Turning brown into gold, making new out of old

Egypt’s domestic oil consumption is increasing while production is declining. In order for Egypt to avoid becoming a net importer of oil within the coming 10-20 years, new discoveries need to be found in addition to optimizing its production from existing aging oil wells. Most of Egypt’s existing oil wells are considered brownfields, which are defined as mature oil fields in a state of declining production or reaching the end of their productive lives; they are typically over 30 years old. This feature explores the potential gains of optimzing production from mature wells
By Mohamed Fouad

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% decline in production since its peak point more than a decade ago. Estimates place the country’s proven oil reserves at 3.7 billion barrels, which is approximately 0.3% of world reserves, while its more recent above-mentioned daily production average equates to less than 1% of world production.
Most of Egypt’s existing oil wells are considered brownfields, which are defined as mature oil fields in a state of declining production or reaching the end of their productive lives; They are typically over 30 years old. Globally brownfields account to an average of 70% of world production.
For the share of production from aging fields to increase, finding ways to slow the decline in their production curves is one of the strategic arenas for global competition. Indeed, mature fields represent an enormous potential resource for the future. Under the usual standards of the oil industry, an average 30 to 35% of the original oil in place in the reservoir is actually recovered by the end of the production period. Considering the huge quantities of oil at stake, boosting the recovery rate by an average of even 10% could yield additional reserves of between 200 and 300 billion barrels. The techniques used to locate and enhance the recovery of residual reserves in fields that have been producing for many years are the only way to anticipate the future behavior of these fields.

The maturity of any field is only considered when it has actually entered a phase of decline; the fact that such a decline is expected must be kept in mind throughout its life cycle.
The decline that increases by time can be resolved more effectively if addressed promptly, and some signs of maturity can be deferred by helping the field lead a sustainable life.
In other terms, an aging field contains smaller and smaller quantities of reserves to produce and with time, servicing such a field with innovative technologies become increasingly difficult to justify in economic terms, combating the spiral of obsolescence creates a pressing need to monitor fields, anticipate and update scenarios based on cumulative data that contribute to greater understanding.
Only this anticipation will allow timely solutions to be found.
A field is a complex system with many inter-related functions: extraction and injection of fluids; fluid treatment (separation, compression, pumping, water injection, etc.) and disposal, energy supply, transport and/or transfer of fluids and energy.

For sustaining the performance of mature fields, reaction has become a major condition. Responding to such reactions depend not just on the gathering of data, but also the information sharing of this data, which is a vital obligation, since the team gathering the information do not have the expertise to respond accordingly. The challenge is not only in the technology used or how efficient it could be; in the end human factor is the only key to any efficiency. To achieve maximum performance from each production process to enhance overall visibility should be the aim in any mature field project management.
The main objective is to develop an evaluation method (reservoir, well, production) designed to provide a consolidated status report on operational processes from the reservoir to the wellhead. The main innovation of the project lies in the consistency of the approach used by all the disciplines involved.

Reaching the greatest possible quantity of the hydrocarbons in place in the reservoir is a key objective to improve the recovery factor.
The use of enhanced oil recovery (EOR) techniques can improve re covery rates. Although such techniques may be implemented at any stage of oilfield development, they continue to hold great potential for mature fields. Different EOR Techniques are designed to dislodge oil from the tops of reservoirs, and are capable of extending the economic life of reservoirs.
These different techniques emerged during the 1980s, and are the focus of renewed interest today. Applying EOR techniques to mature fields is a multidisciplinary process, which must integrate the constraints associated with the existing installations.
Once the remaining oil targets and the most promising EOR method have been identified, designing the EOR project in detail calls for a highly accurate dynamic representation of the reservoir, because it involves complex mechanisms which are generally more costly than ordinary water injections.
For this reason, a precise characterization of the reservoir coupled with reliable flow models is needed to predict the ratio of oil gain to injection volume as closely as possible. It takes special laboratory experiments to calibrate the parameters of the various mechanisms that come into play, so the R&D centers have to develop dedicated protocols.

New wells are usually required to drain remaining reserves. The drilling of new wells on fields that have been producing for several years must be undertaken only once the pressure in the reservoirs to be drilled through has dropped substantially. The pressure of drilling fluids must not be much greater than the reservoir pressure, in order to prevent losses into the formation.
The fluids must also have the right theological characteristics to ensure removal of the drill cuttings, so great care must be taken in defining their physical chemical properties. In extreme cases, the underbalanced drilling technique which is provided by several of well known service companies can be used; this involves drilling while production is ongoing, using a drilling type of foam of lower density than the reservoir pressure gradient which will result in the well no longer being at low head but continuing to produce during the drilling operations.

