In the previous article, we looked at 6 Key Well Abandonment and Decommissioning Challenges and I promised to share with you some of the latest decommissioning technologies and strategies which are in use or being developed and tested today in the Oil & Gas sector.
But first, I think it is important to explain the importance of the need for innovation to tackle the enormous challenges we face with decommissioning in the coming years. Let's do that by looking at a case study of the UK Continental Shelf (UKCS)..
Case Study - UKCS Decommissioning Challenge
The UKCS Decommissioning 2017 Cost Estimate Report provided a cost estimate for offshore oil and gas decommissioning in the UK Continental Shelf (UKCS) of £59.7 billion in 2016 prices. The Oil & Gas Authority (OGA) has set an ambitious target to reduce these costs by at least 35%.
“The two biggest things that will get the North Sea through the next five years are genuine collaboration and the development and application of technology ... that strategy can halve the cost of well plugging and abandonment” Sir Ian Wood
In a recent interview with Energy Voice, Sir Ian Wood summarised the way forward for decommissioning very well, highlighting a need for improvements in technology and also improved collaborations to reduce costs. In this article I will discuss both the latest decommissioning technologies and decommissioning strategies..
LATEST DECOMMISSIONING TECHNOLOGIES
1. Melting the Cap Rock
Melting the cap rock is a method of decommissioning which uses a thermite plug to seal off the well by melting both the well components and the rock formation around them to recreate the cap rock, i.e. Caprock barrier
The low-cost method of rigless well P&A was trialed onshore by Centrica in Canada in 2016, the trial results demonstrated that this technology could potentially reduce well P&A costs by more than 50%.
2. Resin Plugs
Resin has the ability to formulate completely free of solids, allowing it to penetrate microchannels and effectively seal leaks which may not be possible to seal with cement due to it’s particle size.
Resin Application in P&A includes squeezing for annular fluid flow; shut-off gas source and squeezing a previously leaking plug.
Oceaneering recently conducted the Gulf of Mexico’s first permitted lower abandonment using resin. Because there was a downhole obstruction, the operator of this particular field determined that it could not reliably carry out a lower temporary abandonment with cement.
3. Underwater Drones to Monitor Abandoned (P&A) Wells for Potential Hydrocarbon Leaks
Praxis Energy Partners have proposed an innovative cost-saving solution for postoperative surveillance to ensure a leak-free subsea well abandonment over time.
The project proposes to build an underwater drone, using passive acoustics (to "listen" for leaks), and/or sonar (to "ping" for leaks), and/or a camera (take pictures of “bubbles”).
4. Well Barrier Monitoring System
The Stuart Wright Right Time Barrier Condition (RTBC) proprietary wellbore monitoring software can be used in both the well P&A planning and execution phases to accurately capture the condition of the well prior to and during the well abandonment.
During the planning phase, RTBC can be used to create accurate as built wellbore diagrams with critical barrier integrity validation information captured through the generation of Daily Integrity Reports (DIR) performed retrospectively. The DIRs will incorporate key information from the drilling, completions, production and intervention phases to accurately capture the condition of the well and any potential barrier risks that require consideration prior to commencing the well P&A.
During the well execution phase, RTBC will create accurate as built wellbore diagrams with critical barrier integrity validation information captured through the generation of Daily Integrity Reports during the actual wells abandonment. The Daily Integrity Reports will be captured in a secured cloud database that tracks the progression of the abandonment from the perspective of ensuring the abandonment of well barriers are conducted in accordance to corporate or good abandonment practices.
(Disclaimer: I am a consultant employed by Stuart Wright)
5. Suspended Well Abandonment Tool (SWAT)
Claxton have developed a Suspended Well Abandonment Tool (SWAT) which is deployed through the moonpool, landed on the wellhead and then used to conduct casing perforation and placement of the required cement barriers in the well. It can be deployed from a vessel, removing the need for a drilling rig.
6. Gator Perforator
Lee Energy Systems have created this "REPEATABLE HYDRO MECHANICAL MULTI-USE PERFORATING SYSTEM" which can be used to perforate casing without the need for explosives. The video above demonstrates really well how the tool operates, please watch it at your convenience to find out more about this technology.7. Latest P&A Technology
Archer and Hydrawell both offer systems which can offer significant time savings, compared to a typical well P&A, by eliminating the need to perform a milling section and performing the perforation and cementing in a single trip.
"HydraWell’s technology enables plugging of each well in 2-3 days instead of 10-14 days with conventional section milling methods. This means that the operator could save up to 200 rig days on a 20-well field,” says Mark Sørheim, CEO of HydraWell.
