1/13/16 2:26 PM

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CONTENTS
Volume 68 • Number 2

16 GUEST EDITORIAL • CLIMATE POLICY WITH LOW

OIL PRICES
Without serious climate policy restrictions, the use of cheaper oil will likely
grow and extend its life expectancy throughout the global energy system.

32 LINGERING GLOBAL OIL BUST WILL LEAD TO

LASTING CHANGES
The prolonged decline in oil prices is having a significant effect on many
aspects of the oil and gas industry, including operators, service companies,
petroleum engineers, and universities and students. When prices recover,
the industry will look much different than it did just a year or two ago.

44 DOWNTURN REPRESENTS STRESS TEST FOR

UNCONVENTIONAL HYDRAULIC FRACTURE MODELING
Developers of the latest generation of unconventional hydraulic fracturing
models are hoping that current weak oil and gas prices will generate
newfound interest in their software technology.
Stacked rigs and other idled
oil drilling equipment dot
the landscape in Dickinson,
50 UNDERSTANDING UNCERTAINTY AND RISK IN
North Dakota. Illustration based
CAPITAL PROJECTS on photo by Reuters.
During a special session at the SPE Asia Pacific Unconventional Resources
Conference and Exhibition, panelists discussed the role of uncertainty
and risk in sanctioning megaprojects. In an environment where more than
half of all projects are facing cost overruns, schedule delays, or both, the
need to recognize problem areas prior to sanction is as great as ever. This
feature examines the role of uncertainty and risk in megaprojects and
unconventional plays.
DEPARTMENTS
54 DEVELOPMENT OF ENGINEERING COMPETENCY
MODELS CONTINUES 6 Performance Indices
The creation of new engineering competency guidelines are at the leading 8 Regional Update
edge of lifelong learning efforts in the engineering profession. 10 President’s Column
14 Comments
20 Technology Applications
24 Technology Update
28 E&P Notes
64 SPE Events
93 People
95 Professional Services
96 Advertisers’ Index

An Official Publication of the Society of Petroleum Engineers. Printed in US. Copyright 2016, Society of Petroleum Engineers.
 Simple is the New Standard
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The PosiFrac Toe Sleeve™ is designed to open on bleed down after the high-pressure
casing test. Multiple sleeves can be installed at the toe of the well and can be opened
simultaneously, providing more than one fracture initiation point.
The PosiFrac HALO™ large bore frac seat has the largest ID of any frac plug on the
market, and it does not require mill-out following plug-and-perf completion operations.
The simple design increases reliability and virtually eliminates the risk of pre-setting
while being pumped to setting depth. Using industry standard wireline setting tools,
the PosiFrac HALO™ is setting a new standard for plug-and-perf completions.
PosiFrac HALO™ is a HydraWell, Inc. technology licensed exclusively to TAM International.
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TECHNOLOGY FOCUS
We give
you the
58 DRILLING TECHNOLOGY
Michael Weatherl, SPE, President, Well Integrity superpowers
59 Faster Rate of Penetration in Hard Chalk: Proving a New Hypothesis
for Drilling Dynamics you’ve
62 Root-Cause Analysis of Drilling Lost Returns in Injectite Reservoirs
65 Single-Gradient Subsea-Mud-Lift-Drilling Technology in Deepwater
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68 Optimization of Upper Burgan Reservoir Multilateral Well With

dreamed of.
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Mark S. Elkins, SPE, Process Lead, ConocoPhillips
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71 FLNG: Applying Advanced Technology To Bring More Natural not only finds downhole blockages
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73 Process Support and Marine Systems in a Spar Hull: Innovation reconstructions of the obstruction.
Meets Regulation We’ll illuminate the problem, you’ll
76 Implementation of an Acoustic Automatic Leak-Detection Sonar eliminate the problem. Better yet,
in the Gulf of Mexico you’ll eliminate downtime and
increase profitability.
78 WELL TESTING
Angel G. Guzmán-Garcia, SPE, Energy Consultant Contact us for a
79 Production-Logging Tools Facilitate Well Testing in Challenging
demonstration
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82 Complex Reservoir Architecture Validated by Integrating Visit us at Subsea Expo stand 143
Well-Testing Outcomes

84 A Nonisothermal Wellbore Model and Its Application in Well Testing

86 FORMATION DAMAGE
Niall Fleming, SPE, Leading Adviser, Well Productivity and
Stimulation, Statoil

87 Formation-Damage Diagnosis Facilitates Successful Remediation

in Sandstone

89 Filtrate and Mudcake Characterization: Implications for Formation-

Damage Control

91 Controlling Losses When Recompleting Low-Pressure Reservoirs

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 SPE BOARD OF DIRECTORS
OFFICERS
2016 President
Nathan Meehan, Baker Hughes
2015 President
Helge Hove Haldorsen, Statoil
2017 President
Janeen Judah, Chevron
Vice President Finance
Roland Moreau, ExxonMobil Annuitant
REGIONAL DIRECTORS
AFRICA
Adeyemi Akinlawon,
Adeb Konsult
CANADIAN
Darcy Spady, Landar Consulting Corp.
EASTERN NORTH AMERICA
Bob Garland, Silver Creek Services
GULF COAST NORTH AMERICA
J. Roger Hite, Inwood Solutions
MID-CONTINENT NORTH AMERICA
Michael Tunstall, Halliburton
MIDDLE EAST
Vacant
NORTH SEA
Carlos Chalbaud, ENGIE
NORTHERN ASIA PACIFIC
Phongsthorn Thavisin, PTTEP
ROCKY MOUNTAIN NORTH AMERICA
Erin McEvers, Clearbrook Consulting
RUSSIA AND THE CASPIAN
Anton Ablaev, Schlumberger
JPT STAFF
Glenda Smith, Publisher
John Donnelly, Editor
Alex Asfar, Senior Manager Publishing Services
Pam Boschee, Senior Manager Magazines
Chris Carpenter, Technology Editor
Trent Jacobs, Senior Technology Writer
Anjana Sankara Narayanan, Editorial Manager
Joel Parshall, Features Editor
Stephen Rassenfoss, Emerging Technology Senior Editor
Adam Wilson, Special Publications Editor
Craig Moritz, Assistant Director Americas Sales & Exhibits
Mary Jane Touchstone, Print Publishing Manager
David Grant, Electronic Publishing Manager
Laurie Sailsbury, Composition Specialist Supervisor
Dennis Scharnberg, Proofreader
SOUTH AMERICA AND CARIBBEAN
Anelise Quintao Lara, Petrobras
SOUTH ASIA
John Hoppe, Shell
SOUTH, CENTRAL, AND EAST EUROPE
Matthias Meister, Baker Hughes
SOUTHERN ASIA PACIFIC
Salis Aprilian, PT Badak NGL
SOUTHWESTERN NORTH AMERICA
Libby Einhorn, Concho Oil & Gas
WESTERN NORTH AMERICA
Behind
Andrei Popa, Chevron
TECHNICAL DIRECTORS
DRILLING AND COMPLETIONS
every
David Curry, Baker Hughes
HEALTH, SAFETY, SECURITY, ENVIRONMENT,
AND SOCIAL RESPONSIBILITY
Trey Shaffer, ERM
winner
MANAGEMENT AND INFORMATION
J.C. Cunha
PRODUCTION AND OPERATIONS
Jennifer Miskimins, Barree & Associates
is a
great
PROJECTS, FACILITIES, AND CONSTRUCTION
Howard Duhon, GATE, Inc.
RESERVOIR DESCRIPTION AND DYNAMICS
Tom Blasingame, Texas A&M University
DIRECTOR FOR ACADEMIA
Dan Hill, Texas A&M University
nomination
AT-LARGE DIRECTORS
Khaled Al-Buraik, Saudi Aramco
Liu Zhenwu, China National Petroleum Corporation
The Journal of Petroleum Technology® magazine is a
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 PERFORMANCE INDICES

WORLD CRUDE OIL PRODUCTION1+‡ HENRY HUB GULF COAST NATURAL GAS SPOT PRICE‡

THOUSAND BOPD
6
O PEC 2015 MAR APR MAY JUN
Algeria 1370 1370 1370 1370 5 USD/million Btu
Angola 1820 1830 1840 1850 4
Ecuador 553 548 543 541
3
Iran 3300 3300 3300 3300
Iraq 3825 3861 3975 4325 2
Kuwait* 2650 2650 2550 2550
1
Libya 475 505 430 410

2015
JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC
Nigeria 2420 2520 2170 2220
Qatar 1525 1531 1532 1537
Saudi Arabia* 9940 9940 10140 10240
UAE 2820 2820 2820 2820 WORLD CRUDE OIL PRICES (USD/bbl)‡
Venezuela 2500 2500 2500 2500

TOTAL 33198 33375 33170 33663 MAY JUN JUL AUG SEP OCT NOV DEC
Brent 64.08 61.48 56.56 46.52 47.62 48.43 44.27 37.97

THOUSAND BOPD WTI 59.27 59.82 50.90 42.87 45.48 46.22 42.44 37.21

NON-OPEC 2015 MAR APR MAY JUN

Argentina 531 533 536 534
Australia 249 296 258 301 WORLD ROTARY RIG COUNT†
Azerbaijan 828 882 832 867
Brazil 2413 2394 2412 2396 REGION JUN JUL AUG SEP OCT NOV DEC
Canada 3775 3463 3212 3608 US 861 866 883 848 791 760 714
China 4254 4258 4271 4409 Canada 129 183 206 183 184 178 160
Colombia 1023 1028 1026 1010 Latin America 314 313 319 321 294 284 270
Denmark 153 163 161 157 Europe 113 108 109 109 108 108 114
Egypt 525 503 512 511 Middle East 401 391 393 396 403 419 422
Eq. Guinea 249 249 249 249 Africa 103 94 96 96 93 90 91
Gabon 215 205 205 215 Asia Pacific 215 212 220 218 213 208 198
India 776 751 766 771
TOTAL 2136 2167 2226 2171 2086 2047 1969
Indonesia 763 804 810 822
Kazakhstan 1658 1616 1659 1567
Malaysia 697 676 694 620
WORLD OIL SUPPLY AND DEMAND2‡
Mexico 2356 2235 2263 2283
Norway 1586 1614 1555 1595 MILLION BOPD 2015
Oman 977 960 975 993 Quarter 1st 2nd 3rd 4th
Russia 10182 10163 10196 10234
SUPPLY 94.69 95.58 96.60 95.95
Sudan 257 257 242 257
DEMAND 92.89 93.21 94.69 94.28
Syria 30 30 30 30
UK 867 925 1016 880
USA 9567 9612 9400 9296
INDICES KEY
Vietnam 336 323 300 354 + Figures do not include NGLs and oil from nonconventional sources.
Yemen 91 75 27 27 * Includes approximately one-half of Neutral Zone production.

Other 2544 2493 2469 2467 1 Latest available data on www.eia.gov.

2 Includes crude oil, lease condensates, natural gas plant liquids, other hydrocarbons for refinery feedstocks,
Total 44358 44015 43607 43986 refinery gains, alcohol, and liquids produced from nonconventional sources.

Total World 80100 79883 79246 80116 † Source: Baker Hughes.

‡ Source: US Department of Energy/Energy Information Administration.

6 JPT • FEBRUARY 2016

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management system can be deployed in conventional or extended-reach wells, in two or more sections, or across any
number of lateral junctions—all with a single control line. Using the Manara system to monitor and control previously
unattainable zones, operators can now immediately identify problematic areas, pinpoint the cause, and make the
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*Mark of Schlumberger. Copyright © 2016 Schlumberger. All rights reserved. 15-CO-87356

 REGIONAL UPDATE
AFRICA
Z Cairn Energy has flowed oil from its SNE-2
well offshore Senegal. Drillstem testing of a
39-ft interval achieved a maximum stabilized
but constrained flow rate of 8,000 B/D of
high-quality pay. A flow rate of 1,000 B/D
of relatively low-quality pay was achieved
from another zone. Drilled to appraise a
2014 discovery, the well lies in the Sangomar
Offshore block in 3,937 ft of water 62 miles
from shore. Drilling reached the planned
total depth of 9,186 ft below sea level.
Cairn has a 40% interest in the block with
the other interests held by ConocoPhillips
(35%), FAR (15%), and Petrosen (10%).
Z Tullow’s Etom-2 well has discovered oil
in Block 13T of northern Kenya. Drilled to a
5,429-ft final depth, the well found 334 ft
of net pay in two columns while probing an
untested fault block identified by 3D seismic.
The presence of high-°API oil was indicated
by oil samples, cores, and log data, and the
reservoir quality is the best discovered so
far in the South Lokichar Basin, the company
said. With a 50% interest, Tullow is the
block’s operator and Africa Oil holds the
remaining interest.
ASIA
Z Woodside has discovered gas at the
Shwe Yee Htun-1 well in Block A-6 of the
Rakhine Basin offshore western Myanmar.
The presence of 49 ft of net pay in the
target zone was indicated by interpretation
of the results, and a gross gas column of
423 ft was encountered, the company said.
Further analysis of the discovery is expected.
Woodside, the operator, has a 40% stake in
the block with the remaining interest held by
MPRL E&P (20%) and Total (40%).
Z Chevron has begun gas production
from two new wells in the Bangladeshi
state of Sylhet in an effort to ease the
chronic energy shortage in the country. The
company is producing an initial 130 MMcf/D
from a well in the Jalalabad field, situated
175 miles from the capital Dhaka, and was
set to begin producing from a second well at
the beginning of the year.
AUSTRALIA/OCEANIA
Z Quadrant has found condensate-rich gas
at the Roc-1 well in the WA-437-P permit
8 JPT • FEBRUARY 2016
offshore Western Australia. Reservoir-
quality sands, including a net hydrocarbon
interval of 33 ft, were confirmed by wireline
logs from a zone between 14,370 ft and
14,501 ft. Pressure tests identified at least
three discrete hydrocarbon columns in that
zone, and formation fluid samples indicated
a condensate ratio ranging from 20 bbl to
40 bbl per million cubic ft of gas. Quadrant
is the permit operator with a 40% interest.
Carnarvon Petroleum, JX Nippon, and
Finder Exploration each hold 20% stakes.
EUROPE
Z TAQA, a company controlled by Abu
Dhabi National Oil Company, has produced
first oil from the Cladhan field in the United
Kingdom North Sea. Situated 60 miles
northeast of the Shetland Islands in 490 ft
of water, Cladhan has been developed as
a subsea tieback to TAQA’s Tern Alpha
platform and is expected to reach an
initial production capacity of more than
17,000 BOE/D. The field operator TAQA
has a 64.5% interest in Cladhan. The other
interests are held by MOL Group (33.5%)
and Sterling Resources (2%).
Z Premier Oil said in late December that it
expected to produce first oil from the Solan
field in the West of Shetlands area offshore
the UK in January. The originally planned
startup in the fourth quarter of last year was
delayed by adverse weather conditions, the
company said. Premier has a 100% stake
in the field, which is expected to achieve
a plateau production rate of between
20,000 B/D and 25,000 B/D.
Z Statoil is developing a USD 940-million
project to help produce the remaining
reserves of the company-operated Oseberg
field in the North Sea, despite the collapse
in oil prices. The Oseberg Vestflanken
2 project will incorporate Norway’s first
unstaffed wellhead platform as a tie-in to
the Oseberg field center platform complex.
Slated to start up in 2018, Vestflanken 2 is
expected to recover an additional 110 million
BOE and can break even financially with oil
at USD 32/bbl, the company said. Statoil
has a 49.3% interest in Oseberg with the
other interests held by Petoro (33.6%), Total
(14.7%), and ConocoPhillips (2.4%).
Z Lundin has discovered oil at the
16/1-25 S well in production license area
PL338C in the central North Sea area of
the Norwegian Continental Shelf. A well
test achieved production of 265 B/D
through a 36/64-in. choke. A gross oil
column of 98 ft was identified along with
a petroleum system that data indicate is in
communication with the company’s 2009
Edvard Grieg South discovery. Additional
studies of the latest find will be needed.
The license operator, Lundin has a 50%
interest in the well with the other interests
held by Lime Petroleum (30%) and
OMV (20%).
MIDDLE EAST
Z Saudi Aramco is delaying some projects
to focus on higher priority initiatives as
it emphasizes cost controls and budget
tightening to deal with an expected
long period of lower prices, the state oil
company’s magazine the Arabian Sun
said on 30 December. Since late 2014, the
company has slowed or cancelled various
projects, sought discounts on existing
contracts, and recently asked oil service
companies to extend discounts into this
year. Chief Executive Amin Nasser said
that Aramco would emphasize long-term
growth strategies such as expansion in
refining and chemicals and meeting Saudi
Arabia’s growing energy demand.
NORTH AMERICA
Z Pemex made two shallow-water oil
discoveries in the second half of last year
that are eventually expected to produce
combined 40,000 B/D, the company said.
The discoveries will add 180 million BOE
to Pemex’s proved, probable, and possible
reserves. The exact locations of the
discoveries, the type of oil found, and the
timetables for field development were
not given.
SOUTH AMERICA
Z Ecopetrol, Colombia’s state-controlled
oil and gas company, plans to reduce
production this year as a result of a 40%
cut in its investment budget necessitated
by low oil prices. Targeted production of
755,000 BOE/D this year is down from a
target of 760,000 BOE/D a year ago. The
company has budgeted USD 4.8 billion for
investment, compared with USD 6.7 billion
last year. JPT
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 IMPROVING PEOPLE’S LIVES
The Case for Hydraulic Fracturing
Nathan Meehan, 2016 SPE President
There are two great truths tied to hydrau-
lic fracturing.
1. It has helped improve people’s lives
by enabling the oil and gas industry to tap
reserves that otherwise could not have
been recovered.
2. It has unleashed dramatic public
opposition.
I am disappointed to see public opposition to hydraulic frac-
turing, because I think, for the biggest part, it is unfounded.
Hydraulic fracturing has become “fracking” in the common
parlance. To too many people, “fracking” symbolizes all that is
wrong with oil and gas companies and modern technology. It is
certainly associated with all aspects of unconventional resource
development, which depends on both horizontal drilling and
hydraulic fracturing to be successful.
It would be inaccurate to deny that there can be problems. But,
an objective look reveals that its benefits far outweigh its poten-
tial risks. It is a safe, reliable technology that has proven highly
beneficial to society and it is being improved continuously by
operators and service companies. Many studies done by the US
Environmental Protection Agency (2015) and others have found
very small risks from the practice. Let us take a closer look.
A Proven Technology
Since the late 1940s, hydraulic fracturing technology has been
used in more than 1 million US wells to safely produce oil and
gas reserves that otherwise could not be recovered. While the
principles of the process have not changed in decades, modern
hydraulic fracturing relies on vastly improved technology and
processes to ensure its continued contribution to a safe, envi-
ronmentally responsible energy future.
Why the Complaints?
Detractors claim that we do not know enough about fracturing’s
impacts and risks, despite decades of experience. Many who are
critical of hydraulic fracturing are actually critical of unconven-
tional well activity, oil and gas activity in general, and the use
of fossil fuels. To them, hydraulic fracturing is a focal point for
their broader objections.
Critics of the process have claimed multiple problems with
hydraulic fracturing, including:
◗ Earthquakes caused by hydraulic fracturing
◗ Pollution of groundwater with unknown chemicals
To contact the SPE President, email president@spe.org.
10
◗ Air pollution
◗ Surface spills
◗ Fugitive methane emissions
◗ Traffic and noise pollution
◗ Excess use of water resources
Earthquakes
The idea seems simple enough. Pumping large volumes of
fluid underground at high pressures might cause earthquakes.
We all remember the 1978 movie, Superman, in which the
villain, Lex Luthor, tried to cause a giant earthquake in just
this way. Massive hydraulic fracturing can cause microseismic
events. Although these events could essentially be called earth-
quakes, they are 1,000 to 1 million times too small to be felt at
the surface.
Unfortunately, the “facts” supporting most of the complaints
about hydraulic fracturing have about the same level of scientif-
ic supporting evidence as the movie.
However, in Oklahoma there has been a significant increase
in the number of earthquakes of magnitude 3.0 and above,
approximately during the time of increased hydraulic frac-
turing activity. What has caused this measurable increase
in earthquakes?
A careful study by Walsh and Zoback (2015) of increased
earthquake activity in Oklahoma clearly identified the source
of the problem: the injection of massive volumes of water into
basement rock. The study revealed that almost all of the water
volumes are related to saltwater disposal and enhanced oil re-
covery volumes unrelated to hydraulic fracturing.
Groundwater Pollution and Chemicals
No studies have identified significant groundwater pollution
from the process of hydraulic fracturing; however, there may be
some potential risks to groundwater, primarily in older wells, as
a result of behind-pipe leakage. Of the few areas where such pol-
lution has occurred, almost all cases are older wells with poor
cement jobs or leaks in casing.
The industry needs to expand monitoring efforts for un-
conventional wells, making sure that proper cement jobs are
always achieved and that well integrity is maintained. Hori-
zontal well completions have become sufficiently routine that
the technology to limit and detect potential leaks is wide-
ly available. Distributed acoustic sensing using fiber-optic
cable is a relatively new technology that can monitor even
JPT • FEBRUARY 2016
NDF-10695.jpt.Global.Reach.Ad.indd 1 1/4/16 3:20 PM
 the tiniest leaks, well below levels that could pose a danger to
the environment.
The disclosure of chemicals used in hydraulic fracturing has
increased significantly. Water and sand are, of course, the larg-
est components of a hydraulic fracturing treatment—99.55% of
a typical Fayetteville Shale stimulation (Arthur et al. 2008). Oil
and gas operators and service companies continue to use some
chemicals to eliminate bacterial growth, add viscosity, minimize
corrosion, lower friction, etc. Anyone who is interested can go to
www.FracFocus.org to identify the chemicals used in any specific
well. Industry must continue to operate in a transparent and re-
sponsible manner.
Infrastructure Impact
Another argument made by those opposed to hydraulic frac-
turing is that fracturing dozens of stages in hundreds of wells
is a large-scale industrial process with related infrastructure
that may impact the lives of people living near areas where it is
occurring. Large truck traffic can impact the integrity of roads,
disrupt local traffic, and add to noise and air pollution. How-
ever, industry can reduce or mitigate this impact. For example,
pad drilling—the practice of drilling multiple wellbores from a
single surface location—requires fewer trucks, leaves a much
smaller surface footprint, and alleviates a significant amount of
infrastructure-related impact.
Many trucks that previously burned diesel fuel are being con-
verted to use natural gas. These conversions not only lower fuel
costs, but also decrease pollution.
Recycling Programs/Water Reuse
While the demand for water for hydraulic fracturing is small
compared to that for agricultural use, it is important to mini-
mize unnecessary use of fresh water when there is a significant
demand for that resource.
Standard practices to reduce or eliminate the use of fresh
water now involve recycling of unconventional wastewater in
shale plays where disposal options are limited and sourcing
fresh water is difficult or expensive. Recycling not only provides
an answer to the disposal question, but also helps reduce an op-
erator’s fresh water sourcing requirements.
Using recycled water (both recycled flowback and pro-
duced water) as either all or part of a fracturing treatment re-
duces fresh water needs. By centralizing recycling treatment
and storage facilities, industry can deliver water to multiple
wells or locations efficiently. Operators in many plays not only
recycle water, but also use brackish (salty) water in lieu of
fresh water.
Risk Management
Ultimately, oil and gas development is a partnership among land
owners, regulators, operators, and integrated service company
experts, who work together to minimize risks, ensure environ-
mental stewardship, and efficiently recover energy resources.
Risk management begins with comprehensive reservoir
analysis and feasibility studies, which combine geological
features, rock properties, offset well experiences, regulatory
12
4.5
4
3.5
3
USD/gal
2.5
2
1.5
1
0.5
0
1 Jan 2012 31 Dec 2012 31 Dec 2013 31 Dec 2014
Fig. 1—US retail gasoline prices. Source: www.eia.gov/
petroleum/gasdiesel (accessed 30 December 2015).
guidelines, and economic drivers (Meehan 2012). Teams of ex-
pert engineers use the reservoir analysis and feasibility stud-
ies to design and execute development projects that include
the following:
◗ Efficient well placement across the field to maximize
reservoir drainage and improve water management
logistics
◗ Proper well construction to ensure zonal isolation for the
life of the well
◗ Optimized hydraulic fracture stimulation treatments to
responsibly maximize production and economic returns
◗ Enhanced recovery technologies to delay production
declines and extend well life
◗ Safe and effective plugging and abandonment procedures
at the end of the well’s productive life
Reducing the Number of Wells Required
To Develop the Resource
The performance of unconventional wells is highly variable.
There are some who believe that large statistical variations in
the production rates and recoveries from unconventional wells
are inevitable and unavoidable. This belief sometimes leads to a
commitment to “factory drilling,” in which hundreds of nearly
identically designed wells are drilled with a focus on reducing
well costs. Pad drilling plays an important role in this develop-
ment, because it reduces surface costs and enables reductions
in drilling, evaluation, completion, stimulation, and production
costs. However, production and cost histories have shown that
even in some commercially attractive unconventional plays,
25% to 40% of all wells drilled did not achieve acceptable eco-
nomic returns.
A preferred approach is a more strategic and analytical one
that incorporates surface seismic, advanced petrophysics and
geomechanics, and reservoir engineering data into an integrat-
ed model enabling operators to identify the most productive
areas and eliminate the drilling of sub-economic wells. This
holistic, data-driven approach helps operators screen and se-
lect the best areas, and drill fewer wells, but ones that have the
greatest potential and the least risk. It also dramatically lowers
environmental impact while improving economics.
JPT • FEBRUARY 2016
The Bottom Line Bump, P. 2015. Americans are Spending More Than $2 billion Less a
As the world looks forward to a distant but desirable future Week on Gas Than This Time Last Year (13 January 2015).
with safe, renewable energy, the fact remains that today’s www.washingtonpost.com/news/the-fix/wp/2015/01/13/
energy demands can only be met with fossil fuels. This reli- americans-are-spending-over-2-billion-less-a-week-on-gas-
ance is almost certain to continue for many decades to come, than-this-time-last-year/ (accessed 30 December 2015).
requiring significant increases in fossil fuel production. Oil 2015. Total Carbon Dioxide Emissions From the Consumption of
remains the largest primary energy source, with coal in sec- Energy. US Energy Information Administration. http://www.eia.
ond place, and natural gas in third—but gaining momentum. gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=90&pid=44&aid=8
Hydraulic fracturing is essential for low-permeability res- (accessed 30 December 2015).
ervoir development. Unconventional wells may require 25 2015. ExxonMobil Perspectives. Thanks, Fracking. ExxonMobil.
to more than 60 hydraulic fracture stimulations to generate www.exxonmobilperspectives.com/2015/01/23/thanks-fracking/
commercial results. Smaller hydraulic fracturing treatments (accessed 30 December 2015).
are used in higher-permeability wells as both a stimulation King, G. 2012. Hydraulic Fracturing 101: What Every Representative,
and support for sand control operations. Environmentalist, Regulator, Reporter, Investor, University
The abundance of reserves unlocked through hydraulic Researcher, Neighbor, and Engineer Should Know About
fracturing has contributed to drops in both crude oil and gaso- Estimating Frac Risk and Improving Frac Performance in
lineprices (Fig. 1), saving consumers more than USD 2 billion Unconventional Gas and Oil Wells. Paper SPE-152596-MS.
a week according to The Washington Post (Bump 2015). http://dx.doi.org/10.2118/152596-MS.
Hydraulic fracturing also has contributed to a dramatic
drop in greenhouse gas emissions. Carbon dioxide (CO2) emis-
sions from fossil fuels in the US decreased 11% from 2007 to
2013 despite increased energy demand, largely as a result of
increased natural gas production and decreased reliance on
coal (EIA 2015). US production of oil and gas has increased
nearly 4 million B/D since 2008, almost entirely as a result of
drilling wells that have required hydraulic fracturing to pro-
duce at commercial rates. Nothing other than global reces-
sions has decreased CO2 emissions as dramatically as has hy-
draulic fracturing (ExxonMobil 2015).
We know a great deal about hydraulic fracturing and con-
tinue research activity to make it even safer, cleaner, and
more cost-effective. The resulting dramatic increase in safe,
Motivate
affordable energy improves—and will continue to improve—
people’s lives. JPT
Inspire
References
Educate
2015. Assessment of the Potential Impacts of Hydraulic Nominate
Fracturing for Oil and Gas on Drinking Water Resources.
US Environmental Protection Agency. www2.epa.gov/sites/ Do you have colleagues who are authorities in
production/files/2015-07/documents/hf_es_erd_jun2015.pdf their fields and experienced public speakers?
If you do, consider nominating one or more
(accessed 30 December 2015).
of them for the Society of Petroleum Engineers
Walsh, F. R and Zoback, MD. 2015. Oklahoma’s Recent Earthquakes Distinguished Lecturer Program.
and Saltwater Disposal. Science Advances 1 (5). www.advances.
Learn more about the program at
sciencemag.org/content/1/5/e1500195 (accessed 30 December www.spe.org/go/NomDL.
2015).
Nominations are accepted until 15 March.
2008. Arthur, J.D., Bohm, B., and Coughlin, B.J. et al.
Evaluating the Environmental Implications of Hydraulic
Fracturing in Shale Gas Reservoirs. http://www.all-llc.
com/publicdownloads/ArthurHydrFracPaperFINAL.pdf
(accessed 1 January 2016).
Meehan, N. 2012. Hydraulic Fracturing: An Environmentally
Responsible Technology for Ensuring our Energy Future.
http://blogs.bakerhughes.com/reservoir/2012/01/23/hydraulic- The SPE Distinguished Lecturer Program is funded by the
SPE Foundation, Offshore Europe, AIME, and companies
fracturing-an-environmentally-responsible-technology-for-
that allow their professionals to serve as lecturers.
ensuring-our-energy-future-i-of-iii/ (accessed 30 December
2015).

JPT • FEBRUARY 2016 13

 COMMENTS EDITORIAL COMMITTEE
Bernt Aadnøy, University of Stavanger
Syed Ali—Chairperson, Schlumberger
Tayfun Babadagli, University of Alberta

Ending the US Export Ban

William Bailey, Schlumberger
Ian G. Ball, Intecsea (UK) Ltd
Mike Berry, Mike Berry Consulting
John Donnelly, JPT Editor
Maria Capello, Kuwait Oil Company
Simon Chipperfield, Santos
Nicholas Clem, Baker Hughes
US companies began selling crude oil on the international Alex Crabtree, Hess Corporation
market last month shortly after the US Congress ended the Gunnar DeBruijn, Schlumberger
country’s 40-year-old ban on oil exports. The action is another
Alexandre Emerick,
byproduct of the US shale revolution and will do little to settle Petrobras Research Center
the current fight over global oil market share that has driven Niall Fleming, Statoil
oil prices to decade lows. Ted Frankiewicz, SPEC Services
Congress enacted the ban in 1975, after the OPEC oil
Emmanuel Garland, Total
embargoes against the US in the 1970s drove gasoline retail
Stephen Goodyear, Shell
prices higher and caused regional gasoline shortages. There has been an occasion-
Reid Grigg, New Mexico Petroleum Recovery
al relaxing of the ban, such as in the 1980s when shipments of crude began being
Research Center
allowed to Canada and in the 1990s when sales of Alaskan North Slope crude were
Omer M. Gurpinar, Schlumberger
permitted to relieve a glut of heavy oil on the US west coast. Last year, the ban on
A.G. Guzman-Garcia, ExxonMobil (retired)
shipments of condensate was lifted, and both Pioneer Natural Resources and Enter-
prise Product Partners began selling condensate overseas. Greg Horton, Consultant

The first sales of US crude took place on 31 December and in the first week of John Hudson, Shell

January as ConocoPhillips and Enterprise shipped cargoes from Texas to Europe. Morten Iversen, BG Group
The recent drilling boom in south and west Texas has ushered in a buildup in infra- Leonard Kalfayan, Hess Corporation
structure to the refineries along the US Gulf Coast, which will make export easier. Tom Kelly, FMC Technologies
The shale boom made the argument in favor of the embargo seem antiquated. Gerd Kleemeyer, Shell Global Solutions
After falling steadily since 1985, US crude production began increasing in 2009 International BV
with the sharp rise in shale output. In 2009, US output rose to 5.4 million B/D and Thomas Knode, Statoil
increased to 9.3 million B/D last year, as the country almost doubled production, Marc Kuck, Eni US Operating
according to the US Energy Information Administration. The US now rivals Saudi Jesse C. Lee, Schlumberger
Arabia and Russia in terms of energy output and its crude production now surpasses Silviu Livescu, Baker Hughes
its oil imports.
Shouxiang (Mark) Ma, Saudi Aramco
In the short term, US crude exports should have little effect on the global oil mar-
John Macpherson, Baker Hughes
ket or oil prices. The world is currently awash in supply and shipping US crude to
Casey McDonough, Chesapeake Energy
far-away places such as Asia is uneconomic compared with cheaper oil offered from
the Middle East. But in the long term, when the global supply/demand balance tight- Stephane Menand, DrillScan

ens, Asia will have another option for crude, especially after a planned expansion Badrul H Mohamed Jan, University of Malaya
of the Panama Canal is completed. Latin America may be a natural outlet for US Lee Morgenthaler, Shell
oil as its refineries are geared to running the light, sweet crude such as that which Michael L. Payne, BP plc
comes from the Eagle Ford Shale. Most of the refineries on the US Gulf Coast are Zillur Rahim, Saudi Aramco
built to process heavier crude. Shale producers will have another market for their Jon Ruszka, Baker Hughes
crude, which should encourage production once oil price levels rise again. A study Martin Rylance, GWO Completions
by Columbia University predicted that lifting the export ban could increase US crude Engineering
oil production by 1.2 million B/D. Otto L. Santos, Petrobras
The American Petroleum Institute, which lobbied to lift the ban, said the US Luigi A. Saputelli, Hess Corporation
will now be a major player in the global oil market. While that is not likely in the Sally A. Thomas, ConocoPhillips
short  term, lifting the ban does add another wrinkle to the current battle over
Win Thornton, BP plc
global oil market share, which has changed OPEC strategy and caused crude prices
Xiuli Wang, Minerva Engineering
to plummet. JPT
Mike Weatherl, Well Integrity, LLC
Rodney Wetzel, Chevron ETC
Scott Wilson, Ryder Scott Company
Jonathan Wylde, Clariant Oil Services
Pat York, Weatherford International
To contact JPT’s editor, email jdonnelly@spe.org.

14 JPT • FEBRUARY 2016

 Change the
way you drill.
eVolve.

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Learn how our eVolve™ Optimization Service is shaping the future of
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eVolve_WT_081015.indd 1 8/11/15 3:22 PM

 GUEST EDITORIAL

Climate Policy with Low Oil Prices

Roberto F. Aguilera, Adjunct Research Fellow, Curtin University, Australia, and Martin Radetzki, Professor of
Economics, Luleå University of Technology, Sweden

Although oil experienced an extraor- There is little doubt pre-industrial levels throughout the 21st
dinary price increase over the past century, believed to be a warming of
4 decades, a turning point has been about 2 degrees Celsius. Such a policy
reached where scarcity, uncertain sup- that implementation would require global emission cuts of
ply, and high prices will be replaced 30% by 2035, and no less than 50% by
by abundance, undisturbed availabili- of climate policy this 2050, compared with 2011 levels. There
ty, and suppressed price levels in the is little doubt that implementation of
decades to come. ambitious implies climate policy this ambitious implies
In our new book, The Price of Oil, the end of the recent revolution in oil
we conclude that the shale revolution the end of the recent production. There have also been wide-
will yield an increased output of oil in spread claims that such a policy would
the world totaling nearly 20 million B/D result in massive stranded assets in the
by 2035. We also assert that a “conven- revolution in oil fossil fuel industries.
tional oil revolution”—the application of Would sizable proved reserves remain-
horizontal drilling and hydraulic fractur- production. ing in the ground due to a deep climate
ing to conventional oil formations in the policy constitute a serious problem to the
world—will yield a further addition of fossil industries? We do not think so, or
almost 20 million B/D in the same period. to these levels if an early upward reaction else, the reserves would never have been
This extra 40 million B/D is nearly twice takes place. Our optimistic scenario sees created on such a prevalent scale. In the
as much as the global increase in oil pro- a price of USD 40/bbl by 2035. case of oil, the reason proved reserves
duction in the 20-year period from 1994 Without serious climate policy restric- have been created to last more than 50
to 2014. tions, the use of cheaper oil will like- years into the future, at present produc-
As these new production revolutions ly grow and extend its life expectancy tion levels, is that investment in reserve
develop and expand internationally, throughout the global energy system. creation is relatively small in relation
they are bound to have a strong price- to total production costs, and therefore
depressing impact, either by prevent- The Carbon Bubble Fallacy worth the companies’ while to assure rea-
ing price rises from the levels observed A deep climate policy is one that ensures sonable peace of mind about future pro-
in 2015 (the Brent spot price averaged that CO2 concentrations in the atmo- duction potential.
USD 53/bbl), or by pushing prices back sphere do not exceed a doubling from The stranded asset problem could
raise more serious problems if climate
policy resulted in unused production
Roberto F. Aguilera, SPE, is an adjunct research fellow at Curtin installations whose development has
University, Australia, and an associate of Servipetrol Ltd., Canada. involved heavy investment. Applying the
He has participated in numerous energy studies, including those rough and simplified assumption that oil
by the World Petroleum Council, US National Petroleum Council,
output would be reduced in line with the
and UN Expert Group on Resource Classification.
overall emission cuts referred to earlier
of 30% in the coming decades, oil pro-
duction would be reduced from 89 mil-
Marian Radetzki is professor of Economics at Luleå University of
Technology, Sweden. He has held visiting professorships at
lion B/D in 2014 to around 62  million
Colorado School of Mines and at Pontificia Catholic University of B/D in 2035. This would be a remark-
Chile. In the 1970s, he worked as chief economist at the able change, but even here we believe
International Copper Cartel, and has undertaken numerous that serious stranded asset problems are
consultancies over the years. Radetzki and Aguilera’s new book, unlikely to occur. Producing oil wells
The Price of Oil, is published by Cambridge University Press. worldwide experience, on average,
.

