revista e&p - enero 2011

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J A N U A R Y 2 0 1 1

E P M A G . C O

A H A R T E N E R G Y P U B L I C A T I O N

Surface Systems& Solutions

Cost & RiskManagement

Advances inProcessing

FloatingProduction

HP/HT

Surface Systems& Solutions

Cost & RiskManagement

Advances inProcessing

FloatingProduction

HP/HT


2/102

A d v a n c i n g R e s e r v o i r

P e r f o r m a n c e

How we saved a client

:0

L.15

million

and

mitigated

shallow

hazards

A Gulf of Mexico operator needed

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porosity

measurements

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possibility

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gas

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area.

The

operator had not

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project

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The

real-time logs provided conclusive evidence

of

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shallow

gas. Based on that

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COST & RISK MANAGEMENT

Shale gas plays provide valuable seismicin a low-price environment

Effective asset integrity management expandslife extension options

Managing costs does not have to comeat a price

ADVANCES IN PROCESSING

New approach provides

a more accurate model

Multifocusing improves seismic data

HP/HT

Improved drilling systems save rig time

Remote virtual operations combat harshdownhole environments

SURFACE SYSTEMS & SOLUTIONS

Surface pumps sweep stranded oil

New ideas for an old shoe treatment

FLOATING PRODUCTION

Surge in installations bolstersfloating production spend

Construction continues in the FPS sector

IndustryPULSE: Cost-effectivesupply-chain modelsrequire visibility

Operating internationally is enough of a challengewithout losing sight of the supply chain.

EXPLORATION & PRODUCTIONW O R L D W I D E C O V E R A G E

JANUARY 2011VOLUME 84 ISSUE 1

A HART ENERGY PUBLICATION www.EPmag.com

COVER STORY

34

Top 10technologiesto watchAdvanced technology will improve

operations in the coming year.

6

WorldVIEW: Future looksbright for expansion project,

oil sands productionCanadian Ambassador to the US Gary Doer explainswhy the Keystone Gulf Expansion Project is vital to theUS and shares evidence that melts the frozen factson oil sands production.

10

Unconventional: Haynesville

Is the Haynesvillea sleeping giant?

New drilling fluid saves cost,environment

71

75

46

48

51

5457

61

64

66

68

78

82

89 REGIONALREPORT: CHINA


4/102

AS I SEE IT

A new beginning 5

MANAGEMENT REPORT

Lean interacts with the oil, gas industry 13

DIGITAL OIL FIELDIntelligent completion sets record offshore Nigeria 18

New technology to set industry standard 25

EXPLORATION TECHNOLOGY

Forensic geophysics put the pieces together 29

WELL CONSTRUCTION

Are designer fracs good for business? 31

PRODUCTION OPTIMIZATIONThis aint Texas! 33

TECH WATCH

Modern-day bucket brigade saves drowning wells 84

TECH TRENDS

Innovations and new releases 86

INTERNATIONAL HIGHLIGHTS

Operators display global reach 95

ON THE MOVE/

INDEX TO ADVERTISERS 99

THE LAST WORD

Digital oil field transforms workflow, enables improvement 100

E&P (ISSN 1527-4063) (PM40036185) is published monthly by Hart Energy Publishing, LP, 1616 S. Voss Road, Suite 1000, Houston, Texas 77057. Periodicalspostage 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 Box5800, Harlan, IA 51593. Address all non-subscriber correspondence to E&P, 1616 S. Voss Road, Suite 1000, Houston, Texas 77057; Telephone:713-260-6442. All subscriber inquiries should be addressed to E&P, PO Box 5800, Harlan, IA 51593; Telephone: 713-260-6442. Fax: 713-840-1449. [email protected] Copyright Hart Energy Publishing, LP, 2011. 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 grant-ed to users registered with Copyright Clearance Center/0164-8322/91 $3/$2. Indexed by Applied Science, Technology Index and Engineering Index Inc. Federalcopyright law prohibits unauthorized reproduction by any means and imposes fines of up to $25,000 for violations.

DEPARTMENTS AND COMMENTARY

COMING NEXT MONTH The February issue of E&P focuses on the latest advances in drill bittechnology. Other features examine unconventional resources with a special feature on the Utica shale

as well as drilling advances, reservoir characterization, downhole systems, and deepwater advances.The Arctic is the topic of a special regional report.

ABOUT THE COVER ROVs represent some of the technology that willhelp the industry reach deeper water depths. These dual-manipulator, 330-hpwork-class systems have enhanced thruster systems that increase lift capacityby more than 50%. (ROV images courtesy of Oceaneering, cover design byLaura J. Williams)

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ONLINE CONTENT JAN 2011

Eagle Ford well produces 7.51 MMcf/d of gasAn Eagle Ford horizontal completion by Houston-based Burlington

Resources Oil & Gas Co. (ConocoPhillips) flowed 7.51 MMcf/d of gas,1,348 b/d of 57 condensate, and 456 b/d of water from a fracture-treated interval at 14,128 to 17,650 ft (4,306 to 5,380 m).

PREMIUM CONTENT Subscribe @ EPmag.com/explorationhighlights

Colombian oil discoveryBrownstone Ventures Inc. has made an oildiscovery in the Lower Mirador formationwith the #1 Canaguay well on the

Canaguaro block in Colombia.

WEB EXCLUSIVES

Mexico opens doors

to private oil companiesThe supreme court's recent decision ends

the monopoly held by Mexico's state-

owned oil company Pemex.

New York state assemblybacks Marcellus moratorium

Nancy Miller, Online Editor

The legislation calls for a suspension of

drilling permits through May 15, 2011.

Parts of Gulf of Mexicoofficially closed to drilling

Rebecca Torrellas, Online Editor

Obama administration says no new leases

will be permitted in the eastern Gulf of

Mexico until 2017.

Clear political decisions

needed for NCS future

Ashley E. Organ, Assistant Editor

The NCS still faces challenges despite

experiencing a less dramatic financial

crisis and continued high activity levels.

