtesy of
GL Noble Denton)
For larger oil companies in particular, the GoM remains an attractive province. (Images courtesy of GL

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industry

PULSE

The longer-term impact of Macondo, however, might well be on companies’ operational strategies, with the report suggesting safety records will become a more important factor in gaining access to global reserves.

15 years. One is the success of the finance industry in recruiting talented graduates through the promise of high salaries and quick career progression. The negative impact of the Macondo disaster also played a role alongside skep- ticism among younger people about the oil and gas indus-

Natural gas

Natural gas has gained a reputation as a relatively low-carbon “transition fuel” in recent years, and the global demand for LNG has grown as coun- tries in Asia and Europe have sought to increase their supply options. The emergence of large reserves of unconven- tional gas in North America has proven highly attractive to companies looking to replace declin- ing production. Instead of experiencing an antici- pated decline, the region has seen dramatically increased extraction as new technologies have helped to unlock gas resources. Interestingly, some of the industry’s key players have disagreed with the report’s findings, which call natural gas an industry “game changer.” Opponents say companies may find that the cost of extracting unconventional gas will result in a weaker return on Opponents say companies may find that the cost of extracting investment than originally expected. Regulations also investment than originally expected. Regulations also could add cost to the extraction process. Currently, individual states regulate this in North America, but there is potential for a further federal layer of regulation, which could slow oper- ations and increase cost. The report also notes that there is an expectation for closer scrutiny of the environmental impact of unconventional gas. The majority of the industry executives polled expects a modest shift upward in natural gas prices,

polled expects a modest shift upward in natural gas prices, Rising demand for energy means companies

Rising demand for energy means companies increasingly have to develop resources in more challenging environments such as deep water.

especially as global demand is forecast to increase steadily over the next decade. Nearly one-half expects an increase of at least 10% in gas prices, compared with just 7% who think prices will fall by 10% or more. Most of the rest (35%) expect prices to fluctuate around the current price range.

Developing the next generation

The increasing shortage of technical skills is another topic close to the hearts of oil and gas professionals and was a subject of debate at the recent roundtable discus- sion. There is an overall feeling that the industry will encounter challenges as a result of

its failure to attract, recruit, and retain highly talented people. There are several reasons why the oil and gas industry is likely to expe- rience a skills deficit within the next

There is more to the story… READ MORE ONLINE EPmag.com
There is more
to the story…
READ MORE ONLINE
EPmag.com

try’s efforts to support more environmentally friendly approaches to energy production and distribution. The industry could soon find itself returning to a situa- tion in which technical resource demand outweighs sup- ply. Roundtable participants agreed the industry needs to work more cohesively to address the skills problem rather than trying to pursue one another’s human resources.

Cautious optimism

The oil and gas industry is extremely focused on its future challenges and understands the need to find innovative solutions to operating more safely, sustain- ably, and efficiently. The success of key players in the industry in finding more innovative solutions to mitigate risk while remain- ing resourceful and sustaining activity will define their position and reputation in the market this year.

and sustaining activity will define their position and reputation in the market this year. 8 May

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and sustaining activity will define their position and reputation in the market this year. 8 May

May 2011

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EPmag.com

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world

VIEW

New operator takes the stage in Brazil

After only a year and a half of operations, OGX is expecting the arrival of its first FPSO in July 2011 and plans to begin production by August, with a year-end production goal of 20,000 b/d.

Judy Murray, Editor

production goal of 20,000 b/d. Judy Murray , Editor Paulo Mendonça (Image courtesy of OGX) W

Paulo Mendonça (Image courtesy of OGX)

W hen people think about operating companies in

Brazil, OGX might not be the one that immediately leaps to mind. Aggressive growth

plans, however, are moving the company out of the wings and onto center stage. Paulo Mendonça, general executive officer and E&P director, talked to E&P about his company’s history and its goals.

What is the most important thing for the industry to know about OGX as an operating company? OGX is focused on oil and natural gas E&P and was created to pursue and develop opportunities in the oil and gas sector, mainly in Brazil. Since its creation in July 2007, OGX was able to recruit an experienced management and technical team and raise the capital needed to:

• Acquire a high-potential portfolio comprising 34 explo- ration blocks in five Brazilian and three Colombian basins, covering nearly 34,000 sq km (13,127 sq miles);

• Acquire the equipment, services, and geological and geophysical data needed to define nearly 100 prospects in 29 blocks onshore and offshore Brazil;

• Accomplish an aggressive exploration campaign com- prising nearly 100 exploration wells; and

• Begin production.

After a year and a half, six offshore and one onshore drilling rigs are operating, and two others – one offshore and one onshore – are contracted and on location and are preparing to begin drilling. Until now, 32 exploration wells have been concluded. Our first horizontal well was successfully drilled and is being prepared and equipped to start production in

EPmag.com

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May 2011

August of this year. Our first FPSO (floating production, storage, and offloading vessel) will arrive in June/July. Currently, seven exploration wells are in progress: one in the Santos Basin, five in the Campos Basin, and one in the Parnaiba Basin. An exploratory drilling campaign will begin in the Pará-Maranhão and Espírito Santo basins this year. OGX expects to reach production levels of 20,000 b/d by the end of the year, 730,000 b/d in 2015, and 1.38 MMbbl/d in 2019.

How big is OGX and how is it organized in terms of ownership? OGX’s market cap is around US $40 billion. In terms of human resources, we have 250 direct employees, 50% of whom are geologists, geophysicists, and petroleum engi- neers, most of them with more than 15 years of experience in the oil and gas industry. Besides that, there is a group of “first class” Brazilian and global service companies with more than 5,000 employees working directly for OGX. Approximately 62% of the stock belongs to EBX, repre- sented by Centennial Asset Mining Fund LLC in Nevada, and 38% of the shares are in free float.

What is the scope of OGX’s business interests and what are its most important investments to date? Our investments reached $2.7 billion in the period between July 2007 and October 2010. One of the most important investments was in recruitment of the E&P teams. They are responsible in great part for the OGX’s success. Another important project was the acquisition of more than 2,500 km (1,553 miles) of new 2-D seismic, more than 9,500 sq km (3,668 sq miles) of 3-D seismic, and more than 6,100 sq km (2,355 sq miles) of new 3-D seis- mic. All of the offshore blocks are covered by excellent quality 3-D seismic. The onshore Parnaiba Basin blocks have 2-D seismic data acquisition in process, and acquisi- tion will start in Colombia in 3Q or 4Q 2011. OGX contracted six semisubmersibles and one onshore rig that already are operating. In addition, we have one jackup rig and one onshore rig that recently were con- tracted and are ready to start operations. We also have

11

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world

VIEW

eight support vessels and four helicopters operating in logistics support to our operations. The company has completed 29 offshore and two onshore wells. Six offshore wells and one onshore well are in progress, and one offshore and one onshore well are about to spud. We have had no accidents and have achieved a success ratio of more than 90%. Our first FPSO is in the final stage of conversion in Singapore, with a planned arrival to the location in July 2011 to begin production by August 2011 through a long- term production test. All additional equipment necessary to start production already has been purchased or con- tracted, including wet christmas trees, wellhead platforms, etc. We also have ordered our second FPSO.

What types of plays are of most interest? Different types of plays are of interest depending on the basin, but OGX’s most important plays in its offshore con- cessions range from Tertiary and Upper Cretaceous sand- stones to Albian and Aptian carbonates. In the onshore Parnaíba Basin, the main plays are

related to Carboniferous and Devonian sandstones. OGX mainly focuses on the Brazilian basins. Abroad, the main areas of interest are in South Ameri- can onshore basins and in the West Africa offshore basins. We are con- stantly looking for E&P opportuni- ties both in Brazil and abroad. Currently, we are not operating any fields, but OGX will begin by August 2011 in its first oil field in the Campos Basin. In the explo-

ration concessions, OGX operates 27 of its 34 blocks. Based on the experience and capability of its E&P team, OGX prefers to act as operator, but this is not a closed question since OGX recognizes the eventual partner as a capable operator.

OGX plans to start production in 2011, reaching pro-

duction of 20,000 b/d by the end of the year. This objec- tive will be achieved when we start production in August

2011 with the arrival of the OSX-1 FPSO in the Campos

Basin. We plan to be producing approximately 730,000 b/d by 2015 and 1.38 MMbbl/d by 2019. To achieve that level of production, we will need 19 FPSOs, five tension- leg wellhead platforms, and 24 wellhead platforms. This objective is in progress, with the first equipment being bought or contracted in the market. Additional equip- ment will be constructed by OSX, the shipyard plant of the EBX Group.

What are the biggest challenges that a company the size of OGX faces? Given OGX’s aggressive drilling and production goals, the main challenges relate to the scarcity of experienced human resources and critical production equipment in the Brazilian market. OGX plans to overcome these chal- lenges by hiring, forming, and training recently graduated geologists, geophysicists, and petro-

leum engineers and to obtain its critical equipment through its sister company OSX (a shipyard under construction in partnership with Hyundai).

Is there any interest in developing unconventional resources such as shale gas or coalbed methane? Next year OGX intends to begin evaluating unconventional resources related to shale gas and coalbed methane in its Parnaíba Basin and Colombia concessions.

We expect to begin production in the second half of 2011 and will continue adding

We expect to begin production in the second half of 2011 and will continue adding value to our portfolio in Brazil.

What does the company hope to achieve in the next five to 10 years? OGX expects to be recognized as the first public private Brazilian E&P company in terms of reserves and oil and natural gas production and the second one regarding all the companies operating in Brazil, only after Petrobras. In the coming years, OGX will maintain its drilling schedule with the goal of continuing to discover new accumulations of oil and gas while also consolidating areas where discoveries have been made and initiating the production cycle. We expect to begin production in the second half of

2011 and will continue adding value to our portfolio in

Brazil through the acquisition of new areas and abroad by means of bid rounds and farm-ins.

What are some of OGX’s objectives, and how have you gone about achieving them to date? OGX’s has several objectives in its strategic plan. The objective to acquire a diversified and strong portfolio was successfully achieved through the acquisition of 34 high- potential offshore and onshore blocks. Executing an aggressive exploration drilling campaign is another objective. Our campaign includes 87 exploration wells to be drilled from September 2009 through 2013 to find and evaluate oil and gas discoveries. This objective is in progress and has been very successful to date.

May 2011

|

EPmag.com

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management

REPORT

Benchmark survey reveals looming talent shortage

A survey of the oil and gas industry uncovers the strategic importance of technical talent and forecasts a large mid-decade loss of experienced petrotechnical professionals.

mid-decade loss of experienced petrotechnical professionals. Antoine Rostand and Olivier Soupa , Schlumberger Business

Antoine Rostand and Olivier Soupa, Schlumberger Business Consulting

T he oil and gas industry, after a brief post-recession dip, again is in the midst of accelerated global growth.

This resurgence reignites a debate that often is lost during

recessions: the importance of technical talent on produc- tion growth. Since 2004, Schlumberger Business Consult- ing (SBC), the management consulting arm, has studied the global supply and demand of petrotechnical profes- sionals (PTPs) to highlight human resource best practices and to gain insights into an often misunderstood element of the global oil and gas equation – talent needs.

The survey

The annual survey of PTPs (which covers geosciences and petroleum engineering) has become a reference point for E&P executives seeking to understand industry trends and learn practical talent management strategies. Since its inception, the survey has revealed several realities:

• The late-2000s global economic downturn prompted international oil companies (IOCs) to decrease

prompted international oil companies (IOCs) to decrease The 2010 Benchmark uncovers a strong correlation between PTP

The 2010 Benchmark uncovers a strong correlation between PTP intensity and production growth. PTP intensity is defined as the number of PTPs per 1,000 operated boe/d produced versus operated production compound annual growth rate. The corre- lation has an R-squared of 0.7 and is based on a sample of 11 IOCs, which includes data from Western independents and majors for 2005-2010. (Source: “2010 SBC O&G HR Benchmark”)

14

2005-2010. (Source: “2010 SBC O&G HR Benchmark”) 14 recruitment targets more aggressively than national oil

recruitment targets more aggressively than national oil companies (NOCs); • The industry has begun to address the challenge of an aging workforce; and • Coaching has the potential to materially reduce PTP time-to-autonomy and thus the potential to accelerate competency development. This year’s survey reveals two hard truths: (1) technical talent plays a strategically important role in the oil and gas business; and (2) a large demographical shift will materi- ally reduce the number of petrotechnical professionals.

