Defining Technology for Exploration, Drilling and ProductionApril 2010www.worldoil.comGulf Publishing CompanyOTC 2010 PREVIEWDRILLING TECHNOLOGYSteerable liner drillingMultilaterals offshore AustraliaFLOATING STRUCTURES AND MOORINGSARTIFICIAL LIFT ROUNDUPTECHNOLOGY FROM EUROPEWorld Oil APRIL 2010 3 World Oil contentsOFFSHORE CONSTRUCTION65Floating structure and mooring advances target ultra-deepwater fieldsP. Kulkarni New-generation offshore floaters are coming onstream to drill and produce oil and gas under extreme environments.OTC PREVIEW71 Latest technologies, long-term energy strategies distinguish OTC 2010N. Benton From climate change policy to the dynamics of salt tectonics, this years show features a comprehensive array of all things offshore.SUBSEA OPERATIONS83 Successful drilling and completion at BC-10 using surface BOP system B. A. Tarr, T. Taklo, A. Hudson, L. Stockwell and J. Schroeder The implementation of a seabed isolation device enabled a doubling of the operating water depth capacity for operations offshore Brazil.PRODUCTION TECHNOLOGY95Whats new in artificial liftJ. F. Lea and H. W. WinklerPart IIAdvances in subsea boosting, HT pumps and shale gas dewatering.COMPLETION TECHNOLOGY105 Single-trip multilateral junction technology reduces well costs M. Glaser, T. Heng and O. Balstad An innovative application of casing-exit technology saved two trips and $2 million in Norways sgard Smrbukk Sr Field.TECHNOLOGY FROM EUROPEE-115 This special report features selected technology developments and industry interviews representing several key European countries.PRODUCED WATER REPORT147 Fluid modeling helps improve skim tank performance D. W. Phelps, R. I. Khan, J. M. Lee, P. Andrews and D. Marlowe Using computational fluid dynamics simulations, a new internals design was developed to allow the operator to double the process flowrate.153 RMOTCTesting a multistage fluid treatment C. Johnson, J. E. Sundine and M. Curtis The treatment process investigated included electro-coagulation and advanced mechanical separation, as well as a low-pressure, chemical affinity-based filter.APRIL 2010, Vol. 231 No. 4A Gulf Publishing Company PublicationCOLUMNS9Editorial comment Pramod Kulkarni, EditorPlease, God! Give us another boom17Whats new in exploration Christopher Liner, Contributing EditorPassing the salt takes a collaborative effort19Explorationdiscoveries Nell L. Benton, Associate Editor21Drilling advances Jim Redden, Contributing EditorBig indeed can come in the tiniest of packages23Whats new in production David Cohen, Managing EditorA land flowing with milk, honey and natural gas25Oil and gas in the capitals ystein Noreng,Contributing Editor, North SeaNatural gas for Europe: How much? From where? At what price?NEWS & RESOURCES11World of oil, Nell L. Benton29Industry at a glance 157People in industry 159Companies in the news 160New products 164Advertisers index 165Advertising sales office 165World Oil Marketplace166Meetings & eventsABOUT THE COVER The Perdido develop-ment began production on March 31. The float-ing spar, located 200 mi south of Freeport, Texas, in 7,800 ft of water, is the worlds deepest offshore drilling and production platform to date. Photo courtesy of Shell.DRILLING TECHNOLOGY33 Bed boundary mapping proves useful in a heavy oil environmentP. Machado, R. Guzman, C. Rojas, A. Ache, N. K. Hazboun and K. Gonzalez Deep azimuthal electromagnetic resistivity measurements were used to optimize the trajectory of wells drilled with a rotary steerable system.41Steerable liner drillingA. Torsvoll, J. Abdollahi, M. Eidem, T. Weltzin, A. Hjelle, S. A. Rasmussen, S. Krueger, S. Schwartze, C. Freyer, T. Huynh and T. SorheimUnder development since 2006, the first-of-its-kind drilling system was successfully field tested in the Norwegian sector of the North Sea.51Multilateral wells reduce capex in subsea developmentB. Lawrence, M. Zimmerman, A. Cuthbert and S. FipkeAn application of a multilateral junction system offshore Australias Northwest Shelf replaces 18 single wells with nine multilateral wells, saving significant time and cost.SPECIAL FOCUS4 APRIL 2010 World OilHouston Office:Mailing Address: P. O. Box 2608Houston, Texas 77252-2608, U.S.A.Phone: +1 (713) 529-4301 Fax: +1 (713) 520-4433 www.worldoil.comLondon Office:Nestor HousePlayhouse YardLondon, EC4V 5EXUnited KingdomPhone: +44 (0) 20 7779 8800Fax: +44 (0) 20 7779 8996/8899GULF PUBLISHING COMPANYPublisherRon HigginsEDITORIAL EditorPramod KulkarniManaging EditorDavid Michael CohenAssociate EditorNell L. BentonTechnology Editor Diane LangleyDirector of Data Katie Hammon Offshore Rig Data Editor Justin SmithContributing News EditorHenry D. TerrellContributing EditorLeonard V. ParentContributing EditorDr. Christopher LinerContributing EditorJim ReddenContributing EditorJerry GreenbergContributing Editor, WashingtonDr. Roger BezdekContributing Editor, Middle EastDr. A. F. AlhajjiContributing Editor, North SeaDr. ystein NorengContributing Editor, FSUJacques SapirContributing Editor, Latin AmericaDayse AbrantesContributing Editor, Asia-PacificJeffrey M. MooreContributing Editor, LNGSaeid MokhatabMAGAZINE PRODUCTION+1 (713) 525-4633DirectorProduction and OperationsSheryl StoneManagerAdvertising Production Cheryl WillisArtist/IllustratorDavid WeeksContractorEditorial ProductionJessica Crowley ADVERTISING SALESsee Advertisers indexCIRCULATION+1 (713) 520-4440DirectorCirculationSuzanne McGeheeE-mail: circulation@gulfpub.comEDITORIAL ADVISORY BOARDSenior Editorial AdvisorPaul L. Kelly, Energy and Ocean Policy ConsultantEditorial AdvisorsWilliam Donald (Donnie) Harris III, President and CEO, Forrest A. Garb & AssociatesAlexander G. Kemp, Schlumberger Professor, Petroleum Economics, University of AberdeenDr. D. Nathan Meehan, Vice President, Reservoir Technologies, Baker HughesRobert R. Workman, Group President, Distribution Services, National Oilwell Varco, and Chairman, Petroleum Equipment Suppliers AssociationDouglas C. Nester, COO, Prime Offshore LLCDavid A. Pursell, Managing Director and Head of Macro Research, Tudor, Pickering, Holt & Co.T. Jay Collins, President and CEO, Oceaneering International, and Chairman, National Ocean Industries AssociationRobert E. (Bob) Warren, Vice President, Industry and Government Affairs, Pride InternationalTom Price, Jr., Senior Vice President, Corporate Development and Government Relations, ChesapeakeWorld Oil is indexed by Business Periodicals Index, Engineering Index Inc., and Envi-ronmentalPeriodicalsBibliography.MicrofilmcopiesavailablethroughUniversity Micro films, International, Ann Arbor, Mich. The full text of World Oil is also available in electronic versions of the Business Periodicals Index.WorldOil(ISSN0043-8790)(est.in1916asTheOilWeekly)ispublishedmonthlyby Gulf Publishing Company, 2 Greenway Plaza, Suite 1020, Houston, TX 77046. Periodicals postage paid at Houston, TX, and at additional mailing offices. World Oil and The Oil Weekly are registered trademarks of Gulf Publishing Company. 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Other energy group titles include: Hydrocarbon Processing and Petroleum EconomistPublication Agreement Number 40034765 Printed in U.S.A.Industrial RubberCirculating EquipmentIndustrial Rubber, Inc.'s Swages are light and easy to handle, yet robust enough to withstand high pressure cir-culating. e 1502 union sub is easy to replace should the need arise. Swages are available in any size or style of casing thread - just let us know what you need!Features of the IRI Swage Include: Dished Top Design Reduces Weight by up to 33% 1502 Union Easy to Maintain or Replace ACME readed Connections - No Pipe reads One-piece Design allows for High-Pressure Use Available for any size casing, with any style threadsIndustrial Rubber, Inc.'s Circulating Heads comple-ment the Industrial Rubber line of Cementing Heads. IRI Circulating Heads and Cementing Heads utilize a common Quick Connect sub that allows quick change out from Circulating Head to Cementing Head. is makes for a convenient circulating tool when used either in conjunction with an IRI Cementing Head or as a standalone unit.Features of the IRI Circulating Head Include: Quick Coupling Union allowsfast, easy connectionto Casing String Plugs can be dropped through theCirculating Head assemblyby simple removal of theCirculating Head Cap. Available for any size casing, withany style threadsOklahoma City, OKToll-Free: 1-800-457-4851 Fax: (405) 634-9637www.iri-oiltool.comHigh pressure. Extreme temperatures. Volatile products. Its all part of the job in hydrocarbon processing. But so is the goal of maximizing safety integrity. We makethe process more secure with our innovative valves and controls, which is why the industry relies on us to keep their workers safe and their plants running smoothly. Risk has always been part of this job.A part we can do without.Engineering transformation.Learn more about our plant performance solutions at www.cwfc.comINTELLIGENT INTEGRATION.Keeping you productive is our primary objective. And toward that goal we continue to enhance a more effective drilling process with the intelligent, innovative integration of our systems, technologies and human assets.From such diverse goals as managing your ultra-deep drilling risks to accelerating your production returns at the lowest available costs, we recognize the daily challenges you face in our volatile industry. Newpark Drilling Fluids continues to deliver on its promise of matching solutions to your specific drilling needs.Three different classes of assets material, technology and human skills converge into the most intelligent drilling uids and drilling solutions available to your projects. Versatile systems and proprietary products, creative project management skills, powerful application tools, extensive laboratory analyses, nely tuned supply chain management services, safety management and materials disposition. We produce and align them a unied spectrum of skills and services delivered as intelligent, innovative integration. Our commitment to your success. Intelligent integration . . . from your Newpark Drilling Fluids Team. Call or e-mail us today.16340 Park Ten Place, Suite 150Houston, TX77084 Tel: 800-444-0682281-754-8600Fax: 281-754-8663www.newparkdf.com 2010. All rights reserved.avaEditorialPramod.Kulkarni@worldoil.com PRAMOD KULKARNI, EDITORcommentWorld Oil APRIL 2010 9 I am honored to join World Oil maga-zine,whichhasbeendefiningtechnol-ogyfortheupstreamoilandgassector since 1916. We have an energetic edito-rial team in place and all of us are look-ing forward to providing you with news andinsightsaboutexploration,drilling, completionandproductionactivities throughout the world.Theoilandgasindustryispoisedat several critical junctures at this time. The first turning point, hopefully, is the world economyand,consequently,theenergy sector.Whiletherearenocertaintiesin life other than death, taxes and the boom-and-bust cycles for our industry, the