INTELLIGENT GAS LIFT

Cameron Laing, Production Technology Consultant, LETS Summary & Conclusions This paper demonstrates the significant increases in oil production that can result from the deployment of Camcon DIAL units instead of conventional wireline retrievable valves and sidepocket mandrels in a gas lifted production well. A subsea well in a small field development, with limited - if not zero - intervention opportunities, was evaluated over a number of scenarios in its productive life cycle. The Camcon DIAL units were seen to offer much greater flexibility than conventional equipment, as the achievable depth of injection could change in response to the inevitable changes in reservoir pressure and water cut over the life of the well and with the initial uncertainty over Productivity Index. Incremental production delivered in this example was in some cases over 1,000 bopd greater than that of conventional equipment and represented up to 110% more production in one scenario. The ability to open and close the DIAL units at will, and to vary the equivalent port size meant that even greater production increments could be delivered in the scenarios where additional casing pressure or additional gas lift gas became available, since there was no concern over re-opening unloading valves or finding valves stuck closed due to temperature effects on nitrogen charged bellows. Introduction Gas lift is one of the most common artificial lift technologies, lifting reservoir fluids to surface at rates which wells are not able to sustain naturally. Its popularity is related to its inherent ability to handle gassy; sandy; corrosive fluids in deviated wells and its applicability to a wide range of production rates. When gas sales, and therefore gas compression, facilities already exist, the incremental cost of downhole equipment is relatively low and that equipment, once installed, does not present any barrier to reservoir access for investigation, treatment, repair or sand-face production management. Superficially, the equipment also offers the option of adjustment to accommodate changes in well performance. These are the implicit assumptions that have been associated with gas lift for the last half century or more. But in that time period the oil industry has undergone significant transformation; moving geographically from its original land base to deepwater offshore provinces; and moving technically from slick wire intervention to remote real time management of digital intelligent completions. Gas lift technology, however, has virtually stood still the technology that time forgot. My understanding of the direction being taken by the API in drafting RP 19G13 High Pressure and Subsea Gas Lift, is that the use of high pressure gas and a single orifice is the recommended way forward for subsea wells. This amounts to an implicit admission by the industry that the conventional system of unloading valves is not fit for purpose for subsea wells. In my view, it also brings with it additional risks associated with higher inventories of flammable hydrocarbons on host platform topsides, higher cost in subsea distribution systems and higher specifications for casing connections to prevent well integrity threats due to annular pressure migration.

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Taking a closer, more critical, look at gas lift design assumptions clearly shows that it is not just subsea wells that have a problem. The textbooks; recommended practices; and service company procedures all make the same implicit design assumption that the well will operate with a specific reservoir pressure; flow at a specific rate and with a specific water cut. This is a patently naive assumption in many fields being developed and produced today particularly offshore, where fewer, higher cost wells probe fault blocks where sands have uncertain connection to areas already developed; to aquifers or to injection support. Uncertainty over initial well performance is high yet completion equipment, such as mandrel subassemblies, must be made up, tested and shipped before the bit has even entered the reservoir. Ironically, the one certainty is that reservoir pressure, production rate and water cut (not to mention gas lift gas supply volumes and pressure) will surely change over the life of the well. With water injection for pressure maintenance and/or flooding, reservoir pressure may even rise to higher than initial values. Ideally, gas lift gas should only be injected continuously through the orifice normally located in the deepest side-pocket mandrel. Personal communications with service sector companies providing downhole gas lift equipment has confirmed that it is not recommended that injection take place continuously through an unloading valve. This entails a significant risk of destroying the seat through chattering of the ball on the seat of the valve. This would compromise well integrity where the well retains the potential to flow naturally to surface (the standard back check in the nose cone is neither designed nor qualified as a well barrier). It would also compromise any gas lifting of the well at any deeper point as this valve would not be able to close, so gas would always be injected through it. Yet, despite this warning, they are regularly delivering designs to operators where, inevitably, injection will take place through an unloading valve. The next gas lift assumption is that circumstances different to those used in the design exercise can easily be accommodated by simple wireline intervention to change out gas lift valves. This implies that we have ready access to the wellhead. This is not necessarily so for platforms where the rig is involved in a drilling programme and its footprint covers the well bay, or for subsea wells. The cost of operations and the time-lag during which production is lost can both be very significant. Finally it is assumed that intervention will be a simple, trouble free operation. (I should pause here while field engineers stop laughing and pick themselves off the floor.) For many this is in fact true, but for many others with wax, asphaltene, inorganic scale, sand, corrosion, depth and deviation to deal with, this is not a risk free business. For subsea wells, with interventions costing potentially tens of millions of dollars, there are additional operational risks to consider along with the possibility that a high value well could be junked, production actually diminished or the well have to be worked over at further great expense. This paper looks at the options for addressing the challenge of uncertain well performance and highlights, in particular, the potential advantages of the new technology being brought to the industry by Camcon Oil with their Digital Intelligent Artificial Lift (DIAL) unit. Over the past couple of decades we have come to accept intelligent completion equipment that optimises the well Inflow Performance Relationship (IPR) between bottomhole pressure and rate. We are now seeing the possibility of full production system optimisation through incorporating intelligence in the