The strategic importance of talent

One of the biggest risks facing the industry is a potential future lack of qualified technical talent. Oil and gas com- panies have long felt the effect of lacking technical talent, yet few have recognized the issue as a strategic one that impacts corporate growth. Few tangible, quantifiable facts have supported this notion. The relationship between the industry’s technical talent and future production growth never has been well understood. To address this uncer- tainty, the “2010 SBC O&G HR Benchmark” has devel- oped the concept of PTP intensity – the relationship between “PTPs-per-barrel-produced” versus production growth. The PTP intensity concept enables a better quan- tification of the impact of technical talent on the industry. The 2010 Benchmark uncovers a strong correlation between PTP intensity and operated production growth. Faster-growing companies have higher PTP intensities than other companies – high PTP intensities indicate a company employs more PTPs/bbl of oil produced than companies with lower PTP intensities. The 2010 Benchmark segments companies into three peer groups – Western independents, majors, and NOCs – and highlights a striking similarity in the PTP intensities of companies within these peer groups. Majors and Western independents have the highest PTP intensity, although their experienced PTP intensity is projected to decline over the next five years. NOCs have the lowest PTP inten- sity but will experience the fastest PTP intensity growth. PTP intensity analysis shows PTP management is not merely an organization issue – it is a strategically impor- tant issue that impacts corporate growth. The analysis

May 2011

|

EPmag.com

issue – it is a strategically impor- tant issue that impacts corporate growth. The analysis May

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management

REPORT

MgtReport 4/18/11 1:26 PM Page 16 management REPORT While Western independents and majors will have higher

While Western independents and majors will have higher PTP intensities from 2010 to 2015, NOCs will experience rapid PTP intensity growth versus a general decline for Western independ- ents and majors. (“Experienced PTPs” refer to autonomous PTPs able to make original technical decisions. “All PTPs” includes young PTPs who have not reached autonomy.)

PTPs” includes young PTPs who have not reached autonomy.) The Big Crew Change is happening now.

The Big Crew Change is happening now. The graph displays the percentage of PTPs per age category globally. The retirement rate is at 20% for 55-59 year-olds, 90% for 60-64 year-olds, and 100% for 65+ year-olds. People are expected to leave the indus- try at a rate of 1.4%.

also highlights talent management challenges for Western independents and majors, which face declining PTP intensities, and NOCs, which must sustainably manage rapid PTP intensity growth.

The looming talent shortage

Oil price spikes and subsequent price collapses created a demographical gap in the oil and gas workforce. While ris- ing prices initially attracted ambitious PTP students to study the profession, price collapses and industry downsiz- ing eventually diverted talent to other professions. There is consensus in the industry that the Big Crew Change expected in the next five to 10 years will create a signifi- cant change in industry personnel. Oil and gas company

16

cant change in industry personnel. Oil and gas company 16 employees generally retire between ages 55

employees generally retire between ages 55 and 60. The average age of current employees is in the late-40s to early-50s. The 2010 Benchmark shows the Big Crew Change is real and is happening now. This personnel shift will lead to a loss of 5,000 experienced PTPs by 2014. Oil and gas supply is expected to grow to meet the needs of fast-growing emerging markets like China. To ensure production growth is not disrupted, the industry will have to ensure the handover from retiring PTPs to the new generation occurs as effectively and smoothly as possible.

Positive signposts

Despite the imminent talent shortage, positive signposts are appearing. First, demand for graduates is recovering and outpacing the pessimistic forecasts of a year ago. 2011 PTP recruit- ment targets are 15% higher than levels planned in 2009. Second, universities contain a previously untapped tal- ent resource – females. Female PTP numbers at compa- nies have increased since 2006. At NOCs, female ratios rose to 27% from 19% (geosciences) and to 17% from 15% (petroleum engineering). At independents, similar increases have been observed. Finally, mid-career PTP demand is soaring – primarily driven by the need for expertise in unconventional oil and gas (IOCs) and enhanced oil recovery (NOCs). These events signal that the industry is taking action – but a new landscape is emerging.

is taking action – but a new landscape is emerging. New landscape, new mindset The market

New landscape, new mindset

The market for experienced PTPs will tighten, resulting in staff poaching, salary escalation, and higher attrition. These issues will have serious consequences on projects and production capacity. 2010 Benchmark respondents reported that staffing issues will delay projects and may drive increased risk appetite. Mitigation approaches vary:

independents rely on technology to boost PTP productiv- ity, majors standardize projects, and NOCs outsource non- core competencies. Compounding the looming shortage of PTP talent is a shift toward more complex reservoirs and a more strin- gent regulatory environment post-Macondo. In this con- text, companies need to adapt quickly to manage their talent or risk losing their competitive advantage. Compa- nies need to elevate talent

management from merely an organizational issue to a strategic one that can have major implications on cor- porate growth.

that can have major implications on cor- porate growth. There is more to the story… READ
There is more to the story… READ MORE ONLINE EPmag .com May 2011 | EPmag.com
There is more
to the story…
READ MORE ONLINE
EPmag .com
May 2011
|
EPmag.com
implications on cor- porate growth. There is more to the story… READ MORE ONLINE EPmag .com

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18-22 DOF-IBM_18-22 DOF-IBM 4/18/11 1:26 PM Page 18

18-22 DOF-IBM_18-22 DOF-IBM 4/18/11 1:26 PM Page 18

digital

OIL FIELD

Collaboration is key enabler in Russia’s oil, gas field efficiency

Working with IBM and a Russian university, Gazprom Neft-NTTS hopes to advance the digital oilfield concept.

Steve Edwards, IBM Global Business Services

A recent IBM study involving more than 100 corporate- level oil and gas industry executives in 28 countries

revealed that they expect to strategically partner with other organizations for R&D more than twice as much in the year 2030 as they do today. They also expect to conduct 38% less research in-house and 44% less through outsourcing. Shifts to more challenging frontiers mean future R&D will be too complex and costly for any one company to manage on its own. Forward-thinking companies are increasingly seeking to partner with outside entities. In December 2010, Gazprom Neft-NTTS signed an agreement with Russian State Gubkin Oil and Gas Univer- sity and IBM to expand its existing collaborative efforts. company to manage on its own. Forward-thinking companies are The agreement is focused on implementing concepts The agreement is focused on implementing concepts and IT solutions that will help Gazprom Neft develop and oper- ate oil and gas fields more efficiently. This reflects a growing recognition that technology is a key “change agent” in today’s oil and gas fields. Energy demand is expected to increase considerably over the next two decades, driven primarily by demand from emerging countries with burgeoning economic power. Although governments and companies are investigating alternative sources to fossil fuels, the biggest challenge over the next 20 years will be figuring out how to extract more oil and gas from existing sources and discover new sources by bet- ter harnessing technology. As part of the Gazprom Neft agreement, specialized IT solutions will be developed to advance the digital oilfield concept by enabling integrated intelligent management of oil and gas field development and operations. The solu- tions also will result in the creation of a centralized storage and processing environment for geological, geophysical, and field data as well as a knowledge management system.

High-performance collaboration

The first project will be to build a high-performance col- laboration environment for approximately 200 geologists. The new environment will enable geologists to work together on building hydrodynamic 3-D/4-D models and efficiently interpret seismic study data using cloud com-

18

efficiently interpret seismic study data using cloud com- 18 puting technologies, distributed resource access, and model

puting technologies, distributed resource access, and model calculation and interpretation. Support for this resource-intensive, high-performance data processing will come from IBM supercomputers at Gubkin Oil and Gas University. By integrating seismic and geologic data from multiple sources and using advanced data modeling combined with supercomputing (including seismic cloud computing or

Gazprom Neft-NTTS has signed an agreement with Gubkin Oil and Gas University and IBM to
Gazprom Neft-NTTS has signed an agreement with
Gubkin Oil and Gas University and IBM to implement
IT solutions to develop and operate oil and gas fields
more efficiently. (Images courtesy of IBM)

above-petascale resources), companies can find very remote reservoirs. The large Tupi field 180 miles (288 km) off the coast of Brazil is a prime example – results from drilling an exploratory well confirm that this discov- ery could increase Brazil’s current proven reserves nearly six-fold, but the oil is underneath 7,000 ft (2,135 m) of water, 10,000 ft (3,050 m) of sand and rock, and 6,600 ft (2,013 m, or more than a mile) of salt. In addition to the collaboration environment, the indus- try-academia partnership embodied by the Gazprom Neft agreement will yield solutions for a unified field data stor- age and processing space and a system for real-time moni- toring, optimization, and forecasting of field and individual well behavior.

May 2011

|

EPmag.com

18-22 DOF-IBM_18-22 DOF-IBM 4/18/11 1:26 PM Page 19

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18-22 DOF-IBM_18-22 DOF-IBM 4/18/11 1:26 PM Page 21
18-22 DOF-IBM_18-22 DOF-IBM 4/18/11 1:26 PM Page 21 To optimize reservoirs that already have been identified,

To optimize reservoirs that already have been identified,

a variety of enhanced oil recovery techniques have been

developed. However, each technique adds more physical variables to manage and more volumes to estimate and track. By using advanced visualization to render larger amounts of complex data in more intuitive ways, compa- nies can achieve improved decision-making and faster time to oil. And by drawing on spatial and temporal data assimilation from time-lapse seismic systems, companies like Gazprom can run predictive assumptions that dramat- ically increase efficiency in extracting oil and gas. All of these approaches are very data-intensive. In fact,

a single oil field can generate up to one terabyte of data

daily (the equivalent of 109 movies on DVD). Fortunately, advances continue to be made in data analytics and pro- cessing. The Watson computer, recently seen on the game show “Jeopardy!” taking on two of the quiz show’s top-win- ning players, represents a major step forward in deep ana- lytics and system design that can be applied to the oil and gas industry. Watson – the result of 100 years of computing at IBM – can collect, process, and understand data based on natural language within a matter of seconds, offering real potential for improving exploration, production, asset management, and maintenance.

The Gazprom Neft solutions will be based on IBM’s Chemical & Petroleum Industry Information Framework, which provides real-time integration across multiple dis- parate systems using industry standards. The framework

digital

OIL FIELD

Increased automation and collaboration will address the looming skills gap.

enables integrated operations with a reference semantic model based on industry standards, a rules engine, and a visualization model. Completing this technical validation means the solutions will meet criteria for integration with the framework’s production operations domain; IBM soft- ware; and industry standards such as OPC, ANSI/ISA- 88/ANSI/ISA-95, ISO15926, and IEEE 61970/68. The framework also will give Gazprom Neft real-time visibility into production, equipment, and performance informa- tion across its assets. This will help leverage the company’s investment in existing applications and platforms, main- taining a best-of-breed environment via the framework ver- sus point-to-point interfaces.

Freeing employees for high-skill tasks

Human capital is another critical challenge in the oil and gas industry. The same IBM study yielded a surprising finding in this area – namely, that concern about work- force skills availability is decreasing. Yet other studies show that executives are very concerned about the ability to recruit and retain skilled employees and that the oil and gas industry will face growing demand for technologists, strategists, scientists, and multi-energy and risk-manage- ment experts – an order that will be hard to fill because other industries simultaneously compete for these same skillsets as the oil and gas industry moves closer to the “Great Crew Change.” The increased automation and collaboration made pos- sible by digital oil fields can help address this looming skills gap. It enables more effective data collection, moni- toring, communications, and knowledge and information sharing, which enables less-experienced employees to ben- efit from the expertise of seasoned veterans and frees the time for all skilled employees to focus more of their efforts on collaboration, innovation, and continuous process improvement.

No alternative but to get smarter

The odds of finding new sources of oil and gas are becom- ing more challenging, and the need to optimize both the upstream and downstream is becoming more pressing. In response, executives who watch the bottom line at major oil and gas companies worldwide will insist on more visibil- ity into the financial impact of operating decisions. The harder it becomes to find oil and gas reserves and the cost- lier it becomes to offset risk, the more it makes sense to search for new reserves by collaborating with outside part- ners and turning to the latest technologies.

new reserves by collaborating with outside part- ners and turning to the latest technologies . EPmag.com
new reserves by collaborating with outside part- ners and turning to the latest technologies . EPmag.com

EPmag.com

|

May 2011

new reserves by collaborating with outside part- ners and turning to the latest technologies . EPmag.com

21

new reserves by collaborating with outside part- ners and turning to the latest technologies . EPmag.com

18-22 DOF-IBM_18-22 DOF-IBM 4/18/11 1:26 PM Page 22

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23-26 DOF-paradigm_23-26 DOF-paradigm 4/18/11 1:27 PM Page 23

digital

OIL FIELD

GPUs prove their worth in seismic interpretation

Seismic interpreters are encountering record-breaking performance by using GPUs for interactive computation and rendering.

