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SPECIAL REPORT

Improving Downhole Equipment Output and Well Productivity for Oil and Gas Operations The Importance of Centralizers to Well Productivity Balancing the Books Advanced Downhole Technologies Help to Maximize Oil Production How a Small Component Can Deliver Big Savings Advances in Downhole Technologies

Sponsored by

Published by Global Business Media


SOMETIMES PEACE OF MIND IS PRICELESS With daily rig costs in deep-water applications often running at $700 per minute you need to use the best tool in your basket. With units designed to meet your requirements and pass through the previous tight tolerance casings, Centek’s UROS-CT centralizer is the best way to contribute to greater well productivity by ensuring an enhanced cementation job in deep-water wells. The UROS-CT: • Provides maximum stand-off in enlarged open hole applications • Unique patented design reduces drag to ease run in hole, yet has sufficient restoring force to support heavier casings • Dramatically reduces initial insertion, running and re-start forces.

Call us today and let us prove to you how we can support your deep-water operations contact +44 (0)1626 337636 or email sales@centekgroup.com

EXCELLENCE TO THE CORE


SPECIAL REPORT: IMPROVING DOWN-HOLE EQUIPMENT OUTPUT AND WELL PRODUCTIVITY FOR OIL AND GAS OPERATIONS

SPECIAL REPORT

Improving Downhole Equipment Output and Well Productivity for Oil and Gas Operations The Importance of Centralizers to Well Productivity

Contents

Balancing the Books Advanced Downhole Technologies Help to Maximize Oil Production How a Small Component Can Deliver Big Savings Advances in Downhole Technologies

Foreword 2 Tom Cropper, Editor

The Importance of Centralizers to Well Productivity

3

Cliff Berry, Vice President, Global Business Development at Centek Group

Preventable Losses 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 Editor Tom Cropper

Make the Right Choice Overcoming Problems Innovations in Design Centek’s UROS-CT Centralizer Reliability is the Key

Balancing the Books Tom Cropper, Editor

A Volatile Market A Drop in Spending

Advanced Downhole Technologies Help to Maximize Oil Production

Business Development Director Marie-Anne Brooks

Jo Roth, Staff Writer

Senior Project Manager Steve Banks

The Prize

Advertising Executives Michael McCarthy Abigail Coombes Production Manager Paul Davies For further information visit: www.globalbusinessmedia.org

7

9

Decreasing Downtime

How a Small Component Can Deliver Big Savings

11

James Butler, Staff Writer

A Time for Change The Next Generation of Technologies Implementation

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. 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.

Š 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.

Conclusion

Advances in Downhole Technologies

13

Tom Cropper, Editor

Introduction Boom Time for Downhole Innovations New Technologies What the Future Holds Assessing New Technologies

References 15

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SPECIAL REPORT: IMPROVING DOWNHOLE EQUIPMENT OUTPUT AND WELL PRODUCTIVITY FOR OIL AND GAS OPERATIONS

Foreword R

IGHT NOW, as you’re reading this, it’s a fair

Development at Centek Group, explains more

bet that some poor soul is out there pulling up

about the role centralizers play and some of the

a load of pipes and leaving lots of unpleasant debris in the hole, for a simple and avoidable reason – the wrong centralizer was used!

developments his company has been pursuing. Elsewhere we look at the financial imperative underpinning evolution in this field as well as

Centralizers are some of the smallest and most

some of the ways in which centralizer technology

inexpensive components you’ll find on board any rig,

is also evolving. In a world in which profit margins

but the cost when things go wrong can be incredible.

are incredibly tight, any incremental gains will be

Some estimates put the world- wide cost of centralizer

extremely valuable. Given their small size and cost,

failure at $0.5bn – proof that even the smallest defect

centralizers represent an important way in which oil

can have catastrophic effects.

drilling companies can make some important savings.

The job of a centralizer is pretty straightforward –

We’ll also look at development more generally within

to centralize the pipe in the wellbore and allow

downhole environments. As wells become deeper,

easy flow of concrete sealant around it. However,

more complex and more hazardous the strains on

if things go wrong it can lead to channeling or

components are growing. We’ll examine some of the

jamming of the pipe hole. All this leads to costly

key innovations which are spearheading development.

downtime and repair expenses. The first article in this report looks at the core of the problem. Cliff Berry, Vice President of Global

Tom Cropper Editor

Tom Cropper has produced articles and reports on various aspects of global business over the past 15 years. He has also worked as a copywriter for some of the largest corporations in the world, including ING, KPMG and the World Wildlife Fund.

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SPECIAL REPORT: IMPROVING DOWNHOLE EQUIPMENT OUTPUT AND WELL PRODUCTIVITY FOR OIL AND GAS OPERATIONS

The Importance of Centralizers to Well Productivity

SIMPLY SMARTER

Cliff Berry, Vice President, Global Business Development at Centek Group

Set apart from the rest with superior design and construction methods to ease the string to bottom, Centek’s UROS-CT centralizers contribute to greater well productivity by ensuring an enhanced cementation job in deep-water wells.

