Revista E&P - Noviembre 2012

8/11/2019 Revista E&P - Noviembre 2012

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N O V E M B E R 2 0 1 2

Solving the EUR equation

for unconventional results

E P M A G . C O

ESTIMATINGTHE UNKNOWN

Operating Efficiency

Geophysical Market& Technology Update

Flow Assurance

Offshore WellIntervention

Automation

REGIONALREPORT:AsiaPacific


2/144

International

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OPERATING EFFICIENCY

Modeling is next step-change inunconventionals

Racing to real-time collaboration

Mobile solution aids field technicians

GEOPHYSICAL MARKET AND

TECHNOLOGY UPDATE

Marine market steams ahead

Finding the balance between automated and

manual interpretation

AUTOMATION

Technologies for expanding horizon of digitaloil field

Industry groups tackle R&D for drillingautomation

FLOW ASSURANCE

Are slugs too fast to handle?

The economics of subsea sampling inoffshore production

OFFSHORE WELL INTERVENTION

Retrieving subsea wells in one trip

A question of intervention

IndustryPULSE:Pastures old and newrejuvenate Norways

offshore profileThe use of enhanced recovery technologies onmature fields and pioneering production solutionson new ones, combined with a successful frontierexploration program, means that Norway has

been reborn as a global investment hot spot.

EXPLORATION & PRODUCTIONW O R L D W I D E C O V E R A G E

NOVEMBER 2012VOLUME 85 ISSUE 11

A HART ENERGY PUBLICATION www.EPmag.com

38

Unconventional plays wreakhavoc on traditional EURcalculations. Heres whatsbeing done about it.

6

WorldVIEW:A declaration ofindependence

Ryan Lance is defining the new ConocoPhillips

as the independent E&P company moves intoorganic growth mode with a focus on unconven-tional plays, major development projects, and anemerging exploration program.

10

Unconventional:Capital efficiency,optimization keepMarcellus shale active

The proximity to the Northeast markets provides

incentive for companies to continue activities in

the Marcellus shale even though natural gas pricesremain in the doldrums.

50

54

58

62

68

72

78

86

92

108

114

96

COVER STORY: EUR ROUNDTABLE

Estimating

the unknown

REGIONAL REPORT:

ASIA PACIFIC

122


4/144

AS I SEE IT

New faces, new places 5

MANAGEMENT REPORT

Its not just about filling the seat 17

DIGITAL OIL FIELDYouve discovered oil and gas now discover your data 21

Shale gas factory provides collaborative field development 26

EXPLORATION TECHNOLOGY

Growing through the reservoir 31

WELL CONSTRUCTION

Research focuses on measuring effectiveness of cementing jobs 33

PRODUCTION OPTIMIZATION

A first reeled in at Corvina 35

OFFSHORE ADVANCES

Biggest offshore prizes lie deep 37

TECH WATCH

Isolation system shuts down gas migration 118

TECH TRENDS 120

INTERNATIONAL HIGHLIGHTS 128

ON THE MOVE/INDEX TO ADVERTISERS 134-135

LAST WORD

Managing social risk 136

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;2 years (24 issues), US $279. Single copies are US $18 (prepayment required). Advertising rates furnished upon request. POSTMASTER:Send address changes to E&P, PO Box 5020, Brentwood, TN 37024.Address all non-subscriber correspondence to E&P, 1616 S. VossRoad, Suite 1000, Houston, Texas 77057; Telephone: 713-260-6442. All subscriber inquiries should be addressed to E&P, 1616S. Voss Road, Suite 1000, Houston, TX 77057; Telephone: 713-260-6442 Fax: 713-840-1449; [email protected]. Copyright Hart Energy Publishing, LP, 2012. Hart Energy Publishing, LP reserves all rights to editorial matter in this magazine. No article may bereproduced or transmitted in whole or in parts by any means without written permission of the publisher, excepting that permission to

photocopy is granted to users registered with Copyright Clearance Center/0164-8322/91 $3/$2. Indexed by Applied Science, TechnologyIndex and Engineering Index Inc. Federal copyright law prohibits unauthorized reproduction by any means and imposes fines of up to$25,000 for violations.

DEPARTMENTS AND COMMENTARY

ABOUT THE COVER Shale players are discovering that estimating

ultimate recoveries requires more than the standard calculations estab-

lished in the 40s and 50s. Left, the Asia-Pacific region is poised for massive

E&P investment. (Photo courtesy of Anadarko Petroleum; cover design by

Laura J. Williams)

COMING NEXT MONTH The December issue of E&Ptakes a look back at some of

the major exploration, drilling, and production technological breakthroughs of 2012 while

also offering a sneak peek into 2013. Regional reports include a look at developments in

the Eaglebine play and the Arctic, and a special feature focuses on asset integrity man-

agement. 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.

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ONLINE CONTENT NOVEMBER 2012

PREMIUM CONTENT Subscribe @ EPmag.com/explorationhighlights

AVAILABLE ONLY ONLINE

Deepwater GoM activity expected to surge

By Velda Addison, Associate Online Editor

Wood Mackenzie predicts activity in the deep-water Gulf of Mexico will head in a positive direc-tion with production expected to hit 2 MMboe/d

in 2019.

Saudi Arabia gears up for unconventional gas exploration

By Scott Weeden, Senior Editor

The lure of shale gas is generating interest around the globe with SaudiArabia being one of the latest countries to focus on defining its uncon-ventional gas resources.

Western Zagros shines light

on Iraq operations

By Velda Addison, Associate Online Editor

Being among the first companies to enter

Iraqs Kurdistan region brought challenges for

Western Zagros. But the work appears to be paying off as the company

makes oil and gas discoveries.

Petrobras discovery in Sergipe-Alagoas basinRio de Janeiro-based Petrobras has confirmed oil and gas in the BM-Seal-10 block in the ultra-deep waters of the Sergipe-Alagoas basin.

Tonkawa Sand completion by Chesapeake:1,181 Bo, 1.83 MMcf/dA western Anadarko basin exploratory well by Chesapeake OperatingInc. initially flowed 1,181 bbl of 42-degree-gravity oil, 1.83 MMcf of gas,and 1,100 bbl of water per day.

