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Old and partly lost slots that were given up as providers of new production triggered new solutions for Snorre B. The result was three wells with an average price of NOK 170 million, compared to NOK 490 as reference base.

Drilling & well (D&W) has recently delivered three new wells on the North Sea Snorre B field, contributing strongly to the corporate goal of «radical change» to reduce the breakeven for new wells.

The three wells, C-2, C-3 and C-4, have boosted Snorre B production by 30%

'We estimate the price per barrel for these wells to be well below USD 10. Snorre B is currently producing around 80,000 barrels per day, which is a very satisfactory result. Together with D&W we have found the right drilling targets for our wells, and when we add a predictable and long-term drilling plan allowing optimisation and higher efficiency, we have the success factors,' says Oddmund Rismyhr, acting head of Snorre Petec.

New ideas - new possibilities

'This had not been the outcome if the slots had not been so bad at the outset, forcing us to be innovative. Due to a damaged C-3, for example, we applied a simplified casing design. This resulted in a short and quick well,' says Johan Dahl, head of D&W planning.

The cost reduction recipe involved a standardised and simplified well design - a standard completion design for all wells. The same type of drilling fluid was also applied to allow reuse. By carrying out the same operations in series they also saved a lot of time and resources, as they were able to complete all stages - drilling, lower completion, upper completion and Christmas tree setting - three times when they first started the operations.

'If we drill only one well, we must rent equipment and send it back to shore, while the remaining completion equipment and drilling fluid must be sent to shore when we are done. In this case we did the same operations three times, saving much time, improving use of resources and reducing costs and rental time. We also save a lot on mobilisation costs and logistics,' he says.

'At the same time we learn a lot from each well, which is reflected in the reduction in time spent on sub-operations during the process,' says Dahl.

Took advantage of the good weather season

The planning leader points out the good cooperation between D&W and Petec, which allowed them i.e. to include weather considerations in their planning. Normally they experience 35% waiting on weather during the months of the year with the most demanding weather conditions. Operations in bad weather often lead to major downtime incidents. This has been avoided and consequently they have succeeded at their first attempt.

'Earlier we wanted to start production immediately, and it was therefore not considered to adapt operations to the weather conditions. But we realise that when we make a good plan that takes this aspect into consideration and has a long-term perspective we achieve higher production sooner than we did before. If we had done like we did in the old days, we would not have been able to deliver more than two of these three wells, with the starting point we had at that time,' says Dahl.

Aiming for perfection

For the D&W community on Snorre there is only one reference base that matters.

'We are only looking at how close to a «perfect well» we can get,' says Ilhan Løwen, drilling superintendent of D&W.

This is the result of the best sub-operations completed in wells previously and combined in a fictitious reference well.

'We have made it a little difficult for ourselves by including reference wells from the field start-up all the way back in 2001,' he continues.

The «perfect well» time consumption for C-4, C-3 and C-2 was 49, 46 and 69 days respectively. The actual time consumption was 58, 58 and 91 days. The costs were NOK 168, 149 and 193 million. The average price in the period 2009-2013 was NOK 490 million.

Statoil Norway West Europe North Sea
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September, 21 2019
Your Weekly Update: 16 - 20 September 2019

Market Watch  

Headline crude prices for the week beginning 16 September 2019 – Brent: US$69/b; WTI: US$63/b

