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N OV E MB E R 2 0 1 2

Solving the EUR equation


for unconventional results
E P MAG. COM
ESTIMATING
THE UNKNOWN
Operating Efficiency
Geophysical Market
& Technology Update
Flow Assurance
Offshore Well
Intervention
Automation
REGIONAL
REPORT:
Asia
Pacific
991-994 covers-NOV_Layout 1 10/20/12 2:07 PM Page 991
991-994 covers-NOV_991-994 covers-NOV 10/19/12 11:23 PM Page 992
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OPERATING EFFICIENCY
Modeling is next step-change in
unconventionals
Racing to real-time collaboration
Mobile solution aids field technicians
GEOPHYSICAL MARKET AND
TECHNOLOGY UPDATE
Marine market steams ahead
Finding the balance between automated and
manual interpretation
AUTOMATION
Technologies for expanding horizon of digital
oil field
Industry groups tackle R&D for drilling
automation
FLOW ASSURANCE
Are slugs too fast to handle?
The economics of subsea sampling in
offshore production
OFFSHORE WELL INTERVENTION
Retrieving subsea wells in one trip
A question of intervention
IndustryPULSE:
Pastures old and new
rejuvenate Norways
offshore profile
The use of enhanced recovery technologies on
mature fields and pioneering production solutions
on new ones, combined with a successful frontier
exploration program, means that Norway has
been reborn as a global investment hot spot.
EXPLORATION & PRODUCTION
W O R L D W I D E C O V E R A G E
NOVEMBER 2012
VOLUME 85 I SSUE 11
A HART ENERGY PUBLI CATI ON www. EPmag. com
38
Unconventional plays wreak
havoc on traditional EUR
calculations. Heres whats
being done about it.
6
WorldVIEW:
A declaration of
independence
Ryan Lance is defining the new ConocoPhillips
as the independent E&P company moves into
organic growth mode with a focus on unconven-
tional plays, major development projects, and an
emerging exploration program.
10
Unconventional:
Capital efficiency,
optimization keep
Marcellus shale active
The proximity to the Northeast markets provides
incentive for companies to continue activities in
the Marcellus shale even though natural gas prices
remain in the doldrums.
50
54
58
62
68
72
78
86
92
108
114
96
COVER STORY: EUR ROUNDTABLE
Estimating
the unknown
REGIONAL REPORT:
ASIA PACIFIC
122
01-4 TOC-NOV_TOC 10/22/12 11:13 AM Page 1
AS I SEE IT
New faces, new places 5
MANAGEMENT REPORT
Its not just about filling the seat 17
DIGITAL OIL FIELD
Youve discovered oil and gas now discover your data 21
Shale gas factory provides collaborative field development 26
EXPLORATION TECHNOLOGY
Growing through the reservoir 31
WELL CONSTRUCTION
Research focuses on measuring effectiveness of cementing jobs 33
PRODUCTION OPTIMIZATION
A first reeled in at Corvina 35
OFFSHORE ADVANCES
Biggest offshore prizes lie deep 37
TECH WATCH
Isolation system shuts down gas migration 118
TECH TRENDS 120
INTERNATIONAL HIGHLIGHTS 128
ON THE MOVE/INDEX TO ADVERTISERS 134-135
LAST WORD
Managing social risk 136
E&P (ISSN 1527-4063) (PM40036185) is published monthly by Hart Energy Publishing, LP, 1616 S. Voss Road, Suite 1000, Houston,
Texas 77057. Periodicals postage paid at Houston, TX, and additional mailing offices. Subscription rates: 1 year (12 issues), US $149;
2 years (24 issues), US $279. Single copies are US $18 (prepayment required). Advertising rates furnished upon request. POSTMASTER:
Send address changes to E&P, PO Box 5020, Brentwood, TN 37024. Address all non-subscriber correspondence to E&P, 1616 S. Voss
Road, Suite 1000, Houston, Texas 77057; Telephone: 713-260-6442. All subscriber inquiries should be addressed to E&P, 1616
S. Voss Road, Suite 1000, Houston, TX 77057; Telephone: 713-260-6442 Fax: 713-840-1449; custserv@hartenergy.com. Copyright
Hart Energy Publishing, LP, 2012. Hart Energy Publishing, LP reserves all rights to editorial matter in this magazine. No article may be
reproduced or transmitted in whole or in parts by any means without written permission of the publisher, excepting that permission to
photocopy is granted to users registered with Copyright Clearance Center/0164-8322/91 $3/$2. Indexed by Applied Science, Technology
Index and Engineering Index Inc. Federal copyright law prohibits unauthorized reproduction by any means and imposes fines of up to
$25,000 for violations.
DEPARTMENTS AND COMMENTARY
ABOUT THE COVER Shale players are discovering that estimating
ultimate recoveries requires more than the standard calculations estab-
lished in the 40s and 50s. Left, the Asia-Pacific region is poised for massive
E&P investment. (Photo courtesy of Anadarko Petroleum; cover design by
Laura J. Williams)
COMING NEXT MONTH The December issue of E&P takes a look back at some of
the major exploration, drilling, and production technological breakthroughs of 2012 while
also offering a sneak peek into 2013. Regional reports include a look at developments in
the Eaglebine play and the Arctic, and a special feature focuses on asset integrity man-
agement. As always, while youre waiting for the next copy of E&P, remember to visit
EPmag.comfor news, industry updates, and unique industry analysis.
Printed on
recycled paper
01-4 TOC-NOV_TOC 10/22/12 11:48 AM Page 2
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Deepwater GoM activity expected to surge
By Velda Addison, Associate Online Editor
Wood Mackenzie predicts activity in the deep-
water Gulf of Mexico will head in a positive direc-
tion with production expected to hit 2 MMboe/d
in 2019.
Saudi Arabia gears up for unconventional gas exploration
By Scott Weeden, Senior Editor
The lure of shale gas is generating interest around the globe with Saudi
Arabia being one of the latest countries to focus on defining its uncon-
ventional gas resources.
Western Zagros shines light
on Iraq operations
By Velda Addison, Associate Online Editor
Being among the first companies to enter
Iraqs Kurdistan region brought challenges for
Western Zagros. But the work appears to be paying off as the company
makes oil and gas discoveries.
Petrobras discovery in Sergipe-Alagoas basin
Rio de Janeiro-based Petrobras has confirmed oil and gas in the BM-
Seal-10 block in the ultra-deep waters of the Sergipe-Alagoas basin.
Tonkawa Sand completion by Chesapeake:
1,181 Bo, 1.83 MMcf/d
A western Anadarko basin exploratory well by Chesapeake Operating
Inc. initially flowed 1,181 bbl of 42-degree-gravity oil, 1.83 MMcf of gas,
and 1,100 bbl of water per day.
Saudi Arabia: Unconventional gas
discovery results announced
Dhahran-based Saudi Aramco reported several
new unconventional gas field discoveries in the
north and northwestern part of the Kingdom. The dis-
coveries are in the Jawf and Northern Borders provinces as well as areas
near Midyan field, discovered in 2011, Jalamid field in Sidre, and other
gas-bearing structures.
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s we near the end of 2012, we embark on a new chapter at E&P. It
can be difficult to find people with the right combination of industry
knowledge and writing experience to build an editorial staff such as ours,
but Im pleased to introduce you to our staff going forward. Some are new
names, others have new job titles, but theyre all an integral part of our
operation.
Firstly, Scott Weeden has moved from his original position as online edi-
tor to tackle the production technology job and more recently the drilling
technology editorial position for E&P. Scott brings almost 40 years of
experience to his position, having written about the oil and gas industry
for several publications during that time. His depth and wealth of expert-
ise is a huge gift to our magazine.
Secondly, Mark Thomas, the original editor-in-chief of E&P, has
rejoined the staff full-time as our offshore editor. After Mark left E&P
he took on the reins of Deepwater International, a publication he still over-
sees. He also managed public relations for Offshore Europe, Intelligent
Energy, and Russian Oil & Gas, all exhibitions managed by the Society
of Petroleum Engineers. Again, Marks expertise in this area has spanned
decades, and his location in the UK gives us a needed perspective for our
international coverage.
Then we were fortunate enough to hire Jennifer Presley as our new
production technology editor. Jennifer has a unique perspective on the
industry, having been a contract writer for the National Energy Technol-
ogy Laboratory focusing mostly on methane hydrates. Jennifers stories
tend to start with, When I was on the North Slope, or When I was in
the Bay of Bengal Her work has taken her to some very interesting
test sites over the years, and were thrilled to welcome her to our team.
Finally, we welcomed Mary Hogan in October as our associate managing
editor. The associate managing editor position is a challenging one since
Mary will be working with senior editors to keep us on track and ensure
that we meet our deadlines. This is no mean feat, but Mary has the
organizational skills to maintain a tightly run ship.
Of course, E&P is not just about the editors its about our readers.
We would like to encourage all of you to provide any feedback you
might have about our magazine. We have some fresh faces
and the opportunity to be more nimble to respond to
our readers and their constant thirst for new
information. I hope youll take us up on this
challenge.
As I
SEE IT
1616 S. VOSS ROAD, STE 1000
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P: +1 713.260.6400 F: +1 713.840.0923
www.EPmag.com
New faces, new places
5
Read more commentary at
EPmag.com
RHONDA DUEY
Executive Editor
rduey@hartenergy.com
Executive Editor RHONDA DUEY
Group Managing Editor JO ANN DAVY
Senior Editor, Drilling SCOTT WEEDEN
Senior Editor, Offshore MARK THOMAS
Senior Editor, Production JENNIFER PRESLEY
Chief Technical Director,
Upstream RICHARD MASON
Associate Managing Editor MARY HOGAN
Associate Online Editor VELDA ADDISON
Assistant Editor CODY ZCAN
Corporate Art Director ALEXA SANDERS
Senior Graphic Designer LAURA J. WILLIAMS
Production Director JO LYNNE POOL
Reprint & PDF Sales ERIC MCINTOSH
Director of Business Development ERIC ROTH
Group Publisher RUSSELL LAAS
Editorial Advisory Board
CHRIS BARTON
Sr. VP Business Development, Oil & Gas, KBR
KEVIN BRADY
President, Multi Products Company
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
President,
Superior Well Services, a Nabors company
DENNIS A. YANCHAK
Sr. Geosciences Advisor, Apache Corp.
Editorial Director
PEGGY WILLIAMS
Senior Vice President, Consulting Group
E. KRISTINE KLAVERS
President & Chief Operating Officer
KEVIN F. HIGGINS
Chief Executive Officer
RICHARD A. EICHLER
05 AsISeeIt-NOV_Layout 1 10/21/12 6:58 PM Page 5
HARTENERGY
W
ith the Norwegian sectors admirable support
from a government that has reenergized its waters
with an active licensing program and a national oil com-
pany (NOC) that has been strategically investing in both
greenfield and brownfield technologies to access new
reserves, Norway is acting as the engine room driving
continued interest in Europe as an offshore market.
The NOC concerned, Statoil, is stepping up the pace
of its exploration and development activity in the fron-
tier Barents Sea while at the same time continuing to
find major new reserves in its North Sea acreage.
Its world-class Johan Sverdrup discovery in 2011
shocked many observers who had believed the sector had
revealed all its secrets, with recoverable reserves estimated
at up to 3.3 Bboe.
Installations powered from shore
Statoil is busy further appraising the field and will make
a final investment decision by year-end 2013, while also
planning up to 12 further exploration wells over the next
three years. With the reservoir covering 180 sq km (69 sq
miles), it is expected to feature multiple production and
processing platforms as well as the innovative introduc-
tion of full electrification of the installations from shore
an initiative driven by the Norwegian Ministry of Energy
for all future platforms on the NCS. The capex for the
Johan Sverdrups electrification project alone is estimated
to cost around US $1.5 billion. The field itself is expected
to come onstream by year-end 2018.
The project is not Statoils sole focus, of course. It
remains concentrated on unlocking the potential of
its northern waters and for those who think this is a
recent trend, it is worth pointing out that Statoil has
been exploring in the Barents Sea for more than 30
years and has been involved in 88 out of the 92 wells
drilled in the area in total.
The company will drill nine wells in 2013 in its Barents
Sea acreage as well as tripling its Arctic technology
research budget from $14 million (NOK 80 million)
this year to $43 million (NOK 250 million) in 2013.
Statoils exploration executive vice president Tim
Dodson said the Barents holds no fears for the operator,
describing it recently in a briefing at the Offshore North-
ern Seas conference in Norway as a less challenging
area, as the Norwegian Barents is one of the only Arctic
areas with a year-round ice-free zone.
Concept screening
Statoil is due to start exploration drilling using the
West Hercules deepwater rig on the Nunatak prospect
in the Skrugard-Havis oilfield area before year-end and
will then drill and complete three other wells there over
a four-month period on the Skavi, Iskrystall, and Kram-
sno prospects.
The Skrugard-Havis oil hub project itself is still in the
concept screening phase, with Statoil mulling several
alternatives for a central floating production facility with
subsea wells, including an FPSO or Sevan Marine-design
floater with offshore loading or a semisubmersible plat-
form with a pipeline to shore.
The fields lie just 7 km (4 miles) apart, with Skrugard
only discovered in April last year and Havis in January
2012. They are estimated to hold between 400 MMbbl
and 600 MMbbl of recoverable oil, with any produced
gas and water to be reinjected. The development con-
The deepwater drilling rig Aker Barents drilled the Havis
discovery well in the Barents Sea for Statoil and is due to
drill several more wells over the next few months. (Photos
by Harald Pettersen, courtesy of Statoil)
November 2012 | EPmag.com
6
industry
PULSE
Pastures old and new rejuvenate
Norways offshore profile
Norway has been reborn as a global investment hot spot.
Mark Thomas, Senior Editor
06-09 IndPULSE-NOV_06-09 IndPULSE-NOV 10/19/12 11:16 PM Page 6
06-09 IndPULSE-NOV_06-09 IndPULSE-NOV 10/19/12 11:16 PM Page 7
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RACON
cept will be chosen in 2013, according to Statoil, with a
final investment decision in 2014 and first oil by 2018.
A further three wells will then be drilled in the emerg-
ing Hoop area further north in the Barents next summer.
These will be the northernmost wells ever drilled offshore
Norway.
Subsea factory
Statoils Technology, Projects, and Drilling Executive
Vice President Margareth Ovrum is a key figure in the
companys push northwards. She has a strong belief in
the importance of the subsea factory concept as a
major potential solution for the Barents Sea and the
Arctic as a whole.
Statoil already has made major inroads into establish-
ing this concept, of course, being under way with two
major seabed gas compression and boosting projects off-
shore Norway on its Asgard and Gullfaks fields. Subsea
technology will solve a lot of the challenges, Ovrum
told E&P at ONS after one briefing. We have launched
our ambition for a subsea factory by 2020. That is our
road map.
She also added that Statoil was developing more
robust solutions for both permanent and floating pro-
duction solutions for its northern seas and the Arctic.
A key technology soon to be added to Norways off-
shore tool box is the already well-established spar pro-
duction platform. Somewhat surprisingly, it is only now
that a spar has been selected for use in its waters.
Perhaps unsurprisingly, however, Statoil has seized
the opportunity and taken it further the first spar
on the NCS will be the worlds largest (deck weight of
21,000 tonnes; substructure weight of 40,000 tonnes),
will be the first with gas condensate storage, and will
sit in 1,300 m (4,265 ft) water depth. The facility will
be used to develop the Aasta Hansteen field in the
northern Norwegian Sea.
Opportunity enabler
Statoil describes Aasta Hansteen as an opportunity
enabler, as the facility is planned to act as a hub for
future developments, with built-in spare area and weight
capacity, riser slots, and subsea tie-in connections. Gas
processing capacity has been set at 812 MMcf/d.
These world-class developments in both Norways
mature areas and its emerging northern waters are clear
proof that persistence and long-term thinking by both
oil companies and national governments can indeed
bear fruit.
November 2012 | EPmag.com
8
industry
PULSE
Tough weather and sea conditions are a regular experience in
the Barents Sea, as can be seen here on the Polar Pioneer rig
while drilling an exploration well on the Skrugard field.
Norway a top five tip
F
ield development spending offshore Norway will see
this maturing oil and gas province ranked in the
worlds top five in terms of expenditure.
Total upstream development capex will rise more than
30% to US $25 billion by year-end 2012 in Norway,
according to analysts Wood Mackenzie, with that figure
set to keep climbing to almost $30 billion in 2015, further
ensuring the countrys top five ranking as an invest-
ment destination. The only areas lying ahead of it are the
US, Russia, Canada, and Australia.
A key factor in the rising spend trend, stated Wood
Mackenzie, is that around two-thirds will be invested in
EOR from producing fields. Statoil already is a world
leader in EOR, currently recovering 50% of the oil in its
operated fields in Norway well ahead of the industrys
global average of around 35%. Taking the increased
recovery from all its existing fields since it originally sub-
mitted plans for their development and operation, the
company estimates it has increased the oil recovery fac-
tor from around 30% to todays figure of 50%, equating
to approximately 7.5 Bbbl of extra oil.
The company is aiming for an eventual average recov-
ery rate of 60% from the Norwegian shelf.
Ross Cassidy, head of Northwest Europe Upstream
Research for Wood Mackenzie, said, We estimate that
around two-thirds of the $25 billion development expen-
diture in 2012 will be spent on increasing recovery from
producing fields and the remaining third on new field
developments.
Wood Mackenzies report, titled A review of the Nor-
wegian corporate landscape, forecasts that majors will
invest around $26 billion over the next three years. n
06-09 IndPULSE-NOV_06-09 IndPULSE-NOV 10/19/12 11:16 PM Page 8
06-09 IndPULSE-NOV_06-09 IndPULSE-NOV 10/19/12 11:16 PM Page 9
When you think of petroleum engineering and petroleum geology/geophysi
programs, the University of Oklahoma's Mewboume College of Earth &
Energy might be the first college that comes to mind, and it should be.
Home to the world's first school of Petroleum Geology, granting the firs
degree in 1904
Home to the world's first school of Petroleum Engineering
Alma mater to more petroleum engineers and petroleum geologists than
any program in the world
OU is alma mater to eight Society of Petroleum Engineers (SPE)
past presidents, eight American Association of Petroleum Geologic
(AAPG) past presidents and five Society of Exploration Geophysicis
idents.
www.ou.edu/mcee
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ere at the beginning. Here for the future.
November 2012 | EPmag.com
10
A declaration of independence
Ryan Lance is defining the new ConocoPhillips as the independent E&P company moves into
organic growth mode with a focus on unconventional plays, major development projects,
and an emerging exploration program.
T
his past July, ConocoPhillips reported its first quarterly
results as a standalone upstream company, having split
off its downstream assets into Phillips 66 earlier this year
to become the largest North American-based independ-
ent. Production that quarter was 1.5 MMboe/d (55%
liquids, 25% North American natural gas, and 20%
international gas and LNG). Cash from continuing
operations was US $2.2 billion.
At the helm of the Houston company is Chairman and
CEO Ryan M. Lance. He is moving the new entity for-
ward by capitalizing on its major production bases in
North America, Norway, the UK, Australia, Indonesia,
Qatar, and China. Production has declined since 2009 as
a result of non-core asset divestments. But volume ramp-
ups from shale liquids in the US, oil sands in Canada, and
international development projects, as well as emerging
exploration opportunities, should soon take care of that.
The companys roots date back more than a century to
Oklahoma, through heritage companies Continental Oil
and Phillips Petroleum. Today the new independent has
16,500 employees and assets in 30 countries. North Amer-
ica makes up more than half the portfolio.
Five years ago, people would have said that our North
American focus was a problem, but now its where every-
body wants to be thanks to its unconventional resources
and deepwater potential, noted Lance. Also, 80% of our
assets are in OECD countries, and we like the stability and
risk mitigation this provides.
What does forging a new identity as a pure upstream company
look like?
Its blending the old and the new combining the size,
scale, and scope of a major integrated company with the
aggressiveness and agility of an independent.
People always tell me, You have to act like an inde-
pendent now, and I say, No, we need to define what it
means to be an independent ConocoPhillips. We are
unique and uniquely capable. Under [retired chairman
and CEO] Jim Mulvas leadership during an era of
restricted resource access and rising commodity prices,
acquisitions built the major portfolio we enjoy today, with
43 Bbbl of total resources. With years of exploitation and
development opportunities in inventory and shale open-
ing up once-undreamed-of new potential, we can move
into organic growth mode through the drill bit while
building on our capabilities as an explorer.
I also like to remind people that some things wont
change our commitment to safety, environmental pro-
tection, operations excellence, financial strength, our
moral and ethical compass, and our relationships with
the community and host governments.
As the largest North American independent out there,
how are you positioning the new ConocoPhillips?
On the basis of production and reserves, we are about
two times the size of the next-largest independent. But
Ryan Lance, CEO of ConocoPhillips. (Images courtesy of
ConocoPhillips)
Leslie Haines, Oil and Gas Investor
world
VIEW
10-16 WorldView-ConocoPhillips_10-16 WorldView-ConocoPhillips 10/19/12 11:16 PM Page 10
10-16 WorldView-ConocoPhillips_10-16 WorldView-ConocoPhillips 10/19/12 11:16 PM Page 11
Oil & Gas
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Debrin is one of the thousands of dedicated
experts our clients count on every day
Learn more about her here www.gl-nobledenton.com/Debrin
GL Noble Denton is the independent technical
advisor to the oil and gas indust
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November 2012 | EPmag.com
12
were still smaller than
the majors, so we are
carving out a new
space.
Analysts dont quite
know what box to put
us in. They dont know
whether to value us
as a growth-oriented
company or a returns-
oriented company. In
fact, we believe we are
both. Were aiming for
3% to 5% average pro-
duction and margin
compound annual
growth beginning in
2013. Were producing
1.5 million boe/d to
1.6 million boe/d now and plan to get to 1.8 million
over the next five years, all from visible projects already
under way. The unique thing is that this growth also will
improve cash flows and margins. For our size, scale, and
scope, weve built a pretty exciting growth platform.
To what extent are you focused on unconventionals?
What a huge game-changer they are! When you add
in the oil sands, theres tremendous opportunity in
North America. For example, ConocoPhillips expects
210,000 b/d of new production from Lower 48 shale
trends by 2016. In the Eagle Ford, were drilling 180
wells this year and producing 70,000 b/d up from
zero only 18 months ago. In the Bakken, well drill
120 wells this year on a 600,000-acre position. In the
Permian, we plan 300 wells this year on a 1.1-million-
acre position that includes two shale trends as well
as conventional potential, with 7,000 identified new
well locations.
As for the US overall, rewind five years and everyone
was talking about peak oil and importing more than
60% of its oil. The whole conversation is tipped on its
head now when you think about the opportunity we
have as a country and its impact on energy policy.
How do you achieve 3% to 5% growth?
We have five high-margin areas that will account for
550,000-plus boe/d by 2016: US unconventionals; the
Canadian oil sands, where we got out of surface mining
and remain in [steam-assisted gravity drainage]; the
North Sea, where we have several projects in develop-
ment; Malaysia, where we have a big deepwater position;
and Australia, through the coalbed methane-to-LNG
project in Queensland.
The organization knows what it will take, and all of
these projects are now under way. Some will start up this
year, like the first phase of the Malaysia development.
The UK Jasmine project comes online next year, as do
more of our Canadian oil sands. The Asia-Pacific LNG
project is in 2015 and 2016. LNG is very important as
Asia and Europe are short on natural gas, making these
projects very competitive.
For the longer term, weve built a significant explo-
ration portfolio of both unconventional and conventional
opportunities. For example, were now the industrys
sixth-largest deepwater acreage holder in the Gulf of
Mexico and have recently started drilling there. We hold
two exploration blocks offshore Angola offsetting large
recent discoveries as well as blocks in the Bengal fan off
Bangladesh and the Browse basin off Australia, to name
a few. Were looking to expand our positions and add
new ones if they can be competitive.
How much are you buying in the US?
Weve added about 700,000 acres since 2011 in North
American unconventional plays and are always looking for
opportunities. We seek out areas where we can build mate-
rial positions early at reasonable cost as in the Eagle
Ford, where our position cost only around $300 an acre.
What kind of portfolio mix are you aiming for?
I dont have a set goal for a certain mix, but were not
investing any money in North American dry gas plays,
obviously. We target investments in high-quality assets
world
VIEW
Near-term Growth
Based on July 23 forward prices
Canada
heavy oil
~80 Mboe/d
US Lower 48
unconventional
~210 Mboe/d

Australia
Pacifc LNG
~100 Mboe/d
Malaysia
deep water
~80 Mboe/d
North Sea
conventional
~90 Mboe/d
Major Projects
Exploitation
The company has identified five major projects worldwide to maintain steady growth.
10-16 WorldView-ConocoPhillips_10-16 WorldView-ConocoPhillips 10/19/12 11:16 PM Page 12
10-16 WorldView-ConocoPhillips_10-16 WorldView-ConocoPhillips 10/19/12 11:16 PM Page 13
Responsibility is part or our DNA
Shale formations in North America may hel p reduce the continent
'
s dependence on imported oil. But recovering oil
and gas from ti
g
ht rock 10,000 feet under ground requires a lot of skill . fven more than skill , it requires responsibility.
Especiall y when the reserves are in close proximity to prime farmland and local communities . I hat
'
s why we remain
committed to developing technologies that measure up to the toughest efficiency and safety standards . Because we
know that what
'
s great today can always be improved tomorrow. It
'
s in our nature. Never being satisfied .
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November 2012 | EPmag.com
14
that will improve our margins and fit in with where
were going overall.
People ask me, Do you like oil or gas? In what areas?
I like good rocks, low cost of supply, and access to good
markets. You can get these through either oil or gas,
depending on location. I dont have an absolute target
I dont think about the business that way.
Tell us more about the Eagle Ford.
We love it. We were one of the first in this play and
added about 300,000 acres in 2005 and 2006. We identi-
fied the condensate window early on. Today were
among the best operators there and are taking lessons
learned and applying them in a dozen other North
American shale trends.
You talked about the shales at the OPEC meeting earlier this
year. How did the ministers react?
I told them that these unconventional plays and the oil
sands have changed the game and that there is an
opportunity for North America to be a net exporter by,
pick a date, maybe 2025.
The reaction varied from some people who dont want
to believe this will happen to others who want to learn
more about it and consider it in their own plans. Theres
no doubt the reserves are there, so its a question of deliv-
erability, timing of production, and whether appropriate
legislative and regulatory approvals can be obtained.
The other question is how will the unconventional
opportunities present themselves abroad? For example,
the jury is still out in Poland, where we are drilling pilot
wells and preparing to fracture them. Its still early. The
resource is there; the question is deliverability.
You know, the juxtaposition of all these trends
development of the unconventional resources, the
deepwater plays, the LNG projects, and so on makes
it a great time to be in this business. Im excited about
where we are and where were going and the opportu-
nity to deliver on the plans weve set in motion. The
best days for ConocoPhillips are still ahead.
world
VIEW
10-16 WorldView-ConocoPhillips_10-16 WorldView-ConocoPhillips 10/19/12 11:17 PM Page 14
STAY COOL. STAY PROTECTED.
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10-16 WorldView-ConocoPhillips_10-16 WorldView-ConocoPhillips 10/19/12 11:17 PM Page 15
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GE Works to redefine pump efficiencies.
IA .I1
'?
In the oil and gas industry , GE's SPS pumping
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DID YOU KNOW
COMPATIBILITY
IS A KEY PART OF
CHEMICAL SAFETY.
Youve probably heard the old phrase
that oil and water dont mix. The fact is,
there are many chemicals in our industry
that must not be used or stored together.
Combining incompatible chemicals, or
storing them in too-close proximity to
each other, can result in adverse
reactions such as the release of toxic,
corrosive, or ammable vapors and
liquids, excessive heat generation,
even explosions. With some chemicals,
exposure to air or water might even
trigger such reactions.
Dont make decisions youve not been
trained to make. Dont do something
now that might be harmful later. Use
your authority through the management
of change and stop work processes to
correct a situation you view as being
potentially being harmful. When it
comes to chemicals, ask the experts.
At Halliburton, solving customer
challenges is second only to keeping
everyone safe and healthy. You can
nd more safety tips at
www.halliburton.com/HSE.
HSE
TIP No. 11
w
w
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.
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l
l
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b
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Safety Moment Subject suggested by:
Taylor Robinson
Halliburton Employee
2012 Halliburton. All rights reserved.
agF
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ETY
OMEN
,Ra
EPmag.com | November 2012
17
T
he energy industry is always eager to uncover more
top talent in the oil and gas candidate pool. By
understanding a number of admirable changes and
improved practices successfully used by energy compa-
nies as a model, the current recruitment landscape can
underscore succession plans so that another 20-year tal-
ent gap does not occur any time soon.
With that said, the crux of filling open positions today
is to: a) use resources that can tap the small pool of
A-player talent while favorably and accurately represent-
ing a company, b) executing search processes that only
deliver candidates in alignment with a companys cul-
ture, c) identifying and developing high-potential talent
two to three levels down from the current gap, and d)
putting a succession plan together or revisit the one a
company already has.
Tapping experienced (and scarce) talent
Most corporations have determined that external
retained search firms fill the executive seat and access
that talent with great efficiency. Younger midsize compa-
nies with catapulting early growth that have had good
luck hiring via word-of-mouth and referrals from friends
of their leadership, however, have shown resistance to
using outside recruiters. Theres no argument that that
this type of soft referencing can uncover quality talent
and natural culture fits, but there are a few considerations
to keep in mind to do more than fill the seat.
