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SPECIAL REPORT

Innovations in Digital Gas Lift Technology for Modern Offshore Operations Delivering Digital Gas Lift to Offshore Operators Putting Technology into Context Applying Technology to Meet Demands on All Levels Not Just a Longer Life Using the Latest Technology to Enhance Performance

Sponsored by

Published by Global Business Media


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SPECIAL REPORT: INNOVATIONS IN DIGITAL GAS LIFT TECHNOLOGY FOR MODERN OFFSHORE OPERATIONS

SPECIAL REPORT

Innovations in Digital Gas Lift Technology for Modern Offshore Operations Delivering Digital Gas Lift to Offshore Operators

Contents

Putting Technology into Context Applying Technology to Meet Demands on All Levels Not Just a Longer Life

Foreword 2

Using the Latest Technology to Enhance Performance

John Hancock, Editor

Delivering Digital Gas Lift to Offshore Operators

3

Ian Anderson, Camcon Oil

Increasing Recovery Rates Sponsored by

Published by Global Business Media

Published by Global Business Media Global Business Media Limited 62 The Street Ashtead Surrey KT21 1AT United Kingdom Switchboard: +44 (0)1737 850 939 Fax: +44 (0)1737 851 952 Email: info@globalbusinessmedia.org Website: www.globalbusinessmedia.org Publisher Kevin Bell

Gas Lift Optimization – The Pros… …And The Cons The Growth of Digital Gas Lift Putting to the Test An Intervention-Free Era

Putting Technology into Context John Hancock, Editor

Lower Prices Are Not All Good News… …There Are Some Risks Nothing Lasts For Ever

Editor John Hancock

Improved Efficiency Remains the Best Bet

Business Development Director Marie-Anne Brooks

Applying Technology to Meet Demands on All Levels

Senior Project Manager Steve Banks

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Peter Dunwell, Correspondent

Advertising Executives Michael McCarthy Abigail Coombes

More People with Rising Expectations Means More Demand

Production Manager Paul Davies

Using Techniques and Technologies to Maximise Production

For further information visit: www.globalbusinessmedia.org

Not Just a Longer Life

The opinions and views expressed in the editorial content in this publication are those of the authors alone and do not necessarily represent the views of any organisation with which they may be associated.

Working Longer…

Material in advertisements and promotional features may be considered to represent the views of the advertisers and promoters. The views and opinions expressed in this publication do not necessarily express the views of the Publishers or the Editor. While every care has been taken in the preparation of this publication, neither the Publishers nor the Editor are responsible for such opinions and views or for any inaccuracies in the articles.

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Getting the Most from Oilfield Life

10

Francis Slade, Staff Writer

… And Working Smarter To Maximise Returns Enhanced Oil Recovery

Using the Latest Technology to Enhance Performance

12

John Hancock, Editor

The Economic Case for EOR How Oil is Lifted from Challenging Reserves Artificial Lift Using Gas Moves into the 21st Century

© 2015. The entire contents of this publication are protected by copyright. Full details are available from the Publishers. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical photocopying, recording or otherwise, without the prior permission of the copyright owner.

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SPECIAL REPORT: INNOVATIONS IN DIGITAL GAS LIFT TECHNOLOGY FOR MODERN OFFSHORE OPERATIONS

Foreword C

HANGING AND challenging times demand

solution is APOLLO, developed by Camcon Oil, which

creative and efficient solutions and nobody

consists of a low energy pulse control that signals to

would deny that the oil and gas sector is facing

switch an actuator between two stable positions to

changing and challenging times as prices for

operate a valve digitally. This new approach eliminates

oil have fallen to a six or more year low. For

the need for Side Pocket Mandrels (SPMs) and

offshore operators, those challenges are, as ever,

wireless intervention with settings tuned as well-bore

compounded by the environment in which they

conditions change through the life of the installation.

have to operate. As Douglas Fraser, BBC Scotland

Our second article looks at the global economic

Business and Economy Editor put it, “To avoid the

context in which the offshore sector has to operate,

oil investment boom turning into a bust by the

tries to take a longer view and re-emphasises that

dramatic fall in the price of Brent crude, firms in the

efficiency is always a good objective. Then Peter

industry are having to go for unusual measures.”

Dunwell examines the role for technology in leveraging

Perhaps ‘unusual’ isn’t quite the correct term but

the best return on what are already expensive assets.

we know what he means. This paper looks at one of

In particular, he looks at how flow rates and flow

those measures that, having always been useful, seem

volumes can be improved to get more value from

particularly apposite for the current times. Enhanced

those asserts.

oil recovery (EOR) is a long established method for

Next up, Francis Slade covers the topic in the

improving the productivity of higher viscosity, lower

context of the growing phenomenon of life extension

pressure wells at all times and for retaining productivity

to maximise the return from installations. He

and stability in wells operating beyond their planned

considers how technology will not simply maintain

productive life.

the effectiveness of older fields and installations,

This Special Report opens with an article that looks

but can also improve their performance. And finally

at the renewed focus during the last few years on

we look specifically at the use of gas lift solutions

extending the life of and increasing recovery from

and the application of digital IT technology to optimise

offshore oil and gas reservoirs through various

their effectiveness.

enhanced oil recovery techniques. It looks at the pros and cons of gas lift and examines digital gas lift, a new approach which harnesses he benefits of gas lift optimisation but negates its limitations. One such

John Hancock Editor

John Hancock joined as Editor of Offshore Reports in early 2012. A journalist for more than 25 years, John has written and edited articles and papers on a range of engineering, support services and technology topics as well as for key events in the sector. Subjects have included aero-engineering, auto-engineering and electronics, high value manufacturing, testing, aviation IT, materials engineering, weapons research, supply chain, logistics and naval engineering.

