FPSOs also have many advantages in offshore oil and gas development. They are built based on conventional shipbuilding technology and have a large workspace with heavy payload capacity, and they offer easy installation and decommissioning. FPSOs provide a flexible development strategy with advantages in reduced capital investment, varied ownership and operatorship options, and accelerated schedule.
FPSOs are not designed for iceberg impacts, however, except small bergy bits, and pack ice conditions must be minor. Drilling operations cannot be performed on deck due to the motion characteristics of the vessel, so all FPSO wells are subsea.
If an iceberg presents a risk of collision, the FPSO must disconnect from its turret and risers and exit the area to avoid contact. In the early days of Grand Banks exploration, ice avoidance was the prevailing philosophy during drilling.
Close encounters with icebergs could force a MODU to stop drilling and evacuate or prepare for impact, which can significantly increase the cost and risk of operations, and in the case of FPSOs, to disconnect and leave the area in the event of unmanageable ice. Today, there is a joint regional ice management plan that enables coordinated responses for all the operators on the Grand Banks. The plan provides for coordination of ice and iceberg detection, monitoring and trajectory projection, and coordinated management of response actions to icebergs transiting the areas that present risk to drilling and production.
The iceberg management system includes definition of alert and exclusion zones, and coverage surveillance using satellite imagery and aerial flights. The purpose of this review is to evaluate the exploration, development, and production cost offshore Newfoundland using publicly available data.
In most producing areas of the world, detailed field data are unavailable and require expensive commercial subscription services to access, but in a few countries e.
Newfoundland is one of the most transparent regions, especially regarding spending levels and well reports, and in this paper we review the cost components leading to production. For development drilling and production, data provides useful results; for exploration drilling and production cost, more inferences are needed, and results are less robust. This is the first detailed analysis of exploration, development, and production cost offshore Newfoundland.
The outline of the rest of this paper is as follows. The license areas offshore Newfoundland and Labrador introduce the setting and are followed by a summary of exploration activity, producing fields, development activity, production, and reserves.
Exploration cost per well and depth drilled is estimated, along with related summary statistics, and development drilling trends and average cost for MODU wells are examined. The strategies and trade-offs for iceberg-prone developments are highlighted, as well as employment data associated with each project. With only four projects in the region, each is examined individually. The paper concludes with an evaluation of unit development and production costs.
In three appendices, information on iceberg management, drilling time and cost curves, and reservoir management requirements are described. A primer on icebergs and the ice management plans employed by operators is summarized since it is a unique and interesting feature of development in the region.
Time vs. Under international law, coastal states have sovereignty and jurisdiction over their territorial sea, defined from the coastline to a 12 nautical mile nm Footnote 7 limit, and these rights cover the resources of the surface, water column, seabed, and subsoil, and extend vertically to the airspace.
Unlike the territorial sea, which derived from conventions going back hundreds of years, the exclusive economic zone EEZ was a relatively recent creation of the UN Law of the Sea Convention UNCLOS in and provides a coastal state a maritime boundary extending nm km, mi from their coastline where they are granted exclusive economic rights to regulate fisheries, mineral development, and environmental protection. The EEZ is not sovereign water, but exclusive economic rights can be quite valuable.
Pierre and Miquelon that juts south of the island. States present geological evidence to a UN commission, which judges the scientific validity of assertions. Countries with rightful but overlapping claims are expected to come to a settlement. Article 76 of UNCLOS outlines limits of the continental shelf that a country can claim, either nm km from the baseline, or nm km from the m isobath.
For submarine ridges, only the nm km limit is applicable. Canada has submitted its application to the UN for an extended continental shelf claim Footnote 9 offshore Newfoundland and Labrador. ELs may extend to a maximum nine-year term if a well is spudded within the first period either 5 or 6 years from the date of issuance.
Exploration and development wells are used to find commercial accumulations of hydrocarbons and develop them. Exploration wells are drilled outside known reservoirs, and therefore, exploratory drilling almost always Footnote 10 takes place from a MODU such as a jack-up, semisubmersible or drillship. Development drilling is different from exploration drilling, since the objective is to produce, while in exploration the objective is to find hydrocarbons, and in appraisal, to delineate the reservoir and gather the necessary data for planning the development.