Do-it-yourself recruiting. Do-it-yourself in-house recruiters
on a company payroll are assumed to have the best possi-
ble understanding of company culture and unspoken
behaviors that are subtly valued but not usually adver-
tised. Companies should consider having in-house teams
and should ensure the teams feel 100% confident that
every HR representative speaking to potential candidates
in the marketplace can articulate the company subtleties
to vet the talent and accurately match them with the
opportunity.
With a dramatically different discovery process for
company culture and values from the in-house team,
external recruiters typically agree that, at the line-staff
level, internal recruiters add the best value. An internal
teams accessibility to reporting managers for regular dia-
logue and guidance makes for sound hiring. As such,
there are some admirable recruitment strategies going
on in the energy industry to solve the immediate crunch.
For example:
Halliburton is purposefully changing the gender
representation of its in-house recruitment teams. It
would like to move more women with five to 15 years
of experience to higher levels and realizes that when
women are considering a job, they want to see other
women who have been successful in the role; and
Many companies are transition-training military and
other complex instrumentation industry personnel
into the oil and gas sector.
Outsourced recruiting. While the effectiveness of these
recruitment strategies is assumed to be high, the volume
of open engineering and related executive positions
can be overwhelming to an in-house team. A good out-
sourced recruitment firm should offer 100- to 300-plus
man-hours (depending on the impact and level of the
role) dedicated to filling a position as quickly as possible,
accessibility to the competition, transparent reference
reports (this is particularly difficult to gather by an in-
house contact), and a steady process delivering daily and
weekly results. While an external firm should offer much
more, these are the most challenging tasks facing in-
house recruiters. Companies should consider outsourc-
ing if a nodding donkey is needed to get production
started. They need to identify search firms before their
HR department burns through the companys friends
and word-of-mouth sources.
Culture as the success coefficient
An important element in the in-house/outsource discus-
sion is culture and community. Culture is the behavior
of employees how things get done and community is
peoples sense of belonging to and caring for something
larger than themselves. Because talent changes frequently
and retention packages are paid, repaid by the competi-
tion to lure a talent away, and paid again by the latest hir-
ing company, the new deciding variables are culture and
community. In Rebuilding Companies and Communi-
ties, Henry Mitzberg writes that a company without a
compelling culture is like a person without a personality.
That resonates because the contributions of middle man-
agement are getting serious results and retention. These
Its not just about filling the seat
Experienced middle managers are just a few years away.
Mary Campagnano,
Allen Austin Global Executive Search
management
REPORT
17-20 MgtReport-AllanAustin_Layout 1 10/22/12 11:15 AM Page 17
November 2012 | EPmag.com
18
rising stars can drive key changes in the organization, and
they want to stay to see the job through.
Does seeing the job through sound familiar? A Har-
vard Business Review study reports that those retiring
Baby Boomers have nearly everything in common with
the Generation Y workforce. They both value flexi-
ble work arrangements and the opportunity to give
back to society over compensation. These elements
are shaping company culture.
With culture and community being essential ele-
ments, a search process that produces candidates
that align with the companys culture and
values is essential. It is critical to evaluate
the character of candidates, their commit-
ment to making a change, and the potential
contribution of a candidate to the new com-
pany. Literally hundreds of questions must
be asked (both in the form of a self-report-
ing questionnaire and through face-to-face
interviewing), but most poignantly, the cul-
ture of the client company and what is desired
by the candidate must be examined. A careful process
can mitigate failed searches, which are roughly 45% in
the industry. Companies should frequently take the
time to define what their culture is and purposefully
evaluate each candidate against it for the best fit.
Good times and talent ahead
The data is optimistic: Harvard Business Review reports
that 45% of the next round of leaders, Generation Y,
expect to work for their current employer for their entire
career. In as little as five years, there will be a number
(small but measurable) of early leadership-level engineer-
ing talent who represent the new generation with 15 years
of experience. Several companies have role model prac-
tices to retain and develop these high-potential but cur-
rently under-experienced talent:
Shell has career stewards who meet regularly with
emerging leaders, assess their level of engagement,
help them set realistic career expectations, and
make sure theyre getting the right development
opportunities;
A large manufacturer in China gives its rising stars
privileged access to online discussion boards led by
the CEO that are dedicated to the companys biggest
challenges. Emerging leaders are encouraged to visit
the boards daily to share ideas and opinions and to
raise their hands for assignments; and
Johnson & Johnsons high-potential talent partici-
pates in a nine-month program called LeAD, receiv-
ing external coaching and regular assessments. They
develop a growth project a new product, service,
or business model intended to create value for
their business unit. They also leave the program
with a multiyear individual development plan.
Succession planning
Following the exercise of developing talent just below
the current gap, companies should establish a written
succession plan detailing who that talent is and what the
leadership activities are to foster and retain them. This
plan should include who has influence, when revisions
and reviews to the plan are scheduled, actions to imple-
ment in the event of an emergency, etc.
So what about fixing todays immediate problem? A
company must adjust its expectations for the number of
talented candidates it will select from in the short term,
push its recruiters to look globally, participate with top
female talent in women-focused energy associations like
Womens Energy Network, take time to assess culture
and ensure a search process that includes a proper
evaluation of fit, and identify and evaluate its potential
succession talent quarterly.
References available.
management
REPORT
Culture and community are important
factors when looking for top talent.
17-20 MgtReport-AllanAustin_Layout 1 10/22/12 9:10 AM Page 18
17-20 MgtReport-AllanAustin_17-20 MgtReport-AllanAustin 10/19/12 11:17 PM Page 19
FLOW EQUI PMENT LEADERSHI P
Upstream to downstream,
11
onshore to offshore, we'
re there.
Take a closer look at Cameron. And prepare to look far and wide. That's
because Cameron is there in more ways than one. We maintain our
global presence to support you in the field. Our breadth of product
covers the full spectrum - from individual components, to systems, to
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leading solutions partner you seek , look no furt her. Discover Cameron. www.c-a-m.com
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"
EPmag.com | November 2012
21
T
he digital oil field (DOF) has been a major area of
investment for all the majors and a fair few others
since the mid-part of the last decade. It was one of those
times where all the issues swirling around the ether sud-
denly coalesced and screamed a common and over-
whelming answer. Whether the issue was in developing
difficult plays, attracting skilled labor, improving safety,
mitigating environmental impact, improving day-to-day
running and monitoring, or maximizing recoverable
reserves, the answer was IT and lots of it.
And in a historical perspective, this was long overdue.
The concept of shop floor data capture began in the
1970s. And in the decades since, IT has been used to
monitor and record at increasing levels of detail across
motor manufacture, high tech, food processing, and
apparel. Even at the craft end of these industries, the
move to digital has been inexorable: The cylinders in
your Aston Martin are no longer finished by hand using
apricot stones, but then they are also likely to last
321,000 km (200,000 miles).
So there are a lot of data, and they are used so that the
industry can run faster, longer, and cheaper. Near real-
time adjustments can be made from control centers
thousands of miles away; the
technology is there. But what
else is there? Writing in Strategy
and Business in 2008, Steinhubl
and Klimchuk offered the fol-
lowing definition: The digital
oil field is a suite of interactive
and complementary technolo-
gies that let companies gather
and analyze data.
Unknown casualties
in data explosion
Unfortunately those two things
gathering and analyzing can
operate against each other. The
more data that are gathered, the
less data can be analyzed. That is a factor of volume, but
more importantly it is a matter of source. Recording and
generating new data types from new systems have been
necessary consequences of the DOF. But our business
intelligence systems are still analyzing the old world.
These systems are difficult and expensive to implement
and arguably harder and more costly to change. Accom-
modating entirely new data sources means changing
and building new structures of data aggregations,
dimensions, and hierarchies.
All of this is not impossible, but is it reasonable? If it
takes a year to reconfigure corporate reporting struc-
tures, how fundamental will the changes be in the
elapsed time? Is the industry creating a never-ending
task, chasing its own data tail?
What the Gartner Group calls data discovery tools
(and others call analytics) is a more fleet-footed alter-
native. Data is loaded in memory with no preconceived
notions of joins, hierarchies, and aggregations. Users
can then design graphical visualizations of the data to
explore relationships and correlations, drilling down
and filtering to whatever level of detail they require.
Mighty mash-up
The source of data gives us another problem one of
combining or mashing up data sources from disparate
digital
OIL FIELD
Youve discovered oil and gas
now discover your data
The data explosion requires new methods of analysis.
Steve Farr, TIBCO Spotfire
Spotfire can graphically display well relationships in a number of ways. (Images courtesy of
Spotfire)
21-25 DOF-spotfire_Layout 1 10/22/12 9:08 AM Page 21
21-25 DOF-spotfire_21-25 DOF-spotfire 10/19/12 11:17 PM Page 22
Making the
Impassable Possible
Weatherford's patented Compact
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well shuttle makes today
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complex well geometries fully loggable
Wireline services
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Slicklineiheavy-duty wirelne
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Go beyond wireline to optimize openhole logging. The Compact well
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The shuttle houses logging tools safely inside drillpipe as the pipe is
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is pulled out. That's Tactical Technology" in action.
To learn more about our wireline offerings with more options
and more service
,
contact your Weatherford representative
or visit weatherford.com.
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Weatherford
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r c
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systems in order to gain insight. The data may be coming from corporate systems
but increasingly may also be sourced from service partners in the field. Data dis-
covery tools such as Spotfire allow users to quickly mash up data without waiting
weeks for assistance from programmers. Chevron, for example, combines its
geologist-produced water injection modeling data with operating partners real-
time production data so that the water flow can be adjusted accordingly.
This is a sophisticated example of where data mash-up can produce real
efficiencies, and this is becoming critical in an industry where experienced
people are being lost and the risks associated with outsourcing and partnering
need to be mitigated. If E&P companies can no longer rely totally on their
own knowledge and expertise, then they must rely more on collating and ana-
lyzing the data in a holistic and meticulous fashion.
Data are for sharing so is analysis
If data mash-up is the key input to finding new trends in data, then it is the
presentation of the analysis itself that will broaden understanding. Put simply,
methods are needed that facilitate insight. Without this, any attempt to collab-
orate will fail. Initially, Chevrons production partners were reluctant to collab-
orate. It was not until they saw and more importantly understood the results
that they were bowled over.
And this is not just true of sharing with partners. What about the disconnects
in individual businesses? Back and front office collaboration certainly can be
aided through a common context, and so can collaboration with downstream
units wanting to secure product for their refineries and meet the demands of
end customers. This contextual collaboration goes a long way to promoting a
holistic view of the business, and at Chevron the use of Spotfire has grown to
more than 5,000 individuals across multiple use cases.
This is an area where dedicated analytics will always win over Microsoft Excel.
Excel is a personal productivity tool, not a tool built with collaboration in
mind. An analysis can be produced, but its development over time and its ver-
sions, rationale, and formulae cannot be easily understood by anyone but the
author. Tools such as Spotfire allow the data analyst to build analytic apps that
can be easily run by the executive on a web browser or a mobile device.
EPmag.com | November 2012
Spatial patterns of EUR can be viewed across any selected group of wells.
digital
OIL FIELD
21-25 DOF-spotfire_21-25 DOF-spotfire 10/19/12 11:17 PM Page 23
W
Weatherford'
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Tarim, China - In the kickoff and horizontal
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reach TD. Three caliper arms were lost and
a sonic and induction tool catastrophicall
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damaged. The cost in rig time alone was
more than US$300,000.
Weatherford deployed tools to TD safel
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Bluebeam Revu enables oil and gas companies to work smarter and faster, without compromise. Improve project
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EPmag.com | November 2012
25
Do they understand?
This subject of accessibility is important for another rea-
son. For decades the trend has been to run businesses
more scientifically, yet there is often disconnect between
the scientific method and the business decision-maker.
When it comes to the fine detail of analysis, companies
start to rely on experts, folks well-versed in statistical meth-
ods. Spotfire combines the world of the statistician into
the visualization of business data. Prepackaged analytic
capabilities can be used with both static data and real-time
feeds to predict outcomes of actions and offer immediate
suggestions for improvement remedy or risk mitigation.
For instance, using decline curves, Spotfire can readily
estimate well production and estimated ultimate recov-
ery (EUR) while producing an analysis that the engineer
can work with for example, being able to graphically
remove downtime or see the expected yield of a new
well in a particular field. The data analyst can create easy-
to-use methods that explain the model and allow the non-
statistician to interact with it in a jargon-free way.
Keep it visual
People are turned off by columns of numbers, and in an
industry as physical as oil and gas exploration, the desire
always has been to represent data in a graphical format,
for example, geospatial representations of fields and
wells. But true understanding of patterns comes when
they can be overlain with representations of other data
coming from the field.
The importance of these visualizations cannot be over-
stressed. Fernanda Viegas of IBM Research said, Basi-
cally, half our brain is hard-wired for vision. Vision is the
biggest bandwidth that we have in terms of sensory infor-
mation to the outside world. So visualization is taking
advantage of the fact that we are so programmed to
understand the world around us in terms of what we see.
The DOF is becoming the graphically visualized and
analyzed oil field. Theres more to exploration than
hydrocarbons there also are new relationships in all
those data to explore and new business opportunities to
discover.
digital
OIL FIELD
21-25 DOF-spotfire_Layout 1 10/22/12 12:17 PM Page 25
Silica is a problem. J&J has a solution.
J&J offers integrated and retrofit equipment to control ai rborne silica onsite.
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26
T
he advent of natural gas production from unconven-
tional reservoirs like shale formations has had a
marked effect on natural gas prices and has put great
focus on the technologies employed for extracting gas,
such as hydraulic fracturing and horizontal drilling.
However, as the shale gas industry matures, it should
look beyond these key drilling technologies and explore
another technology innovation now appearing in the
industry: the application of lean manufacturing meth-
ods, sometimes called the shale gas factory. In particu-
lar, the factors for its success must be understood.
Production differences
There are several key differences between a typical gas
field development and a shale gas field development,
driven primarily by the characteristics of the gas well.
Well count. Most conventional gas wells exhibit a high
flow (flush flow) during initial production, followed by
a long period of steadily declining flow. A decline curve
will show a constant-slope decrease over time.
Shale gas fields need many more wells, where new wells
add high initial flush flow followed by accumulating tail
flow as the wells age.
The shale gas development will drill wells continuously
to sustain production rates, with ultimate well numbers
in the thousands, followed by long sustained production.
Well complexity. Shale gas wells tend to be relatively
simple in design, relatively shallow, and set in fairly
homogeneous layers. This is partly due to the nature
of shale deposits and partly to the fact that drillers are
developing the easiest geologic structures first. This
relative simplicity and sameness makes drilling and
the completion process amenable to continuous
improvement.
There also might be significant benefits from correlat-
ing drilling and completion practices with the ultimate
characteristics and productivity of the well, including
flush rate peak, initial decline rate, and ultimate tail pro-
duction rates. Similarly, the effect of production meth-
ods and techniques can be evaluated to improve produc-
tion performance over time.
Logistics. A continuous drilling campaign means con-
stant change. New wells mean new automation, new gath-
ering lines, new monitoring, and reporting daily.
Multiple drilling rigs, multiple fracing teams, numer-
ous operations, and maintenance personnel mean con-
stant activity in the field. The supply chain is immense.
All wastes must be removed and sites restored to near
natural conditions. And every action requires proper
permitting and reporting.
Continuous improvement. While all gas producers seek to
improve the processes, the high well count and repetitive
nature of shale gas development provides the opportu-
nity for continuous improvement, both within and
among each of the key steps of field development: explo-
ration and appraisal, drilling, infrastructure build, pro-
duction, reclamation, abandonment, and remediation.
Shale gas factory
That new approach is a shale gas factory that manufac-
tures gas wells and measures success by the effectiveness of
those wells. These need high production (strong flush
digital
OIL FIELD
Shale gas factory provides
collaborative field development
The principles of lean manufacturing are applied to the shale gas factory to eliminate the
wastes of people, time, resources, and assets while improving the quality of the shale gas well.
John M. Gilmore Jr., Invensys Operations Management
Shale gas fields need many more
wells than conventional fields. The illustration shows expansion of
one well to 12 wells from two well pads a half-mile apart within the
same square-mile area. (Image courtesy of frackingboom.com)
26-30 DOF-Invensys_Layout 1 10/22/12 9:14 AM Page 26
26-30 DOF-Invensys_26-30 DOF-Invensys 10/19/12 11:17 PM Page A27
Economic
Conductivit
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26-30 DOF-Invensys_26-30 DOF-Invensys 10/19/12 11:17 PM Page B27
PET/ 2012
Earls Court 2, Warwick Road, London. 20-22 November 2012
Hayward ( Genel Energy ), Glen Cayley (Shell) and Carl Trowell (Schlumberger).
It will also feature a special interactive Plenary Session, consisting of a panel of experts who will debate on the main
societal challenges facing the industry today . This includes representatives from BP, Tullow Oil, WWF and Global Witness.
Following the success from last time, PETEX will again host the Petroleum Geoscience Research Collaboration Showcase.
This designated space will provide representatives
promote licensing rounds and/or available acreage.
Event Informatio
9 PETEX is the largest subsurface -focussed E&P conference and
?o
Q
exhibition in the UK
,
att racting thousands of delegates from
across the world and across a spectrum of industry sectors,
from super-majors to consultancies. A few spaces still remain
for those who would like to exhibit !
Our theme for PETEX 2012 is 'Global Frontiers , Global
Solutions ' . We're promising a comprehensive programme
illustrating the latest global activity in exploration , field
development , reservoir management and unconventional
exploitation .
The conference will open with industry leading keynotes Tony
Building on the success of last time, PETEX will be hosting the
PESGB Graduate Career Fair, Student Lunch and new to
PETEX 2012: The University Forum: a place for Universities
to interact with both students and industry.
We will again be providing a special area
for international representatives ,
including : Oil companies ; Ministries;
Governments and Other promotional
agencies.
with a forum to increase their exposure and
For more information
,
to re ister or to download a timetable
for
the event, please vise our website: www. petex. info
Petroleum Exploration Society of Great Britain, 5th Floor, 9 Berkeley Street , London, W1J 8DW
Tel: +44 (0)20 7408 2000 4 Fax : +44 (0)20 7408 2050 4 Web : www.pesgb.org.uk a Email: pesgb@pesgb.org.uk
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flow with long stable tail production), predictable per-
formance, and highly reliable equipment that is easy to
operate and maintain.
The other measure of performance is the operation of
the factory itself. It must have low capital and operating
costs, perform safely and reliably, and deliver its product
on time while meeting all regulatory requirements.
In short, the shale gas factory must behave like a classic,
lean manufacturing facility by avoiding all the wastes that
could plague any factory environment:
Poor quality. Making goods or services that do not
meet demand; that is, making poor wells;
Transportation. Moving things not required;
Inventory. Having more supplies and materials, work-
in-process, or completed but non-producing wells
than absolutely necessary;
Motion. Equipment or people moving more than nec-
essary to complete the work;
Waiting. Lags between production steps;
Overproduction. Producing or installing before
required by demand;
Too much processing. Doing more than is required;
Defects. Costs of inspecting and correcting defects; and
Human talent. Failing to develop and use the capability
of the work force.
These wastes, termed muda in Japanese, were developed
by Toyota as part of its Toyota Production System (TPS).
TPS was key to the growth of Toyota as a world supplier
of automobiles.
Shale gas factory automation
Invensys and other automation providers, working with
clients to develop shale gas and similar unconventional
gas projects, have found five key areas where typical
operations management systems fall short.
Scalability and flexibility. The operations management
system must be scalable from the initial appraisal wells to
thousands of production wells without needless replace-
ment or reengineering and without being oversized for
the early work. It must have the ability to add or modify
on the fly to avoid needless delays and match demand.
Data volume. The capture of relevant information along
the entire well production process, from exploration to
drilling to operations, produces tremendous volumes of
process and transactional data. Providing availability to all
users in the context that each requires without multiple
historizations and data duplication will be key to the
analysis that leads to continuous improvement.
Asset performance. Captured data must be continuously
analyzed for performance factors and made available to
the personnel who have the most ability to control those
factors. Information context must be available to experts
where they are so that they can analyze problems, provide
solutions, and monitor results without costly, time-consum-
ing travel with a goal to bring the problem to the expert.
Early alerts and workflow. A constantly changing physical
environment and large volumes of data make effective
surveillance of operations extremely difficult. The use
of model-based technologies that monitor and identify
deviations from expected performance coupled with con-
text-directed alerting systems helps focus operation per-
sonnels attention on potential problems promptly.
Alerts can trigger workflows and automatic escalation
if needed. Comprehensive workflows assure that actions
taken and results achieved are captured so that assessment
and improvement are possible.
Collaborative environment, remote operation
Success in the shale gas field will require the cooperation
of personnel from many functional groups such as safety
and environmental, geosciences, drilling, operations,
maintenance, governmental relations, procurement and
contracting, transportation, and many more.
A geographically dispersed, collaborative environment
whereby those people can meet, use their respective tools
to analyze and explain, reach decisions, set actions, and
monitor the results will be essential to success.
Reducing shale gas development costs
The characteristics of shale gas production open the
opportunity for a revised development approach that
will reduce cost and improve productivity in the field.
That revised development approach the shale gas
factory uses the principles of lean manufacturing to elimi-
nate the wastes of people, time, resources, and assets while
improving quality of the final product: the shale gas well.
November 2012 | EPmag.com
28
digital
OIL FIELD
The conventional approach to shale gas development is a drilling
campaign of 100 or so wells, followed by a period of production,
followed by another round of drilling to replace depleted wells,
and so on. (Image courtesy of Invensys)
26-30 DOF-Invensys_Layout 1 10/22/12 11:22 AM Page 28
26-30 DOF-Invensys_26-30 DOF-Invensys 10/19/12 11:17 PM Page 29
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Don't change your geology to fit your software! Use RMS 2012, realistically represent
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Defining benchmarks
W
hen CGG and Veritas united in 2007, the merger
created the worlds largest geophysical contractor.
But apparently that milestone did not temper the com-
panys appetite.
Recently, CGGVeritas announced that it would pur-
chase all of Fugros Geoscience division except for
Fugros existing multiclient library and nodes business.
According to the press release, The transaction will
enable CGGVeritas to become a fully integrated geo-
science company, and it also will strengthen and extend
its existing equipment and acquisition businesses, in par-
ticular with the addition of four high-end 3-D vessels.
According to Antoine Lefort, senior vice president of
communications for CGGVeritas, the transaction will
both extend and strengthen the companys offerings.
One of the reasons for the transaction is for us to move
into the high-end geology, geophysics, and reservoir
characterization markets, Lefort said. We were partly
there with Hampson Russell, and now were establishing
a leading position in this market.
Fugros Geoscience division comprises Fugro-
Jason, Fugro-Robertson, Fugro-Data Solu-
tions, Fugro-Seismic Imaging, Fugro-
Gravity and Magnetics, Fugro-
Geoteam, Fugro MultiClient
Services, and Fugro Airborne.
Obtaining the four new vessels
will strengthen the company,
Lefort added. We think its a very
sound alternative to newbuilds, he
said. We will have new boats without
extending the fleet, plus newbuilds take a
couple of years to complete, and here well have
four immediately after the closing. That is a very good
alternative to catch up with the recovering market.
CGGVeritas also will benefit from the addition of new
acquisition services airborne, marine electromagnet-
ics, and marine magnetics and gravity.
In addition to the new companies CGGVeritas will
acquire, it also has plans to form a joint venture (JV)
with Fugro in seabed acquisition. Under the terms of
the deal, Fugro will own 60% of the JV and will pay
US $290 million to CGGVeritas. This JV will combine
CGGVeritas existing seabed services, including perma-
nent reservoir monitoring, ocean-bottom cable, and
1,000 seabed nodes, with Fugros 1,300 seabed nodes to
create a focused global leader in the fast-growing
seabed acquisition market, according to information
from CGGVeritas.
There also is a commercial agreement for CGGVeritas
to act as a nonexclusive broker of Fugros existing multi-
client data, which remains owned by Fugro. This gives
CGGVeritas access to a broader range of client contacts
while increasing its exposure to complementary and
high-potential regions such as Australia and northwest
Europe, including the Barents Sea.
Finally, the deal includes a global strategic technical
and commercial mutual preferred supplier
agreement.
The addition of Jason and Robert-
son to the CGGVeritas portfolio
will beef up the companys reser-
voir characterization and explo-
ration and appraisal capabilities,
adding more than 500 employ-
ees and giving it a leading posi-
tion in these markets.
This is going to create synergies,
and those synergies are about productivity
for scaled savings for the fleet but also through the
technical and commercial leverage in processing, imag-
ing, and multiclient, said Lefort. We also expect addi-
tional sales from our preferred supplier agreement.
Moving into more of a service-oriented model will
help buffer the company against the cyclical nature of
the business, he added. The deal also is expected to be
accretive as early as the first year after closing, some-
thing that is not so common when you have such a large
transaction, he said.
This transaction is a major step
forward and fits perfectly with CGG-
Veritas strategy, Lefort said.
Growing through the reservoir
Moving into reservoir services will help a major contractor achieve its long-term goals.
Read more commentary at
EPmag.com
RHONDA DUEY
Executive Editor
rduey@hartenergy.com
exploration
TECHNOLOGY
EPmag.com | November 2012
31
exploration
TECHNOLOGY
Moving into
more of a service-oriented
model will help buffer the
company against the cyclical
nature of the
business.
31-32 ExpCOL-NOV_31-32 ExpCOL-NOV 10/19/12 11:17 PM Page 31
31-32 ExpCOL-NOV_31-32 ExpCOL-NOV 10/19/12 11:17 PM Page 32
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CONSTRUCTION
33
O
ne of the biggest questions to come out of the
Macondo blowout in the Gulf of Mexico dealt
with the effectiveness of the cement job. The Research
Partnership to Secure Energy for America (RPSEA) has
taken on that problem with a research project with the
University of Houston to develop smart cementing
materials and drilling muds.
What were trying to do is bring in new technolo-
gies that can be utilized to improve drilling mud and
cement. The challenge that we are now facing is that
we cannot monitor the installation operation. The
question is that you do not know how good the installa-
tion is or if there is a problem, said Vipu Vipulanan-
dan, director, Center for Innovative Grouting Materials
and Technology, University of Houston.
One of the unique aspects of this project is that it is
designed to provide information from the cement
throughout the life of the well. Imagine being able to
monitor a cement job as conditions in the well change
over its lifetime.
The researchers are looking for materials that can be
measured for changes in electrical resistance. The sens-
ing materials would be mixed with the drilling mud or
cement. Not only are we developing a sensing material,
but we are also going to build a simple monitoring sys-
tem that can be used to tell you exactly what is going on
with the drilling mud or cement, Vipulanandan said.
The sensing material would allow the measurement of
changes in electrical resistance during drilling, place-
ment, setting, and hardening in real time.
The sensing material in the drilling mud would allow
the driller to more quickly identify circulation loss and
react to the problem. For cementing, the operator
would be able to determine where the top of the
cement is, any voids in the cement job, and problems
with cracking or temperature changes.
The university researchers will be working with Baker
Hughes on the project, which started in August 2012
and is expected to be completed in 2014.
The researchers will be testing smart materials such as
nanotechnology, polymers, surfactants, and conductive
fiber and filler to select materials for further tests.
We are looking at new technology to make sure we
can sense the materials. We want to monitor resistance
and temperature and then develop a relationship for
how to interpret what is going on in the materials, Vip-
ulanandan said. Currently, researchers are modifying
mud and cement without changing those properties
with piezo-chemical resistive materials.
Vipulanandan is excited about the proj-
ect and what it could provide, especially
in ultra-deepwater operations. This will
be an interesting project to watch.
Research focuses on measuring
effectiveness of cementing jobs
An RPSEA research project was started at the University of Houston to
determine a way to measure drilling mud loss and the effectiveness of
cementing operations in real time.
Baker Hughes cement-pump operator mixes and pumps
cement at the controls of a Falcon cement pump truck. The
University of Houston will be working with Baker Hughes on the
RPSEA research project for monitoring cementing. (Photo cour-
tesy of Baker Hughes)
EPmag.com | November 2012
Read more commentary at
EPmag.com
SCOTT WEEDEN
Senior Editor, Drilling
sweeden@hartenergy.com
33-34 wellconCOL-NOV_Layout 1 10/22/12 11:24 AM Page 33
33-34 wellconCOL-NOV_33-34 wellconCOL-NOV 10/19/12 11:17 PM Page 34
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EPmag.com | November 2012
35
F
ishermen know corvina (aka sea bass) as a feisty
fighter found along the coasts of the southern
Pacific. Foodies know corvina as a tasty ingredient in
ceviche, a Peruvian delicacy. For Wison Offshore and
Marine and Horton Wison Deepwater employees, Corv-
ina is not a fish; it is the home of their newest design off
the coast of northwestern Peru.
The BPZ CX-15 platform, according to Wison, is the
worlds first buoyant tower drilling and production facil-
ity. With a little creative thinking and some tweaking of
their deepwater design principles, the team at Horton
Wison Deepwater delivered to their client, BPZ Energy,
this platform specifically suited for shallower water
deployment.
This design really comes into its own in water depths
greater than 80 m (260 ft), where the buoyant tower
needs much less steel than a conventional fixed jacket,
said Chris Harding, vice president of business develop-
ment for Horton Wison Deepwater. While the BPZ proj-
ect is outside of this range at a water depth of 54 m (177
ft), the structure fit the bill in regard to Peruvian seis-
mic criteria.
