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WORLDWIDE COVERAGE
APRIL 2012
VO L U M E 8 5
A H A R T E N E R GY P U B L I CAT I O N
IMPROVING EXPLORATION SUCCESS
44
46
New approach describes the indescribable
50
Navigation sensor technology aids marine

seismic survey
54
Seismic can be relevant in shales
Ventura basin still holds hidden treasure
ISSUE 4
w w w. E P m a g . c o m
COVER STORY
36
FRONTIER EXPLORATION
58
Geological review of deepwater Liberian basin

outlines prospectivity
62
Iranian discoveries continue
LAND RIG ADVANCES
66
Combined experience brings designed-forpurpose top drive to market
70
Two brakes in one improve performance,

maintain cost
SUBSEA TECHNOLOGIES
74
Collaboration is key to expanding subsea

technologies for deep water
76
Seabed compression advances boost

development options
Balancing Risk
& Reward
Always be prepared is not just
for Boy Scouts anymore.
Offshore support fleet steering a positive course
90
Brazilian E&P spending fuels major supply

vessel growth
104
REGIONAL REPORT:
INDIA
Post Macondo: Stability

returns to Gulf
Reduncies and additions affect safety
and cost in new government regulations.
SERVICE AND SUPPLY VESSELS
86
IndustryPULSE:
12
WorldVIEW:
The classic elephant hunter

takes aim in Central Asia
An independent operator in three underexplored

republics in Central Asia has the know-how to access
a huge pool of resources in the regions vast and
prolific hydrocarbon basins.
80
Unconventional:
Haynesville
The Haynesville can compete
As the largest producing gas play in North America,

the Haynesville shale is a highly competitive asset.
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The new look for 2012
MANAGEMENT REPORT
Using balanced scorecarding in mature fields
The face of the oil and gas industry is changing
16
20
DIGITAL OIL FIELD

Virtual reality simulation improves offshore training, safety
Big Data requires efficient analytics, bandwidth, content
22
26
EXPLORATION TECHNOLOGY
USBs Friend or foe?
31
WELL CONSTRUCTION
New RSS drills from spud to TD in one run
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33
PRODUCTION OPTIMIZATION
Is the industry brave enough to freeze its Arctic plans?
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35
TECH WATCH
96
R&D investment in Brazil continues to surge
TECH TRENDS
100-101
INTERNATIONAL HIGHLIGHTS
ON THE MOVE/INDEX TO ADVERTISERS
108
110-111
LAST WORD
112
Methane in water wells unrelated to hydraulic fracturing
COMING NEXT MONTH
The May issue of E&P looks at offshore technology as it affects explo-
ration and drilling, and a special feature examines deepwater challenges and solutions. Additionally,
the regional report provides a technology and regulatory update for the Gulf of Mexico. Other features
focus on extending reservoir life, sand and water management, and international shales. As always,
while youre waiting for the next copy of E&P, rermember to visit EPmag.com for news, industry, updates,
and unique industry analysis.
ABOUT THE COVER Managers must walk a fine line between being overly
cautious and careless. New integrated schemes can help them integrate risk
management at a corporate level. (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,
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ONLINE CONTENT APRIL 2012
PREMIUM CONTENT
MicroScope
LITION RESISTIVITY
JIG WHILE DRILLING
Subscribe @ EPmag.com/explorationhighlights
Kuwait Energy strikes oil in Western

Desert Concession
A new discovery in Egypts Western Desert Abu
Sennan Concession initially flowed 835 b/d.
Encana reports horizontal Tuscaloosa Marine shale producer

The company has completed a horizontal Tuscaloosa Marine shale
producer in St. Helena Parish, La., that has flowed 280 bbl of 40API oil,
98 Mcf, and 1,277 bbl of water per day.
_Nw
lllllsm?
New gas discovery in Alon A block,

offshore Israel
The Noble-operated #1-Tanin well in the
Alon A block has unlocked 1.2 Tcf to 1.3
Tcf, according to partner Delek Group.
AVAILABLE ONLY ONLINE
SIS Global Forum: New tools tackle heavy

oil, digital oil field
By Rhonda Duey, Senior Editor
Taking integration to the next level, model-based

technologies aid in heavy oil production and
maximize the potential of the digital oil field.
SPE/IADC: Sustainability
encompasses people too
WEBINARS
Revolutionize Your
Tobin Map Data
T. Boone Pickens:
A Conversation
About Energy
Policy, Natural
Gas, and Jobs
By Tayvis Dunnahoe, Senior Editor
Aside from technology and innovation, the importance of people in the oil and gas industry was a
topic discussed at the recent SPE/IADC Drilling
Conference in San Diego, Calif.
CERAWeek: Exploration, technology

critical to future energy supply
By Nancy Agin, Associate Editor
In a dynamic and increasingly challenging world,

the E&P industry must take on new energy frontiers while continuing to invest in cutting-edge
technology R&D to satisfy fluctuating demand.
BSEE: Tackling BOP maintenance/inspection

By Scott Weeden, Senior Online Editor
ABS & ABS Consulting are working with original

equipment manufacturers, drilling contractors,
and oil companies to determine industry practices
for BOP maintenance, inspection, and testing.
Energy Outlook
2012: Where Are
Oil, Gas, and NGL
Prices Headed?
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Evaluating
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Schiumberger
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iCem` service answers

questions before the job.
Find out how at www.halliburton .com/icem
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Upstream, Hart Energy
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P: +1 713.260.6400 F: +1 713.840.0923
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Read more commentary at

Senior Editor
RHONDA DUEY
rduey@hartenergy.com
Senior Editor
TAYVIS DUNNAHOE
tdunnahoe@hartenergy.com
International Editor
EPmag.com
MARK THOMAS
mthomas@hartenergy.com
Associate Editor
NANCY AGIN
nagin@hartenergy.com
Assistant Editor
CODY ZCAN
cozcan@hartenergy.com
The new look for 2012
ALEXA SANDERS
Corporate Art Director

Senior Graphic Designer
Production Director
& Reprint Sales
LAURA J. WILLIAMS
JO LYNNE POOL
Senior Editor/Manager,
Special Projects
JO ANN DAVY
Chief Technical Director, Upstream RICHARD MASON

Director of Business Development
ERIC ROTH
RUSSELL LAAS
Group Publisher
Editorial Advisory Board

CHRIS BARTON
Sr. VP Business Development, Oil & Gas., KBR
KEVIN BRADY
VP, Sales & Marketing,Verdande Technology Inc.
MIKE FORREST
Exploration Consultant, formerly with Shell
JOHN M. GILMORE JR.
Director of Global Industry Solutions Upstream
Oil & Gas, Invensys Operations Management
CHRIS JOHNSTON
VP & Managing Director, North America, Ensco
ULISSES T. MELLO
Manager, Petroleum & Energy Analytics, IBM
DONALD PAUL
Executive Director, University of
Southern California Energy Institute
EVE SPRUNT
Business Development Manager,
Chevron Energy Technology Co.
MANUEL TERRANOVA
Sr. VP Regional Operations & Global Sales,
Drilling & Production, GE Oil & Gas
RONNIE WITHERSPOON
Sr. VP of Marketing & Business Development,
Nabors Drilling USA LP
DENNIS A. YANCHAK
Sr. Geosciences Advisor, Apache Corp.
Vice President, Digital Media

RONS DIXON
Senior Vice President, Consulting Group
E. KRISTINE KLAVERS
Executive Vice President
FREDERICK L. POTTER
President & Chief Operating Officer
KEVIN F. HIGGINS
h, Spring. Its the time when a young mans fancy turns to love, according to Lord Tennyson. But if a young man is working in oil and gas, that
fancy turns instead to readjusting expectations for the year ahead.
Yes, its that time of year when we toss out those 90-day old annual forecasts
that populated industry trade publications as 2012 arrived.
You recall the old narrative: a double-digit increase in capital spending was
an early harbinger of further expansion in the domestic drilling market and
additional proof that the international arena was on the verge of a significant
activity increase.
The narrative was nice while it lasted. But a funny thing happened on the
way to spring 2012. Domestically, natural gas prices per Mcf dropped below
the value of a large Starbucks latte. Natural gas drilling followed suit, with
significant rig count declines in the Haynesville and other dry gas drilling
regions.
By the time 4Q earnings calls wound down in early March, operators were
discussing reduced domestic budgets for any project that involved methane.
It seems the term gas had become a four-letter word.
So where does that leave us for 2012?
The new narrative calls for a flat rig count domestically as operators target
liquids, even as they reduce gas-drilling efforts. The good news is that operators should see relief from escalating field costs. Pressure pumping capacity
additions made sense in an aggressive oil and gas market. Now that the gas
market is weakening and assets are rotating into liquid plays, the inflection
point on when the industry overbuilds has moved into 2012 versus the 2013
event the pressure pumpers discussed previously.
Internationally, the offshore is the place to be as deep water rapidly develops momentum in West Africa, Brazil, and the Gulf of Mexico (GoM). By
year-end, accelerating tightness in the ultra-deepwater segment should
increase rig rates and tighten equipment availability in both the deepwater
and midwater segments.
Meanwhile, the jackup market gives every indication of improvement
globally. In some cases, it involves markets like the Middle East where the
Saudis are expanding programs to offset potential global supply disruptions.
Closer to home, the GoM shelf has become more intriguing as it undergoes
consolidation. Perhaps the most notable indicator that the times are changing
was found when a long-time onshore midcap operator acquired its first offshore shelf package to generate cash to finance development in the Mississippi Lime.
Gulf oil and gas as a free cash flow generator? Now thats something to stir a
young mans fancy.
Chief Executive Officer

RICHARD A. EICHLER
industry
PULSE
Post Macondo: Stability returns to Gulf

Reduncies and additions affect safety and cost in new government regulations.
Adam Feinberg, Miller & Chevalier Chartered
t is not surprising that after a catastrophic event like the

April 2010 oil spill in the Gulf of Mexico (GoM), the
government would impose new regulations on offshore
drilling. Among other things, the government imposed
two deepwater drilling moratoria, created new safety
rules governing offshore drilling activities, adopted new
requirements for oil spill response and containment, and
substantially restructured the federal agencies that oversee offshore drilling by creating the Bureau of Ocean
Energy Management, Regulation, and Enforcement
(BOEMRE) from the former Minerals Management
Service in 2010. It then split BOEMRE into the Bureau
of Ocean Energy Management (BOEM) and the
Bureau of Safety and Environmental Enforcement
(BSEE) in 2011. These actions have had a profound
impact on offshore drilling in the US. Now that two
years have passed since the spill, it is worth taking stock
of the current state of offshore drilling regulation.
Changes in regulation
Some of the governments regulatory changes, even those
that add significant costs, have received broad acceptance

because they improve the safety of offshore drilling. However, other changes have added to the industrys regulatory costs without offering any material improvements.
Moreover, the government has made many procedural
missteps in its regulatory efforts. Without adequate justification, it imposed a deepwater drilling moratorium that a
federal court struck down. It reimposed the moratorium,
again without adequate justification and without following the proper administrative procedures, leading a federal court to hold the government in civil contempt.
After lifting the moratorium, it took an inordinately long
time to issue drilling permits, prompting a federal court
to find the governments actions to be unlawful and to
require the government to act more expeditiously. The
government imposed many substantive regulatory changes
through Notices to Lessees (NTLs) and other informal
guidance documents instead of following the required
notice-and-comment process. As with the moratorium and
the delay in issuing drilling permits, this stealth rulemaking was condemned by a federal court. Further, the governments repeated promulgation of new regulatory
guidance caused significant confusion both among the
industry and the governments own personnel.
Improvements and inadequacies
Workers attempt to contain the oil spill that resulted from the
Deepwater Horizon explosion in 2010. The US governments

response to the disaster has been called into question.
Two years after the spill, the government has improved

on some of these counts. For example, the Department of
the Interior has not recently imposed any new significant
regulatory changes, either through NTLs or through formal regulation.
On the other hand, the speed with which the government is processing applications for permits to drill is still
inadequate. A year ago, a primary reason for the delays
was the governments new and constantly evolving requirements regarding oil spill containment. With time and an
end to the flow of new regulatory pronouncements, the
uncertainty has diminished and operators now know how
they can comply with the governments current view of the
containment requirements.
Yet the delays remain. At present, they seem to be caused
partly by government understaffing and an inefficient allocation of the resources the government does have, conditions that seem to have been made worse by the splitting of
April 2012 | EPmag.com
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E M E R S O N . C O N S I D E R IT
SOLVED':
industry
PULSE
BOEMRE. As a result, the current pace of permit approval

lags far behind historical norms. Even fairly routine permits, such as commingling production or abandoning a
well, take an extended period of time to obtain.
In addition, the BSEE seems to have adopted a deemed
submitted process, under which it will not start to review
a permit application until it deems the application to be
complete. Thus, an application that is approvable but is
missing one piece of data must be resubmitted and
seems to go to the back of the permitting queue before
the BSEE will review and approve it. The concept of
deemed submittal cannot be found anywhere in the Interior Departments drilling permit regulations. Rather, it
seems to be borrowed from the departments planning
document approval process, where the department uses
the concept of deemed submittal to extend the statutory
time period for acting on planning documents. This
deemed submittal system sometimes results in substantial
delays when an operator is forced to make repeated resubmissions before the government will deem an application
to be submitted so the review process can begin.
Regulators are catching up

Macondo hit home the fact that technical
advances were outpacing federal regulations.
By Rhonda Duey, Senior Editor
egardless of ones opinion about the reaction of the

US government to the Deepwater Horizon disaster,
the fact is that it was a wake-up call for those agencies
and organizations responsible for regulating the offshore oil and gas industry. In the two years that have
elapsed since the incident, these groups have been
tasked with reviewing their existing regulations and, if
necessary, updating them to acknowledge new technologies and techniques that have been developed for
deepwater drilling.
Brian Khey, Ltd. Cmdr. for the US Coast Guard, has
been visiting industry events explaining his agencys
plans to overhaul current regulations. Our regulations are petty old, so were trying to update them,
Khey said. The industry outpaced the governments
delay of putting new regulations out.
While the process is ongoing, Khey said the industry should expect policy updates and hopefully a
modernization of the requirements. Already, he said,
a draft guidance has been issued for dynamic positioning and the emergency disconnect procedures
that accompany station keeping. The agency held a
10
The repercussions of these delays go beyond the simple

length of time it takes to obtain a permit. Operators also
suffer due to the lack of predictability in the process.
The ability to schedule rigs, manpower, and the purchase
of raw materials is integral to whether many offshore
prospects can be explored for and developed economically. The lack of certainty about how long it will take an
operator to obtain a permit unnecessarily adds to the costs
of offshore exploration and development and makes the
exploitation of some prospects impossible.
Two years after the GoM oil spill, the regulatory environment is certainly more stable than it was immediately
following that tragic event. The government has allowed
drilling activities to resume and has, at least for the
moment, ceased its practice of repeatedly issuing substantive requirements through NTLs and other informal
guidance documents. However, some problems with the
governments regulatory regime remain. Perhaps most
notably, the period of time it takes to obtain permits is still
too long and unpredictable. Hopefully, the government
will be able to address these issues in the near future.
public hearing in February and is sifting through
industry feedback.
The guidance will be a huge change in the way we
look at dynamic positioning and communications that
go on between the navigational launch of the marine
crew and the drilling crew if something bad does
occur and theyre unable to maintain station, he said.
The Coast Guard is charged with ensuring the safe
operation of vessels, and its regulations cover offshore
drilling. Its purview includes electrical and power
generation and emergency systems.
Khey characterized the relationship between the
Coast Guard and the industry as one where the industry is seeking to understand potential regulatory
changes so that companies can ensure they can comply. The Coast Guard also is working with the Bureau
of Safety and Environmental Enforcement to define
roles and harmonize requirements that overlap.
He admitted that the Macondo disaster was an eyeopening experience for his agency. It hit home the
importance of us updating our regulations, he said.
The question weve asked ourselves is, What are the
important things we should be looking at, and are we
looking at them? Were reevaluating that and making
sure that our inspectors are truly looking at the important things that keep our offshore operations safe.
For more information on changing regulations, visit
Homeport.uscg.mil.
11
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11
emarkable progress from remarkable people

The University of Oklahoma's Mewbourne College of Earth & Energy has
made remarkable progress in the five years since our beginning,and our
many achievements would not have been possible without the more than
million in gifts from alumni and friends in the industry.
dowments of over $14 million for student scholarships

oleum engineering,petrophysics,and frontier shale laboratories
:ilities, classrooms,computer installations,and library renovations

nteractive drilling and well-control simulator
nd geophysical field camp in Colorado

leading shale research program since the Barnett Shale
www.ou.edu/mcee
MEWBOURNE
COLLEGE OF EARTH&ENERGY
THE UNIVER SITY OF OKLAI IOMA
00
Ì
Real education for the real world.
world
VIEW
The classic elephant hunter

takes aim in Central Asia
An independent operator in three underexplored republics in Central Asia has the know-how
to access a huge pool of resources in the regions vast and prolific hydrocarbon basins.
Nancy Agin, Associate Editor
t the core of the Asian continent lie three former

Soviet Union states that hold enormous conventional resource potential in vast, largely underexplored
basins. In these larger states, bordering or near the
Caspian Sea, the regions terrain is considered to be as
diverse and rugged in its extremes as any in the world
with mountains, deserts, and harsh operating conditions.
For more than 20 years, Tethys Petroleum Ltd. has
worked extensively in most of the oil- and gas-bearing
areas in Kazakhstan, Tajikistan, and Uzbekistan and has
honed its knowledge operating in these challenging environments and climates. It also has the distinction of being
the only independent E&P company simultaneously operating in all three countries, where it has a mix of producing and exploration assets with near-term cash flow and
significant upside potential.
Tethys CEO David Robson, a geologist by background,
believes some of the most prolific geologic basins in the
world exist in Central Asia, where large-scale petroleum systems could potentially be found using more accurate geological models of the region and recently acquired data.
Youve got real opportunity in areas that have hardly
been scratched, he said. And although there was some
development done in Soviet times, there are still large
areas that were not explored or have barely been
explored.
Strategically positioned
Tethys began working the Caspian region in earnest with a
fairly limited role as a smaller independent, developing
minor shallow gas fields in the area and initiating the first
dry gas development in Kazakhstan.
We started working in Kazakhstan in 2003, began
our first gas development in 2005, and brought that
onstream in 2007, Robson said. Now that was developing shallow gas at really quite shallow levels only about
450 m (1,476 ft) and that was the focus to getting cash
flow going. Thats the way our company works; we like to
get cash flow, and then we like to go out and explore for
bigger things.
12
Dr. David Robson, CEO, Tethys (Images courtesy of Tethys

Petroleum Ltd.)
The company has since grown into a more substantial

role as a key Central Asia player, concluding, for example,
the first production-sharing contract (PSC) in Tajikistan,
where Robson also functions as a founder of the Presidents
Investment Council. More recently, proposals to diversify
Tajikistans gas import and export infrastructure via the
Navrouz project that will carry gas from Afghanistan has
put the company at the forefront of regional development.
According to Robson, Tethys no longer is focused on
exploiting small deposits but rather is targeting large and
giant structures, particularly in Kazakhstan, which contains 3% of the worlds oil and where, in 2010, the company discovered a new oil province to the west of the Aral
Sea with its Doris discovery well.
Wildcat success
In Kazakhstan, Tethys holds 100% working interest in the
Kyzyloi production contract, the Akkulka exploration contract, the Akkulka production contract, and the Kul-Bas
world
VIEW
exploration and production contract, encompassing a net

area of more than 8,000 sq km (3,089 sq miles).
With production from its Kazakh oil and gas assets driving cash flow, Tethys current major focus is the Doris oil
field, which lies in the Akkulka exploration contract area.
Robson considers Doris the companys biggest achievement to date, noting that it is the first discovery of oil in this
portion of the North Ustyurt basin, with the nearest producing field being several hundred kilometers away.
We began our deep exploration program on this structure, which in those days was called Akkulka, looking for
what we believed to be oil on the structures flanks, he
explained. The area has been explored to an extent in the
past by the Soviets and also by the Japanese national oil corporation. But they were using much more conventional
geologic models. Weve applied more up-to-date models,
and we were successful in finding the Doris field, which we
are now in the process of appraising and developing.
According to Robson, this is a very productive field,
with the first well flowing high-quality oil at approximately
7,000 b/d with a restricted choke. This oil is very light.
Its got no sulfur. Its got no paraffin. You can almost drink
it, Robson said. Its a green oil. Its beautiful.
Tethys brought Doris online in September 2010 following its discovery in February, installing the first oil infrastructure in the basin with its Phase 1 pilot production
facility. The lack of infrastructure, the remote and hostile
environment, and extreme temperatures from +55C to
-45C (+131F to -49F) were not the only obstacles.
Tethys operations are approximately 650 km (404 miles)
away from the nearest major town, so shipping equipment
proved to be a logistical challenge. Its recently opened oil
loading terminal has resolved some of these transport
issues, Robson explained.
Solving the logistics is a key part of working in the
whole area, Robson said. Weve been trucking oil from
the field to the nearest terminal point, which is about 450
km (280 miles) away over some quite tough terrain. But
we inaugurated a new oil loading Aral Oil Terminal in
January 2012 that is closer to the field, only 230 km (143
miles) away, which well use as a trans-shipment point for
bringing equipment to the field, thereby not having to
move it 650 km (403 miles) by road. Instead, well take it
along by rail.
Tethys also uses a fleet of 241 trucks that load oil to and
from the terminal, and the company expects Doris production levels will increase significantly.
We could already do that with more trucks, but were
aiming to effectively improve the road, Robson said. And
at some point in the future, well need to build a pipeline.
By the end of 2012, the terminal, a 50/50 joint venture
EPmag.com | April 2012
with Olisol Investment Ltd., will be capable of handling

around 12,000 b/d of oil, effectively increasing production
two-fold from 2,000 b/d to 4,000 b/d, and that figure could
be scaled up even further, Robson said. Doris has tested
more than 13,000 b/d from the wells on the field and could
potentially produce close to 7,000 b/d as a continual production rate. Were drilling at least two more exploration
appraisal wells on the field this year, which we would anticipate enabling us to step production up even higher, he
said. Were also testing as part of that program a prospect
downdip of Doris that looks to be very substantial in size.
Pioneering deep exploration

In Tajikistan, which Robson referred to as the companys
jewel in the crown, Tethys is sitting on some of the worlds
most attractive acreage and, longer term, hopes its deep
exploration efforts will transform the country into a hydrocarbon exporter. It also recently made the first oil discovery
since the country won independence in September 1991.
Testing is under way to determine its commercial viability.
Tethys first broke ground in this untapped region negotiating the first PSC for the Bokhtar area to the southwest,
which is nearly equivalent in size to Switzerland. Most significantly, the PSC includes almost the entire Tajik portion
of the Afghan-Tajik basin, an underexplored extension of
the greater Amu Darya basin. The Tajik portions deeper
subsalt horizons could be analogous to the supergiant gas
and gas condensate fields in neighboring Turkmenistan
and Uzbekistan, Robson said.
Southern Tajikistan is a geologists dream, with many
different structures, reservoirs, and prolific source rocks,
he said. Tethys 35,000-sq-km (13,514-sq-mile) area is an
enormous part of this basin, containing anticlines and
thrust structures, salt domes, and other associated oil and
gas traps, and we believe from our recent work there is
potential for enormous Jurassic reefs below the regional
salt layer. A recent geophysical survey has identified what
could be considerably large structures of gas, oil, or condensate below the salt; however, nobody knows because no
well has ever been drilled below it.
Robson believes Tethys pioneering exploration of these
supergiant subsalt structures ultimately could prove to be
transformative for the company, which is actively seeking
investment partners for this project.
Uzbekistan also is driving cash flow. Here Tethys implemented the first use of radial drilling and is currently
engaged in production-enhancing operations with NHC
Uzbekneftegaz at the North Urtabulak oil field. The field,
also situated in the prolific Amu Darya basin, is in its last
stages of development.
Its got a little oil left, and were squeezing the last drops
13
world
VIEW
out of the sponge so to speak, Robson said. But were

now in the process of negotiating with the Uzbek government for another field that is only 10 km (6 miles) away
called Chegara, which is a producing field but is not as
mature and has not been developed as much as our existing asset.
The company also has signed a memorandum of understanding with the Uzbek national oil company to acquire
exploration acreage in the northern part of the country
the market for its Central Asia resources will be to the east.
As such, it has developed strong relationships in China and
the Pacific Rim, with Robson serving as board director of
the Pacific Basin Economic Council. Given Chinas rising
energy consumption in particular, Robson is bullish on
regional natural gas prices in the long term.
Today China uses only about 4% of natural gas in its
primary energy mix, but the Chinese government has publicly stated they want to take that up to a level between 15%
More than 200 trucks are loaded with crude oil from the Doris field in Kazakhstan at the Tethys-operated Aral Oil Terminal, which was
inaugurated in January.
near the Doris oil development across the Kazakh border.

