Oilfield Technology Correspondent, Gordon Cope, Examines Whether the Gulf of Mexico’S Production Boom Is Set to 33 the Produced Water Headache Continue Or Falter

MAGAZINE | MARCH/APRIL 2020

Efficiency soars Custom-designed PURSUIT™ drill bits for US basins

46 60

Mar/Apr 2020 Conntentstents Volume 13 Issue 02

03 Comment 29 A promising future Dr Robert Cable, Dr Kelly Chichak, and Peter M. Miranda, 05 World news SI Group, USA, highlight why it is important to place an active effort into delivering new and improved phenolic resin-based 10 Tiger in the tank solutions for oilfield chemical treatment applications. Oilfield Technology correspondent, Gordon Cope, examines whether the Gulf of Mexico’s production boom is set to 33 The produced water headache continue or falter. Jonathan J. Wylde, Clariant Oil Services, USA, considers the production chemistry challenges and opportunities for 15 The nuts and bolts of water injection innovation arising from the problem of water management in the David W. Lothian, Veolia, UK, emphasises the importance of Permian Basin. maintaining valve integrity in a water injection system. 36 Drilling efﬁ ciencies soar to new heights 20 An automatic pilot Alex Benson, NOV, USA, explains how drill bit efficiencies are Michael Konopczynski and Mojtaba Moradi, Tendeka, improving through an environment-specific design approach. UK, discuss how flow control can be optimised with an autonomous outflow control device. 41 Looking below the tip of the iceberg Benoit Deschamps, Rubicon Oilfield International, USA, explores 25 No half measures how wellbore quality impacts the total value of the well. Graham Barker, Tracerco Ltd, UK, argues that accurate measurement is an essential element of controlling and 45 Stacking the odds in safety’s favour improving offshore operations. Brett Morry, Trendsetter Engineering, USA, reviews recent technological developments in the offshore well intervention sector.

49 Taking a peek at progress Charles Tavner, Magma Global, UK, considers how composite pipe can increase profitability for marginal field tie-in projects.

53 Tracking tubular management Front cover Clara Boisserand, Vallourec, France, explains how to control and NOV’s regional approach to optimise drilling operations. drill bit design is making an MAGAZINE | MARCH/APRIL 2020 impact in operations around 57 Extending service life of downhole components the world. The ReedHycalog Mike Huber, Postle Industries, explores three scenarios where team has worked with significant savings are being achieved through novel applications customers to design of existing technologies. application-specific bits that provide the reliability and 61 A view through a different lens ROP needed to tackle some Austin J. Wells, Arnco Technology, USA, explains how changing of their toughest drilling Efficiency soars the way problems are considered is often how solutions are challenges. The PURSUIT™ Custom-designed PURSUIT™ developed. drill bit is the latest premier drill bits for US basins drill bit and it is already delivering excellent performance in the US.

OFC OT M hA il2020 i dd 1 16/04/2020 09 46

Follow us on Twitter Join us on LinkedIn More from @OilfieldTechMag Oilfield Technology Read on the go Like us on Facebook App available on Apple/Android Oilfield Technology

ISSN 1757-2134

Copyright © Palladian Publications Ltd 2020. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted Oilﬁ eld Technology is audited by the Audit Bureau in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner. of Circulations (ABC). An audit certiﬁ cate is available on request from our sales department. All views expressed in this journal are those of the respective contributors and are not necessarily the opinions of the publisher, neither do the publishers endorse any of the claims made in the articles or the advertisements. Printed in the UK. CUSTOM STIMULATION SOLUTIONS TO OPTIMIZE PRODUCTION

Cudd Energy Services (CES) delivers custom stimulation services to help our customers achieve their production goals. We combine our high-performance equipment and extensive operational experience EJ?KJRAJPEKJ=H=J@QJ?KJRAJPEKJ=HKEH=J@C=OłAH@OPK?=NNUKQP= wide scale of operations, from single-stage vertical fracs to complex multi-stage, horizontal fracs. Our professionalism, expertise and in-depth knowledge throughout the major shale plays and basins help us understand the challenges that may arise, and design the KLPEI=HLH=JPKIAAPPDAK>FA?PERAOO=BAHU=J@ABł?EAJPHU

