ENM202 - Facilities Engineering Coursework

Coursework submission deadline is

Sunday 21st December 2014: 13:00hrs (UK time)

This coursework is designed as a self-study programme to further the student’s knowledge of the subject beyond the directly presented course material through web and publication searches and development of company contacts. In the coursework you should provide a demonstration of:-

1. Knowledge and understanding of aspects of field development planning and equipment application. 2. Critical analysis of selected options 3. Fundamental research (with references)

1. Project Brief

The GAZELLE oil field offshore RAS AL ZUBAIR has been producing for a number of years with all production exported via oil pipeline system to Fort Thompson. Development of the field has included injection of produced water into a deep horizon within the field where inadequate pressure support from the aquifer was observed. All effluent water discharges to the sea were halted and subsequent injection and disposal of the produced water required drilling of waste water injection and disposal wells from a second bridge linked well-head jacket. Due to the decline in oil production and hence associated gas there is a real possibility that field life may be constrained by lack of adequate fuel gas for the water disposal/injection and oil export pumping systems. NRGU E&P acquired the offshore producing oilfield, GAZELLE, in 2008 and carried out an assessment of near field potential and reprocessing of existing seismic data leading to exploration of a deep gas prospect which the previous operator had considered to be too high risk. The results of this exploration well have confirmed a gas condensate reservoir with the predicted production forecast given in the appendices. NRGU E&P have authorised drilling of ten development wells to support the supplied production forecast. You are a consultant field development engineer and have been directed to assess the development options and to make a detailed report with recommendations to the NRGU E&P board.

2. Scope of Report

Identify two different development concepts for the GAZELLE field to process the gas and condensate to export quality and define an export method (oil stabilisation and export is already handled by the existing Gazelle platform and is outwith the scope of your report).

i. Gas will be sold and distributed to the nearby fields (custody transfer at GAZELLE) to provide fuel gas and also exported to Fort Thompson to provide fuel for the local market.

ii. The high value condensate will be exported to Fort Thompson to use as feedstock for the new locally owned chemical plant.

iii. All waste products from the hydrocarbon processing shall be disposed locally using the existing GAZELLE facilities to meet all requirements of the strict national environmental laws.

Both options should detail the incremental development from wellhead to gas and condensate delivery points. The subsurface plan is fixed and your report should comprise the following sections:-

a) Prepare flow schemes showing the layout and of the main components used from wellhead to the point of export for BOTH the options being considered. (20%)

b) Critically assess the advantages and disadvantages of each of your development options

including descriptions of the main items of equipment used. Based upon your analysis select a recommended field development plan. This should cover technical viability, cost and commerciality aspects. Cost comparisons should be completed using the supplied XLS spreadsheet and for each option you should include a copy of the working spreadsheet in your report. (30%)

c) Discuss your selected method for fiscalisation for the produced gas and condensate streams. (15%)

d) Highlight flow assurance issues that may specifically be encountered by your preferred

development plan and propose your selected solutions to these indicating the likely impact upon production operations. (20%)

e) Outline the key considerations required for the decommissioning plan for the incremental

aspects of your development options. (15%)

3. Report

The report should be not more than 3000 words with flow diagrams and other relevant drawings to illustrate any points being raised. All references used must be fully identified.

4. Gazelle Field Information

Location

The GAZELLE field (figure 1), offshore RAS AL ZUBAIR, is located 45km from the nearest landfall to the North West – a remote desert region with limited infrastructure. Water depth is 100m. The nearest significant town, Fort Thompson, 200km South West of the field, has a deep water port with tanker berthing capability, a refinery and export facilities. A number of non-operated fields are producing in the same area but all are deemed to be mature assets and suffer from declining production and fuel gas shortages. An oil production profile for the existing GAZELLE oil field is given for information only.

Figure 1. Field Location

Other Development Activity

The oil refining facility in the Fort Thompson currently processes crude oil and NGLs from a number of both onshore and offshore fields in addition to the GAZELLE production. There is a strong local market for natural gas for both domestic consumption and for power generation. Other operators have production licences in the region and are located some 10 -20 km east of the GAZELLE field. In all cases these mature fields are suffering from shortage of fuel gas.

