Embed Size (px)
Citation preview
IOR TECHNOLOGY: ENHANCING PRODUCTION
HOW? GOAL?
Miscible gas is injected into a well to begin the Huff n’ Puff (HnP) process. The gas is absorbed into the oil causing it to swell, reducing the viscosity and increasing the mobility of the oil.
Increased oil mobility and reservoir pressure allows the oil to move through the rock and gives the reservoir the energy needed to push the oil to the surface.
Re-pressurize the reservoir and energize the physical properties of the oil. Increased oil mobility and reservoir energy will allow recovery of more of the oil in place.
IOR can result in extended economic well life, recovery of more oil and accelerated primary production.
WHAT IS IMPROVED OIL RECOVERY?
Any of various methods, chiefly reservoir drive mechanisms and enhanced recovery techniques, designed to improve the flow of hydrocarbons from the reservoir to the wellbore to increase oil recovery beyond that achieved with primary production alone.
IOR Technology: Enhancing Production 2
HOW DOES HUFF N’ PUFF GAS INJECTION WORK?
IOR Technology: Enhancing Production 3
(1) Gas Purchase Pipeline will be used for start up and to augment recycled gas as necessary.
Huff n’ Puff (HnP) miscible gas injection is the optimal IOR method for the Eagle Ford reservoir and has been demonstrated as technically feasible through projects already in place.
HnP Well Produced Oil Produced Water
Produced GasGas/Liquid Separation
Recycle Gas Treatment
Primary Compression
Step-Up Compression
Make-up or Working Gas(1)
WHERE HAS IOR BEEN IMPLEMENTED?
Five operators have Huff n’ Puff operations on approximately 200 wells within the Eagle Ford.
IOR Technology: Enhancing Production 4
Potential CHK IOR Project
Industry IOR Project
Oil
Volatile Oil
Condensate/Wet Gas
Dry Gas
CHK Leasehold
Primary Economic Limit
IOR Uplift:30 – 70% Incremental to Primary EUR
Extension of Economic Life
Primary
IOR
WHAT ARE THE BENEFITS OF IOR?
IOR Technology: Enhancing Production 5
Result is a well that has an extended economic life and an acceleration in the rate of production.
IOR adds energy to the reservoir, which increases the amount of oil that will ultimately be recovered from a well and accelerates the production that would have occurred later in the well’s life.
IOR increases the Estimated Ultimate Recovery (EUR) of a well by 30 – 70% compared to primary recovery alone.
Primary recovery alone recovers only 5 – 10% of the Original Oil in Place (OOIP); IOR increases that recovery to 7 – 17% of OOIP, which is a dramatic increase.
IOR attains results without drilling or completing additional wells and without requiring additional local resources such as sand and water.
WHAT IS THE IOR INVESTMENT TIMELINE?
A timely decision to implement IOR is required during the later stages of the primary development phase of a play.
Eagle Ford IOR projects have demonstrated technical success after 2 – 6 years of primary production.
Approximately one year of design and geologic and petroleum system evaluation is required to assess the viability of IOR in a given area.
Another year is required to construct, pilot test and optimize IOR.
Where utilized, IOR adds incremental production and extends a well’s economic life; however, significant up front investment is required to reduce operator risk.
IOR Technology: Enhancing Production 6
Exploration and Appraisal Phase
Full-field Primary
Development Phase
Optimize and Infill Phase
IOR Decision
PointMaintenance and Decline Phase
Oil Field Life Cycle
Cas
hflo
w
+
-
Field LifeIOR Production
Primary Production
Net Cashflow
Chesapeake makes a substantial investment in science and engineering to determine project viability and justify IOR expense.
WHAT DOES A TYPICAL IOR PROJECT LOOK LIKE?
IOR Technology: Enhancing Production 7
Compressor Station
Pilot Well Field Design
HnP Well
Monitor Well
Containment Well
1 2 3 4 5 6 7 8 9 10 11
The IOR process does not typically involve drilling new wells. Rather existing wells are utilized in one of three ways outlined below.• Huff n’ Puff well (HnP)
A well that will be both an active injection and production well. This well will be on a varying cycle of injection (huff), soak and puff (production).
• Containment wellA well that limits the movement of gas beyond the immediate IOR injection areas. Well will be equipped with gas lift production equipment. This well acts as a boundary to the IOR project.
• Monitor wellA well that will be used to monitor nearby HnP wells. Well will be shut in during pilot for scientific purposes. This well will later be converted to containment or HnP based on results.
IOR generic pilot scope and well layout• HnP wells will see cyclic injection, soak and flowback
- Gas is recycled back to IOR compression station- Liquids are sent to existing production facilities
• Centralized compression to minimize IOR surface impact
• Actual wellfield design will vary from area to area
During primary development, wells experience natural decline in production and reservoir pressure. (see oil production line in figure)
Gas injection during IOR will re-pressurize the reservoir to above the bubble point, resulting in increased oil mobility and increased oil recovery.
