Epm 6

EPMAG.
COM
JUNE 2012
Directional
Drilling
Logging &
Formation
Evaluation
Unconventional
Resource
Development
Mooring & Riser
Advances
Testing/
Production
Management
REGIONAL
REPORT:
South
America
A bigger
toybox
Incremental changes
revolutionize downhole
systems and tools
duog.e?lu.11gsobl
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EXPLORATION & PRODUCTION

WORLDWIDE COVERAGE
JUNE 2012
VO L U M E 8 5
A H A R T E N E R GY P U B L I CAT I O N
UNCONVENTIONAL RESOURCE
DEVELOPMENT
46
New hybrid stimulation validates intervention

for ERD wells
50
Cost effectiveness requires science and

execution excellence
56
Social, environmental issues can play havoc

with shale plays
ISSUE 6
w w w. E P m a g . c o m
COVER STORY: DOWNHOLE SYSTEMS & TOOLS
36
LOGGING & FORMATION EVALUATION
60
Integrated petrophysical uncertainty evaluation

impacts reservoir models
66
Alternative conveyance techniques optimize

logging in unconventionals
DIRECTIONAL DRILLING
70
New-generation hole-enlargement tools

improve drilling efficiency
74
Hybrid system takes drilling in new direction
Downhole tools
revolutionize
incrementally
The spectrum is wide for advanced downhole
systems. More than created as new, drilling
technology has improved in small steps.
TESTING/PRODUCTION MANAGEMENT
78
Greater intelligence requires greater integration
84
Protecting todays SCADA systems with a

defense-in-depth strategy
10
IndustryPULSE:
Going grassroots
in Pennsylvania
Marcellus players succeed when they
build local relationships.
MOORING & RISER ADVANCES
94
Finger on the pulse
98
An uplifting experience: Buoyancy advances

for ultra-deep water
REGIONAL REPORT: SOUTH AMERICA
104
108
Mirroring opportunities across the Atlantic
13
WorldVIEW:
Minister on a mission
The UKs Minister of State for Trade and

Investment is under no illusion about the
need for his nations energy industry to expand its
global upstream activities while also ensuring new
investment is attracted into Britains maturing offshore sector to keep its home fires burning.
Pacific potential exists offshore Colombia
90
Unconventionals:
Mississippi Lime moves into
mainstream oil production
in two years
Operators, including majors, are beginning to move

into the Mississippi Lime play in Kansas, while an
emerging horizontal Woodford play in Oklahoma
is adding to the attraction.
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DEPARTMENTS AND COMMENTARY
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AS I SEE IT
The offshore industry is booming
MANAGEMENT REPORT
Managing change requires an integrated platform
16
DIGITAL OIL FIELD

Theres more to system security than just security
Oman increases oil production with wireless solution
20
24
EXPLORATION TECHNOLOGY
Methane hydrate test successful
29
WELL CONSTRUCTION
These arent your grandfathers tools
31
PRODUCTION OPTIMIZATION
Spar platforms designed for North Atlantic deepwater field
33
OFFSHORE ADVANCES
The cost of 20K by 2020 a price worth paying
Meeting the challenges of our
customers has always been
the focus of our work , and it
continues to be the measure
of our success today.
The relationships we build
with operators have helped
M-I SWACO people keep a
close eye on the issues faced
during drilling, comp letion and
35
TECH WATCH
SPI gels improve mobility control in CO2 enhanced recovery
100
TECH TRENDS
102
INTERNATIONAL HIGHLIGHTS
110
ON THE MOVE/INDEX TO ADVERTISERS
114-115
LAST WORD
Escape from the unconventional treadmill
116
production.
Our collaborative approach

has generated a number of
technical innovations to meet
the changing needs of our
customers such as exploiting
unconventional resources and
defining industry best practice.
When you need solutions
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advanced fluid systems , to
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COMING NEXT MONTH The July issue of E&P reports on the shale gale as it begins to go global, with activity ramping up in Russia, China, India, and Argentina, among other countries. Technology
features include intelligent operations, cost and risk management, land seismic, MWD/LWD, production
logging, and construction and installation, and regional reports will focus on the Niobrara shale and hot
activity in the Mediterranean Sea.. As always, while youre waiting for the next copy of E&P, remember to
visit EPmag.com for news, industry updates, and unique industry analysis.
ABOUT THE COVER A SandRidge rig drills for oil in the Mississippi Lime play
near Alva, Okla. The company has drilled nearly half of all the horizontal wells in
the Mississippian oil play to date. (Photos courtesy of SandRidge Energy; cover
design by Laura J. Williams)
to modeling software-you
know where to look.
Mi SWACO
A Schlumberger Company
www .miswaco. slb.com
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;
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Hart Energy Publishing, LP, 2012. Hart Energy Publishing, LP reserves all rights to editorial matter in this magazine. No article may be
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Printed on
recycled paper
ONLINE CONTENT JUNE 2012
MicroScope
HIGH-RESOLUTION RESISTIVITY
AND IMAGING WHILE DRILLING

PREMIUM CONTENT
Subscribe @ EPmag.com/explorationhighlights
Eni seeks approval to drill

exploratory test in GoM
In Mississippi Canyon Block 655 (OCS
G27293) Eni is planning a Middle Miocene
exploratory test on its Cagnina prospect.
The wildcat has a proposed true vertical
depth of 6,035 m (19,800 ft) and will target pay zones similar to those found in the nearby Coulomb and Blind
Faith fields.
Shale gas well results from southeastern Sweden

Four shallow vertical shale gas tests were completed by Gripen Gas
AB on its Ekeby License Block in Ostergotland, Sweden. The wells tested
for biogenic gas from the Cambro-Ordovician Alum shale over an
area covering about 150 sq km (58 sq miles) and encountered the formation between 75 m and 85 m (246 ft to 279 ft).
Big new offshore oil find reported in Gulf of Paria, Trinidad

The Gulf of Paria find, #1 Jubilee, is in the Soledad license area and is
currently estimated to have 48 MMbbl of recoverable oil.
AVAILABLE ONLY ONLINE
China looks to ramp up

shale exploration and production
By Dr. Michael Warren, Hart Energy
Executive Director of Research
Most people think that China will develop

its unconventional resources quickly with
help from the major integrated oil and gas
companies.
BP global response: New technology

applied to deepwater drilling risks
By Tayvis Dunnahoe, Senior Editor, Drilling
Now two years beyond Macondo, BP steps

into its latest deepwater operations with a
renewed focus on safety and well control
response.
Is third time lucky

for Trinidad and Tobago?
By Mark Thomas, Senior Editor, Offshore
The newest bid round by Trinidad and

Tobago corrects some unfavorable
contract terms from earlier rounds. At least
20 bids for six blocks have been received.
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P: +1 713.260.6400 F: +1 713.840.0923
www.EPmag.com
rduey@hartenergy.com
Read more commentary at
EPmag.com
RHONDA DUEY
Executive Editor
JO ANN DAVY
Group Managing Editor
TAYVIS DUNNAHOE
Senior Editor, Drilling

Senior Editor, Production
SCOTT WEEDEN
Senior Editor, Offshore
MARK THOMAS
Chief Technical Director,

Upstream
RICHARD MASON
NANCY AGIN
Associate Managing Editor
CODY ZCAN
Assistant Editor
ALEXA SANDERS
Corporate Art Director

Senior Graphic Designer
LAURA J. WILLIAMS
Production Director
JO LYNNE POOL
Reprint & PDF Sales
ERIC MCINTOSH
Director of Business Development
ERIC ROTH
RUSSELL LAAS
Group Publisher
The offshore industry

is booming
Editorial Advisory Board

CHRIS BARTON
Sr. VP Business Development, Oil & Gas., KBR
KEVIN BRADY
VP, Sales & Marketing,Verdande Technology Inc.
MIKE FORREST
Exploration Consultant, formerly with Shell
JOHN M. GILMORE JR.
Director of Global Industry Solutions Upstream
Oil & Gas, Invensys Operations Management
CHRIS JOHNSTON
VP & Managing Director, North America, Ensco
ULISSES T. MELLO
Manager, Petroleum & Energy Analytics, IBM
DONALD PAUL
Executive Director, University of
Southern California Energy Institute
EVE SPRUNT
Business Development Manager,
Chevron Energy Technology Co.
MANUEL TERRANOVA
Sr. VP Regional Operations & Global Sales,
Drilling & Production, GE Oil & Gas
RONNIE WITHERSPOON
Sr. VP of Marketing & Business Development,
Nabors Drilling USA LP
DENNIS A. YANCHAK
Sr. Geosciences Advisor, Apache Corp.
Editorial Director
PEGGY WILLIAMS
Senior Vice President, Consulting Group
E. KRISTINE KLAVERS
President & Chief Operating Officer
KEVIN F. HIGGINS
Chief Executive Officer
RICHARD A. EICHLER
ere in North America its sometimes hard to remember that there is

such a thing as an offshore industry its all about shale, shale, and
more shale.
But here in Houston, come early May, the offshore industry takes center
stage at the annual Offshore Technology Conference (OTC). As editors, we
grumble that the conference is too big, too busy, and too crowded (It is all
of the above). But its also a fantastic reminder of the health of the international offshore industry.
This years conference drew 89,400 attendees (I think I was stuck behind
every last one of them in traffic). This is a 30-year high, the third highest in
the shows history, and 14% more than last year.
Exhibit space also set a record, and 2,500 companies representing 46
countries exhibited at the show.
The industry is on the rise, and challenges are ahead, making it more
important than ever to collaborate and share best practices with colleagues
all over the world, said OTC Chairman Steve Balint in a press release.
He is correct about the industry being on the rise. Douglas-Westwood
estimates the industry will spend US $335 billion in the next five years
on offshore operations and maintenance and $232 billion on deepwater
development.
Balint also is correct about the need for collaboration. According to a
panel discussion at OTC, the next few years of offshore development will
require a vast array of new technologies to meet growing energy demand.
These will include the use of new materials like carbon composites,
nanobots, subsea separation and chemical storage, all-electric power systems that get their energy from ocean currents, extended-reach drilling,
and improved AUVs.
Additionally, automation will be important so that the more remote
installations can be unmanned.
As technology advances, so do deeper water discoveries. According to
Guillame Chaimin, vice president of strategy for Total, half of the discoveries between 2000 and 2011 were in deep water. We
believe offshore is, and will remain, a crucial part
of the industry and be a major contributor to
world resources, he said.
So let the OTC confabs continue. Just please
open up more parking at Reliant Center.
7
industry
PULSE
Going grassroots in Pennsylvania

Marcellus players succeed when they build local relationships.
Rhonda Duey, Executive Editor
he saying, Its not what you know; its who you know
definitely applies to operators in the Marcellus shale
in Pennsylvania. The Marcellus stands out as perhaps the
most contentious shale play in North America thanks to
a well-funded and organized opposition that has tried to
convince local landowners that hydraulic fracturing contaminates their water wells.
But navigating these pitfalls takes much more than a
few PowerPoint presentations or locally distributed flyers,
said Alan Novak, president and founder of Novak Strategic Advisors. Novaks firm, based in Pennsylvania, helps
its clients establish community relationships through
intense, personalized grassroots campaigns. Pennsylvania
is not a bad place to do business, he said. It just takes
some getting used to.
The good news

Novak and his company work with Pennsylvanias
Department of Environmental Protection (DEP), an
agency he characterizes as responsibly supportive of
shale production. The DEP
is not taking the role of
police, he said. Its more
an approach of lets figure
out how to do this, do it
together, and do it right. DEP is led by Secretary

Michael Krancer, who has extensive environmental and
business experience. The state also has a governorappointed Energy Executive, Patrick Henderson, who
had been the executive director of the Senate Environmental Committee. Henderson and Krancer work
closely together on energy and environmental policy.
Gov. Tom Corbett also is encouraging shale development. Novak said the previous governor wanted a severance tax but was thwarted by the state legislature, so
nothing was ever done. Corbett announced that in lieu of
a severance tax there would be an impact fee that directs
the funds raised to the local communities affected by shale
development. Some of that money also will go into dedicated environmental funds. The state legislature enacted
Act 13, which imposes an impact fee and not a severance
tax, and Act 13 also provides for preemption of local government zoning regulation of gas and oil production.
Pennsylvanias Public Utility Commission (PUC), led by
Commissioner Rob Powelson, is regulating elements of
the gas industry pipeline safety and the implementation
of Act 13. Powelson spent a great deal of time in Texas
researching and meeting with representatives of the
Texas Railroad Commission in preparation for the PUCs
role in Pennsylvania in the Marcellus shale and gas plays.
The not-so-good news

Doing business in Pennsylvania is complicated by layers
of state and local government, which challenges consistency and uniformity. According to Novak, some localities are very
interested in shale development, while
others have been resistant.
Act 13 has been challenged in the appellate courts of Pennsylvania, and currently the
preemption provisions have been stayed by
the Commonwealth Court. Preemption of
local zoning has been challenged by several
Some localities in Pennsylvania are very interested in shale development, and many of the
businesses in the Marcellus region are experiencing a boom. (Photo courtesy of Chesapeake
Energy Corp.)
June 2012 | EPmag.com
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PULSE
Pennsylvania townships. The issue likely will be resolved

by the Pennsylvania Supreme Court.
The closer you get to the city of Pittsburgh, the more
controversy you get, he said. In fact, the most populous
parts of the state, the southern and eastern portions, lie
outside the boundaries of the Marcellus but contain the
most outspoken critics. Many of the businesses in this
region, though, are benefitting from the boom. Novak
said a company that manufactures large agricultural
buildings such as silos is now getting major contracts
from operators in the northern part of the state. Other
companies are opening northern offices to be situated
closer to the play.
But local businesses also are losing key employees to
the energy companies. The challenge for Pennsylvanias
Labor Department is to try to get people who are unemployed in the southern and eastern parts of the state to
connect to jobs in the northern part of the state because
the jobs are there, he said.
Another issue is other federal agencies that are not as
responsive as the DEP. For instance, the state has two
water commissions, the Delaware River Basin Commission
(DRBC) and the Susquehanna River Basin Commission.
Pennsylvania rivers and streams pour into these bodies of
water, so these organizations have a powerful regulatory
role in the Marcellus play.
The DRBC has literally slowed down its pace of decision-making, and it is devising its own standards and
regs, Novak said.
The Environmental Protection Agency (EPA) is another
stumbling block. Even though they meet regularly with
the DEP, they arent on the same page, he said. Our
PULSE
DEP is seen as being much more understanding and more

willing to work with the private sector than the EPA.
Whats being done

Novaks advice to operators in the Marcellus is to go local.
The best advice I would give anyone is to find local connections, he said. Companies should seek people who
have local ties to help facilitate public relations and sustained community relationships.
Already several groups have been formed to help facilitate this communication, including Energy InDepth,
formed by the Independent Petroleum Association of
America, and the Keystone Energy Forum, formed by the
American Petroleum Institute. Already a dairy group in
the state has formed a working relationship with the latter. The Marcellus Shale Coalition also is a very active
group of Pennsylvania operators.
The whole gist is about sensitizing some of the energy
company representatives, he said. The person theyre
dealing with, the landowner, isnt always the person who
actually farms the land. The energy companies leasing
the land need to connect with the farmers who are actually planting the corn.
Another change is the entrance of major oil companies
into the play. Those companies are used to operating
overseas, where part of the remit is to help local populations through projects like schools and hospitals.
That whole social responsibility metric that emerged
out of that experience has now come back to the US,
said Nancy Sauer, a Houston-based government relations
consultant. Theres starting to be a more formalized
approach toward community outreach.
Novak added that companies need to form coalitions to work for mutually
beneficial goals. This extends to any groups that are active in the area not
just farmers, but hunters and fishermen as well.
Finally, he said, companies are beginning to go native. Shell, for instance, is
opening a regional headquarters in Greensboro, Pa., and has hired John Hines,
formerly the executive deputy secretary at the DEP, to be a part of its government affairs team. Thats a signal that Shell is making a long-term commitment in Pennsylvania, Novak said.
This could be particularly useful as clashes continue between the DEP and
the EPA on environmental standards. Novak and Sauer both expressed concern over President Obamas recent executive order to create an interagency
working group to support the safe and responsible development of unconventional domestic natural gas resources. He has appointed Cecilia Muoz,
recently named Director of the White House Domestic Policy Council and who
is best known for her work on civil rights and immigration policy, to head up
the group.
The newly created Interagency Working Group to Support Safe and
Responsible Development of Unconventional Domestic Natural Gas
Resources includes 13 named federal agencies and offices plus others the
chair may invite.
Theyre going to be coordinating federal activity around unconventional
gas, which is a warning to industry that there is likely to be increased federal
control and regulation of what has, historically, been the domain of the states,
Sauer said. The industry is accustomed to a very high level of technical sophistication in terms of communication with our state regulators. If the federal
government gets involved, and were all trying to recruit experienced regulators and employees from the same very limited and declining pool of technical
people, we may have regulators with limited experience.
This further increases the need to have boots on the ground. We need people who know Pennsylvania, who know the communities, to help develop the
relationships in Pennsylvania, Novak said.
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The person theyre dealing with, the landowner,

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connect with the farmers who are actually
isnt always the person who

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EPmag.com | June 2012
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ere at the beginning. Here for e future.

The ConocoPhillips School of Geology and Geophysics (CPSGG), part of
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world
VIEW
Minister on a mission
The UKs Minister of State for Trade and Investment is under no illusion about the need for his
nations energy industry to expand its global upstream activities while also ensuring new
investment is attracted into Britains maturing offshore sector to keep its home fires burning.
Mark Thomas, Senior Editor, Offshore
ord Stephen Green of Hurstpierpoint is passionate

about British innovation in the global oil and gas supply chain. He is enthusiastic about the dynamic nature
of the worlds upstream business and the UKs unyielding efforts to ensure it continues to earn the right to sit
at the energy industrys top table.
Britains need to maintain its influential role as an
international center of energy expertise and a recognized source of technological innovation and knowledge
for the oil and gas sector is vital for the countrys economy. Equally important is the battle to keep the UK
North Sea and the still-emerging Atlantic Margin frontier West of Shetland as competitive as possible when it
comes to attracting fresh multibillion dollar investments.
This is at a time when the competition for new investment dollars has never been fiercer as younger hydrocarbon provinces around the world put forward their
own compelling cases.
It is at times like these that the need to leverage existing ties with established partners is paramount, and
Green wasted no time in reaffirming as many contacts
and relationships with his counterparts in the US as possible during the worlds biggest offshore event of the
year, the Offshore Technology Conference in Houston,
April 30-May 3.
The UK has an extremely long and well-established
trade relationship with Houston and the US as a whole,
with many billions of dollars having been invested in the
North Sea over the past four decades or so. But the
money flows both ways few realize that the UK is
Texas No.1 foreign investor, and that ongoing relationship is expected to continue to flourish as the state follows its predicted growth pattern.
British innovation is a core strategy of our economy,
the minister said. This is my first visit to OTC, and having
gone round the stands and met with so many British and
other companies, it beggars belief how wide the contribution has been to our economy and many others.
The British have a very strong delegation here, with
at least 124 companies in attendance, and they clearly

have some leading-edge technologies. The sheer variety
of different kinds of companies here is astonishing.
With exploration and production activities being carried out all around the world, the knowledge that has
been working so well on the UK Continental Shelf can
and is being applied elsewhere, Green continued. The
expertise that has been built up in our E&P sector has a
clear resonance everywhere else. This expertise is a key
part of the oil and gas supply chain and plays a significant part in the export of our goods and services internationally, which is worth an estimated US $10 billion to
the UK economy.
Its clear to me that the domestic market is important
in Britain, but the international market is so very important to the country as a whole. Many British firms are
world leaders, and its vital for the US and the UK to continue to collaborate closely.
The minister is certainly a man who knows the economic value of the energy industry and the risks. This
is an industry of very volatile prices. Thats just a fact of
life, he said.
Lord Stephen Green presents during his first visit to OTC in Houston, where he stressed the need for the UK and US to continue
developing their long-established working relationship. According to Green, the UK North Sea remains a stable investment
province for overseas companies. (Photo by Kurt Cobbley)
13
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As a former leading banker in the UK with responsibility for investment banking and capital markets as well as a stint as chairman of the British Bankers
Association, Green has had to use all his financial acumen and experience to
help restore faith both at home and abroad in the countrys fiscal energy policies and stability after controversial budget changes and a windfall tax raid by
the UKs coalition government in 2011 left many questioning whether it was
still a viable province for new offshore investments.
This year saw the government reveal a budget that has gone a long way
toward placating the concerns of North Sea players after a year of heavy criticism from the oil sector. New tax breaks were proposed to boost the development of frontier fields in the West of Shetland, including a $4.7 billion new
field allowance for large and deepwater fields. This was particularly sweet music
to the ears of large companies such as BP and Total, which are set to benefit
most from any eventual reduction in tax as they are under way with substantial
new field developments in the region such as BPs Quad 204 project and Totals
Laggan development.
The government also
promised to end uncertainty
over who pays for the dismantling of old North Sea
platforms by entering into a
contractual approach for
decommissioning tax relief.
It also left open the possibility of the introduction of
further reliefs targeting specific opportunities such as
brownfields and HP/HT
fields, which will be the subject of further consultation.
Green said the UK government had to provide a
fair and stable environment
for innovative industries such as the oil and gas sector. The country needs a
vibrant offshore industry, and Britain is as open and welcome to investment as
any other, he said.
He also stressed the need for the upstream industry to transfer its knowledge
and expertise into other applicable areas such as the offshore wind market. Offshore wind is a key part of the energy mix going forward. Its currently around
6% to 7% of the energy market in the UK, and the target is 20% by 2020. The
transfer of knowledge there is very applicable the very large size of some wind
turbines is similar to some of the oil industrys very large platforms. According
to Green, the UK is going to be one of the largest wind markets in the future,
and a good deal of that will require foreign investment, so we should ensure we
have one of the best offshore wind industries around, he said.
Commenting further on the UKs energy mix, Green pointed out that
nuclear power is contributing around 30% of total supply, while coal is around
20%. But for all the role that nuclear and renewables will play going forward,
he said, the oil and gas contribution is going to be critical as far ahead as we
are able to see.
The country
needs a vibrant
offshore industry,
and Britain is
as open and
welcome to
investment
as any other.
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15
management
REPORT
Managing change requires

an integrated platform
The proliferation of innovations within and outside the industry has been dizzying.
It is easier to keep up when companies have flexible options.
Tony Bowman, Schlumberger Information Solutions
eople in the oil and gas industry have difficult jobs

to find and develop increasingly complex oil fields
and operate them for 20 or 30 years. Just as they make
their plans and start to execute, reality changes.
Some of these changes can be quite dramatic: the price
of oil doubles, the price of gas halves, technical limits suddenly are not so limiting. And the pace of innovation is
becoming an ever-quickening drum beat.
A few cases in point over the past 10 years:
Shale gas was an insignificant part of the resource mix,
but now it has redefined gas supply dynamics;
Presalt reserves in Brazil were only discovered in 2006,
but today these discoveries have changed the industrys perception of deepwater geology;
Water depth limitations have gone from 1,600 m to
more than 3,000 m (5,400 ft to 10,000 ft);
Reservoir depths are now at 10,000 m (35,000 ft);
Proprietary seismic surveys have grown from 3,000 sq
km to 15,000 sq km (1,160 sq miles to 5,800 sq miles);
Wide-, multi-, and full-azimuth surveys have gone from
unknown to representing 35% of the market; and
In 2002, 96% of the wells in the US were vertical, and
now 40% are horizontal.
At the same time, the past 10 years have seen a complete
revolution in the IT industry, moving from teraflops to
petaflops in supercomputing, increasing an order of magnitude in Ethernet capability, and vastly reducing memory
and storage costs.
and post-simulation environment, and a database. Oil and

gas companies wanted to add their own intellectual property to extend Petrel workflows. This meant substantially
rewriting the code more than once. When that was done,
the organization realized that it had built a reservoir-centric platform.
Today, the world runs on platforms. SAP, for instance,
provides solutions for finance integration, resource planning, logistics, and personnel, all from one platform.
Another example is the introduction of search engines.
For the first time, users had the ability to move away from
querying a database to accessing the world of unstructured information: video clips, documents, and web pages.
Thanks to this breakthrough, information and knowledge
can now be disseminated to millions instantly. The challenge now is how to harness this innovation and manage
this proliferation.
E&P platform requirements

The oil and gas industry is complex and requires highly
advanced technical content. E&P requires three unique
perspectives: reservoir, wellbore, and operations.
The reservoir or shared earth perspective begins with
the geology. The platform representation of geology
needs to include a structural model, defined by geo-
Managing the change

