Revista E&P - Mayo 2011

E P MAG.
C OM
MAY 2 0 1 1
2011
Meritorious Awards
for Engineering
Innovation
SEA CHANGE
technology transforms
deepwater operations
Extending
Reservoir Life
Potential Fields
Deepwater
Rig Advances
Sand & Water
Management
Special Report:
BRAZIL
Extending
Reservoir Life
Potential Fields
Deepwater
Rig Advances
Sand & Water
Management
Special Report:
BRAZIL
991-994 HEPcoversMAY_Layout 1 4/18/11 2:12 PM Page 991
991-994 HEPcoversMAY_991-994 HEPcoversMAY 4/18/11 1:33 PM Page 992
EXTENDING RESERVOIR LIFE
Failed waterflood effort provides
lessons learned
Reservoir simulation, history matching extend
reservoir life
POTENTIAL FIELDS
The potential of potential fields
Multiple measurements lead to
singular insight
DEEPWATER RIG ADVANCES
Close observation improves drilling
performance
New ultra-deepwater design boasts capacity,
advanced automation
SAND & WATER MANAGEMENT
New water treatment technology minimizes
offshore footprint, costs
New technologies enhance water,
sand management
REGIONAL REPORT: GULF OF MEXICO
Looking long term: One year on for the
Gulf of Mexico
IndustryPULSE:
Deep water ahead?
Following a year of slow economic recovery, unstable
price fluctuations, and damaging incidents in the
GoM and China, the oil and gas industry is predicting
healthy investment in new exploration and market
opportunities over the next 12 months.
EXPLORATION & PRODUCTION
W O R L D W I D E C O V E R A G E
MAY 2011
VOLUME 84 I SSUE 5
A HART ENERGY PUBLI CATI ON www. EPmag. com
COVER STORY
32
Deepwater raises the
bar for technology
As water depths increase, so do
the challenges associated with
extracting reserves.
6
WorldVIEW:
New operator takes
the stage in Brazil
After only a year and a half of operations, OGX is
expecting the arrival of its first FPSO in July 2011 and
plans to begin production by August, with a year-end
production goal of 20,000 b/d.
11
Unconventional: Horn River
Horn River is a play
for the ages
Activity in the Horn River Basin is slow due to low gas
prices. But a change in market economics could turn
this play into a barnburner.
44
48
50
52
57
60
63
66
106
70
93
SPECIAL REPORT: BRAZIL
79
2011 MERITORIOUS
AWARDS FOR
ENGINEERING
INNOVATION
01-4 TOC_MAY_01-4 TOC 4/18/11 9:58 PM Page 1
AS I SEE IT
Getting back to business in the GoM 5
MANAGEMENT REPORT
Benchmark survey reveals looming talent shortage 14
DIGITAL OIL FIELD
Collaboration is key enabler in Russias oil, gas field efficiency 18
GPUs prove their worth in seismic interpretation 23
EXPLORATION TECHNOLOGY
It is time to disrupt the status quo 27
WELL CONSTRUCTION
Unconventional well construction moves to Poland 29
PRODUCTION OPTIMIZATION
Bugs, bacteria join the battle 31
TECH WATCH
CSEM identifies new prospectivity in an explored basin 87
TECH TRENDS
Innovations and new releases 90
INTERNATIONAL SPOTLIGHT
Mexico calls for E&P service contracts 105
INTERNATIONAL HIGHLIGHTS
Operators display global reach 112
ON THE MOVE/INDEX TO ADVERTISERS 115
LAST WORD
Together, we can speak volumes 116
E&P (ISSN 1527-4063) (PM40036185) is published monthly by Hart Energy Publishing, LP, 1616 S. Voss Road, Suite 1000, Houston, Texas 77057.
Periodicals postage paid at Houston, TX, and additional mailing offices. Subscription rates: 1 year (12 issues), US $149; 2 years (24 issues), US $279. Single
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No article may be reproduced or transmitted in whole or in parts by any means without written permission of the publisher, excepting that permission to
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DEPARTMENTS AND COMMENTARY
ABOUT THE COVER The main photo shows the Pride Angola in West Africa,
currently on a five-year contract with Total (photo by Ken Childress Photography,
courtesy of Pride International). On the left, the gorgeous Paradise Beach in Morro
de So Paulo, Brazil, and a colorful toucan herald the potentially bright future of off-
shore Brazil. (cover design by Laura J. Williams)
COMING NEXT MONTH The June issue of E&P features a cover story on downhole systems
and tools as well as the latest unconventional gas news from Poland. Additional features include fron-
tier exploration, MWD/LWD, well testing and production management, and advances in mooring. The
unconventional report discusses activity in the Monterey shale and the regional report highlights off-
shore frontiers. The second installment of the three-part Special Report: Brazil also is included. While
youre waiting for the next copy of E&P, remember to visit www.EPmag.com for news, industry updates,
and unique industry analysis.
01-4 TOC_MAY_01-4 TOC_MAY 4/18/11 1:25 PM Page 2
ONLINE CONTENT MAY 2011
Two intervals reported at Syrian
exploration well by Gulfsands
London-based Gulfsands Petroleum found oil
in two intervals of the #1-Twaiba exploration
well in Syria.
PREMIUM CONTENT Subscribe @ EPmag.com/explorationhighlights
South Poland shales produce for LNG Energy
LNG Energy of Vancouver announced that the #1-S Wytowno well
had 725 ft (221 m) of gas shows in Lower Silurian, Ordovician, and
Cambrian shales and 1,476 ft (450 m) of gas shows in the middle
and upper Silurian.
AVAILABLE ONLY ONLINE
A Gulf of Mexico milestone: first new
deepwater plan approved since oil spill
By Nancy Miller, Online Editor
US regulators green-lighted the first exploration
plan since the nations deep waters in the
Gulf were declared open for business in
October 2010, following a near six-month
drilling moratorium.
TransCanada sets the record
straight on the Keystone Pipeline
By Judy Murray, Editor
Opposition to the Keystone Pipeline has
hindered progress, but according to
TransCanada, many of the criticisms are
not based on facts.
Drilling down on upstream
innovation in the Gulf of Mexico
By Gerry Love, Scottish
Development International
Scotland delivers another year of key
industry research and innovation at
OTC 2011.
R
E
A
D
T
H
E
L
A
T
E
S
T
E
P
m
a
g
.c
o
m
IN
D
U
S
T
R
Y

N
E
W
S
Appraisal well results increase reserve
estimates for Perla field in Venezuela
Rome-based Eni has upgraded its reserves at
the Perla field in the shallow-water Gulf of
Venezuela following the successful appraisal
at the #4-Perla well.
WEBINARS
Recent
Advances
in Reservoir
Modeling
and Subsea
Instrumentation
Opportunities
for Better
Real-Time
Drill-Head
and Equipment
Data Use
Marcellus
Midstream
Embracing the
Marcellus
O
TC 2010 was somber the industry stunned by an accident nobody thought
could happen.
A year later, the collective mood is staid but not subdued. Companies have faced
the challenge of improving safety head on, and there has been remarkably rapid
progress. Technology development targeting spill prevention and response was fast
tracked, and the advances that resulted are changing the face of the industry. Read-
ers who are interested to know more about the tangible results of the industrys
efforts can read about some of them in International Editor Mark Thomas Gulf of
Mexico (GoM) regional report in this issue (page 106).
While everyone would like to put the Macondo incident behind them, it contin-
ues to impact business and will do so for quite some time. The accident, in fact,
served as the impetus to many of the advances in deepwater technology that are
addressed in this months cover story (page 32).
The moratorium and its lingering repercussions will be with the industry for years,
and speculation will continue about the impact it will have on future E&P and US
energy security.
Bobby Parker, chairman of Parker Drilling, shared some of his views recently at
the Decisions Strategies Oilfield Breakfast Forum in Houston.
Gasoline prices are the one single thing the US public judges the industry on,
Parker said, and given that domestic offshore E&P activity was practically non-exis-
tent for nearly a year, the US should expect prices to rise. In addition to limited pro-
duction from the GoM, he said, instability in many countries that have large oil
reserves does not bode well for prices. Were probably in for more and more nega-
tive publicity.
Steve Thurston, vice president, deepwater and projects business unit at Chevron,
who also spoke at the forum, agreed with Parker. The Gulf of Mexico is important
to the US, he said. We can and will develop the deepwater safely. That means
more permits need to be issued, but at present there is a huge backlog. Although a
number of permits have been granted, the pace is painfully slow, Thurston said,
and this has stalled the tremendous investment in the GoM. Weve got billions of
dollars invested and at stake, and if we cant put it to work in the Gulf of Mexico, we
will have to go elsewhere. With Chevrons large
acreage holdings in the GoM, it will be inconvenient
at best to go somewhere else.
Thurston said the way forward will be paved by a
highly competent US regulatory agency that will allow
work in the deepwater GoM to resume at a much
more rapid pace. This is critically important, he said,
because the future remains in deep water.
As I
SEE IT
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Getting back to business
in the GoM
5
Read more commentary at
EPmag.com
JUDY MURRAY
Editor
jmurray@hartenergy.com
Editor JUDY MURRAY
jmurray@hartenergy.com
Senior Editor RHONDA DUEY
rduey@hartenergy.com
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International Editor MARK THOMAS
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Associate Editor ASHLEY E. ORGAN
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Art Director ALEXA SANDERS
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Designer LAURA J. WILLIAMS
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& Reprint Sales JO LYNNE POOL
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Special Projects JO ANN DAVY
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Business Development ERIC ROTH
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Group Publisher RUSSELL LAAS
rlaas@hartenergy.com
Vice President, Digital Media
RONS DIXON
Senior Vice President, Consulting Group
E. KRISTINE KLAVERS
Executive Vice President and CFO
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FREDERICK L. POTTER
President and Chief Executive Officer
RICHARD A. EICHLER
05 AsISeeIt_05 AsISeeIt 4/18/11 1:25 PM Page 5
6
industry
PULSE
Deep water ahead?
Following a year of slow economic recovery, unstable price fluctuations, and damaging
incidents in the GoM and China, the oil and gas industry is predicting healthy investment in
new exploration and market opportunities over the next 12 months.
T
he offshore market is looking up, according to a new
report on the future of the sector published by the
Economist Intelligence Unit and sponsored by GL
Noble Denton.
Despite concerns over tougher industry regulation
and increased operating costs, the 194 board-level exec-
utives and policymakers from some of the industrys
leading international companies surveyed for the report
are optimistic that 2011 will be a key turning point as
operators prepare to drill deeper in new geographies.
Indeed, 76% of respondents to the survey described
themselves as either highly or somewhat confident
about their companys business outlook. Only 8% were
highly or somewhat pessimistic.
This renewed confidence is largely due to a period of
relative price stability, particularly in North America,
and the fast-growth economies in Asia. The largest por-
tion of industry executives questioned (32%) saw South-
east Asia as offering the greatest opportunities for their
businesses in 2011, while nearly 30% of respondents
identified North America as the most significant region.
Regulation uncertainty
The industry still values the
potential of North American pro-
duction. For larger oil companies
in particular, the Gulf of Mexico
(GoM) remains an attractive
province. The potential impact of
regulatory changes following the
biggest oil disaster in US history
continues to feature heavily in
industry debate a year after the
Deepwater Horizon incident. Survey
results reflect the industrys feel-
ing of uncertainty about the effect
of future legislation.
The oil and gas industry recog-
nizes that increased regulation
will follow the Macondo incident,
but respondents seemed unclear
about when new legislation would appear and what
effect it might have. A large portion (72%) of respon-
dents said they expect regulation to become more strin-
gent in North America in particular, while a substantial
majority (68%) expects cost increases in general.
During a roundtable discussion organized by GL
Noble Denton in London to discuss the findings of the
Economist Intelligence Unit report, European industry
leaders voiced concerns that the increased cost of post-
Macondo regulatory compliance could price smaller
operators out of the market.
Certainly, rising costs are most likely to be more prob-
lematic for smaller E&P companies. Nearly two-thirds of
production in the GoM is accounted for by such compa-
nies, and proposals to raise the US $75 million cap on
liabilities related to offshore oil spills will most likely hit
them hardest as insurance becomes impossible or too
costly to obtain.
Rising demand for energy means companies also
increasingly are required to develop resources in more
challenging environments, such as deep water. With
20% of major oil companies portfolios now coming
from deepwater positions, this clearly will have an
impact on spending.
For larger oil companies in particular,
the GoM remains an attractive
province. (Images courtesy of
GL Noble Denton)
John Wishart, GL Noble Denton
06-10 IndPULSE_06-10 IndPULSE 4/18/11 1:26 PM Page 6
May 2011 | EPmag.com
8
The longer-term impact of Macondo, however, might
well be on companies operational strategies, with the
report suggesting safety records will become a more
important factor in gaining access to global reserves.
Natural gas
Natural gas has gained a reputation as a relatively
low-carbon transition fuel in recent years, and
the global demand for LNG has grown as coun-
tries in Asia and Europe have sought to increase
their supply options.
The emergence of large reserves of unconven-
tional gas in North America has proven highly
attractive to companies looking to replace declin-
ing production. Instead of experiencing an antici-
pated decline, the region has seen dramatically
increased extraction as new technologies have
helped to unlock gas resources.
Interestingly, some of the industrys key players
have disagreed with the reports findings, which call
natural gas an industry game changer. Opponents
say companies may find that the cost of extracting
unconventional gas will result in a weaker return on
investment than originally expected.
Regulations also could add cost to the extraction
process. Currently, individual states regulate this in
North America, but there is potential for a further
federal layer of regulation, which could slow oper-
ations and increase cost. The report also notes
that there is an expectation for closer scrutiny of
the environmental impact of unconventional gas.
The majority of the industry executives polled
expects a modest shift upward in natural gas prices,
especially as global demand is forecast to increase
steadily over the next decade. Nearly one-half expects an
increase of at least 10% in gas prices, compared with just
7% who think prices will fall by 10% or more. Most of the
rest (35%) expect prices to fluctuate around the current
price range.
Developing the next generation
The increasing shortage of technical skills is another
topic close to the hearts of oil and gas professionals and
was a subject of debate at the recent roundtable discus-
sion. There is an overall feeling that the industry will
encounter challenges as a result of
its failure to attract, recruit, and
retain highly talented people.
There are several reasons why the
oil and gas industry is likely to expe-
rience a skills deficit within the next
15 years. One is the success of the finance industry in
recruiting talented graduates through the promise of high
salaries and quick career progression. The negative impact
of the Macondo disaster also played a role alongside skep-
ticism among younger people about the oil and gas indus-
trys efforts to support more environmentally friendly
approaches to energy production and distribution.
The industry could soon find itself returning to a situa-
tion in which technical resource demand outweighs sup-
ply. Roundtable participants agreed the industry needs to
work more cohesively to address the skills problem rather
than trying to pursue one anothers human resources.
Cautious optimism
The oil and gas industry is extremely focused on its
future challenges and understands the need to find
innovative solutions to operating more safely, sustain-
ably, and efficiently.
The success of key players in the industry in finding
more innovative solutions to mitigate risk while remain-
ing resourceful and sustaining activity will define their
position and reputation in the market this year.
industry
PULSE
Rising demand for energy means companies increasingly have to develop
resources in more challenging environments such as deep water.
EPmag.com
READ MORE ONLINE
There is more
to the story
11
New operator
takes the stage in Brazil
After only a year and a half of operations, OGX is expecting the arrival of its first FPSO in
July 2011 and plans to begin production by August, with a year-end production goal of
20,000 b/d.
world
VIEW
W
hen people think about
operating companies in
Brazil, OGX might not be the
one that immediately leaps to
mind. Aggressive growth
plans, however, are moving
the company out of the wings
and onto center stage.
Paulo Mendona, general
executive officer and E&P
director, talked to E&P about
his companys history and its
goals.
What is the most important thing
for the industry to know about OGX as an operating company?
OGX is focused on oil and natural gas E&P and was
created to pursue and develop opportunities in the
oil and gas sector, mainly in Brazil. Since its creation
in July 2007, OGX was able to recruit an experienced
management and technical team and raise the capital
needed to:
Acquire a high-potential portfolio comprising 34 explo-
ration blocks in five Brazilian and three Colombian
basins, covering nearly 34,000 sq km (13,127 sq miles);
Acquire the equipment, services, and geological and
geophysical data needed to define nearly 100
prospects in 29 blocks onshore and offshore Brazil;
Accomplish an aggressive exploration campaign com-
prising nearly 100 exploration wells; and
Begin production.
After a year and a half, six offshore and one onshore
drilling rigs are operating, and two others one offshore
and one onshore are contracted and on location and are
preparing to begin drilling. Until now, 32 exploration wells
have been concluded.
Our first horizontal well was successfully drilled and is
being prepared and equipped to start production in
August of this year. Our first FPSO (floating production,
storage, and offloading vessel) will arrive in June/July.
Currently, seven exploration wells are in progress: one in
the Santos Basin, five in the Campos Basin, and one in the
Parnaiba Basin. An exploratory drilling campaign will begin
in the Par-Maranho and Esprito Santo basins this year.
OGX expects to reach production levels of 20,000 b/d
by the end of the year, 730,000 b/d in 2015, and 1.38
MMbbl/d in 2019.
How big is OGX and how is it organized in terms of ownership?
OGXs market cap is around US $40 billion. In terms of
human resources, we have 250 direct employees, 50% of
whom are geologists, geophysicists, and petroleum engi-
neers, most of them with more than 15 years of experience
in the oil and gas industry. Besides that, there is a group of
first class Brazilian and global service companies with
more than 5,000 employees working directly for OGX.
Approximately 62% of the stock belongs to EBX, repre-
sented by Centennial Asset Mining Fund LLC in Nevada,
and 38% of the shares are in free float.
What is the scope of OGXs business interests and what are its
most important investments to date?
Our investments reached $2.7 billion in the period
between July 2007 and October 2010. One of the most
important investments was in recruitment of the E&P
teams. They are responsible in great part for the OGXs
success.
Another important project was the acquisition of more
than 2,500 km (1,553 miles) of new 2-D seismic, more
than 9,500 sq km (3,668 sq miles) of 3-D seismic, and
more than 6,100 sq km (2,355 sq miles) of new 3-D seis-
mic. All of the offshore blocks are covered by excellent
quality 3-D seismic. The onshore Parnaiba Basin blocks
have 2-D seismic data acquisition in process, and acquisi-
tion will start in Colombia in 3Q or 4Q 2011.
OGX contracted six semisubmersibles and one onshore
rig that already are operating. In addition, we have one
jackup rig and one onshore rig that recently were con-
tracted and are ready to start operations. We also have
Paulo Mendona
(Image courtesy of OGX)
Judy Murray, Editor
11-13 WorldView-May_11-13 WorldView-May 4/18/11 1:26 PM Page 11
eight support vessels and four helicopters operating in
logistics support to our operations.
The company has completed 29 offshore and two
onshore wells. Six offshore wells and one onshore well are
in progress, and one offshore and one onshore well are
about to spud. We have had no accidents and have
achieved a success ratio of more than 90%.
Our first FPSO is in the final stage of conversion in
Singapore, with a planned arrival to the location in July
2011 to begin production by August 2011 through a long-
term production test. All additional equipment necessary
to start production already has been purchased or con-
tracted, including wet christmas trees, wellhead platforms,
etc. We also have ordered our second FPSO.
What types of plays are of most interest?
Different types of plays are of interest depending on the
basin, but OGXs most important plays in its offshore con-
cessions range from Tertiary and Upper Cretaceous sand-
stones to Albian and Aptian carbonates. In the onshore
Parnaba Basin, the main plays are
related to Carboniferous and
Devonian sandstones.
OGX mainly focuses on the
Brazilian basins. Abroad, the main
areas of interest are in South Ameri-
can onshore basins and in the West
Africa offshore basins. We are con-
stantly looking for E&P opportuni-
ties both in Brazil and abroad.
Currently, we are not operating
any fields, but OGX will begin by
August 2011 in its first oil field in
the Campos Basin. In the explo-
ration concessions, OGX operates
27 of its 34 blocks. Based on the experience and capability
of its E&P team, OGX prefers to act as operator, but this is
not a closed question since OGX recognizes the eventual
partner as a capable operator.
What are some of OGXs objectives, and how have you gone
about achieving them to date?
OGXs has several objectives in its strategic plan. The
objective to acquire a diversified and strong portfolio was
successfully achieved through the acquisition of 34 high-
potential offshore and onshore blocks.
Executing an aggressive exploration drilling campaign is
another objective. Our campaign includes 87 exploration
wells to be drilled from September 2009 through 2013 to
find and evaluate oil and gas discoveries. This objective is
in progress and has been very successful to date.
OGX plans to start production in 2011, reaching pro-
duction of 20,000 b/d by the end of the year. This objec-
tive will be achieved when we start production in August
2011 with the arrival of the OSX-1 FPSO in the Campos
Basin. We plan to be producing approximately 730,000
b/d by 2015 and 1.38 MMbbl/d by 2019. To achieve that
level of production, we will need 19 FPSOs, five tension-
leg wellhead platforms, and 24 wellhead platforms. This
objective is in progress, with the first equipment being
bought or contracted in the market. Additional equip-
ment will be constructed by OSX, the shipyard plant of
the EBX Group.
What are the biggest challenges that a company the size of
OGX faces?
Given OGXs aggressive drilling and production goals,
the main challenges relate to the scarcity of experienced
human resources and critical production equipment in
the Brazilian market. OGX plans to overcome these chal-
lenges by hiring, forming, and training recently graduated
geologists, geophysicists, and petro-
leum engineers and to obtain its
critical equipment through its sister
company OSX (a shipyard under
construction in partnership with
Hyundai).
Is there any interest in developing
unconventional resources such as shale
gas or coalbed methane?
Next year OGX intends to begin
evaluating unconventional
resources related to shale gas and
coalbed methane in its Parnaba
Basin and Colombia concessions.
What does the company hope to achieve in the next five to
10 years?
OGX expects to be recognized as the first public private
Brazilian E&P company in terms of reserves and oil and
natural gas production and the second one regarding all
the companies operating in Brazil, only after Petrobras.
In the coming years, OGX will maintain its drilling
schedule with the goal of continuing to discover new
accumulations of oil and gas while also consolidating
areas where discoveries have been made and initiating
the production cycle.
We expect to begin production in the second half of
2011 and will continue adding value to our portfolio in
Brazil through the acquisition of new areas and abroad
by means of bid rounds and farm-ins.
12
We expect to
begin production
in the second half
of 2011 and will
continue adding
value to our portfolio
in Brazil.
world
VIEW
11-13 WorldView-May_11-13 WorldView-May 4/18/11 1:26 PM Page 12
11-13 WorldView-May_Layout 1 4/18/11 10:06 PM Page 13
T
he oil and gas industry, after a brief post-recession
dip, again is in the midst of accelerated global growth.
This resurgence reignites a debate that often is lost during
recessions: the importance of technical talent on produc-
tion growth. Since 2004, Schlumberger Business Consult-
ing (SBC), the management consulting arm, has studied
the global supply and demand of petrotechnical profes-
sionals (PTPs) to highlight human resource best practices
and to gain insights into an often misunderstood element
of the global oil and gas equation talent needs.
The survey
The annual survey of PTPs (which covers geosciences and
petroleum engineering) has become a reference point for
E&P executives seeking to understand industry trends and
learn practical talent management strategies. Since its
inception, the survey has revealed several realities:
The late-2000s global economic downturn prompted
international oil companies (IOCs) to decrease
recruitment targets more aggressively than national oil
companies (NOCs);
The industry has begun to address the challenge of an
aging workforce; and
Coaching has the potential to materially reduce PTP
time-to-autonomy and thus the potential to accelerate
competency development.
This years survey reveals two hard truths: (1) technical
talent plays a strategically important role in the oil and gas
business; and (2) a large demographical shift will materi-
ally reduce the number of petrotechnical professionals.
The strategic importance of talent
One of the biggest risks facing the industry is a potential
future lack of qualified technical talent. Oil and gas com-
panies have long felt the effect of lacking technical talent,
yet few have recognized the issue as a strategic one that
impacts corporate growth. Few tangible, quantifiable facts
have supported this notion. The relationship between the
industrys technical talent and future production growth
never has been well understood. To address this uncer-
tainty, the 2010 SBC O&G HR Benchmark has devel-
oped the concept of PTP intensity the relationship
between PTPs-per-barrel-produced versus production
growth. The PTP intensity concept enables a better quan-
tification of the impact of technical talent on the industry.
The 2010 Benchmark uncovers a strong correlation
between PTP intensity and operated production growth.
Faster-growing companies have higher PTP intensities
than other companies high PTP intensities indicate a
company employs more PTPs/bbl of oil produced than
companies with lower PTP intensities.
The 2010 Benchmark segments companies into three
peer groups Western independents, majors, and NOCs
and highlights a striking similarity in the PTP intensities of
companies within these peer groups. Majors and Western
independents have the highest PTP intensity, although
their experienced PTP intensity is projected to decline
over the next five years. NOCs have the lowest PTP inten-
sity but will experience the fastest PTP intensity growth.
PTP intensity analysis shows PTP management is not
merely an organization issue it is a strategically impor-
tant issue that impacts corporate growth. The analysis
Benchmark survey reveals
looming talent shortage
A survey of the oil and gas industry uncovers the strategic importance of technical talent and
forecasts a large mid-decade loss of experienced petrotechnical professionals.
Antoine Rostand and Olivier Soupa,
Schlumberger Business Consulting
14
management
REPORT
The 2010 Benchmark uncovers a strong correlation between PTP
intensity and production growth. PTP intensity is defined as the
number of PTPs per 1,000 operated boe/d produced versus
operated production compound annual growth rate. The corre-
lation has an R-squared of 0.7 and is based on a sample of 11
IOCs, which includes data from Western independents and
majors for 2005-2010. (Source: 2010 SBC O&G HR Benchmark)
14-17 MgtReport_14-17 MgtReport 4/18/11 1:26 PM Page 14
16
also highlights talent management challenges for Western
independents and majors, which face declining PTP
intensities, and NOCs, which must sustainably manage
rapid PTP intensity growth.
The looming talent shortage
Oil price spikes and subsequent price collapses created a
demographical gap in the oil and gas workforce. While ris-
ing prices initially attracted ambitious PTP students to
study the profession, price collapses and industry downsiz-
ing eventually diverted talent to other professions. There
is consensus in the industry that the Big Crew Change
expected in the next five to 10 years will create a signifi-
cant change in industry personnel. Oil and gas company
employees generally retire between ages 55 and 60. The
average age of current employees is in the late-40s
to early-50s. The 2010 Benchmark shows the Big Crew
Change is real and is happening now. This personnel shift
will lead to a loss of 5,000 experienced PTPs by 2014.
Oil and gas supply is expected to grow to meet the
needs of fast-growing emerging markets like China. To
ensure production growth is not disrupted, the industry
will have to ensure the handover from retiring PTPs to
the new generation occurs as effectively and smoothly
as possible.
Positive signposts
Despite the imminent talent shortage, positive signposts
are appearing.
First, demand for graduates is recovering and outpacing
the pessimistic forecasts of a year ago. 2011 PTP recruit-
ment targets are 15% higher than levels planned in 2009.
Second, universities contain a previously untapped tal-
ent resource females. Female PTP numbers at compa-
nies have increased since 2006. At NOCs, female ratios
rose to 27% from 19% (geosciences) and to 17% from
15% (petroleum engineering). At independents, similar
increases have been observed.
Finally, mid-career PTP demand is soaring primarily
driven by the need for expertise in unconventional oil and
gas (IOCs) and enhanced oil recovery (NOCs). These
events signal that the industry is taking action but a new
landscape is emerging.
New landscape, new mindset
The market for experienced PTPs will tighten, resulting in
staff poaching, salary escalation, and higher attrition.
These issues will have serious consequences on projects
and production capacity. 2010 Benchmark respondents
reported that staffing issues will delay projects and may
drive increased risk appetite. Mitigation approaches vary:
independents rely on technology to boost PTP productiv-
ity, majors standardize projects, and NOCs outsource non-
core competencies.
Compounding the looming shortage of PTP talent is a
shift toward more complex reservoirs and a more strin-
gent regulatory environment post-Macondo. In this con-
text, companies need to adapt quickly to manage their
talent or risk losing their competitive advantage. Compa-
nies need to elevate talent
management from merely
an organizational issue to a
strategic one that can have
major implications on cor-
porate growth.
management
REPORT
While Western independents and majors will have higher PTP
intensities from 2010 to 2015, NOCs will experience rapid PTP
intensity growth versus a general decline for Western independ-
ents and majors. (Experienced PTPs refer to autonomous PTPs
able to make original technical decisions. All PTPs includes
young PTPs who have not reached autonomy.)
The Big Crew Change is happening now. The graph displays the
percentage of PTPs per age category globally. The retirement
rate is at 20% for 55-59 year-olds, 90% for 60-64 year-olds, and
100% for 65+ year-olds. People are expected to leave the indus-
try at a rate of 1.4%.
EPmag.com
READ MORE ONLINE
There is more
to the story
18
A
recent IBM study involving more than 100 corporate-
level oil and gas industry executives in 28 countries
revealed that they expect to strategically partner with other
organizations for R&D more than twice as much in the year
2030 as they do today. They also expect to conduct 38% less
research in-house and 44% less through outsourcing.