Companies have looked for oil there and have yet to
find any, he said, but they have found gas. We think
theyre not looking in the right place, and we think we
know how to find oil there.
The contract is expected to be finalized by year-end
2012.
Tapping the Asian market

In Robsons view, the companys central location in Asia is
a strategic advantage both in terms of learning the lay of
the land and maintaining good working relationships with
neighboring and energy-hungry emerging economies
like India and, particularly, China, which is making significant investments in regional oil and gas projects.
Within this broader context, Robson believes much of
14
to 20%, he said. So even if you see no further energy

growth in China, which I think is highly unlikely given that
the economy is certainly growing, the increased demand
for gas is massive.
According to Robson, the gas will come as LNG from Australia or the Middle East or as pipeline gas, but the logical
place for that gas to come from is Central Asia, he said.
Tethys is a classic elephant hunter, Robson continued.
Its strategy is to increase production and short-term cash
flow to become self-funding to continue financing this type
of exploration and protect downside risks. This is the case
in Tethys work in Kazakhstan and Tajikistan.
But we see great opportunities in the Chinese market, in
the European market, and potentially in the Indian market
for our Central Asia energy resources, and indeed much of
our focus will be to capitalize on these opportunities.
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management
REPORT
Using balanced scorecarding

in mature fields
A balanced view can help ensure that efforts in field management are supporting the
overarching goals of the corporation.
Rob Hull, Halliburton
ver the years, many innovations have come and

gone in the oil and gas industry. From rod pumping technology to the latest smart wells, technology
introduced in the past decade has had a significant
impact. Companies are finding oil and gas reserves in
the most remote parts of the world, viewing the subsurface in virtual reality, and drilling wells under conditions
unimaginable just 10 years ago.
Innovation (even in oil and gas) is frequently the
result of shared best practices between diverse industries.
One methodology used by industries such as retail and
telecommunications is the balanced scorecard (BSC).
This tool is popular because it allows users to tie financial
and nonfinancial metrics together on one dashboard.
Additionally, it can juxtapose seemingly unrelated variables together. Based on the successes of the BSC in other
industries, oil companies should leverage these best practices to monitor their progress in mature fields.
Mature fields are the cash cow of most oil and gas producing companies. However, mature fields are a runrate business with notoriously slim margins, and they
need to be monitored closely. Using a BSC would allow
management to monitor these returns against other critical nonfinancial imperatives.
Production companies need to effectively align their
goals and business objectives at every level of the organization and adapt these objectives to tangible and achievable goals specific to an employees supporting role.
In addition, the industry needs to ensure that field
activities ultimately lead to achieving the vision and strategy of the organization, improve internal and external
communications, and monitor organization performance against strategic goals.
On a more granular level, asset managers worry about
declining production and reaching production targets.
As difficult as these challenges are, corporate goals also
must be addressed. These big picture objectives are
all too frequently left in the boardroom or on analysts
desks and are rarely percolated down to the individual
16
pumper who is ultimately responsible for achieving

them on a field level.
Can these be better managed by a BSC?
A bit of history
The idea of BSCs was originated by Robert Kaplan and
David Norton as performance-measurement frameworks.
Their goal was to add strategic nonfinancial performance
measures to traditional financial metrics and give managers and executives a more balanced view of organizational performance. The methodology was adopted by
mainstream industry in the early 1990s as software applications to measure metrics became more abundant. However, the roots of this approach started in the early 1950s
in work done by both General Electric and French engineers, who created Tableau de Bord, a dashboard of performance measures.
Increasingly, BSCs are being used by corporations.
According to Bain and Co., by 2004 approximately 57%
of global companies were using some form of BSCs.
Recent success stories indicate that corporations are
seeing the benefits of using this type of analysis to track
and achieve their goals.
The oil and gas industry is more traditional; it tends to
be conservative in its management and adoption of new
methodologies. Going forward, the industry would benefit from using this balanced view to ensure the efforts
in mature field management are supporting the overarching goals of the corporation.
Success and failure

For each individual industry, there exist different variables in the scorecards such as financial, customer feedback, internal processes and learning, and growth. The
following case study provides one example of how a corporation customized its scorecard to meet the overall
goals of the company. It is important to note that business scorecards are the result of the individual companys culture and financial needs of monitoring.
Shat-R-Shield is a 40-year-old manufacturer specializing
in plastic-coated shatter-resistant lamps to ensure that
overhead lighting fixtures in factories and assembly plants
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Dopeless Technology.
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Experienced. Efficient. Environmental.
Dopeless technology has been pro, 'en in many drilling applications worldwide over the past nine years.
The multifunctional coating is applied to our connections in the controlled, industrial environment of our mills
leaving them rig ready with no threat compounds.The result: safer operations and less contamination in the
field, faster and more
. connection make-up, and less reservoir formation damage. Dopeless products
are manufactured o :.
'ted production lines with advanced quality controls and supported by a global
network of field services, repair shops and technical support teams.
Technology that makes the difference.
www.tenaris .com/dopelesstec hnology
TenarisHydril1 I
management
REPORT
do not shatter during production. Ten years ago, the company introduced the discipline
of strategic planning into the
business as it realized the
importance of having the
entire organization work
toward a common goal. Over
the next few years it incorporated components of various
strategic models. Management
set targets for the company
and selected initiatives to meet
corporate goals. However,
using such elements such
as Vision, Mission, SWOT
analysis, and Customer Value
A balanced scorecard helps communicate corporate goals at the field level. (Image courtesy
propositions, the team soon
of Halliburton; Source: Epmreview.com/Balanced-Scorecard-Usage-Survey-2010.html)
began to realize it wanted to
take it one step further.
In 2005, the management team attended some trainShield had netted more income than in the previous hising in which members were introduced to the concept
tory of the company. In addition to forming integrated
of a key performance indicator (KPI) BSC, and they
teams to execute these initiatives, Shat-R-Shield is curdecided to try the approach. The team was successful
rently training to cascade its strategic organization-wide
for the first time since it was measuring objectives across
scorecard throughout the company to ensure clarity and
the entire corporation, but there were too many objecalignment. This is the foundation to achieve the fivetives. They used this as a learning exercise since for the
year growth strategy that it currently has in place.
first time Shat-R-Shield was measuring performance.
Practical application to mature fields
The next challenge managers faced was to find measThis example lends itself to tying all the facets together in
ures for the internal processes and learning and growth
a mature field. Sometimes a simple KPI-based scorecard
perspectives of their operational KPI scorecard. Though
cannot cascade through the organization, so enabling the
they went through the basic steps to provide the foundacascading can impact the bottom line of the company.
tion, they found it a bit crude. In 2008, the team obtained
When there is an ability to tie all the elements together,
training for the CEO and others, which allowed them to
companies can begin to realize the needed results within
redo their scorecard and move it into the next iteration
the low-margin mature field.
for the corporation. Results:
Numerous oil and gas companies have implemented
The company took the operational KPI scorecard to
this concept with varying results to transform a passive
a more integrated balanced scorecard with these
process into a more concise daily plan. Several groups are
focus areas:
responsible for different aspects of mature fields. Having
Optimized business systems;
a BSC that will provide the necessary metrics and also
Improved process management; and
communicate the corporate goals for the mature field
Improved product development;
will add significant value and foster the communication
It implemented training for the organization to
throughout the organization.
outsource the explaining for the framework of
As simplistic as this may seem, being able to use
the BSC; and
this methodology in a mature field when operators are
It reduced 20 strategic objectives to eight managedealing with thousands of low-margin wells can add sigable ones.
nificant value when a quick response is needed. If the
The BSC approach achieved significant results within
scorecard is made graphical, users will have a tool that
the organization, both in terms of targets reached and
will provide the necessary vehicle to communicate the
in terms of effecting a change in mindset throughout
overall corporate goals as well as individual field planthe company. The organization started over with the
ning, deliverability, and well production.
scorecard in 2010, and by the end of the year, Shat-R18
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NATIONAL OILWELL VARCO

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management
REPORT
The face of the oil and gas industry

is changing
How are large, global organizations many with long and entrenched histories and practices
aligning their workforces to leverage todays business opportunities in the new world?
Sylvia Vorhauser-Smith, PageUp People
he oil and gas industry is a global business that understands the meaning of resource scarcity. With an ever
larger workforce required to meet the needs of projects
around the world, never has this term applied so aptly to
what is fast becoming one of the rarest of global commodities: human talent.
Competition for talent is reshaping
how oil and gas companies think
about their human capital needs
and the strategies they are
developing to optimize their
access to qualified workers.
This new paradigm
requires focus on using
the critical skills essential
to strategy execution and
project delivery.
Talent acquisition
and mobility
The structural misalignment between the current
skills of the workforce and
those that will be required in
the future is forcing companies
to look beyond their immediate
needs and actively participate in the
development of the industrys future talent
pipeline. Many are actively engaged with the education sector, seeing the need to both attract students to the
industry and its occupations and to assist in defining the
new skills and competencies required to be effective in
tomorrows world. Partnering with leading colleges and
assisting with curriculum development have become recognized activities within corporate talent management teams.
This all comes too late for the industrys middle-tier
employees. Skills are being developed in new graduates,
and these are well developed in the over-50 generation of
the workforce. However, these same skills are lacking in
20
the 30- to 50-year range. As Deloitte highlights in its 2011

Trends report, the industry has lost a generation, and the
result is a severe shortfall of experienced managers and
leaders. In response, the oil and gas industry is taking
ownership of the problem and investing heavily in the
training and development of its emerging talent.
Global rotational programs are increasingly popular
as they allow employees to develop a broad base of skills
across countries and regions and work with
experienced mentors. Developing career
competencies is becoming a prerequisite for success in an environment
where change is constant and
challenges are escalating
in complexity.
Fortunately, technologies
supporting talent acquisition and mobility management are stepping
up to facilitate this. For
organizations to accurately capture the skills
of their workforce, plot
their talent whereabouts,
and link this with business
needs, fully integrated systems are required.
An integrated system provides
greater insight into available talent
and draws upon employee and recruiting data to help model and plan career progression routes for employees. Entry-level engineers
often join an organization with the goal of upward mobility and eventually graduating to team lead or management
level. Petroleum engineers with training and exposure to
the organizations business can be prepared for future
advancement.
Employees benefit because they gain insight into future
opportunities and potential career paths. They understand
the time commitment to advance and can identify others
who have followed a similar career trajectory. Managers
and employees have access to more information, which
management
REPORT
facilitates productive conversations and meaningful development plans that correlate to the organizations goals.
Talent management technology that provides a line
of sight into required competencies, training requisites,
certifications, and other data points across the global
talent base help managers better understand available
talent, where the gaps are, and the development needs
for future success. Using the system, organizations can
foster mentoring relationships to help employees develop
new skills and prepare for advancement. This serves the
dual purpose of keeping employees engaged while
demonstrating the companys commitment to internal growth.
For multinationals operating in
numerous countries and workplace
jurisdictions, the complexities of talent
management are making robust and
dynamic systems essential to effective
workforce management. This complexity is exacerbated by the growing trend
of large multinationals being headquartered predominately in OECD countries yet experiencing their greatest
growth in the emerging markets. The
borderless workplace needs a borderless workforce.
career path options, talent management technologies that

unify processes from talent acquisition to succession planning allow both the employee and manager to optimize
career planning.
Knowledge transfer, succession management

Multinational corporations are subject to a double
whammy knowledge transfer challenge: shifting knowledge from senior, experienced (and soon-to-be-retiring)
employees to the next generation and leveraging organizational know-how and best practices across geographic
and cultural boundaries.
Inter-generational knowledge transfer
requires recognition of the differences
in preferred approaches to ensure the
exchange is optimized. Much research
has highlighted differences, for example in learning styles and communication channel preferences, between
older and younger workers. Across
cultures, different values, norms, and
expectations can present roadblocks to
effective knowledge transfer, to which
many frustrated expatriate leaders will
attest. The oil and gas industry has its
own additional challenges: offshore oil rigs and remote
sites can limit access to technology we otherwise take for
granted. Together, there is any number of hindrances to
the orderly and timely transfer of information from point
A to B.
The ultimate litmus test of effective talent management
is the bench strength of an organizations succession plan.
Succession tests the applied processes and tools of all the
other stages of the talent management life cycle:
Robust sourcing and selection practices fuel the
succession pipeline with new recruits and fresh
experience;
An effective performance process engages high
performers to produce and excel;
Active development processes continuously build the
capabilities required of employees in the future; and
Dynamic, challenging career paths stretch employees
and create the conditions that allow them to reach
their full potential.
All change brings both threat and opportunity. The
changing face of the oil and gas workforce requires a
talent management response that leverages the opportunities through the application of new processes and supporting technologies. In this high-growth and competitive
landscape, human resources are scarce, and the war for
talent is real.
The borderless
workplace
needs a
borderless
workforce.
Career planning, performance, development

Increasingly, organizations recognize that performance,
development, and employee career paths sit on the same
continuum. High performers require constant development to challenge and grow their abilities, and career progression is their goal. Most organizations today recognize
the necessity for the dual-career carriageways of management and technical mastery, the former developing leadership breadth and the latter functional depth. In fact,
career paths and career plans are emerging as the leading
indicator of employee retention and are a go/no-go
deciding factor for many Gen Y employees.
Companies are actively surveying their employees to
understand what really matters. Many have workforces
that span four generations: their wants and needs are
as diverse as their constituents, and the concepts of progression and rewards can have a variety of meanings. For
example, many mature workers are more interested in
flexible work and mentoring others than climbing the corporate ladder. By contrast, young workers want a clear line
of sight to career advancement and specific development
milestones that will enable them to achieve rapid progression. Again, technology is the talent managers friend.
With the ability to dynamically map, link, and illuminate
21
digital
OIL FIELD
Virtual reality simulation

improves offshore training, safety
Three-D virtual reality simulators provide high-fidelity operations, maintenance, and safety
training in a cost-effective, low-risk setting.
John Gilmore, Invensys Operations Management
utting people on offshore platforms, FPSOs, and

other remotely operating vessels just for training purposes not only is costly, but it introduces risk to platform
operators, their co-workers, the facility itself, and the environment. Because of advances in simulation, visualization, and interactive gaming technology, however, it is
now possible for offshore operators to learn much of
their craft in a safe, realistic training environment.
Caspian Sea, for example, come with a high amount of

sulfur and sour gas, with high pressure levels and very
high temperatures. Sending untrained or partially
trained operators into these environments is dangerous.
Advanced training, however, can reduce the risk considerably. Using virtual reality simulation, trainees can
rehearse and respond to problems and abnormal situations repeatedly so they know exactly where they are
supposed to be and what they are supposed to do if the
situation occurs in real life.
Managing new talent

Reducing risk
Simulators also provide access to and knowledge of facilVirtual reality simulation is particularly well-suited for
ity processes, enabling remote management through
use in upstream E&P, where remote and unsafe
locations are increasingly common. This type of
technology enables platform operators to receive
80% to 90% of their training in a virtual environment, which can significantly reduce cost and
risk. For example, risk of injury can be eliminated because operators are not immediately
placed in an unfamiliar offshore environment.
They are less likely in a position to make a mistake that could lead to negative consequences,
such as a spill, and less likely to encounter an
emergency situation they have never before
experienced.
Simulated training also is useful for operations
based in extreme climates such as the Arctic or
in remote locations. For such sites, it is better to
deploy fully trained operators rather than rely on
only partially trained operators who are expected
to learn in the field. The risk to operators, equipment, and the environment in such extreme
locations might be comparable to other closer or
near-shore locations, but if the trainee somehow
instigates an emergency or other abnormal situation in such remote and harsh environments, it is The EYESIM immersive virtual reality training system integrates virtual walkthroughs of facilities such as this offshore oil platform with advanced simuharder to respond as efficiently.
lation and modeling software. (Images courtesy of Invensys Operations
Simulated training can be especially valuable
Management)
in high-hazard areas. Some drilling areas in the
22
Breaking
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At ION , we are driven to solve the toughest problems in the most challenging environments.
In the frigid waters of the Arctic where no modem seismic existed , ION created and
AREAS OF EXPERTISE
employed new technologies that enabled data acquisition under ice. As a result , ION
Unconventional Reservoirs
was able to acciuire data further north than ever before and dramatically extend the
Challenging Environments
traditional data acquisition season. From the Arctic to the desert , transition zone, shallow
Complex Geologies
obstructed marine and other demanding environments, look to ION for breakthrough
innovations that hel p you achieve your most ambitious objectives.
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CHARGED TO INNOVATE. DRIVEN TO SOLVE. '"
Basin Exploration
Reservoir Exploitation
digital
OIL FIELD
unmanned execution and robotic control in hazardous

areas. Simulators can help train operators on new systems as well as train new or younger operators and
engineers in a real-time, immersive environment, helping companies retain and replenish the specialized
knowledge they need to improve their operations.
Not only does simulation provide trainees with a more
realistic environment for extended practice sessions,
it promotes safer shutdowns
and turnaround and also speeds
knowledge acquisition by exposing operators to best practices,
procedures, and site-specific
processes more quickly, further
reducing the risk of operator
error. Users interact with the
virtual facility via devices such
as game controllers, data gloves,
or joy sticks. Special optical
and audio devices such as
head-mounted displays, 3-D
graphics, and surround sound
provide a realistic setting for
training simulation.
on a real platform, right down to ambient noise, light,

and conditions.
The EYESIM simulator has now been extended to
iPhone and iPad users, and all touch facilities are
available for a complete user experience. The mobile
EYESIM offering, using Cloud computing, allows users
to be virtually trained on systems, operational procedures, and plant environments. Extending the EYESIM
model to mobile devices allows
unfettered access to procedures,
processes, and operational statements of work without having to
be at a terminal.
The mobile EYESIM also can be
used for simulating facility experiences in the classroom. Instructors and supervisors can monitor
dynamically and in real time a
trainees position and behavior in
the virtual facility environment
through a client application running on a hand-held device.
Increasing safety,
efficiency
New software
Experience is sometimes defined

One virtual reality system that is
as recognizing your mistake the
being implemented in upstream
second time you make it. Virtual
oil and gas applications is the 3-D
environments help teach trainees
EYESIM immersive virtual reality
how to adapt to rapidly changing,
solution from Invensys Operaextremely hazardous operating
tions Management. The EYESIM
conditions so they can make their
The mobile EYESIM offering allows operators
technology links control room
first mistake in a risk-free envito simulate and monitor systems, operational proceoperators to field and mainteronment. These are the skills
dures, and plant environments in a
nance operators by means of a
operators traditionally have had
virtual environment on hand-held devices.
high-fidelity process simulation
to develop within the school of
and virtual facility environment.
hard knocks.
It provides complete facility crew training to improve
Simulation technology serves a valuable HSE function
skills that are critical to safety by enabling operators to
as well because operators are more fully and capably
perform tasks in a simulated environment, allowing them
trained before implementing an operational procedure
to react quickly and correctly, facilitating reactions in
or process. Simulators can be used for predictive analyhigh-stress conditions, and instilling standards for teamsis, teaching safety procedures such as escape routes,
work and communications.
tracking and visualization, accident investigation, and
The Invensys solution is based on a modeling engine
standardized escalation and remediation procedures. By
powered by the companys SimSci-Esscor DYNSIM simudocumenting safety and environmental procedures, simlation software, which is coupled with a high-performing
ulators also can facilitate and improve regulatory comvirtual reality engine and a high-quality 3-D modeling/
pliance with the goal of helping to reduce emissions.
scanning toolset. The simulations are based on firstThree-D immersive virtual reality training helps trainees
principle modeling of the platform so the operator
achieve goals quicker and with fewer risks to themselves,
experience is similar to what would be experienced
their communities, and their environment.
24
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digital
OIL FIELD
Big Data requires efficient analytics,

bandwidth, content
As the amount of important information continues to increase, companies will need to think
creatively to manage and act on it.
Peter Ferri, NetApp
he world is now entering a new era of big scale in which

the amount of data processed and stored by enterprises
is breaking down existing architectural constructs. A
major reason for this breakdown is that data are growing
on two axes: volume and usage.
The industry has coined the expression big data
to describe this, and although there is no universally
accepted definition, International Data Corp. defines big
data as a new generation of technologies and architectures designed to economically extract value from very
large volumes of a wide variety of data by enabling highvelocity capture, discovery, and/or analysis.
The massive increase in scale is occurring for a number
of reasons. The one that has the most impact on the oil
and gas industry is the enormous growth in machine- and
user-generated data such as microseismic, multicomponent 4-C, and time-lapse seismic data from distributed
control and surveillance systems; downhole sensors;
mobile devices; and myriad other sources. Cost pressures
also are driving consolidation of data centers enterprises
can no longer afford business units to run their own IT
infrastructure. Planned moves to cloud computing and
the demands of hundreds of thousands of users on fewer
centralized systems all contribute to the need for new
thinking to accommodate this increased scale.
A change in mindset
For decades, the industry has been living on the frontier
of data storage, compute, and visualization technologies in
areas such as seismic imaging, real-time data, and reservoir modeling. Companies manage petabytes of data and
generate new data at rates between 30% and 70% a year.
The ability to store large amounts of data is evident, but
the real challenge is being able to acquire, process, manage, and turn such voluminous data into insight, make
information available to the right people, and to do it all
in much shorter time frames. All of these forces together
are putting an enormous amount of pressure on existing
26
Big Data will challenge companies to master their ABCs analytics, bandwidth, and content. (Image courtesy of NetApp)
infrastructures, from compute and applications to network and, especially, the data storage platform.
Traditional approaches are not able to scale to the level
needed to ingest all of the data and to analyze, deliver, and
store at the speeds required in the new big data era. Big
data is breaking todays storage infrastructure along three
major axes:
Complexity. Data are no longer just text and numbers;
data deal with real-time events and shared infrastructure. The information is now linked, it is high-fidelity,
and it consists of multiple data types. Applying normal
algorithms for search, storage, and categorization is
becoming much more complex and inefficient;
Speed. High-definition video, sensor data, seismic data
all of these have very high effective ingestion rates.
Businesses have to keep up with the data flow to make
the information useful. They also have to keep up
with ingestion rates in order to drive ever faster business outcomes; and
Volume. All collected data must be stored in a location
that is secure and always available. With high volumes
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of data and such ridiculously large files, IT teams have to make decisions
about how, where, and how long to store data without increasing operational complexity. This can cause the infrastructure to quickly break on
the axis of volume.
NetApp has divided the solution sets for managing data at scale into three
main areas called the Big Data ABCs: analytics, bandwidth, and content. Each
area has its own specific challenges and unique infrastructure requirements.
Providing efficient analytics for extremely large datasets is critical. Companies are laying the foundations for the digital oil field, and monitoring technologies are streaming hundreds of gigabytes of information a day for a single
field. With new computational approaches like Hadoop and next-generation
data warehouses from vendors like Teradata, companies will be able to gain
increased insight from this data, predict future performance, and solve problems in real time.
Bandwidth solutions focus on obtaining better performance for very fast
workloads like seismic imaging. Companies are acquiring higher resolution and
higher density wide-azimuth datasets and are using much more complex processing algorithms to meet the reservoir challenges around deep water, subsalt,
and presalt. Trace densities now are in the millions of traces per square mile,
and channel counts are in the hundreds of thousands. All of this is pushing past
the limits of todays processing facilities and infrastructures. In these environments it is common to talk about data throughputs in the tens of gigabytes per
second and storage densities approaching two petabytes in the space of a single
computer room floor tile.
The content solution area focuses on the need to provide boundless secure,
scalable data storage. Content solutions must enable storing virtually unlimited amounts of data so enterprises can store as much data as they want, find
them when they need them, and keep them forever. It is estimated that over
the next five years, digital archive capacity will grow nearly 10 times. This is
ushering in new object-based storage solutions and access methods like cloud
data management interface to addresses the needs of these organizations to
access petabyte-scale globally distributed repositories across multiple sites.
Enterprise-level efficiency features also are helping to stem the tide of capacity
growth through features such as data deduplication and lossless compression
that can reduce the storage requirements for both pre- and post-stack seismic
data by as much as 50% significant savings for the multipetabyte environments typical in upstream oil and gas.
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Data life cycle

The Big Data ABCs should not be seen as distinct silos but rather as stages
within a data lifecycle as data flow through these segments. For example, an
operator might see massive amounts of data coming from seismic imaging
(Big Bandwidth), but then the data need to be made available to researchers
all over the globe to be analyzed (Big Analysis), and certainly the data need
to be kept for a very long period of time (Big Content).
The trend of using bigger datasets offers opportunities to spark innovation, deliver new insights, and solve much bigger problems than before.
However, many of todays legacy systems cannot effectively scale to support
the new techniques required to create value from this data. Companies need
to deploy new technology stacks and new design methodologies to overcome
these barriers.
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TECHNOLOGY
USBs Friend or foe?