Huw James, Evgeny Ragoza, and Tatyana Kostrova, Paradigm

T he latest 3-D graphics cards can have more than 400 compute cores and up to 6 GB of graphics memory.

This contrasts with 128 GB of RAM and 16 compute cores on the processor board of a high-end workstation. It nor- mally is assumed that the central processing units (CPUs) are the compute engine in a workstation, but from the numbers above anyone can guess that 400 simple com- pute cores in a graphics processing unit (GPU) can rival 16 complex cores in the CPUs. Today 3-D graphics card specifications are the result of regular and fast-paced doubling of the number of cores and memory sizes over several generations. This latest doubling of memory size to 6 GB means that for the first time there is enough memory on the graphics card to store meaningful amounts of seismic data instead of just on the processor board of a high-end workstation. It nor- graphical representations of those data. The graphical representations of those data. The power of these 400+ cores can be used for computation and volume rendering instead of just painting graphics on the worksta- tion’s screens. The Barnett shale in the Fort Worth Basin of North Texas currently is one of the most actively pursued shale plays in the US. It is overlain by carbonates and shales of the Pennsylvanian Marble Falls group. Since the Ellen- burger below and the Marble Falls above are both water- rich, it is important to avoid generating fractures that penetrate these two formations by opening existing faults or by operating too close to weakened areas over sink- holes.

Computation

The 3-D seismic volume in a reflection amplitude version is 750 inlines, 750 crosslines, and 500 depth samples for a vol- ume size of just less than 300 MB. The Barnett interval lies in the middle of the depth range and is bounded by strong red and blue reflectors at top and bottom. This volume dis- play has some opacity and lighting so the apparent “sec- tion” has some depth of a few lines. There is evidence of faulting at the left of the Barnett interval and hints of fault- ing elsewhere.

EPmag.com

|

May 2011

and hints of fault- ing elsewhere. EPmag.com | May 2011 A volume display of reflection amplitude

A

volume display of reflection amplitude shows the Barnett interval

in

the middle of the depth range. (Images courtesy of Paradigm)

the middle of the depth range. (Images courtesy of Paradigm) The volume display of reflection amplitude

The volume display of reflection amplitude in the Barnett interval

in the middle of the depth range is shown as instantaneous fre-

quency, with lighting and modest opacity.

This volume easily can be placed completely into the GPU memory, where it can be transformed to instanta- neous frequency instantly. The faulted region at the left of the interval is composed of several separate slivers. Faults that cross the whole interval can be identified clearly. The apparent resolution in depth appears to be doubled. Lighting acts as spatial derivative; the mild opacity allows a few inlines to be averaged, which acts as a smoother. The result of this is a more interpretable structural image, and attribute computation is instantaneous for this volume size. This speed offers interpreters the freedom to experi- ment with effects to generate the most interpretable image, which needs to be experienced to get the full impact. Bigger volumes still are quick, just not instanta- neous. Volumes larger than GPU memory can be ren-

full impact. Bigger volumes still are quick, just not instanta- neous. Volumes larger than GPU memory

23

23-26 DOF-paradigm_23-26 DOF-paradigm 4/18/11 1:27 PM Page 24

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23-26 DOF-paradigm_23-26 DOF-paradigm 4/18/11 1:27 PM Page 25 digital OIL FIELD dered; the rendering just has

digital

OIL FIELD

DOF-paradigm 4/18/11 1:27 PM Page 25 digital OIL FIELD dered; the rendering just has to be

dered; the rendering just has to be staged. The results of attribute computation usually are not saved; it is quicker to regen- erate the results than to save and restore the results. This sounds wasteful, but it is not. The 400 cores in the GPU have an extremely potent

capability, but they need data to process. This makes memory space in the GPU extremely valuable, so good housekeeping is important. Only data that truly are needed to be saved onboard the GPU should be kept, and data that need to be saved anywhere should be returned to the CPU. For the CPU, memory capacity is large, though compute power still is scarce. It will take some time to adapt to this change in the value of resources between the GPU and the CPU.

A detailed volume sculpt of the Barnett interval is rendered with variable opacity.

of the Barnett interval is rendered with variable opacity. Volume rendering Historically, volume rendering has been

Volume rendering

Historically, volume rendering has been accomplished by loading the volume to CPU memory and then processing it on the CPU to generate graphics data to send to the GPU across a relatively slow CPU-GPU interface. In such a sys- tem, every time the picture content changes, the display data have to be regen- erated and retransmitted, leading to slower interaction. With 6 GB of graphics memory, whole volumes or significantly sized trimmed volumes can be placed into GPU memory and then rendered using algorithms tailored to full-band- width seismic data rather than general purpose geometry and images. Changes in display content can be accomplished completely onboard the GPU with no need to reload data until a different volume is to be displayed. In this way, traf- fic across a relatively slow interface can be avoided, and interactivity can be kept high. This volume can be rotated, scaled, and edited for color and opacity interac- tively in real time. The whole volume is rendered even though the interval appears limited. This takes a huge number of operations, one for each data point in the volume. With the latest hardware, rendering can be done eight times faster than with the previous generation of graphics cards. The 300-MB volume example was drawn at 15 frames per second. This speed provides ease of use since a mistake in a parameter setting has negligible consequences and can be corrected easily. This reduces user stress, meaning these interactive devices can be handled with a more creative, trial-and-error approach instead of the control required to drive a conventional, slow system. Once a good view is obtained, the quality of the rendering can be improved by using the proces- sor power of the GPU cores. With data placed into GPU memory, the compute capacity of the GPU cores can be exploited fully. Results can be shown directly to the user with no need to return them to CPU memory. GPUs can be expected to take on more of the processing burden, favoring direct interaction with the interpreter.

burden, favoring direct interaction with the interpreter. Acknowledgements We would like to thank Marathon Oil Corp.

Acknowledgements We would like to thank Marathon Oil Corp. for providing the Barnett shale data.

EPmag.com

|

May 2011

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27-28 ExpCOL_27-28 ExpCOL 4/18/11 1:27 PM Page 27

exploration

TECHNOLOGY It is time to disrupt the status quo TerraSpark has grown from a small
TECHNOLOGY
It is time to disrupt the status quo
TerraSpark has grown from a small R&D outfit to a software solutions
provider ready to show the industry what it can do.
V isualization technology in the exploration seg-
ment of the oil and gas industry is no longer the
RHONDA DUEY
new shiny toy. Many companies have adopted the tech-
Senior Editor
nology as a way for asset teams to collaborate and inter-
act with their geophysical data to improve their
understanding of the reservoir.
But for the past few years, a start-up company called
TerraSpark quietly has been taking the visualization
concept to new, and what some might say disruptive,
extremes. Founded by Geoff Dorn, who took ARCO’s
visualization technology to the University of Colorado
after BP purchased his company, TerraSpark has been
pioneering innovative solutions to image complex fault-
ing and deepwater subsalt plays. Its domain transforma-
tion technology removes all of the structure from a
seismic volume so interpreters can view the original
depositional features of the play.
Since March 2010, when the company got invest-
ment money from Limerock Partners,
rduey@hartenergy.com
Read more commentary at
EPmag.com
once was done on paper into a computing environ-
ment. “We’re trying to change how people approach
interpretation at a basic level,” he said. “Interpreters
should always be working in 3-D with complete surfaces.
That’s quite a leap for them to make.”
Already TerraSpark has some early adopter “believ-
ers,” including True Oil, which has been pursuing an oil
shale play in North America. The success of wells in this
area hinges on the ability to identify regions with a
high density of natural fractures. True geoscien-
TerraSpark has grown from eight to 20
employees and has opened a second
office in Houston. It was time to take the
company from a pure R&D player to a
software solutions provider. Dorn hired
Bob Stevenson, who has worked for
some of the industry’s most influential
software providers, to serve as COO for
TerraSpark as it takes its next logical step.
“We’re trying
to change how
people approach
interpretation at a
basic level.”
Geoff Dorn,
TerraSpark
tists used a combination of TerraSpark’s high-
resolution fault imaging technology and an
attribute called Voxel Density Region
Highlighting. This created a volume with
clouds of predicted high natural fracture
density. True Oil’s geoscientists then used
TerraSpark’s integrated Well Path Planner
to create an initial conceptual well path
within the attribute and seismic volumes.
Stevenson was lured to TerraSpark by the com-
mercialization opportunities. “When I got the demon-
stration of the product, I could see the power in it, and I
could also see the challenges involved in getting this
kind of a solution into the commercial phase,” he said.
One of the primary challenges in commercializing
software, Stevenson said, is to make it more user-
friendly. Another issue is to help potential clients wrap
their brains around the potential of the technology.
“This is wonderful technology that can do things that
people said can’t be done,” he said. “It’s a great tech-
nology, but we have to understand the interpreters’
challenges and problems and show them how the tech-
nology can help them in that realm.”
Dorn added that ever since computers became explo-
ration tools, they have mostly been used to convert what
After running TerraSpark’s InsideEarth soft-
ware, True Oil not only drilled a successful well on the
new attribute data but also identified a number of
other prospects for subsequent drilling in the trend.
“The success of this well vindicates their purchase of
our software by providing a successful way to explore
for fractures in this play,” Dorn said.
Success stories like that will help with the commer-
cialization process. “It’s a great story,” Stevenson said.
“We just need to get out there and show them we have
the solution.
“It’s not good enough to show them better, faster,
cheaper. We need to have a
quantitative leap of benefits
to disrupt their current
operations.”
We need to have a quantitative leap of benefits to disrupt their current operations.” EPmag.com |

EPmag.com

|

May 2011

27

We need to have a quantitative leap of benefits to disrupt their current operations.” EPmag.com |
27-28 ExpCOL_27-28 ExpCOL 4/18/11 1:27 PM Page 28 , . . k I S ti
27-28 ExpCOL_27-28 ExpCOL 4/18/11 1:27 PM Page 28
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29-30 WellConstruction_29-30 WellConstruction 4/18/11 1:27 PM Page 29

29-30 WellConstruction_29-30 WellConstruction 4/18/11 1:27 PM Page 29

well

CONSTRUCTION Unconventional well construction moves to Poland Activity is heating up in Poland’s Baltic Basin.
CONSTRUCTION
Unconventional well construction
moves to Poland
Activity is heating up in Poland’s Baltic Basin.
O perators and service companies alike are gearing
up for what they believe is the next big swing in
TAYVIS DUNNAHOE
unconventional gas development.
The big question for the last couple of years has been
where to go outside of North America. Today, all indica-
tions show that Poland is the likely candidate. With
more than 90% of its gas being imported from Russia,
Poland is actively pursuing domestic resource develop-
ment. The country currently has an agreement with
Russia to accept delivery of 11 Bcm per annum from
2012 to 2022. Although early estimates of development
costs have been much higher than standard operations
in North America, these prices may not hold true – at
least in the long term.
On a recent visit to Warsaw, Poland, I met with a num-
ber of experts in the region who talked about Poland’s
potential.
The European business model allows companies to
acquire mineral rights for large concessions of land. The
largest concessions in Poland are equal to about 290,000
acres and were acquired with work commitments to con-
duct a certain amount of seismic and to drill one or two
wells. “This is pretty remarkable when compared with
the cost of acquiring acreage in North America,” said
James Elston, director, Palladian Energy Ltd.
Due to the size of each concession, well planning is
expected to go much more smoothly than in North
America, where lease lines often limit the extent to
which laterals can be drilled, thereby limiting reservoir
contact. On the other hand, shale development in
Europe is very high risk. “This is certainly true for
Poland, but it seems to be de-risking very rapidly,”
Elston said. In Poland, there are around 15 million
acres with shale gas potential – about five times the size
of the Barnett. “Prior to ConocoPhillips’ drilling opera-
tions last summer, this area had a sum total of 20 wells
that penetrated the shale,” he added. Compared to the
large amount of drilling in most North American plays
over the last 100 years, very little is known about the
shale being surveyed in Poland. Relying on Soviet-era
logs has been helpful, but most of the activity in Poland
today revolves around gathering rock for analysis.
Senior Editor
tdunnahoe@hartenergy.com
Read more commentary at
EPmag.com
“Right now we’re in the phase of drilling science
wells,” said Wolf Regener, CEO, BNK Petroleum. “When
we go into development mode, then we’re going to
want to bring in modern, North American-standard rigs
that are built to EU specs.”
This could be a boon for the forward looking drilling
contractor. “I think it is a tremendous opportunity for
North American drillers who can address the different
challenges there are in Europe,” Elston said.
In time, completions technology will be critical. “Were
this market to take off, in terms of North American-style
shale development, then equipment might become a
problem,” said Mark Swift, area manager continental
Europe, Halliburton. “Right now, there’s about 100,000
hp in Europe. Compare that to the US, where’s there’s
around 1 million or 1.5 million. It’s massive. So it would
not take much to make this (market) tight,” he said.
Halliburton has got an early start in Poland’s uncon-
ventional development and currently supplies about
40% of the available horsepower in Europe. “We don’t
envision a problem in terms of supporting this explo-
ration phase,” Swift said.
According to Elston, the winners in European shale
development will be those he calls “AFE Black Belts,”
those companies with the ability to attack the cost base
from day one while maintaining high safety and envi-
ronmental standards.
The opportunities are good in
Europe, but it will require an
aggressive commitment to
move in people, equipment,
and expertise over the next
few years.
aggressive commitment to move in people, equipment, and expertise over the next few years. EPmag.com |