It is a compliant structure and does need to move
with the waves, said Lyle Finn, chief technology officer
for Horton Wison Deepwater. It is this feature that
makes it impervious to earthquakes. The earth can
shake, but the top part is buoyant, so it stays vertical.
The buoyant tower hull consists of four connected,
ring-stiffened cells that measure 8.4 m (28 ft) in diame-
ter and 60.1 m (197 ft) long. The cells surround a cen-
tral suction pile, bringing the total hull length to 69.9 m
(229 ft). The suction pile, similar to a spud can, is what
moors the tower into the seabed.
Tower total weight is 2,500 tons, and it supports a
three-level drilling and production topsides facility that
weighs in at 2,300 tons. The topside is fully equipped to
produce 12,200 b/d of oil and 12.8 MMcf/d of gas and
inject 3,500 b/d of water, and it also is capable of sup-
porting a drilling rig servicing 24 well slots.
Constructed in 11 months at Wisons fabrication
facility in Nantong, China, both were loaded onto the
Osprey, a heavy lift transport vessel, before departing for
Peru in early August. Installation began shortly after the
Osprey arrived in BPZ Energys Corvina field in
Block Z-1, approximately 1.6 km
(1 mile) from BPZs CX-11 plat-
form, in early September.
production
OPTIMIZATION
A first reeled in at Corvina
The BPZ CX-15 platform, the worlds first buoyant tower drilling and
production facility, is installed in the Corvina field.
Read more commentary at
EPmag.com
JENNIFER PRESLEY
Senior Editor, Production
jpresley@hartenergy.com
Seen here is an artists rendering of the BPZ Energy CX-15
buoyant tower drilling and production facility. (Image
courtesy of Horton Wison Deepwater)
35-36 prodCOL-NOV_Layout 1 10/22/12 1:27 PM Page 35
35-36 prodCOL-NOV_35-36 prodCOL-NOV 10/19/12 11:18 PM Page 36
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37
N
o one in the offshore business needs telling that
deep water is the fastest growth market. As new oil
and gas plays continue to emerge such as those in pre-
viously inconspicuous areas like East Africa or the eastern
Mediterranean the majority almost immediately involve
exploration and development activities in deep water.
This is a testing challenge for companies entering
these areas for the first time or those who have had low
levels of activity there previously, stretching the techni-
cal and logistical capabilities of even the biggest super-
majors. Remote locations, little or no infrastructure,
and minimal local expertise nearly always result in
heavy investment.
Italys Eni is a case in point. To develop its massive
Mamba North and South gas discoveries in Block 4 off-
shore Mozambique, where it has around 70 Tcf of gas
in place, it will have to invest up to US $50 billion as a
whole, including possibly up to three gas liquefaction
plants and essentially the building of an entire town
with around 40,000 workers.
Despite the cost, however, deep and ultra-deep water
remains a booming market. Drilling programs con-
tinue to materialize, with activity expected to rise fur-
ther and deeper and more complicated wells requiring
more rig years and new units to deal with them. For rig
players this is translating into stable and improving day
rates, along with longer-term contracts the market is
essentially sold out for 2013.
For floating production specialists, the demand is
expected to equate into orders for at least 60 FPSOs
within the next three years, according to SBM Off-
shore. By 2016 there will be around 220 FPSOs in
production.
A recent report by Bernstein Research highlights that
global deepwater production has leapt from under
500,000 b/d 15 years ago to 5.5 million b/d this year
(about 7% of the worlds oil supply). The shift has
caused a decline in oil produced onshore worldwide
from 90% in 1970 to 70% today, with that figure likely
to continue falling.
About 70% of the discovered reserves have been
found in more than 1,000 m (3,280 ft) water depth,
and 50% of the discoveries have been found in frontier
areas in the past three years alone. Report co-author
Rob West also noted that deepwater acreage, specifi-
cally frontier deepwater acreage, resulted in the largest
discoveries over the last five years. The average size was
600 MMboe in water depths greater than 1,500 m
(4,921 ft).
Fellow analyst company Wood Mackenzie sees the
same trend, forecasting that the deepwater US Gulf
of Mexico is experiencing long-term growth that will
see $70 billion invested in the sector by 2030.
This continued increase in activity will further
expand demand for product lines such as subsea
equipment and infrastructure, infrastructure instal-
lation, marine well testing, wireline, directional
drilling, LWD, and completion equipment.
By its very nature deep water demands advanced
technology solutions, so this long-
term spend trend is a curve from
which we can all take
comfort.
offshore
ADVANCES
Biggest offshore prizes lie deep
The ultra-deep offshore is proving to be the most productive for new giant
discoveries.
Read more commentary at
EPmag.com
MARK THOMAS
Senior Editor, Offshore
mthomas@hartenergy.com
Offshore discoveries hotspots the vast majority of giant oil finds in
the last six years have been found in more than 2,000 m (6,560 ft)
of water. (Chart courtesy of Goldman Sachs)
37 offshoreCOL-NOV_37 offshoreCOL-NOV 10/19/12 11:18 PM Page 37
November 2012 | EPmag.com
38
COVER STORY:
EUR ROUNDTABLE
Rhonda Duey, Executive Editor
Unconventional plays
wreak havoc on traditional
EUR calculations.
Heres whats being
done about it.
T
he E&P industry probably understands the concept of
risk and reward as well as any casino owner in Las Vegas.
Because the industry is working with a product that it rarely
sees, it has come to rely on numerous calculations to esti-
mate what it cannot accurately predict.
Such is the case with estimated ultimate recoveries
(EURs). In conventional reservoirs, engineers rely on calcu-
lations from the 1940s and 50s to determine each wells
EUR, and usually these estimates are within 90% of the
actual ultimate recovery. Unconventional reservoirs, on the
other hand, refuse to bend to simplistic rules that have
explained the behavior of their conventional cousins for
decades. This simple inability to accurately estimate recover-
able reserves impacts not only the company predicting a
wells performance but that companys stakeholders and
government regulators as well.
The unconventionals have added a lot of fuel to the
debate, said Ken Medlock, senior director of the Energy
Forum at the James A Baker III Institute for Public Policy
and adjunct professor and lecturer in the Economics depart-
ment at Rice University. If you think about shales, theyre a
new frontier, and typically theres a steep learning curve
when you dive into any kind of a new frontier.
Thats what were experiencing right now. Theres a lot of
get to know you time.
Added Scott Wilson, senior vice president at Ryder Scott,
The debate keeps everyone thinking. The fact that theres
UNKNOWN
Estimating the
38-49 COVER-EUR_38-49 COVER-EUR 10/19/12 11:18 PM Page 38
38-49 COVER-EUR_38-49 COVER-EUR 10/19/12 11:18 PM Page 39
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November 2012 | EPmag.com
40
COVER STORY:
EUR ROUNDTABLE
Europe is watching
By Melvyn Giles, Shell
N
atural gas is an important component of a sustain-
able future energy mix, including in Europe, and
tight and shale gas are expected to play a role. Both the
demand and the markets will be there to take advantage
of any tight and shale gas supplies that are developed in
Europe.
In Europe, the exploration of shale gas is still in
its early stages, and no commercial production is
taking place. A significant period will be required for
development.
Public concern about the safety and environmental
impact of tight and shale gas continues to mount.
These concerns focus on the process of hydraulic frac-
turing, possible impacts on water availability, and con-
tamination. There are also more general concerns
about other impacts, including noise, compensation,
and intensity of development. This means that the
industry must be transparent about its operations and
listen and respond to the concerns of its neighbors.
And it must maintain the very highest operational and
environmental standards.
The success of proven technologies like horizontal
drilling and hydraulic fracturing technologies in Europe
also will depend on the extent to which environmental
benefits and impacts will be carefully assessed and bal-
anced from the outset. The role of public authorities and
regulators is therefore to ensure that any exploration
and exploitation of tight and shale gas resources are car-
ried out in an environmentally safe and responsible
manner and in compliance with applicable legislation.
There is a robust legislative and regulatory framework
in place within the EU member states. In January 2012,
after conducting a study based on a sample of four EU
member states France, Germany, Poland, and Sweden
the EU commission confirmed that there is no imme-
diate need for changing the EU legislation.
Member states must ensure via appropriate licensing
and permitting regimes that any exploration or devel-
opment of energy resources involving hydraulic frac-
turing complies with the requirements of the existing
legal framework in place in the EU, including provisions
on the protection of environment and health.
Shell has established global onshore tight/shale gas
and oil operating principles to address concerns around
the development of tight/shale gas and oil, specifically
with regard to the practice of hydraulic fracturing. n
controversy is good because that means we havent stopped
working the problem.
So what is the problem?
To understand the scope of the issue, it might be helpful to
review how EURs are determined in conventional reservoirs.
According to Dr. Stephen A. Holditch at Texas A&M, typical
factors in conventional EUR to compute hydrocarbons in
place are formation thickness, porosity, water saturation,
and pressure. EURs are then determined using volumetrics,
decline curve analysis (DCA), materials balance, or reservoir
simulation.
Conventional reservoirs have high permeability and are
usually associated with a fixed area, defined by structure or
faults, Holditch said. In conventional fields, we can deter-
mine the average reservoir pressure by simply shutting in
some or all of the wells for 72-plus hours and measuring the
rate at which the pressure increases in the shut-in wells. With
accurate production and pressure data and good geology, it is
rather easy to determine the EUR in a conventional reservoir.
According to John Lee at the University of Houston, the
two most commonly used methodologies are volumetric
analysis and DCA. Volumetric analysis estimates the volume
of the hydrocarbons in place by examining reservoir proper-
ties and analogous reservoirs to determine the fraction of
the hydrocarbons that might be recovered.
DCA, which is even more commonly used, projects an
observed decline trend into the future. This works well in
conventional fields because the assumptions required are
satisfied by these reservoirs.
The key assumption here is that after a relatively short
period of time, maybe a few weeks or months at most, a well
begins to drain its entire drainage area, and that happens
pretty quickly, Lee said. Thats the condition that has to be
satisfied for our conventional DCA to be reliable.
Unconventional reservoirs
Naturally, as anyone familiar with unconventional reservoirs
can attest, few of the industrys hard-gained rules apply. A
key issue that refuses to be solved by more science or R&D
is a lack of production history.
This also affects DCA, Lee said, because the assumption
that the well is draining its entire drainage area within a few
months is totally incorrect in low-permeability reservoirs.
It can take years before an unconventional well begins to
drain out to its drainage boundaries, he said. Until then,
our conventional methods of extrapolating decline trends
are unreliable.
David Anderson, vice president of Software Technical
Development for Fekete Associates Inc., echoed Lees con-
cerns. Production history is extremely important, he said.
38-49 COVER-EUR_38-49 COVER-EUR 10/19/12 11:18 PM Page 40
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43
COVER STORY:
EUR ROUNDTABLE
Thats the single biggest problem or limitation that we
have in really coming up with a reliable estimate of EUR
in many of these plays. Most of them are less than two
years old, some of them even less than that, so we just
dont have good analogs for them yet.
Standard DCA is based on an equation developed by
J.J. Arps and others in the 1940s. The original model is
based on boundary-dominated flow, the same drainage
calculation that Lee referred to. In transient-flow regimes
like shale plays, many engineers use a hyperbolic b
exponent in the Arps equation to generate the produc-
tion decline curve.
According to an article from Ryder Scotts Reservoir
Solutions newsletter, debate centers on how high this b
factor should be. Some evaluators force a 0<b<1 limit for
the hyperbolic b because they say that Arps defined those
parameters for that case, the article states. The assump-
tion that b is less than 1, however, does not mesh with
what the industry is seeing in actual shale wells.
Medlock explained that trying to force shale plays into
the Arps equation can lead to less than desirable results.
A lot of people were arguing that these shales looked like
they were following harmonic decline, he said. Then we
started to get more production history. The initial produc-
tion fit, but with more history it started to deviate from
that prediction. People have tried double exponential
functions or something with a dynamic b factor. But at the
end of the day, all theyre really doing is curve-fitting.
Taking a scientific approach
By Rhonda Duey, Executive Editor
T
he issue of determining EURs in shales has gotten the
attention of the scientific community. Last year the
Sloan Foundation awarded grants to several universities,
including the Bureau of Economic Geology (BEG) at the
University of Texas-Austin, to study shale development
from several angles.
The BEG selected five US shale plays the Barnett,
Haynesville, Eagle Ford, Marcellus, and Fayetteville to
study closely to see if traditional EUR calculations can be
improved to take into consideration the multiple geo-
logic, engineering, and economic variables that affect
the feasibility of these plays. So far the Barnett results
have been presented to the sponsors, and the peer-
reviewed results will be published soon.
E&P talked to Scott Tinker, director of the BEG, to find
out more about the study.
Why did the Sloan Foundation think this study was
important?
Sloan funded the bureau to look at the below-ground
issues, and it also funded Rice University, the University of
Colorado Denver, and Resources for the Future in sepa-
rate studies to look at the above-ground opportunities
and challenges in shale gas. The bureau team is
studying five major US shale basins, considering the
in-place resource base and what part is recoverable,
accounting for technology and market conditions. Results
of this research will help decision-makers in the US and
elsewhere make informed regulatory decisions and craft
thoughtful energy policy.
Why is EUR determination in shales such a controver-
sial topic?
It is hard to estimate ultimate recovery in unconventional
reservoirs. There is not a lot of production history, the rock
and fluid systems are heterogeneous and comprise very
small pores, the impact of hydraulic fracturing is not com-
pletely systematic, and there is absorption and adsorption
to be sorted out. Most people use mathematical curve fit-
ting. Tad Patzek and others on the Sloan team refined an
approach that honors the physics of the system. We call it
[the] rock exposure index.
So far your work has broken down acreage by tiers
of rock quality. What factors were considered in deter-
mining these tiers?
The tiers represent the expected 30-year production
adjusted for the length of a horizontal well, which we call
adjusted 30-year productivity. We mapped adjusted 30-
year productivity across the field and separated 4000-plus
blocks (2.6 sq km or 1 sq mile per block) into 10 equal-
area tiers.
The Barnett shale is mostly dry gas. Will it be chal-
lenging to tweak your findings for liquids-rich plays
like the Eagle Ford?
Liquids are harder to get out of shale, and two-phase (liquid
and gas) systems are harder to understand and model.
Whats next for the BEG researchers?
We are going to finish characterizing all five shale basins,
some producing fluids and some natural gas, and then take
stock in terms of what it means for US oil and gas produc-
tion from shale. It is an exciting and important opportunity
for the US and the world, and it warrants detailed, quanti-
fied investigation. n
38-49 COVER-EUR_Layout 1 10/22/12 9:19 AM Page 43
November 2012 | EPmag.com
44
According to Wilson, factors such as num-
ber of frac stages and quality of proppant
can affect EURs. There are also impacts
from toe-up and toe-down drilling,
which indicate the direction the drill bit
takes to enter the shale formation.
The theory is that if youre toe-up, you
can remove liquids more effectively, he
said. The bad news is that this is not always
true because artificial lift is kind of an inex-
act science as well.
A considerable amount of research is
being focused on tweaks to DCA. In a paper
given to the SPE Unconventional Resources
conference in Vienna earlier this year, Giles
et al proposed a number of techniques for
approaching this problem including three-
segment DCA, which uses the Arps equation in a way that
honors changing flow regimes in tight or shale wells. In
this approach, Segment 1 identifies the transient flow
characterized by a hyperbolic b1>1 and initial decline rate,
Segment 2 identifies the boundary-dominated segment
characterized by a hyperbolic 0>b2<=1, and Segment 3
identifies the late-life segment charac-
terized by an exponential b=0 and a
constant minimal decline rate. While
the authors state that this approach
applies to most wells in unconven-
tional gas plays, they note that Seg-
ment 2 requires production data
analysis to be performed on a sample
set of wells to determine average tim-
ing and decline constant associated
with boundary-dominated flow. Addi-
tionally, timing is dependent on each
wells drainage area, which is usually a
function of well density.
Indeed, Lee said that well spacing is
an important factor in this determina-
tion. Thats a given in a conventional
reservoir, he said. Its a harder ques-
tion to answer in a shale reservoir. I
think were making progress. Typical
spacing is to put eight or nine wells
per section. Im not aware of hard evi-
dence that this is optimal, but I think
its a step in the right direction.
In addition to DCA research, more
basic research also is under way to bet-
ter understand the physics of shale
reservoirs. Shell, for instance, has
undertaken multiple studies to exam-
ine the micro- and even nano-struc-
ture of shales, which differ from
COVER STORY:
EUR ROUNDTABLE
Time (years)
R
a
t
e

(
b
/
d

o
f

o
i
l
)
History Forecast
Harmonic
Exponential
Hyperbolic with b = 0.5
1200
1000
800
600
400
200
0
0
5 10
15
Which is the right forecast?
This graph shows three decline equations that fit nearly exactly to the first two
years of production but produce noticeably different forecasts. If all three decline
equations match the historical data, then the exponential decline forecast will
show the most decline in rates and provide the most conservative forecast.
(Image courtesy of Petrocenter.com)
38-49 COVER-EUR_38-49 COVER-EUR 10/19/12 11:18 PM Page 44
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46
COVER STORY:
EUR ROUNDTABLE
conventional sandstones or carbonates due to their
organic nature. Lee is in favor of this type of research.
Many companies are doing something similar, and
even smaller operators are supporting research done by
service companies and forming consortia, he said. I
think this is important because we need to understand the
fundamental physics of storage and flow. I strongly sup-
port that type of research.
But its still early days, said Wilson. Were all looking
for the silver bullet, he said. With the number of people
who are studying this problem, if there was an easy answer,
it would have come out long ago.
Why does this matter?
Simply put, this matters in the US because of the Securi-
ties and Exchange Commission (SEC). To book proved
reserves, companies must estimate recoverable reserves to
a 90% certainty. And companies that cant accurately book
reserves will find their profitability potential suffering.
This is a useful metric when youre filing investor rela-
tions reports, said Medlock. From a commercial and
financial standpoint, its pretty important.
While the SEC has yet to file regulations specific to shale
plays, it expects the same high reporting standards as it
does for conventional plays, leading many companies to
file overly conservative EURs. Lee worked with the SEC in
2007 and 2008 to help the commission modernize its rules
for developing oil and gas reserves.
The SEC technical staff certainly will question reserves
estimates that dont appear to be somewhat on the conser-
vative side, he said. The rate of decline becomes less
steep with time in a low-permeability reservoir, and if a
company allows it to get too shallow, the EURs are pretty
clearly optimistic. So the SEC staff will not let this happen.
He added that the staff will question any decline rate
that is less than 6% to 10% per year.
Various news agencies have reported that the SEC has
begun investigating certain publicly owned companies, sus-
pecting that they have overestimated their EURs. As part
of the probe, the SEC has subpoenaed company records,
38-49 COVER-EUR_Layout 1 10/21/12 6:53 PM Page 46
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November 2012 | EPmag.com
48
including those from early 2008, the Ryder Scott article
states. The documents reportedly include material related
to the analysis of production decline curves, historical per-
formance of shale gas wells vs. production forecasts, and
the appropriateness of various DCA methods. In the
past, companies have not been asked to justify reserves
bookings by demonstrating that classic DCA meets SEC
criteria for reliability. After all, this engineering technique
has a successful, established 60-year track record. Now,
however, requirements may be changing.
In addition to SEC requirements, operators need to be
mindful of EURs from a purely economic standpoint. A
lot of people look at the unconventionals as a technology
play that came true because someone invented some-
thing, Wilson said. What really happened was that the
price came up enough that we could do all of this stuff
that weve always been able to do and still make money.
He added that an EUR curve might indicate a good pro-
ducer, but if the well never pays out or if prices collapse,
the well cant be booked. It merges economics with petro-
leum engineering. A lot of people dont realize that if you
spend more money and implement better technology, you
might get to the point where youve spent so much money
that your EUR is zero.
On the other hand, many shale producers are very pro-
lific in their first few months of production. If this is the
case, why does the EUR matter? You can find operators
who will brag about the recoveries theyre getting, Wilson
said. What they dont tell you is that theyve spent twice as
much as the next guy, and theyre actually going to lose
money on the well. So thats a controversy.
But for Holditch, this whole EUR controversy is almost
a moot point. In reality, EURs are actually not that mean-
ingful, he said. Many companies use 30- to 40- to 50-year
well life to calculate EURs. If one looks at the time value
of money, anything past 10 years is not really worth all that
much. In my work, we have found that most unconven-
tional wells will produce 50% of their EURs during the
first seven years or so of their producing life. As such, I am
much more interested in what the production will be after
years one, five, and 10. I couldnt care less how much a
well will produce in the next 40 years.
COVER STORY:
EUR ROUNDTABLE
38-49 COVER-EUR_Layout 1 10/21/12 7:03 PM Page 48
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T
he US Energy Information Administration (EIA)
has projected that by 2035, shale gas production
will account for 46% of US natural gas production.
Throughout the world, countries and companies are
actively seeking to understand the prospectivity of their
own shale deposits. In April 2011, the EIA published the
results of a study it commissioned on an assessment of
48 shale gas basins in 32 countries. An early estimate
indicates 5,700 Tcf of technically recoverable shale gas
resources in those basins outside of the US, which is
nearly as much as the worlds proven gas reserves today.
Still, much remains to be done before the rest of the
worlds shales are as prospective as those of the US.
There is no doubt that the worlds shale gas resources
are abundant, as these are the source rocks for existing
conventional reservoirs. However, there are so many
unknowns that it is extremely difficult to estimate any
shale reservoirs true potential without actually perform-
ing the evaluation through drilling, fracturing, and test-
ing as part of an organic shale exploration program.
Developing unconventionals
Unconventional reservoirs are highly variable, as experi-
ence in US shales has proven in recent years. Conven-
tional geological and petrophysical models for sandstones
and carbonates do not apply, nor does one shale play
model readily fit another. Usual evaluation methods can-
not to identify productive zones. The production mecha-
nism itself is not completely understood, and the decline
patterns are even less well comprehended.
The current method of extraction is to place the well-
bore in communication with as much of the rock surface
as possible to get the gas to flow through the fracture net-
works that have been created. Long horizontal sections
are completed with staged sets of perforations that are
then massively hydraulically fractured. This brute-force
approach uses vast amounts of horsepower, sand, and
fresh water. As there is no consistent method of evaluat-
ing the producibility of the shale, the perforations are
most often planned as a geometric pattern.
Studies done by Schlumberger reveal that 70% of the
production of a standard shale well comes from only
30% of the perforations.
Todays challenge is to apply the latest and best science
regarding unconventional resources to help harness this
potential. New approaches, including next-generation
advanced modeling tools, are enabling the industry to
make another step-change to harness the potential of this
massive resource base. This approach focuses on integrat-
ing reservoir quality, completion quality, and modeling
technology.
The first step to this scientific approach begins before
the well is drilled with reservoir description and insights.
New modeling technology has been developed to address
the challenges in sweet spot delineation, job design, per-
formance prediction, and economic evaluation that cur-
rent methods have been unable to overcome.
Optimization
The Mangrove reservoir-centric stimulation design soft-
ware provides an integrated, science-based approach to
enable a seismic-to-simulation workflow. The software has
been developed after extensive theoretical and experimen-
tal work to fill the void in complex fracture design tool
modeling capability. Its key function, crossing-criteria
equations to model the interaction between hydraulic frac-
tures and natural fractures in the reservoir, as described
by a discrete fracture network (DFN) geological model,
have been developed. The software analytically models
this interaction in terms of various parameters, including
angle of incidence, net pressure, fluid viscosity, and mini-
mum-to-maximum stress contrast in the reservoir.
The workflow is rooted in reservoir characterization.
The software leverages the science of the Petrel E&P
software platform to build multidomain and multisource
cross-validated reservoir models to account for hetero-
geneity that dictates completion and stimulation in
unconventional reservoirs. Optimizing the number
and location of fracture treatment stages has been
primarily an empirical, time-intensive process that
does not account for vertical and lateral heterogeneity.
One available technique that is part of the reservoir-
centric stimulation design software is the wiremesh com-
November 2012 | EPmag.com
50
OPERATING
EFFICIENCY
Modeling is next step-change
in unconventionals
Improved fracture understanding aids optimization.
Dave Sobernheim, Schlumberger
50-53 OPEF-SLB_Layout 1 10/22/12 9:22 AM Page 50
50-53 OPEF-SLB_50-53 OPEF-SLB 10/19/12 11:18 PM Page 51
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plex fracture model. Wiremesh models are capable of
coarsely overlaying microseismic-measured dimensions,
so history-matching is possible to theoretically cali-
brate a model. While effective for environments with
sparse data due to the semi-analytical engine, wiremesh
models suffer from an absence of a true relationship to
physical reality but nonetheless are an improvement
over the classical bi-wing models.
More rigorous modeling techniques are needed to
create a better means of using new advanced well meas-
urements and interpretation techniques in organic
shales, including anisotropic rock mechanical and petro-
physical properties. Accurate predictions of discrete
hydraulic fracture dimensions including length, width,
and conductivity over complex dimensions related to
natural fractures and other textural rock features as
described in the DFN model must be made. One impor-
tant consideration is to integrate this new hydraulic frac-
ture design optimization tool with existing geoscience
workflow platform software tools.
The Mangrove workflow functions on the Petrel soft-
ware are used to build a 3-D geocellular model captur-
ing the rock heterogeneity that is a key characteristic of
unconventional reservoirs. Building a consistent earth
model, which is required for better complex hydraulic
fracture modeling in the new tool, is made possible
through cross-validating multidomain data from geo-
physics, geology, geomechanics, petrophysics, drilling,
and reservoir engineering. This approach encourages
disparate discipline experts to work together on one
common geoscience and engineering platform to build
the shared earth model for a successful design and eval-
uation optimization of the pumping treatments.
Field-proven
For PetroChina, Schlumberger engineers applied this
workflow and generated more than 50% greater produc-
tion in a horizontal well versus the best offset and more
than fourfold production increases on two pilot vertical
wells versus conventional vertical wells in the field. Reser-
voir quality and completion quality calculations were
used in the reservoir-centric stimulation design software
to describe the capacity of the reservoir to produce eco-
nomical flowrates of hydrocarbons as well as to determine
the propensity of the reservoir to respond adequately to
massive hydraulic fracturing stimulation. Both character-
istics are required to generate economic success.
For two operators in the Marcellus shale, the Man-
grove workflow has been successfully applied in optimiz-
ing job design. Pinpointing perforation location and
staging yielded production increases of more than
50% from the baseline performance of offset wells,
which were designed on a static geometric perforation
location basis. In these cases, advanced sonic logging
was deployed as part of the measurements package to
calculate anisotropic rock properties along the horizon-
tal. A completion advisor module was used to group per-
foration clusters and stages into comparable sections of
rock. Microseismic activity was monitored and verified
comprehensive stimulation across the stage clusters.
Compared to the baseline offset wells where this tech-
nique was not used, only a portion of the clusters
received stimulation in each stage.
Technology challenge
Unconventional resources have a major contribution to
make to future energy supply, but technology will have to
evolve for them to realize their full potential. It may be up
to 10 years before these resources are producing fully, at
least in many emerging plays. While the fracturing com-
plexity seen in unconventional resource development
has upended the classical bi-wing fracture optimization
methodology, new technologies are allowing a return to
rigor in the design and evaluation capability through an
accurate modeling of hydraulic fracturing geomechanical
propagation and productive behavior in ultra-low perme-
ability and organic source rocks.
November 2012 | EPmag.com
52
OPERATING
EFFICIENCY
Modeling of complex hydraulic fracture propagation is possible
within the Petrel environment. (Image courtesy of Schlumberger)
50-53 OPEF-SLB_Layout 1 10/22/12 9:24 AM Page 52
50-53 OPEF-SLB_50-53 OPEF-SLB 10/19/12 11:18 PM Page 53
Results match core analysis for Spraberry Wol/ camp play
Understand complex mineralogy in shale reservoirs , and better determine zones prone to fracture stimulation. Easy to learn and
use, PowerLog rapidly loads massive volumes of data while delivering game-changing levels of collaboration: multi-well , multi-
user and multi-interpreter. Engineers, geolog ists, and petrophysicists work together for better drilling decisions.
Downl oad the case stud y www. f ugr o- j ason. com/ spr aber r y
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www.fugro-joson.com
info@fugro-iason .com
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nyone who has watched a Formula 1 (F1) racing team
in action might have wondered why so many people in
the pit spend so much time staring intensely at computer
monitors. The answer is telemetry a word derived from
the Greek tele for remote, and metron for measure.
Out on the track, the race car is wired to stream infor-
mation on every physical attribute of the vehicle back to
the pit crew. Engineers staring at those screens are pro-
cessing and analyzing data moment by moment, anticipat-
ing critical decisions they need to make to win the race.
What does E&P have in common with racing?
F1 racing is a vivid and dramatic analogy for what takes
place in E&P companies all over the world. In the global
pursuit of hydrocarbons, real-time workflows are becom-
ing prevalent. Just like F1 cars, modern oil and gas fields
bristle with instruments that beam a constant stream of
digital data from deep below the earth all the way back
to the office.
Understanding complex subsurface physical condi-
tions has become increasingly difficult. It requires spe-
cialists from multiple disciplines to strive for greater
collaboration to locate and extract precious fluids and
bring them to market from remote areas of the world.
