The Goliat Field: Petroleum Reservoir Management Improvements

David Dubetz, TAMU; Kenneth Goolsby, TAMU; Amr Hailat, TAMU; Shuting Shan, TAMU.
Abstract
This paper provides concrete steps based upon petroleum reservoir management (PRM) principles to
improve development of the Goliat Field. Through analysis of development of this field, it was discovered
that the project is behind schedule regarding first production. This has raised a number of questions
regarding overall management of this field. After understanding the current PRM development approach,
several recommendations were outlined in order to enhance development of this project.
A comprehensive approach was taken, reviewing all available literature on the field in order to determine
risks, and current state with respect to PRM. Each of the PRM principles related to the project and
recommendations for improvement for each principle is provided in this paper.
Introduction
The petroleum exploration & production (E&P) industry is typically exposed to highly complex and risky
projects.These challenges arise from many disparate sources that include technical, economic, political,
and regulatory/environmental risks. Oftentimes, these challenges cannot be overcome with a single
management approach, and many risks cannot be completely controlled or even predicted. The PRM
approach promotes synergy and efficiency between all teams responsible for project operations.
Effective communication throughout the managerial hierarchy allows for greater awareness of risks and a
large pool of expertise from which to consider possible solutions. Project analysis from a multidisciplinary
perspective serves to expose otherwise unconsidered or uncommunicated ideas. This report applies a
PRM-style analysis to the offshore development of Goliat Field, in Norway. First, a multidisciplinary
analysis is applied to the current condition of the field. This information is then used to offer
recommendations for project improvements.
Reserve Assessment & Geoscience Model Integration
Goliat Field is the worlds northernmost oilfield, and is located in the Barents Sea, Norway. The reservoir
is 3000-4000m deep, under 400m of water. An estimated 174 MMBOE reserves exist in the formation,
which is split into four main reservoirs: Realgrunnen, Snadd, Kobbe, and Klapmyss. At the present time,
only the Kobbe reservoir has been drilled with producer wells. The Kobbe Formation is of Middle Triassic
age and produces 33 API oil from horizontal wells. The Snadd shale overlies Kobbe, which serves as a
landmark in well logs since shale can easily be distinguished from surrounding sands. Kobbe is split into
two members: Upper and Lower. The Upper Kobbe is a prograding deltaic system with mouth bars and
tidal lobes, while the Lower member is a heterogeneous fluvial depositional setting. The Lower section
has more limited lateral continuity than the Upper Kobbe, but both subgroups are highly heterogeneous.
Gross vertical thickness of the Kobbe reservoir (including both members) is approximately 240m (Bertelli,
2003).
Goliat field reservoirs wells have complex structure, with a large number of faults and high dip towards the
flank. This geology means compartmentalization of pay zones is likely, necessitating the use of highresolution reservoir models and simulators. This sets up lateral and vertical flow barriers that must be
accounted for in the reservoir fluid model. In a reservoir of this complexity, integration of well data with
reservoir simulators and other tools is needed to increase the likelihood of project success.

One example of an integrated management approach being taken to geological characterization of Goliat
Field is the use of an azimuthal resistivity well-logging technique. Extra-Deep Azimuthal Resistivity
(EDAR) is an advanced tool that can detect stratigraphic boundaries up to 30m away from the wellbore.
This makes it important for fault detection and for use during logging-while-drilling (LWD) techniques.
Before the EDAR data is readable, it must be processed using an advanced multi-component inversion
modeling technique. This algorithm is efficient enough for real-time use, and uses previous well-log data
to inform its processing parameters. A 3-D viewing tool is then used to integrate all of this data onto a
single screen, where an engineer can assess the best way forward (Larson et al., 2015).
Areas for improvement in geoscience & model integration include interpretation of well logs, ensuring
accurate simulations for gas injection, and coupling the reservoir fluid simulator with surface facilities
simulator. Fully coupled reservoir models are difficult to program, but have a number of advantages over
separate simulations. Since the production plan for Goliat Field involves separation of intermediate
hydrocarbons (heptanes plus) from produced fluids, full simulation of the reservoir fluid is necessary.
Typical reservoir simulators can simulate hydrocarbon fluid fractions up to about C 7 (heptane), but surface
facilities simulators require input data up to C40 for best results. For Goliat Field, a delumping algorithm is
suggested which allows the reservoir model to be trained on lab PVT results from subsurface fluid
samples. Using information, the full composition of the fluid from the reservoir simulator output can be
estimated for use in the surface facilities simulator (Vignati et al., 2010).