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production tubing that allows us to optimise the Vertical Lift Performance (VLP) relationship between bottomhole pressure and rate. Example Well Every reservoir rock has a unique set of attributes. Similarly, each oil is also a unique multicomponent hydrocarbon mixture. Wells also have many different depths and trajectories and, while production tubing comes in standard sizes, sizes can be combined in many ways and the string adorned with jewellery that gives it unique attributes providing specific functionality. The example selected as a basis for comparison of gas lift design options may not match every readers idea of a typical well but it is based on a real well that I believe is indeed typical of modern day subsea wells in moderate water depths. The well trajectory is approximated by being virtually vertical down to around 6,000ft MD RKB, then building angle to 66 by 7,000ft MD and holding down to a total depth of 17,600ft MD (11,300ft TVD). The well was completed using a 7liner with a 4.5 by 5.5 production tubing string with the packer and end of the tubing at 17400ft MD and the x-over at 1,100ft MD and the wellhead on the seabed at 600ft MD. The maximum depth for a gas lift mandrel is 17,200ft MD (11,100ft TVD). The reservoir temperature is 260f and the overall heat transfer coefficient (OHTC) assumed for temperature modelling was 5 Btu/hr/ft2/F. A detailed enthalpy balance temperature model reflecting well construction materials; and rock properties; and time on production would be required to predict flowing well temperature gradients for the initial development well in a field but this detail has been omitted here. For simplicity it has been assumed that the OHTC is obtained by matching measured temperatures to a well model for other wells in the field. The oil is a light 38API fluid with a solution GOR of 360 scf/stb and a saturation pressure of 1200psig. The tubing head pressure of the well is assumed to be 500psig. As this is a subsea well, this pressure is, in reality, a variable rather than the fixed value assumed here for simplicity. Subsea wells typically feed into a flowline that is shared with other producing wells and which extends over a significant distance to the host platform. Tubing head pressure will depend on the frictional pressure losses in that line, which in turn depends on the production rate, gas lift rate and water cut etc. associated with the well in question and with the other wells in the gathering system. The completion/packer fluid for gas lift design is taken as treated, filtered Seawater with a weight of 8.6ppg. The key variables that are examined are the well Productivity Index (PI), the Reservoir Pressure and the Water Cut (WC). Each of these parameters can be expected to change over the life of the well. A Reservoir pressure, PI and WC data set can effectively be used to describe a life cycle service load case for the gas lift system (see table below). The use of PI in place of a full blown IPR model is justified in reducing the complexity here in order to meet the objective of this particular exercise but also because the low bubble point pressure of the oil means that gas will not evolve in the near wellbore rock and diminish PI correspondingly. PI is therefore only impacted by two phenomena: a) Completion & Production uncertainty due to, for example: damage caused by ineffective perforating; or by fluid incompatibility between formation water and completion or treatment fluids, such as scale inhibitor squeeze treatments; fines invasion from the completion fluid or migration from deeper in the reservoir; scale formation with injection water breakthrough; cross-flow between differentially pressured zones etc. and b) Relative Permeability effects in the near wellbore rock due to increasing water saturation. The former is taken into account by the use of specific PI sensitivity www.letstrain.co.uk Page 3 of 17 27/4/2011