Delineation wells are used to determine the areal and vertical extent of reservoirs and have many similarities to exploration wells. In exploration drilling, pressure regions are unknown which result in conservative mud weight practices and casing design and slower rate of penetrations. This typically results in slow, expensive wells. Exploration wells are also almost always drilled vertically straight down to target unless bypass and sidetracks are required.
If exploration is not successful, sidetracks may be drilled prior to abandonment to better understand the formation geology, which adds to the cost of the well. Onshore, most successful exploration wells transform into producer development wells since land and infrastructure requirements are not constraining, while offshore, this is much less common. Delineation drilling typically includes coring, fluid sampling, drill stem tests, etc.
Exploration expenditures include seismic surveys, well site surveys, well testing, and drilling operations. Well cost includes new wells spudded and drilled, wells reentered and drilled, and well abandonment. Exploration and delineation wells are grouped together in evaluation since both are drilled using MODUs with relatively simple trajectories and similar cost characteristics. Footnote Exploration expenditures and number of exploration and delineation wells drilled offshore Grand Banks, Newfoundland.
Over the next decade, many fewer exploratory wells were drilled as operators focused on developing their discoveries. Beginning in , operators began to explore further afield, and another wave of exploratory activity occurred in the most recent decade. Measured depth is a primary cost factor which along with the diameter of the borehole determines the volume of rock that must be broken up and removed.
The market rates of MODUs and unplanned events e. Borehole drilled in exploration, delineation, and reentry exploration and delineation wells offshore Grand Banks, Newfoundland.
Aggregate composite annual cost is the sum of all well cost divided by the number of wells and total meters drilled. Average annual statistics are computed over the period year-by-year. Composite averages are always smaller than average cost due to the manner of computation. Average inflation-adjusted exploration and delineation well cost and cost per meter drilled offshore Grand Banks, Newfoundland.
The average measured depth drilled during this period was m per well. Reentered wells are not counted as new wells, but new borehole is allocated in the year incurred. Individual well cost is not reported, only total exploration spending per year, which covers all wells spud and the cost of reentries performed during the year along with ancillary activities, and so the statistics computed are an approximation to actual well cost.
Operators occasionally report exploration well expenditures in their development applications, and this is useful information for comparison. For example, in the Hebron project, ExxonMobil reported exploration cost for seven wells drilled from to In terms of wells drilled, exploration and delineation activity has been low over the past two decades, typically less than three wells per year, although activity levels are occasionally higher.
Recoverable reserves at Hibernia are estimated at MMbbl million m 3. Recoverable reserves are estimated at MMbbl 80 million m 3. The White Rose field was discovered in in m water depth about 30 nm 56 km northeast of Hibernia. In , the 75 MMbbl 12 million m 3 North Amethyst subsea tieback began production through the White Rose facilities, and the West White Rose extension planned to use a gravity-base wellhead platform for drilling but was suspended c.
The Hebron field was discovered in about 5 nm 9 km north of Terra Nova and 17 nm 31 km southeast of Hibernia. Recoverable reserves are estimated at MMbbl million m 3. Development well construction includes two distinct operations—drilling the well to total depth and completing the well through installation of the tree. Development wells include producer and injection gas, water wells and disposal wells, and all successful development wells require completion.
Well completion represents the installation of packers, screens, and other hardware coupled with perforations and stimulation. The goal of drilling is to drill the well to target depth at minimum cost in a safe and environmentally sound manner in accord with all applicable laws and regulations. The goal of completion is to achieve high-rate long-life completions to maximize production rates and resource recovery. Drilling cost depends on location onshore, offshore , purpose of the well exploration, delineation, development , trajectory vertical, directional, horizontal , borehole size and complexity two-dimensional, three-dimensional, extended reach , type original, sidetrack , measured depth, drilling plan number of casings, mud weight, maximum angle, etc.
Completions are the interface between the well and the reservoir, and completion cost is impacted by type single, multiple , complexity gravel pack, frac pack, smart , stimulation requirements, reservoir management and downhole equipment pressure and temperature gauges, chemical injection, gas lift , time of development, and other factors.