Shifts to more challenging frontiers mean future R&D
will be too complex and costly for any one company to
manage on its own. Forward-thinking companies are
increasingly seeking to partner with outside entities.
In December 2010, Gazprom Neft-NTTS signed an
agreement with Russian State Gubkin Oil and Gas Univer-
sity and IBM to expand its existing collaborative efforts.
The agreement is focused on implementing concepts and
IT solutions that will help Gazprom Neft develop and oper-
ate oil and gas fields more efficiently.
This reflects a growing recognition that technology is a
key change agent in todays oil and gas fields. Energy
demand is expected to increase considerably over the next
two decades, driven primarily by demand from emerging
countries with burgeoning economic power. Although
governments and companies are investigating alternative
sources to fossil fuels, the biggest challenge over the next
20 years will be figuring out how to extract more oil and
gas from existing sources and discover new sources by bet-
ter harnessing technology.
As part of the Gazprom Neft agreement, specialized IT
solutions will be developed to advance the digital oilfield
concept by enabling integrated intelligent management of
oil and gas field development and operations. The solu-
tions also will result in the creation of a centralized storage
and processing environment for geological, geophysical,
and field data as well as a knowledge management system.
High-performance collaboration
The first project will be to build a high-performance col-
laboration environment for approximately 200 geologists.
The new environment will enable geologists to work
together on building hydrodynamic 3-D/4-D models and
efficiently interpret seismic study data using cloud com-
puting technologies, distributed resource access, and
model calculation and interpretation. Support for this
resource-intensive, high-performance data processing will
come from IBM supercomputers at Gubkin Oil and Gas
University.
By integrating seismic and geologic data from multiple
sources and using advanced data modeling combined with
supercomputing (including seismic cloud computing or
above-petascale resources), companies can find very
remote reservoirs. The large Tupi field 180 miles (288
km) off the coast of Brazil is a prime example results
from drilling an exploratory well confirm that this discov-
ery could increase Brazils current proven reserves nearly
six-fold, but the oil is underneath 7,000 ft (2,135 m) of
water, 10,000 ft (3,050 m) of sand and rock, and 6,600 ft
(2,013 m, or more than a mile) of salt.
In addition to the collaboration environment, the indus-
try-academia partnership embodied by the Gazprom Neft
agreement will yield solutions for a unified field data stor-
age and processing space and a system for real-time moni-
toring, optimization, and forecasting of field and
individual well behavior.
digital
OIL FIELD
Collaboration is key enabler
in Russias oil, gas field efficiency
Working with IBM and a Russian university, Gazprom Neft-NTTS hopes to advance the
digital oilfield concept.
Steve Edwards, IBM Global Business Services
Gazprom Neft-NTTS has signed an agreement with
Gubkin Oil and Gas University and IBM to implement
IT solutions to develop and operate oil and gas fields
more efficiently. (Images courtesy of IBM)
18-22 DOF-IBM_18-22 DOF-IBM 4/18/11 1:26 PM Page 18
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digital
OIL FIELD
To optimize reservoirs that already have been identified,
a variety of enhanced oil recovery techniques have been
developed. However, each technique adds more physical
variables to manage and more volumes to estimate and
track. By using advanced visualization to render larger
amounts of complex data in more intuitive ways, compa-
nies can achieve improved decision-making and faster
time to oil. And by drawing on spatial and temporal data
assimilation from time-lapse seismic systems, companies
like Gazprom can run predictive assumptions that dramat-
ically increase efficiency in extracting oil and gas.
All of these approaches are very data-intensive. In fact,
a single oil field can generate up to one terabyte of data
daily (the equivalent of 109 movies on DVD). Fortunately,
advances continue to be made in data analytics and pro-
cessing. The Watson computer, recently seen on the game
show Jeopardy! taking on two of the quiz shows top-win-
ning players, represents a major step forward in deep ana-
lytics and system design that can be applied to the oil and
gas industry. Watson the result of 100 years of computing
at IBM can collect, process, and understand data based
on natural language within a matter of seconds, offering
real potential for improving exploration, production, asset
management, and maintenance.
The Gazprom Neft solutions will be based on IBMs
Chemical & Petroleum Industry Information Framework,
which provides real-time integration across multiple dis-
parate systems using industry standards. The framework
enables integrated operations with a reference semantic
model based on industry standards, a rules engine, and a
visualization model. Completing this technical validation
means the solutions will meet criteria for integration with
the frameworks production operations domain; IBM soft-
ware; and industry standards such as OPC, ANSI/ISA-
88/ANSI/ISA-95, ISO15926, and IEEE 61970/68. The
framework also will give Gazprom Neft real-time visibility
into production, equipment, and performance informa-
tion across its assets. This will help leverage the companys
investment in existing applications and platforms, main-
taining a best-of-breed environment via the framework ver-
sus point-to-point interfaces.
Freeing employees for high-skill tasks
Human capital is another critical challenge in the oil and
gas industry. The same IBM study yielded a surprising
finding in this area namely, that concern about work-
force skills availability is decreasing. Yet other studies show
that executives are very concerned about the ability to
recruit and retain skilled employees and that the oil and
gas industry will face growing demand for technologists,
strategists, scientists, and multi-energy and risk-manage-
ment experts an order that will be hard to fill because
other industries simultaneously compete for these same
skillsets as the oil and gas industry moves closer to the
Great Crew Change.
The increased automation and collaboration made pos-
sible by digital oil fields can help address this looming
skills gap. It enables more effective data collection, moni-
toring, communications, and knowledge and information
sharing, which enables less-experienced employees to ben-
efit from the expertise of seasoned veterans and frees the
time for all skilled employees to focus more of their efforts
on collaboration, innovation, and continuous process
improvement.
No alternative but to get smarter
The odds of finding new sources of oil and gas are becom-
ing more challenging, and the need to optimize both the
upstream and downstream is becoming more pressing. In
response, executives who watch the bottom line at major
oil and gas companies worldwide will insist on more visibil-
ity into the financial impact of operating decisions. The
harder it becomes to find oil and gas reserves and the cost-
lier it becomes to offset risk, the more it makes sense to
search for new reserves by collaborating with outside part-
ners and turning to the latest technologies.
Increased automation and collaboration will address the looming
skills gap.
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23
T
he latest 3-D graphics cards can have more than 400
compute cores and up to 6 GB of graphics memory.
This contrasts with 128 GB of RAM and 16 compute cores
on the processor board of a high-end workstation. It nor-
mally is assumed that the central processing units (CPUs)
are the compute engine in a workstation, but from the
numbers above anyone can guess that 400 simple com-
pute cores in a graphics processing unit (GPU) can rival
16 complex cores in the CPUs.
Today 3-D graphics card specifications are the result of
regular and fast-paced doubling of the number of cores
and memory sizes over several generations. This latest
doubling of memory size to 6 GB means that for the first
time there is enough memory on the graphics card to
store meaningful amounts of seismic data instead of just
graphical representations of those data. The power of
these 400+ cores can be used for computation and volume
rendering instead of just painting graphics on the worksta-
tions screens.
The Barnett shale in the Fort Worth Basin of North
Texas currently is one of the most actively pursued shale
plays in the US. It is overlain by carbonates and shales of
the Pennsylvanian Marble Falls group. Since the Ellen-
burger below and the Marble Falls above are both water-
rich, it is important to avoid generating fractures that
penetrate these two formations by opening existing faults
or by operating too close to weakened areas over sink-
holes.
Computation
The 3-D seismic volume in a reflection amplitude version is
750 inlines, 750 crosslines, and 500 depth samples for a vol-
ume size of just less than 300 MB. The Barnett interval lies
in the middle of the depth range and is bounded by strong
red and blue reflectors at top and bottom. This volume dis-
play has some opacity and lighting so the apparent sec-
tion has some depth of a few lines. There is evidence of
faulting at the left of the Barnett interval and hints of fault-
ing elsewhere.
This volume easily can be placed completely into the
GPU memory, where it can be transformed to instanta-
neous frequency instantly. The faulted region at the left of
the interval is composed of several separate slivers. Faults
that cross the whole interval can be identified clearly. The
apparent resolution in depth appears to be doubled.
Lighting acts as spatial derivative; the mild opacity allows
a few inlines to be averaged, which acts as a smoother. The
result of this is a more interpretable structural image, and
attribute computation is instantaneous for this volume
size. This speed offers interpreters the freedom to experi-
ment with effects to generate the most interpretable
image, which needs to be experienced to get the full
impact. Bigger volumes still are quick, just not instanta-
neous. Volumes larger than GPU memory can be ren-
digital
OIL FIELD
GPUs prove their worth
in seismic interpretation
Seismic interpreters are encountering record-breaking performance by using GPUs for interactive
computation and rendering.
Huw James, Evgeny Ragoza,
and Tatyana Kostrova, Paradigm
A volume display of reflection amplitude shows the Barnett interval
in the middle of the depth range. (Images courtesy of Paradigm)
The volume display of reflection amplitude in the Barnett interval
in the middle of the depth range is shown as instantaneous fre-
quency, with lighting and modest opacity.
23-26 DOF-paradigm_23-26 DOF-paradigm 4/18/11 1:27 PM Page 23
Sea
Change
Weatherford's new SeaLance" drilling-with-casing
(DwCTM)
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Drilling hazard miti gation
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The SeaLance system runs casing while drilling to maintain a steel barrier
against trouble zones. Makes your drilling program go about 30 percent
faster to save you some $30 million.*
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i u
dered; the rendering just has
to be staged.
The results of attribute
computation usually are not
saved; it is quicker to regen-
erate the results than to save
and restore the results. This
sounds wasteful, but it is not.
The 400 cores in the GPU
have an extremely potent
capability, but they need data
to process. This makes memory space in the GPU extremely valuable, so good
housekeeping is important. Only data that truly are needed to be saved
onboard the GPU should be kept, and data that need to be saved anywhere
should be returned to the CPU. For the CPU, memory capacity is large,
though compute power still is scarce. It will take some time to adapt to this
change in the value of resources between the GPU and the CPU.
Volume rendering
Historically, volume rendering has been accomplished by loading the volume
to CPU memory and then processing it on the CPU to generate graphics data
to send to the GPU across a relatively slow CPU-GPU interface. In such a sys-
tem, every time the picture content changes, the display data have to be regen-
erated and retransmitted, leading to slower interaction. With 6 GB of graphics
memory, whole volumes or significantly sized trimmed volumes can be placed
into GPU memory and then rendered using algorithms tailored to full-band-
width seismic data rather than general purpose geometry and images. Changes
in display content can be accomplished completely onboard the GPU with no
need to reload data until a different volume is to be displayed. In this way, traf-
fic across a relatively slow interface can be avoided, and interactivity can be
kept high.
This volume can be rotated, scaled, and edited for color and opacity interac-
tively in real time. The whole volume is rendered even though the interval
appears limited. This takes a huge number of operations, one for each data
point in the volume. With the latest hardware, rendering can be done eight
times faster than with the previous generation of graphics cards. The 300-MB
volume example was drawn at 15 frames per second. This speed provides ease
of use since a mistake in a parameter setting has negligible consequences and
can be corrected easily. This reduces user stress, meaning these interactive
devices can be handled with a more creative, trial-and-error approach instead
of the control required to drive a conventional, slow system. Once a good view
is obtained, the quality of the rendering can be improved by using the proces-
sor power of the GPU cores.
With data placed into GPU memory, the compute capacity of the GPU cores
can be exploited fully. Results can be shown directly to the user with no need
to return them to CPU memory. GPUs can be expected to take on more of
the processing burden, favoring direct interaction with the interpreter.
Acknowledgements
We would like to thank Marathon Oil Corp. for providing the Barnett shale data.
digital
OIL FIELD
A detailed volume sculpt of the Barnett interval is
rendered with variable opacity.
1W
Weatherford'
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--
-
--'
?
?a -
V
isualization technology in the exploration seg-
ment of the oil and gas industry is no longer the
new shiny toy. Many companies have adopted the tech-
nology as a way for asset teams to collaborate and inter-
act with their geophysical data to improve their
understanding of the reservoir.
But for the past few years, a start-up company called
TerraSpark quietly has been taking the visualization
concept to new, and what some might say disruptive,
extremes. Founded by Geoff Dorn, who took ARCOs
visualization technology to the University of Colorado
after BP purchased his company, TerraSpark has been
pioneering innovative solutions to image complex fault-
ing and deepwater subsalt plays. Its domain transforma-
tion technology removes all of the structure from a
seismic volume so interpreters can view the original
depositional features of the play.
Since March 2010, when the company got invest-
ment money from Limerock Partners,
TerraSpark has grown from eight to 20
employees and has opened a second
office in Houston. It was time to take the
company from a pure R&D player to a
software solutions provider. Dorn hired
Bob Stevenson, who has worked for
some of the industrys most influential
software providers, to serve as COO for
TerraSpark as it takes its next logical step.
Stevenson was lured to TerraSpark by the com-
mercialization opportunities. When I got the demon-
stration of the product, I could see the power in it, and I
could also see the challenges involved in getting this
kind of a solution into the commercial phase, he said.
One of the primary challenges in commercializing
software, Stevenson said, is to make it more user-
friendly. Another issue is to help potential clients wrap
their brains around the potential of the technology.
This is wonderful technology that can do things that
people said cant be done, he said. Its a great tech-
nology, but we have to understand the interpreters
challenges and problems and show them how the tech-
nology can help them in that realm.
Dorn added that ever since computers became explo-
ration tools, they have mostly been used to convert what
once was done on paper into a computing environ-
ment. Were trying to change how people approach
interpretation at a basic level, he said. Interpreters
should always be working in 3-D with complete surfaces.
Thats quite a leap for them to make.
Already TerraSpark has some early adopter believ-
ers, including True Oil, which has been pursuing an oil
shale play in North America. The success of wells in this
area hinges on the ability to identify regions with a
high density of natural fractures. True geoscien-
tists used a combination of TerraSparks high-
resolution fault imaging technology and an
attribute called Voxel Density Region
Highlighting. This created a volume with
clouds of predicted high natural fracture
density. True Oils geoscientists then used
TerraSparks integrated Well Path Planner
to create an initial conceptual well path
within the attribute and seismic volumes.
After running TerraSparks InsideEarth soft-
ware, True Oil not only drilled a successful well on the
new attribute data but also identified a number of
other prospects for subsequent drilling in the trend.
The success of this well vindicates their purchase of
our software by providing a successful way to explore
for fractures in this play, Dorn said.
Success stories like that will help with the commer-
cialization process. Its a great story, Stevenson said.
We just need to get out there and show them we have
the solution.
Its not good enough to show them better, faster,
cheaper. We need to have a
quantitative leap of benefits
to disrupt their current
operations.
It is time to disrupt the status quo
TerraSpark has grown from a small R&D outfit to a software solutions
provider ready to show the industry what it can do.
EPmag.com
RHONDA DUEY
Senior Editor
rduey@hartenergy.com
27
exploration
TECHNOLOGY
Were trying
to change how
people approach
interpretation at a
basic level.
Geoff Dorn,
TerraSpark
27-28 ExpCOL_27-28 ExpCOL 4/18/11 1:27 PM Page 27
27-28 ExpCOL_27-28 ExpCOL 4/18/11 1:27 PM Page 28
ve in un .
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well
CONSTRUCTION
O
perators and service companies alike are gearing
up for what they believe is the next big swing in
unconventional gas development.
The big question for the last couple of years has been
where to go outside of North America. Today, all indica-
tions show that Poland is the likely candidate. With
more than 90% of its gas being imported from Russia,
Poland is actively pursuing domestic resource develop-
ment. The country currently has an agreement with
Russia to accept delivery of 11 Bcm per annum from
2012 to 2022. Although early estimates of development
costs have been much higher than standard operations
in North America, these prices may not hold true at
least in the long term.
On a recent visit to Warsaw, Poland, I met with a num-
ber of experts in the region who talked about Polands
potential.
The European business model allows companies to
acquire mineral rights for large concessions of land. The
largest concessions in Poland are equal to about 290,000
acres and were acquired with work commitments to con-
duct a certain amount of seismic and to drill one or two
wells. This is pretty remarkable when compared with
the cost of acquiring acreage in North America, said
James Elston, director, Palladian Energy Ltd.
Due to the size of each concession, well planning is
expected to go much more smoothly than in North
America, where lease lines often limit the extent to
which laterals can be drilled, thereby limiting reservoir
contact. On the other hand, shale development in
Europe is very high risk. This is certainly true for
Poland, but it seems to be de-risking very rapidly,
Elston said. In Poland, there are around 15 million
acres with shale gas potential about five times the size
of the Barnett. Prior to ConocoPhillips drilling opera-
tions last summer, this area had a sum total of 20 wells
that penetrated the shale, he added. Compared to the
large amount of drilling in most North American plays
over the last 100 years, very little is known about the
shale being surveyed in Poland. Relying on Soviet-era
logs has been helpful, but most of the activity in Poland
today revolves around gathering rock for analysis.
Right now were in the phase of drilling science
wells, said Wolf Regener, CEO, BNK Petroleum. When
we go into development mode, then were going to
want to bring in modern, North American-standard rigs
that are built to EU specs.
This could be a boon for the forward looking drilling
contractor. I think it is a tremendous opportunity for
North American drillers who can address the different
challenges there are in Europe, Elston said.
In time, completions technology will be critical. Were
this market to take off, in terms of North American-style
shale development, then equipment might become a
problem, said Mark Swift, area manager continental
Europe, Halliburton. Right now, theres about 100,000
hp in Europe. Compare that to the US, wheres theres
around 1 million or 1.5 million. Its massive. So it would
not take much to make this (market) tight, he said.
Halliburton has got an early start in Polands uncon-
ventional development and currently supplies about
40% of the available horsepower in Europe. We dont
envision a problem in terms of supporting this explo-
ration phase, Swift said.
According to Elston, the winners in European shale
development will be those he calls AFE Black Belts,
those companies with the ability to attack the cost base
from day one while maintaining high safety and envi-
ronmental standards.
The opportunities are good in
Europe, but it will require an
aggressive commitment to
move in people, equipment,
and expertise over the next
few years.
Unconventional well construction
moves to Poland
Activity is heating up in Polands Baltic Basin.
EPmag.com
TAYVIS DUNNAHOE
Senior Editor
tdunnahoe@hartenergy.com
29
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29-30 WellConstruction_Layout 1 4/18/11 10:23 PM Page 30
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I
n the technological battlefield of increased oil recov-
ery (IOR), there are now beetles and bacteria out
there fighting in your corner. Although the imagina-
tion does start to run riot with news of Scandinavian
beetles potentially coming to the aid of freezing
pipelines, the concept is sound.
When a major player such as Maersk Oil enters into
a collaborative four-year project that aims to boost IOR
and prolong North Sea (and eventually elsewhere)
operations by using biotechnology to create new solu-
tions and help overcome the challenges of mature
field production, we must take note.
After all, we know the company does not do things by
half-measures in this area witness its recent announce-
ment of a US $100 million investment over the next 10
years in a new research facility at the Qatar Science and
Technology Park in Doha. This will create a world-class
center for developing technologies for increased and
enhanced oil recovery, initially focusing on the 300,000
b/d Al Shaheen field.
Maersk is doing this via a long-term collaboration
with Dutch research association TNO, with the focus
on long horizontal wells as well as IOR through inte-
grated operations and production optimization. Mas-
tering increased and enhanced oil recovery (EOR) is
key to unlocking future hydrocarbons in tight reser-
voirs, the company said.
The science connection at Maersk is highly valued.
Its Biotechnology in Oil Recovery, or BioRec, proj-
ect also was announced recently, with the aim of
answering those eye-catching questions: Can
Scandinavian beetle protein help keep
gas pipelines from freezing, and can bacteria and
enzymes boost oil production in the Danish North?
BioRec is a joint-industry project with Maersk Oil, the
Danish Advanced Technology Foundation (Hjte-
knologifonden), global biotech company Novozymes,
Danish oil company DONG E&P, and three institutions
the Technical University of Denmark, the Danish
Technological Institute, and Roskilde University.
A key aspect is that this project goes further than
many others by linking separate industries oil and
biotechnology through companies and institutions
internationally recognised for innovation.
Initial topics include:
Can enzymes and bacteria be used for EOR by feed-
ing and growing in the reservoir to change the oils
ability to flow?
Can proteins produced by coldwater fish or Scandi-
navian beetles to stop the creatures from freezing be
replicated and used as a hydrate inhibition tool to
stop ice from forming inside pipelines and wells?
BioRecs aim is to be technically able to implement
pilot tests at relevant reservoirs offshore Denmark
within four years.
When we remember that it is accepted practice (but
highly unacceptable) to leave half of a reservoirs oil
behind when it is abandoned, such projects take on
great significance.
EOR through injecting bacteria into the reservoir to
change the oils composition, controlling pipeline cor-
rosion through limiting bacterial growth via enzymes
and other bacteria, or inhibiting
hydrates by using animal-based
proteins instead of chemicals
all are potential solutions worth
investigating.
production
OPTIMIZATION
Bugs, bacteria join the battle
There are several potential solutions worth investigating to stop the freezing
process without the use of chemicals.
EPmag.com
MARK THOMAS
International Editor
mthomas@hartenergy.com
31
Can bacteria
and enzymes boost
oil production in the
Danish North?
31 PRODcol_31 PRODcol 4/18/11 1:27 PM Page 31
32
s the industry looks at the challenges presented by
deepwater operations, it is apparent that in many
cases todays challenges are very much like those of the
past few decades.
Taken at face value, such a statement might imply that
the industry has not made significant progress, but noth-
ing could be further from the truth. Technology advances
have extended the reach of E&P operations into deeper
and more inhospitable operating environments. And as
the industry continues to push the limits of current capa-
bilities, there will continue to be innovations that provide
improvements in safety, efficiency, and productivity.
Macondo
The Macondo blowout in the Gulf of Mexico (GoM) on
April 20, 2010, was a defining incident for the industry.
Post-Macondo operations will reflect more stringent regu-
latory and safety requirements. Though the mainstream
press would have people believe otherwise, these are
changes the industry is embracing.
Robert Patterson, vice president of upstream major
projects, Americas, at Shell, lists the loss of faith in the
industrys ability to work safely as one of the biggest deep-
water challenges. We know how to safely and responsibly
find, drill, develop, and operate fields in deep water. But
we have lost some confidence with the public. I think that
is one of our big challenges in deep water. We need to
earn back the trust that we can develop this frontier
area and other frontier areas as well.
Shell has the distinction of bringing onstream the
deepest drilling and production platform in the
world with the Perdido spar in the GoM. That proj-
ect was executed with 10.5 million man hours with
no lost time incidents recorded. Impressive as this
achievement is, the safety record is not enough.
Safety is a matter of ensuring standards and proce-
dures are complied with and showing consistent compe-
tence. It is about investing in a culture that supports safe
and responsible delivery, Patterson said. Advertising
wont be sufficient to win back public confidence. We
have to demonstrably do our work well every day.
ivind Reinertsen, head of US offshore for Statoil,
agrees. It is important for the industry to come back into
deep water and start the business again, he said. We
have been working diligently with the regulators for the
past year since Macondo to determine what it takes to go
back to work in deep water, and I think together we have
been able to identify what it takes.
The first priority, of course, is to be able to prevent such
an accident. We have been able to get the necessary
equipment in place to handle a blowout like we saw with
Macondo, Reinertsen said. Over the past year, Statoil has
worked to verify all of its equipment and can document it
according to the new rules and regulations that apply to
these drilling units.
GE Oil & Gas is investing in technology for improving
safety as well. Manuel Terranova, senior vice president,
regional operations and global sales, said his company is
trying to bring the aviation mindset to oil and gas. It oper-
ates under a tighter regulatory regime than what weve
been used to, he said. Were trying to leverage from that
experience. Specifically, we are looking at the shearing
capacity of our rams on the blowout preventer. We have
upgraded our shearing capacity to 5,000 psi as a first step.
We are also rolling out a hydrostatically augmented
shearing capacity. This is going to use the hyperbaric,
or hydrostatic, pressure at depth to close the ram.
COVER STORY:
DEEPWATER
DEEPWATER
RAISES THE BAR FOR TECHNOLOGY
Judy Murray, Editor
A
The Pride Angola in West Africa is currently on a five-
year contract with Total. (Photo by Ken Childress Pho-
tography, courtesy of Pride International)
32-43 COVERstory-MAY_32-43 COVERstory-MAY 4/18/11 1:28 PM Page 32
33
COVER STORY:
DEEPWATER
33
Another improvement GE has made is to place more
position indication sensors on the equipment itself.
Were also putting sensors in the BOP core that will relay
its position to topsides, so there will be a visual inspection
point if the ROV has to get sent down.
The other GE product in development is called the
Drilling I-Box, a data logger that captures housekeeping
events on the BOP. Every time a valve or solenoid or
some kind of element on the BOP moves, this unit will
capture that event, much like a black box would capture
the event on an airplane. The data are logged, making
them available for analytics at a later time. The hope is
that this housekeeping data will be useful for predicting
and preventing failures.
This whole notion of capturing the data and then uti-
lizing it to make predictive suggestions to the operator to
avoid nonproductive time (NPT) on the rig is something
that were leveraging from GE businesses, Terranova
said. We know it works in those verticals, and were very
confident its going to work here.
Drilling technology
Jeremy Lofts, senior director of strategic business develop-
ment at Baker Hughes, identified drilling challenges as
one of the major hurdles for deepwater operations. Lofts,
based in Brazil, said Baker Hughes is performing more
than 50% of the drilling for Petrobras, mostly in deep
water. We have to have very sophisticated drilling and
evaluation systems here. The research and design that is
in our technology is huge, he said. In deep water we
are measuring a whole host of things, and each sensor
includes complex electronics and mechanics arguably
more complex than getting us to the moon! Reliability
therefore is critical. If one part fails, it often means a bit
trip that not only causes 12 hours lost time but more
importantly may mean losing data and information over
that interval. A hole in geological data reduces under-
standing of the reservoir, he said. When wells are being
drilled 20 km (13 miles) apart, the operator needs all
those data.
One way Baker Hughes is improving reliability, Lofts
said, is by taking a fresh look at what reliability means.
Statistical analysis of each component life is helping to
identify and reduce this risk, he said, explaining, retir-
ing equipment before it fails is a bit like taking your car
for a service at a pre-set interval. Weve got to work out if
it is 6,000 or 5,000 or 4,000 miles and then make sure we
schedule the service appropriately before equipment
problems occur. We took the best reliability experts from
the aerospace industry to change the game because the
first thing you want to do on an airplane is arrive and get
off! Reliability is the same for us here.
A second challenge is delivering real-time data to help
drillers monitor equipment status and allow geologists
steer to, and in, the reservoir. Real-time data improve
drilling operations by presenting decision-makers with
critical information while drilling is actually happening.
A third drilling challenge is to achieve greater operator
cost efficiency through improved ROP. Were finding in
Brazil that active monitoring of the drillstring and the bit
are allowing us to fine-tune and improve ROP signifi-
cantly, Lofts said. There has already been a big break-
through, and as we go forward, further gains in active
real-time drillstring monitoring and technology, along
with the right expertise, will further speed up the ROP
and bit life, delivering a magnitude of change.
Skip Mick, project manager, GoM deep water, Noble
Energy, believes the complexity of drilling operations
often is misunderstood. There is a lot more science and
technology involved in drilling than most people under-
stand, and the process brings with it a lot of technical
complexity, which can translate to risk if not handled cor-
rectly. Well design is critical, Mick said. A first princi-
ple in drilling is not to let the well to get into a situation
where it can blow out.
Deepwater wells cost a couple of hundred million dol-
lars to drill, and a uncontrolled blowout could cost many
billions of dollars in damage, not to mention the intangi-
ble cost to the companys reputation.
Before a drilling program can begin, it is important to
understand the reservoir. This is particularly important in
deep water because of the inherently high drilling costs.
Mick identified reservoir definition as one of the primary
deepwater challenges. Reservoir analysis clearly domi-
nates the risk in developing deepwater fields, he said.
More wells can cost several hundred million dollars,
Mick explained, pointing out that this impacts not only
the economics of the drilling program but other deci-
sions such as development timing (project cycle time),
reservoir size and production rate, and whether to use
wet or dry trees. Each of these has an effect on overall
project net present value.
As water depths increase, so do the challenges
associated with extracting reserves.
34
Technology, efficiency
One way to extend the limits of regional capabilities is
technology transfer. Statoil, for example, is taking a look
at some of the technology developed for the North Sea
that can be re-qualified for the GoM.
Reinertsen pointed to water injection for pressure
maintenance, common in the North Sea and now begin-
ning to be applied in the deepwater GoM, as one exam-
ple. Another is subsea processing and boosting
equipment used in the North Sea and offshore West
Africa that has potential in the GoM.
While technology transfer will help, Reinertsen said,
new technology needs to be developed to improve pro-
duction efficiency. We need to develop technology to
access more of the reservoir for fewer dollars spent, he
said. Today there have been billions of barrels discovered
in the deepwater GoM, but the recovery factor is 10% to
15% in some of these fields. When we have billions of bar-
rels, we cannot leave 85% in the ground.