Archer Stronghold™ Systems
Archer's Stronghold™ Barricade™ is designed to perforate selected casing or liner sections; wash and clean the perforated zone completely; then enable permanent rock-to-rock cement plugging—all during a single trip.
The HydraHemera™ system was developed to enable plugging a well across multiple annuli without performing a section milling operation.
The system consists of two components, a HydraHemera™ Jetting Tool and a HydraHemera™ Cementing Tool. The HydraHemera™ Jetting Tool is used to wash and clean out debris in the annuli behind perforated casings. It features jet nozzles which are positioned at irregular angles and engineered for optimum configuration and exit velocity. The jets penetrate and clean thoroughly behind multiple perforated casings.
The HydraHemera™ Jetting Tool ensures optimum conditions in the casing annuli prior to placing the plugging material in the cross section. Debris, old mud, barite and old cuttings are replaced by clean mud.
Using a ball drop mechanism after jetting, the HydraHemera™ Cementing Tool is activated, and combined with the HydraArchimedes™ tool enable placing plugging material in the entire cross section of multiple annuli, and hence, establishing a proper barrier in the well for P&A or sidetrack purposes.
You can view a video of the HydraHemera™ system here.
LATEST DECOMMISSIONING STRATEGIES
Historically, the oil and gas industry has not been particularly strong in collaborating and cross-sharing information. In today's low oil price environment, especially in the area of decommissioning where cost saving is paramount, there is now an increased impetus towards collaboration. Below are some examples of collaborations focused around decommissioning and well abandonment.
1. OGA Well Plug and Abandonment (P&A) Optimisation Programme
In February 2017, the Oil and Gas Authority (OGA) launched a search for operators to voluntarily participate in a multi-operator, well P&A optimisation programme.
The objective of the pilot programme is to demonstrate the cost savings which can be achieved through collaborative working, stimulate work-sharing campaigns and adopt improved execution and contracting models.
It will be interesting to see how successful this initiative is and how many Operators opt to sign up for the programme.
2. Integrated Consortiums
In answer to Operator's desire to have a single point solution for decommissioning, a number of consortiums have formed to provide such an offering. One such example is the Bureau Veritas - Stuart Wright consortium which was recently formed to support clients in the North Sea, Asia-Pacific and beyond.
Tackling the enormous challenge of decommissioning will require not only advances in technology but also smarter strategies on how to collaborate to improve efficiency, knowledge sharing and reduce costs.
I have highlighted a few examples of the latest decommissioning technologies and strategies in this article as a starting point for discussion, it would be great to use this platform to hear from you on other technologies and strategies which you have knowledge of or experience with - PLEASE COMMENT BELOW..
Something interesting to share?
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Nagman has diversified into dealing with Flow meters or Instruments viz Electro-Magnetic Flow Meters, Coriolis Mass Flow Meter, Positive Displacement Flow Meter, Vortex Flow Meter, Turbine Flow Meter, Ultrasonic Flow Meter.
Electro-Magnetic Flow Meter:
Size : DN 3 to DN 3000 mm
Flow Velocity : 0.5 m/s to 15 m/s
Accuracy : ±0.5%, ±0.2% of Reading
Coriolis Mass Flow Meter:
Size : DN8~DN300
Flow Range : 8 to 2500000 Kg/hr (for liquids)
4 to 2500000 Kg/hr (for gases)
Accuracy : 0.1% 0.2% 0.5% of Normal Flow Range
Positive Displacement Flow Meter:
Size : DN 15 ~ DN 400
Max. Flow Range : 0.3 m3/hr to 1800 m3/hr
(Will vary based on the measured media & temperature)
Accuracy : 0.1% 0.2% 0.5%
Vortex Flow Meter:
Size : DN 25 to DN 300
Flow Range : 1.3 m3/hr to 2000 m3/hr (Water)
8.0 m3/hr to 10000 m3/hr (Air)
Accuracy : ±1.0% of Reading
Turbine Flow Meter:
Size : DN 4 to DN 200
Flow Range : 0.02 m3 /hr to 680 m3 /hr
Accuracy : 1.0% or 0.5% of Rate
Ultrasonic Flow Meter:
Type : Hand held Ultrasonic Flow meter with S2, M2, L2 Sensors
Accuracy : ±1% of Reading at rates > 0.2 mps
Measuring Range : DN 15 – DN 6000
In its Short-Term Energy Outlook (STEO), released on January 14, the U.S. Energy Information Administration (EIA) forecasts that U.S. natural gas exports will exceed natural gas imports by an average 7.3 billion cubic feet per day (Bcf/d) in 2020 (2.0 Bcf/d higher than in 2019) and 8.9 Bcf/d in 2021. Growth in U.S. net exports is led primarily by increases in liquefied natural gas (LNG) exports and pipeline exports to Mexico. Net natural gas exports more than doubled in 2019, compared with 2018, and EIA expects that they will almost double again by 2021 from 2019 levels.