MANUFACTURING AND QUALITY CONTROL IS CARRIED OUT IN HOUSE WITH TESTING THROUGH THE SUPPLY CHAIN AND FULL PRODUCT TRACEABILITY

Correct centralization of tubular casings is crucial to the success of a well, as incorrect centralization can result in channelling and poor cementation, amongst other problems. Centralizer failures can lead to rig downtime, pulled casing, stuck pipe, fluid migration, sidetracks and even loss of wells. The great majority of centralizer failures are due to choosing an incorrect unit for the job. Everyday someone, somewhere, is pulling casing and leaving debris in the hole for the simple reason that the wrong type of centralizer for a specific job application was used.

Preventable Losses Lost time due to centralization problems is reaching sums in excess of $0.5 billion per year worldwide. Spiralling rig costs of all types, including $1 million per day drill-ships, mean downtime has become prohibitively expensive. Centralizers in real terms are cheap, but when they fail due to damage, breakages or simply getting stuck down the hole due to fitting insufficient centralizers at the correct intervals, then they assume a consequential cost out of all proportion to their price. Centralizer failure costs

a fortune! Most centralizer failures are due to choosing an incorrect unit for the job. The job of a centralizer is to centre the casing in the wellbore so as to allow cement to circulate freely around the tubular and produce a robust cement seal, ensuring zonal isolation. If the centralizer isn’t strong enough to centre the pipe, or if it breaks, the consequences can be very expensive. If it breaks in a deviated well, centralization is usually completely lost rendering effective cementation impossible, added to which the centralizer may jam the pipe down hole. Stuck drill strings are one of the major contributors to drilling downtime, and a common cause of sticking down hole is a failed centralizer. A conservative estimate is that annually, 400 wells worldwide are affected by centralizer problems, at an average cost per well of around $1.5M producing a staggering total annual loss of $0.6B. This is a loss which is largely preventable.

Make the Right Choice Before choosing a centralizer consideration needs to be given to the well geometry, stand-off required, zonal isolation, formation pressure and

EXCELLENCE TO THE CORE Centekgroup.com +44 (0)1626 337636 Call us today and let us prove to you how we can support your deep-water operations.

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SPECIAL REPORT: IMPROVING DOWNHOLE EQUIPMENT OUTPUT AND WELL PRODUCTIVITY FOR OIL AND GAS OPERATIONS

Centralizers in real terms are cheap, but when they fail due to damage, breakages or simply getting stuck down the hole due to fitting insufficient centralizers at the correct intervals, then they assume a

CENTEK HAS THE LARGEST CENTRALIZER MANUFACTURING CAPACITY IN THE WORLD WITH STATE OF THE ART FACILITIES IN BOTH THE UK AND US.

consequential cost out of all proportion to their price

well friction factors as all this will directly affect performance. It must be clear what the customer actually wants and to fully understand this. Centralizer failure or poor spacing can lead to a multitude of downhole problems, all at great expense and rig downtime. In getting to total depth (TD), the centralizers must counteract the often very powerful radial forces exerted by the tubular due to well geometry, and centralize within the borehole to allow optimum passage of annular fluids and correct cement displacement. Achieving proper centralization is especially difficult in under-reamed wells. Under-reaming is a widely used drilling technique for enlarging the diameter of a borehole. Under-reamed sections are becoming more popular as results show improvements, yet for a centralizer, these sections pose the greatest difficulty in getting to TD. A further benefit of under-reaming is it improves the flow and pressure of the annular fluids, but in some cases, by increasing the fluid flow you may run the risk of eroding the surrounding formation. You are also often limited as to how central you can get the pipe, which naturally depends on the choice of centralizer - small units in large holes tend not to be the optimum solution. Also, the well geometry is an important fact to consider. If you can increase the diameter of the annulus you improve the potential for good well cleanout, but if units are lying on the low side then fluid will take the easiest route and the low side of the casing will show little benefit from the clean-out.

Overcoming Problems A basic problem with under-reamed wells is getting effective casing centralization in the 4 | WWW.OFFSHORETECHNOLOGYREPORTS.COM

under-reamed section. Ordinary bow spring centralizers can be damaged when passing through previously set casing. Some suppliers make them oversize so as to improve standoff down hole, but this makes the centralizers tight in the casing and requires a large insertion force which causes drag problems. In addition, conventional bow spring centralizers of a suitable outside diameter to fit the under-reamed section accurately and with sufficient standoff, often get so compressed that they lose their elasticity when passing though the narrower casings. Another approach is the solid or rigid centralizer, which, while axially strong, has a fixed diameter and cannot expand to fit the underreamed hole, so that in horizontal wells it will lie along the bottom of the borehole increasing the risk of bad centralization and a poor cement bond. Centek centralizers are manufactured from a single piece of steel which is fully heat-treated to give a hardened surface that results in greatly reduced torque and drag losses, so abrasive wear caused by running to depth and rotating the tubular is virtually eliminated. These centralizers offer exceptionally high fatigue strength for axial forces and radial side loads on bows during tubular rotation. Despite being fully compressed during passage through the casings, the centralizer offers exceptional restoring force with a very high stand-off ratio once in the open hole. As a low profile unit it takes up less annular space, so its ECD (Equivalent Circulating Density) signature is low allowing the operator if required to pump at a slightly higher rate. This improves well


SPECIAL REPORT: IMPROVING DOWNHOLE EQUIPMENT OUTPUT AND WELL PRODUCTIVITY FOR OIL AND GAS OPERATIONS

cleaning, and the low torque aids part rotation and minimises stall-out all of which contribute to improved cementation.

