Several operators have taken it upon themselves to rejuvenate the production rates of aging wells across the world and have managed to succeed without a loss of revenue, transforming their stories into leading examples of accomplishment for the world to follow.
This feature in essence attempts to undertake two extremely vital components of the current trends in the local and international oil market: the first is the fact that brownfields not just in Egypt but worldwide comprise 2/3 of the world’s recoverable oil. This point will be further elaborated on via a brief examination of a few of Egypt’s many brownfields, their history and their present states. The second part concentrates on case studies of successful brownfield production optimization efforts throughout the world; a look at what technological advancements have meant for the international oil industry in order to ascertain what it can mean for Egypt in the not too distant future.
Where Egypt Stands
The oil and gas industry in Egypt has played and will continue to play an ever-growing role in the country’s economic development. However, while there are certain aspects of the industry that have presented the nation with optimism for the future, such as the growing exportation of liquefied natural gas (LNG), which began in January 2005, there are other aspects which impart a menacing reality. In 1996, Egypt reached its peak point of oil production which essentially equated to 922,000 barrels per day (bbl/d). This in effect caused a decline in the country’s net exports of crude oil and petroleum products.
In 2006, Egypt’s crude oil production averaged 658,000 bbl/d; a startling 40 percent decrease in production since its peak point more than a decade prior. Estimates place the country’s proven oil reserves at 3.7 billion barrels, which is approximately 0.3 percent of world reserves, while its more recent above-mentioned daily production average equates to less than 1 percent of world production.
In 2004, it was estimated that Egypt’s domestic oil consumption stood at 594,000 bbl/d while its exports stood at 134,000 bbl/d. In essence, consumption is swiftly rising while production is steadily declining. In fact, Egypt is expected to become a net importer of oil by the year 2015. And the answer to this dilemma cannot be solely found in natural gas, because in short natural gas cannot wholly replace petroleum and petrochemicals. Furthermore, while alternative energy is undoubtedly the next step to be taken in the long term for the world’s energy crisis, for the short term, there are three key efforts that must be addressed: conservation, exploration and brownfields. The first is redundant and thus will not be discussed in detail, suffice to say that conservation will always have to be on the government’s to do list.
The second means of boosting oil production is new-discoveries through exploration. There are a few problems with this approach however. The first and foremost problem of exploration is cost. Oil companies find exploration to be an expensive operation especially if exploration is pursued offshore. Deep-sea drilling is by far one of the most expensive endeavors world-wide, due to the incredibly high prices of equipment needed for offshore drilling. Secondly, while there have been recent discoveries made in the industry none have been major.
The third method of increasing oil production in a country, whose production has waned in the past few years, and also the most economic method, is to utilize what is already there. And this is where the story gets a little more interesting…
Increased production, greater investment, more job opportunities, higher exportation, enhanced fulfillment of domestic consumption, transfer of knowledge for advanced technologies, all this and so much more encapsulated in just one word: brownfields.
Brownfields: Securing Rising Energy Demand
Brownfields are defined as mature oil and gas fields in a state of declining production or reaching the end of their productive lives. They are typically over 30 years old. So why worry about them? The reason is they account for 67 to 72 percent of world production and, therefore, represent a significant resource to provide future production while utilizing existing infrastructure.
Brownfields are categorized as one among three types of fields, the other two being green-fields and deep-water fields. As already mentioned, green-fields are signified by new discoveries, something which has been taking place in Egypt but not in an astonishing manner, and not in a pace that will secure present and future consumption and export aspirations. Also, green-fields account for 20-25 percent of world production. Deep-water fields also as previously addressed are expensive to explore for and to drill and they account for only 8 percent of world production.
Due to the fact that brownfields account for more than 2/3 of world production, their efficient operation is essential. Currently, the average rate of recovery from a mature field is 35 percent for oil and 70 percent for gas. However, the international industry of oil and gas is attempting to raise this figure to reach 50 percent for oil and 80 percent for gas.
Brownfields in Egypt
Egypt was among the first nations to explore the possibilities of petroleum having discovered several of its fields in the beginning of the 20th century. These fields have since long reached their peak and are now in a dire state of decline.