Predictions that we will run out of oil after a certain period of time are based on an ignorance of the economic way of thinking. The typical way to estimate the number of years it will take us to run out of oil is to consider the following factors:

  • The number of barrels we can extract with existing technology
  • The number of barrels used worldwide in a year

The most naive way to make a prediction is to simply do the following calculation:
Yrs. of oil left = # of barrels available / # of barrels used in a year.
So if there are 150 million barrels of oil in the ground and we use 10 million a year, this type of thinking would suggest that the oil supply will run out in 15 years. If the predictor realizes that with new technologies we can gain access to more oil, he will incorporate this into his estimate of #1 making a more optimistic prediction of when the oil will run out. If the predictor incorporates population growth and the fact that demand for oil per person often rises he will incorporate this into his estimate for #2 making a more pessimistic prediction. These predictions, however, are inherently flawed because they violate basic economic principles. By using economic principles, we will see that: at least not in a physical sense, there will still be oil in the ground 10 years from now, and 50 years from now and 500 years from now. This will hold true whether if you take a pessimistic or optimistic view about the amount of oil still available to be extracted. Let’s suppose that the supply really is quite limited due to the declining factor of our fields.
What will happen as the supply starts to diminish? First we would expect to see some wells run dry and either be replaced with new wells that have higher associated costs or not be replaced at all. Either of these would cause the price at the pump to rise.

“Increasing the recovery factor from the world’s mature oil fields by a single percentage point would give the planet two to three additional years’ worth of oil .”
Christophe de Margerie, President, Exploration & Production Total

When the price of gasoline rises, people naturally buy less of it; the amount of this reduction being determined by the amount of the price increase and the consumer’s elasticity of demand for gasoline. This does not necessarily mean that people will drive less (though it is likely), it may mean that consumers trade in their SUVs for smaller cars, hybrid vehicles, or cars that run on alternative fuels. Each consumer will react to the price change differently.
If we go back to the normal Economics, this effect is clearly visible. The continual reduction of the supply of oil is represented by a series of small shifts of the supply with an associated move along with the demand.
Economics tells us that we will have a series of price increases and a series of reductions in the total amount of gasoline consumed. Eventually the price will reach a point where gasoline will become a commodity purchased by very few consumers, while other consumers will have found alternatives to gas.
When this happens there will still be plenty of oil in the ground, but consumers will have found alternatives that make more economic sense to them, so there will be little, if any, demand for gasoline.
Therefore, even to the consumer, optimizing production from mature assets are essential as they account to more than 70% of world production as mentioned previously. If we focus our economic strategies on brown fields, the consumer would probably not face a huge difference in oil pricing, as supply would increase by an average of 10%, which would accumulate a large amount of the market that would force the cost of a barrel to decrease even with the political instability in the region.

A large portion of the major Egyptian oil fields are considered brownfields, a sizeable percentage of which have very weak productivity rates, or are completely idol. Most of these fields need new strategies to put them back on a reasonable commercial rate of production.
There are several factors at play when explaining why brownfields have been unduly placed in the industry’s hind sight in the past. To begin, there has been a lack of new technologies, a problem that is solved today with technological advancements – which will help in an insight to reservoir information.
This information helps in adding new value to these brownfields in allowing us to re-evaluate the amount of reserves of such fields and hence their daily production rates.
In addition, oil pricing in the past has been in part responsible for the discouragement of companies (or the investors) in applying EOR methods in the early stage of the field’s production, which culminates into weakening reservoir production. In essence, at the field’s early age most companies look at the bigger productivity zones –forgetting the smaller ones; these neglected fields are the ones that currently could be reinvestigated.
Another reason for brownfield neglect is bad reservoir management. To elaborate, this is specifically high shock sizing or high pressure draw down leading to rapid decline, which leaves behind a lot of bypassed oil and makes the field a brownfield. Simply, re-managing such fields in a proper way,and optimizing its productivity in addition to applying the suitable EOR method will add new reserves.
Last but not least to the list of reasons for brownfield abandonment is that most of the small E &P companies have not applied any reservoir studies on their fields since the first studies they may have applied – or did not apply any in the first place – which led to no clear strategy in running such fields, and ultimately turning it into a brownfield even after a very short time of its production life.
The solution to the rise of brownfields in Egypt is fivefold. The first step is to help shareholders to invest more by applying studies and using new technology in evaluating their fields and applying the most profitable EOR method in their fields. This may need some changes in the agreement terms for amortization and oil cost recovery (CRC) pool to allow them to recover what they may invest as capital costs in such projects.
The second step involves a global overview of all fields in Egypt by co-operations between companies working in the same areas to exchange their implantations of in reservoir management and EOR techniques. This is then followed by the third step which is re-evaluating all aging wells and paying more attention to the minor formations which were neglected in the past.
The fourth step is to utilize new and updated technology in all production and development aspects for reviewing aging fields (well by well) to add more value to these brownfields. Finally, Egypt needs to start looking for more efforts from shareholders to help their companies in adding new reserves from brownfields. They have by investing more in the EOR or infill drilling or even deep drilling to explore new horizons.

Additional reporting by Diana Elassy
Special thanks to El Sayed Orabi, EGPC, who has provided this feature with valuable information


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