The lowly, ubiquitous USB port is at the center of a controversy at
major companies.
hose of us with a few decades under our belts can

remember a workplace in which computers did not
exist. By and large, weve welcomed computers and
their subsequent improvements the mouse, color
monitors, e-mail, and Internet access.
But few things drive productivity better than adequate storage devices. It used to take five or six floppy
disks to load some computer programs; now that can
be managed with a single CD. I once owned an external hard drive, not as a backup but because I needed
the extra storage space. With the advent of the USB
interface, a flash drive or memory stick can store
gigabytes of data on a device no bigger than my
little finger.
In the world of geophysics, USB
drives have had an immediate and
impressive impact on the transfer of seismic and well log
data. These are large
datasets that usually cant
be e-mailed or even
stored on a DVD. But
with the USB drive revolution, geophysical
contractors typically
deliver data to their
clients on devices that
connect via USB ports.
This may be changing.
Several major companies,
concerned about security
and malware issues, are moving to ban the use of USB ports
within their companies. While this is
certainly a quick solution to the security
issue, the backlash that will be felt within E&P
departments will be huge.
Ive talked to several geophysicists who are concerned that this ban will seriously hamper their ability
to collaborate with other companies. They also worry
about how they will get their seismic data from their
suppliers. And they worry about presenting at conferences. When presented with alternatives such as emailing the presentation or using their own laptops,
RHONDA DUEY
Senior Editor
rduey@hartenergy.com
EPmag.com
many simply find these solutions unacceptable, particularly when a PowerPoint presentation containing
seismic examples can be several megabytes in size.
Additionally, some companies are banning the use
of DVDs and CD-ROMs, which have been
industry standards for years for archiving technical conferences and providing collateral material such
as maps from contractors.
Some companies will provide exceptions to an outright ban, but even those
will require password
protection and encryption, which can slow
things to a crawl.
I think its time for
the industry to come
to grips with its dueling
needs for productivity and
protection. The IT industry
can be a huge help here.
Already Cloud computing is
reducing data storage and processing headaches in other industries,
and its adoption in the oil and gas industry could reduce the need for external storage altogether. In the meantime, care needs to be taken not
to make such all-encompassing decisions without
proper analysis. Banning USB interfaces might solve the security
issue, but geoscientists and
engineers are not going
to be very happy with the
consequences.
31
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CONSTRUCTION
New RSS drills from spud

to TD in one run
System offers smarter well bores with more directional control.
et again, the SPC/IADC Drilling Conference showcased an impressive amount of new tools and techTAYVIS DUNNAHOE
nology bound for field applications worldwide. Held
Senior Editor
in San Diego, Calif., March 6-8, the drilling sector was
tdunnahoe@hartenergy.com
well represented by a number of companies working to
increase drilling efficiency through the application of
innovative new technology.
EPmag.com
As the shale plays of North America and abroad
become more important to overall reserves, technology
Schlecht, Baker Hughes vice president of Drilling Service,
is trending toward enhancing these applications.
In some shale plays, the AutoTrak Curve system has
Rotary steerable systems (RSSs) have been in play for
reduced drilling time up to four days and saved operators
some time and have proven to be a valuable asset when
60% of the rig time per well, he said.
building curve to access the reservoir sooner. Meeting the
In addition, continuous string rotation reduces torque
challenges of drilling unconventional plays is time-consumand drag for better wellbore quality. This also reduces
ing with conventional tools. Even with current RSS systems,
cleanup time and eases the path for casing running and
multiple trips are sometimes required, which can increase
fracturing operations. Landing the reservoir faster
cycle times for spud to first production.
A new RSS system was launched in San Diego that may
increases the pace for the remaining processes such as
allow operators to access shale reserves in one fast run.
completing, producing, and moving to the next well.
The AutoTrak Curve RSS from Baker Hughes was
The AutoTrak system is fitted with on-bottom downlink
designed to kick off deeper into the well, exposing
commands for fast directional control. The commands
more of the reservoir.
can be sent manually using rig pump controls, a design
For most unconventional plays, there is a high demand
feature included to limit the footprint on the rig site.
for greater buildup rates to maximize the lateral lengths
The tool also can be controlled from the surface comin the reservoir. Operators typically rely on steerable
puter using the automated downlink system. The system
motor assemblies to drill the curve and latallows steering targets to be changed without interruperal. According to Baker Hughes, the Autotion, and the optional battery allows directional surveys
Trak Curve system is capable of drilling
while making connections.
Time will tell if this system is viable. This closed-loop
curves at a buildup rate of up to
drilling system is fully programmable and has currently
15/30 m (100 ft) with continuous
For
undergone more than 10,000 hours of rigorous field testdrillstring rotation. One of the
most
ing in some of the toughest unconventional environkey benefits of this system is
ments in North America, according to Baker Hughes.
that it can be used to drill the
unconventional
We specifically engineered this system to meet
vertical, curve, and lateral
plays, there is a high
the needs of those drilling in unconventional oil
section, typically in a sindemand for greater
and gas plays, said Scott Schmidt, president
gle run. By eliminatof Drilling & Evaluation. With fewer coming slide intervals
buildup rates to maximize
ponents than the typiand improving
the lateral
cal RSS tool, the
rate of ROP, this
lengths in
company hopes to drive a new
system may help drillers to
the reservoir. performance and reliability
reduce cycle times even further.
According to Mathias
standard.
33
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E&P and FOR Related Services

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1;&P Program Research a n d Desi gn
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OPTIMIZATION
Is the industry brave enough to

freeze its Arctic plans?
With Gazprom to start production drilling soon in the Arctic offshore, the
need for the industrys oil spill prevention and response capabilities in the
frozen North to be ready for action should be paramount.
he era of the Arctic as an offshore producing

province is upon us. Innovations in production flow
assurance, subsea technologies, long-distance tiebacks,
real-time remote control and monitoring and of
course ice-resistant platforms where needed mean
that pioneering developments are starting to proceed
in this harshest of environments.
Russia is taking a lead role in the opening up of the
Arctic Circle, especially while authorities in Alaska and
Canada stall their plans as regulations are necessarily
reviewed post-Macondo. The start of production drilling
in Russias Arctic waters from Gazproms Prirazlomnoe
platform in the eastern Pechora Sea is due this summer
or sooner.
The importance of this activity being carried out to
the best of the industrys ability, and with zero margin
for error, cannot be overstated. We all saw how the industry was portrayed and perceived following Macondo.
So the efforts this industry is taking to enhance its
capabilities in this regard should be applauded. At a
recent gathering of oil industry representatives, government, and academia in Norway, the Vice Chairman of
the operators association Oil & Gas Producers (OGP),
Gazproms Prirazlomnoe platform is on location in the Pechora

Sea and will soon start drilling production wells in an area
where the ice can attain a thickness of 50 m (164 ft).
(Photo courtesy of Gazprom)
MARK THOMAS
International Editor
mthomas@hartenergy.com
EPmag.com
Joep Coppes, stressed the work of its Arctic Coordination Task Force and how the industry can contribute to
the sustainable development of the High North.
Earlier this year, the OGP formed an Arctic Oil Spill
Response Technology Joint Industry Project (JIP) with
Shell, ExxonMobil, Statoil, BP, Chevron, ConocoPhillips, Eni, North Caspian Oil Co., and Total.
The JIP is researching seven areas:
Behavior of dispersed oil under ice and dispersant
efficacy-testing in Arctic environments;
Environmental impacts of Arctic spills and the
response to them;
Trajectory modeling in ice;
Oil spill detection/monitoring in low visibility and ice;
Mechanical recovery;
In situ burning in Arctic environments; and
Experimental field releases.
According to Joe Mullin, JIP program manager, prevention of spills is a priority as well as the response to any
spill that could occur. In the last few decades, he said,
the industry has made significant advances in Arctic
spill prevention and response technology, and by working together in this four-year JIP, we will increase knowledge and opportunities to test equipment, conduct field
experiments, and develop oil spill response technology.
But with the JIP not due for completion for four
years, is this the time for the industry to ask itself
whether it should undertake any Arctic
activity until the findings of this study
are known? The consequences, if
the industry proceeds unprepared, could be disastrous.
35
COVER STORY:
RISK MANAGEMENT
COVER STORY:
RISK MANAGEMENT
Balancing risk
& reward
oiled down to its bare essentials, risk management is not that hard a concept to understand. It requires identifying dangers,
assessing the likelihood that they will happen, determining their potential impact, and deciding whether to take
the plunge or play it safe.
The oil industry is no different than other industries in
that it has to manage risk. The difference lies in the number of risks that need to be managed. Obviously there is
the geological risk of drilling an expensive dry hole or
encountering a dangerous gas kick while drilling. There
is technical risk in terms of equipment failures as well as
the traditional geological and engineering uncertainties.
There is financial risk; regulatory risk; market risk; risk for
the security of personnel; and above all risks associated with
health, safety, and the environment. Managing all of these
risks in an effective manner is an enormous challenge.
Traditionally in risk management everything is very
siloed, said Guarav Kapoor, COO of MetricStream. Each
group is handling risk at the business level or at the functional level. Kapoor and other experts hope to see this
shift to risk management at the corporate level.
high. Lets say the price of oil goes up and some currency
fluctuates, and then there is an oil spill the impact can
be compounded 40 times.
Up all night
This type of integrated approach can help managers sleep
more soundly at night, Rhoads said. You can put a system
in place with Excel worksheets, Access databases, and
forms, but the process doesnt exist in technology; it exists
among people, procedures, and policies, he said. You do
training so people follow these policies and procedures.
The system is an aid, but its not going to make people
do their jobs.
Current risk management software, he said, has action
item management. Being able to digitally assign action
items, determine what needs to happen and why, determine what it is attached to, who needs to do it, and by
when, will give a person a good nights sleep. I think people are good at identifying what happened, what went
wrong, and what was done, but when you get down to
addressing corrective actions, thats a gray area.
The magnitude of the problem

Enterprise risk management
Known as enterprise risk management (ERM), this concept is the purview of a few specialty consulting firms like
MetricStream and HSE Technology Corp. Jason Rhoads,
general manager of ERM Services and Solutions for the
latter, said ERM is a big animal.
We try to separate the strategic side of ERM by working
with executives and general managers to determine
a technological roadmap of how to get to where they
want to be with their enterprise, he said. Its taking
off little bites.
This approach, he added, is across the board legal
risk, reputational risk, operational risk, etc. The
roadmap of technologies could be 10 years out, and they
start working with individual iterations to get there.
The company works with multiple software vendors to
help oil and gas companies refine their risk management strategy. The goal is to centralize that strategy,
allowing executives to identify and allocate assets to
the high-risk areas of the organization.
You should be able to reallocate assets across your
organization because its a company you are trying to
run, not individual departments, Rhoads said.
Added Kapoor, In the last three or four years we
have been seeing a major shift toward what I call
integration of risk management, which means that
companies are starting to realize that the impact
of one risk failure on another risk failure is very
Always be prepared
is not just for Boy Scouts
anymore.
Rhonda Duey
Senior Editor
36
How big a deal is risk management? Big enough that

Michael Walls, a professor in the Division of Economics
and Business at the Colorado School of Mines, has for
many years taught a three-day course on Managing Risks
and Strategic Decisions in Petroleum Exploration and
Production. Walls course focuses on techniques for managing the entire complement of risks associated with the
E&P sector. Using advanced techniques in decision analysis, sensitivity analysis, value of information, and portfolio
management, Walls demonstrates how companies can
take a comprehensive approach to risk management and
prudent decision-making.
Yet even within this scope Walls said that companies
need to refine their approach to risk. Even today some
companies think about valuation and petroleum issues in
a deterministic fashion, meaning they are not considering
the uncertainties they face; they are not thinking in a
probabilistic or stochastic fashion, Walls said. Many firms
have become much more sophisticated in thinking about
the issues they face in a probabilistic way, thereby improving the quality of their E&P decisions. But there are still a
lot of companies that have not adopted these techniques
in a comprehensive manner.
Often, he added, company analysts might understand
probabilistic thinking, but their senior managers still
approach problems and decision-making in a deterministic manner. When I work with companies, I try to get
them to think more probabilistically. They live in an
37
COVER STORY:
RISK MANAGEMENT
uncertain world, and thats what were trying to get them

to better characterize.
Walls agreed that risk management has to become part
of the corporate culture, and he added that companies
need to evaluate all of their risks and understand how they
influence potential outcomes and performance. Managers must consider the interaction between the risks that
they face, he said. Just as individual investors try to
reduce risk through diversification, E&P firms can construct diversified portfolios of E&P assets to reduce their
exposure to risk.
A simple example is a company whose assets are all natural gas. Their price risk and asset values fluctuate in
direct correlation to the price of natural gas. Most companies reduce this risk by having more diversified portfolios.
The same can be said of technical risk. A company with
conventional projects in the Gulf of Mexico and unconventional projects in the Marcellus shale has uncorrelated
technical risks because the geology is completely different
in the two regions.
Companies should try to capture some of these uncorrelated outcomes and properly mange assets to allow the
firm to minimize its risks and preserve return, he said.

To do that in a sophisticated way, you have to understand
the risks that you face in each project, and you have to
understand how project X correlates with project Y.
How does a disaster like Macondo factor into the risk
management scheme? Macondo was one of those lowprobability outcomes with a significantly high impact, and
its so far out on the distribution curve that most of us
dont even think about it, Walls said. Its clearly a lesson
in why we should think about and better understand these
low-probability, high-consequence events.
As a manager, Im trying to understand how a whole
series of independent events all lined up perfectly to cause
this to occur. In fact, there are uncertainty analysis techniques called rare-event simulations that allow us to better
understand these kinds of risks and communicate their
effects to decision makers.
In the future there will be something in that set of
events that will cause a company to catch it and keep it
from happening again. It is all about providing clarity with
regard to the uncertainty firms face and improving the
quality of decisions under conditions of uncertainty.
Risky business
Risk management is never more acute than when human lives are in danger.
t is one thing to manage risk from an office or board
room. It is quite another thing to manage risk when
pirates are boarding ones drillship or local communities
are blowing up ones pipelines.
For AKE Ltd., a risk mitigation company, managing
these risks is all in a days work. The company provides
clients with analysts who keep them up to date on risks in
areas in which they operate. For a global industry like oil
and gas, this type of intelligence can be critical to keeping operations running smoothly.
Anywhere where there tends to be instability in the
world, youll find other sectors that pull out, said John
Drake, a senior risk consultant with AKE.But energy companies have a little higher risk tolerance. They are more
willing to face risk to do business.
What kinds of risks do they face? Kidnapping is a major
fear, as is piracy and terrorist attacks against assets such
as platforms and pipelines. Often, Drake said, it boils
down to local communities that feel they are not benefitting from the presence of the energy industry.
They want to express their frustration at that, so theyll
attack the nearest representation of the industry, he said.
But different groups strike out for different reasons.
38
Somalian pirates, for example, are in it for the money.

They are intent on finding out who owns the vessel to
demand a ransom.The perception off the coast of Somalia is that a ship associated with the oil and gas sector is
likely owned by a very rich, powerful organization that
will be able to pay a large ransom, he said.
Piracy off the coast of Nigeria, on the other hand, is often
more politically motivated.They are interested in making
money but also are trying to put political pressure on the
government, Drake said. Their attitude seems to be,
Were going to keep attacking the oil and gas industry
until we see some benefit from it in our infrastructure and
schools and services.
Ultimately, he said, piracy stems from three factors:
poverty, lawlessness, and proximity to major shipping
lanes. The energy industry will not be able to change
poverty or lawlessness in a country like Somalia. But it can
be prepared. People worry about the cost of risk management because it can seem like a big cost center,
Drake said.But if you do it properly, its a structure of costs
you can factor into your accounting.
If you have an incident, the costs can start to mount
very quickly. Its an unknown factor.
i
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COVER STORY:
RISK MANAGEMENT
Collaboration enhances
process safety
Working with service companies early in the planning process drives efficiency.
David Pavel, Weatherford International Ltd.
ollaboration is increasingly critical to managing

well construction risk. While technology produces
remarkable results, the most significant gains in wellbore construction process safety are being achieved
across traditional disciplines, products, and services.
Bringing drilling contractors, manufacturers, and
service companies into the well planning process at an
early stage captures resources that are rich in expertise
and technology and orients them toward the overall
objective of constructing a high-integrity well bore to
total depth (TD). While this is not novel, it is ever more
imperative to ensuring project success.
In difficult wells, process safety is a major consideration to the execution of well construction. Subsurface
conditions in these wells are pushing traditional technologies and work processes to their limits. Delivering
discrete technologies and siloed services can be limiting
and potentially hinder success.
Technologies such as closed-loop drilling (CLD) and
drilling-with-casing (DwC) are information-intense and
cross-discipline by nature. They require a new level of
industry collaboration and engagement.
Finding new answers

There is a significant difference between being asked to
run 457 m (1,500 ft) of 1338-in. casing in the hole and in
helping mitigate hazards and ensuring wellbore integrity
to TD. That difference changes the relationship from a
call-out service to a collaborative partnership with a
shared measure of success.
Greater alignment with the success of the project leads
all parties to engage in collaborative risk assessment
within the context of the operational envelope. The earlier in the project cycle this collaboration occurs, the
greater the degree to which the outcome can be positively
influenced. By collaborating, operators and service companies are in a much better position to understand, anticipate, and mitigate risk as well as reduce costs.
In particular, this collaboration taps into the strengths
of integrated service companies. In addition to novel
40
technologies, these organizations provide important

new perspectives and experiences. Cross-discipline
experts and engineering assets encourage a high degree
of interaction within these services and with the operator. This collaboration is the vehicle for identifying new
options and arriving at new solutions for enhancing
process safety throughout wellbore construction.
Closed loop enhances well control

Process safety contains many elements, not the least of
which is maintaining well control through the well construction process. Well control involves understanding
and managing wellbore dynamics such as pore pressure
and fracture gradients while drilling with the intent to
eliminate or mitigate well control events and anomalies.
Traditionally, well control has largely been the
province of mud systems and BOPs. But these methods
alone are increasingly insufficient to manage HP/HT
wells and narrow pore-pressure/fracture gradient windows. The repercussions are well control incidents and
the inability to execute planned well designs that reach
TD with the optimal hole size.
The leading edge of enhancing primary well control is
a set of scalable CLD technologies. These systems, which
include various managed pressure drilling (MPD) methods, use a novel fluid circulating system to achieve a
major advance in wellbore monitoring and control. The
advances are having a step-change effect on enhancing
the protection of people, the environment, and assets.
Less time spent fighting well problems also can result in
a significant reduction of costs.
Collaboration with the operator early in the planning
process is imperative to successful CLD applications.
The importance lies in the fact that CLD applications
must be engineered according to subsurface factors
such as lithology, pressures, and temperatures. The planning process also facilitates training of operator and rig
personnel on various closed-loop methods. Planning
also helps anticipate modifications to deepwater rigs,
which may involve changes to riser systems and deck
accommodations. This type of collaboration already is
impacting new rig designs that anticipate closed-loop
configurations.
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COVER STORY:
RISK MANAGEMENT
Total depth collaboration

Another critical element to process safety is wellbore
integrity. From a tubular running and casing drilling
perspective, collaboration is fundamental to the well
construction process. This leads to novel hazard mitigation methodologies that integrate advanced tubular running service capabilities on the rig floor with extensive
subsurface expertise and capabilities.
Multidisciplinary service company engineers provide a
common interface with the operator to identify, under-
term wellbore integrity but also aides in preventing well

control issues that could result in a blowout.
The ability to rotate and circulate casing in a
predrilled section helps ensure that casingstrings are
landed at the target depth, which also helps ensure
that wellbore construction remains true to the optimal
design. Among the benefits is the reduction of long
openhole exposure times achieved by eliminating
drillpipe tripping.
Building integrated solutions
A congruous approach to
planning and service delivery
throughout the well construction process results in stronger
defenses. Early collaboration is imperative to minimize the risk
of an incident escalating into a catastrophic event.
stand, and mitigate subsurface hazards. This in-depth

engineering expertise is essential to developing a clear
understanding of operator objectives. These engineers
engage a broad scope of in-house specialists to help
define potential wellbore problems and recommend
appropriate methods and ancillary technologies within
the context of constructing a high-integrity well bore to
the planned objective.
This collaborative process guides the application of
DwC technology, which enables rotation, reciprocation,
and circulation while drilling with the casingstring. An
inherent advantage to process safety is the ability to isolate
trouble zones such as lost circulation or over-pressured
zones behind-pipe while drilling and casing the well.
In addition, the ability to reciprocate the pipe during
cementation results in better cement placement that
enhances zonal isolation. This not only improves long42
While the scope of services involved vary

greatly, collaboration provides the starting
point from which the operator and
service company explore well construction options and innovate
solutions.
An example is a recent project in Latin America. A major
operator was planning reentry
wells to reach reserves below a
depleted zone. The operator
was exploring options and
asked Weatherford about DwC
services. As engineers began to
explore the operators objectives and
challenges, the collaborative process greatly
increased the options under consideration.
Ultimately it was concluded that DwC was not
the optimal solution for drilling the depleted zone.
But because project parameters were better understood,
engineers were able to recommend other bettersuited options.
The success of the effort clearly illustrates that if
operators are to benefit from consideration of all the
options, service companies should be brought into
the loop early in the planning stages.
The collaborative path ahead

As the industry continues to drill more difficult wells,
the risks associated with hazards become substantially
higher, placing process safety as the paramount consideration. The result is a growing need for collaboration.
By involving service companies in the planning process,
operators enhance the integration of technology and
accelerate its adoption, help drive efficiencies and productivity, and promote cross-organizational collaboration. These advances are central to enhancing process
safety and achieving wellbore construction objectives in
the most challenging applications.
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s the lifecycle of a well.
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IMPROVING
EXPLORATION SUCCESS
New approach
describes the indescribable
An innovative application of advanced mathematics has provided geoscientists
and engineers with an accurate, model-independent way to predict critical reservoir
properties from well log data.
Vivek Anand, Bob Freedman, Steve Crary,
and Chanh Cao Minh, Schlumberger;
Robert L. Terry, Maersk Oil Company; Loris Tealdi, Eni
or centuries, inventors have used models to predict the

behavior of their inventions under various environmental conditions. Model airfoils convinced the Wright brothers that heavier-than-air flying machines could transport
people into the heavens. Model hulls proved the viability
of offshore vessels, including drilling rigs, long before the
actual vessel was built and launched. Today, dynamic reservoir models and mechanical earth models help engineers
characterize the way reservoirs will behave under production or stimulation.
Yet the model-based approach has its disadvantages.
Whereas reservoir behavior can be characterized using
models constructed from evolving formation data, reservoir description still depends on painstaking, time-consuming analysis of rock and fluid samples, both involving
discrete parameters. Application of models to predict
accurate discrete parameters in complex media has
proven to be impractical; there are too many possibilities.
About 10 years ago Bob Freedman, a scientific advisor
and project manager at Schlumberger, developed a new
method based on radial basis function (RBF) mapping
for accurately solving complex reservoir characterization
problems. The method was first introduced to the industry in a paper published by Freedman in the SPWLA
Petrophysics Journal, V. 47, pp. 93-111, 2006. The new
method relies on databases acquired on reservoir rocks
and fluids to accurately represent the complex physics.
Over the past few years, considerable success has been
experienced in the accurate prediction of critical rock
and fluid properties that are difficult to impossible to
measure in situ.
(NMR) measurements. Nevertheless, critical properties

were difficult to determine because of the inherent complexity of crude oils. The physics connecting the NMR
measurements to the oil properties are contained within a
laboratory database of NMR and pressure-volume-temperature measurements performed on a representative suite
of live oil samples. By mapping NMR measurements such
as T2, for example, to live oil properties such as viscosity or
molecular composition, properties of samples not in the
database can be estimated with accuracy. A mapping function that is a linear combination of Gaussian radial basis
functions is calibrated using the database and is applied to
predict the desired properties.
The power of RBF mapping for crude oil description is
just the tip of the iceberg. The technique can be used to
Successes exemplify value

In the recent past, determination of the properties of live
oil samples was time-consuming and problematic. Physical
and empirical model-based methodologies were used to
relate crude oil properties to nuclear magnetic resonance
44
FIGURE 1. Computed results of a highly complex reservoir section illustrate excellent agreement between predicted and
measured mobility. (SPE 134011; log data courtesy of Eni)
IMPROVING
EXPLORATION SUCCESS
predict virtually any parameter for which a representative

database can be developed.
From innovation to breakthrough

The RBF technique has been applied to the prediction of
effective permeability from well log data. Effective permeability has been one of the most elusive parameters facing
reservoir and production engineers. Complexities in mineralogy, lithology, and pore geometry, to name a few, have
made determination of this fundamental mobility parameter virtually impossible to predict. Formation testers can
provide spot measurements of fluid mobility; however,
these are only valid at the exact spot of the test. Connecting the dots has been pure guesswork.
The famous Archie saturation relationship is the basis
of modern well log interpretation. Yet this relationship
contains saturation and cementation exponents that are
just now beginning to be determinable. For NMR interpretation, petrophysicists have had to choose between
the Timur-Coates and Schlumberger-Doll Research empirical models to estimate effective permeability to oil. These
model-based techniques work reasonably well under a
limited set of conditions. Elimination of models provides
for the first time the ability to predict effective permeability to oil under any condition.
To develop and prove this application, a worldwide database of 104 whole core samples (79 sandstone and 25 carbonate) was developed from precise laboratory testing.
Parameters such as irreducible water saturation, effective
permeability to oil, and NMR T2 distributions were measured under tightly controlled conditions. From these data,
radial basis mapping functions were developed whereby
effective permeability to oil could be accurately predicted
from readily available well log information. Extending the
application of RBF mapping techniques, such parameters
as molecular compositions; saturations, aromatics, resins,
and asphaltenes; fractions; and viscosities of live crude oils
have been estimated with unprecedented accuracy.
Field examples prove the point

