Vous êtes sur la page 1sur 35
Executive Focus Building Service Solutions B based on It wasn’t long ago that the energy

Executive Focus

Building Service Solutions

B

based on

It wasn’t long ago that the energy conversation was all about hydrocarbon scarcity and peak oil. Now, thanks to the deepwater and unconventional resource booms, the conversation has changed. Today, the buzz is all about the potential prosperity that comes with an abundant global energy supply.

However, as we run the race to “unconventional”

prosperity, the finish line constantly moves because

new technical and economic challenges are uncovered

every day. And breakthroughs in technology and service

models will be required to meet these challenges.

We believe the next breakthrough for unconventional

resource development will be to leverage our

understanding of the subsurface to optimize drilling,

completions, and production.

One of the major lessons from the

initial unconventional “era” is that

to build a truly sustainable global

shale business, we must first reframe

our current approach—which relies

heavily on empirical data and a

factory drilling mindset—to an

approach that is based on geologic

measurement and scientific models.

We know that no two unconventional

resource plays are the same. Even

large source rock shale deposits

have sweet spots and nonproductive

sectors. So, our desire over the last

half decade to engineer the shale with

a one-size-fits-all approach cannot

be sustained on a global basis.

As we move to commercialize

unconventional resources in places

like China, Saudi Arabia, and South

America, we’re going to be less

and less inclined to drill hundreds

of wells in one play to use the law

of averages to predict results.

Instead, we have an opportunity

to integrate prediction techniques,

such as hydraulic fracturing models,

with geomechanics, petrophysics,

and reservoir simulation to identify

commercial prospects earlier and

to derisk the entire field faster and

more effectively.

Providing our customers with a more

comprehensive view of their reservoirs

to accurately pinpoint sweet spots so

they can make the most productive

decisions is a fundamental goal of the

Baker Hughes unconventional resource

strategy. We recently enhanced that

strategy by entering a collaborative

relationship with CGG, a fully

integrated geoscience company that

provides geological, geophysical, and

reservoir capabilities.

By employing reservoir models that

integrate log-derived, near-wellbore

geomechanical and petrophysical

properties from Baker Hughes with

calibrated seismic data from CGG,

operators can optimize well placement

and completion design earlier in the

asset life cycle for more efficient well

construction and more productive wells.

In this issue of Connexus, two articles

about total well solutions for customers

producing unconventional resources in

North America relate the importance of

reservoir intelligence.

In South Texas, Baker Hughes is

providing a total well solution to

Cheyenne Petroleum, one of numerous

smaller producers in the Eagle Ford

shale. The Baker Hughes reservoir

solutions team created a hydraulic

fracturing model using our proprietary

fracturing simulator and then

experimented with different fracturing

scenarios to see which methods

produced the best results. A production

simulator then showed how each

change would affect ultimate recovery.

In the Northeast U.S., Baker Hughes

is delivering a total well solution for

Gastar Exploration Ltd. The operator

is seeing increased production after

changing its standard fracturing

design to an irregular spacing design

based on a developing technique

that uses reservoir lithology and

geomechanical stress measurements

to place the laterals.

Reframing our unconventional resource

strategies around the geosciences and

advancing these new ideas mean we

can extract hydrocarbons in the most

effective, efficient, and sustainable

way possible.

It also means that as an industry

we can build a sustainable global

unconventional resource business that

minimizes our footprint, improves

recovery, and, ultimately, delivers

energy to help transform communities.

ultimately, delivers energy to help transform communities. Martin Craighead Chairman and CEO, Baker Hughes

Martin Craighead Chairman and CEO, Baker Hughes

www.bakerhughes.com

energy to help transform communities. Martin Craighead Chairman and CEO, Baker Hughes www.bakerhughes.com | | 1

| |

1 1

2013

|

Volume 4

|

Number 1

CONTENTS

04

Back to the Future

With operations reaching a performance plateau with current technology, knowledge, and experience, Equion and Baker Hughes have embarked on an ambitious, sustainable plan to design the well of the future.

12

Marcellus Muscle

In-house Baker Hughes coordinators enable small independent Gastar to operate with less overhead but still have access to all the engineering and R&D experts it needs for its operations in the Marcellus shale.

16

Industry Insight

J. Russell Porter, president and CEO of Gastar Exploration Ltd., shares his thoughts on the outlook for natural gas production in the U.S. and how smaller independent companies are playing a big role in the production growth from unconventional resource plays.

20

A Solid Bond

Baker Hughes is working closely with operators to understand their well integrity challenges, and then deploy the right combination of tools to address them.

20

26

Big Service

Cheyenne Petroleum is finding cost savings in almost every aspect of its Eagle Ford shale operations with a Baker Hughes total well solution.

31

The Right Advice

Gaffney, Cline & Associates’ global expertise is providing the technical, commercial, and strategic advice to enable Baker Hughes to bridge the gap between delivering products and services and delivering total solutions.

34

Smart Fields

More and more operators are introducing

the smart field value-added concept to their

business plan, which means much more than

just automating a field or completing the wells with “intelligent” devices.

38

After the Frac

04 As shale oil feedstocks move from the wellbore through the refinery and into the market as finished products, the downstream industry is looking for the right technologies to minimize refining bottlenecks, maintain refinery reliability, and ensure product quality.

2

|

refinery reliability, and ensure product quality. 2 | 44 Faces of Innovation Experience with time-released

44

Faces of Innovation

Experience with time-released medicine led

DV Satya Gupta to the oil patch and his work

in time-released additives in fracturing fluids

and the Sorb™ line of long-term production assurance products.

34

38
38

48

An App for That

The Gulf of Mexico’s frontier ultradeepwater Lower Tertiary trend has pressures up to 27,000 psi and reservoir temperatures up to 325°F (163°C). Baker Hughes has a single-trip frac-pack deployment system for that.

54

The Joy of Software

Drilling and evaluation software can be complex. Running it shouldn’t be, say the folks in the group that performs “usefulness” testing on software that is integral to many of the tools that Baker Hughes designs and manufactures.

59

Trash Talk

As much as 30% of the nonproductive time on a deepwater drilling rig is the result of debris in the wellbore. Baker Hughes may now have the industry’s best integrated system for removing it.

62

Good Neighbors

Baker Hughes supports the PETRONAS Petroleum Education Center, dedicated to the development of future industry leaders by providing hands-on training in real-world applications and by promoting the development of new products and technologies.

64

Latest Technologies

New sponge liner coring systems, electrical submersible pump designs, and hydraulic fracturing pump designs help solve customer challenges.

66

A Look Back

H. John Eastman is called “the father of directional drilling” because of his role in killing a giant oilwell fire in 1934 59 using his newly developed techniques for controlled directional drilling.

42

On the Cover

The Marcellus shale is a sedimentary rock formation stretching from upstate New York to the rolling Appalachian Mountains of West Virginia, shown here.

is published by Baker Hughes Global Marketing. Please direct all correspondence regarding this publication to connexus@bakerhughes.com.

regarding this publication to connexus@bakerhughes.com. www.bakerhughes.com ©2013 Baker Hughes Incorporated. All

www.bakerhughes.com

©2013 Baker Hughes Incorporated. All rights reserved. 38453 05/2013 No part of this publication may be reproduced without the prior written permission of Baker Hughes.

Editorial Team Kathy Shirley strategic marketing manager, brand

Cherlynn “C.A.” Williams publications editor

Tae Kim senior graphic designer

Shirley Leong senior graphic designer

Lan Pham

web designer

Contributors

Ann Liggio

Peter Schreiber

www.bakerhughes.com

Leong senior graphic designer Lan Pham web designer Contributors Ann Liggio Peter Schreiber www.bakerhughes.com | 3

|

3

4

|

4 | With most of its licenses set to expire progressively through 2020, Equion is challenged
4 | With most of its licenses set to expire progressively through 2020, Equion is challenged

With most of its licenses set to expire progressively through 2020, Equion is challenged to improve on an operational plateau for wells being drilled in the Colombia foothills. With Baker Hughes, it is seeking a step change in time and cost performance.

Colombia foothills. With Baker Hughes, it is seeking a step change in time and cost performance.
Colombia foothills. With Baker Hughes, it is seeking a step change in time and cost performance.
Colombia foothills. With Baker Hughes, it is seeking a step change in time and cost performance.

www.bakerhughes.com

Colombia foothills. With Baker Hughes, it is seeking a step change in time and cost performance.

|

5

6

|

Speaking at a technology leadership conference last year, Martin Craighead, chairman and CEO of Baker Hughes, said the lines between the players in the energy industry are blurring. He said that, going forward, success will require nontraditional “balanced” partnerships between operators and service companies. Together, they must learn to apply technology better and faster in a trusting, collaborative way.

“Primary responsibility for technology development shifted decades ago to service companies, and as these technologies—and the problems they are intended to solve—have become more exotic, and as the financial and other resource requirements increase, there is a necessity for nontraditional business relationships,” Craighead said.

The speech resonated with Carlos Vargas, vice president of Drilling and Completions for Equion Energia Ltd., a joint venture company between Colombia’s state-owned oil company Ecopetrol and Talisman Energy, a Canada-based exploration and production company. Equion acquired all of BP’s oil and gas exploration, production, and transportation holdings in Colombia in January 2011. Among the assets were interests in five producing fields in the Casanare foothills of eastern Colombia that, for more than 20 years, have been among the world’s most challenging drilling and completion environments.

Equion’s full-time workforce is fewer than 500 people, primarily former BP employees. Without the resources of a supermajor, Vargas and other leaders at Equion knew that reinventing the company and meeting its financial objectives were daunting challenges.

“When I took this position as vice president, I knew I had to do

something different to improve our performance,” Vargas says. “It’s very expensive to operate in the foothills, and we are no longer

a company that can support the capital expenditures needed to

develop these fields. We need a breakthrough in our performance by improving the way that we are drilling and completing our wells.

“Martin Craighead was right. The only way to overcome the challenges that we have in the industry today is to work differently by working together.”

A plan for the future

With a limited amount of time to recover hydrocarbon reserves in some of its contract areas, and with operations reaching a performance plateau with current technology, knowledge, and experience, late last year Equion embarked on an ambitious, sustainable plan it calls “The Well of the Future.”

Equion’s ultimate goal is to make the wells 30% more efficient in time and in cost. The firm chose Baker Hughes as its technology partner to complement its own capabilities to innovate and optimize the processes needed to construct and complete the challenging foothills wells.

With so much relying on The Well of the Future concept, choosing

a committed partner with world-class technical resources was

paramount, says Alexander Valdivieso, Well of the Future project manager for Equion.

> Among the Well of the Future team are (from left) Jairo Peñuela, Jose Luis
> Among the Well of the Future team are (from left) Jairo
Peñuela, Jose Luis Gómez, Jae Song, Wilson Carreño,
Mario Pacione, Alexander Valdivieso, Pedro García,
Graeme Symons, Luis Carlos Alzate, Cesar López, and
Diego Ramirez.

“Baker Hughes is a leader in drilling technology with substantial foothills experience with Equion and other operators in the area,” Valdivieso explains. “We have a very good relationship in terms of delivery, technology, and trust built over many, many years. We wanted a partner who could align with our goals and realize our sense of urgency to develop the project, and we have that visible commitment from all levels within Baker Hughes.”

“At Baker Hughes, we pride ourselves on helping our customers solve their most difficult challenges,” says Adam Anderson, president, Latin America. “Further, we always look for opportunities to collaborate with customers in innovative ways. In this case, a critical customer came to us with an open mind and asked us to help them achieve breakthrough performance in drilling some of the world’s most difficult wells. It was a natural fit for Baker Hughes and Equion to work together on the Well of the Future project, and having partners from our customers such as Carlos and Alexander will make this a tremendous success for both our companies.”

Embedded since December 2012 in Equion’s Bogota headquarters, a dedicated team of Baker Hughes and Equion employees with “multidisciplinary expertise and an interdisciplinary attitude” is 100% focused on designing a plan that will deliver significant and sustainable value versus the current wells.

“Equion has a challenging deliverable that will be operationally complex and

financially demanding to achieve,” says Edgar Peláez, Baker Hughes vice president of business development for Latin America and executive cosponsor of The Well of the Future. “Well construction in the Casanare piedemont [foothills] currently requires substantial investment in both time and money, leading to a low return on investment for shareholders and compromising business sustainability.

“The Well of the Future team’s goal

is to analyze 20 years of history, then

canvas the world’s ‘best practices’ to see what can be applied through different processes, equipment, and technologies to do things 30% faster and with 30% lower total cost through innovative well designs that can be extrapolated to all the future wells in the hydrocarbon-rich Piedemonte license area and beyond. With some of these wells taking 300 days to drill and complete at costs up to $100 million, a 30% savings in time and cost is significant.”

Reaching these operational goals will take a global network of high-level technical and management support, as well as a steering committee of upper management from both companies to govern the project.

“The Well of the Future team is really

a global network of experts on each

of the relevant technologies that may provide a solution,” Peláez says. “We don’t know where the next solution might come from, but we’re going to promote creativity and connectivity through both of our organizations.”

and connectivity through both of our organizations.” The complexity of the Well of the Future project

The complexity of the Well of the Future project can be readily appreciated by looking at just one aspect of the well construction process:

running the 11 ¾-in. casing and not getting it to bottom as planned.

11 ¾-in. casing and not getting it to bottom as planned. Among the questions that might

Among the questions that might arise are:

„ Why can we not rotate the casing to get past the obstruction?

„ Is the well profile creating too much torque and drag?

„ Are we exceeding the torque limit of the casing couplings?

„ Are the casing couplings hanging up?

„ Is the hole being cleaned effectively?

„ Has the hole collapsed? Why?

„ Have we got the mud rheology right?

„ Have we got the mud weight right?

„ Was the kickoff point too deep?

„ What about the hole geometry itself?

„ What are the geomechanical stresses at the stuck point?

„ Have we reactivated a fault?

„ Are there ledges?

„ Do we have interbedded formations?

It’s clear to see from this one example that the task at hand is not a simple one, and though some of these questions occur every day on every well in the world, what’s different in the Colombian foothills is that they can all happen on every well.

www.bakerhughes.com

world, what’s different in the Colombian foothills is that they can all happen on every well.

|

7

A mountain of challenges

The 17,000 ft (5182 m) of dipped and folded geology between the drilling rig and the producing zones beneath the Andean foothills is nothing short of hellish.

The complexities of the formations are numerous: high tectonic stresses and activity; multiple faults; geological uncertainty; strong natural tendencies; lost-circulation zones; very hard and abrasive formations; and deep, low-porosity reservoirs. Taken together, it means low rates of penetration (ROP), challenging tool and equipment reliability, an abundance of nonproductive time (NPT), and huge costs in rig time.

Poor seismic quality Almost every obstacle calls for a contingency plan, but the reliability and quality of seismic interpretation in the foothills are poor, according to Olga Carvajal, the Baker Hughes geomechanics expert assigned to the project.

“High-dip angles and successive faults make the acquisition of good seismic data extremely difficult,” Carvajal says. “Lateral variation—another important factor that increases the geological uncertainty—is so high that instead of these wells being called development wells, we need to think of them as exploratory wells.”

High NPT The last seven wells that Equion has drilled in the Piedemonte have averaged 16% NPT. Invisible lost time was even higher at 25%.

“Almost all the NPT is related to the complexity of the geology and the stability of the wellbore,” explains Jose Luis Gómez, senior drilling engineer for Equion. “Packoff events. Stuck bottomhole assemblies. Mud losses in the 26-in. and 18 ½-in. hole sections. Difficulty running casing to bottom.

