Journal of Petroleum Technology

Spotlight on R&D Series

Sponsored by SPE R&D Advisory Committee

Contents
“Petroleum Engineering Research and Development – Seeking Value Through
Technology,” by A. Dan Hill, U. of Texas, and Arnis Judzis, TerraTek

“Reservoir Description and Dynamics,” by Roland Horne, Stanford U., and Raj
Raghavan

“Drilling and Completions – Striving for the Par 5 ‘Hole in One’,” by Stephen
Willson and Ken Armagost, BP

“Production Operations R&D – Optimizing Performance From the Sandface to

the Tank,” by Joseph A. Ayoub, Schlumberger, A. Dan Hill, U. of Texas, Carl T.
Montgomery, ConocoPhillips, and Stuart L. Scott, Texas A&M U.

“R&D Needs for Offshore Facilities and Construction,” by William H. Higgs,

Mustang Engineering

“Meeting the R&D Needs for a Global HSE Challenge,” by John Candler and
Monica Norman, M-I Swaco

“Promoting R&D in Management and Information,” by Jeff Spath, Schlumberger,

and Arnis Judzis, TerraTek

“R&D is an Astute Investment,” by Arnis Judzis, TerraTek, and A. Dan Hill, Texas
A&M U.

Copyright 2005
Society of Petroleum Engineers
 Spotlight on R&D Series Coordinators
Arnis Judzis, TerraTek, and A. Dan Hill, Texas A&M U.

2004-05 SPE R&D Advisory Committee

Medhat Kamal, Chairman, Chevron Energy Technology Co.
Don W. Green, U. of Kansas
A. Dan Hill, Texas A&M U.
Arnis Judzis, TerraTek
Hossein Kazemi, Colorado School of Mines
Osvaldo Pascolini, ENI E&P
John R. Smith, Louisiana State U.
Norman R. Warpinski, Sandia Natl. Laboratory
Barth E. Witham, Enduring Resources
Vikram Rao, Halliburton Energy Services
Paul Ching, Shell Intl. E&P
David R. Zornes, ConocoPhillips
A.D. Hill, U. of Texas, and Arnis Judzis, TerraTek Inc.
Petroleum Engineering Research and Development—
Seeking Value Through Technology
A primary mission of SPE is the dissemination of new technology.
But what if there were little support for the development of
new technology?
In 2002, SPE highlighted the importance of creating technology
for oil and gas extraction through the formation of the R&D
Advisory Committee. The committee’s aim is to foster the continu-
ing development of petroleum engineering technology through
collaborations of academia, industry, and government groups
worldwide. Included was the introduction of “performance met-
rics” for this effort and the desire to ensure that the value—finan-
cial and otherwise—of R&D to the oil and gas industry receives
much greater attention.
A major impetus for the committee’s activities has been the
decline in research activity among major operating companies and
the perception that this decline has not only decreased the direct
research efforts of these companies but also reduced their partici-
pation in collaborative research activities with academia, govern-
ment laboratories, and private research companies.
The need for continued collaborative research efforts is clear, at
least from the academic side. For example, in the 2002–03 acade-
mic year, industry provided about 42% of the total external fund-
ing at the U. of Texas Petroleum and Geosystems Engineering
Dept. At the U. of Tulsa, industry funding during the same period
accounted for 54% of external research funding. The continuing
health of petroleum engineering departments and other research
providers throughout the world depends on such support from
industry collaborators.
A reality check on the status of R&D in the oil and gas industry
was essential to the R&D Advisory Committee. In June 2003, the
committee invited numerous companies (operator, service sector,
and consultancy) and academic institutions to present their per-
ceptions about the challenges, uptake, and value of R&D. Not sur-
prisingly, the common themes articulated by industry included
the following:
• Alignment with business is required. This seems rather obvi-
ous when many in the business continue to revise cost structures.
• Management doesn’t always listen to R&D folks, which raises
the issue of the traction of R&D vs. pushing it.
• Companies should make clear their strategy and plans for tech-
nology acquisition. R&D providers can address technical chal-
lenges if they know what the industry needs and how these needs
change over time.
• Personal contact is important. People and networking are vital
even in an e-business environment.
• Time lines for implementation of R&D are being squeezed
shorter and shorter.
• Operators are still reducing production costs where possible.
Not transparent in the discussions were the processes used by
the industry to establish longer-term projects with academic insti-
tutions. The university representatives noted the following:
30
• Funds are decreasing, from both industry (due to mergers) and
the U.S. Dept. of Energy.
• Most petroleum-related departments have small staffs and thus
are finding it tough to compete.
• The pool of people goes away if graduate student funding
drops. This can have an impact on the supply of engineering grad-
uates to the oil industry.
• Academic time lines to conduct R&D continue to be long.
• There is some perception of decreasing graduate student qual-
ity in a visibly cyclical industry.
There was, however, some optimism expressed by the major oil
companies in the continued need for upstream R&D. Technology
implementation leads to improved business performance, such as
finding reserves and improving productivity. Companies continue
to operate in harsh and remote environments, requiring continued
innovation to stay competitive. Some in the E&P business are
clearly heading more toward gas, and others are shifting their pro-
ject portfolios to new geographical profit areas. R&D is expected
to help solve their business challenges also. There is an increasing
use of operating-unit technology “governance” boards to ensure
alignment of R&D with its implementation in the field. And, final-
ly, the use of “virtual” techniques (reservoir simulation, produc-
tion, etc.) and “digital” oilfield concepts are trends that will impact
R&D positively.
What can be done to raise the profile of upstream R&D further?
The R&D Advisory Committee has a number of initiatives under
The SPE R&D Advisory Committee
In 2002, an R&D Task Force recommended to the SPE Board
of Directors that an R&D Advisory Committee be formed to
“identify, encourage, facilitate, and help global R&D activities
that will provide needed technology for future use by petrole-
um engineers.” The mission of this committee is “to encour-
age and facilitate global R&D activities by establishing (1) an
ongoing dialog between industry, government, and academia
that will match industry needs with research efforts, (2) a
cooperative framework for development of technology and a
competent work force for the future E&P industry, and (3)
R&D efforts that satisfy the needs of industry, governments,
and academia in meeting their goals for success.”
Committee members are Medhat Kamal (Chairperson),
ChevronTexaco EPTC; Don Green, U. of Kansas; A.D. Hill, U.
of Texas at Austin; Hossein Kazemi, Colorado School of
Mines; Arnis Judzis, TerraTek Inc.; Peter Oosterling, Shell Intl.
E&P; John R. Smith, Louisiana State U.; Norm Warpinski,
Sandia Natl. Laboratories; and Barth Whitham, WestPort
Resources Corp.
JANUARY 2004
way to satisfy this mission, one of which
we are introducing with this article. We
will be publishing in future issues of JPT a
series of articles that will highlight current
R&D activities under way in academia, in
government laboratories, and in industry,
and the articles will attempt to identify the
areas of most pressing need for future
research. Other initiatives include plans for
R&D sessions at SPE technical meetings,
industry and academic workshops, and
conferences and plans to enhance the
search capability for accessing R&D
providers and topics on the SPE website.
Together, these programs aim to publicize
major R&D issues to technical, operations,
and management constituencies in the oil
and gas industry worldwide.
The JPT articles will focus on the SPE
technical disciplines of Drilling and
Completions; Facilities and Construction;
Health, Safety, and Environment; Man-
agement and Information; Production and
Operations; and Reservoir Description and
Dynamics, with each article written by rec-
ognized research leaders in these fields.
The authors will be asked to present some
recent success stories that show the value
of new technology development and to
predict the R&D needs of the future in
their areas. JPT

If you would like to comment on this series of

R&D articles, please contact us, because we
welcome your input. Send e-mail to danhill@
mail.utexas.edu and judzis@terratek.com.

A. Dan Hill is B.J. Lancaster Professor of

Petroleum Engineering in the Petroleum and
Geosystems Engineering Dept. at the U. of
Texas at Austin. Arnis Judzis is Executive
Vice President at TerraTek Inc. in Salt Lake
City, Utah. Both are members of the SPE
R&D Advisory Committee.