Mike Robinson, FMC Technologies sales and marketing
manager for Australia and New Zealand, identifies maxi-
mizing recovery from both greenfield and brownfield
deepwater assets as one of his companys primary technol-
ogy goals.
Part of the solution, Robinson said, is to get
more knowledge and intelligence from produc-
tion. This is especially important in terms of flow
assurance. As we get into deeper water, we get a
lot more hydrostatic head, he said. We have a
lot more concerns over what happens with fric-
tion. The challenges multiply. We need to under-
stand an awful lot more of whats going on.
Intelligence comes from physical meters and
sensors as well as virtual meters that use algo-
rithms linked to existing sensors, networking
them together and linking them to higher accu-
racy meters such as FMCs MPM multiphase
meter. These meters are clever because they can self-cali-
brate and become more accurate, Robinson said.
Another way FMC is working toward improving produc-
tion is through subsea separation. R&D efforts are
directed at moving from primary to secondary separation.
We can get more hydrocarbons from the reservoir by
placing the factory on the seabed; imagine where we can
place a floating production system, or a lot of that tech-
nology, on the seabed. By doing that, we make the whole
system more efficient. Therefore, we can get more hydro-
carbons out of the ground, Robinson said.
An associated technology challenge for subsea single-
phase and multiphase pumps is high power distribution
to individually control the many pumps and compressors
needed for a larger subsea operation. A big technology
gap is subsea variable speed drives to remotely control
each unique pump without having it directly connected
to a power supply with big cables, he said.
COVER STORY:
DEEPWATER
ABOVE: Shell is investing in Mars B in the GoM where the company
says new on-bottom seismic has unlocked opportunity by delivering
improving imaging. (Image courtesy of Shell) RIGHT: FMC Technolo-
gies smart subsea controls and data management technology
accumulates and performs real-time analysis on vast amounts of
data. (Image courtesy of FMC Technologies)
We understand the risk of plugging and compaction in an openhole
completion. We know how critical dependable sand control is. So we
engineered an innovative new technology that fills that need-literally.
Our exclusive GeoFORM"" sand management system uses a shape-
memory polymer that conforms to the borehole-providing greater
protection while boosting the production and longevity of your asset.
It's just another examp le of how we're constantl
y
developing fit-for-
purpose solutions designed to address your specific challenges. And
how the future of comp letion technology is taking shape quite nicel y.
I/.k2
BAKER
HUGHES
Justin Vinson , Engineering Manager
Leveraging Baker Hughes' patented
GeoFORM system, Justin is part of
the team that is shaping how our
industry approaches sand control
challenges. Learn how this revolutionary
technology can enhance completion
reliability and maximize your recovery
at www.bakerhughes.comljustin
www.bakerhughes.com
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Another technology challenge Robinson identified is
HP/HT operating conditions, especially in the GoM.
Were looking at demands at perhaps 20,000 psi and
more than 400F (204C). Thats pushing the limits of
known material science and classic mechanical engineer-
ing calculations.
HP/HT also is one of the primary deepwater chal-
lenges identified by Halliburton. According to Jonathan
Lewis, senior vice president of drilling and evaluation, the
number of HP/HT wells is increasing dramatically, hav-
ing grown 20% this year over last.
Significant volumes of hydrocarbon exist in HP/HT
formations Lewis said, which is driving the development
of cost-effective, safe, and reliable technologies and
processes to access potential reserves, many of which exist
in deep water. Safely producing from reservoirs at 446F
(230C) and about 30,000 psi is driving the development
of a completely new family of technologies, from drilling
fluids to tools for directional drilling, formation evalua-
tion, and completions. A well currently being drilled off-
shore Malaysia, at the bleeding edge of the current
HP/HT envelope, is leveraging these technologies to
explore previously inaccessible prospects, he said.
Cost savings and efficiency represent another set of chal-
lenges, Lewis said, explaining that given deep water rig
spread rates, it is in both the operator and the service
companys interest to improve overall drilling efficiency
and reduce NPT. Halliburton has invested significantly in
recent years in what it calls an optimized drilling per-
formance strategy, part of its broader Digital Asset initia-
tive. Optimizing drilling performance is about improving
the efficiency by which we design, plan, drill, and position
a well within a reservoir, Lewis said. Its about optimiz-
ing, automating, and integrating in real time. This
requires different ways of working.
Many of these new ways of working are being catalyzed
in a completely different asset type shale plays, he said.
Shale plays have become a crucible for process innova-
tion and operational change in our industry because the
economics of these assets are forcing that upon the oper-
ators and the service companies. Its inevitable that some
of these process innovations will migrate to other asset
types, particularly those where the costs are very high.
One of these is deep water.
Dean Watson, vice president for deep water at Schlum-
berger, said while best-in-class technology is critical to
deepwater developments, excellence in execution on a
global scale is equally important. Schlumberger sees this
as a potential differentiator in the business, he said,
explaining that a service company needs to be able to
ensure that it can deliver the same quality of products
and services anywhere in the world.
The Excellence and Execution program launched by
Schlumberger in 2007 focuses on delivering service qual-
ity and consistency globally through the application of
deepwater processes and initiatives.
When getting ready for a deepwater job, its all about
planning, Watson said, explaining that tools developed
and applied at Schlumberger allow improved planning at
every level of the project. We wanted to focus on ensur-
ing flawless startups and flawless execution.
Typically, operators are not just looking for one discrete
service or one discrete product line. Clients are asking
for much more of an integrated approach, Watson
explained. To execute this effectively, Schlumberger
assigns a specially trained integrated service project man-
ager who manages the interfaces and ensures a seamless
approach that encompasses logistics as well as general
coordination management of the interfaces. The com-
pany also offers a unique deepwater certification program
for anyone working on deepwater projects.
Technology qualification,
integrity management
It is critical to ensure technology going into the field is
qualified. Kieran Kavanagh, group technology director at
Wood Group Kenny, believes reliable technology qualifi-
cation is key to getting it right the first time, particularly
36
COVER STORY:
DEEPWATER
Reservoir depth and water depth combine to present significant
completions challenges. (Image courtesy of Horton Wison
Deepwater)
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COVER STORY:
DEEPWATER
for new technology solutions in deep water.
We need an understanding of the technology
challenges, limits, and enablers associated with
potential riser and subsea solutions and how they
impact facility selection, he said. The more these
are understood and thoroughly qualified prior to
the execution phase of a project, the more likely
they are to add value and the less likely any one of
them is to negatively impact a project later through
failure or underperformance. A key challenge for
us as engineering companies is the reliable evalua-
tion and qualification of technology solutions at the
front end and the systematic attention to managing
integrity later so that we do all that is possible to
minimize the likelihood of unplanned events or
behavior during operation that stem from design
uncertainties, especially the unknown unknowns,
those failure modes that we were not aware we
didnt know.
One of Wood Group Kennys technology goals,
facilitated through joint industry projects (JIPs), is
to develop industry best practice for deepwater
design and integrity management. A current JIP
focuses on doing just that for maintaining subsea
integrity. The goal of an initiative like this is to
establish consensus across multiple operators, often
supported by regulators, for what constitutes best
practice, Kavanagh said. It has to take into
account the experience we have with failure and
what processes should be put in place to prevent it.
We also have to ensure that we are aware of all of
the technologies out there to help us maintain
integrity. This requires constantly surveying tech-
nology. Youve got to be aware of what different
technology companies are doing and see what gaps
there are between what theyre bringing to market
and what is really needed. Integrity maintenance
and successful qualification are tools that help
avoid the cost of getting it wrong, he said.
In addition to these indirect challenges,
Kavanagh said there are considerable direct tech-
nology challenges associated with deepwater and
ultra-deepwater risers. These include HP/HT envi-
ronments requiring thick-walled risers or higher-
strength materials, challenging or sour fluids that
impact the selection of materials and fatigue per-
formance of welded steels, higher loads that com-
plicate installation, and high hangoff loads that
affect facility costs.
Getting it right is of very high value when
the cost of getting it wrong can be an order of
Mooring innovation delivers
M
ooring consti-
tutes a signifi-
cant cost in deep
water. Making the
process more effi-
cient was the goal
for Delmar US in its
development of a
mooring solution
that applies an
anchor placement
approach that
extends the reach of
a single mooring
spread and reduces
the number of
deployments and
retrievals required.
Matt Smith, vice president of operations, explained that the
OMNI-Max anchor, which Delmar designed following Hurricane
Katrina in the GoM to improve out-of-plane loading, is the central
component of a new mooring concept that is applicable for float-
ing production systems, including floating production, storage,
and offloading vessels.
This approach employs a mooring spread that allows a rig to
drill locations with as much as 4,000 to 6,000 ft (1,219 to 1,829 m)
of offset. According to Smith, it is because of the OMNI-Max
anchors superior out-of-plane loading capability that the arm can
rotate such that the anchor can see as much as 180 degrees of off-
set from direction heading where the load is applied. Instead of
having to move the rig from one location to another, we can set up
one mooring spread and use preset moorings. We would then use
different lengths of linear components and move some lengths
around to offset the rig from one location to another.
An anchor-handling boat would manage the linear inserts to
shift the rig. The anchors would have to be set only once but could
be used by a rig on several co-located drilling locations.
According to Smith, if a deepwater rig were to drill two locations
using the same mooring spread, there is potential for US $2.7 mil-
lion in savings. For three or four drill centers, the savings would
be even greater.
Though Smiths calculations are based on the GoM, the concept
can be applied elsewhere. Were thinking its very applicable for
offshore Brazil, West Africa, and some parts of Australia, he said.
If a deepwater rig were to drill two locations
using the same mooring spread as illustrated
here, there is potential for US $2.7 million in sav-
ings. (Image courtesy of Delmar US)
"Wherever you need greater
efficiencies, Halliburton delivers
them in greater
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magnitude higher. The increasing
inventory of subsea equipment
deployed in deep water and the chal-
lenging environments requires us to
focus all the more on qualification,
design assurance, and the maintenance
of integrity through life.
Mick listed riser fatigue as one of the
technology segments that requires fur-
ther research. Riser fatigue is not an
exact science, he said. It is not easy
to determine how much fatigue has
occurred, so designs have to incorpo-
rate factors of safety that take that into
account.
Riser challenges go hand in hand
with floater selection, a segment of the
industry with its own unique challenges.
Brian McShane, vice president of
marine pipeline systems and subsea sys-
tems at INTECSEA, identified harsh
environments as one of the biggest chal-
lenges for floating systems, citing the
Arctic as one of the most significant.
Floating systems are facing harsh
environments in Eastern Canada,
Greenland, Western Australia, West of
Shetlands off the coast of the UK, and
also offshore Russia, he said, explain-
ing that there are considerable chal-
lenges in getting floating systems to
work in these areas.
Another challenge is the growth
in size in terms of the capacity of
these systems. They are moving
toward mega-scales, he said. We also
need companies to be able to build
them and deliver them. There is a
resource constraint that will affect the
time required for construction and
commissioning.
There also are design challenges
as floaters become larger and more
rugged to contend with more demand-
ing operating environments.
Jim Maher, vice president of Horton
Wison Deepwater, identified floater
integrity as one of the industrys biggest
challenges, citing design safety as a pri-
mary goal when introducing new float-
ing concepts.
COVER STORY:
DEEPWATER
Delivering local content
N
ational oil companies (NOCs) control access to approximately 80% of the
worlds hydrocarbon resources, and they are looking for partners that
can do more than offer technology. Were seeing a demand for increased
local content from many of the West African countries and Russia being driven
by NOCs, said INTECSEAs McShane.
Weve looked at setting up satellite offices in some of these locations and
running training programs for groups of engineers. We also are identifying
engineers, recruiting them, and then moving them to where the technology
and skill sets are located. So, for example, we have Angolan engineers work-
ing alongside us in Houston to develop deepwater subsea capabilities. Were
looking at doing the same thing with Ghanaian engineers.
GE is actively addressing the local content issue as well.
In the realpolitik of things, Terranova said, the NOCs have asserted them-
selves over the last five years. Theyre looking for partners that are going to
compete on local development of the economy, jobs, technology transfer, and
know-how transfer. Local content now is as important in some cases even
more important as prices or meeting a technical spec.
The GE approach has been to invest in market segments where it has iden-
tified opportunities for deepwater expansion, such as Western Australia. We
are building a $100 million facility in Perth that is going to allow us to transform
Perth into a center of excellence for deep water, providing refurbishment and
repair of subsea equipment, servicing turbo-machinery equipment, which is
on a lot of offshore platforms, and offering training in a three-story learning
facility built in conjunction with the Western Australian government and other
industry partners.
The company also has established local content through the recent acquisi-
tion of Wellstream, a company with a portfolio of pipeline products and
dynamic flexible risers and static flowlines for deep and ultra-deepwater envi-
ronments and HP/HT pressure products for drilling and service applications.
In addition to their phenomenal technology, they have a presence in a strate-
gic market for us Brazil, Terranova said. Wellstream has a fantastic quayside
facility in Niteroi, just north of Rio. We can potentially leverage that facility for
other product lines, not just flexible risers.
Horton Wison Deepwater also recently set up shop in Brazil, a region Maher
described as a very intriguing market. His company has entered into a joint
venture with Brazils Gaia to create Horton do Brasil. Brazil is requiring foreign
companies to make substantial investment in R&D funding, Maher said, noting
that will build up a tremendous infrastructure and technology base.
This is part of a move on behalf of Horton Wison to increase technology
development in the country. There is a certain appropriateness to this, Maher
said. You need to know what the issues are in order to solve them, and long-
distance problem-solving is always somewhat disconnected.
Horton Wison has cultivated relationships with operators in the GoM so there
is a willingness to approach the company to solicit solutions, Maher said. We
would like to develop that sort of relationship with clients around the world.
32-43 COVERstory-MAY_Layout 1 4/18/11 4:59 PM Page 41
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COVER STORY:
DEEPWATER
It is important to emphasize the integrity manage-
ment side of development, he said. Weve been inter-
ested in learning from what we see, looking at the
actual data, and using those learnings in the design
process. This is critical to improving floater designs.
The key to design is simplicity, Maher said. Simplicity
of design leads to fewer places for failure. The goal of
any design is to make the worst-case scenario as unlikely
as possible.
Human resources
There is consensus that the industry continues to face
both geographic and demographic challenges. Accord-
ing to Patterson, stepping up to those challenges over
the course of this decade will be vital for moving forward
on the industrys key challenges.
Shell is working to tap into talent on a global basis.
We have a strong deepwater capability here in the
United States, in Houston and New Orleans, Patterson
said, noting that efforts to extend that capability have
led to establishing offices in Lagos, Nigeria; Kuala
Lumpur, Malaysia; and Stavanger, Norway; not only to
expand opportunities in different parts of the world but
also to expand the talent base around the globe. Like
most companies, he said, we are improving our devel-
opment programs for people that come in and join our
companies to make sure that were building the compe-
tence that we need and that individuals are able to grow
the careers that they aspire to.
Simply put, The IQ per barrel is going up, he said,
explaining that the amount of technology, innovation,
and human capital is going up for each barrel pro-
duced. This is why the role of people is so critical.
Terranova is sensitive to the demographics issue, refer-
ring to himself as the guy in the gap, where at just
north of 40, he finds that most of his colleagues are 10
to 15 years older or younger than he is. The genera-
tional gap in domain expertise really is an issue, he
said. Weve got a pretty daunting task ahead of us as
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44
EXTENDING
RESERVOIR LIFE
W
ith a preponderance of mature wells and reservoirs
in the US, it is essential to find ways to further
enhance recovery and extend reservoir life. Many options
are available, from redesigning artificial lift systems to
novel stimulation techniques to adding reservoir energy;
thus, selecting the appropriate application becomes
important. The selection process begins with understand-
ing existing reservoir and operating conditions. Is gas
available to assist in lifting? Are clays present in the rock?
Is reservoir pressure depleted?
A second component is to investigate best practices
locally or on a regional and even national scale. A success-
ful practice will be applied (or misapplied) rapidly. Dis-
semination of information also is very important in this
step and is provided by a wide variety of professional
organizations. A third item to consider is what new tech-
nology needs to advance or research accomplished to
meet the goal of extending reservoir life and what infor-
mation can be acquired cost-effectively.
The reservoir
In one case in New Mexico, there was potential for water-
flooding in a shallow, small pressure-depleted oil reser-
voir not conducive to a fully developed, patterned
waterflood. The target reservoir was thin and small in
extent, shallow, at low pressure and temperature, and
had unfavorable mobility ratios. Initial primary energy
was not sufficient to produce the oil; however, significant
mobile oil remained to be recovered. The hope was that
adding energy by waterflooding would improve oil recov-
ery and extend the life of this marginal reservoir.
The Round Tank field was selected because it provided
an opportunity to extend waterflood development to
reservoirs of limited size and unique reservoir conditions.
Discovered in 1970, Round Tank produces from the
Queen formation, a thin sand averaging 15 ft (4.6 m) in
thickness. Most of the production is from the gas cap,
with cumulative production to date of 4.2 Bcf. A thin oil
column exists below a gas cap that contains more than
60% nitrogen. Two wells completed in the oil column
have produced only 26,000 bbl of oil and no gas (i.e., 1%
of the original oil in place). Original pressure was approxi-
mately 750 psi; current reservoir pressure is speculated to
be approximately 100 psi.
As a result of the low pressure and temperature (75F or
24C), very low gas in solution, and high nitrogen content
in the gas, the oil viscosity was high; therefore, the mobil-
ity ratio was unfavorable. All of these traits illustrate the
complexity of successfully waterflooding a mature Queen
sand reservoir.
The very low oil production in the Round Tank field
ranks it as one of the least productive Queen oil fields.
The higher the cumulative oil production, the greater the
likelihood of a field being waterflooded, and vice versa.
This confirms 1) the poor quality of the target, and 2) the
success of waterflooding the Queen.
The waterflood
Two wells were drilled to initiate a pilot waterflood project.
A core was acquired in one of the wells, and this, along
with old logs (circa 1960s), 14 modern logs (obtained from
wells drilled to the deeper San Andres formation), and
production data were the only sources of information. Key
findings were poor reservoir rock quality and the existence
Failed waterflood effort
provides lessons learned
Beware of analogous fields testing in a New Mexico field indicated that one field
would not perform as well as its neighbors.
Thomas Engler, New Mexico Tech (NMT)
The Round Tank
Queen field in South-
east New Mexico.
(Images courtesy
of Thomas
Engler)
44-47 ReservoirLife-NMT_44-47 ReservoirLife-NMT 4/18/11 1:28 PM Page 44
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ostatistical inversion
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46
EXTENDING
RESERVOIR LIFE
of a friable zone (one-third of the core was recovered in
pieces). Petrographic analysis of the core (thin sections
and SEM) exhibited significant fines and clays in the pore
space along with anhydritic cement. Poor core injectivity
tests confirmed the presence of fines migration. Evidence
from sonic logs and the core samples indicated a friable
zone exists with the Queen sand in the pilot area. Mechani-
cal properties vary significantly within this reservoir.
The mechanical heterogeneity has significant implica-
tions for the success of stimulation (hydraulic fracturing)
and water injection. The majority of Queen sand wells are
hydraulically fractured to increase conductivity. Analysis of
the fracture treatment in the new water injection well sup-
ported the creation of a horizontal fracture resulting from
the shallow depth and the postulation that the compressi-
ble nature of the friable zone acted like a barrier, resulting
in a high fracture gradient that diverted the horizontal
fracture to a thin zone within the top of the Queen.
A 3-D-Blackoil simulation model was constructed with
the limited field records. A successful history match was
achieved after reducing the initial permeability values by
approximately two-thirds. The large permeability reduction
from history-matching indicates permeability of the Round
Tank Queen formation is significantly lower than the other
Queen sands since the original permeability was acquired
from adjacent field correlations.
Field tests resulted in very poor injectivity into the injec-
tion well a few barrels per day with high surface pres-
sures. The simulation confirmed this behavior. This
outcome is due to many factors, including low permeabil-
ity, unfavorable mobility ratio, depleted gas cap, and
unsuccessful fracture stimulation.
Key learnings
Even though NMT was unsuccessful in
efforts to improve oil recovery and
extend the life of the reservoir in the
Round Tank Queen field, efforts pro-
vided several benefits to others with simi-
lar situations. First, improved reservoir
description was accomplished with lim-
ited data old neutron and sonic logs,
14 modern logs, and one core and
thus did not require high-cost informa-
tion. Therefore, analogous fields could
apply these concepts as well. Second,
the importance of stimulation design
cannot be overemphasized. In this case,
the occurrence of a friable zone in a
shallow reservoir increased the com-
plexity of the stimulation.
Acknowledgements
The author would like to thank the Research
Partnership to Secure Energy for America
(RPSEA) for supporting this project and also
Martha Cather for editing and providing sug-
gestions to improve the paper. Special thanks
goes to Bruce Stubbs of Armstrong Energy Corp.
for providing technical support for this study
and for permission to publish the data.
References available.
In a graph charting cumulative oil production of Queen oil
fields, the Round Tank field ranks near the bottom.
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48
EXTENDING
RESERVOIR LIFE
A
s operators look to optimize production from
increasingly marginal assets, extend the lifecycle of
their reservoirs through sustainable reservoir manage-
ment targets, and make effective decisions over the alloca-
tion of capital and resources, the models and analytical
processes that define reservoir simulation and history
matching have rarely been more important.
It is reservoir simulation that sits at the interface
between the reservoir model and the economic evalua-
tion of fields and production strategies, and it is history
matching that ensures that the static geological models
are in sync with production data to predict future per-
formance and create uncertainty profiles of the reservoir.
The result is models that are not only consistent with all
the available static data such as well log and seismic, and
dynamic data like production and 4-D seismic but also
are able to reproduce historical field performance.
Forecasts generated from these models play a crucial
role for operators in shortening development cycles,
increasing production, extending reservoir life, and
enhancing ultimate oil and gas recovery.
Rising to the challenge
The rise in computer power, such as 64-bit multicore chip
clusters, parallel processing, and computer-led automa-
tion, has ensured that reservoir simulation is now prac-
ticed via the desktop and across asset teams, enabling
faster decisions and a greater ability to determine the
important what-if scenarios . Today, multimillion cell
reservoir simulation models are the norm.
The same is the case with history matching technolo-
gies. Manual history matching has been replaced by
robust and automated algorithms that allow the reservoir
engineer to focus on developing a clearer understanding
of reservoir mechanisms and their relative impact on pro-
duction behavior and creating simulation models that are
fully consistent with their underlying geological interpre-
tation. In this way, operators can generate
more accurate information on the opera-
tional production decisions that need to
be made to extend reservoir life.
Furthermore, the last few years also have
seen significant advances in uncertainty
prediction tools where, through the analy-
sis of multiple plausible realizations and
uncertainty parameters, operators can bet-
ter quantify the effects of uncertainties on
volumes and cumulative production.
Usability, functionality
As with any fast-changing technologies, chal-
lenges remain, particularly in the need for
improved ease-of-use and functionality in simu-
lation and history matching and the need for
ever more sophisticated (but easy to use) eco-
nomic evaluation tools.
Reservoir simulation today still remains a com-
plex process, and it is incumbent on todays vendors
to guide users through the entire process from
Reservoir simulation, history
matching extend reservoir life
The right combination of technologies can shorten development cycles,
increase production, and extend reservoir life.
Sarika Pugla, Emerson Process Management
Advanced visualization tools
within Roxar Tempest allow multiple 3-D views to be displayed.
(Images courtesy of Emerson Process Management)
48-49 ReservoirLife-Emerson_Layout 1 4/18/11 10:32 PM Page 48
preparing and analyzing original data
through to the economic evaluation
of results.
Similarly, history matching also can be
a time-consuming and cumbersome
process, with history matches often achieved through
different configurations, thereby making it difficult to
determine which model is correct.
Few history matching packages allow the reservoir engi-
neer to include all of the uncertainty parameters that
form part of the history match into the prediction phase:
it is with this in mind that Emerson has made ease of use
and functionality central to its reservoir simulation and
history matching software.
The Roxar Tempest simulation software guides users
through the entire simulation process. The modeling of
complex wells also has been improved in the latest ver-
sions through a new segmented well approach, that
allows for a detailed well model that represents the under-
lying physics more realistically. The company also has
introduced a Todd-Longstaff solvent feature that allows
for efficient simulation of CO
2
floods. Fractured wells also
can be simulated.
Improved functionalities for economic forecasting are
vital. Aggregate rates now are calculated and displayed in
the software, making it easier to interact with other pro-
grams such as economic evaluators and spreadsheets. The
software also includes a new feature where lift model
parameters can be regressed against observed data such
as friction, fluid gravity, or gas-liquid slips.
New load-on-demand features also are key to optimiz-
ing memory usage and letting engineers simultaneously
analyze many more models with complex wells and fine
grids. Derived data such as group totals and well ratios
can be processed on demand, greatly speeding up model
loading. This increased functionality and ease of use
ensures that multiple simulation runs can be loaded and
managed together with observed data, with comparisons
between runs and with historical data greatly speeding up
history matching and sensitivity studies.
Furthermore, while static data can provide information
on the reservoir framework and fluid saturations at well
positions, for example, it is the dynamic data that is so
crucial to extending reservoir life by charting how fluid is
moving during production.
To this end, pressure, volume, temperature, rela-
tive permeability curves, and well lift curves can be graph-
ically edited within the simulation model. Historical
measurements can be entered as a table, well trajectories
can be input directly as 3-D xyz files, and dynamic data
entered in tables as events, which can be interactively
edited, sorted, filtered, and viewed on a timeline. In this
way, operators can track the performance of their reser-
voirs in real time and ensure they produce at an optimal
level to extend reservoir lifecycle.
The companys Roxar EnABLE history matching soft-
ware is playing a key role in extending history matching
further into the predicting of uncertainties crucial in
providing tools to the operator to extend reservoir life.
At present, this tool is the only one available that pro-
vides total uncertainty assessment. Powerful statistical
techniques are used to determine multiple matches of
the reservoir-to-production history and to model the
reservoirs uncertainty. All of the uncertainty parameters
that form part of the operators history match are
included during the prediction stage (there is no need,
for example, to narrow the minimum and maximum
range ranges), and a proxy model is used during the his-
tory match, allowing the simulation model to be easily
extended into predictions to help calculate uncertainty.
These results are used with the simulator to predict
how a field will perform in the future and provide meas-
ures of uncertainty about these predictions crucial
information for extending reservoir life.
The improved usability, functionality, and integration
of history matching and simulation workflows are central
to risk mitigation in reservoir management today.
Through a complete understanding of production
ranges, simulation models that are fully consistent with
the underlying geology, and effective uncertainty quantifi-
cation tools, operators can look forward to highly reliable
production forecasts, increased reservoir performance,
and an extension of reservoir productivity.
49
Roxar Tempest provides inte-
grated model preparation,
black oil, compositional, and
thermal reservoir simulation.
48-49 ReservoirLife-Emerson_48-49 ReservoirLife-Emerson 4/18/11 1:28 PM Page 49
50
POTENTIAL
FIELDS
G
ravity and magnetics can seem a bit like the
flavor of the month sometimes the measure-
ments are considered critical for successful exploration
and other times ignored or viewed suspiciously by the
uneducated.
Luckily for companies that acquire these data, poten-
tial fields measurements are back in vogue, helped
tremendously by technical improvements such as high-
resolution aeromagnetics and gravity gradiometry. Many
oil and gas companies will acquire a gravity or magnetic
survey prior to shooting any seismic to get a general
sense of the lay of the land with a low-cost geophysical
acquisition tool.
Weve been in a teaching mode for most of my
career, said Jeff Rowe, vice president and senior geo-
physicist for Fugro Gravity & Magnetic Services. We
help companies understand the potential value of grav-
ity and magnetics. I think theres more of an openness
to utilizing all geophysical methods and building a bet-
ter workstation toolkit that can allow for a superior
interpretation.
He added that younger geoscientists often have been
exposed to classes in non-seismic techniques in their stud-
ies, giving them a better feel for the value of these data.
Given the reconnaissance aspect of potential fields
data, they lend themselves very well to a multiclient
model. Rowe said Fugro has done close to 6,000 non-
exclusive surveys, all of which are accessible at the com-
panys website. Our game plan with non-exclusive data
is to spend time talking to clients to find out where
theyre looking at doing projects, where theres open
acreage, and where they have needs, and to provide a
cost-effective option rather than shooting a proprietary
survey he said. This way they can see their concession
in a broader geological context.
Uruguay
Recently ANCAP, Uruguays state-run oil company,
invited Fugro to do a complete aeromagnetic survey of
the Pelotas, Punta del Este, and Oriental del Plata off-
shore basins. ANCAP hopes the data will allow a better
understanding of the tectonic evolution of the basins
and identify the structural elements to define play con-
cepts. ANCAP already has multiclient agreements with
CGGVeritas for approximately 7,380 miles (12,000 km)
of 2-D seismic data; has signed a contract with ION/
GXT for the acquisition, processing, and interpretation
of the UruguaySPAN for 1,800 to 2,130 miles (3,000 to
3,500 km) to link the Uruguay basins with the neighbor-
ing offshore basins in Brazil and Argentina; and has
awarded an additional 2-D seismic survey to Reflect
Geophysical.
According to an ANCAP press release, this large
amount of data will provide additional knowledge of the
offshore basins, which will help oil companies that are
evaluating exploration opportunities in Uruguay. The
data will be made available to interested companies in
anticipation of a licensing round to be held in 2012.
