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Copyright 2000, Society of Petroleum Engineers Inc.

This paper was prepared for presentation at the 2000 SPE International Petroleum Conference and Exhibition in Mexico held in Villahermosa, Mexico, 13 February 2000. This paper was selected for presentation by an SPE Program Committee following r eview of information contained in an abstract submitted by the author(s). Contents of the paper, as presented, have not been reviewed by the Society of Petroleum Engineers and are subject to correction by the author(s). The material, as presented, does not necessarily re flect any position of the Society of Petroleum Engineers, its officers, or members. Papers presented at SPE meetings are subject to publication review by Editorial Committees of the So ciety of Petroleum Engineers. Electronic reproduction, distribution, or storage of any pa rt of this paper for commercial purposes without the written consent of the Society of Petroleum Engineers is prohibited. Permission to reproduce in print is restricted to an abstract of not more than 300 words; illustrations may not be copied. The abstract must contain conspicuous acknowledgment of where and by whom the paper was presented. Write Librarian, SP E, P.O. Box 833836, Richardson, TX 75083-3836, U.S.A., fax 01-972-952-9435. ABSTRACT Gas lift is a feasible option as an artificial lift system in a depleted field. In the Bellota field there is no substructure means to install any type of artificial lift system, therefore the use of nitrogen as a gas lift source is necessary to keep the Bellota wells producing. After evaluating different options we implemented a nitrogen generated in situ project using the membrane technology. This paper analyzed the gas lift process design by using nodal analysis and optimum allocation of nitrogen in each well. Special emphasis and consideration was given to this project from an economical, operational, technical and environmental points of view. It is olso compares this option with differents alternatives including the traditional gas lift method using natural gas as a source as well as the use of stored nitrogen from storage trucks (Tanks). Our evaluation of results obtained from the different options investigated in this study clearly indicates that this method is a good option in this particular situation. Nitrogen injection generated in situ with membrane technology can be a feasible and profitable alternate source of gas lift as shown in this study. INTRODUCTION Bellota Chinchorro is one of the seven producing areas in the Southern Region of Mexico. The current production of this field is 105 000 STB/D of oil and 150 MMSCF/D of gas produced from dolomite formations, belonging to Jurassic and Cretaceous age. The objective of this study are the wells drilled in the Bellota field. Initial production of the bellota field started in 1982 reaching a peak production of 44 000 STB/D in 1995. Current production is at 20 000 STB/D, mainly attributed to natural depletion. Year- to- date production

from this field is estimated at 140 MMSTB, and it is expected to produce another 50 MMSTB from calculated total reserves. This field is divided in two different sections. The wells that will be discussed in this gas lift application belong to the north section. These wells are currently depleted below saturation pressure. It is presumed that a gas cap has been already formed in the top of the reservoir, since GOR has been decreasing gradually. In addition, the reservoir pressure has decline drastically making it necessary to provide some form of artificial lift assistance to keep the wells producing. Those wells that have been converted to gas lift, are deep wells, which have so many disadvantages for any SPE 59028 GAS LIFT WITH NITROGEN INJECTION GENERATED IN SITU Miguel A. Lozada Aguilar, M.del Remedios Arredondo Monarrez, SPE, Pemex, PEP. 2 MIGUEL A. LOZADA AGUILAR, M.DEL REMEDIOS ARREDONDO MONARREZ SPE 59028 artificial lift system. Some electric submergible pumps have been tested before with poor results, and then, a gas lift system by using nitrogen as source was installed, since no facilities were available to handle natural gas as a source for gas lift. In the very beginning, storage trucks were used to deliver nitrogen, but since this method was so expensive, an in situ nitrogen generation project was implemented, using the membrane technology. In this way, it was possible to reduce 50% the total costs in three gas lift wells. In March 21 of 1998, gas lift started in wells Bellota 136, 138 and 158-D using nitrogen generated in situ with membrane technology as a source. PRINCIPIA OF MEMBRANE EQUIPMENT FOR NITROGEN GENERATION Nitrogen generation through membrane equipment is carried out by pumping an air current into membrane, which due to its especial material design let the air to be separated into nitrogen and oxygen mainly. This is achieved basically because the oxygen flows faster than nitrogen through it, being expulsed to the atmosphere, as long as the nitrogen is absorbed into the membrane to be delivered to the next compression stage. Before the separation process, air composition is 78% of nitrogen, 21% of oxygen and 1% of rear gases; Neverdeless just after the separation process, gas mixture will be expulsed into the atmosphere with 40% of oxygen content, and the one that has been absorbed into the membrane has from 95% to 98% of nitrogen content. Membranes are built up from a polymeric thin cap, which has special physical properties that make the separation efficiency to have a variation base on: pressure, temperature, permeability, membrane aria and selectivity. Since 1987, when they have been reported for its use in petroleum industry, they have evolved until now, having 60% of better permeability and 30% of better selectivity, besides, a significant reduction on consumption energy has been achieved (Figure No.1). Equipment to be installed on location together with membrane unit is the following: two air compressors

