Application of real-time monitoring NCR August 25th 2015

Trond Lilleng Senior Advisor Integrated Operations TEX FOT OT FO Statoil ASA Mobile: +47 91183884 Email: trlil@statoil.com

Disclaimer: The comments and opinions given in this presentation reflects my personal understanding and opinions to which Statoil do not have any liability. Trond Lilleng, August 22.nd 2015

1) How did this idea of real-time / remote monitoring and control begin (in Norway)? Describe what you are doing in this area; where (what stage) are you in the process? In which countries is Statoil doing Real-time Monitoring? Is this for drilling operations, production operations, or both?

Mail Mark Hutchins, August 3.rd 2015

Broad band fiber establishment started in the Norwegian continental shelf (NCS) 1997 by including fiber in the power cable from shore to the Troll A gas platform. A redundant fiber network (combination of fiber cable backbone network and redundant radio links) was established for major parts of the NCS connecting all Statoil`s offshore installations to shore by approximately 2005. The broadband network formed the basis for real time data transfer and video conference set ups between the offshore installations and onshore support organizations. The driver for this included the need for sharing real time drilling data with onshore colleagues/ experts within Statoil and with the service companies when drilling advanced horizontal and multilateral/branched wells, particularly in the so-called Troll Oil province (thin oil below a huge gas cap). These operations were connected to the development of new downhole well steering technologies (Auto Track) which required on-line continuous follow-up from offshore and onshore experts to be able to steer wells to their targets within narrow vertical limits ( inches). Today many wells with up to 6 branches and extensive laterals (more than 3 km) are being drilled/geo steered. In addition to very limited reservoir target windows, avoiding well bore collisions (crossing older well tracks) is a major safety challenge requiring precise real-time control. The Troll oil province now has more than 150 multi branched subsea wells with more than 45,000 ft of productive reservoir.

How did this idea of real-time / remote monitoring and control begin (in Norway)?

Statoil has established a 24/7 Real Time Data Services center in Stavanger supporting all Statoil`s drilling operations worldwide (production and exploration wells). In addition to NCS, Statoil has ongoing drilling and productions operations on the UKCS, offshore Brazil, GOM, onshore US, offshore Canada/Newfoundland and offshore Tanzania. Statoil operates more than 500 subsea wells, and is the world`s largest operator in water depths greater than 100 m. The RTS center is based on a standardized data/server infrastructure for collecting offshore data and transferring data to shore (SiteCom, WITSM data format) including automated/real-time quality control of the data and transfer/pushing of the data streams to the different applications/customers within the various assets. Statoil`s RTS center has received international recognition. The RTS is a data service. In addition to RTS Statoil has established a central Subsurface Center (SSC), also located in Stavanger with experts supporting the drilling and well operations performed on Statoil`s fixed platforms and mobile drilling units (typically approximately 20-30 ongoing drilling and well operations at any time on the NCS). This service center is called upon by the assets either after having experienced operations upsets, or to receive predictive and planning support for upcoming operations (drilling of advanced well sections, running advanced completions etc.).

How did this idea of real-time / remote monitoring and control begin (in Norway)? cont.

How did this idea of real-time / remote monitoring and control begin (in Norway)? cont.

Another major driver for offshore/onshore connectivity, real-time data and VCs were Statoil`s portfolio of maturing fields, i.e. how reduce operation costs for fields in their tail end production phase with low margins. One major issue was to transfer tasks (administrative tasks and technical services) from offshore to onshore. A major driver for this is the expensive 2-4 rotation schedule (2 weeks on, 4 weeks off) for offshore workers in Norway, meaning that an offshore position typically costs more than 3 times an onshore position for the oil companies. Statoil (and at that time Norsk Hydro which was merged with Statoil in 2007) had around 2005-2006 several fields of this category, including the Brage field which was planned for shut down in 2009. A major effort was made during 2005-2007 to reduce the operating cost margins for Brage (and several other) NCS fields. Brage is still producing (now operated by Wintershall). This achievement would not have been possible without establishment of a new operating model based on real-time data transfer and extensive on-line onshore support. The Brage experience was a major reference when Statoil introduced a called common operating model for all NCS operated fields in 2009. During 2007-2010 Statoil established what was termed “production operations groups” (POGs) for each offshore asset. These are onshore cross disciplinary expert groups including production engineers, geoscientists, reservoir engineers, operation engineers, maintenance engineers and operational planners meeting every morning for offshore/onshore coordination decision meetings, ensuring common situational understanding across functions and between offshore and onshore. The basis for this meeting arena is robust offshore/onshore connectivity, stable VCs and data transfers. Statoil operates more than 30 NCS producing assets having these meetings more or less during the same morning hours (thus there are approximately 50-60 daily onshore/offshore morning meetings when adding up the drilling and well intervention morning meeting and operation and maintenance morning meetings) using VCs and sharing real-time data. Many of the information displays (work surfaces) used in these meeting are automated such that updated information on the production and injection status of all wells, work order status etc. are available as a common decision basis for the POG-meeting. The POG meeting has become a significant success in Statoil, recognized by management as a major contributed to the increased production efficiency achieved during the last years.

