Early Offshore Petroleum Development Cost Estimates Using GISNarmina Lovely, GEOG 596AAdvisor: Patrick Kennelly

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Outline

• Introduction – the Business Challenge

• Summary of Discovery to Development Process

• Spatial Characterization of Prospects and GIS Methodology

• Engineering Characterization of Prospects

• Integration of GIS with Other Applications

• Presentation of Results

• Conclusion and Future Steps

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The business challenge

• Estimate petroleum development costs to guide exploration program

• Automate, standardize and codify engineering cost estimation

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The business challenge

TD: 25000

WD: - 5365

VOL: 310

AGE: Miocene

Pressure: 28378psi

HC Type: Oil

TD: 20000

WD: - 4964

VOL: 250

AGE: Miocene

Pressure: 24480psi

HC Type: Oil

15$ a barrel50$ a barrel

While X has bigger volume, Y might be a better value

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Discovery to Development Process

Exploration well

Exploration well

Appraisal well

Appraisal well

Exploration• Exploration prospect

inputs− Outline of prospect area

− Well location

− Reserve Size

− Water Depth

− Target Depth

− Fluid Type

− Expected Pressures

• Output is well cost and well timing

Appraisal• Number of appraisal

wells determined by reserve size

• Output is well cost(s), seismic cost, and timing

Field Development• Based on logic from tool

which will be seen in upcoming slides

• Output is all development costs and production forecast for life of field

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Spatial characterization of developments

30o

3000 feet

• Well Spacing Calculation

• Bottom Holes Placement

• Maximum Drill Reach Calculation

• Drill Center Distribution

• Gathering System Alignment for Multi-

drill Center Scenarios

• Generation of Tie-Back Options

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Spatial characteristics of developments Well Spacing Calculation

INPUTS:Hydrocarbon typeProspect Area and ShapeMaximum Volume per Well

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Spatial characteristics of developments Bottom Holes Placement

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Spatial characteristics of developments Maximum Drill Reach Calculation

INPUTS:

Target DepthWater DepthMaximum drill reachSpatial Well Distribution

30o

3000 feet

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Spatial characteristics of developments Drill Center Distribution

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Spatial characteristics of developments Gathering System Alignment for Multi-drill Center Scenarios

INPUTS:

Center of the ProspectDrill centers Spatial Distribution

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Spatial characteristics of developments Generation of Tie-Back Options

INPUTS:

Hydrocarbon TypePlatforms Spatial Distribution

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Engineering characterization of prospects

Engineering characterization of developments

• a. Drilling performance and well types

• b. Completion technologies and configurations

• c. Production facilities and tie-backs

• d. Additional production parameters

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Engineering characterization of prospects Drilling Performance and Completion Technologies

30o

3000 feet

• Drilling performance (days to drill 10,000ft)

• Varies by geologic target

• Well tangibles vary by geologic target

• Drill rig day rates ($/day) – company rates

• Rig type

MODU or Platform Rig

• Type of Well

Exploration, appraisal, or development

• Completion type

Wet tree or dry tree

• Maximum drill reach

• Establishes number drill centers required

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Engineering characterization of prospects Production Facilities and Tie-backs

• Wet Tree Local FPS host cost a function of:

• Peak field production

• Water injection requirements

• Number of wells

• Shut in Tubing Pressure

• Water depth

Typical Dry Tree Development(shown w/ subsea tie-back)

Typical Subsea Tie-Back Development

Typical Wet Tree Development

• Subsea tie-back to existing FPS host

• Oil – 25 mile radius

• Gas – 75 mile radius

• Subsea cost a function of:

• Number of wells

• Number of drill centers

• Distances between drill centers

• Shut in Tubing Pressure

• Dry Tree local FPS host cost a function of:

• Peak field production

• Water injection requirements

• Drill rig requirements (Dry tree development only)

• Number and type of wells

• Shut in Tubing Pressure

• Water depth

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Engineering characterization of prospects Additional Production Parameters

• Field production forecast is the sum of individual wells brought online per drilling and completion schedule. Well forecasts utilize initial rate, reserves per well, and decline by geologic age.

• Water injection wells are the ratio of producing wells with well depth consideration.

• Optimize facility options (dry tree versus Subsea tie-back) based on number of wells at each drill center

• Export pipeline cost included to existing FPS’s within 30 miles or nearest one

• Matches facility cost spending profile with first oil date

• Facility abandonment and salvage cost included

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GIS and Information Technology applied

Flow of Automation

Spatial characterization of developments

ArcGIS &

ET GeoWizards

Engineering characterization of developments

MS Excel

Organization of results

MS Access

Presentation of results

PowerPoint

VBA Automation

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Organization of results

A

Subsurface Data:Gross recoverable mmboe 250Net recoverable mmboe 63Reserves per well mmboe/well 9Number of producers 27Number of injectors 9

Capital ($m): Gross WI:9%E&A Drilling: 607 57Dev drilling: 11,788 1,107Facilities: 3,853 362Cap OH:Total: 16,248 1,525

Indicators(NRI) Success RiskedPs: 25%IRR %NPV7 ($m) %Disc. payback (yrs)IE (NPV/WI capital)

ProspectXSS Development w Semi Host BP CONFIDENTIAL

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Conclusions

• Manual process was automated for a batch of prospects

• Took days for each prospect manually, a matter of minutes automatically with favorable results

• ARCGIS was a key technology to automate the calculation

• Integration of GIS Technology with Access, Excel and PowerPoint

• Generated results for hundreds of prospects for comparison purposes: 800+ prospects, 2,300+ development options

• Future Steps:

− Incorporate an economic model for the output

− Simplify cost estimate updating

− Incorporate portfolio analysis toolkit

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Acknowledgements

• BP Engineering Team - Engineering Characterization of developments

• Charles Fried - Flow of Automation between GIS and Excel Engine

• Patrick Kennelly – Penn State Program Advisor