Mark Plummer

Consultant Petroleum & Geothermal Drilli
Last Updated: September 20, 2017
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Technology
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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%.

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Source: https://www.ogauthority.co.uk/news-publications/publications/2017/ukcs-decommissioning-2017-cost-estimate-report/

“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

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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

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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

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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

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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

A special thanks to Arve Bådsvik and Odd Engelsgjerd for highlighting this P&A technology, which I have now added to the original article.

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.

HydraHemera™ System

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

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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.

CONCLUSIONS

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..

#well #abandonment #decommissioning #P&A #technology #technologies
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Your Weekly Update: 11 - 15 February 2019

Market Watch

Headline crude prices for the week beginning 11 February 2019 – Brent: US$61/b; WTI: US$52/b

  • Oil prices remains entrenched in their trading ranges, with OPEC’s attempt to control global crude supplies mitigated by increasing concerns over the health of the global economy
  • Warnings, including from The Bank of England, point to a global economic slowdown that could be ‘worse and longer-lasting than first thought’; one of the main variables in this forecast are the trade tensions between the US and China, which show no sign of being solved with President Trump saying he is open to delaying the current deadline of March 1 for trade talks
  • This poorer forecast for global oil demand has offset supply issues flaring up within OPEC, with Libya reporting ongoing fighting at the country’s largest oilfield while the current political crisis in Venezuela could see its crude output drop to 700,000 b/d by 2020
  • The looming new American sanctions on Venezuelan crude has already had concrete results, with US refiner Marathon Petroleum moving to replace Venezuelan crude with similar grades from the Middle East and Latin America
  • While Nicolas Maduro holds on to power, Venezuela’s opposition leader Juan Guaido has promised to scrap requirements that PDVSA keep a controlling stake in domestic oil joint ventures and boost oil production through an open economy when his government-in-power takes over
  • Despite OPEC’s attempts to stabilise crude prices, the US House has advanced the so-called NOPEC bill – which could subject the cartel to antitrust action – to a vote, with a similar bill currently being debated in the US Senate
  • The see-saw pattern in the US active rig count continues; after a net loss of 14 rigs last week, the Baker Hughes rig survey reported a gain of 7 new oil rigs and a loss of 3 gas rigs for a net gain of 4 rigs
  • While demand is a concern, global crude supply remains delicate enough to edge prices up, especially with Saudi Arabia going for deeper-than-expected cuts; this should push Brent up towards US$64/b and WTI towards US$55/b in trading this week


Headlines of the week

Upstream

  • Egypt is looking to introduce a new type of oil and gas contract to attract greater upstream investment into the country, aiming to be ‘less bureaucratic and more efficient’ with faster cost-recovery, ahead of a planned Red Sea bid round encompassing over a dozen concession sites
  • Lukoil has commenced on a new phase at the West Qurna-2 field in Iraq, with 57 production wells planned at the Mishrif and Yamama formation that could boost output by 80,000 boe/d to 480,000 boe/d in 2020
  • Aker BP has hit oil and natural gas flows at well 24/9-14 in the Froskelår Main prospect in the Alvheim area of the Norwergian Continental Shelf
  • Things continue to be rocky for crude producers in Canada’s Alberta province; production limits were increased last week after being previously slashed to curb a growing glut on news that crude storage levels dropped, but now face trouble being transported south as pipelines remain at capacity and crude-by-rail shipments face challenging economics

Midstream & Downstream

  • The Caribbean island of Curacao is now speaking with two new candidates to operate the 335 kb/d Isla refinery after its preferred bidder – said to be Saudi Aramco’s American arm Motiva Enterprises – withdrew from consideration to replace the current operatorship under PDVSA
  • America’s Delta Air Lines is now reportedly looking to sell its oil refinery in Pennsylvania outright, after attempts to sell a partial stake in the 185 kb/d plant failed to attract interest, largely due to its limited geographical position

Natural Gas/LNG

  • Total reports that it has made a new ‘significant’ gas condensate discovery offshore South Africa at the Brulpadda prospect in Block 11B/12B in the Outeniqua Basin, with the Brulpadda-deep well also reporting ‘successful’ flows of natural gas condensate
  • Italy’s Eni and Saudi Arabia’s SABIC have signed a new Joint Development Agreement to collaborate on developing technologies for gas-to-liquids and gas-to-chemicals applications
  • The Rovuma LNG project in Mozambique is charging ahead with development, with Eni looking to contract out subsea operations for the Mamba gas project by mid-March and ExxonMobil choosing its contractor for building the complex’s LNG trains by April
February, 15 2019
SHORT-TERM ENERGY OUTLOOK

