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F E B R UA R Y 2 0 1 2
VO L U M E 8 5




GGI reduces risk, cost in shale plays


New approach increases heavy oil production

in Egypt


Low-gravity wells in Canada respond to new

CHOPS chemistry


w w w. E P m a g . c o m





Geophysics has a role in shale plays


Drill here models reduce shale play risk



New cutter design improves

average penetration rate


High-efficiency vector-accurate PDC bit

optimizes directional control


Fixed cutter bit allows longer runs, higher speeds

in shales, carbonates


Improved cutter technology increases overall



Drill bits evolve to the new normal in drilling




Shale operators must follow best practices


Hybrid completion isolates 38 Bakken zones

with no lost time


LPG fracing gains acceptance as viable




R&D is vital to reaching further, going deeper


Subsea well intervention technology delivers

at depth



A war of giants could cut off Persian Gulf


New plays take

center stage
From the icy waters surrounding
Greenland to the vast expanse of
China, operators are queuing up
the next round of super fields.


Global changes impact

the future of natural gas

LNG imports could be the success story of 2012.


US midstream segment
in for major overhaul

Regardless of President Barack Obamas decision on

the Keystone XL pipeline, the country is overdue for a
pipeline overhaul.


Unconventional: Bakken
Williston basin oil boom
gains momentum

Williston basin operators are making progress in the

Bakken-Three Forks play, where new zones and technology advances are proving the regions long-term
oil potential.


Yesterdays frontier, todays front line

Recruiting gets a new look



World-class data centers meet oil, gas HPC needs


Three-D real-time visualization service facilitates

accurate, timely decisions


Taking a microscopic view of the shales


Despite lag, GoM activity continues to grow


EOR project has the right mix


Warning system mitigates earthquake damage








Attention to increased risk is critical for safe decommissioning



The March issue of E&P showcases the annual drilling advances and

records feature, celebrating companies whose technology continues to push the limits. The issue also
features intelligent operations, 4-D seismic, drilling and completion fluids, and artificial lift, and regional
reports focus on Canadian shales and West Africa. Additionally, the magazine has a special feature on
deepwater advances. As always, while youre waiting for the next copy of E&P, remember to visit for news, industry updates, and unique industry analysis.

ABOUT THE COVER A polar-class icebreaker clears a path for seismic data
acquisition offshore Northeast Greenland using ION GeoVentures under-ice seismic
data acquisition technology. Greenland is an area of growing interest for the oil and
gas industry. (Image courtesy of ION; cover design by Laura J. Williams)

E&P (ISSN 1527-4063) (PM40036185) is published monthly by Hart Energy Publishing, LP, 1616 S. Voss Road, Suite 1000, Houston,
Texas 77057. Periodicals postage paid at Houston, TX, and additional mailing offices. Subscription rates: 1 year (12 issues), US $149;
2 years (24 issues), US $279. Single copies are US $18 (prepayment required). Advertising rates furnished upon request. POSTMASTER:
Send address changes to E&P, PO Box 5020, Brentwood, TN 37024. Address all non-subscriber correspondence to E&P, 1616 S. Voss
Road, Suite 1000, Houston, Texas 77057; Telephone: 713-260-6442. All subscriber inquiries should be addressed to E&P, 1616
S. Voss Road, Suite 1000, Houston, TX 77057; Telephone: 713-260-6442 Fax: 713-840-1449; Copyright
Hart Energy Publishing, LP, 2012. Hart Energy Publishing, LP reserves all rights to editorial matter in this magazine. No article may be
reproduced or transmitted in whole or in parts by any means without written permission of the publisher, excepting that permission to
photocopy is granted to users registered with Copyright Clearance Center/0164-8322/91 $3/$2. Indexed by Applied Science, Technology
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Gdansk concession exploratory well

has gas shows over 1,000-m interval
In Polands Gdansk W Concession, Londonbased San Leon Energy has drilled and
completed its first shale gas exploration
well in the Baltic basin.

Corridor completes New Brunswick shale gas appraisal well

In southeastern New Brunswick, Corridor Resources has completed
drilling of the 3,188-m (10,459-ft) #59-O Corridor Will DeMille shale gas
appraisal well. The well intersected eight shale intervals with significantly elevated gas shows and organic shale in addition to one 13-m
(43-ft) thick sandstone with good gas shows and visible porosity
toward the top of the Upper Frederick Brook formation.

Pemex: Major gas field discovery in southern

Gulf of Mexico
The #1-Nen discovery well in the Catemaco Fold Belt
has proven, probable, and possible (3P) gas reserves of
approximately 400 Bcf, and production potential could
reach 27 MMcf/d.


China could win, independents

lose from Iranian sanctions
By Scott Weeden, Senior Online Editor

If further sanctions are levied on Iran that cut

the countrys oil exports, oil prices could go
through the roof to the benefit of China and
the detriment of independent oil companies.

Unconventional gas burns bright

in Canadas future
By Brian K. Tully, Associate Editor,
Oil and Gas Investor

The big news in Canada is tight gas, particularly in northeast British Columbia, where, thanks
to the application of technology, it is one of
the hottest plays in the vast, resource-rich

US could emerge as Japans

energy white knight
By Kristie Sotolongo, Associate Editor

With the nuclear industry in Japan virtually

closed down, the country is seeking to bolster
its energy supplies with special interest in the
gas shale boom in the US.


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Exploration Consultant, formerly with Shell
Director of Global Industry Solutions Upstream
Oil & Gas, Invensys Operations Management
VP & Managing Director, North America, Ensco
Manager, Petroleum & Energy Analytics, IBM
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California Energy Institute
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Yesterdays frontier,
todays front line

here are not many in the industry today who cant remember when 300 m (1,000
ft) water depth was considered very deep for oil and gas operations. As scientists
and engineers developed more sophisticated drilling and production units, built
more robust mooring and riser systems, designed better hulls, and conceptualized
equipment that would take operations deeper, they changed the perception of the
deepwater frontier.
Today, oil is being produced safely from Shells Perdido field in the Gulf of Mexico at a depth of 2,450 m (8,000 ft), and R&D efforts are aimed at making production in 3,000 m (10,000 ft) a reality.
As E&P has gone into deeper water, it also has expanded into more challenging
geographical areas, including those with arctic conditions. This harsh operating
environment introduces the need to contend with floating ice, flow assurance and
logistical challenges, and personnel safety issues.
Subsea production, which has been possible for decades, is now reaching greater
depths further from shore in more harsh environments than ever before. The first
subsea separation project, Hydros Troll pilot, was installed in 1999. Subsea compression technology is the next step.
Enormous strides have been made onshore as well. A decade ago, unconventional
developments were a side note. Today, North American shale production is climbing
rapidly, and interest in shale oil and gas is spreading around the globe, with China
and India investing in North American fields while they lay the groundwork for
domestic development. Discoveries in Poland and, most recently, the UK have
placed a number of countries in Europe on the shale map as well.
Meanwhile, Australia, which has increased its LNG output from giant offshore
finds, has ramped up investment in CBM as well. Queensland CBM makes up about
80% of the domestic natural gas market, and plans are now in place to add significant production over the next 10 years.
Technology also has opened up more heavy oil reservoirs for production, including the Hebron field in the Jeanne dArc Basin offshore Newfoundland, which was
discovered in January of 1981and is now scheduled for first oil in 2017.
It is easy to see that yesterdays frontiers are todays front lines. As technologies are
developed and implemented, the E&P horizon will continue to change, and the editors at E&P will continue to spotlight the trends that are changing our industry.
As I conclude this months column, I am embarking for
new frontiers myself. As I leave E&P magazine and take the
next step in my career, I will remember fondly the time
I spent as editor. And I will continue to be a devoted
reader of what I believe is the best magazine of its kind
in the business.


Global changes impact the future

of natural gas
LNG imports could be the success story of 2012.

Nikos Tsafos, PFC Energy

he past year saw dramatic changes in the oil and gas

market, ranging from the Arab Spring to tragedy in
Fukushima, Japan. As the industry heads into a new year,
questions have emerged that will likely preoccupy the gas
market and affect decision-making through 2012.
Here, PFC Energy has identified 10 factors that are
expected to impact industry trends.
What will happen with Japans nuclear situation?
There was no shock greater in the gas market in 2011
than the earthquake and tsunami that hit Japan in March
2011. Nuclear output has dropped 72% from reactors
that were destroyed and from others that have not come
back online following maintenance and repair. LNG
demand in the power sector rose 19% in 2011. Other
questions to consider include whether this de facto moratorium in Japan will continue, whether not how
nuclear power plants will rapidly come back online, and
how these factors will impact nuclear power elsewhere.

What will happen to the shipping market?

Besides spot prices, the most visible sign of tightness in
the LNG market is shipping. From a low of around US
$30,000/day in mid-2010, charter rates are now sustainably above $100,000, and there are several short-term
charters signed for prices above $150,000. It is no wonder
the industry ordered a record 54 newbuilds in 2011. Even
though these newbuilds will not hit the market this year,
shipping will be a key industry segment to watch in 2012.
What will happen to European demand?
After a 7.5% increase in 2010, gas demand in Europe has
fallen approximately 7% (to September), bringing gas
consumption back to 2009 levels. This is due in part to a
weather correction, with 2010 being exceptionally cold.
This demand weakness also reflects idiosyncratic reasons
such as a new coal directive in Spain that boosted coal
use versus gas. But there are broader dynamics that will
weigh on the market: GDP growth is slowing and will be
negative in several countries, and high gas prices and
low carbon emission prices have made coal a lot more
competitive relative to gas. On the other side of the coin,
the revocation of subsidies for renewables could
help gas demand.
With growing gas demand in Japan and
Korea as well as in North America due to low
prices, a big uncertainty is what happens to
demand in OECD Europe and the implications
that will have for gas pricing relative to Asia.
Will the FID wave of 2011 be sustained?
In 2011, a record number of LNG projects took
final investment decision (FID): In Australia
this included Gladstone LNG, Prelude LNG,
In 2011, a record number of final investment decisions were made for major LNG projects, including
the Gladstone, Prelude, Australia Pacific, and Wheatstone developments in Australia. The chart shows a
dramatic spike in sanctioned LNG capacity from the
previous year. (Chart courtesy of PFC Energy)

Febr uar y 2012 |


Australia Pacific LNG, and Wheatstone LNG, and it also

included Donggi-Senoro in Indonesia. Meanwhile, projects such as Sabine Pass (US), Kitimat (Canada), and
Ichthys (Australia) have a credible chance of moving
forward in early 2012.

posed to announce a decision on gas sales from the second phase of Shah Deniz. But there is still no front runner among the competing commercialization options,
and the Total discovery at Absheron could complicate
and delay a decision.

How big will North American gas exports be?

Whats next for East Africa?
The momentum for North American exports is growing
Within two years, East Africa has emerged as one of the
as companies with underused regasification terminals
hottest exploration zones for natural gas. Companies
convert them into liquefaction plants.
such as Anadarko, BG, and Eni have made sizeable disIn November 2011, Cheniere selected Bechtel to be its
coveries in Mozambique and Tanzania that will eventuEPC contractor for the first two trains of its Sabine Pass
ally be relied on to develop an LNG business. Yet there
plant, and the company is making
is still much work needed to delinprogress toward that projects next
eate the resource base, and there also
phase. Other proposed LNG projects
is little existing infrastructure, meanare securing approvals, although the
ing new projects will take time to
pace of development will slow as the
US Department of Energy pauses to
How quickly will shale gas progress
study the impact of LNG exports on
outside North America?
Americas energy security.
Shale gas outside the US is moving
Even before LNG exports materialfrom a land-grab phase to an
ize, the shale gas revolution in the US
exploratory drilling phase. So far the
is having an impact on Canada and
results have been mixed depending on
Mexico. In the past few years, the US
the country: Companies have reported
has managed to reduce its net
disappointing flow rates (Poland); govimports from Canada by 2 Bcf/d, and
ernments have responded with outit has boosted exports to Mexico by
right bans (South Africa and France);
0.5 Bcf/d.
there has been high M&A activity (AusMeanwhile, in Western Canada,
tralia); and there has been progress
Apache-led Kitimat LNG has received
With gas demand rising in
toward larger commercial volumes
export approval from the National
Japan, Korea, and North
(Argentina and China).
Energy Board and seeks to take FID
America, gas demand
in early 2012, while two other projremains to be seen in OECD
Will GTL and floating LNG open up new
ects led by Shell and Petronas are
Europe and how this will
commercialization options for gas?
progressing as well. Between the US
impact gas pricing relative
With Pearl GTL online, gas to liqand Canada, North America is foreto Asia.
uids (GTL) is once again a major
cast to be the second largest source
focus. In particular, the sustained disof LNG growth between now and
parity between oil and gas prices in
2020 (behind Australia).
North America has led Sasol to propose two GTL projWhat impact will smaller markets have on LNG?
ects. After years of registering little besides disappointSix countries Argentina, Brazil, Chile, Kuwait, the
ment, GTL may be getting a second lease on life.
United Arab Emirates, and Thailand have collectively
Besides GTL, the other technological wildcard is floatimported more LNG than China in 2011. Malaysia,
ing liquefaction. By taking FID on Prelude in 2011, Shell
Indonesia, Israel, and Singapore will start to import
paved the way for floating liquefaction, but no other
LNG in 2012 and 2013, perhaps joined by Pakistan.
project has reached FID.
The global natural gas market, in other words, is in
Will Azerbaijan make a decision about the Southern Corridor?
its usual state of flux. But with the US poised to be an
A long-awaited decision on Europes Southern Corridor
exporter of natural gas and a growing demand for LNG
may come in 2012 as the SOCAR-led consortium is supimports around the world, metrics look bullish. | Febr uar y 2012


US midstream segment in
for major overhaul
Regardless of President Barack Obamas decision on the Keystone XL pipeline, the country
is overdue for a pipeline overhaul.

Nissa Darbonne, Contributing Editor

n mid-November, US President Obama announced he

would delay a decision on Keystone XL until 2013.
Shortly after this, the proposed Wrangler Midcontinent-to-Gulf-Coast oil pipeline project was canceled as
ConocoPhillips sold its half-interest in the Seaway system
to the Wrangler half-partner, Enbridge Inc.
Seaway has taken crude oil from the Gulf Coast to
Cushing, Okla., for years. Now Enbridge and former
Wrangler partner Enterprise Products Partners LP,
which already owned half of Seaway, plan to reverse the
670-mile pipes flow by mid-2012 and expand its capacity
to 400,000 b/d.
Brad Olsen, a midstream analyst previously on the
buyside with hedge fund Eagle Global Advisors, in Houston and currently on the sellside with Tudor, Pickering,
Holt & Co. Securities Inc., said Keystone is political
kryptonite for the Democratic president. Approving it
would be a win for jobs particularly union jobs but
greater employment would suppress the disenchantment of Occupy Wall Street and other protestors whose
persistence through the fall of 2012 represents antiRepublican sentiment. Approving it also would provide
the ire of environmentalists, who generally supported
Obamas election in 2008.
Pipelines and the tariff-based nature of their revenue
stream do not usually make headlines, in contrast with the
upstream oil and gas industry, with its huge wildcat wells
and new-play discoveries. But, for Olsen, the midstream is
particularly exciting today and always has been. The midstream industry touches everything. You have to understand the upstream to know whats filling the pipeline,
and you have to understand the downstream to know the
highest value destination for a given hydrocarbon.
Hart Energy visited with Olsen, Tudor Pickerings vice
president for midstream research, shortly after the Keystone XL amendment to the payroll tax reduction bill
cleared Congress at year-end 2011. It requires Obama
to make a decision on the pipeline within 60 days of his

Brad Olsen, Tudor, Pickering, Holt & Co. Securities Inc.

signature, so by late February 2012. Here are Olsens

thoughts on that decision, the WTI/Brent spread, what is
driving the closure of US Northeast refineries, and the
new world order of US hydrocarbon supply and demand.
The Lugar-Hoeven-Vitter amendment to the payroll tax reduction bill put Keystone back on the table.
Ive maintained throughout this political wrangling a
disclaimer that when forecasting politics there is really
no such thing as an expert. Its hard to predict the outcome of something as crazy as Washington. But I believe
Keystone will eventually get built.
Senator Lugar says Obama can only reject Keystone if he deems
trade with Canada to be against US interest. Is it really this
I read the amendment. There is really nothing in it that
says this determines the future of US trade relations.
Febr uar y 2012 |

There is plenty of room for Obama to say, I dont like Keystone as it is proposed without endangering the whole Canadian/US trade relationship. The
US is Canadas largest trade partner and largest importer of Canadian crude.
And on our side, we wouldnt somehow cancel the other 2 million barrels a
day we receive from Canada just because we have some issues with this
Could there be yet another rabbit in the White Houses hat? We were surprised before.
I dont think so. Obviously, the dynamics are fluid, but the core issue here is
that Keystone is a project based on 20-year commitments. It isnt based on capitalizing on a WTI/Brent spread. Its not a project thats going away. Even if
WTI trades at a premium to Brent in the future, for whatever reason, this is a
project that reflects long-term demand by Canadian producers to access the
Gulf Coast, which is the most liquid crude market in North America. The
most dramatic event were going to see is the one weve already seen when
Obama announced he would delay a decision.
I was surprised, too. But, I dont think he has the stomach to reject it. He
knows it will get built at some point, possibly with a different route; you cant
turn off the spigot from our largest single crude importer, which is Canada.
Speaking of the WTI/Brent spread, it is evaporating.
Yes. From our perspective, the high level of WTI/Brent spreads we saw during
the summer wasnt justified by any fundamental factors. There is a speculative
component. The reduction in the spread now (to about US $8 in late December) has surprised some people, but when you see it blow out like it did in
this or any of the commodity markets there is always going to be a speculative component.
Also in play has been the fact that refineries manage their crude inventories
to minimize the amount they hold in storage at the end of a year.
The Seaway deal came about shortly after Obamas November announcement.
How did this work?
The Seaway reversal is the only game in town as an existing asset positioned to
get a large amount of onshore oil production to the Gulf Coast. If Wrangler
were canceled and Keystone were delayed, Seaways value would suddenly be
much higher. Seaway is about a 400,000-barrel-per-day pipeline from the Gulf
Coast to Cushing. Keystone and Wrangler were about 1.5 million barrels a day
together. If these were built, Seaways value would be considerably impaired.
From Conocos perspective, if it held onto Seaway to the point where the 1.5
million capacity is approved and being constructed, it would then be difficult
to sell Seaway for an attractive price.
The Keystone delay made Seaway more valuable. Its already in the ground
and requires few approvals to reverse the direction. Thats what we saw:
Conoco finalized the sale shortly after the Keystone announcement.
It also had two highly incentivized bidders Enterprise that wanted to reverse it,
and Enbridge that wanted in on an oil-to-the-Gulf-Coast pipeline?
Yes. Wrangler was a project by Enbridge and Enterprise. If Enterprise bought
the second 50% of Seaway and canceled Wrangler, then Enbridge would basically be out of the game, sitting on the sidelines. | Febr uar y 2012

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Solving challenges `



Greater pipeline access to Gulf

Coast refineries will provide
North American producers
global marketing opportunities.
(Map courtesy of Oil and Gas


With Keystone and Seaway,

that is more than 1 million
additional barrels a day. Is
there that much more Gulf
Coast oil demand?
On the Gulf Coast, there is
the option to ship refined
products gasoline, diesel,
other fuels abroad. It is
the most liquid crude market in the US and where we
have a disproportionate amount of our refining capacity
as a country. Canadian crude has traditionally gone to
Chicago, but Chicago is not going to be able to take
another 1.5 million barrels a day of crude oil coming
out of the oil sands all of a sudden. And it doesnt make
sense to expand refineries in Chicago because you cant
export the products from there to another country;
Chicago is essentially landlocked. The only real solution
is to get it down to Texas or Louisiana where excess
crude is made into gasoline or diesel, and you can ship
that to another country.
Everyone is just trying to get oil to the Gulf Coast.
There, you always have the opportunity to send it to
another country if you overwhelm domestic demand.
Could WTI resume a premium to Brent?
I dont think we will see WTI at a premium for the foreseeable future. Much has changed in the US and global
market in the past few years. WTI has historically commanded a premium as North America had been seen as
a region where production was in decline everywhere
except for the Canadian oil sands, while US petroleum
consumption was believed to be on a permanent
uptrend. It was thought that the continent would only
get more and more supply-constrained and the only
growing source would be from OPEC. Thus, a looser
supply/demand dynamic for Brent than for WTI and
WTI at a premium to imported crudes.
And that is no longer true?
Yes, youve seen a reversal of this thought. Youve seen
OPEC members in the Middle East having issues with


maintaining production, especially in light of some of the

political unrest of the past year. The Middle East is now
thought of as a supply-challenged region, while the only
place with high-visibility growth in crude supply is North
America between the oil sands, the Bakken, the Eagle
Ford, and various other plays. Now the historical relationship of Brent being a looser supply/demand scenario and
WTI being a tighter supply/demand situation is reversed.
Today, North America is the only place where crude
supply is seen to be increasing over the next few years,
while it is much more uncertain in global markets.
How has this affected the Northeast US refining scene?
Thats a longer dated issue. We have roughly one-half of
total Northeast capacity shutting down in the next two
years 40% to 50% of Northeast capacity. Its really dramatic. Its because of how the US pipeline system is set
up and some outdated assumptions about where crude
oil comes from. There havent been any really meaningful pipelines delivering North American crude oil to the
East Coast. They have always received their crude from
overseas mainly light, sweet crude from West Africa
and the Middle East. In the 1990s, Gulf Coast refiners
debated whether future supply growth would be in the
form of heavy, sour crudes from Canada and South
America that are difficult to refine or the traditional
light, sweet crude from the Middle East and elsewhere.
They bet on heavy, sour crude.
Yes, Valero (Energy Corp.) threw its chips in and said,
We believe it is going to be harder and harder to find
conventional crude in the future. Light, sweet crude

Febr uar y 2012 |



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prices are going to spiral upwards as heavy, sour crude

prices go downward. Were going to have to refine this
heavy, sour crude.
Northeast refineries did not switch?
They would have had to reengineer their facilities too,
and they dont even have access to heavy Canadian
crude. Sunoco (Inc.) and most of the East Coast refiners
decided to throw their hat in with light, sweet crude.
The way this worked out, obviously, is not to their
advantage. The fact is that Valero was right. With exploration in Brazil, Venezuela, Colombia, and elsewhere in
South America, all have found increasing amounts of
heavy, sour crude. Canadian crude has also been increasingly heavy and sour as a result of oil sands development.
Was the WTI/Brent blowout the tipping point?
Sunoco and the others found themselves competing to
sell gasoline made from $120-a-barrel Brent-priced crude
while gasoline from the Gulf Coast was coming from discounted heavy, sour imported oil and from less expensive
WTI-priced oil. Also, East Coast supply has been occasionally interrupted by terrorist attacks and other issues in
Nigeria. Sunoco slowly saw itself kind of choked out by
the changes in refining economics. Its selling their two
refineries by this summer or plans to close them.
What is driving renewed interest in North American
We had a system of plumbing that, as a result of shale
and other horizontal discoveries, no longer reflects
where hydrocarbons are coming from. You have a massive amount of oil coming out of South Texas that had
historically been just a dry gas production area. You
have a reinvigoration of oil production in the Permian
and new oil supply coming out of Oklahoma. North
Dakotas Williston basin went from being a marginal
producer to one of the largest fields in North America.
You have all of these new gas plays. And now, a resurrection of Ohio and Pennsylvania hydrocarbon production.
This area had not had a meaningful increase in production in more than a century.
We have these completely unpredicted, unforeseen,
unforecasted resources. To connect them to demand
areas, you need substantial amounts of new pipeline
infrastructure. This is really a once-in-a-lifetime transformation the industry is going through.
Has the midstream space ever been so heated?
No, not at all. This is as hot as its been in generations.
Prior to the past 20 or 25 years, the overwhelming

majority of midstream assets were within larger energy

companies and part of a larger, integrated business
model. In 1986, the new tax code allowed for the creation of MLPs (master limited partnerships) that have
been a great capital-aggregation vehicle for the midstream industry and have seen great demand from
investors seeking stable, high cash flow assets, which are
exactly what the midstream provides. With the advent of
the MLPs, larger energy companies have had a market
in the past few decades to sell their midstream assets
into and at high prices.
Thats why you see an independent midstream sector
today. This is the first time midstream has been able to
participate in this kind of growth as a sort of standalone
When will the transformation be complete?
Theres little doubt that the pace of new unconventional
resource discoveries in North America has decelerated.
With the Marcellus, the Fayetteville, Haynesville, Eagle
Ford, Granite Wash, it sounded like there was a new play
coming out every week or two. Now it looks as though
the pace has slowed.
But the growth in the midstream industry will continue for the next two or three years because, as the
resource is proven in a region, there is a lag effect. Even
as we see the pace of discoveries slow down, we will still
see very meaningful amounts of midstream investment
being put to work across the industry.
What else should oil and gas investors know about the North
American business today?
WTI/Brent spreads will be substantially diminished by
2014. WTI should remain at a discount as close to 2 million barrels per day comes in from Keystone, Seaway,
and new Permian pipeline capacity.
You have said that onshore US dynamics have affected the
global market. How so?
The last economic recession has turned the US into a
flat demand-type market. In the past, the US as a hydrocarbon consumer has always had a reputation that well
eat anything; give us more and well wolf it down. Today
you cant just shift your oil to the US.
Were in a situation for the first time in a long time in
which onshore producers are trying to get their hydrocarbons to the Gulf Coast because they are no longer
confident that North America will just absorb all the
excess supply.
This is the core principle that is driving a lot of this
pipeline construction.
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Recruiting gets a new look

Forward-looking companies are showcasing their strengths to attract the next generation
of workers.
Rhonda Duey, Senior Editor

sk any industry pundit what major challenges face

the oil and gas industry, and he or she will most
likely bring up the Great Crew Change, the graying of
the industry, workforce shortages, and a simple question: When everyone retires, whos going to be left?
The answer is that there are plenty of people interested in a career in oil and gas and many more who
might be interested if they had more information about
career opportunities. To lure these potential employees,
oil and service companies are pulling out all the stops.