Data Management Coordination

Data Management as a PRM principle is the lynchpin of a successful project, not only in the development
phase of a project but throughout the lifecycle of an asset. Getting data management right from the
beginning can improve not only the efficiency, safety, and overall compliance metrics of the project, but it
contributes directly to whether or not a project is a success or failure.
Improperly managing data can increase the risk of going over budget for a long enough period undetected
that could derail the project. Having poor data management processes between different phases of the
project can increase the risk of the project not meeting regulatory, commercial, or safety expectations. In
the long term data will be either missing or extremely difficult to find, causing increased unnecessary
costs associated with paying resources to find information. Bad decisions directly related to the success
of the project will be made if data management procedures and processes are lacking.
The following steps were taken regarding Data Management. They purchased software to manage data,
workflows and processes, for example SAP, Primavera, and a SIGEP Oracle database. Also, the
Intergraph Smartplant Enterprise solution was purchased for document management purposes to
demonstrate safety, and regulatory compliance. Eni chose Intergraph as their solution for document
management. They valued the effective and consistent management of documents provided by
Intergraph SmartPlant Enterprise solutions, with auditable traceability that is essential to safety, to
demonstrate regulatory compliance and to manage the vast numbers of documents generated in a
complex process facility (Finding Petroleum, 2012).
The current framework consists of all project information (schedule, progress, costs, changes, interface
issues, etc) being cross referenced with each other, as well as to the main project control structures
(Work Breakdown Structure, Product Breakdown Structure), therefore enforcing a consistent view of the

project status from different perspectives. They have a cross-referenced Database for all project Data,
and a streamlined information exchange with contractors with multiple breakdown structures and control
elements. Theyve achieved consistent results, with a tailored approach to data entry, for different
contractors, products etc. This information ties directly into the budgeting and forecast, and overall cost
management. The supported data are Planning & Control, and Interface & Change. The SIGEP Oracle
Database integrates Schedule Data developed with MS Project or Primavera P5/P6 with Progress and
Cost Data managed with the SIGEP modules named: PT (Progress Tracking) and CM (Cost
Management) (Piantanida et al., 2009).
The benefit of having such a rigorous approach to data management regarding cost and budgeting has
allowed them to identify sooner rather than later that they are having some cost overrun issues, which will
allow them to make the necessary adjustments to ensure success of the project.
As it relates to Data Management the following improvements could be made to the Goliat approach. The
development team should define a data management strategy and approach prior to purchasing data
management tools as this would be more beneficial for them than just implementing out-of-the-box data
management tools. This could lead to substantial cost savings, tangible in the short term and intangible in
the long term. Also, the team is trying to make the data fit the tool(s) rather than tailoring the tool to fit the
data. Data management processes and procedures should be commensurate with and constructed to
support each stage of the project. And created in a way that allows for future growth and accommodation
of analogous data sets in subsequent stages of the development project. Taking the steps now to
implement some if not all of these recommendations will help improve the overall success of the project.

