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OILFIELD TECHNOLOGY MAGAZINE SEPTEMBER 2013 www.energyglobal.com VOLUME 06 ISSUE 09-SEPTEMBER 2013

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VOLUME 06 ISSUE 09-SEPTEMBER 2013

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ISSN 1757-2134

contents

Copyright © Palladian Publications Ltd 2013. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner. All views expressed in this journal are those of the respective contributors and are not necessarily the opinions of the publisher, neither do the publishers endorse any of the claims made in the articles or the advertisements. Printed in the UK. Images courtesy of www.bigstockphoto.com.

Oilfield Technology is audited by the Audit Bureau of Circulations (ABC). An audit certificate is

available on request from our sales department.

58| 03 | EDITORIAL COMMENT

| 05 | WORLD NEWS

| 10 | BRACING FOR THE BRAZILIAN BOOMSimon Coton, NES Global Talent, UK, discusses skills shortages and solutions in Brazil’s oil and gas sector.

| 13 | SEIZING THE ONSHORE OPPORTUNITY IN BRAZILJosé de Sá, John Norton and Juan Carlos Gay, Bain & Company, show that Brazil’s oil and gas industry has tremendous new opportunities onshore, but to make the most of these new reserves, operators will need new capabilities and the ability to operate efficiently.

| 18 | INNOVATION AT ISLAYSylvain Denniel and Brian Lynch, Technip UK, show how Total’s Islay project is a key example of the kind of innovation required in today’s E&P and subsea service delivery market.

| 25 | WHAT CAN YOU DO WITH CO2?Oilfield Technology correspondent, Gordon Cope explains how although combining enhanced oil recovery with carbon sequestration sounds like a win-win situation, significant hurdles stand in the way.

| 29 | AUTOMATING ARTIFICIAL LIFT MANAGEMENTJulian Cudmore, Zenith Oilfield Technology, UK, takes a look at a well surveillance system that can allow operators to automate the processes involved in optimising artificially lifted wells.

| 32 | FINDING THE PATH OF LEAST RESISTANCESarah Mitchell and Rob Nordlander, WWT International Inc., USA, examine the importance of bearings in reducing friction in extended reach wells.

| 37 | VANQUISHING VIBRATIONBrad Harkey, Richard Hewlett, Richard Schultze and Daan Veeningen, NOV Downhole, USA, provide a historical perspective on the oil and gas industry’s progress in bringing clarity in downhole dynamics, and reveal/discuss the resulting technological developments.

| 41 | DRIVING DRILLING EFFICIENCYMatt Regan and Ben Lovell, Kongsberg Oil & Gas Technologies, Norway, show how access to real time data is becoming a fundamental part of drilling optimisation.

| 45 | WORKING WITH THE WONDERS OF WIRELESSVictor Garcia and Adrienne Lutovsky, ProSoft Technology, USA, and Chris Deakin, Boss Automation, USA, take a look at the varied applications of wireless technology in an oilfield environment.

| 49 | KEEPING AN EYE ON THE MARGINSMark Patton, Wireless Automation Group, USA, shows how wireless monitoring of oilfield assets can cut risks and boost profits.

| 53 | WORKING WITH THE 4TH DIMENSIONGraham Brew, Dynamic Graphics Inc., USA, and Jane Wheelwright, Dynamic Graphics Ltd., UK, discuss the integration of 4D seismic data into the reservoir management workflow.

| 58 | WATER, WATER, EVERYWHERETony Robertson, NEL, UK, looks at the challenge of dealing with waste water from unconventional gas production in the UK.

| 63 | THE DEVIL IS IN THE DETAILSJoy Sutton, Harry Kaufman, Arash Shadravan and George Song, CSI Technologies, USA, examine cementing best practices to prevent gas migration and counter annular pressure build-up.

| 67 | TAKING TUBULARS OFFLINEAaron Sinnott, Weatherford, USA, details a streamlined tubular management programme that can reduce costs and improve wellsite performance.

| 73 | FUTURE-PROOFINGDr. Rod Martin, Element Materials Technology, UK, explains why the development of advanced oilfield technology is key to the future of ultra-deepwater subsea processing.

| 77 | HIGH DEMAND, LOW SUPPLYMark Guest, OilCareers.com, UK, explains how training and development investment are seen as critical to easing the skills shortage as unconventionals take centre stage.