Fugro plans to acquire 31,250 miles (50,000 km) of
aeromagnetic data over all of offshore Uruguay. This will
consist of a 4,500-ft by 18,000-ft (1,500-m by 6,000-m)
grid in the shallow-water blocks (less than 3,300 ft or
1,000 m) and a 9,000-ft by 36,000-ft (3,000-m to 12,000-
m) grid in the deeper waters.
Rowe explained that the Pelotas Basin is an extension
of a basin in Brazil where Fugro acquired data several
years ago. ANCAP also is studying the similarity of the
The potential of potential fields
A high-resolution airborne magnetic survey will serve as a reconnaissance tool
to high-grade prospects offshore Uruguay.
Rhonda Duey, Senior Editor
A strike seismic section
in the Punta del Este
Basin shows a rift of the
northwest-southeast
structural trend (left). A
dip section in that basin
indicates the same rift
(right). (Image courtesy
of ANCAP)
50-51 Potential-Fugro_50-51 Potential-Fugro 4/18/11 1:28 PM Page 50
51
Punta del Este Basin to the Orange Basin offshore
Namibia and South Africa.
According to ANCAP, the stratigraphy of Uruguays off-
shore basins is characterized by large depositional
sequences that overlay Paleozoic sedimentary rocks and
Precambrian crystalline basement rocks. Sequences
include aluvio-fluvial and lacustrine deposits interbedded
with volcanic rocks as well as a transgressive transitional
sequence followed by regressive deposits.
Diverse play types have been identified, including anti-
clinal structures related to basement highs, compaction
synclines, truncation of synrift deposits by breakup
unconformity, pinchouts, channels, and basin floor fans.
The play types in Uruguay frequently are related to
basement highs, horst blocks, graben structures, and
tilted and rotated fault blocks, Rowe said. In many
cases, the sediments are draped on these features, creat-
ing the stratigraphic traps.
All of the areas in Uruguay are fairly frontier, he
added. Theres not a lot of drilling history there, so its
an ideal place to start an exploration project with a high-
res magnetic database.
The survey will be acquired less than 450 ft (150 m)
above sea level. This allows the company to map not only
the crystalline basement but also magnetic susceptibility
changes from within the sedimentary section. Data also
are acquired at a faster sample rate, which provides reso-
lution an order of magnitude greater than in the past.
The survey, which is scheduled to begin in summer
2011, should take four to five weeks to complete, weather
permitting. Results from the survey should answer several
questions regarding:
The influence of the magnetic basement on the over-
lying sediments;
The relationship between sedimentary anomalies in
the section with the magnetics;
The presence or absence of volcanics;
The orientation of faults observed on 2-D lines;
The location of depo-centers;
The location of mini-basins; and
Determination of migration pathways from the mag-
netic basement architecture.
The data also should be able to be used as a trend/
mapping tool to extrapolate features viewed in the widely
spaced seismic lines.
Without existing magnetic data to demonstrate, it can
seem like a tough sell to get operators interested in invest-
ing in this dataset. Rowe said the client company needs to
look at the bigger geological picture.
In a frontier play, we talk about a game plan and an
approach, he said. By acquiring a uniform grid of data
like were proposing, companies will be able to map the
crystal basement surface and topography and identify
basins, mini-basins, and depo-centers that could indicate
areas that would have higher prospectivity. An airborne
magnetic survey like this provides a good framework
upon which to build an exploration project.
We try to encourage companies to take an approach
where the first step in an exploration project is a recon-
naissance-type of airborne survey, Rowe said. The second
phase would be a more detailed survey utilizing airborne
gravity. And then they might acquire a gravity database in
conjunction with 2-D seismic and develop prospect leads
that are then followed up by 3-D seismic and drilling. He
added that the airborne surveys allow areas to be high-
graded and down-graded, enabling exploration invest-
ment to be more strategically positioned.
Already the company has a list of more than 20 compa-
nies that have expressed some level of interest. Before
we started to negotiate with the government, we met with
a number of significant players to see if Uruguay was on
their radar and, if so, how they would respond to our pro-
posal to undertake this sort of project, Rowe said.
ANCAP negotiations took almost a year because the
country had to pass a governmental decree signed by the
president to allow the survey to go forward. Since then,
the dealings have been easier.
Their offer to industry seems to be very straightfor-
ward, he said. Companies
that are looking for new
places to explore should con-
sider Uruguay. They
will be pleased to discover
ANCAP and the opportuni-
ties that await there.
An aeromagnetic survey will be acquired with a twin engine
Cessna 404 with a stinger-mounted magnetometer. (Image cour-
tesy of Fugro Gravity & Magnetic Services)
EPmag.com
READ MORE ONLINE
There is more
to the story
50-51 Potential-Fugro_50-51 Potential-Fugro 4/18/11 1:29 PM Page 51
E
xploration always has relied on remotely acquired
data to depict the subsurface. In the industrys early
days, a wide variety of measurements were acquired and
analyzed. With the advent of modern 3-D seismic, many
of these faded into the background. Now, with higher res-
olution sensors, greater computing power, and improved
data integration and visualization techniques, these legacy
methods appear to be making a comeback.
Over the last several years, companies have gained
prominence in the exploration services arena by offering
subsurface imaging technologies that go above and
beyond seismic. For example, ARKeX offers advanced
gravity gradiometry surveys to better image complex
geological settings such as subsalt or to fill in the areas
between sparse 2-D or 3-D seismic surveys, while compa-
nies like EMGS and OHM Rock Solid Images offer electro-
magnetic (EM) surveys to better delineate fluid saturation
anomalies in the subsurface, most frequently offshore.
Earlier this year, another company Houston-based
NEOS GeoSolutions entered the global exploration
services arena with an ambitious vision. The company
simultaneously interprets as many geological, geophysical,
and geochemical datasets as possible, including datasets
that are accessible in the public domain, available for
license from third parties, resident in client or NEOSs
own data archives, or newly acquired using NEOS-owned
and operated airborne systems. At present, the company
focuses exclusively on onshore
E&P projects.
The goal is not to
displace conventional
seismic imaging but to
add a suite of geologi-
cal and geophysical measurements that improve seismic
datasets where they exist and, in geographies where they
do not, to serve as placeholders until E&P companies have
a better idea of where they want to commission new seis-
mic acquisition programs.
This approach delivers a more unique, highly con-
strained answer about what is going on within the subsur-
face. A seismic image, when it exists, can be extremely
useful in revealing the structures within the earth, but
other G&G measurements including gravity, magnetic,
radiometric, EM, and hyperspectral can bring even
more to the interpretation as they reveal important things
about rock properties, fluid saturations, and fracture sys-
tems that seismic alone might not define adequately.
Potential fields boom
The remote sensing boom is driven by several factors. One
involves the operational challenges associated with new
seismic acquisition. Land-use permits can be difficult and
time-consuming to obtain. Environmental restrictions
limit the amount of heavy equipment like Vibroseis vehi-
cles that can enter an area. And seismic acquisition pro-
grams typically involve dozens if not hundreds of crew
members to deploy, maintain, and operate the instrumen-
tation, a reality that increases the HSE risk of any project.
These issues drive up the cost and cycle time associated
with new acquisition programs and often limit coverage
to hypothesized, high-potential postage stamp areas.
By contrast, many of the non-seismic geophysical
measurements can be obtained from airborne acquisition
platforms, including satellites, fixed-wing aircraft, and
helicopters. This allows large, basin-scale areas to be
surveyed quickly, efficiently, and with minimal issues of
access and ground-based personnel deployment. Insights
from these programs can be used to help focus follow-on
seismic acquisition programs on the most prospective
areas within the basin or to guide leasing decisions when
time is of the essence.
The science behind the method
NEOSs methodology involves cross-correlating the geolog-
ical and geochemical conditions in the subsurface with the
geophysical responses that result. For instance, most hydro-
Multiple measurements
lead to singular insight
Combining a variety of geophysical measurements gets operators closer to the final answer.
Jim Hollis, NEOS GeoSolutions
Multiple geological,
geophysical, and geo-
chemical datasets are
interpreted simultane-
ously. (Images courtesy
of NEOS GeoSolutions)
POTENTIAL
FIELDS
52
52-56 Potential-NEOS_52-56 Potential-NEOS 4/18/11 1:29 PM Page 52
carbon reservoirs are not sealed perfectly but instead are
penetrated by small faults or fractures that allow light-end
hydrocarbons to seep upward. Bacterial degradation of
leaching hydrocarbons can cause a reduction zone to
develop above the reservoir and either pyrite or sulfur pre-
cipitates to form. These geochemical reactions in the sub-
surface can be detected by looking for geophysical
anomalies in resistivity or magnetic measurements.
Closer to the surface, the migration of trace quantities
of hydrocarbons can cause carbonates to precipitate and
oxidizing zones to form. Once again, these geochemical
reactions can be detected by looking for a geophysical
anomaly (in this instance, a high-resistivity response). At
the surface, leaching hydrocarbons can result in high
gamma halos; oil seeps; trace quantities of natural gas;
or distressed vegetation due to the presence of hydrocar-
bons in the air, soil, or groundwater, any of which can be
detected using an appropriate radiometric or hyperspec-
tral sensor.
Unconventional gas exploration in the Rockies
A multimeasurement approach can add value in many
play types, from the frontier to the mature arena and
from conventional to unconventional reservoirs. In Col-
orados Piceance Basin, NEOS was engaged by a client
whose acreage was underlain by prospective hydrocarbon
and mineral deposits. The terrain in the area was rugged
with highly variable topography and a mix of public and
private lands having both access and use restrictions. Pro-
ducing gas wells had been drilled on the acreage, but
individual well productivity was highly variable. Client
geoscientists theorized that higher production wells were
drilled in the vicinity of naturally occurring fracture
swarms that were associated with nearby faulting.
To better explain the assumed correlation between frac-
ture intensity and well production, NEOS acquired new
airborne geophysical datasets over the project area.
Hyperspectral images helped to identify surface-penetrat-
ing fault lineaments and trace quantities of natural gas at
the surface. A combination of gravity and legacy seismic
datasets helped to establish the regional fault picture,
while magnetic data helped to identify zones of intense
fracturing within the reservoir interval. Geoscientists the-
orized that the fracture zones contained mineralization
anomalies caused by higher water throughput over the
course of geologic time.
Based on a multimeasurement interpretation of the
available and newly acquired data, NEOS identified frac-
ture swarms. Although the area had been drilled and was
under production for a couple of years, the actual well
and production data were not revealed to NEOS at the
start of the project, essentially making it a blind test.
Once the results were delivered, the client confirmed that
their most productive wells were located in the areas with
the highest mapped fracture density.
Sand package identification in the Bossier
The Bossier formation lies just above the Haynesville
shale throughout a large portion of northeast Texas and
northwest Louisiana. While the Bossier contains a variety
53
A gas distribution map for the Bossier formation shows zones of
highest gas saturation in hot colors.
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of play types, the operator was interested in identifying gas-filled sand pack-
ages that were deposited along shelf-edge deltas in the Jurassic. Although
some seismic data existed in the area, legacy velocity models often were inade-
quate to properly depth-migrate the data. By bringing in gravity measure-
ments, NEOS was able to improve the velocity models and the resulting
prestack depth migrated data.
Other geophysical datasets also were acquired and analyzed. High-frequency
EM data were used to map near-surface resistivity anomalies, delineating oxidiz-
ing zones that could have been associated with hydrocarbon leakage from
below. Radiometric data were analyzed to identify potential halos associated
with trace quantities of hydrocarbons in the near-surface. Hyperspectral data
were used to characterize subtle topographic features on the surface, which
were correlated with other measurements to tie surface insights with subsurface
structures, and a proprietary spectral decomposition algorithm was applied to
discriminate lithology and fluid changes within the reservoir interval.
In the end, more than a dozen geological, geophysical, and geochemical
measurements were used in the simultaneous joint inversion, a geostatistical
method that delivers a 3-D probability cube highlighting subsurface rock, fluid,
and fracture patterns along with high-potential drillable sweet spots. One end-
product resulting from the project described the probability that a commer-
cially viable, gas-charged sand package lies beneath that portion of acreage
within the Bossier formation. A well had been drilled into the Bossier in the
middle of the reddish-brown oval and penetrated a large gas-filled sand unit.
The client had withheld the existence of (and data from) that well during
the project, only to have its productive potential validated by the multimea-
surement survey.
The task of finding and producing hydrocarbons grows increasingly com-
plex with each passing year. Fortunately, new
technologies and new techniques to extract
maximum insight from proven methods con-
tinue to be added to the industrys exploration
arsenal.
Geochemical reactions in the subsurface can be detected by looking for geophysical
anomalies in resistivity or magnetic measurements.
EPmag.com
READ MORE ONLINE
There is more
to this story
POTENTIAL
FIELDS
55
52-56 Potential-NEOS_Layout 1 4/18/11 2:34 PM Page 55
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DEEPWATER
RIG ADVANCES
S
ome rigs have a reputation for performance. Under-
standing the elements of efficient operations requires
observation. To improve on this process, Pride Interna-
tional has taken observation to a new level by building
its per-well performance into a repository of useful data
that promises to usher in a consistent level of increased
performance.
Drilling a well
In any given project, the overall responsibilities of drilling
a well are shared. Well parameters and designs are con-
trolled primarily by the operator. During the well con-
struction phase, the driller receives daily parameters from
the customer as part of its well program. Shared responsi-
bilities requiring the attention of both the contractor and
the customer include the actual drilling, weight-on-bit,
RPM, pump rates, circulating, completions, and HSE
management.
The drilling contractor has a spe-
cific set of activities and responsibil-
ities. These rig-controlled processes
(RCPs) account for an estimated
30% of a given well. Rig position-
ing, picking up/laying down
drillpipe, tripping, running and
pulling the riser, building the bot-
tomhole assembly, testing equip-
ment, rig maintenance, crew
competency, and housekeeping are
areas in which the contractor takes
primary responsibility during the overall operation. When
available, efficiencies often can be identified and imple-
mented in these areas to improve a drilling contractors
overall performance.
Observation, action plans
As early as April 2009, Pride began modifying Rimdrill
software in an effort to better capture performance met-
rics and generate daily rig reports. Designed by California-
based Infostat, the software is a reporting tool that
provides a basic platform with standard functionality,
including International Association of Drilling Contrac-
tors standard drilling reports. Wanting to drill down from
basic reporting, Pride has tweaked this platform by adding
new functions and subcodes to develop a more in-depth
view into overall rig performance.
Chris Weber, vice president, operations support for
Pride, explained, We have made several modifications to
Rimdrill to accommodate better, more granular reporting
around the RCPs to generate customized reports and to
capture lessons learned at the rig level.
Close observation
improves drilling performance
Drilling performance is paramount when operating in challenging deepwater environments.
Data gathering and up-close observation of the processes involved in drilling a well can raise
benchmarks on a fleet-wide basis.
Tayvis Dunnahoe, Senior Editor
Roughly 30% of any given drilling proj-
ect contains RCPs, which are defined
as activities for which the drilling con-
tractor primarily controls the outcome
and performance. (Image courtesy of
Pride International)
57
57-59 Deepwater-Pride_57-59 Deepwater-Pride 4/18/11 1:29 PM Page 57
58
Prior to Rimdrill, paper-based reporting was common.
While this system provided an ample amount of informa-
tion on a per-well basis, the capacity to measure against
previous benchmarks was somewhat limited. Today, the
contractor has access to more historical data and main-
tains the ability to compare its performance across a num-
ber of metrics at the push of a button, both on a daily
basis or by using other parameters.
A key tool Pride has implemented to measure its per-
formance is the End-of-Well Scorecard. The scorecard
provides a comprehensive summary of Prides perform-
ance drilling a given well and covers well delivery time,
efficiency benchmarks, HSE, equipment reliability, and
lessons learned.
We are excited about the End-of-Well Scorecard
because it provides rig performance managers with a tool
for reviewing their rigs perform-
ance both with rig crews and
clients, Weber said. These post-
job performance discussions, also
known as After-Action Reviews, are
an important part of a continuous
improvement culture.
One of the keys for us is that the
scorecard is not just a data report.
The scorecards primary function is
to facilitate a performance discus-
sion both with the rig crew and the
customer.
The goal is to reduce the clients
time to drill and produce wells with-
out compromising safety. In addi-
tion to in-depth reporting, the
company also has developed an
observation process. Using the met-
rics derived in its daily reporting,
where deficiencies appear, the con-
tractor sends engineers to observe
the rigs during operations.
Three basic areas are observed
people, process, and plant to deter-
mine where improved efficiency can
drive performance. In one example,
Prides performance team studied
surface casing running speeds and
riser running speeds on the Pride
Africa and Pride Angola. Both drill-
ships were of similar design and
were located in close proximity,
yet the performance data showed a
clear difference in their riser run-
ning speeds. The team spent a week on each rig while
crews ran the BOP and made observations and came up
with a number of findings that explained the difference in
performance. Some had to do with the number of people
on shift at a given time, like crane operators; others had to
do with the configuration of the riser bay.
These are little changes, Weber said. You are not
always going to find a major breakthrough, but in the
spirit of continuous improvement, youre looking for
those things. One of the big things we are focused on is
actionable recommendations not just a report that sits
on the shelf, but things that actually lead to meaningful
actions.
Pumping up performance
One Pride rig that has achieved a dramatic performance
The Pride Angola drillship, which is capable of
working in 10,000 ft (3,048 m) water depth, is
under a five-year contract with Total. The latest
advance in performance measurement was used
to match riser running speeds of this vessel and
the Pride Africa (not pictured). (Photo by Ken
Childress Photography)
57-59 Deepwater-Pride_Layout 1 4/18/11 3:11 PM Page 58
59
improvement recently is the Pride Mexico, which operates
offshore Brazil. Gabe Hoke, the first graduate of Prides
management training program, was named rig perform-
ance manager for the Pride Mexico at the end of October
2009. Performance improvement included significant
reductions in downtime, safety issues, and drillpipe trip-
ping speed. The improvements helped the rig exceed its
2010 performance bonus target by 15%.
The key to improving performance is having complete
buy-in from your team, Hoke said. Performance also
requires a systematic approach that looks at improving
every facet of an operation people, process, and plant.
That is a tangible benefit, Weber added. It shows not
only the advantage that can be gained from separating
performance management from asset management to
put a full-time focus on each but also the payoff from our
management training program.
Moving forward
Prides performance measurement program is still in
its early phase, but benchmarking will continue to
increase. We only go back a couple of years. Were
new into this, Weber said. They are currently rating its
performance on a quarterly basis, looking at each rig
along a number of metrics to apply benchmarking with
each new project.
While it is true that every well is different, by focusing
on those elements that fall within the control of the
drilling contractor (RCPs), Pride is driving toward a
more consistent performance throughout its entire fleet.
The company spent 2010 getting its measurement
tools in place. By driving adoption and getting buy-in
and usage of the system on a per-rig basis, Pride believes
2011 is the year it will start to see performance improve-
ments in the data.
This is the year that we need to make this program
stick, Weber said. We want to drive consistency and
improve performance to continue to strive for the techni-
cal limits inherent to our fleet. Youre not going to get
there if youre not using a process like this.
DEEPWATER
RIG ADVANCES
57-59 Deepwater-Pride_57-59 Deepwater-Pride 4/18/11 1:29 PM Page 59
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A
s of March 2011, Maersk Drilling was awarded the
honor of being the first deepwater drilling contrac-
tor to begin a new exploration well in the US Gulf of
Mexico (GoM) nearly a year after the Deepwater Horizon
accident. The Maersk Developer picked up anchors on
March 21, 2011. One of three semisubmersibles brought
online by Maersk in 2009, the rigs highly advanced
design and improved safety equipment passed the tight-
ened technical requirements in the GoM with only a few
minor adjustments.
With the success of its deepwater fleet, Maersk
recently announced plans to invest US $1.3 billion
in its first two ultra-deepwater drillships.
From deep to ultra-deep
Samsung Heavy Industries in South Korea will build the
two ultra-deepwater drillships, which are sched-
uled for delivery in the second half of 2013. The
contract, signed on April 5, also includes an
option to buy two additional drillships.
The 748-ft (228-m) long drillships will be able
to operate at water depths to 12,000 ft (3,650
m) and will be capable of drilling wells of
more than 40,000 ft (12,200 m). An advanced
dynamic positioning (DP) system will allow the drillships
to automatically maintain a fixed position in severe
weather conditions with waves to 36 ft (11 m) and wind
speeds up to 85 ft/sec (26 m/sec).
Similar to the philosophy applied to Maersks deepwa-
ter semisubmersibles, the drillship design includes fea-
tures for high-efficiency operation including a double
derrick, which allows simultaneous activities. The exten-
sive storage areas and tank capacities provide an advan-
tage when operating in areas with less developed
infrastructure and limited presence of suppliers.
Advanced automation
Last year, we took delivery of the last in our series of
three ultra-deepwater semisubmersibles, said Frederik
Smidth, chief technology officer, Maersk Drilling. We
are taking the experience from those rigs and actually
pushing a bit further. A standout feature to the ships on
order is an improved level of automation using National
Oilwell Varcos (NOV) drilling package, which features
a multimachine control system. The system uses a mul-
titude of automated processes as opposed to remotely
operated equipment.
With the multimachine control system, the opera-
tor is present primarily as a safety feature and is
required to confirm at certain points in the opera-
tion that it is safe to continue. With complete joy-
60
DEEPWATER
RIG ADVANCES
New ultra-deepwater design boasts
capacity, advanced automation
As offshore exploration goes deeper, newer designs focus on increased storage
for fuel and equipment and increased automation.
Tayvis Dunnahoe, Senior Editor
Maersk recently announced plans to invest
$1.3 billion in its first two ultra-deepwater
drillships, which are scheduled for
delivery in the second half of
2013. The 748-ft (228-m) long
drillships will be able to
operate at water depths
to 12,000 ft (3,650 m) and
will be capable of drilling
wells of more than 40,000 ft
(12,200 m). (Images courtesy
of Maersk Drilling)
60-62 Deepwater-Maersk_60-62 Deepwater-Maersk 4/18/11 1:29 PM Page 60
61
stick control, the driller simply confirms the continua-
tion of the multimachine system. It is completely done
from automation, Smidth said.
Maersks ultra-deepwater semisubmersibles were the
first rigs to use NOVs multimachine system. Its been
fairly successful, in our mind Smidth said. We are not
just using automation for the sake of automation, or
because we as engineers like to play with it. This system
actually delivers a higher than average performance.
More importantly, this advanced level of automation
improves efficiency
by providing consistent results. If you look at tripping
speed, for instance, you might be able to do that faster
with a really good operator for a short period of time.
But to do it in a consistent manner, hour after hour, this
level of automation is a huge advantage, he added.
Maersk Drillings new ultra-deepwater drillships will
have the capacity to build casing stands up to 16-in. in
multimachine control. We didnt have multimachine
control standbuilding at all on the semis, Smidth said.
The added feature is considered an advantage for an
ultra-deepwater project where supplies and lack of infra-
structure often can impact drilling operations.
Maersk also has added what it considers to be the
latest advance in deepwater drilling riser technology.
The ships will use GE Hydrills latest deepwater riser
design capable of hands-free connection. The system
is remotely operated, which means no personnel are
on deck handling tools while connecting the riser. For
us, it is a question of safety. We have people away from
moving parts, Smidth said. This riser system is just now
entering the market, but Maersk believes that by the
time its drillships embark there will be an ample
amount of field experience to draw from.
Upgradable design
The size of the newbuilds is an asset. That is the good
thing about these ships, Smidth said. They are huge.
Maersk designed its new vessels with increased capacity
both for present operations and future upgrades. We
have a full dual mud system, so its easy to switch from
one type of mud to another without having to wait, he
added. The increased capacity will ensure continuous
operation. In addition, switching from oil-based to water-
based mud becomes virtually seamless without the need
to clean or empty the mud system between changes.
Fuel capacity also will provide an advantage for these
ships. While the storage capacity for pipe and casing are
comparable to similar drillships on the market, Maersk
added more fuel capacity to surpass the standard. We
increased the fuel capacity on board to provide longer
operational windows without the need to stop work for
refueling, Smidth said.
Looking ahead to the possibility of future regulations,
Maersk has designed its new ships with the capacity for a
seventh RAM. A standard deepwater stack usually has six.
We have very good shear capacity in six RAMs, Smidth
said. We did not order seven RAMs, but we have ensured
that we have enough space for it if it becomes a require-
ment by the authorities or specific client request.
One area Maersk is watching closely is dual gradient
drilling. When drilling in ultra-deepwater and in very
deep wells, mud weight margins are very tight. Mud that
is too light allows kicks, and mud that is too heavy can
be lost in the formation. Systems are being developed
that allow drillers to use lighter mud, but this requires a
vast amount of pumping capacity. For an offshore opera-
tion, deck space is a finite quantity and often can limit
the amount of pumping equipment that is required for
dual gradient drilling.
Two and a half years out, Maersk is looking at capital-
izing on technology advances in this area. We did not
install the pumping capacity, yet. But there is space for it
on the rig, Smidth said. The current design contains
five mud pumps instead of the standard four. He added,
We can easily install two or three more if required.
Maersk is pushing to drive the ultra-deepwater market.
By applying the latest advances in fully automated drilling
packages and looking closely at storage capacity, its new-
builds will find their niche in remote offshore areas.
We dont want to drive the industry for the sake of
being the driver, Smidth said. We want to drive it in
the direction where we see
that we can add value. The
overall philosophy is to cut
the well construction time
looking at all aspects of the
process.
Pictured is the drillers cabin from one of the newbuild deepwa-
ter semisubmersibles Maersk took delivery of last year. The com-
pany is using its experience with these rigs to design highly
automated ultra-deepwater drillships.
For more Deepwater
Rig Advances
articles, visit
EPmag.com
60-62 Deepwater-Maersk_Layout 1 4/18/11 3:12 PM Page 61
60-62 Deepwater-Maersk_60-62 Deepwater-Maersk 4/18/11 1:29 PM Page 62
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63
SAND & WATER
MANAGEMENT
I
n an age of heightened environmental awareness and
regulatory requirements, offshore technology is
charged with meeting new stringent operational chal-
lenges. It is clear the challenges and mandates for cost-
effective and sustainable water management will only
increase over time. To accomplish the important goal of
robust and cost-effective produced water management,
engineers at MyCelx Technologies have worked with
industry leaders to implement MyCelx Clean Water Sys-
tems to meet economic and environmentally responsi-
ble objectives.
Contending with WSOs
Water-soluble organics (WSOs) are an increasing chal-
lenge since they contribute to the total oil content of
produced water. Traditional water treatment technology
is stretching to meet the challenges of produced water
treatment faced in deepwater production where the
WSOs and strong oil-in-water emulsions are present.
MyCelx Clean Water Systems, on the other hand, are
capable of reliably treating free and emulsified oils
and WSOs from water to between zero and 10 parts
per million (ppm).
The technology operates on the principle of chemical
cohesion, which is a clean technology break from other
existing produced water treatment technologies that are
based predominantly on mechanical separation, adsor-
bent, or absorbent technology. Chemical cohesion
enables the system to remove free, emulsified, and dis-
solved hydrocarbons in water.
This technology was first implemented in Anadarko
Petroleum Corp.s saltwater management facilities in
Utah. Due to the presence of iron sulfides, WSOs, and
emulsified oil in the produced water, various technolo-
gies like CPI separators, float cells, nut shell filters,
organo clay, carbon, and chemical cohesion technology
were rigorously evaluated by MWH Global, the engineer-
ing, procurement, and construction contractor at the
production sites. After months of intense field evalua-
tion, an optimum produced water treatment system was
designed for full-scale implementation to consistently
meet the 10 ppm surface discharge requirement at no
visible oil sheen. During the pilot evaluations, the chem-
ical cohesion system consistently treated and discharged
water to less than 10 ppm total oil content including
WSOs at variable influent oil loadings and upstream
treatment process upset conditions.
The produced water treatment facilities at the site came
online in late 2007 with a
combined water pro-
cessing capacity
of 45,000
b/d.
To date, the systems have treated more than 10 MMbbl of
water with an average quality of less than zero to 5 ppm
oil in water.
Technology adoptions
A number of onshore operators have adopted these sys-
tems at 10,000 to 40,000 b/d capacities as a fail-safe unit
post existing oil recovery and treatment systems prior
to discharge into sensitive environments. Successful
onshore operations are being considered and imple-
mented offshore for produced water treatment prior
to overboard discharge.
New water treatment technology
minimizes offshore footprint, costs
The ability to reliably and cost-efficiently manage water associated with offshore production
could be the difference between successful and marginal operations.
Connie Mixon, MyCelx Technologies
Chemical
cohesion enables
the treatment system to
remove free, emulsified, and
dissolved hydrocarbons in water.
(Images courtesy of MyCelx Technologies)
63-65 SANDWATER-MyCelx_63-65 SANDWATER-MyCelx 4/18/11 1:29 PM Page 63
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The system has been optimized for offshore opera-
tions and has proven capable of removing oils and
WSOs to consistently achieve zero to 10 ppm overboard
discharge levels. It also offers flexibility as well as robust
operational and footprint options not found with other
produced water treatment systems.
