The University of Adelaide

Australian School of Petroleum (ASP)

Professor Peter Behrenbruch

Skua Field
Appraisal Plan Report
Field Development Planning (FDP) & Economics Project
Author: The Van Nguyen (Student ID: 1618015)
Role: Drilling Engineer

Summited on: 16/09/2013

The Van Nguyen FDP ‐ Appraisal 1618015

Executive Summary
The Skua field is located in offshore Western Australia in the Timor Sea. This is a marginal
field was presented by BHP Petroleum in 1985. For the secondary appraisal program and
potential development, the maximum budget was allowed of USD $45 million. This appraisal
plan is including obtaining necessary reservoir data from primary appraisal plan to have
sufficient confidence to proceed with a development.

The secondary appraisal plan would cost approximately USD $35.8 million including USD
$6.6 million for acquiring 3D seismic, and USD $29.2 million for drilling two more vertical
wells plus full well test. The determination of hydrocarbons initial in place were determined
the original oil in place (OOIP) of 62 MMSTB and Gas initial in place (GIIP) of 18.8 BCF
respectively in the “most likely” case. By further computing for recovery factor and applied
commodity prices, a reserve value at USD $3,100 million for oil and USD $3.76 million for
gas was calculated. By simply evaluate economic, the used FPSO (floating production storage
and off-loading vessel) would be considered as the most optimal choice for production
facility. The potential development plan will require a specified facility, including additional
cost, was estimated to cost a total of USD $550 million. The final profit from Skua field was
calculated of USD $2,518 million, it is a good outcome for the marginal field.
The brief summary for the secondary appraisal plan are presented in the table 1.

Table 1. Brief summary of the secondary appraisal plan for the Skua field.

Description (Cost)/Revenue

Oil Value (31 MMbbl at $100/bbl) $3100MM

Gas Value (9.4 Bscf at $4/’000 scf) $3.76 MM

Seismic ($6.6 MM)

Drilling & Completions ($29.2 MM)

Production Facilities ($550 MM)

Total $2,518MM

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Table of Contents
Executive Summary ....................................................................................................... 1
Table of Contents ........................................................................................................... 2
List of tables ................................................................................................................... 3
List of figures ................................................................................................................. 3
1. Conclusion and Recommendation .......................................................................... 5
1.1 Conclusions:....................................................................................................... 5
1.2 Recommendation: .............................................................................................. 5
2. Introduction ............................................................................................................ 6
2.1 Objectives .......................................................................................................... 6
2.2 Skua Field Overview.......................................................................................... 6
3. Secondary Appraisal Plan ....................................................................................... 8
3.1 Volumetric Estimation ..................................................................................... 8
3.2 3D Seismic ..................................................................................................... 10
3.3 Additional Appraisal Drilling ......................................................................... 11
4. Conceptual Development Plan ............................................................................. 13
5. Lessons and Learned ............................................................................................ 14
References .................................................................................................................... 15
Bibliography ................................................................................................................ 16

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List of tables
Table 1. Brief summary of the secondary appraisal plan for the Skua field. ................. 1
Table 2. Summary of reservoir parameters from primary appraisal .............................. 7
Table 3. Volumetric calculation ..................................................................................... 9
Table 4. Hydrocarbons original in place calculation ..................................................... 9
Table 5. Skua field values ............................................................................................ 10
Table 6. Decision Matrix ............................................................................................. 12
Table 7. Summary of drilling cost for two wells ......................................................... 13

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List of figures
Figure 1. Location map of the Skua area ....................................................................... 6
Figure 2. The Skua field 2D map ................................................................................... 7
Figure 3. Trapezoidal volume calculation ..................................................................... 8
Figure 4. 3D Seismic acquisition. ................................................................................ 10
Figure 5. Locations of proposed appraisal wells ......................................................... 11

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1. Conclusion and Recommendation

1.1 Conclusions:
 The major uncertainties in the Skua field were reduced by conducting secondary
appraisal plan.
 3D seismic was employed to understand the sub-surface structure and support
calculate data more accuracy.
 By drilling two additional appraisal wells at the specific location C and B will
enhance better volumetric calculation and reserves volume estimation.
 Economics evaluation based on reserve values and capital expenditure as well as
operation expenditure needs to be considered in order to make a positive profit.