So how do oil and gas companies marry the changing
E&P reality with the rapid changes in importance and
capability of information technology?
Ten years ago, Schlumberger bought what it thought
was a nice modeling package. It was easy to use and, as a
result, mainstream geoscientists started to do more and
more modeling. From that notion a model-centric environment was born.
Over time, Petrel software grew from a geologic modeling application to include seismic interpretation, a pre16
The shared wellbore model offers perspectives into petrophysics

and core analysis, drilling and completions design, and well
integrity analysis. (Images courtesy of Schlumberger Information Systems)
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physics; a geomechanical model reflecting the stresses and

strains the rocks have been subjected to; a petroleum systems model, indicating the presence or absence of hydrocarbons within that structure; and a dynamic model to
predict how those hydrocarbons will flow over time.
The industry has been focused on integration in the
earth model; however, the wellbore perspective has even
greater requirements for integration. When a company
drills a well, it is entering a potentially hazardous environment, possibly hundreds of kilometers offshore, under
thousands of meters of water, and drilling through thousands of meters of rock and salt with very high temperatures and pressures. Drilling safely and ensuring well
integrity is crucial.
Just as importantly, it is the oil and gas companys first
opportunity to test its subsurface understanding that
one shot to find out if the geologic hypothesis is correct
and to determine the economics of the field. This perspective includes petrophysics and core analysis, drilling
and completions design, and well integrity analysis.
The operations perspective enables companies to maximize a reservoirs economic potential. This requires an
integrated view of all operational activities. Ultimately
companies are concerned with flow assurance and matching surface facilities with subsurface potential. Operating
the entire system to give the best possible net present
value is the ultimate mission.
These three perspectives must be connected to support
decision making across the E&P lifecycle.
Shale production and the

E&P software platform
Shale exploitation is an example that illustrates how crucial it is to bring these perspectives together on the E&P
platform. The potential of shale reservoirs is enormous.
Of course, there are significant challenges in exploiting
them. Production is variable, fracture effectiveness is
impacted by geomechanics, and a large number of wells
are required to make these plays work. Finally, surface
impact must be reduced as much as possible.
Shale is extremely heterogeneous; each shale reservoir
is unique. It is critical to establish kerogen types and
hydrocarbon maturity to acquire the optimal acreage.
Geomechanically-based analyses are fundamental to
understand fracture patterns. Combining shale qualities,
kerogen distribution, and fracture character enables the
asset team to plan the well trajectory and optimally fracture and stimulate the rock.
To address these challenges, an integrated model-centric platform is essential. Integration of data from many
domains petrophysical, geomechanical, geophysical, and
modeled responses allows geoscientists and engineers to
18
The Petrel shared earth model is the result of oil and gas companies adding their own intellectual property to extend workflows.
characterize heterogeneity in shale quality and stress

regimes as well as to design wells and completions to target sweet spots, stimulating the best quality reservoir rock.
Pad placements can be designed to drill as many wells as
possible from a single point and optimize the length and
spacing of wells, ensuring that as much rock as possible is
treated without interfering with offset wells. Real-time
geosteering allows the drilling and geoscience team to
work together to stay in the zone and cost-effectively stimulate only reservoir rock to optimize production.
Seeing microseismic data in the context of the 3-D earth
model allows users to better understand how the reservoir
is responding during stimulation to change the orientation of the next well or change the operational parameters
in the current well while fracturing.
This kind of analysis is only possible in an integrated
E&P software platform.
Change is inevitable
So what is the new reality? Whatever is considered standard practice today is bound to change. From shale oil to
tar sands to hydrates or the Antarctic, the challenges will
continue to evolve. So the reality is more change than we
can imagine.
By 2022 the industry will be producing fields that
have not yet been discovered, moving unconventional
resources into the conventional category, and making
tasks routine that are currently considered beyond technical limits. Models with billions of cells will run in minutes,
and communications to any office or field in the world will
be almost simultaneous, all at a fraction of todays cost.
A platform that evolves to meet these changing realities
enables better E&P outcomes, providing integration,
extensibility to add new science, and the ability to harness
the knowledge and disperse it to make more informed
decisions.
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OIL FIELD
Theres more to system security

than just security
Integrating health factor analysis and measurement into the development cycle ensures
that quality and security can be built into software.
Jay Sappidi, CAST Research Labs
pplication development continues to get more complex, and because of that complexity, the ability to
measure, monitor, and control what is happening both inhouse and via outsourced development teams is very difficult. Predictability of system stability continues to be an
issue as always, but with businesses relying so heavily on
evolving application development for success and differentiation, it is imperative that these efforts become predictable and successful.
This is why application security is a tremendous issue in
todays economy and continues to grow. Application security failures make news big news. In the energy industry
alone, multiple high-profile security failures have occurred
over the last few years. Whether it is a directed attack like
the unauthorized data access at New York State Electric &
Gas and Rochester Gas and Electric or a virus like Stuxnet
that infects industrial applications worldwide, security
issues have created huge headaches for businesses.
At the root of a significant number of security breaches
throughout businesses today including those in the
energy industry are software failures stemming from
poorly structured application software.
Yet in spite of security being a significant issue, market research firm IDC noted in its top 10 predictions
for the industry that companies will slowly move to fill
security gaps with the help of vendors.
With security being the problem it is, not only should
companies move more quickly to address the issue, but
they also should take a more widespread view of their
systems. Focusing solely on security vulnerabilities adds
significant risk to applications. Design flaws account for
more than 50% of security problems, according to
Software Security: Building Security In by Gary
McGraw, which is why architectural risk analysis plays a
critical role in any solid software security program.
Companies need to perform a code review that examines an
applications overall health, including security.
20
Organizations need to look beyond security to the entire

health of an application when considering its risk to the
business and its ability to adapt and last throughout time.
Structural soundness
Evaluating an application for its structural quality defects is
critical since these defects are difficult to detect through
standard testing, yet these are the most likely to cause operational problems such as outages, performance degradation, breaches by unauthorized users, or data corruption.
In conducting the largest study of application software
health in history, CAST Research Labs compiled and analyzed more than 35 million lines of code across numerous
energy companies. These results were incorporated into
the annual CAST Report on Application Software Health
(CRASH) that showed empirical evidence of a remarkably
high number of structural quality issues among missioncritical business applications. Problems with good structural quality practices can cause issues that affect the
potential high cost or risk in an application.
The amount of data, communications, and transactions executed by that software continue to increase
significantly on a daily basis. The increase of software
knowledge has brought a resurgence of security threats
and infiltrations.

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OIL FIELD
Although some software problems can be introduced

The metrics play a large part in understanding the
into software intentionally, most of them hapapplications DNA, providing a detailed underpen accidentally through mistakes in applistanding about how the application works
There are
cation implementation, failing to adhere
and how well best practices and standards
to standards, or from a lack of knowlare followed. There are hundreds if not
inexpensive tools
edge about best practices. While comon the market today, thousands of known metrics in the dispanies try to fend off potential attacks
cipline of software development,
some even being
through data encryption, firewalls, and
including those documented by stanoffered free of charge dards bodies, vendors, and internal
the like, catching these issues early
before applications are deployed will
organizations responsible for an applivia open source,
save money and time and reduce risks.
cations development.
providing
There are inexpensive tools on the mardevelopers
Early and thorough detection
ket today, some even being offered free of
Finding defects as early as possible is a major
charge via open source, providing developers
with
reason why analysis of application source code
with a way to scan their code for health issues
a
itself is needed to determine potential vulnerabilincluding security, but that is not enough.
way to
ities. If caught during the build process, these
Individual developers often do not care about
can be fixed more easily at reduced cost and
the big picture, nor do they have insight into it,
scan their
lower risk.
but management should be concerned with it.
code for
Because many areas within software affect
They need to ensure that applications do not
health issues
its internal quality, security is one facet of a
become too complex, harder to maintain,
including
thorough application quality inspection
insecure, etc. In addition, they need to be
process that should also include:
concerned about things that the IDE
security,
Transferability how easily a new
Level Tools do not generally look at.
but that is
team or team member can be proThese tools are used by developers on
not enough.
ductive when assigned to work on
pieces of code, not on the entire applithe application;
cation, and do not provide any insight
Changeability how easily and
into the quality or issues of the entire
quickly an application can be modified;
application as it goes across all layers or even as pieces
Robustness the ability of an application to be
start to be plugged together.
changed without risk of failures or defects; and
For example, even to detect one of the most common
Performance performance issues of an application
security vulnerabilities like SQL Injection requires a
based on architectural designs and the appropriate
detailed data flow analysis cutting across different layers
risks in production.
of applications from user interface all the way to dataThese four characteristics plus security are the best
base. This cannot be achieved by looking at individual
measures of the inner health of an application.
programs in isolation.
Moreover, the external quality the functionality and
It is for this reason and many others that, while these
user experience is dependent upon the internal quality
developer tools have their value, they are not enough.
of an application. When combined with security, analyzing
Companies need to implement a comprehensive and
these health factors gives management the overall view of
automated platform for application analysis and measurethe applications health and identifies areas at risk not
ment to perform a 100% code review that looks across the
only for security but for the future of the application in its
entire application or system and provides management
entirety. Specifically, there is a significant complement
with the view of its overall health, including security.
between robustness, changeability, and security as well as
Through the measurement of application development,
across all of the applications health factors.
using application health factors that show how well an
application or overall system is constructed, a company
Comprehensive health check
can get a true assessment of its application health and
Just as each of the health factors are made up of multiple
determine where issues lie. More importantly, by integratmeasurements, each of the measurements is made up of
ing this analysis and measurement into the development
several metrics. Some of them are specific to a language
cycle, quality and security can be built into the product
or technology, and others are more generic in nature.
rather than just testing for them as an afterthought.
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OIL FIELD
Oman increases oil production

with wireless solution
Advanced wireless network equipment increases production while maintaining security and
cutting infrastructure costs.
Duval Yeager, Redline Communications
he digital oil field has many disparate systems that need

to be connected to the network, including SCADA systems, remote terminal units, video surveillance cameras,
and Wi-Fi hotspots, as well as wellheads, drilling rigs, and
semimobile units. This same wireless infrastructure also
must include a distinct network for person-to-person communication across the entire location.
A virtual fiber wireless network can greatly enhance
efficiency and reduce costs by enabling remote collection
of critical operating data. Real-time optimization changes
also improve personnel safety and reduce the possibility of
catastrophic accidents.
Petroleum Development Oman (PDO), a joint venture
with Royal Dutch Shell and the premier E&P company in
the Sultanate of Oman, is currently blanketing a 72,520-sqkm (28,000-sq-mile) oil field with a multipurpose broadband wireless network.
The system was constructed to meet the dual needs of
high speed and low latency requirements.
The operator initially began building its
network using fiber-optic cables. Though
capable of prodigious two-way bandwidth
and low latency, the physical nature of
the fiber, the cost of trenching the network, and the time it took to deploy was
unrealistic for a large-scale oil extraction
operation. Not only did PDO quickly recognize that wireless alone could offer the
ruggedness, flexibility, security, and performance to enable rapid deployment
of a digital network across an expansive
asset, but it also was the only solution that
A tower with multiple Redline RDL-3000
base stations enables wireless broadband
connectivity as part of the virtual fiber wireless network solution. (Image courtesy of
Redline Communications)
24
could address the use of machine-to-machine (M2M)

communications with moveable drilling rigs.
Connectivity and controls capabilities

Although PDO relies upon multiple systems integrators to
implement various applications throughout its oil field
including wellhead automation, operational video surveillance, smart drilling, asset tracking via radio frequency
identification (RFID), and energy management it mandated a single vendor to supply its wireless communications infrastructure.
The operator successfully completed the first phase of
this digital solution using the Redline Communications Virtual Fiber wireless networking equipment to establish highspeed, bi-directional communication links between PDOs
corporate layer and the field layers in its oil and gas fields.
Completed under budget and ahead of schedule, this
first phase consisted of connecting more than 2,000 of the
5,000 oil wells to a centralized location from which they
are remotely monitored and managed, providing real-time
M2M communication and control. The first phase also
was completed at a significantly lower
cost than would have been possible
with fiber.
As hoped, the network has significantly enhanced the fields communications and control capabilities, with
ruggedized wireless technology ensuring not only the highest levels of data
throughput, range, low latency, and
reliability but also providing consistent, fieldwide communications coverage in a demanding application.
Low-latency,
high-data throughput
A digital communications and control
network must have broadband data
throughput together with both long
range and low latency. However, most
wireless technologies cannot deliver
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OIL FIELD
all three. Wi-Fi, for example, focuses on data throughput at the expense of
range, while telecom commercial-grade technologies deliver long range but
lower throughput. Moreover, commercial-grade networks based on WiMAX
and LTE technologies have limited throughput on the uplink path since they
were designed to communicate to other devices and not to network nodes.
The advanced radio technology of Redlines solutions, including multiple-in,
multiple-out, enables a wireless network with high throughput in both downlink and uplink paths without sacrificing range.
This combination of long-range and high bi-directional capacity has helped
PDO reduce the cost of implementing its digital oil field. Specifically, this combination has allowed the company to reduce the number of antenna towers
and masts at remote sites, which account for 40% to 60% of the infrastructure
cost in building a wireless digital oilfield network. Because every 50% increase
in radio range yields a 125% increase in network coverage, longer-range radios
significantly reduce infrastructure costs by minimizing the number of towers
and masts required. Radios operating in point-to-multipoint configurations
also allow many units to communicate over long distances to a smaller number
of base stations, further reducing costs.
Low-latency and high-data throughput were key for PDOs successful implementation, enabling it to control a vast array of machines, equipment, devices,
sensors, and monitors, each with very different data protocols and different
data rates and latency specifications.
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Network segmentation, security

PDO also is segmenting single digital oilfield communications and control IP
network structure into separate distinct networks to meet the needs of different groups within its organization. This segmentation limits access to critical
data only to those who actually need it. As a result, the network can support as
many secure virtual LANs (VLANs) as there are working groups.
These VLANs support a variety of groups and applications, including a
process control network to monitor and control wellheads, drilling rigs, and
hydrocarbon collection systems; an operations network that runs surveillance
video; RFID tags for inventory and to monitor key performance indicators;
a collaboration network for voice and video conference traffic for access to
shared data servers; and an emergency network that includes speaker phone
hotlines, immediate shut-off valves, and other fire and safety systems. Running
all these VLANs on a single network reduced the cost of building the network
infrastructure by half.
Additionally, almost every machine in the oil field is supported from a manufacturers server for service and software upgrades. Network access to the
machines is essential for these update and support services, requiring connectivity over a secure VLAN to protect a vendors intellectual property. Enabling
this connectivity via a VLAN speeds the upgrade process and saves up to twothirds of the cost on a service contract.
Lessons for the industry

PDOs implementation of a virtual fiber wireless network validates wireless
broadband as a key ingredient to the successful deployment and operation of a
digital oilfield solution. Digital oil fields already have been proven to increase
hydrocarbon extraction from existing fields. Wireless connectivity that has the
combination of range, bi-directional speed, and low latency can substantially
lower networking costs and increase deployment speed.
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exploration
TECHNOLOGY
Methane hydrate test successful

DOE project probes the fossil fuel industrys final frontier.
hile natural gas discoveries in the US are not

necessarily anything to crow about with gas
prices hovering in the dismal range, a recent field
trial might uncover a completely untapped form of
natural gas that will make shales pale in comparison.
The US Department of Energy (DOE) announced
recently that the US and Japan have successfully completed a field trial of methane hydrate production
technologies on Alaskas North Slope. The DOE partnered with ConocoPhillips and the Japan Oil, Gas,
and Metals National Corp. to test natural gas extraction from methane hydrate by injecting a mixture of
CO2 and nitrogen into the formation. The mixture
promoted the production of natural gas, and ongoing
analysis will determine if this method also can be used
to store the CO2 in the reservoir.
Why is this important? Because methane
hydrates are by far the most abundant
hydrocarbon resource on the planet,
with some pundits estimating that
the size of the reserves may exceed
the energy content of all other fossil
fuels combined. In addition to the
Arctic, they are commonly found in
ocean sediments.
This is not a new discovery, per se
the industry has known about
hydrates for years. To drillers they are
a hazard and need to be studiously avoided. To
many others they are an energy source that is so
challenging to produce that it will be decades before
hydrate production is feasible. But the DOE project is
laying the groundwork for that production now.
Methane hydrates are 3-D ice structures with natural
gas locked inside and are found around the world.
While the structures look like ice, simply melting
the water only releases the gas into the atmosphere.
Therefore, the hydrates need to be melted in situ.
The DOE project was the first field trial of a
methane hydrate production methodology in which
CO2 was exchanged in situ with the methane molecules within the structure. The test lasted 30 days to
test the depressurization phase. Previously the longest
depressurization field test lasted six days.
RHONDA DUEY
Executive Editor
rduey@hartenergy.com
EPmag.com
The next stages of the research will evaluate gas

hydrate production over longer durations to determine if sustained production might be economically
possible. A press release from the DOE points out that
this could take years but that its research into shale
gas in the 1970s and 80s eventually helped pave the
way for todays shale gas mania.
As part of its announcement, the
DOE also is putting forth an additional
research effort aimed at locating, characterizing, and safely extracting gas
from hydrate formations. It is allocating
US $6.5 million toward this effort. Projects will address deepwater gas hydrate
characterization by direct sampling or
remote sensing field programs; new
tools and methods for monitoring, collecting, and analyzing data to determine
reservoir response and environmental impacts
related to methane hydrate production; and
clarifying methane hydrates role in the environment.
The department is requesting an additional $5 million to further hydrate research both domestically and
in international partnerships. Some of this funding
may go toward a longer extraction test on the North
Slope on an existing gravel bed to accommodate yearround production. Such an effort would again
require engaging private sector and international
partners, the press releases states.
North America may not need a new gas discovery
right now. But if projects like these
prove that hydrates can be economically produced, methane
hydrates might be the 2032
version of the shale gale.
29
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CONSTRUCTION
These arent your grandfathers tools

From the drill bit to the top drive, tool strings are more advanced than ever.
n 2007, the E&P staff set out to commemorate 60

years of offshore drilling in a special supplement to
TAYVIS DUNNAHOE
our November edition. To make it interesting, we
Senior Editor, Drilling
devised a plan to compile news and technology features
tdunnahoe@hartenergy.com
that appeared throughout this period in E&Ps legacy
publication, The Petroleum Engineer.
Launched in October 1929, this magazine served as a
EPmag.com
record of note dispensing principles and best practices
throughout the engineering sector of the oil and gas
One of the problems associated with the multitude of
business. If memory serves, it was quite a hoot perusing
downhole technologies now present is segmentation.
these dusty volumes reading about the latest innovations in
Small business units that are isolated and out of commuoilfield technology as seen more than 75 years prior. Of
nication even within their own companies can create
course, the target at the time was 1947 to the present; howblind spots, preventing a view of the big picture where
ever, curiosity led to further reading from the 1930s.
most innovative ideas arise.
One article that entertained most of the staff was a techSteven Farley is an R&D engineer for Weathernology feature expounding on the principles and beneford International Ltd. Farley, now 33 years old,
fits of maintaining a well bore perpendicular to
was recently awarded (along with his team) Hart
the surface. The underlying problem identified
Energys Meritorious Engineering Award in
deviations from the vertical as destructive to
Drilling for the companys MotarySteerable techequipment and a hindrance to overall producnology at the Offshore Technology Conference
tion. Well accepted at the time, this theory has
in Houston April 30-May 3. When asked how the
long fallen to the age-old killer of false hypothetools hybrid concept came to him initially,
ses: different results.
Today, we talk about steerable systems.
Farley replied, Working in the field.
A standard well site is basically a conWhile vertical wells remain viable
glomeration of all the various subsets
approaches to certain reservoirs, well
within the drilling technology arena, Farbores described as S-shaped and Jley said. Once you see these functioning in
shaped are discussed as complex yet
unison, you begin to see the similarities.
fairly common. Horizontal drilling outOne of the
The tool, for which Farley is named on
paced vertical some years ago, and most
problems
the patent, is a combination of both standrilling engineers discuss building
dard mud motor technology and a rotary
curve more than any other topic.
associated with
steerable system. Beginning in 2007, FarThe roughneck of the 1930s would be
the multitude
ley worked from a proof of concept to its
mystified in a modern drilling cabin and
of downhole
recent commercialization. The tool propossibly not more qualified than the avertechnologies
vides directional control like a steerable
age roustabout. How did we get here?
now present is
system but with a lower cost.
The answer is simple: innovation.
Downhole systems and tools are more
At the end of the day, an engineer with
segmentation.
advanced than ever before. Engineers
decades of experience is more valuable
both young and old have contributed a great deal to the
than one with new boots. But being wet behind the
knowledge gap from this industrys inception to today.
ears is not necessarily a bad thing if it
More importantly, field experience has played a large part
allows you to see the big picture and
in bringing new tools, or combinations of older tools, into
to identify areas where performance
the modern drilling environment.
can be improved.
31
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OPTIMIZATION
Spar platforms designed for

North Atlantic deepwater field
Although a spar platform is used for offloading in the Brent field, this will be
the first deepwater spar production platform in the Norwegian Sea.
nnovation is key to deepwater development. One of

the new technologies being touted for operations in
the North Atlantic Ocean is a variation of the spar platform, called the belly spar.
Aker Solutions presented a paper at the Offshore
Technology Conference 2012 in Houston, April 30-May
3, that describes the companys design for moving spar
production platform technology out of the Gulf of Mexico (GoM) and into the North Atlantic. A variation of
the design using a concrete spar concept also has been
developed for Arctic applications.
Statoil is sold on the idea, having awarded Aker a
FEED contract for the development of the Aasta
Hansteen (formerly Luva) field in the Norwegian Sea.
The contract is for the design of the worlds largest
deepwater spar platform a hull of 193 m (633 ft) and
a draft of 170 m (558 ft).
The Aasta Hansteen spar will be the first production
platform on the Norwegian continental shelf with steel
catenary risers. With a water depth of 1,300 m (4,265
ft), this is probably the only riser technology that can
meet the challenges of the field, said Henning Ostvig,
head of front-end and technology, Aker Solutions.
But not just any spar platform will do. For the most
part, spar platforms were limited to the GoM, which
has certain metocean conditions such as mostly mild
weather with occasional loop currents and hurricanes.
This artists rendition provides an indication of the size of
the belly spar, which will be the worlds largest spar platform
when built. (Illustration courtesy of Aker Solutions)
SCOTT WEEDEN
Senior Editor,
Production Technology
sweeden@hartenergy.com
EPmag.com
The Norwegian Sea is quite different. The metocean

conditions include long-period swell and create fatigue
induced by normal operational seas. Add to that the
water depth. The platform will be designed for 1,300 m
and will include condensate storage in the spar.
The spar consists of a cylindrical hull with three sections an upper spar hard tank, midsection, and soft
tank. A flooded center well houses the risers.
The hard tank has a wide lower section (belly) and a
narrow upper section (neck), which results in low heave
excitation forces and a high natural heave period.
For oil or condensate storage, tanks can be arranged
in the lower part of the hard tank with a favorable vertical center of gravity. The belly starts below the wave surface and extends down to the hard-tank depth. The
upper portion of the hard tank consists of void spaces
for the required buoyancy for the spar. Model wave tests
have shown that the concept is robust.
The analyses indicated that the belly spar performs
well in the long-period extreme storms without any nonlinear or chaotic responses. In the return-period sea
state in a 10,000-year event, the most likely maximum
heave is 5 m to 6 m (16.5 ft to 19.8 ft), and maximum
pitch is less than 10.
The FEED is due in October this
year. It will be interesting to see
where this latest deepwater technology will take the industry.
Editors Note: Information from The Belly Spar - Design and
Verification of an Ultradeepwater Solution (OTC-23461) by
Rolf Loken, Lars Laukeland, and Henrik Hannus, Aker Solutions, was used in this article.
33
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offshore
ADVANCES
The cost of 20K by 2020

a price worth paying
The task of developing the equipment and capability to safely produce
oil and gas at 20,000 psi in deep water, with greater pressures and higher
temperatures, is a challenge that BP is up for.
s the UK major continues to reinvent itself postMacondo, BP is impressing a growing number of

