SPE-193940-MS

Well Reclassification Guidelines: The Backbone for Optimised Well

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Management at Country Level in Malaysia

Ryan Guillory, Wan Abdul Aziz Wan Razali, Rahim Masoudi, Nur Asyikin Ahmad, and Azaruddin Azral Hamid,
PETRONAS

Copyright 2018, Society of Petroleum Engineers

This paper was prepared for presentation at the SPE Symposium: Decommissioning and Abandonment held in Kuala Lumpur, Malaysia, 3 - 4 December 2018.

This paper was selected for presentation by an SPE program committee following review of information contained in an abstract submitted by the author(s). Contents
of the paper have not been reviewed by the Society of Petroleum Engineers and are subject to correction by the author(s). The material does not necessarily reflect
any position of the Society of Petroleum Engineers, its officers, or members. Electronic reproduction, distribution, or storage of any part of this paper without the written
consent of the Society of Petroleum Engineers is prohibited. Permission to reproduce in print is restricted to an abstract of not more than 300 words; illustrations may
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Abstract
As host authority for all hydrocarbon resources in Malaysia, post 2016 transformation, the Malaysian Oil
and Gas Regulator (PETRONAS MPM) put in place enhanced guidelines for classifying wells to steer
Petroleum Arrangement Contractors (PAC's) to align with PETRONAS MPM Total Well Management Key
Performance Indicators (KPI's) and aspirations. The well classification guidelines are key inputs to facilitate
improvement by PAC's in enhancement of flowing strings and management of idle wells. Additionally, well
classification was used in conjunction with new idle well time-bound guidelines to drive abandonment on
idle wells with no remaining economic potential. Subsequent to roll-out of PETRONAS MPM enhanced
guidelines for classifying wells and the added focus on well management, positive changes were observed
in active string percentage (52% to 57%) and idle well management (~5% improvement in effective idle
well restoration). The number of abandonment certificates increased from 20 wells to nearly 300 wells since
the issuance of the new guidelines, and these wells are being planned for future abandonment with cost-
effective and optimized scheduling at a national level.

Introduction
As host authority for all hydrocarbon resources in Malaysia, PETRONAS MPM has oversight of
approximately 4300 strings and 3000 wellbores and has proactively issued Well Classification guidelines
to facilitate and enable Petroleum Arrangement Contractors (PAC's) to maximize value from existing well
inventory via the setting of Total Well Management Key Performance Indicators (KPI) and expectation
targets. PETRONAS MPM Total Well Management KPI's targets are set for each field on expected
production enhancement gains and maximum allowable idle growth from active strings, the number of
expected effective idle strings restored per year, and compliance to idle well time-bound limits. The Well
classification guidelines form the backbone of Malaysian Total Well Management aspirations and enable and
assist PAC's in prioritization of well activities, optimization of budget and cost, safeguarding well integrity
risk on long idle wells, and to initiate planning for well abandonment on idle wells with no remaining
potential.
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PAC's in Malaysia have been required to classify each string in their respective assets into active, effective
idle, non-effective idle, or depleted idle. Post 2016 organizational transformation, it was observed that
there was significant room for improvement in the initial well classification guideline to avoid ineffective
and misleading reporting of well status, locked-in potential, technical potential, deferment, and availability
which impacts production enhancement and idle well reactivation efforts by PAC's. The initial classification
guidelines also led to significant number of idle and depleted wells that did not have any clear forward plan.
The updated well classification guidelines from PETRONAS MPM were issued to fill the missing gaps

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left in the previous guidelines and aimed to:
1. Promote proactive well abandonment plan and execution for depleted wells with no remaining
potential.
2. Trigger pre-emptive and timely action from the responsible parties for each of the string categories.
3. Enforce time-bound wellbore limits to not let wells remain idle for more than 3 years.
4. Improve active string percentage with oriented focus on overall well management.
PAC's are required to submit status for each string on a monthly basis. Well Management KPI's are
reviewed annually for each field with PAC's during the Asset Management Integrated Review (AMiR)
sitting with PETRONAS MPM. Current performance as well as future Well Management outlook are
discussed to ensure plans and budget are in place to meet PETRONAS Total Well Management aspirations.

Well Classification Guidelines

The initial well classification broke down string status into two categories, namely active and idle. The idle
category was further broken down to effective, non-effective, and depleted (Figure 1).

