EPMAG.

COM

FEBRUARY 2013

Reservoir
Characterization
Wellhead Pad
Design/Equipment
Subsea Processing
Advances
Enhanced Recovery
Drill Bit Technology

REGIONAL
REPORT:
South
America

HYDRAULIC
FRACTURING
UNDER PRESSURE
New methodologies
prop open more
opportunities

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to a place where )u
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If you have a thirst for creativity,are passionate about
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Cimarex is the place for you. We're looking for top talent in a
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EXPLORATION & PRODUCTION

WORLDWIDE COVERAGE

F E B R UA R Y 2 0 1 3

A H A R T E N E R GY P U B L I CAT I O N

EOR

VO L U M E 8 6

ISSUE 2

w w w. E P m a g . c o m

COVER STORY: FRACTURING

58

Microbial EOR makes gains

62

Enhancing production with new

gas lift valve

67

Rhamnolipid biosurfactants: new technology

for EOR, remediation

38

RESERVOIR CHARACTERIZATION

70
74

Appraising ultra-deepwater reserves

Evaluating reservoirs with a sharper focus

DRILL BIT TECHNOLOGY

78

Advancing hard/harsh rock drill bits

82

Drill bit designed to return microcore samples

to surface

86

PDC drill bit innovations drive performance in

challenging zones

WELLHEAD PAD DESIGN/EQUIPMENT

90

Economical solutions meet state and federal

mandates for gas flaring

94

Four-for-one well pad design leaves a smaller

footprint behind

SUBSEA PROCESSING ADVANCES

104

Planning for the future

110

Seabed production innovation boosts

expectations

122

REGIONAL REPORT:
SOUTH AMERICA

Hydraulic fracturing:
new perspective leads
to successes
By using alternatives to freshwater, operators
find opportunities for success that can help
change public perception during times of drought.

46

Optimized treatment
design shows promise

52

Proppant economics in
the Eagle Ford formation
IndustryPULSE:

8
12

The future of natural gas

Gas prices suffer from a lack of demand
coupled with negative public opinion.

WorldVIEW:

First in class

Christopher J. Wiernicki, ABS president

and CEO, talks about the changing role of class,
the need for agility in a rapidly advancing industry,
and the value of partnering to extend the reach of
offshore oil and gas operations.

Unconventional:

100

Unlocking Indonesias
CBM potential

With its estimated CBM reserves ranking it

No. 6 in the world, this slumbering Southeast Asian conventional oil and gas giant is picking up the development pace of its unconventional resources.

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.01ADIANT
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DEPARTMENTS AND COMMENTARY

AS I SEE IT
Get ready to innovate

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4 +

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MANAGEMENT REPORT
Minimizing risk in A&D

16

DIGITAL OIL FIELD

!
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c

Remote automation and monitoring captures Caspian value

20

GPU usage grows in digital oil field

24

EXPLORATION TECHNOLOGY
Flying high to find reservoirs

31

DRILLING AND COMPLETION

Water depth, availability drive use of jackup in Chukchi Sea

33

PRODUCTION OPTIMIZATION
Chasing the rabbits of public opinion

35

OFFSHORE ADVANCES
Safeguarding the right to operate

37

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Automated sources, streamers improve seismic repeatability

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115

TECH WATCH
Fracturing with field gas

TECH TRENDS
INTERNATIONAL HIGHLIGHTS
ON THE MOVE/INDEX TO ADVERTISERS

116
120
126
129-131

LAST WORD
Responding to the challenge of induced seismicity

132

COMING NEXT MONTH The March issue of E&P takes a deep-down look at
downhole tools and technology. Other features include intelligent operations, 4-D seismic,
drilling fluids, artificial lift, and floating production, and E&Ps annual Drill Bit Records report
will highlight the latest drilling breakthroughs. Regional highlights include the frenzied
activity in the Bakken shale and an overview of operations in Azerbaijan and Kazakhstan.
As always, while youre waiting for the next copy of E&P, remember to visit EPMag.com for
news, industry updates, and unique industry analysis.
ABOUT THE COVER

Despite the controversy, hydraulic fracturing

continues to open up new reserves of oil and gas. Left, Uruguay is one of
several South American countries poised to enter the global energy arena.
(Photo courtesy of Schlumberger; cover design by Laura J. Williams)

swaco .com/rhadiant

Mi SWACD
A Schlumberger Company
'Mark of M-I .. .

E&P (ISSN 1527-4063) (PM40036185) is published monthly by Hart Energy Publishing, LP, 1616 S. Voss Road, Suite 1000, Houston,
Texas 77057. Periodicals postage paid at Houston, TX, and additional mailing offices. Subscription rates: 1 year (12 issues), US $149;
2 years (24 issues), US $279. Single copies are US $18 (prepayment required). Advertising rates furnished upon request. POSTMASTER:
Send address changes to E&P, PO Box 5020, Brentwood, TN 37024. Address all non-subscriber correspondence to E&P, 1616 S. Voss
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S. Voss Road, Suite 1000, Houston, TX 77057; Telephone: 713-260-6442 Fax: 713-840-1449; custserv@hartenergy.com. Copyright
Hart Energy Publishing, LP, 2013. Hart Energy Publishing, LP reserves all rights to editorial matter in this magazine. No article may be
reproduced or transmitted in whole or in parts by any means without written permission of the publisher, excepting that permission to
photocopy is granted to users registered with Copyright Clearance Center/0164-8322/91 $3/$2. Indexed by Applied Science, Technology
Index and Engineering Index Inc. Federal copyright law prohibits unauthorized reproduction by any means and imposes fines of up to
$25,000 for violations.

Printed on
recycled paper

NeoScope

ONLINE CONTENT FEBRUARY 2013

Subscribe @ EPmag.com/explorationhighlights

PREMIUM CONTENT

Delineation well expands Indra discovery

for Petrobras offshore Brazil
A delineation well on the ultra-deepwater Indra discovery in the postsalt Espirito Santo basin offshore Brazil has confirmed the presence of
light oil and gas in sandstone reservoirs, according to a press release
from Petrobras.

?.3

Endeavour mobilizes semisub to Rochelle field

Endeavour International Corp. has mobilized the Transocean Prospect
semisubmersible rig to complete drilling in the Rochelle field in the
central UK North Sea, the company said in a press release.

Eni and Anadarko sign HOA to develop

natural gas reservoirs in Mozambique
Eni has signed a heads of agreement (HOA) with Anadarko Petroleum
Corp. establishing foundational principles for the coordinated development of common natural gas reservoirs offshore Mozambique, the
company said.

AVAILABLE ONLY ONLINE

Cuadrilla gears up for UK fracing

Allow

By Steven Hamlen, Special to E&P

The UK government gave the thumbs up to

fracing in the country with new controls around
seismic risk.

Nigeria falls behind in worlds LNG race, projects delayed

By Obafemi Oredein, Special to E&P

Experts say there is potentially up to 600 Tcf of gas still to be found in the
country.

Coal could edge oil

as top energy source
By Darren Barbee, Hart Energy

Though an abundance of shale gas leads to

less coal consumption in the US, the use of coal
remains prevalent in countries in other parts of the world.

Independents make exploration

strides in frontier basins

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National oil companies

remain in an infancy
stage when it comes to international exploration, but change could be coming, according to Wood Mackenzie.

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HALLIBURTON

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SEE IT

Executive Editor

1616 S. VOSS ROAD, STE 1000

HOUSTON, TEXAS 77057
P: +1 713.260.6400 F: +1 713.840.0923
www.EPmag.com

rduey@hartenergy.com

Read more commentary at

RHONDA DUEY

Executive Editor

EPmag.com

JO ANN DAVY

Group Managing Editor

SCOTT WEEDEN

Senior Editor, Drilling

MARK THOMAS

Senior Editor, Offshore

Senior Editor, Production

JENNIFER PRESLEY

Chief Technical Director,

Upstream

RICHARD MASON
MARY HOGAN

Associate Managing Editor

Get ready to innovate

VELDA ADDISON

Associate Online Editor

CODY ZCAN

Assistant Editor

ALEXA SANDERS

Corporate Art Director

Senior Graphic Designer

LAURA J. WILLIAMS

Production Director

JO LYNNE POOL

Reprint & PDF Sales

ERIC MCINTOSH

Director of Business Development

ERIC ROTH

RUSSELL LAAS

Group Publisher

Sometimes the best ideas come from the

strangest places.

Editorial Advisory Board

CHRIS BARTON
Sr. VP Business Development, Oil & Gas, KBR

KEVIN BRADY

President, Multi Products Company

MIKE FORREST
Exploration Consultant, formerly with Shell

JOHN M. GILMORE JR.

Director of Global Industry Solutions Upstream
Oil & Gas, Invensys Operations Management

CHRIS JOHNSTON
VP & Managing Director, North America, Ensco

ULISSES T. MELLO
Manager, Petroleum & Energy Analytics, IBM

DONALD PAUL
Executive Director, University of
Southern California Energy Institute

EVE SPRUNT
Business Development Manager,
Chevron Energy Technology Co.

MANUEL TERRANOVA
Sr. VP Regional Operations & Global Sales,
Drilling & Production, GE Oil & Gas

RONNIE WITHERSPOON
President,
Superior Well Services, a Nabors company

DENNIS A. YANCHAK
Sr. Geosciences Advisor, Apache Corp.

HARTENERG Y
Editorial Director
PEGGY WILLIAMS
President & Chief Operating Officer
KEVIN F. HIGGINS

he oil and gas industry cannot thrive without technology, and technology
cannot be developed without innovation. But what, exactly, is innovation?
Peter Diamandis, chairman and CEO of the X PRIZE Foundation, has grappled with this concept since his dream of becoming an astronaut was stalled
when the US abandoned its manned space flight program in the 1970s. He
decided to investigate the idea of private space flight.
The idea was to have innovation be driven by competition, Diamandis told
a gathering at the recent Shell Innovation Summit. He proposed a competition that would award US $10 million to a team that could build a spacecraft
that could carry three adults into space.
It took Diamandis six years to raise the money, but in the end 26 teams
competed.
This approach differs from normal R&D, he said, because it incentivizes
nontraditional players to innovate. We look at where there are market failures, he said.
What Diamandis considers a market failure would be considered by most
others to be a serious global issue. Some of the recent X PRIZE challenges
have included developing a car that gets 161 km (100 miles) to the gallon, a
handheld device that can diagnose a patient as accurately as a team of specialists, and a map of the ocean floors.
One recent challenge was to double the rate at which an oil spill can be
cleaned up from a body of water. More than 300 teams signed on for the initial competition; this was later narrowed to 10. Seven of the 10 teams managed
to double the rate, and the winning team increased the cleanup time 600-fold.
One team met in a tattoo parlor in Las Vegas, Diamandis said. Some of
these people come from very unusual places.
So what is it that drives X PRIZE winners to innovate? The $10 million prize
is no doubt a significant motivator. But Diamandis thinks there is more to it
than greed.
Its tied to passion, to trying to make a difference, he said. Everything
that fuels these people comes from their hearts and souls. By the time they
make a breakthrough, they will have been told no a thousand times.
Innovation requires absolute persistence, he
added. Everything is impossible until you make
it happen.

Chief Executive Officer

RICHARD A. EICHLER

industry
PULSE

The future of natural gas

Gas prices suffer from a lack of demand coupled with negative public opinion.
Rutt Bridges, former SEG president

he future of natural gas is a hard thing to predict.

Commodity forecasting is a pseudo-science at best.
At times it seems that its primary function is to make
astrology look respectable.
The US has enormous natural gas resources, arguably a
100-year supply. Will that resource be the low-cost, low-pollution energy source that provides America with a better
economic and environmental future, or will it remain in
the ground? What will decide this question?
There is no more powerful force for change than the
market. But commodity markets do not care about political correctness. These markets only care about supply and
demand. And right now natural gas is on the wrong side
of that equation.
In March 2012 increased production drove Lower 48 gas
storage to 2.4 Tcf, almost 0.9 Tcf above the five-year seasonal
average. That was the largest seasonal glut since the Energy
Information Agency (EIA) started keeping records in 1994.
The warmest winter since 2000 plus abundant shale gas
soon forced US natural gas wellhead prices below US
$2/Mcf, the lowest level in 13 years. By comparison, Europeans currently pay almost $12/Mcf for imported natural
gas. The US has been blessed with huge shale gas resources.
Shale gas may be predictable, but it is not cheap. At prices
much below $4, these resources will not be aggressively
developed. Commodity reserves are and always will be a
function of price. At the European price of $12/Mcf, we
would all be shocked and amazed at how much gas the US

Utilities have an incentive to switch to natural gas

over coal due to environmental regulations,
but owners are not comfortable with the
volatility of the natural gas market.

has. Perhaps exports will drive development and price,

but we will have to wait and see how the politics play out.
History indicates that natural gas resources will not get
consistently developed. Boom-and-bust cycles will likely
continue. Gas producers will pour money into drilling
wells when prices spike, which too often will create the
next bust. Unfortunately, those same price spikes discourage long-term commitments to gas by large-volume utility
and industrial consumers.
Maybe these lessons can benefit both producers and consumers. But first some data-driven analysis is needed to better understand the natural gas market: what is currently
happening as well as what may happen down the road.

Electricity
Electricity is the biggest slice of the demand side and also
the slice with the greatest upside for increased gas consumption. In January 2011 coal was the fuel of choice for
48% of electricity generation, while natural gas accounted
for about 20%. But as prices plummeted by April 2012, gas
was generating as much electricity as coal.
Unfortunately for coal, the EPA recently set tough limits
on CO2 emissions for new electricity plants. Without carbon capture and storage (CCS), coal is no longer an
option for new plants. Clean coal cannot happen without
CCS, and no coal CCS facility has ever been built in the
US. However, the greatest challenge for CCS is not technical; it is economic. The numbers just do not make sense.
A 2008 McKinsey report, Carbon Capture and Storage:
Assessing the Economics, estimated that if about 100 CCS
projects were built by 2030, the cost of removing 90% of
the CO2 produced from new coal plants might fall to
somewhere between $37/ton to $55/ton of CO2. Early
plants would cost at least twice that much. And combining
oxygen atoms with coal produces about two tons of CO2
per ton of coal burned.
For reference, US utilities paid about $45/ton for coal
in 2012. Burning clean coal would roughly triple that fuel
cost. But the story gets even worse. Due to carbon capture
energy demands, utilities would have to burn 25% more
coal just to produce the same number of kilowatts. And
only a handful of Americas most modern coal-fired plants
could potentially be retrofitted with CCS.
Coals greatest asset as a fuel is the number of older,
paid-off coal plants. But those plants also produce the
Febr uar y 2013 | EPmag.com

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II

industry
PULSE

Operators can show simplistic

images of their fracing operations, but the public also is being
bombarded with images such as
the burning faucet in Gasland.

most pollution and are likely to continue to be shut down

to meet increasingly strict pollution standards.
The real issue is not what the plant costs but what the
electricity costs. The short version is that electricity from
new natural gas plants costs about half as much per kilowatt
as new coal plants, and those EIA estimates are at gas prices
of $4.78/Mcf. The other big electricity source is nuclear.
The only two new US nuclear plants to be built since 1979
(remember Three Mile Island?) were both initiated when
gas prices were approaching $11/Mcf. Both are well over
budget and far behind schedule, and there is about $1 billion in utility vs. construction vendor lawsuits pending.
Economics is what drives utilities to decide what kind of
fuel to burn and what kind of plants to build. More and
more, natural gas has been winning that competition. For
new plants not only does gas produce cheaper electricity,
but the capital costs are lower, construction is faster, and
new capacity can be built closer to where it is needed.
There are far fewer not in my backyard objections, so
smaller modular gas-fired plants can be located nearer
consumers and power grids. Plus, pollutants are a small
fraction of those from coal plants, and gas plant CO2 emissions are about 37% of coal per kilowatt, already meeting
new EPA standards.
On the negative side, if gas prices spike, utilities are
stuck burning gas. And that market risk is the greatest
impediment to long-term natural gas demand.
Recent low gas prices have kept the more efficient gas
plants running nearly flat out. Stricter pollution regulation has also benefited gas, and the increased use of gas
has been a major factor in a 14% drop in US CO2 emissions since 2007. Gas has been a favorite alongside intermittent wind and solar since plants can start up and shut
down in about 30 minutes and also can run at variable
power levels. It is impossible to do a quick startup or shutdown of a coal or nuclear plant.
EPmag.com | Febr uar y 2013

Since 2001 and especially in the past year there has been
a dramatic decrease in the use of coal and a dramatic
increase in the use of gas. Once again, the market is a powerful force. Here is what the US electricity market looks
like right now, and here is where it appears to be headed:
Coal will continue to shrink due to cost and pollution
issues (but export markets are strong);
Gas has major market and environmental advantages
and should continue to grow if we can mitigate price
spikes and better address public concerns about fracing;
Delays and cost overruns for the two new US nuclear
plants will hurt prospects for growth;
Hydropower lacks good sites for new dams and has little growth potential;
Wind and solar are heavily dependent on unpredictable subsidies to consistently grow; and
Everything else is too small to matter unless enhanced
geothermal can greatly reduce costs.

Pitfalls in the road ahead

There is a lot of opportunity for natural gas to continue to
expand its market in electricity generation and potentially
in exports. Shale gas has been a game-changer for the supply side, but we need growth on the demand side. What
are the pitfalls in the road ahead?
No matter how unfair it may seem, fracing has a bad reputation with far too many Americans. There is a rule of
thumb in the media that if it bleeds, it leads. The Davidand-Goliath battle of local landowners and environmentalists vs. big oil and gas comes close enough.
Both sides are approaching the fight in very different
ways. The industry feels that it has logic and reason on its
side, but the storyline may be a bit technical for most
folks: Fracing takes place deep in the earth, with thousands of feet of solid rock between the fracing and your
water supply. The fractures only affect a small part of the
deepest rocks, and steel casing and cement in the well protect the aquifers.
That does not exactly tug at folks hearts like a family
whose water has gone bad. Unfortunately, one anecdote
can have more influence than a thousand statistics. While
it is true that the fracing of the rocks has never caused a
problem, in a few cases the cement job around the casing
that protects aquifers has failed. Such examples are rare,
and companies have almost always been quick to respond.
But so has the media. A few accidents translate into a lot
of newsprint and 30-second TV spots.
Progressive gas developers have worked with states to
tighten well completion standards, which were typically
established long before shale gas fracing was common.
Many companies voluntarily disclose fracing fluids on
9

industry
PULSE

Wars seldom determine who is right, just who is left. We

have a lot at stake. But if both sides are willing to sit down
and truly listen to each other, it is sometimes possible to
find a compromise that works reasonably well for everyone. Sometimes you can find a 60:60 deal, where both
sides working together get more out of the compromise
than they would if they treat their differences as a win-lose
battle. This is true for gas producers and utilities as well as
gas producers and fracing opponents. The compromises
may not be perfect for both sides, but can we afford to let
the perfect be the assassin of the good?
I know many people in our industry who care deeply
about the benefits that natural gas can bring to America
and to the world. Environment and economic prosperity
can coexist. But if you want to catch a trout, you have to be
willing to sacrifice a fly. Unless both sides can find reasonable compromises to our differences, we will waste far too
much of our lives and far too much of our treasure waging
war. Worse still, we may all lose out on this potentially
transformational opportunity in American history.

public websites. Several states already require disclosure,

and more will follow. But as long as a few companies are
unwilling to disclose, the issue will remain in peoples
minds. Every time the industry argues that 99% of frac
fluids are sand and water, the public immediately thinks
about that other 1%. Who will the public believe?
Opponents to fracing have often taken a visual approach.
In the movie Gasland, millions of Americans saw flames
shooting out of a faucet. That anecdotal evidence leaves
a powerful impression, especially compared to our more
technical arguments, even if it is false and misleading.
Due to public concerns, the Colorado Oil and Gas
Conservation Commission tested the methane from this
burning faucet. Scientific analysis proved that the flaming
gas was biogenic in origin as opposed to the thermogenic
gas that comes from deep shale gas deposits. Unfortunately, the average homeowner does not understand or
much care about the difference between shallow biogenic
and deep thermogenic gas. They just remember the flaming faucet.

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ere at the beginning Here for the future

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has been a leader in Geological Sciences for over a century.
Founded by Charles Gould in 1900,OU's geology and geophysics
program granted the world's first degree of Petroleum Geology in 1904.
OU was the site of the American Association of Petroleum Geologists'
inaugural meeting in 1916.

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world
VIEW

First in class
Christopher J. Wiernicki, ABS president and CEO, talks about the changing role of class, the
need for agility in a rapidly advancing industry, and the value of partnering to extend the
reach of offshore oil and gas operations.
J. Massimo, Contributing Editor

he role of class has evolved as the offshore industry

has advanced into deeper water and more exacting
operating environments. As E&P activities move into
even more challenging frontiers, ABS President and
CEO Chris Wiernicki explained how class continues to
transform to answer the industrys changing needs.
What is ABS role as a class society?
The foundation of class is safety. Whatever role class
plays, you cant ignore that. Everything ABS does has to
be true to our mission to promote the security of life
and property and to preserve the natural environment.
Initially, oil and gas industry players wanted a class certificate for insurance purposes and proof of compliance
with international regulatory requirements. Today the
industry is taking advantage of the certification process by
incorporating it more fully into maintenance programs to
improve asset and equipment reliability and by seeking
approval in principle for new technologies required to
support boundary-pushing projects.
Operating companies and drilling contractors are looking for ways to advance safely into operational frontiers, to
increase uptime, to improve productivity, and to extend
the life of offshore assets. Because we work with oil service
companies, drilling contractors, and operating companies,
we are able to provide greater confidence in the safety of
equipment and assets across the board.
Were always looking at ways to refine and reshape
class. To do that, we have to be proactive working with
the industry to develop safety standards, finding pragmatic approaches to safety in new and challenging environments, and advancing solutions that allow safe and
efficient operations. This is essential to maintaining the
confidence of the industry and to ensuring that the role
of class keeps pace with industry needs.
What differentiates ABS as a class society?
Only a handful of class societies have experience with
offshore classification, so the question becomes, How
does ABS differentiate itself within this group?
12

Christopher J. Wiernicki, ABS president and CEO. (Images

courtesy of ABS)

We have been successful for the last 60 years by helping the industry take on new and challenging situations.
ABS was the first society to class an offshore unit, which
required us to develop a set of safety requirements using
our marine experience and engineering judgment for
an application never seen before.
We are a technology-driven organization. My background and training are in engineering, so the person
at the helm of ABS understands the importance of technology development and the role technology plays in
decision-making.
I believe the ability to apply core engineering and
technological knowledge along with our experience will
continue to be a key differentiator in developing practical innovative solutions that help the offshore industry
move forward.
Another significant difference is that we know the offshore industry is different from the marine classification
business. We have a separate Offshore Technical Committee made up of industry experts to provide guidance
on rule development specifically for the offshore oil and
Febr uar y 2013 | EPmag.com

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world
VIEW

gas industry. And we have organized our technology

group to create a specific offshore-focused team.
Frankly, though, I think the key differentiator is our
people. ABS employees are passionate about what they
do, and they understand the value of safety and how the
things they do touch their clients.
How is ABS working with offshore players?
As I mentioned earlier, ABS classed the first offshore unit.
And we have been involved in every single barrier-breaking technology in the industry since that time. We classed
the first jackup, semisubmersible, drillship, FPSO, tensionleg platform, and spar.
Im proud of our history, but Im equally proud of how
we are working globally on pioneering projects.
Part of our edge is that we realize that although a lot of
R&D goes on in Houston, not everything is US-centric. We
recognized several years ago that developing technology
centers in dynamic areas around the world would allow us
to carry out R&D efforts closer to our clients. Today ABS
has R&D facilities in Singapore, Brazil, Korea, and China.
What is in the future for class societies?
While the future is uncertain, one thing cant change.
Class societies cant lose their focus on safety. That is nonnegotiable. The other thing they have to retain is their
independence. The value of a class society is its unique
position in the industry as an independent broker of
safety. We must never lose sight of the fact that we trade on
integrity and must earn the trust of the industry every day.
Safety is a responsibility, not a business. It should never be
for sale. And to be effective, safety has to be implemented
impartially and objectively. ABS has no shareholders or
owners, so we offer a truly independent, unbiased view.
When I think about the class of the future, I always look
back to ABS first foray into the offshore, classing an offshore unit in the absence of established requirements. We
had to develop groundbreaking guidelines and rules. We
have to continue to be groundbreaking if were going to
support the offshore industry in the future. Owners and
operators want to improve efficiencies, increase production, and minimize downtime. Part of our job is to help
them do those things safely.
Thats why we are developing tools like the Independent Software Quality Management (ISQM) system. ISQM
reduces commissioning time for newbuilds and provides a
framework for coordinating and controlling software
development, integration, and maintenance. It is an
example of how ABS has evolved in response to industry
needs to address the next generation of safety systems.
14

ABS classed the first mobile offshore drilling unit in 1958 (top),
the first production spar in 1996 (middle), and the largest production semisubmersible in 2007 (bottom), among many other
breakthroughs.

Our clients expect this. They rely on us to assist them in

solving tough problems that allow them to maintain the
highest safety standards without disrupting operations.
Last year we updated our drilling systems certification
requirements to make sure these are suitably robust, and
we worked closely with industry to develop the next generation of safety standards for well control equipment. We
also participated in several BOP safety improvement and
reliability programs with US and Norwegian regulators
and industry groups.
ABS ability to respond quickly and to meet industry
needs has earned us a formidable position today and
places us firmly where we need to be to play a leading role
tomorrow. Our continued goal is to work with industry to
break down the technology barriers that constrain the
scope and extent of offshore operations.
Febr uar y 2013 | EPmag.com

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management
REPORT

Minimizing risk in A&D

An optimal combination of hedging tools needs to consider market view, curve structure
volatility, and option skew so that producers can get the most price protection for the least cost.
Bob Deman, Asset Risk Management LLC

nergy commodities have a proven history of sudden

and significant commodity price declines and there
might be no worse time for a steep drop than when a company is trying to do an acquisition.
A company that signs an agreement to purchase an
energy asset typically commits to paying a fixed price. But
the purchased assets value can float with the underlying
commoditys forward price curve in that 30- to 45-day
period before the acquisitions close. E&P master limited
partnership (MLP) enterprises seeking to grow through
acquisition face the dilemma of commodity price fluctuation eroding, or even wiping out, the financial benefits of
the deal.
It does not have to be that way, though. Smart use of
hedging techniques can minimize or eliminate the risk.
And the hedging can start when the papers are signed,
even before the assets are formally purchased.
First, lets illustrate the kind of price move that can
jeopardize a deal. Figure 1 shows the forward three-year
West Texas Intermediate (WTI) crude oil curve over a 45day period in spring 2012. Assume a company (we will
call it BuyCo) had priced a transaction in mid-April with
WTI Cal 13-15 Forward Price Curve

$110
Three-year Forward Strip Daily Settle
High = $99.85
Low = $81.87

$105
$100

Alm

ost

$/Bbl

$95

an

$1

8d

ecl

$90

ine

in v

alu
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$85
$80
$75
March-2012

April-2012

May-2012

June-2012

July-2012

Shown is the forward three-year WTI crude oil curve over a 45-day
period in spring 2012, illustrating how price movements can jeopardize a deal. (Image courtesy of Asset Risk Management LLC)

16

the three-year strip at US $99.85. By the time the deal

closed at the end of May, the three-year curve had
declined by $17.98, or 18%, to $81.87. This would affect
the deal economics and ultimately the payout at some
future liquidation event. In the MLP world, it could
restrict the ability to pay the distributions needed to
remain attractive to investors.