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SPECIAL REPORT: INNOVATIONS IN DIGITAL GAS LIFT TECHNOLOGY FOR MODERN OFFSHORE OPERATIONS

Delivering Digital Gas Lift to Offshore Operators

Maximising Field-wide Oil Recovery

Ian Anderson, Camcon Oil

Increasing Recovery Rates From the Norwegian North Sea where operators such as Statoil have recovery rate goals of up to 60%, through to the world’s biggest EOR project offshore Malaysia, the Gulf of Mexico’s deep water developments, and the Middle East where Saudi Aramco has recovery targets of up to 70%, increasing oil and gas recovery remains one of the offshore industry’s greatest challenges. This is particularly the case when average recovery rates today vary significantly between 20% and 40%. It’s for this reason therefore that the last few years have seen a renewed focus on extending the life of and increasing recovery from offshore oil and gas reservoirs through a variety of enhanced oil recovery techniques. Chief among these is artificial lift and technologies such as Electrical Submersible Pumps (ESPs), Hydraulic Pumping Systems and gas lift. According to the organizers of the SPE (Society of Petroleum Engineers) Applied Technology Workshop on Artificial Lift held in Dubai in 2012, 95% of the world’s oil wells today are producing with the help of some form of artificial lift. The Artificial Lift market is predicted to be worth as much as US$16 billion by 2018, according to industry analysts, Markets and Markets.

Gas Lift Optimization – The Pros… One of the principal technologies behind artificial lift is gas lift optimization. Here, gases, such as CO2, natural gas or nitrogen, are injected into the production tubing to reduce the impact of hydrostatic pressure. This results in a reduction in bottomhole pressure allowing reservoir liquids to enter the wellbore at higher flow rates. Today, the Side Pocket Mandrel (SPM) technique in gas lift that makes use of Injection Pressure Operated (IPO) lift valves is one of the industry’s most widely recognized solutions. There are several benefits of gas lift as compared to other techniques when being applied offshore … Gas lift can handle high temperatures, gassy, sandy and corrosive fluids and deviated

Minimising production cost APOLLO - 1

wellbores; and can provide full through bore access to the reservoir for investigation, treatment and repair. Gas lift is also applicable to a wide range of production rates, being more suited to such environments than ESP and Rod pumps, and the SPM and gas lift injection valves allow for a deeper gas injection in the tubing. Due to its versatility, gas lift can also be applied to a wide variety of well conditions and is particularly effective offshore in countering well instability - something which is becoming more and more prevalent in older fields. Such instability can result from a number of factors, including water and gas breakthrough in the wells, slugging, or increased well pressures. It is these characteristics as well as its flexibility with different production rates that makes gas lift more suited to fluctuating well conditions in offshore operations than ESP and Rod pumps. Dr. Rick Lemanczyk of Senergy, for example, recently estimated that gas lift enabled fields can lead to a 2 to 5% increase in fieldwide production. WWW.OFFSHORETECHNOLOGYREPORTS.COM | 3


SPECIAL REPORT: INNOVATIONS IN DIGITAL GAS LIFT TECHNOLOGY FOR MODERN OFFSHORE OPERATIONS

Due to its versatility, gas lift can also be applied to a wide variety of well conditions and is particularly effective offshore in countering well instability

APOLLO - 2

…And The Cons For all these benefits, however, there are number of limitations with many gas lift solutions that are characterized by weak equipment and operational designs, frequent intervention problems, an inability to keep up with many of today’s expensive and complex wells, and implications for time, cost, risk and production. As previously mentioned, the primary gas injection method for gas lift today and one that has been prevalent for almost 50 years, is Side Pocket Mandrel (SPM) configured completions where the valves are installed in a pocket inside the mandrel. SPM tools, however, have no instrumentation with operators unable to access information on pressure and temperature at the point of gas injection. The result is that with such limited information, monitoring gas lifted wells is confined to a basic ‘tick-box’ approach, focusing on wellhead pressure and the occasional fluid level or downhole pressure reading rather than consistent real-time data. Furthermore, the fact that the SPMs tend to host either temperature sensitive ‘injection pressure operated’ devices or a simple orifice with fixed port size makes them vulnerable to unstable operation when annulus and/or tubing pressures change. Annulus pressure fluctuations can create ‘multi-pointing’ injections and require resources to travel to the wellhead to choke the annulus gas supply to compensate. It’s when it comes to well intervention, however, that SPM-related gas lift is most limited with operators having little control and flexibility over altering depth, port size and injection rates in real-time. Much of these issues are addressed through wireline interventions with risks including tangled 4 | WWW.OFFSHORETECHNOLOGYREPORTS.COM

