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DECEMBER 2016

Basin Modeling
Cementing Advances
Pressure Pumping
Offshore Yards Report
Regional Report:

SOUTH AMERICA

HOPE

Glimmers
Innovative ideas are on the horizon.

EXPLORATION & PRODUCTION


WORLDWIDE COVERAGE

DEC EMBER 201 6


VOLUME 89

A H AR T E N E RG Y P U B L IC ATI ON

BASIN MODELING

48

Integrated modeling provides


better answers

52

Exploring tectonically complex basins

ISSUE 12

www . E P mag . co m

COVER STORY:
UPSTREAM CHALLENGES & SOLUTIONS

24

Hope on
the horizon?

CEMENTING ADVANCES

54
56
58

Taking reverse cementing offshore


Resolving well-known issues during
the downturn
Float shoe offers radial cementing solution

PRESSURE PUMPING

60

Sequenced stimulation diversion service


boosts well productivity

64

Unconventional approach to
conventional pressure pumping

OFFSHORE YARDS REPORT

66

Korean shipyards invest in automation

82

REGIONAL REPORT:
SOUTH AMERICA

28

Diversity in
the C-suite

32

Upstream investment:
a contrarian strategy

36

Offshore rig sector faces long and


winding road to recovery

40

Optimizing production,
economics in mature fields

IndustryPULSE:
Future industry turnaround
requires preparation now

10

WORLD VIEW:
The need for
transformation

68

UNCONVENTIONALS: U.S.
Recent shale activity trends
and the future outlook

DEPARTMENTS AND COMMENTARY

AS I SEE IT
A disruptive influence

MARKET INTELLIGENCE
Treading water in the Eagle Ford

16

EXPLORATION TECHNOLOGIES
The next grand challenge

19

DRILLING TECHNOLOGIES
Drilling super laterals requires super rigs, technology

21

COMPLETIONS & PRODUCTION


Small package, big results

23

SHALE SOLUTIONS
Longer laterals drive demand for high-performance semi-premium connections 42

OFFSHORE SOLUTIONS
Unlocking the value of stranded and remote offshore gas assets

44

OPERATOR SOLUTIONS
Smart drillpipe technologies for the drillers toolbox

46

TECH WATCH
A2F on track at industrial scale

72

DIGITAL OIL FIELD


Protecting actuators from cyberattacks

74

TECH TRENDS

78

INTERNATIONAL HIGHLIGHTS

84

ON THE MOVE/INDEX TO ADVERTISERS

86-87

LAST WORD
And now for a few words on safety

COMING NEXT MONTH

88

The January issue of E&P will focus on hydraulic fracturing.

Other features will include processing and interpretation; HP/HT drilling; water management;
and subsea metering, monitoring and processing. The regional report will focus on Canada.
As always, while youre waiting for your next copy of E&P, be sure to visit EPMag.com for the
latest news, industry updates and unique industry analysis.

ABOUT THE COVER As a new day illuminates the night sky over
an equipment yard, the oil and gas industry continues its work on
developing potential solutions to the numerous challenges it faces
daily. Left, Exxon Mobils play-opening Liza discovery offshore
Guyana was drilled by the Stena Carron drillship, with the operator
now estimating minimum recoverable reserves of 1 Bboe, which
will initially be developed via an FPSO unit, subject to final sanction. (Cover image by QiuJu Song, shutterstock.com; left image
courtesy of Hess; cover design by Felicia Hammons)
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
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to $25,000 for violations.

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ONLINE CONTENT DECEMBER 2016


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ACTIVITY HIGHLIGHTS

Cooper-Eromanga Basin appraisal hits 143 m of net gas pay


Santos Ltd. announced results from its #134-Big Lake appraisal well drilled in
South Australias Cooper-Eromanga Basin, PPL11. The well encountered a
net gas pay of 143 m (469 ft) across a 681-m (2,234-ft) gross Permian section.

Antelope Field completion ows 3.661 Mbbl/d of oil


In North Dakotas Antelope Field on the Fort Berthold Indian Reservation,
a Marathon Oil Co. Middle Bakken discovery has produced 3.6 Mbbl/d
of oil, 129.4 Mcm/d (4.573 MMcf/d) of gas and 4 Mbbl/d of water.

Breitburn plans to drill three horizontal smackover tests in Florida


Three Jay Field smackover horizontal tests have been scheduled in the
Florida Panhandle by Breitburn Operating LP. The #37-6 McMillan will be
drilled to a true vertical depth of 4,963 m (16,283 ft) in section 37-6n-30w
of Escambia County.
AVAILABLE ONLY ONLINE

Economists offer upbeat message


on price, production
By Nissa Darbonne, Hart Energy

Two nancial analysts told the DUG


Midcontinent conference crowd that
the oil and gas market is beginning to
look pretty good again. But will it last?

East Africa vs. Gulf of Mexico:


race for 2023 LNG supply
By Scott Weeden, Contributor

Statoil, Eni, Royal Dutch Shell and


Exxon Mobil are bringing nancial
clout into East Africa in its bid to
get to market before more U.S. Gulf
of Mexico LNG producers.

Analysts decipher Trumps


impact on energy
By Len Vermillion, Hart Energy

Hart Energys Digital News Group


Managing Editor Len Vermillion summarizes what weve been hearing from
analysts in the wake of Donald Trumps
election to president of the U.S.

No place for good ol boys


By Marcus Wagner, special to Hart Energy

Oil and gas companies are often run by good


ol boy networks, meaning that some nance
leaders arent onor anywhere nearthe leading
edge of technology.

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EPmag.com

Editor-in-Chief

MARK THOMAS

Executive Editor

RHONDA DUEY

Group Managing Editor

JO ANN DAVY

Senior Editor, Production

JENNIFER PRESLEY

Chief Technical Director,


Upstream

RICHARD MASON

Senior Editor, Digital


News Group
Associate Managing Editor

VELDA ADDISON
ARIANA BENAVIDEZ

ALEXA SANDERS

Corporate Art Director


Senior Graphic Designer

FELICIA HAMMONS

Production Manager /
Senior Graphic Designer

GIGI RODRIGUEZ

Vice President of Publishing

RUSSELL LAAS

Editorial Advisory Board

CHRIS BARTON
Wood Group Mustang
KEVIN BRADY
Highway 9 Consulting
MIKE FORREST
Consultant
GARRETT FRAZIER
Magnum Oil Tools
DICK GHISELIN
Consultant
OLGA KOPER
Battelle
PETER LOVIE
Peter M Lovie PE LLC
ERIC NAMTVEDT
Namtvedt Energy Advisors
DONALD PAUL
USC
KEITH RAPPOLD
Aramco Services
EVE SPRUNT
Consultant
SCOTT WEEDEN
Consultant
TOM WILLIAMS
RPSEA

Editorial Director
PEGGY WILLIAMS
President & Chief Operating Officer
KEVIN F. HIGGINS
Chief Executive Officer
RICHARD A. EICHLER

As I

SEE IT

Editor-in-Chief
mthomas@hartenergy.com

Read more commentary at

EPmag.com

A disruptive influence
Identifying disruptive technologies is tricky,
but filtering out hype from reality is half the fun.

he digital wave that has impacted so many industries has been dubbed the
Fourth Industrial Revolution with justification. We are all aware of how
quickly it is reshaping how we work.
So whats next out there? 4-D printing or smart dust? For those wondering, 4-D printing could be the next step in 3-D printings evolution, leading
to printing clever stuff like expanding or contracting pipe valves. Smart dust
refers to tiny wireless microelectromechanical systems, mini-robot sensors that
would be able to monitor virtually everything.
A survey by Gartner named the hype cycle report offers insights into potential technologies like those above, and its worthwhile reading. The technology
specialists hype cycle is this: Innovation Trigger, Peak of Inflated Expectations, Trough of Disillusionment, Slope of Enlightenment and lastly Plateau of Productivity.
We can all probably recall instances of thesean initial breakthrough, an
avalanche of game-changer clichs, some early failures causing discontent, a
more realistic measured understanding of what the technology is and finally
general acceptance. Many dont get past the initial failures, of course, but
there are those that do.
Heres a real-world example: GE Oil & Gas said automation has dramatically
increased productivity, with new technologies and robotics enabling it to specifically achieve cladding operations seven times faster than before. Threedimensional modeling, meanwhile, helped it reduce manufacturing workstreams for gas turbine nozzles to a single lean line, sensor-enabled and robotically enhanced, cutting lead time by 25%.
It also uses virtual reality tools to validate product designs, immersing engineers into near-full-scale virtual assemblies to ensure parts and tools fit.
A consequence might be that there is too much datawith about 10 terabytes generated every half hour by an oil rig, the fear is we will drown in petabytes. But this is where machine learningsomething some of us are still not
sure aboutis likely to play its part in providing insight into emerging trends
to make better quick decisions.
Some of this might sound optimistic, but did we truly believe 3-D printing would
happen when we first heard of it a few years go, or, if youre a little more experienced, how about when you heard that horizontal drilling would be fully commercialized with better downhole motors and new telemetry kit by the early 1980s?
The impact of disruptive technologies like data-driven digitalization is by its nature difficult to put into perspective during the
early stages but, like so many, once they are in use, we cannot
imagine life without them.
5

industry

PULSE

Future industry turnaround


requires preparation now
As soon as the downturn began, service companies needed
to begin preparing to train new employees for the turnaround.
Companywide systems and processes
John Raine, Weatherford

he current market downturn has resulted in significant reductions in the head counts of service companies. As fallout, the big crew change that the industry
has been anticipating for years might happen a little
bit sooner than expected. When markets recover, it is
unlikely that companies will be rehiring the people that
left the organizations in the first place. Some people
have moved to other industries, while others have chosen to retire.
Service organizations have been through this scenario before and recognize that the loss of experienced
hands can lead to an increase in incidents. As the
industry begins to recover, companies will hire people
who lack industry experience, whether they are fresh
out of college or recruits from other industries. What
can companies do to prepare for the coming influx of
new hires? The industry should take the downturn as
an opportunity to make strategic impacts on safety.

During the past 18 months to two years Weatherford has


instituted a simple but effective system that organizes
everything from expectations of HSE performance to
streamlined processes and procedures. The companys
Operational Excellence and Performance System (OEPS)
sets the organizations standards for service quality, health,
safety, security and the environment (QHSSE).
The OEPS also puts all relevant operational documents and procedures online so that they are
available to employees no matter where they are
working. Following the implementation of the OEPS,
Weatherford has seen an increase in positive performance year over year, with 2015 being the companys
safest year yet.
Because these changes were made systematically at
a companywide level, safety is now embedded in the
companys culture, driving continual improvement and
ensuring that the company only gets better. At the end
of the day, the engine for improvement internally is driven by the need to improve service quality to customers.

Safety-service-quality connection

The process of building a trained, qualified and competent workforce


yields long-term benefits, including enhanced safety and service quality.
(Source: Weatherford)

By streamlining all operational information into a single system, Weatherford can better understand what,
when and why employees engage in activities that pose
medium-to-high risks to the organization. As risks are
identified, the company ensures there are technical
training programs in place to address those risks. These
programs will become especially valuable as the big crew
change takes effect.
With an existing process in place to onboard employees, provide continued education and ensure competency, the challenge of increasing head count becomes
much more important to address head on. The very first
touch point in this process is the Right Start onboarding program, which is aligned to the International
Association of Drilling Contractors, Rig Pass and other
industry expectations.
Once employees complete Right Start, they become part
of the Short-Service Employee Program, which can last
anywhere from six months to one year. As they progress
December 2016

EPmag.com

industry

PULSE

trained and competent people. These efforts, combined


with the implementation of the OEPS, resulted in a
record-setting safety performance for the company in
2015despite the year being a low point for the industry in many ways.
Among the safety improvements recorded in 2015
were a 16% reduction in the total recordable incident
rate, a 23% decline in the lost-time incident rate and a
33% decrease in the preventable vehicle incident rate.
Forty-three of the companys
manufacturing facilities experienced no lost-time incidents, no
recordable injuries and no preVerification
ventable vehicle incidents.
A company can put a safety and
In September 2016 Chevron
service quality management sysrecognized Weatherford for
tem in place, educate employees
achieving a record of 15 years
on it and tell people about it.
with zero lost-time incidents at
But unless a company can get
the operators Malongo Base in
out in the field as a leadership
Cabinda, Angola. Additionally,
team and verify things are hapWeatherford Tubular Running
pening, it will be difficult to
Services recently completed a
make measured progress.
large-scale deepwater developWeatherford addressed this by
ment campaign for Chevron
implementing new documentaAustralia with zero nonproduction procedures and by placing
tive time (NPT). The mechahigh-level leadership involved
nized casing-running system with
in five critical locations in every
14-50 and 7.6-30 power tongs
region. As part of the OEPS
was instrumental in executing
implementation process, the
a nine-well campaign for the
company conducted audits at its
Chevron-operated Wheatstone
facilities around the world. Areas
Project in Western Australia.
for improvement were identified,
The campaign involved making
strategic action plans were impleup 6,923 tubular connections
mented and leadership providduring 68 casing and completion
ed oversight to make sure any
Weatherfords OEPS sets the organizations standards
operations and was completed
problems were addressed. The
for QHSSE. (Source: Weatherford)
without NPT.
verification program drives global uniformity and enables lessons learned to be shared
throughout the company to continuously enhance safety
Laying solid groundwork
and service quality.
The importance of setting a high bar for current
In addition, the company developed the easy-to-use
employees and new hires through safety and service
IOS application called Verified, which is being installed
quality programs cannot be underestimated. Companies
on every operational managers device. Verified can be
throughout the industry must strive to ensure that every
used during supervisor site visits to confirm that operaemployee returns home safely to their loved ones at the
tions are being conducted successfully. If any issues are
end of the day, that the highest level of service quality
found, auditors can very quickly provide feedback and
is delivered to clients and that the environment is the
raise actions within the system that need to be done.
same or better than how it was found.
By achieving a safe and healthy working environment
now, the industry will be ready to integrate new employResult: record-setting safety performance
ees to the highest safety standards when the rush of new
When Weatherford was faced with reducing its head
hires begins.
count, the company did so strategically to keep the most
through their career with Weatherford, continued competence assurance assessments and trainings will be provided.
The companys Competence Assurance Process evolved
through risk-based evaluation and gap analysis to ensure
the right personnel are selected for each task. All of this
work was done with an end goal of improving the service
delivered to the customer. The time and capital spent to
build a trained, qualified and competent workforce yields
long-term benefits, including fewer service disruptions,
improved safety and reduced
environmental risk.

December 2016

EPmag.com

world

VIEW

The need for transformation


Saudi Aramcos president and CEO outlines his four-point framework for success.

Rhonda Duey, Executive Editor

t the recent Society of Petroleum Engineers (SPE)


Annual Technical Conference and Exhibition 2016,
Amin H. Nasser, president and CEO of Saudi Aramco,
gave the opening ceremony keynote speech in which he
discussed his vision for a transformed industry. This is
an excerpt of that speech.

Present scenario
Lets rst recap the energy landscape. World demand is
on a steady, if moderate, course.
While its pace has been tempered by energy efciency
gains, demand will be impacted by global population
growth expected to pass 9.5 billion by 2050, and rising
living standards in developing economies. Meanwhile,
alternative energy sources are gaining ground.
Yet renewables and emerging technologies like electric
vehicles and fuel cells have technical, economic and infrastructure hurdles to pass. And that takes time.
So for years to come, the call on energy will be met by
oil and gas, and oils central position, especially in heavy
transport and petrochemicals feedstock, will remain
solid. But the oil and gas resources we have available, as

well as new discoveries, are more challenging and more


expensive to develop. At the same time, the present oil
and gas elds are becoming increasingly mature and
complex to operate.
Environmental pressures are intensifying amid misperceptions about our support of a cleaner environment.
While the oil market has recovered from its most severe
period, its still weak.
With investments into new oil and gas capacity being
cancelled and deferred around the world, supply growth
has started falling, especially U.S. shale oil.
Despite volatility, the market is heading toward rebalance,
and prices are likely to strengthen with time. However, market volatility could remain with us for the near future.
In light of this backdrop, Id say the industrys present
business and operating model is not up to the tasks ahead.
Id like to discuss an integrated four-point framework that
can stand up to the energy transitions; policy, environmental and regulatory trends; rising complexity of operations; and other variables at play.

Resilience

The rst point on our new business model is resilience.


Unprecedented pressures face the industry in this persistent low oil price environment, especially in terms of
nances, cost and technology. As we
see in the nancial arena, companies
with weak nances are facing serious
difculties, especially those that are
smaller and overleveraged. Strong
nancial capacity to pass through difcult patches is clearly important to
future resilience.
As it stands, $1 trillion in costly,
challenging and marginal resources
may be delayed or canceled by the
end of this decade. Yet long-term
investments must be maintained
to develop new capacity and keep
technology on track. And thats
where greater efciency and cost
competitiveness come in: spotlighting things we can do better and
cheaper without compromise on
Nasser gave the opening ceremony keynote speech at the September SPE meeting in Dubai.
safety or the environment.
(Source: Saudi Aramco)
10

December 2016 | EPmag.com

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Expansion of the Shaybah Field, located in the northern edge of the Rub Al-Khali or Empty Quarter desert, is one of Saudi Aramcos large-scale
oil production projects designed to meet anticipated future demand. The expansion increased production of Arabian Extra Light crude oil by
250,000 bbl/d, raising overall production capacity to 1 MMbbl/d. Shaybahs NGL program delivers on gas production for fuel and feedstock for
domestic industries and displaces liquids as a source of generation. (Source: Saudi Aramco)

Research and high-end technology


Innovation has always been the upstream sectors driving force, an area no one knows better than the SPE. In
recent years, we have seen it take E&P to epic proportions:
Opening new sources of hydrocarbon supply such as
shale oil and gas;
Making exploration more effective and improving
recovery factors;
Lightening our carbon footprint;
Increasing protability; and
Broadly expanding our knowledge and capabilities.
Clearly innovation cant stand still, but it cant plod
along, either. We have to push the envelope.
Saudi Aramco is doing just that as part of our strategic
intent to become a global integrated energy and chemicals company. Were using an open innovation model
to pursue R&D that complements our in-house resources
by three other major vehicles. The rst is strategic alliances with academic institutions, service companies
and technology developers. Second, we have a total of
11 satellite research centers and technology ofces on
three continents, giving us access to world-class talent
and expertise in all corners of the world. And the third is
the use of venture capital through our subsidiary, Saudi
Aramco Energy Ventures, which invests in cutting-edge
technology startups.
Were also leveraging technology to increase recovery
in our oil reservoirs from the current average of 50% to
70% and improve exploration to take our resource base
to 900 Bbbl.

Top-notch talent
But investing in technology and research to solve E&Ps
big challenges also calls for investing in the people who
12

will develop and use these tools. The alternativeputting the recruitment, development and retention of top
talent on the back burner during a downcyclewill only
come back to haunt us. Now is the time to reboot our
approach to human resources [HR].
Thanks to technology, the deep functional expertise
of the past has given way to multidisciplinary skills for
cross-functional challenges. And the learning curve for
staying on top of new technologies, methods and standards is getting shorter.
Id like to highlight some talent solutions were implementing at Saudi Aramco. To switch gears from traditional training to a more immersive, hands-on approach,
we developed our Upstream Professional Development
Center. The center helps to compress the time for newer
engineers and geoscientists to hit the ground running
while capturing the knowledge and experience of more
senior professionals.
In another paradigm shift, King Fahd University of Petroleum and Minerals collaborated with us to establish its new
College of Petroleum Engineering and Geosciences. This
pioneering college seeks the best undergraduate and graduate students to pursue state-of-the-art studies and research
in a creative, multidisciplinary environment that integrates
classroom, lab and eld. Students are challenged to achieve
stretch targets with the overall objective of maximizing
discovery and recovery of hydrocarbon resources. Its rst
cohort of students graduated last spring, and we expect
research-oriented Ph.D. enrollment to grow tenfold.
Another urgent HR challenge facing the industry is
bringing more women into the upstream.
Increasing womens representation is a big focus for
Saudi Aramco, in our company but also through programs that develop their business potential in general.
December 2016 | EPmag.com

This diversity objective especially resonates in the Kingdom, where women are highly educated but underrepresented in the workforce.

Collaboration
The rst three aspects of industry transformation
through a new model converge in point No. 4.
And thats collaboration. As oil companies, service
providers, technology developers, higher education and
others come together in strategic cooperation, its clear:
Resilience, technology and talent integrate and overlap.
There are many areas in which the industrys interests are
aligned, and collaboration can pool resources, spread costs
and enhance the chances of success.
Enhancing our industrys reputation is one such area
where we have been historically lacking.
Partners can help tell our story and shed new light on
our strides in sustainability.
A recent example is the industrys joint efforts to
highlight its role in reducing carbon emissions and conventional pollutants, notably the Oil and Gas Climate
Initiative declaration. Another area where collaboration
can make a big difference is for oil companies, contractors
and service companies to radically improve project designs
and cut costs. Evolving energy and environmental policies
and creating a level playing eld among various energy
sources are also potential topics for strategic cooperation.

Transformation needed
Our sector is undergoing dramatic, complex shifts like
never before. Merely adapting or reacting to change is
only a stop-gap. These dynamics call for us to transform
through a holistic process that spans every dimension,
from technology and operations to HR and organization.
In my view, the new business model Ive sketched out
in part today [Sept. 26] can help us meet the challenges
ahead, with:
Greater resilience through better nancial management, improved project designs, major cost reductions and other efciencies;
Research, technology and talent as our long-term
success drivers; and
Cooperation that multiplies strengths and resources
toward mutual goals.
And to strengthen the new model, we as an industry can
work more closely with SPE both as a platform for discussion
and a catalyst for action. Innovating our business model in
this way can deliver the reinvention needed in disruptive
times and position us even better for the recovery.
Nassers full speech can be accessed at Saudi Aramcos website.
EPmag.com | December 2016

15

market

INTELLIGENCE

Treading water in the Eagle Ford


Until commodity prices improve and stabilize, the Eagle Ford
will remain overshadowed by the high-flying Permian Basin.
locations into the drilled but uncompleted (DUC)
category. Well completions ranged between 110
and 120 monthly through third-quarter 2016 as
ouston, the Eagle Ford has landed. Unfortunately,
some operators reduced DUC inventory.
the play is not yet ready to soar. South Texas was
Drilling contractors are reporting more phone calls
among the hardest hit markets in the downturn, with
and some tire kicking as operators investigate the
drilling levels down more than 85% from peak. Indeed,
availability of Tier I pad-optimal drilling rigs. So far,
rig count actually dropped again early in fourth-quarter
those inquiries have not materialized into additional
2016 but edged back into the mid-30-unit range as the
work, and rig providers do not expect any significant
industry heads into the holiday season.
increase in activity through first-quarter 2017.
South Texas has seen oxygen sucked out of the Eagle
Drilling contractors report 34% utilization, with
Ford as operators reallocate capital to the lower cost
two-thirds of the regional rig fleet stacked. Rig rates
Permian Basin. Service providers are following demand
for the benchmark Tier I 1,500-hp AC-VFD unit
with regional well stimulation fleet count moving up
averaged $15,300 per day, virtually unchanged since
or down monthly as equipment and crews continually
third-quarter 2016. A few rigs are on legacy term
rotate between the Permian
contracts, some of which are
Basin and the Eagle Ford.
slated to expire in the next
n Modest signs of recovery appear
The regional pressure
180 days. Otherwise, work
in Eagle Ford well stimulation.
pumping fleet fell by one to
is well-to-well, with spot
n Lower cost Permian Basin draws
22 in mid-November, with
market daily pricing rangcapital away from South Texas.
525,000 in hydraulic horseing between $14,500 and
power active in the play.
$18,000 for the most desirn Operators experiment with hybrid
Price per stage rose on the
able pad-capable rigs.
gel completions.
basis of more proppant and
Workover contractors
an increase in average lateral
also report 35% utilization.
length coupled with a modest reduction in spacing
Recent restructuring among national-level workover
between stages to an average 65 m (214 ft).
providers who market fleets in the Eagle Ford underSlickwater plug and perf with 400,000 lb to 500,000
score the challenges facing the sector. Prepackaged
lb of sand per lateral constitute the standard Eagle
restructurings keep companies viable but dont
Ford completion recipe. Operators are experimenting
change the competitive landscape since equipwith a closing slug of crosslink gel and coarser regionment and crews are not removed from the market.
al 30/50 sand at the end of each stage to improve conIncreased utilization at below breakeven pricing will
ductivity, which also boosted the price per stage.
not help workover companies improve viability.
Operators are now routinely completing wells as
Contractors report skilled labor is now in short supdrilled, although the percentage of zipper fractures
ply after many workers left the industry for construchas not changed over the last 90 days, with solo fraction jobs or work in the Gulf Coast refinery complex.
tures representing 57% of job mix, down modestly
Meanwhile, operators remain wary of committing
from 59% this summer.
to new work because of commodity price volatility.
Operators have been drilling Eagle Ford wells
Well stimulation contractors indicate customers
at a pace of 80 wells per month in fourth-quarneed $54 oil and $3.50 gas to expand completion
ter 2016, up from a low of 66 when the market
programs, while hard-hit drilling contractors indibottomed in June, according to the U.S. Energy
cate customers wont significantly expand drilling
Information Administration. Operators are mostly
activity until oil prices are closer to $60, a price well
completing wells when drilled instead of banking
above the industrys 2017 expectations.
Richard Mason, Chief Technical Director

16

December 2016

EPmag.com

exploration

TECHNOLOGIES

The next grand challenge


The latest SEAM project is focusing on life-of-eld seismic,
geomechanics and reservoir simulation.