reces-sion appears to have bottomed out. IHS economistNarimanBehraveshexpects demandtostartrisingandcontinueon the upswing through 2011 and 2012. He suggests that oil prices are somewhat high at this time due to investor activity, but he does not expect the prices to dip below $65.OPECPresidentandEcuadorian OilMinisterGermnicoPintoalsosug-gests that acute and excessive price spec-ulation is determining oil prices. OPEC agreed in mid-March to keep production quotas unchanged as the ministers meet-inginViennaexpressedcontentment with oil at about $80 a barrel.As a 35-year industry veteran, I have livedthroughfourboomsandthree busts.Onceagain,Icanhearprayers reachingouttotheAlmightyfromthe oilfield executive boardrooms to the field officesandrigsites,PleaseGod,give us another boom. We wont screw it up this time. Actually, it is the oil and gas industry that has provided the appropri-ateresponsetothedownturnand,on thecontrary,itisthebanks,real-estate speculators and investment bankers that cannotbetrustedtohelpmaintaina stableeconomy.Operatorsandservice companieshavetrimmedbudgets,re-duced rig count and cut payroll to retain financial flexibility. However, these enti-ties have not lost sight of the long-term needforincreasingsuppliesofbothoil andgas.Majorsandindependentshave continuedtheiroffshoreandonshore explorationanddevelopmentprograms anddiscoveredmajoroilandgasfields. A case in point is the robust response to the US Central Gulf of Mexico 213 lease sale. As our article in this issue on float-ingstructuresdescribes,alargenumber of newbuild drillships, semisubmersibles andFPSOsareheadingtowardnew E&ParenassuchasthelowerTertiary fields in the ultra-deep waters of the Gulf of Mexico and the presalt fields offshore Brazil. The industrys heavy investments in such long-term projects will continue withoutregardtothedailypricefluc-tuations.InNorthAmerica,shalegas operators are continuing to acquire new acreageandsustaindrillingoperations, and theres growing interest in pursuing shaleopportunitiesinotherregionsof the world.Thesecondcriticaljunctureforthe oil and gas industry is the mix of energy supplies between oil, natural gas and re-newablesourcessuchasbiofuels,solar andwind. Thereisunanimousconsen-susthatoilwillremainthedominant fuelfordecadestocome.TheObama administrationhasputitspolitical weightandtheeconomicpowerofin-centivesbehindtherenewablesources. USEnergySecretaryPaulChube-grudgingly said at CERA Week in early Marchthatnaturalgascouldserveasa clean transition fuel until the renewable sourcestakeover.Coininganewterm, hydrocarbondeniers,ConocoPhil-lipsCEOJamesMulvacontendedthat naturalgasisnotjustatransitionfuel, but the fuel of the futurewith shale gas providing adequate supplies for the next 100 years. Statoil President Helge Lund said he is mystified as to why natural gas doesnt enter into discussions of alterna-tive clean energy fuels in political circles ofEuropeandtheUS.SaudiAramco President Khalid Al-Falih expressed opti-mism about the long-term prospects for alternativeenergysources,butwarned of green bubbles, the collapse of which will not only have a negative impact on the broader economy, but will also dam-age the long-term prospects for the suc-cess of these energy sources.Thethirdcriticaljunctureconcerns governmentinterventionintheenergy businessthrougheithertaxesorlegisla-tiverestrictions.Thereisthelooming threat of either a cap or a tax on carbon emissions,whichcandrasticallyaffect the US economy as well as every sector of the energy industry. In its FY 2011 bud-get, the US administration is proposing to raise $40 billion from the oil and gas industry over the next 10 years through therepealofavarietyoftaxincentives thathadbeenimplementedtoencour-agedomesticproduction.Shaleopera-tors must contend with a proposed new Environmental Protection Agency study on the effects of hydraulic fracturing and legislativeattemptsintheUSCongress to demand that service companies release proprietary information on the chemical compositionoftheirfracturingfluids. There are, however, encouraging signs in other parts of the world. The province of Alberta, Canada, has decided to rescind alloraportionofthe20%royaltyin-crease it had imposed in 2007. The UK governmentisplanningtoofferincen-tives to encourage exploration in remote areas such as the Shetlands.Thefourthcriticaljunctureconcerns the publishing industry. Just like oil, print publicationswillremainadominant source of news and analysis for the fore-seeablefuture,butthereisalsocomple-mentary growth of instantaneous sources of information from the web and portable devicessuchastheiPhone,Blackberry andtherecentlyintroducediPad.Were now seeing increasing usage of webcasts, podcasts and You Tube videos. World Oil will continue to serve our readers through ourprintmagazineandbooks,butyou can also visit our website (www.worldoil.com), view our profile on Facebook and followusonTwitter.Amongthelatest innovationswehaveintroducedonour websiteiscontextualsearchsoyoucan find the information you needfaster.As we progress to a brave new world, World Oil will introduce evolutionary im-provements to meet the changing needs ofourreaders.Ilookforwardtohear-ing from you. Besides phone and email, IhaveFacebookandTwitteraccounts. Ive heard that the hip people have now moved to new social media sites such as Digg, ShoutWire and Wetpaint. I guess I should stop writing and check out these sites. An editor must follow his readers, wherever they are.WOPlease, God! Give us another boom.HALLIBURTON 2010 Halliburton. All rights reserved.Solving challenges.TMIn places where the odds are against you, Halliburton is there with you.Nell L. Benton, Associate EditorWorld Oil APRIL 2010 11World of oilCentral GOM lease sale receives $949 million in high bids TheCentralGulfofMexicoOilandGasleasesale213,heldonMarch17in New Orleans, attracted $949,265,959 in high bids. The sale was conducted by the Minerals Management Service (MMS) and had 77 companies submitting 642 bids on 468 tracts comprising over 2.4 million acres offshore Louisiana, Mississippi and Alabama. The sum of all bids received totaled $1,300,075,693. A total of 151 tracts in water depths less than 656 ft received bids. This represents 32% of all tracts receiv-ing bids, an increase of 5% from last years Central Gulf lease sale. The highest bid received on a tract was $52,560,000 submitted by Anadarko E&P Company LP and Mariner Energy Inc., for Walker Ridge Block 793. Bidding alone and with partners, Anadarko was successful on 48 of 53 total bids, representing expenditures of about $128 million net to Anadarko. Other companies placing high bids include Maersk Oil Gulf of Mexico Two LLC, Shell Offshore Inc., Chevron U.S.A. Inc., Hess Cor-poration and BHP Billiton Petroleum Inc.. Each high bid on a tract will go through anevaluationprocesswithinMMStoensurethepublicreceivesfairmarketvalue before a lease is awarded. Consol acquires Dominions Appalachian E&P businessConsol Energy has entered into a definitive agreement to acquire the Appalachian exploration and production business of Dominion Resources for $3.475 billion in cash.Asaresultoftheacquisition,onapro-formabasis,Consol,acoal-focused energy company, will become the largest producer of natural gas in the Appalachian Basin.TheacquisitionwilltripleConsolsdevelopmentassetstoapproximately 750,000 acres with the addition of Dominions approximately 500,000 Marcellus Shale acres in Pennsylvania and West Virginia. After completion of the transaction, Consols total proven gas reserves will increase by more than 50% from 1.9 Tcf to approximately 3 Tcf and its potential gas resource base will double to approximately 41 Tcf. Consol will acquire a total of 1.46 million oil and gas acres from Dominion alongwithover9,000producingwells.Uponcompletionofthetransaction,the companysnaturalgasbusinessisexpectedtoaccountforasmuchas35%ofits total revenue.Shell, Nexen announce significant joint oil discovery Royal Dutch Shell and Canadian energy giant Nexen announced they have made a significant oil discovery in the deep waters of the Gulf of Mexico. The drilling in the Appomattox project is the third joint discovery between the two companies in the area, following two others in the Mississippi Canyon also named for American Civil War encounters, Vicksburg and Shiloh. The companies did not estimate the size of the reserves except to call the discovery significant and to say well results have exceeded our pre-drill expectations. The discovery is close to 5 mi deep, located in 7,217 ft of water and was drilled to 25,077-ft true vertical depth. The well encoun-tered approximately 530-ft gross (425-ft net) true vertical thickness of oil pay. Shell made an initial discovery in the deepwater eastern Gulf of Mexico in 2003 with the Shiloh discovery. A second discovery followed in 2007 at Vicksburg, located about 6 mi east of Appomattox.Fugro receives new seismic survey vesselFugro has formally taken delivery of a new-build seismic survey vessel, the M/V GeoCaspian,whichisonlong-termcharterfromship-ownerVolstadMaritime AS. The vessel was outfitted at Fosen Yards in Norway and is capable of towing sixteen 26,250-ft-long seismic streamers, which are fully steerable using DigiFIN technology. M/V Geo Caspian is the third C-class vessel in a series of four delivered since 2007. The next C-class vessel, the M/V Geo Coral will be delivered to Fugro in August 2010. Cascade, Chinook Fields to come onlinePetrobrashasannouncedthatoil productionshouldcommenceatthe Cascade/Chinookdevelopmentin mid-2010.Thecompanystatedthat theChinookFPSOunitshouldsee firstoilinJune2010;however,pro-ductioncouldalsocomeonlinein July.LocatedinthegreaterChinook areaoftheUSGulfofMexico,the fieldshaveacombinedestimated production capacity of 80,000 bopd. Keppel partners to build, operate new shipyard Keppel Offshore & Marine Limited has partnered with State Oil Company ofAzerbaijanRepublic(SOCAR)and Azerbaijan Investment Company (AIC) to develop and manage a new 52-ha shipbuilding and ship repair facility in Baku,Azerbaijan.Theshipyardwill be developed over a period of two to three years and will cost $386 million. Thenewyardisdesignedtounder-takeconstructionofavarietyofves-selsrangingfromoffshoresupport vessels to tankers, as well as perform ship repair and conversions. AlMansoori signs joint venture with Key EnergyAlMansooriPetroleumServices has signed a joint venture agreement withAmerican-basedonshoreener-gy production services company Key EnergyServices.TheJVwillbring several new services to AlMansooris capabilitiesincoiltubing,workover rigs,pumping/cementing,fracturing and acidizing. Apache deploying Firefly in ArgentinaION Geophysical Corp. announced thatitscablelesslandseismicacqui-sitionsystem,Firefly,willbeusedby ApacheCorp.toacquiredataontwo separateprojectsintheMendozare-gionofArgentina.TheApacheproj-ectsinMendozawillutilizeconven-tionalgeophones,markingthefirst timeFireflyhasbeendeployedusing analogseismicsensors.About5,500 Firefly stations will be used during this project,whichisexpectedtostartin May 2010 and finish by August 2010.Are you stuck with mature elds producing up to 98% water, because workovers are just too expensive? Now FMC Technologies has the tool thoroughly eld-tested in the North Sea to boost production using less expensive, monohull vessels. Its called riserless light well intervention (RLWI), and it can increase oil recovery by up to 46% at half the usual cost. Discover the full potential of our intervention technologies atwww.fmctechnologies.com INTEGRATED TECHNOLOGY. INCREASED PRODUCTION. PUT THEM TOGETHER AT OTC BOOTH #1941.www.fmctechnologies.comWe put you rst.And keep you ahead. 