8

|

hole sections. Difficulty running casing to bottom. 8 | Many of these costly NPT issues occur

Many of these costly NPT issues occur in the upper and middle hole sections long before we even get near the reservoir. In the reservoir itself we also have opportunities to reduce invisible lost time such as improving drilling efficiency. And, because we have to use a large, powerful rig to get to the deeper reservoir sections, rig down time becomes very expensive, as well.”

Fluid inconsistencies “Oil-based muds have been the preferred choice over the last 20 years for drilling across these challenging intervals, but even after all these years of experience, we are still facing many problems that have not being resolved,” explains Jairo Peñuela, fluids advisor for Baker Hughes. “Borehole instability along the intermediate sections is one example. There is a clear opportunity to reduce costs by improving the drilling mud system, especially considering the development of water-based technologies in recent years.”

Drilling difficulties As a senior directional drilling advisor for Baker Hughes, Graeme Symons has worked in some of the most challenging drilling environments on earth, including Colombia. “I don’t think there’s any place exactly like this,” Symons says. “Obviously, from a directional drilling standpoint, the geologic complexity is our challenge. On top of that, the hardness of the rock in this area makes it an extremely difficult place to drill, so drilling dynamics and tool reliability become issues.”

“Sandstones in the overburden and the reservoir are very hard and abrasive and they are normally drilled at a very low ROP—1.5 to 4 ft [.45 to 1.2 m] per hour,” explains Pedro Garcia, Baker Hughes senior drilling optimization engineer assigned to

Right Team

+

Analysis

+

Out-of-the-box Ideas

+

Innovative Engineering

+

Cutting-edge Technology

+

Management Commitment and Support

=

The Well of the Future

the Well of the Future team. “Finding the best combination of drilling system and drill bit to improve the ROP performance in the sandstones will have great impact in reducing the time and cost of the wells.”

“If these wells are split into sections, we see similarities to wells in Bolivia, Algeria, and Kazakhstan,” Symons adds. “So, we will be able to pull experience from those locations and bring it into this project. Equion is expecting us to go worldwide and

The Present

FRT8
FRT8

The Future

FRT8
FRT8

> While the Well of the Future project focuses primarily on reducing the time and cost to drill, making adjustments in casing design could help alleviate the problems of hole instability and severe mud losses, while a multilateral well design could make a huge difference in improving productivity.

identify places where we have done similar work and incorporate that experience.”

Completions questions “Due to the complexity of the reservoir itself, and to the uncertainties attached to the stress regime that exists in the reservoir rock, the final completion method and its design needs to be flexible enough to perform within a range of possibilities,” adds Juan Carlos Alzate, senior geologist for Equion. “We never know until the reservoir is actually being drilled whether

the wellbore has intersected a section with large fractures, natural fractures, drilling-induced fractures, no fractures, low porosity, or a combination of all of these. We have to have contingency plans in place to fracture or not to fracture the reservoir to increase production prospects.

“The one thing we do know for certain about all of these challenges,” Alzate concludes, “is that they need to be well understood from an interdisciplinary point of view before we drill the first well.”

The 17,000 ft (5182 m) of dipped and folded geology between the drilling rig and the producing zones beneath the Andean foothills is nothing short of hellish.

www.bakerhughes.com

the drilling rig and the producing zones beneath the Andean foothills is nothing short of hellish.

|

9

Photos courtesy of Equion Energia

“The only way to over- come the challenges that we have in the industry today is to work differently by working together.”

Carlos Vargas vice president, Drilling and Completions, Equion

Vargas vice president, Drilling and Completions, Equion Interdisciplinary solutions Traditional well operations

Interdisciplinary solutions

Traditional well operations typically follow a sequential pattern. The drilling team generally focuses on getting the well to total depth as fast as possible before it’s handed over to the team running completions and puting the well on production.

While this approach is usually sufficient for designing “normal” wells, the Well of the Future team quickly realized that a total interdisciplinary approach was in order to maximize innovation, synergy, and value.

“Going forward, all disciplines will work together on each other’s technical needs and challenges,” says Mario Pacione, Well of the Future project manager for Baker Hughes. “A typical example of this is the interrelationship between geomechanics, directional drilling, and fluids to obtain the best hole quality possible, especially in a stressed environment like the Andean foothills.”

10

|

in a stressed environment like the Andean foothills.” 10 | “This holistic approach is vital due
in a stressed environment like the Andean foothills.” 10 | “This holistic approach is vital due

“This holistic approach is vital due to the multitude of interlinked challenges,” Peñuela adds. “For example, due to the reactive shales, it is necessary to use an oil-based mud system to reduce shale instability. But logging-while-drilling tools work better

in water-based systems. Oil-based mud is

also more expensive and, in the event of

a lost-circulation event, even more costly.

Counter to that, oil-based mud is better able to combat the effects of abrasive formations on drilling tools. So, there always exists this conflicting scenario where one solution creates another problem.”

Before drilling begins in 2014, these are the issues the team will be grappling with to reach the best combination of systems, parameters, and procedures to accentuate the positives and minimize the negative impacts of every procedural decision.

“We are going to pick apart the way that wells were drilled in the past and put every equipment choice and every process step under the microscope and collectively ask ‘why was it done this way?’ and, ‘what if we do it this way?’” Valdivieso says. “We will be applying a continuous improvement technique called DMAIC [define, measure, analyze, improve, control], which will guide our engineering approach. It will lead us to define each problem, determine its impact, work out the causes, and determine the best solutions for every problem; then learn from

their implementation and feed findings back into the learning loop.”

And every step of the process is team driven.

“The team is divided into task force groups, putting together people who have related skills,” Valdivieso explains. “We work from the bottom up, and when an approval of the project managers is required for a decision, we meet together—everybody as a team— and we make the decision to proceed to the next step of the planning process. At the end of every stage of the planning process, the sponsors and the steering committee will receive a report, and then that governing body will give approval to continue to the next gate. That is a clear goal—having a process that facilitates our decisions.”

“This is an exciting and nonconventional project for Baker Hughes,” concludes Ramón Reyes, business development manager for Baker Hughes. “We are looking at 20 years of history and helping to project the next 20 years for Equion. It is not often that a service company is invited to be a part of the conceptualization and the vision of such a project. We are not here to sell products and services. We are here to understand the business of the future.”

We are here to understand the business of the future.” Colombia by the Numbers 2 nd

Colombia by the Numbers

2 nd

Colombia’s ranking in the world as an exporter of cut flowers, after the Netherlands, shipping more than USD 1 billion in blooms annually

500

million tons

Amount of flowers Colombia exported to the U.S. for Valentine’s Day in 2013

300

km

Distance the national bird of Colombia, the Andean condor, can fly in one day

(186 miles)

2.4 billion

Barrels of proven oil reserves (January 2013)

944,000

Barrels per day of oil production in 2012

56 %

Area of Colombia covered by natural forest

55,000

Number of species of plants indigenous to Colombia (15% of the world’s existing species)

1,870

Species of birds indigenous to Colombia (20% of the world’s total bird species)

2

nd

Colombia’s ranking in the world for most species of butterflies, roughly 3,000

3

rd

Colombia’s ranking in the world for Spanish-speaking population

6

th

FIFA world ranking as of April 2013

46

million

Population of Colombia, second largest in South America after Brazil

5700 m

(18,700 ft)

Height of Pico Cristobal Colon, Colombia’s tallest mountain peak

100

Percentage of Colombian coffee a product must consist of to obtain a license to use the Juan Valdez trademark

560,000

Number of people employed in Colombia’s coffee industry

Sources: Embassy of Colombia, Washington, D.C.; www.cia.gov; World Intellectual Property Organization

www.bakerhughes.com

Embassy of Colombia, Washington, D.C.; www.cia.gov; World Intellectual Property Organization www.bakerhughes.com | 11

|

11

Muscle in the

Muscle in the 12 | When a small company invests the majority of its capital budget

12

|

When a small company invests the majority of its capital budget into one project, every spending decision becomes a big one.

into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar
into one project, every spending decision becomes a big one. Less than three years ago, Gastar

Less than three years ago, Gastar Exploration Ltd. found itself a long way from its legacy assets in the deep Bossier natural gas play of East Texas when it ventured east into Appalachia and one of North America’s busiest unconventional resource plays—the Marcellus shale.

The good news for Gastar was that its 75,000-plus net acres in northern West Virginia and southwestern Pennsylvania contained “wet-gas” resources—a hidden treasure in the predominantly dry-gas Marcellus basin.

The bad news was that it was 2010, and service companies could pick and choose who they wanted to do business with in the Marcellus and every other unconventional play in the U.S. Gastar found itself with prime acreage and a plan to drill a lot of wells but no one willing to do the work—except Baker Hughes.

“At the time, it was really busy up here with the Marcellus coming on, and we didn’t have any idea how we were going to get our wells completed,” says Mike McCown, vice president for Gastar’s Northeast operations. “We had drilled our first well in November 2010, and it was obvious that the company providing drilling services on the well had no interest at all in providing us fracturing equipment. I convinced the folks that I knew at Baker Hughes that we were serious and that we were going to be here to stay.”

A two-page agreement and a handshake between McCown and John Fishell, director of strategic integration for Baker Hughes in the Northeast, forged a deal for

a “total well solution” on all of Gastar’s wells in the Marcellus.

“It basically means that Baker Hughes will provide competitive services at a competitive price, and Gastar will allow Baker Hughes to provide every service that it has available to us, including reservoir services, drilling systems, fluids and solids control, completions equipment, pressure pumping, wireline services, water management, and production chemicals,” McCown explains.

By early March 2013, Gastar had drilled and completed 56 wells using some of the most innovative technologies in the Baker Hughes portfolio.

Building relationships

Even though Gastar is a well-financed, publicly traded company with a strong acreage position in the Marcellus, it is still a relatively small operator. With approximately 45 employees, managing the flow of products and services from multiple suppliers on every well adds costs by creating delays and nonproductive time.

Realizing that the efficiency of continuous operations is a key component to improved economics, Baker Hughes has assigned two coordinators— Jorge Guzman for drilling and Jeremy Bolyard for completions—to manage the dynamics among the various product lines that are constantly moving on and off Gastar’s wellsites.

“The coordination of all these various product lines is a significant benefit to our working relationship,” McCown says.

“There’s a lot of moving parts out there. These wells are complex and, because we have so few employees, we rely on an excellent group of consultants out in the field. The coordination of all the different disciplines within Baker Hughes is essential and key to our success.”

Guzman and Bolyard work at Gastar’s Clarksburg, West Virginia, office. “Having in-house contacts coordinating activities enables us to operate with less overhead but still have access to industry experts,” adds Tom Rowan, Gastar drilling and completion engineer. “The communication level is tremendous because more heads come together to find solutions, but the main benefit is continuity. The concept has strengthened both companies.”

The partnership between Gastar and Baker Hughes goes beyond producing natural gas and oil. For example, Gastar’s health, safety and environmental (HSE) coordinator went to work for another company last summer, leaving Gastar without an HSE lead.

“The Baker Hughes safety manager for this area offered to step in and help us out,” McCown says. “He went out and reviewed our drilling rigs and performed onsite inspections of facilities that didn’t even impact our business with Baker Hughes. That speaks volumes about our working relationship. And, by the way, I’m aware of only one recordable injury—a minor ankle sprain—among all the hundreds of employees between the two groups that have been out on location daily for the past two years. That’s an excellent safety record that speaks for itself.”

www.bakerhughes.com

daily for the past two years. That’s an excellent safety record that speaks for itself.” www.bakerhughes.com

|

13

14

Driving down costs

Part of the total well solution for Gastar is having immediate access to a global network of experts.

“We depend on the research and development and engineering abilities of Baker Hughes as if they were our own,” McCown says. “The AutoTrak Curve high-buildup rate rotary steerable system is the best example I can think of. When that technology was communicated to us and we saw the savings that operators were getting in other parts of the country, we knew we wanted to use it because the savings were dramatic. Using the AutoTrak Curve system, we’ve reduced drilling time from 27 days to 18 days.”

“Gastar was the first customer in the Northeast to run the AutoTrak Curve system,” says Wayne Symons, Baker Hughes directional drilling services manager, Northeast area.

“These wells are around 6,500 ft to 7,000 ft (1981 m to 2134 m) true vertical depth, and the lateral probably averages 6,500 ft (1981 m). The ability to stay in the targeted area as you drill with the AutoTrak Curve system creates such a true wellbore and enables you to drill in a very timely fashion. We’ve also introduced the Talon high-efficiency PDC bits, which use proprietary polished cutters and improved mechanical and hydraulic designs to optimize drilling performance. The Talon bits are providing faster rates of penetration and longer run life in the shale formations. And, everyone in this business knows that time is always money.”

“That’s right,” McCown says. “If a larger E&P company saves $200,000 or $300,000 on a well it has much less impact in the big scheme of things than it does on Gastar when 80% of our capital budget is here in the Marcellus. The things that we do up here really matter.”

Embracing new technology

“Let’s face it, the Barnett shale has been drilled through for years,” McCown says. “The Marcellus has been drilled through on the way to deeper formations for probably 70 or 80 years and if it weren’t for new technology the nonconventional formations in these basins would never have been exploited and developed the way they are today. So, I think we have to embrace new technology.”

That willingness to implement new and innovative technologies is manifesting itself in quantified results for Gastar.

Gastar’s standard frac design that placed a stage every 290 ft (88 m) was changed to an irregular spacing design based on results of the Baker Hughes cased-hole Reservoir Performance Monitor (RPM ) pulsed neutron services and the XMAC acoustic logging services. Both services were run on tractor in the lateral to measure reservoir lithology and mechanical

properties, says Eric Claus, account manager for Baker Hughes wireline systems, who introduced the technology to Gastar.

“Working with our wireline group, Gastar chose the perforation stages for a nongeometric frac design based on information obtained from these logs,” adds Randall Cade, manager of the Baker Hughes reservoir solutions team. “The team analyzed production from this well and, compared to four offsets, found it to be 32% better per pound of proppant pumped.” Results were based on 66 days of production from all wells.

“Microseismic analysis and basin experience led us to recommend a 30° azimuthal change for horizontals,” adds Kevin Flavin, a senior geologic consultant. “This new direction will enable Gastar to take full advantage of natural fractures occurring at right angles to principal stress. Our recommendation to change well azimuth is being tested now.”

With approximately 100 wells remaining to be drilled, the Baker Hughes reservoir solutions team continues to recommend ways to improve well targeting and stimulation, including logging-while-drilling, improved frac designs using logs for lateral characterization, improved proppant, better completion techniques, and improved lift options. The team also is analyzing drilling

Time Steerable Motor System Vertical Curve AutoTrak Curve System Lateral Depth Photos courtesy of Charles
Time
Steerable Motor System
Vertical
Curve
AutoTrak Curve System
Lateral
Depth
Photos courtesy of Charles Ryan Associates

|

Lateral Depth Photos courtesy of Charles Ryan Associates | pad well architecture, including wellbore inclination and

pad well architecture, including wellbore inclination and tortuosity, to explain production anomalies.

McCown recently attended a presentation on the new Baker Hughes Rhino bifuel pumps that use a mixture of natural gas and diesel, reducing diesel use by up to 65% with no loss of hydraulic horsepower. “If Baker Hughes gets a fleet of those up here, hopefully we’ll be the first ones to use it,” McCown says. “It’s just a matter of time— due to regulatory pressure—before everyone will be compelled to reduce emissions and what better way to do it than to use your own gas that you’re producing on location?”