RHONDA DUEY
ver since Ive covered the oil and gas industry, the
Executive Editor
concept of multidisciplinary integration has seemed
rduey@hartenergy.com
like the missing Holy Grail. Different disciplines need
to know complementary things about their reservoirs,
Read more commentary at
but their different jargons and data familiarity just
EPmag.com
have never seemed to match up very well.
This is truly the case with time-lapse seismic, also
known as 4-D seismic. Seismic measurements can tell
join as participants. Member companies select the
a lot about certain reservoir changes over time, but
scenarios and make all of the technical decisions. The
reservoir engineers are not always familiar with these
end result will be benchmark datasets to be used for
types of data, and geophysicists might not recognize
further R&D, software development and training. But
their implications in eld development.
the greatest value is in the collaboration to optimize
You get each expert from different disciplines,
workows on known models uninhibited by conand they know what theyre doing, said Mike Meldential data.
len, director of business development at The SociEarlier this year RPSEA, under contract from the
ety of Exploration Geophysicists (SEG) Advanced
U.S. Department of Energys National Energy TechModeling Corp. (SEAM). But when you pull it all
nology Laboratory, funded
together, you start to nd
SEAMs Time Lapse Pilot
inconsistencies in the way
Project. This short six-month
different disciplines make
proof-of-concept project was
assumptions and view the
a prelude to the current Life
subsurface. As you start to
of Field project. The results
gather more perspectives
were very promising and
and more data from more
helped identify a wide variety
viewpoints, the uncertainties
of multidisciplinary issues
start to narrow down.
that will be attacked in the
SEAM was formed 10 years
full Life of Field project, Melago to tackle just this sort
This is a schematic diagram of multicomponent
len said, adding that the full
of challenge. SEAM is the
ocean-bottom node acquisition over the SEAM
project has enough members
research arm of the SEG. Past
Time Lapse Pilot elastic model. Seismic, gravity,
to run several different geoSEAM projects have focused
electromagnetics and petrophysical simulations
logic/production scenarios.
on geophysical challenges in
were run in a time-lapse fashion along with
The hope is that more memland and marine seismic as
simultaneous geomechanical and reservoir ow
bers will join, increasing the
well as pore pressure predicmodeling. (Source: SEAM)
number of simulations that
tion and hazard avoidance.
can be run. Depending on membership interest, CO2
The current project, Life of Field, signicantly broadens SEAMs scope. With technical assistance from the
injection and sequestration or other EOR techniques
Society of Petroleum Engineers, SEAM will model
might be included.
geophysical, rock physics, petrophysical, geomechanSEAM focuses on grand challenges, Mellen said.
ical and reservoir ow responses over time in a numWere trying to pull together
ber of geologic and production scenarios.
larger groups of people from
The Life of Field project brings SEAM together
across the industry to attack
with experts from E&P and service companies that
these grand challenges.

EPmag.com | December 2016

19

drilling

TECHNOLOGIES

Drilling super laterals requires


super rigs, technology
The next generation of rig and completion technology will have more
automation and better data integration to improve drilling times and
increase production efciency.

n emerging trend toward drilling longer and


SCOTT WEEDEN
more complex laterals, so called super laterals,
Contributing Editor
is driving drilling rig manufacturers to innovate.
slweeden@hartenergy.com
This drilling technology trend will add to our
opportunity for our Rig of the Future. We plan to
Read more commentary at
have two rst-generation rigs in operation in U.S. land
EPmag.com
in fourth-quarter 2016, said Paul Kibsgaard, Schlumberger CEO, during the companys third-quarter 2016
conference call Oct. 21. We are prepared to put more
Schlumbergers Drilling and Measurements group
capacity into play on the drilling side of whats going
used a combination of technologies to drill the Puron in West Texas. We are on track with both the engiple Hayes, including the PowerDrive vorteX-powered
neering and manufacturing of the Rig of the Future.
rotary steerable system and the TelePacer modular
Kibsgaard called the two rigs pilot versions since
MWD platform that provided a congurable set of
a significant number of new features are included
integrated measurements. These were paired with
but not all. Few details on the rig specifications
a Smith Bits customized polycrystalline diamond
were discussed.
compact bit with thermally stable diamond inserts to
We are going to be operating them around the
extend bit life.
overall software platform of how we want to do the Rig
According to Schlumberger, this well is the longest
of the Future going forward. The complete version of
onshore horizontal lateral ever drilled in the U.S. The
the rig is going to be rolled out in 2017, he said.
well was drilled in one bit run. The
Eclipse Resources has some expesuper lateral helped Eclipse reduce
rience with an 18,500-ft (5,639-m)
costs by decreasing the number of
super lateral in the Utica Shale in
Super laterals
horizontal penetrations required to
Ohio. Thomas Liberatore, Eclipse
develop the reservoir.
Resources executive vice president
drive rig
Eclipse said in its October 2016
and COO said in the companys
manufacturers to
investor presentation that the lesrst-quarter 2016 report, The
greater innovation
sons learned give it the ability to
company completed drilling its
maximize lateral lengths on all of
extended-reach lateral test well,
and automation.
its operated acreage. The company
which we refer to as the Purple
has an estimated 339 locations with
Hayes well, with a completed latlateral lengths greater than 13,000
eral length of just over 18,500 ft
ft (3,963 m) and 294 locations with lateral lengths
in the condensate area of our Utica Shale acreage in
more than 15,000 ft (4,573 m). What also was amazing
under 18 days.
was drilling more than 18,500 ft in a single bit run
The well has a total measured depth of 27,048 ft
talk about drilling on!
[8,246 m], including the lateral extension. Our comMost recent acquisitions in shale
pletions team was able to successfully complete 123 of
plays have been bolt-on acreage that
124 planned stages as designed at an impressive 5.3
would allow companies to drill
average stages per day, and we saw no issues in commore super laterals.
pleting the toe stages of the well.

EPmag.com | December 2016

21

completions &
PRODUCTION

Small package, big results


New slimline ESP offers operators a solution for their small-diameter wellbores.

asing sizes have shrunk as unconventional wells


JENNIFER PRESLEY
have gone deeper. These smaller diameter wells,
or those with restricted space due to casing patches
Senior Editor,
or complex completion designs, can be especially perProduction Technologies
plexing when the time comes to articially lift them.
jpresley@hartenergy.com
Pumps need space, and that space decreases the
Read more commentary at
closer the pump gets to the reservoir.
EPmag.com
With the release of its CENtrilift PASS slimline electric submersible pump (ESP) system, Baker Hughes
When the ESP is installed vertically, the production
added a new solution for operators looking to lower
stream bypasses the gravity cups, and mechanical vortex
their lifting costs in these perplexing wells while optigas separation technology diverts gas away from the
mizing production to increase reserve recovery. It is
pump and into the annulus. For applications that only
the industrys only small-diameter ESP system capable
require mechanical gas separation, the CENtrilift PASS
of operating at ow rates down to 50 bbl/d, according
system includes a vortex gas separator. Unlike rotary gas
to a company press release.
separators, the vortex design is more efcient and far
At 3.38 in., the slimline ESP system is smaller in diammore effective at separating gas from the uid before it
eter than a standard hamburger bun but larger than a
can enter the pump, according to the company.
baseball. Closer in diameter to a croquet ball, the sysAny gas that does enter
tem is capable of operating
the pump is effectively
at ow rates as low as 50
handled by combining a
bbl/d and as high as 2,500
GI gas insurance boost
bbl/d through its use of
pump and a FLEXthe FLEXPumpER extendPumpER pump. Both
ed-range pump. This
pump designs are engiwide-operating range mitneered to optimize perforigates the need to change
mance in the presence of
out pumping systems as
gas. When the two pump
production rates decline,
technologies are deployed
the company said.
together, the system can
Gas entrained in the
handle more than 60%
production stream or gas
gas volume fractions
slugs that break out of the
At 3.38 in., the CENtrilift PASS slimline ESP system offered by
through the pump, the
reservoir are managed
Baker Hughes can operate at ow rates between 50 bbl/d and
release said.
through the combination
2,500 bbl/d. (Source: Baker Hughes)
With a pressure rating of
of natural and mechan5,800 psi, the ESP can be installed deeper in the well
ical separation in a single design to minimize the
and closer to the reservoir for greater reservoir pressure
amount of gas entering the pump, regardless of welldrawdown and higher recovery rates. Enhancements to
bore orientation.
the motor design improve the mechanical and electrical
When the ESP is deployed in a horizontal or devistrength of the motor by 30% while reducing the angle
ated orientation, gravity cups shift to block the pump
of the motor-to-cable connection
inlet ports on the high side of the intake where the
to mitigate potential damage
gas accumulates, preventing the gas from enterduring installation in smaller
ing the pump and venting it into the annulus, the
diameter wellbores.
release said.

EPmag.com | December 2016

23

COVER STORY: UPSTREAM


CHALLENGES & SOLUTIONS

HOPE

on the horizon?
Despite a challenging environment, the oil and
gas industry still has a few tricks up its sleeve.

The ability to apply a combination of


horizontal drilling, hydraulic fracturing
and advanced completion technology
at scale has had a profound impact
on the industry. (Source: Cameron)

24

December 2016

EPmag.com

COVER STORY: UPSTREAM


CHALLENGES & SOLUTIONS

Rhonda Duey, Executive Editor

hat would solve the upstream oil and gas industrys problems? Many might simply respond, $100
oil. And they would be partly right. But dozens of challenges plague the industry that have little to do with low
commodity prices.
E&P talked to several experts, including many of our
editorial advisers, to address the challenges the upstream
faces and their potential solutions. While many of the
challenges are technical in nature, others are on a larger
scale and encompass everything from carbon capture to
the crew change. We also asked them to address how far
weve come technologically and some of the low-hanging technology fruit that, with a little tweaking, could
address these issues almost immediately.

Tough challenges
Many of the industrys largest challenges have nothing
to do with seismic acquisition or fracture fluid. Larger
challenges loom.
There is a loss of qualified, experienced workforce
and attrition in technical expertise within both operators
and service companies, said Olga Koper, energy business development leader for Battelle, pointing to a large
decrease in innovation within these companies coupled
with the bankruptcies of many small businesses and
decreased funding to academia and research institutes.
Dick Ghiselin, a consultant for Qittitut Consulting,
added, The big crew change has always been a threat,
but today because of the recession the threat is even
more critical. Who are the engineers and geoscientists
of the future? Where will they come from?
Of equal concern is the increased scrutiny of the
industry, particularly in light of climate change findings
and earthquakes resulting from induced seismicity. This
will impact the industrys social license to operate.
Concerns about climate change are becoming
more widespread along with pressure to do something
about it, said Eve Sprunt, a consultant. The carbon
tax can take many forms and will increase costs and
limit opportunities.
Koper listed several aspects of this concern, including
emissions reduction and the development of carbon
capture and sequestration technologies at a large scale.
And all of this leads to increased regulations. Tom
Williams, president of RPSEA, said that in addition to
the commodity cycle, companies are reeling due to
regulations that are politically driven rather than being
science-based. New regulations have contributed to a
EPmag.com

December 2016

number of wells never being drilled, or drilled and not


completed, or being prematurely plugged, thus losing
access to countless millions of barrels of reserves or
lost opportunities of wells not being drilled because of
regulatory restrictions for adding needed production
infrastructure, he said. Even proposed rulemaking
processes are extremely costly, and the uncertainty adds
to the cost to operate.
I do not believe anyone could have ever predicted
the fluctuation in commodity prices or the added regulatory burdens that have transpired over the past eight
years impacting the cost to produce fossil fuels.
Low commodity prices, increased regulations and
technological challenges have combined to stymie the
industrys ability to replace reserves. While there have
been some incredible discoveries in recent years, overall the discovery rate is down, and operators are being
forced to explore in harsher environments. This leads to
higher HSE costs and more difficulty in securing acceptance from stakeholders and the public, Koper said.
This is a particular problem in deep water, where low
commodity prices have caused several projects to stall.
Deep water needs to get back on track as the world
will need deepwater oil production in a few years, said
Mike Forrest, a consultant. The oil price decline has
generally negatively impacted deep water more than
the U.S. unconventional plays. He added that the
industry needs a higher success rate for larger fields,
innovative development systems in a faster time and at a
lower cost, an increase in recovery rates and oil/service
company collaboration.
Peter Lovie of Peter M. Lovie PE LLC added, The
prospects are no longer as good for traditional offshore
developments as they looked three years agothe double whammy of lower oil prices and shale competition.

Biggest advances
Few will disagree that multistage hydraulic fracturing
coupled with horizontal drilling has been the biggest
change in the last two decades, said Don Paul, executive director of the USC Energy Institute, William M.
Keck chair of Energy Resources and research professor
of engineering at the University of Southern California,
noting that the ability to apply a combination of horizontal drilling, hydraulic fracturing and advanced completion technology at scale has had a profound impact
on the industry.
Sprunt added that the recognition of shale as a reservoir opened the door to combining these technologies,
and Forrest said that overcoming preconceptions about
shales was a big step in the right direction.
25

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CHALLENGES & SOLUTIONS

Ghiselin said a greater focus on production data has


led to the development of products like Manara, a joint
project between Schlumberger and Saudi Aramco that
enables real-time reservoir management using downhole data, and ForOil, which provides ultrahigh-speed
processing of massive amounts of digital reservoir data
and enables operators to predict future events in the
lives of their fields.
Greater computational power also has enabled
improvements in seismic images in complex plays,
according to Forrest.

Low-hanging fruit

While there have been some incredible discoveries in recent years,


overall the discovery rate is down, and operators are being forced to
explore in harsher environments. (Source: Geospace Technologies)

Sometimes the best new technologies are considered


crazy ideas early in development, and there can be
considerable skepticism, Forrest said. Ten years ago
friends told me oil recovery from tight shales would
probably not work. The U.S. is now producing more
than 4 MMbbl/d from tight oil plays.
Lovie added that the shale plays have picked up where
deep water might have left off. The demise of [RPSEA]
and [DeepStar] reflects a new world of technology
advances in the E&P world, he said. This coincides
with two phenomena: one, the obvious major downturn,
and two, the rise of the U.S. as the worlds leading oil
and gas producer via advances in shale-related production. In the shale world it becomes possible to increase
production without committing to giant capex projects
that take years to come online and have to show adequate returns from the capex commitment.
But other advances also have been key enablers.
When asked, What have been the biggest technology advances in recent years? CTO for GE Oil & Gas
Kishore Sundararajan simply replied, The way we use
data. He added that the industrys ability to manipulate data and architect it has seen vast improvements.
26

While there are some fixes that, with a bit of extra time
and R&D, can add extra fuel to the fire, Lovie said, I
question if there are any trees with much of this mystical
fruit still around.
Still, data analytics continues to rear its head as an
almost endless opportunity. Digitization and data processing can shed a lot of light on the future at a relatively low investment cost, Ghiselin said.
Koper added, Proven case studies exist on how and
in which areas data analytics increase return on investment for oil and gas companies.
Additionally, the extension of smart oilfield technologies will help lower costs and operations, Paul
said. We also are seeing the growth in the application
of Big Data and analytics platforms to inform better
decision-making in a capital-constrained environment, he said.
Much of the new data revolution is guided by better
sensor technology. Sprunt said a greater use of remote
sensing technologies will aid the industry in finding
and producing oil and gas. And Sundararajan said
systems engineering, which the aviation industry has
been using for a number of years, has good value for
oil and gas. Already GE is working with Shell and BP
to advance this concept.
Another change GE is driving is standardization.
Thats a tougher problem, to bring customers
together, Sundararajan said. But Im happy if we
can standardize for a single customer.
Other low-hanging fruit revolves around water and
fluids, Sprunt said. Already technologies exist to process
produced water and recycle and reuse fracture fluids,
and these technologies are likely to gain traction as
concerns about freshwater use and disposal wells grow.

Game changers
In addition to the low-hanging fruit, there are some
game-changing technologies and ideas that have the
December 2016

EPmag.com

COVER STORY: UPSTREAM


CHALLENGES & SOLUTIONS

potential to revolutionize the industry. Many of these


leverage existing technologies from other industries.
Koper, for instance, mentioned the use of nano-materials for improved production, stimulation and monitoring as well as general field digitization. There was also
a general consensus that the industry could do a better
job powering the oil field.
Koper suggested that emissions and heat losses
could be converted into value-added applications, and
Williams looks forward to the electrification of the oil
patch. This will allow us to run our business off of the
power we produce; have more efficient power to drill,
complete and produce; better monetize our gas, eliminating flaring; reduce truck traffic, emissions and noise;
lower our footprint; and improve the net price for oil
and gas produced, Williams said. We will have to, and
we can, improve our power delivery and power storage
systems to make this happen.
Paul suggested the use of robotics to automate operations. Some engineering and technology companies such as GE are calling on the Industrial Internet
of Things paradigm as the way of the future for the
upstream, he said. We are seeing the same view being
discussed in other industries. Given the challenges of
implementing such changes for many legacy producing

assets, this is likely to take considerable time, but the


long trend seems very powerful and could materially
reduce costs, increase the reliability/integrity/safety/
environmental performance of our facilities and overcome potential shortfalls in the talent pool.
Finally, respondents put forward the idea of new ideas
and better business models. We need new business
models that give the local population a greater financial
stake in the upside of oil and gas operations so that the
locals personally benefit from the production and are
therefore more tolerant of the impact, Sprunt said.
Paul added, The business challenges for the industry
fall into three general classes: lower total costs per barrel; sustainable capability by managing the industry talent pool transition; and sustainable license to operate
resulting from improvements in operating reliability,
asset integrity, safety and environmental impacts.
But the ultimate game changer might simply be a disruptive idea that tips the industry on its ear. Paul
agreed with Sprunt, and Williams added, Some very
smart people will create a disruptive way of using technology for this business: the oil and gas equivalent of
Uber, he said. I think this is likely and will probably
focus on offshore, and many of us in the industry will
be asking, Hey, what just happened?

Offshore is ripe for disruptive technology.


(Photo by curraheeshutter, Shutterstock.com)

EPmag.com

December 2016

27

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CHALLENGES & SOLUTIONS

Diversity in the C-suite


The energy industry requires new thinking to lead tomorrows workers.

Deborah Byers and Glenn Nevill, EY

hen oil prices began their slide in late 2014,


energy executives responded as they typically
do during a downturnparing back workforces,
canceling capital-intensive projects, reducing spending wherever possible and waiting for an uptick. But
as 2017 looms and the market shows little sign of
improvement, oil and gas executives are beginning to
realize that lower-for-longer oil prices will reshape the
industry and their individual companies in dramatic
and long-term ways.
The era of energy abundance requires a new strategic approach and a workforce that has both unique
competencies and diverse perspectives. The oil and gas
companies best positioned for success are those that
can make the transition to a less rigid, more collaborative future. To prepare, oil and gas executives should
be asking themselves:
How should we alter our talent pipeline, recruiting
and retention practices to best align our workforce
with the companys strategic direction and the
changing requirements of the global marketplace?

What skills and experiences will our future company


leaders need, and what should we be doing today to
develop those capabilities?
Addressing these questions now will produce future leadership teams capable of guiding a workforce increasingly
composed of millennials, a generation of employees who
have markedly different needs and expectations of work.

New generation of leaders

Most oil and gas CEOs have traditionally come from


operational backgrounds, which are still predominately
male-dominatedall the way back to undergraduate petroleum engineering programs. A recent study by the American Society for Engineering Education found that in the
2012-2013 school year, just 14% of petroleum engineering
graduates were women. From a broader perspective, of
the 93,000 engineering undergraduate degrees awarded
that year, only 19% went to women, a percentage that has
been relatively unchanged for more than a decade despite
efforts to increase interest in science, technology, engineering and math careers among women and minorities.
Those numbers are reflected in the percentage of
women in key positions across the industry. EYs recent
study of gender diversity in oil and gas found that 11%
of the industrys top global executives are women,
many in traditional staff areas such as law, human
resources, and administration or finance, where
they are typically siloed.
While the survey found that three-fourths of
respondents believe their companies have done
a good job of attracting and retaining women
employees, half said their companies have been
effective at identifying future female leaders and
promoting women into leadership. In fact, 63%
of respondents believe women remain the most
underutilized talent resource in the sector.
In other words, companies might be successful
in hiring women, and most make a concerted
effort to do so, but those women often are not
going into the talent pipeline that develops individuals for future C-level positions.
What happens if companies alter this mindset and
reconsider the pathway to leadership?
For the most part, todays executives began their
Women in the oil and gas industry often end up in more traditional roles that
careers as engineers and learned the financial,
dont have a direct path to the C-suite. (Source: EY)
28

December 2016

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CHALLENGES & SOLUTIONS

legal and human resources elements of leadership


through various assignments over the years. With the
right exposure and opportunities, future executives
could begin as accountants or lawyers and learn the
operational aspects of the business in the same manner.
This type of strategic retooling of the executive
development pool comes at a time when the needs of
companies and their workforces are evolving as well,
in large part due to rapid developments in technology,
the influence of younger employees and the changing
demands of the oil and gas business itself.
So what will the future of work look like for companies in the energy industry?

Future of work
In EYs ongoing study of these major trends and their
potential impact on the future of work, it has identified
seven major elements, or levers, companies in oil and
gas will need to address:
Purpose: Increasingly, corporate executives believe
an organization with a shared purpose, often one
that blends their corporate and social agenda,
is more successful in transformation activities.
Millennials are also more likely to choose a company with a commitment to community and/or social
motives if all other factors were the same;
Digital leadership: A majority of workers think their
job requires human abilities and interaction that
technology will never replace. Empathy is identified
as the most critical attribute for the next generation of digital leaders;
Teaming ability: The continuing need for innovation
is demanding more effective collaboration and teaming. Virtual and network teams will dominate the
new landscape. New ways of working, new mindsets
and new behaviors around work are required;
Mind clarity: The competition for talent is driving
companies to focus on employee experience and
employee wellness. Employees look to work as a
means of growth and fulfillment;
Performance and rewards: The nature of pay and
benefits is changing. Companies need systems and
structure to reinforce employee needs and priorities. High pay is no longer sufficient to attract talent. New approaches to driving behavior change
are required;
Technology experience: Employees increasingly want
the same seamless digital experience at work they
are able to get at home and on personal devices, and
they quickly get frustrated when their companies
cant make that happen; and
30

Physical environment: In addition to minimizing capital asset costs, companies increasingly view office
space as a value generator by locating offices near
talent pools and creating inspirational spaces that
drive collaboration and innovation.