1.832.295.5555 | cudd.com Comment ContactContact uuss Laura Dean, Editor [email protected] Editorial Managing Editor: James Little hese are certainly strange and unprecedented times that we, [email protected] as a world, are now facing. In an eff ort to flatten the curve, and Editor: Laura Dean [email protected] reduce the spread of COVID-19, governments across the globe T Assistant Editor: Nicholas Woodroof are enforcing measures of social distancing, changing the way we live [email protected] our lives, from the way we work, the way we shop, and even the way Design we interact with others. Production: Gabriella Bond On our daily sanctioned walks, I have often found myself stepping [email protected] into the now almost desolate roads to maintain a 2 m distance from passers-by. There is a Sales palpable tension in the air as we find ourselves erring on the side of caution as we distance Sales Director: Rod Hardy ourselves from our friends and families. It is easy to struggle with feelings of isolation in these [email protected] strange times, making it essential to stay connected to those around us, even if conversation Sales Manager: Ben Macleod is now conducted through our computer screens rather than physical interaction. [email protected] While it remains unclear for how long we will be required to remain at home, the team Website at Oilfield Technology wish to assure our readers that we will continue to work hard to Website Manager: Tom Fullerton keep the industry connected and up-to-date. If you haven’t already, why not download the [email protected] Oilfield Technology app to your smartphone or tablet to ensure that you continue to receive a Digital Editorial Assistant: Sarah Smith [email protected] free regular copy of the magazine, wherever you are. More details about the app can be found Digital Administrator: Imogen Poole on p. 59 of this issue. [email protected] Although times are tough at this moment in time, particularly for the upstream industry, Marketing by working together we can look forward to a brighter future. And good news may be Administration Manager: Laura White appearing on the horizon sooner than we could have hoped a month ago. Although we have [email protected] been battling historic low oil prices in recent months as a result of COVID-19 and tensions Reprints: between Russia and OPEC countries, recently promised production cuts from OPEC+ countries [email protected] are expected to help prices recover over the course of the summer, autumn and into the winter of 2020. In order to make sure you are among the first to hear any update on the current situation, particularly if you are working at home, be sure to add our website Palladian Publications Ltd, (www.oilfieldtechnology.com) to your bookmarks and follow us on social media to guarantee 15 South Street, Farnham, Surrey GU9 7QU, UK Tel: +44 (0) 1252 718 999 Fax: +44 (0) 1252 718 992 that you will receive the latest upstream news. Website: www.oilfieldtechnology.com At Oilfield Technology, we will continue to work closely with the industry to ensure that we bring you innovative new digital products to keep the industry well informed, especially in these unfortunate times when many of our long-standing partners have had to postpone or cancel key industry events. I ended my last comment by sharing some ‘good news’ stories from around the globe, because in difficult times it often feels as though good news is hard to come by. So in keeping SubscriptionSubscription with this tradition I offer two pieces of local news which I hope will brighten your day. On Oilfield Technology subscription rates: Annual subscription 29 March 2020, just a 20 minute drive from our offices, in the neighbouring town of Alton, the £80 UK including postage/£95 overseas (postage airmail). Two year discounted rate £128 UK including postage/£152 overseas world’s oldest man Bob Weighton celebrated his 112th birthday. And even closer to home, on (postage airmail). 3 April 2020, our Sales Manager Ben Macleod and his wife Aimee welcomed a beautiful baby Subscription claims: Claims for non receipt of issues must be made within three months of publication of the issue or they will girl into the world. Let’s hope that the newest member of the Macleod family will live a long not be honoured without charge. Applicable only to USA & Canada: OILFIELD TECHNOLOGY and fulfilled life, just like Mr Weighton! (ISSN No: 1757-2134, USPS No: 025-171) is published monthly by Palladian Publications, GBR and is distributed in the USA And last, but certainly not least, from all of us at Palladian Publications, we sincerely wish by Asendia USA, 17B S Middlesex Ave, Monroe NJ 08831. Periodicals postage paid New Brunswick, NJ and additional all our readers, contributors and advertisers the best of health and fortune. Stay safe and I mailing off ices. hope to see you soon at an industry event when this is all over. In the meantime, please enjoy Postmaster: Send address changes to Oilfield Technology, 701C Ashland Ave, Folcroft PA 19032. the latest edition of Oilfield Technology.

March/April 2020 Oilfield Technology | 3 Clariant Oil Services INNOVATION ASSURED. VALUE DELIVERED.

Clariant Oil Services is the fastest growing supplier of specialty We have a network of service and research centers close to all major oilfield production chemicals and services to the oil and gas oil and gas fields in the world, both onshore and offshore. We use industry. Our global presence provides a unique position from innovative technology to improve operations in oil and gas production. which to address and resolve customer challenges anywhere in the Learn how our end-to-end oilfield chemical management systems world. We use chemistry, systems and experts to understand our improve operations and keep production flowing. customers’ needs, then create high-value, innovative solutions that help our customers win.

