SPE Facilities Group Technical Evening

Australia’s offshore well decommissioningApplication of global lessons learned

Christopher MurphySenior Research Fellowchristopher.j.murphy@curtin.edu.au

Agenda

1. Offshore O&G well decommissioning liabilities & practices

2. Well decommissioning compliance

3. Cap rock restoration explained

4. Cost saving opportunities – Australian well decommissioning

5. CUWIM 1 - Forecast cost estimate

6. Summary

1 CUWIM = Curtin University Well Inventory Model

Well DecommissioningPreviously known as permanent well abandonment or P&A

RiglessWorking on a well without the use of a conventional drilling or workover rigWireline and fluid circulating systems are the primary methodsCoil tubing and hydraulic workover unit are also classed as rigless

RiserlessWorking on a subsea well without the use of a riser back to surface

Cap Rock Restoration (CRR)Restoring the reservoir cap rock to pre-drilling /geological condition

Definitions

RR = Rigless / Riserless

Offshore O&G well decommissioning liabilities & practices

Australia

UK

USA GoM

USD 16.6 billion (41%)

1,008 wells

USD 16.5 million / well

Total Liability USD 40.5 billion

Offshore Oil and Gas Decommissioning Liability (Australia)ADVISIAN Exec Summary (10 Mar 2020)

Average cost indicates a rig operation

Advisian - Cost reduction opportunity (Wells)

The following three factors combined would provide an estimated USD 4.1 billion saving:

1. A dedicated P&A workgroup to share lessons learned, pre-screen wells, optimize the execution schedule and ensure continuity of the work schedule (even mini-campaigns); Collaboration

2. Given the sheer volume of wells and a focused effort, it is conceivable that application of a ‘Technical Limit’ approach (best possible performance, limited only by technology and nature) could provide at least 1.2 days saving in operations optimization per well; Technical Limit

3. It is also conceivable that suitable application of new technology could also provide at least a 1.0 day saving in operations per well. New Technology

12,375

4,981

7,394

4,158

3,236

1,487

Total records indatabase

Duplicate recordsremoved

Unique well records Wells already decom Remaining wells to bedecom after 2020

Wells in <100m ofwater

Wells Decommissioning Liability (UK)

Source: UK OGA borehole database statistics (Jan 2021)

UKCS Wells Liability USD 40.1 billion

USD 12.4 million / well (UK)~25% less than Australia

46% in water < 100m

Average cost indicates a rig operation

54,736

17,505

37,231

25,713

11,518

8,564

Total records indatabase

Duplicate recordsremoved

Unique well records Wells already decom Remaining wells to bedecom after 2020

Wells in <100m ofwater

Wells Decommissioning Liability (USA GoM)

Source: BSEE borehole database statistics (Jan 2021)

GoM 1980 -2020 ~20,000 wells decom, >70 % in water < 100m (Primarily rigless techniques - Prof Mark Kaiser at LSU)

Why rigless?Cost reduction, meeting regulations(Cost data not published by BSEE)

My experience USD 1.0 million per well is common

74% in water < 100m

Well decommissioning compliance

Well decommissioning compliance

NOPSEMA(Based on OPGGS Act 2006)Considers well decom in the latest editions of OGUK WDG and NORSOK D-010as “good industry practices”

OGUK Well Decommissioning Guidelines issue 6, June 2018

NORSOK D-010:2021 Well integrity in drilling and well operations

CFR 250 Subpart Q – Decommissioning Activities, current(USA, Code of Federal Regulations)

Note: OGUK WDG and NORSOK are based on the underlying principle of CRR

Well decommissioning compliance

Note: OGUK WDG and NORSOK are based on the underlying principle of CRR

• NOPSEMA

• Assess and approve WOMP

• Operator can select well access method and barrier philosophy

• Risks to be demonstrated as ALARP

• As previously stated, the latest versions of the OGUK WDG and NORSOK D-010 documents are accepted as “meeting good industry practice”. Both documents are based on CRR as a barrier philosophy and accept rigless/riserless techniques as a suitable access methodology to install the well barrier(s) through the production tubing string(s).

Cap rock restoration explained

SSD - C

SSD - C

SSD - C

SSD - C

XN

SSD - O

SSD - C

XX

SSD - C

SSD - C

SSD - C

SSD - C

SSD - C

XX

XX

Well decommissioning current practice (Australia)

Not to scale

Reservoir

Impermeable

Impermeable

Impermeable

Impermeable

Cap rock

All completion equipment

can be removed

Cap rockPrimary barrier envelope

Secondary barrier envelope

Well severed below mudline

Operations can be 20-30 days or moreRig up, BOPs, pulling comp string, PWC, milling etc.