GAZELLE - EMGEE - J4 Petroleum Engineering

GAZELLE - EMGEE – J3 was discovered with the initial exploration well in 2009 and further appraised with the J4 well; data analysis indicates the field’s characteristics are as follows:

VALUE UNIT

Flowing well head pressure

650 psi

Reservoir depth (datum) 15024 ft.bmsl

Reservoir pressure 8270 ft

Condensate gravity 48.3 API degrees

Condensate production 130 bbl/mmscf

Gas specific gravity 0.65

Fort Thompson

Gazelle facility

Subsurface Development Plan

The Gazelle EMGEE – J reservoir comprises a tight Eocene formation underlying the existing oil producing horizons. The hydrocarbons produced contain no H2S or CO2. The exploration and appraisal wells have been plugged and abandoned after testing. NRGU E&P have indicated that ten production wells will be required to support the predicted production profile.

Production Forecast

The production forecast has been generated by a reservoir simulator:

Gazelle

Net Oil J - wells Gas Condensate

kbpd mmscf/d bpd

2015 63 3 6 780

16 57 6 30 3900

17 51 9 50 6500

18 46 10 60 7800

19 41 10 60 7800

20 37 10 60 7800

21 37 10 59 7605

22 33 10 57 7415

23 29 10 56 7230

24 25 10 54 7049

25 22 10 53 6873

26 18 10 52 6701

27 13 10 50 6533

28 9 10 49 6370

29 5 10 48 6211

30 1 10 47 6055

31 0 10 45 5904

32 0 10 44 5756

Year

EMGEE - J

Fiscal & Legal Requirements

It is a condition of NRGU E&P’s production licence for the field development that there is no flaring of excess produced gas; all gas shall be consumed locally (offshore) for fuel gas with the remainder exported to Fort Thomson. If an economic gas evacuation route cannot be found, it is expected that a gas disposal well and associated facilities will be provided as part of the development plan. All environmental discharges must meet minimum accepted international standards. All revenue gaining production streams must be metered to fiscal standards.

Gazelle Facilities Information

The present Gazelle production is via one steel jacketed production platform in 100m water depth with two additional bridge linked well head jackets. Oil is exported via an oversized pipeline to Fort Thompson The field started production some years ago and has come off plateau. Current oil production rates are around 65 mbpd with water cut of 15%. Water injection and disposal plants, sized to meet expected future water rates, are operational and maintain production rates which are predicted to show a slow decline with water cut increasing rapidly. Two 50% trains each with 2 stages of 3-phase separation and surge vessel to stabilise the crude oil to pipeline specifications. Oil is metered to fiscal standards prior to export. Gas from the HP / LP separators and surge vessel is compressed and conditioned for use as fuel gas. A vent/purge/blowdown system is maintained for emergency gas flaring. There is no deck-load or space available on the existing Gazelle platform structure.

5. General information

Should you require further information to prepare a development plan, you are asked to make assumptions on those issues for which you have no or insufficient information. Please ensure that these assumptions are clearly detailed in your report.

Appendices

a. Cost information:

Item Value CommentsDiscount rate 4.00%

Royalty 30.00%

Economics

Oil Price $/bbl 75Note Gazelle oil price discounted due to

long term contract with refinery.

Condensate $/bbl 125Premium price reflects use as chemical

feedstock

Gas Price $/000scf 8.6

Pipeline $mm/km

Subsea 2 12” dia pipe

Subsea 1 6” dia pipe

Land 1.5 all sizes

Bundle 5 10” Carrier with four lines

Jackets $mm

Piled 75

Concrete 200

Semi-sub 175

TLP 160

SBM 25 Export mooring buoy

Topsides Module ($mm)

Drilling (fixed) 75

Production separation 125

Water treatment module 100

Gas treatment module 140

Utilities 65

Accommodation 80

Floating ($mm)

FPSO – Construct 225 150,000 bbl storage

FPSO – Rent (/day) 0.35

Shuttle tanker - rent (/day) 0.15for condensate export via SBM -

requires offshore storage

Operating Costs

Fixed (%ge of cum CAPEX) 5%

Variable gas $/mmscf 50

Variable condensate $/bbl 10.00

Well CAPEX ($mm)

Sub sea 65

TLP (dry tree) 45 requires drilling module

Platform 25 assumes jack-up drilling unit

The above figures are indicative costs only. You can use other figures if these are justified with full explanation and references.

PRESS SPECULATION

NRGU E&P Inc. excited by EMGEE – J4 flowback analysis – September 2012

Exciting times for shareholders as NRGU E&P Inc. continues to release details from its flagship Ras Al Zubair, EMGEE J4 well, the long-awaited follow-up to its proof-of-concept EMGEE J3 well, the first horizontal fracced well drilled in this license which ran into mechanical and completion issues in 2011.