Another new technology introduced to Gastar, says Robert Todd, senior account manager for Baker Hughes, is the Baker Hughes Alpha Sleeve pressure-actuated valve, which is saving approximately USD 20,000 per well by eliminating tubing- conveyed perforating and cleanout runs. “This pressure-actuated valve provides interventionless access to the formation during plug and perf operations, saving time and money,” Todd adds.

As with any hydraulic fracturing operation, water management is always an added expense. Gastar built a pipeline from the Ohio River to one of its fields to avoid having to truck in water for its fracturing operations.

Sourcing water is just one part of the water management equation, however.

“Companies also face costly water disposal issues—particularly in the Northeast where environmental concerns are paramount,” says Shawn Shipman, area manager for Baker Hughes Water Management. “Gastar is using the Baker Hughes H2prO water management service to further reduce costs and environmental impact associated with water usage by treating produced and flowback water for reuse in hydraulic fracturing operations.”

“Based on some of the other experiences in the basin, we started off using 10% flowback water in our fracturing water,” McCown says. “Through recommendations by Baker Hughes, we have increased that to the point where we’re now up to 30%, minimizing our disposal costs and dramatically reducing the amount of water that we need to dispose of. At $7 a barrel, that’s a tremendous savings, and the water quality is excellent so we don’t have to worry about damaging the formation.”

“Costs have precluded small companies from drilling Marcellus wells,” McCown concludes. “We know that we do more with fewer people than any other company in the basin, and a lot of that is because of the assistance of Baker Hughes.”

lot of that is because of the assistance of Baker Hughes.” “These wells are complex and,

“These wells are complex and, because we have so few employees we rely on an excellent group of consultants out in the field. The coordination of all the different disciplines within Baker Hughes is essential and key to our success.”

Mike McCown vice president for Gastar’s Northeast operations

www.bakerhughes.com

and key to our success.” Mike McCown vice president for Gastar’s Northeast operations www.bakerhughes.com | 15

|

15

INDUSTRY INSIGHT with

INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,

Industry Insight

INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,

16

|

INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,
INDUSTRY INSIGHT with Industry Insight 16 | With the rise in production from unconventional resource plays,

With the rise in production from unconventional resource plays, much has been written about the U.S. becoming energy self-sufficient. What are your thoughts on this? Can this goal be achieved?

I don’t see the U.S. becoming truly independent of foreign crude sources to the point where no crude is being brought into the country, but I do think we can greatly reduce our reliance on foreign crude. If we adopt natural gas as a component of transportation fuels and if we continue to allow access for development of our resources in North America, then yes, I think we can greatly reduce our dependence on foreign crude.

development can take place. I think you’ll see these assets migrate toward the larger companies because they have more attractive cost of capital. But, there are decades of drilling to be done in these plays within the U.S., so I think there’s always going to be a role for the smaller companies to play.

always going to be a role for the smaller companies to play. What is your outlook

What is your outlook for natural gas in the U.S.?

The two areas we are watching the most are hydraulic fracturing regulations and additional air quality regulations. Both of those would increase the cost of the resource, but I think the resources are too large not to be developed and used domestically. So, I don’t think that they are in danger of stymieing access to the resources, but I think they’ll just increase the cost of the resource and, like everything else, that cost will eventually be passed on to the consumer.

I don’t think there is a lot of price downside, but I do think price is going to be limited because the size of the resource is so great. I think we need to use gas in a more valuable way—as a transportation fuel, for instance, primarily replacing diesel. The announcement in early March that the railway company BNSF is to begin testing a small number of locomotives using liquefied natural gas as an alternative fuel to diesel was very enlightening. BNSF is the second-largest user of diesel in America behind the U.S. Navy. I think the government should embrace the concept and really be supporting development of the infrastructure needed to do this sort of thing.

of the infrastructure needed to do this sort of thing. In your view, how will federal

In your view, how will federal and state regulations affect the future of activity in the Marcellus and other unconventional shale plays?

in the Marcellus and other unconventional shale plays? Although the Marcellus is considered a gas basin,

Although the Marcellus is considered a gas basin, Gastar has reported a 28% increase in oil/liquids reserves in just three years. To what do you attribute this increase in liquids reserves? And does Gastar intend to concentrate more on liquids production vs. gas production in the future?

We are fortunate that our position in Marshall and Wetzel counties, West Virginia, is in the window of the Marcellus where there is a very liquids-rich gas resource. The increase that we’ve seen has come primarily from the development of those areas, and the fact that each well has about 35% liquids and 65% gas. That makes the economics very attractive. We’ll continue to focus on areas like that because that’s where we generate the highest return. A company our size,

J. Russell Porter is president and CEO of Gastar Exploration Ltd. He has approximately 20 years of experience in the natural gas and oil exploration and production sector. Prior to joining Gastar, he served as executive vice president of Forcenergy Inc., a publicly traded exploration and production company, where he was responsible for the acquisition and financing of the majority of its assets across the U.S. and Australia. Porter earned a bachelor of science degree in petroleum land management from Louisiana State University and an MBA degree from the Kenan-Flagler School of Business at the University of North Carolina at Chapel Hill.

Business at the University of North Carolina at Chapel Hill. Smaller independent companies have been a

Smaller independent companies have been a large part of the production growth from unconventional resource plays. Do you see the mix of companies in these plays changing in the future?

The smaller companies have been the early movers in some of the unconventional resource plays. They’ve certainly been way ahead of the majors and even ahead of the superindependents. I think consolidation will continue because operators with lower cost of capital are the natural owners of these types of assets later in their life cycles when they’ve been ‘derisked’ and true large-scale

of assets later in their life cycles when they’ve been ‘derisked’ and true large-scale www.bakerhughes.com |

www.bakerhughes.com

of assets later in their life cycles when they’ve been ‘derisked’ and true large-scale www.bakerhughes.com |

|

17

or really any company, should be chasing the highest return available, and right now it’s in liquids plays. We’re fortunate in that our gas play has a very good liquids component to it.

that our gas play has a very good liquids component to it. and bundling of services

and bundling of services have helped us get more efficient and drive down some of those costs, and also having an attitude as a company that we’ve got to make things more efficient and drive those returns for our shareholders.

more efficient and drive those returns for our shareholders. Much of the industry doesn’t see the

Much of the industry doesn’t see the value in applying reservoir studies to the unconventional resource plays. Why are they important to Gastar?

I can’t imagine not using every piece of information that’s

possibly available at a reasonable cost. We were early adopters of microseismic technology, and we’ve used that extensively in the Marcellus. We’ve been able to constantly adjust and improve our results and our practices by using that data. And, now, we’re tying that microseismic data to our production data, to our reservoir studies, and to our core analysis to bring everything into one comprehensive analysis of ‘What is this rock? What is this rock doing? What is the rock telling us by the way it performs, the way it fracs?’ We’re trying to glean as much information out of all the data as possible.

glean as much information out of all the data as possible. $5 million to build a

$5 million to build a pipeline from the Ohio River into the area where we’re operating, so we access water at a fraction of the

cost compared to buying it from other operators or from local

municipalities. And, we’ve greatly reduced the number of water trucks on the roads, which reduces the impact on local communities, making the payback on our investment very attractive.

promising right now. There is a real focus on trying to eliminate costs and keep margins as high as possible in East Texas because that is a dry gas area for us.

in East Texas because that is a dry gas area for us. How is Gastar investing

How is Gastar investing in the communities in which it works?

Your total 2013 capital budget is USD 93 million—36% lower than 2012—yet you predict production will continue to increase. What is your strategy behind this?

We’re now to the point where we can lower overall spending and still provide production reserve and cash flow growth because the assets are derisked, and we’ve accumulated significant assets. We’re not spending nearly as much on land as a part of our overall budget. And, we’re really just now into the development phase of the Marcellus, in particular, and we can get more and more efficient. We spent quite a bit on land last year—our total capital was just under $150 million. This year, we will spend in the low $90s but probably still deliver meaningful growth in production and reserves. So we’re sort of reaping the benefit of prior years’ investment.

sort of reaping the benefit of prior years’ investment. Baker Hughes is your single-source provider in

Baker Hughes is your single-source provider in the Marcellus. How has this improved your efficiencies and effectiveness?

When we initiated a relationship with Baker Hughes, it was the only service provider that was willing to make the equipment and the personnel available to us on a timely basis. In return, we have been very open to the Baker Hughes total well solution concept of packaging services. Over the past two years, we’ve seen our overall costs per well decrease, and we’ve seen our EURs and our production increase. In my mind, that’s a direct result of the cooperation between Gastar and Baker Hughes, the fact that Baker Hughes is bringing a full suite of services to the project, and our willingness to engage new technologies—the formation imaging logs and the cased-hole logs, for example—that we might have been more reluctant in adopting if not for the relationship.

Baker Hughes has been very good to say, ‘Try this and see if you like it. If you do, then we’ll work that into the services.’ Some things can have a real impact going forward. For instance, we’ve taken our average drilling time per well from 27 days to 18 days, and a lot of that has been because of our use of the AutoTrak Curve high-buildup rate rotary steerable system.

I think we still have the chance to drive probably half a million dollars of cost out of a $7 million well. Pad drilling

In addition, we are recycling and reconditioning almost all of

our

produced water using the Baker Hughes Water Management

The first way we invest in the communities where we operate

program, which greatly reduces the amount of water we have to

is through the payment of tens of millions of dollars in lease

dispose of. We have water retention facilities where we can store

bonuses, which later get followed by royalty payments. In addition,

our

produced and flowback water, recycle it, recondition it, and

we’ve hired and trained local workers. Our staff in the Marcellus is

mix

it with fresh water to use in fracturing jobs. We’re not seeing

made up of mostly West Virginia, Ohio, and Pennsylvania natives.

any

problems associated with using more and more flowback

We interact a lot with local first responders, and we support those

water, and the amount we use just keeps going up.

groups financially. We’ve had town hall meetings where we’ve

All this means disposal costs go down and the number of vehicles on the road to move that water around goes down. So, we’re spending several hundreds of thousands of dollars less on every

had people from every discipline within Gastar—construction, drilling, completions, fracturing, road crews—available to answer questions from the community. We’ve put tens of millions of dollars into improving and repairing roads that have been

well

for water as a result of the investments we’ve made—and

damaged by our activities. In one instance, we spent $5 million

we’re becoming more efficient in water handling in general.

to build a new road that allowed us to access a large number of

our locations without using the local county roads. All that helps create a positive aura

our locations without using the local county roads. All that helps create a positive aura about Gastar within the community.

Is the industry being pushed by regulations toward a more sustainable water strategy? How can you drive down the cost of water to improve your project economics?

What is your near-term activity focus in your three core asset areas—the Marcellus, Mid-Continent oil play, and East Texas?

I think Gastar has a very good name wherever we operate in the Marcellus. We’ve been very conscious of health, safety, and environment, and we’ve had really no issues, so that’s been something we’ve focused on and we’re proud of because we’re not hurting employees. Overall we’ve got a very cooperative relationship with local community stakeholders—whether they’re royalty owners, surface owners, first responders, or the highway department.

community stakeholders—whether they’re royalty owners, surface owners, first responders, or the highway department.

We’re focused on continued growth in reserves and production

 

I

don’t think the industry needs additional regulations to move

and

cash flow per share. Right now, our focus is on those assets

toward a more sustainable water strategy. We’re doing it without regulation. Gastar has reduced the amount of water used and thus the cost of both our water acquisition and our water disposal because doing so makes economic sense. We invested almost

that

are generating the highest return available—liquids-driven

assets—so, we’ll continue developing the Marcellus. We’re derisking our new Mid-Continent oil play and that’s looking very

our new Mid-Continent oil play and that’s looking very “When we initiated a relationship with Baker
our new Mid-Continent oil play and that’s looking very “When we initiated a relationship with Baker

“When we initiated a relationship with Baker Hughes, it was the only service provider that was willing to make the equipment and the personnel available to us on a timely basis. In return, we have been very open to the Baker Hughes total well solution concept of packaging services. Over the past two years, we’ve seen our overall costs per well decrease, and we’ve seen our EURs and our production increase.”

overall costs per well decrease, and we’ve seen our EURs and our production increase.” 18 |
overall costs per well decrease, and we’ve seen our EURs and our production increase.” 18 |
overall costs per well decrease, and we’ve seen our EURs and our production increase.” 18 |

18

|

overall costs per well decrease, and we’ve seen our EURs and our production increase.” 18 |

www.bakerhughes.com

overall costs per well decrease, and we’ve seen our EURs and our production increase.” 18 |

|

19

Integrated technology solution aimed at

Driving innovations in Well integrity

20

|

By collaborating closely with operators and drawing from a comprehensive portfolio of design processes, cementing technologies and equipment, and R&D processes, Baker Hughes helps minimize risks and ensure long-term integrity for wells around the world.

and ensure long-term integrity for wells around the world. The concept of well integrity is not

The concept of well integrity is not new to the oil and gas industry, but several dramatic and well-publicized incidents in recent years have made the topic a higher priority for operators, regulatory agencies, and the public at large.

“In a world of tightening environmental regulations and increased oil and gas activity in close proximity to high-density population centers, operators must demonstrate the highest competence and commitment to working in a safe and sustainable manner,” says Umberto Micheli, vice president, Baker Hughes Cementing product line. “Without this commitment, an operator may have limited options for sustained production in many regions.”

According to NORSOK standard D-010*, well integrity is defined as the “application of technical, operational, and organizational solutions to reduce risk of uncontrolled release of formation fluids throughout the life cycle of a well.” Baker Hughes’ philosophy on well integrity closely mirrors this definition, which has driven the company’s development of several technologies and applied solutions designed to improve cementing operations, selectively shut off flow zones, and assure long-term well integrity.

With continued expansion into deepwater frontiers and unconventional shale plays onshore, operators need ongoing assurance

that more advanced well integrity solutions are available. “Robust wellbore construction and completions tools will be needed to ensure long-term integrity of more complex wellbores that tap into deeper, hotter, and higher pressure reservoirs,” says Glen Benge, Baker Hughes senior cementing advisor.

“This prompted Baker Hughes to conduct a serious review of its integrity technologies two years ago, in cooperation with our clients, to highlight technical gaps that need to be filled to meet a producer’s operational goals and new well-safety regulations.”

need to be filled to meet a producer’s operational goals and new well-safety regulations.” www.bakerhughes.com |
need to be filled to meet a producer’s operational goals and new well-safety regulations.” www.bakerhughes.com |

www.bakerhughes.com

need to be filled to meet a producer’s operational goals and new well-safety regulations.” www.bakerhughes.com |

|

21

This review identified new development areas for the company and a need to combine well simulation, cementing, evaluation, and mechanical barrier technologies under one comprehensive well integrity solution. “This offering demonstrates our commitment to work closely with operators to understand their well integrity challenges, and then deploy the right combination of tools to address them,” says Deepak Khatri, director of onshore cementing for Baker Hughes.

Success through simulation

An early step to reducing well construction risks is performing an in-depth, prejob evaluation that considers the objectives and challenges of building the well ahead of designing the cementing job.

Baker Hughes cementing specialists complete this vital step by creating cementing prejob models using a number of cementing simulation software applications.