MARK THOMAS
observers with its plans for tackling its next generaSenior Editor, Offshore
tion of fields in the Gulf of Mexico (GoM) and elsemthomas@hartenergy.com
where in the world.
While talking to some of its leading deepwater
EPmag.com
experts at an informal briefing during the Offshore
Technology Conference in Houston, it became
increasingly clear that the company is driving itself
hard to get to grips with the challenge.
The equipment having to be tested successfully to
Its internal Project 20K program is all about
30,000 psi onshore one and a half times its
increasing its capability to 20,000 psi and being able to
designed working pressure.
deal with temperatures of 176C to 204C (350F to
Looney is the first to admit that making this vision a
400F) In many ways the next chapter in deep
reality will require the pooling of brain-power and
water, according to Bernard Looney, its executive
unprecedented collaboration across and outside of
vice president, development.
the industry, involving not only operators,
With BP seeing the big new play as
vendors, and contractors but also acathe Palaeogene, or Lower Tertiary,
demics and regulators. This will be
this means being able to safely
necessary to define codes and
enter and tap resources such as
standards for the design, operaFew can deny
the Kaskida and Tiber discovtion, and reliability of the new
eries in the GoM. Each of
technology, he said.
that the long-term benefits
these fields has accessible
It also will not be cheap,
far outweigh the short-term
hydrocarbons today but
requiring huge multibillion
costs it is estimated that
each also has resources
dollar investments not only
that lie beyond our indusby BP but the offshore
between 10 Bbbl to 20 Bbbl
trys current limit of 15,000
industry as a whole. It will,
of oil globally lie beyond the however, be a price worth
psi and 135C(275F), he
admitted. The intent is to
paying. Few can deny that
existing technological
develop a 20K system within
the long-term benefits far outlimit of 15,000 psi
the next decade that can be
weigh the short-term costs it
deployed around the world.
is estimated that between 10 Bbbl
and 135C.
For the engineers out there, that
to 20 Bbbl of oil globally lie beyond
means the innovative development of
the existing technological limit of
equipment such as:
15,000 psi and 135C.
Subsea valves, weighing 20 tons, capable of closing
But the industry must be entirely confident and
and isolating hydrocarbons in a matter of seconds;
capable of safely entering and tapping those resources
State-of-the-art sensing and monitoring systems for
the day it attempts to do so. BPs
real-time subsea integrity management;
20K program will play a key part
BOPs weighing in excess of a million pounds and
in the industrys progress toward
standing more than 21 m (70 ft) high; and
that day.
35
COVER STORY:
DOWNHOLE SYSTEMS & TOOLS
DOWNHOLE
TOOLS
revolutionize
The spectrum is wide

for advanced downhole
systems. More than created
as new, drilling technology
has improved in small steps.
incrementally
Tayvis Dunnahoe, Senior Editor, Drilling
odays drilling market is driven by an expansive

array of technological options. While certain systems like rotary steerables can be attributed to a revolutionary beginning, the majority of advanced technology
has risen from small, incremental improvements on
existing technology.
While faster than geologic time, the downhole tool market advances slower than is often attributed. Small changes
such as components made more robust, changes in chemical makeup, and the sometimes hybrid confluence of competing technologies impact the way operators drill and
complete their wells. Field trials, breakage, and coordinated R&D between operators and service providers each
share a place in the field of innovation.
Conventional plays and offshore operations are each
represented as beneficiaries of technological innovation.
However, the shale revolution within the last few years best
36
represents technological growth as an incremental process

rather than one expanded through revolution.
Speaking at Hart Energys Developing Unconventional Gas (DUG) conference in Fort Worth, Texas,
April 24, James Wicklund, consultant at Carlson Capital
LLC, said, There are two return drivers for technology
advancement: to lower costs and improve recovery.
A new paradigm
The struggle between E&P and service companies is a
constant. The E&P company provides the geoscience and
the operations, and of course they own the resources,
Wicklund said. With oilfield service companies providing
the technology and equipment, it is always an issue of who
is generating returns.
COVER STORY:
The circular refinement process for new technology

drives the need and requirement to improve returns on
investment. Whether we get giant relative improvements or absolute improvements from here is almost a
moot point, Wicklund said.
Long-term, consistent returns paid in by diligent cost
control and efficiencies bring attention to the current
shale boom. It changed the paradigm, Wicklund said.
When conventional E&P companies traditionally relied
on wildcatting, it was a gamble. Shale plays are now produced and developed as manufacturing exercises. This
industrialization has provided an environment featuring
repetitive operations with more predicatable results.
These projects are predictable, and they have high
capital costs, so you have a whole block of people looking to put money into these plays and then get their
money back, Wicklund said. Returns actually can be
calculated and improved on. Investors can judge which
company is generating the best returns.
Once again, the argument becomes whether technology and innovation drive returns or whether returns
drive technology and innovation.
Wicklund cited Schlumbergers introduction of its
HiWAY frac system. This technology improved production in the Haynesville and the Eagle Ford significantly,
he said. With all of the equipment seen during the
HiWAY frac in the Eagle Ford, the only difference was
the chemistry and the blending technology nothing
else. Rather than seeing brand new, dramatic technologies coming into the market, the shale plays have primarily been enhanced by continued refinements.
Prime objectives include the maximized recovery of
hydrocarbons in place. The prime objective for the oilfield service industry and its highest returns is to provide
the technology to do this, Wicklund said. The oilfield
industry will continue to refine the technology; the E&P
companies will continue to manage the operations. They
will reward the companies that make that possible, he
added.
Opening the curtain on technology

Horizontal drilling, PDC bits, pressure pumping, and
proppants combined have drastically optimized the
factory approach to developing shale plays around the
world. The important point here is that the shale revolution is considered to have begun in 2007. Baker Hughes
started counting horizontal rigs in 1989. Pressure pumping has been around for almost 60 years. All of these
technologies have been around for a while, Wicklund
said. There was no instantaneous revolution in technology. More importantly, the combination of these technologies and their continual refinement contributed to
the shale barrier finally being broken. The whole point
of this was to improve returns, Wicklund said.
Bottom line
Where the bottom line is concerned, advanced tools
and systems are refined through trial and error. Both
operators and service companies have a vested interest
in identifying weak spots in the technological landscape
and working together to engineer a solution.
Robert Banks, executive vice president and chief
operating officer, Swift Energy Co., also said at DUG
Fort Worth, This is what drives the bottom line: continuous improvement, embracing technology, and successfully managing all parts of the business this will help
you deliver economic results for your company and its
shareholders. n
New RSS system drills faster

Unconventional operations benefit from smooth, fast runs.
perators can drastically reduce cycle times by
landing a well sooner. Eliminating slides and
delivering consistent steering and high ROP, even in
high stick-slip environments, are prime objectives in
directional drilling applications. Smooth curves and
straight tangents with better hole qualities can result in
more effective fracturing operations and higher production rates. Baker Hughes AutoTrak Curve rotary
steerable system (RSS) has been achieving these goals
in one run. It also provides continuous string rotation,
which maximizes overall efficiency by reducing torque
and drag to provide a high-quality well bore, better

hole cleaning, and less cleanup time.
The technology is proving better drilling economics, exact wellbore placement, and faster drilling in
unconventional plays. It reduces the time on the well
with reliable performance, less risk, and an improved
bottom line.
The unit is designed as an all-in-one solution that
features real-time azimuthal gamma ray for precise
steering with accurate near-bit measurements.
Expandable pads on a slow-rotating sleeve maintain
37
COVER STORY:
precise trajectory and proper circulation for carrying

cuttings out of the hole. Surface control of the directional capability maintains drilling plans and allows
on-the-fly target changes when needed. The companys PDC bit technology allows for better weighton-bit, improved hydraulic efficiency, and longer life
in tough formations.
Utica success
A client operating in the Utica formation of the
Appalachian basin contacted Baker Hughes to drill an
8/30.5-m (8/100-ft) dogleg severity curve section.
The clients drilling plan included a hard line avoidance at total depth, and the client wanted to significantly improve ROP.
The client chose to drill the section using the Baker
Hughes AutoTrak Curve rotary steerable system along
with an 8-in. Baker Hughes drill bit. The system
allowed the client to significantly reduce total days of
The Autotrak Curve RSS system is a fully equipped, ready-to-use

directional drilling package that provides full surface control
with full rotation for smoother well bores, often in one run.
(Image courtesy of Baker Hughes)
drilling exposure by completing a one-run curve and

lateral on a three-dimensional profile with a 658-m
(2,159-ft) curve and 2,274-m (7,462-ft) lateral.
The companys drilling system eliminated two rig
days compared to average offset wells. n
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1.
COVER STORY:
New running tool ensures successful landing

of completion string
Peace of mind is a good thing when investing in a costly completion application.
roper placement of the completion string can be challenging for some reservoirs. Not
getting it right the first time can
lead to sunk cost and extensive
nonproductive time (NPT). Managing this risk has become
more accessible as running
tools improve.
One example, the Deep Casing Tools (DCT) Shalerunner,
was designed as a cost-effective method for running completion strings in shale wells.
The tool adds a balanced highspeed rotating reamer shoe to
the completion, allowing the
operator to essentially drill the
completion in. The tool can
reduce wiper trips since the
completion itself has the ability
to wash, ream, and reestablish
the borehole. This allows for the
completion to be landed without a need for rotation and without any risk of prematurely
setting the liner hanger.
According to DCT CEO Lance
Davis, This technology provides a simple plug-and-play
solution in risk management.
The tool is specifically
designed to integrate with all
completions to achieve placement. It can eliminate unnecessary cleanout trips, complement
the best practice of proper
circulation, and provide an
added insurance to achieve success. The intrinsic value of the
technology increases with cost
of the completion and the risk of
wellbore instability. It is suited
for applications where the
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40
COVER STORY:
The Shalerunner provides the

ability to wash and ream and
to reestablish the borehole during completion string running.
This allows for the completion
to be landed without a need for
rotation and without the risk of
prematurely setting the liner
hanger. (Image courtesy of
Deep Casing Tools)
imperative is to land the completion in the right place.
Bakken landing
The Shalerunner was used to
ensure landing the 4-in. openhole completion with more than 25
hydraulic openhole packers and
frac sleeves. The well trajectories
were similar 3,048 m (10,000 ft) total vertical depth

(TVD) and 6,096 m (20,000 ft) measured depth (MD)
with 10,000 feet open hole with the casing shoe in
the horizontal section. Whereas offset wells had
required wiper trips, the operator had moved to eliminate the wiper trip, lubricate the borehole, and slide
in the completion. The insurance for this plan was provided by the Shalerunner. This client is now moving to
increase the step-out to 3,962 m (13,000 ft).
Insurance in Niobrara
The technology was applied to land a 4-in. liner in 6in. open hole where the operator had predicted running
problems based on the drilling record. The well trajectory was 3,048 m TVD and 4,572 m (15,000 ft) MD with
1,524 m (5,000 ft) open hole, but here the casing shoe
was in the vertical section. The liner was conventional
with cementing floats above the turbine. The liner hung
up in two sections and could not progress through the
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COVER STORY:
open hole; circulation started rotating the downhole

reamer shoe, and the blocked passages were both
reamed through until the liner was able to pass.
These initial runs allow future wells to be planned
with more complex trajectories, longer step-outs, and
less wiper trips.Clearly the technology provided benefit, and we are excited about running it again, said Vic
Estes, drilling engineering manager, Anadarko.
Field-tested
DCTs Shalerunner has proven a successful risk
management device. As operators step out further
with more complex completion programs, ensuring
a successful landing becomes a necessity. Avoiding
NPT and decreasing the overall cycle time is
helping to achieve more production with lower overall investments. n
New tool displays full view of borehole

Avoiding trouble spots when placing a horizontal well is made simpler through a new LWD service.
orizontal wells require optimal
From historical drilling data in the
placement. Identifying problems
area, it was known that a 10-m (33-ft)
such as fractures and faults also can
bench layer was the most attractive
assist in designing completions appliinterval. This was reconfirmed and
cation. A new resistivity and imagingrefined by openhole logs run in a pilot
while-drilling service is now providing
hole, where the operator identified a 3high-resolution electrical imaging and
m (10-ft) window as the final lateral
microresistivity measurements around
zone target. Keeping the well bore
the full circumference of the borehole
within the highly fractured layer identiin conductive mud environments.
fied in the pilot hole would require
Schlumbergers MicroScope LWD tool
accurate real-time information to guide
also provides enhanced formation evalsteering decisions. The operator
uation, including thin-bed identificaachieved the well placement objective
tion and invasion profile analysis.
needed to optimize recovery by using
The service uses a 434-in. tool in 578the MicroScope service to provide realin. to 6-in. hole sizes that measures
time electrical borehole images,
azimuthally focused laterolog resistivazimuthal GR measurements, and mulMicroScope images showed
ity at multiple depths of investigation.
tidepth measurement of formation
approximately 349 open fractures
Azimuthal gamma ray (GR) and mud and 867 healed natural fractures resistivity.
resistivity are also measured. Formation that strike northwest to southeast
The well was drilled using the Powresistivity measurements, high-resoluerDrive
RSS, engineered for accurate
and dip steeply to the northeast
tion borehole images, and azimuthal and southwest. The open fractures directional control, high ROP, wellbore
GR data are transmitted uphole in real
smoothness, and low tortuosity, thus
were responsible for significant
time using a high-speed telemetry plat- mud losses during drilling. (Image simplifying the installation of compleform that employs advanced comprestions equipment. Analysis of the LWD
courtesy of Schlumberger)
sion algorithms to maximize data rates.
information in real time allowed proacThe high resolution resistivity and imaging-while- tive well placement decisions to be made by compardrilling service is suitable for use in diverse and chal- ing the apparent dip of the formation to the borehole
lenging environments, including unconventional shale trajectory. The service enabled the operator to keep the
plays, carbonates, and clastic reservoirs.
914-m (3,000-ft) lateral within the 10-ft target of best
An operator in Wyoming planned to develop the Nio- quality pay within the desired chalk bench. In addition,
brara formation in the Denver-Julesburg basin by com- post-drill analysis of the high-resolution MicroScope
bining horizontal drilling with multistage hydraulic images facilitated fracture identification, fault estimafracturing. This formation consists of up to four laterally tion, and structural analysis to optimize stage designs
continuous chalk benches with intervening marls. Both for hydraulic fracturing. The packers were staged to
permeability and porosity in the Niobrara chalk are rel- complete similar zones together and away from large
atively low, and production is expected to be enhanced open fractures. Sleeve ports were positioned close to
by natural fractures.
open natural fracture swarms. n
42
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COVER STORY:
RFID enhances casing running
KV
SIMPLY
ACCURATE
Multiple activation capability can improve hole

enlargement operations.
ole enlargement operations are
common for Alaskas North
Slope. Achieving successful results
requires an operator to reach the
planned total depth (TD) in one run
without restrictions or delay.
When drilling long tangent sections, proper hole cleaning is very
important. Having the ability to activate and deactivate the underreamer provides more flexibility for
pumping and rotating at high rates
to sweep the hole clean, especially
when short-tripping to the shoe.
One major benefit is the ability to
surface-test the underreamer. Most
other major bottomhole assembly
(BHA) components are surfacetested prior to tripping in the
hole. Because conventional underreamers are mechanically pinned
closed, surface testing is not an
option. The RipTide RFID reamer
can open and close at surface, confirming that the system is working
properly and reducing the risk of
malfunction once at drilling depth.
An operator set out to successfully
drill and enlarge a 10 58 in. borehole
to a diameter of 11 in. to provide
additional annular space to ensure
the 958-in. liner could reach TD without restriction.
Weatherfords RipTide RFID
10625 series was deployed with
rotary steerable system (RSS) BHA.
The tool successfully enlarged the
intermediate section from 984 m
(3,228 ft) to 3,325 m (10,910 ft). This
included a 2,341-m (7,682-ft) section of shale with claystone and
sandstone stringers. Keeping the
hole clean is the major challenge in
these formations. The ability to
deactivate the reamer and pump
sweeps or pump and rotate in cased

hole is required.
The operation required multiple
activations including surface test,
below the 11-in. shoe, at TD, and
a second surface test. The operator
successfully ran the 958-in. casing
to TD.
The client was able to reach TD in
the 2,341-m (7,682-ft) section, deactivate the RipTide RFID reamer, and
circulate the hole clean. If additional
reaming was required, the reamer
could have been activated again,
saving a trip.
The RipTide RFID reamer has the
ability to activate and deactivate on
demand multiple times. RFID technology allows the reamer to electronically lock and unlock (activate
and deactivate) down hole, keeping
the drilling BHA down hole and providing unparrelled flexibility. Other
benefits include a fullbore inside
diameter (ID) (all other underreamers require a ball to activate, therefore creating a restriction and
pressure drop in the ID). n
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The RipTide RFID reamer has the ability to

activate and deactivate on demand multiple times. RFID technology allows the
reamer to electronically lock and unlock
(activate and deactivate) down hole
keeping the drilling BHA down hole and
providing unparrelled flexibility. (Image
courtesy of Weatherford International Ltd.)
MParadigm,
45
UNCONVENTIONAL
RESOURCE DEVELOPMENT
New hybrid stimulation validates

intervention for ERD wells
Today, lateral sections are up to 3,000 m (10,000 ft) in length, and even longer laterals are
expected in the future as technology development improves the economic viability.
Fraser McNeil and Sharlene Lindsay, Halliburton;
Robert Lyons and Paul Gracey, Boots & Coots
he increased activity in unconventional, tight oil

and gas shale plays has brought with it some unique
challenges, including extended-reach horizontal wells.
Deep-reach wells will eventually require intervention for a
multitude of operations. Typically, coiled tubing (CT) has
been the technology of choice for live-well interventions.
Whether operations involve wellbore cleanouts, hydraulic

fracturing, or any well intervention process using CT, limiting the flow rate could sacrifice optimum performance.
Jointed pipe may be considered a viable alternative,
as larger pipe enables higher pump rates and deeper
penetration before lockup. However, using jointed pipe
reduces efficiency and increases risk in operations as
continuous pumping and reverse circulation cannot
be achieved.
New hybrid technology

Limitations of CT
Owing to the higher treatment and cleanup rates it
delivers and the ability to reach target depth when running in the well, larger-diameter CT is preferred. However, in deep and complex well paths, limited reel
capacity and government road restrictions combine
to limit CT to small diameters.
With small-diameter coil, simply getting to depth may be
an issue. Compared to larger tubing, small-diameter CT
also is more likely to suffer from lockup. Operationally,
small-diameter CT restricts pressures and velocities (when
pumping proppant-laden fluids), which limits flow rate.
A standard hybrid system rigup

is shown. (Images courtesy of
Halliburton/SPE)
A rigless operation, the hybrid system uses both CT

and jointed pipe in a single work string. Compared to
using only jointed pipe, this technology reduces operational time while improving efficiency and safety in
deeper wells.
The hybrid system comprises a hydraulic workover
unit, a CT reel trailer, and a support tower with gooseneck designed to insert and remove a combined tubing
string of jointed pipe and CT under pressure. The technology was developed to incorporate the flexibility and
safety aspects of a CT operation with larger pipe at
deeper depths. While hybrid strings are not new, this
technology represents the first time hybrid work strings
can be run safely in a live-well situation.
The enabling technology intrinsic to the new system is
a well control package consisting of three specially engineered safety valves that remove the need for wireline
and enable full forward and reverse circulating abilities
throughout the primary operation. Since combining
large CT and jointed pipe, deeper targets can be reached
without the resulting lockup issues of small CT. Furthermore, the ability to deliver comparatively more weight on
bit allows for more efficient and deeper drill-out operations. Since less horsepower is expended overcoming
fluid friction, desired rates can be achieved with less
hydraulic horsepower on location.
Multizone stimulation
A Bakken shale operator was looking for a method to
hydraulically fracture 18 zones in a well with 4-in.
cemented casing, drilled to 3,597 m (11,800 ft) meas46
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UNCONVENTIONAL
Annulus pressure
is maintained just
below fracture
initiation pressure
Annulus fluid
continues to
be pulled into
the fracture
ured depth. In these wells, optimum production is achieved by creating multiple transverse
fractures, where each of these fractures must be
contained within the Bakkens lower, middle,
and upper formations. In Bakken wells where
high-rate stimulation techniques are applied, it
is assumed that the upper Bakken acts as a barrier to contain fracture growth. However, in
northeast Montana the upper Bakken shale is
extremely thin. Consequently, applying conventional fracture treatments in this area results in
excessive height growth, ultimately penetrating
Highest
into the overlying Lodgepole formation. This
pressure
Fracture
location
encroachment opens the well to large volumes
continues
of captured water, increasing water production
to extend
considerably. Height growth can be limited by
reducing the injection rate, which in turn
reduces treatment pressures and limits the
effect natural fractures have on rate requireHydrajet-assisted fracturing employs hydrajetting technology to place
ments and fluid loss.
several independent fractures in a well without requiring packers, bridge
A CT technique known as hydrajet-assisted
fracturing (HJAF) was selected to maximize the plugs, or other mechanical sealing devices. Rather, it uses the Bernoulli
energy conservation concept to create a dynamic seal between zones
stimulation effectiveness of a low-rate solution
using fluid velocity.
using focused fluid energy. This ensures adequate fracture generation and proppant place1,527 m (5,010 ft) of 238-in. jointed pipe; however, only
ment by treating one stage at a time while aiming to
980 m (3,216 ft) of CT was required.
contain the fracture within the Bakken formation. IntroThe CT and jointed pipe were run successfully to target
duced to the industry in the late 1990s, HJAF employs
depth as designed, and the fracturing operations comhydrajetting technology to place several independent
menced. A premature screenout occurred on the second
fractures in a well without requiring packers, bridge
interval, and the well bore was cleaned out immediately
plugs, or other mechanical sealing devices. Rather, it
by reverse circulation. The ability to recover quickly from
uses the Bernoulli energy conservation concept to crea screenout allows the operator to proceed immediately
ate a dynamic seal between zones using fluid velocity.
to the next zone or reestablish communication with the
In a low-rate HJAF treatment, fracturing fluids are
current zone. Most importantly, engineers were able to
injected down the CT while pumping on the annulus
refine the fracture treatment schedule to be pumped on
to control leak-off and possibly supplement the fracture
the next zone to reduce the likelihood of the problem
treatment rate being pumped down the tubing. To mitireoccurring. Consequently, the process was able to congate the effects of erosion, the proppant-laden fracturing
tinue for the remaining intervals with very little time lost
fluid is pumped through the hydrajet tool at controlled
due to the screenout, effectively saving considerable time
velocity. This velocity limitation dictated that 238-in. CT
would be required to perform the operation; however,
and expense and resulting in an expedient and successful
the reel capacity available would not support this pipe
completion of the multizone stimulation treatment.
length. By using 238-in. CT and jointed pipe in tandem,
Furthermore, the low rates pumped through the
the hybrid technology can enable the flow rate required
hybrid string required low hhp, with only 3,000 hp
for effective stimulation.
required on location. This represented only 30% of
the horsepower typically used on conventional intervenProject execution
tions in the area.
The minimum length of CT required is based on the
The hybrid unit was shown to provide the flexibility
distance between the first and last zone of interest, at
and efficiency of CT while enabling a HJAF treatment
which point the rest of the string is made up of jointed
that otherwise could only have been completed using
pipe. This well used 2,804 m (9,200 ft) of 238-in. CT and
jointed pipe.
48
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UNCONVENTIONAL
Cost effectiveness requires

science and execution excellence
A statistical approach has been successful in shale plays. As the gas surplus continues,
combining upfront integrated analysis and execution management is essential.
Rhonda Duey, Executive Editor
after the fact? It is impossible to say whether a more scientific approach would have been more cost-effective in
plays where operators used a statistical approach. However, we do know that fractures often close immediately
after theyve been stimulated and that a large amount of
proppant is wasted.
o gauge the success of the shale gale, one needs to

look no farther than natural gas prices in North America. Areas like the Marcellus have been so successful that
the market has been flooded, pushing prices down and
Modeling
operators into oilier plays. But success does not always
The first part of the scientific approach comes before a
equal maximized production or cost effectiveness.
well is drilled. Reservoir modeling is nothing new to the
When we look at unconventional reservoir developindustry, but it has not been used widely in shale plays
ment, one of the key aspects is maximizing the contact
because operators know where the source rock is.
of the well bore with the reservoir. This is enabled by
Its no surprise that shales present significant
horizontal wells with multistage hydraulic fracturing.
exploitation challenges. Production is variable, fracture
But first you need to know where the best production
effectiveness is impacted by geomechanics, and a high
will come from in that reservoir, said Keith Tushingwell count is required to make these plays work, Tushham, unconventional and microseismic director for
ingham said. Taking advantage of the data allows us to
Schlumberger Information Solutions.
measure reservoir quality to define the sweet spots.
Tushingham added that in addition to maximizing
He added that in shale exploration it is important to
reservoir contact, it is also about minimizing developestablish kerogen types and hydrocarbon maturity to
ment costs because the economics are very tight in these
acquire and drill the optimal acreage. For development
reservoirs. So there also has to be a strong spotlight on
and production, geomechanically based analyses support
cost. This means making certain the completions are
understanding the natural and induced fracture patoptimally planned and that there is an appropriate focus
on supply chain management.
Research done at Schlumberger
reveals that 70% of the production of
a standard shale well comes from 30%
of the perforations. That means that
70% of the perforations arent performing, said Tushingham. That
tells you something, such as some
perforation clusters are in the wrong
place. Stimulating nonproductive
rock is expensive and doesnt contribute to production.
If you use the science to thoroughly
characterize the reservoir quality and
preferentially complete a well to hit
the sweet spots, does it make a difference over drilling as many wells as pos- Combining shale characteristics allows the asset team to plan the well trajectory, steer
wells accurately, engineer the completion program, and optimally hydraulically fracture
sible, fracing the entire horizontal
section, and checking the production and stimulate the rock. (Images courtesy of Schlumberger Information Systems)
50
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UNCONVENTIONAL
terns. Combining shale qualities, kerogen distribution,

and fracture character allows the asset team to plan the
well trajectory, steer wells accurately, engineer the completion program, and optimally hydraulically fracture
and stimulate the rock.
perforations are contributing to production. However,

operators need to be able to evaluate the trade-off
between spending the extra time and money up front
against performing unnecessary completions.
The other method of validation is microseismic, which
can illustrate immediate changes to the
stimulation and completion program or
changes in orientation
on the next well, he
added.
Some companies
will not be convinced
until they can prove
that these methods
will increase efficiency. Its all about
economics, Tushingham said. Everybodys trying to drive
down costs and
increase production.
Microseismic offers a validation method whereby changes to the stimulation and completion program can Going forward, the
be illustrated.
right combination of
science and execution
management will win the day. Because of the high well
You geosteer into the sweet spots and stay in that
count and complexity of shale operations, there is maszone as long as you can, Tushingham said. Tushingham
sive scope to increase efficiency.
illustrated with examples from the Bakken, where well
Supply chain management
bores snaked in and out of the reservoir zone throughThere are huge opportunities in shale plays to reduce
out the entire lateral section. MWD technology can help
the cost of operations by leveraging materials manageoperators stay in zone, he said.
ment, logistics, and execution management.
In shale wells, 50% of the cost and effort goes into the
Maintaining and managing large inventories of well
completions. For example, a recent frac job in the Marequipment isnt a core business for operators, Tushingcellus had eight frac stages and used more than 4 milham said. One potential strategy could be partnering
lion pounds of sand and 3 million gallons of water. This
with service providers to take on inventory risk and
required 165 frac tanks and 623 truckloads of water for
guarantee on-time supply of equipment that oil compaone well. Fracturing selectively can significantly reduce
nies have traditionally held in inventory such as propthe amount of sand and water required as well as related
pant, cement, or acid. A related approach that borrows
materials management costs, Tushingham said.
from other industries would be using warehouses with
Production logging
sophisticated systems and tracking capabilities.
Production logs measure fluids in or around the boreAnother significant opportunity lies in improving
hole during production or injection. They are used to
the efficiency of trucking logistics from suppliers to the
analyze dynamic well performance and the productivity
field and for infield water hauling and equipment delivor injectivity of different zones, diagnose problem wells,
ery. Expert practices developed and implemented by
or monitor the results of a stimulation or completion.
logistics companies could make a big difference in the
Tushingham said that production logging can go a
oil field.
long way toward validating a science-based approach to
Further, most companies use Excel-based tools to manshale development since operators can clearly see which
age planning and scheduling of development and pro52
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UNCONVENTIONAL
duction activities planning, permitting, drilling, completions, and putting wells into production. With thousands
of wells to manage through the various stages of planning
and execution at any given time, there is a real need for
an integrated software solution to provide metrics for
cost, time, and inventory at every stage in the process.
Best of both worlds