Todays asset team is an F1 pit crew, responsible for pro-
cessing and interpreting all these data and turning them
into useful information in real time. For both teams, the
ultimate objective is the same: to enable faster, better
decisions that maximize return on investment.
To take the analogy one step further, an F1 pit crew
can use the live data feed to advise the driver when to
make tactical on-track adjustments. Similarly, office-
based geologists and drilling engineers can monitor
real-time log data during geosteering operations and
instruct the directional driller to make course correc-
tions when necessary.
F1 racing teams also use real-time data to make more
strategic decisions. For example, they must determine
when to bring the car into the pits and adjust the set-
tings necessary to achieve optimal performance. E&P
teams also make strategic decisions based on new data.
They must anticipate when to pull the string out of the
hole and change the drill bit, when to alter the mud
weight, or even when a new ahead-of-the-bit well plan
should trigger an update of field models and maps to
ensure safer, more successful outcomes.
For either team, success depends on more than just
the simple acquisition of real-time data. It requires effi-
cient data management, processing, analysis, and inter-
pretation systems that enable a diverse group of experts
to work together and make smart decisions under
extremely demanding conditions.
Realizing the full value of real-time information
Consider what it takes for a team to make joint decisions
using real-time data. Data at the rig must be acquired,
formatted, and transmitted to the office. There, data
must be received and made available for analysis and
interpretation to transform the raw data into informa-
tion that the team can use to make decisions. Two basic
alternatives exist for the storage of such valuable data.
In the first alternative, multiple feeds or copies of data
can be routed into individual standalone applications,
which each team member with a particular area of
expertise then uses to perform a specific evaluation.
The second alternative is to capture real-time data in a
single multiuser data store and provide expert analytical
tools in a unified, multidisciplinary desktop application
November 2012 | EPmag.com
54
OPERATING
EFFICIENCY
Racing to real-time collaboration
A new dynamic 3-D modeling system helps make real-time subsurface modeling possible.
Alex Page, Halliburton
The Dynamic Frameworks to Fill geologic
model can image fluid-filled reservoir
compartments automatically. (Images
courtesy of Halliburton)
54-57 OPEF-Halliburton_Layout 1 10/21/12 6:55 PM Page 54
54-57 OPEF-Halliburton_54-57 OPEF-Halliburton 10/19/12 11:19 PM Page 55
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that can access this shared database. In the first alterna-
tive, experts get a copy of the data in their own applica-
tion. In the second, data that are stored once are
available to the entire team.
Working with a copy of the data may seem pragmatic
because users have their own version on which to experi-
ment, giving them creative freedom. The downside is
that the results of their analyses become stranded in iso-
lated application databases. This stifles collaboration
with other members of the team or requires them to
perform multiple data transfers between all these stand-
alone tools. This process wastes precious time and intro-
duces the risk of data corruption, loss, or duplication.
A common desktop environment with a shared database
also provides team members a more efficient and collabo-
rative workspace than any set of standalone systems.
Real-time subsurface updates
To understand what is being drilled into, typically maps
and models of the subsurface are made based on data
from previous wells and seismic data acquired over the
study area. The traditional process of creating these maps
is too time-consuming and labor-intensive to enable asset
teams to update in real time.
Some asset teams take the time and effort to generate
a full 3-D geocellular model, which allows them to inte-
grate and spatially distribute subsurface rock property
information or investigate a range of stochastic realiza-
tions of earth model properties. While they can plan
new well locations based on this kind of modeling, this
fastidious and comprehensive approach has significant
drawbacks. For one thing, it is not unusual for geocellu-
lar modeling to take weeks or months to complete,
which is the antithesis of real-time decision-making.
The real-time revolution is essentially at odds with tradi-
tional techniques in the same way that electronic commu-
nication has basically made letter writing obsolete.
A new alternative, the DecisionSpace Desktop, is now
available to upstream asset teams. This dynamic 3-D
framework modeling system has an advanced topology
engine at its core, which allows the team to automatically
create structure maps that are consistent from one reser-
voir level to the next.
Each map surface within the framework contains the
instructions required to generate the surface input inter-
pretation, surface interpolation algorithm, extent, and
geometry of the grid. The topology engine tracks the rela-
tive position of and relationship between every surface
and fault that shares an intersection or touch point. Geo-
logical rules re-execute automatically whenever new data
or interpretations affect linked surfaces. This dynamic
approach represents a dramatic departure from conven-
tional mapping workflows. Asset teams can easily incorpo-
rate real-time data and instantly update every map, fault,
or unconformity within the 3-D framework. Real-time
updates apply equally to interval property maps as long
as teams establish instructions to automatically populate
the framework with relevant properties using the new
Dynamic Frameworks to Fill capability.
Ensuring superior performance
Real-time operations have begun to accelerate decision-
making processes across the oil and gas industry. At this
point, however, the industry is only scratching the surface
of what is ultimately possible.
Just like modern F1 racing teams, upstream asset
teams will soon come to rely on real-time workflows
and collaborative, automated systems in order to shift
gears fast enough to ensure both safety and superior
oilfield performance.
November 2012 | EPmag.com
56
OPERATING
EFFICIENCY
In the left image, reservoir fluid contacts update to show how the area transforms as new data are added in real time. In the center
image, a cross section through the prospective fault block shows the model before (dotted lines) and after (solid lines) the dynamic
data updates. The right image shows the Dynamic Frameworks to Fill geologic fault terrace framework with fluid-filled reservoir com-
partments automatically detected.
54-57 OPEF-Halliburton_Layout 1 10/22/12 9:26 AM Page 56
54-57 OPEF-Halliburton_54-57 OPEF-Halliburton 10/19/12 11:19 PM Page 57
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November 2012 | EPmag.com
58
OPERATING
EFFICIENCY
T
he Australian Gas Light Company (AGL) was formed
in Sydney in 1837. It supplied gas for the first public
lighting of a street lamp in Sydney in 1841 and was the
second company to list on the Australian Stock Exchange.
Today AGL Energy Services offers a range of services that
identify opportunities to improve customers systems,
equipment performance, and production processes
through onsite infrastructure design and maintenance,
monitoring and analysis, and energy-related safety and
compliance reporting.
AGLs Energy Services division is responsible for the
top 100 natural gas customers in southern and eastern
Australia, which means servicing more than 850 sites with
24/7 coverage. Managing the multimillion dollar service
business was a daunting process that was very dependent
on paper forms for tracking jobs, procedures, and safety
and environmental records for every customer.
AGLs dedicated national service manager, Sean
Murray, realized the efficiency bottlenecks of relying
on text-based SMS call dispatch and burdening his serv-
ice technicians with binder books full of forms for jobs,
quotes, safety, and site surveys. Service technicians were
required to document all job-related activity and read-
ings on paper. Once the job was completed, all the
paperwork was bundled up and delivered to headquar-
ters in Sydney twice per week via the post office.
AGLs administrative team was tasked with opening,
sorting, and reading the job documentation so they
could transcribe the information into the SAP invoicing
system. We have the best technicians in the market, but
their handwriting is the worst, Murray said. They write
like doctors.
This deciphering process often required several days at
the end of the month to verify and reconcile the accuracy
of the job data before an invoice could be generated and
mailed to the customer. The entire job-to-invoice process
cycle typically took two weeks to complete, extending the
number of days that sales were outstanding from 30 to
more than 45 days.
Improvement for all stakeholders
AGL began the search for a field mobility system that
would reduce or eliminate the paperwork; minimize
data entry for invoicing; and improve productivity for
the service technicians, administrators, management,
and customers. Their research led them to Retriever
Communications, a pioneer of field mobility solutions.
Operating since 1996, with hundreds of mobility apps
spread across 25 countries, Retriever has pioneered soft-
ware as a service (SAAS) mobility solutions hosted in the
Cloud worldwide.
Retriever is a mobile enterprise application platform
for B2B, B2E, or B2C environments. Retrievers software
enables the development, deployment, and management
of robust, secure, cross-platform, fully internationalized
native mobile applications hosted in the Cloud. It will
Mobile solution
aids field technicians
A communications system enables near-constant contact, even without Wi-Fi.
Mary Brittain-White, Retriever Communications
Retrievers mobile applications allow users to continue working
even when out of network range. (Images courtesy of Retriever
Communications)
58-61 OPEF-retriever_58-61 OPEF-retriever 10/19/12 11:19 PM Page 58
58-61 OPEF-retriever_58-61 OPEF-retriever 10/19/12 11:19 PM Page 59
OV
SELECE
cage n
Services, LLC. Find out more at selectenergyservices.com
p
ow
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operate across any IP-based network, including the Inter-
net, GSM, GPRS, 3G and 4G mobile networks, Wi-Fi, and
corporate ethernets.
All Retriever applications are platform-agnostic and
standards-based, facilitating ease of interoperability
with mobile devices and platforms, customer corporate
systems, and public services in the Cloud. Retrievers
project management team was able to focus on AGLs
process and workflow without worrying about engineer-
ing a one-off system. This meant faster implementations
and roll-outs at a lower cost, avoiding the endless soft-
ware implementations that many enterprises experi-
ence. AGLs system was implemented and rolled out
in fewer than 90 days.
Connecting AGL workers
AGLs workers in the field are often in locations that
have limited or no Wi-Fi signal, so their system needed
to work offline. Retrievers mobile applications are
designed to work in an occasionally connected environ-
ment, allowing users to continue working even when
out of contact with the Retriever service due to lack
of network coverage. Retrievers service uses a store
and forward design, handling integration with cus-
tomer corporate systems and optimized data synchro-
nization with Retriever applications. AGLs workers
with remote service routes took advantage of the offline
capability of the system because their work is queued
until they come back into coverage, often at the end
of the day as they head back towards town.
As AGLs system was deployed to field service techni-
cians, positive performance indicators were realized
quickly. For example, safety
and occupational proce-
dures were included in the
job flow, so the technicians
benefitted from immediate
awareness of any job haz-
ards at the site and could
even share this information
with co-workers. Another
benefit realized was in the
area of problem resolution
if technicians ran into
unique situations, they
could quickly capture
details and photos, then
send the information to an
engineer at headquarters
for a resolution. This saved many hours of labor and
greatly reduced return service trips. More importantly,
service technicians were filling out job details as soon
as work was complete, resulting in more accurate job
data and parts tracking while liberating them from the
drudgery of hand-writing reports at the end of the shift.
Optimized billing
The administrative team quickly realized productivity
gains as well. First, job data were arriving electronically,
often hourly as soon as jobs were completed. This was a
huge time-saving feature compared to waiting for job
data via the postal service. The administrators could
immediately start the quality review process and no
longer needed to decipher hand-written reports. Re-
entering job billing information into SAP was no longer
required. The job to invoicing process was fully auto-
mated, saving AGL countless labor hours by eliminating
data entry, and the billing cycle dropped from two weeks
to two days. Customers can receive their job invoices
quickly, which means a lower days/sales outstanding
ratio for AGL.
Compliance for customers
The Retriever field solution also assists AGLs customers
in the area of environmental compliance and reporting.
AGL performs combustion analysis on compressors and
boilers, generating compliance reports for the Aus-
tralian Environmental Protection Authority. These
reports are sent to the customers in a PDF format, so
the customer can share them with the regulators and
meet all compliance reporting deadlines.
November 2012 | EPmag.com
60
OPERATING
EFFICIENCY
The field solution assists AGLs customers in the area of environmental compliance and reporting.
58-61 OPEF-retriever_58-61 OPEF-retriever 10/19/12 11:19 PM Page 60
58-61 OPEF-retriever_Layout 1 10/22/12 1:08 PM Page 61
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capacity
Magnum Cortex [mag-nuhm] [kawr-teks] noun ,
the part of your brain that helps you maximize well completion economics.
estimation a oiiity
Discover your Magnum Cortex.
Visit our booth and learn how to work smarter when
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November 2012 | EPmag.com
62
GEOPHYSICAL MARKET AND
TECHNOLOGY UPDATE
W
ith the stage set for substantial long-term growth
in offshore exploration activity, particularly in
frontier regions, deeper waters, and below complex geo-
logical structures, the marine seismic market is poised
for a strong multiyear recovery.
Recent advancements in seismic acquisition and pro-
cessing have allowed explorers to see presalt and deepwa-
ter formations much more clearly, and these enabling
technologies should continue to fuel the oil and gas
industrys transition towards more complex (and expen-
sive) offshore operations. Some of the most significant
discoveries of the past decade have been facilitated by
new methods of seismic imaging.
Largely in response to this, 58 ultra-deepwater rigs have
been ordered since October 2010 as higher expected
drilling success rates have greatly improved the econom-
ics of presalt and deepwater exploration.
Given that deepwater wells can cost upwards of US $100
million and historical drilling success rates are roughly
30%, operators are expected to increasingly rely on seis-
mic as the deepwater spending cycle unfolds. Dahlman
Rose estimates annual marine seismic spending growth
of 10% to 15% through at least 2014, reflecting a recov-
ery in the US Gulf of Mexico (GoM), the long-term posi-
tive outlook in Brazil and West Africa, revitalized interest
in the North Sea, and compelling prospects in East Africa
and the Arctic. Demand for 3-D seismic has grown by
more than 70% since 2006 in terms of acreage shot and
should be the primary driver of future spending growth.
Regional interest
Operators showed a higher-than-expected commitment to
the deepwater GoM in the recent central licensing round,
which attracted $1.7 billion in high bids. The optimism
ahead of the upcoming five rounds of central and western
GoM lease sales is a positive for the seismic industry, which
should benefit from a recovery in vessel demand to pre-
Macondo levels and higher multiclient sales. In the three
months prior to Macondo, 15 3-D vessels with six or more
streamers were active in the region, compared to the five
vessels active in 1Q 2012. Following the disaster, nearly
20% of the 3-D vessel capacity exited the GoM and put
negative pressure on day rates as the vessels entered the
international markets. Due largely to the positive outlook
in the GoM, Dahlman Rose expects demand in the GoM
to reach eight to 10 vessels by early 2013.
The recent announcement for Brazils 11th licensing
round, which includes 87 offshore blocks and is likely
to occur in May 2013, should add several vessels to the
seven currently operating in the region. Additionally,
there is clearer visibility that the Brazilian presalt round
will occur in November 2013, which will provide an addi-
tional boost to multiclient sales and a further tightening
of the high-end vessel market.
The market in Angola strengthened in 1Q 2012 with the
commencement of a large 10-block multiclient program
for Sonangol being split between WesternGeco, TGS, and
PGS. There are currently eight 3-D vessels operating off-
shore Angola and Nigeria, and interest also is growing in
surrounding offshore regions, including Liberia, Sierra
Leone, Ghana, Cote dIvoire, and South Africa. Explo-
ration in several of these regions will be focused in the
Transform Margin a relatively new play spearheaded by
Tullow Oil.
Significant North Sea legacy discoveries in 2011, notably
Lundins Johan Sverdrup, have revitalized exploration
interest in the region. In late June, Norway formally
Major contractors like PGS
are outfitting most of their
vessels with broadband
capability. The new
technology raises the
barriers to entry for
competition. (Image
courtesy of PGS)
Marine market steams ahead
Better images are spurring more drilling.
Peter Hatfield, Dahlman Rose & Co.
62-67 GEO-dahlman_62-67 GEO-dahlman 10/19/12 11:19 PM Page 62
62-67 GEO-dahlman_62-67 GEO-dahlman 10/19/12 11:19 PM Page 63
B G P -a reliable partner
f or
you
BGP is a leading geophysical contractor, providing geophysical services to its clients worldwide. BGP now has 50
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key business activities of BGP include:
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m4w
62-67 GEO-dahlman_62-67 GEO-dahlman 10/19/12 11:19 PM Page 64
11
Understanding
Reservoirs
Reservoir solutions for
unconventional resources
Heavy oil, shale and coal sea m gas reservoi rs require precise
subsurface information to optimize drilling and maximize
production. With the most experience in survey design,
acquisition, advanced imaging and reservoir characterization
for unconventional resources , CGGVeritas has a proven track
record for delivering the best possible solution for complex
imaging. With local expertise in the regional geology and a
portfolio of innovative technologies, including continuous
reservoir monitoring and microseismic services, we employ
a tai lor-made solution to help you understand the unique
qualities of the unconventional asset you are developing.
Understand more by solving together.
Delivering SeisAble Benefits CGGVERITAS
cggveritas.com/UR
EPmag.com | November 2012
65
launched its 22nd licensing round, offering 86 blocks in frontier regions
in the North and Barents seas, most of which lie north of the giant Skru-
gard and Havis discoveries from the past year. The current North Sea
season has experienced higher demand and utilization than the peak
levels seen in 2007 and 2008.
Higher demand for surveys in Greenland, Baffin Bay, and the Russian
Arctic should require incremental vessels over the next several years.
Norway estimates offshore exploration investments will increase to US $7
billion (NOK 40.7 billion) in 2013 from US $5.6 billion (NOK 32.4 bil-
lion) this year, which should support seismic demand growth of at least
15% in 2013 and 2014.
The industry is ramping up exploration activity in frontier regions,
including East Africa, South Africa, Guyana, and Uruguay. Massive dis-
coveries off Mozambique by Anadarko and Eni, an expected offering of
deepwater blocks off Tanzania later this year, and interest in offshore
Kenya should draw additional vessels to East Africa.
The Indian market faced an especially weak season in the beginning
of 2012, with only one 3-D vessel active in the region compared to the
11 3-D vessels active in 1Q 2009. The region is poised for moderate
improvement following the North Sea season, driven by incremental
demand from ONGC and Reliance.
Capacity
While seismic demand is expected to grow meaningfully over the next
several years, vessel supply growth should be much more modest. Follow-
ing three years of seismic vessel overcapacity resulting from poorly timed
newbuild decisions and subdued demand stemming from the financial
crisis, the seismic vessel market is finally returning to balance in 2012.
Looking forward, there are seven high-end vessels scheduled for delivery
through 2014, representing 3-D supply growth of only 9% from current
levels. Given the 24-month to 30-month lead times for new vessels, the
$200 million to $250 million construction cost (including seismic equip-
GEOPHYSICAL MARKET AND
TECHNOLOGY UPDATE
Polygonal faulting is concentrated in a radial pattern around the top of a salt
dome. The lateral resolution of broadband technology provides a sharp image.
(Image courtesy of CGGVeritas)
62-67 GEO-dahlman_62-67 GEO-dahlman 10/19/12 11:19 PM Page 65
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ment), and the unlikelihood of vessel conversions due to
the heightened power and technology requirements for
modern seismic vessels, upside to this forecast is unlikely.
Vessel day rates, which tend to move rapidly during
changing market dynamics, remain meaningfully below
2008 highs and are poised for a strong recovery through
at least 2014. Current industry backlogs provide visibility
of a tightening market through early 2013. The compa-
nies best positioned to benefit from improved high-end
pricing are CGGVeritas, WesternGeco, and PGS. Com-
bined, the companies have an approximate 65% share of
the high-end vessel market, with fleets almost entirely
equipped with proprietary broadband
technology.
Technology advances
The advent of broadband data acquisi-
tion and new and faster methods of
data processing have been game-chang-
ing developments that have opened
the doors to presalt exploration and
elevated the barriers to entry in the
marine seismic business. Broadband
acquisition, which usually commands
a 10% to 15% pricing premium over
conventional 3-D seismic, is able to cap-
ture pressure and velocity waves and
thus can provide a higher quality, more
accurate, and deeper subsurface image.
Broadband is expected to account for
25% of 3-D seismic demand by year-
end, up from 5% in 2010.
Multiclient libraries
In spite of an improving contract mar-
ket, multiclient investments are grow-
ing in advance of the multitude of
upcoming licensing rounds. CGGVeri-
tas expects to invest US $380 million in
its multiclient business in 2012, com-
pared to $230 million in 2011, while
PGS plans to increase its multiclient
investment more than 40% in 2012.
Through its strong performance dur-
ing the last down cycle, TGS demon-
strated the value of multiclient as a
standalone business and has influ-
enced more focused multiclient opera-
tions throughout the industry.
Strong evidence exists that the
current seismic upcycle will extend
beyond 2014, driven by a more bal-
anced vessel market, recent technologi-
cal developments that have elevated
barriers to entry, and the structural
shift in demand toward deepwater and
presalt exploration.
November 2012 | EPmag.com
66
GEOPHYSICAL MARKET AND
TECHNOLOGY UPDATE
62-67 GEO-dahlman_62-67 GEO-dahlman 10/19/12 11:19 PM Page 66
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November 2012 | EPmag.com
68
GEOPHYSICAL MARKET AND
TECHNOLOGY UPDATE
A
dvances in seismic attribute analysis and color visuali-
zation reveal the geology imaged within 3-D seismic
data with unprecedented clarity. As a consequence,
the industry can develop a level of understanding of
petroleum systems and reservoirs that was previously
unobtainable. Many of the geological features that
become apparent in this way have complex 3-D geome-
tries that need to be captured if they are to be repre-
sented appropriately in a reservoir model. Accurately
incorporating such 3-D geometries into a reservoir
model can have a significant impact on volumetrics and
reserves estimation and lead to better well planning.
Therefore, extraction of 3-D geobodies has become fun-
damentally important in seismic interpretation. Currently,
geobody delineation uses volumetric threshold-based
extraction techniques or auto-tracking/region growing
from a seed point. These techniques are not robust as they
are sensitive to noise and cannot accommodate the varia-
tions in the expression of a geological feature.
To address this issue, ffA has developed a technique that
allows geobodies to be grown that is more reliable than
existing geobody delineation methods while still being
extremely simple to apply. This is achieved by bringing
together data-driven techniques and interpreter guidance
using intuitive manual manipulation tools, which are
unique in enabling on-the-fly 3-D editing of geobodies.
Confidence values computed at every point on the geo-
body surface are displayed to provide direct visual feed-
back to the interpreter on how well the geobody is fitting
to the data, which in turn helps the interpreter edit the
geobody more accurately.
The challenge of delineation
In complex geological environments, a single attribute
is often not effective at delineating a feature in the data.
Combining multiple volumes using color-blending tech-
niques (such as RGB and CMY) is an effective way of
improving the definition of features. With color blending,
features that were previously very difficult to detect
become apparent, although often they will have a
highly variable signature.
With the new adaptive geobodies technique, a variable
character and multiple inputs within a feature are handled
using analysis of local data statistics. This mathematical
sophistication is important in giving the reliability required
for efficient interpretation, but it also is one of the factors
that make the adaptive geobodies so easy to use. This sim-
plicity is a critical factor if a new technology is to deliver on
its value proposition.
Data-driven
Multiple attributes can be used in the geobody extraction
process so that each individual attribute does not need
to fully define the area of interest and each one can
define a different characteristic of the feature (such
as combining edge and envelope
attributes for channel definition).
The statistical process is initiated
simply by defining a number of
seed points.
The seed points represent the
starting points for the extraction
as with conventional autotracking.
Seed points can be placed to identify
areas within the feature and also to
identify exclusion zones. Examina-
tion of the data statistics around
each seed point ensures that as the
Finding the balance between
automated and manual interpretation
A new technique aids in interpretation of any stratigraphic feature.
Gaynor Paton, ffA
A channel and fan system barely visible in the reflectivity data (a) becomes apparent in an
RGB blend of three frequency responses (b) and is extracted as an adaptive geobody (c)
despite the variable expression. (Images courtesy of ffA)
68-71 GEO-ffa_Layout 1 10/22/12 1:51 PM Page 68
68-71 GEO-ffa_68-71 GEO-ffa 10/19/12 11:19 PM Page 69
To overcome the safety and efficiency challenges associated with 4D marine seismic
acquisition, ION collaborated with a major oil company to develop a cost-effective
solution. By leveraging a unique combination of ION marine acquisition technologies
and acquisition optimization services, the client achieved over 20% infill reduction
while exceeding repeatability requirements for the survey. Whether you are sizing up
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CHARGED TO INNOVATE. DRIVEN TO SOLVE.
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seismic character of the feature is changing,
the tracking statistics change with it. This allows
the adaptive geobodies to adapt to changes
in expression. This is just one way in which the
adaptive geobodies technique deviates from
conventional attribute analysis techniques
through replicating the way the human visual
system works.
Interpreter-guided
However, seismic provides an abstract and
ambiguous representation of the subsurface
geology that is subject to artifacts and noise,
which means there are often cases when the
data do not adequately represent the geology
that is being imaged. In these cases, it is neces-
sary for the interpreter to extend or reposition
areas of the geobody to fit with knowledge based on the
users experience. This workflow accommodates that need
and allows the interpreter to manually adjust parts of the
geobody as desired. It is this use of both the available data
and expert knowledge in creating accurate 3-D representa-
tions of geological elements that gives the adaptive geobod-
ies method its power. A result is guaranteed, and that result
will match the data as much as possible while not being
constrained by data imperfections. Two areas in which
adaptive geobodies can turn tasks that were often impracti-
cal or impossible into something that can be done easily
are in interpretation of channel systems and carbonate dis-
solution features.
Channel delineation
In hydrocarbon plays associated with channel systems, the
use of RGB blends of three frequency-magnitude response
volumes has become an accepted interpretation tech-
nique. Primarily this is because RGB frequency blends
greatly aid interpretation of the depositional environment
and reveal additional details of channel structure, over-
bank deposits, and splays. The problem is that reservoirs
associated with channel systems often are extremely het-
erogeneous and therefore have a highly variable character,
making geobody extraction of most channel systems
extremely difficult if not impossible using conventional
methods. However, with the adaptive geobody technique it
is a straightforward process that can be applied in minutes.
Interconnected dissolution features
and collapse structures
Dissolution features and collapse structures are usually
highly complex interconnected features that represent
a significant drilling hazard in carbonate plays but can
be close to impossible to interpret conventionally.
Extracting them as 3-D geobodies gives a much better
understanding of the shape and geometry and of the
interaction between neighboring features than can ever
be achieved using surface-based horizon interpretation.
The adaptive geobody technique can rapidly extract such
features as geobody objects, allowing much more well-
informed wellpath planning.
Unique approach
The adaptive geobodies method is a unique approach to
defining the 3-D geometry of geological features from seis-
mic data. The use of local data statistics and multiattribute
inputs allows the adaptive geobodies to replicate some of
the power of the human visual system while maintaining
an objective analysis approach. Combining this with inter-
preter guidance means that geobodies can be extracted in
a data-driven manner in almost any geological situation.
Crucially, the adaptive geobody technique allows the geo-
body to continue growing in a stable manner as the data
characteristics are changing while the interpreter remains
in control of the extraction. This maximizes the use of
both data and external knowledge to give unprecedented
robustness. In the exploration projects in which it has
been applied, the adaptive geobodies technique has
added significant value through enabling the extraction of
multiple individual but overlying channel systems, com-
plex fan geometries, or subtle karst features. The adaptive
geobodies technique has improved the understanding of
and derisked these projects by refining the geological
models, defining potential prospectivity, and delineating
drilling hazards.
November 2012 | EPmag.com
70
GEOPHYSICAL MARKET AND
TECHNOLOGY UPDATE
An adaptive geobody defines a collapse structure. a) The reflectivity data
(gray scale) is displayed with an RGB blend of three frequency response
volumes that highlight the circular collapse feature in the center. Note the
similarity in the response within the collapse to that of the surrounding area.
b) The adaptive geobody grown using the RGB blend displays the confidence
value on the surface (red is high confidence; blue is low confidence).
68-71 GEO-ffa_68-71 GEO-ffa 10/19/12 11:19 PM Page 70
68-71 GEO-ffa_68-71 GEO-ffa 10/19/12 11:19 PM Page 71
I
T F
GC08gi
U$ $ invested in multi-client data over the past 3 year
Australia , Angola , The Bahamas, Benin, Brazil , Cameroon.; Canada ,
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Learn more at WWW.TGS.CO
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November 2012 | EPmag.com
72
AUTOMATION
W
ith ever-increasing energy needs and the end of easy
oil, oil and gas companies are focusing on fields far
and beyond as well as unconventional sources. Increased
regulatory and safety requirements are coupled with the
need for newer discoveries to meet demand and the pres-
sure of reduced availability of experienced manpower for
safe, reliable, and efficient operations.
The digital oil field is an aggregation of people, processes,
and technologies providing significant value to E&P opera-
tors. However, many oil and gas companies have large, inte-
grated operations across the value chain i.e., upstream,
midstream, and downstream. Therefore, expanding the hori-
zon of the digital oil field concept and technologies to cover
the entire gambit of operations can significantly enhance
the business value of the organization as well as improve
safety and compliance to ever-changing regulations.
The availability and use of accurate, reliable, and timely
information, rather than just data, is a powerful tool that
can enhance asset performance. Integrated solutions that
offer advanced diagnostics can help companies manage the
control assets more effectively, alert operators about poten-
tial problems to enable quick response to issues, and even
prevent problems before they occur.
For example, production data from the wellheads in the
field can be matched with the demand to maximize profits,
and insight into field equipment health status can assist in
predictive maintenance and downtime reduction. Real-time
monitoring of events, predictive and preventive analysis, and
the ability to respond to conditions in the field are crucial
for safe operations.
Business advantages of the introduction of these inte-
grated solutions that yield information instead of just data
As part of wellhead automation systems, remote terminal units are tough by
design and digital oil field-ready and offer performance out of the box, with low
power consumption and include integrated controls. (Image courtesy of GE
Intelligent Platforms)
Technologies for expanding horizon
of digital oil field
A balance between too much and not enough data is crucial for ensuring that relevant
information is available for decision support systems.