or broken cable in the well and wireline or slickline tools being lost. There is also the potential loss of the well (if the wire snaps and junk plugs the tubing, for example) and the halting of production as a new valve is installed in a SPM. There are cost implications offshore as well with the costs of intervention - especially in deep water developments – a significant barrier with a single intervention costing potentially hundreds of thousands of dollars and requiring specialist ROV equipment. One recent example of the problems of well intervention offshore comes from a North Sea field. In this case, 13 valves were pulled from four wells all less than three years old and all of which had been gas lifted. One well was lost completely due to wireline plug problems, only half the valves passed flow check tests and some valves ended up being bent. This was in addition to the million dollar costs of rig-based well intervention. It’s clear that there needs to be a new approach that harnesses the benefits of gas lift optimization but negates its limitations. One such approach is through the emergence of digital gas lift.

The Growth of Digital Gas Lift Like many other areas of the oil and gas lifecycle today, there is a need to introduce greater digital intelligence into gas lift operations and, with regard to gas lift, address some of the weak equipment and operational designs around SPMs. Key to this greater intelligence is the ability for operators to vary injection rates and depths in real-time without production interruption as well as negating the risks of well intervention already outlined. In this way, operators will be able to access pressure and temperature information throughout the gas injection process. It is this focus on an era of intervention-free gas lift which has driven Camcon in developing its intelligent gas lift solution – APOLLO – which, at its core, consists of a low energy pulse control which signals to switch an actuator between two stable positions to digitally operate a valve. The electrically operated valve, actuation configuration and six control actuators for injection variation enables the real-time setting of injection rates, not possible on traditional artificial gas lift technologies. The new approach eliminates the need for SPMs and wireline intervention, with settings tuned as well-bore conditions change through the life of the installation. In addition to the setting of injection rates in real-time and the lack of wireline intervention requirements, another significant advantage of the new solution is that the orifice size is not fixed so that it can be varied on demand, thereby


SPECIAL REPORT: INNOVATIONS IN DIGITAL GAS LIFT TECHNOLOGY FOR MODERN OFFSHORE OPERATIONS

Maximising Field-wide Oil Recovery

CAMCON’S DIGITAL GAS LIFT SOLUTION

CAMCON’S DIGITAL GAS LIFT SOLUTION BEING PREPARED FOR SHIPMENT TO THE MIDDLE EAST

providing greater flexibility and meaning that operators don’t have to size the conventional gas lift orifice for a limited gas injection range. There is also no production tubing obstruction at all at the point of gas injection – again simplifying the whole process and negating substantial intervention requirements. In this way, operators can manage the digital gas lift process off-site and in an environment of their choosing. Today, digital gas lift can be applied in a range of offshore scenarios, including single subsea wells, deviated wells, multi-well onshore fields, dual gas lift completions, and deep-water wells.

Putting to the Test With such a potentially ‘industry changing’ technology, it was essential for Camcon to produce some real-life data to demonstrate its potential, prior to test installations in actual wells. This was achieved through a simulation modelling analysis programme, conducted by Laing Engineering & Training Services (LETS). The example well developed was based on a modern day subsea well in moderate water depths, drilled to a total depth of 17,600 ft Measured Depth (MD) and with a 4.5” by 5.5” production tubing string. The key variables examined during the testing were the well productivity index (PI), reservoir pressure and water cut.

The analysis found that the two scenarios deriving most benefit from gas lift are at the early life stage after three months and the mid-life stage with water injection support. The final conclusions from the modelling were that digital gas lift can deliver as much as 1,000 BOPD more oil production from a typical well and, in one scenario, a 110% increase in production compared to traditional gas lift equipment.

An Intervention-Free Era So how close are we to making intervention-free gas lift a reality? There’s no doubt that more and more operators are seeing the benefits of digital gas lift and the limitations of SPM-related gas lift. One such digital gas lift solution that Camcon is currently deploying is on an onshore well in Oman where Camcon’s intelligent gas lift is being used (and controlled from the safe environment of a production control room) to improve the production performance of the well and preempt well intervention requirements. Offshore installations are expected in the near future. Against the backdrop of low oil prices and the need for enhanced oil recovery, APOLLO is becoming ever more attractive to operators. To this end, as a means of keeping up the levels of investment and product development, Camcon has appointed Darrell Johnson of RMS Partnership as Strategic Adviser to the Camcon Board and shareholders. Darrell will assist Camcon as it engages in a number of negotiations with key strategic partners and rolls out its digital gas lift solutions portfolio globally. Whether single subsea wells, deviated wells, multi-well onshore fields, dual gas lift completions or deep water wells, operators are looking for alternatives to their current gas lift operations. The era of intervention-free gas lift is close upon us!