The chemical cohesion system contends well with
upset conditions, which are prevalent in offshore pro-
duction due to engagement of new wells, presence of oil
in water emulsions, suspended solids, WSOs, flow varia-
tions, and inline chemical dosage equipment malfunc-
tion. The technology can reliably reduce the total oil
content in overboard discharge water to less than 10
ppm, preventing sheen. This gives offshore operators
flexibility to troubleshoot the process upset conditions
while sustaining the necessary quality level for overboard
discharge water at all times. The system also has proven
capable of handling varying and erratic levels of oil and
WSO loading, providing discharge water that exceeds
current regulations.
When new production wells are engaged and when
they mature, the water production rate
and quality of oil and hydrocarbon con-
tamination in produced water can vary
drastically. New wells can bring more
flow fluctuations and WSOs/emulsified
oils in the produced water that can
limit the ability to process and dis-
charge water overboard through exist-
ing produced water secondary
treatment equipments. The chemical
cohesion system can be engaged at full
or partial flow to discharge quality
water overboard without compromising
production.
The systems are available as complete
produced water systems that incorpo-
rate secondary and
tertiary treatment
capable of handling
high oil, WSOs, and
solids loading. A sim-
ple retrofit also is
available. It can boost
existing treatment
train performance
post float cells and remove oils and WSOs to 10 ppm
well below the 29 ppm requirement.
The MyCelx systems have a low turn-down ratio of
0.05, which means at 50,000 b/d the system performs
the same as it would operating at 1,000 or 2,500 b/d.
Traditional equipment and chemical dosage systems
cannot automatically readjust to handle such a low turn-
down ratio.
The systems activate only in the presence of hydrocar-
bons, retaining no water in the process. This means a
system on standby can be engaged when necessary with-
out compromising oil and WSO removal capacity or
effectiveness.
Moving from onshore to deepwater brings challenges.
With the ongoing operator initiatives in deep water,
operational challenges have come to light, and as a
result, operators have been open to considering new
complementary technology and equipment. Integrating
existing proven technology with new technology will
provide the best solution for sustainable produced water
management.
65
SAND & WATER
MANAGEMENT
The version of the MyCelx Clean Water Sys-
tem on this worksite can process 10,000 b/d.
Outlet of condensate Outlet of API separator Outlet of walnut Outlet of MyCelx
recovery tanks /coalescer shell filter polisher system
(oil and gas ppm) (oil and gas ppm) (oil and gas ppm) (oil and gas ppm)
48 ppm 21 ppm 18 ppm < 2 ppm
149 ppm 145 ppm 121 ppm < 5 ppm
14 ppm 13 ppm 8 ppm < 5 ppm
The MyCelx Oil Removal System maintains high water discharge quality under variable loading conditions
due to upset operation of the pretreatment systems, which results from unpredictable day-to-day loading
of the produced water from production wells and the presence of WSOs and emulsified oils. (Data courtesy
of MyCelx Technologies)
66
SAND & WATER
MANAGEMENT
I
n todays competitive market place, operating
companies are continually searching to find new
and improved means of reducing costs and working
smarter. Such a commitment creates challenges and
requires companies to rethink best practices at almost
every stage of the process. A key question in the drive
for enhanced production is how best to control and
manage water and sand. The recent introduction of
a number of new technologies in this field has signifi-
cantly improved performance with associated cost
savings.
One important development has been the combined
use of swellable elastomer packers and inflow control
devices (ICDs), which can provide an effective regulator
for sand and water.
As an example, Tendeka recently successfully deployed
the worlds first slimhole ICD completion in a sandstone
reservoir in the Gulf of Mexico (GoM).
Due to a severely depleted reservoir with difficult
drilling conditions, the well was planned as a re-entry
out of a 5-in. liner with a 4
1
8-in. openhole, which negated
the use of conventional technologies. Offset wells with
sand-control equipment installed had experienced very
high completion skin and used a variety of high-rate
water packs, frac-packs, and expandable screens.
The companys solution was to provide inflow control
screens and swellable packers, which were installed in a
4
1
8-in. openhole section of the well. Coarse metal mesh
sand screens were used to minimize sand and mud plug-
ging during well flowback. The swellable packers with a
slip-on sleeve design were simple to deploy and quick to
install. The new FloRight 2
3
8-in. ultra-slimhole ICD screen
system was used across the 558-ft (170-m) zone at a depth
in excess of 13,123 ft (4,000 m).
The ICD technology used for sand control in the
GoM was based on a recent successful 3
7
8-in. openhole
re-entry completion deployed by Tendeka in the Middle
East to manage water in a producing openhole multilat-
eral horizontal oil well. That project was another world
first in that it allowed the deployment of passive ICDs to
manage inflow from two lateral wells connected to the
motherbore.
The carbonate well reached 50% water cut. Limited
success was achieved with plugging it back to minimize
water production, so the company carried out a
workover and installed the ICDs to passively control
inflow from the laterals, uniformly produce from the
motherbore, and reduce the potential for cross flow
between the laterals.
Tendeka installed 14 FloMatik passive ICDs and six
swellable packers into the motherbore to compartmen-
talize the reservoir. Numerous wellbore hydraulic simu-
lation runs were undertaken to match flow and pressure
profiles.
The ICDs created proportionate inflow along the
well and passively controlled influx from the laterals
with no cross-flow or packer leaks. A rate of 4,100 b/d
of oil with 0% water
cut was achieved,
compared to 1,500
b/d before the
workover.
A swellable
solution
In maturing reser-
voirs, water produc-
tion management
becomes an increas-
New technologies enhance water,
sand management
Swellable packers and ICDs currently are providing significant benefits and greater diversity
than ever before in sand and water control.
Benn Voll, Tendeka
The ultra-slim ICD completion in a trilateral
well was implemented to control inflow from
two laterals. (Image courtesy of Tendeka)
66-69 SANDWATER-Tendeka_Layout 1 4/18/11 10:41 PM Page 66
67
ingly important issue. Production wells experience
co-production of oil and water because of aquifer
encroachment and/or water injection. As a solution,
swellable packers can provide an effective seal against
the formation, which can maximize the effectiveness of
the water shut-off technique.
The basic principle of swellable elastomers is natural
and very simple. Adding water or oil to the appropriate
rubber-based compound causes it to swell as it absorbs
the liquid. There are no moving parts to fail, and as long
as the specific application is engineered and deployed
correctly, very little actually can go wrong.
However, the inherent simplicity of the solution
should not overshadow the complexity of the com-
pounds and packer designs required to create a
swellable packer solution for a well.
Swellable packers combine the advantages of both
cement and mechanical packers without the inherent
complications associated with these traditional technolo-
gies. The packers are thin sections of swellable rubber
that are vulcanized directly on to tubing, swelling when
they come into contact with the appropriate fluid.
Like cement, swellable packers take up any irregulari-
ties in the borehole, and like conventional packers, they
create a pressure-holding seal within the well bore. How-
ever, unlike these traditional methods of zonal isolation,
swellable packers always have something in reserve in
case of a washout in the future, or if water breakthrough
occurs. In such cases, the packer swells further and
adapts to the new structure until a seal is re-established.
As an example, a major North Sea operator was plan-
ning to use through-tubing rotary drilling to sidetrack a
20-year-old well in the UK Continental Shelf, but tradi-
tional cementing was not practical for zonal isolation.
The company decided swellable elastomer packers
could provide the necessary answer.
Prior to sidetracking and the installation of the
swellable packer solution, the well was producing 70%
water cut through the main bore. The operator recog-
nized that water breakthrough was likely to occur again,
so the packer solution had to be designed to cope with
both current and anticipated conditions.
Eight packers were run at depths of 13,500 ft to 15,300
ft (4,115 m to 4,664 m), primarily in the horizontal sec-
tion of the well. Each had 16 swellable elastomer ele-
ments. This multielement configuration delivered a
greater pressure holding ability and faster setting times
without compromising the ability to run in hole with
minimal risk. It also retained joint flexibility, making it
easier to deploy many packers in long-reach horizontal
sections. At key points between the packers, the opera-
tor introduced pre-perforated pipe, leaving blank pipe
where water-producing zones were suspected.
Should the well begin to water out in the future,
the design configuration of blank pipe, packers, and
pre-perforated pipe allow a through-tubing swellable
packer to be applied. The small running diameter of the
packer allows it to be deployed inside tubing. When the
swellable elements are exposed to water, they begin to
swell, shutting off the water-producing zone.
The well was completed on time and on budget, deliv-
ering savings of more than US $10.7 million over a con-
ventional sidetrack. When production began, the well
flowed at a higher rate than expected with negligible
water being produced.
Both swellable packers and ICDs currently are provid-
ing significant benefits and greater diversity than ever
before in sand and water control. They are credible and
proven additions to the reservoir optimization main-
stream and offer new options for cost-effective comple-
tion designs.
For more Sand & Water
Management articles, visit
EPmag.com
66-69 SANDWATER-Tendeka_66-69 SANDWATER-Tendeka 4/18/11 1:30 PM Page 67
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70
UNCONVENTIONAL:
HORN RIVER
I
n North America, the new dirty words in the oil and
gas industry are dry gas. Thanks to the booming suc-
cess of gas shale plays like the Barnett, the Haynesville,
and the Marcellus, natural gas prices have dropped
below US $5/Mcf and show no signs of moving higher
any time soon.
It is in this scenario that producers in the Horn River
Basin in northeast British Columbia currently find them-
selves. The area is remote and far away from gas mar-
kets. But there is so much gas there some estimates
put the amount at 700 Tcf of gas in place that canny
operators are trying to find some way to make the Horn
River work.
Composition, history
The Horn River is composed of Muskwa, Klua, and Evie
shales and has an areal extent of approximately 4,000
sq miles (10,360 sq km). When gas prices are taken out
of the equation, it compares very favorably to its US
cousins. Gerry de Leeuw, Devon Canadas vice president
of exploration, said the Horn River is the thickness of
two Marcelluses and a Woodford combined. The rocks
also have higher carbonate and silica content, making
them more amenable to hydraulic fracturing, according
to the January 2008 issue of the AAPG Bulletin.
Encana is widely credited with kicking off the Horn
River play. Mark Taylor, team lead for Encanas Horn
River Development group, said the basin is surrounded
on all sides by conventional gas reservoirs. Companies
would be aiming for some of the deeper Devonian tar-
gets, looking for those conventional reefs that give up
the gas easily, he said. It was always a drilling problem
getting through the shales.
During one drilling program, an enterprising geolo-
gist decided to come back uphole and flow test the shale
section. Thanks to natural fracturing in that particular
section, Encana got burnable gas at the surface in a sig-
nificant volume.
It was time to have a chat with Encanas Barnett team.
We quickly got together with our peers on the south
side of the border and said, OK, we think we have a
shale. What are we looking for? Taylor said. We took
our learnings from the Barnett and began accumulating
land in what we think is the best position in the basin at
a time when we could still get it more cheaply.
Different approaches
Companies are taking differing approaches to the play.
Devon Canada has 170,000 acres, or about 10% of the
leased acreage in the play. But it currently is not chasing
Horn River wells.
Weve got such a diverse and rich portfolio of oppor-
tunities that we dont really need to chase dry gas,
HORN RIVER SHALE
Basin & Location Information
Basin Horn River
Location British Columbia,
Canada
Est. basin area 4,200 sq miles
(10,878 sq km)
Reservoir Characteristics
Depth 7,874 to 8,859 ft
(2,400 to 2,700 m)
Net thickness 262 ft (80 m)
Total organic carbon
(TOC), %Ro 10% to 12%
Total porosity (%) 3% to 7%
Economic Data
Well spacing (acres) 90
Original gas-in-place (Tcf) 700
Technically recoverable
resources (Tcf) 130
Gross EUR (Bcfe/well) 7
Gross well cost (USD) $9.5 million
F&D cost $1.82/Mcfe
Inital production 7 MMcfe/d
Source: UGcenter.com
Updated 03/29/2011
Rhonda Duey, Senior Editor
Horn River is a play for the ages
Activity in the Horn River Basin is slow due to low gas prices. But a change in
market economics could turn this play into a barnburner.
70-78 Uncon-HornRiver_70-78 Uncon-HornRiver 4/18/11 1:30 PM Page 70
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UNCONVENTIONAL:
HORN RIVER
73
including the Horn
River Basin, de
Leeuw said. We
would look for
higher gas prices
before we started
going after Horn
River again.
Luckily for
companies like
Devon, the British
Columbian government has made this option an attrac-
tive one. De Leeuw said Devon can retain its land for 12
to 18 years by drilling stratigraphic wells down to a cer-
tain depth.
Its a much more rational economic exploitation of
your resource, he said.
Additionally, the government understands the poten-
tial of the Horn River Basin and wants to work with the
oil and gas industry to exploit it intelligently. These
people are extremely well-educated, de Leeuw said.
They understand business, they understand the compe-
tition in the US, they under-
stand that theyre at the end
of the pipe, and theyve cre-
ated a fiscal royalty regime
that actually helps us drill
Horn River faster than we
would normally.
Certainly they understand
that by doing that they
receive a multiplier effect in
terms of income. He added
that the industry is willing to
pay a good price for Horn
River acreage because of the
royalty and fiscal rates. With
these terms in place, Devon
can afford to hang onto its
Horn River acreage until
prices are more favorable.
Making the
economics work
Encana still is active in the
Horn River Basin despite
the low gas prices. Taylor
said the favorable terms have
allowed his company to take
a more orderly development
approach to its acreage,
resulting in incremental les-
sons learned that cumula-
tively help push down costs
and improve efficiencies.
The Horn River wells also
seem to have a lower decline
curve than their American
1 2 3
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BRI TI SH COLUMBI A
N. W. TERRI TORY
HORN RI VER BASI N
0 15 50 Km Fort Nelson
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Most acreage in the center of
the basin already is leased.
(Source: BC Ministry of Energy)
The top Horn River players by
acreage have claimed most of the
basin. (Source: PLSD Research, cour-
tesy of UGcenter.com)
Company Acreage
Apache Corp. 220,000
Devon Energy Corp. 100,000
Encana Corp. 260,000
EOG Resources Inc. 157,000
ExxonMobil Corp. 250,000
Nexen Inc. 88,000
Quicksilver Resources 127,000
Taqa North Ltd. 31,500
74
UNCONVENTIONAL:
HORN RIVER
counterparts, particularly the Haynesville. Haynesville
is a strong play for other reasons, he said. It just
changes the economic model you have. Youre going to
have a longer term, more consistent production rate out
of the Horn River wells as opposed to reaching payout
earlier. Encana has acreage both in the Barnett and the
Haynesville, he said, and the fact that the Horn River
endeavor continues to attract Encana money is a testa-
ment to its prolific potential despite its remoteness.
Encana also has the advantage of knowing the terrain,
having been involved in the conventional Jean Marie
play to the east, where keeping horizontal wells in zone
can be a bigger challenge. Taylor said the tools his com-
pany has been using to drill the Jean Marie carbonate
work fine in the Horn River shale, and despite the very
thick nature of the shale, the company applies the same
geology and geophysics as it does in the Jean Marie to
find the sweetest spots.
In the Jean Marie, weve been targeting layers of car-
bonate that are 3 to 5 m (9.7 to 16.3 ft) thick, he said.
We have a fairly well-established expertise in being able
to put the drill bit where we want it on a horizontal well
and keep it there over thousands of meters.
When the drillers moved over to the Horn River and
we said we had a 100-m (330-ft) package of shale all
you have to do is keep the drill bit in it they didnt
break a sweat.
Another big advantage for Encana is the fact that each
well pad can house as many as 16 horizontal wells, so the
company can keep a drilling crew busy and not have to
let it go every few months. We have what we call a level
load program, Taylor said. We dont move in and put
in five or six rigs and then decide we want to slow down
and go back to zero. The rig thats drilling for us now
moved into the field in October 2008.
Because of this consistency, Encana has seen tremen-
dous drilling efficiency increases. Taylor said in the
2007 time frame, it took more than a month to drill a
3,300-ft (1,000-m) horizontal leg. Now were consis-
tently taking wells out 2,500 to 3,000 m (8,152 to 9,783
ft) and getting them done in 20 to 25 days. On a per-
meter basis, were probably drilling these wells twice
as fast as we were three years ago. That just gets back to
our resource play model repeating what weve done
before.
Due to the northern climate, most operations in the Horn River
Basin are carried out during the winter months to avoid muddy
conditions. (Photo courtesy of Devon Canada)
www.escondido-resources.com
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Cudd Energy Services has the experience and reputation for
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+1.832.295.5555
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77
UNCONVENTIONAL:
HORN RIVER
You can focus on the small incremental changes
because you know youre going to drill another 300
or 400 wells. So its worth chasing.
The wild card
The Horn River Basin already has access to a pipeline
that moves the gas eastward toward
the large US and Canadian markets,
but it has trouble competing with
other shale plays (particularly the Mar-
cellus) that are closer to market.
But LNG might change the nature
of the depressed North American gas
market. If the overabundance of
North American gas could find its way
into other markets desperate for natu-
ral gas, market dynamics could change
significantly.
To this end, producers in the Horn
River have joined forces to build the
Kitimat LNG facility and the Pacific
Trail Pipeline. EOG Resources Inc.
and Apache Corp. advanced the idea
and were later joined by Encana.
The LNG facility will be built on
Bish Cove about 400 miles (650 km)
north of Vancouver. It will be built on
First Nations land under a partnership
with the Haisla First Nation. The ini-
tial phase has a planned capacity of
about 700 MMcf/d. The pipeline will
run from Summit Lake, British Colum-
bia, to Kitimat.
Marketing discussions already are
under way with potential Asia-Pacific
LNG customers. Shipments are
expected to begin in 2015.
This development has the potential
to significantly alter the dynamics of
further Horn River Basin develop-
ment. Mark Papa, CEO of EOG, gave a
presentation in fall 2010 that included
comments on his companys Horn
River activities.
In my opinion, if any LNG export
plans are built in North America, Kiti-
mat is the most likely to happen, he
said. Our Horn River development is
an oil project because we expect the
gas to be sold at an oil index price.
If the balance tips in favor of Horn
River gas, the field will be able to com-
ply for decades to come. De Leeuw said it probably
would be impossible to go full bore on the field due to
physical and personnel constraints, but even if the field
was developed full out, it would have at least 20 years of
production capacity.
Its a resource for many years to come, he said.
Cleaner fracs
through
chemistry.
Introducing the N atu ra Li ne
Process and Products from Multi-Chem.
Multi-Chem has developed NaturaLine'" , a product line and
product evaluation process that provides environmental
solutions for your toughest completion challenges.
The NaturaLine products - biocides, friction reducers .
scale inhibitors and surfactants - can reduce waste
disposal and water treatment costs, and even
chemical usage amounts. These custom-
desi gned products reduce toxicity in your frac
fluids, produced fluids and flowback fluids.
With the NaturaLine process, Multi-Chem
works with operators to develop specialized,
cost-effective chemical completion solutions to
protect your well throughout its life cycle.
Ever quizzed about the make-up of your chemical program?
With Multi-Chem, the answers are easy. For the most
effective way to select completion chemicals, visit our
website at www.multichem.com/NaturaLine.
eat
OCopyrghl 2010. All rights mitmed.
70-78 Uncon-HornRiver_Layout 1 4/18/11 2:28 PM Page 78
H A R T E N E R G Y
Go Beyond the Press Release
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(and what it means for your business).
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Exploration
Allen Bertagne
Mike Forrest
Dave Monk
Completions
George King
Carl Montgomery
Dave Cramer
Remediation
George King
Mike Ming
Cheryl Stark
Drill Bits
John Thorogood
Hani Sadek
Doug White
Formation Evaluation
Mike Allison
Bob Hardage
Lanny Schoelling
Stimulation
Sandra Cobianco
Dave Cramer
Carl Montgomery
Facilities
Ken Arnold
Bill Pike
IOR/EOR
Mike Ming
Scott Wehner
David Zornes
Drilling Tools
Joseph Crouch
Bob Sears
John Thorogood
Production Technology
Mike Allison
Svein Tollefsen
Lanny Schoelling
Intelligent Systems
Randy Clark
George King
Cindy Reece
Drilling Fluids
Ben Bloys
Sandra Cobianco
Doug White
T
he E&P editors and staff proudly present the winners of
the prestigious 2011 Special Meritorious Awards for Engi-
neering Innovation. The pages that follow spotlight the 11
awards the independent team of judges picked as best of the
2011 crop of entries. The winners reached across a broad
range of disciplines and addressed a number of problems
that posed roadblocks to efficient operations. The resulting
technologies opened new and better avenues to the compli-
cated process of finding and producing hydrocarbons
around the world.
This year, some of the brightest minds in the industry
from service and operating companies submitted entries
representing better technology and new techniques for
judges to consider.
The award program honors engineering excellence and
achievement in every segment of the upstream petroleum
industry. It recognizes new products and technologies that
offer innovation in concept, design, and application.
Winning entries represent techniques and technologies
that are most likely to solve costly problems and improve
exploration, drilling, production, facilities, and IT efficiency
and profitability. The people and companies that submitted
the entries realize the oil- and gas-producing industry
depends on new, better, and constantly changing technolog-
ical innovation to continue producing low-cost oil and gas
from smaller and deeper reservoirs to feed an increasingly
energy-thirsty world.
Contest judges chose the winners, but there were no losers
in this contest.The products chosen represented the best of
a long list of winners.
The expert panel of judges included engineers and engi-
neering managers from operating and consulting compa-
nies worldwide. They applied their expertise in areas in
which they specialize. Judges were excluded from categories
in which they or their companies had a business interest.
E&P would like to thank these distinguished judges for
their efforts in selecting the winners in this years competition.
As in past years, E&P will present the 2011 awards at the
Offshore Technology Conference in Houston, Texas, on
May 2, 2011.
An entry form for the 2012 Special Meritorious Awards
for Engineering Innovation contest is available on the maga-
zines website at www.EPmag.com. The deadline for entries
for 2012 is Dec. 31, 2011.
2011 MEA J UDGES
Judges choose top 11 industry projects
79-86 MEAs 2011_79-86 MEAs 2011 4/18/11 1:30 PM Page 79
80
MERITORIOUS AWARDS
FOR ENGINEERING INNOVATION
COMPLETIONS WINNER
BAKER HUGHES | EQUALIZER SELECT WITH MULTITASKING VALVE TECHNOLOGY
Completions design reduces fluid velocity and erosion effects
Using an inflow control device (ICD) allows uniform
inflow across the entire horizontal well bore, which miti-
gates early water or gas coning.
The Baker Hughes Equalizer Select ICD reduces fluid
velocity and erosion effects while exhibiting extremely
low sensitivity to production fluid viscosity. It is adjustable
for various flow restrictions based on the latest logging
data and reservoir modeling prior to completion. The
design also eliminates the need for an inner string dur-
ing installation, allowing circulation through the liner
while running in the hole as well as setting the hydraulic
openhole packers.
A temporary valve system incorporated into the ICD
design provides pressure integrity in the liner until the
upper completion has been installed. Once the upper
completion is in place, the valves are triggered hydrauli-
cally with applied pressure in the production tubing and
opened mechanically by spring force, allowing the ICDs
to be reconfigured into the production mode.
In the Middle East, Baker Hughes Inc. installed an
openhole completion deployed on a slotted liner packer,
which consisted of a series of 4-in. Equalizer CF ICDs
with multitasking valves to set MPas packers in a 61/8-in.
openhole sidetrack. The multitasking valve technology
provided the customer with its first ever run of the upper
completion assembly in the field without battling huge
fluid losses during the entire process. By eliminating the
need for the inner string, the customer was able to
reduce the risk associated with handling and the makeup
of the smaller string of pipe.
The Equalizer Select ICD with multitasking valve technology com-
pletions design allows uniform inflow across the entire horizontal
well bore.
DRILL BITS WINNER
BAKER HUGHES | KYMERA HYBRID BIT TECHNOLOGY
As operators strive for reserves in more difficult,
demanding applications, drilling to reach them has
become an even greater challenge. Complex well pro-
files, hard and interbedded formations, and rig or equip-
ment limitations increase the potential for shorter runs
and expensive tool damage.
Kymera hybrid drilling technology is a coalescence of
roller-cone and PDC bits into a single, patented design.
Combining the cutting superiority and continuous scrap-
ing of diamond bits and the strength of roller cones, the
repairable bit can survive highly interbedded formations
with smooth drilling and toolface control.
Compared to PDC bits, Kymera bits have lower and
more consistent drilling torque, better dynamics and
directional control, improved durability and reliability
in interbedded formations, and less torsional vibration
(stick/slip). Compared to traditional roller-cone bits, the
new hybrid bits have increased ROP potential, minimal
axial vibration (bit bounce), and lower weight-on-bit
requirements.
The bit has been proven
in the field. In Western
Oklahoma, an operator
needed to reduce the num-
ber of days on the well and
increase the number of
wells per year. The highly
interbedded target interval
the Des Moines through
Atoka shale formations
typically requires 82 days to
reach total depth.
For the interval, Kymera
exhibited increased ROP
and footage over both the
roller-cone and PDC bits.
The hybrid technology cre-
ated a much more efficient
drilling environment, ulti-
mately providing significant savings for the operator by
shaving 25 days off the average well performance and
40% cost-per-foot savings.
The Kymera hybrid drill bit can
drill interbedded formations
while exhibiting optimum
downhole dynamics.
Hybrid bit bridges the gap
79-86 MEAs 2011_79-86 MEAs 2011 4/18/11 1:30 PM Page 80
81
MERITORIOUS AWARDS
DRILLING FLUIDS WINNER
NEWPARK DRILLING FLUIDS | EVOLUTION DRILLING FLUID SYSTEM
New water-based drilling fluid for harsh shale environments
Diesel oil-based mud (OBM) has been the fluid of choice
for emerging shale gas plays in North America where high
bottomhole temperatures and high pore pressures are
encountered. Although OBM provides shale-stabilizing
attributes and contaminant resistance, it also has short-
comings, including ancillary OBM disposal, haul-off and
clean-up costs, and environmental liabilities.
Conventional water-based fluids historically have failed
in extreme conditions, causing costly fluid maintenance
issues. Furthermore, lubricity and drilling rate limita-
tions often fall short of OBM capabilities.
Newpark Drilling Fluids introduced the Evolution
drilling fluid system in 2010 as an eco-appropriate solu-
tion to the harsh demands of horizontal shale wells. The
new water-based system has addressed issues including
environmental impact, logistics and disposal issues, and
incremental operational cost while providing extreme
HP/HT lubricity, contaminant resistance, and improved
ROPs with enhanced rotating and sliding performance
over OBM applications.
The Evolution system was used in a Barnett shale
application by a major independent operator that
wanted to address operational problems experienced
with an existing water-based system on an earlier well.
The new drilling fluid system saved the operator 25 days
on location.
Originally developed specifically as an OBM alternative
for Haynesville shale applications, the systems Barnett
application confirms its viability as a drilling solution for
unconventional shale development wells in other plays.
DRILLING TOOLS WINNER
SCHLUMBERGER | SONICSCOPE MULTIPOLE SONIC-WHILE-DRILLING SERVICE
In a fast formation, a monopole tool can deliver shear
slowness (1/velocity) since it is lower than mud slowness.
When shear slowness is larger than mud slowness, a
quadrupole tool is needed to provide the shear measure-
ment. The Schlumberger SonicScope multipole sonic-
while-drilling service is a new LWD service that provides
multipole measurements to
deliver consistent and reliable
compressional and shear data.
It is the only service with a dedi-
cated mode for acquiring
Stoneley waveforms while
drilling, which ensures high-
quality data before washouts
can develop.
The service combines mono-
pole and quadrupole measure-
ments to deliver data in a range
of applications, regardless of
formation slowness. These data
are fundamental to pore pres-
sure monitoring and wellbore
stability evaluation, especially
when drilling in deep water.
Since 1987, Petrom has tested various stimulation and
completion measures to improve production from the
Leb da Est field offshore Romania. Average porosity is
between 15% and 20%, and average permeability is 0.8
md. Microfractures and intergranular porosity connect
zones with good porosity in mainly calcareous reservoir
formations.
By 2008, Petrom had not
been able to achieve more than
approximately 115 boe/d per
well. The low-permeability reser-
voir rock required hydraulic
fracturing, fast, efficient post-
drilling reservoir characteriza-
tion, and natural open fracture
detection.
The first well drilled with the
advanced LWD system was built
in a single run during five days
in August 2009, and its approxi-
mately 4,395-ft (1,400-m) drain
section delivered a peak of more
than 1,000 boe/d from three
fracture stages.
The SonicScope LWD service delivers robust real-time
multipole sonic information for advanced drilling
optimization and formation evaluation.
Advanced LWD tool improves ROP
79-86 MEAs 2011_79-86 MEAs 2011 4/18/11 1:30 PM Page 81
82
MERITORIOUS AWARDS
ENHANCED OIL RECOVERY WINNER
BRINKER TECHNOLOGY LTD. | PLATELET BARRIER TECHNOLOGY
Platelet technology seals leaks, increases production
A newly introduced rigless thru-wellhead workover solu-
tion can bring online in a matter of hours approximately
40% of the worlds oil wells that have been shut in or are
performing poorly.