2010 FMC Technologies. All rights reserved.MPMs Self-Conguring Meters: Unprecedented accuracy for mul ti-phase and wetgas applications. 2010 AWARD WINNERWorld of oilAnalysts predict deepwater spending will top $167B Douglas-Westwood Research has produced an appraisal of anticipated worldwide deepwater expenditures over the five years, to 2014, that concludes $167 billion will bespentanincreaseof37%overtheprecedingfiveyears.Douglas-Westwoods WorldDeepwaterMarketReport2010-2014revealsthatsectoractivitywilllargely remain within the golden triangle of Africa, the Gulf of Mexico and Brazil, with regional investment representing over three-quarters of the predicted global capital expenditure. The majority of golden triangle investment, however, will take place in Latin America, driven largely by the capital-intensive development plans laid out by Petroleo Brasileiro (Petrobras) over the next decade. The report also highlights that Asian deepwater markets will continue to grow during the forecast period, receiving around 10% of the total predicted global investment. The report reveals that opera-tors have exerted substantial pressure on their supply chains during 2009, achieving reductions of up to 15%. This confirms operator purchasing power has returned but that renewed sector growth could encourage cost inflation in some equipment and service markets.Total, DONG partner to develop gas fields offshore UK DONG Energy, along with its partner Total, has announced plans to develop the Laggan and Tormore gas fields in the West of Shetland region in Great Britain. The development of the offshore frontier region is subject to the United Kingdom Gov-ernmentsDepartmentofEnergyandClimateChangeapproval.Yves-LouisDar-ricarrre,PresidentExploration&Productionstated,Totalhasdemonstratedits capacity to successfully develop highly technological projects and continues to do so with the Laggan and Tormore fields, located in one of the most complex environ-ments of the United Kingdom Continental Shelf. Bringing them to production will require near $3.8 billion investment. In taking the decision to develop this complex project, Total confirms its commitment in pursuing its investments in the North Sea and its long term objective towards helping to secure energy supplies for the United Kingdom. Total has also acquired the 10% interest in Laggan and Tormore previ-ously held by Chevron North Sea Limited and the 20% interest previously held by ENI UK Limited. This brings Totals interest in this project to 80% alongside partner DONG E&P (UK) Ltd.Statoil increases stake in ultra-deepwater St. Malo projectStatoil has increased its working interest in the Union-operated St. Malo devel-opment to 21.5% by exercising its preferential rights on a proposed sale of Devons share in the development. Union is a subsidiary of Chevron. St. Malo is scheduled to be sanctioned later this year together with the Chevron-operated Jack develop-ment. ThecombinedJackandSt.Malodevelopmentisscheduledtocomeon-stream in 2014. The Jack and St. Malo discoveries are both in the lower Tertiary trend of the deepwater Gulf of Mexico, commonly known as the Paleogene play. Statoil has made two additional discoveries in the area and is the third largest lease-holder in these ultra-deep waters. Statoil is also currently engaged in two deepwater Gulf of Mexico drilling operations. J. Ray McDermott wins first subsea project in Asia Pacific McDermottInternationalInc.announcedthatasubsidiaryofJ.RayMcDer-mott,S.A.hasbeenawardeditsfirstSURF(SubseaInfrastructure,Umbilicals, Risers & Flowlines) project in the Asia Pacific by PetroVietnam Technical Services Corporation on behalf of its customer, PetroVietnam Exploration & Production. Thescopeofworkincludestheengineering,procurement,constructionandin-stallationofnewproductionandexportlines,umbilicalandsubseacable.This includestie-in,testingandpre-commissioningoftwo1.4-miflexibleflowlines, replacement of two 1.5-mi export flowlines and umbilical, installation of a subsea cable and 3 mi of insulated flexible flowlines. Initial engineering and procurement workstartsimmediatelywiththeoffshoreinstallationexpectedtocommencein the third quarter of 2011. BrandNmProductiveUnderPressureStethoScopePressure, psi6,0006,5007,0007,5007,6003,6004,0004,5005,000*Mark of Schlumberger. Welcome to productive drilling is a mark of Schlumberger. 2010 Schlumberger. 10-DR-0091Welcome to productive drilling. An operator using the StethoScope* service increasedrecoverable reserves in a North Sea wellapproximately 15% by optimizing wellplacement in oil-filled channel sands.StethoScope formation pressure-while-drillingservice sends more real-time data and qualityindicators to surface faster withQaccurate, quality-controlled measurements Qautomatic maximum bandwidth Qno tool orientation.www.slb.com/stethoscopeThe change will do you goodSMweatherford.comChangeto Channel ZeroGet zero gas channeling and avoid annular pressure with a centralizer that changes into a packer With Micro-Seal Without Micro-SealWeatherford introduces the worlds rst packer-centralizers. Micro-Seal systems feature our proprietary hybrid-swellable elastomer elements which expand (in oil or water or both)and conform to annular irregularities to seal against microannulus pressure. And if additional pressure springs up, the elements reactivate to shut it down so you avoid remedial cementing operations. We call it Tactical Technology. Contact your Weatherford representative or visit weatherford.com/micro-seal. We have a full range of Tactical Technology that can change the way you look at all of your service needs. 2010 Weatherford International Ltd. All rights reserved. Incorporates proprietary and patented Weatherford technology.DrillingEvaluationCompletionProductionInterventionWeII construction&HPHQWLQJSURGXFWV&HPHQWLQJSOXJV'HHSZDWHUV\VWHPV)ORDWVWDJHHTXLSPHQW0HFKDQLFDOFHPHQWLQJSURGXFWV6RIWZDUH6XUJHUHGXFWLRQV\VWHPV7RUTXHGUDJUHGXFWLRQ&HPHQWLQJVHUYLFHV'ULOOLQJXLGV'ULOOLQJWRROV,QDWDEOHSDFNHUV/LQHUV\VWHPV0HFKDQL]HGULJV\VWHPV7XEXODUUXQQLQJVHUYLFHVWorld of oilCNXs Marcellus well sets production record CNX Gas Corp. announced production results from its latest horizontal well tar-geting the Marcellus Shale, the GH2BCV well in central Greene County, PA. This well produced for 16 days, at an average production rate of 4.9 MMcf per day. The peak daily production rate was 5.7 MMcf, and the current daily production rate is 5.5 MMcf. The well was drilled with a horizontal lateral of 2,035 ft and was hydrauli-cally fractured with a 7-stage frac. The previous highest producing well was the CNX 3 well, which came on line in October 2008. That well had cumulative production of 1 Bcf through February 2010.BP to pay Devon $7 billion for deepwater assets In a broad-ranging deal, BP will pay Devon Energy $7.0 billion in cash for assets in Brazil, Azerbaijan and the US deepwater Gulf of Mexico. These include interests in ten exploration blocks in Brazil, including seven in the prolific Campos basin, a majorportfolioofdeepwaterexplorationacreageandprospectsintheUSGulfof Mexico and an interest in the BP-operated Azeri-Chirag-Gunashli (ACG) develop-ment in the Caspian Sea, Azerbaijan. BP will assume Devons leases of the Seadrill West Sirius and Transocean Deepwater Discovery drilling rigs for the duration of the contract terms. In addition, BP will sell a 50% stake in BPs Kirby oil sands interests in Alberta, Canada, for $500 million to Devon Energy. The parties have agreed to form a 50/50 joint venture, operated by Devon, to pursue the development of the interest. Devon will commit to fund an additional $150 million of capital costs on BPs behalf. WesternGeco sets seismic record in KuwaitWesternGeco reported that the UniQ integrated point-receiver land seismic sys-temhassetanewindustryrecordinKuwaitforKuwaitOilCompany(KOC)in acquiring data from 80,000 live digital point-receiver channels at a two-millisecond sample interval. During sustained slip-sweep production in February, UniQ technol-ogy acquired and real-time quality checked one terabyte of data per hourthe equiv-alentoffivedaysofproductionforatypical3000-channelconventionalcrew.All data was concurrently pre-conditioned using the Q-Xpress in-field integrated seismic data acquisition and processing workflow for near real-time seismic data analysis.CNOOC, Total to acquire equal stakes in TullowChinas CNOOC Ltd. and French oil major Total SA are each expected to ac-quire a third of Tullow Oil PLCs oil after a round of recent presentations to Ugan-danauthorities. Tullowwillbeginthefirstphaseofdevelopingthehydrocarbons discovered in Ugandas Lake Albert basin this year, with oil and gas production for the local market due to begin in 2011. Natural gas from the Nzizi field will be piped to a power plant to be constructed in Ugandas Hoima district and around 10,000 bopdfromtheKasamenefieldwillbetruckedtolocalmarkets.Followingrecent appraisal drilling, Tullow upgraded the mid-range reserves estimate at its Tweneboa discoveryoffshoreGhanafrom250millionboeto400millionboe. TheJubilee field remains on track to produce its first oil by the end of this year, estimated to be around 120,000 bopd.Gazprom drilling first prospecting well in AfricaThe Gazprom Group has begun drilling their first prospecting well (Rhourde Sayah-2) in Africa within the El Assel license area of Algerias Berkine basin. The well drilling is provided for in the minimum scope of geological exploration ac-tivities according to the terms and conditions of the tender won by Gazprom EP International B.V. for exploration and drilling onshore El Assel area. In the mean-while, Gazprom EP International is carrying out large-scale 3D seismic surveying in other parts of the license area. According to preliminary estimates, drilling of thefirstwellistobecompletedinJune2010andanotherthreewellsaretobe drilled within two years. World of oilAvoid stuck casing with Micro-Seal SpiraGlider centralizers, which glide easily over restrictions. Optimal muddisplacement is ensured for vertical, inclined, horizontal and extended-reach wells, including wellbores with severe doglegs.Optimal casing standoff in cased-hole and openhole sections is yours with Micro-Seal bow-spring centralizers. For gas or LPG storage and injection wells, wells to be fractured or acidized or with perforation damage, or multiple-zone wells.Run through tight clearances or underreamed openhole sections with the Micro-Seal bow-spring centralizer sub. Bows recess completely to enable passage.Proven in years of demanding packer service, Weatherfords proprietary hybrid-swellable elastomers have been specially engineered to seal against microannulus pressure. Micro-Seal elements, together with our proven centralizers, ensure better mud removal and cement integrity to avoid remedial cementing operations.Micro-Seal packer-centralizersTactical Technologyin action:The change will do you goodSMweatherford.comVisit weatherford.com/micro-seal or contact your Weatherford representative. Our full range of Tactical Technology can help you reach your strategic goals. 