Innovations in Design Centek’s Under Reamed range includes the Centek TUR and UROS centralizers that will compress and then expand to fit the largest hole, within reason, that the customer requires. Underreamed centralizers are not manufactured to API standards as there is currently no API standard for under-reamed applications. However, testing of the units is natural to API procedures Centek has introduced a radical innovation in centralizer design which provides quantifiable reductions in drag and torque. The UROS, or Under-Reamed Off-Set centralizer, answers the need to reduce drag forces on run-in-hole through previously set casing before continuing into an under-reamed well section. The UROS significantly reduces initial insertion forces, a characteristic of bow type centralizers, and additionally delivers a substantial reduction in running forces when passing through previously set casings. Once through the compressed stage, the UROS reverts to normal centralizer operation in the open hole with the bows regaining their nominal outer diameter to maximise standoff. The UROS achieves this reduction in drag by its unique, patented bow design. This produces a significant reduction in drag force without reducing the strength of the unit or its capacity to centralize the casing once in the open hole.

Insertion, Running and Accumulative Restart Forces It is important to understand insertion, running and accumulative restart forces because all three apply as bow springs are compressed when passing through the previously set casing. Insertion force occurs once, each time a unit is run into the well and it should be measured. Running force, or drag, is also measurable and the accumulative restart force, again measurable, relates to the forces that must be overcome as a new joint of pipe is added to the string. Centek, as market leaders, are familiar with these issues and using its advanced simulation and modelling software it produces dynamic calculations which are used to design customised centralizers based on the characteristics of each well.

Centek’s UROS-CT Centralizer Centek’s close tolerance UROS-CT centralizer has been designed and manufactured to meet the punishing demands of drilling today’s deepwater wells.

simply stronger

THE CENTEK CLOSE-TOLERANCE UROS-CT CENTRALIZER

When drilling through water depths of 5,000 feet and beyond, there may be as many as nine casing strings running through each other so the tolerances between casings, and between the centralizer and casings, are extremely tight. The UROS-CT is specifically designed for use in tight tolerance casings, where the centralizer must compress completely to travel through a series of tight casing strings but still be capable of fully expanding to the designed open-hole size. The UROS-CT is engineered to very precise ring-gauge tolerances because every millimeter saved permits greater expansion once in the open hole.

With a joint strength unparalleled in the industry and a high restoring force the Centek S2 Hinged centralizer now means there is no longer any need to compromise on performance when using oversized casing connectors.

Reliability is the Key A major problem in some wells is reactive shale formation which can cause serious run-in-hole difficulties, such as getting stuck, damaged centralizers, fishing trips, poor cement jobs and not getting to TD. Reactive shale can respond badly to mechanical interference, typically by swelling which reduces the diameter of the wellbore and can damage less robust centralizers. The effects of swelling can also be made worse by friction in horizontal wells. Major operators have adopted Centek centralizers because of their robustness when compressed on passing through shale sections or other restrictions. Traditionally a mixture of latch or pinned centralizers and solid body units has been used, but the engineering and operational difficulties these caused have led many operators to use Centek units. Most oilfield service providers want peace of mind and the virtual guarantee that the drill string will get to bottom, and should it be pulled due to well conditions then all centralizers will be safely returned to the surface with no units being lost down hole.

excellence to the core Centekgroup.com +44 (0)1626 337636 Call us today to see how we can support your deep-water operations.

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SPECIAL REPORT: IMPROVING DOWNHOLE EQUIPMENT OUTPUT AND WELL PRODUCTIVITY FOR OIL AND GAS OPERATIONS

Centek centralizers are manufactured from a single piece of steel which is fully heat-treated to give a hardened surface that results in greatly reduced torque and drag losses CENTEK CENTRALIZERS ARE MADE OF A SINGLE PIECE OF HARDENED STEEL, WITH NO WEAK POINTS

Centek carries out all manufacturing and quality control in-house. The company employs 256 people in Newton Abbot, Devon, and at the US manufacturing subsidiary in Oklahoma, USA. Centek now has the largest centralizer manufacturing capacity in the world following the expansion of its Newton Abbot factory in 2014. Centek centralizers can be used with all types of well geometry but are designed primarily for long horizontal well sections with high build sections. It is here that the Centek benefits become apparent with no drag, digging in, or difficulties from being either under or oversized to the borehole, so meeting the operational criteria for running casing successfully.

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Contact Centek Limited Station View Forde Road Brunel Industrial Estate Newton Abbot Devon, TQ12 4AE United Kingdom Tel: +44 (0) 1626 337636 Fax: +44 (01) 1626 353278 Web: www.centekgroup.com


SPECIAL REPORT: IMPROVING DOWNHOLE EQUIPMENT OUTPUT AND WELL PRODUCTIVITY FOR OIL AND GAS OPERATIONS

Balancing the Books Tom Cropper, Editor How operators face a difficult balancing act when planning their investment levels

In a market of high price volatility, the offshore industry might be tempted to play it safe and opt for the cheapest components available. However, saving money in the short term can lead to significant expenses in the long term. Downhole conditions are becoming increasingly complex and challenging, and existing equipment is often not up to the task. A reluctance to invest in improvements or move away from existing practices leads to equipment failure, expensive downtime and increased operational risk. The clear lesson is that saving money now, means paying much more later on.