Mayank Mehta, GE Intelligent Platforms
72-77 AUTO-GE_72-77 AUTO-GE 10/19/12 11:19 PM Page 72
72-77 AUTO-GE_72-77 AUTO-GE 10/19/12 11:19 PM Page A73
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alization of the real-time status of fields and equipment, historical trends, and
as a data source for simulation and optimization packages. Virtualization is the
key to having a complete picture of the events unfolding in different opera-
tional areas within the value chain, be it upstream, midstream pipelines, or
the tank storage area, since events in one location can create a backlash in
other related operational areas. The prevention of damaging events is a criti-
cal factor for safety.
While virtualization is a must, due consideration must be given to how
much to virtualize. With the decrease in costs of servers and storage equip-
ment, it is easy to fall into the trap of data and information overload. A bal-
ance between not enough and too much is crucial for ensuring that
decision support systems have the relevant data.
Investments in virtualization and visualization deliver value to any organi-
zation; however, it is important to document and communicate the benefits
during the implementation process to avoid the perception of this invest-
ment as wasteful.
Foresight and insight for increased asset performance. Operational intelligence
enables operators of large industrial equipment to understand what is hap-
pening across the fleets and to predict and prevent equipment problems.
These systems increase production efficiency by improving reliability and
availability. The valuable insight that information provides helps boost asset
performance. For example, effective analytic systems can preempt alarm and
failure events based on historical modeling, enabling active avoidance to
minimize asset downtime and hence increase yields. These solutions provide
actionable warnings of impending equipment problems much earlier than
existing condition-monitoring approaches to:
detect, diagnose, and prioritize emerging performance and reliability
problems;
EPmag.com | November 2012
75
AUTOMATION
72-77 AUTO-GE_Layout 1 10/22/12 11:48 AM Page 75
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76
focus maintenance efforts;
maximize and leverage resources; and
keep operations safe.
The average user of this type of solution can achieve
return on investment (ROI) in six to 12 months, and
sometimes much sooner.
Intelligent pipeline monitoring. Expanding the digital
oil field concept to optimize the transportation of liq-
uids and gases and the storage and custody transfer of
end products ensures that the market demands for the
products are matched with the production to maximize
ROI. The what-if analysis helps business managers have
real-time scenario planning and optimize production
and supply for increased profitability.
Wellhead automation systems. E&P companies are
under intense pressure to maximize productivity, relia-
bility, and efficiency while addressing increasing cost
and profitability pressures. Significantly high financial
and operational stakes in oil and gas recovery, coupled
with sophisticated processes in extremely harsh envi-
ronments, call for renewed focus on the criticality of
wellhead operations. This is the initiation point of the
complete oil and gas value chain and the focal point
for the implementation of digital oil fields, also known
as decision support systems.
Optimizing performance
Reliable information is at the heart of optimized per-
formance. The critical and complex nature of E&P
operations demands that technology solutions aid in
improving the safety of the environment and people,
increase efficiencies, and enable real-time decision
support based on data from multiple disparate sources.
Companies that are lacking accurate, timely, and
integrated information cannot adequately control
and optimize production, leverage a centralized reposi-
tory of data for real-time and historical analysis, or
monitor and enhance field production strategies
a significant disadvantage that results in suboptimal
performance.
AUTOMATION
72-77 AUTO-GE_72-77 AUTO-GE 10/19/12 11:19 PM Page 76
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November 2012 | EPmag.com
78
AUTOMATION
T
he drive for drilling automation within the oil and gas
industry has become stronger in recent years. Industry
research has moved from the laboratory and test rig to
the drilling floor as drilling component vendors as well
as oil and gas companies have launched standardized
development platforms for third-party solution and
service providers to plug into.
Land and offshore drilling automation
Conventional oil and gas technology adoption models
predicted that the initial drivers for drilling automation
would come from the more expensive offshore operations
and migrate to the onshore operations when the tech-
nologies were proven and established.
However, this has been observed to not be the case for
drilling automation since land drilling operations for shale
hydrocarbons and coalbed methane have used drilling
automation technologies to address several key operations
issues. These include standardization of key drilling
processes and operations, addressing HSE issues involved
in drilling, and supporting the new generation of land-
based drilling personnel who have less drilling experience.
Drilling automation initiatives
There are two distinct groups focused upon drilling
automation within oil and gas: the SPE Drilling Systems
Automation Technical Section (DSATS) and the IADC
Advanced Rig Technology (ART) Committee. DSATS
focuses on facilitating the development and implementa-
tion of systems automation specifically, including the link-
age of downhole tools with surface sensors and controlled
equipment, while ART focuses on advancing rig technol-
ogy. In 2010, the two groups began working together on
the topic of developing drilling automation systems within
oil and gas.
The DSATS and ART groups regu-
larly organize major industry events
such as symposiums, workshops, and
debates to advance oil industry knowl-
edge in the drilling automation field.
Automation case studies from both
inside and outside the oil industry have
been presented at meetings, and the
case for drilling automation in both
land and offshore operations has been
robustly debated and discussed by
meeting attendees.
Data automation protocols
In 2011, the IADC established the
Drilling Control Systems (DCS) Sub-
committee to establish protocols that
enable surface drilling control systems
to communicate with downhole drilling
tools to automate the drilling process.
Downhole tool information is made
The DrillScene Advanced Monitoring software provides separate views for the driller, tool-
pusher, mud engineer, mud logger, drilling engineer, and drilling supervisor and superin-
tendent. This is the screen for the driller. (Images courtesy of Sekal Aberdeen Ltd.)
Industry groups tackle R&D
for drilling automation
The case for drilling automation in both onshore and offshore operations has been robustly
debated as the industry moves toward standardized development platforms.
Nick Gibson, Sekal Aberdeen Ltd.
78-85 AUTO-sekaliris_78-85 AUTO-sekaliris 10/19/12 11:20 PM Page 78
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80
AUTOMATION
available from a variety of
proprietary acquisition sys-
tems through protocols
such as WITS, WITSML,
and real-time digital log
information standards.
Rig surface systems use a
variety of communication
protocols more appropriate
for high-speed control. For
drilling automation, the
OPC UA protocol has been
proposed as a common
communication mecha-
nism to link the drilling
control systems and sensors
on the rig with automation
systems that will also
employ downhole data for
intelligent decision-making Each view is tailored to the needs of the rig hands. This is the view for the mud engineer.
78-85 AUTO-sekaliris_78-85 AUTO-sekaliris 10/19/12 11:20 PM Page 80
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November 2012 | EPmag.com
82
or support. Working groups are focusing on improving
communications and developing common protocols.
A DSATS working group is currently forming to recom-
mend interoperability within the control space. This can
be seen as a dictionary that allows different applications to
talk to each other in real time, which DSATS sees as key
to rapid adoption of automation within the drilling
environment.
Membership of both groups is open to industry profes-
sionals who wish to connect with experts in drilling system
automation. The next major event will be a symposium on
Learning from Heavy Industry Front Runners in Amster-
dam at the RAI Congress Center on March 4, 2013.
Drilling automation at IRIS
Since 2003, the International Research Institute of Sta-
vanger (IRIS) has devoted R&D to drilling automation
using the Ullrigg drilling and well center along with its
virtual-rig environment within its facilities in Stavanger,
Norway.
The Ullrigg drilling and well center includes a full-
scale, offshore-type drilling rig with access to seven dis-
tinct wellbores. It provides the oil and gas industry with
a full-scale test rig facility to perform R&D and to test
new workflows, technologies, and drilling solutions.
The result of this research on active control of the
drilling machinery to avoid damaging the well during
drilling operations is DrillTronics, which has been the
subject of multiple articles and technical papers within
the oil and gas commercial and technical press over the
last eight years.
DrillTronics uses coupled dynamic drilling process
models to help monitor downhole behavior within the
wellbore in real time. Using the models predictive capa-
bility, key operational sequences are optimized, and
process behavior is diagnosed for subsequent triggering
of reactive mediating action. It also provides envelopes of
protection for operating the drilling machine within the
acceptable limits of the wellbore.
These models are continuously calibrated and updated
using real-time data from the active drilling program,
ensuring that the physics-based model of the process
behavior in the wellbore remains accurate.
To date, there have been three distinct development
phases for DrillTronics focused on developing safety
mechanisms for drilling fluid circulation and drillstring
dynamics as well as automation of key drilling processes.
Safeguards. The system continuously computes an
envelope of protection for key operational parameters
and inputs the calculated limits into the DCS such that
drillers cannot exceed those limitations (unless they
elect to do so);
Safety triggers. For some chosen parameters, the system
computes maximum or minimum expected values.
Any measurement outside the allowed window is inter-
preted as an incident, and automatic action is per-
formed (e.g. stopping the upward rig block movement
when the hook load is too high); and
Automatic sequences. There are predefined sequences
that are performed automatically or semi-automati-
cally by the system. These sequences require that both
safeguards and safety triggers are already in place in
the system.
The DrillTronics system has been applied on active
offshore Norwegian drilling operations on two occa-
sions, the last time in 2009 on Statfjord C. In addition,
further system testing was performed at the IRIS Ullrigg
center, providing hands-on training in the capabilities
and functionality of the system for offshore drillers. The
results of this training will be the subject of an SPE
paper expected to be published in 2013. The capabili-
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85
ties of the system are further described in SPE papers
99027, 112744, 119650, 128234, 128285, and 128286,
and in ADE paper AADE-07-NTCE-45.
Alongside DrillTronics, IRIS developed the DrillScene
Advanced Monitoring software, which models the physi-
cal state of the full wellbore in real time using the same
coupled physics-based algorithm set as DrillTronics.
DrillScene actively monitors frictions, cuttings returns,
and actual drilling fluid volumes within the wellbore
and provides real-time notification of deviations from
the modeled behavior.
DrillScene uses WITS or WITSML formats for real-
time data feeds as the drilling data input with which to
provide feedback on the well behavior in real time.
The current functionality and drilling issue detection
capabilities of DrillScene are further described in SPE
papers 119435, 150422, and 150942.
Next steps for research
The next phase of R&D for the DrillTronics system by
the team at IRIS will focus on the real-time performance
within the Machine Control Logic Unit of the DCS
along with adaptation for wired pipe solutions. This
upgraded version will be implemented and demon-
strated in the virtual rig environment and the Ullrigg
test facilities at IRIS.
Automation is progressing within the oil and gas
drilling industry. The robust efforts of the SPE and
IADC specialist groups have ensured a common focus
of R&D and the regular exchange of ideas from both
inside and outside our industry.
Acknowledgement
Sekal was established in 2011 to commercialize the DrillScene
and DrillTronics systems as developed at IRIS in Norway.
DrillScene and DrillTronics are now commercially available
from Sekal and are being adopted by a number of global oil and
gas companies.
References available.
AUTOMATION
78-85 AUTO-sekaliris_78-85 AUTO-sekaliris 10/19/12 11:20 PM Page 85
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86
FLOW
ASSURANCE
L
ook up the definition of slug in the dictionary, and
you will find everything from the familiar garden gas-
tropod and bullets to a unit of mass. Everything, that is,
other than the two-phase flow hydrodynamic regime of
slug flow, which consists of alternating high-speed liquid
slugs and slower moving gas bubbles.
Slug flow is a common flow regime encountered in
the operation of oil and gas flowlines and generally
results from flowline sizing pressure and velocity con-
straints. The very nature of slug flow gives rise to time
variations in fluid density and velocity. The slug is
pushed along the flowline at high velocity by the gas
pressure behind it, and this can give rise to liquid
flow rates in the slug that are an order of magnitude
greater than the average. Slug impact loads can be
very high. There are also fatigue concerns, which
emanate from the density variation between the slug
body (liquid dominant with gas bubbles) and the
bubble region (gas dominant with a liquid film).
These can be a significant
issue due to the relatively
high frequency of slugging.
Designing for the effect
of slugging requires an
understanding of the inter-
action between the inter-
nal multiphase flows and
the containing conduit,
a subject which is in its
infancy relative to external
fluid structure interactions.
Recent advances in compu-
tational power, numerical
techniques, 3-D multiphase
flow simulation, and
detailed experimental
measurement techniques
have the potential to facili-
tate significant advances
in the safe design of
mechanical restraining
systems in terms of both the maximum allowable loads
and fatigue life.
Forces caused by density
and velocity variations
Forces due to multiphase flows in offshore risers began
to receive increased attention in the 1980s with the
advent of flexible risers. It was realized that the shape
of the riser could be affected by the fluid density varia-
tions and could lead to riser clashing and increased
static loads, particularly at the touch-down point and
the riser top.
In addition, slug flows can lead to high-frequency
oscillations that may excite structural vibrations at a
similar frequency to vortex-induced vibration and
generate high stresses due to the change in flow direc-
tion. The high frequency of slugging (one per minute
or less) can lead to fatigue concerns, even if the magni-
tude of the loads is not that large. Slugs can be so large
that the riser could be completely liquid and then gas-
filled. While unlikely in the case of normal hydrody-
namic slug flow, it could easily happen during transient
Are slugs too fast to handle?
Research into slug flow could facilitate significant advances in the safe design
of mechanical restraint systems.
Paul Fairhurst, Cranfield University
Shown here are the excursions of a wave catenary riser with a slugging velocity of 10 m/sec (33
ft/sec). (Images courtesy of Cranfield University)
86-91 FLOW-Cranfield_86-91 FLOW-Cranfield 10/19/12 11:20 PM Page 86
86-91 FLOW-Cranfield_86-91 FLOW-Cranfield 10/19/12 11:20 PM Page 87
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EPmag.com | November 2012
89
events and pigging operations. These effects lead to the need for coupling
between the modeling of the internal multiphase flows with the riser mechani-
cal design packages.
Another manifestation of the damaging effects of the density variations
caused by slug flow has been the so-called bouncing pipe that has been
observed at buckle initiator sites. Here, the production pipe is laid along
sleepers at various points to promote lateral buckling during initial startup.
This creates a hump in the pipeline, and its buoyancy changes during the
passage of the dense liquid slugs and the lighter gas bubbles. The result is a
pipeline that bounces and rocks with such a high frequency the fatigue life can
be shortened dramatically.
Momentum forces due to impacts and change of flow direction
Any fluid or moving object that is constrained to change direction requires a
force to be applied to make it change direction. If the fluid has a steady den-
sity and is moving at a steady velocity, the force required is constant and may
be evaluated from a force/momentum balance.
This is the case for stratified, bubbly, and annular multiphase flows. How-
ever, for the case of intermittent slug flow, the velocity and density of the flow
FLOW
ASSURANCE
Phase and pressure are distributed as the slug tail leaves the bend center.
86-91 FLOW-Cranfield_86-91 FLOW-Cranfield 10/19/12 11:20 PM Page 89
.I.
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Conventional
wisdom says
that multi
p
le-zone
frac systems
are onl
y
for
open holes.
At NSC-Tripoint,
we do things
a little
unconventional) .
.v:
FLOW
ASSURANCE
The University of Cambridge designed and built the test rig shown to measure slugging forces.
86-91 FLOW-Cranfield_Layout 1 10/22/12 12:41 PM Page 90
. I I I i
1 . I
D platform to support bend setup
S 3-component force sensor
-T
torque sensor
P preload set for force and torque sensors
Q aluminum brackets to fix bend on preload
J bellow 2
-K
pressure top 2
R bend support 2
L conductance probe 3
Air-liquid slug
flow developed
H bellow 1
G pressure top 1
0 bend support 1
C
F conductance probe 2
Out flow
In flow
in a 9-m (30-ft)
pipe
i
I
I
Flow discharged into a slug catcher
via a 2.57-m (8.43-ft ) pipe
I bend
J
NSC-Tripoint has taken mul t i p le-zone fracturing to another level ,
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-
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MMAN
"
Unconventional? Not for NSC-Tri point.
7-
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varies with time and can give rise to large variations in
the forces experienced as the flow is made to change
direction.
The important thing to note is that the force is pro-
portional to the velocity. The intermittent nature of the
flow means that the force is pushing the bend out as the
slug front hits the bend, which then snaps back as the
tail of the slug passes.
If it is a long slug, acceleration can occur, giving rise
to a higher slug tail velocity compared to the slug front,
meaning that the maximum load on the bend may be
due to the recoil, which is somewhat counter-intuitive.
There are many cases in industry of the destructive
forces of slug flow at bends causing them to move, ulti-
mately jumping off pipe supports or failing. Bends near
separator inlets can generate a twisting torque, leading
to cracks. Separator internals have been damaged.
Topside separators can experience large loads if a
long slug exits the riser due to the large accelerations
at the slug tail. This is caused by the reduced hydro-
static pressure required, which is then available to
accelerate the slug. However, the friction length is
reduced as the slug is consumed by the separator,
leading to a type of domino effect where the main
restraint on the maximum velocity is the backpressure
created in the separator.
Flowlines that operated satisfactorily early in their life
may start to experience movement as the field matures
and the water cut increases. This can increase the load-
ing due to the greater density of the liquid.
In terms of dynamic impact factor, its value is the sub-
ject of debate, but it is generally regarded as a maxi-
mum of 2, mainly from field experience. Whether it
is 1 or 2 can make quite a lot of difference, and this
debate has led to several experimental attempts to
measure the slug forces on pipe bends. This has been
quite difficult to do, with one of the most successful
attempts achieved at the University of Cambridge in
2002. The sophisticated testing rig used a three-axis
load cell to measure the forces due to slugging on a
70-mm (2.75-in.) pipe bend and generally corroborated
the use of a dynamic impact factor of two as a maxi-
mum design value.
These data were subsequently analyzed using a
1-D transient multiphase flow code linked to a 3-D
computational fluid dynamics (CFD) code; in this case
the STAR-OLGA coupling was used. In the coupling
model, the horizontally oriented 90 bend is modeled
using the 3-D CFD code STAR-CCM+, with the flowline
upstream of the bend modeled using the 1-D transient
multiphase flow code OLGA. The predictions were able
to provide reasonable estimates of the slug flow-induced
forces on the bend and were able to generate force dis-
tribution contour plots that illustrated the large forces
that act on a certain area of the bend wall, which is the
part most vulnerable to mechanical damage.
This type of simulation represents the current state
of the art in trying to get a handle on speedy slugs. In
the future, the industry needs to attempt experiments
at a more representative scale and with hydrocarbon
fluids or even consider making the slugs less damaging
in the first place.
FLOW
ASSURANCE
86-91 FLOW-Cranfield_86-91 FLOW-Cranfield 10/19/12 11:20 PM Page 91
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November 2012 | EPmag.com
92
FLOW
ASSURANCE
O
ne of the most commonly used terms in the oil and
gas industry today is flow assurance, and a reduction
in well intervention is one of the most accurate means
of determining flow assurances success. With rigs priced
at as much as US $1 million a day, the costs of shutting
down production for well intervention can quickly add
up, as can the risks. Subsea multiphase sampling can play
a role in preempting well intervention.
The growing role of subsea multiphase meters
With test lines for subsea well testing costing as much as
$60 million along with the accompanying logistical chal-
lenges, the last few years have seen subsea multiphase
meters become a valuable alternative to well testing.
Multiphase meters have ushered in a new era for opera-
tors with smaller platforms and the ability to upgrade facil-
ities to subsea tiebacks.
Commingled pipelines and test separator measure-
ments are a poor indicator of individual well production;
multiphase meters are providing operators with much
clearer data on their operations. Multiphase meters, how-
ever, can only operate to their full potential if precisely
calibrated and sensitively aligned with the changing
conditions of the reservoir and fluctuating flow rates.
With the cost of purchasing and integrating just one
multiphase or wet gas meter being approximately
$400,000, subsea multiphase sampling can have a
significant impact on the economics of the field.
Effective subsea sampling delivers true volumetric sam-
pling on oil, gas, and water in the well without interrupt-
ing production. Through subsea sampling, the operator
can accurately capture fluid properties, calibrate multi-
phase and wet gas meters, and ensure that the wells are
performing at the peak of their production limits. An
important source for evaluating fluid properties and pre-
dicting reservoir performance today is pressure-volume-
temperature (PVT) data.
Importance of accurate PVT
By tracking composition changes, PVT data can play a key
role in supporting production and fiscal allocation and
providing input to EOR programs.
These fractional data on oil, gas, water, salinity, and PVT
are crucial for calibrating multiphase meters. All multi-
phase meters using a gamma source must be configured
with the fluid properties of oil, water, and gas and must
reflect the changing PVT data over time.
Conventional test separators have determined the
changes in volumetric behavior of the reservoir fluid as
it passes through the separator with samples and then is
reconstituted to produce a representative live sample by
recombining the fluids with separator gas to match the
wellhead gas-oil ratio (GOR).
This process can lead to potential inaccuracies, particu-
larly when using a separator on longer pipelines and
where lower pressures decrease PVT accuracy. Using
a test separator to run well tests one at a time can have a
negative impact on field economics with production shut-
down sometimes inevitable.
The economics of subsea sampling
in offshore production
A new subsea multiphase sampling system ensures the collection of accurate PVT data.
Eivind Gransaether, Mirmorax
The SMSS collects
samples under
isobaric conditions
via an ROV.
(Images courtesy of
Mirmorax)
92-95 FLOW-Mirmorax_92-95 FLOW-Mirmorax 10/19/12 11:20 PM Page 92
92-95 FLOW-Mirmorax_92-95 FLOW-Mirmorax 10/19/12 11:20 PM Page 93
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The dangers of inaccurate
PVT analysis were high-
lighted as far back as 1997
in an SPE paper by Adel M.
Elsharkawy of Kuwait Uni-
versity. In this study, inaccu-
rate PVT analysis resulted in
a significant underestima-
tion of the solution GOR
and oil formation volume
factor and an overestima-
tion of crude oil viscosity.
The result was an underestimation of
the ultimate oil recovery from the field in
question by as much as 40%. Better representation of
PVT data ensures better prediction of reservoir behavior
and production optimization. This can only be achieved
through true volumetric sampling.
Subsea multiphase sampling
Recent technology developments in subsea multiphase
sampling systems are generating accurate samples through
the meeting of a number of criteria.
First, the sample needs to be maintained at its original
pressure conditon through extraction, delivery to the sur-
face, and transportation to the laboratory facility. Maintain-
ing this pressure condition and the true representation of
the process is crucial in providing accurate PVT analyses
and accurate samples.
This is opposed to traditional subsea sampling, which
normally takes place topside with samples taken randomly
without attention to the flow dynamics of the fluids being
sampled and the original field pressure conditions. The
result is an incomplete sample and a lack of accurate PVT
data. There also is the danger of fluid contamination
where samples are sometimes exposed to oil-based
drillling or other reservoir production fluids.
Second, sampling needs to take place regularly, with
sampling repeated multiple times on the same well to
secure a number of samples over a certain time period.
This is compared to traditional sampling, which is often
based on a limited number of ad hoc samples retrieved
either through wireline sampling or flow tests.
In addition, water conductivity may change significantly
during the time between the sample being taken and
results received by the laboratory, jeopardizing the validity
of the test and having a major potential impact on well
stimulation operations.
Subsea sampling needs to take place as close to the well-
head as possible. In the case of multiphase meters, it is
only through sampling at
or near the wellhead that
representative samples of
the fluid flowing through the
meter can be generated, yielding more
accurate fluid properties and more accurate
multiphase measurements.
Mirmoraxs subsea multiphase sampling system (SMSS)
has been developed based on the above criteria and is
already having an impact on a number of North Sea fields
in supporting multiphase meters. The SMSS collects the
sample under isobaric conditions for transport back to the
surface via an ROV.
Reservoir management economics
Subsea multiphase sampling today is having a positive
effect on the economics of the field in a number of areas.
While it is difficult to cite specific numbers, it is clear
that the costs of well test lines can have a highly negative
effect on the economics of a reservoir. Subsea well inter-
vention can be labor-intensive and costly, in addition to
the lost production as a result of the shutdown and the
testing and reconnection of the well. A typical well test,
for example, can lead to lost production for 12 hours.
If a well is producing 15,000 b/d and the crude can be
sold for around $95/bbl, losses can amount to more than
$700,000. With the costs involved, the need to calibrate
multiphase and wet gas for maximum effectiveness is vital.
Based on the functionalities of an inline multiphase
sampling system, the operator can read the oil, gas, and
water fractions directly from the sampling bottles taken at
a specific time window. This provides a phase fractional set
of data that can be compared to the metering data for the
same time period.
By calibrating this fixed point at given pressure, temper-
ature, and volumetric fractions, the operator can provide
the multiphase meter with a fixed point, increasing the
meters accuracy significantly in relation to the pressure
and temperature collection conditions of the sample.
The use of fixed datapoints for later reservoir simulation
and effective subsea multiphase sampling is likely to have a
substantial impact in cost savings and flow assurance.
November 2012 | EPmag.com
94
FLOW
ASSURANCE
In this 3-D plot, the correlation curve
between two core data inputs and
the output value is shown. The red
point places the 3-D plot of the
meter in reference at a fixed
point, with PVT data needed to
ensure that all values correlate.
92-95 FLOW-Mirmorax_92-95 FLOW-Mirmorax 10/19/12 11:20 PM Page 94
92-95 FLOW-Mirmorax_92-95 FLOW-Mirmorax 10/19/12 11:20 PM Page 95
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96
UNCONVENTIONAL:
MARCELLUS
Capital efficiency, optimization
keep Marcellus shale active
The proximity to the Northeast markets provides incentive for companies to continue activities
in the Marcellus shale even though natural gas prices remain in the doldrums.
T
he number of drilling rigs in Pennsylvania reached a
three-year low at the end of September. However,
production continued to climb during the first half of
2012, according to data from the Pennsylvania Depart-
ment of Environmental Protection (DEP).
The culprits were low natural gas prices for the
former and new gathering system infrastructure
coming onstream for the latter. Production is expected
to increase even more since so many wells are waiting
to be connected to the delivery pipelines, according
to an article in the Philadelphia Inquirer Oct. 3, 2012.
About one-third of the completed wells in the state are
still waiting for a hookup.
The rig count in Pennsylvania was at 63 rigs by late
September 2012, down from 109 rigs a year earlier.
Some rigs have been moved out of the state as compa-
nies pare down drilling. The number of rigs in Ohio,
mostly in the Utica play, rose to 19, an increase of six
rigs since last year. West Virginia had 27 rigs running
both this year and last year.
The US Energy Information Administration (EIA) said
in May, With the shift to and increase in horizontal wells,
Pennsylvanias natural gas production more than quadru-
pled since 2009, averaging nearly 3.5 Bcf/d in 2011.
Drilling programs in Pennsylvanias shale formations,
like those in other, more established plays such as the
Barnett and Eagle Ford in Texas, are migrating to more
liquids-rich areas due to the price premium of crude oil
and natural gas liquids.
The effect of low natural gas prices is apparent in
Pennsylvanias 2012 well count for the first third of the
year. From January through April, drilling began on 618
new natural gas wells; over 700 new natural gas wells
were started over the same period in 2011. In contrast,
263 new oil and combination (oil and natural gas)
wells were started in Pennsylvania from January through
April 2012, well above the 164 new wells that began
drilling during the corresponding period in 2011,
according to EIA.
Focus on drilling, production efficiency
Even though the number of drilling rigs in the Marcel-
lus has fallen, companies continue to develop the avail-
able resources through more efficient drilling and
production technology.
Consol Energy, for example, said in its operations
update in July that it achieved a peak 24-hour produc-
tion rate of 17.9 MMcf in a well in Westmoreland
County, the highest of any well in company history.
During 2Q 2012, the company drilled 17 Marcellus
shale wells and placed another 18 wells online. Noble
Energy, operator of a joint venture with Consol, drilled
six Marcellus wells in the liquids-rich area of the play.
Noble has one rig drilling in the area, and two addi-
tional rigs are expected to arrive in 3Q 2012. Noble
Energy now expects to drill 31 wells in 2012 on its
operated acreage, down from earlier expectations
of 39 wells, according to the company.
Scott Weeden, Senior Editor
Consol Energy completes a
hydraulic fracturing job in the
Marcellus. (Photo courtesy of
Consol Energy Inc.)
96-107 UNCON-Marcellus_Layout 1 10/22/12 2:00 PM Page 96
96-107 UNCON-Marcellus_96-107 UNCON-Marcellus 10/19/12 11:20 PM Page 97
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November 2012 | EPmag.com
98
Consol has reduced the cost of completing its wells.
The company pointed out that its costs per frac stage in
2011 was US $205,000 per stage. In 2012 to date, frac
costs have declined to $181,000 per stage.
The company has found other ways to improve pro-
duction efficiency and lower costs. The Gas Division
extended its laterals to an average of 1,242 m (4,100 ft)
in the first half of 2012. In 2011, the average was 1,000
m (3,300 ft). Longer laterals, when combined with
other efficiencies such as pad drilling, help to make
Consols Marcellus shale program economic at current
projected NYMEX prices, said the companys update
report in July.
The division also used water from coal mines for
UNCONVENTIONAL:
MARCELLUS
Pennsylvania boosts environmental stewardship in Marcellus play
The regulatory climate in Pennsylvania has been a big factor in opening up the E&P, petrochemical, and manu-
facturing industries in the state. The Marcellus play provides the resources for the transformation of those industries.
T
he success of oil and gas production in the Marcel-
lus shale is not just an energy revolution. It is also a
petrochemical revolution and an industrial rebirth,
Michael Krancer, secretary, Pennsylvania Department of
Environmental Protection (DEP), told E&P.
He pointed to three refineries in the state that were on
the brink of death. What saved them was a gutsy airline
that bought one and a gutsy investor Carlyle Group
that formed a joint venture with Sunoco for another one.
