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The Road to Recovery

1 September 2007




The oil and gas industry is investing heavily in technologies that enable hard-to-reach reserves to be fully exploited. But which technologies are going to deliver the greatest rewards? Barry Mansfield investigates.


Petrol will continue to be the major source of the world's energy well into the 21st century. Moreover, petroleum resources are plentiful, despite some speculation to the contrary. The most troubling questions for the oil industry relate to deliverability rather than availability, and this is surely where technology will play an increasingly important role.

Effective use of technology can help any business increase its success and strengthen its long-term prospects, but business strategists can find themselves wondering which technologies they should choose to pursue from the thousands available.

Oil companies are investing heavily in technology to help them shape today's oil industry and open up new options – BP's technology budget, for example, has increased by an average of 15% per year between 2003 and 2006, and is expected to continue growing. Standardisation will help oil companies deploy and fully exploit these technologies.

STANDARDISATION EFFORT

Although standardisation is commonplace in almost every industry, so far it has not been a feature of the very large projects associated with offshore oil and gas operations. Of the thousands of fixed and floating offshore platforms installed by the industry over the last 40 years, very few are the same. This is because hydrocarbon reservoirs vary greatly, while the surface facilities required to manage different quantities of oil, gas and water, located in different water depths and environments, determine the type and size of the platform.

Also, an offshore field will require only one installation to achieve full development, removing the motivation of field developers to duplicate hardware solutions. Even when the opportunity presents itself, project teams often want to 'do it better'.

Capital cost savings can be achieved through a 'design one, build many' approach. Cost reductions are possible in the supply chain by aggregating demand and placing purchase orders for repeat hardware. Furthermore savings can be realised through the operation and maintenance of look-alike installations, where the facilities and systems on each platform are familiar to the operations teams, allowing for quicker start-ups, flexibility in equipment sharing and improved preventative maintenance, all of which contribute to greater uptime in the production of hydrocarbons.

TARGETED INVESTMENT

Tony Meggs, BP's group vice-president of technology, recently gave a speech in Abu Dhabi, entitled 'The Technology Brain Drain: Inspiring the Next Generation', where he outlined some of the challenges facing energy companies today. He admitted that one of the most effective ways to address climate change is to continue to promote the use of gas, but warned that 'much more is required'. Meggs said: "To move towards a more sustainable future, we need to find ways of decarbonising fossil fuels altogether, through the use of carbon capture and sequestration technology."

But Meggs also pointed out that improving the oil industry's application of technology is not just about throwing money at R&D. Competitive advantage is not achieved simply by spending more. BP is not the biggest investor in R&D in its peer group, but it has the highest growth rate in the industry and claims to be among the most efficient in targeting R&D expenditure and applying it to business goals.

Major projects present an opportunity to innovate at scale. Meggs believes the greatest advances in the industry come from these industrial-scale projects and cannot be demonstrated in the laboratory or in pilot plants.

TECHNOLOGICAL EVOLUTION

BP has developed several technologies to an advanced level to help the company recover oil and gas from the company’s significant hydrocarbon resources. It is currently talking about recovering 18 billion barrels of oil equivalent (boe) developed and undeveloped proven reserves using existing technology. But there are another 39 billion boe of non-proven resources that can only be converted into proven reserves using new technology.

Among the technologies that could help deliver and even add to those 39 billion barrels is advanced seismic data acquisition and interpretation. Seismic imaging is critical to the discovery process, and has been an essential part of the toolkit of companies achieving the highest reserve replacement rates. High-quality seismic images also allow better field development planning and reduce the risks associated with development drilling.

"Capital cost savings can be achieved through a ‘design one, build many’ approach."

The industry is continually experimenting with new seismic techniques, and there has been a recent focus on new acquisition methods, which are proving very successful. Among these are wide azimuth surveys, in which a sparse array of receivers is manipulated to collect reflected signals from a dense assembly of seismic sources, enabling dramatic reductions in the signal-to- noise ratio and resulting in clearer images of the geological subsurface.

BP has taken wide azimuth towed streamer (WATS) techniques from the design stage to proof-of-concept in just 12 months.

The refinement of the 'stress cages' technique will play an important part in drilling processes in future. This is a method of reinforcing a well bore. A shallow concentric region of stress is created around the well, inducing tiny fractures that are then filled with special additives. This forms a cage of stronger rock around the wellbore to optimise drilling conditions and enable wells to penetrate further.

AROUND THE WORLD

Advanced drilling techniques are being employed in Alaska. Multilateral wells, consisting of a main wellbore with several sidetracked branches are being drilled to increase reservoir exposure and attain economic recovery rates. Alaskan innovations that have helped boost recovery rates include improved entry designs into the sidetracks and special downhole packers. The latest multilateral wells are producing at around ten times the rate of previous vertical wells.

" Savings can be realised through the operation and maintenance of look-alike installations."

Further reserve recovery could come from using horizontal drilling combined with advanced hydraulic fracturing techniques in 'tight gas' fields where low connectivity of rock pores makes it difficult to extract gas. Pilot trials in Canada indicate a five-fold increase in reserves recovery compared with conventional vertical wells, at only twice the capital cost.

The development plans of the oil industry globally are staggering. Operators are planning to install 311 fixed platforms as they seek to exploit shallow and moderate-water-depth oil and gas fields. They will introduce 80 fixed platforms in Southeast Asia, 58 fixed platforms in the Gulf of Mexico and a further 28 in waters off Mexico by 2010.

In the waters off Brazil, floating production units are still the foundation for field development. Petrobras plans to use FPSO ships to develop the Albacora Leste and Golfinho fields.Construction is underway on both facilities. Chevron intends to install an FPSO at its Frade field off the coast of Brazil by May 2008.

Given the huge scale of activity, companies choosing their technology options carefully stand to make significant long-term savings.