values and the latter by specific relationship derived from special core analysis tests that are built into the base PI model. In general, the only way is down, relative to the initial PI estimate, unless some specific stimulation treatment is planned as part of the completion or as a remedial treatment at a later date. Analysis Software There are numerous steady state Production System Models on the market and a few transient models. The gas lift unloading operation is a transient phenomenon i.e. pressures and temperatures change over time, as is unstable performance misbehaviour, but continuous gas lift can be adequately modelled as a steady state process. The model used here is a leading software product; PROSPER from Petroleum Experts (www.petex.com), which many petroleum engineers in most leading international E&P companies will be familiar with. Ideally, this kind of comparison would be carried out with linked material balance reservoir models and network gathering system models that link the performance of multiple wells in a common system but for simplicity this has been omitted. Production system analysis can be used to determine many features of a well completion design, from perforating shot density to production tubing size. In this example, the tubing size and other attributes are taken as already fixed. Analysis Workflow The focus of this analysis is to inform the selection of artificial lift equipment that will balance the desire for optimal oil production with the requirement for maintaining well integrity and gas lift equipment functionality over the life of the well. The workflow involves the following 3 basic steps: 1. Conceptual Gas Lift Design: a. Develop a set of scenarios that will encompass the likely well performance over the life of the well b. Review the Base Case reservoir model. This reflected the possibility that a Water Injection well could be added to the reservoir several months after 1st oil and that it would be justified by the initial performance of the lone producer. The following life of well scenarios were established as being representative of a realistic range of possibilities with and without water injection: i. Early Life (1 day): High Reservoir Pressure 7000psig / no water cut ii. Early Life (3 months): Moderate Reservoir Pressure 4700psig / no water cut iii. Mid Life (1 year) Water Injection: Lower Reservoir Pressure 4150psig / low water cut 15% iv. Mid Life (1 year) No Water Injection: Lowest Reservoir Pressure- 3000psig / no water cut v. Late Life (3 years) Water Injection: Moderate Reservoir Pressure- 4700psig / high water cut 90% vi. Late Life (3 years) No Water Injection: Lowest Reservoir Pressure - 3000psig / low water cut- 15% c. Establish appropriate sensitivity variables i. Reservoir Pressure (psig): 7,000; 4,700; 4,150; 3,000. ii. Water Cut (%): 0; 15; 90. iii. PI (barrels per day per psi reduction in bottom hole pressure): 21; 14; 7 iv. Gas Injection Rate (MMSCFD): 0; 0.5; 1.0; 2.0; 3.0; 4.0; 5.0 6.0; 8.0; 10.0 www.letstrain.co.uk Page 4 of 17 27/4/2011

d. Run PROSPER in Optimum Depth of Injection Gas Lift Mode, assuming no pressure loss in annulus, to find for each life cycle case: i. Production Rate Range ii. Depth of Injection Range iii. Gas Injection Rate Range 2. Detailed Gas Lift Design: a. Evaluate results from the sensitivities above to determine the best compromise choice of variables on which to build a base case detailed gas lift design: i. Tubing Size ii. Reservoir Pressure iii. Water Cut iv. PI v. Gas Injection Rate vi. Production Rate b. Perform Enthalpy Balance temperature prediction calculations using the design production and gas injection rate configuration in order to better predict temperatures at valve depths so that nitrogen dome charges can be properly calculated. [This is not discussed in this paper but it should be emphasised that conventional gas lift valve performance is critically related to temperature at valve depth a parameter that is not always established with any great confidence.] c. Establish the specific mandrel spacing, valve port sizes and valve dome pressure settings for the conventional gas lift equipment to be installed in the well. In this case, for expediency the design facility within PROSPER was used. i. Caution should be exercised in using production system modelling software for gas lift design by those who are not experienced gas lift design practitioners. Specialist gas lift service company engineers should be consulted. Many design techniques are available, some of which may blend traditional graphical methods which offer more direct control of the detailed process and the multitude of design safety factors, with the power of software that can quickly generate multi-phase flow tubing pressure gradients. d. Establish the DIAL unit spacing based on the absence of any drop in casing pressure being required between stations 3. Design Comparison: a. Using the range of potential life of well scenarios discussed above, compare the performance of a standard multi-mandrel design with: i. Single point injection at the top mandrel ii. Multiple Camcon DIAL units b. This comparison should: i. Identify where injection via orifice is not possible. ii. Identify both the optimum and maximum practically achievable production rates iii. Identify optimum and maximum practically achievable gas injection rates