Minimising production cost

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SPECIAL REPORT: INNOVATIONS IN DIGITAL GAS LIFT TECHNOLOGY FOR MODERN OFFSHORE OPERATIONS

Putting Technology into Context John Hancock, Editor The future of any technology is only as good as the future of those likely to use it; however, current predictions might not be all the story and technology still has a role to play

Any development and consequent investment in a technology for the offshore oil and gas sector will require investment and that will depend upon the availability of finance and on the perceived prospect of seeing a return on that investment

Lower Prices Are Not All Good News… Even when a topic is as specific as that of ‘Digital Gas Lift Technology…’ it cannot be viewed in isolation from global events. Any development and consequent investment in a technology for the offshore oil and gas sector will require investment and that will depend upon the availability of finance and on the perceived prospect of seeing a return on that investment. In that respect, something significant has changed in the world of offshore oil and gas – oil in particular but affecting the whole sector. So it might be sensible to first tackle this underlying issue on which the future of digital gas lift technology and all other technologies used in offshore oil and gas will have to be founded. As the BBC put it in January 20151; “From 2010 until mid-2014, world oil prices had been fairly stable, at around $110 a barrel. But since June [2014] prices have more than halved. Brent crude oil has now dipped below $50 a barrel for the first time since May 2009 and US crude is down to below $48 a barrel.”

…There Are Some Risks While consumers and media pundits delight in the hope of lower prices for goods and services and while some of a political persuasion smack their lips at the prospect of big energy companies not generating the wealth to which they seem to have become accustomed, the truth is a little different and the potential long term consequences, were they to be the case, not at all good; sometimes in surprising ways. The immediate risk is that energy businesses, unable to foresee levels of revenues that will support the kind of massive investments on which the whole concept of offshore hydrocarbon production has been predicated, will simply stop investing and/or start to cut smaller business coats according to the limited revenue cloth available. As I write (late January 2015), Shell has just announced

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a reduction in investment of $15 billion over the next three years. That is perhaps an obvious result of falling prices but there will be some less obvious consequences. Gail Tverberg, writing in Our Finite World in December 2014 offered ‘Ten Reasons Why a Severe Drop in Oil Prices is a Problem’2. It’s worth reading and far too lengthy to replicate here, but a telling comment in the article explains; “Many people believe that renewables can eventually take over the role of fossil fuels. (I am not of the view that this is possible.) For those with this view, low oil prices are a problem, because they discourage the hoped-for transition to renewables [author’s emphasis]. Despite all of the statements made about renewables, they don’t really substitute for oil. Biofuels come closest, but they are simply oil-extenders... [and] it still takes oil to operate the farm equipment to grow the corn, and oil to transport the corn to the ethanol plant. If oil isn’t around, the biofuel production system comes to a screeching halt.” Falling oil production might actually hinder efforts to move to renewables plus, of course, the impact on the long-term incomes of those consumers reaping the immediate benefits of lower prices could well be a reduction in income from their investments and pensions as energy businesses, long a staple of the fund manager’s portfolio, decline in value.

Nothing Lasts For Ever The underlying causes of this phenomenon are debated but it seems that we are finally seeing the playing out of an oversupply meeting reduced demand with falling prices being the result. The impact has been particularly severe on high cost areas like offshore production in such as the North Sea fields. However, we live in a cyclical world where the economy does not follow a level or unvarying course. And, already, voices are being raised to cast doubt on the likelihood of unending doom.


SPECIAL REPORT: INNOVATIONS IN DIGITAL GAS LIFT TECHNOLOGY FOR MODERN OFFSHORE OPERATIONS

Maximising Field-wide Oil Recovery

APOLLO CAN BE DEPLOYED IN A WIDE VARIETY OF CHALLENGING GEOLOGIES AND COMPLETION STRING GEOMETRIES ­ – MORE THAN FOR CONVENTIONAL GAS LIFT

In his January 2015 article ‘Why $50 Oil Won’t last’ for OilPrice.com3, Robert Rapier examines some usually cited underlying causes of the current low price… increased efficiency of users and a strengthening US Dollar making oil an expensive luxury for some. But he then continues to point out what some might regard as the obvious; “There has indeed been reduced oil consumption in recent years in most developed regions of the world… [but] We have to keep in mind that the developed regions of the world aren’t the entire world. Despite this oft-repeated mantra about falling oil demand, there is no evidence that this is actually true.” What, it seems, is happening is that a slowing pace of increase in demand is being interpreted as falling demand, not at all the same thing. As Rapier colourfully puts it, “if I gained 5 pounds a year each year for the past five years, but this year I only project that I will gain 3 pounds – I [will] not lose weight. I will be 3 pounds heavier than I was instead of 5 pounds heavier.” Even if growing efficiency brings about falling demand in developed economies, in developing and emerging economies, any efficiency growth is likely to be exceeded by long-term demands of economic growth and burgeoning populations. In the paper ‘Global Trends in Oil & Gas Markets to 2025’4 LUKOIL predicts; “…a number of trends will support oil prices in the medium term.” continuing to list some of those growth factors as… • Population growth, urbanization; • Motorization in Asia; • Growing costs of exploration and production;

• OPEC policy; • Dollar depreciation. This is by no means a one-way bet and the LUKOIL paper also lists a number of challenges faced by the oil market. But it would be a reckless futurologist who expected that energy (i.e. oil) prices will remain low for ever. A combination of inexorably rising populations with continually rising expectations and the indisputably finite nature of hydrocarbon resources point to a long term sustainable price. But there is a risk that falling investment and disinvestment in what are, at today’s price, uneconomic fields will leave the world subject to the whims of a few suppliers (not always in stable places and often with ideological as well as economic priorities) whose lower extraction costs make them able to ride out the current low price.