Recruiting in the trenches

Getting a candidate interested in a job in the energy
industry is step one; getting that candidate to choose
one company over another is a very important step
two. BP is working diligently on both objectives. The
company plans to double its spending on exploration
worldwide over the next few years, creating many new
opportunities. Its recent discoveries in the North Sea,
for example, will create 3,000 jobs in the UK alone. It
also is looking to hire 1,000 graduates globally and
offer 500 internships. This comes after a successful
2011, where as of press time, the company was on
track to hire 2,500 new recruits.
The company has identified two key areas of particular need specialist engineers, particularly subsea specialists, deepwater drillers, and process safety managers;
and specialist geoscientists, particularly for EOR.
The company has undertaken a comprehensive and
aggressive strategy to meet its recruiting goals. According
to Simon Drysdale, head of Human Resources, Upstream,
for BP, part of this strategy is to make the companys work
environment visible to potential candidates through discovery days, internships, and an advertising campaign
that showcases employees at
One of the most successful aspects of this plan is the
Ultimate Field Trip. This is a competition that gives UK
undergraduates the opportunity to tackle a real-world
energy challenge, he said. It showcases their talents
and gives them a feel for the work they could be doing
with BP. This years prize was a field trip to Thunder
Horse, BPs largest deepwater oil field.

Ultimate Field Trip winners were rewarded with a visit to Thunder

Horse, BPs largest deepwater platform. (Image courtesy of BP)

Another recent example is the companys donation of

more than 300 Gb of high-resolution geophysical data to
14 US universities. The data were originally gathered and
developed for operational planning at four BP-operated
deepwater Gulf of Mexico fields. Data files include multibeam echo-sounder data for bathymetric mapping, sidescan sonar for seabed imaging, and sub-bottom profiler
records for analysis of shallow marine sedimentary layers.
This project is a way to help the universities continue
academic research and develop specialized expertise
among students, technicians, and researchers in the
area of offshore development while giving BP the opportunity to strengthen relationships with geosciences
researchers and potential recruits, Drysdale said.
Other programs include the BP Energy Play, a program established to promote awareness of the energy
trading sector; BP Discovery Days, allowing university
students to spend a full day at BP to see if their skills and
personality fit; BP Educational Services, a resource center with tools ranging from interactive teaching and lesson plans to Cool Creation competitions; and Schools
Link, a program now covering 194 schools in the UK
allowing BP employees to work with local schools to
enhance curriculum.
Febr uar y 2012 |

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emarkable progress from remarkable people

The University of Oklahoma's Mewbourne College of Earth & Energy ha

made remarkable progress in the five years since our beginning, and ou
many achievements would not have been possible without the more tha
$100 m Ilion in gifts from alumni and friends in the industry.
owments of over $14 million for student scholarships

oleum engineering,petrophysics,and frontier shale laboratories

?s, classrooms,computer installations,and library renovations

An inte active drilling and well-control simulator

A geology and geophysical field camp in Colorado

The leadin shale research program since the Barnett Shale





Real education for the real world.


Getting them in the door

Oil companies are not in the business of custom-designing jobs for their new workers, but they are mindful of
the needs of their recruits, particularly younger employees. When people talk about younger people joining
the workforce, they often cite their desire to be given
responsibility very early in their careers, Drysdale said.
They get that through our Challenger program. In
addition, we have a competitive set of flexible working
practices that are available to all staff.
Concerns about the Deepwater Horizon incident also
are not glossed over. Drysdale said most queries he gets
related to the disaster focus on the financial health of
the company and hence its career
opportunities. We have a strong
story to tell in relation to our
exploration success and our projects portfolio that will create new
and challenging career opportunities for our people for many years
to come, he said.

several rotations in various business units, including

engineering, finance, wells, and subsurface in different
domestic and international locations. Team-building
activities, leadership development, and mentoring from
senior BP employees also are part of the program.
Our graduates find themselves working in a real role
with real responsibilities, e.g., on a drilling platform
or a seismic survey boat, very early in their careers,
Drysdale said.
Additionally, the eXcellence Program is a comprehensive process to guide employees through the first 10 years
of their careers, and Accelerated Development Programs
support the transition from discipline specialist to a tech-

Keeping them engaged

Once a new employee has joined
the company, he or she undergoes
rigorous assessment to help determine deployment and development. The assessment tools we
use in our graduate hiring process
enable our managers to rigorously
assess candidates for the skills
and knowledge to do the job, the
behaviors required that enable
them and others to perform, and
the drivers and attributes that
New employees might find themselves working on a seismic acquisition vessel early in their
underpin performance, he said.
careers. (Image courtesy of ION Geophysical)
Technical skills and knowledge
are assessed using tests and case
studies to simulate jobs and activities, he said. Behaviors
nical leadership role. Most of these are for existing team
are assessed using a structured interview, and drivers
members, but they can sometimes be offered to new hires
and attributes are assessed using a personality questionas well.
naire and aptitude evaluation. Additionally, employees
Whatever level employees join, they will create a
are screened for leadership roles by third parties, typidevelopment plan with their line manager with input
cally clinical psychologists, to measure experience and
from their Organizational Capability manager to ensure
responses against the companys values and behaviors.
they get the right development opportunities to meet
After the screening comes learning and development.
their career and personal goals, he said. OrganizaThe Challenger Program is a three-year training program
tional Capability mangers manage deployment within
for new hires with less than three years of experience in
the business. They manage the business needs against
the industry. It provides them with practical experience
the individual development plans to match openings
and formal on-the-job training by sending them through
with individuals ready for their next challenge.

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World-class data centers meet oil,

gas HPC needs
Co-located data centers offer a cost-effective alternative to internal data environments.

Ed Henigin, Data Foundry

ccording to a survey by Microsoft, 89% of oil

and gas experts believe that to efficiently collect,
store, process, and report data, the need for high-performance computing (HPC) is critical. HPC server clusters
are commonplace in the oil and gas industry, providing
computations and performing multiple iterations much
faster than legacy server environments. The decrease in
time required to deliver the data, analyze them, and produce forecasting models leads to faster, more intelligent
business decisions. The rapidly growing demands of
HPC environments, however, are outpacing organizations ability to expand their internal data centers to
meet these demands. As the need for HPC environments grows, so does the expense to build, maintain,
and properly cool them.

Co-location data centers as a solution

Many companies are discovering the benefits of using
third party co-location data centers. Only a few of

todays data center facilities, however, are equipped to

address all of the needs of HPC users. Often referred to
as world-class data centers (WCDCs), these facilities are
designed to support high power densities, reduce power
costs, increase cooling efficiencies, and support flexible
deployment requirements. Co-locating in a WCDC not
only saves companies from the high construction costs
associated with building a data center and staffing and
maintaining these facilities, but because they are
uniquely designed to handle multiple HPC clusters,
WCDCs afford companies the ability to expand as HPC
demands grow. WCDCs also provide the knowledge and
staff necessary to construct and operate these facilities.

Power and cooling

HPC environments require a higher density of power
and produce significantly more heat than standard
server environments. Multiple levels of redundancy are
built into every phase of a WCDCs power infrastructure,
from the substations to power distribution units. Redundancy starts with dual power feeds supplied by separate
substations, with each substation powered by independent power plants. This level of
redundancy keeps the HPC environment operational in the case of a
major power outage.
A continuous water supply for
chilled water cooling also is vital to a
WCDC. Like the other utilities, the
dual water feeds should enter the
property and connect to mechanical
equipment through diverse paths.
Parallel water lines connect the cooling towers and chillers, providing
increased redundancy and concurrent maintainability.

Ceiling return air plenums separate hot

and cold air, transferring heat from the
servers to the mechanical plant. (Photos
courtesy of Data Foundry)


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WCDCs provide a secure environment for data

storage and collection.

Because every HPC cluster is unique, it also has a

unique set of power and cooling requirements. The
method in which equipment is cooled varies based on
the amount of power drawn:
Standard cabinets: < 8kw
Chimneys: < 25kw
Hot/cold aisle containment: < 30kw
Rear door heat exchangers: < 60kw
Chilled water to cabinet cooling: > 60 kw
To support the wide variety of power densities and
cooling configurations, WCDCs feature top-of-the-line
equipment designed to conserve energy, withstand load
increases, and provide reliable high performance. Heat
can be managed through a number of options, including chimney cabinets, hot or cold aisle containment,
rear door heat exchangers, and chilled water systems.
WCDCs use these cooling methods in tandem to
remove heat from the HPC environment. Ceiling return
air plenums quickly separate hot air from the cold air to
prevent mingling on the data center floor. The chilled
water system transfers heat from the servers to the
mechanical plant through chilled water pipes. The
resulting warm water is then circulated through large
chillers and cooled for reuse. Water-cooled in-cabinet
heat exchangers also are commonly used in the highest
density configurations such as those used by oil and gas
companies. This design consumes significantly less electricity than conventional standalone air-cooled systems.
It also provides a higher concentration of cooling to
locations with HPC equipment and supports higher temperature returns, making the overall environment easier
to manage.

WCDCs offer greater flexibility at lower cost. These facilities are designed to accommodate increased storage
demands and long-term business growth. Oil and gas
companies typically upgrade hardware every two years
and maintain rigorous maintenance schedules. WCDCs

allow companies to stay up to date and at peak performance by providing dedicated, knowledgeable staff who
understand the HPC environment and are able to swap
out and rapidly deploy equipment with zero downtime.
WCDCs provide customers with instant space to meet
changing data storage needs. Collecting petabytes of
data a year, these customers are able to scale up as their
business needs grow instead of scrambling to find more
space or maintaining extra space until they need it.

Accessibility and security

Engineers need to know that their data are highly secure
but also accessible at any time. WCDCs feature multiple
levels of security authentication as well as customizable
access options like biometric scanners, which allow
direct access to customer equipment through separate,
secured entrances.
Engineers also need access to their equipment at
any time. HPC equipment requires more maintenance
and replacement than standard server equipment.
WCDCs have security and operations staff on hand to
allow facility access any time of day, and they also can
act as remote hands when customers cannot physically
be at the data center.
In addition to physical access, a WCDC provides a highspeed fiber backbone and carrier-neutral options to its
customers for remote access. One of the biggest issues
facing oil and gas companies is finding a facility with the
high bandwidth and low latency capabilities required
when accessing petabytes of information remotely. By
providing numerous carrier options, WCDCs ensure
companies get the best rate from the provider with the
highest bandwidth and lowest latency. Data also can be
accessed instantly from any remote facility at any time.
By providing oil and gas companies with cheaper,
more efficient power and cooling options, room to
grow, and ample security and accessibility, WCDCs can
meet the growing demands of the oil and gas industry
and their HPC environments.
Febr uar y 2012 |


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Three-D real-time visualization service

facilitates accurate, timely decisions
The industry has been challenged to visualize disparate datasets together as they are
acquired in real time and in the context of relevant earth models. The goal is to process an
enormous volume of information so collaborators can make accurate and timely decisions
on something that will never actually be seen. A real-time 3-D visualization service can help
achieve these goals.
Andreas Sadlier and Pascal Luxey, Baker Hughes

eople have long relied on printed maps rather than a

textual list of instructions for directions to find their
way around. Maps provide a visual way of analyzing and
processing spatial data because they clearly show orientation and scaling that describe the relationships with other

objects and their relative positions. People understand

things visually more easily, especially when the information describes things in space.
In addition to providing a spatial reference, visualization
of information on a map allows many types of data to be
shown together in context, which clarifies the big picture.
Viewing different datasets together in context provides
more information that enables better decisions in less time.
In the oil and gas industry, everything related to drilling
a well also has a spatial relationship. The location and distance among offset well paths, structure and position of
relevant formations, and the site of the target reservoir
all can be described and visualized in 3-D space. With
advances in LWD tools, azimuthal measurements and
image logs can provide additional intelligence related to
the spatial orientation and scaling of other features, all in
real time. Many of these downhole technologies produce
highly accurate measurements and more data than ever.

Visualization in 3-D

Minimum acceptable separation distance calculations are displayed in 3-D. Tubes represent aggregation of positional uncertainty with ACR along offset wells with respect to the planned well
in yellow. Areas safe to drill are shown as visible space: red areas
indicate where ACR fails, while green areas show where ACR
passes. Dumbbell symbols and connecting lines show the direction along ACR calculation between offset and planned wells.
(Images courtesy of Baker Hughes)


The use of data visualization for decision-making, particularly in real time, has become critical in todays challenging drilling environments. Many drilling applications can
benefit from real-time 3-D visualization, from well planning and directional drilling using 3-D clearance calculations to drilling optimization, reservoir navigation, and
real-time formation evaluation using 3-D wellbore placement inside a geologic model.
Baker Hughes recently introduced its WellLink 3-D visualization service to optimize wellbore placement by providing real-time 3-D visualization of wellbore-related data.
The integrated decision support and visualization platform enables operators to make accurate and timely
decisions within a true collaborative environment by
aggregating data into a single visualization environment.
Our customers can now see a real-time synopsis of
their drilling environment, including earth models and
tool diameters, Scott Schmidt, Baker Hughes president
Febr uar y 2012 |


of Drilling and Evaluation, explained. Well

data is now viewable within its geologic context,
allowing operators to make real-time updates to
drilling parameters and well trajectory, effectively
optimizing wellbore placement and maximizing
reservoir contact.
This visualization service improves the understanding of real-time measurements by displaying
them in geologic context, which can minimize
risk through better understanding of the formation and its relationship with the wellbore. The
3-D visualization service provides better understanding of available space between offset well
paths and the planned or actual well path for
optimal anticollision planning.
According to Pete Clark, directional drilling subject matter expert at Chevron Energy Technology
Co., the ability of a visualization service like
In this figure, deep azimuthal resistivity readings are represented with pins
WellLink 3-D to integrate the wellbore positional
data with logs, offsets, and geologic models in real describing in space the position of the closest to the wellbore bed boundary
(above the well in this case). On the same image, a shallow azimuthal resistivity
time allows drillers to see possible opportunities,
measurement is displayed as an image properly oriented and located along the
hazards, and wellbore collisions so the trajectory
wellbore. Small formation details can be picked as faults, fractures, and bedand drilling parameters can be corrected for perdings. On the inset, other formation measurements are represented as curves
formance and safety. Viewing all types of well
along the wellbore.
information together facilitates a common and
better understanding of a situation, Clark said,
matically in red to alert personnel immediately to potential
while collaborating across various perspectives and disciplines enables good decision-making in a matter of minutes problems. Finally, 3-D symbols showing the amount of available space for drilling provide a contextual representation
rather than hours, days, or weeks.
for the planner or drilling engineer to quickly determine
Collision avoidance
where to steer the well to avoid a collision.
One of the most critical missions in drilling is ensuring
Reservoir navigation
wellbore collisions do not occur. Traditionally, collision
The goal of reservoir navigation is to accurately place and
avoidance has been performed using a series of 2-D manual tools, which often are cumbersome to operate. Outputs keep the wellbore in the pay zone by avoiding premature
or unplanned exits leading to nonproductive time (NPT).
from these tools sometimes are difficult to understand and
The availability in recent years of advanced LWD measureanalyze and easy to misinterpret.
The ability to incorporate information typically displayed ments has made the task of placing the well in the right
zone easier. However, with more challenging wells being
in 2-D reports in a 3-D environment is a significant
drilled, more complex criteria have to be met while
improvement. Displaying traveling cylinder plots with nodrilling. Three-D visualization facilitates collaboration,
go areas from a static report in 3-D, for example, can simenabling the team to place the wellbore optimally.
plify understanding and provide the next step toward a
For example, a deep azimuthal resistivity reading from
more automated solution.
a downhole tool provides orientation data with respect to
Tubes displayed along offset well paths represent the
high side, resistivity values, and signal quality. This informinimum allowable separation distance, providing a visual
mation can be processed seamlessly and rendered as a sininterpretation of how far the planned or currently drilled
gle datapoint in which color, size, and distance from the
reference well path must be from the offset path in questool sensor represent the summation of all related infortion. By visualizing anticollision rule (ACR) calculation
mation. All downhole data are viewed within geologic conresults in context with the reference and offset well paths
text, which provides greater understanding of the wellbore
in a 3-D environment, analysis becomes much simpler. For
placement and plan-ahead decision that may be required.
example, failure cases of the ACR can be color-coded | Febr uar y 2012


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The stabilizer (in purple) above the steering unit is at the bed boundary between
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The visualization of the bottomhole assembly (BHA) within its geologic context can provide insight that often is difficult to detect through direct measurements alone. Drilling dysfunctions that are not addressed can lead to tool
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Dynamic parameters like bending moment and the relative orientation of
the BHA with respect to the wellbore also can facilitate predicting the BHAs
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Turning wellbore-related data into real-time imagery for enhanced well
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A Clearer Image



Taking a microscopic view

of the shales
New electron microscopy techniques provide another look at unconventional reservoirs.


his months exploration feature is about reservoir

characterization, primarily as it relates to shale
Senior Editor
plays. While operators often dont have the luxury of
studying their shale acreage up close and personal,
reservoir characterization can help answer many of
the questions that plague developers of these unconRead more commentary at
ventional resources.
One of the key issues with shale is its mineralogical
composition. Hydrocarbon molecules arent simply
sitting in pore spaces in the shale. Often theyre actuwhether something is a feature or an artifact. In the
ally connected to the organic content, such as kerofield you get a more coarse sample. This quick and
gen, making them even more challenging to produce.
dirty sampling can provide information at the micromUnderstanding these shales at the molecular and
eter scale, but to make out mineralogy, a sample
even nanometer scale could help operators
needs to be studied at a finer scale in the lab.
determine better ways to release the oil
McCrone does research for its clients
and gas.
and customizes its service offerings to
A company called McCrone Assosuit their needs. Theres a range,
ciates Inc. has the tools and techfrom determining the composinology to provide that analysis.
tion to determining the strucAccording to Craig Schwandt, a
ture, Schwandt said. We can
geologist with McCrone, his
identify elemental materials as
company has access to tools
well as organic materials. We
that few oil companies possess.
can do characterization using
The new technology allows
backscattered electron imaging,
one to examine the nanometerelemental analysis, and X-ray difscale features of materials,
fraction to define the phases and
Schwandt said. Most people dont
the data to oil company
really know about it. Its new within the
in a format for their geoi
ur te
sy o f Nu m er
last three years, and it really does open up
chemistry modeling.
avenues for investigation.
Currently, McCrone serves a host of industries,
He added that interest is growing in understanding
but it is just entering the oil and gas business. Schwandt
the nanoporosity of shale plays. The technology is
said that it is a difficult foray since oil companies
available and could benefit companies that might
tend to be loath to share their data. Toward this end,
not have those resources themselves, he said.
McCrone provides the critical confidentiality required
Several new techniques have been introduced
by clients. And the ultimate answer comes at a fraction
recently to study cuttings and cores at the well site,
of the cost to drill and complete a well.
but McCrone handles samples in the lab. Schwandt
Its a lot cheaper for them to experiment with sendexplained that theres a difference in the preparation
ing us a few samples rather than buying the equipment
of the samples that provides a more robust answer in
themselves, he said. Each of these instruthe lab. One of the features of electron microscopy
ments costs about (US) $1 million. A
is the ability to sample using ion polishing, he said.
couple thousand dollars isnt anyIts important at the nanometer scale to determine
thing by comparison. | Febr uar y 2012







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Despite lag, GoM activity

continues to grow
New findings show an increase in permit approvals for deepwater
GoM projects.

nitially released in July 2011, IHS Inc. has updated

its original report, Restarting the Engine Securing
American Jobs, Investment, and Energy Security. The
study used publicly available US government data to
analyze the pace of drilling permit approvals for the
US Gulf of Mexico (GoM) from October 12, 2010,
when the drilling moratorium was lifted, through
April 10, 2011, compared to pre-moratorium levels.
The report identified a growing backlog of plans
pending approval in addition to a sharp reduction in
plan and permit approvals. The indication at the time
showed that the new regulatory process was not yet
functioning. The resulting lag in activity is expected
to result in lost opportunities totaling in the billions.
The current muted approval process would translate
into the loss of 150 MMbbl of oil in 2012 411,000
b/d from the deepwater GoM alone. Gross domestic
product growth in 2012 would decline by US $44 billion, according to the IHS report. On the job front,
the slowdown in the approval process would eliminate
230,000 additional jobs in 2012 and facilitate the loss
of $22 billion in the improvement costs of wages and
compensation. In addition to these effects, federal,
state, and local royalties; bonuses; and tax payments
are expected to decline by $18.6 billion over the next
three years.
Employment effects would not be limited to the Gulf
States. The report showed that one-third of the jobs
created would be outside of the
Gulf region.
IHS has since updated its
original findings using data
from the Bureau of Ocean | Febr uar y 2012

Senior Editor
Read more commentary at
Energy Management/Bureau of Safety and Environmental Enforcement (BOEM/BSEE), formerly the
Bureau of Ocean Energy Management, Regulation,
and Enforcement (BOEMRE).
New information shows that the volume of permit
approval has increased in each of the two quarters following the period from January 1, 2011, through April
10, 2011. Annualized 3Q and 4Q volume of permit
approval activity was 41% and 56% of the historical
annual average, respectively. In the 12 months following the lifting of the moratorium, the 51 permits
approved resulted in an annual rate of approval that
was 32% of the historical average (151 permits).
According to Jim Burkhard, Global Oil Group,
IHS CERA, Regulatory congestion matters because
it influences the pace of development and the pace
of job creation, and it can drastically decrease domestic production.
Although permit approval is still somewhat diminished from pre-moratorium levels, drilling activity is
returning to the US GoM. As the process improves,
the region may quickly be back in full swing.
Despite recent stoppages such as the Keystone
XL Pipeline project delay, demand continues
to increase the need for domestic production. With increased safety, more advanced
well planning, and a range of new technologies being applied,
offshore drillers may
soon breathe easy where
the deepwater GoM
is concerned.






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EOR project has the right mix

A linkup between an NOC and an IOC must be replicated elsewhere.

he relationship between reserve-rich national

oil companies (NOCs) and technology-savvy
international oil companies (IOCs) is one that is
constantly evolving.
Instances of this arise often within the pages of
E&P (for example, in our August 2011 issue), and
the rewards can be staggering. The size and scale of
one of the latest deals is particularly impressive and
reflects exactly what is possible when two like-minded
representatives from each camp put their heads
together for their mutual benefit.
The formal signing between Malaysia state oil
company Petronas and Shells Malaysian subsidiary
to undertake two EOR projects offshore Sabah and
Sarawak will eventually unlock hundreds of millions
of barrels of stranded oil. The contracts
build upon two existing productionsharing contracts (PSCs) for fields
where oil has been produced for
decades using primary and secondary recovery techniques.
On a combined basis, this
would be the largest offshore
EOR development in the
world if it is successful.
The technology to be used
on the 13 fields offshore East
Malaysia could include the
worlds first full field-scale offshore chemical EOR project,
according to Shell, with the
planned injection of alkaline surfactant polymer (ASP) technology using
horizontal wells.
The quest to squeeze more oil out of the ground is
neverending, and ASP flooding technology is a tertiary recovery method used for certain reservoirs that is
likely to become a growing weapon in the offshore
EOR arsenal for NOCs and IOCs alike.
The use of surfactant agents to free oil trapped in
the pore spaces of the reservoir and a polymer to
increase the area of the reservoir sweep already is
in common use onshore. Shell has been testing and
refining ASP methods at sites in Russia and Oman,
and both companies forecast a projected increase in

International Editor
Read more commentary at
the average recovery factor from the fields in the
Baram Delta and North Sabah from 36% to 50%.
But the task they face in delivering this project is a
tough one the application of chemical EOR offshore
is uniquely challenged by remote locations, poor
weather, expensive wells, space and weight limitations,
sea water injection source, and limited disposal
options. These impact subsurface efficiency, logistics, injection, production,
and the environment and are the
reasons why chemical EOR has
been limited to relatively few
pilot tests and partial field projects offshore.
This combined project, however, is intended to be a standard bearer for the industry in
the transfer of chemical EOR
offshore to maximize oil production from existing reservoirs.
Total investment over the next 30
years is forecast at US $12 billion.
It also is a clear example of how an
IOC can add transformative technology,
hard-learned know-how, and value to an NOC
so that the latter can unlock the value of its stranded
resources for the benefit of its citizens. At the same
time, it can enable the IOC to gain access to new
hydrocarbon resources, often in areas previously inaccessible to them.
With more than 90% of global oil reserves controlled by the NOCs, this is an example that will need to be repeated
time and again if the industry
is to extract as much oil out of
the ground as possible.