New skills, new outlook


Those seven levers point to one inescapable fact: The successful leaders of tomorrow wont necessarily be the ones
with the most technical or operational experience; they
will be talented individuals with varying backgrounds,
genders, ethnicities and perspectives who can communicate effectively and engage, inspire and motivate a
diverse, educated, highly demanding workforce.
Further, the oil and gas company of tomorrow will
use flexible teams that collaborate easily across service
lines. Employees will rotate among a wide range of jobs
to gain a broader, more comprehensive understanding
of the company as a whole and improve their ability
to communicate and work with others. In this environment, detailed career planning, where paths to leadership roles are clearly defined and communicated, will
be a necessity, and companies will need to do a much
better job of helping good employees move forward.
Viewing these paths to leadership as well as necessary
executive skill sets in a new lightand, in response, opening up leadership opportunities to a broader range of
high-potential employeeswill help oil and gas companies
attract smart young talent from across the globe and eventually provide needed balance to the C-suite. This diversity
will in turn create stronger, more vibrant energy companies
that are reflective of society and the global marketplace.

Embrace the future


It might sound shocking, but 50% of the companies comprising the Fortune 500 just a decade ago are no longer
in existence, having succumbed to a wide range of competitive challenges and changes in customer interests and
habits. Being aware of major trends and accepting of how
these tectonic shifts will impact your business is a necessity in a world where change is unrelenting.
In fact, smart oil and gas companies are already beginning to explore how to turn future human resource and
organizational culture challenges into a competitive
advantage. They are evolving to embrace the future of
work rather than fighting a losing battle against it.
References available.
The views reflected in this article are the views of the authors
and do not necessarily reflect the views of the global EY organization or its member firms.
December 2016

EPmag.com

COVER STORY: UPSTREAM


CHALLENGES & SOLUTIONS

Upstream investment:
a contrarian strategy
Social risk should not be eliminated from the planning process.
their business models, safeguard operations throughout
the life cycle of the project, reduce their risk exposure,
take advantage of short-term depressed upstream asset
prices and position themselves to increase market share
ctions by oil and gas firms to divest from upstream
when commodity prices rebound.
assets are short-sighted. Upstream investments presThe 2014 commodity downturn significantly accelerent a golden opportunity for companies when social risk
ated an industry trend to divest from upstream assets.
analysis is applied to their risk portfolios. Social risk (e.g.,
Today divestments are employed as part of a strategy to
strikes, protest, litigation, sabotage and violence) are
address short-term cash flow gaps, remove riskier assets
increasing in frequency and magnitude. They cause profrom balance sheets and stabilize cash flow with more
duction disruptions and stoppages up and down the supreliable downstream operations. In addition, firms have
ply chain, especially in frontier markets where upstream
employed traditional financial methods (e.g., capital
investments are more prevalent. Social risk analysis
structure adjustments, employee layoffs and dividend
enables firms to introduce systemic improvements to
payment reductions) to stop the bleeding. This approach is rational for firms
focused on maintaining quarterly profExploration
Development and Production
its and reducing short-term risk. These
Surveys & Exploratory Drilling
Drilling, Separation & Compression
measures have failed, however, to
deliver a sustainable solution to protect
Land/Water
profits. For example, Exxon Mobil not
Contamination
Habitat
Habitat
Land/Water

only missed its profit projections for the


Contamination
Depletion
Depletion
Atmospheric
quarter ending June 30 but also reportEmissions
ed its weakest earnings since 1999. Yet
even in the face of continued lackluster
Operational
Operational
Engineering
earnings, firms have doubled down on
Regulations
Hazards
Hazards
Hazards
traditional methods.
Oil and gas majors, hit hard by the
Community
commodity
downturn, have taken
Health & Safety
Regulations
Community
Strain on

Health &
traditional
financial
methods to the
Disruption of
Infrastructure
Strain on
Safety
Community
extreme.
Chevrons
cash
flow declined
Infrastructure
Cohesion
from $31.5 billion in 2014 to $19.5
billion in 2015. Instead of plugging
Site
Cultural/
Land
Land
Archaeological
Security &
the difference with a reduction in its
Acquistion
Acquistion
Heritage
Vandalism
$8 billion of dividends, Chevron raised
new debt, sold assets and executed
unprecedented layoffs. Changes to
Environmental
higher levered capital structures are eviPhysical
dent across the industry. Exxon Mobil,
Royal Dutch Shell, BP and Chevron
Administrative
have more than doubled their debt
Social
in the past two years. BP more than
tripled its divestment program from a
Social risk dominates upstream operations and intensifies environmental, physical
normal rate of $2 billion to $3 billion a
and administrative risks. (Source: Enodo Global)
Jim Sisco and Bryan Bloom, Enodo Global

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CHALLENGES & SOLUTIONS

year to $10 billion in 2015 in an effort to manage price


volatility. Chevron is executing a plan in 2016 to cut
8,000 jobs, which comprises 12% of its workforce, and
BP is cutting 4,000 jobs or 16% of its upstream workforce. ConocoPhillips has tightened the belt on equity
investors through a dividend reduction from $0.74 per
share in the last quarter of 2015 to $0.25 per share in
first-quarter 2016. Even this drastic approach, by industry standards, is only a short-term fix.

Social risk analysis


Social risk exists throughout the entire oil and gas supply chain. It dominates upstream operations (E&P and
development phases) and intensifies environmental,
physical and administrative risks. Innovative technologies
saturate the industry to improve investment decisions.
They provide companies with unprecedented data to
reduce traditional risks but fail to pinpoint, forecast and
mitigate social risk. During upstream operations firms
are especially exposed to this gap in their risk portfolio.
The cost can be enormous. Extreme losses associated
with black swan events and multiyear delays often are the
result of unidentified or unmitigated social risk.
Proliferation of communication technologies has
made traditional risk analysis obsolete. Moreover, geopolitical, country and security experts employed by
companies to help navigate region-specific challenges
offer only part of the solution. Todays dynamic environments, where most upstream investments are made,
require social risk analysis. Populations, specifically
the communities in the vicinity of production facilities, have more power and influence than ever before.
Activists, environmental groups and criminal networks
use communication technologies (e.g., social media,
cellphones, etc.) to amplify existing hostility and create
grievances within a society. These groups shape perceptions through powerful narratives that instigate protests,
strikes, litigation or violence.
Energy Transfer Partners Dakota Access Pipeline
offers an example of disruption caused by social risk.
The pipeline is designed to transport 570,000 bbl/d
of crude over 1,770 km (1,100 miles) from the Bakken
Shale, Montana and parts of Canada to oil refineries
along the U.S. Gulf Coast. The Standing Rock Sioux
Tribe sued in federal court to block the pipeline, claiming it would destroy important cultural sites and ancestral lands and endanger their water supply. They lost
their case in court, and events turned violent. Company
reports describe organized protests, individuals chaining themselves to equipment, and burned and vandalized construction equipment resulting in more than $3
34

million in damage. In the face of mounting public outcry, the federal government halted construction of the
$3.8 billion pipeline in September, which was due to be
completed by year-end 2016.
Events like these are becoming more frequent and
the new industry norm. Resistance to pollution, land
use and infringement on local livelihoods has led to
defiant actions that damage company property, halt
production and negatively impact profitability. Other
examples include protests by landowners over royalty
agreements with Exxon Mobil in Papua New Guinea,
environmental campaigners occupation of Infrastratas
site on Dorsets Jurassic Coast and months-long work
stoppages at Petrofacs gas plant in Tunis due to labor
disputes. Without a way to forecast and mitigate social
risk, these events make upstream investment cost-prohibitive and reinforce divestment strategies.

Identifying, mitigating social risk


Social risk analysis delivers a solution. It measures how oil
and gas operations impact populations and how populations impact oil and gas projects. Open source information (e.g., social media, local and regional news outlets)
combined with advanced data analytics enable firms to
leverage quantitative and qualitative data to pinpoint, forecast and mitigate social risk. This not only enables firms
to understand the true risk level of an investment but also
serves as a baseline to monitor for anomalies and deviations. For example, will 10,000 angry tweets over low wages
translate into a protest at a facility? With a baseline assessment established, firms can determine if this is cause for
concern and, more importantly, develop mitigation strategies to proactively quell any potential work disruptions.
Social risk analysis provides utility across the entire oil
and gas business model. Integrating social risk analyses
into upstream due diligence investigations allows firms
to proactively quantify the potential for extreme losses.
During operations companies can lower the risk of work
stoppages that affect project timelines and cash flows
through active engagement. The additional layer of
analysis enables firms to better understand total risk
exposure, creating opportunities to strategically acquire
mispriced assets or to more effectively manage operations at current facilities. In todays market where many
oil and gas firms are divesting upstream assists, social
risk analysis provides a unique opportunity to not only
acquire relatively cheap assets but also to create an
enduring upstream portfolio to protect long-term profits. For companies with a more strategic financial strategy and long-term outlook, upstream investments offer
incredible upside potential.
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Seadrills West Hercules semisubmersible unit, pictured


drilling in calm waters in the Barents Sea during happier
higher oil price times in 2013, had its contract with Statoil
terminated early in May 2016. The unit is moored in a
Norwegian fjord and available, but the market for
floaters and jackups is expected to bottom out in early
2017 before starting its expected cautious recovery.
(Photo by Ole Jrgen Bratland, courtesy of Statoil)

Offshore rig sector faces long and


winding road to recovery
The near-term offshore drilling market is one of the most challenged upstream sectors,
with its long-term recoverywhile undoubtedto lag behind any broader upturn.

Ryan Peacock, McKinsey Energy Insights

he near-term outlook for offshore drilling remains


challenged, with activity likely to stay depressed
throughout 2018. Due to the longer cycle times for offshore projects, a recovery in the offshore rig market is
likely to lag any improvement in oil price.
It has been more than two years since the Brent
oil price fell below $100/bbl in September 2014, and
the commodity cycle now looks to have passed its low
point, with prices recovering somewhat. In that time the
industry has witnessed a major decline in global drilling

36

activity, with exploration and development capex falling


by 40% from 2014 to 2016, leading to extensive project
delays and cancellations.
The impact on rig activity has been substantial, with
the most recent Baker Hughes rig count showing the
total number of onshore rigs worldwide falling from
3,206 in September 2014 to only 1,340 in September
2016a decline of almost 60%.
By McKinsey estimates the number of active offshore
rigs has yet to fall to the same extent as the onshore
count, with the number of contracted floater rigs down
from 268 in third-quarter 2014 to 166 in third-quarter
2016a 38% decline. The number of jackups has
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CHALLENGES & SOLUTIONS

fallen by just 28% from 426 in


third-quarter 2014 to 305 in
third-quarter 2016.
The larger decline in the
onshore rig fleet reflects a
quicker response to price
movements due to shorter
contract durations and project
lead times. As prices recover,
the fleet is expected to show
faster recovery and is in fact
already starting to do so. With
Brent floating about $50/bbl
on the back of OPEC signaling a tentative willingness to
restrain output, onshore rig
counts appear to be on the
road to recovery. According
to Baker Hughes, the U.S.
onshore rig count rose from a
low of 380 in May 2016 to well
over 500 in September.

SHORT-TERM DEMAND FOR JACKUPS

Falling to a low point in terms of demand in early 2017, the jackup rig sector is expected to
gently recover, although its longer term resurgence will depend on oversupply continuing to
be mitigated. (Source: McKinsey Energy Insights)

SHORT-TERM DEMAND FOR FLOATERS

Offshore attrition
In contrast, the offshore rig
fleet is still experiencing significant declines. Since the
beginning of the year contracted rig counts have fallen
steadily, with 44 fewer jackups
and 51 fewer floaters under
contract in third-quarter 2016
vs. fourth-quarter 2015. At
the same time, older rigs are
being retired at a record pace,
with 21 floaters and 15 jackups
taken out of service this year
The number of active floaters should reach its lowest point in first-quarter 2017 before then
up to the end of September.
cautiously recovering by year-end 2018. Only about 40% of the floaters expected to be active
The number of new conin fourth-quarter 2018 are currently contracted. (Source: McKinsey Energy Insights)
tracts signed, including extensions, also continues to remain at historically low levels.
Rig owners response
Between the beginning of 2016 and the end of the third
Given this poor performance in the market, rig owners
quarter, 41 new floater and 80 jackup contracts were
have gone to great lengths to reposition themselves to
signed. Extrapolating this for the full year would give
survive low margins until the commodity upcycle brings
a run rate of 55 for floaters and 107 for jackups, which
a hoped-for recovery in activity.
is substantially lower than the 94 and 186 contracts,
Measures taken include aggressive cost-cutting initiarespectively, signed in 2014.
tives on both operational and overhead costs across the
As a result, the day rates for offshore rigs continue to
board as well as concerted action to ensure rigs remain
remain depressed. Day rates have declined about 50%
active as long as possible, with blend and extend conon average for new contracts between first-quarter 2014
tracts becoming increasingly common. Under these
and third-quarter 2016.
agreements immediate day rate reductions are granted
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December 2016

37

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CHALLENGES & SOLUTIONS

to the operator in exchange for extensions to the contract. This reduces costs for operators, while rig owners
can ensure their assets remain active for longer.
Rig owners also are delaying delivery of newly built
rigs from shipyards or refusing delivery in more extreme
cases. Examples include Seadrill refusing delivery of the
West Mira rig from Hyundai and Pacific Drilling refusing
delivery of the Pacific Zonda unit from Samsung.
In the most extreme cases, bankruptcies have been
used to either restructure debt (e.g., Vantage Drilling)
or wind up companies altogether, as was the case with
Hercules Offshore.

Low point in cycle


While the current offshore drilling market is challenging, there are increasing indications that this might be
as bad as it gets, with the sector reaching the low point
of the cycle. OPEC is increasingly signaling its willingness to curtail production, and prices have slowly crept
up in recent months.
Looking forward, McKinsey sees significant uncertainty in the market. While the possibility exists for a prolonged period of depressed prices or, conversely, a jump
toward $90+/bbl should potential market disruptions

A rare highlight for the offshore rig market, Noble Corp.s


high-specification newbuild Noble Lloyd Noble is the worlds
largest jackup. The harsh-environment unit was delivered from
the Sembcorp Marine yard this summer and will start work

occur, the most likely outcome over the next several


years is expected to be a recovery to a new normal of
$65 to $75/bbl. McKinsey estimates this to be the price
band for which sufficient new offshore and shale capacity becomes economic considering the current deflation
in service and equipment costs.
Assuming OPEC acts to maintain market share and
grow production with the market, McKinsey would
expect supply and demand to balance by mid-2017 followed by a steady recovery in price through year-end
2018. Under this slow recovery scenario, McKinsey
anticipates relatively flat production in shallow water
along with small gains in deepwater production,
amounting to about 700,000 bbl/d by 2020.

Mobile offshore drilling unit outlook


Taking into account oil supply/demand dynamics and
recent contracting activity under a slow recovery scenario, McKinsey expects the offshore drilling market
to reach the bottom of its cycle in first-half 2017, after
which it will stabilize with modest gains through yearend 2018.
In the case of jackups, the number of active rigs is
projected to decline from 293 in third-quarter 2016
to 276 in first-quarter 2017, followed by a recovery to
306 active rigs by year-end 2018. Of the rigs active in
fourth-quarter 2018, only about 40% are currently
contracted. From a supply perspective, both continued
deferral of newbuild jackups and increased levels of
retirement are expected. Only 37 newbuild deliveries
are anticipated, with 32 rigs likely to be retired between
2017 and 2018.
The number of active floaters also is projected to
reach its lowest point in first-quarter 2017 as the count
drops to 146 from 163 in third-quarter 2016, although
this is then forecast to increase to 178 by year-end 2018.
Of the floaters active in fourth-quarter 2018, only about
40% are currently contracted. Supply will still be roughly flat, with 29 new projected deliveries in 2017 to 2018
compared to 26 retirements.
Full recovery of both categories will take significantly longer as offshore activity slowly reacts to any
oil price recovery. Particularly in the jackup fleet,
the rig oversupply situation is mitigated. Utilization
levels are not projected to return to above 80% until
the early 2020s for both floaters and jackups, suggesting day rates might remain depressed for some
time to come.

before year-end 2016 on a four-year, $447,000/day contract,


initially predrilling wells on the Mariner Field in the U.K. North
Sea. (Source: Noble Corp.)

38

Editors Note: The author thanks Jeremy Bowden for his contribution to this article.
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CHALLENGES & SOLUTIONS

Optimizing production,
economics in mature fields
Single-treatment microemulsion remediation chemicals provide production
stimulation in wells damaged by a combination of factors.
Ramakrishna Ponnapati, Lirio Quintero and
Mary Jane Felipe, Baker Hughes

o generate cash flow in low-price markets, operators


have historically turned to the resource they can
count on mostfields that have proved they can produce. But optimizing production from mature fields
presents its own set
of challenges that
have the potential to
offset the benefits of
improved production
with higher capital
expense. Increasing
production while lowering lifting costs and
total cost of ownership requires not only
reversing declining production rates but also
doing so with the highest levels of efficiency.
A series of new
chemicals for near-wellbore damage (CND)
from Baker Hughes has
demonstrated the ability to remediate wellbore and near-wellbore
damage from multiple
mechanisms in a single
time-saving treatment
FIGURE 1. From top to bottom,
and to restore shut-in
1) Near-wellbore formation damage
wells to productive life.
slows or prevents oil flow into the well;
The CND remediation
2) CND treatments penetrate and
treatments are made
dissolve or disperse the skin damage;
from custom-formulat3) After a 24-hr shut-in period, production
ed microemulsions that
is resumed and deposits are removed;
remove existing damand 4) The formation is returned to a
age and leave the forhealthy production state, and surfaces
mation surfaces waterare water-wet with no organic deposits.
wet for easier and
(Source: Baker Hughes)
40

faster production. The chemicals can be used in mature


fields, gas storage wells, production and injection wells,
and disposal wells.

Damage mechanisms
Over the lifetime of a well, scale deposits, paraffin and
asphaltene deposits; sludge; fines; emulsions; oil-wet
solids; and microbial slime can build up in the near-wellbore area of openhole wells or anywhere from 0 in. to
24 in. from the perforations that serve as conduits from
the reservoir into a cased-hole well. Often these deposits
build up to the point of causing formation blockages, or
skin, that can restrict the flow of fluids and gases from
the reservoir and reduce productivity.
Standard industry practices to remediate near-wellbore damage have historically involved solvent washing,
acid treatments and hot oiling/watering, which typically deliver short-term production improvement. Many
solvents can remove hydrocarbon deposits, but they
leave the rock surfaces oil-wet, which is another type of
damage, and also could leave the heavy hydrocarbon
deposits to become more problematic and complex to
remove as the well matures. While acid treatments are
effective at removing inorganic carbonate scale, they
can cause asphaltene molecules to destabilize, which
leads to future organic damage. Similarly, hot oiling
and watering techniques help lower the viscosity of paraffin. But as the waxy fluid flows deeper into the reservoir, it cools and creates blockages in other areas.

Wettability
Another challenge to optimizing production from
mature fields is formation wettability. Wettability is the
ability of a fluid to maintain contact with a solid surface in
the presence of other fluids. A good example of wettability at work is liquid car wax. The liquid wax is spread over
the surface of the car. When a drop of nonwetting fluid
rainhits the waxed surface, the rain will bead up, minimizing its contact with the surface of the car. The normal
state of sandstone formation rock is water-wet. This is
what causes the oil to move into the wellbore rather than
adhering to the rock. Water-wet reservoirs are changed
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CHALLENGES & SOLUTIONS

by the adsorption or deposition of organic deposits such


as asphaltenes or paraffins. The wettability of formation
rock also can be altered by surface-active additives used
during wellbore construction or in well interventions.

Operators have long sought an economical solution to


repair near-wellbore damage and increase production
or injection rates without adverse side effects caused by
many traditional stimulation methods. CND chemical
remediation programs designed to treat single damage
mechanisms were introduced several years ago. More
recently, three new microemulsion products were
released to remediate multiple damage mechanisms
in a single-step treatment. The multifunctional microemulsions consist of a solvent, co-solvent, an aqueous
phase and surfactants. The microemulsion fluid formulations were specifically designed to provide production stimulation in wells damaged by a combination of
factors. These treatment products can be combined
with acids to dissolve scale buildup and remove organic
deposits in one step.
The CND500, CND600 and CND700 multifunctional CND treatments are designed to target, disperse
and remove the main mechanisms of formation damage. The CND600 product focuses more heavily on
organic deposit damage. The CND700 product has a
high flashpoint, making it particularly applicable to
offshore applications.
By using multifunctional remediation treatment, the
possibility of misapplications and negative results is minimized. The remediation treatments remove skin damage and clean the near-wellbore area, water-wet the formation, restore fluid communication, and preferentially
remove deposits from oil zones. The treatments require
no additional equipment for application, so large capex
investment is avoided.
Generally, these remediation product treatments
require 100 gal to 5,000 gal4.5 gal to 6 gal per meter
(15 gal to 20 gal per foot) of perforationdepending
on the number of feet of perforations, downhole pressure and the extent of the skin damage. The product
is applied directly down the annulus or down the production tubing of the well with the well production shut
in. The treatment is allowed to contact the damaged
formation area for 24 hours prior to the re-initiation of
production. During the 24-hr soak period, the selected
CND microemulsion disperses organic-based skin damage, breaks emulsion and water blocks, and cleans the
tubing and flowline spontaneously. The treatment also
water-wets the formation. The straightforward removal
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December 2016

100
80

bbl/d of oil

Single-treatment solution

First well
Other three wells

60
40
20
0
1

10

20

30

40

WELL TEST DAYS


FIGURE 2. Remediating a well in a mature East Texas field with a single
CND500 multifunctional microemulsion treatment restored production
and paid for itself within a few days. (Source: Baker Hughes)

process is more rapid and efficient than other stimulation methods (Figure 1).
The primary properties of the CND products are
ultralow interfacial tension, high oil solubilization and
high water-wetting of solids surfaces, often restoring
permeability to greater than 100%. Ultralow interfacial
tension of CND treatment means that no mechanical
energy is required for cleaning. High solubilization
enables the treatments to remove oil and to break
emulsions and sludge. Wettability reversal from oil-wet
to water-wet disperses and mobilizes the solids so that
residual organic deposits can be easily removed.

Case history: East Texas


An operator in East Texas, attempting to stimulate production from a mature field, reperforated four wells with
a water-based fluid. The wells had known asphaltene and
oil-wetting issues. Production was completely lost from
all four wells after the workover, and the wells were shut
in for several months. Baker Hughes properly diagnosed
the root cause of the lost production as multiple damage
mechanisms, including wettability alteration. A remediation treatment was performed using the CND500 microemulsion product after a pre-flush pill of Xylene. Xylene
as a standalone had been used unsuccessfully in previous
treatments without the multifunctional CND treatment.
The wells were treated from 18 in. to 24 in. into the
formation. Production from the first well increased
9,000% immediately and stabilized after 5 weeks at a
6,000% increase. The chemical treatment cost was paid
for in just a few days (Figure 2). Three additional wells
had production increases averaging 2,000% after being
treated with the microemulsion product.
41

shale

SOLUTIONS

Longer laterals drive demand for highperformance semi-premium connections


A new solution for extended laterals is a robust threaded and coupled connection that is
100% pipe-body rated and has enhanced torque capacity, high bending resistance and
superior sealing capability.