A Volatile Market 2014 brought about a shock to the oil industry that few people could have foreseen. Within six months the crude oil price plummeted from just over $100 per barrel to under $50. The reason was OPEC’S decision not to revert to their usual tactic of scaling back production in order to support the price. This, coupled with booming supply from US shale, resulted in a surge of supply. At the same time, a stalling global economic recovery saw demand forecasts fall progressively throughout the year. The question now is whether we have reached a new normal or whether prices are likely to bounce back. At the time of writing (March 2015) the Brent Crude oil price had reached $56.39 a barrel1. That represents a significant bounce from the situation in early 2015 when prices pushed down towards $40 a barrel. Assessing whether this signals a recovery is difficult. Just as the experts failed to predict the price collapse in 2014, they are also struggling to deliver a coherent prediction. Goldman Sachs revised their predictions from suggesting a period of drawn out pain with prices close to $40, to something more positive. By early March they were saying that the risks were on the up side. Meanwhile a Morgan Stanley Report on 8th March stated that the market was surprisingly healthy2. Even so, Goldman and most analysts still believe this bounce. An article in the Economist described the bounce as a ‘dead cat rally’. The

recovery, the article argues, was down to a number of temporary factors including unrest in Libya and sandstorms, which had affected supply in Iraq, an unusually cold winter in the USA and a drought in Brazil. Meanwhile all the suppressing factors remained. OPEC shows no sign of reversing its stance, while production in the USA remains high3. The unavoidable conclusion is that money will continue to be tight.

A Drop in Spending The industry’s response has, in the main, been to reduce spending. Cowen & Co’s annual report predicted a 17% reduction in E&P spending in 20154 as the major oil companies scale back investment. In January 2015 Shell announced plans to slash spending by $15bn5 a year over a period of three years. BP and other producers quickly followed suit as the entire offshore industry embarked on a collective tightening of belts. So what does this mean in spending for technological development in areas such as downhole equipment? Before the crash, estimates were bullish. Research by Lloyds Register Research suggested that R&D spending would increase by 10% in 20156. This research, however, was predicated on oil prices in excess of $100 a barrel and an expectation that they would continue to be high. In this new era of austerity, there is considerable uncertainty about whether R&D spending can continue. Analysts argue that an oil price of approximately $60 is imperative if offshore oil exploration is to remain viable. In marginal fields such as the North Sea the amount of oil that can be extracted depends on the commercial viability of the entire process. Faced with scale backs in investment from the major oil companies, much thought has been given in the corridors of power to how investment can be sustained. In March, a leading think-tank, outlined a five point plan to save North Sea oil including tax cuts and the creation of a hydrocarbon investment bank to sustain offshore exploration7. Even with this help, offshore oil exploration remains a marginal call at best. The financial

Often imitated, never replicated Over 15 years we have built a reputation on the world-leading performance of our unique centralizer technology. As industry leaders we’ve changed perceptions, standards and quality; set benchmarks and created a new category of centralizers, whilst imitators struggle to keep up. With the largest centralizer manufacturing capacity in the world our deep-water product offering is now bigger than ever.

excellence tO the cOre Centekgroup.com +44 (0)1626 337636 Call us today to see how we can support your deep-water operations.

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SPECIAL REPORT: IMPROVING DOWNHOLE EQUIPMENT OUTPUT AND WELL PRODUCTIVITY FOR OIL AND GAS OPERATIONS

Within six months the crude oil price plummeted from just over $100 per barrel to under $50

pressures operators work under increases the tendency to economize where possible, but with exploration becoming more demanding and high risk, this can often be a false economy. Much of the infrastructure used in offshore production is aging with out of date equipment forced to encounter conditions it was not designed for. Extreme temperature and pressure, combined with new drilling techniques and exposure to highly toxic and corrosive elements all provide additional risk factors. Technology is evolving across the board to meet these challenges, but many of the rigs in operation today continue to use old fashioned and out of date equipment. An example of this is the use of centralizers where many operators are still using latch on oversized centralizers. These are by far the least expensive models available, but struggle to cope with downhole conditions. The result is additional downtime which creates a significant cost factor for operators. Every year repair and maintenance costs the industry billions with signs suggesting that the figure is on the increase. The question is, how do companies respond to this problem? In 2012, Seadrill faced a major impact on its profits through a series of blowouts and accidents which sharply increased its downtime. The result was a major overhaul of its entire drilling business – a significant investment, but one where the savings

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in accident and maintenance downtime were more than worthwhile8. The difficulty for operators is in assessing the value of new technologies. Preparing internationally recognized testing standards for all components – no matter how small – is important so that procurement bodies can understand how a potential new product performs. Developers can often state that their products achieve impressive testing results, but these can often be achieved in benign lab conditions and may not be replicated in the real world. With uncertainty surrounding new products, it can be difficult for innovations to demonstrate their worth. The safest option can often be to go with the devil you know, rather than take a risk on new components. However, with downtime becoming a major drain on resources, upgrading is essential. It is difficult not to sympathize with the plight of offshore operators. While some producers of cheaply sourced oil can survive in a low oil price environment, offshore oil needs high prices in order to survive. As the value of the oil they produce is decreasing, the process of drilling is becoming harder, more risky and more expensive. However, while the temptation to cut costs and hope for the best is understandable, the impact in the long term can be prohibitively damaging.