Hill Judzis

JANUARY 2004 31
Roland Horne, Stanford U., and Raj Raghavan
Reservoir Description and Dynamics
Editor’s note: This is the second in a series of articles on the state
of research and development in the major upstream technologi-
cal disciplines.
How great it would be if we could predict the future! One of the most
compelling and focal interests both to oil companies and to oil-pro-
ducing (and oil-consuming) nations is how much oil is in the ground,
and how much will there be next year. Despite being expressed in very
large numbers, with large numbers of significant digits, the amounts of
both present and future oil are immensely uncertain figures. It has
often been quoted that the oil reserves of the world’s largest oil pro-
ducer, Saudi Arabia, have roughly doubled over the past 7 years.
Despite some newly discovered oil fields in that country, the fact
remains that most of the “new” oil was actually “discovered” within
existing reservoirs. All readers of this journal are familiar with how
easy it is to rock markets by reducing reserves—not by losing any, but
just by changing our minds about how much we actually had (see
“Methods for Citing Oil Reserves Prove Unrefined; Shell’s Restatement
Casts a Shadow on How Industry Measures Its Crude Backlog,” The
Wall Street Journal, 14 January 2004). Clearly, the most important peo-
ple in the business are the engineers who figure out those all-impor-
tant estimates of reservoir character and size, then go on to forecast its
future. And we have seen that these estimates, and the methods used
to reach them, have changed very much over the recent past.
The goal of this article is to make the general readership of JPT
aware of some of the R&D activities of engineers involved in the
technical discipline of Reservoir Description and Dynamics by high-
lighting current research that is under way in academia, in govern-
ment, and in industry so as to improve estimates of reserves and
productivity. Further, this article aims to help identify areas with the
most pressing need for the future. Much of this research is dictated
by today’s business needs (use of 3D/4D seismic, improved geologi-
cal modeling capabilities, focus on low-cost production, and
appraisals following three or four penetrations).
Over the past 20 years, engineers have made significant advances in
linking geology to reservoir behavior under a variety of conditions and
in providing information to improve our decision making. This intense
research in geology, geophysics, and modeling has been driven by the
increase in computing power and by the recognition of our uncertain-
ty in describing complex geological environments. Advances in geo-
logical modeling, in the interpretation of geophysical measurements,
and in the ability to correlate such measurements with well logs, cores,
and analogs enable us to estimate spatial properties (porosity, perme-
ability, saturation, and the like) in the form of three-dimensional
“arrays” or “cubes.” Such cubes are now available at finer and finer
scales. Today, it is not unusual for information to be given on the basis
of half-foot vertical intervals. Geologic models with hundreds of thou-
sands to millions of grid cells are not uncommon. The three-dimen-
sional pattern of the properties of these geological models presents sig-
nificant challenges in gridding, in calculating transmissibilities, in
scaleup, in pseudoization of the saturation functions, and in display.
32
Understanding the relationship between the geologic model and flow
in the reservoir/well system and maintaining the essential characteris-
tics of this relationship in the process of creating the reservoir simula-
tion model have been major goals of recent research.
Geology and Flow
Recent research, primarily in the area of well test response, has demon-
strated the relationship between the geologic description and the pres-
sure and pressure-derivative response during a well test. The use of this
relationship to improve the description and reduce the uncertainty in
the geologic model has been demonstrated. Future work needs to relate
geological description to performance in more complex multiphase
flow scenarios. Current research has been addressing this in at least two
significant ways: geostatistical modeling using multipoint statistics (by
incorporating reservoir architecture and properties of the rock fabric)
and the inclusion of production data into the modeling process.
Multipoint statistical methods have shown great promise in creating
reservoir models with much more realistic geological constraints.
Incorporation of history matching into the process is now a common
target for research—the PUNQ (Production Forecast Uncertainty
Quantification) consortium project in Europe during the late 1990s rep-
resented an early research focus on this area (www.spe.org/csp).
Geological Risk and Forecast Uncertainty
A fundamental result of this recent research in geologic modeling has
been the recognition of the uncertainty of our knowledge of these geo-
logic models that, in turn, has given rise to uncertainty in our ability to
forecast the dynamics of the reservoir. This uncertainty arises because
of our limited sampling of the reservoir properties and because of our
basic uncertainty in understanding the specific geologic model. Many
equiprobable models of the geology may be generated and scaled.
These models may give rise to a broad range of reservoir/well perfor-
mances. This is one of the main reasons for the recent interest in incor-
porating history matching into geostatistical realizations so that the
level of uncertainty can be computed appropriately.
Scaleup
Scaleup algorithms have been an important advancement in our ability
to use large-scale models in recent times. The objective is to concentrate
nodes around features that significantly influence fluid flow and to pre-
serve internal connectivity that exists at the fine scale and yet adjust or
predict performance in realistic time frames. Those involved in scaleup
primarily concern themselves with two issues: (1) ensuring that the
pressure-flow relationship is maintained at the fine- and coarse-scale
levels, and (2) ensuring that breakthrough characteristics of all reservoir
fluids are preserved at both scales. Scaleup techniques are of two kinds:
local and global. Local techniques, which by far are the most popular,
presume that we may impose pressure gradients across a small group of
cells that are to be scaled; unfortunately, these techniques do not yield
proper representations of permeability in that the connectivity within
these complex geological models is compromised. For example, when
MARCH 2004
a global pressure gradient is applied across a fine-scale model, it is found
that flow normal to the direction of the imposed gradient may occur,
and additional terms are needed at the coarse scale to account for this
observation; that is, the 5-point, computational stencil that we are all
familiar with is inadequate. Global techniques, which have found lim-
ited application, make no a priori judgments on flow paths by honor-
ing internal connectivity and permit significantly longer flow paths
(locally, fluid may flow countercurrent to the main flow). Differences in
throughput between local and global techniques for a given pressure
gradient may be as great as 50%. Even for rather simple problems,
such as pressure analysis, the process of aggregation of layers may result
in estimates of volumes (reserves) being off by an order of magnitude.
Gridding
Algorithms for the generation of grids for the coarse-grid simulation
model also have been an area of research. Here the emphasis has been
on flexible grids that follow the streamlines and/or local hetero-
geneities. These grids range from fairly uniform to highly distorted.
General grid generation techniques often lead to coarse grids that are
not aligned with the underlying geological grid. A full-tensor-differ-
ence scheme may result from either a full permeability tensor or from
an unaligned grid. Even negative transmissibilities may result if the
grid is severely distorted or if the geology is complex. The relationship
of the well trajectory, gridding, and geology also has been a focus of
research. Grids with a wide variation in cell sizes, very negative trans-
missibility (to account for local fluid movement countercurrent to the
main flow), or a full-tensor-difference scheme may increase computa-
tion time significantly.
Computational Schemes
Even after scaleup, the size of the coarse-grid model may be large. An
efficient solution to this problem has been an area of continuous
study. At the outset it needs to be recognized that it is best to solve
the underlying problem as close to the geologic scale as possible; that
is, if the horsepower is available, it is best to solve the problem with
a minimum of scaleup. Two approaches for solving large coarse-grid
problems have been proposed. First, streamline simulations may be
used to obtain an approximate solution. Although errors in results
may exist because the pressure equation is not solved frequently
enough in a complicated model, these errors may be small. There is
a need to systematically evaluate the type of models and conditions
MARCH 2004
for which streamline simulation is more accurate. Second, multiple
connected computers or CPUs are used. This “brute-force” approach
exchanges computer time (costs) for manpower time (costs) of the
gridding, scaleup, and pseudoization process.
Sequences and Consequences
The result of these technological advances has been that companies
and governments have been able to make better estimates of their oil
reserves—hence the recent “discoveries” and “losses” mentioned
earlier. Perhaps even more importantly, the uncertainty of the esti-
mates has become better understood, even to the point of being
quantified and included into business decisions.
So what will futurists do in the future? As the oil business digs deep-
er into information, and at the same time searches deeper into the
ocean and deeper into the Earth, we can expect that reservoir “imag-
ing” will improve further. Undoubtedly the integration of different data
sources, combined with better modeling algorithms and more muscu-
lar computers, will result in better forecasts. And knowing which side
the coin will fall on will allow us to make better bets! JPT
Roland N. Horne is professor and
Chairman of the Petroleum Engineering
Dept. at Stanford U. and Director of the
Stanford Geothermal Program. He has
received two SPE Best Paper awards, one
for work in well-test interpretation and
another for work in production optimiza-
Horne Raghavan tion, as well as three Best Paper awards
from the Geothermal Resources Council. Horne is an SPE Distinguished Member,
has been an SPE Distinguished Lecturer, and has been awarded the SPE
Distinguished Achievement Award for Petroleum Engineering Faculty and the
Lester C. Uren Award. He is a member of the U.S. National Academy of
Engineering. Rajagopal Raghavan is a retired Senior Staff Associate Reservoir
Engineer formerly with Phillips Petroleum. He has 25 years of experience in acad-
emia and in industry. He is a Distinguished Member of SPE and was awarded the
SPE Reservoir Engineering Award in 1988. He is also a recipient of the
Distinguished Petroleum Engineering Faculty Award of SPE. In 1981, he received
the Tau Beta Pi Award for teaching excellence in the College of Engineering at the
U. of TuIsa. He has held many offices in SPE, including Chairman of the Editorial
Review Committee and Distinguished Lecturer. He holds a BSc degree in electrical
engineering from Birla Inst. of Technology, Mesra, Ranchi, India; a Dip. Pet. degree
in petroleum engineering from the U. of Birmingham, England; and a PhD degree
in petroleum engineering with a minor in mechanical engineering from Stanford U.
33
Stephen Willson, SPE, and Ken Armagost, SPE, BP
Drilling and Completions—Striving for the Par-5 “Hole in One”
Editor’s note: This is the third in a series of articles on the state
of research and development (R&D) in the major upstream
technological disciplines. The articles are part of the mission of
the SPE R&D Advisory Committee, which was created in 2002
to foster the continuing development of petroleum engineering
technology through collaborations of academia, industry, and
government worldwide. The series will focus on R&D in each of
SPE’s technical disciplines. If you would like to comment on this
series of R&D articles, please contact us, because we welcome
your input. Send e-mail to danhill@mail.utexas.edu and
judzis@terratek.com.
As this issue of JPT goes to press, the Shell Houston Open golf tourna-
ment is under way. One cannot but ponder the figurative drilling and
completions challenge that not even Tiger Woods can achieve—the par-
5 hole in one. In golf, a hole in one requires hitting a very small ball a
very long way and, in one shot, landing it in a very small target. The rel-
ative scale of driving a 1.68-in.-diameter ball some 500 yards is compa-
rable to oil and gas exploitation, where a well has to be drilled typically
several miles to intersect a specific target within a chosen reservoir. This
can be achieved incrementally—by taking several shots, or cementing
several well casings—but the big prize is to be able to do it in one go.
In the game of golf, changing the metallurgy of the driver shaft,
or changing the weight and shape of the club head, can lead to
incremental improvement; but this will not achieve the desired goal.
The same applies in the oil patch; no one single technique will
enable a well to be drilled from surface (or mudline) to total depth
(TD) in one go. Multiple complementary innovations are required,
plus a strong tail wind. The combined efforts of oil- and service-
company innovation in R&D, breakthroughs from academia, and
operational insights from experienced field personnel will, if prop-
erly harnessed, provide this necessary tail wind.
What will these innovations entail? The desired goal is the “One-
Trip Well” (OTW), the ultimate in well-construction efficiency from
spud through completion. This is the focus of the 2004 SPE Forum
on the One-Trip Well to be held 27 June–2 July in Broomfield,
Colorado. This promises to be an exciting event, in which partici-
pants will work to identify the technical innovations required to
achieve this step change in well-construction efficiency.
The OTW is defined as a well that can be drilled in a single pass
below the first pressure-bearing casing. Typically, the starting point
would be the surface casing, upon which the blowout preventers have
been installed. To accomplish this goal, four components of the OTW
must be delivered. They are: (1) wellbore pressure integrity (the
strength of the vessel); (2) wellbore pressure management (control of
the pressure imposed upon the vessel during the drilling process); (3)
formation evaluation; and (4) systems and equipment reliability
(including hole quality concerns). And finally, to make the OTW goal
at all interesting, this efficiency must be coupled with an economic
benefit when compared with traditional construction techniques.
34
Wellbore Pressure Integrity. The pore pressure and the fracture
gradient—the “drilling window”—have provided traditional con-
straints on casing setting depths. What can be done to improve the
naturally occurring pressure integrity of the well as we drill ahead?
Recent innovations in drilling-fluid-additive formulations have cre-
ated “designer muds” that have the potential to raise the fracture
gradient in sand and shale formations. Fig. 1 shows a comparison
of leakoff tests (LOTs) performed in shale using such a mud com-
pared with a standard formulation; here, the fracture gradient is
increased from 16 to 22 lbm/gal.1 Further research, field training,
and commercialization of these fluids are required to prove the con-
cept and to achieve widespread application.
Wellbore Pressure Management. If the upper limit to the drilling
window can be extended by designer fluids, what of the lower limit
imposed by pore pressure? The objective is to impose only the pres-
sure required to stabilize and control the exposed formations.
Emerging techniques for managing the imposed pressure, such as
dual-gradient drilling and equivalent circulating density reduction
tools, offer the possibility of widening the drilling window by reduc-
ing or eliminating unnecessary wellbore pressure. In certain cir-
cumstances, underbalanced drilling—or some other innovation—
may be used.
Seekers of the OTW Holy Grail need to be mindful that the over-
burden rocks are a part of the puzzle also. The OTW concept is most
likely to succeed in conditions that are largely in-gauge and free of
wellbore-instability and hole-cleaning problems. In subsalt deepwa-
ter environments, such as the Gulf of Mexico, a “hole in one” can
be approached by using the salt as a “friendly” formation, because
deformation rates are slow enough that slimmed-down casing
designs will not suffer from salt creep. The use of real-time data
interpretation and analysis, look-ahead detection, and drilling-fluid
remediation of subsalt geohazards (rubble zones, perturbed stresses,
high pore pressures) will, in the future, enable the salt exit to pro-
ceed uninterrupted by drilling problems.
In other drilling applications—such as extended-reach drilling—
real-time wellbore-stability analysis services, coupled with advanced
borehole-quality logging and improvements in real-time logging-
while-drilling (LWD) data telemetry (using Wellsite Information
Transfer Standard Markup Language protocols2) will enable the
drilling engineer to assess when conventional drilling bounds are being
exceeded and where reliance is being placed on fracture-gradient-
enhancing drilling fluids. Wellbore quality and instability will need to
be monitored as the OTW is being advanced, because deteriorating
hole conditions (mechanical instability or losses) may dictate when
conventional casings have to be set and when a reduction in hole size
is necessary. Achieving the OTW concept will, therefore, require sig-
nificant input from drilling geosciences (pore-pressure and wellbore-
stability prediction) and LWD data transmitted in real time to identify
potential hazards. This will enable the appropriate drilling operational
procedures to be put in place to mitigate the anticipated risks.
MAY 2004
 basepipes offer the real possibility of installing expandable sand
2400 screens in the most challenging reservoir conditions. Recent advances
Designer-mud
Designer mud
2200 Base Mud L.O.T
Base-mud LOT in expandable completions technology have included the incorpora-
breakdown
tion of elastomers on the outside of the basepipe so that zonal isola-
2000 tion is now possible. These isolation techniques are just now being
Designer Mud
mud
1800 Initial deployed in the field, and further study and field-performance assess-
formation
Formation ment are still needed. However, the development is all directed toward
Surface Pressure, psi