The deal
between Petronas
and Shell to undertake
two EOR projects offshore
Sabah and Sarawak will
eventually unlock hundreds
of millions of barrels of
stranded oil. | Febr uar y 2012



New plays take

center stage
From the icy waters surrounding Greenland
to the vast expanse of China, operators
are queuing up the next round
of super fields.

he world has been running out of oil since at

least the 1880s. Luckily, intrepid explorers tend
to ignore the pundits and find more oil anyway.
Now they are having to push into harsher environments like the Arctic and deep water and to
chase new sources of hydrocarbons like shale
plays and coalbed methane. Often these
resources are in areas without sufficient
infrastructure or in countries that are
not used to having an oil and gas
industry in their backyards.
Despite these challenges, the
quest for new plays continues.
Highlighted here are four
emerging plays with
potential to become
significant sources of
new hydrocarbons.


Febr uar y 2012 |


China: Headed for

a shale gale?
China has the resources in the ground, but
does it have the resources on the surface?
Rhonda Duey, Senior Editor

ne of the most common tactics for entering a new

play is to look for analogs to existing plays. This
sort of stick with what you know approach has led to
successful frontier exploration in places like West Africa
and the Mediterranean Sea.
It does not necessarily work as well with shale plays.
Even within North America, shales vary drastically from
basin to basin and even within basins. Operators eyeing
foreign shales will need to take a very tentative approach.

Chinese opportunities

our Europe/Africa/CIS, Middle East/Asia, and Latin

America regions in support of these developments.

In addition to possible supply shortages, gaining access
to shale acreage will be challenging. According to an
article in the Financial Times, joint venture partners are
the most common avenue to access the Chinese market.
Even high-profile multinationals with extensive local
contacts and resources face regulatory hurdles because
the energy sector is considered as a strategically sensitive
industry, the article states. For this reason, the Chinese
government typically requires local Chinese company
participation and/or the use of Chinese content, conditions that it expects will help the country to develop its
own shale gas expertise.
This access difficulty may be easing, however, since the
government also recently announced it considers shale
gas an independent resource from conventional hydrocarbons and will allow foreign companies to participate
in their development. It also will open the door to
smaller Chinese energy companies.
Chinese shale development is likely to happen, but
not at the speed with which it has happened in the Western Hemisphere. n

China is trying to wean itself from coal and expects to

increase its natural gas consumption by a factor of five,
according to the International Energy Agency. The
hope is to have natural gas account for 10% of the countrys energy mix by 2020.
To this end, Chinese national oil companies have
partnered with foreign companies both in China
and in North American shale plays to increase
their technical understanding of these challenging
and complex resources. Most recently, Devon
Energy Corp. signed an agreement with Sinopec
International Petroleum Exploration & Production
Corp. whereby Sinopec plans to invest US $2.2 billion in exchange for one-third of Devons interest
in five new venture plays in North America. And
Shell recently announced two vertical discoveries
in the Sichuan basin in China.
China claims to have shale gas resources of 3,532
Tcf, according to a report titled Unconventional
gas and the implications for the LNG market in
China, written by Chris Gascoyne and Alexis Aik for
the 2011 Pacific Energy Summit. Tapping into it will
not be easy multiple sources point to equipment
and labor shortages as well as supply chain challenges. Service companies are not unaware of this
opportunity, however. In a recent earnings call, Halliburton CEO Dave Lesar said international unconventional resources were highly undercapitalized
Chinas shale resources are considerably larger than those in North
on the equipment side, and President of Strategy
America, but developing them will be challenging. (Map courtesy of
and Corporate Development Tim Probert added,
Advanced Resources International)
Were in the process of mobilizing horsepower to | Febr uar y 2012



deepwater oil
potential beckons
This deepwater West Africa bright spot could
be on par with the massive hydrocarbon
province that exists offshore Brazil, where
the first presalt discovery was made.
Nancy Agin, Associate Editor

hile operators have turned up world-class oil fields

in Angola and Ghana, the logistically remote and
underexplored Republic of Namibia has not been in the
spotlight. The country, however, is emerging as a promising deepwater petroleum frontier that could deliver
enormous pay. Adding to its appeal, the countrys sedi-

mentary basins are linked to those offshore Brazil, where

a series of prolific presalt discoveries has transformed the
region into a worldwide reference for this play.
In July 2011, Namibias Mines and Energy Minister Isak
Katali highlighted the areas untapped oil potential, confirming that Chariot Oil & Gas had discovered an estimated prospective volume of 11 Bbbl offshore. Katali
said the country was in the throes of its largest exploration campaign, one that would see six to eight wells
drilled during the next 18 months.
Only 14 exploration wells have been drilled in a
500,000-sq-km (approximate 193,000-sq-mile) area so far.
Five of these wells lie in the Kudu gas field, Namibias
sole commercial hydrocarbon discovery, which has 1.4
Tcf of proved gas reserves with an upside of 20 Tcf.
Brazilian startup HRT Oil & Gas is one of a handful of
companies targeting new exploration offshore Namibia,
which CEO Marcio Mello maintains is an analog to the
Brazilian margin bearing the same source rocks and
stratigraphic evolution as the conjugate offshore basins
and holds comparable oil potential.





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HRT operates 10 exploration blocks and holds a participating interest in two additional blocks in Namibias
Orange, Walvis, and Namibe basins; these assets cover a
68,800-sq-km (26,564-sq-mile) area offshore.
According to Mello, who worked as a geologist at
Petrobras for 24 years and in Angola for three years,
the Santos, Esprito Santo, and Campos basins comprise
one giant petroleum system, which he collectively
referred to as the Greater Campos during a technical
program at OTC Brasil in October 2011. Recent subsalt
finds in ultra-deep formations in the Santos basin in particular reveal a very thick and rich source rock related
to the petroleum system HRT is currently studying in
Namibias offshore basins. The OTC session South
America and West Africa: Petroleum Systems and Geological Differences or Similarities also included talks
by Joao Amaral (Total) on presalt plays in the conjugate
margins and Webster Mohriak (HRT) on subsalt exploration in Brazil and Angola.
What kind of correlation can we draw between the oil
shows in the Greater Campos and Namibia? Nilo Azam-

buja Filho, HRT chief technical officer, asked conference attendees, then explained that when combining
datasets from Brazil and West Africa, HRT has identified
four definitive oil families in both regions.
The oil found in Namibia has the same characteristics as the oil families found in Santos basin reservoirs,
he said. These consist of the Marine Deltaic Tertiary,
Marine Anoxic Albian-Cenomanian, Lacustrine saline
oil type, and Lacustrine brackish/saline oil type.
According to Azambuja Filho, an extensive rifting system that extends from the southern part of South America to West Africa has evolved into a massive deepwater
carbonate system where thick salt depositions and similar source rocks can be found in counterpart basins
across the South Atlantic realm.
HRT has identified large prospects in three of its offshore blocks. We think there could be more than 5 Bboe
in these unrisked prospects with objectives in the Upper
Cretaceous turbidite sandstones, as well as the syn-rift carbonates and sandstones that are analogous to the Tupi and
Jupiter fields in southern Brazil, Azambuja Filho said.






- -




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f; - ` I



HRT operates 10 exploration blocks (green)

and holds a participating interest in an additional two blocks (yellow) in Namibias Orange,
Walvis, and Namibe basins; these assets cover
a 68,800-sq-km (26,564-sq-mile) area offshore.
(Image courtesy of HRT Oil & Gas)

In August 2011, HRT raised its net

potential oil resources to 7.9 Bboe following a DeGolyer & MacNaughton
study of its offshore Namibia assets. As
for the region as a whole, the company
has projected as much as 50 Bbbl of
recoverable oil.
Chariot has pegged its unrisked prospective resources
in eight exploration blocks in the Namibe, Lderitz, and
Orange basins at 20 Bbbl (12.5 Bbbl net), according to
information published by the company in January 2012.
Both companies plan to invest heavily in exploration
efforts in the region in the coming year, with Chariot
scheduled to drill its first well, Tapir South, in 2Q 2012
and HRT expected to drill up to four wells through 2012.

Meanwhile, with an additional 9,900 sq km (3,822 sq

miles) of 3-D seismic data added at year-end 2011 based
on Katalis estimates, new exploration and the chase for
the first world-class oil deposit offshore Namibia continues. The country was expected to close its open licensing system, which was adopted in 1999 and allows
international oil companies to apply for acreage at any
time, by year-end 2011. n



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Australia extends
gas development
to CBM
With an estimated 198 Bcm of CBM
resources, Australia is working to move
more reserves into production.
Judy Murray, Editor

as production has trended upward in Australia over

the last decade, with conventional gas making up
the lions share. While Australias enormous offshore gas
developments have been in the limelight, the country has
been producing commercial coal seam gas, or coalbed
methane (CBM), in increasing volumes since 1996.
Australia has an estimated 198 Bcm of CBM. Queensland, in northeastern Australia, is home to the two
largest producing basins.

The Bowen basin covers 160,000 sq km (61,776 sq

miles) of Central Queensland. Production from this
basin has provided the majority of Queensland CBM to
date, but activity in the Surat basin has begun to pick up
in the last couple of years, with first commercial production reaching the domestic market in 2006.
According to a government report, the CBM in the
300,000-sq-km (115,831-sq-mile) Surat basin, which
stretches beyond Queensland into northern New South
Wales, is not buried as deeply as that in the Bowen basin.
This means the gas concentration is lower and the gas
less thermally mature. There is higher permeability in
this basin, and because the coal is generally shallower,
drilling and completion costs are lower.
Queenslands CBM industry has seen considerable
growth over the last 15 years, with the number of CBM
wells drilled increasing from 10/yr in the 1990s to more
than 600/yr in 2009 and 2010. According to a report
issued by the Geological Survey of Queensland, CBM
exploration and development activity remained strong
even through the recent global economic downturn. In
the 2009-2010 period, production increased to 212 peta-

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Coal reserves in
million metric tons

Estimated CBM resources

(in Bcm)







million metric tons per year of LNG could be

exported from Queensland, beginning in 2013.

Looking ahead

While there is no question that Australias CBM

resources are considerable and there is a growing
domestic and international market for the countrys
gas, future exploration and development will not
be without challenges. In a recent Ernst & Young
report titled Coal seam gas: broadening the energy
mix, analysts point to a number of challenges,
risks, and issues that could limit CBM development.
These include access to reserves, a yet-to-be-disSouth Africa
None estimated
closed fiscal regime that will likely increase the govPoland
ernment take, and the unresolved issue of water
management. Not surprisingly, environmental conBrazil
None estimated
cern about the potential loss of water supply to
Sources: BP Statistical Review of World Energy 2010 and Methane-to-Markets Partnership, Global Overview of CMM Opportunities, January 2009
landowners and townships, the possibility of reduced
water quality resulting from cross-contamination of
joules (PJ) from 151 PJ in 2008-2009, which represents
aquifers or contamination from drilling chemicals, gas
more than 70% of the regions gas production.
migration to water bores, and produced water treatment
There is considerable interest in continuing this trend.
and disposal are at the top of the list of concerns. These
The report states that beginning in 2007, there has been
issues will have to be dealt with if CBM production is to
growing interest by both Australian and international
move forward.
energy companies in using Queenslands CBM reserves to
The incentives for developing this resource are great,
develop an export LNG sector. Eight export LNG projects
and the global need for energy continues to grow.
had been publicly announced by February 2011. If all
Clearly, there is an impetus for developing acceptable
eight materialize, according to the report, more than 50
strategies for managing risk to produce these reserves. n

Arctic activity
warming up
Opportunities in the often-frozen northern
seas are growing for explorers looking for
that first mover advantage.
Mark Thomas, International Editor

he E&P industry knows the Arctic is a unique environment. It poses such tough physical and technological challenges that few believed until recently that the
sustained exploration and development of its massive
hydrocarbon resources was possible.
But it is those huge reserves of recoverable oil and gas
(estimated by the US Geological Survey, or USGS, at
around 90 Bbbl of oil, 1,670 Tcf of gas, and 44 Bbbl of
natural gas liquids) that are too tempting to ignore.
Alongside the current handful of pioneering and

often ice-bound offshore activities established or being

drawn up and implemented in areas such as Alaska,
Canada, Russia, and northern Norway, upcoming licensing rounds offshore Greenland are exciting industry
interest more than most.
This is largely because exploration activity in the US
and Canadian territories has been delayed by offshore
drilling regulatory and policy reviews, while Russias arctic activities in areas such as the Pechora and Barents
seas continue to progress more slowly than hoped. Russias first commercial offshore Arctic field, the Gazpromoperated Prirazlomnaya project in the eastern Pechora
Sea, is finally expected to start flowing oil by the end of
1Q 2012 via a fixed platform after originally being discovered in 1989. Meanwhile, the Shtokman field, discovered in 1988, has been delayed again while Gazprom
and partners Statoil and Total consider how best to commercially develop the initial phase of this challenging
gas field.
This slow pace has left the door open for Greenland
to establish itself as an accessible and willing Arctic CirFebr uar y 2012 |


cle province, and the country is

on a sustained campaign to attract
more companies into its frontier
areas. Already it is recognized as
offering a favorable fiscal regime
with a stable investment climate
and a supportive administration.
The government is in the early
stages of a North East Greenland
licensing round for acreage in the
Greenland Sea. The Bureau of
Minerals and Petroleum (BMP) is
holding two successive rounds in
2012 and 2013, including a preround for members of a consortium that already holds acreage in
the area (the Kanumas Consortium, consisting of ExxonMobil,
Statoil, BP, Japan National Oil
Corp., Chevron, Shell, and state oil
company Nunaoil AS) and an ordinary round for nonconsortium
companies. The total area on offer
covers nearly 50,000 sq km (19,305 The Toisa Vigilante subsea support vessel visits Nuuk Harbor, Greenland, while supporting
operations for Cairn Energy. (Photo courtesy of Cairn Energy)
sq miles) divided into 19 blocks.
The most active company in
Greenland is UK independent Cairn Energy, which has
Cairn reported that severe mud losses and poor hole
carried out a sustained multibasin frontier campaign offconditions hampered the full evaluation of this interval,
shore West Greenland, with no discoveries so far but
which was thought to be of potential interest because
some encouraging results.
of oil and gas shows. A modular dynamic tester (MDT)
The company the largest acreage holder in the
program recovered fluid samples to surface, revealing
country admits this is all part of the risk of being a
only mud filtrate and failing to establish hydrocarbons.
first mover in this frontier region, where the rewards
A set of sealed MDT samples have been sent to laboratocould be company-transforming.
ries in the UK for further analysis.
The yet-to-find volumes of oil and gas offshore West
The company is pushing on with a 3-D seismic program
Greenland are put by the USGS at 7.3 Bboe and 54 Tcf
covering 1,500 sq km (580 sq miles) in the Pitu Block in
of gas. Cairn has amassed a 85,000-sq-km (32,820-sqBaffin Bay currently being processed with fully migrated
mile) database of 2-D seismic, and last year the company
results expected this year. It added that the results of shalcompleted two 3-D surveys.
low borehole geochemical analysis confirmed micro seepCairn drilled three wildcats in 2010 followed by a furages of oil and gas in the immediate vicinity of the main
ther five in 2011. Last years program saw wells drilled
structures identified on the previous 2-D seismic data.
in both shallow and ultra-deep waters, with the LF7-1,
It also is processing 3-D seismic data shot over parts of
Gamma-1, Delta-1, AT7-1, and AT2-1 wells all failing to
southern Greenland and expects fully migrated results
find any significant hydrocarbons.
by mid-2012.
The AT7-1 well in the Atammik Block in the South
An additional 3-D seismic survey over the Lady
Ungava Area is a good example of the activities the comFranklin and Atammik region is under consideration
pany is undertaking. The well was drilled by the Leiv
for 2012, with the potential for further drilling in the
Eiriksson semisubmersible rig in 909 m (2,982 ft) water
West Greenland basins in subsequent years.
depth approximately 200 km (124 miles) offshore the
Meanwhile, Cairn is planning to seek farm-in partners
capital of Nuuk. The well hit a 113-m (371-ft) gross
to assist in funding future activity phases. With the cominterval with 53 m (174 ft) of net reservoir quality
pany holding 11 blocks out of the 20 currently licensed,
sands of Cretaceous age.
it is likely to find plenty of willing partners. n | Febr uar y 2012



GGI reduces risk, cost in shale plays

Providing an adjunct to seismic, gravity gradiometry images structural complexity
at a fraction of the cost of a 3-D survey.

Phill Houghton, ARKeX

ith shale gas having the potential to change the

demand/supply energy outlook in North America,
todays operators are looking for ways to exploit the
resource as efficiently as possible.
Identifying, mapping, and staying within sweet spots;
determining well locations and spacing so drilling can be
optimized; and designing the most effective production
strategy, while taking heed of environmental sensitivities,
are all key drivers for shale gas operators today.

Rising to the challenge

There is no doubt that todays 3-D seismic technologies
are capable of developing highly accurate 3-D structural
models of shale gas fields, helping to optimize drilling
and completions.
Advanced seismic processing and high-resolution wideazimuth 3-D surveys are generating detailed information
on key reservoir properties such as pore pressure and
local stresses and are providing important input for fracture stimulation programs.
While information generated from seismic is crucial
in guiding drilling and completion programs, gravity
gradiometry imaging (GGI) also is playing an important
role alongside 2-D seismic in optimizing exploration strategy in shale gas plays.
These benefits are principally seen in two crucial areas
firstly, in indentifying zones where there
is a high probability of structural
complexity, which can subsequently have a negative effect on

The FEA-derived model shows more structurally complex areas in

red and less complex areas in blue. (Images courtesy of ARKeX)


tion and fracing programs; and secondly, in reducing cost

and risks surrounding shale gas exploration.
Airborne GGI surveys are able to explore vast regions
quickly and efficiently with minimal environmental
impact and with significant implications for reducing risk
and cost (typical multiclient surveys in North America
cost in the region of US $2 an acre, whereas 3-D seismic
can cost as much as $150 an acre).

Modeling complex geologies

GGI is a fast growing technique that maps small density
variations in underlying rocks by measuring the gradient
of the earths gravity field.
The technology benefits of GGI in traditional oil and
gas exploration have significant applications in shale gas
fields today. For example, the high-resolution data and
bandwidth generated, coupled with the strong signal-tonoise ratio, make GGI a highly effective technology in
modeling complex geologies and generating accurate
velocity/density relationships.
Through precise positioning of subsurface density
contrasts, GGI can accurately target geological settings,
derive basement structure maps, and provide input to
the structural definition of overlying sedimentary sections
and horizons.
The ability for GGI to include 3-D geology in its datasets
allows the seismic interpreter to develop structural models
outside the plane of 2-D seismic acquisition and provides
an increased spatial awareness of the target area.
GGI can provide valuable data to interpolate between
two seismic lines often several miles apart providing
confirmation of whether two independently interpreted
faults on two seismic sections are connected. This is a significant benefit in the early stages of shale gas exploration
where 3-D seismic access is restricted. Here, GGIs ability
to look at the geology sideways when developing its
structural models is of high value to shale gas operators.
The most significant application GGI has for shale gas
exploration is through a new solution called ShaleQube.
This exploration workflow combines the structural modeling information generated by GGI with the finite element method, which is used to calculate zones where
there is a higher or lesser probability of structural complexity within a target sequence.
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With such structural complexities increasing the likelihood of the operator losing contact with the shale or
coming across faults that have the potential to divert
hydraulic fracturing or reduce pressures (ultimately
resulting in abandoned wells), the information generated
from GGI and the resultant finite element analysis (FEA)
can be crucial in determining exploration strategies.
It is more important than ever for operators to understand the structural complexity of shale gas fields, the
presence of faults, and which areas of the field are more
or less structurally complex than others ahead of planning 3-D seismic acquisition.

GGI on the Montney

The Montney formation is in the Western Canada Sedimentary Basin in British Columbia and Alberta. Here,
shale gas extraction began in the late 2000s.
ARKeX carried out an initial GGI survey in partnership
with JEBCO Seismic LLP in 2005 and 2006 to identify a
Mississippian gas play. At the time of acquisition, the Montney shale gas play was not a prime target, so the survey
design was not optimized for this play type. However, the
data did cover part of the Montney shale and subsequently
were used to help develop the ShaleQube workflow.
Using the GGI interpretation, an isopach map was generated that clearly showed the sedimentary structure

within the Montney rifted section and the faults believed

to control fluid distribution. The structural data were
then input into FEA, where the combination of highresolution GGI data plus a 2-D seismic-guided 3-D earth
model generated a 3-D volume of the structural complexity of the shale gas interval.
In this case, zones were highlighted where there was an
increased probability of faulting and where the operator
might want to acquire further 3-D seismic data. The FEAderived model illustrated more structurally complex areas
where there was a high probability of encountering faults
and less complex areas where there was a lower probability of encountering faults.
The model provided crucial information for operators
making exploration decisions on shale gas plays and the
targeting of future 3-D seismic surveys.

GGI on the Marcellus

ARKeX also has been working in partnership with Global
Geophysical Services to improve understanding of the
Marcellus shales structural complexity on a regional
scale. The Marcellus shale is one of the largest sources of
domestic natural gas to be discovered to date in the US.
The airborne survey of 9,065 sq km (3,500 sq miles)
was completed in just 100 days, and the preliminary GGI
data are providing valuable information about how the
structures and faulting, seen in 2-D seismic data, can be
linked to help provide an overall understanding of the
structural framework in the area.
The data show a strong correlation to the fold axes interpreted in the region where low-density regions exist along
the anticlines and high-density regions where synclines are
present. While the GGI data do not image the Marcellus
shale itself, they are able to identify the density interfaces
that influence the Marcellus, particularly the salt the shale
is sitting on top of and the Tully and Onondaga limestone
layers that bound the Marcellus interval.
Although the survey results need to be analyzed in
more detail, an improved understanding of the Salina salt
and associated faulting will provide valuable information
about the structural complexity within the Marcellus.

Getting in on the ground floor

The full-tensor gravity gradiometry data overlying the fold axes

clearly show the structural correlation.


Although 3-D seismic is still playing the lead role in mapping out shale gas reservoirs today, if used at an early stage
in the exploration lifecycle, ShaleQube can play an invaluable role in identifying key structural elements such as
faults, identifying more structurally complex zones, providing input into the design and targeting of future 3-D
seismic surveys, and optimizing drilling program and
production strategies.
Febr uar y 2012 |






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New approach increases

heavy oil production in Egypt
Developing new technology to conduct effective production logging in extreme conditions
is vital to the future of unconventional oil production.

Ismail Mohamed, Zenith Oilfield Technology

s world energy demand continues to increase, the

oil and gas industry is moving to develop the less
conventional resources. Technology is opening new
exploration options, including heavy oil, which makes
up 15% of the worlds oil resources.

develop a new Y-tool that can operate at four times the

rate limit of competing products in the market.
The Y-tool customized for Scimitars requirements is
part of Zeniths complete ESP bypass system. Using
patented Saddle technology revolutionizes bypass system
installation, halving the actual installation time and significantly reducing rig costs and time-to-production delays.