16 JPT • FEBRUARY 2016

 INTERSECT
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without compromising efficiency or accuracy.
The INTERSECT* simulator combines physics and performance to deliver reservoir simulation at the scale you need—
fast. The parallel architecture provides superior scalability that enables more realistic geological descriptions and
production forecasts with an improved assessment of uncertainties. Operating in terms of oilfield concepts, the
INTERSECT simulator’s intelligent logic stays consistent for efficiently optimizing your reservoir management strategy
with results you can trust.

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*Mark of Schlumberger; the INTERSECT simulator is a joint product collaboration of Schlumberger, Chevron, and Total.
Copyright © 2016 Schlumberger. All rights reserved. 15-IS-89001

Carbon Dioxide Emissions (million tonnes)
Fig. 1—Carbon dioxide emissions from 1965 to 2015. Source: BP Statistical
Review of Energy.
decline rates of 7% per annum, so stable
production requires investments either
in reserve growth or in the develop-
ment of completely new fields. No more
than 5 years of ceased investments would
then be required to reduce current pro-
duction capacity to the maximum 2035
level imposed by climate action. In the
absence of dramatic and sudden mea-
sures imposed without warning, there is
little likelihood that installations capa-
ble of continued production would be
left idle in consequence of interventions
to arrest climate change. These consid-
erations raise questions about the real-
ism of stranded asset fears.
Climate Policy Costs
The cost of a rational, deep climate pol-
icy, using the most efficient instruments
and assuming that economic adjustment
to the policy effects will be ideally flex-
ible, has been assessed to amount to
perhaps 1–2% of annual global GDP:
USD  770–1,540 billion in 2014. Politi-
cal issues will obviously arise, as these
costs will ultimately have to be borne by
unwilling taxpayers or energy users.
These issues will become much more
profound since less developed countries
are now the largest emitters (Fig. 1),
and virtually all of the energy demand
growth in the future will come from
these countries. Yet it is reasonable for
18
Year
them to express an unwillingness to go
along with a global emissions deal in
which everybody is charged equally for
each emission unit. Given the industri-
alized world’s history of intensive oil,
coal, and gas use, it is clearly a politi-
cally and morally sensitive issue to deny
less developed countries the use of fos-
sil fuels to achieve reduced emissions
at the expense of similar prosperity.
Income transfers from wealthier coun-
tries would be required to get poorer
countries aboard a global scheme.
Against this background, it may be
appropriate to present results showing
the order of magnitude of the required
dollar flows if the world is to attain
the emissions goal referred to earlier,
with the non-OECD world’s participa-
tion paid for in full by financial trans-
fers. By 2020, the net annual transfers
have been assessed at USD 500  billion,
of which USD 200 billion would be from
the US. By 2050, the required annu-
al transfers would exceed USD 3  tril-
lion, with the US contribution rising to
USD 1 trillion. At the Copenhagen cli-
mate meeting of 2009, wealthy coun-
tries pledged USD 100 billion a year
until 2020 in compensation to the rest
of the world, a promise renewed at the
recent climate summit in Paris. To put
these sums into perspective, actual
commitments to date amount to about
USD  10 billion in total, but even these
meager offers are not definitive as they
face political resistance in several of the
countries making them. Given the rela-
tive size of these numbers, it is easy to
understand the difficulty in bridging
the gulf between the climate rhetoric
and the political preparedness to incur
the costs.
Climate Policy Prospects
and Implications
Practically all energy forecasting organi-
zations predict an expanding fossil fuel
future for decades to come, with oil con-
tinuing to play a key part in satisfying
the world’s energy needs. Moreover, the
oil industry’s investment behavior exhib-
its unbelief in deep climate policy in
the foreseeable future. We are inclined
to share these views, and contend that
the stranded asset phenomenon may
come to apply in the main to expen-
sive, subsidized renewables if these atti-
tudes prevail and become instrumental
in policy evolution.
Another point to consider in this con-
text is that a vast majority of the world’s
oil reserves are in the hands of state-
owned enterprises in developing coun-
tries. These organizations have goals
such as social and economic develop-
ment, which are likely to be higher prior-
ities than cutting emissions. Moreover,
oil consumers in most oil-producing
developing countries receive significant
public subsidies. These subsidies are
politically hard to discontinue. They
also encourage domestic usage, and, by
implication, the level of production.
Despite the difficulties in predicting
what might transpire, history and cur-
rent behavior point to no more than
superficial climate action in the future.
The cost of a severe policy is so high,
and the confusion and inaction since the
signature of the shallow Kyoto protocol
so pervasive, that we deem a reversal of
past climate policy inactivity to be highly
questionable. The noncommittal nature
and the extended deferral of action
characterizing the just-completed Paris
agreement support our view. Hence, we
conclude that climate policy is unlikely
to hamper the progress of our projected
oil revolutions. JPT
JPT • FEBRUARY 2016
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up that puts increased pressure on values such
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INVENTING. COLLABORATING. LEADING.

 TECHNOLOGY APPLICATIONS
Chris Carpenter, JPT Technology Editor
Measurement-While-Drilling
Tool
NOV Wellbore Technologies introduced
the BlackStar II electromagnetic (EM)
measurement-while-drilling (MWD)
tool, part of the InTerra family of sen-
sors and systems. The BlackStar II EM
MWD tool uses EM telemetry to trans-
mit data measurements even while mak-
ing a connection, enabling increases in
survey speed and accuracy that drive
performance gains. EM systems send
information to the surface through the
Earth’s crust using low-frequency EM
waves. Information is received at a sur-
Fig. 1—NOV Wellbore Technologies’ BlackStar II EM MWD tool does not rely on
moving parts for operation.
Fig. 2—The CENesis PHASE multiphase production solution from Baker
Hughes surrounds the ESP system in a shroud, reducing gas interference in
performance.
20
face antenna, decoded and processed by
a computer, and distributed to the drill-
er’s readout display without the encum-
brance of mud or wire transmission
(Fig. 1). EM tools have no moving parts,
allowing for use in air-drilling condi-
tions or high-lost-circulation-material
environments where mud-pulse tools
are rendered inoperable. The BlackStar
II EM MWD tool transmits data mea-
surements from the bottom of the hole
back to the surface, allowing the driller
to control and monitor the location and
orientation of the drill bit. Surveys can
be transmitted during connections, min-
imizing the nonproductive time associ-
ated with conventional mud-pulse tools.
The flexibility of EM systems makes
them the preferred strategy in a growing
number of MWD applications, includ-
ing underbalanced drilling, underpres-
sured formations, vertical-control drill-
ing, and coalbed methane.
◗ For additional information, visit
www.nov.com.
Artificial-Lift
Production Solution
Baker Hughes introduced the CENesis
PHASE multiphase encapsulated pro-
duction solution, which helps opera-
tors avoid production interruptions in
unconventional wells. Designed to sep-
arate natural gas from the oil stream
before it can enter an electrical-
submersible-pumping (ESP) system, the
solution mitigates production downtime
and potential ESP performance issues,
which can ultimately improve reserves
recovery. During the production phase
in unconventional plays, higher levels of
natural gas are usually released from the
pay zone as reservoir pressure depletes.
This gas typically enters the horizontal
wellbore and accumulates in the high
side of the lateral, creating large gas
slugs that, as they move up the wellbore,
cause low-flow or no-flow conditions in
an ESP system. The CENesis PHASE solu-
tion mitigates this problem by surround-
ing the entire ESP system in a shroud,
allowing lighter natural gas to continue
flowing up the wellbore while heavier
production fluid flows into the shroud
and is produced through the ESP system
(Fig. 2). The shroud also provides a sup-
ply of production fluid so the ESP system
can continue to operate during gas-slug
events when natural gas completely dis-
places fluid in the wellbore. Mitigating
this gas interference in the pumping sys-
tem stabilizes production and reduces
downtime associated with pump-cycling
and gas-locking conditions.
◗ For additional information, visit
www.bakerhughes.com.
JPT • FEBRUARY 2016
Fig. 3—BBA Pumps’ BV100 dual-vacuum sludge pumps are
designed for difficult pumping jobs.

Dual-Vacuum Sludge Pump

For its new-generation drills, Conrad Stanen has chosen the
BV100 sludge pump from BBA Pumps. With the BV auto-
prime sludge-pump range, BBA Pumps offers a series of
vacuum-assisted centrifugal pumps for use with abrasive liq-
uids. These are specially designed for the pumping of drill-
ing sludges and bentonite in order to meet the toughest pump
jobs. Using high-efficiency pumps and state-of-the-art diesel
engines, the pumps offer maximum performance at minimal
cost (Fig. 3). The BV range of pumps has been designed with
a clear focus on reliability and durability. Featuring a 100%
mechanical priming system, the BV series pumps quickly
prime and reprime, even from dry conditions. The heavy-
build style of both pump and frame make the BV range perfect
for use in the strenuous drilling market. The pumps are con-
structed of steel-welded materials for high wear resistance
and feature the MP100 oil-spill-free priming system. A float-
ing box on the suction spool is easy to clean, and large inspec-
tion covers allow easy access.
◗ For additional information, visit
www.bbapumps.com.

Antislip/Stick Tool
The new Counter Force antislip/stick tool (AST) solution by
Tomax keeps the lower bottomhole assembly and the drill
bit suspended in both axial and rotational directions at the
critical moment when the first cutter touches the rock. As
the load increases, the helix-telescope function of the Tomax
AST ensures a steady load within the capacity of the fresh cut-
ters, regardless of how hard the rock is. As more of the cutters
are engaged, a smooth bottomhole pattern develops (Fig. 4).
When the full cutting face is engaged, the Counter Force AST

JPT • FEBRUARY 2016


Fig. 4—The Counter Force AST from
Tomax.
system is practically offloaded, while
the main springs in the AST system take
over to keep the system in tune. Now
the weight on bit (WOB) can be brought
beyond the compressive strength of the
rock to produce a fast, yet safe, rate
of penetration. The patented Counter
Force AST makes it safe to run a drill
bit that is sharp enough to stay engaged
even in the hardest layers. A continu-
ous cut at moderate WOB produces less
heat and makes the cutter last consid-
erably longer. The larger cuttings from
a sharper edge are removed more eas-
ily, to leave the cutting surfaces clean at
all times.
◗◗For additional information, visit
www.tomax.no.
Exhaust-Gas-Cleaning System
The Alfa Laval PureSOx exhaust-gas-
cleaning system is a flexible choice for
sulfur oxide abatement. Its compact
construction and multiple configura-
tions, combined with custom engineer-
ing, make it easy to adapt for individ-
ual vessels (Fig. 5). With the launch of
an inline I-design scrubber, the P
­ ure­SOx
platform is now even more versatile.
The inline-scrubber design, or I-design,
builds directly on proven PureSOx tech-
nology. It provides an additional alter-
native for vessels with more-complex
22
Fig. 5—The Alfa Laval PureSOx
exhaust-gas-cleaning system is
adaptable to individual vessels.
structural needs. As with the U-design
PureSOx scrubber, the I-design scrubber
can be configured with multiple inlets.
This reduces space needs and installa-
tion costs by allowing one scrubber to
handle exhaust gas from multiple sourc-
es, including boilers as well as the main
and auxiliary engines. A further alterna-
tive for inline PureSOx configurations
is reflux. Reflux involves the creation of
two separate loops: one for the jet and a
second for the absorber. In the jet loop,
clean water is evaporated by means of
the waste heat in the exhaust gas. The
vapor is then recondensed as clean water
Fig. 6—Weatherford’s slim-profile COI tool delivers high-definition well images.
in the absorber loop. The water-cleaning
unit is a vital component of any closed-
loop or hybrid PureSOx system. When
the scrubber is in closed-loop mode, the
unit removes soot from the circulation
water, thus protecting the scrubber and
enabling compliant discharge of bleedoff.
◗◗For additional information, visit
www.alfalaval.com/puresox.
Slim Microimager for OBM Wells
Weatherford introduced the compact oil-
based-mud (OBM) microimager (COI), a
slim-profile tool that delivers fullbore,
high-definition images in wells drilled
with oil-, diesel-, or synthetic-based
muds. The tool’s 4.1-in. diameter enables
deployment in a wide range of geome-
tries including narrow, horizontal, and
highly deviated wells. The COI features
eight pads with 72 total measurement
electrodes that provide optimum cover-
age (Fig. 6). The images can be enhanced
further through Weatherford Reveal 360
image processing. Reveal 360 technolo-
gy uses structural and textural informa-
tion in the measured parts of the image
to reconstruct any gaps between pads.
Through analysis of the COI images,
the structural, stratigraphic, and dep-
ositional geology around the wellbore
can be detailed, even in wells previously
deemed too complex for imaging servic-
es. Recently, the COI was deployed with
other petrophysical-measurement tools
in an 8¾-in. OBM well in Latin Ameri-
ca. The COI captured superior images of
the geology compared with incumbent
JPT • FEBRUARY 2016
technology, which enabled detailed frac-
ture analysis and stratigraphic interpre-
tation. As a result of the image and inter-
pretation services, the operator was able
to reduce reservoir uncertainty and to
optimize the completion design.
◗ For additional information, visit
www.weatherford.com

Subsea Connector
Ametek has expanded its portfolio of
high-pressure, high-temperature (HP/HT)
connectors with the addition of its lat-
est Elite Series Wet-Mate connector. The
three-channel connector is designed to
operate reliably in the extreme environ-
ments found in subsea and downhole oil
and gas applications. The HP/HT connec-
tor is just 15.8 mm in diameter and has
been functionally tested to 1034 bar and
temperatures as high as 150°C (Fig.  7).
The Elite Series Wet-Mate connectors
feature a distinctive, patented design in
which concentric contacts are individ-
ually sealed within pressure-balanced,
oil-filled plug-and-receptacle connec-
Fig. 7—The Elite Series Wet-Mate HP/HT connector from Ametek.
tor housings. The sealed receptacle with
its concentric contacts features an oil-
filled primary chamber to prevent water
ingress. Each electrical band is protect-
ed further within an individual second-
ary oil-filled chamber when mated. All
chambers have individual seals, so that
the failure of any one seal does not com-
promise the connector’s overall integrity.
A central female pin, axially displaceable
in the central passage, prevents water
ingress or loss of oil when the connector
is not mated. A main insulated plug core
with contact bands on the connector dis-
places the female pin during the mating
process. The plug core is protected by an
outer sleeve that covers the contacts in
the oil-filled chamber. JPT
◗ For additional information, visit
www.ametek.com.

JPT • FEBRUARY 2016 23

 TECHNOLOGY UPDATE
Custom Biological Produced Water Treatment
Yields Fast Oil Recovery Boost in Waterflood
P. Karicherla, B.G. Clement, SPE, K.M. Kozicki, M.B. Samuel, and T. Meling, SPE, Glori Energy
Improving oil production from mature
fields is a significant challenge because
of rising recovery costs and fluctuating
crude oil prices. Although large invest-
ments are made in finding new reserves,
typically more than 60% of discov-
ered oil is left behind. Thus, the use of
enhanced oil recovery (EOR) technolo-
gies is necessary to bring more of this oil
into production. This article describes
how the use of a biological EOR technique
that applied produced water for reservoir
flooding in a mature field led to rapid and
substantial increases in oil production.
Glori Energy’s Activated Environment
for Recovery of Oil (AERO) technology is
a biological EOR method in which cus-
tomized nutrients are injected into the
reservoir to activate native microbes. The
ensuing microbial activity improves oil
mobility and leads to increased produc-
tion in waterflooded sandstone reservoirs.
Use of the technology involves mini-
mal capital spending and low operating
costs, and applications can use existing
field infrastructure. Reservoirs respond
quickly to the use of the method, show-
ing higher oil rates and increased oil cuts.
Recovery is increased, and the economic
life of the field is extended.
Oil fields are screened in a two-step
process that includes reservoir analysis
and treatment design. Reservoir analysis
involves geological assessment to deter-
mine key characteristics such as porosity,
permeability, structural alignment, net
pay, oil gravity, injector/producer conti-
nuity, and historical production response.
The analysis allows for a quick review of
multiple fields to select the one predicted
to benefit most from biological EOR.
Treatment design comprises biochem-
ical testing and nutrient formulation. The
process starts with the sampling of reser-
24
voir fluids under controlled conditions,
using specialized equipment from perti-
nent locations such as injection, produc-
tion, and source-water wells. Chemical
analysis is begun immediately upon the
sample’s arrival to determine the physico-
chemical characteristics of oil and water.
Biological testing comprises assessing
the viability of native microbial popula-
tions, developing a customized nutrient
blend tailored to the field, and confirm-
ing the suitability of injection water for
supporting microbial activity.
The achievement of residual oil recov-
ery results from the stimulation of spe-
cific indigenous microbial communities
exclusively in the near-injector region.
A low concentration of low-cost, inor-
ganic nutrient is added continuously to
the injection water to stimulate growth
of the resident microbial populations
on residual oil. The growth disrupts the
interfacial tension between oil and water,
improves oil mobility, and enhances the
sweep of the flood by diverting water into
previously unswept channels that con-
tain residual oil.
Because the goal is to stimulate growth
in the formation at the oil/water interface,
the injection water must be largely free
of bioavailable carbonaceous compounds
(e.g., oil, organic acids) or the nutrients
will be consumed independent of their
growth on residual oil. Thus, produced
water for reinjection (PWRI) can require
conditioning to reduce the concentra-
tions of free oil and total organic carbon.
Case Study
Biological EOR was implemented in a
small pilot area of a large, mature water-
flooded Southern California field (SCF)
through continuous nutrient injection
into the PWRI. The project planning began
with reservoir analysis and fluid sampling
to assess biogeochemical compatibility.
Geological assessment characterized
the SCF as an east-west trending anti-
cline, plunging toward the southwest and
truncated on the northeast by a region-
al fault. The field was found to produce
from a stratigraphically complex forma-
tion at depths of 2,000 ft to 4,100  ft.
Strata were coarse clastic turbidites
deposited in a deepwater environment on
submarine fans. The rock types included
sand, shale, silt, and conglomerate with
interbedded sand-silt and shale.
The formation was divided into four
zones and 16 individual reservoir units,
with four original oil/water contacts. The
net reservoir thickness varied from 25 ft
to 120 ft, the porosity averaged 20%
to 26%, the oil gravity ranged between
20 °API to 36 °API, and the permeabil-
ity was between 200 md and 1,300 md,
with continuity between injectors and
updip producers. All features were con-
sidered favorable for implementing bio-
logical EOR.
Biochemical testing showed that while
most water quality parameters were
favorable, free oil content and aqueous
organic carbon were above the permitted
levels. This indicated the need for a free
oil removal process. Biological experi-
ments revealed that the aqueous organic
carbon was not bioavailable and would
not compete for nutrients with the bio-
logical EOR process. Additional biologi-
cal experiments were used to validate a
nutrient solution that stimulated growth
of the indigenous microbial communi-
ties on oil and this was developed for
field application.
As a consequence of the biological stud-
ies, a surface system for water condition-
ing and nutrient injection was designed
JPT • FEBRUARY 2016
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 600 120,000

500 100,000

400 80,000
Production (BOPD)

Injection (BWPD)
300 60,000

200 40,000
Free Oil Removal
100
% Removal

100 20,000
0
0.0 2.0 4.0 6.0
Months Relative to AERO Start
0 0
–44 –38 –32 –26 –20 –14 –8 –2 4 10 16 22 28
Months Relative to AERO Start
Updip Producers, Waterflood Updip Producers, Activated Environment
Updip Producers, Post-AERO waterflood for Recovery of Oil (AERO)
Field Injection Rate (B/D) Downdip/on-strike Producers
Updip Producers, Pre-AERO Decline

Fig. 1—The average daily oil production, water injection, and calculated pre-project decline trend for the pilot project
are shown. The daily oil rate increased significantly following nutrient injection and dropped back to predicted decline
rate when the project ended. Inset: The free oil content in the injection water is shown before and after a remediation
system was used for meeting water quality specifications. Graphics courtesy of Glori Energy.

to remove oil from the PWRI and deliver
customized nutrients to each of the four
target injection wells. The oil removal
system consisted of 19 depth-style poly-
ester filter elements situated within a
horizontal housing that coalesced the
free oil from the PWRI.
The horizontal configuration of the
housing created additional rising time for
the coalesced oil, which was directed to a
storage tank. A volume surge tank, from
which the oil had been removed, served
as the injection water storage tank for the
triplex injection pump. The nutrient injec-
tion skid consisted of a high-pressure,
low-volume dosing pump in addition to
an air compressor and receiver.
Nutrients were injected into the water
suction line of the triplex pump and
pumped into a four-way manifold for
continually delivering water and nutri-
ents to each injector. In addition, precise-
ly controlled air from the nutrient injec-
tion skid was delivered by means of mass
flow controllers to each wellhead. Opera-
tional stability was maintained through
regular field quality control assessments
and satellite monitoring of the nutrient
injection system.
Oil production was assessed in wells
considered by the operator to be in the
monitoring area, representing an out-
put of about 500 B/D. Enhanced produc-
tion was first noted 3½ months into the
project and peaked between 5 and 5½
months (Fig. 1). A decline in the final
month coincided with a downturn in field
injection and production volumes.
Assessing the response exclusively from
full-field production data, the increase was
almost 130 B/D in wells updip of the injec-
tion wells. However, monthly changes in
injection volume complicate the short-
term analyses. Individual production well
data were statistically noisy, but when
average production over the 4-month win-
dow (including the 2 weeks following the
pilot project) were compared with the
7-month, pre-project period, eight wells
had demonstrable increases.
The eight responding wells showed a
1.2- to 2.5-fold increase in oil cut and a 1.4-
to 3.5-fold increase in oil rate, which equat-
ed to a 66 B/D increase in oil production.
Another four wells with similar pro-
duction patterns had a 25 B/D production
increase over the same period. However,
because of statistical noise and the short
project duration, we consider these to
have been probable rather than certain
responders to the pilot treatment.
Thus, even with monthly data resolu-
tion and a short, 6-month pilot, we were
able to identify a 1.6- to 2.0-fold increase
in oil rate and a 1.5- to 1.7-fold increase
in oil cut, resulting in a 66 B/D to 91 B/D
increase in production from select pro-
duction wells.
While these production increases are
less than the 130 B/D increase observed
in monitored field production during the
pilot project, the difference of 40 B/D to
70 B/D could have resulted from month-
to-month variations and/or the sum of
enhancements too small to resolve in
a 6-month period. Viewed against the
decline shown in Fig. 1, these changes are
even more favorable, with the pilot proj-

26 JPT • FEBRUARY 2016

Fig. 2—A structure map of the pilot area in a Southern California field where biological EOR was applied to improve oil
recovery. The blue circles are injection wells that received customized nutrients. The green and yellow circles are wells
showing a production increase.
ect showing a marked deviation upward
that remained above this baseline for
almost a year.
In addition to the overall produc-
tion increase, the response pattern was
notable. In previously published results
from projects performed with this tech-
nology on waterfloods in Kansas (Bauer
et al. 2011) and Alberta (Havemann et al.
2015), responding wells were structurally
updip and distant from the injectors. This
project was similar, in that the respond-
ing wells were updip of one or more treat-
ed injectors, and some were more than
2,000 ft away (Fig. 2). This is consis-
tent with the response patterns observed
in core experiments (Jones 1985; Sunde
et al. 2012) where oil travels much fast-
er than the injected water, resulting in a
rapid response from a drop in pressure.
Based on the positive results obtained
from the current and several other field
applications, biological EOR is an effec-
tive and economic approach for recover-
ing trapped oil in mature, waterflooded
fields that are approaching their eco-
nomic limit. Furthermore, the applica-
tion of PWRI to the method has now been
validated through the use of established
water conditioning technology on only a
fraction of the total injection water. JPT
References
Bauer, B.G., O’Dell, R.J., and Marinello,
S.A. et al. 2011. Field Experience from a
Biotechnology Approach to Waterflood
Improvement. Presented at the SPE
Enhanced Oil Recovery Conference, Kuala
JPT • FEBRUARY 2016
Lumpur, Malaysia, 19–21 July. SPE-144205- SPE J 25(01): 101–112. http://dx.doi.
MS. http://dx.doi.org/10.2118/144205-MS. org/10.2118/12125-PA.
Havemann, G.D., Clement, B.G., and Kozicki, Sunde, E., Asa, S., and Lillebø, B. et al. 2012.
K.M. et al. 2015. New Microbial Method Towards a New Theory for Improved Oil
Shows Promise in EOR. J Pet Technol Recovery from Sandstone Reservoirs.
67(3): 32–35. Presented at the SPE Improved Oil
Jones, S.C. 1985. Some Surprises in the Recovery Symposium, Tulsa, Oklahoma,
Transport of Miscible Fluids in the 14–18 April. SPE-154138-MS. http://dx.doi.
Presence of a Second Immiscible Phase. org/10.2118/154138-MS.
New Mexico Institute of Mining and Technology
DIRECTOR/PETROLEUM RECOVERY RESEARCH CENTER
Directs the center’s research program; provides leadership to a team of scientist,
engineers, technical, and administrative staff. Serves on Boards and Committees,
at the Institutional, State, and Federal levels. Develops collaborative research
efforts with other divisions of New Mexico Tech. Supports the Institute’s academic
goals through advising/supporting graduate and undergraduate students.
Interacts with oil and gas producers to determine the needs of NM hydrocarbon
industry and to maintain good working relationships. Ph.D. required in Engineering
or Physical Science. Strong administrative and budgetary skills required. Ability
to interact effectively with hydrocarbon procedures and professional scientist and
engineers required. Ability to develop good working relationships with industrial
sponsors and government agencies required. Demonstrated ability to obtain
research funding from industrial, governmental, or other sources required. Ability
to develop and maintain professional contacts internationally required. Must have
10+ years of experience in R&D of improved methods for oil and gas recovery,
including at least 3 years in Management of research projects, budgets, and
personnel, including scientists and engineers. Must have strong research record
and international reputation in methods for improved oil and gas recovery.
Interested candidates should submit a resume, copies of transcripts and three
references to: New Mexico Institute of Mining and Technology, Human Resources
801 Leroy Pl. Brown Hall Box 113, Socorro, NM 87801. The selection process will
begin immediately and continue until the position is filled.
New Mexico Institute of Mining and Technology is an Equal Opportunity/
Affirmative Action Employer.
27
 E&P NOTES
Mexico’s Onshore Auction Considered
a Success, Deepwater Up Next
Trent Jacobs, JPT Senior Technology Writer
Each of the 25 onshore blocks offered to
private companies in Mexico’s Decem-
ber auction were awarded, almost all of
which went to Mexican companies. It was
the third installment of the country’s his-
toric Round One auction process made
possible by a 2013 constitutional reform
that for the first time in a generation
allows private companies to extract oil
and gas in Mexico.
The results of the latest auction
exceeded expert predictions as well as
those of the Mexican government that
prior to the auction, had announced it
would consider five awarded blocks to be
a success. Only five out of 19 blocks were
awarded in the shallow water auctions
held earlier in 2015.
In total, 22 of the blocks were awarded
to 13 Mexican companies and consortia,
with three other blocks going to a Cana-
Mexico’s third auction for onshore
mature fields was hailed as a
resounding success as all 25 blocks
were awarded to mostly Mexican
oil and gas companies. There
are concerns though that several
companies overbid and will find it
hard to make their fields economic.
Photo courtesy of Mexico’s National
Hydrocarbon Commission.
28
dian oil company. This result checked
one of the biggest boxes for the Mexi-
can government: to firmly establish a
domestic and privately owned oil and
gas sector.
“This is a triumph for Mexico,” Juan
Carlos Zepeda, the president commis-
sioner of Mexico’s National Hydrocar-
bons Commission, told reporters after
the auction. The government esti-
mates that combined production from
the newly auctioned areas will reach
36,000 B/D of oil and 240 Mcf/D of gas.
And while no one seems to be disput-
ing the success of the onshore auction,
which consisted entirely of mature oil
and gas fields, there are concerns that
the bidding was so aggressive that the
winners left little room for themselves to
turn a profit.
The highest bid came from Canamex
Dutch, a Mexican-Dutch consortium,
which will send 85.7% of its production
revenue to the government. The average
royalty of all the winning bids was 63%
plus income taxes.
At the time of the auction, the Mex-
ican crude oil basket was priced at
around USD 30/bbl and production
from the awarded areas is expected to
come quickly, perhaps in as little as 12
months. Pablo Medina, a Latin Ameri-
ca upstream research analyst at Wood
Mackenzie in Houston, said that if oil
prices do not rise significantly, some
companies will find themselves in a
tough economic position.
Highlighting the “extremely high”
bids, he noted that several of the fields
may require capital expenditures of
around USD 15/BOE. “Then you need to
pay 90% in royalties. So in some cases,
you basically end up with USD 3 to cover
your USD 15 in costs,” he said.
Almost 100 companies prequalified
ahead of the onshore auction in large
part due to the government’s loosening of
the operating experience requirements.
The relatively small size of the blocks
also allowed firms with relatively modest
financial resources to compete.
In the end, 40 companies submit-
ted bids, the highest number of any of
the three auctions held so far. Several
of the winning bids came from service
companies looking to make the leap to
becoming operators after working for
decades with Pemex, Mexico’s national
oil company.
Francisco Mendez, an attorney with
Mayer Brown, has been consulting with
several of the companies involved in
the auctions and believes the govern-
ment has made good on the promise
that it would be receptive to the indus-
try’s suggestions on how to improve the
bidding terms.
“I’ve seen an evolution from the gov-
ernment with regard to the drafting of
the contracts,” he said. “Mexico is com-
ing from a 76-year period of monop-
oly, so change is not that easy. But as
everyone saw, there is a lot of attractive-
ness in this opening” of the country’s
energy sector.
Shortly after the onshore auction was
completed, the government announced
the terms for the highly anticipat-
ed deepwater auction that will feature
10 offshore blocks, four in the Perdi-
do area and six in the southeast Sali-
nas Basin. Unlike the onshore and shal-
low water auctions, the next auction
will likely see bids from large inter-
national oil companies with extensive
deepwater experience.
Data rooms opened in January and will
remain available to companies until Sep-
JPT • FEBRUARY 2016
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 tember. There is no set date for the auc-
tion as yet but it is expected to take place
no earlier than October.
The Perdido blocks, located near the
maritime border with the United States,
are considered to be the most promising
because of the notable discoveries made
in the area. The Salinas blocks have seen
far less exploration activity and there-
fore will present more risk.
Compared with the USD 1 billion in
combined investments expected from
the 25 onshore blocks, each of the deep-
Drilling Fluid Uses Acid and Salt To Improve Well
Performance
Trent Jacobs, JPT Senior Technology Writer
The inventor of a new water-based
drilling fluid believes the chemical
process involved with his technology
opens up natural fractures as drilling
takes place to increase production in
shale formations.
The key ingredients of the technolo-
gy, called the Aquarius Drilling System,
are readily available salts and acids that
can be used in conjunction with prov-
en completion techniques, or in some
cases, in lieu of hydraulic fracturing.
“It is so simple that it is almost
embarrassing that no one has used this
before,” said Daryl Breese, an entre-
preneur and former mud engineer with
almost 30 years of experience. “You
select the salt, select the acid, and rock
and roll.”
After receiving significant interest
from multiple companies, Breese said
last year he agreed to sell exclusive
rights to distribute the drilling fluid to a
major service company whose name he
could not disclose because of a contract
agreement. He said the service company
is continuing to test the technology and
that he expects it to see wider use as
those trials are completed.
Explaining how the patented drilling
fluid works, he said that as long as its
salt content is higher than that of the
target formation, the shale will dehy-
drate through the process of “osmot-
ic sucking.” As that takes place, the
acid dissolves carbonate stringers and
30
water blocks could demand an invest-
ment as high as USD 10 billion. The
government is also counting on the
deepwater blocks to deliver the vast
majority of the new barrels needed to
reverse the country’s declining produc-
tion—now at its lowest level in 25 years.
“The deep water is pretty much
the whole reason Mexico made the
reforms,” to its energy laws said Gonza-
lo Monroy, managing director of energy
consulting company GMEC in Mexico
City. “Pemex did not have the capital,
enlarges natural fractures and micro-
fractures along the wellbore. In theory,
this chemical tandem creates near-well-
bore pathways for hydrocarbons to be
produced and sends drill cuttings to the
surface that are free of hydrocarbons
and can be recycled.
The idea for the new drilling fluid
came to Breese in 2009 after work-
ing as a contractor in the Marcellus
Shale region of Pennsylvania for New-
park Resources, a large global provider
of drilling fluids. Range Resources, the
operator of one of the projects he was
involved with, was searching for a novel
way to eliminate the USD 80,000 it was
spending per well to dispose of its drill-
ing cuttings at hazardous waste sites.
The solution Breese said he helped
develop was a water-salted-polymer-
based drilling fluid that Newpark
now markets as the Evolution drilling
fluid system.
“It is really the first drilling fluid that
enabled the cuttings to be approved for
recycling instead of being thrown into a
landfill at USD 4,000 to USD 5,000 per
truckload,” he said. “They could actually
use the drill cuttings for things like a rig
base or a pad base—so that was a huge
cost savings for them.”
Breese said the difference between
the two systems is that his involves the
use of acid. He added that the main
reason companies have avoided acidiz-
ing while drilling is because they were
they did not have the experience, and
it was very risky for Mexico as a coun-
try and as the ultimate owner of Pemex
to do it on its own. It could’ve been a
potential disaster.”
Monroy added that while it was ini-
tially thought that Pemex would seek to
participate in the deep water auction as
a minority partner with another opera-
tor, its credit rating was downgraded in
November to an investment level lower
than what many companies require of a
joint-venture partner.
afraid of rusting drillpipe even though,
as he argues, “Drillpipe is cheap com-
pared to hydrocarbon production.”
Breese said adding a 3% to 4% con-
centration of hydrochloric acid to his
drilling fluid effectively dissolved lime-
stone stringers inside a Marcellus gas
well and helped improve the initial pro-
duction rate by 50% compared with an
offset well. Using drill cuttings or other
geologic samples from the target forma-
tion, laboratory and field tests are need-
ed to determine the types of acids and
salts to use, as well as their concentra-
tions and the exposure time needed to
net the desired results.
He is hopeful that the technology
may someday also be used in the United
Kingdom to develop coalbed methane
resources. But due to the widespread
public opposition to hydraulic fractur-
ing, the extraction of coalbed methane
has been slow to materialize. Breese said
his drilling fluid could provide the mid-
dle ground needed to get things moving
in the UK because it can help achieve
production without hydraulic fractur-
ing. He said an operator can just “dial
in” the acid concentration to create the
desired cavity inside the coalbed to pro-
duce sufficient quantities of gas.
“Now you can say, we are not going
to frac, we are just going to drill and we
will keep the drilling fluid local to the
pay zone and it is not going to affect the
water supply at all,” he said.
JPT • FEBRUARY 2016
US, Alaska Governments End Legal
Claims for Exxon Valdez Incident
Stephen Whitfield, Staff Writer
The US Department of Justice and the
Alaska Department of Law recently
closed federal and legal actions against
ExxonMobil Corp. and its corporate pre-
decessors involving the 1989 crude oil
spill from the Exxon Valdez oil tanker.
The legal actions stem from a 1991
plea agreement the company reached
with both governments in US district
court. Under that agreement, the com-
pany agreed to pay a criminal fine of
USD  125 million. An ensuing civil set-
tlement required the company to pay
an additional USD 900 million to both
governments over a 10-year period to
reimburse past costs and fund the resto-
ration of damaged natural resources.
One aspect of the settlement remained
unresolved, however: a provision called
the “reopener for unknown injury.” This
provision allowed both governments to
seek up to an additional USD 100 mil-
lion if they found substantial losses or
declines in wildlife populations or habi-
tats that could not have been anticipated
at the time of the settlement.
Beach surveys conducted in 2001 by
the US National Oceanic and Atmospher-
ic Administration (NOAA) revealed the
presence of patches of oil from the Exxon
Valdez spill in subsurface sediments and
on rocks in the spill area. Further surveys
conducted in 2003 determined that the
oil was degrading at a slower rate than
the government had anticipated, and that
it was still a threat to species that dug
into the sediments in search of food. This
spilled oil was identified as a likely factor
in the limited recovery of two species, sea
otters and harlequin ducks.
Based on its findings from the NOAA
beach surveys, the governments request-
ed a USD 92 million payment from
ExxonMobil in August 2006, 1 month
before the court-mandated deadline to
file for additional damages. While the lit-
JPT • FEBRUARY 2016
igation to recover that money proceeded,
the Exxon Valdez Oil Spill Trustee Coun-
cil commenced with its Habitat Resto-
ration Plan, funding monthly scientific
studies to determine why the oil had not
yet degraded and what could be done to
make it nontoxic.
By 2013, the council had determined
that the populations of harlequin ducks
and sea otters had recovered to pre-spill Registration
levels and were no longer more exposed
to oil than populations outside of the
Now Open
spill area.
If more work is needed, the coun-
cil has approximately USD 200 million
remaining from the 1991 civil settlement
with the company. NOAA has plans to
continue monitoring the oil sites and
assist the council in determining the
measures needed to further restore the
Alaskan coastline.
The Exxon Valdez spill was one of the
largest spills ever along the US coast. It
led to significant institutional and regula-
tory changes, including the Oil Pollution
IADC/SPE
Act of 1990 and the creation of NOAA’s DRILLING
Damage Assessment Remediation and
Restoration Program. The Oil Pollution CONFERENCE
Act required the gradual phasing out of
single-hulled tankers in US waters. As AND EXHIBITION
of 1 January 2015, all tankers entering
US ports and harbors require a double- Fort Worth, Texas, USA
hulled design. 1–3 March 2016
Alan Mearns, a senior staff scientist
at the US National Ocean Service’s Office
Fort Worth Convention Center
of Response and Restoration, said the www.spe.org/events/dc/2016
double-hulled tanker requirement has
had a significant impact on safety in
the industry.
“We’ve had several instances of what Visit www.spe.org/go/16dcj
could have been another Exxon Valdez,
to learn more and sign up to receive
where a large tanker runs aground and
hits something. But no oil spilled because conference updates and news.
the accident didn’t cause penetration
into the second hull where the tanks are,”
Mearns said. JPT
 Lingering Global Oil
Will Lead to
P
redictions of a 2016 recovery in
the exploration and production
(E&P) sector became increasing-
ly rare after 2015 ended with a thud as
oil prices sank below USD 40/bbl.
The industry consensus now is that oil
and gas prices are going lower for lon-
ger, and activity in 2016 will be lower
than in 2015, said Ethan Phillips, a lead-
er in the oil and gas practice at Bain &
Co. “We are coming around to the notion
that when the industry does come back
it will look different.”
Oil prices now are no more predict-
able than they were in December when
they unexpectedly slid from around
USD  50/bbl to around USD 35/bbl.
For many companies that spent last
year struggling to eke out a profit at
USD 50/bbl in high-cost plays, from
deepwater development to shale,
that pushed the break-even point
beyond reach.
32
In the coming years, production
growth is expected largely from low-
cost producers in the Middle East, led
by Saudi Arabia, which has stuck with its
plan to regain market share, even if that
means keeping oil prices low. A spike in
tensions between Iran and Saudi Ara-
bia and its allies in early January was a
reminder of the political risk associated
with the region. But bad market news
from China snuffed an oil market rally
by showing its appetite for hydrocar-
bons this year likely will be limited.
While US producers proved surpris-
ingly resilient in 2015—with new plat-
forms in the Gulf of Mexico pushing up
the total US annual output—that does
not appear sustainable. Lower prices
have led to steep reductions in reserve
estimates in high-cost plays, increasing
pressure from investors and lenders to
deal with the problems created by dwin-
dling cash flows. And the cost per bar-
rel in deepwater plays is delaying many
projects there.
Investment bankers and private equi-
ty investors once eager to put money
into unconventional E&P have turned
their attention to profiting from dis-
tressed E&P deals.
“A few of the things that were kind
of propping revenues and activity lev-
els are playing out,” said Karr Ingham,
consulting economist for the Texas Alli-
ance of Energy Producers, adding, “It is
increasingly apparent that activity levels
will drop by more than they are now.”
More Casualties
Another year of lower prices and deep
E&P budget reductions are forcing more
rounds of layoffs, pushing estimates of
the jobs lost as high as 250,000 world-
wide, with more to come. Job offers
for petroleum engineering graduates
have been sinking as the numbers hit-
JPT • FEBRUARY 2016
Bust Stephen Rassenfoss, JPT Emerging Technology Senior Editor
Lasting Changes
ting the job market remain at record
levels. Drilling rigs and pressure pump-
ing trucks used for fracturing are being
stored away for a day when they will be
needed again.
“This year it is new territory. We have
not seen a period during which the fractur-
ing industry fleet has shrunk” so fast, said
Richard Spears, vice president of Spears
and Associates, which provides consult-
ing services to the worldwide petroleum
equipment and service industry. The firm
is estimating about one-quarter of that
capacity will disappear. Capacity is being
removed part by part as drilling rigs and
pressure pumping trucks are cannibalized
by owners trying to keep other equipment
working at deeply discounted rates.
Many companies in that business will
be gone. Spears predicts at least 12 pres-
sure pumping companies of the 50 it
tracks will be out of business when the
market begins to recover. It expects a
JPT • FEBRUARY 2016
25% reduction in pressure pumping
capacity, bringing supply in line with
demand, allowing the market to begin to
recover no later than 2017.
That is an optimistic view, with oth-
ers predicting the oil and gas industry to
recover no earlier than 2018. OPEC has
forecast oil prices to average USD 70/bbl
by 2020, but Spears and others expect oil
prices to reach that level sooner, in part
because of the severe cuts in the indus-
try now.
“As people read this in February 2016
it may feel like the worst month ever, but
in that moment are the seeds of recovery
sown,” Spears said. “Companies are so
full of despair, but what they are doing
will lead to better times,” eliminating
surplus supplies of oil and equipment.
Stressing
Bankruptcy filings during the last 3
months of 2015 reached levels not seen
during the global reces-
sion of 2008–2009, and
the numbers are expected
to rise this year.
“At least nine US oil and
gas companies, account-
ing for more than USD 2
billion in debt, have filed
for bankruptcy so far in the
fourth quarter,” according
to a report from the Federal
Reserve Bank of Dallas titled,
OPEC Tips Crude Oil Markets
Over the Cliff.
This year, the financial pres-
sures on E&P companies will rise.
A chart from the report showed
the sharp decline in E&P spending
while failures are rising. Companies
are trying to live within the limits of
their cash flow as they face increasing-
ly tough credit reviews from lenders
and investors.
33
 Prepare for Market Turbulence
When these charts were created by the US Energy Information Administration in early December, the consensus was that
prices would rise this year to around USD 50/bbl. At that time it appeared demand growth would catch up with supply.
Charts courtesy of the US Energy Information Administration, Short-Term Energy Outlook.

