OPC Insight Winter 2014/2015 by MESO Marketing

Insight 2

Aberdeen Energy Capital of Europe

Falling oil prices - is it all doom & gloom?

Training: Course details announced

White Paper: North African Petroleum Systems

Where Well Testing goes wrong

Could you be a good consultant?

Focus on Algeria

New contracts

Latest Vacancies

News, people, community

Winter 2014-2015 Issue 19

Aberdeen “Energy capital of Europe” Aberdeen has been the centre of exploration and production operations in the North Sea since the mid-20th Century earning itself the nickname of the “Energy Capital of Europe”. However, as North Sea reserves and production rates have declined over the last few years, Aberdeen has been looking to a future that is not based on local oil production but as a global centre of excellence for subsea, marine and renewable energy engineering. The impact is being felt in the local labour market. This year only a handful of wells have been drilled and mostly by independents. The demand for drilling operations staff is declining and several businesses are shedding staff in these areas and are exiting assets. The exit of major operators is providing opportunities for smaller independent E&P companies to make their mark in the market and BP has also made a new find so exploration & production is not quite dead yet. Developments in technology have meant that assets can be re-evaluated and additional production opportunities can be identified. However the overall future demand for the majority of labour skills looks set to be in onshore research, engineering and technology based roles. Fortunately the market is responding well to this shift as growth and investment continues in the region. A world-class business park, Primefour, home to oil and gas companies such as Apache North Sea, Nexen and Transocean, highlights Aberdeen’s importance to the global oil and gas industry. OPC’s office in Aberdeen is not only supporting North Sea projects but is now looking at projects in the USA and North Africa reflecting Aberdeen’s new role as a global centre of engineering excellence. OPC in Aberdeen OPC first opened its doors in Aberdeen in 1997 and has since grown steadily to support a number of technical services contracts as well as becoming the hub of our new training initiative. Over the last 17 years we have developed valuable relationships with a number of key

clients in Aberdeen and the office is an integral part of OPC supporting North Sea operations, complimenting our offices in London and Stavanger. Typically over the years we have had a number of OPC consultants working in Aberdeen in a range of disciplines including geology, geophysics, production technology and reservoir engineering, however it has been our full-time in-house technical team based in Aberdeen that is the driving force behind our more recent successes. In particular it’s been our expertise around reservoir surveillance and PTA that has grown the business in Aberdeen. Having key principal level resources in place including Bill Roberts (Well Test Expert), Roy Hartley (Petroleum Engineering), Ian Hancock (Reservoir Engineering), Nick Colley (Petrophysics), Robin Crawford (Geology) and Nicholas Wells (Petroleum Economics) has significantly helped in the development of our technical services group. Recent projects led out of Aberdeen include; • Late life evaluation study on a large number of fields in the SNS investigating potential upsides of further development and eventual abandonment. • PTA study on water injectors in North Sea oil field. • Well test interpretation using PTA on water injectors of West of Shetland and Central North Sea fields • Reservoir surveillance study on a SNS tight gas field using PTA on data permanent downhole gauges and producing well test data. Training Services

OPC have developed a new 2015 Training Services initiative utilising a well-established group of world-class trainers. Our training services involve the development of bespoke courses based on the individual needs of our clients, as well as the introduction of a range of public courses and Lunch and Learn sessions on key topics such as reservoir surveillance using PTA.

Veronica Bowes joined OPC two and a half years ago to support OPC’s Aberdeen and international operations. She provides consultants for technical disciplines including Well Test Engineers, Reservoir Engineers and Geologists. In addition to this she is responsible for sourcing training experts for OPC’s public courses and bespoke training projects for individual clients.

New OPC staff in Aberdeen After 6 years as a software engineer, Philippe Auge graduated with a Masters in Reservoir Engineering from the IFP School in Paris. Philippe had been inspired by OPC visiting lecturers Piers Johnson and Bill Roberts and was encouraged to apply to OPC - and joined us in 2013. He

Yatin Suri is a Reservoir Engineer and specialises in well test interpretation /pressure transient analysis. He has onshore field experience as a well test engineer as well as exceptionally strong technical knowledge – he graduated from IFP School France with highest grades in his class. In his free time he organizes a radio show in Aberdeen.