The regulatory climate in Pennsylvania was a big
factor, he said. We are certainly open for business in
Pennsylvania. We are looking for creative solutions.
As an example, he described a study that was done
for the Marcus Hook refinery in Delaware County. The
study came up with seven potential uses for the refin-
ery, and six of those were related to the Marcellus. If
that study had been done in 2007, there would have
been one use. The study would have taken eight hours
instead of eight weeks.
Krancer noted that the DEP provides regulatory serv-
ices across all industries in the state from farming to
X-rays to natural gas to oil refineries. Government has
two major roles, he said. The primary role is to pro-
mote public safety. The second is to put our economic
house in order. The DEP is in position to protect public
safety.
However, the DEP is not just involved in public safety.
We certainly have a role in education, and not just oil
and gas, he said. We need to increase the energy IQ
of the average Joe Q. and Jane Citizen.
There are a lot of positive stories to tell. Recently, on a
three-well pad in southwest Pennsylvania, Consol
Energy used a 10% blend of mine-sourced water for
fracing.
In Pennsylvania, we have an abandoned-mine
drainage problem. I met people in the western part of
the state who didnt know that streams were not sup-
posed to be orange, he said. One recommendation
from the Marcellus Shale Advisory Commission was to
try to use mine drainage. Now we have a white paper to
try to put legs on this. There is a bill pending in the state
senate to put legs on this as well. This is one of a genre
of efforts with technology in the industry.
He pointed to other fracing technologies, including
GasFracs propane fracing and efforts by Air Products to
use nitrogen for fracing. All kinds of technology are
coming to the fore, he said. There is a lot of capital
investment aimed at using less water.
There are challenges facing the oil and gas industry
that are similar to what faces other industries. Protecting
the water is one of those, he said.
This is a world-class play with world-class operators
and world-class expectations, Krancer continued.
Companies are not welcome in Pennsylvania unless
they are committed to environmental stewardship. An
economic case for being environmental stewards could
be made. Companies that do not have an environmen-
tal ethos will not be tolerated. n
Hydraulic fracturing continues to pose environmental challenges
in Pennsylvania. A Weatherford crew works on a well in the Mar-
cellus shale. (Photo courtesy of Weatherford International)
96-107 UNCON-Marcellus_96-107 UNCON-Marcellus 10/19/12 11:20 PM Page 98
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hydraulic fracturing for the first time. The three-well
Morris 14 pad in southwest Pennsylvania was fraced with a
10% blend of mine-sourced water. The pad came online
in early July and was producing at an initial rate of 18
MMcf per day, according to the report.
Anadarko Petroleum ended its 2Q 2012 producing
about 1.2 Bcf/d gross from about 340 wells. The com-
pany spudded 17 wells during the quarter using four
operated rigs. Another 39 wells were spudded with 11
non-operated rigs.
The companys focus on capital efficiency and opti-
mization has resulted in a 16% reduction in drilling
costs since 1Q 2012, while drilling cycle times have been
safely reduced to an average of 20 days per well from
22.5 days during 1Q 2012, according a 2Q 2012 report
from Anadarko. The company also reduced its average
completion cost to approximately $3.7 million per well
compared to $4.5 million per well at year-end 2011.
Anadarko also began testing another formation in the
play. Its first Geneseo well was completed with encourag-
ing early results. The formation is about 303 m (1,000
ft) shallower than the Marcellus shale. The company
expects to begin production from a second Geneseo
well soon.
Cabot Oil & Gas Corp. maintains its enthusiasm for
the play. Marcellus production averaged more than 700
MMcf/d for the last two weeks in August, hitting a
record 752 MMcf during one 24-hour period.
This production increase was driven by a coordinated
effort to manage field line pressures rather than new well
connections, said Dan O. Dinges, chairman, president,
and CEO in a press release. Our infrastructure provider,
Williams Partners LP, recently completed a series of proj-
ects and upgrades that improved the pipeline system
operating efficiency, allowing increased production.
Recently released data from the state of Pennsylvania
showed that the company had 14 of the top 20 produc-
ing wells in the first half of 2012. Since the start of our
efforts in Pennsylvania, our cumulative production has
reached 354 Bcf, with only 145 producing horizontal
wells, said Dinges.
The DEP noted that the top five gas producers
Chesapeake Energy Corp., Cabot Oil & Gas, Talisman
Energy USA Inc., Range Resources Corp., and
Anadarko produced 61% of the states total. The
four most productive counties, representing 68% of
production, are Bradford, Susquehanna, Lycoming,
and Tioga.
November 2012 | EPmag.com
100
UNCONVENTIONAL:
MARCELLUS
Several companies maintain steady drilling
operations in the Marcellus play. (Photo
courtesy of Consol Energy Inc.)
96-107 UNCON-Marcellus_96-107 UNCON-Marcellus 10/19/12 11:21 PM Page 100
96-107 UNCON-Marcellus_96-107 UNCON-Marcellus 10/19/12 11:21 PM Page 101
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In West Virginia, one company that is planning on
increasing its operations in the Marcellus is Antero
Resources. The company is operating 10 drilling rigs
in the play in northern West Virginia. An 11th rig was
being added in August and a 12th rig in October.
Antero has 315 MMcf/d of gross operated production
in the play, of which 98% is coming from 88 horizontal
Marcellus wells. Nineteen horizontal wells are either
being completed or waiting on completion.
The company also has two fully dedicated frac crews
currently working along with spot crews as needed. A
third Antero-dedicated frac crew is scheduled to begin
work in 4Q 2012. In 2Q 2012, Antero completed 13 hori-
zontal Marcellus wells with an average 24-hour peak rate
of 14 MMcf/d and an average lateral length of approxi-
mately 2,182 m (7,200 ft).
Antero has 258,000 net acres in the Marcellus shale
play. Only 16% of that acreage was associated with
proved reserves at mid-year 2012.
Citrus Energy now ranks as the No. 10 producer in
Pennsylvania with 14 wells, all in Wyoming County. The
company has the two top wells in the state with only
26,500 leased acres.
Long-term service life
The service companies still see the Marcellus as an area
for continued drilling and development. Many of the
operators are migrating toward the liquid producing
areas and are looking for reliable and efficient solutions
to solve their develop-
ment challenges, said
Thomas Distephano,
northeastern general
area manager, Weath-
erford International.
Weatherford has
operations in Indi-
ana, Illinois, Ken-
tucky, West Virginia,
Pennsylvania, and
Ohio to service
clients in the Marcel-
lus and Utica shale
plays. We are cur-
rently moving more
resources to client job
sites in the area, and
in most cases the
additional bodies are
related to an intro-
duction of a new
product or service. Additionally, we are building new
locations so we are better equipped to supply resources
when needed, and the goal is to hire and train locally
when possible, he told E&P.
The Marcellus has proven its economic value but is
still in its infancy in terms of lifecycle, so we anticipate
continued activity for the coming decade. We believe
the Marcellus operators will turn to technology to
increase efficiency and maximize their rate of return.
These technological improvements will materialize in
both the drilling and completions phase of the well,
he said.
Other companies pull back
According to EOGs 2Q 2012 report, the company
planned to further decrease its drilling activity on its
dry gas reserves during the second half of 2012 due to
the ongoing weakness in natural gas pricing.
Through active drilling programs in prior years and
2012 to date, EOG has captured strategic natural gas
acreage in the Uinta, Horn River, Barnett, Haynesville,
and Marcellus plays. When natural gas prices rebound,
EOG will hold an attractive portfolio of natural gas
resources for future development, according to its
report.
Refining impacts, new technology
One unexpected impact from the Marcellus boom
has been the turnaround of three refineries in Pennsyl-
November 2012 | EPmag.com
102
UNCONVENTIONAL:
MARCELLUS
Weatherford conducts a flow test for an operator in the Marcellus
shale. (Photo courtesy of Weatherford International)
96-107 UNCON-Marcellus_96-107 UNCON-Marcellus 10/19/12 11:21 PM Page 102
96-107 UNCON-Marcellus_96-107 UNCON-Marcellus 10/19/12 11:21 PM Page 103
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November 2012 | EPmag.com
104
vania. The Mar cus Hook crude oil refin ery shut down
in Decem ber 2011 due to high crude oil prices over-
seas. In July, Delaware County offi cials released an IHS
report that rec om mended renovating the plant to
use Marcellus gas.
Two other refineries have seen changes in ownership
that want to take advantage of the nearby surplus of
gas and liquids. Sunocos Philadel phia refin ery was
pur chased by the Car lyle Group and is now Philadel-
phia Energy Solu tions. Delta Air lines bought the idled
Cono coPhillips refin ery in Trainer to refine jet fuel for
the airline.
On the technology side, EQT Corp. has launched
several different projects that impact the bottom line.
The company began a program to convert the power
generation on drilling rigs to use LNG, displacing the
diesel at the well site. This program marks the first
LNG rig conversion in the Marcellus shale and will
provide a cleaner burning alternative fuel for the
regions drilling operations.
We continually look for opportunities to improve
our operations, and displacing diesel, by introducing
the use of alternatives such as LNG and field gas, is one
way of doing so, stated Steve Schlotterbeck, president,
E&P for EQT, in a press release. LNG is about 40% less
expensive than diesel. The LNG being used for EQTs
pilot program is produced locally from Marcellus natu-
ral gas reserves. EQTs initial rig conversion is now
operating in northern West Virginia. A second rig
also has been converted and is now in operation.
EQT also introduced its new fracing design. Its origi-
nal design called for 91-m (300-ft) stages consisting of
five clusters on 18.2-m (60-ft) spacing. The new design
calls for 45.5-m (150-ft) stages that consist of five clus-
ters on 9.1-m (30-ft) spacing.
The wells using this design have a 40% higher IP and
20% to 25% greater estimated ultimate recovery. The
incremental cost per well is about $1.2 million. The
return on the incremental investment is higher than
100% at a NYMEX gas price of $4 per MMBtu.
UNCONVENTIONAL:
MARCELLUS
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SPECIALIZING IN THE UTICA AND MARCELLUS SHALE FORMATIONS
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Ohio, Pennsylvania, and West Virginia. Surfside can provide this information for
a price far less than the initial cost of putting a crew in the field and in most
cases, can deliver the information in less than a day.
96-107 UNCON-Marcellus_Layout 1 10/22/12 9:27 AM Page 104
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C O N F E R E N C E
COVERING THE
BAKKEN & NIOBRARA
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Fresh Perspectives orr North American I u
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As horizontal drilling and multi-stage fracturing technology is applied to Rockies basins, producers are bringing
tremendous new amounts of hydrocarbons to market . From new Bakken oil destined for the U.S. Gulf Coast to new
NGLs from the wet - gas-filled horizontal Niobrara play, the industry is hurrying to get these supplies to end users
across the Lower 48. At the Rockies Midstream conference , producers , shippers and end-users will discover how
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industry leaders share actionable intelli gence on what lies ahead for infrastructure build-out .
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Pn'sent ecr by :
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96-107 UNCON-Marcellus_96-107 UNCON-Marcellus 10/19/12 11:21 PM Page 107
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DECEMBER 6
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COLORADO CONVENTION CENTER
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DECEMBER 6, 2012 - PRELIMINARY CONFERENCE AGENDA
7:00 am Registration Opens - Breakfast on Exhibit Floor
8:30 am Opening and Welcome Remarks
John Harpole, Founder and President ,
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8:40 am Producer
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g
ht on
Crude in the Bakken
Jim Volker , Chairman and CEO,
Whiting Petroleum Corp
9:10 am Panel: Crude Oil Transport - Getting to Markets
Tad True, Vi ce President , Bridger Pipeline LLC
10:00 am Networking Break
10:30 am The Rocki es Producer
'
s Perspective:
A Spotlight on NGLs
James J. Kleckner , Vice President - O perations ,
Anadarko Petroleum Corp.
11:15 am Panel: Natural Gas in the Rockies
Moderator: Stuart Nance, Vice President , Market-
ing, Bill Barret Corp.
Becca Followill , Managing Director ,
U.S. Capital Advisors
Bryan Hassler , Managing Director ,
Freepoint Commodities.
12:00 pm Luncheon and Keynote Speaker
Steve Moore, Economist , Editorial Board
Member
,
Wall Street Journal
1:30 pm The Rockies Producer
'
s Perspective:
A Spotlight on Natural Gas
Moderator: Paul Hart , Editor ,
Midstream Business , Hart Energy
2:00 pm Roundtable: The Growth of Rocki es-Sourced NGLs
Moderator: Kristen Holmquist , Midstream Analyst ,
Ponderosa Advisors
Don Baldridge, Senior Vice President , NGL
Marketing and Logistics , DCP Midstream Partners
Bob Clark, Chairman and CEO, Bear Tracker Energy
2:45 pm Networking Break
3:15 pm Panel: Back to the Future - Marketing Gas in the Rockies
Moderator : John Harpole, Founder and President ,
Mercator Energy LLC
Tim Carter , Director , Gas Supply, Xcel Energy
Bill Barnett , Vi ce President , Nitrogen Projects ,
Dyno Nobel
4:15 pm Closing Keynote: Porter Bennett '
s Vi ew of the
Future of Rockies Midstream
Porter Bennett , President and CEO ,
Ponderosa Advisors
5:00 pm Networking Reception
Agenda content and timeline subject to change
108
OFFSHORE
WELL INTERVENTION
A
round the world, operators are bolstering their
offshore E&P efforts to meet growing oil and gas
demand, which requires a substantial investment in
infrastructure. Whether the equipment resides above
the water on a platform, on the seafloor, or beneath the
mud line, it will eventually reach the end of its pro-
ductive life cycle.
Dismantling a subsea well and its supporting
infrastructure must be carefully executed to ensure
that no threats to personnel safety or the environ-
ment are encountered and that usable components
are salvaged.
Plug and abandonment operations are viewed as
a necessary part of doing business, even though
they offer no return on investment. Weatherford
has developed a technology designed to lower the
cost and risk of subsea well abandonment and sus-
pension. The external-latch, Mechanical Outside
Single Trip (MOST) system is designed to cut and
retrieve subsea wellheads or associated downhole
tubulars and equipment in one trip without the use
of mobile drilling units or explosive severance
devices.
The technology is suitable for single-trip cutting
and retrieval of a variety of subsea wellheads with
18
3
4-in. high-pressure housings and for cutting and
retrieving multiple cemented or uncemented
strings of various sizes from 13
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8 in. through 36 in.
The system has a maximum 400,000 lb pull capacity
and a lift capacity of 200,000 lb and, depending
on the type of wellhead to be retrieved, is operable
in one of three cutting modes: compression cut
with marine swivel (or top-drive rotary), compres-
sion cut with mud motor, and tension cut with
mud motor.
Greater stability
By latching on to the external profile of the wellhead
high-pressured housing, the system prevents wellhead
turning and listing for greater stability. And unlike an
internal latch mechanism, which risks damaging the
internal sealing areas of the high-pressure housing and
thus making the wellhead unusable, the technologys
grapple arms never contact the internal seals.
Retrieving subsea wells in one trip
Whether they reach their economic limit or suffer irreparable damage, all offshore wells inevitably
shift from asset to liability, with subsea well abandonment and suspension the next step.
Richard Segura and Delaney Olstad, Weatherford
BHA schematics for the three MOST tool configurations: These
include compression cutting with marine swivel (left), com-
pression cutting with mud motor (center), and tension cutting
with mud motor (right). (Images courtesy of Weatherford)
November 2012 | EPmag.com
108-113 OFFWELL-Weatherford_Layout 1 10/22/12 12:06 PM Page 108
108-113 OFFWELL-Weatherford_Layout 1 10/22/12 10:26 AM Page 109
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This design also provides greater clearance to allow
the cuttings to flow out of the ports and away from the
working mechanism, preventing a swarf
buildup. The external latch provides
support to the wellhead assembly to
eliminate any lateral whipping that
might impede cutting and helps
increase the likelihood that the
retrieved wellheads can be reused
with minimal damage.
Unlike abrasive cutting tools, the
MOST system works reliably at any well-
bore depth. In addition, it eliminates
the need for explosives or chemical
agents. By avoiding the preblast proto-
col that must be followed when using
explosives, the system also can improve
wellsite safety and efficiency.
In addition, shape charges may not
completely sever the pipe on the first
explosion, necessitating a second blast
and raising further safety and environ-
mental risks. By contrast, once the cut
is made with the MOST system, positive
affirmation on complete separation is achieved by sim-
ply pulling up on the tool.
Operational principles
The system was specifically designed for deployment
from a semisubmersible rig or monohull vessel. The
technology is easy to apply and set, by lowering it into
position as part of a bottomhole assembly (BHA). The
grapple arms are activated by moving the mandrel body
upwards. The grapple arms then close and engage the
external profile on the subsea wellhead.
The latch and unlatch can be visually confirmed using
an ROV at the seafloor. The mandrel is rotated into the
locked position inside the grapple housing, which is also
visually confirmed via the ROV.
When the cut is made in tension, the grapple arms are
already engaged and latched onto the high-pressure well-
head housing with an overpull of 20,000 lb to 30,000 lb.
Once the cut has been completed, the entire assembly is
pulled out of the hole and landed in the rigs moonpool.
Field-proven system
This system has been deployed in more than 1,500 wells
globally, including in the US Gulf of Mexico (GoM),
Australia, North Sea, Norway, and West Africa.
In the worlds first rigless subsea abandonment, the
system was deployed from a monohull vessel to decom-
mission five subsea wells in the North Sea region. The
November 2012 | EPmag.com
110
OFFSHORE
WELL INTERVENTION
The unlatched (left) and latched (right) views of the MOST tool
are shown against the external view of the high-pressure well-
head housing.
The MOST tool (pictured) allowed the wellhead to be recovered with the high-pressure
and low-pressure housings intact and no damage to the internal profiles.
108-113 OFFWELL-Weatherford_Layout 1 10/22/12 11:45 AM Page 110
108-113 OFFWELL-Weatherford_Layout 1 10/22/12 2:29 PM Page 111
Anal si
i it at D E t- B th 51
www.exprogroup.com WELL FLOW
MANAGEMENTT
Downhole Vide
kage of specialised services and products to assist ou
customers achieve their goals across the lifecycle of a well.
Our people are committed to delivering operational excellence t
()
FmXPRO
Expro
Delivers well flow management
-?
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ubsea Safety Systems
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November 2012 | EPmag.com
112
OFFSHORE
WELL INTERVENTION
operation marked the worlds first drillpipe-deployed surface recovery and
storage of oil-based drilling fluids.
Crews recovered the 18
3
4-in. subsea wellheads, 30-in. conductor casing,
20-in. casing, and the retrievable guidebase from the seabed in a single
trip. This project was completed in 40 days with no accidents, environmen-
tal incidents, or nonproductive time.
The tool also was used to recover an exploratory subsea wellhead off the
coast of western Australia in approximately 1,186 m (3,914 ft) water depth.
After cutting and pulling a 9
5
8-in., 53.50-lb/ft production casing string using
a BHA consisting of a cut and pull spear and the M-23 cutter, a second BHA,
including the MOST system, was run to cut and pull 20-in. by 36-in. conduc-
tor casing strings and recover the subsea wellhead.
The second BHA, consisting of a 12-in. outer diameter M-24 casing cut-
ter, non-rotating 17
1
4-in. stabilizer, and the MOST tool, was lowered in the
hole and stabbed into the wellhead at 1,186 m (3,891 ft) with an ROV. The
tool latched on to the high-pressure wellhead housing and locked with
30,000 lb overpull. The conductor casing was cut at 1,191 m (3,907 ft)
using sea water and a flow rate of 900 gal/min with 1,600 to 1,840 psi
pump pressure. The cut was completed in four hours, and the wellhead
was released and pulled to the rig floor and laid out.
GoM subsea abandonment
An operator in the GoM used the system to help permanently abandon a
4,267-m (14,000-ft) subsea well in 95 m (313 ft) of water, fulfilling regula-
tory requirements for protection of the environment and clearing the
subsea floor. Two separate BHAs were run to cut and retrieve 9
5
8-in. and
then 13
3
8 -in. casing strings. After the proper plugs were set, the riser and
BOPs were pulled.
The compression-cut MOST tool with the M-24 cutter dressed to cut 20-
in. by 30-in. conductor was deployed. An ROV was used to guide the assem-
bly into the wellhead, and the MOST tool engaged the wellhead externally
with its grapple arms locked onto the outer profile. An overpull of 40,000
lb was applied to ensure engagement, and once confirmed, a 10,000-lb
down weight was set on clamps prior to cutting.
Cutting parameters of 900 gal/min at 2,758 psi were established, and the
cut was made 6 m (20 ft) below the mud line. Maximum pump pressure of
3,800 psi was recorded. Mud coming out from around the outside of the
30-in. casing, lateral movement on the wellhead, and a drop in pressure (to
2,850 psi) all gave positive indication that the cut was completed. With an
overpull of 55,000 lb, the wellhead and conductor started to come out of
the seabed. The wellhead and the guide base were successfully recovered
without any damage to the wellhead, allowing it to be reused. The cutting
operation was completed in just over three hours.
These jobs highlight the various options and flexibility that the technol-
ogy is capable of handling. The shallow-water GoM job was performed with
a smaller, inexpensive semisubmersible rig, and the production string cuts
were done using mud motors as the rig had limited top-drive capabilities.
The deepwater Australian job used a larger semisub with a top drive system
of greater capability. Both these jobs were completed without any safety or
environmental incidents accidents, allowing the wellheads to be efficiently
recovered for reuse.
108-113 OFFWELL-Weatherford_Layout 1 10/22/12 11:54 AM Page 112
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November 2012 | EPmag.com
114
OFFSHORE
WELL INTERVENTION
T
he best way of defining the well intervention market,
specifically the light well intervention (LWI) market,
is when well operations and maintenance (except
drilling) are carried out on a live well without a riser.
Well intervention is used to increase the productivity
and lifespan of wells and has been proven to add years to
a wells productive life. Typically, these types of operations
have been performed from a drilling rig, but in an effort
to reduce costs, LWI methods using a monohull vessel
have been in development for some time. The benefits of
this method include being able to move quickly from one
well to another, which reduces production downtime, and
also the lower dayrate costs of a monohull vessel com-
pared to a drilling rig (especially for deep water).
New technology developers nearly always expect the
market to rave over their new products, but oil compa-
nies have been apparently reluctant to back unproven
technologies, which has led to several companies bank-
rupting themselves in the process.
AX-S
The most recent casualty has been UK-based Expro AX-S,
which recently entered administration after spending the
past two years and an estimated US $200 million trying to
fine-tune its AX-S system, which it had fitted to the subsea
vessel Havila Phoenix. Expro had recently secured its first
major contract in the LWI market, but it was too little too
late. BG Group had awarded the company a rolling con-
tract with the potential for an extended intervention
campaign, which was due to start in October this year.
This was not soon enough for the Aberdeen-based com-
pany, which had been paying approximately $90,000 to
$100,000 per day for the vessel and other extras such as
ROVs, with roughly half just being for the base vessel.
The vessel has now been returned to Fugro-TSM, which
is chartering the vessel from Havila Shipping but has yet
to decide upon its future.
The administrators KPMG are seeking buyers for
Expro AX-S (the Expro Group is unaffected), and there
are several companies out there who might be interested
in taking on the system, which has the selling point of
being able to work in deeper water than most other LWI
systems. One such company is Cameron, which has been
trying to enter the market but has until now found it too
capital-intensive. It may now find this opportunity more
favorable as the AX-S system is a fair way along its testing
phase and apparently nearing operational readiness
with its BG contract award.
Other potential buyers include rivals such as FMC
Technologies, Helix Well Ops, Baker Hughes, and
Schlumberger, all of which already have their own sys-
tems. There also are plenty of other subsea engineering
companies out there who have an interest in the inter-
vention market.
Recent market developments indicate that this casu-
alty will not have a major impact on the competition as
they already have begun their expansion programs in
recent months, mostly on the back of contracts with
major oil companies.
New contracts
Statoil has contracted Aker Solutions and Eide Marine
Services for newbuild semisubmersible intervention ves-
sels, which will work with the Norwegian operator for
A question of intervention
The market for light well intervention vessels has both opportunities and pitfalls
for new players in equal measure.
Daniel Quarm, Derrick Offshore
Helix, currently building a new version of its Q4000 semisub unit
for deepwater well intervention work at a cost of $385 million,
also has leased the Skandi Constructor for three years for the
well intervention market. (Photo courtesy of Helix)
114-117 OFFWELL-derrick_114-117 OFFWELL-derrick 10/19/12 11:21 PM Page 114
114-117 OFFWELL-derrick_114-117 OFFWELL-derrick 10/19/12 11:21 PM Page 115
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eight years after delivery plus six years of options. The
state-owned oil company also has extended its contract
with Island Offshore for the Island Frontier (which uses an
FMC Technologies intervention system) for a further five
years in direct continuation of its current contract.
Helix, through its Well Ops subsidiary, has contracted
Sembcorp to build a new version of its current semisub-
mersible unit Q4000 at a cost of $385.5 million, due to
enter the market in 2015. Helix also has purchased a drill-
ship, Discoverer 534, from Transocean, which it will con-
vert for well intervention duties at a cost of $180 million,
including the vessel cost, intervention tower, and conver-
sion. Those vessels will be focused on the market in the
GoM, while for Helixs European and West Africa division
it has added the Skandi Constructor to its fleet for three
years starting from 1Q 2013, giving it time to build and
test an intervention tower for the vessel.
Aker Solutions, apart from its newbuild semisub-
mersible vessel for Statoil, is looking to consolidate its
position in the LWI market after it recently secured a
contract with Total E&P Angola to provide intervention
services for two years using the vessel Skandi Aker, which
had been seeking a long-term contract for some time.
Another of Akers vessels, Skandi Santos, has been work-
ing for Petrobras installing subsea trees and will continue
with the Brazilian major for a few more years. Its other
vessel, the Aker Wayfarer (a sister ship to the Skandi Aker),
has not had an intervention tower installed yet, although
Aker maintains that this is the plan for the vessel.
Aker has been working on the construction vessel spot
market mostly and has managed a fairly consistent utiliza-
tion level, although its current work scope is coming to
an end with no future commitments. It may be more will-
ing to move the vessel into the intervention market now
that Aker has secured the $250 million contract from
Total E&P Angola.
Barriers to entry
Any newcomers into the LWI market will have to compete
with these three players who all have long-term contracts
in place, as well as Eide Marine Services. The latter has
managed to break into the market with its own eight-year
contract to supply a hybrid design Category A LWI vessel
for Statoil, although whether the company has the ability
to maintain its market position remains to be seen.
There are many companies out there that may have the
technology to enter the LWI vessel market. The question
is whether they have the capital and cash flow to prove
their technology before they are awarded a long-term con-
tract by a major company or if they can convince smaller
oil companies to take the risk of backing them.
November 2012 | EPmag.com
116
OFFSHORE
WELL INTERVENTION
LEFT: Statoil earlier this year opted for Eide Marine Serv-
ices innovative hybrid Category A semisubmersible
vessel for an initial eight-year LWI term of service. The
first of its kind, the vessel hull is nearing completion in
China before it heads for STX in Finland for outfitting.
(Image courtesy of Eide Marine Services)
ABOVE: Aker Oilfield Services Skandi Aker is the first
well service vessel of its kind capable of performing
riser-based subsea well intervention in deep and ultra-
deep waters. Its first contract will be for Total E&P
Angola offshore Angola starting early in 2013. (Photo
courtesy of Aker Solutions)
114-117 OFFWELL-derrick_114-117 OFFWELL-derrick 10/19/12 11:21 PM Page 116
114-117 OFFWELL-derrick_114-117 OFFWELL-derrick 10/19/12 11:21 PM Page 117
OPTIMIZING RESERVOIR DRAINAGE / INTERVENTIONS
OUR TRACK RECORD
GOES A LONG WAY
YEARS CONVEYING TOOLS
AND SERVICES
YEARS RUNNING
MECHANICAL INTERVENTIONS
I'
,
YEARS CLEANING-OUT WELLS
U
u
m
w
U
10,000.000
9.000,000
8,000,000
7.000,000
6.000,000
5.000,000
4.000,000
3.000,000
2.000,000
1.000
,
000
8
YEARS PERFORMING
MILLING SERVICES
As the first company to introduce a- line interven-
tions
,
Welltec " has amassed an i mpressi ve t rack
record across a wide range of intervention solutions:
F
8 years performing milling services
9 years cleaning out wel l s
10 years running mechanical interventions
1996 1997 1996 1999 2000 2001 2002 2003 2009 2005 2006 2007 3008 2009 200 2011 2012 17 years conveying tools and services
'Ulf
Wel ltec
S
hallow gas migration through cement, in which gas
from a shallow zone migrates to the surface before the
cement can properly harden, affects zonal isolation and
has been a major source of problems for many years. It is
not easy to prevent the micro-annular gas fissures or per-
manent flow channels to the surface created due to this
migration. Because they occur at shallow to medium
depths, it is difficult to maintain sufficient hydrostatic
pressure while the cement is still in a liquid state, and
lower temperatures near the surface extend the transition
period from the cements liquid to elastic-solid state. In
applications where the well is going to be fractured, the
problem can be further compounded due to bal-
looning and contraction of the pipe from the
fracing pressure cycles.