EPmag.com

|

May 2011

29

aggressive commitment to move in people, equipment, and expertise over the next few years. EPmag.com |

29-30 WellConstruction_Layout 1 4/18/11 10:23 PM Page 30

mRc McJunkin Red Man Corporation m K C MIDFIELD I Transmarkq° p mnc A nn
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31 PRODcol_31 PRODcol 4/18/11 1:27 PM Page 31

31 PRODcol_31 PRODcol 4/18/11 1:27 PM Page 31

production

OPTIMIZATION Bugs, bacteria join the battle There are several potential solutions worth investigating to stop
OPTIMIZATION
Bugs, bacteria join the battle
There are several potential solutions worth investigating to stop the freezing
process without the use of chemicals.
I n the technological battlefield of increased oil recov-
ery (IOR), there are now beetles and bacteria out
MARK THOMAS
there fighting in your corner. Although the imagina-
tion does start to run riot with news of Scandinavian
beetles potentially coming to the aid of freezing
pipelines, the concept is sound.
When a major player such as Maersk Oil enters into
a collaborative four-year project that aims to boost IOR
and prolong North Sea (and eventually elsewhere)
operations by using biotechnology to create new solu-
tions and help overcome the challenges of mature
field production, we must take note.
After all, we know the company does not do things by
half-measures in this area – witness its recent announce-
ment of a US $100 million investment over the next 10
years in a new research facility at the Qatar Science and
Technology Park in Doha. This will create a world-class
center for developing technologies for increased and
enhanced oil recovery, initially focusing on the 300,000
b/d Al Shaheen field.
Maersk is doing this via a long-term collaboration
with Dutch research association TNO, with the focus
on long horizontal wells as well as IOR through inte-
grated operations and production optimization. “Mas-
tering increased and enhanced oil recovery (EOR) is
key to unlocking future hydrocarbons in tight reser-
voirs,” the company said.
The science connection at Maersk is highly valued.
Its “Biotechnology in Oil Recovery,” or BioRec, proj-
ect also was announced recently, with the aim of
answering those eye-catching questions: Can
Scandinavian beetle protein help keep
International Editor
mthomas@hartenergy.com
Read more commentary at
EPmag.com
gas pipelines from freezing, and can bacteria and
enzymes boost oil production in the Danish North?
BioRec is a joint-industry project with Maersk Oil, the
Danish Advanced Technology Foundation (Højte-
knologifonden), global biotech company Novozymes,
Danish oil company DONG E&P, and three institutions
– the Technical University of Denmark, the Danish
Technological Institute, and Roskilde University.
A
key aspect is that this project goes further than
many others by linking separate industries – oil and
biotechnology – through companies and institutions
internationally recognised for innovation.
Initial topics include:
Can enzymes and bacteria be used for EOR by feed-
ing and growing in the reservoir to change the oil’s
ability to flow?
Can bacteria
and enzymes boost
oil production in the
Danish North?
Can proteins produced by coldwater fish or Scandi-
navian beetles to stop the creatures from freezing be
replicated and used as a hydrate inhibition tool to
stop ice from forming inside pipelines and wells?
BioRec’s aim is to be technically able to implement
pilot tests at relevant reservoirs offshore Denmark
within four years.
When we remember that it is accepted practice (but
highly unacceptable) to leave half of a reservoir’s oil
behind when it is abandoned, such projects take on
great significance.
EOR through injecting bacteria into the reservoir to
change the oil’s composition, controlling pipeline cor-
rosion through limiting bacterial growth via enzymes
and other bacteria, or inhibiting
hydrates by using animal-based
proteins instead of chemicals
all are potential solutions worth
investigating.
proteins instead of chemicals all are potential solutions worth investigating. • EPmag.com | May 2011 31

EPmag.com

|

May 2011

31

proteins instead of chemicals all are potential solutions worth investigating. • EPmag.com | May 2011 31

32-43 COVERstory-MAY_32-43 COVERstory-MAY 4/18/11 1:28 PM Page 32

COVERstory-MAY_32-43 COVERstory-MAY 4/18/11 1:28 PM Page 32 COVER STORY: DEEPWATER DEEPWATER RAISES THE BAR FOR
COVER STORY: DEEPWATER DEEPWATER RAISES THE BAR FOR TECHNOLOGY Judy Murray, Editor A s the
COVER STORY:
DEEPWATER
DEEPWATER
RAISES THE BAR FOR TECHNOLOGY
Judy Murray, Editor
A s the industry looks at the challenges presented by
deepwater operations, it is apparent that in many
cases today’s challenges are very much like those of the
past few decades.
Taken at face value, such a statement might imply that
the industry has not made significant progress, but noth-
ing could be further from the truth. Technology advances
have extended the reach of E&P operations into deeper
and more inhospitable operating environments. And as
the industry continues to push the limits of current capa-
bilities, there will continue to be innovations that provide
improvements in safety, efficiency, and productivity.
Macondo
The Macondo blowout in the Gulf of Mexico (GoM) on
April 20, 2010, was a defining incident for the industry.
Post-Macondo operations will reflect more stringent regu-
latory and safety requirements. Though the mainstream
press would have people believe otherwise, these are
changes the industry is embracing.
Robert Patterson, vice president of upstream major
projects, Americas, at Shell, lists the loss of faith in the
industry’s ability to work safely as one of the biggest deep-
water challenges. “We know how to safely and responsibly
find, drill, develop, and operate fields in deep water. But
we have lost some confidence with the public. I think that
is one of our big challenges in deep water. We need to
earn back the trust that we can develop this frontier
area and other frontier areas as well.”
Shell has the distinction of bringing onstream the
deepest drilling and production platform in the
world with the Perdido spar in the GoM. That proj-
ect was executed with 10.5 million man hours with
no lost time incidents recorded. Impressive as this
achievement is, the safety record is not enough.
“Safety is a matter of ensuring standards and proce-
dures are complied with and showing consistent compe-
tence. It is about investing in a culture that supports safe
and responsible delivery,” Patterson said. “Advertising
won’t be sufficient to win back public confidence. We
have to demonstrably do our work well every day.”
Øivind Reinertsen, head of US offshore for Statoil,
agrees. “It is important for the industry to come back into
deep water and start the business again,” he said. “We
have been working diligently with the regulators for the
past year since Macondo to determine what it takes to go
back to work in deep water, and I think together we have
been able to identify what it takes.”
The first priority, of course, is to be able to prevent such
an accident. “We have been able to get the necessary
equipment in place to handle a blowout like we saw with
Macondo,” Reinertsen said. Over the past year, Statoil has
worked to verify all of its equipment and can document it
according to the new rules and regulations that apply to
these drilling units.
GE Oil & Gas is investing in technology for improving
safety as well. Manuel Terranova, senior vice president,
regional operations and global sales, said his company is
trying to bring the aviation mindset to oil and gas. “It oper-
ates under a tighter regulatory regime than what we’ve
been used to,” he said. “We’re trying to leverage from that
experience. Specifically, we are looking at the shearing
capacity of our rams on the blowout preventer. We have
upgraded our shearing capacity to 5,000 psi as a first step.
We are also rolling out a hydrostatically augmented
shearing capacity. This is going to use the hyperbaric,
or hydrostatic, pressure at depth to close the ram.”
The Pride Angola in West Africa is currently on a five-
year contract with Total. (Photo by Ken Childress Pho-
tography, courtesy of Pride International)
32
May 2011
|
EPmag.com
contract with Total. (Photo by Ken Childress Pho- tography, courtesy of Pride International) 32 May 2011
contract with Total. (Photo by Ken Childress Pho- tography, courtesy of Pride International) 32 May 2011
COVER STORY: DEEPWATER As water depths increase, so do the challenges associated with extracting reserves.
COVER STORY:
DEEPWATER
As water depths increase, so do the challenges
associated with extracting reserves.
Another improvement GE has made is to place more
position indication sensors on the equipment itself.
“We’re also putting sensors in the BOP core that will relay
its position to topsides, so there will be a visual inspection
point if the ROV has to get sent down.”
The other GE product in development is called the
Drilling I-Box, a data logger that captures housekeeping
events on the BOP. “Every time a valve or solenoid or
some kind of element on the BOP moves, this unit will
capture that event, much like a black box would capture
the event on an airplane.” The data are logged, making
them available for analytics at a later time. The hope is
that this housekeeping data will be useful for predicting
and preventing failures.
“This whole notion of capturing the data and then uti-
lizing it to make predictive suggestions to the operator to
avoid nonproductive time (NPT) on the rig is something
that we’re leveraging from GE businesses,” Terranova
said. “We know it works in those verticals, and we’re very
confident it’s going to work here.”
it is 6,000 or 5,000 or 4,000 miles and then make sure we
schedule the service appropriately before equipment
problems occur. We took the best reliability experts from
the aerospace industry to change the game because the
first thing you want to do on an airplane is arrive and get
off! Reliability is the same for us here.”
A
second challenge is delivering real-time data to help
drillers monitor equipment status and allow geologists
steer to, and in, the reservoir. Real-time data improve
drilling operations by presenting decision-makers with
critical information while drilling is actually happening.
A
third drilling challenge is to achieve greater operator
Drilling technology
Jeremy Lofts, senior director of strategic business develop-
ment at Baker Hughes, identified drilling challenges as
one of the major hurdles for deepwater operations. Lofts,
based in Brazil, said Baker Hughes is performing more
than 50% of the drilling for Petrobras, mostly in deep
water. “We have to have very sophisticated drilling and
evaluation systems here. The research and design that is
in our technology is huge,” he said. “In deep water we
are measuring a whole host of things, and each sensor
includes complex electronics and mechanics – arguably
more complex than getting us to the moon! Reliability
therefore is critical. If one part fails, it often means a bit
trip that not only causes 12 hours lost time but more
importantly may mean losing data and information over
that interval.” A hole in geological data reduces under-
standing of the reservoir, he said. “When wells are being
drilled 20 km (13 miles) apart, the operator needs all
those data.”
One way Baker Hughes is improving reliability, Lofts
said, is by taking a fresh look at what reliability means.
“Statistical analysis of each component life is helping to
identify and reduce this risk,” he said, explaining, “retir-
ing equipment before it fails is a bit like taking your car
for a service at a pre-set interval. We’ve got to work out if
cost efficiency through improved ROP. “We’re finding in
Brazil that active monitoring of the drillstring and the bit
are allowing us to fine-tune and improve ROP signifi-
cantly,” Lofts said. “There has already been a big break-
through, and as we go forward, further gains in active
real-time drillstring monitoring and technology, along
with the right expertise, will further speed up the ROP
and bit life, delivering a magnitude of change.
Skip Mick, project manager, GoM deep water, Noble
Energy, believes the complexity of drilling operations
often is misunderstood. “There is a lot more science and
technology involved in drilling than most people under-
stand, and the process brings with it a lot of technical
complexity, which can translate to risk if not handled cor-
rectly.” Well design is critical, Mick said. “A ‘first princi-
ple’ in drilling is not to let the well to get into a situation
where it can blow out.”
Deepwater wells cost a couple of hundred million dol-
lars to drill, and a uncontrolled blowout could cost many
billions of dollars in damage, not to mention the intangi-
ble cost to the company’s reputation.
Before a drilling program can begin, it is important to
understand the reservoir. This is particularly important in
deep water because of the inherently high drilling costs.
Mick identified reservoir definition as one of the primary
deepwater challenges. “Reservoir analysis clearly domi-
nates the risk in developing deepwater fields,” he said.
More wells can cost several hundred million dollars,
Mick explained, pointing out that this impacts not only
the economics of the drilling program but other deci-
sions such as development timing (project cycle time),
reservoir size and production rate, and whether to use
wet or dry trees. Each of these has an effect on overall
project net present value.
EPmag.com
EPmag.com
|
|
May 2011
May 2011
33
33