pack, an air nitrogen compressor pack, flow meter unit and additional equipment. A brief functional description for each component is given next to it. a).- Two air compressor pack. This pack has the function of comprise the air, which comes from the atmosphere to be deliver into the next compression stage. Air pressure is increased from atmosphere pressure to 200 PSIG. Those two compressors handle 5.6 MMSCF/D with 1100 HP of potency. b).- Air nitrogen compressor pack. This pack has the function to raise the air pressure that comes from the previous stage to be deliver into the membrane unit at 400 PSIG, and it has also the function to increase the pressure of nitrogen which comes from membrane unit in two stages, one of them from 400 PSIG to 900 PSIG and the other one from 900 PSIG to 2000 PSIG, to be deliver into the gas line for gas lift purpose. c).- Membrane unit. This pack has the function of separate 5.6 MMSCF/D of air to obtain 2 MMSCF/D of nitrogen with 95% to 98% of quality. This unit is built up of 36 cylinders, the ones has the membrane element inside of them. d).- Flow meter unit. This unit has the function of measure the amount of nitrogen that is deliver into the gas line for gas lift. e).- Additional equipment. This equipment helps in order to let the main equipment accomplish its function. Some of the most important devices are: filter system, coolers, start on compressor, energy plant and fuel storage. SPE 59028 GAS LIFT WITH NITROGEN INJECTION GENERATED IN SITU 3 GAS LIFT NETWORK AND WELLS CONVERSION Those three wells, which will be converted from natural flow to gas lift, were drilled in the same location, thereby gas lift line construction was cheap and quickly, as distance from each well was no longer tan 500 FT. It was also necessary to install flow meter and regulation valves for each well. The nitrogen generation equipment was installed in the same location (figure No. 2). In the other hand, in order to make the wells conversion cheaper, it was concluded that no workover rigs should be necessary, as operation conditions for each well permitted start the wells on production just by injecting gas in one point, that means not to use any upper injection valve. In this way a puncher charge was shot, taking in account the equivalent diameter for an specific drop drown from casing pressure to tubing pressure. This was achieved basically, because a high pressure was available in the gas line (2000 PSIG). EQUIPMENT DESIGN In order to design the equipment dimensions, it was necessary to use three different software: nodal analysis, gas lift design and equal slope method to allocate the amount of gas for each well. Based on the results getting from the equal slope method and gas lift design software, it was concluded that 2 MMSCF/D of N2 will be necessary to be injected in those three wells, and 1600 PSIG will be required on

surface pressure; thereby, according to manufacture specifications, one equipment for 2 MMSCF/D and 2000 PSIG was selected for this purpose (figure 3 and 4). Gas lift design criteria was to find out the deepest injection point, thereby, with static conditions was possible to start the wells on production with 2000 PSIG of surface pressure. Injection points were located just above of packers, due basically, that reservoir pressure was low enough, end in the other hand, wells productivity index were high enough to reach dynamic conditions with only one gas injection point. Thanks to those conditions mentioned before, it was possible to shoot the tubing by using puncher charges, rather than use workover rigs to pullout tubing string and put it back with gas lift valves. Due basically, that there wasnt any available surface control valve for high pressure, it was necessary to install chocks in order to allocate the optima amount of gas for each well; thereby it was necessary to design the right diameter for each one of them, using Bernulli equation. ECONOMICAL ANALYSIS a) Assumptions for different scenarios In order to asses the feasibility of this project, three scenarios were made in a period of time of five years: 1) build up a gas lift network in order to use natural gas as a source, installing compressors in the location to increase gas pressure to that one which is necessary for each well. 2) Inject nitrogen as a gas lift source by using storage trucks. 3) Inject nitrogen as a gas lift source, by generating it with membrane technology, with leasing option. 4) Inject nitrogen as a gas lift source, by generating it with membrane technology, with purchase option. Those assumptions used for this analysis are refereed to July, 1998 (table No.1). The economical premises are defined as following: Oil price: It is refereed to July 1998. Production race: For comparison purpose, according to allocation of gas for each well, getting from equal slope method, it was possible to increase 3725 4 MIGUEL A. LOZADA AGUILAR, M.DEL REMEDIOS ARREDONDO MONARREZ SPE 59028 STB/D by injecting 2 MMSCF/D of nitrogen, and 4125 STB/D by injecting 2 MMSCF/D of natural gas. Discount rate: It was used that one from Pemex projects, which is 10%. Initial investment: Initial investment was considered in this way: For gas lift network option, it was considered to built up 13 miles of gas lift line of 6 in. and 3 in.. For membranes leasing option, it was considered to invest on nitrogen line from membrane equipment to each well. For membrane purchase option, it was considered to invest on nitrogen line from membrane equipment to each well. For storage trucks option for nitrogen injection, there wasnt any investment. Operational costs: In order to obtain those costs, it