1.2 Recommendation:
 Acquire 3D seismic for the entire Skua field
 Drill two vertical appraisal wells at location C first, based on the good potential
outcome to continue on drilling location B otherwise review the appraisal plan.
 Try to achieve a positive economic.

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2. Introduction

2.1 Objectives
The main purpose of the study is to develop a secondary appraisal plan by choosing optimal
well locations for the Skua area based on available data from the primary appraisal plan.
Further, this study also recommends the future development plan for the field.

2.2 Skua Field Overview

The Skua area was discovered by BHP Petroleum in 1985, and the distance is approximately
250 km northwest of Western Australia in Timor Sea (Figure 1).

Figure 1. Location map of the Skua area

Data available for this study is taken from the primary appraisal plan include 2D seismic, and
the location of three existing wells includes Skua-1, Skua-2, and Skua-3 as shown in figure 2.
In particular, the well Skua-1 was a dry hole and was plugged and abandoned. Skua-2 was
determined very low oil rate after conducting a Drillstem Testing (DST) was also plugged and
abandoned. Meanwhile, the last well, Skua-3 was suspended after DST has shown a good
potential of high oil rate. From the existing geological data has shown that the oil column was

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discovered is about 46.5 (mBRT) with the oil water contact (OWC) of 2333 (mBRT) and the
presence of small gas cap at gas oil contact of 2386 (mBRT).

Another aspect of the Skua has been previously submitted by BHP Petroleum is strong
aquifer support. The Plover formation is sand prone and about 600m thick (Skua Geology
and Aquifer, Appraisal plan Package). So, this strong aquifer volume will provide advantage
pressure support to the Skua field.
In addition, the following data were given (Appraisal plan Package)
Table 2. Summary of reservoir parameters from primary appraisal
Net-to-Gross 50%

Gross Thickness, (mTVD) Oil = 46.5m/Gas = 28m

Porosity  = 21%

Hydrocarbons Saturation S = 82%

Oil Formation Volume factor Bo = 1.48 rb/stb

Oil expansion factor Bg = 200 scf/rcf

Skua -3

Skua -1
Skua -2

Figure 2. The Skua field 2D map

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3. Secondary Appraisal Plan

3.1 Volumetric Estimation

This section will present the reserve calculation bases on the original hydrocarbons in place
equation. According to Dean (2007), the trapezoid integration method was employed to
calculate the hydrocarbons volume.

(1)

By using this method, the reservoir was divided into multiple trapezoidal parts. These parts
were dimensioned to best fit and represent the reservoir (see figure 3).

Figure 3. Trapezoidal volume calculation

The OOIP and GIIP were estimated using the following equations (Dean, 2007):

(2)

(3)

Where,
 Vb : Bulk volume (cubic metre)
 NTG : Net to gross
 Si : Saturation of oil or gas

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 Ø : Porosity
 Boi : Initial oil formation volume factor (rb/stb)
 Bgi : Initial gas formation volume factor (rcf/scf)

With the available data in the exploration stage, the accuracy of the estimate is depending on
uncertainties in gross-rock volume. Finally, the volume of the Skua reservoir was conducted
by using the equation (1) to calculate their volumes from trapezoidal method. The total of
trapezoidal volume of the Skua field was then taken into account for bulk reservoir volume
(table 3). In addition, the Skua field is expected to have recovery factor (RF) of 40 to 60
percent due to edge water drive. Then, the calculated bulk volume and the reservoir
parameters in the table 2 were substituted into equation (2) and (3) to calculate the total
volume of the presence hydrocarbons. So, the original hydrocarbons in place was calculated
based on “most likely” case is about 62 (MMSTB) and 18.8 (BCF) for oil and gas
respectively (table 4).