WWW.CLARIANT.COM/OIL World news

ExxonMobil cuts CAPEX by 30% InIn bbriefrief ExxonMobil is reducing its 2020 CAPEX by 30% and lowering cash operating expenses by 15% in response to low commodity prices resulting from oversupply and demand weakness from the Norway COVID-19 pandemic. Capital investments for 2020 are now expected to be approximately US$23 billion, down Altera Infrastructure L.P. has entered from the previously announced US$33 billion. The 15% decrease in cash operating expenses is into a contract amendment with intended to increase efficiencies and reduce costs, and includes expected lower energy costs. Shell, as operator for and on behalf of The largest share of the capital spending reduction will be in the Permian Basin. Reduced the Knarr field licence partners, that activity will affect the pace of drilling and well completions until market conditions improve. extends the contract for the lease and Current operations onboard the Liza Destiny FPSO at the Stabroek block offshore Guyana operation of the Petrojarl Knarr FPSO are unaffected, and start-up of the second phase of field development remains on target until at least March 2022. The vessel for 2022, with the Liza Unity FPSO currently under construction. As the company waits for has been operating on the Knarr field government approval to proceed with a third production vessel for the Payara development, offshore Norway since 2015 under a firm some 2020 activities are now being deferred, creating a potential delay in production start-up of duration until March 2021. 6 to 12 months. Despite the reductions, ExxonMobil expects to meet its projected investment of US US$20 billion on US Gulf Coast manufacturing facilities made in its 2017 ‘Growing the Gulf’ Subsea 7 has announced the award of initiative. The company also expects to reach its proposed US investment of US$50 billion contracts by Chevron USA for subsea over 5 years announced in 2018. installation services related to the Anchor field, located in the Green Apache and Total discover SDX Energy makes onshore Canyon area of the Gulf of Mexico. oil off shore Suriname discovery in Egypt Subsea 7’s scope of work includes project management, engineering, Apache Corp. and Total have announced SDX Energy has made a commercial gas procurement, construction and a significant oil discovery at the Sapakara discovery during drilling operations at the installation of the SURF components West-1 well drilled offshore Suriname on SD-12X well in the South Disouq exploration including, but not limited to, the Block 58. The well was drilled using the permit onshore Nile Delta, Egypt, in which production flowlines, risers, umbilicals, Sam Croft drillship, with Apache and Total the company has a 55% working interest. flying leads, jumpers, and associated each holding a 50% working interest. The well has been drilled to a measured appurtenances. Fabrication of the Sapakara West-1 was drilled to a depth of 7245 ft, encountering 108 ft net flowlines and risers will take place at depth of approximately 6300 m (20 700 ft). of high-quality gas-bearing sands, with an Subsea 7’s spool-base in Ingleside, Preliminary fluid samples and test results average porosity of 20%, near the base of Texas, with offshore operations indicate at least 79 m (259 ft) of net oil and the Kafr El Sheikh (KES) formation. The anticipated to occur in 2022 and 2023. gas condensate pay in two intervals. The top of the KES sand was encountered shallower Campanian interval contains 13 m at a measured depth of 6506 ft. It is Indonesia (43 ft) of net gas condensate and 30 m (98 ft) estimated that the well has encountered of net oil pay, with API oil gravities between approximately 24 billion ft3 equivalent Conrad Petroleum, Coro Energy and 35 and 40˚. The deeper Santonian interval of recoverable gas and condensate Empyrean Energy have announced contains 36 m (118 ft) of net oil-bearing resources, which is significantly in excess an upgrade of resource estimates for reservoir with API oil gravities between of the minimum commercial volume of the Mako gas field in the West Natuna 40 and 45˚. approximately 8 billion ft3 equivalent. Basin. The new assessment includes Apache has identified at least seven The drilling rig is now completing the a 1C (contingent) resource estimate 3 distinct play types and more than 50 well and preparing for testing in the coming of 323 billion ft , an increase of 76% prospects within Block 58, a thermally weeks. on the pre-appraisal estimate, and a mature play fairway comprising The Sobhi well is expected to be tied 2C (contingent) resource estimate of 3 1.4 million acres. in during 2021 via a 5.8 km tie-in to the 493 billion ft , an increase of 79%. The Upon completion of operations at Ibn Yunus-1X location where an existing new estimates suggest the field may be Sapakara West-1, the Sam Croft will move to flowline connects to the South Disouq able to achieve a plateau production 3 the Kwaskwasi prospect in Block 58. central processing facility. rate of 150 million ft /d.