2010 Weatherford International Ltd. All rights reserved.Incorporates proprietary and patented Weatherford technology.Our clients face unique geophysicalchallenges at every stage of their fieldlife cycle, from reservoir identificationand characterization to developmentand management. We understand thesechallenges and offer technology andexpertise to provide tailor-made solutions.Powered by Q* point-receiver seismicacquisition methodology, which supplies fundamentally better measurements, WesternGeco has launched ExplorationQ, Complex IlluminationQ, 4DQ, and CarbonatesQ solutions packages to address efficientexploration, difficult imaging, time-lapse, and carbonate reservoir projects respectively. We listen to your challenges.We understand your needs.We deliver value.www.westerngeco.com/pofqThe Power of Q*Mark of Schlumberger 2010 Schlumberger. 10_se_0036World Oil APRIL 2010 17Offshore,thenewgiantsarerum-bling.Weseeastreamofnewsabout AngolasKwanzaBasinandCongo Basinultra-deepwateroil,Brazilsgi-antTupiField,anddeepwaterGulfof Mexicoheadlinediscoverieslike Tiber, Thunder Horse and dozens more. Aside from being offshore, you might wonder whatallthesehaveincommon.Two things, really.Firstisarelentlesspushintodeeper water,anaturalexpansionintolessex-ploredterritory.Successfuldrillingin 10,000ftofwaterhasbeenreported, and 5,000 ft is now almost routine. Like amedicalscan,seismicisusedtoiden-tifyfeaturesofinterestandreducevari-ous kinds of exploration and production risk. From a seismic point of view, deep waterpresentsnospecialproblems.For years,academicgeophysicistshavebeen gathering and processing reflection data insomeofthedeepestwateronearth. Therearesomepeculiarities,likea seafloor reflection time of 14 seconds in theMarianastrench(11kmofwater), but no intrinsic difficulties.Thesecondcommondenominator issalt:amassiveheadache,andanop-portunity, for geophysicists. Salt is very simpleandbenignstuffwhenfirstde-posited. It forms in low-slope coastal ar-easwithtidalinfluxofseawaterrichin minerals.Strandedwatersevaporateto leave thin salt layers; the tide comes and goes,leadingtomoreevaporationand moresalt.Infavorablecircumstances, thesaltcanbuilduptogreatthickness (5,000ftintheGulfofMexico).But, at this stage, it is just a vast slab of salt. Withgeologictime,tectonicsubsid-ence and sedimentation, the salt is bur-iedunderanever-thickeningwedgeof sandstone,shaleandlimestone.Asthe sedimentsbecomemoredeeplyburied, they lithify into rocks and, importantly, become more dense. Salt density chang-es little with burial, so at some point it is less dense than the overlying rock and itbeginstomove.Slowly,overtensof millions of years, the buoyant salt grinds upward, deforming, bending, fracturing and faulting the overlying rock.We see today a snapshot of this slow, powerfulprocess.Gonearethedays whenwethinkofsimpledomescom-posedofsmooth,ghost-likeblobsof salt. We now understand that salt flows toformavastandbizarrebestiaryof shapes. But what is it that makes salt so seismically difficult?Theproblemcomesnotfromden-sity,butfromthespeedatwhichseis-micwavestravelthroughsalt.Inthe GulfofMexico,forexample,aswe passdownfromtheoceansurface,we firsthavewater,withaseismicvelocity ofabout1,500m/s,thensedimentsat maybe 2,000 m/s, then a progression of shale and sandstone with wave speeds of 2,5003,500m/s(dependingonrock frameandporefluidproperties),and finally salt at 5,000 m/s.Thissetsupadifficultsituation.It isoftenusefultothinkaboutseismic waves as a family of rays, like pencils of laserlight.Whenaraytravelsthrough thesedimentandhitsthesalt,itbends accordingtoasimplerulecalledSnells law.Thelawdependsonlyontheve-locitycontrastandtheangleoftheray relative to a line perpendicular to the salt face. Importantly, the ray bends gently in the pile of overlying sediment, but kinks dramatically at the top salt interface and againatthebase,whentheraypasses backintosedimentaryrocks.Tomake thingsworse,itturnsoutthatgeologic saltbodiesarerarelysmooth.Theyare irregular,deformedinterfaceskicking the rays off in crazy directions. A ray and its neighbor can end up miles apart after whacking into salt.We care about rays because they must be accurately mapped for some kinds of seismic imaging to work. One of the les-sons of the last decade or so is this: The salt is sometimes so complicated that no one can figure out the rays. But rays are a human invention, a useful and simpli-fyingapproximationwhentheearthis not too complicated. For extreme cases, likeimagingthrough2kmofsaltina soft-sedimentbasin,therayanalogy breaksdownorbecomesenormously complicated.Consequently,therehas been a subsalt push to move away from ray-basedimaging(termedKirchhoff migration)infavorofalgorithmsthat usewavesdirectly(waveequationmi-gration).Unlikerays,wavefieldsare smooth,continuousandeasytocom-pute. The ultimate version of wave equa-tionimagingisreversetimemigration (RTM). Although RTM has been theo-retically understood since about 1982, it is only recently that computer power has enabled people to do 3D prestack RTM on large surveys.Whilewewerebuildinganunder-standingofsalttectonicsandwave equationmigration(andthecomputer sciencetomakeitwork),therewasa growing sense that something was miss-ing.Asresearcherswenttoevergreater lengthstoimproveimagingalgorithms, theimprovementswerebecomingpro-gressivelysmaller.Rays,waves,better physics,fastercomputersitallstarted to look the same, like we were up against somekindoffundamentallimittoim-agequalityincomplexsubsaltareas. Asitturnsout,thenextlevelofimag-ingcamenotfrombetteralgorithmsor computers, but from good old-fashioned communication.Overthedecades,two groups had grown up in offshore explo-ration,acquisitionandimaging.Onea pragmaticfieldcampaignofcables,air-gunsandhighseas,theothercloistered inresearchlabs,derivingandprogram-ingequationsonsupercomputers.You canimaginehowthecompanypicnic split up.There have always been voices calling outthatafundamentallinkexistsbe-tween acquisition and imaging, and that significantadvancescanonlycomeby tuning both. We know this new way of seismic shooting as wide or full azimuth, but it is hardly new in concept. Land 3D shootinghasbeenfullazimuthforde-cades. Now it is happening offshore.Itisthetwinadvanceofwaveequa-tion imaging and wide-azimuth acquisi-tionthathasallowedustopeerbetter intothedeep,unlockingasubsalttrea-sure trove around the world.WOC.L.Liner,aprofessorattheUniversityof Houston,researchespetroleumseismology andCO2sequestration.HeistheformerEdi-torofGeophysics,authorofthetextbookEle-mentsof3DSeismology,andamemberof SEG, AAPG, AGU and the European Academy ofSciences.Readhisblogathttp://seismos-blog.blogspot.com. Whats new incliner@uh.eduCHRISTOPHER LINER, CONTRIBUTING EDITORexplorationPassing the salt takes a collaborative effortAt T3, we dont just design, manufacture & service products - We build lasting relationships with our customers.Come Visit Us at the OTC - Booth #2979 To Learn of our Latest Pressure Control & Wellhead ProductsT3 MainHouma, LA985-851-2020 T3 RockiesRock Springs, WY307-362-1320 T3 CanadaNisku, Alberta 780-955-2210 T3 ElastomersNisku, Alberta 780-955-6307 T3 Middle EastDubai, U.A.E. 97-14-885-1300 T3 MexicoCardenas Tabasco011-52-937-373-5417T3 IndiaChinchwad Pune 91-20-3062-5053 Pressure Control Service CentersT3 Longview ServiceLongview, TX903-234-0233 T3 Penn ServiceClymer, PA724-254-2068 x 2407Custom CoatingApplicatorsHouston, TX713-842-4330 T3 VentureHouma, LA 985-851-3160 T3 ArdmoreHouston, TX713-996.4110 T3 CypressCypress, TX 832-237-0561T3 CreekmontHouston, TX713-957-2288 T3 JenningsJennings, LA337-824-6000www.t3energy.comWorld Oil APRIL 2010 19Nell.Benton@worldoil.comNELL L. BENTON, ASSOCIATE EDITOR ExplorationdiscoveriesNell.Benton@worldoil.comNELL L. BENTON, ASSOCIATE EDITOR Africa-Middle East. In waters 4,800-ft deepoffshoreMozambique,Anadarko encounteredanadditional76netftof naturalgaspayatabout17,000-ft TD in the Windjammer discovery well. The additional pay intersected in the deeper objective brings the total net ft of natu-ralgaspayinWindjammertomore than 555 ft. OilSearchpenetratedagas-bearing sectioninitsAlMeashar-1exploration well being drilled onshore Yemen in the AlMeasharprospectonBlock7.High levels of gas were encountered at a depth of 11,725 ft. Oil Search plans to drill to about 11,976-ft TD and then commence a logging and testing program.IPRMediterraneanExploration,op-erator of Block XXIV in Syria and part-ner with ONGC Videsh Ltd., has made three back-to-back oil and gas discover-ies onshore Syria. First production from thefieldsisexpectedduringthesecond quarter.IPRistheoperatorofSyrias BlockXXIVwith40%interestinpart-nership with OVL (60%).GulfKeystoneannouncedthat KalegranLtd.,a100%subsidiaryof MOL Hungarian Oil and Gas Plc and the operator of the Akri Bijeel block in Kurdistan,concludedasuccessfuloil testintheBijeel-1explorationwellin theAkriBijeelblock. Thetestedzone flowedatratesofupto3,200bopd withassociatedgasratesof933,000 cfd. Oil gravity was 18 API and flow-ing wellhead pressure was 420 psi on a 34 choke. Americas.Shellannouncedasignifi-cantnewoildiscoveryintheeastern areaoftheGulfofMexico.Thedis-coveryislocatedattheAppomattox prospect in 7,217 ft of water in Missis-sippi Canyon blocks 391 and 392. The discovery well was drilled to a depth of 25,077ftandencountered530ftof oilpay.Shellthendrilledanappraisal sidetrack to 25,950 ft and encountered approximately380ftofoilpay.Shell operatesandholdsan80%working interestintheprospectwithpartner Nexen who holds the remaining 20%.MexicosstateoilcompanyPemex hasmadetwomajoroildiscoveriesin the Sound of Campeche, Gulf of Mexi-co. Each of the two discoveries has pos-sible reserves of 1 billion boe, with one containinglightcrudeandtheother extra-heavy crude. PacificRubialesEnergyhasmadea newoildiscoverywithitsQuifa-24X exploratorywelldrilledontheQuifa BlockintheLlanosBasin,Colombia. ThewellwasdrilledonProspectQ at the northeastern border of the Quifa Block,andfoundthetopoftheCar-bonera basal sands at 3,206-ft MD. The petrophysicalevaluationofthewellin-dicates a net pay zone of 22 ft with 32% average porosity. IvanhoeEnergyhasreceivedinitial results from its IP-15 exploration well in the Amazon Basin Block 