Table 3. Volumetric calculation

Pessimistic Most likely Optimistic
Length (m) 3470 4780 6090
Volume oil [AH] (acre-ft) 76921 105961 135000
Volume gas [AH] (acre-ft) 13538 18649 23760

Table 4. Hydrocarbons original in place calculation

Oil (MMSTB) Gas (BCF)

Most Most
RF Pessimistic Likely Optimistic Pessimistic Likely Optimistic

45 62 79 13.65 18.81 23.96

0.4 18 24.8 31.6 5.46 7.52 9.59
0.5 22.5 31 39.5 6.83 9.4 11.98
0.6 27 37.2 47.4 8.19 11.29 14.38

There were a pessimistic, most likely and optimistic cases for the differences recovery factors
were applied to the OOIP and GIIP. In order to value the reserve, a commodity prices were
also applied (indexmundi, 2013). It should be noted that these prices were used to make
roughly economic value for the reserve.

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In this study, the author uses the price of West Texas for crude oil as of 2013 (USD $100/bbl)
and Henry Hub for gas (USD $4/’000 scf)
The reserve values are presented in the table 5.

Table 5. Skua field values

Oil Value Gas Value

Case RF Oil Reserve Gas Reserve
at $100/bbl at $4/'000 scf
Pessimistic 0.4 18 MMSTB $1,800 MM 5.46 BSCF $21.84 MM
Most
0.5 31 MMSTB $3,100 MM 9.4 BSCF $ 37.6 MM
Likely
Optimistic 0.6 47.4 MMSTB $4,740 MM 14.38 BSCF $ 87.52 MM

3.2 3D Seismic
After considering all aspects such as reservoir characteristics, analogue data from existing
wells, the 3D seismic was employed to the entire Skua field. This 3D interpretation is extreme
important because it will give full picture of the geological structure including the location of
the faults and the extent of the shale layers. Base on that, the 3D seismic also be able to help
with more accuracy in the calculation of gross rock volume. The 3D acquisitions of Skua area
are presented in Figure 4.
The total cost for this 3D seismic is about USD$6.6M including post processing cost.

Figure 4. 3D Seismic acquisition.

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3.3 Additional Appraisal Drilling

This section is including the locating and drilling two additional vertical appraisal wells with
fully testing (cores, logs and DST). The objective of drilling new appraisal wells is to gather
more information to help identifying the initial hydrocarbon in place, the extension of the
shale layers and the main fault, and also the depth of fluid contacts.

Three locations have been proposed for drilling vertical appraisal wells as shown in the
Figure 5. Well location A was pointed to determine the compartmentalisation. The location B
was placed to investigate the reservoir where the uncertainties still remain (Behrenbruch and
Mason 1993). The location C was placed to find the extent to the North of the reservoir.

In order to make a decision where to drill, a decision matrix was made to choose the location
of new wells (see table 6). This matrix weighting was focusing on the location which allow
further identify gross rock volume (highest weight of five) and the formation continuity
(weight of four) which are the most uncertainties parameters. Then further identify remain
uncertainties in compartment, fluid contacts and fluid samples.

Figure 5. Locations of proposed appraisal wells

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Table 6. Decision Matrix

(1-5) Location A Location B Location C

Rating Value Rating Value Rating Value

Objective Weighting
GRV 5 3 15 4 20 5 25

Formation Continuity 4 3 12 5 20 4 16

Compartmentalization 3 5 15 3 9 4 12

Fluid Contacts 2 4 8 2 4 3 6

Fluid Samples 1 5 5 3 3 4 4
Total 55 56 63

Due to the budget constraint, the project team then considered to select only two well to be
drilled to minimise economic expenditure. The information from decision matrix has shown
the order to be drilled were location C, and locations B are satisfying objectives most
adequately.

The drilling appraisal program was designed to drill two vertical wells. The jack up drilling
rig was the most optimal choice for shallow water depth of 83 (mBRT), it also selected
because of lower renting cost compare to the alternatives. The hire cost for jack up rig was
USD $250,000 per day, plus USD $3 million more for mobilisation. The drilling schedule
was design about twenty-eight days including ten days to run logging, coring and DST. The
total cost to drill two new wells was estimated about USD $29.2 million.