was considered the production increase for each option, as well as the total operational costs for each option, getting, in this way the cost for each produced barrel. Operational costs for that to build up gas lift network, is an addition of: differential cost between to buy 2 MMSCF/D of natural gas and to sell the same amount of sour gas; leasing of compressors to increase gas pressure from gas line pressure to that which is required to inject in to the well; and comprising costs to inject sour gas toward sweeter station; which yield 657.8+48+184.2 = 1249 USD/D. Operational cost for that to leasing storage trucks for injecting 2 MMSCF/D of nitrogen is equal to 18,650 USD/D. Operational cost for leasing membranes to generate 2 MMSCF/D of nitrogen is equal to 11, 275 USD/D Operational cost for membrane purchase is alike to that of comprising costs in gas lift network option, which is equal to 184.2 USD/STB. Field depletion: it was taken that one which represents field performance. b) Interpretation of economical indicators. Some of the indicators shown here are quite far good for any petroleum project, basically because the high production rate to be expected (table 2). Some comments are summarized as following: - Giving the risk approach form internal rate of return all of the four option are excellent, as it is unlikely to reach the same value for discount rate in any bank. - Regarding to investment efficiency all the values are quite high, so it means that all the four options are profitable. - Pay back period is very short for every option, so cash flow will be available since the early stages. - Net present value could be the indicator to be considered for making a good decision, since option 1 and 4 represent the highest values, and they also represent an important difference between the others options. - As net present value for option 1 and 4 are quite similar, best option should be that which has some else benefits; whether environmental, technical or operational aspects concerns. TECHNICAL, OPERATIONAL AND ENVIRONMENTAL ISSUES Technical comparisons: According to equal slope method, figure 6 shows how injecting the same amount of gas, whether nitrogen or gas at the same depth, it is possible to obtain 400 STB/D more injecting natural gas than nitrogen. The explanation of this is because nitrogen SPE 59028 GAS LIFT WITH NITROGEN INJECTION GENERATED IN SITU 5 is heavier than natural gas, thereby getting a higher gradient all along the tubing; therefore, the higher flowing bottom hole pressure, the lower liquid rate based on productivity index ecuation. For this specific case a 10% production rate increase could

be achieved (figure 5). In the other hand, shows how the higher nitrogen weigth in the annulus, the surface requirements pressure is lower from that with natural gas injection, therefore less potency is required. For this particular case it is expecting to reduce 10% of total costs due to potency reduction (figure 6). Operational and environmental comparisons: Nitrogen is an unfinished source available in the atmosphere, thereby its use doesnt have to deal with hydrocarbon exploitation. Nitrogen plants can be installed in the most convenient place, as they dont need natural gas supply. As nitrogen is an inert gas, safety problems are reduced enormously. Petrochemical plants can only handle 3% of impurity as a total amount of gas, thereby nitrogen uses as a gas lift source is constrained by the total processed gas. For this particular case the impurity percentage was no higher than 0.5%. As it is known nitrogen generated with membrane technology has from 5 to 2% of impurities, mainly oxygen. Somewhere during membrane operation, there were some corrosion problems in the process facilities, but unfortunately by that time it was necessary to stop membrane operation for budget reasons, without giving the chance to evaluate oxygen impact on this problem, specially because sour gas is produced in those wells. So this is a big concern as this technology is a good option for this particular case, anyway, if it was true, it is possible to use chemical products to avoid this phenomena. CONCLUSIONS Nitrogen injection as a gas lift source is feasible, as it is an unfinished and available source in the atmosphere. Nitrogen injection as a gas lift source has a similar profitability as that with natural gas injection. At this moment with the current conditions on the leasing contract, it is more profitable for PEMEX to buy and install its own plant. It is possible to save 10% of potency injecting nitrogen rather than natural gas. There is a significant reduction on risks, as nitrogen is an inert gas, besides of that a significant reduction of gas line mileage is achieved. Reduction of 10% of production rate is expected as a result of inject nitrogen rather than natural gas. Further investigation will be needed to evaluate the nitrogen impurities on corrosion problems. The amount of nitrogen used for gas lift is constrained by the total gas handled in petrochemical plant, which shouldnt be no higher than 3%. REFERENCES - Nodal analysis software, PIPESIM, Baker Jardine and Associates Limited. - The technology of artificial lift methods volume 2 kermit Brown.