A complex lithology example is represented by a well
drilled using synthetic oil-based mud. Density, neutron,
and resistivity logs were acquired while drilling. NMR and
formation pretest fluid mobilities were acquired using
wireline tools. Figure 1 shows the results. The lithology is
a highly complex mixture of sandstones, clays, muscovite,
and dolomite (right-hand track). Oil is predominately
indicated in the clean high-porosity sands. The computed
effective permeability to oil (mobility) is shown in Track
2, with good agreement to the oil mobility test points
from the pretest pressure tool (green dots). While the
effective permeability curve appears as a continuous
black line, it is only valid in the oil sands. A completion
design that focuses on the high-permeability peaks
should provide the highest productivity.
A deepwater well provides the second example (Figure
2). While the sand body that represents the target reservoir is relatively large and contiguous, porosity and permeability are much lower than the previous example. Despite
the uniform appearance of the sand body, the mobility
curve shows several breaks with very low relative permeability. Accuracy of the permeability prediction is confirmed by good agreement with the pretest pressure
mobility points in Track 2. Selective perforating can
avoid the tight spots and maximize flow into the completion, especially in the shaly portion seen at the bottom
15 m (50 ft) of the reservoir.
A new paradigm
FIGURE 2. A high-profile deepwater well example illustrates the risk

of assuming uniform permeability by simply connecting the dots.
(SPE 134011; log data courtesy of Maersk)
The success in accurate prediction of critical parameters

in complex situations is highly encouraging. It has proved
to resolve issues that have plagued producers for decades.
In a macro sense, the application of RBF mapping heralds a breakthrough in formation and fluid characterization and hints at potential applications in well stimulation
analysis and prediction as well as enhanced recovery
design and evaluation.
45
IMPROVING
EXPLORATION SUCCESS
Ventura basin still holds

hidden treasure
A multimeasurement exploration approach breathes new life into an old basin.
Chris Friedemann, NEOS GeoSolutions
alifornias Ventura basin has been in production

since 1861, the year Lincoln was sworn in as President and the first shots of the American Civil War were
fired. Approximately 100 oil and gas fields have been
discovered since, with cumulative production from the
basin exceeding 4 Bboe.
Although activity has slowed in recent decades, several
E&P operators remain intrigued by the basins exploration potential. They believe discoveries remain to be
made and are working to identify bypassed targets
masked by Venturas complex geology; deeper zones
analogous to Oxys 2009 discovery in the nearby San
Joaquin basin; and sweet spots in the Monterey shale,
the pervasive source rock that has recently become an
unconventional reservoir target.
Integrated study
Because of challenging topography, urbanization, environmental concerns, and subsurface complexity, groundbased seismic acquisition is not a practical alternative in
most parts of the basin. In 2010, Houston-based NEOS
GeoSolutions approached several E&P operators about
sponsoring a basin-scale survey that would rely not on any
single geophysical dataset but on a methodology in which
all available geological, geophysical, geochemical, and
petrophysical data would be accessed and simultaneously
integrated and interpreted.
A seismic image, when it exists, can be extremely useful
in revealing the structures within the earth, but other
geological and geophysical measurements can bring even
more clarity to the interpretation as they reveal important
things about basin architecture, fault and fracture systems, rock properties, and fluid distributions.
To complement existing 2-D seismic lines, well logs,
and geologic maps in the public domain, NEOS acquired
a series of airborne geophysical measurements over
roughly 2,600 sq km (1,000 sq miles) of the onshore
Ventura basin. The newly acquired datasets included:
Gravity to delineate deep basin architecture and
basin-scale structural features;
46
In this gravity model of a portion of the Ventura basin, California,

deeper sedimentary depocenters are shown in purple. Producing well locations appear as black dots, dry holes as blue dots.
(Images courtesy of NEOS GeoSolutions)
Magnetics to map regional fault and fracture networks; and

Hyperspectral data to detect oil seeps and microseepage impacts on surface vegetation.
On some basin-scale projects like this one, additional
datasets such as radiometrics and electromagnetics also
are acquired.
These nonseismic datasets delivered new insights to the
programs underwriters, even when interpreted individually. For instance, the gravity data showed the presence of
a much deeper sediment column in portions of the basin
that had limited well penetrations. In addition, gravity
measurements highlighted several unknown and untested
mini-basins along the edges of the main basin depocenter.
An analysis of the magnetic data provided further
exploration insight. The vast majority of the fields in
the Ventura basin are aligned with identifiable magnetic
anomalies that correlate with deep-seated fault systems,
something that could be expected in a tectonically active,
structurally driven basin. An analysis of the hyperspectral
data highlighted a larger number of seeps throughout the
basin. Geoscientists on the ground confirmed the seep
anomalies detected using the airborne sensor platform.
Armed with the location of new depocenters and miniApril 2012 | EPmag.com
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EXPLORATION SUCCESS
LEFT: A NEOS geoscientist ground-truths Ventura

airborne hyperspectral measurements using a
handheld analytical spectral device. An oil seep
exists about 2 m (6 ft) behind the geoscientist.
BELOW: In this geostatistical assessment of the
probability of liquid hydrocarbons in the shallow
Pico formation, hot colors correspond to a high
probability of oil. Black dots represent producing
wells within the Pico horizon.
basins from gravity data, the ability to

identify regional fault systems using magnetic data, and the presence of direct and
indirect hydrocarbon indicators on the
surface from hyperspectral imaging,
explorationists are now able to qualitatively identify new leads and play types
throughout the Ventura basin.
New exploration tools

The NEOS methodology provides interpreters with an
additional tool to aid in the search for hydrocarbons. This
is based on a geostatistically driven, software-enabled
search for the unique measurements and attributes that
correlate with known fields (or high production rate
wells) in a basin or designated area of investigation. Once
these correlative anomalies with known fields (or wells)
are identified, a proprietary software package based on
pattern recognition algorithms is used to identify the same
set of correlative anomalies in areas without well control.
In essence, the software is searching for unexploited parts
of the basin that share the same set of geo-anomalies as
the areas known fields and highest producing wells.
What measurements are used as part of the search? In
the case of Ventura, nearly 50 raw datasets and calculated
attributes were considered, including items like Bouger
gravity and the first vertical derivative of reduced-to-pole
magnetic data. The methodology determines the statistical relevance of each measurement and attribute, eliminates measurements and attributes that are not relevant,
and mathematically determines the weighting factors to
apply to each statistically relevant dataset and attribute.
The result is an objective, mathematically driven map of
the entire basin, highlighting areas that are being flagged
as relatively more prospective or productive. As with any
measurement or tool, the interpreter does not blindly fol48
low the output but instead uses the insights provided to

derisk previous exploration concepts and to identify possible new leads worthy of further study.
In the case of the Ventura basin, geostatistical methodology was applied to four separate geologic horizons that
are producing today, including the shallow Pico formation, the Sespe, the Miocene (effectively the Monterey
shale zone), and the deep Eocene. The shallow zones had
more well penetrations and discoveries than the deeper
intervals. Nonetheless, even the shallow Pico contains several high-potential exploration anomalies that have yet to
be drilled. The results become even more interesting as
the investigation goes deeper, where the number of well
penetrations into geostatistically identified anomalies is
even smaller and, therefore, the corresponding exploration potential is even higher.
The methodology is injecting new life into an old basin,
arming Ventura operators with the additional data and
insights they require to unlock a new wave of exploration
in the years ahead. Whether a play is old or new, conventional or unconventional, a multimeasurement interpretation approach can often complement data that already
exist and help geoscientists understand the attributes that
determine where fields might be located within a basin or
why some wells are more productive than others, even
when completed similarly within the same geologic horizon or area of the play.
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IMPROVING
EXPLORATION SUCCESS
Navigation sensor technology

aids marine seismic survey
A new digital compass provides a clear view of the geology from the seabed.
Al Hise, NCS SubSea; John Thorson, Sparton Navigation

and Exploration; Craig Lippus, Geometrics
To achieve this, the companies knew they had to start

with a clean slate, meaning they did not want to use any
of the existing off the shelf products.
Product requirements
CS SubSea, a company that provides survey, navigation, and positioning services for the oil and gas
industry, evaluated and approved Sparton Navigation
and Exploration to provide integrated navigation sensors for use in the first integrated navigation system for
the P-Cable High-Resolution Multi-streamer Seismic system. This technology was developed to provide oil and
gas producers with an ultrahigh-resolution image of
the geology from the seabed down to approximately
2,000 m (6,000 ft). This information is valuable as it
illuminates potential hazards such as gas pockets and
chimneys as well as providing a good picture of ancient
river channels, ice gouge, and similar features. NCS
worked closely with
Subsea Systems and
Geometrics to devise
the proper hardware
that would allow for
development of an
advanced software
product that provides
proper and precise
real-time positioning of
the hydrophone array.
NCS was closely
involved with both SubSea Systems
and Geometrics in
developing a navigation and positioning
technology that would
precisely and continuously provide a realtime position and
shape analysis for the
P-Cable Seismic system,
as well as ancillary inwater equipment.
50
To commence evaluation of a navigation system, the

product requirements had to be defined to ensure the
product chosen met the challenges of the multistreamer
seismic technology application. As such, the requirements for a navigation system were:
Low cost;
Low power;
Small size and mass;
High accuracy;
X,Y, and Z real-time data output;
Robustness to withstand the elements and the rigors
of the application environment; and
Fast update rates.
A new compass aids in

navigating the P-Cable Towed Array.
(Image courtesy of Geometrics/Fugro West, Inc.)
IMPROVING
EXPLORATION SUCCESS
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to enterprise sites - on
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See it live at AAPG 2012

Booth 1028
TOP: Computed streamer positions are derived using surface GPS data coupled with the
heading information from the compass units. BELOW: The effectiveness of the software representation is due in part to the Sparton compass. (Image courtesy of Sparton Navigation and
Exploration)
With the advent of MEMS sensor technology, the digital compass has
emerged as a leader in price-performance, offering a number of advantages
to the designer as a method of providing and maintaining accurate heading.
A digital compass typically consists of magnetometers (used to measure the
earths magnetic field to determine magnetic north), and accelerometers
(used as a tilt sensor to compensate for the orientation of the magnetometers
Paradigm
www .pdgm.com
51
IMPROVING
EXPLORATION SUCCESS
The schematic shows the P-Cable system being towed behind the
vessel and the subsequent types of near-seabed surface geologic features that are imaged. (Image courtesy of Sparton Navi-
The compasses
provide accurate and
reliable heading information, delivered over the Ethernet
backbone, allowing the system to use
those headings in conjunction with surface
GPS positions to derive the true shape of the
cross-cable and the seismic streamers, all in real time.
An important design consideration was having a compass that could be integrated inside of the in-water
equipment. Attaching external devices that housed digital compasses was not feasible due to the close spacing
of equipment while it was being deployed and towed.
The Sparton units met this challenge well, allowing for
even tighter spacing configurations for the in-water
equipment.
gation and Exploration)
Vision of efficiency
due to pitch and roll). Digital compasses also can be augmented with the use of gyroscopes (angular rate sensors
used to compensate for magnetic disturbances and
dynamic environments).
Designing the compass

Ultimately, the MEMS-based digital compass design met
the product requirements and was selected for testing.
Based on positive test results, Subsea Systems and NCS
chose the digital compass because of its extremely compact size and three-axis reference output. Another key
aspect was the Ethernet capability. The digital compass
is integrated at 6.25-m or 12.5-m (20.5-ft or 41-ft) intervals along a towed wire called a cross cable between
two diverters, which provide the necessary horizontal
lift to spread the cable. The digital compass resides in
a titanium housing that also serves as an attachment
point for a seismic streamer. These seismic streamers
also have digital compasses integrated in their tails,
meeting another key design consideration; they have
to fit inside the existing streamer canister dimensions.
52
The computed positions of the streamers and the cross

cable are derived using surface GPS data coupled with
the heading information from the compass units. Note
the digital compass heading information in the data
form top right of the figure.
Eddie Majzlik, technical manager and product development lead for NCS, said, We were able to easily interface with the Sparton personnel and communicate not
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IMPROVING
EXPLORATION SUCCESS
Seismic can be relevant in shales

A novel interpretation and characterization of an Eagle Ford shale play used geometric,
mechanical, and full-azimuth seismic attributes.
Joanne Wang and Duane Dopkin, Paradigm;

Richard Kelvin, Seitel
hale plays have become one of the important sources

of hydrocarbons, both domestically and globally.
Due to their unique nature, shale plays have demonstrated challenges to geoscientists in reservoir E&P. In
searching for the sweet spots of a shale formation, geoscientists must rely on seismic data, microseismic data,
core data, well data, and a wealth of other technologies
to characterize and model what is frequently a highly
heterogeneous formation. The defining factors of a
sweet spot include rock properties such as brittle/
ductile quality, in situ stress, and total organic content.
Project review
The Eagle Ford shale is located in the Western Gulf
Basin and trends across South and East Texas. This Cretaceous formation is the source rock for the Austin
Chalk oil and gas formation. The seismic data cover
about 340 sq km (130 sq miles) across Karnes and Live
Oak counties and was acquired by Seitel. The seismic
survey is in the primary production zone of a wet
gas/condensate window. There are two existing wells

inside of the seismic survey. The seismic data were
processed through full-azimuth prestack depth migration with continuous azimuth reflection angle gathers
as the primary outputs.
Objectives
Shales are frequently highly heterogeneous in nature.
Seismic data, with properly preserved amplitudes and
sampled in the angle domain, contain information
related to lithology and rock properties. Properly
processed and analyzed, the seismic data are not only
relevant in prospect identification but also are an important data source for well planning in a shale play. The
objectives of this study are:
To observe shale heterogeneity by examining and
analyzing different seismic attributes such as frequency-dependent attributes, structural attributes,
and trace shape attributes;
To determine and map the shale brittleness using
rock mechanical attributes such as Poissons ratio
and Youngs modulus; and
To estimate stress and its orientation by deriving,
evaluating, and integrating amplitude versus angle
versus full azimuth (AVA(Z)) and residual moveout
attributes.
Well data analysis

There are two vertical wells inside the seismic survey
that include both sonic and density logs. The well data
are used in seismic-to-well calibration operations to
determine the shale formation depth and thickness,
to derive wavelets from seismic angle stacks, and to
build the impedance background models.
Seismic attribute visualization/interpretation
FIGURE 1. In a co-visualization of curvature and facies classification map, colors represent facies as delineated from seismic
trace shapes. Faults are easily identified with the curvature
attribute. (Images courtesy of Paradigm)
54
Post-stack seismic amplitudes are used to interpret structural horizons and to generate many types of seismic
attributes. The key process in post-stack seismic attribute
analysis is to examine and analyze different seismic attributes and then narrow them down to a manageable number that contribute to the understanding of the target.
Structural attributes such as curvature and coherence
are used to delineate seismic scale discontinuities such
IMPROVING
EXPLORATION SUCCESS
as faults. Physical attributes like spectral decomposition

sample seismic energy variations with frequency and can
be useful in evaluating thin bed effects like tuning.
Organized classification attributes based on trace shape
similarity, for example, are useful in detecting changes
in facies, lithology, and rock properties.
Figure 1 is a co-visualization of a curvature attribute and the trace shape
classification attribute for the interval
of Eagle Ford shale. Major faults trending northeast are easily identified with
the curvature attribute. One of the
wells penetrates a visible fault. Trace
shapes are delineated by nine organized and structured groups of seismic
facies represented by different colors
that indicate changes within the shale
interval. This attribute demonstrates
the heterogeneous nature of the
shale formation. Co-visualizing the
two attributes not only allows us to
describe the geology with each attribute but also the attributes relationship to each other. For example, we
can visualize how the facies change
relative to faulting to understand if
the faults act as the boundary for the
facies and are responsible for their
compartmentalization behavior. Faulting could help explain the distribution of ductile and brittle behavior in
the Eagle Ford shale.
to the data preparation (e.g. wavelet analysis and background model building), inversion parameter optimization, and quality control to ensure the accuracy of the
compressional (P) and shear (S) wave impedances. Poissons ratio and Youngs modulus (times Rho) can subsequently be derived from the P and S impedances.
Compliance
%fanaaernent
OPPFPr,
Geomechanical attribute
generation and interpretation
One property that defines sweet spots
is shale brittleness. Where the shale
is brittle, it responds favorably to
hydraulic fracturing and stimulation
when compared with the ductile
regions within the shale. Mapping the
shale brittleness is important in the
process of prospect identification and
characterization. Shale brittleness can
be described by some of the mechanical attributes that can be derived from
seismic and well data, such as Poissons ratio and Youngs modulus.
Seismic inversion is a pathway to
estimate these attributes and properties in 3-D. Great care must be given
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IMPROVING
EXPLORATION SUCCESS
FIGURE 2. A distribution of a shale brittleness indicator in the

Eagle Ford formation shows geobodies representing higher brittle zones.
FIGURE 3. Stress intensity is represented by both the color and

the length of the vector. The orientation of the vector represents
the azimuth of the symmetry axis perpendicular to the orientation of the maximum horizontal stress.
A shale brittleness indicator can be developed using

both the Poissons ratio and Youngs modulus Rho attributes. Figure 2 shows the result of the 3-D distribution of
the shale brittleness indicator in the Eagle Ford formation. Geobodies that represent higher brittle zones can be
isolated and mapped using
cross-plotting operations.
The extracted geobodies
can be incorporated into
the reservoir model.
into continuous azimuth reflection angle gathers in

depth can be used to estimate stress and stress orientation. In the study area, the Eagle Ford formation ranges
in depth from approximately 3,445 m to 3,845 m (11,300
ft to 12,600 ft) dipping from northwest to southeast at an
average dip less than 2 degrees. Horizontal transverse
isotropy (HTI) media could be assumed for the local
Eagle Ford layer. Two independent approaches were used
to estimate layer anisotropy in a HTI media, one based on
full-azimuth amplitude sampling and the other based on
full-azimuth residual (velocity) moveout sampling. Both
measure the azimuthally dependent behavior of the data
in depth.
Figure 3 shows the stress map derived using AVA(Z)
inversion from the full azimuth reflection angle gathers.
The stress intensity is represented by both the background color and the length (magnitude) of the vector.
The orientation of the vector represents the azimuth of
the symmetry axis perpendicular to the orientation of
the maximum horizontal stress. Full-azimuth reflection
angle gathers are used to systematically measure HTI
anisotropy effects of less than 1% with repeatability and
confidence. These types of results are not possible with
conventional surface azimuth sectoring approaches.
Seismic data carry critical information related to rock
properties and stress, which are among the determining
factors for sweet spot prospecting. Technologies are
available to generate seismic attributes that can fully
characterize the geology of the shale plays, including
structural features, formation heterogeneity, rock properties, and stress. Highly desired information such as
shale brittleness and stress can be extracted from the
seismic data, making seismic data more relevant in the
exploration and exploitation of shale resource plays.
In situ stress estimation and mapping

Understanding stress and
its orientation is critical in
well planning and hydraulic
fracturing program design.
The acquired seismic data
include a rich surface sampling of azimuth data. An
in situ decomposition of the
recorded seismic wavefield
56
FIGURE 4. Sweet spot identification requires a

workflow that takes well and seismic data into
account.
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FRONTIER
EXPLORATION
Geological review of deepwater

Liberian basin outlines prospectivity
New data and drilling results show great promise offshore Liberia.
Muhammad S. Tamannai, Ian Deighton,
and Peter Conn, TGS
good understanding of the structural evolution and

hydrocarbon potential of Liberian frontier waters.
Geological background
he Liberian basin comprises offshore Liberia and

Sierra Leone. Details of the regional structure and
petroleum prospectivity of this frontier margin have not
been well understood. In 2000-2001, TGS acquired 9,382
line km (5,715 line miles) of regional 2-D seismic data,
and an interpretation report was released in 2007 and
revised in 2010. Between 2007 and 2011, a series of 3-D
seismic surveys was acquired over several blocks in the
Liberian basin. All of these datasets have provided better
understanding of the regional structure and petroleum
prospectivity of this frontier margin.
In 2009-2010, a new long-offset seismic survey was
performed in Liberian ultra-deep waters to evaluate its
hydrocarbon prospectivity and provide a good-quality
extension of existing seismic into ultra-deep waters. Evaluations of all the 2-D and 3-D datasets have provided a
The geological evolution of the Liberian basin is related

to the opening of the Atlantic Ocean. The offshore
Liberia margin is bound by the Sierra Leone transform
system to the north and the St. Paul transform system to
the south. The area is structurally complex, with transpressional and transtensional systems associated with
these major fault zones. Between the major fracture
zones, the upper Cretaceous depositional environments
were less affected by major faulting, which allowed deposition of thick deepwater shales and turbidite sands.
Exploration in offshore Liberia
On the offshore Liberian continental shelf, two

exploratory drilling stages took place (1970-1972 and
1984-1985) with a total of nine wells in 400 m (1,310 ft)
maximum water depth. Oil shows were encountered in
eight of the wells, but no commercial discovery was made. Deepwater economics and lack
of good-quality modern seismic data were
among the main reasons for early termination
of exploration campaigns.
Recent advances in deepwater technology
have opened up the region to a new phase of
exploration. In offshore Sierra Leone, the
Venus B-1 discovery well (2009), drilled in
1,800 m (5,905 ft) water depth, found 14 m
(46 ft) net of hydrocarbon pay in upper Cretaceous deepwater fan sands. This was followed by the Mercury-1 discovery in 2010.
Mercury-1 was drilled in 1,600 m (5,245 ft)
water depth and encountered 41 m (135 ft)
net of oil pay within the same play.
In 2011, two exploration wells were drilled
offshore Liberia, Apalis-1 and Montserrado-1.
Apalis-1 found upper Cretaceous source and
reservoir rock with oil shows. Montserrado-1
was drilled to a depth of 5,400 m (17,720 ft)
The location of the Liberian basin shows its proximity to the major transfer fault
and made a noncommercial oil discovery in
zones. (Images courtesy of TGS)
late Cretaceous reservoir sands. The well
58
FRONTIER
EXPLORATION
encountered good-quality, water-bearing sands in the

main objective. In a deeper secondary target, 8 m (26 ft)
of hydrocarbon pay was intersected, and a sample of
light oil was recovered.
Petroleum systems evaluation

Two petroleum systems exist in the offshore Liberian
basin, early Cretaceous and late Cretaceous. Exploration
wells drilled on the shelf show that the early Cretaceous
contains three or more oil-prone marine and lacustrine
(Type II/III) source rock intervals that extend in age
from Aptian to Albian.
Abundant structural traps are potential targets within
the lower Cretaceous system. They are mainly fault
blocks and fault-associated structural closures related
to transtensional regimes during the mid-Cretaceous rifting event. Where found as transpressional pop-ups, these
structures can be associated with strike-slip motions. Fault
blocks were the main exploration targets in wells drilled
on the shelf. They also exist in ultra-deep water, where
they could be potential exploration targets.