Saudi Arabia: Unconventional gasdiscovery results announced

Dhahran-based Saudi Aramco reported severalnew unconventional gas field discoveries in thenorth and northwestern part of the Kingdom. The dis-

coveries are in the Jawf and Northern Borders provinces as well as areasnear Midyan field, discovered in 2011, Jalamid field in Sidre, and othergas-bearing structures.

READTHELATESTEPmag.com

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As we near the end of 2012, we embark on a new chapter atE&P. It

can be difficult to find people with the right combination of industry

knowledge and writing experience to build an editorial staff such as ours,

but Im pleased to introduce you to our staff going forward. Some are new

names, others have new job titles, but theyre all an integral part of ouroperation.

Firstly, Scott Weeden has moved from his original position as online edi-

tor to tackle the production technology job and more recently the drilling

technology editorial position forE&P. Scott brings almost 40 years of

experience to his position, having written about the oil and gas industry

for several publications during that time. His depth and wealth of expert-

ise is a huge gift to our magazine.

Secondly, Mark Thomas, the original editor-in-chief ofE&P, has

rejoined the staff full-time as our offshore editor. After Mark leftE&P

he took on the reins ofDeepwater International, a publication he still over-

sees. He also managed public relations for Offshore Europe, Intelligent

Energy, and Russian Oil & Gas, all exhibitions managed by the Societyof Petroleum Engineers. Again, Marks expertise in this area has spanned

decades, and his location in the UK gives us a needed perspective for our

international coverage.

Then we were fortunate enough to hire Jennifer Presley as our new

production technology editor. Jennifer has a unique perspective on the

industry, having been a contract writer for the National Energy Technol-

ogy Laboratory focusing mostly on methane hydrates. Jennifers stories

tend to start with, When I was on the North Slope, or When I was in

the Bay of Bengal Her work has taken her to some very interesting

test sites over the years, and were thrilled to welcome her to our team.

Finally, we welcomed Mary Hogan in October as our associate managing

editor. The associate managing editor position is a challenging one sinceMary will be working with senior editors to keep us on track and ensure

that we meet our deadlines. This is no mean feat, but Mary has the

organizational skills to maintain a tightly run ship.

Of course,E&Pis not just about the editors its about our readers.

We would like to encourage all of you to provide any feedback you

might have about our magazine. We have some fresh faces

and the opportunity to be more nimble to respond to

our readers and their constant thirst for new

information. I hope youll take us up on this

challenge.

As ISEE IT

1616 S. VOSS ROAD, STE 1000HOUSTON, TEXAS 77057

P: +1 713.260.6400 F: +1 713.840.0923www.EPmag.com

New faces, new places

5

Read more commentary at

EPmag.com

RHONDA DUEY

Executive [email protected]

Executive Editor RHONDA DUEY

Group Managing Editor JO ANN DAVY

Senior Editor, Drilling SCOTT WEEDEN

Senior Editor, Offshore MARK THOMAS

Senior Editor, Production JENNIFER PRESLEY

Chief Technical Director,Upstream RICHARD MASON

Associate Managing Editor MARY HOGAN

Associate Online Editor VELDA ADDISON

Assistant Editor CODY ZCAN

Corporate Art Director ALEXA SANDERS

Senior Graphic Designer LAURA J. WILLIAMS

Production Director JO LYNNE POOL

Reprint & PDF Sales ERIC MCINTOSH

Director of Business Development ERIC ROTH

Group Publisher RUSSELL LAAS

Editorial Advisory Board

CHRIS BARTON

Sr. VP Business Development, Oil & Gas, KBR

KEVIN BRADYPresident, Multi Products Company

MIKE FORREST

Exploration Consultant, formerly with Shell

JOHN M. GILMORE JR.

Director of Global Industry Solutions UpstreamOil & 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 ofSouthern 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

President,Superior Well Services, a Nabors company

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

H A R T E N E R G Y


8/144

With the Norwegian sectors admirable supportfrom a government that has reenergized its waters

with an active licensing program and a national oil com-pany (NOC) that has been strategically investing in both

greenfield and brownfield technologies to access newreserves, Norway is acting as the engine room drivingcontinued interest in Europe as an offshore market.

The NOC concerned, Statoil, is stepping up the paceof its exploration and development activity in the fron-tier Barents Sea while at the same time continuing tofind major new reserves in its North Sea acreage.

Its world-class Johan Sverdrup discovery in 2011shocked many observers who had believed the sector hadrevealed all its secrets, with recoverable reserves estimatedat up to 3.3 Bboe.

Installations powered from shoreStatoil is busy further appraising the field and will makea final investment decision by year-end 2013, while alsoplanning up to 12 further exploration wells over the nextthree years. With the reservoir covering 180 sq km (69 sqmiles), it is expected to feature multiple production and

processing platforms as well as the innovative introduc-tion of full electrification of the installations from shore an initiative driven by the Norwegian Ministry of Energyfor all future platforms on the NCS. The capex for theJohan Sverdrups electrification project alone is estimatedto cost around US $1.5 billion. The field itself is expectedto come onstream by year-end 2018.

The project is not Statoils sole focus, of course. Itremains concentrated on unlocking the potential ofits northern waters and for those who think this is arecent trend, it is worth pointing out that Statoil hasbeen exploring in the Barents Sea for more than 30years and has been involved in 88 out of the 92 wellsdrilled in the area in total.

The company will drill nine wells in 2013 in its BarentsSea acreage as well as tripling its Arctic technologyresearch budget from $14 million (NOK 80 million)this year to $43 million (NOK 250 million) in 2013.

Statoils exploration executive vice president Tim

Dodson said the Barents holds no fears for the operator,describing it recently in a briefing at the Offshore North-ern Seas conference in Norway as a less challengingarea, as the Norwegian Barents is one of the only Arcticareas with a year-round ice-free zone.

Concept screeningStatoil is due to start exploration drilling using theWest Herculesdeepwater rig on the Nunatak prospectin the Skrugard-Havis oilfield area before year-end andwill then drill and complete three other wells there overa four-month period on the Skavi, Iskrystall, and Kram-

sno prospects.The Skrugard-Havis oil hub project itself is still in the

concept screening phase, with Statoil mulling severalalternatives for a central floating production facility withsubsea wells, including an FPSO or Sevan Marine-designfloater with offshore loading or a semisubmersible plat-form with a pipeline to shore.

