E PM 20131201

EPMAG.
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DECEMBER 2013
Technology Transfer Industry Reviews: Exploration Drilling Production Offshore Unconventionals: CBM
REGIONAL REPORT:
2014 Exploration Hotspots
A BRAND NEW DAY

Experts predict great progress in 2014
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EXPLORATION & PRODUCTION WORLDWIDE COVERAGE

A H A R T E N E R GY P U B L I CAT I O N
DECEMBER 2013
VO L U M E 8 6 ISSUE 12
w w w. E P m a g . c o m
TECH TRANSFER
COVER STORY: EXPERTS PREDICT
42 44 48
Out of this world-class solutions Taking cues from outer space
EXPLORATION REVIEW
Finding new ways to discover oil
32
Experts Predict!
E&Ps editorial advisory board members share their insights on 2014.
IndustryPULSE:
DRILLING REVIEW
54
Deeper wells, longer laterals, higher production drive drilling technology
PRODUCTION REVIEW
64
Production toolbox gets a little heavier in 2013
OFFSHORE REVIEW
74
Industry adopting pragmatic approach to offshore projects
86
REGIONAL REPORT: 2014 EXPLORATION HOTSPOTS
Downhole electronics: How hot can you go?

The energy industrys push into deeper, hotter formations will require new types of sensors.
10
WorldVIEW:
Plenty is on Brazils presalt plate for Petrobras

Its all systems go for Petrobras as the company tackles a daunting project schedule, but the Brazilian NOC is up for the challenge.
68
Unconventionals: CBM
Queensland LNG projects lead CBM developments worldwide
CBM developers worldwide especially in Australia, China, and India are boosting development while shale gas is slowing US CBM production.
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Good tidings 7 16 18 25 27 29 31 79 80 84 90 94-95 96
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MANAGEMENT REPORT
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EXPLORATION TECHNOLOGY
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COMING NEXT MONTH The January issue of E&P will look at the state of R&D among some
of the worlds largest national oil companies. Other features include seismic processing and interpretation, HP/HT drilling tools and challenges, surface production systems, and rig and drillship innovation, and regional highlights will include a look at Argentinas unconventional fields and West Africa. As always, while youre waiting for the next copy of E&P, remember to visit EPMag.com for news, industry updates, and unique industry analysis.
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ABOUT THE COVER The E&P editorial advisory team predicts interesting
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FOGL announces third Falkland Islands survey

Falkland Oil and Gas Ltd. (FOGL) announced the start of its third 3-D seismic survey focused on its license areas to the south and east of the Falkland Islands.
GE project targets oil sands gas emissions

GE Canada has unveiled a second phase of investment to develop technology that addresses environmental performance in the Alberta oil sands.
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Cooper, Beach hit oil at Callawonga well

Cooper Energy Ltd. announced in a press release that Callawonga-9, an oil development well in the Cooper basin in Australia, has penetrated at least 6 m (20 ft) of gross oil column in the McKinlay member and Namur sandstone.
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Indonesia E&P activity remains strong
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A host of companies are drilling exploration wells in Indonesia, with the eastern areas of the country very much on the radar.
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Good tidings
As the global energy tide ebbs and flows, oil and gas resources continue to provide an abundance of opportunities for the E&P sector.
ccording to the International Energy Agency (IEA), some long-held tenets of the energy sector are being rewritten, with the forecast activity set to keep the E&P business busy for decades. The IEAs annual World Energy Outlook is a worthwhile read when considering the futures big picture as we near the start of a new year. But to put it bluntly, the IEAs outlook is not telling us much we didnt already know. For example, the report tells us that OPEC and the Middle East will remain critical in the long term for the supply of low-cost oil. And over the next 10 years, Brazil and the US will mostly be responsible for temporarily reducing OPECs contribution. Demand, meanwhile, will continue to be dominated by growth from China and India. This is not exactly shocking news. But some of the figures within the outlook do give good insight into what may lie around the corner for us. Estimates for ultimately recoverable oil resources are increasing thanks to improving technology. The latest IEA figures for remaining recoverable resources are 2,670 Bbbl for conventional oil (including NGL), 345 Bbbl of tight oil, 1,880 Bbbl of extra-heavy oil and bitumen, and 1,070 Bbbl of kerogen oil. Oil supply is forecast to rise from 89 MMb/d last year to 101 MMb/d in 2035, including a rise in unconventional oil (up 10 MMb/d) and NGL linked to the increase in gas output (up 5 MMb/d). Conventional oils share of total crude production falls from 80% in 2012 to two-thirds by 2035, the report said. The IEA also estimates that the observed decline rate for conventional fields past their peak will be around 6% per year. The above stats are a good indicator of where much opportunity lies, with declining output from fields being a major driver for investment. Total spending in the upstream sector is expected to rise to more than US $700 billion this year alone, the IEA said, representing a new record. I recently heard George Kirkland, Chevrons vice chairman and executive vice president of upstream, talk about the industry having to produce oil from increasingly complex resources. He mentioned a mind-boggling figure of between $7 trillion and $10 trillion of additional investments. Clearly the resources are out there to be found and produced from these increasingly complex projects, driven in turn by technology advances and the oil price. The IEA stated that although technology and high prices are opening up these resources, it doesnt mean the world is on the verge of an era of oil abundance. But it does mean we can safely say that there will be an abundance of opportunities for the E&P sector to thrive.
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PULSE
Downhole electronics: How hot can you go?

The energy industrys push into deeper, hotter formations will require new types of sensors.
Adam White, eXception EMS Ltd.
lectronics are becoming a ubiquitous part of our everyday lives, not only in our homes but also at commercial and industrial sites. The use of electronics at these sites is changing the way many companies are managing and averting risk, allowing them to measure and control risk in ways theyve never been able to before. The oil and gas industry relies heavily on these advanced technologies to develop reliable and innovative ways to optimize businesses as advancements in offshore drilling and hydraulic fracturing are making it possible to recover gas from greater depths and in harsher environments. The high price of oil and, in some regions, natural gas has helped fund research into extracting hydrocarbons from these more difficult places, both onshore and offshore. The challenge to electronics manufacturers and designers is to get these ever-shrinking, increasingly complex electronics to work at the high temperatures, vibration, and extreme pressures encountered in these
environments. Instrumentation designed to work in this environment is constantly being challenged, and there has been a proliferation of electronic devices for some of these difficult environments, including the most challenging to date: downhole. A drive for high levels of functionality in products designed to measure performance in downhole environments such as sensors within drillheads that can measure depth, vibration, and temperature has seen the electronics change from simple low-technology, conservative designs to ones using technology normally seen in mobile phones, such as 0.5-mm pitch ball grid arrays, small chip components measuring less than 1 mm, and high-performance silicon. But these complex designs still have to survive the high temperature and vibration commonly seen in a drilling operation. A typical example of this is the accurate vibration sensor that lives right behind the drillbit. This sensor has a high-specification digital signal processor, radio communications, and flash memory, which all fit into a metal tube 100 mm long and 40 mm in diameter. So the challenge is to develop technology that allows more information to be delivered in smaller devices in harsher environments, and the electronics industry is having to work hard to come up with a solution to this problem.
High melt-point solder techniques

Electronics manufacturers are accustomed to the use of different solder alloys to achieve strong joints at higher temperatures. In fact, high-temperature alloys were being used before EU legislation had moved the rest of the industry away from tin or lead. The performance of these alloys is sufficient between 150C and 175C (302F and 347F) operating temperatures, but above this range, different alloys are needed to provide the tensile strength required. Each of these has its own challenges Pb85 has poor solderability, and Au80 is prohibitively expensive but the alloy that is currently getting the most focus is high melt-point (HMP) Pb93.5,Sn5,Ag1.5. This alloy has great tensile strength at high temperatures and flows well when liquid. The main problem is that its melting point of 301C (574F)
December 2013 | EPmag.com
Complex electronics have to survive high temperatures and vibration typical of a drilling operation. (Image courtesy of eXception EMS Ltd.)
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means that the processing temperature of current automated manufacturing methods is so hot that the silicon devices within the manufacturing process can get damaged. Currently, the only method of soldering these devices is by using skilled people, but even then it is not possible to solder some of the new miniaturized parts by hand. However, new manufacturing equipment that will help solve this problem is on the horizon, driven by the demand created by the industry.
More ruggedized products

Current electronics also need to go through a suitable ruggedization program to make sure they can physically survive the environment they are made to work in. This normally involves mechanical adhesive to support the joints and some kind of coating and potting to ensure physical separation from the elements. Care has to be taken to ensure that at the extremes of temperature and pressure, the coefficients of thermal expansion (CTEs) are matched throughout the product to ensure that no undue stress is put on the joints that might cause premature failure. In such critical devices this ruggedization is a necessity one customer develops a drillhead control product that uses up to five different products for ruggedization. They include mechanical adhesive for big parts to aid vibration-proofing, a white ceramic product to help heat dissipation, a conformal coat for electronics protection, a potting compound to protect the hole assembly, and a foam to stop material going where it shouldnt and causing a CTE mismatch.
Packaging technology
HMP can take the working temperatures of the electronics above 200C (392F), but soon after this the integrity of the component packages defines the limit of the working temperatures. Most electronics are only available in plastic packages. These are designed to withstand 260C (500F) for short periods, for example as part of the soldering process, but not for extended periods of time. Thus, many high-temperature tools used above 200C have a very short life expectancy before the packaging deteriorates.
Heat-sinking Hybrids
Hybrid technology is currently being investigated to get away from the packaging issue. This technology has been around for a long time; it involves bonding the bare silicon onto a ceramic substrate and wire-bonding the connections onto conductive paths printed onto the substrate. These can withstand much higher temperatures for much longer, but they have a few drawbacks. The hybrid circuits are more time-consuming and costly to prepare tooling for and are not easily modified. This means design changes are more difficult and expensive and take longer. Also, many of the parts that are used downhole are not available in bare die format, although increasingly vendors are responding to the need. Working electronics create heat, even when they are hot already. This problem will become more acute as the environment gets hotter. The initial solution is to make the electronics withstand the hotter temperatures again, but as the realistic working limit is reached, methods of heatsinking the electronic assemblies need to be found. Initially this has been through traditional heat sinks, but now the use of thermally conductive adhesives is becoming common. Other methods such as banked thermoelectric coolers (a solid-state electric cooler) may need to be considered to keep the junction temperature of the silicon down to a level where its working life will be suitable.
How hot will we go?

While we can visualize the development path of electronics working at more than 300C and its not too much of a stretch to see 500C (932F) the unknown quantity is how long it will take to get there. This depends on the market drive and investment availability, which in turn will depend ultimately on the price of oil. It also is uncertain whether a disruptive technology will change the expected development path using hybrids and SiC. This potentially could be high-temperature conductive adhesives, encapsulants, or polychlorinated biphenyl materials. The threat of this will stop investment in the technology until the market needs it imminently, and many assemblers wont invest in hybrid technology until they can see the demand. The winners as always will be those who are bold enough to gamble on the right technology at the right time.
9
Silicon carbide
Silicon carbide (SiC) is getting a lot of attention and funding in the power electronics segment. It is a new higher performance replacement for silicon due to its high energy gap, good thermal conductivity, and hightemperature operation. These characteristics make it good for downhole applications, and it is now possible to drive more efficient motors and power supplies at higher temperatures. At present it is only available for power diodes and transistors, and unfortunately there is no sign yet that this development is going to extend into processor, sensor, and communication technology that would be required to get these products working at above 300C (572F).
EPmag.com | December 2013
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II
world
VIEW
Plenty is on Brazils presalt plate for Petrobras

Its all systems go for Petrobras as the company tackles a daunting project schedule, but the Brazilian NOC is up for the challenge.
Mark Thomas, Editor in Chief
s the dust continues to settle in Brazil following the feeding frenzy that surrounded the countrys firstever presalt auction of the rights to one of the biggest offshore fields ever discovered, Petrobras already has much on its plate to digest. Maria das Graas Silva Foster, the companys president, however, seems unfazed by the many tasks that lie ahead. Consider the fact that her organization is on target to bring to completion a total of nine new major offshore oil and gas production facilities by the end of this year alone, and her confidence is understandable. It is the first time in the companys history that it has ever received this many production units in a single year, and Foster told delegates at OTC Brasil in Rio de Janeiro their installed capacity will amount to 1 MMb/d.
very proud of the shipyards in Brazil. Ten years ago a lot of people laughed when we mentioned local content. In addition to the 17 stationary production units that are currently under construction in Brazil, we have 28 rigs and 41 transport ships being built in Brazil. To meet this [production] curve, we have 12 more contracts to do. The success of the companys exploration in the presalt has been little short of spectacular, Foster continued. Pointing out that all 13 presalt wells drilled up to the end of October had found oil, she added that altogether a total of 144 exploratory wells have been drilled in the presalt with an astonishing 82% success rate. Our exploration success is impressive. If we count offshore and onshore wells, we have a 65% rate, which is far higher than the global average, she said. She went on to point out that Brazil accounted for 62% of large deepwater discoveries worldwide between 2007 and 2012.
Libra in the spotlight

With much of the global industrys attention focused on the bidding battle for the rights to explore and eventually develop the Libra field, Foster spent time outlining the state-owned majors expectations. The company,
Target of 4.2 MMb/d by 2020

These production units are a key part of the operators plans to double its current production levels and achieve its ambitious target of 4.2 MMb/d of oil by 2020. That target is backed up by a forecast investment of up to US $237 billion, according to its latest business plan. Of the units starting up this year, the FPSO vessels Cidade de So Paulo, Cidade de Itaja, and Cidade de Paraty have already come onstream, while others such as the FPSO unit P-63 and the semisubmersibles P-55 and P-58 are in place. The P-61 and P-62 units also were due to arrive at their final locations in December. Giving Petrobras perspective on the many outstanding opportunities and challenges in Brazil, Foster discussed the transition that will occur over the course of the next five or six years for the company and the country. The P for production will be more important for us than the E for exploration, she said. Looking back a short time showed how far the country has come in many regards with respect to its industry capabilities, Foster added. Highlighting the growth of the shipbuilding industry in recent years, she said, We are
10
Maria das Graas Silva Foster, the CEO of Petrobras, is confident the company will hit its 2020 production target of 4.2 MMb/d. (Images courtesy of Petrobras)
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which is already pumping more than 330,000 b/d of oil from its other presalt assets, believes Libra is one of the most promising accumulations yet. Petrobras has a 40% stake in the field in the Santos basin and is expecting first oil to be extracted in 2020. The regulatory framework [production sharing] is clear, objective, and unambiguous, she said. Foster also noted that investments in Libra will start to ramp up significantly within the next four years. In 2017 Libra will start to become a material aspect of our capital expenditure. However, by then, the company will already be producing 750,000 b/d more than the current 2.2 MMb/d of oil that are flowing today from its existing fields. Between 2020 and 2023, we will see Petrobras and our consortium partners ramping up production on Libra, she added.
Field spend of $180 billion

The task of exploring, appraising, and developing the presalt Libra deposit is huge, with the company and its
consortium partners Shell, Total, CNOOC Ltd., and China National Petroleum Corp. facing a total forecast field life investment of up to $180 billion over the period of the agreement. The consortium has pledged to the Brazilian government a minimum 41.65% of profit oil, after already agreeing to pay a signature bonus of $6.7 billion for the field rights. But there should eventually be profits, especially since at its peak the field is forecast (admittedly at a very early stage in its assessment) to be likely to produce up to 1.4 MMb/d, according to the National Petroleum Agency (ANP). The ANP puts recoverable reserves between 8 Bbbl and 12 Bbbl. Fosters experienced Petrobras colleague Jose Miranda Formigli, the companys E&P director, also was upbeat both on the quality of the consortium partners and the potential of the field itself. We believe that the technical expertise that they will bring for subsurface issues will be extremely important for the Libra development. All these companies have quite a lot of experience in implementing megaprojects, he said at OTC Brasil. But we will need to balance the exploration and appraisal period with the time for first oil, and to reach that, we have to have the right information management which means we have to share the right information within the consortium.
Up to 15 production systems
The consortium, which will be led by Petrobras, should in the near future outline specific targets and plans for Libra, Formigli said. The development is likely to be produced through
ABOVE: Keeping its eyes on the prize, the P-63 Papa Terra FPSO vessel heads for its oilfield location in the Campos basin. A tension-leg platform also will join it on the field soon, with peak production levels expected to hit 140,000 b/d of oil. RIGHT: The P-55 semisubmersible production platform sails en route to the Roncador field in the Campos basin after leaving the Rio Grande Shipyard. It is one of nine units being installed by Petrobras in 2013.
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When you think of petroleum engineering and petroleum geology/geophysics
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degree in 1904
Home to the world' s first school of Petroleum Geology,granting the first Home to the world 's first school of Petroleum Engineering
Alma mater to more petroleum engineers and petroleum geologiststhan any program in the world. OU is alma mater to eight Society of Petroleum Engineers (SPE)
past presidents, eight American Association of Petroleum Geologists (AAI ) past press ueius anu nve JU U eLy UI rupIUrauuII Ueupm (SEG) past p -esidents. www.ou.ed u/mcee
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between 10 and 15 separate but largely replicant floating production systems in a phased or module approach, as Petrobras terms it. This will be similar to the operators strategy for the development of its giant Lula field, meaning offshore contractors are likely to be approached before year-end 2014 regarding the various development aspects. At this stage, however, Petrobras will say only that recoverable oil volume estimates, costs, investments, and a schedule for the production systems will be progressively released in a timely manner, as the minimum exploration program is developed. The Libra block covers 1,548 sq km (598 sq miles) and was discovered by well 2-ANP-0002ARJS in 2010, in water depths of around 2,000 m (6,500 ft). Petrobras has a 40% stake in the field, with its partners being Shell (20%), Total (20%), CNPC (10%), and CNOOC (10%). The contract for the block will be under a 35-year production-sharing framework in accordance with law No. 12,351, which covers the authorization of the E&P of oil and gas in the presalt and other strategic areas. The minimum exploratory program to be carried out over an initial fouryear period will include 3-D seismic for the whole block, two exploration wells, and one extended well test. For the exploration phase the minimum percentage of overall local content is 37%, while in the development stage it will rise to 55% for systems with first oil until 2021 and 59% for those after 2022.
field, including taxes, of around 80% (one of the highest rates in the world), according to the ANPs director general, Magda Chambriard. During OTC Brasil, she said, We couldnt have attained a scenario that would be more successful than this one.
Government take of 80%

Although plenty still remains to be clarified there have only been two wells drilled in the license area so far few doubt it will eventually deliver substantial returns for all those involved. Not least among them will be the government, which will have a total predicted eventual take from the
15
management
REPORT
Asset management key to E&P performance

GPS-enabled devices help answer important logistical questions.
James MacLean, Geoforce
&P executives are under great pressure to make the right location decisions when it comes to leasing, drilling, and exploiting reserves. These decisions are delivered by the best technology in the world and carefully analyzed by experts. However, there are other key location-related variables E&P executives should carefully consider that also can significantly impact operations and profitability wholly apart from where to invest and drill. When it comes to maximizing performance in the oil field, executives will run more efficient, profitable operations when they know the answers to the following four questions.
GPS devices like Geoforces GT-1 can help operators keep track of their inventory. (Image courtesy of Geoforce)
Where is my equipment?
Locating equipment in the oil field has always been a challenge. The oil field is a 24/7 operation. Valuable assets like frac tanks, generators and pumps, trucks, vessels, and cargo are constantly in motion across drilling rigs, platforms, shore bases, marine vessels, and vehicles. Many sleepless nights are caused by operators and service providers scrambling to get the right equipment to the right site at the right time. Theres not an operations manager in the industry who hasnt bolted up in bed late at night worried that a key component for a job scheduled the next day is missing. Ironically, equipment tracking and management has traditionally been a low-tech, tedious, labor-intensive process. Even today, many companies manually manage key assets (and their locations) in spreadsheets or even on whiteboards and are often forced to guess the latest locations of specific equipment. To address the challenge, an increasing number of rental companies, service companies, and operators are starting to use location-based technologies to simplify asset management and operate more efficiently. For example, E&P companies are leveraging GPS and other wireless technologies to instantly locate and manage their valuable equipment. Consider the real-world example of a supermajor operator awaiting a key chemical shipment from its chemicals
16
supplier for offshore production. The operator was unaware that the job had already been loaded on two intermediate bulk containers and made an urgent call to the chemical services company to determine the shipments status. Leveraging this new technology, the service provider was able to check the GPS system and determine that the shipment had been on the dock for two days. Crisis averted. In another example, an operator sought a solution to better manage its equipment headed offshore in Brazil. Some shipments were more important than others, but the dock was so crowded it was almost impossible to navigate and quickly find key equipment. The operator was able to solve the challenge by leveraging GPS tracking.
Where is my money?
Theres a famous expression attributed to John Wannamaker in the late 19th century, I know half the money I spend on advertising is wasted; I just dont know which half. In the oil field today, most executives could paraphrase that expression by saying, I know half of my rental equipment billing is wrong; I just dont know which half. Not even the biggest E&Ps own all their equipment, and there is often a lot of time wasted by service companies and rental companies as they try to sort out who had what and when and how much the bill should be.
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Invoice discrepancies between rental companies and service companies are not uncommon. In one recent case in which there was some disagreement, an operators rig manager asked, What does the GPS show? Based on the data tracked via GPS, the manager was able to determine that the equipment was there for nine days. The operators representative instructed the service company to pay the invoice for nine days, and the case was closed. Another situation involved an equipment rental company providing powered equipment such as generators and light towers to well sites. The companys business model was to charge customers only for the equipment utilization time. But what are best practices for determining actual equipment utilization? Should they rely on a rotating group of site workers to remember when the equipment was on? In this case, by leveraging GPS devices with engine runtime capability, all doubt was removed. The runtime data combined with the location record accurately captured it all, eliminating any he said, she said.
Where is my opportunity?
Opportunity tied to knowing equipment location in the oil field comes in many flavors. One of the most obvious is missed jobs. Consider that one lost job for a service company because it cant find a piece of equipment could be a six- or seven-figure loss. Branch offices that know this sometimes hoard key equipment, just so they wont be caught short. If the service company flies blind on location, it either loses money completely or buys more equipment than necessary for the just-incase scenarios. Take the example of a service company with five locations within an operating region. Logic says that expensive equipment such as US $100,000 sand separators should be shared between locations as no single location will need them 100% of the time. But in reality human
Where is my risk?
The oil and gas industry has an exemplary safety record compared to virtually every other industry. But there is always risk. Knowing the location of radioactive sources is an example in which GPS tracking technology can prevent or limit a risk of major fines and penalties. Another area of concern is vehicle safety. The fear of lawsuits and/or injuries keeps a lot of HSE executives up at night. But vehicle tracking combined with driver performance metrics (tracking speeding, hard braking, etc.), can help mitigate that risk. To illustrate, Geoforce works with an offLocating equipment in the oil field has always been a challenge. The oil field shore helicopter service company that equips is a 24/7 operation. its fuel totes with GPS tracking and shares the location data (including duration on specific nature takes over. When location A is bidding on a job rigs) with a supermajor operator. The key safety issue is that needs a sand separator and it doesnt have one fresh fuel. The ideal rotation at the rig is a first in/first a phone call to location B might yield a less-than-truthout process, which limits the risk of stale fuel. But offful response: No, Im not sure where that equipment shore rig operations are hectic, and when new fuel totes is. Location B knows it might also need that sand sepaarrive on deck, the older totes might easily get pushed to rator soon, so it is reluctant to part with it. But with GPS the back. Theres a risk of a last in/first out rotation, tracking there is no question. When location A calls to where the fuel stashed in the back is never used. The request the sand separator for a job starting Thursday, it solution in this case was simple: Give the operator the can see on the track-and-trace system that location B has ability to specify the fuel tote to be used based on GPSone. The result: an end to hoarding plus a measurable enabled days on site reports, even if it means rig workincrease in utilization. ers have to do a little extra work to find the right tote.
17
digital
OIL FIELD
The value of IT for the oil and gas industry