1600 breakdown
Breakdown
1400
1200
1000
800
600
400
200
0 designs. One cannot but wonder what new advances emerging
0.00 5.00 10.00 15.00 20.00
Time, min
Fig. 1—Example of formation breakdown enhancement
using “designer mud” (after Aston et al.1).
Remedial measures—lost-circulation materials and other chemi-
cals—may require redesign for use with OTWs. Expansive fluid-loss
treatments that are placed indiscriminately in any loss zone or con-
duit may be required. These chemical treatments may need to be
deformable so that the plugging mechanisms are resilient to fluctu-
ations in wellbore pressure. They should ideally be soft, drillable
materials so that the borehole can be recovered after placing the
treatment. New drilling remediation treatments, such as the
DrillAhead System,3 are proving effective in the remediation of lost-
circulation events, and it is anticipated that new treatments such as
this will continue to be developed to extend hole section lengths.
Unplanned drilling events should not, therefore, mean that the cur-
rent hole section needs to be TD’d. Achieving the OTW efficiency
objective will require recovery from events such as wellbore insta-
bility and lost circulation so that the borehole can be advanced to its
target at depth.
Evaluation. Certainly, if the well is to be drilled in a single pass, the
formation-evaluation component must be addressed. Definitive
geological properties must be measured as a part of the overall
drilling process. Real-time information requirements must be estab-
lished and met.
Systems Reliability. The component solutions must work together
to accomplish the desired well results and do so reliably. The com-
ponents must have the life and durability to match the challenge.
The resultant hole quality will be measured by indicators such as
tortuosity, rugosity, roundness, stability, directional control, and ulti-
mate well position.
Completions Efficiency. Within the reservoir interval, the aspiration
of an OTW completion may have a useful ally in expandable-sand-
screen technology. This completions technique has increased in
uptake in the past few years, and several vendors now offer it. Some
issues remain regarding the long-term integrity of these completions,
particularly in soft sediments experiencing large depletions. But
recent designs incorporating higher collapse resistance and expanded
the same goal of maintaining the largest possible borehole diameter
through the reservoir. Where cased and perforated completions are
required for well productivity, hydraulic fracturing, etc., the possibili-
ty of running expandable solid tubulars (again with zonal-isolation
elastomers) or conventional cemented pipe remains.
Of course, the trend will be increasingly toward the intelligent
well, where the innovations described above are combined with
fiber-optic data-transmission systems capable of relaying large quan-
tities of subsurface data to the well control room. Work is under way
to combine intelligent-well capabilities with expandable comple-
tions. This work will continue and will be incorporated into well
nanotechnology will provide to oilfield completions instrumenta-
tion and downhole flow control. The possibility exists for downhole
control systems to be significantly downsized, and intelligent
“robots” may one day be available to repair and replace any mal-
functioning downhole equipment.
All this will lead to wells becoming slimmer and slimmer, and the
conventional technique of wells telescoping downward in succes-
sively smaller hole diameters will be a thing of the past. A 20,000-
ft-long 81/2-in. hole section may be utopia, but the winds of change
are coming around to blow in the right direction.4
The views expressed in this article are those of the authors. They do
not necessarily represent the views of BP plc or its subsidiaries. JPT
References
1. Aston, M.S. et al.: “Drilling Fluids for Wellbore Strengthening,” paper
SPE/IADC 87130 presented at the 2004 SPE/IADC Drilling Conference,
Dallas, 2–4 March.
2. See www.witsml.org for further details.
3. The DrillAhead System is a registered trademark of Halliburton Energy
Services.
4. Authors’ note: Just how far are we from a par-5 hole in one? We’ve got the
distance. Both the PGA of America and the Guinness Book of World Records
recognize 64-year-old Mike Austin’s 515-yd drive at the U.S. National
Senior Open as the “longest drive, regulation course” and “longest drive,
competition,” respectively. To date, the longest straight hole in one was
recorded on the par 4, 444-yd 10th hole at Miracle Hill Golf Club in
Omaha, Nebraska. Here, on 7 October 1965, 21-year-old Robert Mitera
achieved this record performance. A 50-mph gust carried his shot over a
290-yd drop-off. The group in front testified to the remaining distance.
This feat is documented in the Guinness Book of World Records. The tech-
nical capability appears to be here, we’re just waiting for the right wind.
Stephen Willson, SPE, is the Drilling
Rock Mechanics Advisor in BP’s
Houston E&P Technology Group. He
is a 2004–05 SPE Distinguished
Lecturer. He holds a PhD degree in
civil engineering from the U. of
Willson Armagost Manchester, U.K. Ken Armagost,
SPE, is a Drilling Technology Pro-
gram Leader for BP in Houston and is Cochairman of the 2004 SPE North
American Forum on the One-Trip Well. He holds a BS degree in chemical
engineering from Ohio State U.

36 MAY 2004
Spotlight on R&D
Joseph A. Ayoub, Schlumberger; A. Dan Hill, U. of Texas at Austin; Carl T. Montgomery, ConocoPhillips; and Stuart L. Scott, Texas A&M U.
Production Operations R&D—Optimizing Performance
From the Sandface to the Tanks
Editor’s note: This is the fourth in a series of articles on the
state of research and development (R&D) in the major up-
stream technological disciplines. The articles are part of the
mission of the SPE R&D Advisory Committee, which was
created in 2002 to foster the continuing development of
petroleum engineering technology through collaborations of
academia, industry, and government worldwide. If you would
like to comment on this series of R&D articles, please contact
us, because we welcome your input. Send e-mail to dan-
hill@mail.utexas.edu and judzis@terratek.com.
If the reservoir engineer is the strategic planner of the oil field and
the crystal ball gazer, and the drilling engineer is the builder (the
wells are the structures created to produce oil and gas), then the
production engineer is the system operator, the plant manager of the
oil field. The production engineer is charged with overseeing the
daily operation of wells, including constant monitoring of well per-
formance, planning and supervising workover operations to maxi-
mize recovery, and optimizing artificial-lift and pipe flow systems.
As such, R&D in production operations often has immediacy and a
direct, tangible economic target. New developments in well-stimu-
lation technology, for example, quickly can be judged by the pro-
ductivity increases resulting from their implementation. On the
other hand, long-term research also has had considerable impact.
Many current deepwater developments are founded on multiphase
transport through subsea pipelines that have been implemented
based on years of basic studies of multiphase pipe flow. In this arti-
cle, we highlight some of the recent R&D achievements in this
broad area of production operations and attempt to identify the fer-
tile grounds for future research.
Hydraulic Fracturing
Since its inception in 1947, the hydraulic fracturing of oil and gas
wells has evolved into a highly sophisticated, highly profitable tech-
nology. As Ralph Veatch, one of the fathers of hydraulic fracturing,
once put it: “We know everything about hydraulic fracturing except
how long they are, how high they grow, how wide they are and how
much conductivity they have.” Despite the humor in this statement,
it also contains a lot of truth. A number of techniques recently
developed use the mechanics of rock behavior to help stimulate the
well, including cavity completions in coal and heavy-oil-bearing for-
mations, soft-rock fracturing, fracturing with nothing but water, and
fracturing of long horizontal wells. We are currently unable to
model many of these techniques because, interestingly enough,
most, if not all, of the commercial hydraulic-fracturing design mod-
els assume that rock is a linear elastic material. When rock behaves
as it does in the upper part of Fig. 1, this assumption is valid and
works well. The problem becomes apparent when one looks at the
lower graph in this figure. The models are satisfactory for the first
36
part of the envelope, but as the rock becomes ductile, there is an
error introduced that is compounded as the net pressure in the frac-
ture builds. For many soft rocks, the linear elastic region is only 100
psi and the ductile region can be quite large. This introduces an
error in the simulators, which can give the design engineer consid-
erable heartache. Fractures are predicted to be contained when they
should not be, net pressures are much higher than expected, leakoff
control becomes a very large issue, lower than expected pad vol-
umes are required, toughness criteria have to be adjusted to very
high values, etc.
For the large, long-term projects of the future, there is a need for
much more sophisticated 3D, nonlinear geomechanics models that
can predict the behavior of rock when it is subjected to the injection
of solids such as in frac-pack treatments, drill-cuttings injection,
and produced-solids disposal projects. In addition, these models
need to be enhanced to allow the prediction of solids production
from cavities and how these will affect the ultimate productivity
index of the well. These models are slowly becoming available1,2
and will play a much wider role in the future.
Near-Wellbore Conditions
A key part of the well production system is the well completion
and near-well formation because this region is the interface
between the well and the reservoir—any unnecessary flow restric-
tion here is a bottleneck restricting production. One fruitful area
of research has been in modeling the flow behavior in this region
to isolate the effects of the well completion from formation-dam-
age effects that are targeted with stimulation treatments. These
studies have shown that convergent flow to the slots of a slotted
liner (Fig. 2) or to perforations can greatly amplify the effects of
formation damage.3 Models of the near-well vicinity such as these
allow us to design completions that can minimize near-wellbore
restrictions. Future research on well completions and matrix-stim-
ulation methods will be aimed at consistently creating the zero-
pressure-drop completion.
Optimization of the matrix-stimulation techniques applied to
enhance near-well permeability will continue to be an active area of
research, particularly by the service sector, where obvious market
advantages can be gained with new developments in fluid systems,
fluid delivery, and placement techniques, as well as modeling
advances. Detailed studies of the complex chemistry of the acidiz-
ing process have led to fundamental changes in the acid systems
commonly applied—the days of pumping 3% HF/12% HCl mud
acid with no consideration of formation mineralogy are over. More
basic research into the chemical and physical interactions between
stimulation fluids and oil- and gas-bearing formations undoubtedly
will lead to the development of new acid systems in the future.
Further advances in modeling capabilities also will have direct bear-
ing on the improvement of these stimulation processes. For exam-
ple, we have recently been using geostatistical methods to model the
fine-scale heterogeneities present in most sandstones, then simulat-
JULY 2004