SPECIAL REPORT: IMPROVING DOWNHOLE EQUIPMENT OUTPUT AND WELL PRODUCTIVITY FOR OIL AND GAS OPERATIONS

Advanced Downhole Technologies Help to Maximize Oil Production

SIMPLY SMARTER

Jo Roth, Staff Writer How advanced downhole technology is increasing the amount of oil sourced from wells

W

ITH MANY of the world’s conventional oil supplies running low, offshore oil companies have to get innovative. Enhanced Oil Recovery Solutions (EOR) are becoming increasingly important in maximizing the productivity of an oil well. However, with budgets tightening, there is now another factor to consider: cost. The new generation of technologies is having to perform the difficult task of increasing the flow of hydrocarbons while keeping costs to a minimum. In this article we’ll examine some of the technologies being used to increase oil supply and to achieve this with the minimum of expense.

The Prize Enhanced oil recovery solutions offer vast potential, but analyzing exactly how much is a major challenge. According to Kevin Watts, director of Enhanced Oil Recovery Business at Linde LLC, there could be enormous untapped reserves. Speaking at the Society of Petroleum Engineers Symposium in 2014, he said that there could be as much as 50bn barrels9 of oil yet to be recovered around the world. The potential for tapping these sources is enormous, but the question is: can oil companies afford to access this goldmine? The oil price has been on the slide for the past six months and although prices appear to have stabilized for the time being, they remain far below the $100 per barrel level seen at the beginning of 2008. With such a bleak sales outlook, exploration companies are faced with an unenviable task – to find new sources of oil and to maximize existing sources, but to do so with the minimum of cost. There are only two ways to find more oil – either go out and discover new oil fields or improve production from existing oil wells. The former

option is expensive with no sure fire outcome. In 2014, reports placed the cost of global oil exploration at $1trillion, but this did not bring guaranteed finds. New discoveries in 2014 amounted to only 16bn barrels10 of oil. It was the lowest figure for 20 years and marked the fourth year in a row discoveries have declined, making it the longest period of decline since the 1950s. There is expectation of untapped oil in the Arctic, but this represents an even more expensive and uncertain task. Shell suffered an unsuccessful foray into the arctic in 2013, and failed to extract any oil. In the end all they walked away with was $1.1million11 in fines for air quality violations. A more affordable and short term solution therefore, rests with increasing production of oil through existing wells. This can be done through so-called secondary extraction techniques – also known as Improved Oil Recovery Solutions (IOR) and tertiary production techniques – known as Enhanced Oil Recovery Solutions (EOR). IOR normally focuses on techniques such as the injection of water into the reservoir to force oil to the surface. EOR includes more extreme options such as injecting gasses into the well to extract the most hard to reach oil. The robustness of this market can be seen by the positive outlook on carbon dioxide sales. CO2 has been used in enhanced oil recovery solutions for around 40 years. As focus on EOR increases, the market in CO2 has also prospered. According to a report by Vision Gain12, spending on CO2 EOR will reach $4.72bn in 2015. Although the report expects this to decline in the short term thanks to the impact of low oil prices, the ten year forecast is optimistic. Increasingly, though, nitrogen is being seen as a more viable alternative to CO2. It is more freely available, inert, free of oxygen and non-corrosive.

Set apart from the rest with superior design and construction methods to ease the string to bottom, Centek’s UROS-CT centralizers contribute to greater well productivity by ensuring an enhanced cementation job in deep-water wells.

EXCELLENCE TO THE CORE Centekgroup.com +44 (0)1626 337636 Call us today and let us prove to you how we can support your deep-water operations.

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SPECIAL REPORT: IMPROVING DOWNHOLE EQUIPMENT OUTPUT AND WELL PRODUCTIVITY FOR OIL AND GAS OPERATIONS

Enhanced oil recovery solutions offer vast potential, but analyzing exactly how much is a major challenge

Decreasing Downtime From the moment a well is drilled, the clock starts ticking. A driller’s aim is to get in, drill the well and extract the oil in the shortest possible time. Every extra day – or even hour – can push costs up substantially. The problem is that many of the rigs in operation around the world feature equipment which is outdated. While compliant with minimum safety guidelines, this equipment can be prone to failure and creates more downtime than is strictly necessary. Equally, with downhole conditions becoming more severe, it may be facing challenges that it was not built to survive. Changing out equipment can represent a considerable operation in terms of time and money. However, operators must make the judgement about whether or not it is worth the money. Will the higher cost for new components, plus installation costs, pay off further down the line through reduced down time and greater efficiency? A crucial weapon in this fight is anti-corrosion technology. As conditions become ever more challenging, a new generation of technologies is needed to address issues such as ultra-high temperature and pressure, and corrosive gasses and fluids used in EOR techniques.