At the end of the day, it makes sense to understand the
reservoir to target drilling and completions and to plan
wells and completions as judiciously as possible. Spending money to get the right data and conducting thorough analyses supports cost-effective well placement and
selective fracing. Combining science with smart logistics
and execution can go a long way toward maximizing
production and ensuring better economics.
However, getting the balance right between upfront
planning and execution excellence also is important.
Recent discussions with various operators have convinced Tushingham that more of them are becoming
convinced that a scientific approach provides the most

cost-effective results.
One operator noted that the great majority of the value
is in the earth model and well evaluation and, to a lesser
extent, in well execution. If digital models are not being
built, the company ends up wasting capital and will not
achieve optimal production. In other words, excellence in
execution will not make up for a lack of upfront analysis
to understand where to drill and complete wells.
Summarizing comments from this and other operators, Tushingham said he is hearing more and more that
consistent production performance is related to highly
integrated subsurface teams performing thorough earth
modeling and using consistent and rigorous well design
processes. Further, this upfront planning must then be
combined with well-informed wellsite teams with excellent remote support. Finally, costs above the authorization for expenditure are usually caused by lack of early
integrated evaluation and a less-than-consistent well
planning process.
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0 Copyright 2012 Modern Group Inc. All rights reserved.
UNCONVENTIONAL
Social, environmental issues can

play havoc with shale plays
Transparency goes a long way to answering stakeholder concerns. Failure to address any one of
these aspects could cause unforeseen difficulties that can lead to a costly learning experience.
Melinda Truskowski, Dr. Bill Dershowitz,

and Tekla Taylor, Golder Associates
unforeseen difficulties that can turn what might have been

a profitable venture into a costly learning experience.
Production factors impact non-production risks
any oil and gas companies, when working in shale

plays such as the Bakken, Niobrara, and Marcellus,
find their hands are full managing production issues such
as well spacing and depth, hydraulic fracturing design,
water resources, and sustained gas production.
However, experience shows that in many cases it is navigating the social and environmental issues that separate
successful operators from those who see their expenses
and timelines grow.
Decisions made in the production arena have many
impacts on social and environmental risks. For example, a
well that is sited to access a prolific reservoir and has a surface location in a sensitive environment will typically result
in project delays to accommodate needed permitting and
mitigation.
The network of natural fractures stimulated by hydraulic fracturing is constrained within the shale due to presence of the
quenching layer. (Image courtesy of Golder Associates)
Careful consideration of both production and social

and environmental factors at the planning stages of a well
can improve the return on investment.
This is particularly a concern in situations where the
time remaining on a land lease is short and there is pressure to produce it or lose it.
Experience shows that production risks and the social
and environmental aspects of a project are interrelated.
Failure to address any one of these aspects will likely cause
56
Many production considerations have direct and indirect

impacts on the social, environmental, and regulatory risks
associated with shale plays, all centering on water. These
include:
How the water is sourced even in comparatively
water-rich Pennsylvania, there are potentially many
competing uses for water;
Transporting the water with many truck-loads, possibly
over roads that were originally designed for horsedrawn traffic;
Storing water onsite prior to use, whether in tanks or
in-ground impoundments;
Storing the produced water and managing risks to
groundwater or surface water due to a release;
Reusing water and the implications this may have on
its utility for frac purposes;
Treating flowback and produced water, possibly in
public or commercial water treatment facilities, to the
required standards before discharging it; and
Disposing of water through deep-well injection and
addressing the shortage of sites that are geologically
suitable for injection.
A growing area of concern related to water has to do
with reinjection. Even where the rock mass is suitable for
this, there are often concerns about potentially induced
seismic activity.
Publicity about earthquakes related to deep geothermal
projects has raised concerns about earthquakes that might
be associated with reinjection of produced water. A good
understanding of the rock mass can help manage these
risks as well as provide reassurance to stakeholders, including local residents and regulatory authorities.
Understanding existing fracture network

Knowledge of the fracture network helps determine:
The financial risk involved by understanding how far
the frac will extend, which is a factor in how much
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UNCONVENTIONAL
nately, there have been many developments in the way decisions are made, taking into account the complex relations
between production, social, and environmental issues.
Using tools such as triple bottom-line analyses helps
improve decision-making from a production viewpoint
and it also helps demonstrate good stewardship to stakeholders, showing that the company is taking due precautions to manage potential risks.
In stakeholder meetings and presentations, it is helpful
to clearly explain the decisions made in the way a project
is designed, including the location of wells and how the
water impacts will be managed.
Transparency goes a long way to answering stakeholder
concerns and minimizing the potential for delays and
increased expenses. By illustrating the data and analyses
used in the decision-making process for resource development using visual/graphical tools that clearly present the
data, a company can provide a more compelling communication tool than asking an already skeptical audience to
simply trust that their concerns are being considered.
hydrocarbon resource can be extracted from a well;

Optimal well spacing to maximize recoveries while
minimizing the number of wells required;
A wider range of options for the surface well location
to avoid locations near inhabited areas or where there
are vulnerable ecosystems such as wetlands;
Optimal direction and depth of the producing leg of
the well and trajectories;
The amount of water that will be needed and how
much will be produced; and
Whether fractures can be expected to terminate due to
a low stiffness layer and quenching fractures so these
do not extend past the intended formations.
Transparent decision-making reduces conflict

The large water volume requirements of virtually all
unconventional plays create interest among stakeholders,
who have concerns that need to be addressed.
Good understanding of the reservoir itself and good decisions about water can help defuse potential conflicts. Fortu-
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M
LOGGING &
FORMATION EVALUATION
Integrated petrophysical uncertainty

evaluation impacts reservoir models
Propagating uncertainty from well logs to production forecasts enables
quantification of its effect on other subsurface measurements.
J. Kim McLean, Jean-Claude Dulac,
and Emmanuel Gringarten, Paradigm
owadays, 3-D reservoir models play an essential role

in the assessment of hydrocarbon resources. They
not only are used to estimate in-place volumes but also
are the primary input to flow simulation for optimizing
and forecasting how much resource can actually be
recovered.
A 3-D reservoir model is a gridded numerical representation of the producing reservoir intervals. Each cell of
the model must contain information about the rock type
present at that location along with its porosity, permeability, and fluid saturation. These values are commonly distributed away from the wells using geostatistical modeling
techniques. The input data for these algorithms include
the interpreted well log values as well as parameters such
as proportions of sands, average porosity, geological body
dimensions, spatial correlation lengths, porosity-permeability relationships, saturation-height functions, etc., all
of which are derived directly from well logs and cores.
Uncertainty in hydrocarbon volumes is typically
assessed through multiple realizations of the reservoir
models petrophysical content. Many models are generated using a fixed set of interpreted well logs and parameters derived from them. Given the overwhelming
geological uncertainty present in all oil and gas reservoirs, any one of these models is a possible representation of the reservoir. However, by relying on a single set
of well logs, the process of constructing alternative,
equally probable reservoir models greatly underestimates
the overall uncertainty for in-place hydrocarbons and
thereby also the uncertainty in production forecasts.
The petrophysical logs used in reservoir models are the
result of multiple processing and interpretation steps,
each carrying their own uncertainty and aiming to solve
FIGURE 1. On the top, a histogram shows the possible ranges of
matrix and shale values used to calculate shale volume. The
image on the bottom shows a range of shale volume results
calculated from gamma ray. (Images courtesy of Paradigm)
60
LOGGING &
FIGURE 2. Facies log uncertainty is shown at different well loca-
FIGURE 3. Three different porosity distribution per facies defined
tions from the three different Porosity logs (P10, P50, and P90).
from the porosity logs (P10, P50, and P90) are shown. A Sand
The model comprises two reservoir intervals referred to as A
corresponds to the top reservoir interval of Figure 2 and B Sand
Sand toward the top and B Sand below.
to the bottom one.
an inverse problem that can lead to non-unique solutions.

Capturing and quantifying uncertainty throughout the
petrophysical analysis also can lead to multiple sets of well
logs, each being a valid possibility. These multiple sets
must be considered during the construction of the reservoir model as they will lead to different sets of input
parameters, affecting quantity and connectivity of sands,
porosity, permeability, and saturation distributions. The
ability to propagate well log uncertainty all the way to production forecasts allows geoscientists and engineers to
quantify its importance relative to other key subsurface
uncertainty components.
analysis, and many of these overestimate the resulting

uncertainties if they do not account for dependencies and
correlations between the various parameters used in the
analysis. The Monte Carlo simulation must be performed
in the same manner that a petrophysicist would typically
work. For each iteration, one set of consistent parameters
is used over a zone or depth range. Each resulting simulated log is then a valid possibility. Additionally, the impact
that individual parameters have on volume estimates can
be evaluated. The sensitivity analysis and resulting tornado
charts are key in understanding which inputs drive uncertainty around resource estimates. This also aids in decisions on additional data acquisition to reduce uncertainty,
if necessary, thereby lowering the risk.
A deterministic Monte Carlo analysis yields multiple
realizations of porosity, water saturation, permeability,
and other logs. From these coherent sets of logs, pessimistic, median, and optimistic cases can be extracted.
For example, curves corresponding to P10, P50, and
P90 values can be retrieved using an equivalent hydrocarbon column as a ranking criterion to compare alternative sets of logs. These can then be provided as input
to a reservoir modeling system for a much more complete look at the overall uncertainty on hydrocarbons inplace and production responses. The more sets of logs
that can be considered, the better, as they will allow a
more comprehensive propagation of the uncertainties
through the modeling process.
Standard analysis
Unfortunately, well log uncertainty is seldom considered
in reservoir models. In a standard deterministic petrophysical analysis, a petrophysicist selects one set of parameters for each zone of interest and passes on one set of
well logs to the reservoir modeler. However, deciding what
parameter to use during the analysis is not an objective
matter. The petrophysicist often considers a most likely
value somewhere between a minimum and maximum
value for each parameter, which is generally estimated
from experience or analog information. Thus, there is an
acknowledged range of possibilities that can yield a range
of interpreted results. Running a Monte Carlo analysis of
the deterministic petrophysical workflow gives geoscientists a means to understand and quantify the impact of
well log uncertainty on the overall uncertainty when
assessing in-place hydrocarbon volumes.
Deterministic simulations
There are different ways of applying the Monte Carlo
62
Consistent modeling
To construct a geologically consistent reservoir model, a
hierarchical approach is taken where geological facies
are spatially distributed first followed by porosity, permeJune 2012 | EPmag.com
LOGGING &
distributions for each reservoir interval obtained from

the P10, P50, and P90 porosity logs. Given these differences in a priori distribution, the overall simulation
process will generate spatial porosity distributions that
will cover a larger uncertainty spectrum than considering a single set of well logs.
The same conclusion applies to permeability and
water saturation, providing an ensemble of reservoir
models that capture a larger range of the overall uncertainty. Figure 4 compares oil-in-place estimates from 100
reservoir models using the pessimistic, the median, and
the optimistic set of logs. Figure 4(d) corresponds to
100 models efficiently accounting for alternative well
logs. Figure 5 shows the influence of the petrophysical
uncertainties on cumulative oil produced as obtained
through flow simulation. A similar reservoir model (i.e.,
same random path) is generated for each of the three
sets of logs and associated derived parameters. The
impact on estimated ultimate recovery is clearly visible.
Well log uncertainty too often is ignored in the reservoir modeling process, yet it can drastically impact inplace and produced volumes estimates. Although the
conclusions are somewhat expected, it is important to
note that these types of integrated studies are now possible, and by enabling the propagation of uncertainty
from seismic and log interpretation to flow simulation,
they allow a rigorous quantification of the overall uncertainty and associated risks.
FIGURE 4. Oil-in-place estimates from 100 models use (a) a

pessimistic, (b) a median, and (c) an optimistic set of logs.
Section (d) is the result of 100 models combining all well log
uncertainties.
ability, and initial water saturation, capturing geological

and physical dependencies. The first element impacted
by well log uncertainty will therefore be the facies distribution. Figure 2 shows an example where pay sands are
defined from a cut-off on porosity. Given three possible
porosity logs extracted from petrophysical uncertainty
analysis as described above, there will be three possible
facies distributions, each exhibiting very different reservoir characteristics.
Once the facies model is generated, porosity distributions are then simulated inside each facies. Since there
are different porosity logs, each facies will have a different porosity distribution to honor during the simulation
process. Figure 3 shows the different porosity cumulative
64
FIGURE 5. A production profile at one well location shows the

impact of uncertainty on logs. The three dashed curves correspond to similar geological models generated using three sets
of logs.
LOGGING &
Alternative conveyance techniques

optimize logging in unconventionals
Openhole logging is a well-established means by which E&P companies better understand
reservoirs and determine where and how to complete their wells.
Aamir Hameed and Robert Hemminger,
Weatherford International Ltd.
raditionally, the conveyance technique of choice has

been wireline, which delivers formation evaluation
logging tools to total depth (TD) such that accurate
completion decisions can be made for the optimal longterm viability of the well.
In laterals, conventional wireline logging becomes
more difficult, more prone to failure, and more risky.
This is largely a result of two limitations: first, because
conventional wireline logging involves pushing the tool
downhole, any ledge or other obstruction encountered
runs the risk of hindering forward motion or damaging
the tool.
The second limitation is the cable itself, which does not
provide freedom to the driller. This is particularly relevant in shale wells, which are inherently sticky by nature.
Getting the tool past a sticky section of the well bore
requires rotating the pipe, which is not possible using

conventional wireline logging. Hence this conveyance
technique presents additional risks in the form of incomplete datasets, increased capital costs, and safety concerns
for the rig crew, who are simultaneously tripping pipe and
running wire downhole.
The industrys common approach has been to simply
avoid logging in laterals altogether. In long-lateral shale
oil and gas wells, rather than convey logging tools to
identify those zones that are most conducive to hydraulic
fracturing, operators may decide to fracture the entire
section.
This often proves to be a costly decision because the act
of blindly fracturing an entire interval can result in a high
number of perforation clusters contributing to a small
percentage of total production. Typically, the largest cost
of completing an unconventional well is the fracturing
stage, with each stage costing up to US $250,000. As many
shale gas wells require up to 20 stages, this failure rate
can translate to an operator overspending on a single
well by several million dollars.
Optimizing cost
This conveyance system incorporates a drop-float valve in the

BHA to allow tools to pass through it for drop off or pick up,
which also helps maintain well control at all times during the
operation. (Images courtesy of Weatherford International Ltd.)
66
Weatherford has a suite of smaller diameter, shorter

length memory-based logging tools called Compact tools.
All functions of the tool can be deployed to TD via
conveyance methods well suited for laterals, including
monopole, cross-dipole sonic and formation testing,
basic resistivity, and nuclear services. These solutions
ensure that wireline data with the same set of tools,
sampling rates, and output can be obtained reliably
without using wireline.
Pump-down drop-off is a through-drillpipe conveyance
system used to deploy a memory logging tool string that is
run on wireline through the drillstring after the driller has
reached TD. The tool string is dropped off into the bottomhole assembly (BHA). The wireline is then retrieved
and the drillstring is pulled out of hole (POOH), while
the attached logging tools record formation data to memory. This conveyance system incorporates a drop-float
valve in the BHA to allow tools to pass through it for drop
off or pick up, which also helps maintain well control at
LOGGING &
Additional reservoir insight,

including identifying the presence and orientation of faults
and fractures, evaluating secondary porosity, and identifying
sand-shale facies, is possible
ft) TD. The tools were deployed into the well bore and
POOH to successfully log the entire well bore. The complete logging data profile was acquired in 45.5 hours,
just 10% of the time the operator had spent on attempting to log the well previously with the conventional logging tools.
by analyzing the microresistivity

formation images provided by
Logging shale wells
the CMI.
The successful deployment of logging tools via the well

shuttle and pump-down/drop-off conveyance techniques
has given operators the confidence to begin logging shale
wells. The two factors most critical for shale resource
development optimal well placement and accurate
fracture stimulation in the zones of interest particularly
benefit from the log data obtained from cross-dipole
sonic measurements and microresistivity imaging.
The industry's first 2.5-in cross-dipole sonic tool
provides acoustic data for a variety of formation evaluation applications. It incorporates three high-powered
transmitters one monopole and two wideband, lowfrequency dipole transmitters perpendicular to each
other. A receiver section consisting of an array of eight
receiver stations each one consisting of gain-matched
piezoelectric geophones aligned with the dipole transmitters record up to 96 high-fidelity wideband waveforms. These sections are separated by an isolator
section that prevents direct flexural wave transmission
to the receivers through the tool body. Acoustic data
from the cross dipole tool is used in the evaluation of
rock mechanical properties, which informs the design
of hydraulic fracturing programs.
Additional reservoir insight, including identifying the
presence and orientation of faults and fractures, evaluating secondary porosity, and identifying sand-shale facies,
is possible by analyzing the microresistivity formation
images provided by the compact micro imager (CMI).
The CMI has eight arms located in two different planes.
The upper caliper arms are cross-linked to help centralize
the tool and provide two diameter measurements, while
lower caliper arms are independently articulated to maintain the good borehole contact necessary for high image
quality. The CMI can be deployed through drillpipe into
open hole or into extremely tight-tolerance boreholes.
For shale plays, the deployment of cross-dipole sonic
and CMI tools has broader implications if the datasets are
incorporated with information from other evaluation
tools, including mud logging, core sample analysis, and
wellsite geochemical analysis. Taken together, these
datasets provide a comprehensive understanding of the
reservoir such that it can be developed with minimal
uncertainty and risk and help to identify sweet spots,
which is a much awaited solution for the industry.
all times during the operation.

In addition, a reamer or openbore drill bit can be run when
applying the pump-down dropoff technique.
Another conveyance method,
the well shuttle messenger,
transports logging tools inside
the drillpipe such that they are
isolated and protected from the
borehole environment. No
wireline is required for conveyance, and therefore the shuttle can be run into the well at
tripping speed and rotated up
to 60 rpm to move past sticky
sections of the well bore or
other obstacles with circulation
as and when required. The
tools are deployed at TD, and logs are recorded into
memory. Again, drillers have the freedom to circulate at
any time and back-ream, within operational limits, if
required. When integrated with a full drillstring-conditioning trip, the well shuttle helps eliminate a loggingonly run.
Success in complex trajectory

The well shuttle system has been used to deliver and
deploy logging tools for laterals around the world. An
operator in China used this conveyance system to log the
kickoff and horizontal section of a complex-trajectory
well in a sandstone formation after previous techniques
failed. The operator had tried a tool-push conveyance
logging system into the openhole onshore well, but after
six runs over the course of 22 days, the system failed to
reach TD. The failure resulted in a cost of $300,000 in rig
time and irreversibly damaged sonic and induction tools.
The company provided a logging string consisting of a
gamma ray tool, array induction tool, sonic sonde tool,
and borehole navigation tool, all deployed with the well
shuttle. The shuttle protected the logging string during
run in and successfully conveyed it to 5,730 m (18,799
68
DIRECTIONAL
DRILLING
New-generation hole-enlargement
tools improve drilling efficiency
Proper reamer selection proves to bolster drilling efficiency in
directional applications.
Will Bradford, Halliburton Drill Bits & Services
This graph shows the XR Reamers enhanced capabilities

including opening ratio, temperature stability, and flow rate.
(Images courtesy of Halliburton)
XR Reamer
70
Te
m
pe
rat
ure
Flow Rate
he advantages of reaming while drilling are clear: the

pilot hole offers good directional control while the
enlarged hole creates the right conditions for running
casing or completion equipment. The end result can
lead to significant savings in time and cost. Over the last
several years, however, experience with this operation
has highlighted issues that can erode savings and contribute heavily to nonproductive time (NPT).
The chief problem has been complex bottomhole
assembly (BHA) dynamics that result from managing
two hole diameters simultaneously. Often, the bit is
drilling in a different formation type than the reamer,
which is positioned in the BHA at quite a distance from
the bit. Therefore, the issue of two hole sizes becomes
even more complicated the vibration tendencies
induced by one type of rock are compounded by the
characteristics of the higher rock.
Vibration, which is defined as unwanted axial, lateral,
and torsional movement, not only dissipates energy that
should be available at the bit face, but can lead to multiple costly failures related to fatigue, including:
Drillstring twist-off;
Tool damage/malfunction;
Reduced mean time between failure
for MWD/LWD and directional
drilling components; and,
Compromised performance in
1,400
rotary steerable system (RSS)
applications.
One study estimates the cost of vibra900
tion-related failures to be in excess of US
$300 million annually (Jacobsen-Plutt et
al. 2009).
Analysis comparing the level of vibration before the activation of the reamer
to the level after activation shows that
vibration intensifies when the reamer is
engaged. In short, the hole-enlargement
tool is often the noisiest component in the BHA (Servaes 2009).