FMC Technologies’ South American Technology Center located at the UFRJ Technology Park in Rio de Janeiro, Brazil. The Technology Center supports the local development of subsea technology to respond to the demanding deepwater and pre-salt environments in the region. The facility is equipped with extensive integration and full-scale prototype testing capabilities.

On this month’s cover >>

September 2013 Volume 06 Issue 09

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OILFIELD TECHNOLOGYSeptember 2013

Cecilia Rehn

Deputy Editor

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Headlines over these fi rst days of September have centred on oil and gas geopolitics, Syria and rising crude prices, as the cost of a barrel recently hit a two-year high.

Syria dominated the 2013 G-20 Saint Petersburg Summit, where US President Barack Obama and Russian President Vladimir Putin clashed over a united response to last month’s chemical weapons attack on civilians, which left more than 1400 dead in a suburb of Damascus. No one has taken responsibility for the assault, and at time of press, a promised preliminary UN report on the chemical attack has yet to be published. The US states it has proof that the attack was carried out by government forces, while Moscow, an ally of President Bashar al-Assad’s regime, claims the attack was the work of rebels to attract a foreign-led strike.

Earlier this summer, President Putin told journalists that the Syria question was an appropriate topic for the summit and brazenly added that: “I will be addressing Obama not as my colleague, not as the US President but as the winner of the Nobel Peace Prize.” In the aftermath of the summit, Russia has set forth a plan to put Syria’s chemical weapons under international control. Although requirements remain vague, the Russian news agency Interfax has quoted Syrian Foreign Minister Walid Muallem as saying that his country agrees with Russia and that the initiative would “remove the grounds for American aggression”. The US and France have spoken out in support of Moscow’s plan, but will want to keep military options open to avoid a game of cat and mouse.

Although not a major exporter, Syria holds 2.5 billion bbls of crude oil as of January 2013, the largest proved reserve of crude oil in the eastern Mediterranean, besides Iraq.1 However, after two and a half years of civil war, exploration has come to a standstill, with international oil companies once operating in Syria abandoning their operations due to escalating violence and sanctions targeting the country’s energy sector.

Currently, Russia is the only remaining international partner still working to develop Syria’s oil and gas resources over the past year.

Understandably, when there is the threat of trouble in the

Middle East, oil prices tend to climb. Representative of traders growing worried about seemingly likely military intervention in Syria, West Texas Intermediate crude for October delivery settled at US$ 110.53, its highest since May 2011. October Brent rose to trade above US$ 116/bbl. Analysts anticipate supply to recover in due course, yet not quickly enough to check a short-term spike in prices.

Despite the fact that Syria neither exports much oil nor controls a critical trade route, its civil war has become a proxy battle for the world’s largest energy producers, with Russia and Iran backing President Bashar al-Assad, and Saudi Arabia, Qatar and the US supporting the rebels. Adding to the world’s unease and pushing up prices, production is currently down in several OPEC countries such as Iran (down 1.2 million bpd); Libya (1.2 million bpd); Nigeria (300 000 bpd); and Iraq (250 000 bpd) due to sanctions, labour strikes, thefts and attacks.

Perhaps this is why some have chosen to focus on innovation coming out of the US Eagle Ford Shale this month, where producers are driving down the cost of their wells by using techniques such as ‘pad drilling’: sending multiple wells radiating off in different directions from a single site.

William Thomas, Chief Executive of EOG Resources, said last month that it had cut the average cost of a well in the Eagle Ford Shale from US$ 6 million to US$ 5.5 million. The long-term outlook on this US industry is still debatable, although the International Energy Agency has predicted that before the end of the decade the US would be the world’s largest oil producer2 and the shale revolution has undoubtedly a large part to play in realising this goal.

As the oil and gas industry soldiers on we look forward to hearing about new technologies and successful case studies from across the globe.