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Chrome plating, thermal sprays and metallic coverings are all coming into the market as well as special polymers which can supplement or replace metal when used at depth. An example of this is VESTAMID NRG13, a flexible polymer which can be used for metallic cables and pipeline. For extreme depth they have developed a pipeline made entirely from this polymer and reinforced with glass fiber. The challenge for all of these products is to produce solutions which are lighter, stronger and cheaper than current alternatives. To achieve this, significant investment is being sunk into cutting edge, next generation technologies such as nano-particles. These microscopic particles exhibit extremely strong atomic bonds which can produce strong and almost impossibly light materials. These products are still in the developmental stage, but represent an ideal vision of what might be possible to achieve. Whatever the future holds, though, delivering more oil in existing and new sources will be crucial to supply. As companies becoming increasingly efficient and effective at extracting oil, they are pioneering a new generation of downhole technologies which will prove crucial in delivering on these challenging goals.


SPECIAL REPORT: IMPROVING DOWNHOLE EQUIPMENT OUTPUT AND WELL PRODUCTIVITY FOR OIL AND GAS OPERATIONS

How a Small Component Can Deliver Big Savings James Butler, Staff Writer They may not be the largest components on board a rig, but centralizers are crucial components and when things go wrong implications can be severe

They are one of the smallest and least expensive components on an oil rig, but you ignore centralizers at their peril. As downhole conditions evolve, many rigs are using centralizers which are not equipped for the job. The result is damaging downtime which is costing the industry millions of dollars a year. The good news is that technology exists to address the situation – but the bad news is that many operators are going for the cheapest option, leaving themselves open to significant costs in maintenance and repair.

A Time for Change In the oil and gas industry change comes slowly if it does at all. The work involved in replacing existing equipment, retraining staff, as well as the inevitable risk that comes with implementing new technology means there is considerable inertia to overcome. Add to that cost pressures which encourage drillers to opt for the cheapest available component, and you have an industry which, in many cases, is simply not fit for purpose. This is the case with centralizers. These perform an extremely simple but important job. They are there to centralize the casing in the wellbore to allow an even distribution of cement, resulting in a firm seal. Although it may not be the most expensive piece of equipment on board a rig, the consequences if anything should go wrong can be severe. If the centralizer breaks it will be impossible to achieve even concentration of cement around the seal, which will lead to expensive downtime. Unfortunately, for the oil industry centralizer failure is an all too common occurrence and costs the industry millions. The most extreme case can be found with BP’s Deepwater Horizon where a desire to reduce costs saw BP cut back on the number of centralizers used. According to testimony from Nathaniel Chaisson, a cementing engineer with Halliburton, BP opted to use only six centralizers as opposed to Halliburton’s recommended 21. He said that the issue raised a

red flag at the time, although he did not believe – either at the time or later in the hearings – that this was a safety concern. Instead he said, “There was no safety concern,” he said. “I was completely aware of the effect it may potentially have on the cement job, but there were no safety concerns.” At the time the major worry was that a lack of centralizers could lead to further remedial work and unnecessary cost in the future.14 The absence of these centralizers was the subject of considerable focus during the subsequent hearings and, while they may not have seemed to be a safety concern, independent testimony suggested they could have led to the escape of hydrocarbons to the surface. Even so, it should serve as a vivid illustration of the dangers of choosing a less expensive option. For all the warnings, though, centralizer failure continues to be a problem for the industry. The problem arises in changes in well geometry. The transition to deviated wells means many of the current models no longer do the job effectively. Technology has changed, but adoption lags behind.

simply stronger With a joint strength unparalleled in the industry and a high restoring force the Centek S2 Hinged centralizer now means there is no longer any need to compromise on performance when using oversized casing connectors.

The Next Generation of Technologies One of the leading names in this field is Centek solutions and they have been at the forefront of pioneering the next generation of centralizer technology designed to cope with the changing conditions found down hole. They argue that most of the commonly bought and more affordable centralizers are unsuitable for the challenges found today. They were initially designed for vertical holes and are ill suited to deviated and horizontal bore holes commonly found today. Many are made over gauge, are susceptible to drag and friction degradation, while their multi-part construction makes them fragile and liable to fail under the high radial loads to which they are routinely subjected. The result is a high failure rate which adds additional expense to any well project.

excellence to the core Centekgroup.com +44 (0)1626 337636 Call us today to see how we can support your deep-water operations.

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SPECIAL REPORT: IMPROVING DOWNHOLE EQUIPMENT OUTPUT AND WELL PRODUCTIVITY FOR OIL AND GAS OPERATIONS

The big problem is with old fashioned equipment trying to address modern challenges

Their solution is labelled the S2 Centralizer and represents, they say, the biggest step forward in technology in 40 years. It boasts a single piece construction making it more robust than its competitors and one that can be re-used. They claim that it is the only centralizer which has been left successfully in place when the casing has been pulled15. The product has already proven its ability in the field and they point to a case study in which they estimate it produced almost ÂŁ20,000 of savings to a single customer. Repeat liner fails had meant centralizers needed to be pulled out of the hole and were subjected to severe drops of 4000ft. The S2 maintained a good condition each time the line was re-run, which saved their customer 18 hours.