The fields lie just 7 km (4 miles) apart, with Skrugardonly discovered in April last year and Havis in January2012. They are estimated to hold between 400 MMbbland 600 MMbbl of recoverable oil, with any producedgas and water to be reinjected. The development con-

The deepwater drilling rig Aker Barentsdrilled the Havis

discovery well in the Barents Sea for Statoil and is due to

drill several more wells over the next few months. (Photos

by Harald Pettersen, courtesy of Statoil)

November 2012 | EPmag.com6

industryPULSE

Pastures old and new rejuvenate

Norways offshore profileNorway has been reborn as a global investment hot spot.

Mark Thomas, Senior Editor


9/144

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cept will be chosen in 2013, according to Statoil, with a

final investment decision in 2014 and first oil by 2018.

A further three wells will then be drilled in the emerg-

ing Hoop area further north in the Barents next summer.These will be the northernmost wells ever drilled offshore

Norway.

Subsea factoryStatoils Technology, Projects, and Drilling Executive

Vice President Margareth Ovrum is a key figure in the

companys push northwards. She has a strong belief in

the importance of the subsea factory concept as a

major potential solution for the Barents Sea and the

Arctic as a whole.

Statoil already has made major inroads into establish-

ing this concept, of course, being under way with two

major seabed gas compression and boosting projects off-

shore Norway on its Asgard and Gullfaks fields. Subsea

technology will solve a lot of the challenges, Ovrum

told E&Pat ONS after one briefing. We have launched

our ambition for a subsea factory by 2020. That is our

road map.

She also added that Statoil was developing more

robust solutions for both permanent and floating pro-

duction solutions for its northern seas and the Arctic.

A key technology soon to be added to Norways off-shore tool box is the already well-established spar pro-

duction platform. Somewhat surprisingly, it is only now

that a spar has been selected for use in its waters.

Perhaps unsurprisingly, however, Statoil has seized

the opportunity and taken it further the first spar

on the NCS will be the worlds largest (deck weight of

21,000 tonnes; substructure weight of 40,000 tonnes),

will be the first with gas condensate storage, and will

sit in 1,300 m (4,265 ft) water depth. The facility will

be used to develop the Aasta Hansteen field in the

northern Norwegian Sea.

Opportunity enablerStatoil describes Aasta Hansteen as an opportunity

enabler, as the facility is planned to act as a hub for

future developments, with built-in spare area and weight

capacity, riser slots, and subsea tie-in connections. Gas

processing capacity has been set at 812 MMcf/d.

These world-class developments in both Norways

mature areas and its emerging northern waters are clear

proof that persistence and long-term thinking by both

oil companies and national governments can indeed

bear fruit.


industryPULSE

Tough weather and sea conditions are a regular experience in

the Barents Sea, as can be seen here on the Polar Pioneerrig

while drilling an exploration well on the Skrugard field.

Norway a top five tip

Field development spending offshore Norway will seethis maturing oil and gas province ranked in theworlds top five in terms of expenditure.

Total upstream development capex will rise more than

30% to US $25 billion by year-end 2012 in Norway,

according to analysts Wood Mackenzie, with that figure

set to keep climbing to almost $30 billion in 2015, further

ensuring the countrys top five ranking as an invest-

ment destination. The only areas lying ahead of it are the

US, Russia, Canada, and Australia.A key factor in the rising spend trend, stated Wood

Mackenzie, is that around two-thirds will be invested in

EOR from producing fields. Statoil already is a world

leader in EOR, currently recovering 50% of the oil in its

operated fields in Norway well ahead of the industrys

global average of around 35%. Taking the increased

recovery from all its existing fields since it originally sub-

mitted plans for their development and operation, the

company estimates it has increased the oil recovery fac-

tor from around 30% to todays figure of 50%, equating

to approximately 7.5 Bbbl of extra oil.

The company is aiming for an eventual average recov-

ery rate of 60% from the Norwegian shelf.

Ross Cassidy, head of Northwest Europe Upstream

Research for Wood Mackenzie, said, We estimate that

around two-thirds of the $25 billion development expen-

diture in 2012 will be spent on increasing recovery from

producing fields and the remaining third on new field

developments.

Wood Mackenzies report, titled A review of the Nor-

wegian corporate landscape, forecasts that majors will

invest around $26 billion over the next three years.


11/144

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12/144November 2012 | EPmag.com10

A declaration of independenceRyan Lance is defining the new ConocoPhillips as the independent E&P company moves into

organic growth mode with a focus on unconventional plays, major development projects,

and an emerging exploration program.

This past July, ConocoPhillips reported its first quarterlyresults as a standalone upstream company, having split

off its downstream assets into Phillips 66 earlier this year

to become the largest North American-based independ-ent. Production that quarter was 1.5 MMboe/d (55%liquids, 25% North American natural gas, and 20%international gas and LNG). Cash from continuingoperations was US $2.2 billion.

At the helm of the Houston company is Chairman andCEO Ryan M. Lance. He is moving the new entity for-ward by capitalizing on its major production bases inNorth America, Norway, the UK, Australia, Indonesia,Qatar, and China. Production has declined since 2009 asa result of non-core asset divestments. But volume ramp-ups from shale liquids in the US, oil sands in Canada, and

international development projects, as well as emergingexploration opportunities, should soon take care of that.

The companys roots date back more than a century toOklahoma, through heritage companies Continental Oiland Phillips Petroleum. Today the new independent has16,500 employees and assets in 30 countries. North Amer-ica makes up more than half the portfolio.

Five years ago, people would have said that our NorthAmerican focus was a problem, but now its where every-body wants to be thanks to its unconventional resourcesand deepwater potential, noted Lance. Also, 80% of ourassets are in OECD countries, and we like the stability and

risk mitigation this provides.

What does forging a new identity as a pure upstream company

look like?

Its blending the old and the new combining the size,scale, and scope of a major integrated company with theaggressiveness and agility of an independent.