Options
Put options are the building blocks for hedge transactions
that do not create exposure. A put option is a contract
between two parties to exchange an asset (the underlying)
at a specified price (the strike) by a predetermined date
(the expiry). One party, the buyer of the put, has the
right, but not an obligation, to sell the asset at the strike
price by the future date, while the other party, the seller
of the put, has the obligation to buy the asset at the strike
price if the buyer exercises the option. The buyer of the
put option pays a premium to the seller.
In our view, producers tend to overpay for put options.
A purchased put protects the producer in the unlikely
event that prices fall to zero. But our analysts believe that
prices below $65 are not sustainable in the long term since
unconventional oil projects become unprofitable. Therefore, price protection below $65 has marginal utility, especially if the bank price deck is at or above this level. A
producer is better off selling off protection below $65
via a put spread.
The put spread is the combination of a long put option
and a short put option at different strike prices for the
same time period. The cost of a put spread is lower than a
put option because the producer collects a premium for
the sold put option.
The put swaption is an option granting its owner the
right but not the obligation to sell an underlying
swap at a specified price. It also requires the buyer to
pay a premium to the seller. Put swaptions exercise
into swaps if the market price at expiration is below
the strike price. If the market is above the put swaption
strike price, the producer would not exercise and is free
to hedge. If the acquisition has not closed at the exercise
date, then the put swaption will cash-settle, and the producer remains unhedged. The expiration date of a put
swaption should be set a few weeks after the closing date
to account for minor delays in closing.
Febr uar y 2013 | EPmag.com

management
REPORT

Now, how can hypothetical BuyCo use the hedging tools

to protect itself? Lets look at options that require an
upfront cash outlay as well as options that require no
money down.

Paying to hedge before the close

If BuyCo has the free cash, it can purchase a combination
of puts, put spreads, or put swaptions to hedge 100% of
the price risk. Pricing changes in the energy markets can
make it easy to overspend for price protection or choose
the wrong structure. For instance, in a low-volatility environment, puts or put swaptions may be superior to put
spreads in cost effectiveness. A market in steep backwardation (future prices far below the current spot price) is not
the best environment to use swaps or put swaptions.
After the acquisition closes, BuyCo can attempt to
recoup its hedging costs. It can sell call options to convert
new put positions into collars or put spread positions into
producer three-ways. It also can turn swaps into protective
spreads by selling puts against the swaps that were created

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through exercise of the put swaptions. These techniques

could allow BuyCo to collect all or even more than the
original hedging costs.
The puts, spreads, and swaptions could cost a significant
amount of money, however. Alternatively, BuyCo can
hedge with swaps and post a margin, a technique that
could significantly reduce out-of-pocket costs. Margin is
the collateral a bank needs to offset the risk and exposure
created when the bank transacts with a producer that has
not pledged assets.
After the acquisition closes, the acquisition assets secure
the margined swaps, and BuyCo returns the posted margin. The big risk with cash margining is cash availability
should the market explosively move higher before the
close. For example, a 1,000 bo/d short WTI swap for three
years would incur $1.095 million in margin for every $1
that WTI moved higher.

Cash-free hedging
What if BuyCo does not have enough cash on hand to

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17

management
REPORT

purchase price protection for the acquisition? First,

assuming BuyCo already has assets, it could use its spare
hedge capacity or restructure existing hedges. To use
spare hedge capacity, BuyCo will have to hedge to the
fullest extent allowed by the covenant in its credit facility.
The second method is restructuring the existing hedge
portfolio. Assume BuyCo has an existing 100 b/d Cal 14
WTI producer collar in place a long $85 put and a short
$105 call. BuyCo can buy back the existing short $105 call
and defer the premium payment until 2014.
Alternatively, BuyCo can extract value by rolling the
puts and/or calls. Lower put strikes are cheaper, so BuyCo
can receive a premium payment by selling the existing
long $85 put and buying a $75 strike. And since lower call
strikes are more expensive, BuyCo could get another premium payment by buying the $105 call back and selling a
$95 call to replace it. BuyCo can invest the premiums in
new hedges covering acquisition volumes.
The third method looks to the seller. If the seller has
hedges, it can be included as part of the acquisition, lock-

ing in hedge economics. The acquisition sales price is simply adjusted up or down based on the mark-to-market of
the hedges at the signing of the production sharing agreement. It is possible to avoid costs for transferring the
hedges, especially if the buyer and seller have a common
bank for their credit facilities.
Regardless of the strategy, producers need to look deep
into the market to ensure they get the most hedge coverage for the cheapest possible price. Hedging is an art, not
a science. The optimal combination of puts, put spreads,
and put swaptions should be created with careful attention
to market view, curve structure volatility, and option skew
so that the producer can get the most price protection for
the least cost. Most importantly, producers should treat
their hedges like assets and manage them much as they
would manage the assets bought in a deal.
Acknowledgment
This article originally appeared in the October 2012 issue of Oil
and Gas Investor.

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OIL FIELD

Remote automation and monitoring

captures Caspian value
The reliable operation and monitoring of safety critical valves are vital to the oil and gas
industry. Their failure to operate on demand could have catastrophic consequences.

Luca Marinai, Ajay Khetarpal, Brett Grange,

George Mackinnon, and Christopher Houghton, BP

unction-testing safety valves like emergency shutdown

valves (ESDV) or blowdown valves (BDV) is a significant job, and a key element for consideration is the travel
time the time that an ESDV takes to close or a BDV to
open. Measuring safety valve travel time requires the operation of these critical devices, normally resulting in a partial plant shutdown with inevitable consequences on the
production profile.
BP introduced its Safety Valve Travel Timer (SVTT)
software at Sangachal Terminal in Azerbaijan, and after
early successes it was further deployed offshore in the
Azerbaijan-Georgia-Turkey (AGT) region.
The tool, developed and supported within BPs Field
of the Future program, automates travel time data acquisition and is designed to continuously monitor the operation
and movement of ESDVs and BDVs. It calculates the time
for a valve to transition from one state to another and compares this against the target time for showing results. The
data are automatically collected during both routine and
unplanned activities.
Deployment of the SVTT software helps reduce the
number of function tests carried out on safety valves,
thereby delivering significant cost savings. Moreover, the
automated monitoring of safety valves allows proactive
intervention on abnormal valve performance before
failures occur.

Monitoring 1,841 valves

The onshore implementation of the SVTT covers 438
valves (356 ESDVs, 66 BDVs, and 16 flare valves) located at
the Sangachal Terminal. Offshore, the SVTT was configured on 1,403 valves comprising 90 BDVs and 1,313
ESDVs a combined total of 1,841 valves in the region.
The offshore implementation includes some subsea tree
valves, but the monitoring focus and priority are on topside process safety valves. In the SVTT monthly report to
the assets, valves are prioritized based on their safety
integrity level (SIL) and environmental integrity level
20

BPs SVTT system has helped to reduce by half outages needed

for routine periodic function testing of critical safety valves.
(Images courtesy of BP)

(EIL) rating, with particular attention given to valves with

SIL/EIL 1 and above.
For wellhead-related valves, continuous monitoring
presents a more marginal value opportunity because these
valves undergo twice-yearly well integrity tests (WIT),
which include pressure buildup test requirements. However, for these valves the SVTT offers continuous logging
of valve movement that can track performance, especially
when integrated with WIT results.
Travel time was configured using process safety hazard
management measures documents, which included
the valves performance standards. Data were critically
reviewed and compared with the information found on
the specific safety requirement specification and valves
manufacturer data sheet. For the majority of valves, the
most interesting target is the limit-to-limit time. Depending on the valve body size and application, the target times
vary from 1 to 2 seconds up to 30 to 35 seconds.
The deployment of the SVTT software has been accompanied by a rigorous business process. A single point of
accountability (SPA) was appointed to own the application in the region and liaise with all the relevant stakeholders within the company, including the Field of the
Future development and deployment teams, instrumentaFebr uar y 2013 | EPmag.com

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OIL FIELD

tion and control technical authorities, asset maintenance staff at multiple assets in the regions, and staff
from other BP regions to share
learnings and experience. The
SPA prepares a monthly report
for each asset in the region, providing routine valve movements tracking and data analysis.

Data and results

In the Caspian region safety valve
health has been monitored on a
continual basis with the SVTT softThe ability to curtail PM has saved man-hours
ware. The ones that fail to operate
and lost production time.
on demand or do not move in predefined target times are highlighted as warning/fail by the tool and investigated for corrective actions. The software analyzes the raw data to capture
successful or unsuccessful valve events.
As an example of one of the tools benefits, in the Shah Deniz fields flare staging valves SVTT identified a number of valve openings/closures and recorded
time, prompting an investigation. During shutdown a valve was found to be
seized. It had operated about 5,000 times in a year, which led to its breakdown.
Based on this process, pressure settings were reviewed to prevent recurrence.
Other issues that the system has identified include:
Switch failure;
Corrosion;
Low valve air pressure; and
Sticking valve stem.
Another important benefit is the reduction of function tests (preventative
maintenance [PM]) taking advantage of valve movements during operations.
In the Caspian AGT region, more than half of the PM is closed out using
the SVTT, which saves at least 1,000 man-hours per year (assuming two to three
hours of technician time for process isolation, verification, and de-isolation per
PM). Considering that some ESDV PM requires train or full facility shutdowns,
the closeout of these safety valves PM is estimated to deliver significant value
well beyond the man-hour savings.
Around 100 to 120 movements are recorded on average in a month in the
region, and of these between 1% and 3% can be fail messages. For the valves
reported with pass messages, credits are taken and function-test PM is rescheduled accordingly. For the valves in fail or unknown status, a separate list is
created, and a detailed analysis is carried out. The valves not complying with
the target times are investigated and corrected.
The SVTT has helped BP reduce by half the number of outages needed for
routine periodic function testing of critical safety valves. The recorded information has provided auditable proof of the valves operational integrity. Continuous
valve performance monitoring also has allowed proactive detection of faulty
valves, enabling early remedial measures and often avoiding the need for major
overhauls, which require valve removal.
The successes in the Caspian have contributed to making this application a BP
standard across the companys operations worldwide.

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EPmag.com | Febr uar y 2013

digital
OIL FIELD

GPU usage grows in digital oil field

E&P sectors appetite for data drives IT solutions.

Velda Addison, Associate Online Editor

xperts are touting GPUs as a faster, more economical

data solution for use in E&P operations. IT companies are stepping up to meet the challenge of handling
large amounts of data, including in remote 3-D visualization environments.
Larger dataset sizes and computational needs driven
by techniques to better understand the subsurface
have led to a wave of development to meet digital
oilfield needs.
E&P companies are finding data solutions by turning
to systems developed by companies such as NVIDIA,
Cisco, and NetApp. Technical experts from several
companies, including Petrobras, participated in
Hart Energys three-part Big Data and the Cloud
webinar series.

Computationally intensive seismic processing algorithms such as

Paradigms VoxelGeo GPU-based attribute extraction and rendering platform can help reduce delays and allow diverse teams to
collaborate and view that data. (Image courtesy of Paradigm)

24

Its not enough just to have good seismic data.

You need to have the content to be able to make
better drilling decisions and well path locations. So
you have data from electromagnetic surveys to help
correlate that, said Ty McKercher, a high-performance
computing solution architect for NVIDIA. And
every time you add another data type or a different
data type or a different discipline, it introduces delays
in the system.
That is where the GPU system steps in to help reduce
delays and allow diverse teams to collaborate and view
that data. Such systems are affordable and allow the
leverage of existing knowledge to a familiar tool, McKercher said. The technology is being used in complex
seismic data processing techniques such as reverse time
migration (RTM), wave equation migration, Kirchhoff
time-to-depth migration, and multiples elimination.
He noted that it is important for GPUs and CPUs to
cooperate via application codes. This enables tasks to be
performed simultaneously by the two. For example, data
filtering can be done on the CPU while doing computations on the GPU.
Paulo Souza, Geophysical Technology, Petrobras,
spoke on the benefits of using hybrid computing for
seismic processing. Petrobras started using GPUs in
2006 after moving from mainframes. Now GPUs make
up more than 90% of the companys processing power,
Souza said.
When using RTM for imaging complex structures on
GPUs, Souza said the velocity field is read once per job.
Groups of GPUs are used to process a group of shots
one shot at a time per group. And a group of shots is
stacked in memory before going to disk about every
three to six hours.
The process involves breaking the data into small
pieces and starting a pipeline to overlap four communication stages.
We have the GPU calculating the bulk of the model.
We are moving data from the GPU to the host. Also,
we are sending the data to the neighbor, receiving the
data from the neighbor, and copying the data from
the GPU.
By using GPUs, Petrobras saw gains of up to 10 times
in performance per price and per watt over traditional
architectures.
Febr uar y 2013 | EPmag.com

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digital
OIL FIELD

Growing appetite for data

When it comes to making room for common
applications such as email and databases
along with highly technical applications
such as those involving seismic data and
well planning, handling massive amounts
of data has presented challenges in the
digital oil field.
Many are finding answers and learning
ways to virtualize the resources with cloud
technology as IT companies tout advances
such as remote 3-D visualization capabilities
and associated supportive systems as well as
other applications.
A lot of the components necessary to create
an effective 2-D and 3-D visualization environment have existed separately for quite some
time now, said Stuart Lowery, business development manager of Data Management and
Infrastructure for Paradigm. There are high-

NVIDIAs Kepler GPU is the first designed specifically for cloud computing.
(Image courtesy of NVIDIA)

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end work stations, large amounts of

memory, high-end graphics cards,
and fast network connections to
shared network storage devices.
The game-changing event is the
evolution of GPUs for both visualization and computation, he said.
That, coupled with flexible
storage and storage virtualization,
creates the building blocks to
create a remote 3-D visualization
environment, he said. The new
challenge is that 3-D graphics
capabilities are pervasive and
now seen as critical to E&P workflows. Systems and software are
available to support this remote
3-D visualization.
For example, there are widely
available graphics capabilities on
many platforms, powerful traditional
desktops, emerging devices for
mobile users, and massive compute
power in datacenters, he said. Now
were starting to see hybrid systems
with coupled CPUs and GPUs and
even single chips with both.
Software is capable of combining
data from different repositories from
multiple sources, displaying them in
Febr uar y 2013 | EPmag.com

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digital
OIL FIELD

3-D on remote desktops, and allowing them to be

shared by multiple users. That could prove useful when
handling large amounts of high-resolution data and
well log images as well as raw data coming from the
field. It has even greater importance considering the
industrys mobility.
The key is to pool the resources so they can be
virtualized and tightly coupled in a secure manner,
Lowery said. The datacenter of the future includes
a shared data repository as reliable storage, compute
power, and graphics that can be shared that are in
close proximity to the storage network infrastructure
that connects those. The real key here is they have to
be scalable and flexible in providing the low latency
required to support remote visualization in an interactive way for the user.

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28

the graphics side for interpretation to seismic

processing and flow simulation, and efforts are
underway to integrate the two with new cloud
technology, said Keith Cockeram, energy business
development manager for NVIDIA. He said that
hardware to handle large, expensive data has been
secured; however, data sizes are outgrowing screen
resolution.To overcome the challenge, Cockerham
said the company has done compression and
color space conversions on the hardware itself and
increased algorithms for pixel compression, among
other steps. The company also has developed
software to handle the increasing size of datasets,
giving power users their own GPUs and memory
footprints while others such as those who do not
require much graphic power share.
As the data volume grows along with the need for
collaboration to empower users and handle real-time
information, Peter Ferri, energy industry director for
NetApp, said the pressure is on IT to get it right. There
are operational challenges such as security and time
constraints posed by trying to copy large amounts of
data to local storage.
There is a proliferation of siloed infrastructure
areas that is making it very difficult for companies
to efficiently provision services or make changes
across multiple software architectures with unintegrated
management tools [along with] the inability to fully
leverage assets, which leads to increased costs,
he said. However, the companys customers are
moving from such rigid silos to a more serviceoriented infrastructure.
One solution involved working with Cisco on
its FlexPod integrated system, which John Thomas,
technical solutions architect, Data Center group
for Cisco, explained. The systems features include
extended memory for faster rendering, bigger
datasets, more desktops per server, and low latency.
Nearly 40% of all large enterprises have virtualized
these services, Ferri said.
Using Hess Corp. as an example, Ferri said
NetApp has enabled the company to support
four times more 3-D seismic interpreters.
The company increased efficiency by decreasing
backup time, decreasing data loading performance
from 20 minutes to one to two minutes, and
reducing storage capacity needs by 30%, according
to Ferri.
The key enabler is virtualization, he said.
Its an evolutionary process.
Febr uar y 2013 | EPmag.com

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exploration
TECHNOLOGY

Flying high to find reservoirs

Technology uses gravity perturbations to find potential trapped fluids.

eismic technology is arguably one of the most

enabling technologies in the oil and gas industry.
But it has its shortcomings.
It is expensive to acquire, particularly on land. The
data take a long time to process and interpret. And the
results are often ambiguous.
Finally, seismic information is great at illuminating
underground structures, but it falls short of illuminating underground oil and gas.
NXT CEO and inventor George Liszicasz has developed a technology called the stress field detector (SFD)
that he said can be used prior to a seismic survey to
identify potential trapped fluid reservoirs below the surface. SFD is a patent-pending airborne technology that
uses airborne gravitational measurements to identify
these reservoirs. The tool is flown in a jet at 3,000 m
(10,000 ft) traveling 470 km/hr (285 mph). The surveys cost a fraction of what a seismic survey would cost,
can be done 90% faster than a seismic survey, and
cause no environmental disturbance.
Unlike traditional gravity measurements, which
measure gravity magnitude, and gravity gradiometers,
which measure the difference in density magnitude
from one location to another, Liszicasz maintains that
SFD responds to changes in the orientation of Earths
gravity field caused by subsurface stress.
SFD has to be in motion, he said. It couples directly
with the perturbations or the anomalies in the subsurface. It does not respond to the total magnitude of the
field; it only responds to changes in the gravity field.

NXTs SFD equipment is flown at high altitudes and fast speeds

to cause perturbations in the orientation of the Earths gravity
field caused by subsurface stress. (Image courtesy of NXT)

EPmag.com | Febr uar y 2013

RHONDA DUEY
Executive Editor
rduey@hartenergy.com
Read more commentary at

EPmag.com

The key to the technology is fluids inability to transmit

shear. You can cut rocks, and you can tear rocks, and
you can apply forces from different angles, he said. But
you cant take a pair of scissors and cut your coffee.
The technology was developed when Liszicasz was
working on a pyroelectric material that could be used in
pacemakers to harness the patients body heat to power
the device. I solved that problem, but in the meantime I
made this discovery, and I forgot all about the other
one, he said.
He removed most of the seats in his van to house the
system and drove around the US and Canada trying out
his method in different geological environments reef
systems in Michigan, Austin chalk formations in Texas,
salt domes in Louisiana, overthrust faults in the foothills,
and overpressured reservoirs in Wyoming. Ultimately, he
created a library of the tools responses to these varying
geologic settings.
The next step was to swap the van for the jet. NXT
did its first test flight in 1997 and after a lengthy R&D
process began offering SFD as a commercial service
in 2006.
Its first jobs were in Canada, both in conventional
plays and in the Horn River basin shale play. Since then
NXT has gone international and is currently working
in Mexico and Pakistan, among other places.
Case studies abound. One survey led to the discovery
of a 180-MMbbl field in Colombia, Liszicasz said. The
client was shooting a 3-D survey over the entire block.
For [US] $500,000 we could tell them where to focus
their activities in stage 1 of the exploration cycle.
Technologies like airborne magnetics and gravity
can map basin architecture; 2-D reconnaissance seismic can identify traps. We
find trapped fluids. Thats what E&P
companies are looking for.

31

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drilling &
COMPLETION

Water depth, availability drive

use of jackup in Chukchi Sea
ConocoPhillips plans to drill one or two exploration wells in 2014 using a
jackup rig during the open-water season in the Chukchi Sea.

onocoPhillips wants to drill on the blocks in the

Chukchi Sea that the company leased in 2008. If
everything goes according to plan, one or two wells
will be drilled on the Devils Paw prospect about 128
km (80 miles) offshore Wainwright, Alaska, during
the open-water season in summer 2014.
In drilling terms, a jackup is ideal for the Chukchi
Sea with water depths of 40 m to 42 m (132 ft to 139
ft), Randall Shafer, ConocoPhillips, said during a
presentation (Offshore Technology Conference Paper
No. 23745) on Use of Jackup Drilling Units in Arctic
Seas with Potential Ice Incursions During Open-Water
Season at the 2012 Arctic Technology Conference in
Houston Dec. 4, 2012.
After looking at semisubmersibles, drillships,
and jackups, the company chose a jackup based on
higher variable deck load and deck area, a fixed riser
to the seabed, surface and seabed BOP controls, and
availability.
The initial wells will be drilled in the Chukchi Sea
on blocks awarded to ConocoPhillips during Lease
Sale 193.
Based on US National Ice Center data from 1996 to
2007, the average open-water season was about 100
days from July through October. Open water for the

SCOTT WEEDEN
Senior Editor, Drilling
sweeden@hartenergy.com
Read more commentary at

EPmag.com

purpose of evaluating modular offshore drilling units

is defined as no ice within 45 km (25 nautical miles)
of the proposed well location, Shafer noted.
Ice-alert and ice-management systems are keys to
safe operations. All of these systems are designed
around the amount of time it takes to secure the well.
It takes us 24 hours to secure a well and jack down
the rig. That varies with the depth of the well, he
added. However, we dont expect any ice incursions
into our area at all. Over the last three years, we
havent had any ice incursions.
An added level of safety is provided by a specially
designed prepositioned capping device (PCD), which
consists of two blind/shear rams and is installed on
the wellhead on the seabed. In the unlikely event of
loss of primary and secondary control from the surface BOP, the PCD can be activated to regain
control of the well either from the drilling rig
or a nearby vessel. The PCD system is separate
A new day will dawn for explofrom the rigs BOP and power source.
ration in the Arctic Ocean with
ConocoPhillips has been running virtual
the use of a jackup drilling rig
drilling exercises for three consecutive years
during the open-water season
timed to the open-water seasons. By July 27,
in the Chukchi Sea in 2014.
2012, the ice was 45 km away. In the virtual
drilling program, we spudded the well on July
30 and completed it by Sept. 2, Shafer
explained. We suspended operations during
the drilling as a test and still completed the
well. We then moved the rig into
the second position and drilled
that well too. We moved the rig
off location on Oct. 1.

EPmag.com | Febr uar y 2013

33

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production
OPTIMIZATION

Chasing the rabbits of public opinion

President of ANGA encourages industry to continue educating the public
on hydraulic fracturing.

ne summer when I was a child I spent my days

riding with my grandfather on his tractor as he
worked in his cotton fields. To stop my steady stream of
but whys?, he would turn me loose to catch the hundreds of jackrabbits that called the fields home. For
every one that I caught, he would pay me US $5. With
empty pockets and a dusty mouth, I would go with him
to the coffee shop for lunch. It was there that I first
heard the holy trinity of Texas farmer shop talk:
football, cotton futures, and chances of rain.
As summer approaches, the need for rain continues
to be strong across most of the High Plains and southwestern US. Exceptional drought has placed extreme
pressures on state and local water management plans.
And in those drought-stricken areas that have rigs working night and day, it is easy to single out the industry as
being a major consumer of water. People have questions about how much water is being used and why so
much is needed by the industry to frac a well.
People turn to the news media first and their neighbors second for those answers, according to an April
2012 report by the Deloitte Center for Energy on its

keeping
the publics
attention
can be as
difficult as
catching
Permian basin
jackrabbits on a
summer day

EPmag.com | Febr uar y 2013

JENNIFER PRESLEY
Senior Editor, Production
jpresley@hartenergy.com
Read more commentary at

EPmag.com
survey of the public opinion of shale gas development. However, in regard to the trustworthiness of
the news media when it comes to coverage of the
industry, only 17% felt the coverage was extremely
or very trustworthy.
Peter Robertson, an independent senior advisor
for oil and gas at Deloitte LLP, said the report shows
that there is an opportunity that exists right now to
improve the perception of trustworthiness of the
industry by providing more information.
But has the industry provided too much? Regina
Hopper, president of Americas Natural Gas Alliance,
in remarks about potential hydraulic fracturing in New
York, said that residents there have heard so much
from both sides that theyre kind of shutting down.
The remark was made during the US Energy Associations State of the Energy Industry forum in Washington, D.C. Hopper encouraged natural gas supporters to
have conversations with people who sincerely have questions about natural gas development, keeping in mind
that the mission is to talk with these folks not to
them, but with them.
Her remarks are timely in that supporters of the
motion picture Promised Land have attempted to direct
the publics attention to the national debate on
hydraulic fracturing. But based on early box office
returns, it appears that the movies supporters may
learn what most in the industry already know: that
capturing and keeping the publics attention can be
as difficult as catching Permian basin jackrabbits on a
summer day. The real trick, however, is in knowing
what to do with the attention after it is caught so that
it does not get away or bite
you badly in the polls.

35

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offshore
ADVANCES

Safeguarding the right to operate

With the UK industry implementing safety improvements post-Macondo,
it is a reminder that no offshore operator should ever take its license to
operate for granted.

K operators are in the midst of implementing a

wide-ranging set of improvements recommended
by a UK government-commissioned review of the
North Sea safety regime prompted by the Macondo
tragedy nearly three years ago.
The substantial amount of work done and the future
workload that remains following the findings of the
Maitland Report are burdensome but very necessary.
The review by Geoffrey Maitland, professor of energy
engineering at Imperial College, London, was commissioned to examine the safety regime and review other
Macondo reports. His report in December 2011
broadly gave the UK Continental Shelf (UKCS) regime
a clean bill of health.
But it also identified areas where regulations and
management systems still need to change. The industry
association Oil and Gas UK (OGUK) quickly accepted
and acted and is still acting on much of his guidance, within timeframes agreed upon with the Department of Energy and Climate Change (DECC).
However, some of the guidance required by Maitland
on operations and practices is not due to be published
for some time.
Ed Davey, secretary of state at the DECC, has established a steering group to implement most of Maitlands recommendations, which include new guidance
on keeping critical safety equipment in good repair.
The Well Life Cycle Practices Forum, set up to share
best practices on well management and design, is being
made permanent.
These moves will help to appease the concerns that
Maitland had. One of his comments concerning incidents requiring emergency closure of BOPs that had
occurred on the UKCS was, It is not clear that the lessons from such incidents were always as widely or rapidly communicated and implemented as they should
be. He also added that the capping and containment
of free-flowing deepwater wells and the development of
fail-safe flow barriers remain key technology challenges
for the industry.
While heartened by OGUKs efforts in the development of new well-capping equipment, Maitland said,

EPmag.com | Febr uar y 2013

MARK THOMAS
Senior Editor, Offshore
mthomas@hartenergy.com
Read more commentary at

EPmag.com

Encouraging as this response is, it is only the first stage

in what is needed in terms of improved and new technology to reduce the risks of deepwater drilling and to
minimize the timescales and consequences of any failures of well integrity. The industry must take responsibility for investing immediately in the R&D necessary to
address these critical issues.
The industry has indeed taken responsibility. OGUK
has produced financial responsibility guidelines, which
propose a way for operators to assess potential costs of
well control, pollution remediation, and compensation
in the event of an incident. Operators also are now
required to carry out emergency response exercises
every three years rather than every five years.
Malcolm Webb, OGUKs CEO, said the Maitland
Review had highlighted where improvements were
possible and that the majority of these have been
implemented.
But before we start to relax, Brad Corson, management committee chairman of the International Association of Oil and Gas Producers, said that everything the
association does is driven by one thing: maintaining the
upstream industrys license to operate. In a global
environment a single incident can jeopardize existing
and future operations for all, he said, adding that
despite hundreds of billions of dollars in investment,
this license is up for renewal every day by international
agencies, regional bodies, and national governments.
In the days ahead, when the burden of implementing stringent safety regimes might weigh a little heavily, it is worth remembering that this
industrys license to operate should
never be taken for granted.