Darren Santeler, Vallourec USA Corp.

espite the recent drop in the number of drilling rigs,


long-term demand for natural gas is expected to
grow as industrial use and exports rise. The Marcellus
and Utica shale plays will play key roles in meeting
increased production needs, particularly as northeastern U.S. natural gas infrastructure continues to expand.
Even though producers have become more proficient at
extracting hydrocarbons, operators look for new technologies to optimize the drilling process for improved efficiency and cost reduction.
The shale and tight oil formations of the Marcellus
and Utica are deeper and more complex than the Eagle
Ford or Barnett shale plays. Marcellus wells are drilled
1,524 m to 2,743 m (5,000 ft to 9,000 ft) vertically and
3,048 m (10,000 ft) horizontally. To reach these pay
zones, thicker and heavier weight
pipe is needed to handle the burst
and tension requirements for fracture treatment. In addition, these
longer laterals require a higher
torque connection to reach the
target depth.
To meet operators needs for a
higher performance semi-premium
threaded and coupled connection
that exceeds the American Petroleum
Institute (API) Buttress capabilities,
Vallourec has developed an improved
connection that is stronger and
enhances well integrity. Using the
DWC/C solution for production casing, the DWC/C-IS coupling includes
an internal shoulder for positive posiThe increased coupling OD of DWC/CIS PLUS provides higher tension and
pressure ratings. (Source: Vallourec
USA Corp.)

42

tion makeup to eliminate the use of backups during the


running operations. Rigidness of the internal shoulder
provides additional stability in the connection.
Another option, the DWC/C-IS PLUS, offers a larger coupling outer diameter (OD) that prevents the
connection from being a limiting factor on heavier
wall production casing. Its stronger-than-the-pipebody boosts the available performance for operators
by increasing the connection performance to 100% of
pipe body rating.

Faster makeup
Searching for ways to speed up casing jobs, producers looked to the industry to design an easier-to-run
connection that ensures rig reliability and simplified
operations. The DWC/C-IS, with its internal shoulder,
provides more reliability during the makeup process for
the rig crew and proper thread interference for superior sealing capability. Since backups are not applied
to the coupling, this allows the connection to be made
up without any external loads applied that could cause
improper makeup signatures. This makeup process
will result in fewer connections requiring breakout for
review and assessments.

Higher rated pipe


Operators are rotating and applying a compressive load
on the pipe during installation of the string through
high bending and dogleg severity, subjecting the connections to high fatigue. Risk is increased further when
unknown variables are introduced. Operators also
demand reliability and well integrity to ensure production for the life of the well without leaks or shut-outs.
API Buttress is not validated to high-torque capability or 100% compression resistance with high bending
resistance. Limitations for an API connection occur
when, during horizontal well casing, additional weight
or torque is required to reach the target depth. The
DWC/C-IS PLUS gives operators a matched strength
coupling that is more robust and has better fatigue
resistance to reach the outer edge of their formation.
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shale

SOLUTIONS

This connection can be used with the heavier wall


and higher yield strength pipe necessary for the
required higher pressures.
DWC/C-IS PLUS connections can handle the
cyclic loads induced by internal pressure of the
fracturing jobs, rotational torque requirements
and the tensile loads of the entire length of the
casing string. With its larger coupling, it is recommended for heavier weight pipes. Its increased
cross-sectional area makes it a stronger coupling
with more area to resist fatigue loads, giving the
operator an increased safety factor. It also provides matched strength couplings and therefore
a connection that is more robust and has better
fatigue resistance than alternatives.

High-cyclic loads
When installing the string in the wellbore, the
pipe might be subjected to harmonic fatigue loads.
After installation in the wellbore, Marcellus operators may run 30 to 60 fracture stages. Therefore,
Quality control helps guarantee performance of the DWC/C-IS PLUS
the high-fatigue load is followed by a high number connections at the site. (Source: Vallourec USA Corp.)
of fracturing cycles and then by pressure-testing
to ensure the connection is physically capable of
performing in the manner used by operators in
the field. In every fracture stage internal casing
pressures can approach pipe burst strength prior
to rapid pressure reduction. It is a high-fatigue
load coming close to the limit of the pipe and
connection and then reducing pressure multiple
times. These high cyclic fracture stages generate
extremely high fatigue loading, and operators
demand strings and connections that will meet
their requirements. This new family of connections
has been fit-for-purpose-tested and validated, testing the connections through the rigors encountered in shale wells. The family also has been
successfully used in the field for years.
Complex wells in the Marcellus and Utica are
comparatively deeper and higher pressure and,
Strict manufacturing protocols ensure tighter tolerances. (Source: Vallourec
therefore, present operators with unknown variUSA Corp.)
ables. Rock pressures vary by area, and operators
Some of the shale operators are starting to see more
are still discovering the effect of the rock density variais not always better. They might have done 30 fractures,
tion on the strings. The casing string might encounter
then dropped down to 15 and then tried 20 or 25 to
collapse and get various loads on the pipe that operators
find the most efficient scenario. Unknown well condimight not expect because shale drilling has only been
tions can occur in new horizontals, and operators are
around for eight to 10 years in that region. Load conditrying to understand and establish best practices.
tions as a result of the formation are still in the infancy
Operators are improving their understanding of the resstages as a result of the new area of development. New
ervoirs and utilization of production casing, completion
drilling methods and new technologies help operators
and well stimulation techniques.
improve drilling efficiency and productivity.
EPmag.com

December 2016

43

offshore

SOLUTIONS

Unlocking the value of stranded


and remote offshore gas assets
New GTL technology helps convert natural gas into hydrocarbon products.

Dmitry Popov, INFRA GTL Technology

ver-growing demand for hydrocarbon assets takes gas


exploration to areas far removed from the market.
Almost one-third of known gas reserves are considered
to be stranded. For the most part, the reason is economic rather than technological. It costs too much to
extract and transport gas to the customers.
Companies are looking for different ways of monetizing such assets. LNG represents one such possible
solution. LNG technology does certainly help to bring
natural gas to the market. However, the cost of gas
liquefaction, transportation and regasification is significant; moreover, this process does not add value to the
original product. Irrespective of the shipping distance,
the product remains the same, but its cost to the end
user is increasing.
Fischer-Tropsch synthesis represents an interesting
alternative to such applications. This is a catalytic process that converts synthesis gas (a mixture of carbon
monoxide and hydrogen) into synthetic hydrocarbons

crude oil, lubrication oils and synthetic fuels. FischerTropsch synthesis originates back to the 1920s, when
German scientists Franz Fischer and Hans Tropsch
succeeded in producing hydrocarbons out of coal.
Seventeen coal-to-liquid plants were built in Germany
before and during World War II. At the time the technology was very expensive and yielded many byproducts.
Since then such companies as Shell and SASOL have
improved the technology efficiency and focused on converting natural gas into hydrocarbon products, known
as gas to liquids (GTL). The process continues to attract
attention primarily because it allows companies to add
value to natural gas and produce transportation fuels
and motor oils worth much more than the original feedstock. High-quality GTL products contain no sulfur, generate lower emissions and are readily biodegradable.
Having so many advantages, GTL technologies are
still plagued by high capital cost and a large footprint,
mainly due to the fact that the classical Fischer-Tropsch
process produces wax that needs to be sent to hydrocracking and other refining processes.

New catalyst technology

The new technology uses a pelletized catalyst that will produce liquid light synthetic fuel from
the Fischer-Tropsch reactor without wax or other byproducts. (Source: INFRA GTL Technology)

44

INFRA GTL Technology, an international company based in Houston, came up with a pelletized
catalyst where multicomponent
catalysts are impregnated by cobalt
nano-particles. The catalyst is highly
productive and very stable, offering
at least two years of useful life without rejuvenation. It is bifunctional;
the Fischer-Tropsch reaction is
accompanied by cracking and other
processes, which allows users to
produce liquid light synthetic oil
straight from the Fischer-Tropsch
reactor without a wax stage and
without any byproducts.
INFRAs GTL technology involves
only two stages: oxidation of natural
gas to synthesis gas and obtaining
clear synthetic crude oil.
December 2016

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offshore

SOLUTIONS

Incoming feed gas


passes through a series of
inlet pretreatment and
prereforming vessels. The
function of these vessels is
to remove sulfur and convert heavy hydrocarbons to
methane. Synthesis gas is
produced through either
steam methane reforming
or auto-thermal reforming.
The Fisher-Tropsch block
contains two stages. The
Fisher-Tropsch reaction is
carried out at constant temperature as cooling water is
circulated on the shell side
to preserve the reaction at
isothermal conditions.
The final productliquid synthetic oilcontains
The commercial plant comes in modules that fit easily into standard shipping containers. (Source: INFRA
diesel and gasoline fractions GTL Technology)
only (with a large propor2016 INFRA plans to start up its demonstration plant in
tion of jet fuel fraction). It can be easily upgraded into gasWharton, Texas.
oline, diesel or jet fuel. There is no waste or byproducts.
This first-of-its-kind commercial 100-bbl/d plant is
As a result, the capital cost of a GTL plant decreases
built in pre-engineered standardized easily deployed
by at least 50% as compared to similar technologies.
modules in the dimensions of standard shipping conOperating costs go down significantly as well. For
tainers. The whole plant fits into 14 skids that have
large-scale plants capex could be as low as $25,000/
been fully equipped in the assembly shop and delivered
bbl of daily installed capacity, and opex would be close
to the site ready for the installation and startup.
to $3/bbl. Consequently, INFRAs technology makes
The compact design-intensified steam-methane
production of synthetic oil economically feasible, ensurreformer fits two modules. The reformer comprises a
ing that the GTL process is profitable as a rule and
box-type radiant furnace and convection section. The
cost-competitive with oil refining. Also, the elimination
reformer is capable of producing 2.5 tons of synthesis
of hydrocracking and upgrading stages allows operators
gas per hour. A prereformer can be provided for heavito reduce the plant footprint and to manufacture comer hydrocarbons. Fixed-bed tubular reactors filled with
pact, modular and easily transportable GTL units.
proprietary catalyst are designed inside two modules
Excess energy is recovered and used to generate
and carry out a two-stage process Fischer-Tropsch synenough electricity for the entire GTL plant. Fischerthesis. Gas cleaning, sulfur removal, synthesis gas condiTropsch water, produced as part of the synthesis of
tioning and auxiliary equipment also are included.
hydrocarbons, is clean enough to be put back into the
The advanced design enables fast installation, startup
process. Thus, plants built with INFRAs technology are
and commissioning, dramatically reducing construction
self-sufficient in utilities.
costs and allowing clients to turn their plant over to
Stranded and remote gas fields can benefit from such
production quickly.
self-sufficient, low-cost, compact and modular design.
INFRAs technology is easily scalable and offers very
With the help of this GTL technology, high value-added
good economies of scale, which will help to improve the
productssynthetic oil or liquid motor fuelscan be
economics of remote gas field development significantly.
produced onsite and brought to the market using the
To the extent that the technology can be applied to elimexisting oil infrastructure (pipelines, tankers or railways).
inating gas flaring, it also can reduce the environmental
INFRAs technology has been tested in full-cycle pilot
impact of oil and gas industry developments.
plants that have been operated since 2010. By year-end
EPmag.com

December 2016

45

operator

SOLUTIONS

Smart drillpipe technologies


for the drillers toolbox
Advances in technology boost successful development of new
LWD and drilling technology offshore the Norwegian Continental Shelf.
Reina Teelken, NOV, and Ove Johnny Rossa and
Nils Kristian Edwards, Baker Hughes

ired drillpipe (WDP) technology was implemented


on a multiple-well project located offshore the
Norwegian Continental Shelf. The operators main
objective was to drill each well as cost-effectively as possible while making sure that the wellbore placement was
optimum. Achieving this goal required the use of specific
LWD equipment together with the WDP Network. This
high-speed data network enables instantaneous transmission of all downhole data and saves valuable rig time.
Full real-time understanding of the downhole drilling
environment as well as the formations drilled enables
quick actions for mitigating drilling dysfunctions and
equivalent circulating density management as well as
optimal well placement. The planned extended-reach
wells had a very tight pressure window. Landing and geosteering the reservoir sections required the latest LWD
technologies on WDP to achieve the goals of the project.

Complex drilling application


The drilling targets consisted of an oil reservoir and several deeper structurally complex high-pressure gas and
condensate reservoirs. The oil reservoir was developed
with long horizontal wells. Several deviated wells were
drilled to unlock the gas and condensate reserves. The
field was initially discovered 40 years ago but proved too
complex to develop until now.
Over the years several exploration and appraisal wells
were drilled within a narrow pressure window, with multiple bottomhole assembly (BHA) runs per section. The
complex drilling environment posed many challenges,
including severe losses, influxes and unstable formations.
Excessive downhole shock and vibration also challenged
successful delivery of MWD/LWD signals to surface. To
overcome these challenges, WDP technology was implemented from the start of the field development.
The realized quantifiable benefits outweighed the
initial upfront investment and recurring operating and
maintenance costs compared to a drilling operation with
mud pulse telemetry. This translated into direct net rig
46

time savings, providing a return on the technology investment, which doesnt take into account additional upside
benefits identified. These benefits included significantly lower geological uncertainties and reduced risk of
high-impact events such as well collapse or catastrophic
flow events, providing not only economic benefits but
also HSE benefits. Enabling the full use of LWD technology for improved well placement and the quality of the
drains drilled without compromising well integrity was
also a significant benefit of the WPD implementation.

New drilling technologies on WDP


NOVs BlackStream Along String Measurements (ASM)
technology provides real-time measurement reading
from sensors embedded at multiple points throughout
the drillstring. The technology acquires temperature,
annular and bore pressure, rotational velocity, and
three-axis vibration data at high frequencies. The data
are streamed to surface via WDP.
The ASM data enable an improved understanding
of the downhole environment not only at the BHA but
throughout the entire openhole and cased sections.
The tools provide flow-off readings, which proved useful
on this tight margin application. The main benefits of
running this technology are:
annular pressure measurements over the entire
openhole section, with or without flow;
monitoring of hole cleaning efficiency and real-time
adjustments of parameters such as ROP and circulation time;
enhanced MPD management, with the ability to
monitor annular pressure fluctuations during connections and tripping;
safe management of critical situations; and
determination of pack-off point.
Baker Hughes GaugePro Echo on-command digital
reamer consists of a main reamer plus a near-bit reamer
integrated in the BHA. Both reamers were initially activated through the use of mud pulse downlinks.
During the project the service company was able to
adapt the integrated reamer technology such that it could
be digitally activated and deactivated through WDP telemDecember 2016

EPmag.com

operator

SOLUTIONS

The use of integrated reamers on WDP eliminated the need to


activate and deactivate the system with dropped balls.
(Source: Baker Hughes)

etry. Activating and controlling both the near-bit reamer


and main reamer with WDP telemetry was a worlds first.
The main reamer was used to open up the hole and also
enabled easier pulling out of hole. The near-bit reamer
eliminated the need for a dedicated reamer run to open
up the rat hole. At least three dedicated reamer runs were
saved by using the integrated dual-reamer setup.
A main benefit of running dual integrated reamers
on WDP is the elimination of the old-fashioned use of
dropping a ball to activate or deactivate the reamer.
The reamer can be activated and deactivated unlimited times as activation and deactivation commands are
transmitted though downlinking.

Latest MWD/LWD technology applied on WDP


In tight pressure regimes there is a great need for
geostopping to avoid a blowout. Looking ahead of the
well path was deemed essential for safe operations.
In addition to crossing pressure regimes in different
formations, these wells had a very tight mud pressure
window. The wells were drilled with managed-pressure
drilling due to these pressure constraints. In this environment even pressure fluctuations from a downlink
to the tool can be disastrous for wellbore stability.
WDP downlinks are instantaneous and do not induce
any downhole pressure fluctuations. Thus they are
currently the only technology providing a solution for
these kinds of applications.
There were large geological and seismic uncertainties
in terms of depth to reach the reservoir. Not only was it
important to land the well at the right true vertical depth
(TVD) for maximum reservoir exposure, but also setting
casing as close as possible to formations with different
pressure regimes was imperative from a safety point of
view. Borehole seismic-while- drilling was seen as the
most cost-effective solution.
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December 2016

The WDP Network transmitted the seismic memory


data in real time to surface,
enabling detection of formations ahead of the bit.
This is the first time that
this has been achieved.
The seismic-while-drilling
tool detected relevant formations 200 m (656 ft) TVD
below the tool in real time.
Real-time first-break data
were used to update velocity
profiles for reduction of the
surface seismic. In addition,
reflective data were processed continually after each
connection to look below the SeismicTrak enables real-time
bit for distances up to 200 m borehole seismic-while-drilling.
TVD. Although this achieve- (Source: Baker Hughes)
ment could have been done
with mud pulse telemetry, such results would have taken
significantly longer, and data quality would have suffered.

Final results
Valuable rig time was saved due to the instantaneous
data transmission enabled by WDP, and at least three
dedicated reamer runs were saved by using the integrated dual reamer setup.
The wells were landed and navigated within the reservoir with real-time recorded quality formation evaluation, annular pressure and drilling dynamics data from
the BHA and annular pressure and drilling dynamics
data measured all along the string with ASM tools.
High-resolution images were available for real-time decision making, and images such as short-spaced density
images were used for wellbore breakout indicators.
This resulted in improved geological understanding
based on enhanced formation evaluation data acquired
in real time that led to subsequent improved wellbore
placement and increased reservoir section length. Netto-gross ratio was increased by more than 28% compared to expected and more than 200 m more reservoir
was drilled and completed. In total, the geosteering
optimized net sands by about 1,000 m (3,281 ft) measured depth over three horizontal sections.
This extension in drain length, together with the optimum wellbore placement within the reservoir, actually
saved the operator from drilling another well since
planned drain section length and quality already had
been achieved.
47

BASIN MODELING

Integrated modeling provides


better answers
Combining geostatistical reservoir modeling with classical basin modeling
techniques helps predict sweet spots in unconventional reservoirs.
Jeffrey M. Yarus, Elham Mohsenian and
Jordan M. Yarus, Halliburton

ost unconventional shale reservoirs contain a wide


range of in situ hydrocarbons (gas/oil) that are
tied to a variety of sources and require extraction methods not commonly used in more conventional settings.
As such, new strategies for exploration, characterization
and development are required.
To understand and model a source-reservoir formation, both static reservoir modeling and dynamic basin
modeling are important. An efficient workflow to combine these methodologies will help obtain a complete
view of not only the hydrocarbon evolution history but
also the present-day physical state and distribution of
these hydrocarbons within the formation itself at the
reservoir scale. Here, shale sweet-spot identification is
defined based upon the integration of the 3-D static
geological model along with the basin dynamic processes acting on rocks and fluids during the development of
a sedimentary basin. This workflow contains a variety of
conditions and variables, including static petrophysical,
geomechanical and geochemical properties from well
logs and seismic surveys and dynamic time-based properties such as sedimentation, burial history, erosion,
uplift, thermal condition, pressure calculations, diagenesis prediction, etc.
a)

Combining static properties in the earth model with


rock and fluid properties from dynamic burial history at
the reservoir scale is the heart of this workflow and the
key to improving sweet-spot identification. The proposition is back-stripping the static reservoir model so that
the entire history of the reservoir and its constitutive
fluids can be recreated. This will assist in validating the
structural integrity of the model and provide information
about organic matter type, quality, initial and presentday organic matter distribution, and maturity level of the
source rock. Maturation simulation will provide information about timing of hydrocarbon generation, the quality
and the state of the hydrocarbons (gas, liquids-rich gas
and oil). Migration simulation will demonstrate the location of hydrocarbons within the model.
Petroleum systems tools allow geologists to quickly evaluate fluid properties within the context of the existing
framework using data from available wells. One principle
advantage of this approach is the integration of all available
geological and geochemical data into a consistent and comprehensive model. This enables a number of assessment
capabilities, including risk assessment, evaluation of reservoir potential and optimization of asset development plans.

Integration of geomodeling, basin modeling


Geomodels provide a snapshot of the present-day structural
framework of a reservoir along with its orientation and
b)

FIGURE 1. This reservoir geomodel shows a) the underlying cellular structure and b) the 3-D geomodel of matrix permeability from the Eagle
Ford Formation in Texas. (Source: Halliburton)

48

December 2016

EPmag.com

BASIN MODELING

FIGURE 2. A 1-D basin model is the second step of the workflow. (Source: Halliburton)

composition and the internal arrangement of the reservoir


properties. These models can be either stochastic or deterministic. Figure 1a represents an example of a reservoir
model showing the underlying cellular architecture. Figure
1b shows the distribution of porosity in a 3-D geomodel.
The geomodel becomes the input to a basin modeling
exercise to validate the distribution of key rock properties and distribute critical fluid properties. It is the addition of the petroleum system analysis and numerical simulation of a basin that improves the sweet-spot definition
in unconventional reservoirs. This can create a quality
index variable that represents the intersection of optimal
petrophysical, geomechanical and geochemical properties and the distribution of the static hydrocarbon fluid
properties. Additionally, it provides the means by which
the reservoir arrived at its current state.

Workflow
1. Analyze source rock samples. To obtain basic geological
and geochemical parameters from source-reservoir
EPmag.com

December 2016

formations, source rock samples must first be analyzed using standard methods. This provides information about vitrinite reflectance, total organic carbon
(TOC), hydrogen index, oxygen index, kerogen type,
rock types and mechanical properties of shale.
2. Perform 1-D basin modeling in several wells/pseudo-wells
located in the study area. Calibrated 1-D models will
provide information about the history and the
present-day state of pressure, maturity, heat flow,
erosion, hiatus, tectonic history and rock properties
like porosity.
3. Build a high-resolution 3-D model of the reservoir and import
results from the 1-D basin model. The geomodel captures
the geometry and architecture of the reservoir from
seismic and well tops. Petrophysical, geomechanical
and geochemical properties are distributed throughout the volume, enabling the identification of the
mechanical stratigraphy and associated best characteristics for stimulation and completion. Further, geostatistical methods can be employed to produce a variety
49

BASIN MODELING

FIGURE 3. This geomodel shows the distribution of brittleness collocated with seismic
acoustic impedance. (Source: Halliburton)

a)

b)

c)

d)

FIGURE 4. One layer in a 3-D basin model displays four stages of methane maturation in
the Eagle Ford: a) present day, b) 36 million years ago, c) 56 million years ago and d)
about 100 million years ago. (Source: Halliburton)

a)

b)

c)

d)

of interpolated, simulated and iso-probability maps of key properties such as


erosion, organic carbon, hydrogen index
and others useful in 3-D basin modeling.
4. Import estimated boundary maps to the
3-D numerical basin model as input data.
Simulate and calibrate the model against
present-day observed data.
5. Perform uncertainty and sensitivity analysis.
Uncertainty and sensitivity analysis is
required as it is unlikely that a single
unique geological historical scenario
exists to explain present-day conditions. A final single best-case scenario
can be selected at the end.
6. Import to static reservoir model. Key properties such as effective stress, temperature, maturity, hydrocarbon phase and
the other properties can be applied
to the reservoir grid and visualized.
Further, these properties can be visualized at any historical time from inception to present day.
Geomodeling methods have no capability
to describe the means by which a reservoir
arrived at its current state nor the predictive
condition of the petroleum fluid properties
residing within. The quality, quantity and
state of hydrocarbons in unconventional reservoirs depend on parameters like the initial
geochemistry, maturity level and storage
capacity of the source rock, which are better
obtained from classic basin modeling. Basin
modeling is the key tool to help in the evaluation of initial organic matter distribution,
type and quality inside a formation as well as
the present day TOC and maturity level of
organic matter. These three parameters have
a first-order control on the volume of hydrocarbons generated and still retained in the
reservoir. Combining classic reservoir characterization with basin modeling at the reservoir scale provides a step forward in modeling unconventional resources.
References available.
FIGURE 5. Static reservoir model properties from
the Eagle Ford include a) methane, b) Youngs
modulus, c) TOC and d) co-simulation of porosity
and brittleness. (Source: Halliburton)