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32-43 COVERstory-MAY_32-43 COVERstory-MAY 4/18/11 1:28 PM Page 34
COVERstory-MAY_32-43 COVERstory-MAY 4/18/11 1:28 PM Page 34 COVER STORY: DEEPWATER Part of the solution, Robinson said,

COVER STORY:

DEEPWATER

4/18/11 1:28 PM Page 34 COVER STORY: DEEPWATER Part of the solution, Robinson said, is to

Part of the solution, Robinson said, is to get more knowledge and intelligence from produc- tion. This is especially important in terms of flow assurance. “As we get into deeper water, we get a lot more hydrostatic head,” he said. “We have a lot more concerns over what happens with fric- tion. The challenges multiply. We need to under- stand an awful lot more of what’s going on.” Intelligence comes from physical meters and sensors as well as virtual meters that use algo- rithms linked to existing sensors, networking them together and linking them to higher accu- racy meters such as FMC’s MPM multiphase

to higher accu- racy meters such as FMC’s MPM multiphase meter. “These meters are clever because

meter. “These meters are clever because they can self-cali- brate and become more accurate,” Robinson said. Another way FMC is working toward improving produc- tion is through subsea separation. R&D efforts are directed at moving from primary to secondary separation. “We can get more hydrocarbons from the reservoir by placing the ‘factory’ on the seabed; imagine where we can place a floating production system, or a lot of that tech- nology, on the seabed. By doing that, we make the whole system more efficient. Therefore, we can get more hydro- carbons out of the ground,” Robinson said. An associated technology challenge for subsea single- phase and multiphase pumps is high power distribution to individually control the many pumps and compressors needed for a larger subsea operation. “A big technology gap is subsea variable speed drives to remotely control each unique pump without having it directly connected to a power supply with big cables,” he said.

ABOVE: Shell is investing in Mars B in the GoM where the company says new on-bottom seismic has unlocked opportunity by delivering improving imaging. (Image courtesy of Shell) RIGHT: FMC Technolo- gies’ smart subsea controls and data management technology accumulates and performs real-time analysis on vast amounts of ABOVE: Shell is investing in Mars B in the GoM where the company data. (Image courtesy data. (Image courtesy of FMC Technologies)

Technology, efficiency

One way to extend the limits of regional capabilities is technology transfer. Statoil, for example, is taking a look at some of the technology developed for the North Sea that can be re-qualified for the GoM. Reinertsen pointed to water injection for pressure maintenance, common in the North Sea and now begin- ning to be applied in the deepwater GoM, as one exam- ple. Another is subsea processing and boosting equipment used in the North Sea and offshore West Africa that has potential in the GoM. While technology transfer will help, Reinertsen said, new technology needs to be developed to improve pro- duction efficiency. “We need to develop technology to access more of the reservoir for fewer dollars spent,” he said. “Today there have been billions of barrels discovered in the deepwater GoM, but the recovery factor is 10% to 15% in some of these fields. When we have billions of bar- rels, we cannot leave 85% in the ground.” Mike Robinson, FMC Technologies sales and marketing manager for Australia and New Zealand, identifies maxi- mizing recovery from both greenfield and brownfield deepwater assets as one of his company’s primary technol- ogy goals.

34

greenfield and brownfield deepwater assets as one of his company’s primary technol- ogy goals. 34 May

May 2011

|

EPmag.com

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32-43 COVERstory-MAY_32-43 COVERstory-MAY 4/18/11 1:28 PM Page 35
I/.k2 BAKER HUGHES AC% 4 1P ? ,t 4 we are the peop e of
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Ir'
Justin Vinson , Engineering Manager
We understand the risk of plugging and compaction in an openhole
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Leveraging Baker Hughes' patented
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technology is taking shape quite nicely. www.bakerhughes.com d 1 2011 Baku Hu yhes Innupaxed. All Rlghls

32-43 COVERstory-MAY_32-43 COVERstory-MAY 4/18/11 1:28 PM Page 36

32-43 COVERstory-MAY_32-43 COVERstory-MAY 4/18/11 1:28 PM Page 36
COVERstory-MAY_32-43 COVERstory-MAY 4/18/11 1:28 PM Page 36 COVER STORY: DEEPWATER Another technology challenge Robinson

COVER STORY:

DEEPWATER

Another technology challenge Robinson identified is HP/HT operating conditions, especially in the GoM. “We’re looking at demands at perhaps 20,000 psi and more than 400ºF (204ºC). That’s pushing the limits of known material science and classic mechanical engineer- ing calculations.” HP/HT also is one of the primary deepwater chal- lenges identified by Halliburton. According to Jonathan Lewis, senior vice president of drilling and evaluation, the number of HP/HT wells is increasing dramatically, hav- ing grown 20% this year over last. “Significant volumes of hydrocarbon exist in HP/HT formations” Lewis said, “which is driving the development

Lewis said, “which is driving the development Reservoir depth and water depth combine to present

Reservoir depth and water depth combine to present significant completions challenges. (Image courtesy of Horton Wison Deepwater)

of cost-effective, safe, and reliable technologies and processes to access potential reserves, many of which exist in deep water. Safely producing from reservoirs at 446ºF (230ºC) and about 30,000 psi is driving the development of a completely new family of technologies, from drilling fluids to tools for directional drilling, formation evalua- tion, and completions.” A well currently being drilled off- shore Malaysia, “at the bleeding edge of the current HP/HT envelope,” is leveraging these technologies to explore previously inaccessible prospects, he said. Cost savings and efficiency represent another set of chal- lenges, Lewis said, explaining that given deep water rig spread rates, it is in both the operator and the service company’s interest to improve overall drilling efficiency

36

interest to improve overall drilling efficiency 36 and reduce NPT. Halliburton has invested significantly in

and reduce NPT. Halliburton has invested significantly in recent years in what it calls an “optimized drilling per- formance strategy,” part of its broader Digital Asset initia- tive. “Optimizing drilling performance is about improving the efficiency by which we design, plan, drill, and position a well within a reservoir,” Lewis said. “It’s about optimiz- ing, automating, and integrating in real time.” This requires different ways of working. “Many of these new ways of working are being catalyzed in a completely different asset type – shale plays,” he said. “Shale plays have become a crucible for process innova- tion and operational change in our industry because the economics of these assets are forcing that upon the oper- ators and the service companies. It’s inevitable that some of these process innovations will migrate to other asset types, particularly those where the costs are very high.” One of these is deep water. Dean Watson, vice president for deep water at Schlum- berger, said while best-in-class technology is critical to deepwater developments, excellence in execution on a global scale is equally important. “Schlumberger sees this as a potential differentiator in the business,” he said, explaining that a service company needs to be able to ensure that it can deliver the same quality of products and services anywhere in the world. The “Excellence and Execution” program launched by Schlumberger in 2007 focuses on delivering service qual- ity and consistency globally through the application of deepwater processes and initiatives. “When getting ready for a deepwater job, it’s all about planning,” Watson said, explaining that tools developed and applied at Schlumberger allow improved planning at every level of the project. “We wanted to focus on ensur- ing flawless startups and flawless execution.” Typically, operators are not just looking for one discrete service or one discrete product line. “Clients are asking for much more of an integrated approach,” Watson explained. To execute this effectively, Schlumberger assigns a specially trained integrated service project man- ager who manages the interfaces and ensures a seamless approach that encompasses logistics as well as general coordination management of the interfaces. The com- pany also offers a unique deepwater certification program for anyone working on deepwater projects.

Technology qualification, integrity management

It is critical to ensure technology going into the field is qualified. Kieran Kavanagh, group technology director at Wood Group Kenny, believes reliable technology qualifi- cation is key to getting it right the first time, particularly

May 2011

|

EPmag.com

believes reliable technology qualifi- cation is key to getting it right the first time, particularly May

32-43 COVERstory-MAY_32-43 COVERstory-MAY 4/18/11 1:28 PM Page 37

32-43 COVERstory-MAY_32-43 COVERstory-MAY 4/18/11 1:28 PM Page 37
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32-43 COVERstory-MAY_32-43 COVERstory-MAY 4/18/11 1:28 PM Page 38

32-43 COVERstory-MAY_32-43 COVERstory-MAY 4/18/11 1:28 PM Page 38
COVERstory-MAY_32-43 COVERstory-MAY 4/18/11 1:28 PM Page 38 COVER STORY: DEEPWATER Mooring innovation delivers M ooring

COVER STORY:

DEEPWATER

Mooring innovation delivers M ooring consti- tutes a signifi- cant cost in deep water. Making
Mooring innovation delivers
M ooring consti-
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cant cost in deep
water. Making the
process more effi-
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for Delmar US in its
development of a
mooring solution
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anchor placement
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extends the reach of
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spread and reduces
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deployments and
If a deepwater rig were to drill two locations
using the same mooring spread as illustrated
here, there is potential for US $2.7 million in sav-
ings. (Image courtesy of Delmar US)
retrievals required.
Matt Smith, vice president of operations, explained that the
OMNI-Max anchor, which Delmar designed following Hurricane
Katrina in the GoM to improve out-of-plane loading, is the central
component of a new mooring concept that is applicable for float-
ing production systems, including floating production, storage,
and offloading vessels.
This approach employs a mooring spread that allows a rig to
drill locations with as much as 4,000 to 6,000 ft (1,219 to 1,829 m)
of offset. According to Smith, it is because of the OMNI-Max
anchor’s superior out-of-plane loading capability that the arm can
rotate such that the anchor can see as much as 180 degrees of off-
set from direction heading where the load is applied. “Instead of
having to move the rig from one location to another, we can set up
one mooring spread and use preset moorings. We would then use
different lengths of linear components and move some lengths
around to offset the rig from one location to another.”
An anchor-handling boat would manage the linear inserts to
shift the rig.The anchors would have to be set only once but could
be used by a rig on several co-located drilling locations.
According to Smith, if a deepwater rig were to drill two locations
using the same mooring spread, there is potential for US $2.7 mil-
lion in savings. For three or four drill centers, the savings would
be even greater.
Though Smith’s calculations are based on the GoM, the concept
can be applied elsewhere.“We’re thinking it’s very applicable for
offshore Brazil,West Africa, and some parts of Australia,” he said.

38

Africa, and some parts of Australia,” he said. 38 for new technology solutions in deep water.

for new technology solutions in deep water. “We need an understanding of the technology challenges, limits, and enablers associated with potential riser and subsea solutions and how they impact facility selection,” he said. The more these are understood and thoroughly qualified prior to the execution phase of a project, the more likely they are to add value and the less likely any one of them is to negatively impact a project later through failure or underperformance. “A key challenge for us as engineering companies is the reliable evalua- tion and qualification of technology solutions at the front end and the systematic attention to managing integrity later so that we do all that is possible to minimize the likelihood of unplanned events or behavior during operation that stem from design uncertainties, especially the unknown unknowns, those failure modes that we were not aware we didn’t know.” One of Wood Group Kenny’s technology goals, facilitated through joint industry projects (JIPs), is to develop industry best practice for deepwater design and integrity management. A current JIP focuses on doing just that for maintaining subsea integrity. “The goal of an initiative like this is to establish consensus across multiple operators, often supported by regulators, for what constitutes best practice,” Kavanagh said. “It has to take into account the experience we have with failure and what processes should be put in place to prevent it. We also have to ensure that we are aware of all of the technologies out there to help us maintain integrity.” This requires constantly surveying tech- nology. “You’ve got to be aware of what different technology companies are doing and see what gaps there are between what they’re bringing to market and what is really needed. Integrity maintenance and successful qualification are tools that help avoid the cost of getting it wrong,” he said. In addition to these indirect challenges, Kavanagh said there are considerable direct tech- nology challenges associated with deepwater and ultra-deepwater risers. These include HP/HT envi- ronments requiring thick-walled risers or higher- strength materials, challenging or sour fluids that impact the selection of materials and fatigue per- formance of welded steels, higher loads that com- plicate installation, and high hangoff loads that affect facility costs. “Getting it right is of very high value when the cost of getting it wrong can be an order of