37

COVER STORY:
FRACTURING

COVER STORY:
FRACTURING

the oil and gas industry is criticized for using freshwater that could be used for other purposes, said
Stephen Holditch, professor of petroleum engineering at Texas A&M University.
While the challenges facing the industry on waterrelated issues are numerous, in regards to the sourcing of water for operations, Holditch said that one
challenge is to put the use of freshwater by the oil
and gas industry in perspective to other uses.
According to the most recent report on estimated
water use conducted by the US Geological Survey,
water use was about 410 Bgal/d in 2005. Power generation, irrigation, and public consumption are all
significant draws on freshwater supplies located on
and below the surface. Fortunately, the hydrologic
cycle works to replenish the supplies except during
times of drought. It is when the supply gets tight
that the public wants to know how much water it
takes to frac a well.
Hydraulic fracturing may use as little as 50,000
gallons of water in a conventional vertical well treatment. Multiple interval fracturing in horizontal
Putting it all in perspective
wells may require 2 [million] to 6 million gallons
As the industry knows all too well, water manageper well, said Steve King, US region sales and techment is critical. It is during times of drought that
nical director of
fracturing servThe comparison between the amount of water needed to drill and fracture a single well one time and
ices for Weatherthe amount consumed by the public provides perspective on freshwater usage.
ford. This is the
Unconventional play
The amount of water needed to
Is equivalent to the amount
total amount of
drill and fracture one Chesapeake
of water used:
water required to
deep shale gas well:
fracture a well.
Eagle Ford shale
4.9 MMgal
to irrigate 11.6 acres of
Once a well is
vegetables in season
fractured and
placed on producby the City of San Antonio
in ~17.7 minutes
tion, it may be
capable of proMarcellus shale
5.6 MMgal
to irrigate 9 acres of corn
ducing for 20 to
in season
30 years. Fracturby New York City in 8 minutes
ing is not an
ongoing process
Barnett shale
2.8 MMgal
to irrigate 4.2 acres of corn
in a given well.
in season
According to
by the Dallas-Fort Worth
a
Chesapeake
Metroplex in ~4.2 minutes
Energy water use
fact sheet, total
Niobrara shale
4.3 MMgal
to irrigate 6.5 acres of
Wyoming wheat for a season
water use in the
Eagle Ford shale
by the City of Denver in
area in 2008 was
~26 minutes
approximately
Source: 2012 Water Use Fact Sheets, Chesapeake Energy
klahoma and Texas are both home to thriving
unconventional resource plays where hydraulic
fracturing is unlocking the potential of hydrocarbonbearing formations. However, the shift from vertical
to horizontal fracturing of wells has brought with it
the need for greater quantities of water and a greater
awareness of drought conditions.
Yet year after year, summer weather forecasts for
the High Plains and southwestern US promise
plenty of high temperatures and zero chances for
rain. In summer 2012, more than 90% of Oklahoma
was categorized as being under extreme or exceptional drought by the National Drought Monitoring
Network. A quick look at a drought map would
show that Texas also was severely impacted.
This months E&P cover looks at new perspectives
in alternative water usage, a novel application
of treatment and stimulation designs in the
Ordos basin, and proppant economics of the
Eagle Ford shale.

Hydraulic fracturing:
new perspective leads
to successes
By using alternatives to freshwater, operators
find opportunities for success that can help
change public perception during times of drought.
Jennifer Presley, Senior Editor, Production
38

Febr uar y 2013 | EPmag.com

EPmag.com | Febr uar y 2013

39

COVER STORY:
FRACTURING

Devon Energys Cana Woodford water recycling

facility includes a 500,000-bbl lined storage
reservoir. (Image courtesy of Devon Energy)

64.8 Bgal. Primary water users in

the area were irrigation (~70%)
and municipal/ public water
supply (~26%). To drill and fracture a single Chesapeake deep
shale gas well in the Eagle Ford,
it takes approximately 4.9 MMgal
of water.
In the Marcellus shale, the fact
sheet noted that the region used
approximately 3.6 Tgal of water
in 2000. The natural gas industry
in the region is expected to
increase that amount by less
than 0.1%, which is well within
available resources in the region.
And what happens in those
areas, like the Eagle Ford shale,
where the available resources
may be a little tight?

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COVER STORY:
FRACTURING

In this map showing drought conditions as of Aug. 21, 2012, it is easy to identify the many areas across the continental US, covering several unconventional plays, that have experienced drought conditions ranging from abnormally dry to exceptional. (Image courtesy of the
National Drought Mitigation Center at the University of Nebraska-Lincoln)

The energy companies understand that water is a primary issue when it comes to having a license to operate,
said Michael Young, associate director for Environmental
Systems and senior research scientist at the Bureau of
Economic Geology at the University of Texas at Austin.
The companies are working to avoid using potable
groundwater wherever they can. And this means using
alternative sources.

Finding alternative successes

Several alternatives have been used, or are currently in
use, in drilling and fracturing operations. While some
have experienced success, the jury is still out on others
as each brings a unique set of challenges that the industry is working to address.
One alternative is the use of recycled produced water.
When Devon Energy Corp. drilled its first well in Oklahomas Cana Woodford shale play in 2008, company
officials found that the flowback water was sufficiently
low in salt content and could be reused without needing
extensive treatment.
42

The company built a water recycling facility in the

area that in the first three months of its operation in
2012 saved more than 1 MMbbl of water. Considering
that the state was experiencing exceptional drought
conditions, the facility could not have gone operational
at a better time.
According to Devon spokesman Tim Hartley, field
operators are very pleased with how the program is
working. The new facility was put into service around
mid-year 2012 from an idea for which no regulatory
permitting process existed in 2008, Hartley said. At the
time the facility was first proposed, there was no regulatory permitting process in place for it. This was due primarily to the size of the storage reservoir, which can
hold 500,000 bbl or 21 MMgal of water.
By the end of January 2013, the company expected to
have 63 wells hooked up to the system, with the goal of
connecting an additional 112 wells throughout 2013.
The system has recycled 3.5 MMbbl of water to date. In
2013 it is expected that an additional 5 MMbbl of water
will be recycled.
Febr uar y 2013 | EPmag.com

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FRACTURING

According to King, Apache and other companies have

found that saltwater is equally as good as freshwater for
fracturing. Consistency of the water quality, however, is
the key.
As long as you can keep the water quality relatively
consistent the consistency of the chlorides, the hardness, the calcium then a service vendor can take that
and, by manipulating the chemistry of the small amount
of additives, actually get the friction reducers, biocides,
and all of those things to work, he said.
An add-on perk to using saline water out of an aquifer
is that were using water thats been outside of the hydrologic cycle for a long time, said Young. Were not losing
any water that was originally part of the hydrologic cycle.
Young added that if the flowback water is treated on
site and made available for release into rivers or streams,
then water is being added back to the hydrologic cycle,
which is very advantageous, particularly in areas that are
water-short, he said. And that could be a new source of
water for communities.

Devon has installed approximately 15 miles [24 km]

of water pipe connecting our wells to the Cana water facility so far, he said. We expect to lay an additional 25
miles [40 km] of pipe to wells in the Cana during 2013.
Another successful alternative is the use of saline or
brackish water. For example, Apache Corp. uses saline
water in its wells in the Horn River basin located in
northeast British Columbia. The nonpotable water is
from the Debolt subsurface brine aquifer located just
above the Horn River shale.
Before it is used, the saline water is treated at the
Debolt Water Treatment Plant. The plant produced
approximately 95% of the water required for fracturing
operations in Apaches Horn River basin area in 2011.
A total of one or two additives are mixed in with the
water, usually a friction reducer and a small dose of biocide, and we frac the well with it, said George King,
distinguished engineering advisor for Apache Corp.
Produced water is then filtered and put right back into
the formation. It is a closed-loop fracturing system.

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COVER STORY:
FRACTURING

Optimized treatment design

shows promise
The first horizontal wells drilled in the Chang-7 formation deliver significant production
increases in Ordos basin tight oil reservoirs.
Yang Hua, Xu Yong Gao, Yang Ke Wen,
and Zhou Shu Xun, PetroChina Changqing Oilfield Co.;
Liu Hai and Luo Yin, Schlumberger

hallenging low-permeability oil reservoirs in the

Ordos basin in north-central China offer proof that
in-depth reservoir understanding, advanced design and
evaluation workflows, and appropriate completion and
fracturing techniques result in production increases of
as much as 80% to 100% over baseline. A pilot project
recently conducted in the basin set out to quantify
production improvements in two horizontal wells and
three vertical wells placed between two horizontal wells
equipped for real-time microseismic fracture monitoring.
An unconventional fracture model incorporating
geologically and geophysically defined natural fracture
patterns and mathematical interaction criteria for
hydraulic and natural fractures was used to optimize
treatment design. Real-time microseismic fracture
monitoring through a dual-monitoring well setup
was performed on a total 26 stages of fracturing treatments. Simultaneous treatments pumped in four stages
were compared to other stages pumped in chronological sequences.

FIGURE 1. The pilot projects horizontal laterals were drilled

orthogonal to maximum horizontal stress to fracture across
the laterals. (Images courtesy of Schlumberger)

Ordos basin challenges

Although historical field development in Ordos basin
tight oil reservoirs was considered economical, the
average production after hydraulic fracturing was low,
and most of the wells were producing only marginally.
Studies indicated that insufficient connected and conductive fracture surface area induced by conventional
fracture completion techniques was the major reason
for low productivity.
Yet even by increasing the fracture treatment size and
proppant mass pumped into the formation, no obvious
incremental production gains were achieved using
conventional fracture design methodologies. This
pointed to the need to improve the understanding of
fracture mechanical propagation behavior and the
proppant distribution mechanism in the reservoir to
break through the production barrier status quo.
46

Pilot project in Chang-7 formation

To accomplish this objective, the pilot projects two
horizontal laterals were drilled orthogonal to maximum
horizontal stress orientation to enable propagating transverse hydraulic fractures across the laterals as shown in
Figure 1. To obtain accurate microseismic data, dual
monitoring was established using two out of the three
monitoring wells simultaneously.
The horizontal wells were drilled in the lower Chang-7
formation, which is very fine sandstone grading to siltstone with average permeability of 0.24 mD and an
average porosity of 10.5%. Natural fractures are widely
distributed across the basin; however, their nature and
characteristics vary from formation to formation and
from block to block.
Febr uar y 2013 | EPmag.com

COVER STORY:
FRACTURING

The two horizontal wells were the first in this reservoir. The vertical wells
that were completed initially produced 31 b/d to 179 b/d after conventional
fracturing treatment with crosslinked gel and about 50 to 120 tons of proppant
placed. Production from the vertical wells declined quickly in three months to
fewer than 18 b/d and could hardly produce economically afterward. From
previous post-closure pressure decline analysis it was determined that effective
permeability can be as low as 0.01 mD. Extremely low permeability and insufficient fracture surface area for oil production were considered the main causes
for low production.

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To achieve the objective of maximizing the reservoir-fracture surface contact
area in this basin, it was necessary to have an accurate understanding of how
the fracture was penetrating into the reservoir, including complexity, effective
length, fracture containment within the pay zone, and fracture conductivity for
hydrocarbon production. It is well known from other tight oil plays that reservoir contact area can be significantly improved with multiple transverse fractures for horizontal wells. However, even with transverse fractures, the well
potential could only be maximized with contribution from all of the pay intervals and optimized proppant distribution along the lateral.
Rather than using traditional planar fracture models based on a 1-D geomechanical model, the new Mangrove reservoir-centric stimulation design
software was introduced for the pilot project. The software, which is a plug-in
for the Petrel E&P software platform, uses an integrated reservoir-centric
workflow to enable seismic to simulation as well as optimal completion and
stimulation scenarios to enhance production from unconventional reservoirs. The design-execution-evaluation cycle in this workflow is distinguished from previous conventional capability by its ability to simulate

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FIGURE 2. By correlating the features from several well logs, the structural variation
along the laterals between the monitoring wells was identified.

EPmag.com | Febr uar y 2013

47

COVER STORY:
FRACTURING

complex natural fracture and hydraulic fracture interaction via new mathematical models in tight reservoirs.
For example, the 3-D geocellular earth model captures sedimentary, stratigraphic, and geomechanical
details in the reservoir and bounding layers. In the
past these models have been used solely for geologic
study and reservoir simulation. However, in the new
workflow the hydraulic fracture completion design
based on the 3-D geoceullar earth model is coupled
with production prediction based on the hydraulic
fracture gridded onto the upscaled reservoir model.
This enables the full usage of the model and a much
more realistic picture of hydraulic fracturing behavior
and its impact on well productivity.
For improved accuracy, model calibration plays an
important role in this workflow. While 3-D earth models
and complex fracture models provide details in realworld dimensions with deliberate data inputs, model
accuracy is improved through fracture and production
behavior calibration.

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FIGURE 3. The surfaces extracted from well correlation show

Workflow steps are integrated into

a single work platform and can be
implemented routinely for single
well or multiple well design. Calibration cycles are performed during
the fracture treatment if necessary.
The workflow is tailored according
to how much data are available, and
the complexity of the 3-D models is
chosen to enable the capturing of
adequate details with acceptable
computer time consumption.
In this pilot project, geostatistical
well correlations to reflect the
detailed formation variation along
the laterals were established through
the three vertical wells placed
between the two horizontal target
wells. By looking at the features from
several well logs, a series of well tops
including the top and bottom of
the target Chang-7 formation was
identified to reflect the structural
variation along the laterals. After
building a structural model, a 3-D
zonal model was built according
to the surfaces extracted from
well correlation. Geologic structure
and reservoir property variation were
captured. Properties for each zone
Febr uar y 2013 | EPmag.com

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COVER STORY:
FRACTURING

were determined based upon the properties

of the monitoring wells along the laterals.
To capture the basic characteristic and
quantitative modeling of the natural fracture
system in this area, a discrete fracture network
(DFN) approach was used based on geologic
knowledge. A manual DFN model was initially
created to represent the natural fractures.
With the DFN model and 3-D geomechanical
model, the unconventional fracture simulation result suggested basic planar fractures
with some simple fracture networks by opening natural fractures and creating new fracture branches during the main fracture
propagation. The DFN model can be further
calibrated according to microseismic fracture
monitoring results.
This unconventional fracture model
can explicitly model fracture propagation
in 3-D. Hydraulic fracture-natural fracture
interaction, stress shadow effect between
nearby fractures, proppant transportation in
fracture networks, lateral stress, and property
variations are considered.

New workflow results

in increased production
Initial production tests on both horizontal wells
showed 783 b/d and 648 b/d, respectively, significantly higher than all the wells completed in

FIGURE 5. The initial production result for both horizontal wells

(wells A and B) shows a substantial increase as compared to the
vertical well on the same pad.

tight oil reservoirs in the Ordos basin. Production normally varied from 31 b/d to 50 b/d in vertical wells and to
201 b/d for horizontal wells, on average. The initial result
showed substantial production increase compared with
the production from the Chang-6 formation of the nearest
offset reservoir as shown in Figure 5, which actually had
slightly better reservoir quality. Compared with the best
horizontal well, the initial results showed an 80% to 100%
production increase.
The stabilized production rates after three months
were 5.5 and 3.9 times those of the same vertical well.
Results showed more than a 50% increase compared
with the horizontal well completed in the same formation in the northern part of the basin.
FIGURE 4. The 3-D zonal model with minimum horizontal stress
was determined based upon properties from the monitoring
wells along the laterals.

50

This article was prepared from SPE article 158268, presented

at the SPE Annual Technical Conference and Exhibition held
in San Antonio, Texas, Oct. 8-10, 2012.
Febr uar y 2013 | EPmag.com

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COVER STORY:
FRACTURING

Proppant economics in the

Eagle Ford formation
A new economic analysis determines the optimal proppant for its cost.

T.R. McNealy, Halliburton

onsideration of proppant economics before

selecting a proppant is of substantial importance
to stimulation design in the Eagle Ford formation.
To operators, the value of proppant is the most important factor of proppant economics. Using the cost ratio
between proppants and conductivity adjustments are
just two ways to determine the value of proppant. When
one of these methodologies is used to determine which
proppant has the greatest value, operators can achieve
the biggest bang for their buck. Conductivity and how
sands are impacted at closure stress greater than 6,000
psi also must be examined.
Some operators in the Eagle Ford formation have
pumped sands at 2,743 m to 3,353 m (9,000 ft to 11,000
ft) true vertical depth (TVD), observing the effects
of shattered sand as it is later cleaned out of surface
equipment every month. Currently, some operators are
pumping sand at 3,810 m (12,500 ft) TVD in the Eagle
Ford formation with a fracture gradient of ~1.05 psi/ft.
At 12,000 psi of closure stress, more than 95% of all the
white sand pumped has been damaged. To put this in
perspective, on a typical well in the Eagle Ford formation, proppant can cost up to US $1 million. If 95% of
the proppant has been damaged, then $950,000 has
been spent on damaged white sand. Within any project,
the limitations should be known upfront. In the case of
the Eagle Ford formation a wide range of depths can be
examined, as the Eagle Ford formation has depths from
610 m to 6,096 m (2,000 ft to 20,000 ft) TVD, depending
on the geographical location. Most of the drilling in the
Eagle Ford formation occurs at depths ranging from
1,219 m to 4,877 m (4,000 ft to 16,000 ft) TVD.

Proppant considerations
The two most commonly examined properties of
proppant are fracture conductivity and price. Proppant
damage is one of the mechanisms that will reduce conductivity. Determining the correct stress initially is critical to proppant selection and maintaining conductivity
52

once the proppant has been placed. Because of criticism

with respect to the accuracy of the equation for closure
stress on proppant in the fracture, in this work it is
assumed for our comparisons that the minimum in situ
horizontal stress is the closure stress on the proppant.
Baseline conductivities of sample proppants are used
because using dynamic conductivities can lead to endless results from an infinite number of possibilities. In
the interest of keeping it simple, all of the conductivity
values are taken from the same third-party commercial
testing laboratory. It can be assumed that, by using a
single testing vendors data, errors in the conductivities
are minimized.

Method 1: Cost ratio between proppants

The first method for proppant value can be determined
by dividing the proppants conductivity by the proppants cost. This calculation will result in the actual
value of the proppant.

Method 2: Conductivity adjustments

The second method is considerably more involved.
To determine a dollar-for-dollar comparison between
proppants, a process of generating adjusted conductivities is necessary. Based on the equations used, proppant
conductivity has a linear proportionality to the concentration of the proppant pack. In general, for round
proppants, this relationship is generally true for most
laboratory measurements when no additional damaging
components are present. In other words, the conductivity of a proppant pack at a concentration of 4.88 kg/sq
m (1 lbm/sq ft) is about half of the conductivity of
that with a proppant pack at a concentration of 9.77
kg/sq m (2 lbm/sq ft), as the resultant pack widths are
proportional to mass per unit area. Knowing that conductivity and concentration have a linear relationship
at similar stresses is the key to calculating the second
method.
The next part of the second method is determining
the cost ratio between the subject proppant (white
sand) and the other proppants of interest at a specific
closure stress value. The cost ratio is defined as the cost
Febr uar y 2013 | EPmag.com

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magnumoiltools.com

1
OIL TOOLS

I N T E R N A T I O N AL

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COVER STORY:
FRACTURING

of proppant of interest over the cost of subject proppant. Because conductivity and concentration have a
linear relationship, one can multiply the conductivity by
the inverse of the cost ratio to determine the new effective proppant concentration that is a dollar-for-dollar
equivalent.
In other words, if proppant B is two times as expensive, what would the conductivity be if only half as much
was used?
The idea is to predict what the conductivity would be
if a dollar-for-dollar equivalent existed between proppants. This is a completely new way of thinking about
proppants and as these have traditionally been viewed
on a pound-for-pound basis.
An example of the second method would be to choose
two proppants and record the conductivities at the same
stress (7,000 psi at 9.77 kg/sq m) and the cost per kilogram. The cost ratio can be determined by dividing the
new proppants cost over the original proppants cost
for instance,the cost of a ceramic divided by the cost of
white sand, which typically is a ratio of 2:3.
The conductivities recorded were at a proppant
pack concentration of 9.77 kg/sq m. Dividing this concentration by the cost ratio would result in the concen-

tration of the new proppant to effectively normalize the

cost between the two proppants to focus on the conductivities. With the new concentrations for the two proppants, a variety of software applications can be used
to determine the proppant pack conductivity for the
new proppant.
It is possible that better proppants could yield higher
conductivities using a fraction of the amount of white
sand. Even at stresses between 4,000 psi and 7,000 psi,
white sand appears to have a higher value.

Design simulation

This economic analysis was designed to find the optimal

proppant for its cost. If millions of dollars are spent on
proppant, why not achieve the highest conductivity possible at a comparable cost? This question implies that
possibly few operators have spent the time or resources
to determine the best option with respect to proppants.
The simple reasoning of many is that 1.81 kg (4 lbm)
is better than 0.91 kg (2 lbm) because more proppant
should equal better production. Taking the proppant
damage into consideration reveals that the sands will
have more than 90% damage at 8,000 psi, while most of
the other coated and ceramic proppants are still below
75% damage. This is important to
consider as damage affects actual
conductivity; it also has an impact
on how much proppant might
later be produced to surface. In
the event that this analysis has
resulted in a new proppant being
chosen, small changes to the
pump schedule will help ease the
transition.
To maintain the current fracture geometry, it is assumed that
the amount of fluid injected into
a reservoir will remain the same;
in other words, all stage volumes
previously used will be the same.
This will help reduce the number
of variables when comparing the
new design to offsets previously
completed. Second, it is important to reduce the proppant concentrations on the job until the
job proppant total mass is costcomparable to the original job
The output proppant pack conductivity of an Eagle Ford completion at 4,206 m
design. The intent is to spend the
(13,800 ft) TVD was simulated to compare the fracture conductivities of white sand
same amount of money and
and VersaProp using different amounts of proppant. (Image courtesy of Halliburton)
achieve higher conductivity.

54

Febr uar y 2013 | EPmag.com

1- TEC

multi-stage

WELL SOLUTIONS

completions
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COVER STORY:
FRACTURING

This new design can be used in conjunction with

hydraulic fracture modeling software to verify the results
and support the analysis. The output proppant pack
conductivity of an Eagle Ford completion at 4,206 m
(13,800 ft) TVD is shown in the figure. The conductivity
coloring shown on all the images is using the same scale
(0 to 600 mD-ft). The conductivity in the simulator output appears to be lower than other conductivity tests,
so it is assumed that the simulator is factoring similar
damages as the dynamic damage effect is turned off
in the simulator.
The fluid system used in the simulation is 18.14-kg
(40-lbm) crosslinked guar at 177C (350F) bottomhole
static temperature. This fluid system is not recommended at this temperature mainly because of premature proppant settling, which can be observed from
the results.
The sand simulation clearly shows it to be on the low
end of the conductivity scale. Nowhere in the fracture
does the simulation predict more than 120 mD-ft. Even

Rupture Pin Technology

if the pumped concentration of white sand is doubled

from 0.48 kg/l to 0.96 kg/l (4 lbm/gal to 8 lbm/gal),
conductivities higher than 180 mD-ft will not be
achieved. To determine how this compares in terms
of value, VersaProp proppant seems to be a better
choice for this job than white sand. While there are
other proppants to use in this example, the pricing of
ceramics and bauxites has a great impact on this analysis, and any changes could qualify a different proppant
as the best choice.
When using VersaProp proppant at 0.24 kg/L (2 lbm/
gal), the simulator figure shows a little more than 300
mD-ft. Even using this proppant at a quarter of the original amount still allows stimulations at higher conductivities than the original amount of white sand at this stress
level. By matching up the pump schedules for 0.48 kg/L
(4 lbm/gal) and using this proppant, the simulator
shows very high conductivities.
References available.

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i ;i 1 ' ' 8

Febr uar y 2013 | EPmag.com

r
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'-

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.. i-+f , i i V $ !ulr;tF I,

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Orato

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f

Willow

15 key comparisons between Multistage Unlimited ,

plug & perf ,and ball-sleeve/packer completions
Based on 4.5-in (114.3 mm) casing

Unlimited stages?
Single-trip completion?
Less than 1 hour per stage?
Precise frac locations?
Required frac flowrates?
Number of frac units required?
Circulate fluids to frac zone?
Water and chemicals conservation?
Reduce the risk of screenouts?
Reverse out sand from screenouts?
Real-time frac zone pressure reading?
Unrestricted wellbore with no drillouts?
Eliminates rig-down/rig-up between stages?
Cemented wellbore isolation?
Coiled tubing required?

Multistage
Unlimited

Plug & Perf

(five clusters/stage)

Ball-Sleeves
and Packers

Yes
Yes
Yes
Yes

Yes
No
No
No

No
Yes

25-35 bpm
3-5
Yes
Yes
Yes
Yes

85-100 bpm
12-14
No
No
No
No

Yes
Yes
Yes
Yes
Yes

No
No
No
Yes
Yes

Yes

No
85-100 bpm
12-14
No
No
No
No
No
No
Yes
No
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We rest our case.

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EOR

Microbial EOR makes gains

New technology that introduces functional microbes along with nutrients
into the reservoir shows promise as an MEOR solution.
Scott Jackson and John Fisher,
DuPont Sustainable Solutions

MEOR is estimated to cost around US $10/bbl of produced incremental oil. The technology uses pre-existing
waterflood equipment. The periodic treatment is normally brought in on a tank truck and piped to the injector manifold for pumping. After the treatment is
pumped, the pipes are disconnected and the truck
drives away. Compare this method to alkali surfactant
polymer chemical EOR, which requires a significant
investment in infrastructure, from mixing tanks to additional pumps to treater tanks for hard-to-break emulsions. Above ground, MEOR has no footprint. Below
ground, once feedings are stopped, the ecology of the
reservoir will return to its natural state, and the effects
caused by the microbe treatment dissipate over time.
MEOR can be applied to high-water-cut wells in the later
stages of secondary production or at the beginning of a
waterflood treatment to increase production. It may also
be used in conjunction with other EOR technologies.
MEOR is a reversible process.

s oil prices have risen and remain high, EOR has

become an increasingly important topic among oilfield operators. EOR technology targets the tough-to-get
oil in conventional plays, typically the 55% to 80% of oil
left in situ after primary and secondary recovery have
been executed.
EOR has recently become a hot topic for many reasons, the biggest being maturing wells and high crude
prices that allow the technology to pay out. Much EOR
technology tends to be expensive and/or energy-intensive. Microbial EOR (MEOR), a treatment that uses
native microbes to recover oil, is an affordable, low-footprint option in fields of moderate temperature, salinity,
and permeability. Especially in sandstone and consolidated sandstone formations, this technology is simpler
to implement and can compete with the performance
MEOR and inoculation
of chemical EOR or can even be combined with it to
DuPont began to research MEOR eight years ago, and
increase its effectiveness.
in 2012 the companys Matrx EOR Technology was
Microbial treatment takes advantage of oil-releasing
introduced. Over the years, the research and logistics
qualities found naturally in certain microbe species native
to the oil reservoir environment.
MEOR can address flow conformance or residual oil saturation.
Flow conformance is improved
through a bioplugging mechanism in which a microbe produces
biopolymers that block preferred
channels and force water into
new locations of the formation,
improving sweep efficiency. The
oil release mechanism takes
advantage of the properties of
indigenous microbes to release
biosurfactants that reduce the surface energy holding the oil to the
rock. In most cases, MEOR consists of enhancing the activities of
FIGURE 1. A slim-tube pressure-drop test demonstrating bioplugging shows the contrast
these special microbes through
between using live injection water with native microbes only compared to inoculated live
the periodic injection of tailored
injection water. (Images courtesy of DuPont Sustainable Solutions)
nutrients downhole.
58

Febr uar y 2013 | EPmag.com

EOR

team became convinced that inoculation, in which a fermented batch of the functional microbe is injected in
large volumes as a broth prior to nutrient injection, is
critical to success. The method of putting only nutrients
down a well is not enough for consistent results, and lab
tests support this finding, as is highlighted in Figure 1.
The figure shows a pair of identical slim tubes treated in
an identical manner using live injection water to provide the background of organisms present in the well.
One slim tube, however, was inoculated with the preferred microbe while the other was not. Both were fed
nutrients. Only the inoculated slim tube presented the
desired bioplugging mechanism.
Once the reservoir is inoculated, the microbes are
fed a customized aqueous nutrient solution that is
pumped downhole periodically. DuPont relies on a
proprietary injection process protocol to ensure that
nutrient effects are propagated far beyond the wellbore
to prevent wellbore fouling and to ensure that the
inoculated microbes deep within the reservoir are fed.