March/April 2020 Oilfield Technology | 5 World news

Diary dates Siccar Point and Shell Scarborough project 7 – 10 June 2020 defer Cambo FID to 2021 proposal approved AAPG Annual Convention & Exhibition Siccar Point Energy E&P and Shell have Australia’s National Offshore Petroleum Houston, Texas, US announced the deferral of the planned Safety and Environmental Management ace.aapg.org/2020 sanction date for the Cambo project to Authority (NOPSEMA) has advised of 2021 in light of the effects of the COVID-19 its acceptance of the Scarborough 20 – 22 July 2020 pandemic. offshore project proposal (OPP), URTeC The Cambo field, located 125 km following its assessment of the potential Austin, Texas, US northwest of the Shetland Islands, environmental impacts over the life of the urtec.org/2020 offshore the UK, and in a water depth project. of 1100 m, was discovered in 2002, and The OPP is the primary subsequently had four appraisal wells Commonwealth environmental 31 August – 3 September 2020 drilled up to 2012. A final successful assessment document for the ONS 2020 appraisal well was drilled and flow tested Scarborough project in Commonwealth Stavanger, Norway by Siccar Point during the summer of waters and forms the basis for future ons.no 2018. It is one of the largest undeveloped activity-specific environment plans, which fields in the UK continel nta shelf – with an must also be assessed and approved by 9 – 12 November 2020 estimated 600 million bbl in place – and NOPSEMA.u Frut e activities include the ADIPEC 2020 will open-up other prospects for potential drilling of gas wells, installation of a FPU Abu Dhabi, UAE development in the area. and installation of a pipeline. adipec.com A final investment decision (FID) on The Scarborough gas field contains the project had been expected in 3Q20. an estimated contingent resource (2C) dry 3 8 – 11 December 2020 This will now be targeted for the second gas volume of 11.1 trillion ft . The field is half of 2021, subject to approval of the held 73.5% by Woodside and 26.5% by EAGE Annual Conference & Exhibition necessary licence extension, a request BHP. Amsterdam, the Netherlands for which has been submitted to the A FID is due to be taken on the project eage.eventsair.com/eageannual2020/ UK Oil and Gas Authority. in 2021.

BHP awards McDermott contract for Trion FPU pre-FEED design

Web news McDermott International has been awarded a contract by BHP to provide pre-FEED highlights services for a FPU that will be installed in a water depth of approximately 8200 ft (2500 m) at the Trion field, located appro ximately 19 miles (30 km) south of the US/Mexico border and approximately 112 miles (180 km) offshore Mexico. Ì BP announces cuts to spending The pre-FEED scope includes engineering tasks related to the configuration, sizing and Ì Shell updates 1Q20 outlook preliminary analysis of the FPU, including topsides, hull, risers and mooring. McDermott will work in partnership with Houston Offshore Engineering (HOE) and Ì Johan Sverdrup field due to reach peak Wood on the pre-FEED, with McDermott’s Houston office leading engineering services – production earlier than expected supported by its Mexico City office – and HOE and Wood providing engineering for the Ì Rosneft sells Venezuelan assets to hull and topsides, respectively. McDermott will perform project management, execution Russian government planning and estimation services, as well as installation studies and technical support for fabrication and integration planning. The project will begin immediately, with completion projected in 3Q20. The contract award will be reflected in the company’s 1Q20 backlog. To reade mor about these articles McDermott is currently delivering the SURF components, transportation and and for more event listings go to: installation, pre-commissioning of one jacket and topsides for the BHP Ruby Project, located offshore Trinidad and Tobago. It is also providing FEED activities for a FPU for the www.oilfieldtechnology.com Scarborough field gas development in Western Australia.

6 | Oilfield Technology March/April 2020 1RYHO+LJK'HQVLW\6ROLGV)UHH &RPSOHWLRQ)OXLG6ROXWLRQVIRU Environmentally Sensitive Wells

START WITH TETRA CS NEPTUNE® COMPLETION FLUIDS

Our innovative high-density TETRA CS Neptune completion ȵXLGVDUHIUHHRISULRULW\SROOXWDQWV2XUȵXLGVKHOSDGGUHVV WKHHQYLURQPHQWDOFKDOOHQJHVIDFLQJR΍VKRUHRLOSURGXFHUV VHHNLQJDQDOWHUQDWLYHWR]LQFEULQHV&RVWLQJVLJQLȴFDQWO\OHVV WKDQDOWHUQDWLYHFRPSOHWLRQȵXLGFKHPLVWULHVWKH\FDQDOVR EHXVHGDVWKHEDVLVIRUORZVROLGVUHVHUYRLUGULOOLQȵXLGVRU LQRWKHUDSSOLFDWLRQVZKHUHDKLJKGHQVLW\HQYLURQPHQWDOO\ DFFHSWDEOHȵXLGLVUHTXLUHG

Visit tetratec.com/neptune for more information or FRQWDFWXVDWFRPSOHWLRQȵXLGV#WHWUDWHFFRP

TETRA CS Neptune®&RPSOHWLRQ)OXLGV3RUWIROLR TETRA CS Neptune® Divalent Completion Fluids To 15.4 lb/gal • 350°F (177°C) TETRA CS Neptune® High Density Divalent (HDD) Completion Fluids To 15.7 lb/gal • 290°F (143°C) TETRA CS Neptune® Extra High Density Divalent (XHDD) Completion Fluids To 17.5 lb/gal • 350°F (177°C) TETRA CS Neptune® High Density Monovalent (HDM) Completion Fluids To 13.1 lb/gal • > 350°F (171°C) TETRA CS Neptune® Extra High Density Monovalent (XHDM) Completion Fluids To 15.7 lb/gal • > 350°F (177°C)