How did this idea of real-time / remote monitoring and control begin (in Norway)? cont.

Statoil established their Multi Field Operation Center (MFOC) in Bergen in 2007. This center provides 24/7 services within telecommunications ensuring broad band network connectivity for all NCS assets, fiscal metering services ensuring consistent fiscal reporting to the Norwegian regulator for all Statoil`s assets (offshore reduction of 2 people/POB per asset), and condition monitoring services for heavy rotating machinery (compressors, gas turbines, major export pumps etc.). MFOC is gradually expanding its services to include other types of production topside (dry) and subsea equipment. Statoil has also developed centralized onshore logistics and marine operations services. These services are based on real-time tracking of all moving vessels on the NCS. A new Logistics and Emergency Response Center (LERC) will be opened in Statoil`s offices at Sandsli outside Berger later this year. This will become a unique combined center for on-line logistics operations, marine services and emergency response capability, and said to be among the largest such centers. The center supports all drilling and well operations and production installations operated by Statoil on the NCS, but is also (increasingly) providing on-line operations and logistics support to Statoil`s operations in other parts of the world.

2) Are you using internally developed technology or vendor supplied? How are the data used (e.g. efficiency, safety, double check operations, etc.)? Describe any use of condition-based monitoring?

Mail Mark Hutchins, August 3.rd 2015

Are you using internally developed technology or vendor supplied?

Statoil uses internally developed, but mostly vendor supplied data solutions and applications. There is still a long way to go to achieve standard data formats and application solutions. Experiences from the last 10 years probably suggests that there are real limits to standardization both with respect to costs and time for development. Statoil is pragmatic and implement practical solutions which can function today – and in the future. Statoil will support and use available standards (Statoil together with BP was a major contributor to the establishment of the WITSML standard and is participating in a series of industrial standardization efforts). However, the ideal solutions must not be allowed to stand in the way blocking/postponing optimization opportunities causing loss of production and ability to capture quick wins, which may not be available “next year” (when the “next generation” standard and/or applications solution is available). Real-time data is transferred to shore and/or to Statoil`s service providers. For well construction and geo steering, ref. integrated drilling services (IDS) (directional drilling, mud logging, MWD/LWD, etc.) real-time data are transferred to on-shore support/service centers typically in Baker, Schlumberger or Halliburton. During the last years major tender invitations, Statoil has requested the service providers to establish real-time data- and service centers in their own offices in Norway to provide services for operations on the NCS. In this respect Baker Hughes has been a fore runner through their development of the Beacon concept service center in Stavanger. From this center Baker provides real-time support services to Statoil`s integrated drilling operations 24/7. The center also includes day time engineering support. The Beacon concept has resulted in significant reductions in offshore manning as many of the services are provided through onshore support and remote operations. Schlumberger and others are gradually complying to Statoil`s expectations and requirement for these services. These operational- and engineering expert support services are complementary to Statoil`s own onshore support (ref. 1.rst line, RTS and SSC).

Are you using internally developed technology or vendor supplied? cont.