Inoculation is repeated one or two times per year.

Nutrients are fed more frequently, generally on a
monthly basis. The effects of MEOR can take anywhere
from one to four months to show up since the effects
are deep in the reservoir. Like other EOR treatments,
the microbes need time to propagate into the reservoirs
and perform the function, factoring in biological
response time. This can be seen in data from a very
successful field trial carried out from 2010 to 2011
and presented in Figure 2. Three months after the
battery was inoculated and given monthly nutrient
feedings, a clear and sustained jump is observed in
the figure. The elevated production also lasted months
beyond the last feeding.
These results are from a partial treatment of a field in
Alberta, Canada, in which three out of 10 injectors in
this field served by this single battery were treated. The
increased production shown in Figure 2 represents a
15% to 20% increase in production rate for the affected
producers with a corresponding decrease in water cut

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59

Going GREEN?

CONSIDER POTASSIUM CHEMISTRY!

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EOR

FIGURE 2. A 15% to 20% increase in production rate was demonstrated for affected
producers with a corresponding decrease in water cut after the MEOR technology was
deployed.

after the MEOR technologies were deployed. Production rates rose due to an
increase in sweep efficiency using the bioplugging mechanism. Measuring the
increase in injection pressure at a constant injection flow was a challenge but
served as a key indicator that the technology was able to develop significant
and sustainable bioplugging of the reservoir as it was designed to do, significantly improving flow conformance. These results were achieved with a much
smaller environmental and capital footprint than other EOR technologies.

Overcoming biases
MEOR providers still fight to overcome biases in the oil and gas industry. Sustaining and encouraging microbial life in wells sounds counterintuitive to
many reservoir engineers and operators. Certain microbe classes such as sulfate-reducing bacteria (SRB) can be particularly damaging, contributing to
corrosion of ferrous metal surfaces and oil recovery equipment as well as
souring and plugging. However, the Matrx technology relies on nitrate-reducing bacteria, which are generally benign. Data show that the technology may
actually inhibit the growth of harmful SRB.

Future growth
Matrx MEOR Technology is steeped in the companys foundational experience with industrial biosciences and combines the companys expertise in
chemical and biosciences with its growing presence in the upstream oil and
gas sector. The company is now looking for partners in the US market to
deploy the technology. DuPont continues to evaluate other ways in which
microbiology can be used in various upstream processes or combined with
other EOR methods like CO2 flooding.
EPmag.com | Febr uar y 2013

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61

EOR

Enhancing production
with new gas lift valve
A modified design improves performance and reliability.

Alan Brodie, PTC

or oil fields with gas compression facilities, gas lift is

an established method of enhancing production,
especially late in field life when reservoir pressure may
decline or water production increases. Gas lift works by
reducing the density and therefore the hydrostatic pressure created by produced fluids in production tubing.
Consequently, the drawdown between the reservoir and
the bottom of the wellbore is increased, and higher production is achieved.
Gas lift involves circulating gas down the A annulus
between the production tubing and the production casing to as deep a location in the tubing as possible. The
gas enters the production stream via a gas lift valve
(GLV). The GLV is furnished with an orifice valve, which
is sized for critical flow to ensure any fluctuations in tubing pressure due to situations like slugging are not exacerbated by resultant fluctuations in lift gas rate.
The deeper the lift gas can be injected, the greater the
benefit. This is usually constrained by the discharge pressure of the gas compressor and the pressure of the column of liquid in the tubing when initiating gas lift or
when restarting following a shutdown.
Injection pressure-operated (IPO) unloading GLVs
often are used to overcome this constraint. They are
designed to transfer the lift gas injection depth to succes-

sively deeper locations within the well. Once the transfer

process is completed, it is important that the unloading
valves close reliably to ensure that all of the available lift
gas is injected from the deepest possible location.

Traditional solutions
Historically, the only reliable solution to the gas lift system
design and performance optimization challenge
described above has been to:
Conservatively select a lift gas injection depth that will
work under the worst-case combination of reservoir
pressures; and
Install a retrievable dummy GLV at a deeper location
in the well that could be accessed if the worst-case
combination does not materialize or if conditions
change, such as a fall in reservoir pressure.
In the event deeper gas lift became possible, the dummy
valve would be retrieved along with the existing orifice
GLV using wireline intervention techniques. The dummy
valve would then be replaced with a new orifice valve, and
the orifice valve would be replaced with a new IPO
unloading valve.
This activity is among the most challenging of all wireline operations and usually takes a few days to complete.
Furthermore, in deviated wells or wells where scale precipitation has occurred, it has been known to take a number
of weeks. At the worst, loss of wireline can result in the
requirement for workover if fishing operations prove

GLVs enable gas to be injected to improve production rates. (Images courtesy of PTC)

62

Febr uar y 2013 | EPmag.com

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EOR

unsuccessful. Consequently, it
can become very expensive,
especially in subsea wells.

A new solution
PTC has developed a new IPO
unloading GLV design that has
been field proven in hundreds
of wells. The GLV is designed
to be equally effective as both
an orifice/operating valve and
The new IPO valve can be used either as an unloading valve or as an orifice valve.
as an IPO unloading valve.
It flips between these modes
as needed.
the bellows and/or the unloading valve seal. It usually is
Consequently, a gas-lifted well now can be completed
not recommended.
without using a dummy valve at the deepest envisaged
The new valve design
lift gas injection depth. Instead, an orifice valve can be
The new IPO unloading valve design is modular, incorpoinstalled at that depth, and an IPO unloading valve can
rating in series both a standard orifice check valve module
be installed at the depth the conservative design assumes
and an unloading valve module. The latter incorporates a
the lift gas injection will be restrained to.
patented double-acting bellows design rated to 10,000 psi.
Depending on the actual reservoir and well characterisDespite this high-pressure rating, the double-acting
tics, the IPO unloading valve then can be reliably used
bellows facilitate unusually long valve stem travel. This is
as an orifice valve or as an unloading valve without the
because the charge pressure does not act on the internals
requirement for wireline intervention.
of the bellows, which are instead fully sealed and filled
Traditional valve design
with silicone oil. In this case, the charge (or dome) presOriginal IPO GLVs incorporated a metal bellows charged
sure acts only externally on the upper cross section of
with high-pressure gas to close the valve when the annuthe bellows.
lus pressure fell below the bellows charge pressure.
When the dome pressure is higher than the annulus
The design has not changed much since the first
pressure, the dome side of the bellows is fully compressed,
patent in 1944.
and the well side of the bellows is fully extended (and vice
PTC technicians identified numerous limitations in this
versa when the annulus pressure is higher than the dome
original design, most critically that the bellows move both
pressure). In both cases, the extent to which the bellows
axially and radially as the annulus pressure changes, and
moves is limited by the amount that the double-acting belthe amount they move is not physically constrained. Conlows can be compressed.
sequently, these bellows have a relatively low pressure ratConsequently, the bellows can be designed to travel a
ing, which limits the depth to which they can be installed
relatively long distance with a very small pressure differenin the well.
tial. This facilitates an extremely responsive mechanism
They also have to be relatively stiff, resulting in a slow
and long unloading valve stem travel, which addresses
response time and only a very short valve stem travel
the potential for erosion and facilitates rig time savings
between the open and closed positions. For this reason,
during unloading.
long-term gas lift operation through a traditional IPO
The double-acting bellows also is very reliable, having
unloading valve would most likely result in damage to
been tested by an operator to more than 100,000 cycles
without fail. The major benefit of this
is that when the bellows is in the open
position, the unloading valve becomes
almost hydrodynamically invisible,
meaning the valve can be used reliably as either an IPO unloading valve
The new design incorporates a bellows system with greater unloading valve stem travel
or as an orifice/operating valve.
and better reliability.

64

Febr uar y 2013 | EPmag.com

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EOR

Rhamnolipid biosurfactants: new

technology for EOR, remediation
For chemical or synthetic surfactants, rhamnolipids can be used as green replacements
and can increase oil recovery after primary and secondary recovery operations.

Todd Jones, AGAE Technologies LLC

ith the price of crude oil at US $85/bbl and higher,

financial incentives are feeding a renewed and
growing interest in using EOR methods to access trapped
oil in mature fields. While much of the oil has been recovered, experts estimate that more than 60% of the usable
oil remains in the ground after primary and secondary
recovery attempts. Hundreds of thousands of wells are
sited on top of this oil but are unable to bring it up.
This residual oil could amount to 1 Tbbl to 4 Tbbl
worldwide, with more than 380 Bbbl in the US alone.
However, with growing environmental concerns and
tightening regulations, many of the traditional EOR
methods are no longer viable. Thus, new techniques are
sought that can effectively and economically recover this
oil with less impact on local environments.
One approach showing great promise is the enhancement of existing chemical or synthetic surfactant formulations with natural green, renewable, and affordable
biosurfactants called rhamnolipids. American Green
Agricultural and Environmental (AGAE) Technologies
LLC, a biotech firm headquartered in Corvallis, Ore.,
has developed technologies to produce high-quality
and high-purity rhamnolipids in industrial quantities
for just such a purpose.
In addition to producing user-friendly and cost-effective
rhamnolipids, AGAE Technologies investigates EOR surfactant formulations that are enhanced by the addition of
rhamnolipids. Low concentrations of rhamnolipids can
lead to a significant reduction in the interfacial surface
tension (IFT) between water and oil trapped in diverse
reservoir matrices. Low IFT greatly facilitates recovery of
hard-to-extract oil. AGAE also works with remediation
experts to develop more effective remediation products
that include rhamnolipid biosurfactants.

Benefits of rhamnolipids
AGAEs findings show that not only do the new rhamnolipid-containing formulations bring down critical IFTs to
EPmag.com | Febr uar y 2013

Very low concentrations of natural rhamnolipid biosurfactant

can effectively facilitate recovery or remediation of crude oil.
(Images courtesy of AGAE Technologies LLC)

extremely low levels but also that the IFT effect can
be accomplished using very low concentrations of rhamnolipids and smaller amounts of chemical surfactants.
These results are significant on several levels. First, significant cost savings can be achieved for surfactant-based oil
recovery since the amount of required surfactants can be
reduced by very low concentrations of rhamnolipids. This
means less surfactant must be purchased and transported
to recovery sites.
Second, the environmental impact of recovery will be
diminished by the use of rhamnolipids and less chemical
surfactant product, as most chemical surfactants are
toxic to the environment. Rhamnolipids, on the other
hand, are earth-friendly and nontoxic. In addition, by
using less chemical surfactant, there will be less postrecovery chemical surfactant needing disposal.
Third, rhamnolipids used for recovery actually can
help remediate oil spillage and contamination after
recovery because the presence increases the bioavailability and mobility of petroleum hydrocarbons and acceler67

EOR

Chemical structures illustrate the representative rhamnolipids.

ates the natural endogenous microbial-based degradation, both in situ and ex situ.

are biodegradable and nontoxic, properties that make

them more environmentally compatible than most
chemical surfactants.
Because of the superior ability to enhance the breakdown over time of less soluble or completely insoluble
hydrocarbons in the environment, rhamnolipids have
been of particular interest to scientists and engineers
involved in the oil industry. In fact, rhamnolipids have
been studied for more than 60 years, but only recent
breakthroughs have made large-scale quantities of rhamnolipids available for commercial use.
Studies in the scientific literature have demonstrated
that rhamnolipids are effective surfactants for improving
oil recovery, remediation, sludge removal, tank cleaning, and pipeline flow. In all of these studies, rhamnolipids have been consistently effective at increasing the
mobility and bioavailability of water-insoluble petroleum
hydrocarbons. As natural surfactants produced by soil
bacteria that take up and use petroleum hydrocarbons
for growth, rhamnolipids seem to be tailor-made for
mobilizing oil components.

How rhamnolipids work

Surfactants are detergent-like, surface-active agents that
work in the boundary or interface between two immiscible substances to lower IFTs. In the case of oil and water,
this interface is the thin layer between the water and the
oil. Each surfactant molecule has a hydrophilic, or
water-loving, head that is attracted to water molecules
and a hydrophobic, or water-hating, tail that repels
water and attaches itself to the crude oil molecules.
These complementary chemistries loosen the grip of
the reservoir matrix on the oil and allow a temporary
interaction with water to sweep the hydrocarbons toward
an extraction point. Most surfactants, however, are of
petroleum origin and synthetically produced and show
limited effectiveness in extreme conditions.
Rhamnolipid biosurfactants, in contrast, are glycolipids produced naturally in the earth by the bacterium
Pseudomonas aeruginosa, which is commonly found
in contaminated soil. These exhibit higher selectivity
and specific activity in extremes of pH, salinity, and
temperature than most chemical surfactants. For these
reasons, scientists have long been interested in using
rhamnolipids as green replacements for chemical or
synthetic surfactants.
Rhamnolipids from AGAE are produced from renewable feedstock and can be produced in virtually unlimited quantities. Due to excellent surfactant activity,
rhamnolipids can be used in very low concentrations
and in extreme conditions. In addition, rhamnolipids
68

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Febr uar y 2013 | EPmag.com

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RESERVOIR
CHARACTERIZATION

Appraising ultra-deepwater reserves

A new approach is intended to reduce uncertainty.

William Head, RPSEA

very oil or gas company that has ever existed has put
some kind of number on reservoir performance. That
number might have been in barrels, cubic feet, flow rate,
pressure, metric tons, BTUs, water, a ratio, or some other
measure, all measured over time. Time then was remeasured in money. That money translated to an economic
metric such as net present value or booked reserves. Such
metrics became the decision focus for the future of project investments. The actual metric of risk the investors
were willing to take was often parlayed back to a machine
(such as the popular computerized Monte Carlo statistical method) to grant comfort to the risk-takers.
While we can calculate a risk-money number to several
significant digits, how far we drift from hard reality using
number analysis is too frequently measured in dry holes
and premature production failures. This part of science
is more of an art, and art is in the eye of the beholder.
Therefore, science and engineering are turning to a
machine process once again to see if there can be a
more deterministic method we can use.

New research

such as seismic data and limited well test data. Ultimately, it would calibrate extensively using productionengineering flow data. Systematic assessment of the
information content in each type of data will therefore
be possible.
One large objective of the study is to prove that a geologic model can be calibrated to actual dynamic reservoir
performance using a statistical model selection approach.
Moreover, the objective is to prove that calibrated models
can be used to estimate key reservoir flow connectivity
characteristics discernible from early appraisal data such
as well tests. The key here is in early appraisal, the decision
time on just how big the development footprint should be.
Marathon Oil provided production performance and
well-test data for this project. The existing first-generation
software for building a reservoir model, performing
model selection, and subsequently assessing flow connectivity was created using seismic, regional well data,
and a few local well examples. The model was tested for
mechanical defects against preliminary versions of samples within Marathons Lobster dataset.
UT is continuing its work on the RPSEA contract in
2013. The latest effort will determine and verify the software using history matches against the full Lobster
dataset and will confirm that the model is robust in predicting reservoir conditions. This segment of the work
will concentrate on the probabilistic assessment of reservoir flow connectivity conditioned to geologic parameters
using a reservoir database. The plan is to assess complex
reservoir characterization of turbidite reservoirs through
matching production performance. Finally, the work
should validate proxy functions developed for well test
analysis using pressure data and early well history to
match results.

The University of Texas at Austin (UT) received a

research contract with the Research Partnership to
Secure Energy for America (RPSEA) to examine the
possibility of deriving a repeatable statistical method
to describe reservoir performance parameters ahead
of major development using 3-D seismic, petrophysical
well logs, and standard engineering performance data.
The overall objective is to develop data interpretation and
computer statistical techniques to assess flow connectivity
characteristics of deepwater sediments.
This is a very different approach from
This architecture is typical of a turbidite
the traditional practice. Traditional practice starts with regional geology collection, system found in the Gulf of Mexico.
(Images courtesy of RPSEA)
seismic acquisition and interpretation,
seismic attribute estimates, volumetric derivations (usually based on elevation and
porosity), a test well or two with some flow
tests at a tiny vertical interval, and petrophysical logs. The goal is to progressively update a
model for an ultra-deepwater turbidite reservoir initially using very limited appraisal data
70

Febr uar y 2013 | EPmag.com

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RESERVOIR
CHARACTERIZATION

Probable modeling
Researchers at the UT Bureau of Economic Geology
have spent the past decade mining previously published
and unpublished research for information on the characteristics of deepwater deposits. These data are housed in a
proprietary database, which now contains thousands of
measurements of sand and shale-bed lengths and thicknesses, spatial geometries, porosities, permeability, lateral
connectivity relationships, lateral overlap, and vertical connectivity. In addition, programs in outcrop study have
yielded decades of knowledge on below-seismic heterogeneity in deepwater deposits.
Subsequently, these statistics, together with the well-specific information provided by Marathon, will be used to
construct a suite of plausible/equi-probable models.
The fast proxy depicting the relationship between reservoir connectivity and flow performance can be used to
perform fast uncertainty assessment and sensitivity analysis. Using the algorithms, including Growthsim and random-walker algorithms, researchers build a suite of
geologic models and corresponding dynamic simulation
models based on appraisal well data and appraisal plus
development well data coupled with seismic data. Testing
and screening of these models with production history
from the Lobster field will use existing automated historymatching or model selection techniques.
Once again, science and engineering decision-makers
turn over part of the decision outcome to the Monte
Carlo predictor. The multiple point product terms in the
proxy expression are representations of the higher order
connectivity of the reservoir petrophysical model. Due to
uncertainty in the detailed characteristics of the reservoir,
the multiple point product terms are themselves uncertain. The probability distributions describing the uncertainty in specific higher order terms can be calibrated on
the basis of the suite of history-matched reservoir models
for the Lobster field. Monte Carlo uncertainty estimates
for flow responses such as oil saturation can be constructed by sampling from the uncertainty distribution
for specific reservoir connectivity terms (keeping the
other terms constant). The results will be presented in
the form of connectivity-response surfaces that provide a
visual representation of the relationship between different measures of reservoir connectivity and the corresponding response.
Multiple representations of reservoir compartmentalization also are possible considering the uncertainty in
the relationship between seismic two-way time and actual
horizon depths. The initial suite of reservoir models used
during history-matching also can take into account the
72

Turbidite lobes were extracted using seismic volumes (left) and

stochastic modeling of permeability variations within a lobe
(right) using well data and production information.

prior structural uncertainty. The final history-matched

models can be reanalyzed for reservoir compartmentalization by performing spill point analysis.
The preceding analysis is predicated on the ability to
synthesize reservoir models with and without a diagenetic
overprint. Diagenetic cementation in deepwater deposits
is known to occur in deeply buried strata. Several scenarios of total and effective porosity distribution will be
designed and used to condition models examining the
effect of diagenetic petrophysical alteration of flow in
these deepwater deposits. Unconditional models of the
diagenetic indicator can then be simulated. The emphasis
will be on designing some scenarios for diagenetic distribution of cements as examples of how diagenesis plays
out in other deepwater occurrences.
The focus of the current phase of work is to develop
and history-match models for the Lobster area that reflect
the main architectural elements of the Lobster field. Turbidite-producing intervals occur in the form of thousands
of small lobate gravity flows that are amalgamated into
what appears as a sheet. This suggests the presence of
flow baffles and complex connectivity even within a single
depositional sequence. These internal heterogeneities
could impact flow connectivity and the long-term production performance of the reservoir. The development of a
technique to represent heterogeneity in flow connectivity
consistently across a range of scales is proposed. These
multiscale reservoir models will then be evaluated for the
impact on past flow performance as well as the future
productivity of wells.
The final technique and software will be available to the
entire industry. Of course, those who use it should question the accuracy of the results. Risk, size of a deepwater
footprint, and total investment expense will always involve
judgment. This program will add a significant tool for
those who need to look where they cannot see and predict what they cannot directly measure. The less we guess,
the safer we all will be.
Febr uar y 2013 | EPmag.com

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RESERVOIR
CHARACTERIZATION

Evaluating reservoirs
with a sharper focus
A new tool combines technology, application expertise, and
geosciences consulting to reduce formation testing uncertainties.

Charles Fensky, Weatherford International

o help optimize reservoir stimulations, operators

increasingly rely on mini-fracs, a small fracturing treatment performed ahead of the main stimulation job.
Weatherford has introduced a new reservoir evaluation
system (RES) tool that allows mini-frac operations to be
performed in less time and at a lower cost while retaining
the same valuable insight into the nature of the reservoir.
Conventionally, mini-fracs have been run off the
drilling rig by pumping fluid into a packed-off section
of the wellbore and measuring the pressure at which
the formation begins to break down and allow fluid
ingress. While mini-frac runs provide valuable insight
into the pressures required to fracture the formation,
their deployment from drilling rigs has proven costly
and time-consuming. In addition, this method has been
imprecise in its ability to measure formation breakdown
pressure in a narrow window.
Wireline formation testers have been used for years
as a mini-frac alternative to drilling rigs, but their tendency to pump fluids into the wellbore at erratic rates
introduces uncertainty in the ultimate formation breakdown measurement.

Technology for tortuous paths

The evaluation tool is housed in a uniform 4.5-in. outside
diameter body, which enables it to be run in smaller holes
and tortuous well paths. Once the tool has arrived at its
required location, either straddle packers or a high-articulation probe pad are deployed to maintain a tight seal
against the wellbore during a measurement. This both
lowers the risk of getting stuck and limits the operators
exposure to a dropped signal during data acquisition.
The tool is deployed downhole via wireline, which also
provides the power and telemetry necessary to place it in
position. The pad conforms to the uneven and irregular
surface of the wellbore wall for more accurate pressure
readings up to 8,000 psi.
Once the tool has verified its seal against the wellbore
via the wireline link to the surface, formation pressure
74

The RES tools small and uniform 4.5-in. outer diameter helps
minimize the risk of sticking and tool loss, a particular benefit
for slim holes with tortuous well paths. (Images courtesy of
Weatherford International)

evaluation begins by pumping pressurized fluid into the

well. The RES pump has nearly twice the flow throughput
of conventional formation tester pumps approximately
0.7 gal/minute vs. 0.4 gal/minute and pumps at a steady
flow rate.
Further accuracy in pressure measurements is assured
through the use of dual high-caliber quartz gauges, which
represents a departure from the conventional technique
that incorporates a strain gauge as a backup to a main
quartz sensor. Because the tool provides these pressure
data back to the surface as a test is under way, quality control evaluations of the data can be performed and corrections to the pumping rate made in near-real time.
Once the data are collected, the seal is terminated, and
the tool is brought back to surface. As the pressure bleeds
off from the test area, the miniature fractures created during the test seal off. This spot of local weakness will later
be sealed with cement during the completion and will not
be able to propagate and steal fracturing fluid.
Febr uar y 2013 | EPmag.com

Reducing risk and uncertainty

in unconventional reservoirs .
. .r y

q
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ResSCAN Fracture Diagnostic:

This attribute map, from a multicomponent seismic ResSCAN, shows
the naturally occurring fracture complexity in the reservoir interval. The
yellow areas indicate multi-directional natural fracturing and correlate
with wells having above average total production. The blue-black areas
indicate areas with ou frac turing or fractures iri a s ingle direction.
Hi g h Facture Density

t
Low Facture Density

WELL PRODUCTION
Ab ove Average Total Production -

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data processing group, ResSCAN programs full y leverage upfront geological , petrophysical,
and rock physics analysis to establish which seismic attributes, potentially from
multicomponent data , tie the geology and rock physics for a given shale play. As a
result , operators gain vital information to help them make better drilling and completion
engineering decisions . To learn more, visit

"
91

GEOVENTURES' "

AREAS OF EXPERTISE

Unconventional Reservoirs
C h a l l e n g i ng En v i r o n men t s

Complex Geolog ies

Basin Exploration
Reservoir Exploitation

RESERVOIR
CHARACTERIZATION

A cooperative engineering effort

The tool measures the

A deeper level of formation insight is realized through

close collaborative work between the operators logging
unit personnel and technology field experts. This collaborative team uses proprietary algorithms and software to
stream output to offsite stakeholders and decision-makers.
Data sharing is performed in a fully transparent manner,
enhancing the efficiency and accuracy of further well
completion and stimulation decisions.
Further benefits are realized by integrating the tool with
other wireline-deployed evaluation technologies designed
specifically for smaller diameter wellbores.
Data analysis is another integral part of the evaluation
system, designed to help the operator make decisions that
impact the completion method, well spacing, and future
field development. Typical pressure profile analyses conducted include identification of pore fluid type, estimation of pore fluid properties, estimation of fluid contacts
and hydrocarbon column heights, quantification of depletion and overpressure, identification of hydrodynamic
conditions, and investigation of lateral and vertical reservoir continuity and connectivity. In addition, petrochemical analysis provides estimates on formation permeability
and high-resolution borehole temperature information.

formation response

Proving the potential

The technology was first successfully deployed in shale
plays in North America to measure formation breakdown
pressures and pinpoint the locations best suited for stimulation. Most recently, it was deployed for a client in Spain
to identify suitable formations for CO2 storage as part of a
feasibility study for a carbon capture and storage project.
In particular, the client wanted to evaluate formation
breakdown pressure to limit CO2 ingress to the rock,
which is a necessity as EU environmental regulations
limit fracturing activities.
The RES tool was deployed as part of an integrated suite
of services to ensure the successful drilling, completion,
and production of each well, although initially it was used
to collect and analyze pressure-volume-temperature and
water samples. As the project evolved, discussions between
the operator and the service companys personnel uncovered the potential for the tool to provide mini-frac evaluations. To date, the system has successfully completed eight
mini-frac studies in four wells for the operator, with each
study consisting of pressure-injection and leakdown cycles
over a two-day period. Each well test fulfilled the clients
screening requirements and confirmed the tools ability to
more precisely pinpoint formation breakdown pressure.
Ultimately, the operator gained confidence in the tools
76

and the breaking

pressure of the
rock with a
high degree
of accuracy.

ability to help plan future CO2 injection programs while

complying with EU environmental guidelines.
The company is evaluating additional field applications,
including the very tight rock formations of Australias coal
seams. In particular, the tool can be used to obtain representative reservoir pressures in coalbed methane using a
combination of precise drawdown and injection techniques. By performing a small fluid injection into the
formation and letting it build back to its original state,
the operator obtains the required pressure measurement
more efficiently and in a shorter timeframe than with
conventional measurement methods.
The tool also has potential use in new shale plays where
historical knowledge about formation breakdown pressures does not exist. Gaining this upfront knowledge
via the RES might allow field economics and frac stage
design to be planned more accurately before frac trucks
and other equipment are brought to the field. For example, instead of being forced to deploy frac plugs or packers at equally spaced intervals within the lateral, the
information obtained by the new evaluation tool allows
the operator to space packers at variable intervals to isolate and fracture those sections that are expected to yield
the most production. Ultimately, this increases the probability of project success and helps the operator avoid the
risk of deploying too few or too many frac trucks and
incurring unnecessary costs.
Febr uar y 2013 | EPmag.com

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DRILL BIT
TECHNOLOGY

Advancing hard/harsh rock drill bits

A new bit design improves ROP and reduces tripping.
Alexis Garcia, National Oilwell Varco

significant challenge for oil and gas operating companies worldwide is to maximize drill bit run intervals within interbedded, hard-to-drill rock sections. In
these more challenging applications, polycrystalline diamond compact (PDC) and roller cone insert designs are
pushed to their limits and often fail due to PDC thermal
fatigue, severe abrasion, bearing failures, or impact damage. This translates into additional trips for replacing bit
types or cleaning the hole from junk left in the hole,
representing significant added costs.
An additional cost that operators incur is represented
by the utilization of multiple bits to finish these intervals
when a single diamond-impregnated bit can complete
the interval using a mud motor or a turbine. Standard
mud motors have a maximum circulating life of 250 to
300 hours depending on temperatures, fluid type in the
string, and a variety of other downhole environmental
variables. When a challenging zone is encountered that
results in the need for a high-speed drive technology,
high-speed mud motors or turbines are often used with
impregnated-diamond bits to complete these intervals.
Tool selection criteria will consider longevity, torque
capability, and temperature tolerance, amongst other
variables. From the directional drilling aspect, traditionally only mud motors were used,
but currently both motors and turbines are used to steer the well
toward the objective.