A detailed framework addresses tradeoffs among sources of value and adds to the bottom line.
Hakan Civi and Arthur Chung, A.T. Kearney
ver the past decade IT has become increasingly more relevant to the success of global oil and gas companies. Continued growth and competitiveness require companies to deploy best-in-class applications that enable core business operations/support functions and that build service capabilities to run IT systems. The value of IT for oil and gas companies is not commonly understood since expectations can significantly differ across segments. Upstream views IT mainly as an enabler to find and develop new reserves, minimize production losses, and reduce operational risks. Downstream expects IT to support and drive efficient manufacturing and supply chain operations. Reliability is the common expectation across all segments where IT systems can help prevent and contain the risk of catastrophic events. Expectations can vary significantly across these segments when it comes to IT cost. As such, oil and gas CIOs find themselves facing two major strategic challenges: aligning business stakeholders around a common understanding of the value of IT and ensuring cost efficiency. Successful CIOs explore ways of defining and delivering upon value expectations, Magic Triangle of IT Value to Business which include a disciplined Business approach to cost.
and innovation, cost efficiency, and reliability and quality (Figure 1). Building the CIO agenda around these dimensions helps IT organizations extract the most value from IT. The business enablement and innovation dimension emphasizes what IT needs to do to build and operate systems to enable business operations and offer new capabilities that drive competitive advantage; The reliability and quality dimension focuses on optimizing the lead times for new capabilities and on-time/on-budget delivery to ensure high levels of service availability, data integrity, and quality. This dimension also includes IT mandates that ensure compliance to standards and safety of oil and gas operations; and The cost-efficiency dimension centers on establishing an optimal cost-to-serve model where the key cost drivers are running and maintaining IT systems and the investments needed for delivering business capabilities. There is a widespread belief in the industry that there are deep tradeoffs between cost efficiency and the other two dimensions of value, but in most cases the tradeoffs are more of a perception than reality. Many clients have
Reserve replacement ratio Financial Cycle time reduction Metrics Production volumes Capital productivity Finding, development, operating cost Intangibles Technology as a differentiator in reserve access: partnership/JV bids Compliance Prevention of single catastrophic incident
Enablement/ Innovation
IT value triangle
A.T. Kearneys IT value triangle framework addresses the perceived and real tradeoffs among sources of value and helps drive stakeholder alignment on the CIO agenda. The IT value triangle emphasizes the importance of striking a balance among three critical sources of value: business enablement
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Cost Efficiency
Invest Cost of project delivery Cost of new equipment / infrastructure Infrastructure Run & Software / applications Maintain In-house resources Contractors
Reliability / Quality
Lead time for new capabilities Invest On-time/on-budget delivery Service availability Run & Time to respond/repair Maintain Incident Resolution Data integrity/quality
FIGURE 1. The IT value triangle emphasizes the importance of striking a balance among three critical sources of value. (Images courtesy of A.T. Kearney)
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the implementation of the three primary levers. New efficiency Rapid external cost reducPerformance frontier tion takes advantages of (Quality/ Business reliability external IT spend opportuniEnablement/Innovation Transform to and enhance value ties that do not result in sigbusiness Spend more to enablement/ nificant tradeoffs between increase innovation) performance performance and cost. ExterQuality/Reliability nal IT spend can be more Typical starting than 60% of an oil and gas position companys IT budget. A proLower performance to save cost grammatic approach includStatus quo Cost Efficiency efficiency ing spend consolidation, frontier direct negotiations, benchCost marking, contract restructurFIGURE 2. CIOs can find new efficiencies by restoring balance among the three critical ing, spot audits, and rate value dimensions. card enforcements can drive a 5% to 10% cost improvement within a year. High Game Changers Unconventional IT Game Changers The organizational realign Disruptive efforts that yield the greatest value ment lever focuses on opporExternal IT Spend Internal tunities to streamline Conventional Value IT Spend operations and the gover Time Horizon: Short Time Horizon : Long nance model across IT func Risk: Low Risk : High tions. This lever can be Value: Short Term Value : Long Term difficult as it implies head Sources of Value: Sources of Value : count reduction and changes Hardware Operating Model to the current organizational Network Restructuring structure. Such challenges Software Org. Efficiencies IT Services are compounded for decen IT Consulting tralized oil and gas compa Staff Augmentation nies where duplicate and shadow IT organizations Low exist. C-level sponsorship, Simple Difficult Ease of Execution best-in-class organizational FIGURE 3. In this assessment of enterprise IT spend, value creation is charted vs. ease models, and a rigorous of execution. approach to identifying core capabilities/assigning ownerdemonstrated that they can improve cost efficiency ship across IT organizations are critical for this lever to while delivering on value expectations across the other be successful. two critical dimensions. The game-changer lever fundamentally changes the way IT operates through transformational initiatives. IT cost-efficiency agenda Game changers are CIO-driven and can alter the IT A significant opportunity exists for oil and gas CIOs to organization structure, supporting processes, infrastrucleap to a new efficiency frontier (Figure 2) by restorture, and vendor engagement models simultaneously. ing balance among the three critical dimensions of Cost efficiency can be a critical output, but the focus is a value and placing a greater emphasis on establishing step change in quality and reliability of the underlying an IT cost-efficiency agenda. services. Cost benefits are achieved by driving greater Executing an IT cost-efficiency agenda begins with an operational integration, consolidating and centralizing enterprise IT value assessment to identify and prioritize the IT structure, and optimizing the supplier engageopportunities that shape a multiphase program through ment model. Game changers can be challenging to
Illustrative
Typical Tradeoffs for Oil and Gas Companies
Value
IT Game Changers
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Value Creation
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Facility models that understand field plans
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execute and can result in near-term change management issues for the IT organization. But done right, with solid stakeholder support, game changers can move all sources of value and define a new efficiency frontier. Of the three levers, the rapid external cost reduction lever is the easiest and fastest to implement. It is important not to lose sight of the other two levers, which span across internal and external IT spend. Successful implementation of all three levers can help the CIO achieve significant short-term and sustainable long-term benefits. In one instance a global oil and gas company was able to execute all three levers in succession to achieve a cost improvement of more than US $100 million and higher service levels.
Managing change and sustaining benefits

Value created through the successful execution of the levers outlined above can be easily eroded if the levers are not accompanied by actions to manage change and sustain benefits over time. Managing change is no easy
feat and requires a coordinated global program to align stakeholders, drive initiatives, and track and demonstrate value creation. Sustaining benefits can be equally as difficult. Failure to sustain benefits destroys the return on investment. CIOs need to align the operating model and establish supplier governance programs to sustain and realize the full potential of an IT cost-efficiency program. The IT value triangle highlights the importance for CIOs to balance sources of value from innovation, reliability, and cost efficiency. Client projects have shown that improved cost efficiency can be achieved without sacrificing business value expectations. Executing an effective IT cost-efficiency agenda through a combination of rapid external cost reduction, organization realignment, and game-changer levers can help overcome the perceived value tradeoffs and yield significant productivity gains. Success will require strong sponsorship to drive and mandate change and establish proper governance models to sustain benefits.
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TECHNOLOGY
Burying sources to find hidden treasure

A new source concept could lead to a much better understanding of fractured reservoirs.
nce again we visit the debate over whether seismic technology has any use in unconventional reservoirs. But this time were not talking about using it as an exploration tool or even a tool like microseismic that monitors the reservoir as its being fractured. Were talking long-term reservoir monitoring with a new source technology that isnt even in the prototype stage yet. The issue with fractures is that they tend to close over time due to changes in the stress field. Operators find themselves needing to refrac wells periodically to reopen these sealed fractures. The proposed source technology would reside in a rathole in the bottom of a producing well or in a shallow offset well. Operators could take frequent snapshots of their reservoirs by permanently installing receivers near the surface. Over time this would lead to a tomographic image of the reservoir. Jim Applegate, CEO of Pegasus Oil & Gas Inc. in Denver, is a proponent of this new technology being developed by Owen Jones, cofounder and CEO of Argus Reservoir Monitoring Inc. This would give operators a sound reason to decide to refrac one well over one interval rather than blanketfracing the whole well or fracing every well in an area, he said. Thats where the costs are in this operation.
RHONDA DUEY
Executive Editor rduey@hartenergy.com
EPmag.com
A new source technology could provide long-term fracture monitoring to better determine refrac locations. (Image courtesy of Baker Hughes)
There are several advantages to having a subsurface source, he said. For one thing, it removes the necessity of bringing surface sources such as vibrator trucks into an operating oil or gas field a huge advantage in places like the Marcellus shale with difficult topography. Second, it eliminates the need for the sound waves to travel through the weathered region in the near surface, which can wreak havoc on the energy and frequency content of the signal. Also, it is yet another way to scientifically prove to the naysayers that the fractures being created in shale reservoirs are not affecting shallow aquifers. But like any good time-lapse program, whether conventional or unconventional, the biggest benefit is simply getting to know the reservoir a little bit better. We know there are bypassed hydrocarbons in these fields, Applegate said. We know that the sweep of our production, whether its initial, secondary, or tertiary, is not complete. By putting five to 10 sources, you can monitor the movement of the fluids. If you can increase the productivity in a field by 10% or 20%, that more than pays for the system and the monitoring, he added. Whats needed to bring this technology to fruition is, not surprisingly, funding. Applegate and Jones have talked to a few companies but are wary of intellectual property issues. I believe its going to take somebody who has vision, some real insight, Applegate said. Itll take a wealthy individual or a service company willing to risk some money to test the concept. But even if it costs [US] $5 million, thats a cheap Marcellus well.
25
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COMPLETION
Pipelay reelships meet challenges of 3,000-m water depths

From Santa Fe Internationals first dynamically positioned pipelay reelship in 1979, the industry is continuing its plunge into deeper waters.
fter finishing sea trials in the Gulf of Mexico (GoM), Santa Fe Internationals pipelay reelship Apache left on July 2, 1979, for her first job in the North Sea. As the first dynamically positioned reelship, the vessel could carry 1,818 metric tons (mt) of pipe spooled on its permanent reel and was rated to 915-m (3,000-ft) water depths. Fast forward to 2013 some 34 years later, when Technip hosted a press tour of its pipelay capabilities at its Theodore, Ala., spoolbase. Its reelship Deep Blue was loading pipe while we were there, and the differences between this ship and the Apache are astounding. There are two reels on the Deep Blue with a combined capacity of 5,600 mt. The ship can carry a total of 10,000 mt of pipe and is rated to water depths of 3,000 m (9,842 ft). The ship has the world record for the deepest installed reeled pipe on the Perdido field in the GoM in 2,957 m (9,701 ft) of water. The original Apache was 122 m (400 ft) long with a 21.3-m (70-ft) beam. The Deep Blue is 206.5 m (677.5 ft)
SCOTT WEEDEN
Senior Editor, Drilling sweeden@hartenergy.com
EPmag.com
The first dynamically positioned pipelay vessel, Apache (top), was built in 1979 for operations in 915-m water depths. The
Deep Blue (bottom) now works in 3,000 m of water. (Images

courtesy of Technip)
long and has a molded breadth of 32 m (105 ft). Think of the effort that has gone into advancing the technology of deepwater pipelaying. As Raymond Semple, Technips COO for the subsea business unit, told us, Technip ordered the hull of a drillship for the Deep Blue. Pipe is laid vertically through the moonpool. The sheer size of the pipehandling equipment is massive. And the masters of the vessel can drop the end of the pipeline in a 10-m (33-ft) square on the seabed in nearly 3,000 m of water. While on the bridge of the Deep Blue talking to Capt. Julian Osman, master of the Deep Blue, and Adrian Bruce, offshore construction manager, I mentioned the Santa Fe Apache. I was working on another magazine in 1979 where we did a six-part series on the thennew ship. What was interesting was that both of these men on the Deep Blue had worked on the original Apache. They said that the hull of the original Apache had been scrapped, but the reel and pipelay spread from the vessel were transferred to Technips Apache II, which was built in 2009, exactly 30 years after the original vessel began operations. That says a lot about the original equipment as well as the people who designed, built, and operated it. Bruce was a diver on the Apache. He now controls the pipelay operations on the Deep Blue. The skills that he learned as a diver and working subsea make him exemplary as the operator of the laying system, Semple said. The past and the future blend together very well on the bridge of the Deep Blue.
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production
OPTIMIZATION
The times they are a-changin

Natural gas production in the Marcellus brings widespread transformation to the region.
he International Energy Agency (IEA) released its World Energy Outlook 2013 just as Hart Energys DUG East conference was gearing up in Pittsburgh. In it, the IEA proclaims that many of the long-held tenets of the energy sector are being rewritten. The news of this rewrite is certainly not new to those in attendance at the conference as the significant impact of the development of the Marcellus shale is widely evident across the region. For example, more than 6,000 wells have been drilled in the Marcellus as of 2013, according to Cameron Horowitz, director of E&P equity research at US Capital Advisors. He also noted in his DUG East presentation that in the last six years there have been more than 12,000 drilling permits issued. Wells in two counties are producing some staggering results. Susquehanna and Bradford counties each produce close to 56.6 MMcm/d (2 Bcf/d), according to Horowitz. Future production in the Marcellus is forecast to be 566 MMcm/d (20 Bcf/d) by 2019. In the Marcellus, there are more than 5.7 Tcm (200 Tcf) of remaining resource with an approximate 30,000 viable drilling locations at less than US $4 gas. This resource richness triggered the transformation of the regions largest coal producer into a leading natural gas producer. CONSOL Energys president Nicholas Deluliis described this transformation of the 150-year-old company. Ten years ago we were a tradi-
JENNIFER PRESLEY
Senior Editor, Production jpresley@hartenergy.com
EPmag.com
tional coal producer. In fact, we were the largest underground coal producer in the world. Natural gas was just an afterthought to what we did, he told DUG attendees. Eight years ago we created CNX Gas through an IPO [initial public offering] to grow our gas segment alongside our coal segment. Three years ago we acquired the Dominion Resources Appalachia E&P business and became a coal company with a growing natural gas business. The transformation did not end there. In October CONSOL announced the sale of five of its West Virginia coal mines. According to Deluliis, the company is now an E&P business with a best-in-class legacy coal position. The worlds changing, and true to our legacy, CONSOL is as well. Yes, to quote musician Bob Dylan, the times they are a-changin, and natural gas production is fueling that change for the better. And with the IEA stating in its outlook that the global demand for all forms of energy will increase by one-third from 2011 to 2035, the change is a necessary one. On another topic, this will be my last production technology column. I have jumped ship and will begin covering the offshore sector for the magazine. Look for next months column to be written by senior editor Amy Logan, our newest addition to the E&P editorial team. In closing I would like to add that Ive enjoyed covering the production side of the industry this past year. Thank you for your emails full of suggestions and observations. Please keep them coming as we truly appreciate hearing from you.
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ADVANCES
Taking forecasts with a pinch of presalt

Having spent several days being bombarded with jaw-dropping activity and investment forecasts during a visit to the vibrant city of Rio de Janeiro, its time for a reality check.
ou may have noticed occasional news items coming out of Brazil in recent months, unless youve been living in a hole. Theres the buildup to the biggest single-sport event in the world taking place there next year when the football (or soccer as its known in the US) World Cup comes to town for four weeks mid-2014 to be played in what is the sports spiritual home. Sure, England invented it but we cant play it like they can. I even saw the greatest footballer ever, Pel, at the Rio de Janeiro airport as I left one of my personal highlights of the year. Then theres the biggest multisport event in the world to follow, when in 2016 the Summer Olympics roll into town. And for us oil folk, there was talk of Petrobras and its partners being likely to spend US $180 billion developing the Libra presalt megafield as part of the companys push to double todays production level and hit 4.2 MMboe by 2020. Thats all backed up by its forecast investment of up to $237 billion on E&P projects between now and 2017. All these big numbers can daze a man, so Im grateful to one of my worldly, wise colleagues for dragging me back to reality as we returned to our hotel through crawling rush-hour traffic after a busy day at OTC Brasil. Itll be chaos. These roads will be a disaster zone. They havent got the infrastructure in place to cope with the numbers that are coming. I cant see how theyll deal with it, he said. True, he was talking about the roads. But he could have been just as easily talking about Brazils offshore sector and infrastructure and the task that lies ahead of it a task already stretching its staff and resources close to the limit, as well as its financial reserves. Thanks to its presalt boom, for example, Brazil is the No.1 location for floating production projects in the
MARK THOMAS
Editor in Chief mthomas@hartenergy.com
EPmag.com
planning stage, with 22% of visible projects located there, according to International Maritime Associates. We all know about the fleet of replicant FPSO vessels that Petrobras is having built. But it also is likely to need 12 production units for its Libra field, while the equally huge Jupiter field could need six. The already-producing Lula development will need another two, while there are at least seven others being considered. Sorry, but I see an elephant in the room. The tender for the FPSO vessel for the Carioca field saw the contract go to Modec and Schahin Petrleo e Gs. But I hear the process only brought one bid, with a lease in the $700,000/d range. If thats true it smashes through any previous lease rate ceiling for a floater and indicates something else: that there is real concern within the industry that Brazils local content policy is causing capex and opex on its projects to spiral upwards. Escalating costs have already caused majors to stall developments and have a rethink elsewhere look at BP on Mad Dog and Woodside on Browse. With Libra and Jupiter around the corner, soaring costs and resulting delays are the last things Brazil can afford its got two big parties to pay for.
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Mike Forrest Consultant
Emphasize reservoir characterization for long-term planning
he shale revolution in the US during the past decade was fast-moving. After initial geology studies and vertical well drilling with cores and testing, land acquisition was first priority. My old saying is, An oil company can have a great exploration idea with state-of-the-art technical work, but without land holdings in the most attractive areas, the company has nothing. The early movers usually acquired the most attractive acreage. The land grab, sometimes at exorbitant prices that led to economic failures, was followed by acquiring additional geology data plus experiments in horizontal well landing points, lateral length, and hydraulic fracture and completion design. Microseismic surveys, either downhole or surface, were often acquired to get a general understanding of where the stimulated fractures were generated. Today, most oil companies have drilled sufficient wells to hold key acreage. Drilling efficiencies including pad drilling multiple horizontal wells from one surface
location have reduced costs. Infill programs are in progress. The massive amount of technical data in shale plays now needs to be reviewed with multidisciplinary teams integrating geological, geophysical, and engineering data to build reservoir characterization models, sometimes called earth models. Teamwork with geoscientists and engineers is essential. The goals of these studies are to enhance the measurements to define commercial success. This includes initial production (IP) for gas and/or oil, decline rate measured over time as a well produces hydrocarbons, and estimated ultimate recovery (EUR) per well. There are uncertainties concerning all these criteria, including several definitions of IP, the fact that a small change in decline rate can be very important, and EUR estimates that increase or decrease over time. All technical disciplines geology, geophysics, and engineering are in the learning stage, even after several years of production history. In the end, the only meaningful criterion is the net income results over time. Similar to conventional oil and gas field studies, the best results are obtained when the data are reviewed in their entirety with emphasis on the basics. For example, day-to-day interpretation of the data during the exploration and development stage can easily lead to bias that should be removed. This is similar to a conventional field redevelopment study that begins with recorrelating all of the electric logs and making new structure maps and net pay thickness maps. Also, an effort should be made to group all of the previous drilling experiences with best results, including geologic criteria; well landing point and drilled in zone; horizontal well length; and especially fracture stimulation design, which often varies considerably.
Experts predict!
E&Ps editorial advisory board members share their insights on 2014.
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December 2013 | EPmag.com EPmag.com | December 2013
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After more than 50 years as a geophysical interpreter, I believe the biggest reason for success is having a thorough knowledge of the technical data and the simple issues, the basics. In shale plays, the basics include understanding the rocks, source rock total organic carbon and relationship to nearby brittle intervals, porosity and pore throat size, and importance of selection of the horizontal well landing interval. Geoscience staff should work with drilling engineers on a 24-hour basis to keep horizontal wells in the selected zone. A 1,525-m (5,000-ft) horizontal well will contact 50 times more rock than a 30-m (100-ft) interval in a vertical well, and complex stimulated fractures will contact several orders of magnitude more rock. Companies often state that hydraulic fracturing enables gas and oil to be produced at economic rates, but horizontal well drilling technology enables fracing to touch large volumes of the shale. Some studies indicate that most oil and gas is produced from a few hundred meters adjacent to the horizontal wellbore. Hydraulic fracturing plays a major role in well productivity and thus must be included in reservoir characterization studies. This includes acquiring data to understand the stress field in the shale reservoir. Shales are strongly anisotropic, having significant rock property variations in all directions. Microseismic and 3-D seismic can help map velocity anisotropy, but there are data quality and resolution issues. In many cases, interpretation is in the learning stage. Understanding the role of natural fractures is also important as they can impact the stimulated fracture patterns. The stress field in a shale changes during oil and gas production and can impact stimulated fracture patterns. There is evidence that some fractures close
during pressure drawdown and this can be a factor in infill drilling programs where interference between wells can be an issue. Geoscientists and engineers map fractures on a relatively gross scale, and the details may never be fully understood. Technology should play a major role in reservoir characterization studies. I believe the importance of porosity is undervalued, and discussions should include ways to improve mapping high-porosity areas and pore throat size. After understanding the detailed geologic framework and its variability, sometimes over short distances, discussions should include the application of 3-D seismic including multiple attributes to fill in the white spaces (the undrilled area) between wells. Some companies are using advanced microseismic data such as buried arrays over a large area to map fracture patterns over time. Cost savings should be a deliverable from reservoir characterization studies. For example, can completion design be improved to select specific frac stages and perforation intervals? What is the optimum well spacing to drain oil and gas with the highest profitability? A detailed reservoir characterization has many longterm advantages: Prioritizing and planning infill drilling programs; Increasing EUR per well by possibly as much as a factor of two; Assisting strategy for divesture and acquisition of assets via mergers or farm-ins; and Assisting in long-term financial planning. Oil companies will drill thousands of wells in the shale plays during the next few years, and a long-term business and financial strategy should be based on integrated reservoir characterization studies. n
Dick Ghiselin, P.E. Qittitut Consulting
FUD notwithstanding
or decades our industry has progressed through technological innovation. One by one, the seemingly impassible hurdles of the E&P environment have been
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overcome through the combined efforts of operators and their technical services providers. Predicting the future with minimal success was simply a case of identifying the toughest problems of the day, which if solved yielded the highest return on investment and you could bet that the industry would solve them. But times have changed. No longer can we characterize our challenges solely in physical terms. Today we must consider geopolitics. An excellent example is the ill-fated Keystone pipeline project. Whether it ever carries a single drop of oil to Gulf Coast refineries has absolutely nothing to do with the terrain, the enabling technology, or the financial requirements. The decision is purely political.
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Recent news revealed that the people of California have been unaware that hydraulic fracturing has been going on for decades there. Notwithstanding the fact that not one single frac-related incident of pollution, injury, or environmental damage has been attributed to the practice, activists have begun their attack. Using the press, they have started spreading fear, uncertainty, and doubt (FUD) among the populace. So if you asked me to predict the future production of California, I would have to consider the potential political effect of this story, an impossible task. Overseas is no exception. Political forces have ruined the once-proud energy industry of Venezuela. At a Hart Energy-sponsored conference a decade ago, the president of Petrleos de Venezuela SA (PDVSA) revealed his plan to boost production then standing at about 3 MMb/d to 6 MMb/d within the next five years. Then along came geopolitics. Where is Venezuelan production today? In Russia, independent oil company Yukos bragged that it had doubled its production in two years while halving its inventory of wells a remarkable feat of applied technology. But then politics came into the picture. The company was forced to sell its assets for a song, and it does not exist today. The elephants in the room are China and India, whose thirst for energy grows unabated. Can anyone predict the political stability of these countries? In the US, production has blossomed, and the country is becoming the worlds energy production hub. The vehicle that has enabled this phenomenal growth is technology. The vehicle that is on a crash course to curtail this growth is in Washington DC. The Keystone pipeline is but an example. Without a shred of evidence to support their claims, the anti-frac crowd accuses the industry of polluting freshwater aquifers and flooding wells with toxic chemicals. Notwithstanding the fact that we have been fracturing formations for more than half a century, the FUD persists, leading several states to ban hydraulic fracturing altogether. Offshore the fallout from the Macondo incident is purely political. There is no denying that the Macondo incident was a tragedy. But the technological solution is at hand. The political effect of Macondo can be seen as some seek permission to explore the coastal areas of the Atlantic, Pacific, and Arctic oceans.
The current world record for deepwater drilling is held by Transoceans Dhirubhai Deepwater KG-1 high-specification ultra-deepwater drillship in 3,174 m of water. (Image courtesy of Transocean)
companies have booked record gains overseas. Despite the political turmoil in many key areas of the Middle East, others have managed to take up the slack. Off the east coast of Africa new discoveries promise to build industry interest in the area. The east coast of India beckons as well despite HP/HT issues. In fact, the current world record for deepwater drilling is held by Transoceans Dhirubhai Deepwater KG-1 high-specification ultra-deepwater drillship in 3,174 m (10,411 ft) of water. In the eastern Mediterranean, gas development offshore Israel continues apace, attracting the interest of Cyprus and Lebanon. These areas also hold promise of increased activity. Australia continues to develop its gas reserves. Starting in Queensland, initiatives are proceeding to develop coalbed methane reserves and build pipelines to the southern population centers of the country. Shale gas development also is on the horizon. Offshore development continues to grow. Deepwater offshore development of the Lower Tertiary play in the Gulf of Mexico holds high promise. Not only have several huge discoveries been announced in US waters, but it looks like Mexico will finally break its political logjam that has impeded its development of both land and deepwater areas. In my view Mexico holds the most exciting potential.
Technological innovations open doors On to the crystal ball