In summary, the total expense for the additional appraisal drilling was USD $35.8 million
includes USD $6.6 million for acquiring 3D seismic and USD $29.2 million for drilling two
new vertical wells.

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Table 7. Summary of drilling cost for two wells

Cost Description Cost ($'000)

USD
Jack up mob/demob $3,000
Jack up Hire cost, S250k/day $14,000
Site survey, S450k/well $900
Drilling services, $150k/day (avg. 18 days/well) $2,700

Completion, $1.5 MM/well $3,000

Well test, $400k/day (7 days/well) $5,600

Total $29,200

4. Conceptual Development Plan

This preliminary development plan is aimed to prepare appropriate facilities for the
development stage of Skua field. The floating production storage and off-loading (FPSO)
vessel was an appropriate production facility for the field because this is a shallow water
depth of 83 (mBRT) and approximately 250 km from onshore. The proposed option was
purchased a used FPSO. For instance, the Nigaloo Vision recently sold for USD $185 million
could capable of processing 63,000 bbl/day. So, the total amount of storage could be tie in
about 10 wells in production. Furthermore, the FPSO can also be mobilized when field
depleted. The total cost for production facilities were estimated about USD $550 million
includes approximately USD $300 million for FPSO facility, USD $100 million for subsea
equipment, and another USD $150 million for approximately 10 producers.
This development plan is simply a preliminary design for roughly economic calculation, the
more details will be presented when more data and information is obtained after secondary
appraisal completed.

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5. Lessons and Learned

The project team had estimated 62 MMSTB of oil, and 18.8 BCF of gas respectively in the
reserve, however it is believed those number were not correct due to the limited of time to
discuss among the group members, and to discover more data related to the Skua field - a
marginal field. If move time given, more attention will be paid to calculate the amount of
hydrocarbons in place, the volume of the shale and the outcome will be expected for the
hydrocarbons will be go up.

One of the crucial things that I have learned beyond the project is working in a project team
as a company. Each division group must be able to take responsibility for their parts, and
together contribute to the final outcome. For instance, in this course I have to finalise the
drilling part in time frame of one day to report to the management. It is important because of
losing a million of dollar if any mistakes may cause. Also, I have learned to ask the question
to get the right thing. The lesson was true for me, it is believed if I raise the right question,
and I still got a chance to get the thing I wanted rather than nothing.

Another lesson that I have learned was communication in the real working environment.
Because of my English is not a mother language, therefore I am not usually confident to get
involve into discussion among the team. Sometimes this disadvantage drove me to work
insufficient.

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References
Behrenbruch, P, 2013, Integrated Field Development Planning and Economics Project,
Australian School of Petroleum, University of Adelaide

Behrenbruch, R and Mason, L (1993). Optimal Oil Field Development of Fields with a Small
Gas Cap and Strong Aquifer. SPE Asia Pacific Oil & Gas Conference & Exhibition.

Dean, L (2007). Reservoir Engineering for Geologists, vol. 11. Fekete Associates Inc. Part 3 -
Volumetric Estimation.

Indexmundi (2013). http://www.indexmundi.com/commodities/. Viewed on 06/09/2013

Skua Geology and Aquifer, Appraisal plans Package, provided by professor Behrenbruch.

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Bibliography

Australian Geological Survey Organisation, 1996. Vulcan Tertiary Tie (VTT) basin study,
Vulcan Sub-basin, Timor Sea, North-western Australia. AGSO Record 1996/61.

Cadman, S.J. and Temple, P.R., 2004. Bonaparte Basin, NT, WA, AC & JPDA, Australian
Petroleum Accumulations Report 5, 2nd Edition, Geoscience Australia, Canberra.

Osborne, M., 1990. The exploration and appraisal history of the Skua Field, AC/P2, Timor
Sea. APEA Journal, 30 (1), 197-211.

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