20 in the Pun-garayacu field, Ecuador. Results indicate a thick, clean, high-quality oil formation inthemaintargetHollinheavyoilres-ervoir. TheIP-15wellreached1,343-ft TD and is located in the northwest cor-ner of the field.Petrobrasdiscoveredoilinthepre-salt Block BM-S-9 in the Santos Basin offshoreBrazilwithwellBRSA-788-SPS. The well, drilled in waters 6,950-ft deep, is in the same quadrant as the CariocaandGuaradiscoveries.Petro-bras is the operator of BM-S-9 and the discoverywellwith45%interestin partnershipwithBG(30%)andRep-sol-YPF (25%).Blackhawk Resource has commenced drillingthefirstoftwoback-to-back wellsonitsBodopropertyinthePro-vost area of Alberta, Canada. The BLR Bodo-1wellisa2,460-ftverticalwell targetingbypassoilpayintheColony Formation. Blackhawk has identified six follow-updrillsitesthatarecontingent uponthesuccessfulcompletionofthe BLR Bodo-1 well.Europe.JupiterEnergysJ-50wellin Block31,Mangistau,Kazakhstan, iscurrentlydrillingaheadat8,970ft, abovetheprimaryobjectiveMiddle Triassicreservoir,commencingat 9,580ft.Theblockcovers50sqmi oftheMagistaubasininsouthwestern Kazakhstanand isontrendwith three existingproducingoilfieldsthathave potentialreservesinexcessof21-56 million bbl of oil. Jupiter Energy is the sole operator of Kazakhstans Block 31 and the J-50 well.Statoilhasidentifiedfourprojects, locatedintheNorweigansectorofthe North Sea, to be given fast-track status. Nine out of ten development candidates are likely to be developed with one sea-bed template and several wells. The four projects,Katla,VigdisNordst,Gygrid andPan/Pandora,containrecoverable reserves that have been estimated at more than 140 million boe.Royal Dutch Shell is planning to take part in the exploration of the Yamal Pen-insula Yuzhno-Tambeyskoye gas field in Russia,whichislicensedtoNovatek. Thefieldisonthenortheastcoastof the Yamal Peninsula, some 125 mi from theBovanenkovoField,whichisbeing developedbyGazprom.Accordingto Russian classification (C1+C2), the field holds gas reserves estimated at 44.36 Tcf, with production projected to be as much as 706.3-882.9 Bcf a year.BGNorgemadeanoildiscoveryin theNorwegiansectoroftheNorthSea about16minortheastoftheSnorre field. The primary exploration target for the well was to prove petroleum in Lower Jurassic reservoir rocks in the Cook for-mationandthesecondarytargetwasin the Statfjord formation. Oil was proven in the Cook formation, while the Statf-jord formation was found dry. Operator BGisintheprocessofcompletingthe drilling of the well, 34/5-1S. Australia-NewZealand.KeaPetro-leum is gearing up to commence drilling its Wingrove-2 exploration well onshore NewZealandintheTaranakiBasinin BlockPEP51153. Wingrove-2willbea deviated well, designed to test the updip potentialofthegoodoilshowsseenin thebasalMountMessengerSands.Kea is the operator of Blocks PEP51155 and PEP51153with40%interestinpart-nershipwithHardieEnergy(30%)and Rawson Taranaki (30%).ExomaEnergyhascompletedanex-tensivereviewofitsfiveGalileeBasin permitsincentralQueensland,Austra-lia,whichcoversome10,040sqmiof coal seam gas and shale gas acreage. Tests have confirmed that these coal seam gas areas alone could hold in excess of 20 Tcf ofgasresource.Afurther10drillsites havebeenselectedinBlocksATP991, ATP996, ATP999 and ATP1005. WODrillingJIM REDDEN,CONTRIBUTING EDITOR jimredden@sbcglobal.netadvancesWorld Oil APRIL 2010 21jimredden@sbcglobal.net JIM REDDEN, CONTRIBUTING EDITORInwhattodayseemsliketheDark Ages, I attended a conference on remote-ly operated vehicles (ROVs) in San Diego whereIwashandedajoystickandpro-ceeded to send a Jules Vernesque gizmo glidingaroundaswimmingpool.Well, notgliding,exactly;morelikecrashing intoitswalls. Thethingthatstruckme thenwashowmyson,whowasamae-stro at Pac-Man and all those other new-fangled video games that were all the rage at the time, could carve out a nice future for himself. But, alas, he threw it all away and got himself a PhD in physics and a cushy position at MIT.That was my first hands-on experience with just how dexterous the oil field has been over the years in adopting elements ofother,oftenverydissimilar,enter-prises. Like the joysticks used to launch thosethen-revolutionaryROVs,acriti-cal component of the latest class of deep-waterseismictechnology,forinstance, also was borrowed from video games in the form of the IBM PowerXCell 8i pro-cessor,whichwasdevelopedspecifically fornext-generationgamingconsoles. Wealsoavailourselvesoftechnologies withindisciplinesthatcertainlycannot be considered childs play, like medicine, for example. In a quid pro quo of sorts, cardiologistsandoilfieldscientistseven meetside-by-sideinHoustonforacol-laborativeefforttheycallPumpsand Pipes. In one of the most recent confer-ences, a Methodist DeBakey Heart Cen-ter presentation on left ventricular assist devices preceded an ExxonMobil lecture on subsurface pumps.Medicalresearchersalsowereamong the very first to pounce on the opportuni-ties in nanotechnology, but it didnt take long for their oilfield brethren to join the party. While medical futurists envisioned tiny robots coursing through the human body like microscopic Lancelots, slaying all sorts of infirmities, their oil industry counterparts were a bit less quixotic, set-tlingforsuchinnovationsasadvanced reservoircharacterization,longer,and stronger deepwater umbilicals and new-age drilling and completion fluids.Quitesimply,nanotechnologyisthe study of the properties and chemistries of matter at a very small scale. And, when we say very small, we are understating it by a few magnitudes of order. To put it into perspective,onesheetofpaperisabout 100,000nanometers(nm)thick,anda singlestrandofhumanDNAis2nmindiameter.Anaturalextensionofmi-croengineeringnanotechnology,ina nutshell, is aimed at delivering more for lessmuch, much less.Theoilindustryseesendlesspossi-bilities. For instance, in 2006, Australias UniversityofQueenslandunveiledthe firstoilfieldapplicationofnanotechnol-ogyintheformofnanosensorscapable of penetrating the tiniest of rock pores to identify reserves left behind after prima-ryrecovery.Elsewhere,in2005,H2Oil Corp.andPetroChinasHuafuOilfield Chemical Co. built a joint venture man-ufacturing plant in Tianjin, China, for a liquid nanotechnology fuel additive. The plant employs what H2Oil calls NanoG-host technology to produce enough ad-ditives to treat 25 billion gallons of fuel a year. H2Oil President Richard Hicks said thatusingnanotechnologywillenable Chinatoproducesomeofthecleanest andmostenergy-efficientgasolineand diesel fuels in the world.In 2007, the Bureau of Economic Ge-ology(BEG)attheUniversityofTexas formed its Advanced Energy Consortium (AEC), focused on the application of nan-otechnology similar to that being investi-gated in Australia. The AEC, which counts among its membership Baker Hughes, BP, ConocoPhillips,Halliburton,Marathon, Occidental, Schlumberger, Shell and To-tal,saiditsgoalistodevelopsubsurface nanoscale sensors that can be injected into wells. These sensors would migrate out of thewellboresandintotheporesofthe surroundinggeologicalstructuretocol-lect data about the physical characteristics of hydrocarbon reservoirs.Houston-basedNanoRidgeMaterials Inc.andco-participantsTechnip,Duco and Rice completed a one-year study that examinedtheuseofnanotechnologyto design ultra-high-conductivity deepwater umbilicals. NanoRidge believes the use of emergingcarbonnanotechnologycould enablepowerdeliverytotheseafloor wherelightweightandextremelyhigh currents are required. The public-private ResearchPartnershiptoSecureEnergy forAmerica(RPSEA)providedpartial funding for the research project.Basically,theinvestigationentailed thedevelopmentofanelectricalcon-ductorsuitableforuseinsubseaum-bilicalswithconductivitymuchgreater thancopperandallowingfortieback distances approaching 100 miles. Nano-Ridge says that using carbon nanotubes imbeddedinapolymerconductorcan yieldconductivitiesthatare100times that of copper alone.NanoRidgeProductDevelopment Engineer Lori Jacob said a prototype has been developed and lab tested. She said additionalinformationwillnotbere-leased until REPSA completes its review of the final report.M-ISwacoalsoseesenormouspo-tential for nanochemistry in drilling and completionfluids.Latelastyear,itput up$460,000tofundatwo-yearjoint studywithRiceUniversity.Today,the company is collaborating with both Rice and the University of Texas on what Vice PresidentofResearchandEngineering JimBrutonsaidisanexaminationof differentnanochemistriesandtheirpo-tentialapplicationsintheoilfield.For now,thecompanyiskeepingitswork closetothevest,butBrutonsaidthe possibilities are intriguing.Rightnow,weareinthepurere-searchstage,sowedontwanttoreveal too much on what we are doing. But, we feel nanotechnology indeed has applica-tions in drilling and completion fluids as well as material science, he said.WhenIlookatthemind-boggling technologiesunderdevelopmenttoday andjuxtaposethosewiththeperennial crew change weve been hearing about for years, I can almost visualize a future where some12-year-oldtechno-whizdeftly pushes buttons that enable him or her to adjust weight-on-bit or fluid properties on a rig thousands of miles away. Of course, that will have to wait until he or she blows up a cyborg with a cyber-missile.WOJimRedden,aHouston-basedconsultantand ajournalismgraduateofMarshallUniversity, has more than 37 years experience as a writer, editor and corporate communicator, primarily fo-cused on the upstream oil and gas industry.Big indeed can come in the tiniest of packagesPERMANENT MONITORING AND CONTROLIntelligent Completions *Mark of Schlumberger. Measurable Impact is a mark of Schlumberger. 2010 Schlumberger. 