Fig. 1—Hard vs. soft rock.
ing acid transport and dissolution in such systems. Typical results
(Fig. 3) show that acid penetrates much deeper into the formation
than previously predicted because of channeling that occurs in het-
erogeneous systems. Increasing computing power undoubtedly will
lead to more sophisticated and detailed modeling of well processes
such as acidizing.
Multiphase Processes
Dramatic changes in the energy “mix” are dictating fundamental
changes in production operations. The non-OPEC resource base
already has begun to shift from onshore and shallow-water oil
production to unconventional gas, deepwater oil, and heavy oil. The
future undoubtedly will call for substantial changes in production
operations as unconventional gas (coalbed methane, tight gas, and
deep gas), heavy oil, and deepwater resources assume predominant
positions. Common to these new energy sources is the critical
nature of the production development strategy in determining eco-
nomic viability. The traditional cycle of exploration, drilling, and
production has changed as these future energy resources are often
well known and drillable with conventional techniques. However,
adopting a production development strategy that makes maximum
use of technology is often what allows companies to convert oil
and/or gas discoveries into bookable reserves.
Without question, environmental concerns play a much greater
role in production operations than they did 2 or 3 decades ago.
The modern production system has changed in response to soci-
ety and regulations. The production system that is emerging
makes use of a multiphase development strategy to eliminate
tanks, minimize the “footprint” of production operations, and
JULY 2004
Fig. 2—Pressure contours around a slotted liner showing
the high-pressure gradients caused by flow convergence
to the slots.
reduce up-front capital costs. For production to be successful, a
new generation of production equipment is taking center stage;
this includes multiphase meters and pumps, leak-detection
devices that can function for long multiphase flowlines operating
in subsea or arctic environments, and compact separator systems
built around cyclonic separation.4
Flow Assurance
Flow assurance has been a research topic that has generated interest
for more than a decade. As subsea and deepwater developments
began to proliferate, many questions are being answered with large-
scale wax and hydrate research programs such as the one at U. of
Tulsa. In the years to come, a shift in research interests is expected
as industry concerns move from design issues to operation issues.
Methods to monitor multiphase production systems are needed to
optimize inhibition programs and detect and locate wax and
hydrate problems. Of critical importance will be analysis methods to
distill the vast data that can be gathered from these complex sys-
tems. Here the rich petroleum engineering experience with pres-
sure-transient analysis can be used to develop type curves and other
analysis techniques to better understand the behavior of multiphase
gathering systems.
Multiphase Metering
The newly developed ability to meter a multiphase flow stream is
opening up exciting new opportunities for well monitoring and
optimization. Today, multiphase metering is an emerging technol-
ogy with intense research interest in the areas of wet-gas metering,
subsea metering, water-cut determination, and downhole mea-
37
Spotlight on R&D
Fig. 3—Porosity change from acidizing in a heterogeneous sandstone.
surements (for use with intelligent-well systems). These top
research areas were identified at the recent Texas A&M U.
Multiphase Measurement Roundtable. Considerable interest is
also focused on developing guidelines and recommended prac-
tices for this technology as it moves from the exception to the rule.
The future will see research focused on improving the accuracy
and repeatability of these devices. Currently accuracy is highly
variable, depending on water cut, gas volume fraction (GVF), and
other parameters. Efforts are expected to focus on obtaining sin-
gle-digit accuracy over the entire life of a well or field. This may
require some form of partial separation when high water cuts and
GVFs are encountered.
Multiphase Pumping
The ability to pump a multiphase mixture of oil, water, natural gas,
and solids has developed to the point where it is accepted as a best
practice in some producing areas. Intense research interest will con-
tinue for the next decade as this new technology is applied in sub-
sea, downhole, and wet-gas applications. A recent survey of research
interests taken at the annual Texas A&M U. Multiphase Pump User
Roundtable indicated the top research topics to be: (1) mitigation of
sand wear; (2) adaptation to wet gas; (3) understanding water-cut
effects; and (4) taking surface multiphase-pump technology down-
hole. Considerable interest continues in shared field-demonstration
projects and understanding critical performance criteria such as
mean time to failure and failure modes.
Production Monitoring and Control
Exciting technological advances have taken place over the past 10
years. The Internet is now a well-established part of our way of life.
38
Can we imagine living without it? Sensors have become very small
and quite affordable. Nearly everything can now be done faster, more
cost-effectively, and often better with new technology. The oil field is
also adapting and using technology to enhance production processes.
While some old fields still rely on operators going physically to the
wellhead to record pressure-gauge and other instrument readings,
others are getting equipped with permanent sensors and transmission
equipment to relay the data directly to a server that can be accessed
through the Web from the comfort of the office or home. Technology
is even available to allow a cost-effective retrofit of old existing instal-
lations (Fig. 4).
The supervisory control and data acquisition system has been part
of the everyday language for a while. More recently, e-field or
i-field, smart wells, and real-time production optimization have been
the subjects of forums and intense discussions in both formal and
informal settings. It is clear that, as an industry, we are solidly mov-
ing in that direction, and operators are even considering un-manning
previously manned active production platforms. Web-enabled data
transmission and delivery provide a powerful tool for production
monitoring and control that is starting to be used more widely by the
industry and to perform a variety of functions ranging from remote
supervision of a wellsite classic intervention to remotely controlling
some processes.
As production-monitoring and -control systems are deployed,
total system reliability becomes essential. The latter include the
components—particularly in the downhole environment where
time, temperature, and chemistry are key parameters—as well as the
software and data-transmission infrastructure. Looking further into
the future, smart dust or distributed wireless-sensor networks are
coming of age. Continued advances in both hardware and software
JULY 2004
 Fig. 4—Existing installations can be cost-effectively retrofitted for modern monitoring and
control.
are making these wireless-sensor networks more affordable and
more effective at self-organizing and transmitting relevant
data/information.5 The wireless-sensor networks would have obvi-
ous applications in production operations (e.g., ubiquitous moni-
toring in process plants and pipelines).
The advanced production-monitoring and -control technology
will create huge amounts of data. Effective processes and algo-
rithms to convert the sea of data into actionable information are
required. The system would rely on an array of analysis tools
ranging from well performance analysis (e.g., Nodal and transient-
pressure analysis) to coupled large models that simulate the
physics of the processes (e.g., reservoir simulators/surface network
models) and would likely include neural networks and fuzzy logic
analysis tools. A degree of automation would be necessary to
reduce the workload and alert experts only when a decision or
intervention is needed. More R&D will be required to push the
envelope as more decisions/interventions can be triggered by a
smart system, effectively reducing the workload of the
human operator.
Finally, the current industry trend for intelligent wells assumes
that we can predict what actions are likely to be needed in the
future. Since the reservoir description and its dynamic behavior are
typically deciphered and understood better over time, it is likely that
some anticipated future needs might not materialize and some
unexpected ones might appear. While intelligent completions com-
pensate for some of that by building a degree of flexibility into the
system, one can wonder if the future would bring yet another tech-
nology that allows better on-time, in-situ customization of the com-
pletion as and when needed to adapt to changing reservoir and pro-
duction conditions. Would that be robots? JPT
JULY 2004
References
1. Chin, L.Y., Raghavan, R., and Thomas, L.K.: “Fully Coupled Geo-
mechanics and Fluid-flow Analysis of Wells With Stress-Dependent
Permeability,” SPEJ (March 2000) 32.
2. Chin, L.Y. and Montgomery, C.T., “A Numerical Model for Simulating
Solid Waste Injection in Soft Rock,” paper SPE 90507 prepared for pre-
sentation at the 2004 SPE Annual Technical Conference and Exhibition,
Houston, 26–29 September.
3. Furui, K., Zhu, D., and Hill, A.D.: “A Comprehensive Model of Horizontal
Well Completion Performance,” paper SPE 84401 presented at the 2003
SPE Annual Technical Conference and Exhibition, Denver.
4. Shoham, O. and Kouba, G.: “Compact Multiphase Cyclonic Separation
Technology,” Research Report to Sponsors, U. of Tulsa, May 2004.
5. Madden, S., Franklin, M., Hellerstein, J., and Hong, W.: “TAG: A Tiny
Aggregation Service for Ad-Hoc Sensor Networks,” Intel Research, IRB-
TR-02-011, 1 August 2002.
Joseph A. Ayoub is a Schlumberger Adviser and Segment Research
Champion based in Sugar Land, Texas. He has published in the areas of well-
test interpretation, stimulation, and frac pack. He has served on several SPE
committees and was an SPE Distinguished Lecturer in 1998–99. A. Dan Hill
is B.J. Lancaster Professor of Petroleum Engineering in the Petroleum and
Geosystems Engineering Dept. at the U. of Texas at Austin. Carl T.
Montgomery is an Engineering Fellow with ConocoPhillips Production
Assurance and Optimization in Bartlesville, Oklahoma. He is responsible for
the development and transfer of stimulation technologies for ConocoPhillips’
worldwide operating companies. He recently was named SPE Technical
Director for Drilling and Completions. Stuart L. Scott is an associate pro-
fessor in the Harold Vance Dept. of Petroleum Engineering at Texas A&M U.
He has chaired several SPE forums and committees. In 2003, he was award-
ed the ASME Worthington Medal for his work in multiphase pumping.
39
Spotlight on R&D
William H. Higgs, SPE, Mustang Engineering L.P.
R&D Needs for Offshore Facilities and Construction
Editor’s note: This is the fifth in a series of articles on the state
of research and development (R&D) in the major upstream
technological disciplines. The articles are part of the mission of
the SPE R&D Advisory Committee, which was created in 2002
to foster the continuing development of petroleum engineering
technology through collaborations of academia, industry, and
government worldwide. If you would like to comment on this
series of R&D articles, please contact us, because we welcome
your input. Send e-mail to danhill@mail.utexas.edu and
judzis@terratek.com.
In the past half-century, spectacular advances have been made in the
design, construction, and installation of structures for offshore oil
and gas production. From the original simple fixed four-pile plat-
form in 20 ft of water offshore Louisiana, the industry has evolved
to today’s use of permanent floating structures with sophisticated
facilities designed to support production in fields exceeding 1 mil-
lion bbl of oil equivalent and operating in water depths exceeding
7,000 ft.
Expansion into increasingly deeper waters in search of larger
reserves has presented operational challenges requiring ingenuity, risk
taking, and foresight. The ability to continually push the technologi-
cal envelope has historically been made possible by the joint R&D
efforts of operator companies, engineering and construction firms,
contractors, equipment manufacturers, and academia. This article will
highlight a few selected areas in which R&D has contributed to recent
operational successes or in which future R&D efforts undoubtedly
will be required to provide technological support for continued fron-
tier pursuits and for meeting the associated challenges.
Solutions from R&D efforts can be broadly categorized according
to their level of beneficial impact on a project’s outcome and the
immediacy of the need, whether short-term or long-term. A break-
through solution can be construed as one in which state-of-the-art
technology has been applied in a fashion that allows immediate and
significant gains. R&D also can improve current know-how by
advancing technology to newer generations that provide faster,
more economical or more viable alternatives to prior approaches.
Based on project involvement and knowledge of the offshore arena,
this article will attempt to categorize each of the areas accordingly
and discuss how this vital R&D activity should be protected.
Gas Solutions
The increased demand for natural gas in the U.S. and globally, sup-
ported by satisfactory market prices, makes the economic recovery,
processing, handling, and transportation of natural gas products an
area with immediate as well as long-term potential. Oil and gas
reserves have been, and continue to be, discovered in locations
remote to distribution infrastructure, such as deepwater Gulf of
Mexico, Newfoundland, West Africa, Malaysia, Trinidad, and
46
Indonesia, where the gas associated with oil production or gas
reserves considered small are disadvantaged economically. The
industry has solved the question of producing remote oil with float-
ing production, storage, and offloading (FPSO) vessels or with
spars, tension leg platforms, subsea completions, and other floating
production systems that include subsea oil pipelines, but we are still
faced with the question, “What do we do with smaller volumes of
associated or produced gas?”
Technically feasible and economically viable gas solutions for
remote gas are emerging rapidly in the form of transportable, mar-
ketable, and fungible gas products such as liquefied natural gas
(LNG), methanol, Fischer-Tropsch liquids, ammonia, urea,
dimethyl ether (DME), and liquefied petroleum gases (propane,
butane). Organizing a commercial deal that connects a market for
the products with the gas source is the key. Bringing down capital
and operating costs is the facilitator, and the inventive process is
under way now.
Several innovations are now coming from research designed to
give clients the best options for commercializing their disadvan-
taged gas. Immediate benefits are the elimination of gas flaring,
alternatives to costly gas reinjection, and the creation of marketable
gas products that, in themselves, can be a viable gas business. Some
of the most recently proposed gas solutions include:
• Barge-mounted gas-to-liquids process.
• FPSO-vessel-mounted methanol processing.
• Gasification of coal into Fischer-Tropsch liquids (methanol,
DME, diesel).
• Development of horizontal steel LNG storage tanks in a Perlite-
insulated concrete “cold box” for onshore or offshore applications.
• A “short haul” concept for small LNG quantities (150–300
MMscf/D) including a concrete barge with new tank design to lique-
fy, store, and offload LNG near the gasfield end, transport it 1,000 to
1,500 miles, and then have a similar regas barge at the destination.
• New regas technology using air exchangers to greatly reduce
fuel costs and air emissions.
• A concept to produce and store compressed natural gas on spe-
cially designed shuttle tankers.
• LNG FPSO vessels for liquefying gas at offshore field locations
in the open ocean.
• LNG floating storage and regasification units for importing
LNG and regasifying it in the open ocean.
In addition to these technologies, R&D needs to continue its
focus on developing economical products and processes that can be
used for stranded and associated gas so the products can be readily
marketed. In that regard, ongoing efforts need to be continued in
the transport, storage, and offloading of LNG.
Deepwater Solutions
The movement into deeper water also brings a major focus on flow
assurance. The current use of methanol to inhibit hydrates in
pipelines can cause problems in onshore refineries. Further devel-
SEPTEMBER 2004
opment in glycol inhibition and recovery and proprietary chemicals
is needed to reduce costs and mitigate risks. As the developments
move into deeper water, various designs or materials will limit the
depth of the development. To overcome these limitations and still
maintain a reasonable economic recovery, the designs must be mod-
ified and different or exotic materials must be used; otherwise, the
internal or external pressures and weights will be too great. Different
developments will still require different solutions. New or more effi-
cient floating structures will be required to support the topside
weights. Subsea processing and pumping will be needed to mini-
mize line sizes and extend the distances for subsea tiebacks.
Improvements in riser technology to operate in greater water depths