- Gas lift optimitation and design software GLOPCealc. - Temas selectos sobre bombeo neumtico continuo. Colegio de Ingenieros Petroleros de Mxico. 6 MIGUEL A. LOZADA AGUILAR, M.DEL REMEDIOS ARREDONDO MONARREZ SPE 59028 - Optimizacin de la distribucin de gas en la red de bombeo neumtico del campo Cunduacn Oxiacaque, AIPM, Miguel Angel Lozada Aguilar y Maria del Remedios Arredondo M. - Technical and operational manual of membrane plants. SPE 59028 GAS LIFT WITH NITROGEN INJECTION GENERATED IN SITU 7 Figure 1 Figure 2 MEMBRANE DIAGRAM FIBER NITROGEN AIR FEED WASTE OXYGEN VENT FIELD MEMBRANE DIAGRAM BELLOTA 158-D WELL BELLOTA 138 WELL BELLOTA 136 WELL MEMBRANE EQUIPMENT GAS METER MEMBRANE COMPRESSOR COMPRESSOR COMPRESSOR FLOW LINE NITROGEN LINE PROCESS FACILITIES 8 MIGUEL A. LOZADA AGUILAR, M.DEL REMEDIOS ARREDONDO MONARREZ SPE 59028 Figure 3 Figure 4 WELL PERFORMANCE WITH NITROGEN INJECTION 0 200 400 600 800 1000 1200 1400 1600 1800 0 0.2 0.4 0.6 0.8 1 NITROGEN INJECTION RATE (MMSCF/D) LIQUID RATE (STB/D) BELLOTA 136 BELLOTA 138 BELLOTA 158-D Iny.P.=1437 PSIG Iny. P.=1380 PSIG Iny.P.=1671PSIG EQUAL SLOPE METHOD CHARACATERISTIC CURVE FOR THREE WELLS WITH NITROGEN INJECTION

0 500 1000 1500 2000 2500 3000 3500 4000 4500 0 0.25 0.5 0.75 1 1.25 1.5 1.75 2 2.25 2.5 Nitrogen injection rate (MMSCF/D) Liquid rate(S TB/D) 4100 SPE 59028 GAS LIFT WITH NITROGEN INJECTION GENERATED IN SITU 9 Figure 5 Figure 6 EQUAL SLOPE METHOD NATURAL GAS VS. NITROGEN INJECTION COMPARISON 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 0 0.25 0.5 0.75 1 1.25 1.5 1.75 2 2.25 2.5 GAS INJECTION RATE (MMSCF/D) LIQUID RATE (STB/D) 4100 4500 NATURAL GAS NITROGEN SURFACE REQUIREMENTS PRESSURE NATURAL GAS VS. NITROGEN COMPARISON 1500 2000 2500 3000 3500 4000 4500 5000 5500 700 950 1200 1450 1700 1950 Pressure (Psi) Depth ( m ) NITROGEN NATURAL GAS 10 MIGUEL A. LOZADA AGUILAR, M.DEL REMEDIOS ARREDONDO MONARREZ SPE 59028 Table 1 Table 2 BASIS FOR ECONOMICAL ANALYSIS OPTION CONCEPT PRICE PER BARREL (USD)

PRODUCTION INCREASE (STB/D) DISCOUNT RATE (%) CAPITAL INVESTMENT (USD) OPERATIONAL COSTS (USD/STB) FIELD DEPLETII ON (%) GAS LIFT NETWORK NITROGEN IINJJ.. WIITH STORAGE TRUCKS MEMBRANE LEASSIING MEMBRANE PURCHASE 2 3 4 1 10 10 10 10 44112255 33772255 33772255 33772255 1100 1100 1100 1100 10 10 10 10 0.3028 5.0006 3.027 0.049 1253,000 115500,,000000 1710,960 0 PROFITABILITY INDICATORS OPTION CONCEPT NET PRESSENT VALUE (DLS) INVESTMENT EFFICIENCY EFFIICIIENCY RATE (%) INTERNAL RATE OF RETURN ((%))

PROFITABILITY RATE (%) PAY OUT TIIME ((YEARSS)) GASS LIIFT NETWORK NITROGEN INJECTION WITH STORAGES TRUCKSS MEMBRANE LEASING MEMBRANE PURCHASSE 2 33 4 1 44380,058 2299,,448811,,660077 40575,592 36 1100,,000000 198 25 82 347 116 74 0.0865 0. 0158 0.1281 900 539353,083 4995 0.03 1155 6310 780 21221,890 667788999966,,770000 1.47 x 10 -7

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