Statoil uses condition and production real-time monitoring (CPM). The condition monitoring data are increasingly used for condition based maintenance (CBM). Traditionally CBM has been applied mostly for heavy rotating machinery. Extensive efforts have been made during the last years to increase/expand CBM to cover more type of equipment topside (process equipment including electrical systems, different sized motors, heat exchangers, critical emergency shutdown valves, actuated valves, control valves etc.), subsea (subsea production systems, well heads and well intervention systems) and down hole (including ESPs). Also the drilling equipment itself is gradually being subject to an increasing amount of condition monitoring from instrumentation of the top drives, draw works, mud pumps and other pieces of drilling and well intervention equipment. For each equipment type requirements/specifications with respect to type of data (temperatures, pressures, vibrations, etc.) and type of instrumentation need to be defined and installed, expert support need to be in place onshore, and close collaboration with maintenance planners etc. need to be in place to realize the potential with CBM. Statoil`s time frame for this is 5-10 years. Management`s main strategy in this respect is “direction”, being aware that such a process will require maturing internally in Statoil and within the contractor and service organizations. Statoil`s management has stated 30% reduction in offshore maintenance hours and significant cost reductions as a target for CBM. The increased focus on condition monitoring subsea include Åsgard Field subsea (11,5 MW) compressors, and introduction of “health certificates” for subsea well heads/intervention equipment and for BOPs. For BOPs there is, as you all know, a way to go for the O&G industry. After Macondo several industry initiatives have been taken to improve/increase monitoring, control, inspection routines, recertification etc. for the BOPs. Statoil participate in several of these industry initiatives (IOGP/International Oil and Gas Producers, IADC/International Association of Drilling Contractors a.o.). Major contractors/equipment providers such as NOV, Cameron and GE now have this high on the agenda. Det Norske Veritas (DNV) has proposed a joint industry project aimed at condition based maintenance for BOPs (2013).

Are you using internally developed technology or vendor supplied? cont.

Early kick detection based on more extensive use of real-time data is also recognized by the industry and Statoil as a major challenge, - and opportunity, e.g. ref. ongoing research and industry efforts related to “bottom up” instrumentation (at bit, LWD, sensors above the BOP package etc.) for early kick detection. Statoil believe that experience from extensive use of real-time data for many years from our offshore installations provides a valuable experience basis for extending this strategy also for BOPs and new ways for early kick detections, but is well aware that reaching this goal requires stamina and time. The condition monitoring data are used in various ways. The real-time drilling and geo steering data are continuously transferred during the operations, but with significant delays of seconds, minutes and quite often – in practical terms – several minutes. The condition data for rotating equipment on gas turbines are used “instantaneously”/automatically (equipment protection) within milliseconds. Condition data on plant and equipment integrity are included in the maintenance planning cycle which may take from hours to weeks or months. Sampling rates, real-time transfer, batching intervals etc. need careful considerations in each single case. Data are in many cases fed automatically to applications and simulation models. Dynamic production simulation models are expected to receive much more attention as a tool for on-line production optimization the coming years. Within drilling there have been extensive research (UT RAPID, IRIS Drilltronics etc.) and industry initiatives during the last 6-8 years. To which extend automation is going to get a breakthrough for optimization of drilling and well operations is still uncertain. The JPT June 2015 edition contains the article “Automated Drilling Technologies Showing promise”, including a critical perspective pointing to the need for including humans/key operators in the solutions to be able to take into account the large number of factors that actually need to be managed to optimize the operations with respect to rate of penetration, drilling/geo steering precision and safety.

3) In which direction do you see this process going? What kind of implementation timeline do you envision? Is it part of a strategic plan?

Mail Mark Hutchins, August 3.rd 2015

In which direction do you see this process going?

There has been many discussion with respect to the term “real-time data”. A more correct connotation might be “right time”, as this of cause depend on the type of usage. The real challenge is actually most often to be able to use the “real-time” data in the right context and have “real-time” access to relevant reference, history and planning data, thus being able to update and adjust within variable, but often very limited time windows as the operations progress. Statoil has been using “real-time” data for the last 10-15 years within various operations. This development followed after the huge wave of ICT-developments during the 1990s, followed by the establishment of broad band communication network in the North during 2000-2005. The application of extensive VC collaboration and use of real-time data is probably still is in its early days within O&G. As we/Statoil have been working with the implementation of integrated operations and new ways of working based on extensive expert support, onshore/offshore collaboration and use of real-time data (real time common situational awareness independent on locations of stakeholders) we experience that there seems to be no limits to the potential usage/applications and that new opportunities occur as we experience/learn more.