Minimising production cost

Improved Efficiency Remains the Best Bet But, if short-termism is a risk, so is cost complacency. Even when prices start to recover, the producers in the best positions will be those who have invested in technologies to improve the long-term efficiency of all producing fields and optimise the productivity of even the older fields currently active. And that’s where this article returns to the topic in hand – intelligent gas lift solutions. Among a raft of means to improve the efficiency and productivity of offshore oilfields and maximise the value of investment in those facilities, enhanced oil recovery using gas uplift will, as the following articles explain, ensure greater efficiency to better withstand future price movements.

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SPECIAL REPORT: INNOVATIONS IN DIGITAL GAS LIFT TECHNOLOGY FOR MODERN OFFSHORE OPERATIONS

Applying Technology to Meet Demands on All Levels Peter Dunwell, Correspondent Getting the best results requires the best and most effective solutions

We cannot talk about offshore subsea energy production without talking about enormous investments and costs, reflecting the demanding environment in which the sector operates and the technically challenging processes by which it wins production

More People with Rising Expectations Means More Demand Following on from John Hancock’s article, we’ll look a little further into the underlying factors that will drive any future context for offshore oil and gas (and the technologies that it uses). Beyond that, we’ll consider some of the economic factors around offshore installations and some of the ways in which producers are addressing the need to optimise the value of investments; including methods such as enhanced oil recovery and gas lift solutions. Perhaps the best place to start is where the previous article reached in suggesting that population growth lay at the foundation of any future prospects for demand growth and therefore long-term price stability at higher than current levels. Demographic predictions suggest that the world’s population will grow by more than 1.1 billion people between 2010 and 2025 of which 1 billion will be added to the urban consumer class as growing populations also migrate from rural, low energy consumption areas to cities where their expectations of ‘things to own’ and consumption of energy will rise exponentially. The other big factor to consider is what is termed by LUKOIL (see previous article) as “The motorization of the population in developing countries.” The enormous disparity in levels of car ownership between developing countries and the developed world combined with the high proportion of global population in developing countries and their higher birth rate means that there is significant potential for growth in ownership and in the accompanying fuel consumption. These are all factors that any oil producers will need to take into account when planning future investment in new production and the technologies that accompany all production. But, notwithstanding any of the above, the fact remains that we cannot talk about offshore subsea energy production without talking about enormous investments and costs, reflecting the demanding environment in which the

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sector operates and the technically challenging processes by which it wins production. And along with that, we cannot avoid the need to reduce costs – true of any business but especially the case for producers operating in the high cost environment of offshore oil.

Getting the Most from Oilfield Life In January 2015, Jake Huneycutt writing in the Seeking Alpha article ‘How Low can Oil Fall?’5 concluded; “… there’s little evidence to suggest that break-even costs for the vast majority of producers are anywhere near the $90 - $100 per barrel prices that have been common over the past several years. Meanwhile, continued advances in technology could further reduce extraction costs (author’s italics)… From a quick glance at break-even prices, it would appear that $50 per barrel might not be sustainable in the long-run and it’s at least reasonably likely we could see a push back up to $60 - $70 in the next 2-3 years.” It seems that prices will rise but there will still be an imperative for producers to be as efficient as possible. The introduction notes to 2014 PILOT Share Fair, Oil & Gas UK6 stated that, “The UK oil and gas industry’s urgent need to improve its efficiency and reduce costs will provide a key focus…” In this context, we’ll need to consider the life stages of an offshore oil and gas field. Cairn Energy7 explains this as an eight stage process over a period of more than 30 years plus the final stage of decommissioning:1. Due diligence; 2. Prequalification; 3. Exploration seismic; 4. Site survey; 5. Exploration drilling; 6. Appraisal drilling; 7. Development; 8. Production; 9. Decommissioning.


