Oil E&Ps Technical discussion thread

25th Jun '09 by jonnyt

13 comments 2174 reads

It's come to my attention that there doesn't seem to be threads concerning the technical aspects of Oilers. I'd like this thread to be used to discuss anything technical about the drilling for and production of oil and gas.

I'm pretty sure there are lots of people out there who would like to understand more about the day to day operations in the industry rather like myself.

So I will start the thread off with a few questions.

When drilling and total loss of drilling mud is experienced how can casing be cemented in place through the section that experienced the loss?

Given this happens in Vugs and highly fractured rocks wouldn't the cement also get absorbed into the structure?

Doesn't this have implications for flowing through perforations given the reservoir may be cemented up?

The reason I ask is due to GKP's announcement yesterday and another share I hold, Ascent suffered the same fate at Agnani-1

JonnyT

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Cuthbert C

25th Jun '09

Morning Jonny, nice to see you here

Can I just ask why discussion of the E&P sector is developing under the sector heading of O&G Producers - which implies the exclusion of pure exploration cos - rather than the more obviously appropriate E&P sector heading which, as far as I can see, is still waiting in a virginal state to be brought into life?

Not criticising, just puzzled.

Murakami

Let us know if you want it moved?

djpreston

Hi Murakami

Id agree with tournesol. Would make sense for most of the coverage that has been on the "producers" sector to be in the E&P sector. Indeed, should we even have a seperate sector?

Sorry, I should clarify the way our sector taxonomy works. This is really a Meta Discussion so we should probably move it elsewhere, rather than continue to clog up Jonny T's thread (apologies). Let's continue the discussion here: http://www.stockopedia.com/forum/view/30486/sector-industry-classifications-of-threads

passinthru

Hi JonnyT

Q. When drilling and total loss of drilling mud is experienced how can casing be cemented in place through the section that experienced the loss?

With difficulty. If the mud has been a total loss then the cement will take the easy route and follow the lost mud. It’s unlikely to get to this stage though. The drilling department will have stabilised the mud losses by using a type of lost circulation material (this can be very low tech – coconut husk as an example, probably called fibre expanding additive and charged somewhere near the price of gold :-))

Once this loss has been stopped or at least safetly slowed to a rate manageble for further operations then a cement system can be designed. Cementing over a highly fractured interval does not mean that the cement has to ingress into the formation. The cementing design people will have plenty of scope to put a system together that matches the requirements of the drilling team. These are not just limited to:

- A light weight cement to cover just the zone of interest.

- No cement at all, a casing does not have to be cemented over the interval. This can be tricky and is not the type of thing often done in exploration work though.

- A combination of a cement system and mechanical casing products that prevent a cement slurry

from channeling into a formation.

Q. Doesn't this have implications for flowing through perforations given the reservoir may be cemented up?

Yes. And it is for this reason that samples from drilling and wireline cores can be evaluated and an expectancy of flow from drill stem testing. If this flow does not happen then a near well clean up is usually given. This can be as simple as a acid flush to dissolve any nasties from the drilling and cement. Not sure about the coconuts though:-)

SW10Chap

Hi JonnyT,

This sequence of questions are all cementing-related and I'm happy to give a high-level view. I'll also drop a line to passinthru [EDIT: Oh for goodness sake, he would post whilst I was writing this, wouldn't he!]; I see he's registered here and might be able to give you the benefit od his specific experience on this.

Let's start with losses, which are essentially a function of differential pressure, whereby the pressure in the well-bore (created by the weight of the fluid column of mud) exceeds that in the rock pores. This means, in theory, you can cause losses to happen simply by weighting up the mud - and vice versa, reduce losses by lightening up the mud. Which is fine as long as the pressures inherent in the rock pores follow a nice clean hydrostatic gradient. Problems arise when this hydrostatic gradient is not so clean and the mud weights required to control fluids at one point in the well actually cause the mud to invade the rock pores elsewhere.

It's quite possible to cement these areas where losses are experienced: cementing is an operation which takes place under pressure and where you actually want the cement to displace other fluids in the annulus. On top of that, cement has a different viscosity and character to drilling mud and so it will not invade the formation in the same way.

It's worth noting from my explanation above that losses do not occur exclusively in areas where there are vugs or fractures - although these can also be contributing fractures. Cement is absorbed into these voids, although I believe that the extent to which it penetrates can be controlled by clever mixes, setting times and watever cementers do in that shack of theirs :)

The perfs obviously follow the cementing. A decent cement job in a ggod reservoir is essential for productive perforations. The cemet should seal off the annulus between the casing and the reservoir completely. The widt of that annulus will (ideally) be around half-an-inch to an inch and the perfs can be 12 inches in length - so the cement interval is of little consequence.

Hope that's a reasonable start...