Conceptual Design Results 1900 psig casing head pressure is available for gas lift but 1800 psig casing head pressure was used in the conceptual analysis as the actual operating casing head pressure. This was to take into account pressure drops taken from maximum available casing pressure to close unloading valves prior to reaching the operating depth (orifice). 500psi DP across the orifice at the point of injection was www.letstrain.co.uk Page 5 of 17 27/4/2011

assumed for conceptual design (the actual DP depends in reality on both the orifice port size and the rate of gas injection through that port since neither are know at this stage a starting assumption, based on experience, must be made). Table 1 Productivity Index bpd/psi 7 14 21 Table 2 Productivity Index bpd/psi 7 14 21 Table 3 Productivity Index bpd/psi 7 14 21 Table 4 Productivity Index bpd/psi 7 14 21 Life Cycle Stage 1a: Early Life 1 day Optimum Optimum Natural Depth of Gas Lift Flow Injection, ft Injection Production MD RKB MMSCFD bopd 3,790 5.0 15,695 3,160 3.0 20,635 2,930 1.0 22,855 Life Cycle Stage 1b: Early Life 3 Months Optimum Optimum Natural Depth of Gas Lift Flow Injection, ft Injection Production MD RKB MMSCFD bopd 6,275 8.0 5,545 5,030 8.0 8,835 4,635 6.0 10,545

Gas Lifted Oil Production bopd 16,105 20,730 22,865

Gas Lifted Total Liquid Production blpd 16,105 20,730 22,865

Gas Lifted Incremental Oil bopd 410 95 10

Gas Lifted Oil Production bopd 8,950 11,330 12,545

Gas Lifted Total Liquid Production blpd 8,950 11,330 12,545

Gas Lifted Incremental Oil bopd 3,405 2,495 2,000

Life Cycle Stage 2a: Mid Life Water Injection Support Optimum Optimum Natural Gas Lifted Depth of Gas Lift Flow Oil Injection, ft Injection Production Production MD RKB MMSCFD bopd bopd 15,525 6.0 3,275 10,350 8.0 4,677 8,250 8.0 5,670

Gas Lifted Total Liquid Production blpd 3,855 5,505 6,670

Gas Lifted Incremental Oil bopd 3,275 4,677 5,670

Life Cycle Stage 2b: Mid Life No Water Injection Support Optimum Optimum Natural Gas Lifted Gas Lifted Depth of Gas Lift Flow Oil Total Liquid Injection, ft Injection Production Production Production MD RKB MMSCFD bopd bopd blpd 17,200 6.0 1,990 2,340 16,605 6.0 3,045 3,585 14,485 6.0 3,495 4,115

Gas Lifted Incremental Oil bopd 1,990 3,045 3,495

Table 5 Productivity Index bpd/psi 7 14 21

Life Cycle Stage 3a: Late Life Water Injection Support Optimum Optimum Natural Gas Lifted Depth of Gas Lift Flow Oil Injection, ft Injection Production Production MD RKB MMSCFD bopd bopd 9,780 8.0 452 7,150 8.0 634 6,310 8.0 743 Page 6 of 17

Gas Lifted Total Liquid Production blpd 4,525 6,340 7,435

Gas Lifted Incremental Oil bopd 452 634 743 27/4/2011

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Table 6 Productivity Index bpd/psi 7 14 21

Life Cycle Stage 3b: Mid Life No Water Injection Support Optimum Optimum Natural Gas Lifted Gas Lifted Depth of Gas Lift Flow Oil Total Liquid Injection, ft Injection Production Production Production MD RKB MMSCFD bopd bopd blpd 17,200 6.0 1,990 2,340 16,605 6.0 3,045 3,585 14,485 6.0 3,495 4,115