Petrobras cuts spending and oil production Production boosted at two North Sea fields As a result of the sharp decrease in oil and fuel prices and demand and the COVID-19 pandemic, Petrobras has announced a series of measures to reduce disbursements and Production has been boosted from two preserve liquidity. North Sea fields following successful The measures include a reduction of planned investments for 2020 from US$12 billion drilling campaigns. to US$8.5 billion, mainly due to postponements of exploratory activities, interconnection First gas from the new C6 well of wells and construction of production and refining facilities, and of the devaluation of the at Spirit Energy’s Chiswick field in Real against the US dollar; mothballing of 62 platforms in operation in shallow water fields the Southern North Sea, achieved in the Campos, Sergipe, Potiguar and Ceara basins; lower costs with well interventions and on 11 March 2020, has added up to optimisation of production logistics; and postponement of new material contracts for a 15 million ft3/d of gas to the field. The period of 90 days. new well brings overall production from As a result of the implementation of the measures, the company estimates that it will the Greater Markham Area (GMA) to balance its cash flow in 2020. 110 million ft3/d of gas. The development Petrobras has also decided to reduce its oil production by 200 000 bpd, due to oversupply well, completed two months ahead of in the foreign market and the reduction of global demand for oil. The company has said it will schedule, is expected to help extend life of evaluate market conditions and, if necessary, make new adjustments in oil production. the GMA hub to 2028. In early April, the company announced that it had identified the presence of oil in the Together with partner Dana Petroleum, pioneer well of the Uirapuru block, located in the Santos Basin, as well as at an exploratory Spirit Energy has also completed drilling well in the Sudoeste de Tartaruga Verde block, located in the Campos Basin. The former of a new production well at the Chestnut is located approximately 200 km off the coast of Brazil, at a water depth of 1995 m in field, unlocking another 2.5 million bbl and the exploratory prospect known informally as Araucária. The exploratory well in the potentially extending the life of the field by Campos Basin, informally called Nais, is located 130 km offshore, in water depths of 1080 m. a further three years.

Cairn Energy announces Eni revises 2020 – 2021 Malaysia high CO2 gas field cuts in 2020 CAPEX business plan study announced

Cairn Energy has announced a 23% Eni has concluded a revision to its planned JX Nippon Oil & Gas Exploration Corp. reduction in CAPEX for 2020. The reduction activities as a result of the sharp decrease Japan Oil, Gas and Metals National Corp. is not expected to impact the company’s in commodities prices and the foreseeable (JOGMEC) have reached an agreement with previously disclosed production and constraints arising from the COVID-19 Petronas to implement a joint study into production cost guidance for 2020. pandemic. the development of gas fields using CCS Planned 2020 CAPEX on the company’s Specifically, Eni will reduce CAPEX in technology. UK producing assets is expected to be 2020 by approximately €2 billion, equal The study will focus on the below US$45 million, reduced from the to 25% of the total CAPEX planned, and development of high CO2 gas fields in original forecast of US$65 million as a OPEX by approximately €400 million. In Malaysia, which are currently assumed to result of cost savings identified and the 2021, Eni expects a CAPEX reduction of be difficult to develop from an economical deferral of certain activities planned for the approximately €2.5 – €3 billion, equal to point of view due to associated CO2 Catcher fields. 30 – 35% of the CAPEX scheduled for the management costs. The study aims to The Sangomar joint venture (JV) same year in the business plan. develop an environmentally friendly gas partnership between Cairn, Woodside, The projects involved are related field development method by capturing

Petrosen and FAR Ltd. is working mainly to upstream activities, particularly CO2 contained in the produced gas and collaboratively to assess several production optimisation and new project reinjecting it into nearby mature gas fields. substantial initiatives to reduce and developments scheduled to start in the If development of such high CO2 gas re-phase CAPEX on the Sangomar short-term. In both cases, activities will be fields is confirmed by the study to be development project offshore Senegal. restarted as soon as appropriate market feasible and the parties agree, JX intends At this stage, based on initiatives already conditions appear, and related production to move forward to gas production with a identified, Cairn’s expectation is that net will be recovered accordingly. As a result of low environmental impact through the use CAPEX on Sangomar in 2020 will be below these measures and the current depressed of CCS technology. US$330 million, reduced from the original scenario, the company’s production in The study will also cover the feasibility forecast of US$400 million. A broader 2020 is expected to be between 1.8 and of supply chain construction of hydrogen review of CAPEX for 2020 and future years 1.84 million boe/d, and it will remain made from the gas produced from the high is ongoing with the JV. unchanged in the following year. CO2 fields.