50

December 2016

EPmag.com

BASIN MODELING

Exploring tectonically
complex basins
Fully coupled structural restoration and petroleum systems
modeling improves exploration risk assessment.
accumulate. The elements are an effective source rock,
reservoir, seal and overburden, with the latter burying
the source rock to a depth where it can reach thermal
maturity. Processes include trap formation; source rock
xploration risk assessment is typically achieved by a
maturation; and generation, migration and accumulaholistic evaluation of the basin petroleum systems
tion of hydrocarbons. Elements and processes need to
and the combined risks identified for the reservoir, trap,
occur in a specific relation and order for organic matter
charge and seal. In structurally complex basins, strucin the source rock to be converted to petroleum, stored
tural segmentation can severely complicate the process.
and preserved. A dynamic model, one that evolves
Modeling a representative paleoenviroment often chalthrough geologic time, is essential to correctly assess the
lenges software technology and requires more time and
many interactions as process timing often determines
effort than can be justified by the business requirements.
exploration success or failure.
Conventional PSM uses vertical backstripping to
Conventional shortcomings
describe the structural evolution of a basin. However,
Exploration risk can be reduced by understanding the
this is not sufficient in structurally complex regions.
likelihood of hydrocarbon presence, type and potenLateral rock movements mean PSM should be pertial volumes. Seismic data can delineate the trap, and
formed using structurally restored models. This requires
high-quality 3-D seismic might reveal information on
a specific methodology to simulate physical parameters
reservoir quality or provide an indication of fluid consuch as rock stress, pore pressure and compaction withtent. However, seismic data alone is not adequate to
in a basin and then to correctly couple the resulting
reveal the complete geological story.
structures with subsequent modeling of the thermal
Petroleum systems modeling (PSM), a geological
history, source rock evolution and derived hydrocarbon
modeling technique that reconstructs basin evolution,
compounds. The PSM must be structurally consistent
can provide a solution. PSM incorporates all of the geothrough geologic time; if the geometric framework is
logic elements and processes needed for oil and gas to
inconsistent, the properties and processes simSOUTH
Surface leakage at faults
NORTH
ulated in this framework also will be incorrect.
An inconsistent structural framework will lead to
Gas
0 Ma
an incorrect thermal history, causing erroneous
Santa Barbara
oil eld
hydrocarbon generation results and spurious
Oil
Oil
migration pathways and accumulation locations.
12 Ma
Seal leakage
Andy MacGregor, Bjorn Wygrala, Martin Neumaier,
Alex Wilson and Juan Carlos Hidalgo, Schlumberger

Prospect
Gas

Solution and case studies

5,000 m

15 Ma

21 Ma

Transformation ratio
23 Ma
10 Km

FIGURE 1. Structural history and a 2-D petroleum systems model demonstrate the
oil charge history of the Santa Barbara Field in Venezuela and lateral variations of
hydrocarbon properties when approaching the main thrust. (Source: Schlumberger)

52

Schlumberger developed the TecLink workflow in


the PetroMod petroleum systems modeling software to integrate structurally restored paleogeometries at specified time steps into the petroleum
system model. This technique correctly couples
the temperature and pressure fields and simulated
dynamic fluid movements to the structural component of the model.
The TecLink workflow was applied to a 2-D
cross section from the Monagas fold and thrust
December 2016

EPmag.com

BASIN MODELING

Hybrid 3-D migration model


belt in eastern Venezuela (Figure 1). Although
this passive margin setting was tectonically calm
during the Mesozoic to Mid-Cenozoic, transpression started in the Late Oligocene, resulting in
inversion of the major normal faults. Thrustingrelated tectonic burial caused rapid heating and
pore pressure increases within the footwall source
rocks, favoring hydrocarbon generation and
expulsion. At the same time, folding and faulting
3-D present day model
created structural traps in the thrusted footwall
that received the hydrocarbon charge. All of those
Cross section showing
petroleum systems processes were directly constructural complexity
trolled by the tectonic evolution and have been
captured in the dynamic model.
Integrating the structural restoration made it
possible to successfully model the charging of the
FIGURE 2. The 3-D model illustrates the structural complexity of the Llanos Basin in
producing Santa Barbara oil field and long-distance Colombia. (Source: Schlumberger)
migration along the regional foreland bulge into
Pressure and thermal boundary conditions through
southern oil fields. A prospect north of Santa Barbara, in
geological time were defined to constrain the model,
the vicinity of one of the major thrusts, was investigated.
which was calibrated to well control for pressure, temAs a result of modeling the geomechanical response to
perature and thermal maturity. The dynamic evolution
the thrusting, seal integrity was identified as a primary
of the basin was modeled, including the interaction of
risk. The modeling also indicated that if oil had accuthe key petroleum system elements and processes. The
mulated in the past, it was most likely cracked into gas
consistent 4-D geological model generated for the area
under high temperatures. The gas-enriched trend has
identified multiple possible migration pathways from
been confirmed by recent drilling results, which have
the potential kitchen areas to provide confidence in
established extension of the Travi Field to the southwest.
exploration decisions in one of the most structurally
PSM studies can include 1-D, 2-D and 3-D models.
complex areas in Colombia (Figure 2). Detailed hydroHowever, only 3-D modeling can fully assess and quanticarbon migration studies were performed to underfy petroleum migration, accumulation and loss because
stand the filling history and migration pathways with
these transport processes are inherently 3-D and 4-D.
a match to known fields and observed accumulations.
Modeling 3-D petroleum systems in structurally comThree key exploration risk factors were determined
plex compressional areas is a time-consuming and techfrom the study:
nically challenging task. Almost all PSM studies to date
1. Lower and Upper Cretaceous source rocks reached
in basins dominated by compressional tectonics have
peak hydrocarbon generation between the Turonian
been limited to using multiple 2-D transects, as in the
and the Paleocene. Transformation ratio progrespreceding Venezuela case study.
sively decreases toward the east. Peak hydrocarbon
Centro de Innovacin y Tecnologa-ICP de
generation was reached before the structures were
ECOPETROL faced this challenge in evaluating the
fully formed.
exploration potential of the petroleum system of the
2. Younger Paleocene source rocks contribute signifinortheastern Cordillera and foothills area of the Llanos
cantly to the present-day accumulations and are still
Basin in Colombia. The area has been subjected to
in the generation window.
intense compressional tectonics, leading to a high
3. The hydrocarbon pathways suggest long-disdegree of shortening and structural complexity.
tance migration over a significant period of time.
PetroMod TecLink technology was employed to build
Consequently, there is a significant risk of migration
the fully coupled 3-D model needed to properly assess
losses due to the complex migration history.
petroleum migration, accumulation and loss. The petroExploration risk from frontier areas to near-field exploleum systems story is further complicated by long lateral
ration can now be assessed with greater confidence, and
migration pathways of up to 400 km (250 miles) and diathe exploration decisions made are auditable by referchronous episodes of migration and trap formation during
ence to the 3-D petroleum systems models.
the uplift and exhumation of the eastern Cordillera.

EPmag.com

December 2016

53

CEMENTING ADVANCES

Taking reverse cementing offshore


RFID technology expands capability to reverse-cement liners in depleted subsurface wells.

effective, primary cementing applications have been


limited to land and shallow-water wells where there is
no marine riser and the annulus extends directly to
the surface.
he unique and complex characteristics of deepwater
Considering the efficiency and ECD benefits offered by
formations have been strong drivers for technologireverse cementing, there was a clear value to expanding
cal innovation, as operators and service companies alike
the applications of this technique. Weatherford took a
expand their capabilities to meet the demands of this
systems approach to bringing reverse cementing to deephigh-stakes arena.
water basins. The company developed a multitool linerOne of the most critical aspects of well development,
cementing system that uses radio-frequency identification
cementing is especially challenging in deepwater envi(RFID) technology to facilitate a flow path that diverts
ronments with depleted formations, weak or lost-circulacement in the annulus below the riser and BOP stack.
tion zones, and narrow pore pressure/fracture gradients.
The CrossStream subsurface reverse-cementing system
These conditions influence the window of acceptable
is engineered to run above a liner hanger and to selecequivalent circulating density (ECD) downhole necessary
tively place fluid when and where it is needed. Because
for successful cementing operations.
cement cannot be pumped down the annulus directly
Traditionally, cement is pumped down the drillpipe,
from the rig floor in deep water, cement is first pumped
liner or casing inside diameter (ID) and pushed up the
down the drillpipe conventionally and then diverted to
annulus. The resulting lift pressure, combined with very
the annulus above the liner by a tool in the CrossStream
tight annular restrictions that sometimes occur at the
system. From there it continues down to the liner shoe.
previous casing shoe, creates high ECD on the bottomReturn fluid flows up the liner casing ID and crosses
hole formation, increasing the risk of losses to the formaback through the CrossStream tool into the annulus
tion during cement placement.
above the liner before returning to the surface.
Bottomhole ECD and lost-circulation risk can be
In cases where losses have occurred far down in the
reduced using a reverse-cementing technique whereby
wellbore, the subsurface reverse-cementing system miticement is circulated down the annulus and back up
gates the potential of cement losses into the formation.
through the casing or liner ID. While the approach is
The system also lowers bottomhole
ECD, thereby reducing the risk of
fluid losses and expensive remediation due to inadequate cement coverage across weak or depleted zones.
RFID technology enables the
activation of multiple tool functions
without the limitations of a mechanically manipulated system. In the case
of the CrossStream system, RFID
tags command tools to selectively
switch between conventional and
reverse-circulation flow paths multiple times on demand in a single trip.
For example, the liner can be run
in-hole with the CrossStream system
set up to allow conventional circulation. Prior to the reverse cementing
The crossover tool enables liner rotation and reciprocation during reverse-cement placement, which
job, an RFID tag would be pumped
enhances the quality of the cement job. (Source: Weatherford)
Crystal Wreden and Eric Evans, Weatherford

54

December 2016

EPmag.com

CEMENTING ADVANCES

downhole to switch the CrossStream system to the subsurface reverse circulation flow path. Alternatively, the tools
can be cycled using a sequence of pressure pulses.
A key aspect of the system is its ability to continuously
rotate and reciprocate the liner during cementing, further enhancing hole-cleaning efficiencies and set-cement
integrity. Depending on well geometry, the system also
can reduce the operational time required for cementing.
Because reverse-cement placement stops once cement
has filled the annulus and shoe track, pumping the volume inside the liner for displacement is not necessary.

Conventional,
reverse flow paths
Engineered in a modular design for versatility, the
subsurface reverse-cementing system includes an
RFID-activated crossover tool, which is required for
any subsurface reverse-cementing operation, and two
auxiliary RFID-actuated tools that can be deployed
depending on job requirements. An RFID circulation
tool enables selective, continuous circulation into
the work string annulus without flowing fluid past
the depleted zone or displacing cement. An RFID
flapper valve isolates the running string when setting
an expandable liner hanger after cement placement.
In addition to the RFID components, a bi-directional
float collar allows flow in conventional circulation and
reverse circulation directions.

Validating the approach


To validate the performance of the crossover tool and
bi-directional float collar in field conditions, a major
operator applied the subsurface reverse-cementing
approach to install a liner in a land well in Pennsylvania
in July 2015. The selected well accommodated a casing
design with a liner string inside a surface string, with the
geometries of the parent casing and liner string similar
to the design of an offshore well candidate in terms of
the annular clearance. This geometry maintained a tight
annular clearance between the casing ID and liner outer
diameter as typically seen in deepwater wells.
The crew ran the crossover tool downhole in the
reverse position, after which cement was placed in the
annulus to cement the liner in reverse with rotation.
A field technician then released an RFID tag at the
start of displacement that, upon arrival downhole,
signaled the crossover tool to shift from the reverse
flow path to the conventional flow path. After the tags
passed the tool, the well was shut in so that casing and
tubing pressure could be monitored. Pressures equalized after five minutes, indicating the tools were funcEPmag.com

December 2016

The subsurface reverse-circulation flow


path diverts returns up the ID and into
the annulus above the upper ports.
(Source: Weatherford)

tioning as planned. The liner


hanger was then successfully set
by traditional methods.
In place of conventional float
equipment, which is typically
located in the shoe for standard
cementing operations and allows
flow in only one direction, the
crew ran a bi-directional float collar near the top of the liner hanger. Based on existing float-collar
technology, the bi-directional
float collar was designed with
three flapper valvestwo downward-facing flappers to hold back
pressure after the cement job and
a top, upward-facing flapper valve
that facilitates circulation while
tripping out of the hole without
disturbing the cement. Because
the flappers face in opposite
directions, the float collar provides a seal above and below the
cement. A stinger is attached to
the liner running string that holds
the flappers open during the
cementing operation.
After the cement had set, the operator ran cement
bond logs and ultrasonic logs to evaluate cement coverage and integrity. The team also deployed a cold tracer
to enhance cement detection based on the reduced
thickness of the cement sheath. The logging results
indicated a good-quality cement bond throughout the
openhole section. The quality of the cement shown
by the bond log also validated the subsurface reversecementing approach.
As part of the development process, the CrossStream
subsurface reverse-circulation system is being validated
in stages to test this new technology. Large-scale testing and land trials have been completed, with offshore
trials planned for the future. The successful land trial
provided valuable knowledge and is a major milestone
toward transitioning this technology for routine offshore use, including deepwater formations where the
risk of depleted or weak formations and subsequent
cement losses are problematic.
55

CEMENTING ADVANCES

Resolving well-known issues


during the downturn
Seize opportunities for improved efficiency in cemented completions.

Travis Harris, Packers Plus Energy Services

s oil and gas prices remain lower for longer, producers


seek opportunities for continuous improvement. Great
strides have been made since 2015 in reducing breakeven
prices. Recent reports have indicated that breakeven prices
in major North American plays now range from $30/bbl to
$50/bbl, depending on the play and operator.
The Packers Plus line of cemented completions aims
to build on this success. Both QuickFRAC (limited
entry) and Diffusor (single-point entry) cemented systems are designed to address common issues such as
running the system to bottom, accessing the toe section
of long laterals and achieving uniform stimulation.

System installation
A critical part of any installation is getting the system to
the planned depth. During installation it can be helpful
at times to rotate the liner. Rotation breaks static friction
and allows the system to move through tight areas. However, not all liners are designed for rotation. The Packers
Plus Premium Liner Hanger has a high torque rating
that allows operators to rotate, push and pull on the liner
hanger without accidentally releasing the running tool.

A liner hanger must also be robust enough to handle


the weight required to push on the tool string without unintentionally presetting slips or packers. The
Premium Liner Hanger can hang loads up to 350,000
lb, with a packer designed for maximum contact area
rated to 10,000 psi of differential pressure.
The running tool used to install and cement the liner
hanger must be able to release reliably. This tool is
designed with both primary and secondary releases to
lower operational risk.

Extended-lateral completions
For extended-lateral wells, ball-activated systems provide
a major advantage in accessing the toe of the well to initiate treatment without having to pump wireline or push
coiled tubing. Cemented ball-activated technologies,
including Diffusor for single-point entry and QuickFRAC for limited entry, enable both cost and time efficiencies for the toe stimulation of an extended lateral.
Eliminating trips in and out of the well at each stage is
particularly significant in extended laterals, where plug
conveyance and millout become riskier. It becomes increasingly difficult to put weight on the bit as the millout progresses toward the toe, increasing operational risk.

Stimulation treatment
distribution

FIGURE 1. The ball-activated QuickFRAC limited-entry system facilitates consistent fluid


distribution throughout the perf clusters. (Source: Packers Plus Energy Services)

56

A common problem with limitedentry stimulation is that perforations


near the heel of a stage are typically
quickly eroded by proppant flow.
This can result in uneven distribution of fluid between perforation
clusters, which results in uneven
stimulation of the stage. Furthermore, logging and tracer data have
shown that clusters do not contribute equally to production.
Limited-entry treatment using the
QuickFRAC system ball-activated
sleeves resolves this issue with erosion-resistant tungsten carbide-reinforced ports. These entry points
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FIGURE 2. Overdisplacement is caused when excess fluid pushes proppant too far
into fractures, resulting in poor near-wellbore conductivity. (Source: Packers Plus
Energy Services)

are able to withstand high pressures and flow rates, facilitating consistent fluid
distribution throughout the clusters (Figure 1).
When high breakdown pressures require high fluid rates, single-point entry
completion systems such as Diffusor are more effective at stimulating some
formations compared to limited entry.
A study modeling the completion and reservoir data in the Wolfcamp Shale
estimates a 12% higher EUR over 30 years from wells completed with singleentry stimulation compared to traditional limited entry using plug and perf.
Finally, ball-activated systems can sidestep the potential for overdisplacing
proppant. Excess fluid can push the proppant near the wellbore deeper into
fractures, causing the near-wellbore fractures to close. This leads to poor
near-wellbore conductivity and lower production.
In ball-activated systems, overdisplacement can be controlled or avoided
because the ball can be pumped within the flush volume of the previous
stages treatment (Figure 2).

High-efficiency cemented completions


The debate about the merits of differing completion styles is ongoing. Regardless of promised advantages, low oil and gas prices might prevent operators
from venturing away from familiar methods. To stay competitive, flat-rate or
per-stage service fees have become more common in the current market. This
reduces the premium offered by the efficiency of ball-activated systems since
ball-activated completions are typically done at least three times faster. As a
case in point, during a QuickFRAC toe stimulation in Oklahoma, the transition
time between the ball-activated stages was about 15 minutes.
Price wars aside, time efficiency is still king. While revenue can be recovered,
time cannot. Packers Plus cemented technology addresses many of the inefficiencies of traditional completions. The Premium Liner Hanger has been designed to
mitigate risks at critical stages of installation. Both QuickFRAC and Diffusor are
ball-activated systems that can reduce nonproductive time and proppant overdisplacement and effectively stimulate the toe of extended-reach laterals.
Packers Plus has offered ball-activated completion design and experience
worldwide for more than 15 years. Successfully proven in more than 244,500
openhole stages, the same efficient ball-activated technology also is available
for cemented completions.
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December 2016

57

CEMENTING ADVANCES

Float shoe offers


radial cementing solution
New high-speed low-torque float shoe alternative
uniformly distributes cement at the casing shoe.

Chimerebere Nkwocha, Geopro Technology Ltd.

rilling events and the eventual outcome of a drilling


campaign can be unpredictable, with some incidents
leading to costly or catastrophic outcomes. To solve problems such as wellbore instability or sloughing shales, the
drilling industry has traditionally responded by introducing new technologies, techniques or processes. This can
include reducing downtime, especially after extensive
openhole logging, or after any operation that requires
the wellbore to be left open for a prolonged period of
time, as this can be critical for the E&P sector.

While rotating at high speeds, the GeoproHYDRA disperses fluid

Uniform deposition
The GeoproHYDRA is a low-torque high-speed tool that
addresses cementing issues affecting high-angle and
horizontal wells. It disperses fluid uniformly by rotating
as cement passes through at very high rotational speeds.
The result is cement deposition at the top and bottom.
This more uniform deposition of cement around the
borehole significantly improves the quality of cement
at the shoe in all well types and thus the integrity of the
cement behind the casing or liner.
By rotating part or all of the tool at high speed, a
cyclone effect is created, which also helps to clear
the borehole of all debris and contaminants prior to
cementinga useful additional capability in sticky hole
conditions or through unstable formations. Rotation
of the entire tool is beneficial when working on a long
high-angle section, where rotation is needed at the bottom to work the string down.
Thanks to the high rpm achieved, the envelope of
application is widened. This tool also can be used as a
jetting tool or a core tripping cleanup tool. In addition,
well brushes can be installed to make it a cleanup tool
for cement. Alternatively, a bit can be put at the bottom
of it to clean the casing line before drilling out.

uniformly as cement passes through it, ensuring uniform deposition


in the casing shoe. (Source: Geopro Technology)

Cementing challenges
One such challenging area is cementing. The strength
of the cementing operation on a well depends on how
the cement is deposited. In a vertical well cementing
is usually relatively straightforward since the cement
comes up the sides evenly. The more inclined the well
is, however, the more likely it is that fluid will follow the
path of least resistancein other words, flow to the top
of the casing and not the bottom.
Furthermore, in high-angle and horizontal wells when
displacing cement, conventional technologies are not
designed to apply the slurry evenly around the casing
string, with more cement usually going preferentially
to the high side of the hole rather than radially around
the string.
58

Field trials
Trials of this dual cementing/reaming technology are
currently taking place on wells in Murmansk in northwest Russia, with positive results so far. On the first well
where the technology was trialed, previous attempts to
land 7-in. casing at the target depth had failed, costing
the operator 35 days of nonproductive time (at a monetary cost of more than $1 million) and resulting in the
entire casing string having to be pulled out of the hole,
resulting in broken centralizers and other accessories.
The formation was unstable, a significant proportion of
the hole was at high inclination and the casing shoe also
went through an azimuthal turn of more than 100 degrees.
Having used the tool described above, the cement at the
shoe was of good quality when tested, and debris removal
also was improved. The operator plans to use the tool on
two more wells this year and a further 20 next year.
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PRESSURE PUMPING

Sequenced stimulation diversion


service boosts well productivity
Carbonate formations in the Middle East and in West Texas see significant
increase in production post-stimulation with new service.
and are deemed to be more suitable for cased-hole
completions. However, the high permeability of both
materials often leads to fluid breakthrough.
Conventional diversion techniques, including frack
cid stimulation, long the preferred method for
diverter balls, rock salt and benzoic acid flakes, are
boosting the flow of hydrocarbons in carbonate
further limited because they are not designed for openformations, has seen challenges when it comes to
hole types of completion.
diverting the fracturing fluid into target zones. In
In a move that represents the industrys most signifwells with multiple clusters or perforation intervals,
icant step change in diversion technology in several
for example, it often is difficult to divert the stimulayears, Schlumberger has developed a technique that
tion fluid from one zone to another because the fluid
more reliably diverts acid stimulation fluids into target
naturally enters zones with the lowest rock stress or
zones, improving both reservoir contact and well prohighest permeability.
ductivity. The OpenPath Sequence diversion stimulaThe use of conventional diversion systems in carbontion service, officially released in November 2016 and
ate formations can be unreliable and less than effective.
built on the success of previous fluid diversion systems,
Isolation techniques that use diversion material to block
has been effectively implemented in carbonate fields in
perforation entrance holes often do not align perfectly
the Middle East and the Permian Basin. The service has
with the perforation and therefore do not provide relisignificantly improved stimulation results and increased
able diversion. Other options such as rock salt and benproductivity (Figure 1).
zoic acid flakes are not dependent on perforation shape
As the first member of the
OpenPath stimulation services
family, the new diversion
stimulation service includes
stimulation modeling and a
proven near-wellbore diversion system. The new service
sequentially stimulates multiple zones and intervals in
cased-hole and openhole completions in conventional and
unconventional formations. It
can be deployed to selectively
and temporarily plug a specific region along the wellbore
or uniformly distribute fluid
along the wellbore to maximize wellbore coverage.
The cornerstone of the new
service is a composite pill engineered as a blend of degradFIGURE 1. The new diversion stimulation service sequentially plugs perforations in the near-wellbore area to
able fibers and multimodal
maximize wellbore coverage, resulting in greater production and recovery when compared to conventional
particles that temporarily block
methods. (Source: Schlumberger)
Wael Mahmoud, Julie Padgett and
Dmitriy Usoltsev, Schlumberger

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PRESSURE PUMPING

low-stress or high-permeability entry intervals to


enable stimulation of new
higher stress zones by
diverting the acid between
clusters along the wellbore.
Diversion occurs in the
near-wellbore area of the
formation, with the largest
particles forming a bridge
while the smallest particles
fill in the gaps between the
large particles to create a
very low-permeability seal.
The fibers enhance composite pill bridging capacity
and provide particle susFIGURE 2. A rise in surface pressure after the diversion treatment is a clear indication of leak-off control
pension, keeping the mate- and formation diversion. (Source: Schlumberger)
rial intact to isolate the
desired zone with optimum plugging performance.
This necessitated deploying an acid treatment that
The treatment, which deploys an acid suitable for spewould effectively stimulate multiple perforation intercific reservoir conditions and completion design, effecvals in a continuous treatment and without mechanical
tively increases the stimulated rock volume to enhance oil
isolation. To enhance production, the design and
and gas production. The new acid diversion stimulation
treatment called for diverting some of the acid stimtechnique can be used with a variety of acid systems,
ulation from the upper zones of the formation to the
including an engineered acid designed specifically for the
lower reservoir zone, an endeavor that had previously
new service. Based on empirical data, diversion material
been unattainable.
can withstand differential pressure up to 4,500 psi for acid
The OpenPath Sequence service released composite
fracturing or matrix stimulations. Following treatment,
pills to provide consistent and reliable isolation plugs,
the fibers and particles completely degrade within hours
with the treatment alternating between three acid stimor days at temperatures ranging from 54 C to 149 C (130
ulation stages and two diversion stages. After placement
F to 300 F) with no intervention required. This further
of the pills, diversion within the perforated intervals was
reduces costs and HSE risks for completion operations.
indicated by diversion pressures of 500 psi and 1,600 psi
The new service is especially suited for conventional
as well as net pressure changes calculated from instanand tight carbonate formations with the degree of pertaneous shut-in pressures. Injection log data based on
meability and porosity frequently found in the Middle
stationary spinner and temperature measurement proEast, where acid stimulation is very common. It was
vided further solid confirmation that the diversion techdesigned to provide stimulation diversion in new comnique had been effective.
pletions and for restimulation in mature fields.
Injection logging performed after the prejob injection and after each diversion verified that all perforation intervals had received coverage.
Productivity index jumps 300% in Middle East
In the upper reservoir the injection flow profile
A Middle East operator used the diversion stimulation
for the intervals changed an average of 70% for perservice in 2016 to divert stimulation fluid to target
forated clusters after the first diversion stage and
zones, significantly improving productivity in a multimore than 150% after the second diversion stage.
layer limestone reservoir characterized by a high degree
Injection logging confirmed that fractures also had
of heterogeneity, natural fractures and multiple perfobeen initiated and propagated in the lower reservoir
ration intervals. To maximize project economics, the
following the second diversion stage. Total producoperator needed to refracture a vertical well using a
tion improved to 1,200 bbl/d from 350 bbl/d prior to
technology capable of delivering good fracture conducstimulation, while the productivity index rose by more
tivity, an extended fracture length and effective fluid
than 300% (Figure 2).
diversion in the near-wellbore area.
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December 2016

61

PRESSURE PUMPING

Optimizing diversion in West Texas


In the Permian Basin an operator used the OpenPath
Sequence service to enhance diversion between multiple formation layers with varying in situ stresses and
permeability. The operator needed to convert a vertical
injector back to a producer well. Located in the Clearfork Shale of the San Andres play, the well had been
completed with cemented production casing perforated
with 756 entrance holes over an extended interval of
323 m (1,060 ft).
The multizone laminated carbonate formation with
low bottomhole static temperatures ranging from 40
C to 60 C (120 F to 140 F) had been stimulated with
a matrix treatment a year earlier, just before the well
was converted to a water injector. Mechanical diversion
methods for fracturing were not possible due to operational complexities and cost constraints. The primary
objective was to maximize the number of effectively
stimulated zones using acid stimulation treatments tailed
with some proppant.