Figure 1—Initial Well Classification Guidelines

A review of the initial well classification guidelines was carried out in order to improve PAC's overall
well management aspects which would translate into better business performance and value to PAC's and
PETRONAS. The additional revisions can be summarized as follows:
1. Introduction of subcategories under Active category
2. Further streamlining of subcategories under effective idle
3. Removal of "Depleted" category and introduction of the new "Non-Economic" category
SPE-193940-MS 3

4. Introduction of "Abandonment" category to cater to wellbores with abandonment and future wellbore
utilization requirements.
The revised well classification guidelines are shown in Figure 2. Additional details on each category and
sub-category are described in the sections below.

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Figure 2—Revised Well Reclassification Guidelines

Active Category
The active string category was further broken down into flowing and intermittent strings. Intermittent strings
are defined as strings that are flowing/injecting less than 10 days in a calendar month. The intermittent
subcategory applies to all strings that are emerging idle, under intermittent flow due to string unable to
sustain flow for extended time period, or swing wells that are opened occasionally upon operational or
commercial requirements. The new intermittent sub-category puts additional focus on active strings with
issues and assists to initiates actions required to mitigate idle growth. The active category is utilized to set
KPI's for each PAC around expected yearly Production Enhancement target for active strings, as well as
maximum allowable idle well growth.

Idle Category
The idle category is defined as a string that is closed in for 90 consecutive days or more. The Idle category
is broken down into three sub-categories, namely effective, non-effective, and non-economic idle.
Effective idle is defined as a shut-in string with an economically viable opportunity within designed
capacity of production/injection facilities and definitive short term action plan to reactivate. The Non-
Effective Idle category is for strings which have capacity shut-in with medium to long term action plans
which are economically viable to realize but are currently closed in due to Reservoir Management Plan
or are beyond the design capacity of the production or injection handling facility. The Non-Economic Idle
category is for strings which have capacity and non-capacity shut-in where wellbore reserves or the overall
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production of a platform (or field) is not economically viable to reactivate. Each idle category has sub-
categories which are described in Table 1.

Table 1—Idle Sub Category Descriptions

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Under the PETRONAS MPM Total Well Management Guidelines, idle well KPI's for each Producing
Field are set which includes targets for reactivation of Effective idle strings and reactivation of idle wellbores
within time-bound guidelines. Accurate classifications of idle string status and locked-in potential is critical
for understanding the total potential and required budget to realize potential gains from idle well reactivation.

Abandonment Category
A key addition to the new Well Classification Guidelines was the introduction of the Abandonment category.
The Abandonment Category was created for wellbores that are declared to have no further economic
potential for reactivation with an approved plan for either P&A or future wellbore utilization (donor well for
sidetrack). To ensure that no economic reserves are left behind in a well, PETRONAS MPM has initiated
a process to review all wellbores proposed for abandonment. Once an agreement is reached between the
PAC and PETRONAS MPM that no economic reserves remain, the well is issued a Subsurface Well
Abandonment Plan (SWAP) certificate and then well abandonment planning can begin. The SWAP process
is described in more detail in the next section of the paper. The sub-categories for the Abandonment Category
are described in Table 2.

Table 2—Abandonment Sub Category Descriptions

SPE-193940-MS 5

Subsurface Well Abandonment Plan (SWAP) Process

The Subsurface Well Abandonment Plan (SWAP) certificate is an agreement between the PAC and
PETRONAS MPM that there are no remaining economic reserves remaining from the current wellbore
and that the reservoirs in the wellbore can be abandoned. The SWAP certificate requires endorsement from
PETRONAS MPM via Asset Management Integrated Review (AMiR) committee prior to performing well
abandonment (SWAP-1) or for use of the wellbore for future utility such as for sidetrack (SWAP-2). There

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are three main requirements for SWAP-1 issuance prior to approval of P&A:
1. Prove that reserves in existing zone are depleted or uneconomic to restore to production.
2. Prove that any behind casing opportunities do not exist, or are not economically feasible.
3. Prepare subsurface P&A concept.
Recent updates to plug and abandonment regulations in Malaysia implemented in 2016, in line with
international best practices, allow permanent barrier isolation at the Caprock level and do not require
isolation of individual perforated intervals with cement if certain criteria are met. For wells proposed for
abandonment in fields still on production, a review of potential impacts on field ultimate recovery due to
potential crossflow between reservoir layers below the permanent barrier at Caprock level is required during
the subsurface P&A concept discussion. A high level flowchart for the reservoir isolation requirements of
perforated intervals is shown in Figure 3.

Figure 3—Guidelines for Reservoir Isolation Requirements of Perforated Intervals

6 SPE-193940-MS

Wellbores proposed for future utility such as slot recovery or sidetracking are also required to show that
there are no economic reserves remaining in existing zones or in any economic behind casing opportunities.
These SWAP-2 category wells also require a discussion on subsurface abandonment requirements for the
temporary abandonment required ahead of slot recovery or sidetracking.

