SPE-200959-MS

Development and Execution of Heritage Petroleum Company Limited’s

First Offshore Workover Campaign - A Case History of Successful
Implementation of Performance Management

Shazim Mohammed, Dale Persad, and Kirk Baksh, Heritage Petroleum Company Limited

Copyright 2021, Society of Petroleum Engineers

This paper was prepared for presentation at the SPE Trinidad and Tobago Section Energy Resources Conference held virtually 28 - 30 June 2021. The official

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proceedings were published online on 28 June 2021.

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
not be copied. The abstract must contain conspicuous acknowledgment of SPE copyright.

Abstract
Heritage Petroleum Company Limited (HPCL) is the newest operating oil and gas company in Trinidad
and Tobago and was vested and entrusted with the operation and management of all the exploration and
production assets of Petroleum Company of Trinidad and Tobago Limited ("Petrotrin"). Being driven by oil-
based revenue meant that rig intervention projects had to be innovative, economically viable and practical
to meet the company’s financial commitments. This paper presents the concepts and processes behind the
development and implementation of HPCL’s Workover Scoping and Procurement Framework.
The offshore team recognized the need to frame the well review and workover candidate selection process
as well as a procurement process that was both operationally accommodating and in accordance with public
procurement regulations. This process would also have to be tested, since it was a new concept that was
not practiced by Petrotrin.
The well review process involved defining reservoir deliverability and in-place volumes through static
and dynamic modelling, establishing current well potential and deliverability via nodal analysis with
installed completion designs, topside infrastructure conditions and flow restrictions.
The procurement process was achieved by identifying local resources and generating framework
agreements for services and equipment. Job specific resources were tendered to ensure a transparent
selection and award. The process also involved ranking the risks of all candidates. Economic analyses were
performed to determine whether the financial indicators were positive to ensure viability of the campaign.
A scorpion plot was also used to manage the performance of this framework during the campaign.
The result was a campaign consisting of 15 wells that was delivered on time and within the workover
budget. Actual production gain was over 1700 BOPD as opposed to the expected gain of 1450 BOPD.
Budgeted Net Present Value (NPV) and actual NPV was calculated to be US$ 9.42 million dollars and US
$ 11.7 million dollars respectively. All resources were demobilized and removed from the offshore acreage
to reduce risks and floating expense to the company at the end of the campaign.
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Introduction
Heritage Petroleum Company Limited (HPCL) acquired the Exploration and Production assets of Petrotrin
on December 1st 2018 and became responsible for the safe and efficient recovery of oil and gas reserves
from the Land, North Eastern, South Western and Offshore Soldado Fields. Production methods for each
field differ based on fluid viscosity, reservoir pressure, pipeline network and geographical location. It should
also be noted that these are mature fields with depleted reserves and aged surface infrastructure.
Being a state-owned company, HPCL needed to quickly recover production rates while addressing asset
integrity issues that could significantly affect the environment and nearby communities. Oil winning projects
had to be strategically executed to avoid idle resources during periods of low activity, but also had to be
nimble enough to quickly mobilize and execute corrective actions associated with emergency responses. The
executing department recognized that traditional tendering processes could not be adopted, but adherence to
public procurement regulations had to be mainta ined. This was the foundation for the Drilling and Workover
service framework.

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The timeline for the Offshore Business Unit (OBU) to commence rig activity was set at ninety days after
the scheduled commencement of the same activity for the Land Business Unit. This was an opportunity to
develop and implement the service framework before mobilization of offshore resources.
For a successful project, there needed to be seamless coordination between three essential divisions of
the company which were the executing department, Finance and Supply Chain Management. The Drilling
and Workover service framework would be a tool that would streamline all departments during the planning
stage. In addition to the implementation of this framework, work processes would have to be adopted with
clearly defined deliverables and timelines since the intention would be to complete a project cycle within
a single fiscal year.
Any well intervention project scope in a mature field will differ from another, hence the framework would
have to allow for a dynamic workplan while honoring the regulations of public procurement and mitiga
ting bad spending. Historically, service tenders would have been awarded for long term ‘callout’ arrangeme
nt but even with such arrangements, costs would be incurred unnecessarily particularly for services that
require marine vessels to be ready and available throughout the contracted period. Alternative agreements
would have to allow for resource availability without financial commitments.
To maximize return on investment, an internal process for value assurance had to be developed. This
process would provide the budget allocations at the start of every financial cycle.
At the next stage, the competitive tendering process would commence having defined the project. After
awards are made, the resource pool would be mobilized for execution. All resources will be de-mobilized
after completion of the project; although this would significantly reduce project investment, there will be
no allowance for activity after the project ends. This means that any oil winning prospects would have to
be differed to the following financial year.

