IPTC-19506-MS

Total Well Management : Maximising Well Lifecycle Value – A Regulator

Perspective

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Ryan Guillory, Wan A. Aziz Wan Razali, Rahim Masoudi, Ratan Singh, and Nur Asyikin Ahmad, PETRONAS

Copyright 2019, International Petroleum Technology Conference

This paper was prepared for presentation at the International Petroleum Technology Conference held in Beijing, China, 26 – 28 March 2019.

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Abstract
The 2015 oil price downturn and future uncertainty in the industry have resulted in Malaysia Oil and Gas
Regulator PETRONAS (MPM) taking a more proactive role in driving Malaysian Petroleum Arrangement
Contractors (PACs) to maximize lifecycle value from their well stock. Key focus areas include streamlining
review processes, reducing well cost, maximizing production from active wells and reactivating idle
wells, reducing failures from well activities, driving value driven surveillance and promoting low cost
well abandonment. This paper will focus on how the objective & value driven approach by PETRONAS
MPM have resulted in business performance improvements at the national level through proactive and
effective well value maximization throughout field/well lifecycle, from exploration stage down to the
decommissioning and abandonment stage.

Introduction
As regulator and host authority for all hydrocarbon resources in Malaysia, PETRONAS Malaysia Petroleum
Management (MPM) has oversight of all strings and wells in existing Malaysian fields. In response to the
2015 oil price downturn and based on a review of historical well management performance, PETRONAS
MPM has taken a more proactive role in driving Malaysian Petroleum Arrangement Contractors (PACs)
to maximize lifecycle value from their well stock. Under the Total Well Management (TWM) initiative,
PETRONAS MPM has issued numerous guidelines and set TWM Key Performance Indicators (KPIs) to
drive improvements in maximizing technical potential & production delivery from existing wells, ensuring
idle wells with potential are reactivated, reducing failures from well intervention activities, driving value
driven surveillance, and promoting innovative solutions in abandonment execution at a lower cost on wells
with no remaining economic potential. In line with the vision to be the distinctive resource owner and
manager to maximize long term value from oil and gas for PETRONAS and Malaysia, several streamlined
processes were introduced to drive monetization of resources to maximize value and to drive efficient asset
management and in which Total Well Management plays a critical role. This value driven approach has
resulted in business performance improvements at the national level through proactive and effective well
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value maximization throughout field/well lifecycle from exploration stage down to the decommissioning
and abandonment stage.

Total Well Management Guidelines and Initiatives

PETRONAS MPM has issued several guidelines and initiatives to shape and steer Total Well Management
efforts in order to drive PACs to align with Total Well Management KPIs and to achieve the Total Well
Management aspirations for Malaysia.

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Well Reclassification Guidelines
Well Reclassification guidelines were issued to fill in the missing gaps left by the previous guidelines with
a focus on promoting proactive well abandonment plan and execution for depleted wellbores, triggering of
pre-emptive and timely action from the responsible parties for each of the string categories, enforcement
of time-bound idle well limits, and improving active string percentage with an oriented focus on well
management. PACs are required to submit status of each string monthly and categorize based on the
reclassification guidelines. These updated well classifications form the backbone of Total Well Management
efforts1.

Candidate Selection Guidelines for Production Enhancement & Idle Well Reactivation Proposals
The candidate selection guidelines are aimed at enhancing the success rate of production enhancement and
idle well reactivation activities and also standardize the process for candidate well and activity selection,
and describe what cost level or job type requires PETRONAS MPM approval. The guidelines lay out a
systematic process to ensure that each PAC performs proper candidate screening and holistic candidate
selection and proper risk assessment to ensure mitigations are in place to minimize both operational and
reservoir related job risk. Due to the consistent economic approach used, the PAC and PETRONAS MPM
can use the risked economic results to assist in prioritizing of activities.

Post Job Analysis and Lessons Learned Database

To evaluate the success of production enhancement and idle well reactivation jobs and to gather lessons
learned, post job analysis must be carried out for all jobs which need PETRONAS MPM approval and for
any job considered unsuccessful based on criteria described in the Candidate Selection Guidelines. The Post
Job Analysis and Lessons Learned Report is a brief report outlining the positive as well as the negative take-
aways from the job and lessons which could be learned from the job. Each report goes into a web based
database which all Malaysian PACs have access to so that repeat failures for common job activities can be
prevented or so that successful actions can be replicated.