Political possibilities aside, I predict a general shift of E&P overseas. This shift has already begun as evidenced by third-quarter results posted by the major service companies. With only modest gains in North America, these
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Although several technological innovations enhance the capabilities of service providers to enter deeper, hotter, higher pressure wells, one addresses a political concern. Many countries with attractive potential have very strict laws regarding importation and transportation of
radioactive sources. This has inhibited formation evaluation, which depends on nuclear logging tool systems. Recently, Schlumberger introduced its NeoScope multifunction nuclear logging device, which does not require a chemical source. Because it generates its own radioactivity downhole using electronic generators, it is completely inert when deactivated. Accordingly, the tool can be easily imported and transported in countries with restrictive radioactivity laws. The tool has the potential to boost activity in those countries as they race to catch up in energy production. Other technological innovations have aided the assault on HP/HT wells. Tool and battery technology improvements have addressed extreme temperatures in the Gulf of Thailand and in Indias Krishna Godivari
basin. Of common concern are activities that require equipment to stay on bottom for extended periods. LWD systems are particularly susceptible to heat problems, and production logging permanent downhole gauges must be able to perform at temperature extremes for extended periods. Innovation is lagging behind demand in this area. Although there is no question that hydrocarbons are a finite resource, the dire peak oil predictions of M. King Hubbert have been proved unfounded by technology improvements. I have complete confidence that technology will continue to win out over the technical barriers posed by the frontier environment. Thus, my prediction for the future is technically optimistic. Political optimism is another matter. n
Kevin Brady Multi Products Co.
Artificial lift technologies will continue to evolve and converge
was updating some training material a few weeks ago when I ran across a textbook on artificial lift that was published by the Petroleum Extension Service (PETEX) in 1985. Of the artificial lift methods it covered, sucker rod pumping was the most prevalent, it devoted just one seven-page chapter to gas lift and plunger lift, and plunger lift received only two pages. It also covered electric submersible pumps (ESPs) and hydraulic pumps. The instruction revolved around vertical wells, referred to directional wells as crooked holes, and didnt reference horizontal drilling because the methodology was not yet widely adopted. It doesnt really seem like 1985 was that long ago, but we all know that a lot has changed with technology since that time. Technology has rapidly advanced in drilling and exploration but maybe not so much in the production aspects. At least that is how it appears in my mind.
Maybe that is because exploration technology and drilling tools and methodologies are more exciting and receive more coverage in technical journals. But artificial lift technology has changed a lot too and is becoming more important as a focus on well economics and long-term productivity takes hold. So where are we in the year 2013? Sucker rod pumping still comprises most of the artificial lift market 82% of all wells, according to a recent report by Spears and Associates. ESPs comprise the largest spending segment, but that is declining as spending on rod pumping continues to grow. Other artificial lift methods have grown in popularity and acceptance as technologies have evolved. Regarding plunger lift and gas lift technology, market information shows that the percentage of spend has remained about the same for the past few years. Maybe the rate of spending increase has not kept with the overall pace of artificial lift growth. But as I discuss this with operators, I find that they are considering more options when it comes to artificial lift selection, mainly due to technology improvements that are giving wells more overlap in application. In the past, a production engineer may have chosen to employ rod pumping without giving it much thought. Now that same production engineer may consider rod pumping, gas lift, plunger lift, gas-assisted plunger lift, velocity strings, or some other method before making a decision. Plungers are asked to do much more than they were first designed to do, which was to extract small amounts of water from producing gas wells. Now plungers are operating in horizontal shale wells, sometimes down to 65 to 70 of inclination. These are being routinely employed in wells that are producing
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more than 100 b/d of oil and in wells that are producing more than 42 Mcm/d (1.5 MMcf/d) of natural gas. Gas lift applications are also becoming more widely employed, especially in wells with lower gas-to-liquids ratios, where a lot of oil needs to be produced with not enough reservoir energy to move it. Gas lift has been the most widely employed method of artificial lift for mature offshore wells for some time. For horizontal shale wells and areas where operators have easy and economical access to a source of gas to inject along with compression to inject it, gas lift is a good solution. This method is being employed at a growing rate in producing wells in the Bakken, Eagle Ford, Utica, and other resource plays that produce high fluid volumes. It used to be that production engineers that were installing plunger lift systems were running out of options. The well was getting near the end of its life, and it was producing less gas and more water. Economic analysis showed that a form of artificial lift with low capital cost and minimal operating costs was all that could be justified. If a newer well became a candidate for plunger lift, it was seen as a failure a dog well, or one that the operator could not justify spending much money on. But
that mindset is changing with horizontal shale wells. Just recently I was in a meeting with a production engineer who was happy to be installing plunger lift systems on wells that had been in production for a short time. His view was not that these were bad wells but that every well was going to need a form of artificial lift, and that for his program, plunger lift worked well. Not only was it an economical solution, it was producing the results he and his team were seeking. His view was, I have a well that is producing 14 Mcm/d (500 Mcf/d) of gas and 120 b/d of oil, and plunger lift is helping me keep that production up. How can you call that a bad well? So as we sit here at the end of 2013, sucker rod pumping is still the most widely used form of artificial lift. But it is getting some strong competition from a list of alternatives that continue to emerge with lower capital costs, that fit an expanding range of well applications, and that produce results that production teams are happy with. If and when PETEX chooses to revise its artificial lift textbook, it will be interesting to see how the page count is divided up. My guess is that while rod pumping will still receive a healthy dose of pages, the allocation will be much more diversified among the alternatives. n
Eve Sprunt Consultant
The evolving work force in E&P

tudents are flooding into petroleum engineering programs because they have seen those ahead of them get good starting offers at a time when few other industries have sustained their entry-level hiring. Overall there is not a shortage of entry-level talent, and competition has eased. In some developing countries, there is a shortage of graduates who meet hiring standards. Upgrading university programs can be difficult because faculty members feel threatened by the proposed changes. Online courses combined with secure testing systems could provide a solution to identify qualified students. Just as mobile phones initially were more widely adopted in countries with unreliable phone systems, online courses combined with high38
security testing may first gain traction in countries where the university programs are not accredited and internationally recognized. With the double-decade-long oil price slump (Figure 1), mid-career talent is scarce. Competition for this talent segment will be intense. Companies have been trying to ease the shortage of mid-career employees with extensive training programs designed to minimize the number of years required to convert new hires into fully qualified professionals. The trick will be retaining the newly skilled professionals once the intensive training period ends. The people hired in the heady days of the late 1970s/early 1980s oil boom are now over 50. Many of them plan to retire in the near future. If interest rates trend upward, long-term employees with interest rate-sensitive lump sum retirement benefits will be stampeding to the exits. A wealth of experience will vanish with them, but there are ways to keep retirees engaged and persuade them to return. Retention of talent is a critical success metric, and the stakes are high with the Big Crew Change. Complicating the situation, the incoming work force differs in significant visible and invisible ways from the work force of the past. The 2013 SPE Talent Council retention survey found that prior to the Big Crew Change, the majority of the work force was composed of men who were their houseDecember 2013 | EPmag.com
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FIGURE 1. A hiring hiatus in the 80s and 90s means that mid-career talent is now scarce. (Images courtesy of Eve Sprunt)
FIGURE 2. Younger men are much more likely to have a spouse who works full time. (Note: FT is employed full-time, PT is employed part-time, and out means left the work force.)
FIGURE 3. Women are a growing fraction of the work force and are generally part of a dual-career couple.
holds single breadwinner (Figure 2). Younger men are increasingly likely to be dual career with a domestic partner who works full-time. Women are not only a growing fraction of the work force but are generally part of a dualcareer couple (Figure 3). Attrition of mid-career women has been higher than for their male counterparts. Retention practices adopted in the last century were optimized
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for the male single-breadwinner work force and should be updated for the new work force that doesnt have a stay-athome partner managing domestic logistics. Physicists refer to dual-career couples as the two-body problem. However challenging it is to find one good job, it is more difficult to find two attractive positions in the same area. When one partner is required to relocate, the couple faces sacrificing one career and income or repeating the process to find two positions together. Dual-career couples generally consider both careers to be equally important, and both men and women leave employers to follow a relocated partner. Some couples try to simplify the situation by working for the same employer, but others are not willing to accept the downside of that alternative, which is having their employer manage their careers as a couple. Conflict with supervisor/management was a factor in retention of men in dual-career couples and women. The greater conflict may be because supervisors tend to be older and single breadwinners. These bosses may not understand the issues faced by dual-career couples and thus consider the employees choices to be unambitious and/or unprofessional. Companies with career development processes that continue to favor single breadwinners may end up with management who are increasingly out of touch with their work force and talent retention problems. Inflexible work schedules, working too many hours, and too much time away from family were frequently cited by younger people as the most important reason they changed employers. Access to part-time work and telecommuting were not critical to most of the younger active work force but were among the strongest incentives to motivate people of all ages to return to the work force. Opportunity is the most important driver for men and women of all ages. One of the top reasons women give for leaving the work force is insufficient opportunity, challenge, career potential, and career stagnation. Retirees and others who have left the work force can be motivated to return by a chance to make a difference. Younger people are relatively more motivated by opportunity than older people, so a younger work force will tend to be more likely to switch employers for what is perceived to be a good opportunity and a chance to develop new competencies. In short, two areas require attention: Education and screening in developing countries; and Retention incentives for a work force that is rapidly changing. n References Sprunt, Eve; Howes, Susan; and Pyrcz, Michael; 2013, Attraction and Retention of Employees, Results of 2013 SPE Talent Council Survey, SPE paper number 168112 (released Oct 2, 2013).
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TECH TRANSFER
Out of this world-class solutions

Deloitte and NASA team up to take predictive analytics to the next level.
NASA employees. I was complaining, quite frankly, that we had all of these great strategies, all of these great competencies that we were developing, but we didnt have what the oil and gas industry was really looking for proof and practical application. One of my friends encouraged me to contact NASA. The result of that conversation is a strategic partnership in which Deloitte will work with the space agency to tap into its 50-year history of putting people into space and bringing them back to Earth. The goal of the partnership, announced earlier this year, is to take advantage of the emerging science of predictive analysis to manage risks and prevent catastrophes.
Rhonda Duey, Executive Editor
embers of the Deloitte Center for Energy Solutions had a problem. Increasingly, their clients were asking for services to manage risk in novel ways. But they werent sure where to find the answers. As one CEO put it to us, What I need Deloitte to provide me with is a vision of whats around the corner, said David Traylor, a principal with Deloitte & Touche LLP. I dont like surprises. The quest to find the answer became a personal one for John England, vice chairman and leader of Deloittes oil and gas practice. He said that clients were asking for practical applications. We couldnt show them where wed done this before, he said. The genesis of the solution was living near the Johnson Space Center. Most of my friends are
Meeting of the minds

While tech transfer between aerospace and the oil and gas industry isnt exactly a new concept, its usually a materials science type of transfer lightweight metals for offshore applications, for instance. NASA, which has been tasked since the end of the shuttle program with finding commercial applications for its technology, also has a safety culture to rival any of the majors. Oil and gas and space exploration have the same types of operating conditions, Traylor said. Theyre in harsh conditions, and theyre in remote locations very remote, in the case of NASA. They both have complex engineering systems. They also have culturally diverse work forces, and there is a heavy reliance on contractors. How do you bring all of this together to operate safely? He added that while Deloitte has tools and technologies to address advanced risk analysis, it doesnt have the operations. NASA does. It operates space stations and has launched rockets and space shuttles.
Initial focus areas

Traylor outlined three areas that will make up the initial offering. The first is risk culture. While acknowledging that every company has a risk culture, the reality is that these cultures can deteriorate over time, often leading to catastrophic events. Its something that NASA, unfortunately, has experienced, he said. History is the best teacher for us. He added that what tends to deteriorate is not safety training; its a companys ability to identify new risks.
The first Cygnus commercial cargo spacecraft built by Orbital Sciences Corp. is photographed by an Expedition 37 crew member on the International Space Station during rendezvous. (Images courtesy of NASA)
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If you do things that are repetitive, you can rely on clients, NASA is looking forward to continued learning history, he said. But if you are using new technologies as it enters its next phase of space exploration. or are in new environments, youre introducing potenWhat we want to get out of this is knowledge and tial for new risks. experience, said Bill McArthur, director of the JohnThe second focus area is on risk modeling and son Space Centers Safety and Mission Assurance simulation. This helps determine what can go wrong and what the consequences of that failure are. It examines the probability of an event occurring, and it helps companies determine where they should focus their resources. Traylor said that this is an effective way to model the lowprobability, high-impact events known as black swan events. Risk modeling and simulation help determine how much effort you put into examining these risks by getting into the DNA of that risk. If you can measure the probability, measure the exposure, and understand what causes it, then by continuously measuring it you NASA is developing a deep space habitat to allow a crew to live and work safely in space can see if the probability is for up to a year. increasing. If it is increasing, management should pay attenoffice. Deloitte brings in strengths from areas that tion and take corrective action. complement ours, and we believe that partnering with The third focus area is emerging risk management. them will help maintain the skills that our work force Also called risk sensing, this process examines the movhas, skills that we can then turn around and translate ing parts in an operation. Traylor used a well as an into mitigating the risks of the programs that we curexample. Financial records may indicate that the projrently operate. ect has used up to 70% of These programs include the Orion deep-space transits budget but is only 40% complete. This could be portation program, he added. due to numerous factors, but it results in management Overall, the partnership aims to bring an even making the decision to increase that wells budget. deeper degree of risk awareness to the oil and gas The president of one of the major oil and gas industry. Given the complexity of modern E&P projcompanies told us, What keeps me up at night is ects, finding the right risk management tools is an that I dont know the cumulative effects of those important step. authorized field exceptions that Ive granted, Were trying to understand the risks associated with Traylor said. Emerging risk management identifies these very complex systems because something that all of those dots from those disparate systems HR, looks like a minor anomaly sometimes has significant financial, engineering. It analyzes those written text consequences farther down the line, McArthur said. documents, and with precursor analysis bolted onto Its difficult for an individual to understand the intertext mining, we can start connecting those dots. action between the parts. By modeling and simulation, Whats in it for NASA? you try to create these events in a virtual environment While Deloitte principals are looking for a long-term and then examine the parameters that can be tweaked relationship with NASA to bring these services to their to reduce the likelihood of a catastrophic event.
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TECH TRANSFER
Taking cues from outer space

The E&P sector can learn much about asset maintenance from the space and satellite industry.
Robert K. Perrons, Queensland University of Technology; and Matthew G. Richards, Massachusetts Institute of Technology
ractitioners from both the upstream oil and gas industry and the space and satellite sector have repeatedly noted several striking similarities between the two industries over the years, which have in turn resulted in many direct comparisons in the media and industry press. The similarities between the two industries have even resulted in a modest amount of cross-pollinating between the respective supply chains. Because the operating conditions of both industries are so extreme, some oil and gas equipment vendors have occasionally sourced motors and other parts from aerospace contractors. Also, satellites are now being used to assess oil fires, detect subsidence in oil fields, measure oil spills, collect and transmit operational data from oil and gas fields, and monitor the movement of icebergs that might potentially collide with offshore oil and gas installations. Relatively little sharing or cross-learning has occurred between the two industries with regards to asset maintenance, however. This is somewhat surprising in light of the fact that here, too, the sectors have much in common. First, the technical challenges facing both industries are often complex and technologically demanding. Second, assets in both sectors are typically difficult to access and offer limited servicing opportunities. Third, both sectors operate in harsh environments and manage assets that are habitually subjected to component wearout and degradation. And fourth, the life cycles of assets in both industries frequently extend into decades. It therefore follows that the space and satellite sector might be able to offer fresh perspectives and novel ideas about how to maintain oil and gas assets most notably, offshore platforms. Five decades of experience in on-orbit servicing (OOS) have resulted in many valuable lessons in the space and satellite industry that can be boiled down into four broad maintenance principles.
Maximizing knowledge of target satellites

Maximizing knowledge about the state of a target satel44
The Solar Maximum satellite gets a repair. (Images courtesy of NASA)
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lite is critical to reducing the amount of uncertainty associated with servicing operations. If an orbiting servicing vehicle has perfect information about the satellite, then operations may be precisely scripted. The less knowledge that is available on the target satellite, the more operations need to be adaptable, thereby adding to the complexity of the procedure. This maintenance principle has clear implications for the 15,000 or so oil and gas platforms and many thousands of miles of pipelines around the world. Each of these assets typically requires several million dollars
worth of inspections and maintenance-related activities each year to ensure that they have not been seriously affected by a wide variety of potential problems such as mechanical vibration, corrosion, or soil movements on the seabed. The oil and gas industry has made significant progress in the digital oilfield domain, but much of this emphasis so far has been on increased production and greater ultimate recovery. However, the overarching philosophy of the digital oil field that is, obtaining data about critical parameters of an oil and gas production system and then using these data to optimize performance on a continuous basis could clearly be applied to the maintenance of these systems, too. Significant reductions might accordingly be possible in maintenance budgets for oil and gas facilities in remote locations if these kinds of smart technologies were more aggressively deployed with these functions in mind.
Managing the scale of servicing activities

Managing the scale of servicing activities is critical for controlling the complexity of satellite servicing operations. If the scale of a servicing operation is too great, then it may require multiple servicing vehicles, which could in turn cripple the economic justification for performing the task. The scale of servicing activities also is quite relevant to offshore oil and gas platforms. Design decisions for these kinds of assets are often based on factors other than long-term serviceability and ROV access. Instead, short-term capital constraints and a strong commitment to working within project budgets often result in design choices that minimize an assets up-front price tag while inadvertently increasing long-term life-cycle costs for things like maintenance. This could potentially be avoided if asset design teams were properly incentivized to think more about these long-term costs.
Minimizing the precision of servicing activities

Minimizing the required precision of OOS involves designing satellites so that a helpful amount of tolerance is permitted during servicing operations. Service precision is significantly affected by the degree of component integration within the orbiting satellite. Systems that mainly consist of highly bespoke custom-made components that are developed as an integrated whole do not usually offer the same degree of overall service-related tolerance that more modular systems do, and engineers in the space and satellite sector accordingly tend to strongly prefer modular designs over integrated ones. This push toward modular systems is very relevant to the upstream oil and gas sector since most of todays
The second Hubble servicing mission included history-making on-orbit surgery on two important scientific instruments aboard the telescope.
46
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An Intelsat 603 rescue is carried out.
offshore installations tend to be based on highly integrated designs. Earlier attempts in the industry to use more modular designs were only partially successful, and the majority of installations these days are still designed in a way that prioritizes size and weight reductions over modularity and standardization. But major breakthroughs continue to be made with regards to materials, design technologies, and manufacturing methods. The upstream oil and gas industry should therefore consider moving more aggressively toward modular designs as these enabling technologies fall into place.
larly applicable to maintenance in the upstream oil and gas industry. In much the same way that many satellites deliver functionality that is sorely missed during periods of downtime (e.g., national security or communication links), there are strong financial pressures to maximize the availability of oil and gas facilities. Shutdowns of even a few days can result in losses of millions of dollars in the oil and gas sector. When faced with the threat of shutdown situations in the space and satellite industry, OOS planners frequently include strategies for temporarily outsourcing functions to shield end users from operational downtime. While it is difficult to outsource production streams in an oil and gas setting, there are still some valuable lessons to be gleaned from how the space and satellite sector manages these scenarios. OOS missions are typically designed in a way that dramatically shrinks the possibility of operational downtime, and significant planning and resources are allocated within the space and satellite industry to preemptively guard against these types of failure. This is quite different from the more reactive approach to maintenance that is often the norm in the upstream oil and gas industry. There are clearly some important differences between the two industries, but the oil and gas industry could potentially make significant improvements in asset maintenance by selectively applying a few of the space and satellite maintenance strategies discussed here. Acknowledgment A longer and more academic version of this article, titled Applying Maintenance Strategies from the Space and Satellite Sector to the Upstream Oil and Gas Industry: A Research Agenda, was published in Energy Policy volume 61, pages 60 to 64.
47
Minimizing temporal constraints

Timing is an important determinant of success for OOS missions, and the concept of access timing that is, the amount of time required to transport servicing tools to the area of interest on the target satellite is particuEPmag.com | December 2013
EXPLORATION REVIEW
Finding new ways to discover oil