Service Framework Development

HPCL’s Drilling and Workover campaigns are required for production growth and development of
established reserves in our existing and possibly new acreage. The resources to execute these projects are
numerous and costly. The overall project can become a liability to HPCL if the procurement of services and
equipment are not synchronized with project objectives. Ideally, personnel and equipment should only be
deployed as required by the project scope. This will reduce idle resources and maximize productive expense.
The scope of work for each Drilling and Workover campaign is very dynamic and varied for each
campaign based on parameters such as available resources, field, well depth, formation, lift mechanism
and production strategies. Time required for planning of a campaign can be three months to as much as a
year, during which the HPCL team required a foundation for establishing cost and available resources for
accomplishing project objectives.
SPE-200959-MS 3

The intent of the Drilling and Workover service framework is to register competent service providers
under respective service functions and have them commit their prices/rates to HPCL. Although these prices
will be fixed, discounts can be offered by the contractors for each project, allowing each service provider
an opportunity to compete for each campaign. This being the foundation of the framework, allowed HPCL
to access service and associated cost for both planning and execution phases of the projects.
Before engaging service providers, a foundation of agreed processes and recognized suppliers was
established under the HPCL Drilling and Workover Service Framework. The list of services was generated
by the project executing line and recommended suppliers was populated with capable and recognized local
and international service providers with past oil and gas industry experience.
The supplier list was populated in accordance with following criteria. HPCL ensured that suppliers and
contractors:
a. had the legal capacity to enter into the procurement contract;
b. were not insolvent, in receivership, bankrupt or being wound up, affairs are not being administered

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by a court or a judicial officer, their business activities have not been suspended and they are not the
subject of legal proceedings for any of the foregoing;
c. have not, and their directors or officers have not, been convicted of any crimina l offence;
d. have fulfilled their obligations to pay all required taxes and contributions in Trinidad and Tobago;
e. have the necessary professional and technical qualifications and competence, financial resources,
equipment and other physical facilities, managerial capability, reliability, experience and personnel
to perform the procurement contract;
f. meet relevant industry standards.
*The criteria for Bidder selection obtained from the Public Procurement and Disposal of Public Property
2015
The suppliers were required to provide the following support documentation which were used to assess
their technical competence:

• HSSE Management System

• Performance Profile – Past Experience

• Financial Heath (Audit/Financial statements for the past three years)

• STOW (Safe to Work) Certification

• Quality Management System

• Preventative Maintenance Program

Each Business Unit required a pre-approved execution plan and budget before proceeding with the
service procurement process. The approved execution plan was assigned a budget item number/account
with expected expense based on estimates provided by the executing line.
The executing line was responsible for generating a detailed Scope of Work for each service category
required to execute the pre-approved project. Scope of Work included the following:

• Detailed description of the work required under each service category, including materia l items
and personnel requirement. The detailed Scope of Work captured any and every expectation to be
covered in the eventual Conditions of Contract for the agreement.
• Duration of project or number of jobs assigned to the project.

• Contractor supply and expense obligations if applicable.

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• Performance criteria (KPI’s)

• Project location (Land or Offshore or both depending on required work)

• Any other details as required to execute the required work.