This is becoming a particularly difficult prob-
lem as operators continue to push into uncon-
ventional shale plays characterized by a large
number of natural fractures. Solutions that can
effectively, economically, and permanently iso-
late these zones and allow the cement to
harden thoroughly prior to the onset of gas
migration are becoming increasingly critical
to the long-term viability of the well.
Weatherfords swellable Micro-Seal isolation
system (MSIS) prevents fluid and pressure
migration because of its proprietary hybrid
swellable elastomer that conforms to and
seals against micro-annular voids between
the cement sheath inner diameter and the
casing outer diameter.
Conforming to the problem
While swellable elastomers have demonstrated
an ability to isolate wellbores in many types
of wells, a range of construction challenges
complicates isolation performance when con-
ventional elastomers are used. These chal-
lenges range from short-term stimulation
concerns to long-term micro-annulus isola-
tion. Planning for these problems is complicated by dif-
ferences in wellbore fluids and downhole temperatures,
which affect swelling and compatibility.
Conventional elastomers tend to swell only in the pres-
ence of a single fluid phase oil or water and, depend-
ing on the downhole temperature, may swell too slowly to
isolate the wellbore prior to gas migration. The propri-
etary hybrid elastomers used in the isolation system
demonstrate greater flexibility and are activated by oil,
water, wet gas, or a combination of any of these to con-
form to and seal off the micro-annulus. The elastomers
also are designed to swell only when they are in place to
avoid rapid reaction with wellbore fluid during deploy-
ment on the pipe or with the mix water in the cement
while it is curing.
The MSIS-Unit is the central system compo-
nent. When combined with other mechanical
cementing products, the unit can provide excel-
lent casing standoff and highly efficient displace-
ment of mud during primary cementing
operations for improved wellbore stability in both
regular and irregular annular geometries.
The systems ultimate goal is to create at
least one point in the well where total annular
isolation is achieved. However, the traditional
deployment scenario consists of strategically
positioning multiple tools on cemented pipe to
provide a series of response points to ensure that
fluid migration is stopped wherever it may occur.
The customizable system comprises of a family
of elastomers and centralizer designs for deploy-
ment in a range of wellbore geometries and reser-
voir temperatures. The elastomer is available in a
slow-swelling form for deployment in wells with
ambient temperatures of 66C up to 150C (150F
to 300F) to prevent premature swelling and stick-
ing prior to arriving at the designated isolation
point. For wells in the range of 38C (100F)
or lower, another elastomer can be used to
swell more quickly and provide faster micro-
annular isolation.
The suitable elastomer is selected for each
well after comprehensive screening tests dur-
November 2012 | EPmag.com
118
David Westgard, Weatherford
tech
WATCH
The bow string, as part
of the isolation system,
helps to enhance annular
isolation. (Images cour-
tesy of Weatherford)
Isolation system
shuts down gas migration
A new swellable system uses proprietary elastomer technology to effectively
seal off micro-annular voids.
118-119 TechWatch-NOV_118-119 TechWatch-NOV 10/19/12 11:21 PM Page 118
EPmag.com | November 2012
119
ing the planning stage, in which the elastomer packer
seals are tested in actual well fluids for criteria including
fluid compatibility, life expectancy, bond strength, swell
ratio and elongation, and shear. With this information, an
optimal elastomer is chosen that not only enables swelling
times to be properly managed during deployment but
also maintains a high-integrity seal during its required
operating life.
The MSIS-Unit consists of a slip-on seal unit that is effec-
tive as a standalone product. It also can be deployed with
one of several centralizers, depending on the wellbore.
The MSIS-Bow is a slip-on bow-spring centralizer designed
to provide optimal casing standoff in appropriate cased-
hole and openhole sections. Finally, the MSIS-Rigid is
a slip-on rigid centralizer with axial or biased blades
designed to optimize mud displacement in vertical,
inclined, or horizontal wells. The ultimate result of each
of these designs is better mud removal during primary
cementing operations for improved wellbore stability.
The swellable isolation system has demonstrated
improved wellbore quality while reduc-
ing the frequency of interventions and
remedial cementing operations. Strate-
gic positioning of multiple systems
across the expected problem area also
has been shown to prevent buildup of
annular casing pressure, which reduces
or eliminates the need to bleed off at
the wellhead.
Field tests proving potential
To date, more than 1,000 of these sys-
tems have effectively and efficiently shut
off gas migration along the micro-annuli
in cemented liners, including use in
many US shale gas plays like the Mar-
cellus. Producers in this region needed
a long-term solution to isolate micro-
annuli created during or after cementing operations or
following fracture stimulation.
The isolation units are deployed with a bow centralizer
design on 11
3
4-in., 9
5
8-in., 8
5
8-in., and 5
1
2-in. casing/liner
strings in open holes ranging from 8
1
2 in. to 14 in. As of
September 2012, the units have been deployed in more
than 70 wells in the field and have consistently prevented
gas migration to the surface.
The technology has been implemented elsewhere,
including offshore Angola, for an oil producer looking
for a way to shut off potential water migration along annu-
lar voids in an 8
1
2-in. hole with 7-in. casing cement sheath.
This operator deployed the MSIS-Rigid at 3,271 m (10,733
ft), providing isolation above and below the oil/water
contact zones and the oil-bearing zones at an inclination
angle of 28. To date, the installed casing string and units
have successfully isolated water migration per the clients
production program.
The MSIS-Bow also has been deployed for a gas pro-
ducer in the Middle East who wanted to mitigate against
sustained annulus pressure and shut off potential pres-
sure migration in a well. Several systems were installed
on the 9.63-in. casing string inside 13.38-in. casing, at
key points along a 27 to 31 interval to provide a series
of response points for potential gas migration. The sys-
tems integrated centralizer provided maximum casing
standoff for mud displacement during cementing opera-
tions, and the combined action of the strategically placed
units prevented the need for the remedial cementing
operations that are typically required due to micro-annu-
lar pressure migration. Since this initial deployment, the
operator has deployed similar MSIS-Bow units on six
other wells in the region.
tech
WATCH
The MSIS provides customized, swellable wellbore isolation
while preventing micro-annular fluid and pressure migration.
The companys swellable elastomers yield many benefits and are formulated to
meet an operators specific operational environment objectives.
118-119 TechWatch-NOV_118-119 TechWatch-NOV 10/19/12 11:21 PM Page 119
High-temperature downhole pumps
extend PCP application
High tempera-
tures in wells have
often prevented
operators from
applying progress-
ing cavity pumps
(PCPs) in down-
hole operations.
Robbins & Myers
Energy Services
Group now pro-
vides a line of
high-temperature
downhole pumps,
the Moyno HTD
pumps, to with-
stand the compli-
cations of high-temperature situations when applying
PCPs. The companys Moyno HTD350 and HTD600 high-
temperature downhole pumps feature an elastomeric sta-
tor that is mechanically secured to the stator tube as well
as an all-metallic stator that enables resistance to chemi-
cals and the ability to handle high temperatures. Because
of their capabilities of withstanding high downhole tem-
peratures, these pumps are able to extend the application
range of PCPs. The HTD350 technology is designed to
mechanically secure the stator elastomer without using
bonding agents between the elastomer and the stator
tube. The Moyno HTD600 is an all-metallic stator that is
compatible with steam injection applications without hav-
ing to remove the stator from the well. The Moyno HTD
series are available in a variety of models to suit a range of
applications. rmenergy.com.
Connection tool facilitates rigid assemblies
Peak Well Systems 90 Degree Safe Connect tool uses a piv-
oting design to enable extended-length rigid assemblies to
be safely and securely raised or lowered between horizon-
tal and vertical positions during deployment into the well
and removal from a well. This can prevent undue stress
and bending that causes damage to wire and tool compo-
nents and potential harm to personnel should the wire or
tool component fail, according to the company.
The tool is connected directly above the long assembly in
the horizontal position and provides a hinge or pivot when
being raised into the vertical position. Once the item is in a
vertical position, an internal latch automatically locks the
connection. This produces a rigid tool that can sustain
both upward and downward jarring during any setting or
pulling process. The latch can then be locked into the
release position using an integral J-slot mechanism to
revert the connection into pivot mode. peakwellsystems.com.
Repair system seals damage
on outer sheath of flexible risers
According to Flexlife, about 35% of risers may contain
damage to the outer sheath, which increases the risk of cor-
rosion from the surrounding oxygenated seawater. Instead
of replacing the sheath, the company suggests the use of its
Armadillo technology. This repair system is designed to
create a seal that will prevent seawater entering the risers
annulus. The system is constructed in bespoke lengths and
diameters, allowing continuous operation of the flexible
pipe. In an offshore operational demonstration in Brazil,
the technology was applied on a gas-lift riser in a semisub-
mersible production platform. It was installed at a 4-m (13-
ft) water depth and endured a pressure test of 2.5 bar in
the annulus. According to the company, the pressure test
proved the integrity of the repair, confirming the technol-
ogys capabilities. flexlife.co.uk.
Shale technology increases reservoir contact
Baker Hughes FracPoint MP sleeve with DirectConnect
offers more controlled hydraulic fracture initiation points
and improves connectivity to the pay zone, allowing
increased contact with the reservoir. The technology does
this by using openhole packers to isolate multiple stages
and ball-activated sleeves to divert the fracturing treatment
into the formation. A single ball opens five sleeves per
stage, each sleeve including eight DirectConnect ports
that are placed 45 apart.
At each stage in the hydraulic fracturing process, a ball
is dropped. The sleeves open, and hydraulic pressure
pushes the telescoping DirectConnect ports into the for-
mation at high velocity. According to the company, the
November 2012 | EPmag.com
120
tech
TRENDS
The line of HTD pumps provides solutions
to high-temperature applications that
previously prevented operators from
using downhole PCPs. (Image courtesy of
Robbins & Myers Energy Services Group)
Flexlife engineers handle Armadillo technology in Flexlifes
Aberdeen R&D facilities. (Image courtesy of Flexlife)
120-121 TechTrends-NOV_120-121 TechTrends-NOV 10/19/12 11:21 PM Page 120
EPmag.com | November 2012
121
tech
TRENDS
ports act like chisels to initiate fractures at controlled
points along the wellbore, resulting in an accurate place-
ment of the hydraulic fracture treatment and a better con-
nectivity to the reservoir. Operators are able to fracture
through five sleeves per stage with as many as 17 stages per
well, connecting with the reservoir through as many as 85
sleeves and 680 ports, said the company. bakerhughes.com.
Drilling fluid
remains stable
to ensure quality
reservoir charac-
terization
The new RHADIANT
ultra-high temperature
non-aqueous drilling
fluid system from MI-
SWACO, a Schlum-
berger company,
eliminates drilling fluid
product degradation,
prevents wellbore con-
trol issues, and provides
a thin filter cake for
enhanced logging con-
ditions. Unlike conven-
tional non-aqueous
drilling fluids, the sys-
tem prevents barite sag and stuck pipe, according to the
company. The drilling fluid system maintains a stable rhe-
ological profile and extreme temperature stability during
prolonged static conditions throughout well construction
and openhole logging, with little maintenance necessary.
Ultra-thin and slick filter cake deposits and the stable rhe-
ologies clear the path for logging, casing, and cementing
operations, thus enabling accurate perforation placement,
optimized completions, and quality reservoir characteriza-
tion, according to the company.
The technology was used in an ultra-high temperature
exploration well in the Gulf of Thailand, where, with zero
lost circulation, it effectively delivered filtration control
and filter cake quality with stable rheological properties.
Even though the fluid remained static for more than 90
hours, the customer was able to perform seven openhole
wireline logging runs when using the drilling fluid system.
Monitoring system measures microseismic
events during hydraulic fracturing
ESG Solutions Hybrid Downhole/Near-surface microseis-
mic monitoring system addresses recent concerns sur-
rounding the potential of oil and gas operations to induce
larger magnitude events. According to the company, this
technology fills a need to accurately detect seismicity
greater than M0 in addition to small-scale microseismic
activity. It deploys near-surface or shallow buried micro-
seismic arrays. Geophones, the conventional tool used to
measure micro-earthquakes, may not be optimized like
the companys new microseismic monitoring system to
record the lower frequency signals, some in the range of -
M4 to M0, or to record the larger frequency signals, some
in the range of M0 to M4. The hybrid tool combines its
near-surface microseismic arrays with a network of vertical
downhole tool strings to increase the physical field of cov-
erage and more accurately measure the events of larger
magnitude. esgsolutions.com.
Integrated reservoir engineering
software suite improves decision-making
The Roxar Tempest 7.0 by Emerson Process Management
provides a single consistent interface to E&P reservoir
engineers, encompassing five modules that can be
deployed as an integrated unit with a common interface
or individually to enhance existing workflows. This ver-
sion builds on the previous versions of the companys sim-
ulation and history matching software. The modules
include:
The Tempest VIEW, capable of processing results
from multiple simulations with millions of cells and
thousands of wells;
The Tempest ENABLE, a history matching and uncer-
tainty estimation software solution that harnesses the
simulator to drive it through hundreds of realizations
and to steer it to deliver better quality history matches
and more reliable uncertainty estimates;
The Tempest MORE, a full physics simulator that can
be optimized for very large models;
The Tempest PVTx, an equation-of-state pressure-vol-
ume-temperature analysis tool, which facilitates the
characterization of black oil or compositional fluids;
and
The Tempest VENTURE, an economic evaluation
tool, which provides cash flow analysis derived from
simulation results to allow the incorporation of infla-
tion rates, prices, currencies, costs, taxes, and other
variables.
This software is for use on all types of reservoirs and
geologies. According to the company, it is ideal for uncon-
ventional and EOR studies such as CO
2
injection, coalbed
methane, steam-assisted gravity drainage, and shale gas
fields. emerson.com.
Cody zcan, Assistant Editor
The ultra-high temperature non-aque-
ous drilling fluid system is the first
drilling fluid proven to deliver stable
rheological performance at bottom-
hole temperatures approaching
260C (500F), according to the com-
pany. (Image courtesy of MI-SWACO)
120-121 TechTrends-NOV_120-121 TechTrends-NOV 10/19/12 11:21 PM Page 121
November 2012 | EPmag.com
122
REGIONAL REPORT:
ASIA PACIFIC
E
ven with heightened political tensions between coun-
tries bordering the East China and South China seas,
the Asia-Pacific region is set for unprecedented growth
as demand for natural gas and oil continues to surge
upwards.
As the world and the region continue to search for
undiscovered hydrocarbon resources and to maximize
already developed fields, capex investments in E&P activi-
ties are important for long-term producing countries like
Malaysia to tackle production declines and continue to
compete with new players, as smaller countries, such as
Brunei, Bangladesh, and Myanmar, come into the mar-
ket, said Dr. Arnis Judzis, Offshore Technology Confer-
ence (OTC) board of directors representative, at the
opening of OTC Asia 2012 Oct. 2.
Asia is becoming increasingly important in the world
of oil and gas exploration and drilling. The region is sup-
ported by strong fundamentals including sustained high
rates of economic growth and high oil prices, leading
many international operators to expand oil E&P activity in
a region with a rapidly growing thirst for energy, he said.
Asia-Pacifics offshore resource development, which
already accounts for almost 30% of the 306 E&P projects
worldwide, is poised for aggressive growth in the next five
years, according to an offshore oil and gas market analysis
provided by Infield Systems Ltd.s, Regional Perspectives
Offshore Asia Oil and Gas Market Report to 2015, which
was commissioned by the OTC board.
Forecasters estimated that between 2011 and 2015,
US $87 billion would be spent in the region. The largest
capex increase in the region is expected to be for projects
offshore Malaysia at more than $59 billion even ahead
of China and India. An estimated 84 fixed deepwater
platforms and eight FPSOs will be installed offshore
Malaysia between 2011 and 2015.
As the demand for fixed, floating, and subsea units
continues to rise, we envision the players here making
technological leaps in drilling, exploration, production,
and environmental protection over the next few years,
Judzis said.
Added the Infield authors, Despite this expected surge
in demand, it is unlikely that the regions largest coun-
tries will be able to reduce their dependency on crude
imports, giving further support to exploration and pro-
duction activity in the long run. Meanwhile, new oil fron-
tiers are being opened up in deeper waters and also in
countries such as the Philippines and Myanmar, which
did not previously have any significant levels of offshore
activity. These developments are expected to greatly
increase demand for subsea units in a region traditionally
dominated by shallow-water production.
Regional capex growth
Malaysia and Indonesia face production decline if they
do not take steps to maintain E&P activity.
In Indonesia, producers are expected to increase
capex on Indonesian projects from the $8 billion spent
between 2006 to 2010 to more than $12 billion forecast
for 2011 to 2015, according to the report.
Projects offshore Malaysia are expected to see the
largest increase between forecast periods, with more than
$17 billion forecast over the next five years. Meanwhile,
China and India are expected to be in second and third
place around the world with $13.5 billion and $13.1 bil-
lion in spending, respectively.
A wealth of undeveloped gas reserves and continued
increases in demand from the region will drive capex
Scott Weeden, Senior Editor
Asia is expected to be the largest fixed-platform market over
the next five years in terms of capex.
Asia-Pacific region poised
for huge growth in investments
Capex levels in Asia are forecast to continue to recover after stagnating between 2006 and 2009.
122-125 RR-AsiaPacific-1Weeden_Layout 1 10/22/12 2:10 PM Page 122
EPmag.com | November 2012
123
spending in Australia to more than $4 billion per annum
over the next five years.
Capex levels on pipeline and fixed platform develop-
ments will take up the regions largest proportion of
regional expenditures. Pipeline capex is expected to total
more than $42 billion, with fixed-platform costs forecast at
$27 billion over the same period.
Subsea capex will see strong growth, from more than $2
billion in the period 2006 to 2010 to more than $7 billion
for the next five years, according to the report.
Fixed-platform market
Asia is expected to be the largest fixed-platform market
over the next five years in terms of capex. Forecasts indi-
cate that the region will take up almost 31% of the global
market between 2011 and 2015 or $27.5 billion out of
$89.8 billion, according to the report.
The greatest expenditure and units will be directed
towards projects offshore China, Malaysia, and Thailand.
China is expected to install 78 units with a capex of $5.7
billion, while Malaysia is expected to install 84 units cost-
ing more than $4.4 billion.
Asia is expected to install 459 fixed platforms between
2011 and 2015, with the vast majority of units expected to
be pile-type (434 platforms out of 459 fixed units), mostly
for shallow-water developments. Drilling in deep water off-
shore China, India, Indonesia, and Malaysia is expected to
speed up, the report continued.
Floating production systems market
Compared with other regions, capex on floating produc-
tion units in Asia is ranked the second lowest in the fore-
cast period, ahead of only the Middle East and Caspian
regions, stated the report. Overall, during the 2011 to
2015 period, forecasts suggest that just less than $7.2 bil-
lion will be invested.
Some 49 FPS installations are expected, primarily in
Indonesia (13 units), Vietnam (12 units), and Malaysia
(eight units).
Over the next five years, other smaller Asian countries
are expected to come into the FPS market, including
Brunei, Bangladesh, and Myanmar. With this extra
demand, floater capex is expected to increase by 42%
between 2011 and 2015.
Pipeline, subsea markets
In terms of capex, the Asian pipeline market represents
the largest segment of oil and gas expenditure in Asia.
Between 2011 and 2015, the reports forecasts show that
the region will see more than $42 billion in spending.
Projects based in Malaysia and India are expected to be
the driving forces behind capex in the region, with opera-
tors predicted to spend more than $7.2 billion and $7.1
billion, respectively.
Overall, pipelines forecast for 2011 to 2015 exceed what
was installed in the previous five years by almost 50%.
The Asian subsea market is the third smallest in the
world, since many of the developments are in shallow
water that negates the need for subsea infrastructure.
Capex expenditure is expected to be just more than $7
billion on subsea projects between 2011 and 2015 com-
pared to $2.25 billion over the previous five years. Within
the region, the countries that are expected to drive subsea
demand include Malaysia, Indonesia, China, and India,
according to the report.
Malaysia and Indonesia are the regional subsea drivers
and are expected to require 57 and 45 subsea trees over
the next five years, respectively. China and India also are
expected to be significant demand drivers, requiring 42
and 38 subsea trees, respectively.
China has gained experience with its offshore operations in the
Bohai Bay and will be expanding into deeper water. (Photo cour-
tesy of ConocoPhillips)
Although shallow-water rigs like Seadrills jackup West Defender
will continue to have a market in Southeast Asia, Indonesia,
Malaysia, and the Philippines are all expected to move into deep
water. (Photo courtesy of Seadrill)
REGIONAL REPORT:
ASIA PACIFIC
122-125 RR-AsiaPacific-1Weeden_122-125 RR-AsiaPacific-1Weeden 10/19/12 11:22 PM Page 123
Boundary conflicts could derail plans
Attempts to occupy islands by Japanese and Chinese pro-
testers have heightened the conflict over maritime bound-
aries in the East and South China seas. Japan, Vietnam,
Malaysia, and the Philippines are facing off with China
over which country owns what part of the Outer Conti-
nental Shelf (OCS).
As the demand for oil and gas in the region continues
to grow, these conflicts over potential petroleum resources
are becoming more threatening. The China-Japan con-
frontation is getting the biggest headlines currently, but
leasing activity offshore Vietnam and the Philippines is
heating up the confrontations as well.
CNOOC recently offered 22 blocks in the South China
Sea, much to the consternation of Vietnam. Nine of the
blocks, according to Vietnam, are within the Vietnamese
exclusive economic zone. The blocks are well south of
mainland China; thus the OCS claim for China would be
difficult to determine.
In July, China put a military garrison along with a leg-
islative assembly on the Paracel Islands, which also are
claimed by Vietnam. The move added to the tensions
between the two countries.
The Philippines also weighed in on the dispute Sept.
5 by renaming the waters west of that country. The area
is now the West Philippine Sea, according to Philippine
President Benigno Aquino III. He ordered all maps to
be redrawn using the new name for the area west of the
Philippines, including the contested Spratly Islands
and the Scarborough Shoal, which are prime areas
for exploration.
In April, China and the Philippines were in a confronta-
tion over the Scarborough Shoal. The new West Philip-
pine Sea is supposed to boost the Philippines claim to
the OCS. Planned drilling operations offshore Vietnam
and the Philippines could bring the matter to a head.
How the countries deal with these conflicts could have
an impact on oil and gas companies far beyond just those
regions. If these become armed confrontations, oil prices
could skyrocket.
November 2012 | EPmag.com
124
REGIONAL REPORT:
ASIA PACIFIC
122-125 RR-AsiaPacific-1Weeden_122-125 RR-AsiaPacific-1Weeden 10/19/12 11:22 PM Page 124
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November 2012 | EPmag.com


126
REGIONAL REPORT:
ASIA PACIFIC
T
he East Java-Makassar-Muara (EJMM) MegaProject
consists of 98 2-D lines totaling more than 16,000 km
(9,941 miles), covering the four hydrocarbon-bearing
basins: East Java/North Lombok, South Makassar, the
Kutei/North Makassar, and the frontier Muara basins.
It combines five separate long offset 2-D surveys
acquired by PGS and MultiClient Geophysical between
2005 and 2010 into a single consistent time-, phase-, and
amplitude-matched seismic dataset. The interpretation
of the EJMM MegaProject dataset has been undertaken
post-data merge to provide an improved, consistent, and
comprehensive interpretation by tying wells to a common
2-D seismic database.
The 2-D grid ties the basins together and intersects
several key wells. It gives the ability to obtain a regional
geological perspective to help evaluate proven and new
plays, look at the petroleum systems at the regional scale,
understand recent well results, and correlate key strati-
graphic elements across the basins to better understand
the lateral continuity of sequences and structural devel-
opment of the basins.
Regional geologic setting
The EJMM MegaProject covers four Tertiary basins
along the eastern margins of the Sundaland Craton in
the tectonically complex area between the island of Java
to the south and the islands of Borneo and Sulawesi to
the north, all of which are affected by the collision of
Eurasia with the Australian and Pacific plates.
From the Early Cretaceous to no later than the Early
Eocene, the area experienced periodic episodes of exten-
sion and compression, which have resulted in the current
configuration of the basins. This dataset has been con-
structed to study the back arc East Java/North Lombok
basins in the southern zone of the data and the South
and North Makassar basins, which extend northward to
the contiguous Muara basin around the northeastern
edge of Borneo.
All of the basins in the EJMM MegaProject contain
thick Tertiary sections. An isochron map between seabed
and top pre-rift (basement) defines the Tertiary depocen-
ters. North Lombok, South Makassar, and North Makas-
sar basins are clearly defined, whereas the Muara basins
complexity is shown (Figure 1). The stratigraphy of these
basins is very similar, with both syn-rift and sag contribut-
ing to the deposition of Paleocene-Eocene clastics, which
are overlain by Eocene-Oligocene reefal complexes
buried by thick Miocene-Recent packages.
All of the basins have undergone various degrees of
extensional and compressional tectonics, resulting in
a range of possible exploration targets, from simple
inverted basin floor fans or stratigraphic pinchouts to
intricate thrust-fold complexes resulting from more
Tad Choi, Andrew Botsford, and Larry Endebrock, PGS
FIGURE 1. The black lines indicate the EJMM MegaProject. The
gray lines are other PGS 2-D data. This Tertiary isochron map
defines the North Lombok, South Makassar, North Makassar,
and Muara basins. (Images courtesy of PGS)
MegaProject gives the big picture
in Makassar Straits
An interpretation project that ties basins together from East Java to Muara could be the key to
understanding the regional framework and exploring for new prospectivity.
126-127 RR-AsiaPacific-2PGS_126-127 RR-AsiaPacific-2PGS 10/19/12 11:22 PM Page 126
EPmag.com | November 2012
127
REGIONAL REPORT:
ASIA PACIFIC
intense deformation as the Australian continental plate
collided with the continental Eurasian plate.
Seismic interpretation
Six key horizons were interpreted for this project. Five
of these are major unconformities, regional seismic
markers that have been tied to formation tops where
well data is available. Due to the nature of these mark-
ers, interpreting horizons away from the well ties was
generally straightforward over most of the project area
except in zones of major compression and inversion
where either the horizon has been eroded or the tec-
tonic complexity prevents accurate imaging by the seis-
mic data.
A simplified stratigraphic column has been prepared
for the EJMM MegaProject area. This shows the key
lithological descriptions of the four main basins (East
Java/North Lombok, South Makassar, North Makassar,
and Muara basins) and their relationship to the hori-
zons picked (Figure 2).
The seabed horizon was picked as the first continuous
trough on all the 2-D lines across the project area. The
importance of picking this reflector is mainly for calculat-
ing time thickness maps. The Early Pliocene Unconfor-
mity, related to the collision of the Australian continental
plate with the Eurasian continental plate, is the shallowest
horizon picked. The Mid-Miocene Unconformity is an
extensive marker that correlates to a major eustatic sea
level fall and the spreading of the South China Sea. It
reflects transpressional inversions related to a number
of local and regional collisional events, primarily along
basin edges. Post-rift thermal sag was initiated in the
Late Eocene and continued through the Oligocene
into the Early Miocene. The Top Oligocene
horizon defines the end of this rift/sag period
and the onset of inversion as the front edge of
the Australian Plate makes contact with the
Eurasian Plate. It marks the end of oil-prone
lacustrine and deltaic petroleum systems and
the beginning of the development of shallow
to deep marine systems.
The Eocene Unconformity is a rifting surface
related to the initial collision of the Indian-
Australian plate with Eurasia and the beginning
of the spreading of the Celebes Sea.
The top pre-rift pick marks the base Tertiary.
There are only a couple of well ties for this
horizon in the South Makassar basin. The geo-
logical age of the pre-rift section is equivocal,
usually labeled as Pre-Tertiary but postulated to
be at least Mesozoic and likely to be even older,
possibly ranging to Pre-Cambrian.
Advantages of a MegaProject when exploring
The EJMM MegaProject gives new entrants and existing
operators the opportunity to regionally evaluate the geo-
logical concepts and hydrocarbon play elements of these
Tertiary basins on a single 2-D seismic dataset. It enables
tying key wells, understanding recent well results, and
correlating stratigraphy across the basins to help derisk
decisions and high-grade prospective areas.
The main aim is to be able to evaluate basins at the
big picture regional scale instead of postage stamp
evaluations. A continuous 2-D section approximately
2,000 km (1,242 miles) long shows how the four basins
can be seen in one section (Figure 3).
FIGURE 2. This simplified stratigraphic column shows the litholo-
gies across the basins and the relationship of the horizons in
this project.
FIGURE 3. The North Makassar and South Makassar basins are shown here in
the higher image in one continuous seismic section, while all four Tertiary
basins of the EJMM MegaProject are shown in one continuous seismic section
in the lower image.
126-127 RR-AsiaPacific-2PGS_Layout 1 10/22/12 11:56 AM Page 127
EUROPE
Irelands Kish Bank to be explored
Irish explorer Providence Resources has been awarded a
Foreshore License over an area in the Kish Bank basin
offshore Dublin. The license was awarded by the Fore-
shore Unit of the Irish Department of Environment,
Community, and Local Government and permits a 2-D
seismic program and a wellsite survey as well as the
drilling of an exploration well on the Dalkey Island
prospect, located in Exploration License 2/11. Provi-
dence holds a 50% interest as operator in SEL 2/11
with its partner PSE Seven Heads Ltd., a wholly-owned
subsidiary of Malaysias Petronas.