Then the OPEC meeting ended with no deal to limit production, causing prices to plunge on fears of a lingering supply glut.

Depressed prices, though, may finally force producers in the US and other non-OPEC countries to reduce output.

34 JPT • FEBRUARY 2016

 “Those of us with debt in our busi-
nesses are doing everything we can to
Oil Production (thousand B/D)
help the bank to not call the loan,” Spears
said. “We are trying to hold on to the debt
we have got. It is hard to imagine asking
a bank for added capital. Right now they
are looking at the upstream business with
a jaundiced eye.”
Companies that depended on bor-
rowed money to grow faster than their
cash flow might allow must now reduce
costs enough to generate the cash need-
ed to continue paying their bills and sat-
isfy creditors. Not all can survive the test.
Some will become corporate “zombies
lacking the cash flow or access to capi-
tal to continue operations through 2016,
if current price levels persist,” said Alan
Cunningham, technical director for Gaff-
ney, Cline, & Associates.
For service and supply companies this
reduces demand, and changes the pri-
orities of customers. “Optimization now
shifts to minimizing costs rather than
maximizing barrels,” said David Deaton,
chief advisor in production solutions for
Halliburton’s Landmark Software and
Service. “Now they are focused on cash
management, and lowering the cash cost
per barrel even if it impacts production.”
Shrinking
Layoffs have come in waves and that is
expected to continue. It began with ser-
vice companies and suppliers reducing
capacity and costs as they adjusted to
reduced demand and deep discounts
demanded by E&P companies. By year’s
end, operating companies were increas-
ing their share of reductions as it became
apparent that prices were not going to
recover soon. Reductions in estimated
reserves offered an abstract measure of
a concrete change—less oil is likely to be
produced from high-cost plays, reduc-
ing the need for workers and equipment.
And the methods used to reduce those
production costs are designed to get
more out of the ground, often with fewer
wells and people, further reducing the
demand for workers even if prices rise
back above USD 50/bbl.
Depressed prices are “destroying a sig-
nificant portion of the oil and gas industry
in the US,” said John Graves, the owner of
Graves and Co. While he makes his living
JPT • FEBRUARY 2016
2,800
2,400
2,000
1,600
1,200
800
400
0
Bakken
The Permian is the only major liquids-rich play where production is rising.
Courtesy of the US Energy Information Administration Drilling Productivity
Report.
running a firm offering transaction servic-
es and operating advice to E&P companies,
he took on a project to track oil industry
job cuts because he thought other counts
were too low. By year end, he estimated
that global job losses exceeded 250,000.
Companies also are backing away
from projects that represent a significant
amount of future production. A study from
Tudor, Pickering, Holt & Co. reported that
150 projects had been delayed or canceled.
That will reduce production in future years
from reservoirs holding an estimated 125
billion barrels of oil. The projects were in
the oil sands, liquefied natural gas produc-
tion, and deep water in countries demand-
ing a large take of future revenues.
North American E&P companies that
survive 2016 will need to be efficient,
financially strong, technologically savvy
operators able to respond to sometimes
short windows of opportunity.
Companies are redefining their strate-
gies to allow quicker reactions to chang-
es in the business, and a shortening of
the time between spending and produc-
tion. Rather than defining their options
as unconventional versus conventional,
many firms are talking about short-cycle
versus long-cycle primary assets, Phillips
said. The goal is to manage projects large
enough to matter to a big operator “but
still be flexible enough to make relative-
ly short-term moves on the demand and
pricing side,” he said.
Rather than commitments stretching
out for years, these development plans
can be adjusted on a quarterly basis. For
example, ConocoPhillips explained its
January 2015 January 2016
Eagle Ford Haynesville Marcellus Niobrara Permian Utica
decision to get out of deepwater explo-
ration and shift its spending to onshore
by saying it was trying to get away from
projects demanding large capital invest-
ments where there are years between dis-
covery and first production.
“The North American unconventional
plays can also be considered to be option-
al plays, with lower costs and quicker
times associated with switching on or off
investments,” Cunningham said.
Last year, Scott Sheffield, chairman and
chief executive officer of Pioneer Natu-
ral Resources, described a short-cycle
approach this way: “at USD 70 (per bbl) we
can grow. At USD 80 we can grow more.”
That approach could put a lid on future
prices. “People are ready to drill at the
drop of a hat,” Ingham said. “The indus-
try is really almost spring-loaded to
respond to a relatively small uptick in
price, which stomps out any sniffle of
recovery you have.”
Lower prices push producers—includ-
ing national oil companies with the
lowest-cost conventional reserves—to
reduce their cost per barrel. The combi-
nation of efficiency and quick response
could create an oil business like the North
American natural gas business, where
production has remained high despite
prices at or below USD 2 MMBtu in the
heart of the winter heating season.
“That is what points to a scenario
we do not want to talk about out loud,”
Ingham said. “It is worth mentioning
that producers live in fear of a crude oil
market post-2014 that is like the natural
gas market.”
35
 Power in Oil Markets Shifts Back to Middle East
P lunging oil prices led to a dras-
tic drop in drilling rigs working in
most places in the world, with a nota-
2,100 600

1,900 500

OPEC/Saudi Arabian Rig Count

ble exception. Baker Hughes’ widely
watched weekly report on drilling rigs 1,700
shows activity has remained steady in 400

US Rig Count
Saudi Arabia and the Middle East. 1,500
Those countries possess rich conven- 300
tional, onshore oil reserves, where the 1,300
cost of lifting a barrel is still solidly prof- 200
itable at prices below USD 20/bbl. These 1,100
countries have millions of barrels a day
100
of capacity and plan to produce it. 900
Iran has said it plans to export
500,000  BOPD of oil as soon as it is 700 0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
allowed back in the market, which
depends on its compliance with an agree- US OPEC Saudi Arabia

ment to dismantle its nuclear program. Saudi Arabia has increased the number of drilling rigs running as the number
Libya’s warring parties recently working in the United States has plunged. The chart uses two different scales.
announced a fragile truce with a goal of The scale on the left axis is the US rig rate and the one on the right is the rig
forming a national government, which count for Saudi Arabia and OPEC. Chart courtesy of the US Federal Reserve
might allow it to increase exports that Bank of Dallas using Baker Hughes rig count data.
could rise to 1 million B/D this year,
according to Nouri Berouin, chair- past 12 months, nearly twice the added One indicator of the changing geogra-
man of the Libyan national oil com- output of Saudi Arabia, according to phy in oil production is the disappear-
pany. The comment was in a report the US Energy Information Administra- ance of the spread between the value of
from the Middle East Policy Council tion. Iraq plans to continue increasing the US benchmark crude, West Texas
that said the company is working to production, and Saudi Arabia has about Intermediate (WTI), and the interna-
ramp up its output from 350,000 B/D to 2 million B/D of spare capacity if there tional standard, Brent crude.
600,000 B/D. is a need for it. When US oil production was grow-
Despite conflicts in Iraq, Iraqi pro- Even the United States is export- ing, the US export ban led to an over-
duction reached 4.5 million B/D in ing crude oil again, with a law taking supply of high-quality crude that
November. It has added more than effect early this year eliminating a long- depressed WTI prices. Not long ago
1  million B/D of production over the standing ban. WTI tracked for USD 10/bbl less than
Brent. Now that supply is growing inter-
nationally, there were days in Decem-
2.5
Production outages ber where Brent sold for a bit less
Spare capacity than WTI.
Million B/D, November 2015

2.0 Another sign of the shift is that work-

ing rigs drilling in North America now
1.5
represent less than half of the rigs work-
ing in the world, falling from 60% at the
end of 2014 to less than 43% at the end
1.0 of 2015, according to the Baker Hughes
weekly rig count.
0.5 Saudi Arabia has established that
it is once again the dominant force in
the world oil markets, and it is plan-
0.0
Iran Libya Iraq Kuwait Saudi Arabia ning for lingering low prices. Its
NOTES: The EIA defines production outages as estimated unplanned crude oil production outages. Spare 2016 budget reduces its sizeable def-
capacity is defined as sustainable production capacity (IEA) minus actual production and outages (EIA). icit by cutting subsidies for every-
thing from energy to water, and it
Iran production expected to come back on line after sanctions end. Sources: assumes an average Brent oil price at
Energy Information Administration (EIA) and International Energy Agency (IEA). USD 37/bbl in 2016, according to John

36 JPT • FEBRUARY 2016

 New-Well Oil Production per Rig (B/D)
Sfakianakis, a Riyadh-based economist 250
800
at Ashmore Group, the Bloomberg news New-well oil production per rig
700
agency reported. Rig count 200
Prices that low will speed the decline 600

Rig Count
of US unconventional oil production, 500 150
which was only marginally profit- 400
able at around USD 50/bbl. Before the 300 100
price decline, US producers were pro- 200
ducing more oil per well drilled, but 50
100
on the downside were the number of
0 0
rigs working (down more than 60%) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
and the production decline rate in
older wells.
For example, in the Bakken, there Legacy Oil Production Change (thousand B/D)
was a 40% average increase in the out- 0
put of new wells, but a more than 60% (10)
drop in the number of new wells drilled (20)
to fill the gap left in output as older
(30)
wells’ production declined. An EIA chart
(40)
did not suggest any improvement in
that rate. (50)
Being the low-cost leader is a role (60)
change for Saudi Arabia, which long (70)
was willing to reduce supplies to sus- (80)
tain prices. But when US production 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
surged and demand growth from China
slowed, it shifted to defending its share
of the market. Daily production per new well drilled in the Bakken (upper ) was up last year
The current situation is similar to but far fewer rigs were working. New production could not keep up with
declines in older wells. Courtesy of the US Energy Information Administration.
other commodity markets, such as the
corn market. When prices go down,
farmers commonly grow more to try to As prices drop, more production is ance of Energy Producers. “They are all
maintain their income. While the rich- required to pay for these politically vital commodity markets for one thing. The
est oil producers have a big price edge programs, which can sustain an over- market structures are much the same for
when it comes to lifting crude, national supply that depresses prices. agricultural commodities as petroleum
oil company profits are needed to pay “There are a lot of similarities” with commodities. The biggest producer in
for everything from energy and educa- farm commodities, said Karr Ingham, a the world has little to say about what the
tion to defense and desalination plants. consulting economist for the Texas Alli- price is,” which is set by the markets.

Petroleum Engineering Graduation Rate Exceeds Demand

P etroleum engineers have sophisti-

cated, precise equations to help pre-
dict and control what flows out of wells.
But when it comes to the number of
trained engineers in the world, guess-
work is required.
Over the past 10 years, the number of
engineers graduating from US universi-
ties with petroleum engineering degrees
has surged. Last year’s graduating class
broke a record set in the early 1980s
boom and, despite the plunge in oil
prices, this year’s class is even larger,
according to an annual survey of petro-
leum engineering enrollment by Lloyd
Heinze, a petroleum engineering pro-
try hiring plans. “The reality is oil com-
panies cannot predict more than 6
months into the future about hiring.
fessor at Texas Tech University. The students we are taking in are in a 4-
The total will not tip down until the to 5-year pipeline,” Heinze said, adding,
next school year, and even then the “Our industry has never figured out how
expected number is about 30% higher to predict this.”
than the largest graduating class during During the late 1970s and early
the 1980s. 1980s, petroleum engineering schools
For professors worried about what trained a generation of engineers now
their students’ job prospects will be nearing retirement age. This oil price
after graduation, it points to a high level downturn is increasingly compared
of uncertainty associated with indus- to that long-lasting period. A series

JPT • FEBRUARY 2016 37

 Student/Faculty US Petroleum Engineering quite quickly,” Heinze said. “We probably
60 Undergrad/Faculty should have peaked enrollment where it
55 Grad/Faculty was about 5 years ago, and we wouldn’t
50 Undergrad/Doctor ratio
have been quite so out of line.”
45 While industry leaders have long talk-
40 ed about not repeating the mistake of
35 graduating engineers that the industry
Ratio

30
does not need, there has been a recent
25
sharp reduction in recruiting by oil com-
20
panies. Heinze has seen commitments
15
to hire graduates from the current class
10
drop to half of what it was just a few
5
months ago.
0
The longer-term question in his mind
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010

2012
2013
2014
2015
2016
2017
2011
Academic Year (2006=Sept 2005–Aug 2006)
While the number of petroleum engineering students surged, the number
of teachers did not, sharply increasing the student-faculty ratio. Courtesy of
Lloyd Heinze, Texas Tech University.
of price shocks hit the industry in the
late 1970s and 1980s, followed by a
stagnant decade defined by low prices,
during which few petroleum engineers
were hired.
The trend changed only after the turn
of the century, when prices began to
rise significantly and the industry react-
ed to the fact that it would need to find
replacements for a workforce nearing
retirement age. For the past decade,
petroleum engineering programs have
been urged to supply the engineers need-
ed for this great shift change. The need
2500
BS 1956–2017
BS 1979–2017
2000
BS degrees granted
to replace retirees, plus the work cre-
ated by the surge in drilling required
for unconventional reservoir develop-
ment, virtually guaranteed that every
graduate could find a high-paying job. It
was an especially attractive option after
the global recession in 2009 led to a
depressed market for graduates in many
other majors.
“We have been overproducing petro-
leum engineering students for the last 10
years compared to what industry would
be normally hiring. But in the oil indus-
try, experienced workers were retiring
US Petroleum Engineering BS Projection
Brown curve is blue curve
shifted back 31 years
2015 1,728 BS
2016 2,082 BS
is how many engineers will the indus-
try need from future graduating classes?
When the petroleum engineering student
graduation rate from 1979 to the present
is overlaid on the period from 1956 to the
present, the recent period showed simi-
larities to the period that ended with the
1980s bust.
One difference is that graduations over
the past 5 years total 8,450, 43% higher
than the comparable historic peak. If the
history match holds true, the industry
could be entering into another extend-
ed hiring drought for college gradu-
ates because the number of jobs is stag-
nant, and so many of them are filled by
young engineers.
One unknown is the number of jobs
available to fill. Heinze is trying to esti-
mate the need, which has not been
done. Variables include the number of
engineers retiring, or finding work in
another industry after a layoff, and the
future of unconventional exploration
and development.

2017 2,023 BS The shale boom offered work for a lot

1500
of engineers because it required mass
producing plans and documentation
for thousands of wells. While oil and
1000 gas companies have said they want to
avoid another hiring drought, they must
weigh that goal against the cost and time
500 required to turn a college graduate into a
productive engineer.
Low prices present a major chal-
0 lenge—finding a way to lower the cost
0 10 20 30 40 50 60
of these wells enough to profitably drill
Number of Years them again—but solving that problem
may well mean a lasting reduction in the
The number of petroleum engineering degrees (BS) awarded since 1979 is
overlaid on the early years of the line showing degrees awarded since 1956. number of workers and wells drilled.
The ups and downs in the recent cycle resemble the shape of the previous While production is steadily growing
boom. Courtesy of Lloyd Heinze, Texas Tech University. in the Middle East, fewer wells are need-

38 JPT • FEBRUARY 2016

ed per million B/D of production, and
with so many skilled workers seeking
jobs, national oil companies have their
pick of experienced talent. National oil
companies in the Middle East are com-
mitted to hiring local talent flowing from
the growing petroleum engineering pro-
grams in those countries. The number
of petroleum engineering students has
also been rising in places such as Brazil
and China.
Future graduation rates will depend
on student choices, which do seem to
have been affected by the downturn. At
Texas Tech, the number of students who growth. He said university administrators
attended an open house for petroleum are unwilling to pay for a hiring surge for a
engineering dropped to 260 in 2015, less program serving an industry where peak
than half of what it had been a year demand has been short-lived. But state
before, Heinze said. colleges are also reluctant to set limits on
Since then, the job market for gradu- student enrollment.
ates has deteriorated further. Last fall, “If we cut enrollment to half what it is
it appeared there would be jobs offered currently, that is about what faculty could
to half of his school’s graduates, but handle and do a good job,” he said. “I am
by December the estimate was fewer really unhappy for the students. I cannot
than 25%. say there was a faculty member in petro-
Reduced enrollment in US programs leum engineering who did not think we
has an upside. The rapid rise in student let this (rise in student enrollments) get
numbers was not matched by faculty away from us.”

Living-Dead Equipment Adds to Oversupply

Global Oilfield Market (USD billion)

T hose who track drilling and fractur- 500

450
ing equipment are apt to mention
400
zombies. That is the living-dead machin-
350
ery still counted as available to work,
300
but more likely now to be used for spare
250
parts or scrapped.
200
In both those equipment markets, one-
150
quarter or more of capacity is expect-
100
ed to disappear over time, but it is a 50
slow-moving sort of destruction with an 0
uncertain outcome.
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Richard Spears, vice president of Spears
& Associates, sees fracturing trucks
massed at a service company repair facil- Oilfield spending is expected to fall for the second year running, which is the
ity in his hometown of Tulsa, but no one first time this has happened in the past 20 years. Chart courtesy of Spears &
Associates.
ever seems to be working on them.
“There has never been a time when
the fleet has not been maintained. Based
on our research, capacity falls by 5 mil-
lion horsepower through the bottom of
the market in the summer of 2016,” said
Spears, who works for a company tracking
the fracturing service business.
That represents about one-quarter of
the capacity of the fracturing business
where the total horsepower indicates how
much water and sand can be pumped into
a well to fracture the rock.
Offshore, there is an even bigger glut
of floating drilling equipment. Many of
those vessels are classified by their own-
ers as stacked, which normally would
mean they are being preserved for future
use. Analysts predict, however, that about Yards filled with idled drilling rigs have sprouted up like forests in Midland,
one-third of the more than 300 of them Texas, and in other places near where unconventional drilling once boomed.
in existence will never return to service, Despite the drop in drilling, production in the surrounding Permian Basin was
even if oil prices rise. still up in 2015. Courtesy of Dan Hill, Texas A&M University.

JPT • FEBRUARY 2016 39

 “When the oil price recovers somewhat,
perhaps to the USD 60–70/bbl, which
we consider a more viable long-term oil
price, we believe there is a market for
200-plus rigs in total, meaning around
100 in the traditional mid- to more shal-
low water depth, and around 100 rigs on
the deepwater side,” said Knut Erik Løvs-
tad, an analyst following oil services for
Fondsfinans. “That means that roughly
100 rigs have to be scrapped.”
There is an oversupply of a wide range
of onshore and offshore equipment,
from drilling rigs to construction ves-
sels, where the equipment built when oil
was at USD 100/bbl far exceeds the likely
future demand.
New equipment is still arriving in some
sectors. For example, the building boom
that doubled the fleet of subsea construc-
tion vessels between 2007 and 2014 is
expected to increase the fleet by 8% in
2016, at a time when there are wide-
spread project delays and cancellations.
Fracturing Capacity
The actual amount of onshore fracturing
capacity lost requires an educated guess
about how this process will play out in
the isolated places where idle equipment
is parked, and the willingness of own-
Service Focus Changes the Cost per Barrel
D uring a protracted period of de-
pressed prices in E&P, the customer
focus for service companies and suppli-
ers shifts to finding ways to reduce the
cost of producing a barrel of oil.
Step one in the process was meet-
ing the demand by operators to dis-
count services and supplies to maintain
customers in a shrinking market. Last
year, cost cuts were quick, often sub-
stantial, and not likely to be repeated
this year.
“There is a limit to that (discount-
ing) where you begin losing capabil-
ity,” said Ethan Phillips, a partner for
Bain & Co., who recently did a report
on changing opportunities for oilfield
service and supply companies. “The
easy stuff, cutting capacity and pric-
ing, came quickly. Now service and
40
ers to maintain it. “Where the 5 million
(horsepower) goes is the question. Some
of it cannot be brought back. It has been
removed physically,” Spears said.
Companies in the pressure pumping
business are being squeezed so hard that
as equipment wears out, idle units are
cannibalized for parts. While these units
could be returned to service by replacing
the missing and broken parts, higher day
rates would be needed to justify the cost
of that work.
That would require demand for more
drilling and fracturing, which is not like-
ly in the US unconventional business for
some time. When the market improves, a
sharp rebound is not expected. The indus-
try has shown it can get significantly more
oil per well drilled by focusing on the best
rock. Increased productivity is likely to
limit demand for drilling and completion
services when the market improves.
Spears sees a recovery in the oil busi-
ness beginning late this year, but a sig-
nificant rebound in day rates for comple-
tion equipment is not likely occur before
late 2017.
Deepwater Rigs
Offshore, many of the rigs facing retire-
ment are old only in comparison to the
equipment companies are looking to
that next stage, which is: How can we
collaborate with our customers to look
for ways to shave costs, promote new
development, and gain efficiency?”
he said.
Optimization used to be associated
with maximizing production. Now it
must offer a way to profitably produce,
even from higher-cost reservoirs.
“The conversation has changed,” said
David Deaton, chief advisor in produc-
tion solutions for Halliburton’s Land-
mark Software and Services. “For the
more nimble operating companies, it is
a call to action to streamline processes
and improve efficiencies.”
An example of that was a producer
that lowered the cost of heavy oil pro-
duction by testing how production held
ones that were a product of the building
boom in rigs and workboats since 2010.
More efficient onshore and offshore new
equipment will likely push older, less effi-
cient machinery out of service because
the cost of upgrading it is too high,
Løvstad said.
Although many of the older rigs are
counted stacked for future use, “we
do not believe that these rigs will be
coming back to the market,” he said.
The biggest losses will be mid-water
rigs—floaters built for water depths
from 500 to 3,000  ft. Jobs in water
deeper than 1,500  ft will general-
ly be done by newer deepwater rigs,
he said.
Owners of the living-dead rigs have
little reason to scrap them soon because
steel prices are down, reducing the
value of the scrap, and removing them
from the fleet may trigger repayment
of loans secured by the equipment,
Løvstad said.
“We have assumed that it will take a
couple of years to clean out the excess
supply, so we expect the poor market in
terms of the supply/demand balance for
rigs to last through 2017, with a poten-
tial recovery in day rates in 2018–19,”
he said.
up when steam injection was reduced,
and discovered that reducing one of its
most expensive inputs had a negligible
impact on oil production, making it an
attractive tradeoff.
“Even though efficiency is a continu-
ous goal, operators may not have con-
sidered reducing the steam plant out-
put, as long as they could produce any
amount of oil at USD 100/bbl with a
profit,” Deaton said.
There is an increased focus on reduc-
ing production costs because drilling
for more oil is simply too expensive,
particularly if it is heavy oil. To limit
costs, service company customers want
to get more value from the equipment,
software, and data they own. Better
measurement and analytics can be an
attractive option, but only if it can be
JPT • FEBRUARY 2016
managed by the operations and engi-
neering staff, which has seen its work- SERVICE DECLINE BREAKDOWN
load grow as companies have cut staff,
Change in
Deaton said. Type of Service Annual Revenue
(%)
Next Steps
The industry cannot afford to abandon Contract Compression Services 0
exploration and development because it Geophysical Equipment and Services –1
needs to make up for the natural decline Artificial Lift –4
in older wells, so new approaches are Well Servicing –5
required. An obvious target is deep-
Surface Equipment –5
water development, where the average
Subsea Equipment –5
cost per barrel is even higher than shale
plays onshore and major cost overruns Specialty Chemicals –6
have been common. Production Testing –6
There have been early examples in the Floating Production Services –6
North Sea and Gulf of Mexico, where Offshore Contract Drilling –7
projects are being engineered to sim- Petroleum Aviation –7
plify designs. Complexity and over- Directional Drilling Services –9
customization are on the list of things
Supply Vessels –9
causing blown budgets and timelines.
Cementing –9
Phillips said the options include more
modest designs for production systems, Wireline Logging –9
limiting modifications of the compo- Surface Data Logging –9
nents used, and buying systems in the Drilling and Completion Fluids –9
form of standardized modules designed Completion Equipment and Services –9
by the supplier. Coiled Tubing Services –10
The financial constraints require Hydraulic Fracturing –10
more widespread use of management Solids Control and Waste Management –10
approaches, such as designs based on
Logging-While-Drilling –11
a specific price point, rather than set-
Land Contract Drilling –11
ting the cost based on the design, and
zero-based budgeting where the full Rental and Fishing Services –11
cost must be justified rather than the Drill Bits –11
cost beyond a benchmark level. Offshore Construction Services –12
Casing and Tubing Services –13
Data Insights Inspection and Coating –14
Operators are looking for ways to get Unit Manufacturing –15
more value from available hardware and
Downhole Drilling Tools –16
information. An example of that is find-
Rig Equipment –18
ing ways to get more out of the data
Oil Country Tubular Goods –20
flowing from operations.
For example, systems that sift through
data flowing from pumps seek trends or The impact of spending reductions in exploration and production vary by sector
anomalies that may point to opportuni- in 2016. Courtesy of Spears & Associates.
ties to increase efficiency or avoid cost-
ly failures, said Deaton, who is the tech- to information that will help them be “Automating the data activities and
nical advisory council chair for the SPE more productive, such as knowing in applications in this way will lead to more
Petroleum Data-Driven Analytics Tech- advance what is likely wrong with a efficient use of engineers’ time, less
nical Section. Pattern recognition soft- pump and what parts will be required to time searching for tools and data, and
ware can be used to seek out ways to fix it. Getting that information into the therefore reduced nonproductive time,”
reduce downtime and operating costs hands of field workers requires organi- Deaton said. “The staff can be more effec-
on a limited budget. zational changes to ensure staffers see tive in looking for and applying more
Over time, the goal is to create acces- the value of the tools, know how to use optimization opportunities …(which) is
sible databases from isolated spread- them, and have the resources available to also called for in these times of reduced
sheets, which can offer workers access address problems. operations and engineering staff.”

JPT • FEBRUARY 2016 41

 Financial Pressures To Drive Industry To Consolidate
P ressure is growing this year for
exploration and production (E&P)
companies to “face the reality of a pro-
longed period of low prices,” said Alan
Cunningham, technical director for Gaff-
ney, Cline & Associates.
Working for a company whose core
business is calculating the value on oil
and gas reserves has given him a view
of how the financial pressure on compa-
nies has increased over the past year as it
has become increasingly obvious that oil
prices are going to remain low.
For investors, this hurts earnings and
reported reserves for E&P companies in
high-cost plays. While this can apply to
deepwater or heavy oil projects, it is par-
ticularly true in US shale because of how
reserves are booked, he said. Lower pric-
es can depress two key measures of credit
worthiness: cash flow and the value of oil
and gas reserves.
Because reserves are based on how
much oil and gas can be profitably pro-
duced, companies in plays where the cost
of adding production is greater than the
current value of oil and gas are facing
reserves reductions and impairments,
which is the term used for reductions in
the value of oil based on formulas used by
lenders to evaluate loans.
“Impairments are more likely to occur
first in areas with higher costs and lower
margins, which is why the North Ameri-
can unconventional and heavy oil assets
60
50
Percent of Responses
40
30
20
10
0 them expected their companies to close
Large increase
in both M&A
activity and
defaults/bankruptcies
A survey of those in exploration and production in the US states, including
Colorado and Oklahoma, found they are feeling more pressure from lenders
and expect that will result in increased numbers of acquisitions and failures
this year. Courtesy of the Federal Reserve Bank of Kansas City.
42
are particularly vulnerable,” Cunning-
ham said.
Gaffney, Cline, & Associates’ model of
the Eagle Ford shale concluded that only
two out of 10 major operators in the south
Texas formation were making a profit on
new wells last fall. For the majority of
them, the break-even price is more than
USD 50/bbl. Last fall, lower prices led to
reduced reserve values for about 75% of
the companies working there, he said.
Since then, prices have fallen further,
adding to the pressure from investors
and lenders to take action.
“If 75% of the companies were nega-
tively affected by evaluations last fall, and
(there are) more to come in the spring, I
would think a lot of them would be either
selling or not spending,” he said.
The corrective actions can range from
refinancing or selling assets, from selling
the company to filing for bankruptcy. But
so far, there has been little action. “Take
away a few mega-deals and 2015 would be
characterized as a down year, when there
were more potential buyers than sellers,”
Cunningham said, adding “that condition
could be reversed in 2016 as more com-
panies will be forced to consider offers.”
Corrections Coming
The need to act will be strongest for
those lacking the cash flow, or the abil-
ity to raise the money needed to continue
operating. Those with insufficient cash
Large increase Little change in Little change
in M&A but M&A but large in both M&A
little change in increase in activity and
defaults/bankruptcies defaults/bankruptcies defaults/bankruptcies
flows can expect a chilly reception from
lenders. Financial players with money to
invest are taking a harder line than they
did a year ago when investors bought bil-
lions worth of stocks and bonds from US
unconventional operators. Weak compa-
nies “will be subject to predatory offers,”
he said.
Signs of the transition are comments
from executives in investor conference
calls about the importance of limiting
investment to the amount of cash gener-
ated by operations, and announcements
of debt exchange offers by companies
proposing deals to investors hoping to
extend the due date on loans and perhaps
reduce the amount owed.
They are responding to lenders
whose measures of loan risk have
surged. Gaffney, Cline describes it as a
three-step process:
◗ In the spring of 2015, companies
and lenders waited to see if
lower oil prices would last
long enough to require reductions
in reserve estimates used for
financial reports and lender
evaluations.
◗ The next step came in the fall of
last year when lenders began to
reduce the borrowing bases—the
formula that includes reserves
used to evaluate loans on the
books—and the vast majority
were “negatively affected” by this
process.
◗ Finally, this spring comes the
answer to the question: “And then
what?” At that point, the pressure
to act will likely begin to thaw the
freeze in deal making.
A survey of energy executives last fall
by Ernst & Young found that 88% expect-
ed the oil and gas deal market to improve
over the next 12 months, and 59% of
acquisitions over the next 12 months,
which is double the response from a sur-
vey conducted 6 months earlier.
Lenders have proceeded cautiously
because of the magnitude of the losses
that could be triggered by an aggres-
sive move to demand payment on all
the loans where borrowers are not com-
JPT • FEBRUARY 2016
plying with the terms. But the level of
impairments was huge when oil was
trading around USD 50/bbl, and it has
fallen from there.
“The number and volume of them is
huge compared to any prior year,” said
Paul O’Donnell, principal equity ana-
lyst for consultancy IHS. Three-­quarters
of the companies surveyed by IHS were
affected, for an industry total of USD 100
billion in reduced value.
So Many Jobs Have Been Cut It Is Hard To Count Them All
T he impact on workers from the glob-
al downturn is so large it is diffi-
cult to track. At the high end of the job
loss estimates is John Graves, owner of
Graves & Co., who estimated the num-
ber of jobs lost in the oil and gas indus-
try at more than 250,000 at year end,
and rising.
There are other estimates, but most
cover smaller areas and report lower
totals. The US Federal Reserve Bank
of Dallas estimated the US oil and gas
industry employment is down 70,000 in
December, while Oil and Gas UK put the
total in the United Kingdom at 65,000
earlier this fall, before a large round of
late-year layoffs.
In Texas, the number of E&P jobs loss-
es totaled 56,000 through September,
an 18% drop in employment from the
end of 2014, based on an estimate by
Karr Ingham, a consulting economist for
the Texas Alliance of Energy Producers.
That total is based on numbers from the
monthly employment reports from the
Texas Workforce Commission.
Economic reports use broad job cat-
egories that make it hard to isolate oil
and gas company workers, or determine
which are in E&P.
“When the upstream oil and gas econ-
omy in Texas entered into the current
contraction, we estimated jobs lost over
the length of the downturn could total
40,000–50,000,” Ingham said. “We now
appear to be well beyond that estimate,
and the end is not in sight.”
US job losses loom large because the
US drills and fractures a disproportion-
ate share of the world’s wells. The US rig
JPT • FEBRUARY 2016
Late last year, some asset deals began
to occur. Companies with high debt loads
were beginning to work with bondhold-
ers to restructure debt. O’Donnell said
that at the time most were small com­
panies, though the problems now are
more widespread.
One source of cash flow that sustained
the industry in 2015 was hedging. Last
year, many US independents used futures
and options contracts to lock in prices for
count dropped from 1,811 rigs working at
the end of 2014 to 698 at the end of 2015,
according to Baker Hughes. There were
419 rigs working in the Middle East in
November, slightly higher than the previ-
ous year, according to the survey.
The 60% drop in rig use in the US
triggered reductions in a wide range of
jobs ranging from completions crews to
drilling engineers. The outlook for North
America in 2016 is more sharp cuts in
E&P spending, more consolidation, and
rising numbers of bankruptcies. All of
those point to more job losses.
Graves started doing his own estimates
of job losses because the reports he saw
did not look right to him. “We thought
(job losses) were being underreported,”
Graves said, adding that his research
confirmed his suspicions.
To explain his approach, Graves shared
a key part of it: a spreadsheet listing a
year’s worth of job reduction announce-
ments filling rows from 6 to 344. By mid-
December, there had been 144 job cut
announcements from service companies,
88 from E&P operators, and 77 from sup-
pliers. Some companies show up multiple
times, including three majors with five or
more announced rounds of reductions.
The hundreds of rows of job loss
announcements fail to catch all the cuts.
Private companies are less likely to dis-
close job loss figures than public com-
panies. And many employment reduc-
tions are below the 50-job threshold set
by the US law requiring advance notice
of job cuts.
To fill in the gap, Graves assumes that
every drilling rig laid down represents 30
a relatively high percentage of their pro-
duction at around USD 90/bbl.
This year, only about 11% of the pro-
duction of a group of 48 North Amer-
ican independent E&P companies sur-
veyed by IHS was hedged. Those hedges
will pay less because they are locking in
an average price of USD 69/bbl. “Going
into 2016, it is more important than ever
to be well hedged. It is lower than where
you want to see it,” O’Donnell said.
JOB CUTS FROM 2015
Oil and Gas
Job Cuts
Worldwide Numbers Percent
Service 120,488 47.76
Drilling 40,699 16.13
Supply 41 , 8 1 4 16.58
E&P 48,050 19.05
Midstream 1,094 0.43
Legal Services 109 0.04
TOTAL 252,254 100.0
workers, and to avoid double-counting
he subtracts the cuts announced by drill-
ing contractors.
He said that is a conservative assump-
tion. Offshore rigs employ more people.
Most announcements do not disclose
contractors let go, and self-employed
people are not counted in govern-
ment surveys of people on business
payrolls. Also, many workers are tak-
ing severance packages, so they do not
show up in surveys based on the num-
ber of persons filing for unemployment
benefits, which are used for monthly
government reports.
More losses are likely this year because
a wave of consolidation is expected,
Graves said. And the hardest hit are like-
ly to be on the E&P side.
“The service companies sort of front-
line all of that” cost cutting, Ingham said.
“Their employment is more volatile.
They respond quicker and in a more dra-
matic fashion, and then we see the effect
on (oil and gas) producing and operat-
ing companies.” JPT
43
 Downturn Represents Stress Test
for Unconventional Hydraulic
Fracture Modeling
Trent Jacobs, JPT Senior Technology Writer