10-CO-0002Intelligent wells, brilliant performanceSaudi Aramco optimized oil production from horizontal multilateral wells in the complex Shaybah field using data from Schlumberger intelligent completions. The intelligentsystem integrated the WellWatcher* permanent reservoir monitoring system and remotely operated flow control valves, enabling Saudi Aramco to Qavoid crossflow between the lateralsQenhance reservoir recoveryQoptimize production without costly interventions.www.slb.com/icGlobal Expertise | Innovative Technology | Measurable ImpactJAMES F. LEA,CONTRIBUTING EDITOR jamesflea@aol.comWhats new inWorld Oil APRIL 2010 23David.Cohen@worldoil.com DAVID MICHAEL COHEN, MANAGING EDITORLetmetellyousomethingthatweIs-raelishaveagainstMoses.Hetookus 40yearsthroughthedesertinorderto bringustotheonespotintheMiddle East that has no oil!Golda Meir, 1973IfGoldaMeirwerealivetoday,she might owe Moses an apology. Israel still has no oil reserves to speak of, but if the giant Tamar offshore natural gas discov-eryisanyindication,thenperhapsthe leader of the Exodus knew what he was doing after all.DiscoveredinNovember2008by NobleEnergyandIsraeliPartnersIs-ramcoNegev,DelekDrilling,Avner OilExplorationandDorGas Exploration,the6.3-Tcffind intheeasternMediterranean isthebiggestinthecountrys history,representing40years ofelectricalsupplyatcurrent demand levels, or 1520 years atprojectedgrowth.Itisalso thesecond-largestgasfind worldwide since Jan. 1, 2008, rightafterPetrobrasgiant Jupitersubsaltdiscoveryoff Brazil. Shortly after the Tamar discovery, Noble found an ad-ditional 0.5 Tcf at the nearby Dalit prospect.Theimplicationsofgas productionfromthesedis-coveriesforIsraelarepro-found,affectingenergysecu-rity,infrastructureandtrade relations. As Noble Chairman and CEO Chuck Davidson was quoted assayinginaNovemberOilandGas Investor article, Its not very often you get to be part of an exploration venture thathasthepotentialtodramatically change a countrys energy supply.Developmentplan.The$2.5$3 billiondevelopmentplancallsforsub-seaproductionof Tamargasanddeliv-ery via a high-pressure, dual 16-in. sub-seapipelinetoanonshoredistribution terminal90kmawaynearDor,20km south of Haifa. A subsea monoethylene glycol (MEG) line will provide flow as-surance for the gas being produced from thefield.ThoughNobledeclinedto commentonwhetherDalitproduction wouldeventuallybetiedintothesame system,thesmallerdiscoverydoeslie close to the Tamar pipelines path, about 30 km from shore.Davidsontoldreporterslastmonth thatNobleexpectsfirstproductionof 750MMcfdby2012greaterthan thecountrysprojectedgasdemandfor thatyear.Israeliofficialshavebeenless optimistic, saying in February that they dontexpectgasdeliveriesfromTamar until the following year.Theprojectisnotwithoutitstech-nicalchallenges.Deliveringgasfrom faroffshoreisnevereasy,andgenerally requiressomeformofexpensivetreat-ment.AccordingtoaMarch17article in the Israeli newspaper Haaretz, Noble planstodeliverthegasataveryhigh pressureof400500bars,muchmore thanthe80100barsatwhichcurrent Israeli gas supplies are delivered.High-pressuredeliveryreducesthe cost of production by offering more flex-ibility in terms of swing production and byeliminatingtheneedtoaddsubsea compressors as the field depletes. How-ever, experts in the Israeli infrastructure ministry have recently raised safety con-cernsaboutdeliveringthegasatsuch high pressure.Implications.Tamargascouldbe theanswertoIsraelsprayersinmany respects.Thecountryhasbeengreatly expanding its natural gas use, and its use ofgasforelectricalgenerationjumped from zero before 2003 to about 40% of electrical supply today.Israelonlyhastwosourcesforthis natural gas: Mari-B Field in the Medi-terraneanandpipelineimportsfrom Egypt.Mari-B,whichwasalsodis-coveredbyNoblein2000with1 Tcf ofinitialreserves,willbedepletedin a few years. Egypt has supplied gas to Egyptsince2005,butthesaleshave facedprotestsandlegalchallenges inthatcountry,includingacourt-imposedbanongassalesto Israelthatwasjustrecently overturnedbyEgyptshigh court. Thissupplyinsecurity had Israel looking into poten-tial Russian or LNG supplies, but the Tamar and Dalit dis-coverieshavechangedthe picturedramatically,offering Israeltheprospectofnear energyindependenceforthe first time.There are big plans brewing for all that gas. Israel is invest-ingaround$1billioninits gasdistributionnetwork,set tocover90%ofthecountry in2013,tomeetanexpected increaseinannualdemandto 350420Bcfin2016,from about 140 Bcf now.Long-termdomesticgas supply would also benefit Israels effort to reduce its dependence on foreign oil by electrifying its auto fleet. California-basedcompanyBetterPlaceisinthe processofrollingoutitsfirstelectric vehicleservicenetworkinIsrael.The first charging spot opened in 2008 at a cinema car park in Pi-Glilot, and pub-licnetworksinTelAviv,Haifa,Kefar Sava, Holon and Jerusalem are also be-ing planned and installed.Inalandwhereeventhecommon-placetakesonbiblicalproportions,its easytoseeanepicrolefornaturalgas exploration and production activities in the years to come. WOA land owing with milk, honey and natural gasproductionFig. 1. The proposed development scheme for Tamar Field is a subsea production system tied back to an onshore terminal south of Haifa. Courtesy of Noble Energy.

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Hose management www.contitech-online.comThe hose engineering specialists for Oil & GasContiTech Oil & Marine brings together the most respected brands in uid management for the oil & gas industryVisit us at OTC 2010, booth 7513World Oil APRIL 2010 25Oil and gas in theeditorial@worldoil.comJEFF MOORE, CONTRIBUTING EDITOR, ASIA-PACIFICcapitalsThe outlook for the European gas mar-ket is changing quickly. The convention-al demand outlook was that, because of diminishing domestic output and rising consumption,Europewouldbeforced toincreaseimportsandconsequently loseleveragewithalimitednumberof suppliers, with an upside price risk. With moreemphasisonenergyconservation, renewable energy and eventually nuclear power, Europes gas import needs might bemuchmoremoderatethan,untilre-cently, anticipated. As for supplies, wor-riesaboutscarcitydissipateastheavail-abilityofseabornesuppliesisrealized, andespeciallyasthepotentialforshale gas dawns. Moreover, new pipeline sup-plies seem to be available from the Cas-pianregionandevenCentralAsia. The diversificationenhancessupplysecurity andstrengthensthebuyersbargaining position, leading to a downside price risk for producers.Thedevelopmentofshalegasinthe UShastriggeredachainofchangesin theglobalgasmarket.Onlyfiveyears ago,theconsensuswasthatNorth Americawasdestinedtobecomeama-jorLNGimporter.ProspectsforUS salesspurredinvestmentingasfields, LNG export terminals and tankers. The Shtokman project in the Russian Barents Sea explicitly targeted the US market, as did LNG projects in Angola, Qatar and other countries. Consensus was also that rising US imports would pull gas prices up, so that, in the longer run, both LNG and pipeline gas would be more costly.Suchprospectscausedconcernsin Europe;theoutlookwasforbothgas import dependence and gas prices to rise quickly.RepeateddisruptionsofRus-siangassuppliesthroughUkrainewere areminderoftheprecarioussecurityof supplyforpipelinegastransitingthird countries.Suddenleapsingasprices, partlyduetoindexationtooilprices, demonstrated the cost of depending on a small number of external suppliers.Againstthisbackdrop,theEuropean Commission designed an ambitious pro-gram called 20-20 by 2020meaning a 20% reduction in the energy intensity of the EU economy and a 20% share for renewable energy. Policy instruments are regulationsandsubsidies;forexample, utilitiesinGermanyarecompelledto have a certain share of renewable energy intheirportfolio,andgovernmentspay for investment in wind and solar power.Astheeconomiccontextchanges, policieschange.Themostimmediate impactisthatLNGprojectsoncedes-tinedfortheUSareseekingportselse-where, essentially in Europe and China. Next is the potential impact of pipelines from new gas suppliers such as Libya and Azerbaijan. Even if the Nabucco project to bring Caspian gas to Europe is costly andmayinitiallybedifficulttofilland finance, there is supply potential beyond Turkey.RelationswithIranmightim-prove, and Qatar has the worlds second-largest proved gas reserves. Consequent-ly,Europeispotentiallyfacingamuch larger choice of gas suppliers.Such prospects evidently enhance the attractiveness of natural gas for Europes energyinvestorsandnationalenergy planners.DevelopingaEuropeanshale gasindustrywouldlikelytakeatleasta decade, given the need for investment in infrastructureandenvironmentalprob-lems.Butthereareresourcesthere,and suchprospectsalsoenhancetheattrac-tivenessofnaturalgas.Dependenceon fuel imports looks less threatening with a plethora of suppliers.Thefinancialcrisis,theEuropean recessionandthehighdebtburdenof manygovernmentsundermine20-20 by2020.Stagnanteconomies,unem-ploymentandbudgetdeficitsreduce governmentsappetiteforcostlyenergy programs,andthereisnotmuchpri-vate capital available for energy projects that are only viable with handouts from governmentsthatneedtocutbudgets. Against this backdrop, policies are likely toconvergeonthemostcost-effective solutions,whichprobablywillmean considerablegasvolumesforheating and electricity. ThestructureoftheEuropeangas marketislikelytochangemarkedly. Supplierdiversificationandcompeti-tion provide strong arguments for open access to infrastructure and clients, and againstimportmonopoliesandpoliti-calcontrolofgastrade.Thehistorical monopolies in European gas trade were justifiedbytheneedtoinvestininfra-structureandtobargainwithasmall number of sellers. This is no longer the case;infrastructurehasbeendeveloped and sellers are many.GassupplierstoEurope,whetherby LNGorbypipeline,mayexperience volume growth in the market, but much strongercompetitionislikelytokeep prices down for a long time. Spot trading is likely to replace long-term take-or-pay contracts,andindexationtooilprices willbeunsustainable.TheShtokman project seems far off, and Nabucco seems rather uncertain. Deferring major invest-ment projects has little or no impact on the immediate market balance, but com-promises the long-term predictability of the gas market, whose balance ultimately dependsonheavycapitalinvestment withlongleadtimes.Thus,short-term andmedium-termconsumergainsmay lead to a long-term predicament. Tosumup,changingcircumstances enhancethecompetitivenessofnatural gas in the European market, but the in-cumbent suppliers need to rethink their strategies.Norwegiangasexporterswill continuetobenefitfromgeographical proximity and a reputation of reliability, but will have to comply with lower mar-gins and a more volatile market. Russian exporters will have to prove their reliabil-ity. Russias major advantage is that it is a huge market for European goods and ser-vices, with potential for further growth. In the immediate future, Russia may lose from supplier diversification, but, in the longer run, Russia may be a winner, in-sofar as its gas resources are available for incremental exports to Europe and have not been committed to the Chinese mar-ket.Againstthisbackdrop,Europehas an interest in maintaining a major share for Russia in the gas market and not un-critically diversifying away from Russian gas imports. WOysteinNorengisaprofessorattheNor-wegianSchoolofManagement.Hehasalso served as an advisor and consultant to organiza-tions such as the International Monetary Fund and the World Bank, governments and energy companies.Hehasservedonthesupervisory board of RWE Dea.Natural gas for Europe: How much? From where? At what price?Oil and gas in theeditorial@worldoil.comYSTEIN NORENG, CONTRIBUTING EDITOR, NORTH SEAcapitalsWorld Oil APRIL 2010 29Industry at a glance1.02.54.05.57.08.510.011.513.012-monthActual monthlyM F J D N O S A J J M A M F J D N O S A J J M A M2009 2010 2008Source: The Gas Price ReportMONTHLY U.S. GAS PRICES & TRENDS ($/Mcf)2009 2010 200835557595115135155W. Texas Inter.Brent BlendArabian LightF J D N O S A J J M A M F J D N O S A J J M A M FSource: DOESELECTED WORLD OIL PRICES ($/bbl)WORKOVER RIG COUNT Feb.Jan.Dec.Feb. % chng % chngRegion2010201020092009mo agoyr agoTexas Gulf Coast1371341231572.2-12.7ArkLaTex105101851304.0-19.2Eastern USA56585364-3.4-12.5South Louisiana39403848-2.5-18.8Mid-Continent325341323365-4.7-11.0West Texas / Permian4774544315525.1-13.6Rocky Mountain265269265260-1.51.9West Coast / Alaska3223093073710.7-13.2Total US1,7261,7061,6251,9471.2-11.4Canada5395144786234.9-13.5Source: CameronWORLD OIL & NGL PRODUCTIONMillion barrels per dayFeb. 