must be addressed. The negative effects of vortex-induced vibra-
tions, higher pressures, and fatigue failures need to be studied.
Automation Upgrades
Modernization of offshore facilities and enhancements to safety sys-
tems are highly dependent on implementation of the latest control
technology. Trends toward highly complex unmanned platforms, sig-
nificantly larger structures, and remotely operated facilities will con-
tinually spur the upgrading of automation and control. These
enhancements will help maximize production levels while protecting
personnel and the physical asset. Advances in automation technolo-
gies have evolved to meet regulatory, safety, operational, and produc-
tion-efficiency demands. This evolution has grown to include
advanced process control technologies specifically targeting produc-
tion uptime and optimization of process operations. Information from
these highly complex systems also provides a wealth of data that fur-
ther translates into improved marketing and efficiencies across the
supply chain. Efficient selection and implementation of these automa-
tion systems requires a broad experience and knowledge base regard-
ing automation technologies and production processes.
Information-Management Solutions
There have been numerous improvements in many facets of the
management of information, including 3D-modeling capabilities,
data warehousing, and scheduling. The ongoing need, however, is
for improving the connectivity of these and other technologies. In
the past, all project data were generated and issued in hard-copy for-
mat. In today’s world and current project-execution philosophies,
there is a greater demand to enter data one time, have the data
usable by multiple entities that conceivably could be located in mul-
tiple regions of the world, and have the information accessible in
real time. In addition, there are desires to link various pieces of soft-
ware to enable people to schedule, status, and plan work activities
in a more visual manner, as is being done with 3D models.
48
Efficiencies and cost savings can be achieved if information can be
truly warehoused in a format that allows various software to use the
same information.
Security and Safety Solutions
Offshore assets, remotely operated or manned, are vulnerable to
potential terrorist attacks. There are both topside and subsea compo-
nents that warrant a continued need for R&D to develop methods to
safeguard these investments after installation. Significant advance-
ments have been made in the reliability and safety aspects, but mini-
mal consideration has been given to the protection of the asset.
How To Address the Needs?
With just this cursory discussion of increased opportunities in deep
water, the variety of solutions for gas processing, the potential for
increased automated control of facilities, and the global need for
asset protection, it is apparent that there exists a need for continued
and expanded R&D programs. While these and other R&D oppor-
tunities can readily be identified, there is often insufficient industry
funding to address them. Downward pressure on margins in today’s
marketplace generally preclude the monetary capabilities to support
extensive development efforts. Whereas joint industry projects were
prevalent during previous decades, they have largely been replaced
with on-the-job development initiatives undertaken within the pro-
ject. Operator-company R&D staff and budgets have been dramati-
cally reduced, as have grants to academic institutions. While highly
viable technologies might still be funded and supported, many
potential areas of improvement will not be pursued. The negative
impacts of this situation could lead to excessive risk taking, costly
retrofitting, or premature revamps.
The industry has made tremendous advances in hydrocarbon
extraction and processing. These step changes have been facilitated
by significant reliance on R&D. To continue meeting global offshore
energy requirements, there needs to be a continued synergy devel-
oped among all industry beneficiaries, and funds need to be allocat-
ed to support the effort. JPT
William H. Higgs, P.E., is a member of SPE and is
Copresident and a cofounder of Mustang Engineering. A
distinguished graduate of the U.S. Military Academy at
West Point, New York, Higgs has more than 25 years’
experience in the oil and gas industry. He and partner
Paul Redmon recently were selected to receive the 2004
Higgs
Industry Achievement Award by the Engineering and
Construction Contracting Assn.
SEPTEMBER 2004
Spotlight on R&D
John Candler, Manager of Environmental Affairs, and Monica Norman, Vice President of Research and Engineering, M-I Swaco
Meeting the R&D Needs for a Global HSE Challenge
Editor’s note: This is the sixth in a series of articles on the
state of research and development (R&D) in the major
upstream technological disciplines. The articles are part of the
mission of the SPE R&D Advisory Committee, which was cre-
ated in 2002 to foster the continuing development of petrole-
um engineering technology through collaborations of acade-
mia, industry, and government worldwide. If you would like to
comment on this series of R&D articles, please contact us,
because we welcome your input. Send e-mail to
danhill@mail.utexas.edu and judzis@terratek.com.
R&D activities in the health, safety, and environment (HSE)
global arena span the range of involvement from wellsite chal-
lenges to sustainable development. This wide spectrum of chal-
lenges calls for an R&D effort to match the developing needs of
the upstream industry. A significant culture change has driven
changes in equipment and operational practices that have con-
tinuously reduced accident rates industrywide. Likewise, envi-
ronmental initiatives have produced new technologies that con-
tinue to allow the development of difficult to reach reserves with
reduced impacts. As the global community continues to increase
its focus on issues of global warming and protection of biodiver-
sity, the upstream industry will be called upon to respond to con-
cerns that go beyond the direct impacts of exploration and pro-
duction (E&P) activities.
Environmental Science and Technology
Development Research
From an environmental-protection perspective, controlling dis-
charges and understanding their fate and effects have always
been a high research priority. The major discharges that evolve
from worldwide E&P operations are drilling fluids and cuttings
generated during the drilling operation, along with produced
water from the production operations. Traditional lines of
research have focused on the fate and effects of these discharges
in both onshore and offshore environments.
The trends to reduce environmental impact by reducing dis-
charges have steadily increased over the last 10 years. Owing to
undesirable HSE characteristics and high aromatic content, cut-
tings generated from diesel-based drilling fluids were the first to
be prohibited from being discharged offshore. While the subse-
quent development of low-toxicity mineral oils promised lower
toxicity compared to diesel, several seabed studies later showed
that appreciable amounts of hydrocarbons persisted in the form
of cuttings piles. Consequently, mineral-oil-based drilling fluids
were no longer permitted to be discharged in the North Sea.
Research efforts into developing more environmentally benign
fluids continued, resulting in the introduction of synthetic-based
systems that pledged no aromatic content, low toxicity, and rapid
biodegradation. Several generations of these fluids have since
been engineered in response to ongoing environmental-impact
40
studies. The emphasis on reducing environmental impact also
includes the development of water-based drilling fluids and sys-
tems. Even though many studies have shown negligible damage
from water-based-fluid discharges, offshore disposal of cuttings
may become prohibited in some areas based on the precaution-
ary principle and potential sublethal impacts.
As countries continue to review and upgrade their control of
environmental impacts, they are constantly requesting the most
up-to-date information available on potential impacts. In some
areas, permission to drill is accompanied with stipulations to
perform ongoing seabed surveys around discharges and to mon-
itor and report all potential impacts in the area. These surveys
can cost millions of dollars to perform, and the information pro-
duced is often difficult to interpret. Differentiating no impact
from limited impact from unacceptable impact is difficult when
biological analyses are conducted with very little standardiza-
tion. Science very rarely offers the “yes” and “no” answers that
regulators and managers request, thus resulting in continuous
demands for industry scientists to both investigate and educate.
The area of environmental science that supports individual
surveys and the comparison between surveys is ripe with oppor-
tunities. In the past, the general approach has been to allow off-
shore drilling and monitoring for potential impacts. The appli-
cation of the precautionary principle is a pathway to preventing
activities unless the safety of the operation can be determined
before its initiation. Consequently, in the future, the scientific
proof of environmental acceptability is going to require rigorous
and high-standard efforts. While these efforts are easy to justify
when pertaining to a specific drilling program, the larger effort
to address these issues on a regional or global basis is difficult to
justify because the benefits are long term and cross company
boundaries. In the end, the demand for higher and higher levels
of environmental protection will continue to drive environmen-
tal technology forward.
A recent success story in this area is the development of test
methods and a seabed survey program sponsored by the U.S.
Synthetic-Based Mud Research Group. Rather than wait for
problematic environmental tests to be imposed on companies,
industry proactively formed and funded a research group to
identify and develop testing procedures appropriate to define the
best available technology. The results of the work group efforts
provided test methods and a seabed survey program to the gov-
ernment that supported the continued discharge of synthetic-
based drilling fluids. As a result of these efforts, deepwater
drilling programs that rely on the performance benefits of syn-
thetic-based drilling fluids continue to be successful invest-
ments, completed in compliance with regulatory requirements.
Continued development of joint-industry projects that address
common environmental issues regionally is a proven cost-effec-
tive way to leverage both money and research scientists. An addi-
tional aspect of the Synthetic-Based Mud Research Group effort
was the inclusion of service companies, operators, government,
and academic resources, which proved to be an effective way to
NOVEMBER 2004
provide balance and credibility to the Since the early 1960s, societal awareness
research efforts. resulted in founding several influential
The environmental technologies avail- organizations, such as the World
able to minimize footprint and potential Conservation Union and World Wide
impacts offshore have made dramatic Fund for Nature, that focus on bio-
steps forward. Universally agreed upon diversity conservation. Continued efforts
waste-management hierarchy is continu- by operators and service companies into
ing to cause a shift toward waste mini- the issues of biodiversity will ensure that
mization, selecting technologies that keep E&P activities can be seen as part of the
pollutants within the operational process, solution and not part of the problems,
and developing beneficial reuse options which include habitat loss, changing land
for byproducts. Current examples of this use, overharvesting/exploitation, alien
Remote drilling locations in areas of
approach include beneficial reuse of drill high biodiversity such as this one in species, pollution, climate change, and
cuttings as soil amendments and use of Ecuador drive current HSE programs. human population growth. Long-term
produced water as a water resource in arid energy scenarios show global energy
climates. While traditional bioremediation efforts have focused demand tripling or even quadrupling by 2050. Most of this
on destruction of hydrocarbons, more recent developments have demand is expected to be met with oil or gas. As oil and gas
introduced vermiculture (worm farming), bioreactors, and com- fields evaluate areas of high biodiversity value, the burden of
posting as pathways to not only remove hydrocarbons as an end- effectively protecting biodiversity will require intense research
point, but also to enhance soil quality. Rather than simply de- efforts. Industry has already shown examples of how bio-
stroying the hydrocarbons, advances in thermal treatment tech- diversity-protection measures can be incorporated into seismic
nologies have resulted in their recovery and beneficial reuse as investigations, as well as exploration and development pro-
an energy source. Continued developments in these fields will grams. In the future, these examples will likely become standard
continue to make advanced technologies more cost-effective and practice and there will be a strong need for R&D programs to
available. Other developing management technologies, such as lead the way.
injection of drill cuttings, are gaining credibility as injection-
modeling and -monitoring techniques improve. Occupational-Health-Related Research
While traditional measurements of drilling waste have focused It is difficult to imagine that certain chemicals were once used as
on offshore and onshore discharges, a new awareness of cross- drilling fluid products in the oil field. Contemporary knowledge
media contamination has begun to focus on assessing discharges of health impacts led to the prohibition of these products.
in a manner that reduces the total discharges and does not sim- Currently, significant efforts are required to fully research and
ply change the address of the contamination (i.e., water to air identify potential health concerns, properly label products,
pollution or water pollution to land discharges). These efforts inform workers of potential health hazards, and identify proper
have resulted in life-cycle analysis research, which replaces pre- personal protective equipment. Continued efforts to identify
vious efforts to use a single discharge medium to establish regu- unhealthy exposure conditions are now focusing on inhalation
latory limits. exposure to mist, vapor, and dust in pit rooms and around shak-
Drilling fluid formulations have continued to evolve to meet ers. In addition to reviewing product formulations, modern
the technical demands of deepwater, high-temperature, high- design and analytical techniques are evolving to ensure effective
pressure, directional, extended-reach, and depleted-zone ventilation as part of new drilling rig design and to develop cost-
drilling. Occupational HSE impacts are increasingly designed effective methods of retrofitting existing rigs where needed.
into new products as performance criteria. Traditional research Examples of evolving engineering controls to minimize exposure
lines for drilling fluids have assumed direct discharge into the include automated chemical-addition systems and bulk materi-
receiving environment. As mechanical and chemical treatment al handling.
options continue to work toward the goal of keeping the pollu- Traditional lines of occupational-health research have been
tants in the operation system, it can be expected that new lines expanded to include the stresses placed on workers in difficult
of research will evolve that focus on matching drilling fluid for- or remote work locations and criteria for worker fitness. As the
mulations with physical and chemical treatments that result in oil field continues to evolve in remote locations, prevention and
waste minimization. Because of the consumable nature of management of tropical diseases remain areas for improved edu-
drilling fluid products, they often are the fastest and most flexi- cation and research.
ble way to introduce and achieve environmental performance
goals. Therefore, R&D opportunities for advances in drilling flu- Safety-Related Research
ids technology continue at the forefront of environmental pro- The culture shift toward operational practices and equipment
tection efforts. design that result in a safer work environment offer new research
In addition to discharges, concerns about biodiversity are gen- opportunities that move beyond traditional analysis of accident
erating a new wave of research into understanding the impact of statistics toward proactive measures that identify potential acci-
E&P operations. The earth’s great biodiversity is becoming nar- dent situations and provide corrective actions. New communica-
rower as natural habitat is increasingly converted into agricul- tion tools supported by the Internet allow lessons learned to be
tural land or urban centers. Species of plants, animals, fungi, and effectively communicated around the world. Efforts have
microscopic organisms (such as bacteria) are being lost at alarm- expanded in safety research to better understand patterns of
ing rates. Scientists around the world are cataloging and study- human behavior and develop techniques to modify behavior that
ing global biodiversity in hopes that they might better under- can lead to accidents. The equipment and chemicals used in the
stand it, or at least slow the rate of loss. oil field have been evolving in ways that continue to reduce haz-