Smart completions refer to downhole equipment and sliding sleeves that allow controlling production from multiple zones. The total borehole drilled in development wells is about twice the total measured depth of exploration wells, 1. Measured depth is measured along the path of the wellbore. At Hibernia, , m development wellbore has been drilled through , , m at Terra Nova, , m at White Rose, 68, m at North Amethyst, and 76, m at Hebron Fig.
Hebron is still early in its development campaign. A strong correlation arises between development well counts and total measured depth drilled because of similar regional geology of producing formations.
In Fig. Since operators are producing from the same trend and relatively narrow intervals within those trends, and because development well profiles are broadly similar across the four projects, the strong fit of the regression is not surprising. Borehole drilled in development and reentry development wells offshore Grand Banks, Newfoundland, — Relationship between amount of borehole drilled and number of development wells top and correlation bottom offshore Newfoundland, — It normally takes 2—3 months on average to drill and complete one well from a platform rig, and so at Hibernia, the number of development wells drilled during its early years was limited to about 12 wells per year from its two active drill rigs.
Hebron has one rig, and well counts are limited to about 6 wells per year. For wells drilled from a MODU, drilling and completion time is a bit longer, but wells are also usually simpler so annual well counts per rig are about the same. End of Well reports serve as a record of operations performed during the drilling and completion of wells. Hibernia and Hebron do not report cost data, except in special cases, and so no comparisons can be made between MODU wells and platform wells. Also, not surprisingly, data from recent wells are somewhat more comprehensive and complete than early End of Well reports, which may not include cost vs.
Well type and well status are primary categories in the cost evaluation. Producers and injectors have been drilled and completed while suspended wells are in an indeterminate suspended state, on their way to completion, or on their way to abandonment, if unsuccessful.
Suspended wells Footnote 15 are not considered in evaluation unless their status is clearly defined e.
During drilling, wells may be abandoned if problems arise or a productive zone cannot be found. Abandoned producer and abandoned injector wells were previously completed and are included in evaluation without abandonment cost.
Of the wells reported, about two-thirds are producer and injector wells, and the remaining wells are in various indeterminate states which were not evaluated. For a brief review on time—depth and cost—depth plots, see Appendix B. A total of 35 producers and 26 injector wells from to provide drilling and completion cost data. Development cost distribution for production and injection wells from FPSO developments offshore Newfoundland, — Cost distributions for each well class are depicted in Figure Drilling and completion cost distribution for producer top and injector bottom wells in FPSO developments offshore Newfoundland, — Through February , 1.
Natural gas associated with oil production is not a sales product and, after fuel use and gas lift, is compressed and reinjected for pressure maintenance and potential later extraction.
Some gas is flared for safety purposes. A significant amount of water is also produced with black oil reservoirs, and 1. Oil and water production tends to correlate with one another in aquifer drive Footnote 16 reservoirs after a period Fig. Gas disposition and water injection totals per project through March 31, , are shown in Table 4. Hebron data are not depicted because the field only came on-stream in late Note that gas flared, fuel, and injected totals Bcf 79 billion m 3 , and are equal to gas production, since lift gas is recirculated within the system.
Gas reinjection is used to maintain reservoir pressure and displace the oil, and with the gas stored it may be recovered in the future. Water is injected into formations for voidance replacement in aquifer drive reservoirs, and normal practice is to inject volumes approximately equal to the oil and water volumes produced.
Through March 31, , MMbbl oil and MMbbl water million m 3 oil and million m 3 water was produced, or MMbbl million m 3 fluids total, and MMbbl million m 3 water was injected. On a field basis, injection-to-production ratios range from 0. For additional background on produced water, water and gas injection requirements offshore, see Appendix C.
Petroleum reserves offshore Newfoundland are estimated at 3. The Labrador shelf is believed to have substantial gas resources, but to date discoveries have been small. Equinor Canada proposed drilling up to 24 offshore wells six per exploration license between and The first step of federal environmental assessment is a public consultation process and environmental evaluation. After the consultation process and environmental review is completed, if the economic and operator conditions e. The number and type of development well are key design parameters in every offshore development.
Engineers determine how wide wells should be spaced without suffering any significant loss of reserves. Major fields will usually have many productive fault blocks and numerous pay sands and require dozens of wells to develop.