The United States trades natural gas by pipeline with Canada and Mexico and as LNG with dozens of countries. Historically, the United States has imported more natural gas than it exports by pipeline from Canada. In contrast, the United States has been a net exporter of natural gas by pipeline to Mexico. The United States has been a net exporter of LNG since 2016 and delivers LNG to more than 30 countries.
In 2019, growth in demand for U.S. natural gas exports exceeded growth in natural gas consumption in the U.S. electric power sector. Natural gas deliveries to U.S. LNG export facilities and by pipeline to Mexico accounted for 12% of dry natural gas production in 2019. EIA forecasts these deliveries to account for an increasingly larger share through 2021 as new LNG facilities are placed in service and new pipelines in Mexico that connect to U.S. export pipelines begin operations.
Net U.S. natural gas imports from Canada have steadily declined in the past four years as new supplies from Appalachia into the Midwestern states have displaced some pipeline imports from Canada. U.S. pipeline exports to Canada have increased since 2018 when the NEXUS pipeline and Phase 2 of the Rover pipeline entered service. Overall, EIA projects the United States will remain a net natural gas importer from Canada through 2050.
U.S. pipeline exports to Mexico increased following expansions of cross-border pipeline capacity, averaging 5.1 Bcf/d from January through October 2019, 0.5 Bcf/d more than the 2018 annual average, according to EIA’s Natural Gas Monthly. The increase in exports was primarily the result of increased flows on the newly commissioned Sur de Texas–Tuxpan pipeline in Mexico, which transports natural gas from Texas to the southern Mexican state of Veracruz. Several new pipelines in Mexico that were scheduled to come online in 2019 were delayed are expected to enter service in 2020:
U.S. LNG exports averaged 5 Bcf/d in 2019, 2 Bcf/d more than in 2018, as a result of several new facilities that placed their first trains in service. This year, several new liquefaction units (referred to as trains) are scheduled to be placed in service:
In 2021, the third train at the Corpus Christi facility in Texas is scheduled to come online, bringing the total U.S. liquefaction capacity to 10.2 Bcf/d (baseload) and 10.8 Bcf/d (peak). EIA expects LNG exports to continue to grow and average 6.5 Bcf/d in 2020 and 7.7 Bcf/d in 2021, as facilities gradually ramp up to full production.
Source: U.S. Energy Information Administration, Natural Gas Monthly
In the January 2020 update of its Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) forecasts that U.S. crude oil production will average 13.3 million barrels per day (b/d) in 2020, a 9% increase from 2019 production levels, and 13.7 million b/d in 2021, a 3% increase from 2020. Slowing crude oil production growth results from a decline in drilling rigs during the past year that EIA expects will continue through most of 2020. Despite the decline in rigs, EIA forecasts production will continue to grow as rig efficiency and well-level productivity rise, offsetting the decline in the number of rigs until drilling activity accelerates in 2021.
EIA’s U.S. crude oil production forecast is based on the West Texas Intermediate (WTI) price forecast in the January 2020 STEO, which rises from an average of $57 per barrel (b) in 2019 to an average of $59/b in 2020 and $62/b in 2021. The price forecast is highly uncertain, and any significant divergence of actual prices from the projected price path could change the pace of drilling and new well completion, which would in turn affect production.
Crude oil production in the Lower 48 states has a relatively short investment and production cycle. Changes in Lower 48 crude oil production typically follow changes in crude oil prices and rig counts with about a four- to six-month lag. Because EIA forecasts WTI prices will decline during the first half of 2020 but begin increasing in the second half of the year and into 2021, forecast U.S. crude oil production grows slowly month over month until the end of 2020. In contrast, crude oil production in Alaska and the Federal Offshore Gulf of Mexico (GOM) is driven by long-term investment that is typically less sensitive to short-term price movements.
In 2019, Lower 48 production reached its largest annual average volume of 9.9 million b/d, and EIA expects it to increase further by an average of 1.0 million b/d in 2020 and 0.4 million b/d in 2021. EIA forecasts the GOM region will grow by 0.1 million b/d in 2020 to 2.0 million b/d and to remain relatively flat in 2021 because several projects expected to come online in 2021 will not start producing until late in the year and will be offset by declines from other producing fields. Alaska’s crude oil production will remain relatively unchanged at about 0.5 million b/d in 2020 and in 2021.