Subsurface Well Abandonment Plan Guideline

As described in previous paper on Well Reclassification Guidelines1, the Subsurface Well Abandonment
Plan guideline describes the process required by PACs to go through prior to obtaining approval for
well P&A, where the PAC must demonstrate and PETRONAS MPM must agree that there are no
remaining economic reserves left in the existing wellbore. Additionally, with the recent updates to plug
and abandonment regulations in Malaysia allowing for permanent barrier isolation at the caprock level, a
subsurface review of the abandonment concept is also required during this process. Wells with approved
Subsurface Well Abandonment Plan certificate are moved into the P&A planning funnel with the intent to
optimize P&A activities at a national level.

Risked Transfer Incentive Contract

Due to the substantial number of idle wells with limited remaining reserves and high execution risk
combined with low success rate in the past, PETRONAS MPM initiated a Risk Transfer Incentive Contract
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(RTIC) to promote active participation from Service Contractors to revive these stranded wells. The RTIC
is based on risk sharing where the service provider absorbs portion of the cost if pre-job expectations are
not met. Due to the cost sharing concept it is targeted that Service Contractors will be more involved in
the job planning to ensure job success resulting in more of the stranded wells revived hence reducing the
number idle wells stock. Wells which failed under RTIC will move to the abandonment category.

Well Integrity Guideline

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The Well Integrity Guidelines were issued to drive proactiveness in managing well integrity issues, minimize
value leakage due to deferred production caused by idle wells with integrity issues, ensure consistency
amongst PACs when evaluating well integrity, and ensure PAC well integrity activities are in accordance
to Work Program and Budget (WPB) commitments and PETRONAS strategic planning. The Well Integrity
Guideline emphasizes PETRONAS MPM commitment to well integrity and support for proactive mitigation
of any HSE issues associated with well integrity.

Monitoring & Tracking Tools

In support to overall Digital vision in PETRONAS to be the data-driven organization and to achieve
Operational Excellence in delivering new value to the organization, PETRONAS MPM has designed a
holistic approach in managing, monitoring, and tracking of Total Well Management key focus areas. The
current database and reporting mechanism from all operators in Malaysia has been further strengthened
and optimized for further standardization and transparency when it comes to data capture. This effort
includes migration of database from a custom-made tool to a stable and industrially recognized platform,
improvement of current reporting requirements related to wells allocated and test production data,
introduction of standard reporting template for well inventory status, well intervention activities plan
vs actual, and well integrity reports, as well as close communication and strong support group from
PETRONAS with the PACs. The strategy to improve at the foundation level has helped to reduce redundancy
of multiple reporting requirement from various parties as well as enabling PETRONAS and PACs to refer
to single source of truth.
In parallel, PETRONAS MPM has also initiated the development of PETRONAS Asset Performance
Centre (PACE). Main objectives of this applications are focusing on development of essential tools to
automate analysis for PETRONAS to act on decision making, to leverage on existing data-driven technology
to enhance the TWM strategies and solutions, to minimize human intervention on monitoring and tracking
of major TWM KPIs, as well as to improvise ways of working in evaluation asset performance and potential
improvement through ‘360’ view. First phase of PACE is focusing on ‘Back to Basic’ concept where data
were transformed into a statistical and descriptive tool. The next stage of development will be further
embarked into looking at diagnostic and eventually predictive tool.
Realizing that success rate of production enhancement and idle well reactivation is disturbingly low,
PETRONAS MPM has also set up a lesson learn web portal to capture all the success and failure stories
across all PACs with regards to Well Intervention activities, covering from candidate selection up to post
job analysis. This tool has helped to capture and share best practices and lesson learn among Operators,
streamline success evaluation on a standardized and uniform criterion, and serve as good reference tool on
estimation of Possibility of Success for future jobs, based on historical records and benchmarking that has
been captures.

Asset Lifecycle Review Process

In line with the vision to be a distinctive resource owner and manager to maximize the long term value
from oil & gas for PETRONAS and the nation, several asset review processes were streamlined to drive
monetization of resources to maximize value as well as efficient asset management. These processes and
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reviews touch on the entire asset lifecycle. The Total Well Management philosophy of maximizing well
lifecycle value is an integral part of these processes (Figure 1).