8 | Oilfield Technology March/April 2020 Production Chemical Solutions SUPERIOR SERVICE AND CHEMICAL APPLICATION EXPERTISE TO MAXIMIZE ASSET VALUE

No matter the production method, our solutions solve traditional and unique asset integrity, ﬂow assurance and phase separation challenges.

Our chemistry and application expertise are driven by experienced personnel, leading test equipment, and trusted data to improve your production economics.

halliburton.com © 2020 Halliburton. All Rights Reserved. © 2020 Halliburton. Oilfield Technology correspondent, Gordon Cope, examines whether the Gulf of Mexico’s production boom is set to continue or falter.

he Gulf of Mexico is one of the most prolific oil Chevron, aft er losing out to Occidental in its bid to acquire and gas regions on earth. Due to a combination of Anadarko, has pursued a combination of joint ventures (JVs) hydrocarbon-rich shales onshore and immense and drilling alliances to increase its output to 421 000 bpd. conventional deposits off shore, explorers and developers In addition to a long-standing JV with Cimarex Energy, it has have more than doubled US output over the last decade. also signed agreements with Devon, EOG and Conoco. The While some analysts enthuse that the region still holds deals promote aggregation of land and access to well data vast untapped resources, others are adamant that the boom that allow the California-based company to finely hone its will falter. Who is right? targets and increase production. Chevron is also going deeper, seeking out richer shale Onshore targets, and drilling longer horizontal wellbores (the industry The shale boom first started in Texas when independents average is already 8500 ft ) in an eff ort to out-produce rivals. So pioneered the use of horizontal drilling and hydraulic far the strategy has paid off , with initial shale oil production fracturing in hydrocarbon-rich, low-permeability rock. The averaging 760 bpd in the Midland region compared to the most successful operators have been in the Permian Basin, average of 705 bpd. Depletion rates are much lower than the where producers focused on the Bone Spring Formation industry average, with 51% drop-off in the first year compared and the Wolfcamp Formation. The Bone Spring Formation is to the industry average of 70%. Chevron is hoping to boost its approximately 3500 ft thick, with interbedded carbonates and Permian production to 900 000 bpd by 2023. silty sands. The Wolfcamp Formation contains interbedded Exxon, which currently produces 274 000 boe/d in shales and sands and is up to 7500 ft thick. Both contain the Permian Basin, announced that it plans to increase numerous stacked unconventional plays. Production levels production to 1 million boe/d by 2024. The company in the Permian Basin alone reached 4.7 million bpd and an estimates that it has a 10% return on US$35/bbl. It has estimated 17 billion ft 3/d in late 2019. large, contiguous landholdings, allowing for extended-bore Over the last several years, however, supermajors such drilling. Its use of advanced technologies, including enhanced as ExxonMobil and Chevron have muscled their way into the subsurface characterisation, subsurface modelling and Permian Basin by buying up smaller fry and consolidating algorithmic data analytics, will increase recovery and reduce landholdings. CAPEX per well.