If you’ve picked up a copy of this issue at SPE ATCE, then come and say hello to the Oilfi eld Technology team at booth 353. To share news and interact from further afi eld, join our discussions on LinkedIn (Oilfi eld Technology group), Twitter (@Energy_Global), and on Facebook (EnergyGlobal). Looking forward to hearing from you!

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05OILFIELD TECHNOLOGYSeptember 2013

world news

inbrief

China and Kazakhstan have signed 22 separate agreements worth US$ 30 billion. Kazakhstan’s President, Nursultan Nazarbayev was quoted as saying, “Among these, there are large-scale ones, including on co-operation in the oil and gas sector, which are essential for us.”

Included in the bundle of agreements is an agreement worth US$ 5 billion involving the Caspian Sea Kashagan field. China’s President Xi said, “An agreement has been reached betwen the two countries about China’s participation in the development of the Kashagan field.”

The deal will see China National Petroleum Corp. (CNPC) gain an 8.33% stake in the massive field, which contains recoverable reserves of approximately 13 billion bbls. of crude oil. The field, which was discovered

in 2000, also happens to be the world’s largest oil discovery in 30 years.

According to Sauat Mynbayev, the head of Kazakhstan’s state-owned oil and gas company KazMunaiGas, CNPC will pay a further US$ 3 billion towards the funding of the second phase of development at the Kashagan field; the field is expected to begin production from 2020.

The agreements come as part of a concerted effort to boost relations between the two countries, as well as the deals covering investment in the oil and gas industry. Xi and Nazarbayev signed a pledge to strengthen their nations’ strategic partnership. Xi stated: “Our co-operation is entering a new level [...] As they say, close neighbours are closer than distant relatives. We assign high priority to our relations with the Central Asian countries.”

USAUS Interior Secretary Sally Jewell stated that there appeared to be no sense of urgency amongst offshore drillers to return to the Arctic.

“I have not heard from any companies an urgency to go forward until they’re ready and they are confident they can do it in a safe and responsible way”, stated Jewell.

Statoil, Eni and Repsol all hold Arctic leases, but with their enthusiasm potentially having been cooled by Shell’s slow progress, they have yet to put forward any exploration plans.

LIBYAAn official from Libya’s National Oil Corp. was reported as saying that, due to ongoing protests and disruption, the country’s oil production had fallen to approximately 150 000 bpd with exports dropping to 80 000 bpd.

Naji Mukhtar, the head of the General National Assembly said that “production has stopped as a result of the port closures and production has reached almost zero.” Mukhtar warned that Libya’s reputation was being damaged and that it was at risk of losing long-term customers.

UZBEKISTANTethys Petroleum has received final presidential approval for a production enhancement contract (PEC) covering the Chegra group of oilfields in southern Uzbekistan.

The PEC must now be registered with various government bodies, in order for work to begin; this process is expected to take two months. Tethys’ Executive Chairman and President, Dr David Robson said, “It was a great pleasure to receive confirmation of the presidential approval.”

// China & Kazakhstan // 22 agreements worth US$ 30 billion signed; Kashagan stake included

Russian independent oil and gas company Lukoil has announced that its net income for Q2 2013 was US$ 2.1 billion, more than double last year’s figure. One explanation for the significantly higher figure is that income for last year was hit by an increased tax bill.

However, despite the significant rise in income, the figure still fell short of analysts average estimate of US$ 2.25 billion.

In recent years, the company has had to deal with declining production, as its fields in Western Siberia (which make up the majority of its assets) have begun to deplete. In a bid to combat this decline, the company has bought into assets outside of Russia, such as the giant West-Qurna 2 field in Iraq.

Houson-based Oasis Petroleum has offered US$ 1.515 billion across four deals for 116 000 acres of North Dakota’s Williston Basin, giving the company “high quality acreage in the heart of the Bakken and Three Forks play.”

The purchases increase the company’s total acreage by almost 50%, bringing the overall figure to 492 000 acres. The newly acquired assets currently produce approximately 9300 boepd and are expected to bring Oasis’ total production to 43 000 boepd.