People always tell me, You have to act like an inde-pendent now, and I say, No, we need to define what itmeans to be an independent ConocoPhillips. We areunique and uniquely capable. Under [retired chairmanand CEO] Jim Mulvas leadership during an era of

restricted resource access and rising commodity prices,acquisitions built the major portfolio we enjoy today, with43 Bbbl of total resources. With years of exploitation anddevelopment opportunities in inventory and shale open-ing up once-undreamed-of new potential, we can move

into organic growth mode through the drill bit whilebuilding on our capabilities as an explorer.

I also like to remind people that some things wontchange our commitment to safety, environmental pro-tection, operations excellence, financial strength, ourmoral and ethical compass, and our relationships withthe community and host governments.

As the largest North American independent out there,

how are you positioning the new ConocoPhillips?

On the basis of production and reserves, we are abouttwo times the size of the next-largest independent. But

Ryan Lance, CEO of ConocoPhillips. (Images courtesy of

ConocoPhillips)

Leslie Haines, Oil and Gas Investor

worldVIEW


13/144



were still smaller thanthe majors, so we arecarving out a new

space.Analysts dont quite

know what box to putus in. They dont knowwhether to value usas a growth-orientedcompany or a returns-oriented company. Infact, we believe we areboth. Were aiming for3% to 5% average pro-duction and margin

compound annualgrowth beginning in2013. Were producing1.5 million boe/d to1.6 million boe/d now and plan to get to 1.8 millionover the next five years, all from visible projects alreadyunder way. The unique thing is that this growth also willimprove cash flows and margins. For our size, scale, andscope, weve built a pretty exciting growth platform.

To what extent are you focused on unconventionals?

What a huge game-changer they are! When you add

in the oil sands, theres tremendous opportunity inNorth America. For example, ConocoPhillips expects210,000 b/d of new production from Lower 48 shaletrends by 2016. In the Eagle Ford, were drilling 180wells this year and producing 70,000 b/d up fromzero only 18 months ago. In the Bakken, well drill120 wells this year on a 600,000-acre position. In thePermian, we plan 300 wells this year on a 1.1-million-acre position that includes two shale trends as wellas conventional potential, with 7,000 identified newwell locations.

As for the US overall, rewind five years and everyone

was talking about peak oil and importing more than60% of its oil. The whole conversation is tipped on itshead now when you think about the opportunity wehave as a country and its impact on energy policy.

How do you achieve 3% to 5% growth?

We have five high-margin areas that will account for550,000-plus boe/d by 2016: US unconventionals; theCanadian oil sands, where we got out of surface miningand remain in [steam-assisted gravity drainage]; theNorth Sea, where we have several projects in develop-ment; Malaysia, where we have a big deepwater position;

and Australia, through the coalbed methane-to-LNGproject in Queensland.

The organization knows what it will take, and all ofthese projects are now under way. Some will start up thisyear, like the first phase of the Malaysia development.The UK Jasmine project comes online next year, as domore of our Canadian oil sands. The Asia-Pacific LNGproject is in 2015 and 2016. LNG is very important as

Asia and Europe are short on natural gas, making theseprojects very competitive.

For the longer term, weve built a significant explo-ration portfolio of both unconventional and conventionalopportunities. For example, were now the industryssixth-largest deepwater acreage holder in the Gulf ofMexico and have recently started drilling there. We holdtwo exploration blocks offshore Angola offsetting largerecent discoveries as well as blocks in the Bengal fan offBangladesh and the Browse basin off Australia, to namea few. Were looking to expand our positions and addnew ones if they can be competitive.

How much are you buying in the US?

Weve added about 700,000 acres since 2011 in NorthAmerican unconventional plays and are always looking foropportunities. We seek out areas where we can build mate-rial positions early at reasonable cost as in the EagleFord, where our position cost only around $300 an acre.

What kind of portfolio mix are you aiming for?

I dont have a set goal for a certain mix, but were notinvesting any money in North American dry gas plays,obviously. We target investments in high-quality assets

worldVIEW

Near-term GrowthBased on July 23 forward prices

Canadaheavy oil

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Major Projects

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The company has identified five major projects worldwide to maintain steady growth.


15/144

is

part

or

our

DNA

formations

in

North America may hel p reduce the continent

'

s dependence on

imported oil. But

recovering oi l

gas from

ti

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rock

10,000 feet under ground requires a lot of skill

.

fven more than ski l l ,

it requires responsibility.

y

when

the

reserves

are in

close

proximity to prime

farmland

and local communities .

I

hat

'

s wh y

we

remain

to

developing

technolog ies

that

measure

up to

the toughest efficiency and safety

standards

.

Because

we

what

'

s great

today can always be improved tomorrow

.

It

'

s

in our nature

.

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being

satisfied

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that will improve our margins and fit in with where

were going overall.

People ask me, Do you like oil or gas? In what areas?

I like good rocks, low cost of supply, and access to goodmarkets. You can get these through either oil or gas,

depending on location. I dont have an absolute target

I dont think about the business that way.

Tell us more about the Eagle Ford.

We love it. We were one of the first in this play and

added about 300,000 acres in 2005 and 2006. We identi-

fied the condensate window early on. Today were

among the best operators there and are taking lessons

learned and applying them in a dozen other North

American shale trends.

You talked about the shales at the OPEC meeting earlier this

year. How did the ministers react?

I told them that these unconventional plays and the oil

sands have changed the game and that there is an

opportunity for North America to be a net exporter by,

pick a date, maybe 2025.

The reaction varied from some people who dont want

to believe this will happen to others who want to learnmore about it and consider it in their own plans. Theres

no doubt the reserves are there, so its a question of deliv-

erability, timing of production, and whether appropriate

legislative and regulatory approvals can be obtained.

The other question is how will the unconventional

opportunities present themselves abroad? For example,

the jury is still out in Poland, where we are drilling pilot

wells and preparing to fracture them. Its still early. The

resource is there; the question is deliverability.

You know, the juxtaposition of all these trends

development of the unconventional resources, the

deepwater plays, the LNG projects, and so on makesit a great time to be in this business. Im excited about

where we are and where were going and the opportu-

nity to deliver on the plans weve set in motion. The

best days for ConocoPhillips are still ahead.