READTHELATESTEPmag.comINDUSTRYNEWS

Exploration well hits oil,gas offshore CameroonBowlevens #1 Sapele exploration well hasbeen drilled to a depth of 11,024 ft (3,360m) in approximately 66 ft (20 m) water.

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As ISEE IT

EPmag.com | January 2011

Editor JUDY [email protected]

Senior Editor RHONDA [email protected]

Senior Editor TAYVIS [email protected]

Senior Editor JO ANN [email protected]

Senior Editor RICHARD G. [email protected]

Contributing Editor DON [email protected]

Assistant Editor ASHLEY E. [email protected]

CorporateArt Director ALEXA SANDERS

[email protected]

Senior GraphicDesigner LAURA J. WILLIAMS

[email protected]

Production Director

& Reprint Sales JO LYNNE [email protected]

Manager,Special Projects JO ANN DAVY

[email protected]

Online Editor REBECCA [email protected]

Director ofBusiness Development ERIC ROTH

[email protected]

Group Publisher RUSSELL LAAS

[email protected]

1616 S. VOSS ROAD, STE 1000HOUSTON, TEXAS 77057

TEL: +1 713.260.6400FAX: +1 713.840.0923

www.EPmag.com

Senior Vice President, Consulting

E. KRISTINE KLAVERS

Executive Vice President and CFO

KEVIN F. HIGGINS

Executive Vice President

FREDERICK L. POTTER

President and Chief Executive Officer

RICHARD A. EICHLER

The January 2011 issue ofE&Pis the debut not only of a new design for the magazine but ofexpanded content. We have broadened our global perspective in the printed magazine with the

inclusion of a regional report, and we have expanded our coverage of international highlights.

As those who have attended the Hart events on unconventional plays can attest, Hart has carved out a

niche in the unconventional arena. This is reflected in a special section this year that takes an in-depth

look at individual shale developments and the technologies that are being implemented to produce them.While we have made improvements, we have not abandoned the featuresE&Preaders expect to see

each month. The Industry Pulse, World View Executive Interview, Digital Oil Field, Management Report,

Operator Solutions, and columns will continue to be part of each issue. And of course, readers will still

find case studies that address specific technologies related to exploration, drilling, production, and off-

shore challenges.

As we have done in the past, we will continue to place more technical content online. The online Table

of Contents in each issue in 2011 lists the additional feature articles that can only be accessed online.

In the interest of keeping abreast of the technologies that are most critical to the industry,E&Palsohas formed an Editorial Advisory Board that will help to direct editorial content. This group of industry

experts has agreed to serve a two-year term from 2011 through 2013. They graciously contributed their

insight and guidance in assisting the editors in choosing our Top 10 Technologies to Watch for the

coming year (page 34). And board member John Gilmore of Invensys Operations Management hasprovided a thought leadership piece that is featured in the Last Word, the final segment of the issueon (page 100).

I hope you will take the time to explore the new and expanded content and that you enjoy reading

this inaugural issue of the bigger and betterE&Pas much as we have enjoyed creating it for you.Finally, I would like to officially recognize the group of industry experts who have agreed to serve

on our board:

Kurt Albaugh,Consulting Engineer for the Oil & Gas Industry Upstream

Mike Bannon,US Industry Solutions Director, Energy & Process, Microsoft

Chris Barton,Vice President, Business Acquisition Asia Pacific, McDermott

Kevin Brady, Vice President of Sales and Marketing, Verdande Technology Inc.

Mike Forrest, Exploration Consultant, formerly with Shell

John M. Gilmore Jr., Director of Global Industry Solutions Upstream Oil & Gas, InvensysOperations Management

Chris Johnston,Vice President and Managing Director, North America, Pride International

Ulisses T. Mello, Manager, Petroleum & Energy Analytics, IBM

Donald Paul, Executive Director of the University of Southern California Energy Institute,where he holds the William M. Keck Chair in Energy Resources

Eve Sprunt, Business Development Manager, Chevron Energy Technology Co.

Manuel Terranova, Senior Vice President, Regional Operations and Global Sales Drilling & Production, GE Oil & Gas

Ronnie Witherspoon,Senior Vice President of Marketing andBusiness Development for Nabors Drilling USA LP

Dennis A. Yanchak, Senior Geosciences Advisor,

Apache Corp.

A new beginning

Read more commentary at

EPmag.com

JUDY MURRAY

Editor

[email protected]


8/102

Januar y 2 011 | EPm ag.com6

Cost-effective supply-chain models

require visibility

One of the biggest challenges global companiesin the oil and gas industry face is finding a cost-effective

supply-chain model. Main objectives for this process include max-imizing the use of ocean freight versus air freight and balancing

procurement and international operations to keep costs low.

The biggest contributor to inefficient supply-chain management

is a lack of visibility. Many companies simply do not know the sta-

tus of source and supply. Vendor compliance also can create prob-

lems in the form of late shipments and incorrect materials, not to

mention issues with proper certificates and licenses for shipments,

especially for overseas markets.

Crane Worldwide Logistics, a Houston-based company estab-

lished in 2008, currently is helping to bridge these gaps with a new

fully integrated global system. The company, while involved in

several different industries, has made a solid effort to provide

logistics solutions to the oil and gas industry. After two acquisi-

tions, about 45% of the companys business addresses energy-

related supply-chain solutions. The company has grown 300% in

the course of 26 months. This growth is being driven by providing

Web-based visibility to the supply chain.

A visible solutionWhen it comes to supply-chain models, many companies operate

in a reactionary mode. This means that ordering materials is car-

ried out with very little awareness of when those materials will be

received. Not focusing on the purchase order (PO) side or the ven-

dor management side often can create significant lags between

order placement and when materials are received. Operating

through poor processes without metrics in place to ensure that

materials are moved through the warehouse and reach their desti-

nation in a timely manner can drive up cost substantially.