May 2011

|

EPmag.com

“Getting it right is of very high value when the cost of getting it wrong can

32-43 COVERstory-MAY_32-43 COVERstory-MAY 4/18/11 1:28 PM Page 39

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32-43 COVERstory-MAY_32-43 COVERstory-MAY 4/18/11 1:28 PM Page 40

32-43 COVERstory-MAY_32-43 COVERstory-MAY 4/18/11 1:28 PM Page 40
COVERstory-MAY_32-43 COVERstory-MAY 4/18/11 1:28 PM Page 40 COVER STORY: DEEPWATER Delivering local content N ational

COVER STORY:

DEEPWATER

Delivering local content N ational oil companies (NOCs) control access to approximately 80% of the
Delivering local content
N ational oil companies (NOCs) control access to approximately 80% of the
world’s hydrocarbon resources, and they are looking for partners that
can do more than offer technology. “We’re seeing a demand for increased
local content from many of the West African countries and Russia being driven
by NOCs,” said INTECSEA’s McShane.
“We’ve looked at setting up satellite offices in some of these locations and
running training programs for groups of engineers. We also are identifying
engineers, recruiting them, and then moving them to where the technology
and skill sets are located. So, for example, we have Angolan engineers work-
ing alongside us in Houston to develop deepwater subsea capabilities.We’re
looking at doing the same thing with Ghanaian engineers.”
GE is actively addressing the local content issue as well.
“In the realpolitik of things,”Terranova said,“the NOCs have asserted them-
selves over the last five years. They’re looking for partners that are going to
compete on local development of the economy, jobs, technology transfer, and
know-how transfer. Local content now is as important – in some cases even
more important – as prices or meeting a technical spec.”
The GE approach has been to invest in market segments where it has iden-
tified opportunities for deepwater expansion, such as Western Australia.“We
are building a $100 million facility in Perth that is going to allow us to transform
Perth into a center of excellence for deep water, providing refurbishment and
repair of subsea equipment, servicing turbo-machinery equipment, which is
on a lot of offshore platforms, and offering training in a three-story learning
facility built in conjunction with the Western Australian government and other
industry partners.”
The company also has established local content through the recent acquisi-
tion of Wellstream, a company with a portfolio of pipeline products and
dynamic flexible risers and static flowlines for deep and ultra-deepwater envi-
ronments and HP/HT pressure products for drilling and service applications.
“In addition to their phenomenal technology, they have a presence in a strate-
gic market for us – Brazil,”Terranova said.“Wellstream has a fantastic quayside
facility in Niteroi, just north of Rio. We can potentially leverage that facility for
other product lines, not just flexible risers.”
Horton Wison Deepwater also recently set up shop in Brazil, a region Maher
described as “a very intriguing market.” His company has entered into a joint
venture with Brazil’s Gaia to create Horton do Brasil. Brazil is requiring foreign
companies to make substantial investment in R&D funding, Maher said, noting
that will build up “a tremendous infrastructure and technology base.”
This is part of a move on behalf of Horton Wison to increase technology
development in the country.“There is a certain appropriateness to this,” Maher
said.“You need to know what the issues are in order to solve them, and long-
distance problem-solving is always somewhat disconnected.”
Horton Wison has cultivated relationships with operators in the GoM so there
is a willingness to approach the company to solicit solutions, Maher said.“We
would like to develop that sort of relationship with clients around the world.”

40

sort of relationship with clients around the world.” 40 magnitude higher. The increasing inventory of subsea

magnitude higher. The increasing inventory of subsea equipment deployed in deep water and the chal- lenging environments requires us to focus all the more on qualification, design assurance, and the maintenance of integrity through life.” Mick listed riser fatigue as one of the technology segments that requires fur- ther research. “Riser fatigue is not an exact science,” he said. “It is not easy to determine how much fatigue has occurred, so designs have to incorpo- rate factors of safety that take that into account.” Riser challenges go hand in hand with floater selection, a segment of the industry with its own unique challenges. Brian McShane, vice president of marine pipeline systems and subsea sys- tems at INTECSEA, identified harsh environments as one of the biggest chal- lenges for floating systems, citing the Arctic as one of the most significant. “Floating systems are facing harsh environments in Eastern Canada, Greenland, Western Australia, West of Shetlands off the coast of the UK, and also offshore Russia,” he said, explain- ing that there are considerable chal- lenges in getting floating systems to work in these areas. Another challenge is the growth in size in terms of the capacity of these systems. “They are moving toward mega-scales,” he said. “We also need companies to be able to build them and deliver them.” There is a resource constraint that will affect the time required for construction and commissioning. There also are design challenges as floaters become larger and more rugged to contend with more demand- ing operating environments. Jim Maher, vice president of Horton Wison Deepwater, identified floater integrity as one of the industry’s biggest challenges, citing design safety as a pri- mary goal when introducing new float- ing concepts.

May 2011

|

EPmag.com

challenges, citing design safety as a pri- mary goal when introducing new float- ing concepts. May

32-43 COVERstory-MAY_Layout 1 4/18/11 4:59 PM Page 41

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32-43 COVERstory-MAY_32-43 COVERstory-MAY 4/18/11 1:28 PM Page 43

“It is important to emphasize the integrity manage- ment side of development,” he said. “We’ve been inter- ested in learning from what we see, looking at the actual data, and using those learnings in the design process.” This is critical to improving floater designs. “The key to design is simplicity,” Maher said. “Simplicity of design leads to fewer places for failure. The goal of any design is to make the worst-case scenario as unlikely as possible.”

Human resources

There is consensus that the industry continues to face both geographic and demographic challenges. Accord- ing to Patterson, stepping up to those challenges over the course of this decade will be vital for moving forward on the industry’s key challenges. Shell is working to tap into talent on a global basis. “We have a strong deepwater capability here in the United States, in Houston and New Orleans,” Patterson said, noting that efforts to extend that capability have

COVER STORY:

DEEPWATER

led to establishing offices in Lagos, Nigeria; Kuala Lumpur, Malaysia; and Stavanger, Norway; not only to expand opportunities in different parts of the world but also to expand the talent base around the globe. “Like most companies,” he said, “we are improving our devel- opment programs for people that come in and join our companies to make sure that we’re building the compe- tence that we need and that individuals are able to grow the careers that they aspire to.” Simply put, “The IQ per barrel is going up,” he said, explaining that the amount of technology, innovation, and human capital is going up for each barrel pro- duced. “This is why the role of people is so critical.” Terranova is sensitive to the demographics issue, refer- ring to himself as “the guy in the gap,” where at just north of 40, he finds that most of his colleagues are 10 to 15 years older or younger than he is. “The genera- tional gap in domain expertise really is an issue,” he said. “We’ve got a pretty daunting task ahead of us as an industry.”

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43

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44-47 ReservoirLife-NMT_44-47 ReservoirLife-NMT 4/18/11 1:28 PM Page 44
ReservoirLife-NMT 4/18/11 1:28 PM Page 44 EXTENDING RESERVOIR LIFE Failed waterflood effort provides

EXTENDING

RESERVOIR LIFE

Failed waterflood effort provides lessons learned

Beware of analogous fields – testing in a New Mexico field indicated that one field would not perform as well as its neighbors.

Thomas Engler, New Mexico Tech (NMT)

W ith a preponderance of mature wells and reservoirs in the US, it is essential to find ways to further

enhance recovery and extend reservoir life. Many options are available, from redesigning artificial lift systems to novel stimulation techniques to adding reservoir energy; thus, selecting the appropriate application becomes important. The selection process begins with understand- ing existing reservoir and operating conditions. Is gas available to assist in lifting? Are clays present in the rock? Is reservoir pressure depleted? A second component is to investigate best practices to assist in lifting? Are clays present in the rock? locally or on a regional and locally or on a regional and even national scale. A success- ful practice will be applied (or misapplied) rapidly. Dis- semination of information also is very important in this step and is provided by a wide variety of professional organizations. A third item to consider is what new tech- nology needs to advance or research accomplished to meet the goal of extending reservoir life and what infor- mation can be acquired cost-effectively.

The reservoir

In one case in New Mexico, there was potential for water- flooding in a shallow, small pressure-depleted oil reser- voir not conducive to a fully developed, patterned waterflood. The target reservoir was thin and small in extent, shallow, at low pressure and temperature, and had unfavorable mobility ratios. Initial primary energy was not sufficient to produce the oil; however, significant mobile oil remained to be recovered. The hope was that adding energy by waterflooding would improve oil recov- ery and extend the life of this marginal reservoir. The Round Tank field was selected because it provided an opportunity to extend waterflood development to reservoirs of limited size and unique reservoir conditions. Discovered in 1970, Round Tank produces from the Queen formation, a thin sand averaging 15 ft (4.6 m) in thickness. Most of the production is from the gas cap, with cumulative production to date of 4.2 Bcf. A thin oil column exists below a gas cap that contains more than

44

60% nitrogen. Two wells completed in the oil column have produced only 26,000 bbl of oil and no gas (i.e., 1% of the original oil in place). Original pressure was approxi- mately 750 psi; current reservoir pressure is speculated to be approximately 100 psi. As a result of the low pressure and temperature (75°F or 24ºC), very low gas in solution, and high nitrogen content in the gas, the oil viscosity was high; therefore, the mobil- ity ratio was unfavorable. All of these traits illustrate the complexity of successfully waterflooding a mature Queen sand reservoir. The very low oil production in the Round Tank field ranks it as one of the least productive Queen oil fields. The higher the cumulative oil production, the greater the likelihood of a field being waterflooded, and vice versa. This confirms 1) the poor quality of the target, and 2) the success of waterflooding the Queen.

The waterflood

Two wells were drilled to initiate a pilot waterflood project. A core was acquired in one of the wells, and this, along with old logs (circa 1960s), 14 modern logs (obtained from wells drilled to the deeper San Andres formation), and production data were the only sources of information. Key findings were poor reservoir rock quality and the existence

The Round Tank Queen field in South- east New Mexico. (Images courtesy of Thomas Engler)
The Round Tank
Queen field in South-
east New Mexico.
(Images courtesy
of Thomas
Engler)

May 2011

|

EPmag.com

The Round Tank Queen field in South- east New Mexico. (Images courtesy of Thomas Engler) May
The Round Tank Queen field in South- east New Mexico. (Images courtesy of Thomas Engler) May

44-47 ReservoirLife-NMT_44-47 ReservoirLife-NMT 4/18/11 1:28 PM Page 45

ReservoirLife-NMT 4/18/11 1:28 PM Page 45 Jason ® Discover RockMod® The Power of Integration
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44-47 ReservoirLife-NMT_44-47 ReservoirLife-NMT 4/18/11 1:28 PM Page 46

44-47 ReservoirLife-NMT_44-47 ReservoirLife-NMT 4/18/11 1:28 PM Page 46

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EXTENDING

RESERVOIR LIFE

of a friable zone (one-third of the core was recovered in pieces). Petrographic analysis of the core (thin sections and SEM) exhibited significant fines and clays in the pore space along with anhydritic cement. Poor core injectivity tests confirmed the presence of fines migration. Evidence from sonic logs and the core samples indicated a friable zone exists with the Queen sand in the pilot area. Mechani- cal properties vary significantly within this reservoir. The mechanical heterogeneity has significant implica- tions for the success of stimulation (hydraulic fracturing) and water injection. The majority of Queen sand wells are hydraulically fractured to increase conductivity. Analysis of the fracture treatment in the new water injection well sup- ported the creation of a horizontal fracture resulting from the shallow depth and the postulation that the compressi- ble nature of the friable zone acted like a barrier, resulting in a high fracture gradient that diverted the horizontal fracture to a thin zone within the top of the Queen. A 3-D-Blackoil simulation model was constructed with the limited field records. A successful history match was achieved after reducing the initial permeability values by approximately two-thirds. The large permeability reduction

approximately two-thirds. The large permeability reduction In a graph charting cumulative oil production of Queen oil

In a graph charting cumulative oil production of Queen oil fields, the Round Tank field ranks near the bottom.

from history-matching indicates permeability of the Round Tank Queen formation is significantly lower than the other Queen sands since the original permeability was acquired from adjacent field correlations. Field tests resulted in very poor injectivity into the injec- tion well – a few barrels per day with high surface pres- sures. The simulation confirmed this behavior. This outcome is due to many factors, including low permeabil- ity, unfavorable mobility ratio, depleted gas cap, and unsuccessful fracture stimulation.