The late Cretaceous system is the most important.
Source rocks are formed by late Cenomanian to Turonian organic-rich (Type II) marine shales deposited
throughout the central and southern Atlantic during a
global anoxic event. Within this system, significant
recent discoveries have been made offshore Ghana,
Liberia, and Sierra Leone. Multiple sandstone reservoir
targets overlie the potential source rock interval.
Following recent discoveries, stratigraphic traps are
now seen as the most prospective play type in the offshore Liberian basin (and throughout the West African
transform margin). Deepwater fan and lobe structures
occur throughout the mid- to upper-Cretaceous
sequence, providing potentially attractive reservoirs. A
regional channel/fan complex has been identified and
mapped across from the slope extending into the deep
basinal areas between intra-Campanian and top Cretaceous. Seismic imaging allowed delineation of multiple
fans within this thick complex. The presence of sand
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FRONTIER
EXPLORATION
bodies is indicated by
brighter seismic amplitudes within each fan.
Basin modeling
Shelf wells have been used
to constrain a regional
crustal model, which was
used as the starting point
for stretching-based
thermo-tectonic geo-history modeling. In addition to the shelf wells,
pseudowells have been
A regional Liberian ultra-deep seismic line shows the complete sedimentary sequence. Structural traps
modeled at various
and some potential hydrocarbon indicators (fluid conduits) also are shown.
selected deepwater locations to understand sediment paleo-temperatures
within the study area.
Extreme crustal stretching associated with early
Cretaceous Atlantic rifting resulted in rapid
subsidence to bathyal
conditions in the late
Albian.
Two main source rock
intervals (Turonian-Cenomanian and late Albian)
were modeled for hydrocarbon expulsion. The
modeling indicated that:
Burial and temperaA composite seismic line extending from Liberian shallow waters to ultra-deep basins (>4,000 m, or
ture conditions in
13,525 ft water depth) shows three fans identified between intra-Campanian and top Cretaceous.
Liberia ultra-deep
water are such that
the Cretaceous source rocks expelled hydrocarbons
tified extending from mid-shelf across to the ultraduring the late Cretaceous to present;
deep basin;
Early Cretaceous source rocks would have under Upper Cretaceous stratigraphic and Lower Cretagone peak expulsion within the late Cretaceous; and
ceous structural play types (tilted fault blocks) have
The major phase of expulsion of Turonian-Cenobeen identified and evaluated;
manian source rocks occurred throughout the late
An Albian lacustrine shale and a regional TuronianCretaceous to early Paleogene.
Cenomanian marine shale are the two main source
In summary, the study indicated several aspects of
rocks in the study area. Thermal modeling indicates
Liberian basin geology:
that these source rocks are mature, with peak expul The study area is structurally complex in parts. Its
sion throughout the late Cretaceous to early Paleoevolution and architecture are controlled by ocean
gene; and
spreading and transform movements. It is bounded
Numerous potential hydrocarbon indicators
by the Sierra Leone and the St. Paul transform zones;
(bright/dim amplitudes, gas chimneys) have been
Extensive thick channel/stacked fan complexes
identified, suggesting working hydrocarbon systems
(within late Albian-top Cretaceous) have been identhat have been proven by recent drilling results.
60
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FRONTIER
EXPLORATION
Iranian discoveries continue

In this world-class setting, the potential for major gas discoveries is high.
Behrooz Esrafili-Dizaji and Hossain Rahimpour-Bonab,

University of Tehran
n a global ranking of geologic provinces in terms of

petroleum resources, the Zagros and Persian Gulf
basins are among the richest provinces. According to
the BP Statistical Review of World Energy June 2011,
these areas hold 2,777 Tcf of natural gas reserves, roughly
40.5% of the worlds total. Several supergiant nonassociated gas reservoirs have been found in this region.
The Permo-Triassic successions (the Dehram group in
Iran and its lateral equivalent, the Khuff formation), are
major gas-producing intervals in these basins. The supergiant North Dome/South Pars field alone is estimated to
hold about 19% of the worlds total gas reserves, producing gas and condensate from these intervals.
Dehram reservoirs
and deeper intervals. The Dehram sediments in the

Dezful Embayment are too deep (deeper than 6,000 m,
or 19,685 ft) to have been reached by the drill bit.
Petroleum system components

The Paleozoic petroleum system is the main petroleum
system in the Persian Gulf basin and surrounding areas,
particularly in Qatar/Fars High. The Lower Silurian Sarchahan formation (or Qusaiba Hot shales) is believed to
be the main source rock for this petroleum system. Thermal evolution studies denote inception of oil generation
in the Middle Jurassic in areas of greatest subsidence,
while the gas window was reached locally as early as the
Middle Cretaceous. Then, gas was accumulated in the preZagros trap structures. Major reservoir rocks of this system
are the oldest reservoir rocks in Iran and consist of three
formations, Faraghan, Dalan, and Kangan. The Dashtak
formation, containing shale, claystone, anhydrite, and
limestone, is the regional and efficient cap rock of the
Dehram reservoirs.
Current data indicate 38 petroleum fields in the

Dehram intervals of Iran. The majority of the Dehram
Geologic history and depositional setting
reservoirs are clustered in the Eastern Zagros or Fars
The Permian rifting along the Zagros by the opening of
and offshore Fars provinces. In addition, these succesthe Neotethys Ocean coincided with transgression and
sions offer potential petroleum exploration opportunities in the Western Zagros.
Most of the Dehram reservoirs are
Moreover, 14 giant/supersituated in the Fars and offshore Fars
giant Dehram gas reservoirs
areas, but a few reservoirs are in the
(about half of the total gas
reserves of Iran) are in the Per- Lurestan province and Bandar Abbas
hinterland. Reservoir distributions in
sian Gulf, and several Dehram
these basins indicate the roles of
giant/supergiant gas reservoirs
Qatar-Kazerun and Balarud faults
are not developed yet, accordon reservoir system configurations.
ing to the 2009 Iran Energy
(Modified from Bordenave, 2008)
Balance Sheet.
These Dehram reservoir distributions and their absence in
the Dezful Embayment and
Izeh Zone indicate main controls of Qatar-Kazerun and
Balarud faults for these reservoir configurations. No information is available for the
Dezful Embayment and the
Izeh Zone because no wells
have penetrated the Triassic
62
11
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11
FRONTIER
EXPLORATION
The oomoldic shoal facies of Lower Kangan (K2) from the South
Pars gas field are one of the main reservoir rock types, particularly
in fractured and dolomitized intervals. (Courtesy of the University
of Tehran)
deposition of the cyclic, dominantly shallow marine carbonates and evaporites of the Early Permian to Early Triassic Dehram group. The lithology of this group ranges
from siliciclastics to limestones and dolomites, anhydrites, and shales.
The Faraghan formation is composed of clastic deposits.
In fact, this formation represents post-Hercinian continental deposition in fluvial to deltaic systems. It is a time
equivalent to the Unayzah formation in the Arabian countries. The Unayzah formation hosts enormous oil and gas
potential in the fields of Saudi Arabia. Results of deep
drilling in the Persian Gulf indicate that this formation
has good reservoir properties. As expected, with deeper
drilling, Faraghan reservoirs could be new discoveries in
the Persian Gulf area in the future.
The Middle-Late Permian Dalan formation is the middle interval of the Dehram group and is divided into
three units, Lower Dalan, Nar, and Upper Dalan members. The lower and upper units consist of carbonates
with approximately 160 m and 180 m (525 ft and 590 ft)
thickness, respectively. Based on reservoir properties,
Dalan reservoirs are divided into four reservoir units
from base to the top, including K5 (Lower Dalan), Nar
member, and K4 and K3 (Upper Dalan). Most of the
Dalan gas reservoirs are hosted by the formations upper
part (K4 and K3) in the Persian Gulf area. Dalan reservoirs are associated with shallow carbonates (particularly
grainy facies of oolitic shoals) of paleoplatform. In this
platform, mud content of the facies (grain/mud ratio)
increases basinward, so reservoir characteristics decrease
accordingly; for example, mean porosity decreases from
9% in the Persian Gulf reservoirs to 3% in the Interior
Fars reservoirs.
Therefore, on a regional scale, reservoir characteristics are mainly a function of the depositional environ64
The Triassic Dashtak formation provides efficient seal for the

Faraghan, Dalan, and Kangan reservoirs. (Courtesy of the University of Tehran)
Two microphotographs from Faraghan rock types indicate texturally inverse, poorly sorted quartz arenite in A and poorly sorted,
medium sand-size quartz arenite with carbonate cements in B in
the Golshan field. (Figures from M. Mehdinia)
FRONTIER
EXPLORATION
TABLE 1: The eight supergiant Dehram gas

fields of Iran. (Iran Energy Balance Sheet,
2000-2009)
Field
Recoverable reserve
South Pars
360 Tcf
North Pars
47 Tcf
Kish
45 Tcf
Golshan
25-45 Tcf
Tabnak
21.2 Tcf
Kangan
20.1 Tcf
Nar
13 Tcf
Aghar
11 Tcf
ment in both the Dalan and Kangan

reservoirs, but in some fields fracturing
and dolomitization are the main impact
on reservoir quality.
The Early Triassic Kangan formation
is a major gas and condensate reservoir
in many fields in the Iran territories.
Inhouse data indicate that 28 gas reservoirs have been discovered from the
Kangan formation in the Zagros and
Persian Gulf basins. The depositional
system of the Kangan formation is simi-
lar to the Permian platform, but seemingly there were no major paleohighs and reefal bodies as depicted for the Dalan formation. Besides, from
Permian to Triassic, there is a decreasing trend in the volume of anhydrite
facies and an increase of shale facies. Based on reservoir properties, Kangan reservoirs are separated into two main reservoirs units, K2 and K1.
Development of clean oomoldic shoal facies bodies after the Permo-Triassic mass extinction led to high reservoir quality in the lower part of Kangan Formation (K2), which is known as an excellent reservoir unit.
Discoveries continue
Iran has several supergiant and many giant gas fields in the Permo-Triassic
Dehram group, all in the southwestern area. In the last 10 years alone, seven
fields have been found in Iran. Based on current data, Early Permian
sequences, particularly the Faraghan and Zakeen formations, now can be
considered as good targets for gas reserves, particularly in the Persian Gulf,
so deeper drilling will be necessary for new discoveries in this area.
TABLE 2: Dehram group subdivisions, lithologies, and depositional settings.
Name
Age
General lithology
Depositional environments
Kangan
E. Triassic
Carbonate and
evaporite,
with minor shale
Epiric carbonate system
Dalan
M.-U.
Permian
Carbonate and
evaporite
Epiric carbonate system
Faraghan
E. Permian
Shale, sandstone,
and conglomerate
Fluvial to deltaic
Apparently, there are local paleohighs and seaways along the Zagros (with reef bodies or emergent pre-Permian clastic units) that
separated the Dalan depositional system from the open Neotethys ocean during the Permian era. (Compiled from Szabo and Kheradpir, 1978; Insalaco et al., 2006)
65
LAND RIG
ADVANCES
Combined experience
brings designed-for-purpose
top drive to market
Much like major operators, the top drive market is driven by a select number of players
globally. A small Houston-based company hopes to level this playing field
engineering an evolved generation of top drives from the ground up.
Tayvis Dunnahoe, Senior Editor
op drives have been adopted as

standard equipment in the oil
patch. While there are many well
known providers for this important
component, most drillers can count
them on one hand. One small service company, Global Drilling Support (GDS) International, has taken
lessons learned and developed a
new high-performance top drive
that can be customized per the specific needs of each application.
Keith Holliday, president and
CEO, and Paul Nicholson, vice president, are top drive veterans, with
more than 35 combined years of
experience in manufacturing, servicing, rebuilding, and operating top
drives. Holliday and Nicholson originally founded GDS as a service company in 2008 focused on repairing
and rebuilding top drives and providing parts service for all major brands. In
2009, the companys focus took a different
direction as its owners began to consider the
development of a new top drive design.
Having had years of experience dealing with
a number of chronic problems while either
The GDM top drive was conceived to provide ready

access to all common maintenance areas, adding to
the speed and ease of service and repair operations.
(Images courtesy of GDS International)
66
servicing or operating top drives, Holliday

and Nicholson set out to build a tema that
could produce a top drive that would effectively address many of the issues that
often plague existing designs. The
result of their efforts was the companys Global Drilling Machine
(GDM) line of top drives. This line
of top drives represents an evolutionary upgrade to existing designs
formulated to deliver a combination
of high torque, reliability, and maintainability. To meet a wide range of
market applications, the GDM line
includes a range of top drives from
500 tons to 800 tons.
Design concept
The design of the GDM line of top
drives was directed by a core set of
objectives providing a rugged
mechanical design with a minimum
number of failure points that was
also capable of producing both hightorque and high-rpm output. In addition, the GDM top drive was conceived to
provide ready access to all common maintenance areas, adding to the speed and ease
of service and repair operations. Personnel
safety also was factored into the GDM envelope, with built-in work platforms supplied
as standard for the top drives.
Manufactured under an API 8C License
(Cert. No. 8C_0161), GDM top drives offer a
number of key features. Both the 500- and
800-ton models use industry-standard GE
drive motors, with a unique self-aligning couApril 2012 | EPmag.com
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LAND RIG
ADVANCES
pling, which adds significantly to motor life. These

top drives also incorporate a solid drive pinion
supported from both the top and the bottom
for increased reliability. Another key element in
the GDM design is its use of a robust helical gear
assembly, which contributes to the units higher
torque capabilities, longer life, and quieter operation. An optional torque multiplier also is available.
Forced-spray lubrication was included to ensure
consistent lubrication of all key parts of these
top drives. Similarly, all GDM top drives use
submerged thrust bearings to extend their
operational life and reliability.
GDM top drives also benefit from the manufacturers advanced control system. This system
incorporates a comprehensive operational and
maintenance module, which provides for a proactive
approach to preventative maintenance and service
and adds to the reliability and long life of the top
drive. Another key element of the control system, an
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LAND RIG
ADVANCES
The 850 and beyond
adjustable pipe handling module, allows for automatic

positioning with the racking board and derrick man.
The GDM 850 is designed to operate at 1,570 continuous horsepower from 120 to 240 rpm (maximum).
Built to deliver the torque required by todays demanding deepwater and horizontal drilling applications,
the GDM 850 will deliver 64,000 ft-lbs of continuous
torque at 0 to 116 rpm. This top drive also is designed
to provide up to 88,000 lbs of intermittent torque at 0
to 188 rpm.
The GDM 850s static brake capacity is rated at 57,000
lbs, while pipehandling capacity is at 110,000 ft-lbs. This
850 is designed to deliver 7,500 psi mud flow through a
4-in. passage. Applicable to land, barge, and offshore
use, the GDM 850 weighs less than 35,000 lbs and is 7 m
(23 ft) tall with 120-in. elevator links.
The first of the GDM 850s was sold to Lafayette, La.based Megadrill Services Ltd. for installation on the
companys new Majestic in-land barge rig. The Majestic,
a newly built 3000HP rig, is under contract with a
major operating company to drill in Nigeria.
Proprietary remote IBOP actuator

Another key feature of all GDM top drives is GDS
advanced remote internal blowout preventer (IBOP)
actuator. Already proven as an aftermarket component
on a wide range of top drive models, this remote actuator
offers a number of features not found on conventional
IBOP actuators. To begin, this unit is based on a design
philosophy that emphasizes a simple, compact structure
with fewer moving parts. The compact footprint of this
actuator provides ample room for elevator links to pass,
and its three-cylinder design allows uniform actuation.
From an operational perspective, this GDS actuator
allows for opening and closing actuation while in rotation, eliminating the mess often associated with having
to stop rotation before opening and closing. This
proven unit also provides manual operation through
actuation cams, eliminating the need for rotating seals.
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69
LAND RIG
ADVANCES
Two brakes in one improve

performance, maintain cost
In many situations, engineering innovation helps to contain development costs
rather than contribute to the upward spiral.
Tayvis Dunnahoe, Senior Editor
n spite of its demand as a global commodity, the price

of oil can be wildly unpredictable. A jumble of geopolitical forces, environmental factors, and seasonally fluctuating demand combine to make oil futures prices
anything but certain. But the cost of drilling for that
oil is a different story.
Whether oil prices are up or down, the drilling costs
can be reliably predicted to become more expensive. A
significant component of oilfield exploration is the specialized equipment required. In many situations, engineering innovation helps to contain costs rather than
contribute to the incessant upward spiral.
That is the case with the new dual-actuator AquaMakks drawworks brake developed by Wichita Clutch,
The Dual Actuator AquaMaKKs water-cooled brake provides

both failsafe parking and precision tension braking capability in
one unitized assembly. (Images courtesy of Wichita Clutch)
70
headquartered in Wichita Falls, Texas. The dual-actuator option adds another layer of versatility and costeffectiveness to Wichitas line of AquaMakks brakes.
Looking for a better solution

Tri-Service Oilfield Manufacturing (TSM) is a leading
manufacturer of drawworks for the drilling and service
rig industry. For more than a half century, TSM has
been supplying the global oil industry with a complete
line of drilling and service equipment. Along the way,
the company has built a worldwide reputation for quality, reliability, and customer satisfaction.
Searching for a way to control equipment costs, TSM
contacted Wichita Clutch and inquired about the possibility of developing a single brake solution that would
be more cost-effective and readily available than the
dual-action brakes the company was previously using
on its drawworks. TSM wanted a more economical
single-unit assembly that would provide both tension
braking and spring-set failsafe parking, said George
Nemec, Wichita Clutch area sales manager.
Responsible for controlling the process of lowering
and retrieving tons of equipment thousands of feet into
and back out of the earth, the braking system of a drawworks assembly is obviously a critical component. And
since they are subject to nearly unimaginable stresses,
extended downtime for repair or replacement of drawworks brakes can be costly. TSM has used Wichitas
brakes in their drawworks assemblies for a number of
years, and Wichita had earned a reputation for quality
products and reliable customer support. So there was a
comfort factor for TSM in turning to Wichita Clutch
with its request.
TSM engineers collaborated with Wichita Clutch in the
design of the new braking solution. Wichita was given
our performance parameters such as static and dynamic
stopping and retarding conditions, said a representative
of the TSM engineering team. Wichita then sized the
brake as required to meet our desired service factor. The
physical size was also reviewed to ensure that our drawworks and the brake were a good match. Speed of delivApril 2012 | EPmag.com
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ENERGY SERVICES
LAND RIG
ADVANCES
ery was also critically important, and Wichita was able to

beat the closest competitors lead time by 50%.
Two brakes in one

The resulting solution was Wichita Clutchs dual-actuator AquaMakks brake. According to Richard Mayberry,
engineering manager at Wichita Clutch, TSM wanted
to be able to use the brake as the primary static holding
or parking brake, along with being used as a dynamic
brake. The goal was achieved. In dynamic tensioning
mode, the AquaMakks dual-actuator brake can absorb
up to 3,400 HP 35% more than the closest competitor.
And for static parking, the unit provides a torque rating
sufficient to hold 750,000 lbs on 12 lines.
The AquaMakks incorporates a number of innovative
features. Perhaps the most pioneering is the composite
water jacket.
High-tech composites
The use of metal is losing its iron grip on the world of
manufacturing. Advanced composite materials offering
dramatic improvements in strength-to-weight ratios and
superior corrosion resistance are replacing metal in
many applications. Consider Boeings new 787 Dreamliner half of its primary structure is built of composite
materials. And yet the Dreamliner is setting new performance standards unmatched by aircraft of traditional
all-metal construction. The benefits of modern composites are applicable to many industries outside the field of
aerospace. Wichita Clutch took a cue from the aerospace industry in solving a problem that has plagued the
operators of heavy-duty industrial brakes for decades.
In the oilfield, sometimes the water used in brake
cooling systems is not of a high quality, Mayberry
explained, and over a short period of time can severely
corrode the working internals of a water jacket. But the
composite material water jacket of the AquaMakks is
impervious to widely ranging quality issues.
The superior corrosion resistance of the AquaMakks is
a boon to offshore operators using saltwater as a coolant,
but water quality also is an issue in many locales. Some
Texas oil fields, for instance, must deal with highly acidic
water with a very low pH value very corrosive to water
jackets of traditional iron construction.
A side benefit of the AquaMakks composite water jacket
is significant weight savings, with a weight reduction of
50% or more compared to brakes using iron water jackets.
This can result in weight savings of thousands of pounds
in the largest units, significantly benefitting mobile applications such as truck-mounted units. And the advantages
of composite construction come without any sacrifice in
72
TSM incorporates the Wichita Clutch Dual-Actuator AquaMaKKs

on its drawworks.
strength. In stress testing, engineers were unable to

induce a structural failure even when stressing the unit to
more than four times its maximum design load.
Easy maintenance, retrofit

The dual-actuator AquaMakks also helps operators keep
down costs by making maintenance faster and less laborintensive. When the copper alloy wear plates need to
be adjusted, the process is as simple as removing some
shims; disassembling the unit is not required. Inspection
and maintenance also are simplified with the open case
design, providing easy access to key components. To speed
the process of repair and replacement, the AquaMakks
design uses fewer mounting bolts than competing units.
In addition, the design of the AquaMakks enables
quick and easy replacement of older single-actuator
brakes. Mayberry said, [The main design challenge]
was to make the dual actuator assembly such that it can
be retro-fitted onto existing brakes without impact to
the rest of the brake unit. Simply remove the normal air
tube holding plate, install the dual-actuator head assembly, and go back to work.
There is even an option for easy interchangeability with
competing models by matching the mounting bolt pattern
and tooth profile. In fact, making the unit interchangeable with other models was a unique TSM requirement.
According to the TSM representative, No significant
changes need to be made to the drawworks to drop in
this brake in place of competitor units.
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SUBSEA
TECHNOLOGIES
Collaboration is key to expanding

subsea technologies for deep water
As oil company subsea portfolios become increasingly large and diverse,
the resultant demand for more complex technology solutions is driving the industry
to innovate more rapidly than ever before.
Mark Thomas, International Editor
he subsea portfolios of the vast majority of oil and gas

companies, large and small, are growing not only in
terms of their size and total numbers but also with regard
to their diversity and technological complexity.
Three leaders in this field are Chevron, BP, and Total,
each having their own take on the specific needs of the
upstream industry to meet the challenge of developing
and producing subsea projects of the future. With the sectors future growth directly linked to the fast-expanding
deepwater and ultra-deepwater field development boom
around the world, the development of new and enhanced
subsea technologies is an integral part of many companies overall deepwater technology investments.
Chevron is a case in point. The US majors total subsea
production figure in 2010 was around 500,000 boe/d. By
2015, that figure is forecast by the company to soar to
roughly 800,000 boe/d, with more than 20 major capital
projects lined up in its investment queue for approval.
Peter Blake, Subsea Systems manager for Chevron,
spoke about the companys approach at the recent Subsea 2012 event in Aberdeen. Chevrons global subsea
presence is one of the largest in the industry, he said, and
it is still growing. Technology plays a vital role, with projects becoming more complex and technology-driven. For
us, subsea technologies are a key part of the overall deepwater technology investment, he said.
As an example, he mentioned 12 unspecified projects and
their subsea technology needs; these included several needing various combinations of at least three of the following:
Instrumented pipeline protection (HIPPS);
Multiphase flowmeters;
Subsea sampling;
Chemical injection distribution;
Intelligent well completion;
Subsea boosting;
Subsea power; and
Direct electrical heating.
74
Blake stressed the need for technology investment to

be focused, collaborative, and leveraged, and he also
highlighted what he regarded as critical elements for
long-distance subsea tiebacks: hydrocarbon/water separation and solids management, riser umbilical and flowline
design and integrity, boosting and gas compression, produced water reinjection, power distribution, and reliable
monitoring and control.
Flexibility is critical
Flexibility and the ability to interchange modules also
will be a key requirement. According to Blake, When it
comes to subsea systems, we are now looking at very long
field lives. The system we put in on day one is not what we
will be using in year 20. So we need to be more flexible
with our subsea systems.
Blake also outlined a specific example of where technology collaboration is driving the industry forward.
The Subsea Wet Insulation Systems (SWIS) Joint Industry
Project (JIP) has been under way since 2007, addressing
a number of serious challenges faced in recent years by
users of wet subsea flowline and equipment insulation
systems in up to 3,000 m (10,000 ft) water depth. These
challenges have threatened the schedules and budgets
of major offshore projects and reduced confidence in
the long-term integrity of wet insulation systems.
The goal of the JIP is to identify and develop solutions
for these challenges, move the industry (both users and
suppliers) forward by increasing its understanding of the
causes of these issues, and improve the performance and
reliability of wet insulation systems, thus reducing risks.
Specific objectives include long-term simulated service
testing to establish the performance of available insulation systems at field operating conditions; nonlinear
modeling prediction of linepipe and system performance; and development of guidelines for the design,
specification, qualification, inspection, and application
of these systems.
Co-managed by Chevron and Statoil, the JIP has 13 participants and has a budget of US $4.5 million. The JIPs
SUBSEA
TECHNOLOGIES
work is still ongoing, with major players such as Total and

Hess recently joining the project.
This kind of collaborative approach will be increasingly
typical as the industry uses subsea technologies to produce its deepwater and ultra-deepwater assets.
Subsea infrastructure is the delivery vehicle for the
reservoir: we need to understand subsurface uncertainty
and deliver the right system at the right time, Blake said.
Subsea major capital projects are a significant part of
Chevrons strategy, and upcoming large subsea projects
will need strong project management skills and leadership with a focus on improving on-time delivery performance, aftermarket support, and experienced support
personnel.
He also pointed out that Chevron has increased its
planned investment in subsea technology R&D over the
next five years, and it will continue to operate its Center
of Excellence model for subsea, with hubs in Aberdeen,
Perth, and Houston. The company also is set to more
than double its number of subsea engineers.
gas/liquid separation at the mudline spanning several

reservoirs, with a trio of subsea separation units (SSUs)
installed. Each one consists of four retrievable packages:
a gas-liquid separator, two hybrid pumps to boost the
liquids, and a manifold to distribute the effluents to the
separator and pumps. The hybrid pumps combine multiphase stages compatible with the presence of gas in the
liquid and a centrifugal stage to improve efficiency.
Riviere said that with many more marginal fields to be
developed via subsea tiebacks, the industry is now able to
largely meet the challenge thanks to recent advances in
subsea processing, subsea gas/liquid separation, electrical
heating of flowlines, all-electrical systems, and the arrival
of new installation vessels.
Horizon disaster showed subsea capabilities
Dave Turner, BP vice president, Subsea Production

Operations, stressed how even the worst events can have
a positive input. According to Turner, the Deepwater
Horizon accident:
Pushed the limits for complex simultaneous operaSubsea gas/liquid separation
tions and multi-ROV operations;
Luc Riviere of Totals R&D Deep Offshore team, present Operated multiple major vessels in close proximity
ing at the same event, highlighted the companys sucfor an extended period of time;
cesses in deepwater West Africa, especially the Pazflor
Constructed complex novel seabed systems;
project in Block 17 offshore Angola.
Connected the system to dynamic positioning vessels
Among several industry firsts, Pazflor saw the first
in short timeframes;
implementation of subsea gas/liquid separation an
Conducted extensive monitoring campaigns; and
advance that enabled the projects economic viability. It is
Demonstrated the skills of the subsea industry.
the first project to deploy a development plan based on
Turner went on to highlight the importance of areas
such as condition monitorAccording to Peter Blake at Chevron, technology investment
ing and integrity managewill be focused, collaborative, and leveraged to enable subsea
ment, internal learning and
developments in deep water and ultra-deep water, where the
improvement, and tools and
projects are becoming increasingly complex and technologytechnology advances (BP is
driven. (Graphic courtesy of Chevron)
working on areas such as
HIPPS, production boosting, and HP/HT).
He concluded that
the recruitment of fresh
talent into the subsea arena
remains a crucial challenge.
The glue that holds all this
together is human capability
and capacity ... and human
capability is the greatest
challenge we have across
the subsea supply chain.
As an industry, we need
to work on this together,
he concluded.
75
SUBSEA
TECHNOLOGIES
Seabed compression advances

boost development options
A Norwegian player is lining up a queue of gas compression projects that will greatly
enhance the industrys subsea toolbox for IOR and much more.
opting for gas compression on the seabed for sgard in