Stage Gate Process Utilization

The PRM Stage Gate topic is critically important to the overall success of the Goliat development project.
Key risks associated with not adhering to a Stage Gate process is as follows. If certain phases of the
project are not executed in the proper order with comprehensive and complete results, this can adversely
impact success of the project. Also, the project will be at risk of failure if all necessary inputs from prior
stages are not included/accounted for in subsequent stages. Though a Stage Gate process existed for
the development of this field, there still was some room for improvement identified.
A brief overview of the stages is as follows. An environmental assessment was completed followed by a
Plan for Development and Operations (PDO), included in it was an Impact Assessment (IA) and
alternative development approaches. The next stage was implementation phase which they are
completing, and are moving into the startup of production, however they are behind schedule (Eni.,
2015).
The environmental assessment was completed on the Goliat field, the results of which included ensuring
the reinjection of produced water with a minimum of 95%, also controlling CO2 emissions, and oil spill
contingencies (Bjornbom et al., 2010). The Goliat development project stage followed the environmental
requirements stage very closely, and was able to include these strict requirements early in the Goliat
development project.
This was followed by the Goliat PDO, which was approved by the Norwegian parliament on 6/21/2009.
This phase included a full review of economical, resource-related, technical, safety-related, and business
and environmental conditions. As well as information about how an installation may be disposed of at the
end of the petroleum operations. Included in the PDO was an Impact Assessment (IA) including a public

hearing portion whose main focus was on the non-technical themes. Within the IA was a Concept
Selection Phase which was responsible for evaluating alternative development techniques (Bjornbom et
al., 2010).
One recommendation for improving the Stage Gate process of this field would be better evaluation
activities after each stage to help improve outputs and inputs between stages. Moving onto the next
phase of the project without doing a proper look back can lead to oversights and mistakes. Also, more
clearly defined goals for each stage would result in better outputs. The managers of this project did not
specify goals for each stage and seemed to be very reactionary to outside influences rather than being
proactive in both identification of requirements, but also goals. The project is behind schedule which is
emblematic of loose controls around project Stage Gate execution. Considering incorporating this
suggestions for improvement should help prevent oversights, and lead to a more efficient execution of the
project.
Asset Management in Context with Company Strategies
Eni SpA as the operational company in the Goliat Field owns 65% share of the field. Statoil ASA owns the
rest 35% of it. The Goliat Field has not started producing since attaining the exploration rights in 2009
from the Norwegian Parliament. The new estimated production time is late 2015 (Hovland, 2014).The
postponed situation leads to increases in costs. To better manage this field, it is critical to discuss the
portfolio and strategies of the operational company. This section will analyze company portfolio from the
structure and business lines of the company, management strategies, company's current financial status
with recommendations, and the Goliat Field management with recommendations.
Company Structure and Business Lines
Eni SpA is an integrated energy company operating in 83 countries. Eni, with consolidated subsidiaries
engaged in oil and gas exploration & production, development and production, marketing of gas,
electricity and liquefied natural gas, power generation, refining and marketing of petroleum products,
production and marketing of petrochemical products, commodity trading and oilfield services and
engineering industries. In terms of the shareholders, Italian government owns 30% of the Eni Group and
has veto rights. The Eni Group as a whole holds 30.5% of Saipem, 8% of Snam, and 100% of Versalis. In
detail, Eni reduced the holdings in Saipem from 43% to 30.5% and completed the sale of the 5% shares
in Galp. Under the current low oil price environment, Eni tries to dispose the non-core business to cash in
to cover part of the company debt (Eni., 2015).
General Strategies
Given the current low oil price situation, Eni continues to complete company transformation. Based on the
2015-2018 Strategic Plan, the company set the objectives including cash and value growth, sustainable
shareholder distribution, and robust balance sheet. The actions for achieving the objectives are exploring
adjacent fields to maintain long term value, shortening the time to market projects, managing and
controlling capital expenditures and costs, restructuring mid-downstream and re-basing of dividend (Eni.,
2015).
Company current Financial status and Recommendations
Based on Q3 2015 financial reports of Eni, the profit has been wiped out in this period of time due to a
wider loss in the gas and power sector and higher taxes in exploration and production sector. The total
adjusted net loss was 257 million euros compared with net income of 1.17 billion euros a year earlier. Like
other big oil companies, Eni has been forced to cut spending, sell assets and cancel projects to partially
cover company debt, which has been partly offset by higher margins from oil refining.