62

To meet this objective, Schlumberger recommended


using the new diversion stimulation service to divert the
acid stimulation to the target zones. The acid fracturing
treatment design included five stimulation stages separated by four diversion stages using the composite pills
for isolation.
The five stimulation stages were completed with a
consistent incremental net pressure of more than 400
psi, indicating that the fracturing fluid had been successfully diverted between the various stress zones during
the treatment. Radioactive tracers further confirmed
diversion between stages and also verified that 100% of
the more than 305-m (1,000-ft) interval was successfully
stimulated. No diversion material was observed on the
surface during flowback, verifying laboratory tests indicating that the diversion materials had fully degraded
even at the low formation temperatures of 38 C to 40 C
(100 F to 120 F).
Following the stimulation treatment, initial fluid production of the well was 600 bbl/d, exceeding expectations.

December 2016

EPmag.com

PRESSURE PUMPING

Unconventional approach to
conventional pressure pumping
The next generation of pressure pumping systems delivers a cleaner,
quieter solution to hydraulically fractured wells.

Chris Combs, Evolution Well Services

ncreasing environmental regulatory pressures to


reduce emissions and noise have operators looking for
unconventional solutions to provide relief. Technology
advancements are addressing these issues in a cost-effective and efficient manner in this lower-for-longer market. One solution is through the use of next-generation
electric-powered hydraulic fracturing systems.
As a full service electric-hydraulic fracturing company, Evolution Well Services offers its multipatented
processes to generate electrical power using a mobile
gas-turbine generator to power electrically driven process equipment. The electric power is generated onsite
using 100% natural gas, be it from the field pipeline,
CNG or LNG. It is the systems ability to use multiple
sources of natural gas that offers cost savings to E&P
companies in completions operations.
The economics associated with burning field gas as
the fuel to power the process equipment delivers 95%
fuel cost savings in comparison to diesel fuel.

Additionally, using natural gas to fuel a turbine generator eliminates the environmental and personnel risks
associated with diesel use. Evolutions fleet emissions
are far below the Environmental Protection Agency Tier
IV standards for all categories of nitrogen oxides, CO2,
hydrocarbon and particulate matter.
Measured noise levels for conventional fracturing
fleets are typically in the +/-115 dB range. Evolutions
measured noise levels reside in the +/-80 dB range, providing the opportunity to work within highly regulated
and residential areas.

System technology

The company operates a General Electric TM2500+


turbine generator package that produces up to 32 MW
of electric power for the complete fracturing fleet. Monitoring and operation of the electric motors that drive the
process equipment are controlled remotely, providing
exact measurement and control over the entire system.
The company was granted exclusivity by General
Electric to be the packager of its TM2500 line of turbine engines into Evolutions mobile hydraulic fracturing power generation transport system. In
addition, the company holds multiple patents for its custom turbine generator transport, dual-pump transport and dual-blender
transport designs.
The fracture pump transports are configured to provide 5,000 hhp and 6,000 hhp
per transport, while the dual blender has a
designed 240 bbl/m capacity (120 bbl/m
each side) that unitizes a primary and secondary blender onto a single transport.
These blenders can be used in unison or
independently and can be configured for
slipstream and conventional pumping applications. The blenders are equipped with
ambidextrous suction and discharge capability, with blender tubs delivering up to 36,000
lb/min of proppant when used in unison.
Customized mobile chemical additive
The General Electric TM2500+ turbine generator package produces up to 32 MW of
electric pump skids feature high, medium
electric power for the complete fracturing fleet. (Source: Evolution Well Services)
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PRESSURE PUMPING

and low-rate capacities and are fully


controlled from the control center
transport and/or directly at the pump
control unit. Each chemical additive
pump skid can be manually moved
adjacent to the respective chemicals
storage vessels. Unitized upon each of
these skids is a flowmeter and a small
reservoir for flush and pump cleanup
purposes. The flexible positioning of
these modular chemical additive pump
skids allows reduced suction distance
between the chemical storage and the
chemical additive pump. This affords
greater control and accuracy, reducing
the amount of suction hose required
and thus reducing the probability of
viscous fluids from experiencing flow
issues such as polyacrylamide plugs
Reduced operational footprint offered by the electric-powered hydraulic fracturing fleet
and liquid slurry blockages.
provides operators with wellsite space not available with a conventional fleet.
The control center transport is
(Source: Evolution Well Services)
designed with comfort of control and
has LCD monitors to view live video feeds from each
equipment during a fracturing job as all operations are
piece of process equipment, including the pumps, hydraconducted remotely.
tion unit, chemical additive pumps, sand belts, blender
Process equipment is equipped with LED operational
tubs and sand hoppers. Additionally, the control center
lighting and military-grade digital cameras to transmit
transport receives multichanneled data streams of diaglive feeds from each equipment transport to the control
nostic data from each equipment transport, providing a
center data transport. These features provide enhanced
proactive approach to repair and maintenance that can
monitoring without personnel exposure to the high-presresult in preventable nonpumping time.
sure areas of operation. In addition, the physical layout
of the equipment has been engineered to minimize the
personnel required during rigup and rigdown.
Smaller crew, safer operations
The companys configuration of electric pumps,
Through its use of electric systems, the company is able to
blender, hydration and sand handling equipment prouse the advanced capabilities provided by automated sysvides a significantly smaller footprint for the process
tems, reducing by more than 50% the number of personequipment near the wellhead. Well sites with convennel required on a job site. An 11-man crewincluding an
tional equipment typically become crowded and danelectrician and turbine generator operatorperform the
gerous, with hydraulic fracturing equipment competing
companys hydraulic fracturing jobs. Also, smaller crew
with wireline, coiled tubing and other service equipsize means fewer safety risks like those typically associated
ment for proper positioning near the wellheads.
with personnel exposure and injuries during fracturing
Evolutions equipment footprint is about 40% of conoperations of conventional equipment.
ventional equipment. This reduced footprint affords
For example, diesel engines used on conventional
operators with wellsite space or terrain constraints the
fracturing fleets require hot fueling during pumping.
opportunity to reduce wellsite construction costs in a
This creates risks for fuel spillage and possible fire. Hot
safe and environmentally friendly manner.
fueling is eliminated with the use of the electric fracturAs of fall 2016, Evolution had successfully completed
ing fleet, regardless of job size or length of pump time.
more than 200 stages and 800-plus pumping hours in
Blenders and other process equipment found on
the Permian Basin, pumping more than 100 million
conventional fleets require personnel to perform handspounds of sand and achieving a sustained maximum
on operations, increasing their exposure to hazardous
rate of 110 bbl/min and maximum treating pressure of
environments. However, with the electric-powered frac11,500 psi consistently.
turing system, no personnel are required near process
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December 2016

65

OFFSHORE YARDS
REPORT

Korean shipyards
invest in automation
R&D efforts improve efficiency and construction execution.
Hyun-Buki Jeon, ABS; Manjoo Huh, DSME; San Ryong Shin
and Sang Hun Ryu, HHI; and DongSoo Kang, SHI

s offshore drilling and production units become


more complex, shipyards have to evaluate and
update processes and tools. Korean yards, which have
been highly regarded as reliable and competent facilities for decades, are investing in R&D with the goal
of developing automated approaches to carry out routine tasks and introducing innovative technologies to
improve construction capability.

R&D investment
Construction of the Daewoo Shipbuilding and Marine
Engineering (DSME) shipyard began in 1973 at Okpo
Bay, Geoje Island, on the southeastern tip of the Korean
Peninsula. Completed in 1981, DSME has since grown
into a premium shipbuilding and offshore contractor
specializing in offshore platforms, drilling rigs and
FPSO units/floating production units.
To improve the construction process, engineers at the
DSME R&D center are focusing on product design and
production technologies fundamental to offshore assets.
The onsite Research Institute comprises two research
laboratories: a comprehensive test laboratory dedicated
to R&D for welding technology and testing of related

devices and a test and measurement laboratory for HSErelated research.


The Research Institute is developing and designing
hull forms for offshore vessels and advancing hydrodynamic performance analysis and evaluation technology using computational fluid dynamics. The yard
also develops analysis methods to determine offshore
structure strength and fatigue and is investing in
complex structure design technology. Additional
R&D focuses on diagnosis and control technology
for structural deformation and finding ways to apply
composite materials.
The test laboratory for welding is looking into multiple issuesarctic welding, plumbing welding, thick-plate
welding, thin-plate welding, high-energy welding, etc.
in addition to developing technologies for analyzing and
assessing materials, assessing low-temperature toughness/rupture testing and evaluating welding materials.
Other focus areas include corrosion/heat treatment,
steel processing, technology for analyzing residual stress
and fatigue strength for welded areas, and investigation
into welding mechanization and automation.
The focus on automation encompasses development
and field application of automation-related devices,
facilities and systems. Current research targets automation processes and facilities layout with research into
the application of robot systems in the field.

Welding, manufacturing automation leveraged

DSME is using an automated welder to improve performance,


quality and safety. (Source: DSME)

66

Headquartered in Ulsan, South Korea, the Hyundai


Heavy Industries (HHI) yard is one of the largest in the
world. Established in 1991, the yard covers 1,780 acres,
with 10 large-scale dry docks and nine Goliath cranes,
which allows HHI to manufacture vessels of any type and
up to 1 million deadweight tonnage in size. HHI built
the worlds first T-shaped dry dock in 2009 followed by
the H-Dock.
HHI showcases its best technology in welding and
manufacturing automation. Among its capabilities
are fully machine-driven steel-cutting lines and a hot
forming automation facility. As the use of robotics in
shipbuilding increases and technologies such as sensor
systems and artificial intelligence add complexity, there
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EPmag.com

OFFSHORE YARDS
REPORT

is a gradual move toward customized automation technology to optimize shipyard operations.


HHI released mini welding robotics to its shipyards
in second-half 2013. The robots, which measure 50
cm by 50 cm by 15 cm with the welding arm retracted, can operate in areas inaccessible to humans. A
magnetized body allows them to suspend from panels
and ceilings, and a single human operator can control
three robots simultaneously.
The development trend for welding procedure specification is to improve the deposition rate, weld speed
and welding quality. HHI has developed a new digital
process to achieve better quality and higher productivity
at a reduced cost. Included in this initiative is the hybrid
welding power source, which changes polarity (direct
current electrode negative to direct current electrode positive) and vice versa via electric circuit, making gas tungsten arc welding and flux cored arc welding achievable
using a single power source. Additionally, HHI installed
a smart welding system in 2016 to monitor welding
parameters, machine error messages, etc., so workers can
check welding conditions in real time. Data are recorded
and stored in the smart welding system archive for immediate access and for future use for quality enhancement.

Mini welding robots can operate in areas inaccessible to


humans. A magnetized body allows them to suspend from
panels and ceilings. (Source: HHI)

Production automation emphasized


The current harsh business environment has led Samsung Heavy Industries (SHIs) Geoje Shipyard to
leverage innovative automation technologies that allow
low-cost construction, high-quality products and on-time
delivery, expediting the transition from conventional
construction to a smart yard system through information and communications technology (ICT) conversion.
A key to success for efficient construction and a highly qualified product is using automated robot systems
and continuously enhancing their performance. With
piping processes becoming more complicated, especially in offshore plants, SHI has focused on improving
automated pipe welding and inspection machines. The
flux-cored automatic orbital welding robot and hot-wire
tungsten inert gas orbital welding robot for heavy pipe
have increased welding speed by three to six times over
previous welding robots. And automatic radiographic
testing inspection, which is a change in approach from
inspection of outside-on-circumference to inside-centerof-pipe using autonomous mobile robots, has reduced
inspection time up to 93%. To shorten lead time, SHI
has doubled lifting capacity from a gigablock to a terablock using two different floating cranes that make it
possible to lift, move and mount offshore plant modules
weighing about 11,600 metric tons.
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December 2016

Mobile devices such as smart phones and tablets eliminate


excessive paper and unnecessary communication among
fabricators, vendors, class societies and owners. (Source: SHI)

SHI is capitalizing on ICT to implement a digitally


monitored and managed system. The resulting smart
yard uses large amounts of information across all construction processes, gathering and digitizing it to enable
data-based process control and optimal resource allocation to minimize reworking rate and inventories. For
example, real-time welding information will be monitored and welding specifications controlled using more
than 1,200 digital welding machines through local LTE
networks. Mobile devices such as smart phones and tablets will display the latest version of drawings in 2-D and
3-D as well as the real-time status of construction work,
removing excessive paper and unnecessary communication losses among fabricators, vendors, class societies
and owners.
67

UNCONVENTIONAL
REPORT: U.S.

Recent shale activity trends


and the future outlook
The U.S. shale landscape has transformed itself over the last several
years and has finally hit the first downcycle for many producers.
Jessica Pair, Stratas Advisors

otable basins throughout the U.S. have remained


resilient through the shale industrys first real
downturn, such as the Permian Basin and Marcellus, but
there have been drastic declines in other smaller basins
such as the Panhandle area and the Rockies. Operators
across the industry are turning to a strategy that is heavily weighted toward completions and are focusing on
determining the best practices for increasing well recoveries while still making efforts to drive down costs.

Drilling activity
Figure 1 highlights the profiles of historical drilled and
completed wells as reported by the Energy Information
Administration. Clearly, the number of wells drilled
dropped after the price of oil fell in late 2014. Things
seemed to pick up a bit in mid-2015 before sliding considerably. Completions, on the other hand, reflected an
immediate change in activity and really didnt pick back
up until late 2015, building a relatively healthy balance of
uncompleted wells. In contrast to drilling, operators have
maintained a relatively strong appetite for completing
wells, reflecting a need to continue operating but doing

so while spending far less. Between first-quarter 2014 and


fourth-quarter 2015 the number of drilled but uncompleted wells (DUCs) increased about 13% across all basins.
To gain an understanding of where this activity is
located, Stratas Advisors analyzed the same information at a play level. Figure 2 illustrates that the highest
increases were in the Eagle Ford and the Permian
Basin. By the end of first-quarter 2015, DUC inventories in these areas posted year-over-year growth figures
of 34% and 83%, respectively. The higher figure in
the Permian Basin speaks to the huge draw from the
Delaware and Midland basins, where operators were
drilling their high-graded acreage in anticipation of
a future rebound in prices. In contrast to the sustained activity in the southwestern Texas region, the
DUC count in the Marcellus area dropped by about
16% over the same time period as drilling activity
declined slightly in first-quarter 2015, but completions
increased in an effort to continue filling the northeastern gas demand.

Production

Given the drop in commodity prices, the production has


naturally been slowing down from the historic gains the
U.S. was experiencing relating to the shale gale. While
the natural gas basins have not
US WELL INVENTORY
declined quite as much, several
Avg. Drills and
Avg. DUC Balance
notable oil and liquids-rich
Completions
areas have taken bigger hits,
5,000
1,750
with some reports noting
1,700
4,500
1,650
declines in a few of the smaller
4,000
1,600
plays at more than 80%. This
3,500
1,550
often has been coupled with
1,500
3,000
many of the existing operators
1,450
2,500
declaring bankruptcy or selling
1,400
2,000
1,350
out of their producing assets
1,500
1,300
altogether, as seen within the
1,250
1,000
Panhandle and other regions of
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
north Texas and Oklahoma.
Avg. Drilled
Avg. Completed
Avg. Balance
Notwithstanding the drop in
production, shale resiliency
FIGURE 1. The average amount of wells drilled and completed has fallen since year-end 2014.
often is referenced when con(Source: Stratas Advisors)
68

December 2016

EPmag.com

UNCONVENTIONAL
REPORT: U.S.

US WELL INVENTORY
sidering global oil and gas marTotal Count
kets post-price collapse. While
1,200
reported figures have shown a
clear turn for the worse, espe1,000
cially in certain plays, the con800
solidated impact is markedly
600
less catastrophic than the dire
predictions for which many in
400
the industry had been bracing.
200
As illustrated in Figure 3, total
production in 2016 is expected
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
to close out at about 5% lower
Utica
Permian
Niobrara
Marcellus
Eagle Ford
Haynesville
Bakken
than 2015 levels. Compared to
the massive increases to which
FIGURE 2. The Permian Basin and Eagle Ford experienced the highest growth in overall well
the world had grown accusinventory during 2015. (Source: Stratas Advisors)
tomed, this drop is indeed
TOTAL PRODUCTION BY HYDROCARBON
material. However, given that
MMboe/d
prices have been cut in half, a
14.0
decline of a mere 5% is something to respect, if not applaud.
12.0
With respect to prices,
Stratas Advisors believes that
10.0
global demand will support
8.0
a gradually increasing price
for West Texas Intermediate
6.0
(WTI). Stratas Advisors believes
the price of oil in Cushing
4.0
Oil / FC
will average between $48/bbl
Wet Gas
and $55/bbl in 2017 and will
2.0
continue to slowly increase in
0.0
real terms thereafter. At those
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
prices there are several opportunities in shale for investors
FIGURE 3. The price collapse has brought production down from highs seen in 2015 and is
to capture value. Furthermore, expected to remain low until 2020. (Source: Stratas Advisors)
operators are continuing to
Figure 3 illustrates how the price collapse is anticmake impressive advancements in drilling techniques
ipated to take a toll on current and near-term proand methods, and they are making these improveduction for oil and gas. The major crude oil- and
ments at continually declining costs.
condensate-bearing regions are estimated to produce
The combination of a reasonably elevated price
about 4.9 MMbbl/d in 2016, which represents an 8%
deck and a lower cost per extracted barrel provides
decrease from the 5.3 MMbbl/d recorded in 2015.
sufficient support for a long-term production profile
Stratas Advisors expects crude and condensate producthat is increasing. Stratas Advisors expects the rate of
tion to decrease by another 2.9% in 2017 before startproduction to decline through the rest of 2016 and
ing to increase in the longer term. Declines in gas will
into first-half 2017. Stratas Advisors then expects it
prove to be notable but only about half of those in oil
to reverse this pattern starting in mid-2017. At that
on an equivalent basis. Opening export options and
time, Stratas Advisors forecasts WTI to be about $55/
improved well results should help push up gas producbbl and forecasts total production to average slightly
tion at a faster pace than oil over the long term.
more than 14 MMboe/d. The rate of increase Stratas
The Permian Basin continues to be the largest
Advisors forecasts thereafter means production would
source of tight oil throughout the U.S., with producnot return to the peak rate that was experienced in
tion nearing 2 MMbbl/d, up by more than 7% rela2015 until at least 2020.
EPmag.com

December 2016

69

UNCONVENTIONAL
REPORT: U.S.

TOTAL QUARTERLY SHALE OIL PRODUCTION

2015 average. However, the


area was not immune to the
$120
6,000
oil price declines, and Stratas
Advisors expects production
$100
5,000
in 2017 will be about 2%
$80
4,000
lower. The region has not yet
$60
3,000
entered into full-scale development, and the majority of
$40
2,000
production is derived from a
$20
1,000
small number of operators.
$0
Assuming WTI increases over
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018
the next several years, Stratas
Permian
Eagle Ford
Bakken
Rockies
Other
WTI
Advisors believes the SCOOP/
STACK region could mimic
FIGURE 4. Production declines from the top oil plays have largely been mitigated by increasing
the production increases that
production in the Permian Basin. (Source: Stratas Advisors)
have been experienced in the
TOTAL QUARTERLY SHALE WET GAS PRODUCTION
Permian Basin. The SCOOP/
HH
Production
STACK might not yield the
($/MMBtul)
(MMcfe / d)
same volume; however, the
60,000
$6
basin does provide multiple
50,000
$5
stacked pay zones allowing
40,000
$4
further delineation to occur,
which should support what
30,000
$3
would still be an impressive
20,000
$2
and wider asset base.
10,000
$1
The Marcellus and the
Utica
have continuously pro$0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
duced
the largest amount
2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018
Permian
Eagle Ford
Bakken
Rockies
of natural gas since the
Marcellus
Utica
Other
Henry Hub
inception of drilling in the
Appalachian Basin (Figure 5).
FIGURE 5. Wet gas production has largely been sourced from the Marcellus and the Utica. It is
The Marcellus did marginally
expected to remain steady in the coming quarters. (Source: Stratas Advisors)
slow down over the past several quarters as operators were forced to reallocate
tive to 2015 (Figure 4). Stratas Advisors believes the
resources to their best performing assets around the
Permian Basin will continue to increase production
county. In 2015 operators in the Marcellus posted
as high-grading efforts in the area have remained
production increases of under 13%, averaging 436
strong during the downturn. Operators have conMMcm/d (15.4 Bcf/d). In 2016 production in the
tinuously improved overall drilling metrics, yielding
Marcellus is expected to still post an increase, but
larger recoveries per well. Stratas Advisors forecasts
the rate of growth has slowed considerably to only
the play to increase another 8% in 2017, posting an
about 5% over 2015, ending the year with an overall
average rate of about 2.1 MMboe/d. The Bakken has
average of 458.7 MMcm/d (16.2 Bcf/d). Production
decreased production by about 15% in 2016 to more
in the Utica, however, almost doubled in 2015 relathan 1 MMbbl/d.
tive to 2014. This smaller area has received a great
The younger SCOOP/STACK region has prodeal of attention, and operators continue to allocate
pelled itself into one of the top regions of the U.S.
precious capital to the region.
Operators have focused within the SCOOP for the
In a trend similar to the Marcellus, production is
past several years and have recently begun shifting
expected to show increases in 2016 at a lower but still
north into the STACK. In 2016 the SCOOP/STACK
impressive rate of growth. Stratas Advisors expects the
is estimated to produce at a rate of more than 430
Utica to post production growth this year of more
Mboe/d, which given its relative size and the new
than 30% to 84.9 MMcm/d (3 Bcf/d).
interest yields an impressive 80% increase over the
Production
(Mboe / d)

70

WTI
($/ Bbl)

December 2016

EPmag.com

tech

WATCH

A2F on track at industrial scale


A joint venture will use air-to-fuels technology to produce synthetic fuels.