Forecast Highlights

Global liquid fuels

  • Brent crude oil spot prices averaged $59 per barrel (b) in January, up $2/b from December 2018 but $10/b lower than the average in January of last year. EIA forecasts Brent spot prices will average $61/b in 2019 and $62/b in 2020, compared with an average of $71/b in 2018. EIA expects that West Texas Intermediate (WTI) crude oil prices will average $8/b lower than Brent prices in the first quarter of 2019 before the discount gradually falls to $4/b in the fourth quarter of 2019 and through 2020.
  • EIA estimates that U.S. crude oil production averaged 12.0 million barrels per day (b/d) in January, up 90,000 b/d from December. EIA forecasts U.S. crude oil production to average 12.4 million b/d in 2019 and 13.2 million b/d in 2020, with most of the growth coming from the Permian region of Texas and New Mexico.
  • Global liquid fuels inventories grew by an estimated 0.5 million b/d in 2018, and EIA expects they will grow by 0.4 million b/d in 2019 and by 0.6 million b/d in 2020.
  • U.S. crude oil and petroleum product net imports are estimated to have fallen from an average of 3.8 million b/d in 2017 to an average of 2.4 million b/d in 2018. EIA forecasts that net imports will continue to fall to an average of 0.9 million b/d in 2019 and to an average net export level of 0.3 million b/d in 2020. In the fourth quarter of 2020, EIA forecasts the United States will be a net exporter of crude oil and petroleum products by about 1.1 million b/d.

Natural gas

  • The Henry Hub natural gas spot price averaged $3.13/million British thermal units (MMBtu) in January, down 91 cents/MMBtu from December. Despite a cold snap in late January, average temperatures for the month were milder than normal in much of the country, which contributed to lower prices. EIA expects strong growth in U.S. natural gas production to put downward pressure on prices in 2019. EIA expects Henry Hub natural gas spot prices to average $2.83/MMBtu in 2019, down 32 cents/MMBtu from the 2018 average. NYMEX futures and options contract values for May 2019 delivery traded during the five-day period ending February 7, 2019, suggest a range of $2.15/MMBtu to $3.30/MMBtu encompasses the market expectation for May 2019 Henry Hub natural gas prices at the 95% confidence level.
  • EIA forecasts that dry natural gas production will average 90.2 billion cubic feet per day (Bcf/d) in 2019, up 6.9 Bcf/d from 2018. EIA expects natural gas production will continue to rise in 2020 to an average of 92.1 Bcf/d.

Electricity, coal, renewables, and emissions

  • EIA expects the share of U.S. total utility-scale electricity generation from natural gas-fired power plants to rise from 35% in 2018 to 36% in 2019 and to 37% in 2020. EIA forecasts that the electricity generation share from coal will average 26% in 2019 and 24% in 2020, down from 28% in 2018. The nuclear share of generation was 19% in 2018 and EIA forecasts that it will stay near that level in 2019 and in 2020. The generation share of hydropower is forecast to average slightly less than 7% of total generation in 2019 and 2020, similar to last year. Wind, solar, and other nonhydropower renewables together provided about 10% of electricity generation in 2018. EIA expects them to provide 11% in 2019 and 13% in 2020.
  • EIA expects average U.S. solar generation will rise from 265,000 megawatthours per day (MWh/d) in 2018 to 301,000 MWh/d in 2019 (an increase of 14%) and to 358,000 MWh/d in 2020 (an increase of 19%). These forecasts of solar generation include large-scale facilities as well as small-scale distributed solar generators, primarily on residential and commercial buildings.
  • In 2019, EIA expects wind’s annual share of generation will exceed hydropower’s share for the first time. EIA forecasts that wind generation will rise from 756 MWh/d in 2018 to 859 MWh/d in 2019 (a share of 8%). Wind generation is further projected to rise to 964 MWh/d (a share of 9%) by 2020.
  • EIA estimates that U.S. coal production declined by 21 million short tons (MMst) (3%) in 2018, totaling 754 MMst. EIA expects further declines in coal production of 4% in 2019 and 6% in 2020 because of falling power sector consumption and declines in coal exports. Coal consumed for electricity generation declined by an estimated 4% (27 MMst) in 2018. EIA expects that lower electricity demand, lower natural gas prices, and further retirements of coal-fired capacity will reduce coal consumed for electricity generation by 8% in 2019 and by a further 6% in 2020. Coal exports, which increased by 20% (19 MMst) in 2018, decline by 13% and 8% in 2019 and 2020, respectively, in the forecast.
  • After rising by 2.8% in 2018, EIA forecasts that U.S. energy-related carbon dioxide (CO2) emissions will decline by 1.3% in 2019 and by 0.5% in 2020. The 2018 increase largely reflects increased weather-related natural gas consumption because of additional heating needs during a colder winter and for additional electric generation to support more cooling during a warmer summer than in 2017. EIA expects emissions to decline in 2019 and 2020 because of forecasted temperatures that will return to near normal. Energy-related CO2 emissions are sensitive to changes in weather, economic growth, energy prices, and fuel mix.