The acreage, most of which is situated in the West Williston area of North Dakota, holds proved reserves of 45.7 million boe with a net value just short of US$ 900 million.

// Lukoil // Q2 net income doubles

// Oasis Petroleum // US$ 1.5 billion in deals

06 OILFIELD TECHNOLOGYSeptember 2013

diarydates

webnews highlights

Scan for the ENERGY GLOBAL iPhone/iPad App

To read more about these articles and for more event listings go to:

world news

BP discovers gas in Salamat well in Egypt

ABB and Statoil to develop deepwater subsea power and control technologies

Engineers wanted Down Under

22 - 27 SeptemberSEG International Exposition and 83rd Annual MeetingHouston, USAE: [email protected]/web/annual-meeting-2013

30 September - 2 OctoberSPE ATCENew Orleans, USAE: [email protected]/atce/2013

29 - 31 OctoberOTC BrasilRio de Janiero, BrazilE: [email protected]/2013

10 - 13 NovemberADIPECAbu Dhabi, UAEE: [email protected] // UK // So far no technical fault

found after Sumburgh heli accident

The UK’s Air Accident Investigation Bureau has released a statement saying that it had so far been unable to find any “causal technical failure” that lead to the crash. However, further detailed examination of the incident is still ongoing and could potentially shed more light on the event.

The crash, which resulted in the deaths of four crew members, occurred as 11 year old AS332 LW Super Puma helicopter was flying to the Sumburgh airport in the Shetland Islands. All Super Puma flights were cancelled for six days in the wake of the accident until the Helicopter Safety Steering Group (set up by Oil and Gas UK) suggested that the flights could resume.

The AAIB has stated that, “At about two miles from the runway threshold the helicopter was approximately 240 ft below the vertical approach profile, with a rate of descent of about 500 ft/min, and an airspeed of 68 knots.”

“The airspeed continued to reduce below 30 knots and as it did so the helicopter pitched increasingly nose-up. The rate of descent remained constant for a period, before increasing rapidly. Shortly thereafter the helicopter, which was intact, struck the sea in a near level pitch attitude with a slight right bank. Both engines were delivering power until impact.”

According to reports, the Neuquen province of Argentina has scheduled the next lease sale for the Vaca Muerta shale field for March next year.

Patagonia’s regional Energy Minister said that the auction will cover a 500 km2 section of the field where companies had earlier won rights to operate but later failed to provide the investment. He was quoted as saying, “The idea is to hold the auction in March or April [...] We are going to test the market to see how interested companies are, at least in exploration.”

It is estimated that the entire Vaca Muerta could, underneath its 3 million acre area, contain up to 661 billion bbls. of oil and 1181 trillion ft3 of natural gas. Despite these potential riches, the recent nationalisation of YPF has made foreign investors cautious.

Petronas has awarded CGG with a contract to complete and process 10 000 km2 3D seismic survey offshore Sabah and Sarawak in Malaysia.

The acquisition began in August and is expected to last for five months; two vessels, the Viking Vision and Geowave Voyager, have been deployed in order to ensure that the shoot is completed before the monsoon season. The Vision and Voyager will be covering spreads of 12 x 100 x 8100 m and 8 x 100 x 8100 m respectively in a Broadseis configuration designed to address the challenging geology.

Although CGG did not specify exactly which blocks the survey would be covering, the company did mention that the geology covered would include carbonate layers, complex channels and shallow gas anomalies.

// Argentina // March auction for Vaca Muerta

// CGG // 10 000 km2 Malaysian 3D shoot won

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world news

08 OILFIELD TECHNOLOGY September 2013

// UK // Shale gas will not endanger environmental goals

// Tullow Oil // Makes first Arctic discovery

// Max Petroleum // Sagiz West & Uytas update

// Petrobras // July production falls 2.5%

// Iraq // Maysan oilfield contracts dished out

Tullow Oil has made its first discovery in the Arctic Barents Sea offshore Norway. OMV, the operator of the prospect, in which Tullow holds a 20% stake, encountered a reservoir that could hold 65 - 165 million bbls. of oil and 10 - 40 billion ft3 of natural gas.