Reservoir sands that are deep and compact will require a smaller number of wells than a thin reservoir that is spread over a large areal extent. If there are faults and reservoirs are isolated, more wells will be required to reach these locations. Phased developments are often the preferred strategy for complex reservoirs or where the operator wants to limit initial development costs.
The depletion plan of some developments may feature wells whose service changes during the life of the field, e. Development wells are more complex than exploration wells and usually more expensive to drill, not only because of their trajectories but because they must be completed readied for production , and for complex completions cost can be as large as drilling.
Three-dimensional and extended reach well Footnote 17 cost may be up to five times as much as a directional well of the same length. Most offshore development wells drilled from a platform rig are directional, and because many wells are drilled in sequence, learning occurs, and performance typically improves. A dry tree well has its tree Footnote 18 above the waterline and is accessible from the platform, allowing direct access from a platform rig or MODU.
Production from dry tree wells flows from the reservoir through the conductor to the rig floor. Wet subsea wells have their trees located on the seafloor, either directly below the platform or offset from the platform.
In iceberg-prone areas in water depth less than m, wet wells are placed in excavated glory holes Footnote 19 to protect the wellheads and trees from scouring icebergs Fig. Source : SUT There is no subsea infrastructure cost for dry tree wells but major construction and completion challenges to overcome in reaching target using directional and extended reach wells. Dry tree wells allow easy access for maintenance and repair, as well as for future sidetracking operations.
In comparison with wet tree wells, dry tree wells have lower life cycle operating cost and can extract more resource because of the ability to intervene in the well on an as-needed basis at minimal cost Reid et al.
For empirical data on the difference between dry tree and wet tree economic limits in the deepwater US Gulf of Mexico, see Kaiser and Narra Subsea wells also have greater difficulty flowing with high water cuts because of hydrate formation, and if gas lift or subsea compression is used to flow to a lower abandonment pressure, flow assurance issues may result. For subsea wells, the number and location of drill centers is a compromise between drilling operations, flow assurance, subsea cost, and future development.
Access to the wellbore is only available from a MODU mobilization, which is expensive and can hinder reservoir development. Flow assurance is a significant operational issue and complication since fluid must be transported along or underneath the seafloor in flowlines to reach the host. Flow assurance requires use of chemicals, electrohydraulics for control, and regular pigging operations that increase operational cost and complexity.
All reinjected fluids must also be transported in flowlines along the seabed. A gravity-base structure is a structure capable of withstanding the environmental forces to which it is exposed during its lifetime by its own weight.
Gravity platforms may be built of concrete or steel or a combination of the two, but most of the gravity structures constructed for oil and gas development are concrete and are stabilized by skirts that penetrate the seabed.
Concrete GBSs have a large footprint to minimize soil-bearing loads and, to provide buoyancy for transportation, have large enclosed volumes which can be used to store oil and other liquids. GBS developments in an iceberg environment are designed to withstand icebergs up to a specific mass limit Widinato et al. Most GBS designs have a base caisson for oil storage and shafts penetrating the water surface to give support for the topside structures, and to serve for drilling, risers, and utility systems for offloading and ballast operations.
In the first generation of GBSs, grout was normally placed under the platform to secure full contact between underside and seabed, but in the second generation of GBSs, more sophisticated systems were employed including potential refloat Hjelde FPSO facilities comprise a ship-shaped vessel held on location by a mooring system anchored to the seabed. If an FPSO operates in a hurricane or iceberg-prone area, the vessel may be specified with a disconnectable turret Footnote 20 to allow the FPSO to disconnect from its wells and move offsite.
Well fluid is transferred using flowlines and risers and is processed by equipment mounted on the deck. Produced oil is stored in tanks in the hull, awaiting transfer to shuttle tankers through an offloading system. GBS developments allow the use of dry tree wells drilled and completed from a platform rig and can also use wet wells if reservoir targets are beyond the capability of the platform rigs, whereas FPSOs do not allow drilling or workovers from the vessel and require subsea wet tree wells drilled and completed from a MODU.
Subsea facilities at each drill center incorporate manifold systems to comingle the flow from the production wells, distribute gas lift to the production wells, and distribute water and produced gas to the water and gas injection wells.