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DID YOU KNOW

COMPATIBILITY

IS A KEY PART OF

CHEMICAL SAFETY.Youve probably heard the old phrase

that oil and water dont mix. The fact is,

there are many chemicals in our industry

that must not be used or stored togethe

Combining incompatible chemicals, or

storing them in too-close proximity to

each other, can result in adverse

reactions such as the release of toxic,

corrosive, or flammable vapors and

liquids, excessive heat generation,

even explosions. With some chemicals,

exposure to air or water might even

trigger such reactions.

Dont make decisions youve not been

trained to make Dont do something

HSE

TIP No. 11

halliburto

n.c

om

/HSE

agF

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,Ra


20/144EPmag.com | November 2012 17

The energy industry is always eager to uncover more

top talent in the oil and gas candidate pool. By

understanding a number of admirable changes and

improved practices successfully used by energy compa-

nies as a model, the current recruitment landscape can

underscore succession plans so that another 20-year tal-

ent gap does not occur any time soon.With that said, the crux of filling open positions today

is to: a) use resources that can tap the small pool of

A-player talent while favorably and accurately represent-

ing a company, b) executing search processes that only

deliver candidates in alignment with a companys cul-

ture, c) identifying and developing high-potential talent

two to three levels down from the current gap, and d)

putting a succession plan together or revisit the one a

company already has.

Tapping experienced (and scarce) talent

Most corporations have determined that externalretained search firms fill the executive seat and access

that talent with great efficiency. Younger midsize compa-

nies with catapulting early growth that have had good

luck hiring via word-of-mouth and referrals from friends

of their leadership, however, have shown resistance to

using outside recruiters. Theres no argument that that

this type of soft referencing can uncover quality talent

and natural culture fits, but there are a few considerations

to keep in mind to do more than fill the seat.

Do-it-yourself recruiting. Do-it-yourself in-house recruiters

on a company payroll are assumed to have the best possi-

ble understanding of company culture and unspokenbehaviors that are subtly valued but not usually adver-

tised. Companies should consider having in-house teams

and should ensure the teams feel 100% confident that

every HR representative speaking to potential candidates

in the marketplace can articulate the company subtleties

to vet the talent and accurately match them with the

opportunity.

With a dramatically different discovery process for

company culture and values from the in-house team,

external recruiters typically agree that, at the line-staff

level, internal recruiters add the best value. An internal

teams accessibility to reporting managers for regular dia-

logue and guidance makes for sound hiring. As such,

there are some admirable recruitment strategies going

on in the energy industry to solve the immediate crunch.

For example:

Halliburton is purposefully changing the gender

representation of its in-house recruitment teams. It

would like to move more women with five to 15 years

of experience to higher levels and realizes that when

women are considering a job, they want to see other

women who have been successful in the role; and Many companies are transition-training military and

other complex instrumentation industry personnel

into the oil and gas sector.

Outsourced recruiting.While the effectiveness of these

recruitment strategies is assumed to be high, the volume

of open engineering and related executive positions

can be overwhelming to an in-house team. A good out-

sourced recruitment firm should offer 100- to 300-plus

man-hours (depending on the impact and level of the

role) dedicated to filling a position as quickly as possible,

accessibility to the competition, transparent reference

reports (this is particularly difficult to gather by an in-house contact), and a steady process delivering daily and

weekly results. While an external firm should offer muchmore, these are the most challenging tasks facing in-

house recruiters. Companies should consider outsourc-

ing if a nodding donkey is needed to get production

started. They need to identify search firms before their

HR department burns through the companys friends

and word-of-mouth sources.

Culture as the success coefficientAn important element in the in-house/outsource discus-

sion is culture and community. Culture is the behaviorof employees how things get done and community is

peoples sense of belonging to and caring for something

larger than themselves. Because talent changes frequently

and retention packages are paid, repaid by the competi-

tion to lure a talent away, and paid again by the latest hir-

ing company, the new deciding variables are culture and

community. In Rebuilding Companies and Communi-

ties, Henry Mitzberg writes that a company without a

compelling culture is like a person without a personality.

That resonates because the contributions of middle man-

agement are getting serious results and retention. These

Its not just about filling the seatExperienced middle managers are just a few years away.

Mary Campagnano,

Allen Austin Global Executive Search

managementREPORT



rising stars can drive key changes in the organization, and

they want to stay to see the job through.

Does seeing the job through sound familiar? A Har-

vard Business Reviewstudy reports that those retiringBaby Boomers have nearly everything in common with

the Generation Y workforce. They both value flexi-

ble work arrangements and the opportunity to give

back to society over compensation. These elements

are shaping company culture.

With culture and community being essential ele-

ments, a search process that produces candidates

that align with the companys culture and

values is essential. It is critical to evaluate

the character of candidates, their commit-

ment to making a change, and the potential

contribution of a candidate to the new com-pany. Literally hundreds of questions must

be asked (both in the form of a self-report-

ing questionnaire and through face-to-face

interviewing), but most poignantly, the cul-

ture of the client company and what is desired

by the candidate must be examined. A careful process

can mitigate failed searches, which are roughly 45% in

the industry. Companies should frequently take the

time to define what their culture is and purposefully

evaluate each candidate against it for the best fit.

Good times and talent aheadThe data is optimistic: Harvard Business Reviewreports

that 45% of the next round of leaders, Generation Y,

expect to work for their current employer for their entire

career. In as little as five years, there will be a number

(small but measurable) of early leadership-level engineer-

ing talent who represent the new generation with 15 years

of experience. Several companies have role model prac-

tices to retain and develop these high-potential but cur-

rently under-experienced talent:

Shell has career stewards who meet regularly with

emerging leaders, assess their level of engagement,

help them set realistic career expectations, andmake sure theyre getting the right development

opportunities;

A large manufacturer in China gives its rising stars

privileged access to online discussion boards led by

the CEO that are dedicated to the companys biggest

challenges. Emerging leaders are encouraged to visit

the boards daily to share ideas and opinions and to

raise their hands for assignments; and

Johnson & Johnsons high-potential talent partici-

pates in a nine-month program called LeAD, receiv-

ing external coaching and regular assessments. They

develop a growth project a new product, service,

or business model intended to create value for

their business unit. They also leave the program

with a multiyear individual development plan.