October 2010 before making the final investment decision last year.
So why opt for subsea compression? As any field ages,
its natural pressure declines, meaning that compression is
needed to extract more gas and get it to a platform. Until
now, the standard solution has been for that compression
to be done on a platform or from shore. However, the
closer the compressor is placed to the wellhead, the more
gas can be extracted because the compressors suction
pressure will be lower than if it is installed on a platform.
To achieve this, Statoil will place two massive compressors
near the wells on sgard that will provide enough pressure to transport the gas to the platform.
The Gullfaks 2030 and Ormen Lange pilot projects will
eventually benefit from the technology; technology qualification and testing are under way at both developments.
tatoil is pioneering the worlds first subsea gas compression project to eventually boost production when
needed on its flagship sgard field in the North Sea.
The company is in the vanguard of a growing industry
movement toward the general acceptance and implementation of various subsea processing solutions to improve
recovery of oil and gas reserves from brownfield developments across the globe. These solutions include seabed
separation, single and multiphase hydrocarbon boosting,
raw seawater injection, sand handling, and produced
water reinjection.
All of these solutions will play a key part in enabling the
industrys inexorable advance into deeper waters and
more remote environments.
Gas compression is arguably the most
important piece of equipment in the
subsea toolbox as the industry positions
itself to meet these future challenges.
According to Statoil Senior Vice President for Subsea and Marine Technology
Bjrn Kre Viken, Subsea compression
is the most important single part of the
subsea factory. My opinion is that we are
not that far from realizing a subsea factory Statoil is ahead on this. All the
other operators are thinking along the
same lines, but someone has to go in
front. And when it comes to subsea
compressors and subsea technology
in general, we are in the lead. This is
an important technology to have in
our toolbox.
But also importantly, this is being
business-driven. We are not doing this
from a technology point of view itself;
it is connected strongly with the business
A field schematic shows the planned layout of Statoils sgard field offshore Norway,
case. It has to compete with other
which will feature a huge subsea compression station weighing 4,800 tonnes. (Images
concepts.
courtesy of Statoil ASA)
Statoil first officially confirmed it was
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SUBSEA
TECHNOLOGIES
Subsea no longer necessarily means small, as this scale image from Statoil demonstrates. The sgard compression station will feature
two 11.5 MW compressors, with the substantial power requirement to be supplied by a high-voltage electricity system from the sgard
A floating production platform.
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sgard was not the first field to opt

for subsea compression another
opportunity was assessed in 2008 by
Statoil for its Tune field offshore
Norway. Although there was a clear
production acceleration and increased
recovery effect, it was not possible to
develop a sufficiently robust business
case at the time. The knowledge gained
from studying this opportunity for what
was a relatively small field where a simple multiphase compressor system
could be applied did not go to waste
and is being taken further in the work
being done on the Gullfaks subsea
compression project.
According to Statoil, the Gullfaks
South recovery rate already is 62%, and
the combination of subsea compression and conventional low-pressure
production in later phases could lift
the total recovery rate to 74%. This
would increase production by 3 Bcm
of gas, or an additional 6%.
Statoil also has identified several
other small- and medium-sized fields as
potential candidates for the technology.
But it is sgard that leads the way, with
the subsea compression system aimed at
increasing pressure from the fields
SUBSEA
TECHNOLOGIES
Midgard and Mikkel reservoirs in Blocks 6507/11 and

6407/12, and 6407/7, respectively. This could enhance
recovery by up to 28 Bcm and 14 MMbbl of condensate
(around 278 MMboe), the company has estimated.
Two conventional compressor trains, each with an
inlet/anti-surge cooler, will be used along with a common scrubber and condensate pump. The moisture will
be removed from the gas before it is compressed on the
seabed.
The Midgard and Mikkel gas reservoirs were developed
as subsea installations in the Halten Bank area of the Norwegian Sea, around 200 km (124 miles) offshore. The
wellstream from the two fields, located 50 km (30 miles)
and 70 km (43 miles) away, respectively, is sent in the
same pipeline to the sgard B platform. Current analysis
shows that by year-end 2015, the fields pressure will
become too low to avoid unstable flow and maintain a
high production profile to the platform, with the low
pressure unable to transport the gas.
For sgard, qualification of components began in
2005, with work including the development of a suitable

scrubber capable of handling solids as well as liquids.
Statoil said the application of the two massive 11.5
MW compressors, plus coolers, separators, and pumps
in one subsea template, will involve an investment of
almost US $2.6 billion. Much has gone into developing a
compact compressor design, with motor and compressor
housed in the same casing and motor cooling using the
process gas.
A high-voltage electrical power distribution system will
be provided via submarine cables from the sgard A FPSO.
The $590 million contract for the design and construction of the gas compression system is being carried
out by Aker Solutions, which is also doing the modifications on sgard to provide electricity to the system.
The compression station (4,800 tonnes) and manifold
station (900 tonnes) will be installed in 250 m to 325 m
(820 ft to 1,066 ft) water depth by Italys Saipem, which
also will carry out the lifting of a new module onboard
the sgard A FPSO.
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79
UNCONVENTIONAL:
HAYNESVILLE
The Haynesville can compete

As the largest producing gas play in North America, the Haynesville shale
is a highly competitive asset.
Peggy Williams, Editorial Director
oday, the Haynesville shale is the largest producing gas

play in North America. It produces some 6.5 Bcf/d, a
remarkable rise from zero production in 2007. Indeed,
this upstart shale gas play now accounts for 10% of total
daily US gas production.
Integrated workflow key to

managing risk in shale plays
Contributed by CGGVeritas
ptimism drives our business.From Spindletop to today,
it only takes one spectacular well to start a boom, but
possibly dozens of dry holes or, in todays shale plays, subeconomic wells to turn that optimism into realism.
CGGVeritas has developed an integrated workflow, which
includes high-quality 3-D seismic survey design and acquisition through reservoir characterization, to derive detailed
geomechanical and lithological models that can guide more
targeted and effective drilling and completion programs.
The company has published results for the Haynesville
shale using the Tri-Parish CGGVeritas multiclient data (SEG
2011). The Hampson-Russell multi-attribute analysis of various reservoir quality indicators was used to predict actual gas
production at the wells covered by the study, and excellent
correlation was achieved. With this strong link established
between seismic attributes and production measurements,
several areas of high potential (sweet spots) for future development were identified.
The first step in identifying potentially productive zones
is to understand the lithological and geomechanical properties that control reservoir quality. In the Haynesville shale,
prestack simultaneous inversion was used to extract acoustic
and shear impedances to predict properties such as density,
porosity, brittleness, mineral composition, and total organic
content, which were calibrated against existing well information. This showed that rock properties of the lithology
above and below the Haynesville are very different from
those within it (even though post-stack seismic reflection
amplitudes may look similar). Having identified the potential sweet spots, the effectiveness of hydraulic stimulation
80
And yet the book on the Haynesville is that it is uneconomic in todays gas market. It is a dry gas play, and the
deep, hot, and highly pressured formation requires very
costly wells. Rigs have been relocated from the North
Louisiana and East Texas environs of the Haynesville to
such liquids plays as the South Texas Eagle Ford.
Not everyone shares a dim view of the Haynesville,
however. A major proponent of the play is Calgary-based
was assessed by using stress estimates derived from
anisotropic analysis of the wide-azimuth seismic data calibrated against available core measurements.
The strength of this technique is the number of different
attributes used to produce the models. No single attribute
produces a reliable correlation with production, but by
applying multi-attribute analysis to a wide range of lithological and geomechanical properties, areas of potentially
high production can be predicted. Partners in this study
have commissioned further proprietary studies over their
licenses.
This workflow is as applicable to liquids as to gas and is
being extended to shale oil reservoirs. The models can be
used to predict reservoir drainage geometry and induced
fracture behavior so that the most productive well locations
and fracture stages can be determined, reducing exploration
risk. The risks associated with drilling hazards and hydraulic
stimulation also can be mitigated by locating ductile areas and
identifying faults that might allow leakage of gas or proppant
out of the desired zone. This study will enable optimal drilling,
completion, and recompletion of the Haynesville to power US
energy for decades.
The first six months of production predicted from seismic and

correlated to actual values are shown. Note potentially high
production areas (circled) that have not been drilled. (Image
courtesy of CGGVeritas)
"When talking
unconventionals ,
you 'll tend these
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Whether you ' re working in shales, tight rock , coalbed
methane or heavy oil, unconventional challenges

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safe solutions from Halliburton. Indeed, backed by the
industry's most effective technologies and workflows ,
the globally experienced , basin-specific experts of
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a'
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DZINO
The Haynesville is an Upper Jurassic-age shale in northern

Louisiana and eastern Texas, situated between the Cotton Valley sandstone group and Smackover limestone formation.
There were more than 2,000 Haynesville wells drilling, permitted, or waiting on completion as of March 2012. (Map and
data courtesy of Louisiana Department of Natural Resources)
Encana Corp. The Canadian senior has applied its skillset

to its prime Haynesville land position, and it claims that
the results speak for themselves. In an early November
2011 conference call with investors and shareholders,
Encana talked up the Haynesville and perhaps changed a
few minds about the realities of this prolific resource play.
The Haynesville has led Encanas recent corporate production growth. For 2011, we expect to average 505
MMcfd, more than 50 times what we were producing just
three short years ago, said Eric March, Encana executive
82
vice president. The Haynesville shale represents extraordinary opportunity.

Engineering efficiency, advanced horizontal drilling and
completion technologies, and lower cost structures are
making the Haynesville a highly competitive, economically
robust resource play that has a long-term future, he said.
In recent years, Encana worked to retain its core leasehold. The company has 250,000 net acres in the heart of
the Haynesville and mid-Bossier plays, and the majority of
that is now held by production (HBP), said Paul Sander,
UNCONVENTIONAL:
HAYNESVILLE
the order of 5%. Around one-half of our wells employed

vice president, Midcontinent business unit. Now that the
this practice in 2011, and it is now our standard practice,
HBP grind is largely behind it, Encana is applying its
Sander said.
resource play hub development strategy to the Haynesville.
The upshot of all Encanas engineering, innovation, and
The approach calls for drilling fewer, longer laterals at
best practices is an affirmation that the Haynesville is truly
optimum spacings and employing lower cost, higher
a top-tier, highly competitive asset, said the company.
recovery completions. Already, Encana has driven costs
down to US $3.70/Mcf in the Haynesville, a remarkable drop from more
than $5.50/Mcf in 2008. Going forward, Encana targets supply costs of less
than $3/Mcf.
We expect to achieve this through a
FNV IRO AIEN TAL
combination of improved well perform1
ance and reduced cost structures, primarily through the implementation of our
resource play hub model, Sander said.
Pad drilling and increased efficiencies are pillars of Encanas program. In
its Credence area, where it owns 100%
working interest, Encana has reduced
drill times by 38% and drill costs by
30% since 2009. Completion efficiency
and costs also have improved even as
well lengths and completion intensity
have increased.
4
Since the first quarter of 2010, the
p
number of frac jobs Encana has
pumped per month has doubled. Most
recently, we pumped as many as 145
completion stages from a single crew in
a single month, Sander said. And
more stages mean lower average costs.
The wells also are getting better.
Encana has tweaked its designs to place
More locations. More services. More peace of mind.
more sand in the completions network
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Sander, it is less costly for the company
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to invest in bigger completions on fewer
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wells than it is to drill more wells with
As the nation ' s leading provider of oilfield waste management
smaller completions. Ultimately, we are
solutions , R360 offers superior access to strateg ically located
heading to 106-acre spaced wells or
facilitie s across the country. Because when it comes to
even 160-acre spaced wells, he said.
environmental solutions , you need a provider you can count on.
On the production front, Encana has
had good success with slowback, a practice that limits a wells production rate
to keep the surface pressure drop to less
than 25 psi per day. Wells produced with
the slowback method appear to have
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83
ix
DEVELOPING U N C O N V E N T I O N A L S
April 23-25, 2012
Fort Worth Convention Center

Fort Worth , Texas
RlCf f NAL
rheO
UNCONVENTIONAL:
The New Standard
Energy supp l y has entered a fundamentall y new age. Thanks to fracturing advances and the upsurge in
unconventional production , the U.S. is now the world's largest producer of natural gas and third largest producer of
oil. Unconventionals have turned the tide for U.S. energy supp ly.
What lies ahead? Join us at the 2012 DUG the Original Conference & Exhibition for the latest thinking from CEOs
of leading operating companies , technical experts and i n d u s t r y professionals. They will provide a broad up date on
unconventional oil and gas p lays in North America and beyond .
Technologies emp loyed today improve profitability and the DUG conference provides the forum for companies to
share their success stories. This is THE perfect opportunity for executives and middle managers to learn more about
the complexities of unconventional resource development.
Also, you will want to hear Dr. Condoleezza Rice, 66th U.S. Secretary of Stal e and former National Security Advisor,
as she shares her experiences in the State Department with registered DUG delegates.
GOLD SPONSORS
ion
ENC.1P INVESTMENT S L.P.
G EO V E N T U R E S
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Schlumberger
SILVER SPONSORS
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and
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Stephen Bull
Statoil ASA
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Senior Advisor
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Steve Antry
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of Oklahoma LLC
E& P ' leant Leader

Office of Petroleum ,
Natural Gas
and Biofuels Anal ysis
U.S. Ener gy Information
Administration (EIA)
Wolf E. Regener
David Hill
vp
N a t u r a l Gas
Economy Operations
Encana
President and COO

G oodrich
Petroleum Corp.
70
r
Brandt 0. Temple
President and CEO

B N K Petroleum, Inc.
Robert C. Turnham
Porter Bennett
Founder
Pondorosa Advisors
Founder
Bentek Energy
President
Sunrise Exp loration
and Production
FEATURED LUNCHEON SPEAKER
Dr. Condoleezza Rice
66th U.S. Secretary of State , Former N a t i o n a l Security Advisor

M a r k your calendars and p lan to attend DUG 2012. Join us for lunch as Dr. Condoleezza Rice
l
l shares her energy a n d foreign policy experiences w i t h registered DUG delegates.
p
i
COMPLETIONS TECHNOLOGY WORKSHOP

A P R I L 23
As more technology is app lied in the world's emerging unconventional p lays , the debate
on what makes a perfect well is still unsettled. With an array of possibilities for
completions, most companies stick with what they know. This workshop will hig hligh t
some of the " stand out " technolog ies that are fast becoming standard operating
procedures. In addition to specific tools , h y draulic fracturing reci pes use many
components. The availability and supp ly of horsepower, fluids and proppant each
p lay a role in bring ing hi gh-productivity wells in under the bottom line.
Plan to attend this highly informative workshop during the DUG conference.
For more information and agenda, go to dugconference.com and click on
Technical Workshop.
To register, go to dugconference.com
For more i nf or m a t i o n , contact Roxanne Starling
at rstarlingOhartenergv. com
II
=ti
1
\4 .
SERVICE AND
SUPPLY VESSELS
Offshore support fleet

steering a positive course
After troubled times for some regions, the OSV market around the world looks set to enjoy
better times as offshore support vessel operators move to meet growing demand
from oil and gas companies.
Daniel Quarm and Ian Coates, Derrick Offshore Ltd.
US Gulf of Mexico
The US market has faced many problems over the past

few years: the financial crisis, the fall in oil prices and just
as the industry had started to recover the Deepwater Horizon disaster, which put a halt to activity in the US Gulf of
Mexico (GoM) region.
With the moratorium on deepwater activity instituted
as a result of the oil spill, rates for supply vessels plummeted, and many vessels were laid up or reloChanges in E&P Budgets vs. Oil Price
cated to other regions. When the moratorium
was lifted in October 2011, it took some time
% change in E&P Spending
40%
140
for activity to begin increasing because of the
Brent Crude Price
35%
complicated nature involved with applying for
120
deepwater permits.
30%
These hurdles were eventually overcome,
100
25%
and activity is now steadily increasing. And,
20%
80
because of the number of vessels that left the
15%
region for greener shores, there is a shortage
60
10%
of good quality DP2 PSVs, and rates have
started to rise. The industry also has started
5%
40
to see increased rates for anchor handlers,
0%
20
but not as much as had been seen before
-5%
the Macondo disaster in the GoM when
0
-10%
they were in extremely short supply.
2006
2007
2008
2009
2010
2011
2012e
There is an expectation that 2012 is the
The rising oil price has fueled increased spending plans by oil companies, which beginning of a new revival for the GoM as
is in turn leading to renewed confidence and investment by supply vessel operamany owners are starting to renew their newtors to meet growing demand. (Source: Barclays E&P Spending Survey/IEA)
build programs, and some substantial orders
86
US/Billion
% change
he worldwide market for offshore support vessels

(OSVs) has been in recovery mode since the financial
crisis of 2008 and the resulting plunge in oil prices, with
some regions recovering better than others. Now, the offshore industry is seeing positive outlooks around the
world in 2012.
This has been primarily because of the recent high and
stable oil price, with Brent Crude peaking in May 2011 at
more than US $126/bbl. It has remained above $100/bbl,
which has been fueling increases in oil company confidence and spending. With forecasters predicting that the
oil price will average around $110/bbl this year, oil and
gas companies will once again be able to pursue more
marginal fields in far deeper waters that would not be
profitable otherwise.
The rise in oil company spending on E&P has a waterfall effect on the whole offshore industry, with E&P com-
panies requiring more drilling rigs, which in turn need

supplying and moving. This is where the offshore support
sector comes in.
Other industry sectors also are having a knock-on effect
on the offshore industry such as renewables, where there
is an overlap in the tonnage required for certain tasks,
especially construction and installation. This has tightened some markets, especially in the North Sea and
Europe, where vessels are able to compete for jobs in
both industries and are therefore less reliant on just
one or the other.
We set the record

for setting records
SERVICE AND
SUPPLY VESSELS
have been placed. Hornbeck has ordered 16 PSVs and Harvey Gulf also has a
number on order.
In total there are around 50 PSVs on order, which will be delivered over the
coming months and years from US-based shipyards.
Another positive note for US and Mexican players is the further development
in talks between both governments regarding cooperating on offshore fields,
where legal ownership has been a contentious issue near the maritime border.
Once this is fully resolved, oil companies will finally be able to explore offshore
regions where there is massive potential for discoveries.
k
v,
71
;v ,
North Sea
The North Sea is among the most mature offshore markets in operation today
and benefits from many years of experience where the major E&P players have
endured tough times before. The market for OSVs has managed to remain fairly
buoyant. The 2011 summer season had proven to be especially favorable for vessel owners, with rates finally reaching the heights that were seen before 2008.
The North Sea spot market for OSVs is often used as the benchmark for
regions around the world, but it is often more volatile than the others because of
a number of factors. The main factor is the weather, which can cause many vessels
to suddenly become available, while at other times when the weather is good,
rates can rocket upward because charterers are looking to get their work completed before the weather becomes inclement. In the North Sea, a significant
number of orders have been seen for large DP2 PSVs, which are due for delivery
over the coming months. This could have a significant impact on demand and
supply, which has been fairly balanced over the past few years. A number of the
vessels delivered since January have had little effect on the market because they
have been chartered on long-term contracts or taken out of the North Sea and
relocated to regions such as Brazil.
Anchor handlers saw an influx of newbuild vessels, especially extra-large tonnage vessels, a few years ago. These vessels have been in high demand because
of their high specifications and variety in capabilities such as ROV support. The
industry might start to see a new round of orders over the coming years as confidence has increased. This was evidenced by the impressive day rates seen toward
the end of the 2011 summer season, when some vessels were chartered for as
much as $308,700/day.
West Africa
The West African offshore market is one where traditional trends do not seem to
apply, due in part to the special make up of the region where there is an emphasis on trying to include local content. However, these indigenous companies are
still developing and sometimes lack the stability of other regions as governments
can change quickly. Some local companies also lack the experience that those
from other countries often draw on.
To counteract local content laws in this region, international contractors might
form joint venture (JV) partnerships with local companies so their vessels can
operate without hindrance.
The creation of companies such as Sonatide (a JV between Tidewater and
Sonangol) have allowed companies like Tidewater, Bourbon, and Sanko Shipping
to dominate the West African market because of their high-quality tonnage (fairly
young DP2 tonnage), which is in high demand in the region. These vessels often
are quickly snapped up by oil companies on long-term contracts.
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SERVICE AND
SUPPLY VESSELS
Average PSV Charter Rates (US$)

$50,000
Piracy is another factor that plagues

the region, especially around Nigeria
where attacks are almost an everyday
occurrence that do not just affect the
shipping industry. As well as affecting the
vessels, the attacks also increase
insurance costs and deter other companies from investing in the region.
Meanwhile, East Africa is a region
showing immense growth potential and
opportunity, but there are signs that this
area will take a few more years to fully
mature. This is because of security concerns and the lack of clarity in the region
in terms of local content laws that could
arise. With Somalia so close to countries
like Mozambique and Tanzania, where
exploratory work is accelerating, many
owners are wary of the region and will
want to stay clear until the situation
resolves itself.
$45,000
North Sea
US Gulf
$40,000
Asia Pacific
West Africa
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$0
Rates in most areas are on the rise, with the US GoM market steadily increasing and
the volatile North Sea market still buoyant yet largely influenced by seasonal weather
patterns. (Data courtesy of Derrick Offshore Ltd.)
Average AHTS Charter Rates (US$)

$200,000
Asia Pacific
North Sea
$180,000
US Gulf
In the lead up to the 2008 financial crisis