Crane combines a number of principles to provide morevisibility at both ends of the supply chain. Using a Web-basedproduct, like C2C, the company has completely integrated it into

their freight-forwarding system. Where most companies re-key

line item PO details into a freight-forwarding system, Crane has

developed the ability to release a complete PO or a single line

item, which saves time and serves to eliminate errors during

re-keying. As the line items are released, the information flows

electronically into the companys freight-forwarding system,

which builds the commercial invoice and packing list for that

consolidation.

One of our differentiators is the fact that we operate on one

single global operating platform, said Joe Smeraldi, director ofEnergy and EPC for Crane Worldwide Logistics. Due to acquisition

and legacy systems around the world, much of these data must be

re-keyed five or six times in average logistics scenarios. The new

approach changes that. Asias exports are Houstons imports. The

data are pulled through electronically. We dont ever re-key data;

we dont ever have to re-key values. It leads to much less error, and

its a much more efficient process, Smeraldi said.

The companys Web-based portal, known as C-View, gives cus-

tomers visibility of their materials throughout the entire supply-

chain cycle. The account-specific platform allows buyers to search

specific POs to see the status online. The platform provides line

Operating internationally is enough of a challenge without losing sight of the supply chain.

Tayvis Dunnahoe, Senior Editor

Visibility and communication are two keystones of consis-

tent, cost-effective logistics management.

INDUSTRY

PULSE


9/102

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item details such as promised dates, delivery times, and damage

reports. Because the system images all e-documents, customers

can even pull a copy of the vendor packing slip from the Web.Within 24 hours of receipt, the system can provide full, Web-basedvisibility to the client.

People love to see the status of their inventory, and were able to

show them in real time, Smeraldi said. Whether materials are

Issued, Not Received; On-hand in the Warehouse; In Transit to

Final Destination; or Arrived Destination, Awaiting Customs

Clearance, the companys online system can tell its clients the sta-

tus of their materials in any stage of that supply chain by country.

Improved international operationsNabors Industries operates rigs in 30 countries around the world.

From consumables and spare parts to capital equipment, when crews

have a need, a buyer issues a PO, which is then issued to a supplier.When this occurs, Crane receives an electronic copy of the PO.

The company supports its clients out of three major hubs:

Shanghai, Houston, and Aberdeen. In the first 12 hours of the PO

being issued, Crane contacts the supplier and verifies receipt of

the PO.

In its most basic form, the system helps to expedite POs as

they come into the hub. Traditionally, most companies would

not have visibility of the material until it arrived at their freight

forwarders dock.

After an extensive planning period, Crane went live with its

electronic data interchange in March 2008 in Shanghai. Things

went very well there, Smeraldi said. After the first three months

of managing POs, as part of a phased integration, the company

discovered that its clients Chinese suppliers were averaging deliv-ery 60 days past their commitment date. This had never beenmeasured before, Smeraldi said.

In addition to running past commitment dates, Cranes plat-

form showed that a lack of visibility led to other problems in sup-

ply-chain management, such as unnecessary reorders of materials

and ordering materials that are restricted in certain geographical

areas. Without a means of determining the root-cause analysis of

inventory on hand and existing problems, the client had a pur-

chasing excess that kept occur-

ring without its knowledge.

On any given day, Nabors can

have approximately US $2.4 mil-lion in its supply chain. Through

Cranes Web-based system with

better-tuned, better-designed

warehouse processes, the com-

pany has gained the ability to put

its material to work quicker.

Looking aheadIn a general sense, logistics sim-

ply is moving goods from point A

to point B. But with the elevation

in global activity, the logisticsside of the oil and gas industry isalmost an extension of procure-

ment, especially for companies

like Crane.

We manage their supplier

base rather than those goods

moving blind in a black hole

until they reach the freight for-

warder, Smeraldi said. By mitigating the aspect of blind move-

ment, the companys improved visibility works to resolve many

procurement issues in an ongoing, corrective-action basis. Rather

than work from crisis to crisis, Crane has moved upstream to bet-ter manage the logistics process and resolve issues as they arise.

Rather than just reacting to the issue, weve gone back and cor-

rected the root cause, Smeraldi said.

Visibility and communication are two keystones of consistent,

cost-effective logistics management. The companys C-View com-

bines four elements: service, execution, IT (which encompasses all

of it), and account management to provide an eyes-on-the-

ground approach that gives international oil and gas companies

more visibility to their supply chain. At the end of the day, it

comes down to service and execution because it is still a people

business, Smeraldi said.


Operating through poor processes without metrics

in place to ensure that materials are movedthrough the warehouse and reach

their destination in a timely manner

can drive up cost substantially.

INDUSTRY

PULSE


11/102

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Future looks bright for

expansion project,oil sands production

According to Canadian Ambassador to the USGary Doer, the US $12 billion Keystone Gulf Coast ExpansionProject will play an important role in linking Canadian crude oil with

the largest refining markets in the US and will, in the process, signifi-

cantly improve North American energy security.

TransCanada began commercial operation of the first phase of the

Keystone Pipeline System on June 30, 2010. A newly constructed

innovative bullet line now carries oil nonstop from Canada to market

hubs in the US Midwest.

Phase II will extend the pipeline from Steele City, Neb., to Cushing,Okla. The proposed Keystone Gulf Coast Expansion Project is a36-in. line that would stretch 1,661 miles (2,673 km) from Hardisty,

Alberta, southeast through Saskatchewan, Montana, South Dakota,

and Nebraska. It would incorporate a portion of Phase II of the Key-

stone Pipeline to Cushing and continue south through Oklahoma to a

delivery point near existing terminals in Nederland, Texas, to serve

the Port Arthur, Texas, marketplace.

While Canada campaigns to move forward with this project, the

country also is addressing the challenges associated with oil sands

production. In an exclusive interview withE&P, the ambassadorshared his thoughts on these subjects.