Succession planningFollowing the exercise of developing talent just below

the current gap, companies should establish a written

succession plan detailing who that talent is and what the

leadership activities are to foster and retain them. This

plan should include who has influence, when revisions

and reviews to the plan are scheduled, actions to imple-

ment in the event of an emergency, etc.So what about fixing todays immediate problem? A

company must adjust its expectations for the number of

talented candidates it will select from in the short term,

push its recruiters to look globally, participate with top

female talent in women-focused energy associations like

Womens Energy Network, take time to assess culture

and ensure a search process that includes a proper

evaluation of fit, and identify and evaluate its potential

succession talent quarterly.

References available.

managementREPORT

Culture and community are important

factors when looking for top talent.


22/144

FLOW E Q U I P M E N T

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24/144EPmag.com | November 2012 21

The digital oil field (DOF) has been a major area of

investment for all the majors and a fair few others

since the mid-part of the last decade. It was one of those

times where all the issues swirling around the ether sud-

denly coalesced and screamed a common and over-whelming answer. Whether the issue was in developing

difficult plays, attracting skilled labor, improving safety,

mitigating environmental impact, improving day-to-day

running and monitoring, or maximizing recoverable

reserves, the answer was IT and lots of it.

And in a historical perspective, this was long overdue.The concept of shop floor data capture began in the

1970s. And in the decades since, IT has been used to

monitor and record at increasing levels of detail across

motor manufacture, high tech, food processing, and

apparel. Even at the craft end of these industries, the

move to digital has been inexorable: The cylinders inyour Aston Martin are no longer finished by hand using

apricot stones, but then they are also likely to last

321,000 km (200,000 miles).

So there are a lot of data, and they are used so that the

industry can run faster, longer, and cheaper. Near real-

time adjustments can be made from control centers

thousands of miles away; the

technology is there. But what

else is there? Writing in Strategy

and Businessin 2008, Steinhubl

and Klimchuk offered the fol-

lowing definition: The digitaloil field is a suite of interactive

and complementary technolo-

gies that let companies gather

and analyze data.

Unknown casualtiesin data explosionUnfortunately those two things

gathering and analyzing can

operate against each other. The

more data that are gathered, the

less data can be analyzed. That is a factor of volume, but

more importantly it is a matter of source. Recording and

generating new data types from new systems have been

necessary consequences of the DOF. But our business

intelligence systems are still analyzing the old world.

These systems are difficult and expensive to implement

and arguably harder and more costly to change. Accom-

modating entirely new data sources means changingand building new structures of data aggregations,

dimensions, and hierarchies.

All of this is not impossible, but is it reasonable? If it

takes a year to reconfigure corporate reporting struc-

tures, how fundamental will the changes be in the

elapsed time? Is the industry creating a never-endingtask, chasing its own data tail?

What the Gartner Group calls data discovery tools

(and others call analytics) is a more fleet-footed alter-

native. Data is loaded in memory with no preconceived

notions of joins, hierarchies, and aggregations. Users

can then design graphical visualizations of the data toexplore relationships and correlations, drilling down

and filtering to whatever level of detail they require.

Mighty mash-upThe source of data gives us another problem one of

combining or mashing up data sources from disparate

digitalOIL FIELD

Youve discovered oil and gas

now discover your dataThe data explosion requires new methods of analysis.

Steve Farr, TIBCO Spotfire

Spotfire can graphically display well relationships in a number of ways. (Images courtesy of

Spotfire)


25/144

Making the

Imp

assa

ble Po

ss

ibl

e

Weatherford'

s

patented

Compact

well

shuttle

makes today

'

s

complex well geometries fully loggable

Wireline services

Assure

conveyance

systems

Evaluation

p

,

on

I?L'

.

r

Production

Coiled-tubing

Compact welshuttle

Compact

drop-off

Pi

pe-conveyed

Pump-down

drop-off

Slicklineiheavy-dutywirelne

Standard wireline

Thru-drillpipe

Thru-the-bit

Tractor

Openhole

Acoustics

Formation

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imaging

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Microsesmic s e r v i c e s

Go beyond wireline

to

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quality data even

in

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decidedly

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complex wellbores.

The

shuttle

houses logging

tools

safely

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drillpipe as

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pipe

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to total depth

.

Tools

are then

pumped

into open hole

to log

into

memory

as

the drillstring

is pulled

out. That'

s Tactical Technology

n

action.

To learn

more about our wireline

offerings

with more options

and

more service

,

contact your

Weatherford

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visit weatherford.com.

W

Weatherford

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r

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.

. r ry

-d +i

?


26/144

systems in order to gain insight. The data may be coming from corporate systems

but increasingly may also be sourced from service partners in the field. Data dis-covery tools such as Spotfire allow users to quickly mash up data without waiting

weeks for assistance from programmers. Chevron, for example, combines its

geologist-produced water injection modeling data with operating partners real-

time production data so that the water flow can be adjusted accordingly.

This is a sophisticated example of where data mash-up can produce real

efficiencies, and this is becoming critical in an industry where experienced

people are being lost and the risks associated with outsourcing and partnering

need to be mitigated. If E&P companies can no longer rely totally on their

own knowledge and expertise, then they must rely more on collating and ana-

lyzing the data in a holistic and meticulous fashion.

Data are for sharing so is analysisIf data mash-up is the key input to finding new trends in data, then it is the

presentation of the analysis itself that will broaden understanding. Put simply,

methods are needed that facilitate insight. Without this, any attempt to collab-

orate will fail. Initially, Chevrons production partners were reluctant to collab-

orate. It was not until they saw and more importantly understood the results

that they were bowled over.

And this is not just true of sharing with partners. What about the disconnects

in individual businesses? Back and front office collaboration certainly can be

aided through a common context, and so can collaboration with downstream

units wanting to secure product for their refineries and meet the demands of

end customers. This contextual collaboration goes a long way to promoting a

holistic view of the business, and at Chevron the use of Spotfire has grown tomore than 5,000 individuals across multiple use cases.

This is an area where dedicated analytics will always win over Microsoft Excel.

Excel is a personal productivity tool, not a tool built with collaboration in

mind. An analysis can be produced, but its development over time and its ver-

sions, rationale, and formulae cannot be easily understood by anyone but the

author. Tools such as Spotfire allow the data analyst to build analytic apps that

can be easily run by the executive on a web browser or a mobile device.