Advanced design
To meet the industrys needs,
National Oilwell Varco developed
the DuraDiamond Evolution
diamond-impregnated line of
drill bits. The drill bits were
designed as a result of knowledge
gained through experience combined with the latest materials
engineering that have pushed the
evolution of conventional designs,
incorporating innovative design
concepts coupled with the
78

advances in manufacturing technology to respond to the

hardest rock drilling market.
The drill bits combine advanced cutting structure
design and materials engineering to deliver improved
durability and ROP, enhancing the conventional diamond bit range of applications. The bits are proficient
in drilling hard, abrasive, and interbedded formations
faster. The bits were designed for multiple drive types
and have three profiles for application-specific requirements. The design also includes antisticking features for
bit sticking problems. The gauge retention has been
dramatically enhanced as well.

Bit durability

The design enhances durability of the bit, creating a longlasting cutting structure that can stay in the hole longer
and achieve longer intervals. New design features are
included to mitigate specific problems like localized wear
in specific lithologies via change in grit mixes, profiles for
drive type/directional trajectory and formation abrasion
potential, selection in blade layouts and sleeve materials
(matrix or steel), and API pin and short-gauge configurations for directional applications on motor assemblies.
With these features, the product becomes more versatile
for drilling not only hard and interbedded rock layers
but also interbedded sequences of varying compressive
strengths. The bits consist of two series: Sub Series 5
and Sub Series 7. The Sub Series 5
bit design includes abrasion- and
impact-resistant PDC cutters placed
in optimal positions in the profile of
the bit. The sunken thermally stable
polycrystalline diamonds were engineered to the cone and nose areas,
providing increased wear protection.
This series has sharp and straight bit
blades for drilling through softer formations that require shearing action.
It has an interruptions option for
additional shearing and cleaning in
softer formations. It also has optimized hydraulics for efficient cooling
This 6-in. DD5760 bit achieved a country
and cleaning.
record in Colombia. (Images courtesy
The Sub Series 7 bit has an
of National Oilwell Varco)
increased blade count added to
Febr uar y 2013 | EPmag.com

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DRILL BIT
TECHNOLOGY

the center of the bit to improve durability. The optimizing of the blades layout increases the contact surface
area, which improves the ability to remove more rock.
The round blade geometry provides more cutting surface, and the shoulder of the bit has dedicated ports and
improved hydraulics, enabling it to get sufficient fluid,

proper cooling, and cleaning. Selection criteria for

either sub series will depend on the specific application.
Due to the high rotational speeds, wear in abrasive
lithologies tends to be accelerated; therefore, the use of
maximum gauge pad protection and PDC protection of
the turbine sleeve is recommended. The use of steel turbine sleeves in conjunction with a turbine through a very
abrasive formation is not often recommended due to the
lower abrasion resistance of the steel turbine sleeves.
With their thicker and stronger blades and wider
water courses, these bits have overcome the issue of having occasional blade breakage and have reduced the
tendency of balling when drilling softer formations.
The bit features include a heavy-set gauge that protects the bit and prevents undergage dull condition.
Other features of the bit overcome mechanical bit sticking, which has represented a significant problem in
some areas.

Setting records

The Sub Series 5 bit features sunken thermally stable

polycrystalline diamonds.

The Sub Series 7 bit features an enhanced blade count.

80

The bits allow for outstanding ROPs and have set

numerous records in the field.
Recently in Oman, an 8-in. DD4540 drilled an interval of 1,276 m (4,187 ft) at 2.9 m/hr (9.6 ft/hr) on turbine assembly, generating savings of more than US
$400,000 for the operator. The bit performed exceptionally well, delivering the directional objective and achieving above-average ROPs compared to direct offset
diamond impregnated drill bit runs.
In a challenging turbine application in Texas, a 6-in.
DD5760 drilled an interval of 934 m (3,062 ft) at 2.7
m/hr (8.8 ft/hr), achieving significantly more footage
than direct offset runs in a single run. The assembly
built inclination from 73 to 89 through a sequence
of hard sandstone, shale, and siltstone sections.
In a deep well in Algeria with a depth out of 5,425 m
(1,780 ft), two 6-in. DD5560S bits drilled from shoe to total
depth, where an average of three to four bits was required
on direct offset wells. The bits drilled 222% farther and
reduced cost per meter by 35% compared to offsets.
A 6-in. DD5760 achieved a country record in Colombia
in terms of interval drilled by one single bit through the
reservoir section, completing the entire 2,336 m (764 ft)
through very hard and abrasive sequences. The bit outperformed offset runs by 97% in intervals drilled and
replaced three impregnated offset bit runs. The bit
showed an overall good dull condition.
The diamond-impregnated drill bits provide a solution to the industry problem of needing a bit that maximizes drill bit run intervals within interbedded,
hard-to-drill rock sections.
Febr uar y 2013 | EPmag.com

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DRILL BIT
TECHNOLOGY

Drill bit designed to return

microcore samples to surface
Depending on the formation strength and BHA architecture, microcore fragments
and even intact microcores can be recovered at the shakers.

Duane Shotwell, Tercel Oilfield Products

ow penetration rates and a lack of quality cuttings are

two of the main drilling challenges in drilling deep
reservoirs. The extreme drilling conditions in these
reservoirs are typically characterized by high hydrostatic
pressures of more than 20,000 psi and temperatures of
more than 149C (300F).
One of the primary operational issues of concern is
the hard to drill behavior of the formations due to
either the high intrinsic mechanical properties of the
rock or from strengthening of the rock due to the high
confining pressure. The confined compressive strength
of the formations often exceeds 40,000 psi. The drilling
of such hard formations usually requires specific drilling
systems to achieve an efficient ROP. The best solution
often involves the use of high-rpm drive systems such as
turbines or high-speed motors, and a fixed cutter bit is
usually the drill bit of choice.
A new drill bit solution has been jointly developed by
DDS, a Tercel Oilfield Products company, and Total SA
to address these problems. The MicroCore bit concept
was designed with the goal of continuously generating
microcores of the formation while drilling while simultaneously improving the cutting efficiency of the drill bit.
Not only does this concept improve the quality of the
cuttings recovered at the shakers while drilling, but it
also improves the drilling performance of the bit when
combined with application-specific design methodology.
Due to the limited depth of cut of fixed cutter bits
in drilling these deep hard rock formations, real-time
formation evaluation and analysis using cuttings are
extremely difficult. The average size of the cuttings
recovered at the shakers is extremely low (0.02 mm
to 0.2 mm), making the cuttings irrelevant for geological identification of the formations. This occurs with all
types of fixed cutter bits, including heavy-set polycrystalline diamond compact (PDC), diamond impregnated, and natural diamond fixed cutter bits. Geological
identification of the formation through traditional mud
logging becomes a much more complex task and could

82

A fixed cutter bit leaves the center of the hole uncut (1), which
creates a core. This core is broken by the bit itself (2) and
ejected at the side through a specifically designed junk slot (3).
(Images courtesy of Tercel Oilfield Products)

require an expensive coring operation to collect formation and geological information needed for rock identification and evaluation.

How the bit works

The MicroCore bit concept consists of a fixed cutter
bit that leaves the center of the hole uncut. The lack
of bit center leads to the creation of a core. This core
is broken by the bit itself and ejected at the side through
a specifically designed junk slot. The core is then carried
to the surface along with the other cuttings, which leads
to high-quality cuttings for surface examination. The
improvement is very important where normal cutting
quality is poor due to use of turbines or high-speed
motors combined with impregnated or natural
diamond bits.
Febr uar y 2013 | EPmag.com

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DRILL BIT
TECHNOLOGY

The microcores and microcore fragments generated by

this bit concept differ from conventional cuttings as the
texture is preserved from the shearing action of the cutting process. The cuttings produced are therefore much
larger and undisturbed. The relevant petrophysical and
geomechanical properties can be more easily evaluated,
and these are more representative of the in situ formation
properties. Cuttings of this type can be invaluable when
used in conjunction with well-known formation evaluation
services and technologies such as advanced cuttings characterization, fluid logging and analysis in real time, and
digital rock physics.
The shearing mechanism that induces the breakage of
microcores requires less energy than a conventional cutting process occurring in the center area of the drill bit.
In a fixed cutter bit the center of the bit is one of the most
inefficient cutting areas, as the cutting speed of the cutter
is very low or none. Compared to a conventional drill bit
design with a fully closed cutting structure, a significant
part of the energy used in the center area can be saved.
Applying this available energy to the reduced cutting
structure allows the production of a higher depth of cut
for a given weight on bit, therefore increasing the cutting
efficiency and overall ROP of the bit.
By removing the center, increased penetration rates can
be obtained depending on the bit diameter. This increase
is in the range of 15% to 25% in the laboratory when rock
is drilled under atmospheric pressure condition. In field
application the increase is higher, depending on the effect
of the confining pressure, and has been observed at a
value higher than 100% in low-ROP applications.
Application-specific designs can be produced for all types
of fixed cutter bits, including heavy-set PDC, impregnated,
hybrid, and natural diamond bits. The size of the microcore
will range between 10 mm in diameter for smaller bit sizes
of 6 in. up to 40 mm in diameter for 17 in. and larger.
Depending on the formation strength and bottomhole
assembly architecture, microcore fragments and even
intact microcores can be recovered at the shakers.

Wide variety of formations cored

The MicroCore bit technology has been deployed in a
wide variety of applications around the world, ranging
from drilling conventional development wells to reducing
the number of coring jobs required in exploration wells.
Although originally developed for HP/HT environments,
this technology was expanded to provide more conventional applications with benefits of improved drilling efficiency and quality formation samples.
Successful applications have been completed in many
different environments, including highly confined reser84

The microcore cuttings (bottom) are much larger than conventional cuttings (top) and can provide formation and geological
information needed for rock identification and evaluation.

voirs in the North Sea; compacted or interbedded formations in Saudi Arabia, North Africa, and Pakistan; sticky
shales in Colombia, the North Sea, and the US; and the
deepwater presalt hard carbonates in Brazil. Runs have
been successfully completed on bent motors, rotary steerable systems, and turbines. While most of the exploration
applications were vertical, field development applications
were completed with an inclination of up to 65. In each
case these challenges were met with application-specific
designs in a variety of bit sizes, types, and International
Association of Drilling Contractors (IADC) codes. MicroCore bit designs can be made in various cutting structure
types including PDC, impregnated, hybrid, and natural
diamond, in both matrix and steel bodies.

Case study
A major operator drilling offshore on an ultra-deepwater
well wanted to obtain better formation cuttings while
drilling hard formations in the 12-in. section. This section
of the well is typically drilled with an impregnated bit run
on a turbine. Consequently, the cuttings typically produced
are very fine and not useful for formation evaluation. Due
to the high drilling costs, the operator was also concerned
about the penetration rate and durability of the bit. Tercel
Oilfield Products designed a 12-in., eight-blade, 16-mm
cutter, heavy-set PDC bit (IADC M422) for the application.
The resulting bit drilled 96 m (317 ft) in 99 hours, which
was very comparable to the offset bit performances. Not
only did the bit produce a good run in both penetration
rate and meters, it continuously produced large microcore
fragments throughout the entire run.
Febr uar y 2013 | EPmag.com

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DRILL BIT
TECHNOLOGY

PDC drill bit innovations drive

performance in challenging zones
North American operators are increasing ROP and achieving fewer bit runs using advanced
conical-shaped PCD element and rotating PDC cutter technology.
Steven Segal and Robert Ford,
Smith Bits, a Schlumberger company

s the exploration and development of hydrocarbons

intensifies across North America, bit designers have
introduced two new products to maximize drilling performance; a conical diamond element fails the rock more
efficiently at the bit center thereby increasing ROP while
a polycrystalline diamond compact (PDC) cutter that
rotates on its axis significantly extends run lengths by
using its entire circumferential diamond edge.

By reconfiguring the bit with the Stinger element, a column of

rock is allowed to form at the center of the cutting structure,
which is continuously crushed and fractured, increasing drilling
efficiency. (Images courtesy of Schlumberger)

Conical diamond elements improve ROP

Efforts to develop a more efficient PDC drill bit have
focused on the bits cone area because of two inherent
inefficiencies: limited rock removal at the center of
the wellbore from relatively low rotational velocity of
the center cutters and the potential of bit torque fluctuations from large variations in the depth of cut as
center cutters bear the highest load on the bit. Both
86

inefficiencies can limit ROP and make drill bits more

susceptible to the damaging effects of lateral/torsional
shocks and vibration.
Designers theorized that removal of these central cutters would improve the overall shearing efficiency of the
bit by allowing a stress-relieved rock column to develop
and then be destroyed using the Stinger conical-shaped
polycrystalline diamond (PCD) element. This new element has a unique conical geometry combined with an
ultra-thick synthetic diamond layer that is twice as thick
as those on conventional PDC cutters. Its material is
engineered to provide superior resistance to abrasive
wear and impact loading. To maximize drilling performance, an integrated drill bit design platform software
was used to optimize the cutting structure and model
cutting behavior.
The conical element is positioned at the center of the
cutting structure with the conical tip pointing vertically
down toward the rock. As the bit rotates, the element
engages the rock column, which is continuously pointloaded with high axial compression to fracture and
destroy it. This mechanism enables the bit to deliver
faster ROP and reduce the potential for vibrations.
Fracturing of the rock column also creates larger
cuttings fragments for improved formation analysis.
Laboratory testing was conducted to verify the
bottomhole profile and investigate bit behavior with
the conical diamond element bits. Using a full-scale
pressurized drilling simulator, different rock formations
were drilled with conventional PDC drill bits and bits
equipped with a conical element. The bottomhole pattern created by the different bit types was examined,
confirming that the bit with the conical element had
generated a small-diameter rock column at the very
center of the borehole. The cuttings collected during
the drilling were much larger than those generated
from the conventional PDC drill bit.
Before field trials were started, engineers identified
existing bit designs that were meeting expectations but
concluded that further enhancements were desired
to improve overall drilling performance. These designs
were then modified to include the conical element and
Febr uar y 2013 | EPmag.com

When Every Run Counts

ULT ERRAM

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016

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When Every Run Counts, operators

are calling on Ulterra to provide
solutions to lower their drilling costs.
Named "the fastest growing drill bit
company" by a prestigious oilfield
research company, Ulterra is the bit
supplier of choice when drillers
require a partner with unmatched
credibility and a commitment to
excellence.
Ulterra is unique by its flexibility to
changing industry dynamics and its
ability to respond to a customer 's
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solutions. Its strength resides in the
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Contact your local representative today to find out more

about the entire Ulterra line of premium drill bit technology.

www.ulterra.com 1 420 Throckmorton Street I Suite 1110 1 Fort Worth,Texas 76102 1 +1 817 293 7555

DRILL BIT
TECHNOLOGY

released into the field for

The ONYX 360 rolling
performance evaluation. A
PDC cutter was developed
detailed study of more than 30
following several years of R&D
individual runs in the western
to determine the ideal mateUS demonstrated that more
rial, rolling mechanism design,
than 50% of the runs with the
and proper attachment for
new drill bit were rated as delivimproved drilling performering above-average ROP, with
ance. The rolling PDC cutter
an average ROP gain of 20%
is mounted in the bit body
over offset bit runs. In the
and allowed to rotate freely.
Texas and Oklahoma PanhanAs the cutter revolves in its
dle region, the average ROP
pocket during drilling, the
improvement was 25%.
entire circumference contacts
In the Williston basin in
rock, which redistributes
North Dakota, field trials of the
wear. This ensures that the
conical element demonstrated
diamond cutting edge remains
even better performance with
sharper longer during drilling.
the PDC drill bit removed from
Because these are cooled more
In a field test dull grade, the ONYX 360 rolling
the hole in good dull bit condiefficiently, the cutters survive
cutter (bottom) shows light uniform scarring
tion, exhibiting no wear on the
longer downhole, leading to
across its entire circumference, while the
conical element. The new drill
improved bit life.
nearest fixed ONYX cutter (top) was graded CT.
bit was run on a steerableExtensive laboratory testing
motor bottomhole assembly
was conducted to evaluate the
(BHA) in similar vertical-hole applications through a
durability of the rolling cutter. Drilling a granite test
highly mixed and interbedded sequence of formations,
sample, the new cutter demonstrated a six-fold increase
including sand-shale, salt, and limestone/dolomite/
in cutter life compared to premium fixed cutters. Dull
anhydrite, with an unconfined compressive strength
analysis of the rolling cutter demonstrated that it had
range from 2,000 psi to 25,000 psi.
fully rotated, displaying even wear over its entire 360
A conventional 8-in. PDC drill bit without the conical
circumference. To field-test the rolling cutter, the techelement from Smith Bits drilled a 1,995-m (6,583-ft) secnology was deployed in an application where convention to kickoff point at an ROP of 29.4 m/hr (97 ft/hr).
tional PDC drill bits were experiencing heavy wear over
In contrast, a PDC drill bit fitted with the conical element
relatively short run intervals.
drilled similar interval lengths but with an average ROP
The Granite Wash formation is composed of quartz
of 51 m/hr (168 ft/hr). The runs included an operator
and feldspar with quartz/calcite cementation. The forrecord ROP of 61.5 m/hr (203 ft/hr) in one well. Overmation is often developed using a steerable motor BHA
all, the average ROP of drill bits fitted with the conical
to drill a long lateral for increased reservoir exposure.
element was 46% higher than the next best average ROP
PDC drill bits were mounted with rotating PDC cutters
of 34.8 m/hr (115 ft/hr) reported by other drill bits used
placed adjacent to fixed cutters to evaluate the performin offset wells.
ance and wear characteristics of the rolling cutter. These
bits delivered consistent increases in footage of 20% or
Rotating PDC cutter extends bit life
more in the Granite Wash formation, and dull evaluation
Despite 40 years of prolific use, however, there still exists
of the cutters showed no cutter loss and 100% cutter rotaan inherent limitation of the fixed PDC shear element
tion. Regular fixed PDC elements showed wear flats T1 or
only a relatively minor portion of the cutters edge congreater, while the rotating PDC cutters showed light unitacts the formation. As a result, only a small part of the
form scarring over the entire diamond edge.
entire cutter contributes to the bits durability and
Advancing PDC technology
drilling performance.
As the fixed cutters engage the formation, the cutters
Through greater ROP and enhanced bit durability, coniwear and chip due to mechanical and thermal effects. This
cal-shaped PCD elements and rotating PDC cutters are
continual degradation of the cutters edge causes a loss in
aiding operators whose drilling programs have helped
shearing efficiency that in time terminates the bit run.
reverse the decline in US oil output.
88

Febr uar y 2013 | EPmag.com

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Improved geological
insight while drilling faster
The MicroCORE T'" D r i l Bit improves ROF by U p to 351r6 , w h i l e delive ' i'nq_
hig h quality Jndisturbed c u t t i n gs , generat ' nq ( ruc ial geoIog ica
i n f o r m a t i o n and g i v i n g cperator s the abi lit y to analy z e a c o n t in u o u s
flovinf valriable format inn mit pri, I
TOTA L
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TOTAL patented technolo

www.terceloilf ield.co

TERCEL
PRA CTICAL INNOVATIO

WELLHEAD PAD
DESIGN/EQUIPMENT

Economical solutions meet state and

federal mandates for gas flaring
Vapor recovery unit offers economic and environmentally friendly solutions
for enhanced production using recovered gas vapor.
Sheri Vanhooser and Steve Torrez,
Compressco Partners LLP

Compressco Partners has modified the controls of its

46-hp GasJack compressor design, which offers flexibility
from a compression ratio standpoint in addition to the
large suction/discharge operating parameters that can
be achieved. Through its experience in unconventional
oil plays, the company has developed systems that can
achieve up to 98% control efficiency. Sharp vapor production declines and fluctuations can wreak havoc on
VRU systems if the proper criteria are not met. The compressor applies makeup and recycled gas systems, speed,
capacity control methods, and automatic start/stop to
optimize the machine to the individual production at
each location. Unlike other types of VRU compressors,
the GasJack has the ability to handle wet gas streams
(greater than 2.5 BBtu) with minimal efficiency losses
due to contamination from liquid fallout.
For applications where an electric solution is preferred
to capture vapors, there are several options with varying
ranges in the companys V-Jack line of compressors. All
of the compressors can be used on the various types of
VRU applications.
The industry has seen an increase in the vapor recovery
market from 64% in areas such as the Niobrara/Bakken
to more than 175% in the Eagle Ford during 2012. Flash

riving across South Texas at dusk, it does not take

long to spot a bright red glow as one looks across the
horizon. Flares dance above the oil fields as excess vapors
are burned off during production. This oxidation process
has been occurring since the start of the oil industry and
until recently was regarded as the nature of the business.
But due to ever-increasing federal and state environmental emission regulations for greenhouse gas, volatile
organic compounds, and hazardous air pollutants, this
may soon be a sign of the past.
Producers are looking to solutions such as oil storage
tank vapor recovery units (VRUs), vapor recovery towers
(VRTs), and low-pressure separator flash gas recovery
(FGR) applications to eliminate gas flaring.
Todays VRU applications are just as unconventional as
the horizontal oil plays across the US. Steep oil production decline rates, inconsistent vapor production rates,
and liquid fallout in the compression phase due to the
Btu-rich vapor all contribute to the success and profitability of VRU applications. Each application needs to be
evaluated carefully to determine which
system of controls is best suited to meet
the specialized requirements of VRU and
FGR applications. In addition to the environmental advantages that these regulations provide, there is also an economic
silver lining through incentives that can
be recognized from recovered gas revenue, recovered NGL, and the carbon
credit market.
The use of compression for vapor recovery has been well proven; however, having
the correct controls and configurations to
make it the most effective can be challenging. In the past there was little flexibility
The multistage FGR system eliminates
with varying vapor volumes, which can
the need for flaring. (Images courtesy
often occur due to rapid decline rates or
of Compressco Partners LLP)
early instability of production rates.
90

Febr uar y 2013 | EPmag.com

in n
See
lmore ROP?

i4

Seek no more.

SEEKER

TM

S Series

Directional Drill Bits

An evolution in bit design and engineered

to maximize ROP in a variety of directional
applications while maintaining superior
directional control.

More efficient drilling ; optimizing

the cutting structure and hydraulic
balance for the lithology

Reduced cost per foot ; maximizing

ROP through enhanced cuttings

evacuation

Increased interval ; reducing non-productive

time by reducing bit trips
Expanded selection of optimized bit designs
for the specific directional application
.;d r `[;-9 a
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WELLHEAD PAD
DESIGN/EQUIPMENT

separator applications in the Appalachian regions

increased approximately 30% in 4Q 2012. Regulations
requiring capture of vapors during flowback will also dramatically increase the need for VRUs on new drills.

were set upon startup. As the production declined, the

unit count was reduced by moving these units to new
locations coming online.

Flash gas recovery

Direct from storage tanks
The traditional method for recovering tank vapors is
pulling the vapors directly off a common vent header
across the top of all the oil storage tanks to capture losses.
This method works very well with large-capacity storage
tanks where the vapor production rate is fairly constant,
such as central gathering facilities. However, an individual
or small-cluster well pad presents challenges to compressor optimization due to standard daily operating procedures such as tank gauging and oil loading. Compressco
assisted an operator in southeast Texas with its VRU application needs, providing recommendations for addressing
oxygen ingress. A Fisher gas padding system was installed,
thief-hatch spring weight and seal material were changed,
and an O2 sensor was installed on the discharge side of
the compressor. The makeup system is controlled with a
pilot controller operating in inches of water column. The
automatic start/stop compressor was configured to 50%
volume capacity, and the speed was set at 75% of rated
maximum allowable. The well produced 350 b/d to 400
b/d of 48API gravity oil, and the VRU sales meter averaged 70 Mcf/d in July 2011 and is still in operation. This
setup reduced the risk of oxygen ingress and was economically viable. Most importantly, the operator was in compliance with regulations.

Flash gas in the oil field refers to the gas released by the
pressure and temperature drops during the extraction
and separation process at the well site. The flash process
often occurs when pressures are below the pressure

Vapor recovery units will help operators be in full compliance

with EPA regulations set for 2015 that will no longer allow gas
flaring.

Vapor recovery towers

A VRT is a vessel designed as a final stage of gas separation between the heater treater, production unit, or lowpressure separator and the storage tanks and is operated
near atmospheric pressure. VRTs provide a liquid barrier
between the VRU compressor and the oil storage tanks,
eliminating the potential for oxygen ingress from the
storage tank battery. By reducing the pressure drop
between the production equipment and the oil storage
tanks, the VRT reduces the flashing losses that occur in
the storage tanks to levels below state and federal emission requirements.
Several large operators in the Eagle Ford shale have
chosen the VRT as the primary method for capturing
vapor emission. With more than 100 GasJack compressors
in this play, its success is due to a proven track record on
handling high-Btu vapor, compressor operating flexibility,
service capabilities, and equipment availability. Due to the
steep production decline rates in the Eagle Ford, the
company has had many locations where multiple units
92

required for the gas to be discharged to the sales or

gathering pipeline. This gas was often sent to a flare
on location and destroyed. As fields mature, midstream
companies lower the pipeline pressures to allow for the
free flow of natural gas into the compressor stations or
processing plants. The current revitalization of old fields
is due to unconventional drilling technology and operators capitalizing on the opportunity to capture the previously flared gas using low-cost compression.
Recently, an operator in Ellis County, Okla., produced a
well making an average of 300 b/d of oil and immediately
noticed the increased flaring from the low-pressure separator. When the GasJack unit was delivered and installed
at the location, the line pressure was 225 psig. The compressor was set up to pull the low-pressure separator to 7
psig and discharge to 225 psig. The first full day of FGR
production totaled 153 Mcf/d, and the company held
that average for several months for a return on investment of 6.5:1 at a gas price of US $3.
Febr uar y 2013 | EPmag.com

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WELLHEAD PAD
DESIGN/EQUIPMENT

Four-for-one well pad design

leaves a smaller footprint behind
Company sees growing opportunities for its well pad design concept,
which is both environmentally and economically friendly.