More gas is required to re-pressurize reservoirs that have produced more primary fluids by producing longer. (see red bars in figure)
Economics of HnP are dependent on commodity prices (i.e. gas price, oil price). Low gas prices and high oil prices are beneficial for HnP.
WHEN SHOULD A WELL BE CONVERTED TO IOR?
IOR Technology: Enhancing Production 8
Conversion to IOR is more expensive to implement the longer a well is produced via primary recovery.
Primary Oil Production Rate, bopd
IOR Gas Purchase Need, bcf
IOR Optimal Implementation Window
Optimal IOR Investment Decision
Point
Years on Primary Production
Increasing uncertainty and more gas needed for IOR re-pressurization as wells depleteLow depletion,
Low gas purchase
0 2 4 6 8 10 12 14 16
WHAT DOES A TYPICAL IOR PROJECT LOOK LIKE?
IOR Technology: Enhancing Production 9
IOR build out is executed in three phases:
Phase 3: Full-FieldPhase 2: ExpansionPhase 1: Pilot
Existing wells, facilities and right of ways are leveraged
Project is scaled with minimal additional infrastructure
Existing Wellbores
Existing Production Lines
IOR Injection Lines
Existing Production Facility
IOR Compression Facility
Existing Well Pad
WHAT DOES A TYPICAL IOR PROJECT LOOK LIKE ON THE SURFACE?
IOR Technology: Enhancing Production 10
Primary Development IOR Development
Key Operational Difference Between Primary and IOR Unconventional Development
Primary Development IOR Development
Drilling and Completion of Wells
Hydraulic Fracturing to Access Reserves
Artificial Lift for Pumping Wells
Buildout of Well Pads and Production Gathering
Injection Into Existing Wells
Gas Injection to Swell/Mobilize Existing Resources
Injection Energy Used to Lift Wells
Existing Infrastructure Plus Parallel Injection System
BEFORE
AFTER
BEFORE
AFTER
HOW LONG DOES AN IOR PROJECT TAKE?
IOR projects take longer to develop than primary drillingApproximately two years to begin gas injection and another six months for pilot testing. Timely communication and execution of unit agreement and infrastructure approvals influence schedule.
IOR Technology: Enhancing Production 11
Early Work and Design – prospect evaluation, conceptual engineering, landowner approval, and JV partner approval
Procurement, Construction and Commissioning – detailed engineering, procure compression and other long lead equipment, construct facilities, and construct gas supply line
Testing and Optimization – operate the facilities to complete multiple HnP cycles; evaluate data and optimize operations
Execution – maximize production during project life and expand IOR to other parts of the field
Execution
Testing and Optimization
Procurement, Construction and Commissioning
Early Work and Design
IOR Development Schedule
12 months
15 months
6 months
4 – 8 years
PRIMARY DEVELOPMENT VS. IOR
IOR has lower capital costs (capex), but requires two years to design and implement compared to a mobilization of months for drilling and completing new wells (primary development). Early investments in IOR capex are not offset by revenues for two to three years.
IOR has higher operating costs (opex) due to operating compression and purchase of working gas; impacts revenue to recoup capex. (longer time to breakeven)
Economics are sensitive to opex, which can be impacted by the volume and price of working and fuel gas.
IOR Technology: Enhancing Production 12
Primary IOR
Capital $6 – 10mm/well $1 – 2mm/well
OPEX 1x Primary 2 – 4x Primary
Cycle Time 9 – 12 months 18 – 36 months
Project Life Varies 4 – 10 years
EBITDA Profile Majority in initial 2 – 3 years More evenly distributed
Payout 1 – 3 years 2 – 5 years
Ability to Reuse Major Capital Equipment No Yes
Oil Per IOR Project
Cumulative Cashflow
Oil Per Horizontal Well
IOR Incremental Oil Production vs. Cumulative Cashflow
Project Life
More consistent production profileDecreasing Margins
in Outer Years
Primary Oil Production vs. Cumulative Cashflow
Well Life
+
-
Prod
uctio
n
+
-
Cas
hflo
w
WILL MY LEASE CHANGE?
IOR Technology: Enhancing Production 13
In order to conduct an IOR project, it will be necessary to amend the underlying lease(s) to effectively:• Recognize IOR project operations as “operations” that perpetuate the lease(s) even if
there may be periods of cessation of production or other operations that exceed 90 days.• Address the accounting for and payment of royalties on gas to allow Lessee to produce,
use, recycle and sell “Working Gas” without the obligation to pay royalties thereon. - Oil royalties will be based on the amount actually produced and sold.
• Address the unitization and allocation of production from wells within the applicable IOR Project Area to the pooled units or tracts in which the lease(s) have been included.
The estimates included in the foregoing slides are for demonstrative purposes only and are not representations or guarantees regarding future production or performance. Although Chesapeake believes the estimates to be reasonable, they are subject to change and actual results may vary significantly. These slides are meant to demonstrate the potential related to the IOR Project but are not to be relied upon as a prediction of actual future performance.
Learn more at CHK.com/IOR