How will the Keystone project improve US energy security?If you ask most Americans the question, Where does most of your

oil come from? they would say Saudi Arabia, but Canada is the

largest supplier of oil to the US.

When people argue against oil from Alberta or argue against all

oil or fossil fuels they often neglect the fact that there is a continu-

ing demand for energy. Oil and gas will continue to be the fuels that

meet that demand.

The next question in terms of the energy security debate is,

Would Americans prefer to get their oil from Canada, a neighbor

with a democratic government and with the same democratic values

as the United States, or would they prefer to get it from the Middle

East or Venezuela? I think the answer to that question, again, is over-

whelmingly that they would prefer their neighbors.

Approval of the Keystone pipeline is going to be a defining point

at which the United States decides whether it will rely more on

Canada and less on the Middle East.

I think Governor Brian Schweitzer of Montana said it best when

we were discussing the Keystone project. He said, I dont send my

national guard to Fort McMurray or Edmonton; they are in the Mid-

dle East risking their lives.I cant make a better argument than that of the governors regard-

ing US energy security.

Does the project introduce benefits other than energy security?

There are many economic benefits. Thousands of jobs will be created

through pipeline construction and operation. That is one of the rea-

sons the project has garnered support in Montana, North Dakota,

South Dakota, Oklahoma, and Kansas and from both of the US sena-

tors from Texas.

Usually when youre proposing an energy project, people say, Not

in my backyard. For the most part, that isnt the case with the

pipeline. The money associated with building this pipeline is notcoming from the public sector. It is coming from the businesses

themselves, and that investment will create an estimated 13,000 pri-

vate sector jobs directly connected to the project along with thou-

sands of additional jobs indirectly associated with the pipeline.

While its true that Texas has a lower unemployment rate than the

rest of the US about 8.1% the state needs these jobs. The pipeline

project has the potential to help the economy.

Now is the time to get the building trades people, who have a 25%

unemployment rate, working. And this is not requiring any govern-

ment subsidies. Its straight-up old private-sector money cash on

the dash, as they say.

Canadian Ambassador to the US Gary Doer explains why theKeystone Gulf Coast Expansion Project is vital to the US and shares

evidence that melts the frozen facts on oil sands production.

by Judy Murray, Editor

(ImagecourtesyoftheGovernmentofCanada)

WORLD VIEW


13/102


Is the vocal opposition of environmentalists likely to be an obstacle to

creating a broader market for production from the oil sands?

We acknowledge that sometimes we are dealing with advocates

against oil. The unfortunate situation is that they often oppose opera-

tions on the basis of what I call frozen facts. This is particularly an

issue in Washington, not here (in Texas) and not generally where the

pipeline is proposed to go.

The number one frozen fact we have to deal with is the perception

of emissions. When the oil sands were first being developed, emis-sions were high 80% higher than conventional oil but that level

has been brought down to 18%. Its lower than that of California ther-

mal oil.

Number two is water utilization. Water volumes required to pro-

duce the oil sands was high when it first started. Its like comparing

the old IBM computer that filled up a room to a BlackBerry.

Water usage has been reduced from 10:1 to 2:1, which is lower

than ethanol. And it still must continue to improve as far as Canadi-

ans are concerned.

Number three is the belief that the oil sands are devastating the

province. In fact, weve set aside a portion of the Boreal Forest in

Canada that is the size of France; so weve preserved a lot of land. Wedo take seriously preserving forests in our country, especially some ofthe undisturbed lands that historically have never been touched

except for the traditional aboriginal people who lived in those areas.

Those are the frozen facts we have to deal with in Washington. It is

critical that we work to continue to disprove them.

Can you discuss some of the technologies that have been put to use to

address such things as the tailing ponds?

A lot of the technology has been used to reduce the number of tailing

ponds and the volume of water they contain. A big part of that is

reduced water utilization at the front end. A lot more water is reused

now, as is a lot of land.The industry in Canada knows that economic sustainability is tied

to environmental responsibility. Companies cant rely on energy

security to drive the industry; it has to be a work in progress on envi-

ronmental sustainability as well.

The message Canadas government has given to the industry is

that the best way to deal with critics is to correct the facts and to keep

moving our feet to improve our record.

What are some of the other things that you are contending with ?

One thing we are contending with is that inside Washington, nobody

wants to talk about coal having 60 times more emissions than the oil

sands. Because nobody wants to take on the coal lobby in Washing-

ton, the oil sands have sort of become a bit of a target. Im convinced

that if people have the proper facts, the oil sands can survive this

scrutiny.

The other thing were contending with is propaganda. I was

attending a panel in Copenhagen with Canadian Prime Minister

Stephen Harper last year that addressed emissions and environmen-

tal responsibility. There was a beautiful actress on the panel who said,

You know, Ive weaned myself completely off of fossil fuels.My response is that its a long kayak ride from Hollywood.Buying credits doesnt mean youve weaned yourself off fossil

fuels. You still take an airplane over to Copenhagen.

This sums up the battle were in.

How do you think Canada measures up in terms of environmental

responsibility?

Everybody wants to improve the environment, and thats why

Canada signed on with the United States to a 17% reduction in emis-

sions by the year 2020 from 2005. We committed to that in Copen-

hagen. It is a more doable proposal from our perspective than Kyoto.

Its more practical in two ways: More countries have signed on, and itis a more realistic and achievable objective. Weve also got harmo-

nized agreements with the goal of reducing carbon emissions by

17%, and weve come forward with the light vehicle and the

tailpipe emissions standards.

Meanwhile, Canada is going ahead with new regulations on

coal, which will probably eliminate all but two coal-fueled plants

in Canada for the purposes of electricity.

Were not trying to be holier than thou, and we know we have

to continue to improve our footprint. We take that seriously, but

critics of the oil sands should consider the fact that where other oil

is coming from is not Disneyland.

Phase II of TransCanada's Keystone Pipeline will extend the

pipeline from Steele City, Neb., to Cushing, Okla. The photo

shows construction near Augusta, Kan., in August 2010.