D
evelopers of the latest genera- and much younger startups are also in tainability to the flagging shale business
tion of unconventional hydrau- the hunt, such as Sigma3 and FracGeo, by engineering wells that produce more
lic fracturing models are hop- who teamed up in the summer of 2014 oil and gas from fewer wells, with fewer
ing that current weak oil and gas prices to introduce and market new unconven- fracturing stages.
will generate newfound interest in their tional reservoir models. “People are struggling to make a prof-
software technology. Several other players are pushing it with the current oil price just by drill-
After years of rewriting old programs their own approaches but the concept ing every location,” on a geometric grid,
and coming up with new ones, the model- they all share is that if shale produc- said Colin Sayers, an adviser with Sch-
ers say they have advanced the industry’s ers can predict what subsurface prop- lumberger who works on the company’s
ability to digitally simulate how shale erties dictate a quality completion, they unconventional modeling and seismic
reservoirs react to hydraulic fracturing. can land wells in geologically and geo- technologies. The approach he is pitch-
If the technology works, they may have mechanically favorable sweet spots and ing is to “put the wells in the right place
overcome the major limitations that have spend their capital on initiating frac- with the right orientation, and choose
stymied the adoption of fracture model- ture stages only in the most likely-to- where you should complete based on data
ing since the onset of the North American produce sections of a well. The tech- rather than just guesswork.”
shale revolution. nology could also reduce the financial One of the most important metrics
Those working on this new front pain incurred through time-consuming, of success is if the software can accu-
include service company giants such as trial-and-error pilot programs used rately simulate the interaction between
Schlumberger, which in recent years has to determine a particular field’s best hydraulic fractures and the natural frac-
built and acquired a number of modeling, completion practices. tures that act as the dominant transport
simulation, and 3D seismic technologies Ultimately, the technological goal is to mechanism for hydrocarbons in uncon-
to capture this budding market. Smaller lower break-even costs and deliver sus- ventional reservoirs. This objective is far
simpler to understand compared to the
MillerGrid – POIL
underlying science involved, which some
1023.187317
859.316711
argue is not fully understood yet.
695.446106
531.575500 “We don’t have the physics to three
367.704895
203.834305 places past the decimal point, but we are
close enough. The number one issue is
that we are lacking the data,” said Neal
Nagel, chief engineer at Oilfield Geo-
mechanics, who has tracked the mod-
eling sector for nearly 30 years and is
familiar with the latest approaches
being introduced.
“Even if we have the physics, we need
the data—and the data take time and
money,” he said.
Some of the data will come relatively
easy and cheap. Many operators are sit-
ting on mountains of geologic and pro-
A 3D simulation of a horizontal wellbore combined multiple sets of data duction data that will need to be sifted
including seismic, pressure distribution, and microseismic to provide the through in order to be useful in the mod-
operator with a better understanding of the geomechanics involved with
the completion design. The companies developing these simulations with
eling environment. Some will have to
advanced computer models are hoping that the shale industry begins to take obtain new data by way of sophisticat-
notice of how the technology may improve production results. Image courtesy ed well logs or seismic surveys that cost
of FracGeo. several millions of dollars, yet in some

44 JPT • FEBRUARY 2016

cases, still cost less than a single hori-
Well L
zontal well. BOPD=439
Well J
But right now, there are only a limited BOPD=646
RISC=59%
number of case studies available to help RISC=26% Well K
BOPD=447
convince shale producers that fracture RISC=58%
modeling is the silver bullet solution to
Well G
all of their problems. BOPD=859

Predicted 90-Day IP (BOPD)

900
Schlumberger says it achieved average 800 RISC=21%
production gains of 200% to 300% in 700 Well I
600 BOPD=762
stages where its geomodeling program 500
Well H RISC=24%
was used to compare engineered comple- 400
BOPD=833
300
RISC=22%
tions vs. geometrically completed stages 200
in the same well operated by an undis- 200 300 400 500 600 700 800 900
closed operator in the Niobrara Shale. Measured 90-Day IP (BOPD)

The software technology was also used to

achieve a 35% higher initial production
rate in a Marcellus Shale gas well oper-
ated by Seneca Resources.
FracGeo says its model successful-
ly identified the need for variable well
spacing and refracturing candidates for
Southwestern Energy in the Fayetteville
Shale. The case study will be presented
at this month’s SPE Hydraulic Fracturing
Conference and Exhibition in The Wood-
lands, Texas.
The company is trying to prove
to the industry that its geomechan-
ical models can drive well perfor-
mance and, over time, may help illumi-
nate the shadowy science involved with
hydraulic fracturing.
“The whole process here is to under-
stand what we are doing to the rock as we
Using a so-called geologic sweet spot modeling program, shale operators
can try to predict production based on their proposed well trajectories
and placement. This example from the Bakken Shale shows the Relative
Intercepted Shale Capacity (RISC) which indicates the percentage of each well
that does not move through “good rock” and can be used with another model
to estimate the geomechanical effects of hydraulic fracturing efficiency. The
inset shows the correlation between the predicted initial production rates to
the measured production rates. Image courtesy of Sigma3.
frac it,” said Ahmed Ouenes, chief execu- geologic variations found in a lateral
tive officer (CEO) and founder of Frac- wellbore several thousands of feet long,
Geo. “And then from that understanding, the standard practice is to arbitrarily per-
we can decide multiple things: either skip forate into the reservoir about every 50 ft
stages, change the treatment, change the to 100 ft and group those “perfs” into
spacing, or the sequence.” sections called fracture stages. Identical
stimulation treatments are injected into
Completion Customization 30 or 50 of these stages.
Such decisions would represent a degree Widely cited studies show that as a
of completion customization rarely seen result of these geometric completions,
in the shale industry. Despite the many 40% to 60% of stages produce little
Pressure
(psia)

Stage Stage 1023.2

1 1 813.14
2 2
603.08
3 3
4 4 393.03
5 5
182.98
6 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13

(a) (b) (c)

Based on the same horizontal well, a geomechanical model, microseismic data, and a reservoir simulation are all used
to improve the ability to model hydraulic fracture complexity. The hope is that by combining diagnostic data and
simulations, computer technology can help answer critical questions about well spacing, reserve estimates, and other
issues with which the shale industry continues to struggle. Images courtesy of FracGeo.

JPT • FEBRUARY 2016 45

 or no hydrocarbons, while 30% of the
stages represent 80% of a well’s entire
production. Baker Hughes estimates that
ineffective stages have come at an annual
cost upward of USD 40 billion.
The alternative being pitched by the
model developers are called geologic or
engineered completions, which concen-
trate stages where the data suggest both
hydrocarbons and the conditions need-
ed to effectively fracture the rock coex-
ist. This approach requires a greater than
usual emphasis on detailed reservoir
data regarding natural fractures, rock
mechanics, brittleness, bedding planes,
in-situ stresses, lithology, etc.
“On the unconventional reservoirs, we
kind of lost this geoscience input for
many years,” explained Peter O’Conor,
vice president of integrated solutions and
business development at Sigma3. “People
were doing factory drilling and the oil
price was very high, and if 40% of the
stages were not contributing to produc-
tion, it was still a profitable exercise.
“Eventually, we saw as an industry that
a percentage of our wells were really poor
producers, some were okay, and some
were really good,” he said. But since the
end of 2014, it has become increasingly
clear that most shale producers can no
longer rely on the law of averages to bal-
ance the losses on the bad wells with the
profitably of the good ones. Even when
prices were at their highest, it has been
said that only a third of a company’s shale
wells supported an entire development.
Stress Matters
The pressure to rapidly improve that mar-
gin of error has forced producers to zero
in on geologic sweet spots, or sections of
the formation which are likely to produce
the most oil and gas. However, “There
are a lot of wells that you cannot explain
entirely with geological sweet spots,” said
Ouenes. “Once you have good geology,
you would also like to be fracking into a
good geomechanical condition.”
He explained that a primary indica-
tor of a geomechanical sweet spot is a
zone with low differential stress. Frac-
Geo has developed a program that can
quickly generate a map to identify where
these stress zones are along a proposed
wellbore path. Areas with the lowest dif-
46
ferential stress are most likely to yield
complex fracture networks, whereas
areas with higher differential stress are
less likely.
Side-by-side comparisons of data from
microseismic surveys and the stress maps
reveal that areas with the most micro-
seismic events are concentrated where
there is the lowest differential stress. “In
the high-differential stress zone, nothing
much happened,” when uniform fractur-
ing treatments were applied, Ouenes said.
Logging tools can be run inside a well
to detect these stress zones but only
around the near-wellbore area, not into
the far field of the reservoir. By model-
ing the entire stress field before a well
is drilled, engineers can begin to under-
stand how shifting its placement may
improve their odds of achieving a com-
plex fracture network.
If an engineer decides not to move a
proposed well, they would at least have a
rough idea that in high-differential stress
zones fracturing fluids may need to be
pumped at higher rates, or at larger vol-
umes, or a different proppant is needed,
or that they should avoid fracturing into
those zones altogether.
This type of stress modeling also
applies to refracturing. Once an area of
the reservoir has been depleted through
years of production, the stress field
inside the reservoir can switch direc-
tion, a phenomenon known as stress
rotation. “The maximum stress direction
is now the minimum stress direction,”
explained O’Conor of Sigma3. “And so
when you restimulate, you open up virgin
rock, and lo and behold, the production
comes back to what it originally was.”
But the process of refracturing remains
a tricky business because of the uncer-
tainties involved with where and exactly
how to apply it. Using production histo-
ry data, completion data, and seismic as
inputs, modeling may simplify the pro-
cess of choosing which wells and which
stages to refracture.
Another potential use for these models
involves simulating the effects of stress
shadowing that develops in the reser-
voir when sequenced fracturing oper-
ations are used on pads with multiple
wells. Stress shadows are an effect of the
near-wellbore stress field being altered
by each stage of hydraulic fracturing and
they can have dramatic impacts on the
results of subsequent fractures in the
same well or offset ones.
For the past few years, operators
have been experimenting with these
sequenced techniques, called “zipper
fracs,” “parallel fracs,” and “sequential
fracs,” and have sometimes seen produc-
tion benefits due to the effects of stress
shadowing. However, the trial-and-error
approach has provided little explanation
as to why a given fracturing sequence is
better than another.
Without clear answers, the primary
driver for sequenced fracturing has been
the operational efficiency achieved when
crews and equipment are used to com-
plete multiple wells in quick succession.
The hope is that through geomechan-
ical simulations of stress shadowing,
operators could have the ability to select
sequences that also result in enhanced
production and lower well costs.
Seeing More
with 3D Seismic
Microseismic is among the most useful
and popular technologies to emerge from
the development of shale. Among other
things, it has enabled the industry to
understand stress shadowing, refractur-
ing, and has illuminated the variability of
fracture stage production. But as Sayers
of Schlumberger notes, “To get micro-
seismic data, you have to drill a well.”
The best way to get valuable geome-
chanical information without first drill-
ing a well is through a 3D seismic sur-
vey. For Schlumberger and others, 3D
seismic data have become a major driv-
ing force behind the accuracy of their
predictive models.
But until about 3 or 4 years ago, such
data were hard to come by as few shale
producers had run 3D surveys across
their acreage. Since then, there has been
an uptick in 3D seismic acquisition thanks
to the adoption of geosteering technolo-
gies that are used to ensure a wellbore
follows the boundaries of the target for-
mation and for sweet-spot mapping.
For modeling efforts to really take off,
this growing library of 3D data will be
critical because it provides two reservoir
inputs needed to run many of them: the
JPT • FEBRUARY 2016
Introducing a new controlled optimization
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 Pre-Modeling
These charts show how data-driven software is used to identify key patterns and optimize horizontal well completions
in shale reservoirs. The complex processes use several modeling programs to predict production results, completion
quality, and analyze uncertainties. Images courtesy of Intelligent Solutions Inc.
in-situ stress state and a description of
the natural fractures. Historically, this
type of data has mattered more to geo-
physicists than completion engineers,
which is something Schlumberger is hop-
ing the success of its models can change.
“To most engineers, seismic is a wig-
gle—so we don’t want to deliver wig-
gles,” said Sayers. “What we are trying to
do, in a nutshell, is to make seismic a tool
for the engineers.”
But applying 3D seismic to heteroge-
neous shale formations is a much more
difficult task than it is for conventional
reservoirs. The mix of clay, mineralized
crystals, natural fractures, and hydro-
carbons all cause seismic waves to be
affected as they move through the shale
formation. This has led Schlumberger
to develop a new way to interpret waves
after they are received.
This process, called orthotropic inver-
sion, has enabled the company to quan-
tify both the abundance and orientation
of natural fractures and the stress state in
the reservoir. With the seismic inversion
working “hand in hand” with a geome-
chanical model, Sayers said the change in
48
Modeling
spatial variability of the stresses and the
ease of fracture initiation and propaga-
tion may be predicted more reliably.
Because the stress field around a well-
bore interacts with natural fractures,
each fracture stage has the potential to
affect the outcome of the one next to it.
This means two fracture stages could be
communicating via a connected natural
fracture network and thus doing the job
that a single fracture stage could do.
In wells where there is a strong ten-
dency for stages to communicate, mod-
eling could be used to cut down on the
number of stages. For example, a well
with 25 strategically placed stages might
be able to produce as much hydrocarbons
as a well with 35 evenly-spaced stages.
“If the completion cost represents 70%
of the cost of the well, that reduction in
number of stages represents almost a
20% cost saving for the considered well,”
said Ouenes.
Seeking Adoption
As promising as today’s state-of-the-art
models sound, there is reason to be skep-
tical about their chances of becoming
Post-Modeling
a must-have technology for producers.
The first commercially available uncon-
ventional fracture models were not up
to the task because they were based on
codes originally developed in the 1980s
and 1990s for conventional reservoirs
that assumed hydraulic fractures in shale
would be bi-wing and symmetrical, which
they are not.
“The industry saw that the simulation
tools were lacking in some areas, which
gave an opportunity for entrepreneurs
and universities to jump in,” said Nagel of
Oilfield Geomechanics. “Now, it is going
to take a period of time for the industry to
accept and recognize the benefits, as well
as potentially the limitations, of some of
these newer codes.”
Nagel, who is also an SPE Distin-
guished Lecturer on the topic of stress
shadowing, said that, based on the his-
tory of unconventional fracture modeling
thus far, he expects only one or two out
of the half a dozen new approaches to be
successfully commercialized. He believes
if a major operator adopts fracture mod-
eling and publicizes maybe a year or two
of strong results, others will follow.
JPT • FEBRUARY 2016
 The big challenge Nagel foresees is
that if collecting the data costs too much
money, and calibrating the models takes
too long or is too cumbersome, shale pro-
ducers may move on once again regard-
less of the value proposition.
“Even if you have a better mousetrap,
what does it take to convince the indus-
try?” he asked. “They have to make an
impression by clearly increasing produc-
tivity and clearly reducing costs, other-
wise it’s just going to be a sort of research
tool—which is the mentality I get from
most of our clients right now.”
And even if the modeling technolo-
gy works as advertised, there is concern
that the notoriously change-averse cul-
ture of the oil and gas industry repre-
sents yet another significant hurdle. “We
need management to look at their orga-
nizational structures and how they could
more optimally adopt new workflows and
new technologies without some of the
barriers like, ‘This is the way we’ve always
done that kind of thing,’” O’Conor said.
Another Paradigm
There are routes being taken in the mod-
eling sector other than the geomechani-
cal or numerical approach. One of them
is a data-driven model developed in 2011
by Shahab Mohaghegh, president and
CEO of Intelligent Solutions. So far, the
model has been used in the Eagle Ford
Shale and the Niobrara by Anadarko, the
Marcellus Shale by Shell, and in the Utica
Shale by Total.
The Intelligent Solutions model relies
on data mining programs that predict
the performance of well and completion
designs without trying to answer ques-
tions about the size and complexity of
induced hydraulic fractures as the geo-
mechanical models try to do.
“The paradigm shift is to complete-
ly abandon this way, or this approach
to modeling,” he said. “When you don’t
understand the physics, or your under-
standing of the physics is very limited,
then you try to use the data.”
The viewpoint that the industry does
not know enough about the science of
hydraulic fracturing puts Mohaghegh at
odds with others in the modeling com-
munity. He maintains that the unresolved
issues about how hydraulic fractures
JPT • FEBRUARY 2016
interact with natural fractures make it
“too complicated for us to mathematical-
ly model it,” and those who attempt this
“grossly approximate things to a level of
irrelevance and lack of validity.”
SPE Faculty
Mohaghegh, also a professor of petro-
leum and natural gas engineering at West
Innovative
Virginia University, believes the key to
accurate modeling involves “hard data” Teaching Award
including fluid types, injection rates,
proppant types, and volumes used in pre-
vious hydraulic fracturing operations. It
also includes information about the con-
struction of those wells, the reservoir’s
characteristics, and production history.
“The beauty of it is that all of this data
is available to every company that has a
Apply today!
shale asset,” he said. “They probably do
not realize what a treasure of data they This award recognizes
are sitting on, the value of it, and how
much we can learn from it.” petroleum engineering
The model is validated using real pre-
production data and artificial intelli- faculty who have
gence, or “machine learning,” to see if
it can replicate the actual results of the demonstrated innovative
wells on production. Intelligent Solutions teaching techniques,
takes the data used to construct and stim-
ulate those existing wells to build mul- but also encourages
tiple models to predict 30-day, 90-day,
6-month, and 12-month production rates. and equips others in
Mohaghegh said the accuracy of the
models increases from around 75% for academia to use similar
the 30-day model to 85% to 90% for the techniques.
12-month model, which he claims is sig-
nificantly greater than what other mod-
eling technologies offer. Once there is a
good level of confidence achieved in these
models, they can be adjusted and tweaked
to see what changes may result in comple-
tion optimizations for future wells in the
same area.
He compared this way of building a
model to the way models are built for Application Deadline:
driverless cars or autopilot systems in
commercial aircraft. He also uses the 15 April
challenges of the pharmaceutical indus-
try as an analogy.
“When they want to make drugs, they To learn more and apply, visit
have some measurements and some www.spe.org/go/innovativeaward.
ideas, but nothing is precisely, determin-
istically, or mathematically modeled in
medicine,” he said. “But we know a lot
about the human body and how it func-
tions, and so dealing with hydraulic frac-
turing and production optimization in
shale is pretty much like that.” JPT
 A wellsite generator from one of Arrow
Energy’s coalbed methane development
projects in the Surat Basin in Queensland. The
high cost of conventional logging methods
have forced the company to consider less
expensive options that may limit the project’s
economic value or increase risks in the
operation. Photo courtesy of Arrow Energy.

Understanding Uncertainty
and Risk in Capital Projects
Stephen Whitfield, Staff Writer

T he SPE Asia Pacific Unconventional

Resources Conference and Exhibi-
tion held in Brisbane last November fea-
tured a special session, “Megaprojects:
Past, Present, and Future,” that focused
on some of the key issues facing mega-
projects in the Asia Pacific region. Panel
speakers discussed the main impedi-
ments to megaprojects, resource acqui-
sition and management, and the project
management skills and business climate
in the region.
Another topic the speakers addressed
was the role of uncertainty and risk in
sanctioning megaprojects. In an environ-
ment where more than half of all projects
are facing cost overruns, schedule delays,
or both, the need to recognize problem
areas prior to sanction is as great as ever
(Ernst and Young 2014).
One way to improve decision making
for megaprojects is to understand, quan-
tify, and mitigate risk and uncertainty. To
do that, exploration and production com-
panies are spending money to gather and
analyze the necessary data.
Steve Begg, a professor of petroleum
engineering and management at the Uni-
versity of Adelaide and a panelist at the
megaproject special session, said a com-
pany that is biased toward risk aversion
or risk-seeking behaviors faces a worse
long-term outcome than companies that
take a risk-neutral, or an expected-value,
approach to decision making.
“If you’ve got large degrees of uncer-
tainty but you’re unbiased, then one proj-
ect might fail but another one might be
brilliant, and if you look at a collection of
decision outcomes in a corporation, you’ll
be well ahead. So uncertainty isn’t the
problem. It’s bias,” he said.
The final investment decision often
involves three elements: an owner’s goals
for the project, the tasks an operator can
realistically execute within a project, and
the information an operator has about the
project. Begg said a problem most compa-
nies face is that the information they have
is skewed toward desirable outcomes
such as lower costs, lower construction
times, and higher production totals.
Begg said that faulty estimations are a
measure of uncertainty, and risk is a pos-
sible consequence of uncertainty. A com-
pany that makes optimistic estimations
prior to sanction is not engaging in risk-
seeking behavior, and a company that
makes cautious estimations is engaging in
risk-averse behavior.
Uncertainty Modeling
To help reduce uncertainty in decision
making, Begg proposed a holistic and
probabilistic approach embedded in a
decision support system. This approach,
the scholastic integrated asset model
(SIAM), includes a technological compo-
nent that integrates a variety of evalua-

50 JPT • FEBRUARY 2016

tion and decision-making tools as well
as a modeling philosophy that takes into
account the magnitude of uncertainty
in a decision.
The SIAM is designed to identify the
uncertainties that impact decisions the
most, value the acquisition of informa-
tion, and encourage flexibility in forward
plans to mitigate and exploit uncertain-
ties (Begg  2013). It contains six elements:
◗ Simplified component models for
each part of the decision-making
process
◗ A Monte Carlo simulation engine
◗ Modeling language for
customization
◗ The incorporation of
interdependencies between
components
◗ The implementation of decision
logic
◗ The updating of information as a
result of learning
By integrating the technical and busi-
ness aspects of decision making, the
SIAM establishes a value-driven focus in
the work of multidisciplinary asset teams.
Petrobras recently proposed the devel-
opment of an integrative method to fore-
casting production development projects
(PDPs) that incorporates different uncer-
tainty areas such as the association of the
reservoir and activities schedule.
A typical PDP workflow involves paral-
lel schedule-uncertainty analysis. On one
track, companies analyze a set of proba-
ble schedules generated by a Monte Carlo
simulation to determine a set of compli-
ance dates for first oil and ramp-up activ-
ities. On the other track, they simulate
representative reservoir probabilistic
models based on a deterministic sched-
ule and generate a probabilistic net pres-
ent value (NPV). This leads to a second
output of a range of probable outcomes
and economic indicators reflecting the
uncertainties in a deterministic schedule
(OTC 26309).
Petrobras’ approach would merge the
two tracks, providing a complete set
of probabilistic production curves that
encompass all possible schedules in every
associated discipline.
The schedule-uncertainty analysis fol-
lows a nine-step sequence of activities.
The first step is a qualitative analysis and
JPT • FEBRUARY 2016
documentation of scheduling risks. The
second step is the development of a spe-
cific schedule based on the work break-
down structure highlighted in Fig.  1. In
the third step, risks are matched with
schedule activities, and in the fourth step
probabilistic estimates for the duration of
schedule activities are obtained through
databases or interviews with subject mat-
ter experts. These estimates are set as the
inputs in the model.
The fifth step in the process is the attri-
bution of each probabilistic estimate to
a given schedule activity, and the defini-
tion of points of interest that are then set
as outputs. The sixth step is the running
of a schedule simulation with appropri-
ate software. In the seventh step, a results
evaluation through the output’s probabi-
listic distributions and sensitivity analysis
helps define the inputs that could have the
greatest impact on a project. In the eighth
step, a risk assessment associated with
the most impactful variables to first oil
and ramp-up helps determine the most
important risks within the project.
The final step is a review of the risk-
response plans made during the qual-
itative risk analysis for maintenance,
monitoring, and control, thus restarting
the evaluation cycle for a simulation of
mixed scenarios.
Petrobras ran 5,000 simulations for
an unnamed PDP using the Monte Carlo
method, producing 5,000 probable
schedules to first oil. To determine which
schedule on this spectrum was most likely
to occur, the company integrated each one
into a reservoir model to develop a proba-
development project
Stationary
Wells
production unit
Critical resources
Construction
availability
Drilling and
Anchoring completion
campaign
Commissioning
Source: OTC 26309
Fig. 1—The development of a work breakdown structure is one of the steps
in the schedule-uncertainty analysis Petrobras performs in its integrated
production development project workflow.
ble distribution of startup dates for every
well. To account for the limitations that
commercial reservoir simulators have in
manipulating schedules, it ran each simu-
lation in smaller time increments.
The workflow was then implement-
ed in an uncertainty analysis software
program, after which the experimental
design was modeled with the simulated
schedules covering the maximum variable
spectrum. From that, Petrobras could
predict the NPV of each schedule from the
values of the variables considered.
Costs and Uncertainty
Value creation will become an even great-
er need for operators as megaprojects
continue to grow in scope and cost. In
2014, Ernst and Young estimated that
68% of projects in the Asia Pacific region
scheduled for first oil between 2014 and
2035 will face cost overruns, and the aver-
age project in the region is expected to
run 57% over budget.
The rising cost of megaprojects may
lead to more risk-averse decision mak-
ing from owners. While Begg cautioned
against making such a conclusion—only
the individuals present during the final
investment decision process can real-
ly determine if an organization is being
risk-averse—he said that high capital
costs increase the chances of bad out-
comes, and with that increased chance
comes an increased aversion to risk-tak-
ing action.
“I would say, from what I know and
understand, given the fact that if you’ve
got a megaproject, it’s likely to be a very
Production
Subsurface Health, safety,
Indicators
installation and environment
Critical resources
availability
First oil
Pipelay support First gas
vessel campaign injection
Production
ramp-up
51
 significant part of your portfolio, and if it
fails it has a very big impact on the corpo-
ration, that those are the conditions that
would lead to risk aversion,” Begg said.
Risk aversion is not always a subop-
timal course of action for owners when
handling megaprojects, especially the
case in riskier environments. Begg said it
can be a reasonable behavior if an owner
faces severe consequences for a bad deci-
sion made prior to sanction.
“It depends on the size of your portfo-
lio. If you had 50 situations, or even 10
situations that were highly risky, but you
took a risk-neutral approach, then maybe
over the course of 10 outcomes you would
be ahead on average. So it depends on
whether you’re looking at an individual
event or an individual decision in its out-
come, or a collection of decisions and
their outcomes,” he said.
In discussing risk aversion, Begg differ-
entiated between decision making, where
risk aversion applies, and the estimation
of outcomes. He said overconfidence, or
a greater belief in the outcome of an event
than the evidence suggests, is a strong
motivator within the industry.
Risk and opportunity are the two fac-
ets of uncertainty: Because their out-
comes are known, sure decisions carry
no risk and no opportunity for additional
gains. Overconfidence lowers the range of
uncertainty: If a decision maker is over-
confident, the outcome of the decision
will look less risky than it is in reality.
Begg said optimism, or the tendency
to skew estimates toward a desired out-
come, is a subset of overconfidence.
“Overconfidence relates to the range
of uncertainty,” Begg said. “I would like
costs to be lower, so I tend to predict a
lower range of costs. I would like the time
to startup to be lower, so I tend to predict
that as lower. I would like production to
be higher, so my uncertainty estimates
can be biased toward the high side. The
optimism relates to where the central
value (of an estimate) is: Are things gen-
erally low or are things generally high?”
In addition, Begg said groupthink nar-
rows the range of uncertainty in decision
making, though that narrow range may
increase the chance of a faulty decision.
Without groupthink, a company would
have a wide range of opinions to consider
52
when making decisions, thus mitigating
the impact of cognitive bias.
“If you have groupthink combined with
a motivational bias, then you might get
both optimism in terms of the typical out-
come being skewed toward the desired
outcome, plus the overconfidence since
there isn’t even a wide range of outcomes,
because everybody’s thinking the same,”
Begg said.
China: Technological Advances
Uncertainty in decision making is not
solely a concern for the owners of mega-
projects. As unconventional resources
take up a greater share of the industry,
owners and operators are looking to effi-
cient ways to increase production, espe-
cially in newer markets. In some regions,
countries are still deciding whether
unconventionals are a viable proposi-
tion at all.
At the conference, representatives
from PetroChina and Schlumberger
released the early findings of an inte-
grated project examining the feasibility
of certain technologies in the first inte-
grated shale block in the Sichuan Basin,
the Longmaxi formation. China is in the
early stages of shale gas development, so
companies investing in the area must bal-
ance the need for capital investment with
potentially low economic return.
Longmaxi is one of the more promis-
ing shale gas reserves in the country. The
formation is a constant marine-deposited
layer with an average thickness of 120–
200 m characterized by a lower section
of calcareous-siliceous shale. It is a thick
formation, but recent exploration data
have shown its most promising gas-bear-
ing interval is at a depth of 20–30 m (SPE
176861). Total porosity in that interval
ranges from 2% to 6%. The total organic
carbon (TOC) also ranges from 2% to 6%.
In late 2013, PetroChina started its
first batch drilling project in the Zhao-
tong block, located in the southwestern
edge of the Sichuan Basin. The first phase
of the project involved the deployment
of five platforms with four to eight later-
als in each pad. One pilot well was drilled
for each platform and studied in detail
to give the company a better sense of the
formation properties near each opera-
tion area. By investigating the microseis-
mic data and production rate from each
lateral, the company was able to identify
key production drivers and determine
the most economic technologies to use
on the development.
The company utilized nuclear mag-
netic resonance, borehole imagery, and
induced gamma spectroscopy for con-
ventional wireline logging in its vertical
wells, revealing the reservoir and com-
pletion quality of Longmaxi and its adja-
cent formations. It identified two zones
within a sublayer that had a TOC content
of around 2.8% to 4.0% and a porosity
of 2.9% to 5.0%. For logging of its hori-
zontal wells, the company used logging-
while-drilling (LWD) tools such as LWD
spectroscopy, 3D borehole calipers, and
gamma ray imagery.
Typically, operators working in Long-
maxi presume that the fracture would
propagate upward and downward with
low contrast within the section, so they
would complete an exploration offset
well with the lateral placed in the mid-
dle of the Longmaxi organic shale sec-
tion. However, Liang et al. state that this
idea has not been proven by accurate
fracture simulation, and previous test-
ing had not considered the possibility of
fracture misalignment and excess fluid
loss between the interface of the bedding
layers of the shale formation. Misalign-
ment and fluid loss could lead to fracture
height restriction.
With that in mind, PetroChina incorpo-
rated a more integrated drilling and frac-
turing strategy, evaluating the fracture
geometry with two fracturing simulation
models. The models accounted for extra
leakage and pressure loss through mis-
aligned layers and could be used to under-
stand the geometry of complex fractures
by simulating the interaction between
hydraulic fractures and natural fractures.
This modeling led to the discovery of two
optimal landing points from which the
company could base its well placement
strategy and ultimately execute fractur-
ing treatment.
The first round of batch drilling was
successful enough to encourage further
production of shale gas in China. Petro-
China found that the integrated approach
allowed it to develop the reservoir eco-
nomically. The initial production of its
JPT • FEBRUARY 2016
 TABLE 1—SUMMARY OF RESULTS FROM THE LOGGING TECHNOLOGY TRIAL PERFORMED BY ARROW ENERGY
FOR ITS COALBED METHANE DEVELOPMENT PROJECTS IN THE SURAT BASIN

Topic Mining Drillpipe Push Tool Mining Wireline Tool Conventional Wireline Tool
Well Type Development Development Exploration and appraisal
Good—additional data
Data Quality Excellent Excellent
corrections required
Logging behind collar
Logging System Openhole Openhole
attached to drillpipe
Shallow/low pressure and Shallow/low pressure and Very deep/low-high hostile
Depth/Condition
low temperature low temperature pressure and temperature
Typically separate but can
Tools Stackable Yes Yes
be stackable
Minimal 3 hours rig up and 5 hours for stackable tools
8 hours rig up, rig down,
Operational Rig Time rig down time only. Logging including rig up, rig down,
and rig standby while well
Required occurs as drillpipe is pulled and rig standby while hole
is logged
out of hole is logged
Operational Risk Low Medium Medium
Advanced Tool Suites
Very limited Limited Extensive
Available
Cost of Logging Contractor Moderate Cost-effective Expensive
Rig Time Required No Yes Yes
Crew Size Typically 1–2 Typically 1–2 Typically 2–4
Source: SPE 176823.

H1 well was 60% higher than a typical
offset well with similar wellhead pres-
sure. Wells H2 and H3, which were drilled
after H1, improved production totals by
an additional 20% to 50%.
A construction program is underway
to deliver more natural gas from Long-
maxi, and PetroChina will perform fur-
ther analysis of its production mecha-
nisms as it gathers more correlation data
from the field.
Australia: Coalbed Methane
The burgeoning unconventional re-sourc-
es market in Australia is facing a similar
technology risk. Arrow Energy’s coalbed
methane (CBM) development projects in
Queensland are designed to handle the
drilling and evaluation of approximately
1,000 wells over a 10-year period. How-
ever, high logging costs have forced the
company to look into more cost-effective
ways to evaluate formations. This includ-
ed either early data coverage (which
limits the project’s economic value) or
restricted logging (which increases the
project’s risk).
The company’s study, which was pre-
sented at the conference, focused on a
CBM project in the eastern part of the
Surat Basin, an area of approximately
22 000 km. It needed geophysical logs as
part of the data acquisition program, par-
ticularly during the stages of early devel-
opment. The mining logging technology
consists of a basic logging suite. In order
to perform advanced logging in explo-
ration and appraisal wells, the company
sought a replacement for the convention-
al logging tool that would ensure holistic
subsurface characterizations and front-
end engineering work for future project
decision making (SPE 176823).
The study compared three logging
technologies: a mining drillpipe push
logging tool, where a composite collar
is inserted inside the drilling borehole
assembly before the production section is
lifted; a slimline mining wireline logging
tool; and a conventional wireline logging
tool, which is the most common practice
for CBM formation evaluation.
A comparison of the three technolo-
gies can be seen in Table 1. While mining
stackable logging tools are more cost-effi-
cient and leave a smaller footprint, they
are also less reliable in performing local
standard operating procedures. JPT
For Further Reading
OTC 26309 Reservoir-Schedule Coupled
Uncertainty Analysis for PD Projects:
Optimization Opportunities and
Improvements for More Robust
Production Forecasts by V.C. Silva and
J.W. Pinto, Petrobras.
SPE 176823 Formation Evaluation Logoff
Results Comparing New Generation
Mining-Style Logging Tools to
Conventional Oil and Gas Logging Tools
for Application in Coalbed Methane
(CBM) Field Development by T. Gan,
B. Balmain, A. Sibgatullin et al., Arrow
Energy; E. Murphy and L. Cook, Shell
International.
SPE 176861 Technology Feasibility and
Production Driver Study in the First
Integrated Shale Gas Block in Sichuan
Basin by X. Liang, J. Yajun, G. Wang et al.,
PetroChina Zhejiang Oilfield Company; X.
Zhou, Y. Luo et al., Schlumberger.
Begg, S.H. 2013. Some Reflections on
Uncertainty, Decisions, Models, and
People. In Proceedings: The Second
AusIMM International Geometallurgy
Conference 2013, 3–6. Melbourne,
Australia: The Australasian Institute of
Mining and Metallurgy.
Ernst and Young. 2014. Spotlight on Oil and
Gas Megaprojects. Internal Report, Ernst
and Young Global Limited, London, UK
(accessed 28 December 2015).