The CemFACTS advanced cement placement software incorporates the planned cement setting depth, hole size, desired pump rates, and bottomhole temperatures and pressures to simulate cement slurry placement. It also performs interactive calculations of the necessary volumes of cement slurry and spacers, mixing and displacement rates, and anticipated pressures. The simulation also factors in fluid compressibility and multiple temperature regimes. Taken together, this allows the operator to better predict rheological changes under bottomhole conditions, and pump rates can be modified to avoid lost circulation or fluids migration.

22

|

modified to avoid lost circulation or fluids migration. 22 | Once the cement job has been
modified to avoid lost circulation or fluids migration. 22 | Once the cement job has been

Once the cement job has been completed, the CemFACTS software evaluates the results and analyzes how well they compare with the prejob simulation. “The software highlights deviations between the simulation and reality, enabling us to make changes to the cement job design for future wells and further optimize the process,” Khatri says.

To better understand the expected wellbore stresses that will act on the cement and impact its long-term integrity, Baker Hughes engineers run the IsoVision software application. Users input the physical properties of the cement, casing, and formation, as well as any expected temperature or pressure changes that might occur during the cementing, fracturing, and production phases. The software then models the radial and tangential stresses

and predicts whether the cement sheath will maintain its integrity throughout the full life cycle of the well.

With this information, operators can make changes to their cementing program, such as including different additives in the cement that change its compressive and tensile strength, Young’s modulus, and Poisson’s ratio, and make it more resilient to downhole stresses.

“The benefit of these simulation offerings goes beyond the ability to make changes to the cement job design,” Khatri says. “They help engineers to make informed decisions regarding the placement, design, and selection of a cement system to better withstand wellbore stresses and minimize risks throughout the well’s producing life.”

minimize risks throughout the well’s producing life.” Cementing a solid bond Once the simulation is completed,

Cementing a solid bond

Once the simulation is completed, Baker Hughes works with the operator to select the optimal spacer system, which helps ensure that the wellbore is free of drilling mud and other debris, and water-wets the casing string and formation rock for vastly improved cement bonding.

The Baker Hughes well integrity service includes the UltraFlush ME (micro emulsion) spacer system to assist in this effort. This patent-pending surfactant technology displaces oil- based mud systems and breaks the oil phase down into nanoparticle-sized droplets that are easily carried out in a strong water-external emulsion.

To further optimize a cement job, operators need assurances that the cement is delivered to the desired location in the wellbore, without causing lost circulation issues or other damage to the producing formation. The SealBond cement spacer system can be deployed to clean the wellbore as well as mitigate the invasion of cement slurry filtrates into the formation by forming a barrier at the wellbore wall, which also acts to strengthen the wellbore.

„ The DuraSet system to withstand stresses induced by hydraulic fracturing, high-injection pressures, and temperature fluctuations

„ The PermaSet system for maximized cement longevity in CO2 and other corrosive environments

„ The XtremeSet system to ensure long-term zonal isolation in wells with bottomhole temperatures as high as 600°F (316°C) and pressures up to 40,000 psi (275.8 MPa)

“We continue to develop new Set for Life cement system formulations to respond to more challenging wellbore-stress scenarios,” adds Rob Martin, Cementing product line manager for Baker Hughes. The latest addition to the family is the EnsurSet self-sealing cement system, which seals tiny cracks in the cement sheath that occur as

the casing string expands or contracts due to a sudden change in wellbore temperature or pressure. “The EnsurSet system responds to these stresses by sealing cracks up to 0.15

mm [0.006 in.] in size multiple times and

wherever they may occur in the cement,” Martin says. “This solution was developed to address the current industry concerns around maintaining sustained casing pressure and preventing microannulus gas migration.”

Once the wellbore has been properly conditioned a cement slurry is chosen that will ensure the best long-term resilience against stresses in the cement sheath.

Baker Hughes has designed specialized cementing equipment, including the Falcon

land-based units and the Seahawk offshore cementing units to flawlessly execute cementing operations reliably, safely, and

Baker Hughes has a wide variety of cementing offerings under the Set for Life family of cement systems—customized

cost

effectively.

solutions that address a host of downhole

This

equipment includes fully automated

conditions and well requirements. These

slurry density control, a robust process

solutions include:

that

allows high-rate, heavyweight, and

„ The DeepSet system for shallow water and gas-flow control in deepwater wells

ultralightweight mixing while providing ergonomic safety and comfort features for the cement unit operator and critical component redundancy.

www.bakerhughes.com

safety and comfort features for the cement unit operator and critical component redundancy. www.bakerhughes.com | 23

|

23

24

|

A new wireless topdrive cement head was

recently developed to improve the safety and reliability of ultradeepwater cementing operations. The tool is capable of remotely launching plugs for offshore deployment using a touchscreen and can rotate the string to improve cement placement.

Ensuring excellence

“Because the true benefit of the long-term well integrity solution hinges on reliable tools and in-field expertise, Baker Hughes

invests a great deal of time and resources

to test all cementing technologies prior to

deployment and to train personnel in the

safe and efficient deployment and operation

of all cement slurries, tools, and equipment

involved in the job,” Khatri says.

“We have dedicated innovation centers strategically located around the world, including Tomball, Texas; Dhahran, Saudi Arabia; and Rio de Janeiro, Brazil,” he says. “These centers serve as collaboration engines, where we work with our clients to jointly develop technologies that address specific regional needs.”

In the cementing arena, Baker Hughes qualifies cement and spacer systems; fluids using equipment that includes a pressurized tensiometer to measure direct uniaxial tensile strength at downhole well conditions up to 15,000 psi (103.42 MPa) and 400°F (204°C); a device to measure cement expansion and shrinkage under various temperatures and pressures; and a device that measures the wettability and compatibility of cements and spacer fluids in downhole conditions.

“Our technology centers have served as vital proving grounds for the development of the EnsurSet self-healing cement, where we conducted controlled cracking tests under temperature, allowed the cement to seal, and then attempted to flow oil, gas, and other fluids through it to evaluate the integrity of the resealed system,” Martin explains. “We have also developed multipurpose additives and new cement retarders in various regional centers.”

Qualified personnel are the final critical component of ensuring well integrity for the life of the well. Baker Hughes invests

in a comprehensive training program that fosters competence, a commitment to safe operations, and personal development. Through its structured LEAD (Learn, Excel, Achieve, and Develop) training program, employees gain in-depth well integrity and cementing application expertise with both theoretical and hands-on learning. This includes a Web-based Learning Management System, which provides training course catalogs, online access to Web-based teaching modules, access to external learning content, and assignment and management of individual competence requirements and records.

“Just as airline pilots use flight simulators to train and gain confidence in their abilities, our field specialists train in a classroom environment on cement unit simulators,” says James Curtis, director of offshore cementing for Baker Hughes. “These simulators familiarize our field specialists on the Seahawk and Falcon cementing units under various ‘what-if’ scenarios, so that once they get to the field, they can run these systems efficiently and safely, and correct any operational issues should they arise.”

As operators move into new areas that demonstrate more technical challenges for long-term well integrity, Baker Hughes aims to continue integrating new technologies and services. “We keep looking for new ways to expand and improve our cementing systems, analysis, and modeling software, and in-house expertise to surpass the industry’s well integrity needs for remote and technically challenging wellbore environments around the world,” Micheli concludes.

environments around the world,” Micheli concludes. * The NORSOK standard is developed with broad petroleum

* The NORSOK standard is developed with broad petroleum industry participation by interested parties in the Norwegian petroleum industry and is owned by the Norwegian petroleum industry, represented by The Norwegian Oil Industry Association and Federation of Norwegian Manufacturing Industries.

> Baker Hughes trains field specialists on cement unit simulators and tests all cementing technologies before they are deployed to the field.

technologies before they are deployed to the field. Further wellbore isolation can be achieved with the
technologies before they are deployed to the field. Further wellbore isolation can be achieved with the

Further wellbore isolation can be achieved with the proper application of gel treatments such as the Baker Hughes ZoneSafe gel, which penetrates porous zones and blocks the flow of fluids or gas into or out of treated areas. “The ZoneSafe gel provides the necessary protection for areas where it is vital to ensure nonflowing conditions and to keep well production at optimal levels,” says Freeman Hill, product line manager for Baker Hughes Subsurface Water Management Services. “The treatment is easy to use and to deploy in the field, and it has negligible impact on operations.”

The gel treatment can be added into a cement squeeze just prior to deployment, and the standard kit is applicable in downhole temperatures ranging from 80°F to 140°F (27°C to 60°C). A higher temperature system also is available. “The ZoneSafe treatment has been successfully deployed in multiple annular channel cement squeeze operations to protect critical exposed areas in the well,” Hill adds.

An operator in the Marcellus shale in the Northeast U.S. used the gel treatment on 50 horizontal wells that were shut in due to potential health, safety, and environmental (HSE) hazards caused by channeling behind the well casing. These channels can be very difficult to squeeze off using standard squeeze practices, which usually require multiple attempts before achieving satisfactory results. The operator stood to lose approximately USD 12.6 million in production revenue for each cumulative month that the wells were shut in. A ZoneSafe treatment was completed on each well in less than half a day, followed by shutting in the wells to ensure proper setting and curing of the polymer gel and the cement. Once the wells were brought back on production, follow-up analysis showed that the gel treatment had sealed the behind-the-pipe channels, thus eliminating HSE concerns and getting production back on line fast.

www.bakerhughes.com

behind-the-pipe channels, thus eliminating HSE concerns and getting production back on line fast. www.bakerhughes.com | 25

|

25

BIG

BIG SERVICE 26 | www.bakerhughes.com | 27

SERVICE

BIG SERVICE 26 | www.bakerhughes.com | 27
BIG SERVICE 26 | www.bakerhughes.com | 27
BIG SERVICE 26 | www.bakerhughes.com | 27

26

|

BIG SERVICE 26 | www.bakerhughes.com | 27

www.bakerhughes.com

BIG SERVICE 26 | www.bakerhughes.com | 27

|

27

It’s no secret that the biggest players in the oil patch get their pick of vendors and services, but what about the rest? When small energy companies drill multimillion- dollar wells, they’re putting a sizeable chunk of the company’s cash on the line. Things have to go right the first time.

That’s tough in a busy market. Good luck scheduling a completion or frac date when the majors can have the biggest service companies tied up for years.

“One of our biggest problems in the Eagle Ford has been getting vendors,” says Greg Presley, senior operations engineer for Cheyenne Petroleum. “If you’re not a major company and don’t have other places where you’re using their services, it is very difficult to get reputable companies to do anything for you. The majors are first in line for mud and cement and pipe; all the same goods and services we need.”

Cheyenne Petroleum is typical of the hundreds of small oil and gas companies in the U.S. Based in Oklahoma City, Cheyenne holds some 17,000 acres in South Texas, where it produces more than 5,000 barrels a day from the Eagle

28

|

produces more than 5,000 barrels a day from the Eagle 28 | Ford shale and the

Ford shale and the Pearsall formation.

For companies like Cheyenne, it’s a challenge just to execute their development plan when they have to piece together every aspect of each new well. That’s where Baker Hughes comes in.

Improved project management

Vincent Palomarez is the business development manager for U.S. Land. His group coordinates activities between the various Baker Hughes product lines for customers in the lower 48 states. Palomarez is also Cheyenne’s single-point of contact with Baker Hughes. The new arrangement is a step-change from the way things have worked in the past.

“Baker Hughes and other large service companies are organized around product lines,” Palomarez explains. “Pressure pumping, for example, is separate from the drilling group, which is separate from completions or reservoir services.”

That corporate structure works well enough for large customers who are often organized along the same lines, but for Cheyenne and other independents, it means coordinating

with dozens of different service groups and vendors for everything they need to construct a well and get it on production. Large energy companies typically have the staff and experience to do it, but smaller companies don’t.

“What we’re offering is a unified front across all of our project lines,” Palomarez says. “For smaller companies, it greatly simplifies the process to have one person to contact for anything they need.”

Baker Hughes calls this approach “total well solutions”—a well that is built almost entirely using equipment and services it provides. It’s not just efficient in terms of teamwork, there are cost savings as well. If the pressure pumping crew takes longer than expected, for example, the wireline crew doesn’t charge for standby time, and vice versa.

A bigger toolbox

“At Cheyenne, we’ve been working with Vincent Palomarez and Justin Pitts for about two years,” Presley says. “Using Baker Hughes for the majority of services has really opened up our toolbox. Now that we have access to better technology

and more reliable service, it makes our drilling and completions go a lot faster.”

The client still plans each new well, but Baker Hughes handles the service coordination details. Presley and his colleagues at Cheyenne monitor the progress to see if anything needs to be changed. From the client’s viewpoint, one benefit of having the same person to contact for all of the services they need is that if something goes wrong, there’s no one else to blame.

“When we were still using separate

contractors for everything, and there was

a problem, each of them blamed someone

else,” Presley says. Now, it’s not just the

drilling company or the mud company or

the casing company. It’s all Baker Hughes.

If something does go wrong, I just call

Vince and he says, ‘Okay, we’ll fix it.’”

Presley notes that the close alignment with Baker Hughes allows Cheyenne to drill wells that are as consistently good as anything the majors do, yet still remain compact and efficient.

“Without this arrangement, we’d need a lot more people,” Presley says. “The good

“Without this arrangement, we’d need a lot more people. The good thing is that we’re able to stay relatively small in the office and still get a lot done.”

Greg Presley senior operations engineer, Cheyenne Petroleum

Greg Presley senior operations engineer, Cheyenne Petroleum thing is that we’re able to stay relatively small

thing is that we’re able to stay relatively small in the office and still get a lot done. We’ve gotten pretty consistent, especially on the drilling side. We are growing as a company and getting more efficient all the time. We’re saving money and producing good wells. Baker Hughes is helping to coordinate things, instead of us having to make 50 phone calls a day to make sure everything is lined up.”

Reservoir solutions

The Eagle Ford and other tight oil and gas plays tend to be vast areas of dense, and what many believe to be relatively homogeneous rock. But, drilling experience is proving that unconventional reservoirs are geologically complex. Some of the smaller producers who lack the manpower, expertise, and cash for extensive reservoir modeling settle on one well plan and repeat it over and over, but that seldom produces the best results.

In Cheyenne’s case, there was an option.

Sergio Centurion is part of the Baker Hughes reservoir solutions team that was called in to help Cheyenne develop an affordable 3D model of its field.

“We looked at all the information they had to see what we could do,” Centurion says. “First we did some data mining, using well logs from Cheyenne’s existing wells, as well as production data and other published information about the neighborhood. Gradually, we pieced together a complete picture.”

Centurion and his team were able to use the Baker Hughes JewelSuite reservoir modeling software to begin building a reliable 3D model of the reservoir.

“Next, we created a hydraulic fracturing model using our proprietary fracturing simulator,” Centurion adds. “We experimented with different fracing scenarios to see which methods produced the best results.”

‘Firsts’ in the Eagle Ford

Some might worry that as a smaller company, Cheyenne would have less access to the latest tools offered to the majors. “Not so,” says Presley, whose company was among the first to try several advanced completion and drilling technologies, including the Baker Hughes AutoTrak Curve high-buildup rate rotary steerable system,

www.bakerhughes.com

including the Baker Hughes AutoTrak ™ Curve high-buildup rate rotary steerable system, www.bakerhughes.com | 29

|

29

30 | which shaved an average of five days off the time it took to
30 | which shaved an average of five days off the time it took to

30

|

30 | which shaved an average of five days off the time it took to drill

which shaved an average of five days off the time it took to drill each new well with conventional motors. In many cases Cheyenne realized a reduction of eight to 10 days in drilling time. The transition has helped Cheyenne reduce its overall drilling costs by USD 200,000 to 300,000 per well on average while achieving better borehole quality and little to no issues running production casing strings.