Brinker Technology Ltd.s Platelet Barrier Technology
is compact, easy to deploy, and can increase production
more efficiently than traditional methods. In the time it
would take to plan one rig workover, the new technology
can address integrity issues in more than 100 wells, rap-
idly restoring production and releasing limited rig
resources for workovers or drilling new wells.
Inspired by the human bodys response to cuts and
wounds, the technology uses sealing particles known as
Platelets contained within a viscous carrier fluid that is
pumped downhole through the wellhead to the leak site.
The operator can control the carrier fluid to ensure it is
positioned at the leak site where it is extruded through
the hole. The suspended Platelets gather together and
seal the leak. The entire process can be completed in less
than three hours.
In Alaska, platelet barrier technology repaired five
leaks in four days, enabling the operator to increase pro-
duction by an estimated US $100,000/day. The solution
was achieved without having to excavate and remove the
surface conductor or pull the tubing and cut and pull
the casing.
EXPLORATION TECHNOLOGY WINNER
GEOTRACE | BANDWIDTH EXTENSION
When imaging deep objectives, it is common to be
unable to resolve beds that are less than 80 ft (24 m)
thick. Bandwidth extension (BE) from Geotrace changes
that. By extending the signal spectrum by a full two
octaves on most seismic data, beds that are 15 to 20 ft
(4.6 to 6.1 m) thick now can be mapped.
BE uses the continuous wavelet transform (CWT) to
perform a time series analysis of seismic traces that
decomposes them into their respective amplitude and
phase components in both frequency and time. Using
fundamental frequencies, their harmonics are predicted
to extend the upper end of the spectrum and sub-har-
monics to extend the lower end. While still in the CWT,
these harmonics are convolved with the input trace. If
there is signal present in the data that corresponds to the
harmonic frequencies, it is enhanced. Any harmonic or
sub-harmonic frequencies that do not correspond to sig-
nal in the data fall out of the spectrum.
BE can be used as a standalone tool, or data can be input
to inversion processes that predict acoustic impedance or,
in the case of prestack inversion, compressional-wave veloc-
ity, shear-wave velocity, density, Youngs modulus, Poissons
ratio, brittleness, porosity, and more.
This innovation means better wells are being drilled.
Small faults can be mapped much more easily, sweet
spots in resource plays can be better defined, and thin
beds and pinchouts can be imaged. Success rates in sev-
eral plays have improved from about 30% to more than
90%, meaning the risk of drilling dry holes is almost
eliminated.
When compared to traditional seismic, BE datasets show much
higher resolution.
Platelets are adaptable for a
variety of leak scenarios and
have been field-proven to tem-
peratures from -40F to 302F (-
40C to 150C).
Technology images deep, thin formations
79-86 MEAs 2011_79-86 MEAs 2011 4/18/11 1:30 PM Page 82
83
MERITORIOUS AWARDS
FACILITIES WINNER
BAKER HUGHES | ECO-CENTRE
Eco-friendly facility purpose-built for processing waste
Cuttings removed while drilling comprise the single
largest volume of waste produced during the exploration
phase. To fully comply with continually evolving environ-
mental legislation, a simple extension and modification
of existing procedures is not enough.
The Baker Hughes Eco-Centre waste management
facility in Peterhead, Scotland, provides the North Sea oil
and gas industry with the highest level of environmen-
tally compliant waste processing services, from rig site to
final disposal.
The facility was purpose-built for solids and liquid
drilling waste and can process more than 33,000 tons of
drill cuttings and 3.7 million gallons of liquid waste
annually. Synergies from having separate waste streams,
using the energy captured from one stream to power the
other, saves energy and lowers the carbon footprint.
Baker Hughes Inc. also has developed the EcoLink
online remote monitoring software system to support the
waste processing facility. Customers can monitor drilling
waste around the globe, 24/7, with near-real-time data
on waste locations, tonnage, analysis results, and cumula-
tive costs through the WellLink DS Web portal to ensure
accessibility, accuracy, and accountability.
To allow future technology to be addressed, the Eco-
Centre houses the Fluids Environmental Services Global
Research and Development Center, providing a platform
for investigating technology that will be required within a
fully licensed site to allow trials to be carried out with
real waste material, including both drilling solids (cut-
tings) and slop fluids.
FORMATION EVALUATION WINNER
HALLIBURTON | GEOTAP IDS
In the past, operators required wireline operations to
obtain multiple fluid samples. Halliburtons GeoTap IDS
fluid identification and sampling-while-drilling sensor
and acquires samples within hours of drilling the forma-
tion instead of days, reducing the likelihood of borehole
damage and producing a less-contaminated sample.
Capable of being positioned anywhere within the LWD
bottomhole assembly (BHA), the GeoTap IDS sensor
extends a probe on command to establish a seal at the
borehole wall. Multiple drawdown tests then measure
formation pressure and calculate fluid mobility for sam-
pling, after which a surface command is sent to begin
pump-out operations.
Fluid vis diverted through a zero-shock chamber to a
series of conventional one-liter DOT-certified sample
bottles, with up to five one-liter bottles in each GeoTap
IDS sensor sample collar, which can be stacked to carry
15 samples or more.
Since the process is performed while drilling, data are
obtained in real time, and samples are available immedi-
ately when the
BHA returns to
surface. When a
sufficient quantity
of samples is col-
lected, the pump
is stopped and the
probe retracted.
The drilling opera-
tion is free to con-
tinue, leaving the
option of later
acquiring addi-
tional samples in
other zones.
The GeoTap IDS
sensor increases safety of drilling operations by providing
accurate formation data, which allow more accurate mud
weights to be used, minimizing the risk of fluid influxes
and/or lost circulation.
The GeoTap IDS sensor identifies fluid and
samples while drilling, eliminating the
need for wireline operations.
The Eco-Centre has
brought about a step
change in how the indus-
try handles and processes
its drilling wastes.
Tool samples while drilling
79-86 MEAs 2011_79-86 MEAs 2011 4/18/11 1:30 PM Page 83
84
MERITORIOUS AWARDS
IT WINNER
VERDANDE | DRILLEDGE
Software helps mitigate downhole problems
The DrillEdge system from
Verdande Technology uses
case-based reasoning (CBR)
techniques to monitor drilling
operations in real time and
provide a studied alternative
to gut feeling.
DrillEdge uses a library of
stored cases and continu-
ously compares each case
against a real-time data stream
from a well that is being
drilled. When a situation
looks similar to a past prob-
lematic case, the case is dis-
played on a radar screen
along with lessons learned, mitigation advice, and com-
pany best practices.
The radar screen provides an
intuitive interface that allows
drilling engineers to monitor
multiple wells simultaneously.
In the center of the screen, the
result of the CBR search for
past situations is shown on the
case radar. Here, each case that
is relevant to the current opera-
tion is displayed as a dot col-
ored according to the severity
of the situation it represents.
By clicking on a case, the
user can access more informa-
tion in text form. This informa-
tion typically contains a
summary of the incident, what actions were taken when
this case first occurred, lessons learned, and best practices.
PRODUCTION TECHNOLOGY WINNER
RESMAN | CHEMICAL TRACER TECHNOLOGY
Production scenarios increasingly are being characterized
by very complex wells in demanding and costly operating
environments. Obtaining vital reservoir and well surveil-
lance data is complicated by long horizontal wells, multi-
lateral completions, etc. In addition, reservoirs have more
complex subsurface structures with different physical
properties leading to uneven drainages and early break-
through of unwanted fluids such as water.
Resman chemical tracer technology acquires insight
into the inflow distribution in these challenging situations
without wireline, coiled tubing, or downhole tools and
without interrupting production. Tracer elements are
embedded in plastic inserts that are adapted to comple-
tion configuration and can be deployed in any type of
well, including horizontal and multilateral wells.
The deployment technology allows tracers to be inte-
grated into conventional completion hardware, where
they lie dormant until triggered by the arrival of oil or
water. When triggered, they dispense unique chemical
fingerprints into the flowstream that can be detected in
wellhead samples. Con-
centrations as small as
one part per trillion can
be detected, and because
each chemical has its own
signature, the tracers
point of origin can be
determined.
In the Tyrihans field off-
shore Norway, the opera-
tor needed to monitor
production to determine
if the entire lateral was
contributing and if water
was coning to points along
the laterals. Successful well cleanup also was essential.
Resman replaced sections of the predrilled liner with
screen sections containing tracer elements. This solution
offered sufficient insight into the inflow distribution with
zero operational risk and lower costs.
Tracer elements embedded in
plastic strips are inserted into
completion components before
they are run into the well.
DrillEdge compares stored drilling data to real-time
data to anticipate potential hazards.
Interventionless surveillance provides long-term solutions
79-86 MEAs 2011_79-86 MEAs 2011 4/18/11 1:31 PM Page 84
85
MERITORIOUS AWARDS
STIMULATION WINNER
BAKER HUGHES | OPTIPORT
Multistage frac completion system proves cost-effective
Multizone proppant fracturing of horizontal wells has
changed the economic landscape of the North American
oil and gas industry. In the Western Canadian Sedimen-
tary Basin, annular fracturing has taken hold, further
improving the economic viability of mature fields.
Baker Hughes has taken this technology a step further
with OptiPort, which combines ball-drop completions with
annular fracturing. The new technology reduces well com-
pletion costs and improves the value of the well. Since its
introduction in 2010, more than 1,000 zones have been
stimulated in more than 50 wells.
OptiPort contains fracture ports opened by a pressure-
activated valve; fracture ports replace perforations in a typ-
ical well bore. Once the ports are open, fracture
treatments are pumped down the wellbore CT annulus.
Each zone is treated sequentially, starting at the bottom of
the well. Subse-
quent zones are iso-
lated by
bottomhole assem-
bly run on CT.
In the Viking for-
mation in the Dods-
land area of
southwest
Saskatchewan, Canada, Penn West Energy applied four
horizontal fracturing techniques. The fourth technique
cemented monobore completions with OptiPort CT frac
sleeves with CT-deployed abrasive perforating and annular
fracturing systems using foamed Aquaclear was the most
cost-effective. The technique also reduced water consump-
tion by 36% compared to the other three techniques.
OptiPort combines ball-drop comple-
tions with annular fracturing.
79-86 MEAs 2011_79-86 MEAs 2011 4/18/11 1:31 PM Page 85
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87
C
ontrolled-source electromagnetics (CSEM) is an
emerging technology for marine hydrocarbon
exploration that has seen a variable degree of accept-
ance across the industry despite empirical results show-
ing that the success rate for exploration wells drilled on
prospects with a significant CSEM anomaly is as high as
70%, twice that of exploration wells drilled on prospects
with no or only weak CSEM. Part of the challenge for
this technology has been a lack of understanding on
how to integrate it with more traditional geological and
geophysical workflows.
A case study from the Norwegian Continental Shelf
(NCS) illustrates the potential of CSEM technologys
ability to identify new prospectivity in an explored basin.
Rocksource ASA is a young Norwegian E&P company
that focuses heavily on the use of CSEM technology and
its integration into the exploration work-
flow. In the APA 2009 licensing round
on the NCS, Rocksource was awarded
60% of license PL 559, where feasibility
studies have shown that the prospectivity
from several different reservoir intervals
should be feasible for de-risking with
CSEM data.
The new play concept
The Upper Triassic Grey and Red Bed
formations underlying the Jurassic Bt
Group previously were not considered
interesting targets for exploration,
although most of the discovery wells
have proven reservoirs and some oil
shows in this stratigraphic interval.
In recent studies, new prospectivity
has been defined where these strati-
graphic units play an important role,
not only due to the sandy reservoir
intervals, but also as a base sealing unit
for prospective hydrocarbon traps. The
presence of these Upper Triassic sands also could be the
key to hydrocarbon migration in areas where traditional
Jurassic carrier beds do not reach.
Proprietary CSEM and seismic data have been used as
part of an integrated approach to test and de-risk the
identified prospectivity.
Re-investigating an old prospect
In 2003, the PL 128 license acquired data that
indicated a CSEM response related to the Linerle
prospect. Well 6608/11-4 was drilled in 2004 and
proved an oil leg in the Tilje formation. This was
argued as a clear indication that CSEM technology
was able to de-risk prospectivity in the area. The
CSEM line also showed an elevated response to the
northeast of Linerle corresponding to the Valkyrie
prospect. Encouraged by these results, a further CSEM
survey consisting of several lines was acquired in this
area to test the Valkyrie prospect.
Well 6608/11-5 drilled the Valkyrie in 2006. Only very
small amounts of hydrocarbons were discovered, and it
This map shows the location of PL 559 (blue area) in relation to nearby fields and wells.
The acreage covered by PL 559 previously was part of PL 128. (Images courtesy of Rock-
source ASA)
CSEM identifies new
prospectivity in an explored basin
Electromagnetic data bring a fresh look to an old field.
Susanne Sperrevik, Jon Ivar Rykkelid,
Jonny Hesthammer, Daniel Cumming, Kate Berry,
Stephen Eaton, Christine Ekeli, Gregor Maxwell,
and Torolf Wedberg, Rocksource ASA
tech
WATCH
87-89 TechWatch-Rocksource_87-89 TechWatch-Rocksource 4/18/11 1:31 PM Page 87
was classified as dry by the operator. The well contains
insufficient hydrocarbons to explain the observed CSEM
anomaly, and the Valkyrie case was taken as evidence
that the CSEM tool was not applicable or at least chal-
lenging to apply in this area. Several of the lines showed
an elevated response over the prospect, but clear varia-
tions were observed
along the CSEM
lines. A model was
made where a highly
anisotropic layer was
introduced to explain
the results.
In the current
study, the published
data were compared
with seismic and well
data from the area.
This comparison sug-
gests that the Valkyrie
well was drilled south-
west of the main
CSEM anomaly.
This observation
applies for both the
basic normalized
data and for the
inversion results.
Since the published
information is limited
and the raw data were
unavailable, it was
too early to conclude
whether the observed
response represents a
major hydrocarbon-
filled target. These ini-
tial observations,
however, were suffi-
cient to encourage fur-
ther study.
Special studies were
carried out for both
the Linerle discovery
and the Valkyrie
prospect to assess
whether the observed
CSEM anomaly over
Valkyrie could be
explained by electrical
anisotropy or whether
the well simply missed the CSEM anomaly. These studies
show that it is highly unlikely that anisotropy can cause
the observed anomaly. However, a synthetic model with
a resistive hydrocarbon-filled target located just north-
east of the well at the target level in the older Triassic
Grey Beds gave a good match to the real data.
88
tech
WATCH
This image illustrates the CSEM (seabed logging) survey acquired over the Valkyrie prospect and the
elevated response over this prospect. To the left is a plot showing normalized data (top) and the inver-
sion results (bottom) along the Lo5n line (marked with a yellow line in the map). Well 6608/11-5 was
drilled after the Statoil publication, but its location has been marked with a red line in the cross sections
by the authors. In the map, both the Linerle and the Valkyrie wells are marked as blue-filled circles (all
lines and well locations have been added in this study).
The inversion results (2005, upper left well location and rotated normalized plot have been added in this
study) are consistent with the revised mapping and new CSEM inversion results from the Phoenix and
Amazon prospects (lower left). The electromagnetic results from different CSEM surveys are consistent with
geological mapping of the area (right figure).
At the Linerle prospect, a hydrocarbon-filled target is
needed to match the observed response in the real data,
although the expected response at the well location
likely is below detection level (the CSEM line is slightly
off the location of the well and covers areas that might
have a different hydrocarbon column thickness com-
pared to the well location). The study
also showed that a match between
synthetic models and real data can be
achieved without including
anisotropy at all, whereas significant
electrical anisotropy is more likely to
create a significant mismatch.
The results from these studies led
to a process that eventually resulted
in Rocksource being awarded PL 559
together with VNG Norge and Ska-
gen44. Subsequently, the license
holders acquired a new CSEM line
that tested both the extension of the
Linerle discovery to the east (named
the Phoenix prospect) and a new
prospect (Amazon) to the north and
east of the Valkyrie prospect. The
new CSEM data clearly show anom-
alies that match the lateral extent of
the Phoenix and Amazon prospects.
The observed anomalies across the
Phoenix and Amazon prospects are
consistent with the modeling of a
significant hydrocarbon-filled
target. The license owners have
decided to drill a well to test the
Phoenix prospect and obtain infor-
mation about the Amazon stratigra-
phy in 2011. The results from this
well will be invaluable for understand-
ing the observed responses in the
CSEM data.
Based on the significant scientific
interest related to CSEM data, con-
tractor EMGS has established a con-
sortium called EDDA. The purpose of
the EDDA project is to evaluate and
accelerate the use of 3-D CSEM data
in E&P. As a part of the consortium, a
large 3-D CSEM dataset recently was
acquired over this region. The good-
quality data should provide insight
into the geological complexity of the
area. Together with a well on the Phoenix/Amazon
prospect, the data are expected to lead to an increased
understanding of the potential of the CSEM
technology.
tech
WATCH
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New system provides accurate
wellbore pressure control
The Low Pressure AutoChoke Console (LPAC) from
M-I Swaco, a Schlumberger company, provides accurate
control during managed pressure drilling, underbal-
anced drilling, and other low-surface pressure opera-
tions. It allows operators to directly set and maintain the
desired backpressure on the well and allows adjustments
to be made using a touch-screen human-machine inter-
face (HMI) on either the local console or a standard
remote HMI near the driller. The LPAC and AutoChoke
units combine to provide precise, accurate wellbore
pressure control.
Primary components include the local hydraulic power
unit (HPU) console, which provides hydraulic power that
drives two AutoChoke units to the required set-point pres-
sures that directly control the backpressure held on the
well. The HMI on either the HPU console or the remote
version allows operators to control and adjust the set-
point pressures on two units and displays other operating
parameters, including casing and drillpipe pressures,
pump rates and strokes, and diagnostics.
The
LPAC system
includes
backup
power stor-
age devices
an internal air
tank, hydraulic accu-
mulator, and an unin-
terruptable power
supply. It can main-
tain power for more
than two hours after
loss of rig air and
up to one hour
after loss of rig
power. The
backup devices
work seamlessly,
enabling the choke
operator to continue operation without interruption in
control. www.slb.com/lpac
Mini servovalve enables high-density
design of motion control systems
Woodward HRT Inc. has introduced the compact Model
10M miniature servovalve, a small, lightweight servovalve
that provides precision flow and motion control. It is a
scaled-down single-stage, dual-nozzle flapper servovalve
for two-, three-, or four-way flow/pressure control appli-
cations, either hydraulically or pneumatically, for system
pressure ranging from zero to 1,000 psi.
Pressurized supply fluid enters the P port, flows
through two orifices, continues to two opposing nozzles,
and exits the T port. With no electrical command to the
valve, the flapper is centered between the nozzles, result-
ing in equal pressures at the A and B ports. An input
electrical signal to the coil polarizes the armature, caus-
ing it to pivot in relation to the permanent magnetic
fields in the torque motor frame. The flapper is moved
toward one of the two nozzles, causing differential pres-
sure on the A and B control ports.
The new servovalve features a mounting pattern
that is interchangeable with any standard ARP-490 Type
IB, 0.48-in. port circle and is adaptable to manifold
installations, with one common pressure supply and
return line for multiple servovalves. Electrical connec-
tion is through a highly flexible, strain-relieved four-lead
cable that uses parallel wiring for additional reliability.
www.r-ddv.com
Gas-detection instrument
is ideal for confined spaces
Industrial Scientifics Ventis MX4 multigas detector is a
lightweight, highly configurable instrument that is avail-
able with or without integral pumps and is compatible
with the iNet gas detection service. The Ventis detects
gases including oxygen, combustible gases (LEL or
CH
4
), CO, H
2
S, NO
2
, and SO
2
and is ideal for confined
space monitoring and/or continuous personal monitor-
ing in potentially hazardous environments.
In confined space applications, it can be used to draw
samples from up to 100 ft (30 m) with the integral
pump. The gas detector alerts users in dangerous condi-
tions through an audible alarm, ultra-bright LED visual
alarms, and a vibrating alarm.
An extended-range lithium-ion battery enables up to
20 hours of uninterrupted personal monitoring when
tech
TRENDS
The LPAC local HPU con-
sole provides hydraulic
power that drives two
AutoChoke units to the
required set-point pres-
sures. (Image courtesy
of M-I Swaco)
90-92 TechTrends_90-92 TechTrends 4/18/11 1:31 PM Page 90
91
used with the no-pump version. Overmold color options
also are available, including either black or safety orange
for increased visibility. www.indsci.com
AHC system eliminates vessel motion,
minimizes downtime
Scantrol AHC is an active heave compensation (AHC)
control system for winches and cranes used for subsea
operations. It includes a motion reference unit to meas-
ure vessel heave as well as pitch and roll motions. The
system controls the winch to eliminate vessel motion
being transferred to the load, even when operating in
rough sea conditions. It can adapt to varying load and
operating conditions to maintain safe and efficient com-
pensation without overloading the winches.
The system can perform safe and reliable AHC with any
winch or crane used for subsea operations. It can control
both electric and hydraulic winches and optimizes AHC
through continuous winch performance analysis. The sys-
tem is flexible and can be delivered in different configu-
rations, ranging from a control unit with a simple
operator panel or radio control to an advanced iSYM sys-
tem with multiple displays and data recorders.
The company has developed a toolbox to specify AHC
requirements and determine the optimum winch
design. It helps the winch designer identify critical fac-
tors and minimize power consumption. Its toolbox
includes software for data logging and for monitoring
AHC performance. www.scantrol.no
Tablet PC increases productivity
Motion has introduced the CL900, a small form-factor,
rugged tablet PC with a flexible feature set that enables
access to and use of data while mobile. The tablet can
withstand harsh conditions while enabling real-time col-
laboration and access to information. Advanced durabil-
ity, connectivity, and mobility features include:
Up to eight hours of battery life;
Lightweight and rugged design 2.1 lb and less than
16 mm thick that offers the protection of the MIL-
STD-810G specification (4-ft or 1.2-m drop test);
IP-52 rated exterior to protect against dust, mois-
ture, and other elements;
Optional integrated Gobi 3000 mobile broadband
with GPS, 802.11 a/b/g/n WLAN, Bluetooth 3.0,
and a wireless SIM port for advanced communica-
tions; and
Corning Gorilla Glass display for added durability
and scratch resistance and DuPont Vertak to
improve visibility in various lighting conditions.
The tablet offers several optional features and connec-
tivity ports to improve functionality, including front and
rear-facing cameras to support documentation, video
conferencing, and collaboration; a full complement of
ports to simplify the use of industry standard peripheral
solutions; and a countertop docking station that opti-
mizes the PC for touch input and a way to integrate
peripherals. The CL900 is expected to be available in
early 2Q 2011. www.motioncomputing.com
Multiphase flowmeter improves
reservoir performance management
Shell and Krohne have released a new multiphase
flowmeter for oil and gas field installations based on
magnetic resonance technology. The new flowmeter
was developed through R&D collaboration between
Shell and magnetic resonance specialist Spinlock.
Offering a simpler, less expensive, and more accurate
solution, the flowmeter addresses the need for enhanced
flow measurements to optimize well and reservoir man-
agement. It operates across the entire gas volume fraction
range and does not require frequent recalibration. The
meter fits around pipe to mitigate internal restrictions
and does not use radioactive sources. www.shell.com
Ashley E. Organ, Associate Editor
tech
TRENDS
The basic AHC system can include several advanced options.
(Image courtesy of Scantrol)
This biennial event will take place for e first
time 4-6 October, 2011 in Rio de Janeir t the
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93
SPECIAL REPORT:
BRAZIL
B
razil is discovering billions of barrels of presalt
oil at a dizzying pace, becoming an oil power-
house and attracting international attention. Poten-
tial reserves estimates for the string of Brazilian
presalt oil discoveries range from 50 to 100 Bbbl.
The countrys proved reserves as of December 2010
stood at 15,986 Bboe.
Petrobras president Jos Sergio Gabrielli says Brazil
is working to become the fifth-largest oil producer in
the world. Petrobras plans to more than double daily
output to 5.7 MMbbl by 2020.
The company will spend US $220 billion through
2014 executing the worlds largest oil-industry invest-
ment plan. In 2011, $4 billion will be spent in the largest
exploration campaign in the companys history, which
includes 162 wells, twice the average number of
drilling projects over the last few years. In fact, the
boom in Brazils offshore oil industry began in the
1970s thanks to huge discoveries of turbidite reservoirs
(post-salt) in the Campos Basin offshore Rio de Janeiro.
Today, the Campos Basin produces approximately 80%
of Brazils output, including 50% of the countrys natural
gas. Unfortunately, the Campos Basins post-salt crude is
heavy and is declining. On the giant Marlim field, which
has been producing for 20 years, production declined to
less than 300,000 b/d in 2010 from 645,000 b/d in 2002.
As these fields mature, the basin is gaining a second lease
on life with new presalt light oil discoveries.
Key players in the carbonate
The Tupi field discovered by the consortium operated
by Petrobras (65%), BG Group (25%), and Petrogal/
Galp (10%) in the Santos Basin in October 2006 set the
wheels in motion for what now is a huge prospect for
development that is expected to transform the country
into an oil-producing giant. Because Brazilian law
requires oil fields be named after a fish, the field was
renamed Lula (squid) in 2010.
The largest hydrocarbon find in the world since 2000,
Lula, which lies 155 miles (250 km) from the coast of
Rio de Janeiro, holds estimated recoverable reserves of
5 to 8 Bboe. Eleven exploratory and development wells
have been drilled to date.
To achieve the 100,000 b/d target for the first phase of
the Lula Pilot project, there will be six or seven produc-
ers, one gas injector, one water injector, and one water
alternating gas (WAG) injector. Eventually, there will be
nine producing wells, one gas injector, two WAG injec-
tors, and three water injectors connected to the Cidade de
Angra dos Reis floating production, storage, and offload-
ing vessel (FPSO) through individual flowlines.
Today, the RJS-660 and RJS-665 wells are producing
around 15,000 b/d, although the potential of RJS-660 is
estimated at more than 20,000 b/d. Production is con-
strained due to the impossibility of flaring all of the asso-
New discoveries bring
new challenges offshore Brazil
As exploration efforts continue to find additional presalt reserves, R&D dollars are pouring into
technology development that will allow safe and efficient production.
The Tupi field holds approximately 5 to 8 Bboe of
reserves. Iara holds approximately 3 to 4 Bboe.
(Source: Agncia Petrobras de Notcias)
Jean Marlin, Contributing Editor
93-99 Brazil-overview_93-99 Brazil-overview 4/18/11 1:31 PM Page 93
94
ciated gas. All associated gas that is not used to improve
oil recovery is sent to the Mexilho platform via an
18-in. diameter, 134-mile (216-km) gas pipeline called
Tupi-Mexilho.
From the platform, gas is transferred through another
gas pipeline to the Monteiro Lobato gas treatment unit,
also known as UTGCA, in Caraguatatuba in So Paulo
State. There, it will be processed, compressed, then
delivered to the Caraguatatuba-Taubat onshore gas
pipeline (GASTAU) which will be interconnected with
the southeast transportation pipeline network.
This route will be in place in 2011 and will be able to
evacuate up to 10 MMcm of gas from presalt projects in
2013. Additional routes for gas from presalt fields are
under study. These include a new gas pipeline to Cabiu-
nas, in Rio de Janeiro, and the use of floating LNG.
There are two wells planned for Cernambi field (for-
merly Iracema) in BM-S-11 block. One is being drilled,
and work on another is expected to start in 2Q 2011.
Petrobras has filed the Declaration of Commerciality
SPECIAL REPORT:
BRAZIL
Petrobras to build more FPSOs
F
loating, production, storage, and offloading vessels
(FPSOs) are the production units of choice offshore
Brazil. Petrobras and partners have committed to 12 addi-
tional units. The first two FPSOs will be chartered, one for
the Guar area and the other for the Lula field. Each will
have a processing capacity of 120,000 b/d of oil and 5
MMcm/d of gas. Two FPSOs will be chartered for Guar
North and the Cernambi field as well. Six of the remaining
FPSOs will belong to the BM-S-11 consortia (Lula, Cer-
nambi, and Iara), and two units will belong to BM-S-09
(Guar and Carioca).
Processing plants in each FPSO will be able to separate
the CO
2
stream and reinject it in the reservoir. Processing
capacity will be 150,000 b/d of oil and 6 MMcm/d of gas.
Repsol and Galp Energia have joined an effort initiated
by Petrobras and BG Group to develop an onboard natu-
ral gas liquefaction unit (ONGU) to operate in blocks BM-
S-09 and BM-S-11.
NSAI CERTI FI ED
Netherland, Sewell & Associates , Inc. is one of the most
respected names in independent reserves reporting. We
provide petroleum engineering and geoscience consulting
services to clients worldwide. Each evaluation is based on
technical expertise , sound professional judgment , and
years of experience.
With NSAI , you get our team of experts and a reliable ,
respected report.
NETHERLAND , SEWELL & ASSOCI ATES , INC.
More companies pick NSAI for their SEC reserves Dallas 214 .969.5401 Houston 713.654.4950
report ing than any other consulting firm. www .netherl andsewel l . com
( based on most rece nt John S. Hero l d, Inc. sur vey) info@nsai-petro.com
IL
I'M
f/
If
R
?
-
-!