Gas Lifted Incremental Oil bopd 1,990 3,045 3,495

Conceptual Design Results Comparison From the tabulated conceptual design results it can be seen that, over the life of this well, there is extremely wide potential range of injection depths --- anywhere from 3,000 17,000ft MD and a similarly wide range of optimal gas injection rates, anywhere from 1.0-8.0 MMSCFD. Welcome to the real world, rather than the textbook world, of gas lift design! Some engineers propose rationalising this dilemma by using a probabilistic approach, based on a particular distribution of key parameter values, similar to that used in determining actual oil reserves in place, to establishing the target injection depth and injection rate as a basis for detailed gas lift design. In my opinion, it is better to consider this a strategic decision that will be influenced by the operators business drivers. There will be different answers in different situations. The right answer is not necessarily a technical one. Is it more important to gain quick payback on a risky investment through maximising early time production rates than to maximise the full life cycle reserve recovery by lifting as deep as possible over the longer period of tail end production, or vice versa? Table 1 shows that the benefit of gas lift on day 1 is relatively trivial and so can reasonably be ignored. Similarly, Table 6 is, in this example, identical to Table 4 and so we can combine these two cases in one for analysis. Both are low reservoir pressure consistent with no water injection support (limited aquifer support assumed). The two scenarios that demonstrate most benefit from gas lift are in Table 2 and Table 3. Table 2 might be more important if early payback is important. On the other hand, with the reservoir pressure that table 2 is based upon, the well is capable of sustaining natural flow meaning that gas lift is not essential for significant production rates to be achieved. For Table 3 and all subsequent tables, the reservoir pressure has fallen to a level where it cannot support natural production gas lift is essential for any production to take place. For this example it was decided that the detailed design would be based on the maximum oil production rate seen in a situation where gas lift was essential for production i.e. the Table 3 case with a PI of 21. This targets a mid depth range of points of injection. If well performance is poorer than expected, or reservoir pressure falls lower, we will be assured of injecting at this depth. PI is considered to be unlikely to be higher and, if it were, we could probably still get by with injecting at this depth with a lower gas injection rate. If we had chosen a case from Table 2, while we would have benefited under the conditions assumed for that table, we would have lost production in every other case as the depth of injection would be significantly higher and production consequently lower than would have been possible with a deeper point of injection.

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The theoretical optimum gas injection rate indicated for all tables, apart from Table 1, is in the range of 6.0 8.0 MMSCFD. This is, however, a luxury that is unlikely to be available since it is probable that the host production facility will have a limited total amount of gas to distribute between many wells. This must be allocated optimally between wells of different potential. It is probable that we will operate much further to the right on the oil production v gas injection curve. Examining the chart for Table 3, it can be seen that most of the benefit of gas lift can be obtained with a much lower rate of around 2.0 MMSCFD. It is also considered prudent to size the conventional gas lift orifice for a lower gas injection rate, and live with that limitation, rather than assume a higher injection rate that ultimately may not be available leading to potentially unsustainable instability in the well casing and tubing pressures due to the marginal DP across the injection valve that results. One of the great advantages of the Camcon DIAL unit is that the orifice size is not fixed it can effectively be varied on demand. 2.0MMSCFD was selected as the injection rate for each of the systems being compared thus providing a level playing field for comparison. It should be noted, however, that there are three options available for varying the gas injection rate using the DIAL units. Firstly, since each DIAL unit incorporates multiple valves, it may be that additional valves in that unit can be opened. Secondly, if the DIAL unit is already has all valves open, the casing pressure could be raised (should that option be available) in order to increase the rate through the unit. This would not be feasible with conventional equipment as the upper unloading valves would start to open (with potentially damaging results). Finally, if the casing pressure cannot be raised and the DIAL unit at the point of injection is operating at capacity, one or more valves in a second DIAL unit located higher in the wellbore can be opened, creating a limited form of multi-point injection, to maintain the required gas injection rate in a controlled and stable manner. Detailed Gas Lift Design A typical gas lift design technique built in to the PROSPER program similar to those used by gas lift service companies - was selected to determine mandrel spacing and valve port size. The depth established for the top mandrel was subsequently used as the single orifice design. The mandrel spacing for the Camcon units was based on the same design technique but without taking any casing pressure drops (as needed to close conventional unloading valves). The fixed port sizes and dome pressures calculated are of course irrelevant for the DIAL unit. Only minor use of safety factors was made for all designs. The transfer tubing pressure was taken as the objective fluid gradient. The gas passage calculation, which is based on the Thornhill-Craver equation, was de-rated by 75% to reflect gas lift service company data (i.e. a larger port size will be required to pass the specified gas injection rate than would be the case without de-rating the calculation). In a conventional design it is prudent to install mandrels beneath the design injection depth to permit a deeper point of injection to be established if well performance allows. Dummy valves are installed in these mandrels, as having additional valves that would in effect be holes in the tubing beneath the orifice (which cannot close) would be a recipe for instability. Changing out those dummies requires wireline intervention and is unlikely to happen in a subsea well. For the Camcon DIAL units, injection can take place through any unit at any time and when the unit is not in service the valve ports can be closed off by a signal from surface. No well intervention is required. The location of these additional units lies outside the envelope created by the design tubing pressure gradient, so they cannot be spaced in the conventional manner. A couple of extra DIAL units were installed arbitrarily at approximately 2000ft TVD intervals to cover virtually the full range of injection depth possibilities over the life of the well