Implementation The big problem is with old fashioned equipment trying to address modern challenges. All too often operators are found to have purchased cheaper models which are prone to failure or, in the case of the Deepwater Horizon spill, to have purchased

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too few. It represents a short-term option which saves a few pennies at the outset, but leaves the door open for substantial losses further on down the road. Even so, a new product represents a risk, and operators need to ensure they have the right tool for the job. Laboratory testing is not always able to simulate real life events. As such, real world performance of products is the best tool to convincing late adopters. By seeing cost and efficiency savings in real terms, they can get a much better handle on the value on offer.

Conclusion Given the vast and highly sophisticated equipment on board any oil rig, centralizers are easy to forget about. However, they do an incredibly important job and failure here can lead to knock-on effects further down the line. The latest generation of technologies is working to address the major issues associated with failed centralizers and to deliver a crucial efficiency gain for companies.


SPECIAL REPORT: IMPROVING DOWNHOLE EQUIPMENT OUTPUT AND WELL PRODUCTIVITY FOR OIL AND GAS OPERATIONS

Advances in Downhole Technologies Tom Cropper, Editor Despite difficult times for the industry overall, the downhole sector is booming as manufacturers strive to obtain every last drop of oil they can

Introduction As oil companies push the envelope in terms of where they drill and the amount of oil they’re seeking to extract from existing fields, they are spurring increased investment in downhole technologies. These aim to drill more effectively, improve the integrity of the bore, reduce maintenance and increase oil recovery rates. In this article, we focus on the major innovations taking place in downhole technology as well as looking ahead at what the future might hold.

Boom Time for Downhole Innovations All attention regarding oil prices has focused on a surplus of supply versus demand. However, although demand has been increasing more slowly than expected, it is still going up and it’s outstripping the industry’s ability to find more oil. In 2014 approximately 16 billion barrels of oil was discovered while over 30billion are used every year with demand rising by just under 1mb/d at the end of 201416. This supply has been met by increased production from US shale and continued high production rates from OPEC countries. However, this will not continue forever. In the longer term, more oil will be required. This fact is part of the reason why innovation in new technologies in downhole equipment continues apace. A report from Research and Markets predicted the downhole drilling market to grow at a CAGR of 10.2%17 over the year. Moreover, it predicted that a key trend would be advances in technologies as manufacturers sought new ways to handle the challenge of increasing oil yield, and coping with greater depth, higher temperatures, pressures and corrosive materials.

New Technologies These technologies will need to be applied throughout the process including casings, cementing, drilling tools and centralizers, all of which need to be as strong, reliable and

durable as possible. They need to be designed to meet an ever widening range of parameters, performing better in more extreme environments than previous technology. As drilling depth deepens, though, it is becoming more difficult to design equipment for purpose. Developers can carry out all the testing and simulation they like; the fact is that real world conditions can be more extreme and unpredictable than anything encountered in the laboratory. The risk of unexpected and premature failure is very real, so development of all these tools must go hand in hand with more effective well-monitoring technologies. These perform the challenging job of reporting on in-pipe conditions and reporting faults before they become a problem. A report in 2012 states: “New surface sensors are needed that employ smart technologies and enhanced data processing. By combining these high-speed, high quality measurements with predictive models, set points and limits can be directly connected to the latest generation of open-architecture rig control systems to improve drilling safety and efficiency.”18 By deploying small and high tech sensors within the pipelines, operators are able to get real time images of the condition inside the pipe with alarms being set off when faults are detected.

Often imitated, never replicated Over 15 years we have built a reputation on the world-leading performance of our unique centralizer technology. As industry leaders we’ve changed perceptions, standards and quality; set benchmarks and created a new category of centralizers, whilst imitators struggle to keep up. With the largest centralizer manufacturing capacity in the world our deep-water product offering is now bigger than ever.

What the Future Holds Developments in the future will depend greatly on the landscape against which it is operating – namely, the challenges and demands of offshore exploration, commercial realities and legislative changes. In terms of finance, there is little consensus about the future direction of the market. Depending on who you talk to, prices are likely to do one of the following: 1. A  tennis ball bounce: The market has had a shock to the system, but before long prices will return to normal. 2. R  emain the same: Among some experts there is a belief that today’s prices represent

excellence tO the cOre Centekgroup.com +44 (0)1626 337636 Call us today to see how we can support your deep-water operations.

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Whatever financial climate EPC contractors find themselves operating in, the reality of the offshore industry is that it’s going to become much more challenging

a ‘new normal’. In order to survive, offshore drilling will have to become much more cost effective. This means that the next generation of technologies will not only have to be more effective but will have to generate substantial cost savings across the board. 3. A  recovery over the long term: Others believe in a depressed market for a couple of years followed by a recovery. The rationale for this focuses on the assumption that supplies from US shale will peak and eventually drop off; OPEC may decide to cut back on production and renewed economic growth will spark another surge in demand for oil. Whatever financial climate EPC contractors find themselves operating in, the reality of the offshore industry is that it’s going to become much more challenging. The age of easy oil is well and truly over and new discoveries will, for the most part, be at depth facing extreme conditions. Furthermore, efforts will be redoubled on squeezing every last drop of oil from existing fields. This means continued and increased investment in downhole technologies which aid in secondary and tertiary oil recovery processes. Finally, the regulatory environment is likely to become much more severe. New environmental legislation is on the cards focusing on cleaner emissions standards and greater energy efficiency. With major companies straining at the leash to advance into extremely challenging areas such as the arctic, governments are in the process of formulating policies which aim to increase oversight in these high risk operations. In the US, for example, the Obama administration recently approved new regulations

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aimed at supporting drilling in the arctic19. These include the drilling of a relief well to contain any uncontrolled spill. Technology in areas such as these will have to attain unprecedentedly tough performance standards as it faces a range of climate and environmental challenges which go far beyond anything encountered before.