Contributed by Carbon Engineering and


Greyrock Energy

arbon Engineering Ltd. (CE) and Greyrock Energy


Inc. recently announced that they are joining
forces to produce ultralow carbon liquid transportation fuels using only water, CO2 captured from air and
renewable power as inputs. Even with growth in sales
of electric vehicles and other alternatively powered
vehicles, it is estimated that liquid fuels (diesel and gasoline) will still dominate more than 85% of the fuel for
transportation by 2035, according to BP. Finding ways to
produce clean liquid fuels from alternative resources is
imperative to supporting the massive growth in energy
requirements worldwide as well as addressing the problem of climate change.
CE, a privately funded Canadian company, has developed and tested a technology for the capture of CO2
directly from the atmosphere. Greyrock Energy provides fuel synthesis technology and has marketed platforms that convert flexible combinations of methane,
CO2 and hydrogen into liquid fuels such as gasoline
and diesel.

Greyrock and CE have partnered to combine these


systems in a full Air to Fuels (A2F) pilot plant in
Squamish, Canada. This plant will come online in 2017
and will convert CO2 and renewable electricity into
clean transportation fuels for testing and demonstration purposes. Within the plant CO2 and hydrogen will
be converted into syngas, and in turn Greyrocks Direct
Fuel Production platform will enable the production of
premium fuels from synthesis gas.
Greyrock diesel meets ASTM D975 specifications
and can be used directly in transportation vehicles.
Greyrock gasoline blendstock can be used to upgrade
and improve petroleum-based gasoline. Additionally,
Greyrock products may be further processed to produce synthetic kerosene and other high-value products.

Catalytic process

Greyrock developed and tested its technology for the conversion of synthesis gas to clean transportation fuels beginning in 2006. The companys catalytic process eliminates
the production and refining of wax normally associated
with the manufacture of synthetic fuels. These fuels feature virtually no sulfur or aromatics as well as high cetane
and good lubricity. This means that the fuels
have premium environmental and operating
properties over both petroleum-based equivalents and synthetic fuels produced from wax.
Greyrock recently released its Flare-to-Fuels
product line for the capture and conversion
of natural gas and NGLs, otherwise flared at
wellhead locations, directly into clean synthetic fuels. These plants are designed to accept
either 585 MMBtu/d or 65 MMBtu/d. They
also are designed to be remotely operated
moveable systems. Fuels produced from these
plants can be used directly in the field or sold
into ready fuel markets.
Associated gas often is flared due to lack of
pipeline and processing infrastructure. Flared
gas produces CO2, nitrogen oxides, black carbon/soot and other pollutants. Improperly
operated flares also can vent substantial
amounts of methane.
The World Bank estimates that about 140
This photo shows an example of Greyrocks small-scale gas-to-liquids plant.
Bcm (about 5 Tcf) of natural gas is flared
(Source: Greyrock Energy)
72

December 2016

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tech

WATCH

annually, resulting in the emission of


more than 300 million tons of CO2 into
the atmosphere. Installation of the Flareto-Fuels systems to convert this gas rather
than flare would result in the production
of more than 18 billion gallons of clean
fuels per year.
Greyrock also is working on deployment
of its technology as a methodology to
address stranded gas as a pipeline replacement. In addition, the Greyrock technology
can be used to process coalbed methane,
biogas and other gases.
The fuels produced by the process have
premium properties, including zero sulfur,
no aromatics, high cetane and excellent
lubricity. Greyrock diesel also can be used
At industrial scale, an air capture facility will be factory-sized and can capture up to
as a blendstock to upgrade the quality of
1 million tonnes of CO2 per year with a single facility. (Source: Carbon Engineering)
petroleum-based diesel fuels.
When the fuel is used in new diesel engines with
ry-sized and can capture up to 1 million tonnes of CO2
advanced control systems, reductions in particulates,
per year with a single facility. All energy demands for
carbon monoxide, hydrocarbons and nitrogen oxide
plant operation and compression to the final purified
emissions can be achieved. These pollutants can be
150-bar CO2 output stream are included in this value.
reduced further when the fuel is used in older lightFurther, the system can be powered by renewable
duty and heavy-duty diesel vehicles with less efficient
energy, and in the case where natural gas is used to
emission control systems, in off-road diesel vehicles
thermally heat the CE calciner module, all CO2 from
such as tractors and bulldozers, in stationary diesel gencombustion is captured and purified along with that
erators and in diesel-powered vessels.
captured from air.
In addition, these diesel fuels can reduce greenhouse
gas emissions. Greyrocks diesel engine emissions studAir to fuels demonstration, deployment
ies have shown that CO2 and methane emissions, both
The A2F pilot project is on track to be built and tested
greenhouse gases, are reduced in new diesel vehicles
in 2017 and forms an important step toward larger scale
by up to 3.5% and 9%, respectively, when compared to
commercial facilities that will produce these same fuels
petroleum-based diesel fuels.
for local transportation markets. Due to being cleaner
Greyrock recently was recognized with an R&D 100
burning and ultralow carbon intensity on a life-cycle
Award, having developed one of the 100 most technobasis, the two companies are hoping to deploy such
logically significant new products of the year.
larger projects in markets within Canada and the U.S.
that are governed by low carbon fuel standards (LCFS)
and similar regulations.
Direct air capture
Synthetic fuels produced with A2F have several intrinsic
CE has been developing its direct air capture technoladvantages to offer in decarbonizing the transportation
ogy since 2009 and now has eight core patents and a
sector, namely that they have an energy density 30-fold
system proven by successive prototype and pilot demongreater than todays best batteries, can be produced with
strations. CEs air capture system is built on a wet scruba land footprint 100-fold less than todays biofuels and
bing air contactor that uses a strong hydroxide solution
are drop in compatible with todays engines and refuelto capture CO2 and convert it into carbonate. This is
ing stations. This drop-in compatibility allows progressive
paired with a regeneration system based on calcium
emissions reductions by gradual fuel switching without
cycle processing borrowed from the pulp and paper
infrastructure turnover. There has been a surge of recent
industry and adapted to air capture-specific needs.
interest in air to fuels, and internal estimates suggest that
CE has an industrially scalable low-risk air capture
fuel production costs will allow market entry into LCFStechnology that is ready for commercial deployment.
style systems at current prices.
At industrial scale, an air capture facility will be factoEPmag.com

December 2016

73

digital

OIL FIELD

Protecting actuators from cyberattacks


Military-level security systems and solutions safeguard against unauthorized access to
master stations that provide remote control of actuators.
Tighter safeguards
Ugo Baldereschi, Pentair Valves & Controls

he adoption and integration of new technologies


coupled with the trend toward constant device and
communication connectivity have led to an increased
level of vulnerability of industrial plants and facilities
to cyberattacks. Suppliers such as Pentair Valves & Controls, end users, and industry and professional organizations are developing solutions for protecting offshore
and onshore E&P facilities by applying and adapting
technologies borrowed from mature environments,
namely the military and banking sectors.
The Pentair Valves & Controls Biffi DCM2
Diagnostic Communication Master offers a safe and
highly secure option for the control of actuators from
a remote control room. The DCM2 is an evolution of
a Biffi Diagnostic Communication Master product that
has been installed and operating effectively worldwide
for more than 20 years. The DCM2 acts as an interface
between the upper level of the control system and the
field devices connected by a fieldbus network. The
DCM2 also provides advanced centralized control and
monitoring of up to 300 actuators through a multiprotocol network able to manage optic fibers, wireless and copper-wired connections concurrently and
securely. The DCM2 combines Biffis experience in
actuation technology with the flexibility and operative
reliability of the LonWorks open and standard bus
communication protocol.

The DCM2 Diagnostic Communication Master offers a safe and


highly secure solution for the control of actuators from a remote
control room. (Source: Pentair Valves & Controls)

74

The need for connectivity and the availability of data on


multiple devices has increased the threat of cyberattacks
exponentially, creating a growing number of opportunities for infiltration by malicious parties. Attempting to
curb this problem has led to the emergence of sophisticated firewall and information protection systems that
increase the complexity of the security systems. The direct
corresponding impact of the threat of cyberattacks in
industrial settings is the growth in the number of employees who must be dedicated to the critical function of
managing and protecting communications and data.
Equipment and firmware that govern industrial
processes have been adjusted to the environment and
increasing security demand. The effort to strengthen
some devices that primarily demanded speed in the
data exchange has now been partly moved toward the
implementation of sophisticated protection algorithms,
for which a significant portion of calculation power is
needed. For this reason, despite the steady growth in
the power of microprocessors in the last several years,
there has been only a moderate increase in communication efficiency since this power has partly fueled complex algorithms dedicated to data protection.

Master stations
A device that has captured the attention of computer
security professionals in industrial applications is the
master station. The master station is a gateway that is
primarily used in the petroleum sector and serves as the
connecting link between the distributed control system
(DCS) in the operators control room and the actuation
systems operating in the field. The process is governed
by the control room, which collects all the data from the
field and then sends commands to the actuated valves
that will act according to the procedures established.
However, network control in the field to which the actuated valves respond is not directly entrusted to the control room. Rather, network control is connected to the
master station. The master station has the task of interrogating all actuators in the field dozens of times per second to ease the DCS from this burdensome task, check
actuator availability and offer the degree of redundancy
to various levels by connecting the valves with multiple
December 2016

EPmag.com

digital

OIL FIELD

loop configurations, for which an interruption will not


generate a loss of control of the infield nodes with the
ultimate purpose of ensuring adequate safety.
The degree of sensitivity of the information passing
through the master station is enormous. This device has
control of the whole plant, having the last word on
the opening and closing of all the infield valves, and it
contains all data related to the configuration of the system from which sensitive information can be inferred.
For this reason, the precautions implemented by the
plant or facility, especially in the petroleum industry,
are particularly stringent and prohibit any possibility of
wireless access and auxiliary connections, even for maintenance and repair purposes.

database. To understand the complexity of the security


systems implemented in the field, it is important to classify the types of potential threats to which these devices
can be subject. Different countermeasures will respond
differently to the categories of threats.
Previously, the simple application of symmetric
encryption was sufficient to ensure the security needed. Both interfaced devices (control room and master
station) were in possession of the same encryption and
de-encryption key. This key could obviously not be sent
together with the message/command but had to be
communicated to both devices beforehand by a third
party that was potentially in possession of the key and
able to create a weak point in the system.

Advanced cryptology systems

Advanced master station

Given that these precautionary measures are not sufficient, information exchanged with the master stations
must have the highest level of protection as with a banking system, a military defense system or an industrial

The alternative is asymmetric encryption. The receiver has


two keys. One is public (generated to encrypt the message
but not able to decrypt it), and one is private (this is the
only key able to decrypt the message). The public key can

EPmag.com

December 2016

75

digital

OIL FIELD

be distributed to senders to encrypt their message. Only


the receiver has the private key and can read the message.
The infield gateway constantly exchanges information
in this way. It is clear that the interception of a command or its modification could have extremely serious
consequences. Therefore, the latest generation of devices has implemented this advanced encryption, which
can guarantee the inviolability of the system.

Operational security guarantee


Password management poses other challenges. Password
management in todays environment is more organized
and official, meaning that access keys are provided by
the manufacturer under explicit request of the customer.
The validity of the access keys can be associated with the
role of an end user (observer, user, maintenance and
administrator) and is limited in time and number of
accesses. Thus, even a remote support request from the
end user to the manufacturer results in the transmission
of an encoded certificate with a public key that only the

76

gateway can decipher. The procedures for use of the


password, number of accesses and time duration also
can be defined. Once used, the password is no longer
effective and the master station remains protected for
the functions that are inaccessible with ordinary use.
The most advanced field control equipment also allows
a direct connection to the manufacturer, usually established through a virtual private network for which the
highest level of protection is required.
Increasingly sophisticated plant management technologies pose complex problems in and of themselves. At
the same time, producers of the DCM2 and other devices, solutions and data that these devices and systems support must remain diligent in their surveillance of those
cyberattackers. Although equipment, systems and solutions providers as well as plant and facility owners and
operators will never be completely immune to future
cyberattacks, this heighted level of awareness puts all
stakeholders in a solid position to be better organized
and better equipped to protect their assets.

December 2016

EPmag.com

tech

TRENDS

Wireline tool improves efficiency of pressure,


volume, temperature sampling
Weatherford International Plc has released its Compact
formation sampler. The slim-profile wireline tool can
capture up to three 700-cc samples in a wide range of
borehole sizes, a press release stated. The size of the
tool distinguishes it from other pressure, volume and
temperature samplers on the market. The slim profile
enables the tool to be run past restrictions smaller than
3 in. and to operate in boreholes as large as 14 in. Additionally, the self-centering design substantially reduces
formation-sticking risks, enables a more efficient and
faster connection with the target zones and makes it
possible to deploy the tool on traditional wireline or
through drillpipe. weatherford.com

Eliminate motor chunking failures


Sperry Drilling, a Halliburton business, has released
GeoForce Endure and StrataForce Endure drilling
motors, a press release stated. Challenging drilling
operations can cause motors to degrade. This results
in nonproductive time due to chunking, which
limits the life and performance of motors. Chunking
occurs when the elastomer across the motors power
section, especially at the lower end of the stator, breaks
down. The Endure motor technology is designed to
overcome this issue with a proprietary metal helix that
controls vibration and prevents overloading the stator
elastomer. halliburton.com

Multiphase flowmeter offers


flexible monitoring

The Roxar MPFM 2600


M is a flexible and
easily manageable
wellhead measurement
flowmeter.
(Source: Emerson)

78

Emerson Automation Solutions


has released the Roxar MPFM
2600 M multiphase flowmeter.
The Roxar MPFM 2600 M is a
flexible and easily manageable
wellhead measurement product based on a field-proven
technology platform, a product
announcement stated. The
meter is designed for operators
with direct and continuous
wellhead multiphase flow monitoring needs. The Roxar MPFM
2600 M is part of the scalable
Roxar multiphase product family
and provides flexibility as fields
mature and conditions change.
The compact meter can be easily
retrofitted in the field, delivers

straightforward installation and commissioning, and has


been specifically designed to meet operators capex and
varying field requirements. The MPFM 2600 M also can
identify and measure nonsymmetrical flow in varying
flow regimes. emerson.com

Service maximizes value of well tests


Schlumberger has released GeoTesting geology-based well
test design and interpretation services. Built in the Petrel
E&P software platform, the new services maximize the
value of well tests by integrating geological and geophysical models with dynamic well test data in a shared earth
model for more accurate interpretation compared with
conventional analysis limited to geometrical models, the
company said. The Petrel GeoTesting plug-in includes
Global Sensitivity Analysis designed for targeting geological features of interest and incorporating uncertainty in
the geological model during well test design and execution. New grid-based inversion technology automatically
calibrates reservoir models with dynamic well test data
for direct integration into the reservoir model, enabling
more accurate reservoir characterization. In addition, the
naturally fractured reservoir pressure transient simulator
provides new insight into the complex behavior of transients and the matrix-fracture interaction. slb.com

Service platforms improve benchmark for


offshore hydrocarbon transfer
Gall Thomson has released a series of new service
packages that will allow end users of marine breakaway
couplings (MBCs) to maintain top-level operational performance, a press release stated. Offering four options,
Gall Thomson will provide a flexible range of global
service choices based on operational requirements and
logistics. Called MBC4, the new packages are seen

Max Virgin, managing director of Gall Thomson, said, Making


sure an MBC is in top working order is vital so that should an
offshore accident take place, the device will activate as
intended when called upon and mitigate the risk of equipment
damage and pollution. (Source: Gall Thomson)

December 2016

EPmag.com

DOWNLOAD

THE APP

as an additional step to improved and safer transfer of


oil and refined products as well as achieving minimum
downtime. The four packages include infield service, a
Gall Thomson approved certification engineer visit, Gall
Thomson Approved Regional Service Centre and Return
to Gall Thomson U.K. Technology Centre. All four can
be called upon for inspection, refurbishment or resetting
of Gall Thomson MBCs. gall-thomson.co.uk

Data, transaction and workflow platform


for upstream management
P2 Energy Solutions has released a fully integrated data,
transaction and workflow platform that enables upstream
oil and gas teams to effectively manage every facet of
their business from the field to the back office, a press
release stated. The P2 Oil & Gas Platform is a continuation of P2s product-integration strategy and is designed
to deliver a seamless software and data experience for
teams across the upstream enterprise. The platform features best-in-class E&P capabilities, integrated end-to-end
workflows and cloud availability. p2energysolutions.com

Advancing subsea compression systems


Aker Solutions and MAN Diesel & Turbo expect to cut the
size and weight of subsea compression systems by at least
50% a year after the first such system successfully went
onstream at Statoils sgard Field, a press release stated.
The sgard system, which has been running with practically no stops or interruptions in its first year, will help
recover an additional 306 MMboe more cost-effectively,
safely and with a smaller environmental footprint than a
traditional platform, MAN said. Aker Solutions delivered
the system in close collaboration with partners including
MAN and the operator Statoil. dieselturbo.man.eu

Satellite image library for ground scouting


prep, field exploration activities
Airbus Defence and Space has released One Atlas, a
new satellite image basemap, which covers the earths
landmasses with professional-grade imagery. Available
online 24/7 and refreshed within a 12-month period, One
Atlas provides those working within oil, gas and mining
industries easy access to cost-effective, high-quality and
homogeneous imagery, a press release stated. One Atlas
can be used for the preparation of ground scouting or
field exploration activities as well as the planning of new
facilities and construction works. During a sites decommissioning phase, One Atlas fresh images offer a tool to
oversee site restoration. The service offers a streamlined
workflow, and the costs related to updating, selecting, processing and hosting imagery are drastically reduced. One
EPmag.com

December 2016

Atlas facilitates the sharing of data across teams or partner


organizations with no compromise on security or privacy.
It also enables users to plan, map and locate their teams,
assets or areas of interest anywhere on the globe. intelligence-airbusds.com/one-atlas

System detects hard-to-find methane leaks


Southwest Research Institute (SwRI) is developing a
methane leak detection system for the U.S. Department
of Energys (DOE) National Energy Technology Laboratory, a press release stated. The project, funded through
a $798,000 DOE award, will develop an autonomous,
real-time system to detect small methane leaks that are
difficult to detect with current technology. SwRI will
combine machine learning with passive optical sensing
to identify small methane emissions using its Smart Methane Leak Detection technology, also known as SLED/M.
SwRI aims to develop the SLED/M system for use across
the entire natural gas supply chain, from extraction and
storage to transportation and distribution. The two-phase
DOE project will take place over the next 18 months. In
Phase 1, SwRI will apply its liquid spill detection capabilities to develop the methane detection system using
integrated optical sensors and an embedded processing
unit to enable machine learning through algorithms that
recognize patterns and trigger alarms during leak events.
Phase 2 will focus on integrating and field-testing the system to document and demonstrate capabilities within a
controlled environment. swri.org

Preventative maintenance made simple


HTL Worldwide Ltd. has released a specialist coating to
extend the life of any structure or assembly, a product
announcement stated. Offering complete joint preservation and corrosion prevention, HTL Pro-Tect is suitable for any mechanical and electrical application that
is subject to climatic corrosion. With easy application
and a lifespan of up to 25 years, the coating will protect
all mechanically exposed assemblies in the harshest
environmental conditions, including subsea. The highstrength nature of the product comes from its silicone
base, which forms a strong, resilient and rubberized
coating that averts moisture, debris, and water or oxygen
ingress. HTL Pro-Tect is 100% recyclable. htlgroup.com

Chemical-resistant lining provides


seamless protection
Rhino Linings Corp. has released HiChem 11-70, a twocomponent, 100% solids, zero-VOC polyurethane lining,
a press release stated. HiChem 11-70 protective lining
provides excellent stability for immersion applications
79

tech

TRENDS

and where high levels of chemical resistance are required


to deliver corrosion protection. HiChem also meets NSF
Standard 61 requirements for use in 5-gal and larger
potable water storage tanks or pipelines with 0.75-in. or
greater pipe diameter. Additionally, HiChem 11-70 meets
the demand for ecofriendly coatings and linings. The
polyurethane lining can be applied using plural component spray equipment to concrete, fiberglass, plastic,
metal and wood. The protective lining creates monolithic, seamless protection that conforms to any shape
and size. rhinolinings.com/industrial

geoscience mapping, a ScienceDaily.com article reported.


LIME is a high-performance 3-D viewer that can be
highly useful for geoscientists returning to their office
after fieldwork. The software allows users to explore
their 3-D datasets and perform measurements, analysis
and advanced visualization of different data types. The
software is developed by the Virtual Outcrop Geology
Group, a collaboration between Uni Research CIPR
in Bergen and the University of Aberdeen in the U.K.
The LIME software can be downloaded and used on
the researchers own laptop and can handle very large
high-performance 3-D datasets. uni.no/en

Scale remover unclogs fast, safely


EcoClean biodegradable scale and rust remover powered by Nano VpCI is designed to make unclogging heat
exchangers, chillers, condensers, cooling towers and
pipes safe, fast and easy, a company product announcement stated. The EcoClean scale remover dissolves
heavy scale, corrosion and naturally occurring oxides
off metal surfaces in contact with water, providing one
safe remover for all descaling and derusting needs. The
powerful corrosion inhibitors contained in this heavyduty scale remover also protect metals from flash rust
that would otherwise occur after treatment. EcoClean is
nontoxic, biodegradable and safe to use on ferrous and
nonferrous metals. EcoClean saves time and money by
creating clean surfaces that improve water flow in pipes
and increase heat transfer efficiency in heat exchange
equipment. The remover comes in a water-soluble
pouch form that can be easily thrown into a system and
circulated to protect hard-to-reach areas. cortecvci.com

Long-life oxygen sensor for hazardous areas


Tyco Gas & Flame Detection has released a new longlife oxygen sensor for the OLCT 60. The OLCT 60 is a

4-20 mA analog gas transmitter designed for industrial applications in hazardous locations. The new
design is lead-free and has an operational lifespan of
five years. The range is from 0 vol % to 30 vol % O2,
and the sensor operates from -40 C to 50 C (-40 F to
122 F) continuously, allowing new opportunities in
low-temperature applications. This new oxygen sensor completes the range of Tycos current two-year
life O2 sensors, carries a full four-year warranty and
is compatible with any existing OLCT 60 O2 detectors (except intrinsically safe variants) from the
field. TycoGFD.com

Long-range radar positioning vessels safely


Guidance Marines new Artemis Mk6 system is the most
complete long-range radar in the products history,
positioning vessels safely and effectively up to 10,000 m
(32,808 ft), a press release stated. The system is typically
used in the offshore operation of offloading and transportation of oil between shuttle tankers and FPSO units.
The new system, which overcomes GNSS scintillation,
boasts an all-weather operating system up to 10 km (6
miles), interchangeable antennas and antenna units,
and a Guidance Dashboard user interface, and it is compatible with all existing Mk5 stations. guidance.eu.com

Improving drilling waste transportation


Cubility AS has released a new technology that improves
the transportation of drilling waste, a press release
stated. CubeLink safely and cost-effectively transports
drilling waste directly from shale shakers or Cubilitys
MudCube solids control system to a storage unit or final
processing unit on a drilling rig onshore or offshore.
CubeLink consists of a recurring belt shaped in a dropbelt configuration. The system opens up in a U-shape in
the feeding station to receive drilling waste that is fed by
gravity from one or several shakers or MudCubes into
the feeding station. The belt is then closed and routed
to the destination. The belt opens up and returns flat
over a turning roller, where the drilling waste drops by
gravity into a receptacle. cubility.com

High-performance 3-D viewer for geoscientists


New software for virtual model interpretation and
visualization called LIME was developed for improved
80

December 2016

EPmag.com

REGIONAL REPORT:
SOUTH AMERICA

New kid on the block


Global exploration activity might be down in the dumps,
but theres a new exploration hot spot lighting up South America.