Setting the stage

Oil in the desert
Operators in Egypts Eastern Desert are facing the
challenge of recovering the regions large heavy oil
resources, which are contained in fractured carbonate
reservoirs. Such reservoirs offer pessimistic probabilities,
with primary recovery rates as low as 1% and ultimate
recovery under 30%. In the case of the Issaran field,
however, steam EOR has been used to change the production outlook.
The work undertaken in the Issaran field has demonstrated the importance of sophisticated logging and
production technology that can withstand the extreme
operational conditions of unconventional oil production. In the Issaran field, the technology improved reservoir characterization and extended production in heavy
oil reservoirs that might otherwise not be viable.
To exploit the production from oil zones in conditions
of high fracture intensity and water cuts, it was essential to
precisely identify high permeability layers and calculate
their corresponding reservoir pressure. In this case,
unique production logs were combined with high-capacity electric submersible pumps (ESPs). The conundrum
was to find an ESP that could provide enough drawdown
while retaining the ability to perform accurate production logging in high-rate flowing conditions. Operator
Scimitar partnered with Zenith Oilfield Technology to

The Issaran field, discovered in 1981, is operated by

General Petroleum Co. and Scimitar Production Egypt.
The field, which holds an estimated 1.6 MMbbl of 10-

Operator Scimitar partnered with Zenith Oilfield Technology to

develop a customized Y-tool that operates as part of Zeniths
complete ESP bypass system. (Images courtesy of Zenith Oilfield Technology)


Febr uar y 2012 |


12API crude, covers 20,000 acres 290 km (180 miles)

southeast of Cairo and 3 km (1.9 miles) inland from the
western shore of the Gulf of Suez.
Initially the wells yielded an average of 30 b/d. Cyclical stream stimulation initiated in 2006 boosted production to a peak of 8,000 b/d in 2007, but decreased to
5,000 b/d in 2010 due to water breakthrough.
Part of the difficulty in producing the field was the
dissimilar reservoir formations, each of which required
different management. Formations included Miocene
dolomites and limestones (upper dolomite, lower
dolomite, Gharandal, and Nukhul limestones) and
sandstones (Zeit).
The Upper Dolomite formation had the unfavorable
oil recovery factor of oil-wet reservoir rock. Similar factors
plagued the Lower Dolomite sections, and because of
their shallow depth, cold production was not an option
for these formations.
Three limestone bodies comprise the Gharandal formation, all with permeability of less than 20 md. Due to its

highly fractured nature, the deepest Gharandal formation, called the Nukhul zone, has been the largest producer of cold oil in the field. Unfortunately, high fracture
permeability caused water flow into the wellbore in some
areas of the reservoir, resulting in high water cuts. Steam
channeled through these fractures resulted in heat depletion within the reservoir, hampering heavy oil viscosity

Breaking barriers for a solution

High water production was the result of two main factors
water and steam channeling through fractures and difficulty in determining the correct pay resistivity cut off. It
was crucial to distinguish between water and oil zones to
shut off the breakthrough and maximize production.
An ESP was deployed to maximize production, but it
presented a new set of problems. The Y-tools available on
the market at the time reached their limits at 1,000 b/d of
fluid, but a capacity four times that amount was required
to meet Scimitars objectives. Zenith developed a Y-tool to

Shale rig inspections

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ModuSpec rig inspection services can reduce downtime and save money by improving the reliability, safety and
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From a dropped-objects survey to a value assessment of your rig fleet, ModuSpec can help you continue with what
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allow production logging with

the higher rate and optimize
The Y-tool was built for 7-in.
casing, and the tubing size was
designed to optimize production. Given the diameter
parameters, concerns arose
during risk assessment about
fishing operations and also the
risk of plugging with the heavy
oil. The wireline production
logging toolstring was run
through the completion using
the Y-tool to ensure it would
go through. This allowed a
trial run offline to ensure
potential problems could be
addressed prior to the toolstring going into action.

Logging the problems

Identifying these problem
high-permeability layers was
central to halting water and
steam breakthrough. Wells
were experiencing 98% to
100% water cuts, so flowing
surveys and shut-ins were
conducted to determine the
optimum conditions
in the varying composite
areas of the reservoirs.
The best possible results
for the well were attained
using the Y-tool for the
first time, achieving the
designed well production
rates with the ESP. It also
allowed water production
to be isolated so oil zones
could be targeted within the

Using the Y-tool in conjunction with

the wireline production logging toolstring enabled Scimitar to identify
and shut off high-permeability layers
and deter early steam and water
breakthrough in production.


Production log results had momentous impact on

the field development plan. Identifying water-bearing
layers by detecting different layer pressures and identifying water production zones led to the increase in the resistivity cut off for hydrocarbon production. Recompletion
of these wells was successful by closing off the lower resistivity zones, which saw water cut drop from above 90% to
less than 50%.
The upper and lower dolomite wells have been
completed as cased/openhole steam injection wells,
producing by cyclical steam stimulation. After production logging, new cased-hole wells were trialed for these
formations, confirming increased oil production. Steam
injector wells were used in the existing openhole wells in
these formations, avoiding highly fractured zones, which
resulted in incremental oil production of around 40 b/d
per well.
The Nukhul reservoir housed some problematic openhole wells, one of which was experiencing 98% water cut
and another 100%. Four reservoir zones could be identified in production logging, and a selective inflow profile
identified individual layer pressures so oil contributing
intervals could be targeted to increase oil rate to 70 b/d.
Another well that was contributing to water cut in surrounding wells due to downward cross flow was plugged
back and subsequently recompleted to produce from the
Gharandal formation.

Field development success

Using the Y-tool in conjunction with the wireline production logging toolstring enabled Scimitar to identify
and shut off the high permeability layers and deter early
steam and water breakthrough in production. Processing a higher rate of fluid using the ESP was only possible
using the monitoring Y-tool, which had the capacity to
process this volume of activity. Having accurate information in hand allowed the operator to conduct tests and
gather results to make informed decisions about operational changes.
The results from the Nujhul well were pivotal to the
success of the entire field. Increasing the drawdown
in this formation increased oil production. And
using the ESP with the Y-tool increased production
to 20,000 b/d while decreasing water cut in
surrounding wells.
The ability to monitor even when using high-rate
ESP equipment proved pivotal for the Issaran field. It
enabled the operator to improve results in a highly complex reservoir scenario where various factors came into
play to test the technology and processes used to extract
the heavy oil.
Febr uar y 2012 |

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Low-gravity wells in Canada

respond to new CHOPS chemistry
A new chemical dispersant technology is boosting recovery rates without thermal assistance
in heavy oil wells by improving viscosity and sand management.

Travis Minish, Champion Technologies

he capability to transform economically marginal

heavy oil wells into reliable, profitable producers is
becoming increasingly important as low-gravity reserves
account for an ever greater share of global oil supplies.
Field implementation of a newly introduced technology
indicates it could be a means to that end.


These issues conspire to undermine the economics of

CHOPS projects in the Lloydminster area and have
inspired a local saying: If youre producing heavy oil,
youre producing sand.
A new dispersant chemistry designed to reduce the
apparent viscosity of low-gravity crude oil in the well bore
has been integrated into production operations in the
past year at about a dozen wells producing low-gravity
crude from early Cretaceous Mannville group geologic
intervals composed of unconsolidated sandstones, silts,
and shales. Operators have deployed the new chemistry
in wells that had been achieving lower-than-expected production rates, requiring frequent servicing and maintenance intervention, and/or experiencing high rates of
equipment failure.

Operators in the Lloydminster region of Saskatchewan

and Alberta have been implementing cold heavy oil production with sand (CHOPS) processes since at least the
early 1980s and began transitioning to downhole progressive cavity pumps (PCPs) in the early 1990s to overHow the chemistry works
come the viscosity- and sand-related limitations of pump
When mixed with water and injected downhole, the new
jack-driven pumping systems. But viscosity-induced prodispersant chemistry creates a water-external macro-emulduction problems have persisted.
The variable viscosity of reservoir fluids
7-24 Test Well
from Cretaceous Mannville group geoProduction increase after application of dispersant chemistry
logic intervals can cause severe oil-water
slugging downhole as the formation
water migrates through and around the
heavy oil. The highly viscous oil does not
flow or load into the pump as easily as
the free water, which leads to higher bottom solids and water (BS&W) readings
at surface, low pump efficiencies, and
high torque requirements. Solids production from the unconsolidated reservoir
increases the severity of torque fluctuations on pumping assembly components.
Produced sand typically settles and packs
in and near the well bore or accumulates
in production components and in flowlines connecting wellheads to tank batteries. This leads to high rates of equipment
failure, unscheduled production interAdding the new dispersant pushed production numbers consistently up. (Images
ruptions, and an increased need for
courtesy of Champion Technologies)
servicing and maintenance.

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sion (or dispersion) in the reservoir near the well bore in

which a water-wet film prevents heavy oil from adhering to
surfaces of the rod string, downhole pump, or production
tubing. Dispersed in the water-external macro-emulsion,
reservoir fluids and sand enter the pump easily and are
lifted to the surface more reliably; the steadier flow eases

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the stress on pumping assembly components. The emulsion is tight enough to lift sand up through production
tubing to the surface and carry it through the flowline,
but loose enough to allow production stream constituents
to separate cleanly after reaching the storage tank.
Principal effects documented at wells being treated with
the dispersant technology include drastically lower operating costs and incremental production gains up to 300%.
Operating costs have been curtailed
through a combination of pump torque
reductions greater than 50%, increased
well operating speeds greater than
100%, less sand accumulation in production equipment and flowlines, and
less downtime while awaiting service or
In addition, the emulsion can be
resolved easily with a conventional
emulsion breaker before sale, allowing
producers to avoid paying purchasers
crude treating fees. And residual derivative chemicals in sale oil following
treatment have proven to have no discernable effects on separation facilities.
With only a small number of wells
treated commercially, drawing conclusions about the long-term effectiveness
of the new dispersant technologys
potential would be premature. But with
the ease of integrating injection of the
chemistry into an existing production
system and low treatment costs, the
technology is strengthening the competitiveness of CHOPS as a viable recovery option for low-gravity reserves.


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The new CHOPS chemical technology

was put to the test on the 7-24 well in
Morgan field in the Lloydminster
area.The 7-24 well was drilled directionally at a 35-degree angle in July 2010
to a measured depth (MD) of 744 m
(2,441 ft) and a true vertical depth of
611 m (2,005 ft). It was perforated
between 689 m and 693 m (2,274 ft)
MD in the Lloydminster member of the
Mannville group. The Lloydminster
sub-unit is an early Cretaceous formation up to 30 m (100 ft) thick comFebr uar y 2012 |


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The RapidFrac ' system . Your solution to costly completion challenges.

More efficientl y completing horizontal multi-zone wellbores in order to enable the
precise placement of sub-interval fractures-with minimal or no intervention-is a
challenge. The solution? Leveraging Halliburton 's total capabilities and leadership

in cased-hole and openhole horizontal solutions with the new RapidFrac" system
solution. By integrating reliable Halliburton sleeves with a wide array of packer
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posed of unconsolidated quartz sand with silt.

The well came online in August 2010 producing about
1 cu m/d of 11.7API gravity crude. Viscosity of the lowgravity crude exceeded 120,000 centipoises (cPs). The
average BS&W of produced fluids was 30%, with sand
cuts as high as 15%.
A Champion representative rates the dispersant chemical injection rate.



RockMo d

The Power of Integration

High Detail from Combined

Wells, Geology,and Seismic


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Detail from post stack seismic data


Detail from RockMod prestack geostatistical inversion

Fugro-Jason's RockMod offers unparalleled insight into your

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As is often the case,a new well based on the results of this study
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D r y

Production from the well fluctuated,

increasing to 7 cu m/d by December
2010, before dropping to 5 cu m/d in
February 2011. In May 2011, the last
month before a field test was initiated
with the new dispersant chemistry,
production averaged 9 cu m/d.
The high-viscosity crude created
drag as it traveled up the 4-in. production tubing, limiting the speed at
which the producer could rotate the
15 Series PCP downhole to 65 rpm.
Under normal operating conditions,
the PCP requires 1,200 ft/lb of torque.
After the 7-24 well was serviced in
June 2011, a treatment program was
initiated in which 1,980 ppm (to produced oil) of the new dispersant
chemistry, diluted in a volume of water
equal to 30% of the produced total
fluid (oil and water), was injected continuously down the annulus to the
reservoir. At that time, the downhole
PCP was upsized to a 27 Series.
The production response was immediate. Production for the full month of
June averaged more than 13 cu m/d,
followed by 16 cu m/d in July and 22
cu m/d in August.
In late August, the 7-24 well was
serviced again and the PCP upsized
once more to a 45 Series. Production
in September averaged 26 cu m/d.
At the end of November, the PCP
was running at 135 rpm, and the rod
torque was at 800 ft/lb.
After deducting chemical program
costs, the producer is realizing a net
gain of more than US $4,000/day in
increased oil sales, or $1.4 million per
Febr uar y 2012 |









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Geophysics has a role in shale plays

Shale operators are beginning to learn that rapid development does not always equal
optimal development. Reservoir characterization can help.
Rhonda Duey, Senior Editor

ometimes it is helpful to remember that 3-D seismic

was originally intended to be a development tool rather
than an exploration tool. This is important in todays shale
plays, where the common cry is, We dont need seismic to
find the shale. We already know where it is.
Yes, but few if any operators understand how it behaves,
why one fracture stage within a well produces 10 times
more oil or gas than its neighbor, or how to find sweet
spots to overcome that inequity. It takes 3-D seismic back
to its roots a delineation tool that offers more information about the reservoir.
Mike Mueller, vice president of analysis for MicroSeismic Inc., said that shale plays require a completely different mindset than conventional plays. In a conventional
reservoir, you have a trap, migration of hydrocarbons into
that trap, and a relatively discrete place where the hydrocarbons are going to be developed, he said. Shale plays,
on the other hand, cover larger areas and contain varying
amounts of hydrocarbons throughout that extent. Therefore, they require reservoir characterization.

This may seem a brash statement when one considers

the amazing success many operators already are enjoying
in shale plays. But those heady days may be dwindling.
Some of these guys have drilled great wells, said
Jacques Leveille, senior vice president and technology
advisor for ION. They were not using geophysics, but
by golly, whatever they did, they did it well.
But I dont think its sustainable, and I think they
know that, fundamentally.

The challenges

Shales present a host of issues that require something a

little more subtle than brute force. Given their tendency
toward nanoporosity and their fractured nature, they
behave quite differently than conventional reservoirs.
And each other.
One thing I try to communicate to people is to not
waste time on the analogy effort, said Ross Peebles, director of unconventional consulting for Global Geophysical
Services. Its distracting at best and lazy at worst.
Common wisdom dictates that natural fractures in
shales should be mapped, either as an aid to production
or as a drilling hazard to be avoided. Borehole imaging
devices can provide some fracture characterization, but the narrow depth of investigation does not provide a field-scale look.
To truly map the fractures, seismic is
But here is the rub fractures occur on
a smaller scale than seismic is able to
resolve. So geophysical companies try a
variety of techniques to determine fracture
location and orientation from various
acquisition and processing methods.
One methodology that has both proponents and detractors is the use of multicomponent seismic. This type of acquisition,
which provides shear (S) as well as compressional (P) wave data, can often indicate fracture orientation through a phenomenon
known as birefringence or shear-wave splitting. When they encounter open aligned
Results show that stimulation programs can be optimized based on rock properties vertical fractures, shear waves split into the
from seismic data. Well B produced twice the production per foot of Well A. (Image fast and slow modes. The fast S wave is polarcourtesy of ION)
ized in the fracture plane, while the verti-


Febr uar y 2012 |

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Process Management


S O L V E D" .


cally traveling slow wave is polarized perpendicular to the

always unambiguous, information about the dominant
fractures. The difference in the velocities is proportional
fracture orientation and sweet spots of high fracture
to fracture density.
density can be obtained from the azimuthal variation of
In the cases weve looked at, we always have better
P-wave moveout parameters, reflection amplitudes,
information and attribute determination with
and attenuation coefficients, he said.
good PS data, Leveille said.
Sweet spots
That is the good news. The bad
Shale operators are chasing
news is that multicomponent
sweet spots to help them
data is more expenoptimize well and
sive to acquire
and much more
placement, but
difficult and timethe jury is out
consuming to
about what
process. So comexactly constipanies like Geottutes a sweet
race and ION are
spot and how
processing widegeophysical
azimuth data rich
in azimuthal and
might identify them.
offset sampling.
One area of intense
As with so many debates
interest revolves around the britabout shales, the real answer to
tleness of the rock, brittleness being
this question is, It depends. Lee
a good indicator of how well the
Bell, chief geophysicist for Geokirock will fracture during stimulanetics, said that good and well-caliBuried arrays of geophones can take frequent
tion. In certain situations, seismic
brated P-wave data can suffice in
microseismic measurements during frac jobs,
attributes are capable of determinsome shales. But the S wave data,
aiding in reservoir characterization. (Image
ing rock brittleness. Is this enough?
he added, have a greater sensitivity
courtesy of MicroSeismic Inc.)
Brittleness is very popular these
to fracture orientation.
days, Bell said. Even with the P-wave
Another debate surrounding
data we can make estimates of the shear by the partitionfractures is the use of curvature analysis. Mueller said
ing of energy at reflector interfaces. From the Vp/Vs ratio
that more curvature can be indicative of more natural
we can estimate Youngs modulus and Poissons ratio as
fractures. But not always. Curvature analysis is useful in
those apply to brittleness. But thats not the only thing
finding structural fractures, but shale plays tend to be
you can characterize. He added that porosity and minercharacterized by regional fractures, which are not
alogy also can be studied.
caused by curvature.
Mueller is a fan of the brittleness approach. The idea
Curvature is good, but its part of the story, he said.
that we want to bias ourselves toward developing brittle
We dont have great proven 3-D seismic methods to
shales is probably the right bias, he said. This will tie
identify noncurvature-related regional fractures.
into geological and engineering information. His comToward this end, Ilya Tsvankin at the Colorado School
pany is working with NSI Technologies to study how proof Mines is researching other ways to characterize smalllific brittle rocks have been to date in shale development.
scale fractures. We cannot see such fractures directly on
For Leveille, brittleness is one of many characteristics
seismic images, he said. But they influence the effecthat might help determine sweet spots, and again it varies
tive medium properties and, therefore, seismic velocities
from shale to shale. The Barnett shale, for instance,
and amplitudes.
has very loud microseismic events because the rock is
Tsvankins group is developing seismic inversion
very brittle.
methods based on realistic azimuthally anisotropic
Brittleness is a very important attribute there because
models of fractured formations. He emphasizes that it
the formation cracks very well, he said. But if you go to
is highly beneficial to combine 3-D wide-azimuth data
the Montney shale, things are different. You have to deterwith walkaway vertical seismic profiling surveys.
mine the optimal set of attributes for each shale play.
Case studies have shown that valuable, although not

Febr uar y 2012 |

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Global applies this concept in its multiclient datasets, Peebles said. We take the approach that we dont really know
whats going to be useful in any particular development
area, he said. We use a statistical approach, and we analyze seismic attributes, look at geological indicators, integrate microseismic, and look at engineering datasets and
determine which ones are most relevant to well performance and productivity in a particular development.
Global has the largest modern full-azimuth multiclient
library in unconventional plays, including more than
10,400 sq km (4,000 sq miles) in the Eagle Ford, and has
done a tremendous amount of study in that play. Peebles
said that while his company is studying and modeling the
entire 6 million acres of the Eagle Ford, We believe that
each operators development benefits from a customized,
local analysis.
Leveille added that ultimate characterization will come
when people stop using conventional reservoir characterization techniques in unconventional plays. I think that is the
wrong way to look at it, he said. These are totally different
rocks and behave differently seismically.
People will need to find better ways to predict where
the sweet spots are. Its a challenge for geophysics. But I
think its a healthy challenge.
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Drill here models

reduce shale play risk
An integrated, scientific approach is critical for identifying and interpreting key factors
and unlocking the resource potential of shale plays.

Kevin McKenna and Ahmed Ouenes,

SIGMA3 Integrated Reservoir Solutions

n the last few years, shale resource plays have brought a

welcome renaissance to the US onshore E&P business.
Companies have competed for the best land positions using
the best information available, often drilling ahead of seismic data out of necessity. Drilling has consistently produced
results in plays like the Marcellus, Eagle Ford, Bakken, and
Niobrara, and many shale players are taking the opportunity to optimize production from resource plays using technology fit for the areas unique subsurface challenges.
Profit margins are thin in unconventional resources,
especially in areas associated with dry gas. Relatively small
increases in average initial production rates (IPs) and estimated ultimate recoveries (EURs) across a portfolio make
a material impact on the long-term economic viability of
a play and bring significant value to shareholders. The
search is on for technologies that truly optimize these
critical production metrics.

Subsurface models

patented workflow organizes and assembles those contributions to create a predictive model that ties all of the
data together and tests then constantly against blind wells
to validate their predictive capabilities.
Recent projects in North American resource plays have
allowed the company to perform high-resolution inversions on prestack seismic data for physical rock properties. In the process, factors such as TOC, frac closure
stress, rock brittleness, natural fracture density, and porosity have been analyzed for their weighted predictive capabilities for reservoir properties and production. This
approach bridges the gap between geophysics and reservoir engineering, bringing new value to seismic data in
shale plays. Finally, engineers have quantitative predictive
models they can use to plan well locations and frac jobs.
Geologists provide vital input from core, outcrop, and
well log data to create a fracture indicator log that ties
seismic information to the physical properties of the
earth. Pressure and completion data from reservoir engineers bring knowledge of historical reservoir production
into the model. The geological model rigorously applies
the geophysical attributes to empirically test the validity of
results against well data throughout the process. Well logs

Subsurface understanding is a key component for production optimization in resource plays because total
organic content (TOC), rock brittleness, porosity, closure stress, natural fractures, and pore pressure drive
production. By maximizing the insight gained from
each available data type, subsurface models identify
and predict reservoir rock, meeting the necessary criteria for highly successful wells. Success is determined
by knowledge of rock physics properties and correlation to production information plus local knowledge
of the field. Wells planned and fraced using these drill
here models minimize the risk of poor performance
due to poor reservoir quality and significantly increase
average IP rates and EURs.

The workflow
The SIGMA3 workflow uses all available data and input
from geophysicists, geologists, and reservoir engineers to
accurately represent the subsurface at different scales. A

Fracture directions were derived using a cumulative oil model.

(Images courtesy of Sigma3)

Febr uar y 2012 |


fracture indicator log was created based on well

log and core data and subsequently was correlated
to an optimized combination of seismic attributes
using a patented workflow involving supervised
neural networks. The CFM model accurately predicted fracture location, orientation, and density.
Modeling showed selected spectral imaging attributes, curvature, and impedance all played a meaningful role in predicting natural fractures.
When using prestack data and elastic inversion,
rock mechanical properties such as Lambda-Rho,
Mu-Rho, and the derived rock brittleness allow
highly advanced and accurate modeling of the key
rock properties that control the performance of
the frac jobs and ultimately the performance of the
The map on the left shows cumulative Niobrara production, while the map
well. The workflow uses extended elastic inversion,
on the right shows the probability of 25,000 bbl of cumulative oil.
providing very high-resolution Vp, Vs, and density
properties and additional properties that could be
are analyzed and used as ground truth to calibrate other
inverted directly from the prestack data. By using stochasinterpretations, and quantitative and qualitative productic inversion on the mid, near, and far stacks, Vp, Vs , dention data are incorporated to ensure the model takes into
sity, and these additional properties can be derived at a
account the oil and gas that has already been produced.
resolution of 0.5 ms to 1 ms.
Many recent resource play projects have revealed pore
The workflow delivered 3-D models of permeability,
pressure as a key contributing factor affecting frac closure
porosity, fracture orientation, and fracture density for
pressure and thermal maturation. This information is
Teapot Dome. By testing the model against blind wells,
incorporated in the models, giving an extra dimension of
high confidence was established in the predictive capabilinsight into the factors driving production in some fields.
ity of the work. A strong correlation was shown to exist
between known historical production in the field and the
Ahead of the curve in Niobrara
3-D permeability model. Because permeability is strongly
The workflow was recently applied in the Teapot Dome
tied to natural fracture density in the model, natural fracarea on the Niobrara shale interval with the goal of
tures were determined to be an important driver for prounderstanding production drivers and optimizing future
duction in this area.
well placement. The data in this area are fairly limited
Further modeling of well productivity used cumulative
only 15 wells with sonic and density logs and only one
oil production as a proxy for fracture density around the
core with some porosity and permeability measurements
wells. Using only 2-D maps of key rock properties and
were available. Fortunately, 3-D post-stack seismic data
seismic attributes, it was possible to derive a map showing
were available over the entire area, and a full analysis
cumulative oil in place for the area of interest. This map
of the available data could be performed.
clearly shows hydrocarbon sweet spots, some of which
During the course of this study, several seismic inversions
have yet to be drilled.
were applied to the 3-D post-stack seismic data, including
The way forward
several deterministic and stochastic inversions, spectral
imaging, and volumetric curvature. Each extracted a difThere is no cookie-cutter solution for shale resource
ferent aspect of the information contained in the post-stack
plays. Every shale is different, and the factors driving proseismic that was then used in the modeling process. Key
duction are different as well. Drawing on extensive expeseismic horizons and faults were interpreted in time and
rience modeling these reservoirs in the US and abroad,
used to build a 3-D geocellular grid. The grid was depththe SIGMA3 solution has proven to be a scientifically
sound pragmatic workflow for finding the key drivers
converted along with the seismic attributes.
Because naturally occurring fractures have been docuand modeling them using the best information available
mented as potential drivers of production in the Teapot
from all the data.
Dome area, the SIGMA3 continuous fracture modeling
(CFM) technology was incorporated into the workflow. A
References available. | Febr uar y 2012



New cutter design improves

average penetration rate
One of the key factors facing drillers is the ability to maintain good directional control
while achieving high penetration rates.
Wiley Long, Smith Bits, a Schlumberger company; and
Vladimir Shulga, OJSC Verkhnechonskneftegaz

or the past five years, drilling engineers at Verkhnechonskneftegaz (VCNG), together with service company advisors, have made steady improvement in drilling
performance by studying drilling records and making
systematic improvements to the bottomhole assembly
(BHA). Initially, tungsten carbide insert (TCI) drill bits
were run on positive displacement motors (PDMs). The
procedure evolved to the use of rotary steerable systems
(RSSs) and PDC bits.
Challenged to improve drilling performance in its
Eastern Siberian oil field, VCNG took a systematic
approach. Instead of focusing on a single factor, such as
the bit, the mud, the BHA, or the actual drilling techniques, each facet of the drilling operation was studied,
from both its individual contribution to its collective
performance aspects.