Exploration technology continues to get more accurate at peering beneath the surface.
high-power pulse for depth of exploration and a lower power pulse for near-surface imaging. ION Geophysical launched its Narwhal system for integrated ice management services. The solution provides visualization, analysis, tracking, prediction, monitoring, and risk mitigation tools to address arctic seismic acquisition operations. WesternGeco is pushing the boundaries of full waveform inversion (FWI) in the marine environment by using synthetic data along with a real GoM dual-coil shooting acquisition dataset with offsets up to 14.3 km (8.8 miles) and full-azimuth distribution. Results indicate that FWI can be used in the processing sequence due to the long offsets and low frequencies provided by this method. PGS unveiled its latest Ramform, the Titan, equipped with 24 streamer reels. It includes safety features like increased working and storage space, stable capacity for more than 6,000 tons of fuel and seismic equipment, an automated back deck, two stern-launched workboats, and two 40-person lifeboats with a scoop rescue system. The vessel also includes an upgraded GeoStreamerbased seismic package as well as amenities including a 225-sq-m (2,422-sq-ft) sports hall, gym, theaters, TV and game rooms, 60 single cabins, and 10 twin cabins. For land acquisition, Sercel launched its new 508XT land seismic acquisition system, offering crews the ability to record up to 1 million channels. The system combines cabled and wireless technologies. Inova Geophysical launched its AccuSeis SL11 single-component broadband digital sensor to provide higher resolution. AccuSeis is, according to the company, the lightest, smallest, and most durable digital sensor in the industry.
Compiled by Rhonda Duey, Executive Editor
his past year has seen many refinements in the technologies that debuted in the first decade of this century. Seismic acquisition, processing, and interpretation technologies continue to improve, and new and better methods of well logging and testing are helping to give operators the best information possible about their wells.
Acquisition
CGG achieved acquisition milestones this year during surveys in the Gulf of Mexico (GoM). Using its StagSeis survey configuration, the company deployed the longest offsets in the industry for a full-azimuth multivessel survey, using 18-km (11-mile) offsets. Its Geo Caribbean, meanwhile, claimed the title of the largest manmade moving object with its 13.4-sq-km (5.2-sq-mile) towing configuration. CGG also launched MULTIPULSE, a near-surface and deep-penetrating electromagnetic (EM) survey technique that increases resolution and bandwidth. The technology combines the benefits of CGGs airborne time-domain EM products by offering both a
Processing
TGS introduced Clari-Fi, a broadband processing solution that addresses the ghost and earth-filtering effects of marine seismic data. The solution works by computing an inverse operator to deconvolve the ghosts from conventional streamer data. CGG started the reimaging of its entire Cornerstone multiclient dataset, creating a 35,000-sq-km (13,500-sqmile) contiguous broadband prestack depth-migrated volume in the central North Sea. The existing dataset is being reprocessed with a deghosting technique, which
This image from Narwhal shows a vessels planned route through the Northwest Passage, including areas where the ice conditions provide different levels of risk (color coding) based on the vessels ice classification. The view integrates ice charts, satellite imagery, and other data types, while the calendar feature (top) allows users to time-slide through the data to understand what happened in the past and predict what will happen in the future. (Image courtesy of ION)
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will produce an extended-bandwidth dataset complementing its BroadSeis acquisition technology. The company will use TomoML, its multilayer tomography, as part of the reprocessing. PGS is reprocessing its Crystal I and II wide-azimuth programs in the deepwater GoM. Techniques including improved designature/debubble, bandwidth extension, tilted transverse isotropy velocity model FWI velocity model updates are shown using (left) 14-km (8.7-mile) maximum offbuilding, PGSs hyperTomo tomography set and (right) 29-km (18-mile) maximum offset. (Image courtesy of WesternGeco) platform, and anisotropic prestack depth migration with reverse time migration (RTM) will be used in the project. ware, NetApps E-Series storage systems, and Terascalas One new processing method introduced by Arcis SeisTeraOS. mic Solutions, TGS, involves preconditioning of seismic Interpretation data by not only removing spatial noise and enhancing Objects that have passed through the same seismic trace the coherency and alignment of reflection events but twice are considered to have multiple Z points for the also by regularizing the missing offsets and azimuths in same X and Y points. A new suite of functionality in the prestack stage. Arcis claims that this approach results Schlumbergers Petrel 2013 release helps interpreters in more balanced stacked data and yields more confimodel salt more accurately by accounting for these muldent attribute displays that lack artifacts. tiple points. This interpretation process allows more Data storage and management are always big issues accurate salt imaging that wraps a triangulated mesh with seismic data, and NVIDIA, NetApp, Cisco, and around the salt body. Citrix have created a data center solution to support Petrel 2013 also introduced a volume-based modeling better geological and geophysical applications by collosystem to support precise representation of complex cating data in a centralized flexible cloud-based archigeology, enhanced rendering to illuminate geobodies, tecture. The companies have created the Private Cloud and geomechanical reconstruction to validate interprebased on FlexPod, a computing, networking, and stortation in complex depositional environments. age solution platform developed by Cisco and NetApp. ARKeX, which acquires potential fields data, has Additionally, NetApp has joined forces with Landmark introduced a new modeling and interpretation tool Software and Services and Terascala to bring to market that better integrates these data with seismic and other a high-throughput processing storage architecture geophysical data. XFIELD allows users to create 2-D/ called the Landmark Accelerated Processing Architec2.5-D models in either time or depth and integrate all ture. This provides more throughput, performance, and datasets, including gravity, magnetics, gravity gradiomesupportability for Landmarks SeisSpace ProMAX soft-
The figure on the left shows legacy wave equation-migrated data in the Crystal Garden Banks/Keathley Canyon area in the deepwater GoM. In the figure on the right, the legacy data have been reprocessed using tilted transverse isotropy RTM. (Image courtesy of PGS)
50
EXPLORATION REVIEW
Greenland says development must meet its national interests

Cooperation among companies offshore could have benefits for the bottom line, the environment, and the countrys future.
By Hans Christian Krarup, Golder Associates
ooperation seems to be a key theme for companies operating offshore Greenland. One reason for this is that the extent of the resource has been barely probed, so companies involved in early-stage or frontier exploration have to think in a bit more unorthodox way. Some of the cooperation can be motivated by managing their financial exposure by the industrys tradition of joint ventures. In other circumstances it is motivated by the wish to minimize the impact on local communities. An example of this is the Social Baseline Study that Golder Associates, in partnership with Greenlandic consultancy Inuplan, carried out for Maersk Oil Kalaallit Nunaat A/S, Cairn Energy Plc, ConocoPhillips, and Shell Greenland for their planned exploration activities in northwest Greenland. By conducting a joint study, the impact on the involved communities and stakeholders will be kept at a minimum compared to a situation where each company would have conducted its own stakeholder meetings and other such steps. Another reason to cooperate is the countrys location; it is remote from the nearest established infrastructure, so companies may find it economical to share equipment, particularly in emergency and spill response. By having companies obligated to back each other up, these companies can increase the quality of the response resources as well as provide a broader range of solutions. This is particularly acute given Greenlands concern about resource activity harming the fishing sector, which forms the countrys main source of income. The current legislation that requires a dual-rig policy means that each oil company would need two drilling rigs for drilling an exploration well. If a company is only planning to drill a single well, it will be expensive to have an idle rig standing as backup. However, without an extra rig, it would be difficult to drill a relief well in the same drilling season in an actual or threatened blowout since getting another drillship on site might take weeks. A relevant solution could be that two oil companies mutually are committed to immediately suspending their own operations if there is an emergency need to drill a relief well. The national election in March 2013 that saw Aleqa Hammonds Siumut Party come to power signals that
some things in Greenland can be altered by the political winds of change. Some understanding of Greenlands history will help oil and gas companies understand how their work may fit into the islands future. Long ruled by Denmark, Greenland was granted home rule in 1979 by the Danish parliament. In 2009, the Act on Greenland Self-Government gave Greenland greater responsibility for internal affairs. Denmark controls Greenlands foreign affairs, security, and financial policy in consultation with Greenlands home rule government. Denmark also continues to provide about half of Greenlands income in the form of a subsidy. The other main source of the countrys income comes from fisheries, with some income from tourism and mining. Underlining the new governments concern that any resource development must be done in a way that benefits Greenland, there are worries that resource activity may cause problems for fisheries and for traditional hunting and fishing activities. This is balanced by Greenlands desire to chart its own course. At the October 2013 Arctic Circle conference in Iceland, Hammond voiced her hope that Greenland will be independent within her lifetime. This opinion is not necessarily shared by all other Greenlanders, but there generally is a strong desire for Greenland to determine its own future. Being independent means cutting the financial strings to Denmark, and to support the islands 57,000 people, other sources of income are needed. The most promising candidates are mining and oil and gas. However, exploiting the countrys natural resources with the current work force will be difficult, so the Greenland government formed the Greenland School of Minerals and Petroleum in 2008. So far the different stakeholders in Greenland have focused on requiring international resource companies to involve local companies in their projects rather than focusing on employment of Greenland citizens. The regulatory environment in Greenland as it pertains to resources is still in development. While this poses some uncertainties, it also has some advantages for resource companies in that there is room for discussion with government entities. n
51
EXPLORATION REVIEW
domain E&P data management system that tracks data objects created in seismic time, seismic depth, or geological depth and manages time-depth and depth-depth relationships. The workflow includes calibration of seismic data with well log data in depth, which in turn enables the creation of a dynamic 3-D structural framework in depth. It also incorporates structural geology and 3-D reconstruction technology to refine complex depth interpretations.
Logging, coring, and well testing

XFIELD is a common interpretation environment that can draw from all forms of geophysical data. (Image courtesy of ARKeX)
try, 2-D seismic, 3-D seismic, well log data, geological horizons, and topography. The Kingdom Illuminator platform from IHS is relying on technology based on studies of the neuronal circuits in the human brain modeling the way people perceive orientation patterns. The platform enables new methods of estimating volumetric dip and azimuth attributes, even in low signal-to-noise data and complex geological conditions. A new workflow for fault interpretation has been developed by dGB in partnership with Bo Zhang from the University of Oklahoma and Michael Pelissier with Roc Oil (Bohai) Co. The workflow performs semiautomated fault illumination using a discontinuity attribute as input. The output is fault patterns. The algorithm calculates the local maximum curvature in cross-sectional profiles of discontinuity on time slices to extract the center lines of possible fault locations. Jason, a CGG company, introduced the 3-D Interpretation application complementing its current quantitative analysis and risk reduction techniques. The new application makes it easy for teams to build, refine, and complete structural, stratigraphic, and rock property models within one environment. dGB has added dip-steered gridding to its suite of opensource seismic interpretation software. This approach takes the seismic dip and azimuth information at all known and unknown sample positions within a given radius and grids a horizon by following the dip azimuth. It generates few artifacts and does not rely on initial models. Landmark claims to have developed the industrys first complete depth interpretation workflow on a single software platform. The platform relies on a multi52
Halliburton introduced Dash, an emergency response module for use in deepwater and ultra-deepwater exploration and appraisal well testing. The system sends an electrical signal through the umbilical to a dual-redundant solenoid valve. This valve isolates the umbilical from the surface and releases a lock so that hydrostatic fluid from the riser pressurizes a chamber. This delivers pressurized fluid to the functions of the subsea safety system. The safety tree balls and the retainer valve close, and a vent sleeve opens prior to the subsea safety tree latch disconnecting. Then the upper section of the landing string moves through the drilling BOP stack and clears the disconnect point. The system is engineered to ensure that an electrical failure cant compromise safety or functionality. Halliburton also introduced its Integrated Computational Element (ICE Core) fluid analysis service. Previously, optical analyzers could tell an operator when a sample was pure enough to collect, but rarely could they identify which fluid components were present and in what proportions, according to a Halliburton press release. ICE Core fluid analysis technology, which is a component of Halliburtons Reservoir Description Tool,
New 3-D multi-Z capabilities greatly enhance productivity. (Image courtesy of Schlumberger)
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delivers this information, the company said. The new technology is well suited for downhole fluid analysis including applications in deep water, exploration, sample validation, fluid analysis between samples, where flow assurance is an issue, when mapping water floods, when determining reservoir connectivity, when determining compositional grading of reservoir fluids, and to see if fluids are changing. The fluid analysis technology works via light shining through downhole fluids and then through ICE Core sensors. Each sensor is programmed to recognize the chemical nature or optical fingerprint of a specific fluid component such as methane, ethane, propane, aromatics, saturates, or water. Measuring the intensity of light passing through any one sensor indicates the presence and proportion of a particular chemical component within the overall fluid. Because the technology relies on photometric detection instead of spectroscopy, it does not require a computer to perform calculations on an optical spectrum. Each sensor is designed to respond specifically
to the fingerprint of the selected analyte using all of the information in the optical spectrum. Corpros Thin Sleeve System (TSS) Core Barrel is a 6-m (20-ft) ultra-stable system that delivers better core quality and smoother coring operations than the conventional 9-m (30-ft) systems, according to the company. It accomplishes this via two independent inner tubes that protect the core during the cutting process. The tubes also allow the recovery to take place without transmitting any stress to the core. The tools barrel is composed of steel with aluminum liners that strengthen and stiffen the coring system. It does not degrade or stretch, even in HP/HT hydrogen sulfide wells, according to the company. Also, conventional methods of describing the core called for it to be cut into 1-m (3-ft) sections, packaged, and shipped to shore before geologists working offshore could view and assess the conditions. The HalfMoon On-Ice liners that the TSS system uses enable geologists to lift the top half of the aluminum and describe the core at the well site.
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DRILLING REVIEW
Deeper wells, longer laterals, higher production drive drilling technology

With costs continuing to rise, operators and service companies are collaborating on technology to improve the bottom line.
the drilling equipment while maintaining the well control flow-rate objectives set out in the program. In each bypass application a Smart Dart is used to set the valve quickly into the right mode, while in the closing cycle a universal closing dart is rapidly deployed to allow drilling to resume quickly with no loss of hydraulic performance. Multiple Smart Dart cycles can be performed in any sequence. In the record depth run, which was delivered out of Churchills recently opened Houston base, the DAV MX circulation sub was activated with a 214-in. Smart Dart pumped in to the valve seat in less than 30 minutes and at a flow rate of 170 gpm. With the valve open and reamer disabled, the assembly was pumped out through the window at 300 gpm/2,800 psi and showed no signs of drag or overpull. After passing through the window, the well was circulated before pumping out of hole to 5,030 m (16,500 ft) at 425 gpm/3,800 psi. The valve was then deactivated with a universal closing dart being pumped into place in less than 15 minutes and at a flow rate of 250 gpm. The DAV MX is used across a range of drilling environments including deepwater, HP/HT, and high-angle extended-reach drilling. The mechanical extrusion system is significantly more reliable, faster, and more costeffective than polymer extrusion, the process used for traditional ball-activated systems. Simple casing buoyancy system reduces running time. Operators around the world are taking advantage of horizontal drilling and completion technology to profitably develop low-permeability formations, especially shales. One drawback to horizontal wells, however, is the difficulty of running production casing around the radius and to the toe of the well because of high frictional drag in the lateral section. As lateral sections increase in length, lateral drag frequently exceeds the driving force provided by the weight of the vertical pipe. Operators often resort to rotating the casing string, but that requires expensive premium connections. The AirLock casing buoyancy system from NCS Energy Services facilitates landing casing without
Compiled by Scott Weeden, Senior Editor, Drilling
hether it is deepwater drilling in the Gulf of Mexico (GoM) or 3,000-m (9,840-ft) laterals in North American shale plays, the ability to more efficiently perform operations from opening sliding sleeves to landing casing at the shoe is critical to lowering costs and increasing production.
Frac systems
Dart-activated system deployed at record depth in GoM. Churchill Drilling Tools deployed its dart-activated DAV MX circulating valve at a record measured depth of 7,930 m (26,012 ft) in a development well off Louisiana in the GoM. The circulating valve system, which includes metal Smart Dart activation technology, enabled rapid and assured reamer bypass in a sidetrack operation and exploited the deepwater capability of the Smart Dart to withstand rapid delivery speeds and HP/HT variations. Using its multicycle capability, bypass deactivation was equally simple as the assembly was pulled from hole. This proved the capability of the system to give the operator total control over both the fluid path directions and
Churchill Drilling Tools set a record with its DAV MX circulating valve at a record measured depth of 7,930 m in the GoM. (Image courtesy of Churchill Drilling Tools)
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The Super-Port is available for openhole and cemented applications and for HP/HT wells. (Image courtesy of Peak Completions)
casing rotation, without interrupting casing and cementing operations, and at nominal cost. The exclusive AirLock seal allows the vertical casing section to be filled with fluid as casing is run, while the lateral section remains air-filled and buoyant. The enhanced lateral buoyancy reduces sliding friction more than 50%, while the weight of the vertical section provides additional force to push the string all the way to the toe of the well. The simple and passive system has only two components: a seal collar installed in the casing string just above the radius section and a debris-trap collar installed just above the float shoe. Both collars are made up in the casing string during run-in. The seal collar contains a pressure-calibrated breakable seal that locks air in the lower section while the upper section is run and filled with fluid. After the casing is landed, surface pressure is increased to fragment the disc, leaving an unrestricted casing bore. Seal fragments are collected by the AirLock debris trap, and cementing operations proceed as usual.
Excess pressure applied to open the toe valve allows immediate injection to commence fracing operations. (Image courtesy of Team Oil Tools)
To date, all casing strings run using the casing buoyancy system have been landed and cemented successfully, NCS Energy Services said. Ball-actuated frac sleeve provides 62 stages. The Super-Port ball-actuated fracturing sleeve from Peak Completions provides operators with up to 62 independently treated stages using reduced increment ball seats. A single ball is dropped for each stage, and hydraulic pressure shifts the sleeve open to expose stimulation ports. The Super-Port maintains a true 10,000-psi differential rating that offers a solution for stimulation and high frac-pressure capabilities, according to the company. The Super-Port uses standard frac balls that are easy to mill out and offer low costs. By using the additional number of large ball sizes, operators can significantly increase the minimum inside diameter (ID) of the system, making it suitable for extendedreach wells with high stage counts, the company said. In addition, a larger minimum ID reduces the pressure drop across the system, providing more flexibility in operations. Dissolvable frac balls can eliminate drill-outs. The Magnum Fastball from Magnum Oil Tools International dissolves on its own under heat, which can eliminate the need for drill-outs, according to the company. This also can eliminate the necessity of well intervention for stuck frac balls or loose frac ball fragments. These dissolvable frac balls can be used with slidingsleeve systems or composite frac plugs and, once dissolved, allow free flow of hydrocarbons. The frac balls have been field-tested at 20 bbl/min, according to the company, and come in sizes ranging from 34 in. to 4.6 in. The environmentally friendly chemical composition also prevents the frac balls from getting stuck in the ball seat. Hydraulic toe valves designed for cemented applications. An innovative and economical multizone well completion system designed for both open-hole and cemented fracing operations includes the ORIO Toe Valve, which provides a method for performing a high-pressure casing test prior to establishing injection into the formation. The hydrostatically operated sliding sleeve is part of Team Oil Tools T-Frac System. The patented ORIO Toe Valve is run at the bottom of the completion string in horizontal wells. The tool is specifically designed to work in a cemented environment. After completion of the test, excess pressure is applied to open the valve and allow immediate injection to commence fracing operations, including the traditional plug-and-perf method. The toe valves design ensures that the sleeve will open even if excess cement is left in the wellbore. The inner piston is the only moving part in the tool and is completely isolated from the cement. There are no moving parts on the ID or outside diameter of the tool. The ORIOs
56
DRILLING REVIEW
unique three layers enable it to function as required. The toe valve specifications include a rupture disk with ratings up to 20,000 psi that allows pressure-testing of the casing in excess of 15,000 psi and a temperature rating of 177C (350F). The certified rupture disks allow the valve to be opened within 2% of design. Traditional toe valves yield higher failure rates due to the necessity for the sleeve to crush any excess cement. The use of an atmospheric chamber means the valve can remain fully open with hydrostatic pressure alone. This particular feature allows higher injection rates as the tool fully opens once activated. Once the rupture disk has burst, hydrostatic pressure continues to drive the sleeve fully open and maintains it by acting against an atmospheric chamber that allows maximum flow area throughout. Shouldered connections allow rotation while running in the hole or during cementing. Interventionless toe initiation not only provides an operational cost reduction but also serves as a technology enabler for the cemented ball-activated frac sleeves. With-
out an interventionless toe initiation, ball-activated frac sleeves cannot be used in a cemented lateral.
Drillbits
Conical diamond technology, rolling PDC cutter introduced. A unique conical diamond element was introduced by Schlumbergers Smith Bits to enhance polycrystalline diamond compact (PDC) drillbits for improved drilling performance along with a new PDC cutter for improved drillbit durability. The conical Stinger PDC element enables high-point loading to fracture rock more efficiently during drilling for increased ROP and durability. The diamond element has an ultra-thick polycrystalline diamond layer that is significantly thicker than conventional PDC cutters. The elements shape is optimized for strength in axial compression. When centrally positioned in a PDC drillbit cutting structure, the Stinger element improves performance by crushing formation core at the borehole center, increasing drilling speed.
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57
DRILLING REVIEW
At the same time, the Stinger technology also delivers a more stable bit with less vibration to reduce stress on drillstring components and improve the reliability of downhole tools. In the Williston basin an 834-in. PDC bit is typically used to drill the vertical hole before the curve and lateral section in the Bakken oil-bearing sands. In field tests centrally placed Stinger element technology was added to the baseline vertical section drillbit design. Average ROP was increased by more than 46% when compared to the next best performance in offset wells, with a record ROP increase of 77%. In another development Smith Bits introduced its ONYX 360 rolling PDC cutter. An industry first, this unique technology enables a PDC cutter to rotate 360 while drilling, significantly improving drillbit durability in abrasive formations and extending drillbit life and footage drilled per run. Strategically positioned in the highest wear areas of a drillbits cutting structure, the rolling cutter uses its entire diamond edge to shear the formation as the bit rotates, thereby distributing wear over its full circumference. This rotation allows the cutters diamond edge to stay sharp longer, increasing penetration rates and extending drillbit life. The 360 rotation also reduces frictional heat buildup, resulting in less wear and fewer bit replacement trips. During field testing, more than 80 runs and 39,634 m (130,000 ft) were drilled. In the US Midcontinent Granite Wash, PDC drillbits were fitted with the rolling cutters to increase the amount of footage drilled. In one field test footage was extended by 57% in the abrasive sandstone formation while ROP increased 26%. The new rolling cutters also exhibited uniform wear with no cutter loss and 100% cutter rotation compared to premium PDC fixed cutters that showed greater wear with less footage drilled. PDC drillbit can increase stability, ROP. Ulterra introduced its CounterForce PDC bit design technology. The tool can lower bit torque and vibration and create more efficient failure of rock, the company said. The technology is designed to increase stability and ROP by maintaining a consistent torque signature with cutters that work to increase crack propagation and lower lateral vibration. In a case study from the Permian basin, the company noted how the technology was used to finish a Wolfcamp lateral, with the operator reporting a 42% faster ROP than with direct offsets. The operator saved a day of drilling using the technology, according to Ulterra. Multidimensional cutter can improve drilling performance. The StayCool multidimensional cutter can help opera58
tors drill to total depth faster and more cost-effectively by extending cutter life and footage per run. Used exclusively on the Hughes Christensen Talon platform of PDC bits, these cutters incorporate a contoured diamond table, wear-resistant diamond materials, and new interface designs, according to Baker Hughes.
These cutters incorporate a contoured diamond table that reduces friction and maintains a sharper cutting edge throughout the bit run. (Image courtesy of Baker Hughes)
In challenging environments such as interbedded sandstones and carbonates, bit performance is directly related to cutters and the ability to withstand heat. Overheated cutters experience abrasive wear faster, which can lead to lower ROP and higher mechanical specific energy or wasted energy that is not directly transferred into removing rock. The StayCool cutters patent-pending contoured design can reduce friction, maintain a sharper cutting edge throughout the bit run, and reduce mechanical specific energy, the company said. Laboratory testing has shown that the cutters generate 20% less heat on the cutter face than conventional flatsurface cutters. Less heat minimizes cracking tendencies on the diamond table that can lead to failures and shorten run life.
Rotary steerable system