SPECIAL REPORT: INNOVATIONS IN DIGITAL GAS LIFT TECHNOLOGY FOR MODERN OFFSHORE OPERATIONS

Maximising Field-wide Oil Recovery

DIGITAL GAS LIFT CAN DELIVER IMPROVED PRODUCTION RATES WITHOUT INTERVENTION

Using Techniques and Technologies to Maximise Production In all of this, it is the eighth stage, production, where producers have the potential to maximise return and improve cost effectiveness using technologies that can optimise all production, improve low rate production and improve later well stability. Those latter cases are most likely to occur in an older field where the underlying pressure in the reservoir has fallen as the product has been extracted. That, in turn, is increasingly the case as field and asset life is extended to extract the maximum return from investments and assets that probably cannot be re-used and whose value therefore needs to be leveraged to the greatest possible extent. Also, given the costs associated even with extending field and asset life and the probable need to reduce break-even points for any operation, it will prove economic to employ whatever technology might increase the flow and speed of production while, at the same time, supporting better well stability. Enhanced oil recovery (EOR) technologies such as gas lift solutions will be significant contributors to this and if any of them can be further improved by the

application of digital, intelligent methodologies, so much the better. Again, the introduction to the 2014 PILOT event (see above) states that, “The industry faces the challenge of improving exploration success, increasing recovery and safely extending the operating lives of oil and gas fields while also working to overcome the impact of declining oil prices.” and extols the value for, “[operators] with upcoming UKCS projects to increase their awareness of the expertise, innovative products and specialised services offered by suppliers” It seems that in any economic climate and especially the current situation of low oil prices for, at least, the foreseeable future, there is a choice for offshore oil and gas operators. They can either abandon assets and investments on which they have lavished massive amounts of expenditure (capital and current) or find ways to further improve the costs of extraction (and/ or the efficiency of extraction) in order to find a break-even point at which the operation will be sustainable at lower prices (even if they rise from the present level). In this, the link to the technologies that are the subject of this paper is clear.

Minimising production cost

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SPECIAL REPORT: INNOVATIONS IN DIGITAL GAS LIFT TECHNOLOGY FOR MODERN OFFSHORE OPERATIONS

Not Just a Longer Life Francis Slade, Staff Writer There’s no point in a field working longer unless it can be made to work economically; extending value as well as life

Life extension is not, in itself, a cost-free or even a low cost option and so anything that will contribute to enhanced production from the field or through the installation will almost certainly be cost effective

Working Longer… One way in which producers can maximise the value of an expensive asset (field or installation) is to extend its producing life. The assets cost a great deal and even when prices are high, anything to optimise their productive output will be welcome so, when prices are low, the imperative to get the most value from current assets will be immense. But life extension is not, in itself, a costfree or even a low cost option and so anything that will contribute to enhanced production from the field or through the installation will almost certainly be cost effective. The Journal of Petroleum Technology, February 2012 edition8 explained, “To keep capital and operational expenditures at a minimum, there is an increasing requirement from operators to use existing infrastructure... Therefore, platforms become ‘hubs’ and often their operational life is extended.” Stephen Pullinger’s article in EDP24, ‘Ageing North Sea oil and gas platforms in the spotlight’9 clarified the position; “About 70pc of installations and equipment in the Southern North Sea are older than their expected 25-year lifespan. The oldest has been standing for 48 years – 23 years longer than it was built to do – as demands have grown to extend their use.” Taking that to its next level, in his review for the UK Department of Energy and Climate Change of future economic recovery from the UK Continental Shelf10, Sir Ian Wood said; “I will consult with Government and Industry on the key lines of inquiry that will make a real difference to improving our economic recovery including optimising use of and extending life of infrastructure, production efficiency and maximising the use of key technologies.”

actively producing today, made possible through advances in oil and gas recovery methods.” It’s usually demand and economics that drive life extension programmes and, when oil prices were higher, the cost of the technical issues mattered less. But today, in an era of lower prices, producers must ensure that, whatever the cost of technology, it can be justified by the improved productivity that technology can facilitate. And technology is undoubtedly the key factor. BP12 states that; “Technology underpins everything we do, from operating safely to discovering and recovering more resources. BP is applying new and existing technologies across all its North Sea operating assets and continuing to progress the implementation of some pioneering techniques. Thanks to this, the company can now safely access reservoirs that were out of reach 30 years ago and recover more from existing fields. It means safer, more reliable and more efficient operations, now and in the future.” It’s all about enhancing production and reducing costs, which means that, among other things, installations that have had their working life extended will also need to be equipped with the means to ensure maximum production from the often also aging fields that they serve. This can include all sorts of technologies such as subsea processing but they’ll all work better and better pay for themselves if the product flows smoothly and swiftly from the reservoir to the surface. DNV (see above) as part of its Remaining Life Assessment (RLA) methodology looks not only at the state of the asset and the process of life extension but also at, “the status of the installation and its associated facilities, and the investment needed to ensure that the extension period is economically efficient.”

… And Working Smarter To Maximise Returns

Enhanced Oil Recovery

This is a recurrent theme when we talk about life extended assets; the need to maximise production capabilities. DNV ‘Helping offshore assets age gracefully’11 sums it up as, “Many offshore fields developed during the offshore boom years in the 1970s and 1980s are still

One method by which aging facilities can be reinvigorated is a type of enhanced oil recovery known as Gas Injection. As a field ages and the product it contains is depleted, the pressure available to ‘push’ the product from the reservoir will be less. That means that otherwise good oil

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SPECIAL REPORT: INNOVATIONS IN DIGITAL GAS LIFT TECHNOLOGY FOR MODERN OFFSHORE OPERATIONS