U.S. residential electricity price

  • West Texas Intermediate (WTI) crude oil price
  • World liquid fuels production and consumption balance
  • U.S. natural gas prices
  • U.S. residential electricity price
  • West Texas Intermediate (WTI) crude oil price
February, 13 2019
The State of the Industry: A Brightened 2018

2018 was a year that started with crude prices at US$62/b and ended at US$46/b. In between those two points, prices had gently risen up to peak of US$80/b as the oil world worried about the impact of new American sanctions on Iran in September before crashing down in the last two months on a rising tide of American production. What did that mean for the financial health of the industry over the last quarter and last year?

Nothing negative, it appears. With the last of the financial results from supermajors released, the world’s largest oil firms reported strong profits for Q418 and blockbuster profits for the full year 2018. Despite the blip in prices, the efforts of the supermajors – along with the rest of the industry – to keep costs in check after being burnt by the 2015 crash has paid off.

ExxonMobil, for example, may have missed analyst expectations for 4Q18 revenue at US$71.9 billion, but reported a better-than-expected net profit of US$6 billion. The latter was down 28% y-o-y, but the Q417 figure included a one-off benefit related to then-implemented US tax reform. Full year net profit was even better – up 5.7% to US$20.8 billion as upstream production rose to 4.01 mmboe/d – allowing ExxonMobil to come close to reclaiming its title of the world’s most profitable oil company.

But for now, that title is still held by Shell, which managed to eclipse ExxonMobil with full year net profits of US$21.4 billion. That’s the best annual results for the Anglo-Dutch firm since 2014; product of the deep and painful cost-cutting measures implemented after. Shell’s gamble in purchasing the BG Group for US$53 billion – which sparked a spat of asset sales to pare down debt – has paid off, with contributions from LNG trading named as a strong contributor to financial performance. Shell’s upstream output for 2018 came in at 3.78 mmb/d and the company is also looking to follow in the footsteps of ExxonMobil, Chevron and BP in the Permian, where it admits its footprint is currently ‘a bit small’.

Shell’s fellow British firm BP also reported its highest profits since 2014, doubling its net profits for the full year 2018 on a 65% jump in 4Q18 profits. It completes a long recovery for the firm, which has struggled since the Deepwater Horizon disaster in 2010, allowing it to focus on the future – specifically US shale through the recent US$10.5 billion purchase of BHP’s Permian assets. Chevron, too, is focusing on onshore shale, as surging Permian output drove full year net profit up by 60.8% and 4Q18 net profit up by 19.9%. Chevron is also increasingly focusing on vertical integration again – to capture the full value of surging Texas crude by expanding its refining facilities in Texas, just as ExxonMobil is doing in Beaumont. French major Total’s figures may have been less impressive in percentage terms – but that it is coming from a higher 2017 base, when it outperformed its bigger supermajor cousins.

So, despite the year ending with crude prices in the doldrums, 2018 seems to be proof of Big Oil’s ability to better weather price downturns after years of discipline. Some of the control is loosening – major upstream investments have either been sanctioned or planned since 2018 – but there is still enough restraint left over to keep the oil industry in the black when trends turn sour.

Supermajor Net  Profits for 4Q18 and 2018

1. ExxonMobil:

- 4Q18 – Net profit US$6 billion (-28%);

- 2018 – Net profit US$20.8 (+5.7%)

2. Shell:

- 4Q18 – Net profit US$5.69 billion (+32.3%);

- 2018 – Net profit US$21.4 billion (+36%)

3. Chevron:

- 4Q18 – Net profit US$3.73 billion (+19.9%);

- 2018 – Net profit US$14.8 billion (+60.8%)

4. BP:

- 4Q18 – Net profit US$3.48 billion (+65%);

- 2018 - Net profit US$12.7 billion (+105%)

5. Total: 

- 4Q18 – Net profit US$3.88 billion (+16%);

- 2018 - Net profit US$13.6 billion (+28%)

February, 12 2019