Veronica Bowes Consultant Services Advisor aberdeen@opc.co.uk +44(0)1224 329 1111

Left to right: Philippe, Yatin and Veronica

has been involved in Well Test Interpretation projects for operators in the UK and worldwide, utilising his software skills to generate significant efficiencies in well test data manipulation.

Oil below $70- is it all doom and gloom for the E&P industry?

With the price of Brent crude down to $70 at time of writing on 1st December after a steady period at around $110, what does this mean for the Exploration & Production industry, the activities undertaken and the people working in it? The human body reacts to a drop in temperature by shifting its blood to the internal organs critical for life, a survival mechanism. This analogy can also be related to some E&P companies, whose risk profile is high, and who, after observing a sharp decline in oil prices, have begun to move their resources around their prized assets. The effect for those companies is obvious - as they seek to optimise production but reduce CAPEX and OPEX in a turbulent market, internal resources are reduced. These companies will be looking to reduce exploration costs and even offload assets. However, with many oil industry experts commenting that the inevitable balance of supply and demand will see oil prices grow again in the long term, E&P players with healthy, well balanced finances are on the hunt to pick up quality exploration assets for a reduced price from distressed sellers. We can expect to see an increase in the movement of assets amongst companies and an increase in consultancy work relating to these transactions. Many recent licence awards will have a commitment to acquire seismic data or a timetable to drill exploration wells that cannot be postponed. We expect to see an increase in farm-out activity as this scenario continues to play itself out. One clear result of the falling oil price is that costs throughout the sector are coming under pressure. Rig hire rates are forecast to fall and contract labour day rates are reported as down from their

Riley Smith Business Development Manager london@opc.co.uk +44 (0)20 7428 1111

peak. However, as with any market, if a particular skill is in short supply, quality expertise will be in demand and should be able to maintain market rates. 115.00 110.00 105.00 100.00 95.00 90.00 85.00 80.00 74.66 70.00

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Financial pressure is making labour localisation projects more of a priority. OPC is already heavily involved in running knowledge transfer projects throughout the globe and we are experiencing an increased demand for a wide range of our training programmes from IOCs and NOCs looking to maximise the benefits of local expertise. Finally there will be an increased demand for cost effective and flexible service providers. Major oil companies will scrutinise a supplierâ&#x20AC;&#x2122;s services and look for value - suppliers such as OPC which provide an integrated, flexible support network across all upstream oilfield services will become more attractive to oil companies, large and small. An integrated and flexible supplier can also provide valuable continuity to projects.

Training: Course details announced

OPC has published a full programme of over 20 training courses covering the disciplines of general management, geophysics, drilling operations, reservoir engineering, commercial and economics. Reservoir & Production Engineering Practical Well Test Interpretation Advanced Well Test Interpretation Reservoir Characterisation

The new comprehensive training initiative, announced in the spring of 2014, is in response to client demand to assist developing their personnel in local operating countries throughout the globe. Training has always been a key service area for OPC and this new initiative builds upon historic expertise

Reservoir Surveillance – Effective use of Permanent Downhole Pressure Data Integrated Reservoir Management Basic Reservoir Engineering for Production Operations Staff Advanced Hydraulic Fracturing Fractured Reservoirs

General Management “Petroleum Explored” - An Introduction to E&P Introduction to Data Management The Digital Oilfield

Drilling Operations Introduction to Drilling & Completions Operations Fundamentals of Well Control Casing Cementing - Current Leading Practice & New Techniques Advanced Well Cementing

Geology, Geophysics & Petrophysics Introduction to Petroleum Geology Fundamentals of Applied Petrophysics

Hernan de Caso, OPC Reservoir Engineer delivering a Reservoir Surveillance training course in Azerbaijan

but introduces a new focus on knowledge transfer and local in-country labour development for companies with operations in the Gulf, African and Asian sectors. Most training will be delivered as private bespoke courses in-country and tailored to meet individual client’s needs although public courses of the most popular topics will also be held. For more information get in touch with Edna Travers: Edna Travers Business Developement Manager edna.travers@opc.co.uk +7 915 434 1347