NOVEMBER 2004
ards. One recent example is the recent introduction of pneumat-
ic transfer systems, which dramatically reduced the number of
hazardous crane lifts previously associated with the handling of
cuttings boxes. Ongoing research continues to identify and
evolve the equipment and procedures on drilling locations to
improve safety performance. However, the most important safe-
ty device will continue to be the personnel both on and off of
the location.
The future success of the upstream industry will become
increasingly dependent on research efforts that pave the way for
continuous improvements in HSE performance. The challenge
has been effectively met through today, and the horizon offers
opportunities for those with the wisdom to pursue the needs of
the future. JPT
John Candler, P.E., is the M-I Swaco
Manager of Environmental Affairs. He
has more than 20 years of experience
in environmental testing and research
of drilling fluids and has served on
Candler Norman numerous industry research projects
supporting the continued improvements in environmental research and regu-
latory controls. He holds a BS degree in civil engineering from Louisiana
State U. Monica Norman, SPE, is Vice President of Research and
Engineering for M-I Swaco. She has been actively involved in petroleum
research for the past 20 years, the last 11 years in drilling fluids and waste
management. She holds a BS degree in biomedical electronics and MS and
PhD degrees in atomic physics from the U. of Salford, England.
NOVEMBER 2004
Spotlight on R&D
Jeff Spath, SPE, Schlumberger, and Arnis Judzis, SPE, TerraTek
Promoting R&D in Management and Information
Editor’s note: This is the seventh in a series of articles on the
state of research and development (R&D) in the major
upstream technological disciplines. The articles are part of
the mission of the SPE R&D Advisory Committee, which
was created in 2002 to foster the continuing development of
petroleum engineering technology through collaborations of
academia, industry, and government worldwide. If you
would like to comment on this series of R&D articles, please
contact us, because we welcome your input. Send e-mail to
danhill@mail.utexas.edu and judzis@terratek.com.
During 2004, guest authors described R&D challenges and needs
for SPE’s disciplines related to drilling and completions; facilities
and construction; reservoir description and dynamics; production
and operations; and health, safety, and environment (HSE). A com-
pelling case was made for increased R&D activities and awareness
in each of these areas. Our topic, management and information, pro-
vides a challenging focal point for a discussion of R&D needs
because management processes and information systems play
important roles in the upstream business.
The sphere of management and information is undeniably crucial
in enabling the upstream oil and gas industry to continue to develop
the petroleum engineering technology vital to meet future needs.
Central to the topic of R&D in management and information is the
need for vision and leadership, especially as R&D affects manage-
ment systems; techniques and performance; project management;
education, training, and competence; and information systems.
Additionally, for operators and service companies, there remains a
need to articulate the case for management and information R&D to
the potential suppliers of management and information technology.
In the next few paragraphs, we will describe some issues perti-
nent to today’s concerns from those seeking increased use of
new technologies.
A Quality Management and Information Discipline
The next major challenge in the oil & gas industry is cost-effective,
easy access to information, allowing individuals or companies to do
their jobs better and more efficiently. In many large companies,
strategic data are collated at a very high organizational level.
However, gaining full value from this information depends on mak-
ing it accessible at functional levels companywide that support
domain and discipline workflow. With the potential of the “big crew
change” (Fig. 1) in 4 or 5 years, it is essential to develop tools and
processes to allow the knowledge of experts to be captured and
transferred easily to others in the industry. The vital task for our
industry is to make sure we do not lose this knowledge and infor-
mation, but capture and use it to take us to the next level of perfor-
mance in the 21st century. As the workplace expands to all corners
of the world, the oil and gas industry must continue to invest in
improving connectivity and developing tools and processes not only
to manage its own knowledge and information, but to connect all
accessible information around the world, including from academia,
research institutes, and potential customers.
40
Even though infrastructure unit prices continue to fall, the infra-
structure required to manage more complex workflows continues to
increase. The most successful companies will understand the need
of moving answers and knowledge through their organizations, not
simply data. The underlying source of the answer or knowledge
may be many gigabytes of data, but it is the end result—a “yes” or
“no” answer, for example—that is most important. This concept is
especially relevant in frontier development areas and other environ-
ments with infrastructure limitations.
As the ability to capture and store complex raw data becomes less
costly, the task of turning that data into corporate knowledge and
making it available across geographical and domain boundaries
becomes more daunting. Companies that fail to recognize the need
for a structured Information Management program that includes
infrastructure, technology, process, and the management of culture
change will find themselves at an increasing disadvantage in the
marketplace. Further, more stringent accountability guidelines and
pressures to reduce operating cost will inevitably collide with the
sheer volume of information being stored, organized, and preserved.
Refreshing and Reinventing Knowledge Management
Companies of all sizes are seeking to refresh or reinvent their knowl-
edge management programs. Often, the complexities of existing work-
flows defining a company’s culture—as well as the diversity, number,
and differing formats of the data affecting those workflows—make
these programs seem too costly or complex to undertake. Making mat-
ters worse, companies embarking on costly information and knowl-
edge management programs, only to abandon them as the cost esca-
lates, may find themselves supporting and managing fragmented, yet
costly, pockets of information that have little strategic value.
R&D News
The U.S. Dept. of Energy (DOE) is soliciting grant proposals for
several projects, with bids due by 1 March. The DOE expects to
award between 11 and 17 projects by 30 September. Projects are
divided into five areas of interest.
• Advanced Diagnostics and Imaging Technology—(A)
Subsurface imaging focusing on new vertical seismic profil-
ing methodology and interpretation and (B) reservoir char-
acterization and management.
• Reservoir Efficiency Processes—(A) heavy-oil recovery and
(B) gasflooding.
• Preferred Upstream Management Practices—A field
demonstration to increase current oil production from a
field that otherwise would not be produced, with a focus on
new technologies not in current practice in that region.
• Delivery Reliability for Natural Gas—(A) inspection tech-
nologies, (B) remote sensing, (C) operational technologies,
and (D) materials development.
• Alternative Gas-Storage Technologies.
More information on the grant proposals can be found
on the Internet at www.netl.doe.gov/business.
FEBRUARY 2005