Jennifer Presley, Senior Editor, Production

n the eight years since the first commercially successful well in the North Dakota Bakken formation was
horizontally drilled and fracture-stimulated, the operator of that well has made steady and continual improvements in its application of drilling and completion
techniques.
By capitalizing on these improvements, Continental
Resources was the first to complete a 390-m (1,280-ft)
lateral multistage frac in 2007, a horizontal well in the
Three Forks formation in 2008, and a paired Middle
Bakken and Three Forks well in 2010.
The lessons learned and experiences gained from
these successes helped the company further tackle the
challenges of tapping the Bakken shale in a manner that
was both environmentally and economically friendly. In
doing so, Continental took an approach different from
the rest.

94

New approach

With its reduction in rig footprint, the ECO-pad concept helps

Where other companies were using a single-pad technique, Continental applied the old adage of doing
more with less to its well development strategy. Using
the companys ECO-pad technique, multiple wells can
be drilled and completed from a single 8-acre pad. This
reduces the wells surface impact by 65%, according
to the company.
The technique allows development of two separate
formations (Bakken and Three Forks) on two separate
spacing units simultaneously, increasing production efficiency. Thanks to advancements in technology, the technique has evolved since it was first used in 2010 in Dunn
County, N.D.
When we originally began to utilize the process, it
was a four-well concept, said Pat Bent, vice president
of Drilling for Continental. We felt like it was the most
displacement in a build section we could do at the time.
Since then, technology has improved to the point where
we have ECO-pads with four, six, and as many as 14 wells
currently in the Bakken.

to ensure that the wildlife will always have plenty of room

to roam.

The company has seen tremendous results with the

technique. For example, its Dvirnak-Pletan ECO-pad
project was completed in 4Q 2011 and produced a total
of 7,352 gross boe/d for all four wells in the initial oneday test periods, or an average of 1,838 gross boe/d per
well, according to a company press release.

Optimized operations
The company uses a batch drilling process to optimize
its operations. All four surface holes are drilled first, followed by four intermediate sections, and then finished
with the laterals. According to the company, the process
saves significant time and costs associated with switching
out drillpipe and mud systems for the three different
downhole sections.
The true vertical depth of an average Continental well
is 2,895 m to 3,200 m (9,500 ft to 10,500 ft). The measFebr uar y 2013 | EPmag.com

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WELLHEAD PAD
DESIGN/EQUIPMENT

A lonely rig on the plains of North Dakota drills into the prolific
Bakken and Three Forks formation in search of oil.

ured depth for typical 3-km (2-mile) lateral averages

6,096 m to 6,706 m (20,000 ft to 22,200 ft), according
to information provided by the company.
One of the more significant operational efficiencies
gained by using the ECO-pad is the reduction in time it
takes to move the rig. The company uses walking rigs,
and it takes approximately eight hours for the rig to
walk to the next well. The 2013 target goal for rig moves
location to location is five days, Bent said.
If you drill singles, you add five days to each consecutive well, he said. We can walk our rigs wellcenter to
wellcenter in a relatively short amount of time, so were
able to drill back-to-back sections. The efficiencies that
weve seen have been in the 20% to 30% range. This is
partially attributable to the ECO-pad technique and to
our rig fleet.
Consolidating drilling operations for four wells on
one ECO-pad has also brought cost savings. In addition
to the reduced drilling costs, a reduction in completion
costs also is accomplished by conducting fracture stimulation treatments on multiple wells in one continuous oper96

ation. Coiled tubing is used for well cleanout to approximately 5,791 m (19,000 ft), Bent said.
All drilling activity is closed-loop, with produced and
stimulation flowback water going to storage tanks for
transportation to saltwater disposal facilities. Post-completion, about 25% of the disturbed area is reclaimed
when the wells go into production.

Future growth
As the leading lease holder with more than 1.1 million
net acres in both the North Dakota and Montana
Bakken formation, Continental believes the ECO-pad
is the key to maximizing development. In a 2011
annual report, the company said it plans to increase
the use of the concept as the field matures.
According to Bent, the companys multiwell pad
activity through 2012 included 47 locations, with an
additional 71 pads planned for 2013.
Our year-end goal is to have 70% of our activity
on ECO-pad wells, Bent said. As acreage comes
into production, there are a few locations that we
drill that are proved undeveloped. We will be highgrading our rig fleet in 2013, exchanging single rigs
for more walkers.
Febr uar y 2013 | EPmag.com

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UNCONVENTIONAL:
INDONESIA

Unlocking Indonesias CBM potential

With its estimated CBM reserves ranking it No. 6 in the world, this slumbering
Southeast Asian conventional oil and gas giant is picking up the development pace
of its unconventional resources.
Indonesia ranked No. 6 for CBM reserves

Mark Thomas, Senior Editor, Offshore

oalbed methane (CBM) has taken something of a

global back seat in terms of publicity in recent years,
with the North American shale boom dominating the
headlines. But in Indonesia, it is this unconventional natural gas lying in coal seams that will largely help to fuel
the countrys continuing efforts to ramp up its gas production, with shale for once being the resource told to
wait its turn.
This disparate Southeast Asian country remains geologically blessed with considerable unconventional and conventional hydrocarbon resources and is still a leading
exporter of natural gas. According to the US Energy
Information Administration, the countrys gas production has risen approximately 25% since 2005.
But with Indonesias crude oil production continuing to
fall while domestic energy demand continues to shoot
upwards, an energy shortage is being forecast by 2022.
The exploration and development of unconventional
hydrocarbon resources is seen as the key to bridging this
potentially damaging supply-and-demand gap. Gas has
been specified by the Indonesian governments national
energy policy to make up at least 30% of
the energy mix, especially for power generation purposes, with CBM in particular
to make up 3% of that mix by 2025.
Although the CBM industry in the
country is still very young, the total CBM
reserves there are huge, currently estimated at a minimum of 453 Tcf. To put
that in perspective, the countrys conventional natural gas deposits are estimated
at 190 Tcf.

According to recent figures from consultancy Advanced

Resources International, Indonesia is ranked sixth in the
world for potential CBM reserves, with South Sumatra
alone estimated to hold around 183 Tcf.
As a result, the countrys government has set a CBM
production target of 500 MMcf/d by 2015, 1 Bcf/d by
2020, and 1.5 Bcf/d by 2025.
Overall in 2012 Indonesia officially approved 274 contractors work plans and budgets (conventional and unconventional oil and gas) to help it achieve this ambition,
according to Energy and Mineral Resources Minister Jero
Wacik. He said this would equate to total oil and gas investment in the country of more than US $26.2 billion in 2013.
A total of 74 of those approved work plans were for
projects in the production phase, according to SKMigas,
an upstream regulatory body. Formed as a temporary
unit by the Ministry of Energy and Mineral Resources in
2012 to replace the recently disbanded BPMigas unit,
SKMigas has been made a permanent fixture.
SKMigas is on a ministry-backed mission to drive new
investment throughout its upstream sector, not only in
unconventionals but also in its significant offshore shallow and deepwater sectors.
Kutai Basin
GIP potential: 80 Tcf
Infrastructure: pipeline & LNG
Price: US $7.50/Mcf to
US $15/Mcf
S ING APOR E
B ONT ANG
LNG

Barito Basin
GIP potential: 102 Tcf

Indonesias three largest CBM basins have estimated potential reserves that individually nearly
match or surpass the countrys current known

South Sumatra Basin

and proven total conventional gas reserves of

GIP potential: 183 Tcf

Infrastructure: pipeline
Price: US $6 to US $10.50

approximately 107 Tcf, while total potential CBM

J AK AR T A

reserves for the whole country are put at nearly

four times as much. (Image courtesy of CBM
Asia Development Corp.)

98

Febr uar y 2013 | EPmag.com

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UNCONVENTIONAL:
INDONESIA

The regulator forecasts that the 74 projects in the production phase will result in up to $23.5 billion in investments during the course of 2013 alone, with the money
outlined to be spent as follows:
$14.7 billion on production activities;
$5 billion on development projects;
$2.3 billion on exploration; and
$1.5 billion on general administration.
With the total work plan for these 74 projects estimated
to include up to 1,200 development wells, 1,100 workover
wells, and 100 exploration wells, this is a true statement of
intent by Indonesia to raise its game.
The remaining 200 work plans were submitted by companies for projects still in the exploration phase and are
expected to result in around $2.7 billion of investment.
That will involve 75 conventional exploration projects
and more than 80 CBM exploration probes.
By August 2012 there were a total of 50 CBM working
areas, according to SKMigas, with the government targeting
a total of 210 by 2025. These are likely to be spread wider
than just South Sumatra, as major basins exist elsewhere:
Barito (101.6 Tcf), Kutai (89.4 Tcf), Central Sumatra (52.5
Tcf), North Tarakan (17.5 Tcf), Berau (8.4 Tcf), Ombilin
(0.5 Tcf), Sulawesi (2 Tcf), and Bengkulu (3.6 Tcf).

Basin

CBM
resources (Tcf)

S. Sumatra

183.0

Barito

101.6

Kutai

80.4

C. Sumatra

52.5

N. Tarakan

17.50

Berau

8.40

Ombilin

0.50

Pasir/Asem

3.00

Jatibarang

0.80

S.W.
Sulawesi

2.0

Bengkulu

3.6

Total

453.30 Tcf

Prospectivity
level

High

Medium

Low

Indonesias CBM resources place it No. 6 in the world rankings,

although activity is still largely in the exploration and appraisal
phases. (Image courtesy of International Gas Union)

The operators senior vice president of Upstream

Strategic Planning and Subsidiary, Rony Gunawan, said,
In the future, conventional oil and gas reserves will be
harder to get, and CBM is the alternative energy for
Indonesia.

Sanga-Sanga is a world first

Pertaminas CBM push
Very much part of this strategic gas push by SKMigas is
state-owned Pertamina. Apart from its internal drive to
help raise Indonesias declining oil production levels to
1 MMb/d by 2014 from 865,000 b/d in 2012 (down from
898,000 b/d in 2011), the company also has a clearly
stated ambition to make CBM one of its main gas
production priorities.
Pertamina allocated $437 million in 2013 toward the
exploration and development of its CBM assets. The company already has spudded the first of those wells in a production-sharing contract (PSC) area in Sumatra and is on
the search to source up to 30 drilling rigs for its CBM
exploration plans. The company has 14 CBM PSCs in
Sumatra and Kalimantan the two main coal-producing
areas in Indonesia on which it intends to focus its strategic exploration efforts.
The goal for the company is to achieve a production
target of 500 MMcf/d by 2025, and it reached a landmark
goal in this strategic push by achieving production from
its first operated CBM well at year-end 2012. The ME-IIICBM-001 well in Muara Enim, South Sumatra, is operated
via its subsidiary Pertamina Hulu Energi. The company
said the well is forecast to produce for at least 30 years.
Up to eight wells will be drilled in the block at an estimated cost of around $2 million per well.
100

There are currently four commercially producing CBM

blocks in Indonesia, including the most well-known,
Sanga-Sanga, as well as Sangatta and Sekayu.
In the high-profile Sanga-Sanga CBM PSC in the Kutai
basin, East Kalimantan, BP and Eni have been exporting
CBM from Bontang as LNG since March 2011. This was
the worlds first CBM-to-LNG project.
A consortium led by VICO the joint venture (JV)
between BP and Eni that operates the project signed
a PSC for the exploration and development of CBM
resources from the 1,700-sq-km (656-sq-mile) block in
November 2009. The CBM license overlays the same
acreage as the already existing conventional PSC held by
the same companies, which has been producing conventional gas from the block for more than 40 years.
Sanga-Sanga as a whole delivers around 13% of the gas
that feeds the Bontang LNG plant in Kalimantan, one of
the worlds largest LNG plants. BPs technical knowhow
gained in the pioneering development of CBM technology in the San Juan Basin in Colorado and New Mexico
in the US, where the company has more than 30 years of
operating experience, has been crucial to its rapid
progress in Indonesia.
A thorough appraisal process in 2010 and 2011 as part
of an initial $38 million work program commitment to
determine the production capacity of the block has been
Febr uar y 2013 | EPmag.com

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UNCONVENTIONAL:
INDONESIA

an outstanding success. Cautious estimates by BP for the

CBM reserves in the PSC area were initially put at 4 Tcf
when the PSC was signed. Eni estimated the contract area
holds as much as 13 Tcf in CBM resources alone.
The speed of Sanga-Sangas CBM development has
been helped by the simple fact that the PSC already had
extensive gas production infrastructure in place with
access to markets via the Bontang LNG plant as well as
local customers. This existing infrastructure allowed BP
and its partners to rapidly and cost-efficiently develop the
blocks additional reserves.
Other companies large and small that are at the forefront of Indonesias CBM drive include majors such as
ExxonMobil; independents like Dart Energy, Medco
Energi, and VICO; and smaller local players like Ephindo
Energy and Star Energy.

Other players moving in

Others also have seen the potential, like Total, which has
been in Indonesias conventional oil and gas sector for
several decades. The company made a strategic decision
to take its first-ever CBM block anywhere in the world in
March 2011 coincidentally the same month BP and
Enis Sanga-Sanga began producing when it acquired a
50% stake in a PSC for the Kutai Timur block in the Kutai
basin in East Kalimantan.
Dart Energy is expecting first commercial production
from its Sangatta West CBM permit in East Kalimantan
during 2013 while also recently being awarded the Bontang Bengalon CBM PSC.
The Sangatta West (Sangatta I) block covers 1,168 sq km
(451 sq miles) and is just 50 km (31 miles) north of the
Bontang LNG plant. Dart farmed into the block in early
2009 for a 24% interest and joint operatorship with
domestic player Ephindo, with Pertamina holding the
remainder. The company said that the results from its
wells in a southeast sub-block have been encouraging so
far, with surface facilities and infrastructure deployed as
part of a long-term production test. A pilot-to-power project enables early gas commercialization and the smallscale supply of gas to the nearby town of Sangatta along
with ensuring its own project power supply. The long-term
strategy is to transport gas to the Bontang LNG plant.
Sangatta I was the first CBM PSC in Indonesia to have
publicly certified reserves and resources. Dart has put
recoverable reserves at around 38 Bcf (proven, probable, and possible) and contingent resources of 273 Bcf
(2C recoverable) in the 78-sq-km (30-sq-mile) southeastern sub-block. The larger western sub-block area is estimated to have prospective resources of 192 Bcf (best
estimate, recoverable).
102

Cost-effective operations are key

In CBM activities, cost-effective operation and process
flexibility generally separate the winners from the losers.
Most companies involved admit that CBM projects cannot
afford long timeframes and large scales like more conventional oil and gas projects.
Drilling needs in the CBM arena include the requirement for shorter procurement processes and closer collaboration with service companies to create fit-for-purpose
equipment, according to statements from Ephindo. Now
we are paying a lot of money for using equipment that is
not fit-for-purpose because we dont have many choices,
said Ephindo CEO Sammy Hamzah in a recent corporate
interview on the companys website.
The other challenges [are] land access, terrain, and
how to lower our cost in drilling site preparations, he
continued. Although Ephindo is not yet commercially
marketing CBM gas, it is in the process of trying to sell
gas on a smaller scale. Hamzah added, Gas has slowly
become the prime commodity for energy, and this will
greatly help CBM become commercially viable.
Ephindo leads a consortium that was awarded the
Sekayu II CBM PSC last year. Sekayu II is located in South
Sumatra and covers an area of 451 sq km (174 sq miles)
contiguous to the Star Energy-operated Sekayu CBM PSC,
in which it already holds a 21.5% interest. Ephindo is the
operator of the Sekayu II PSC, in which Star holds the
remaining 26% interest.
The companies three-year firm commitment consists
of geological and geophysical studies, one core hole, and
the drilling of one exploration well with a production
test. The official cost is estimated at $3.35 million.
Ephindo now holds interests in seven PSCs, four of
which it operates and two that it operates jointly, with its
total Indonesian CBM net acreage now standing at 2,915
sq km (1,125 sq miles).

Why Indonesian CBM?

The well costs stated in several of the examples mentioned previously show why CBM activity in Indonesia
holds such interest for the increasing number of companies studying it.
The relatively low cost compared to conventional wells
and the good level of available control data from the
long-term conventional activity carried out in the established basins are two key factors, according to Canadabased CBM Asia Development Corp. The CBM-focused
independent outlined in a recent presentation that with
an optimum well depth range of 200 m to 1,000 m (656 ft
to 3,281 ft), current drilling costs run at approximately $1
million per well based on the use of 500-hp to 750-hp rigs.
Febr uar y 2013 | EPmag.com

UNCONVENTIONAL:
INDONESIA

In addition, drilling costs are expected to fall sharply,

the company added, as lower horsepower-dedicated CBM
rigs and slimhole mining rigs are deployed. These drilling
costs compare favorably to onshore conventional drilling
costs in Indonesia of between $10 to $30 million per well.
The companys own 2013 work program is expected to
achieve first commercial gas flows, with two production
pilot programs planned one in the Barito basin, the
other in Central Sumatra as well as dewatering activities
at the Sekayu PSC and the Kutai West PSC. The Barito
basin program will see one core well drilled on the Kuala
Kapuas I PSC and one five-well production pilot, with
negotiations on rig deployment well advanced and
drilling planned to get under way in June 2013.
The central Sumatra basin work program calls for one
five-well production pilot, with negotiations on rig deployment again well advanced, according to CBM Asia in its
latest activity update. Drilling will start in October 2013.

Largest and best CBM play in the world

The Barito basin is the largest and best CBM

exploration play in the world, in CBM Asias opinion,

with an industry gas-in-place estimate of 102 Tcf.
This is why the company agreed to a major farm-in
JV deal with ExxonMobil in December. The final
terms and conditions of the farm-in remain subject
to further negotiation and execution of formal agreements between the companies as well as government
approval. But if it goes ahead, the estimated $15
million deal will see CBM Asia acquire a 35% to
37.5% participating interest in four existing PSCs
(Banjar I PSC, Banjar II PSC, Barito I PSC, and Tapin
PSC) in the Barito basin. The company will also gain
rights to farm into additional PSCs in the Kutai basin,
in which CBM Asia and ExxonMobil would hold equal
ownership stakes.
Indonesias unconventional gas resources will play
a major part in the countrys drive to secure its future
energy needs without relying on imports. According
to the current plans in place, CBM gas will lead the
way, while shale is for once the resource that will have
to take a back seat, at least for now.

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EPmag.com | Febr uar y 2013

103

SUBSEA PROCESSING
ADVANCES

Planning for the future

Oil and gas operators implementing or considering seabed processing systems
need subsea safety systems to achieve the highest levels of
performance criteria if they are to deliver the goods.
Hank Glansbeek, Expro Group

ltra-deepwater discoveries are playing a crucial role

in replacing global oil and gas reserves, and operating companies are constantly confronted with new challenges to ensure these are discovered, appraised, and
developed safely and efficiently.
Subsea safety systems are critical in delivering safe,
compliant, and efficient operations in all subsea applications. Todays subsea operations require superior functionality, performance, and reliability because of the
deeper waters and higher pressures and temperatures.
With this in mind, certain tools have been developed
using an integrated design and qualification process,
which ensures that equipment meets the highest performance criteria.

Performance under pressure

Fifteen years ago, 1,524 m (5,000 ft) of water was considered deep by the upstream oil industry. However, with
new technologies, numerous operators today are successfully drilling in water depths of 1,830 m to 3,050 m
(6,000 ft to 10,000 ft) and beyond, with more companies
joining in the exploration for hydrocarbons at these
increased depths.
The deeper the exploration, the more expensive
the project. Therefore, large reservoirs have to be targeted to have the biggest impact on global reserves. If
the volumes of hydrocarbons are significant enough,
then it is well worth the investment. With the success
of oil and gas discoveries in areas such as the Gulf of
Mexico (GoM), Brazil, and Africa, the expectations
for finding large reservoirs by drilling in deeper water
are even higher.
While the rewards can be extraordinary, increased
drilling activity in these water depths can be challenging
because of the increased safety requirements and a limited offshore workforce with enough experience.
Subsea safety systems and extensive training programs
can help to overcome these obstacles.
Recent offshore incidents in the GoM and Brazil spotlighted the need for more stringent safety requirements.
For companies that breach regulations, governments are
104

The landing string assembly is a critical component in the protection and safety of personnel, the well, and the rig, providing
the capability for safe, low-cost well re-entry for future well intervention and workover. Expros landing strings are designed to
meet the highest performance criteria in deep-sea drilling.
(Images courtesy of Expro Group)

Febr uar y 2013 | EPmag.com

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SUBSEA PROCESSING
ADVANCES

SUBSEA PROCESSING
ADVANCES
Smaller service companies tend to
have more room for flexibility, providing
operators with the advantage of

imposing large fines and even

preventing drilling operations
from occurring.
There is a need for safety systems to help reduce these risks.
Organizations such as the API
and the ISO are establishing standards for the design and qualification of subsea safety products,
providing third-party credibility.
Although there is not a onesize-fits-all industry standard, individual companies set their own
requirements and decide what
standards safety systems must
comply with. Going through ISO
or API provides credibility and
shows clients that subsea safety
equipment is qualified and meets
high standards.

custom-tailoring tools based

on their own needs.

Variations of standards and challenges are the

result of well conditions and areas of deployment. Rigs in the GoM must deal with hurricanes, which can shut down operations and cause
operators to move the rig off location. Volatile
weather in the North Sea makes drilling and
completion operations particularly hazardous as
a result of the rigs movements, while Brazil and
Africa tend to have calmer waters.
What has long been labeled as the crew
change also has become a serious concern for
the industry. The oil bust of the 1980s and subsequent peaks and troughs help explain the demographic shift in the industry. As crude prices
plummeted, companies laid off workers and, in
many cases, stopped hiring.
These layoffs and hiring freezes have left an
age gap in the industrys work force. Oilfield
workers are now retiring in large numbers, leaving their tasks to a younger generation with less

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Febr uar y 2013 | EPmag.com

EPmag.com | Febr uar y 2013

107

SUBSEA PROCESSING
ADVANCES

experience. Operators should therefore look for a subsea safety company that has highly trained multidisciplinary staff allocated to project delivery and execution
as required.

Reliable subsea solutions

A subsea safety systems main objective is to allow hydrocarbons to flow in a safe manner. This enables oil companies to obtain valuable information for field development
and complete or intervene in wells prior to production.
In emergency situations a subsea safety system needs
to quickly and safely stop the flow of hydrocarbons and
disconnect at the seabed, allowing the rig to move to a
safe location.
Every projects needs are different. Operators are not
only looking for systems that respond quickly and safely
to emergency situations but also systems that require
equipment with commercial benefits such as rig time
savings or improved production. Smaller service companies tend to have more room for flexibility, providing

operators with the advantage of custom-tailoring their

tools based on their own needs. With the continuous
development of downhole completions and subsea infrastructures to accommodate deepwater production, developing a range of subsea safety tools for well operations is
important to cater to evolving market needs.
These tools provide well control functions and disconnect capabilities during well installation, workover, intervention, and well test operations. The landing string
assembly is a critical component in the protection and
safety of personnel, the well, and the rig, and it provides
the capability for safe, low-cost well reentry for future well
intervention and workover.
Highly trained personnel are a necessity for operating
safely in these challenging conditions. In-depth awareness
of a clients requirements and needs means that subsea
staff can provide the most effective technical solutions to
ensure that deepwater well installation, workover, and
intervention operations are met in a cost-effective and
timely manner.

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108

Febr uar y 2013 | EPmag.com

SUBSEA PROCESSING
ADVANCES

Operational feedback is a critical aspect in continually

improving the industrys understanding of system
integrity and reliability and helps eliminate failures that
could lead to unnecessary downtime. With operational
costs in deep water at approximately US $1 million per
day, avoiding downtime is important to minimize costs
for operators. Therefore, system monitoring and tracking of the equipment during the operation itself are
becoming the standards, enabling us to better understand the systems exposure while preventing failures
from occurring during the operation.
Subsea safety companies place great emphasis
on safety performance. They want to deliver high
standards in the industry and are looking for ways to
develop tools that can continuously improve the safety
of the operations and enhance the commercial viability
of subsea developments.

The future of the subsea market

Subsea is a long-term, high-growth market with demand

.
?

set to increase in developing and mature locations.

There will be a continued focus on identifying safe
drilling locations in deep water and an increase
in importance in subsea safety systems and
equipment used.
But in shallower waters, subsea activity also remains
high. For several years it has been predicted that North
Sea activity would go into decline. However, the shift
from major oil companies to smaller independent operators has kept activity high, as these companies are
active in developing and investing in smaller fields.
Deepwater areas in the GoM, South and West Africa,
the Asia-Pacific region, and frontier areas within Europe
and East Africa continue to be focal points for both the
short and long term.
Subsea safety companies continue to invest in product
lines around the world to meet customer demands. The
global prospects indicate a very positive outlook for the
subsea market, with increasing opportunity and investment potential for the future.

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109

SUBSEA PROCESSING
ADVANCES

Seabed production innovation

boosts expectations
Recent advances in subsea processing systems have moved the concept
firmly into the mainstream development tool box of operators around the world.

Mark Thomas, Senior Editor, Offshore

ransferring the task of the initial processing of oil and

gas from platform topsides to the seabed for both
brownfield and greenfield projects has been one of the
offshore industrys greatest technological challenges.
Once merely a vision, the concept of subsea factories a
phrase coined by Statoil, one of the biggest proponents of
subsea processing solutions is close to reality. Today, the
various components required for an all-encompassing system are deployed with increasing confidence in long-term
performance and reliability.
The need to have subsea processing options essentially
the ability to manipulate the wellstream between the wellhead and host facility at their disposal is vital for oil and
gas operators, especially those at the forefront of pioneering ultra-deepwater projects or remote and harsh environment developments such as the Arctic Circle.
There are currently four main types of subsea processing applications:

Statoils Ormen Lange field will be one of the worlds largest

subsea processing systems. (Image courtesy of Statoil)

110

Single/multiphase hydrocarbon boosting (pumping);

Gas compression;
Separation systems (gas/liquid and liquid/liquid with
produced water reinjection); and
Raw seawater injection.
The main prerequisites and enablers for the above
applications are:
Long-distance/high-voltage power;
Advanced process monitoring and control; and
Cost-efficient installation, maintenance, and retrieval.

Higher recovery rates

With the generally accepted thinking that wet tree developments with boosters can deliver between 5% and 20%
higher recovery rates compared to dry tree developments,
the commercial benefits can be very persuasive.
This applies to both new and existing projects, with
companies like Statoil making it a key part of future plans
to improve reservoir recovery rates from both brownfield
and greenfield developments. Much of the companys
focus lately has been on seabed gas compression, the most
recent subsea processing technology, which has not yet
been implemented in any field worldwide. In simple
terms, the closer that compression can be placed to a
well, the more gas can be extracted.
Traditional topsides compressors have a low tolerance for
liquid, resulting in two approaches to subsea compression:
Separating the gas so that a traditional compressor
can be used; and
Building a liquid-tolerant or multiphase compressor.
The operator is planning to break first ground by using
subsea gas compression for some of its domestic flagship
North Sea projects such as sgard (expected to be the first
to get underway in 2015), Gullfaks South (also possibly
started in 2015), and Ormen Lange (to be started at a later
stage in its producing life). The company also has at least
10 other projects that it is considering for the same potential application.
But subsea processing covers a much wider remit than
just gas compression and for some areas is considered an
enabling technology for new projects without which fields
cannot be profitably developed.
Febr uar y 2013 | EPmag.com

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SUBSEA PROCESSING
ADVANCES

Vital seabed processing experience has been gained on pioneering projects such as the Tordis subsea separation and boosting
development offshore Norway, the worlds first application of
produced water reinjection with sand management, multiphase
metering, and boosting of wellstream fluids, all in a modular
design. (Image courtesy of Statoil and FMC Kongsberg)

New ways of applying subsea processing

New technology development continuously opens the
door to new ways of applying subsea processing, according
to Simon Davies, project manager of Technology at Statoil
(which receives more than 50% of its production from
subsea production systems via 500 operated subsea wells).
In the future there is likely to be even tighter integration of subsea processing building blocks used as part of a
complete field development concept.
The industrys vision of a subsea factory may drive the
application of more sophisticated gas processing on the
seabed (gas sweetening and gas dehydration). Reinjection
of produced water for pressure support rather than disposal will bring more stringent requirements for produced water quality (effective subsea produced water
treatment and monitoring).
Longer and more remote step-outs also are raising interest in developing local, potentially renewable power generation concepts, Davies said.
Pumping and compression technology will continue to
evolve, he continued, while separation systems will also
become more sophisticated, incorporating compact separation technologies and electrostatic coalescers. More
compact wet gas compression units also will emerge to
enable the development of small and medium-sized fields.