JPT • FEBRUARY 2016 53

 TALENT & TECHNOLOGY
Development of Engineering Competency
Models Continues
The American Institute of Mining, Met-
allurgical, and Petroleum Engineers
(AIME), of which SPE is a member soci-
ety, is one of 17 societies that make up
the American Association of Engineer-
ing Societies (AAES). AAES, a multi-
disciplinary organization of engineer-
ing societies dedicated to advancing the
engineering profession’s impact on the
public good, hosts working groups on
topics of interest to three or more mem-
ber societies. AAES formed the Lifelong
Learning Working Group (LLWG) in 2013
to “serve as a forum to share best prac-
tices and data and to discuss issues and
opportunities related to the activities
of the member societies to enhance the
quality of lifelong learning programs
in the United States.” The group iden-
tified developing a competency model
as a key priority to help many mem-
bers understand the knowledge and
skills needed to thrive in the engineer-
ing workplace.
SPE has been developing discipline-
specific technical competencies for the
past several years to assist young pro-
fessionals, and more recently graduate
engineers, in quickly ramping up with
necessary skills needed to succeed in
today’s competitive environment. SPE
believes that accelerating competency is
one direct way for industry to deal with
“the big crew change” caused by the
retirement of a large number of petro-
leum engineers. In addition to these
technical competencies, SPE established
a Soft Skills Committee 5 years ago to
help oil and gas professionals garner
and hone the nontechnical expertise
needed to be successful in a global mar-
ketplace. SPE’s work is at the leading
edge of lifelong learning efforts in the
engineering profession.
54
The working group holds monthly
calls, and SPE’s experiences have pro-
vided a critical template for other engi-
neering organizations to develop their
discipline-specific competencies. The
challenge now is to bridge SPE’s work
in discipline-specific technical and non-
technical skills with more generic com-
petency model work that has recent-
ly been released by AAES to create a
holistic lifelong learning roadmap for
SPE members. Behrooz Fattahi, AIME
2014 president and SPE Soft Skills Com-
mittee charter member, asked AIME’s
Executive Director and AAES LLWG co-
chair, Michele Lawrie-Munro, to work
with SPE’s Soft Skills Committee to make
these connections.
Framework for the
Engineering Profession
The Engineering Competency Model
(Fig. 1), released by AAES in July 2015,
was created as a guideline for devel-
oping the engineering workforce as a
whole. Funded by a grant from the Unit-
ed Engineering Foundation, the AAES
LLWG partnered with the US Depart-
ment of Labor’s Employment and Train-
ing Administration to prepare this free
public resource. The collaboration is part
of the Industry Competency Model Initia-
tive, in which the Employment and Train-
ing Administration and industry partners
work together to develop and maintain
dynamic models of the foundational and
technical competencies necessary in eco-
nomically vital industries and sectors of
the US economy. The group has overseen
competency models for 26 professions,
including machinists, nurses, and emer-
gency responders, advanced manufactur-
ing workers, and cybersecurity and infor-
mation technology specialists.
“The Engineering Competency Model
has the potential to unite the profession
on the fundamentals that engineers will
need to solve the global challenges we are
facing,” said Jerry Carter, chief executive
officer (CEO) of the National Council of
Examiners for Engineering and Survey-
ing and cochair of the LLWG.
The model was constructed as a
tiered pyramid, creating a system that
splits into three sections: foundation-
al, industry-related, and occupation-
related. The first three tiers are foun-
dational, showing personal, academic,
and workplace skills that are common
to the engineering profession. Tiers 4
and 5 are industry-related, with both
industrywide skills and industry-specif-
ic areas, the latter to be determined by
discipline-specific representatives. The
sixth and final tier is occupation-related
and is divided into two sides: manage-
ment competencies and requirements for
a particular position within the engineer-
ing profession.
The specific guidelines offered in the
model were designed to help employ-
ers and employees alike understand the
core set of abilities needed to enter the
engineering profession, in general, and
to assist employees in maintaining their
skills and be successful throughout their
careers. The model is also meant to be a
living template—engineering organiza-
tions are encouraged to not only adopt
the model, but also to build on it by
adding more discipline-specific technical
skills (Tier 5).
Lifelong Learning and
Professional Skills
Lawrie-Munro said a presentation at the
AAES meeting in October 2012 about
the need for lifelong learning opened
JPT • FEBRUARY 2016
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 Fig. 1—Engineering competency model. Courtesy of US Department of Labor Employment & Training Administration.
her eyes to the need for a competency
model and continuous improvement in
the engineering profession. The Nation-
al Academy of Engineering’s report pre-
sented by Debasish “Deba” Dutta, now
the provost at Purdue University and
at that time with the University of Illi-
nois at Urbana-Champaign, along with
the University of Illinois’ Lalit Patil, and
James B. Porter Jr., retired vice presi-
dent of E.I. du Pont de Nemours and Co.
and a member of the National Acade-
my of Engineering, recommended AAES
take the lead, along with academia and
employers, to ensure the importance
of lifelong learning was promoted. The
engineering competency model embod-
ies this. “We took that to heart and
56
formed our lifelong-learning working
group at AAES,” said Lawrie-Munro,
who has also cochaired the effort with
Cathy Leslie, executive director of Engi-
neers Without Borders USA.
The report pointed out, “For too long,
the issue of lifelong learning for engi-
neers has been on the back burner,
even as American industry has heav-
ily invested in MBA and executive busi-
ness education. A plan for vigorous,
continual intellectual renewal through
broad-based commitment to lifelong
learning could have a powerful role in
ensuring that the United States remains
competitive in the face of accelerat-
ing technological change and pressures
on an aging US engineering workforce
that is not being replenished sufficient-
ly rapidly.”
Leslie, a civil engineer, said Engineers
Without Borders leaders had noticed that
many of their volunteer engineers, both
students and professionals, lacked skills
such as leadership, technical writing, and
a sense of global awareness and perspec-
tive. Though today’s students are good at
giving presentations, they are less pre-
pared in how to handle team communica-
tions, team dynamics, and multicultural
teamwork, Leslie said. The competency
model comes at just the right time for
millennials (loosely defined as those who
reached young adulthood about the year
2000) who need a career roadmap, Leslie
said. “The millennials of today don’t mind
JPT • FEBRUARY 2016
working hard, as long as they know what
they’re working for,” she said. “I think
the model establishes a great baseline. If
you look at the ECM (Engineering Com-
petency Model), it’s not just about math
and science skills,” Leslie said. “It’s about
being ethical. It’s about understanding
public policy, quality control, and health
and safety. It’s about understanding sus-
tainability and the impact of projects on
our environment. We’ve agreed on what
being professional means.”
Model Development Process
To begin development of the model, the
US Department of Labor’s Employment
and Training Administration assigned
a dedicated research team to oversee
the project, and members of the LLWG
provided the team with a vast amount
of background information to review,
including accreditation criteria, bodies
of knowledge from various engineering
societies, the Project Lead the Way out-
line, and curricula and related resources
from academic institutions around the
US. Project Lead the Way is a leading
science, technology, engineering, and
math program used in more than 8,000
schools across the US. The working group
also identified subject matter experts
from AAES member societies, which rep-
resent industry and academia, to assist
the research team in developing and cri-
tiquing the draft model through a series
of webinars designed to gather feedback
and further refine the draft. Subject mat-
ter experts from AIME’s member societ-
ies included Jeff Fergus, a professor in the
Materials Research and Education Center
at Auburn University and member of The
Minerals, Metals, and Materials Society,
and Andy Schissler, petroleum engineer-
ing exam coordinator at the Society for
Mining, Metallurgy, and Exploration.
Throughout the development of the
competency model, the working group
sought feedback and input from stake-
holders across the engineering commu-
nity—from educators of future engineers
to those who employ engineers. A webi-
nar was held in February 2015 for AAES
member societies and other stakeholders
to explain the development process, dis-
cuss how the model could be a useful tool
for engineering-related societies in the
JPT • FEBRUARY 2016
future, and get feedback on the prelimi-
nary draft. The working group also dis-
tributed a survey to solicit feedback from OTC is where energy professionals
the engineering community and gath- meet to exchange ideas and
ered input from more than 100 engineer-
opinions to advance scientific
ing leaders, which was used to inform
updates and revisions to the model. and technical knowledge. Gain
In April 2015, the working group and access to leading-edge technical
the Department of Labor’s Employment information, the largest equipment
and Training Administration met with exhibition, and valuable new
the subject matter experts, representa- professional contacts.
tives from AAES member organizations,
and other members of the engineering
community to gather additional insight
and finalize the competency model. At
this meeting, Lawrie-Munro shared SPE’s
online competency tool, which generated
great interest, especially from the Ameri-
can Chemical Society, another leader in
the engineering profession in the soft
skills development arena.
Another society participant in the
LLWG has been the Society of Women
ENDLESS
Engineers. Executive Director Karen
Horting, and former Executive Director
Betty Shanahan, recognized 5 years ago
INNOVATION
the need for lifelong learning that goes
hand-in-hand with developing workplace
ƛ0%,/"" %+,),$6
and competency skills. In 2010, that soci- Conference 2016
ety released a Leadership Competency
Model (see societyofwomenengineers. ǗȔǚ6| NRG Park
swe.org /page/1724-pd-leadership-
competency-model). Shanahan is also a ,201,+Ǿ"50Ǿ
member of SPE’s Soft Skills Committee.
The Engineering Competency Model
has been endorsed by AAES’ represen-
tative body, the General Assembly. An
interactive version of the model with
detailed explanations of each of the com-
petencies and resources used to build it is
available online through the US Depart-
ment of Labor Employment & Training
Administration’s Competency Model
Clearinghouse website. Visit http://www.
aaes.org/model for more information.
The LLWG of AAES will continue pro-
moting and encouraging adoption of
the Engineering Competency Model Registration open now.
through 2016 with outreach at specif-
ic events and through a video for use in
Visit 2016.otcnet.org
academia as well as a print-on-demand for more information.
one-pager and detailed PowerPoint
presentation. Additionally, it plans to
guide other engineering associations
interested in developing their Tier 5
discipline-specific competencies. JPT
 TECHNOLOGY FOCUS

Drilling Technology
Michael Weatherl, SPE, President, Well Integrity

Perseverance. The featured papers high- key personnel can jeopardize the ability
light this as a critical element in the to follow through with implementation
successful application of new drilling of new technology. In this context, perse-
technology. In one case, breakthrough verance is more challenging, but it is also
performance was achieved on a com- more important today than ever before.
plex, high-temperature/high-pressure Although most of us could agree that
exploration well offshore Norway as an a fearless approach to new technology
example of “what can be delivered when is desirable and even necessary for sur-
a team adopts a fearless approach to new vival in some cases, like so many things
technology.” The team suggests fearless in life, getting there is easier said than
pursuit, or perseverance, against a vari- done. Thinking back on a few recent case
ety of obstacles, hurdles, and potential histories and firsthand experience with
show-stoppers. major projects, there were significant
One might consider, then, what there challenges, time constraints, and limited
is to fear when trying something new. In engineering resources to investigate new
reality, plenty. First, history has proved alternatives fully. Most often, there is
that breakthroughs most often occur as concept selection, partner approval, and
a result of sustained effort, through trials authorization for expenditure before
and tribulation and, yes, failure. More assembling the full team, committing
specifically, primary financial exposure to a rig, and selecting and procuring
and schedule risks often correlate direct- long-lead equipment. Permit/regulatory
ly to the well-construction phase. Beyond endorsement increasingly requires dedi-
financial and schedule risk, what about cation of substantial time and resources
corporate reputation and career aspira- as well. By this time, the execution phase
tions? These objectives can sometimes be looms large on the horizon; we often
at stake during the operational phase, as end up in the fast-track mode. Expedit-
well. Are these realities understood and ing peer reviews, recruiting and training
accepted by project leadership? Imple- personnel, and delivering and inspect-
mentation of new technology can require ing the rig and other major equipment
that leadership and key team members are top priorities. Sound familiar? In
be willing to step outside their comfort many cases, there can be a tendency to
zones. When there is a high rate of turn- fall back on proven equipment and pro-
over, changes in management and other cedures to minimize financial and sched-
Michael Weatherl, SPE, is an engineering consultant and president
of Well Integrity in Houston. He holds a BS degree in petroleum
engineering from The University of Tulsa. Before starting Well
Integrity in August 2014, Weatherl worked as a drilling and
completion team leader for Hess’ New Ventures Unit in Houston
following assignments as team leader and drilling adviser in
Stavanger and offshore Americas. Before working for Hess, he
worked for 25 years for Chevron, including in a number of
positions in production and drilling in Louisiana and Texas. Weatherl is a member of the
JPT Editorial Committee and serves on the SPE Deepwater Drilling and Completion
Conference committee. He has authored several papers and served as technical editor
for SPE Drilling & Completion from 1991 to 2013.
ule risk. “This is how it has been done
before” is repeated, and the new idea is
put on hold.
But it does not have to be that way.
Proper vision, an atmosphere where the
risk/reward profile of new drilling tech-
nology is understood clearly, adequate
time, and sufficient dedicated Earth-
science and engineering resources are
foundation ingredients.
The featured papers represent relevant
examples where these attributes com-
bined to achieve impressive results dur-
ing well construction.
Consider the common threads in the
selected papers illustrating step-change
performance being delivered, over-
coming short-term technical and orga-
nizational challenges with clear vision
and sustained efforts over consider-
able periods of time. For today and the
days ahead, important lessons are found
in perseverance. JPT
Recommended additional reading
at OnePetro: www.onepetro.org.
SPE/IADC 173081 All-Attitude Gyro-
While-Drilling Technology Provides
Accurate Surveys in High-Angle East/West
Directional Wellbores Delivering Reduced
Costs and Increasing the Length of the
Producing Zone by Keith Beattie, Gyrodata,
et al.
SPE/IADC 173125 Pioneer Turbodrilling
With 16½-in. Impregnated Bit in Deep
Presalt Well in Santos Basin by R. Pantoja,
Petrobras, et al.
SPE/IADC 173046 Drilling-With-Liner
Technology Enables Successful Sidetrack
Through Depleted Sands in Shallow-Water
Gulf of Mexico by Wayne Bridgeman,
Chevron, et al.
SPE 172559 Application of Friction-
Reducing Rigid-Resin Centralizers Based
on Silicon Carbide by Urdaneta Javier,
Halliburton, et al.

58 JPT • FEBRUARY 2016

Faster Rate of Penetration in Hard Chalk:
Proving a New Hypothesis for Drilling Dynamics

L arge areas of the North Sea contain

Cretaceous sediments, which
form a massive hard layer of chalk
a basic strategy was formulated by the
team leader: Drill with a high point load,
and preserve a defined bottomhole cut-
that historically has presented a major ting pattern. The strategy was built on
drilling risk and expense to operators the hypothesis that the drill-bit cutters
in the area. To mitigate such problems, are not the primary source of stick/slip
a Norwegian operator gathered an vibrations in hard chalk.
integrated team to thoroughly analyze
drilling records and lessons learned Key Considerations
from previous offset wells and to Eliminating Vibrations. Consistent with
re-engineer the drilling process. the hypothesis, it was assumed that the
The positive results of this effort primary source of vibrations was bore-
are described in the paper. hole friction. Three main contributors to
friction were identified:
Introduction ◗ Interaction between the stabilizers
In 2011, an operator initiated prepara- and the borehole wall
tions for drilling a series of deep, high- ◗ Pinching of stabilizers in
pressure/high-temperature exploration “microdoglegs” or ledges from
wells in the Norwegian part of the cen- lateral bit walk
tral North Sea. Given the depth of the ◗ Friction on other parts of the
exploration objectives, the first three drillstring and the bit at high weight
wells in the program had to penetrate a on bit (WOB)
massive body of hard Cretaceous chalk Consequently, the replacement of in-
belonging to the Shetland geological line stabilizers with roller reamers was
group. Acknowledging the challenge prioritized. The use of a modern rotary-
and the fact that a discovery would lead steerable system (RSS), which claims to
to the drilling of successive wells though improve wellbore quality and the preser-
the same troublesome interval, an inte- vation of a well-defined cutting pattern,
grated team representing both the oper- was deemed adequate for minimizing the Fig. 1—Illustration showing the
ator and technologists from the key sup- risk of the hole-pinching effects. To re- perceived challenge to the left with
pliers was assembled. Individuals from duce friction from the drill-bit wear-flat the proposed solution requiring less
this same group are the authors of this and other parts of the bottomhole as- WOB to the right.
paper. The team’s task was to produce sembly (BHA), the drill-bit specialists on
and execute a strategy that made it pos- the team presented a design with a more- ◗ Overload when breaking through
sible to drill the entire 12¼-in.-hole sec- aggressive cutter projection. contrasting interbedded layers
tion, including the hard chalk, in one of rock
bit run. Preventing Cutter Damage. Two main ◗ Backspin
In order to accomplish the goal of com- sources of potential cutter damage were On the basis of the risk from contrast-
pleting the entire section in one bit run, identified: ing layers, a new dynamic depth-of-cut-
control technology was considered.
This article, written by JPT Technology Editor Chris Carpenter, contains highlights
Power Reserve for Continuous Cut.
of paper SPE 173068, “Faster ROP in Hard Chalk: Proving a New Hypothesis for
The overall strategy was dependent on a
Drilling Dynamics,” by Eirik Akutsu, SPE, and Mads Rødsjø, SPE, Det Norske; John surplus level of rotary power. The team
Gjertsen and Mats Andersen, SPE, NOV; Nils Reimers, SPE, and Morten Granhøy- found the required increase in power
Lieng, SPE, Tomax; and Ellen Strøm, SPE, and Kjell Arvid Horvei, SPE, Halliburton, from two sources:
prepared for the 2015 SPE/IADC Drilling Conference and Exhibition, London, 17–19 ◗ Reduced loss through friction and
March. The paper has not been peer reviewed. vibrations

For a limited time, the complete paper is free to SPE members at www.spe.org/jpt.

JPT • FEBRUARY 2016 59

 ◗ Addition of a high-output mud
motor [positive-displacement motor
(PDM)] near the bit
Fig. 1 illustrates the perceived chal-
lenge and the emerging BHA solution.
The effort relied on the bit being capable
of handling significant levels of energy
without initiating stick/slip effects. To
reduce the risk from stick/slip induced
through friction, the standard stabiliz-
ers are replaced by roller reamers and
the drill bit requires less WOB to be effec-
tive. A modern, powerful PDM is includ-
ed on top of the RSS, and the risk of cut-
ter damage is mitigated by an antistick/
slip tool (AST).
A Different Approach
to Bit Selection
A more-aggressive polycrystalline-
diamond-compact (PDC) -bit design was
chosen to improve both drilling efficien-
cy and durability. Historically, more-
heavy-set PDC-bit designs have been
selected when expecting harder forma-
tions, increased levels of vibration, and
severely worn PDC-bit cutting struc-
tures. However, use of a heavy-set bit
with high WOB requirements often in-
creases the compression load on the BHA
and consequential side forces, leading
to friction-induced stick/slip. Therefore,
more-aggressive, lighter-set PDC-bit de-
signs to provide increased point loading
were selected to minimize the require-
ment for high WOB, hence reducing the
risk of generating torsional vibrations.
Directional-Steering Capability
Steering was needed in the chalk section.
Although use of a bent-housing motor
would provide such capabilities, steer-
able motors would be less effective and
also would leave a less-favorable hole
quality compared with an RSS. The pre-
ferred RSS solution was based on point-
ing the bit in the desired direction. The
tool uses a driveshaft that is mounted
with bearings at each end. The drive-
shaft is then deflected midway between
the bearings by a pair of eccentric rings
through which the shaft passes. By rotat-
ing the rings, the shaft can be deflected
to any desired tool-face setting, from 0
to 100% deflection. The deflection of the
shaft results in an angle change of the bit
itself relative to the RSS housing, to force
the bit angle.
60
Dynamic Depth of Cut
A new dynamic depth-of-cut, vibration-
mitigation technology was available that
allows for the use of aggressive cutting
structures in difficult formations. The
AST has a simple mechanical function.
The tool is made up on top of the BHA
and balances the WOB applied from sur-
face against the reactive torque from the
bit. Any abrupt change in torque, such
as a torque spike from the cutters hang-
ing up in the exit of a hard stringer, will
cause a telescopic contraction of the unit
produced through an internal helix. This
contraction instantaneously reduces the
weight on the cutters. The contraction
continues until the weight (i.e., depth of
cut) is reduced enough so that rotation
can continue; as it does so, an internal
spring will reapply the initial weight. If
the torque builds up again, the tool will
repeat the process and needs no reset.
Drilling Results
The library of reference data for rate of
penetration (ROP) and time to drill the
Shetland chalk showed a spread of 14
to 30 days. When considering the wells
drilled in the last 5 to 6 years, the aver-
age number for the sections, including
the Shetland group, is 20 days count-
ing four bit trips. Typical budget figures
used for new wells covering the same in-
terval by experienced well planners esti-
mated 16 days, including three bit trips
with the latter figures representing an
optimistic projection.
First BHA Run (Well A). On bottom,
the drilling of the 12¼-in. section com-
menced at fast rates through the initial
shale layers until entering the Shetland
group. Through the Shetland group, the
penetration rates continued at steady,
fast speed. The team leader approved
that the driller offshore be as aggressive
as prudently possible with the drilling
parameters for maximum speed in order
to establish the boundaries for the sys-
tem. As the ROP increased, the vibrations
transmitted from the measurement-
while-drilling tool remained in the safe
range. The torsional-shock data from the
RSS y-axis accelerometer from this first
run confirmed no stick/slip.
Bit-Wear Analysis. In the process of es-
tablishing maximum loading, the AST
system was compressed outside of its
functional envelope. As the bit was about
to exit a stringer below the Shetland
group, a torque spike snapped the PDM’s
titanium driveshaft. The BHA was pulled
for motor replacement. On the basis of
this experience, the next well in the cam-
paign (Well B) had parameters adapt-
ed to the established limitations and
the 12¼-in. section was drilled to total
depth in one run—including the Shet-
land group. The section took approxi-
mately 8 days to drill—approximately
half the typical budget figure and almost
2 weeks less than the average from re-
cent years.
New Advances in Well C. A different
make of drill bit was selected for Well C.
The bit was even more aggressive and
based on a different design than the first
two. Also, a new-design 8¼-in.-outer-
diameter AST was included. This AST
had an extended operational range com-
pared with the AST used on the previ-
ous two wells. With these changes, the
12¼-in. section was again completed in
one run. Some intervals with a caution
level of risk were seen as the ROP was
taken up as high as 25 m/h in the hard
chalk. The section was drilled in 4 days,
and the bit again had little wear.
Reliable Solution
for Drilling Hard Strata
The results confirmed that the BHA im-
provements and the choice of an aggres-
sive bit made it realistic to drill the prob-
lematic strata in one fast run in all three
wells. The distance between the wells
was significant, and the hard chalk came
in at different true vertical depths. These
observations strongly point to the total
BHA design and the bit as the key con-
tributors to the success in all three wells.
When comparing the wells with the av-
erage from the offset wells, savings in
the range of 12 days could be concluded.
With an average budget allocation of be-
tween 60 and 80 days per well, the sav-
ings from the work would reduce the
overall well cost by 15–20%. Considering
the work was performed from a sixth-
generation rig, the cash savings were sig-
nificant. After the study was completed,
a fourth well was drilled on the basis of
the same work. The 12¼-in. section was
again drilled in one run. JPT
JPT • FEBRUARY 2016
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 Root-Cause Analysis of Drilling Lost Returns
in Injectite Reservoirs

T he work presented combines a

fundamental-physics approach
with field data to identify the root
key physical effects during the cuttings-
removal process are captured through
constitutive models for frictional pres-
asymptotically approach the fracture-
closure pressure, also called the
fracture-closure stress (FCS). The
cause of drilling failures in Paleocene sure drop in a circulating mud, heat fracture-reopening pressure (FRP) is
and Eocene injectite-sand intervals. transfer between the formation and the pressure required to reopen an ex-
Study results showed that unfavorably drilling fluid, cuttings deposition/ isting fracture and at a minimum can
oriented sand/shale interfaces, erosion, and particle/liquid drag force. equal the FCS but is typically larger to
which can occur more frequently The partial-differential equations of some degree. In this regard, above the
at the top of an injectite reservoir, mud and cuttings transport are dis- FCS, fluid can be lost to a fracture and
can reopen at equivalent circulating cretized along the wellbore, and the this can be thought of as a depend-
densities (ECDs) below predicted entire system of equations is solved si- able pressure-relief valve. Additional-
fracture gradients, but above the multaneously in an implicit manner for ly, field data have demonstrated that a
minimum stress, and can result in each timestep. With this approach, the pre-existing fracture can be reopened
massive losses. efficiency of hole cleaning can be char- repeatedly without a reduction in its
acterized for these wells. Additional- FCS because this is driven by the far-
Theoretical Approach ly, the effect of both lost returns and field stress.
and Application breakout can be incorporated into The LOP observed during an LOT is
Diagnosing narrow-margin drilling the models. inherently an uncertain measurement
challenges in injectite sands has proved and can range from the minimum stress
to be extremely difficult because of the Drilling Lost Returns. The upper to the FBP of the formation. The LOP
convoluted nature of available drilling bound of the drilling margin is tradi- is an operationally practical measure-
data, statistically small data sets, and tionally defined by the fracture gradient ment and traditionally serves as the
often contradictory “apples-to-apples” obtained operationally through leakoff maximum pressure that the wellbore
comparisons made on the basis of sim- tests (LOTs) and verified before drill- can sustain without experiencing losses
ple metrics. Two mechanisms have ing the reservoir section by formation- and typically defines the fracture gra-
seemed probable: (1) suboptimal hole integrity tests (FITs). LOTs and FITs dient, or upper bound of the drilling
cleaning leading to packoff and subse- are typically performed at the shoe and margin. However, in reality, the upper
quent lost returns, or (2) lost returns gradually increase the pressure until the drilling margin can actually be a re-
leading to suboptimal hole cleaning and formation begins to take fluid, or leak- sult of any of these factors at a par-
subsequent packoff. off occurs, defining the leakoff pressure ticular depth.
(LOP). Conversely, an extended LOT For reference, available test data used
Wellbore Cleaning. In this work, well- (xLOT) continues to pump fluid after a in this study showed the FCS to be as
bore cleaning is evaluated with a pro- breakdown signature is observed at the low as 1.31–1.43 specific gravity (sg), the
prietary transient-hydraulics and -hole- fracture-breakdown pressure (FBP) and FPP to be approximately 1.45–1.51 sg,
cleaning model. This model is based the fracture-propagation pressure (FPP) and fracture initiation to be as high as
on first-principle equations of mass is established. 2.45  sg. However, xLOT and FCS mea-
and momentum transport for drilling Subsequently, a hard shut-in is per- surements were limited and sparsely
fluid and cuttings along the wellbore formed and the minimum stress can dispersed throughout the field.
in the annular space between the drill- be determined on the basis of the pres- Instead of treating lost-returns be-
pipe and casing (or open hole). The sure falloff where the pressure will havior as a single-point measurement
captured by a traditional LOT or FIT at
the shoe, this study proposes treating
This article, written by JPT Technology Editor Chris Carpenter, contains highlights
the physical loss mechanism as a reacti-
of paper SPE 174848, “Root-Cause Analysis of Drilling Lost Returns in Injectite vation of pre-existing features.
Reservoirs,” by Scott Buechler, Jing Ning, Nidheesh Bharadwaj, Kaustubh In its simplest form and minimum
Kulkarni, Caleb DeValve, Carsten Elsborg, Timothy Head, and Arnout Mols, value, the wellbore pressure required
ExxonMobil, prepared for the 2015 SPE Annual Technical Conference and Exhibition, to reopen a pre-existing fracture can be
Houston, 28–30 September. The paper has not been peer reviewed. any pressure in excess of the FCS.

For a limited time, the complete paper is free to SPE members at www.spe.org/jpt.

62 JPT • FEBRUARY 2016

 2.4 1740
Normal Stress
Loss (m3/h) ECD (sg), Normal Stress (sg)
ECD
2.2 Vsh 1741
LCM Treatment
1742
2

TVD (m)
1743
1.8
1744
1.6
1745
1.4
1746

1.2
0
–10
–20
4800 4900 5000 5100 5200 5300 5400 5500
MD (m)

Cloud Sand Shale

Fig. 1—Integrated interpretation of drilling diagnostics to identify root-cause loss mechanism. Vsh=shale volume.
LCM=lost circulation material.

Results effect of all tool joints. More specifically, likely stemmed from a single event
Wellbore Cleaning. Transient-hydraulics it does not result in increased localized from which there was no recovery.
and -hole-cleaning simulations were pressure peaks around any tool joint be- ◗ The location where losses initiated
conducted for a number of historical hind the bit. Finally, the simulation re- agrees well with high-angle features
wells to understand the effect of drilling sults demonstrated that pressure (or with predicted closure stresses
events, such as lost returns and break- ECD) measured by the MWD tool near near the minimum horizontal
outs, on ECD and hole cleaning. It can the bit is a reasonably good estimate stress and just below ECD.
be seen from these comparisons that the for the maximum possible pressure The hypothesis of a pre-existing
model is capable of capturing the impact (or ECD) present anywhere downhole fracture/feature observed from image
of fluctuating operational parameters for the purpose of conducting fractur- logs agrees well with observed drilling
and predicting the downhole ECD with- ing analyses. events, and it is evident that the pres-
in 0.025 sg of a measurement-while- sure required to reopen these features is
drilling (MWD) tool. Drilling Lost Returns. To evaluate the governed by the orientation of the pre-
The effect of tool joints on transient hypothesis that the reopening or re- existing fracture. In the well analyzed
hole cleaning was also evaluated to bet- activation of pre-existing fractures or in Fig.  1, losses were observed when
ter understand whether the low clear- features is a potential source for ob- drilling through a near-vertical fracture
ance around a tool joint would cause served drilling lost returns, real-time with an ECD in excess of the FCS. In this
localized pressure (or ECD) spikes be- and logged drilling and surveillance case, the FCS was defined as a minimum
hind the bit that were significantly high- data were used. From these data, a num- of 1.45 sg for a vertically oriented frac-
er than ECDs captured at the bit or by ber of conclusions can be inferred: ture and a maximum of 2.31 sg for a hor-
MWD measurements. The primary con- ◗ Detectable features on the image izontally oriented fracture. These two
cern here would be whether, if pres- log occur more frequently in values correspond to an assumed, but
ent, these larger pressures behind the regions where there is substantial unknown, minimum horizontal stress
bit would be large enough to exceed the change in the shale volume. and overburden. To validate this ap-
fracture gradient and initiate losses. ◗ Interfaces are somewhat stochastic proach for potential use in a forecast-
More importantly, because the pres- in nature; high-angle features ing sense, available drilling data  were
sure at any given depth is an integrat- are relatively uncommon along used for a well undergoing cleanup in
ed quantity, the pressure in the hole the length of the wellbore but which the mud weight was held con-
always shows an increasing trend fur- do occur. stant but the flow rate was varied, and
ther down the wellbore. It is impor- ◗ Sustained losses first occurred near drilling mud was either lost or returned
tant to note that the effect of the tool 4910- to 4920-m measured depth depending on the flow rate (i.e., ECD). It
joints will be an integrated effect; how- (MD) and stayed relatively constant was found that once normal stresses are
ever, downhole pressure increased by throughout the remainder of overcome, losses are proportional to
approximately 35–50  psi, including the drilling, implying that losses most flow rate.

JPT • FEBRUARY 2016 63

 Applications to Drilling
Injectite Reservoirs
It was apparent that, while unfavorably
oriented interfaces infrequently occur
in these wellbores, it takes only one to
initiate losses and, typically, once initi-
ated, losses are sustained. Furthermore,
the likelihood that an LOT or FIT will
encounter an unfavorable interface at
the shoe is small, and it is not likely that
an LOT or FIT conducted at the shoe
would capture the lower bound of these
reopening pressures. As such, thinking
of the upper bound of the drilling mar-
gin in terms of a “lost-returns” gradi-
ent instead of a traditionally defined
fracture gradient is more applicable for
injectite reservoirs. Such an approach
would likely make traditional drilling
more challenging by making the drill-
ing margin tighter, but would character-
ize the root cause of drilling challeng-
es. Tighter margins could be addressed
with technologies such as managed-
pressure drilling (MPD), or, by knowing
the root cause, technical solutions could
be engineered.
Conclusions
The root cause of drilling failures was
found to be (infrequently occurring)
unfavorably oriented sand/shale inter-
faces that reopen when ECD exceeds
the minimum stress and that result in
massive losses. These interfaces were
found to correlate reasonably well with
observed loss events. In parallel, this
was supported by hole-cleaning simula-
tions that showed that, without losses,
hole cleaning would not result in pack-
off. A lost-returns gradient was pro-
posed instead of the traditional frac-
ture gradient populated by localized
events during LOT and FIT at the cas-
ing shoe. This lost-returns gradient
was calibrated through observed tran-
sitions between losses and no losses
while wells were being cleaned up. The
result was a tighter, but better-defined,
drilling margin that could be addressed
through the use of MPD, alternative
casing-design strategies, optimized
well-path placement, or other engi-
neered solutions. JPT
64
SPE EVENTS
WORKSHOPS
15–16 February ◗ Abu Dhabi—SPE Flow
Assurance and Production Chemistry:
How to Minimise Downtime, Enhance
Production and Improve Operations
from Wells and Facilities
16–17 February ◗ Mangaf—SPE Applied
Tracer Technology to Maximise
Hydrocarbon Recovery
21–24 February ◗ Kota Kinabalu—
SPE Operating Mature and Very
Mature Fields—Operating, Upgrading
& Extending the Production Life of
Offshore Assets
21–24 February ◗ Kuala Lumpur—SPE
Maximising Asset Value Through Data
Science & Analytics
23–24 February ◗ Muscat—SPE
Unconventional Reservoir Fracturing
23–25 February ◗ Abu Dhabi—SPE Sour
Oil and Gas Fields: The Challenging
Transition from Appraisal through
Development to Operations
29 Feb–3 March ◗ Kuala Lumpur—SPE
Drilling and Completions Fluids and Waste
Management
1–3 March ◗ Dubai— SPE Well Testing:
Technology, Operations, Sampling, and
Reservoir Characterisation in the Current
Price Environment
2–3 March ◗ Bogotá—SPE/AAPG Colombia
Offshore—Challenges and Opportunities
for an Emerging Industry
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Throughout the Asset Life Cycle
9–10 March ◗ Harstad—SPE Norwegian
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13–16 March ◗ Penang—SPE Complex
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14–15 March ◗ Aberdeen—Brownfields
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Meet the Challenges
CONFERENCES
9–11 February ◗ The Woodlands—SPE
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Conference
24–26 February ◗ Lafayette—SPE
International Conference and Exhibition on
Formation Damage Control
Find complete listings of upcoming SPE workshops, conferences,
symposiums, and forums at www.spe.org/events.
1–3 March ◗ Fort Worth—IADC/SPE
Drilling Conference and Exhibition
21–23 March ◗ Muscat—SPE EOR
Conference at Oil and Gas West Asia
22–23 March ◗ Houston—SPE/ICoTA
Coiled Tubing and Well Intervention
Conference and Exhibition
22–25 March ◗ Kuala Lumpur—OTC Asia
9–13 April ◗ Tulsa—SPE Improved Oil
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11–13 April ◗ Stavanger—SPE International
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Safety, Security, Environment, and
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Our Future Through Innovation and
Collaboration
12–13 April ◗ Galveston—SPE/
IADC Managed Pressure Drilling and
Underbalanced Operations Conference
and Exhibition
20 April ◗ Bergen—SPE Bergen One-Day
Seminar
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Deadline: 18 March
JPT • FEBRUARY 2016
Single-Gradient Subsea-Mud-Lift-Drilling
Technology in Deepwater Gulf of Mexico

S ubsea-mud-lift-drilling (SMD)
technology is a form of managed-
pressure drilling (MPD). As with other
MPD systems, SMD technology offers
early detection of influxes (kicks) and
minimizes downhole losses to weak
subsurface formations. However,
significant differences are built into the
SMD system. This paper will highlight
the benefits of single-gradient SMD
(SMD-S) technology, the execution of the
most recent deployment, and test results
that represent the final steps in moving
toward continued MPD operations in the
deepwater Gulf of Mexico (GOM).
Introduction
SMD is a sophisticated subsea MPD tech-
nology development and commercializa-
tion project that has just completed its
fourth offshore deployment. With every
deployment, the learnings have been
captured and addressed successfully. The
most recent deployment in the deepwater
GOM has demonstrated that the technol-
ogy works as designed by successfully
accomplishing nearly all test objectives.
The confidence is now very high that the
industry will see the successful commer-
cial delivery of a drilling technology that
offers potential for a more-efficient drill-
ing operation. In addition, this technol-
ogy will lead ultimately to enhanced pro-
duction and recovery from deepwater
assets. SMD has two operational modes,
SMD-S and dual-gradient SMD (SMD-D),
as illustrated in Fig. 1.
SMD-D. A fluid with a density equiv-
alent to seawater is used in the riser
This article, written by JPT Technology Editor Chris Carpenter, contains highlights of
paper SPE 174881, “Successful Testing of Single-Gradient Subsea-Mud-Lift-Drilling
Technology in Deepwater Gulf of Mexico,” by Sharifur Rahman, Calvin Holt, David
Dowell, Danilo Morales, and Siri Davis, Chevron, prepared for the 2015 SPE Annual
Technical Conference and Exhibition, Houston, 28–30 September. The paper has not
been peer reviewed.
and a heavier mud weight is used below
the mudline. This combination of gradi-
ents results in an annular-pressure pro-
file that more closely follows the natu-
ral pore-pressure and fracture-gradient
trends. This significantly improves the
ability to stay within the pressure win-
dow much longer without changing mud
weights. Dual-gradient drilling helps to
eliminate casing points that are required
in conventional drilling and offers sig-
nificant production benefits in the deep-
water environment.
In order to maintain constant bot-
tomhole pressure (BHP), this technique
allows annulus pressure to be trapped
below a subsea rotating control device
(SRD) during connections by increas-
ing the maximum-lift-pump (MLP) inlet
pressure to help manage ballooning or
control wellbore stability.
SMD-S. The same mud density is placed
in the riser and below the mudline, so
the well is effectively in single-gradient
mode. Static and dynamic BHPs for an
SMD-S system are established with equa-
tions provided in the complete paper.
Pressure can be pumped off during
circulation or trapped during connec-
tions with the MLP by reducing or add-
ing pressure below the SRD to offset
the effect of annular frictional pressure
(AFD) as the rig pumps are ramped up
to the drilling flow rate. This effective-
ly allows the system to maintain a dy-
namic BHP in the well that is approx-
imately equivalent to the static BHP,
thereby providing greatly improved sta-
bility through tight pressure windows
such as those commonly seen in the deep-
water GOM.
Note that a unique attribute of the
SMD-S system is the ability to pump off
AFP from under the bearing-latch as-
sembly (BLA) in the SRD. In this configu-
ration, the well is always hydrostatical-
ly overbalanced, even in the event of an
equipment failure or unplanned loss of
power to the system.
SMD-Equipment Testing
To safely and reliably perform SMD-S
drilling, the SMD-system hardware and
operating procedures were required to
satisfy a number of basic requirements.
The system needed to demonstrate de-
fined performance criteria of all routine
drilling operations, safely manage non-
routine drilling operations (e.g., well-
control and lost-circulation events), and
maintain the well in a safe condition in
the event of equipment failure.
Overall, cased-hole testing results
were very positive and the technology
concept was validated successfully along
with the mechanical and operational via-
bility of the MLP and the SRD to perform
single-gradient MPD operations. Forty-
four test objectives were attempted dur-
ing the testing sequence, and 43 objec-
tives were met.
The main focus of the testing program
for SMD-S was to determine the stability
of the MLP inlet pressure and the abil-
ity to manage the wellbore-pressure pro-
file within a controlled and predictable
range. Routine drilling procedures were
tested in cased hole, with special empha-
sis on the start- and stop-circulation pro-
cedures while controlling AFP. Further,
an assessment was made of the MLP-
inlet-pressure control while tripping pipe
through the BLA installed on the SRD,
along with verifying the ability of the
pump to maintain a close-to-constant
bottomhole pressure during these op-
erations. Within the nonroutine opera-

For a limited time, the complete paper is free to SPE members at www.spe.org/jpt.