Asia Pacific
West Africa
$160,000
which led to many oil and gas companies
significantly reducing their spending
$140,000
budgets, operators active in Southeast
$120,000
Asia and the Pacific already had a significant number of vessels on order and
$100,000
many being delivered at the same time.
$80,000
This led to massive market oversupply
$60,000
with little activity occurring, which has
left many newbuilds idle. Anchor han$40,000
dlers were the worst hit among the off$20,000
shore fleet with the 5,150 BHP design the
most popular in this region because
$0
of its shallower waters.
It has taken a long time for activity to
rebound, but the industry is seeing signs The anchor handling market is expected to steadily improve, with the heavily
impacted GoM starting to revive after a torrid time post-Macondo. (Data courtesy
of this, especially in Malaysia and Ausof Derrick Offshore Ltd.)
tralia, where the majority of offshore
projects seem to be focused on the presLooking ahead
ent. Projects such as Gorgon and Ichthys in Australia have
When oil companies are more confident, this allows the
been a lifeline for some operators, with large injections of
service and supply industry to budget in line with them.
cash from Shell and the other oil companies. But quaranWhile this growth in confidence and activity is occurring in
tine laws around Australia have not made matters easy,
some regions globally, it is only now starting to happen in
and few operators qualify for some of the work.
others where specific market conditions have not allowed
Orders for newbuilds are on the rise, however, and activrecovery until the present time. The overall outlook for the
ity levels are expected to continue rebounding through
OSV market, meanwhile, looks to remain on a steadily
2013 as other regions such as Vietnam increase their activimproving course for the remainder of 2012.
ity levels.
88
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SERVICE AND
SUPPLY VESSELS
Brazilian E&P spending fuels

major supply vessel growth
A massive increase in upstream expenditure in Brazil is driving a strong demand
for supply vessels as oil companies tackle deep and ultra-deepwater areas
where there is little or no infrastructure.
massive financial support for the development of the

countrys booming oil and gas sector, plough hundreds
of millions of dollars into the building of both PSVs and
AHTS vessels.
In 2010, for example, it financed projects to build 58
PSVs and AHTS vessels:
19 PSVs (CBO Grupo Fischer);
15 PSVs and 4 AHTS (Bram Edison Chouest);
Eight PSVs and 5 AHTS (WSOffshore Wilson Sons
and Ultratug);
Four PSVs (Starnav Detroit); and
Three AHTSs (Dof Navegao DOF).
If domestic yards in Brazil are able to deliver supply
vessels in line with the Prorefam III plan, nearly all
AHTS units operating in the countrys offshore sector in
2014 will be Brazilian-built, while the number of internationally-built PSVs in operation that year will still be
about 15 vessels more than in 2010 as demand growth is
expected to be higher than construction plans, according to IHS-Petrodata.
It added that it is unlikely that the Prorefam III aims
will be reached. The number of PSVs is expected to be
close to the target level, but the construction of more
razils booming supply vessel sector is the fastestgrowing market in the world, driven by the sheer
numbers required for E&P activities in the countrys
deepwater and ultra-deepwater basins.
While the countrys shallow and benign market segment is by no means quiet, it remains a relatively stable
one with around 50 vessels in action. But the Harsh &
Deepwater (H&D) segments operating fleet is soaring
in size, from 60 vessels in 2005 to nearly 160 vessels in
2010, according to IHS-Petrodata.
This impressive annual growth rate of 22% is almost
entirely due to the dramatic surge in upstream E&P activity in the deep and ultra-deep waters of the presalt Campos and Santos basins. Broken down a little further, the
demand for platform supply vessels (PSVs) has been growing faster than for anchor handling tug supply (AHTS)
vessels. In 2005 the mix was about 50/50, while in 2010
the mix was 60/40 in favour of PSVs, IHS-Petrodata said.
But as is always the case in Brazil, the issue of local content is a key factor with the government having clearly
stated its desire to develop and increase its domestic
The Maersk Leader AHTS vessel will
offshore yard activity, so that all supply vessels operstart work for Petrobras offshore
ating in Brazil can be built there.
Brazil later this year on ultraThe H&D supply vessel fleet in Brazil is mostly
deepwater projects.
modern, and all the Brazilian-built vessels are built
(Photo courtesy of
after the year 2000. As of late 2011, around oneMaersk Supply
third of the fleet in operation was built in Brazil
Services)
while the rest was built internationally.
As a result of the governments desire to develop
and expand domestic yard activity the Brazilian
authorities launched a financial incentive scheme
called Prorefam III to directly stimulate in-country construction of 146 offshore supply vessels
(OSVs) before year-end 2014. This number is further split into 82 PSVs and 64 AHTS units.
This has seen organizations such as the Brazilian
development bank BNDES, which is providing
90
SERVICE AND
SUPPLY VESSELS
complex-to-build AHTS units is expected

to lag behind significantly. In total we
expect total demand for internationallybuilt AHTS and PSVs to be higher in
2014 than in 2010. We do not believe
Petrobras will delay field developments
due to a lack of Brazilian-built rigs and
vessels. We expect a practical approach
based on contracting international vessels until sufficient domestic resources
are available, the analysis firm stated in
a paper at OTC Brasil 2011.
That belief is backed by three recently
issued contracts by Petrobras to Denmarks Maersk Supply Service (MSS)
Petrobras alone has an estimated shipbuilding demand for 192 OSVs offshore Brazil until
totaling US $281 million.
2015, with the Brazilian governments Prorefam III initiative aimed at supplying the marAll three contracts are four years in
ket with 146 new vessels. (Table courtesy of the Brazilian development bank BNDES)
duration starting in December 2012 and
include the AHTS vessels Maersk Leader, Maersk Lancer,
deepwater anchor handling with both conventional and
and Maersk Launch. The vessels will be involved in ultratorpedo anchors.
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biggest single customer, and five vessels for other international oil companies.
Petrobras remains the dominant client in Brazil colloquial, representing nearly 80% of demand. Meanwhile,
OGX represents about 5% of demand while other operators represent 8% of demand, and a spot market also has
started to emerge.
Petrobras investment plan for 20112015 shipbuilding demand is still huge,
with 192 new units forecast by 2015 and
281 by 2020. This is in addition to the 50
drillships and semisubmersible rigs, and
50 FPSOs and production semisubs it
also is forecasting until 2020.
A key question emerging is on the
exact timing of future demand growth
and yard construction capacity growth in
Brazil as international contractors
remain concerned about future demand
for vessels built outside the country.
IHS-Petrodata expects an average
annual demand growth for the next
five years of 14% for H&D supply vessels in Brazil. On top of the forecast
rise in E&P spending for Petrobras and
other operators, the longer distances
and less existing field infrastructure
in the emerging Esprito and Santos
basins will also result in a requirement
for more supply vessels for both
drilling rigs and field production
platforms.
Assuming the same growth trends for
AHTS and PSVs as in recent years, the
mix in 2015 will be about 70/30 in
favor of PSVs compared to 60/40 in
2010, although there is some uncertainty about this, according to IHSPetrodata.
However, the long-term trend will be
V.
M
I
'
that supply vessel contractors with
Brazilian ambitions will have to build
their fleets in Brazil. The main challenges appear to be potential delays
and cost overruns for newbuildings, as
well as higher operating costs than in
other regions.
up " 0
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92
Editors Note: Excerpts for parts of this article have been taken from OTC Brasil 2011
paper 22507, presented by IHS-Petrodata.
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tech
WATCH
R&D investment in Brazil

continues to surge
Increased investment at Cenpes and other Brazilian research centers is
facilitating growth in technology R&D and innovation.
Jean Marlin, Contributing Editor
etrobras plans to invest US $4.5 billion in R&D over

the next five years, especially on advancing technologies for ultra-deepwater oil production. We are encouraging industrial groups to set up research centers, including
foreign companies, that will register or apply for patents in
Brazil, said Aloizio Mercadante, former R&D minister
and now education minister.
The companys future plans are mainly directed for the
development of deepwater oil exploration in the Atlantic
Ocean below a thick layer of salt. Estimated at 50 Bbbl or
more, these discoveries could more than triple Brazils
2011 proven crude oil reserves of 16.4 Bboe.
The goal is to prepare the country to become the fifth
largest oil producer. Also, by overcoming materials and
equipment challenges, the Brazil government is working
to rank among the main exporters of crude.
Seeing Brazil as a good investment opportunity and

recognizing the quality of local universities, the biggest
suppliers of Petrobras are establishing an intellectual partnership with the company in addition to trade ties. The
minister cited biotechnology, biofuels, and environmental
research among the projects being developed.
Cenpes (Centro de Pesquisas Leopoldo Americo
Miguez de Mello) is the Petrobas R&D center, created in
1970 at the campus of the Federal University of Rio de
Janeiro (UFRJ). Since 2005, Cenpes has invested $700
million modernizing and expanding its facilities. This has
attracted international firms with operations in the Brazilian oil industry including Schlumberger, FMC Technologies, GE, Halliburton, Cameron, and Baker Hughes.
The investments in the experimental infrastructure
Cenpes constructed are critical for implementing a technological strategy. The physical space of the R&D center
has nearly doubled. Another 183,000 sq m (2 million sq
ft) were added on, reaching 297,000 sq m (3.2 million sq
ft) and making it one of worlds largest applied research
centers. Research facilities at decentralized sites add
another 276,000 sq m (3 million sq ft).
The new Cenpes facilities were inaugurated in 2010. In
addition, Petrobras also has semi-industrial experimental
plants, operational in several Brazilian states, integrated
into its industrial units. Cenpes has become the largest
research center in the southern hemisphere and one of
the five largest in the area of oil and gas worldwide, Cenpes General Director Carlos Tadeu da Costa Fraga said.
Resources for developing solutions
The Petrobras R&D facilities at Ilha do Fundo (Fundo Island),

Rio de Janeiro, include 227 new laboratories, making it the
largest research center in the southern hemisphere and one of
the five largest in the area of oil and gas worldwide. (Images
courtesy of Petrobras News Agency)
96
In recent years, Petrobras has consistently ranked among

the worlds top five investors in energy R&D, investing
around 6% of revenue. Growth is not limited to the skills
of the workforce.
The financial resources earmarked for R&D at Petrobras have been increasing, especially over the last five
years, keeping pace with the mushrooming investments
the company has made in other areas. The company has a
larger number of industrial projects, and its technological
challenges also have multiplied. Of around $2.7 billion
invested in R&D between 2009 and 2011, 59% was alloApril 2012 | EPmag.com
cated to E&P and 21% to new processing, refining, and

petrochemical technologies. Although only 2% was allocated to biofuels, this represents $31.7 million, ranking
Petrobras among the top 10 investors in biofuel R&D in
the world today. The amount of research dedicated to
environmental issues focuses mainly on atmospheric pollution and water resource management.
Cenpes research facilities

Research is simply not possible without quality laboratory
infrastructure, and Brazils current legislation for the oil
and gas industry has enacted incentives for innovation.
If the development of an exploration block in Brazil
leads to significant production, operators are required to
spend 1% of the value of future production on local R&D.
For now, the 1% rule only has a significant impact on
Petrobras, with an R&D budget of $1.2 billion. International operators also will see their obligations surging as
production from recent finds come online.
Industry-wide, the 1% obligation is expected to gener-
ate a cumulative total of $9.5 billion in R&D spending in

Brazil by 2020, according to a National Agency for Petroleum, Natural Gas, and Biofuels survey estimate. Actual
spending will depend on the vagaries of oil prices and production growth as well as possible changes in the laws governing how the oil money is spent.
By building domestic innovation capability, the government not only is driving Brazilian science and technology
but also reaping direct benefits, whether in terms of
human resource training or in attaining higher quality
and faster results from joint research projects.
Cenpes has 130 laboratories and 30 pilot plants, employing a technical staff of approximately 1,800, of whom 807
are graduate researchers and 314 are engineers responsible for the early design stages of major undertakings.
This is a genuinely unique arrangement since few oil
companies have their basic engineering teams actually
inside their research centers, bringing designers and
researchers closer together and encouraging the application of technological innovations in the companys
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97
tech
WATCH
engineering projects. Petrobras currently is investing

more in training its personnel than at any other time
in its history.
Approximately 511 technicians are operating and
maintaining Cenpes experimental facilities, which
range from conventional laboratories to semi-industrial
experimental plants, some of which are located within
the companys production facilities. This also brings
technology development nearer to implementation.
R&D partnerships
Very substantial input is due to significant experimental
infrastructure investments in partner institutions (universities and providers of goods and services in Brazil). Cenpes
works closely with these partners, sharing facilities and
developing solutions together.
Petrobras has invested on average around $300 million
per year in Brazilian universities, with consistent input
over the past three years.
These Thematic Networks are projects that are being
developed in laboratory facilities built at Brazilian universities under Petrobras management model for technology.
The partnerships are approximately four times larger in
terms of area than existing Cenpes facilities. It is estimated
that for every Cenpes researcher there are about 15 external researchers working at universities, suppliers, and partner facilities due to these networks.
This growth was rapid and made possible after the company identified 50 strategic issues in the oil and gas sector
and selected potential partners for each of them. Today,
Petrobras has more than 100 Brazilian R&D institutions
working in partnership with Cenpes.
With the advent of presalt E&P, the scale and complexity
of the demands on Petrobras have grown considerably,
requiring an expansion that has made Brazils oil and gas
technology facilities among the best equipped in the world.
Many traditional suppliers also have turned to Petrobras
for long-term strategic partnerships involving cutting-edge
technologies and technical expertise.
The pioneer was Schlumberger, which in 2010 inaugurated the Center for Research in Geo-engineering and has
since contracted 50 Brazilian researchers. The center plays
a leading role in presalt carbonates in deepwater and
ultra-deepwater fields.
Three specially designed, fully integrated laboratories
for testing and evaluating rocks and fluids in controlled
environments were installed at the Schlumberger R&D
center. In addition, the geo-engineering technology center
for developing end-to-end geosciences and geo-engineering workflows is using the Ocean application development
framework and Petrel seismic-to-simulation software.
98
It also hosts a WesternGeco GeoSolutions Hub that

provides seismic data integration-optimized solutions
to address specific regional challenges. The center has
10,000 sq m (107,639 sq ft) of office, laboratory, and
conference space and staffing capacity for 300 people.
Ongoing research programs are a multiteam effort of
Schlumberger companies (Drilling & Measurements,
Smith, M-I SWACO, Geoservices, and TerraTek Geomechanics Laboratory) and include marine electromagnetics, petrophysics, reservoir engineering, geomechanics,
drilling optimization, and completions.
BG Group announced that it will invest close to $1.5
billion in its Global Technological Center in Rio de
Janeiro by 2021. BG expects its annual R&D spending in
Brazil to rise from zero last year to $50 million/year by
2014, to $100 million/year by 2016, and to more than
$200 million/year in 2021, according to Damian
Popolo, BG technology manager in Brazil.
Additionally, Baker Hughes is opening a technology
center at Campinas, Technip has opened a research center in Esprito Santo state, and IBM has opened a technological center in Rio.
According to the calculations of the Rio de Janeiro
state government, these companies together have
invested approximately $303 million.
Andy ODonnell, president of the Western Hemisphere for Baker Hughes, sees the company opening a
new level of collaboration with customers and universiApril 2012 | EPmag.com
Cenpes installations include a 3-D simulation dome for group visualization of presalt projects.
ties in Latin America. They will build together a new

generation of highly specialized wellbore construction
tools and services to economically produce the presalt
reservoirs offshore Brazil. Besides strengthening the
capability to provide local solutions, the new center in
Brazil represents the next phase in the expansion of
Baker Hughes global technology network, he said.
Cenpes also seeks to strengthen its international ties
with universities and research institutes to act as the
linchpin between these scientific institutions and some
of Brazils major suppliers. This is paving the way for
faster technological development throughout the entire
energy sector supply chain. One example is the Glasgow
Caledonian University (GCU), which signed a Letter
of Intent to work with UFRJ, focusing on its School of
Engineering and Built Environment and UFRJs Cento
de Technologia.
And FMC Technologies has opened a $40 million
subsea research center at UFRJ, the largest subsea
technology research center in South America. As GCU
has a five-year collaboration agreement with FMC Technologies in Scotland to undertake R&D in new sensor
developments for the subsea oil and gas industry, the
agreement between the universities also can lead to
the development of new collaborative R&D activities
between GCU, UFRJ, and FMC Technologies.
Innovation and practical application

The Petrobras 2011-2015 Business Plan calls for $224.7
billion of investments and is a robust plan backed by a
portfolio of highly attractive opportunities.
It was conceived to move the Brazilian oil-related
goods and services industry forward, providing
development opportunities in equipment, services,
and technology for an internationally competitive
oil and energy sector.
The companys vision is supported by a coherent
technology strategy, driven by business goals and
founded on long-standing, tried, and tested technological competence, with strong investments in generating
and, above all, applying knowledge. This practical application is guided by four principles that orient research
project management: strict alignment with business and
a focus on results, implementation of technology solutions, technology cooperation, and building local capacity. Increased investments at Cenpes are aimed at
further implementing these goals and spurring technological innovation.
At Petrobras, innovation is viewed as the practical
application of the knowledge acquired to ensure that it
is translated into positive business results, Fraga said.
We are convinced that innovation is the only path to
success in todays highly competitive environment.
99
tech
TRENDS
Cable recording system

streamlines land seismic operations
The INOVA Geophysical G3i cable-based channel recording system is a flexible, portable technology that can be
used to capture 2-D, 3-D, and 4-D data in a wide range
of land seismic surveys, including high-density wideazimuth acquisition in challenging environments.
The G3i land recording system supports more than
100,000 channels and features advanced ground electronics and high-productivity vibroseis capabilities. It
also has a rugged aircraft-grade aluminum enclosure
and polycarbonate exterior for improved durability in
the field.
According to INOVA, the system requires less field
equipment to transport, maintain, and troubleshoot,
so surveys can be carried out with more efficiency. For
example, the unit deploys power-down-the-line technology to evenly distribute battery power to multiple field
station units using the power supply and fiber tap units
along with standard 12V batteries. Additionally, these
ground electronics consume only 235MW of power per
channel measured at the power supply, the company
said. The system also features a 1.2-kg compact remote
acquisition module station with four analog channels, as
opposed to using the existing single channel stations
offered by competitors. Inovageo.com/G3i
coalbed methane, heavy oil, and shale plays in North

America and Australia.
According to the company, the iPZIG service features
sensors placed directly behind the drill bit, providing
greater directional control and accuracy while drilling
when compared to conventional technologies. Data
reflecting changes in lithology and bottomhole assembly
orientation also can be identified using the new service,
so rapid geosteering adjustments in the well trajectory
can be made while staying in the production zone longer.
These data help reduce directional drilling risks and
allow for optimal well placement in critical hole sections.
In one application in a North American shale play,
the operator drilled a 1,524-m (5,000-ft), 8-in. lateral
section in an abrasive formation. The iPZIG at-bit measurements were used to control well trajectory, enabling
the bit to remain in the target zone 100% of the time,
according to PathFinder. slb.com/ipzig
Latest ROV offers upgrades

for speed, agility in deep water
The Tomahawk multi-role ROV manufactured by the
Forum Subsea Technologies Sub-Atlantic product line
can be deployed in demanding deepwater environments
such as in the Gulf of Mexico, Brazil, and West Africa
and requires less personnel and a reduced level of specialism to operate relative to electro-hydraulic workclass systems, the company said.
The latest Sub-Atlantic ROV offering is rated to 3,000
m (10,000 ft) water depth and can be used for survey,
well intervention, and drilling support tasks. Combined
The INOVA G3i land recording system has been successfully

deployed by BGP for high-productivity vibroseis techniques in a
western China oil field. (Image courtesy of INOVA Geophysical)
New service improves directional

control in unconventional zones
PathFinder, a Schlumberger company, has released
the iPZIG at-bit inclination, gamma ray, and imaging
service to optimize well placement through early bed
boundary detection, specifically in high-efficiency
drilling applications. The new at-bit imaging service has
been successfully tested in unconventional zones such as
100
Garaged facing inward, the Sub-Atlantic Tomahawk multirole

ROV can simultaneously carry camera boom arms on the front
and TSS440 search coils on the rear. Garaged facing outward, it
can be fitted with manipulators (front) and intervention tooling
(rear). (Image courtesy of Forum Subsea Technologies)
tech
TRENDS
with the Sub-Atlantic 3,000v, 400Hz small diameter

tether technology makes the products speed and agility
ideal for live-boating operations as well, according to
Forum Subsea. It also can be equipped with a 10kW
hydraulic power unit for running heavy-duty manipulators, tools, and work skids and features a 35kW power
system. The open deck space and payload are supported
by a large buoyancy area, providing a stable platform.
Additional features include coarse wave division
multiplexing and dual gigabit Ethernet options and
a communication junction box to easily integrate the
operators own equipment, which can be monitored,
controlled, and diagnosed using the Forum Subsea
Sub-Atlantic subCAN system. F-e-t.com
tions and minimize delays in high-cost offshore environments, the company said.
The vessel will be rated to 15,000 psi and offer 15,000
hydraulic horsepower pumping capacity as well as the ability to pump at rates of more than 60 bbl/min. Engineering work on the marine and stimulation systems is under
way, and completion is set for late 2013. Bakerhughes.com
Corrosion, marine debris cleaning system

maintains onstream assets
Paradigm Flow Services has launched the Pure-Flow
chemical cleaning system to aid in the removal of
corrosion accumulation and marine growth in fire
mains critical to the safe operation of offshore oil and
gas installations. The new solution is particularly effective in eliminating buildup in aging assets, where pipe
work can be older than 25 years, according to Paradigm.
The chemical treatment works to remediate biofilm,
marine growth, and corrosion caused by bacteria, which
can restrict water flow, thin pipeline walls, and cause
blockages in deluge nozzles. Pure-Flow is generated
in situ and can be injected into a live fire main system
while maintaining pressure and without having to shut
down operations or dismantle pipe work, such as in traditional methods like high-pressure jetting. The cleaning agent also degrades quickly into sea salt after use
and is approved for use in environmentally sensitive
areas, the company said.
As part of the Paradigm firewater deluge liftetime
solutions, the system includes internal video inspections
backed by deluge testing results showing that blockages
and restrictions have been eliminated and helping operators comply with HSE inspections. Paradigmflow.com
New pressure pumping vessel

to set sail for North Sea in 2013
A Baker Hughes pressure pumping vessel currently
under construction has been chartered by a subsidiary
to provide offshore stimulation services on Maersk Oils
assets in the North Sea. The eighth stimulation vessel in
the Baker Hughes pressure pumping fleet, the Blue Orca
will feature enhanced safety systems with redundant
back-up blending and pumping capabilities to support
high-rate and high-volume multizone fracturing operaEPmag.com | April 2012
The ability to differentiate facies type along with its probability

of occurrence using the enhanced HRS-9 software suite can
yield much more refined risk analysis. (Image courtesy of
CGGVeritas)
Software suite improves

reservoir characterization analysis
The CGGVeritas company Hampson-Russell Software
and Services has redesigned its suite of reservoir characterization applications across a wide range of seismic
exploration and reservoir characterization technology
platforms, such as AVO analysis and inversion to 4-D and
multicomponent interpretation. The HRS-9 software
suite features new architecture that includes a common
intuitive interface and data management system to
improve custom workflows.
According to CGGVeritas, the software interface acts as
a dashboard, integrating all functionality from the previously separate programs into a single application. This
solutions-based approach to reservoir characterization
provides geoscientists with more in-depth data analysis,
further reducing exploration risk, the company said.
Additional advancements include multi-threaded 64bit computing, allowing for the managed use of multiple
CPU cores, batch processing for optimum resource
scheduling, and the ability to cross-link output and
input processes. Cggveritas.com
Nancy Agin, Associate Editor
101
DEVELOPING UNCONVENTIONALS
A
Convention Centre
Calla ` rA
CA NADA
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=EATURED SPEAKER!
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NTRODUCING DUGT !
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Murray Nunns
President and CEO

PennWest Exploration
Ron Bailey
Dana Johnson
Torn Alexander
VP Natural Gas, Canada

Nexen, Inc.
President,
USA Operations
Enerplus Corporation
General Manager
SWN Resources Canada
r
Hart Energy i
proud to introduce
our latest D U G' Serie,
conference and exhibition
Together with the Canadian Society for
Unconventional Resources (CSUR), we will bring
the latest tig ht oil and gas insights to Calgary on June 18 -20 , 2012.
Richard Moorman
CEO
Tamboran Resources
Jon Noad
Exploration Manager,
Canada
M u r phy Oil Corporation
Dave Collyer
President
Canadian Association of
Bevin Witzba
Manag ing Director
RBC Rundle Group, RBC
Petroleum Producers
(CAPP)
Energy Partners
Alongside of the operator spotli g hts of individual p lays like the Montney, Cardium , Bakken , Exhaw and
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REGIONAL REPORT:
INDIA
India in a race against time

to find new reserves
Indias thirst for more energy to feed the worlds second-fastest growing economy
means it needs to find and produce new and large oil and gas reserves quickly
if it is to achieve its growth goals.
he exploration and development of new oil and gas

reserves are critical for India. One of the worlds
fastest-growing emerging economies today has to import
nearly three-quarters of its oil supplies to feed soaring
demand in 2010 the subcontinent, along with China,
accounted for 40% of the global increase in oil demand.
But despite the governments efforts over the past
decade to entice western players into its upstream sector, a general perception within the industry of rather
chaotic licensing rounds and conflicts between the staterun major Oil and Natural Gas Corp. (ONGC) and the
countrys industry regulator, the Directorate General of
Hydrocarbons (DGH), are threatening to derail Indias
ambitious growth plans.
India has a projected growth rate of 8% to 9% per
year, and its energy needs are expected to triple by 2035
from 468 million tonnes of oil equivalent (MMtoe) at
present to nearly 1,405 MMtoe.
At the forefront of the challenge to find new reserves
are ONGC and the privately-run Reliance Industries
Ltd. (RIL). Although ONGC has by far the lions share
in terms of acreage and production at present, it was
RIL that little over a year ago took the boldest step by
entering into its US $7.2 billion strategic partnership
with BP. The UK majors reasons for partnering with
RIL were to pursue upstream opportunities in the prolific Krishna Godavari (KG) basin, which lies onshore
and offshore the east coast between Chennai and
Kolkata, and to create a pathway into the downstream
sector to provide the country with fuel.
Back in 2008 BP and Reliance formed a 50/50 joint
venture (JV) for deepwater exploration D17 block in the
KG basin, where seismic data acquisition is due to get
under way this year.
But the mega-deal last year saw the two companies
enter into a partnership to cooperate across the entire
hydrocarbon value chain. In the upstream, BP took a
30% stake in 23 almost entirely deepwater blocks cover-
104
Vantage Drillings Platinum Explorer deepwater drillship is on a

five-year contract with ONGC offshore India. (Photo courtesy of
Vantage Drilling)
ing around 270,000 sq km (104,200 sq miles), with both

to also bid together for incremental opportunities in
other deepwater blocks off Indias east coast.
With Reliance as the operator, BP also is now bringing
its subsurface understanding to the table, helping RIL
optimize gas recovery from high-profile projects such as
the world-class KG-D6 block. This block currently provides around 45% of all gas produced in India from
fields such as D1 and D3 (22 wells including 18 producers) but has been suffering from declining production
volumes due to reservoir complexity, higher than envisaged water ingress, and natural reserves decline.
Significant steps already have been undertaken by the
JV technical teams in assessing these complexities, based
on which plans for workovers, side tracks, and additional wells have been planned, with execution subject
to necessary approvals.
The early signs are already encouraging the D6
gas fields had completed 900 days of 100% uptime and
zero-incident production by year-end 2011. Average gas
production from the block was 55.9 MMcm/d, with a
cumulative production of 1,257 Bcf since inception.
Average oil production for 2011 from the block was
REGIONAL REPORT:
INDIA
21,971 b/d, with cumulative output of 14 MMbbl of oil

and condensate since inception.
The companies are now working up an integrated
field development plan for all the gas discoveries in KGD6, encompassing existing wells and other satellite discoveries within the block to maximize capital efficiency
and accelerate monetization. An outline development
plan for four satellite fields was approved in January,
with engineering studies now foregoing. These four
fields will eventually be tied back 76 km (47 miles) to
the existing production facilities on the D1-D3 fields.
Reliance also was busy with the drill bit over the
course of 2011, making six discoveries including W1 in
the KG-V-D3 block, as well as onshore wells AF1, AJ1,

AT1, AN1, and AR1 in its CB-10 block. It has submitted
an integrated appraisal program for all its CB-10 discoveries. The company has submitted initial proposals for
commerciality to the DGH for review and discussion for
the discoveries of D33 in the GS-01 block (recently
approved by the Government), D39 and D41 in the KGV-D3 block, and D36 in the KG-D4 block.
Further appraisal of these finds is scheduled through
2012.
East coast crown jewel

Indias east coast remains the crown jewel for the
End of an era as the New Exploration Licensing Policy

makes way for open system
ndias long series of successful licensing rounds held
under the banner of its New Exploration Licensing Policy (NELP) are set to come to an end.
Increasingly complex and fractious NELP rounds that
have seen awards for its latest round (NELP-IX) repeatedly
delayed have led to plans to implement an open licensing policy in the future.
The NELP-IX round originally saw regulators plan to
award 33 blocks by September 2011, but this has been cut
to just 14 after Indias upstream regulation committee, the
Empowered Committee of Secretaries (ECS), recommended cancelling at least 10 bids where it felt the government was being offered less than 15% net present
value of profit petroleum.
Final approval sits with the Indian Cabinet Committee
on Economic Affairs, but among the bids currently set to
be hit by this decision are ones from Reliance Industries,
ONGC, Indian Oil Corp., Oil India, Bharat Petro Resources,
and Hindustan Petroleum Corporation Ltd.
Significantly, bids for a total of seven deepwater blocks
and three shallow water blocks were recommended for
rejection by the ECS in what could be a serious blow to
the countrys supposed deepwater ambitions.
Reliance bid for six out of 34 areas originally offered for
licensing in the ninth NELP licensing round, including for
the Andaman deepwater blocks AN-DWN-2010/3 and
AN-DWN-2010/4. A consortium of ONGC and Oil India
Ltd. also bid for the same blocks. The ECS also recommended turning down ONGCs offer for two other
Andaman Sea blocks, AN-DWN-2010/1 and AN-DWN2010/2, where it was the sole bidder.
It also recommended turning down bids by a consortium of ONGC-OIL and GAIL for deepwater block GS-
DWN-2010/1, and another by ONGC-OIL-BPRL for KeralaKonkan deepwater block KK-DWN-2010/1.