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Table 7 Productivity Index

Gas Lift Equipment: Basis of Design Reservoir Water Cut Target Gas Pressure Injection Rate psig 4125 % 15 MMSCFD 2.0

Load Fluid Gradient

bpd/psi 21

psi/ft 0.45

Flowing Tubing Head Pressure psig 500

Gas Injection Casing Head Pressure psig 1900

Having performed the design exercise, the mandrels were spaced as shown in Table 8. Using the gas injection rate of 2.0 MMSCFD discussed previously, the port size for the orifice was set at 20/64 (5/16) and the port for the unloading valve was set at 12/64 (3/16). The unloading valve was set with a Test Rack Opening Pressure (TRO) of 1650 psig. Examining the plot of gas pressure vs. gas injection rate at the valve, 2.0 MMSCFD is just to the right of the curve minima. This means that 2.0MMSCFD is close to the minimum injection rate for stable injection. The dp across the valve for 2.0MMSCFD is found to be 205 psi. These figures were used in establishing production rates under the different reservoir pressure, PI & water cut scenarios established previously, using a Valve Depths Specified calculation in PROSPER. The calculation determines whether or not injection can take place at that depth. Since injection is only allowed via the orifice, only the orifice depth is specified for the conventional design. The operating casing head pressure is 1850 psig as a 50 psi drop has been taken to close the unloading valve. For the Camcon design all DIAL unit depths are specified and the calculation indicates at which depth gas will be injected at. For simplicity, the multiple ports in the Camcon DIAL unit are approximated by the same 5/16 port and dp assumed for the conventional design. The casing head pressure for this case is 1900psig as no drops are ever taken. For the Single Orifice option only the depth of the top valve is considered but a 16/64 (1/4) port size with an 800psi dp was chosen. The injection of 2.0MMSCFD trough this size of orifice is further away from potential instability (in this case ~1.0MMSCFD) as we have the luxury of a high dp to work with. Injection pressure is 1900psig in this case. Table 8 Gas Lift Mandrel Spacing, ft MD / TVD RKB Conventional Single Orifice 4,190 / 4,190 4,190 /4,190 6,770 / 6,585

Camcon DIAL 4,190 / 4,190 6,970 / 6,730 10,555 / 8,500 15,615 / 10,500

Table 9 PI bpd/psi 7 14 21

Life Cycle Stage 1a: Early Life 1 day Conventional Design Single Orifice Orifice @ 6770 ft Orifice @ 4190 ft Oil bopd 16,105 20,730 22,865 Gas Lift MMSCFD 0.0 0.0 0.0 Oil bopd 16,105 20,730 22,865 Gas Lift MMSCFD 0.0 0.0 0.0 Oil bopd 16,105 20,730 22,865

Camcon DIAL Units Gas Lift MMSCFD 0.0 0.0 0.0 Depth of Injection ft MD

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Table 10 PI bpd/psi 7 14 21 Table 11a PI bpd/psi 7 14 21 Table 11b PI bpd/psi 7 14 21 Table 12a PI bpd/psi 7 14 21 Table 12b PI bpd/psi 7 14 21

Life Cycle Stage 1b: Early Life 3 Months Conventional Design Single Orifice Orifice @ 6770 ft Orifice @ 4190 ft Oil bopd 2,865 4,625 5,895 Gas Lift MMSCFD 2.0 2.0 2.0 Oil bopd 2,360 4,060 5,330 Gas Lift MMSCFD 2.0 2.0 2.0 Oil bopd 3,125 4,650 5,920

Camcon DIAL Units Gas Lift MMSCFD 2.0 2.0 2.0 Depth of Injection ft MD 10,555 6,970 6,970