Methanol is normally injected at the Christmas tree, while production chemicals can be injected either at the tree or downhole. Deaerated seawater is injected into oil zones for pressure maintenance. Electrohydraulic umbilicals to each manifold convey the required hydraulic fluid, chemicals, power, and communication signals necessary to operate the tree valves and monitor downhole and tree-mounted instrumentation. The Hibernia field was discovered in and delineated by nine wells over 5 years Smith From the onset, the project was expected to require frequent wellbore intervention and extended reach wells, thus strongly favoring a GBS development despite higher investment cost Elsborg et al.
The Hibernia GBS is a cylindrical concrete caisson that extends from the seabed to 5 m above the waterline and designed to resist an iceberg impact up to 6 million tonnes Footnote 21 Fig. Four shafts extend 26 m above the caisson to support the deck and topsides weighing 60, t. Accommodations are for — personnel Table 6. Source : SEC. A m thick ice wall forms the perimeter of the caisson and has 16 teeth designed to dissipate the impact energy of an iceberg to an interior tie wall Fig. The cells of the wall are filled with sea water and solid ballast.
There are two drill shafts, a riser shaft, and a utility shaft; the utility shaft is permanently dry. The shafts are connected with walls and compartmentalize the interior of the caisson into six oil storage cells of , m 3 1. Source : Hoff et al. The Hibernia Southern Extension is a subsea development about 7 km southeast of the GBS that included five production wells and six water injection subsea wells for pressure support.
The Hibernia reservoir is highly faulted and consists of multiple, stacked fluvial channels and sand bars. A total of 64 well slots are available, and circa almost all of these were in use Fig.
Most fault blocks have been developed with remaining targets including smaller blocks and infill well opportunities Lawrence et al. At the time of drilling, Hibernia wells expanded the extended reach envelope of the industry and continue to expand the envelope as shown in Figure 23 Woodfine et al.
Source : Hibernia Management and Development Company. Extended reach drilling at Hibernia circa relative to world database showing total vertical depth versus horizontal displacement in meters. A combination of water flooding and gas reinjection is used to maximize recovery and is common to all projects in the region. Oil is transferred from the platform to shuttle tankers via an offshore loading system which consists of subsea pipelines, a subsurface buoy, and flexible loading hoses.
Two tankers with a cargo capacity of , barrels , m 3 are used to ship crude directly to market or to a transshipment terminal located in Placentia Bay, Newfoundland. The colored lines in Fig.
The SE drill center is for water injection only Haugen et al. Source : Suncor. The field is divided by faults into more than two dozen connected tank units, and most units or fault blocks hold an injector—producer well pair Stephens et al. Most of the producer wells are deviated, and most injectors are vertical or close to vertical Fig. Three long reach wells have 4—5 km offset and 6—7 km measured depth. The FPSO vessel has a length of m, a beam of A controlled disconnect can be accomplished in waves up to 7.
An emergency disconnect can be accomplished in 15 min. The turret is 70 m from the bottom of the spider buoy to the swivel stack Fig. At the main deck, the turret diameter is 12 m and at the vessel keel 22 m. When the spider buoy is released from the lower turret, it free-falls to its design depth. Initial development required 14 production wells in the South Avalon reservoir and 11 water and gas injection wells Pardy et al. Produced associated gas minus gas lift and fuel gas is reinjected into a gas cap in the northern part of the field to maintain reservoir pressure and for possible future extraction.
The Northern pools and West Avalon extension has a thick gas accumulation and a thinner, less extensive, oil leg Fig. The wellhead platform would host a drilling rig intended to improve drilling efficiency, lower operating costs, and extract a larger portion of the resource, but the project is currently suspended and future operations under review.
If sanctioned, the concrete GBS is expected to be m high and weigh , tonnes, with total platform height m and operating weight 30, ton. After initial discovery in , field delineation and appraisal stretched over a period of 19 years before the decision to proceed was made in with a concrete GBS and offloading system Fig.
Source : Hebron DA volume 2 development plan September Three rotated fault blocks define the structural framework of the Hebron field Fig. Within the three main fault blocks are three main reservoirs, and five hydrocarbon pools define separate accumulations Cornaglia and McNeill The Ben Nevis reservoir Pool 3 is expected to be developed as a subsea tieback at a later date. The Pool 1 Ben Nevis reservoir is the focus of the development and requires extended reach producers drilled from the platform and completed with up to m open-hole gravel packs to mitigate sand control issues.