Cased Hole Logging & Production Log Evaluation Seismic Interpretation AVO and Seismic Inversion

Economics & Commercial Introduction to International Petroleum Economics Petroleum Economics & Risk Analysis

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TECHNICAL WHITE PAPER

By Robin Crawford, Senior Consulting Geologist

North African Petroleum Systems: Future Potential Exploration in North Africa began in the early 1900s but really took off in the late 1950s and the 1960s when a large number of the major fields of Algeria, Libya and the Egyptian Gulf of Suez were found. The region continuously increased production throughout the 1960s and 1970s and has maintained significant output to the present day. There have been conflicts that have interrupted investment but the region has always kept the industry interested. In the 1990s the Algeria Berkine trend of 6-8 billion barrels of oil equivalent (bboe) was found and in the 2000s the Nile Delta with its huge gas potential came to the fore. There is still conflict in the region. Libya has not yet recovered from its independence from 42 years of dictatorship. The region still holds the industry’s interest with the potential for growth in conventional resources in all of the countries and for the huge potential in shale oil and gas in the area. When the industry refers to North Africa we generally mean the countries of Morocco, Algeria, Tunisia, Libya and Egypt. To understand why North Africa is important and to understand how it offers such huge potential it is always good to get an understanding of scale. The land area of North Africa is equivalent to almost three quarters of the land area of the continental USA. Texas (always a good measuring tool for the oil industry) would fit into Algeria

alone more than three times. The area is vast. The map below shows the petroleum basins of North Africa, their approximate location and area. Resources of approximately 150 bboe have been discovered and partly produced in these basins. In 2013 the USGS World Petroleum Resources Project published Yet to Find (YTF) numbers for the area of an additional 82 bboe of risked recoverable conventional resources comprised of 19 billion barrels of oil and 370 Trillion Cubic Feet (TCF) of gas. In 2011 the US Energy Information Administration estimated risked recoverable resources of shale gas from the area of a further 550 TCF. They did not estimate the potential for associated condensates and shale oil, which will be considerable. Huge numbers by any one’s standards and close to one of the world’s largest markets. Two gas pipelines to Spain and Italy have been built in the last 15 years to add to the existing line to Italy. Liquefied Natural Gas (LNG) is shipped from Algeria around the world including the UK. North Africa gas is hugely important to Europe to provide competition and diversification of supply. So why is North Africa so prolific in hydrocarbons? It comes down to two factors: multiple good to excellent quality source rocks, and efficient petroleum systems.

Figure A. Map of North Africa showing the approximate location and area of its major petroleum basins. Basins: E – Essouira; R – Reggane; Gr – Gourarra; T - Tilrhempt Oued Mya HMD Ridge; G – Ghadames; M – Murzuc; P – Pelagian Hammamet; S – Sirte; ND – Nile Delta; GS – Gulf of Suez . Colour Code: Blue – Palaeozoic Systems; Purple – Palaeozoic / Mesozoic Systems; Red – Mesozoic Systems; Yellow – Tertiary System.

The quality (thickness and richness) of the North African source rocks is what drives the quality of the North African petroleum system and therefore the exploration opportunity. The Palaeozoic Silurian and Devonian source rocks of North Africa are some of the best in the world. Luning (2000, 2003) has written at length about them. The organic content of both intervals has been measured in excess of 20%. The source intervals have widespread preservation and reach thicknesses in excess of 80m (Silurian) and 200m (Devonian) in Algeria. The Mesozoic and Tertiary source rocks of the Pelagian, Sirte and Nile Delta are also good to excellent quality and can be several hundred metres thick (Pelagian and Sirte) with TOCâ&#x20AC;&#x2122;s up to 6% (Baric 1996, Mejri 2006).

than half as much again to be found and produced. Over the last 5-8 years onshore exploration 3D has become the order of the day and as this becomes cheaper and the quality of image improves then the more subtle traps will be imaged to release these hydrocarbons. The EIA study highlights the huge potential for shale gas. Exploration companies are already active in Tunisia for shale potential and the Tunisian authorities are reviewing contract changes to accommodate shale projects. Shale exploitation is the next phase if the rocks are right and the industry can overcome the considerable operational challenges. North Africa remains attractive to the industry and still has much of its energy prize to give up.