SW10

jonnyt

Thanks guys, a great start to the thread.

kentpaul

26th Jun '09

This comment has been moderated

doverbeach

2nd Jul '09

Afren have responded to grumblings about lack of of formation on their Ebok drilling plans with more information than analysts could possibly want on some technical bits - http://www.afren.com/uploads/MicrosoftPowerPoint5Ebokfielddevelopmentplanning.pdf, http://www.afren.com/uploads/MicrosoftPowerPoint3Ebokappraisalprogramme.pdf and http://www.afren.com/uploads/6Ebokdrillingoperations.pdf for anyone that fancies this stuff! If any of this looks unusual, I would be interested, otherwise I shall assume it comes under the heading of 'blinding them by science' and as a distraction from the no signed contracts or rigs yet - although discussions are of course well underway :)

In reply to doverbeach (post #9)

more information than analysts could possibly want on some technical bits

I think that's right. I can only pull up two documents from the links you've given, the drilling programme and the appraisal programme. Both of them look like documents intended for in-house use whch, for some reason, they've decided to publish without simplifying them.

The drilling programme (PDF) is something that you'd expect to see on the wall of the Petroleum Engineer and one or two others. It's primary function is to use Page 4 to prove the existence of SW10's Law, which is essentially defined as the area above the curve :-) Worth noting though that these are all described as 'typical' and so don't actually refer to any of the specific wells.

The appraisal programme (PDF) looks a bit like something created to obtain a "go-ahead" decision. It contains some bits of reasonably interesting stuff to a techie and I don't know if it would add much to an investor's decision-making process. It suggests that a reasonable amount of money has been spent with BakerHughes...

On a broader point, I am troubled by the age of the child shown in the background of the photo on both header pages!

14th Aug '09

Can you believe what your company is telling you?

The majority of investors in E&Ps have little technical knowledge. There are many here and on other boards who have done an extraordinary job in educating themselves about the Exploration element, from initial seismic surveys right through to first oil or gas. (I do realize that there is also a 'P' in E&P, I just find it tremendously boring - and first oil or gas is usually a good sign that it's time to go home.)

Nonetheless, all of us are tremendously reliant on news and technical information fed to us by our companies. Sometimes these are reasonably straightforward, well-worded and easy to understand. On other occasions they seem to be a little more difficult to understand and a question or two on your favourite discussion board can help to shine a light on what's going on, particularly if someone with a little experience shows up. From time-to-time there are those releases which confound everyone but the most ardent and even your associates with a little technical knowledge are left bemused.

What to make of it? Are those who produce a series of complex and befuddling releases simply poor at expressing themselves? Too busy getting the day job done? Incompetent and out of their depth? Or are there even fraudsters out there?

Thanks to muscovite on TMF who flagged this extraordinary report. Commissioned by Fraud Discovery Institute, Inc the report claims to reveal
InterOil’s history of making false claims about discoveries, hyping the stock to raise funds. They even use the phrase 'Ponzi Scheme.'

Is InterOil unique? Or are there patterns of behaviour we've seen elsewhere? Consider this paragraph:

“...the geological data omissions from various InterOil testing as well as their many “oops
we did not mean that” restatements of testing results do not happen in a vacuum but rather they
happen within the context of a well planned scheme executed by a senior management skilled
at the fraud techniques necessary to promulgate a long running Ponzi scheme for over a five
year period having raised over a half a billion dollars.”

Has your company ever made “oops we did not mean that” restatements either of testing results or other price-sensitive releases?

Or how about this?

InterOil selectively chooses to release only pieces of information regarding their
findings... [showing] their need to raise capital to sustain their
Ponzi scheme.”

Ever had to pester your company for additional detail in order to get a satisfactory picture of what's really going on at the wellsite?

Whatever the truth about InterOil, I commend the document to anyone who has an interest in investing in E&Ps, particularly some of the more adventurous and esoteric companies.

Without wishing to spoil all the fun, here are a couple of quotes from the technical experts employed by the Fraud Discovery Institute which I think are universally-applicable lessons in themselves:

“In my professional opinion, before claiming that it has commercial viable projects,
InterOil will have to invest significant additional risk capital in drilling additional wells and
conducting long term production tests of the gas reservoirs.”

“With the above net pays and porosities it is indeed possible to achieve the record flow
rates that InterOil announced during short flow or drill stem tests under the temperature
and pressures expected at the depth of the reservoir. However, flow rates obtained
during short open hole tests cannot be extrapolated to long term reservoir performance,
particularly for the type of reservoirs and porosity of Antelope-1 well.”