Cutting-edge technology

A new bit design

With the rest of the drilling system optimized, the drill bit
design was analyzed using the IDEAS drill bit design platform. The analysis led the team to choose the proven
SHARC PDC drill bit. The drill bit was shown to be very
stable when powered by the high-speed RSS that had
been chosen to drill the target formations. Initial field
testing with the MDSi716 bit achieved the desired shoe-toshoe runs using standard cutters.
Laboratory tests indicated that further ROP improvement could be attained by fitting the drill bit with the
new ONYX II premium PDC cutters. This proved to be
the ideal combination for the tough interbedded carbonate and evaporite sequences.
The principle benefit of the premium cutter is its
improved wear resistance. Not only could it achieve the
one-trip goal throughout the target section, but it could
do so at unprecedented speed and efficiency. Hole quality
and directional control were excellent. Average ROP
improvement of 19% was achieved compared with offset
wells. Two separate field records were attained: the longest
interval was drilled at 2,645 m (8,676 ft), and the fastest
shoe-to-shoe interval was drilled at 33.2 m/hr (109 ft/hr).
Throughout the campaign, the VCNG set the performance bar high with demanding operating parameters:
Bit rotational speed ranging from 165 rpm to 210 rpm;
Downhole weight-on-bit ranging from 2 to 18 tons;
Drilling fluid flow rates ranging from 396 to 528 gpm;
Mud weight 10.8 ppg (1.3 sg);
Hole deviation in ranging from 10 degrees to 30
degrees; and

The specific challenge to overcome was the efficient construction of an 8-in. directional interval penetrating
alternating carbonate and evaporite sequences. Drillers
found it challenging to maintain good directional control
while achieving a high rate of penetration (ROP).
For help in drilling hard rocks, engineers specified a
drilling system with the SHARC high abrasion resistance
PDC drill bit and the PowerDrive vortex-powered RSS.
The RSS gets its main drilling power from the rigs top
drive but is speed-boosted by an inline
PDM located in the BHA.
To justify the economics of the RSS,
the drilling team knew they would
need to shave considerable time off the
drilling curve. They hoped to do this
through a combination of improved
ROP and improved drill bit longevity.
The goal was to drill the entire 8-in.
directional interval in a single bit run. The ONYX II cutters (left) consistently outlast standard ONYX cutters in comparative
tests on offset wells. (Images courtesy of Schlumberger)


Febr uar y 2012 |





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Hole deviation out ranging from 80

degrees to 90 degrees.
Although the earlier generation
ONYX PDC cutters have good wearresistant qualities, a comparison with
the new ONYX II cutters on separate
shoe-to-shoe runs revealed dramatic
In this offset comparison of 8-in. bit runs of greater than 2,000 m (6,560 ft), the ONYX

improvements experienced

II bits outperformed other bits.

The systematic approach allowed the operator to

develop a compelling set of statistics from which the
incremental improvement of each change could be
gauged. Over the interval in which the design changes
were implemented and tested, steady improvement in
ROP can be seen from the initial run that averaged 20
m/hr (66 ft/hr) to the final run that averaged 33.2
m/hr (109 ft/hr).
Likewise, a comparison of ROPs attained in intervals

exceeding 2,000 m (6,560 ft) illustrates the clear advantage of the new ONYX II cutters.
The PDC bits used in these wells are specifically
designed to minimize vibration. Vibration robs energy
from the bits ability to cut rock and can cause damage
to downhole drilling instrumentation. The bits also are
designed to minimize cutter wear and damage. This
maximizes cutter life and extends shoe-to-shoe performance while retaining sharp edges for higher ROP.

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High-efficiency vector-accurate PDC

bit optimizes directional control
Newer designs use a number of combined features to increase
ROP in situations once considered off limits.

Nick Evans, Baker Hughes Inc.

he Hughes Christensen Talon 3D high-efficiency vector-accurate PDC bit is an optimized one-piece steel
frame designed to shorten drilling days while supplying
high ROP and directional control to drill curve and lateral sections efficiently.

Well balanced bit

Baker Hughes engineered the Talon 3D drill bit for
superior hydraulic efficiency, allowing operators to
meet performance needs in low-hydraulic horsepower
per square inch (HSI) situations. The bit balances the
ratio-to-axial and radial forces the bottomhole assembly
(BHA) imposes on it when drilling, and enhanced
control improves steerability and buildup rate aggressiveness. This is especially important where peak performance is demanded in extended-reach laterals.
When paired with an optimized, conventional drilling
system, an operator can get through the lateral and into
the pay zone in less time.
The bit includes optimally designed junk slots to aid
large-volume evacuation of cuttings material. Efficiently

shaped and positioned blades, nozzles, and cutters

increase capacity and flow of cuttings and resist pack-off
incidents to keep operators drilling at the desired ROP.
Its patented polished cutters reduce balling to further
maximize the evacuation efforts and also eliminate
buildup on the cutting face, aiding cuttings transport
and improving overall drilling efficiency.
By combining features such as an application-specific
cutting structure, optimized one-piece steel body, large
volume junk slots and superior hardfacing, the Talon 3D
drill bit is able to increase an operators ROP in situations once considered off limits drilling farther,
faster, and with more control.
The bits optimized junk slot volume and geometry
provide hydraulic efficiency in low HSI applications. Bit
balling is reduced by the bits propriety polished cutters
and cuttings evacuation is maximized. The applicationspecific cutter technology can be tailored to the parameters of the formation and operation, which can also help
to improve cutting efficiency and evacuation.

One fast run

In one application, the Talon 3D bit drilled an entire
section in one fast run in the Samotlorskoe oil field in

The Talon 3Ds performance is compared to a competitor offset. The ROP for this section is currently unsurpassed in the Samotlorskoe
field in Western Siberia, Russia. (Images courtesy of Baker Hughes Inc.)


Febr uar y 2012 |

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AND increased reserves.

(There,we szid it. Yes, we did it.
And only our technology makes it possible.)

Western Siberia, Russia. Drilling in a low-HSI environment through interbedded sands and shales, the operator
was challenged with an inability to achieve the necessary
high buildup rate in one run.
The bit was used on a positive displacement motor
BHA and effectively drilled the section with a top ROP
of 66.3 m/hr (217.5 ft/hr). Its increased junk slot area
improved cleaning, reduced bit balling, and completed
the well profile, achieving a buildup rate of 2.5/10 m
(2.5/32.8 ft).
Hughes Christensens patented polished cutters provided superior cutting efficiency and minimized cutter
and bit balling. TRACBlock technology was deployed on
the Western Siberia project. This technology uses a proprietary depth-of-cut-control method to manage
unwanted torque spikes when drilling interbedded and
soft formations. The section was drilled in one run with a
section drilling time of 19.9 hours. The ROP for this section is currently unsurpassed in Samotlorskoe field.
The Talon 3D bit profile design and cutting structures
provide mechanical efficiency, durability, and directional
control. The bit also displays enhanced durability and reliability because of its hardfacing, which reduces bit erosion in
a variety of environments. In addition, the short bit-to-bend
dimension improves steerability on conventional directional
equipment and increases buildup rate aggressiveness.

No water, eart h-friendly hydrocarbon gel,higher reservoir

production. And our patented process advantages don't
stop there. We re GasFrac , changing the industry one well
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The Hughes Christensen PDC bit is built for longer life using
superior hardfacing material and application-specific polished
cutters for increased durability to improve performance in challenging environments. Pictured is the Talon 3D 6-in. QD3065.


Febr uar y 2012 |



Field Records

NOV's patented technology

enables ReedHycalog bits to
drill further and faster than an
other PDC bit on this planet.
Contact your NOV* representativ
about ReedHycalog bits and visit /hellos
. e4

to learn more about setting

records in your field.



I ns C

iu y .

. .1oli mite l

8011 1 1111


Fixed cutter bit allows longer runs,

higher speeds in shales, carbonates
Slower ROP due to bit cleaning efficiency is now becoming history.

Marc Davidson, Halliburton Drill Bits & Services

integrity (TMI). The bit has achieved 87% faster ROP

over the field average in Oman.
The success was accomplished primarily by resolving
the bit cleaning issue. The steel-body bit has several characteristics that make this possible. First, steel is more ductile than tungsten carbide. The blades of the steel bit
extend farther from the body, creating improved flow
paths for the fluid emerging from the bit nozzles, which
increases the ROP.
Another success factor is the expansion of nozzle types
available to design. The different types allow greater
flexibility to get the fluid flow in the places of the design
where cleaning is most effective. This flexibility ensures
that the SteelForce design is consistently faster and has
less erosion than other similar bits in the fields.
To combat erosion in abrasive formations, SteelForce
bits are coated in a new hardfacing that increases the
amount of carbide pellets on the surface. This hardfacing helps extend the life of the bit so it can compete
favorably with tungsten carbide bits. In addition, each
bit has an anti-balling coating that changes the electrical

n the Anaima field in Oman, the carbonate and shale

formations are not particularly abrasive, but frequent
bit balling was slowing the ROP to an average of 20
m/hr to 21 m/hr (65 ft/hr to 70 ft/hr). The operator
had been using mostly tungsten carbide bits. A switch to
steel-body fixed cutter bits showed some gains as the
ROP rose to an average of 30 m/hr to 32 m/hr (100
ft/hr to 105 ft/hr).
The lessons learned from this improvement were
applied to the Halliburton SteelForce bit. The fine tuning paid off while drilling the 1214-in. interval, the
operator set a field record for drilling 1,634 m (5,360 ft)
in 23 hours at an ROP of 71 m/hr (233 ft/hr). When
the operator reached total depth (TD) for the interval,
the new SteelForce bit was pulled and graded 1-1
nearly new condition.
With higher penetration rates, lower cost per foot, and
application-specific designs, the Halliburton SteelForce
bit makes slow
ROP (due to
bit cleaning)
history. The
SteelForce bit
features a large
flow area and
coating to help
with cuttings
removal and bit
balling. The
SteelForce bit
has premium
cutter technology that provides abrasion
and impact
resistance and
Conventional matrix bit (left) compared to high blade standoff of the SteelForce bit design. (Images courtesy of

Febr uar y 2012 |


cutter bit will drill farther faster and reduce the cost per
potential of the steel to a strong negative. This repels
foot drilled.
the negative ions in the drilling fluid so a lubricant
barrier of water forms on the surface
of the bit, preventing the bit from
The cutters, like the rest of the bit,
are designed to extend bit life without sacrificing ROP. Traditionally,
cutters provide abrasion and impact
resistance, but thermal degradation
can damage cutters through the differing expansion coefficient of the
materials in the cutter. The ability of
a cutter to manage the frictional heat
generated during the drilling process
allows it to stay sharper longer and
wear at a slower rate.
Each bit is designed specifically for
the application. The combination of
these optimized features means the
Five standard nozzles are compared to seven micro nozzles.

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Improved cutter technology

increases overall performance
Drill bit design is only one part of the puzzle.

Tom Roberts, NOV ReedHycalog

ith the growing directional drilling market

and the huge diversity of drive types encompassing both rotary steerable systems (RSSs) and
positive displacement motors, the need for drill
bits designed specifically for these applications is
becoming more and more critical to delivering
optimized directional drilling performance. The
drill bit design is only one factor, however. Fitting
drill bits with the correct cutter technology to solve
drilling challenges such as abrasive resistance,
thermal resistance, or impact damage due to high
torsional and lateral vibrations also is a critical part
of providing a complete drill bit solutions package.
ReedHycalogs Seeker Directional drill bit product line from NOV Downhole recognizes that a single drill bit design will not work for every drive type
and well profile. Seeker drill bits, in conjunction
with NOV Downholes advanced cutter technology,
Helios Thermal Tough Cutters, have set multiple
field records by outperforming similar bits in the
same geological location. Seeker drill bits are
designed to match the bit to the specific drive type,
well profile, and lithology by using the most comprehensive range of products in the industry coupled with proprietary bit selection software.
Design features such as cutting structure, profile,
Seeker drill bits in conjunction with the NOV Downhole advanced cutter
bit length, and gauge geometry are customized to
technology have set multiple field records outperforming similar bits.
offer a system-matched approach derived from
(Image courtesy of NOV ReedHycalog)
long-term, intensive interaction with directional
tool suppliers in combination with an understanding of the performance limitations of various well
profiles. Seeker bits are equipped with the companys
and more than 100% increase in ROP, providing dralatest cutter technology. Since launching this new cutter
matic savings to the customer.
technology, engineers have been able to significantly
Bit selection also is one of the areas that has become
improve overall bit performance, in many cases
very critical to overall drilling performance. Assuring
enabling operators to reach total depth (TD) with one
proper bit selection can be challenging with the variety
bit. Helios Thermal Tough Cutters have already set mulof options in the market today. The various RSS and
tiple records in the field, including 194% increase in the
motor configurations have different drill bit requireaverage footage drilled, 52% decrease in cost per foot,
ments. However, with the large variation in characteris72

Febr uar y 2012 |



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tics of cutting structures, in combination with a

diverse range of gauge lengths and geometries, how
can a driller select what bit is suitable for which tool?
To ensure consistent and accurate matching of the
drill bit to specific drive type and trajectory, NOV
Downhole developed an interactive software tool
for optimal bit selection. The ReedHycalog SystemMatcher software incorporates logic regarding tool
operation and trajectory requirement and assesses
these against key characteristics of the drill bit
including bit length, profile, gauge geometry,
cutting structure, and side cutting capability. Combining this software with the correct cutters for the
application will deliver enhanced performance.

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With field results displaying improved dull condition,

improved ROP, increased interval drilled, and lowered drilling costs, the NOV Downhole advanced
cutter technology provides enhanced performance
through the impact, abrasion, and thermal resistance
found in ReedHycalog Helios Thermal Tough
The 8-in. Seeker bit with Helios cutters in combination with an RSS successfully drilled a main bore
and three openhole sidetracks without pulling to
surface for a total of 4,827 m (15,836 ft), which set
a new field interval record in the Troll field. The
formation was mainly Sognefjord, consisting of
medium to coarse grained sand with hard calcite
stringers. Improved directional control requiring
less steering forces than offsets was reported. The
Seeker bit displayed excellent durability, drilling the
challenging interval and coming out in good condition ( 0-1-WT-N/S-X-I-ER/CT-TD).
The 8-in. Seeker SKH716D coupled with Helios
cutters achieved the top three drill-out to kickoff
point (KOP) runs for an operator in Montague
and Cooke counties in Texas. The formations
drilled included the Caddo, Atoka, Upper Barnett,
Forestburg, and Barnett, comprising limestone,
sandstone, siltstone, conglomerate, and shale. The
8-in. SKH716D was run on an NOV mud motor
drilling an average interval of 1,957 m (6,421 ft)
with an average ROP of 60.6 m/hr (198.9 ft/hr).
Overall, when compared to its nearest offsets ROP,
the Seeker bit showed a 20% improvement.
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Advancements in materials, modeling, and best practices have given rise to products
that are performing at rates unheard of just 10 years ago.
levels. Designers first evaluated a six-blade design that
previously had been used in the area. This proven platform had been successfully deployed to address these
or drill bit manufacturers, a new normal in drilling
increased rpm demands when ROP is the primary conpractices is something of a Catch-22. Drill bits
cern. However, engineers knew intuitively that the 13-mm
equipped with the latest in technology are drilling furcutters did not sustain enough diamond volume to comther, faster, and with more precision, but in the past,
plete the objective.
completing a section with one drill bit was considered
To add durability and increase diamond volume, an
a decent goal. Today, expectations have moved even
additional blade was added to the design along with prehigher. Operators are asking for bits that can complete
mium 16-mm cutters. This design added stability features
the section in half the time at rates of penetration
through cone and profile refinements, resulting in an
(ROP) maintaining, on average, 30.5 m/hr (100 ft/hr).
entirely distinct 8 -in. VM716P Navigator PDC bit design.
The need for pure product toughness combined with
In two separate runs, the seven-bladed PDC bit has
newer requirements for meeting the objective at consisdrilled more than a mile of footage in a 24-hour period.
tently high rates of ROP has led to a transformation in
According to post-run reports, the bits were still drilling
product design.
at a solid ROP of more than 30.5 m/hr when pulled.
In revisiting the further, faster, and more precise
On the first run report, the bit drilled more than the
model, it is understood that there must be some sort of
operators normal depth and required holding a greater
give and take in design components. Increased durabilthan normal deviation of 11.4 degrees. The bit drilled
ity features can adversely affect speed and agility and
1,822 m (5,976 ft) in just over 27 hours for an average
vice versa. The challenge in the producers corner is to
ROP of 75 m/hr (247 ft/hr). The closest comparison
find the sweet spot in this tradeoff in directional respondrilled 183 m (600 ft) less with an average ROP of 30
siveness, longevity, and speed.
m/hr (98 ft/hr), a difference of more than 250%.
Varel International has adapted to
On the second run report, a
this challenge by adding a new NaviVM716P design in the same area
gator PDC drill bit to its product
again drilled past the operators
line, providing a bit ready to meet
normal depth. This was accomthe new normal in drilling parameplished while also holding a larger
ters through advanced bit design.
tangent of 10 degrees compared
to competitive performances. The
Cooke County success
bit drilled approximately 1,800 m
An operator requested a drill bit that
(5,900 ft) in 22.75 hours for an averwas capable of meeting the demandage ROP of 79 m/hr (260 ft/hr). In
ing revolutions per minute (rpm)
this case as well, the closest competirequirements in an application in
tive offset came up short, drilling
Cooke County, Texas. The energy
only 255 m (837 ft) with an average
inputs for this specific operator
ROP of 60 m/hr (197 ft/hr).
exceeded 180-200 rpm.
To date, this new design has been
This post-run evaluation image shows the 8 -in.
According to the Varel field engiused on multiple operations and is
neer, bits in this area are required to VM716P Navigator bit after completing more than considered the top performer in
a mile of drilling with an average ROP of 79 m/hr
meet the new normal expectations
the area due to depth, ROP, and
(260 ft/hr). (Image courtesy of Varel International) tangent achievements.
of drilling at extremely high energy
Brian Kurasek, Varel International


Febr uar y 2012 |

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Shale operators must follow

best practices
Abiding by new DOE recommendations will help minimize
public resistance to natural gas development.

Dr. Stephen Holditch, Texas A&M Energy Institute

roduction of natural gas from shale reservoirs is

approaching 30% of total natural gas production in
the US. Today, the US is not only self-sufficient in natural gas, but it has enough natural gas for the rest of this
century on the basis of current demand. In fact, the
industry could produce much more natural gas than it
does now if demand increases.
In early 2011, the US Department of Energy set up a
Secretary of Energy Advisory Board (SEAB) subcommittee to evaluate how shale gas reservoirs could be developed safely. The secretary requested that within 90 days
of its first meeting it report to SEAB on the immediate
steps that can be taken to improve the safety and environmental performance of fracturing.
In August 2011, the subcommittee issued its first
report containing 20 recommendations. In November
2011, the subcommittee issued its final report with a status on the implementation of all 20 of its recommendations. Both reports and tens of thousands of related
documents on the subject can be found and downloaded at

Some of the DOEs major recommendations include:
Improving casing and cementing procedures to isolate the
gas-producing zone from overlaying formations and potable
aquifers. Loss of well integrity is the result of poor well
completion or poor production-pressure management;
Controlling the entire lifecycle of the water used from acquisition to disposal. All water flows should be tracked and
reported quantitatively throughout the process;
Limiting water use by controlling vertical fracture growth.
Periodic direct measurement of earth stresses and the
microseismic monitoring of water and additive needs
eliminates rogue methane migration and saves production money;
Using multiwell drilling pads to monitor processes and
minimize truck traffic and surplus road construction. The
use of mats, catchments, groundwater monitors, and

surface water buffers should be industry standard in

shale gas production;
Declaring unique and/or sensitive areas off-limits to
drilling. Such an abundance of natural gas reserves
has come from the fracing revolution that there is no
need to drill beneath protected urban or wilderness
areas. This recommendation is one of the most difficult to apply as the owners of the minerals in such
areas have the right to produce those minerals. Fortunately, with long-reach horizontal drilling, many
urban areas can be developed from remote pad sites
with appropriate controls; and
Mitigating noise, air, and visual pollution. Conversion
from diesel to natural gas or electrical power for
equipment fuel is an important first step and can be
substantially accelerated.

Air quality and lifestyle disruption

In addition to the familiar concerns about water quality,
the impact of hydraulic fracturing on air quality can be
challenging. The full cycle of shale gas production from
initial exploration through the capture and transport of
the natural gas and final site remediation can result in
the emission of some methane and diesel exhaust from
the trucks and drilling rigs required for drilling and completing the wells. Methane is the pollutant that requires
the most attention. Some opponents would rather see the
methane flared than simply released into the atmosphere. However, most operators would rather not flare
methane because it is a commodity.
One problem that surfaced during the SEAB subcommittee fact-finding was the problem of lifestyle disruption. Most people, especially in the Northeast US, do
not like the truck traffic, the compressor stations, the
gas pipelines, and other activities that disrupt their dayto-day lives. These are issues the industry can and
should address by doing things such as drilling multiple
wells from a single pad and converting drilling rigs and
trucks to burn natural gas for fuel rather than diesel.
Additional suggestions include:
Enlisting a subset of producers in different basins to
design and implement measurement systems to colFebr uar y 2012 |


The subcommittee report details recommendations to quell public concerns about hydraulic fracturing.



Improve public information about shale
gas operations
Improve communication among federal


and state regulators and provide federal

funding for STRONGER and the Ground
Water Protection Council

Comment & Status

Federal responsibility to begin planning for public website. Some discussion
between DOE and White House offices about possible hosting sites but no firm
plan. States should also consider establishing sites.
Federal funding at $5m/y will allow state regulators/NGOs/industry to plan
activities. Possible minor DOE FY2012 funding; no multi-year commitment.
See discussion below.
We encourage EPA to complete its current rule making as it applies to shale

Measures should be taken to reduce emis- gas production quickly, and explicitly include methane, a greenhouse gas,


sions of air pollutants, ozone precursors,

and controls from existing shale gas production sources. Additionally, some

and methane as quickly as practicable.

states have taken action in this area, and others could do so as well. See discussion below.

Enlisting a subset of producers in different


basins to design and field a system to collect air emissions data.

Immediately launching a federal intera-


gency planning effort to acquire data

and analyze the overall greenhouse gas
footprint of natural gas emissions use.


Industry initiative in advance of regulation. Several companies have shown

interest. Possible start in Marcellus and Eagle Ford. See discussion below.

OSTP has not committed to leading an interagency effort, but the Administration is taking steps to collect additional data, including through the EPA air

Encouraging shale-gas production com-

A general statement of the importance the subcommittee places on reducing

panies and regulators to expand immedi-

air emissions. Federal funding at $5m/y for state regulators/NGOs/industry will

ately efforts reduce air emissions using

encourage planning. Some states have taken action in this area, and others

proven technologies and practices.

could do so as well.

Launch additional field studies on possible


methane migration from shale gas wells

No new studies launched; funding required from fed agencies or from states.

to water reservoirs.