EPmag.com | November 2012

Spatial patterns of EUR can be viewed across any selected group of wells.

digitalOIL FIELD

W

Weatherford

Tactical Technology

T

in

action:

Compact

'

well shuttle helps

log

complex horizontal

well

in

under

two days after failed

attempts

spanning 22

days

Tarim,

China -

In the kickoff and horizontal

section of a complex well trajectory, six

runs of a tool-push logging

system

failed

to

reach TD. Three

caliper

arms were

lost and

a sonic and

induction tool catastrophicall

y

damaged.

The

cost

in

rig

time

alone

was

more

than

US$300

,000.

Weatherford deployed tools

to TD

safel

y

inside

the drillpipe using the Compact

well

shuttle.

The

entire formation section

was

logged

in 45.5

hours-a fraction of the

time

and cost of previous attempts.

To

learn more about

enhancing

your logging

operations with our ten different

Assure

conveyance options

and

Compact tools

,

contact your Weatherford representative or

visit weatherford.com.

weatherford

.

com

Cl 2C125Vmtaertnrd

ntm1

to

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The advent of natural gas production from unconven-

tional reservoirs like shale formations has had a

marked effect on natural gas prices and has put great

focus on the technologies employed for extracting gas,such as hydraulic fracturing and horizontal drilling.

However, as the shale gas industry matures, it should

look beyond these key drilling technologies and explore

another technology innovation now appearing in the

industry: the application of lean manufacturing meth-

ods, sometimes called the shale gas factory. In particu-

lar, the factors for its success must be understood.

Production differencesThere are several key differences between a typical gas

field development and a shale gas field development,

driven primarily by the characteristics of the gas well.Well count. Most conventional gas wells exhibit a high

flow (flush flow) during initial production, followed by

a long period of steadily declining flow. A decline curve

will show a constant-slope decrease over time.

Shale gas fields need many more wells, where new wells

add high initial flush flow followed by accumulating tail

flow as the wells age.

The shale gas development will drill wells continuously

to sustain production rates, with ultimate well numbers

in the thousands, followed by long sustained production.

Well complexity. Shale gas wells tend to be relatively

simple in design, relatively shallow, and set in fairlyhomogeneous layers. This is partly due to the nature

of shale deposits and partly to the fact that drillers are

developing the easiest geologic structures first. This

relative simplicity and sameness makes drilling and

the completion process amenable to continuous

improvement.

There also might be significant benefits from correlat-

ing drilling and completion practices with the ultimate

characteristics and productivity of the well, including

flush rate peak, initial decline rate, and ultimate tail pro-

duction rates. Similarly, the effect of production meth-

ods and techniques can be evaluated to improve produc-

tion performance over time.

Logistics.A continuous drilling campaign means con-

stant change. New wells mean new automation, new gath-

ering lines, new monitoring, and reporting daily.

Multiple drilling rigs, multiple fracing teams, numer-

ous operations, and maintenance personnel mean con-

stant activity in the field. The supply chain is immense.

All wastes must be removed and sites restored to near

natural conditions. And every action requires proper

permitting and reporting.

Continuous improvement.While all gas producers seek toimprove the processes, the high well count and repetitive

nature of shale gas development provides the opportu-

nity for continuous improvement, both within and

among each of the key steps of field development: explo-

ration and appraisal, drilling, infrastructure build, pro-

duction, reclamation, abandonment, and remediation.

Shale gas factoryThat new approach is a shale gas factory that manufac-

tures gas wells and measures success by the effectiveness of

those wells. These need high production (strong flush

digitalOIL FIELD

Shale gas factory provides

collaborative field developmentThe principles of lean manufacturing are applied to the shale gas factory to eliminate the

wastes of people, time, resources, and assets while improving the quality of the shale gas well.

John M. Gilmore Jr., Invensys Operations Management

Shale gas fields need many more

wells than conventional fields. The illustration shows expansion of

one well to 12 wells from two well pads a half-mile apart within the

same square-mile area. (Image courtesy of frackingboom.com)


30/144

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flow with long stable tail production), predictable per-

formance, and highly reliable equipment that is easy to

operate and maintain.

The other measure of performance is the operation ofthe factory itself. It must have low capital and operating

costs, perform safely and reliably, and deliver its product

on time while meeting all regulatory requirements.

In short, the shale gas factory must behave like a classic,

lean manufacturing facility by avoiding all the wastes that

could plague any factory environment:

Poor quality. Making goods or services that do not

meet demand; that is, making poor wells; Transportation. Moving things not required;

Inventory. Having more supplies and materials, work-

in-process, or completed but non-producing wells

than absolutely necessary;

Motion. Equipment or people moving more than nec-

essary to complete the work;

Waiting. Lags between production steps;

Overproduction. Producing or installing before

required by demand;

Too much processing. Doing more than is required;

Defects. Costs of inspecting and correcting defects; and

Human talent. Failing to develop and use the capabilityof the work force.

These wastes, termed muda in Japanese, were developed

by Toyota as part of its Toyota Production System (TPS).

TPS was key to the growth of Toyota as a world supplier

of automobiles.

Shale gas factory automationInvensys and other automation providers, working with

clients to develop shale gas and similar unconventional

gas projects, have found five key areas where typical

operations management systems fall short.

Scalability and flexibility. The operations management

system must be scalable from the initial appraisal wells to

thousands of production wells without needless replace-

ment or reengineering and without being oversized forthe early work. It must have the ability to add or modify

on the fly to avoid needless delays and match demand.

Data volume. The capture of relevant information along

the entire well production process, from exploration to

drilling to operations, produces tremendous volumes of

process and transactional data. Providing availability to all

users in the context that each requires without multiple

historizations and data duplication will be key to the

analysis that leads to continuous improvement.

Asset performance. Captured data must be continuously

analyzed for performance factors and made available to

the personnel who have the most ability to control thosefactors. Information context must be available to experts

where they are so that they can analyze problems, provide

solutions, and monitor results without costly, time-consum-

ing travel with a goal to bring the problem to the expert.