A new rotary steerable system (RSS) can deliver build rates of up to 18/30 m (100 ft) with full directional control and dogleg assurance for complex 3-D well profiles and multilateral well designs in carbonate, sand, and unconventional reservoirs, according to Schlumberger. The company introduced its slimhole PowerDrive Archer high build-rate RSS, which can drill well profiles previously only possible with motors in one run with the ROP and wellbore quality of a fully rotating RSS.
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DRILLING REVIEW
Built on the reliability of the PowerDrive X6 system, the slimhole RSS uses a combination of push- and point-thebit technologies. The geosteering and openhole sidetrack applications were proven in more than 130 field test runs in North America, the Middle East, West Africa, Europe, and Asia. In the Permian basin, Cimarex Energy needed to drill a 618-in. horizontal section within a 2.1-m (7-ft) thick true vertical depth zone in the Bone Spring shale formation. The well design included high dogleg severity with a 10/30-m curve. The slimhole high build-rate RSS was selected to eliminate additional trips downhole, and the challenging curve and lateral were drilled in one run, saving 26 hours of drilling time.
panys HXI 250-ton model and generates 24,000 ft-lb of drilling torque. The technology allows the transition of the top drive between mobile rigs and includes a safety interlock of the process logic controller system and drillers control panel. The company also designed the HCCDS to be light and compact. The system can allow circulation, rotation, and reciprocation of the casing, which can ensure it reaches casing point. In addition, the system can replace conventional power tongs, traveling elevators, and the stabbing board.
Downhole solutions
Dogleg reamer solves lateral drilling issues. Although the drilling of extended lateral sections has become relatively routine, wellbore quality issues such as microdoglegs and efficient hole-cleaning significantly increase operator risk and expense. National Oilwell Varcos Borehole Enlargement Group developed its newest premium string tool, the Dog Leg (DL) Reamer, to help avoid and solve problematic lateral drilling issues. The DL Reamer has a slight eccentric profile, allowing the tool to pass through a smaller restriction than its actual drill size. As a result, the tool will slide efficiently, even if the pilot bit becomes slightly under gauge. The reamer also has two distinct cutting structures one for minimizing microdoglegs while drilling ahead and the other offering an uphole cutting structure to allow back-reaming while pulling out of the hole or while pulling up to make connections. Designed for maximum toughness, the DL Reamer has resulted in reduced trip time and proven success in shale laterals, extended-reach wells, creeping salts, and swelling shales. It cleans the wellbore before expandable packer completions or running production casing with added stability and protection while stirring cutting beds and eliminating dedicated wiper trips. The reamer also features torque-control components, resulting in a maintained ROP, over-engagement of cutters in formation, controlled lateral engagement, and stability. During the testing phase in extended Bakken shale applications, the DL Reamer proved extremely successful in cleaning the wellbore and eliminating dedicated postwell reamer runs. The reamer has been successfully deployed in Wyoming, Oklahoma, and Latin America and is available for pilot bit sizes ranging from 534 in. to 1214 in. Multiple product solution solves wellbore instability. A client in South America had unsuccessfully tried to drill two critical wells at a cost of more than US $80 million each. The clients failed attempts were due primarily to uncontrollable annular pressures that resulted from large losses of drilling fluid and wellbore instability during the drilling processes.
Surface drilling equipment

New top-drive casing drive system built for horizontal wells. Tesco Corp. introduced the HXI 150-ton top drive and hydraulic compact casing drive system (HCCDS) for extended-reach horizontal wells, the company said. The top drive is a lighter, more compact version of the com-
The HXI 150-ton top drive generates 24,000 ft-lb of drilling torque and is designed for both the horizontal and vertical stages of the well. (Image courtesy of Tesco Corp.)
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DRILLING REVIEW
The DL Reamer has a slight eccentric profile to help solve problematic lateral drilling issues. (Image courtesy of National Oilwell Varco)
Weatherford was asked to step in and recommended a set of technology solutions that would allow for safe and effective drilling of this horizon. Weatherford proposed and successfully implemented a multiple product solution comprised of its Microflux Control System, reaming liner services, and solid expandable systems. As a result, as many as 40 wells will now be drilled using this process. Lost circulation pill designed for drilling, production, completion. Multi Squeeze is a blend of customized lost circulation material and new proprietary crosslinked polymer that provides a highly effective, pliable plug that will penetrate fractured zones and form a solid seal in the formation, according to Circulation Solutions LLC. Multi Squeeze has no activators, retarders, or additives other than salt water, fresh water, sea water, brine, or production water to activate the pill, which eliminates any risk of premature activation. The blend can be used in any application where a squeeze plug is beneficial to stop losses and increase the integrity of the formation. Product can be specially blended to protect and improve wellbore integrity based upon the formation and drilling fluids in use and can stop losses and seepage in both drilling and recompletion applications, the company explained. The product will form a solid seal in the loss zone, not in the well bore. Once the pill is properly mixed and weighted to the required density (up to 18 ppg), it is spotted across the loss zone. The pipe is then pulled 61 m (200 ft) above the top of the pill. Squeeze pressure of 100 psi to 150 psi (higher pressure may be used in certain situations) forces the pill to compress and penetrate the problem zone. The product is effective at temperatures up to 204C (400F). Multi Squeeze has proved to be useful in improving wellbore integrity, cement enhancement, severe and total circulation loss, formation stability, depleted zones, reen62
tries, workovers, completions, and producing formations. The product reduces cost associated with expandable liners, slimhole tool rentals, rig time, coiled tubing, and cement, Circulation Solutions said. The blend is environmentally friendly with no contamination of the pay zone. The product is acid soluble and compatible with all waterbased, oil-based, and synthetic-based drilling muds. It can also be blended with fiber to maximize results. RFID-actuated drilling circulation sub. Weatherford has developed the latest addition to its portfolio of radio frequency identification (RFID) technology, the JetStream drilling circulation sub. Used to simplify drilling and hole cleanup operations, this device features an RFID-actuated circulating valve for unlimited opening/closing capability. To communicate open and close commands, a surfacelevel RFID tag is dropped and circulated internally through the sub. A built-in antenna receives the RFID signal, and a battery-powered electric motor operates a hydraulic pump, which moves the valve from the closed position to either the open or diverted position. If pumping an RFID tag is not possible, additional technology embedded in the sub enables pressure-cycle or mechanical-dart actuation as contingencies. The RFID sub transforms conventional circulation devices with a design that eliminates ball seats and the associated ID reductions. This is especially advantageous when
The Multi Squeeze lost circulation pill works in both vertical (top) and horizontal wells (bottom), acting as a bridging agent to block formation fractures thus restoring circulation. (Image courtesy of Circulation Solutions)
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The managed pressure drilling rotating control device assembly offers precise detection and control of gas influxes and helps mitigate the difficult problems associated with wellbore stability. (Image courtesy of Weatherford)
multiple tools are run, in which case the lowermost ball seat would pose a major restriction in a conventional tool. Full through-bore diameter provides access to a series of up to 16 RFID-actuated tools. Activations can occur in any order and simultaneously. This increased control facilitates zone selection to enhance annular flow for optimal wellbore cleaning. Sensors on the RFID-activated circulating valve log all downhole events in the subs unique internal memory. Performance data can be downloaded and accessed in less than an hour of retrieval via a close-proximity communication device. Data including time, drillpipe pressure, hydraulic micropump pressure (inside the sub), temperature, and battery capacity are automatically converted and displayed on a vertical strip chart. The circulation sub includes a range of additional improvements that encourage productivity and reliability for operators. It averages 750 hours per major service interval to enhance operational efficiency and reduce nonproductive time.
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PRODUCTION REVIEW
Production toolbox gets a little heavier in 2013

New technologies are set to deliver more data and more product in the pipeline for operators.
design for ultra-high temperature reservoirs up to 210C (410F). This tool, which is part of a reservoir characteristics services portfolio, can deliver high-quality measurements and reservoir-representative fluid samples with maximum safety and efficiency, all in a single run, according to the company. The system offers multiple advantages over conventional drillstem test configurations, the company said, including shorter string design, lower operating pressure, less nitrogen, fewer seals and connections, multicycle flexibility, single-trip efficiency, all-ceramic multichip module design, and high-resolution quartz measurements. Each of the four Quartet-HT technologies is engineered specifically for high-performance, ultra-high temperature reservoir testing: The CERTIS high-integrity reservoir test isolation system combines the features of a retrievable drillstem testing packer with a hydraulic set permanent packer for single-trip, production-quality well isolation; The IRDV, an intelligent remote dual valve, features a flexible multicycle independent command and control system for reliable well control and reservoir interaction; The signature quartz gauges with a large memory capacity and long battery life can ensure that highquality measurements are provided for accurate reservoir characterization; and The SCAR inline independent reservoir fluid sampling system produces contaminant-free representative fluid samples maintained at or above reservoir pressure in nonreactive chambers. With the rugged test string, operators can isolate the zone, control the flow, measure pressure and temperature, and acquire and retrieve multiple reservoir-representative fluid samples in a single run at ultra-high temperatures. Expro released its mobile well test units that are fully portable production facilities, specifically designed for harsh arctic operating conditions. The units provide well tests and cleanup operations. According to the company, the units process and measure well effluent and remove water and solids prior to flowing to a production facility.
Compiled by Jennifer Presley, Senior Editor, Offshore
nowledge is power, and when dollars are on the line it is the not knowing why a well is not online that can make for a frustrating experience. Fortunately for operators a whole bevy of new technology entered the market in 2013 that will help them know more about their producing reservoirs. Heres a look at a few of the new tools for the production toolbox that made their 2013 debut for reservoir measurement and testing, fluids management, and offshore markets.
Reservoir measurement and testing

A new downhole reservoir testing system for ultra-high temperatures was unveiled by Schlumberger this year. The Quartet-HT high-performance downhole reservoir testing system from Schlumberger combines four downhole technologies into one advanced downhole string
A Schlumberger engineer prepares the CERTIS high-integrity reservoir test isolation system for ultra-high temperature testing. (Image courtesy of Schlumberger)
64
PRODUCTION REVIEW
Conventional methods called for equipment to be transported to the well site in several pieces, carried in by trucks. By combining the equipment into one mobile unit, transportation costs are cut and logistical efficiency is enhanced, according to the company. Houston-based Bell Technologies launched this year its new flow measurement system, the Torus Wedge Primary Flow Element. The product measures differential pressure flow in liquids, gases, and slurries. The tools circumferential ramp gradually merges the flowstream into the orifice plate. The stream is then discharged along the downstream ramp, isolating the flowstream from coming into contact with a hard edge and keeping wear to a minimum, according to the company. By allowing for more efficient flow, the tool enables a user to pump downstream using less horsepower. The ramp self-cleans, eliminating grease and oil on the orifice plates and turbine meters. In addition, the bidirectional tool can fit between standard pipe flanges, making it easy to replace, according to the company. The addition of remote seals can provide insulation from the transmitter. When Colorado Engineering Experimental Station Inc. compared 2-in.-, 3-in.-, and 4-in. versions of the tool with same-size orifice plates, it found that the Torus Wedge allowed the fluid to expend less energy while passing through the measurement device. New for General Monitors this year is its PA4000 Photoacoustic Infrared Gas Monitor. The device eliminates interference from water vapors when monitoring gas, according to the company. The product comprises a photoacoustic infrared sensor to monitor gases including hydrocarbons, solvents, alcohols, CO2, CO, and others. The gas monitor eliminates cross-sensitivity to water vapor with a sensing technique that determines the amount of water vapor in a sample. It then subtracts those data from the gas reading, allowing the final reading to be stable with no compromise to the sensitivity of the measurement. It is able to operate for months without drift. The technology also can be used by delivering a pressurized sample to the unit. Depending on the specific configuration, the gas monitor has a range of 0 ppm to 1,000 ppm and is accurate to approximately 2 ppm of reading at 0 ppm to 100 ppm and approximately 10% of reading from 100 ppm to 1,000 ppm. For certain gases it detects concentrations as low as 0.01 ppm. The monitor operates in a range of 0C to 50C (32F to 122F). It has a storage temperature range of -55C to 70C (-67F to 158F). The technology has a temperature effect of 0.03% per Celsius degree of reading and operates at a relative humidity range of 0% to 95%, noncondensing.
Fluids management and treatment

Halliburton announced this year the release of its new fracturing fluid system that allows operators to use produced flowback water. The companys UniStim Service is its latest advancement to the H20 Forward service and suite of products aimed at reducing freshwater use in completions. The UniStim Universal high total dissolved solids (TDS) crosslink fracture fluid can enable operators to use 100% produced or flowback water. The crosslinked gelled water system has the ability to tolerate salt concentrations in excess of 300,000 ppm as well as other contaminants. Additionally, the hydraulic fracturing fluid system allows companies to use waste streams to negate fresh water used in completions, with economic and environmental benefits. The UniStim service can allow companies to recycle all available impaired waters with minimal treatment and make stable crosslink fracture fluids in highTDS waters, according to Walter Dale, Halliburtons strategic business manager of water management solutions. This advancement can reduce the amount of water treatment needed to make stable fluids, with the end result being a reduction in the use of disposal wells and fresh water. AquaMost Inc. unveiled its new SX PECO Reactor, which enables chemical-free water treatment, the company said in a press release. The chemical-free biocide can handle different water types and flow rates with little or no operator interaction. The technology can treat fresh, brackish, and salt water as well as flowback and produced water. The system can be installed at disposal wells, fixed plant recycling facilities, and the wellhead. In addition to the chemical-free killing of multiple bacteria types, the reactor also has a modular design that is scalable to meet industry requirements and a compact footprint, and it can lower energy consumption. In spring 2013, systems were deployed in the Eagle Ford and Barnett shales in Texas, the Piceance and Denver-Julesburg basins in Colorado,
One of three arctic enclosed mobile well test units was shown during a launch event in Anchorage, Alaska. (Image courtesy of Expro)
65
PRODUCTION REVIEW
and the Uinta basin in Utah. When used in these areas, the companys reactor outperformed chemical biocide treatment methods, killing more types of bacteria for less money without requiring the purchase, storage, handling, and insurance of chemicals, according to the release. RCW Energy Services new water transfer management system enables real-time monitoring of operations. The company introduced its H2OmniView water transfer management system for use in fracturing and oilfield operations, the company said in a press release. In addition, RCW signed an agreement with Anelto LLC for a user-friendly cloud-based platform to accompany the system. Using this software, fracturing operation managers can track all phases of the water transfer process using any device connected to the Internet, RCW said. The technology can help companies conserve water and provides a real-time interface that monitors water flow, pressure, and volume; detects leaks; and communicates alert notifications. A new particle analysis technology developed by Cambridge Consultants will allow real-time measurement of droplets of oil or particles of sand and wax in produced fluids at offshore and remote production sites, the company said in a press release. This has the potential to allow produced water to be safely reinjected into a well or disposed of overboard. The new technology combines optical measurement and signal processing techniques to measure the size distribution of droplets ranging from sub-micron () to tens of in diameter at typical production flow velocities. The technologys hardware allows it to be deployed online in remote locations, with the results then sent directly to an operator to allow remedial action to be taken before a situation becomes critical. The new technology has the potential to be affordable enough to allow numerous devices to be deployed at multiple locations, the company said. Such a system also could include a local alarm that would flag potential problems and send control signals to fix an issue or turn off a valve. With a compact, lightweight design, Moyno 500 Grinder Pumps pair a high-performance progressing cavity pump with a solids reduction unit, the company said in a press release. The pumps include replaceable carbide tips on a cast iron cutter disc, which rotate against a toolsteel cutter ring. This allows debris to be reduced in size, which can help prevent ragging and blockages in process equipment, the company said. The pump can be used in a variety of applications including marine oil spills and septic systems, environmental cleanup, and industrial waste transfer. The technology includes discharge pressures to 100 psi, prelubricated fully sealed ball bearings, American National Standards Institute-compatible tank
66
The 500 Grinder Pump pairs a progressing cavity pump with a solids reduction unit. (Image courtesy of Moyno Inc.)
mounting flanges, a carbon/ceramic mechanical seal, and flow rates up to 15 gal/min.
Offshore
Baker Hughes launched its new gravel-pack and frac-pack system that can help improve production ratings offshore. The companys SC-XP gravel-pack and frac-pack system is designed to increase operational efficiency by withstanding higher bottomhole temperatures and can improve production ratings compared to previous sand control systems, Baker Hughes said in a press release. The system, which can be used for both frac packing and openhole gravel packing, can be run into the well up to 30% faster than previous systems and can operate in temperatures up to 204C (400F) and with treating pressures of 15,000 psi. The system also can convey proppant volumes up to 1.6 MMlb at a rate of 65 bbl/min while still preserving casing integrity and is available in 758-in. and 958-in. sizes, according to the press release. Working with a major operator, Baker Hughes used the system to frac pack a completion in 758-in. casing at a depth of 3,840 m (12,600 ft) in the Gulf of Mexicos (GoMs) South Timbalier field. GE Oil and Gas introduced this year flexible pipes aimed at helping operators overcome challenges in the Santos basin, the company said in a news release.
Baker Hughes used the SC-XP system to successfully complete a frac-pack operation in the GoMs South Timbalier field. (Image courtesy of Baker Hughes)
PRODUCTION REVIEW
Each pipe layer is made with a material specifically engineered to withstand the more acidic environment, the release said. Altogether, about 70 professionals worked on the flexible pipe technology project, which the GE team in Niteri is continuing to enhance through more R&D. The team has been working on the technologies for the past three years. As a result, the company said it now is one of only two accredited providers of advanced flexible pipes to be used in this location. GE said the technology builds on its 2011 acquisition of Wellstream Holdings, which enabled GE to grow in the FPSO segment that underpins deepwater oil and gas production activities in Brazil and around the world. The business specializes in the engineering and manufacturing of high-quality flexible risers and flowline products for oil and gas transportation in the subsea production industry. To drive additional innovation, GE is establishing a new US $250 million global research center in Rio de Janeiro, which will host a subsea systems laboratory that will focus
on developing more solutions for the presalt layer and ultra-deepwater exploration, according to the release. In addition to the future subsea systems laboratory, the company also has announced a total of $262 million in investments to expand its equipment production facilities in Niteri and Maca both in Rio de Janeiro and Jandira in So Paulo. Dow Corning Corp. has developed Dow Corning XTI-1003 RTV Silicone Rubber Insulation for HP/HT equipment used in deepwater production infrastructure and tiebacks. The insulation is a solid, nonsyntactic advanced thermal insulation solution. This room temperature-curing liquid-silicone rubber elastomer cures to a durable and flexible translucent rubber without potentially harmful byproducts. The technology currently is being tested for implications of increased joint strength; flexibility; thermal stability; gains in field performance, reliability, and service life; and application ease. The company said the tests indicate these improvements.
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67
UNCONVENTIONALS: CBM
Queensland LNG projects lead CBM developments worldwide

CBM developers worldwide especially in Australia, China, and India are boosting development while shale gas is slowing US CBM production.
part, initial rates were less than 28 Mcm/d (1 MMcf/d) with reserves less than 142 MMcm (5 Bcf). The scale is based on finding and development [F&D] costs. Obviously, F&D costs go up as the performance goes down. As the reserves per well go down, you have to drill more wells, he explained. The idea that producers will easily find some great sweet spots to fill the LNG trains is misleading. There will be huge variability and distribution in those 19,000 wells that the industry will experience, he added. Because we are basically committed to drilling a lot of wells and delivering oil and gas, we clearly want to optimize where we put that money. We want to drill in the good places first because it requires less investment, he said. As Zuber said, permeability is a big driver in CSG development based on how these coals are cleated, depth of burial, where they are found in structural terms in the basin, and stress fields. Based on those factors, there is a wide range of permeability. Low-permeability coals are an issue. Operators have found that these coals become problematic since it takes
Scott Weeden, Senior Editor, Drilling
he largest coalbed methane (CBM) development in the world is under way in Australia. The CBM, which in Australia is referred to as coalseam gas (CSG), will supply export markets. The Queensland Curtis LNG plant will be the first facility to begin liquefaction in 2014, followed by Australia Pacific LNG (APLNG) and Gladstone LNG (GLNG) in 2015. Total output from the three plants will be more than 24 million metric tons per year (1.17 Tcf/y), which equates to about 99 MMcm/d (3.5 Bcf/d). With economic demonstrated reserves of CSG estimated at 924 Bcm (33 Tcf), there should be enough gas to supply the projects easily for more than 20 years. But getting that gas out of the ground and delivering it to the LNG plants in a timely manner can be daunting. The numbers are pretty staggering. Were talking about fully developing two basins. And this gas already is committed, Michael Zuber, adviser at Schlumberger for unconventional gas in the Asia area, said during Hart Energys DUG Australia conference in Brisbane on Aug. 29. They are talking about drilling between 1,000 and 2,000 wells per year for the foreseeable future. The level of activity is going to be daunting. By 2020, about 19,000 wells will be drilled. Innovation is needed in terms of optimizing solutions and minimizing costs. You can see today we have drilled a small percentage of all the wells that will be drilled, he continued. We know the performance of a very small number of all these wells. The challenge on the upstream side is to really deliver these volumes. A big part of what has been happening in the last few years is exploration within these coal fields to try to find out the places to avoid and the places where we really want to go.
Drivers, challenges for Australian CSG

Schlumberger Business Consulting looked at initial production rates and also initial reserves in CSG wells for some of the projects in eastern Australia. For the most
68
Earlier in 2013 construction was under way on one of two hubs in Santos Fairview field. (Image courtesy of Santos)
LEFT: Gladstone LNG signed agreements with Origin to make gas transportation more efficient between the two projects gas fields in the Surat basin and the corresponding LNG plants in Gladstone. The 42-in. GLNG pipeline stretches 416 km (260 miles) across Queensland. (Image courtesy of Santos) BELOW: This truck-mounted rig is drilling a CSG well for Arrow in Queensland. (Image courtesy of Arrow)
more technology and more investment to produce the wells. Thats a challenge, he noted. To deliver a certain amount of gas, you need to drill more of these wells, and perhaps they are more costly. The whole process basically spins out of control. This is one of the reasons we are looking for shale and tight gas right now. Geologic complexity and the ability to predict performance also are challenges. Operators need to look at the design of every well in terms of geology to get the most out of the coals. The ability to predict performance in CSG is not that easy to do. Prediction requires lots of data, Zuber said. One other big issue Zuber pointed to is the ramping up of gas production. Lots of wells are being drilled and shut in, waiting on the day when the LNG plants are turned on and we can bring these wells online. This is very unique in terms of CSG. Typically for CSG, you drill the wells, complete them, put them online, and get them producing and dewatering. Ideally you never shut them in. This startup is going to be a unique experience in the world of CSG. There is going to be a learning curve and lots of fits and starts. In Queensland, operators really need to shorten the learning curves. They need to better understand the reservoir and get more rapidly to optimized solutions. Integration and innovation are needed, bringing together a lot of stakeholders, he added.
Projects working together

Origin has the longest track record in CSG, drilling its first exploration well in Queensland in 1993. Today it is the leading producer in Australia. With partners ConocoPhillips (37.5%) and Sinopec (25%), Origin (37.5%) owns APLNG. As of June 30, 2013, 45% of its upstream and downstream projects were complete. The
first train is scheduled to begin production by mid-2015 and the second train by late 2015. The company has drilled 343 wells and laid 73% of its pipeline from Condabri to Gladstone. Even with this progress, Origin is shoring up both its CSG supply and sales. In April 2013, the company signed an agreement to buy 4.6 Bcm (163 Bcf) for 10 years from Beach Energy starting in 2015. It signed another agreement in September with Esso/BHPB for 11.5 Bcm (407 Bcf) for nine years beginning in 2014. A sales agreement was signed with its rival GLNG for 9.7 Bcm (344 Bcf) for 10 years starting in 2015. On Oct. 25, 2013, the company also signed agreements with GLNG for gas swapping and infrastructure connection, the companies said in a press release. The new agreements are expected to make gas transportation
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more efficient between the two projects gas fields in the Surat basin and the corresponding LNG plants in Gladstone. Under the terms of the agreements, two pipeline connection points will be built between the GLNG and APLNG infrastructure, and a number of gas swap agreements will be undertaken to minimize gas movements and operational costs. This type of integration will be beneficial in assuring the CSG projects will be able to meet the demand of the LNG plants.
was an expert in coal mining. He put a new team of officials in charge of redrafting the note, which was expected to be ready by November. The Economic Times stated that some bureaucrats in the oil ministry wanted to avoid any controversy by not allowing private investment in those coal blocks. By favoring only public-sector companies, the bureaucrats would be immune from investigative agencies. However, such a move would put a damper on CBM exploration. Although the government is still wrestling with CBM
CSG operations are monitored by Santos from its operations center in Brisbane. (Image courtesy of Santos)
India prepares CBM bidding policy