(Image courtesy of TransCanada)


14/102

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managementREPORT

Lean has become a thought-leadership topic for oil and gas execu-

tives lately, particularly as E&P companies review their asset

holdings under current economic and environmental conditions

and increased market competition. Seeking to approximate flaw-

less execution, many oil and gas companies have turned to Leanas an operating philosophy for achieving zero-defect performance

while maintaining a necessary degree of flexibility and responsive-

ness. Success depends on managing Lean from design through

implementation, particularly in the face of oilfield resistance.

What is Lean?What distinguishes Lean from other management principles is that

it requires reengineering all interrelated and supporting processes at

the same time. Lean presents the most comprehensive way of think-

ing about business and operating improvements while fully

accounting for each process, system, and organization and its

requirements for an integrated solution.The approach to improvement is very different between Lean

and other change initiatives such as Six Sigma. Instead of viewing

a process through measurement and analysis of variations and

under-performance, (e.g., design, measure, analyze,

improve, and control), it systematically looks for value

in a process from beginning to end, tracing all the way

through the process. Lean offers a more robust

approach that includes trial and error and creates

more sustainable results. It also leverages higher

order management systems for control of

processes and standardization of operating pro-

cedures. Such metric guidance serves to bet-ter direct the workforce on a daily,

shift-by-shift, area-by-area basis.

Lean in the oil, gas industryResponding to intense interna-

tional competition and cost pres-

sure, Lean principles have been

applied in most major industries.

Oil and gas companies, however,

have been reluctant to adopt the

principles out of concern for lost

flexibility in the face of the unknown. As any oil and gas executive

knows, each piece of information secured during an exploration,

development, or production optimization effort can dictate an

unanticipated course of action. With so many scenarios to manage,

how can an organization implement Lean principles?

A core business process is supported by several support

processes and sub-processes. Upon rigorous investigation, many of

these can be improved and standardized to some degree, collectivelyresulting in breakthrough performance for the core process. Lean

not only applies to repetitive processes such as well drilling and well

repairs but also to one-off processes such as capital projects and

greenfield developments.

Many Lean program leaders fail to recognize how important it is

for top management to get the entire workforce to openly embrace

the challenge of breakthrough performance, visibly demonstrating

managements alignment and support for them.

In addition, some programs employ months of extensive

training, pilot programs, or statistical analysis, stalling momentum

and delaying tangible solutions and results for which management

can claim victory. The faster and more effectively Lean can be inte-grated into operations, the faster business transformation willoccur. Hence, the concept of value velocity comes into play.

Value velocity is about getting rapid results to win buy-in and

commitment from middle management and front-

line supervision for the strategic importance of a

Lean initiative.

Significant improvementsin the oil patch

In the exploration process many support and sub-

processes are infamous for causing delays, such

as rework and unnecessary movement of peo-ple and equipment. Whether waiting on seis-

mic interpretations, permits,

infrastructure build-outs, or final

exploratory drilling prognoses, the

overall performance of the

exploration process often is

constrained by the perform-

ance of its many parts. By

improving each of the parts, the

core process can be improved

to a meaningful degree.

Lean interacts with the oil, gas industryCan Lean principles bring excellence to E&P activities, or will they fetter users and limit theirflexibility? The answer might come as a surprise.

Gary Traylor, Celerant Consulting

Successful change programs focus on both the technical

and the change dimensions of a Lean deployment. (Image

courtesy of Celerant Consulting)


16/102

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Additional ways oil and gas companies can

successfully apply Lean are: Lean developmental drilling, including more

than technical limit specifications to total depth

as well as the processes between rig movements,

from nipple-up to nipple-down, for all location

preparation and surface equipment installations

and for all while-drilling processes related to con-

tracted service companies and material providers;

Offshore drilling and operations logistics relating to all

people, material, and equipment, including Lean processes

for integrating supply bases, boats, and helicopters used to

transport employees and service company contractors, with the

main emphasis on 100% on-time and in-full delivery and arrivalat minimal costs and inventory levels;

Well-completion processes for onshore gas, particularly shale

gas operations, to include Lean optimization and coordination

of formation fracturing and/or gravel packing jobs with the

proppant and fluid requirements as constrained by multiple

factors such as transport mode mix, water availability, road

hauling integrity, injection permitting requirements, etc.;

Producing well-optimization and workover programs to

include Lean processes for predicting, prioritizing, and

sequencing through-tubing repairs and well pullings with the

objective of minimizing well downtime and restoring produc-

tion at the lowest cost (including rig lease requirements); and Gas gathering and compression system optimization, including

integration of customer tie-ins and new well hookup cycle

times, compressor station uptime, and cross-system gas balanc-

ing requirements, all for optimizing customer well drawdown

and gas delivery.

Overcoming cultural resistanceIn a survey in iSixSigma Magazine, the biggest challenge companies

face in implementing Lean is changing the culture, cited by 20% of

the 515 survey respondents (September 2009). When attempting to

change organizational culture, it is important to realize that cultures

cannot be changed overnight. It requires years to convert the manybeliefs, artifacts, rituals, and norms prevalent throughout the busi-

ness. Expecting real cultural change to become part of the organi-

zations DNA is simply not going to happen in a short space of time.

This is where another profound shift in thinking is needed.

Sustainable Lean performance is much more about people and

their behaviors than it is about technical fixes or plants and equip-

ment. The process of change must consider the reality of the situa-

tion in which people work. To change behaviors, management must

engage the organization around desired behavioral norms to demon-

strate the benefits of changing behavior. In the oil patch, particularly

in the field, change can be met with stiff resistance whether based

on a companys

historical success,

enduring myths about

personalities, or perceived risks

associated with change, especially when

safety and environmental performance are of the

highest priority.

Guiding organizational behaviors requires a strong sense of pur-

pose and must be led from the top down, with specific focus onengaging middle managers for their complete commitment to thenew targets for improvement. Management also must set strong

expectations for driving through obscurities and meeting demand-

ing timelines while providing sufficient support structures and

resources needed to break through the barriers of insufficient or

misunderstood data.