Fast-growing market
This is why a number of companies have been carefully
112

positioning themselves to capture as much of this growing

market as they can.
Toward year-end 2012, FMC Technologies Chairman
and CEO John Gremp in the companys 3Q 2012 results
presentation said that bidding and tendering activity for
subsea processing projects was set to shoot up over the
course of 2013 and 2014. As many as eight projects were
in the offing for this year, he said, with at least that number lined up for the following 12 months.
Rival contractor Cameron also said in November that it
was linking up with Schlumberger to create the OneSubsea joint venture (JV). The JVs stated aim to manufacture
and develop products, systems, and services for the subsea
market also enables it to specifically target the expanding
subsea processing market.
Cameron will hold a 60% stake in the JV, with Schlumberger holding the remainder. The latters reservoir,
well completions, subsea processing, and integration
platform expertise will be a major boost to the services
Cameron will be able to offer as manager of the JV for
the forecasted 16 seabed processing projects over the
next two years.
The overall trends indicate that the number of subsea
processing projects going forward will continue to rise
sharply. A recent Bernstein Research report showed global
deepwater production has risen from less than 500,000
b/d 15 years ago to about 5.5 MMb/d in 2012. Another
4 MMb/d of deepwater production could be flowing
by 2020.

Future trends
Around 200 deepwater subsea fields are expected to come
onstream over the next four years, with more than 11,000
subsea wells forecasted to be in operation worldwide by
the end of this decade.
As subsea processing technologies continue to advance,
the likely trends and focus areas are expected to revolve
around the following:
Technology replication reusing knowledge, designs,
and qualified technology;
Continued qualification toward deeper waters, longer
step-outs, and heavier or colder crudes;
Promotion of standardization of components, procedures, and qualification specifications; and
Greater processing efficiency (flow assurance).
Bearing in mind that these processing advances also will
be equally applicable to mature shallow-water areas, their
increasing application worldwide is inevitable.
Acknowledgment
Excerpts have been included in this article from SPE paper 20619.
Febr uar y 2013 | EPmag.com

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industry

IMPACT

Automated sources, streamers

improve seismic repeatability
Steering controller aids in 4-D surveys, allowing more accurate monitoring of
reservoir fluid changes.
Mary Hogan, Associate Managing Editor

s the 2008 exploration technology winner of Hart

Energys Meritorious Awards for Engineering Innovation (MEAs), WesternGecos Dynamic Spread Control
(DSC) technology improved repeatability of seismic
source positioning in time-lapse projects.
After a period of hydrocarbon production typically
ranging from one to two years, 3-D seismic surveys are
repeated to determine reservoir fluid changes. Changes
in reservoir fluid content and/or pressure can lead to
changes in the seismic signal, so mapping differences
between two vintages of survey can indicate where hydrocarbon movement has taken place and identify as-yet
untapped compartments, said Paul Bidmead, marine
marketing manager for WesternGeco.
Prior to the introduction of DSC technology in 2007,
several studies showed that differences in the positions
of seismic sources and receivers from one survey to the
next could lead to differences in seismic response that
could obscure subtle indications of fluid movement.
15
10

meter

5
0
-5
-10
W.Regent with DSC
W.Neptune without DSC

-15
1800

2000

2200

2400
shot no

2600

2800

3000

Shown are the results of a 2007 test in which two vessels

attempted to keep their sources on a straight pre-plot baseline.
The DSC-equipped vessel kept its sources much closer to the
baseline than the vessel steered manually. (Image courtesy of
WesternGeco)

EPmag.com | Febr uar y 2013

WesternGecos Q-Fin marine seismic streamer steering

devices enabled vertical and lateral steering to keep
receivers as close as possible to the positions of previous surveys. The addition of DSC technology provided independent steering of the sources in addition to the streamers,
Bidmead said. Automation of the whole system was the key
to taking positioning repeatability of all the elements of insea equipment to an unprecedented level of accuracy.
Using information from a previous survey, multiple
GPS measurements, and a dense in-sea real-time acoustic
positioning network, a 4-D steering controller automatically steers the vessels, sources, and streamers to achieve
the best possible 4-D match.
Since its introduction, DSC technology has been
used on a majority of the companys repeat surveys.
In recent projects, more than 99% of source positions
have been within 2 m [7 ft] inline and approximately
98% within 6 m [20 ft] crossline of programmed locations, Bidmead said. WesternGeco is the only supplier
of seismic services that can provide this level of positioning repeatability.
The DSC system remains virtually unchanged since
being introduced and remains a key component of WesternGecos marine seismic positioning system. The company has, however, made several operational changes to its
TRINAV integrated navigation and positioning system, of
which DSC is a part. TRINAV serves as a tool to help position the seismic vessel, sources, and streamers.
In 2012, WesternGeco introduced IsoMetrix marine isometric seismic technology, which aims to deliver highfidelity point-receiver seismic data while overcoming
spatial wavenumber bandwidth compromises.
The IsoMetrix technology works in tandem with the
Nessie-6 point-receiver streamer system, which uses
hydrophones and calibrated point-receiver microelectromechanical system accelerometers to measure the full particle acceleration of the upgoing and downgoing seismic
wavefield. Direct measurement of the vertical and crossline
gradient enables unaliased reconstruction of the pressure
wavefield between the streamers, Bidmead said, adding,
The TRINAV positioning system, including DSC, is an integral part of the new seismic acquisition system.
115

tech

WATCH

Fracturing with field gas

Natural gas-powered turbine technology is the future of fracture stimulation,
lowering operators costs and reducing air emissions.
Andrew Ward, Chris Combs, David Kinnaird,
Ted McIntyre, and Tommy Monsey, Green Field

uel to power a fracture stimulation job can be a major

expense in todays shale-dominated market, where a
single well may require more than two dozen fracture
stages to achieve maximum production and recovery. A
system has been developed that can save operators more
than 85% on their fuel costs by operating entirely on
processed fuel gas straight from the field.
The technology not only saves operators money, but it
also significantly reduces air emissions produced by the
well completion process. The turbine power technology
has already passed EPA Tier 4 emissions standards years
ahead of the 2015 industry deadline. The system can fracture a well while producing zero particulate matter and
nitrogen oxide emissions, two emissions that federal regulators have targeted in the Tier 4 standards.
In addition to the ability to use natural gas straight
from the field, the technology offers operators the flexibility of using traditional No. 2 diesel, LNG, or compressed natural gas (CNG), depending on the drilling
location and the available service infrastructure. Each
fuel is individually capable of powering the turbine fracturing pumps; unlike most natural gas-powered solutions,
the fuel is not blended in any capacity.
Last, the pumping systems enable operators to reduce
the size of their well pad footprint, which is a key advantage
to E&P companies working in mountainous regions where
roads and topography present a tremendous challenge.

The importance of breakthrough technologies

It is only because of ongoing technology breakthroughs
that the oil and gas industry working in the Lower 48
has been able to continue to find and economically
develop massive quantities of oil, natural gas, and
gas liquids reserves that were previously too costly to
develop or technically unproducible. Globally, companies are spending billions on R&D and are competing
for the next important breakthrough that will not only
advance well economics and productivity but also
reduce the impact of oil and gas development and
production on the environment.
This systems most substantial differentiator is the ability to fuel fracturing equipment with multiple forms of
natural gas. Natural gas offers not only important environmental value, but it also drastically reduces fuel costs
for hydraulic fracturing. In addition, it provides an operational advantage by significantly reducing downtime
between stages for refueling because the gas can be
constantly fed into the turbines.
The cost savings of running on CNG are still being evaluated but are estimated to fall somewhere between LNG
and field gas.
Table 1 outlines the fuel cost comparisons based on 900
fracturing stages and the amount of fuel consumed.
(Note: Unit cost is based on the fuel cost average in
2012.)

Field gas test

In November 2012, Green Field became the first company to operate a turbine fracturing pump (TFP) on
100% field gas during a demonstraTABLE 1. Fuel cost comparisons were based on 900 fracturing stages and the amount of
tion test in an active field in North
fuel consumed. (Figures courtesy of Green Field)
Texas. The demonstration consisted
of a TFP hooked into a sales gas
Number of Stages
900
pipeline fed by a producing well.
Diesel
LNG
Field Gas
The company achieved a highUnit cost (gal or Mcf, US)
$4
$1.50
$3.60
pressure run of 8,500 psi-260
scf/minute and achieved a lowFuel cost per stage
$14,000
$8,925
$1,944
pressure run of 4,000 psi-203
Volume per stage (gal/Mcf)
3,500
5,950
540
scf/minute. When idling, the pump
Total cost
$12.6 million
$8 million
$1.7 million
burned 109 scf/minute. The line
% Difference
36.25%
86.11%
pressure for the demonstration was
660 psi, with a minimum requireEstimated savings
$4,567,500
$10,850,400

116

Febr uar y 2013 | EPmag.com

tech

WATCH

FIGURE 1.

In these test results, Figure 1 is based on 500 hhp,

and Figure 2 is based on 1,000 hhp.

FIGURE 2.

ment of 250 psi needed by the TFP. Figures 1

and 2 show the test results.
The field gas was introduced into the pump
from a producing well located 33 m (100 ft)
away. The gas flowed out through the pipe to
a gas processing unit, where it was dehydrated
and chilled to remove the liquids. Once dehydrated, a compressor pushed the dry gas into
a pipeline, where it was hooked up with a
flange connection to the gas conditioning
unit (GCU). The operator on this location
provided a gas analysis beforehand, and the
operator set the gas supply around Green
Fields parameters to provide clean dry gas
for the test.
The GCU was rigged up to the fracturing
unit with a standard steel braided hose. The
entire system was first purged with nitrogen
and checked for leaks. The nitrogen was bled
off, and the system was pressurized with natural gas. Finally, Green Field checked for leaks
again and administered a sniffer test with a
combustible detection meter to check for
proper oxygen content and explosive limits.
Once pressurized with gas, the fracturing
process was initiated. For this demonstration

TABLES 2 and 3. Turbine pumps emit 87% less NOx than conventional pumps and 77% less CO than the competition.

Parameter
Date

Semi-annual
test

Permit limit:
No. 2 diesel

Summary diesel engine vs. turbine engine

emission comparison Oct. 4, 2007

Oct. 4, 2007

T55-L-712 Lycoming Turbine

Basis of comparisons: hp load on diesel No. 2 was 2,178. On

B-100 biodiesel, it was 2,238. An average of 2,208 hp was used
for the following calculations:

NOx ppm

57

NOx lb/hr

6.93

CO ppm

38

CO lb/hr

2.81

Oxygen %

NOx Diesel engine. Average NOx emissions: 0.024 X 2,208 hp

= 52.992 lb/hr NOx. The turbine as measured was 6.93 lb/hr on
No. 2 diesel fuel (57 ppm). On B-100 biodiesel, the turbine
measured 6.11 lb/hr (57 ppm).

16.3

Operating Parameters
Fuel
Btu/hp hr

191.5

GPM

11,386.25

Fuel Btu

129,500

Btu/gal (7.1 diesel weight)

Suction

75

psi

Discharge

6,150

psi

RPM

1,543

Load

2,178

BHP

Test based on standard No. 2 diesel through a certified emissions lab.

EPmag.com | Febr uar y 2013

CO Diesel engine. Average CO emissions: 0.0055 X 2,208 hp

=12.144 lb/hr. The turbine as measured was 2.81 lb/hr on No. 2
diesel fuel (38 ppm). On B-100 biodiesel, the turbine measured 2.31 lb/hr (35 ppm).

Emission Reduction Summary

A turbine on No. 2 diesel fuel produced 86.9% less NOx than
a diesel engine at the same hp. The CO was 76.8% less on a
turbine vs. diesel engine.
On B-100 biodiesel, a turbine produced 88.4% less NOx than
a diesel engine at the same hp. The CO was 80.9% less on a
turbine vs. diesel engine.

117

tech

WATCH

the source water was provided on site and stored in a

500-bbl frac tank. This water was charged to the TFP via
a standard C pump. The pump was rigged up normally,
and water flowed back into the same tank. Green Field
used the choke to create horsepower and reached 8,500
psi the standard pressure for a fracturing job and ran
full separate tests at 500 hhp and 1,000 hhp. Pressures
and rates were sustained, and each test was successfully
run for 20 minutes.

Tier 4 emission standards

From an environmental standpoint, the cleaner, fuelburning capability of this TFP is an advantage and differentiator to existing technologies.
In May 2004, the US Environmental Protection
Agency signed the final rule introducing Tier 4 emission
standards, which were to be phased in between 2008
and 2015. The Tier 4 standards require that emissions
of particulate matter and nitrogen oxides be reduced
by about 90%.

0 R D E R

The new TFPs burn significantly cleaner than a conventional fracturing pump running on diesel, which traditionally has been used to power fracture stimulation
jobs. These produce no emissions while running on natural gas. As a result, the technology already exceeds the
EPA Tier 4 requirement without reducing hhp. As seen
in Tables 2 and 3, when turbine pumps are compared
with conventional pumps running on diesel, these TFPs
emit 87% less nitrogen oxide and 77% less CO than the
competition. This is of tremendous value in a region
where environmental regulation and concerns are
highly stressed.
In addition to the lower emissions benefits, another
differentiator is the fact that these TFPs contain the
highest power density on the market, thereby enabling
operators to significantly reduce the size of the drilling
pad footprint. This is a major benefit in regions where
roads can be treacherous, pad space is limited due
to the topography, and environmental regulation is
stringent.

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Updated version of SCADA

supports new data, applications
The newest version of ABBs SCADA system, SCADAvantage 5.4, helps oil and gas companies manage operational changes with liquid metering and instant status
checks of remote operations, the company said. The system also now supports V-cone and liquid measurement
data, which are integrated with alarming, trending, and
historic information to manage by exception. The
release includes a new liquid-volume balancing and leak
detection application; geographic information system
mapping capabilities, which use mapping software from
ESRI; and on-demand text message reporting. The system also includes features to provide protection against
threats from the environment, malicious attacks, and
other sources, the company said. One such addition is
Disaster Recovery, which works in warm standby for
ultra-fast failover and includes tools for configuring
and stepping through a recovery scenario. abb.com.

membrane into a measurement cell, which contains an

optical light source and a microphone. The gas molecules briefly absorb incident light modulated at a specific frequency as intermolecular energy, which is then
released as translational energy. This creates periodic
temperature and pressure changes that generate measurable acoustic pulses. The gas sensor comprises two
separate and identical cells that act interchangeably
either as the primary gas measurement cell or as a secondary compensation or reference cell. The secondary
cell also is used as a redundancy measure in the event of
primary cell failure. The fail-safe gas sensor has been
engineered to sustain harsh conditions along oil and gas
upstream and midstream operations, where they withstand vibration, temperature, and humidity extremes,
the company said. The factory-calibrated sensor requires
less routine maintenance due essentially to its immunity,
embedded self-diagnostics, false alarm rejection, and
temperature compensation algorithms. carthagoinc.com.

Gas detector measures

acoustic pressure waves, redundancy

Barrel protects core during cutting,

enables viewing on site

The OptoAcoustic gas detector from Carthago International Solutions determines gas content by measuring
acoustic pressure waves that are propagated as gas is
irradiated under an appropriately tuned light. It is a
microprocessor-based self-contained gas sensor that provides continuous monitoring of combustible gas leaks in
the concentration range of 0% to 100% lower explosion
limit, respectively 0 ppm to 20,000 ppm CO2. According
to the company, a gaseous mixture diffuses through a

Corpros Thin Sleeve System (TSS) Core Barrel is a 6-m

(20-ft) ultra-stable system that delivers better core quality and smoother coring operations than the conventional 9-m (30-ft) systems, according to the company. It
accomplishes this via two independent inner tubes that
protect the core during the cutting process. The tubes
also allow the recovery to take place without transmitting any stress to the core. The tools barrel is composed
of steel with aluminum liners that strengthen and stiffen
the coring system. It does not degrade or stretch, even
in HP/HT H2S wells, according to the company. Also,
conventional methods of describing the core called
for it to be cut into 1-m (3-ft) sections, packaged, and
shipped to shore before geologists working offshore
could view and assess the conditions. The Half-Moon
On-Ice liners that the TSS system uses enable geologists
to lift the top half of the aluminum and describe the
core at the well site. corpro-group.com.

The retrofit compatible gas detector is factory-calibrated and

ready for immediate use; once power is applied, the sensor is
fully operational, with no calibration required. Embedded linearization and compensation algorithms enable it to maintain
accurate output over the sensor measurement range throughout its lifetime, according to the company. (Image courtesy of
Carthago International Solutions)

120

Alternative clay material eliminates

transportation costs of ceramic proppants
Materials such as kaolin and bauxite clays that make up
ceramic proppants are manufactured in limited locations. In some areas this lack of convenient access to
proppants creates high transportation expenses. The
need to import ceramic proppant materials is eliminated with a new line of proppants by Brownwood Clay
Febr uar y 2013 | EPmag.com

tech

TRENDS

Holdings that can be made with other suitable clay

minerals that are accessible in more locations where
shale plays are prominent, thus cutting transportation
costs. The proppant uses naturally occurring mineral
resources and can be manufactured near operations
to lessen production delays, the company said. This
material has been tested by third parties, which conclude the material is less expensive. The third-party
tests also concluded that the material met the APIs
published specifications and was comparable with
the strength and uniformity of kaolin- and bauxitebased ceramic proppants. The company has developed
formulations TEXFloat, TEXLite, TEXRes, and
TEXProp using the alternative clay material.
brownwoodclayholdings.com.

System upgrade imports

information automatically from Excel
A desire to eliminate human error during oil and gas
operations by reducing the need to manually input data is
becoming prominent in the industry, and in answer, companies are finding ways to import information automatically into integrated systems. Subscribers of WellEz are
now able to import large amounts of data directly from
an Excel spreadsheet in the companys upgrade to its oil
and gas reporting software. The software stores information from every part of the well life cycle, according to the
company. Vendor spreadsheet reports such as data on
mud, directional drilling, fracture reports, and perforation can be integrated into a single database to create a
comprehensive well history, the company said. wellez.net.

are willing to stop the drilling process to update data

volumes. This makes the process of uploading data
error-prone, sacrificing the accuracy of the information.
The software updates ability to convert time-based data
into depth provides real-time information to make more
precise decisions on where to steer the well, the company said. This also eliminates the need for a geophysical expert to conduct the depth conversion process
while creating a shared workflow process for geologists,
engineers, and geosteerers. Other features included
with the 8.8 release are the Seismic-Explore, which adds
an SEG-Y viewer and editor; the Direct Connect that
now supports international well information; and the
EarthPAK, which now has cross-section and correlation
capabilities, enhanced well displays, and more robust
interpretation tools, according to the company. ihs.com.

Mobile well test unit

made for arctic conditions
Mobile well test units from Expro are fully portable production facilities, specifically designed for harsh arctic
operating conditions. The units provide well tests and
cleanup operations. According to the company, the units
process and measure well effluent and remove water and
solids prior to flowing to a production facility. Conventional methods called for equipment to be transported to
the well site in several pieces, carried in by trucks. By combining the equipment into one mobile unit, transportation costs are cut and logistical efficiency is enhanced,
according to the company. exprogroup.com.
Cody zcan, Assistant Editor

Geoscience software interpretation

tool converts time-based data to depth
The newest release of the IHS Kingdom 8.8 by IHS
enables geophysicists and geologists to conduct dynamic
depth conversion of time-based data, according to the
company. IHS Kingdom is a Windows-based geoscience
software interpretation tool that helps to evaluate potential oil and gas reservoirs and plan field development.
The new release includes a velocity modeling feature
that automatically integrates with commonly used data
such as horizons and well tops, the company said. This
enables interpreters to build and maintain a virtual
velocity model to convert data from time to depth. Formerly, velocity models would take several hours to convert manually updated time-based data into depth so
that geologists and engineers could interpret the information. Also, according to the company, few operators
EPmag.com | Febr uar y 2013

One of three arctic enclosed mobile well test units was shown
during a launch event in Anchorage, Alaska. (Image courtesy
of Expro)

121

REGIONAL REPORT:
SOUTH AMERICA

Heading south
Brazil continues to dominate the landscape, but South America is seeing
some newer faces join the oil and gas crowd.
Rhonda Duey, Executive Editor

tion Jan. 5, about a week ahead of schedule. The FPSO

is anchored in 2,140 m (7,021 ft) of water and can
process 120,000 b/d of oil and 5 MMcf/d.
Most recently, Petrobras drilled its fifth well in the
Tupi South area of the Santos basin following the execution of the transfer of rights agreement. The well confirmed the presence of good-quality reservoirs in
carbonate rocks below the salt. Once the well is complete, formation testing is scheduled.

outh America stands as one of the worlds most prolific oil provinces. From the heavy oil fields in
Venezuela to the presalt province offshore Brazil, the
continent is brimming with promise.
Brazil gobbles most of the headlines these days, with
almost daily releases from Petrobras noting discoveries,
field extensions, and initial production. At the Jupiter
Suriname
field, preliminary drilling results of 3BRSA-967A-RJS (3Recently, some new names have joined the ranks of estabRJS-683A) confirmed the presence of natural gas and
lished petroleum producing countries in South America.
condensate. The well was drilled 7.5 km (4.6 miles)
Among these is Suriname, one of the many countries of
from the discovery well and is located in Block BM-S-24
interest along the Atlantic Transform margin. Just as
at a water depth of 2,161 m (7,091 ft). So far the well
some companies are looking offshore West Africa for prehas detected an oil column of 176 m (577 ft) in goodsalt analogs to Brazil, many West African operators are
quality reservoir rock, according to Petrobras.
chasing analogs west to South America. In December
In the Sergipe-Alagoas basin, the company discovered
2011, Kosmos Energy announced it had executed two
a new accumulation of light hydrocarbons in ultra-deep
production-sharing contracts (PSC) with the government
waters in concession area BM-SEAL-11. The well is
of Suriname for offshore blocks 42 and 45. Soon after, in
located in 105 km (64 miles) from the municipality of
Aracaju, off the coast of
Sergipe State, at a water
depth of 2,328 m (7,638
ft). This discovery was
Petrobras fifth in 2012.
The company did not
take much time off celebrating the new year. On
Jan. 2 Petrobras announced
that its third Carcar probe
found a massive 471-m
(1,545-ft) oil column containing 31API oil free of
contaminants as well as 402
m (1,320 ft) in carbonate
reservoirs with excellent
porosity and permeability.
Tests from the well indicate
that the oil flow in the
reservoir has more potential yet, the company said.
The presalt Sapinho
Petrobras Sul de Tupi well is located south of the Lula field at a water depth of 2,188 m (7,178 ft)
field in the Santos basin
and 302 km (186 miles) off the coast of Rio de Janeiro state. (Map courtesy of Petrobras)
was brought onto produc-

122

Febr uar y 2013 | EPmag.com

REGIONAL REPORT:
SOUTH AMERICA

June 2012, Chevron announced that it would join forces

with Kosmos to explore off the small South America
country. Under the agreement, Kosmos has a 50% working interest and remains operator of both blocks until the
end of the exploration phase. Chevron has assumed the
remaining 50% working interest and will be the operator
following any commercial discoveries.

both geologically and geographically, he said. In addition, we are very disciplined thematically, targeting
primarily frontier and emerging areas of the Atlantic
Transform margin, where there is evidence of a working
petroleum system although no significant play-opening
discoveries have been made. The deepwater area offshore
Suriname fits this strategic focus.
Kosmos was operator of the Jubilee discovery offshore Ghana, so it has an extensive working knowledge of this geology on
the other side of the Atlantic Ocean, Fauria added.
Target reservoirs are Upper and Middle
Cretaceous-age slope turbidite sands with
good lateral continuity. Source rocks are
similar to those of the giant fields offshore
West Africa.
Despite these desirable qualities, the
area has not yet yielded up much of its
bounty. Fauria said that the majority of the
offshore drilling to date has been in shallower water targeting Miocene- or Tertiaryage reservoirs.
The company has recently completed a
very sizable 3-D seismic program, and
Fauria said that processing and interpretation of the data are likely to take the better
part of 2013. He expects the first drilling
to take place the following year.
The PGS Ramform Sovereign conducted a seismic survey for Kosmos Energy
We are enthusiastic and optimistic
offshore Suriname. (Image courtesy of PGS)
about the potential for discovering
significant commercial volumes of hydroIn October 2012 Apache Corp. joined the ranks by
carbons offshore Suriname, Fauria said. Given the size
signing a PSC with Staatsolie Maatschappij Suriname
of our Suriname exploration portfolio, a discovery could
NV, the state oil company, for Block 53, located about
lead to several additional exploratory wells targeting
130 km (81 miles) off the northwest coast of Paramaibo,
follow-up opportunities.
the company said. Apache has agreed to a work program
Uruguay
that includes a 3-D seismic program expected to begin
Uruguay is not a complete stranger to oil and gas, but its
this year and two exploration wells. Apache has a 100%
emergence as a major player has yet to happen. This is
participating interest in the block.
not for lack of trying on the part of the government.
Block 53 is on trend with the large Zaedyus discovery
The country held its second licensing round in 2012
offshore French Guinea an indication that the Equatoafter a lukewarm reception to its first round. While sevrial Margin play fairway may extend to the west side of
eral companies did bid in that first round, there was not
the Atlantic Ocean, said Tim Chisholm, director of
much movement in terms of new exploration programs,
Apaches New Ventures activities in the Americas, in a
said Alex Vartan, vice president, South America Multistatement. Apache was selected after a competitive bid
client for PGS. The government, in conjunction with
round involving companies with proven international
ANCAP [the state oil company of Uruguay], chose to
exploration track records.
change the terms in Uruguay to make it much more
Tom Fauria, vice president, Exploration South Amerattractive, focusing on reducing the royalties in the secica for Kosmos, said the area fits that companys exploond round, Vartan said. And they removed the signaration plans. Our exploration strategy is very focused,
EPmag.com | Febr uar y 2013

123

REGIONAL REPORT:
SOUTH AMERICA

ture bonuses to make it an attractive playing field for

new entrant companies.
These improvements seem to have helped the bidding round netted US $1.65 billion in bids, and Vartan
said several majors bid in the second round. Given the
renewed interest in the region, PGS decided to move
ahead with a very large multiclient survey to help fulfill
the exploration programs that were submitted for bid.
The company started acquisition of 15,550 sq km
(6,000 sq miles) in December 2012 using its Geostreamer
technology. It is one of the largest seismic surveys ever
shot in the region. PGS will provide fast-track processing
for operators needing early access to the images and will
offer survey results in conjunction with its existing 2-D
data in the neighboring Pelotas basin.
Vartan said that Uruguay is of interest geologically as a
conjugate margin play, again playing to the strengths of
companies like Tullow, which have had similar success in
West Africa. The area also is of interest to companies
that would like to explore offshore Brazil but are
stymied by the lack of licensing rounds.
It also is a good learning experience for ANCAP personnel, who have mostly been involved in refining and
distribution in the past, Vartan said. They are a very
young exploration company, so the exploration group

PGS began acquiring its 15,550-sq-km (6,000-sq-mile) 3-D multiclient survey in December 2012. It will be one of the largest seismic surveys ever shot offshore Uruguay. (Map courtesy of PGS)

is very small, he said. They are set to grow rapidly over

the next few years. I think there will be an education
process to go through, but they are very cooperative
and easy to work with.
124

The government of Uruguay also is unused to major oil

and gas campaigns, and Vartan said that the industry is
working with the government to get it up to speed. He
added that the threat of nationalization is not a major
concern.
While PGS activity in Uruguay is nowhere near as
extensive as its activity in neighboring Brazil, Vartan thinks
Uruguay has a bright future. Its a frontier basin, he said.
It has tremendous potential that is as yet unknown,
untapped; no wells have been sunk to date. But I think
it has the potential to be a great area for PGS.