JPT • FEBRUARY 2016 65

 SMD-D SMD-S

Seawater
Gradient
8.6-lbm/gal 14.6-lbm/gal
Mud Mud

Above SRD Above SRD

SRD 1,790 psi SRD 3,036 psi

MLP inlet WD=4,000 ft

MLP MLP MLP inlet Pump Off
1,840 psi 2,786 psi
BOP Seafloor BOP 250 psi

AFP Single-Fluid AFP

300 psi Density 300 psi
High-Density
Drilling Fluid

16-lbm/gal 14.6-lbm/gal
Mud Mud

BHP
BHP
15,452 psi
15,233 psi

Fig. 1—Subsea mud-lift-drilling-technology modes. BOP=blowout preventer; WD=water depth.

tions, the ability to detect a kick and re-
spond to a potential equipment failure
was also tested.
Test Results and Key Findings
MLP-Inlet-Pressure-Control Test. The
MLP pressure showed stability at dif-
ferent conditions. Flow rates were var-
ied from 300 to 800 gal/min, combined
with different MLP inlet set points from
400 to 1,000 psi.
The MLP demonstrated control of set-
ting the inlet pressure while following
a schedule automatically from 750 to
1,000 psi as rig-pump flow rate was re-
duced from 800 to 0 gal/min, followed
by manual control of the ramp-up sched-
ule. Very good MLP-inlet-pressure stabil-
ity was observed while pumping at dif-
ferent flow rates once steady-state flow
was achieved.
The MLP managed small increments
of pressure (25-psi steps) during AFP
management while controlling the set-
ting manually or automatically. During
normal-drilling-related tests, the sys-
tem was able to maintain BHP within a
10-psi band.
The SMD-S test for dynamic-flow-
check procedure was performed by re-
ducing the MLP inlet pressure from ap-
proximately 1,000 psi to approximately
400 psi while maintaining both rig-pump
and MLP rates at a constant 800 gal/min;
equivalent pressure reduction was ob-
served on the BHP, which was verified
with the real-time measurement data
from the annular-pressure-while-drilling
(APWD) tool.
AFP Management During Connection.
The SMD-S connection procedure was
tested and verified successfully. The AFP
algorithm works by automatically ad-
justing the MLP inlet pressure against a
predefined flow rate vs. pressure table
input by the system operators. While
the AFP algorithm worked reasonably
well for the MLP ramp-down sequence,
logic errors were noticed during MLP
ramp up, which needed the manual
intervention of the system operators
to correct.
The BHP tracked the MLP inlet
pressure during the connection-
procedure test.
This test demonstrated that the
bottomhole static density and bot-
tomhole circulating density can
be controlled precisely by use of the
SMD-S technique.
Kick Detection. The purpose of this test
was to verify the kick-detection mech-
anism with the SMD system and test
the ability to shut in and line up to cir-
culate out a kick conventionally. Dur-
ing the test, the drill crew was able to
identify the influx in less than a 2-bbl

66 JPT • FEBRUARY 2016

gain in the system, even with the low
influx rate of only 25 gal/min. The kick-
detection capability of the pump worked
as designed.
BLA. The BLA successfully latched into
the SRD joint and sheared from the run-
ning tool, so the setting procedure was
executed as designed. After setting, the
BLA-sealing element was tested success-
fully in holding a pressure differential
across the seal. The test simulated trip-
ping 70 tool joints through the element
while varying tripping speed, rotary
speed, and MLP inlet pressure; the max-
imum differential pressure tested was
750 psi. Rotary speed was varied from 50
to 100 rev/min.
The BLA sealing element was inspect-
ed at the provider’s shop after retrieval,
and it showed no signs of abnormal wear.
Benefits of SMD-S System
Wells currently in the deepwater-GOM
portfolio will benefit from the application
of the technology in the following areas:
◗ SMD-S will improve the
likelihood of accessing the top
of the Wilcox formation with
larger drift by eliminating the
contingency casing strings that
are set as a result of dealing with
losses and kicks encountered while
drilling through tight pressure
windows.
◗ By adjusting the MLP inlet
pressure, SMD-S will allow better
management of the BHP to mitigate
or eliminate losses when drilling
through tight margins.
◗ Ballooning can be mitigated by
maintaining near-constant BHP
during drilling.
SMD Forward Plan
Testing results clearly demonstrated
that the design fundamentally works and
that the SMD system can offer tremen-
dous value to deepwater wells through
MPD. The system demonstrated con-
trol and sensitivity to wellbore pressures
well within the design parameters. In
the near term, the operator plans to use
and mature SMD-S technology in drilling
deepwater-GOM wells.
Once the SMD-S technology is imple-
mented successfully, testing of SMD-D
will commence. It is notable that the
JPT • FEBRUARY 2016
equipment used for SMD-D is unchanged conventional-drilling margins. While
from that of SMD-S, so testing of the eliminating casing strings does save
dual-gradient capabilities is effectively drilling time and reduces mechani-
an operational procedure test. cal risk in deepwater wells from tight
SMD-D remains the ultimate ob- mechanical clearances, the real value-
jective because this is the only tech- adding benefit is that it offers the ability
nology available today that offers the to reach a reservoir with larger casings
ability to eliminate casing strings in a than with conventional single-gradient
deepwater well while maintaining all MPD systems. JPT
Missouri University of Science
and Technology
Department of Geosciences and
Geological and Petroleum Engineering
Assistant/Associate Professor of
Petroleum Engineering
The Department of Geosciences and Geological and Petroleum Engineering (GGPE)
at Missouri S&T seeks applicants for a full-time tenure track faculty opening in
Petroleum Engineering with appointment at the assistant or associate professor level
to begin August, 2016. The successful candidate is expected to teach undergraduate
and graduate courses, develop an externally-funded research program, participate in
student advising, outreach programs, curricular development, and perform university
and professional service. A PhD in petroleum engineering or a related discipline
is required. Preference will be given to those applicants whose specialties are in the
areas of drilling engineering, well completions, geomechanics or hydraulic fracturing.
Industry experience is also preferred.
Recognized for its academic excellence and strong return on investment, Missouri S&T
consistently ranks among the top “Best Investment” public universities for both in-state
and out-of-state students. Missouri S&T is a technological research university with a
strong emphasis in engineering, science and technology. There are approximately 8000
students (6200 undergrads, 1800 grad students) in 55 different degree programs. The
GGPE department consists of 21 faculty, over 360 undergraduates, and over 300 graduate
students in Geology, Geophysics, Geological and Petroleum Engineering.
For additional information (but not to submit applications) contact Dr. Shari Dunn-
Norman, 151 McNutt Hall, Rolla, MO 65409; caolila@mst.edu; (573) 341-4840.
Interested candidates should electronically submit an application consisting of a cover
letter, current curriculum vitae, a statement of research and teaching interests, one
sample publication, and complete contact information for five references to the Missouri
S&T’s Human Resource Office at http://hraadi.mst.edu/hr/employment/. Review of
applications will begin March 1, 2016, and continue until the position is filled.
All submitted application materials must have the position reference number 00065568
in order to be processed. Acceptable electronic formats that can be used for email
attachments include PDF and Word; hardcopy application materials will not be accepted.
Missouri S&T participates in E-Verify. For more information on E-Verify, please contact
DHS at 1-888-464-4218.
The final candidate is required to provide official transcript(s) for any college degree(s)
listed in application materials submitted. Copies of transcript(s) must be provided prior
to the start of employment. In addition, the final candidate may be required to verify
other credentials listed in application materials. Failure to provide official transcript(s)
or other required verification may result in the withdrawal of the job offer.
Missouri S&T is an AA/EO Employer and does not discriminate based on race, color,
religion, sex, sexual orientation, national origin, age, disability, or status as Vietnam-
era veteran. Females, minorities, and persons with disabilities are encouraged to apply.
Missouri S&T is responsive to the needs of dual-career couples.
67
 Optimization of Upper Burgan Reservoir
Multilateral Well With Inflow-Control Device

I n coning situations, such as in the

production of oil reservoirs with
a bottom aquifer, multilateral wells
Stratigraphy
of Upper Burgan Reservoir
The Burgan formation is a major reser-
es a progradational shoreface succes-
sion, but, in the southeastern part of
the field, the occurrence of channelized
reduce the coning effect and, hence, voir unit. It unconformably overlies the sandbodies could point to an incised val-
prove to be more cost-effective. This carbonate Shuaiba formation and un- ley fill. The overlying UB4 layer does not
paper discusses the first multilateral derlies the Mauddud carbonates with lo- record any significant channelized-delta
well with a Level-4 junction combined cally unconformable contact. The thick- sandbodies and is instead marine influ-
with an inflow-control device (ICD) ness of Burgan is approximately 950 ft enced with some evidence of a deltaic
planned, designed, and drilled in the of soft, clean, porous, well-sorted quartz influx toward the top. The UB3 and UB2
Upper Burgan reservoir of Raudhatain sandstones of littoral to possibly deltaic form two distinct layers in the Raud-
field, north Kuwait. The paper covers aspect, interbedded with siltstones and hatain field, and it is in Layer UB3 that
the main challenges of well placement dark shales. The Burgan formation at the main phase of delta buildout is re-
during geosteering to ensure the best Raudhatain has been divided informally corded in this field. Delta progradation
quality of reservoir rock in structurally into three members, termed the Upper continues in the overlying UB2 layer,
and depositionally complex settings Sand, Middle Shale, and Lower Sand. but the system has started to backstep
with smart-completion design. The Upper Burgan reservoir sediments here, supported by the preservation of
were deposited during the Lower Creta- thinner and muddier channel fills. The
Introduction ceous and are Albian in age. Two gross surface that marks the turnaround be-
The Raudhatain oilfield structure is one depositional models are recognized for tween the UB3 and UB2 layers is subtle
of several developed along a prominent the Upper Burgan: a tidally influenced, in the cored study wells and is typically
anticlinal ridge that plunges gently north fluvial-dominated delta model and a picked after calibration with openhole
of Kuwait. These individual highs, in marine-influenced shoreface model. logs. The uppermost UB1 layer repre-
which the principal oil accumulations of Each of these models typically dominates sents the drowning of the delta system in
the area are localized, tend to be of large a specific layer or constitutes a discrete the Raudhatain field.
areal extent and substantial structural re- horizon within a layer. In gross terms, the Within the Upper Burgan system, there
lief. The Raudhatain structure exhibits a Upper Burgan in north Kuwait is charac- are a number of sand-dominated genet-
quasiradial pattern of small normal faults terized by the buildout and subsequent ic elements that have been recorded. Of
of limited throw. This geometry suggests backstepping of the delta system with these, three in particular—channel-fill,
a primary origin by uplift. widespread shoreface conditions partic- mouthbar, and sand-flat sandbodies—
The Raudhatain structure is a faulted ularly developed at the base and the top have been identified as having the best
anticlinal dome with 65 to 90 ft of topo- of the Upper Burgan. reservoir qualities.
graphical relief. The 3D seismic has de- Primary depositional factors are the
fined the major faulting in the northern Sedimentology main controls on reservoir quality, and,
part of Raudhatain as northwest trend- of Upper Burgan therefore, the sedimentary framework
ing, whereas in the southwestern part of The Upper Burgan in the Raudhatain can be used to predict relative reservoir
the field the faults trend northwest. Fault field comprises five layers, called the quality. Consequently, the best reservoir
throws are highly variable and range UB5, UB4, UB3, UB2, and UB1 from base quality is typically sustained by predomi-
from less than 30 ft to as much as 150 ft. to top, respectively. UB5 also compris- nantly clean and fine- to medium-grained
channel-fill sandstones. Mouthbar and
This article, written by JPT Technology Editor Chris Carpenter, contains highlights sand-flat sandbodies also display good
reservoir properties.
of paper SPE 175227, “Optimize Development Strategy of Upper Burgan Reservoir
The distribution and orientation of
Through Multilateral Well With Inflow-Control Device in Raudhatain Field, North
the best reservoir multistory channel-
Kuwait,” by Sankar Chowdhuri, Peter Cameron, Tarek A. Gawwad, Mohammad fill sandbodies are relatively predict-
R. Madar, Siddhartha Sankar Sharma, Moute’a Dughaim AlMutairi, Vijay able in the various layers across the
Shankar Rajagopalan, Suresh Chellappan, and Moudi Fahad Al-Ajmi, Kuwait Oil Raudhatain field. In summary, the best
Company, prepared for the 2015 SPE Kuwait Oil & Gas Show and Conference, Mishref, reservoir sandbodies are found in the
Kuwait, 11–14 October. The paper has not been peer reviewed. UB3 layer and then the UB2 layer (re-

For a limited time, the complete paper is free to SPE members at www.spe.org/jpt.

68 JPT • FEBRUARY 2016

duced net/gross and reservoir quality) 6,000 100
90
and are typically multistory channel 5,000

Oil Rate (B/D)

80

Water Cut (%)

fills, which are typically distributed in 4,000 70
60
the northeastern, central, and south- 3,000 50
ern areas of the field. Although these 2,000
40
30
sandbodies appear to be thinner in the 20
1,000
south of the field, there appears to be 10
0 0
a good degree of lateral connectivity

RA-ML

RA-A

RA-B

RA-C

RA-D

RA-E

RA-F

RA-G

RA-H

RA-I

RA-J

through both mouthbar and sand-flat
sandbodies with enhanced connectiv-
ity toward the top of both layers. Similar
excellent-quality channel-fill sandbod-
ies only occur at the southern field mar-
gin in the UB5 layer, but their lateral ex-
tent is very limited.
Multilateral-Well
Candidate Selection
Well RA-ML is located in the eastern
flank of the field with good oil satura-
tion, viscosity of 4 to 5 cp, and 2,300-psi
reservoir pressure, which is far above
the bubblepoint pressure of 1,300 to
1,400 psi. It was decided to exploit UB3
upper and UB3 lower sands with two
vertically staggered laterals by commin-
gled production. In the eastern part of
the Raudhatain field, the channel sand-
stones are particularly well-developed,
with thicknesses of 25 to 40 ft, as shown
in the well correlation section along
some wells offset from RA-ML having
porosities from 17 to 26%. The range of
permeability varies widely, from a few
hundred millidarcies to 3.5 darcies. A
nonpermeable shale layer separates the
two sand layers.
RA-ML Drilling Challenge
and Geosteering Work Flow
The first multilateral well in north Ku-
wait, RA-ML, was drilled and complet-
ed successfully in 72 days—8 days less
than the planned rig days. A pilot hole
of 8½  in. was drilled with 64.6° incli-
nation for evaluating the sublayers of
UB3 by use of a logging-while-drilling
(LWD) tool and a formation-pressure
tester. LWD logs displayed very good po-
tential in UB3 for both sublayers, as pre-
dicted from a 3D geological model. The
well was drilled without any complica-
tions, though it was sidetracked for geo-
logical reasons at the beginning of the
second lateral. This sidetrack helped to
geosteer the well into the good-quality-
sand reservoir and avoid penetrating the
Oil Rate (B/D)
Fig. 1—Production performance of Well RA-ML vs. other Upper Burgan
horizontal wells.
intervening shale barrier between the
two sublayers.
Deep-resistivity-mapping technology
was used to place the laterals in UB3
upper and lower channels of reservoir
sand. The structural dip of the forma-
tion and the thicknesses of the sand res-
ervoirs varied from the indications of
pilot hole.
The length of the upper lateral in the
UB3 upper sand was 2,145 ft in good-
quality reservoir, whereas the length
of the lower lateral was 1,757 ft in the
UB3 lower channel sand of equally good-
quality reservoir rock. A dedicated tool
was used for quantitative formation and
petrophysical evaluation in addition
to spectroscopy.
Logging and
Petrophysical Evaluation
An integrated petrophysical evaluation
was performed on the 8½-in. section of
the first lateral by use of a multipurpose
measurement from the dedicated tool,
to derive a better water-saturation and
permeability computation. The log data
from the 6⅛-in. section of the second
lateral were recorded to assess the water
saturation and permeability. The record-
ed logs indicated that the sand quality
was very good to excellent, with an av-
erage porosity of 20 to 23%, resistiv-
ity of approximately 50 to 100 —·m, and
log permeability of approximately 1.5 to
3.5 darcies.
Multilateral Completion
With Inflow-Control Device
The objective of the completion was to
have a pressure integrity at the junc-
tion with a Level-4 type of multilateral-
completion assembly, to achieve the
RA-K
Water Cut (%)
optimum production target from both
laterals simultaneously. Hence, the well
was completed with a 5½-in. openhole
ICD for the first lower lateral and a 4½-in.
openhole ICD for the second upper lat-
eral by an electrical-submersible-pump
completion string.
Production Performance
of RA-ML and Other Upper
Burgan Horizontal Wells
The initial production results show that
RA-ML is expected to produce approxi-
mately 5,322 BOPD with 0% water cut
through a 48-in. choke size. The aver-
age production of a horizontal well is
approximately 1,500 BOPD. The best
production from a single lateral upper
Burgan horizontal well was approximate-
ly 3,145 BOPD (Fig. 1). Thus, the produc-
tion of RA-ML was significantly higher
than that of any other producing wells
of the Upper Burgan formation over the
Raudhatain structure.
RA-ML is producing 40% more than
the best horizontal well and exhibits
threefold more in production than the
average horizontal production rate.
Conclusions
Use of a multilateral well with an ICD
has efficiently accelerated production,
improved sweep efficiency, and delayed
water breakthrough. Well RA-ML is lo-
cated in the eastern flank where the ex-
pected rate is approximately 700 BOPD
for a vertical well and 1,500 BOPD for
a horizontal well. In the Upper Bur-
gan reservoir, the American Petroleum
Institute gravity decreases from crest
to flank (32 to 25 °API) and the vis-
cosity increases from crest to flank
(0.6 to 8 cp). JPT

JPT • FEBRUARY 2016 69

 TECHNOLOGY FOCUS

Offshore Facilities
Mark S. Elkins, SPE, Process Lead, ConocoPhillips

Welcome to the Offshore Facilities fea- The first paper provides The design and regulatory requirements
ture in this month’s JPT. It was my plea- are discussed, and lessons learned and
sure to go through 169 papers submit- a high-level look at the recommendations for future projects
ted to SPE in this field over the past design and construction are supplied.
year and select three for inclusion in this The final paper discusses the devel-
issue as well as three for additional read-
of the Prelude floating opment and testing of an active acous-
ing. I considered making my selections liquefied-natural-gas tic automatic leak-detection sonar.
along a theme, but offshore facilities is a facilities. This is The technology makes use of the dif-
broad category spanning vast engineer- ferent acoustic impedance of hydrocar-
ing interests and challenges. The papers a world-class bons compared with the surrounding
I chose are those I enjoyed reading. The gasfield-development seawater to detect with a sonar head
result is a rather eclectic mix. the partial reflection of the transmit-
The first paper provides a high-level
project taking on ted signal by this interface. The paper
look at the design and construction of significant technical describes field trials of the technology
the Prelude floating liquefied-natural- challenges ... . in the Gulf of Mexico using a substi-
gas (FLNG) facilities. This is a world- tute target to simulate an oil release and
class gasfield-development project tak- nitrogen to simulate natural gas.
ing on significant technical challenges, reduce subsequent development time I hope you enjoy reading these papers
and the paper touches on technolo- and cost. as much as I did. JPT
gy selection and development, safety- The next paper describes the design,
design aspects, and construction activi- construction, and installation of a spar
ties. The intent of the developer is for in the Gulf of Mexico, including bulk Recommended additional reading
Prelude to be the first of many FLNG storage tanks for produced oil, metha- at OnePetro: www.onepetro.org.
projects, using a “design one, build nol, and diesel and independent tanks
many” strategy to leverage learnings and for production and subsea chemicals. SPE 172150 The Use of Multirotor
Remotely Operated Aerial Vehicles as a
Method of Closely Visually Inspecting Live
and Difficult-To-Access Assets on Offshore
Mark S. Elkins, SPE, is process lead for ConocoPhillips’ Alaska Platforms by Malcolm Connolly, Cyberhawk
liquefied-natural-gas (LNG) project. He holds a BS degree in Innovations
chemical engineering from Louisiana State University. Elkins has OTC 25676 Implementing
worked for 36 years in the oil and gas industry in various Constructability in Brownfield Projects:
process-engineering roles. He worked for Arco for 20 years, A Case Study by Amir G. Salem, SBM
supporting domestic and international projects and operations Offshore, et al.
both offshore and onshore. For the past 16 years, Elkins has OTC 25685 The Risk of Cryogenic-Liquid
worked for ConocoPhillips, primarily on gasfield-development Release Could Have Been a Show Stopper
projects. He served as the company representative in the engineering contractor for the Floating Liquefied-Natural-Gas
shop for ConocoPhillips’ FLNG technology-development project from 2011 to 2013. Market: How Did the Industry Respond?
Elkins is a member of the JPT Editorial Committee. by R. Wade

70 JPT • FEBRUARY 2016

FLNG: Applying Advanced Technology
To Bring More Natural Gas to Market
T he constraints of space and
seaworthiness required the
designers of Shell’s joint-venture
floating-liquefied-natural-gas (FLNG)
facility to assemble these technologies
in novel configurations. The operator is
applying standardization as a philosophy
for its FLNG design so that developments
can become faster and more cost
effective and has also developed an
FLNG solution designed for leaner-gas
fields that has many similarities to
standard FLNG designs. The so-called
“FLNG Lean” is able to deliver higher
LNG-production capacities.
Introduction
With a long history in the LNG industry,
the operator signed an agreement with
a consortium of heavy-industry compa-
nies to design and build multiple FLNG
facilities and entered the front-end en-
gineering design (FEED) development
phase, which focused on the technical
requirements of the project. The opera-
tor’s Prelude project was the world’s first
to make a final investment decision on an
FLNG facility in May 2011. The Prelude
project is expected to produce 3.6  mil-
lion t/a (mtpa) of LNG, 1.3 mtpa of con-
densate, and 0.4 mtpa of liquefied petro-
leum gas (LPG).
Proven Technologies
in Innovative Combinations
The operator’s FLNG facility itself is large
but is still one-quarter the size of an
equivalent facility on land. The key com-
ponents of an FLNG development include
This article, written by JPT Technology Editor Chris Carpenter, contains highlights of
paper OTC 25907, “FLNG: Applying Advanced Technology To Bring More Natural Gas
to Market,” by Alexander Boekhorst, Bruce Steenson, and Harry van der Velde,
Shell, prepared for the 2015 Offshore Technology Conference, Houston, 4–7 May. The
paper has not been peer reviewed.
Copyright 2015 Offshore Technology Conference. Reproduced by permission.
The complete paper is available for purchase at OnePetro: www.onepetro.org.
JPT • FEBRUARY 2016
standard gasfield components such as
production wells, subsea templates and
risers, and the floating facility itself. The
facility is a full floating production facil-
ity with living quarters; gas-processing,
-treatment, and -liquefaction facilities;
and product-storage and -offloading fa-
cilities. All of these are integrated into a
single design. All processing operations
are carried out offshore, with LNG, LPG,
and condensate product exported direct-
ly from the facility.
Once constructed, the FLNG facility
will be towed to the field site where it
will be moored for the duration of opera-
tions—approximately 20 to 25 years—
without being disconnected. The FLNG
unit has been designed to withstand ex-
treme weather, including a Category 5 cy-
clone, and will remain on location during
all conditions.
The FLNG facility has an internal turret
because this configuration is more suitable
for fields that require larger and more-
complex subsea systems and an increased
number of risers. Internal turrets are also
better suited for harsh metocean condi-
tions. All the subsea connections join the
facility by the turret. Production wells on
the seabed feed gas and condensate from
the reservoirs through a number of flex-
ible risers and a standard fluid-transfer
system (swivel stack) into the facility.
A double-walled substructure car-
ries the topside and the turret-mooring
system. It hosts the LNG-, LPG-, and
condensate-storage tanks; the water-
production units (potable water, process
water, and boiler feed water); wastewater
treatment facilities; and several facilities
for intermediate storage, maintenance,
and operations. The hull of the facility is
designed to have a 50-year life.
Major processing equipment, such as
the absorption columns and the main
cryogenic heat exchangers, has been
modified to allow it to operate efficiently
under marine conditions. The FLNG fa-
cility will use the operator’s proprietary
double-mixed-refrigerant (DMR) process
to liquefy the gas. The DMR method is a
flexible process that uses mixed refriger-
ant for precooling and liquefaction cy-
cles, enabling full power usage over a
wide ambient-temperature range.
Specially designed cooling-water risers
will draw water from deep in the ocean to
be used in the LNG process. Process ef-
ficiency is increased by the cooler water.
More than 50 000 m3/h will be drawn
from 150 m below the facility, where the
water is approximately 10°C lower than
the surface water temperature.
The FLNG product-containment sys-
tem is based on LNG containment sys-
tems commonly used on LNG carri-
ers. However, FLNG requires tanks that
have been designed to withstand liquid-
motion, or sloshing, forces when only
partly full. Prelude will feature six LNG
tanks, four LPG tanks, and two tanks for
condensate. Total storage capacity will
be 220 000 m3 of LNG, 90 000 m3 of
LPG, and 126 000 m3 of condensate.
The offshore transfer operation of LNG
is among the more critical issues in the
offshore LNG chain. The products will be
stored in the hull of the facility until they
are offloaded to the ships that will trans-
port them to market. LNG and LPG will
be offloaded by a side-by-side vessel con-
figuration, using an offloading system
developed from conventional LNG load-
ing equipment. This system of specially
designed cryogenic loading arms makes
allowance for the fact that both the facili-
ty and the product carrier will be moving.
71

Accommodation
Utilities
End flash, boil-off
and fuel gas
Loading arms
Mercury removal
Fig. 1—Prelude
facility layout.
Thrusters at the stern may also be used
to position the FLNG facility to ease the
offloading process.
Safety by Design
The safety of the FLNG facility has been
foremost during its design, and its safety
is comparable with that of modern off-
shore oil and gas facilities.
Process safety has been the single most
important driver for developing the facil-
ity layout. Quantitative risk assessments
performed at different design phases of
the project have been used to evaluate lay-
out options, and rigorous process-safety
standards have been applied throughout
the design process. The overall aim is to
reduce the risk for personnel operating
the facility and to be able to demonstrate
that the design choices satisfy “as low as
reasonably practicable” criteria.
The living quarters, the helipad, the
control room, and the workshop are lo-
cated at the back of the FLNG facility.
These areas, where more people may be
working or resting, are, by design, far-
thest away from the turret and processing
facilities where there are large, high-pres-
sure inventories of gas, and separated by
relatively low-risk equipment and utilities
located in between (Fig. 1).
There are also 20-m safety gaps across
the full width of the FLNG barge be-
tween adjacent processing modules. On
the barge deck and the main process
deck, escape routes are provided at both
starboard side and port side, running
along the full length of the FLNG facility.
The central alley between the port- and
starboard-side modules provides a third
escape route on the process-deck level.
72
Steam generation
Liquefaction
Inlet facilities
Produced storage within the hull
Prelude Progress
Prelude is a global project, with fab-
rication of the components occurring
around the world, including Geoje Is-
land in South Korea, Dubai, Malaysia,
France, and Australia. For example, the
Prelude FLNG substructure and topside
are under construction at a shipyard on
Geoje Island.
In October 2012, the operator marked
the first steel cut for the substructure
and steel began to be welded together
into large blocks by thousands of work-
ers in the ship yard. The blocks were
then joined together into megablocks,
and then into gigablocks, and eventually
into the substructure itself. In May 2013,
the keel was laid in the dry dock. In
November 2013, just 14 months from
first steel cut, the operator and its part-
ners celebrated the floating of the biggest
hull ever built.
The hull will remain floating alongside
a quay in the ship yard as the topside is
installed and integrated over the coming
years. The topside modules are being fab-
ricated and are now being lifted progres-
sively onto the hull.
Construction of a project of this mag-
nitude does not come without risk. Safe-
ty is the top priority. This goal underpins
daily conversations on personal safety
with workers in the construction yard
at their morning toolbox meetings as
well as longer-term process-safety con-
siderations of ensuring receipt of quality
equipment from vendors.
The Future for FLNG
The FLNG project is pursuing a design-
one-build-many standardization philos-
Flare
Booster compression
Natural-gas-liquid extraction
and fractionation
Turret and mooring
ophy so that developments can be quick-
er and more cost effective. Shell has set
up an LNG Programme Team to ensure all
learnings are captured and implemented
in subsequent projects.
The operator has also developed an
FLNG solution for leaner-gas fields.
FLNG Lean is a higher-capacity FLNG
facility that can be applied to fields with
lean compositions that do not have the
benefit of considerable condensate
and LPG revenue streams. By optimiz-
ing liquid-handling and -storage facili-
ties, FLNG Lean is able to achieve LNG-
production capacities of approximately
6 mtpa. FLNG Lean is built off the same
platform as Prelude, incorporating all
the lessons learned and technology de-
velopment since the start of the Pre-
lude project. Feasibility and pre-FEED
studies have been carried out, proving
that safety, technical, and economic cri-
teria can be met. Where possible (i.e.,
hull, accommodation, operating and
safety philosophies, flare and blowdown
system, cooling water), systems are
copied directly from Prelude, enabling
maximum repeatability.
To create sufficient deck space for the
liquefaction trains and process equip-
ment, some utilities have been moved
into the hull. Aeroderivative gas turbines
will drive liquefaction compressors and
generate power.
In addition to an enlarged operat-
ing envelope for inlet gas in terms of
both composition and flow rate, en-
abling technologies have been de-
veloped for deepwater applications of
FLNG and tandem offloading in harsh-
er environments. JPT
JPT • FEBRUARY 2016
Process Support and Marine Systems
in a Spar Hull: Innovation Meets Regulation

H istorically, the marine systems

on a spar are relatively simple.
However, attracted to the operational
value of having large volumes of storage,
particularly for flow assurance of the
subsea wells and flowlines during shut-
down conditions, the subject-hull design
criteria included the capabilities to store
(inside the hull) 10,000 bbl of dead oil,
1,000 bbl each of diesel and methanol,
and 2,400 bbl of subsea chemicals.
The paper traces the development
of the project’s process-support and
marine systems.

Introduction
The Gulfstar 1 (Fig. 1) is a spar-based
floating production system located in
the Gulf of Mexico. The spar has full
offshore-processing and measurement
capabilities for delivering oil and gas to
the export pipelines, which tie into the
existing offshore infrastructure.
The spar hull is 584 ft long and 85 ft in
diameter with a 60-ft hull freeboard. The
hull supports an 8,500-short-ton, three-
level topside. The hull also supports five
initial risers hung off at the riser porch
and provisions for four additional steel Fig. 1—Gulfstar 1 spar on location.
catenary risers to be pulled in through
pull tubes. The spar is held on station by and storage for dead oil, methanol, and ◗ 85-ft-diameter hard tank, skirt
a taut mooring system composed of nine diesel in integral (structural) tanks and section, and keel tank with an overall
chain/polyester/chain mooring lines ar- for flow-assurance chemicals in indepen- length of 584 ft. The top of the hull is
ranged in three groups. dent (free-standing) tanks inside the hull. at elevation of +60 ft and the bottom
The spar is fitted with a variable ballast of the keel tank is at an elevation of
system that uses compressed nitrogen to Arrangement of the Hull −524 ft, relative to the waterline.
adjust the seawater level in the four open- The hull exhibits a classic spar design, ◗ A wet center well with a diameter
bottom ballast tanks. The spar hull also with the general dimensions and geo- of 30 ft from elevation of −232 ft
supports process and utility equipment metries as follows: to an elevation +60 ft.
◗ A hard tank from elevation of
−152 ft to an elevation of +60 ft.
This article, written by JPT Technology Editor Chris Carpenter, contains highlights of
Surrounding the 30-ft-diameter wet
paper OTC 26040, “Process Support and Marine Systems in the Hull: Innovation Meets
center well and forming the section
Regulation,” by Peter Kitchen, Houston Offshore Engineering, and Scott Murphy, called the “hard tank” are six levels of
Williams Field Services, prepared for the 2015 Offshore Technology Conference, watertight flats or decks; these are de-
Houston, 4–7 May. The paper has not been peer reviewed. scribed in the complete paper.
Between elevation −152 ft and eleva-
Copyright 2015 Offshore Technology Conference. Reproduced by permission. tion −232 ft are four watertight radial

The complete paper is available for purchase at OnePetro: www.onepetro.org.

JPT • FEBRUARY 2016 73

 SI METRIC
CONVERSION FACTORS
The list below includes SI‡metric
conversion factors for common
engineering units.

acre × 4.046 873 E+03 =m2

acre × 4.046 873 E−01 =ha
acre-ft × 1.233 489 E+03 =m3
ampere-hr × 3.6* E+03 =C
Å × 1.0* E−01 =nm
°API 141.5/(131.5+°API) =g/cm3
atm × 1.013 250* E+05 =Pa
bar × 1.0* E+05 =Pa
bbl × 1.589 873 E−01 =m3
Btu × 1.055 056 E+00 =kJ
Ci × 3.7* E+10 =Bq
cp × 1.0* E−03 =Pa • s
cycles/sec ×1.0* E+00 =Hz Fig. 2—Schematic of the top of the spar.
dyne × 1.0* E−02 =mN
bulkheads that form four seawater bal- into four compartments at the waterline
eV × 1.602 19 E−19 =J
last compartments. These compartments for stability purposes. Two of these com-
ft × 3.048* E−01 =m
are configured to have varying propor- partments were converted into holds to
ft2 × 9.290 304* E−02 =m2
tions of void volume to seawater volume house the chemical storage tanks.
ft3 × 2.831 685 E−02 =m3 and provide the principal method for
°F (°F−32)/1.8 =°C controlling the draft as well as the static Process and Utility Equipment. In ad-
°F (°F+459.67)/1.8 =K list and trim of the spar. dition to the marine systems and fluid-
gal (U.S. liq) × 3.785 412 E−03 =m3 The ring-shaped keel tank is divided storage systems, the hull was designed
hp × 7.460 43 E−01 =kW into four compartments by watertight to accommodate two diesel-driven fire-
hp-hr × 2.684 520 E+00 =MJ radial bulkheads to provide the capabil- water pumps, four seawater-lift pumps,
in. × 2.54* E+00 =cm ity to apportion the fixed ballast in these two jockey pumps, the open-drain sump
in.2 × 6.451 6* E+00 =cm2 compartments so as to correct for known caisson, and the closed-drain skid. This
in.3 × 1.638 706 E+01 =cm3
and initial horizontal eccentricities in equipment was installed after the hull
the topside, mooring, and riser payloads. was upended, along with the air-handling
kip × 4.448 222 E+03 =N
During upending of the hull in the field, units. Fig. 2 illustrates the top of the spar.
knot × 5.144 444 E−01 =m/s
the keel tanks, skirt section, and the sea-
ksi × 6.894 757 E+03 =kPa
water ballast tanks all free flood with sea- Equipment Orientation and Support.
kW-hr × 3.6* E+06 =J water. Solid, fixed ballast was installed Equipment installed in the hull of a semi-
lbf × 4.448 222 E+00 =N offshore from a hopper barge after up- submersible or tension-leg platform can
lbm × 4.535 924 E−01 =kg ending of the hull. be installed, piped, commissioned, and
mL × 1.0* E+00 =cm3 operated in its customary orientation. A
mho × 1.0* E+00 =S Tanks. The tops of the 40-ft-high storage spar, however, is typically fabricated in
mile × 1.609 344* E+00 =km tanks are 8 ft below the spar deck. A coffer- the horizontal position and upended off-
oz (U.S. fl) × 2.957 353 E+01 =cm3 dam space between the tank and the outer shore. For this reason, spars do not typi-
psi × 6.894 757 E+00 =kPa shell, between adjacent tanks, and between cally contain equipment inside the hull.
psi2 × 4.753 8 E+01 =kPa2
the tank top and the spar deck is filled with For the Gulfstar spar, all the equip-
nitrogen. Each tank has one or two 8-ft ac- ment inside the hull had to be designed
sq mile × 2.589 988 E+00 =km2
cess trunks that extend from the top of the to be installed vertically in the block-
stokes × 1.0* E−04 =m2/s
tank to the top of the spar. Access to the fabrication phase and then rotated into
ton × 9.071 847 E−01 =Mg
tank is from the top of the spar through an the horizontal position during the block-
ton (metric) × 1.0* E+00 =Mg entrance in the access-trunk area. erection phase and eventually upended
tonf × 8.896 444 E+03 =N Because of the potential hazardous and offshore after the wet tow.
tonne × 1.0* E+00 =Mg corrosive nature of the chemicals, 316
stainless-steel pressure vessels were se- Fluid-Storage Systems
*Conversion factor is exact.
lected to store the production and subsea Dead-Oil Storage and Transfer. The
chemicals in the hull. The hull is divided dead-oil-storage and -transfer system

74 JPT • FEBRUARY 2016

 consists of two integral tanks, each with
an operating capacity of 4,880 bbl and
four transfer pumps. Dead oil is loaded
from the topside production header to
one of the two tanks located in the hull
where it is stored for future use during
a shutdown.
A detailed discussion of the spar’s
methanol- and chemical-storage and ma-
rine systems—including ballast, dewa-
tering, and tank-monitoring systems—is
provided in the complete paper.
Fire and Safety
The first step in managing fuel sources
is to ensure the containment of flam-
mable fluids. This includes selection of
materials to prevent corrosion; use of
welded connections instead of threaded
or flanged connections, especially in in-
accessible locations; selection of pump
seals; and locating openings such as tank
vents away from sources of ignition.
To reduce the potential for energy or
sources of ignition, the electric system
for the hull is ungrounded. In the chemi-
cal pump room there are no electric mo-
tors. All pump drivers are either hydrau-
lic motors or nitrogen-driven pneumatic
pumps. All instrumentation is intrinsi-
cally safe. Even the diode lights are inter-
locked so that they cannot be energized
until the ventilation is running.
To control the oxygen levels in the inte-
gral tanks and the independent tanks, an
active inert-gas (nitrogen) system is used.
In addition to the blanket gas on the in-
side of the tanks, a blanket-gas system is
installed to fill the entire void spaces sur-
rounding the integral tanks and the in-
dependent tanks. The oxygen levels are
measured in all of those spaces, and the
safety system will alarm if these levels are
greater than 5% and will take executive
action if the level increases beyond 8%.
The hull is fitted with fire-water,
water-mist, and foam fixed-firefighting
systems. The ventilation systems are de-
signed to achieve a minimum number of
air changes per hour (ACH) on the basis
of the hazards present and the service
category of the space. Even though the
hull is unmanned, the ventilation systems
are designed for continuous operation.
The chemical-pump room poses the most
risk and is categorized as a “cargo pump
room.” As a result, the ventilation system
provides 20 ACH.
A discussion of interfaces with regula-
tory bodies such as the Bureau of Safety
and Environmental Enforcement and the
US Coast Guard is provided in the com-
plete paper.
Conclusion
The large space available in the spar hull
lends itself well to the storage of large
amounts of fluids. Hull storage reduces the
topside payload and the vertical center of
gravity and, for a subsea-production-hub
facility, possesses considerable benefits
for the operator when large amounts of
dead oil can be stored for flowline flush-
ing. These benefits, however, do not come
without some shortcomings. One down-
side is overcomplication of the hull design
and fabrication. Another disadvantage is
negotiation of the additional regulatory
interfaces that must be managed through
the design and fabrication process. The
prescriptive rule-based regulatory system
in place for marine-system design is in-
tended to avoid mistakes, but when the
rules and regulations do not quite fit, there
is no easy avenue that allows the designer
to deviate from the rules, even if a more-
practical or safer method is available. JPT

Critical Well
Engineering

Well Construction
Material Selection
www.vikingeng.net

Multi-String Analysis
Failure Analysis
Training
Petroleum Consulting

The Way
Tubular Design
Should Be
 Implementation of an Acoustic Automatic
Leak-Detection Sonar in the Gulf of Mexico

T he authors have developed an

active acoustic automatic leak-
detection sonar (ALDS) designed to
◗

◗
Alarm on leaks within a few minutes
of their initiation
Ensuring that the system is
depths and for various leak rates and
plume geometries.

detect hydrocarbon leaks (mono- and reliable, networkable, compatible Equipment

multiphase oil and gas) at significant with subsea power-distribution ALDS System. ALDS comprises top-
ranges, allowing coverage of wide areas requirements, and deployable side and subsea equipment components.
from a single sensor. The system’s single across the full depth range of The topside equipment includes a rack-
subsea sensor offers 360° continuous producing oil fields (4000 m) mountable command unit known as the
coverage, providing automatic, robust Command Workstation (CWS) that dis-
detection and localization of any leak, Principles of Operation plays an easy-to-interpret infrastruc-
followed by an alert within tens of seconds The system is an active sonar that trans- ture schematic with leak-detection-
of a leak developing. This paper provides a mits ultrasonic pulses or “pings” at symbology overlay, a rack-mounted sonar
case study of an experimental program in 70 kHz into the water and listens for re- interface unit that performs all signal and
which the system underwent trials in deep flections from objects within its field of data processing, and a converter unit for
water (2000 m) at the Thunderhorse field view. This system is a phased-array pro- fiber communication and power inter-
in the US Gulf of Mexico (GOM). cessor capable of looking at returns from facing through the subsea umbilical. The
360° of azimuth coverage simultaneously. umbilical may be several kilometers long
Introduction Hydrocarbons have different acous- (8 km for the experiments detailed in the
Most methods for detecting small leaks— tic properties from the surrounding sea- complete paper) and terminates at the
for example, passive acoustic detectors water, notably a different acoustic im- deepwater tie-in point, which connects
that “listen” for the sound of a leak— pedance, which means that a sound wave through the subsea converter unit. The
have very limited range, which makes encountering the boundary between sea- sonar head is deployed on a 5-m-high
them suitable for applications such as water and hydrocarbon will be partial- tower on a steel sled designed to give the
pipeline surveys but not for wider field ly reflected and therefore “seen” by the sensor a good vantage point over the local
coverage. ALDS was developed to ad- sonar head. To determine if a reflection subsea infrastructure.
dress the requirements for a system that is from leaking hydrocarbons, the sonar This sled was designed to allow the
can provide leak detection, including the map for each ping is compared with a sonar to be leveled by an ROV and also to
ability to localize the leak, from a single reference map to see if the scene has allow the hook up of the sonar to a sub-
point for a whole drill center. The typical changed. Data processing is then used to sea termination hub by an electrical flex-
requirements for such a system include assess any changes from the reference ible link for power and an optical flexible
◗ Continuous and automatic detection map to see if they match the character- link for data.
and localization of oil and gas istics of a hydrocarbon leak or those of The sled was deployed to the seafloor at
leaks across a drill center in both other objects such as remotely operated a remote drill center by use of a dynami-
cluttered and uncluttered seabed vehicles (ROVs), which might be operat- cally positioned support vessel. The ROV
regions with full 360° coverage ing within the ALDS field of view. then made the power and communica-
◗ Automatic elimination of transient Theoretical modeling has been used tions connections. The sonar was powered
acoustic targets to ensure low false- to estimate the acoustic target strength up, and the ethernet communications over
alarm rates of oil and gas plumes at various water optical fiber were tested over an 8-km-
long link back to the production platform.
This article, written by JPT Technology Editor Chris Carpenter, contains highlights
Oil Target. Obvious environmental con-
of paper OTC 26270, “A Case Study on the Implementation of an Acoustic Automatic
straints prohibiting the release of an actu-
Leak-Detection Sonar (ALDS) in the Gulf of Mexico and Its Application to Current
al oil plume during this experiment meant
and Future Brazilian Fields,” by G. Brown, S. Fasham, P. Tomlinson, and R. Crook, that simulating the oil leak was quite a
Sonardyne, prepared for the 2015 Offshore Technology Conference Brasil, Rio de design challenge. A satisfactory solution
Janeiro, 27–29 October. The paper has not been peer reviewed. involved the use of 65-m-long neoprene
strands in 10 bundles of 10 strands, tie
Copyright 2015 Offshore Technology Conference. Reproduced by permission. wrapped approximately every 1.1 m and

The complete paper is available for purchase at OnePetro: www.onepetro.org.