Other aspects of the operation can be impaired by the
use of conventional reamers. The acquisition of important LWD data can be disrupted by high vibration levels
and a lack of hole concentricity. Cutter design can
severely limit the ROP and shorten the run time, resulting in multiple trips and tool replacements. Inability to
produce and sustain a gauge hole will create issues for
running and cementing casing. Factoring in todays
challenging well trajectories, even moderate loss of hole
quality can exacerbate all these potential problems.
But, even if a reamer can deliver acceptable performance in meeting these challenges, design limitations can
significantly reduce its operational effectiveness. The
selection of a hole-enlargement tool must address several capabilities including the determination of how
much enlargement can be achieved (opening ratio);
maximum flow rate capacity; and whether or not the
arms and cutters offer prolonged life and fast drilling.
A new generation of hole-enlargement tools has been
able to establish an excellent track record in all of the
230
Other
175
25%
50%
Opening Ratio
DIRECTIONAL
DRILLING
The XR Reamer is engineered to take out the vibration-inducing aspects. Pictured is a

reliability assessment based on an X-Y vibration data field test.
above performance criteria. In addition, it is the only tool that can be

deactivated after enlarging for drilling ahead with the original pilot
hole size and allow full-flow circulation while tripping out. The XR
Reamer features multiple refinements that help minimize or eliminate
the well-known issues typically encountered with hole-enlargement
operations. Extreme downhole environments are also part of the
repertoire: the XR Reamer is designed for temperatures up to 230C
(450F).
Hole size, flow rate

If hole enlargement is the goal, then a reamer that maximizes that
value will help cut costs and improve the efficiency of subsequent casing-running operations. The XR Reamer features a wide range of
diameters capable of enlargement to 50% over the pilot hole or drift
diameter.
The high-powered rigs and drillships deployed around the world
have sophisticated, high-output pumps that function at high efficiency.
While the design of MWD/LWD tools has generally kept pace with the
high flow rates generated by these pumps, many reamers require
restricted flow rates. The XR Reamer has proven to operate reliably at
flow rates up to 1,400 gal/min and at mud densities up to 16.0 lb/gal.
In the Norwegian North Sea, an operator recently drilled a 3,876-m
(12,716-ft) section in one run to total depth, with a pump rate of 1,189
gal/min. The arms exhibited very little wear.
Reliabilty, run length

The XR Reamers are the result of several years of continued evolution.
As an example, they have been deployed in deepwater Gulf of Mexico
(GoM) operations for a major operator to successfully enlarge approx72
DIRECTIONAL
DRILLING
imately 19,050 m (62,500 ft) of well bore. In a total of 38 runs using a variety
of RSS configurations, the high-performance reamers have accumulated
2,285 hours with 97% reliability.
On a 2010 field trial in the North Sea, the XR Reamer was used to successfully drill and ream a 3,101-m (10,173-ft) 812-in. x 912-in. section, the longest
run achieved in the Brage field and a world record at that time. The average
ROP was 61 ft/hr. One year later, a modified and improved tool was used in
the same field to drill 2,931 m (9,616 ft), with an average ROP of 105 ft/hr.
In Egypt, performance records compiled for 18 wells drilled by one operator showed that the XR Reamer had zero impact on drilling performance
and produced no detectible vibration in the BHA. The operator was able to
sustain a high ROP and control equivalent circulating density (ECD) values
within the programmed range. Caliper logs on these wells showed a gauge
hole in every reamed section.
The runs ranged in length from 30 m to 577 m (98 ft to 1,893 ft). The
opening diameters ranged from enlarging from 812 in. to 1214 in. up to
enlarging from 1712 in. to 22 in.
In another Egypt-based operation, the 812-in. hole was enlarged while
drilling with an RSS and holding at a 73 inclination to accommodate running a gravel pack application. The operator was able to drill and open
the 53-m (174-ft) section to 912 -in. in one run of 8.8 on-bottom hr, with an
average ROP of 19.75 ft/hr. In this case, the XR Reamer was run and
made up below the MWD/LWD tools. The LWD data were obtained without disruption.
The cutter quality and arrangement on the arms is integral to longevity
and reaming effectiveness.
Vibration
When a hole-enlargement tool can reduce or eliminate vibration, it naturally optimizes the entire drilling operation from BHA performance to
ROP to log-data acquisition. The XR Reamers are carefully engineered to
take out the vibration-inducing aspects. The reamer body helps minimizes
BHA vibration and micro-doglegs at formation transition interfaces. Lateral
vibration is reduced owing
to the tight tolerance body-to-hole design. Resistance to bending and tilting
helps reduce torsional vibration. Overall, the XR Reamer has outperformed
others in key areas that impact cost and time.
A robust accumulation of field performance data confirms the ability of the
XR Reamer to consistently meet or exceed hole enlargement requirements,
even in difficult downhole enviThe opening-size data for the one operators
ronments. The technology is
GoM wells is shown below.
mature enough so that a wide
range of tool diameters is availPilot Hole, in.
Enlarged Hole, in.
able. The tool design is flexible
enough to allow for the effective
8
9 , 12
positioning in the BHA, optimal
10
12
cutter strength and placement,
12
14 , 17
and adaptation of function to
wellbore conditions.
16, 17
20
1
73
DIRECTIONAL
DRILLING
Hybrid system takes drilling

in new direction
Technology blends features of RSS and mud motors to optimize drilling in low buildup-rate wells.
Chris Maranuk, Weatherford International Ltd.
odays reservoirs are increasingly defined by challenging, tortuous wells that require more precise directional drilling. Operators seek innovative solutions that
deliver improved drilling efficiency and directional control that also remain cost-effective. Traditionally, there
have been two alternatives for drilling horizontal and deviated wells conventional mud motors and rotary steerable
systems (RSS).
Mud motors are a reliable, proven technology that is
economical to use with little risk. But mud motors often
cannot optimize drilling efficiency and lose the ability to
provide extended-reach drilling (ERD) capability like
rotary steerable tools do. Rotary steerables offer precise
directional control, thus improving drilling efficiency and
enhancing ROP, but they are expensive to operate and
costly to replace if lost in-hole.
A new technology is bridging the gap between the
two, providing the industry with a third economically
attractive option designed to improve ROP and reduce

sliding in low buildup-rate directional drilling situations.
Weatherfords MotarySteerable directional control system
combines the hydraulic horsepower of a positive displacement mud motor (PDM) and the directional control of an
RSS, providing continuous 3-D directional control while
rotating and creating high-quality, smoother boreholes.
The design features a mud motor with a bent sub and
specialized MWD tools using a new steering technique
called targeted bit speed (TBS) that enhances drilling efficiency for a variety of drilling scenarios. These include vertical control, horizontal S-shaped wells with long tangents,
and J-shaped well designs.
TBS facilitates steering by modulating the fluid flow
within the drillstring, creating slight oscillations in the flow
rate through the mud motor. This allows high-frequency
variations in drilling parameters to control the bit speed to
help steer the well in any targeted azimuth. TBS also overcomes sliding, one of the key limitations of mud motors,
which requires that the drillstring rotation be stopped
while the bit is rotating downhole. This can lead to drilling
inefficiency and reduced drillstring rotation, especially in
highly deviated wells. When TBS is employed, drillstring
rotation can be near continuous thereby reducing wellbore
frictional forces and helping with ERD applications.
Low buildup-rate wells
TBS facilitates steering by modulating the fluid flow within the drillstring, creating slight oscillations in the flow rate through the mud
motor. This allows high-frequency variations in drilling parameters
to control the bit speed to help steer the well in any targeted
azimuth. (Images courtesy of Weatherford International Ltd.)
74
The technology is designed for any application that uses a

mud motor, including vertical control, long horizontal laterals, and tangential situations where a hole is drilled and
held at an angle. In S-shaped wells, the tool can be used to
build up angle to a desired inclination, drill a tangent section, hold the angle, and redirect the bottomhole assembly (BHA) to maintain verticality.
But the system is particularly effective as a costefficient alternative to RSS for optimizing horizontal
drilling when buildup rates are low 0 to 3/30 m (100
ft). If a higher build rate is required, the system is flexible
in that it can switch from continuous rotation to sliding or
conventional drilling until the desired build rate is
achieved without making changes to the BHA.
Developed in 2008 and 2009, the system was designed
for use in hole sizes ranging from 6 in. to 12 in.,
DIRECTIONAL
DRILLING
The design features a mud motor with a bent sub and specialized MWD tools using a new steering technique called targeted bit speed
(TBS) that enhances drilling efficiency for a variety of drilling scenarios. These include vertical control, horizontal, S-shaped wells with
long tangents and J-shaped well designs.
including the 778-in. size, which is common in North

America but infrequently serviced by RSS.
Following successful field trials in 2010 in the Uintah
basin, Barnett, and Eagle Ford shale plays, the technology was introduced commercially to the US shale plays
in 2011 and has since been deployed globally. It has
been used in a variety of applications in Canada, Russia,
Mexico, and Eastern Europe, drilling more than 76,200
m (250,000 ft) in close to 50 wells.
hole with a maximum dogleg of 5.95/30.5 m (5.95/100

ft) as an alternative to an RSS to reduce sliding time and
produce a smother wellbore. Drilling commenced at
2,870 m (9,415 ft) and continued to 5,984 m (19,632 ft),
more than 3,000 m (10,000 ft). The system allowed the
operator to gain precise steering capability and decrease
sliding time from 30% to 8%, resulting in a reduction of
seven days of rig time. The smoother wellbore enabled
the operator to easily run casing, saving more than US
$520,000 in rig time and other associated costs.
Suited for shale

The system is particularly well suited for low-cost applications in the US unconventional markets for vertical
control and horizontal drilling.
In a long-lateral oil well in the North Dakotas Bakken
shale play, a 4-in. system was deployed in a 6-in., 91.23
76
Challenging formations, well designs

TBS technology also is well suited for hard formations such
as limestone and dolomite that require the horsepower of
a PDM and for remote, logistically challenging locations
where the cost of bringing in and servicing complex and
DIRECTIONAL
DRILLING
costly RSS is prohibitive. The companys system was used to

successfully drill a straight hole in an extremely hard formation in Poland with 12-in. bits. The well was drilled
from approximately 1,700 m (5,577 ft) to 3,200 m (10,498
ft), and because of formation characteristics, it took 45
days to drill approximately 1,500 m (4,921 ft).
Most of the well was kept below a 2 inclination, with the
final section being allowed to drift up to 3.5 once the tool
was removed from the BHA prior to reaching total depth
(TD). Both PDC bits and less expensive tri-cone bits were
used in the operation. However, the tri-cone bits proved to
be only about 50% as effective as the PDC bits, which provided better directional control.
The technology also was deployed in a trial program for
a major operator in the Buzuluk region of west-central
Russia in the southern Ural Mountains. Although rich in
oil and gas reserves, the area is very remote and presents
extreme operational challenges for bringing in equipment. In this case, the system was used to drill four Sshaped wells to reach the reservoir targets.
Seven S-shaped and J-shaped wells, all 8 in., were drilled

with the system in Mexico. These types of well designs are
typically the most difficult to drill with conventional BHA
assemblies because the same BHA must be used to drill the
vertical, build the curve, hold the tangent, and then drop
the well back to vertical while drilling to TD.
TBS technology allowed these wells to be drilled using
conventional BHAs with near-contiguous rotation of the
drillpipe. Most of the wells exceeded 95% rotation of the
drillpipe, with several of them building and holding tangents of more than 60. High-angle tangents tend to be
very difficult to hold direction without significant corrections as the BHAs often tend to build, drop, or turn
depending on formation and BHA dependencies.
Successful applications of TBS technology resulting
in enhanced ROP, reduced slide time versus rotating time,
and fewer days on location in various regions have opened
opportunities for further global expansion of the MotarySteerable system, with deployments planned in Colombia,
the Middle East, and China in the near future.
77
TESTING/PRODUCTION
MANAGEMENT
Greater intelligence
requires greater integration
For all the commentary on intelligent oil fields and smart well-based operations,
operators are still struggling to access all the information they need on their
subsea operations and subsea well performance.
Vincent Vieugue, Emerson Process Management
t is no coincidence that subsea wells still tend to generate up to 15% less average recovery rates than their topside counterparts, with much of this due to a lack of
information that can lead to costly subsea interventions.
A lack of pressure and temperature information, for
example, can result in the need for well intervention techniques such as logging, perforating, and plug setting, and
if not detected in areas behind the well, the casing can be
even more damaging.
Similarly, completion components might have to be
replaced and wellbore access freed up if sand is not
detected early in the wellstream. The dangers from water
breakthrough in the wellstream can lead to significant
production problems relating to hydrate formation. Furthermore, the stakes are high with an increased focus on
subsea operations and growing subsea infrastructures.
Douglas Westwoods World Deepwater Market Report
forecasts a 90% growth in deepwater expenditure
between 2012 and 2016, and Emerson expects the number of new christmas trees coming onstream each year
to increase from about 280 in 2011 to around 720 by
2016. These subsea trees also will bring with them associ-
ated hardware, such as control modules, wellbore equipment, manifolds, and umbilicals equipment that will all
need monitoring.
The need for intelligence subsea

Todays operators need subsea fields and well architectures to be equipped with the very latest in subsea monitoring and maintenance techniques, with the success of
these wells dependent on the vast amount of real-time,
fieldwide production information generated. This
requires the use of intelligent solutions that can
provide continuous monitoring, handle and generate
value from huge reams of data, and remain proactive
throughout the production life cycle.
The bottom line is that todays smarter oil and gas
organizations must apply new technologies and processes
to capture and transform raw data into actionable insight.
The potential benefits are huge. Shell, for example, estimates that using intelligent technology for monitoring
and controlling a field results in around 10% more production of oil and 5% of gas.
Growth in intelligent multiphase meters

The evolution of multiphase meters is a good example of
the move toward increased intelligence subsea. Subsea
multiphase and wet gas meters generate crucial
real-time information on flow conditions in the
reservoir and act as an important alternative to
traditional well testing. They provide data on
flow conditions in the reservoir and track the
development of gas coning, water breakthrough, indications of residual oil, and even
reservoir zone interconnectivity.
Subsea multiphase meters can work intelligently
alongside sand erosion and pressure and temperature sensor systems to help operators deal with
challenges such as sand erosion and other threats
to subsea infrastructure as well as ensuring each
well is operating at peak potential. (Images
courtesy of Emerson)
78
TESTING/PRODUCTION
MANAGEMENT
While previously being viewed as

ments. The meter detects the resostandalone products, today they are an
nant frequency in a microwave resointegral part of a much broader field
nance cavity with the resonant
management system and come with a
frequency depending on the dielecvariety of intelligent features that
tric properties of the fluid mixture
negate the need for subsea intervenpresent in the cavity.
tion and maintenance. These include
When water is detected in the well,
condition monitoring and intelligent
the meters can provide crucial inforself-diagnostics to improve flow commation to the operator, Anadarko
puter capabilities, consistency checks,
Petroleum, allowing preventative or
data validation and configuration,
remedial action to be taken through
alarm systems, and calibration with
other subsea instrumentation. This
third-party PVT modules.
might include chemical distribution
The latest subsea multiphase and
and injection systems, which ensure
wet gas meters from Emerson also
the accurate injection of hydrate
come with a number of intelligent
inhibitors such as methanol and
new features. For example, a soon-toethylene glycol.
be-launched subsea wet gas meter
Another example in the GoM is
In the GoM, Emersons Roxar subsea wet gas Petrobras Cascade and Chinook
comes with new transmission-based
meters played a key role in measuring the
technology to extend the operating
fields, where Emersons Roxar subsea
early onset of formation water production on multiphase meters are working alongrange, improved accuracy and
Anadarko Petroleums Independence Hub
reduced PVT dependence through
side sand erosion and pressure and
facility, allowing appropriate preventative
multivariate analysis, and a new salintemperature sensor systems. The sysor remedial action to be taken.
ity measurement system.
tems are working together intelliWhile such features are crucial in
gently, helping Petrobras meet
reducing the need for subsea intervention, it is through
challenges such as sand erosion and other threats to subthe interaction of these meters with other subsea instrusea infrastructure as well as ensuring each well is operating
mentation that they can be used to their full potential and
at its peak potential through the multiphase meters.
contribute to an intelligent fieldwide production system.
The final example is from Statoils Heidrun field on the
In this way, they move away from just being part of the
Norwegian Continental Shelf, where, according to the
reservoir engineering discipline and adopt a multidiscipliNorwegian Petroleum Directorate, continuous efforts are
nary approach across the reservoirs life cycle.
being made to find new methods to increase oil recovery.
Such integration can include everything from the wet
While the field does not include Emersons multiphase
gas meters identifying water breakthrough and enabling
meters, it does make extensive use of the companys intruremedial action to be taken via other instrumentation to
sive corrosion probes and intrusive sand/erosion probes
the combining of multiphase meters with other intelligent
and also has a few locations with combined corrosion and
downhole pressure and temperature devices.
sand/erosion probes to track sand damage and corrosion.
In this way, crucial decisions such as choke setting or
With a recent increase in sand production in the field,
EOR techniques such as artificial lift can be based on all
Emerson has been working with Statoil to increase the
the necessary information. Reconciled well phase flow
fields sand monitoring capabilities through a new sand
rates, for example, can be combined with permanent
management module. The module allows Statoil to
downhole gauge data to calculate predefined production
respond faster to changes in sand production conditions
targets and system constraints.
and establish maximum sand-free production rates for
production optimization. A common software platform
GoM, North Sea examples
also allows the operator to monitor and manage both
In the deepwater Independence Hub field in the Gulf of
intrusive and nonintrusive sand monitoring equipment
Mexico (GoM), Emersons Roxar subsea wet gas meters
and can have a crucial impact on production strategies.
played a key role in measuring the early onset of formaA single, common software platform is vital to any inteltion-water production.
ligent field monitoring system. Data validation, flow assurThe meters intelligent measurement capabilities are
ance, sand and erosion, corrosion, simulation and
based on advanced microwave-based dielectric measureproduction control, virtual flow metering, and hydrate
80
TESTING/PRODUCTION
MANAGEMENT
management all can be coordinated through Emersons

software platform, providing operators with a complete
overview of their subsea assets.
Operating intelligently
alongside other instrumentation
Today, a chief criterion of any of Emersons instrumentation is its ability to operate seamlessly and intelligently
alongside other instrumentation.
Downhole monitoring systems and HP/HT gauges, for
example, are today deployed in production, injection, and
observation wells in conjunction with the downhole instrumentation of highly complex multizone intelligent wells.
Such systems also are working closely with subsea corrosion sensors that help prevent subsea leakages, subsea
valve actuators that allow for the rapid isolation of wells
while reducing the size and weight of the subsea templates, and subsea acoustic sand monitors that enable
the operator to immediately respond to increases in
sand production.
82
Furthermore, recent developments in flow systems that

now can generate multiphase flow measurements from
downhole in the well will ensure a close link with other
downhole solutions, with the Roxar Intelligent Downhole Network (IDN) acting as a unifying platform.
The IDN allows operators to install up to 32 instruments on a single cable, all of which provide input to
manage a whole range of production wells or separate
zones simultaneously. In this way, the intelligent network
can act as a hub for downhole choke position indicators,
future measurement devices, and third-party sensors
and for the transmission of power and data a subsea
intelligent network in action.
As operators subsea operations continue to grow and
as the need for increasing recovery rates become ever
more pressing, delivering improved subsea intelligence
and integration into reservoir monitoring is likely to
remain a key operator focus.
Finally, the whole is proving to be greater than the
sum of its parts in intelligent subsea monitoring.
TESTING/PRODUCTION
MANAGEMENT
Protecting todays SCADA systems

with a defense-in-depth strategy
With increasing cyberattacks on production facilities and pipelines,
operators must be proactive in defending SCADA systems.
Darin Andersen, Norman ASA
ecure and well protected SCADA systems are critical to

E&P companies. Without this protection, cyberattacks
have the potential to wreak terrible accidents and destruction to both facilities and the surrounding area.
A defense-in-depth approach to network security will
provide the most comprehensive protection against malware threats and other forms of cybercrime. Security
architectures with multiple layers of protection from
multiple vendors provide the best protection, especially
when deployed at multiple levels in the network.
Likewise, a multilayer endpoint management strategy
with antivirus, patch, remediation, and application and
device controls will provide the most comprehensive
protection at network end points.
Security professionals at E&P companies should continuously review their organizations security implementations to identify areas of vulnerability and implement
defense-in-depth network strategies appropriately to
ensure that the agencys network resources are adequately protected.
Evolution of SCADA for E&P
SCADA systems have evolved significantly. E&P companies have recognized the lowered costs, simplified
accessibility, and improved efficiency gained through
connecting an IP-based network to the SCADA systems.
Todays SCADA systems are integrated tightly with corporate networks and the Internet.
Multiple factors have contributed to the increased
exposure of SCADA control systems, and these include:
Technical information availability. Public information
about infrastructure and control systems is available
to potential hackers and intruders. Design and
maintenance documents and technical standards for
critical systems can be easily found on the Internet,
threatening overall security.
Remote connections that are vulnerable. Unstable or
unsafe connections such as VPNs and wireless networks are used for remote diagnostics, maintenance,
and examination of system status.
Networking of control systems. Organizations have
increased connectivity through the integration of
control systems and enterprise networks. Any breach
at any point in the network exposes all the information SCADA-related data, emails, corporate information, etc., to intruders.
Ensuring cybersecurity in control systems can seem
like a daunting task since it requires cooperation and
commitment from the entire organization. Upper management must recognize the numerous benefits of a
secure SCADA system.
A wide range of energy companies use SCADA systems

to control and manage oil and gas facilities and related
infrastructure. The types of critical infrastructure that
SCADA systems control include physical
and IT assets; networks; and services
that, if disrupted or
destroyed, could
have a serious
impact on the
health, security,
and/or economic
wellbeing of both
people in the area of A well-devised defense-in-depth
strategy is effective in protecting SCADA systems
the facility and the
from cyberattacks. (Illustration courtesy of Norman)
country at large.
84
TESTING/PRODUCTION
MANAGEMENT
These advantages include ensuring system uptime,

reliability, availability, and safety to both the facility and
surrounding area. A secure system protects the company, its vendors, systems integrators, customers, and
others who interact with the SCADA system.
To provide maximum protection for critical SCADA
data assets, IT teams at E&P companies should deploy a
defense-in-depth security approach that includes multiple
layers of protection to recognize and thwart cyberattacks.
Defense-in-depth in modern networks

The basic premise of defense in depth is to use a layered
approach to network security by deploying one or more
layers of protection at network boundaries (firewalls,
antivirus/malware appliances, and intrusion prevention
devices) and additional layers of protection at the individual computer workstations or end points.
This defense strategy is most effective when using
multiple unique defense mechanisms, such as multiple
vendor solutions for anti-virus control. Any gaps in one
vendors security solution are addressed by the second
vendors solution.
Signature-based detection. This strategy involves

searching for known patterns of data within executable code. These patterns are regularly updated
by the antivirus companys research team. It is critical that all end points with antivirus software receive
updated signature files regularly.
Heuristic detection. This form of detection is used to
identify new malware for which no signature is
known. The antivirus software identifies new viruses
or variants of existing viruses by looking for patterns
that are similar to those of known malicious code
or slight variations of such code.
Sandbox detection and analysis. Sandbox solutions execute unknown files in a protected environment and
analyze the results of that execution to see if the files
trigger any malicious actions in the host environment.
This strategy can identify new and undiscovered malicious code that can pass through signature-based and
heuristic detection methods undetected.
All antivirus solutions will provide some level of protection for the network end points, but the best antivirus
solutions use a combination of all three techniques to
protect end points from infection.
Network-level security
The first level of security to consider when implementing
a defense-in-depth strategy is at the network level. Proper
attention to security at the network level will provide benefits including
Network perimeter. The network perimeter or edge is
where Internet traffic enters and exits an organizations network. Various types of protection can be
deployed, including malware protection, spam filtering, content filtering, network firewalls, and intrusion
detection and prevention.
Segmented networks. Large internal networks often are
organized into groups of smaller networks. This type
of network topology reduces congestion and improves
network performance by reducing the amount of traffic flowing through any one network segment.
Endpoint-level security
An effective security infrastructure must protect all
network end points (servers, workstations, etc.) from
cyberattack. The accepted way to protect these network
resources is by installing antivirus software and enabling
a firewall at each end point.
Antivirus software is used to prevent, detect, and
remove malware (including computer viruses, computer
worms, trojan horses, spyware, and adware). There are
a number of strategies that can be employed by an
antivirus solution:
Antivirus endpoint protection is not enough

Antivirus software is a critical component of endpoint
security, and IT teams must ensure that the software is
installed on every server and workstation on their networks. End points with outdated virus definition files are
a security risk, so procedures should be put in place to
ensure that all end points are regularly updated with
new virus definition files.
Patch and remediation software. More than 90% of
cyberattacks exploit known security flaws for which
remediation is available. For network end points to
be completely secure, security personnel also must
know what software is installed and operating on
each end point.
Application and device-control software. One aspect of
endpoint security that is often ignored is application
usage. By implementing a whitelist approach to
managing application usage, security personnel can
define what devices and applications are permitted
on the network through user and/or machine-specific policy rules.
Solutions like the Norman SCADA Protection system
protect against cyberattacks from malware such as trojans, worms, and viruses that can cause millions of dollars of damage and disruption to production and
services delivery. These types of solutions are a critical
component of a defense-in-depth strategy.
85
UNCONVENTIONALS:
MISSISSIPPI LIME
Mississippi Lime moves into

mainstream oil production
in two years
Operators, including majors, are beginning to move into the Mississippi Lime play in Kansas,
while an emerging horizontal Woodford play in Oklahoma is adding to the attraction.
Scott Weeden, Senior Editor, Production Technology
he Mississippian limestone or Mississippi Lime play

started around 2009 with the first horizontal wells in
Oklahoma with SandRidge Energy leading the way.
Three years later, companies like Devon, High Mount,
and Calyx are opening up a horizontal Woodford play in
the same area.
However, what makes the Mississipian limestone play
somewhat unique and attractive is that it is very lowtech. At the same time, it is very cost-effective to drill
into the formation with well costs ranging around US
$2.8 million to $3.5 million.
The Mississippian Lime is a fairly low-tech play, and
youre in an area where there is already a lot of infrastructure in place from previous production, said Steve Antry,
chairman and CEO, Eagle Energy Co. of Oklahoma.
It is a relatively shallow play at 909 m to 1,818 m (3,000
ft to 6,000 ft) of depth. It costs about $3.5 million in well
costs. There are a short number of drilling days. It is very
low-pressure and we use low-tech equipment, he said.
Were drilling our 50th well right now. Weve been continuously surprised at the number of really big wells. Two
years ago, the Mississippian was barely a blip on the radar
screen. Whats developing in this trend as it gets bigger is a
series of core areas that keep elongating the play, Antry
explained.
The horizontal wells drilled in the play have lateral
lengths between 758 m to 1,515 m (2,500 ft to 5,000 ft)
86
and are fracture stimulated in six to12 stages. The fracture

stimulation treatments are not as large as those in the
Bakken play or other unconventional resource plays such
as the Eagle Ford, according to Magnolia Petroleum Plc.
SandRidge: Probably the biggest single player

