E. AMADASU

Head, Upstream Monitoring and Regulations DivisionDepartment of Petroleum Resources, Nigeria

WELL INTERVENTION OPERATIONS AND COMPLIANCE ISSUES

DEPARTMENT OF PETROLEUM RESOURCES

Content…..

▪ Role of the DPR

▪ Legal Framework for Intervention Operations in Nigeria

▪ Global dynamics of Industry Developments

▪ Regulatory value proposition for optimal Well Intervention

▪ Intervention Operations In Nigeria

▪ Distribution of Field Performance in Nigeria

▪ Compliance requirements

▪ Challenges

▪ Way forward

▪ Conclusion

Role of the Department of Petroleum Resources

3

• Regulate and Monitor all oil and gas activities in Nigeria.

• Optimize government revenue earnings and stakeholder value creation

• Ensure efficient recovery and conservation of hydrocarbon resources

• Administer and provide accurate and reliable data for investors, strategic

planning and national development purposes.

• Promote and ensure a safe, secured and environmentally sustainable friendlyoil and gas sector in Nigeria

• Ensure sustainable development of the industry through effective regulationand implementation of government policies on oil and gas matters.

• Ensure efficient development, operation and maintainance of oil and gasfacilities in accordance with the provisions of the law.

• Conservation of the nation’s rich Hydrocarbon Resources.

Legal framework for Resources Development, Production and Optimization in Nigeria

4

Field Development Plan (FDP)

•Section 37 of Drilling & Production Regulations 1969

•Resources/Reserves

•Wells Count

•Production profiles

•Well Test/ Production Accounting

•New Technologies

•Flow Assurance

•Gas Utilization

•Economics

Rig and Vessel Operations

• Section 34 of Drilling & Production Regulations 1969

• Expires 31st

December

• Not transferable

• Pre Shipment Inspection

• ACS

• Pre License Inspection

Drilling Activity

• Section 32 of Drilling & Production Regulations 1969

• Exploratory, Appraisal & Development drilling

• Sidetrack

• Redrill

• Well Deepening

• Change of Trajectory

Re-entry Operations

•Section 32 of Drilling & Production Regulations 1969

• Initial Completion

•Well Clean Up

• Injectivty Test

•Workover

•Well Stimulation

•Recompletion

Well Abandonment

• Section 35 of Drilling & Production Regulations 1969

• Well Suspension

• Well Plug back

• Well Abandonment

Petroleum act 1969 and amendments and other principal legilsations

DEPARTMENT OF PETROLEUM RESOURCES

Global Dynamics of Industry Developments

5

Tough Time for a REGULATOR!

Production

Exploration

Capital Investment

Reserve

▪ Imbalance in oil demand and supply ▪ Oil price not dictated by demand/supply alone. ▪ Bust and Boom: cyclical investment pattern.▪ Strong Production growth outside OPEC particularly USA. ▪ Nigeria is a Price Taker! ▪ A Regulators Dilemma?

Regional competition on investing upstream capital exploration and

development spend reinforces the need for robust regulatory framework on

resource optimization

DEPARTMENT OF PETROLEUM RESOURCES 6

Regulatory Value Proposition for Optimal Well Intervention Practices

• Plug and abandonment rules

• Timeliness of regulatory approvals

• Incentives for self regulation against command and control

• Knowledge and experience sharing among regulators and industry

• Technical effectiveness (Rig Vs Riglessoperation)

• Does the job justify the remaining reserves

• Collaborative efforts among industry players

• Integrity of vessels conversion

• Compliance with standards

• Availability of vessels and equipment's

• Incentivizing R&D investment in production optimization innovation

• Deployment to ensure resources optimization

• Cost efficiency

TechnologyVessel and Equipment

RegulationCost

Efficiency

Commitment by Industry and dynamic regulation by government are critical to optimal intervention practices in oil and gas production and management

Intervention Operations in Nigeria

7

• Well intervention is a necessary option to optimize resource recovery and acceleraterevenue generation to fund national plans and stakeholder sustainable valueproposition

• Frequency of well intervention during the life of a field depends on numerousvariables including reservoir characteristics, infrastructures and economicconsiderations

• Choice of technique and equipment to be deployed for intervention depends onsubsurface condition which determines the mechanical and economic success of thejob.

• Deepwater fields notably Bonga, Agbami, Erha etc are cutting egde developments

that have leverage on technology developments to enhance production through

efficient well intervention techniques.

▪ There is huge intervention requirement in onshore fields to shore up productionand enhance recovery.

▪ Equipment and vessel integrity and compliance is key to achieving value creationin intervention programs.

Distribution of fields Performance (1-5KBOPD)

8

-

1,000.00

2,000.00

3,000.00

4,000.00

5,000.00

6,000.00

BO

NN

Y N

OR

TH

ISA

N

OK

UB

IE

EJA

ALI

NS

O

OG

HA

RE

FE

EB

UG

HU

EA

ST

AD

IBA

WA

NE

ME

FA

EP

U

Od

eam

a C

ree

k

Uq

uo

Co

nd

en

sate

GIL

LI-G

ILLI

BE

NIK

U

TA

PA

MIN

A

Oru

bir

i

AK

RI

NK

ALI

EG

BE

MA

ER

IEM

U

AB

ITE

YE

KW

ALE

IND

A

OD

UG

RI

BE

LLA

EG

BE

MA

WE

ST

EB

UG

HU

(O

PL

98

)

IZO

MB

E (

OP

L118

)