76 JPT • FEBRUARY 2016

spaced around the inside circumference
with nylon hoops approximately 15 cm
in diameter, attached every meter to two
nylon cords as strain members. The idea
is that the neoprene is not under ten-
sion and thus can spread out between
each hoop, simulating the oil in an actual
plume. Calculations show this configura-
tion is equivalent to an oil-leak rate of ap-
proximately 100 B/D, depending upon the
typical ascent rates of oil plumes. Neo-
prene will therefore behave as an oil-like
acoustic target but with a water relative
density of 1.3, sufficiently high for it to
stand upright in the water column when
deployed from the dynamic-positioning
(DP)-vessel reel. The general shape that
the strands take in the water column is
also oil-plume-like in appearance.
Gas Target. The design of the gas-leak ex-
periment was even more challenging be-
cause it required very substantial seabed
infrastructure deployment and recovery
to allow an extended trial period. Fig.  1
shows the complete deepwater-gas-test
experimental equipment onboard the DP
vessel during transit to the trials area. The
image shows the 2100-m coiled tubing
unit used to supply high-pressure nitrogen
(N2) gas from the DP vessel to the seabed-
deployed (and ROV-controlled) hydraulic
distribution system (HDS) from which the
second ROV deploys a reelable gas-leak
target to the surveyed test locations.
The leak target was deployed by ROV
up to 350 m from the HDS to the re-
quired survey positions in the operation-
al field infrastructure. The calibrated gas
leaks at 2000-m water depth were mon-
itored by the ROV for 1 L/min (9 B/D at
depth) and 5 L/min (45 B/D at depth). The
differential pressure at depth is approxi-
mately 1 bar.
Experimental Methods
The deepwater tests took place in an op-
erational production field in the GOM
during early 2012 and early 2013 for the
oil-leak and gas-leak experiments, respec-
tively. A significant part of the planning
process was to ensure the completion of
comprehensive technical risk-assurance
assessments that dealt with the unique
challenges of conducting experiments of
this complexity in such hostile environ-
ments. Among the many challenges were
the following:
JPT • FEBRUARY 2016
Subsea 365-m
hose reel
Liquid N2
N2 pump
unit
Hose
puller
Fig. 1—Gas-target components on vessel before deployment.
◗ Designing and creating a
200-m-long oil target capable of
being deployed from a DP vessel
in approximately 2000-m water
depths
◗ Designing and making a controlled
gas-leak system for operation in
deep water for leak rates of between
1 L/min at depth (9 B/D) and
10 L/min (90 B/D), as well as “burps”
◗ Designing an experiment that
can be conducted safely in an
operational oil field close to a
subsea infrastructure
During the oil-leak experiment, the oil
target was deployed from a DP vessel to
various locations. Typically, several min-
utes of data were recorded at each target
position. For the gas-leak experiment, an
ROV deployed the gas target (approxi-
mately a 30-cm cube) to various surveyed
positions within the producing field.
Trial Results
The system has been proved against
monophase simulated oil leaks (so-called
“dead” oil) in an operational deepwater
(approximately 2000-m) production field
in the GOM. Leak rates of approximate-
ly 100 B/D were localized at sensor leak
ranges out to 500 m in uncluttered seabed
and to 250 m among the field seabed in-
frastructure of pipelines, manifolds, and
risers. The ultimate detection range re-
corded was limited by the linear extent of
the synthetic oil-leak target but is expect-
ed to exceed 1000 m for higher leak rates.
Against monophase gas leaks in the
same deepwater production facility, the
system detected small, 1-L/min at depth
(9-B/D) gas leaks reliably when in close
proximity to a variety of seafloor equip-
Sonar
tower
2100-m
coiled tubing
ment and at sensor leak ranges of 750 m
on clear vectors.
Assuming typical gas/oil ratios of ap-
proximately 1000 m3/m3, this gas-leak
rate of 1 L/min at depth would be associ-
ated with less than 2 B/D of oil in a typi-
cal mixed-phase leak of so-called “live”
oil. This deepwater experiment therefore
shows ALDS capable of detecting live-
oil leaks of less than 2 B/D at sensor leak
ranges of 750 m. In addition, analysis of
leak-rate sensitivity showed ALDS capa-
ble of detecting just 0.2 B/D of live oil at
sensor leak ranges of up to 500 m.
System Applications
The GOM trials represent a typical appli-
cation of ALDS for a new field in the pro-
duction phase; however, ALDS also has
potential for use during other stages of
field development. During the exploration
phase, the system can be used before drill-
ing to establish a reference map for the
field and potentially to detect any variable
natural seeps by measuring over a number
of tidal cycles. This can allow an operator
to document natural seepage in a field and
to inform a regulator before commencing
drilling. Here, ALDS can be linked to the
platform control room and, if possible,
back to shore to allow real-time reporting
of leak alarms, giving the operator a high
confidence of no leakage and early warn-
ing should an incident occur.
In production, the system is of sig-
nificant interest for monitoring injec-
tion wells during enhanced-oil-recovery
activities. Other potential applications
include carbon dioxide detection and a
standalone option for fields with limited
infrastructure; these developments are
detailed in the complete paper. JPT
77
 TECHNOLOGY FOCUS

Well Testing
Angel G. Guzmán-Garcia, SPE, Energy Consultant

What a tumultuous, challenging, and Despite the a comprehensive analysis of the field,
exciting year 2015 was. The roller- within the volume surveyed during pro-
coaster ride made it a year ripe for merg-
naysayers’ comments duction. It is the integration of engineer-
ers and acquisitions. Within the next and predictions, ing, geological, and geophysical infor-
few months, a few of the common com- the usual creativity mation that increases the value of the
pany names in our industry will soon interpretation from a well test. In fields
be part of history books, dwindle in our and ingenuity of engineers with complex reservoirs, this holistic
memories, and eventually disappear and scientists approach is definitely adding value to
from our vernacular. Geopolitical unrest, the teams in charge of putting together a
unpredictable weather conditions in all in the oil industry development program.
parts of the globe, and distrust shook were ubiquitous. Despite a smaller volume of articles
the world. and presentations on well testing in
As is usually the case under these cir- 2015, relative to previous years, the arti-
cumstances, panic spread like wildfire duction logging to allocate production cles chosen for this issue of JPT show the
and layoffs became the norm. Recent when multiple reservoirs are produced breadth of applications, as well as the
university graduates were having diffi- commingled. Because of the success ingenuity of experts and academics. As
culty landing well-remunerated jobs and derived from distributed-temperature difficult as it is to narrow down the pub-
were forced to move back in with their sensors and fiber-optic cables, the tem- lications to three selections, I believe
parents or find menial jobs until con- perature history acquired during a well that, in the end, these three manuscripts
ditions improve. Some consulting firms test is also receiving interest among show the incisive use of well-test data. Of
talk about cautious optimism for 2016, practitioners. The downhole tempera- course, the interested reader is encour-
not necessarily in regard to the oil price ture history is a quasimirror-image of aged to seek further articles on this topic
rebounding quickly. Nonetheless, despite the downhole pressure and, thus, can in the OnePetro library. JPT
the naysayers’ comments and predic- be used to infer the behavior of fluids
tions, the usual creativity and ingenu- in the wellbore, as well as to assist in
ity of engineers and scientists in the oil the interpretation during pressure tran- Recommended additional reading
industry were ubiquitous. sient analysis. Basically, engineers now at OnePetro: www.onepetro.org.
Downhole temperature measure- have access to additional information in
ments have been commonplace in pro- their toolbox that can be integrated into SPE 172689 The Evolution of Well-
Testing Practices From Conventional to
Zero Flaring in a Saudi Aramco Oilfield
Development by L. Duthie, Saudi Aramco,
Angel G. Guzmán-Garcia, SPE, is an independent energy consul- et al.
tant. He holds a PhD degree in chemical engineering from Tulane SPE 174897 Testing a Heavy-Oil
University. Guzmán-Garcia spent more than 23 years with Well in Ultradeep Waters: Challenges
ExxonMobil, where he held a variety of positions: conducting Overcome by State-of-the-Art Technology
research on the response of resistivity tools in shaly sands; inves- in Atlanta Project, Santos Basin, Brazil
tigating nuclear-magnetic-resonance petrophysical applications; by Carlos A. Pedroso, QGEP, et al.
conducting and interpreting production logging; designing fluid- SPE 175233 Successful DST Methodology
sampling collection and pressure/volume/temperature analyses; Adopted in Highly Deviated, Deep, Sour,
and designing, executing, and interpreting well tests in both siliciclastic and carbonate and High-Pressure/High-Temperature
environments. He is an instructor in well testing, production logging, and petrophysics Exploratory Well: A Case Study by Abdulla
and is a member of the JPT Editorial Committee. Al-Ibrahim, Kuwait Oil Company, et al.

78 JPT • FEBRUARY 2016

Production-Logging Tools Facilitate
Well Testing in Challenging Environments

T he Pugang gas field, one of the

biggest inland gas discoveries of
the last decade in China, has hydrogen
140
Gas Rate
45

Tubing Pressure
sulfide (H2S) concentrations as high as 120
Water Rate
10%, making surface- and downhole- 35

Tubinghead Pressure (MPa)

facilities design and execution 100

Gas Rate (104 m3/d)

challenging. Testing these wells also

Water Rate (m3/d)

is difficult because of the surface risks 80
25
inherent in conventional testing. Well
testing using production-logging tools
60
recently has been introduced in this 15
field and has been of tremendous
40
benefit to the operator in identifying the
inflow zones and in performing well- 5
test analysis. 20

Field Introduction 0 –5
The Pugang gas field, discovered in 2002, 09/10/12 10/2/9 10/6/9 10/10/7 11/2/4 11/6/4 11/10/2 12/1/30 12/5/29
is the second-largest gas field in China Date
and the largest sour field discovered in
Fig. 1—Typical well-production profile.
the last decade. This field is north of
Chongqing in the Sichuan basin. The
reservoir fluid in this field is dry gas anguan and Upper Permian Changxing Well Testing
with high H2S (14.4%) and carbon di- formations. These carbonates are open- for Reservoir Surveillance
oxide (CO2) content (9.91%). The field platform carbonates, mainly platform- With high-permeability zones, the gas
is flanked on the west with a gas/water margin shoal and reef sediments. The production observed tends to be on the
contact at 5140-m true vertical depth Feixianguan formation is composed high side, with some wells producing
subsea. With no voidage-replacement mainly of carbonate platform-margin at rates as high as 0.9×106 std m3/d. A
mechanism in place yet, the production shoal and evaporitic environments. typical well-production profile is shown
of water because of the contact move- The main porosity types in the Feixian- in Fig. 1. At these high rates, production
ment is also a concern for the opera- guan formation include intercrystalline, impairment because of scale buildup and
tor. Therefore, production logging as a solution-enlarged intercrystalline, solu- other associated corrosion effects is det-
reservoir-monitoring and -surveillance tion vugs, and compressional microfrac- rimental to overall field production given
tool has been used since 2010, and more tures. Normally, the solution porosity the small number of wells producing in
than 18 wells have been tested to date. is connected by fractures, which gives this field.
Gas in the Pugang field is mainly rise to the high permeability observed in Water production in Pugang gas wells
contained in the Lower Triassic Feixi- this formation. causes not only sour corrosion but also
sweet corrosion. Although most of the
This article, written by Special Publications Editor Adam Wilson, contains highlights tubulars used in this field are corrosion
of paper IPTC 17771, “Well Testing in Challenging Environments: A Case Study From resistant, continuous monitoring of the
state of downhole tubulars is essential.
Onshore China,” by Xin Ling Peng, Mei Sheng Liang, Jie Hu, Xiao Lei Wu, and Dong
Most of the producing gas wells are devi-
Lin Qin, Sinopec, and Prasanna Tellapaneni, Bo Nan Ren, Tao Zhang, and Zhi
ated (typically 35–40°). It is possible that
Hong Guo, Schlumberger, prepared for the 2014 International Petroleum Technology static water is present downhole, with
Conference, Kuala Lumpur, 10–12 December. The paper has not been peer reviewed. no production of water observed at sur-
face; this leads to corrosion downhole
Copyright 2014 International Petroleum Technology Conference. Reproduced by even in wells with no water production
permission. at surface. Water production in these gas

For a limited time, the complete paper is free to SPE members at www.spe.org/jpt.

JPT • FEBRUARY 2016 79

 wells has been shown to cause produc-
tion problems by liquid loading of the gas
wells. Therefore, monitoring water pro-
duction and any static water column be-
comes critical for production.
Pugang gas wells are generally com-
pleted in the entire Feixianguan for-
mation, and perforations greater than
400  m in length are seen often in these
wells. However, given the dolomitic na-
ture of the formation and the diagenetic
nature of the permeability, barely 10% of
the perforations contribute to the flow.
Without an estimate of downhole produc-
tion intervals and their contributions, a
meaningful pressure-transient interpre-
tation is challenging. Thus, an ideal test-
ing program for these wells must meet
the following minimum objectives:
◗ Confirm accessibility of the
formation and presence of static
fluid columns.
◗ Identify production intervals and
their contributions; confirm water-
entry zones.
◗ Estimate the permeability and
boundary parameters if observed.
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80
◗ Confirm the presence of dual-
porosity behavior.
◗ Quantify near-wellbore damage (if
any), and provide recommendations
for stimulation.
◗ Quantify the production potential
of the well.
These objectives, coupled with the in-
herent risks associated with testing these
high-H2S wells conventionally, led the
operator to use production-logging tools
to perform well-test analysis and for res-
ervoir surveillance.
Acquisition Methodology
The following acquisition methodology
was adopted to meet the objectives:
◗ Run 1: A dummy run of wireline-
conveyed weights is made to
confirm the accessibility of the
wellbore and to act as a drift run.
◗ Run 2: Wireline-conveyed pressure/
temperature sensors are run to
estimate the static fluid column
by means of change in tension
and fluid gradient while the well
is producing.
◗ Run 2: The well is shut in,
and pressure buildup at the
midperforation is recorded using
the pressure/temperature sensors.
◗ Run 3: Wireline-conveyed pressure/
temperature, spinner, and water-
identification sensors are run to
perform a shut-in wellbore profile
and identify any crossflow in the
production intervals.
◗ Run 3: The well is now produced
at a series of production rates by
changing the surface choke, and
midperforation flowing pressures
are recorded. Also, the production
intervals and their contributions
are recorded by use of spinners and
water-identification probes.
Because of the highly corrosive
content of the fluids, exposing the
production-logging tools to the mini-
mum amount of time required to achieve
the objectives is critical. Therefore, ex-
tensive prejob planning is conducted on
the basis of the information available at
the prejob stage, including any previous
production-logging runs made. Initially,
a dummy run with pressure and temper-
ature sensors is conducted to check the
depth to which the tools can pass and a
pressure buildup is recorded at the mid-
perforation depth. Real-time monitoring
of the pressure buildup is conducted by
the reservoir-engineering team to ensure
that the tool is not exposed to this cor-
rosive environment longer than neces-
sary. Once the pressure-buildup objec-
tives are met, the tool is pulled out of hole
and flowing passes are made. The flowing
passes are also monitored in real time by
the reservoir-engineering team to con-
firm that the data acquired are sufficient
to meet the objectives. In the case of no
ambiguity, the flowing passes are sus-
pended and the tool is pulled out of hole.
Splitting the operation into two runs
dramatically reduced the operational
failures observed.
Interpretation Work Flow
The flowing and shut-in flowing profiles
obtained in the acquisition, along with
the openhole logs and pressure/volume/
temperature data, are integrated to gen-
erate a gas-production profile in terms of
the producing intervals and their contri-
butions. Layer contribution, along with
measured flowing pressures, is used to
estimate the permeability of these in-
dividual producing layers. The layers’
petrophysical parameters are then con-
firmed by the pressure-transient analysis.
Pressure-transient analysis is performed
by use of multilayer models and by re-
gression of the petrophysical parameters
until a match is obtained. This history-
matched pressure-transient analysis
is used to estimate the initial reservoir
pressure and to estimate formation dam-
age. An estimate of the well deliverability
is then made using the flowing pressures
measured at different flow rates.
Conclusions
Because of the high H2S and CO2 con-
tent in the Pugang gas, well testing in
this field is challenging. This paper il-
lustrates a work flow for performing
well testing and reservoir surveillance in
this challenging environment. The com-
plete paper presents three case studies
in which use of this work flow yielded ac-
tionable information that could be used
not only to book reserves but also to in-
crease productivity. By using production
logs as a time-lapse measurement, infer-
ences about water-front movement, loss
of productivity, and depletion trends also
can be made. JPT
JPT • FEBRUARY 2016
PROPEL SSP:
THE PROPPANT + FLUID SYSTEM THAT

PAYS OUT
IN LESS THAN
4 MONTHS
REDUCING COST PER BOE.
READ THE WHOLE STORY AT FMSA.COM/4MONTHS
 Complex Reservoir Architecture Validated
by Integrating Well-Testing Outcomes

T his work presents a real

field example in which the
integration of well-testing and
6,100
Cleanup Main Flow Sampling
26,000
24,000
6,000 22,000
geological interpretations increased 20,000
the understanding of a complex, 18,000

Oil Rate (STB/D)

5,900 Main BU

Pressure (psia)
heterogeneous reservoir. An integrated Initial BU 16,000
study of both dynamic well-testing Final BU 14,000
5,800
data and geological/seismic models 12,000
was conducted to assess a very 10,000
complex pressure response obtained 5,700
8,000
from a production test conducted in 6,000
an offshore oil well. The well-testing 5,600 4,000
objectives were to improve reservoir 2,000
characterization and to quantify the 5,500 0
well productivity in a high-permeability 09-Feb 10-Feb 11-Feb 12-Feb
oil-bearing sandstone formation.
Fig. 1—Well 3 testing sequence. BU=buildup.

Introduction
The target of the production test [drill- perature, average permeability, and well DST Operations
stem test (DST)] is considered one of damage; the assessment of well produc- Well 3, the subject well, was tested along
the more important reservoirs for the tivity; and the detection of late-time the 9⅝-in. liner, using a conventional
development of a field asset located in effects (i.e., any presence of hetero- 4½-in. DST string, over the perforated
ultradeep water. Both the dimensions geneities or permeability barriers with- interval from 13,041- to 13,140-ft mea-
involved and the average petrophysical in the radius investigated by the test sured depth (MD).
properties are expected to sustain quite with respect to the current geological/ Because the tested formation was rec-
good production performance. seismic environment). ognized to be sand sensitive, the well
A dedicated test giving good and reli- The bottomhole data were acquired by was completed for sand control with
able interpreted results was considered a real-time acquisition system through- an inside-casing gravel pack (ICGP) to
essential to assess the expectations con- out the well testing to achieve an effec- counter the risk of sand production. An
cerning the reservoir productivity and tive balance between the value of in- acoustic sand detector also was included
extent, thus confirming the viability of formation and the optimization of the in the surface equipment and installed
the development project. rig time and costs. The bottomhole- upstream of the choke manifold, to mon-
The DST addressed the general main pressure (BHP) and -temperature data itor in real time any risk of solids and
well-testing objectives: the acquisition were transmitted in acoustic wireless sand production at surface throughout
of representative reservoir-fluid sam- mode through the tubing because no the test.
ples (at surface and downhole); the es- cables are allowed in ultradeep water, for The downhole tester valve [intelli-
timation of formation pressure and tem- safety reasons. gent remote dual valve (IRDV)] was set
at 12,736-ft MD, allowing downhole
This article, written by Special Publications Editor Adam Wilson, contains highlights shut-in of the well to minimize well-
of paper IPTC 17986, “Complex Reservoir Architecture Validated by Integrating bore storage effects. The gauge cho-
sen as the reference for the well-testing
Well-Testing Outcomes,” by Eleonora Azzarone, SPE, Enzo Beretta, SPE, Sergio
analysis was positioned at 12,529-ft
Salvadori, and Pietro Bettazzoli, Eni, prepared for the 2014 International Petroleum
true vertical depth (TVD), below the
Technology Conference, Kuala Lumpur, 10–12 December. The paper has not been IRDV and 184 ft above the top of the
peer reviewed. tested interval. A sampler carrier was
also included in the DST string config-
Copyright 2014 International Petroleum Technology Conference. Reproduced by uration, for downhole reservoir-fluid-
permission. sample collection.

For a limited time, the complete paper is free to SPE members at www.spe.org/jpt.

82 JPT • FEBRUARY 2016

 The testing operations lasted almost 1
week. The well-test sequence, with BHP
history and produced-oil rates, is pre-
sented in Fig. 1.
Well-Testing Analysis
The hydrocarbon was recognized to be
light oil, at 42 °API. The bubblepoint
pressure was expected to be on the order
of 4,400–4,600 psia, from pressure/
volume/temperature studies of the field.
Neither carbon dioxide (CO2) nor hydro-
gen sulfide (H2S) was detected during
testing operations.
The express-pressure-tool (XPT) pres-
sure survey run on the intercepted oil-
bearing reservoir clearly showed the
presence of oil, with an average gradient
of 0.259 psi/ft.
The reservoir pressure, extrapolated
from the well-test interpretation of the
DST, proved to be in line with the pres-
sure trend of the survey.
Tidal Effect and Correction. When test-
ing a well with a floating system in ul-
tradeep water, tidal phenomena can
affect, sometimes heavily, the BHP mea-
surements acquired during the tests. The
pseudoharmonic waves induced by tides
are capable of introducing significant
noise on the pressure-gauge response,
which is amplified at late times. What-
ever the hydrocarbon, this effect increas-
es as formation permeability increases.
By capturing the current tidal-effect
law with dedicated seabed gauges, it is
possible to remove this effect from the
real pressure response and proceed with
a reliable interpretation.
Interpretation Diagnosis and Results.
The DST well-test interpretation was
conducted on the tide-corrected gauge,
which was chosen as the reference for
the analysis. The whole rate history was
introduced to honor the principle of the
superposition effect.
The three buildups and three draw-
down periods of the main flow were
compared. They showed similar trends,
except for the first drawdown period
because reasonable cleanup conditions
were not achieved. This proved a good
consistency in the characterization of
the most representative reservoir and
well parameters among the different
pressure responses.
JPT • FEBRUARY 2016
All the reported buildups were per- ◗ The late-time pressure response,
formed with the well shut in downhole at after correction for tidal effects,
the IRDV. The main 36-hour buildup was clearly proved that some geological
selected as the reference period for the features were investigated within
interpretation. the testing time. On the basis of
The reservoir static pressure extrapo- an updated geological map, the
lated from well-test interpretation at the channel model was assumed as
gauge depth of 12,529-ft TVD proved to the most likely solution, with the
be consistent with the XPT-survey trend. well location set approximately in
The consequent pore pressure showed a the middle.
normal hydrostatic gradient. ◗ The adopted wireless technology
The lithological scenario proved to proved to be very effective in
be quite complex, with considerable managing the testing operations in
permeability-thickness-product (kh) real time. In particular, the main-
variations. buildup duration was increased to
In this interpretation process, the achieve better confidence in the
major changes in kh were attributed late-time response.
mainly to the thickness variations be- ◗ The integrated dynamic and static
cause of overlapping layers. In this per- studies were the key to achieving a
spective, the average oil permeability was true understanding of the complex
assumed constant because permeability reservoir characteristics and
variations could be considered of mini- behavior, representing the basis
mal impact. Furthermore, the mobility for moving into any sound field-
comparison of the layers provides quite development implementation. JPT
similar values.
The mechanical-skin value was deter-
mined to be acceptable considering the
ICGP completion and the overbalance
perforations. The well-test interpreta-
tion analysis was performed considering
both constant- and variable-skin options.
From the comparison of the two different
matches, it is clear that the well improves
its performance from the cleanup to the
main flow phase.
Conclusions
The well-testing analysis on Well 3, sup-
ported by robust geological and seismic
investigations, provided the following
main conclusions:
◗ Neither CO2 nor H2S was detected.
Sand or solids production was
never experienced during the
test. This confirmed the good
efficiency of the gravel-pack
system. The basic sediments and
water measured during the main
flow was 0%.
◗ The extrapolated reservoir-
pressure result was consistent with
XPT pressure data. The formation
is confirmed to be in a normal
hydrostatic pore-pressure regime.
◗ Despite the ICGP completion
and overbalance perforations,
an acceptable mechanical skin
was found.
83
 A Nonisothermal Wellbore Model
and Its Application in Well Testing

A lthough the wellbore is in a

nonisothermal environment,
heat transfer between the fluid in
bore model was coupled with an exist-
ing reservoir model through BHT. After
that, several synthetic cases were simu-
which includes a calculation of optimal
transformations from data sets, is ap-
plied for the purpose of demonstrat-
the wellbore and the formation is lated to verify the wellbore model. Final- ing an existing relationship between
often ignored and temperature is ly, on the basis of the coupled wellbore/ temperature (response variable) and
usually assumed constant in data reservoir model, the transient tem- flow rate and pressure (predictor vari-
interpretation, which will lead to perature behavior during flowing and ables). The algorithm is known as the
misunderstanding of the pressure shut-down periods was drawn out for alternating-conditional-expectations
profile. In this work, wavelet transform well-testing analysis and some typical (ACE) method.
and a nonlinear-regression-analysis thermodynamic parameters were esti- The ACE method was used for a set of
method were used to study the mated by use of a set of field data. transient downhole data that were re-
relationships between downhole corded by PDGs. Then, the maximal cor-
temperature, pressure, and flow rate. BHT, BHP, and Flow-Rate relation and the set of optimal transfor-
A nonisothermal wellbore model Relationships mations that contains the transformed
was established that is capable of It is worth noting that formation pres- values in the same order as the inputs
predicting temperature, pressure, sure and temperature emerged in many are produced.
flow rate, and liquid-fraction profiles similar characteristics. First, tempera-
under multirate and multiphase ture and pressure meet the same diffu- Wavelet Transform. Wavelet trans-
production scenarios. sion equation. Second, at the junction be- form is a mathematical method to ana-
tween formation and well, near-wellbore lyze signals that have the characteris-
Introduction damage should be considered for pres- tic of time variation. In other words, it
In order to monitor the downhole pro- sure. At the same time, on the tempera- is a multiresolution frequency-analysis
duction and injection conditions, as well ture side, heat loss should also be con- method. Compared with other signal-
as make decisions for well-performance sidered, located in the formation, casing, analysis techniques, such as the
optimization, the dynamic temperature tubing, and cement. Third, wellbore nonlinear signal-processing method,
data acquired from permanent down- storage is compared with heat-capacity wavelet transform can provide more-
hole gauges (PDGs) and distributed- coefficient in wells. Fourth, constant- accurate analysis results for certain
temperature sensors (DTSs) are often in- pressure and impermeable boundaries classes of signals and images.
terpreted widely. have been set for pressure boundaries, There are several kinds of wavelets. In
In this paper, first, the relationships but the temperature boundary is always this study, the simplest and most widely
among bottomhole-pressure (BHP), regarded as infinite ground. Analyses of used method—the Haar wavelet—was
-temperature (BHT), and flow-rate data the measured PDG data show that the selected to process the downhole tran-
were analyzed briefly by use of wave- temperature can also be used to provide sient pressure and temperature data ac-
let transform and nonlinear regression. reservoir information. quired by PDGs.
Next, a nonisothermal wellbore model If we treat the transient pressure and
with complex structure was derived the- Nonlinear-Regression Analysis. A temperature data as signals of a draw-
oretically step by step. Then, the well- nonlinear-regression-analysis method, down period, the amplitude of well-test
coefficients is positive and, for pres-
This article, written by Special Publications Editor Adam Wilson, contains highlights sure buildup, the amplitude is negative.
of paper IPTC 18152, “A Nonisothermal Wellbore Model With Complex Structure and Therefore, the timing of the flow events
can be identified with wavelet transform.
Its Application in Well Testing,” by Shiyi Zheng, SPE, London South Bank University,
and Yiqun Zhang, SPE, Heriot-Watt University, prepared for the 2014 International
Theoretical Derivation of the
Petroleum Technology Conference, Kuala Lumpur, 10–12 December. The paper has Nonisothermal Wellbore Model
not been peer reviewed. The nonisothermal wellbore model rep-
resented in this paper is capable of pre-
Copyright 2014 International Petroleum Technology Conference. Reproduced by dicting the temperature, pressure, and
permission. flow-rate profiles under multirate and

For a limited time, the complete paper is free to SPE members at www.spe.org/jpt.

84 JPT • FEBRUARY 2016

multiphase production scenarios. This
numerical wellbore model calculates
temperature and pressure from bottom-
hole to wellhead separately and iter-
ates until the estimated and calculated
values converge.
First, a geothermal gradient must be
assumed and a timestep set, along with
input for other wellbore/formation prop-
erties. Then, the Hagedorn-Brown model
is modified and recoded to calculate
pressure, flow-rate, and liquid-fraction
profiles. After that, this pressure-
calculation model is coupled with a heat-
transfer model to calculate the temper-
ature profile. Finally, the program will
check the convergence of temperature
profiles and continue to calculate for next
timesteps by using the steady-state tem-
perature and pressure profiles to replace
the items in transient-state temperature-
calculation equations. Because the pres-
sure model and temperature model are
not run simultaneously, the fluid param-
eters can be amended by iteration and
the problem of having to enter either the
exact pressure profile or the exact tem-
perature profile in advance is solved.
Heat-Transfer Model. Thermodynamic
behavior of the flowing fluid is one of the
dominant factors that affect multiphase
flow in the wellbore. In addition, PDGs
usually are installed several hundred feet
above the pay zones, so the heat transfer
along that distance, which can lead to
misunderstanding the pressure profile,
should not be ignored. In order to study
the principle of temperature well testing,
first the temperature changes along the
wellbore need to be figured out, includ-
ing heat transfer by convection in the
fluid and by conduction between well-
bore and formation.
Pressure- and Flow-Rate-Profile Cal-
culation Model. The Hagedorn-Brown
model is one of the more successful
wellbore-pressure-drop-calculation
methods for multiphase steady-state
flow. This correlation includes the ef-
fects of gas slippage and was generated
by analyzing a wide range of experimen-
tal data, such as liquid rates, gas/liquid
ratios, tubing sizes, and different fluid
properties, obtained from a vertical well.
Although the Hagedorn-Brown meth-
od was developed for vertical wells, in
JPT • FEBRUARY 2016
this paper, a modification is made so that ◗ The Joule-Thomson coefficient,
it suits inclined flow and even applies to viscosity, permeability, and porosity
horizontal wells. Fluid properties are also are very sensitive to temperature
treated as functions of pressure and tem- changes, and, in accordance with
perature rather than as constants. In ad- an established nonisothermal well-
dition, the Hagedorn-Brown method was testing model, these representative
found to be effective for slug-flow predic- thermodynamic parameters can be
tion in oil wells; however, on the basis of obtained accurately.
other existing correlations and assump- ◗ For pressure-buildup tests, a
tions, different flow regimes such as bub- wellbore-storage effect starts with
ble flow are taken into account. wellbore-temperature increase
and ends when the temperature
Application of the decreases. The jump in temperature
Nonisothermal Wellbore can be very small in the case of
Model in Well Testing high permeability and small Joule-
The PDGs and DTSs are always some dis- Thomson coefficients but can be
tance away from the sandface (approxi- relatively large when low porosity
mately 400 ft); in fact, heat transfor- and large viscosity exist. Thus, the
mation occurring between the wellbore transient temperature data may be
fluids and the surrounding formation will used as a fast and reliable diagnostic
seriously affect the transient tempera- tool in well-testing analysis to detect
ture recorded by the gauges. In order to the end of wellbore storage. JPT
use those downhole transient data for
well-testing interpretation, it is neces-
sary to couple the wellbore model with a
reservoir model to simulate actual tran-
sient temperature behavior during pro-
duction and shut-in periods. Then, some
typical thermodynamic parameters can
be estimated by matching the simulat-
ed results with the real data. In addi-
tion, the effect of wellbore storage on
temperature can be simulated by the Changing Your
model, and it provides a new method
to assist transient pressure analysis for Address?
well-testing interpretation.
Let SPE know.
Conclusions +1.972.952.9393
◗ The analyses for measured PDG data
by wavelet transform and nonlinear
regression show that temperature
responds to changes in flow rate and
pressure; therefore, temperature
Update Your
can be used to provide reservoir Member Profile
information.
◗ A nonisothermal wellbore model http://www.spe.org/
was developed, and its reliability members/update
has been verified by comparing it
with other published models.
◗ The established wellbore model
can calculate temperature profiles,
integrate pressure data, and SPE Benefits
determine flow-rate profiles more
accurately. Discover the possibilities.
The transient temperature behavior
http://www.spe.org/
◗
at the gauges can be simulated by
members/benefits
coupling the wellbore model with a
reservoir model.
85
 TECHNOLOGY FOCUS

Formation Damage
Niall Fleming, SPE, Leading Adviser, Well Productivity and Stimulation, Statoil

Does formation-damage coreflooding completion fluid. A cleanup sequence
give a good representation of damage is performed, increasing either draw-
that occurs downhole? For those of us down or flowrate, after which the plug
who are actively involved in coreflood- can be spun down in an ultracentri-
ing, this is a common question to be fuge to irreducible brine saturation and
asked. In addition, it is central with a final permeability is measured that
regard to the design of corefloods that can be compared to the baseline per-
will provide information enabling the meability. The percentage difference
qualification of specific drilling and between these permeabilities gives the
completion fluids or identification of return permeability.
damage mechanisms for wells in pro- At a recent meeting of those inter-
duction. Key to all of this is the selection ested in formation damage from North
of representative core material from the Sea  operators, I asked the question,
main production or injection intervals. “What is return permeability?” Is the
Formation damage represents a most representative return perme-
near-wellbore reduction in permea- ability that identified after the clean-
bility during drilling, completion, or up sequence of the  coreflood or that
production, and the plugs selected for identified after spin down? With regard
testing represent a point around the to the latter, one of my formation-
wellbore in which we attempt to iden- damage colleagues often says that
tify either the damage mechanisms that we cannot spin down the reser-
can be expected for new wells or that voir. Therefore, how representative is
may have occurred for wells in produc- this permeability?
tion. In order to achieve this, return- Another question asked at the
permeability tests are performed that same meeting was, “What are the
are designed to replicate drilling and pass/fail criteria for a formation-
completion of wells, cleanup, and pro- damage test?” Each company tends to
duction. Each company has its own have its own specific criteria, but one
coreflood procedure, but they follow a criterion commonly used is that a 60%
basic pattern of a baseline permeabil- return permeability is acceptable. How-
ity followed by application of mud and ever, this in itself is an oversimplifica-
Niall Fleming, SPE, is the leading adviser for well productivity and
stimulation with Statoil in Bergen, Norway. He has worked
previously as a production geologist, chemist, and engineer.
Fleming’s main interest is within the area of formation damage
from drilling and completion fluids and in wells under production.
He holds a PhD degree in geology from Imperial College London.
Fleming has authored several SPE papers, is an associate editor
for SPE Production & Operations, serves on the JPT Editorial
Committee, and has been a member of the organizing committees for several SPE
conferences and workshops.
tion because a high-permeability res-
ervoir (e.g., 10 darcy) could experience
significant formation/completion dam-
age without affecting well productiv-
ity. Furthermore, it does not take into
account that openhole completions
tend to be more resilient to damage
because of the high surface area avail-
able for inflow.
After we have performed our core-
flooding, obtained return permea-
bilities, and identified the formation-
damage mechanisms for the different
tests performed, a common question
asked is, “How do these values relate
to potential well productivity?” This
is a fundamental question and one for
which we have not had an adequate
answer. Recently, however, compu-
tational fluid dynamics has been used
with some success to relate coreflood
data to provide an indication of produc-
tion rates. Predicted values have been
shown to be similar to actual production
rates achieved.
I hope you enjoy the papers. JPT
Recommended additional reading
at OnePetro: www.onepetro.org.
SPE 174174 Integrated Approach
To Managing Formation Damage in
Waterflooding by Sergey Aristov, Shell,
et al.
SPE 174188 Bursting the Skin Bubble—
Decoupling Formation Damage From Skin
in Complex Well Geometries by Michael
Byrne, LR Senergy, et al.
SPE 174199 New Laboratory Method To
Assess Formation Damage in Geothermal
Wells by Zhenjiang You, The University of
Adelaide, et al.