Idle Well Time-bound Guidelines

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Given the increased number of mature fields in Malaysia and the number of long idle wellbores,
PETRONAS MPM introduced idle well time-bound guidelines in December 2016 to put more focus on
moving wellbores with no remaining potential toward abandonment and to ensure idle wells with remaining
economic potential are reactivated in a timely manner.
The time-bound guidelines are summarized below.
1. Wellbores must be reactivated within 3 years of going idle, or moved to SWAP-1 or SWAP-2 category.
For dual string wells, 3 years' duration applies once both strings become idle.
2. Well abandonment or partial well abandonment must be completed within 3 years from the date of
SWAP-1 certificate approval.
3. Well abandonment for wells with SWAP-1 must be completed before Production Sharing Contract
(PSC) expiry.
4. Temporary abandonment timing for sidetrack or slot recovery for wells with SWAP-2 certificate is
based on agreed plan as outlined in Field Development Plan.
The idle well time-bound guidelines are one of the key Total Well Management KPI's and all idle
wellbores that do not meet the time-bound requirements are reviewed with PETRONAS MPM during the
annual AMiR cycle to ensure that every wellbore has an agreed upon plan.

Total Well Management Key Performance Indicators

PETRONAS MPM has set Well Management KPI's to faciliate the steering of PAC's to align with Malaysian
well management aspirations. The main objective of the Total Well Management (TWM) KPI's is to
maximize value addition and arrest value leakages from well assets in Malaysia in order to enhance value to
PETRONAS and PAC's. The TWM performance of each field is measured, monitored, and reviewed with
PETRONAS MPM during the annual AMiR cycle. The TWM KPI's focus on four key areas, namely active
wells, idle wells, idle well growth, and well abandonment. Each focus area is summarized below.
1. Production enhancement from active wells through annual technical potential target, which promotes
proactive surveillance and production enhancement on active wells.
2. Target for maximum allowable idle well growth by enhancing surveillance practices and increasing
focus on emerging idle wells.
3. Focus on reactivation of effective idle wells by achieving a minimum target of successful reactivation
on 30% of effective idle strings annually.
4. Increase well abandonment activities and limiting the amount of time a well can remain idle via
adherence to the idle well time bound guidelines.
The new classification guidelines were a key part of the TWM KPI's as the output was used in the setting
of several of the TWM KPI's, and the well classification results continue to be used to measure where each
field in Malaysia stands in relation to PETRONAS MPM TWM targets and aspirations.
SPE-193940-MS 7

Conclusion
The Malaysian Oil & Gas Regulator (PETRONAS MPM) has taken a more proactive role in shaping Well
Management efforts at a national level via establishment of Total Well Management KPI's, which enable
PAC's to maximize value from their existing well stock. The updated Well Classfication guidelines form the
backbone of Malaysian Total Well Management efforts and have facilitated improvements in enhancement
of flowing strings and management of idle wells. Via enhanced guidelines for well classification and new

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regulations on idle well time-bound limits, steer has been given to Malaysian PAC's that long idle wells
with no remaining economic potential & future opportunity need to be prepared for abandonment. The
Subsurface Well Abandonment Plan process was enhanced to ensure no remaining economic potential is
left behind in any well, that P&A concept relative to subsurface is cost effective with no impact to field
ultimate recovery, and that more candidates are moved into the P&A funnel to allow for scheduling and
optimization synergies at a national level.
Subsequent to roll-out of PETRONAS MPM enhanced guidelines for classifying wells and added focus
on well management, positive changes were observed in active string percentage (52% to 57%) and idle
well management (~5% improvement in idle growth and effective idle well restoration). The number of
abandonment certificates increased from 20 wells to nearly 300 wells in a year time span. These wells
are being planned for future abandonment with scheduling optimized at a national level. With new P&A
regulations in Malaysia allowing for permanent barrier setting at the Caprock level, a review of the
abandonment concept with respect to subsurface concerns is completed during the Abandonment certificate
process. These new Caprock guidelines resulted in 30% savings on well P&A activities carried out in 2017.

Nomenclature
AMiR Asset Management Integrated Review
KPI's Key Performance Indicators
P&A Plug and Abandonment
PAC's Petroleum Arrangement Contractors
PETRONAS MPM PETRONAS Malaysia Petroleum Management
SWAP Subsurface Well Abandonment Plan
TWM Total Well Management