The one bright spot for the frontier deepwater zone is
that a consortium of BG Group and BHP Billiton has provisionally won a deepwater block in the Mumbai basin
(Block MB-DWN-2010-1). BG said its qualifying bid for the
block will, if formally approved, see it act as operator of
the consortium with a 50% stake. The block off the west
coast of India is approximately 350 km (217 miles) offshore and covers an area of 7,963 sq km (3,074 sq miles).
Water depths range more than 2,000 m (6,562 ft).
The NELP rounds previously have been of great value
to India, with the prior rounds attracting more than US $11
billion of investment commitments and seeing 87 oil and
gas discoveries reported so far. A total of 235 exploration
blocks have been awarded overall. However, problems
with NELP-IX have prompted the Indian government and
the Directorate General of Hydrocarbons after the round
is completed to implement plans to offer exploration
acreage under an Open Acreage Licensing Policy (OALP)
instead of the yearly NELP rounds, similar to how bids are
accepted in the UK and Canada.
The OALP is proposed to be implemented on a sectoral
basis, with the help of data repositories from the countrys
NOCs such as ONGC until such time as a full National Data
Repository is set up and operational.
An open system is seen as the way forward to enable
a more flexible approach for operators and is being
implemented to further encourage international companies to participate in what will be perceived as a simpler
system and will open up the countrys entire acreage.
105
REGIONAL REPORT:
INDIA
countrys offshore sector, and ONGC is focused on

the area.
The company already has oil flowing from its G1-GS15
field development in the KG basin, with the GS15 portion of the project lying in shallow water around 5 km
(3 miles) offshore. However, the G1 portion of the
development will see ONGC bring onstream what will be
its first operated deepwater project offshore India, with
the field located nearly 30 km (19 miles) from the coast
in 500 m (1,640 ft) of water.
The G1 field is planned to come onstream in May
2012, at a rate of 2 MMcm/d, while output from GS15 is
expected to plateau at more than 9,000 b/d. Development of several other nearby fields is scheduled to get
under way before year-end and through 2013.
Close by it also has the high-profile KG-DWN-98/2
block, which lies adjacent to Reliances D6 fields. ONGC
is planning to start a first production phase within the
next six years and has previously flagged overall investment levels of nearly $8 billion for the project.
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106
Cairn India had made four discoveries in the block

before selling a 90% stake to ONGC in 2005. ONGC
then made a further six discoveries and its first ultradeepwater discovery, UD-1, in the block. The UD-1
discovery lies in the southern part of the block in
2,841 m (9,321 ft) water depth and would be by far
the most technologically challenging ultra-deep
discovery in the country.
The company is focusing on two options, one being a
standalone development of the main field area, while
the other would involve an integrated development of
the main field as well as the northwest area of the block.
Initial estimates place development costs at nearly $3 billion for the first phase, with in-place reserves estimated
by the DGH at 3.9 Tcf of gas.
Up to 11 production wells would be drilled at UD-1 to
initially produce it, with a peak rate eventually predicted
at around 715 MMcf/d.
However the state-owned major, with its limited
deepwater experience, remains on the lookout for an
experienced western partner after losing former block
partners Statoil and Petrobras several years ago when it
decided the block was not a priority.
Although the BG Group has been repeatedly linked
with ONGC, ConocoPhillips has recently thrown its hat
in the ring over a possible multi-block partnership; however, this remains in the early stages of discussion.
It has been reported that up to 19 blocks offshore
east and west coasts could be part of a deepwater exploration deal.
Off the countrys west coast there already are some
promising discoveries that ONGC is progressing. The
company has a potential fast-track development under
consideration for the Daman (Main) and Daman
(North) prospects in the B-12 and C-24 blocks.
Strategically, ONGC remains on a clearly stated mission to double its reserves to 12 Btoe by 2020, finding
new reserves via the drill bit and using new technologies
to improve its recovery factor. The goal is to raise the
factor from around 28% in 2000 to a planned 40% by
the end of this decade.
It already has made significant progress in this regard,
with its recovery factor raised from the initial 28% figure
to 33.5% in 2011. A total of 15 out of 21 IOR/EOR redevelopment projects have already been completed, with
an estimated cumulative gain of 64 million tonnes.
ONGC currently has 107 well stimulation units in
action, with 121 drilling rigs in action (87 onshore,
34 offshore).
HART E N E R G Y
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HIGHLIGHTS
For additional
information on
these projects
and other global
developments:
READ MORE ONLINE
EPmag.com
SOUTH AMERICA
EWT under way on Iracema
An Extended Well Test (EWT) is under way in the presalt Iracema area of the Santos basin offshore Brazil
using the FPSO BW Cidade de So Vicente. The floater is in
Block BM-S-11, with the unit connected to well RJS-647
in 2,212 m (7,258 ft) water depth. The facility is gathering technical data on the behavior of the reservoirs and
oil flow along with other data, which will support development of the final production system expected to start
operations at the end of 2014 via the installation of the
150,000 b/d FPSO Cidade de Mangaratiba. During the
EWT, the well is expected to produce at a restricted flow
of approximately 10,000 b/d of oil.
shore Namibia after signing a rig contract for the first

deepwater well, Tapir South. The Maersk Deliverer semisubmersible rig was due to arrive at the planned well location
by the end of March, with the wildcat forecast to take up
to two months to drill. The Tapir South prospect, which is
estimated to contain around 604 MMbbl of oil, will be
drilled in approximately 2,108 m (6,916 ft) water depth to
5,100 m (16,733 ft) TD.
Statoil joins Tanzanian party
Statoil has joined the growing ranks of operators lining up
potential major gas developments offshore East Africa
after confirming success with its first ultra-deepwater well
offshore Tanzania. The company encountered 120 m (394
ft) of excellent quality reservoir with high porosity and
high permeability in the Zafarani exploration well in
Block 2, with logging results proving up to 5 Tcf of gas in
place. The find was made in 2,582 m (8,472 ft) water
depth, with the well to be drilled to a planned TD of
approximately 5,100 m (16,733 ft).
NORTH AMERICA
Repsols sweet find in Campos basin
Repsol Sinopec and its partners have made a high-impact
ultra-deepwater discovery on the Po de Acar prospect
in the Campos basin offshore Brazil. Partner Statoil said
the discovery well encountered two presalt accumulations
comprising a hydrocarbon column of 480 m (1,575 ft)
with a total pay of around 350 m (1,148 ft). A drill stem
test performed in a partial section of the pay zone flowed
5,000 b/d of light oil and 28.5 MMcf/d of gas.
Trinidad & Tobago deep round
Trinidad and Tobagos latest deepwater licensing round
was due to open March 29. The 2012 Deep Water Competitive Bid Round has a closing date of July 30, according
to the Ministry of Energy and Energy Affairs (MEEA).
Road shows were held in Houston and London, where six
selected deepwater blocks were unveiled. The six blocks
offered are in the East Coast Marine area and Trinidad
and Tobago Deep Atlantic area. PGS, in conjunction with
the MEEA, has acquired 6,766 km (4,204 miles) of marine
multiclient 2-D data over approximately 43,000 sq km
(16,602 sq miles) of the offshore area.
AFRICA
Chariot to get rolling with Namibian wildcat
Chariot Oil & Gas will kick off its exploration program off108
ATPs Morgus field flows oil

ATP Oil & Gas has announced initial production rates
from its Mississippi Canyon Block 942 A-3 (#2) well in
excess of 7,000 boe/d, of which 85% is oil. The well,
located on the Morgus field in the Gulf of Mexico
(GoM), encountered 73 m (239 ft) of net pay. This is
the fourth well brought on production at the Telemark
Hub location via the ATP Titan floating drilling and production platform. ATP operates the hub in approximately 1,219 m (4,000 ft) water depth.
Cascade FPSO onstream
Production is flowing from the deepwater Cascade/
Chinook field through the BW Pioneer FPSO vessel in the
GoM via the Cascade-4 well, which is approximately 250
km (155 miles) offshore in 2,500 m (8,202 ft) water depth.
The production well was drilled and completed in Lower
Tertiary reservoirs. The BW Pioneer is the first FPSO to produce oil and gas in the GoM and has the capacity to
process 80,000 bbl of oil and 500 MMcm/d of gas.
Caesar/Tonga begins producing in deepwater Gulf
Anadarko Petroleum has started production at the
Caesar/Tonga development in the Green Canyon area
of the deepwater GoM from the Constitution spar in 1,524
m (5,000 ft) water depth. Production is expected to ramp
up to 45,000 boe/d from the first three subsea wells.
international
HIGHLIGHTS
CGGVeritas kicks off Tabasco 3-D survey

CGGVeritas has begun acquiring the Tabasco 3-D multiclient survey near the Kuparuk and Alpine oil fields
on Alaskas North Slope. The company is deploying its
high-productivity vibroseis acquisition and EmphaSeis
broadband vibroseis technologies for the first time on
the tundra to acquire the 345-sq-km (133-sq-mile) survey. The first migrated data is scheduled to be delivered
in July 2012.
EUROPE
Statoils Skrugard
success in Barents
Statoil has successfully
drilled appraisal well
7220/5-1 on the Skrugard
discovery in the Barents
Sea offshore Norway. The
well was drilled in 388 m
(1,273 ft) water depth,
reaching a total depth
(TD) of 1,740 m (5,709 ft).
The well encountered a 25m (82-ft) gas column and a
Estimates confirm Skrugard holds 48-m (157-ft) oil column in
at least 250 MMbbl of recoverthe Middle-Lower Jurassic
able oil and approximately 10
reservoir, St, and NordBcm of associated gas. (Map
mela formations. Together
courtesy of Statoil ASA)
with the Havis field, which
was discovered at the
beginning of 2012 southwest of Skrugard in the PL532
license, recoverable oil reserves in the area are now more
than 500 MM bbl.
Irish appraisal success on Barryroe
Providence Resources has confirmed the presence of highquality light oil within a potentially extensive sandstone
system at its Barryroe appraisal well in the North Celtic
Sea. The appraisal well 48/24-10z was drilled to 2,301 m
(7,550 ft) TD and encountered a primary basal sandstone
reservoir interval within the predrill depth prognosis. Indications of hydrocarbons were seen while drilling, and wireline logging has confirmed the presence of 12 m (41 ft) of
net pay in both oil and gas-bearing zones, with the oil gradient being consistent to that of light 40API crude oil.
Duo hits gas offshore Romania
The OMV Group and ExxonMobil have reportedly
encountered approximately 71 m (233 ft) of net gas pay
at the Domino-1 well offshore Romania. The well is in

the Neptune block in 930 m (3,051 ft) water depth.
MIDDLE EAST
Saudis stepping into Red Sea
Saudi Aramco plans to drill its first deepwater well in
the Red Sea by year-end 2012. The company expects
to establish up to 100 Bbbl of new oil from its existing
fields in the Kingdom over the next several decades via
enhanced oil recovery methods as well as discovering
additional reserves in unexplored areas such as the Red
Sea. The initiative also is expected to increase the companys natural gas production 40% by 2014. The company also is working on increasing its rate of oil recovery
from fields from 50% to 70% in the coming years. Saudi
Arabia has 267 Bbbl of proven reserves, about one-fifth
of the worlds total.
Total snaps up Yemen block
Total has acquired a 40% operating interest in the Block
3 exploration license onshore Yemen from Oil Search.
The license covers an area of 2,954 sq km (1,141 sq miles)
in the eastern section of the Marib basin. Totals partners
will be the Austrian OMV, the Czech MND, and stateowned Yemen General Corp. for Oil and Gas (YGC).
Once the transaction has been completed, the joint venture will resume exploration with a seismic survey, which
may be followed by the drilling of an exploration well.
ASIA/PACIFIC RIM
Natuna prize for Premier
Premier Oil has confirmed its latest test on the Lama
formation within the deepwater Anoa field in the Natuna
Sea Block A offshore Indonesia was successful. The WL-5
development well was deepened to 3,356 m (11,012 ft) TD
to investigate the exploration potential of the Lama formation. The well encountered approximately 91 m (300
ft) of fractured Lama sandstones and was tested and
flowed gas at a rate of 17 MMcf/d through a 4864-in. choke.
South China Sea project gets green light
Chinas State Oceanic Administration has approved the
environmental impact assessment (EIA) for the Beibu
Gulf project, which comprises the development of the
WZ 6-12 and WZ 12-8 West oil fields in the South China
Sea. First oil production from the Beibu Gulf project is
expected by year-end 2012. The ramp-up to full-field
peak production is anticipated during 2013, according
to project partner Roc Oil (19.6%).
109
on the
MOVE
People
The Center for Offshore Safety has
appointed Charlie Williams executive
director.
Shell has named Andrew Brown
upstream international director and a
member of the Executive Committee,
based in the Netherlands. Additionally,
Malcolm Brinded has stepped down as
an executive director.
Former 3M Chairman,
President, and CEO George
Buckley (left) has taken the
reins as chairman, Expro.
The Society of Petroleum Evaluation
Engineers (SPEE) has elected a new
Punnett to head the companys project

management and specialist installation
services as global president.
Executive Committee consisting

of President Marshall Watson (top
left), Vice President Richard
Krenek (bottom
left), Past-President Barry Ashton
(top right), and Secretary-Treasurer
Samantha Meador (bottom right).
Jan Grimnes, founder and CEO of

Technoguide AS, has joined the board
of ffA as a non-executive director.
Joe Miller (right) has been
promoted to vice president
and general manager for
Devin International, a subsidiary of Greenes Energy Group.
Stephane Constant has taken up the

newly created post of chief technology
officer, Xodus Group, to lead the companys integration of surface and subsurface services.
The board of Petrobras has elected

Jos Eduardo de Barros Dutra as corporate and services director.
Offshore Installation Services Ltd., an

Acteon company, has selected Jeremy
Sigma Offshore has named Geir Eik vice

president, Internal Turret Systems.
THE ULTIMATE GUIDE

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MARICELLUS
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irFeuur?? Ftt?w ro Im
.?
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110
EP'
on the
MOVE
MARKETING | SALES | CIRCULATION
Expansions
Group Publisher
RUSSELL LAAS
Tel: 713-260-6447
rlaas@hartenergy.com
Associate Publisher
DARRIN WEST
Tel: 713-260-6449
dwest@hartenergy.com
United States
Canada / Latin America
1616 S. Voss Road, Suite 1000
Houston, Texas 77057 USA
Tel: 713-260-6400
Toll Free: 800-874-2544
Fax: 713-627-2546
Regional Sales Manager

JULIE B. FLYNN
Tel: 713-260-6454
jflynn@hartenergy.com
Regional Sales Manager

HENRY TINNE
Tel: 713-260-6478
htinne@hartenergy.com
HB Rentals has expanded its presence

in Australia by introducing four new
product lines including A60 Temporary offshore accommodation and living quarters modules and ATEX Zone
one pressurized A60 cabins, refrigerator containers, and workshops.
Houston-based WellEz has opened a
new regional office in Denver, Colo. The
company offers complete well lifecycle
reporting for oil and gas operators.
AVEVA has established a new office in
Seoul, South Korea, that incorporates a
dedicated product training center. The
office also hosts sales, marketing, product
support, and administration functions for
AVEVA customers in South Korea.
Champion Technologies is launching a
new training academy in April. Courses
will focus on areas such as corrosion,

production chemistry, asphaltenes and
gas hydrates, microbiology, and phase
separation.
Expro has opened its new operations
base in the Shekou industrial zone in
China. The facilitys workforce comprises both operational and support
employees responsible for servicing
operations in the South China Sea.
The Expro Shekou base has a permanent

staff of 12 employees supervised by China
Operations Manager Matthew Milne and has
already supported three successful well subsea landing string campaigns for the CNOOC
Yacheng project. (Photo courtesy of Expro)
Advertising Sales Representative

ERIC MCINTOSH
Tel: 713-260-6471
emcintosh@hartenergy.com
Sales Manager
Eastern Hemisphere
DAVID HOGGARTH
Tel: 44 (0) 7930 380782
Fax: 44 (0) 1276 482806
dhoggarth@hartenergy.com
Advertising Coordinator
CAROL NUNEZ
Tel: 713-260-6408
cnunez@hartenergy.com
Subscription Services
E&P
1616 S Voss Road, Suite 1000
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List Sales
MICHAEL AURIEMMA
Venture Direct
212.655.5130 phone
212.655.5280 fax
mauriemma@ven.com
ADVERTISER INDEX
American Jereh International . . . . . . IBC

Baker Hughes Incorporated . . . . . . . . 39
Cameron . . . . . . . . . . . . . . . . . . . . . . . 2, 3
Checkers Industrial Safety Products . . 106
CNPC Greatwall Drilling Co. . . . . . . . 34
Cudd Energy Services . . . . . . . . . . . . . 71
Diamondback Industries . . . . . . . . . . . 25
Dragon Products, Ltd. . . . . . . . . . . . 49, 93
E&P . . . . 84, 85, 94, 95, 102, 103, 107, 110
Emerson . . . . . . . . . . . . . . . . . . . . . . . . . 9
Expro . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Expro Group . . . . . . . . . . . . . . . . . . . . 79
FlexSteel . . . . . . . . . . . . . . . . . . . . . . . . 27
Fugro Jason . . . . . . . . . . . . . . . . . . . . . . 57
Gas Gun, The . . . . . . . . . . . . . . . . . . . . 78
Gefco . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Halliburton . . . . . . . . . . . . . . . . . . . . 6, 81
ION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
J&J Truck Bodies & Trailers . . . . . . . . . 59
Mechanix Wear . . . . . . . . . . . . . . . . . . 41
Mewbourne College
of Earth & Energy . . . . . . . . . . . . . . . . 11
M-I Swaco . . . . . . . . . . . . . . . . . . . . . . . . 4
ModuSpec . . . . . . . . . . . . . . . . . . . . . . 69
Momentive . . . . . . . . . . . . . . . . . . . . . . 91
National Oilwell Varco . . . . . . . . . . 19, 77
Newpark Drilling Fluids . . . . . . . . . . . 32
P2 Energy Solutions . . . . . . . . . . . . . . . 55
Paradigm BV . . . . . . . . . . . . . . . . . . . . 51
Polarcus DMCC . . . . . . . . . . . . . . . . . . 30
PTS Inc. . . . . . . . . . . . . . . . . . . . . . . . . IFC
R360 . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Rockwell Automation . . . . . . . . . . . . . . 89
Roxar AS . . . . . . . . . . . . . . . . . . . . . . . . 67
Schlumberger . . . . . . . . . . . . . . 5, 87, BC
Society of Petroleum Engineers . . . . . 98
Spectrum . . . . . . . . . . . . . . . . . . . . . . . 61
TAM International . . . . . . . . . . . . . . . . 47
TEAM Oil Tools
. . . . . . . . . . . . . . . . . . 53
Tenaris . . . . . . . . . . . . . . . . . . . . . . . . . 17
Tervita . . . . . . . . . . . . . . . . . . . . . . . . . .15
Tetra Technologies . . . . . . . . . . . . . . . 73
TGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Weatherford International, Ltd. . . . 28, 29
Zeeco . . . . . . . . . . . . . . . . . . . . . . . . . . 92
111
last
WORD
Methane in water wells

unrelated to hydraulic fracturing
An extensive study backs what the locals already know water wells in
Pennsylvania have contained methane for hundreds of years.
J.A. Connor, L.J. Molofsky, and S.K. Farhat,
GSI Environmental Inc.; A.S. Wylie and T. Wagner,
Cabot Oil and Gas Corp.
he rapid expansion of Marcellus shale gas extraction

in the Appalachian basin of the northeastern US has
prompted significant public concern regarding the potential for groundwater impacts due to hydraulic fracturing
operations. This concern has been heightened by media
coverage suggesting that hydraulic fracturing operations
and gas extraction activities in northeastern Pennsylvania
(Susquehanna County, in particular) have resulted in widespread occurrences of methane in shallow groundwater.
However, the results of an extensive water well survey by
GSI Environmental Inc. indicate that methane is commonly found in drinking water aquifers prior to proximate drilling activities in Susquehanna County. In
addition, a review of relevant geologic and historic information, as well as isotopic analyses of
dissolved gases, suggests that methane
in Susquehanna County water wells
is most likely associated with sources
in the shallow subsurface or Upper
Devonian gas-charged deposits that overlie the deeper Marcellus shale targeted for
commercial development.
This finding reinforces the need for
evaluation of potential stray gas
impacts based upon multiple
lines of evidence in order to
properly assess the source
of methane impacts and the
risks associated with gas well
Historical
drilling and hydraulic fracturpublications and
ing operations.
geologic records show
Shale gas drilling activities
first
began in Susquehanna
that elevated methane
County in 2006. However,
concentrations have been
historical publications and
observed in springs and
geologic records show that
water wells for more than
elevated methane concentrations have been
200 years in the area.
112
observed in springs and water wells for more than 200 years
in the area. In the 1950s, the morning ignition of the water
fountain at Rush High School was a daily ritual. In addition,
local water well drillers report frequent encounters with
shallow gas-bearing deposits, particularly within the sandstone units of the Upper Devonian Catskill and Lock Haven
formations. Indeed, predrill sampling and testing of more
than 1,700 water wells by Cabot Oil and Gas Corp. in
Susquehanna County from 2008 through 2011 found
methane to be present in 78% of the water wells prior to
nearby gas well drilling activities. These predrill samples
were obtained from water wells located at least 300 m
(1,000 ft) away from active drilling operations. In this
dataset, methane concentrations in water wells within 1 km
(0.6 miles) of the nearest active gas well were comparable
to those in water wells greater than 1 km away, suggesting
no relation to gas development activities on a regional
scale. Rather, elevated methane levels in groundwater
showed a clear relation to topography.
In addition to geologic and historic evidence for shallow
natural gas sources, the isotopic signatures of dissolved
gases in Susquehanna County also suggest that the
observed methane levels are not likely associated with
deep Marcellus shale gas. In 2009 and 2010, the Pennsylvania Department of Environmental Protection and Cabot
collected samples of dissolved gases from 14 water wells in
Susquehanna County for geochemical analyses to determine the origin of impact. The carbon and hydrogen isotopic signatures of the dissolved gases were found to be
consistent with either thermogenic gases from Upper and
Middle Devonian deposits overlying the Marcellus shale,
microbial gases formed in shallow glacial drift and alluvium, or a mixture of the two. These data show that the
presence of elevated methane in water wells throughout
Susquehanna County could be explained without any contribution from Marcellus shale related to the hydraulic
fracturing process.
In several cases, site-specific investigations may be
required to determine the source of methane in individual
water wells. However, based upon available information it
is premature at best to conclude that gas well drilling and
hydraulic fracturing activities are having any regional-scale
impacts on shallow groundwater resources.
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