Fig. 1—The preponderance of industry employees between
the ages of 40 and 55 clearly shows that a “big crew
change” will come soon.
To mitigate these risks and ensure both long-term value and sus-
tainable management of change, it is highly beneficial to adopt “van-
ishing point” vision. This requires management to look over the
horizon and envision where the company ought to be in 3 to 5 years.
It is essential to realize that the company will never arrive at the orig-
inal destination. However, this initiative ensures that the company is
moving in the right direction. Once the vanishing point is deter-
mined, the execution of a knowledge management program requires
a series of “progressive solutions.” These must yield rapid return on
investment, provide discrete deliverables that bring value in and of
themselves, and support corporate workflows. Even the best infor-
mation reporting system can be useless, if difficulty of data entry
leads to inaccuracies or the data do not support a natural workflow.
Where R&D Can Be Important
Within our industry, a number of areas where R&D could benefit
management and information stand out. Among them are:
• Answer delivery vs. data delivery. As a comparison, you
receive a text message on your cell phone disclosing that your well
has reached total depth and asking for a yes or no answer on a
sidetrack, or, alternatively, you sit in an office or at the wellsite
monitoring raw data to make the same decision. Answer delivery
means that you receive workflow intelligence, not simply data.
• The seamless integration of workflow processes that require
input from and output to a large number of discrete data sources (i.e.,
client relationship management, HSE, technical data, operations).
• Compression of data to help transmit large amounts of infor-
mation that are difficult to move across the Internet today and that
will be even more difficult to move as information databases grow.
• Smart knowledge management through standardization of data-
bases with unique identifiers, enabling quick access to data from
any database around the world.
• Integration of new workflows into those in current use.
• Uptake of new technology by business units. This means not only
providing the best data management and knowledge sharing tools that
enable people to do their jobs more effectively, but overcoming a reluc-
tance to change and ensuring that people use these tools and even seek
what is new as they integrate change management into their whole
way of working.
• Development of competencies and training. Highly competent
staff trained at academic institutions and, later, in the oil and gas
FEBRUARY 2005
industry are a key to avoiding problems related to the “big
crew change.”
A Success Story
One success is the impact that InTouch has had for Schlumberger.
InTouch is an enterprisewide internal service providing timely
technical support to field operations covering all products and
services for Schlumberger. InTouch acts as a bridge between the
company’s technology centers and the field, with a mandate to
accurately capture and store knowledge, and disseminate it to the
field as quickly as possible. The goal of this mandate is to improve
service delivery to clients and achieve faster deployment of new,
more robust technology through improved technical support and
comprehensive solutions. InTouch won the Chairman’s
Performed by Schlumberger Award in 2001, the highest honor
any technology can receive within Schlumberger. The program
also has won recognition from leading independent organizations,
and it has been selected for use in benchmarking studies.
How Best To Promote R&D for Management and Information
To conclude, it is fair to say that we can and should do more to promote
R&D related to the management and information sphere. However, as
we strive to do so, should we rely on performance metrics or attempt
more effectively to articulate business needs to the sources of technolo-
gy? This is an area in which many organizations trip themselves up.
Senior management, faced with the task of setting operational budgets,
often wishes to rely on firm savings or opportunity projections to deter-
mine whether large information and knowledge management programs
move forward. Yet these managers also realize the financial exposures
their companies face from programs that are poorly defined or execut-
ed. Nevertheless, the potential reward to every part of an organization
that takes a sustained, well-executed, and systemic approach to work-
flow-centric information management far outweighs any risk.
Management techniques, project management, assurance pro-
grams (including HSE), and information systems are valid targets
for enhanced R&D and implementation by most sectors in the oil
and gas industry. For-profit technology companies and academic
institutions may indeed be in a good position to fill technology
gaps in management and information, given the sufficient chal-
lenges facing operators, service companies, and others in the oil
and gas industry. JPT
Jeff Spath is President of Data &
Consulting Services, Schlumberger
Oilfield Services, a position he assumed
in February 2003. Based in Houston, he
directs operations of the industry's
largest data processing and geotechnical
Judzis Spath
consulting organization for clients
worldwide. Prior to this position, he was
Vice President of Schlumberger Information Solutions, where he directed oper-
ations that provide E&P software, information management services, and com-
plete business workflow solutions for clients in North and South America. Spath
holds BS and MS degrees in petroleum engineering from Texas A&M U. and a
PhD degree in reservoir engineering from Mining U. of Leoben, Austria. Arnis
Judzis is Executive Vice President of TerraTek Inc. in Salt Lake City, Utah, and
is a member of the SPE R&D Advisory Committee. He has more than 25 years
of experience in the oil and gas industry and has been active in drilling and
management of technology. He earned a PhD degree in chemical engineering
from the U. of Michigan.
41
Spotlight on R&D
R&D Is an Astute Investment
Arnis Judzis, TerraTek, and A. Dan Hill, Texas A&M U.
Editor’s note: This is the last of a series of articles on the state
of research and development (R&D) in the major upstream
technological disciplines. The Spotlight on R&D Series, com-
prising articles published in JPT during 2004 and 2005, will
be available as a collection through the SPE eLibrary.
In January 2004, the SPE R&D Advisory Committee kicked off a
series of guest articles in this journal to articulate and promote the
benefits of R&D in the upstream oil and gas industry. Authors well
known in the industry articulated not only the challenges but also
the successes of R&D in all SPE disciplines: Drilling and
Completions; Facilities and Construction; Reservoir Description
and Dynamics; Production and Operations; Health, Safety, and
Environment; and Management and Information.
The SPE Board of Directors formed the R&D Advisory
Committee in 2002 at the recommendation of the R&D Task
Force. Its goals were to “identify, encourage, facilitate, and help
global R&D activities that will provide needed technology for
future use by petroleum engineers.” The committee has begun a
number of initiatives that are visible in the industry and particu-
larly for individuals and companies involved in SPE. The R&D
Advisory Committee has taken a lead in the following areas:
1. R&D Providers Directory
The R&D Providers Directory was launched on 28 February 2005.
It connects universities, research institutes, and other organizations
that perform R&D for the upstream oil and gas industry with com-
panies seeking technology applications. The directory can
• Describe facilities, expertise, and types of R&D performed.
• Highlight special features that make the university/institute unique.
• Describe recent and ongoing research projects.
• Identify faculty or principal researchers and their qualifications.
The information is fully searchable by companies looking for
R&D expertise and is available at www.spe.org. For more informa-
tion about listing an organization in the R&D Providers Directory,
please contact SPE at rdprov@spe.org.
2. R&D Session at the SPE Annual Technical
Conference and Exhibition
At this year’s SPE Annual Technical Conference and Exhibition (9–12
October in Dallas), an R&D panel discussion will focus on upstream
research activity and the perception that its decline has not only
decreased the direct research efforts of operating companies but also
reduced their participation in collaborative research activities with
academia, government laboratories, and private research companies.
This panel discussion is titled “Future Technology—Whose Job Is
It?” and take place on 12 October. It aims to be a vehicle to:
• Increase communication among industry operators and service
companies, academia, and government agencies.
• Highlight the major areas in which additional research is need-
ed from the industry viewpoint.
34
• Explore methods for funding research at universities, national
laboratories, and private research organizations.
• Discuss the role of government in selecting and funding basic
research.
The panel will include members from operators, service compa-
nies, universities, and other organizations worldwide. Those con-
firming participation so far include Tom Zimmerman, Managing
Director, Schlumberger Doll Research; Sidney Green, Chief
Executive Officer and President, TerraTek; Roland Horne,
Chairman, Petroleum Engineering Dept., Stanford U.; and Tony
Meggs, Group Vice President Technology, BP.
3. R&D Forum
An SPE Forum Series event titled “Technology Development—
Who Pays and Who Plays?” will be held 19–24 June in
Broomfield, Colorado. The forum will be chaired by Don W.
Green, U. of Kansas, and Hossein Kazemi, Colorado School of
Mines, and co-chaired by Medhat M. Kamal, ChevronTexaco. The
forum committee comprises leading technologists representing
operators, service companies, academia, and other R&D providers
worldwide. The forum program notes that “all sectors of the
industry recognize that technology will play an increasingly
important role in efficient, cost-effective oil and gas exploration
and production operations worldwide. Yet there appears to be a
disconnect between users and providers of technology. The
forum’s objectives are (1) to bring attention to the issues facing
R&D and technology development and set the stage for more effi-
cient and productive activities to add value to our business, and
(2) to stimulate interaction among academia, industry, and gov-
ernments, thus leveraging each others’ efforts.”
4. The Case for Upstream R&D—Astute Investments
Are a Mainstay for the Upstream Industry
What is all the concern about R&D in the oil and gas industry?
Clearly, project investment is high and operators are seeking oppor-
tunities that will replace reserves and increase production in new
and existing markets. These geographical profit centers can be
remote, have high entry barriers, and perhaps have technical chal-
lenges. The latter point is a subject that the R&D Advisory
Committee is addressing, though the issues are clearly connected.
The series of JPT articles in the past year has presented a num-
ber of success stories that illustrate the value of upstream R&D. In
addition, these articles have highlighted challenging areas of tech-
nology that hold the promise of future advancements with the
strategic application of R&D. The key points of these articles are
summarized below.
Reservoir Description and Dynamics
Roland Horne, professor and Chairman of the Petroleum
Engineering Dept. at Stanford U., and Rajagopal Raghavan, retired
Senior Staff Associate Reservoir Engineer formerly with Phillips
Petroleum, kicked off the series of “Spotlight on R&D” articles
MAY 2005