Another technology drawing a lot of industry attention is a bifuel system that uses a blend of natural gas and diesel fuel to power the high-pressure pumps used for hydraulic fracturing. Cheyenne was among the first to try the Baker Hughes Rhino bifuel hydraulic fracturing pumps.

“Our initial runs were very promising,” Palomarez says. “Using LNG [liquefied natural gas] that we trucked to the site, we were able to substitute up to 65% of the diesel fuel with natural gas. Now, we’re trying to determine if Cheyenne has enough dry gas from its own wells to use as fuel for future frac jobs. If not, we will continue using LNG.”

These examples reflect a dynamic that provides a great benefit to both Baker Hughes and its customers by introducing technology sooner and by providing a value

proposition that impacts multiple service lines when they are deployed in unison.

“The ideal scenario with all Baker Hughes customers is to promote the value of our complete suite of services to their projects,” Palomarez says. “If we can demonstrate an ability to introduce new technology to customers like Cheyenne Petroleum, and be able to quantify a positive effect on their AFE or production, the industry will take notice and be more open to the concept of integrating services for total well solutions.”

The personal touch

“What we are trying to offer to our smaller customers is a different type of project management,” Palomarez says. “The most critical point I’ve learned is that success depends on the people involved. It is important that critical people stay connected to the customer.”

By the end of the year, Palomarez hopes to have at least six new people in the role of integrated services field coordinators—new positions that will be filled primarily from within Baker Hughes. Not just anyone can fill the role.

“We’re looking for people experienced in drilling, fracturing, and completions,” he says. “We will train them, based on their experience, to be familiar with all of our product lines in the region. They will also need to spend enough time together to understand the customer’s needs and personality. The fit has to be right, and that is very hard to do.”

Presley agrees. “Having Vince represent all the Baker Hughes product lines has smoothed things out for us. I don’t think it would have been possible for Baker Hughes to keep this relationship if Vince and Justin weren’t in the game.”

relationship if Vince and Justin weren’t in the game.” Gaffney, Cline & Associates’ global expertise is
relationship if Vince and Justin weren’t in the game.” Gaffney, Cline & Associates’ global expertise is

Gaffney, Cline & Associates’ global expertise is providing the

technical, commercial, and strategic advice to enable

In 2008, Baker Hughes launched a strategy

to expand its reach beyond the wellbore and into reservoir and asset management. The company built its Reservoir Development Services (RDS) business unit on the acquisition of four separate companies: EPIC Consulting (a Canada-based reservoir engineering company with CO2 and heavy oil expertise), Helix RDS (a provider of reservoir engineering, geophysical, production technology, and associated specialized consulting services), geomechanical software and training consultants GeoMechanics International, and international advisory firm Gaffney, Cline & Associates.

Baker Hughes to bridge the gap between delivering products and services and delivering total solutions to maximize the value of a customer’s asset.

ADVANCING RESERVoIR PERFoRMANCE with the

Right

Advice

“The acquisition of these companies enabled Baker Hughes to provide more customer-focused solutions and a resource pool for field development projects, as well as to support Integrated Operations projects and to provide a career path for geoscientists and petroleum engineers within Baker Hughes,” says Chris Ward, vice president, Subsurface Integrity and Evaluation Services.

www.bakerhughes.com

Baker Hughes,” says Chris Ward, vice president, Subsurface Integrity and Evaluation Services. www.bakerhughes.com | 31

|

31

As a standalone product line unlike any other in the Baker Hughes portfolio, Gaffney, Cline & Associates, which today also consists of the former Helix RDS and EPIC Consulting companies, provides human capital with consulting abilities and training that enables it to see things from a larger perspective, complementing the traditional product lines that offer unique products and services.

“Clients basically want solutions to help them maximize the value of their assets, and that requires an understanding of the subsurface, the reservoir, and the entire economics of asset delivery,” says Scott Reeves, president, RDS. Over the past five decades, Gaffney, Cline & Associates’ employees have supported governments, ministries, national oil companies, and international oil companies at the very highest levels to address changing and complex needs in geophysical, geological, petrophysical, and commercial information to make investment decisions that will improve clients’ return on their investments.

“Gaffney, Cline & Associates’ relationship with Baker Hughes means we can offer, when appropriate, a complete service package ranging from field development planning, execution, and operational management with the full breadth of Baker Hughes products and services to span the entire asset life cycle,” Reeves adds.

32

|

to span the entire asset life cycle,” Reeves adds. 32 | A 50-year legacy In 1962,

A 50-year legacy

In 1962, American Ben Cline and Englishman Peter Gaffney founded Gaffney, Cline & Associates to provide expert, impartial, and in-depth advice to oil and gas companies wishing to develop and improve the performance of their hydrocarbon assets.

While working on a joint venture project in Venezuela’s Las Mercedes field, Cline and Gaffney had an idea on how to optimize the project’s production operations. Their proposal (which was declined by the operator) broke with the then-traditional structure that separated the geoscience, engineering, and commercial functions within oil companies, creating instead a consultancy that integrated all of those disciplines for better focus on the best solution for the issues in question.

Not deterred by rejection of their new approach, the pair established a consulting company called Technical Services Limited S.A. (TSL) in Caracas, Venezuela. The partners opened their first office in Fyzabad, Trinidad, and soon changed the name of the company to Gaffney, Cline & Associates when they discovered another company in Fyzabad named TSL (Trinidad Steam Laundry).

Today, Gaffney, Cline & Associates maintains offices and operations in all of the world’s major petroleum centers and employs teams

of geoscientists; petroleum economists; reservoir, production, and petroleum engineers; operations specialists; midstream and downstream specialists; and principle advisors on exploration strategy, fiscal infrastructure, and licensing. Its client base ranges from the smallest start-up to the largest major, and includes governments, ministries, national oil companies, banks, and transnational financial institutions. One of the notable functions of Gaffney, Cline & Associates is to provide third- party verification and/or valuation of oil and natural gas reserves for company annual reports and for U.S. Securities and Exchange Commission filings.

Integrating capabilities

“Gaffney, Cline & Associates’ expertise is the subsurface—providing the technical work and doing the economics that leads up to the products and services that Baker Hughes delivers,” says Edwin Jong, manager, Gaffney, Cline & Associates, Aberdeen. “We translate to Baker Hughes what our clients’ issues are and say, ‘Okay, they have these specific field or reservoir optimization or production issues, so here’s the perfect opportunity for Baker Hughes to now deliver the great products and services it’s known for. And all that advances a customer’s reservoir performance.”

When Sasol Petroleum, a South African oil and gas company, and Talisman, an independent Canadian operator, hoped to develop a play within a 51,000-acre reserve in western Canada’s Montney shale, it also wanted to investigate the economic viability of a gas-to-liquids fuels plant.

the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included
the economic viability of a gas-to-liquids fuels plant. Baker Hughes used a multidisciplinary team that included

Baker Hughes used a multidisciplinary team that included Gaffney, Cline & Associates and the Subsurface Integrity and Evaluation product line, along with experts from the Baker Hughes Geosciences and Pressure Pumping groups, to assess the technical and economic merits of the investment opportunity. The integrated Baker Hughes team supplied experts covering disciplines in geophysics, geology, petrophysics, reservoir engineering, drilling, completions, facilities, and related costs, as well as knowledge of the gas-to-liquids industry.

“Assessment efforts included evaluating the shale gas potential at the subsurface, the surface, and infrastructure levels, providing a comprehensive technical evaluation,” says D. Nathan Meehan, senior executive advisor, reservoir and geosciences. “The team efficiently addressed complex technical

and logistical issues in-depth, using its established ‘shale engineering’ approach. Additionally, RDS supplied geomechanical and reservoir simulation models that are better suited to predict long-term shale production performance compared to the usual ‘type curve’ approaches. From the RDS integrated assessment, Sasol was able to properly assess the reserve and enter a partnership with Talisman for a commercially viable play.”

Working together in the Gulf of Mexico, Gaffney, Cline & Associates and the Subsurface Integrity and Evaluation product line carried out a regional reservoir study of the deepwater Wilcox formation to identify the range and trends of the formation’s petrophysical and geomechanical properties, particularly its Paleocene challenges. The study provided insights into the reservoir

characteristics impacting commercial development of the world-class hydrocarbon play that can be addressed with present-day technology and identified technology gaps.

“These initial studies gave the Baker Hughes Gulf of Mexico team a better understanding of the subsalt reservoir and earned trust from a major Gulf of Mexico deepwater operator, which asked Baker Hughes to prepare a front-end engineering design proposal to help solve the challenges of the Lower Wilcox completion design,” states Lisa Li, principle advisor for Baker Hughes reservoir management, Gulf of Mexico. “Through collaboration with the operator, Baker Hughes will design and provide new completion technology focused on system reliability that will maximize reserve recovery, improve reservoir management, and extend well life 20-plus years.”

maximize reserve recovery, improve reservoir management, and extend well life 20-plus years.” www.bakerhughes.com | 33

www.bakerhughes.com

maximize reserve recovery, improve reservoir management, and extend well life 20-plus years.” www.bakerhughes.com | 33

|

33

The Art of Making

Fields smart

34

|

The Art of Making Fields smart 34 | More and more operators are introducing the smart

More and more operators are introducing the smart field value- added concept to their business plan, which means much more than just automating a field or completing the wells with “intelligent” devices. It involves people, technologies, and processes that deal with a much broader scope of work across all of the activities embedded in managing an oil and gas asset.

In today’s world of high oil prices, visionary companies— including major resource holders such as national oil companies (NOCs)—are developing and executing intelligent field strategies to ensure that they can maximize their assets’ value in the long-term when oil prices may not be as robust as they are now. Intelligent field strategies can add value at any oil price. During periods of low prices, process optimization enabled by intelligent solutions is critical to enterprise/asset value maximization.

“We have observed that the dynamics of the oil and gas industry are shifting significantly from what they were a decade ago,” says Leonel Pirela, intelligent fields global director, Gaffney, Cline & Associates. “For example, by developing and adopting intelligent technologies and solutions under a lean-six sigma methodology through designing and implementing organizational change programs, companies can become more efficient and effective at maximizing value from their resource base.

“These visionaries are looking for companies like Baker Hughes that have the capabilities and the flexibility to offer vendor-neutral integrated and scalable asset solutions to ensure there is minimum waste when integrating intelligent field solutions into their existing infrastructure at all levels—wells, plants, information technology/ information management/telecommunications, enterprise processes, analytical software applications, and so on.”

Making the right decisions

The terms “digital field,” “smart field,” and “intelligent field” all encompass

a process that should be applied to everything along the asset’s life cycle: from reservoir management to production optimization to the actual daily operations that ensure the safety and integrity of assets, people, and the environment.

“By having the right data with the right workflows and associated business or technical processes in the right hands at the right time, the right decisions can be made,” explains Pirela. “Each and every decision has follow-on consequences, so the better the quality of any one decision the more effective the myriad of following decisions becomes.”

“We have all seen how access to data streamlines our daily lives: Where can we

buy the lowest priced items? What’s on at the cinema? What’s the weather going

to do? We can change our plans as better data becomes available,” Pirela explains.

“And, so it is with oil and gas assets. With every decision-making group within an operating company that is managing an asset—including corporate functions like accounting, procurement, and legal—constantly updating, reevaluating, and running ‘what-if’ scenarios, it can maximize the return on large investments.”

it can maximize the return on large investments.” “The West Kuwait integrated digital oilfield conceptual

“The West Kuwait

integrated digital oilfield conceptual study project was developed through close collaboration between the KOC team and a Baker Hughes- led consortium of

This is the

initial step of a journey that will bring KOC to a world leadership position in digital fields and to a world-class

example of excellence.”

Bader Al-Matar team leader, research and technology subsurface, KOC

www.bakerhughes.com

example of excellence.” Bader Al-Matar team leader, research and technology subsurface, KOC www.bakerhughes.com | 35

|

35

Decision making along an asset life cycle

m a r t E g n x o e e e r r m
m
a
r
t
E
g
n
x
o
e
e
e
r
r
m
c
l
C
a
a
h
P
R
n
u
e
e
p
v
a
u
e
r
r
e
e
t
t
P
m
l
I
t
a
Asset
Production
Reservoir
l
m
s
c
Operations
Optimization
n
Management
e
l
c
p
o
S
p
I
a
e
e
l
t
A
D
i
a
a
g
C
t
e
e
n
t
r
m
t
O
i
o
r
m
n
s
v
n
S
i
i
I
e
g
p
z
e
y
p
M
o
s
a
e
n
s
i
o
a
t
r
t
r
t
i
d
a
e
o
M
C
e
t
n
l
i
m
e
n
a
g
s
u
r
e
n
t
a
n
&
l
e
e
P
r
e
m
u
c
s
u
p
d
a
o
o
l
e
r
n
e
P
M
v
a
e
l
D
P
d
l
e
i
F
OPERATIONS FOCUS
OPERATIONS
FOCUS

Being able to speak an operator’s language at the asset level and to

understand this decision-making hierarchy and subsequent business processes

is crucial in today’s marketplace.

“For Baker Hughes,” Pirela says, “it means having all the elements required to offer integrated smart-field solutions through intelligence-driven product lines and asset management capabilities that reside in our technology centers, geomarkets, and within the consultancy arm of Gaffney, Cline & Associates and selected best-in-class, third- party vendors.

“It means being a service company that thinks like an operator to better serve the needs of its client base.”

Realizing the smart-field vision

A few years ago, Kuwait Oil Company

(KOC) introduced a Digital Oil Field culture within its management organization aimed at modernizing the monitoring and management of its upstream oil and gas operations.

36

|

and management of its upstream oil and gas operations. 36 | ENGINEERING ENGINEERING FOCUS FOCUS In
ENGINEERING ENGINEERING FOCUS FOCUS
ENGINEERING
ENGINEERING
FOCUS
FOCUS

In a strategic initiative to deploy integrated digital field (IDF) technology to maximize the value of its hydrocarbon assets, KOC conducted three pilot projects to test different technologies to maximize ultimate reserves recovery by improving the management of its reservoirs and associated enhanced oil recovery programs.

“KOC then commissioned a fourth pilot project to marshal the extensive knowledge base derived from the ongoing pilots, together with evolving best practices from the industry at large, to implement a state- of-the-art, large-scale pilot that can form the foundation for ongoing IDF implementation throughout Kuwait,” Pirela explains.

KOC invited Baker Hughes to submit a proposal to prepare a front-end concept selection study for implementation of the fourth pilot. Realizing there was an opportunity for Baker Hughes to participate in the area of the digital oil field, Gaffney, Cline & Associates [the consulting arm of the Baker Hughes Reservoir Development Services business unit] assembled a

ASSET/FIELD ASSET/FIELD FOCUS FOCUS
ASSET/FIELD
ASSET/FIELD
FOCUS
FOCUS

multidisciplinary team of subject matter experts from within Gaffney, Cline & Associates and other Baker Hughes product lines, along with some third-party providers for services that Baker Hughes does not offer—that could better understand what KOC wanted to achieve in one of its giant oil fields that is being redeveloped under the umbrella of KOC’s IDF vision.

KOC accepted the Baker Hughes proposal and the project team, led by Gaffney, Cline & Associates, completed the concept selection study in August 2012.