2010Jan. 2010Avg. 2009Avg. 2008OPECCrude Oil1 Saudi Arabia7.97.947.928.90Iran3.743.73.743.90Iraq2.542.452.452.38United Arab Emirates2.282.292.592.27Kuwait2.032.032.312.01Neutral Zone0.520.520.540.57Qatar0.820.80.770.85Angola1.951.891.771.85Nigeria1.9821.821.95Libya1.531.521.551.72Algeria1.251.251.251.36Ecuador0.470.460.470.50Venezuela2.232.222.162.35NGLs & condensate5.135.134.654.40 Total OPEC34.3734.2033.9935.01 OECD2 US8.188.078.077.52Mexico2.972.952.973.16Canada3.253.063.223.25United Kingdom1.441.44.524.75Norway2.322.261.471.56Europe-others0.660.640.660.72Australia0.550.560.550.55Pacific-others0.110.120.100.10 Total OECD19.4819.2521.5621.61 NonOECD1 Former USSR13.6113.713.2712.82China3.933.763.793.79Malaysia0.710.710.740.77India0.810.80.800.81Indonesia0.9911.000.98Asia-others1.151.121.101.08Europe0.130.130.130.14Brazil2.632.622.492.37Argentina0.710.740.720.75Colombia0.750.720.670.59Latin America-others0.440.4440.430.42Oman0.830.820.810.75Syria0.370.370.380.39Yemen0.280.270.300.30Egypt0.680.640.690.70Gabon0.240.240.230.21Africa/Middle East-others1.631.641.641.68 Total nonOECD29.8929.7229.1928.55Processing gains32.202.202.292.24Total supply85.9485.3787.0387.41Source: International Energy AgencyNote:Totals and subtotals may not add, due to rounding.1 Indonesian production has been reclassified within nonOECD and excluded from OPEC.2 Comprises crude oil, condensates, NGLs and oil from unconventional sources. 3 Net of volumetric gains and losses in refining (excludes net gain/loss in China and nonOECD Europe) and marine transportation losses. U.S. OIL PRODUCTION1 Thousand barrels per dayDAILY AVERAGE FOR MONTH State orFeb. Feb.Jan.District2010*2009** % diff.2010*Alabama18.021.0-14.318.0Alaska681.0653.04.3698.0Arkansas17.017.00.017.0California644.0634.01.6660.0Colorado68.065.04.665.0Florida2.02.00.02.0Illinois25.025.00.025.0Kansas105.0108.0-2.8104.0Kentucky9.03.0200.09.0Louisiana1,549.01,362.013.71,491.0Michigan16.017.0-5.917.0Mississippi64.064.00.064.0Montana79.079.00.077.0Nebraska6.06.00.06.0New Mexico173.0153.013.1165.0North Dakota241.0197.022.3236.0Ohio16.016.00.017.0Oklahoma181.0178.01.7184.0Texas1,378.01,305.05.61,356.0Utah67.064.04.765.0Wyoming149.0145.02.8144.0Others225.026.0-3.821.0Total US5,513.05,140.07.35,441.0Lower 484,832.04,487.07.74,743.01 Includes lease condensate.*APIs current estimate.** DOEs revision as of 10 months from current issue date.2 Includes Arizona, Indiana, Missouri, Nevada, New York, Pennsylvania, South Dakota, Tennessee, Virginia and West Virginia.Benchmarkcrudeoilfuturesweredownby$2/bbl month-on-monthinFebruary,butreboundedbyalmost $10/bblfromearly-Februarylows.WTIandBrentBlend were recently trading at $82/bbl and $80/bbl, respectively, on a perceived heightening of geopolitical tensions affecting some producing countries, but market sentiment was tem-pered by ample physical oil supplies. OPEC crude produc-tionhita14-monthhighof29.2mb/dinFebruary,with Iraqaccountingforhalfofthe200kb/dincrease.USoil production rose from 5,441 MMb/d to 5,513 MMb/d. Gas pricesdroppedinMarch,withanaverageof$4.29,com-pared to Februarys average of $5.22. The international rig count rose by 8% to 1,692, while the number of US rotary rigs rose by 6%. The workover rig count increased by 2% to 1,726. Both domestic and international geophysical activity remained unchanged through March.WO30 APRIL 2010 World OilIndustry at a glanceSource: CameronSources: Baker Hughes & M-I SwacoU.S. ROTARY DRILLING RIGSINTERNATIONAL ROTARYDRILLING RIGS U.S. WORKOVER RIGS1,5001,7001,9002,1002,3002,5002,700D N O S A J J M A M F J20102009200920101,1001,2001,3001,4001,5001,6001,7001,800D N O S A J J M A M F J8001,0501,3001,5501,8002,0502,300D N O S A J J M A M F J20102009INTERNATIONAL ROTARY RIG COUNT Monthly average Feb. 2010Jan. 2010Feb. 2009RegionLandOffshoreLandOffshoreLandOffshoreCANADA560445634121EUROPE234324442151Germany4141100Italy313130Netherlands242202Norway019022025Poland303000United Kingdom114114020Others10411484MIDDLE EAST*217312253723025Abu Dhabi848373Iran561456145910Oman440450530Saudi Arabia551255136012Syria180190210Turkey707050Others291357250AFRICA117401073511422Algeria220180230Egypt45134015448Libya164142151Nigeria485425Sudan210210280Others91591428LATIN AMERICA308712967629480Argentina650580631Brazil333133313030Colombia330340290Mexico9822100259834Venezuela551351145613Others245206182FAR EAST161117166105154109Australia411512129China, offshore029017024India753074275224Indonesia451147115513Malaysia013013018Myanmar323211Pakistan181180210Thailand393939Vietnam0801007Others133164104Total1,3863061,2743001,225288*No data available for Iraq. Sources: Baker Hughes Inc. & M-I Swaco U.S. GEOPHYSICAL ACTIVITYSeismic crews workingRegionsMar. 2010Feb. 2010Mar. 2009RegionsMar. 2010Feb. 2010Mar. 2009Rocky Mountains10105Gulf Coast7611Mid-Continent121223Offshore131310Southwest81011Others121310Total646470 Source: IHS EnergyINTERNATIONAL GEOPHYSICAL ACTIVITY Seismic crews workingRegionsMar. 2010Feb. 2010Mar. 2009RegionsMar. 2010Feb. 2010Mar. 2009Africa737273Far East*707072Canada161612Middle East343434CIS464647Latin America353536Europe323235United States626470Total368369379Source: IHS Energy*Includes China ROTARY RIGS RUNNING IN U.S.Monthly average% diff.STATE Feb. Jan.Feb.Feb. 10and AREA201020102009Feb. 09Alabama - Total432...Land431300.0Inland water000...Offshore001...Alaska - Total107911.1Land979...Offshore100...Arkansas42385016.0California - Total2525244.2Land2424234.3Offshore111...Colorado50456826.5Florida100...Kansas19211618.8Kentucky861127.3Louisiana - Total20519415730.6North - Land1361308070.0South - Inl. water13136116.7South - Land18132218.2Offshore39384920.4Michigan000...Mississippi1091216.7Montana75475.0Nebraska210...Nevada44633.3New Mexico56524719.1New York23333.3North Dakota80716327.0Ohio77812.5Oklahoma11410413012.3Pennsylvania676724179.2South Dakota000...Tennessee11475.0Texas - Total5495215744.4Offshore43633.3Inland water000...District 123219155.6District 219182832.1District 338344515.6District 44743482.1District 5777412638.9District 672639625.0District 7B9101540.0District 7C53504032.5District 81111116960.9District 8A2020195.3District 933332722.2District 104541486.3Utah242324...W. Virginia2525263.8Wyoming38375226.9Others34966.7US offshore total45425721.1US grand total1,3531,2731,3232.3Source: Baker Hughes Inc.Note:Totals and subtotals may not add, due to rounding. INTERNATIONAL OFFSHORE RIGS US Gulf of MexicoEurope/MediterraneanWorldwideFeb. 2010MobilePlatform*MobilePlatform*MobilePlatform*Total rigs in fleet11954104107753298year ago895478107536296Contracted rigs,732490104582239year ago603278104457252Rig utilization, %,61.244.487.097.277.380.2year ago68.159.399.097.285.285.1 Source: Offshore Data Services Weekly Mobile Offshore Rig Count*Updated quarterly.Industry at a glanceWorld Oil APRIL 2010 33DRILLING TECHNOLOGYSPECIAL FOCUS:Bed boundary mapping proves useful in a heavy oil environmentDeep azimuthal electromagnetic resistivity measurements were used to optimize the trajectory of wells drilled with a rotary steerable system. Pedro Machado, Ruben Guzman, Carlos Rojas and Alberto Ache, PDVSA; Nidal Khalil Hazboun and Karin Gonzalez, SchlumbergerPrimary(cold)productionofheavyoilfromtheFaja PetrolferadelOrinoco(Orinocooilbelt)deliversverylow recovery factors. Steam-assisted thermal production methods are increasingly being used in the region to enhance recovery. To optimize the heating efficiency of steam injection and the gravitational segregation of heavy oil, several of the steam-as-sisted techniques used in the region require precise positioning of horizontal wells close to the bottom of the reservoir sands. These sands are usually unconsolidated and highly heteroge-neous, with lateral variations at subseismic scales. Many of the reservoirs are less than 20-ft thick.Petrleosde VenezuelaSA(PDVSA)hasambitioustar-getsforimprovingoilrecoveryfactorsintheregion. The companyhasbeenevaluatingtechnologiestomoreaccu-ratelypositionwellsandimproveoveralloperationaleffi-ciency. PDVSA carried out a pilot project in a thin, uncon-solidated package where a high drilling rate (up to 1,000 ft/hr) was expected. Theprojectdeployedarotarysteerablesystem(RSS) combinedwithadeepazimuthalelectromagneticresistiv-ity system. This enabled real-time bed boundary mapping, providingengineerswithfit-for-purposeinformationwith which to make geosteering decisions to optimally place wells within the pay zone. The new information was subsequent-ly used to update and increase the accuracy of the geological model, benefitting future field development activity.THE BARE HEAVY OIL FIELDBareFieldislocatedintheOrinocooilbelt,oneofthe worlds largest heavy oil accumulations, containing an estimat-ed1.3trillionbbloforiginaloilinplace,ofwhich300bil-lion bbl are considered recoverable. The belt extends for about 375 mi along the north side of the Orinoco River in the east of Venezuela, and is divided into four blocks: Boyaca, Junin, AyacuchoandCarabobo.BareField,withasurfaceareaof about 1,560 sq mi, is in the Ayacucho Block, Fig.1.Oil in the Orinoco belt is mostly contained in fluvial, near-shore marine and tidal sandstones of the Oficina Formation, deltaic sequences deposited during the Miocene and Pliocene epochs. Reservoirs range in depth from 500 to 4,600 ft, and theycontainoilwithgravitiesranging46API.Viscosities range from 2,000 to 8,000 cP. Because of its high viscosity, primary (cold) production of heavyoilfromtheOrinocobeltistypicallyexpectedtode-liver recovery factors of just 3%. PDVSA has targets for much higher recovery factors, mostly to be achieved through steam-assisted thermal enhanced production methods.The sandstones of the Oficina Formation exhibit consider-able internal fluid-flow heterogeneity caused by juxtaposition ofdifferentfaciesandbyshalebarriersthatreducerecovery efficiency.Between30%and40%oftheoilinplaceinthe deltaic sequence is in sand bodies less than 20-ft thick, repre-senting an additional challenge to cost-effective exploitation.The main reservoir of Bare Field is in the lower part of the Oficina Formation, and is composed of shale, siltstone, mud-stone, coalbeds and sand bodies, interpreted as a product of a tide-dominated coastal plain setting. The main oil-bearing in-tervals are sands deposited as fluvial systems of braided plains, channels and channel-fill bars.SIMULATION OF WELL PLACEMENTAnumericalsimulationmodelusingrepresentativeprop-ertiesfromBareFieldwasdevelopedtoverifywhetherwell location within the pay zone has a significant effect when ap-plying the horizontal alternating steam drive (HASD) thermal recovery process.The HASD process uses a set of parallel single horizontal wellsactingalternativelyasoilproducersandsteaminjec-tors. The