If source rock quality is the most important factor to drive the quality of a petroleum system then in North Africa, timing of generation, expulsion and migration is a close second. Late is good, allowing time for the emplacement of reservoirs, seals and traps. In North Africa most of the basins have late generation and migration or an element of it. The Eastern Algeria basins, the Pelagian and Sirte basins have been in a generation and migration phase for most of the Tertiary and part of the Late Cretaceous period â&#x20AC;&#x201C; the last 60-80 million years. This is long after the deposition of the prolific Triassic reservoir with its Triassic Jurassic evaporite super-seal in Algeria and mostly after the deposition of the late Cretaceous and early Tertiary reservoirs and seals of the Sirte and Pelagian basins. The Palaeozoic systems (e.g. Ghadames) are generally less efficient than the Mesozoic systems (e.g. Sirte) because they have an early phase (375 to 300 mybp) of generation and migration. The products of this phase are lost at the Hercynian uplift and erosion (320 to 250 mybp). In these systems the hydrocarbons found today are those generated in the late phase (80 mybp to present day) of generation and migration. This is with the exception of the Algeria Reggane and Gourara basins where the source rock is fully converted pre-Hercynian times and the only hydrocarbon found today is dry gas associated with the last phase of migration as the source rocks are uplifted and decompacted to release trapped methane. The USGS study of risked YTF suggests that there is more

Early Carboniferous Channel Sands. One of the under-explored plays of the Ghadames Basin that may be illuminated by exploration 3D

Robin Crawford Senior Consulting Geologist london@opc.co.uk +44 (0)20 7428 1111

Well Testing Where it goes wrong OPC began life as a well testing consultancy in 1987 and whilst growing into a fully integrated subsurface engineering, geosciences and production technology provider, itâ&#x20AC;&#x2122;s no surprise that well testing remains an integral part of the business. OPC are often asked to analyse data from well tests where incorrect methods and been employed to collect the data and generally the test has been rushed and poorly planned. This leads to inconclusive, ambiguous and false reservoir characterization, additional costs, delays and confusion. Ultimately test objectives are not met, resulting in ill-informed business decisions being made regarding further development. Here we would like to provide some detail on some of the most common issues weâ&#x20AC;&#x2122;ve observed when an un-integrated approach is taken to testing operations.

Separation Reservoir Engineers interpreting a well test can often be detached from the planning and operations phases with no first-hand knowledge of what occurred during a test. Looking back at a well test report, important details are often missed and the data set may consequently be misinterpreted. In addition to this, operations teams can often be based in a different country to the team planning the well test, resulting in communication issues.

No Clear Objectives

It is essential that all objectives of the well test are well established, clearly communicated and fully understood. A plan as to how the objectives are to be met needs to be fully integrated into the design of the test and discussed beforehand to ensure all stakeholders in the test (particularly operations staff) recognise and understand the reasons behind each action. Due to the uncertainty involved in well testing, the direction of a well test can change as unforeseen or unavoidable factors appear. This can be anything from equipment failure to unexpected reservoir properties. It is important that any forward plan still aims to meet the original objectives and future operations do not cause a conflict, potentially leading to unmet objectives or additional cost. In these situations, due to cost, objectives may be changed or re-prioritised.

Inexperience

For Operators of all sizes, testing is an infrequent and specialist activity and consequently, the operator staff can be less familiar with well testing operations or interpretation. Because of this, only the biggest E&P companies typically retain significant well testing capabilities within their organisation. When it comes to testing, the companies either bring in expertise in the form of contractors or rely on existing and potentially inexperienced staff.

In summary

These are the most common issues that we observe in un-integrated well testing. If youâ&#x20AC;&#x2122;d like to avoid these and have a properly planned and integrated approach, give OPC a call BEFORE planning your next well testing project.

Riley Smith Business Development Manager london@opc.co.uk +44 (0)20 7428 1111

Could you make it as a consultant?