Falkland Islands
It is possible that some areas of South America make
news for all of the wrong reasons, and this could be the
case with the Falkland Islands. Even though the British
pushed the Argentinians out after their 1982 invasion of
the islands, Argentinians still maintain that the islands
belong to them, while the British prefer to let the
islanders govern themselves.
In the midst of this uncertainty, several oil and gas
companies are attempting to gauge the prospectivity of
the waters surrounding the islands. Rockhopper Exploration Plc was founded in 2004 with a strategy to explore
for oil in the north part of the region. It acquired four
production licenses, PL023, PL024, PL032, and PL033,
covering about 3,800 sq km (1,470 sq miles). It also
has smaller interests in three blocks operated by Desire
Petroleum Plc. In addition, the company has a significant interest in license PL004b, which has the extension
to its Sea Lion field as well as the Beverley, Casper, and
Casper South discoveries.
Over the years Rockhopper carried out 2-D, 3-D, and
controlled-source electromagnetic surveys, and in February 2010, it brought the Ocean Guardian drilling rig on
site to carry out a multiwell drilling program. The company reported the first oil discovery in May 2010 on the
Sea Lion prospect and subsequently was the first company to flow oil to surface in Falkland Islands waters. The
first campaign concluded in January 2012 with three oil
discoveries, three gas discoveries, multiple successful Sea
Lion appraisal wells, and a successful appraisal of Casper.
Recently, Rockhopper farmed out 60% of its interests
to Premier Oil Plc to fund further development. The
Sea Lion field is now fully financed, said Pierre Jungels,
chairman, in Rockhoppers latest investor report. This
means that for its 2C case, Rockhopper has approximately 142 MMbbl of financed oil that, from late 2017,
should begin generating cash flow with an estimated
value to Rockhopper in excess of $2 billion at a 10%
discount factor.
Febr uar y 2013 | EPmag.com

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international
HIGHLIGHTS

For additional
information on
these projects
and other global
developments:

READ MORE ONLINE

EPmag.com
EUROPE

Total announces North Sea discovery results at Garantiana

Total announced a new oil discovery at exploration well
No. 34/6-2S on the Garantiana prospect in Norwegian
North Sea Block 34/6, PL 554. The 1,234-m (4,050-ft)
well is in 125 m (410 ft) of water, and production is from
the Cook formation in the Triassic Lunde. Tested on a
28
64-in. choke, the well flowed approximately 4,000 b/d of
oil. The predrill unrisked mean potential was estimated
at 92 MMbbl of oil. Total is the operator of Block 34/6,
PL554, and the Garantiana discovery well with 40% interest in partnership with Bridge Petroleum (20%), Svenska
Petroleum (20%), and Det Norske Oljeselskap (20%).
Fresh Sverdrup success for Statoil in Norwegian North Sea
Statoil drilled a successful appraisal well in the southern
part of the Johan Sverdrup discovery in the Norwegian
North Sea, the company said in a press release. The
state-owned operator completed the well in Production
License 265 with its partners Petoro, Det Norske Oljeselskap, and Lundin Petroleum. The well encountered a
30-m (98-ft) gross oil column in Upper to Middle Jurassic reservoir rocks, of which about 20 m (66 ft) were of
very good reservoir quality, according to the Norwegian
Petroleum Directorate in a separate press release.
The well, drilled in a water depth of 111 m (364 ft)
by the Ocean Vanguard rig, will be permanently plugged
and abandoned.

NORTH AMERICA
Castex Energy begins Louisiana state water test
Houston-based Castex Energy Inc. has spudded a
Louisiana state water test in St. Mary Parish. The No. 2
State Lease 20369 is in Atchafalaya Bay field, and the
proposed depth is 5,913 m (19,400 ft). Directly to the
southwest are two Castex wells, No. 1 State Lease 20369
and a northwest offset, No. 1 State Lease 20221. The No.
1 State Lease 20369 was drilled to 6,450 m (21,160 ft)
and was tested flowing 10 MMcf of gas and 88 bbl of
41API gravity crude from Cibicides opima (Middle
Miocene) at 5,511 m to 5,535 m (18,080 ft to 18,160 ft).
In mid-2012, No. 1 State Lease 20221 flowed 15 MMcf of
126

gas, 122 bbl of 40API gravity crude, and 20 bbl/d of

water, also from the Cibicides opima (Middle Miocene)
at 5,546 m to 5,582 m (18,194 ft to 18,314 ft).
Subsea 7s Mexican JV awarded $140 million contract
A US $140 million contract has been awarded to Subsea
7s Mexican joint venture (JV) by state-owned Pemex
for a project in the Bay of Campeche offshore Mexico,
according to a company press release. The contract
comprises the engineering, fabrication, and installation
of a 16-km (10-mile) pipeline, two slug catchers, and
two cantilever structures for the Line 60 project. This
is the first award won by the JV, the company said.

GULF OF MEXICO
ExxonMobil plans development tests at Hadrian South
A recently approved drilling plan by ExxonMobil Corp.
indicates that the company will drill up to two development tests at its Hadrian South prospect in the Gulf of
Mexico. The ventures are planned from offsetting surface locations in Keathley Canyon Block 964 (OCS
G21451) where the water depth is 2,365 m (7,760 ft).
Offsetting the proposed ventures to the northwest is a
wildcat drilled by ExxonMobil in late 2008. The No. 1
OCS G21451 reached 6,694 m (21,962 ft) in Eocene. In
2009 the test was sidetracked to a total depth of 6,084 m
(19,962 ft) in Miocene. ExxonMobil operates Block 964
with a 46.67% working interest along with partners Eni
(30%) and Petrobras (23.33%).

MIDDLE EAST
TransAtlantic announces Molla Block results
Turkeys first horizontal exploration well, No. 3H-Gokso,
was completed in the Molla Block by TransAtlantic Petroleum. After 36 hours of testing on a 2464-in. choke, the flowing tubing pressure was 200 psi, and the shut-in casing
pressure was 500 psi. After about a week of testing, the well
produced approximately 3,000 bbl of oil and 10,000 bbl of
water. The average oil cut has ranged between 20% and
40%, with daily production between 350 bbl and 500 bbl
of oil. TransAtlantic is the operator of Molla Block 4174
and No. 3 Hgoksu with 100% interest.
AGR strikes gas offshore Israel
An exploration well in frontier deep waters offshore
Israel has encountered significant gas shows, operator
AGR of Norway said in a press release. The Aphrodite-2
probe reached a total depth of 5,652 m (18,544 ft) in a
water depth of 1,707 m (5,601 ft). Based on examinaFebr uar y 2013 | EPmag.com

international
HIGHLIGHTS

tions performed during the drilling, significant signs

of hydrocarbons (natural gas) were found in the lower
Miocene sands, the operator said. The net thickness of
the natural gas-bearing layer is approximately 15 m
(49 ft), the operator added. No production tests have
yet been performed. The rig has completed drilling
the well and is expected to plug and abandon it in the
next two weeks.

SOUTH AMERICA
Petrobras gas discovery in Peru estimated at 1.7 Tcf
Petrobras reported a gas field discovery in Block 58 in
the Madre de Dios basin in the Cuzco region of Peru.
Two previous discoveries, No. 2X-Picha and No. 1XUrubamba, established recoverable reserves of 1.7 Tcf
within the concession. The latest venture, No. 3X-Taini,
has increased reserve figures to approximately 2 Tcf with
about 114 MMbbl of condensate. A fourth well is currently under way on the block at No. 1-Paratori.
Petroamerica successfully completes Las Maracas well
Petroamerica Oil Corp. tested and completed its Las
Maracas-6 well drilled in the Las Maracas field in the
Llanos basin of Columbia, the company said in a press
release. The well successfully tested 29API oil from a new
reservoir interval, the Une formation, at a rate of approximately 600 b/d. The well was completed with an electric
submersible pump and is now producing from the middle Gacheta sand interval at a rate of approximately 1,850
b/d of oil under natural flow and less than 0.5% water
cut. Petroamerica holds a 50% participating interest in
the Los Ocarros Block where the field is located.

ASIA PACIFIC
Chevron makes dual discoveries offshore Western Australia
Chevron has made two deepwater gas discoveries in the
Exmouth Plateau area, located in the Carnarvon basin
offshore Western Australia, the company said in a press
release. The Pinhoe-1 well encountered approximately
60 m (197 ft) of net gas pay in the Barrow and Mungaroo sands. The well was drilled in 929 m (3,048 ft) of
water to a total depth of 4,083 m (13,396 ft). The Arnhem-1 well confirmed approximately 45 m (149 ft) of
net gas pay in the upper Mungaroo sands, the company
said. The well was drilled in 1,208 m (3,963 ft) of water
to a total depth of 2,913 m (9,557 ft). Chevron Australia
is the operator of both the WA-383-P and WA-364-P permit areas and has a 50% interest, with its partner being
Shell Development (Australia) Pty. Ltd. (50%).
EPmag.com | Febr uar y 2013

Ivanhoe transfers Zitong Block to Shell China

Through subsidiary Sunwing Zitong Energy, Ivanhoe
Energy Inc. transferred its interest in the exploration,
development, and production contract for the Zitong
Block to Shell China E&P Co., the company said in a
press release. In exchange for Sunwings interest in the
Zitong petroleum contract, Ivanhoe will receive total
pretax cash proceeds of US $105 million. Per the completion of the transaction, Shell will assume the obligations under the supplementary agreement and will
replace Ivanhoes performance bond with its own.

AFRICA
Repsol finds gas in Algeria
In Algerias Illizi basin, Madrid-based Repsol reported a
gas discovery at No. 1-Tihalatine South, the first well to
be drilled in the Sud-Est Illizi concession in the current
exploration campaign. The initial
gas flow at the
1,073-m (3,520-ft)
well was 3.7
MMcf/d. Repsol is
the operator of the
3,240-sq-km (1,251sq-mile) Sud-Est
Illizi concession
and its blocks 232
and 241. Repsol
owns 25.725%, and
After discovering gas in Algerias Illizi
partners are Enel
with 13.475%, GDF basin, Repsol plans to drill four more
wells as part of the exploratory
SUEZ with 9.8%,
program. (Image courtesy of Repsol)
and Algerias
Sonatrach with
51%.
African Petroleum launches campaign offshore Liberia
African Petroleum has kicked off a two-well exploration
campaign in frontier deep waters off the coast of
Liberia, according to a company press release. The
company is underway with a wildcat on the Bee Eater-1
prospect in Block LB-09, with the well having spudded
on Jan. 4, 2013, using Ocean Rigs semisubmersible Eirik
Raude. Mean recoverable unrisked prospective resources
for the Bee Eater/Narina system are estimated at 840
MMbbl. African Petroleum holds a 100% stake in both
blocks. The second well in the program will be drilled
by the same rig immediately after completion of Bee
Eater-1.
127

INDEPENDENT PETROLEUM ASSOCIATION OF AMERICA

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Thursday, March 21,2013

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Blackhorse Golf Club

Cypress ,TX

SHOTGUN: 1:00PM

Wildcatters'Open Committee
Melinda Faust,Lantana Oil & Gas Partners - Committee Chair
Bob Jarvis,IPAA
Burk Ellison,National Oilwell Varco
C.W. Macleod, Sanchez Oil and Gas
David Culberson,Select Energy Services
Don Crow,Lufkin Industries, Inc.
George Frisk,Texla Energy Management
Jerry Edrington,BlackTower Energy
Justin Moore,Occidental Petroleum Corporation
Karl Brensike,Remora Oil & Gas
Reed Barrett,Drillinglnfo, Inc.
Richard LeBlanc,Norris Sucker Rods
Ron Barnes,Oil and Gas Asset Clearinghouse
Russell Laas,Hart Energy Publishing L.P.
Suzanne Ogle,Regency Energy Partners

IPA4 1
a

A day of great golf, food and networking

with other industry professionals

Tina Hamlin, IPAA

Sponsorship is the only way to guarantee a spot in the tournament and space is limited so register early.
For more information,contact Brittany Green at bgreen@ipaa.org or 800/433-2851 or visit IPAA Meetings
online at www .ipaa .org

r4

VIA

on the
MOVE

IHS Inc. has chosen Rich Walker

as executive vice president, Global
Marcus C. Rowland has been elected to Finance. Todd Hyatt was selected as
serve on the board of directors of War- senior vice president, CFO, and chief
ren Resources Inc.
IT officer.

PEOPLE

Chris Finlayson has taken the reins

as CEO of BG Group. Finlayson,
who joined BG in August 2010,
replaces Sir Frank Chapman, who
is stepping down due to health
reasons. Chapman will continue
to serve as an advisor until he
retires in June 2013.
Dirk Warzecha has assumed responsibilities as COO of RWE Dea AG, succeeding Ralf Baben, who has retired.
First Reserve Corp. has promoted five
members of its senior investment team.
John Barry, Alex Williams, and Neil
Wizel were promoted to managing
directors. Adi Blum and Mark Saxe
will both serve as directors.
Gastar Exploration Ltd.s board of
directors has elected John Selser to
serve as chairman of the board.
J. Larry Nichols, (left)
executive chairman and
co-founder of Devon
Energy, was named 2012
Oklahoman of the Year by Oklahoma
Today magazine. The distinction
highlighted Nichols professional
and civic leadership.
Thomas Willardson has joined Sapphire Energy Inc. as CFO, bringing
more than 30 years of experience
with him.
National Oilwell Varco CEO Merrill
A. Pete Miller Jr. was named 2012
CEO of the Year by Morningstar Inc.
The award spotlighted his corporate
stewardship, independent thinking,
and ability to create lasting value for
shareholders.
EPmag.com | Febr uar y 2013

John Ughetta has assumed responsibilities as executive vice president, Sales

and Business Development, of SIGMA
Integrated Reservoir Solutions Inc.
Maury Dumba (left) has
been promoted to senior
vice president, Business
Development, at Greenes
Energy Group.
IHC Merwede has tapped
Rene Raaijmakers (right)
as its new offshore sales
director.
UniversalPegasus International welcomed Terry
Mienie (left) as business
development director of its
UK and international operations.
Romar International has
appointed Lyle Hopkins
(right) as international
business development manager for opportunities in the Middle
East, North Africa, and India.
TAM International Inc. has
selected Jim McGowin (top
left) as general manager of
TAM Completion Systems
and Ray Frisby (lower left)
as technical director of
TAM International.
Daren Martin, a change management
expert, has joined Solomon Associates, where he will lead Solomon
University management courses for
industry professionals.
Timothy J. Nedwed, the leader of
ExxonMobil Upstream Research Co.s

oil spill response research program,

was honored for his contributions with
the Edith and Peter ODonnell Award
for Technology Innovation.
Altor Risk Group
has named Dominic
Webb (left) head of
its southeast Asian
and Pacific operation. The company also promoted Brian
Davis (right), who will serve as business
unit leader of the Middle East, Africa,
and Central Asia regions.
John Donaldson (right) will
lead the growth of QTEC
Internationals US division as
regional manager.
Crowley Maritime welcomed Matt Yacavone (left)
to its petroleum services
team, where he will serve as
vice president of sales and chartering.
PetraCat Energy Services LLC has
tapped Rod Kelly as senior technical
advisor. In his new role, Kelly will promote the companys surface pressure
transient testing technology.
Phil Goodall will help grow Nessco
Groups international offshore weather
monitoring business in his new role as
business development manager for the
MetOcean system.
Brian Meinhart has joined Western
Energy Alliance, where he will serve as
a policy analyst and assist with the companys community outreach and public
lands advocacy efforts.

COMPANIES
Euromoney Magazine named
PTT Exploration and Production
(PTTEP) Public Co. Ltd. the best managed company in Thailand and best
managed company in Asia for oil and
129

DEVELOPING UNCONVENTIONALS

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algary, Alberta,Canada

Experts Review UnconventionalResources and Capital

Mark your calendars today for the second annual DUG Canada conference and exhibition. Together with the
Canadian Society for Unconventional Resources (CSUR), Hart Energy once again brings its unique DUG series,the
world's largest unconventional resource conferences, to Calgary in February 2013. This year's theme focuses on growth
prospects ahead - Changing Dynamics: Unconventional Resources Require Unconventional Capital.
Canadian oil production is forecast to double between now and 2030, and the country 's li ght , ti g ht oil p lays will
contribute mighti ly to that growth. The Duvernay shale play is quickly emerg ing as a world-class target , while
powerhouse producers such as the Cardium and Montney are posting impressive production gains. And classic
oil-saturated reservoirs like Slave Point in the Peace River Arch are in the midst of major rejuvenation.
The DUG Canada conference and exhibition examines Canada's rap idly-develop ing oil-rich unconventional
plays. Beyond producer spotli g hts on the Duvernay, the Montney and "the two Bakkens ," conference agenda

topics include:

Making Plays Competitive

JVs , Corporate & Asset Deals
Optimal Drilling & Comp letion Strategies

Social & Environmental Challenges

Midstream Infrastructure

If your company is involved in Canada 's resource plays, or if you want to exp lore business opportunities in
Canada now and into the future , plan now to attend this conference.

FEATURED SPEAKERS INCLUDE

Victor Ojeda
Manag ing Director

Shell Canada Ltd.

Mike Wood
VP, Canada Shale Division
Talisman Energy Inc.

John Gibson , Jr.

President and CEO

Tervita Corp.

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Ian Anderson
President
KinderMorgan Inc.

View full agenda at dugcanada.com

Use Promo Code DUGC1 00 and save CAD $100 on your full-conference registration.

PRESENTED BY:

HA R T E N E R G Y

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MARKETING | SALES | CIRCULATION

Group Publisher
RUSSELL LAAS
Tel: 713-260-6447
rlaas@hartenergy.com

Associate Publisher
DARRIN WEST
Tel: 713-260-6449
dwest@hartenergy.com

United States
Canada / Latin America
1616 S. Voss Road, Suite 1000
Houston, Texas 77057 USA
Tel: 713-260-6400
Toll Free: 800-874-2544
Fax: 713-627-2546

Regional Sales Manager

JULIE B. FLYNN
Tel: 713-260-6454
jflynn@hartenergy.com

United Kingdom / Europe

Africa / Middle East
Eden House
64-66 High Street
Chobham
Surrey GU 24 8AA, UK
Tel: 44 (0) 7930 380782
Fax: 44 (0) 1276 482806

Sales Manager
Eastern Hemisphere
DAVID HOGGARTH
Tel: 44 (0) 7930 380782
Fax: 44 (0) 1276 482806
dhoggarth@hartenergy.com

Advertising Coordinator
CAROL NUNEZ
Tel: 713-260-6408
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Subscription Services
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List Sales
MICHAEL AURIEMMA
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Tel: 212-655-5130
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EPmag.com | Febr uar y 2013

gas. PTTEP president and CEO Tevin

Vongvanich accepted the awards on
behalf of the company.
After expansion and renovation efforts,
Shell has relaunched Shell Technology
Center Houston. The center serves as
a base for several of the companys
technology focus areas in both the
upstream and downstream sectors as
well as a main office for more than
2,000 Shell scientists and engineers.
With plans to open a second office
block at its Aberdeen, Scotland, headquarters, NCS Survey, an Acteon company, also announced the opening of
new offices in Stavanger, Norway, and
Rio de Janeiro, Brazil.
Headquartered in Aberdeen, Scotland,
GE Oil and Gas Subsea Systems plans

to open a new subsea center in Bristol.

Located in the citys Aztec West Business Park, the center will allow the
company to expand its UK presence.
Stork Technical Services Subsea will
grow its headquarters in Aberdeen,
Scotland, with the addition of a new
operational hub.
Intertek has expanded its presence in
Ghana by opening a calibration laboratory. The new facility, located in the
companys Takoradi Port location, will
provide petroleum industry testing and
inspection services.
Proserv, headquartered in the UK,
has acquired Total Instrumentation
and Controls, expanding its drilling
and production controls services
internationally.

ADVERTISER INDEX
Aggreko Oil and Gas . . . . . . . . . . . . . . . . . . . . . . .10
Allmand Bros. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Ariel Corporation . . . . . . . . . . . . . . . . . . . . . . . . 65
Baker Hughes Incorporated . . . . . . . . . . . . . . 15,41
Bluebeam Software, Inc. . . . . . . . . . . . . . . . . . . . .21
Cameron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Carbo Ceramics . . . . . . . . . . . . . . . . . . . . . . . . . 69
Cimarex Energy . . . . . . . . . . . . . . . . . . . . . . . . . .IFC
C&J Energy Services . . . . . . . . . . . . . . . . . . . . . . .45
CorsiTech . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
CRU Logistics LLC . . . . . . . . . . . . . . . . . . . . . . . . .49
CESI Chemical . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
Cudd Energy Services . . . . . . . . . . . . . . . . . . . . . 43
Dragon Products, Ltd. . . . . . . . . . . . . . . . . . 106-109
E&P . . . . . . . . . . . . . . . . . . .2-3,103,111,114,118,130
DuPont . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99
Dyna-Drill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77
FlexSteel Pipeline Technologies, Inc. . . . . . . . . .19
FMC Technologies . . . . . . . . . . . . . . . . . . . . . . . 105
Forum Energy Technologies . . . . . . . . . . . . . . . .93
Frontier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Gas Gun, The . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
GE Oil & Gas, Surface Pumping Systems . . . . . . 66
Great Wall Drilling Company . . . . . . . . . . . . . . . 81
Halliburton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
IHRDC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
ION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
IPAA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .128
i-TEC Well Solutions . . . . . . . . . . . . . . . . . . . . . . .55
Exergex Tube . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
Keane Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
Magnum Oil Tools International . . . . . . . . . . . . . 53
McAda Fluids Heating Services . . . . . . . . . . . . . .40

Mechanix Wear . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Mewbourne College of Earth & Energy . . . . . . . 11
M-I Swaco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Momentive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Nabors Completion & Production Services . . . . .51
National Oilwell Varco . . . . . . . . . . . . . . . . . . 13,91
Nauchers Alpine Solutions Inc. . . . . . . . . . . . . . . 60
NCS Energy Services . . . . . . . . . . . . . . . . . . . . . .57
Newpark Drilling Fluids . . . . . . . . . . . . . . . . . . . 32
Offshore Technology Conference . . . . . . . . . . .119
Peak Completions . . . . . . . . . . . . . . . . . . . . . . . . 18
PGS Exploration (UK) Ltd. . . . . . . . . . . . . . . . . . . 30
Radcan Energy Services Inc . . . . . . . . . . . . . . . . .29
Rockwater Energy Solutions . . . . . . . . . . . . . . . .34
Rupture Pin Technology . . . . . . . . . . . . . . . . . . . .56
Scientifc Drilling . . . . . . . . . . . . . . . . . . . . . . . . . .83
Society of Exploration Geophysicists . . . . . . . . 125
Select Energy Services

. . . . . . . . . . . . . . . . . . . .36

Schlumberger . . . . . . . . . . . . . . . . . . . . . . . . . 5, BC
Spectrum Geo . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Supreme Services . . . . . . . . . . . . . . . . . . . . . . . . .28
TAM International . . . . . . . . . . . . . . . . . . . . . . . .IBC
Tank Connection . . . . . . . . . . . . . . . . . . . . . . . . . .44
Target Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . .95
TEAM Oil Tools

. . . . . . . . . . . . . . . . . . . . . . . . . . 27

Tercel Oilfield Products UK Limited . . . . . . . . . . .89

TGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Ulterra Corp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87
Varel International . . . . . . . . . . . . . . . . . . . . . . . . .85
Weatherford International, Ltd. . . . . . . . . . . . 22, 23
WellEz Information Management, LLC . . . . . . . . .61

October 2012 | EPmag.com131

last

WORD

Responding to the challenge

of induced seismicity
Monitoring and communication are key to reducing manmade earthquakes.
few are large enough to be felt and fewer still cause damage. When fluids are injected into the crust, the pore
pressure that pushes back against the tectonic forces
ecent evidence of induced seismicity near Basel,
compressing the rock increases. If the pore pressure
Switzerland, and Youngstown, Ohio, in proximity to
becomes high enough, and if there is a stressed fault
injection activity highlights the need to minimize the risk
currently bound fast by friction, the pore pressure may
of anthropogenic seismicity during pumping operations.
overcome the friction and allow the fault to slip.
According to the Environmental ProtecSeismic imaging can be used to screen
tion Agencys numbers, approximately
potential well locations for proximity to
151,000 oil and gas and waste injection
fault zones. Microseismic monitoring allows
wells are pumping more than 2 billion
continual observation of the reservoirs seisgallons of liquid under the US every day.
mic response during injection procedures.
These Class II wells are performing fracturA traffic light response protocol for injecing and waste injection.
tion monitoring has been developed for
To date, more than 2 million wells have
enhanced geothermal system projects in
been stimulated through fracing, which
the US and has been carried over to fracing
employs a small volume of fluid at high
operations in the UK. The system posts a
pressure in short durations. Induced seisgreen light when observed seismic events are
mic events are most often between -3 and -1
less than a prescribed threshold (typically 0).
on the Richter magnitude scale magniA yellow light (typically between 0 and 1.7),
tudes so small they are only detected with
a caution condition, obligates closer observasensitive monitoring equipment.
tion of well activities. A red light condition
Wastewater injection for disposal purexists for events detected above the highest
poses involves larger fluid volumes than
threshold, calling for cessation of pumping
fracing, pumped in at lower pressures with
activity and flowback of the well until the
slower rates over a longer time. The fluid is
seismicity returns to an acceptable level.
intended to disperse aseismically in the tarAn important aspect of risk mitigation
get formation.
is community awareness. It is essential
Despite this high level of activity, any
that local residents be informed of what
report of seismicity associated with either
processes are taking place and be educated
process is rare. In the few instances where
about the real risks of seismicity so that
microseismic (magnitude 2+) events
wholesale panic does not set in if weak
have occurred, it appears that the injecevents are felt.
tion well was situated near a fault or
According to the Lawrence Berkley
other zone of weakness that was under
National Laboratorys Earth Science divifor injection monitoring sion, All experience to date has shown
tectonic stress.
The key to safe practices is underthat the risk [from induced seismicity],
has been developed
standing the processes that cause seismic
for enhanced geothermal while not zero, has been either minimal or
events. The movement of continents,
can be handled in a cost-effective manner.
system projects in the
gravity, and planetary forces dictate that
With appropriate monitoring and conthe Earths crust is critically stressed
trols
the industry can continue to be a
US and has been carried
almost everywhere. As a result, there are
good steward of the environment and proover to fracing operations vide the new sources of energy that the
literally millions of earthquakes worldwide annually, though fortunately only a
global market requires.
in the UK.
Peter M. Duncan, MicroSeismic Inc.

A traffic light
response protocol

132

Febr uar y 2013 | EPmag.com

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