SSD - C

SSD - C

SSD - C

SSD - C

XN

SSD - O

SSD - C

XX

SSD - C

SSD - C

SSD - C

SSD - C

SSD - C

XX

XX Down hole completion equipment

may be left in place. There are

some outliers e.g. electric cables

and control lines

Rigless with CRR normally takes

significantly less time than other

methods resulting in less project

cost (often 25 - 75%)

All lower zones in equivalent

or risk assessed pressure

regimes where cross flow is

deemed acceptable over

geological time

Primary barrier envelope

Secondary barrier envelope

Well severed below mudline

Cap rock

Reservoir

Impermeable

Impermeable

Impermeable

Impermeable

Not to scale

Rigless well decommissioning

Operations can be 5 – 7 days or less

Practical case – well decom

Plug-01

Plug-02

Plug-03

Plug-02

Plug-01 Plug-01

Cap rock

Rigless = 5 - 7 days common in GoM

Day 1 Day 2 Day 3-4 Day 5 - 7

Cost saving opportunities – Australian well decommissioning

Hypothesis – Australia well decom

If the principle of cap rock restoration (CRR) can be applied to the significant portion of the total well inventory containing a completion (i.e. production tubing), then application of rigless/riserless (i.e. subsea wells) and rigless (i.e. platform wells) access methods can significantly reduce cost, versus current practice, while ensuring the same standards of well integrity.

Geoscience Australia

Australian Wells Databases(public)

NOPIMS (GA)

CUWIM(Excel)

Raw Data

>20k Records of hard to visualise data

Data Processing

& Validation

Curtin University Well Inventory Model (CUWIM)

Mar 2020

>20k Records Fully customizable

sort and filtercapabilities + graphics

WAPIMS (GA)

~900 wells on Barrow Island

Not to scale

Target well

CRR

CUWIM - Forecast cost estimate

CUWIM – Well classifications

i. DNC - Dry, Not Completed

ii. DCNR - Dry, Completed, Not Rigless

iii. DCR - Dry, Completed, Rigless

Dry (platform) wells – easily accessible Wet (subsea) wells – more complicated

iv. WNC - Wet, Not Completed

v. NR - Wet, Completed, Not Rigless

vi. WCR - Wet, Completed, Rigless

CUWIM – Summary of wells (offshore Commonwealth)

Data Processing

& Validation

CUWIM – Cost table

Access Method DescriptionWell Decom

Million USD

Duration

Days ATotal Well Cost Rate

USD/day B

i Floating rig (semi)- conventional techniques 7.70 35 220,000

ii Floating rig (semi) - rigless/riserless techniques 3.80 20 190,000

iii Jackup - conventional techniques 3.75 25 150,000

iv Jackup - rigless techniques 1.88 15 125,000

v HWU - conventional techniques 2.40 20 120,000

vi HWU - rigless techniques 1.65 15 110,000

vii Rigless - only wireline & pumping 1.02 12 85,000

A Interfield rig move included in duration, international mob excluded.B Operator total cost per well in USD divided by duration days.

Access methods i and iii are in line with costs for Southern North Sea operations (OGUK 2019).

Access methods ii, iv & vi rigless techniques means the unit is used as an access platform. All well work is performed with wireline and

pumping. Reduction in USD/day and durations due to multiple service companies not required, drilling BOPs and risers are not used,

tripping pipe operations are minimised, completion strings left in situ up to the bottom of the SCSSV.

Access method vii rigless uses stand alone wireline and pumping spread supported by a minimum cross trained crew.

Table 1. Single well access method and cost estimate

CUWIM - Hypothetical cost estimate

Floating rig, Not Completed

Floating rig, Not Completed

Floating rig, Conventional

Floating rig, Rigless

Floating rig, Rigless

Jackup, Conventional

Jackup, Conventional

Jackup, Conventional

HWU, Conventional Rigless

Rigless

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Base Case(no rigless)

Step 1. Rigless(no deep set lines)

Step 2. Rigless(inc deep set lines)

USD

Mill

ion

s

Estimated Cost Reduction OpportunitiesCUWIM (840 wells)

USD 1,655 millionUSD 854 million

USD 4.9 million / well (CUWIM)

● Current offshore well decom liability USD 16.6 billion

● Cost saving opportunities highlighted by Advisian can be supplemented by methodology

changes

● Rigless methodology is applicable on many wells provided well barrier element

verification is demonstrated.

● GoM executing rigless since 1980

● Applied to Australian offshore well inventory

○ 21% Through methodology change (rigless vs. rig)

○ 20% additional if barrier element with cable or hydraulic lines are acceptable

● Barrier element verification remains the key uncertainty and requires a lot of work

Summary

APPEA Journal Reference

Murphy, C., and Higgins, S. A. (2021) Australia offshore well inventory characterisation and decommissioning cost

saving opportunities through cap rock restoration and rigless/riserless techniques.

The APPEA Journal 61. In press. doi: 10.1071/AJ20118

https://www.appeaconference.com.au/

Thank you

Christopher MurphySenior Research Fellowchristopher.j.murphy@curtin.edu.au

Curtin University Oil and Gas Innovation Center (Perth, WA)https://cuogic.curtin.edu.au/