Life Cycle Stage 2a: Mid Life Water Injection Support Conventional Design Single Orifice Orifice @ 6770 ft Orifice @ 4190 ft Oil bopd 2,165 3,455 4,360 Gas Lift MMSCFD 2.0 2.0 2.0 Oil bopd 1,550 2,715 3,575 Gas Lift MMSCFD 2.0 2.0 2.0 Oil bopd 2,710 3,800 4,400

Camcon DIAL Units Gas Lift MMSCFD 2.0 2.0 2.0 Depth of Injection ft MD 15,615 10,555 6,970

Life Cycle Stage 2a: Mid Life Water Injection Support & Higher CHP Conventional Design Single Orifice Camcon DIAL Units Orifice @ 6770 ft Orifice @ 4190 ft Depth of Oil Gas Lift Oil Gas Lift Oil Gas Lift Injection bopd MMSCFD bopd MMSCFD bopd MMSCFD ft MD 2,165 2.0 1,550 2.0 3,005 3.0 15,615 3,455 2.0 2,715 2.0 4,245 3.0 10,555 4,360 2.0 3,575 2.0 5,240 3.0 10,555 Life Cycle Stage 2b: Mid Life No Water Injection Support Conventional Design Single Orifice Camcon DIAL Units Orifice @ 6770 ft Orifice @ 4190 ft Depth of Oil Gas Lift Oil Gas Lift Oil Gas Lift Injection bopd MMSCFD bopd MMSCFD bopd MMSCFD ft MD 750 2.0 2.0 1,570 2.0 15,615 1,205 2.0 2.0 2,210 2.0 15,615 1,500 2.0 2.0 2,595 2.0 15,615 Life Cycle Stage 2b: Mid Life No Water Injection Support & Higher CHP Conventional Design Single Orifice Camcon DIAL Units Orifice @ 6770 ft Orifice @ 4190 ft Depth of Oil Gas Lift Oil Gas Lift Oil Gas Lift Injection bopd MMSCFD bopd MMSCFD bopd MMSCFD ft MD 750 2.0 2.0 1,750 3.0 15,615 1,205 2.0 2.0 2,595 3.0 15,615 1,500 2.0 2.0 3,095 3.0 15,615

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Table 13 PI bpd/psi 7 14 21

Life Cycle Stage 3a: Late Life Water Injection Support Conventional Design Single Orifice Orifice @ 6770 ft Orifice @ 4190 ft Oil bopd 325 480 Gas Lift MMSCFD 2.0 2.0 Oil bopd 220 365 460 Gas Lift MMSCFD 2.0 2.0 2.0 Oil bopd 375 485 575

Camcon DIAL Units Gas Lift MMSCFD 2.0 2.0 2.0 Depth of Injection ft MD 10,555 6,970 6,970

Table 14 PI bpd/psi 7 14 21

Life Cycle Stage 3b: Late Life No Water Injection Support Conventional Design Single Orifice Camcon DIAL Units Orifice @ 6770 ft Orifice @ 4190 ft Depth of Oil Gas Lift Oil Gas Lift Oil Gas Lift Injection bopd MMSCFD bopd MMSCFD bopd MMSCFD ft MD 750 2.0 2.0 1,570 2.0 15,615 1,205 2.0 2.0 2,210 2.0 15,615 1,500 2.0 2.0 2,595 2.0 15,615

Table 15

Life Cycle Case

Incremental Oil Production from Camcon DIAL Units PI Increment vs. Increment vs. Increment vs. Single Orifice Conventional Conventional bpd/psi Multi-Mandrel Multi-Mandrel bopd Design Design bopd % 7 14 21 7 14 21 7 14 21 7 14 21 7 14 21 7 14 21 0 0 0 765 590 590 1160 1085 825 1570 2210 2595 155 120 115 1570 2210 2595 0 0 0 260 25 25 545 345 40 820 1005 1095 50 5 575 820 1005 1095 0 0 0 9 0.5 0.4 25 10 1 110 83 73 15 1 110 83 73