In terms of the gas and power sector of Eni, the adjusted operating loss expanded from 180 million euros
to 469 million euros (Rascouet, 2015). Weak demand for gas in Europe and differences of contract prices
of gas over time are two main factors lead to a wide loss in the sector. To reduce the debt burden, it is
necessary to continuously reduce the equity holdings in gas and power related sector corporations. This
recommendation is made based on the previous actions Eni made in terms of Saipem and Galp in late
2015. Additionally, the companys main strategy is focusing on the core business, which is exploration
and production. Reducing the equity holdings in non-core business will develop more finance for
discoveries. The second recommendation for gas and power sector is to negotiate and maintain longterm gas contracts. The price differences over time could largely affect generating profit from the gas
sector. Hence, re-negotiating gas contracts is necessary as a long-term business strategy.
According to the Integrated Annual Report of 2014 (2015), the adjusted tax rate in 2014 increased by
approximately 2 percentage points due to a large share of taxable profit reported in the countries with
high tax rates. Especially in regions around Norway, the tax on oil production can be as high as 78%.
Hence, it is necessary for Eni to have strategies to reallocate the assets among countries to take
advantage of safe, lower tax rate countries. It is possible to use different transfer pricing methods to have
a reasonable tax payment range.
Additionally, it is critical for the company to be in compliance with regulations in different countries. It is
beneficial for maintaining company reputation and reducing unintended costs from violating regulations.
Violating regulations may lead to project delays or related fines. Also, better asset management in
different countries requires studying cultures and measuring the different risks of the countries.
The Goliat Field Financial Status and Recommendations
The recent analysis on the Goliat Field shows the estimated cost has increased from 3.23 billions euros in
2009 to 5.03 billions euros in 2015. The project has been delayed twice since 2013. The latest projection
on production date from this field is late 2015. Under the current low oil price environment, reducing
production cost is critical for producing oil and gas, especially from high cost Arctic oil fields. It could be
reduced through different approaches, including data management, geology and geoscience
improvement, and environmental risk mitigation. For instance, it is critical for the company to seek cost
efficiencies due to greater deployment of proprietary technologies designed to maximize the rate of
hydrocarbon recovery from reservoirs and reduce drilling costs.
Additionally, according to Enis CEO, the breakeven price for the Goliat field is near $55 U.S. dollars
based on the Brent oil benchmark price. However, the break even price for this field could be as high as
$122 if including the cost of delay and the cost of regulatory violations (Sylvers, 2015). There is not
enough information published on how the break even price has been calculated. In order to have better
finances for the field, it is necessary for the company to have a more transparent model on calculating the
breakeven price for investors. A more accurate break even price would be helpful for long-term project
management.
Decision & Risk Management Evaluated with Mitigation Plan
The petroleum industry is Norways largest industry; therefore, it is no surprise that Norway is one of the
leading countries in developing regional management plans as part of an integrated, ecosystem-based
management regime for their sea areas. To provide a common factual basis for impact assessments
related to O&G development, comprehensive information was compiled on environmental conditions,
commercial activities in the Barents Sea, and social conditions in North Norway.