Suppliers was invited to bid for services for each campaign. The bidding process was simply a commercia
l quotation and selection of lowest cost at this point, owed to due diligence in the preceding stages. It should
be noted that the bidding document is the most critical document for supplier selection, since the bid form
captured all requirements that were specifically tailored for the work plan. This included the quantities
and duration expected for the upcoming workplan. From this bid form, the bidder had information on the
expected activity and was invited to offer discounts on their prices based on expected revenue.
This process will be repeated for each project hence each supplier was given an equal opportunity to be
awarded for future campaigns.
The well review process involved defining reservoir deliverability and in-place volumes through static

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and dynamic reservoir modelling together with decline curve analysis. Current well potential was estimated
using nodal analysis with installed and proposed completion designs, choke models and flow restrictions.
Risks were identified and steps were taken to mitigate these risks. Preliminary economic analyses were also
done to rank potential candidates based on favorable economic indicators.

Results and Discussion

As outlined previously, the Offshore Business Unit adopted this process to test and identify its merit.
Although the final framework was not formerly integrated with the company, the Offshore Business Unit
followed the guidelines by planning, tendering and executing as though the framework was functio na l.
The net result can be assessed by comparing the initial plan (pre-screening), final plan (post screening) and
actual results. This is summarized below:

Pre-screening plan (Figure 1)

• 43 candidates outlined as potential workovers

• Risked Peak Production of 1800 BOPD

• Estimated Expense - US$ 18.6 Million

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Figure 1—Pre-screening Plan

Post Screening plan (Figure 2)

• 15 candidates selected for workover

• Risked Peak Production of 1453 BOPD

• Cost – US$ 5.85 Million

Figure 2—Post screening Plan

Project Results (Figure 3)

• 15 workovers executed

• Actual Peak Production of 1774 BOPD

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• Cost – US$ 5.94 Million

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Figure 3—Estimated and Actual Total Oil

Adopting the candidate screening process and Service Framework reduced expenditure by approximate ly
US$12.7 million dollars, while achieving 1774 BOPD peak production as shown above in figures 1,2 and
3. Estimated oil gains used for project economic analysis and actual gains obtained are shown in figure 4.
A scorpion plot which focused on well potential was used to track planned and actual cumulative workover
costs with incremental oil gains as shown in figure 5.

Figure 4—Budgeted VS Actual Rates and Cumulative Cost

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Figure 5—Scorpion Plot Used to Track Workover Performance

No Lost Time Incidents occurred as shown in Table 1.

Table 1—Targets for First Workover Campaign

Conclusions
The workover candidate screening process and Drilling and Workover Service Framework proved to be
a beneficial and cost effective method. The number of candidates were reduced from 43 to 15 while
the expenditure reduced by US$12.7 million while actually achieving a peak production of 1774 BOPD.
Budgeted Net Present Value (NPV) and actual NPV was calculated to be US$ 9.42 million dollars and US
$ 11.7 million dollars respectively
The candidate screening process was influenced by the operating cost, returns on investment and market
availability for services. The resource pool used for the Service Framework was dynamic and it is expected
that more opportunities will be available on the local market in the near future. To ensure transparency in the
procurement process, HPCL will need to ensure that market research is done routinely. HPCL has already
begun the process of inviting Expressions of Interest (EOI) to the wider market, both local and international,
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with the aim of obtaining a larger and suitable resource pool. This will have to be examined and updated
every three years.
The operations team will be able to strategically plan and execute oil winning projects as demanded by
the company’s business and strategic plan with this framework implemented throughout HPCL’s operations.
During periods of low activity, there will be no financial nor contractual obligations to suppliers.
Due to the aged infrastructure and well installations, there is a high probability that HPCL will need to
respond to emergencies associated with uncontrolled hydrocarbon emissions. The service framework will
still allow for the mobilization of resources with minimal procurement requirements, allowing the operations
team to focus on planning and execution.

Acknowledgements
The authors will like to thank the management of Heritage Petroleum Company Limited for permission to
publish this paper.

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Nomenclature

ABN Abandonment
BOPD Barrels of Oil Per Day
ETW Expense Type Workovers
HPCL Heritage Petroleum Company Limited
HSSE Health, Safety, Security and Environment
KPI Key Performance Indicators
NPV Net Present Value
NRT New Reserve Type
OBU Offshore Business Unit
STOW Safe To Work