NRGU E&P who took over in 2008 believed that the underlying deeper tight Eocene zones could, with the aid of the horizontal drilling and multi-stage hydraulic fracking techniques that revolutionised drilling in North America, deliver many times the discovery well production rates. But, as long-time shareholders can attest, this vision has proved far more challenging, and costly, to deliver and the current well is the company's second attempt to get this right.

Initial signs are encouraging: the recovered condenstae, which has an average API value of 48.3 degrees, has been transported via a temporary export system using a leased shuttle tanker to a nearby refinery for sale, where it attracts a premium price.

The gas is currently being flared during testing but in the future there will be ready demand given this is the offshore hub for the Greater Gazelle region, where fuel gas shortage results in fuel gas prices of US$8.40/mmbtu (US$8.61 /mscf). The oil/condensate to gas ratio is reckoned to be around 130 barrels of liquids per mmscf, some 300 per cent higher than anticipated during well design. This is an unexpected boost for the company.

"It is a nice sweetener to continue production of oil which sells for an attractive price during flow-back and clean-up as some wells only flow water during early clean-up,” says the current MD, Brody Chance, who took over in December 2012

True to form, however, the well has thrown up complications, with pressure data indicating a partial clogging of the well bore perforations due to the breakdown of the polymer gel used in the frac fluid and very fine particulate matter.

The company will use a chemical flush to clear the blockages, which it says is a common remedial treatment in the industry and not unexpected for such a pioneering well. “As the first well of this type in the Gazelle Basin to "flow-back and clean-up" Chance commented, it is not unexpected for some remedial work as part of those operations,” - So far, so good, it seems.

Source: CrudeNews

CONFERENCE REPORT

Fort Thompson, Ras Al Jumar 26/8/2009

Ras Al Zubair oil output threatened by platforms running out of juice - AH Press

The Ras Al Zubair oil industry is facing the threat of a cascade of rig closures, unless ageing platforms can urgently source more gas to help squeeze out the remaining barrels. The potential threat to oil revenues looms as Ras Al Zubair prepares to vote in January's national elections -- a debate in which oil production forecasts have become a political football.

The affected offshore area, the Gazelle trend, is a very mature part of the basin where producers are trapped in a vicious circle of falling output, rising costs to patch up ageing platforms, and dwindling power supplies. To lift more oil from these depleted reservoirs, producers need to inject vast quantities of water -- a power intensive process that requires a reliable source of fuel gas. Some platforms are not able to generate enough of their own fuel so have to try and import the shortfall from neighbours, but the overall net position will go negative as early as 2016. This could force the early abandonment of rigs, with the loss of critical platform hubs sounding the death knell for dependent fields.

'We may be near a production efficiency precipice,' said Muhanned Al Ahmad, economics and joint venture manager at RAZONG (Ras Al Zubair Ministry for Oil & Natural Gas), speaking at Oil & Gas Ventures Fort Thompson conference earlier this summer. 'Because of the interconnected nature of this area, there is a domino effect that kicks in.'

Al Ahmad presented findings from a cross-operator work group he co-chairs which seeks to improve co-operation amongst producers focused on the 'Gazelle Rejuvenation Area'. This includes NRGU E&P’s Gazelle hub, which will leave the most stranded assets if shut down early. The fall in production efficiency means that time is running out. The Rejuvenation Area is now producing at just 7 percent of its peak, compared with 29 percent for the Ras Al Zubair Offshore Industry as a whole.

Possible solutions

To arrest this decline, producers need to lay their hands on fresh power supplies. Under government auspices, a Gas Working Group is looking at ways to source, transport and deliver reliable fuel gas. 'We've got to get this fixed – a very small amount of gas could make a lot of difference to this area,' Al Ahmad said. 'If you can improve water injection then it delivers a significant incremental uptick in barrels.'

As output has declined, platforms have become increasingly dependent on each other for fuel gas supplies and to spread fixed costs. The leveraging effect of any one party withdrawing is getting bigger as margins are squeezed. Al Ahmad described a downward 'death spiral' where less power leads to lower water injection, so production falls and there is less fuel gas for water injection. Eventually the platform becomes uneconomic and has to cease production.

'We are all inextricably tied together, we depend on each other. We have no time left to make mistakes,' Al Ahmad said.

Source: Associated Hackers Press