Mark Thomas, Editor-in-Chief

ndustry attention has for years been focused mainly on


the regular ow of opportunities coming out of South
Americas traditional upstream activity centers of Brazil,
Venezuela, Colombia and Argentina.
But the economic uncertainty and quarrelsome geopolitics of South America continue to leave it vulnerable,
with the ongoing ramications from the corruption that
has plagued Brazil and Venezuelas problems with major
debt just two of the substantial current threats that loom
over the oil and gas industrys cautious plans to invest.

Upstream backwater
Hence the surprise emergence of the upstream backwater of Guyana as an exploration hotspot for oil majors
Exxon Mobil and Hess has been extremely welcome.
The drilling of the ultradeepwater Liza-1 discovery
well in 2015 was a true game changer, and the initial
apparent size of the nd in the Stabroek Block quickly
prompted operator Exxon Mobil to appraise it earlier
this year. The Liza-2 well persuaded the normally ultraconservative operator to excitedly issue a recoverable
reserves estimate of between 800 MMboe and 1.4 Bboe

and describe it as world class, while a third appraisal


probe in October drilled by the Stena Carron drillship
has now prompted it to raise that minimum recoverable
reserves estimate to 1 Bboe.
According to Exxon Mobils latest plan submitted to the
countrys environmental protection agency, the U.S. major
already is underway with pre-FEED studies for a converted
FPSO development linked to a signicant subsea umbilicals, risers and owline system with subsea manifolds and
two subsea production and injection well clusters.

Spread-moored FPSO unit


This would be initially based around a 100,000-bbl/d
spread-moored FPSO unit with 1.6 MMbbl of storage
capacity and tanker ofoading facilities. The development
strategy is then expected to see the operator follow the
phased and proven approach it adopted for its Kizomba
and Kizomba Satellites development in Angolas deep
waters on the other side of the Atlantic, with a design
one, build many philosophy for the multiple FPSO units.
Its still too early for a formal decision, but the operator and its partners have indicated in the environmental plans outline schedule that the project could
be sanctioned by mid-2017. This would help it take
advantage of the low market prices that are available for
the small number of new offshore development projects
being tendered and further squeeze down the projects
breakeven costs. On this basis Guyana could have its
rst offshore production facility up and running as
soon as late 2020 or early 2021, according to Exxon
Mobils schedule, under a 20-year IP operations phase.
This would be impressively rapid for an offshore sector that previously has seen only sluggish activity and
a small number of unsuccessful offshore wells drilled
since the 1960s (most of those back in the late 1960s
and early 1970s).

Stabroek stats

Exxon Mobils play-opening Liza discovery offshore Guyana was


drilled by the Stena Carron drillship, with the operator estimating
minimum recoverable reserves of 1 Bboe, which will initially be
developed via an FPSO unit subject to nal sanction. (Source: Hess)

82

The Stabroek Block itself lies about 190 km (120 miles)


offshore Guyana and covers 6.6 million acres (26,800
sq km or 10,347.5 sq miles). Exxon subsidiary Esso E&P
Guyana Ltd. is the operator with a 45% working interest
with partners Hess Guyana Exploration Ltd. (30%) and
CNOOC Nexen Petroleum Guyana Ltd. (25%).
December 2016

EPmag.com

REGIONAL REPORT:
SOUTH AMERICA

The Liza-1 discovery well hit 90 m (295 ft) of 32API


crude, while Liza-2 encountered more than 58 m
(190 ft) of oil-bearing sandstone reservoirs in Upper
Cretaceous formations.
According to partner Hess third-quarter results in late
October 2016, the Liza-3 well was also more than successful. CEO John Hess described it as a world-class resource
discovery, adding in the results statement, Based on the
positive results of the Liza-3 well, we now expect Liza to be
at the upper end of the previously announced estimated
recoverable resources range of 800 MMboe to 1.4 Bboe.

Deeper pay zone


The well, spudded in early September, is believed to
have established a deeper pay zone than the rst two
wells, hitting about 61 m (200 ft) of net pay after being
sidetracked and deepened. It was drilled by the Stena
Carron to a total depth of 5,486 m (18,100 ft) in a water
depth of 1,829 m (6,000 ft), about 4 km (2.4 miles) from
the discovery well. Hess COO Greg Hill added in an
investor call that the reservoir had a very healthy gasto-oil ratio that should aid oil production.
There was some disappointment, however, with an
exploration well drilled prior to Liza-3 on a separate
prospect called Skipjack 40 km (25 miles) northwest
of Liza proving unsuccessful. The operator has since
moved the drillship about 16 km (10 miles) to the
northwest to spud another wildcat, this time on the
Payara prospect, which will be followed by further
exploration wells during 2017.
Exxon Mobil and Hess have said the block contains
further multiple prospects and play types, which they
are expecting to drill during 2017 and 2018.
Exxon Mobil also has indicated that it plans to use
two dynamically positioned drillships simultaneously to
drill the production and injection wells on Liza.

Fiscal-friendly terms
Guyana, a British colony until 1966 that has strong links
with the Caribbean, has a scal regime that at this nascent
stage in its evolution is very explorer-friendly as the republic looks to encourage more companies to its waters.
At present, after any commercial production begins,
a licensee will be allowed to recover all capital and
operating costs from cost oil, which for the rst
three years is up to 75% of production and thereafter
up to 65% of production.
The licensee share of the remaining production or
prot oil for the rst ve years is 50% of the rst
40,000 bbl/d of oil, 47% for additional production and
45% thereafter.
EPmag.com

December 2016

Uruguay sets depth record


While Guyana has been stealing the headlines in recent
times, another of South Americas smaller countries also has
been in the spotlight by having the worlds deepest ever offshore well drilled.
Although Totals Raya-1 wildcat offshore Uruguay proved
unsuccessful, the fact that this countrywith no production or
proven reserveshad the potential to tempt the French major
to carry out frontier exploration indicates more activity will follow. Prior to the Total probe, little interest had been shown since
the mid-1970s, when two dry wells on the Lobo and Gaviotn
prospects were drilled by Chevron on the continental shelf.
The ultradeepwater Raya-1 well was drilled mid-year, setting a world record after the drillship Maersk Venturer carried out the operation 250 km (155 miles) offshore in a water
depth of 3,411 m (11,191 ft). This beat the previous record of
3,170 m (10,401 ft) set by ONGC offshore India.
The South Atlantic Margin continues to be a play of interest to the industry, particularly in light of Brazils huge proven reserves just north of Uruguay, and although Total has not
released any official details about the wells results, it is continuing to analyze the data. The French operator has shot more
than 7,100 sq km (2,741 sq miles) of 3-D seismic over the block.

Bid rounds
Two bid rounds held in 2009 and 2012 attracted a number of
majors, including Total, which was awarded Block 14 in the second round. It later shared out the risk on the block when Exxon
Mobil and Statoil farmed in for 35% and 15%, respectively.
The Norwegian player also is a partner with 35% in neighboring Block 15 in the Pelotas Basin alongside operator
Tullow Oil (35%) and partner Inpex (30%).
Tullow and its partners have agreed to a yearlong extension of the contract on Block 15 to complete further seismic
activity, with a 3-D shoot covering 2,500 sq km (965 sq miles)
set to get underway before year-end 2016 or early in 2017.
This is aimed at adding to a number of initial leads previously
identified in a 3-D survey carried out by Tullow in 2013.
Uruguays oil regulator Ancap is working on plans for a third
bid round, possibly in 2017, but the disappointing news from
Totals wildcat and the depressed exploration environment
globally might delay those plans into 2018. Up to 17 blocks are
expected to be put up for grabs, with five in shallow waters and
the rest in water depths ranging from 100 m (328 ft) to beyond
3,500 m (11,483 ft). They also will include blocks previously held by BP and YPF but later relinquished. The blocks will
range in size from 2,500 sq km to 6,500 sq km (2,510 sq miles).
Ancap also is working on improving the incentive to
explore, with longer initial exploration periods and higher
cost-recovery allowances.
83

international

HIGHLIGHTS

Colombia

Canacol Energy Ltd. plans to drill


four new gas development wells,
#1-Trombon, #6-Nelson, #8-Nelson
and #3-Clarinete, plus one new oil
well in 2016. Canacols recent gas
discoveries have added 8.5 Bcm
(302 Bcf) in 2P reserves on the
Esperanza and VIM 5 E&P blocks
in Colombias Lower Magdalena
Basin. A second rig has been added
for drilling in two blocks. Canacols
inventory of prospects holds an estimated 67.9 Bcm to 79.2 Bcm (2.4
Tcf to 2.8 Tcf) of unrisked mean
estimate resource potential. Canacol
is drilling #1-Trombon in the Esperanza Block in the Lower Magdalena
Basin, which is estimated to contain
1.1 Bcm (40 Bcf) of potential recoverable resource. The #6 and #8 Nelson are in the same block and will
target a Cienaga de Oro (CDO)
reservoir. The #3-Clarinete will be
drilled in the VIM-5 Block of the
Lower Magdalena Basin and target
CDO reservoir sandstones, which are
productive in Clarinete and Nelson
gas fields.
2

Colombia

GeoPark Ltd. announced that its


Llanos Basin Block 34 development well, #4 Tigana, flowed 3.3
Mbbl/d of oil. The well was drilled
to 3,398.5 m (11,150 ft) and produces from Guadalupe. It flowed
15.3-degree-gravity oil with a water
cut of less than 1% during testing
on an electric submersible pump.
Tested on a 4464-in. choke, the wellhead pressure was 100 psi. Additional production history will be
required to determine stabilized
flow rates. Tigana Field is along the
same trend and fault line as Jacana
Field. The company is drilling
appraisal well #6 Jacana to test the
southwest extension of the field.
84

Canada

Petrolia Inc. is drilling the lateral section in #1-Bourque, a wildcat on the


Gaspe Peninsula in Quebec, Canada,
to 1,700 m (5,577 ft). The planned
true vertical depth is 1,505 m (4,938
ft) before the company sets intermediate casing. The projected depth is
3,450 m (11,319 ft), and the 1,750-m
(5,741-ft) horizontal leg of the reservoir will be followed by logging and
completion. Four cement plugs will
be set between 1,780 m and 2,746 m
(5,840 ft and 9,009 ft). The rig will be
moved a few meters away toward the
enlarged portion of #1-Bourque to
drill #3-HZ Bourque, which will be vertically drilled to 1,006 m (3,300.5 ft).
According to the company, the hole
will then be progressively deviated to
a total depth of 1,500 m (4,921 ft),
1,299 m (4,262 ft) true vertical depth.
The planned depth of #3-HZ Borque
is 3,150 m (10,335 ft). A production
test of Forillion will be performed for
both wells following drilling, logging
and tubing installation.
4

Norway

Results from an offshore Norway


appraisal well at the Skipper oil discovery in Block 9/21a in License P1609
were announced by Independent Oil &
Gas Plc. The well was drilled to 1,700 m
(5,578 ft) and hit 11-degree-gravity oil
in the Skipper reservoir. The current
estimate of oil in place is 142.6 MMbbl
at the North Sea venture. Testing indicated the reservoirs permeability is 10
darcies. The company plans additional
testing and reservoir modeling.
5

Norway

Lundin Petroleum AB has completed


drilling and testing of a reentry of
appraisal well #7220/11-3 A on the
eastern flank of the Alta discovery in
PL609. According to the company,

the Alta discovery has estimated gross


contingent resources of between 125
MMboe and 400 MMboe. The reentrys objective was to further assess
the quality of the Permo-Carboniferous carbonate reservoir and to
conduct injection and production
tests. Two injection tests in the carbonate reservoir below the oil-water
contact proved good to very good
reservoir quality and injectivity in the
Falk and Orn formations, according
to the company. A production test
on a 6464-in. choke in the gas zone in
the Lower Triassic reservoir section
produced a maximum of 594,654 cu.
m/d (21 MMcf/d) of gas. Pressure
data from previous wells at #7220/113, #7220/3A and #7220-3 AR indicate
good communication with the two
previously drilled wells on the Alta
discovery. The original discovery
well, #3-Alta, was completed in 2015
and hit a 120-m (394-ft) gas column.
6

Pakistan

Two new gas and condensate discoveries were announced by Petroleum


Exploration Ltd. in the Ayesha-1 gas
field in Pakistans Badin IV South
Block, Sajjawal District, Sindh Province. The #1-Aminah was drilled to
2,297 m (7,536 ft) and completed in
the Cretaceous Lower Goru A sands.
It was tested in 14 m (46 ft) of perforations in Lower Goru A-Sand. During
a 10-hr period it averaged 538,020
cu. m/d (19 MMcf) of gas on a 4864in. choke, with a wellhead flowing
pressure of 1,607 psi. The average
condensate-to-gas ratio at the 2,280-m
(7,480-ft) well was about 3.8 bbl to
28,317 cu. m (1 MMcf) with 24.5 bbl/d
of water. The #1-Ayesha North was
completed in Cretaceous Lower Goru
A sands. It was tested in an 18-m (59-ft)
interval on 4864-in. choke, flowing about
246,356.5 cu. m/d (8.7 MMcf/d) with
an average wellhead flowing pressure
of 771 psi. The condensate-to-gas ratio
December 2016

EPmag.com

international

HIGHLIGHTS

1
2
8

was about 8.17 bbl per 28,317 cu. m


with 28 bbl/d of water.
7

India

Oilex Ltd. plans to drill a vertical well


in the Cambay Block onshore Gujarat, India. Based on core analysis, the
operator might fracture-stimulate the
EP-IV zone reservoir. In addition,
the venture will test the shallower
OS-II zone to prepare an OS-II field
development plan for extension of
the production-sharing contract that
ends in 2019. Drilling is expected to
begin in 2017, with EP-IV fracture
stimulation to follow.
8

Indonesia

Saka Energi Indonesia discovered


offshore oil in the Ujung Pangkah
Block in East Java, Indonesia. According to the company, the discovery
proved 300 MMbbl of oil at exploraEPmag.com

December 2016

tion well #4V-Sidayu. The discovery


confirms a field extension after the
2015 discovery at #3ST1-Sidayu in
Tuban, Kujung-1 and Ngimbang formations in the Sidayu structure. The
company plans additional testing
and field development.
9

Australia

Results from the #2-Roc appraisal well


by operator Quadrant Energy Australia
Ltd. confirm gas condensate at the offshore Western Australia site. In Block
WA-437-P condensate-rich gas samples
were extracted from the well at several
locations. Wireline logging tests indicate a 30-m (98-ft) net reservoir and
60 m (197 ft) of gross gas- and condensate-charged sands. Downhole sampling rates indicate gas and condensate
permeability of 100 to 350 millidarcies.
A liner will be installed for testing, and
perforations are planned in the uppermost 35-m (115-ft) sand interval.

10

10 Australia

Falcon Oil & Gas Ltd. released


results from its #1H-NW Amungee
well in Northern Territory, Australia. The Beetaloo Basin venture was
drilled to 3,808 m (12,493 ft) and
fl owed between 22,653 cu. m/d
and 33,390 cu. m/d (800 Mcf/d
and 1.2 MMcf/d) of gas after fracturing. The initial estimates indicate a dry gas composition with less
than 4% CO 2. Falcon hit a 30-m
(98-ft) accumulation with 4% to
7.5% porosity, a gas saturation
range of 50% to 75% and permeability between 50 and 500 nanodarcies. Additional testing and
exploration is planned.
For additional
information on
these projects
and other global
developments:

READ MORE ONLINE

EPmag.com
85

on the

MOVE

PEOPLE

Dr. Berislav Gaso has


been appointed MOL
Groups upstream executive vice president.

Weatherfords Bernard J.
Duroc-Danner, chairman of the
board, president and CEO, departed
from the company Nov. 9. Krishna
Sprayroq Inc. selected Jeremy
Shivram will lead as interim CEO
Huckaby as the new director of
and will continue as CFO until a new business development.
CFO is named. Robert Rayne, vice
chairman of the board, will serve as
Ken Sill (left) and Greg
chairman of the board.
Miller have joined the
Equity Research Team of
EQT Corp. President Steven T.
SunTrust Robinson HumSchlotterbeck will succeed David L.
phrey and will cover the oilfield
Porges as CEO when Porges retires
services and equipment space out of
in first-quarter 2017. Porges will
Houston as well as U.S. communicaremain as chairman of the board for tions and internet infrastructure out
one year following his retirement.
of New York, N.Y., respectively.
Husky Energys President and
CEO Asim Ghosh will be retiring
Dec. 5 but will remain on the
board of directors.
NetApp Inc. selected Bill Miller
as CIO.
Sanchez Energy Corp. appointed
Howard Thill executive vice president and CFO.
CAP Energy named Randy
Yeager president.
Oilfield Helping Hands
appointed Gregory
Rachal president.

86

resources industry practice in the


U.S. and also appointed Scott
Smith to lead its power and utilities sector. England and Smith
succeed John McCue, who previously held both roles.
Chevron Corp. named Rhonda J.
Morris corporate vice president of
human resources.
Oil & Gas UK has appointed four
new members to its board: Cory
L. Loegering, Apache North
Sea; Robin Allan, Premier Oil;
Bill Dunnett, Repsol Sinopec
Resources UK; and Peter Wilson,
Rowan Companies.

The board of BP Plc appointed


Ashtead Technology
appointed Graeme Booth Nils Smedegaard Andersen as a
to its U.K. team as regional nonexecutive director.
technical support leader.
COMPANIES
Ricardo Johnson joined C.H.
GE and Baker Hughes announced
Fenstermaker & Associates LLC
that the companies have entered
as survey and mapping coastal
into an agreement to combine GE
services director.
Oil & Gas and Baker Hughes.
Global Maritime Consultancy &
Schlumberger opened a new reserEngineering appointed Helge
Flesland to lead its Mission Critical voir and rock analysis laboratory in
Abu Dhabi, United Arab Emirates.
Systems Group in Norway.

Tyler Farquharson, EXCO


Resources Inc.s current vice president of strategic planning, has
become CFO and treasurer following the departure of Chris Peracchi. Farquharson will continue to
serve as vice president of strategic
planning and lead the investor
relations function.

Mark Hunt has been promoted to


the newly created position of operations manager for SIMMONS
EDECOs European base of operations in Great Yarmouth, England.

Robert Gordon University, in conjunction with Merlin ERD Ltd.,


has developed a bespoke training
course in extended-reach drilling
for industry professionals.

Business Development Manager Kevin Keogh is to relocate from Paradigm Flow


Services headquarters in
Aberdeenshire, Scotland, to Houston,
where he will head up the companys
business development activities.

Emuge Corp. opened a new technology center in West Boylston, Mass.

Bristow Group selected William


Bill Collins as senior vice president global operations.

Deloitte selected John England


as a vice chairman of Deloitte
LLP to lead its energy and

Geopro Technology Ltd. opened


its newest office in Kuala Lumpur,
Malaysia. The office will manage
operations across the whole of
Southeast Asia.
GE held the grand opening of its
new Oil & Gas Technology Center
December 2016

EPmag.com

on the

MOVE

MARKETING | SALES | CIRCULATION

Vice President of Publishing


RUSSELL LAAS
Tel: 713-260-6447

Oct. 5 in Oklahoma City. The center


will become a central hub for GE
scientists and engineers to closely collaborate with the industry on digital
and hardware solutions.
Flotek opened its new 50,400-sq ft
Global Research & Innovation Center
in Houston.

rlaas@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

Senior Director
of Business Development
HENRY TINNE
Tel: 713-260-6478
htinne@hartenergy.com

Director of Business Development


DANNY FOSTER
Tel: 713-260-6437
dfoster@hartenergy.com

RSP Permian Inc. said Oct. 13 it will


acquire Silver Hill Energy Partners
LLC for about $2.4 billion.
Woodside acquired 100% of
the shares in ConocoPhillips
Senegal B.V.
The Lyell Centre, a Scottish-based
global research center for earth
and marine science and technology
based at Heriot-Watt University,
has opened.

Catoosa Test Facility completed a


$2.5 million expansion in July at its
facility in Pawnee County, Okla., that
will double borehole testing capacity
for oilfield manufacturers in the R&D Drilinginfo has acquired GlobalView, a
provider of analytics, risk management
phase of new product development.
and data management solutions.
Ranger Energy Services LLC has
acquired Bayou Workover Services LLC. Drger has debuted its first North
American mobile showroom filled
with products. The trailer acts as
Bluware Inc., Hue AS and Headwave
Inc. will join to form an organization of a traveling oil and gas tradeshow
along the Gulf of Mexico coastline.
geoscience and engineering software.
Sentinel Peak Resources will buy
Freeport-McMoRan Inc.s onshore
California oil and gas properties, paying up to $742 million for the assets.

ProSep has signed a distribution


agreement with Puffer-Sweiven to
expand ProSeps offerings beyond
the upstream oil and gas market.

Sales Manager, Eastern Hemisphere


DAVID HOGGARTH
Tel: 44 (0) 7930 380782

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December
December 2016
2016

87

last

WORD

And now for a few words on safety


Valves, controls and humans all play important roles in ensuring safety in hazardous
E&P environments.
lessly on through the evolution of safety. These
solutions have to withstand extreme overpressure
conditions, and engineering and technical teams in
the field must be able to depend on industry-comhe oil and gas E&P process represents one of many
pliant reliable equipment produced by leading supexamples of humankinds attempt to tame nature.
pliers. Industry standards set by organizations such
Thankfully, we succeed a majority of the time and withas the American Petroleum Institute, International
out difficulty. But on very few occasions we fail miseraOrganization for Standards, European Standards
bly and completely.
and the International Electrical Commission are
The recently released Deepwater Horizon feature
constantly evolving to address country- and applifilm shines a spotlight on the tragic consequences of
cation-specific needs to address obvious dangerous
human, process and equipment malfunctions in an
operating conditions.
ultradeepwater offshore drilling rig operation. The
Those buying what we have taken years to develop
film is based on actual events of the night of April 20,
and sell need to be aware of the
2010, when a gas release and subbest and not simply the cheapest
sequent explosion occurred on
solutions for optimizing safety
the Deepwater Horizon drilling vesThose buying
and performance.
sel in the Gulf of Mexico. Eleven
what we have
End users should expect nothpeople died, 11 others were
ing
less than a collaborative and
injured, the rig sank and almost 5
taken years to
effective
working relationship
MMbbl of oil spilled into the Gulf
develop and sell
with their suppliers. In addition
of Mexico.
need to be aware
to being assured that all techniEvery one of us who is closely
cal specifications are met, cusassociated with the oil and gas
of the best and
tomers should expect access to
industry can learn from this sad
not simply the
ongoing training and customer
experience. Deep wells pose
cheapest solutions
education; availability of either
extremely hazardous conditions
onsite or remote equipment
and bring with them a huge level
for optimizing safety
testing; and ability to readily tap
of risk. Situations can get out of
and performance.
into the knowledge and expericontrol quickly. Dangerous condience of the sales, engineering
tions can escalate to the point of
and maintenance representatives
no return.
assigned to support them. This is much more than a
Valves, controls, automation solutions and aftermarcustomer-vendor engagement; it is an effective partket services are critical to helping ensure safe operating
nership. Customers should expect access to experts
conditions, especially within offshore and onshore E&P
who are well-versed in all aspects of operating, mainenvironments. Such technologies and services support
taining, testing and serving these critical compoextreme pressure and temperature conditions in E&P
nents, processes and systems.
environments that demand the very besthigh integrity,
When an owner, operator or authorized representapressure protection, emergency shutdown and isolation
tive is specifying valves and controls equipment and
solutionsto protect process infrastructure, high-pressolutions, asking for references and proof of experisure vessels, critical process equipment and pipelines.
ence from the suppliers who are being considered is
Safety-instrumented systems such as high-integrity
absolutely essential. And that is because, collectively,
protection systems, emergency shutdown valves and
all of us need to be 100% on top of our game all of
pressure-relieving devices bring together new techthe time.
nologies and solutions as the industry moves relentAndrew Hoxley, Pentair Valves & Controls

88

December 2016

EPmag.com

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