10 | | 11 Exxon currently has 56 rigs dedicated to the Permian and has entered service. The 175 000 boe/d field is significant in that it is the first budgeted US$6.6 billion on drilling over the next 5 years. Plans are also deepwater Jurassic field to come into production in the Gulf of Mexico. underway to develop dedicated transportation for 600 000 bpd of oil and The Norphlet formation play is well known in shallow waters for its prolific 1 billion ft 3/d for delivery to its refineries and petrochemical plants on the gas fields from ancient sand dune rock. In 2018, Shell announced that US Gulf Coast. it had made the Dover discovery 13 miles from Appomattox, its sixth And, according to the US Geological Survey (USGS), there is Norphlet discovery. The proximity will allow attractive tieback economics. much more to tap. The federal agency estimates that unproven, technically-recoverable reserves in the Wolfcamp and overlying Mexico Gulf Bone Springs stand at 46 billion bbl of oil, 280 trillion ft 3 of gas and Since the ending of state-owned Pemex’s monopoly over the oil and gas 20 billion bbl of NGLs. According to IHS Markit, Permian Basin production sector under the presidency of Enrico Pena Nieto in 2013, international and will reach 5.4 million bpd by 2023. domestic oil companies have invested billions of dollars in Mexico. One of the first major finds aft er the Mexican government liberalised Offshore the sector was the Zama field, a 1 billion bbl reservoir in shallow waters off While onshore garners most of the spotlight, deepwater wells in the the Gulf Coast of Mexico. The block is owned by US-based Talos Energy and Gulf of Mexico average 5000 bpd, an order of magnitude greater than Mexico’s Sierra Oil & Gas. onshore. In addition, off shore wells (which can produce as high as Eni also made the Mizton discovery, a 350 million boe field in the 30 000 bpd initial rates), have much lower decline rates, paying out for nearby Bay of Campeche, as well as several other finds. Eni’s off shore decades. discoveries will reach full production in 2021, when an FPSO being built by According to the US Energy Information Administration (EIA), MODEC will be connected. The vessel, under a 15 year contract, will have a production in the off shore Gulf rose 100 000 bpd in 2019, finishing at capacity of 90 000 bpd, 75 million ft 3/d of gas and 700 000 bbl of storage. 1.9 million bpd at the end of the year. The growth has been partially driven by infill drilling and increased production in existing fields such as Mars, LNG Thunder Horse and Tahiti, but the ramp-ups of Chevron’s Big Foot and According to the EIA, global LNG demand rose to a record 316 million t in Shell’s Crosby fields have also been major contributors. 2018, and is expected to exceed 400 million t by 2023. The two primary deepwater targets for drilling are structures in the As a result of cheap shale gas, US LNG has been growing at a rapid Miocene and the Lower Tertiary. Miocene targets are essentially extensions pace, primarily in the Gulf Coast. At the end of 2019, total US LNG export of fields found in shallower waters near the shores of Texas and Louisiana. capacity stood at 6.9 billion ft 3/d and is expected to rise to almost The Lower Tertiary play is a series of large, anticlinal structures with 10 billion ft 3/d by the end of 2020, or approximately 76 million tpy. four-way closure sitting in sediments 23 – 64 million years in age. The Cheniere has five trains operating at Sabine Pass with a total capacity trend, which sits beneath a thick wedge of salt, runs from the middle to the of 3.5 billion ft 3/d. It expects to have the sixth train online in 2Q23, raising western side of the Gulf of Mexico and is approximately 50 – 70 miles wide capacity to 4.2 billion ft 3/d. Total expenditures for the six trains at the and 200 miles long. Louisiana facility exceed US$20 billion. Bidding for off shore oil and gas leases has shown a dramatic increase Cheniere is also building an LNG facility in Corpus Christi, Texas. It over the last year. A March 2019 auction drew US$244.3 million in high bids, announced that it would complete its second train in 1Q21, 4 months and the August 2019 auction received US$159.4 million, making it the most earlier than previously planned, raising total capacity to 1.4 billion ft 3/d. productive year since 2015. Equinor and BP were major bidders, focusing It is also expected to make a final investment decision (FID) by late 2020 on acreage near existing infrastructure where discoveries could be tied on Stage 3 at Corpus, a combination of seven mid-scale trains capable of back relatively inexpensively to production platforms. converting 1.25 billion ft 3/d of gas. The bidding reflects the long-standing interest that both European In December 2019, the Federal Energy Regulatory Commission gave companies have had in the Gulf. In 2019, BP, the largest producer in the green light to Tellurian to start site preparation work at its proposed the Gulf of Mexico at 300 000 boe/d, announced plans for several new US$27.5 billion Drift wood LNG export facility in Louisiana. The work production units. Two units with 10 wells will be located south of its includes grading, removal of existing buildings and dredging of a marine Thunder Horse platform, adding 50 000 boe/d gross production by 2021. port. Initial construction is expected to begin in 2020, with first delivery of BP used advanced proprietary seismic exploration to identify 1 billion bbl up to 27.6 million tpy by 2023. While most LNG operators seek long-term of new reserves in the play. The company estimates that it can make a contracts for delivery, the Houston-based company is inviting investors to profit with off shore fields at US$40/bbl, and hopes to increase its off shore participate in a wide array of activities, from production to pipelines and production to 400 000 bpd by the mid-2020s. “Those big fields keep on liquefaction. giving,” said Starlee Sykes, BP’s president for operations in the Gulf. Equinor made the highest bid in the March 2019 auction, spending NGLs US$24.5 million on a block in the Mississippi Canyon region adjacent As a result of the growth of gas production in the Gulf, the EIA is forecasting to the Gladden Deep prospect. It also increased its holdings in the propane production to rise to an average of 1.71 million bpd by the end 73 000 bpd Caesar Tonga oilfield when it purchased Shell’s 22.45% interest of 2020, an increase of 120 000 bpd over 2019. Ethane output is expected for US$965 million. The deal gives Equinor a total interest of 46% (operator to rise by 300 000 bpd in 2020, to 2.18 million bpd. Petrochemical refiners Anadarko holds a 33.75% interest, and Chevron 20.25%). In total, Equinor are scrambling to bring ethane crackers online and exporters are building now has 125 000 boe/d production from the Gulf. “We are pleased to new terminals in the Gulf, but inventories are expected to remain at increase our presence in the United States, one of our core areas,” said record highs. Christopher Golden, head of Equinor’s off shore US production. “This is an asset we understand well, and our larger interest will deliver significant Challenges additional free cash flow from day one.” In late 2019, investments in unconventional plays were hit by more Royal Dutch Shell is also a major producer in the off shore Gulf. Its restrictive rules. Independent operators who have relied on bank credit Appomattox field, with 700 million bbl of recoverable oil, came onstream in to finance operations had their terms tightened when lending institutions 2019 when its main platform (built for 40% less than originally budgeted) lowered their price decks (the average expected price over the next