The Permian region remains the most prolific growth region in the United States. Favorable geology combined with technological improvements have contributed to the Permian region’s high returns on investment and years of remaining oil production growth potential. EIA forecasts that Permian production will average 5.2 million b/d in 2020, an increase of 0.8 million b/d from 2019 production levels. For 2021, the Permian will produce an average of 5.6 million b/d. EIA forecasts that the Bakken region in North Dakota will be the second-largest growth area in 2020 and 2021, growing by about 0.1 million b/d in each year (Figure 2).
EIA expects crude oil prices higher than $60/b in 2021 will contribute to rising crude oil production because producers will be able to fund drilling programs through cash flow and other funding sources, despite a somewhat more restrictive capital market. Financial statements of 46 publically-traded U.S. oil producers reveal that these companies generated sufficient cash from operating activities to fund investment and grow production with WTI prices in the $55/b–$60/b range. The 46 selected companies produced more than 30% of total U.S. liquids production in the third quarter of 2019. The four-quarter moving average free cash flow for these companies ranged between $1.7 billion and $3.5 billion from the fourth quarter of 2017 through the second quarter of 2019. The third quarter of 2019—the latest quarter for which data are available—had less cash from operations than investing activities, but this figure was skewed by the large, one-time acquisition cost of Anadarko Petroleum by Occidental, valued at $55 billion (Figure 3).
Results for these 46 publicly traded companies do not represent all U.S. oil producers because private companies that do not publish financial statements are not included in EIA’s analysis. The Federal Reserve Bank of Dallas Energy Survey sheds some light on the financial position of a broader set of companies. Released quarterly, the bank’s survey asks oil companies about business activity and employment and asks a few special questions that change each quarter. The number of companies that participate varies each quarter, but generally the survey includes about 100 exploration and production companies. In the most recent survey (from the fourth quarter of 2019), 75% of survey respondents said they can cover their capital expenditures through cash flow from operations at a WTI price of less than $60/b. In addition, 40% of survey respondents plan to increase capital expenditures in 2020 compared with 2019, while 24% of respondents expect to spend about the same (Figure 4).
Since about 2017, large, globally integrated oil companies have acquired more acreage in Lower 48 regions, particularly in the Permian. These companies have announced investment plans to make Lower 48 production an increasing portion of their portfolios. These companies can typically fund their investment programs through cash flow from operations and are generally less susceptible to tighter capital markets than smaller oil companies. The financial results of the public companies shown in Figure 3 and the Federal Reserve survey support EIA’s production forecast and suggest that U.S. crude oil production can continue to grow under EIA’s price forecast for 2020 and 2021 because many companies are less dependent on debt or equity to fund investment.
U.S. average regular gasoline and diesel prices decline
The U.S. average regular gasoline retail price fell more than 3 cents from the previous week to $2.54 per gallon on January 20, 29 cents higher than the same time last year. The Midwest price fell over 5 cents to $2.39 per gallon, the Gulf Coast price fell nearly 5 cents to $2.23 per gallon, the Rocky Mountain price fell more than 3 cents to $2.57 per gallon, the East Coast price fell more than 2 cents to $2.50 per gallon, and the West Coast price fell nearly 2 cents to $3.18 per gallon.
The U.S. average diesel fuel price fell nearly 3 cents from the previous week to $3.04 per gallon on January 20, 7 cents higher than a year ago. The Rocky Mountain price fell nearly 6 cents to $3.01 per gallon, the East Coast price fell nearly 4 cents to $3.08 per gallon, the Midwest price declined almost 3 cents to $2.94 per gallon, the West Coast price fell nearly 2 cents to $3.57 per gallon, and the Gulf Coast price dropped more than 1 cent to $2.80 per gallon.
Propane/propylene inventories decline
U.S. propane/propylene stocks decreased by 1.4 million barrels last week to 86.5 million barrels as of January 17, 2020, 17.1 million barrels (24.6%) greater than the five-year (2015-19) average inventory levels for this same time of year. Midwest, East Coast, Gulf Coast, and Rocky Mountain/West Coast inventories decreased by 0.7 million barrels, 0.4 million barrels, 0.2 million barrels, and 0.1 million barrels, respectively. Propylene non-fuel-use inventories represented 6.9% of total propane/propylene inventories.
Residential heating fuel prices decrease
As of January 20, 2020, residential heating oil prices averaged nearly $3.07 per gallon, 3 cents per gallon below last week’s price and 10 cents per gallon lower than last year’s price at this time. Wholesale heating oil prices averaged almost $1.96 per gallon, more than 7 cents per gallon below last week’s price and more than 7 cents per gallon lower than a year ago.
Residential propane prices averaged almost $2.01 per gallon, less than 1 cent per gallon below last week’s price and more than 42 cents per gallon less than a year ago. Wholesale propane prices averaged more than $0.60 per gallon, nearly 4 cents per gallon lower than last week’s price and 20 cents per gallon below last year’s price.