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Figure 1—PETRONAS MPM Lifecycle Technical Review Committee Processes and Total Well Management Fit

Asset Management Integrated Review

PETRONAS MPM requires all assets to go through an Asset Management Integrated Review (AMiR)
sitting in which 8 key pillars of asset performance and plans are discussed for endorsement (Fig 2). Total
Well Management is one of the main pillars reviewed to ensure PAC plans and performance are aligned
with PETRONAS MPM expectations. The field performance with regards to Total Well Management KPIs,
previous Production Enhancement & Idle Well Reactivation performance, plans, and budget, as well as
well integrity status and plans are reviewed in detail during the sitting. Additionally, other factors which
may impact Total Well Management performance including a review of reservoir performance, surface
facilities performance including any facility capacity constraints, and well and reservoir surveillance plans
are reviewed. By looking at each field using this holistic approach, the PAC and PETRONAS MPM are
able to understand other factors impacting Total Well Management Performance so that the issues can be
addressed and mitigated and lifecycle value of each well can be optimized.

Figure 2—8 Pillars of Asset Management Integrated Review (AMiR)

IPTC-19506-MS 5

Asset Development Integrated Review

All resource development projects must go through Asset Development Integrated Review (ADiR) process,
where PETRONAS MPM Technical Review Committee (TRC) provides techno-commercial endorsement
of the proposed development and reserves improvement project. Up to five TRC assurance stages
are required prior to Field Development Plan (FDP) submittal and post-FDP project implementation,
consisting of planning and expectation setting, reservoir characterization and volumetric assessment,
dynamic performance and prediction, concept select and development, and front end engineering and design

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(if required). In line with Total Well Management philosophy, the TRC committee will ensure that the well
design proposals are fit for purpose and will give maximum economic value during the field life. This
includes ensuring that primary reservoir targets have optimal sand face completion and artificial lift design,
that behind casing opportunities of secondary targets can be monetized economically, and that the well
design caters for future well abandonment.

Asset Value Framing

Post 2016 organizational transformation, PETRONAS MPM introduced Asset Value Framing (AVF)
exercise to provide an avenue to identify and frame all the potential opportunities & synergies both
within the Production Sharing Contract (PSC) boundaries and outside PSC boundaries with the intent to
maximize asset/field life value. Opportunities associated with reservoir redevelopment and optimization,
improved and secondary recovery, near field exploration, well management and optimization, operational
excellence and cost reduction, facilities optimization inside and across PSCs, and commercial opportunities
are identified and evaluated. The end product of the AVF is a road map with a list of value generating projects
and a timeline to bring those projects forward so that the PAC and MPM are aligned on the best way forward
for the asset. Total Well Management opportunities and challenges such as production enhancement, idle
well reactivation and management, well intervention, well cost reduction, and P&A are identified, evaluated,
and later endorsed brought to fruition via the ADiR and AMiR processes.

Total Well Management Key Performance Indicators

A review of the status of Malaysian well and string inventory (active string percentage, well and string
idle time) as well as the performance of production enhancement (PE) and idle well reactivation (IWR)
activities (operational and economic success rate) showed many areas of value leakage and opportunities
for improvement. To address these identified gaps, PETRONAS MPM established Total Well Management
Key Performance Indicators (KPIs) which all Petroleum Arrangement Contractors (PACs) must follow. The
main objective of TWM KPIs is to arrest value leakages and maximize value addition from well assets in
Malaysia to enhance value to PETRONAS and its Petroleum Arrangement Contractors (PACs). The KPI
guidelines focus on six key areas:
1. Production enhancement on Active wells
2. Minimizing Idle well growth
3. Idle well reactivation (IWR)
4. Idle Well Timebound Limits and Well Abandonment
5. Production Enhancement (PE) and Idle Well Restoration (IWR) success rate
6. Well Integrity
The Total Well Management KPIs which all PACs are measured on at a field level are shown in Figure
3. The background and importance for each of the KPIs is further discussed below.
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Figure 3—Total Well Management KPI Spider Plot

Production Enhancement on Active wells

A review of Malaysia wide well intervention performance showed that many production enhancement
activities on active strings had a high success rate and delivered gains at a lower cost. A production
enhancement target is set for each Production Sharing Contract (PSC) area to drive PACs to deliver more
production from active producers and extending the life of producing strings via additional focus and
surveillance. The production enhancement target is based increasing field technical potential above the No
Further Activity technical potential rate forecast by a certain percentage.