The Mississippian play from our perspective has a lot
better porosity than what you find with most of the
tighter rocks that the industry is drilling today, said
Kevin White, senior vice president, business development, SandRidge Energy. In conjunction with better
rock quality than tighter shales, it is rather inexpensive
to drill.
The formation is somewhere between 1,212 m to 1,818
m (4,000 ft to 6,000 ft), depending on what part of the
play youre in, before you kick off and go horizontal. We
spend around $3 million to drill these wells, he added.
And SandRidge knows what they are talking about.
The company is probably the biggest single player with
about 2 million net acres under lease. The play itself
at least what we would define as buy areas for us to
acquire acreage is about 17 million acres. The play
goes through northern Oklahoma, and southern and
western Kansas, White explained.
The company is largely done with its leasing. We have
enough acreage that we would have drilling opportunities
that will probably carry us out about 15 years, he said.
ABOVE: A rig drills for oil near Alva, Okla. (Images courtesy of
SandRidge Energy)
UNCONVENTIONALS:
MISSISSIPPI LIME
The Mississippi Lime is really our growth area. We have

two other areas where were spending capital. One of those
areas is the Central Basin Platform in the Permian basin,
White continued. We recently closed our acquisition of a
company that has shallow-water GoM properties and production. Well be making some investment there, but the
real growth for the company is in that Mississippian play.
This year, the company is going to drill about 380 wells.
Were expanding the geographic area where were
drilling, so were going further west in Kansas. Weve got
plans to add one rig per month all the way through the end
of 2013. Were in a continued ramp-up phase, he said.
The company has learned quite a bit about being successful in the play. Its drilling time has dropped from
about 30 days early in the play to about 19 days over the
past two months.
Early in the play, we were putting in more frac stages
than we are today. Weve learned we can use six to 10 frac
stages. We were also spacing fracs too close together and
perhaps overstimulating the rock, which was encouraging
more water production than was absolutely necessary.
We actually backed off on the number of stages, which
is a little bit different than in the rest of the industry. In
terms of ingredients, we are now using basically water,
sand, and some friction reducer, White said.
Its a pretty simple and inexpensive frac. It doesnt take
a lot of horsepower. We are able to use lower-horsepower
rigs and lower-horsepower frac fleets, he added.
The companys success has caught the attention of several foreign investors. Early in 2012, the company closed a
joint venture with Repsol YPF for $1 billion. Last August,
an affiliate of Atinum Partners Co. Ltd., a Korean company, invested $500 million for about 113,000 net acres.
SandRidge may be the biggest player in the Mississippi
Lime, but it definitely is not the only player.
We convinced Riverstone to let us risk some of our capital to test our thesis that the Mississippian might be good.
We retested one of the crummy Hunton wells. We cut a
window into the Mississippian at a little shallower depth
than the Hunton. After that, we stopped drilling Hunton
wells and went straight to the Mississippian, he explained.
It was encouraging enough not to drill any more Hunton
wells, and we didnt look back.
Now, the company has four rigs running in the play and
plans to have six rigs working by year-end 2012. Assuming
three wells per section, the company has identified about
600 drilling locations.
Eagle is flying high

The Mississippi Lime has been very good to us. Weve
gone from about 1,000 boe/d of production to a little over
10,000 boe/d, Antry told participants at the Hart Energy
DUG Conference on April 24, in Fort Worth, Texas. The
Longhurst No. 1 is the biggest well in the trend. It came in
at about 3,000 boe/d. In a little over five months, the well
had paid out five times. Its been an eyepopper.
What was funny for the company was that the Mississippi
Lime was not even the primary target when the company
started drilling in the area.
When we picked up our initial dataset in the fourth
quarter 2009, the Mississippian was a distant secondary
objective. Our intention was to consolidate some of the
Hunton Lime. Then, we started hearing about some datapoints from SandRidge and Chesapeake.
An exploration technician monitors operational data at

SandRidges corporate headquarters in Oklahoma City.
Its a foregone conclusion that the area is going to

four wells per section, he said. Thats coming by the
end of the year. That means we will have about 750 total
locations. Chesapeake, Chaparral, and SandRidge have
been permitting wells that represent the fourth well in
a section.
The Mississippi trend started off in Oklahoma in
about eight counties. Were right in the middle of
Woods and Alfalfa counties. SandRidge is doing very
well up in Kansas, and there is actually some activity in
eastern Colorado right now as well, he said.
87
UNCONVENTIONALS:
MISSISSIPPI LIME
This is the point where you say were really lucky,

Antry added. The word luck doesnt embarrass me in
the least. Its taken me 35 years to get this lucky.
Eagle Energy also has learned a lot about how to be successful in the Mississippi Lime. The Nemaha ridge cuts
through the eastern part of the trend. There is a lot of difference in wells east or west of the ridge. Eagle is primarily
west of the ridge.
He pointed out that a lot of datapoints are now coming
from east of the Nemaha ridge from Encana, Halcon, and
Range Resources. Recently, Osage Exploration and Development Inc. reported a well with an initial production
(IP) of 1,185 boe/d. Companies in this area have to focus
more on structure than do operators west of the ridge.
Eagle pays close attention to the mud logs. We just
work off the mud logs. We dont even run electric logs.
Again, it is a very low-tech play. There are probably 500
horizontal datapoints in Oklahoma and probably 150 in
Kansas, he said. We can tell with mud logs how good a
well will be. Mud logs have not failed us yet.
Mississippian chat, limestone

favors horizontal drilling
ccording to geologic descriptions provided by
Magnolia Petroleum Plc and Eagle Energy Co. of
Oklahoma, the Mississippian oil trend is an expansive
carbonate stratigraphic trap producing at shallow
depths ranging from 1,372 m to 2,134 m (4,500 ft to
7,000 ft) below the surface.
The reservoirs lie at the regional Pennsylvanian/
Mississippian unconformity. There are four basic
depositional environments in the Mississippian limestone of northern Oklahoma and southern Kansas
Mississippi Chat, Chester, Meramec, and Osage.
The Mississippi Chat is the uppermost member at
the unconformity between the Pennsylvanian and Mississippian aged rocks and is considered to be a very
good hydrocarbon reservoir. These Chat reservoirs
are very widespread, vary in gross thickness from a
few feet to 80-ft thick and are heterogeneous in nature.
The Chat is comprised of varying amounts of weathered chert, limestone, and dolomite. Porosities range
from 3% to 35%.
The Mississippi Lime underlies the Chat and comprises the Mississippi Chester, Manning, Meramec,
and Osage. It is a marine limestone sequence with
interbedded dolomite facies, enhancing porosity, and
permeability. Porosities range from 5% to 15% with
water saturations ranging from 25% to 60%.
90
Early in its efforts in the play, the company drilled too

deeply into the Mississippi Lime. The well was producing a
lot of water. The formation has 10% to 15% porosity and
35% to 65% water saturation. What the company learned
was to drill the horizontal sections in the top 18 m (60 ft)
of the formation.
We map our area based on the top 33 m (100 ft) with
any porosity greater than 5%. That has worked pretty well
for us. Our target for the IP type curve is 705 boe/d. Our
average IP type curve over the last 12 months is a little
over 800 boe/d. We havent drilled any dogs. We have
some very good wells, he explained.
Eagle has made quite a few changes in its frac procedures as well. We started out doing our fracs, which were
a little too big. We went down to our current design,
which is really modest, Antry said.
Based on the results from its newer wells, Eagle now has
a program to go back in and restimulate its earlier wells.
For about a $400,000 frac, we added $10 million in the
first well we reentered on our PV-10 reserves. Were clearly
identifying more wells to reenter. We now routinely refrac
our wells after a certain period of time, he added.
As part of the companys change in its frac design, Eagle
uses a fraction of the amount of proppant than anyone
else does and about four times more acid.
These are not like the big shale fracs and are relatively
inexpensive. We think the acid is the key out here. Some
people agree with us and some dont. We look at the proppant more as just a diverter. To us, it is just going into the
microfractures so the acid can get out further.
We think the results are rather telling. These are some
of our better wells, he said. One well was brought in at
2,600 boe/d.
Antry pointed out that one of the biggest contributors
to the growth for all companies in the play is the willingness to share information. I got to witness camaraderie
in the oil and gas business. I cant even express to you
how much data sharing there was by SandRidge and with
local companies like us and Spyglass. We were all getting
together early on and sharing information. It was very
gratifying. Even though were competitors, we helped
each other a lot.
Eagle has an acreage position of about 100,000 acres.
The company is moving beyond its sweet spot in its exploration efforts. In one of our newest wells, were testing
the B member, which is the middle member and down a
little deeper. Weve had some really encouraging results,
so well see if that is present in our acreage.
The company also is moving into Kansas where it has
about 5,000 acres. I think there are still some core areas
yet to be identified, Antry said. We have a little pilot program where well be shooting 3-D seismic in Kansas this
UNCONVENTIONALS:
MISSISSIPPI LIME
summer. If it is good, there are about 50 more locations to

drill up there.
Outside Oklahoma and Kansas, he thinks there are Mississippian versions of this play in other states that should
work. There are a lot of people I know looking in those
areas, he added.
Minnows to majors in the Mississippian play

Small companies opened up the Mississippian play and
are still integral to further development of the area. Now,
the majors are starting to creep into the edges of the play.
Minnows like Magnolia Petroleum acquired additional
acreage in the proven and producing US onshore hydrocarbon formations of the Mississippian and Woodford in
Oklahoma.
The company acquired 1,191 net mineral acres with an
average 31% working interest and 24.8% net revenue
interest in the Mississippi Lime, including the opportunity
to participate in six potential wells. An additional 245 net
mineral acres were acquired in the Woodford and Mississippi oil plays.
As an example, Magnolia is participating in the Lois

Rust 7-27-12H, which was drilled and is waiting on completion, with 2.29% working interest and 1.72% net revenue
interest. Chesapeake is the operator. The completed well
costs are estimated at $3.72 million. For about $85,548,
Magnolia is taking part in this well.
So far this year, we have acquired 3,000 net mineral
acres primarily in the proven Mississippian formation, the
reopening oil play in Oklahoma, said Rita Whittington,
Magnolia COO. This is a crucial step on the road to
accelerating Magnolias transformation into a significant
US onshore oil and gas company.
At the opposite end of the scale is Shell Oil, which just
recently began activity in the play in Kansas. Antry, for
one, was very glad to see majors moving into the play.
There is a long list of other companies in the play,
including: Calyx Energy, Ceja Corp., Chaparral Energy,
Chesapeake Energy, EOG Resources, Osage Resources,
Pablo Energy, Raam Global Energy Co., Red Fork Energy
Ltd., Running Foxes Petroleum, Sullivan & Co., Spyglass
Energy Group, Territory Resources, Devon Energy, Ameri-
91
company. We are looking for farm-in/joint venture partners. We expect our TSXV listing to
occur during calendar year 2012 (the company is
already listed on the ASX as AOK).
Lanskey noted, Historical well completions indicate
a wide variety of completion methods and perforated
intervals in the Mississippi Lime. Cumulative production
levels on vertical wells range from 10,000 boe to 100,000+
boe, depending on location and completion methods.
Similar patterns are being reported in the horizontal
completions with various operators using different methods of completion.
For AusTex, The chert/chat is a lot easier to produce
than the solid. However, the solid is naturally fractured
and appears to respond well when fraced at a high rate,
he concluded.
American Petro-Hunter is expanding the play into
Payne County with three wells planned for 2012. In addition, the company is drilling two wells during the year in
its North Oklahoma project.
Territory Resources has retained RBC Richardson-Barr to market
its Red Rock and Kildare blocks in Noble and Kay counties,
Acreage for sale, opening up Woodford play
Okla. The packages consist of 77,000 net acres in Noble County
Territory Resources is a small private company in Stillwater, Okla., that originally had about 200,000 acres in the
play. Weve sold off 60,000 acres and are selling off
another 100,000 acres. We plan to stay in the area with
about 40,000 to 50,000 acres, said Ed Gallegos, Territory
Resources owner.
The company has two blocks for sale. The Kildare Block
in Kay County has 24,000 gross (23,000 net) acres, which
are underlain by the Mississippian Limestone. Its Red
Rock Block in Noble County covers 85,000 gross (77,000
net) acres and is underlain by the Mississippian limestone
and Woodford shale.
RBC Richardson-Barr is currently marketing the two
blocks, which should be available for another two months,
Gallegos explained. Its an interesting play. Weve done a lot
of core work in the Mississippian. It is estimated that there
are 15 to 20 million barrels of oil per section in the play.
Once the leases are sold, the company will shoot 3-D
seismic over some of its remaining acreage and continue
development in the area. Its on the eastern side the
Nemaha Ridge. We have one rig running. After we shoot
the 3-D, we will have two rigs running, he said.
Other companies in the area include High Mount with
four rigs running and Devon Energy with up to a dozen
rigs, according to Gallegos.
There is in an emerging horizontal Woodford play in
the area. Weve drilled one good Woodford well. Calyx
Energy has two rigs running in the Woodford area. They
have now moved to doing 70% of the work in the Woodford and 30% in the Mississippian, he added.
prospective for the Mississippian limestone and Woodford shale

and 23,000 net acres prospective for the Mississippian limestone. (Image courtesy of RBC Richardson-Barr)
can Petro-Hunter, and Vitruvian Exploration.

AusTex Oil Ltd., an Australian firm in the play, has
about 5,000 acres in Kay County, Okla., and around
27,000 gross acres in Sheridan and Thomas counties,
Kan., said Dan Lanskey, managing director, AusTex.
In Kay County, we have drilled two verticals as operator and participated in one horizontal well with Range
Resources. On the verticals, we have completed two
stage fracs in the chert and solid with IPs of 50 boe/d
and 90 boe/d. The horizontal well has been drilled,
fraced, and is waiting on hookup, he said.
The Mississippi Lime is the companys No. 1 focus.
Currently, the company is drilling a 10-well vertical
program to delineate the Kay County acreage before
going horizontal later in the year. Were currently
developing two vertical wells per month in Oklahoma
and have just finished seismic acquisition in Thomas
County, Lanskey said.
The average cost of well for AusTex is about $3.2 million. The companys longest lateral is 1,192 m (3,911 ft).
In addition to the Mississippi Lime, the company has
some historical production in Oklahoma from the Redfork, Cleveland, and Layton sands.
Revenue is growing from production success, he said.
However, we are still raising capital as required as a public
92
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MOORING &
RISER ADVANCES
Finger on the pulse

Being able to directly monitor the tensions being experienced by mooring lines in situ and in
real time on a floating production unit or mobile offshore drilling unit gives vessel operators
the full picture when it comes to how their fleets are performing on location.
he floating production systems fleet has grown steadily

over the past two decades, and a total of 216 floating production projects are currently either being bid, designed, or
in the planning stage, according to the latest figures from
market analysts International Maritime Associates.
With orders for 130-190 production floaters forecast
over the next five years, FPSOs are expected to account
for up to 75% of future floater orders. With this expected
level of market activity, the demand for the monitoring of
mooring lines and further advances in related technologies is expected to grow in parallel.
One of the issues with floating installations is that they
are moored to the seabed and therefore are subject to the
forces exerted during stormy conditions. These exceptional forces can cause deterioration of the mooring lines
and in some circumstances result in mooring line breaks.
Being able to monitor the tension experienced by the
mooring lines enables FPS operators to proactively take
the required measures to maintain mooring line integrity.
Pulse Structural Monitoring developed its MoorASSURE system for an FPSO vessel offshore Brazil supplied
by SBM Offshore. A new monitoring system was specified
for the project, not only to notify the operations team in
the event of a line break but also to record the line tension experienced over time so the mooring line performance could be evaluated. The project specification also
called for the system to have the capability to identify progressive degradation such as line creep and quantify the
need for line retensioning.
Subsea motion data loggers

Pulse decided to use acoustic communication to relay the
measured data to the control room to avoid problems associated with cables connecting the system to the surface. As
a result, the main components of the MoorASSURE system are Pulses subsea INTEGRIpod AF motion data loggers, with one being mounted on to the chain hawse of
each of the floaters nine anchor legs.
The real-time system uses inclinometers to measure the
angle of the mooring lines and uses those measurements
to calculate the tension experienced by the lines. Acoustic
94
An Inter-M Pulse unit is ready for load out. (Images courtesy of

InterMoor)
communication then connects the system to the vessel,

enabling the measuring devices to be positioned outside
the load path of the mooring line and eliminating the risk
of damage to cables.
Richard Kluth, managing director of Pulse, said in a
recent press statement, The market is demanding systems
that will tell the crew where a mooring line is and also
determine how it is performing. Mooring line integrity
management is extremely important, as the potential production losses from coming off station are very significant.
The success of the project, which has been operating
since May 2009, encouraged Pulse and its sister company
InterMoor UK to further develop their complementary
products so they could be installed as an integral part of
the mooring line rather than being mounted onto it.
This involved advancing InterMoors long-established HLink long-term connector. H-Links were designed to connect chains and ropes of varying sizes together and have
been installed in some of the harshest offshore environments around the world for more than 25 years.
As a standalone connector the H-Link was relatively
rudimentary, said Alan Duncan, managing director of
InterMoor UK. Speaking at a briefing at the Offshore
Technology Conference in Houston, he said it was logical
that it could be enhanced in its design and far beyond the
scope of just a chain connector.
Using the knowledge and experience of H-Link design
and manufacture, the H-Link developed into a working
MOORING &
RISER ADVANCES
component that could be used offshore to allow twist to be

taken out of chain/wire systems, said Duncan. The Inter-M
Swivel was developed and has been used offshore in extreme
environments as a longer-term connector with all of the
design/integrity requirements built in, he added.
Demand for intelligent line monitoring

But throughout the swivels development process, the market
feedback was that clients wanted more. Throughout the trials
and offshore use of the swivel, the customer feedback and
requests for an intelligent line monitoring connector led to
the development of the Inter-M Pulse, Duncan said. It fits as
a standard part of the chain.
The new system is the result of close collaboration between
Pulse and InterMoor UK, both part of the Acteon group of
companies. It is deployable in water depths of up to 1,500 m
(5,000 ft) and again features Pulses subsea motion data loggers as a key component.
The logger uses a motion sensor to record the movement of a
structure to its onboard memory over a period of time, with the
data then periodically transmitted to the surface via its acoustic
link. Topside monitoring software allows for logging program
selection, system diagnostics, and data retrieval. Three userdefined logging programs (Infrequent, Frequent, and Emergency) are available to suit different offshore environments.
The logger contains all electronics, batteries, and sensors
and is enclosed in a cylindrical corrosion-resistant casing rated
for up to 3,000 m (10,000 ft) water depths.
As part of the Inter-M Pulse system, it enables the long-term
intelligent connection of mooring chains along with the
capability for monitoring and tracking the in situ tension of
each mooring line. It can then transmit the tension data back
acoustically to the topsides control room, according to associ-
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The unit is attached to the mooring chain before deployment on its
field test in the UK North Sea on Diamond Drillings Ocean Nomad
semisubmersible rig.
PTS Inc. Corporate & Sales Office
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95
MOORING &
RISER ADVANCES
The Inter-M Pulse unit complete with the installed

INTEGRIpod AM acousticallylinked motion data logger.
ated press material released alongside Duncans presentation.
North Sea field trial

It was recently the subject of a successful field trial conducted in the UK North Sea. Duncan outlined how a 76mm, 800-ton minimum break load unit was deployed from
the back of an anchor handling vessel over the stern roller
for Diamond Drillings Ocean Nomad semisubmersible rig.
The unit was located on BG Groups Everest 22/10a
block in the UK North Sea for a six month drilling campaign. The unit deployed was designed for use on all offshore units, according to the associated press material.
The field trial mooring system consisted of a combination
chain and fiber makeup with the unit installation located
at the fiber and shackle connection.
During a one-month sea trial, sea states of around 12 m
(39 ft) were not uncommon. The Inter-M Pulse sent accurate line tensions and inclination readings to the surface
control room on board the rig at all times and was immediately operational after its successful installation, according
to InterMoors
test findings
material. The data
was sent back to the topside system via the acoustic data link
every minute several hours a day. The sea trial proved that
the system will communicate in a range of sea states, and
the readings have since been verified and documented.
It worked great. We are really happy with the trial, said
Duncan. Clients have also now asked for it to be tested in
the Gulf of Mexico. Theyd like to see a wet trial, and
were hoping to start that in about two months time
there, running it for about six months.
The ability of the system to raise the alarm when a mooring line fails and monitor the performance of the mooring
lines and mooring cable creep is a practical advance, and
the need for such a monitoring system is real. Last year
there were four vessels that lost a chain, said Duncan during the press conference. They did not know.
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MOORING &
RISER ADVANCES
An uplifting experience: Buoyancy

advances for ultra-deep water
With drilling companies soon to be exploring in 3,500 m water depth and far beyond within
the next five years, the challenge of dealing with the deployment of increasingly heavy
weights for risers and moorings often in high currents has demanded radical advances in
terms of product design and materials technology for the offshore industry.
he ability to deal with extreme water depths of potentially up to 4,500 m (15,000 ft) has required the identification and qualification of completely different foam
buoyancy components.
Aberdeen-based specialist Balmoral Offshore Engineering has tackled the challenge specifically with the
issue of ultra-heavy riser strings in mind. The prize? The
global drill riser buoyancy market is conservatively esti-
mated to be worth around US $320 million annually,

according to the company.
This is not to say, however, that these are depths not
encountered by it before. Balmoral has produced other
buoyancy products for even deeper waters. It supplies,
for example, high-performance low-density pure foam
(LDF) composite buoyancy stems for specialized ROVs
and AUVs that regularly venture into more than 4,000 m
(13,000 ft) water depth, although mostly at present as
part of oceanographic research and mapping activity.
It also has qualified an LDF composite system with
a density of 650 kg/cu m. (1,433 lb/3.3 ft) that is rated
for 10,000 m (32,800 ft) about as deep as it gets offshore so water depth in itself is not a problem.
Reducing the submerged weight

Minimizing top tension and preventing stress in a riser
is a problem for the oil and gas industry as it carries
out exploration and development activity in ultra-deep
waters around the world in addition to
reducing loadings during deployment or
retrieval of a BOP stack.
Hence the requirement for improved riser
buoyancy to provide more uplift by effectively
decreasing the submerged weight of the steel
riser joints.
This has led to a dramatic improvement in
riser buoyancy in terms of product design and
materials technology. It can no longer be
looked upon as a commodity product, said
Jim Hamilton, Balmoral international business
The inset graphic shows how much more uplift is provided by the Durafloat Superlite and Superlite-X systems compared to industry standard designs. At more
than 2,000 m (7,000 ft) there is approximately a 10%
improved uplift performance. At depths of 3,700 m to
4,600 m (12,000 ft to 15,000 ft) this increases by 30%
to 50% respectively. (Images courtesy of Balmoral)
98
MOORING &
RISER ADVANCES
Foam density reduction was targeted alongside mechanical per-
cal depth limit of approximately 12,000 ft within a twoto five-year timescale.