In which direction do you see this process going? cont.

One of the latest developments is related to permanent reservoir monitoring (PRM), i.e. seismic monitoring based on ocean bottom sensors registering fluid movements in the producing reservoir and giving feedback to the reservoir and production engineers with respect to injection volumes etc., and to the geo scientists with respect to needs/timing for updating their models. Statoil has been performing extensive research in this area and has installed PRM for 2 mature fields in Norway, and is planning to apply PRM to other fields (particularly for the new field under development). Integrated operations and smarter ways of working based on extensive collaboration and efficient (real time) data sharing has for many years been, and still is part of a strategic direction within Statoil. This is manifested in Statoil`s governing systems as formal work process and technical requirements and guidelines, and reflected by the fact that requirements to the IO way of working are included in design in all new development projects in Statoil. All major development contracts, maintenance and modification contracts, drilling and integrated services and well intervention contracts include requirements with respect to integrated operations ways of working including concrete set-ups and solutions with respect to VC collaboration and use of real-time data for all relevant services.

4) What are some of the challenges you have faced? 5) What was the response from industry as a whole? 6) Response from the regulator?

Mail Mark Hutchins, August 3.rd 2015

What are some of the challenges you have faced?

Statoil`s main approach to efficient use of real-time data and integrated operations ways of working is to think “MTO”, i.e. Man, Technology and Organization combined. The challenges are technical, but much focus is required on how to make people “happy” with respect to new ways of working, and how to make organizations responsible, requiring precise definitions of roles and responsibilities among all parties involved. This context does not allow space to go into these issues in detail, but could possibly be discussed separately. Some of the issues related to efficient use of real-time data and implementation of integrated operations in Statoil are discussed in the SPE-papers referenced below (there are, of course many more publications from Statoil addressing various issues related to use of real-time data and integrated operations).

References: SPE 128676, “Integrated Operations Methodology and value Proposition”, Trond Lilleng, Svein Ivar Sagatun Statoil ASA, presented at the SPE intelligent Energy Conference held in Utrecht, The Netherlands 23-25 March 2010 SPE 150418, “Integrated Operations in Statoil – from Ambition to Action”, Trond Lilleng, Mette Øyen, Unn Farestvedt, Harald Engelsen, Hilde Nordbø, Berit Vennes, Aleksander Revheim, Ole Seim, Teresa Halvorsen, Statoil ASA, presented at the SPE Intelligent Energy Conference and Exibition held in Utrecht, The Netherlands, 27-29 March 2012

What was the response from industry as a whole? Response from the regulator?

The response to Statoil`s efforts by the industry in general with respect to basing operations on more proactive use of real-time data and closer collaboration offshore/onshore is basically positive. Contractors and service providers are responding constructively, but there are still many traditional services not systematically using real-time data and leveraging the potentials with respect to offshore/onshore collaboration etc.. The Norwegian regulators i.e. Norwegian Petroleum Directorate (NPD) and Petroleum Safety Authority, Norway (PSA) have been actively engaged in the developments of integrated operations ways of working and proactive use of real-time data on the NCS. One issue which, however, still is a major issue and concern, particularly for PSA is that there always should be enough manning onboard to ensure safe operations and efficient evacuation in emergency situations. Also Norwegian Oil and Gas Association (previously OLF) has played a very important key role for the development of the application of real-time data on the Norwegian continental shelf.

Attachments

Statoil IO concept

IO concept definition in Statoil: Integrated Operations (IO) is a way of working based on the MTO (Man, Technology, Organization) perspective, focusing on efficient collaboration and use of information across disciplines,

professions and companies independant of location of work sites. IO seeks to use all our competencies and experiences and new data and communication technologies which are developing at an ever increasing pace

Development of IO in Statoil

2000 2020

ICT Broadband fiber network

Common operating model

IO Fokus Areas towards 2018

Incr

ease

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tent

of

the

IO W

ay o

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Expert Centers

2010

IO in Contracts

Standardised Work Processes

IO in Governing System

IO Ways of Working, NCS

1990 2000 2020 2010

From: Autonomous operations

As-is: IO ways of working

To-be: Condition based predictive operations