Maximising Field-wide Oil Recovery

is less likely to be extracted unless pressure can be added. The next article will deal with this in detail but the injection of gas into a reserve will not only increase pressure to reinvigorate the flow but will also loosen the product itself to further enhance the speed at which it can be transferred to the surface. Not only can a field be productive for longer but a faster product flow brings more value in less time, to improve the return on any time related process in the system. Rigzone13 offers an additional and environmental benefit for gas injection. “Additionally, gas injection can serve as an economical way to dispose of uneconomical gas production on an oil reservoir… the low levels of natural gas that are produced from prolific oil fields are re-injected into the formation as form of disposal, as well as pressure maintenance.” Caty Hein, blogging for Halliburton Consulting14 draws it all together; “Optimizing production

and decreasing costs for an artificial lift system are interdependent and can be achieved by properly planning a strategic design based on the consideration of both individual well characteristics and a lift system’s practical operational capabilities… By planning in a timely fashion and going about choosing the artificial lift system from a strategic standpoint versus a “that’s what we’ve always done” approach will potentially help increase production and decrease costs.” Offshore oil producers face challenging times in their quest to economically produce oil from reserves under the sea and to turn in a profit. But challenges have never been in short supply for this sector and producers have always risen to those challenges. The current price based challenge will be greater than most but with the application of intelligent technology, can be tackled, as the next article will show.

Minimising production cost

WWW.OFFSHORETECHNOLOGYREPORTS.COM | 11


SPECIAL REPORT: INNOVATIONS IN DIGITAL GAS LIFT TECHNOLOGY FOR MODERN OFFSHORE OPERATIONS

Using the Latest Technology to Enhance Performance John Hancock, Editor As EOR enhances the recovery rate of oil so the application of digital technology improves the way that gas lift EOR works

The consensus seems to be that average recovery rates from oil and gas reserves world-wide are at around 35% which means that some 65% of known reserves remain unrecovered

P

REVIOUS ARTICLES have referred to situations where moving the product from reservoir to the surface is inhibited. With age, the productivity of offshore oil and gas fields declines. Canadian Oilwell Systems Company ‘Basic Artificial Lift’15 explains the phenomenon: “Reservoirs are typically at elevated pressure because of underground forces. The driving force in a reservoir is one of two main types: water drive or gas drive. A water drive reservoir is connected to an active water aquifer that provides the drive mechanism. A gas drive reservoir derives its energy from gas expansion, either from a gas cap or from gas breaking out of solution. Early in its production life, the underground pressure will often push the hydrocarbons all the way up the wellbore to the surface. Depending on reservoir conditions, this ‘natural flow’ may continue for many years. When the pressure differential is insufficient for the oil to flow naturally, some method of lifting the liquids… must be used to bring the oil to the surface.” And, it isn’t only old reserves that can exhibit pressure and viscosity challenges to extraction.

The Economic Case for EOR Calculations vary but the consensus seems to be that average recovery rates from oil and gas reserves world-wide are at around 35% which means that some 65% of known reserves remain unrecovered. One reason for historically low rates of recovery might reflect the technology available to lift product from below the surface in ever more challenging conditions; or rather the limitations of any such technology. Sub-sea and deep sea fields add significant top-side difficulties to the subterranean challenges that oil and gas producers have always faced. But, again, things are changing as technology and engineering make possible the exploitation of ever more difficult reserves. Technology also offers answers to the problems associated with aging fields, i.e. a decline in productivity to uneconomic levels as 12 | WWW.OFFSHORETECHNOLOGYREPORTS.COM

pressure falls. The industry has long employed artificial means to speed that process, help heavier products to the surface or compensate for any loss of natural pressure, usually a result of aging.

How Oil is Lifted from Challenging Reserves The group of technologies and solutions used to achieve production in the circumstances cited above are usually referred to using the catch-all terms, improved oil recovery (IOR) in challenging reserves and enhanced oil recovery (EOR) in aging reserves and they include a range of artificial lift solutions. These are not technologies of minor importance. Total16 ‘Enhancing Deepwater Recovery’ has calculated that an increase on current recovery levels of just 5% would represent “some 300 billion additional barrels of additional reserves – equivalent to estimated reserves yet to be discovered.” In another paper17, Total adds, “Keeping the fluids flowing is one of the most critical challenges of the deepwater context, where low temperatures, high pressures, and poorly consolidated reservoirs can all lead to blockages in production lines.” The Rigzone article, ‘What is EOR and How Does it Work?’18 explains; “Used in fields that exhibit heavy oil, poor permeability and irregular fault lines, EOR entails changing the actual properties of the hydrocarbons, which further distinguishes this phase of recovery from the secondary recovery method. While water flooding and gas injection during the secondary recovery method are used to push the oil through the well, EOR applies steam or gas to change the makeup of the reservoir. Whether it is used after both primary and secondary recovery have been exhausted or at the initial stage of production, EOR restores formation pressure and enhances oil displacement in the reservoir. There are three main types of EOR, including chemical flooding, gas injection and thermal recovery.”