Disclosure of Fracturing fluid composition


Elimination of diesel use in fracturing fluids

DOI has announced its intent to propose requirement. Industry appears ready
to agree to mandatory stricter disclosure. See discussion below.
EPA is developing permitting guidance under the UIC program. The Subcommittee reiterates its recommendation that diesel fuel should be eliminated in
hydraulic fracturing fluids.


R&D needs

OMB/OSTP must define proper limits for unconventional gas R&D and budget
levels for DOE, EPA, and USGS. See discussion below.

lect comprehensive methane and other air emissions

data from shale gas operations and make those data
publicly available;
Launching a federal interagency planning effort to
acquire data and analyze the overall greenhouse gas
footprint of shale gas operations throughout the lifecycle of natural gas use in comparison to other fuels; and
Encouraging shale gas production companies and
regulators to expand efforts to reduce air emissions | Febr uar y 2012

using proven technologies and practices.

The energy bonanza that comes from the hydraulic
fracturing of horizontal wells drilled in shale rock
has changed Americas energy outlook dramatically
in less than a decade. Shale gas producers need to
quickly define and enforce best practices to guarantee
public confidence in their stewardship of this technology revolution that could lead to energy security for
the US.


Hybrid completion isolates

38 Bakken zones with no lost time
An operator maximizes contact with the reservoir and increases initial
production rates while also saving on rig time.

Matthew Crump, Weatherford

aximizing economics in shale development is

dependent on the ability not only to create horizontal wellbores through long segments of tight oil- or
gas-bearing formations but also to connect the wellbore
to as much of the reservoir as possible through staged
perforating and stimulation.
Multizone completion technology has become the
accepted standard for long, tight shale wells in the US
because of the productivity and cost-saving advantages
that come from zone-specific designs. A recent 38-zone
hybrid completion in the Bakken shale illustrates the
benefits that can accrue from a creative approach and a
broad technology portfolio.
In North Dakota, an operating company sought the
most efficient way to drain a 3,000-m (10,000-ft), 6-in.
lateral at 5,800 m (19,000 ft) measured depth. The operator wanted to treat the maximum number of zones,
with an average zone length of 80 m (250 ft). To accomplish the operators objectives, the company designed
and installed a 38-stage multizone completion using a
customized ZoneSelect system.
The system combined the wellbore isolation effectiveness of Fraxsis swellable packers throughout the well with
the time-saving efficiency of toe sleeve and single-shot
ball-drop fracturing sleeves in the toe section and FracGuard composite plugs to increase the number of zones
in the heel section. In all, 20 frac sleeves, 18 composite
plugs, and 38 swellable packers were used in the well.

Range of options
The fracturing completion system was developed to
enable zone-specific completion designs based on an
extensive portfolio of zonal isolation and fracturing
sleeve technologies and a modular design methodology.
The resulting ability to open, isolate, and fracture specific zones based on length, geologic conditions, configuration, and other characteristics has proven particularly
beneficial in North American shale plays. Zone-specific,
life-of-well isolation methods help overcome zonal isola80

Deploying composite plugs with swellable packers in lieu of

cement can improve zonal isolation. (Images courtesy of
Weatherford International)

tion difficulties. Economic viability is enhanced by the

ability to perform multiple fracture stimulations in a single trip, with minimal to no through-tubing intervention.
Four zonal isolation methods are offered: swellable
packers, mechanical openhole packers, composite
plugs, and cement. The annulus swellable packer was
selected for zonal isolation on the North Dakota Bakken
well. The short, slim packer provides high pressure differential and enhanced performance while improving
completion installation.
Proprietary metal backup rings integrated with the rubber element expand with the element and lock against
the formation to hold the packer in place and prevent
rubber extrusion. As a result, a 1.5-m (5-ft) packer can
provide a seal to 7,500 psi. The short length makes the
packer easy and less costly to install. Bonded, swellable
elastomers activated through natural wellbore fluids provide sealing capability for the life of the well. The packer
is available in water-swell, oil-swell, and hybrid elastomer
variations; each of these can be customized to meet the
pressure and size required by the well.
Pump-down wireline-set composite plugs were used in
the heel section of the well. Pumping the plugs into the
well accelerates operations and reduces rig time over
standard coiled tubing and eliminates the need for
Febr uar y 2012 |



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expensive wireline tractors. Jet ports wash away debris

ahead of the plug, while perforating guns conveyed
above the plug make single-trip plugging and perforating possible.

Fracturing sleeves
In the North Dakota well, a hydraulic toe sleeve was used
to treat the first zone. The liner was run into the wellbore
with the landing collar, allowing circulation during run-in.
The first ball was dropped and circulated, falling on the
landing collar to close the liner system. Pressure was then
applied against the landing collar to shift it closed. Pressuring up further to 2,500 psi opened the hydraulic toe
sleeve to actuate it and enable fracturing the first stage.
Single-shot ball-drop fracturing sleeves were used to
control access to the frac zones and divert frac treatments
in the first 20 zones of the well. The single-shot sleeves
use a continuous method of isolating below the sleeve,
opening a port, fracturing, then moving to the next zone.
Sleeves are opened from the bottom up with successively
larger balls. After a ball opens a particular sleeve, it lands




Your Oil & Gas Operations Management Team

John A Linton III 281-389-5558

above the previous sleeve and seals off the previous zone.
After being opened, each sleeve remains open permanently. At the end of the frac job, the balls are produced
out of the hole, and the ball seats can be milled out of the
tubing if the client prefers.
A volume of 290 bbl of treatment was pumped into the
zone. After the first stage was complete, another ball was
dropped and landed in the first single-shot sleeve. Pressure of 2,000 psi was applied to shift the first sleeve to isolate and treat the first zone. The ID of the first ball seat
was 1.9 in. Balls and seats became progressively larger as
the completion system moved uphole.
For this well, the company used sleeves that use aluminum balls rather than the standard composite balls.
The aluminum balls enable more sleeves to be installed
in the completion by reducing the seat size increments
required to shift the sleeves. The perception is that composite balls are easier to mill than aluminum balls. However, in a similar Bakken well in which 28 zones were
isolated in a single trip, the aluminum balls were proven
to have mill-out times comparable to those with compos-


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Febr uar y 2012 |

The ZoneSelect SingleShot Fracturing Sleeve was used during a multizone

completion in the Bakken shale in North Dakota.

ite balls. A proprietary mill enabled the company to

achieve excellent milling times.
Other fracturing sleeve options include multi-array stimulation systems (MASSs), multishift, and monobore frac
sleeves. The multi-array sleeves use ball-drop methodology
to fracture up to 10 zones, with six sleeves per zone in a
single trip (up to 60 individual frac ports per completion).
They can be used with packers or cemented in place. After
initially being opened with a ball, multishift sleeve balls
and ball seats are milled out and can then be closed or
opened with a shifting tool, making them well-suited for
wells that might require reentering for additional fracturing or zonal isolation.
Monobore sleeves are shifted mechanically with a shifting tool. With monobore sleeves, there are no ball seats
to mill out, and zones can be treated in any sequence. The
monobore completion is paired with a ZoneSelect garage
that provides a recess to house the shifting tool during the
fracture treatment. The expanded OD provides the necessary flow area around the tool to maximize the flow during
the frac.

the hybrid
While fracturing
sleeves are considered the
most economic means of completing multizone fractured wells,
their application is limited by the progressive ball seats that
must be used to add additional zones to a completion.
To ensure the largest possible wellbore to frac through
in the lower zones, many operators use frac sleeves at the
toe and switch to the plug-and-perf methodology above
the toe in a hybrid completion.
By selecting the hybrid completion methodology for its
North Dakota Bakken well, the operator was able to maximize contact with the reservoir and
There is more
increase initial production rates
to the story
over the average completion while
also saving days of rig time.

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LPG fracing gains acceptance

as viable alternative
Closed-loop reservoir stimulation system offers operators an environmentally friendly
alternative to traditional methods with promising production increases.

Mark Thomas, International Editor

ntil other techniques become available, hydraulic

fracturing (fracing) will remain the preferred
method of reservoir stimulation for extracting hydrocarbons from shale plays. With the increased environmental issues that have arisen recently with traditional
fracing, however, operators are looking for more environmentally friendly alternatives.
Liquid petroleum gas (LPG) fracing has emerged
as a viable and production-enhancing alternative to
hydraulic fracturing. According to Zeke Zeringue,
president and CEO of Calgary-based GasFrac Energy
Services, LPG fracing can accomplish the same task as
oil-based fracs but at a lower cost and with better results
GasFrac admits its biggest challenge is finding the right people
due to the lower viscosity of LPG and its lower surface
to fit into its safety-oriented culture. It expects to double its fleet
tension.The company has deployed this technology at
size in 2012. (Images courtesy of GasFrac)
its Canada and US operations.
GasFrac uses waterless gel technology to stimulate
reservoirs with the primary
ingredient being propane,
Zeringue explained. This
enables us to gel the
propane with a nominal
number of additives and
proppant in a closed blending system.
Effectively the technology
uses hydrocarbons to stimulate new hydrocarbons with
no biocides or carcinogens
in the gel. This creates a
cleaner and more environmentally friendly reservoir
GasFracs gel reacts with
the newly stimulated hydrocarbons, transforming into a
Average cumulative production versus time charts on Viking horizontal wells at Harmattan East/
gaseous state and flowing
Crossfield East in Alberta, Canada, illustrate how GasFrac has performed favorably compared to
back into the pipeline. This
eliminates the need for post- offset production wells.

Febr uar y 2012 |

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tiple benefits, including increasing the production yield

and income from oil and gas wells and increasing recoverable reserves up to 30%. The fact that it does not require
any water and produces no wastewater also are major
pluses, especially in todays highly sensitive times when
Improved economics
public scrutiny of fracing and its side effects is acute.
Using LPG instead of water for fracing is said to have mulWere creating much larger effective frac lengths than water fracs can,
Zeringue said. Our proppant is deliv/
ering a larger pay zone height, both
initially and long term. Ninety-day IP is
off the charts when compared to other
methods because the fluid recovery is
immediate, recapturable, reusable,
and nearly 100%. Were able to create
a fluid-free reservoir within days of
stimulation, whereas water can stay in
the reservoir for years and create flow.
back blockage.
With more than 1,000 propane fracs
carried out so far, recent contract
awards indicate growing industry
acceptance. Husky Energy last year
awarded GasFrac a three-year contract
with a two-year renewal option on its
liquids-rich formation at Ansell in westcentral Alberta, Canada, after carrying
out a series of significant tests and
analysis on reservoir deliverability. The
Ansell development is a large project
with the potential for up to 2,600
Cardium and deeper Mannville wells,
and the contract is a vote of confidence
by Husky an early adopter of GasFracs LPG process in the technology.
Every job that GasFrac performs is
in a closed-looped system, meaning no
part of the process is exposed to open
air. The company is working with
others toward having a fully recycled
system, where it would use its LPG gel
to stimulate the fractures, recapture
the propane in its gaseous state when
it returns to surface with the hydrocarbons with no flaring, and reuse it for
the next stage or treatment. This
would greatly reduce costs in multistage horizontal wells, according to
What is needed to do this are the
facilities to recapture, separate, and
job cleanup and offers the ability to recapture and reuse
or sell the propane. There also is virtually no damage to
the formation.


071' - .



Febr uar y 2012 |

As the LPG frac jobs have increased in size, GasFrac has added
larger proppant blenders and more powerful frac pumps.

reuse the propane, he said. There are operators in certain areas that have these facilities, and over time, as our
process becomes more of an accepted industry practice,
those facilities will grow.
We also are looking at the next generation of LPG
fluids and how we can enhance our current process.
R&D will play a big part in our growth.
Zeringue added that the companys biggest challenge
is finding the right people and partnerships for success.
He expects to double the fleet size in 2012, which will
require more employees. Weve invested heavily in
infrastructure and should have ample proprietary
turnkey spreads by the end of 1Q 2012. We are also
looking at forming partnerships with companies that
can facilitate and complement our process.

Safety features
There has been some understandable industry and reg-

ulatory concern about the safety of the LPG fracturing

process because of its flammability, Zeringue conceded.
Our number one goal as a company is to be safetyfocused at all times, he said. We have put advanced
safety features and protocols in place that other traditional fracing processes dont necessarily need to have.
Zeringue noted that some of the major operators have
spent up to two years vetting the companys process and
performing numerous safety audits. We were finally able
to perform our first jobs for them in 4Q 2011, he said.


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P E R F O R M A N C E . T O G E T H E R TM /fracfacts



Williston basin oil boom

gains momentum
Williston basin operators are making progress in the Bakken-Three Forks play, where new
zones and technology advances are proving the regions long-term oil potential.

Nancy Agin, Associate Editor

he Bakken shale, a tight oil resource play covering

64,750 sq km (25,000 sq miles) in South Dakota,
North Dakota, and Montana in the US and in the Canadian provinces of Saskatchewan and Manitoba, is ranked
as the largest continuous onshore oil accumulation in
the Lower 48.

Early Mississippian-Late Devonian in age, the BakkenThree Forks petroleum system in the Williston basin was
discovered in the 1950s and has since evolved into a
world-class hydrocarbon resource play. The US Geological Survey has estimated North Dakota and Montana
could hold 5 Bbbl to 10 Bbbl of technically recoverable
oil in the Bakken-Three Forks complex alone.
Encountered at depths of approximately 2,590 m to
3,200 m (8,500 ft to 10,500 ft), the Bakken comprises



Well #


Section, Survey


7,088 Boepd
(4,815 Bo, 13.16

Whiting Oil &

Gas Corp.

21-4H Tarpon-Federal

McKenzie , ND


Nov. 2011

7,033 Boepd
(3,385 Bo, 2.19

EOG Resources Inc. 10-1211H Stateline

Roosevelt, MT


Aug. 2011

5,330 Boepd
(4,661 Bo, 4.01

Exploration Co.

2-H Sorenson 29-32

Mountrail, ND


Mar. 2011

5,200 Boepd*

Exploration Co.


McKenzie, ND


July 2011

5,133 Boepd
(4,335 Bo, 4.79

Exploration Co.

1-H Sorenson 29-32

Mountrail, ND


Mar. 2010

5,061 Boepd
(4,438 Bo, 3.73

Exploration Co.

1-H Clifford Bakke 26-35

Mountrail, ND


Oct. 2010

5,035 Boepd**

Exploration Co.

1-H Jack Cvancara

Mountrail, ND


May 2010

4,761 Boepd***

Whiting Oil &

Gas Corp.

11-27H Maki

Mountrail, ND


Oct. 2009

4,675 Boepd**

Exploration Co.

1-H Domaskin 30-31

Mountrail, ND


Jan. 2011

4,570 Boepd***

Whiting Oil &

Gas Corp.

11-9H Richardson- Federal Mountrail, ND


Oct. 2008

4,431 Boepd***

Whiting Oil &

Gas Corp.

12-10H Fladeland

Mountrail, ND


July 2010

4,169 Boepd**

Exploration Co.

1-H Abelmann 23-14

McKenzie, ND


Jan. 2010

*Source: Newfield Exploration Co.: 24-hour average. **Brigham Exploration Co. *** Source: Whiting Oil & Gas Corp.
Data Source: IHS Inc.;, November 2011. Conversion: 1 bbl of oil equivalent (boe) = 6,000 cf of gas


Febr uar y 2012 |


the upper shale, middle dolomite (Middle Bakken), and

lower shale, with the Middle Bakken targeted as the primary oil reservoir. The Middle Bakken is characterized
by average porosity of 5%, low permeability of 0.04 md,
and thickness up to 43 m (140 ft).
Directly below the Bakken lies its sandy counterpart,
the Three Forks formation, and together these form
a petroleum system with oil-producing rock situated
between shale layers that can be found approximately
3 km (2 miles) below the surface. Also a focus of Bakken
operators, the Sanish sandstone occurs between the
Three Forks and Lower Bakken shale, but the formation
is less prevalent in the Williston basin.
Since US production from the Bakken shale began in
earnest with the 2000 discovery of the Elm Coulee field in
Richland County, Montana, the play is rapidly transforming from early-stage exploration into development. Horizontal drilling and multistage fracturing campaigns
continue to prove the regions significant unconventional
potential, adding to long-term development in the region.

Most active onshore Lower 48 oil play

Since 2008, the Bakken has been coming of age predominantly in North Dakota, where Williston basin shale
potential has attracted significant international attention.
The first international operator to enter the basin, Statoil
ASA announced in October 2011 it planned to acquire
Bakken-focused Brigham Exploration Co. for US $4.7 billion. The deal, which closed at year-end 2011, grants the
Norwegian company access to more than 375,000 net
acres (60% derisked) in the tight oil play where the
Austin-based independent is producing 21,000 boe/d
gross and has an existing risked resource base of 300
MMboe to 500 MMboe. Within five years, Statoil estimates its Brigham output has the potential to escalate
to 60,000 boe/d to 100,000 boe/d.
The transaction also provides Statoil with approximately 430 miles of oil, natural gas, and water transportation systems centrally located in the basin.
Twenty-four hour initial production (IP) rates have
averaged 2,800 boe/d from 88 North Dakota wells on


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The frac valve seal surf acecondition

goes unaddressed in typical
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91 ?

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Continental completed the first commercially viable horizontal

well in the North Dakota Bakken. The Robert Heuer 1-17R was horizontally drilled and fracture-stimulated in Divide County in 2004.
(Image courtesy of Continental Resources)

production, according to Brigham, which reported a

record-setting Bakken well in March 2011. The #2-H
Sorenson 29-32 in the Alger field flowed 5,330 boe/d
(4,661 bbl; 4.01 MMcf/d).
Brigham operates 12 rigs in the Bakken shale play,
where it has drilled six of the 10 highest IP rate Bakken
wells to date, and has 140 wells planned for 2012.
Meanwhile, leading Williston oil producer and
Bakken play founder Continental Resources is investing
in its ECO-Pad technology to increase per-well recoveries, reduce drilling and completion costs, and improve
its environmental footprint in the play. The company
has deployed this technology to centralize its Bakken
operations while drilling from a single pad on two
adjoining 1,280-acre spacing units.
Continental also has maintained long-term growth



fJJ rJJJI-:j! /)

J r iiiJJIJ

expectations for the play. The company estimates the

Bakken/Three Forks play holds 24 Bboe of potentially
recoverable reserves, which it says could double US oil
reserves. Continental is the largest acreage holder in the
Bakken with a lease position of more than 901,000 net
acres as of September 2011; 72% of the companys
acreage is in the North Dakota portion of the play.
Infrastructure takeaway is expected to triple from
540,000 b/d in 1H 2011 to more than 1.4 MMb/d
through year-end 2013 as the Bakken expands, according to information published by Kodiak Oil & Gas in
December 2011.
Meanwhile, Bakken economics are
profitable in the current oil-pricing
environment. At year-end 2011,
Williams spinoff WPX Energy listed the
play pre-tax IRR at 65% based on
$95/bbl oil, among other factors. The
company also anticipates Bakken takeaway will increase to more than 1
JE / i11
MMb/d by early 2013.

fli - rLL rJJJ

, rt e



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April 14-18

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E . r v

Montana Bakken still evolving

While North Dakota has remained the
focal point for many Williston basin
operators, Montana Bakken activity is
accelerating, and production has
improved since the initial #1-4H Piranha (630 boe/d) discovery by Slawson
Exploration in 2008.
Top-producing Montana Bakken
wells include the Brigham-operated
#1-H Gobbs 17-8 A well in Roosevelt
County (24-hour peak flow rate of
1,817 boe/d), the XTO Energy-operated #11X-12 Thiel well in Richland
County (1,201 boe/d), and the EOGoperated #5-1003H Stateline in Roosevelt County (409 boe/d).
EOG recently completed two top
Montana Bakken discoveries the
#1-2423H and #10-1211H Stateline
which are the first Bakken producers
Febr uar y 2012 |


in their respective townships in Roosevelt County.

According to IHS Inc., the wells are near the Elm
Coulee Northeast field and produce from fracturestimulated, openhole Middle Bakken intervals.
The #1-2423H Stateline produced 5,375 bbl of oil,
3.62 MMcf of gas, and 12,960 bbl of water (5,979 boe/d)
from the Middle Bakken in 15 days during August 2011,
according to IHS data. The horizontal completion is in
Section 24-28n-59e and was drilled to 4,868 m (15,972
ft), with a true vertical depth (TVD) of 3,148 m (10,327
ft) and bottomhole location in Section 23-28n-59e.
The #10-1211H Stateline produced 3,385 bbl of oil,
2.19 MMcf of gas, and 11,239 bbl of water (3,750 boe/d)
in 10 days during August 2011, according to IHS. The
horizontal completion is in Section 12-28n-59e and was
drilled to 4,752 m (15,590 ft), with a TVD of 3,154 m
(10,347 ft).
EOG has scheduled four additional horizontal Bakken
wells on its leases in Roosevelt County township 28n-59e
in Sections 13, 15, 24, and 26.

Advancing the shales

The Bakken stands at the forefront of R&D. Bakken wells
are consistently drilled to around 6,100 m (20,000 ft) with
2,740-m (9,000-ft) laterals, and new technology has created 20- to 30-stage fracturing and multiple laterals from
common pads, making it one of the cleanest and most
efficient plays in the world, according to the Hart Energy
2012 North American Unconventional Yearbook.
In 2007, the Bakken Research Consortium was formed
to develop best practices for developing Bakken wells.
The consortiums 31 members include prominent
Bakken operators such as Chesapeake Energy Corp.,
EOG Resources Inc., Hess Corp., Newfield Exploration
Co., and Exxon Mobil Corp. via XTO Energy Inc., as
well as agencies such as the Department of Energy and
North Dakota Geologic Survey.
As operators continue to favor North American shale
development, premium oil shales like the Bakken will
redefine domestic oil production, attracting both local
and international attention for the long term.


Frac Fact #3:

Sand and debris can

accumulate in frac service,
imp airing equipment operation.




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clean out and inspections.
Cameron gives fati gued frac valves the care
and maintenance they need to perform optimally.
Valve history anc trac< nc

Thorough teardown, cleaning and inspections

Complete care for maximized frac time


P E R F O R M A N C E . T O G E T H E R T IM




R&D is vital to reaching further,

going deeper
A commitment to developing and embracing new technology is critical to achieving
advances in subsea technology.

Neil Gordon, Subsea UK

onger tiebacks, deepwater construction, increased

production, and integrity issues on aging assets are
just a few of the challenges facing the subsea sector as it
matures and exploits deepwater and ultra-deepwater
fields. The deeper and further north the industry goes,
the bigger the problems become. The changing operating conditions demand equipment with superior functionality, performance, and reliability.
The challenges have been set, and experts are taking
this chance to deliver technology that has never before
been implemented. Extensive R&D is being undertaken
to maximize and extend the life of current fields.

Striving for solutions

Since the late 1990s, flow assurance and the challenges
associated with the move to deep water have dominated
the subsea umbilicals, risers, and flowlines industry.
These challenges have led to new technologies such as
Technips electrically trace-heated pipe-in-pipe (ETHPiP) design, which provides a low-power solution that
compliments reel-lay installation. The companys Evanton
spool base in Scotland was developed to accommodate
ETH-PiP assembly and is an example of how the North
Sea has provided an arena for transferring groundbreaking technology to the worldwide subsea industry.
Umbilical and riser technology also has undergone
changes as companies have contended with flow assurance, fatigue, access for inspection, and total installed

FMC supplied subsea equipment for Statoils sgard field in the

Norwegian North Sea, the largest subsea development at the
time of its completion. (Image courtesy of FMC Technologies)


Febr uar y 2012 |

FMC Technologies

we 're doin what's

never bee



Total's Pazflor project off Angola represents yet another first

for FMC Technolog ies: I t s the first deepwater development
based on full fi eld gas/li quid separation at the mudline.
1hree vertical separation systems make it feasible to extract
heavy, hi g hl y viscous oil economicall y from deep Miocene

reservoirs. With proven subsea separation technolog ies, we

are pushing the limits of oil recovery in deepwater basins

,-A JOE;

around the world. And that 's onl y the beg i n n i n g .


And keep you ahead.





We put you first.

1 'r.