Increment vs. Conventional Multi-Mandrel Design (3.0 MMSCFD) bopd

1a

1b

2a

2b

840 790 880 1000 1,390 1,595

3a

3b

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Discussion For Life Cycle Stage 1a, the early life (1-day) scenario, injection of 2.0 MMSCFD at the depth of the top mandrel is not possible, so the well will be left to flow naturally without any gas lift assistance. For Life Cycle Stages 2b & 3b, which are in fact identical and represent the lowest value of reservoir pressure, there is no stable solution as the VLP and IPR curves do not intersect. It is not possible by injecting gas only at the depth of the top mandrel to reduce bottomhole pressure sufficiently to get the well flowing. For Life Cycle Stage 3a, with a strong reservoir pressure and the strongest PI it is not possible to inject 2.0 MMSCFD at the depth of the orifice in mandrel number 2 in the conventional gas lift design. Since there is a risk that injecting through the unloading valve may damage the valve, no injection takes place. Since the well is not capable of natural flow with this high water cut, the well must remain shut in until either the reservoir pressure falls to the point that gas can be injected at the depth of the orifice or, conversely, reservoir pressure rises high enough to deliver natural flow. There is no such problem with the Camcon DIAL unit. In this case 2.0 MMSCFD can be injected at mandrel 2 since there is greater casing pressure available at depth (no pressure drop is necessary to close the unloading valve above. Alternatively, if the pressure difference across the DIAL unit was not available, the unit could be closed by a remote instruction and the DIAL unit above opened up to continue lifting the well and maintain oil production. For each of the Life Cycle Stages (apart from Day 1 when the well is too strong for any gas lifting regardless of the equipment) it can be clearly seen that the flexibility of the DIAL unit to move injection depth up and down the well in response to the changes in well production characteristics yields additional production. At times this incremental production is worth over 1,000 bopd, yielding significant extra cash flow. The relative benefit varies over time but is always positive and reaches up to 110% in one case. (The relative benefit is truly massive in the case where the well must be shut in, given a conventional design, but the relative % measurement of infinity is not particularly meaningful!) In order to make this comparative modelling exercise practical in a multi-variable scenario, some simplifying assumptions were made, such as the selection of 2.0 MMSCFD as the allocated gas injection rate. This does not enable a full appreciation of the potential of the DIAL units, which provide the option of changing the effective port size by selectively opening a number of valves in an individual unit. In order to capture this, a scenario was created where higher casing head pressure becomes available (perhaps through re-wheeling the compressor or perhaps as a result of less pressure drop in the distribution lines) and more gas lift gas also becomes available (perhaps as other wells are shut in). A casing head pressure of 2000psig and a gas injection rate of 3.0 MMSCFD were modelled for the two mid life Life Cycle Stages. The conventional design cannot take advantage of this as higher casing head pressure will re-open the unloading valve. Furthermore, the port size was based on the lower injection rate and cannot be changed without accepting the cost and risk of well intervention. With higher casing head pressure and higher gas injection rates, the DIAL unit delivers even greater incremental production and without any well intervention.

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Appendix 1: Graphical Illustrations from Petroleum Experts PROSPER Software (www.petex,com) Figure 1: VLP/IPR Curves for Late Life Scenario 4700psig / 90% WC; No production solution (intersection of curves) for zero gas lift.

Figure 2: Oil Production vs. Gas Lift Gas for Early Life Scenario 4700psig / 0% WC; Well capable of natural flow (zero Gas Lift) regardless of PI.

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Figure 3: Depth of Injection vs. Gas Lift Gas for Mid-Life Scenario with Water Injection; uncertainty over PI yields a wide depth range

Figure 4: Detailed Gas Lift Design Plot of TVD vs Pressure & Temperature; Conventional Equipment

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Figure 5: Gas Lift Orifice Performance Curves for the downhole pressure, temperature and gas lift gas gravity used in this example

Figure 6: Annulus Pressure at Valve Depth vs. Gas injection rate showing curve minima

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Figure 7: DP across valve vs. gas lift gas injection rate

Figure 8: VLP/IPR curves for the Late Life / High Pressure / High Water Cut Scenario with Conventional Equipment injection at the orifice in mandrel 2 is possible with PIs of 7 and 14 but not for a PI of 21. The VLp then defaults to the natural flow VLP for which there is no solution (VLP/IPR intersection)

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Figure 9: Mid-life Scenarios with Conventional Equipment Injection at the orifice in mandrel 2 is possible for both reservoir pressures and each PI.

Figure 10: Mid-life Scenarios with Camcon DIAL Units Injection takes place deeper for the lower reservoir pressure and each PI but for the higher reservoir pressure the injection depth is raised for each value of PI. The stair step in the VLP reflects the lifting of the depth of injection resulting in higher bottomhole pressures for a given production rate.

END

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