' %
?;'
with the Agncia Nacional do
Petrleo, Gs Natural, e Biocombustveis (ANP) for the
accumulations of light oil and gas in the Lula and Cer-
nambi areas.
Two wells have been drilled in the Iara exploratory
area in the northern part of BM-S-11 block. They are tar-
geting the same formation as the wells on Cernambi at
18,045 to 19,685 ft (5,500 to 6,000 m) total vertical
depth subsea. Evaluation activity will continue on Iara in
line with the ANP-approved appraisal plan.
Franco, a field northeast of Iara, is considered the sec-
ond-largest find in the presalt, with an estimated 4.5
Bbbl of reserves. The single nonproducing well in this
area was drilled as part of the governments plan to eval-
uate presalt areas before launching new bid rounds.
95
The Cidade de So Vicente FPSO recently
was moved to the northeast side of the Lula
field in the Santos Basin and is producing
15,000 b/d. Production capacity on the
FPSO is 30,000 b/d of oil and 1 Mcm/d of
gas. The long duration test will collect tech-
nical information for the development of the
reservoirs in the basin. The information will
define the development model for the Tupi
area as well as for other presalt accumula-
tions in the sedimentary basin. (Image cour-
tesy of Agncia Petrobras de Notcias)
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Two wells have been drilled in the Guar exploratory
area in Block BM-S-09, and two more are under way.
The first two wells are producing via the Dynamic Pro-
ducer FPSO. An additional four wells have been drilled
in the Carioca exploratory area, also in Block BM-S-09.
And one well has been drilled in the Jpiter exploratory
area in Block BM-S-24, with another planned for later
this year.
In February 2011, Petrobras announced its latest San-
tos Basin presalt discovery in Block BM-S-10. The Macu-
nama well was drilled in 7,001 ft (2,134 m) water depth
in the 1-RJS -617D (Parati) assessment area.
SPECIAL REPORT:
BRAZIL
Onshore Brazil
gets a second look
By Ashley E. Organ, Associate Editor
I
n the past, oil and gas opportunities onshore Brazil have
been overshadowed by the countrys vast offshore
resources. Although onshore resources represent only 10%
of Brazils total proven oil reserves, the 1.4 Bbbl in esti-
mated reserves is significant. Recently there has been a
strong campaign led by associations of small to medium-
sized independent operators for the Agncia Nacional do
Petrleo, Gs Natural, e Biocombustveis (ANP) to offer
onshore areas currently under concession to Petrobras to
smaller companies.
Initial exploration
Brazils onshore frontier region includes 14 promising
basins that cover approximately 1.5 million sq miles
(4 million sq km) equivalent to more than twice the area
of all other South American countries combined. The
large interior areas with petroleum potential the Acre,
Solimes, Amazonas, Paran, Parnaba, and So Francisco
basins are vastly underexplored primarily because of
their size, remoteness, and geological complexities.
These regions all exhibit oil or gas seeps.
In 1939, a small oil accumulation discovered near Sal-
vador City in northeastern Brazil initiated the first phase of
oil exploration in the country. Only 10% of Brazils onshore
sedimentary basins have been explored, mostly in the
north/northeast during the late 1950s through the 1990s.
During that time, 201 fields were discovered. A few indi-
vidual oil fields contain original reserves of more than 400
MMboe, but more than half produced less than 1 MMboe.
Little activity has occurred in the interior basins since then.
Smaller companies join the mix
Since 1999, the ANP has held four bid rounds offering 157
areas 40 onshore and 117 offshore. Only 87 exploration
licenses were granted 27 onshore and 60 offshore.
Since onshore investments are relatively small com-
pared to those offshore, small to medium-sized inde-
pendents are ideal candidates to develop mature fields
and target other exploration opportunities onshore.
Petrobras still is the dominant player and plans to dou-
ble the number of onshore wells drilled by 2012.
Using the Canadian oil and gas market as a reference
model, both Petrobras and ANP are pushing to offer
onshore blocks to small companies. According to Indus-
try Canadas website, the Canadian oil and gas market
comprises predominately small and medium-sized com-
panies that are positioned strategically throughout the
value chain and generally interact with larger corpora-
tions, providing solutions in manufacturing and services.
Together with Petrobras, smaller investors will help Brazil
diversify its upstream industry.
Using the area per well drilled as a measure of the exploratory
effort to date, all basins listed are considered frontier basins.
(Source: American Association of Petroleum Geologists Interna-
tional Conference and Exhibition presentation)
Wells Drilled in Onshore Basins
Basins Basin area Number Sq km
(sq km) of wells per well
Parecis 355,400 2 177,700
So Francisco 379,357 4 94,839
Alto Tapajs 80,400 0 80,400
Parnaba 668,858 33 20,268
Acre 150,000 11 13,636
Pantanal 87,700 8 10,963
Paran 1,127,400 128 8,808
Tacut 12,500 2 6,250
Amazonas 615,600 168 3,664
Maraj 53,000 16 3,313
Solimes 480,000 147 3,265
Tucano Central,
Norte e Jatob 28,500 24 1,188
Tucano Sul 7,000 96 73
Recncavo 10,359 1,038 10
97
In early June, Petrobras plans to begin producing
35,000 b/d from the Urugua and Tambau fields, also
in the Santos Basin.
Recent activity
Petrobras presalt E&P department reported that an
extended well test (EWT) of a presalt reservoir called
Tracaj, in the Marlim Leste field in the Campos Basin,
began in February 2010. An oil reservoir was discovered
with well 6-MLL-70 at 14,573 ft (4,442 m) depth in Sep-
tember 2010.
According to Petrobras, the purpose of the EWT in
the 6-MLL-70 well is to study the reservoir and design
the areas production development project. Last Decem-
ber, Petrobras began a similar test at an accumulation
known as Carimb in the presalt layer of the Caratinga
field concession west of South Marlim field.
Recently, Petrobras completed two new wells in
the presalt layer north of the Campos Basin offshore
Esprito Santo State, proving a light oil (30 API) discov-
ery in Parque das Baleias (Whale Park). The recoverable
volume of the discoveries made in the presalt reservoirs
of the Baleia Franca, Baleia Azul, and Jubarte heavy oil
fields is estimated between 1.5 and 2 Bboe. The excel-
lent results achieved by these two wells led Petrobras
to expedite studies to accelerate presalt production
in the basin.
Wells 6-BFR-1-ESS and 6-BAZ-1DB-ESS, drilled a few
kilometers from the two presalt wells, discovered
reserves under a layer of approximately 2,297 ft (700 m)
of salt in water depths ranging from 4,423 to 4,678 ft
(1,348 to 1,426 m). The reservoirs are 13,780 to 15,748
ft (4,200 to 4,800 m) below sea level and have oil-bear-
ing porous thicknesses of 623 and 984 ft (190 and 300
m), proving the major potential of the discoveries.
So far, six presalt wells have been drilled and all have
hit oil and gas. These new discoveries have pushed the
total estimated volume of oil in the Parque das Baleias
area to 3.5 Bboe. Petrobras also is preparing to bring the
nearby Cachalote field onstream where production is
expected to reach 100,000 boe/d this year. By 2015, the
company expects Parque das Baleias to produce between
400,000 and 500,000 boe/d with presalt reserves making
up approximately 40% of the increase.
Not all of Brazils latest significant discoveries have been
in the presalt. At year-end 2010, Petrobras announced a
post-salt light oil discovery Esprito Santo Basin, the third-
largest oil and gas-producing basin in Brazil. Drilled to a
total depth of 6,988 ft (2,130 m), the 1-BRSA-882-ESS well,
informally known as Indra, lies about 87 miles (140 km)
offshore Vitria, the capital of Esprito Santo State.
Estimates place the fields potential at 300 MMbbl
of oil.
Technology, logistics
When Petrobras began drilling in the presalt, there
were many skeptics because of the enormous technology
challenges. Petrobras continues to fund R&D efforts
through its world-class R&D center, Centro de Pesquisa e
Desenvolvimento Leopoldo A Miguez de Mello (Cenpes).
The Mature Fields Recovery Enhancement Program at
Cenpes reports that, on average, the oil recovery factor
is 35% in mature fields that have reached their produc-
tion peak and have gone into decline. With such an enor-
mous volume of reserves at stake, efforts are targeting
enhanced oil recovery for mature fields. The Advanced
Oil Recovery Technology Program at Cenpes is working
on technology that it hopes will make possible a recovery
factor of 50%.
Production is one major challenge; logistics is
another. In the presalt discoveries, we have two kinds
of logistical problems, Gabrielli explained at a press
conference. The first is about people, which is a prob-
lem of distance. In the Campos Basin, currently our
main producing area, we transport more than 60,000
people to the platforms 150 km (93 miles) offshore by
helicopter. But the presalt clusters in the Santos Basin
can be 300 km (186 miles) away, too far for large-scale
helicopter transportation.
One solution for improving transportation is to build
offshore platforms midway between the coast and the
presalt discoveries to serve as logistical hubs with sleep-
ing quarters so workers arriving by boat can be distrib-
uted by helicopter to the operating rigs and platforms
after overnight stays on the logistical hub.
Because supply delivery is an issue as well, additional
platforms could be dedicated to materials transfer. You
need transportation of chemicals, machines, plus elec-
tricity, Gabrielli said. We probably will have specialized
platforms dedicated to generating electricity and others
to mix chemicals for drilling fluids.
Meanwhile, Petrobras is working to reduce the num-
ber of people working on the platforms by increasing
the level of automation in the field.
One Cenpes initiative to address this challenge is to
develop automated processing plants to separate oil,
gas, and water on the seabed. Our target for the next
10 years is to not need production platforms, Carlos
Tadeu Fraga, director of Cenpes, told the business news-
paper Valor Econmico.
Cenpes envisages processing units capable of working
at 6,562 ft (2,000 m) water depth. Remotely monitored
SPECIAL REPORT:
BRAZIL
93-99 Brazil-overview_Layout 1 4/18/11 2:33 PM Page 98
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99
SPECIAL REPORT:
BRAZIL
subsea electrical generators would power the units
tasked with pumping oil and gas through pipelines that
would move production flow to gathering stations and
terminals on the coast.
A more immediate goal, according to information pro-
vided by Petrobras presalt E&P department, is to sub-
stantially reduce drilling and completion times and to
optimize material specifications for wells. Effective use of
the most modern rig designs will be important in achiev-
ing this objective, as will improved bit designs.
Riser qualification also will be critical. Flexible riser
qualifications for production or gas and water injection
are under way. Also crucial will be guidelines for installing,
monitoring, and operating uncoupled riser systems, as
well as flow assurance, considering wax deposition risks.
So far, the experience in presalt operations suggests
that technologies also should allow the predictability of
fluids distribution (lateral and vertical variation), includ-
ing contaminants.
This must be supported by reservoir quality predictabil-
ity based on high-resolution seismic, special seismic pro-
cessing, velocity seismic profiles, well logging (nuclear
magnetic resonance and image logs), well cores, lateral
samples, fluid sampling, drillstem tests, long duration
tests, and integrated geological modeling (including the
reconstruction of the depositional environment).
Reservoir management will be vital as well and will
have to include reservoir monitoring through produc-
tion logs and 4-D seismic; injection optimization on a
reservoir basis, including the use of intelligent comple-
tion devices; controlling the injection front by designing
the drainage plan to reduce the chance of fluid channel-
ing through high-permeability layers or conductive
faults; mitigating hydrate potential in satellite injectors;
and water injectivity.
One technology that likely will be put to work on the
presalt fields is subsea gas processing that will allow CO
2
separation from the gas stream and reinjection in the
reservoir. Reportedly, a hub concept is being considered
in which input from neighboring production units
would be sent to a single location for processing. The
hub platform would separate the CO
2
stream, which
would be reinjected into the reservoir, and send hydro-
carbons on to market through gas pipelines.
Petrobras foresees enormous expansion over the life of
the presalt fields and is investing over the long term in
technologies that will help the company extract the most
value from its vast reserves.
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SPECIAL REPORT:
BRAZIL
O
ver the past two decades, successive Brazilian gov-
ernments consistently have adopted policies that
support economic liberalization. In 1995, Brazil began
restructuring the hydrocarbon industry, which led to the
creation of the Agncia Nacional do Petrleo (ANP)
and ultimately the enactment of a new petroleum law in
1997. Today, in addition to overseeing other industry
activities, the ANP is responsible for granting E&P rights
in Brazil to private entities, rights previously exercised
solely by Petrobras the former state energy monopoly.
The liberalization policies significantly redefined the
E&P landscape in Brazil and led to increased participa-
tion in the sector by both pure-play E&Ps and integrated
companies. Over time, the E&P sector in the country
has become characterized by the clarity of its fiscal
regime and the stability of its contract environment.
However, recent legislature pertaining to future presalt
developments suggests nationalism is on the rise. The
new law grants Petrobras an effective monopoly over the
operatorship of all future presalt projects. This leaves
partner companies at the mercy of Petrobras. Notwith-
standing, the country remains an attractive destination
for E&P activity, and today there are 77 companies, of
which 36 are foreign, involved in E&P activities in Brazil.
Since deregulation of the oil industry began in 1995,
oil production has increased from 800,000 b/d to 2.1
MMbbl/d of oil, a compound annual growth rate of
approximately 7%. This makes Brazil the 14th largest
producer in the world, the third largest in Latin Amer-
ica, and the seventh largest producer outside of OPEC.
Today, roughly 93% of the countrys production comes
from offshore basins, with the Campos Basin accounting
for 75% of daily production. However, the recent presalt
discoveries in the Santos Basin have the potential to
transform Brazil into one of worlds top oil producers.
Tudor, Pickering, Holt & Co. International predicts the
recent oil finds, on aggregate, could add another 50
Bbbl of oil to Brazils reserves, taking the country from
its current proved reserve level of 12.9 Bbbl to 63 Bbbl,
just behind Russia.
It is important to note that outside the Campos and
Santos basins there are still vast areas of the country yet
to be explored. According to the ANP, there are 29 sedi-
mentary basins with oil and gas potential in the country,
covering an area of 2.9 million sq miles (7.5 million sq
km, or 10 times the area of
Texas). It estimates that less
than 5% of this area has been
explored.
Managing growth
Tudor Pickerings analysis of
planned and ongoing develop-
ment projects suggests that up
to 5 MMbbl/d of oil could be
produced from the Santos
Basin by 2020, at a total devel-
opment cost of US $250 bil-
lion. However, the increase in
development activity will have
unintended consequences,
especially for E&P companies.
Brazil already is rapidly
becoming capacity-constrained
in terms of production, rather
than reserve-constrained, as
are most non-OPEC nations.
Focusing on Brazils E&P potential
While opportunities in Brazil are compelling, there are project development and execution risks.
In 2009, Brazil had the lowest oil reserves when compared to other oil-producing countries. After adjust-
ing for Campos Basin and presalt discoveries, Brazils projected reserves move to the middle of the pack.
(Images courtesy of the BP Statistical Review and Tudor, Pickering, Holt & Co. International)
Anish Kapadia, Tudor, Pickering, Holt & Co. International
100-101 Brazil-primer_Layout 1 4/18/11 10:58 PM Page 100
Going forward, one of the biggest issues for the country will be how it man-
ages the growth in oil production.
The governments desire to maximize local content in the oil services
and equipment manufacturing sectors could temper production growth.
Development stage local content participation has risen from less than 50%
in the early licensing rounds to 84% in the 10th and most recent round. In
spite of this, Tudor Pickering believes there is substantial opportunity for
international oil service providers, particularly those working in deep water,
to gain exposure to what is arguably the largest market for field develop-
ment services over the next decade. This is because the magnitude and
nature of the services required exceeds the capacity and capabilities of local
service providers.
Proceed with caution
With relatively few wells drilled in the high-potential Santos Basin and
largely underexplored interior and coastal areas, Brazil is set to be a focal
point for E&P activity in the coming decade. Equally important, sustained
global demand for hydrocarbons will continue to make deepwater, presalt,
and other high-cost developments associated with the country attractive.
This dynamic will continue to direct capital toward Brazils E&P space.
Local and foreign companies with experienced management teams will
take advantage of this, and they will have a high chance of achieving explo-
ration success and consequently generating significant alpha.
In the near term, investors with exposure to such companies will benefit
from Brazils exploration potential. However, there is an overriding risk to
the monetization of discoveries in the country, particularly offshore and
gas discoveries. The stringent local content requirements and the rush to
develop multiple projects simultaneously will lead to delays in the develop-
ment of future projects, thus eroding value. Overall, near-term opportuni-
ties in Brazil are compelling; however, investors must remain cognizant of
project development and execution risks.
SPECIAL REPORT:
BRAZIL
Brazils potential production is significantly greater than the countrys historical oil
production, assuming no development constraints.
100-101 Brazil-primer_Layout 1 4/18/11 10:58 PM Page 101
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SPECIAL REPORT:
BRAZIL
B
razil has long been known as a country with vast
potential. When it first became a republic in the
1800s, Brazil did so in an atmosphere of euphoric opti-
mism. Brazilians have, at times, held an overly optimistic
view of their governments ability to guide the country in
the right direction.
Recent discoveries in the presalt area place Brazil
among the largest oil producers in the world. Current
forecasts envision that sometime between 2014 and 2024
Brazil will become the worlds fifth largest economy and
So Paulo the fifth wealthiest city.
In private conversations, Brazilians temper optimism
over presalt with caution. They are aware of the countrys
failure to live up to politicians expectations in the past.
Presalt wealth, and how the government plans to use it,
will be a crucial test of Brazils moral fiber and forever
mark its destiny.
Presalt
Dubbed presalt because they lie
beneath a layer of salt, the presalt layers
are geologic formations that hold one
of the largest reserves of medium to
light oil and gas in the world. The area
spans 500 miles (805 km) along the
coast of Brazil (from the state of Espirito
Santo to Santa Catarina), 186 miles (300
km) off the coast of Rio de Janeiro, and
15,000 ft (4,572 m) below the ocean bottom depths of up
to 6,000 ft (1,829 m). Nearly half the size of Italy, it
includes offshore fields such as Tupi, Guard, Bem-Te-Vi,
Carioca, Jupiter, Sugar Loaf, and Iara. The entire presalt
layer is estimated to hold reserves of 50 to 80 Bbbl of oil. If
estimates prove correct, Brazil potentially could become
the sixth largest oil-producing country in the world.
To accelerate and expand E&P of presalt layers, Petro-
bras hatched an aggressive investment plan to double
Brazils production to 3.5 MMbbl/d by 2012. The Brazil-
ian government currently projects total capital expendi-
tures for the 2010-2014 period at US $224 billion. Brazil is
banking on what it considers the virtual certainty of presalt
wealth. Evidence supports the fact that oil-rich fields exist
and foreign companies are reporting early success. How-
ever, it remains to be seen if the governments regulations
of the presalt will allow the country to fulfill that promise.
Regulations
Since 2009, former President Luiz Incio Lula da Silva has
been trying to pass new regulation for the presalt area. On
Aug. 31, 2009, he submitted four bills to Brazils lower
house, the Chamber of Deputies, describing administra-
tion of presalt development and how future presalt oil rev-
enues will be spent. These bills were passed in 2010 and
represent a significant departure from the existing conces-
sion-based system. Instead of competition, the presalt bills
centralize decision-making and leave bureaucrats to select
winners in the process (including indirectly through the
designation of certain areas as strategic Petrobras only,
therefore being government-controlled). These winners
will be selected largely based on the amount of money
they turn over to the government. Further, private compa-
nies will be allowed to bid, but only if they partner with
Petrobras, which will have a 30% stake
in all presalt wells. A new state agency,
Pr-Sal Petrleo SA (PPSA), will con-
trol all drilling contracts and exercise
veto power over all consortiums.
Presalt regulation consists of three
main parts. The first is Law 12,276/
2010: Capitalization of Petrobras. The
goal of this law is to capitalize and
strengthen Petrobras power by inject-
ing the financial equivalent of 5 Bbbl of
oil into the company. Specifically, the
Brazilian government is authorized to assign non-granted
presalt acreage directly to Petrobras (without a bid round)
containing a maximum of 5 Bbbl of oil and natural gas
equivalent of reserves (approximately $50 billion).
Reserves will be estimated and valued in place per
international oil industry practice and independently certi-
fied. Prospective reserves transferred to Petrobras will be
used by the Brazilian government to capitalize Petrobras
through the subscription of shares up to the value of the
reserves. Resources accumulated in the capitalization will
be used to pay for the transfer which must be affected in
treasury securities and to finance investment. Minority
shareholders will be entitled (though might not be finan-
cially able) to exercise preferential rights, allowing them
Predicting Brazils presalt wealth
The countrys presalt regulatory framework might be the key to success.
Aaron Ball and Paula Galhardo,
Squire Sanders & Dempsey Energy Group
Brazil is banking
on what it
considers the
virtual certainty
of presalt wealth.
102-104 Brazil-presalt_102-104 Brazil-presalt 4/18/11 1:32 PM Page 102
103
SPECIAL REPORT:
BRAZIL
103
to pay the equivalent cash value to subscribe for new shares
in proportion to their existing shareholdings. Petrobras
will pay for the assignment with federal debt bonds.
Petroleum activities in such acreage will be carried out
by Petrobras at its own risk and cost. If production does
not yield 5 Bbbl of petroleum equivalent, Petrobras will be
granted additional acreage to reach the 5 Bboe, and any
production in excess of that will belong to the Brazilian
government.
The second part of the presalt regulation is Law
12,351/2010: Production Sharing Agreements (PSAs) for
Presalt and Other Strategic Areas and Social Fund. This
law regulates E&P of oil, gas, and other hydrocarbon flu-
ids under the regime of PSAs. Pursuant to Law 12,351,
PSAs will apply only to the presalt area and to other areas
deemed strategic by PPSA. The concession system that
has been used by Brazil for E&P will be valid only for the
blocks that already were auctioned.
PSAs are defined in Law 12,351 as a regime of explo-
ration and production of oil, natural gas, and other fluid
hydrocarbons, whereby oil companies will be granted
rights to explore, develop, and produce petroleum
reserves at their cost. In the event of a commercial
discovery, costs incurred will be reimbursed through an
entitlement to production referred as to as cost oil. The
remaining petroleum, after deduction of cost oil, is consid-
ered profit oil. This is shared between the contractor and
the government in the percentages set forth in the PSA.
Under Law 12,351, the Brazilian government can award
a PSA to Petrobras as sole contractor without holding a
licensing round, or it can tender blocks to other contrac-
tors, provided that Petrobras possess a minimum 30%
interest. Petrobras can bid alone or in a consortium to
increase its participating
interest beyond the minimum.
On the PSAs awarded to Petrobras
without a tender, the National Council
of Energy Policy will determine the profit
oil split with Petrobras. Bidders on tendered
PSAs will indicate their proposed profit oil split at equal to
or higher than the minimum percentage set forth in the
tender documents as the Brazilian governments share.
The bid offering the Brazilian government the highest
percentage of profit oil will win the auction. The winning
company in the auction process must pay royalties and a
fee called Participao Especial (PE, or Special Participa-
tion) that varies from 0% to 40%.
Under all PSAs, the contracted company will engage in
exploration at its own risk. If successful, the contracted
company will be reimbursed in oil production for the
exploratory investments and development of production
and for production operational costs. The excess mate-
rial/oil will be allotted as established in the PSA.
The final part of the legislation is Law 12,304/2010:
Incorporation of State Oil Company, PPSA, to Manage
Government Interests in PSAs. This law creates PPSA, a
public company organized as a corporation under the
aegis of the Ministry of Mines and Energy for the purpose
of managing PSAs. Although a party to the PSAs, PPSA
will not take up any risk or responsibility for costs of oil
and gas exploration activities. However, PPSA will nomi-
nate half of the members of the respective operating com-
mittee, including its president, and will have voting rights
and power of veto over all decisions relating to activities
conducted under the PSAs. PPSA also is responsible for:
Conducting the management, audit, and fiscaliza-
tion of petroleum activities performed under PSAs;
Authorizing bidding processes related to the E&P of
presalt areas;
Representing the government through operational
committees in consortiums incorporated for the exe-
cution of PSAs; and
Representing the government in case of unitization
in the presalt and strategic areas.
Although the Brazilian presalt shows great potential,
foreign investors in the market must be aware of possi-
ble complexity created by the new regulatory framework
in what already is a highly regulated sector in an equally
well-regulated economy.
April 17-19, 2012
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After all, there's only one way to witness a DUG Series event: Attend one.
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HART ENERGY
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105
international
SPOTLIGHT
T
he hydrocarbons sector plays an important role in the
Mexican economy. In 2010, hydrocarbons contributed
7.4% to the nations GDP and made up 14% of the coun-
trys total exports. From 2004 to 2009, oil production fell
approximately 800,000 b/d before stabilizing in 2010,
according to a presentation by Mario Gabriel Budebo,
Deputy Secretary of Hydrocarbons for the Ministry of
Energy of Mexico. Natural gas production, meanwhile,
has increased in Mexico over the last few years.
State-owned Pemex has grown its investment in E&P
over the last decade, which has allowed the company to
stabilize oil production and increase reserve replacement
rates. Mexico has significant undeveloped hydrocarbon
resources and developing the more complex fields will
require more administrative flexibility, better procure-
ment tools, and more execution capabilities, Budebo said.
In March 2011, Pemex launched the first tender for
three incentive-based E&P service contracts that will allow
private companies to operate mature fields in the Magal-
lanes, Santuario, and Carrizo areas in southern Mexico.
Reactivate brownfields, increase production
Reactivating the brownfields is a key component to
Pemexs plan, and reactivation strategies will be imple-
mented to address geological models, completions,
workovers, and optimization issues. Mature fields in the
Magallanes, Santuario, and Carrizo blocks combined hold
207,000 boe of proved, probable, and possible oil reserves.
At a recent press conference, Carlos Morales Gil, CEO of
Pemex E&P, said production from the three blocks could
be increased to 55,000 to 60,000 b/d within three years.
The onshore Magallanes block in northeast Tabasco
State on the Bay of Campeche comprises the Otates and
Snchez Magallanes fields. Of the 782 wells drilled in the
block, 60 currently are producing approximately 7,996
b/d of oil. In the Magallanes block, new investments are
essential to improving the recovery factor.
The Caracolillo, El Golpe, and Santuario fields make up
the 32,106-acre Santuario block, just south of Magallanes.
Of the 211 wells drilled, 31 currently are producing:
Caracolillo field: 11 wells drilled, zero wells producing;
El Golpe field: 136 wells drilled, 13 wells producing; and
Santuario field: 64 wells drilled, 18 wells producing.
Current oil production from the block is approximately
5,934 b/d. Again, recovery factor is the issue and the
opportunity in the Santuario block. El Golpe is waiting
for a new wave of investments, said Vinicio Suro, South
Region vice president of Pemex E&P, and a new exploita-
tion strategy will add value to current production.
The Carrizo block in central Tabasco State covers 3,215
acres with only 43 wells drilled to date and no producing
fields. Pemex said the lack of investment in the area has
limited the ability to move fields into production. The
way to increase production, Suro said, is to initiate it and
reclassify reserves.
Aligning human, economic, and technological
resources is key to Pemexs strategy to produce existing
and new reserves in the mature blocks through integrated
incentive-based contracts. Companies awarded these con-
tracts will be compensated by means of a tariff associated
with each extracted barrel of oil plus partial recovery of
costs in addition to bonuses based on productivity and
cost reduction.
The data room in Tabasco State, Mexico, can be
accessed from March 1 to June 24, 2011. Pemex has sched-
uled the first project meeting for May 3 and results of the
tender will be announced on Aug. 11. For more informa-
tion, visit www.pemex.com.
MEXICO
USA
GULF OF
MEXICO
Pemex launched the first tender for three incentive-based E&P
service contracts for mature fields in the Magallanes, Santuario,
and Carrizo areas in the southern region of Mexico. (Image
courtesy of Pemex)
Mexico calls for E&P service contracts
For the first time in more than 70 years, private companies will have the opportunity to operate
in Mexico.
Ashley E. Organ, Associate Editor
105 Spotlight-Mexico_105 Spotlight-Mexico 4/18/11 1:32 PM Page 105
A
nalysis of what happened on April 20, 2010, when
the Deepwater Horizon rig in the Gulf of Mexico
(GoM) exploded and sank is ongoing, and conclusions
continue to be drawn.
But E&P is by its very nature a long-term, forward-
looking business that cannot afford to stand still. As the
industry approaches the halfway point of 2011, all eyes
are focused on the way ahead and the day-to-day busi-
ness of finding and safely producing oil and gas for the
demanding US market.
The fact that the business now appears to be moving
ahead relatively smoothly in the GoM during a period of
chaotic and unpredictable national events elsewhere in
the energy-producing world could serve as a timely
reminder to those in charge of the country that security
of supply remains a key factor in the nations future well-
being. Ensuring that the upstream industry can do its job
106
REGIONAL REPORT:
GULF OF MEXICO
Looking long term:
One year on for the Gulf of Mexico
The GoMs oil and gas industry has been the most written about, talked about, and
misunderstood business on the planet for the past year. But as the clich goes a year is a
long time in politics, business, and, in this case, the world of upstream oil and gas.
Mark Thomas, International Editor
The MWCCs
expanded contain-
ment system will be
available in 2012
and is being engi-
neered for use in
10,000 ft water
depth, with a
capacity to handle
100,000 b/d of liq-
uid and 200 MMcf/d
of gas. (Image cour-
tesy of Marine Well
Containment Co.)