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Key learnings

Even though NMT was unsuccessful in efforts to improve oil recovery and extend the life of the reservoir in the Round Tank Queen field, efforts pro- vided several benefits to others with simi- lar situations. First, improved reservoir description was accomplished with lim- ited data – old neutron and sonic logs, 14 modern logs, and one core – and thus did not require high-cost informa- tion. Therefore, analogous fields could apply these concepts as well. Second, the importance of stimulation design cannot be overemphasized. In this case, the occurrence of a friable zone in a shallow reservoir increased the com- plexity of the stimulation.

reservoir increased the com- plexity of the stimulation. Acknowledgements The author would like to thank the

Acknowledgements The author would like to thank the Research Partnership to Secure Energy for America (RPSEA) for supporting this project and also Martha Cather for editing and providing sug- gestions to improve the paper. Special thanks goes to Bruce Stubbs of Armstrong Energy Corp. for providing technical support for this study and for permission to publish the data.

References available.

May 2011

|

EPmag.com

technical support for this study and for permission to publish the data. References available. May 2011
technical support for this study and for permission to publish the data. References available. May 2011

44-47 ReservoirLife-NMT_44-47 ReservoirLife-NMT 4/18/11 1:28 PM Page 47

44-47 ReservoirLife-NMT_44-47 ReservoirLife-NMT 4/18/11 1:28 PM Page 47
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48-49 ReservoirLife-Emerson_Layout 1 4/18/11 10:32 PM Page 48

48-49 ReservoirLife-Emerson_Layout 1 4/18/11 10:32 PM Page 48
48-49 ReservoirLife-Emerson_Layout 1 4/18/11 10:32 PM Page 48 EXTENDING RESERVOIR LIFE Reservoir simulation, history

EXTENDING

RESERVOIR LIFE

Reservoir simulation, history matching extend reservoir life

The right combination of technologies can shorten development cycles, increase production, and extend reservoir life.

Sarika Pugla, Emerson Process Management

A s operators look to optimize production from increasingly marginal assets, extend the lifecycle of

Forecasts generated from these models play a crucial role for operators in shortening development cycles, increasing production, extending reservoir life, and enhancing ultimate oil and gas recovery.

their reservoirs through sustainable reservoir manage- ment targets, and make effective decisions over the alloca- tion of capital and resources, the models and analytical processes that define reservoir simulation and history matching have rarely been more important. It is reservoir simulation that sits at the interface between the reservoir model and the economic evalua- tion of fields and production strategies, and it is history matching that ensures that the static geological models are in sync with production data to predict future per- formance and create uncertainty profiles of the reservoir. The result is models that are not only consistent with all and history matching have rarely been more important. the available static data – such as well the available static data – such as well log and seismic, and dynamic data like production and 4-D seismic – but also are able to reproduce historical field performance.

Rising to the challenge

The rise in computer power, such as 64-bit multicore chip clusters, parallel processing, and computer-led automa- tion, has ensured that reservoir simulation is now prac- ticed via the desktop and across asset teams, enabling faster decisions and a greater ability to determine the important “what-if” scenarios. Today, multimillion cell reservoir simulation models are the norm. The same is the case with history matching technolo- gies. Manual history matching has been replaced by robust and automated algorithms that allow the reservoir engineer to focus on developing a clearer understanding of reservoir mechanisms and their relative impact on pro- duction behavior and creating simulation models that are fully consistent with their underlying geological interpre- tation. In this way, operators can generate more accurate information on the opera- tional production decisions that need to be made to extend reservoir life. Furthermore, the last few years also have seen significant advances in uncertainty prediction tools where, through the analy- sis of multiple plausible realizations and uncertainty parameters, operators can bet- ter quantify the effects of uncertainties on volumes and cumulative production.

Advanced visualization tools within Roxar Tempest allow multiple 3-D views to be displayed. (Images courtesy
Advanced visualization tools
within Roxar Tempest allow multiple 3-D views to be displayed.
(Images courtesy of Emerson Process Management)

Usability, functionality

As with any fast-changing technologies, chal- lenges remain, particularly in the need for improved ease-of-use and functionality in simu- lation and history matching and the need for ever more sophisticated (but easy to use) eco- nomic evaluation tools. Reservoir simulation today still remains a com- plex process, and it is incumbent on today’s vendors to guide users through the entire process – from

48

and it is incumbent on today’s vendors to guide users through the entire process – from

May 2011

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EPmag.com

and it is incumbent on today’s vendors to guide users through the entire process – from

48-49 ReservoirLife-Emerson_48-49 ReservoirLife-Emerson 4/18/11 1:28 PM Page 49

ReservoirLife-Emerson 4/18/11 1:28 PM Page 49 To this end, pressure, volume, temperature, rela- tive

To this end, pressure, volume, temperature, rela- tive permeability curves, and well lift curves can be graph- ically edited within the simulation model. Historical measurements can be entered as a table, well trajectories can be input directly as 3-D xyz files, and dynamic data entered in tables as “events,” which can be interactively edited, sorted, filtered, and viewed on a timeline. In this way, operators can track the performance of their reser- voirs in real time and ensure they produce at an optimal level to extend reservoir lifecycle. The company’s Roxar EnABLE history matching soft- ware is playing a key role in extending history matching further into the predicting of uncertainties – crucial in providing tools to the operator to extend reservoir life. At present, this tool is the only one available that pro- vides total uncertainty assessment. Powerful statistical techniques are used to determine multiple matches of the reservoir-to-production history and to model the reservoir’s uncertainty. All of the uncertainty parameters that form part of the operator’s history match are included during the prediction stage (there is no need, for example, to narrow the minimum and maximum range ranges), and a proxy model is used during the his- tory match, allowing the simulation model to be easily extended into predictions to help calculate uncertainty. These results are used with the simulator to predict how a field will perform in the future and provide meas- ures of uncertainty about these predictions – crucial information for extending reservoir life. The improved usability, functionality, and integration of history matching and simulation workflows are central to risk mitigation in reservoir management today. Through a complete understanding of production ranges, simulation models that are fully consistent with the underlying geology, and effective uncertainty quantifi- cation tools, operators can look forward to highly reliable production forecasts, increased reservoir performance, and an extension of reservoir productivity.

performance, and an extension of reservoir productivity. Roxar Tempest provides inte- grated model preparation,

Roxar Tempest provides inte- grated model preparation, black oil, compositional, and thermal reservoir simulation.

preparing and analyzing original data through to the economic evaluation of results. Similarly, history matching also can be

a

process, with history matches often achieved through different configurations, thereby making it difficult to determine which model is correct. Few history matching packages allow the reservoir engi- neer to include all of the uncertainty parameters that

form part of the history match into the prediction phase:

it is with this in mind that Emerson has made ease of use

and functionality central to its reservoir simulation and history matching software. The Roxar Tempest simulation software guides users through the entire simulation process. The modeling of complex wells also has been improved in the latest ver- The modeling of complex wells also has been improved in sions through a new segmented well sions through a new segmented well approach, that allows for a detailed well model that represents the under- lying physics more realistically. The company also has introduced a Todd-Longstaff solvent feature that allows for efficient simulation of CO 2 floods. Fractured wells also can be simulated. Improved functionalities for economic forecasting are vital. Aggregate rates now are calculated and displayed in the software, making it easier to interact with other pro- grams such as economic evaluators and spreadsheets. The software also includes a new feature where lift model parameters can be regressed against observed data such as friction, fluid gravity, or gas-liquid slips. New load-on-demand features also are key to optimiz- ing memory usage and letting engineers simultaneously analyze many more models with complex wells and fine grids. Derived data such as group totals and well ratios can be processed on demand, greatly speeding up model loading. This increased functionality and ease of use ensures that multiple simulation runs can be loaded and managed together with observed data, with comparisons between runs and with historical data greatly speeding up history matching and sensitivity studies. Furthermore, while static data can provide information on the reservoir framework and fluid saturations at well positions, for example, it is the dynamic data that is so crucial to extending reservoir life by charting how fluid is moving during production.

time-consuming and cumbersome

reservoir life by charting how fluid is moving during production. time-consuming and cumbersome EPmag.com | May

EPmag.com

|

May 2011

reservoir life by charting how fluid is moving during production. time-consuming and cumbersome EPmag.com | May

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50-51 Potential-Fugro_50-51 Potential-Fugro 4/18/11 1:28 PM Page 50
Potential-Fugro 4/18/11 1:28 PM Page 50 POTENTIAL FIELDS The potential of potential fields A

POTENTIAL

FIELDS

The potential of potential fields

A high-resolution airborne magnetic survey will serve as a reconnaissance tool to high-grade prospects offshore Uruguay.

Rhonda Duey, Senior Editor

G ravity and magnetics can seem a bit like the “flavor of the month” – sometimes the measure-

ments are considered critical for successful exploration and other times ignored or viewed suspiciously by the uneducated. Luckily for companies that acquire these data, poten- tial fields measurements are back in vogue, helped tremendously by technical improvements such as high- resolution aeromagnetics and gravity gradiometry. Many oil and gas companies will acquire a gravity or magnetic survey prior to shooting any seismic to get a general sense of the “lay of the land” with a low-cost geophysical acquisition tool. “We’ve been in a teaching mode for most of my career,” said Jeff Rowe, vice president and senior geo- of the land” with a low-cost geophysical acquisition tool. physicist for Fugro Gravity & Magnetic Services. physicist for Fugro Gravity & Magnetic Services. “We help companies understand the potential value of grav- ity and magnetics. I think there’s more of an openness to utilizing all geophysical methods and building a bet- ter workstation toolkit that can allow for a superior interpretation.” He added that younger geoscientists often have been exposed to classes in non-seismic techniques in their stud- ies, giving them a better feel for the value of these data. Given the reconnaissance aspect of potential fields data, they lend themselves very well to a multiclient model. Rowe said Fugro has done close to 6,000 non- exclusive surveys, all of which are accessible at the com- pany’s website. “Our game plan with non-exclusive data is to spend time talking to clients to find out where they’re looking at doing projects, where there’s open acreage, and where they have needs, and to provide a

cost-effective option rather than shooting a proprietary survey” he said. “This way they can see their concession in a broader geological context.”

Uruguay

Recently ANCAP, Uruguay’s state-run oil company, invited Fugro to do a complete aeromagnetic survey of the Pelotas, Punta del Este, and Oriental del Plata off- shore basins. ANCAP hopes the data will allow a better understanding of the tectonic evolution of the basins and identify the structural elements to define play con- cepts. ANCAP already has multiclient agreements with CGGVeritas for approximately 7,380 miles (12,000 km) of 2-D seismic data; has signed a contract with ION/ GXT for the acquisition, processing, and interpretation of the UruguaySPAN for 1,800 to 2,130 miles (3,000 to 3,500 km) to link the Uruguay basins with the neighbor- ing offshore basins in Brazil and Argentina; and has awarded an additional 2-D seismic survey to Reflect Geophysical. According to an ANCAP press release, this large amount of data will provide additional knowledge of the offshore basins, which will help oil companies that are evaluating exploration opportunities in Uruguay. The data will be made available to interested companies in anticipation of a licensing round to be held in 2012. Fugro plans to acquire 31,250 miles (50,000 km) of aeromagnetic data over all of offshore Uruguay. This will consist of a 4,500-ft by 18,000-ft (1,500-m by 6,000-m) grid in the shallow-water blocks (less than 3,300 ft or 1,000 m) and a 9,000-ft by 36,000-ft (3,000-m to 12,000- m) grid in the deeper waters. Rowe explained that the Pelotas Basin is an extension of a basin in Brazil where Fugro acquired data several years ago. ANCAP also is studying the similarity of the

50

years ago. ANCAP also is studying the similarity of the 50 A strike seismic section in

A

strike seismic section

in

the Punta del Este

Basin shows a rift of the

northwest-southeast structural trend (left). A dip section in that basin indicates the same rift (right). (Image courtesy

of ANCAP)

May 2011

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(left). A dip section in that basin indicates the same rift (right). (Image courtesy of ANCAP)

50-51 Potential-Fugro_50-51 Potential-Fugro 4/18/11 1:29 PM Page 51

An aeromagnetic survey will be acquired with a twin engine Cessna 404 with a stinger-mounted magnetometer. (Image cour- tesy of Fugro Gravity & Magnetic Services)