OPC contracts hundreds of consultants every year and the demand for good consultants within the industry continues to grow – so could you make the grade? What makes a good consultant? While there are a variety of skills and personalities that can be successful as a consultant, this is our top six list of what you will need: • Practical expertise / experience in a particular skill (5 years minimum) • Flexibility • Good communication skills • High degree of organization • Tolerance / ability to deal with difficult people • Self-sufficiency Current market conditions The fall in the global oil price has undoubtedly had an impact on the market conditions for technical consultants. Many E&P Companies are looking to reduce costs and they are terminating some

consultancy contracts. In addition, full time staff numbers are being reduced in certain areas and as a result, we are seeing an increase in the number of individuals seeking new consultancy contracts. On the plus side, the reduced oil price will lead to an increased rate of asset transactions – leading to an increase in consultancy work on these projects. In addition, companies that have reduced staff numbers still have obligations to deliver on projects and are therefore increasing the demand for consultancy support. As a summary market conditions are “flexible” – and that is normally a good time to be part of a technical consultancy! Most consultants that we deal with have made very successful careers and are very happy that they made the choice to become a consultant. If you’d like to discuss your options, call our Consultant Services team and they can talk you through the benefits and pitfalls.

Earning potential

No big-company benefits

Job Variety

Lack of job security

Do something you enjoy

No organised training / job

Pass on your expertise to others

development

Be regarded as an expert

No coasting – you have to deliver

Ability to take long breaks / holidays Less politics / responsibility

Thibault Grand Consultant Services Team Leader

london@opc.co.uk +44 (0)20 7428 1111

Focus on Algeria

OPC’s David Carney acted as an official witness to the announcement of the latest exploration contract awards in Algeria Four blocks were awarded in total – an Enel-Dragon oil consortium picked up two blocks, Tinhert Nord and Msari Akabil. A Statoil-Shell consortium was awarded Timissit and a Repsol-Shell partnership took the Boughezoul block. David had been invited to the event organised by ALNAFT (L’Agence Nationale pour la Valorisation des Ressources en Hydrocarbures), the national agency in charge of promoting hydrocarbon resources in Algeria, and was asked to act as an official witness along with Sergey Panferov, Director of Gazprom in Algeria. David said “I was delighted to act as a witness to the announcements of the contract awards. OPC has been involved with the Algerian oil industry since 2006 and we are naturally delighted to see further development contracts awarded in the country.”

2014 Contract Awards 1 Boughezoul - Repsol / Shell This large block is located in the north of Algeria. This was won by the Repsol / Shell consortium over a bid from ENI. 2 Timissit - Statoil / Shell The 2,730 square km block is located in central Algeria, near the Libyan border & In Amenas. Statoil will be operator with 30% & Shell will hold 19%. Sonatrach will own the remaining 51%.

3 Tinrhert Nord - Dragon Oil / Enel Tinrhert is located in the Illizi Basin, in eastern Algeria, near a number of producing oil and gas fields and several undeveloped discoveries have been made in the block. Dragon will hold a 70% stake in the 2,907-square km Tinrhert licence and be operator, while Enel would own the remaining 30%. 4 Msari Akabli - Enel / Dragon Oil Enel will hold 70% of the Msari Akabli licence and be operator, while Dragon will own the 30% balance. The block covers an 8,096-square km area and is located in the Ahnet Basin, in southwestern Algeria. David adds “While we continue to provide expert upstream geological evaluation services to the companies investigating oil potentials in Algeria, we have been particularly happy to help with the training of local engineers and geoscientists. Knowledge transfer and the development of indigenous petroleum engineering expertise will be vital for the future growth of the oil sector in Algeria.”

OPC in Algeria

OPC has supplied services in Algeria since 2006.

David Carney Algeria Business Development Manager london@opc.co.uk +44 (0)20 7428 1111

Algerian Oil & Gas Industry

Algeria supplies Europe with about one fifth of its gas imports and energy exports are the backbone of the economy. According to OPEC Algeria has 17th largest reserves of oil in the world (12.2 billion barrels), and second largest in Africa, while it has the 9th largest reserves of natural gas. Sonatrach, the national oil company, is the largest company in Africa.