Early alerts and workflow.A constantly changing physical

environment and large volumes of data make effective

surveillance of operations extremely difficult. The use

of model-based technologies that monitor and identify

deviations from expected performance coupled with con-

text-directed alerting systems helps focus operation per-

sonnels attention on potential problems promptly.

Alerts can trigger workflows and automatic escalationif needed. Comprehensive workflows assure that actions

taken and results achieved are captured so that assessment

and improvement are possible.

Collaborative environment, remote operationSuccess in the shale gas field will require the cooperation

of personnel from many functional groups such as safety

and environmental, geosciences, drilling, operations,

maintenance, governmental relations, procurement and

contracting, transportation, and many more.

A geographically dispersed, collaborative environment

whereby those people can meet, use their respective toolsto analyze and explain, reach decisions, set actions, and

monitor the results will be essential to success.

Reducing shale gas development costsThe characteristics of shale gas production open the

opportunity for a revised development approach that

will reduce cost and improve productivity in the field.

That revised development approach the shale gas

factory uses the principles of lean manufacturing to elimi-

nate the wastes of people, time, resources, and assets while

improving quality of the final product: the shale gas well.


digitalOIL FIELD

The conventional approach to shale gas development is a drilling

campaign of 100 or so wells, followed by a period of production,

followed by another round of drilling to replace depleted wells,

and so on. (Image courtesy of Invensys)


33/144

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When CGG and Veritas united in 2007, the mergercreated the worlds largest geophysical contractor.

But apparently that milestone did not temper the com-panys appetite.

Recently, CGGVeritas announced that it would pur-chase all of Fugros Geoscience division except forFugros existing multiclient library and nodes business.According to the press release, The transaction willenable CGGVeritas to become a fully integrated geo-science company, and it also will strengthen and extend

its existing equipment and acquisition businesses, in par-ticular with the addition of four high-end 3-D vessels.

According to Antoine Lefort, senior vice president ofcommunications for CGGVeritas, the transaction willboth extend and strengthen the companys offerings.One of the reasons for the transaction is for us to moveinto the high-end geology, geophysics, and reservoircharacterization markets, Lefort said. We were partlythere with Hampson Russell, and now were establishinga leading position in this market.

Fugros Geoscience division comprises Fugro-Jason, Fugro-Robertson, Fugro-Data Solu-

tions, Fugro-Seismic Imaging, Fugro-Gravity and Magnetics, Fugro-Geoteam, Fugro MultiClientServices, and Fugro Airborne.

Obtaining the four new vesselswill strengthen the company,Lefort added. We think its a verysound alternative to newbuilds, hesaid. We will have new boats withoutextending the fleet, plus newbuilds take acouple of years to complete, and here well havefour immediately after the closing. That is a very good

alternative to catch up with the recovering market.CGGVeritas also will benefit from the addition of new

acquisition services airborne, marine electromagnet-ics, and marine magnetics and gravity.

In addition to the new companies CGGVeritas willacquire, it also has plans to form a joint venture (JV)with Fugro in seabed acquisition. Under the terms ofthe deal, Fugro will own 60% of the JV and will payUS $290 million to CGGVeritas. This JV will combineCGGVeritas existing seabed services, including perma-nent reservoir monitoring, ocean-bottom cable, and

1,000 seabed nodes, with Fugros 1,300 seabed nodes tocreate a focused global leader in the fast-growing

seabed acquisition market, according to informationfrom CGGVeritas.

There also is a commercial agreement for CGGVeritasto act as a nonexclusive broker of Fugros existing multi-client data, which remains owned by Fugro. This givesCGGVeritas access to a broader range of client contactswhile increasing its exposure to complementary andhigh-potential regions such as Australia and northwestEurope, including the Barents Sea.

Finally, the deal includes a global strategic technicaland commercial mutual preferred supplier

agreement.

The addition of Jason and Robert-son to the CGGVeritas portfoliowill beef up the companys reser-voir characterization and explo-ration and appraisal capabilities,adding more than 500 employ-

ees and giving it a leading posi-tion in these markets.

This is going to create synergies,and those synergies are about productivity

for scaled savings for the fleet but also through thetechnical and commercial leverage in processing, imag-

ing, and multiclient, said Lefort. We also expect addi-tional sales from our preferred supplier agreement.

Moving into more of a service-oriented model willhelp buffer the company against the cyclical nature ofthe business, he added. The deal also is expected to beaccretive as early as the first year after closing, some-thing that is not so common when you have such a largetransaction, he said.

This transaction is a major stepforward and fits perfectly with CGG-Veritas strategy, Lefort said.

Growing through the reservoirMoving into reservoir services will help a major contractor achieve its long-term goals.

Read more commentary at

EPmag.com

RHONDA DUEY

Executive Editor

[email protected]

explorationTECHNOLOGY

EPmag.com | November 2012 31

explorationTECHNOLOGY

Moving intomore of a service-orientedmodel will help buffer the

company against the cyclicalnature of the

business.


36/144

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wellCONSTRUCTION

33

One of the biggest questions to come out of the

Macondo blowout in the Gulf of Mexico dealt

with the effectiveness of the cement job. The Research

Partnership to Secure Energy for America (RPSEA) has

taken on that problem with a research project with the

University of Houston to develop smart cementingmaterials and drilling muds.

What were trying to do is bring in new technolo-

gies that can be utilized to improve drilling mud and

cement. The challenge that we are now facing is that

we cannot monitor the installation operation. The

question is that you do not know how good the installa-

tion is or if there is a problem, said Vipu Vipulanan-

dan, director, Center for Innovative Grouting Materials

and Technology, University of Houston.

One of the unique aspects of this project is that it is

designed to provide information from the cement

throughout the life of the well. Imagine being able tomonitor a cement job as conditions in the well change

over its lifetime.

The researchers are looking for materials that can be

measured for changes in electrical resistance. The sens-

ing materials would be mixed with the drilling mud or

cement. Not only are we developing a sensing material,

but we are also going to build a simple monitoring sys-

tem that can be used to tell you exactly what is going on

with the drilling mud or cement, Vipulanandan said.

The sensing material would allow the measurement of

changes in electrical resistance during drilling, place-

ment, setting, and hardening in real time.

The sensing material in the drilling mud would allowthe driller to more q

Revista E&P - Noviembre 2012

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