Barents Sea boost for Eni
Italys Eni has hit gas and condensate with its first wildcat
in production license 533 in the Barents Sea offshore
Norway. Eni Norge AS, the operator of PL 533, com-
pleted the drilling of well 7220/10-1 with the Norwegian
Petroleum Directorate estimating the size of the find
at between 5 MMcm and 7 MMcm of recoverable oil
equivalent. The wildcat well, dubbed Salina, is located
50 km (31 miles) northwest of the Snhvit field. In the
primary target, a 38-m (125-ft) gas/condensate column
was encountered in the Knurr formation. In the second-
ary target, a 54-m (177-ft) gas/condensate column was
encountered in the St formation. Further delineation
of the discovery will be considered. The well was drilled
to a vertical depth of 2,371 m (7,779 ft) and terminated
in the Snadd formation in the Upper Triassic. The probe
was drilled by the Scarabeo 8 rig in 348 m (1,142 ft) water
depth, with the well to be permanently plugged and
abandoned. Eni operates PL 533 with a 40% interest,
with its partners Lundin, Det Norske, and RWE Dea
holding 20% each.
AFRICA
Eni mulls floater for Ghana
Italys Eni is considering a fast-track early production
development using an FPSO for its first deepwater oil dis-
covery offshore Ghana. The state-owned operator con-
firmed that its first crude discovery in the Offshore Cape
Three Points (OCTP) block in the Tano basin has the
potential for a commercial development because of
the presence of oil as well as gas and condensates. The
Sankofa East-1X well hit 28 m (92 ft) of gas and conden-
sate. But crucially, it also hit 76 m (249 ft) of gross oil pay.
Eni is immediately planning to spud further appraisal
wells to delineate the size of the find. The Sankofa East-
1X well was drilled to a total depth of 3,650 m (11,976 ft)
in 825 m (2,707 ft) of water, with a production test flow-
ing 5,000 b/d of high-quality oil. Eni also said that there
are ongoing engineering studies for the development
and commercialization of the blocks non-associated
gas reserves. Eni, through its subsidiary Eni Ghana E&P
Ltd., is the operator of the OCTP block with a 47.22%
share. Its partners are Vitol Upstream Ghana Ltd.
(37.78%) and GNPC (15%).
Maersk hits Angolan oil
Denmarks Maersk Oil has hit more oil in a deepwater
concession offshore Angola, with the company and its
partners planning to carry out further appraisal and
evaluation work. The companys subsidiary Maersk Oil
Angola A/S, together with concessionaire Sonangol E.P.
and partners Sonangol P&P and Odebrecht Oil and Gas
Angola Ltd., said it had successfully completed drilling
the Caporolo-1 wildcat in the Lower Congo Basin with
positive results. Caporolo-1 is a step-out exploration well
on a separate structure adjacent to, and not part of, the
existing Chissonga discovery in Block 16. A production
test was conducted, which flowed at a maximum rate of
3,000 b/d of oil on a
36
64-inch choke size. The well was
drilled in the western sector of Block 16, around 13 km
(8 miles) from the companys Chissonga discovery. The
probe was drilled in 1,235 m (4,052 ft) of water to a total
depth of 5,508 m (18,072 ft) using the Pride South Pacific
semisubmersible rig. Sonangol E.P. is the concessionaire
of Block 16.
NORTH AMERICA
Shells Alaskan adventure kicks off
Royal Dutch Shell is under way with a well in the Beau-
fort Sea offshore northern Alaska targeting the Sivulliq
prospect. As with a well it spudded in September in the
Chukchi Sea off northwestern Alaska, Shell is currently
permitted by federal authorities to drill only to shallow
depths short of oil-bearing reservoirs. The permits
issued by the US Bureau of Environmental Safety and
Enforcement allow only top-hole drilling because Shell
has not yet met the required oil-spill regulations, having
failed to gain US Coast Guard clearance for a required
EPmag.com
READ MORE ONLINE
For additional
information on
these projects
and other global
developments:
November 2012 | EPmag.com
128
international
HIGHLIGHTS
128-133 Highlights-NOV_128-133 Highlights-NOV 10/19/12 11:22 PM Page 128
128-133 Highlights-NOV_128-133 Highlights-NOV 10/19/12 11:22 PM Page 129

OFFSHORE
ENERGY
CENTER
i
i
l
l
II for omrna
f Offshore No
Ili Mall of
OFFSHORE
PIONEERS
2013
Help us honor those
that made our industry
what it is today.
The Offshore Pioneers
will be inducted into the
Offshore Energy Center
'
s
Hall of fame
in September of 2013
l i

W--"
is currently calling for nominations of Industry
Pioneers and Pioneering Technologies for induction
into the Mail of fame. for 2013, the committee would
like to place an emphasis on receiving nominations for
the individuals who formed some of the foundations
for the offshore industry's technology and/or were
corporate leaders, preferably before 1985 including
overseas developments.
recognizes important achievements of individuals
who are recognized leaders in the offshore energy
industry.
rd
recognizes important technologies by individuals,
companies , organizations or institutions.
Nominations Close
December 10
, 2012
To receive a nominating package, please contact the
Offshore Energy
(
enter at 281.679.8040,
email oecraoceanstaroec.com or log on to
www.oceanstaroec .com and download the forms.
Hugh Elkins - Chairman, Hall of Fame Committee
III M
November 2012 | EPmag.com
130
international
HIGHLIGHTS
oil-spill barge.
Shell said the
barge, the Arctic
Challenger, will
not be available
for use this year
in Alaska but
that repairs
should be com-
pleted in time
for next years
open-water
drilling season.
The Sivulliq
prospect being drilled by the Kulluk rig is 26 km (16
miles) offshore. The Burger prospect in the Chukchi,
which Shell is drilling with the Noble Discoverer drillship,
is 112 km (70 miles) offshore.
TGS survey in British Columbia
TGS, through its newly-acquired subsidiary Arcis Seismic
Solutions, is to acquire 3-D seismic onshore in northeast
British Columbia, Canada. The Cameron River 3-D sur-
vey is a multiclient project that will cover an area of 470
sq km (181.5 sq miles) along the prolific liquids-rich Tri-
assic Montney and Doig unconventional fairways, said
TGS. High-resolution seismic will enable exploration for
stratigraphic and structural traps and will illuminate the
Cretaceous through Devonian section. The seismic data
will be processed by Arcis. Intermediate products will be
available to the industry in 1Q 2013, with final data avail-
able in the second quarter.
GULF OF MEXICO
Pemex reveals second Perdido find
Pemex has confirmed another ultra-deepwater oil discov-
ery in the Gulf of Mexico (GoM) with estimated reserves
put at about 200 MMbbl of oil. The find follows on the
heels of its Trion-1 discovery in the Perdido Fold Belt
area, revealed in August. This latest find on the Supremus
prospect was made in a water depth of around 2,900 m
(9,500 ft) and is part of the companys US $1.1 billion
spending program this year on deepwater targets. The
probe was drilled by the Bicentenario semisubmersible rig,
which will next go to drill a wildcat on the Maximino
prospect, for which Pemex also has high expectations.
The estimated proven, probable, and possible (3P)
reserves for the Supremus-1 well are put at between 75
MMbbl and 125 MMbbl of crude. Trion-1 was estimated
to have 3P reserves of up to 400 MMbbl of crude.
BOEM unveils Central GoM sale
The next lease sale for the Central GoM will take place
in March 2013, with a total of 38 million acres to be
offered by the Bureau of Ocean Energy Management
(BOEM). Lease Sale 227 will take place in New Orleans
March 20, 2013, and is the first of five such annual Cen-
tral Gulf sales. The sale will encompass around 7,250
unleased blocks located in water depths ranging from 3
m to 3,400 m (9 ft to 11,115 ft). BOEM estimates the
proposed sale could result in the production of 0.46
Bbbl to 0.89 Bbbl of oil and 1.9 Tcf to 3 Tcf of natural
gas. Western Gulf Lease Sale 218, held in December
2011, received high bids on tracts covering about 1 mil-
lion acres and netted nearly US $325 million. Central
Gulf Lease Sale 216/222, held in June 2012, attracted
more than $1.7 billion in high bids for more than 2.4
million acres. The next sale, Western GoM Lease Sale
229, announced earlier this year, will take place in New
Orleans Nov. 28.
SOUTH AMERICA
Uruguay deepwater winners
ANCAP, the national oil company of Uruguay, has
signed offshore production-sharing contracts (PSCs)
with four companies that pave the way for deepwater
exploration activity in frontier Atlantic Margin acreage
over the next three years. The NOC signed the deals
with BG, BP, Total, and Tullow Oil, initially awarded the
blocks in April. The two British companies each won
three oil blocks, while there was one each for Total and
Tullow. The blocks are located in water depths ranging
between 500 m and 2,500 m (1,640 ft and 8,202 ft) in
the Pelotas and Punta del Este basins. Total planned
investment is estimated at up to US $1.6 million over the
first three years. The work plans for the first three-year
period include one exploration well, 3-D seismic data,
3-D electromagnetic data, seabed samples, and 2-D seis-
mic data. Each PSC covers a period of 30 years.
Petrobras fills in Franco SW details
Petrobras has completed drilling a fourth well in its
Transfer of Rights area in the presalt Santos basin and
verified a hydrocarbon column of 438 m (1,437 ft). The
Brazilian major had previously announced the find in
August when the well was still being drilled and had
reached a depth of 5,656 m (18,557 ft). At that time it
had confirmed up to 295 m (968 ft) of net pay. The
3-BRSA-1053-RJS (3-RJS-699) well, known as Franco SW,
is located in 2,024 m (6,641 ft) water depth around
210 km (130 miles) offshore Rio de Janeiro. It is also
The Kulluk rig is drilling the Sivulliq prospect
26 km (16 miles) offshore in the Beaufort Sea
offshore Alaska. (Image courtesy of Shell)
128-133 Highlights-NOV_128-133 Highlights-NOV 10/19/12 11:22 PM Page 130
128-133 Highlights-NOV_128-133 Highlights-NOV 10/19/12 11:22 PM Page 131
1\A
t o
DATE
CANADIAN UNCONVENTIONALS
Hart Energy is once again proud to host our latest DUG
T`' Series
Conference and Exhibition. Together with the Canadian Society
for Unconventional Resources (CSUR), we will bring the latest
tight oil and gas insights to Calgary in February 2013.
tion
Cent
Canada
DEVELOPI NG UNCONVENTI ONALS
CANADA
Canadian oil production is forecast to double between now and 2030, and the country's light , tight
oil plays will contribute mightily to that growth.The Duvernay shale play is quickly emerging as a
world-class target, while powerhouse producers such as the Cardium and Montney are posting
impressive production gains. Traditional Deep Basin vert ical plays -the Nordegg, Dunvegan, Bell
y
River and more-are now being targeted by operators wielding horizontal unconventional technology.
And classic oil-saturated reservoirs such as the Slave Point in the Peace River Arch are in the midst
of major rejuvenation.
The 2ND ANNUAL DUG CANADA CONFERENCE AND EXHIBITION
........ . ............................ . ......... .......................... . ....
........ will look at the depth and breadth of Canada 's rapidl y-developing
Presented by:
HART ENE RGY
r
,?^
k,
CSUR
unconventional
p
lays. Beyond insi
g
hts into the most active
producers and their programs in the hottest plays, conference
agenda topics include:
> Key Geological & Geophysical Characteristics
> Breakeven Costs & EURs
......................... ..................................... .................... . > JVs, Corporate & Asset Deals
> Optimal Drilling & Completion Strategies
Invnd(
kis
MIDSTREAM
> Social & Environmental Challenges
> Midstream Infrastructure
> Export Opportunities
Sponsored bry :
u
If your company is involved in Canada 's resource plays, or if you
M
want to explore the opportunities in Canada now and into the
RN
OMI
L
future, plan now to attend this conference.
uk
l
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a
17 km (10 miles) south of discovery well 2-ANP-1-RJS
(Franco). The total depth of 5,973 m (19,597 ft) was
reached in a stratigraphic horizon established in the
exploratory program. Analyses of the oil recovered from
carbonate reservoirs below the salt layer confirmed good
quality oil (from 28 API to 30 API). This well is part of
the Mandatory Exploratory Program in the Franco area
where Petrobras acquired the right to produce up to 3
Bbbl of oil. The exploratory phase is under way and is
expected to be completed by September 2014.
MIDDLE EAST
RWE extends Nile Delta find
Germanys RWE Dea Egypt has confirmed a further exten-
sion of the South Sidi Ghazy-1x discovery in the Egyptian
Nile Delta. The latest well follows the successful appraisal
of the North Sidi Ghazy-1x discovery reported earlier this
year. The companys Disouq project is planned to start pro-
ducing next year. Well SSG-1-2 was the second to be drilled
in the South Sidi Ghazy structure and reached a total meas-
ured depth of 2,833 m (9,295 ft). The well was drilled 1.3
km (0.8 miles) northwest from the discovery and con-
firmed the extension of the gas resources and the good
Messinian (Abu Madi formation) reservoir properties in a
northwestern compartment of the field. The first phase of
the Disouq development will see RWE Dea develop seven
gas discoveries together with the Egyptian Natural Gas
Holding Company and the Suez Oil Company. The
onshore block covers 5,375 sq km (2,075 sq miles).
Ultra-deep wildcat off Israel
Calgary-based GeoGlobal Resources Inc. has spudded a
deepwater wildcat offshore Israel in the Mediterranean
Sea. The Sara-1 exploration probe was spudded by
GeoGlobal and its part-
ners in September using
the Noble Homer Ferring-
ton semisubmersible rig.
The well is located 60
km (37 miles) offshore
in approximately 1,400
m (4,593 ft) water
depth. Sara-1 is planned
to be drilled vertically
to approximately 4,000
m (13,124 ft) true verti-
cal depth subsea and
is anticipated to take
approximately 50 days
to drill. GeoGlobal is the
operator of the well with a 5% stake. ILDC Energy and its
affiliates own 41.6%, and its parent company Israel Land
Development Company owns 5%. Modiin Energy LP, con-
trolled by Tzahi Sultan and Nochi Dankers IDB Holding
Corp. Ltd., owns 29.2%, IDB directly owns 5.6%, and IPC
Oil and Gas Holdings Ltd. holds 13.6%.
CENTRAL ASIA
Black Sea shoot for Lukoil
A 3-D seismic survey is underway by Lukoil subsidiary
Lukoil Overseas on two deepwater blocks in the Roman-
ian sector of the Black Sea. The shoot over the East Rapso-
dia and Trident blocks is being carried out by CGGVeritas
and is due for completion in November. The survey will
cover up to 2,000 sq km (772 sq miles). The blocks are
being explored by Lukoil (80%, operator) and US inde-
pendent Vanco International (20%). The consortium was
awarded the right to implement these projects as a result
of concession agreements signed in 2011. Both blocks fea-
ture water depths ranging from 90 m to 1,000 m (295 ft to
3,281 ft) and lie between 60 km and 100 km (37 miles to
62 miles) offshore.
ASIA PACIFIC
Chevrons Satyr no myth
Chevron has notched up further exploration success
offshore Western Australia, with its Satyr-2 probe in the
Greater Gorgon area hitting gas pay. The exploration
well in the Carnarvon basin confirmed approximately
39 m (128 ft) of net gas pay in the WA-374-P permit area
approximately 120 km (73 miles) northwest of Barrow
Island. The well was drilled in 1,088 m (3,570 ft) of
water to a total depth of 3,796 m (12,454 ft). Satyr-2 is
Chevrons 15th discovery in Australia since mid-2009.
Chevron Australia is the operator of WA-374-P with a 50%
interest, while Shell and ExxonMobil each hold 25%.
Beach in a whirl over Windmill
Australian independent Beach Energys Windmill-1
exploration well in PEL 92 on the western flank of the
Cooper basin onshore Australia discovered oil in the
Namur Sandstone and Birkhead formations. The well
reached a total depth of 2,100 m (6,890 ft), and wireline
logs have now been acquired. The well hit a 6-m (20-ft)
net oil column in the Namur sandstone and indications
of oil within the Birkhead formation, said minority part-
ner Cooper Energy in a press statement. Joint venture
participants in PEL 92 are Beach Energy (75%, opera-
tor) and Cooper Energy (25%).
November 2012 | EPmag.com
132
international
HIGHLIGHTS
Nobles Homer Ferrington rig will
drill the Sara-1 probe to a planned
depth of 4,000 m (13,124 ft).
(Image courtesy of Noble Drilling)
128-133 Highlights-NOV_128-133 Highlights-NOV 10/19/12 11:22 PM Page 132
128-133 Highlights-NOV_128-133 Highlights-NOV 10/19/12 11:22 PM Page 133
4TH ANNUAL
MARCELLUS-UTICA MIDSTREAM
CONFERENCE & EXHIBITION
DAVID L. LAWRENCE CONVENTION CENTER
PITTSBURGH, PA
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Mark your calendars ! The Marcellus-Utica
Midstream Conference and Exhibition is
moving to January!
The 4th Annual Marcellus Midstream Conference & Exhibition (now
renamed Marcellus- Utica Midstream) focuses on opportunities
surrounding the region's burgeoning production. From dry-gas pipelines
and processing plants to liquids options and markets
,
excitement
continues to build in the midstream sector. Hart Energy provides topical
,
industry leading speakers and presentations to provide actionable
business intelligence for sponsors, exhibitors and attendees.
It's the same great conference that surpassed 2
,
000 in attendees in
2012 and had over 200 exhibitors. Take time now to mark your
calendars , register to attend and plan to exhibit.
We ll see you in Pittsburgh on January 29-31, 2013.
PRESENTED BY:
HART E NE RGY
HOSTED BY:
MIDSTREAM
U50^L
CO
GAS
CEI
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Inves tor
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MARCELLUS-UTICA
MIDSTREAM
C O N F E R E N C E & E X H I B I T I O N
541
November 2012 | EPmag.com
134
on the
MOVE
PEOPLE
Sam Henry has been named president
and CEO of GDF SUEZ Energy
Resources, succeeding Robert Wilson
in the position. Wilson was recently
named president and CEO of GDF
SUEZ Gas NA Holdings LLC.
Jeff Miller has been promoted to
executive vice president and COO of
Halliburton. He will be responsible for
the companys global operations, busi-
ness development, and marketing.
Dr. Mario Ruscev has been named
chief technology officer of Baker
Hughes Inc., where he will lead
efforts in technology, research,
and development.
The National Ocean Industries
Association has appointed Michael
Kearns as vice president for govern-
ment relations.
Dr. Alice P. Gast was elected to
Chevrons board of directors. She
will serve on the companys Audit
Committee.
Schlumberger Business Consulting
has appointed Chris Peeters as direc-
tor of Europe, Middle East, and Africa
region and will assume responsibility
for managing the Paris-based utilities
practice.
Remi Volpe (right) has been
selected as vice president
and general manager for
Honeywell Sensing and
Control, where he will oversee the
companys Europe, Middle East, and
Africa region.
UTEC has announced
the appointment of Sean
Halpin (left) as global AUV
manager and US geophysi-
cal manager.
Clariant Oil Services has appointed
Michael Brauchle as business develop-
ment manager for Europe and CIS.
McCrometer has tapped Carl Kull as
its new regional sales manager for
Southeast Asia.
Brandon Leger (right) has
assumed responsibilities as
operations coordinator
Quality Control for Variable
Bore Rams Inc.
Norway-based
Mirmorax AS has
appointed Erlend
Blanchard (left)
as its business unit
manager. Svein Torkelsen
(top right) has been
named as technical product
manager for Mirmoraxs
Oil in Water product line.
Snorre Lge (bottom right) has
been selected for its R&D engineer
position.
Xodus Group Houston has named
Dominic Wright as flow assurance
lead.
Hogan Lovells recently announced
that Diogenes Bermudez, former
general counsel for Petrobras
Venezuela, has joined its Caracas
office as counsel in the infrastructure
and project finance practice.
Renita Durbin recently joined
J&J Technical Services, LLC where
she will oversee growth in Louisiana
as a member of the companys sales
team.
EXPANSIONS
Ashtead Technology Offshore will
soon be relocating to its new global
headquarters in Westhill, Aberdeen,
Scotland.
134-135 Onthemove-NOV_134-135 Onthemove-NOV 10/19/12 11:22 PM Page 134
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American Jereh International Corporation . . IFC
Archer Well Company Inc. . . . . . . . . . . . . . . . 47
Australian American
Chamber of Commerce . . . . . . . . . . . . . . . 115
Baker Hughes Incorporated . . . . . . . . . . . 39,45
BGP International . . . . . . . . . . . . . . . . . . . . . . 63
Bluebeam Software, Inc. . . . . . . . . . . . . . . . . . .24
Cameron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Carbo Ceramics . . . . . . . . . . . . . . . . . . . . . . . 27
CGGVeritas . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
Compressor Systems, Inc. . . . . . . . . . . . . . . . .87
Cudd Energy Services . . . . . . . . . . . . . . . . . . . 49
Dragon Products, Ltd. . . . . . . . . . . . . . . . . . . 7, 81
E&P . . . . . . . . . . . . . . . 76, 106-107,124,131, 133
Expro Group . . . . . . . . . . . . . . . . . . . . . . . . . .111
Falcon Technologies . . . . . . . . . . . . . . . . . . . 101
FlexSteel Pipeline Technologies, Inc. . . . . . . .97
FMC Technologies . . . . . . . . . . . . . . . . . . . . . . 36
Forum Energy Technologies . . . . . . . . . . . . . .42
Frac Chem . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Frontier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Fugro Jason . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
GE Oil & Gas, Surface Pumping Systems . . . . 16
Glen Raven Technical Fabrics . . . . . . . . . . . . .14
GL Noble Denton . . . . . . . . . . . . . . . . . . . . . . . 11
Gorman-Rupp Company, The . . . . . . . . . . . . . 93
Great Wall Drilling Company . . . . . . . . . . . . . 77
Greenes Energy Group . . . . . . . . . . . . . . . . . 109
Halliburton . . . . . . . . . . . . . . . . . . . . . . . 4, 83, 99
ION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
J&J Truck Bodies & Trailers . . . . . . . . . . . . . . . . . 25
Magnum Oil Tools International . . . . . . . . . . . 61
McJunkin Redman Corporation . . . . . . . . . . . 15
Mechanix Wear . . . . . . . . . . . . . . . . . . . . . . . . . 88
Mewbourne College of Earth & Energy . . . . . . 9
M-I Swaco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Momentive . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
National Oilwell Varco . . . . . . . . . . . . . . . . . . . 34
Newpark Drilling Fluids . . . . . . . . . . . . . . . . . 32
NSC-Tripoint . . . . . . . . . . . . . . . . . . . . . . . . 89-91
Offshore Energy Center . . . . . . . . . . . . . . . . .129
Oilfield Improvements . . . . . . . . . . . . . . . . . 134
Paradigm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
PGS Exploration (UK) Ltd. . . . . . . . . . . . . . . . . 30
PGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Pentair Technical Products Anoka . . . . . . . . . . 46
Precision Geophysical . . . . . . . . . . . . . . . . . 113
Roxar Software Solutions . . . . . . . . . . . . . . . . . 29
Roxar Flow Measurement . . . . . . . . . . . . . . . 105
Schlumberger . . . . . . . . . . . . . . . . . . . . . . . 3, BC
Schneider Electric . . . . . . . . . . . . . . . . . . . . . . 20
Select Energy Services . . . . . . . . . . . . . . . . . .59
Spacecom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Spectrum Geo Inc. . . . . . . . . . . . . . . . . . . . . . . 67
Statoil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Surfside Abstracting, Inc. . . . . . . . . . . . . . . . 104
TAM International . . . . . . . . . . . . . . . . . . . . . . .41
TEAM Oil Tools . . . . . . . . . . . . . . . . . . . . . . . . 84
Tenaris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Tendeka . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95
Tetra Technologies Inc. . . . . . . . . . . . . . . . . . IBC
Tex-Az Field Services . . . . . . . . . . . . . . . . . . . .82
TGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Thru Tubing Solutions . . . . . . . . . . . . . . . . . . . .79
Timken Company, The . . . . . . . . . . . . . . . . . . . .51
TrueNorth Steel . . . . . . . . . . . . . . . . . . . . . . . . 80
U.S. Steel Tubular Products . . . . . . . . . . . . . . . 73
Volvo Penta . . . . . . . . . . . . . . . . . . . . . . . . . . . .103
Weatherford International, Ltd. . . . . . . . . . 22, 23
Well Control School . . . . . . . . . . . . . . . . . . . . .112
WellEz Information Management, LLC . . . . . . .75
Welltec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Zeeco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
ADVERTISER INDEX
on the
MOVE
EPmag.com | November 2012
135
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
United Kingdom / Europe
Africa / Middle East
Eden House
64-66 High Street
Chobham
Surrey GU 24 8AA, UK
Tel: 44 (0) 7930 380782
Fax: 44 (0) 1276 482806
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
PO BOX 5800
Harlan, IA 51593
Tel: 713-260-6442
Fax: 713-840-1449
custserv@hartenergy.com
List Sales
MICHAEL AURIEMMA
Venture Direct
Tel: 212-655-5130
Fax: 212-655-5280
mauriemma@ven.com
MARKETING | SALES | CIRCULATION
Glacier Energy Services has relocated
its main business and manufacturing
operations to its new facilities in Glas-
gow, Scotland.
Ikon Science has opened new offices in
Calgary, Alberta, Canada, focusing on
delivering services to the Canadian
exploration and development industry.
Aberdeen-based Xodus Group, an
international energy consultancy,
recently announced plans to expand
into Middle East operations with the
opening of a new office in Dubai, UAE.
Honeywell has expanded its presence
to Saudi Arabia, where it recently
opened a research and training center
in the Dhahran Techno Valley.
Partnering with OFS Energy Fund, KW
International LLC plans a new manu-
facturing facility in Columbus, Texas.
The company specializes in midstream
and production equipment.
Iowa-based Mechdyne Corp. has
expanded its presence into the Middle
East with the opening of its new office
in the UAE.
dGB Earth Sciences has announced
the opening of an office in Rio de
Janeiro, Brazil.
Aker Solutions recently expanded its
services to Labuan, Malaysia, opening a
subsea lifecycle service base to support
the Asia Pacific region.
Reflex Marine has opened an accred-
ited service center in Mount Pearl,
Newfoundland, appointing Nord
Marine Services Ltd. to operate the
new Canadian location.
October 2012 | EPmag.com
134-135 Onthemove-NOV_Onthemove 10/22/12 3:05 PM Page 135
P.
November 2012 | EPmag.com
136
last
WORD
S
ocial risk is becoming as important a factor in project
delays as technical risk. Being technical people, we are
used to managing technical risk and have the processes
and systems in place to do so. However, we have yet to
develop effective processes to manage social risk. Histor-
ically the industry has largely managed to escape the
impact of social risk as our projects have been offshore
and out of sight, but it is becoming more evident that our
interaction with the local population as well as at govern-
ment, national, and international levels creates significant
risk to the project and to the company.
Social risk
The shale gas debate has brought oil and gas into the
center of the public eye when it comes to addressing
our energy needs.
Disenfranchised populations living around a project
routinely delay and damage project progress. The need to
win the hearts and minds of people living near production
facilities is just as important in the international domain.
But perhaps more complex in international operations
is the industrys interface with national governments. An
important cause for disenfranchised people is the effect
of hydrocarbon wealth on a corrupt government. Key
questions for us to address are the roles an oil company
has toward national governments and whether we can
choose to ignore the human rights/social justice records
of the host governments in countries in which we operate.
Most companies would agree that the answer to the
second question is probably no, but to the first,
the honest answer is we dont know.
In a number of developing countries, particularly in
Africa and the former Soviet Union states, our industry
has a dominant impact on the national economy and in
some cases enables corrupt governments to stay in power
to the detriment of their subjects. World Bank data from
1970 to 2001 shows that on average, countries in Africa
and the Middle East are worse off now than before hydro-
carbon development.
The industry has the chance to improve social well-
being in emerging hydrocarbon economies such as
Ghana, Uganda, and Mozambique. In Ghana the signs
are very encouraging, but sadly less so for Uganda and
Mozambique.
Taking a holistic view
Many of the issues discussed here are caused by poor-
quality governance. However, I believe the solution starts
at the local and project level. The implicit contract that
a company has is that a project will damage the local
neighborhood but that local people will be better off.
The industry has manifestly broken this contract in that
the populace is patently worse off.
Achieving a winning outcome to this contract requires
managing the interplay of three risk domains: environ-
mental, societal, and technical. The value of the environ-
ment must be determined in social terms (and not a
purist preservation measure set in Western ivory towers).
We can manage our environmental impact at the project
design phase through engagement with the local people.
We can also manage the benefits to society with local pro-
curement and wealth creation (i.e., not just building
schools and hospitals to salve our conscience).
The way forward
We should take the same approach to winning social
acceptance for a shale gas development in the UK as for
building an LNG plant in Mozambique by engaging with
people early, listening to them, and having a material
value proposition for them.
Achieving such an outcome requires integrating early
social engagement and HSE functions into the project
stage processes to address local concerns alongside achiev-
ing regulatory compliance. This will be a challenge for
many companies that have only just managed to get geolo-
gists to talk to engineers. Social scientists may appear a
step too far but are absolutely essential.
Managing social risk
Getting a license to do business requires understanding public perception.
Hamish Wilson, SLR Consulting
136 LastWord-NOV_136 LastWord-NOV 10/19/12 11:22 PM Page 136
991-994 covers-NOV_Layout 1 10/22/12 12:40 PM Page 993
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991-994 covers-NOV_991-994 covers-NOV 10/19/12 11:23 PM Page 994
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