recovery mechanism is a combination of horizontal steamfloodingbetweenwellsandcyclicsteamstimulation ofeachofthewellsinthepattern.Steamiscontinuously injected through one set of wells while a second set of wells is producing. Afterapre-definedperiod,whichcanlastfromdaysto months,thewellsrolesareswitched,withtheinjectorsbe-Fig. 1. Location of Bare Field, Orinoco oil belt, Venezuela.34 APRIL 2010 World OilSPECIAL FOCUS DRILLING TECHNOLOGYcoming producers and vice versa. The role-switching contin-ues cyclically over the economic life of the production system. The process is designed to spread heat throughout the reser-voir, decreasing oil viscosity and thus improving oil drainage.The model simulated a five-well HASD pattern. Five dif-ferent scenarios were considered, locating the five wells from nearthebottomtonearthetopoftheformation.Figure2 showsthesimulatedtemperatureprofileinthereservoiraf-ter 10 years of steam injection with wells near the bottom of the formation. The area colored in yellow represents the high-est temperatures. The red line in Fig. 3 shows cumulative oil productionplottedagainstdistancefromthebottomofthe reservoir. This indicates that maximum production is achieved when wells are placed near the bottom of the reservoir.Creating steam represents a significant operational cost, socumulativesteamoilratio(CSOR)isanimportantpa-rameter when evaluating the economics of a heavy oil proj-ect. ThebluelineinFig.3showsthatCSORislowestmeaning that the least steam will be required for a particular volumeofoilproductionwhenwellsareplacednearthe bottom of the reservoir.OPTIMUM WELL PLACEMENTPDVSA initiated a project to investigate whether new well placement technology could improve drilling and production efficiency in its unconsolidated heavy oil reservoirs in the Ori-noco belt. Two candidate wells (Fig. 4) were identified in the central area of the Bare field in the TL sand, a 30-ft reservoir unit at 2,700 ft depth in the lower part of the Oficina Forma-tion.Availablelogdataindicatedstronglateralvariationin both sand thickness and petrophysical properties.The project required the drilling of 3,000-ft horizontal sec-tions for the two wells about 7 ft above the base of the reser-voir. A key objective was that the wells should avoid sand exit, despitetheexpectedsubseismicgeologicalvariations,thereby avoiding the need for sidetracks. Inaddition,itwasdecidedthatactualsandthickness shouldbemeasuredalongthetrajectory.Apoint-the-bit powered RSS was selected to meet these objectives. The drill-bit featured frontal jets to reduce washing out of the uncon-solidated sand formation.PROACTIVE GEOSTEERINGManyhorizontalwellshavebeendrilledintheOrinoco belt,usuallyusingconventionalwellplacementtechnologies such as log correlations, modeling and real-time image inter-pretations. Thereactivenatureofthisconventionaltechnol-ogy does not meet the requirements of advanced geosteering systems.Amoreproactiveapproachwasrequired,basedon real-timelogging-while-drilling(LWD)measurementsand software that would enable in-time drilling decisions.The bottomhole assembly included a deep azimuthal elec-tromagnetic resistivity LWD systemSchlumbergers propri-etaryPeriScopebedboundarymapperdeployedabovethe RSStomeasurethedistancetogeologicboundariesinreal time, allowing proactive geosteering through the reservoir. The tool was oriented azimuthally by the use of a magnetometer, and also provided annular pressure and azimuthal gamma ray (GR) measurements. The RSS provided a continuous inclina-tion measurement about 14 ft behind the bit.PRE-JOB MODELINGAmultidisciplinaryteamwasformedcomprisedofa geologist,geophysicist,drillingandreservoirengineers,sys-tem engineers and well placement engineersto plan the job details,whichincludedspecifyingdownholetools,software, people and data transmission systems.Theteamperformedafeasibilitystudytoquantify whether the sensitivity of the deep resistivity tool was com-5 19 20 40 550 01234567812345Oil cumulative production, million bbl Distance from the bottom, ftCumulative steam-oil ratioFig. 3. Cumulative oil production (red) and steam-oil ratio (blue) plotted against distance from the bottom of the reservoir.Fig. 4. Trajectories of the two candidate wells. The contoured horizon is a reector below the TL sand.Fig. 2. Modeled temperature prole of a ve-well HASD pattern after 10 years of steam injection.A major operator in the North Sea faced a feld with complex collision concerns in an extremely harsh environment. TESCO provided its rotary steerable CASING DRILLING directional(CDD)wellsolutiontorealizeseveralbenefts,includingreducedlost circulation,excellentholeconditions,onbottom rateofpenetrationequalto conventionaldrilling,andenhancedwellcontrol. Addintheequipmentmaintenancetimesavings and the elimination of certain classes of expendables such as drillpipe, and there is a measureable, positive efect on OPEX due to TESCOs CASING DRILLING technology. In addition, our depth of resources accelerates feld development, since the combination of using CDD with our other technologies demonstrates opportunities for drilling multiple wellsfromasingleplatform.Formorein-depth information, visit www.tescocorp.com.TESCO is changing the way people defne Total Depth.CASINGDRILLINGaccomodates a wide variety of build rates and casing sizes.Casing Size(inches)Casing Weight(lb/ft)Casing Grade Maximum Build Rate (degree/100 ft)5 1/2 17 P110 137 23 L80 87 5/8 29.7 L80 79 5/8 36 J55 4 1/210 3/4 45.5 J55 413 3/8 54.5 J55 3Total Depth is more than just a number.B E T T E R W A Y S T O T H E B O T T O M Top Drives Sales & Rental/Tubular Services Proprietary & Conventional /CASING DRILLING/Completions/AccessoriesTesco Corporation / November 2009` Total Depth12,088 ft, North Sea36 APRIL 2010 World OilSPECIAL FOCUS DRILLING TECHNOLOGYpatible with the expected petrophysical properties of the res-ervoir. A 2D section along the proposed well trajectory was generated based on resistivity measurements from a nearby wellandpropertiesofthe TLsandextractedfromthe3D structural model, Fig. 5a. Syntheticlogswerealsogenerated(Fig.5b):GR,con-ventionalresistivitiesanddeepazimuthalelectromagnetic resistivity raw data, which was used to predict distances to bed boundaries.The deep azimuthal electromagnetic resistivity data is plot-ted on a symmetric scale. The tool is sensitive to nearby resis-tivity contrasts. When the readings are close to zero, the tool is away from any boundaries (areas marked 2 in Fig. 5b). If a more conductive bed is located above the trajectory, curves willdeflectupproportionallytotheresistivitycontrastand distance (1). Conversely, if the more conductive bed is be-low,thecurveswilldeflectdownward(3).Themodeling exercise indicated that the tool was able to accurately predict the base of the TL sand within a detection range of 7 ft, which met the requirements of the project.LWD FIELD SOFTWAREDuring the drilling operations, LWD data was transmitted inrealtimetothesurface,wherespecializedsoftwaretools were utilized to present information that would enable proac-tive decisions to optimize the well positioning in the produc-tive zone. A three-layer model inversion algorithm was used to obtain distance to bed boundaries, horizontal and vertical re-sistivity of the reservoir, and resistivities of the beds above and below the measurement points in the TL sand. The software provided bed boundary information through both azimuthal curves and inversion results.Anothersoftwareplatformprovided3Dinteractivedis-plays of the gamma ray images along the well trajectory and interpretationsofformationdips.Aseismic-to-simulation software application was also provided, allowing collaborative workflowsandintegrationofoperationsbetweengeophysi-cists, geologists and reservoir engineers.RESULTSThetwowells,eachwith3,000-fthorizontaldisplace-ment, were optimally positioned on the first attempt, so no sidetrackswererequired.TheRSS,underthedirectional drillerscommand,respondedtoallgeosteeringrequire-ments,deliveringanin-gaugesectionwithlesstortuosity andsmallerdoglegseverities(below5/100ft)compared with downhole motors. Goodgeosteeringoperationalperformance,datasignal levelandsamplingfrequencywereachievedatthesame timeashighratesofpenetration(ROP),averagingmore than 500 ft/hr and reaching up to 1,000 ft/hr. Net pay aver-aged 90%.Figure 6 shows a representation of an interpreted structural modelbasedonthedistancetoboundariesdetectedbythe deepazimuthalelectromagneticresistivitytoolinoneofthe wells.Theboundariesonthe2Dsectionarereferencedto the executed well trajectory (red line) and color coded where darker colors represent lower resistivities. Supportingthisinterpretationaretheextractedrelative dips,representedbybluelinesonthecurtainsection(verti-cal section along the trajectory) extracted from the GR image interpretationonthetoptrack.Ashalesection,accounting for about 10% of the total drilled interval, is indicated by the darker GR images on the top track coinciding with the region where the trajectory exits the sand interpretation.The wells were drilled through sand bodies previously in-terpretedasbeingapproximatelyhorizontalalongthewell trajectory. After drilling 3,000 ft of horizontal section, varia-tion in true vertical depth (TVD) was found to be about 20 ft, representing an average relative dip angle of less than 0.5. However,dipsrelativetothewelltrajectorydisplayedlarger (2) variations locally, providing a tortuous geometry that is only feasible to navigate using real-time bed boundary map-ping technology.GEOLOGICAL MODEL UPDATEInformationprovidedbythebedboundarymapperwas used to update the geological model. Figure 7 shows the well trajectory(red)withabackgroundpictureoftheinversion canvas. Superimposed are yellow and green sticks depicting the distancestoboundariesandtheirinclinations. Thedistance totheboundariesresultsfromtheinversionofthereadings. Every distance to boundary is associated with an orthogonal bed inclination for every trajectory point where the inversion is performed. This information is displayed as an angle toward one side of the well trajectory.The new information enabled the creation of updated sur-faces that better represented the reservoir boundaries. The new Fig. 5. a) The proposed well trajectory and b) synthetic logs: GR (bottom), conventional resistivities (middle) and deep azimuthal electromagnetic resistivity raw data (top).Fig. 6. Structural interpretation based on distance to boundaries detected by the LWD resistivity tool. The red line is the well trajectory.N\ccJ\im`Z\I`^jNfibfm\iI`^j;i`cc`e^I`^jDl[GldgjJpjk\djGXikjJ\im`Z\:fgpi`^_k)'('Df[\ie>iflg@eZ%8cci`^_kji\j\im\[%Jaa`dahlna`q_ejc`ksjpeiaejsahhoanre_ejc(skngkrano]j``nehhejc;Sanaiknapd]j_]l]^ha*L%J%fne\[Xe[fg\iXk\[%=fle[\[`e(0-*%Pfli\`ek_\Ylj`e\jjf]^\kk`e^k_\afY[fe\%N\i\_\i\kf_\cgpfljlZZ\\[`ek_XkYlj`e\jj%N\dXel]XZkli\fli]lccc`e\f](,'kf(#'''?G:ffg\i&;iX^fei`^jXkflijkXk\$f]$k_\$XikL%J%]XZ`c`k`\j#b\\g`e^Zcfj\Zfekifcfm\i\m\ip[\kX`ckf\ejli\