Kamal Green Hill Judzis
Kazemi Pascolini Smith Warpinski
Whitham Rao Ching Zornes
Members of the SPE R&D Advisory Committee
Medhat M. Kamal, Chairman, Research Consultant,
ChevronTexaco EPTC
Don W. Green, Distinguished Professor, Dept. of Chemical and
Petroleum Engineering, U. of Kansas
A. Dan Hill, Robert L. Whiting Endowed Chair in Petroleum
Engineering, Texas A&M U.
Arnis Judzis, Executive Vice President, TerraTek
Hossein Kazemi, Adjunct Professor, Colorado School of Mines
Osvaldo Pascolini, Senior R&D Advisor, ENI E&P
John R. Smith, Assistant Professor, Louisiana State U.
Norman R. Warpinski, Technical staff member, Sandia Natl. Labs
Barth E. Whitham, President, Enduring Resources
Vikram Rao, Vice President Technology, Halliburton Energy Services
Paul Ching, Director, E&P Research and Development, Shell
International E&P
David R. Zornes, Manager Reservoir Mechanisms Section,
ConocoPhillips
with their view of the R&D challenges facing Reservoir Description
and Dynamics.
They wrote, “How great it would be if we could predict the future!
One of the most compelling and focal interests both to oil companies
and to oil-producing (and oil-consuming) nations is how much oil is
in the ground, and how much will there be next year. Despite being
expressed in very large numbers, with large numbers of significant dig-
its, the amounts of both present and future oil are immensely uncer-
tain figures. It has often been quoted that the oil reserves of the world’s
largest oil producer, Saudi Arabia, have roughly doubled over the past
7 years. Despite some newly discovered oil fields in that country, the
fact remains that most of the ‘new’ oil was actually ‘discovered’ within
existing reservoirs. All readers of this journal are familiar with how
easy it is to rock markets by reducing reserves—not by losing any, but
just by changing our minds about how much we actually had (see
Methods for Citing Oil Reserves Prove Unrefined; Shell’s Restatement
Casts a Shadow on How Industry Measures Its Crude Backlog, Wall
Street Journal, Print Media Edition: Eastern Edition, New York, N.Y., 14
January 2004). Clearly, the most important people in the business are
36
the engineers who figure out those all-important estimates of the reser-
voir character and size, then go on to forecast its future. And we have
seen that these estimates, and the methods used to reach them, have
changed very much over the recent past.” The authors also highlight-
ed “research that is under way in academia, in government, and in
industry so as to improve estimates of reserves and productivity; geol-
ogy and flow; geological risk and forecast uncertainty; scale-up; grid-
ding; and computational schemes. The result of these technological
advances has been that companies and governments have been able to
make better estimates of their oil reserves.”
Drilling and Completions
Stephen Willson, Drilling Rock Mechanics Adviser, and Ken Armagost,
Drilling Technology Program Leader, both with BP, presented a case for
the “one-trip well” (OTW) concept and the technical needs behind the
challenge. It was also the subject of a Forum Series held in the summer
of 2004 and is analogous to “striving for the par-5 ‘Hole in One.’ ”
They wrote, “In the game of golf, changing the metallurgy of the
driver shaft, or changing the weight and shape of the club head, can
lead to incremental improvement; but this will not achieve the desired
goal. The same applies in the oil patch; no one single technique will
enable a well to be drilled from surface (or mudline) to total depth in
one trip. Multiple complementary innovations are required, plus a
strong tail wind. The combined efforts of oil and service company
innovation in R&D, breakthroughs from academia, and operational
insights from experienced field personnel will, if properly harnessed,
provide this necessary tail wind. The OTW is defined as a well that
can be drilled in a single pass below the first pressure-bearing casing.
Typically, the starting point would be the surface casing, upon which
the blowout preventers have been installed. To accomplish this goal,
four components of the OTW must be delivered. They are:
• Wellbore pressure integrity (the strength of the vessel).
• Wellbore pressure management (control of the pressure
imposed upon the vessel during the drilling process).
• Formation evaluation.
• Systems and equipment reliability (including hole-quality
concerns).
And finally, to make the OTW goal at all interesting, this efficien-
cy must be coupled with an economic benefit, when compared with
traditional construction techniques.”
Production and Operations
A respected group of individuals presented a case for R&D and
“optimizing performance from the sandface to the tanks.” Joseph A.
Ayoub (Schlumberger), A. Dan Hill (now with Texas A&M U.), Carl
T. Montgomery (ConocoPhillips), and Stuart L. Scott (Texas A&M
U.) spotlighted R&D needs for Production and Operations.
They wrote, “If the reservoir engineer is the strategic planner of the
oil field and the crystal ball gazer, and the drilling engineer is the
builder (the wells are the structures created to produce oil and gas),
then the production engineer is the system operator, the plant man-
ager of the oil field. The production engineer is charged with over-
seeing the daily operation of wells—including constant monitoring
of well performance, planning, and supervising workover operations
to maximize recovery—and optimizing artificial-lift and pipe flow
systems. As such, R&D in production operations often has immedi-
acy and a direct, tangible economic target. New developments in
well-stimulation technology, for example, quickly can be judged by
the productivity increases resulting from their implementation. On
the other hand, long-term research also has had considerable impact.
Many current deepwater developments are founded on multiphase
transport through subsea pipelines that have been implemented
MAY 2005
based on years of basic studies of multiphase pipe flow.” They also
highlighted some of the recent R&D achievements in this broad area
of production operations and identified the fertile grounds for future
research: hydraulic fracturing, near-wellbore conditions, multiphase
processes, flow assurance, multiphase metering, multiphase pump-
ing, and production monitoring and control.
Facilities and Construction
William H. Higgs, Co-president and co-founder of Mustang Engineer-
ing, L.P., noted R&D needs for offshore facilities and construction.
He wrote, “In the past half-century, spectacular advances have
been made in the design, construction, and installation of structures
for offshore oil and gas production. From the original simple fixed
four-pile platform in 20 ft of water offshore Louisiana, the industry
has evolved to today’s use of permanent floating structures with
sophisticated facilities designed to support production in fields
exceeding 1 million BOE and operating in water depths exceeding
7,000 ft. Expansion into increasingly deeper waters in search of larg-
er reserves has presented operational challenges requiring ingenuity,
risk taking, and foresight. The ability to continually push the tech-
nological envelope has historically been made possible by the joint
research and development efforts of operator companies, engineering
and construction firms, contractors, equipment manufacturers, and
academia. Solutions from R&D efforts can be broadly categorized
according to their level of beneficial impact on a project’s outcome
and the immediacy of the need, whether short-term or long-term. A
‘breakthrough’ solution can be construed as one in which state-of-
the-art technology has been applied in a fashion that allows immedi-
ate and significant gains. R&D can also improve current know-how
by advancing technology to newer generations that provide faster,
more economical, or more viable alternatives to prior approaches.”
The article also highlighted R&D challenges such as stranded gas,
deepwater flow assurance, automation upgrades, information man-
agement, and security and safety.
Health, Safety, and Environment
Monica Norman, Vice President of Research and Engineering, and
John Candler, Manager of Environmental Affairs, both with M-I
Swaco, presented a compelling case for meeting the R&D needs for
a global health, safety, and environment (HSE) challenge.
They wrote, “Research and Development activities in the HSE
global arena span the range of involvement from wellsite challenges
to sustainable development. This wide spectrum of challenges calls
for an R&D effort to match the developing needs of the upstream
industry. A significant culture change has driven changes to equip-
ment and operational practices that have continuously reduced
accident rates industrywide. Likewise, environmental initiatives
have produced new technology that continues to allow the devel-
opment of difficult to reach reserves with reduced impacts. As the
global community continues to increase focus on issues of global
warming and protection of biodiversity, the upstream industry will
be called upon to respond to concerns that go beyond the direct
impacts of exploration and production activities.
“From an environmental protection perspective, controlling dis-
charges and understanding their fate and effects have always been a
high research priority. The major discharges that evolve from world-
wide exploration and production operations are drilling fluids and
cuttings generated during the drilling operation, along with pro-
duced water from the production operations. Traditional lines of
research have focused on the fate and effects of these discharges in
both onshore and offshore environments. As countries continue to
review and upgrade their control of environmental impacts, they are
constantly requesting the most up-to-date information available on
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potential impacts. In some areas, permission to drill is accompanied
with stipulations to perform ongoing seabed surveys around dis-
charges and to monitor and report all potential impacts in the area.
The area of environmental science that supports individual surveys
and the comparison between surveys is rife with opportunities.
“A recent success story in this area is the development of test
methods and a seabed survey program sponsored by the US
Synthetic-Based-Mud Research Group. Rather than wait for prob-
lematic environmental tests to be imposed on companies, industry
proactively formed and funded a research group to identify and
develop testing procedures appropriate to define the best available
technology. The results of the work group efforts provided test
methods and a seabed survey program to the government that sup-
ported the continued discharge of synthetic-based drilling fluids. As
a result of these efforts, deepwater drilling programs that rely on the
performance benefits of synthetic-based drilling fluids continue to
be successful investments, completed in compliance with regulato-
ry requirements. Continued development of joint industry projects
that address common environmental issues regionally is a proven
cost-effective way to leverage both money and research scientists.
An additional aspect of the Synthetic-Based-Mud Research Group
effort was the inclusion of service company, operator, government,
and academic resources, which proved to be an effective way to pro-
vide balance and credibility to the research efforts.”
Management and Information
Management and Information provides a challenging focal point for
an R&D discussion. Both management [processes] and information
systems play important roles in the upstream business. Jeff Spath,
President of Data and Consulting Services–Schlumberger Oilfield
Services, and Arnis Judzis, Executive Vice President, TerraTek Inc.,
tackled these two topics.
They wrote, “The sphere of Management and Information is
highly important in any comprehensive discussion of the role of
R&D in enabling the upstream oil and gas industry to continue to
develop the petroleum engineering technology vital to meeting
future needs. Central to this topic is the need for vision and leader-
ship, especially as they affect management systems; techniques and
performance; project management; education, training, and compe-
tence; and information systems. Additionally, for operators and ser-
vice companies, there remains a need to articulate the case for
Management and Information R&D to the potential suppliers of
Management and Information technology.
“The next major challenge in the oil and gas industry is cost-effec-
tive, easy access to information allowing individuals or companies to
do their job better and more efficiently. In many large companies,
strategic data is collated at a very high organizational level. However,
gaining full value from this information depends on making it acces-
sible at functional levels companywide that support domain and dis-
cipline workflow. With the potential of the big “crew change” in 4 or
5 years, it is essential to develop tools and processes to allow the
knowledge of experts to be captured and transferred easily to others
in the industry. The vital task for our industry is to make sure we do
not lose this knowledge and information, but capture and use it to
take us to the next level of performance in the 21st century.”
A number of areas in which R&D could benefit Management and
Information include
• Answer delivery vs. data delivery.
• The seamless integration of workflow processes that require
input from and output to a large number of discrete data sources.
• Compression of data to help transmit large amounts of infor-
mation.
MAY 2005
 Fig. 1—R&D for management and information: scaling of reservoir heterogeneity
(courtesy TerraTek).
• Smart knowledge management through standardization of data-
bases.
• Integration of new workflows into those in current use.
• Uptake of new technology by business units.
• Development of competencies and training.
Common Themes
A theme common to R&D endeavors in the six disciplines is an
emphasis on economic benefit. Many of the successful R&D pro-
jects reviewed were relatively short-term, with clearly identifiable
economic returns resulting. The longer-term efforts described have
less clear definition and higher risk, but with potential economic
returns that are substantial enough to be attractive, even in light of
the risks. R&D is an astute investment.
A Final Note
In March, SPE approved an extension of the R&D Advisory
Committee’s term to June 2007. We are also pleased to announce the
addition of three new members to the committee: Vikram Rao, Vice
President Technology, Halliburton Energy Services; Paul Ching,
Director, E&P R&D, Shell Intl. E&P; and David R. Zornes, Manager
Reservoir Mechanisms Section, ConocoPhillips.
MAY 2005
SPE’s Board Committee on Membership, Education, and
Professional Activities will seek reports on the committee’s activities
related to (1) the Technology Development Forum (19–24 June
2005 Broomfield, Colorado) and (2) plans for the next 2 years
including new R&D initiative projects and timelines for completion.
We hope the readers of JPT and the petroleum engineering audience
will continue to view R&D as an astute investment in the oil and gas
industry and continue to provide success stories for others to review.
Universities and other R&D institutions are capable of addressing
the needs of the upstream business; however, they need both the
commitment of resources and understanding of future challenges
faced by operators and service companies alike. JPT
Arnis Judzis is Executive Vice President of TerraTek Inc. in Salt Lake City,
Utah. He has more than 25 years of experience in the oil and gas industry
and has been active in drilling and the management of technology. He holds
a PhD degree in chemical engineering from the U. of Michigan. A. Dan Hill
is a professor and Robert L. Whiting Endowed Chair in Petroleum
Engineering at Texas A&M U. He has been involved in petroleum engineer-
ing research in academia and industry for the past 26 years. He holds a BS
degree from Texas A&M U. and MS and PhD degrees from the U. of Texas at
Austin, all in chemical engineering.
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