According to the Directorate General of Hydrocarbons (DGH) database, India has an estimated 2.6 Tcm (92 Tcf) of CBM gas reserves. As the worlds third largest producer of coal, however, commercial production of CBM is still at a very nascent stage in the country. The Indian government is now coming to grips with its policy for CBM exploration. On July 12 a CBM policy was proposed to provide incentives to Coal India Ltd. (CIL) to exploit gas in its coal blocks. Under the policy, the state-owned firm would not have to bid for the blocks since it already owns them. The government already has bid out 33 CBM blocks to noncoal companies, including Oil and Natural Gas Corp. (ONGC) and Great Eastern Energy Corp. Ltd. (GEECL). That created a furor with the oil minister, Veerappa Moily, who rejected the draft note for the Union Cabinet, directing officials to redraft it, according to the Economic Times. Under Indias mining laws, coal mining is the mandate of the coal ministry while the oil ministry regulates CBM exploration. Moily criticized the draft note, saying that CIL was not an expert in CBM exploration any more than ONGC
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policy, the industry continues to move ahead. On June 5, ONGC announced in a press release it will give 10% to 25% stakes in its four CBM blocks to Dart Energy Ltd. in an effort to expedite production. ONGC finalized its partners for producing CBM in its Jharia, Bokaro, North Karanpur, and Raniganj blocks. A company official said Dart will get 25% each in the Jharia, North Karanpur, and Bokaro blocks, where Dart would be the lead partner, and 10% in the Raniganj block. On May 20, GEECL said it won a 25% stake in ONGCs Raniganj CBM block in West Bengal. The Raniganj (North) block is next to GEECLs Raniganj (South) block. The DGH estimated that Raniganj (North) holds in-place gas reserves of 42.5 Bcm (1.5 Tcf). GEECL owns 100% of Raniganj (South), which began CBM production in 2007. The company received approval to drill an additional 200 wells in the Raniganj (South) block with production beginning in 2018.
Indonesia pushes CBM

Although Australias three LNG plants under construction in Queensland are relying on CBM for feedstock,
these are not the first LNG plants to liquefy CBM. BP began selling CBM to the Bontang LNG plant in East Kalimantan several years ago when conventional resources were not able to provide enough feedstock. In Indonesia the coal seams are up to 50% thicker than similar deposits in the Powder River basin in Wyoming, the coals are shallower, and the gas content is very high. Netherland Sewell & Associates Inc. has estimated gas content in East Kalimantan at 8.5 cm/ton (300 cf/ton), about six times that of the Powder River basin. In the Barito basin in South Kalimantan the geology is really spectacular, Scott Stevens, chairman of CBM Asia, said. It is super thick, more than 100 m [330 ft], and there are gas kicks in all of the well logs so there clearly is gas in the coals. And theres almost no faulting. Its geologically very simple, and it has huge potential. Recently, the company entered a joint venture agreement with ExxonMobil. Stevens said that Exxon entered Indonesia a few years ago and acquired majority stakes in four production-sharing contracts. Exxon drilled six
wells, confirmed the good geologic conditions, and then sought a low-cost partner. We were in the right place at the right time, Stevens said. The companies are planning a five-well pilot project this year. In an Aug. 22 press release, CBM Asia said that ExxonMobil agreed to extend the umbrella agreement signed Dec. 19, 2012. Our confidence in the commercial viability for CBM in Kalimantan is high, and we look forward to success in the coming drilling season, Alan Charuk, president and CEO of CBM Asia, said. On the Sekayu production sharing contract (PSC), Medco Energi, operator, resumed production testing of the CBM-02 well May 23, 2013. A new high-capacity submersible pump was installed, dewatering the well at the rate of 3,000 b/d of water from the Palembang coal seams. Gas production initiated almost immediately, increasing as the well dewatered. At the Kutai West PSC, Newton Energy, operator, began completion and stimulation operations in four coal seams in the KW-CBM-01 well in September.
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Cementing inflatable packers adds pay to Australian CSG wells
Small-scale CBM-to-LNG plant

CBM Asia Development Corp. signed a nonbinding memorandum of understanding (MoU) with a multinational gas company to conduct a technical and market study of a CBM-to-LNG facility with a potential capacity of up to 1.4 MMcm/d (50 MMcf/d) in South Kalimantan, Indonesia, the company said in a press release Sept. 26. As specified under the MoU, CBM Asias responsibilities are to conduct a commercial analysis on the CBM development strategy required to meet the proposed LNG facility capacity and to produce a technical study to determine gas production schedule, reserve certification, and natural gas delivery points. The gas company will conduct market analysis on the demand for LNG and undertake an infrastructure study on construction of the LNG facility and related logistical groundwork. Each party is responsible for its own costs in relation to the study. On completion of the study, the two companies will jointly decide on the feasibility of the project with a view to entering into a definitive agreement on the establishment of a business relationship. The proposed business structure would require CBM Asia to supply natural gas whereas MGC would offtake gas; build, own, and operate the LNG facility; and market/ deliver the LNG to the end consumer. The potential CBM field development, gas sales contract, LNG facility construction, and other related works would remain subject to local, regional, and central government approvals. From a development perspective the potential establishment of a medium-scale LNG facility with a capacity of up to 1.4 MMcm/d provides the crucial mid-development step beyond early-stage power generation toward development of new pipelines and/or largescale LNG facilities required for full-scale development of the Barito basins vast CBM potential, Charuk explained.
onal isolation and minimizing loss of productive coalseam exposure are significant challenges faced by Australias coalseam gas (CSG) producers. In two of the countrys larger CSG states, operators are achieving both with a novel technique that inflates specialized annular casing packers (ACP) with cement. In Queensland, where most of the countrys CSG is produced, operators in the Surat and Bowen basins are using Weatherfords BullDog inflatable ACP and stage cementing tools to avoid covering valuable pay exposure while providing long-term isolation. More than 1,000 successful zonal isolations have been completed to date. The exposure challenge stems from isolation regulations that require cement to be placed to a predetermined depth below the top coal seam. To meet this requirement, a 1.2-m (4-ft) conventional packer element is set at a predetermined depth below the top coal seam, further covering the producing zone, providing a platform for cementing above the zone to the surface, and preventing cement contamination of the coal seam. This ensures that there is complete well integrity and protects the formation and above. Inflating the packer conserves the 1.2 m of exposure to coalseam pay that would otherwise be lost. In doing so, it achieves the primary objective of long-term zonal isolation. Installed as an integral part of the casing, the BullDog ACP system is typically placed at a predetermined depth below the upper coal seam prior to cementing the casing. Full inflation with cement puts the packer element in contact with the borehole. This immediately isolates the lower coal seam while allowing the casing string above it to be cemented through a casing-cementing tool. Weatherfords Micro-Seal swellable elastomer technology is often used to enhance zonal isolation by preventing gas flow that can occur during production due to the development of a microannulus between the cement and casing interface, which is common during the life of the well. Success in the Australian wells provides a solution to the regulatory challenge that satisfies the zonal isolation objectives without compromising the wells productivity. n
Chaotic CBM development in China

If the experience of Green Dragon Gas is any indication, the CBM industry in China is somewhat chaotic. In an Oct. 9 press release, the company said it was surprised to find out that its Chinese partners had drilled 1,500 wells on
The BullDog inflatable annulus casing packer conserves the 1.2 m of exposure to coalseam pay that would otherwise be lost, allowing additional production. (Image courtesy of Weatherford International)
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five of its six CBM licenses without the knowledge of Green Dragon Gas. The company didnt find out about the wells until five of the licenses were reissued by the government in July. The company estimated that about US $500 million was spent in total on all 1,500 wells. The wells could boost the companys reserves at the next independent evaluation as well as add to its gas production without it having spent any money on exploration. With the newly discovered wells, the company could meet its production target of 510 MMcm (18 Bcf) of gas by 2014. Green Dragon Gas also has reengaged Greka Drilling to drill wells over the next six months. Green Dragon was confirmed as the official license holder by the government despite claims from China United Coalbed Methane Corp. The company was waiting on all of the information available about these wells from the state-owned companies China National Offshore Oil Co. (CNOOC), CNPC, PetroChina, and China United CBM. On Oct. 29 Green Dragon announced a nonbinding preliminary agreement with CNOOC in relation to the drilling that had been carried out on its license area. The company said at the time that it believed it would accrue revenue and reserves from the wells drilled by these companies.
The three LNG plants under construction on the harbor side of Curtis Island offshore Gladstone will use CSG as the feedstock. (Photo by Scott Weeden)
State-owned companies increase drilling

One drilling company is making inroads in CBM wells in China. Greka Drilling signed a series of contracts in the first half of 2013. On June 20, the company was awarded a second contract from Huabei Oilfield, a subsidiary of CNPC, to drill wells in the Anze CBM Project in Shanxi, China. The target coal seams are at depths from 1,000 m to 1,400 m (3,300 ft to 4,592 ft). Around 110 vertical and directional wells will be drilled in 2013 by CNPC and Greka. A total of 300 wells are planned for the project. Huabei Jincheng contracted Greka to drill at its Jincheng block in Shanxi Province. Currently, a fourwell directional drilling program is being drilled. One well that the drilling company completed is on production and being evaluated. Sinopecs Huadong CBM contracted the company for a one-year program to drill 50 wells at Jixian, Shanxi Province. Sinopec Huadong CBM has a 3,000-well program. About 600 wells in total are planned for this year. Greka has two rigs operating and expects to continue the drilling program subject to agreement with the client on drilling locations. Sinopecs Huabei (Petroking) project has plans for a 50-well program during the current exploration phase
for unconventional oil within the Xunyi block, Shanxi. Greka is under contract to drill 100 wells subject to successful drilling of the first 20 drilled across the Sinopec Huabei acreage, including the Xunyi block. The company also has two rigs currently drilling under this program. The first horizontal well was spudded Aug. 1 in cooperation with Sinopec engineers.
US CBM loses out to shale gas

According to the US Energy Information Administration, CBM production steadily declined from 2008 to 2011, which corresponds to the increase in shale gas production. CBM went from 55.5 MMcm (1.96 Bcf) in 2008 to 49.8 MMcm (1.76 Bcf) in 2011. The top five CBM-producing states in 2011 were Colorado, 14.6 Bcm (516 Bcf); Wyoming, 14.3 Bcm (506 Bcf); New Mexico, 10.6 Bcm (374 Bcf); Virginia, 2.83 Bcm (100 Bcf); and Alabama, 2.78 Bcm (98 Bcf). Consol Energy has been the leading producer of CBM in the Appalachian basin since the 1980s. In 2Q 2013 its total production was 589 MMcm (20.8 Bcf), which is 7% lower than the 631.5 MMcm (22.3 Bcf) produced in 2Q 2012. The company reduced its focus on CBM drilling and has been shifting rigs and capital toward higher potential return Marcellus and Utica drilling prospects.
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OFFSHORE REVIEW
Industry adopting pragmatic approach to offshore projects

With the offshore sectors breakneck pace slowing compared to previous years, the industry is embracing a more pragmatic approach to exploiting its new resources.
Offshore production rising
Total offshore production of oil and gas this year is expected to hit close to 50 MMboe/d, according to a recent presentation by analyst Douglas-Westwood. Offshore oil production makes up around 30% of the worlds crude output of almost 90 MMb/d, while global offshore gas production will be close to 2.8 Bcm/d (100 Bcf/d) or around 18 MMboe/d, Clarkson Research estimated. With the increasing number of major offshore gas and floating LNG (FLNG) projects emerging driven largely by market demand and its more environmentally friendly image, the proportion of gas in terms of total offshore output will continue to grow. Historically northwest Europe and North America have been the main offshore gas producing regions, accounting for 54% 991 MMcm/d (35 Bcf/d) of global output at their peak in 2001. But by 2008 the Middle East began to take on that mantle, to the point that largely thanks to output from the giant offshore South Pars and North fields of Iran and Qatar, respectively it accounts this year for around 33% of world offshore gas production. According to Clarkson Research, this continual rise of the Middle East in terms of its offshore gas over the last decade has been complemented by a growth in output from the AsiaPacific region to an estimated 643 MMcm/d (22.7 Bcf/d)
Mark Thomas, Editor in Chief
s 2013 draws to a close, the many thousands of individuals working in the global offshore industry are unlikely to have the time to pause and take stock of just what has been achieved during the course of another hectic year. Some would say its just business as usual in an industry that by its very nature has to push the physical and technical boundaries to find and access new hydrocarbon reserves. But in a year when much of the wider general publics attention has been drawn by the smoothrunning Greenpeace publicity machine to what activity might eventually get under way in the ice-bound waters of the Arctic, the offshore business itself has been busy in less chilly parts of the globe achieving record levels of activity. This activity has been driven by the E&P sectors desire to increasingly monetize offshore remote gas via multibillion-dollar LNG projects in areas such as offshore Western Australia and East Africa as well as the ongoing push into ultra-deepwater and harsh/sour gas environments.
Deeper and darker

So how far has the industry pushed into the deep, dark depths in 2013? To put it into some perspective, in 1970 the average distance from shore of known oil fields stood at 60 km (37.3 miles) with the average water depth being 54 m (177 ft). To date this year the average distance to shore has more than doubled to 134 km (83.3 miles), and the average water depth is 15 times deeper at an impressive 876 m (2,874 ft), according to analyst Clarkson Research Services. Offshore gas projects have pushed the boundaries even further, with Woodside Petroleums deepwater Pluto LNG project off the coast of Western Australia coming onstream in 2012 and currently holding the record for the worlds longest gas well subsea tieback at 210 km (130.5 miles), stretching back to an onshore LNG plant on the Burrup Peninsula.
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From Finland to Texas: The 23,000-ton Lucius truss spar hull onboard the Dockwise Mighty Servant I was en route in May this year to the Kiewit yard in Ingleside, Texas, from where it was built at Technips yard in Pori, Finland. (Image courtesy of Dockwise)
OFFSHORE REVIEW
in 2013, representing approximately 22% of global offshore gas production. Northwest Europe, North America, and the Mediterranean are expected to account for 17%, 9%, and 9% respectively this year. According to the latest market information, there were 261 offshore fields under development as of September 2013 that will produce associated or nonassociated gas. According to Clarkson Research, a total of 124 are scheduled to come onstream by year-end 2014.
Pragmatic project approach

Amidst such promising signs for the offshore sector, it may seem a little strange in an industry review of 2013 to highlight two of the most high-profile delays to have occurred in world-class offshore megaprojects. But these delays on BPs Mad Dog project in the Gulf of Mexico (GoM) and Woodside Petroleums Browse LNG development offshore Australia do not reflect a problem during the development and execution process, as one might expect. This is rather a more pragmatic approach by the operators themselves to dealing with spiraling cost estimates before nearing any potential problems and resulting interminable delays. The result? Both went back to the drawing board earlier this year to drive down those estimated costs. This more cautious attitude in tackling megaprojects is a welcome recognition by the upstream industry that its performance thus far on such large developments has been distinctly unimpressive. According to Edward Merrow, founder and CEO of Independent Project Analysis Inc., four out of every five upstream oil and gas megaprojects fail. Cost-wise he defines such projects as requiring a minimum of US $1.5 billion in capital cost while also being highly complex in terms of engineering and resources. Worryingly, he points out that a project that does not exceed 25% of its initial budget is currently considered successful as long as it also experiences no cumulative delays of longer than a year. It also is apparent that two-thirds of failed projects studied suffered production-attainment problems, meaning these didnt even achieve 50% of the targeted production for the first two years of operation. It is often a field operators perceived need to bring projects onstream as quickly as possible that causes these problems, but it appears that this year at least the offshore sector is learning the lessons of the recent past.
Highlighting the problem of soaring cost inflation levels generally on offshore projects, BP laid the blame for its rethink squarely on this issue and put its so-called Big Dog spar on a weight-loss program with the help of its project contractors. BP CEO Bob Dudley admitted in the majors mid-2013 results presentation that the company was seeing sector inflation of around 5% per year for both capex and opex. Dudley said that what the company had done is I think what you would expect us to do as we refine capital cost and project designs. If they dont fit, well take a step back rather than committing and then going down the road, as they say in the US, to Abilene [Texas] with some big projects. So I think this is exactly what youd like to see us do. A final investment decision is expected possibly by yearend or early 2014. Mad Dog lies in Green Canyon Block 782 in water depths ranging from 1,372 m to 2,073 m (4,500 ft to 6,800 ft), with recoverable reserves put at up to 450 MMboe. First oil was originally penciled in for 2018.
Browse revamp
Similar to BP, Woodside and its partners pulled the plug on one of the worlds biggest offshore/onshore LNG projects when it ditched plans for an onshore plant to receive gas from its remote Browse deepwater field off Western Australia.
Selected 2013 Offshore Milestones

Average field distance to shore: 134 km (83.3 miles) Average water depth: 876 m (2,874 ft) Largest diameter flexible pipe: 20.5 in. (Technip Egina) Most expensive FPSO vessel order ever: $3 billion (Total Egina) Deepest FPSO vessel ever ordered (water depth): 2,896 m (9,500 ft) (Shell Stones) Norways first-ever Spar ordered: Aasta Hansteen (Statoil) Plan for worlds largest FLNG unit: Scarborough (ExxonMobil Australia) Estimated production from subsea-completed wells: 7.9 MMboe/d First CAT I arctic drillship for Statoil FEED study awarded to Inocean Slimmed-down 10,000-psi capping stack unveiled: 2.7 m by 2.7 m (9 ft by 9 ft), 50 tons (Marine Well Containment Co.)
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Costs cause Mad Dog rethink

On Mad Dog, BP has opted for a slimmed-down spar production platform for Phase 2 of the development in the GoM, having stalled the project earlier this year due to the rising forecast costs.
OFFSHORE REVIEW
The operator, along with Shell and other partners, is still weighing plans for an FLNG solution for the field after deciding earlier this year that escalating costs were just too much. The companies are considering alternative development concepts for the field, with the FLNG option the favored solution for the project, especially as Shell is already FIGURE 1. Technological advances have reduced the cost of deepwater wells to the point under way with the development of where offshore projects can now compete with onshore rivals for investment dollars. (Data its own Prelude gas field offshore courtesy of Wood Mackenzie; Source: Ocean Rig) Western Australia via an FLNG unit due onstream in 2017. Woodside and Shell signed a technology agreement, have the potential to turn those projects into assets with a with the Australian operator saying using an FLNG solunet present value of up to $110 billion, mainly through tion could save around 20% on Browse compared to the optimization. original onshore plant plan. It also would have the ability to reduce capex and Woodsides CEO Peter Coleman said that the original opex by an estimated $46 billion over the next decade, plan was shelved after a technical and commercial evaluahe added. tion determined the concept did not meet the companys Reflecting the apparent thinking behind BPs and commercial requirements for a positive final investment Woodsides decisions on Mad Dog and Browse, he said, decision. Coleman said FLNG had the potential to comDeepwater oil and gas has been all about technology. mercialize the Browse resources in the earliest possible Technology is a very important component but I would timeframe. say an important next step is in the economics and collabHe added that the cost escalation on Browse had been oration to find more value. consistent with other projects in Australia. Unfortunately, Drilling highlight the cost escalation has been such that the total costs for Another speaker, Steve Thurston, Chevrons vice president Browse have resulted in the current development not of deepwater exploration and projects, flagged another being commercial. The decision is a commercial one. milestone achieved during 2013. He highlighted dualCollaboration trend gradient drilling technology as being a clear example of The trend of companies increasingly collaborating to a DeepStar technology that progressed from an initial reduce costs was a topic discussed at the offshore indusresearch project in 1996 to full deployment earlier this trys biggest event of the year: the 2013 Offshore Technolyear by Chevron in the US GoM. The technique essentially ogy Conference in Houston. eliminates water depth constraints for deepwater wells by The operator-funded DeepStar global technology initiareplacing the mud in the riser with seawater-density fluids. tive has been the upstream industrys most successful colRig market laboration in tackling deepwater challenges. But in a The offshore rig market itself performed strongly DeepStar panel discussion at the show, the need for furthroughout the year, with the total number of rigs in ther collaboration and standardization was stressed as cruaction standing at 819 as of mid-November. Utilization cial to help companies push into ultra-deep water, both in rates for deepwater rigs in particular hovered at around terms of accessing new reserves and also maximizing pro90%, with the highest utilization for that category of rig duction from existing assets. in Brazil, followed by the North Sea, West Africa, and the Occo Roelofsen, director of global oil and gas practice US GoM. at McKinsey & Co., pointed out that if the GoM was operTechnological advances have reduced the cost of deepated by a single company it would dramatically speed up water wells generally, according to a recent briefing by the process of bringing fields onstream, developing standeepwater-focused driller Ocean Rig, to the point where dardized technical solutions, and maximizing the value of offshore projects are now competitive with onshore ones its assets. This theoretical single operator would have (Figure 1). around $50 billion of projects today in action but would
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OFFSHORE REVIEW
Ultra-deep water remained the key growth market in the drilling space, with exploration drilling activity remaining strong globally. Demand for development drilling programs will naturally follow, it added. However, the contractor did point out that the supply of new ultradeep units was being limited by yard capacity. A total of 13 ultra-deepwater newbuild units have been ordered by rig contractors as of early November this year. Rig major Transocean highlighted the favorable market prompting the orders for newbuilds of this type of rig, with day rates for the highest specification units stable at $550,000 to $600,000 throughout 2013. A total of approximately 40 new floating rigs and 60 jackup units are under construction and due to be delivered through 2014, the company said in its latest results presentation. For shallower waters, fellow rig player Noble Drilling said recently that out of the offshore industrys existing fleet of 429 jackups, a total of 157 are less than 10 years old. On top of this there are currently another 119 under construction, meaning an eventual total of 276 units will be either new or less than a decade old. That will bring the overall age of the total future fleet of 548 units down significantly, helping to address industry concerns over what had been a potentially alarming aging fleet.
and regasification units, and one mobile offshore production unit. The order intake pace this year has been averaging 2.4 units per month, IMA said, which is nearly double the long-term average. There were 218 floating production projects in various stages of planning at the beginning of November. This included an order by Total to Samsung Heavy Industries for a $3 billion FPSO vessel for the operators deepwater Egina field offshore Nigeria, achieving the perhaps unwanted milestone of being the most expensive FPSO vessel ever ordered. However, it also reflects the increasing complexity and scale of many of todays crop of new field developments in remote or deepwater areas, not only in the floating production sector but also in the subsea and vessel segments.
Offshore discovery count

So how many offshore discoveries have been made this year? An end-of-year figure is not yet available, but by the end of the third quarter there already had been 45 significant new oil and gas finds, with at least 19 of those in deep water, according to information compiled from various presentations given at the Barclays CEO Energy Conference. There is not room to run through them all here, but suffice it to say the key areas for producing the goods reflected the trend of recent years, with Brazil, East and West Africa, the GoM, Western Australia, and the Eastern Mediterranean all contributing significant finds.
Key spend trend of 2013

The upstream industrys rising development expenditure levels this year reflect the sectors increased focus on exploiting what it has found offshore in recent years. The floating production sectors order activity is always a good indicator, and since the beginning of 2013 there have been orders for 24 floaters with a total contract value of around $19 billion, according to analyst International Maritime Associates. These include 11 FPSO vessels, two tension-leg platforms, one spar, two barges (one for oil and gas and one for LNG), seven floating storage
Offshore oil and gas production in 2013 (indicated by the red line) is continuing on its steep upward growth curve. (Image courtesy of Douglas-Westwood)
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IMPACT
Multilateral system creates cemented junction in a single trip