Punta del Este Basin to the Orange Basin offshore Namibia and South Africa. According to ANCAP, the stratigraphy of Uruguay’s off- shore basins is characterized by large depositional sequences that overlay Paleozoic sedimentary rocks and Precambrian crystalline basement rocks. Sequences include aluvio-fluvial and lacustrine deposits interbedded with volcanic rocks as well as a transgressive transitional sequence followed by regressive deposits. Diverse play types have been identified, including anti- clinal structures related to basement highs, compaction synclines, truncation of synrift deposits by breakup unconformity, pinchouts, channels, and basin floor fans. “The play types in Uruguay frequently are related to basement highs, horst blocks, graben structures, and tilted and rotated fault blocks,” Rowe said. “In many cases, the sediments are draped on these features, creat- ing the stratigraphic traps. “All of the areas in Uruguay are fairly frontier,” he on these features, creat- ing the stratigraphic traps. added. “There’s not a lot of drilling history added. “There’s not a lot of drilling history there, so it’s an ideal place to start an exploration project with a high- res magnetic database.” The survey will be acquired less than 450 ft (150 m) above sea level. This allows the company to map not only the crystalline basement but also magnetic susceptibility changes from within the sedimentary section. Data also are acquired at a faster sample rate, which provides reso- lution an order of magnitude greater than in the past. The survey, which is scheduled to begin in summer 2011, should take four to five weeks to complete, weather permitting. Results from the survey should answer several questions regarding:

• The influence of the magnetic basement on the over- lying sediments;

• The relationship between sedimentary anomalies in the section with the magnetics;

• The presence or absence of volcanics;

• The orientation of faults observed on 2-D lines;

• The location of depo-centers;

• The location of mini-basins; and

• Determination of migration pathways from the mag- netic basement architecture. The data also should be able to be used as a trend/ mapping tool to extrapolate features viewed in the widely spaced seismic lines. Without existing magnetic data to demonstrate, it can seem like a tough sell to get operators interested in invest-

EPmag.com

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May 2011

to get operators interested in invest- EPmag.com | May 2011 ing in this dataset. Rowe said
to get operators interested in invest- EPmag.com | May 2011 ing in this dataset. Rowe said

ing in this dataset. Rowe said the client company needs to look at the bigger geological picture. “In a frontier play, we talk about a game plan and an approach,” he said. “By acquiring a uniform grid of data like we’re proposing, companies will be able to map the crystal basement surface and topography and identify basins, mini-basins, and depo-centers that could indicate areas that would have higher prospectivity.” An airborne magnetic survey like this provides a good framework upon which to build an exploration project. “We try to encourage companies to take an approach where the first step in an exploration project is a recon- naissance-type of airborne survey,” Rowe said. “The second phase would be a more detailed survey utilizing airborne gravity. And then they might acquire a gravity database in conjunction with 2-D seismic and develop prospect leads that are then followed up by 3-D seismic and drilling.” He added that the airborne surveys allow areas to be high- graded and down-graded, enabling exploration invest- ment to be more “strategically positioned.” Already the company has a list of more than 20 compa- nies that have expressed some level of interest. “Before we started to negotiate with the government, we met with a number of significant players to see if Uruguay was on their radar and, if so, how they would respond to our pro- posal to undertake this sort of project,” Rowe said. ANCAP negotiations took almost a year because the country had to pass a governmental decree signed by the president to allow the survey to go forward. Since then, the dealings have been easier. “Their offer to industry seems to be very straightfor- ward,” he said. “Companies

that are looking for new places to explore should con- sider Uruguay. They will be pleased to discover ANCAP and the opportuni- ties that await there.”

discover ANCAP and the opportuni- ties that await there.” There is more to the story… READ
There is more to the story… READ MORE ONLINE EPmag.com
There is more
to the story…
READ MORE ONLINE
EPmag.com
ANCAP and the opportuni- ties that await there.” There is more to the story… READ MORE
ANCAP and the opportuni- ties that await there.” There is more to the story… READ MORE

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52-56 Potential-NEOS_52-56 Potential-NEOS 4/18/11 1:29 PM Page 52

POTENTIAL

FIELDS

Multiple measurements lead to singular insight

Combining a variety of geophysical measurements gets operators closer to the final answer.

Jim Hollis, NEOS GeoSolutions

E xploration always has relied on remotely acquired data to depict the subsurface. In the industry’s early

days, a wide variety of measurements were acquired and analyzed. With the advent of modern 3-D seismic, many of these faded into the background. Now, with higher res- olution sensors, greater computing power, and improved data integration and visualization techniques, these legacy methods appear to be making a comeback. Over the last several years, companies have gained prominence in the exploration services arena by offering subsurface imaging technologies that go above and beyond seismic. For example, ARKeX offers advanced gravity gradiometry surveys to better image complex geological settings such as subsalt or to fill in the areas between sparse 2-D or 3-D seismic surveys, while compa- nies like EMGS and OHM Rock Solid Images offer electro- magnetic (EM) surveys to better delineate fluid saturation anomalies in the subsurface, most frequently offshore. Earlier this year, another company – Houston-based NEOS GeoSolutions – entered the global exploration services arena with an ambitious vision. The company simultaneously interprets as many geological, geophysical, and geochemical datasets as possible, including datasets that are accessible in the public domain, available for license from third parties, resident in client or NEOS’s own data archives, or newly acquired using NEOS-owned and operated airborne systems. At present, the company focuses exclusively on onshore E&P projects. The goal is not to displace conventional seismic imaging but to add a suite of geologi-

Multiple geological, geophysical, and geo- chemical datasets are interpreted simultane- ously. (Images courtesy of NEOS GeoSolutions)

cal and geophysical measurements that improve seismic datasets where they exist and, in geographies where they do not, to serve as placeholders until E&P companies have a better idea of where they want to commission new seis- mic acquisition programs. This approach delivers a more unique, highly con- strained answer about what is going on within the subsur- face. A seismic image, when it exists, can be extremely useful in revealing the structures within the earth, but other G&G measurements – including gravity, magnetic, radiometric, EM, and hyperspectral – can bring even more to the interpretation as they reveal important things about rock properties, fluid saturations, and fracture sys- tems that seismic alone might not define adequately.

Potential fields boom

The remote sensing boom is driven by several factors. One involves the operational challenges associated with new seismic acquisition. Land-use permits can be difficult and time-consuming to obtain. Environmental restrictions limit the amount of heavy equipment – like Vibroseis vehi- cles – that can enter an area. And seismic acquisition pro- grams typically involve dozens if not hundreds of crew members to deploy, maintain, and operate the instrumen- tation, a reality that increases the HSE risk of any project. These issues drive up the cost and cycle time associated with new acquisition programs and often limit coverage to hypothesized, high-potential “postage stamp” areas. By contrast, many of the non-seismic geophysical measurements can be obtained from airborne acquisition platforms, including satellites, fixed-wing aircraft, and helicopters. This allows large, basin-scale areas to be surveyed quickly, efficiently, and with minimal issues of access and ground-based personnel deployment. Insights from these programs can be used to help focus follow-on seismic acquisition programs on the most prospective areas within the basin or to guide leasing decisions when time is of the essence.

The science behind the method

NEOS’s methodology involves cross-correlating the geolog- ical and geochemical conditions in the subsurface with the geophysical responses that result. For instance, most hydro-

May 2011

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52
52
conditions in the subsurface with the geophysical responses that result. For instance, most hydro- May 2011
conditions in the subsurface with the geophysical responses that result. For instance, most hydro- May 2011

52-56 Potential-NEOS_52-56 Potential-NEOS 4/18/11 1:29 PM Page 53

carbon reservoirs are not sealed perfectly but instead are penetrated by small faults or fractures that allow light-end hydrocarbons to seep upward. Bacterial degradation of leaching hydrocarbons can cause a reduction zone to develop above the reservoir and either pyrite or sulfur pre- cipitates to form. These geochemical reactions in the sub- surface can be detected by looking for geophysical anomalies in resistivity or magnetic measurements. Closer to the surface, the migration of trace quantities

of hydrocarbons can cause carbonates to precipitate and

oxidizing zones to form. Once again, these geochemical reactions can be detected by looking for a geophysical anomaly (in this instance, a high-resistivity response). At the surface, leaching hydrocarbons can result in high gamma “halos”; oil seeps; trace quantities of natural gas; or distressed vegetation due to the presence of hydrocar- bons in the air, soil, or groundwater, any of which can be detected using an appropriate radiometric or hyperspec- tral sensor.

Unconventional gas exploration in the Rockies

A multimeasurement approach can add value in many

play types, from the frontier to the mature arena and from conventional to unconventional reservoirs. In Col- orado’s Piceance Basin, NEOS was engaged by a client whose acreage was underlain by prospective hydrocarbon and mineral deposits. The terrain in the area was rugged with highly variable topography and and mineral deposits. The terrain in the area was rugged with highly variable topography and a mix of public and private lands having both access and use restrictions. Pro- ducing gas wells had been drilled on the acreage, but individual well productivity was highly variable. Client geoscientists theorized that higher production wells were drilled in the vicinity of naturally occurring fracture swarms that were associated with nearby faulting. To better explain the assumed correlation between frac- ture intensity and well production, NEOS acquired new airborne geophysical datasets over the project area. Hyperspectral images helped to identify surface-penetrat- ing fault lineaments and trace quantities of natural gas at the surface. A combination of gravity and legacy seismic datasets helped to establish the regional fault picture, while magnetic data helped to identify zones of intense fracturing within the reservoir interval. Geoscientists the- orized that the fracture zones contained mineralization anomalies caused by higher water throughput over the course of geologic time. Based on a multimeasurement interpretation of the available and newly acquired data, NEOS identified frac- ture swarms. Although the area had been drilled and was under production for a couple of years, the actual well and production data were not revealed to NEOS at the start of the project, essentially making it a blind test.

EPmag.com

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May 2011

essentially making it a blind test. EPmag.com | May 2011 A gas distribution map for the
essentially making it a blind test. EPmag.com | May 2011 A gas distribution map for the

A gas distribution map for the Bossier formation shows zones of

highest gas saturation in hot colors.

Once the results were delivered, the client confirmed that their most productive wells were located in the areas with the highest mapped fracture density.

Sand package identification in the Bossier

The Bossier formation lies just above the Haynesville shale throughout a large portion of northeast Texas and northwest Louisiana. While the Bossier contains a variety

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FOR INTEGRATED DEEPWATER SOLUTIONS ? f 6yo ? ? r ? f A N. COUNT
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52-56 Potential-NEOS_Layout 1 4/18/11 2:34 PM Page 55

POTENTIAL FIELDS
POTENTIAL
FIELDS
1 4/18/11 2:34 PM Page 55 POTENTIAL FIELDS Geochemical reactions in the subsurface can be detected

Geochemical reactions in the subsurface can be detected by looking for geophysical

anomalies in resistivity or magnetic measurements.

of play types, the operator was interested in identifying gas-filled sand pack- ages that were deposited along shelf-edge deltas in the Jurassic. Although some seismic data existed in the area, legacy velocity models often were inade- quate to properly depth-migrate the data. By bringing in gravity measure- in the area, legacy velocity models often were inade- ments, NEOS was able to improve the ments, NEOS was able to improve the velocity models and the resulting prestack depth migrated data. Other geophysical datasets also were acquired and analyzed. High-frequency

EM data were used to map near-surface resistivity anomalies, delineating oxidiz- ing zones that could have been associated with hydrocarbon leakage from below. Radiometric data were analyzed to identify potential halos associated with trace quantities of hydrocarbons in the near-surface. Hyperspectral data were used to characterize subtle topographic features on the surface, which were correlated with other measurements to tie surface insights with subsurface structures, and a proprietary spectral decomposition algorithm was applied to discriminate lithology and fluid changes within the reservoir interval. In the end, more than a dozen geological, geophysical, and geochemical measurements were used in the simultaneous joint inversion, a geostatistical method that delivers a 3-D probability cube highlighting subsurface rock, fluid, and fracture patterns along with high-potential drillable sweet spots. One end- product resulting from the project described the probability that a commer- cially viable, gas-charged sand package lies beneath that portion of acreage within the Bossier formation. A well had been drilled into the Bossier in the middle of the reddish-brown oval and penetrated a large gas-filled sand unit. The client had withheld the existence of (and data from) that well during the project, only to have its productive potential validated by the multimea- surement survey. The task of finding and producing hydrocarbons grows increasingly com- plex with each passing year. Fortunately, new

com- plex with each passing year. Fortunately, new There is more to this story… READ MORE
There is more to this story… READ MORE ONLINE EPmag.com EPmag.com | May 2011
There is more
to this story…
READ MORE ONLINE
EPmag.com
EPmag.com
|
May 2011

technologies and new techniques to extract maximum insight from proven methods con- tinue to be added to the industry’s exploration arsenal.

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55

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