This was a major challenge for the technical and engineering R&D teams in Aberdeen.
More than 30 years of technical development was
required to achieve the existing standards of foam
mechanical performance for depth ratings to 10,000 ft
[3,000 m] and within a commercially-attractive system,
Oram explained. Pushing the envelope out to 15,000 ft
required the identification and qualification of completely different foam buoyancy components. Patent
applications have been lodged to cover the novel aspects
of the new systems.
The new syntactic foams produced, Durafloat Superlite and Durafloat Superlite-X, are rated to more than
4,000 m and are an extension to the companys existing
Durafloat range.
formance improvement at Balmorals inhouse subsea test center

in Aberdeen, where the Superlite program was carried out.
development director. Drilling operations in waters of

great depth and high currents such as West Africa, the
Gulf of Mexico, and offshore Brazil demand the deployment of ultra-heavy riser strings. Deepwater buoyancy
modules are also substantial in size and weight and are
susceptible to impact and flexure damage caused by vessel motion and strong ocean currents.
Thats why we had to look at the development of a
lower-density, lighter-weight material that would operate
successfully beyond the 3,500 m (12,000 ft) previously
offered.
Massively increased riser size

To give some perspective, drilling riser buoyancy module foams were originally developed more than 20 years
ago for operation in relatively benign conditions (for
example, a service depth of 1,524 m [5,000 ft] was once
considered seriously deep), Balmoral Technical Director
Dr. Robert Oram said.
Additionally, riser weights were far more modest in
the past than is now the case.
Balmorals technical and engineering teams were
tasked with developing a lighter syntactic material, based
on the original Durafloat system, for use at operational
extremes of 4,000 m typically 914 m to 1,524 m (3,000
ft to 5,000 ft) deeper than industry-standard drill riser
buoyancy.
We started the Superlite development program
approximately 18 months ago following in-depth discussions with drilling contractors, Oram said. From these
discussions, it became increasingly obvious that exploration drilling would be moving beyond the then techniEPmag.com | June 2012
Pushing the depth frontier

How much of a development leap was it to go beyond
3,500 m to the new capability of more than 4,000 m?
Composite syntactic foams comprise three components larger diameter, hollow composite spheres encapsulated in a matrix of epoxy resin, which itself is filled
with hollow glass microspheres, Oram said. Pushing the
depth frontier out from 12,000 ft to 15,000 ft without
major increase in foam density required evaluation of the
performance limitation of each component. The identified major areas of development involved both macrospheres and resin matrix: for composite macrospheres, a
completely different resin reinforcement system had to
be identified and qualified, whilst a new resin system had
to be introduced to replace the existing system, which
effectively ran out of steam at 12,000 ft.
Drill riser buoyancy modules are
ready for load-out. The global
drill riser buoyancy market is
estimated to be worth US $320
million annually.
99
tech
WATCH
SPI gels improve mobility control

in CO2 enhanced recovery
A new SPI gel system offers a promising solution to the conformance
problem with CO2 floods.
William Fincham, National Energy Technology
Laboratory (NETL), and Kenneth Oglesby,
Impact Technologies
project being undertaken by The Letton-Hall Group,

Impact Technologies LLC, and Clean Tech Innovations LLC (CTI), with funding from the National Energy
Technology Laboratory, will demonstrate the ease of use
and potential of carbon dioxide (CO2) injection/production profile modifications using silica polymer initiator
(SPI)- CO2 gel systems. The objective is to advance SPICO2 EOR gel technology by performing multiple smallscale field injectivity tests using both huff and puff and
conventional pattern flood applications. A secondary
objective of the project is to improve the SPI- CO2 gel
integrity by testing a super-absorbent polymer instead of
the polyacrylamide currently being used.
Issues associated with using CO2 for EOR are its low
density and viscosity compared to the crude oil and brine
in the reservoir. The injected CO2 has substantially higher
mobility relative to the crude oil and brine, which promotes fingering and early breakthrough of the CO2 to the
production wells. High conformance or sweep efficiency
(i.e., good contact with all the crude oil in the reservoir) is
particularly critical in costlier CO2 floods where the end
result of poor sweep efficiency is less oil recovered with
substantially higher costs resulting from multiple handling
(production, compression, and reinjection) of the CO2.
Research has gone into developing gels for the primary
CO2 phase, but none are low-cost and commercial. A new
SPI gel system may aid in the conformance problem with
CO2 floods. Of particular importance to this and other CO2
injection projects is the use of an external initiator such as
CO2. In SPI-CO2 gels, the CO2 becomes the external initiator of the SPI fluid following its placement in the reservoir.
An SPI mix slug will be incorporated in the water cycle
of a water-alternating-gas injection, and the CO2 slug that
follows will finger through and permeate the more viscous
aqueous SPI mixture in the flow path, generating carbonic
acid, which will immediately initiate the gelation process.
This newly set SPI gel diverts the CO2 that follows and
100
SPI gel is shown with internal initiator. (Images courtesy of NETL)
In SPI-CO2 gels, the CO2 becomes the external initiator.
tech
WATCH
causes it to finger and dissolve into fresh SPI mix, leading

to SPI gel formation at additional locales. The process
continues until the CO2 is fully blocked or all the SPI
mix is consumed.
The SPI gel can improve sweep efficiency to a greater
degree than conventional systems because it sets up in
the high-permeability paths that the CO2 had traveled
previously and is unique in that it is silicate-based and will
remain a low-viscosity fluid until gel initiation is triggered
by CO2. This is a clear improvement over current technology where the gel gradually sets up as a function of time,
regardless of location. In addition, the final product in
commercial quantities is expected to be less expensive
than competing polymer gels or other systems.
US CO2 EOR production has grown by 4%/year over
the last 20 years to todays level of 280,000 b/d. The use
of SPI gels is anticipated to further improve those levels
by 1%/year within a few years of a successful demonstration and up to 3%/year in future years. SPI could add
more than 300 MMbbl of otherwise bypassed reserves
over 10 years.
Accomplishments
The team has been in contact with major CO2 flood operators to ascertain their needs and to inquire about performing tests in their fields. Several industry contacts have
indicated that SPI gels have a place in the CO2 market if
the gels perform as expected during the projects field
test. Legal agreements are being pursued with two companies, and one company has provided the project team with
field data, fluids, and core segments for use and analysis.
One major CO2 flood operator wants to get to the field
right away, while other operating companies have
expressed interest.
The CTI laboratory in Bartlesville, Okla., performed

more than 600 gel forming bench tests, half at 23C
(74F) and half at 60C (140F). Approximately 40 additives have been evaluated to date at various concentrations
and combinations with additional additives. Three formulations look very promising as candidates for further sand
pack testing.
The base SPI polyacrylamide polymer was changed to a
ultra-high molecular weight polymer that is much easier to
hydrolyze. This has benefits of easier mixing in the field
and better isolation of the SPI mix within high-permeability zones, a key interest of the industry.
A full CO2-capable sand pack system was developed at
the CTI lab. Operational improvements to the modified
sand pack system have been completed, allowing the use
of supercritical CO2 at 1,500 psi. These improvements
include:
Safe handling and discharging of CO2;
Accurate means to meter and deliver supercritical
CO2 to core apparatus for sand pack testing; and
Accurate means to meter and account for all gas and
liquid mass exiting the system and other improvements to aid in closing a mass balance (a 2% mass
balance closure is anticipated).
Impact Technologies is continuing to communicate
with chemical providers and CO2 operators on a frequent
basis with the goal of securing multiple CO2 flood operators for field-testing of the SPI gel. The company will
begin to order the required chemicals necessary to complete testing and begin treatments in selected fields.
Test plans for field activity will be developed and will
include preparation of the well and site for the field injectivity test (i.e., roads to the well site must be accessible);
available access to electricity unless generation is anticipated and desired; finalization of legal documents (liability releases, safety training, data releases) before moving
onto the site; obtaining injection well and offset well data
(oil rates, water rates, CO2
rates, pressures, profile surveys, tracer surveys) to establish a pre-test baseline; and
ordering and delivery of
pumps, rate/pressure recording, and metering equipment
to the field site.
CO2 flows through aqueous SPI

in the reservoir to form carbonic
acid, which initiates the gelation
process.
101
tech
TRENDS
Reservoir modeling software

enhances sweet spot visualization
The latest version of Baker Hughes reservoir modeling
software improves the understanding of unconventional
plays with integrated 3-D models and allows for enhanced
visualization of all relevant datasets while viewing thousands of wells at once, the company said.
JewelSuite 2012 features the Blue Marble Geographics
GeoCalc coordinate transformation library for correct
well placement and incorporates advanced Multi-Point
Statistics with easier usability and faster run times. The
software also enables batch processing of property modeling and includes an unconventional play workflow for
sweet spotting from a variety of reservoir and well models
run in different production scenarios. BakerHughes.com.
Remote-controlled hot tap machine

improves safety with diverless capability
The new Subsea 1200RC Tapping Machine by T.D.
Williamson allows hot tapping to be carried out remotely
from the safety of a diving support vessel or platform
without the need for diver assistance in deep waters.
According to the company, the hot tap system has
demonstrated the feasibility of conducting critical tapping operations entirely by remote control. As a compact and lightweight machine, the diverless subsea
system is topside-driven, allowing for direct control with
its passive ROV interface that can be operated from an
onboard laptop. Another
benefit of the technology is
that it provides visibility during the tapping operation
where previously there was
none. Built-in sensors allow
continuous recording of
actual pressures, temperatures, rotation, and movement of the pilot drill and
cutter, offering a view of
A hot tap can be carried out
what is taking place within
using the lightweight Subsea
the enclosed space at the
1200RC tapping machine
heart of the cutting operavia remote control. (Image
tion, the company said.
courtesy of T.D. Williamson)
TDWilliamson.com.
Drilling data server and repository

manages well data analytics
DDSR, a drilling data server and repository from PointCross Inc., manages petabyte-sized drilling data across
all wells. It includes interoperability with external tools
for extracting patterns from surface and subsurface logs
to develop predictive analytics and models.
102
According to the company, the technology harmonizes units and normalizes mnemonics of datasets for
analysis across disparate wells by using extracted,
indexed patterns for detection or building predictive
models and geotechnical markers for drilling safety,
operations, and optimizing reservoir management.
Resin-coated fracturing proppant

now available to Canadian operators
The Oilfield Technology Group of Momentive Specialty
Chemicals Inc. has begun offering its OilPlus resincoated proppant to fracturing service companies and
operators in Canada. The proppant is an advanced curable resin-coated fracturing sand available in 20/40,
30/50, and 40/70 mesh sizes that can be used to optimize oil and gas production by maximizing flow capacity
from the reservoir to the well bore. Specifically designed
for fracturing treatments in oil and liquids-rich reservoirs, the OilPlus proppant has demonstrated four times
more oil flow through the proppant pack than conventional proppants, according to Momentive.
The companys resin-coated proppant line consists of
five different curable resin-coated sands and one procured resin-coated sand. Momentivefracline.com.
New buoyant tower provides

storage, flexibility offshore Peru
GMC and Horton Wison Deepwater have formed a joint
venture to design and supply a shallow-water buoyant
tower solution based on proven cellspar technology at
the BPZ Energy-operated Corvina field offshore Peru.
According to the companies, the design provides multiple
benefits for fields where other concepts would be problematic, requiring high capital costs and expensive crane
barges for installation. The tower can operate in up to
213 m (700 ft) water depth. It also can be relocated to
allow small marginal plays to be exploited in a cost-effective manner while
eliminating separate
shallow-water drilling
units and can used
for hydrocarbon storage if necessary.
The Corvina fields
CX-15 shallow-water
tower will consist of
The CX-15 shallow-water buoyant
four cylindrical cells
tower, which is planned for installaconnected to the
tion at the Corvina field in 3Q 2012,
seabed by a single
will be the first application of this
suction pile integral
design. (Image courtesy of GMC and
to the hull structure.
Horton Wison Deepwater)
A total of 24 drill
tech
TRENDS
slots will be available for potential use for gas and water
reinjection wells. The platform is designed for 12,200
bbl/d of oil, gas compression capacity of 12.8 MMscf/d,
and produced water handling and injection capacity of
3,500 bbl/d. Fabrication is under way at Wison Offshore
and Marines yard in Nantong, China.
New motor, RSS enhance downhole

drilling performance, efficiency
Sperry Drilling, a Halliburton business line, has introduced the SperryDrill XL/XLS and GeoForce XL/XLS
series motors to its fleet of positive displacement drilling
motors and the Geo-Pilot EDL rotary steerable system
(RSS) to its Pilot fleet of automated drilling systems.
The XL and XLS series motors feature downhole
drilling technology for harsh drilling conditions and
special applications such as air drilling, extended-reach
drilling (ERD), and high-temperature drilling and configurations that can suit any drilling environment.
According to Halliburton, the new motors are able to
achieve higher build rates unattainable with conven-
tional motors because of a shorter bit-to-bend. They also

deliver the highest torque and weight-on-bit ratings and
toughest bearing assembly.
Sperry Drillings new Geo-Pilot EDL 9600 RSS is ideal
for drilling well trajectories for ERD applications where
consistent doglegs are required to drill the surface hole
in shallow, soft formations, the company said. The high
build-rate RSS features an enhanced dogleg capability
and allows for drilling of the vertical, curve, and lateral
sections in one bottomhole assembly with no added
trips for motors. The system has been used in offshore
and onshore operations to drill hole sizes ranging from
838 in. to 1712 in. In its first extensive global application,
the Geo-Pilot RSS was used to drill six complete build
sections from vertical to horizontal, delivering excellent
performance, the company said, including consistent
dogleg capacity up to 8/30.5 m (100 ft), with reserved
deflection capacity reaching 10/30.5 m.
Halliburton.com.
Nancy Agin, Associate Managing Editor
Innovative Pri
nt Technology
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C,As
MOMENTI `4E'103
REGIONAL REPORT:
SOUTH AMERICA
Mirroring opportunities
across the Atlantic
A glance through any article on South Americas upstream activity in recent times
will almost certainly throw up the usual suspects Brazil, Venezuela, and Colombia.
But the continents northeast margin also is being viewed by an increasing number
of oil companies as the next big thing.
he Equatorial Atlantic Transform Margin is now

believed to be conjugate to the highly-productive
Transform Margin of West Africa, with a number of
oil and gas companies both large and small aiming to
replicate the giant finds being made offshore Ghana
and elsewhere.
Their expectations were given a major boost by the
September 2011 discovery of the Zaedyus oil field in
deep waters offshore French Guiana. Operated by Tullow Oil, which has had tremendous success across the
Atlantic offshore West Africa with giant finds like the
Jubilee field offshore Ghana, the GM-ES-1 wildcat in
the Guyane Maritime license was a major breakthrough.
The well drilled by the ENSCO 8503 semisubmersible
rig in 2,048 m (6,719 ft) water depth encountered 72 m
(236 ft) of net oil pay in two turbidite fans with goodquality reservoir sands.
The find to a large extent justified the faith Tullow
and its partners Shell, Total, and
Northern Petroleum had in their
belief that the Jubilee play was mirrored with a twin basin on the other
side of the Atlantic Ocean and that
there was a whole new hydrocarbon
frontier to exploit, not only offshore
French Guiana but across the
Guianas as a whole, covering Suriname (formerly Dutch Guiana) and
Guyana (formerly British Guiana).
In 2007, Tullow made the strategic move (coincidentally the same year it discovered Jubilee) to purchase fellow independent explorer Hardman Resources Ltd.,
making it the operator of the Guyane Maritime license.
At the time this was an area of South America with no
history of oil or gas discoveries, although it had for some
time been believed to hold the same potential source and
reservoir rocks as those in West Africa. Two wells had
been drilled in shallower waters offshore French Guiana
in the 1970s but targeted different play concepts.
For many observers 2012 is the year when the areas
potential will be fully confirmed, with an appraisal well
due to be spudded mid-2012 by Shell (which took over
the operatorship of Zaedyus in February) using the newbuild ultra-deepwater drillship Stena DrillMax ICE.
Partner Northern Petroleum says the second phase of
drilling is likely to be followed by an exploration well on a
neighboring prospect in the same area. Additional 3-D
seismic also is planned to be shot this year to further
delineate other leads on trend and similar to Zaedyus.
Shell holds a 45% interest in the license as operator,
South Americas northeast margin is

heating up, with last years Zaedyus
discovery offshore French Guiana being
followed this year by wildcat wells offshore Guyana and seismic surveys offshore Suriname. (Map courtesy of CGX)
104
REGIONAL REPORT:
SOUTH AMERICA
with its partners being Tullow (27.5%), Total (25%), and

Northpet Investments (2.5%.
Derek Musgrove, managing director at Northern, said
the drilling campaign was aimed not only at delineating
Zaedyus but confirming the wider significant potential of
the permit area, which covers the entire length of the
prospective continental shelf edge of Guyane (a distance
of about 200 km, or 124 miles).
Suriname
The first well drilled by the ENSCO 8503 newbuild semisubmersible following its delivery from Keppel FELs shipyard in Singapore resulted in the Zaedyus discovery offshore French
Guiana. (Photo courtesy of Keppel Corp.)
P R E - O R D E R
To the west of French Guiana is neighboring Suriname,

where activity is not so advanced but where Tullow is again
in the early stages of exploration. The company late last
year farmed out a 30% interest in the 2,369-sq-km (915-sqmile) deepwater Block 47 to Norways Statoil.
Planning is well advanced for the acquisition of more
than 2,000 sq km (772 miles) of 3-D seismic, which is due
to start before mid-year subject to the necessary environmental approvals. The 3-D program is expected to take
approximately four months to complete. Tullow is retain-
N - 0 -W
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REGIONAL REPORT:
SOUTH AMERICA
Problems brew in Argentina

Petrobras is one of many companies left in the
lurch after repatriation.
By Jean Marlin, Contributing Editor
ince Argentine President Cristina Fernandez won a landslide
victory in the October 2011 elections, she has demanded that
all oil and gas companies operating in Argentina, including foreign companies, repatriate all future export earnings to Argentina.
This also includes demanding Argentine companies not to pay
dividends and reinvest those funds earmarked for dividend
payments in Argentina.
The Argentine government stripped further oil and gas concessions from Repsols Argentine subsidiary YPF, and events indicate
that it is only matter of time before the company is nationalized.
Telam, the official news agency of the Argentine government,
reported April 3, that the government of the Neuqun province in
Argentina revoked the concession of Petrobras to explore petroleum in the area of Veta Escondida.
The following day, the new president and CEO of Petrobras,
Maria das Graas Foster, told the local press she was surprised,
especially because Petrobras was evaluating future opportunities
for more investments in Argentina. The assets in Argentina are
Petrobras largest outside of Brazil.
Most of the oil Petrobras produces in Argentina is from the
Puesto Hernandez oil field in the Neuqun province and the
Medanito and El Tordillo fields in the provinces of La Pampa and
Chubut, respectively.
Foster said Petrobras has complied with all concessionaire
requirements, and she understands that the agreement remains
in force for exploration and exploitation. This is part of Petrobras
concession rights and renegotiations as agreed upon with the
province Dec. 10, 2008, ratified by the Provincial Executive, and
extending until 2027.
Petrobras owns 55% of the concession and is the operator.
Investments were made according to research into new hydrocarbon accumulations. Over the last three years, US $10 million
has been invested. Additionally, the company said it has begun
efforts to look for unconventional hydrocarbons in the area with
new technologies.
Petrobras claims it has not committed any breach that would
support Neuquns government decision and continues to make
company officials available to the provincial authorities to maintain a constructive dialog for its current and future ventures. A delegation of Petrobras officials recently traveled to Neuqun to
negotiate a solution to the impasse created by Argentina.
106
ing its 70% working interest as operator and has

plans for an exploration well in 2014. The state oil
company, Staatsolie, has the option to participate
during any development and production phase
with a 20% interest.
Fellow explorer Kosmos Energy, itself a successful West African player, also is present in Suriname
where it has two ultra-deepwater blocks that it currently operates with a 100% interest. Kosmos says it
sees Suriname as an opportunity to explore for the
Upper Cretaceous stratigraphic play type along the
Northeast (NE) margin of South America, and that
its blocks contain the same petroleum system as the
discovery offshore French Guiana.
Its nearly 3 million gross acre position in the
Suriname-Guyana basin was the companys first
portfolio expansion outside of Africa. Kosmos is
currently reprocessing existing 2-D seismic data
with plans to acquire new 3C data over Blocks 42
and 45 later this year or into 2013. Depending on
the results, first drilling could take place by 2014.
Guyana
Next to Suriname is Guyana, where there is an
exploration well ongoing that has slipped under
most observers radar but which could be every
bit as potentially important as the Zaedyus discovery well.
Spudded by the Atwood Beacon jackup rig in February with Spains Repsol as operator (15%), the
wildcat is targeting the shallow-water Jaguar
prospect and will be drilled to a planned total
depth of 6,500 m (21,000 ft). The Jaguar fan system lies within the 8,400-sq-km (3,243-sq-mile)
Georgetown Block, with the HP/HT Jaguar-1X well
targeting the Turonian geologic zone expected to
complete by July. Predrill reserves have been estimated at 700 MMboe.
According to Repsol, this is a true frontier well
given that a previous 25 wells drilled in Guyana all
failed to hit commercial quantities of hydrocarbons. The companys partners on Jaguar are Tullow (30%), YPF Guyana (30%), and Canadas CGX
Energy (15%).
CGX itself also recently revealed that a wildcat
well targeting the Eagle-1 prospect in its 100%operated Corentyne license offshore Guyana had
turned out to be a disappointment. The well
encountered oil and gas shows but good-quality
sandstone reservoirs were ultimately proven to be
water-bearing.
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REGIONAL REPORT:
SOUTH AMERICA
Pacific potential
exists offshore Colombia
Colombias hydrocarbons agency is looking to establish a new frontier in a
previously little-explored area off its west coast in the countrys latest licensing round.
Luis Carlos Carvajal, PGS
olombias National Hydrocarbons Agency (ANH)

has defined two Pacific basin blocks, Tumaco
Offshore 6 and 7, offered under a technical evaluation
agreement modality in the countrys 2012 licensing
round.
Both blocks lie in 100 m to 3,000 m (328 ft to 9,843 ft)
water depth. PGS has acquired and processed 2,730 km
(1,700 miles) of high-resolution multiclient 2-D seismic
data offshore the Pacific Coast of Colombia between
Buenaventura and Tumaco and has reprocessed 2,404
km (1,500 miles) of legacy 2-D seismic to complement
the modern survey coverage. Processed ship-borne
gravity and magnetics complete the dataset.
Structural framework, stratigraphy

The Choc-Pacific coastal and offshore region makes up
a little-explored geologic province with underestimated
petroleum potential. Surface onshore seeps and oil shows
in the few wells drilled to date confirm the existence of
mature source rocks, and new biostratigraphic data pro-
vide a greatly improved understanding of the basins history and deepwater depositional environment.
The North-Andean margin is being deformed by the
subduction of the Nazca plate (5 cm/y to 7 cm/y) along
a N80 direction. The Nazca plate carries the Carnegie
ridge, a 200-km (124-mile) wide buoyant ridge that
subducts under the Ecuadorian central margin involving
major crustal deformation. The northern flank of the
Carnegie ridge divides the Ecuador-Colombian margin in
two tectonically and seismically contrasted segments.
In Western Colombia, the Pacific Coastal basin divides
into the Uraba, Atrato-San Juan, and Tumaco basins,
whereas the Borbn, Manab, and Progreso basins have
formed along Coastal Ecuador. In North Ecuador-South
Colombia, the Borbn and Tumaco basins may form a
single basin that extends dominantly onshore from the
Jama-Quininde fault in Ecuador to the Garrapatas fault
system to the north.
The structural style of this area corresponds to forearc
basins in convergent margins developed over folded
oceanic sediments adjacent to the subduction zone.
Such a framework could be conducive to an attractive
array of hydrocarbon-bearing traps. Along the southern
Pacific margin of Colombia,
thick Cenozoic sedimentary
sequences accumulated
over blocks of oceanic
or transitional crust that
accreted between the Late
Cretaceous and Early
Cenozoic and formed the
onshore Borbn (Ecuador)
and Tumaco (Colombia)
basins and the offshore
Pacific Manglares Frontal
basin (Tumaco offshore).
Colombias ANH is offering two
frontier Pacific Ocean permits
in its 2012 licensing round,
Tumaco Offshore Blocks 6 and
7. (Images courtesy of PGS)
108
REGIONAL REPORT:
SOUTH AMERICA
Sedimentary fill in the

Colombia Pacifico basin is
generally of Tertiary age,
with the oldest sediments
dated at Late Cretaceous age.
The Cenozoic sedimentary
section of the basin is subdivided into important unconformities recognized by
changes in faunal composition, which in turn coincide
with Paleo-environmental
and lithological changes.
Hydrocarbon potential
No commercial hydrocarbon
fields have been discovered
to date in the Colombia
PGS acquired and processed 2,730 km (1,663 miles) of high-resolution multiclient 2-D seismic data
Pacific basin, but a number
offshore Colombias Pacific coast. The data showed the presence of high-amplitude BSR, interof wells drilled both offpreted to be gas hydrates, in sediments at depths of 800 m below the seafloor. Gross gas volumes
shore (four) and onshore
of these resources on Tumoca Offshore Blocks 6 and 7 are estimated to be 158 Tcf.
(12) have yielded good gas
shows. Source rocks are of
Cretaceous and Lower Tertiary age and are oil- and gasbut strong propensity toward gas-prone kerogen. This
prone. Onshore gas shows are mainly from the Oligois at odds with the numerous oil seeps associated with
Miocene section.
mud volcanoes immediately northeast and suggests that
Surface indications of oil and gas have been reported
none of the wells analyzed, which apart from Remolino
from numerous locations, especially in the more open
Grande-1 all bottomed in Miocene or younger, reached
country to the north towards the Gulf of Urab (North
the section that is generating the oil.
Pacific coast), where they are principally associated with
Exploration play types
mud volcanoes.
Exploration play type is defined here as structural or
PGS MC2D seismic data acquired over the Pacific marstratigraphic closures fed by various Oligo-Miocene
gin show the presence of high-amplitude bottom simusources.
lating reflectors, interpreted to be gas hydrates, in
Eight play types are recognized in the Tumaco Offsediments at depths of ~800 m (~2,625 ft) below the
shore 6 and 7 blocks:
seafloor. Gas hydrates contain immense amounts of
Type-1: Folds, anticlines, narrow mud cored antienergy almost twice that of fossil fuels. The company
clines, and anticlines induced by basement;
has estimated gross gas volume of these resources on
Type-2: Inversion/transtensional structures, complex
Tumaco Offshore 6 and 7 to be 158 Tcf.
folding, and faulting. Thrust-related anticlines
Subsurface shows of oil and gas were encountered in
rollovers;
the Buchad-1, Chagu-1, and Majagual-1 wells. Two
Type-3: Change in seismic character, indicating
wells, Sandi-1 and Tambora-1, have been drilled in the
strong facies changes and usually changing to sands;
offshore Tumaco basin. The Tambora-1 well had gas
Type-4: Extensional system. Blocks highly faulted;
shows with small impregnations of asphalt in Lower
Type-5: Eocene to Miocene units against Paleo-highs;
Tertiary clastics.
Type-6: Eocene to Miocene units against normal
Although oil and gas seeps, shows, and offshore hydrofaults;
carbon anomalies attest to the presence of mature source
Type-7: Wedging on the edge of the basin. Intrarocks in the Pacific coastal basins, hard geochemical data
formational wedging; and
are sparse and confined to the younger part of the sec Type-8: Updip erosional truncation of strata at the
tion. Analysis of Sandi-1, Tambora-1, Remolino Grande-1,
base of recent units.
and Majagua-1 suggest good total organic content values
109
international
HIGHLIGHTS
For additional
information on
these projects
and other global
developments:
READ MORE ONLINE
EPmag.com
SOUTH AMERICA
Total takes Uruguayan license
Total confirmed the award of a deepwater exploration
license offshore Uruguay following the countrys second
bidding round held earlier this year by the national
company ANCAP. The company was awarded Block 14
subject to further approval by Uruguayan authorities.
The frontier block has a surface area of 6,690 sq km
(2,583 sq miles) and is located in the Pelotas basin
around 250 km (155 miles) offshore in 2,000 m to 3,500
m (6,562 ft to 11,483 ft) water depth.
Trinidad and Tobago interest grows
The government of Trinidad and Tobago has received
more than 20 nominations for six deepwater blocks up
for bid in its 2012 Deepwater Competitive Bidding
Round, according to Energy Minister Kevin Ramnarine.
Blocks TTDAA 1, TTDAA 5, TTDAA 6, and 25 (a) are
located off the east coast, while Blocks TTDAA 28 and
TTDAA 29 are off the northeastern coast. Bidding ends
July 30. Successful bidders will be granted a contract for
nine years with renewals for a term of 30 years from the
date of the contract if successful discoveries are made.
To increase deepwater exploration, the government
has introduced incentives for this round by reducing the
petroleum profits tax from 50% to 35%. The definition
of deep water was amended from 400 m (1,300 ft) to
1,000 m (3,280 ft) for cost recovery rates, which also
were increased from 60% to 80%.
Presalt Iara western extension confirmed
Petrobras has confirmed the westerly extension of its
Iara evaluation area in the presalt Santos basin offshore
Brazil with well 3-BRSA-1032-RJS (3-RJS-697). Drilled
in 2,150 m (7,054 ft) water depth, the well (informally
known as Iara Oeste) is the third drilled in the discovery
evaluation plan 1-BRSA-618 (Iara). It reached 6,050 m
(19,850 ft) total depth (TD) and flowed good-quality oil
samples ranging from 21 to 26 API in carbonate reservoirs. Petrobras operates the block with a 65% stake; BG
Group holds 25% and Petrogal Brasil/Galp Energia
holds the remaining 10%.
110
Fresh find north of Lula