Technology can access nearby additional reserves while maintaining original wellbore production.
Mary Hogan, Associate Managing Editor
Weatherfords OneTrip StarBurst system reduces
single-trip multilateral system, Weatherfords OneTrip StarBurst technology creates a Technology Advancement for Multilaterals Level 4 cemented junction with fullbore liner access to the lateral bore. This represents an advancement to the conventional StarBurst system that required three trips for installation. StarBurst systems, which can be used for new development drilling and reentries, provide access to additional reserves while maintaining original wellbore production. The technology won the drilling tools category of Hart Energys 2009 Meritorious Awards for Engineering Innovation. Since its introduction, the system has brought simplicity to multilateral solutions. Since the mid-1990s, attempts have been made to create multilateral systems that provide a maximum number of combined features and options, said Cliff Hogg, Weatherfords global product line manager for reentry systems. However, in an attempt to create these maximum-flexibility multilateral systems, the industry ended up with solutions that were impractical for a variety of reasons. Prior to the StarBurst system, many multilateral solutions involved excessive trip requirements. In many high-dollar offshore environments and deep-well systems, where potential cost benefits of the multilateral should be the greatest, these increased trip requirements can severely impact the economic justification with previous trip-intensive multilateral systems, Hogg explained. Also, with many of the previous multilateral systems, a wide range of unique tools were required as part of the downhole junction creation process. Special casing joints, special material compositions, etc., all led to an increase in system cost and also resulted in longer and more complicated manufacturing, shipping, and mobilization requirements, Hogg said. Quantitative risk assessment also came into play prior to the StarBurst system. As additional trips and operations were being conducted, as new and unique installation processes were being required, and as more requirements were being made with regards to liner orientation and
the number of trips typically required in multilateral installations. (Image courtesy of Weatherford)
landing depths, the resulting overall risk of the multilateral installation process was increasing, Hogg said. This often led to a decision to proceed with a nonmultilateral solution. During the last decade, Weatherford has run more than 50 StarBurst systems in 7-in. and 958-in. wellbores. According to the company, a majority of installations in 958-in. casing are now using the OneTrip Starburst systems, which have been run in both the North Sea and China. Since the systems introduction, focus has been placed on ensuring its compatibility with rotary steerable systems as well as the continual rotation across the window junction resulting from these drilling systems. The perforating process also continues to be improved upon, with refinements in perforating guns and charges resulting in improved penetration capabilities. Finally, the ability to orient and point the perforating gun at the concave face while running on wireline or tubing continues to evolve and improve, making it even more practical to perforate the StarBurst concave in high-depth, high-inclination wellbore systems that might have proved problematic in the past.
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Dual-reamer technology eliminates cleanout trips

A new drilling system saves money in deepwater drilling operations.
Vishal Saheta, Schlumberger
eepwater reservoirs hold a wealth of resources for a hydrocarbon-thirsty world, but they are complex, risky, and expensive to produce. Specialized drilling operations that are necessary to enhance production in this growing sector also can impact the economics and efficiency of the well construction process. In deepwater Gulf of Mexico (GoM) wells operators frequently use hole enlargement while drilling (HEWD) to use larger casing sizes and increase the diameter of the production string, minimize hole-opening trips, enable better equivalent circulating density (ECD) management, and improve borehole quality. These are typically achieved through the use of a concentric expandable underreamer in a conventional bottomhole assembly (BHA) design. The underreamer is positioned above the long, complex LWD string so that the enlarged borehole will not degrade the accuracy of formation evaluation measurements and to account for stabilization of the MWD/LWD tools, realtime communication of the MWD/LWD tools, and the ball-drop requirements of reamers. The rathole is a result of the underreamer being placed high in the BHA and is the unenlarged portion of the hole from the reamer to the bit. To open the long rathole to the larger borehole size to accommodate the liner string, the drilling BHA must be tripped back to surface to allow for a dedicated cleanout or hole-opening run, which adds time and cost to the entire operation. Ratholes can create various issues for operators such as causing difficulties in selecting a casing point, having negative effects on liner hanger setting depth, increasing ECD concerns while cementing if the casing is set in the rathole, and causing flat time between redrilling the interval between the shoe depth and the total depth. A new integrated dual-reamer drilling system for HEWD operations enlarges the rathole at total depth (TD) and carries out the cleanout during the drilling run, eliminating the need for a separate rathole cleanout run. The system, which has been field-tested in deepwater
fields globally, has been shown to deliver considerable reductions in well construction costs and rig time. The new technology also gives operators greater control over the underreamer while downhole than in conventional HEWD operations, where the concentric expandable underreamer consists of a single cutter block and a simple expansion mechanism. In the
Drillcollar
Rhino RHE system upper reamer
Rhino XS reamer
LWD
LWD
MWD
MWD
LWD Rathole with conventional BHA
LWD
Rhino RHE system lower reamer
RSS Drillbit
Rathole with Rhino RHE system BHA
RSS Drillbit
The Rhino RHE dual-reamer system uses the Rhino XS hydraulically expandable reamer positioned above the MWD/LWD tools and the Rhino XC on-demand reamer located near the bit. After the first reamer opens the hole, the BHA is tripped back, placing the near-bit reamer above the pilot hole to enlarge the rathole to TD. (Images courtesy of Schlumberger)
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conventional scenario a hydraulically activated piston forces the cutter blocks to traverse on a spline mechanism, resulting in the radial expansion of the blocks. The activation mechanism is typically deployed by dropping a ball down the drillstring. The ball shears an activation sleeve, allowing the remainder of the mechanism to deploy. A locking mechanism limits the cutter blocks to a predetermined radial position. The conventional BHA also includes a rotary steerable system (RSS) and MWD/LWD tools, which are critical in deepwater operations.
The RoD technology also allows two underreamers to be placed in the same drillstring and activated as needed during the drilling operation. This feature stabilizes the MWD/LWD tools and ensures real-time connections between those tools and accuracy of formation evaluation measurements while the rathole is eliminated. Another advantage is that the functionality of the RoD tool can be verified at surface.
On-demand reaming
To address the limitations of this conventional underreamer design and meet operators ongoing need for greater efficiency, Schlumberger developed the Rhino RHE dual-reamer rathole elimination system for deepwater HEWD operations. The tandem design features a near-bit Rhino XC on-demand hydraulically actuated reamer working in concert with a conventional hydraulically actuated reamer for HEWD and an RSS paired with a customized polycrystalline diamond cutter bit. Positioned between the RSS and MWD/LWD components, the ream-on-demand (RoD) tool features a sophisticated hydraulic system that can perform multiple activations or deactivations of the cutting blocks. The technology eliminates the need to drop an activation ball into the drillstring, which in turn allows a higher degree of flexibility in placing the underreamer in the BHA. The activation/deactivation mechanism includes a valve piston that selectively allows or prevents fluid flow in the underreamer drive position. The position of the valve piston is controlled by a cam mechanism that can be manipulated with mud pump flow rates. By using specific indexing flow rates in a predetermined sequence, the modes can be switched between closed and open. Switching is confirmed by observing several surface and downhole parameters such as standpipe pressure, surface torque, hook load, and downhole data channels indicating flow-rate changes through the MWD/LWD string. The on-demand reamer, which remains in passive mode during the primary drilling interval, has standard cutter blocks or optional cement cleanout cutter blocks with a minimum number of cutters on the gauge surface. Upon reaching TD, the BHA is tripped back to the depth where the on-demand reamer is placed above the pilot hole that was previously enlarged by the HEWD reamer. The on-demand passive reamer blocks are then activated to enlarge the rathole while the drilling process starts.
To open the long rathole to the larger borehole size, the drilling BHA is usually tripped back to surface, and a dedicated cleanout run is performed. The near-bit reamer of the Rhino RHE system activates at TD, avoiding the extra rathole cleanout run. In wells with multiple casing sections requiring HEWD, significant time savings are attainable by eliminating the cleanout trip.
Avoiding a cleanout run

The Rhino RHE system was successfully deployed in a 12-in. by 14-in. exploration well in the GoMs Mississippi Canyon in approximately 2,134 m (7,000 ft) of water. In this case the operator wanted to significantly reduce the length of the rathole during HEWD while using MWD/LWD services. The plan was to place a conventional ball-activated underreamer above the MWD/LWD tools in the BHA and place the RoD tool between the MWD/LWD components and the RSS. This would enable the operator to perform HEWD for the entire interval using the conventional reamer. The operator also could enlarge the remaining rathole by activating the RoD tool at the top of the rathole and reaming
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until the bit was back to bottom, eliminating the need for a separate cleanout run. Before commencing the operation, an engineered drilling system was deployed that uses predictive modeling to minimize risk and determine optimal reamer placement, ensuring it did not interfere with RSS directional capabilities, establishing surface operating parameters, and customizing individual components. For example, the RoD was modified to act as a stabilizer in the deactivated state and as a reamer in the activated state, replacing the stabilizer typically included above the RSS tool in a conventional RSS BHA. Hydraulics analysis also was performed to verify that all of the tools in the BHA could operate within the planned flow rates and mud weights during the drilling phase. The BHA was assembled normally at the rig site. After drilling out the casing shoe, the conventional underreamer in the BHA was deployed below the 1358in. casing shoe using an activation ball released from surface. The ball-activated underreamer and drillbit
began enlarging the hole while drilling until TD was reached. The interval was drilled at an average ROP of 25.8 m/hr (84.5 ft/hr), with 372 m (1,221 ft) of 1214-in. pilot drilled and simultaneously enlarged to 1412 in. During this phase, the hydraulic RoD underreamer remained in the deactivated mode and was monitored from the rig floor until reaching TD. At TD the BHA was pulled back, and the RoD underreamers cutting mechanism, positioned at the top of the rathole, was activated and confirmed open by a 225-psi decrease in standpipe pressure and an increase in weight-on-bit torque. The system was able to enlarge 46.6 m (153 ft) of 1214-in. rathole to 1412 in. in about three hours. The success of the first running of this specific BHA configuration confirmed the reliability of the integrated dual-reamer drilling system in deepwater drilling operations. By eliminating the need for a dedicated rathole cleanout run, the procedure saved the operator an estimated 16 hours in nonproductive time and reduced operational costs by approximately US $625,000.
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Honoring the industry's best new tools and techniques for finding, develop ing, and producing hydrocarbons.
Submit entries online at
epmag.com/mea
January 31 , 2014
Deadline:
tech
TRENDS
Production system improves economics in unconventional wells

Baker Hughes announced the commercial release of the ProductionWave production solution for unconventional oil wells. The system offers better economics, a smaller environmental footprint, and fewer HSE risks than traditional rod lift systems in unconventional resource plays, according to a Baker Hughes press release. ProductionWave uses Baker Hughes Centrilift FLEX series pumps, electric submersible pumps that can operate in flow ranges from 50 b/d to 4,000 b/d of fluid. The production solution also has technology for gas handling and sand control, production chemicals and services, and technology related to applications engineering, real-time optimization, and field support. The solution allows for deeper placement in the well for greater drawdown and affords the benefit of deviation tolerance, which increases system uptime, improves asset recovery, and eliminates the tubing wear typical of rod lift systems. There are no above-ground rotating parts, reducing the HSE hazards, according to the press release. bakerhughes.com
tools using remote input/output installed on the drawworks, top drive, mud pumps, and drill floor. The system communicates over fiber optics for optimal process speed with no noise or interference, Omron said in a press release. The PRECISE System has an advanced process and surveillance camera system to allow the operator to quickly detect and react to problems as well as a talk-back system integrated into the systems ergonomic cyber chair for two-way voice communications and enhanced safety on the drilling rig. Omrons system offers a variety of industrial protocols and Ethernet connectivity into the control system, allowing thirdparty integration. oilfield.omron.com
Sonic-while-drilling service helps manage risk for large boreholes

Schlumberger released the multipole sonic-while-drilling service for wells with large boreholes that enables operators to better manage drilling risk, according to a press release from the company. The SonicScope multipole sonic-while-drilling service for large boreholes provides measurements to determine formation pore pressure and breakout limits with a quality-control process consisting of a series of unique control plots that assures that data are unaffected by external factors. Additionally, the service employs a fast-logging multimode capability that enables top-of-cement identification with consistency and repeatability while tripping. It combines monopole and quadrupole measurements to provide Stoneley data and compressional and shear slownesses in all formations, regardless of mud slowness. By using the data as part of a real-time workflow, operators can more safely drill wells by estimating pore pressures in various geological layers and adjusting mud weight windows, according to Steve Kaufmann, president of Schlumberger Drilling and Measurements, in the press release. The SonicScope service has been field-tested globally, including in several deepwater locations, in boreholes ranging from 10 in. to 17 in. slb.com/sonicscope
Automated drilling system provides costeffective consolidated control center

Omrons PRECISE Automated Drilling System allows drilling contractors to drill wells from one control and monitoring system. The system is designed to make drilling safer and faster with lower operating costs, according to Barry Baker, Omrons senior technical sales specialist. It features a capacitive touch screen on the newest monitor designs and interfaces with the rig
Tool provides diverless solution to subsea clamp installation

T.D. Williamson introduced the Clamp Installation Tool (CIT), a remote-controlled system that offers pipeline operators a diverless solution to installing any proprietary clamps on subsea pipelines in need of repair or preparation for tie-in to new pipelines. An experienced technician can operate the CIT via laptop onboard a platform or diving support vessel away from the pipes, improving
The PRECISE Automated Drilling System allows drilling contractors to control and monitor operations on the rig from a consolidated control center. (Image courtesy of Omron)
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tion of the heaviest equipment in deep water, according to an Aquatic press release. The carousel can handle a product load up to 1,500 metric tons (mt), has a maximum reeling speed of approximately 1 km/hr (0.6 mph), and uses a built-in tensioner with a maximum line pull of 5 mt to maintain product tension on the horizontal reel at all times. The carousel has a reel diameter of 12 m (39.4 ft) and a variable hub diameter, which allows it to handle multiple products and be mobilized onto most vessels of opportunity. aquaticsubsea.com
Operated by remote control, the CIT from T.D. Williamson offers a safer, more efficient way to install pipeline repair clamps and proprietary fittings on subsea pipelines. (Image courtesy of T.D. Williamson)
operational safety and efficiency and enhancing technician control over clamp installation operations. The CIT is a self-contained tool with a built-in control and hydraulic system and a passive ROV interface. The full installation package consists of an installation frame that incorporates the installation tool, a control skid, a third party-supplied work-class ROV, and a clamp or fitting provided by a third-party supplier. Sensors on the control skid transmit information to the technicians laptop on the position and proximity of the ROV manipulator arms and rotation speed during the bolt spinning and tensioning process. The technicians can visually monitor each installation through the sensors information and cameras affixed to the CIT and ROV. Because the CIT is modular, after the clamp is installed and the frame is removed and recovered at the surface, it can then be used immediately to install additional clamps on the pipeline. tdwilliamson.com
Aquatics 1500Te Modular Carousel System can be broken down into components that are easily shipped and can be mobilized onto most vessels of opportunity. (Image courtesy of Aquatic Engineering & Construction Ltd.)
Steam generator improves EOR at great depths

Blackbird Energy LLC announced that a downhole steam generator for improving EOR is now commercially available after 11 months of successful field tests. The Blackbird generator can induce superheated steam, CO2, heat, and pressure directly into the payzone as deep as 6,096 m (20,000 ft) using rocket-based technology. Equipment is staged on trailers for quick mobility away from wells that are unproductive, and all CO2 emissions are kept underground. This technology makes it possible to use steam for EOR for deep formations and Arctic permafrost, according to a Blackbird press release. The Blackbird generator tools are sized to fit 5-in., 6-in., and 7-in. oil well casings and will accommodate standard turning sweeps for horizontal wells. The tool generates 5 MMBtu/hr to 50 MMBtu/hr and offers substantial energy savings compared to current surface steam generators, according to the release. downholesteam.com
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Modular carousel can ease cost of heavy installations

Aquatic Engineering & Construction Ltd., an Acteon company, unveiled the 1500Te Modular Carousel System, a modular drive system for installing and replacing flexibles, umbilicals, power and telecommunication cables, and wire rope products in deepwater operations. The modular design enables the carousel to be broken down into components that fit in standard shipping containers and gives users a less expensive option than buying a new vessel and building a carousel around it, according to Chris Brooks, Aquatic group president. The system provides the strength and stability to withstand the installaEPmag.com | December 2013
Message to E&P companies: The world is your oyster

Potential exploration hotspots for 2014 are spread across the globe, but offshore plays could see the most action.
in the deepwater Gulf of Mexico (GoM). Farther south, eyes are on South Americas Transform Margin, and the excitement is expected to continue offshore Brazil, where Mellen believes onshore shale play activity could blossom toward the end of the year. High interest in Norways licensing rounds already has set the scene for what Tom Ziegler, vice president of GlobalMultiClient at Petroleum Geo-Services (PGS), said is an area to watch in 2014. Acreage offshore Russia, particularly in the Barents and Pechora seas, also could attract oil companies. Looking to Asia, Myanmar is poised to be a hotbed of activity in 2014, as nearly 60 companies already have been shortlisted for participation in a bidding round that makes available onshore and offshore blocks. However, companies are not expected to overlook Indonesia nor to give up on Australia both could be exploration hubs in 2014. These are just a few of the many areas mentioned as possible future hotspots. So where are the most promising emerging exploration frontiers for 2014? Its worldwide, Ziegler said. Offshore remains key to delivering on the demand for hydrocarbon liquids despite the increasing volumes from shale. Shale is part of the mix, but it still remains a small part of the mix.
Velda Addison, Associate Online Editor
xperts predict companies seeking hydrocarbon pay will turn places on every continent into exploration hotspots of varying degrees in 2014. Massive gas finds off the east coast of Africa are expected to keep companies busy with possible movement farther north in hopes of hitting more gas, according to Foster Mellen, an oil and gas strategic analyst with Ernst and Young. Those willing to jump political hurdles in their search for oil and gas could transform areas offshore Cyprus into a hotspot. Moving across the Atlantic to North America, eagerness on the part of the Mexican government to reverse years of declining production could spark a frenzy of activity
East Africa, Middle East

With recent successes offshore, East Africa is certainly an area that is going to be busier in the next year or so; exploration campaigns are being committed, and interest is rising from the independents and, more recently, the majors, Ziegler said. Anadarko and its partners, for example, have made several natural gas discoveries offshore Mozambique. Within the Offshore Area 1 block alone, Anadarko said on its website that it has drilled more than a dozen deepwater wells, finding an estimated 1 Tcm to 2 Tcm (35 Tcf to 65 Tcf) of recoverable gas. Yet the region is still very underexplored, with few wells drilled to date, specifically offshore Mozambique and Tanzania and onshore Kenya and Uganda, Ziegler added. But that could change. Analyst Wood Mackenzie forecast that upstream investment in East Africa could hit US $7 billion by 2018.
Statoils Bay du Nord discovery is located about 500 km (310 miles) northeast of St. Johns, Newfoundland and Labrador, Canada. The find is the companys third for the Flemish Pass basin. (Image courtesy of Statoil)
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Mellen called offshore East Africa an area that has been hot and will stay red hot. Depending on whom you talk to, we have only started scratching the surface there, Mellen said. Yet weve found massive gas deposits there. Onshore and farther up the coast, we are starting more exploration and with mixed results. But theyve found some good potential plays in Uganda, Kenya, even up in Somalia and Ethiopia. We expect activity in that part of eastern Africa to remain relatively hot. Shifting northward, gas finds offshore Israel the site of Noble Energys massive Tamar and Leviathan finds are likely to give companies hope that similar gas plays can be replicated off the coast of Cyprus, Mellen said. Nobles appraisal well on its Block 12 gas discovery offshore Cyprus has firmed up gross resources of up to 170 Bcm (6 Tcf), Hart Energys Deepwater International reported in October. The substantial field size is enough to encourage Noble and its partners to continue with their evaluation of various phased development options, including an initial onshore LNG plant, although it would be marginal to develop on a standalone basis at present, the newsletter noted. Nobles gas discoveries here have attracted others to the area, including offshore Lebanon. There was a big milestone in May this year when the minister of energy announced the opening of a round Lebanons first step toward exploration offshore, Ziegler said. Cyprus had a licensing round this year, so I havent included it as an exploration hotspot for next year. But in Lebanon, we believe the license round will likely close in the first half of 2014 with block awards coming after that. There is certainly extreme interest in the area. We have a very large 2-D and 3-D database offshore in Lebanon, which shows a lot of prospectivity, and over other areas in the Mediterranean that indicate great potential throughout the region.
ping will provide important knowledge of these parts of the shelf. Heightened activity also could be on the horizon for other parts of the Norwegian Continental Shelf considering the high level of interest from companies wanting dibs on acreage in mature areas of the North Sea and Norwegian Sea. The NPD said it has received applications from 50 companies vying for a total of 377 blocks or partial blocks covering 103,029 sq km (39,780 sq miles). The blocks, including new acreage in the Aasta Hansteen area, are expected to be awarded in 2014. For the 23rd round companies may nominate blocks to be included. They will start to see license rounds in the previously unexplored zone, and oil companies are looking closely at this area, Ziegler said. There will be some jockeying for position, better understanding the geology, and nominating blocks to go into future license rounds. I imagine there will be quite a bit of interest there.
Myanmar, Australia
Following the suspension of sanctions by the US and the EU in 2012, experts believe Myanmar will see more action in 2014. The government already has made onshore blocks available during licensing rounds in January 2013, and the future could hold another round for 30 offshore oil and gas blocks (11 shallow-water and 19 deepwater). The Southeast Asian country is stepping up its efforts to lure companies as it aims to tap an estimated 2.2 Tcm (72 Tcf) of gas and 540 MMbbl of crude oil. It is clearly an energy-rich country and has large reserves of oil and natural gas, Ziegler said. There is likely to be major interest in Myanmar as it moves into licensing round mode in 2014. Offshore, it remains unexplored. Whether or not exploration takes off will depend on whether companies are amicable to the governments production-sharing contract (PSC) terms. Under the new model PSC, the Myanmar government has increased royalty payment to 12.5% and state equity to 25% in discovered fields, E&P reported in October. The changes are up from 10% and 15%, respectively, in the previous model. Profit split also has been raised as an area of concern. Exploration activity in Asia has stayed relatively strong mainly just because of the objectives of the big national oil companies the Chinese in particular but also the Indonesians and Malaysians, Mellen said. Myanmar shows a lot of potential, but people arent giving up on Indonesia, and even in Australia, there is still a lot of gas to be found. Ziegler added, Australias Northwest Shelf, a predominately gas domain although there is some oil continues to attract interest.
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Norwegian, Russian Arctic

The end to a land dispute between Russia and Norway could lead to the Barents Sea becoming an exploration hotspot next year, Ziegler said. However, the challenge for oil companies is the political environment, getting into the region with Russian partners. There also are drilling challenges such as the fairly short weather window. The Norwegian Petroleum Directorates (NPDs) acquisition of 2-D seismic data covering 13,200 km (8,202 miles) in the new Norwegian maritime zone northeast in the Barents Sea could further stimulate interest. The areas surveyed this summer are not opened for petroleum activities, and we know little about the subsurface conditions there, Sissel Eriksen, the NPDs exploration director, said in a news release. The mapEPmag.com | December 2013
The challenge is keeping the LNG industry competitive, as global production will grow substantially in the next few years with supplies from several sources expected to rise significantly, including East Africa. Shale is likely to play a key role in the competitiveness of Australias LNG industry, he said, noting PGS has built a substantial library here in recent years, including the addition of new 3-D data in 2013 that increase focus on identified reservoir targets. There have been some recent finds in the Browse basin, which are keeping the interest going from an exploration perspective. Its a big area with some big prospects.
The PGS Ramform Titan was launched in April 2013 and already is acquiring data in the worlds most prospective exploration regions. (Image courtesy of PGS)
Greece, Ireland
Another previously overlooked area is offshore Greece, which could be the site of more activity next year, given the promising outlook in nearby plays. That corner of the Mediterranean is generating a lot of interest, according to Ziegler. [Greece] will probably be in a license round sometime within 2014. We worked with the government to acquire a large grid of data offshore western and southern Greece to allow companies to screen the area in advance of a license round, he said. PGS announced in July 2013 that it had acquired new 2-D multiclient seismic data to support the license round. Traveling northwest across Europe, Ziegler also believes Ireland will attract exploration interest next year, particularly in the frontier Porcupine and Celtic Sea areas. Despite an ExxonMobil-operated wildcat offshore Ireland in the Porcupine basin hitting a water-bearing reservoir and subsequently being plugged and abandoned, hope remains in the area. Tony OReilly, CEO for well partner Providence Energy, said in a news release that the well demonstrated that all of the key components of a working petroleum system exist in the southern Porcupine basin. These data are encouraging not just for the adjacent Dunquin South prospect but also for the basin in general and are likely to intensify the already growing industry focus on this emerging hydrocarbon exploration arena. Cairn Energy also is among the companies with exploration plans set for offshore Ireland. Earlier this year the company farmed into a 38% working interest in two exploration licenses and one licensing option covering 2,753 sq km (1,063 sq miles) in the Porcupine basin. In addition, the company entered a contract to secure a drilling rig for a planned Spanish Point appraisal well with drilling operations set to start in 2Q 2014. Mexican government pushes through energy reform plans, we could start to see some activity in the Mexican part of the GoM assuming they go forward with changes to their contracting. The big oilfield services and the drillers would love to get into those plays. Timing-wise, however, it will be difficult for Mexicos deepwater GoM to become an exploration hotspot in 2014, he added, noting exploration activity is more likely to ramp up in 2015. But the mature areas of the US GoM will remain among the exploration hotbeds, according to Ziegler. Its a very important oil-producing area with a fairly established lease rollover. I think well see it still playing an important part in companies portfolios. Statoils success also could stimulate interest offshore Canada. Recoverable oil reserves for Statoil and partner Husky Energys latest discovery there, the Bay du Nord, are between an estimated 300 MMbbl and 600 MMbbl. The discovery marked Statoils third in the frontier Flemish Pass basin, where it also has its Mizzen find estimated to hold a total of 100 MMbbl to 200 MMbbl of recoverable oil according to a news release. The other discovery, Harpoon, was announced in June, but Statoil has not confirmed volumes. Farther south, the northeastern coast of South America in whats called the Transform Margin is potentially very attractive, according to Mellen. The idea is that the formations off the northeast coast of South America are the counterparts to what were seeing in West Africa, he said. The thought was those two continents were together [millions of years ago]. The underlying geology is thought to be related. And Brazil is in an exploration class by itself, Mellen added. In addition to presalt action, 2014 could see onshore shale activity in Brazil depending on how quickly exploration programs take off following the 12th bidding round that offers more than 163,000 sq km (62,935 sq miles) spanning seven onshore basins.
North and South America