Bringing real bottom-line benefitsAchieving significant success through Lean relies on finding the

right fit, charting a robust roadmap to the end, measuring success

along the way, and winning genuine senior level commitment. The

workforce must fully grasp its short-, medium-, and long-term tar-gets and objectives for the program and understand how results will

be measured and reported to upper management. By emphasizing

value velocity, initial results should come quickly, keeping momen-

tum moving forward.

The company that accurately identifies opportunities, engages its

workforce, and builds the right systems to measure performance

and ensure continuous improvement can iterate the value stream

cycle faster, thereby getting more out of its organization over time.

When combined with the right focus on changing behaviors and

getting buy-in from employees with rapid, visible, measurable results,

Lean can bring oil and gas companies real bottom-line benefits.

managementREPORT

Expecting real cultural change to

become part of the organizationsDNA is simply not going

to happen in a

short space oftime.


18/102


19/102


Intelligent completion technology (i.e., a system capable of

remotely activate preinstalled downhole tools without direct

well intervention) took its first R&D steps in the mid-1990s in ajoint industrial project aimed at developing the first commercial

intelligent completion system. Since then, the technology has

evolved, becoming very widespread and much more reliable.

Eni ran the first intelligent completions in the Mediterranean

Sea on the deepwater Aquila project with mixed results. The com-

panys most recent experience with intelligent completions in

West Africa, however, has met with success. The project was the

industrys first execution of a three-level frac pack intelligent

completion, and the technology offered the full textbook suite of

benefits: accelerated production, increased recoverable reserves,

and fewer development wells.

West Africa firstEni faced three significant challenges in planning the ABO

11development well on the deepwater ABO field offshore Nigeria:

the three productive zones had to be selectively isolated and moni-

tored (per Nigerian policy), commingled flow from layers with

different oil and reservoir characteristics had to be managed, and

sand control management was required to prevent sand produc-

tion. An additional reservoir management goal was to accelerate

production of the deeper layers and achieve a production increase.

Eni carried out feasibility and risk analysis during the planning

phase, leading to selection of the intelligent completion with frac

pack as the best solution. Several benefits justified the increased costof this technology: overall project capital expenditure (capex) reduc-

tion (one well versus three), increase in expected cumulative produc-

tion, and anticipated production of the reservoirs lower layers.

The well came onstream in February 2009, with overall project

capex reduced by 35% and cumulative production increased by 20%.

Business case for intelligent completionsThe project base case initially envisaged one well for each of the two

main producing zones. This assumption was forced by the impossi-

bility of running a dual completion due to tight clearance between

tubing hanger and casing and the need to avoid workover during the

wells life. Comparing capex for the base and intelligent completion

cases showed that with intelligent completion on three layers, drilling

could be limited to a single phase. Drilling capex could be reduced

by 70% compared to the base case, while completion capex could

be reduced by up to 45% of the original approval for expenditure.

A simplification of the subsea production systems allowed furtherenhancement to the project economics.

Design issues, challengesThe upper completion for ABO 11 included two 2-in. flow control

valves with seven positions, one 312-in. flow control valve with 10

positions, two seal unit multiports with hydraulic and electrical

feed-throughs, one production packer with six feed-throughs, and

a downhole monitoring system. The completion was designed to

incorporate a frac pack sand control assembly.

The selected production casing had a 958-in. OD. To install the

frac pack assembly and flow control valves inside the screens, it

was decided to run 7-in. wire wrapped screens, 23 lb/ft, but with2-in. reduced size control valves that had to be re-engineered fromthe conventional 3.5-in. size.

Like other fields offshore Nigeria, ABO is characterized by sand

with high permeability. A frac pack was preferred to a gravel pack

Intelligent completionsets record offshore NigeriaIntelligent completions are becoming a standard in complex development projects when

the additional capex investment is justified by accelerated production, increased reserves,

or a reduction in number of development wells.

Stefano Di Vincenzo, Eni E&P Division

The intelligent completion increased cumulative production from

ABO 1. The base case (purple), two (red) zones and three (yellow)

zones used intelligent completion. (Images courtesy of Eni)

digitalOIL FIELD


20/102


21/102

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for sand management based on experi-

ence on ABO main. The first design was

confirmed during the drilling phase, anda 20/40 mesh was selected. A major con-straint was to achieve a good result in

frac pack operation with the 7-in. wire

wrapped screens installed within the

production casing with a clearance of

less than 1 in., as recommended in the

best practice of frac pack operations.

Sand controlThe selected brine for the two upper

zones was 1.23 specific gravity (SG)

CaCl2. For the third zone only, it wasincreased to 1.25 SG. A tubing-conveyed

perforating (TCP) assembly with 7-in.

guns with big-hole 12 shots per foot was

the perforating selected. After perfora-

tions, losses were controlled by fluid and by pumping a viscosified solids-free pill to avoid

damage to the formation. With the screens assembly in hole, an acid pill was pumped before

each frac operation.

No nonproductive time (NPT) was recorded during TCP operations. Some NPT resulted from

electronic connection malfunctions and weather during fracing and pumping. The use of a

stimulation vessel, initially not planned, eventually resulted in nearly five days delay. TCP runs

(running in hole and pull-out), screens and lower completion runs in hole, and frac pack opera-

tions (makeup flowhead, stub-in, and pumping) were considered an entire operation packagefor each zone.

Frac pack operations were carried out for each zone, with the lower zone proving to be the

best because a clear screen-out was achieved with subsequent stress and re-stress to achieve

the best perforation cover. The complete slurry volume was pumped into the formation for

each level. The middle and upper zones were fractured and pumped without a clear screen-

out to avoid formation damage. Each lower completion assembly was made up with a flap-

per isolation valve to prevent damage from debris falling into the formation and screens.