Risk Management
The severe climatic conditions make the development of Arctic and execution of offshore and subsea
marine operations extremely challenging; therefore, special requirements have to be implemented to
mitigate risk during field development. With input from the industry, the Royal Norwegian Ministry of the
Environment developed an Integrated Management Plan that establishes a holistic and ecosystem-based
management of all activities in the Barents Sea; risk is estimated using the following:
Probability of accidental discharges to the sea
Probability of oil contamination
Exposure-based environmental risk analysis
Damage-based environmental risk analysis
Probability of damage-related costs
Figure 1 shows the links between risk management by the authorities and the actors themselves in
different phases of their activities, and a framework for an integrated risk management regime.
Environmental Impacts
The state of the environment in the Barents Sea-Lofoten area is generally clean, rich and productive.
This makes oil spills especially important to prevent and contain. The Goliat project was designed to fulfill
the high environmental requirements established through the Integrated Management Plan for the
Barents Sea. The purpose of the plan is to maximize the value of the offshore resources in the area while
applying strict requirements to secure the environment. In an effort to comply with the plan,
arrangements have been made to provide good co-existence with fisheries, which has the greatest impact
on the ecosystem. In addition, oil-spill preparedness is given high priority and thorough planning. An
integrated oil spill surveillance system and robust contingency plans have been put in place in the case of
a spill (Bjornbom et al., 2010).
Oil spill contingency plans consist of four barriers as shown in figure 2 (JPT, 2013):
1. Combating oil spills in the open sea close to the discharge source
2. Recovery of oil along the drift trajectory of the spill (between the source and the coast)
3. Combat measures in coastal areas and on the beaches
4. Measures for cleaning the beaches
Regulatory Impacts and Recommendations
Early in the development plan for the Goliat field, strict regulatory & environmental requirements were
established for the project. These requirements were closely followed and implemented in the design
phase. 2 examples highlighted below:
Zero discharge policy - Injection of produced water with a minimum of 95% regularity.
This was met by designing a robust injection system consisting of multiple injection wells and
pumps.
Reduction of CO2 emissions - Investigation of using power from shore in order to reduce
the CO2 emissions. The project team concluded that using power from shore in combination with
an offshore gas turbine-driven generator is the most effective solution. This resulted in cutting
CO2 emissions by half compared to 100% gas turbines.
On September of 2014, the Norwegian Petroleum Safety Authority (PSA) carried out an audit on the
Goliat FPSO where it found a number of regulatory violations. Findings concluded that improvements
could be made in connection with evacuation routes, test method for heating cables, organization of
electrical staff and overview of temporary equipment. These findings delayed the project start up and
generated significant losses to the Operator. More frequent internal audits may be prudent to mitigate
similar violations in the future.
Social Impacts and Recommendations
Petroleum activities are important both for economic growth and as a means of financing the
Norwegian welfare society. The Goliat field project is the first oil field to be developed in the Norwegian
sector of the Barents Sea. Both the development and operational phases will generate positive spin-offs
for the region. The financial benefits generated will be felt not only by business, but also by the cultural

and community life of the region as a whole. The fields impact assessment studied how petroleum
activities in the LofotenBarents Sea area affected employment. These activities are predicted to
generate between 1000 and 4000 year-round jobs in North Norway. Petroleum activities will also generate
jobs in other industries.
On February of 2015, a man fell from the Goliat FPSO at a height of 20 meters and was in the water for
a few minutes before being rescued. The PSA conducted an investigation to clarify the course of events
and identify the direct and underlying causes of the incident. The Operator should take this incident
seriously and work with PSA to eliminate similar near misses. These incidents affect the companys
reputation to regulatory bodies and society, which may risk their overall License to Operate. More
frequent HAZOPS may be prudent to mitigate similar incidents in the future.
Conclusions
The following recommendations will have the biggest impact on improving the field:
Better interpretation of well logs, ensuring accurate simulations for gas injection, and
coupling the reservoir fluid simulator with surface facilities simulator.
Defining an overall data management and coordination strategy prior to purchasing data
out-of-the-box software can lead to more efficient use of data and potential cost savings
Identifying inputs and outputs prior to starting a phase in the project, as well as
performing a look back or review would be help ensure key information is not overlooked
Be more transparent with key economic data such as break even prices
Testing and better oversight of electrical staff and equipment
Keep better track of near misses and other safety related incidents
These improvements will help with better data integration and insight into management and execution of
the project.

Acknowledgements
We would like to thank Professor McLeroy - TAMU for all of the help and assistance in analyzing this field,
and with helping us understand PRM principles enough to provide meaningful recommendations to
improve this field.
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The Goliat field project team showed robust integration of systems in the areas of risk management and
contingency planning. There is good coupling between R&D, exploration, and development projects,
which they were able to leverage to implement new knowledge and technology into operational activity.