12 | Oilfield Technology March/April 2020 A LEGACY OF EXCELLENCE

! "# $ % &$ % ! ' ( ( %" %) * + + 5 years) to under US$51/bbl and US$2.50/million Btu of gas. This lowered in digital technologies, including new generations of communication companies’ reserve base limits (RBLs), and hence the amount they networks, the internet of things (IoT) and artificial intelligence (AI). could borrow. Leverage has also been lowered from four times EBITDA to In mid-2019, Houston-based communications firm RigNet partnered three. Private investors, their enthusiasm dampened by tepid returns over with major wireless provider T-Mobile to expand 4G long-term extension the last decade, are also shunning these plays. Increases in production are (LTE) wireless service to encompass 60 000 miles2 in the Gulf of Mexico. expected to flat-line throughout 2020. Analysts are also predicting a flood Platforms, drillships and helicopters will benefit from the improved of bankruptcies. service, which provides up to 10 times the speed of 3G networks for mobile While the Trump administration has promoted greater oil and gas devices such as smartphones and tablets. The equipment is 5G compliant, drilling in federal lands on the continental shelf, the Democrat-controlled allowing it to roll out the next generation of high speed service. Shell House of Representatives and various states have resisted. In is already using 4G communications at its Olympus and Appomattox September 2019, the House passed two bills banning new drilling off platforms to speed up its off shore digitisation plans. Florida’s Gulf coast, as well as the Atlantic and Pacific coasts. The bills are In mid-2019, oilfield service provider Baker Hughes formed a not expected to pass in the Republican-controlled Senate however. partnership with a Silicon Valley company, C3.ai. The latter off ers The 2018 election of Mexican President Andres Manuel Lopez Obrador AI services that will be integrated into Baker Hughes’s product line. largely brought the privatisation policies of Nieto to a halt with the Customers will benefit from increased automation and reduced cancellation of upcoming auctions of blocks. Pemex was also given the maintenance. “In the deepwater drilling sector alone, a 30% eff iciency green light to pursue partial ownership of the off shore Zama field, since improvement through automation and digital transformation would up to one-third of the field may lie under its lands. These moves, as well reduce rig demand by more than 20 rigs,” noted Wood Mackenzie. as other initiatives to curb private investment, have cast a cloud over Baker Hughes has already contracted with BP and Shell to use C3 and the sector. other proprietary soft ware in its Gulf off shore rigs. A longer-term issue with which the off shore Gulf has to contend is Onshore, producers are using longer horizontal wellbores, newer the attractive fiscal, regulatory and economic advantages of prospective fraccing technologies, higher sand loads and other innovations to optimise plays in the presalt regions of Brazil and deepwater Guyana. Bureau of production and reduce costs per barrel. Chevron noted that its Permian Ocean Energy Management (BOEM) off icials note, however, that several horizontal wellbores averaged 9000 ft in 2019, and the goal is to extend riskier deepwater parcels were also purchased in the August 2019 them to almost 10 000 ft in 2020. auction by major players in the Gulf, indicating a long-term focus on Activity in the Gulf Coast, especially onshore, will be driven by the US off shore. price of crude. The ongoing agreement between OPEC, Russia and other non-OPEC producers is fragile, and new production in Guyana, Brazil and The future other non-OPEC producers will place increased supply pressure on prices Over the last 5 years, total discovered recoverable reserves in the off shore throughout 2020. That said, the geologic prospects in the region remain Gulf have topped 5 billion bbl. In order to develop and produce these extremely bright, and the Gulf will remain a prime focus of explorers for the assets as economically as possible, operators are focusing on advances coming decade.

PulseEight Dynamic Downhole Reservoir Management System

Ѵv; b]_|vv|;lv;lrѴo Ѵb7-ulomb1vruo71ঞom |;Ѵ;l;|u|_-|r|vruo71;7Yb7v|oouh-v-|oŊ- 1_-mm;Ѵ=ou7-|--m7|ooѴ1oll-m7vĺ|Ľv|_;m;|-; bm1olrѴ;ঞomvbm|;ѴѴb];m1;ĺ

#nextwave

tendeka.com/pulseeight THAT WAS A SAMPLE OF

MARCH/APRIL ISSUE

DON’T WANT TO MISS OUT? You will need to register to read the full edition. Please log in to www.oilfieldtechnology.com or alternatively click here to register for free!

For more information about Oilfield Technology subscription package, please contact us:

E: [email protected] T: +44 (0)1252 718999