Among these fields is the GPC field in the Gulf of Suez, which was discovered in 1915, with a 100% working interest going to EGPC. Production on the field commenced the same year as its discovery with 31.1 (‘000 b/d) reaching its peak in the year 1984 with 35.1 (‘000 b/d). In the year 2005 production rates had declined to 15.1 (‘000 b/d).
Another EGPC field, Hurghada was also discovered in 1915. Unlike the GPC field, the production rates of the Hurghada field were never that impressive with initial production standing at 0.5 (‘000 b/d). The field’s peak point did not raise its production rates at all, but decline began after the year 1965 and in 2005 stood at zero production.
The Ras Gharib field was discovered in 1938 and production began on the field a year later, where production rates stood at 8.1 (‘000 b/d). In 1975, the field reached its peak production rate of 9.3 (‘000 b/d) and in 2005 that rate declined to 3.3 (‘000 b/d).
However, it is the later discoveries which prove to be the true victims of declining production rates. Among these fields is BP’s Morgan field operated by GUPCO. The field was discovered in 1965 and began production in 1967 with a zero production rate. This rate boomed in 1970 reaching its peak of 268.9 (‘000 b/d). In 2005 this rate dropped to a staggering 22.8 (‘000 b/d).
Another GUPCO operated field that is in a sad state of decline is the Ramadan field, which was discovered in 1974 and reached its peak production of 114.5 (‘000 b/d) in 1978. In 2005 the rate plummeted to 11.3 (‘000 b/d).
The above examples of brownfields in Egypt are just the tip of the iceberg. There are close to 90 other fields which face similar states of decline of production. One can only imagine that if these fields were revived what possibilities they might present to the overall production of the country; meeting domestic demand, while also posing opportunities for export and thus the rise in investment, employment, technology and infrastructure for the nation at large.
So Why Not Invest in Brownfields? Logistics of the Field
The reason brownfields are said to be the most economical means of increasing oil and gas production is that they as previously mentioned utilize the advantage of already existing infrastructure. This simply means that mature fields that contain wells with artificial lift systems, casing, tubing and surface facilities merely need a work-over.
However, this does not mean that wells should be operated on with the same technologies that they were initially utilizing when the well was first developed. One of the main problems with trying to optimize production from a brownfield is that technologies were not altered in order to adapt to the aging of the well. While infrastructure can remain the same, technologies have to advance in order to generate a greater output from a mature field.
So how exactly can one go about optimizing production from a brownfield? The first step, undoubtedly, is to have better knowledge of the reservoir and to know the location of un-recovered oil in a field and to understand the fluid and pressure distribution of the reservoir. This endeavor has to be undertaken through the cooperation of field engineers, geophysicists and geologists. Once better knowledge of the reservoir has been acquired, facilitating access to these reservoirs must then ensue.
Reaching the oil is by far one of the most important tasks, but optimizing the production of the un-recovered oil that has been found is equally as important. Optimization efforts range from completion and lift strategies to fluid management. There have been several discoveries in the field of production optimization.
With the threat of an energy crisis on the horizon and present oil prices sky-rocketing, brownfields provide a viable solution for the future. So why are they not being concentrated on? Simply put, the answer boils down to economics, as most things usually do. There is not enough innovation specific to Egyptian fields on the part of researchers due to the lack of investment on the part of companies. There is a lack of investment owing to the shortage of incentives on the part of the government; a distressing absence of interest caused by the myth of a diminished rate of return.
Only a few years ago was it true that developing brownfields was an overly costly endeavor that would have expenditure surpassing profit. However, recent technological developments have rendered production optimization methods more economical. These developments have been successfully implemented elsewhere and have economically recovered their cost while increasing the production of once deliberated wells.
Leading By Example
The beginning of this millennium witnessed the rising prices of oil and gas coupled with rising political tensions in many of the prime oil producing countries, which caused a certain scare in the industry. Much like the great gold rush, this was the rush for hydrocarbons. In the international oil and gas industry buzz terms such as peak oil and resource nationalization shook the very fiber of oil dependent countries. These were very real problems that called for very real solutions.