“InterOil did not disclose any detailed information about the flow test that resulted in the
record 383MMcfd and 5,000bd flow rates (while somewhat more detailed information,
including the precise interval and pressure data, was provided about the tests performed
in the lower, less productive zones at the base of the Antelope limestone reservoir
sequence.) It is curious also that pressure data was provided for the Elk-1 and Elk-4
wells, but not for the Antelope-1 flow test."

Good luck, and remember that whilst not all oilmen started out as cowboys, there are still some cowboys playing at being oilmen.

emptyend

15th Aug '09

In reply to SW10Chap (post #11)

All very good points, SW10!!

I think there are a couple of points worth repeating to help people sort the wheat from the chaff on such matters:

a) does the company keep coming back to the market to raise fresh funds?

b) do their RNSs repeatedly fail to provide important technical information on well tests (eg flow rates, choke sizes, test durations etc)?

c) do management have a decent stake in the company and have they put in their own cash (rather than simply exercised free options)?

If the answer to a) or b) is yes and the answer to c) is no, then I'd raise at least one warning flag.

On reading your post, I can think immediately of at least three companies (all much discussed on bulletin boards) that I wouldn't touch with my longest bargepole, irrespective of the apparent "value". Some will say "there is always a price" - but IMO there is no price low enough to compensate for well-founded fears over management integrity.

rgds

oilretire

29th Aug '09

Not sure if it's the right thread, but the presentation will be technical in nature. It's 'Offshore Europe' in Aberdeen 2nd week of Sept. Looking through the programme, this series for Thursday 10th caught my eye - Atlantic Margin Exploration.

Not sure if anyone will be going though......................http://www.offshore-europe.co.uk/page.cfm/action=Seminars/SeminarID=116

14.30 (123927) Sub Basalt Plays in the Rockall and Faroes Shetlands Basins
I. Davison, GEO International; S. Stasiuk, International Geoscience; and P. Nutall and P. Keane, ION GXT

15.00 (124191) Estimating the Magnitude of Exhumation from 2D And 3D Seismic Velocity Datasets: A Case Study from the Slyne Basin, Offshore Northwestern Ireland
F. Biancotto, R.J. Hardy and S.M. Jones, Trinity College Dublin

15.30 (125055) Exploring the Resource Potential of a Dormant Deepwater Tight Gas Condensate Accumulation Using Modern Seismic Technology - The Spanish Point Discovery, Main Porcupine Basin, Offshore Ireland
S.G. Pugliese and D.J. Davies, Sosina Exploration; J.M. O’Sullivan, Providence Resources
16.00 Coffee Break
16.30 (125073) Prospectivity on the Erris Ridge (Licence 7/97) „Ÿ High Risk/High Reward Frontier Exploration on the Irish Atlantic Margin
A. Howard, S. Beswetherick and G. Miglio, Eni

17.00 (125056) Controls on the Lower Cretaceous Carbonate Habitats of the South Porcupine & Goban Spur Basins, Offshore Ireland
J. O'Sullivan, Providence Resources; S.M. Jones and R.J. Hardy, Trinity College Dublin

17:30 (124464) Wellbore Instability Predictions within the Cretaceous Mudstones, Clair Field, West of Shetlands
R. Narayanasamy, D. Barr and A. Milne, BP

Oil E&Ps Technical discussion thread

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Jonnyt

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14.30	(123927)	Sub Basalt Plays in the Rockall and Faroes Shetlands Basins
		I. Davison, GEO International; S. Stasiuk, International Geoscience; and P. Nutall and P. Keane, ION GXT

15.00	(124191)	Estimating the Magnitude of Exhumation from 2D And 3D Seismic Velocity Datasets: A Case Study from the Slyne Basin, Offshore Northwestern Ireland
		F. Biancotto, R.J. Hardy and S.M. Jones, Trinity College Dublin

15.30	(125055)	Exploring the Resource Potential of a Dormant Deepwater Tight Gas Condensate Accumulation Using Modern Seismic Technology - The Spanish Point Discovery, Main Porcupine Basin, Offshore Ireland
		S.G. Pugliese and D.J. Davies, Sosina Exploration; J.M. O’Sullivan, Providence Resources
16.00		Coffee Break
16.30	(125073)	Prospectivity on the Erris Ridge (Licence 7/97) „Ÿ High Risk/High Reward Frontier Exploration on the Irish Atlantic Margin
		A. Howard, S. Beswetherick and G. Miglio, Eni

17.00	(125056)	Controls on the Lower Cretaceous Carbonate Habitats of the South Porcupine & Goban Spur Basins, Offshore Ireland
		J. O'Sullivan, Providence Resources; S.M. Jones and R.J. Hardy, Trinity College Dublin

17:30	(124464)	Wellbore Instability Predictions within the Cretaceous Mudstones, Clair Field, West of Shetlands
		R. Narayanasamy, D. Barr and A. Milne, BP