Minimizing Idle Well Growth

Despite heavy activity focusing on idle well reactivation, historically idle well growth from active producers
had slightly exceeded the number of idle wells reactivated. Reasons for this high idle well growth include
lack of surveillance on active strings and reactive versus proactive action taken on emerging idle wells.
Maximum allowable idle well growth targets area set each year for each PSC in order to ensure more focus
on maintaining the health of active strings and keeping them active for longer.

Idle Well Reactivation

As has been described in previous paper on Well Reclassification Guidelines1, all idle strings are classified
into either effective, non-effective, or non-economic category. Effective idle strings are defined as those
which have remaining economic potential that can be reactivated in the near term. A yearly TWM KPI
was put in place to ensure enough focus and budget is put on reactivating these effective idle strings in a
timely manner.

Idle Well Timebound Limits and Well Abandonment

The existing Malaysian idle well inventory showed a high number of long idle wellbores with no defined
plan forward for either reactivation or moving toward plug and abandonment (P&A). To drive improvements
in this area, idle well time-bound guidelines were implemented to put more focus on moving wellbores with
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no remaining economic potential toward abandonment and to ensure idle wells with remaining economic
potential are reactivated in a timely manner1. These time-bound guidelines were included in the updated
PETRONAS Procedures & Guidelines for Upstream Activities (PPGUA 4.0).

Production Enhancement and Idle Well Reactivation Success Rate

A review of previous year’s production enhancement and idle well reactivation jobs showed many areas of
value leakage, either due to operational issues, or production gain sustainability because of either reservoir

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issues or improper candidate selection. Targets for success rates are set for the overall annual production
enhancement and idle well reactivation campaign, where success rate is defined as the post-job Unit
Enhancement Cost (UEC), or money spent per bbl gained, is higher than the pre-job estimate of UEC.
To assist in achieving the production enhancement and idle well reactivation success rate targets, several
guidelines and initiatives were pushed by PETRONAS MPM and rolled out to PACs.

Well Integrity
The well integrity KPIs are designed to drive prudent management of well integrity matters and to ensure
PACs fulfill well integrity Work Program and Budget (WPB) commitments, determine the effectiveness
of the PACs Well Integrity Management System, support proactiveness in arresting numbers of wells with
integrity issues, and minimizing the impact of unplanned deferment due to well integrity issues.

Conclusion
As the Regulator, whose main focus is to play facilitator and enabler role, PETRONAS MPM has adopted
a proactive stance using new approaches to deliver maximum value from its assets. Joint committees
between Operators, Cost reduction alliance with Service industry, Objective driven surveillance, Well
Management KPIs, Time-bound limits, Risk incentive contracts and streamlined review processes, as well
as Industry-wide collaboration engagements are all novel to Malaysia Oil and Gas Industry and which have
been effectively deployed by PETRONAS MPM. As a result, better and improved overall performance
of Petroleum Arrangement Contractors was achieved in Malaysia. Positive changes were observed in
overall PACs performance as a result of MPM’s pro-active lifecycle value maximization efforts. Active well
percentage increased by 5%, and success rate of Production Enhancement jobs improved by 5% as wells.
The number of Abandonment certificate issued increased by a factor of 15, and the number of wells idle >
3 years without plan for abandonment decreased by 30%.

Nomenclature
ADiR Asset Development Integrated Review
AMiR Asset Management Integrated Review
AVF Asset Value Framing
FEL Front End Loading
IWR Idle Well Reactivation
KPIs Key Performance Indicators
MPM Malaysia Petroleum Management
PACs Petroleum Arrangement Contractors
PE Production Enhancement
RTIC Risk Transfer Incentive Contract
SWAP Subsurface Well Abandonment Plan
TWM Total Well Management
WPB Work Program and Budget
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Reference
1. Guillory, Ryan; Wan Razali, Wan Aziz; Masoudi, Rahim; Ahmad, Nur Asyikin; Hamid,
Azaruddin Azral; Mahidi, Khairul Azmi; Well Reclassification Guidelines: The Backbone to
Optimised Well management at Country Level in Malaysia, paper SPE-193940-MS (2018).

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