106-111 RegionalReport-GOM_106-111 RegionalReport-GOM 4/18/11 1:32 PM Page 106
107
REGIONAL REPORT:
GULF OF MEXICO
responsibly without being overbur-
dened by unnecessary restrictions
is an important requisite.
The E&P sectors wish to move
on with activities in the GoM
should not be seen as insensitive to the memory of those
workers who died onboard the Deepwater Horizon far
from it. The need to progress and learn from such
events is genuine, and based on previous experiences
such as Piper Alpha in 1988 in the North Sea, it will result
in the eventual betterment of oil and gas operations and
safeguards around the world.
Looking at the status of the region today, the number
of potential project opportunities emerging is encourag-
ing not just in the US sector as fresh activity offshore
Mexico and Cuba also looks set to begin soon.
But these opportunities will be tackled in a very differ-
ent environment from the business-as-usual scenario
that existed a year ago.
New permitting and drilling regulations have had a
profound impact on oil companies exploration and
development plans, and the US government has made it
clear that offshore activity in the GoM will continue to
be scrutinized like never before.
Tighter regulations mean higher costs. A recent sur-
vey of oil companies showed an expectation of signifi-
cant price increases as a response to more stringent
drilling, well design, and overall offshore safety require-
ments. Exposure to larger liabilities could put the deep-
ABOVE: ATP Oil & Gas Corp.s ATP Titan
drilling and production platform on the
Telemark Hub in Mississippi Canyon
Block 941 was the first stationery deep-
water facility to receive a permit to
resume drilling in the GoM after the
ban was lifted. (Image courtesy of ATP
Oil & Gas Corp.)
RIGHT: The subsea capping stack for
the MWCC interim containment system
has the ability to shut in oil flow or flow
the oil to surface vessels. (Image cour-
tesy of Marine Well Containment Co.)
108
REGIONAL REPORT:
GULF OF MEXICO
water GoM out of the reach of the small and medium-
sized independents that make up two-thirds of the out-
put from the GoM despite, in many cases, their
blemish-free records.
PFC Energy recently said that increasing the liability
ceiling to US $300 million would wipe out 15% to 20%
of operators, which would decrease GoM production by
approximately 950 MMbbl over the next decade.
Fortunately, the potential exodus of operators from
the GoM has not occurred. Despite sliding to the right
by at least a year in terms of their planned onstream
dates, forecast expenditure figures remain strong over
the next few years and are predicted to rise more than
was originally forecast before the Macondo tragedy
occurred.
Many operators have used the enforced delay to deal
with implementing new regulations and improving
design concepts and infrastructure plans for upcoming
projects.
But the two most important projects concerning
future activity in the GoM right now have little to do
with any one particular company or discovery.
Industry spill response initiatives
A massive responsibility rests with the industrys own
self-instigated initiatives to prepare fully and very pub-
licly its oil spill response plans. These plans must make
companies as prepared as possible for any future inci-
dent, with no room for complacency.
The amount of learning from Macondo has been
huge, and the practical experience is being wisely
invested in projects such as the major-driven Marine
Well Containment Co. (MWCC) and the more inde-
pendent-driven Helix Well Containment Group
(HWCG).
Shell, ExxonMobil, Chevron, and ConocoPhillips have
pushed to make the non-profit MWCC venture a viable
solution, and they have since been joined by BP, BHP
Billiton, Apache Corp., Anadarko Petroleum Corp., and
most recently Statoil.
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domsalesegefco.com
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wwwpvicom.com sales@pvicom.com 713-981-5558
109
REGIONAL REPORT:
GULF OF MEXICO
Marty Massey, MWCC CEO, said, Our growing mem-
bership is taking a leadership role in improving industry
response capabilities in the deepwater Gulf of Mexico.
He went on to describe the development of resources in
the Gulf as critically important to the US, as it accounts
for 30% of US oil and gas production and supported
more than 170,000 American jobs.
BHP chief executive J. Michael Yeager added, The
Marine Well Containment Co. is an important industry
effort that allows us to demonstrate that we have the
necessary tools readily available to quickly respond to a
subsea well control incident. While we dont expect to
ever have to use the equipment, we believe it is our
responsibility to be prepared.
System equipment and services will be available to
both members and non-members. Non-members will be
able to enter into agreements for access to the MWCC
system on a per-well fee basis.
Today MWCCs interim containment system is ready
for deployment and capable of operating in 8,000 ft
(2,438 m) water depth and processing up to 60,000 b/d
of fluid.
The initial response system includes a subsea capping
stack with the ability to shut in oil flow or to flow oil via
flexible pipes and risers to surface vessels. The system
also includes subsea dispersant injection equipment,
manifolds, and capture vessels to provide surface pro-
cessing and storage. The capping stack has a maximum
operating pressure of 15,000 lb/sq in. and has a dual
barrier design with a BOP plus containment cap. It also
can be controlled by an ROV if necessary.
ExxonMobil is leading the system expansion effort,
which will allow operations in 10,000 ft (3,048 m) water
depth and process up to 100,000 b/d of fluid, with com-
ponents to be delivered in 2012.
A contract related to the expanding system recently
was awarded to Weatherford International Ltd. for the
design and construction of topsides process modules for
two dynamically positioned tankers in the GoM. The
contract is scheduled for completion in 2012. Weather-
ford also has a letter of intent for long-term storage and
maintenance of the equipment, including providing
assistance to deploy and operate the process modules
if required to respond to a future underwater well-
control incident.
Technip, meanwhile, won a contract for the design,
procurement, and fabrication of the umbilical, riser,
and flowline components for the expanded system, also
set for completion next year. The contractors scope of
work includes two deepwater riser systems for operation
in 10,000 ft water depth using buoyancy elements, con-
nection systems, and flexible jumpers as well as two
shallow-water systems for 2,000 ft (610 m) water depth
using a lazy wave catenary configuration and one con-
trol umbilical.
The HWCG is on course to substantially increase its
own subsea well containment capabilities, with plans to
expand its ability to control and contain an incident in
up to 10,000 ft water depth by 3Q 2011.
The group is an expanding industry cooperative of 24
deepwater E&P companies in the GoM formed to
respond to oil spill incidents. It already has a system in
BOEMRE issues
additional guidance
T
he Bureau of Ocean Energy Management, Regulation,
and Enforcement (BOEMRE) has issued additional
clarification and several refinements to deepwater drilling
rules and subsea well containment plans and procedures.
BOEMRE said in response to concerns from operating
companies, it had addressed contradictions in permit-
ting requirements that arose from adopting the American
Petroleum Institutes guidelines for well design. Spill con-
tainment requirements were categorized into three types,
with distinct response requirements for each.
Most importantly, the calculated discharge rate for a
particular well will be based on the cap and flow capac-
ity of the spill containment solution rather than the total
maximum discharge rate for an open hole.
Our goal remains the same as it has been from day one
to ensure that offshore operations are conducted as
safely as possible, said BOEMRE Director Michael R.
Bromwich. This guidance document gives deepwater
drilling operators additional information to help address
some of the recurring issues that have been raised in our
ongoing discussions with industry.
One interested commentator was Helix Energy Solu-
tions Group. The BOEMRE has provided valuable clarifi-
cation on how drilling permit applications are evaluated
for spill response preparedness, said Owen Kratz, CEO
of Helix. This mutual exchange of information and tech-
nology between regulators and industry allows Helix to
further tailor its response capabilities specifically for
deepwater and exploratory wells. Using the well integrity
and collection capability criteria provided, operators can
give the BOEMRE the background it needs to continue
issuing drilling permits with confidence.
place that is capable of facilitating control and contain-
ment of spills in 5,600 ft (1,707 m) water depth. This
will use Helix Energy Solutions Groups fast response
system, which includes its Q4000 intervention vessel and
the Helix Producer I and features a 10,000 psig capping
stack.
It was anticipated system capabilities would be
expanded to 8,000 ft water depth in April, with capture
and processing capabilities of 55,000 b/d of oil and 95
MMcf/d of gas. HWCG also was due to add a 15,000 psig
capping stack as E&P went to press.
Helixs CEO Owen Kratz testified before the House
Committee on Science, Space, and Technology earlier
in April, taking the committee through the industrys
current and future offshore drilling safety and emer-
gency response technologies. Helixs vessels played a key
role during the Macondo incident control and spill con-
tainment effort.
110
REGIONAL REPORT:
GULF OF MEXICO
O
pportunities in the Gulf of Mexico
(GoM) do not exist only in terms of
new projects. With a huge amount of
defunct platforms, wells, and pipelines
eventually to be removed and now
required to be removed by new federal
rules introduced toward the end of last
year, estimates for the idle iron market
over the next few years are growing.
Of the 6,500 offshore structures around
the world, more than half reside in the
GoM. However, at present, fewer than 200
structures are being removed in any given
year in what has been a relatively low-key
and steady market sector.
But the market for decommissioning
this idle iron is expected to grow substan-
tially to provide new opportunities for
existing service providers specializing in
plugging wells and removing and dis-
mantling old platforms and subsea infrastructure.
Some estimates place the figure at around US $3 bil-
lion in new revenue over the next few years in terms of
setting permanent plugs in 3,500 offshore wells and
removing at least 650 platform facilities that are
believed to be subject to the rules introduced last year
by the Bureau of Ocean Energy Management, Regula-
tion, and Enforcement (BOEMRE).
As the E&P industry continues to be pushed to clean
up its act faster than before, costs will rise. Current
estimates show dismantling a shallow-water platform
can cost up to $2 million, depending on its size, and
the cost goes up dramatically in deeper waters.
One of the main issues will be the lack of enough
suitable heavy-lift vessel capacity in the market to take
the platforms apart and back to shore. This likely will
lead to a more coordinated industry approach in the
short to medium term. Analyst Douglas-Westwood has
forecast the decommissioning market could be worth
around $1 billion per year over the next 30 years.
BOEMREs rule changes require, with a few excep-
tions, that operators in the GoM plug wells that have
been idle for at least five years within three years if no
longer considered profitable. The same also is the
case for removal of idle platforms.
Although many operators have developed more
organized decommissioning schedules to help reduce
liability exposure to incidents such as storms, the post-
Macondo effect and BOEMRE have added fresh
urgency to their plans.
Idle iron is a growing GoM opportunity
The number of platform removals in the GoM has been rising gradually, but
the recent drive by BOEMRE to tackle the idle iron issue via new legislative
requirements is forecast to lead to a considerable rise in the number of
removals over the next several decades. (Source: Bureau of Ocean Energy
Management, Regulation, and Enforcement)
111
REGIONAL REPORT:
GULF OF MEXICO
The provision of effective oil well containment capability is essential to
facilitating responsible energy development in the deep waters of the US
Gulf, Kratz said. Our goal as an offshore service company that employs
more than 1,500 people worldwide is to get the Gulf back to work.
Of the eventual 10,000-ft system, Roger Scheuermann, commercial director
for HWCG, said, Our enhanced response and containment capabilities
would exceed the depth of any well currently drilled or planned by the con-
sortiums members and would allow operators to control capping and con-
tainment stacks at the greater depths.
HWCG currently has agreements in place with more than 30 service
providers that will provide additional services, products, and personnel
if needed.
It already has carried out two tabletop exercises, the latter, for example,
bringing together more than 225 technical professionals for a day-long exer-
cise designed to increase members coordination and preparedness in the
event of a subsea well containment incident.
While we do not anticipate an incident, we are committed to maximum
preparedness to ensure rapid response and containment of a deepwater oil
spill, Scheuermann said. Collaboration is critical to our readiness, and that
is why the Helix Well Containment Group has conducted two tabletop exer-
cises in the past three weeks. HWCG is planning a third tabletop exercise in
late May.
With guidance from the Bureau of Ocean Energy Management, Regula-
tion, and Enforcement (BOEMRE), HWCG has developed a well contain-
ment plan that clearly identifies response protocols for foreseeable deepwater
containment scenarios. Bringing together the industrys brightest and most
experienced deepwater personnel, this drill tested our ability to activate the
HWCG well containment plan, said Tim Sargent, chair of the HWCG Tech-
nical Committee. As a result of these drills, we can expedite our decision-
making process and optimize the utilization of our plan.
So why is the progress and visibility of these spill response projects so
crucial?
The Department of the Interior estimates that in 2009, 80% of US offshore
oil production and 45% of natural gas production took place in the deepwa-
ter GoM. Nearly 4,000 wells have been drilled in these depths as well as about
700 wells in ultra-deep water (5,000 ft or 1,524 m or greater).
It is estimated that the impact of regulatory impediments on energy sup-
plies and the economy because of permitting delays and the drilling morato-
rium has been a loss of 300,000 b/d in oil production since May 2010,
according to the Energy Information Administrations Short Term Energy
Outlook.
One year after Macondo, the GoM finally is able to begin cautiously ramping
up its activity. The 10th drilling permit the latest in a steady flow now being
issued by BOEMRE in line with its rigorous new standards including the
requirement to demonstrate the capacity to contain a subsea blowout can be
considered something of a milestone. The regions operators are beginning to
feel their confidence return, along with the planned multibillion dollar expen-
diture that will result.
But none are under any illusion as to the vital importance of an exemplary
period of exploration and development activity. The industrys very existence
as a viable business in the GoM depends on it.
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international
HIGHLIGHTS
South America
Desire spuds fresh Falklands probe
Desire Petroleums latest wildcat well in the frontier North
Falkland Basin is under way. Well 14/15-3 on the Ninky
prospect in Tranche D is being drilled by the Ocean
Guardian rig in 2,150 ft (655 m) water depth offshore
the Falkland Islands in the South Atlantic. The well has a
planned total depth of approximately 8,596 ft (2,620 m).
Guar Norte test flows 6,000 b/d
Petrobras has completed a formation test in the first
extension well on the Guar field in the presalt Santos
Basin in 6,949 ft (2,118 m) water depth, approximately
190 miles (305 km) off the coast of So Paulo State, con-
firming the ultra-deepwater accumulations high produc-
tivity estimates. Well 3-SPS-69 (3-BRSA-788 or Guar
Norte) in Block BM-S-9 flowed approximately 6,000 b/d
of good-quality light oil (30 API). Initial production
potential is approximately 50,000 b/d of oil.
Peregrino flows for Statoil offshore Brazil
Statoil has started producing oil from its Peregrino field
53 miles (85 km) offshore Brazil in the Campos Basin in
approximately 328 ft (100 m) water depth in licenses
BMC-7 and BMC-47. Production will gradually ramp up to
a plateau of 100,000 boe/d. The field contains 300 to 600
MMboe recoverable. An exploration well currently is
being drilled at Peregrino South.
Pacific Rim
AED hits Brunei gas
A subsidiary of Australias AED Oil Ltd. has completed
well testing operations on its Lempuyang-1 probe
onshore Brunei. The well intersected excellent-quality
reservoir sands, with gas flowing to surface from two test
intervals. Some thin gas sands were interpreted at the
lower reservoir test interval between 10,095 and 10,276 ft
(3,077 and 3,132 m) measured depth (MD), of which 79
ft (24 m) were perforated. The upper reservoir test inter-
val between 9,347 and 9,409 ft (2,849 and 2,868 m) MD,
of which 59 ft (18 m) were perforated, flowed gas to sur-
face before the operator was forced to cease testing due
to a downhole mechanical failure. As a result, no gas flow
rates could be established.
Thailand test hits oil
Coastal Energy has drilled the Bua Ban North A-04 well in
the Gulf of Thailand to a total vertical depth of 6,417 ft
(1,956 m). The well encountered 22 ft (7 m) of net pay in
the Miocene with average porosity of 29%. The company
estimates the reservoir contains approximately 6 MMbbl
of oil in place. The well also encountered 11 ft (3.4 m) of
net sand with shows in a deeper Miocene section with 22%
average porosity and 10 ft (3 m) of net sand with shows in
the Upper Oligocene with 25% porosity.
Europe
Eni hits hydrocarbons in Barents Sea
Italys Eni has made a hydrocarbon discovery in the Nor-
wegian Barents Sea, approximately 93 miles (150 km)
northwest of the Goliat oil field. The Skrugard discovery
was made via the 7220/8-1 exploration well, the first
drilled in the PL 532 license, in 1,224 ft (373 m) water
depth. The well proved columns of 108 ft (33 m) of gas
and 295 ft (90 m) of oil. Proven recoverable resources are
preliminarily estimated at between 150 and 250 MMboe.
SeaBird flies early on Rosebank
SeaBird Exploration PLC has been granted the option to
start the second stage of the Ocean Bottom Node survey at
the deepwater Rosebank field offshore the UK with the
Hugin Explorer as node vessel and Munin Explorer as source
vessel earlier than the initially agreed start date.
EPmag.com
READ MORE ONLINE
For additional
information on
these projects
and other global
developments:
Guar Norte offshore Brazil flowed approximately 6,000 b/d of
good-quality light oil. (Image courtesy of Petrobras)
112-114 Highlights_112-114 Highlights 4/18/11 1:32 PM Page 112
113
Africa
Teak-2 success offshore Ghana
Kosmos Energys Teak-2 well has hit fresh reserves in the
Jubilee development offshore Ghana in the West Cape
Three Points license. The Atwood Hunter drilled the well to
a total depth of 11,184 ft (3,409 m) in 2,904 ft (885 m)
water depth. Teak-2 discovered 89 ft (27 m) of net hydro-
carbon-bearing Campanian and Turonian reservoirs. It
intersected five intervals containing high-quality oil, gas,
and gas condensate, and an additional 20 ft (6 m) of net
oil and gas pay were encountered at the top of good-qual-
ity Campanian reservoirs, more than 328 ft (100 m) thick.
Fresh find offshore Tanzania
Ophir Energy and partner BG Group have confirmed a
Tanzanian gas discovery offshore Africas east coast with
the Chaza-1 well, in Block 1 approximately 11 miles (18
km) offshore southern Tanzania in 3,117 ft (950 m) water
depth. The Deepsea Stavanger drilled the well to a total
depth of 16,060 ft (4,895 m).
Middle East
Noble suspends Israel well
Noble Energy Inc. has suspended drilling operations on
its Leviathan-1 well offshore Israel. Wear on the wellbore
casing, will require additional material and equipment to
complete the well. The company is preparing to move the
Sedco Express rig to the nearby deepwater Tamar field,
where development drilling will get under way.
Central Asia
Rosneft adds to NAD exploration
Russias Rosneft will drill three wildcat wells and one fur-
ther appraisal well in a new license to explore the Naulsk
oil field area in the Russian Nenets Autonomous District
(NAD). Severnaya Neft, a Rosneft subsidiary, will be the
operator of the sub-Arctic project. Naulsks oil reserves,
classified as C1 and C2, are estimated at 51.3 million met-
ric tons. Production is expected to reach a maximum vol-
ume of one million tons per year.
North America
Oklahoma horizontal flows
Hadaway Engineering Inc. has completed a horizontal
exploratory test in well #1-30H Dude in Section 30-3n-
22ecm in Beaver County, Okla. The well was tested in an
openhole lateral at 6,255 to 10,370 ft (1,897 to 3,161 m)
and flowed 203 b/d of 44-gravity oil with 170 Mcf/d of gas
and 980 b/d of water following fracture stimulation.
Carthage field Haynesville well completed
Sun River Energy Inc. has completed the Neal Heirs # 1
well (API # 42-365-37706) in the Carthage field in Panola
County, Texas. The well was drilled vertically to a total
depth of 11,057 ft (3,370 m) and is flowing 2,256 Mcf/d
with a flowing tubing pressure of 3,320 psi.
Gulf of Mexico
Clayton Williams plans shallow-water well
Clayton Williams Energy Inc.s #1 State Lease 19924 well
in Eugene Island Block 16 is scheduled to be directionally
drilled to 15,225 ft (4,641 m). The shallow-water venture is
planned from a surface location in the northwestern por-
tion of irregular Block 16 offshore St. Mary Parish, La.
Walter to drill wildcat well
Walter Oil & Gas Corp. is planning to drill wildcat well
OCS G33103 in Ship Shoal Block 316 offshore Louisiana.
Plans submitted to the Bureau of Ocean Energy Manage-
ment, Regulation, and Enforcement indicate the well will
be drilled on the northwestern portion of the tract in 277
ft (84 m) water depth.
international
HIGHLIGHTS
The Teak-2 well discovered 89 ft of net hydrocarbon-bearing Cam-
panian and Turonian reservoirs offshore Ghana. (Image courtesy
of Anadarko Petroleum Corp.)
112-114 Highlights_112-114 Highlights 4/18/11 1:32 PM Page 113
ADVERTISER INDEX
on the
MOVE
115
Jay Collins, president and CEO of Ocea-
neering International Inc., will retire in
May 2011. Kevin McEvoy, executive vice
president and COO, will succeed Collins.
Fabio Barbosa has been appointed CFO
of BG Group.
Richard Cooper, CEO and executive
director of Offshore Hydrocarbon Map-
ping, has been appointed to TerraSpark
Geosciences board of directors.
Terra Resources plc has appointed
Ambassador Jacques Berniere and
professor Bernard Reich as new
directors of the board.
John T. Gremp (left) will succeed
Peter D. Kinnear as president and
CEO of FMC Technologies Inc.
Gremp also has joined the board
of directors. Kinnear will remain chairman
of the board until Oct. 31, 2011, when
Gremp will assume the role.
The Intervention & Coiled Tubing
Associations European chapter has
appointed Rob Grassick chairman
and Callum Munro vice chairman.
Duco de Haan will become head of
ModuSpec effective July 1, 2011.
Barry Ashton of AJM Petroleum Consult-
ants will head the Society of Petroleum
Evaluation Engineers new executive
committee.
The International Marine Contractors
Association has appointed Andy
Woolgar of Subsea 7 president of
the council.
Logan International
Inc. has named David
S. Jones (left) senior
vice president and
COO Downhole Tools and Lawrence
D. Keister (right) vice president of
Finance and CFO.
American Association of
Professional Landmen . . . . . . . . . . . . . . . . 95
ATV SpA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Baker Hughes . . . . . . . . . . . . . . . . . . . . . . . . . 35
BGP Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Boots and Coots . . . . . . . . . . . . . . . . . . . . . . . . 4
British Midland International . . . . . . . . . . . . 10
Cameron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
CNPC Greatwall Drilling Co. . . . . . . . . . . . . 56
Cudd Energy Services . . . . . . . . . . . . . . . . . 76
Dragon Products, Ltd. . . . . . . . . . . . . . . . . . . 15
E&P . . . . . . . . . . . 68-69, 78, 86, 92, 98, 104, 114
Emerson Process Management . . . . . . . . . . . 7
Escondido Resources II . . . . . . . . . . . . . . . . . 74
Expro Group . . . . . . . . . . . . . . . . . . . . . . . . . 53
FloaTEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
FMC Technologies . . . . . . . . . . . . . . . . . . . . . 42
Frontier Energy Group, Inc. . . . . . . . . . . . . . 85
Fugro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
FGMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Fugro Jason . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
GEFCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Halliburton . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Heerema Marine Contractors . . . . . . . . . . . . 41
Keen Energy Services . . . . . . . . . . . . . . . . . . . 9
Kongsberg Oil & Gas Technologies . . . . . . . 43
McDermott . . . . . . . . . . . . . . . . . . . . . . . . . . IFC
McJunkin Red Man Corp. . . . . . . . . . . . . . . . 30
M-I Swaco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Momentive . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Multi-Chem . . . . . . . . . . . . . . . . . . . . . . . . . . 77
NanoSteel Company, Inc. . . . . . . . . . . . . . . . 19
National Oilwell Varco . . . . . . . . . . . . . . . 13, 20
NEOS GeoSolutions . . . . . . . . . . . . . . . . . . . . 47
Netherland, Sewell & Associates, Inc. . . . . . . 94
Newpark Drilling Fluids . . . . . . . . . . . . . . . . 28
Oilfield Improvements . . . . . . . . . . . . . . . . 111
OTC Brasil . . . . . . . . . . . . . . . . . . . . . . . . . . . .92
P2 Energy Solutions . . . . . . . . . . . . . . . . . . . . 72
Paradigm . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Pegasus Vertex, Inc. . . . . . . . . . . . . . . . . . . . 108
Petris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Roxar Flow Measurement . . . . . . . . . . . . . . . 62
Roxar Software Solutions . . . . . . . . . . . . . . . . 22
Schlumberger . . . . . . . . . . . . . . . . . . . . . OBC, 3
Stallion Oilfield Services . . . . . . . . . . . . . . . . 75
Tetra Technologies, Inc. . . . . . . . . . . . . . . . IBC
The GasGun . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Vicinay Cadenas SA . . . . . . . . . . . . . . . . . . . 99
Weatherford International Ltd. . . . . . . . . 24, 25
WesternGeco . . . . . . . . . . . . . . . . . . . . . . . . 101
Wood Group Surface Pumps . . . . . . . . . . . . . 71
Group Publisher
RUSSELL LAAS
Tel: 713-260-6447
rlaas@hartenergy.com
Associate Publisher
DARRIN WEST
Tel: 713-260-6449
dwest@hartenergy.com
United States
Canada / Latin America
1616 S. Voss Road, Suite 1000
Houston, Texas 77057 USA
Tel: 713-260-6400
Toll Free: 800-874-2544
Fax: 713-627-2546
Regional Sales Manager
JULIE B. FLYNN
Tel: 713-260-6454
jflynn@hartenergy.com
Advertising Sales Representative
HENRY TINNE
Tel: 713-260-6478
htinne@hartenergy.com
Sales Manager
Eastern Hemisphere
DAVID HOGGARTH
Tel: 44 (0) 7930 380782
Fax: 44 (0) 1276 482806
dhoggarth@hartenergy.com
Advertising Coordinator
CAROL NUNEZ
Tel: 713-260-6408
cnunez@hartenergy.com
Subscription Services
PO BOX 5800
Harlan, IA 51593
Tel: 713-260-6442
Fax: 713-840-1449
custserv@hartenergy.com
List Sales
MICHAEL AURIEMMA
Venture Direct
212.655.5130 phone
212.655.5280 fax
mauriemma@ven.com
MARKETING | SALES | CIRCULATION
115 Onthemove_Layout 1 4/18/11 5:17 PM Page 115
r
P
116
T
he IAGC is a combined voice that can be louder and
more influential than the individuality of certain geo-
physical companies. Its reasons for existence are many:
Through one voice, the association provides
anonymity for membership;
Members can pool resources and work on things
that are not practical individually;
The association can work with local, state, and fed-
eral government agencies to address sensitive issues;
and
It can fight those factions that oppose what it does.
This concept embodies all trade associations and cer-
tainly is not limited to the geophysical industry.
The sheer volume of issues the IAGC is taking on as
an association is amazing. These issues need immediate
attention and have tremendous impact on the ability of
the members to do their jobs. The challenges have to be
attacked with minimal staff, so efforts need to be
focused, effective, and well-coordinated to maximize the
value to the members. Because the staff resources
are so limited,
the organization
relies heavily on
the participa-
tion of its
members
through work groups,
committees, and targeted work-
shops. This participation is where IAGC finds the
strength to be more effective. And it has provided that
degree of anonymity to each individual member yet car-
ried the weight of all.
Too often trade association membership is faced with
unexpected hurdles that can cripple the entire industry
(the Macondo well explosion in the Gulf of Mexico is a
prime example). Associations then put the wheels in
motion to react, respond, and direct their resources to
overcome these obstacles and put their industry back on
the right track. But it is not easy. There are many envi-
ronmental groups, grassroots organizations, and key
constituencies that are more sophisticated, have higher
public visibility, and are well-funded to bespeak these
endeavors. Additionally, government responds with
tighter restrictions to appease these opponents, and
the industry is left with unavoidable hindrances that
beg for reparation.
But it doesnt take a catastrophic event to take action
within associations. Why wait for calamity?
There is enough know-how within these organizations
to take a proactive approach to industry matters. IAGCs
current structure has attacked issues that, although not
presently problematic, could evolve into game-changing
obstacles. An example is the recent explosion in seismic
acquisition activity in the northeast US. This increased
activity in an area relatively unfamiliar with seismic sur-
veying has caused a serious prob-
lem with local and state agencies
that have neither the staff nor the
experience to handle the many
issues exploration activity can gen-
erate. The take-charge plan of
attack by the IAGC helped some
agencies to cope better with the
overload and improve procedures
to provide more efficient ways of
doing business.
It is obvious that trade associa-
tions are extremely helpful and
effective and offer industries a
voice. IAGC members realize
and appreciate the value that the
IAGC brings to the industry, but
more participation is always
needed.
Do not wait for someone else to throw their hat into
the ring get involved, be proactive, and support your
industry. The future of your business and the health of
your company rely on your contributions.
Together, we can speak volumes
Trade associations can accomplish what individual member companies
cannot a substantive, united voice.
Jim White, FT Seismic Support Inc.
(Past Chairman of the International Association
of Geophysical Contractors)
last
WORD
It is
o
b
v
io
u
s
th
a
t
tra
d
e
a
s
s
o
c
ia
tio
n
s
are extremely helpful
and effective and
o
ffe
r in
d
u
s
trie
s
a

v
o
ic
e
.
116 LastWord_116 LastWord 4/18/11 1:33 PM Page 116
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