In a statement, OMV said, “The well results are a breakthrough for the regional exploration activities as the presence of good quality oil shows the possible large potential of an area, which will see more exploration drilling in the near future.”

The appraisal well was drilled to a total depth of 905 m in water depths of 373 m and will be plugged and abandoned after the completion of further testing. The drilling rig is then due to move on to drill the 7323/7-1 S at the Wisting Alternative prospect, also operated by OMW.

The discovery is a positive result for the region after Statoil postponed the 600 million bbl Johan Casterberg find.

Independent oil and gas exploration and production company, Max Petroleum, has revealed that it has received positive drilling results from wells in both its Sagiz West and Uytas fields in Kazakhstan.

The SAGW-5 well located in the Sagiz West field was drilled to a total depth of 1395 m and hit 16 m of net pay over a 19 m interval. According to the company, reservoir quality appears to be very good with a porosity range of 15 - 25%. Once permission from the government has been received, the next stage is to begin production tests. The drilling rig is now to move on to drilling the SAGW-6 well.

The UTS-13 well in the Uytas field was drilled to 208 m total depth and uncovered 8 m of net oil pay over a 53 m interval. Reservoir quality is reportedly excellent and, as with SAGW-5, production testing is planned to begin once governmental approval is obtained.

Brazilian state oil giant, Petrobras has announced that its output for July fell by 2.5% compared to last year’s figures. The company, which produces the majority of Brazil’s oil and gas, said that the drop in production was due to maintenance work at production facilities and platforms.

Overall, the company produced 2.49 million boepd in July, down from last year’s figure of US$ 2.55 million boepd. Domestic crude output for July was also down by 4.6% when compared to June.

The company released as statement saying that, “The decrease in July was due to scheduled maintenance shutdowns on Campos Basin platforms, in addition to the completion of an extended well test in the Sapinhoa Norte field, in the Santos Basin pre-salt, operated by the itinerant production unit FPSO Cided de Sao Vincente. In September, a new extended test well will be carried out in the Lula Extremo Sul area.”

The Iraqi Oil Ministry has handed out contracts to three companies for the drilling of 39 production wells in the Maysan oilfields. The Maysan fields, operated by CNOOC and Turkish Petroleum Corp. (TPAO), contain approximately 2.5 billion boe.

Weatherford won two contracts worth US$ 94.98 million and US$ 82.39 million. Bohai Drilling Company won a US$ 96.66 million contract, and COSL (a unit of CNOOC) was awarded a contract worth US$ 73.82 million. TPAO and CNOOC signed an agreement in 2010 to develop the Maysan fields with a production target of 450 000 bpd by 2016.

Iraq has also announced that it would be extending its oil export agreement with neighbouring Jordan for an extra year.

The UK Secretary of State, Edward Davey has defended the safe and responsible exploration for shale gas in the UK, as he spoke about a report released by the UK Department for Environment and Climate Change (DECC) that estimates that “the carbon footprint of UK produced shale gas would likely be significantly less than coal and also lower than imported LNG.”

Davey was quoted as saying, “Gas, as the cleanest fossil fuel, is part of the answer to climate change, as a bridge in our transition to a green future, especially in our move away from coal.”

“We have to face it: North Sea gas production is falling and we are becoming increasingly reliant on gas imports. So UK shale gas could increase our energy security by cutting those imports.”

According to the DECC’s Chief Scientific Advisor, David Mackay, who worked on the report, the “study indicated that shale gas, if properly regulated, is likely to have a greenhouse gas footprint no worse than the other fossil fuels that society currently depends on.”

He continued, “To ensure that shale gas exploitation doesn’t increase cumulative greenhouse gas emissions, it is crucial that society maintains efforts to drive down the costs of low-carbon technologies, including carbon capture and storage.”

The UK has potentially significant shale gas reserves, but despite a government keen to begin extraction, public opinion remains divided.

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Simon Coton, NES Global Talent, UK, discusses skills shortages and solutions in Brazil’s oil and gas sector.

I

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THE

Skills shortage

BOOM

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