Geosciences

Members of our North African G&G team have been evaluating data in Algeria since the 1980s. This team includes Robin Crawford, a British Geologist (ex-Amoco, BP) and Rabia Lounis, an Algerian Geophysicist (ex-Sonatrach). The team provided support to one of the bidders in the latest round of contract evaluations.

Engineering

OPC have been seconding consultants to perform reservoir and wells production engineering services for a gas production company in Southern Algeria.

Training

OPC has delivered a series of bespoke training courses to national Algerian staff working for ALNAFT, and local/ international oil companies. The courses have covered • AVO and Seismic Inversion and Shale Gas Field Development, • Advanced Hydraulic Fracturing, • Reservoir Surveillance using Pressure Transient Analysis and PVT/SCAL.

Latest OPC contracts Technical authority (Production Chemistry and Production Technology on subsurface related projects) for Major International EPC company Contract to plan, design and execute an offshore well test in West Africa providing well-site reservoir engineering support and live 24/hr interpretation at all stages of the test. Provision of in-house technical study support and technical consultants to US-based E&P company with interests in Europe PTA contract with a major E&P company operating in West Africa Technical training services contract with major E&P company in operating in North Africa.

Vacancies

SPAIN / ABU DHABI

Reservoir Engineer / Development Geologist /Geophysicist/Petrophysicist Subsurface team to support exploration, appraisal and field development studies of three onshore fields. Evaluation of prospectivity, resources and risks of a future development at different stages of evaluation. Review and assess potential development concepts and options.

HOUSTON

Production Engineering Consultant Six month assignment for a Production Engineer experienced in offshore condensate plays. Familiarity with facilities and processing. Ability to mentor engineers while being hands on with engineering work.

INDONESIA

Operations Excellence SpecialistÂ HOUSTON / PITTSBURGH

Production EngineerÂ

Optimising or setting up processes and systems to support and improve production operations activity by engendering a culture of continuous improvement and rigour to the operation.

Undertake production engineering studies of the Marcellus Shale to optimize production, with a special emphasis on well performance, field gathering and facilities. Experience in unconventional reservoirs and horizontal wells is preferred. ALGERIA

Reservoir Engineer (3 required) Dynamic simulation using Eclipse 300, field development planning and operations experience required. Will also ideally be experienced in Prosper, GAP, MBal, Saphir.

VARIOUS

Well Test Engineers – Global Operations OPC provides fully integrated testing services to E&P clients globally. Our integrated approach flows through the planning, design, operations and interpretation phases of the test and includes 24/7 monitoring and real time analysis of the test by onsite reservoir engineers, allowing immediate decision making and optimised test duration. Applications are invited from well test engineers experienced in onsite real time analysis to work on rotation at global locations.

HOUSTON

Senior Deepwater Reservoir Engineer Implementation of field enhancement and development projects in the deepwater Gulf of Mexico (GOM). Strong reservoir engineering background in simulation, reservoir surveillance and evaluating exploitation opportunities.

HOUSTON

Petrophysicist Petrophysicist required to participate in the planning and execution of formation evaluation programs to optimize project team objectives, particularly as a member of integrated project teams. Masters/PhD in Geology, Petroleum Engineering or Physics and four years minimum experience.

HOUSTON

Reservoir Engineer Studies of US shale area to define reservoir potential with special emphasis on optimizing performance and field development. Forecasting and monitoring of production, project economics and providing support to the Finance, Planning and Reserves functions. Strong understanding of deterministic and probabilistic reserve calculations is a must.

ALGERIA

Development Geologist Supporting reservoir field teams. Must be able to build static geological models from scratch using Petrel. Well planning to optimise well locations. Providing expert geological advice in all aspects of Exploration.

Any of these vacancies suit you or somebody you know? Please email your current resume to: cv@opc.co.uk. We are always looking for talented individuals with 10 years + experience in E&P so if nothing here matches what you’re looking for, still feel free to send us in your details or call us on +44(0)20 7428 1111. 13