Assessing New Technologies These new realities make investment in new technologies imperative, as existing and out dated equipment will be unable to deliver the safety, efficiency and high performance required for sustainable offshore exploration. However, in an environment in which every penny counts, companies will have to become extremely astute at identifying the correct technologies for their requirements. As such, they will need to engage in substantial open and transparent cooperation with smaller scale suppliers. This can take the form of investment from larger companies to help smaller innovative firms take inventions from concept to commercial viability. Alternatively it can form looser cooperation agreements between suppliers and end users. While the future may, indeed, be uncertain, there has never been a greater need for innovation in even the smallest components. Incremental gains across the spectrum can deliver substantial cost savings, reduction in maintenance and safety improvements which can, in the end, make the difference between success and failure of an entire project. Marrying the technology available with the challenges of drilling and economic realities will be key to how the next 20 years shape up.


SPECIAL REPORT: IMPROVING DOWNHOLE EQUIPMENT OUTPUT AND WELL PRODUCTIVITY FOR OIL AND GAS OPERATIONS

References: Oil Prices Resume Slide: http://www.wsj.com/articles/crude-oil-prices-resume-slide-1425985096

1

2

Goldman Sachs says its Oil Forecast May be Too Low: http://tiny.cc/ev9kvx

3

Dead Cat Rally: http://www.economist.com/news/business-and-finance/21646096-price-oil-has-bounced-recovery-some-way-dead-cat-bounce

4

Sharp drop in spending expected: http://www.ogj.com/articles/2015/01/sharp-drop-expected-in-global-e-p-spending-in-2015-study-says.html

5

Shell to cut spending by ÂŁ15bn: http://www.cnbc.com/id/102378480

6

New Research Shows Oil and Gas Spending to increase: http://www.lr.org/en/energy/news/technology-radar-preliminary-results.aspx

7

Oil Industry Action Plan Set Out:

http://www.glasgowsouthandeastwoodextra.co.uk/news/scottish-headlines/oil-industry-action-plan-set-out-1-3714075 8

Rig Downtime costs Seadrill millions: http://gcaptain.com/downtime-costs-seadrill-millions/

9

50 billion barrels of oil waiting for EOR in offshore areas:

http://www.offshoreenergytoday.com/50-billion-barrels-of-oil-waiting-for-eor-in-offshore-areas/ 10

Discoveries of new oil and gas reserves drop to 20 year low: http://tiny.cc/au9kvx

11

Shell to pay $1.1million in fines: http://uk.reuters.com/article/2013/09/06/uk-shell-alaska-fines-idUKBRE9850UU20130906

12

Carbon Dioxide enhanced recovery:

http://www.marketwatch.com/story/carbon-dioxide-co2-enhanced-oil-recovery-eor-market-2015-2025-2015-03-05 13

VESTAMID NRG: http://www.vestamid.com/product/vestamid/en/products-services/vestamid-nrg/pages/default.aspx

14

Lack of Centralisers in Well a Concern: http://www.nola.com/news/gulf-oil-spill/index.ssf/2013/03/lack_of_centralizers_in_drill.html

15

Centek Solutions: http://www.centekgroup.com/our-products/the-s2-centralizer/

16

Oil market report: https://www.iea.org/oilmarketreport/omrpublic/

17

Global Downhole drilling tools market: http://www.digitaljournal.com/pr/2484138

18

New surface and downhole sensors needed: http://tiny.cc/ow9kvx

19

Obama admin approves regulations for drilling in the Arctic: http://rt.com/usa/234255-obama-regulations-oil-alaska/

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SPECIAL REPORT: IMPROVING DOWNHOLE EQUIPMENT OUTPUT AND WELL PRODUCTIVITY FOR OIL AND GAS OPERATIONS

Notes:

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SOMETIMES PEACE OF MIND IS PRICELESS With daily rig costs in deep-water applications often running at $700 per minute you need to use the best tool in your basket. With units designed to meet your requirements and pass through the previous tight tolerance casings, Centek’s UROS-CT centralizer is the best way to contribute to greater well productivity by ensuring an enhanced cementation job in deep-water wells. The UROS-CT: • Provides maximum stand-off in enlarged open hole applications • Unique patented design reduces drag to ease run in hole, yet has sufficient restoring force to support heavier casings • Dramatically reduces initial insertion, running and re-start forces.

Call us today and let us prove to you how we can support your deep-water operations contact +44 (0)1626 337636 or email sales@centekgroup.com

EXCELLENCE TO THE CORE


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Defence Industry – Special Report on Improving Downhole Equipment Output and Well Productivity for Oil and Gas Operations