PIR

IGB

EN

E

MA

LU

Aw

ob

a

Kra

kam

a

CLO

UG

H C

RE

EK

INIM

UT

OR

OG

U

Stu

bb

Cre

ek

JIS

IKE

Eg

bao

ma

AFR

EM

O

Ala

kir

i

OLE

H

KO

RO

AM

A

RO

BE

RT

KIR

I

EW

AN

AFA

M

UG

HE

LLI E

AS

T

AW

AW

A

Ovo

rh

Ota

kik

po

DE

LTA

SO

UT

H

OG

BE

LE

1KOPD - 5KOPD

Frequency of well intervention during the life of a field depends on numerous variables

including reservoir characteristics, infrastructures and economic considerations

Large number of producing fields rely on intervention programmes to accelerate

recovery and enhance performace

Distribution of Fields Production Performance

9

-

2,000.00

4,000.00

6,000.00

8,000.00

10,000.00

12,000.00

5KOPD - 10KOPD

-

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

10kOPD - 20KOPD

- 10,000.00 20,000.00 30,000.00 40,000.00 50,000.00 60,000.00

20KOPD - 50KOPD

-

50,000.00

100,000.00

150,000.00

200,000.00

250,000.00

USAN ERHA AKPO BONGA AGBAMI

>50KOPD

Intervention optimization techniques facilitate production optimization

Intervention Cost and Duration – Case Study

10

YEAR

WELL A

METHOD DE

PLOYED COMMENTDURATION COST

1 7 days 8 M$ Rig Acid stimulation with rig

2 7 days 9.5 M$ Rig Stimulation with Rig

3 8 days 10 M$ Rig Stimulation with rig

4 8 days 4.5 M$ Vessel Rigless stimulation with V

essel

5 7 days 2.6 m$ Vessel Rigless Stimulation with V

essel

YEAR

WELL B

METHOD D

EPLOYED COMMENTDURATION COST

1 7 days 9 M$ Rig Stimulation with rig

2 8days 9.5 M$ Rig Stimulation with Rig

3 7 days 2.2 M$ Vessel Rigless stimulation with Ve

ssel

From the studies carried out:• Required duration of rig per well – 65 days Required duration of Vessel per well – 68 days• Required cost per well using rig - 70 M$ Required cost of Vessel – 35 M$

ConclusionFor remaining reserves of 6 Mbbls and 16 Mbbls respectively, Cost effective solution developed for managing the PI decline in Wells A and B wells is deployment of OIMR Vessel with significant cost reduction compared to rig operations. Pay out is in about a month.Cost showed a significant capital outlay of 140 M$ (excluding rig mobilization cost)

Compliance Requirement For Re-entry (Well Intervention) Operations in Nigeria

11

❑ RE-ENTRY PROPOSAL to include:

• Structural maps• Well Correlations• Re-entry plan• Well Schematics• Hydrocarbon Distribution Chart (Saturation Chart, Logs)• Resource accounting (Reserves, production)• Data gathering plan (Press, Zonal Vol., Temp., Formation Isolation)• Valid licensed Rig / Intervention vessel• Re-entry cost and Schedule (Dev. Cost/Operating Cost/Tangibles)

❑ Payment of statutory fees

❑ Re-entry approval prior to actual re-entry

❑ Monitoring of re-entry operations

Well Intervention Value Addition

12

• Scope of work identified in well intervention includes: well logging,perforating, well cleaning, fishing, fluid displacement, thru tubing sandcontrol, remedial cementing, selective stimulation, thru tubingcompletions artificial lift services, re-entry drilling and surface controlledsubsurface safety valve repairs

• In 2017, estimate of oil gain from the above intervention operations inOffshore is about 20,000 bopd with about 65,000 bopd in other terrain.

• In 2018, estimate of oil gain from the above intervention operations inoffshore increased to 50,000 bopd with about 80,000 bopd in other terrain

• This was achieved with reduced cost, time and production deferment.

• In Quarter 1, 2019, we have licensed 7 Intervention Vessels in Nigeria asagainst 3 and 4 for the previous years

• However, more can be achieved with enhanced engagement with theregulator by the industry

Key Intervention Challenges in the Nigerian Oil & Gas Industry

• Dwindling Exploration activities reinforces further intervention to recovery

of remaining hydrocarbon

• Erosion of Value assurance to all stakeholders due to high operational cost

• Minimal intervention due to robust FDP

• Growing spate of non-compliance in terms of licensing of intervention

vessels and well intervention operations permit

▪ Robust Field Development Plan

▪ Smart well Technologies for ease of intervention operations

▪ Timely engagement and effective interface management

▪ Regulatory compliance by industry players

▪ Statutory reporting of Oil and Gas Operations

▪ Automation of regulatory processes to ease business and enhance

reporting and monitoring of intervention operations.

The Way forward

14

▪ Compliance in Well Re-entry Operations will promote the optimization of

hydrocarbon resources recovery and value proposition to stakeholders

▪ Emerging industry dynamics are reinforcing the importance of well

intervention

▪ Technology is a key enabler to cost efficiency and production optimization.

▪ Regulatory compliance by well intervention vessel operators must be

pursued to ensure hitch free and safe operations

▪ We are committed to optimizing the regulatory environment in Nigeria to

enhance our competitiveness and ensure ease of doing business and

regulatory compliance.

Conclusion

15

▪ For additional information on the mandate/roles of the DPR and

the legislative instruments & regulatory tools employed by the

Department, please visit the DPR corporate website:

www.dpr.gov.ng

DPR Website

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Thank you for listening