Completion operationsThe downhole monitoring system was designed to monitor pressure, temperature, and the

functioning of the flow-control valves. Three annulus gauges monitor reservoir pressure. The

lower and middle gauges are part of the upper completion string located inside the productioncasing as tubing-retrievable inside a single gauge mandrel. Single gauges were exposed and

oriented to the flowing annulus to monitor pressure and temperature before drawdown inside

the flow-control valve. It is possible to close each valve and monitor reservoir buildup without

shutting down the well.

When running in hole, the last valve was open while two valves remained closed. Avoiding

the dummy run also was an advantage because with this kind of multiport and valves, the

risk of damage with respect to a correctly performed space-out was higher because the

lower completion was exposed to potential damage.

Lessons learnedTwo years were spent reviewing the details of the project and adopting the learnings from

The details of the

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two previous experiences on ABO 9 and 10 (two zone intelligentcompletions with sand control).

In the end, there were a number of significant lessons learned:

Early involvement of the reservoir and completion depart-

ments is ideal;

Materials and electrical continuity must be performed on

a dry mate connector and electrical splice, as provided by

vendors, before running the completion;

Subsea motherboard cards must be supplied in advance bythe subsea vendor so site integration tests and load coeffi-cients can be communicated to downhole permanent gauges;

The contingency plan must be discussed with the completion

supplier in case a failure happens during the running in-hole

phase. For ABO 11, Eni ran a perforation contingency system

just below each valve that makes it possible to orient perfora-

tions in case of valve failure in the closed position (this kind

of valve will not move if the control line is sheared);

Slickline operations must be drastically reduced to avoid

flat time in subsea applications and to eliminate invasive

operations that could damage intelligent completion func-

tionality; and A dedicated team is the best approach for a challenging

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digitalOIL FIELD

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sealing technology.

www.c-a -m.com

R A I S I N G

P E R F O R M A N C E . T O

G E T H ER T M

? C AM ERON

LEADING

COMPETITOR

E LA S TO M E R I C SEALS

Seal

Working Pressure Temp Coverage

Seal

Working Pressure Temp Coverag

S

15

,

000

psi

-50 to

350F

- 15

,

000

psi 0

to

300F

T

5

,000

psi -50

to

300F

- 5

,000

Ps

0

to

250F

MEC 15

,

000 psi

-

50 to

350

F -

NOT O F F E R E D

SIB

15

,

000 psi

0

to 350F -

15

,

000 psi

-50 to 250F

SLS 20

,

000 psi -75 to 650F - 20

,

000

psi -75 to 400F

METAL SEALS

MRD

15

,

000

psi

-

50

to

350F

- 15,000

psi

0 to 350F

CANH

' 30

,000 psi

-

50 to 450F

-

20

,

000

psi -20 to 275F

SRL 30

,

000 psi

-50

to

650F -

20

,

000 psi -

MTBS 30

,

000

psi -75

to

450F - 20

,

000 psi -20 to 350F

Competitor data obtained from public sources.

CAMERO

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1

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26/102


digitalOIL FIELD

Once an oil or gas discovery is made, operators face a broad

spectrum of development options. One of the decisions that

has to be made at the outset is the approach that will be taken for

lifecycle management. Management takes into account both time

and technology in effectively scheduling routine and daily work.Norway-based oil and gas engineering company Aker Solutions

recently launched one of the most advanced integrated operations

suites available in the industry for lifecycle management as part of

its expanding drilling lifecycle services (DLS) business.

Into the futureThe most recent development has been

dubbed the Iport. It is a large facility in the

companys main office in Stavanger, on Nor-

ways west coast. This facility is the physical

manifestation of science with a vision in this

discipline.The main component is 3-D simulator soft-

ware technology for training, planning, and

testing purposes in relation to drilling proj-

ects. The technology behind the simulators is

derived from the gaming industry, which has

provided strong data processing engines and

great visual quality. Techniques such as laser

scanning are used to ensure all of the physical

measurements of every rig used in the program are correct.

The process is called Visioneering the combination of visuali-

zation technology and engineering. Visioneering goes beyond the

simple use of simulators. It requires cooperation and close dia-logue with the client at every stage of every project.

According to Ole Paulsen, who heads Aker Solutions perform-

ance technology center, The main feedback from clients has been

that the simulator makes quality assurance of rigs and equipment

much easier.

Precision is critical, he said. Having access to complex infor-

mation in the form of images simplifies project planning and exe-

cution, clarifies communication, and reduces risk and cost in

addition to having simulators as working tools.

Training in simulators has proven to be an effective and efficient

way of gaining offshore experience without ever having set foot on

a rig, which provides significant cost and HSE benefits.

The uniqueness of the center is that it combines the simulators,

technological facilities, and services under one roof in one port.

The center has five main areas on the ground floor, each equippedwith a simulator. The five areas include a dome-shaped training

simulator, two Visioneering suites, a mission control room, and an

online rig support room.

The dome simulator is the biggest simulator in the Iport and is

used mainly for training offshore personnel.

In the two Visioneering suites, personnel can meet for planning,

engineering, and precommissioning. They can check compatibility

between pieces of machinery as well as compatibility between

existing software/equipment and new software/equipment to be

installed. All of this is accomplished in accordance with the

Visioneering work method.

New technologyto set industry standardA novel approach to drilling lifecycle management improves dynamics for

deepwater operations.

Ivar Simensen, Aker Solutions

The technology behind the

simulators used in the Iport is

derived from the gaming industry.

(Images courtesy of Aker Solutions)


27/102

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In the mission control room, clients can bring their own servers and have access to simula-

tors that allow them to visualize drill floor activities (XfactorDES) and drilling processes

(XfactorDPV) on their rigs. Other possibilities include multidiscipline operational training,

well construction and drilling management, mission control, and support.

Personnel who staff the online rig support room provide 24-hour support for troubleshoot-ing and general support for day-to-day operations. For example, in an emergency situation,the support personnel have access to all rig documentation as well as a simulator. This

improves their ability to communicate with offshore personnel to facilitate rig operation

and repair without having to send personnel offshore.