86 JPT • FEBRUARY 2016

Formation-Damage Diagnosis Facilitates
Successful Remediation in Sandstone

W ell-control fluids were used

during a routine overbalanced
workover operation in an offshore
mechanisms can occur during sandstone
acidizing: formation deconsolidation in
acid; reprecipitating during primary, sec-
access from the tubing puncher, an un-
treated pre-existing well-fluid-loss con-
dition, and a poor cement-plug cleanup
well completed in high-permeability ondary, and tertiary reactions; or the re- with a viscous HEC pill are believed to
sandstone. A fluid-loss-control lease of fines because of partial decompo- have compromised the entire wellbore-
pill was used to control excessive sition of minerals in acid. cleanout success.
losses; however, because of the high In the case of damage with oil-based After pulling out tubing, the well was
permeability of the reservoir and the material or emulsions, microemulsion cleaned and stimulated further with
absence of sized particles in the pumped treatments have been recommended. microemulsion-acid treatment before
pill, a large amount of fluid was lost The microemulsion will solubilize the oil flowback, though with limited success.
to the formation. A comprehensive and emulsions and fluidize the filter cake After initial post-microemulsion clean-
review, accompanied by laboratory into a single mesophase while dissolving up, the flowback showed emulsion re-
work, was conducted to identify the the acid-soluble particles and making the turns. The well was then treated with a
damaging mechanism and formulate a solids and formation rock water-wet. The solvent. Thereafter, 100% oil was recov-
remedial treatment. oil-based-mud particles in a filter cake ered, but natural well production could
will disperse, allowing the produced fluid not be sustained.
Introduction to displace these blocking particles from
Polymer-based fluids are beneficial in the damaged zone into the wellbore and Preliminary Formation-Damage
terms of generating viscosity to clean out through any screens. Diagnosis
the wellbore during any well interven- During well completion, multiple fluids
tion. Improper polymer selection has led Well Background not only were circulated downhole but
to significant formation damage in sev- The well in question was drilled and com- also were injected into the well forma-
eral situations. Polymers also can invade pleted initially as an oil producer with an tion. It was suspected that the subse-
the high-permeability zones, hampering inflow-control-device/sandscreen com- quent treatment fluids—microemulsion
hydrocarbon flow through the zones. Bi- pletion installed in the horizontal later- acid and solvents (cutting wash and de-
polymers generally are removed through al across the reservoir. Because of some mulsifier) spotted and injected across the
acidizing, which breaks down the poly- issues with completion hardware in the lateral—may also have reacted with the
mer backbone. The damage caused by well, a workover operation was conduct- earlier fluids lost and injected, to form
polymers can be minimized with proper ed that revealed significant formation damaging byproducts in the well.
polymer selection. damage/production impairment. Dur- Generally, all the introduced
Standard remedial treatments for re- ing the workover, multiple cement plugs completion-fluid materials and existing
moving the near-wellbore polymer in- were spotted in the top sandscreen bore preworkover wellbore fluids were iden-
clude injecting solvents (e.g., xylene), to create a barrier. Before the cement tified as subjects of investigation. These
acids, alcohols, glycols, surfactants, or a job, production tubing was punched and included microemulsion, brine, HEC/XC
mixture of these liquids into the well. 309 bbl of diesel and 540 bbl of NaCl polymer brine, cement-slurry filtrate,
In sandstone well treatments, forma- brine with hydroxyethylcellulose (HEC)/ and diesel.
tion composition should be considered xanthan gum (XC) polymer were bull- Formation-damage laboratory evalua-
carefully, especially minerals susceptible headed in an attempt to clean the pro- tion was designed to be consistent with
to acid attack. Three potential damaging duction string. Inadequate circulation the preliminary formation-damage di-
agnosis. Fluid-chemical samples were
first analyzed, and compatibility tests
This article, written by Special Publications Editor Adam Wilson, contains highlights
were conducted to generate emul-
of paper SPE 174279, “Formation-Damage Diagnosis Facilitates a Successful Remedial-
sion or precipitate that was similar to
Treatment Design and Execution in Sandstone Horizontal Oil Producer: A Laboratory that observed in the field. Thereafter,
and Field Case Study,” by M.A. Bataweel, SPE, A.H. Al-Ghamdi, SPE, P.I. Osode, SPE, potential treatment-fluid options for
T.A. Almubarak, SPE, E.S. Azizi, SPE, Eddy Sarhan, SPE, and M.G. Al-Faifi, SPE, damage removal were evaluated to de-
Saudi Aramco, prepared for the 2015 SPE European Formation Damage Conference, termine the most effective option for the
Budapest, Hungary, 3–5 June. The paper has not been peer reviewed. well conditions.

For a limited time, the complete paper is free to SPE members at www.spe.org/jpt.

JPT • FEBRUARY 2016 87

 Procedure and
Experimental Work
Fluid-chemical samples were first ana-
lyzed and compatibility tests were car-
ried out to generate emulsion or pre-
cipitate similar to that observed in the
field. Thereafter, potential treatment-
fluid options for damage removal were
evaluated to determine the most effec-
tive option for the well conditions.
Simulation of the Fluid-Reaction By-
products/Emulsion Samples. Previ-
ous laboratory evaluations indicated
that there was no incompatibility issue
between microemulsion-treatment
formulation and the formation crude
and formation water. Nonetheless,
it was considered important to veri-
fy this observation because emulsion
was observed during the post-treatment
well cleanup.
Treatment-Fluid Options for Re-
covered Field Samples and Fluid-
Reaction Byproducts. The perfor-
mance treatment-fluid options con-
sidered for removal of the recovered
field emulsion sample and any other
identified laboratory incompatibility
sample were benchmarked against the
microemulsion-fluid-treatment formu-
lation applied in the well.
Coreflood. A coreflood apparatus
was built to simulate fluid flow in po-
rous media in the reservoir. A positive-
displacement pump equipped with a
programmable controller was used to
deliver fluids at constant flow rates. A
set of valves was used to control the in-
jected fluid into the core sample. Pres-
sure transducers were used to measure
the pressure drop across the core. A
convection oven was used to provide
a temperature-controlled environment.
Results and Discussion
Simulation of the Wellbore Fluids In-
teraction To Replicate Emulsion For-
mation. Microemulsion treatment
with wellbore fluids including viscous
pill, crude, cement filtrate, and com-
binations of these was performed to
evaluate any potential precipitation or
emulsion. Compatibility tests were con-
ducted at simulated reservoir tempera-
88
ture of 160°F and aged for 24 hours. The
microemulsion treatment was mixed
with different fluids at three different
volume-percent ratios.
Analysis of the interaction between
treatment solution and HEC/XC viscous
brine revealed no indication or visual-
ization of any separation or precipita-
tion that could be the source of dam-
age. When microemulsion treatment
was mixed with crude, it did not show
any indication of emulsion and the two
liquids separated with a clear interface
between them. When microemulsion
treatment was mixed with HEC/XC vis-
cous brine then mixed with crude, it
showed the potential of emulsion.
Cement filtrate was mixed with
crude oil at different volume ratios and
showed emulsion tendency, especially
at a 1:3 ratio of filtrate to crude. Mix-
ing microemulsion treatment with ce-
ment filtrate did not show any negative
interaction, indicating good compatibil-
ity. To evaluate the effect of microemul-
sion fluid on preventing or enhancing
emulsion tendency, cement filtrate was
mixed with microemulsion at a 1:1 ratio
before being mixed with crude at differ-
ent volume ratios. The test showed that
microemulsion had a positive effect and
prevented the formation of emulsion.
Only two cases showed potential
emulsion: viscous HEC/XC brine and
cement filtrate. Adding microemulsion
helped prevent emulsion in all cases.
Field-Sample Identification. Viscous
brine showed the highest potential of
forming emulsion because large amounts
of HEC/XC brine were lost during the
field operation. High-viscosity HEC/XC
brine was prepared and analyzed with
nuclear magnetic resonance (NMR) to be
used as reference. The NMR signal gen-
erated from the aqueous part of the field
sample after the emulsion was broken
matched the previous signals from the
sample prepared in the laboratory, indi-
cating that the viscous pill aggravates the
formation of emulsion.
Treatment To Remove Field Emulsion
Samples. Experiments were conduct-
ed to assess the ability of the pumped
microemulsion solution and proposed
treatment to break the emulsion. If the
pumped treatment broke the emulsion,
it would eliminate the possibility that
the loss of productivity was from emul-
sion blockage. The first two experi-
ments were conducted using the pre-
viously pumped microemulsion-based
fluid. The first experiment uses the com-
plete package with 10% acetic acid, and
the second was without the acid. Both
showed the ability to break the emul-
sion. A second set of experiments was
conducted to develop and evaluate an
alternative treatment based on formic
acid to break the field emulsion. That
proposed formulation was also able to
break the emulsion.
Formation-Damage Diagnosis and
Remedial Treatment Design. Review
of the field operation and initial labo-
ratory work indicated that loss of the
viscous pill to the formation could be
the damage mechanism in this case.
The initial microemulsion with acetic
acid was designed to treat any emulsion
and damage on the sandface but did not
penetrate deeply enough to remove the
polymer damage. The proposed treat-
ment targeted a larger-volume treat-
ment with deeper invasion. The pro-
posed stimulation fluid should take care
of the emulsion in the wellbore and at
the sandface and should be compati-
ble with formation rock, to prevent any
negative interactions with clay that can
worsen performance.
Conclusions
◗ Microemulsion-treatment fluid
was found to be compatible with
formation crude, the viscous pill,
and cement filtrate. It also helped
prevent emulsion potential from
cement filtrate mixed with crude.
◗ Analysis of the flowback samples
indicated that the recovered
emulsion was a mixture of
viscous polymer/brine and
formation crude.
◗ Formic acid and microemulsion
treatment were found to form
an effective demulsifier.
◗ Both treatment solutions were
compatible with the formation
core and showed some ability to
remove damage caused by the
viscous pill. JPT
JPT • FEBRUARY 2016
Filtrate and Mudcake Characterization:
Implications for Formation-Damage Control

T his paper focuses on experimental

methods quantifying water-based
muds and investigating effects on
same time, the filter cake is undergo-
ing compaction by the effect of the fluid
drag as the smaller drilling-fluid parti-
published analytical models. The dis-
tinctive element of this study is that, un-
like other HP/HT filtration experiments
particle bridging, filtrate invasion, and cles are flowing through the filter cake. that used filter paper or ceramic disks,
permeability. To show the particle- As a result of the deposition and com- the filtration media used were sand-
bridging effect, high-pressure/high- paction undergone by the filter cake, the stone cores. This helps to capture rock-
temperature (HP/HT) filtration tests thickness of the cake and its porosity heterogeneity effects on filtration.
were conducted on sandstone cores and permeability will vary, thus affect- First, sandstone cores were cut from
with permeability ranging from 10 md ing the performance of the filtration. one sandstone slab. Four types of sand-
to more than 1100 md. Analytical During filtration, new particles are de- stone cores were used for this study—
models were used to calculate mudcake posited on the surface of the cake and, Bandera brown, Berea upper gray, Berea
permeability for the tests using over time, the thickness of the cake in- buff, and Michigan. The sandstone-core
different mix designs. The results from creases until filtration subsides. permeabilities used for testing were
this study can be applied to designing Filtrate behavior of the drilling fluid 15.9, 122, 423, and 1130 md.
wellbore-strengthening fluids to affects the permeability of the filter cake. The second step in the experimen-
mitigate formation damage. Thin mudcakes, which have low permea- tal setup was to prepare the drilling-
bility, strengthen the wellbore; however, fluid composition and measure the
Introduction thick mudcakes can cause operational particle-size distribution (PSD) before
In an overbalance situation, the fluid problems such as stuck pipe, excessive and after the blend. Water-based drill-
phase of the mud, called filtrate, in- torque, drag, and high swab and surge ing fluids are composed of gels, thick-
vades the formation, whereas solid par- pressures. Lost-circulation material, eners, thinners, mud-viscosifying addi-
ticles of the mud build up mudcake. such as properly sized calcium carbon- tives, and weighting material or bridging
Characteristics of filtrate and mudcake ate, can prevent leaks of whole mud agents. All components of the water-
are strongly controlled by mud parti- into the formation, which, in turn, pre- based drilling fluid except the weighting/
cle type, size, and concentration. It is vents leaks of the base fluid such as oil or bridging agent were blended together
often desirable for a mud to leave a thin, water. These two chain processes signifi- and weighed. After testing the PSD of
low-permeability cake that helps with cantly increase wellbore strength to pre- the solids, the water-based-drilling-fluid
near-wellbore stability and strength- vent fractures or fracture propagation. components were blended and oven
ens the wellbore. The goal is to re- rolled for 16 hours at 150°F. After remov-
duce the amount of whole mud flow- Experimental Methodology ing the blended mud from the oven, the
ing into the formation and to prevent The laboratory experiments in this work PSD was tested.
loss of circulation, which causes many were conducted on sandstone cores with The third step in the experimental
drilling-related problems. different permeabilities that were fit process was to conduct the HP/HT fil-
Drilling-fluid particles present differ- into the HP/HT permeability-plugging tration test and collect the cumulative
ent sizes; the larger particles form the apparatus (PPA). The bridging efficiency filtrate volume by use of the PPA. For
first layer of the filter cake, and the was investigated by studying barite and the HP/HT filtration, the experiment
smaller particles deposit within the cake calcium carbonate invasion using ex- was conducted at timestep intervals,
formed by the larger particles. At the perimental values alongside previously with the greatest length being 30 min-
utes, at operating conditions of 250 and
This article, written by Special Publications Editor Adam Wilson, contains highlights 2,000 psi. After obtaining results of fil-
tration loss, the PPA cell was cooled,
of paper SPE 174273, “Study of Filtrate and Mudcake Characterization in High
the core was removed, and the mudcake
Pressure/High Temperature: Implications for Formation-Damage Control,” by Saeed
thickness was measured in various sec-
Salehi, SPE, University of Louisiana at Lafayette; Ali Ghalambor, SPE, Oil Center tions and averaged.
Research International; Fatemeh K. Saleh, University of Louisiana at Lafayette; Fluid loss was measured (from spurt
Hadi Jabbari, SPE, University of North Dakota; and Stefanie Hussmann, University to 30 minutes) for four different sand-
of Louisiana at Lafayette, prepared for the 2015 SPE European Formation Damage stones of various permeabilities with
Conference, Budapest, Hungary, 3–5 June. The paper has not been peer reviewed. four types of drilling-fluid formula-

For a limited time, the complete paper is free to SPE members at www.spe.org/jpt.

JPT • FEBRUARY 2016 89

 0.05
0.045
0.04
Cake Permeability (md)
0.035
0.03
0.025
0.02
0.015
0.01
0.005
0 framework for studying particle bridg-
Michigan Berea Buff
Fig. 1—Mudcake permeability calculated for water-based mud (gray) and for a
sample with sized calcium carbonate (blue).
tions. Spurt loss signifies the amount
of filtrate collected after the differential
pressure has been applied to the core
for 10 seconds. The objective is to mini-
mize the amount of spurt loss within a
30-minute window.
Scanning electron microscopy of the
cores was conducted before filtration
tests in order to design for PSD using
Technical Papers
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papers synopsized in this
issue are available free to
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at www.spe.org/jpt.
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90
Berea Upper Gray Bandera Brown
image-processing techniques. The goal
of this technique was to analyze pore
throats in order to optimize PSD de-
sign of drilling muds. Pore throats were
obtained from averaging scanning-
electron-microscopy images at the top
edge of the core, following a methodol-
ogy similar to elemental mapping. Simi-
lar to elemental mapping, porosity mea-
surements were performed by use of
scanning-electron-microscopy images.
The results of several filtration tests
revealed that the mixing design that had
fine-sized calcium carbonate as the pri-
mary bridging agent was better at re-
ducing filtration. Additionally, it was
observed that much higher spurt loss
was observed in higher-permeability
samples (Michigan) compared with the
lowest-permeability samples (Bandera
brown). Results indicate reduction in cu-
mulative filtration of more than 10  mL
when using sized calcium carbonate in
the mud design.
Results of filtrate tests revealed the
following:
◗ In all cases except the Bandera
brown samples, base drilling fluid
mixed with barite resulted in the
highest filtration loss compared
with other mixtures with sized
calcium carbonate.
◗ Michigan samples showed the
highest filtration loss compared
with lower-permeability samples.
◗ Filtration loss was generally lower
when using fine-sized calcium
carbonate particles in the mixtures.
Data from cumulative filtrate loss
from each individual sample were used
to calculate mudcake permeability. Re-
sults of mudcake-permeability calcu-
lation confirm the observations from
filtration tests where mudcake permea-
bility was reduced significantly (Fig. 1).
It was observed that reduction in mud-
cake permeability by up to 2.5 orders of
magnitude is achieved for the Bandera
brown sandstone sample.
Conclusions
This study presents an experimental
ing and filter-cake buildup. The specific
results and conclusions can be summa-
rized as
◗ Filtration for sandstone samples
of different permeabilities
under HP/HT conditions was
accomplished, and particle
bridging was investigated through
scanning-electron-microscopy-
image analysis. In addition,
studies of mud filtration using
rock disks as the filtration medium
can simulate downhole filtration
conditions better.
◗ Permeability of the mudcake
was lower with decreased
filtration. Mudcake-permeability
reduction of up to 2.5 orders
of magnitude was observed for
the Bandera brown sandstone
sample. (Mudcake permeability
was calculated using existing
analytical models.)
◗ In studying drilling-fluid
bridging, PSD and PPA results
can help in selecting the optimum
concentration and type of particles
for future drilling operations
to maintain borehole stability
and mitigate formation-damage
problems. PSD design based on
an image-analysis technique
can be used to optimize PSD.
This technique can capture
heterogeneity effects that can
affect PSD design.
◗ The use of sized calcium carbonate
with appropriate concentration
has decreased HP/HT filtration
quite significantly. It was concluded
that porous-medium permeability
is a key factor affecting cumulative
filtration. JPT
JPT • FEBRUARY 2016
Controlling Losses When Recompleting
Low-Pressure Reservoirs

A challenge in many permeable,

water-sensitive, subhydrostatic
reservoirs is avoiding the loss of
completion fluid when completing or
working over wells. To overcome the
limitation of conventional fluid-loss-
control pills, a low-viscosity system was
developed. The system is composed of a
viscous disproportionate permeability
modifier (VDPM) with sized synthetic
polymer particles and fibers, which
degrade into organic acids. The VDPM
reduces the effective permeability to
water-based fluids, and the sized particles
create an impermeable filter cake. When
the particles degrade, the organic acid
acts to break any remaining polymer.
Traditional
Polymer-Gel Systems
The limitations of many convention-
al fluid-loss-control pills have result-
ed in the development of a number of
solids-free fluid-loss-control pills. In
high-permeability reservoirs, a highly
crosslinked gel is needed to achieve good
fluid-loss control. Polysaccharides, such
as guar, have been widely used for this
application because of their low cost and
availability. These guar-based fluids are
typically crosslinked with borate or or-
ganometallic crosslinkers. The viscosity
of crosslinked guar decreases significant-
ly at temperatures greater than 200°F be-
cause of the limited thermal stability of
the polymer. For higher-temperature ap-
plications, polyacrylamides can be used
to form crosslinked gels.
A limitation of crosslinked polysac-
charide and polyacrylamide polymers is
that they require an internal or external
This article, written by Special Publications Editor Adam Wilson, contains highlights of
paper SPE 174169, “Controlling Losses When Recompleting Low-Pressure Reservoirs,”
by G. Uguna, Petroamazonas, and R. Rachid, SPE, A. Milne, SPE, and S. Ali, SPE,
Schlumberger, prepared for the 2015 SPE European Formation Damage Conference,
Budapest, Hungary, 3–5 June. The paper has not been peer reviewed.
breaker. The breaker is required to break
the crosslinked polymer and lower the
viscosity of the fluid so the broken gel can
flow out of the formation matrix. Even
when using an internal breaker, some
polymer remains in the pore spaces, ef-
fectively reducing and damaging the per-
meability of the formation.
To overcome the limitation of residual-
polymer damage, hydroxyethylcellulose
(HEC) has been used extensively because
of its low residual-solids content. However,
linear HEC polymer solutions do not form
rigid gels but control fluid loss through vis-
cosity and gradual filtration. This means
that, as the linear fluid penetrates deep-
er into the formation, the shear rate de-
creases and the apparent viscosity increas-
es. Permeability damage has been shown
to increase with increasing penetration of
viscous fluids, not only with HEC.
Despite all the advances made regard-
ing the design of fluid-loss-control pills,
the greatest challenge remains the same,
which is to have a fluid that prevents the
loss of water-based fluids into the reser-
voir but does not limit the production of
crude out of the reservoir when the well is
put on production.
Disproportionate
Permeability Modifiers
Disproportionate permeability modifiers
(DPMs) are commonly used to reduce the
production of unwanted water in sand-
stone and limestone reservoirs. These
polymers are conventionally mixed in
light brine and pumped into the forma-
tion as a low-viscosity (<5 cp) fluid.
The low concentration of monovalent
salts in the brine limits the hydration of
the polymer. Once placed in the forma-
tion matrix, the polymer adsorbs onto
the surface of the pore spaces because of
the electrostatic charges on the polymer
and on the surface of the pores. This re-
duces the effective permeability of the
formation to water and, in turn, the pro-
duction of water. However, because the
effective permeability to crude remains
unchanged, there is no decrease in the
production of crude.
In reservoirs known to have mixed
wettability or to be oil-wet, it is not
unusual for a treatment with a low-
viscosity DPM polymer fluid actually to
increase the effective permeability to oil,
while decreasing the effective permea-
bility to water.
Meanwhile, VDPM fluids have been
used successfully to divert matrix-
stimulation treatments from one inter-
val to another and control unwanted
water production after the treatment in
wet producers.
In the case of a VDPM fluid, the chem-
istry used to viscosify the low-viscosity
DPM polymer fluid must not interfere
with the adsorption of the polymer and
the resulting differential permeability
modification—change in effective per-
meability to water—when injected into
the matrix at low and high shear rates.
Laboratory testing showed that the vis-
cosity of a low-viscosity linear DPM poly-
mer solution could be increased by use of
a proprietary viscosity-enhancer pack-
age (VEP). This enables the viscosity of
the DPM polymer fluid to be adjusted
as a function of the permeability and
temperature, independent of the DPM
polymer concentration.
Increasing the VEP concentration in-
creases the viscosity of a polymer fluid
without crosslinking the polymer or
compromising the ability of the DPM
polymer to adsorb onto the surfaces of
the pore spaces in order to decrease the
effective permeability to water.

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JPT • FEBRUARY 2016 91

 Traditional Sized Particles with solid-acid particles using polyglycol-
SPE SERVICE DIRECTORY The most common approach taken to ic acid (PGA), a biodegradable polymer.
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Cynthia Thompson, cthompson@spe.org impermeable filter cake. The particles
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bridge on the face of the formation or VDPM Fluid-Loss-Control Pill
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Craig Moritz, cmoritz@spe.org
Phone: 1.713.457.6888 be different for each producing interval. matrix-permeability reservoirs, the limit-
JPT Equally, in low-pressure reservoirs, there ed surface area of the pore spaces and high
John Donnelly, jdonnelly@spe.org may not be sufficient differential pres- shear rates through the pore throats en-
Phone: 1.713.457.6816
sure across the sandface to remove a filter sure that DPM rapidly accumulates in the
Peer Review
Stacie Hughes, shughes@spe.org cake when the well is put on production. pores and prevents further fluid invasion.
Phone: 1.972.952.9343 This has led to increased interest in solu- However, as the permeability increases,
Professional Development Services ble solids, which, with time and temper- the surface area of the pore spaces also in-
Tom Whipple, twhipple@spe.org
Phone: 1.972.952.9452 ature, dissolve into the formation water creases while the shear rate through pore
Section Service or into the crude. Rock salt is commonly throats decreases. This means that the
Phone: 1.972.952.9451
sections@spe.org
used to minimize damage but is less effec- volume of fluid, with a given polymer con-
SPE Website
tive in controlling losses, and fluid-loss- centration, that must be injected into the
John Donnelly, jdonnelly@spe.org control pills are more difficult to design matrix to have sufficient DPM polymer
Phone: 1.713.457.6816
because of the solubility of the rock salt. adsorbed in the matrix also increases. It is
Subscriptions
Phone: 1.800.456.6863 or 1.972.952.9393 Oil-soluble resins are another common not possible to increase the DPM polymer
service@spe.org alternative but have limitations in terms concentration because the polymer will
of cost, temperature, and particle size. start to plug the pore throats.
Americas Office
222 Palisades Creek Dr., Richardson, TX 75080-2040 USA In the case of a fluid-loss-control pill,
Tel: +1.972.952.9393 Fax: +1.972.952.9435
Email: spedal@spe.org
Degradable Solids the VDPM fluid or brine that is injected
Asia Pacific Office Degradable solids, unlike soluble parti- or lost into the formation matrix must be
Level 35, The Gardens South Tower Mid Valley City,
Lingkaran Syed Putra, 59200 Kuala Lumpur, Malaysia
cles, are most commonly solid-acid pre- recovered when the well is put on produc-
Tel: +60.3.2182.3000 Fax: +60.3.2182.3030 cursors, which hydrolyze as a function tion. However, the adsorbed DPM poly-
Email: spekl@spe.org
Canada Office
of time and temperature to form a liquid mer greatly reduces the effective perme-
Eau Claire Place II, Suite 900–521 3rd Ave SW, Calgary, AB T2P 3T3 acid. However, below a critical threshold ability to water and acts as a check valve,
Tel: +1.403.930.5454 Fax: +1.403.930.5470
Email: specal@spe.org temperature, these particles are effec- slowing the rate at which the water-based
Europe, Russia, Caspian, and tively inert and insoluble in water, great- fluid can flow out of the formation as the
Sub-Saharan Africa Office
1st Floor, Threeways House, 40/44 Clipstone Street, London W1W ly simplifying the design of fluid-loss- well cleans up. For this reason, the VDPM
5DW UK control pills. fluid-loss-control pill is based on the same
Tel: +44.20.7299.3300 Fax: +44.20.7299.3309
Email: spelon@spe.org Solid-acid particles can be used in sev- chemistry as the VDPM diverter fluid,
Houston Office eral different ways in fluid-loss-control with the addition of sized PGA particles.
10777 Westheimer Rd., Suite 1075, Houston, TX 77042-3455 USA
Tel: +1.713.779.9595 Fax: +1.713.779.4216 pills. Solid-acid particles can act as an in- The PSD of the PGA solid-acid precursor
Email: spehou@spe.org
ternal breaker, with the sized solid-acid is designed to create an impermeable fil-
Middle East, North Africa, and South Asia Office
Office 3101/02, 31st Floor, Fortune Tower, JLT, P.O. Box 215959, particles replacing some of the sized cal- ter cake on the face of the formation and
Dubai, UAE
Tel: +971.4.457.5800 Fax: +971.4.457.3164 cium carbonate particles in a convention- not in the pore throats of the formation
Email: spedub@spe.org al gel/polymer fluid-loss-control pill. matrix. Even in a high-permeability res-
Moscow Office
Perynovsky Per., 3 Bld. 2, Moscow, Russia, 127055
Alternatively, it is possible to replace ervoir, only a few barrels of fluid are lost
Tel: +7.495.268.04.54 all the inert (typically calcium carbonate) into the reservoir before the impermeable
Email: spemos@spe.org
solid particles in a fluid-loss-control pill filter cake is formed. JPT

92 JPT • FEBRUARY 2016

PEOPLE

Dan Adamson’s SPE Legacy a Lasting One

DAN K. ADAMSON, because of decreased production dur- political, professional-technical associ-

who guided SPE for ing the Iranian Revolution. Oil prices ation and should stay independent of
more than 2 decades rose sharply and long lines were com- domestic political affairs.”
as its executive direc- mon at US gasoline stations. SPE was
tor and helped trans- still under the umbrella of its parent An International Association
form it into a leading organization, the American Institute of Many consider Adamson’s guidance of
international techni- Mining, Metallurgical, and Petroleum SPE into a highly regarded international
cal-professional association, died 26 Engineers (AIME), but the oil industry, association as his chief legacy. In 1976,
December. He was 76. and SPE’s membership, was becoming the SPE Board had passed a resolution
Adamson joined SPE in 1965 as assis- increasingly global. Some members of stating that SPE should provide services
tant to the executive secretary, the title the SPE Board of Directors and officials to members worldwide, recalls Douglas
of SPE’s top position at the time, work- at AIME wanted SPE to remain a primar- Ducate, who became second in charge
ing in administration, student rela- ily US-focused organization and become at SPE after Riley’s death and who also
tions, continuing education, and special more involved in politics. Adamson was instrumental in successfully building
assignments, and became publications strongly disagreed. the organization.
manager in 1967. He eventually moved “When I first began working with Adamson and his supporters on
up the ranks to become assistant execu- Dan, SPE was just a subsidiary of AIME the SPE board faced tough questions
tive director and general manager and and there were some very different and about whether SPE was charting the
became SPE’s fourth executive director strong perspectives about SPE’s future,” right course. “But he was able to main-
in 1979, after David Riley, who had held said Marvin Katz, who served as SPE tain the relationship with AIME while
the position for 11 years, died suddenly president in 1980. “Some wanted SPE to building SPE internationally,” Ducate
of a heart attack at age 48. become more involved politically in US said. “The focus of his administra-
Adamson would keep the top posi- affairs, representing the industry along tion was to carry out the direction of
tion until his retirement in 2001, estab- with other associations. But Dan felt the board to ensure that SPE became
lishing an indelible imprint on the Soci- very strongly that SPE should be a non- a successful international association,
ety. When Adamson joined SPE, it was
a largely US-based organization with
membership totaling 15,000 and a staff
of fewer than 50. When he stepped down
36 years later, the Society’s member-
ship had grown to 51,000 members
from more than 50 countries and it
had established offices in London and
Kuala Lumpur as well as successful
meetings around the world. “Dan was a
great man who had an impact on many
people and built SPE into a success-
ful, international organization,” said
Mark Rubin, who succeeded Adamson
upon his retirement and is now SPE’s
chief executive officer and executive
vice president.

Charting SPE’s Direction

The year Adamson became executive
director was a critical one for both the
oil and gas industry and SPE. A second
“oil shock” had hit the United States Adamson, left, and Douglas Ducate at SPE headquarters.

JPT • FEBRUARY 2016 93


which involved recruiting members,
establishing sections, and building
relationships worldwide.”
And Adamson excelled at building
relationships. “He knew literally thou-
sands of SPE members—he knew their
names, their companies, and he did
everything he could to make you suc-
ceed,” said Dennis Gregg, SPE president
in 1986. “He was always very supportive
of the members but he never wanted or
took credit.”
A Friend to Many
Katz agreed. “Dan was comfortable work-
ing with people at all levels of the petro-
leum industry worldwide and was able to
encourage not only engineers but man-
agement of the importance of SPE and its
valuable role in information dissemina-
tion,” he said.
“So many people regarded Dan as one
of their best friends,” said Katz, who
traveled to China and other internation-
al venues with Adamson to build con-
tacts and meet with members around
the world. “When you talked to him,
you had his undivided attention and
he was genuinely concerned about you
both personally and professionally. He
was a wonderful friend to have.”
Lyn Arscott, who served on the SPE
board as treasurer during the 1980s and
was SPE president in 1988, said Adam-
son made any member he came into
contact with feel welcome in the asso-
ciation. “He just cared for people. He
would make the extra effort to talk to
people, to solve problems, and to fol-
low up,” he said. “If the board learned
of a problem in a local section, Dan
94
would immediately be on the phone try-
ing to resolve it. He just knew everyone
and knew who to talk to and he would
work hard to resolve any issue that
came up.”
Significant Achievements
Adamson made other long-lasting con-
tributions to SPE. He helped create
the Offshore Technology Conference
(OTC)—which debuted in 1969 in Hous-
ton and remains one of the industry’s
major global conferences—and was
instrumental in SPE becoming involved
in the Offshore Europe conference in
Aberdeen and SPE’s first conference in
China, in Beijing in 1982. Adamson was
initially assistant executive manager of
OTC and later executive manager.
He also worked with the SPE Founda-
tion to build SPE’s headquarters build-
ing in Richardson, Texas, in 1984, as
the staff had outgrown rented space in
Dallas, and oversaw the technological
upgrade of SPE staff operations. “He
was the helmsman during SPE’s tech-
nology upgrade,” Ducate said. Oil and
gas companies had become “way out in
front in the use of technology,” he said,
including the use of computers, data
transfer, and email. “His drive to take
SPE’s technology to a higher level to
meet the needs of members was a jug-
gling act. That whole shift in how we
did business was a huge challenge for
the staff.”
Colleagues and friends of Adamson
frequently mention his desire to credit
others for accomplishments and steer
away from the limelight. “Dan was a
very self-effacing person and had a style
that allowed him to sit down with CEOs,
members, or officials of national oil
companies (NOCs) and make friends,”
Ducate said. “He could sit down with
anyone and explain the mission and
value of SPE. He built relationships that
led many NOCs to welcome SPE into
their countries.”
After his retirement, SPE staff and
board members tried several times to
recognize his service to the association.
“We tried for years to honor him after he
retired and he refused,” said Gregg. “He
said that SPE awards were for the mem-
bers, not the staff.”
“When you talked to him,
you had his undivided
attention and he was
genuinely concerned about
you both personally and
professionally. He was a
wonderful friend to have.”
—former SPE President
Marvin Katz
Arscott added, “Dan once said that his
job was to make the SPE presidents look
good, and that was typical of his unself-
ish nature.”
Another personality trait that stood
out was his frugality, not only with SPE’s
money but in his personal life. “He had
a unique way of looking for the best
bargains in travel,” Ducate said. “He
could find inexpensive hotels in expen-
sive locations and the most inexpensive
plane routes. He came from a humble
background, and he was thrifty in his
approach to things throughout his life.”
Adamson was born 12 October 1939
in Vernon, Texas, a small town near the
Texas-Oklahoma border. He attended
the University of Missouri and gradu-
ated from Southwestern University with
a BA degree in history. At Southwestern,
he met his future wife, Diane, whom he
married in 1962 and who preceded him
in death in June 2015. They lived in Den-
ver for 2 years where he taught school
before moving to Texas.
A memorial service was held in Jan-
uary for Adamson at University Park
United Methodist Church in Dallas,
attended by many former SPE presi-
dents and staff. He is survived by four
daughters, Larkin Bryant, Rebecca
Schatzle, Amy Anderson, and Sarah Kel-
lar; and eight grandchildren.
JPT • FEBRUARY 2016
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96 JPT • FEBRUARY 2016

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