AIVs, AUVs, and ROVs will increasingly play an important role

in the subsea environment. (Image courtesy of Subsea 7)

target. Improvements in nontethered vehicles are

allowing AUVs to break boundaries in exploring further under ice sheets.
Integral to the success of technology over long distances is underwater positioning surveys and sonar
systems. These are becoming more widely specified
for exploration, construction, and production operations. Recent history has seen simple monotone pulse
and frequency shift-keyed technology deployed for
underwater communication.
As the move to new frontiers has progressed, issues
such as inadequate signaling and the inability to work
over long ranges have arisen. Because developments
from acoustic systems and integration with inertial
navigation systems have become prominent for a range
of positioning and measurement (such as spool metrology), applications have been designed to overcome signaling issues.

cost. Investment has been made in developing bundled

and single hybrid towers, steel catenary risers, and flexibles. And composite technology, which is in a relatively
early stage of development, will no doubt make its mark
soon as well.
Common language
As many pipelines and subsea wells reach the end of
It is crucial that consistency and common standards be
their planned lifespan or even exceed it, they require regestablished as new technologies are introduced. Adoptular servicing. New and innovative technologies to lower
ing a common standards policy such as the new Energy
the cost of pipelines over their lifetime could offer signifiInstitute guidelines helps the industry better deal with
cant savings. Pipelines made of composite material and
reliability, which improves efficiency and safety. Today
coatings that will not corrode and are less prone to blockage should offer increased pipeline and riser reliability.
The move into harsh geographical areas like the
Arctic has brought the use of conventional hydraulic
systems under scrutiny because of environmental
issues and has led the industry to set targets to
decrease hydrocarbon releases. To contend with this
challenge, the use of all-electric christmas trees is
being considered as a possible solution, although the
technology is in the very early stages of development
and acceptance.
Exploration in deep water and ultra-deep water is
becoming more dependent upon autonomous inspection vehicles (AIVs), AUVs, and ROVs. These vehicles
will increasingly play an important role, for example,
using ROVs deployed concurrently on different sections of a project to deliver better efficiency.
The design of these vehicles has evolved in recent
years. A fiberglass monocoque construction now offers
a more compact, rigid, strong, and lighter ROV that is
more energyefficient and can be deployed for longer
periods of time.
AUVs also are undergoing heavy R&D, with the goal Technips ETH-PiP technology provides a low-power solution that
of extending the nonstop record of 31 km (19 miles) a complements reel-lay installation. (Image courtesy of Technip)

Febr uar y 2012 |


different manufacturers use different interface protocols when developing subsea control systems, a situation
that complicates integration. Industry standardization
must go farther to ensure across-the-board regulation
with new technologies.

The role of the UK in frontier areas

Subsea 7s Seven Borealis is the industrys newest pipelay/

heavy-lift vessel designed to overcome the challenges of ultradeep water. Created through a conversion project carried out
jointly with the original designers, the vessels 600-metric-ton Slay system and 1,000-metric-ton J-lay tower provide a more stable environment for pipelay operations. A series of anti-heel and
anti-roll systems ensures greater stability for vessels working in
harsh environments. (Image courtesy of Subsea 7)

The North Sea has long been recognized as the test bed
for subsea technologies and services, and as a mature
province, it will continue to be the seat of subsea learning. The UK will continue to pioneer and internationalize new skills, technologies, and expertise into frontier
areas. Subsea UK is committed to promoting opportunities in emerging markets and disseminating the technological expertise of the UK subsea industry with the goal
of extending subsea technology into frontier areas.
Keeping ahead of the game in terms of R&D is more
important than ever, and Subsea UK will continue to
assist its members to lead the challenge of pioneering
new technology and expertise.

l y l lr 7


With over 300 installations ,Delmar has the experience ,

manpower, equipment ,and proven heave compensation
installation methodology to complete your subsea project in
a safe , cost-effective ,and timely manner.
Worldwide installations: GoM, W. Africa, Brazil, Mediterranean
Proven installations from 1000-9000' water depth
Installed equipment weight ranging from 5 tons to 100+ tons
Operations support for TLP and Spar projects
Emergency response plans for MODUs, TLPs, and Spars
Dedicated emergency equipment for MWCC and HWCG

When planning your next subsea installation project,let

Delmar put our 43 years of experience to work for you.


toms and Headquarters

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Tel: +1337.365.0180
Fax: +1337.365.0037 | Febr uar y 2012

Technical and Engineering

2424 Wilcrest Dr., Suite 225
Houston, Texas USA 77042
Tel: +1832.252.7100
Fax :+1832.252.7140

Delmar North Sea Ltd


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Subsea well intervention technology

delivers at depth
New ultra-deepwater riserless intervention technology is improving production at a
fraction of the cost of traditional methods.
The system, which is deployed from a monohull vessel,
is the worlds first intervention technology that can
operate in depths to 3,000 m, which means the technolhile subsea well intervention is necessary, tradiogy is suitable for every subsea well in the world. The
tional methods can make it a time-consuming and
average intervention is six to eight days using AX-S,
very costly activity, with drilling and semisubmersible rig
compared to a typical deepwater intervention time of
costs running from US $1 million to $1.4 million a day.
10 to 12.
There are more than 4,000 oil and gas producing subsea
To enable deployment of the system, Expro has entered
wells worldwide, and this number is increasing at a rate
into a multiyear charter party contract with TS Marine
of approximately 500 a year. With many of these wells
Asia Pacific to use its DP 2 multiservices vessel Havila
more than a decade old, intervention is crucial to
Phoenix for worldwide operations. The Havila Phoenix is
achieving maximum extraction.
110 m (361 ft) long and 23 m (75.5 ft) wide, with a moonThe sustained rise in deepwater exploration has made
pool of 7.2 m by 7.2 m (23.6 ft by 23.6 ft) and a 250-metthe challenge of cost-effective well intervention even
ric-ton actively heave-compensated subsea crane. Two
more pertinent. The challenging conSchilling UHD workclass ROVs rated
ditions experienced at depth in Asia,
for 4,000 m (~13,120 ft) capable of
Brazil, West Africa, and the Gulf of
carrying video cameras ensure operaThe sustained rise
Mexico mean many wells have been
tions are safe and effective.
in deepwater
producing for several years without
Designed for deep water
necessary intervention. This often
exploration has
The AX-S structure is 33.5 m (110 ft)
results in suboptimum production
made the challenge
tall and weighs 220 metric tons. It is
and ultimate recovery reduction.
of cost-effective
deployed onto a subsea tree with an
It was clear that the oil and gas
active heave-compensated fiber-rope
industry required a step-change in
well intervention
winch from the vessel and is remotely
technology, and it was at 3,000 m
even more pertinent.
controlled from the surface like an
(10,000 ft) that the AX-S (access)
ROV. It consists of an integrated set
challenge started.
of pressure-contained subsea packDeveloped at 3,000 m
ages comprising a well control package (WCP), tool storFollowing a seven-year development program involving
age package (TSP), wireline winch package (WWP), and
the technical expertise of a range of partners includfluid management package (FMP). A hydraulic pluging input from more than 200 vendors international
pulling tool overcomes the risks associated with pulling
oilfield services company Expro has introduced a techand setting tree crown plugs while a novel control umbilinology that provides a cost-effective well intervention
cal overcomes the challenges of weight and subsequent
solution designed to close the value recovery gap
deployment/handling system size.
between subsea and dry-tree fields by providing a
The system has a fully enclosed pressure housing with
safe, riserless, and remotely operated subsea solution
no dynamic seals between the well bore and surroundthat is at least one-third less than the cost of using a rig.
ing environments.
The AX-S subsea well intervention system is a life-ofThe WCP is a dual safety barrier containing industryfield solution to well intervention and is designed to
proven 738-in. shear seal and gate valves. If a safety issue
arises, the operator has time to identify the problem and
directly address some of the unique operating demands
isolate the well bore.
of the deepwater subsea environment.
Matthew Law, Expro


Febr uar y 2012 |

Positioned directly above the WCP is the TSP, which

contains eight tool pockets located around the inner circumference of the package. The tools are swapped on the
seabed (in minutes rather than hours), and as they are
held in a pressure-retained housing, no pressure testing is
required after each tool change. The pressure housing all
but eliminates the possibility of hydrocarbons leaking into
the surrounding water and water seeping into the well.
The tools are run in the well by the WWP, which has
7,620 m (25,000 ft) of monoconductor that conveys the
various intervention tools into the well.
Expro, Deep Tek Ltd., and Parkburn have developed
a fiber rope umbilical bundle and handling system to
deploy the AX-S system. The bundle is made up of a fiber
rope helically wrapped with three individual umbilicals,
which provides greater strength and operational efficiency than wire rope alternatives. It is buoyant in water
and adds no weight to the deployment system. The light
weight of the rope also reduces winch power consumption, and there is no torque in the lifting line that could
prove hazardous in managing vessel-based operations.
The final subsea section, the FMP, can deploy glycol
fluid into the system to flush out hydrocarbons that are
then circulated back into the well or subsea production
system. Depending on the specific needs of the customer,
seawater can be mixed with the fluid in variable ratios for
pressure-testing and flushing.
A control cabin on the vessel has a computer generated
interface to control the various packages on a fully automated basis. There is no requirement for any hydraulic
lines going back to the surface.
The system is more cost effective than riser-based alternatives because it is supported from a monohull vessel,
and it is faster to operate than wire-through-water solutions, especially on horizontal trees. Studies carried out
by Expro indicate that AX-S is the only viable solution
that is economically attractive for wireline intervention in
deepwater wells.

Subsea Test Tree

Landing String
Assembl y

PTS is ready for your next

Well Test, Flowback, or

DH Control System
For more information on how
PTS can provide an integrated
Well Testing Package for your
project, please visit us at


Tried and tested

Expro completed the rollout of a three-phase wet testing
process in September 2011. Starting at a depth of 115 m
(375 ft), the company tested the active heave-compensation tool, winder, and umbilicals and deployed and recovered dummy packages onto the seabed in the Buchan
Deep, East of Peterhead, Scotland.
These subsea packages were completed at a depth
of 1,206 m (3,957 ft) in Sognefjorden, northeast of
Bergen, Norway, and tested in 2,444 m (8,018 ft) water
depth North of Shetland in the Norwegian North Sea. | Febr uar y 2012

A Ell III I C01151110-11M


Inc.Corporate & Sales Office

6911 Signal Dr, Houston,TX 77041

Tel, 281 498 7399



The AX-S system, which can be deployed

from a monohull vessel, is capable of
operating at 3,000 m (10,000 ft) water
depth. (Image courtesy of Expro)

The final phase of testing, scheduled

for completion in early 2012, is to
install the subsea packages and run
the final commissioning on the subsea wellhead.
AX-S aims to provide enhanced
hydrocarbon recovery by providing
wet trees with the same opportunity
for intervention and management as
dry trees. The system has the potential to transform the economics of
subsea well production by providing
a safe, cost-effective solution compared to traditional intervention




Low Invasion Coring
J.B. Bloys and H.R. Warner Jr.
The latest addition to SPE' s Monograph Series, Low Invasion Coring will help readers develop an
understanding of how to app ly the array of technologies required for successful comp letion of a lowinvasion-coring (LIC) project. This monograph addresses the princi ples of obtaining low-invasion cores and
provides essential practical ti ps for eng ineering field LIC projects . Appendices provide detailed information
on specific core-anal ysis procedures.
Contents :('replanning Low-invasion-coring bit selection Other downhole hardware Low-invas ioncoring fluids Rigsite operations Coring poorly consolidated sandstone Core analysis
Appendices include :Summaries of selected SPE papers concerning LIC technolog ies Special
circumstances-sponge coring and the use of noninvading core gel Impact of oil-based mud on connate
water saturation and other rock properties

Visit our online bookstore at www

SPE members receive 10% off any SPE Bookstore item by using coupon code 1202E&P .


r "
(C:pne s

15 March 2012)

M 1!

Society of Petroleum Eng ineers

Febr uar y 2012 |



Thursday, March 22,2012

Blackhorse Golf Club

Wildcatters'Open Committee
Don Crow,Lufkin Industries - Committee Chair

Ron Barnes,Oil and Gas Asset Clearinghouse

Reed Barrett,Drillinginfo

David Culberson, Select Energy Services

Burk Ellison ,NotionalOilwell Varco

Melinda Faust, Lantana Oil & Gas Partners

Tina Hamlin,IPAA

Bob Jarvis ,IPAA


1 11

z EXA s

i A Th


Russell Laas,Hart Energy Publishing

Richard LeBlanc,Norris Sucker Rods

C.W. Macleod, Sanchez Oil and Gas

Suzanne Ogle, Regency Energy Partners

Dan Steele,Independent

Amber Vasquez, Network International

Sponsorship is the only way to guarantee a spot in the tournament and space is limited so register early.
For more information ,contact Nikki McDermott at nmcdermott@i or 800/433-2851 or visit IPAA Meetings
online at



Warning system mitigates

earthquake damage
Early warning system analyzes seismic waves to anticipate tremors.

Rhonda Duey, Senior Editor

ecent devastating earthquakes have spurred research

into warning systems that can give people a chance to
get to higher ground. But their usefulness is limited not
only by the speed at which earthquakes and resulting
tsunamis occur, but also by the methods by which warnings are transmited, primarily telephone systems and
the Internet.

Workers place equipment to detect earthquakes near the

George Massey Tunnel in Vancouver, BC. (Images courtesy of
Weir-Jones Engineering Group)

Weir-Jones Engineering Ltd. provides a different

kind of early warning system, one that is deployed
locally at sites that are susceptible to earthquake damage. In the oil and gas industry, this includes onshore
and offshore production facilities and transmission
lines, where ground movement can have devastating
consequences. According to a USGS report, the 1994
Northridge earthquake in Los Angeles, Calif., caused a

gas line to rupture, and the gas was ignited by the ignition system on a nearby truck, causing a massive fire.
The government of British Columbia (BC) judged the
Weir-Jones system so effective that it elected to install
the system on the George Massey Tunnel south of Vancouver to prevent motorists from being trapped beneath
the river during an earthquake.

The genesis
Founded in 1971, the Weir-Jones Engineering Group specialized in vibration monitoring, running burst tests on
line pipe in northern Alberta. These tests are destructive
and only last a few milliseconds, so you dont get an
opportunity to rerun the test if you dont get the data
the first time around, said Iain Weir-Jones, company
president. The data acquisition systems have to be
super-reliable and very quick.
Early on, company personnel took measurements,
did some engineering work, and turned the data over
to their clients. Most of what we did was tell people like
metallurgists or pipeline designers or chemical engineers what their systems were doing so they could modify them and change process parameters, he said. It
became apparent that, although our expertise was in
collecting information, there were a number of areas
where it would be useful to collect information for
events in an automated manner.
The goal was to remove the human factor and analyze
the data in real time. We started developing systems
which had, for want of a better word, innate intelligence, he explained.
Ultimately, the company began developing systems
that could monitor vibration patterns and determine
whether or not they were threatening. This became the
genesis of the earthquake early warning system (EEWS).
Instead of monitoring mechanical vibration, the system
listens to vibrations in the earths subsurface. It works on
a premise that is familiar to geophysicists the time difference between compressional (P) and shear (S) wave
arrivals. The system senses the arrival of P waves, which
travel faster than S waves and can be indicative of a
major quake.
Febr uar y 2012 |


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The George Massey Tunnel is equipped with an

earthquake early warning system that will close
the tunnel to protect motorists from being
trapped under the river.

If we pick up the P wave reliably, quantify it, and determine whether it is the
precursor of a potentially damaging S
wave, then weve got a time lead before
the arrival of the S wave, he said.

How it works
The subsurface is a noisy place, so redundant sensors
are needed to validate the P-wave arrival. Typically these
sensors are placed about 1 km (0.6 miles) apart. When
two or more sensors pick up a P-wave signature, the Pwave arrival is validated.
The system then studies the amplitude and frequency
of the signature. If the signature is determined to be
valid and confirms the incoming S wave will cause damage, the system triggers the alarms that have been put in
place. In the case of the Massey Tunnel, warning signs
are turned on, and the tunnel is closed until the danger
is past.
The EEWS also takes into account the design characteristics of the structures being protected. New building
codes along the west coast of North America ensure
structures can withstand certain ground motion. The
threshold level at a brand new high-rise would not necessarily be the same as a 30-year-old facility, he said. We
tailor the criteria based on the design characteristics of
the structure.
Weir-Jones said that everything from P-wave detection
to estimating damage risk takes about one-third of a second and requires no human intervention. He added
that a facility 200 km (120 miles) from the epicenter
of an earthquake might have only a 15-second window
between the P arrival and the S arrival. You dont have
a huge amount of time, but its enough time to shut
down compressors, bring elevators to the lobby, close
tunnels, and shut off big natural gas pipelines, he said.
Weir-Jones emphasized his systems are not to be confused with regional earthquake warning networks. The
facility-specific systems we are building are hardwired
and provide instantaneous response with no lost time,
he said.

At the reservoir scale

Not surprisingly, this type of system also is being used to
monitor producing fields. Were looking at vibrations

caused not by massive earthquakes but by small induced

earthquakes, microseismic events, and were looking for
the energy releases caused by strata movement associated with the depletion of the reservoir, he said. This is
helpful in a number of applications:
Delineating production zones;
Fracture monitoring;
EOR techniques;
Heavy oil production-related deformations;
Casing deformation;
Natural gas storage;
Carbon sequestration;
Geothermal reservoirs; and
Subsurface waste disposal.
Weir-Jones Engineering provided the equipment and
supplies for two of the largest permanent passive microseismic monitoring systems in the world, for Imperial
Oil at Cold Lake, Alberta, and for Canadian Natural
Resources in its cyclic steam stimulation field. The
company also developed the worlds first integrated
microseismic monitoring system using dedicated radio
frequency links between a master and multiple slave
stations. The system uses GPS-based time referencing
for synchronization across the entire system.
Other installations have included a multichannel, permanently installed system for continuously monitoring
the progress of a CO2 sequestration project and an 800channel permanent passive microseismic monitoring
system in Saudi Arabia.
The company also has streamlined its borehole installation, working with Imperial Resources to develop a
cost-effective technique for installing custom triaxial
packages in deep boreholes using coiled tubing and
cement injection and with Encana on a technique to
install small-diameter triaxial packages in the annular
space between the casing and the wall of the borehole
for low-noise installations in producing wells.
Febr uar y 2012 |


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Configuration and diagnostics software tool

improves process control
The Micro Motion ProLink III by Emerson Process Management is a Microsoft Windows-based configuration,
data-logging, and troubleshooting tool with an unmatched
response time and easy-to-use device intelligence and diagnostics display for the range of Micro Motion Coriolis flow
and density transmitters.
According to Emerson, customers can streamline work
practices and process control with the latest version of
this software tool, which features service benefits including the ability to simultaneously connect to multiple
devices and monitor system performance through trending and data logging. Prolink III allows the user to view
and improve process conditions across more than one
transmitter at a time. Once connected, process variables
and alerts can be viewed immediately through a single
full diagnostics display. The transmitter configuration
tool identifies fault conditions that are separated by severity to prioritize alerts. It also connects to all Micro Motion
Coriolis transmitters and supports HART, Modbus RS485, and Modbus/TCP communications. Advanced transmitter functionality such as Smart Meter Verification,
concentration measurement, petroleum measurement,
Net Oil Computer, discrete batching, or filing and dosing
application software can be configured easily using the
ProLink III diagnostics tool.

The ProLink III includes a guided connection wizard, simulated

device feature, and offline configuration tool to help mitigate
expensive downtime and reduce startup costs by providing less

ing drilling (CTD) operations in the Niobrara formation in Kansas. According to AnTech Ltd., the Polaris is
an affordable alternative to rotary steerable systems that
increases drilling efficiency and speed while making
minimal impact on the environment.
The Niobrara drilling program undertaken by AnTech
and Advanced Drilling Technologies consisted of three
wells drilled directionally. The first well was drilled to
1,000 m (3,000 ft) true vertical depth (TVD), with more
than 185 m (600 ft) of lateral displacement. The second
well was drilled to more than 450 m (1,500 ft) TVD
with an average dogleg severity of approximately 7.5
degrees. The tool, which includes a solid state gyro system, removing the need for a magnetic steering instrument, was easy to steer, and enabled both wells to be
completed in less than one day. The Polaris also has sensors close to the bit allowing corrective actions to be carried out immediately, the company said.

New water conservation services,

technology optimize well economics
Halliburton is providing new water management services
to operators in the Permian basin, Niobrara, and Eagle
Ford shale plays to reduce the amount of freshwater used
for hydraulic fracturing as well as overall costs for waterrelated services in unconventional developments.
For its Total Water Management Solutions (TMWS)
initiative, the company has deployed its CleanWave technology, which uses electrocoagulation to remove suspended solids from water and make it into clear brine
for fracturing. The technology can be used to recycle
flowback and produced water, improving wellsite economics. According to Halliburton, the eventual goal is
to eliminate the need for freshwater use in fracturing
operations. Toward that end, the company is investing
in additional technology, water-related equipment and
facilities, and development of high-performance fracturing fluid systems that can be formulated with the recycled or produced water.
TMWS water supply points are in Weld County, Colo.;
Wilson County, Texas; and Lea and Eddy counties, New

room for error. (Image courtesy of Emerson Process Management)

Downhole drilling system

adds precision in coiled tubing drilling
The AnTech POLARIS downhole drilling system offered
in the companys new directional drilling services division has contributed to a series of successful coiled tub104

3-D seismic analysis software

maximizes data visualization
ffA has released the GeoTeric seismic interpretation
workflow software to improve decision-making while
processing, interpreting, and modeling large volumes
of seismic data in less time. The 3-D seismic software can
Febr uar y 2012 |



hydraulically fractured and enables the well to be completed in a single, continuous process. The technology
works by using a series of balls pumped through the
completion string to open valves that allow access to the
formation. According to the company, more than 20
sleeves per stage can be installed in a cemented liner
and opened sequentially with a single ball.
In one application on the Norwegian shelf, the i-Frac
system reduced stimulation of a North Sea well to 1.5 days
compared to an average of 40 to 50 days. The company
was able to open 56 valves in three zones in the North Sea
well by dropping only three balls. The ball drop sleeve system also has improved completion time and costs in the
US Bakken and Woodford shale plays, i-Tec said.

A Geoteric RGB blend is imaged to show detailed channel morphology. (Image courtesy of ffA)

be applied in conventional and unconventional reservoir analysis to directly translate geophysical data into
geological information while making interpretation
workflow more efficient.
The GeoTeric suite features the Adaptive Geobodies
technology, which was developed in conjunction with
Lundin Norge, used to extract 3-D geobodies in areas
such as braided channels or karst systems where it would
be impossible for other conventional seismic interpretation techniques, ffA said. This technology offers high-resolution 3-D manual manipulation tools and the ability to
account for the interplay between different geological elements when examining the geological expression in seismic data from an image processing perspective. GeoTeric
also provides access to post-stack techniques for reducing
the noise level in seismic data while preserving information content.

Ball drop sleeve system cuts completion

time, costs
A new lower completion ball drop sleeve system by
i-TEC Well Solutions allows operators to bring wells
in tight formations online faster than other methods,
helping to curb costs, improve zone isolation, and start
production in shorter time, the company said.
The i-Frac system replaces the common plug-andperf technique in both cemented and openhole applications. It eliminates trips to prepare each zone for being | Febr uar y 2012

A number of stages can be run in a single well using the i-Frac

technology. The number of valves per stage also can be varied
to suit conditions. (Image courtesy of i-TEC Well Solutions)

Absorbent technology removes toxins

from flowback water
A swellable, molecularly modified glass, the Osorb
field water treatment solution by Produced Water
Absorbents Inc. (PWA) is capable of absorbing volatile
organic compounds, including formation hydrocarbons and upstream production chemicals.
The company recently fielded skid-units tested by
Texas A&Ms GRPI and trailer-mounted units conducting pilots with E&P companies at up to 1.5 bbl/min.
According to PWA, these pilots are removing 90% to
99.9% of soluble and micro-droplet volatiles from production waters in the Clinton, Bakken, Utica, and
Wamsutter formations. Unusual for a polishing system,
it is closed-loop. The captured hydrocarbons are recovered with little or no waste stream, and the regenerated
Osorb can be reused.
Nancy Agin, Associate Editor


A war of giants could cut off

Persian Gulf production
With the instability of the global market a market that historically has experienced
severe fluctuations as a result of regional political issues it is in the worlds best interest
to avoid the outbreak of war with Iran.
Mohammad Sadegh Amini, Contributing Editor

he Persian Gulf is linked to the destiny of energy security and stable oil prices in the global market. The
region holds 65% to 75% of proved global petroleum
reserves and 35% to 50% of natural gas, exporting 20%
of the worlds energy through the Strait of Hormuz. It is
clear the developing crisis in the Persian Gulf has the
potential to adversely impact the global economy as well
as regional and trans-regional security.
Maintaining stability in this region is critical to ensuring
the continued supply of oil and gas to many countries.
Because of the strategic role played by the Persian Gulf
with regard to the global oil industry, every step taken
against Irans nuclear program makes the stability of the
global energy market more tenuous.