“An asset is not only about the subsurface or the wellhead. It is everything that goes from the reservoir downstream all the way to the flange at which you hand off your products,” Pirela says. “So, from a profitability perspective, we wanted to provide a flexible, integrated solutions plan, meaning that if Baker Hughes could not provide a service, we would source those services—whether they are technology advisory services or technologies—from vendors that can provide fit-for-purpose

> Leonel Pirela, intelligent fields global

director, Gaffney, Cline & Associates

fields global director, Gaffney, Cline & Associates solutions, with a preference for open source

solutions, with a preference for open source [nonproprietary] technologies.”

To better enhance client service and to build a strong communication network between the two parties, the project team “mirrored” KOC’s technical organization. “This closeness not only spurred a team culture of co-creation and co-ownership, it also enabled us to get a very good feel for KOC’s technical needs,” Pirela says.

The concept selection work was well received by KOC.

“We had identified KOC’s major issues and we delivered our recommendations to bridge the gap between the current operating environment and KOC’s vision for an end-to-end integrated solution with IDF technologies to yield the desired production and oil recovery optimization capabilities,” Pirela adds.

KOC has now invited Baker Hughes to lead implementation of the IDF-based redevelopment project in the giant 200,000 BOPD Minagish field. The two companies are discussing contractual arrangements

The two companies are discussing contractual arrangements while preparing to kick off Phase 2 of this

while preparing to kick off Phase 2 of this complex, but high-value IDF project.

Baker Hughes is now making advance preparations to design an integrated surface and subsurface monitoring, control, and optimization solution that includes intelligent wells, waterflood management, seismic technologies, integrated asset modeling, production loss management, H2S monitoring and visualization, integrated information technology/information management (IT/IM) architecture, IT/IM security, and collaboration center design.

“In addition, the most important asset—the people making it all happen—are being considered through a detailed change management plan,” Pirela adds.

“The West Kuwait integrated digital oilfield conceptual study project was developed through close collaboration between the KOC team and a Baker Hughes-led consortium of companies,” says Bader Al-Matar, team leader, research and technology subsurface, for KOC. “This milestone covered the full understanding

of the surface, subsurface, IT, connectivity, and change management aspects that are important to develop the next phase of the project. This is the initial step of

a journey that will bring KOC to a world

leadership position in digital fields and to

a world-class example of excellence.”

The Minagish field redevelopment involves drilling a significant number of

new wells and reentering and retrofitting approximately 30 to 40 existing wells with intelligent well completions, including electrical submersible pumping (ESP) systems and inflow control devices that can be monitored and controlled remotely. Approximately one-third of the 100 wells in the field are naturally flowing oil producers; one-third are fitted with artificial lift systems in the form of ESPs, and another one-third of the wells are water injectors.

“This is truly a first-of-its-kind project because it involves so many experts from within the Baker Hughes intelligence-driven product lines, technology centers, and geomarket offices, as well as consortium parties from all over the world, many with operator and asset director experience who understand what KOC wants to achieve with this digital field project,” concludes Pirela, who piloted Shell’s first smart field in Asia Pacific as the decision-making executive. “It also highlights the value-added factor that Gaffney, Cline & Associates brings through its large and diverse skill pool, and it positions Baker Hughes as a company that can speak the operator’s language at the asset and enterprise level.

“This project presents Baker Hughes with an opportunity to set a new reference in the international oil and gas industry for large-scale, brownfield redevelopment supported by IDF technology. Baker Hughes greatly appreciates the opportunity to partner with KOC in this unique and challenging undertaking.”

appreciates the opportunity to partner with KOC in this unique and challenging undertaking.” www.bakerhughes.com | 37

www.bakerhughes.com

appreciates the opportunity to partner with KOC in this unique and challenging undertaking.” www.bakerhughes.com | 37

|

37

After the

FRACFRAC

38

|

After the FRACFRAC 38 | The upstream industry has seen monumental growth and profits from the

The upstream industry has seen monumental growth and profits from the recovery of oil from shale plays, thanks to advances in horizontal drilling and hydraulic fracturing. Now, the downstream industry is looking for the right technologies to minimize refining bottlenecks, maintain refinery reliability, and assure product quality as these new feedstocks move from the wellbore through the refinery and into the market as finished products.

www.bakerhughes.com

feedstocks move from the wellbore through the refinery and into the market as finished products. www.bakerhughes.com

|

39

40

|

4 0 | A decade ago, the oceans of hydrocarbons trapped in the Eagle Ford, Bakken,

A decade ago, the oceans of hydrocarbons trapped in the Eagle Ford, Bakken, and Marcellus shales lay virtually undisturbed, and how to produce the oil from those tight shale formations was still a mystery.

faced a decade ago when heavy Canadian crudes grew as a feedstock.

In other words, this reversal of fortune is impacting both upstream and downstream economics.

Today, these and many other shale plays have helped boost U.S. production to record highs and, in 2011, contributed to the U.S. producing more oil domestically than it imported for the first time in decades.

Defining refining’s issues

“Because refineries are set up to handle more conventional crudes, the unique combinations of challenges associated with shale oil require refiners either to accept lower throughput—and consequently lower margins—or to look for ways to improve its processability so that the oil can be refined without causing operating or product quality problems,” says Scott Bieber, commercial development manager for Baker Hughes Downstream Chemicals. “Baker Hughes is aware of these challenges surrounding processing oil from shale and is responding with a proactive approach to help manage the negative impacts that can occur through the production, transportation, and refining of shale oil.”

To ensure delivery of the best possible solutions to the downstream industry, Bieber and others within the Downstream Chemicals group participated in a technology exchange with experts in the Baker Hughes Pressure Pumping and Upstream Chemicals product lines to get a better understanding of the hydraulic fracturing process and the chemicals that are used to stimulate and to optimize production.

that are used to stimulate and to optimize production. The unique combinations of challenges associated with

The unique combinations of challenges associated with shale oil require refiners either to accept lower throughput—and consequently lower margins—or to look for ways to improve its processability so that the oil can be refined without causing operating or product quality problems.

This new source of crude oil has breathed new life into both companies and communities, while providing a secure oil supply.

Shale oil is a light crude with low viscosity and low sulfur content, making it a desirable feedstock for U.S. refiners. Its abundance throughout much of the country makes it a secure source of domestic energy that enables refiners to do more accurate long-term planning. And, it’s cost effective for refiners to acquire.

These winning characteristics have landed shale oil as a feedstock in an increasing number of refineries. But as shale oil continues to gain favor, refiners are also beginning to recognize a parallel pattern of operational issues not unlike the processing challenges

www.bakerhughes.com

to recognize a parallel pattern of operational issues not unlike the processing challenges www.bakerhughes.com | 41

|

41

“Because of the high levels of paraffin in shale oil, as well as the potential for asphaltene incompatibility if these oils are blended with more asphaltenic crudes, fouling risk increases.”

Jenny Thomas product line manager for process chemicals

42

|

Thomas product line manager for process chemicals 4 2 | “We felt it was important to

“We felt it was important to understand what happens at the production stage and if any of the processes could affect what happens to our downstream customers,” Bieber says. “In the end, we didn’t discover any overarching issues in relation to the way wells are stimulated, and we now know that nothing we are doing on the production or completion side of our business is negatively affecting the quality of the oil and the way it behaves at the refinery. The truth of the matter is, it’s mostly the characteristics of the oil itself that creates the challenges.”

“The composition of shale oil varies from basin to basin throughout the U.S.,” explains Larry Kremer, technology advisor for Downstream Chemicals research and development. “In fact, an analysis of three samples of Eagle Ford crude delivered to a refiner in just one week showed the crude density ranging from 44.6° to 55.0° API. Their appearance ranged from light yellow to dark brown to an opaque-reddish color. The only thing the three samples had in common was a bottom layer of sludge occupying between 10% and 15% of the sample volume.”

Other problematic characteristics of shale oil include high paraffin content, low asphaltene and low sulfur content, hydrogen sulfide content, and tramp amines (a result of chemical treatments to control hydrogen sulfide), all of which can potentially

lead to significant disruptions across the refining supply chain—from transportation from the oil field to processing at the refinery.

“The good news is that there are proven solutions for almost every step in the process to optimize the economics of refining shale oil and to keep profits flowing,” Bieber says.

The right refining solutions

In much the same way that refiners have responded to other crude challenges, there are solutions available to manage shale oil issues.

“Baker Hughes has researched and carried out testing of shale oils both in the field and at its research and development center in Sugar Land, Texas, in an effort to define programs to help manage the negative impacts that occur in various segments of the downstream industry,” says Jerry Newberry, product line manager, fuel additives. “Understanding the composition of the crudes to be blended before they arrive at the terminal is a more profitable approach for refiners to take to determine the most economical path for making those crudes compatible, including pretreatment options. Various tests offered through Baker Hughes technologies can help refiners make more accurate crude blending decisions.”

One of the biggest issues facing the downstream industry is fouling, adds Jenny Thomas, product line manager for process chemicals. “Because of the high levels of paraffin in shale

oil, as well as the potential for asphaltene incompatibility if these oils are blended with more asphaltenic crudes, fouling risk increases,” Thomas explains. “Both paraffins and asphaltenes can contribute to fouling and sludging that reduce capacity in pipelines and crude tanks, generate emulsions in desalter units, and foul process unit preheat exchangers and furnace tubes.”

In worse-case scenarios, fouling can lead to unplanned refinery shutdowns, resulting in millions of dollars in lost revenue.

“A refiner processing Eagle Ford shale oil blended with foreign crude oil found itself in a costly, unplanned shutdown due to a blend that caused severe rapid fouling of the preheat train,” says Nick Black, district manager for Baker Hughes Downstream Chemicals.

The refiner now uses the Baker Hughes Field ASIT services tool, a field-deployed testing service for rapid stability testing of asphaltenes on a wide range of crudes and crude blends. “This testing service

Understanding the composition of the crudes to be blended before they arrive at the terminal is a more profitable approach for refiners to take to determine the most economical path for making those crudes compatible, including pretreatment options.

allows operators to optimize their crude diet, thus maximizing their profitability and minimizing reliability risks,” Black explains. “The tool is used specifically to track the asphaltene stability of crude blends and can serve as a ‘gatekeeper’ for acceptable crude blends. This information, used in tandem with information obtained from other crude stability testing, can provide the refiner with a very good predictive tool to prevent unplanned events.”

By setting minimum asphaltene stability index (ASI) levels with the Field ASIT services tool, the refiner can anticipate processing challenges and avoid costly outages.

A higher percentage of Eagle Ford crude in the crude blend has also caused an increase in the tramp amine content in the crude distillation units. This, in conjunction with high overhead chloride content, can cause an increase in overhead corrosion rates, and overhead bundle life reduction by 75%. This decrease in bundle life increases the risk of an unplanned shutdown.

The amount of caustic used in the process can be increased to reduce the overhead chloride level and the Baker Hughes EXCALIBUR contaminant removal program can be adjusted to maximize amine removal at the desalter.

“These changes can successfully reduce the overhead salt formation temperature, which reduces the risk of corrosion,” Black adds. “The refiner can also reduce the amine salt corrosion risk by maintaining a higher minimum overhead exchanger temperature target. With revised operating and treatment strategies, the refiner can reduce maintenance costs by extending the bundle life and also minimize the risk of an unplanned shutdown.

“Baker Hughes will continue to work collaboratively with our customers to better understand these ever-changing feedstocks with the goal to proactively help refiners prevent unplanned events in the future.”

feedstocks with the goal to proactively help refiners prevent unplanned events in the future.” www.bakerhughes.com |

www.bakerhughes.com

feedstocks with the goal to proactively help refiners prevent unplanned events in the future.” www.bakerhughes.com |

|

43

Faces of Innovation 44 | DV satya None of Steve Jobs’ smart technology would have

Faces of Innovation

44

|

DV satya

Faces of Innovation 44 | DV satya None of Steve Jobs’ smart technology would have hit

None of Steve Jobs’ smart technology would have hit the market and changed our lives if it weren’t for little-known chemical engineer Yoshio Nishi. He invented the lithium ion rechargeable battery that powers the Jobs-inspired gadgets full of apps that bring the world to our fingertips.

It takes only a quick look outside the pages of a chemistry book to see the impact that chemical engineers have had on the world: plastics, polymers, and petrochemicals; foods, fertilizers, and pharmaceuticals. They make products from raw materials, and they find ways to convert one material into another useful form.

find ways to convert one material into another useful form. DV Satya Gupta is a Baker

DV Satya Gupta is a Baker Hughes chemical

engineer whose name appears on more than

130 patents relating mostly to technologies

for well stimulation. He’s credited with

research in everything from carbon dioxide- compatible, nonaqueous crosslinked fracturing fluids to cat litter.

Among the many technological achievements credited to Gupta is a line of scale inhibitor products based on the chemistry found in diatomaceous earth, a naturally occurring substance used in everyday cat litter.

Gupta, business development director for

to eliminate unwanted material deposition before it becomes problematic, then continues to treat the well, tubulars, and production facilities throughout their productive life. Today, the Sorb family of solid inhibitors includes the ScaleSorb , ParaSorb , BioSorb , SaltSorb , CorrSorb , and AsphaltSorb products.

The path to chemical engineering

University of Miami in Florida but turned it down in favor of the chemical engineering Ph.D. program at Washington University.

the

Baker Hughes Production Enhancement

Satya Gupta was born in Chennai, India.

“I wasn’t interested in medicine,” he says. “I

product line, explains what led to the discovery: “I was having lunch with a

Formerly known as Madras, Chennai is situated on the Bay of Bengal and is known

was interested in solving problems.”

production chemical scale inhibitor scientist some years ago, and he was talking about

as the cultural capitol of south India. His father was an accountant for the Reserve

Gupta accepted an airline ticket to the U.S. in exchange for an assistantship at the

the

need for a product that could be

Bank, and his mother was a stay-at-home

university where, for his master’s degree,

dumped into a rat hole that would release

mom to Gupta and his three sisters.

he worked on an encapsulated product

scale inhibitor over a period of time to

for treating people who had overdosed on

protect tubulars. I came up with a very simple solution. Essentially, we took cat litter and put scale inhibitor into it, and

Out of approximately 200,000 students who applied for entrance into the Indian Institutes of Technology (IIT), Gupta was one

barbiturates. For his Ph.D., Gupta worked on an encapsulated, injectable contraceptive for women, which eventually was funded and

the

litter slowly adsorbed the chemical.

of about 2,000 chosen for the low-tuition,

commercialized by a Norwegian company

My

background was fracturing, so I said,

five-year engineering program. (The IIT were

under the name Depo-Provera.

‘Why can’t we put this in a frac fluid and slowly release it?’ The technology took off

started as institutions of national importance and there were five of them at that time.

His fascination with time-released

like

crazy, and it has become the Sorb line

Gupta joined the institute in Madras.)

chemistry led to a job at Gulf Research and

of products for Baker Hughes. That’s how

then Pennzoil, where he worked on the

simple the concept was. It wasn’t brilliant,

His thesis on artificial kidney membranes

GUMOUT line of products.

but

it was fun.” And, more importantly, it

was noticed by a professor at Washington

was the kind of out-of-the-box thinking that solves customer challenges.