With the help of advancing technology, service companies created enhanced oil-recovery (EOR) methods, which could be implemented on brownfields. Such methods utilize oil-field chemicals such as biocides, surfactants, and lubricants. These methods along with these chemicals present a viable solution to the world’s rising oil demand. Now that the easy oil is gone, the hard is all we have.
Several operators have implemented some of these optimization methods and have succeeded in their endeavors. Their success can prove to be a learning experience for some of the brownfields found in Egypt.
Brownfield Optimization Success Stories
Case Study #1
In 2006, with the assistance of brownfield optimization methods and exploration success, , a leading Russian oil company, which was created in 2003 through the merger of BP’s Russian Oil and Alfa Access Renova group (AAR), managed to produce 620 million barrels of oil equivalent and to add 861 million barrels of new proved reserves.
Case Study #2
As one of the leading service companies on an international level, Schlumberger maintains an impressive portfolio of optimization successes. The intriguing aspect about the company is the fact that for over 25 years the company has made it its mission to address brownfield challenges. Thus, their experience in the field has become a tool for others to learn.
Among their successes are several wells in Angola operated by ChevronTexaco. In this endeavor, the service company logged three wells and opted to used mechanical plugback tools (MPBTs) in order to increase production of the wells. The overall cost of the project was approximately US $400,000. This amount of money was recovered with the increased production in just eight days. In total, the increased production of the three wells reached to 2,400B/D.
Another project undertaken by the company was comprised of an Integrated Project Management (IPM). Implemented on the Waddell Ranch in Texas—consisting of 1,300 wells in an area of close to 80,000 acres—the project was essentially a restructuring of the field organization and the implementation of a total field management program. Schlumberger began on the field in 1998 and has since managed to reduce well lift system failures to 0.25%, while increasing production by 40% and saving more than US $1 million rendering the rate of return on the capital invested more than 100%.
Case Study #3
The Occidental Petroleum Corporation (Oxy), an international oil and gas exploration and production company, took over operation of the offshore Idd El Shargi North Dome oil field located in Qatar in 1994. When Oxy took over the field it had been in decline for close to 25 years.
The field initially went into production in 1963. It reached its peak production in 1970, producing 50 (‘000 b/d). In 1994 this figure had dropped to 20(‘000 b/d). By implementing state of the art technology, advanced drilling systems, waterfloods and reservoir characterizations, Oxy was able to enhance recovery rates and add new reserves.
After the implementation of these measures the operator managed to boost production to approximately 138 (‘000 b/d), which is close to triple the original production rate. The field now has an estimated four billion barrels of remaining oil in place. Since the operator’s takeover of the field in 1994 they have managed to produce more than 200 million gross barrels of oil.
So What Did We Learn?
The above case studies of brownfield success stories are telling of the possibilities that are present right within our country. The age of reasoning cost effectiveness as a deterrent to investing in brownfield production optimization methods is over. Both public and private entities have to take steps to cooperate in order to encourage the rejuvenation of mature fields throughout the country.
As previously mentioned, Egypt possesses several brownfields that are in dire need of attention. Investing in these brownfields will create more jobs, will better the infrastructure of the site while maintaining good environmental standards, will increase revenue and will secure future local and global demand.
The rising demand for oil, which in effect creates the rising prices of the commodity have rendered brownfield production optimization a necessity and no longer a luxury. On the side of the public sector a highly developed and motivated research center should attempt to scout for the future problem-solvers of the world, while also presenting the private sector incentives for operating brownfields. On the part of private entities, an awareness of advanced technology should be in the foreground of any new operating endeavor. It is not just brownfields that require enhanced oil recovery methods, but also greenfields so as to prepare for the imminent decline of production. One of the problems found in addressing brownfield challenges is the already existent infrastructure in the fields which did not take into account new technologies and development.
With the recent discourse of peak oil and the instability of oil producing countries, it would be foolish to lightly dismiss more than 2/3 of the world’s recoverable oil. Exploration will always be an option, albeit an expensive one, but no one truly knows what the future holds. Production optimization is not solely a science, but rather a culture. Borrowing from the motto of the Boy Scouts of America, one must always keep in mind that in order to survive you must be prepared. So let’s prepare for the future, let’s work with what we have so that we can face what we’re not sure of.
By: Diana ElassyDownload