A new oil accumulation has been revealed by Petrobras
to the north of its giant Lula presalt field in the Santos
basin in Block BM-S-42. Well 1-RJS-689A (1-BRSA-925A
RJS), informally known as Dolomita Sul, was drilled in
1,747 m (5,732 ft) water depth. The company is the sole
concessionaire of the block and said the new find confirms the potential of the presalt region beyond the limits of the first discoveries (presalt cluster).
The discovery was confirmed through oil sampling
using wireline tests in carbonate reservoirs in presalt layers, situated at a well depth of 5,660 m (18,570 ft).
NORTH AMERICA
Spartacus prospect spudded in GoM
Anadarko Petroleum has spudded a deepwater exploration well at the Spartacus prospect in the US Gulf of
Mexico (GoM). The well is targeting subsalt layers near
the operators Lucius megaproject, which is currently
under development.
Nexens Kakuna comes up dry
Nexen Inc. has drilled a dry hole with its Kakuna subsalt
exploration well in Green Canyon Block 504 in the
deepwater GoM. The company said the well did not
encounter commercial hydrocarbons and will be
plugged and abandoned. Kakuna was drilled to a depth
of 9,235 m (30,300 ft) at a total cost of approximately
US $120 million, net to Nexen ($80 million after-tax).
EUROPE
Wintershall scores on Skarfjell offshore Norway
Germanys Wintershall has made a discovery in the Norwegian North Sea on its operated Skarfjell prospect in
Production License 418 and hinted that it could form
the basis for a new area development hub. Wildcat well
35/9-7 found Upper Jurassic reservoir sands of very
good quality containing light oil with a significant oil
column.
Preliminary resource estimates range between 60
MMbbl to 160 MMbbl of recoverable oil. Commercial
viability as well as potential further upside will need to
be confirmed through appraisal drilling.
RWE makes 13 Bcm find near Heidrun
A gas discovery of up to 13 Bcm of recoverable gas has
been made near the Heidrun field in the Norwegian
Sea in 399 m (1,300 ft) water depth, according to the
Norwegian Petroleum Directorate. RWE Dea Norge,
international
HIGHLIGHTS
operator of Production License 435, is in the process of

completing the drilling of wildcat well 6507/7-15 S,
which will be permanently plugged and abandoned.
The well was drilled about 3.5 km (2 miles) west of the
6507/7-14 S gas discovery made on the same license in
2010 and 15 km (9 miles) northwest of the Heidrun
field in the Norwegian Sea.
The well was drilled to a vertical depth of 4,534 m
(14,900 ft) and was terminated in the Tilje formation in
the Lower Jurassic. Gas was proven in sandstones in the
Garn and Ile formation (the Fangst Group) in a gross
column of about 140 m (460 ft). Preliminary estimates
place the size of the discovery at 4 Bcm to 13 Bcm of
recoverable gas.
The 10-streamer seismic vessel Polarcus Nadia is carrying out a

3-D survey across Blocks 2512A, 2513A, 2513B, and 2612A in the
Luderitz basin offshore Namibia. (Image courtesy of Polarcus
Seismic Ltd.)
AFRICA
Wentworth completes Tanzanian test
Wentworth Resources has completed testing of its
Ziwani-1 exploration well in the Mnazi Bay Concession
in Tanzania. The well was spudded in February and
drilled to 2,671 m (8,764 ft) TD. A gas-bearing zone was
tested using drillstem equipment, with the zone flowing
gas at an unstable rate of up to 7.2 MMcf/d. The tested
zone is a new reservoir interval not previously encountered in the Mnazi Bay block.
Analysis of the test data indicates the potential
resource volumes of the well are subcommercial, and
the well has been plugged and abandoned. Although
several sandstone intervals of Oligocene/Eocene age
were penetrated deeper in the well, logging proved
these to be water-bearing. The rig will now be moved to
the Mnazi Bay gas field, where it will commence a threewell workover program.
Tullow hits oil onshore Kenya
Tullow Oil has encountered total net oil pay of more than
100 m (328ft ) across multiple reservoir zones at the
Ngamia-1 exploration well onshore Kenya in Block 10BB.
The well has been deepened from 1,041 m (3,416 ft) to
1,515 m (4,971 ft) and will continue to be drilled to 2,700
m (8,859 ft) TD. A sidetrack was required in this section,
and following completion of logging and sampling in difficult hole conditions, a total pay count greater than 100
m was discovered over a gross oil-bearing interval of 650
m (2,133 ft). Oil samples with an API greater than 30
have been recovered to surface from the newly drilled
section, with similar properties to the light waxy crude
encountered in the upper reservoir zone. The Ngamia
structure is the first prospect to be tested as part of a multiwell drilling campaign in Kenya and Ethiopia.
Serica under way with Namibian shoot

Serica Energy has started its planned seismic survey
over deepwater acreage covering 4,150 sq km (1,602 sq
miles) offshore Namibia. The Polarcus Nadia seismic
vessel arrived in Namibia in late April after a 5,070-km
(3,150-mile) mobilization from Tanzania. The area to
be surveyed comprises Blocks 2512A, 2513A, 2513B,
and 2612A, making this one of the largest 3-D seismic
surveys to be undertaken offshore Namibia. The survey
is expected to take three months to complete. BP will
earn a 30% interest in the license under a farm-out
agreement with Serica by meeting the survey cost.
Latest Teak appraisal offshore Ghana noncommercial
Kosmos Energys latest appraisal well offshore Ghana
has been deemed noncommercial. The Teak-4A
appraisal well in the West Cape Three Points Block,
which was targeting the stratigraphic extension of the
Teak discovery area, encountered thin, noncommercial
reservoirs and is being plugged and abandoned. The
company and its partners have begun integrating well
results into the Teak field model to determine forward
appraisal and development plans. The Atwood Hunter rig
drilled Teak-4A to 2,850 m (9,348 ft) TD in 554 m
(1,817 ft) water depth. Following the completion of
operations at the Teak-4A well, the drilling rig will set
gauges at the Teak-2A well and perform a drillstem test
at the Akasa oil discovery in the same block.
Barquentine test boost for Cove
The latest flow test by Cove Energy and its partners offshore Mozambique has confirmed the need for fewer
development wells than originally planned for the Barquentine field, which is part of the larger Prosperidade
gas complex in the Rovuma Basin Area 1 block. The Bar111
international
HIGHLIGHTS
quentine-1 test results at the northern end of the gas complex saw gas flow at a rate of approximately 100 MMcf/d,
with minimal pressure drawdown, targeting a deeper
Oligocene sand formation than the previously tested Barquentine-2 in March. The test data supports potential
unconstrained flow rates of up to 200 MMcf/d, meaning
fewer development wells will be needed, with the flow
rates also demonstrating a high-permeability reservoir.
Transoceans Deepwater Millennium drillship conducted a drill-
with dual-sensor receivers (hydrophone and geophone)

will be deployed on the seabed.
No laurels for Hardy as D9 relinquished off India
Hardy Oil and Gas has consented to the relinquishment of
a deepwater frontier exploration block off the east coast of
India. The company said it had received a proposal from
KG-DWN-2001/1 (D9) license operator Reliance Industries Ltd. to relinquish the block because of its low hydrocarbon potential despite having made one gas discovery.
The proposal set out that following the integration of all
geoscientific data and the results of the three exploration
wells, including the KG-D9-A2 natural gas discovery ... further exploration or appraisal activity is unwarranted, the
company said in a press release. Hardys D3 exploration
license in the Krishna Godavari basin remains the primary
focus, and it will continue to collaborate actively with
partners Reliance and BP to optimize the exploration program for this highly prospective block, the company said.
stem test at the Barquentine-1 well in 1,585 m (5,200 ft) water

depth. The 2012 testing program also includes drillstem tests in
PACIFIC RIM
the Lagosta and Camaro areas to the south of the Barquentine discovery area. (Image courtesy of Transocean Ltd.
MIDDLE EAST/CENTRAL ASIA

ATP spuds Israeli deepwater well
ATP Oil & Gas and subsidiary ATP East Med B.V. have
begun drilling the companys latest deepwater exploration well offshore Israel. The US independent is
drilling the probe on its Shimshon prospect in the
Levant basin using the Ensco 5006 drilling rig. The
Shimshon well is being drilled in 1,104 m (3,622 ft)
water depth, with a planned target depth of 4,500 m
(14,764 ft). After spudding, several protective casing
strings will be set until the well has penetrated the salt
layer. A full set of electric logs will be run at TD to assist
in evaluation of target reservoirs.
RWE Dea surveys Turkmenistan shallow waters
RWE Dea has started a program of seismic surveys in the
Caspian Sea offshore Turkmenistan, with plans to spud an
exploration well next year. The company is exploring geological structures in the Miocene and Pliocene at depths
from 3,000 m to 6,500 m (9,843 ft to 21,326 ft), carrying
out a 3-D transition zone seismic survey for the first time
on the coast of Turkmenistan. The survey comprises the
acquisition of 3-D data over the 400-sq-km (154-sq-mile)
Block 23 and a 2-D program to assess further exploration
potential of the block. The survey is taking place in less
than 5 m (16 ft) water depth, where ocean-bottom cables
112
CNOOC confirms large Bohai Bay oil find

CNOOC Ltd. has successfully appraised the Penglai (PL)
9-1 hydrocarbon-bearing structure following the discovery
made in 2010. The appraisal confirmed that PL9-1 is a
large oil field.The field is located in the Miaoxibei uplift in
the eastern part of Bohai Bay in 25 m (83 ft) water depth.
One of the appraisal wells, PL9-1-5, encountered oil pay
zones with a total thickness of more than 200 m (656 ft),
and the well was tested to produce around 700 b/d of oil.
The company also made a successful discovery on the
PL15-2 structure, located 8 km (5 miles) south of PL9-1.
The discovery well, PL15-2-1, encountered oil pay zones
with a total thickness of 83 m (272 ft), and the test indicated an average rate of more than 1,200 b/d.
Eni signs on for South China Sea block
CNOOC has signed a production-sharing contract with
Eni China B.V. for deewater Block 30/27 in the South
China Sea. Block 30/27, located 400 km (249 miles) off
the coast of Hong Kong, covers a total area of 5,130 sq km
(1,980 sq miles) and is one of the blocks CNOOC offered
for foreign cooperation last year. According to the terms
of the contract, Eni will conduct a 3-D seismic survey covering 2,000 sq km (772 sq miles) and will drill one exploration well on the block. All expenditures incurred during
the exploration period will be carried by Eni, which will
operate the block with a 100% stake. CNOOC has the
right to participate with up to a 51% working interest in
any commercial discoveries on the block.
111A
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the meeting place for the global oil & gas industry
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June 12 - 14,2012
WORLD
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SEPTEMBER
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on the
MOVE
People
Tidewater Inc.
President and
CEO Dean Taylor
(left) has stepped
down after a
34-year career with the company. Taylor, who is succeeded by Jeffrey M. Platt,
(top right) will remain on
the board as a nonexecutive chairman.
Jeffrey A. Gorski (bottom right) also
has succeeded Platt as executive vice
president and COO.
ABS has shuffled
its senior management: James (Jim)
Gaughan (top
left) has replaced
Dr. Kirsi Tikka, who has
been appointed president
and COO of the ABS Europe
operating division, as chief
engineer; John McDonald has taken on
the role of vice president and chief of
staff; Robert (Bob) Giuffra (bottom
left) has moved from his current position as senior vice president, Quality
and Service, to the newly created position of senior vice president, Service
Delivery; and Adam Moilanen, (right)
who currently serves as chief of staff,
has been named vice president, Quality.
Dave Workman
(left) has assumed
the role of COO
and Erik-Jan
Bijvank (right),
senior vice president for the UK and
Africa at Stork Technical Services.
Rhonda B. Rosen has joined NDB

Energy Inc. as CFO.
Continental Resources Inc. has tapped

Jose A. Bayardo as its senior vice president, Business Development.
Frank Brown has joined FairfieldNodal

as director of North American land
licensing.
Jim Macklin has taken the reins as vice

president, Projects and Engineering at
InterMoor, an Acteon company.
Variable Bore Rams Inc. has named

Jared Primeaux operations and logistical coordinator and Mathew Brocato
assembly technician.
Acteon has named Lester

Clark (right) vice president.
EFC Group has appointed Craig
Clarke vice president, Americas.
Greenes Energy Group has

promoted Carlos Chagas de
Oliveira Jr. (right) to general
manager, Brazil.
InterAct PMTI, an Acteon company,

has welcomed Cynda Maxon as its senior project director and F. Charles
(Skip) Newton as its senior scientist.
Awards
David Weinstein has been elected president and CEO of ABS affiliate ABS
Group of Companies Inc.
Larry Denver has taken the helm of
OVS Group LLC as president. Jose N.
Alvarez, founder and former president
of the company, will maintain his role
as CEO.
Former executive vice president of
AGR Field Operations, ge
Landro, (right) has returned
to AGR as executive vice president, Strategy & Integration.
114
Brian Russell (left) and Dan Hampson (middle) of Hampson-Russell

Software & Services, a CGGVeritas company, were recognized as the
inaugural honorees of the first CSEG Symposium, held in Calgary,
Alberta, Canada, in March. Satinder Chopra (far right) is CSEG
Symposium Committee chair. (Image courtesy of CGGVeritas)
EP
MARKETING | SALES | CIRCULATION
Group Publisher
RUSSELL LAAS
Tel: 713-260-6447
rlaas@hartenergy.com
Associate Publisher
DARRIN WEST
Tel: 713-260-6449
dwest@hartenergy.com
United States
Canada / Latin America
1616 S. Voss Road, Suite 1000
Houston, Texas 77057 USA
Tel: 713-260-6400
Toll Free: 800-874-2544
Fax: 713-627-2546
Regional Sales Manager

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Tel: 713-260-6454
jflynn@hartenergy.com
Regional Sales Manager

HENRY TINNE
Tel: 713-260-6478
htinne@hartenergy.com
Advertising Sales Representative

ERIC MCINTOSH
Tel: 713-260-6471
emcintosh@hartenergy.com
Sales Manager
Eastern Hemisphere
DAVID HOGGARTH
Tel: 44 (0) 7930 380782
Fax: 44 (0) 1276 482806
dhoggarth@hartenergy.com
Advertising Coordinator
CAROL NUNEZ
Tel: 713-260-6408
cnunez@hartenergy.com
Subscription Services
E&P
1616 S Voss Road, Suite 1000
Houston, Texas 77057
Tel: 713-260-6442
Fax: 713-840-1449
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List Sales
MICHAEL AURIEMMA
Venture Direct
212.655.5130 phone
212.655.5280 fax
mauriemma@ven.com
on the
MOVE
Expansions
Aker Solutions is establishing an office
in lesund, Norway, which will provide
specialist competence on structural
design, structural analysis, and naval
technology. In July the company also
plans to open a new service base in
Labuan Federal Territory in East
Malaysia to support the installed and
future deepwater projects in the Asia
Pacific region.
Cargotec has established a new offshore service center in Houston, Texas,
which provides repair, upgrades, and
systems modernizations for rigs, vessels,
and platform operators.
Proserv Group Inc. has acquired the
subsea controls business of Weatherford
International that specializes in subsea
and topside communication and control systems, subsea intervention services, and subsea termination equipment
for offshore production optimization,
control, and monitoring. The acquisition includes more than 300 personnel
and all control systems operations in the
UK, Norway, North America, the Middle East, and the Far East.
Carbo Ceramics Inc. will begin construction on a new ceramic proppant
manufacturing plant in Millen, Ga.,
which is expected to begin operations
in late 2013.
FlexSteel Pipeline Technologies has
opened a 26,000-sq-m (~280,000-sq-ft)
manufacturing facility in Baytown,
Texas. The new facility is equipped to
manufacture the companys new 8-in.
diameter pipe, which is expected to
reach markets in 4Q 2012.
Diamond Offshore Drilling has
entered into a turnkey contract with
the Hyundai Heavy Industries shipyard
for construction of a new ultra-deepwater drillship, Ocean BlackLion, which is
slated for delivery in 4Q 2014.
ADVERTISER INDEX
American Jereh
International Corporation . . . . . . . . . . . IBC
Archer Well Company Inc. . . . . . . . . . . . . . 43
Ariel Corporation . . . . . . . . . . . . . . . . . . . . 57
Baker Hughes Incorporated . . . . . . . . . 47, 69
BGP International . . . . . . . . . . . . . . . . . . . . 28
Cameron . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Checkers Industrial Safety Products . . . . . 91
Cudd Energy Services . . . . . . . . . . . . . . . . 53
Delmar Systems, Inc. . . . . . . . . . . . . . . . . . . 96
Diamondback Industries . . . . . . . . . . . . . . 23
Dragon Products, Ltd. . . . . . . . . . . . 2-3, 39, 55
Drilformance . . . . . . . . . . . . . . . . . . . . . . . . . 93
Dynalloy Industries, Inc. . . . . . . . . . . . . . . . 40
E&P . . . . . . . . . . . . . . . . . . . 83, 88-89,105, 107
Emerson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Expro Group . . . . . . . . . . . . . . . . . . . . . . . . 49
Falcon Technologies . . . . . . . . . . . . . . . . . . 51
FlexSteel Pipeline Technologies, Inc. . . . . 25
Fugro Jason . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Global Petroleum Show/
World Heavy Oil Congress . . . . . . . . . . . 113
Great Wall Drilling Company . . . . . . . . . . . 63
Halliburton . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
J&J Truck Bodies & Trailers . . . . . . . . . . . . . 77
K+S KALI GmbH . . . . . . . . . . . . . . . . . . . . . 54
Magnum Oil Tools International . . . . . . . . 71
Mewbourne College of Earth & Energy . . . 12
M-I Swaco . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Momentive . . . . . . . . . . . . . . . . . . . . . . . . . 103
National Oilwell Varco . . . . . . . . . . . . . . . . . 21
Nauchers Alpine Solutions Inc. . . . . . . . . . . 76
Newpark Drilling Fluids . . . . . . . . . . . . . . . 30
Paradigm . . . . . . . . . . . . . . . . . . . . . . . . 45, 73
Peak Completions . . . . . . . . . . . . . . . . . . . . 41
Pentair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Permian Basin International Oil Show . . . . 82
PGS Exploration (UK) Ltd. . . . . . . . . . . . . . . 59
Production Tech and Services . . . . . . . . . . 95
Repsol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Roxar AS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Roxar Limited . . . . . . . . . . . . . . . . . . . . . . . . 67
Saudi Aramco . . . . . . . . . . . . . . . . . . . . . . . IFC
Schlumberger . . . . . . . . . . . . . . . . . . 5, 11, BC
Select Energy Services . . . . . . . . . . . . . . . . 81
Society of Exploration Geophysicists . . . . 97
Spectrum . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Superior Drillpipe Manufacturing Inc. . . . 72
TAM International . . . . . . . . . . . . . . . . . . . . 44
Taylor Valve Technology . . . . . . . . . . . . . . . 91
Tervita . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Tetra Technologies Inc. . . . . . . . . . . . . . . . . 79
Travelers Insurance . . . . . . . . . . . . . . . . . . . 19
TrueNorth Steel . . . . . . . . . . . . . . . . . . . . . . 58
United Rentals . . . . . . . . . . . . . . . . . . . . 14, 15
Weatherford International, Ltd. . . . . . . 26, 27
115
last
WORD
Escape from the

unconventional treadmill
A contrarian strategy of investing in conventional assets has its advantages.
Conventional properties continue to be a very viable
long-term investment in oil and natural gas for several key
reasons. First, there is generally no exploration risk when
t seems like every couple of months there is a new shale
working with a field that is more than 50% developed and
play popping up, followed by a run on leases in the area,
has an established production history. The availability of
a surge in expectations, dozens of industry conferences,
data on previously drilled wells and evidence of producand a migration of oilfield service providers to the area.
tion performance offer a foundation of knowledge on
With so many producers flocking to unconventional
which to build a solid capital program. In legacy convenresources, one might be tempted to believe that conventional fields with large original oil or gas in place, increastional oil and gas properties have seen better days and are
ing the fields total reserve recovery by 2% to 5% can
at the end of their useful life. But these assumptions would
produce a meaningful value increase.
be incorrect.
Second, conventional assets with the majority of the
Unconventional plays attract attention for their promise
reserves at proved-developed-producing status
of growth and repeatable inventory. They are todays
generally have a shallower decline rate
North American elephant prospects. But
than unconventional resource plays.
along with their high initial production
Shallow declines result in
rates comes a host of burdens that do
longer field lives and prenot fit the business model of all prodictable cash flows. Finally, the
ducers. New plays can present explocapital required to sustain and
Along with
ration risk if they have not been
grow production is far less for a
high initial
adequately delineated, the wells
conventional field. There are many
production rates
generally cost a multiple of conlow-risk ways to boost production
ventional well expenses, and well
from legacy assets, including recomcomes a host of burdens
completions often require expenpletions, artificial lift additions, and
that do not fit the business
sive technology and services to profacility upgrades. These methods,
model of all producers.
duce the best results. In their early
along with cost reductions, often
life, unconventional wells have steep
enhance the value of the assets.
declines of 80% or more, and producers
In addition to these benefits, convenfind themselves on a treadmill to bring
tional assets offer more stable, reliable pronew wells online as quickly as possible to
duction and cash flow than unconventional
maintain production rates. To retain
resource plays. When operators use comacreage recently leased, producers
modity derivatives to hedge a majoroften must sustain an unecoity of their production, it allows
nomic drilling program, as is the case for many producers
them to lock in their project economics in the field and
today with natural gas spot prices between US $2 and
improve cash flow stability. A companys ability to secure
$3/Mcf.
future cash flows from its production can be a valuable
The effect of the aggressive, expensive drilling schedtool for investment vehicles such as upstream master limules of many producers today is that they need to fund
ited partnerships (MLPs). The goal of MLPs is to maintain
these programs. This is typically done by accessing the capstable cash flows and pay quarterly cash distributions. Conital markets and also selling their conventional assets to
ventional properties offer a predictable production profile
meet their cash flow requirements. There are approxithat fits the MLP business model. Even though convenmately $200 billion to $300 billion of conventional oil
tional oil and natural gas investments can be viewed as a
and natural gas assets in the US, and many of them are
contrarian strategy today, they continue to produce free
locked inside unconventional resource companies.
cash flow that appeals to a wide variety of investors.
Alan L. Smith, QR Energy LP
116
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We are looking for experienced professionals for the following positions:

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New hybrid stimulation validates intervention

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LOGGING & FORMATION EVALUATION

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Finger on the pulse

An uplifting experience: Buoyancy advances

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Eni seeks approval to drill

Shale gas well results from southeastern Sweden

Big new offshore oil find reported in Gulf of Paria, Trinidad

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1616 S. VOSS ROAD, STE 1000

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ere in North America its sometimes hard to remember that there is