University in St. Louis, Missouri, who was doing chemical research in biomedical-

“At the time, GUMOUT was mainly used by men,” Gupta says. “Because of the

The Sorb family of solid inhibitors can be compared to time-released, encapsulated medicine. It works preventively to slow or

related studies on membranes and encapsulations. As Gupta looked at options for advanced studies, he was offered a medical doctor Ph.D. program at the

way you had to open the can women didn’t like using it because it was easy to spill and it smelled bad. I made a big Tylenol-type capsule of GUMOUT gas line

www.bakerhughes.com

it was easy to spill and it smelled bad. I made a big Tylenol-type capsule of

|

45

Among the many technological achievements credited to Gupta is a line of scale inhibitor products
Among the many
technological
achievements credited
to Gupta is a line of
scale inhibitor products
based on the chemistry
found in diatomaceous
earth, a naturally
occurring substance
used in everyday
cat litter.

46

|

occurring substance used in everyday cat litter. 46 | antifreeze that could be dropped into the

antifreeze that could be dropped into the gas tank when you pumped your gas so women would use it. It was called Gas Caps. I wasn’t in marketing obviously.”

From Gas Caps to oil patch

Gupta remembers well the day he discovered the oil patch. It was in 1987, and he was interviewing for a position to establish a research and development department for the Western Company of North America, a service company specializing in acidizing, fracturing, and cementing.

“I had gone to Fort Worth [Texas] and was sitting in the HR vice president’s office having an interview when this old man in a crumpled up suit walked into the office, sat down, and said, ‘Vince, what’s going on?’ The VP told him that he was interviewing me for the lab R&D position,” Gupta recalls. “The old guy says, ‘Son, tell me about yourself.’ So, we talked for a little bit and he stood up and said, ‘Hire him,’ and just walked out. The VP looked at me and said, ‘I guess you’re hired. He’s the CEO, and no one’s going to tell Eddie Chiles you’re not hired.’ “

(Chiles founded the Western Company in 1939. He became somewhat of a cult figure through his 1970’s TV commercials featuring the mantra, “If you don’t own an oil well, get one!” and his radio commercials that began with the announcer asking: “Are you mad today, Eddie Chiles?” to which Chiles would always answer, “Yes, I’m mad!” before launching into a monologue about how poorly Americans were being represented by a too-liberal Congress.)

When BJ Services bought the Western Company in 1995, Gupta left the company and joined Frac Master, where he set up an R&D department in the company’s Calgary, Alberta, Canada, headquarters. In 1999, BJ Services acquired Frac Master, and three years later Gupta relocated to BJ’s headquarters in Tomball, Texas, as senior research leader for fracturing technology.

In April 2010, Baker Hughes acquired

BJ Services, and the following year Gupta traded his lab coat for a sport coat when he was appointed to his current role in business development.

“I have a business development title, but

I’m still in technology, so I do a different type of business development than the conventional sales person would do, which means I do more technology transfer and deal with our customers’ engineering and

technical issues,” he explains. “I still dabble

in technology solutions.”

Looking around at the mounds of “research” stacked about his office, Gupta admits he could never completely give up finding

solutions to apply in the field. “Sometimes

I forget I’m not in R&D anymore, so when I

have ideas I still have papers and things that

I want to work on. Sometimes I give it to

somebody else to do something with, but it’s

what I do, and what I find fun.”

A portfolio of solutions

To say Gupta is an expert in well stimulation would be an understatement. In January, Baker Hughes recognized him with the company’s Lifetime Achievement Award.

A sampling of technologies that Gupta

has developed or helped develop includes: encapsulated breakers, polymer- specific enzyme breakers, premium

performance aqueous fluid systems, nonaqueous fluid systems, ultralightweight proppants, and the Sorb line of long- term production assurance products.

Much of the development work on encapsulated breakers took place in the early 1990s, but the entire line of products is still on the market today and is essential for hydraulic fracturing.

When a well is fractured hydraulically, the water or other fluid being used may be viscosified, or thickened, with polymers (gelling agents). This viscosified fluid suspends the sand or ceramic grains used to prop open the created fractures. After the pumping process ends, the polymer tends to remain in the fractures, along with the proppant.

“We want the proppant to stay in but everything else we want to bring back out,” Gupta explains. “The polymer keeps the oil or gas from flowing through the fractures, so we want to ‘break’ the viscosity of this fracturing fluid in order to recover it. The chemical we add to the fluid is called a ‘breaker.’ And, because we don’t want it to work until we’re finished fracturing, it’s time released. That’s the concept behind encapsulated breakers.”

“Since the initial product launch in 2005, Baker Hughes has treated more than 15,000 wells with Sorb long-term production assurance technologies, and new business continues to be generated through collaboration with our Production Chemicals group,” says Harold Brannon, vice president, technology, Pressure Pumping. “In 2012, Sorb product usage was up 80% from 2011, resulting in 3,000 wells being treated with 8.26 million pounds of Sorb products.

being treated with 8.26 million pounds of Sorb products. “The core invention, or technology, of controlled

“The core invention, or technology, of controlled time-release additives is actively being used as a platform for product development in other service lines, including cementing and multizone production monitoring products,” Brannon adds. “A new proppant material made from nano alumina called SorbUltra is slated to be introduced later this year and will extend the product line into the deepwater market.”

Most recently, Gupta’s research has helped lead to the development of a replacement for guar (the most popular gelling agent for preparing aqueous-based fracturing fluids) and to a method for making fracturing fluids from produced water.

Some of the fracturing solutions Gupta has worked on, however, didn’t involve water at all.

“When a lot of people think of fracturing, they think there has to be a hydraulic medium, typically water or gelled water,” he says. “One of the unique things I have worked on is nonwater-based fracturing, where we do frac jobs with alcohol or seawater or liquid CO2. Some of these are unique in the sense that nobody else does it. If everybody can do it, my interest wanes.”

The next bright idea

Whether it’s finding a way to fracture wells in the middle of the Arabian Desert with CO2 where there is no water to be found, fracturing with natural gas, or producing natural gas from gas hydrates, Gupta believes the next big technology breakthrough is just around the corner. Or in the case of encapsulated inhibitors—over lunch.

“I gave a talk recently and I said, ‘Make it a point to have lunch with somebody in a different group at least once a week. Some of the things I’ve developed are because I did that. I’ve learned a lot from talking to people from other disciplines, finding out what they know and what their challenges are.

“Sometimes, what others think of as a big challenge is a simple thing to solve. And what you might think is a big challenge is really somebody else’s simple solution.”

challenge is really somebody else’s simple solution.” GUMOUT ® is a registered trademark of Illinois Tool

GUMOUT ® is a registered trademark of Illinois Tool Works Inc.

www.bakerhughes.com

else’s simple solution.” GUMOUT ® is a registered trademark of Illinois Tool Works Inc. www.bakerhughes.com |

|

47

Collaboration

Delivers

Deepwater

Completions

Multizone, single-trip frac pack reduces completion time, costs in frontier ultradeepwater field

The Petrobras subsea developments at the Cascade and Chinook fields in the Gulf of Mexico have been a proving ground for new technologies and services, having delivered several deepwater firsts. The fields, located in the Walker Ridge area 180 miles (290 km) off the Louisiana coast, are tied to the Gulf of Mexico’s first floating production, storage, and offloading (FPSO) vessel. And at a water depth of 8,250 ft (2515 m), they represent the outer limits of deepwater development to date.

48

|

the outer limits of deepwater development to date. 48 | Baker Hughes has been closely involved

Baker Hughes has been closely involved with the development of the Cascade and Chinook fields since their early development days and continues to provide a wide range of services, including directional drilling, logging-while-drilling, drilling and completion fluids, wireline

logging, wellbore cleanup and completion fishing services, sand control equipment, and upper completion systems including surface controlled subsurface safety valves.

“The deepwater wells at Cascade and Chinook require completions that incorporate frac packs, which involve the simultaneous hydraulic fracturing of the reservoir with the placement of a gravel pack,” says Kevin Joseph, a Baker Hughes completions engineer working with Petrobras on the Cascade project. “For the highly consolidated, low-permeability reservoirs at Cascade, frac packs provide a two-fold benefit.”

The “frac” component of a frac pack allows for hydraulic fracturing to stimulate the formation and boost production rates. The “pack” component provides well integrity benefits, such as preventing the production of formation sand. A properly deployed frac pack provides high-conductivity channels that penetrate into the formation, while leaving undamaged packing gravel near the wellbore and in the perforations.

However, the conventional method of deploying frac packs, in which each zone or pack is deployed in an individual trip, adds significantly to logistical costs, rig time, and the number of trips down hole. Minimizing these trips to reduce costs was a major driver for Petrobras to select a multizone, single-trip frac-pack deployment system, which would allow the operator to treat multiple zones during a single trip down hole.

“We considered the use of multizone, single- trip systems early on as a way to reduce completion time and risk without sacrificing the benefits of a standard frac pack, including the creation of a conductive fracture network to stimulate the reservoir and provide robust sand control at the same time,” says Scott Ogier, a completion engineer for Petrobras. “The safety and operational reliability of these systems were also major factors in our decision, along with the opportunity to work with a service provider such as Baker Hughes, to keep advancing the technology for new deepwater challenges.”

These systems are not necessarily new to the industry. The Baker Hughes Multi-zone Single-trip (MST) completion system had a proven track record in wells in India and Indonesia where it helped reduce the costs of sand control operations by 40% to 60%. In addition, the MST’s large internal flow area minimized inside diameter restrictions in the production casing, allowing for improved production rates. However, using the technology in the Gulf of Mexico at these water and reservoir depths posed unique challenges and required careful planning, with close involvement and input from Petrobras.

www.bakerhughes.com

unique challenges and required careful planning, with close involvement and input from Petrobras. www.bakerhughes.com | 49

|

49

5,000 ft

Shelf

7,500 ft

50

|

5,000 ft Shelf 7,500 ft 50 | Cascade and Chinook Fields in the Gulf U N
5,000 ft Shelf 7,500 ft 50 | Cascade and Chinook Fields in the Gulf U N
5,000 ft Shelf 7,500 ft 50 | Cascade and Chinook Fields in the Gulf U N
5,000 ft Shelf 7,500 ft 50 | Cascade and Chinook Fields in the Gulf U N

Cascade and Chinook Fields in the Gulf

U N I T E D S T A T E S H o u
U N I T E D S T A T E S
H o u s t o n

of Mexico

in the Gulf U N I T E D S T A T E S H

A u s t i n

N e w O r l e a n s
N e w O r l e a n s
E S H o u s t o n of Mexico A u s t i
M E X I C O
M E X I C O

Gulf of Mexico

A u s t i n N e w O r l e a n s
Cascade Lower Chinook Tertiary Trend 1,000 ft Deepwater
Cascade
Lower
Chinook
Tertiary
Trend
1,000 ft
Deepwater
Lower Chinook Tertiary Trend 1,000 ft Deepwater > Since its introduction in 2007, the MST system
Lower Chinook Tertiary Trend 1,000 ft Deepwater > Since its introduction in 2007, the MST system

> Since its introduction in 2007, the MST system has been successfully deployed in 40 wells in the Eastern Hemisphere, treating more than 180 zones.

in the Eastern Hemisphere, treating more than 180 zones. Collaboration begins early “Baker Hughes’ MST

Collaboration begins early

“Baker Hughes’ MST capabilities, which were enhanced by our acquisition of BJ Services, had to be upgraded to meet the specific challenges of deep and ultradeepwater wells,” says Colin Andrew, product line manager for multizone systems for Baker Hughes. “For example, we had to make improvements to maximize production rates, and to boost the pressure and temperature ratings for the Cascade reservoirs. We also had to ensure that each zone could be tested after setting an isolation packer to give Petrobras confidence that zonal isolation was achieved.”

Baker Hughes and Petrobras worked closely on these projects, beginning with comprehensive prejob planning that captured all relevant operational parameters that the upgraded MST was expected to encounter during deployment. Simulation modeling was performed using Baker Hughes’ proprietary InQuest PayZonePro software, which simulated downhole tool movement and was instrumental in providing a dependable gauge of weight on the tool during all phases of the sand control operation. PayZonePro accounts for the ever-changing conditions that occur during a frac pack such as workstring shrinkage, expansion, and ballooning due to temperatures and pressures; fluid and slurry friction; downhole hydraulic pressures; and piston effects. This helps ensure that the tools remain in specific locations, that the ratings of the tools are not exceeded and, ultimately, a successful frac pack.

The companies collaborated on internal and external peer reviews, and well review workshops. In these workshops, all critical parties, from upper management to tool assemblers, reviewed every aspect of the field execution plans, providing the greatest opportunities for success.

plans, providing the greatest opportunities for success. “The deployment of the MST system met our objectives
plans, providing the greatest opportunities for success. “The deployment of the MST system met our objectives

“The deployment of the MST system met our objectives in delivering a robust completion, while greatly reducing the completion time over a conventional stacked, frac-pack system.”

Scott ogier Petrobras completion engineer

The team also jointly developed a list of potential field scenarios that might hinder the MST’s deployment and operation, and formulated decision trees and contingency plans to address these scenarios and guarantee a successful installation.

“Thanks to this early collaborative effort with Petrobras, we gained an in-depth understanding of the expected operational challenges, which led to further upgrades by Baker Hughes to the MST,” Joseph says. This included upgrading the pressure rating of critical components of the MST from 10,000 to 12,500 psi [69 to 86 MPa].

“We also conducted a major testing campaign on our frac ports, with Petrobras involvement,” Andrew says. This included erosional testing to confirm that the frac ports could withstand the high proppant pumping rates required on the Cascade well.

Field deployment

Petrobras approved a field trial of the newly redesigned MST system to complete its Cascade 5 well, located in 8,149 ft (2484 m) of water. The MST was to be used to conduct frac-pack completions through 10 1/8-in. casing in this high-pressure, Lower Tertiary formation.

Ensuring successful deployment began with having the right personnel involved at the right time. To that end, Baker Hughes and Petrobras jointly deployed a field operations team consisting of highly qualified professionals from both companies—personnel that both understood the specifics of their role and could work together to achieve the overall goals of the project.

“This relationship allowed us to quickly eliminate any bottlenecks that were identified during the process,” Joseph says. “The lines of communication were kept open within manufacturing and across product lines, divisions, and disciplines to support a flawless offshore execution.”

To keep Petrobras up to date on any logistics or delivery issues, Baker Hughes project managers and other designated personnel were charged with communicating to the right people in the Petrobras organization.

The offshore team consisted of four tool specialists, split into two crews on 12-hour shifts and staggered to the rig crew’s shift changes, to manage effective handovers. Two Baker Hughes engineers working under a similar staggered shift system supported these specialists. The specialists and engineers maintained a close working relationship with Petrobras operations to accurately track and document all tool ratings, and to ensure that they complied with regulations set forth by the U.S. Bureau of Safety and Environmental Enforcement.

During the frac pack, Baker Hughes had dedicated representatives in Petrobras’ remote operations control room, with an open communications line to both the frac boat and the rig, to support the operation and any decision making during the sand control operation.

Finally, an operations coordinator at the Baker Hughes operations base in Lafayette, Louisiana, stood ready to dispatch back-up

www.bakerhughes.com

at the Baker Hughes operations base in Lafayette, Louisiana, stood ready to dispatch back-up www.bakerhughes.com |

|

51

52

|

52 | equipment in the event that one or more MST components were damaged during surface

equipment in the event that one or more MST components were damaged during surface make-up. Having this coordinator tied into Baker Hughes’ logistics and supply chain to guarantee efficient replacement of critical components could save days, and several hundreds of thousands of dollars in rig cost.