SPECIAL REPORT: INNOVATIONS IN DIGITAL GAS LIFT TECHNOLOGY FOR MODERN OFFSHORE OPERATIONS

Maximising Field-wide Oil Recovery

Artificial Lift Using Gas Moves into the 21st Century In this paper we are particularly concerned with artificial lift using gas (usually CO2) injection. The solution involves injecting gas into a well when natural pressure in the reservoir is insufficient to push the product up from the reserve. The gas reduces the viscosity of oil in the reservoir which allows it to flow more easily and therefore at a better rate. The result is to improve well performance to extract more product in less time using less force. This method has been employed in the oil industry since the early 1950s and a great deal of investment has been employed in developing it, and development is continuous. Traditional gas lift EOR has been a mechanical process in which side pocket mandrels have been used to control injection rates. As part of this, to effect an injection rate variation, a wireline has to be used to change a valve. By modern standards, this is a cumbersome process, adding mechanical complexity, requiring time to be carried out and not offering any finesse of control; it is therefore less able to react to changing conditions in quick time. Making use of the latest digital technologies, newer control

systems allow injection rates to be monitored and controlled in real time thus improving the responsiveness of the system and reducing the chances of failure. Offshore magazine highlighted the latest developments19, “The industry’s ability to remotely monitor downhole conditions in real time and to control the flow of fluids between the reservoir and the wellbore without physical intervention has been achieved through intelligent completion technology and continues to prove its value in unconventional applications.” In another article, ‘Artificial lift optimization increases production and recovery rates’ 20, Offshore magazine summarises; “An increasing number of end users will be deploying artificial lift optimization solutions that leverage the connectivity, real-time monitoring, Big Data information management, and advanced analytics capabilities of the Industrial Internet of Things (IIoT), which lends itself to the geographically distributed and infrastructure-constrained nature of upstream production assets onshore, offshore, and subsea.” That it seems is how the future of artificial gas lift will look.

Minimising production cost

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References: BBC http://www.bbc.co.uk/news/business-29643612

1

2

Our Finite World, ‘Ten Reasons Why a Severe Drop in Oil Prices is a Problem’

http://ourfiniteworld.com/2014/12/07/ten-reasons-why-a-severe-drop-in-oil-prices-is-a-problem/ 3

OilPrice.com http://oilprice.com/Energy/Oil-Prices/Why-50-Oil-Wont-Last.html

4

LUKOIL ‘Global Trends in Oil & Gas Markets to 2025’ http://www.lukoil.com/materials/doc/documents/Global_trends_to_2025.pdf

5

Seeking Alpha, ’How Low Can Oil Fall?’ (free register to read the whole article) http://seekingalpha.com/article/2835936-how-low-can-oil-fall

6

Oil & Gas UK http://www.oilandgasuk.co.uk/news/news.cfm/newsid/1088

7

Cairn Energy http://www.cairnenergy.com/index.asp?pageid=554

8

The Journal of Petroleum Technology

http://www.mydigitalpublication.com/article/Offshore+Oil+and+Gas+Installation%E2%80%94Aging+and+Life+Extension/951953/0/article.html 9

EDP 24 http://www.edp24.co.uk/business/ageing_north_sea_oil_and_gas_platforms_in_the_spotlight_1_3877450

10

UK Dept. of Energy https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/320221/edu_booklet_aug_13.pdf

11

DNV http://www.dnv.com/industry/oil_gas/publications/updates/oil_and_gas_update/2013/02_2013/helping_offshore_assets_age_gracefully.asp

12

BP http://www.bp.com/en/global/corporate/about-bp/bp-worldwide/bp-united-kingdom/bp-in-the-north-sea.html?gclid=CIKb2uebssMCFQsXwwod8hQApQ

13

Rigzone, ‘How Does Gas Injection Work?’ http://www.rigzone.com/training/insight.asp?insight_id=345&c_id=4

14

Halliburton Solutions Blog,Cathy Hein, ’Artificial Lift Systems and The 5 Ps’ http://halliburtonblog.com/artificial-lift-and-the-5-ps/

15

Canadian Oilwell Systems Company ‘Basic Artificial Lift’

http://www.coscoesp.com/esp/basic%20artificial%20lift%20tech%20paper/Basic%20Artificial%20Lift.pdf 16

Total http://www.total.com/en/energies-expertise/oil-gas/exploration-production/strategic-sectors/deep-offshore/innovation/enhancing-deepwater-recovery

17

Total, ‘Deep Offshore’ http://www.total.com/sites/default/files/atoms/files/deep-offshore.pdf

18

Rigzone ‘What is EOR and How Does it Work?’ http://www.rigzone.com/training/insight.asp?insight_id=313&c_id=4

19

Offshore magazine

20

http://www.offshore-mag.com/articles/print/volume-67/issue-1/drilling-completion/intelligent-well-technology-can-control-oil-reservoir-inflow-auto-gaslift-system.html

Offshore Magazine, ‘Artificial lift optimization increases production and recovery rates http://www.offshore-mag.com/articles/print/volume-75/issue-1/departments/offshore-automation-solutions/artificial-lift-optimization-increases-production-and-recovery-rates.html

14 | WWW.OFFSHORETECHNOLOGYREPORTS.COM


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