A series of peripheral water injectors is used in development, and solution gas will be stored in Pool 2 Ben Nevis reservoir and produced again later in field life when gas requirements exceed production from the field. Chances of success increase when the development well is drilled to a depth that is likely to be most productive.
The exploratory well determines whether oil and gas are present in a prospective reservoir. Since geology and subsurface conditions are uncertain, there are heightened risks of complications during exploratory drilling. Energy companies expend significant resources in pinpointing the best locations for drilling wells since a dry or unproductive well can be a substantial expense.
While exploratory wells are designed to confirm reserves are accessible, development wells are drilled with various and different objectives, such as flowing production, artificial lift production, injection of water or gas, and to monitor the performance of a well. The accounting treatment for development wells also differs from exploratory wells.
The costs of dry development wells are usually capitalized as an asset on the balance sheet , whereas the costs associated with dry exploratory wells are an expense on the income statement , according to the International Financial Reporting Standards IFRS and the United States generally accepted accounting principles GAAP.
The probability of achieving a successful well increases as more wells are drilled in an oil field. It is first necessary to divide the drilling program into stages, and then it is possible to compare the success of wells in different fields. Development wells tend to be the final phase of the oil drilling process.
The four phases of the oil and gas extraction process are 1 exploration 2 well development 3 production 4 site abandonment. Prior to the drilling of a development well, oil and gas companies usually drill appraisal and exploration wells. Appraisal wells are drilled only when a discovery is made, with the motive of assessing the size and viability of the reservoir.
Drilling techniques vary widely. The life cycle and operational period of development wells are much greater than appraisal wells. Additionally, development wells are normally larger in diameter and deeper than exploratory wells, thus they are also much more expensive and complex to drill. Success rates of wells drilled during the exploration phase have improved significantly over the last 50 years.
The agency states that most U. Energy Information Administration. Energy Trading. Your Privacy Rights. To change or withdraw your consent choices for Investopedia.
At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Croatia has a long history in production of oil and gas, which is ongoing for more than 60 years. Domestic production in Croatia is declining, due to that fact, it is necessary to stimulate new investments for exploration of hydrocarbons in order to increase domestic production of oil and gas.
Investments in exploration activities have declined both offshore and onshore. Oil production fell by Energy resources such as oil and gas are the drivers of economic growth. Nowadays, accessible domestic energy resource mean energy independence and the sovereignty and security of each country.
Exploration block is an area in which is possible to carry out exploration activities for the purpose of hydrocarbon exploration under strictly controlled conditions. Exploration blocks as defined in April have been located 10 km away from the mainland and 6 km away from islands. It is important to note that prior to the new block demarcation no exclusion zones existed.
Today, thanks to the new regulatory framework and approach, drilling on the mentioned islands is no longer possible nor is drilling possible within ten kilometers of the mainland and six kilometers from the islands. In fact, Croatia is the only country bordering the Adriatic Sea that has exploration blocks and offshore production and does not allow any exploration nor production ten kilometers from the mainland.
During the 5 year exploration period, actual offshore exploration activities are expected to last approximately 6 months. The exploration period lasts 5 years. During the five years exploration period, actual offshore exploration activities are expected to last approximately 6 months. Whereas drilling can be expected in the fourth or fifth year of the exploration period. For example it is necessary to perform an environmental impact assessment defining the conditions under which production is possible and if production is possible.
Today, on the Croatian side of the Northern Adriatic, there are 3 exploitation fields which contain 19 active gas production platforms. What is the difference between exploration and production well? An exploration well, depending on the sea and well depth, is usually drilled in one to four months, and is drilled for the purpose of confirming and identifying hydrocarbons reservoirs.
Production wells which are drilled in order to develop confirmed reserves and are then connected to the production platform. Many producing production wells, depending on the size of the reservoir, can be connected to one platform. For the example, in the Croatian Northern Adriatic, there are 19 gas platforms which are connected to approximately 50 production wells.
What are the differences in respect to the upcoming hydrocarbon exploration and production activities and activities performed prior to the new regulatory framework of ? Is it possible to explore for only gas, and not the oil?
0コメント