Realizing results

The collaborative working relationship between Petrobras and Baker Hughes allowed the MST to successfully fracture multiple zones in the Cascade 5 well in a single trip. The well had a bottomhole pressure exceeding 19,000 psi (131 MPa) and was successfully stimulated at a pumping rate of 32 barrels per minute, with an average of 260,000 lbm of proppant per zone.

The MST was deployed and set at each zone without incident, with the production sleeves opening and closing as planned and the isolation assembly successfully installed. The isolation packers and production packers were set and tested to confirm complete well integrity prior to performing the frac pack. After stimulating all zones, the system was pulled to surface and inspected. Even after pumping more than 500,000 lbm of proppant through the tool at high injection rates, the crossover section of the MST demonstrated minimal wear.

Petrobras did not incur any lost-time incidents or nonproductive time related to the deployment and operation of the MST, and achieved additional deepwater firsts in the process. The well’s total depth was 26,586 ft (8103 m), making it one of the deepest frac packed wells on record and the deepest application of the MST system.

“This was the first MST installation for the Baker Hughes Gulf of Mexico team, and Petrobras’ willingness to work so closely with us was critical to our success,” says Matt Falgout, operations coordinator for Baker Hughes sand control systems. “They treated us as part of a team from the outset, participating in some of the training exercises with our personnel and sharing their lessons learned from the completion of the initial Cascade and Chinook wells. Anytime we encountered a roadblock, we worked together to find a solution, and ultimately, delivered a flawless completion for the well.”

In terms of operational savings, Petrobras achieved approximately USD 5 million in rig rate reductions alone. “The deployment of the MST system met our objectives in delivering a robust completion, while greatly reducing the completion time over a conventional stacked, frac-pack system,” Ogier concludes. “We currently plan to use the MST for the remainder of the Cascade/ Chinook project, and lessons learned from the first deployment will aid us in future completions.

“This close working relationship, both in the office and in the field, ensured smooth deployment of the MST system in Cascade 5. It was truly a joint project that shared a common goal, which we will strive to repeat in future wells.”

goal, which we will strive to repeat in future wells.” Lower Tertiary team dedicated to delivering

Lower Tertiary team dedicated to delivering game-changing completion systems for

ultradeepwater Gulf of Mexico

Baker Hughes is adopting a cross- functional team approach that prioritizes projects to address major industry challenges and meet customers’ specific needs—projects like designing completion systems for the frontier ultradeepwater Gulf of Mexico.

Integrated product teams (IPTs) are commonly used in many engineering- centric industries. Baker Hughes will use the structure to develop innovative industry solutions. The cross-functional teams will take a systems approach to problem solving and are comprised of employees from diverse disciplines like operations, customer service, engineering, reliability, and supply chain. Integrating supply chain and operating processes will optimize the ordering, manufacture, assembly, test, and deployment of these systems solutions.

“This is a change in the way we traditionally approach problem solving and innovation,” says Mike Sanders, vice president of Enterprise Engineering for Baker Hughes. “While the composition and size of a team will vary depending on the project, they are all created with the express purpose of delivering a product or service to customers faster.”

In 2009, Baker Hughes Reservoir Development Services completed a study that characterized the Lower

Tertiary trend (also referred to as the Paleogene or Lower Wilcox) stratigraphy in the Gulf of Mexico. This study was completed using publically available data, updated in 2012, and also addressed such subjects as subsalt drilling, formation evaluation and, during the operations phase, sanding, compaction, and flow or production assurance. This study provided insight into the problems to be addressed while drilling, completing, and producing Lower Tertiary wells through the entire asset life cycle.

In collaboration with Gulf of Mexico customers, the IPT will design and build an integrated completions system for the Gulf of Mexico’s frontier Lower Tertiary, where water depths reach 10,000 ft (3048 m) with a potential total well depth of 30,000 ft (9144 m).

Baker Hughes estimates that 150 or more wells will be drilled and completed in the Gulf of Mexico through 2020. The frontier ultradeepwater environment has pressures up to 27,000 psi (186 MPa) and reservoir temperatures up to 325°F (163°C). Wells in this area will be designed for a life expectancy of 20 to 30 years, so it’s critical the completion and production systems are reliable.

“The industry doesn’t currently have completion and production systems that can handle the temperatures

and pressures that the earth exerts at this depth,” says Bob Bennett, vice president, Lower Tertiary IPT. “Baker Hughes has the opportunity

to establish itself as a leader in this emerging market. To capitalize on this opportunity, we’re assembling a team of approximately 100 people to deliver

a system to meet the highly specialized requirements of the Lower Tertiary.”

Bennett adds, “Our goal is to deliver

a state-of the-art integrated tubing

hanger-to-toe injection well and production well completion systems for the frontier Lower Tertiary.” This process will include lower completion systems, intelligent production systems, sandface surveillance and control, upper completion systems, in-well and seafloor electrical submersible pumping systems, and subsea marinization. A phased technology development plan spanning 2013 through 2017 has been adopted to provide the solutions required to meet and exceed the needs of frontier ultradeepwater operators in the Gulf of Mexico. To date, about 60% of the team members are in place working at the Baker Hughes Center for Technology Innovation in Houston, which has testing capabilities up to 40,000 psi (275 MPa) and 700°F (371°C).

www.bakerhughes.com

in Houston, which has testing capabilities up to 40,000 psi (275 MPa) and 700°F (371°C). www.bakerhughes.com

|

53

54

|

54 | O ne visit to the Baker Hughes User Lab and the notion that oil

O ne visit to the Baker Hughes User Lab and the notion that oil and gas companies are stodgy places where creativity can’t be found goes right out the window.

www.bakerhughes.com

and gas companies are stodgy places where creativity can’t be found goes right out the window.

|

55

“User experience involves a person’s emotions about using a particular product or system and includes a person’s perceptions of the practical aspects such as utility, ease of use, and efficiency of the system.”

Joel Tarver manager, user interface/ user experience group

Joel Tarver manager, user interface/ user experience group > A background in the gaming industry prepared

> A background in the gaming industry prepared user experience specialists Steven Pierce (left) and Daniel Casslasy to deliver quality, innovation, and a unique culture among developers.

56

|

innovation, and a unique culture among developers. 56 | As a guest lecturer to students studying

As a guest lecturer to students studying human–computer interaction at Houston’s Rice University, Joel Tarver was attempting to explain what Baker Hughes does and to give the students

a preview of the capabilities of the company’s new usability lab.

“My class really wants to know what an oil and gas service company is doing with a high-tech usability lab that measures user experience,” interrupted Professor Michael Byrne. Tarver turned to the Internet for support, doing a quick search result for “Microsoft CEO Steve Ballmer and Baker Hughes.”

“I showed the class a copy of a speech that Ballmer delivered in Houston at IHS’s CERAWeek 2011 where he mentioned

a partnership between Baker Hughes

and Microsoft that involves the software company’s cloud infrastructure it calls ‘Windows Azure .’ The technology is enabling Baker Hughes scientists and engineers to run more accurate simulations and to deliver better results at a much, much faster pace.

“All of a sudden, the students saw Baker Hughes as more than muscle and steel.”

Making the complex simple

Tarver manages the Baker Hughes user interface/user experience (UI/UX) group that performs user experience testing, or “usefulness” testing, on software that is integral to many of the tools that Baker Hughes designs and manufactures.

“User experience involves a person’s emotions about using a particular product or system and includes a person’s perceptions of the practical

aspects such as utility, ease of use, and efficiency of the system,” he says.

In other words, it measures subjective satisfaction.

“Through every aspect of software development and workflow design, the user experience must be considered, measured, and refined,” explains Daniel Casslasy, one

of the team leads for drilling and evaluation software. “Drilling and evaluation software

is complex. It supports directional drilling,

measurement-while-drilling (MWD), and logging-while-drilling (LWD) tools so, if we can design and build software in such a way that the complexity is shielded from the user, it takes much less time to learn how to use the software and for the user to be fully productive with it.

“In short, our goal is to make our software a joy to use.”

Some of that is accomplished by data visualization—being able to communicate information clearly and effectively through graphical means. Some of it comes from pure simplification.

For instance, anyone who has purchased a smart phone or a touch-screen tablet knows they no longer come with a binder full of operating instructions. The learning curve for operating a smart phone is so flat that most children know how to scroll through photo albums and listen to their favorite Justin Bieber songs by the time they’re 2 years old.

The bottom line is this: Today’s users want

a pleasant and uncomplicated experience

whether they are making a phone call or logging a well.

whether they are making a phone call or logging a well. Functionality vs. usability While engineers

Functionality vs. usability

While engineers typically are concerned with functionality, the visual communication and interaction experts on the user interface team focus on not only how a system looks but how it works. They rigorously test Baker Hughes software as it’s being developed:

not just for reliability, but for performance, usability, and consistency—all of which help drive efficiency for customers, no matter their level of experience or comfort when using any of the tools.

“Without science and software, the tools needed to get hydrocarbons out of the ground would be just a pile of metal,” Casslasy says. “The tools we develop at Baker Hughes are all well and good, but without software to control them and to interpret the readings that the tools take, we may as well be lowering chains of paperclips down the borehole.

“As a company, one of our primary objectives is to help our customers get to the pay zone as quickly as possible. Slow or difficult-to-use software impedes their ability to do so.”

Knowing what customers want in the software they’ll be using on their wellsites is paramount to the UI/UX group and its research in the usability lab.

The lab, located in the Baker Hughes Houston Technology Center, opened in January 2012. The Silicon Valley-inspired complex has an observation room with one-way glass, surveillance cameras, and eye-tracking equipment so development teams can monitor a user’s experience, including body language, firsthand. The lab also includes “war rooms” complete with video and audio conferencing to encourage cross-team interaction and an “innovation room” where users can write and draw on “smart walls” that transmit the data as notes directly to the participants’ computers.

A culture of innovation

Situated along a second-floor walkway that overlooks a football field-sized area where drilling and evaluation tools are assembled, the usability lab is “a microcosm of culture change” for Baker Hughes, according to Tarver.

of culture change” for Baker Hughes, according to Tarver. > Joel Tarver demonstrates the eye-tracking equipment

> Joel Tarver demonstrates the eye-tracking equipment used by development teams to monitor a user’s experience, including body language.

What was once a storage area for old hardware is now a modern and inspiring environment for people to work and to interact. Some of the equipment is the same as that used in Google’s usability lab. The lab’s visitor list includes people from technology’s “Big 3” (Apple, Google, and Microsoft) who have come to Houston to meet with Baker Hughes software developers.

In one of the project rooms, a developer takes cues from an LWD tool operator from the Africa region who will be using the software in the field, as a life-sized cardboard cutout of Captain Spock from the Star Trek Enterprise oversees the conversation.

Explains Tarver: “Software developers are problem solvers who work hard. They’re also creative people, and creativity can’t be turned on like a faucet. If they get stuck, I want them to come in here and play with Legos, watch a movie, play video games—do something that gets those creative juices flowing again.”

www.bakerhughes.com

watch a movie, play video games—do something that gets those creative juices flowing again.” www.bakerhughes.com |

|

57

The end users of the system are also provided a space to work and provide insight for the system from the beginning. “Involving people who will be running the tools on location is just another way to help them design better solutions for our customers,” Tarver adds.

In another room, music from The Black Keys wafts from an MP3 player as user experience specialist Steven Pierce creates a data visualization display for a new software platform called Cadence on his drawing tablet. Cadence, one of the software packages for laptops being tested in the lab, is a replacement for the Advantage surface system used to capture complex data from Baker Hughes LWD tools.

Pierce, like Casslasy, joined Baker Hughes from the video gaming industry, which highlights the importance of having the right culture along with an eye for quality and innovation.

58

|

culture along with an eye for quality and innovation. 58 | “Bringing people in from outside

“Bringing people in from outside our industry gives us a different perspective,” Tarver says.

“I do think that some people think people from the gaming industry are slackers still living in their parents’ basements, but in reality they’re more like special forces. They are exceedingly driven and exceedingly talented.

“A lot of what goes into developing games is done through a visual approach. So, we are looking at how we can present things in a more visual, interactive, and smarter way. What I would like is for Baker Hughes to be to data visualization what Google is to search.”

The usability lab underlies the Baker Hughes mission of anticipating, understanding, and exceeding the expectations of the customer. “I often give tours to internal groups to let them know about the lab’s capabilities and that it can and should be shared,” Tarver says. “We have some

> Test-driven development means software is rigorously tested as it’s developed, not just for reliability, but for performance, usability, and consistency.

great technology internally for user testing that can provide real value to us and ultimately to our customers, whether it’s a brochure, an interface for the Baker Hughes Operating System (BHOS), a mobile app for IT, a tradeshow booth, our intranet or corporate websites, or desktop applications.

In February, Tarver was invited to a workshop in Aberdeen, Scotland, where he presented concepts for improved data visualization to aid decision making, as well as concepts for automation, to a group of Statoil managers and engineers. The Norwegian national oil company is planning a field development that is scheduled to begin in 2016 with a field life of 30 years.

“We wanted to make the customer aware of concepts that may become reality within the lifetime of this project,” says Marianne Stavland, a Baker Hughes project manager for Statoil Mariner/Bressay. “Our aim was to initiate a discussion around how services could be delivered differently in the future.

“I think the industry is spending a lot of valuable time fighting software at the moment. The usability lab can change that by ensuring that the software is working for us, not against us. Also, if we deliver on the concepts, we will turn the multitude of available data into information for improved decision making to enhance our customers’ operations. I also believe the concepts will help the industry attract creative and innovative people.”

Tarver agrees. “We need to show that we are a technology company, and it is exciting, and it’s interesting, and there’s a lot to learn here,” he concludes. “We need to show people that Baker Hughes isn’t your typical oil and gas service company anymore. We are a technology company that specializes in oilfield services.”

technology company that specializes in oilfield services.” > Joe Cottrell, a field operations engineer, inspects

> Joe Cottrell, a field operations engineer, inspects key dimensions on the XP riser brush and boot basket.

On average, as much as 30% of the nonproductive time on a deepwater drilling rig is the result of debris in

the wellbore—trash that’s

left over from drilling and completion operations. Baker Hughes

may now have the industry’s best integrated system for removing it, but don’t take our word for it. World Oil magazine thinks so too.

www.bakerhughes.com

system for removing it, but don’t take our word for it. World Oil magazine thinks so

|

59

01
01

01> The X-Treme Clean XP well cleanup system removes debris from the wellbore that could hinder future operations.

02> George Krieg (left) and Joe Cottrell inspect the brush strips on the XP casing brush.

There’s a point after drilling a well when you pull all the drilling tools, replace the drilling mud with completion fluid, and prepare to open a portion of the hole to the reservoir you’re trying to reach. With shallow, uncomplicated wells, the job goes quickly, but with complex, deepwater wells that can cost USD 100 million or more, this critical process is anything but routine.

Thanks to drilling mud, most of the rock is gone from the hole by the time the drill bit reaches the bottom of the well. What remains are small bits of rock, pieces of

60

|

well. What remains are small bits of rock, pieces of 60 | 02 metal, and, if
02
02

metal, and, if the rig crew wasn’t careful, an occasional wrench or glove.

“All of that must be cleaned from the hole as part of the completion process to reduce or eliminate associated risks and costs,” says Yang Xu, Baker Hughes wellbore cleanup product line manager. “This is especially true for high-cost deepwater wells.”

Failure to clean the wellbore after drilling operations can cause big, expensive, and even dangerous problems later on. The sand control screen, for example, can become contaminated and plugged before reaching total depth. Packers—expand