Across the Atlantic, the US and Canada will stay the base for lots of exploration activity, Mellen said. And if the
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The frontier Sergipe basin offshore Brazil also could see plenty of action. Petrobras said in September that the results of extension well 3-SES-176D (3-BRSA-1178D-SES), informally known as Farfan-1, confirmed the extent of the previous light oil discovery in the Farfan area. Brazil has had lots of exploration activity in the last five years, and it looks like the next five years are going to be as exciting, Mellen said.
Spending flattens
Despite the potential for a worldwide hotbed of activity, exploration spending is not expected to eclipse those of previous years. Both Ziegler and Mellen believe that the amount of money companies dole out for exploration will increase but that growth will not be as high as in the past three years or so. Companies increasing investment levels and fairly static oil prices have put pressure on E&P companies cash flows, Ziegler said, meaning there will probably be slower growth in terms of E&P spending. In the offshore seg-
ment where PGS operates, we believe that we will see a reasonable growth toward 2015 but maybe not quite the amount of growth we saw in the previous three years. Offshore exploration expenditures will be driven by several key areas that have played a big role in exploration activity in recent years. These are Brazil, the US, Norway, Angola, and Australia, he said. Between 2000 and 2008, exploration spending was increasing year-over-year by 18% to 20%, Mellen said. However, in the last three years its been down around 15%. He believes exploration spending will grow between 10% and 15% in 2014. Global exploration spending was approximately $100 billion for 2012. I think the industry had a lot on its plate. There has been a lot of volatility in the market, Mellen said. But a 15% increase is still pretty strong. Its just backed off a little bit from what we saw in the early part of 2000 when there was probably more concern that we were running out of oil and needed to look harder. It has stayed reasonably strong.
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HIGHLIGHTS
For additional information on these projects and other global developments:
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AFRICA
South Africa plans to issue shale gas permits South Africa plans to issue licenses permitting the exploration of shale gas reserves in 1Q, Mineral Resources Minister Susan Shabangu said. The country published proposed regulations for hydraulic fracturing Oct. 15, a year after lifting a ban on the process, as it seeks to tap as much as 13.7 Tcm (485 Tcf) of resources in the semi-arid Karoo region. Shell and other explorers have applied for permits to explore the Karoo. South Africa, which imports 70% of its crude oil, estimates shale gas may generate US $100 billion of sales within three decades, helping bring it closer to supplying its own energy demand. Cobalt makes presalt discoveries offshore Angola Cobalt International Energy Inc. announced in a press release discoveries at its Lontra #1 and Mavinga #1 deepwater presalt exploratory wells offshore Angola. On Block 20 the Lontra #1 well has reached total depth, and the drilling and evaluation results confirm an oil and gas discovery, Cobalt said. Cobalts partners in Block 20 include Sonangol Pesquisa e Produo S.A. and BP Exploration Angola (Kwanza Benguela) Ltd. In addition, the Cobalt-operated Mavinga #1 exploratory well reached total depth and encountered approximately 30 m (100 ft) of net oil pay on Block 21. This discovery was confirmed by the successful production of oil from mini drillstem tests, direct pressure and permeability measurements, and log and core analyses, Cobalt said, but efforts to establish a sustained flow rate from a full drillstem test were not successful. Cobalts partners in Block 21 include Sonangol Pesquisa e Produo S.A., Nazaki Oil and Gaz, and Alper Ltda.
Petroleum through a Malaysian affiliate. Petronas Carigali Sdn. Bhd., a subsidiary of Petronas, has a 25% interest in the block. In Indonesia, PetroChina, which is the operator of and Petronas partner in the onshore Jabung block in Sumatra, has made a gas discovery through the NEB Base-1 well. Petronas holds a 42.85% equity in the Jabung block. Meanwhile in Australia the Evans Shoal North-1 appraisal well in the Evans Shoal gas field in the Timor Sea, located in the NT/P48 exploration permit, has been successfully drilled to the target depth of 3,955 m (12,976 ft). The partners in the NT/P48 joint venture (JV) are Shell (operator; 32.5%), Eni (32.5%), Petronas (25%), and Osaka Gas (10%). The well is operated by Eni on behalf of the JV. Gas2Grid hits oil at Malolos-1 Gas2Grid Ltd. announced in a press release that it has lodged with the Philippine Department of Energy, under the terms and conditions of the service contract, an application to declare Malolos-1 an oil discovery. Gas2Grid successfully perforated and flow-tested two oil-bearing sandstones in Malolos-1 at depths of 2,219 m to 2,227.5 m (7,280 ft to 7,308 ft) and 2,178 m to 2,195.4 m (7,152 ft to 7,207 ft). Oil was produced on a short-term test at indicative production rates of between 100 b/d and 200 b/d of oil. Oil from the lower sandstone also flowed to just below the surface. These results have now been integrated with all other available technical data, and Gas2Grid considers Malolos-1 an oil discovery.
EUROPE
First Subsea to provide moorings for worlds largest spar First Subsea has won a contract to provide mooring line connectors for a deepwater field operated by Statoil offshore Norway. The UK subsea mooring specialist was awarded the contract by Hyundai and Technip to supply the connectors for the spar platform to be located on the Aasta Hansteen gas field in the Norwegian Sea. The facility will be the worlds largest spar platform and the first of its kind offshore Norway, First Subsea said in a press release. The platform will be moored with 17 Series III Ballgrab subsea mooring connectors in 1,300 m (4,290 ft) of water, approximately 300 km (186 miles) west of Bodo in northern Norway. The platform is due to start producing in 2017 at a planned rate of 23 MMcm/d (812 MMcf/d) of gas. Statoil is the operator of Aasta Hansteen with a 75% interest, with its partners being OMV (15%) and ConocoPhillips (10%).
ASIA-PACIFIC
Petronas makes three new gas discoveries Petronas announced new gas discoveries in three of its upstream ventures in Malaysia, Indonesia, and Australia. The Malaysian discovery is via the Pegaga-1 well in Block SK320 offshore Sarawak, which is operated by Mubadala
90
international
HIGHLIGHTS
First Subseas deepwater mooring connectors will be used on the worlds largest spar platform in the Aasta Hansteen gas field. (Image courtesy of First Subsea)
Marathons Mirawa-1 well finds oil, gas Marathon Oil Corp., through its wholly owned subsidiary Marathon Oil KDV BV, announced in a press release that the Mirawa-1 exploration well has discovered multiple stacked oil and natural gas producing zones on the companys operated Harir block in the Kurdistan region of Iraq. Located approximately 64 km (40 miles) northeast of Erbil, the Mirawa-1 well was drilled to a total depth of approximately 4,267 m (14,000 ft). Oil and natural gas shows were noted over an extensive gross interval of both Jurassic and Triassic reservoirs from 1,768 m (5,800 ft) to total depth, according to the release. An extensive drillstem testing program was conducted. Marathon Oil is the operator with a 45% working interest in the Harir block. Total holds a 35% working interest, and the Kurdistan regional government holds a 20% carried interest.
Endeavour announces start of production at Rochelle field Endeavour International Corp. announced in a press release that first production from the Rochelle gas condensate field in the UK North Sea commenced Oct. 23, 2013. The West Rochelle W1 well, the first of two development wells, is now flowing natural gas with associated liquids. The second development well, East Rochelle E2, has been drilled to total depth, cased, and is in the process of being completed, according to the press release. The E2 well is expected to be online later this quarter and will provide redundancy in producing the companys allotted capacity limits across the Scott platform. Endeavour has a 44% working interest in the Rochelle field located in blocks 15/26b, 15/26c, and 15/27.
NORTH AMERICA
Eni, Quicksilver Resources enter shale deal Eni has signed an agreement with Quicksilver Resources to jointly evaluate, explore, and develop unconventional oil reservoirs (shale oil) onshore the US, according to a news release. Eni will earn a 50% share in 52,500 gross acres held by Quicksilver in the Leon Valley area located in Pecos County, Texas. The terms of the agreement call for an initial three-phase program that includes the drilling of up to five exploration wells and the acquisition of a 3-D seismic survey aimed at determining the hydrocarbon potential of the area and the subsequent development plan, the release said. In order to earn a 50% interest in Quicksilver acreage, Eni will pay up to US $52 million representing 100% of the drilling, completion, and seismic costs. Following this initial investment, any future expenditure will be shared equally between Eni and Quicksilver. Chevron establishes recoverable resource in Duvernay Chevron Corp. announced in a press release the successful conclusion of the initial exploration phase by its Canadian subsidiary, Chevron Canada Ltd., in the Kaybob area of the Duvernay play located in westcentral Alberta, Canada. Chevron Canada Ltd. successfully concluded the initial 12-well exploration drilling program in the liquids-rich portion of the Duvernay shale play, according to the release. Five wells have been completed and are tied in to production facilities, and an additional four wells are waiting on completion and tie-in. The companys acreage is well positioned
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MIDDLE EAST
Oryx hits oil at Ain Al Safra Oryx Petroleum Corp. Ltd. announced in a press release the discovery and testing of crude oil at Ain Al Safra. The Ain Al Safra discovery will be appraised in 2014 as part of the multiwell appraisal and development drilling program in the Hawler license area in Kurdistan, where Oryx Petroleum is the operator and has a 65% participating and working interest. The Sakson Hilong 10 rig spudded the exploration well targeting the Ain Al Safra prospect, a broad fault-bounded anticline, in the Hawler license areas in early June, according to the release. The AAS-1 well targeted oil potential primarily in the lower Jurassic and Triassic and secondarily in the Cretaceous.
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in the condensate-rich and volatile-oil portion of the play. Liquids yield for the completed wells ranges from 30% to 70% with initial production rates up to 212 Mcm/d (7.5 MMcf/d) of natural gas and 1,300 b/d of condensate.
of this development varies from approximately 100 m to 2,000 m (360 ft to 6,500 ft). Technips operating center in Houston will perform the overall project management. The infield flowlines and risers will be welded at the groups spoolbase in Mobile, Ala. The offshore installation is expected to be performed in the second half of 2014 by vessels from Technips fleet: The Deep Blue will lay the deepwater infield lines, while the G1200 construction vessel will install the export flowlines.
SOUTH AMERICA
Petrobras hits oil with Bracuhy probe, confirms Jupiter connectivity An ultra-deepwater appraisal well has confirmed good connectivity between the large Jupiter oil, gas, and condensate discovery offshore Brazil and the nearby Bracuhy discovery in the presalt Santos basin. Operator Petrobras said in a press release it had completed drilling well 3-BRSA-1183-RJS (3-RJS-713) in Block BM-S-24, the third well drilled in the Jupiter area. The well confirmed a hydrocarbon column of about 160 m (525 ft) starting at a depth of 5,322 m (17,461 ft) containing rocks of good porosity and permeability characteristics. In addition to the gas cap and condensate, Petrobras confirmed that the well also hit an oil column about 100 m (328 ft) thick. A further appraisal well and a formation test are planned for the oil-bearing zone to verify its characteristics and the reservoirs productivity in 2014. Total will develop Vega Pleyade field Total has made the final investment decision to develop the offshore Vega Pleyade gas and condensate field, the company said in a press release. Vega Pleyade will produce through three horizontal wells. Together with production from the other Total-operated fields in the area, it will allow optimization of supply to the existing treatment plants and continuation of the plateau production of 18 MMcm/d (636 MMcf/d) or 130,000 boe/d, according to the press release. Vega Pleyade is located offshore Tierra del Fuego, Argentina, in the Cuenca Marina Austral 1 (CMA-1) concession that Total has operated since 1978. The field development plan consists of a wellhead platform in a water depth of 50 m (164 ft) that will be tied in to the Total-operated onshore Rio Cullen and Canadon Alfa treatment plants by a 77-km (48-mile) pipeline, according to the release.
Chevron Canada Ltd. successfully concluded a 12-well exploration drilling program in the Kaybob area of the Duvernay play in Alberta, Canada. (Image courtesy of Chevron)
GULF OF MEXICO
CGG will conduct GoM survey for Pemex CGG announced in a press release that it has been selected to acquire a large high-end seismic acquisition survey in the Mexican waters of the Gulf of Mexico (GoM) on behalf of Pemex. The survey is Phase 5 in Pemexs Centauro program, the largest ever proprietary 3-D wide-azimuth program to be conducted worldwide. Phase 5 will add another 6,850 sq km (2,645 sq miles) of data to the existing 25,000 sq km (9,653 sq miles) already acquired since Centauro began in October 2010. This brings the total volume to almost 32,000 sq km (12,355 sq miles), according to the release. The survey will be acquired by the Oceanic Vega and Oceanic Sirius, CGGs two state-of-the-art 20-streamer vessels. The project is expected to be completed in March 2014, according to the release. Technip wins LLOG GoM subsea contract Technip was awarded a contract by LLOG Exploration Offshore for the development of the Delta House field located in the Mississippi Canyon area of the US Gulf of Mexico. The contract ranges in value from US $1.4 million to $3.4 million. This contract covers the project management, engineering, fabrication, installation, and precommissioning of more than 200 km (124 miles) of infield and export flowlines and risers. The water depth
92
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Environmental Drilling Solutions announced two seniorlevel additions to its management team; John Meckert (top) was named CEO, and John Marty III (bottom) became business development manager. Robert L. Potter retired as president of FMC Technologies Inc. John T. Gremp has assumed the role in addition to his current duties as chairman and CEO. International Western Petroleum Corp. promoted Robert Smith to COO. Taipan Resources Inc. appointed Paul Logan exploration manager. Chevron announced that on Jan. 1, 2014, Jay Johnson will become senior vice president of the upstream division, and Joe Geagea will become senior vice president of the technology, projects, and services division. Pierre Breber will be made corporate vice president and president of Chevron Gas & Midstream. BP tapped Richard Herbert to take over the role of head of exploration. He replaced Mike Daly, who will retire at the end of the year after 28 years with the company. Graham Maxa (right) accepted the position of finance director at Fine Tubes. David Dickson has been selected by McDermott International Inc. to become president and CEO when Stephen M. Johnson retires from the position this month. Dr. John Walsh (left) joined CETCO Energy Services as director of technical water treatment.
94
Occidental Petroleum Corp. promoted Vicki A. Hollub to a vice president position for the company and executive vice president for US operations in the oil and gas division. Ceona welcomed Claire Goldie as business development manager. Jason Fox (left) joined Evonik Corp.s oil and gas group as director. Claire Miller was named CEO of the Energy Industries Council. Citadel Energy Services LLC hired Dr. Bruce Langhus as chief geologist and Dr. Marian Smith as director of research. Andrew Duncan (right) has taken on the role of president and managing director of Bibby Subsea Inc., a new division of Bibby Offshore. The division also welcomed Errol Campbell as ROV operations manager. T.D. Williamson named Chad C. Fletcher (left) vice president of Western Hemisphere operations. Intertek appointed Jill Rennie (right) associate director to lead its environmental consultancy team in Aberdeen, Scotland. Olu Phillips (left) has taken the post of country manager in Nigeria for Proserv. Wireless Seismic Inc. promoted Travis Ohnesorge to the position of vice president for the customer services division. Newfield Exploration Co. announced that Terry W. Rathert will retire from his post as executive vice president and
CFO in 2014 after more than 25 years with the company. Lawrence S. Massaro has been selected to succeed Rathert in his roles. J. Robinson Robin West joined the Center for Strategic and International Studies (CSIS) as a senior adviser and resident affiliate to the CSIS Energy and National Security Program. ROVOP welcomed Alan Shanks to its ranks as finance director and to its board of directors. Cohen Guidry assumed the role of global HSEQ manager for InterMoor. Peak Well Systems appointed Paul Emmerson (right) technical sales manager for the Middle East region. John Watts stepped into the role of Rockwell Automations regional marketing director for the Asia-Pacific area. Nautronix welcomed Bob Barrett as sales manager at the companys global headquarters. Ashley Anderson and Scott Williams also joined the team as sales engineers. Terrance Ivers has assumed responsibility as executive vice president of oil and gas for SNC-Lavalin. Deep Casing Tools appointed Brad Whitfield vice president for the US and Mike Chomack vice president for Canada. National Fuel Gas Co. promoted Lee E. Hartz and Jeffery J. Kittka to assistant vice presidents of the pipeline and storage division. Kevin D. House and John J. Polka Jr. were promoted to assistant vice presidents of the utility division. DONG Energy named Marianne Wiinholt CFO.
MARKETING | SALES | CIRCULATION
P ?
COMPANIES
Velocys Plc opened a Houston office that will serve as the companys commercial and engineering center. The location will allow the process engineering team to be closer to the companys engineering partners and customers. Archer, an oilfield service company, has consolidated its Houston-area operational bases into a new 9,290-sq-m (100,000-sq-ft) facility. It houses the survey and inspection, directional drilling, wireline, and oil tools divisions and includes office, warehouse, lab, and workshop facilities. FlexSteel Pipeline Technologies Inc. opened a new service center in Killdeer, N.D. The center houses technical and
RUSSELL LAAS Tel: 713-260-6447 rlaas@hartenergy.com
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MOVE
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field services staff and production and installation equipment to help support the companys clients throughout the Bakken shale play. Canary LLC hosted a grand opening event for the largest Bakken shale wellhead facility. From this location, Canary will offer wellhead, hot oil, slickline, wireline, hydrotesting, pressure testing, and frac heating services. Newpark Drilling Fluids celebrated the grand opening of its new technology center. Located on 11 acres in Katy, Texas, the 9,540-sq-m (102,685-sq-ft) complex includes 3,437 sq m (37,000 sq ft) of R&D space, a field-testing and services area, and a training lab that features a drilling simulator, a training auditorium, and a full range of analytical capabilities.
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Australian American Chamber of Commerce . . . 28 Cameron . . . . . . . . . . . . . . . . 23 Canary . . . . . . . . . . . . . . . . . . .55 Checkers Industrial Safety Products . . . . . . . . . . .71 Cimarex Energy Co. . . . . . . .IFC Emerson Process Managment . . . . . . . . . . . . . .19 E&P . . . 2-3,41,59,71,78,83,89,93 FlexSteel . . . . . . . . . . . . . . . . . . 6 Gardner Denver (GARD) . . . .39 Great Wall Drilling Company . . . . . . . . 61 IPAA . . . . . . . . . . . . . . . . . . . . .45 IRWA . . . . . . . . . . . . . . . . . . . . .22 KBC Advanced Technologies plc . . . . . . . . .21 Magnum Oil Tools International . . . . . . . . . . . . . 26 MCE Deepwater Development 2014 . . . . . . . .63
Mewbourne College of Earth & Energy . . . . . . . . 14 M-I Swaco . . . . . . . . . . . . . . . . . .4 Momentive . . . . . . . . . . . . . . . 67 National Oilwell Varco . . . . . . 24 OneSubsea . . . . . . . . . . . . . . . .30 PGS Exploration (UK) Ltd. . . 15 Precision Geophysical, Inc. . . 49 Rushmore Reviews . . . . . . . . .11 Schlumberger . . . . . . . . . . .5, BC Subsea Expo . . . . . . . . . . . . . .82 TAM International . . . . . . . . .IBC TEAM Oil Tools . . . . . . . . . . . . 35 TSC Drillpipe . . . . . . . . . . . . . .57 Weatherford International, Ltd. . . . . . . . . 13 Xplore Technologies Corp. . .53
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last
WORD
Dont forget to work on safety culture

Until the industry makes the final shift to a culture of safety, it will continue to struggle with significant variations in safety performance.
Jim Collins, Sanjel Corp.
he best strategy for improved safety performance in the oilfield business is to shift the employees way of thinking. Cultural change as a safety strategy may seem obvious when working in the high-risk oilfield business. But as with any strategic initiative, how employees think, feel, and act and how closely and consistently their behaviors reflect the companys strategy are the clearest indications of a cultural shift. In the 1980s most safety efforts were targeted at getting employees to wear personal protective equipment (PPE). Reflecting back on that decade, while it may not have been obvious, the energy industry was already starting on the path to developing a safety culture. Moving into the 1990s, we realized that wearing PPE did not prevent employees from having injuries it only reduced the severity of injuries sustained and did little to improve overall safety performance. Focusing on employees actions and providing direct support by adding safety-specific positions (such as health and safety advisors, supervisors, and managers) initiated a shift in culture and fostered a movement toward behaviorbased changes. The early 2000s launched the decade of documentation, review, and verification contractor registries and a period for all oilfield contractors to create rules related to safety. The registries provided a means for operating companies to compare their contractors safety statistics,
96
and as a result, poor performers were pressed to either improve their safety record or lose work. This was a significant period for our business since companies were forced to rethink their strategy and focus on safety as a means to enhance the employee experience, strengthen client relationships, and improve the bottom line. A culture of safety where employees are encouraged and supported in thinking, feeling, and acting with safety as a priority continues to be a challenge in the oil industry. The creation of more policies, manuals, and rules will not drastically improve or even sustain safe performance. Only permanent change as verified by employee actions and then subsequent outcomes will prove meaningful over the long term. During the past 30 years we have experienced a culture move from one that blames the injured to more of a team goal. However, we still find resistance within organizations due to a mistaken belief that shortcuts in safety can be justified by other priorities. This simply cant be true. Until we make that final shift in culture whereby everyone gets it, we will continue to struggle with significant variation in safety performance. Managers must continue to work at driving culture deeper into their organizations and maintain a positive yet disciplined approach toward working safely. They must spend more time encouraging employees to eliminate and reduce risk. And we all must ensure that safety gets the same respect, review, audit, and acknowledgment as any other business strategy. We all win when no one gets hurt.
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2014 Exploration Hotspots

A BRAND NEW DAY

Cimarex Energy Co. has operations

detailed pre - and post-drill economic evaluation

Chosen by analysts as a top "Oily stock to Watch"

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EXPLORATION & PRODUCTION WORLDWIDE COVERAGE

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Out of this world-class solutions Taking cues from outer space

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Production toolbox gets a little heavier in 2013

Industry adopting pragmatic approach to offshore projects

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Plenty is on Brazils presalt plate for Petrobras

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