Arab countries and war with Iran

Experts on international diplomacy agree that the negative consequences of a crisis in the Persian Gulf would be
significant increased vulnerability of the oil industry,
compromised supply, and instability in the price of oil.
The only way to avoid these potentially cataclysmic
issues is to avoid a war in Iran. Although the Arab countries in the region have allowed US Navy bases and an
American military presence, they have no desire for war
because they know if the US or Israel attack Iran, the
result could be the loss of billions of dollars invested in
the regions oil industry.
The other countries in the region recognize how much
their existence owes to their own oil industry, and without
dollars gained through the sale of oil, their governments
would be in jeopardy.
Countries in the southern part of the Persian Gulf are
facing some complicated issues. While they are working
to adapt to the vagaries of a critical relationship between
Tehran and Washington, they find themselves between a
rock and a hard place. While they are concerned about
Iran having access to nuclear weapons, they are loath to
see the outbreak of a military conflict in the Persian Gulf.

They see themselves as victims of both sides. The fact

is, regardless of their misgivings about Irans potential
nuclear arms, leaders in the region know they cannot
stand against their neighbor with impunity. There is a real
fear that they will not be able to prevent Iranian missiles
from hitting their onshore and offshore oil and gas facilities if they side with the West. They have not forgotten
what happened to their oil tankers during the war
between Iran and Iraq. A similar event could happen
again and this time on a larger scale.
Arab leaders, unlike their American and Israeli counterparts, have accepted the reality that Iran is a considerable regional player and a powerful neighbor. If Iran were
to carry out its threat to blockade the Strait of Hormuz,
its neighbors might well be exposed to political and economic instability. Iranian military forces also will consider
destroying the industry and infrastructure of any country
in the region it perceives as a supporter of US forces.
This perception was reflected in a recent speech delivered by Saudi Arabias Prince Turki Al Faisal, the exchief of the Intelligence Service Organization, who
warned against a military attack on Iran because of
the dire regional consequences. Prince Faisal, who is
regarded as a highly influential official in Saudi Arabia
and one of the trustworthy partners of the US in the
region, emphasized that closure of the Strait of Hormuz
will bring about dangerous repercussions for the
economies of the region because it will disrupt the
process of oil transport, following which the price of
oil, loading, and insurance rates will increase to an
untenable point.
Countries in the Persian Gulf also believe a disruption
in supply to the global market could mean a dramatic
recasting of their role in supplying the world with energy.
The fear is that ultimately capital will be focused elsewhere, perhaps in shale development in North America,
where US reserves alone have been estimated at more
than 2,000 Tcf. At current consumption rates this is
enough natural gas to supply the nation for the next hundred years. The Western world is working diligently to
decrease its dependence on Middle East oil, and a threat
Febr uar y 2012 |


to reliable delivery will likely lead to redoubled efforts to

develop domestic resources.

The effect of the expanding crisis

The impact of closing the Strait of Hormuz would not
be confined to the Persian Gulf. Simon Henderson, an
expert on Middle East policies at the Washington Institute, believes any type of military involvement in the Persian Gulf will endanger US energy security and raise the
price of oil. The fact is that 20% of the worlds required
oil passes through this strait, and there is no alternative
path for transporting oil out of the region to international markets.
Even if Iran does not close the Strait of Hormuz, it can
halt its own oil exports, which would lead to a sharp rise

War and the offshore industry

With European and US forces patrolling the southern
part of the Persian Gulf, Irans Revolutionary Guard
Corps has threatened to mine the gulf and to bring its
naval power to bear if the country is threatened further.
Iran has bolstered its defenses of the Strait Hormuz, creating new defensive lines in the eastern part of the strait.
Iran is the only country in the region with submarines
and the wherewithal to use them to demolish oil platforms in the Persian Gulf by means of its long-range torpedoes. Iran also will target oil and gas installations from
its underground missile bases. In case of military action,
offshore platforms and facilities certainly will be damaged. The result has the potential to be catastrophic
from an environmental standpoint.
There will be no guarantee of production in the case of
an attack, and no E&D work will take place as long as the
conflict continues. Construction in the worlds shipyards
will be impacted, and the price of oil will spike dramatically. The human resources issue with which the industry
has been contending for decades will become even more
of a concern. And the future of the global offshore industry will suffer greatly.
Before this situation becomes extreme, it would be wise
for both sides to consider one simple truth either the

Despite the embargo, Iran continues to develop

the giant South Pars field. (Photos courtesy of
Mohammad Sadegh Amini)

in oil prices. While there has

been speculation in the past that
Saudi Arabia could make up for
the loss of Iranian oil through
increased production,
it is unlikely that the country will
be able to close the gap between
global supply and demand.
Today, the Persian Gulf supplies
35% of US oil imports, 56% of the
European Unions, and 80% of
Japans. This is an important issue
because forecasters agree that
within a few decades, the world will
be even more dependent on Middle East oil than it is
today. The International Energy Agency forecasts 30.5%
of the oil necessary for the world will pass through the
Strait of Hormuz until 2030. | Febr uar y 2012

Persian Gulf is safe for everyone, or it is safe for no one.

There is unlikely to be an unqualified winner in a war
between the West and Iran, but there undoubtedly will be
many losers.


For additional
information on
these projects
and other global


Iran to rack up US $15 billion in oil deals

Iranian Offshore Oil Company (IOOC) Managing
Director Mahmoud Zirakchainzadeh has announced US
$15 billion in oil deals will be signed by domestic and
foreign companies by March 2013. A contract worth
$1.1 billion has recently been signed for developing the
Lavan gas field, Zirakchainzadeh said, adding that
another deal, valued at $3 billion, also will be signed for
developing the Forouz B gas field by year-end 2012.
Negotiations are under way to conclude separate contracts for developing the Farzad A, Forouzan, Soroush,
and Esfandyar fields.
Oman Block 15 test resumes
Testing operations on Block 15 onshore Oman have
resumed, according to Swedish explorer Tethys Oil.
A jet pump has been installed in the JAS-2 well in an
attempt to clear the well from water and enable it to
flow hydrocarbons. The Block 15 license also has been
extended for three years until October 2014. The JAS -2
well, drilled in 2008, showed the same log response
while drilling as the JAS-1 drilled in 2007. While the
JAS-1 well flowed reasonable quantities of gas and
condensate, the JAS -2 well tested only water. Subsequent analysis of JAS -2, including a comprehensive
logging program in 2010, suggests that the water
comes from a system of fractures at the far end of the
horizontal section.

are approximately 17 MMboe (83% oil). The Pompano

platform is a production hub with seven producing
leases that average 3,300 boe/d (net). The hub has a
production capacity of 60,000 b/d of oil and 135
MMcf/d of gas.
Cobalt kicks
off Ligurian
Cobalt International Energy Inc.
reported that the
Ensco 8503 semisubmersible rig
has returned to
the GoM following a sublet to
drill a well in
French Guiana.
Cobalt received
the required
US Coast Guard
The ENSCO 8503 semisubmersible rig is
Certificate of
drilling two wildcat wells for Cobalt in
the deepwater GoM after drilling a sucand subsequent
Approval To Drill cessful discovery well offshore French
Guiana for Tullow Oil. (Photo courtesy
(APD) from the
of Keppel Corp.)
Bureau of Safety
and Environmental Enforcement (BSEE) for the Ligurian-2 deepwater
exploration well. Ligurian is in the Southern Green
Canyon area, in Block 814, immediately adjacent to the
2009 Heidelberg discovery in which Cobalt is part
owner. After drilling Ligurian-2, the company plans to
move the rig to the North Platte-1 well location in the
Garden Banks area.

Stone lands BPs Pompano
Stone Energy Corp. has closed the acquisition of deepwater assets from BP Exploration & Production in the
US Gulf of Mexico (GoM) for US $167.6 million. The
assets include interests in 23 exploration leases near the
Pompano field. The acquisition also includes BPs 75%
operated working interest (WI) in the five-block Pompano field in Mississippi Canyon; a 51% operated WI
in the adjacent Mississippi Canyon Block 29; and a
50% nonoperated WI in the Mica field, which ties back
to the Pompano platform. Estimated proved reserves

Tambuat adds to Golfinho reserves

Petrobras has discovered a new light oil and natural gas
accumulation in the Golfinho Concession (4-BRSA1001-ESS). The discovery well, 4-GLF-31-ESS, known as
Tambuat, is 74 km (45 miles) off the coast of Esprito
Santo state and 7 km (4 miles) from the Cidade de Vitria
FPSO on the eastern side of the Golfinho field in 1,520
m (4,987 ft) water depth. Drilling will continue to a
depth of 6,100 m (20,014 ft) to test deeper formations.
This activity is part of the Varredura Project, a program
designed to boost the production of hydrocarbons from
new discoveries close to existing production systems.
Febr uar y 2012 |

3rd Annual Developing

Unconventional Oil (DUO)
Conference & Exhibition


May 14 - 16 , 2 0 1 2
Colorado Convention Center


Denver, Colorado


Register online:

North America 's Bountiful Resource

he 2012 DUO'
" Reservoirs Conference & Exhibition focuses on the geology, technology and
economics of unconventional oil resources. Plays like the Bakken and Niobrara are driving remarkable

growth in production and reserves. Leading operators, geoscientists and energy economists will deliver their
insi g hts on this rap idl y chang ing sector. Find out where the action is now and what new plays will be emerging.
With more than 3 ,500 attendees in just two years , this conference provides one of the industry's premier
networking events.







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Guar declared commercial

Petrobras has submitted a Declaration of Commerciality a
year earlier than originally anticipated on behalf of Block
BM-S-9 consortium partners BG Group and Repsol
Sinopec Brasil for the Guar area to the ANP (National
Agency for Petroleum, Natural Gas and Biofuels). The

Sapinho field in the Santos basin has an estimated total

recoverable volume of 2.1 Bboe. The presalt field has
good quality oil of approximately 30API. The consortium also submitted the final Evaluation Plan for Guar
and will submit the Development Plan by February 2012.

Lukoil outlines Africa spend plans
Lukoil plans to spend US $500 million
to $600 million drilling at least three
wells offshore West Africa in 2012,
according to Vice President Leonid
Fedun. In December 2011, Lukoils
Independence-1X deepwater exploration well in Block CI-401 offshore
Cote dIvoire discovered light oil and
gas condensate. The company has
scheduled an appraisal well to be
drilled in 1H 2012. The privately
owned oil company has drilled five
wells in West Africa, four of which
have confirmed the presence of hydrocarbons. Lukoil has three blocks offshore Cote dIvoire. It also holds a
stake in the Cape Three Points deepwater block offshore Ghana.

. can we work

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Ophir kicks off Tanzania program

Ophir Energy has initiated its 2012
drilling program offshore Tanzania
using the Odfjell drillship Deepsea
Metro-1. The first three wells will be
Jodari-1, Mzia-1 and Papa-1. The
Metro-1 is capable of drilling 3,000 m
(10,000 ft) water depth.
The Jodari-1 and Mzia-1 wells are situated in Block 1. For efficiency reasons the Mzia-1 tophole section will be
drilled first as part of a batch drilling
program, then the rig will drill Jodari1 before returning to Mzia-1 to complete the bottom portion. The Mzia-1
well was spudded in 1,500 m (4,921 ft)
water depth in January 2012. The
Jodari-1 well, modeled by Ophir to
contain mean resources of 2.2 Tcf, is
expected to spud in 1,155 m (3,790 ft)
water depth and will be drilled to a
total depth of 4,600 m (15,093 ft).
Febr uar y 2012 |

The New Standard




Fort Worth Convention Center I Fort Worth, Texas

DUG T M has become THE conference where industry leaders

network and discuss unconventional resource opportunities. As industry moved
beyond the Barnett shale into a truly global prospecting phase,so has the DUG agenda! Join more
than 2,400 professionals representing 800+ companies as they share drilling plans and review how
unconventional plays are dramatically changing global energy markets.
The DUG conference allows companies to highlight their success stories and identify future trends.
It is the perfect place for executives and managers to keep abreast of rapid market changes.



Peter Robertson
Senior Advisor
Deloitte LLP

Former Vice Chairman

Chet ron Corp




Scott Sheffield

David Hill


Steve Antry

V R N a t u r a l Gas
Economy Operations


Natural Resources

F(N le Energy Co.


Oklahoma LLC


Dr. Condoleezza Rice


Former US Secretary

to attend DUG 2012.












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Mark your calendars and plan



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President and CEO

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Presalt find in Kwanza basin

Denmarks Maersk Oil has encountered oil at its deepwater presalt exploration well in the Kwanza basin offshore
Angola. A preliminary interpretation of data from the
Azul-1 well in Block 23 indicates a potential flow capacity
of more than 3,000 b/d of oil. Maersk expects to drill
three exploration wells through 2013 in Blocks 8 and 23.

Statoil finds twin for Skrugard discovery
Statoil and partners Eni Norge AS and Petoro AS have
made a substantial oil discovery on the Havis prospect in
the same license as its Skrugard find in Production
License 532 in the Barents Sea. This is the second highimpact discovery in the countrys northern seas in nine
months. Estimated recoverable volumes are 400 MMboe
to 600 MMboe.
Well 7220/7-1, drilled by the Aker Barents semisubmersible rig to a vertical depth of 2,200 m (7,218 ft) in
365 m (1,198 ft) water depth, proved a 48-m (157-ft) gas
column and a 128-m (420-ft) oil column. The partnership will drill an appraisal well on Skrugard to assess further upside potential in the licenses.

Republic of Cyprus. Having already had significant success offshore Israel, the US independent has drilled a
successful well on the Cyprus Block 12 prospect in the
Greater Levant basin. The Cyprus A-1 well encountered
approximately 94 m (310 ft) of net gas pay in multiple
high-quality Miocene sand intervals.
The discovery well was drilled to a depth of 5,860 m
(19,225 ft) in 1,689 m (5,540 ft) water depth. The estimated gross resource range is 5-8 Tcf, with a gross mean
of 7 Tcf. Total gross mean resources for the companys
five discoveries in the basin so far are estimated to be
more than 33 Tcf.
Shtokman partners delay final investment decision
Shtokman Development AG has delayed a final investment decision (FID) for the Shtokman gas megaproject
through March 2012. Project shareholders OAO
Gazprom, Total SA, and Statoil ASA had previously
targeted an FID by year-end 2011, but discussions were
stalled after Total and Statoil pressed for tax breaks
from the Russian authorities. The Shtokman gas field
in the Barents Sea holds 3.9 Tcm of gas reserves. Development has been delayed several times because of the
fields technical complexity and economic scale. Phase 1
production was initially set for 2016.

OGDCL hits hydrocarbons in Pakistan
The operator of the Zin exploration license in the
Pakistan province of Balochistan, Oil & Gas Development Co. Ltd. (OGDCL), has confirmed a hydrocarbonbearing horizon in exploratory well Zin X-1 in the Dera
Bugti district. The company, which operates the license
with a 95% working interest, drilled the well to a depth
of 2,300 m (7,546 ft) targeting the hydrocarbon potential of the Pab sandstone and Sui main limestone formations. The first targeted zone tested 5.48 MMcf/d of gas
through a 32/64-in. choke at a wellhead flowing pressure of 1,050 psi.

The Havis discovery in the Barents Sea is Statoils second highimpact find in Norways northern seas in the last nine months.
(Map courtesy of Statoil ASA)

Noble boosts Mediterranean reserves

Noble Energy has confirmed another major gas discovery in the Mediterranean Sea, this time offshore the

Spectrum sets sights on Sumba Straits

Spectrum, in partnership with CGGVeritas and GeoData
Ventures, has begun a 2-D multiclient seismic survey covering several open acreage blocks in the Sumba Straits,
Indonesia, an area that has attracted significant industry
interest. The prefunded program is planned over 1,325
km (823 miles), with CGGVeritas providing acquisition
and processing services. Final deliverables are expected
to be available in March this year.
Febr uar y 2012 |


27-29 March 2012


SPE Intelligent Energy

International 1


27-29 March

Jaarbeurs,Utrecht,The Netherlands


SPE Intelligent Energy International

27-29 March 2012, is the world's

leading event examining and advancing

s in which upstream oil & gas
companies can maximise efficiency
and optimise production through
streamlined processes, innovative

technologies and integrated operations.

A focused , high-calibre international event

Attracts a select group of the best minds and leaders in

the industry
An exclusive platform to discuss digitally enabled and
associated technology as well as the opport unity to debate

the issues of people,process and change management

Gain in-depth evaluations and first-hand ex perience
of all the latest international technologies, solutions
and processes required to unlock the considerabl
potential of fully integrated operations

on the

Martin Craighead has succeeded Chad Deaton as
Baker Hughes president
and CEO. Deaton will
remain board chairman.
John Bodin has been named director,
Global Business Development, for
Delmar Systems Inc.
Summit Energy Services has promoted
Will Reedy to COO.
Emerson Process Management has appointed Frode
Sedberg regional manager
based in Brazil, within its
Roxar Software Solutions division.

work with key multinational and stateowned oil and gas companies throughout the Middle East.

Focus Exploration has appointed

Marc H. Helsinger executive vice
president, Exploration and Business

Senergy has elected Vivien

Broughton vice president
of resources to develop the
companys global talent pool.

DOYLES has hired Eric

Myers as its new director,

Nancy E. Bowers has joined

Fugro Gravity & Magnetic
Services in Houston as senior geophysicist, responsible
Nicolas Phillips is now head of the Mar- for gravity and magnetic data sales.
keting, Technology, and Key Accounts
division at Clariant Oil Services.
John Wishart has taken charge of
Lloyds Registers Global Energy Team,
based in London.

Atlas has named Natavan Askerova

account director. Based in Abu Dhabi,
Askerova will oversee the companys

TAM International has opened a new

office in Shenzhen, China, to support
regional demand for the companys

f/1Ts -1T

a?c , .


w.'.nellr y?

?r.?F?RJro ..







Febr uar y 2012 |


on the


Group Publisher
Tel: 713-260-6447

Associate Publisher
Tel: 713-260-6449

United States
Canada / Latin America
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Houston, Texas 77057 USA
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212.655.5130 phone
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deep well cement integrity and shale

fracing services.
Aker Solutions has announced plans to
open an advanced drilling equipment
simulator in Houston in early 2012. Doubling the capacity of the companys current 911-sq-m
(9,800-sq-ft) training
center in Katy, Texas,
the 240-degree domed
simulator will create a
real-time visualization
of drilling operations.
Fiberspar has
expanded its LinePipe
flowline technology
used for production
gathering and injection
applications into Australia via its newly created Fiberspar Australia
Pty. Ltd. subsidiary,
based in Brisbane.
Fiberspar deployment

centers also are planned in Adelaide to

provide product and installation support
for projects in the Cooper basin.
The Petroleum Extension Service
(PETEX), a component of the Division
of Continuing and Innovative Education
at the University of
Texas at Austin, has
extended its Professional Land Management Certificate
Program to Oklahoma City, Okla.
The program was
launched in Fall
2011 in Austin,
Houston, and San
Antonio, Texas.

A 3sun Group employee carries

out inspection work at the
companys new UK facility.
(Image courtesy of 3sun Group)

3sun Group has

established a base in
Westhill, UK, near
Aberdeen, following a
number of contract
wins in the North Sea.


Ariel Corporation . . . . . . . . . . . . . . . . . . . . . 21
Baker Hughes Incorporated . . . . . . . . . . . . . 41
Boot & Coots, A Halliburton Service . . . .34-37
Cameron . . . . . . . . . . . . . . . . . . . . . . . 87, 89, 91
CDI Seals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
CGGVeritas . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Checkers Industrial Safety Products . . . . . . . 64
CNPC Greatwall Drilling Co. . . . . . . . . . . . . 30
CTAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Cudd Energy Services . . . . . . . . . . . . . . . . . 73
Delmar Systems, Inc. . . . . . . . . . . . . . . . . . . . 95
Diamondback Industries . . . . . . . . . . . . . . . . 75
Dragon Products, Ltd. . . . . . . . . . . . . . 17, 67, 85
E&P . . . . . . . . . . . . . . . . . . . . 101, 103, 109, 111
Fairfield Nodal . . . . . . . . . . . . . . . . . . . . . . . . 63
FMC Technologies . . . . . . . . . . . . . . . . . . . . . 93
Forum Energy Technologies . . . . . . . . . . . . . 47
Frontier Wellhead . . . . . . . . . . . . . . . . . . . . . 19
Fugro Jason . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
GasFrac Energy Services, Inc. . . . . . . . . . . . 68
Gas Gun, The . . . . . . . . . . . . . . . . . . . . . . . . . 90
Greenes Energy Group . . . . . . . . . . . . . . . . 49
Halliburton . . . . . . . . . . . . . . . . . . . . . . . . . 9, 51
Halliburton Landmark Software & Services . . 4
IPAA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
i-TEC Well Solutions . . . . . . . . . . . . . . . . . . . 77
J&J Truck Bodies & Trailers . . . . . . . . . . . . . . 71

KBR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
McJunkin Red Man Corporation . . . . . . . . . IFC
McPhar International . . . . . . . . . . . . . . . . . . . 58
Mewbourne College of Earth & Energy . . . . 15
M-I Swaco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Moduspec . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Momentive . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
National Oilwell Varco . . . . . . . . . . . . . . . . . . 69
Newpark Drilling Fluids . . . . . . . . . . . . . . . . . 28
Optimization Petroleum Technologies . . . . . 57
P2 Energy Solutions . . . . . . . . . . . . . . . . . . . 110
PGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Production Technology & Services . . . . . . . . 97
Reed Exhibitions/SPE Intelligent Energy . . 113
Rockpile Energy Services . . . . . . . . . . . . . . . 82
Rockwater Energy Solutions . . . . . . . . . . . . . 81
Roxar Software Solutions . . . . . . . . . . . . . . . . 55
Schlumberger . . . . . . . . . . . . . . . . . . . . . . 3, BC
Society of Petroleum Engineers . . . 59, 98, 114
TBC-Brinadd . . . . . . . . . . . . . . . . . . . . . . . . . 65
Tenaris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Tetra Technologies . . . . . . . . . . . . . . . . . . . IBC
Tex-Az Field Services, Inc. . . . . . . . . . . . . . . 82
United Electric Controls . . . . . . . . . . . . . . . . 64
V&M . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Weatherford International, Ltd. . . . . . . . . 24, 25
Zeeco, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50




Attention to increased risk

is critical for safe decommissioning
With growing emphasis on increasing oil recovery, it is easy to lose sight of
the big business of decommissioning.
John Kelly, Stork Technical Services

nalysts have predicted that North Sea decommissioning costs over the next 40 years could exceed 47.5
billion (US $75.3 billion), and it is estimated that around
150 assets will be decommissioned in the Gulf of Mexico
in the next five years.
Decommissioning is one of the most complex phases in
the asset lifecycle, and managing the safety of employees
and operational risk poses a number of major issues for
operators and project support partners.
In some cases, installations that have been producing
for 30 years have had the same core workforce on it since
hookup and commissioning. It is important to realize that
for these individuals in particular, decommissioning is not
business as usual.

Changing risks
A platforms risk profile changes when production has
ceased and the installation moves into the engineering
down and cleaning and module process and utility separation phases. The move from production to active reduction in the hydrocarbon inventory changes the working
practices, and other specialist service providers such as
waste handling specialists and heavy lift contractors
become involved in the project.
An important difference from steady state producing
operations to the decommissioning process is that the
physical operating environment is constantly changing,

which introduces the opportunity for injury. For example,

eye injuries from debris and dust can increase as people
access areas that have not been entered for a number of
years. Dropped objects like detached cable trays also pose
a serious risk because corrosion can increase as the heat
supply drops with cessation of production.
With separation, lifting, and removal taking place in
various areas across the installation, safety escape routes
might not be as available as they were during the operational phase. In fact, it is not uncommon for them to
change on a daily basis. Work also will be carried out in
modules that have been partly decommissioned, and
efforts could be required to ensure safe operations.
Introducing new people, processes, equipment, and
changes to the installations operating philosophy means
everyone has an even greater role in ensuring that safety
remains the primary focus and the highest HSEQ standards are maintained during decommissioning.
The introduction of many new personnel who are unfamiliar with the installation often can be perceived as a
potential risk by the existing platform team. But personnel
new to the installation can offer a different perspective
and see potential hazards that were not immediately obvious to the incumbent platform team. Feedback from new
personnel should be actively encouraged.
Given that decommissioning involves a wide range of
complex and potentially hazardous work scopes, it is crucial for both contractors and operators to recognize the
level of upfront inspection, engineering, and planning
required before work takes place on site. For example, indepth site surveys of cold cutting options, access methods,
waste removal, and asbestos, as well as extensive nondestructive testing, are often carried out to give a clear picture of what activity the project could entail.
Clarifying work scopes, developing methodology and
work practices, and quantifying the resources required will
help ensure decommissioning is delivered in the safest,
most efficient, and most cost-effective manner.
A multidisciplined Stork Technical Services employee uses rope
access to carry out air gouging on a leg of the NW Hutton platform during a North Sea decommissioning project. (Image courtesy of Stork Technical Services)


Febr uar y 2012 |





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