The first floor of the facility has a small cinema with a specialized screen, walkways, and a

meeting room associated with the mission control room. With all of these technological inven-

tions and facilities available, the Iport center provides in one location everything clients and

visitors need to ensure a projects success.

The performance technology center was established under its current name in 2010 by the

internal merger of Aker Solutions drilling equipment hub in Stavanger, Norway, and its wholly

owned subsidiary First Interactive, which also was based in the countrys oil capital. The divi-

sion is spearheading the development of new technology in Aker Solutions DLS business andtoday has more than 10 years of operational experience.

The performance technology center employs approximately 100 employees in two Norway

offices in Stavanger and Oslo; St. Petersburg, Russia; and Kharkov, Ukraine. The center is part

of Aker Solutions global DLS business, which operates in all major deepwater drilling hubs

around the world.

In addition to domestic bases in the cities of Kristiansand and Stavanger, the group has

major hubs in Rio das Ostras, Brazil; Houston; and Singapore. All of the locations are fully

equipped with Aker Solutions simulators and highly experienced and qualified staff who can

provide around-the-clock service on Aker Solutions full range of topside drilling equipment.

In 2011, the company plans to roll out the advanced features from the Iport to these locations

to make the technology and service available to more customers around the world.

digitalOIL FIELD

Training in simulators has proven to be an effective and efficient way of gaining

offshore experience without ever having set foot on a rig.

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explorationTECHNOLOGY

On page 54 of this issue you will find a feature on seismic

data processing. Processing has really taken off in the past

few years, aided by faster compute power and technology transfer

from other industries such as gaming.

But the basic adage behind processing has always been

garbage in, garbage out (or any number of variations of the

word garbage). In other words, if raw data is of poor quality,there is not much that even the cleverest processor can do to ren-

der the final product useful.

However, I recently attended a client meeting hosted by Spec-

trum Geo, and I guess it could be argued that the company brings

another adage one mans trash is another mans treasure to

the data processing arena. Working with vintage data, Spectrum

can shed new light on prospective areas without shooting a single

line of new seismic data, although that often will be the final result.

I met with Ted Stieglitz, software development and business devel-

opment manager, and Andy Cuttell, executive vice president, to dis-

cuss the company and its business model. Spectrum has been a

processing shop for a long time, and more recently it hasbegun offering multiclient datasets. In both cases it hasexperience working with vintage datasets, which

Stieglitz referred to as datasets with opportunity.

According to Stieglitz, Theres a significantcost differential between reworking vintage dataversus acquiring new data. Obviously peoplewould like to have new data all the time. Butthere can be a 10-to-1 difference in cost.

Spectrums multiclient model is to find fron-

tier areas that are planning licensing rounds, track

down all of the existing data, and use the latest pro-

cessing methods to improve data quality. In terms of pro-cessing technology, Spectrum has a wide offering of technical

solutions, but it does not rely on any special tricks to improve

the value of vintage data.

I dont think the issue is having tools in your toolbox,

Stieglitz said. I think the issue is having good geophysicists

who know how to work the data, know the geologic basin, and

have the technical maturity to be able to think creatively to

extract the most out of the data.

On the client side, he added, often the data exists in house, and

even though new surveys might be planned, Spectrum starts

with the vintage data.

Any time you have a working petroleum system, theres always

an opportunity to revisit it, he said.

What Spectrum brings to the table that makes it an attractive

partner is what Stieglitz refers to as forensic geophysics, the will-

ingness to start from scratch rather than work with preprocessed

data. I would prefer to work with the rawest form of the data, he

said. I want to begin with raw field tapes (if possible).

Finding those original field tapes can be a daunting challenge as

mergers and acquisitions have wreaked havoc on tape libraries. In

one instance, Cuttell said, a project in the North Sea required five

3-D surveys to be merged together. The field tapes were inone location, the navigation tapes in another, and the

paper data were elsewhere still. This was true for

each survey, meaning that data had to be culled

from 15 locations.

It was chaos trying to sort that out, Cuttell

said. It took nearly nine months to get all of

the pieces together.

It is this kind of detective work that keeps oil

companies on the client list. Their internal geo-

physicists might know how to work the data quite

well, but being willing to find it in the first place could

prove too time-consuming.When it comes to getting a box of tapes and you have

to sort through all of the geometry information, do all of

the legwork to find the history, figure out what youve

archived, and try to fix that dataset, its very expensive,

and usually its more cost-effective for the client to

send that work out,

Stieglitz said. Were

always looking for

opportunities where

we can add

value.

Forensic geophysicsput the pieces togetherOne processing shop goes to great lengths to find vintage data and reprocesses it with

tender loving care.

Read more commentary at

EPmag.com

RHONDA DUEYSenior Editor

[email protected]


Any timeyou have a workingpetroleum system,

theres always anopportunity to

revisit it.


31/102

E P

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32/102

wellCONSTRUCTION

It is no secret that unconventional resources have come

onstream in a big way due to recent advances in horizontal

drilling and hydraulic fracturing. While the use of rotary steerable

systems, improved bit designs, and more robust downhole tools

are vastly cutting the time it takes to drill a well, fracturing tech-

niques will most likely benefit from a wide range of innovative

technology within the next five to 10 years.The key to successful completion is in optimizing the process

through proper placement and the number of fracs per well. Most

plays in the US are at more than 10 stages per well, said Amerino

Gatti, vice president, Reservoir Production Group at Schlumberger,

in a presentation at Decision Strategies Inc.s Oilfield Breakfast on

Dec. 3, 2010.

In addition, initial production and economic ultimate recovery

have increased year-over-year in the double digits due to the

advances in the drilling and completion market. For most author-

ization for expenditures, 40% to 60% are driven by drilling and

completion cost, Gatti said. By optimizing stages and increasing

overall production, o

revista e&p - enero 2011

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