  • Global crude oil prices surged at the start of the week as news that a successful drone strike on the Abqaiq processing plant and the Khurais oil field in Saudi Arabia took out over half of the Kingdom’s crude production capacity
  • Brent prices jumped above US$70/b at one point on fears on global supply disruption, but abated as President Donald Trump authorises the release of US strategic petroleum reserves to cover the market
  • Initial fears that the Saudi Arabian crude output would be crippled for months proved to be extreme, with Saudi Aramco announcing that some 70% of capacity at Abqaiq had been restored within days
  • But more worryingly is that this incident escalates the risk of a full-blown military confrontation with Iran; the US was quick to accuse Iran of the attack, citing data on the attack, which was denied by Iran
  • Yemen’s Iran-backed Houthi rebels claimed responsibility for the attack, although initial results of a Saudi investigation pointed to the weapons originating from Iran
  • For now, crude oil prices have retreated as the risk of widespread supply disruption abated, but tensions are still high in the region
  • This comes after President Trump signals that he was considering easing sanctions in an apparent thaw in the US-Iran relationship; this opportunity now appears to have evaporated
  • Saudi Arabia’s new oil energy minister, Prince Abdulaziz bin Salman, made a positive impression at the recent OPEC+ meeting, with errant members of the group signalling that they were now ready to adhere to the supply deal
  • In Venezuela, the oil crisis continues as ongoing US sanctions now mean that the country cannot find enough vessels to transport its crude, as shippers fear losing insurance coverage if they transport Venezuelan oil
  • Iran has released the UK-flagged Stena Impero vessel that it had impounded, a lone bright spot in a region now clouded by geopolitical tensions
  • Against this backdrop, the US active rig count recorded yet another fall, losing five oil and seven gas rigs for a net drop of 12 to a new total of 886 rigs
  • With the shock of the Saudi drone attacks abating, crude oil prices are retreating back to their previous range – US$60-63 for Brent and US$56-59/b for WTI – as the impact of global supply was minimised; another attack, however, might cause a more permanent shift in prices


Headlines of the week

Upstream

  • Equinor has received consent from the Norwegian Petroleum Directorate to continue operations at the Tordis and Vigdis fields through 2036 and 2040, respectively, extending the life of the North Sea fields by 34 years
  • BP has announced that it will deploy continuous measurement of methane emissions for all future oil and gas projects in a bid to reduce emissions
  • CNOPC and Niger have agreed to collaborate on a 1,892km pipeline to carry oil from Niger’s Agadem rift basin to port facilities in Benin
  • The South African government is tabling a new law that will allow the state to take a free stake of up to 10% in all new oil and gas ventures, hoping to capitalise on a surge in upstream interest after Total’s Brulpadda discovery

Midstream/Downstream

  • As the IMO deadline for low-sulfur marine fuels approaches, refiners have begun stockpiling supplies of very low-sulfur fuel oil to ensure adequate supply; this includes Japan’s Cosmo Oil that aims to begin supplying VLSFO to the domestic marine market by October 2019
  • IndianOil’s Gujarat refinery stated it ready to produce 12,900 b/d of VLSFO by October while its Haldia refinery will start producing 5,500 b/d of VLSFO by December; this should be adequate to cover the India’s marine fuel demand
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  • Valero Energy and Darling Ingredients are launching the first renewable gasoil plant in Texas, focusing on producing renewable diesel and naphtha
  • In the UK, Essar Oil’s Stanlow refinery aims to increase its diet of US crude from a current 35% to 40%, leveraging on cheaper American oil
  • The after-effects of Russia’s contaminated crude through the Druzhba pipeline continues as Total issues a tender to sell 1.3 million barrels of tainted Ural crude through Rotterdam after failing to process it

Natural Gas/LNG

  • Poland has won a ruling from the EU courts to reduce Russian control over the key EU Opal pipeline that carries Russian gas from the Nord Stream link to Germany, preventing Gazprom from using most of Opal capacity in a bit to increase energy security for Eastern European countries
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September, 20 2019
Financial Review: Second-Quarter 2019
Key findings
  • Brent crude oil daily average prices were 9% lower in second-quarter 2019 than in second-quarter 2018 and averaged $68 per barrel
  • The 117 companies in this study increased their combined liquids production 4.6% in second-quarter 2019 from second-quarter 2018, and their natural gas production increased 5.0% during the same period
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  • Dividends plus share repurchases were nearly one-third of cash from operations, slightly lower than the six-year high set in first-quarter 2019

Distributions to shareholders via dividends and share repurchases amounted to nearly 33% of cash from operations


See entire second-quarter review

September, 20 2019